Certain portions of this agreement have been omitted pursuant to a request for
confidential treatment and are replaced herein by ***. The omitted material has
been filed separately with the Securities and Exchange Commission.
FORMAL AGREEMENT
BETWEEN
XX. XXXXX ENTERPRISES, L.P.
AND
MCA INC.
TABLE OF CONTENTS
PAGE
FORMAL AGREEMENT...............................................................1
I. PROJECT DESCRIPTION ..................................................1
II. APPROVALS AND CONSULTATIONS...........................................2
III. GRANTS OF RIGHTS AND FINANCIAL TERMS..................................3
A. RIGHTS ACQUIRED ..................................................3
1. Theme Park Rights and Related Advertising
Rights .......................................................3
2. Merchandise Rights............................................5
3. Retained Rights...............................................5
B. FINANCIAL TERMS ..................................................6
IV. OTHER THEME PARKS ....................................................9
X. XXXXX OF RIGHTS ..................................................9
B. FINANCIAL TERMS ..................................................9
V. OVERALL MERCHANDISING RELATIONSHIP...................................10
VI. MISCELLANEOUS LEGAL .................................................10
TERMS AND CONDITIONS ..........................................................1
1. DEFINITIONS ..........................................................1
a. Xx. Xxxxx Elements................................................1
b. Attraction........................................................1
c. Theme Park........................................................2
d. MCA...............................................................2
2. WARRANTY OF TITLE.....................................................2
3. COPYRIGHT/TRADEMARK...................................................4
4. INDEMNITIES...........................................................7
5. TERM..................................................................8
6. CREATIVE MATERIALS....................................................8
i
7. CONFIDENTIALITY.......................................................8
8. NOTICES/PAYMENTS......................................................9
9. FURTHER INSTRUMENTS..................................................10
10. SUCCESSOR(S) IN INTEREST.............................................10
11. AUDIT AND REVIEW.....................................................10
12. BREACH/CURE..........................................................11
13. NO JOINT VENTURE.....................................................12
14. FORCE MAJEURE........................................................12
15. MISCELLANEOUS........................................................12
ii
FORMAL AGREEMENT
BETWEEN
XX. XXXXX ENTERPRISES, L.P.
AND
MCA INC.
Xx. Xxxxx Enterprises, L.P. ("Xx. Xxxxx Enterprises") and MCA INC.
("MCA") hereby agree as of April 21, 1994, to the following terms and conditions
relating to the grant from Xx. Xxxxx Enterprises of certain specified theme park
and related merchandising rights in the Xx. Xxxxx properties listed on Exhibit A
attached hereto (the "Properties") to MCA (as defined in Section 1(d) of the
Terms and Conditions) (such Terms and Conditions attached hereto as Exhibit B
and incorporated by this reference herein), all as set forth below ("Formal
Agreement"). This Formal Agreement is entered pursuant to the provisions of
Section VI, paragraph "L," of that certain agreement between Xx. Xxxxx
Enterprises and MCA effective April 21, 1994 (known as the "Short Form
Agreement") and supersedes said Short Form Agreement.
I. PROJECT DESCRIPTION
MCA is developing a complete destination resort on approximately 800
acres owned by it and a partner in Orlando, Florida, on which Universal Studios
Florida is located and attracted over seven million visitors in 1993, which will
include a second gated theme park, "The Second Gate".
"The Second Gate" will be similar in size, quality and originality to
Universal Studios Florida and is expected to generate even greater attendance,
stay time and visitor expenditures given the unique appeal of the park and the
synergies which will arise from a total destination resort concept.
Within "The Second Gate", as a major component, MCA proposes to include
a totally themed environment based on Xx. Xxxxx properties which may be called
"The World of Xx. Xxxxx". The World of Xx. Xxxxx will be substantially similar
to that described in the conceptual materials previously furnished to Xx. Xxxxx
Enterprises (subject to the technical and budgetary feasibility of developing
the concepts presented), and any significant deviations will be subject to Xx.
Xxxxx Enterprises' reasonable approval, provided such approval will be exercised
in a manner so as to permit the development of The World of Xx. Xxxxx in a
reasonable manner. As contemplated, and as previously presented to Xx. Xxxxx
Enterprises, The World of Xx. Xxxxx will include shows, rides and other
entertainment attractions as well as Xx. Xxxxx themed facilities and carts
selling food and merchandise.
No other proprietary characters, materials or trademarks may be
presented as attractions or elements of The World of Xx. Xxxxx without the
consent of Xx. Xxxxx Enterprises,
1
except in connection with temporary special events such as parades that pass
through the area and except as provided herein.
Within The World of Xx. Xxxxx the preponderance of logo merchandise
sold will be that which is licensed from Xx. Xxxxx Enterprises, and in no event
will a Xx. Xxxxx character or other Xx. Xxxxx material, including trademarks, be
combined on any item (other than the applicable theme park name and logo) of
merchandise with any non-Xx. Xxxxx character or material without the consent of
Xx. Xxxxx Enterprises.
Within The World of Xx. Xxxxx there will be no items of merchandise or
service sold which are inappropriate for or inconsistent with the Xx. Xxxxx
image such as packaged alcoholic products, cigarettes, "adult" entertainment or
products, and the like.
II. APPROVALS AND CONSULTATIONS
The Merchandise sold and Attractions within The World of Xx. Xxxxx will
be designed in consultation with representatives of Xx. Xxxxx Enterprises, and
all major Attractions (as well as all Merchandise developed for sale) will be
subject to approval of Xx. Xxxxx Enterprises which will not be withheld in an
unreasonable manner and will be exercised in a manner so as to permit the
development of The World of Xx. Xxxxx in a reasonable manner.
Because of the extensive time and effort (as well as cost) involved in
designing and constructing theme park attractions, including the multi-million
dollar attractions planned for The World of Xx. Xxxxx, approvals need to be
granted or denied in a timely manner. Accordingly, if Xx. Xxxxx Enterprises does
not respond within two weeks after presentation of a written request for
approval, such silence will be deemed an approval; provided, however, that if
the exigencies of production or preparing merchandising, advertising or
promotional materials require a shorter approval period, Xx. Xxxxx Enterprises
will, upon request, use best efforts to respond on an expedited basis. Rejection
from Xx. Xxxxx Enterprises will include specific reasons and, to the extent
feasible, suggested revisions that would make the submittal acceptable. Xx.
Xxxxx Enterprises agrees to keep MCA notified in writing as to which officer
and/or agent of Xx. Xxxxx Enterprises is designated to give its consent and/or
approval hereunder.
Once specific design/development stages (such as storyboards or
schematic drawings or artwork for theme park elements and drawing and
specifications for items of merchandise) are approved for elements of The World
of Xx. Xxxxx and Xx. Xxxxx Merchandise, such elements or merchandise items can
continue in development and be deemed approved unless MCA shall make significant
deviation in the same.
2
All theme park elements and merchandise will be of the comparable high
quality maintained by MCA throughout Universal Studios Florida.
Approval rights will be exercised consistent with the following
criteria:
1. The specific theme park use or merchandise must be of high quality
and consistent with the standards maintained by MCA throughout Universal Studios
Florida.
2. Xx. Xxxxx Elements must not be portrayed in a manner which is
demeaning, derogatory, or inconsistent with their character.
3. Xx. Xxxxx Elements must be portrayed in a manner that is not
inconsistent with their portrayal in the licensed properties in forms of use
previously approved by Xx. Xxxxx Enterprises or in the underlying books.
4. Xx. Xxxxx Elements must reflect artistic quality and preservation of
the integrity of the characters consistent with that of the Properties.
III. GRANT OF RIGHTS AND FINANCIAL TERMS
A. RIGHTS ACQUIRED
1. Theme Park Rights and Related Advertising Rights
Subject to the approvals as previously set forth, Xx. Xxxxx Enterprises
grants to MCA the worldwide exclusive license to use Xx. Xxxxx Elements in
Attractions at Theme Parks (all as defined in Section 1 of the Terms and
Conditions). Use of Xx. Xxxxx Properties is subject to the reservations or
exceptions set forth on Exhibit A.
a. The parties acknowledge that the book Oh, the Places You'll
Go! and the story "What Was I Scared Of?" from the book Sneetches and Other
Stories are subject to an existing agreement with TriStar Pictures, Inc. and may
not be used under this Formal Agreement for a period of seven (7) years from
July 13, 1994.
b. The parties acknowledge that "Daisy-Head Mayzie", an as-yet
unpublished book, is subject to a holdback of seven years from the date of first
broadcast or ten years from July 23, 1993, whichever is earlier, under an
existing contract, and may not be used until that contract permits. Xx. Xxxxx
Enterprises shall provide written notice to MCA as soon as such rights are clear
and MCA can use this property immediately thereafter.
