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Exhibit 10.56
Execution Copy
Term Sheet For
Universal/Xxxxxx Restated Agreement
Universal Studios, Inc. and The Xxxxxx Entertainment Company, hereby agree to
the terms set forth in this Term Sheet as follows:
Currently Proposed
Videos Universal passes on the proposed videos, allowing
Xxxxxx to proceed with any third party, subject to
the preclusion period and other relevant provisions
below.
Remaining Rights
FNFR FNFR and FN rights for all Characters (other
than Casper Characters as set forth below) and
all Products (other than new filmed or
television entertainment Products featuring a
Casper Character or having a Casper Character's
name in the title) will terminate immediately,
except to the extent provided below. In
addition, Universal agrees not to assert any
rights against Xxxxxx that Universal may have
under the Universal/Paramount Pictures Agreement
so as to limit Xxxxxx'x rights with respect to
any Characters other than Xxxxxx.
FNFR rights to direct-to-videos featuring a
Xxxxxx Character or having a Xxxxxx Character's
name in the title will also terminate
immediately, but Universal will retain until
December 7, 0000 xxx FNFR right for the first
feature length post-theatrical sequel Casper
direct-to-video. In return, if the Casper
theatrical sequel were released in the summer of
1999 or 2000, Xxxxxx agrees not to make any
proposal that would require the exercise of the
post-theatrical FNFR right until January of the
calendar year (i.e., January 1999 or January
2000, as applicable) during which such
theatrical sequel is scheduled to be released,
and such proposal will not be bundled with other
Xxxxxx Products. It is understood that
Universal's FNFR right to the first
post-theatrical video will apply to any proposal
made prior to December 7, 2000 even if such
proposal relates to such a video that is
(because of the timing of the theatrical sequel)
to be released after December 7, 2000. It is
also understood that if the parties come to
agreement on such video pursuant to Universal's
FNFR rights, and such video is released in a
timely manner in accordance with such agreement,
then Xxxxxx will not permit the initial release
of a direct-to-video that includes a Casper
Character
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during the period from 6 months before to 9
months after the initial release of such
Universal direct to video except for
direct-to-videos of less than 35 minutes in
length.
All other rights with respect to filmed
entertainment Products featuring a Casper
Character or having a Casper Character's name in
the title will remain as provided under existing
agreements (including without limitation
Universal's exclusive right to make Casper
Pictures, as originally defined under the
Distribution Agreement), including, without
limitation, the expiry dates set forth therein
with respect to the FNFR and FN rights set forth
therein except as provided in the next sentence.
In regards to such expiry dates, the parties
acknowledge that (i) the FN rights in respect of
Pictures set forth in Section II.5(e) of the
Distribution Agreement will expire on December
7, 2000, or sooner if Universal owns less than
5% of Xxxxxx; (ii) Universal's FNFR rights with
respect to the direct-to-video set forth in the
preceding paragraph will expire on December 7,
2000; and (iii) for purposes of the term set
forth in Section III of the Distribution
Agreement, Universal's FNFR and holdback rights
under Section III will expire on December 7,
2000, except as follows:
(A) On December 7, 2003, with respect to
FNFR for both live action and animated
television programs, in which the Character
Casper is the principal Character or in the
title for which Xxxxxx'x name appears as a
reference to such Character;
(B) On June 30, 2001 with respect to FNFR
rights for both live action or animated
television programs in which another Casper
Character is the principal Character or in
the title of which Xxxxxx'x name does not
appear but another Xxxxxx Character's name
does as a reference to such other Casper
Character;
(C) On December 7, 2003 with respect to
FNFR rights for domestic distribution of
Xxxxxx TV Library Products; and
(D) On the date hereof with respect to FNFR
rights for foreign distribution of Xxxxxx
TV Library Products;
Provided that the expiry dates for the FNFR
rights referred to in clauses (A), (B) and (C)
above will be December 7, 2000 unless (x)
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on or before June 15, 2000, Universal has
provided Xxxxxx with a Final Notice (as defined
under "Theatrical Preclusion Period" below) of
an anticipated release of the First Sequel (as
defined under "Theatrical Preclusion Period"
below) on or prior to Labor Day 2001, (y) such
First Sequel is, in fact, initially released in
at least 800 theatres in the domestic market
prior to Labor Day 2001, and (z) with respect to
clause (C) only, the projected domestic box
office for the First Sequel exceeds $100
million.
