Document:

EXHIBIT
10.16

 

Information
marked [XXX CONFIDENTIAL TREATMENT REQUESTED] has been

omitted pursuant to a request for confidential treatment. Such omitted
information

has been filed separately with the Securities and Exchange Commission.

 

[LETTERHEAD]

 

November 13,
1998

 

Ticketmaster
Corporation

3701 Wilshire Boulevard

Seventh Floor

Los Angeles, California 90010

 

	
  Attn:

  	
   

  	
  Mr. Terry
  Barnes

  
	
   

  	
   

  	
  President
  and Chief Executive Officer

  

 

Gentlemen:

 

This
letter agreement (the “Agreement”) sets forth the mutually binding agreement
between SFX Entertainment, Inc., a Delaware corporation, on behalf of
itself and the SFX Affiliates (collectively, “SFX”), and Ticketmaster
Corporation, a Delaware corporation (“Ticketmaster”), for the amendment and
extension of the existing ticketing agreements with respect to each of SFX’s
venues which are currently under contract with Ticketmaster, a ticketing
services agreement for those SFX venues which are not presently under contract
with Ticketmaster, and SFX’s related promoters in the United States and
internationally.

 

Subject
to the terms and conditions set forth herein, and in consideration of the
mutual promises and covenants set forth herein, SFX and Ticketmaster hereby
agree as follows:

 

1.  Definitions.  As
used in this Agreement, the following capitalized terms shall have the
respective meanings set forth below, unless otherwise defined herein:

 

(a)   “Agreement”—
This letter agreement dated as of November 13, 1998, as this letter
agreement may be superseded, replaced or amended by the Master Agreement
intended to be negotiated and executed by the parties hereto.

 

(b)   “Attraction”—
A concert, theatrical presentation, motor sports or other sports event or other
entertainment feature to be held at a Facility in the continental United States
or internationally (provided Ticketmaster is providing ticket service
operations in the international location) in respect of which SFX owns or
Controls the Right to Sell Tickets to the public or which is held at an “SFX
Facility” or a “Non-SFX Facility”; provided, however, an Attraction shall not
include any event at the Lakewood Amphitheater located in Atlanta, Georgia, or
the Starplex Amphitheater located in Dallas, Texas.

 

(c)   “Business
Day”— Any day other than a Saturday, a Sunday or any other day on which the
banks in the State of New York are closed.

 

(d)   “Controls
the Right to Sell Tickets”— means that SFX has the ability, whether by
contract, ownership, management or otherwise, to determine the manner in which
and/or means by which Tickets may be sold to the public at any Facility. To the
extent that SFX does not have such ability, SFX shall use its reasonable best
efforts in its capacity as Facility manager, consultant, minority partner or
otherwise to recommend and secure the exclusive use of the TM System by such
Facility for such Attraction; provided, however, that after SFX exercises its
reasonable best efforts in the manner described above, on an Attraction by
Attraction basis, its failure to secure said rights shall not be deemed to be a
breach of this Agreement.

 

(e)   “Customer
Convenience Charge”— The amount charged to a Ticket purchaser by Ticketmaster
for the use of the TM System.

 

1

 

(f)    “Effective
Date”— means January 1, 1999.

 

(g)   “Facility(ies)”—
Any and all amphitheaters, theaters, arenas, stadiums and other facilities of
any nature whatsoever where an Attraction is to be held, including, but not
limited to, SFX Facilities and Non-SFX Facilities, whether now existing or
existing at any time during the term hereof.

 

(h)   “Non-SFX
Facility(ies)”— Any Facility other than an SFX Facility with which Ticketmaster
has a ticketing services agreement in effect at the time of the performance of
the Attraction.

 

(i)    “Outlet”— A
physically existing retail Ticket selling agency where Tickets for an
Attraction are made available through the TM System and are offered for sale to
the public.

 

(j)    “SFX
Affiliate(s)”— any entity or person which is directly or indirectly controlled
by, under common control with or controls SFX, or any other such entity or
person, including, but not limited to, the entities set forth on Exhibit A
hereto.

 

(k)   “SFX
Facility(ies)”— Any Facility (i) which SFX owns, operates, manages,
controls or leases, or for which any such entity otherwise has any other right
to sell, or Controls the Right to Sell Tickets, whether as of the date hereof
or at any time in the future during the term of the Agreement, and (ii) with
which, at the time of the performance of the Attraction, Ticketmaster does not
have a ticketing services agreement.

 

(l)    “Telephone
Sales”— All sales of Tickets through the TM System by telephone, television,
computer and/or the Internet.

 

(m)  “TM
Affiliate(s)”— Any entity which is directly or indirectly controlled by Ticketmaster,
other than any entity which is solely a licensee of the TM System and the
Ticketmaster mark and which does not otherwise satisfy any of the conditions
set forth in the first part of this sentence.

 

(n)   “TM System”—
The computer hardware, software, related procedures and personnel, repair and
maintenance services established and maintained by Ticketmaster for the purpose
of selling, auditing and controlling the sale of Tickets for Attractions.

 

(o)   “Ticket”— A
printed evidence of the right to occupy space at or to attend an Attraction.