3
c. None of the works referred to in the foregoing subparagraphs
a. and b. will be licensed to any other party for any of the exclusive rights
granted hereunder or in a manner inconsistent with the rights granted in this
Formal Agreement while this Formal Agreement remains in effect.
MCA's rights hereunder include the exclusive right to use Xx. Xxxxx
Elements in any Attraction in a Theme Park (all as defined in Section 1 of the
Terms and Conditions). The right to use the title "The World of Xx. Xxxxx" in
connection with a Theme Park created pursuant to this Formal Agreement is a
non-exclusive license only other than for Theme Parks, for which it is an
exclusive license, and the same or similar title may be used by other licensees
of Xx. Xxxxx Enterprises in noncompeting contexts.
Xx. Xxxxx Enterprises also grants to MCA the right to use Xx. Xxxxx
Elements in connection with the advertising, publicizing and marketing of "The
Second Gate" or other Theme Park based on Xx. Xxxxx Elements consistent with the
normal manner in which MCA markets its parks or attractions subject to any
limitations provided in this Formal Agreement ("Marketing Rights").
The Marketing Rights will include the right to have joint promotions
for "The Second Gate" involving The World of Xx. Xxxxx or the Attractions
thereof or corporate sponsorship of the same, it being understood that in such
joint promotions or corporate sponsorships, it will be clear that it is The
World of Xx. Xxxxx (or the Attractions thereof) at "The Second Gate" and not the
Xx. Xxxxx Elements independent of "The Second Gate" which are being included in
such materials, and that the Xx. Xxxxx Elements are not affiliated with or
endorsing any product or service other than "The Second Gate", but rather are
merely portrayed as elements offered at "The Second Gate". Xx. Xxxxx Enterprises
shall have a reasonable right of approval with respect to any such joint
promotions or corporate sponsorships, which right of approval shall be exercised
in accordance with the criteria and procedures described in Article II of this
Formal Agreement, and in this subparagraph. Neither Properties nor Xx. Xxxxx
Elements will be used to endorse products. Further, no such promotions or
corporate sponsorships will be with products reasonably considered inappropriate
for Xx. Xxxxx Elements or inconsistent with the Xx. Xxxxx public image, or
inconsistent with established Xx. Xxxxx Enterprises marketing relationships.
From time to time, Xx. Xxxxx Enterprises will furnish MCA with the various
marketing relationships it has, and MCA will not enter into any joint promotions
or corporate sponsorships with any other companies in any of the categories
specified by Xx. Xxxxx Enterprises.
4
2. Merchandise Rights
Xx. Xxxxx Enterprises grants to MCA a non-exclusive license to use the
Properties and Xx. Xxxxx Elements to make and have made merchandise (other than
publishing, home or interactive videos, and phonograph recordings) for sale
solely within (i) "The Second Gate", (ii) other Theme Parks owned or operated by
MCA pursuant to Article IV, and (iii) in stores owned by MCA or by the operator
of a Theme Park operated pursuant to Article IV where a wide collection of its
theme park merchandise is sold, provided such stores are located within 25 miles
of an MCA owned or operated Theme Park (stores owned and operated by MCA within
an airport may be beyond the 25-mile limit if in the ADI market of the city
where the Theme Park is located, provided there shall not be airport stores at
more than two airports for any one Theme Park). As a direct merchandise
licensee, MCA's rights will be non-exclusive in the sense that Xx. Xxxxx
Enterprises may license third parties (but not for products identified with a
Theme Park created pursuant to this Formal Agreement) to develop and sell items
in the same categories (e.g., clothing, mugs, caps, etc.).
Merchandise offered for sale by MCA will be manufactured to MCA's order
(subject to the aforesaid approval rights) or purchased from licensees of Xx.
Xxxxx Enterprises. The appropriate royalty specified below will accrue upon
receipt by MCA of the licensed merchandise, and will not be subject to reduction
for returns, defective merchandise (where MCA or its designee is the
manufacturer), or unsold goods.
If MCA purchases merchandise from parties which are licensed by Xx.
Xxxxx Enterprises, the MCA royalty payable hereunder will be the excess, if any,
between the royalty specified in this Formal Agreement and the royalty payable
to Xx. Xxxxx Enterprises by such licensee. MCA will receive credit (for purposes
of off-setting advances) only for any royalty payable by MCA under this Formal
Agreement.
Assuming comparability of price, quality, and ability to deliver the
quantity desired on the schedule specified, MCA will give preference in purchase
of Xx. Xxxxx themed merchandise to Esprit de Corp. or any other then current
licensee of Xx. Xxxxx Enterprises (if Esprit de Corp. is currently a licensee of
Xx. Xxxxx Enterprises).
3. Retained Rights
All rights in and to the Properties and associated rights are retained
by Xx. Xxxxx Enterprises, except for the specifically identified granted rights,
and Xx. Xxxxx Enterprises reserves the right to use, and to license others to
use, the reserved rights so long as not in conflict with the rights granted
under this Formal Agreement. MCA recognizes that Xx. Xxxxx Enterprises or its
predecessors in interest have previously
5
granted all of the rights and licenses to third parties, which are described in
Exhibit B.
B. FINANCIAL TERMS
1. Advance Payments
MCA will make an advance payment of $*** payable as follows:
a. $*** (receipt of which is acknowledged).
b. October 1, 1994 - $***
c. October 1, 1995 - $***
d. October 1, 1996 - $***
If MCA shall fail to make any of the above payments on a timely basis
and provided Xx. Xxxxx Enterprises is not in material default of this Formal
Agreement, MCA's license under this Formal Agreement shall terminate and neither
party shall have any further obligations under this Formal Agreement and this
Formal Agreement shall terminate. Any payments made as aforesaid shall be
non-refundable.
2. Merchandise Royalties and Merchandise Guarantees
Each year, beginning on the date described in Subparagraph (c) below,
MCA will pay to Xx. Xxxxx Enterprises an amount equal to the greater of the
Merchandise Royalty or Merchandise Guarantee, as such terms are hereinafter
defined.
As provided in subparagraph (d) hereinbelow, of the $*** advance
payment described in paragraph 1, $*** shall be a pre-payment (until such $***
is totally absorbed) of the annual Merchandise Guarantees and Merchandise
Royalty hereinafter described. Until such $*** has been totally absorbed, the
Merchandise Royalty and Merchandise Guaranty payable hereunder shall be $***
annually.
a. "Merchandise Royalty" shall mean the applicable percentage
royalty set forth below of the wholesale cost (or if manufactured by MCA or its
affiliates its cost of manufacturing) of all Xx. Xxxxx Merchandise offered for
sale by MCA pursuant to this Formal Agreement [excluding all consumable items
(even if the packaging of such items is themed around the Properties)], without
reduction for returns, defective merchandise (where MCA or its designee is the
manufacturer), unsold goods or any other item (the "Wholesale Cost"):
i. The Merchandise Royalty shall be *** percent of Wholesale
Cost to MCA of all Merchandise in ***.
6
ii. The Merchandise Royalty shall be *** percent of
Wholesale Cost to MCA of all Merchandise for ***.
The Merchandise Royalty shall accrue upon receipt by MCA of the
applicable Merchandise or other item, as provided in this section.
b. "Merchandise Guarantee" shall mean the minimum annual amount
payable (regardless of the actual Merchandise Royalty or Wholesale Costs in any
year) set forth below:
i. The Merchandise Guarantee shall be $*** ***.
ii. The Merchandise Guarantee shall be $*** ***.
iii. The Merchandise Guarantee shall be $*** ***.
iv. It is the intent of this Agreement that MCA shall be
able to offer a line of approved Xx. Xxxxx merchandise for sale at the Theme
Park. Xx. Xxxxx Enterprises will not exercise its approval rights so as to
frustrate the intent of this Agreement.
c. Payment of the Merchandise Royalty or Merchandise Guarantee,
as applicable, shall begin either when The World of Xx. Xxxxx or first Theme
Park is open to the public or on December 31, 2001, whichever shall occur first,
and succeeding annual payments shall be made on each anniversary date thereof
(the "Anniversary Date"). The payment due upon the opening of "The Second Gate"
or first Theme Park shall be the minimum Merchandise Guarantee described above.
