Development & Services Agreement

DEVELOPMENT AND SERVICES AGREEMENT



This Development and Services Agreement (the "Agreement") is made and entered into as of June 28, 199 6 by and between Ticketmaster Multimedia Holdings, Inc., a Delaware corporation, with offices at 3701 Wilshire Blvd., Los Angeles, California 90010 ("Company") and Starwave Corporation, a Washington corporation with offices at 13810 S.E. Eastgate Way, Sui te 400, Bellevue, Washington 98005 ("Provider"), upon the following terms and conditions:



1.0 BACKGROUND; THE PROJECT



1.1 Company desires to have delivered and implemented a custom, turnkey, integrated, multi-user network, tra nsactional web site (hereinafter referred to as the "System") for use by Company on the TM Web Site. The System must, among other things, effectively interface with Company's ticketing system (the "TM System").



1.2 In its consultations with Company and after a mutual determination of system requirements, Provider has represented, among other things, that, with Company's cooperation, it could provide Company with the System, defined in Section 1.1 above, that would meet Company's requirements, and that Provider would deliver, install and test the System, and provide conversion, training, and support services (the "Project"), all as defined and described herein.



1.3 In reliance upon Provider's recommendations, and subject to the terms and conditions of this Agreement, Company engages Provider to perform the Project and to provide other software and services as Company may request from time to time on an ongoing basis during the term of this Agreement.



2.0 DEFINITIONS



The following definitions shall apply to this Agreement:



2.1 "Company Net Profits" means gross revenues actually received by Company and the other TM Subsidiaries directly from the on-line sale of merchandise to consumers on the TM Web Site, l ess (a) any shipping/handling charges (including insurance) collected by Company and the other TM Subsidiaries in connection with the sale of such merchandise and (b) direct costs of the sale of such merchandise, including, without limitation, the invoice d cost of such merchandise, costs of developing, operating and maintaining the TM Web Site, packaging costs, chargebacks, returns, refunds, credit card company charges, selling incentives and commissions directly connected with the sale of the merchandise, billing errors, doubtful accounts, marketing costs directly and exclusively associated with the sale of the merchandise and applicable taxes; provided that such direct costs shall not include overhead charges such as the general and administrative expense s of Ticketmaster Corporation.

2.2 "Com pany Source Content" means all content delivered by the Company in connection with or related to the TM Web Site, including, without limitation, all text, photographs, sound audio and video segments, animation, databases, screen displays, graphics, charts , tables or any other content or documents (including all literary and statutory rights thereto).



2.3 "Confidential Information" means all financial records and financial information regarding the parties, technical information regarding the parties' pr oducts or business, design, development, production, and sales processes (provided they can be shown to be unique and proprietary), consumer and distributor lists, all Company's business records, all Company's consumer records, all Company's sales data an d history, Provider's proprietary software, Company's proprietary software, and any other information or documentation covered by Section 17.1 below.



2.4 "Copyrights" shall mean any of the copyrights owned by Provider or Company for use on or with the Software, whether registered or unregistered.



2.5 "Documentation" shall mean all information including, but not limited to, user manuals, handbooks, operating instructions, technical data or other materials (whether in human or machine-readable form) re lating to the Licensed Software, including any updates or revisions to such materials.



2.6 "Domain Name" means a name associated with a specific address for a computer server registered with InterNIC for use on the Internet.



2.7 "Existing TM Web Si te" means the web site currently available on the World Wide Web portion of the Internet through the Company and/or a TM Subsidiary, which web site is or was operated and maintained by Provider on behalf of one or more of the TM Subsidiaries on the Web Se rver.



2.8 "Hardware" shall mean the equipment recommended by Provider necessary to run the Software. The term "Hardware" shall also include all related operating system software.



2.9 "Inventions" shall mean any idea, design, concept, technique, inventi on,

discovery, or improvement, regardless of patentability.



2.10 "Know How" shall mean all trade secrets and information relating to the Licensed Software in the possession of Provider, including that comprised in designs, drawings, specific ations, manuals or materials that enable one to use technology and used by Company to carry out its obligations under this Agreement.



2.11 "Licensed Materials" means any materials or elements not owned by Provider or Company, of whatever nature (including computer programs) created for or furnished to Provider by third parties and that are used by Provider to create the TM Web Site.