With respect to Universal's remaining FNFR
rights, the existing FNFR language will be
modified to provide that (i) the procedure shall
require Xxxxxx, instead of Universal, to provide
its Bottom Line Terms to Universal for a
proposed "Transfer" and to provide Universal
with the matching right now set forth if Xxxxxx
thereafter proposes to enter into an agreement
with a third party in which any financial or
other material term (including fixed
compensation/license fee) is not as beneficial
to Xxxxxx as the Bottom Line Terms it proposed
to Universal (i.e., the "Conclusively More
Favorable" standard will no longer apply in
light of the change in procedure); and (ii) a
proposal will be deemed to qualify as a
"Product" if it includes at least a 1 page story
idea, a description of proposed principal
Characters, a proposed budget range, and a
proposed process for deciding other principal
elements, and Universal will have changed or
added elements protection up and to the deal
being made with the third party.
For purposes of this Term Sheet and the restated
agreement, the term "Casper Character" means the
fanciful characters Xxxxxx, each and all of the
Ghostly Trio, Xxx Xxxxxx, Xx. Xxxxxx, Xxxxxx,
Poil, Nightmare and all New MCA Elements, it
being understood, however, that neither this
Term Sheet nor the restated agreement will limit
Universal's and Xxxxxx'x existing rights with
respect to New MCA Elements except to the
extent, if any, set forth in the merchandising
amendment referred to below. It is understood
that Universal's exclusive rights to do Casper
Pictures under the Distribution Agreement,
without fees other than the Rights Fee
(including merchandising participation) called
for hereby, are limited to the use of Casper and
other Characters included in the original Casper
Feature as well as New MCA Elements and that,
except as so limited, the Rights Fee and
merchandising participation is an "all-in fee"
for the pertinent rights, including the
soundtrack. Subject to the further provisions
hereof, Xxxxxx retains non-exclusive theatrical
movie rights to the Ghostly Trio, but will not
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permit the release (except by Universal) of any
theatrical film that includes the Ghostly Trio
or any of them prior to December 31, 2002.
The rights and obligations of the parties set
forth in the August 1, 1996 Xxxx Xxxx agreement,
the rights and obligations of the parties in
respect of animated television programs
featuring a Casper Character set forth in the
September 22, 1994 Universal/Xxxxxx animation
studio agreement (the "PSO Agreement"), and the
rights and obligations of the parties set forth
in the March 26, 1996 television Distribution
Agreement will be unaffected by this Term Sheet
or the restated agreement, except to the extent
expressly modified herein or by the
merchandising amendment referred to below, and
except that (i) the 2-year holdback set forth in
paragraph 6 of the PSO Agreement is increased to
3 years and is agreed to include only animated
television shows; and (ii) the separate PSO
entity will be eliminated from the PSO Agreement
without a material alteration of the parties'
underlying substantive rights.
Theme Parks Universal releases its theme park rights to all
Characters other than Casper Characters, subject
only to the rights that are granted under a
"Stroller Agreement" currently being negotiated.
Universal and Xxxxxx will negotiate in good
faith definitions of the term "theme park" for
purposes of the Distribution Agreement, but if
no agreement can be reached after such good
faith negotiation the Distribution Agreement
will remain unmodified in this respect. In light
of the reduction in Characters committed to
Universal there will also be an equitable
reduction in the shelf space committed in the
Distribution Agreement to merchandising of
Xxxxxx Characters and Products. Such equitable
reduction will be based on actual historical
usage, but shelf space committed will be no less
than 100 square feet. Except as set forth above,
Universal's theme park rights to the Casper
Characters will remain as set forth in the
Distribution Agreement.
Library As of January 25, 1997, Universal's unrecouped
costs with respect to the Xxxxxx Classic Video
Library, including the cost of inventory on hand
and the $200,000 advance previously made to
Xxxxxx, appear to be approximately the amount
set forth in that separate letter between the
parties of even date with this Term Sheet (the
"Pricing Letter"). Xxxxxx will (a) make
Universal whole with regard to such amount (as
it exists as of the closing specified below) by
way of the payment specified below, and (b)
assume Universal's
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legal obligations for future returns of product
then existing in the field (it being understood
that Xxxxxx will not assume any other
obligations of Universal with respect to such
Video Library). In return, Universal will assign
to Xxxxxx all of its rights in and to the Xxxxxx
Classic Video Library and any related inventory
and artwork, including, without limitation,
assigning to Xxxxxx all of Universal's third
party license agreements for the Video Library
and will indemnify Xxxxxx against any breach of
such third party license agreements by
Universal. Xxxxxx will pay 100% of such
unrecouped costs to Universal at the closing.