Thereafter, each annual Merchandise Guarantee or Merchandise Royalty shall be
*** at "The Second Gate". Any appropriate *** shall be made within 30 days
7
following the end of the quarter in which the Anniversary Date occurs. Any ***
shall be treated as a credit toward the following year's payments. Failure to
make any Merchandise Royalty or Merchandise Guarantee payment when due
accompanied by a written notice of license termination by MCA or, subject to the
cure provision contained in Section 12 of the Terms and Conditions, failure to
make any Merchandise Royalty or Merchandise Guarantee payment when due without
written notice of license termination by MCA shall cause MCA's license under
this Formal Agreement to terminate (and MCA will discontinue operation of The
World of Xx. Xxxxx or any other Attractions containing Xx. Xxxxx Elements) and
neither party shall have any further obligations under this Formal Agreement and
this Formal Agreement shall terminate, provided, however, that MCA shall have
the right to sell off merchandise and accept returns as to merchandise
inventoried or stocked or tied into the Theme Park for a period of six-months.
d. Notwithstanding the foregoing, no actual payment of any earned
Merchandise Royalty or Merchandise Guarantee in excess of $*** in any given year
shall be made, until such time as the aggregate amount of all such Merchandise
Royalty and Merchandise Guarantees due and payable in excess of all such $***
yearly payments shall equal $***. In other words, until the $*** advance is
"earned out," each year MCA must pay to Xx. Xxxxx Enterprises $*** (which amount
shall in any event be non-refundable), and the difference between the $***
payment and the actual amount earned by Xx. Xxxxx Enterprises (which will be the
greater of the Merchandise Royalty or applicable Merchandise Guarantee) will be
applied to earn out the $*** amount. After the $*** amount is fully absorbed, in
any year in which the amount of Merchandise Guarantee is exceeded, the
appropriate royalties shall be paid on a quarterly basis, within 30 days after
the end of each quarter commencing with the first full quarter after the
Anniversary Date on which the $*** amount is fully absorbed.
3. If MCA agrees to pay (whether under an existing deal or a future
deal while this Formal Agreement is in effect) to any unrelated third party who
is licensing Theme Park rights (for other than a temporary, short term use), for
the right to use its proprietary properties in an MCA theme park, a form of
compensation based on a percentage of the retail sale by MCA of licensed
merchandise, or a higher royalty based on the wholesale cost to MCA of the
merchandise, or a percentage or fee based on gross revenues or gross receipts of
the theme park, or any substantial portion thereof (including admission charges
and/or food sales, but excluding (a) agreements where there is a bona fide and
substantial continuing element of personal services, (b) restaurants, and (c)
bona fide franchise arrangements, such as McDonald's or Popeye's Chicken), MCA
shall promptly inform Xx. Xxxxx Enterprises of such arrangement. Xx. Xxxxx
Enterprises can elect, within 60 days after receipt of such notice, to take the
material financial terms of such other arrangement and make
8
such form of compensation applicable to this Formal Agreement in which case MCA
will receive credit for the sums theretofore paid to Xx. Xxxxx Enterprises. This
paragraph shall not apply to (1) an agreement with a company taking a
significant equity interest in the theme park involved, or (2) an agreement
where the elements granted (i.e., the group of characters) consist (a) of a
major library or the collected works of well known authors or artists (allowing
for isolated characters that may not be available, or for that portion of a
collection of characters that are not consistent with the theme of the theme
park in question) or (b) of a large number of properties assembled by a major
company owning properties appropriate for the theme park in question.
4. MCA may purchase, in the sole discretion of MCA and as appropriate
for its needs, Xx. Xxxxx merchandise produced by Xx. Xxxxx Enterprises or a
licensee of Xx. Xxxxx Enterprises. Xx. Xxxxx Enterprises will use its best
efforts to encourage its current and future licensees to offer Xx. Xxxxx
merchandise for sale to MCA on terms no less favorable than those offered to any
other purchaser of Xx. Xxxxx merchandise, although MCA acknowledges that Xx.
Xxxxx Enterprises cannot be obligated to provide such terms.
IV. OTHER THEME PARKS
X. XXXXX OF RIGHTS
MCA shall have the exclusive world wide right to develop Attractions
based on Xx. Xxxxx Elements in other Theme Parks it owns or operates (either
alone or in conjunction with other parties), except that MCA will not develop or
operate more than three Theme Parks based on the Xx. Xxxxx Elements in the
United States.
Additional Theme Parks shall be subject to all the terms and conditions
of this Formal Agreement provided that each Theme Park's development and related
merchandising shall be treated separately with respect to approval rights,
insurance, accounting, reports and royalties and other financial matters, and
there shall be no cross-collateralization. The parties shall enter into a
separate agreement substantially identical (except for the description of the
Theme Park) with this Formal Agreement for each additional Theme Park. All items
which have previously been approved shall be deemed approved for any new Theme
Parks.
B. FINANCIAL TERMS
All annual payments and guarantees described in Paragraph III.B.2 of
this Formal Agreement shall be required for each such additional Theme Park
utilizing Xx. Xxxxx Elements, and in addition an advance payment of $*** shall
be paid at the rate of $*** upon the first public announcement that such Theme
Park will contain Xx. Xxxxx Elements (or the commencement of construction of Xx.
Xxxxx
9
Attractions, whichever shall occur first). Thereafter, there will be additional
payments of $*** each upon the following two anniversary dates of such initial
payment. In no event will the entire $*** be paid later than the opening of the
Attractions based on Xx. Xxxxx Elements to the public. *** dollars of the
aforesaid $*** advance would be entirely "absorbed," and the other financial
terms described in Paragraph III.B.2 shall apply, in the same manner described
previously. Once the above payments are commenced with regard to an additional
Theme Park, if the subsequent payments (i.e., either of the $*** payments) are
not made, MCA's rights to that location lapse (but not its exclusivity) without
further obligation by either party pursuant to such location's agreement, and
payments must be commenced "de novo" - i.e., the initial $*** payment must be
made again if MCA thereafter wishes to utilize Xx. Xxxxx Elements at that
location.
V. OVERALL MERCHANDISING RELATIONSHIP
MCA would like to explore with Xx. Xxxxx Enterprises the possibility of
forming a joint venture to develop and exploit merchandising opportunities in
the Properties. Such joint venture, being the sole entity authorized to
merchandise Xx. Xxxxx (other than the Theme Park Merchandising Rights described
above) would be empowered, at its own expense, to police and prosecute all
non-licensed (i.e., "bootleg") Xx. Xxxxx merchandise.
While Xx. Xxxxx Enterprises presently supervises and grants its own
merchandise licenses, if it decides to grant broad multiple category merchandise
licensing rights to an unrelated third party, MCA will have a first right to
negotiate to exploit such merchandising rights. Additionally, from time to time,
MCA may make presentations to Xx. Xxxxx Enterprises with a goal of entering into
a licensing relationship for specific categories of merchandise. The foregoing
shall in no way be construed to limit Xx. Xxxxx Enterprises' rights to continue
to grant licenses to such third parties and for such categories of merchandise
as it shall select in its discretion subject to the licenses granted to MCA
hereunder.
VI. MISCELLANEOUS LEGAL
A. This Formal Agreement is subject to the Terms and Conditions which are
attached to this Formal Agreement as Exhibit B and incorporated by this
reference.
B. Xx. Xxxxx Enterprises will execute the undated Short Form Copyright
License attached to this Formal Agreement as Exhibit C. Immediately upon
execution of this Formal Agreement, MCA will record Exhibit C with the United
States Copyright Office
or such other offices or places in the world as may be reasonably necessary to
protect MCA's rights.
10
mca inc. XX. XXXXX ENTERPRISES, L.P.,
By: Xxxxxx-Xxxxx Enterprises,
By: /s/ Xxx Xxxxxxx Inc. General Partner
---------------------------------
Xxx Xxxxxxx, Chairman
MCA Recreation Services
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Xxxxxx X. Xxxxxx, President
By: /s/ Xxxx XxXxxx
----------------------------------
Xxxx XxXxxx, Vice President
11
FORMAL AGREEMENT
BETWEEN
XX. XXXXX ENTERPRISES, L.P.
AND
MCA INC.
TERMS AND CONDITIONS
These Terms and Conditions are a part of the Formal Agreement between
MCA INC. ("MCA") and Xx. Xxxxx Enterprises, L.P. ("Xx. Xxxxx Enterprises") dated
as of April 21, 1994 ("Formal Agreement") and by this reference made a part of
the Formal Agreement. As used in these Terms and Conditions and in all Exhibits
which are attached to these Terms and Conditions, capitalized terms have the
same meaning as the terms defined in the Formal Agreement or which are otherwise
defined in the Terms and Conditions or Exhibits, as the case may be.