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2.12 "Licensed Software" shall mean any and all software related to the T M Web Site, in object code and/or in source code form, which was or is developed by Provider and/or its licensors (if applicable), and is provided to the Company by Provider as Works for Hire (as described in Title 18 USC et. seq., "The United States Copy r ight Act") for use in connection with and/or on the TM Web Site and all functions contained therein. All Software documentation and support materials shall be deemed part of the Licensed Software. Provider Technology shall be owned though licensed by the P rovider to Company as limited by paragraph 2.18 below. In no event shall Provider have any right, title or interest in or to any TM procedures and/or methodologies incorporated in any programs at the Company's direction including, but not limited to, tran sactional protocols.



2.13 "Marks" means the marks "TICKETMASTER" and any other trademarks or service marks or Domain Names or URLs used on or in connection with or associated with the Web Pages or the TM Web Site or owned by Ticketmaster Group, Inc. and /or the TM Subsidiaries.



2.14 "Nonconformity" means a design error, design defect, functional defect, programming error or anomaly and/or deviation.



2.15 "On-Line Revenue" means gross service charge revenues actually received by Company and the other TM Subsidiaries directly from service charges collected by Company and the other TM Subsidiaries from selling tickets to the public on line on the TM Web Site, less (a) applicable taxes, (b) refunds, (c) rebates, (d) credit card processing fees, and (e) shipping and handling charges.



2.16 "Proprietary Rights" shall mean the Trademarks, Copyrights, trade secrets, Know-how, Inventions (whether patentable or not) and Confidential Information, collectively.



2.17 "Provider Royalty Period" means the period during which Provider is entitled to royalty payments of the Agreement, as set forth in Section 9.0.



2.18 "Provider Technology" means those progr ams of the Licensed Software and any and all intellectual proprietary rights contained in and related thereto to which are listed in Exhibit "A" attached hereto and incorporated by reference in this Agreement. Notwithstanding this provision or any other p rovision contained in this Agreement, the Company may modify, enhance and maintain the Provider Technology for use in conjunction with the TM Web Site. In no event shall Provider Technology include any Company Source Content.



2.19 "Software" shall mean all programming in object code, source code or any other format in accordance with the Specifications, and shall be deemed to include all Documentation that supports or relates to any or all of the foregoing.



2.20 "Specifications" means the definition of the scope and functional characteristics of the Web Pages and TM Web Site prepared by the Company in reliance upon the Provider's recommendations and as generally described in Exhibit B.



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2.21 "Subsidiary" of a person (a "Parent") means any corporation or other entity with respect to which at least a majority of the outstanding voting power at the time is controlled, directly or indirectly, by the Parent, one or more Subsidiaries or by the Parent and one o r more Subsidiaries.



2.22 "Trademarks" shall mean, whether registered or unregistered, the trade names of each party and any other trade name, trade dress, trademarks or service marks owned by or licensed by each party for use on or with the Software, t he System or the Services.



2.23 "TM Subsidiary" or "TM Subsidiaries" means one or more Subsidiaries of Ticketmaster Group, Inc.



2.24 "URL" means a Uniform Resource Locator, namely, an address associated with each Web Page on the Internet.



2.25 "Web Pages" means those materials created and developed pursuant to this Agreement or in connection with the Existing TM Web Site containing Company Source Content or other materials furnished by Company to Provider for the purpose of providing a site for such files on the World Wide Web portion of the Internet via a server furnished by Provider, Company or another party.



2.26 "Web Server" means a computer operated by Provider for making the TM Web Site and/or the Existing TM Web Site available on the Internet.



2.27 "TM Web Site" means Company's Web Pages available on the World Wide Web portion of the Internet.



2.28 "Works" means all of the results and proceeds of Provider's services and any materials created or developed by or on behalf of Provi der pursuant to this Agreement or in connection with the Existing TM Web Site, any information or data derived or resulting from or relating to the use of the TM Web Site on the Web Server (or any other web server operated by Provider), and any copies or derivative works of any of the foregoing, in whatever physical form in which any of the foregoing may exist, but specifically excluding the Provider Technology and the Licensed Materials.



