Exhibit 10.16
LICENSE AGREEMENT
THIS AGREEMENT is made and entered
into as of the 23rd day of May, 1991, by and between Ticketmaster
corporation, an Illinois corporation (“Ticketmaster”),
and Ticketmaster Group Limited Partnership, a Maryland limited
partnership (“User”).
W I T N E S
S E T H :
WHEREAS, Ticketmaster is the owner
of certain software systems, accounting procedures and know-how
which, in the aggregate, comprise a computerized event ticketing
system (the “System”); and
WHEREAS, Ticketmaster is the owner
of and/or claims ownership rights to the name, mark and logo
“Ticketmaster” (the “Mark”), which Mark is
used in conjunction and identified with the System; and
WHEREAS, the System and the Mark are
known within the computerized ticketing industry and by the public
as connoting a high level of quality and service; and
WHEREAS, User desires to be granted
a license by Ticketmaster to use the System and the Mark in
connection with User’s computerized event ticketing business
in the territory described in Exhibit I attached hereto (the
“Market Area”);
NOW, THEREFORE, in consideration of
the premises and the mutual covenants herein contained and for
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree
as follows:
1. License .
Ticketmaster hereby grants to User an exclusive right and license
to use the System and (solely in connection with the System and the
provision of computerized ticketing services) the Mark within the
Market Area; subject to the rights retained by Ticketmaster in
accordance with Section 5 hereof.
User hereby acknowledges that the
System and the name “Ticketmaster” are highly regarded
in the computerized ticketing industry and by the public, and that
Ticketmaster deems it important that all persons using the System
or such name operate in a manner consistent with good business
practice. Accordingly, User agrees to operate its business in a
manner that will not negatively affect the reputation of the System
or the Ticketmaster name, including, without limitation thereby,
the prompt settlement of accounts and the honoring of all bona fide
obligations.
Ticketmaster further assigns all of
its right, title and interest in and to those certain agreements
described on Exhibit II attached hereto to User, it being
agreed and understood that (i) such agreements are assigned by
Ticketmaster to User as is, and without any representations and
warranties whatsoever, and (ii)
User shall indemnify and hold.
Ticketmaster and its officers, directors, employees, agents,
representatives, affiliates, shareholders, successors and assigns
harmless from and against any and all losses, claims, damages,
liabilities, costs and expenses (including, without limitation,
reasonable attorneys fees) arising from or related to such
agreements and to the performance thereof by User at any time from
and after the date hereof.
2.
Term . The initial term of this Agreement and the
license granted hereby shall commence on the date hereof, and shall
remain in force, unless terminated earlier in accordance with the
provisions hereof, until the tenth (10th) anniversary of the
Operational Date. This Agreement may be renewed by User for
two additional five year terms by written notice of renewal
delivered by User to Ticketmaster no less than 90 but no more than
150 days prior to the expiration of the then current term of this
Agreement so long as User is not in default under this Agreement
either at the time such notice is delivered or at the time the
renewal period is scheduled to commence.
As used in this Agreement,
(A) the term “Operational Date” shall mean the
date upon which the System becomes operational in the Market Area
or any part thereof, and (B) the term “Operational
Year” shall mean the twelve-month period commencing on the
Operational Date and ending on the first anniversary of such date
and each twelve month period thereafter.
3.
Base Payments
. User shall pay to Ticketmaster
during each year of the term hereof a minimum annual royalty in the
amount of $125,000 for the right to use the System and the Mark in
the Market Area (the “Base Payment”). The Base Payment
shall be payable in advance in equal quarterly installments
commencing on the Operational Date.
All Base Payments shall be made by
User directly to Ticketmaster in United States Dollars in the
manner designated by Ticketmaster from time to time during the term
of this Agreement, which may include wire transfer into a
Ticketmaster bank account.
4.