1. DEFINITIONS
a. Xx. Xxxxx Elements. As used in this Formal Agreement, "Xx. Xxxxx
Elements" means, without limitation (but solely and exclusively in connection
with the rights granted pursuant to Paragraph III(A) of the Formal Agreement),
any of the characters and/or "locations" contained in the Properties (as defined
in the Formal Agreement), the name "Xx. Xxxxx," art work, plots, dialogue,
common phrases, trademarks and/or logos, likenesses, visual representations,
digitized likenesses, symbols, designs, personalities, mannerisms, themes,
plans, elements contained in the Properties and, to the extent owned by Xx.
Xxxxx Enterprises and not subject to conflicting grants or agreements, music,
drawings, cartoon and film footage and sequences, stills, live action footage,
voices, storyboards and animations contained in material associated with the
Properties.
b. Attraction. As used in this Formal Agreement, "Attraction" means,
without limitation (but solely and exclusively in connection with the rights
granted pursuant to Paragraph III(A) of the Formal Agreement), live
performances, shows, exhibits, attractions, animated and non-animated films
(using both then existing films owned or licensed by Xx. Xxxxx Enterprises and
films that may be produced for MCA's purposes; provided, however, that use of
existing films owned or licensed by Xx. Xxxxx Enterprises is subject to Xx.
Xxxxx Enterprises' prior written approval and subject to availability of rights
under existing agreements relating to such films), visual displays,
demonstrations, set designs, musical shows, live or taped shows or films, all
configurations of digital storage and delivery systems and/or technology now
known or hereafter devised, including without limitation, all computer-assisted
media rights (including without limitation, CD-ROM, CD-I, 3D0 and all similar
hard or floppy disc systems, interactive cable limited to exhibition and use
within Theme Parks owned or operated by MCA pursuant to this Formal Agreement
and the marketing thereof (as provided in Paragraph III(A) of the Formal
Agreement) and all other interactive media, systems, devices or methods now
known or hereafter devised), virtual reality devices or simulators, backgrounds,
costumes, amusement park rides, ride/films, funhouses, strollers, restaurants,
food vending facilities, food or merchandise carts, game/arcade areas,
decorations, activities, shops, and as otherwise provided in this Formal
Agreement and, subject to Paragraph II of the Formal Agreement, in any other
manner in which characters or elements are used (or are going to be used) by any
means of demonstration, exhibition or technology whether now known or hereafter
invented (provided such means shall be consistent with the grant of rights
contained in Paragraph III(A) of the Formal Agreement) by MCA in Theme Parks.
c. Theme Park. As used in this Formal Agreement, "Theme Park" means any
theme park, studio tour, or similar tourist attraction (whether now known or
hereafter invented) (such as, by way of example only, Universal Studios Florida,
Universal Studios Hollywood and "The Second Gate") or any separately identified
area or component thereof, or other group location-based entertainment areas
("GLBEA") which shall contain without limitation a combination of Attractions
(such as, by way of example, visual displays, attractions, amusement park rides,
funhouses, game/arcade areas (other than coin-operated arcade games and CD-ROMs
for home use), ride films and virtual reality devices or simulators), provided
that MCA shall not open any GLBEA containing the Xx. Xxxxx Elements separate and
apart from "large scale" centers such as Universal Studios Florida, Universal
Studios Hollywood and "The Second Gate".
d. MCA. As used in this Formal Agreement, "MCA" means any corporation
related to or affiliated with MCA INC., or any corporation, partnership or other
venture in which MCA, or any corporation or partnership related to or affiliated
with MCA, has an ownership or management interest. The parent company, MCA INC.,
which is signatory to this Formal Agreement shall remain primarily responsible
for all payments and other obligations called for in this Formal Agreement, and
MCA INC. may not, without prior written approval of Xx. Xxxxx Enterprises,
assign or sublicense any rights hereunder to any entity that does not qualify as
one of the entities described above, except as provided in paragraph 10 of these
Terms and Conditions.
2. WARRANTY OF TITLE
Xx. Xxxxx Enterprises represents and warrants that Xx. Xxxxx
Enterprises has the right to enter into and to perform all of Xx. Xxxxx
Enterprises' obligations under this Formal Agreement, and the execution,
performance and delivery by Xx. Xxxxx Enterprises of this Formal Agreement has
been duly authorized by all necessary corporate action on Xx. Xxxxx Enterprises'
part; this Formal Agreement constitutes Xx. Xxxxx Enterprises' legal, valid and
binding obligation enforceable in accordance with its terms; Xx. Xxxxx
Enterprises is the sole and
2
exclusive owner in the United States, Japan, France and the United Kingdom
during the term of this Formal Agreement of all the rights granted pursuant to
this Formal Agreement (subject to the expiration of the applicable terms of
copyrights (which term includes the renewal period in the Properties subject to
renewal) in the Properties and expiration of trademark rights, if such trademark
rights are susceptible to expiration), including, without limitation, the Xx.
Xxxxx Elements; Xx. Xxxxx Enterprises has made no grant of rights inconsistent
with the rights granted to MCA in this Formal Agreement; there are no
attachments, liens, encumbrances, or other legal disabilities which exist that
would impair MCA's ability to exercise MCA's rights under this Formal Agreement;
there are no claims or, to the best of Xx. Xxxxx Enterprises' knowledge using
due diligence, threatened claims, against Xx. Xxxxx Enterprises, MCA or any
third party relating to the use by MCA, Xx. Xxxxx Enterprises or any other party
of the Xx. Xxxxx Elements or any of the rights granted to MCA under this Formal
Agreement; the underlying materials from which the Xx. Xxxxx Elements are
derived, including without limitation the Properties, consist of copyrighted and
in some cases trademarked materials, and all such copyrights and trademarks are
owned solely by or licensed to Xx. Xxxxx Enterprises on an exclusive basis; with
respect to the United States, Japan, France and the United Kingdom, all
copyrights, trademarks and other proprietary rights subject to registration in
respect of the Xx. Xxxxx Elements are valid and subsisting without any
attachment, lien or encumbrance and there are no other proprietary rights,
whether granted by Xx. Xxxxx Enterprises or otherwise, that would be infringed
by the exercise by MCA the rights granted under this Formal Agreement; Xx. Xxxxx
Enterprises is the owner in the United States of America, France, Japan and the
United Kingdom, without any attachment, lien or encumbrance, of all copyrights
and trademarks regarding the Xx. Xxxxx Elements, and all such copyrights and
trademarks are valid and subsisting; Xx. Xxxxx Enterprises will cause the
appropriate party to timely renew any copyright subject to renewal in connection
with any and all of the Properties; Xx. Xxxxx Enterprises has not made any
grants inconsistent with the grant of rights to MCA under this Formal Agreement;
the Properties do not contain any libelous or obscene matter, do not violate the
right of privacy or any other right of any party or person, and are not in the
public domain (except as reflected on Exhibit A hereof).
MCA represents and warrants that MCA has the right to enter into and to
perform all of MCA's obligations under this Formal Agreement; this Formal
Agreement constitutes MCA's legal, valid and binding obligation enforceable in
accordance with its terms; and all Theme Parks, stores, outlets, goods and
services sold or operated by MCA in connection with its performance hereunder
shall be of high quality consistent with other MCA theme parks, stores, outlets,
goods and services sold or operated by MCA and suitable for their intended
purpose.
3
3. COPYRIGHT/TRADEMARK
MCA will take appropriate action as reasonably directed by Xx. Xxxxx
Enterprises to protect all copyrights and trademarks (including the use of
appropriate notices, as directed by Xx. Xxxxx Enterprises) in connection with
the uses granted hereunder, including in-park uses, merchandise, advertising and
packaging.
Xx. Xxxxx Enterprises shall own all right, title and interest,
including all copyrights and copyright renewals and extensions, and causes of
action of any kind, with respect to any portion or component of any theme park
element, retail element, goods or other item created by or for MCA if and to the
extent that it uses a portion of or incorporates the Properties or Xx. Xxxxx
Elements, including all characters, text, and images contained therein, whether
such portion or component is a "derivative work" or "new work" under the United
States or other applicable copyright laws (the "Work Product"), and such Work
Product will be licensed to MCA pursuant to the terms of this Formal Agreement.
MCA hereby sells, assigns, and transfers to Xx. Xxxxx Enterprises its entire
worldwide right, title and interest in and to all Work Product and shall obtain
and provide to Xx. Xxxxx Enterprises appropriate written work for hire
agreements or assignments, as appropriate, executed by any person or party who
has made any contribution to the creation of the Work Product, such that
ownership in such Work Product is in the name of Xx. Xxxxx Enterprises, free of
any claims, interests or rights of any other parties. MCA agrees not to permit
any persons to retain or reserve by oral or written agreement any rights as
"authors" of such Work Product.
