EXHIBIT 10.1
FORM OF MASTER LICENSE AGREEMENT FOR ELECTRONIC BILLBOARDS
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This MASTER LICENSE AGREEMENT FOR ELECTRONIC BILLBOARDS (the
"Agreement") is entered into by and between Electronic Billboard Technology,
Inc. (hereinafter "EBT"), a Delaware corporation having its principal offices at
3006 Longhorn Boulevard, Suite 107, Austin, Texas 78758 and Cinemark USA, Inc.
(hereinafter "Cinemark"), a Texas corporation having its principal offices at
3900 Dallas Parkway, Suite 500, Plano, Texas 75093 (collectively, the "parties"
or "Parties").
BACKGROUND AND RECITALS:
This background is included to assist in interpreting this Agreement
and to understand the basis upon which certain terms and conditions have been
included in this Agreement. It is not intended, nor should it be construed, to
supersede or amend the specifically, recited terms and conditions of this
Agreement.
EBT produces billboards for electronically displaying advertising
messages ("Electronic Billboards"). Cinemark is interested in using these
Electronic Billboards at several of its theatre locations, with the possibility
of expanding the use of Electronic Billboards at other of its theatre locations.
The purpose of this Agreement is to establish the terms and conditions of the
initial sites and to serve as a master license for all theatre sites which may
utilize the Electronic Billboards. As hereinafter set forth, EBT and Cinemark
will add addenda to this Agreement to cover the additional theatre locations
mutually agreeable to both parties, if any, that will utilize the Electronic
Billboards.
AGREEMENT:
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1) EBT, at its sole cost and expense, does hereby agree to erect one (1)
Electronic Billboard, along with all of the corresponding electrical
installations, at each of the sites designated on Schedule "A" of this
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Agreement. Cinemark and EBT shall jointly determine the precise location on
each of these sites for the placement of the billboards, and such location
will be designated on Schedule "A-1" to be attached to this Agreement; if a
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joint decision cannot be reached for the placement of the billboard(s), EBT
shall have the right to decline to install the sign at that particular
site. The Electronic Billboards will be constructed according to the
specifications provided by Cinemark, to be attached hereto as Schedule "B".
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Cinemark does hereby agree to grant to EBT a license to use the space shown
on Schedule "A-1", and such space shall include the space reasonably
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required for EBT to erect, operate and maintain the Electronic Billboards,
on the terms and conditions hereafter set forth (herein, the "License").
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EBT agrees that this License shall not be filed or otherwise placed of
record with any county, municipality or otherwise. The License specifically
includes the right of EBT to sell advertising to third parties on the
Electronic Billboards. The third parties may include local, regional and
national advertisers and are subject to Cinemark's approval, which will not
be unreasonably withheld. Notwithstanding anything to the contrary in this
Agreement, the Electronic Billboards shall not contain any advertisements
for any beverages competing with beverages sold in Cinemark's theatres,
tobacco products, firearms or pornographic materials, guns, weapons or
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other similar products, celebrity names/motion picture titles, famous
quotes, controversial 900 numbers, psychics, alcohol, or religious icons,
nor any advertisements or other promotional material for a Competing
Service (hereinafter defined). For purposes of this Agreement, "Competing
Service" means (i) any internet site or channel, alternative media service
or telephone ticketing service if such internet site or channel,
alternative media service or telephone ticketing service has a principal
purpose of selling, marketing and distributing movie tickets and directly
competes with any website operated by Cinemark or any website or telephone
ticketing service on which Cinemark sells tickets, and (ii) any web site or
internet site or channel if such web site or internet site or channel is
predominately movie-related and has showtimes and sells, markets or
distributes movie tickets.
2) EBT, with the reasonable assistance of Cinemark, shall be responsible for
obtaining all necessary permits and licenses to erect, operate and maintain
each Electronic Billboard. If, for any reason, EBT is prevented by any
governmental authority from erecting and reasonably operating any of the
Electronic Billboards (including, without limitation, being prevented from
obtaining any off-premises permits for advertising), then this Agreement
shall terminate and become null and void, but only as to the site affected
by such restriction.
3) This Agreement shall run for a period of five (5) years from the Effective
Date hereof; provided, however, the date upon which rental payments due
hereunder shall commence, with respect to each Electronic Billboard, shall
be the earlier of the following: (i) the date the Electronic Billboard is
installed and operational or (ii) the date EBT starts collecting
Advertising Revenue (hereinafter defined) for the Electronic Billboard.
