Document:

<PAGE>

                                                                   Exhibit 10.49

                    AMENDED AND RESTATED LICENSE AGREEMENT

     This Agreement is made and entered into as of January 1, 2000 (the
"Effective Date"), by and between Liquid Audio, Inc. ("LA"), a corporation
organized under the laws of the State of Delaware, and Liquid Audio Japan, Inc.
("LAJ"), a corporation organized under the laws of Japan.  Capitalized terms not
otherwise defined shall have their meaning as set forth in Section 1 below or
elsewhere herein.

     WHEREAS, the parties have entered into a Services Agreement dated as of
______, 1999 (the "Original Agreement");

     WHEREAS, the parties wish to clarify and distinguish the revenue streams
for (1) the services and trademark license provided by LA to LAJ under the
Original Agreement, and (2) the software license granted by LA to LAJ under the
Original Agreement;

     WHEREAS, in connection with this clarification, the parties wish to amend
and restate the Original Agreement;

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties hereby agree as follows:

     1.  DEFINITIONS.
         -----------

            a.  "Business Procedures" means the procedures set forth in the
Annual Business Plan (as defined in Section 2(g)), and any other procedures for
operating the Local Business that are issued by LA, including all updates or
revisions thereto.

            b.  "Gross Revenues" means all revenues arising from the Local
Business.

            c. "LA Products and Services" means the products and services
detailed in Exhibit A.

            d.  "LA Software" means the software identified on Exhibit A for use
by LAJ in exercising the appointment hereunder.

            e.   "LA Trade Secrets" means LA's Business Procedures, application
program interfaces, and certain know-how, techniques, processes, methods and
other trade secrets that may be disclosed by LA to LAJ hereunder.

            f.  "LMN-J Domain" means www.liquidmusicnetwork.co.jp or the
                                     ----------------------------
alternative domain name for the LMN-J that is chosen by mutual agreement of the
parties.

            g.  "LMN-J" means a localized version of LA's Liquid Music Network
World Wide Web site.

            h.  "LOC-J" means a localized version of LA's Liquid Operations
Center.
<PAGE>

            i.  "Local Business" means an internet-based business operated in
the Territory under the Business Procedures that provides the LA Products and
Services. For avoidance of doubt, the Local Business does not include the sale
of products and services of LA that are covered by the Reseller Agreement.

            j.  "Localized Version" means a modified version of the LA Software
or LA Products or Services translated into Japanese.

            k.   "LAJ Shareholder Agreement" means that certain agreement among
LA, Super Stage, Inc., and certain investors, pursuant to which LA, Super Stage,
Inc., and certain investors have agreed to management terms for LAJ.

            l.  "Reseller Agreement" means that certain Software Reseller
Agreement dated August 9, 1998 between LA and LAJ.

            m.  "Subsidiaries" means all current and future business entities of
which LAJ owns, directly or indirectly, at least fifty percent (50%) of the
equity securities or other equity interest granting voting rights exercisable in
electing the management of the entities, for so long as such ownership exists.

            n.  "Term" means the term of this Agreement commencing upon the
Effective Date and expiring concurrently with the expiration of the Reseller
Agreement (currently December 31, 2003), unless earlier terminated pursuant to
the terms of Section 11 below.

            o.  "Territory" means Japan.

     2.  APPOINTMENT AND LICENSE GRANT.
         -----------------------------

            a.  Appointment.  LA hereby appoints LAJ, and LAJ hereby accepts the
                -----------
appointment, to operate the Local Business, solely on the terms and conditions
detailed herein.  This appointment shall be on an exclusive basis during the
Term, except that if LAJ fails to achieve [*] of the revenues specified in the
Annual Business Plan (as defined in Section 2(g)) for a given year, then LA may
terminate this Agreement, effective immediately.  Notwithstanding the foregoing,
the parties hereby acknowledge that this appointment shall not preclude LA from
continuing its worldwide efforts to promote and offer the LA Products and
Services; provided that, if LA receives inquiries or orders for LA Products and
Services from individuals or entities located within the Territory who will use
the LA Products and Services within the Territory, LA shall direct such sales
and revenue leads to LAJ in accordance with Section 2(c).  Such efforts may
include, without limitation: (a) engaging in activities designed to foster
integration between and amongst LAJ and LA's appointees and business associates
in other territories; and (b) establishing and leveraging relationships with
individuals and entities both inside and outside the Territory (as contemplated
in Section 6(i)) to assist LAJ in maximizing the performance of the Local
Business.

            b.  License Grant.  Subject to the terms and conditions set forth
                -------------
herein, LA hereby grants LAJ the nontransferable license in the Territory to use
the LA Software solely to the extent necessary to operate the Local Business.

                                                                             -2-

*  Certain information in this Exhibit has been omitted and filed separately
   with the Commission. Confidential treatment has been requested with respect
   to the omitted portions.
<PAGE>

            c.  Territorial Limitation.  LAJ will limit its marketing and
                ----------------------
distribution efforts to individuals and/or entities, as applicable, that: (a)
are physically located in the Territory, and (b) will use the LA Products and
Services within the Territory. In the event LAJ receives inquiries or orders for
LA Products and Services from individuals or entities located outside the
Territory or who intend to use such LA Products and Services outside the
Territory, LAJ will not respond to such inquiries or fulfill such requests.
Instead, LAJ shall refer all such inquiries to LA. In the event LA receives
inquiries or orders for LA Products and Services from individuals or entities
located within the Territory who will use the LA Products and Services within
the Territory, LA shall direct such sales and revenue leads to LAJ. In addition,
to the extent LA identifies other direct sales or revenue leads that are
appropriate for the Local Business, LA shall refer such leads to LAJ.

            d.  Additional Restrictions.  LAJ may not modify, translate, or
                -----------------------
otherwise alter the LA Software or any other materials provided by LA under this
Agreement. LAJ agrees that it will not itself, or through any Subsidiary,
affiliate or other third party: (i) copy, market, sell, distribute, sublicense,
rent, lease, timeshare, or encumber the LA Software; (ii) attempt to decompile,
disassemble or reverse engineer the source code (in whole or in part) for the LA
Software, or otherwise attempt to derive such source code, or take any other
action in derogation of LA's or its suppliers' intellectual property rights;
(iii) market, distribute, sell, develop or cause to be developed any derivative
software or any other software program, technology, products, or services based
upon or competitive with the Local Business, LA Products and Services, LA
Software or LA's Confidential Information; or (iv) alter, encode, copy or
transmit any audio or other information using the LA Software without obtaining
all necessary copyright and other permissions, and LAJ will at its expense
defend, indemnify, and hold harmless LA and its officers, directors, and
employees against all liabilities, damages, claims, fines and expenses arising
out of any claim that LAJ has not obtained such permissions.

            e.  Reservation of Rights and Ownership.  All rights not expressly
                -----------------------------------
granted hereunder are reserved by LA. This Agreement does not authorize or imply
any rights other than as expressly set forth herein. LA retains ownership of the
LA Software and all right, title and interest therein. LAJ acknowledges and
agrees that it is acquiring only the right to use the LA Software in order to
operate the Local Business. All patents, copyrights, trade secrets and other
intellectual property rights in and to the LA Software shall remain the
exclusive property of LA or its suppliers.

            f.  Acknowledgement.  The parties hereby acknowledge that the
                ---------------
licenses granted under Sections 2 (Appointment and License Grant), 4
(Trademarks), or elsewhere in this Agreement are not senyo jisshiken or senyo
shiyoken, as applicable. Furthermore: (i) LAJ shall not have the right to
prosecute infringement actions in its own name and (ii) LAJ, its affiliates, and
agents shall not attempt to register any right or license hereunder as a senyo
jisshiken or senyo shiyoken. Any such attempt shall be deemed a breach of this
Agreement that is not amenable to cure within thirty (30) days, and, as a
result, LA may immediately terminate this Agreement.

            g.  Annual Business Plan.  The parties shall meet annually at a
                --------------------
mutually agreed upon time and place to prepare a business plan detailing,
without limitation, LA Products and Services to be offered by LAJ and minimum
revenue targets ("Annual Business Plan"), subject to any procedures set forth in
the LAJ Shareholder Agreement. If the parties fail to agree upon an Annual
Business Plan within sixty (60) days after the start of the year to which such
Annual Business Plan

                                                                             -3-
<PAGE>

relates, then each party shall refer the matter to higher levels of management
for resolution, and such persons shall use their best efforts to resolve the
matter for no less than thirty (30) days.  Any matter such persons are unable to
resolve within such period may be submitted to arbitration pursuant to Section
12(a).

            h.  Milestones.  In addition to complying with any milestones or
                ----------
benchmarks set forth in the Annual Business Plan, LAJ shall: (a) establish the
LMN-J within six (6) months of the Effective Date; and (b) commence operation of
the LOC-J within three (3) months of the Effective Date. LA's Liquid Operations
Center shall be used in place of the LOC-J until the LOC-J is operational. LOC-J
and/or Liquid Operations Center fees payable by licensees of LA's software shall
be paid to LAJ and remitted to LA, provided that the amount of such fees shall
be determined and revised from time to time by agreement of LA and LAJ.