Additional Payments
. In addition to the Base Payments,
User shall pay to Ticketmaster with respect to each Operational
Year an additional royalty (the “Additional Payment”)
equal to (i) the Number of Tickets Sold multiplied by the Per
Ticket Amount minus (ii) the aggregate Base Payments actually
paid by User to Ticketmaster during that Operational year. To the
extent that in any Operational Year part (i) of the foregoing
calculation does not exceed part (ii) thereof, no Additional
Payment shall be made by User to Ticketmaster for that Operational
Year and Ticketmaster shall not be obligated to return any portion
of the Base Payments paid during such Operational Year or to credit
any amount against Additional Payments payable in any succeeding
Operational Year. As used herein “Number of Tickets
Sold” shall mean for any
2
Operational Year the number of
tickets sold or distributed by User, whether or not by or through
the System or using the Mark, in the Market Area and to which a
customer convenience charge or service charge is or normally is
attached, whether at remote ticket outlets, by telephone, by mail
order, at facility box offices, at User locations or elsewhere
(exclusive of complimentary and season tickets and tickets sold at
a facility box office by a party not affiliated with User where
that party assesses a service charge no part of which accrues to
the benefit or is otherwise payable to User or User’s
affiliates). Further, as used herein, the “Per Ticket
Amount” shall be the amount set forth below during each of
the indicated Operational Years (including permissible renewal
periods):
|
|
|
The Per Ticket
|
|
During Operational years
|
|
Amount Shall Be
|
|
|
|
|
|
1 through 2
|
|
$
|
0.06
|
|
3 through 4
|
|
$
|
0.07
|
|
5 through 6
|
|
$
|
0.08
|
|
7 through 8
|
|
$
|
0.09
|
|
9 through 10
|
|
$
|
0.10
|
|
11 through 12
|
|
$
|
0.11
|
|
13 through 14
|
|
$
|
0.12
|
|
15 through 16
|
|
$
|
0.13
|
|
17 through 18
|
|
$
|
0.14
|
|
19 through 20
|
|
$
|
0.15
|
In the event that this Agreement is
terminated for any reason prior to its expiration, the period
commencing on the day following the end of the prior Operational
Year and ending on the date of termination shall be deemed to be an
Operational Year for purposes of this Agreement.
Additional Payments for each
Operational Year shall be calculated and paid by User to
Ticketmaster in United States Dollars on a quarterly basis, within
ten (10) days following any quarter during an Operational Year
in which the aggregate per ticket royalty for such year exceeds the
Base Payment for such year and in each quarter thereafter during
any such year. All Additional Payments shall be made by User
directly to Ticketmaster in the manner designated by Ticketmaster
from time to time during the term of this Agreement, which may
include wire transfer into a Ticketmaster bank account.
Within ten (10) days after the
end of each quarter of the term hereof, User shall deliver to
Ticketmaster a report of all tickets sold, printed, produced and
distributed by User in the Market Area during such quarter, which
report shall contain such information as may be necessary for
Ticketmaster to calculate Additional Payments and such other
information as Ticketmaster may reasonably request. Ticketmaster
shall be entitled upon reasonable notice to
3
User to access to the books and
records of User during User’s normal business hours and at
User’s premises for purposes of confirming and computing the
amounts of Additional Payments payable hereunder; provided,
however, that access to such books and records by Ticketmaster
shall not unduly disrupt normal business operations of
User.
5.
Ticketmaster Rights
. Notwithstanding anything to the
contrary herein, Ticketmaster is hereby retaining the right for
itself and for its affiliates to sell, by telephone and/or at
outlets, tickets or other evidences of admission or entitlement to
attend or receive transmission of the following events within the
Market Area and User shall have no right, license or interest in or
to use the System or the Mark with respect to said
events:
(a)
Any pay per view events for cable
systems, whether by use of an 800 number or otherwise;
and
(b)
Special events, which do not involve
any traditional venues or tickets on sale to the general
public;
; provided, however, that User will
have the right and license, on a nonexclusive basis, to use the
System and the Mark with respect to pay per view events for cable
systems serving only the Market Area and no other areas outside of
the Market Area.
6.
Title .
(a)
Title, beneficial interest and all
ownership rights to the System, the Mark and all related materials
furnished by Ticketmaster and licensed under this Agreement shall
remain in Ticketmaster. User hereby acknowledges that the System,
the Mark and all related materials furnished by Ticketmaster
hereunder are claimed by Ticketmaster to be Ticketmaster’s
proprietary information and trade secrets, whether or not any
portion thereof is, or may be, validly copyrighted, patented,
trademarked or otherwise protected.
(b)
User’s rights in and to the
System and the Mark furnished by Ticketmaster as a result of this
Agreement may not be assigned, licensed or otherwise transferred
voluntarily, by operation of law or otherwise, without the prior
written consent of Ticketmaster.
(c)
Ticketmaster and/or User may add to,
delete from or modify the System and all related materials
furnished by Ticketmaster hereunder in any manner, but no such
changes, however extensive, shall reduce Ticketmaster’s title
to the System. Any improvements made by User shall be and remain
the confidential, proprietary property and information of User
except that Ticketmaster shall retain
4
all proprietary rights in the
underlying System as so improved and User shall not have any right
to use the System as so improved without the prior written consent
of Ticketmaster (except pursuant to this Agreement).