 

2.  Ticketing
Services Agreement.  SFX hereby grants to Ticketmaster,
and Ticketmaster accepts from SFX, the exclusive right during the term
of this Agreement to sell, as SFX’s agent, all Tickets made available generally
to the public through any and all means, including but not limited to at
Outlets and/or by Telephone Sales, for any Attraction scheduled or presented by
SFX at any Facility; provided, however, that SFX shall have the right to
conduct box office, season, subscription, affinity and club programs, box seats
and group sales of Tickets, but may not use the services of any third party
computerized or electronic ticketing service or entity to conduct such sales.
SFX and Ticketmaster shall use their respective reasonable best efforts to
draft and execute a long form Master Agreement to amend and extend the existing
Agreements on the terms and conditions contained herein, and to apply this
Agreement to any Facility not already under contract with Ticketmaster and as
set forth herein. In the event of any inconsistencies or conflicts between this
Agreement and any existing agreement between SFX and Ticketmaster, then the
terms of this Agreement shall prevail unless and until such Master Agreement is
executed. This Agreement shall constitute a legal, valid, binding and
enforceable agreement between the parties. All SFX Facilities which upon the
Effective Date of this Agreement either have existing ticket servicing
agreements with Ticketmaster or a Ticketmaster Affiliate, or which do not have
ticket servicing agreements with any third party, shall be subject to the terms
and conditions of this Agreement and the Master Agreement as of the Effective
Date. In the event that during the term of this Agreement, SFX or an SFX
Affiliate has or acquires any facility, company, promoter or other entity which
owns, has a contract with or is otherwise lawfully bound to any ticketing

 

2

 

service
or system other than the TM System, SFX shall not be obligated to change such
arrangement or to divest itself of, or to decline to enter into, any such
transaction; provided, however, that at such time as SFX or an SFX Affiliate is
no longer obligated to use the services of any third party ticketing provider,
or presently has or in the future may have the ability to enter into an
agreement with Ticketmaster, then any such applicable facility, company,
promoter or entity shall become an SFX Facility or SFX Affiliate, as
applicable, and shall be bound by the terms and conditions of this Agreement
and the Master Agreement.

 

3.  Term
and Effective Date.  This Agreement shall extend each of
the existing SFX agreements with Ticketmaster for a period from the current
respective expiration dates (as set forth on Exhibit B hereto) through December 31,
2005, respectively pursuant to the terms and conditions of this Agreement and
the Master Agreement. This Agreement shall be effective as of the Effective
Date and shall be for a term of seven (7) years commencing as of January 1,
1999. Ticketmaster shall have the option in its sole discretion to renew the
Agreement for an additional period of three (3) years on the terms and
conditions in effect in the last year of the Agreement, including any such
annual increases to the Customer Convenience Charges and handling fees provided
herein, provided that upon exercise of that option to extend the term,
Ticketmaster shall pay to SFX in consideration for the right to extend the
Agreement, a non-refundable payment in the amount of [XXX CONFIDENTIAL
TREATMENT REQUESTED] at any time within the six (6) month period prior to
the expiration of the initial term.

 

4.  Revenue
Sharing Agreement.  SFX and Ticketmaster agree to share
the “per ticket” Customer Convenience Charges, and the “per order” handling
fees with respect to the services provided by both Ticketmaster and SFX
(defined as the quotient of the total amount of handling fees collected by
Ticketmaster per year divided by the number of orders processed by Ticketmaster
per year) (collectively, “Per-Order Ticket Revenues”), on all Tickets for
Attractions for which such charges and fees are received and retained according
to the following methodology: The first [XXX CONFIDENTIAL TREATMENT REQUESTED]
of Per-Order Ticket Revenues shall be retained by Ticketmaster, and the next
[XXX CONFIDENTIAL TREATMENT REQUESTED] of Per-Order Ticket Revenues or portion
thereof shall be paid to SFX. All Per-Order Ticket Revenues above [XXX
CONFIDENTIAL TREATMENT REQUESTED] shall be divided equally between SFX and
Ticketmaster. Settlement and payment of all amounts owed to SFX under this Section 4
shall be made on a weekly basis, with a reconciliation and any adjustments made
on a quarterly basis. In the event that Ticketmaster does not receive a minimum
amount of [XXX CONFIDENTIAL TREATMENT REQUESTED] of Per-Order Ticket Revenues
per year on an annual blended basis for each of the initial [XXX CONFIDENTIAL
TREATMENT REQUESTED] years of the Agreement, then SFX shall pay to Ticketmaster
an amount equal to the total amount of any such shortfall (up to a maximum of
[XXX CONFIDENTIAL TREATMENT REQUESTED] per year and in an aggregate amount not
to exceed [XXX CONFIDENTIAL TREATMENT REQUESTED]). Commencing in year [XXX
CONFIDENTIAL TREATMENT REQUESTED] of this Agreement, SFX shall pay any amounts
to be paid hereunder ratably over years [XXX CONFIDENTIAL TREATMENT REQUESTED],
[XXX CONFIDENTIAL TREATMENT REQUESTED] and [XXX CONFIDENTIAL TREATMENT
REQUESTED] from the amounts otherwise payable to SFX under Sections 4, 5 and 6
of this Agreement. The parties shall mutually agree to the amount and timing of
any increases to be made to the Customer Convenience Charges and the handling
fees over the term of this Agreement. The initial Customer Convenience Charges,
the handling fees at an agreed to minimum of [XXX CONFIDENTIAL TREATMENT
REQUESTED] per order and minimal annual increases shall be set forth on a
schedule to be attached to the Master Agreement; provided, however, that in the
event the parties are unable to reach agreement on the amount of the annual
increases for the then existing Customer Convenience Charges and handling fees,
such increases each year commencing as of January 1, 1999 shall be the
greater of [XXX CONFIDENTIAL TREATMENT REQUESTED]% per annum or the percentage
increase in the national Consumer Price Index over the immediately