     3.  OTHER ACTIVITIES.  In the event that LAJ desires to: (i) enter into any
         ----------------
operational activities other than those included in the Local Business, or (ii)
partner with third parties with respect to the same (collectively, "Other
Activities"), LAJ shall notify LA in writing, and LA agrees to negotiate in good
faith with LAJ regarding the expansion of LAJ's appointment hereunder to include
such Other Activities; provided, however, that LA reserves the right not to
negotiate or agree to any proposed Other Activities if LA, in its sole business
discretion, concludes that such proposed Other Activities would materially
affect the core operation of LAJ or LA's Trademarks (as defined in Section 4(a)
below) in an adverse manner. LA shall have no liability to LAJ hereunder
whatsoever in the event LA fails to enter into or negotiate any such agreement
for Other Activities with LAJ. In addition, LAJ acknowledges that this Agreement
is subject to termination by LA pursuant to Section 11 in the event that LAJ
engages in any Other Activities without the prior written consent of LA. To the
extent that LA may provide assistance to LAJ in establishing relationships with
entities engaged in businesses related to these Other Activities, LA agrees in
good faith to do so; provided, however, that LA shall not be obligated to take
any action pursuant to this provision that would be inconsistent with its
obligations under any agreement it is a party to or that would, in LA's sole
determination, have a negative impact on its business, in any way.

     4.  TRADEMARKS AND TRADE NAMES.
         --------------------------

            a.  Right to Use.  During the term of this Agreement, LAJ shall have
                ------------
the right and shall be required to indicate to the public within the Territory
that it operates the Local Business under the name, "Liquid Audio Japan", and
shall have the right and shall be required to market and distribute the LA
Products and Services under the "Liquid Audio" trademark, and any other
trademarks, marks, trade names, domain names and Uniform Resource Locators
("URLs") that LA may approve for use in connection therewith in the Territory
(collectively, "LA's Trademarks"). Notwithstanding the foregoing, any use of
LA's Trademarks on the LMN-J, Web sites, or other postings on the Internet or in
other electronic transmissions via computer networks shall be subject to the
prior written approval of LA.

            b.  Restrictions.  LAJ shall not use LA's Trademarks, or any other
                ------------
copyright, trademark, logo or other right of LA in any manner contrary to public
morals, in any manner which is deceptive or misleading, which is derogatory to
LA's Trademarks, or which compromises or reflects unfavorably upon the goodwill,
good name, reputation or image of LA or LA's Trademarks,

                                                                             -4-
<PAGE>

or which might jeopardize or limit LA's proprietary interest in LA's Trademarks.
Any such misuse will give rise to LA's rights for immediate termination of this
Agreement. Nothing herein shall grant to LAJ any right, title or interest in
LA's Trademarks. All uses of LA's Trademarks hereunder by LAJ shall inure solely
to the benefit of LA. If LAJ, in the course of exercising its rights hereunder,
acquires any goodwill or reputation in the LA Trademarks, all such goodwill or
reputation will automatically vest in LA when and as, on an ongoing basis, such
acquisition of goodwill or reputation occurs, as well as at the expiration or
termination of this Agreement, without any separate payment or other
consideration of any kind to LAJ. At no time during or after the term of this
Agreement shall LAJ challenge or assist others to challenge LA's Trademarks or
the registration thereof or attempt to register any trademarks, marks, trade
names, domain names, URLs or like designations that are confusingly similar to
those of LA.

            c.  Approval of Representations.  All representations of LA's
                ---------------------------
Trademarks that LAJ intends to use shall first be submitted to LA for approval
in writing (which shall not be unreasonably withheld) of design, color and other
details, or shall be exact copies of those used by LA. LAJ shall not use any of
LA's Trademarks in conjunction with another trademark on or in relation to any
other products or services without LA's prior written approval. All uses shall
be subject to approval by LA to ensure that LA's Trademarks are not used by LAJ
in a manner that is unintended by LA, and notwithstanding any approval by LA,
LAJ is responsible for the contents of such advertising and compliance with all
laws and regulations within the Territory relating thereto.

            d.  Trademark Registrations in the Territory.  LAJ shall advise LA
                ----------------------------------------
regarding the registrations or filings appropriate to protect the use of the LA
Trademarks in the Territory or to otherwise safeguard LA's interests hereunder.
LA shall make such registrations or filings with the Japan Patent Office or
other appropriate authorities; provided, however, that LAJ shall provide all
assistance reasonably requested by LA in making such registrations or filing,
but LAJ shall not be obligated to pay for such registrations and filings.

            e.  Infringement Actions.  LAJ shall cooperate with LA in all
                --------------------
respects at LA's reasonable request in connection with any action or proceeding
prosecuted by LA involving LA's Trademarks or other intellectual property
rights. LAJ shall promptly notify LA of any such infringements or any acts of
unfair competition by third parties that come to LAJ's attention. LA shall have
the exclusive right, exercisable at its discretion, to institute in its own name
and/or LAJ's name and to control, all actions against third parties relating to
LA's Trademarks, and other intellectual property rights, at LA's expense. With
respect to any such actions, LA shall employ counsel of its own choice to direct
the handling of the litigation and any settlement thereof. LA shall be entitled
to receive and retain all amounts awarded, if any, as damages, profits or
otherwise in connection with such suits handled by LA. LAJ shall not, without
LA's prior written consent, institute any suit or take any action on account of
such infringements, acts of unfair competition or unauthorized uses, provided
that LA's consent shall not be unreasonably withheld. LA shall endeavor to
provide LAJ with notice of its consent or lack thereof on an expedited basis in
the event of an emergency that requires LAJ to seek immediate relief in order to
prevent further infringement of the rights licensed hereunder. If, with LA's
consent, LAJ institutes, at its sole cost and expense, such a suit or action,
the handling of the litigation and any settlement thereof shall remain subject
to LA's approval. LAJ shall be entitled to recover all reasonable costs and
expenses incurred in any such suit or action handled by LAJ from any financial
recovery awarded or obtained, and the

                                                                             -5-
<PAGE>

damages LAJ incurred, to the extent compensatory damages were awarded therefor,
and the remainder shall be retained by LA. LA shall incur no liability to LAJ by
reason of LA's failure or refusal to prosecute, or by LA's refusal to permit LAJ
to prosecute, any alleged infringement by third parties, nor by reason of any
settlement to which LA may agree. For instances in which the procedures set
forth in this Section are expressly prohibited by the laws or regulations of the
Territory, the parties shall mutually agree upon alternative procedures.

            f.  Domain Names. LA shall, prior to the first date LAJ makes the
                ------------
World Wide Web site for the LMN-J generally available on the World Wide Web,
register the LMN-J Domain name with InterNIC (or its successor Internet name
assignment authority) and/or the Japan Network Information Center (JPNIC). LA
also shall pay the registration fees for one year. Thereafter, LA shall in a
timely fashion renew such registrations with such authorities each time such
registration becomes due during the Term, and LAJ shall promptly reimburse LA
for the cost of such renewal. For instances in which the procedures set forth in
this Section are expressly prohibited by JPNIC's terms and conditions or the
laws and regulations of the Territory the parties shall mutually agree upon
alternative procedures.

     5.  LOCALIZED VERSIONS, UPDATES AND MAINTENANCE SERVICES.
         ----------------------------------------------------

            a.  Localized Versions.
                ------------------

                    (i)  Costs.  LAJ shall bear all costs associated with the
                         -----
development and on-going production of the Localized Versions. Development costs
shall include, without limitation, the development services of LA valued on
"cost plus" basis (i.e., time and materials with time being computed based on
fully burdened labor costs of the dedicated personnel plus [*] of the total), as
well as the costs of third party contractors and subcontractors who assist in
the production of the Localized Versions. On-going production costs include,
without limitation, the cost of creation and production of any physical media or
materials that are distributed as part of the Localized Versions, including,
without limitation, manuals, diskettes, labels and boxes required. LA will
invoice all development costs monthly and such costs shall be due within thirty
(30) days after the invoice date. In the event that LAJ prepares any Japanese-
language translations or interface modification designs necessary for such
localization, LAJ will be solely responsible for, and shall ensure the accuracy
and correctness, of all such Japanese-language translations and interface
modification designs provided by LAJ.

                    (ii) Procedures.  In the event that LAJ desires the
                         ----------
development of a Localized Version, LAJ will submit a localization request to LA
that contains a detailed description of the desired localization, and LA shall
evaluate the request and determine whether the requested localization: (1)
provides sufficient detail, (2) is commercially feasible to develop and
implement; and (3) constitutes a necessary customization of the applicable LA
Products and Services, LA Software, or Business Procedures for use in the
Territory. If LA reasonably determines that the requested localization meets the
foregoing requirements, LA will cooperate with LAJ to develop the requested
localization or to have such localization developed by third parties; provided
that all matters relating to the Localized Versions shall remain subject to the
final approval and control of LA. LA will prepare a schedule of the processes to
be accomplished in creating the Localized Versions and will allow LAJ to
participate in the development of the Localized Versions where this

                                                                             -6-

*  Certain information in this Exhibit has been omitted and filed separately
   with the Commission. Confidential treatment has been requested with respect
   to the omitted portions.
<PAGE>

participation is acceptable to LA in its sole discretion. If acceptable to LA in
its sole discretion, this participation in development of the Localized Versions
could include providing source code to LAJ for development purposes. LA shall
have no liability to LAJ in the event that completion of any Localized Version
is delayed for any reason or abandoned due to technical difficulties after a
reasonable level of sustained diligent efforts by LA's personnel.

          b.  Updates and Maintenance Services. During the Term, LA will deliver
              --------------------------------
to LAJ any updates, when and if available, to the LA Software on a periodic
basis which LAJ shall promptly implement. LA shall continue to provide such
updates during any Renewal Term; provided that LAJ continues to pay the
quarterly maintenance fee described on Exhibit B. LAJ will be responsible for
all front-line maintenance and support for the LA Products and Services and any
end-user software included in such LA Products and Services.

          c.  Ownership Rights.  LA will own all right, title and interest in
              ----------------
and to the Localized Versions and updates, all specifications, designs,
inventions and all related work product in all stages of development ("Work
Product"), including, without limitation, all translations, interfaces and other
contributions by LAJ hereunder, and all copyrights and other intellectual
property rights therein and thereto. LAJ hereby forever and irrevocably assigns
and transfers to LA all right, title and interest in and to the Work Product,
including, without limitation, all copyrights, patents, trade secrets and other
proprietary rights therein and thereto, and LA shall have the exclusive right to
file patents and other intellectual property registrations with respect thereto.
All updates and Localized Versions are provided on an AS-IS basis. LA cannot
guarantee that program errors reported by LAJ relating to the LA Software will
be corrected.

          d.  Cooperation by LAJ.  In order to facilitate prompt and efficient
              ------------------
completion of any Localized Versions hereunder, LAJ and its personnel shall
cooperate fully with LA and its personnel in all respects, including, without
limitation, providing information as to customer requirements, and providing
access to (i) all necessary information relating to any localization request as
requested by LA, (ii) LAJ's software systems and facilities, and (iii) officers
and other personnel of LAJ.