Subject to the terms and conditions of this Formal Agreement, during
the term of this Formal Agreement and following the termination thereof, Xx.
Xxxxx Enterprises agrees that it shall not use, copy or exploit such Work
Product, provided that the foregoing will not be construed to prevent Xx. Xxxxx
Enterprises from using or licensing any of the Properties or Xx. Xxxxx Elements,
or any portion of the Properties or Xx. Xxxxx Elements, including all
characters, text and images, for the creation of new (defined to exclude
nonmaterial changes to the Work Product) or independently created works,
derivative works, compilations, etc. of any kind, even if such independently
created works are substantially similar to the Work Product. Notwithstanding the
foregoing, such uses and/or licenses shall not violate MCA's exclusive license
for Theme Park use granted pursuant to Paragraph III(A)(1) of the Formal
Agreement. It is understood that any physical and tangible manifestations of
Work Product, separate and apart from the copyright and other intellectual
property rights therein, shall be owned by MCA, provided that MCA shall have no
right to exploit same following the termination of the Formal Agreement, subject
to MCA's right to sell off Merchandise and accept returns as to Merchandise
inventoried or stocked or tied into the Theme Park for a period of six-months.
4
MCA shall have and retain all exclusive rights in those portions or
components of any theme park element, retail element, goods or items comprising
or incorporated into the Work Product upon deletion therefrom of all references
to Xx. Xxxxx Elements and the Properties, including any characters, text and
images contained in Xx. Xxxxx Elements and the Properties, trademarks, service
marks and the Work Product. MCA shall have all right, title and interest in and
to such materials and all proprietary rights therein, including, without
limitation, all copyrights and other intellectual property rights, all contract
and licensing rights, and all claims and causes of action of any kind with
respect to any of the foregoing, whether now known or hereafter to become known.
MCA can exploit or otherwise dispose of its retained rights in MCA's sole
discretion.
MCA shall make reasonable efforts to register the copyright in each
such theme park element, retail element, goods or other item showing copyright
ownership as a compilation in its name, showing copyright ownership consistent
with the foregoing paragraphs, in compliance with the Copyright Laws of the
United States (as amended by the Berne Convention Implementation Act of 1988)
and the Universal Copyright Convention, and shall provide such evidence of such
registration as is reasonably satisfactory to Xx. Xxxxx Enterprises.
Notwithstanding the foregoing, Xx. Xxxxx Enterprises may elect, upon written
notice to MCA, to obtain such copyright registrations and other protection as to
the Work Product as it shall deem appropriate.
Xx. Xxxxx Enterprises recognizes that copyrights in the Properties are
subject to renewal, and that such renewal rights may vest in persons not parties
to this Formal Agreement. Xx. Xxxxx Enterprises represents and warrants that
possible statutory heirs of the renewal rights in connection with the Properties
have signed the Heir's Agreement dated as of April 21, 1994 (attached hereto as
Exhibit "D" and incorporated herein by this reference); and Xx. Xxxxx
Enterprises will immediately notify MCA in writing of any new statutory heirs
and use best efforts to cause such heir(s) (and/or his or her legal guardian) to
sign the Heir's Agreement.
All trade names, trademarks, service marks, commercial symbols and/or
logos used by MCA hereunder which use or incorporate any element of the
Properties or Xx. Xxxxx Elements ("Marks"), including in connection with theme
parks, retail stores, merchandise and services, shall be the sole and exclusive
property of Xx. Xxxxx Enterprises and such Marks are licensed to MCA pursuant to
the terms of this Formal Agreement. Subject to the terms and conditions of this
Formal Agreement, during the term of this Formal Agreement and following the
termination thereof, Xx. Xxxxx Enterprises will not use any new Marks which were
developed by MCA hereunder, provided that the foregoing will not be construed to
prevent Xx. Xxxxx Enterprises from using or licensing the Properties, including
all Xx. Xxxxx Elements, characters, text and any images in connection with any
new
5
(defined to exclude nonmaterial changes to the Marks) or independently created
trade names, trademarks, service marks, commercial symbols and/or logos to be
used in connection with any goods or services. Notwithstanding the foregoing,
such uses and/or licenses shall not violate MCA's exclusive license for Theme
Park use granted pursuant to Paragraph III(A)(1) of the Formal Agreement. It is
understood that any physical and tangible manifestations of the Marks, separate
and apart from the intellectual property rights therein, shall be owned by MCA,
provided that MCA shall have no right to exploit the same following the
termination of the Formal Agreement, subject to MCA's right to sell off
merchandise and accept returns as to merchandise inventoried or stocked or tied
into the Theme Park for a period of six-months.
MCA shall have and retain the exclusive rights in those portions or
components of the Marks upon deletion therefrom of all references to the
Properties, including any characters, text and images contained in the
Properties, the Xx. Xxxxx Elements and Work Product. MCA shall have all right,
title and interest in and to such materials and all proprietary rights therein,
including, without limitation, all trademark, service xxxx and other
intellectual property rights, all contract and licensing rights, and all claims
and causes of action of any kind with respect to any of the foregoing, whether
now known or hereafter to become known. MCA shall have the right to exploit or
otherwise dispose of its retained rights in MCA's sole discretion.
Each party agrees to take such actions, and to execute, acknowledge and
deliver to the other party such assignments, documents, instruments and
agreements as the other party shall reasonably request to effect or evidence
each party's ownership rights described herein.
Xx. Xxxxx Enterprises shall make reasonable efforts to file in the
United States, Japan, France and the United Kingdom such trademark or design
applications relating to the use or proposed use by MCA of the Marks in such
classes as Xx. Xxxxx Enterprises shall deem appropriate. MCA shall keep Xx.
Xxxxx Enterprises informed as to its proposed uses of any Marks, including the
jurisdictions and the goods and/or services in connection with which, it
proposes to use the Marks and when it proposes to begin using any Xxxx in any
jurisdiction or any goods or services. Xx. Xxxxx Enterprises shall consider such
information in planning and implementing its worldwide trademark registration
and enforcement strategy.
Commencing upon entry of this Formal Agreement, MCA will cooperate with
Xx. Xxxxx Enterprises to develop a trademark registration program, identifying a
reasonable number of Marks which should be registered in a reasonable number of
countries, for a reasonable number of international classes (with particular
reference to the United States, Japan, France and the United
6
Kingdom) to enable the parties to protect their rights which are the subject of
this Formal Agreement.
MCA shall keep appropriate records (including copies of pertinent
invoices and correspondence) and evidence of use relating to the dates when each
of the Marks is first used hereunder in each country, and the dates of first use
with respect to each Xxxx in connection with each separate good or service. If
so requested to do so by Xx. Xxxxx Enterprises, MCA agrees to supply Xx. Xxxxx
Enterprises with samples of such usages of the Marks and other information which
will enable Xx. Xxxxx Enterprises to complete and obtain trademark, service xxxx
or design applications or registrations, or for enforcement purposes. MCA also
agrees to reasonably cooperate with Xx. Xxxxx Enterprises in connection with
providing information for, and executing and delivering such documents as are
required in connection with complying with any registered user requirements of
any country.
Each party will promptly notify the other of any infringements or
violations of the rights licensed to MCA hereunder which come to their
attention. The parties agree to consult with each other as to how to respond to
each such infringement or violation. In the event the parties jointly conclude
that legal or other action should be taken with respect to such infringement or
violation, the parties shall promptly and diligently prosecute such action and
shall share equally in all costs and expenses and all recoveries and awards,
with respect thereto. If either party (i) does not in good faith consult with
the other with respect to responding to any infringement or violation in a
prompt and timely manner, or (ii) advises the other party that it does not
intend to participate in any action, then the other party shall be free to
respond to such infringement or violation or proceed with such action in any
manner which it deems appropriate, at its own expense, and shall receive all
recoveries and awards therefrom. Notwithstanding the foregoing, MCA shall have
no right to settle or otherwise dispose of any infringement or violation in any
manner which affects, relates to or involves Xx. Xxxxx Enterprises' Properties,
rights, copyrights or Marks licensed under this Formal Agreement, without Xx.
Xxxxx Enterprises' prior written consent, and Xx. Xxxxx Enterprises shall have
no right to settle or otherwise dispose of any infringement or violation in any
manner which affects, relates to or involves the properties, rights, copyrights
or trademarks of MCA, without MCA's prior written consent.