 

3

 

preceding
twelve months as promulgated by the United States Department of Labor, Bureau
of Labor Statistics.

 

5.  Rights
to Premium Service Charge.  The amount of any additional
service charge with respect to VIP or premium Tickets sold to Attractions which
entitle the purchaser to additional services or perquisites at any Facility
(i.e., premium parking, special entrances, priority seating, wait service,
etc.), or with respect to special events for which such additional service
charge is separately negotiated by SFX and agreed to by the owner or operator
of the Facility, and which are in excess of the applicable base Customer
Convenience Charge per Ticket for that Attraction, shall be divided as follows:
[XXX CONFIDENTIAL TREATMENT REQUESTED]% shall be retained by Ticketmaster, and
[XXX CONFIDENTIAL TREATMENT REQUESTED]% shall be paid to SFX. Settlement and
payment of all amounts owed to SFX under this Section 5 shall be made on a
weekly basis.

 

[XXX CONFIDENTIAL TREATMENT REQUESTED]

 

7.  Signing
Bonus; Annual Advances.  In consideration for SFX entering
into and performing this Agreement, Ticketmaster shall, on the fifth Business
Day after the date of the execution of this Agreement, pay to SFX a
non-refundable signing bonus in the amount of [XXX CONFIDENTIAL TREATMENT
REQUESTED]. Additionally, on the fifth Business Day of January, 1999, and on
the fifth Business Day of January of each of the years 2000, 2001, 2002
and 2003, Ticketmaster shall advance to SFX the sum of [XXX CONFIDENTIAL
TREATMENT REQUESTED]. The advances made to SFX on the fifth Business Day of January of
each of the first five years of the term of the Agreement shall be fully
recoupable without interest by Ticketmaster throughout the course of the year
and shall be offset against any and all amounts otherwise due to SFX under
Sections 4, 5 and 6 hereof until all amounts are recouped in full; provided, however,
that all amounts from advances which have not been recouped by Ticketmaster in
the event of a termination of the Agreement prior to the expiration of its term
shall be paid by SFX to Ticketmaster in full promptly following the effective
date of such termination.

 

8.  Internet
Marketing.  SFX shall have the right to place links to
Ticketmaster’s Ticketmaster.com web site from SFX owned or operated facilities
for the purpose of selling Tickets to Attractions, and Ticketmaster shall place
links from its Ticketmaster.com web site to SFX owned and operated web sites to
enable purchasers of Tickets to Attractions to gain access to SFX’s transaction
page. Ticketmaster shall provide SFX with a box on the Ticketmaster web site at
which Tickets for SFX’s Attractions are sold for SFX’s use in connection with
its sponsorship sales, and shall also provide prominent space for SFX to
include ticket header sponsorship information on the web page outside the
box for SFX’s use in connection with the sale of Tickets to SFX’s Attractions.

 

9.  Credit
Card Charges.  With respect to all Tickets which are
purchased through the use of American Express, Master Card, Visa, or Discover
Card, SFX shall instruct Ticketmaster to increase the Customer Convenience
Charge by an amount equal to [XXX CONFIDENTIAL TREATMENT REQUESTED], provided
that Ticketmaster may increase such amount by the amount of any increase in
inter-bank fees.

 

10.  Additional
Business Opportunities.  Ticketmaster and SFX agree to use
their reasonable best efforts to develop future merchandising and promotional
opportunities, including but not limited to joint ventures for licensing,
merchandising and affinity and similar programs to be sold through Ticketmaster
Direct and other sources (including various existing and to-be-formed Internet
sites), and to use reasonable efforts to cause additional promotional
programming and other opportunities through Home Shopping Network, USA Network
and other assets of USAI on commercially reasonable terms.

 

11.  Access
to Data Bases.  At SFX’s request, Ticketmaster shall
deliver to SFX without cost the data bases for all Attractions in accessible
electronic form and in a reasonably expeditious manner for SFX’s use, subject
to Ticketmaster obtaining any requisite consents prior to such delivery.
Alternatively,

 

4

 

SFX
may from time to time request that Ticketmaster provide SFX with certain
reasonable services utilizing the SFX data bases and the Ticketmaster data
bases, and upon such request Ticketmaster shall provide such services and shall
be compensated for providing such services at its direct cost (excluding
corporate overhead allocations) plus [XXX CONFIDENTIAL TREATMENT REQUESTED]%.
Additionally, from time to time, Ticketmaster and SFX shall cooperate to
develop affinity merchandising and similar programs to be shared jointly
between the parties utilizing both SFX’s and Ticketmaster’s data bases, and the
profits from any sales generated by such particular programs shall be shared
equally between the parties after deducting the direct costs thereof (excluding
corporate overhead allocations).