3.0 ENGAGEMENT, DURATION



3.1 Company hereby engages Provider to provide the services and related materials and equipment hereinafter described at Provider's facility in Bellevue, Washington or at Company's facility in Los Angeles, California (as the parties mutually agree) an d subject to all of the terms and conditions of this Agreement. Provider has commenced engagement prior to the date hereof and agrees that such prior activity, as well as, the activities it will undertake hereinafter were and shall be subject to the terms o f this Agreement, and hereby accepts such engagement and agrees to make itself available and to render the services under this Agreement in a professional, high-quality and timely manner, consistent with the highest computer software development industry professional standards. Provider agrees to provide services, as reasonably



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4.0 DEVELOPMENT AND TM WEB SITE OPERATIONS



4.1 Development.



4.1.1 Provider has in the past provided and shall continue to provide professional consulting, creative, writing, design and computer programming services in connection with the development of Company's Web Pages and the TM Web Site, as well as such other services, materials, and equipment as are customarily provided in connection with such consulting, creative, design and programming activities or as may be r equired or directed by the Company from time to time; provided, that all creative and design work shall be subject to the prior written approval of Company and provided, further, that all new creative and design work requested by Company after Final Accep tance shall be subject to the prior approval of each of the parties. Such services, materials and equipment shall include, without limitation:



4.1.1.1 Designing, creating and testing Web Pages and the TM Web Site, which shall contain, without limitation, the content of the site, menus, cross-references, hypertext, other organizational features, screen layouts, screen displays, operational control features, security features and the other features, and computer source code and object code relat ed to the development and implementation of these elements;



4.1.1.2 Providing technical and creative assistance, materials and services to upgrade or modify Web Pages and TM Web Site;



4.1.1.3 Developing and implementing plans to promote and publicize the TM Web Site in appropriate forums, such as indexing services and USENET groups;



4.1.1.4 Providing general technical and support services for the operation of the TM Web Site on the Internet on the Web Server;



4.1.2 If any Nonconformities are discovered, Provider will immediately correct such Nonconformities at Provider's cost and expense.



4.2 TM Web Site Operations. Provider has in the past provided and shall continue to provide all services and equipment necessary to install, maintain, and support the TM Web Site over the Web Server and make the TM Web Site available to Internet users. Such service and equipment shall include:



4.2.1 Installing and, if necessary, converting, Company's Web Pages for use on the Web Server such that Company's Web Pages are readily available on the World Wide Web portion of the Internet utilizing all regularly used versions of all major commercially available browsers;



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4.2.2 Furnishing a Web Server running SPARC 20 connected to a T1 or faster communications link provided to Company with sufficient minimum disk space for storage of the TM Web Site and Web Pages on the Web Server;



4.2.3 Providing all computer, communications and other equipment necessary for the Web Server to access the Internet on a continual basis;



4.2.4 Training of Company personnel at Company's Los Angeles, California facility for the purpose of internal content creation and updates;



4.2.5 Forwarding to the E-mail address specified by Company on a daily basis any comments or other communications from the TM Web Site designated for Company;



4.2.6 Correcting any errors to the TM Web Site caused by Provider within twenty-four (24) hours of Provider's knowledge of such errors; and



4.2.7 Creating an environment (a working Web Page) for Company to be able to send and receive documents (such as by Standard Internet File Transfer Protocol [FTP]) as well as for the purpose of Company updating Web Pages and the TM Web Site.



4.3 Transitioning of Development and Operations to the Company. Provider shall transition and migrate responsibility for the development, operation and maintenance of the Web Pages, the TM Web Si te and the Existing TM Web Site to Company in an orderly and efficient manner, without interruption or disruption of service to the end-user (the "Transition"). Such Transition responsibilities shall include, without limitation:



4.3.1 provide training to Company personnel at Company's Los Angeles, California facility necessary to effect the Transition;



4.3.2 migrate the TM Web Site to Company's web server(s);



4.3.3 provide general technical and support services for the operation of the TM Web Site on the Internet on Company's web server(s);



4.3.4 provide technical services to upgrade or modify Company's Web Pages on the TM Web Site or web pages;



4.3.5 promptly upon request of Company, deliver to Company all Works and all Company Source Content;



4.3.6 cooperate with Company in conducting tests of any hardware or software; and



4.3.7 provide all then-current user guides, installation guides, narrative descriptions, specifications, file lay-outs, logic flow diagrams, test or other data, test programs



- 6 - and other information that is owned, used or held by Provider in connection with performance of its obligations under this Agreement.