     6.   ADDITIONAL OBLIGATIONS OF LAJ AND LA.
          ------------------------------------

               a.  Reports.  LAJ agrees to provide LA with a quarterly sales and
                   -------
activity report with contents and format to be determined by LA. This report
must be forwarded to LA within thirty (30) days after the close of each calendar
quarter.

               b.  Promotional Activities.  LAJ shall be entitled to pursue an
                   ----------------------
array of promotional strategies to maximize the performance of the Local
Business. LA will support LAJ's marketing efforts by: (i) continuing to pursue
its current marketing and promotional efforts designed to establish awareness of
the Local Business; (ii) creating and providing appropriate marketing
documentation and other promotional materials; (iii) assisting in the
development of marketing and promotional concepts; and (iv) involving LAJ in
applicable marketing campaigns initiated by LA. In addition, the parties shall
mutually agree on other promotional activities that LAJ will perform to assist
LA in developing its brand identity in the Territory. This may include, without
limitation,

                                                                             -7-
<PAGE>

mention in LA's press releases and marketing materials. At minimum, LAJ shall,
at its own expense, actively promote the Local Business, including advertising
in trade and other appropriate publications within the Territory, and
participating in appropriate trade shows, seminars, and joint marketing programs
with applicable marketing partners.

          c.  Finances and Personnel.  LAJ shall maintain a net worth and
              ----------------------
working capital sufficient, in LAJ's reasonable judgment, to enable LAJ to use
its best efforts to perform fully and faithfully its obligations under this
Agreement. LAJ shall devote sufficient financial resources and technically
qualified service personnel to fulfill its responsibilities under this
Agreement, including, without limitation, its payment obligations set forth in
Section 7 below.

          d.  Customer Relations.  LAJ shall, at its own expense: (i) provide
              ------------------
adequate contact with existing and potential customers of the LA Products and
Services within the Territory on a regular basis, consistent with good business
practice; (ii) assist LA in assessing customer requirements for the LA Products
and Services, including modifications and improvements thereto, in terms of
quality, design, functional capability, and other features; (iii) submit market
research information, as reasonably requested by LA, regarding customer
feedback, competition and changes in the market within the Territory; and (iv)
promote the use of the LA Products and Services in the major recording industry
corporate accounts market segments and other appropriate market segments; and
develop and serve major recording industry corporate accounts.

          e.  Standard of Business Practices.  LAJ shall establish and maintain,
              ------------------------------
and shall cause its employees, consultants and agents to establish and maintain,
a high standard of ethical business practices in connection with its
appointment, including, without limitation, full compliance with Sections 12(o)
and 12(p) below. LAJ shall comply with all laws and regulations relating or
pertaining to its appointment, and shall comply with the regulations and
directives of any regulatory agencies which shall have jurisdiction over this
Agreement, the LA Products and Services, or the LA Software.

          f.  Representations of LAJ.  LAJ represents and warrants on a
              ----------------------
continuous basis that it is a corporation duly organized and validly existing
under the laws of Japan; it has full right, power and authority to enter into
this Agreement and to perform all of its obligation hereunder; its execution,
delivery and performance of this Agreement have been duly and properly
authorized by all necessary actions and this Agreement constitutes its valid and
binding obligation, enforceable against it in accordance with its terms; and its
execution, delivery and performance of this Agreement will not, with or without
the giving of notice or passage of time, or both, conflict with, or result in a
default or loss of rights under, any provision of its Articles of Incorporation
or other organizational documents or any other agreement to which it is a party.

          g.  Representations of LA.  LA represents and warrants on a continuous
              ---------------------
basis that it is a corporation duly organized and validly existing under the
laws of Delaware; it has full right, power and authority to enter into this
Agreement and to perform all of its obligation hereunder; its execution,
delivery and performance of this Agreement have been duly and properly
authorized by all necessary actions and this Agreement constitutes its valid and
binding obligation, enforceable against it in accordance with its terms; and its
execution, delivery and performance of this Agreement will not, with or without
the giving of notice or passage of time, or both, conflict with, or

                                                                             -8-
<PAGE>

result in a default or loss of rights under, any provision of its Articles of
Incorporation, Bylaws or other organizational documents or any other agreement
to which it is a party.

          h.  Intellectual Property Registrations and Government Approvals.  LA
              ------------------------------------------------------------
shall be responsible for obtaining any copyright, trademark or other
intellectual property rights protection, in LA's name, for the LA Software, LA
Products and Services, or LA Trademarks in the Territory. LA shall be
responsible for all fees or expenses incurred in connection with such
intellectual property registrations. LAJ shall promptly notify LA in writing of,
and shall be responsible for obtaining any necessary government approvals that
may be required with respect to this Agreement. LAJ shall be responsible for all
fees or expenses incurred in connection with obtaining any necessary government
approvals with respect to this Agreement.

          i.  Additional LA Obligations.  LA and LAJ shall cooperate to
              -------------------------
integrate appropriate components of the LA Products and Services offered in the
Territory with other products and services offered by LA in the United States
and other territories. LA also shall offer LAJ access to the expertise and know-
how LA has developed for the technical and business implementation of the LA
Products and Services in the Territory, and shall provide general consulting
services to LAJ with respect to the Local Business on an as-needed basis
pursuant to the fee schedule attached as Exhibit C. In addition, LA and LAJ
shall cooperate to leverage LA's strategic partner relations, as appropriate,
for the benefit of LAJ in the Territory. These relations may include internet
companies, major entertainment companies, major music industry companies,
copyright societies, hardware Original Equipment Manufacturers (including
computers and consumer electronics companies), software partners, financial
clearinghouses, systems integrators, and global advertisers and sponsors.

     7.   COMPENSATION TO LA.
          ------------------

               a.  Payment Terms.  All payments due hereunder shall be
                   -------------
calculated, denominated and made in United States Dollars, and LAJ shall be
solely responsible for all costs of any currency conversion to United States
Dollars, and such costs shall not reduce the amounts due to LA hereunder. All
payments required hereunder shall be made by wire transfer to the account of LA,
or in accordance with such other instructions as LA may from time to time
provide to LAJ. All payments hereunder shall be made without set-off of any
amount whatsoever, whether based upon any claimed debt or liability of LA to
LAJ. Any past due amounts shall bear interest at the lesser of 1.5% per month or
the maximum rate permitted by applicable law. LAJ shall pay all of LA's costs
and expenses (including reasonable attorneys' fees) to enforce LA's rights under
this Section 7.

          b.  Software License Fee.  In consideration of the software license
              --------------------
granted herein, LAJ shall pay LA the non-refundable license fees specified on
Exhibit B ("Software License Fees") according to the schedule detailed therein.

          c.  Additional Software License Fees. As additional consideration for
              --------------------------------
the software license granted herein, no later than thirty (30) days after the
end of each quarter, LAJ shall make the following payments to LA ("Additional
Software License Fees"): Commencing with the first quarter of 2000, and
continuing during any Renewal Term, LAJ shall pay the percentage of Gross
Revenues earned by LAJ during each quarter as shown in Exhibit B. Commencing
with the first quarter of 2002 and continuing during any Renewal Term, LAJ shall
pay LA an additional [*] of Gross

                                                                             -9-

*  Certain information in this Exhibit has been omitted and filed separately
   with the Commission. Confidential treatment has been requested with respect
   to the omitted portions.
<PAGE>

Revenues (e.g., a total of [*] in the first quarter of 2002) earned by LA during
each quarter. During any Renewal Term, LAJ may credit any maintenance fees paid
for a given quarter against any Additional Software License Fees due under this
Section for such quarter. Notwithstanding the foregoing, LAJ shall be obligated
to pay the maintenance fees specified in Exhibit B during each quarter of any
Renewal Term, and such maintenance fees are due regardless of the amount of
Additional License Fees for any such quarter.

          d.  Taxes.  In addition to the other charges specified above, LAJ
              -----
shall pay directly any and all taxes, imposts, duties or similar charges,
including, without limitation, sales, use, ad valorem, value added, franchise,
withholding or other taxes, duties, imposts or charges that may be imposed by
any jurisdiction in connection with LAJ's appointment or any of the amounts
payable by LAJ to LA hereunder, however designated or levied, it being
understood that the amounts payable hereunder are net amounts and may not be
reduced or deducted from with any taxes, duties, imposts or other charges. If
LAJ is legally required to withhold any taxes on any payments made hereunder to
LA, LAJ shall withhold and make timely payment of such taxes to the pertinent
tax authorities, provided that the amount of such payments are grossed up to
ensure that LA will receive the full amount payable hereunder. LAJ shall
indemnify and hold LA forever harmless from all such taxes, customs, duties,
levies, impost or any other charges now or hereafter imposed, including, without
limitation, any penalties, interest or other assessments that may be incurred
due to failure, delay or errors by LAJ in reporting or payment thereof. LA
agrees that in the event that LA is able to make use of the foreign tax credit,
then, on a prospective basis, LA shall advise LAJ to deduct any tax imposed on
any Additional Software License Fees due hereunder so that such tax may reduce
the amount payable to LA; provided however that: (i) LAJ may not offset any such
taxes against any Software License Fees, maintenance fees, or other fees due
hereunder and (ii) LAJ shall not have the right to recover any prior taxes from
amounts previously paid by LAJ hereunder. If LA gives such advice, then such
Additional Software License Fees (after the deduction of the withholding taxes)
shall be considered the gross amount. When such advice is made, LAJ shall pay
the withheld amount to the relevant tax authorities in the Territory and furnish
an official receipt thereof to LA so that LA may enjoy the benefit of the
foreign tax credit.