Cinemark and EBT shall have certain termination rights, as set forth in
this Section 3. Cinemark may terminate the License in whole or merely with
respect to any individual site hereunder, with or without cause, at any
time by giving EBT no less than thirty (30) days prior written notice of
its intent to terminate the License; in such event, Cinemark shall refund
to EBT the prorated portion of any rental payments paid in advance to
Cinemark which correspond to the period after the termination date for such
site(s). EBT may terminate the License in whole or merely with respect to
any individual site hereunder, with or without cause, at any time by giving
Cinemark no less than thirty (30) days prior written notice of its intent
to terminate the License; in such event, EBT shall not be entitled to the
refund of any rental payments paid in advance to Cinemark. Within sixty
(60) days of the expiration or earlier termination of this License, EBT
shall, at its cost and expense, remove each Electronic Billboard and
restore each location to the condition it was in prior to the installation
of the Electronic Billboard, normal wear and tear excepted; provided,
however, all power lines installed in connection with these billboards as
well as the base unit upon which the signs have been installed shall at all
times remain the property of Cinemark and shall not be removed or altered
during the term hereof or upon the termination or earlier expiration of
this License. If EBT fails to remove the Electronic Billboard(s) within
this sixty (60) day period, EBT shall be deemed to have conveyed ownership
of the Electronic Billboard(s) to Cinemark and agrees to execute any
instrument necessary to effectuate such transfer.
4) As consideration for the License, EBT shall pay to Cinemark Percentage
Rental for each Electronic Billboard equal to the following ("Percentage
Rental"):
a) Fifteen percent (15%) of the Advertising Revenue (defined below) from
the operation of each Electronic Billboard until EBT recovers one-half
of its direct, out-of-pocket costs of the Electronic Billboard; and
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b) Thereafter, twenty percent (20%) of the Advertising Revenue from
operation of each Electronic Billboard until EBT recovers all of its
direct, out-of-pocket costs of the Electronic Billboard; and
c) Thereafter, for the remainder of the term of this Agreement,
twenty-five percent (25%) of the Advertising Revenue received from
operation of the Electronic Billboard.
For each billboard installed pursuant hereto, EBT shall provide Cinemark
with a cost breakdown of all of EBT's direct, out-of-pocket costs that EBT
will seek to recover under the terms of this Agreement.
5) The aggregate collected gross cash proceeds generated from all displays on
the Electronic Billboards ("Gross Revenue") shall be the basis of the
calculation of Percentage Rental to be paid to Cinemark. EBT agrees that
should any advertiser offer barter terms (i.e. non-cash consideration such
as stock) in exchange for advertising on the Electronic Billboard, Cinemark
and EBT shall jointly discuss the barter offer with such advertiser. If EBT
and Cinemark elect to accept such barter offer, EBT and Cinemark shall
negotiate in good faith the proper allocation of the barter consideration
and such barter consideration shall not be considered Gross Revenue. If EBT
does not accept the barter arrangement and Cinemark elects to accept the
barter arrangement, Cinemark shall pay EBT the market value of the
advertising spot. The Cinemark payment shall be in the form of a credit to
EBT against amounts payable or to become payable by EBT to Cinemark under
Section 4 hereof. As used herein, the term "Advertising Revenue" shall mean
Gross Revenues reduced by the amount of all applicable sales taxes with
respect thereto. Percentage Rentals payable pursuant to Section 4 shall be
paid as set forth in Section 6 below and shall be accompanied by a written
statement for such period which sets forth the Gross Revenue, the
Advertising Revenue and the basis on which such Percentage Rental paid to
Cinemark was calculated. In addition to the Percentage Rental payable
hereunder, Cinemark shall also be entitled to use thirty (30) Premium
Advertising Spots (hereinafter defined) of thirty (30) seconds each, per
day, on each of the Electronic Billboards installed under this Agreement
for its own use and at no cost. "Premium Advertising Spots" shall mean
those advertising spots between the hours of 6:30a.m. and 9:00a.m. and/or
4:30p.m. and 7:00p.m., or such other times as may be designated by
Cinemark. Furthermore, at any time there is unsold advertising time
available on any of the Electronic Billboards installed under this
Agreement, Cinemark shall have the right to use that time for its own use
and at no cost, subject to time (or any part of it) being subsequently sold
by EBT, at which time Cinemark's use of such unsold advertising time shall
cease. At no time shall Cinemark's use of the advertising time made
available to Cinemark at no cost be used by Cinemark in a manner which
would be in competition with the sale of advertising space and time on
those same Electronic Billboards. It shall not be considered competition if
Cinemark uses its "no cost" advertising time to advertise "In-Theater
Promotions." In-Theater Promotions are hereby defined to mean advertising
promotions which do not run for more than a sixty (60) day period, the
purpose of which are to stimulate the sale of theater tickets or the sale
of concessions in the theater, only, and which do not involve the receipt
of any cash consideration by Cinemark for the advertisement.