Company will use reasonable best efforts to cooperate with Provider in connection with Provider's obligations under this Section 4.3.



5.0 PROJECT MANAGEMENT



5.1 Company and Provider have each designated one individual to se rve as "Project Manager" and may from time to time designate in writing replacement Project Managers. Except as otherwise described herein, the Project Managers will be deemed to have authority to perform the management duties described in this Agreement, and give and receive any notices or other communications required hereunder. All communications relating to Sections 4.0 through 8.0 shall initially be conducted through the parties' Project Managers.



5.2 In addition to the foregoing, Provider's and Co mpany's Project Managers and other appropriate personnel as necessary will meet to discuss any matters that relate to the performance of this Agreement, as might reasonably be requested from time to time by either party.



6.0 PERSONNEL; RESOURCES



6.1 Provider shall exercise due diligence to maintain an adequate number of trained, competent personnel to perform its duties under this Agreement and for future support.



6.2 During the course of the Project and during the Provid er Royalty Period, if Company notifies Provider that an employee of Provider or any third party personnel who perform services in connection with the Project at Company's premises, does not adequately perform responsibilities assigned to that individual o r lacks the ability or skills (including, without limitation, interpersonal skills) needed to fulfill his or her tasks related to the Project, then Provider shall take such actions as necessary to substantially improve such person's conduct or performance, or at Company's request, and at no cost to Company, Provider shall replace such individual with an individual who reasonably meets Company's qualifications.



6.3 When a party's personnel are located at the other party's facilities, the hosting party wil l, at no charge to the other party, provide such personnel with a work environment reasonably suitable for those persons to perform their assigned responsibilities. Each party shall provide the other party with reasonable advance notice of any visiting pe rsonnel.



7.0 PROJECT CHANGE



7.1 During the Project and the Provider Royalty Period, if either party wishes to make changes to the Licensed Software, or change any component thereof (collectively referred to as a "Change"), both parties shall comply with the procedures set forth in Sections 7.2 through 7.5 inclusive.



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7.2 The Company Project Manager, when requesting a Change, will submit in writing to the Provider's Project Manager the requested Change and any other information to be provided thereon for the consideration and implementation of such Change.



7.3 If the Change is initiated by Company:



7.3.1 Provider will evaluate such Change Request and will respond to Company's Project Manager in writing within five (5) days following receipt of the Change Request. Provider's response will include a statement of the availability of Provider's personnel and resources and any required adjustment to the Project. There sha ll be no further costs or charges for reasonably requested changes during the Provider Royalty Period.



7.3.2 Should Company elect to pursue such Change Request, Company will, within five (5) days after receiving Provider's response and Resulting Changes, authorize Provider to implement the Change by returning to Provider's Project Manager a copy of the Change Request and Provider's response with the Resulting Changes executed by Company's Project Manager. Upon such authorization by Company, Provider will commence performance in accordance with such Change Request and Resulting Changes.



7.4 In addition to any Change, the parties may utilize the procedure set forth in these Sections 7.1 through 7.5 inclusive to amend the Project as a result of any unforeseen Project problem.



7.5 Each Change Request fully executed by both Project Managers shall be deemed incorporated into, and will constitute a formal amendment to, this Agreement.



8.0 FINAL ACCEPTANCE



8.1 After Project completion, Provider shall install the Software on the Hardware and demonstrate and test the Soft ware in accordance with the objective performance criteria to determine whether or not the Software or the applicable part thereof is free of material defects and operates in all respects in conformity with the Specifications.



8.2 If the Software is no t free of material defects or does not operate in all respects in conformance with the Specifications, then Company shall promptly notify Provider of any Nonconformity. Provider shall exercise due diligence to correct any Nonconformity, and shall again de m onstrate and test the Software until it is free of defects and operates in all material respects in conformance with the Specifications. This process shall continue until Company accepts the Project. Unless specific notice is delivered to Provider by Comp any by September 1, 1996, setting forth nonacceptance, then Company shall be deemed to have accepted the Project as of said date, subject to latent defects and the terms and conditions of this Agreement.



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9.0 COMPENSATION

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