 

12.  Affinity
Programs.  At SFX’s request, Ticketmaster shall mail
information about current or future affinity programs (i.e., programs which
provide additional benefits to the purchaser of a Ticket) which SFX provides to
Ticketmaster to any consumer who purchases a Ticket through Telephone Sales to
an Attraction at an SFX Facility or a Non-SFX Facility (provided SFX first
receives the written consent to so solicit from the third party having a
ticketing agreement with Ticketmaster for such Attraction at the Non-SFX
Facility), at Ticketmaster’s direct cost (excluding corporate overhead
allocations) plus [XXX CONFIDENTIAL TREATMENT REQUESTED]%. Ticketmaster and SFX
shall cooperate in expanding such services utilizing Ticketmaster’s phone
operators and other Ticketmaster assets and personnel (such as Ticketmaster’s
monthly Guide) on economic terms and conditions to be mutually agreed to by the
parties.

 

13.  Storage
Fee; Additional Ticketmaster Income; Promotion Efforts.  Ticketmaster
agrees to eliminate the account storage fee or any similar fee which is being
charged to SFX or any SFX Affiliate as of the Effective Date. SFX agrees that
it will provide an amount of business opportunities to Ticketmaster’s various
businesses (other than the ticketing business, i.e., Ticketmaster Direct) which
will result, on an annual basis, in additional operating income to Ticketmaster
of at least [XXX CONFIDENTIAL TREATMENT REQUESTED], based on Ticketmaster’s
representation that its business operates at no less than a [XXX CONFIDENTIAL
TREATMENT REQUESTED]% margin. Such additional operating income shall come from
services which Ticketmaster provides to SFX for licensing, merchandising and
affinity and similar programs and/or other revenue sources described herein.
SFX shall use its reasonable best efforts to promote the use of IVR and
Internet sales of Tickets at all SFX Facilities and for all SFX Attractions.

 

14.  Representations
and Warranties of SFX.  SFX represents and warrants to
Ticketmaster that:

 

(a)   SFX and each
of the SFX Affiliates is a corporation duly organized and in good standing in
its state of incorporation and has adequate power to enter into and perform
this Agreement;

 

(b)   This
Agreement has been duly authorized, executed and delivered on behalf of SFX and
constitutes the legal, valid and binding agreement of SFX, enforceable in
accordance with its terms;

 

(c)   The entering
into and performance of this Agreement will not violate any judgment, order,
law or regulation applicable to SFX or any provision of SFX’s charter or
bylaws, or result in any breach of, constitute a default under, or result in
the creation of any line, charge, security interest or other encumbrance upon
any assets of SFX pursuant to any instrument to which SFX is a party or by
which it or its assets may be bound;

 

(d)   SFX has the
right to sell, or Controls the Right to sell, Tickets to each SFX Facility
which is subject to the terms of this Agreement at which any of its Attractions
are held, and is duly authorized to execute, perform and deliver this
Agreement; and

 

(e)   SFX has the
right, authority and power to enter into this Agreement on behalf of and bind
itself and each of the SFX Affiliates.

 

5

 

15.  Representations
and Warranties of Ticketmaster.  Ticketmaster represents
and warrants to SFX that:

 

(a)   Ticketmaster
is a corporation duly organized and in good standing in its state of
incorporation and has adequate power to enter into and perform this Agreement;

 

(b)   This
Agreement has been duly authorized, executed and delivered on behalf of
Ticketmaster and constitutes the legal, valid and binding agreement of
Ticketmaster, enforceable in accordance with its terms;

 

(c)   The entering
into and performance of this Agreement will not violate any judgment, order,
law or regulation applicable to Ticketmaster or any provision of Ticketmaster’s
charter or bylaws, or result in any breach of, constitute a default under, or
result in the creation of any line, charge, security interest or other
encumbrance upon any assets of Ticketmaster pursuant to any instrument to which
Ticketmaster is a party or by which it or its assets may be bound;

 

(d)   Ticketmaster
is duly authorized to execute, perform and deliver this Agreement; and

 

(e)   Ticketmaster
has the right, authority and power to enter into this Agreement on behalf of
and bind each of the TM Affiliates.

 

16.  Miscellaneous.

 

    (a)  Notices.  Any notice
required or permitted to be given by the provisions of this Agreement shall be
conclusively deemed to have been received by a party hereto on the day it is
delivered by hand or fax to such party at the addresses or fax numbers
indicated below (or at such other address or fax number such party shall
specify to the other party in writing including by fax), or, if sent by
registered or certified mail, on the third Business Day after the day on which
mailed, addressed to such party at such address:

 

 

	
  If to SFX, at:

  	
   

  	
  SFX
  Entertainment, Inc.