6) EBT shall guarantee to Cinemark, throughout each year of this License, a
minimum annual rental ("Annual Minimum Rent"), per site, of $36,000.00,
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payable in advance as follows: $18,000.00 within five (5)
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days of the inception of the first six month period during each year, and
$18,000.00 within five (5) days of the inception of the second six month
period during each year (each of such $18,000.00 amounts being hereinafter
referred to as the "Semi-Annual Minimum Rent" and each of such twelve month
periods being hereinafter referred to as a "Contract Year"). At the end of
each of such six month periods, EBT shall calculate the Percentage Rental
attributable to said period. If the Percentage Rental attributable to the
prior six month period is equal to or less than $18,000.00, no additional
monies will be owing to Cinemark for said period. If the Percentage Rental
attributable to such prior six month period is greater than $18,000.00,
then EBT shall, within thirty (30) days of the conclusion of the prior six
month period, pay Cinemark additional monies for said period equivalent to
the difference between the amount of Percentage Rental and the Semi-Annual
Minimum Rent. Any rental payments due hereunder which are not paid within
ten (10) days of its due date shall bear interest in an amount equivalent
to the lesser of (a) 1.5% per month or (b) the highest lawful rate under
applicable law.
7) EBT, at its sole cost and expense, shall be responsible for the
installation, repair, maintenance and/or replacement of each Electronic
Billboard to include the cost of electricity to power each Billboard. In
order to determine the charge for electricity at each separate Billboard
site, EBT shall, at its sole cost and expense and in its own name, have
installed a separate meter to measure the amount of electrical usage of the
Billboard, at each Billboard location. The cost of the installation of the
electrical meter, including permitting and licensing fees and the cost of
all wiring to the meter, shall be included in the term "direct,
out-of-pocket costs" as that term pertains to EBT's recovery of its costs
as provided in paragraph 4) of this License. If Cinemark terminates this
License as to any site within twelve (12) months of the installation of a
Billboard at that site and EBT has not fully recovered (as provided in
paragraph 4)) the costs of the installation of the electrical meter for
that site, then Cinemark shall reimburse EBT the unrecovered costs for the
installation of that electrical meter. However, if EBT terminates this
License within the same period, EBT shall not be entitled to any
reimbursement of the costs of the installation of the electrical meter.
8) EBT agrees to indemnify, defend and hold harmless Cinemark from and against
any and all claims, demands, liability or expense (whether as a result of
personal injury, death, property damage or otherwise), including without
limitation court costs and reasonable attorney's fees arising out of (i)
breach of this Agreement by EBT, (ii) the erection, use or operation of the
Electronic Billboards, (iii) any willful misconduct or negligent act or
omission by EBT or its employees, agents or subcontractors or (iv) the
violation, infringement or dilution of any trademark, tradename service
mark or service name of any person or entity.
9) Cinemark agrees to indemnify, defend and hold harmless EBT from and against
any and all claims, demands, liability or expense (including as a result of
personal injury, death or property damage), including without limitation
court costs and reasonable attorney's fees arising out of (i) the breach of
this Agreement by Cinemark, (ii) the operation and maintenance of the
theatre site where each Electronic Billboard is located (save and except
the operation and maintenance of the site licensed to EBT), unless such
claim, demand, liability or expense is attributable to the intentional act
or negligent act or omission by EBT or its employees, agents or
subcontractors, or (iii) any willful misconduct or negligent act or
omission by Cinemark or its employees.
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10) EBT shall maintain all risk property casualty insurance on the Electronic
Billboards during the term of this License in an amount equal to 100% of
the replacement cost of each Electronic Billboard.
11) As set forth below, EBT shall maintain liability insurance during the term
of this License with an insurer approved by Cinemark and authorized to do
business in the states where the respective sites hereunder are located,
and such insurance shall include Cinemark as an additional insured:
a) Commercial general liability insurance in an amount not less than
$2,000,000.00 per occurrence for bodily injury or property damage or
personal injury, $2,000,000.00 in the aggregate; and,
b) All such policies shall contain endorsements whereby the carrier
agrees that its insurance is primary and not contributory with or in
excess of any coverage which Cinemark may carry.
c) No such insurance policy shall be canceled, endorsed, altered or
reissued to effect a change in coverage for any reason whatsoever
unless such insurer shall have first given Cinemark thirty (30) days
prior written notice thereof.
12) The parties will promptly execute and deliver to each other such further
documents and take such further action as shall be required to more
effectively carry out the intent and purpose of this Agreement and the
License.
13) All notices, demands, or consents required or permitted under the Agreement
shall be in writing and shall be delivered personally or sent by certified
or registered mail, return receipt requested, to the appropriate party to
the address set forth in the first paragraph of this Agreement or at such
other address as shall be given by either party to the other in writing.