(d)
User acknowledges and agrees that
Ticketmaster has acquired all right, title and interest in and to
all equipment formerly used in connection with the Ticketron System
including, but not limited to, any such equipment or personal
computers used at any facility box offices or outlets in the Market
Area, but excluding, as to the Market Area, (i) the personal
computers, printers and CRTs currently installed and being used in
the facility box office at the Capital Centre in Landover,
Maryland, (ii) the printers and CRTs currently installed and
being operated in the facility box offices at Baltimore Arena in
Baltimore, Maryland, and Patriot Center in Fairfax County,
Virginia, and (iii) all “dumb” CRTs formerly being
used by Ticketron in the Market Area and attached cabling (but not
including any new CRTs).
7.
Use of the System and
Mark .
(a)
The System (including any changes
thereto made by or on behalf of Ticketmaster or User) and all
related materials may be used for, by or on behalf of User only in
connection with any computer equipment which User uses solely for,
or solely in connection with, computerized ticketing at the
facility locations and remote terminal locations within the Market
Area. The System may not be utilized in connection with any
additional physical computer facilities (or other computers), for
any other reason or by or for any other person, firm, corporation
or other organization, without the prior written consent of
Ticketmaster.
(b)
User agrees that the Mark shall be
the sole mark and name utilized by it in connection with the System
and the operation of its ticketing business, and shall not be used
with any other marks or names.
(c)
The Mark shall be used by User in
accordance with such quality control standards as Ticketmaster may
from time to time prescribe for use by its non-affiliated licensees
with respect to products and services in connection with which the
Mark is utilized. Further, User shall only use the Mark together
with such notations as Ticketmaster may from time to time prescribe
for purposes of advising the public of service mark, trademark and
similar protection. User shall cease all use of the Mark ten
(10) days after notice from Ticketmaster that User has failed
to comply with any such standard unless, within such ten
(10)-day
5
period, User corrects such failure
to the satisfaction of Ticketmaster.
(d)
Neither User nor any of its
employees, agents or representatives shall reproduce, duplicate or
otherwise copy the System or any related materials furnished by
Ticketmaster hereunder or any portion thereof, except for internal
use directly with the System. All such materials and any copies
thereof shall be returned by User to Ticketmaster immediately
following termination or expiration of this Agreement.
8.
Warranties
. Ticketmaster warrants to User that
it is the owner of the System end the Mark (or claims ownership
rights to the Mark) and has the right to grant this license to
User. Ticketmaster further warrants that the System to be installed
in the Market Area will be substantially the same as, and will be
capable of performing (if used with the same equipment and subject
to limitations based on size and capacity) as, the basic system
currently being operated by Ticketmaster and its licensees in San
Francisco and Philadelphia. The System does not include certain
custom enhancements such as direct line credit card authorization,
disaster recovery, off-line archiving of accounts, nitrun, remote
VAXNET software and the TM fraud program, all of which may be
purchased separately. IN THE EVENT OF ANY BREACH OF THE WARRANTY
CONTAINED IN THE PREVIOUS SENTENCE, TICKETMASTER’S SOLE
RESPONSIBILITY SHALL BE TO USE ITS BEST EFFORTS TO CORRECT THE
SYSTEM SO THAT IT PERFORMS IN ALL MATERIAL RESPECTS IN THE MANNER
DESCRIBED ABOVE. THE WARRANTIES CONTAINED IN THIS PARAGRAPH 8 ARE
IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
User hereby warrants to Ticketmaster
that (i) it is a duly organized and validly existing limited
partnership under the laws of the State of Maryland; (ii) it
has all necessary power and authority to execute and perform this
Agreement in accordance with its terms; (iii) the execution
and performance of this Agreement by it will not breach, constitute
a default under or violate any of User’s governing
instruments or any agreement to which it is a party or by which its
assets may be bound; (iv) this Agreement is enforceable against
User in accordance with its terms; and (v) no approvals or
consents of any third party (including any government agency) is
necessary in order for User to execute and deliver this Agreement
and to perform hereunder.
9.
Breach of Warranty
.
(a)
Ticketmaster shall, at its expense,
defend any action brought against User to the extent such action is
based on a claim that the use of the System or the Mark directly
infringes any service mark, trademark, copyright or patent
(“Infringement Action”) and Ticketmaster
shall
6
pay any and all costs, expenses,
damages, recoveries, deficiencies and attorneys’ fees awarded
against User in any Infringement Action; provided that
(i) Ticketmaster’s obligations under this Paragraph
9(a) are conditioned on User’s promptly notifying
Ticketmaster of any Infringement Act