  
	
   

  	
   

  	
  650 Madison Avenue

  
	
   

  	
   

  	
  16th Floor

  
	
   

  	
   

  	
  New York, New York 10022

  
	
   

  	
   

  	
  Attn: Michael G. Ferrel,
  President & 

  
	
   

  	
   

  	
  CEO

  
	
   

  	
   

  	
  Fax
  No. (212) 486-4869

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  SFX
  Entertainment, Inc.

  
	
   

  	
   

  	
  650 Madison Avenue

  
	
   

  	
   

  	
  16th Floor

  
	
   

  	
   

  	
  New York, New York 10022

  
	
   

  	
   

  	
  Attn: Richard A.
  Liese, Esq.

  
	
   

  	
   

  	
  Fax
  No. (212) 486-4830

  
	
   

  	
   

  	
   

  
	
  If to Ticketmaster, at:

  	
   

  	
  Ticketmaster Corporation

  
	
   

  	
   

  	
  3701 Wilshire Boulevard

  
	
   

  	
   

  	
  Seventh Floor

  
	
   

  	
   

  	
  Los Angeles, California
  90010

  
	
   

  	
   

  	
  Attn: Terry Barnes,
  President & CEO

  
	
   

  	
   

  	
  Fax
  No. (213) 480-4884

  

 

6

 

	
  with a copy to:

  	
   

  	
  Ticketmaster Corporation

  
	
   

  	
   

  	
  8800 Sunset Boulevard

  
	
   

  	
   

  	
  West Hollywood, California
  90069

  
	
   

  	
   

  	
  Attn: Eugene Cobuzzi, COO

  
	
   

  	
   

  	
  Fax
  No. (310) 360-6509

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Ticketmaster Corporation

  
	
   

  	
   

  	
  555 West 57th
  Street

  
	
   

  	
   

  	
  New York, New York 10019

  
	
   

  	
   

  	
  Attn: Daniel R.
  Goodman, Esq.

  
	
   

  	
   

  	
  Fax
  No. (212) 399-1395

  
	
   

  	
   

  	
   

  
	
  and with a copy to:

  	
   

  	
  Ticketmaster Corporation

  
	
   

  	
   

  	
  8800 West Sunset Boulevard

  
	
   

  	
   

  	
  West Hollywood, California
  90069

  
	
   

  	
   

  	
  Attn: Stuart DePina, CFO

  
	
   

  	
   

  	
  Fax
  No. (310) 360-0625

  

 

 

 

(b)  Applicable Law.  This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York. Any action that is or may be commenced by any party
pertaining to this Agreement and the subject matter hereof shall be commenced
in a Federal or state court located in New York County, New York. The parties
hereto hereby consent to the jurisdiction of such court.

 

(c)  Counterparts.  This
Agreement may be executed in one or more counterparts, all of which shall be
deemed to be one and the same Agreement.

 

(d)  Amendments.  This
Agreement shall not be changed, modified, altered or amended in any respect
without the mutual consent of the parties hereto, which consent shall be
evidenced by a written amendment to this Agreement executed by the parties.

 

(e)  Entire Agreement.  This
written Agreement and the Exhibit hereto constitute the sole and only
agreement of the parties relating to the matters covered hereby. Any prior or
contemporaneous agreements, promises, negotiations or representations not
expressly set forth in this Agreement are of no force or effect.

 

(f)  Joint and Several Obligations.  Notwithstanding
anything to the contrary contained in this Agreement, all agreements,
covenants, duties and obligations of SFX hereunder shall be the joint and
several agreements, covenants, duties and obligations of SFX and each of the
SFX Affiliates.

 

(g)  Existing Agreements.  Upon
the execution of this Agreement, and except as otherwise provided herein,
including the extension of the existing Agreement on the terms set forth
herein, all existing ticketing servicing agreements between Ticketmaster and
any of SFX or the SFX Affiliates shall automatically terminate as of the Effective
Date hereof with respect to activities following such date, and shall be of no
further force or effect with respect to activities following such date.

 

(h)  Confidentiality.  It is
the intent of the parties hereto that the terms, conditions and provisions of
this Agreement shall remain confidential and shall not be disclosed to any
other person without the prior consent of the non-disclosing party. However,
the parties acknowledge that (i) in operating under this Agreement and the
Master Agreement, multiple employees of each of them will be privy to some or
all of the provisions hereof and (ii) certain regulatory processes
(including, but not limited to, those related to the Securities and Exchange
Commission) may require disclosure of some or all of the provisions hereof, and
that any disclosure pursuant thereto, or any inadvertent disclosure by a
recipient thereof of any non-material terms, shall not constitute

 

7

 

a breach of this Agreement.
In the event either party is requested or required (by oral questions,
interrogatories, requests for information or documents in legal proceedings,
subpoena, civil investigative demand or other similar process) to disclose all
or any portions of this Agreement, the party from whom the disclosure is sought
shall provide the other party with immediate oral, followed by prompt written,
notice of any such request or requirements so that such party may seek a
protective order or other appropriate remedy and/or waive compliance with the
provisions of this Agreement. If, in the absence of a protective order or other
remedy, the party from whom disclosure is sought is, nonetheless, legally
compelled to disclose all or any portions of this Agreement, such party may,
without liability hereunder, disclose the Agreement or only that portion of the
Agreement which it is legally required to disclose.