          e.  Accounting and Audit Rights.  LAJ shall keep and maintain full and
              ---------------------------
accurate books of account and records. LA or its designees shall be entitled, at
its expense, to inspect such books and records on a quarterly basis and to audit
such books and records on an annual basis during or after the Term during
reasonable business hours and in each case upon five (5) business days prior
written notice to LAJ, and make copies and summaries of such books and records.
All such books of account and records shall be retained by LAJ for a minimum of
three (3) years after expiration or termination of this Agreement. If LA or its
duly authorized representative discovers a deficiency in the payments to LA
pursuant to any statement in the period under audit (an "Audit Deficiency"), LAJ
shall promptly pay such Audit Deficiency to LA and, if such Audit Deficiency is
[*] or more of the payments made to LA pursuant to any statement in such audit
period, LAJ shall promptly pay all costs and expenses incurred by LA in
connection with such audit. If such Audit Deficiency is [*] or more of the
amounts paid to LA pursuant to any statement in the period under audit, then in
addition to the above, LA may, at its sole option, immediately terminate the
Agreement upon written notice to LAJ; provided that LAJ shall still be obligated
to tender the Audit Deficiency and associated costs and expenses to LA.

                                                                            -10-

*  Certain information in this Exhibit has been omitted and filed separately
   with the Commission. Confidential treatment has been requested with respect
   to the omitted portions.
<PAGE>

     8.  WARRANTY DISCLAIMER.  ALL LA SOFTWARE, LA TRADE SECRETS, LA PRODUCTS
         -------------------
AND SERVICES AND OTHER MATERIAL DELIVERED BY LA ARE PROVIDED "AS-IS," AND LA
GRANTS NO WARRANTIES OR CONDITIONS, EXPRESS OR IMPLIED, BY STATUTE OR OTHERWISE,
REGARDING SUCH ITEMS, THEIR FITNESS FOR ANY PURPOSE, THEIR QUALITY, THEIR
MERCHANTABILITY, OR OTHERWISE.

     9.  INDEMNIFICATION OBLIGATIONS.
         ----------------------------

               a.  Indemnification by LA. LAJ agrees that LA has the right to
                   ---------------------
defend, or at its option to settle, and LA agrees, at its own expense, to defend
or at its option to settle, any claim, suit or proceeding brought against LAJ on
the issue of infringement by the LA Software or LA Trademarks of any copyright
or registered patent or trademark, as applicable, issued in the Territory prior
to the Effective Date of this Agreement, or, with respect to updates and
Localized Versions issued in the Territory prior to the date of release to LAJ,
subject to the limitations hereinafter set forth. LA shall have sole control of
any such action or settlement negotiations, and LA agrees to pay, subject to the
limitations hereinafter set forth, any final judgment entered against LAJ on
such issue in any such suit or proceeding defended by LA. LAJ agrees that LA at
its sole option shall be relieved of the foregoing obligations unless LAJ
notifies LA promptly in writing of such claim, suit or proceeding and gives LA
authority to proceed as contemplated herein, and, at LA's expense, gives LA
proper and full information and assistance to settle and/or defend any such
claim, suit or proceeding. Notwithstanding the foregoing, LA shall have no
liability for, and LAJ will indemnify and hold harmless LA from, all liability
arising from: (i) the combination or use by LAJ of the LA Software with any
materials not furnished by LA, if such claim would have been avoided by use of
the LA Software alone; (ii) the use or incorporation of any materials supplied
to LA by LAJ; or (iii) any other action or inaction by LAJ that would result in
the liability contemplated by this provision. If the LA Software, LA
Trademarks, or any part thereof, is, or in the opinion of LA may become, the
subject of any claim, suit or proceeding for infringement of any patent,
copyright or trademark or other intellectual property right, then LA may, at its
option and expense:  (i) procure for LAJ the right to sell or use, as
appropriate, the LA Software, LA Trademarks, or such part thereof; (ii) replace
the LA Software, LA Trademarks, or portions thereof, with other suitable
technology, trademarks, or portions thereof; (iii) suitably modify the LA
Software, LA Trademarks, or portions thereof; or (iv) if none of the foregoing
is commercially feasible in LA's judgement, terminate this Agreement and LAJ's
license to the LA Software and/or LA Trademarks.  LA shall not be liable for any
costs or expenses incurred without its prior written authorization.

          b.  Limitation.  Notwithstanding the provisions of Section 9(a) above,
              ----------
LA assumes no liability for (i) infringements covering any combination, method
or process in which any of the LA Software may be used but not covering the LA
Software when used alone, including, without limitation, any use of software or
technology belonging to third parties, regardless of whether such software or
technology may be necessary to the use or modification of, or compatible with,
the LA Software, (ii) infringements involving the modification or servicing of
the LA Software, or any part thereof, unless such modification or servicing was
performed by LA, (iii) failure of LAJ to implement any updates to the LA
Software, if the infringement would have been avoided by the use of the update,
(iv) any trademark infringements involving any marking or branding other than
LA's Trademarks when used alone; or (v) infringements arising from uses of the
LA Software which do not comply with the uses permitted under this Agreement.

                                                                            -11-
<PAGE>

          c.  Entire Liability.  The provisions of this Section 9 state the
              ----------------
entire liability and obligations of LA and the exclusive remedy of LAJ and its
customers, with respect to any alleged infringement of patents, copyrights,
trademarks or other intellectual property rights by the LA Software, LA Products
and Services, or any part thereof.

          d.  Indemnification by LAJ.  Except for LA's indemnification
              ----------------------
obligations set forth above, LAJ will indemnify, defend and hold harmless LA,
its parents, subsidiaries, affiliates, and each of their respective successors
and permitted assigns, directors, officers, employees, representatives, agents,
consultants and contractors, in respect of any and all losses, claims, suits,
proceedings, liabilities, causes of action, damages, costs, expenses (including
reasonable attorneys' fees and expenses) arising out of or relating to LAJ's
exceeding the scope of its appointment hereunder, the breach or inaccuracy of
any representation, warranty, covenant, agreement, term or condition made by LAJ
hereunder, the distribution of the LA Products and Services (excluding those
claims under Section 9(a) that the distribution of the LA Products and Services
infringe a third party's rights), any suit brought by an end-user or third
party, or use of any audio recordings or other copyrighted material in
connection with the LA Software or LA Products and Services, or the actions or
omissions, including negligence and other tortious conduct, of LAJ, its
employees, officers, agents or contractors.

     10.  PROPERTY RIGHTS AND CONFIDENTIALITY.
          -----------------------------------

               a.  Property Rights.  LAJ agrees that LA owns all rights, title
                   ---------------
and interest in all embodiments of the LA Software, LA Trade Secrets, LA
Products and Services, and LA Trademarks, as well as all underlying copyrights,
patents, trademarks, inventions, know-how, trade secrets, or other proprietary
rights relating thereto. The appointment, licenses, and other rights granted
hereunder transfer to LAJ neither title, nor any other proprietary or
intellectual property rights to the foregoing. The use by LAJ of any of these
property rights is authorized only for the purposes herein set forth, and upon
termination of this Agreement for any reason such authorization shall cease.

               b.  "Confidential Information" means this Agreement and its
Exhibits, any addenda hereto signed by both parties, all information models,
logic diagrams, information, data, drawings, benchmark tests, documentation,
specifications, trade secrets, structure, sequence and organization, object
code, source code, and any other proprietary information disclosed by one party
(the "Disclosing Party") to the other party (the "Receiving Party") directly or
indirectly (which information is marked as "proprietary" or "confidential" or,
if disclosed orally, is designated as confidential or proprietary at the time of
disclosure) hereunder constitutes the confidential and proprietary information
of the Disclosing Party. LA's Confidential Information includes, but is not
limited to, the LA Software and LA Trade Secrets, object code and source code of
or relating to the LA Software, if disclosed to LAJ hereunder in written,
electronic or verbal form, and any adaptations of the aforementioned, all
knowledge and know-how inherent to the LA Software, as well as the knowledge and
know-how that is applied to the configuration of the LA Software, and any other
proprietary information supplied to LAJ by LA hereunder. LAJ acknowledges that
any use of the Confidential Information inconsistent with this Agreement shall
constitute an infringement of LA's intellectual property rights, a
misappropriation of LA's Trade Secrets, unfair competition and a breach of this
Agreement.