4. INDEMNITIES
MCA agrees to defend, indemnify and hold harmless Xx. Xxxxx Enterprises
against any claims (except to the extent they are related to breaches in Xx.
Xxxxx Enterprises' warranties) (i) arising out of MCA's exploitation of the
rights granted hereunder, and operation of the theme parks, stores and other
outlets, including without limitation, tort liability to
7
Xx. Xxxxx Enterprises, (ii) arising from MCA's breach of its representations,
warranties or covenants contained herein, and any infringement proceedings that
may be brought resulting from the use of non-Xx. Xxxxx elements by MCA, and
(iii) resulting from the use of the Xx. Xxxxx Properties. Xx. Xxxxx Enterprises
agrees to defend, indemnify and hold harmless MCA against any claims arising
from Xx. Xxxxx Enterprises' breach of its representations, warranties or
covenants contained herein, including any copyright or trademark infringement
proceedings that may be brought resulting from the use of the Xx. Xxxxx Elements
by MCA, subject to the limitations in Paragraph 2 of these Terms and Conditions.
Any indemnification obligation hereunder shall apply to the party specified, its
respective officers, directors, shareholders, employees, partners, agents,
attorneys, successors, assigns, parents, subsidiaries and affiliated companies,
and shall cover any claims, costs, lawsuits, liabilities or losses (including
reasonable attorneys' fees and all related costs). MCA agrees that it or an
appropriate theme park operating entity will provide Xx. Xxxxx Enterprises with
a certificate of insurance evidencing General Liability coverage of a minimum of
$10 million per occurrence, and naming Xx. Xxxxx Enterprises as an additional
insured.
5. TERM
Once a theme park containing Xx. Xxxxx Elements is open, the term of
this Formal Agreement will be for so long as MCA is operating such theme park in
a manner consistent with the descriptions in Sections 1 and 2 of the Formal
Agreement, it being understood that the copyrights in the Properties may expire
during such period. The copyright provisions, warranties, representations and
indemnities contained in Sections 2, 3 and 4, above, shall survive the
termination of the Formal Agreement.
6. CREATIVE MATERIALS
Xx. Xxxxx Enterprises will cooperate in making available to MCA to the
extent same is available, information, artwork, archive material, key personnel
and other materials reasonably requested by MCA in order that MCA can creatively
develop The World of Xx. Xxxxx and the Xx. Xxxxx Attractions and exploit its
rights hereunder. MCA will reimburse Xx. Xxxxx Enterprises for its reasonable
costs in this regard.
7. CONFIDENTIALITY
Both parties agree that any public announcement concerning the
relationship between MCA and Xx. Xxxxx Enterprises will be at a time, place and
manner as is mutually determined by the parties and that neither party will
disclose the material provisions of this Formal Agreement, unless required by
court order. Xx. Xxxxx Enterprises will keep confidential any information that
is disclosed to Xx. Xxxxx Enterprises regarding the design and content, budget,
techniques, and time tables for
8
The World of Xx. Xxxxx and/or "The Second Gate" unless and until and only to the
extent that this information is made public by MCA, or required to be disclosed
by law. Any information provided by Xx. Xxxxx Enterprises to MCA which is
identified as confidential will be kept confidential by MCA to same extent.
Both parties agree that under any circumstances they will keep
confidential the existence of this Formal Agreement and any of its elements.
8. NOTICES/PAYMENTS
Any notices, approvals, payments or other communications required or
permitted to be given or delivered hereunder shall, unless otherwise permitted,
be in writing and shall be delivered personally, transmitted by telex,
telecopier or telegraph (if other than a payment), or, except during periods of
postal disruption, sent by registered mail, return receipt requested, postage
prepaid, to the parties at their respective addresses appearing herein, or at
such other addresses as either party may from time to time designate to the
other in writing. Any notice, approval or communication so given shall be deemed
to have been received on the date on which it is delivered, on the day
transmitted if by telex, telecopier or telegraph, or, if mailed, on the second
business day next following the mailing thereof, except that any payment shall
be deemed made when received. Any such notice shall be sent to the parties at
the following addresses:
To: XX. XXXXX ENTERPRISES, L.P.
0000 Xxxxxxx Xxxxx
Xx Xxxxx, Xxxxxxxxxx 00000
Copy To: XXXX XXXX XXXX & FREIDENRICH
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx XxXxxx
Copy To: INTERNATIONAL CREATIVE MANAGEMENT, INC.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx
To: MCA INC.
000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Copy To: MCA INC.
000 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
9
Copy to: XXXXXXXXX, XXXXX & XXXXXX
0000 Xxxxxxxx Xxxxxxxxx, 0xx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx, Esq.
A11 payments hereunder will be made to International Creative
Management, Inc, ("ICM") as agents for Xx. Xxxxx Enterprises, L.P., 00 Xxxx 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, attention: Xxxxxxx Xxxxxxxx.
9. FURTHER INSTRUMENTS
Xx. Xxxxx Enterprises will execute, acknowledge and deliver to MCA or
cause to be executed, acknowledged and delivered to MCA, in form approved
reasonably by MCA, any and all further assignments or instruments which MCA may
deem necessary, expedient or proper to carry out and effectuate the purposes and
intent of this Formal Agreement. If Xx. Xxxxx Enterprises fails to execute and
deliver to MCA such further assignments or instruments within fifteen business
days after MCA's request therefor, then to the extent that Xx. Xxxxx Enterprises
is legally entitled to execute, acknowledge and deliver such assignments or
other instruments, Xx. Xxxxx Enterprises appoints MCA as Xx. Xxxxx Enterprises'
irrevocable attorney in fact, with the right, but not the obligation, to do any
and all acts and things necessary to execute, acknowledge and deliver any such
further assignments and other instruments, in the name of and on behalf of MCA,
which appointment is deemed to be a power coupled with an interest and
irrevocable.
10. SUCCESSOR(S) IN INTEREST
The rights granted pursuant to the Formal Agreement and/or any other
location's agreement pursuant to Article IV of the Formal Agreement may be
assigned to any successor owner of a Theme Park containing the Xx. Xxxxx
Elements and shall inure to the benefit of any such successor owner of such
Theme Park; provided, however, that no such assignment shall relieve MCA, INC.
of its obligations under the Formal Agreement unless such assignment is to a
party or guarantor that Xx. Xxxxx Enterprises reasonably approves as being
financially responsible and able to assume the obligations in connection with
such Theme Park. Successor parties or guarantors may make subsequent assignments
to new parties or guarantors, subject to the foregoing procedure.
11. AUDIT AND REVIEW
During the term of this Formal Agreement, MCA shall keep full and
accurate books of account and copies of all documents and other materials
related to this Formal Agreement (the "Records") at MCA's principal office in
the United States, for a period of not less than four years after each was
generated or prepared in the ordinary course of business. Further, MCA shall
provide to Xx. Xxxxx Enterprises, at the same time it makes
10
payment of any Merchandise Royalty or Merchandise Guarantee, a full and complete
statement showing in reasonable detail the basis on which such Merchandise
Royalties were calculated, and providing such other information as Xx. Xxxxx
Enterprises shall reasonably request.
Xx. Xxxxx Enterprises shall have reasonable audit and review rights to
verify that proper Merchandising Royalties are paid to Xx. Xxxxx Enterprises in
connection with this Formal Agreement. MCA will keep the Records open to
inspection by Xx. Xxxxx Enterprises or Xx. Xxxxx Enterprises' duly authorized
agents and representatives, who shall have reasonable access to the Records for
such purposes at reasonable hours of the day during which MCA's offices are
open.
Xx. Xxxxx Enterprises shall have the right of inspection of the Records
not more than once each calendar year. In the event that Xx. Xxxxx Enterprises
causes an examination to be made of the Records, that examination shall be
conducted in a manner as not unduly to interfere with MCA's business. Xx. Xxxxx
Enterprises and Xx. Xxxxx Enterprises' duly authorized agents and
representatives conducting any examination will maintain the confidentiality of
all information obtained by them as a result of such examination and shall not
reveal to any other person, firm or corporation any information acquired as a
result of such examination, except as may be required by law in connection with
any legal action or other proceeding implemented by Xx. Xxxxx Enterprises to
enforce Xx. Xxxxx Enterprises' rights under this Formal Agreement. MCA will
maintain the Records for at least four years as set forth above, except that if
a bona fide dispute arises between the parties prior to the end of such four
year period with respect to any payment or the information contained in the
Records, then MCA will maintain the Records until a resolution of the dispute,
or four years from the date of the termination of this Formal Agreement,
whichever last occurs. Xx. Xxxxx Enterprises shall respect the confidentiality
of, the Records, but shall be entitled to make such disclosures reasonable in
order to enforce Xx. Xxxxx Enterprises' rights hereunder. MCA will reimburse Xx.