 

(i)  Severability.  In the
event any one or more of the provisions contained in this Agreement shall for
any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, but this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein. Further, in
the event that any provision of this Agreement shall be held to be
unenforceable by virtue of its scope, but may be made enforceable by a
limitation thereof, such provision shall be deemed to be amended to the minimum
extent necessary to render it enforceable under the laws of the jurisdiction in
which enforcement is sought.

 

17.  Indemnity.

 

(a)  SFX shall protect, indemnify, save
and hold Ticketmaster and the TM Affiliates, including all of their respective
officers, directors, shareholders, employees and/or agents, harmless from and
against any and all claims, actions, damages, expenses (including court costs
and reasonable attorneys’ fees), obligations, losses, liabilities and liens
imposed or incurred by, or asserted against, Ticketmaster, the TM Affiliates or
their successors or assigns, by any person or entity, caused by or occurring as
a result of SFX’s use of the TM System at a Facility, except to the extent that
such claim shall relate to Ticketmaster’s gross negligence or wilful misconduct
with respect thereto, the performance of this Agreement or the breach of any
covenant, representation or warranty contained in this Agreement by SFX, its
agents, employees or any other person (other than Ticketmaster or a TM Affiliate)
acting under the direction and on behalf of SFX.

 

(b)  Ticketmaster shall protect,
indemnify, save and hold SFX and the SFX Affiliates, including all of their
respective officers, directors, shareholders, employees and/or agents, harmless
from and against any and all claims, actions, damages, expenses (including
court costs and reasonable attorneys’ fees), obligations, losses, liabilities
and liens imposed or incurred by, or asserted against, SFX, the SFX Affiliates
or their successors or assigns, by any person or entity, caused by or arising
out of any alleged patent, trademark, or copyright infringement, asserted
against SFX with respect to SFX’s use of the TM System, except to the extent
that any such claim shall relate to SFX’s negligence or wilful misconduct with
respect thereto, the performance of this Agreement or the breach of any
covenant, representation or warranty contained in this Agreement by
Ticketmaster, its agents, employees or any other person (other than SFX or an
SFX Affiliate) acting under the direction and on behalf of Ticketmaster.

 

18.  Press
Releases.  It is the intention of the parties to issue a
press release regarding the general nature of the terms and conditions of this
Agreement after the execution by both parties of this Agreement.
Notwithstanding the foregoing, neither party shall make or issue any public
statements, disclosure or press release with respect to the matters
contemplated herein without the prior consent of the other, which consent shall
not be unreasonably withheld, provided that (i) press releases in
conformity with the disclosure requirements of the Securities and Exchange
Commission, in a form which shall be previously approved by Ticketmaster and
SFX, may be issued by SFX and/or Ticketmaster if deemed necessary, (ii) that
the parties hereto shall continue such communications with

 

8

 

directors,
employees, customers, suppliers, franchisees, lenders, lessors, shareholders,
partners and other particular groups as may be legally required or necessary or
appropriate and not inconsistent with the best interests of the other parties
for the proper consummation of the transactions contemplated herein, and (iii) as
required by law.

 

19.  Expenses.  Each
of SFX and Ticketmaster shall be solely responsible for and bear all of their
respective expenses, including, without limitations, expenses of legal counsel,
accountants and other advisors, incurred at any time in connection with all
negotiations and documentation relating to the parties’ entering into this
Agreement and the Master Agreement.

 

In order to confirm your agreement to the terms and
conditions set forth herein, kindly execute and return the signed copy hereof
to the undersigned.

 

	
   

  	
  Very truly yours,

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  SFX ENTERTAINMENT, INC.

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  By:

  	
  /s/ MICHAEL G. FERREL

  	 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Michael G. Ferrel

  	 

	
   

  	
  Its:

  	
  President and Chief
  Executive Officer

  	 

	
   

  	
   

  	
   

  	 

	
  AGREED TO AND ACCEPTED
  THIS

  	
   

  	
   

  	 

	
  13th DAY OF
  NOVEMBER, 1998:

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
  TICKETMASTER CORPORATION

  	
   

  	 

	
   

  	
   

  	 

	
  By:

  	
  /s/ TERRY BARNES

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  Terry Barnes

  	
   

  	 

	
  Its:

  	
  President and Chief
  Executive Officer

  	
   

  	 

						

 

9Exhibit
10.18

 

	
  

  	
  Paul d’Eustachio

  President

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE OFFICES

  
	
  July 28, 1997

  	
  1 Harry S. Truman Drive

  
	
   

  	
  Landover Maryland 20785

  
	
   

  	
  (301) 808-4300

  
	
   

  	
  Fax (301) 808-4325

  

 

Ned
S. Goldstein

Senior Vice President

and General Counsel

Ticketmaster
Corporation

8800 Sunset Blvd.

West Hollywood, CA 90069

 

Re:      License Agreement

 

Dear
Mr. Goldstein:

 

Ticketmaster
has raised a question of whether “Additional Payments” are due under the
License Agreement in connection with certain tickets sold by the USAir Arena,
Baltimore Arena and Patriot Center box offices. In response, we have carefully
reviewed the issue of box office sales, sought to compile relevant information
and reached the following conclusions.