                                                                            -12-
<PAGE>

               c.  Nondisclosure Obligations.  Each party agrees that it shall
                   -------------------------
use the Disclosing Party's Confidential Information solely in accordance with
the provisions of this Agreement and will not disclose, or permit to be
disclosed, the same, directly or indirectly, to any third party without the
Disclosing Party's prior written consent. Each party agrees to exercise a high
standard of care in protecting the Confidential Information from unauthorized
use and disclosure, but no less than reasonable care. Without limiting the
foregoing, each party shall adopt whatever measures may be required to limit
access to the Confidential Information to those of its employees that are
subject to non-disclosure obligations and who require such access in order to
exercise such party's rights and perform its obligations in a manner consistent
with this Agreement.

               d.  Exceptions to Nondisclosure Obligations.  Notwithstanding the
                   ---------------------------------------
above, the receiving party shall have no liability to the disclosing party with
regard to Confidential Information which:

                         (i)    was generally known and available in the public
domain at the time it was disclosed or becomes generally known and available in
the public domain through no fault of the receiving party;

                         (ii)   was known to the receiving party at the time of
disclosure as shown by the files of the receiving party in existence at the time
of disclosure;

                         (iii)  is disclosed with the prior written approval of
the disclosing party;

                         (iv)   is independently developed by the receiving
party without any use of Confidential Information and by employees or other
agents of the receiving party who have not been exposed to such Confidential
Information;

                         (v)    becomes known to the receiving party form a
source other than the disclosing party without breach of this Agreement by the
receiving party and otherwise not in violation of the disclosing party's rights;
or

                         (vi)   is disclosed pursuant to the order or
requirement of a court, administrative agency, or other governmental body;
provided, that the receiving party shall provide prompt, advance notice thereof
to enable the disclosing party to seek a protective order or otherwise prevent
such disclosure and provided that the receiving party's disclosure is limited to
the extent expressly required by such court, administrative agency or other
governmental body.

     11.  TERM AND TERMINATION.  This Agreement shall commence upon the
          --------------------
Effective Date and continue until expiration of the Term, unless earlier
terminated in accordance with the provisions of this Agreement. Upon mutual
agreement prior to the expiration of the then-current Term, the parties may
renew this Agreement for an additional term of the same duration as the initial
Term ("Renewal Term"), subject to any terms and conditions issued by LA. LAJ
shall not be obligated to pay a separate renewal fee for such Renewal Term for
the license of LA Software, but will be obligated to pay quarterly maintenance
fees as described on Exhibit B. Notwithstanding the foregoing, upon expiration
of the Term, this Agreement shall automatically renew for the Renewal Term,
provided that LAJ: (a) achieves one hundred percent (100%) of the key
quantitative

                                                                            -13-
<PAGE>

benchmarks detailed in the then-current Annual Business Plan; and (b) meets any
other benchmarks or milestones set forth therein.

               a.  Mutual Agreement.  This Agreement may be terminated pursuant
                   ----------------
to the mutual, written agreement of the parties.

               b.  Termination Due to Related Events. LA shall have the right to
                   ---------------------------------
terminate this Agreement, effective immediately, if the Reseller Agreement is
terminated for any reason.

               c.  Termination for Default by LAJ. If either party defaults in
                   ------------------------------
the performance of any material provision of this Agreement, then the non-
defaulting party may give written notice to the defaulting party that if the
default is not cured within 30 days the Agreement will be terminated; provided
that the cure period shall be 10 days for payment obligations, and there shall
be no cure period if the nature of the default is not subject to cure. LAJ's
failure to make any payments when due shall be considered a default of a
material provision giving rise to LA's right of termination. If the non-
defaulting party gives such notice and the default is not cured during the
applicable period (if any), then the Agreement shall automatically terminate at
the end of that period.

               d.  Termination for Insolvency.  This Agreement may be terminated
                   --------------------------
by either party, on notice, (i) upon the institution by or against the other
party of insolvency, receivership, bankruptcy, reorganization or composition
proceedings or any other proceedings for the settlement of such party's debts,
(ii) upon the other party's making an assignment for the benefit of creditors,
or (iii) upon the other party's dissolution, winding up or ceasing to conduct
business in the normal course.

               e.  Termination for Changes in LAJ's Business. This Agreement may
                   -----------------------------------------
be terminated by LA, upon written notice, upon the occurrence of any of the
following events, unless LA has granted its advance written approval in regard
to the applicable event: (i) upon LAJ's making any basic change in the general
nature or scope of its business, including without limitation, changes to its
articles of incorporation, including any increase or reduction in authorized
share capital and any changes in the rights of outstanding shares; (ii) upon the
removal of the director(s) from LAJ's board that were nominated by LA, if any;
(iii) upon the sale of any equity of LAJ other than pursuant to LAJ's initial
public offering; (iv) upon the merger or consolidation of LAJ with another
company, or the sale of all or substantially all of the business or assets of
LAJ, or any other change of control of LAJ; (v) upon the establishment by LAJ,
Super Stage, Inc., or any of their investors, of a business relationship with
any direct competitor of LA, including directly or indirectly participating in
any entity that sells, resells or distributes any software, product, or service
that materially competes with the LA Software (as defined in the Reseller
Agreement; hereinafter referred to as the "LA Resale Software"), LA Software, or
the LA Products and Services; (vi) upon the investment by LAJ in any other
business or entity; (vii) upon LAJ's entering into any material transactions not
in the ordinary course of business or between LAJ and a director or shareholder
of LAJ or an affiliate of such a shareholder, other than LAJ Shareholder
Agreement; (viii) upon LAJ's entering into any operational activities (other
than those specified herein or in the Reseller Agreement), partnering with third
parties with respect to the same, or receiving revenues from transactions that
are enabled by the LA Resale Software or LA Software.

                                                                            -14-
<PAGE>

               f.  Legal or Regulatory Prohibitions.  If any law or regulation
                   --------------------------------
applicable to LA or LAJ prohibits use of the LA Software, LA Trade Secrets, or
LA Trademarks by LAJ in the manner contemplated by this Agreement, or permits
the use of the LA Software, LA Trade Secrets, or LA Trademarks by LAJ in a
manner not expressly licensed by this Agreement, this Agreement may be
terminated by LA by giving written notice of termination to LAJ, such
termination to be immediately effective upon the giving of such notice.

               g.  Limitation on Termination Liability.  In the event of
                   -----------------------------------
termination by LA in accordance with any of the provisions of this Agreement, LA
shall not be liable to LAJ, because of such termination, for compensation,
reimbursement or damages on account of the loss of prospective profits or
anticipated sales or on account of expenditures, inventory, investments, leases
or commitments in connection with the business or goodwill of LAJ. Termination
shall not, however, relieve either party of obligations incurred prior to the
termination.

               h.  Transition Procedures and Wind-Down.  Upon: (i) expiration,
                   -----------------------------------
or (ii) termination pursuant to Sections 2(a) or 11(a), then: (1) LAJ shall
provide LA with an updated customer list no later than ten (10) days after such
expiration or termination; and (2) LAJ and LA shall cooperate to develop
transition procedures ("Transition Procedures") related to the Local Business.
If the parties fail to agree upon Transition Procedures within sixty (60) days
after such expiration or termination, then each party shall refer the matter to
higher levels of management for resolution, and such persons shall use their
best efforts to resolve the matter for no less than an additional thirty (30)
days. Any matter that such persons are unable to resolve within such period may
be submitted to arbitration pursuant to Section 12(a). Section 11(i) shall be
suspended during the period of such negotiations (the "Wind-Down Period") and
LAJ shall be entitled to continue servicing its existing customer base during
the Wind-Down Period; provided however, that in no event shall such Wind-down
Period exceed one hundred and twenty (120) days. The parties shall cooperate
during such Wind-Down Period to pay highest regard to customers' requests with
regard to continuation of service after expiration or termination of this
Agreement; provided that this provision shall in no way limit the terms of
Section 11(g).

               i.  Return of Materials.  Within 30 days after the expiration or
                   -------------------
termination of this Agreement, LAJ shall prepare all embodiments of the LA
Products and Services, LA Software, LA Trade Secrets, LA Trademarks, and any
other materials provided by LA hereunder that are in LAJ's possession or control
for shipment, as LA may direct, at LA's expense. LAJ shall not make or retain
any copies of any of LA's Confidential Information which may have been entrusted
to it. Effective upon the termination of this Agreement, LAJ shall cease to use
all LA Trademarks. In this regard, immediately upon the termination of this
Agreement, LAJ shall take all steps, as instructed by LA, to de-register or to
transfer to LA any user rights LAJ may have with respect to LA's Trademarks. In
addition, LAJ shall change its corporate name, trade name, and other aspects of
its corporate identity or otherwise ensure that such names may not be reasonably
confused with the LA Trademarks (or any variation thereof), or the name,
initials, trademark, service mark, domain name, or logo of LA's affiliates (or
any variation thereof).

               j.  Survival of Certain Terms.  The provisions of Sections 2(e)
                   -------------------------
(Reservation of Rights and Ownership), 4(b) (with respect to restrictions on
registration of trademarks), 5(c) (Ownership Rights), 7(d) (Taxes), 7(e)
(Accounting and Audit Rights), 8 (Warranty Disclaimer),

                                                                            -15-
<PAGE>

9 (Indemnification Obligations), 10 (Property Rights and Confidentiality), 11(g)
Limitation on Termination Liability, 11(h) (Transition Procedures and Wind-
Down), 11(i) (Return of Materials), 11(j) (Survival of Certain Terms), 12
(Miscellaneous Provisions), and 13 (Limitation of Liability) shall survive the
expiration or termination of this Agreement for any reason. All other rights and
obligations of the parties shall cease upon termination of this Agreement.