Xxxxx Enterprises for the reasonable cost of any final audit resulting in Xx.
Xxxxx Enterprises' being due additional sums exceeding five percent of any
payment at issue, otherwise, all audits shall be conducted at Xx. Xxxxx
Enterprises' sole expense.
12. BREACH/CURE
Either party may terminate this Formal Agreement upon a material breach
of the other party, subject to written notice and a reasonable opportunity to
cure. Except as provided herein, any casual or inadvertent failure to make any
payment due under this Formal Agreement will not constitute a material breach of
this Formal Agreement unless Xx. Xxxxx Enterprises notifies MCA in writing that
MCA has failed to make such payment and MCA then fails to make such payment to
Xx. Xxxxx within 30 days after
11
MCA's receipt of the notice (subject to events of Force Majeure as defined in
Section 15, below). Notwithstanding the foregoing, a breach and/or termination
of any one agreement for a Theme Park containing the Xx. Xxxxx Elements shall
not effect and/or cause a breach and/or termination of any other location's
agreement for a Theme Park containing the Xx. Xxxxx Elements and Xx. Xxxxx
Enterprises shall be limited in its right to pursue its remedies against MCA in
connection with such Theme Park wherein the breach and/or termination occurred.
13. NO JOINT VENTURE
Nothing in this Formal Agreement shall be construed to place the
parties in the relationship of partners or joint venturers, and neither party
has any power to obligate or bind the other party in any manner whatsoever.
14. FORCE MAJEURE
If MCA is prevented, materially hampered, or interrupted in the
preparation or production or operation of "The Second Gate" or "The World of Xx.
Xxxxx" or other Theme Park containing the Xx. Xxxxx Elements pursuant to this
Formal Agreement by reason of any governmental law, action, inaction, ordinance,
regulation, executive or judicial order, judgment or decree, earthquake, flood,
fire, epidemic, accident, explosion, casualty, act of God, lockout, strike,
labor controversy or threat thereof, riot, civil disturbance, boycott, war or
armed conflict (whether or not officially declared), act of a public enemy,
embargo, delay of a common carrier, the inability without fault on MCA's part to
obtain sufficient material, labor transportation, power or other essential
commodity or service required in the conduct of a Theme Park or merchandising
hereunder, or by reason of any other cause of a similar nature which event has
or might reasonably have the effect of interfering with MCA's ability to exploit
the rights granted under this Formal Agreement ("Force Majeure Event"), MCA may
suspend payment of any sums otherwise due to Xx. Xxxxx Enterprises for a period
up to six months, but MCA will resume payment at the end of the Force Majeure
Event upon written notice to Xx. Xxxxx Enterprises. None of MCA's rights in the
Xx. Xxxxx Attractions will be affected by such suspension for a Force Majeure
Event and/or suspension of payments.
15. MISCELLANEOUS
a. No waiver by any party of any breach of this Formal Agreement by the
other party will be deemed a waiver of any preceding or succeeding breach of any
provision of this Formal Agreement. The remedies provided in this Formal
Agreement are cumulative, and the exercise of one remedy will not preclude the
exercise of any other remedy for the same default.
12
b. This Formal Agreement and the Exhibits attached to it are intended to be
the final and complete expression of the agreement between the parties and
supersedes any and all prior and contemporaneous agreements and understandings
relating to the subject matter of this Formal Agreement, including the Short
Form Agreement effective as of April 21, 1994.
c. This Formal Agreement may not be modified nor may any of its terms be
waived except in writing signed by both parties. If any part of this Formal
Agreement is declared invalid or unenforceable by a court of competent
jurisdiction, it shall not affect the validity of the balance of this Formal
Agreement.
d. The headings of the paragraphs are for convenience only and in no way
limit or affect the provisions of the Formal Agreement.
e. This Formal Agreement is governed by and interpreted in accordance with
the laws of the State of California applicable to agreements entered into and to
be performed wholly in California.
f. The parties agree to first submit any controversy or claim arising out
of or relating to this Formal Agreement, or breach thereof, to non-binding
mediation by a mediator to be selected by the parties. Any legal proceeding of
any nature brought by either party against the other party to enforce any right
or obligation under this Formal Agreement will be submitted only for trial
before any state or federal court in the State of California, County of Los
Angeles. The parties expressly consent and submit to jurisdiction of any such
court, waive all objections to such jurisdiction on the basis of venue,
jurisdiction, or personal jurisdiction, and agree to accept service of process
outside the State of California in any matter to be submitted to any court under
this Formal Agreement.
g. If any party brings an action to enforce or interpret the terms of this
Formal Agreement or to declare rights under the Formal Agreement or to recover
for or prevent breach of the Formal Agreement, the prevailing party in any such
action will be entitled to its reasonable attorneys' fees and costs to be paid
by the losing party as fixed by the court as well as to such reasonable
attorneys' fees and costs incurred in enforcing any judgment obtained.
13
A-1
EXHIBIT A
THE PROPERTIES
Title Date of Copyright
----- Copyright Reg. No.
Date of Renewal
Renewal Reg. No.
------- --------
500 Hats of Xxxxxxxxxxx Xxxxxxx 09/28/38 A121907
11/19/65 R373275
And to Think That I Saw It on 09/28/37 A112004
Mulberry Street 10/06/64 R345815
Xxxxxxxxxxx & the Oobleck 10/06/49 A37840
11/05/76 R645569
Cat in the Hat 02/28/57 A281039
01/31/85 RE240391
Cat in the Hat Comes Back 09/05/58 A355615
03/03/86 RE288973
Cat in the Hat Songbook 08/22/67 A953771
Cat in the Hat (Spanish) 04/13/67 A954923
Come Over to My House * 09/07/66 A873098
Xx. Xxxxx' ABC Book 08/29/63 A651707
06/03/91 RE527899
12/18/91 RE561716
Xx. Xxxxx' Sleep Book 08/30/62 A599141
01/22/90 RE465216
Fox in Socks 02/04/65 A765204
06/19/93 RE625055
Green Eggs and Ham 09/01/60 A475565
01/19/88 RE376436
Happy Birthday to You 10/01/59 A412696
01/08/87 RE323355
Hop on Pop 02/05/63 A616710
06/03/91 RE528173
12/18/91 RE561717
A-1
Xxxxxx Hears a Who 09/27/50 A152927
01/06/83 RE115184
How the Grinch Stole Christmas 09/23/57 A312043
02/11/85 RE238319
I Had Trouble Getting to Solla Sollew 08/27/65 A794059
06/16/93 RE625058
I Wish That I Had Duck Feet * 08/27/65 A794058
06/19/93 RE625057
If I Ran the Circus 09/11/56 A254660
01/30/84 RE205426
If I Ran the Zoo 09/27/50 A47792
10/17/77 R674412
King's Stilts 10/04/39 A132666
05/17/67 R410210
On Beyond Zebra 09/19/55 A204493
01/31/83 RE160864
One Fish Two Fish Red Fish Blue Fish 03/01/60 A35009
01/19/88 RE376431
Scrambled Eggs Super! 03/20/53 A84364
(No renewal)
Sneetches and Other Stories ** 09/01/61 A543386
01/17/89 RE425704
Ten Apples Up on Top * 02/24/61 A512606
01/17/89 R430091
Thidwick the Big-Hearted Moose 08/16/48 A25079
09/09/75 R613758
Yertle the Turtle and Other Stories 04/24/58 A336186
03/03/86 RE288967
Because a Little Bug Went KaChoo * 09/30/75 A729059
Butter Battle Book 04/10/84 TX1-345339
Cat's Quizzer 08/23/76 A808640
Did I Ever Tell You How Lucky You Are? 09/12/73 A502030
Eye Book * 10/07/68 A39909
Foot Book 10/07/68 A39908
A-2
Great Day for Up * 08/27/74 A595526
Xxxxxx Humperdink? Not Him! * 09/20/76 A815130
Xxxxxx Hatches the Egg 10/21/40 A147032
01/19/68 R428772
Hunches in Bunches 03/25/83 TX1-070382
I Can Draw It Myself 08/28/70 A254607
I Can Lick 30 Tigers Today! 09/26/69 A132498
I Can Read With My Eyes Shut! 11/17/78 TX277144
I Can Write! * 08/12/71 A301287
I'm Not Going to Get Up Today * 05/12/88 XX0-000000
Xx a People House * 08/15/72 A381487
Lorax 08/12/71 A301289
Many Mice of Xx. Xxxxx 04/09/90 VA-392557
(aka Pop-Up Mice of Xx. Xxxxx) * cover illustration
only)
Xxxxxx X. Xxxxxx, Will You Please Go Now! 08/15/72 A381497
Maybe you Should Fly a Jet * 01/26/81 TX633591
McElligot's Pool 09/22/47 A17021
11/04/74 R589631
Xx. Xxxxx Can Moo! Can You? 08/28/70 A254461
My Book About Me * 09/02/68 A149611
Oh, Say Can You Say? 12/18/79 TX474051
Oh, the Places You'll Go! ** 10/19/90 VA430950
Oh, the Thinks You Can Think 08/26/75 A692225
Please Try to Remember the 10/17/77 A922415
First of Octember *
Shape of Me and Other Stuff 07/24/73 A475432
There's a Wocket in My Pocket 08/12/74 A595528
Tooth Book * 09/23/81 TX772784
A-3
Wacky Wednesday * 09/10/74 A596273
Would You Rather be a Bullfrog? 08/26/75 A729058
You're Only Old Once 04/14/86 TX1-807266
08/26/91 TX3140074
Six by Seuss 08/26/91 TX3138467
Seven Lady Godivas 09/20/39 A132274
03/29/67 R407033
Xx. Xxxxx From Then to Now *** (applied for)
Daisy-Head Mayzie **** [Not yet published]
Any other Xx. Xxxxx books illustrated with typical Xx. Xxxxx characters, whether
or not previously published by Xxxxxxx X. Xxxxxx are included in this grant, but
not books illustrated with other than typical Xx. Xxxxx illustrations and not
fine art books.