 

First,
while there is some ambiguity in the terms of the License Agreement, and in
their application to this matter, TGLP will make an Additional Payment to
Ticketmaster in connection with certain tickets sold by the USAir Arena box
office. Second, TGLP does not believe that Additional Payments are due in connection
with sales by the Baltimore Arena and Patriot Center box offices. Both
conclusions are discussed further below.

 

Turning
first to the USAir Arena, it imposes a $1.00 service charge upon certain
advance sale tickets sold through the box office. There is no service charge
upon season tickets or date-of-event sales. Nor are service charges imposed on
advance sales to certain events, such as Ringling Brothers and Disney on Ice.

 

The
USAir Arena also sells a limited number of tickets on what it refers to as a
consignment basis. This typically involves the advance sale to a third-party of
a block of tickets for a particular event. Service charges for consignments
generally range from $2 to $5 per ticket.

 

USAir
Arena box office employees generate a daily spreadsheet which includes a line
item showing service charges collected that day. Using these spread sheets, the
USAir Arena Accounting Department then prepares monthly spreadsheets compiling
total service charges collected. This line item includes both the $1.00 service
charge applied to certain advance sales and the consignment charges.

 

Total
service charge income for the USAir Arena box office during the previous three
fiscal years (July 1, 1994 through June 30, 1997) was as follows:

 

	
  1995

  	
   

  	
  $

  	
  69,079

  	
   

  
	
  1996

  	
   

  	
  $

  	
  77,240

  	
   

  
	
  1997

  	
   

  	
  $

  	
  87,945

  	
   

  

 

CONCERTS  · 
SPORTS  · 
PERFORMING ARTS · CULTURAL ATTRACTIONS  ·  FAMILY &
SPECIAL EVENTS  ·  CLUBS

 

 

To ensure that
Ticketmaster receives all payments to which it may be entitled under the
License Agreement, we have assumed that each dollar of revenue collected reflects
one ticket sold. In fact, the number of tickets to which a service charge
applied was substantially less, because the service charges applied to
consignments exceeded $1.00 per ticket.

 

Using that assumption, we
then made the following calculations:

 

	
   

  	
   

  	
   

  	
   

  	
  Per Ticket Amount

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Under License

  	
   

  	
   

  	
   

  
	
  Fiscal Year

  	
   

  	
  Number of Tickets

  	
   

  	
  Agreement

  	
   

  	
  Total

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1995

  	
   

  	
  69,079

  	
   

  	
  .07

  	
   

  	
  $

  	
  4,836

  	
   

  
	
  1996

  	
   

  	
  77,240

  	
   

  	
  .08

  	
   

  	
  $

  	
  6,179

  	
   

  
	
  1997

  	
   

  	
  87,945

  	
   

  	
  .08

  	
   

  	
  $

  	
  7.036

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  TOTAL

  	
   

  	
  $

  	
  18,051

  	
   

  

 

The USAir Arena
Accounting Department no longer has records which isolate service charge income
from all other sources of revenue for fiscal years 1992, 1993 and 1994. We
have, however, compiled information enabling us to make a relatively accurate
computation of the number of tickets to which a service charge was applied, and
made assumptions in Ticketmaster’s favor designed to ensure that it receives
all Additional Payments to which it may be entitled.

 

Again assuming that every
dollar of service charge revenue reflects one ticket sold, during each of
fiscal years 1995, 1996 and 1997 approximately 8% of all tickets sold by the
USAir Arena box office carried a service charge. (The total number of box
office sales during fiscal years 1995, 1996 and 1997 were 920,229, 934,982 and
1,120,045, respectively.) Although, for the reasons set forth above, that
assumption substantially overstates the actual number of tickets subject to a
service charge, we have applied the same 8% figure to the total number of
tickets sold by the USAir Arena box office for fiscal years 1992, 1993 and 1994.
Total box office ticket sales those years were 833,925, 828,476 and 8X8,225,
respectively. Applying the 8% figure, this translates to 66,714, 66,278 and
71,058 tickets bearing a service charge during those years.

 

We then made the
following calculations:

 

	
   

  	
   

  	
   

  	
   

  	
  Per Ticket Amount

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Under License

  	
   

  	
   

  	
   

  
	
  Fiscal Year

  	
   

  	
  Number of Tickets

  	
   

  	
  Agreement

  	
   

  	
  Total

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1992

  	
   

  	
  66,714

  	
   

  	
  .06

  	
   

  	
  $

  	
  4,003

  	
   

  
	
  1993

  	
   

  	
  66,278

  	
   

  	
  .06

  	
   

  	
  3,977

  	
   

  
	
  1994

  	
   

  	
  71,058

  	
   

  	
  .07

  	
   

  	
  4,974

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  TOTAL

  	
   

  	
  $

  	
  12,954

  	
   

  

 

2

 

Enclosed
is a check for $ 31,005, reflecting Additional Payments for the period July 1,
1991 through June 30, 1997, for box office sales at the USAir Arena, 1 believe
that this payment exceeds the maximum amount potentially due under the License
Agreement. In addition, it is our intention to work with the USAir Arena to
establish a system for reporting such sales, and remitting payments to
Ticketmaster, each year going forward.