     12.  MISCELLANEOUS PROVISIONS.
          -------------------------

               a.  Arbitration of Disputes.  Except as otherwise provided in
                   -----------------------
this Agreement, any dispute, controversy or claim arising out of or relating to
this Agreement or to a breach hereof, including the interpretation, performance
or termination, shall be exclusively and finally resolved by binding
arbitration. Arbitration shall be conducted by the International Chamber of
Commerce (the "ICC") which shall administer the arbitration under its commercial
rules (the "Rules"). Arbitration under this Section 12(a) shall be initiated by
a written demand for arbitration specifying the controversy or claim on which
arbitration is sought, as well as the relief requested. Service of the
arbitration demand shall be effective if made pursuant to the notification
provisions contained in Section 12(e) below. The arbitration shall be conducted
by a panel of three (3) arbitrators chosen in accordance with said Rules within
30 days after receipt by the respondent of the demand to arbitrate. The
arbitration, including the rendering of the award, shall take place in Palo
Alto, California, if initiated by LAJ, or in Tokyo, Japan, if initiated by LA,
as the case may be, and shall be the exclusive forum for resolving such dispute,
controversy or claim. The arbitration proceedings and all pleadings and rulings
shall be conducted and written in the English language. For the purpose of any
arbitration proceeding, this Agreement shall be governed by the governing law
described in Section 12(c) below. This arbitration agreement is intended by the
parties to be self-executing. The panel shall have sole jurisdiction to
determine whether (i) a claim is subject to arbitration, (ii) the arbitration
may proceed even if one of the parties refuses to attend or participate and
(iii) an award against that party may be ordered pursuant to default or
otherwise by the panel. The parties agree that they will arbitrate all claims
agreed to be arbitrated herein regardless of the existence of any related
dispute, action or special proceeding between any or all of the parties hereto
and/or any third party. The arbitration panel shall render a written arbitration
decision with its award, and the decision of the arbitration panel shall be
final and binding upon the parties hereto, and the parties hereby waive any
right of appeal under applicable law. Judgment upon the award rendered by the
arbitration panel may be entered in any court of competent jurisdiction. The
prevailing party shall be entitled to recover its reasonable attorneys' fees and
its share of the costs including any auditing costs or expenses of expert
witnesses.

               b.  Injunctive Relief.  In the event of actual or threatened
                   -----------------
breach of the provisions of Sections 2 or 10 above, the nonbreaching party will
have no adequate remedy at law and will be entitled to immediate and injunctive
or other equitable relief, without bond and without the necessity of showing
actual money damages, and notwithstanding Section 12(a) above, each party shall
have the right to institute judicial proceedings against the other party or
anyone acting by, through or under such other party in order to seek such
injunctive or other equitable relief. The prevailing party in any such legal
action for injunctive or equitable relief shall be entitled, in addition to any
other rights and remedies it may have, to reimbursement for its expenses,
including court costs and reasonable attorneys' fees. With respect to any such
legal action for injunctive or equitable relief, the State courts sitting in
Santa Clara County, California, and the Federal courts for the Northern

                                                                            -16-
<PAGE>

District of California shall have nonexclusive jurisdiction, and the parties
hereby irrevocably consent to personal jurisdiction of and venue in such courts
in any such matter and waive any objection thereto.

               c.  Governing Laws.  The validity, construction and
                   --------------
enforceability of this Agreement shall be governed in all respects by the laws
of the State of California (and applicable United States federal law) applicable
to agreements negotiated, executed and performed in the State of California by
California parties, without reference to conflict of law principles. For the
avoidance of doubt, the rights and obligations of the parties under this
Agreement shall not be governed by the 1980 United Nations Convention on
Contracts for the International Sale of Goods.

               d.  Disclosure; Publicity.  Except as specifically provided
                   ---------------------
herein, nothing in this Agreement shall be deemed to give either party any
rights to use the other party's trademarks or trade names without the other
party's specific, written consent. LA and LAJ shall consult with each other
before issuing any press releases or otherwise making any public statements with
respect to this Agreement and the transactions contemplated hereby. Neither LA
nor LAJ shall issue any such press release or make any public statement without
the agreement of the other party, except as may be required by law.

               e.  Notices.  All notices required hereunder shall be in writing
                   -------
and shall be made by personal delivery, or by legible facsimile or by first
class, registered or certified mail, postage prepaid, or by express courier, to
LA and to LAJ at the address and telecopier numbers indicated below:

                    (i)  For LAJ:
                              Liquid Audio Japan, Inc.
                              Shinjuku Mitsui Building 30F, 2-1-1
                              Nishi-shinjuku, Shinjuku-ku
                              Tokyo 163-0430, Japan
                              Attention: Masahiro Kuroki
                              Telecopy: (03) 3340-4442

                         With a mandatory copy to:
                              Nishimura & Partners
                              Ark Mori Building, 29th Floor
                              12-32, Akasaka 1-Chome
                              Minato-Ku, Tokyo, 107-6029, Japan
                              Attention: Takanobu Takehara, Esq.
                              Telecopy: (03) 5561-9711

                    (ii) For LA:
                              Liquid Audio, Inc.
                              810 Winslow Street
                              Redwood City, California 94063
                              Attention: Robert Flynn
                              Telecopy: (650) 549-2099

                                                                            -17-
<PAGE>

                         With a mandatory copy to:
                              Wilson Sonsini Goodrich & Rosati
                              650 Page Mill Road
                              Palo Alto, California 94304-1050
                              Attention: Alan Austin, Esq.
                              Telecopy: (650) 493-6811

or such other address or addresses as may have been furnished in writing to LA
by LAJ or to LAJ by LA. Any notice or other communication required to be given
hereunder shall have been duly given five (5) business days after posting when
enclosed in a properly sealed envelope addressed as aforesaid, registered or
certified, and deposited postage prepaid, or if by legible facsimile, when
received or, if by express courier or in person, when received.

               f.  Severability.  Whenever possible, each provision of this
                   ------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision or portion of any provision of this
Agreement should be invalid under applicable law, such provision or portion of
such provision shall be ineffective to the extent of such invalidity, without
invalidating the remainder of such provision or remaining provisions of this
Agreement.

               g.  Waiver.  A provision of this Agreement may be waived only by
                   ------
a written instrument executed by the party entitled to the benefit of such
provision. The failure of any party at any time to require performance of any
provision of this Agreement shall in no manner affect such party's right at a
later time to enforce the same. A waiver of any breach of any provision of this
Agreement shall not be construed as a continuing waiver of other breaches of the
same or other provisions of this Agreement.

               h.  Further Assurances.  The parties shall each perform such
                   ------------------
acts, execute and deliver such instruments and documents, and do all such other
things as may be reasonably necessary to accomplish the transactions
contemplated by this Agreement. In the event that LAJ fails to promptly execute
any documents reasonably necessary to confirm, set or record LA's rights to the
LA Software, LA Trademarks, Work Product, or any other material owned by LA
hereunder, LAJ hereby appoints LA as its attorney-in-fact for the purpose of
executing such documents, which appointment shall be deemed a power coupled with
an interest and shall be irrevocable.

               i.  Subject Headings; Counterparts.  The subject headings of the
                   ------------------------------
sections of this Agreement are included for the purposes of convenience only,
and shall not affect the construction or interpretation of any of its
provisions. This Agreement may be executed in counterparts. Each executed
counterpart may be delivered to the other party by facsimile and copies bearing
the facsimile signature of a party will constitute a valid and binding execution
and delivery of this Agreement.

               j.  Entire Agreement.  This Agreement, including the Exhibits
                   ----------------
attached hereto, and any Addenda constitute the entire agreement of the parties
with respect to the subject matter hereof and supersedes all prior agreements,
communications and understandings between them with respect thereto. No
modification of this Agreement shall be effective without the mutual written
agreement of both parties. No terms or conditions of any purchase order,
acknowledgment or other business

                                                                            -18-
<PAGE>

form that LAJ may use in connection with the exercise of its appointment or the
licensing of the LA Software from LA will have any effect on the rights and
obligations of the parties hereunder, or otherwise modify this Agreement,
regardless of any failure by LA to object to such terms or conditions. In the
event of a conflict between this Agreement and an Addendum, the terms of such
Addendum shall prevail.

               k.  Independent Contractors.  The relationship of LA and LAJ
                   -----------------------
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement shall be construed to (i) give either party the
power to direct and control the day-to-day activities of the other, (ii)
constitute the parties as partners, co-owners or otherwise as participants in a
joint or common undertaking, or (iii) allow LAJ to create or assume any
obligation on behalf of LA for any purpose whatsoever. All financial obligations
associated with LAJ's business are the sole responsibility of LAJ. All sales and
other agreements between LAJ and its customers are LAJ's exclusive
responsibility and shall have no effect on LAJ's obligations under this
Agreement. LAJ shall be solely responsible for, and shall indemnify and hold LA
free and harmless from, any and all claims, damages or lawsuits (including LA's
reasonable attorneys' fees) arising out of the negligence or other tortious
conduct of LAJ, its employees or its agents in performing LAJ's obligations or
exercising LAJ's rights under this Agreement. LA shall indemnify and hold LAJ
free and harmless from any and all claims, damages or lawsuits (including LAJ's
reasonable attorneys' fees) arising out of the negligence or other tortious
conduct of LA's employees or agents in performing LA's obligations under this
Agreement.

               l.  Nonassignability and Binding Effect.  A mutually agreed
                   -----------------------------------
consideration for LA's entering into this Agreement is the reputation, business
standing, and goodwill honored and enjoyed by LAJ under its present ownership,
and, accordingly, LAJ agrees that its license and other rights and obligations
under this Agreement may not be transferred or assigned directly or indirectly,
whether by operation of law or otherwise, without the prior written consent of
LA, and any purported transfer or assignment without such consent shall be void
ab initio. Subject to the foregoing sentence, this Agreement shall be binding
upon and inure to the benefit of the parties hereto, their successors and
assigns.

               m.  Force Majeure.  Except for payment obligations hereunder,
                   -------------
neither party shall incur liability to the other party due to any delay or
failure in performance hereunder caused by reason of any occurrence or
contingency beyond its reasonable control, including but not limited to failure
of suppliers, strikes, lockouts or other labor disputes, riots, acts of war or
civil unrest, earthquake, fire, the elements or acts of God, novelty of product
manufacture, unanticipated product development problems, or governmental
restrictions or other legal requirements; provided, that such party notifies the
other party in writing immediately upon commencement of such event and makes
diligent efforts to resume performance immediately upon cessation of such event.
In the event such events continue for a period of 180 days in the aggregate, the
other party shall have the right to terminate this Agreement upon written notice
to such party.

               n.  Language.  This Agreement is in the English language only,
                   --------
which language shall be controlling in all respects, and all versions hereof in
any other language shall not be binding on the parties hereto. All
communications and notices to be made or given pursuant to this Agreement shall
be in the English language.