Other than as set forth in this paragraph,
Xxxxxx shall have no further obligations to
Universal for revenue participation in
connection with the exploitation of the Video
Library. Closing of the above transaction will
occur upon the 90th day following execution of
this Term Sheet unless otherwise mutually agreed
by the parties. Universal will act expeditiously
after the execution of this term sheet to notify
relevant accounts and following such
notification may fulfill existing orders but
will not accept new orders (unless Xxxxxx
approves).
Theatrical
Preclusion
Period Universal would be entitled to one Theatrical
Preclusion Period ("TPP") for each Casper
Picture (as originally defined in the
Distribution Agreement) theatrical sequel
released in at least 800 theatres in the U.S.
and Canada in the future, provided that
Universal will not be entitled to more than one
TPP if the first Casper theatrical sequel
("First Sequel") is not generally released
(i.e., in at least 800 theatres) in the U.S. and
Canada during the summer of either 1999 or 2000.
Each TPP would run for the period set forth in
the Pricing Schedule. In order for Universal's
TPP to be effective it must give written notice
(an "Initial Notice") by February 15 of the year
preceding the year a Casper theatrical sequel is
to be released either of (i) initial approval of
a screenplay (subject to changes), or (ii) the
commencement in good faith of pre- production
activity. Such Initial Notice shall be
accompanied by payment of $500,000 of the Rights
Fee in order to be effective. In addition, for
the TPP to be effective, Universal must give a
further written notice (a "Final Notice) by June
15 of the year preceding actual theatrical
release that the TPP will actually occur (which
Final Notice will be accompanied by 50% of the
balance of the Rights Fee as set forth below).
After the First Sequel and/or first TPP, no
subsequent TPP will commence earlier than the
third
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anniversary of the beginning of the preceding
TPP or later than the sixth anniversary of the
beginning of the preceding TPP and then only if
there were an actual release during such
preceding TPP. If Universal does not give Final
Notice (as described in this paragraph above) by
June 15, 1999 of its intention to enter into
production of a sequel or fails to release the
sequel after giving such notice, then it will
lose any right to more than one TPP.
It is understood that, in order to be effective,
a Final Notice must specifically state in good
faith that the sequel will be produced with the
intention of initial theatrical release in the
Summer (by August 31) of the applicable year.
Late release of a sequel will be subject to
additional Rights Fees as described below,
except to the extent such late release is the
result of a force majeure event, but in no event
will late release extend the TPP.
Restrictions During
Preclusion Period Except as set forth below, during a TPP, there
will be no direct or indirect initial
exploitation or re-release (not including
re-runs of television shows) of any Precluded
Film Product (as defined below) in its initial
medium of exploitation, or any promotion,
marketing, solicitation of orders, manufacture,
shipping or fulfillment of orders, advertising,
etc. relating to any such Precluded Film
Product, by Xxxxxx (or by any of its licensees
(other than Universal) or any distributor or
subdistributor of a licensee (other than
Universal)). A "Precluded Film Product" shall
mean any filmed entertainment Product first
released, broadcast or exhibited after January
1, 1998 that features a Casper Character.
Notwithstanding the foregoing, the restrictions
set forth in this paragraph will not apply to
the following:
o Xxxxxx'x Xxxxxx direct-to-video scheduled for
release in 1997.
o Episodes of a television series ordered by a
network (as defined in the Distribution
Agreement) and accepted by Xxxxxx, prior to
the last date on which a Final Notice
respecting such TPP would be permissible, for
broadcast during the TPP, provided that (1)
the order that is accepted includes at least
6 episodes of a series, (2) Xxxxxx gives
Universal prompt written notice of any such
acceptance of an order for a television
series and the proposed period of broadcast,
(3) such acceptance is with respect to a
series the
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pilot script for which was ordered prior to
the last date on which an Initial Notice
respecting such TPP would be permissible, and
(4) any portion of the Rights Fee paid prior
to acceptance of the order by Xxxxxx shall be
subject to prompt refund if Universal gives
notice of cancellation of the TPP within 5
business days of its receiving notice of such
acceptance by Xxxxxx.