 

The
USAir Arena also charges season ticket holders a handling fee in connection
with certain transactions, such as the exchange of tickets to one game for
those of another. It is a flat fee (generally $5.00) and does not vary
according to the number of tickets involved. We do not believe that an
Additional Payment is due under the License Agreement in connection with these
handling fees, but provide this information to ensure that the factual record
is complete.

 

Turning
to the Baltimore Arena, I am informed that it imposes a $1.00 service charge on
all tickets purchased at the box office with a credit card. The purpose of the
charge is to offset the credit card commission the City of Baltimore must pay
to the credit card company with respect to such sales. The box office also
sells a small number of consignment tickets to various events, for which the
service charge is $3.00. Both service charges are paid to the City.

 

It
is my understanding that under the current Management Agreement between
Baltimore and Centre Group, Centre Group’s compensation for managing the
Baltimore Arena is based upon the degree of improvement in the net operating
loss of the Arena below $650,000. Net operating loss is defined as gross
revenue less operating expenses. The first $100,000 of improvement goes to the
City; the next $100,000 goes to Centre Group; reductions of net operating loss
of more than $200,000, but less than $800,000, are split 50%-50% between the
City and Centre Group; and reductions of more than $800,000 are shared 65% by
the City and 35% by Centre Group.

 

In
our view, no Additional Payment is due in connection with tickets sold by the
Baltimore Arena box office. The service charges are imposed by the City, are
paid to the City, and principally offset associated credit card expenses. As an
aside, it is my understanding that the total number of ticket sales by the
Baltimore Arena box office to which a service charge is applied is quite small.
Indeed, I am informed that the City’s total service charge income has been less
than $20,000 per year, the bulk of which consists of credit Card charges.
Accordingly, should Ticketmaster disagree with our position, the amount at
issue is less than $2,000 per year, and less than $10,000 for the entire term
of the License Agreement.

 

Next,
I understand that George Mason University imposes a $1.00 service charge on
certain advance ticket sales at the Patriot Center box office. Sales to
University events (such as basketball games) and children’s events (such as
Disney and the Barney Show) are excluded. The service charges are paid to the
University, and are included in the gross revenue of the Patriot Center.

 

It
is my understanding that pursuant to the Management Agreement for the Patriot
Center between the University and Centre Group, Centre Group receives a fixed
fee of $250,000 per year, and a variable fee based on building gross revenue.
The variable fee is two percent of building revenue if building expenses are
more than 70 percent of revenue; 2.5 percent of building revenue if building
expenses are between 60

 

3

 

percent
and 70 percent of revenue; and three percent of building revenue if building
expenses are less than 60 percent of revenue. The total fee is capped by the
requirement that the fixed fee must be at least 51 percent of the total fee
paid to Centre Group.

 

In
our view, no Additional Payment is due in connection with sales by the Patriot
Center box office. The service charge is paid to the University, and there is
no direct tie between that charge and Centre Group’s compensation. We do not
believe that it was the intent of the License Agreement to require an
Additional Payment in these circumstances. This is illustrated by the fact that
if an Additional Payment was due upon the sale of such tickets, it would
substantially exceed the highest potential increase in Centre Group’s variable
fee by reason of the imposition of the service charge. Specifically, while the
maximum amount of the variable fee can be 2 - 3% of additional revenue
generated (i. e., two
or three cents), the Additional Payment would be eight cents per ticket.
Plainly, neither TGLP nor an affiliate would choose to implement a program
under which, in the best case, it was net out-of-pocket five cents per ticket
sold by reason of the imposition of a service charge.

 

I
am informed by Centre Group that the Patriot Center box office applied the
$1.00 service charge to less than 40,000 tickets annually from 1991 through
today. Accordingly, should Ticketmaster disagree with our position, the amount
at issue is less than $4,000 per year, and less than $20,000 for the entire
term of the License Agreement.

 

This
letter is written for the purpose of resolving disputes between TGLP and
Ticketmaster with respect to the issue of box office sales. While we do not
agree with all of the positions that Ticketmaster has taken with respect to the
relevant terms of the License Agreement (such as the definition of an affiliate
and other relevant terms), the sums involved with respect to the issue of box
office sales are quite small, and in our view should not be a source of ongoing
disagreements. TGLP’s goal is to fully satisfy any obligations owing to
Ticketmaster, and to avoid the recurrence of these issues in the future. To
that end, I am willing to provide Ticketmaster with additional information
concerning these issues, independently of the outstanding litigation. We will
also consider any countervailing points you wish to raise, or proposed
solutions, and address them promptly.

 

In
closing, I must emphasize that much of the information set forth above was
compiled by me (or at my direction), and first came to my attention, as a
result of the questions recently raised. To my knowledge, neither Ticketmaster
nor TGLP previously focused upon these questions. There has never been any intention
to withhold funds owing to Ticketmaster.

 

	
  Sincerely,

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Paul d’Eustachio

  	
   

  
	
  Paul
  d’Eustachio

  	
   

  

 

Enclosure

 

	
  cc:

  	
  Abe
  Pollin

  
	
   

  	
  David
  Osnos

  

 

4

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