                                                                            -19-
<PAGE>

               o.  Compliance with Laws.  LAJ shall, at its own expense, pay all
                   --------------------
import licenses and permits, pay customs charges and duty fees, and take all
other actions required to exercise its appointment, accomplish the Services, or
complete any authorized import and use of the LA Software in the Territory. LAJ
shall ensure compliance with any applicable laws relating to its activities
under the terms of this Agreement, and LAJ hereby represents and warrants that
no consent, approval or authorization, or designation, declaration or filing
with any governmental authority in the Territory is required in connection with
the valid execution, delivery and performance of this Agreement.

               p.  Government Regulations.  LAJ acknowledges that LA may be
                   ----------------------
subject to regulation by various government agencies having jurisdiction, which
may prohibit use, export, re-export or diversion of certain products and
technology in or to the Territory. Any and all obligations of LA to provide the
LA Software or other materials or any media in which any of the foregoing is
contained, as well as any other technical assistance shall be subject in all
respects to such applicable laws and regulations as shall from time to time
govern the license and delivery of technology and products. LAJ agrees to
cooperate with LA, including, without limitation, providing required
documentation, in order to obtain any necessary export licenses or exemptions
therefrom. LAJ warrants that it will comply with all such applicable laws and
regulations governing use, exportation and re-exportation in effect from time to
time.

          13.  LIMITATION OF LIABILITY.  IN NO EVENT SHALL LA'S AGGREGATE
               -----------------------
LIABILITY HEREUNDER EXCEED THE TOTAL AMOUNTS PAID BY LAJ HEREUNDER DURING THE
PERIOD(S) IN WHICH SUCH CLAIM(S) AROSE. IN NO EVENT SHALL LA BE LIABLE TO LAJ OR
ANY OTHER ENTITY FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, INDIRECT OR
RELIANCE DAMAGES, HOWEVER CAUSED, WHETHER FOR BREACH OF CONTRACT, NEGLIGENCE OR
UNDER ANY OTHER LEGAL THEORY, WHETHER FORESEEABLE OR NOT AND WHETHER OR NOT LA
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, AND NOTWITHSTANDING THE
FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. IN NO EVENT SHALL LA BE
LIABLE FOR LOST DATA, LOST PROFITS, BUSINESS INTERRUPTION, FAILURE OF THE LA
SOFTWARE, OR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS BY ANYONE. LAJ AGREES THAT
THESE LIMITATIONS OF LIABILITY ARE AGREED ALLOCATIONS OF RISK AND ARE REFLECTED
IN THE ROYALTIES AND FEES AGREED UPON BY THE PARTIES.

                                                                            -20-
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized.

LIQUID AUDIO, INC.                           LIQUID AUDIO JAPAN, INC.

By:  /s/ Robert Flynn                        By:  /s/ Chiaki Konagai

Name:  Robert Flynn                          Name:  Chiaki Konagai

Title:  SVP Business Development             Title:  VP Business Development

                                                                            -21-
<PAGE>

                                   Exhibit A

LA PRODUCTS & SERVICES:
-----------------------

  Liquid Music Network:   This is the music search website, as run by LA US,
  that is the basis of the Liquid Affiliate program. The components are: the
  search engine and website; the e-commerce channel; database and administration
  tools website.

  Liquid Operations Center:  This is the system for client (player) passport
  acquisition

  Liquid Distribution:  This is the back-end technology for distributing content
  independently of e-commerce integration.

  Liquid Promotions/Advertising

  Remote Inventory Fulfillment System

  Liquid Artist Program

  Liquid Hosting:  This is the system by which content is encoded, quality
  tested and published to the partner's Liquid System.

LA SOFTWARE
-----------

  Core System Software:

  Player - version 4.0

  Liquid Server   Internationalized Double-byte - version 4.0

  Liquifier - version 4.0

  Liquid Music Network:   Reference source code that is LMN version 2.5, which
  supports the following service components (none are localized):

  Liquid Server (license allows use of server for remote inventory fulfillment)
  Internationalized Double-byte - version 4.0

  LMN database structure

  Music search web pages

  E-commerce channel connectivity - LAJ to customize to local provider interface

  Content administration and QA web tools

  Affiliate identification support

  Liquid Operations Center:  Liquid Passport acquisition website
  Liquid Distribution:  Inventory Management database schema and descriptions
<PAGE>

                                   Exhibit B

                             Software License Fees

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
     Due Date             Quarter              Amount               Quarter              Amount
------------------------------------------------------------------------------------------------------
<S>                       <C>                  <C>                  <C>                  <C>
      January 1          Q4, 1999                [*]
------------------------------------------------------------------------------------------------------
      March 1            Q1, 2000                [*]               Q1, 2001                [*]
------------------------------------------------------------------------------------------------------
      June 1             Q2, 2000                [*]               Q2, 2001                [*]
------------------------------------------------------------------------------------------------------
      September 1        Q3, 2000                [*]               Q3, 2001                [*]
------------------------------------------------------------------------------------------------------
      December 1         Q4, 2000                [*]               Q4, 2001                [*]
------------------------------------------------------------------------------------------------------
</TABLE>

     The software license fees above are non-refundable and cannot be offset
with any other fees due under this Agreement or any other agreement between LAJ
and LA.

     During any Renewal Term, LAJ will pay to LA a quarterly maintenance fee in
the amount of [*], due on the first business day of each quarter.

                      Additional Software Licensing Fees

     Each quarter as shown below, LAJ will pay to LA the following percentages
of Gross Revenues no later than 30 days after the end of such quarter.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
Quarter           Rate       Quarter           Rate        Quarter           Rate        Quarter            Rate
----------------------------------------------------------------------------------------------------------------------
<S>               <C>        <C>               <C>         <C>               <C>         <C>                <C>
Q1 2000            [*]       Q1 2001             [*]       Q1 2002             [*]       Q1 2003              [*]
----------------------------------------------------------------------------------------------------------------------
Q2 2000            [*]       Q2 2001             [*]       Q2 2002             [*]       Q2 2003              [*]
----------------------------------------------------------------------------------------------------------------------
Q3 2000            [*]       Q3 2001             [*]       Q3 2002             [*]       Q3 2003              [*]
----------------------------------------------------------------------------------------------------------------------
Q4 2000            [*]       Q4 2001             [*]       Q4 2002             [*]       Q4 2003*             [*]
----------------------------------------------------------------------------------------------------------------------
</TABLE>

     * And thereafter during and Renewal Term

                                                                            -23-

*  Certain information in this Exhibit has been omitted and filed separately
   with the Commission. Confidential treatment has been requested with respect
   to the omitted portions.
<PAGE>

                                   Exhibit C

                          General Business Consulting

     LA shall provide general consulting services to LAJ with respect to the
Local Business on an as-needed basis.  All consulting services shall be
specified in writing and mutually agreed upon by the parties.  The fees charged
by LA for such services shall be as follows:

     Senior staff        [*]

     Staff               [*]

LAJ shall reimburse LA for all direct expenses and out-of-pocket costs.  LA will
invoice all consulting fees monthly and such fees shall be due within thirty
(30) days after the invoice date.

*  Certain information in this Exhibit has been omitted and filed separately
   with the Commission. Confidential treatment has been requested with respect
   to the omitted portions.<PAGE>

                                                                   Exhibit 10.31

                      COMPENSATION CONTINUATION AGREEMENT

     This Compensation Continuation Agreement (the "Agreement") is entered into
as of January 5, 2000 by and between Identix Incorporated, a Delaware
corporation ("Identix"), and James P. Scullion ("Employee").

     WHEREAS, Identix desires to secure an agreement from the Employee that
Employee will continue to provide his ongoing business time, energy and skills
to management and affairs of Identix;

     WHEREAS, the Employee desires to provide Identix with such agreement and
obtain certain assurances from Identix;

     NOW THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the parties hereto agree as follows:

          1.   Definitions.  For purposes of this Agreement:
               -----------

               (a)  "Effective Date" means the date first-above written.

               (b)  "Resignation for Good Reason" means a voluntary resignation
of employment by Employee as a result of a material diminution in
responsibility, decrease in base salary or an involuntary relocation; provided,
however, that Identix's hiring of a new Chairman and CEO will not, in and of
itself, constitute a material diminution in responsibility; and provided
further, however, that Employee notifies Identix on or prior to any such
resignation, giving good reason for such resignation, and Identix fails to cure
such event within 30 days thereafter.

               (c)  "Expiration Date" means March 31, 2002.

               (d)  "Termination For Cause" means termination by Identix of
Employee's employment by Identix (i) by reason of Employee's commission of a
felony or other conduct involving fraud or moral turpitude, (ii) by reason of
Employee's fraud upon, or deliberate injury or attempted injury to Identix,
(iii) by reason of Employee's failure to substantially perform for Identix the
normal material duties related to his job position (other than failure resulting
from incapacity due to disability or death) which failure continues for sixty
(60) days following the Employee's receipt of written notice of such failure to
perform, specifying the nature of the failure and the means by which it can be
remedied, (iv) by reason of Employee's willfully engaging in gross misconduct
which is materially and demonstrably injurious to Identix, or (v) by reason of
Employee's willful breach of this Agreement in any material respect.