o After 6 months have expired from the initial
street release date in a relevant market of
the home video containing the theatrical
motion picture the release of which gave rise
to the TPP (but no later than expiration of
the TPP), Xxxxxx (or such licensee,
distributor, etc.) may, with respect to
direct- to-video Products initially released
prior to the TPP, solicit (but not advertise,
promote, market, etc.) and ship orders in
such relevant market and manufacture home
video devices for such purpose, in all cases
generally consistent with the prior practice
of Xxxxxx or such licensee or distributor or
consistent with industry practices generally
followed for direct-to-video products where
there is no competitive prequel, sequel or
related video in the marketplace (including a
video of a related theatrical film).
o With respect to any filmed entertainment
Product released prior to the TPP, Xxxxxx (or
its licensees, distributors, etc.) may
release such Product in a secondary medium
(which includes re-runs of television shows),
other than theatrical release, and advertise,
market and promote such Product in such
secondary medium, in a manner generally
consistent with industry practice absent the
release of a related theatrical film (e.g., a
fourth quarter 1998 Casper video could be
broadcast on TV during a subsequent TPP).
o Commencing the second May 1st of a TPP with
respect to any direct-to-video Product
scheduled to be initially released after the
conclusion of such TPP, and commencing the
second July 1st of a TPP with respect to any
television Product scheduled to be initially
released after the conclusion of such TPP,
Xxxxxx may commence trade advertising and
engage in general paid advertising for any
such post-TPP Product, and may engage in
manufacturing and solicitation of orders for
such post-TPP direct-to-video Product to be
fulfilled after the TPP, provided that such
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activities are consistent with Xxxxxx'x prior
practices or customary industry practices and
are not designed to take advantage of the
marketing of the theatrical film or video
containing the same that were released during
the TPP.
o The appearance or featuring of Spooky, Poil,
Nightmare and/or any or all of the Ghostly
Trio in any filmed entertainment Product, in
each case after December 31, 2002, and the
"guest appearance" of Nightmare in one
direct-to-video in which Xxxxx the Good
Little Witch is featured as the primary
Character and which is released prior to such
date.
o Press announcements and public filings
required to be made by Xxxxxx to comply with
law, stock exchange or NASDAQ rule.
Xxxxxx will not exercise the rights it retains
during the TPP in a manner to intentionally
frustrate Universal's rights. It is understood
that, subject to the rights granted Universal,
there will be no restrictions on Xxxxxx'x right
to develop, finance and produce Casper Character
filmed entertainment Products during a TPP
(other than Casper Pictures) or merely to enter
into contracts to be performed outside a TPP, it
being acknowledged that the existence of the TPP
shall not prevent Xxxxxx from entering into
promotional or commercial tie-in agreements or
into contractual arrangements for advertising so
long as the performance of any such agreement or
arrangement shall not occur during the TPP. It
is understood, however, that additional
merchandising restrictions may apply as
described below.
It is further understood that there will be no
restrictions on Universal's products, provided
that (i) during the fourth quarter of calendar
1997 and the fourth quarter of calendar 1998,
and (ii) during the first quarter following
Xxxxxx'x initial street release of the first
Casper direct-to-video initially released after
each TPP, Universal will agree to market,
advertise, promote, sell and otherwise
distribute its Casper video products (including
videos of its animated television show) in a
manner generally consistent with its or the
video industry's historical practices respecting
sales of such products without regard to the
concurrent release of a Xxxxxx direct-to-video
Product during such quarter.
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Rights Fee For the First Sequel, the fixed dollar amount
set forth in the Pricing Letter against the
percentages of gross proceeds set forth in the
Pricing Letter. Home video receipts will be
included in gross proceeds on the royalty bases
set forth in the Pricing Letter. The first
payment for the First Sequel would be the
non-refundable amount set forth in the Pricing
Letter and will be due immediately upon
executing this Term Sheet. The balance of the
fixed Rights Fee for the First Sequel, and the
fixed Rights Fee for any subsequent sequel,
would be paid as follows: $500,000 upon giving
of the Initial Notice for the TPP (it being
understood that such amount would be applied
against a later TPP if a Final Notice is not
given, except and to the extent set forth below
in the event a Final Notice is not given because
of an arbitration result that is not acceptable
to Universal); 50% of the balance upon giving
the Final Notice for the TPP; and the balance
upon commencement of principal photography but
no later than 12 months after the Final Notice.