* The illustrations to these titles are not included within the definition of
the "Properties" under this Formal Agreement. Xx. Xxxxx, therefore, makes no
grant and extends no warranties or indemnities with respect to said
illustrations.
** MCA acknowledges and agrees that it may not exercise any of the rights
granted to it under the Formal Agreement with respect to the book, Oh, the
Places You'll Go!, or to the story "What Was I Scared Of?" which is contained in
the book Sneetches and Other Stories, until seven years from July 13, 1994.
*** Only the images and verse created by Xxxxxxx X. Xxxxxx contained in this
title are included in this grant. MCA acknowledges and agrees that some of the
images and verse contained in this title are now in the public domain, and Xx.
Xxxxx Enterprises makes no grant and extends no warranties to such material.
**** MCA acknowledges and agrees that it may not exercise any of the rights
granted to it under the Formal Agreement with respect to Daisy-Head Mayzie prior
to seven years following the date of first broadcast of the animated television
program based on the title.
A-4
EXHIBIT B
PREVIOUSLY GRANTED RIGHTS
1. Miscellaneous existing contracts with respect to television
programs, video products and dramatic presentations, none of which involve any
rights inconsistent with rights granted hereunder.
2. Agreement with Tri-Star Pictures, Inc., to produce a motion picture
based on "Oh, the Places You'll Go!" and "What Was I Scared Of?" (from
"Sneetches and Other Stories") including certain rights with respect to
"Visiting Characters" from other Xx. Xxxxx books. Tri-Star Pictures, Inc., has
acknowledged that the letter agreement attached hereto as Exhibit B-2 (and
incorporated by this reference herein) clarifies Tri-Star Pictures, Inc.'s
rights with respect of the Properties and the Visiting Characters.
3. Agreement with Xxxxx-Xxxxxxx, Inc., to produce an animated
television program based upon an as yet unpublished book entitled "Daisy-Head
Mayzie", to be published by Random House. Copyright ownership in the program is
held jointly by Xx. Xxxxx Enterprises and Xxxxx-Xxxxxxx, Inc.
4. Agreement with Living Books, Inc. to produce, sell and distribute
electronic versions of books written by Xxxxxxx X. Xxxxxx.
B-1
XX. XXXXX ENTERPRISES, L.P.
c/o International Creative Management, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
July 13, 1994
Xxxxxxx Xxxxxxxxxxxxx, Esq.
Senior Vice President, Legal Affairs
Tri-Star Pictures, Inc.
00000 Xxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxxx Xxxx, Xxxxxxxxxx 00000
Dear Xx. Xxxxxxxxxxxxx:
Reference is made to that certain agreement between Theodor and Xxxxxx
Xxxxxx (the "Owner") and Tri-Star Pictures, Inc. ("Tri-Star") dated as of
September 7, 1990 (the "Agreement") pertaining to certain rights granted to
Tri-Star respecting Oh, the Places You'll Go! and What was I Scared of?
(hereinafter referred to as the "Property").
This will acknowledge that theme park rights in the Property were not
granted to TriStar by Owner under the Agreement either to the Property or to the
Visiting Characters as defined in said agreement.
In consideration of Tri-Star's entering into this letter of clarification,
Owner agrees that, if Owner elects to separately license theme park rights to
the Property to a third party as distinct from a license to a third party of
theme park rights to all or substantially all of the Xx. Xxxxx properties, Owner
shall notify Tri-Star in writing of the terms and conditions it has been offered
by such third party for such license and Tri-Star shall have the right to accept
such terms and conditions not less than five business days after receipt thereof
by written notice to Owner, in which event Owner shall license such theme park
rights to TriStar on such basis. The terms and conditions which are presented to
Tri-Star shall not include any terms which cannot be met as easily by one person
as another.
In the event Tri-Star declines such offer, Owner shall be free to license
such theme park rights to a third party on a basis not less favorable to Owner
than that last offered to Tri-Star. However, it will not thereafter license such
theme park rights to a third party on a basis less favorable to Owner than that
last offered to Tri-Star unless it first offers such terms and conditions to
Tri-Star as set forth above.
EXHIBIT B-2
EXHIBIT C
TO THE FORMAL AGREEMENT BETWEEN
MCA INC.
AND XX. XXXXX ENTERPRISES, L.P.
DATED AS OF APRIL 21, 1994
Attached is the Short Form Copyright License.
C-1
SHORT FORM LICENSE OF COPYRIGHT
-------------------------------
Subject to the restrictions, exclusions, terms and conditions set forth
in the agreement between Xx. Xxxxx Enterprises, L.P. ("Licensor") and MCA INC.
("Licensee") dated as of April 21, 1994 (the "Formal Agreement"), Licensor, for
valuable consideration received, sells, grants and assigns to Licensee and to
such of its representatives, successors and assigns as may be authorized
pursuant to the terms of the Formal Agreement, an exclusive license to the
rights to any and all of the Xx. Xxxxx characters and any and all related
characters and elements, including, but not limited to, the likenesses,
digitized likenesses, visual representations, symbols, designs, personalities,
voices, music, mannerisms, common phrases, themes, plots, elements and
animation, and a non-exclusive merchandising license in connection with the
same, for use by Licensee in, and in connection with, theme parks, amusement
parks, studio attractions and other comparable venues throughout the world, all
as set forth in more detail in the Formal Agreement.
Dated as of this 27th day of Sept., 1994.
XX. XXXXX ENTERPRISES, L.P.,
By:
Xxxxxx-Xxxxx Enterprises, Inc.
General Partner
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Xxxxxx X. Xxxxxx, President
By: /s/ Xxxx XxXxxx
--------------------------------
Xxxx XxXxxx, Vice President
C-2
STATE OF CALIFORNIA
SS.
COUNTY OF SAN DIEGO }
On SEPTEMBER 27, 1994, before me, the undersigned Notary Public, personally
appeared XXXXXX X. XXXXXX ( X ) personally known to me or ( ) proved to me on
the basis of satisfactory evidence to be the person whose name is subscribed to
the within instrument, and acknowledged to me that she executed the same in her
authorized capacity, and that by her signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Xxxxxxx Xxxxxx
--------------------------------
(S E A L)
STATE OF CALIFORNIA
SS.
COUNTY OF SAN DIEGO }
On SEPT. 28, 1994, before me, the undersigned Notary Public, personally appeared
XXXX XXXXXX ( X ) personally known to me or ( ) proved to me on the basis of
satisfactory evidence to be the person whose name is subscribed to the within
instrument, and acknowledged to me that he executed the same in his authorized
capacity, and that by his signature on the instrument the person, or the entity
upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Xxxxxxx Xxxxxx
--------------------------------
(S E A L)
C-3
EXHIBIT D
TO THE FORMAL AGREEMENT BETWEEN
MCA INC.
AND XX. XXXXX ENTERPRISES, L.P.
DATED AS OF APRIL 21, 1994
Attached are the Heir's Agreements.
D-1