               (e)  "Termination Other Than For Cause" means termination by
Identix of Employee's employment by Identix (other than in a Termination For
Cause). Included within the definition of "Termination Other Than For Cause"
shall be (i) Employee's death during the
<PAGE>

term of this Agreement, (ii) termination of Employee's employment by Identix
based on Employee's failure to perform his duties under this Agreement on
account of illness or physical or mental incapacity for a period of more than
three (3) consecutive months or (iii) any other involuntary termination that
does not constitute a Termination For Cause.

               (f) "Voluntary Termination" shall mean termination by Employee of
Employee's employment by Identix, excluding termination by reason of Employee's
death or disability as described in Section 1(e).

          2.   Duties.  During the term of this Agreement, Employee shall devote
               ------
all of his business time, energy, and skill to the affairs of Identix; provided,
however, that Employee may undertake such specific additional charitable and
business activities, if any, as Identix may reasonably approve (including,
without limitation, activities for affiliates of Identix).  During the term of
this Agreement, Employee shall report directly to the person indicated on
Schedule A, or to such other person or persons as may be selected by the Board
of Directors of Identix from time to time.

          3.   Term of Agreement.  The term of this Agreement shall commence on
               -----------------
the Effective Date and end on the Expiration Date, unless extended by mutual
written agreement of Employee and Identix or earlier terminated as provided in
this Agreement.

          4.   Termination For Cause.   Termination For Cause may be effected by
               ---------------------
Identix at any time during the term of this Agreement and shall be effected by
written notification to Employee.  Upon Termination For Cause, Employee shall be
immediately paid all accrued salary and bonus, and all accrued vacation pay, all
to the effective date of termination, but Employee shall not be paid any other
compensation or reimbursement of any kind, including, without limitation,
severance compensation.

          5.   Termination Other Than For Cause or Resignation for Good Reason.
               ----------------------------------------------------------------
Notwithstanding anything else in this Agreement, Identix may effect a
Termination Other Than For Cause at any time after giving at least 30 days'
notice to Employee of such termination or pay in lieu of such notice. Upon the
effective date of any Termination Other Than For Cause or Resignation for Good
Reason, (a) Employee shall immediately be paid all accrued salary and all
accrued vacation pay, all to the effective date of termination, (b) as severance
compensation, Employee shall continue to be paid his then current base salary
until that date which is one calendar year from the effective date of
termination ("Severance Period"), (c) Employee shall be paid all bonuses accrued
through the date of termination, (d) during the Severance Period, Identix shall
make COBRA payments to continue Employee's medical and dental benefits (or pay
Employee an amount equivalent to such COBRA payments) and shall make payments to
continue Employee's term life insurance (or pay Employee an amount equivalent to
the premiums in effect prior to termination), and (e) all outstanding options to
purchase Common Stock granted to Employee shall fully vest immediately, but
Employee shall not be paid any other compensation or reimbursement of any kind.
A schedule of all such outstanding options is attached hereto as Schedule B. If
any Termination Other Than For Cause is the result of the

                                       2
<PAGE>

death of Employee, all payments payable under this Section 5 shall be paid to
Employee's heirs or legal representative.

          6.   Voluntary Termination.  In the event of a Voluntary Termination,
               ---------------------
Identix shall immediately pay to Employee all accrued salary and bonus, and all
accrued vacation pay, all to the effective date of termination, but no other
compensation or reimbursement of any kind, including, without limitation,
severance compensation.

          7.   Salary and Benefits.
               -------------------

               (a)  Base Salary.  As payment for the services to be rendered by
                    -----------
Employee as provided in Section 2 and subject to the terms and conditions of
this Agreement, Identix agrees to pay to Employee a "base salary" at the rate
per month indicated on Schedule A, subject to deductions, payable bi-weekly in
the same manner as other Identix employees receive their base compensation.

               (b)  Bonus.  Employee shall be eligible for a bonus as indicated
                    -----
on Schedule A.

               (c)  Fringe Benefits.  Employee shall be eligible to participate
                    ---------------
in such of Identix's benefit plans as are now generally available or later made
generally available to employees of Identix. Such benefits shall at a minimum
include medical, dental and term life insurance.

               (d)  Car Allowance.  Employee shall receive a car allowance of
                    -------------
$666.67 per month during the term of this Agreement.

          8.   Stock Options.  In further consideration for Employee agreeing to
               -------------
perform services for Identix hereunder, contemporaneously with the execution of
this Agreement, Employee and Identix shall enter into a stock option agreement
in the form attached hereto as Schedule C, covering the number of shares of
Identix Common Stock indicated on Schedule A.

          9.   Annual Performance Review.  Identix shall perform an annual
               -------------------------
review of Employee's performance and, in the discretion of the Compensation
Committee of the Board of Directors, make appropriate increases in Employee's
base salary, establish an incentive bonus program for the upcoming 12 months and
determine whether additional stock option grants should be recommended to the
Board of Directors of Identix. The first such annual performance review shall be
conducted on or about September 30, 2000.

          10.  Miscellaneous.
               -------------

               (a)  Waiver.  The waiver of any term or condition of this
                    ------
Agreement by any party shall not be construed as a waiver of a subsequent breach
or failure of the same term or condition, or a waiver of any other term or
condition of this Agreement.

                                       3
<PAGE>

               (b)  Notices.  All notices, requests, demands, and other
                    -------
communications made in connection with this Agreement shall be in writing and
shall be deemed to have been duly given on the date of delivery if delivered by
hand delivery or 12 hours after facsimile transmission to the persons identified
below or five days after mailing if mailed by certified or registered mail
postage prepaid return receipt requested addressed as follows:

               If to Identix:

               510 N. Pastoria Ave.
               Sunnyvale, California 94086
               Attn: Vice President and General Counsel

               Facsimile:         408-739-0178
               Confirmation No.:  408-731-2000

               If to Employee:

               To the address indicated for Employee on Schedule A

Any party may change its address for notices by notice duly given pursuant to
this Section 10(b).

               (c)  Headings.  The headings contained in this Agreement are
                    --------
intended for convenience and shall not be used to interpret the meaning of this
Agreement or to determine the rights of the parties.

               (d)  Governing Law; Consent to Jurisdiction and Venue.  This
                    ------------------------------------------------
Agreement shall be governed by and construed in accordance with the laws of the
State of California applicable to contracts entered into and wholly to be
performed within the State of California by California residents. Employee
hereby submits to the jurisdiction and venue of the Superior Court of the State
of California for the County of Santa Clara or the United States District Court
for the Northern District of California for any legal action arising from or
connected with this Agreement. Employee agrees that service upon Employee in any
such action may be made by first class mail, certified or registered, in the
manner provided for delivery of notices in Section 10(b).

               (e)  Successor and Assigns.  This Agreement shall be binding upon
                    ---------------------
and inure to the benefit of the executors, administrators, heirs, successors and
assigns of the parties; provided, however, that this Agreement shall not be
assignable by Identix (except in connection with the merger or consolidation of
Identix with or into another entity or the sale by Identix of all or
substantially all of its assets) or by Employee.

               (f)  Counterparts. This Agreement may be signed in counterparts
                    ------------
with the same effect as if the signatures of each party were upon a single
instrument. All counterparts shall be deemed an original of this Agreement.

                                       4
<PAGE>

               (g)  Withholdings.  All sums payable to Employee hereunder shall
                    ------------
be reduced by all federal, state, local and other withholding and similar taxes
and payments required by applicable law.

               (h)  Severability.  If any provision of this Agreement is held to
                    ------------
be unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent possible.
In any event, all other provisions of this Agreement shall be deemed valid and
enforceable to the full extent possible.

               (i)  Entire Agreement; Modifications.  Except as otherwise
                    -------------------------------
provided herein, this Agreement represents the entire understanding between the
parties with respect to the subject matter hereof, and this Agreement supersedes
any and all prior understandings, agreements, plans and negotiations, written or
oral, with respect to the subject matter hereof. All modifications to the
Agreement must be in writing and signed by the party against whom enforcement of
such modification is sought, provided that no modification shall be enforceable
against Identix unless signed by the Chief Executive Officer of Identix or a
duly-authorized member of Identix's Board of Directors.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.

                              IDENTIX INCORPORATED

                              By    /s/ Randy Hawks for Compensation Committee
                                    Name: Randall Hawks, Jr.

                                    Title: Director

                              EMPLOYEE

                              By  /s/ James P. Scullion
                                  Name: James P. Scullion

                                       5
<PAGE>

                      COMPENSATION CONTINUATION AGREEMENT
                                  SCHEDULE A

1.    Name and address of Employee:     James P. Scullion
                                        15820 Bruce Court
                                        Monte Sereno, CA 95030

                                        Fax: (408) 354-9498

2.    Term of Agreement:   January 5, 2000 - March 31, 2002, unless earlier
      terminated in accordance with its terms.

3.    Base Salary:    $250,000 per annum.

4.    Bonus:          (A)

5.    Stock Options:  33,333 shares (B)

6.    Initially report to:  An Executive Committee of the Board of Directors
      until such time as a permanent Chairman and CEO is hired.

(A)  To be determined on an Annual Basis by the Compensation Committee.

(B)  Option grant is for Employee's acceptance and performance of the additional
     responsibilities (in addition to current responsibilities as President and
     COO) as chief officer of the Company, responsible for the day-today
     management of the Company's operations, to and through the hiring of a new
     Chairman and CEO.  Such options shall be non-qualified stock options with
     an exercise price equal to 85% of the closing sales price on the American
     Stock Exchange for Identix common stock on January 5, 2000.  Such options
     shall vest at a rate of 1/6 per month.

Agreed by:

Identix:       /s/ Randy Hawks for Compensation Committee
               Randall Hawks, Jr.

Employee:      /s/ James P. Scullion
               James P. Scullion

                                       6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00009-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00009-of-00352.parquet"}]]