14) This Agreement and the License shall be deemed to be made in the state of
Texas and in all respects shall be interpreted, construed, and governed by
and in accordance with the laws of the state of Texas.
15) The waiver by any party of any term or provision of this Agreement shall
not be deemed to constitute a continuing waiver thereof nor of any further
or additional rights such party may hold under this Agreement.
16) The parties hereto acknowledge that there are ongoing possibilities between
them relating to theatre sites operated by Cinemark, other than those
specifically referenced in Exhibit "A" hereto, which in the future may
utilize Electronic Billboards. Nothing contained herein shall be construed
to require Cinemark to utilize Electronic Billboards at any theatre now or
hereafter operated by Cinemark, except at those theatres identified on
Exhibit "A" hereto and under the express terms of this Agreement. In the
event that, during the term of this Agreement, any theatre sites operated
by Cinemark are equipped with Electronic Billboards, each of Cinemark and
EBT's rights and obligations with respect to those sites ("Additional
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Billboard Sites") shall be governed by this Agreement; accordingly, upon
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such occurrence the parties hereto shall execute addenda to this Agreement
(or some such similar instrument) to add the Additional Billboard Sites, if
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any, hereto. The parties hereto agree that, regardless of the actual
commencement date of this Agreement with respect to any Additional
Billboard Sites, the term for such site(s) for the purposes of this
Agreement shall expire five (5) years from the Effective Date hereof,
unless this License is earlier terminated in accordance with the terms
hereof.
17) EBT represents and warrants to Cinemark that the Electronic Billboard
advertising will not violate, infringe or dilute any trademark, trade name,
service mark or service name of any person or the right of privacy or
publicity of any person.
18) EBT shall keep full and proper books, records and documents relating to the
business transacted between the parties pursuant to this Agreement. Within
thirty (30) days after the end of each year Contract Year, EBT will supply
Cinemark with a certificate signed by EBT's Chief Financial Officer stating
that all sums payable to Cinemark in respect of such Contract Year were
calculated in accordance with the terms of this Agreement. Such certificate
shall be accompanied by a financial statement setting forth the calculation
of Advertising Revenue for such Contract Year, which shall include the
Gross Revenue received by EBT solely in respect of the advertising sold
pursuant hereto.
Where Cinemark so requests from time to time during the term of this
Agreement, but in no event more often than once in any 12-month period, and
within one year after the expiration or earlier termination of this
Agreement, EBT will permit independent auditors selected by Cinemark to
inspect, upon reasonable notice and during normal business hours, the
books, records and documents kept by EBT solely relating to Gross Revenue
and Advertising Revenue amounts (the "Advertising Audit") related to this
Agreement. The Advertising Audit may cover any Contract Year not
theretofore subject to Advertising Audit. If the Advertising Audit reveals
that the Advertising Revenue figures provided to Cinemark by EBT pursuant
to the terms of this Agreement in respect of such Contract Year were less
than the actual Advertising Revenue figures for such period, then EBT shall
immediately pay to Cinemark the amounts due by EBT to Cinemark in respect
of such period due to such Advertising Revenue underage, together with
interest on such amounts at the rate set forth in Section 6 above.
Additionally, if the Advertising Audit reveals that EBT underpaid Cinemark
by more than 3%, EBT shall reimburse Cinemark for the reasonable cost of
such Advertising Audit.
19) Cinemark hereby advises EBT that certain theatre sites operated by Cinemark
are operated pursuant to lease agreements with the owners of these sites.
For such sites, any agreement between Cinemark and EBT to allow the
placement thereon of Electronic Billboards shall be conditioned on
Cinemark's obtaining the approval of the respective landlord(s). Cinemark
agrees to notify EBT of the approval or denial by such landlord promptly
after the landlord has communicated its response to Cinemark.
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Entered into effective as of this _____ day of _______________, 2000
("Effective Date").
ELECTRONIC BILLBOARD TECHNOLOGY, INC.
By:______________________________________
Marc Eller,
Chief Executive Officer
CINEMARK USA, INC.
By:______________________________________
Walter Hebert,
Vice President - Purchasing
Cinemark Partners II, Ltd., being the owner in fee of that certain theatre
located at 11819 Webb Chapel Road, Dallas, Texas 75234 ("Webb Chapel Theatre"),
joins in the execution of this Agreement to effectuate the license granted
hereunder as to such theatre; accordingly, with respect to the license at the
Webb Chapel Theatre, all references herein to Cinemark shall mean Cinemark
Partners II, Ltd.
CINEMARK PARTNERS II, LTD.
By: Cinemark Partners I, Inc., its general
partner
By:_______________________________
Alan Stock,
President
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Schedule A
To
Master License Agreement for Electronic Billboards
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