The Rights Fees for theatrical sequels after the
First Sequel would be negotiated in good faith
by the parties, provided that if the sequel in
question is the subject of a TPP, then the
Rights Fee (both fixed and contingent) and
merchandising participation for such sequel
shall be no lower than the immediately preceding
sequel to which a TPP applied. Such good faith
negotiations concerning a subsequent sequel
shall be initiated by Universal's giving written
notice to Xxxxxx that it desires to set such
Rights Fee, provided that such written notice
may be given only after the expiration of 90
days from the initial domestic theatrical
release of all sequels for which the Rights Fee
has previously been determined (including the
First Sequel), whether by agreement or
arbitration.
If after the giving of such notice, the parties
are unable to agree upon the pertinent Rights
Fee within thirty (30) days, then the Rights Fee
shall be determined by baseball arbitration,
which may be initiated by either party, and in
which the arbitrator(s) shall be instructed to
render a decision within 60 days following
commencement of the arbitration and to choose
between the last written offer made by Universal
and the last written offer made by Xxxxxx during
the negotiations. With respect to any
disagreement between the parties in respect of
the Rights Fee, it is understood that: (i)
Universal may proceed to production pending
agreement or arbitration of the Fee, (ii) the
standard to be used by the arbitrator(s) will be
the market value of comparable rights taking
into account
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the performance of the immediately preceding
theatrical sequel and whether the sequel in
question will be the subject of a TPP, (iii) no
payment, other than the amount due upon the
giving of the Initial Notice, will be due for a
subsequent sequel until the entire Fee is
resolved either by negotiation or by
arbitration, (iv) if the parties do not agree by
the time of the Initial Notice, then the
arbitration shall be commenced within 30 days,
with instructions to the arbitrator(s) to render
a decision no later than the following May 20,
(v) nothing will obligate Universal to pay any
arbitrated fee if it does not proceed to
production, or otherwise obligate Universal to
proceed to production, subject to Universal's
obligation to pay the pertinent portion of the
fixed fee if it has given an Initial Notice or
Final Notice of a TPP to which such fee relates,
and (vi) in the event Universal does not
proceed, then up to $250,000 of the amounts paid
at the time of the Initial Notice may be applied
by Universal as an advance against film payments
to Xxxxxx for prior Features and the balance
shall be treated as an advance against a Rights
Fee for a future sequel.
Except to the extent caused by force majeure
events, in the event that for any reason after
Universal provides Xxxxxx with a Final Notice,
the initial U.S. street release date of the home
video containing the Casper Picture to which
such notice relates does not occur by the second
April 15 of the TPP, then Universal will pay to
Xxxxxx the delay amounts set forth in the
Pricing Letter. Such amount shall be in addition
to the Rights Fee if the initial U.S. street
release date of such home video occurs more than
120 days after the date of general U.S.
theatrical release of the Casper Picture, but
shall be treated only as an increase in the
fixed portion of the Rights Fee if such release
date of the home video occurs within such 120-
day period.
It is further understood that in addition to the
foregoing, Universal will pay Xxxxxx (x) upon
the closing of the assignment of the Classic
Video Library, the nonrefundable $250,000 called
for by the merchandising amendment, and (y) upon
execution of this Term Sheet, the amount set
forth in the Pricing Letter as a nonrefundable
advance against future film payments that may
become due from Universal to Xxxxxx as part of
the Rights Fee (other than merchandising
participation) from the First Casper Feature.
Merchandising As part of the restated agreement, the parties
would execute the merchandising amendment
substantially in the form of the October
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29, 1996 draft previously negotiated (including
the proposed side letter regarding foreign
licensing agents and other matters), with the
following substantive changes respecting
merchandising of Products related to Casper
Characters. Xxxxxx would be paid its minimum
advance for the first 12 months of the TPP upon
the commencement of the TPP, and its advance for
the remainder of the TPP after the first 12
months (pro-rated for a partial period) will be
paid upon the conclusion of the first 12 months
of such TPP. The substantive changes are:
o The Xxxxxx Preclusion Period will mirror the
TPP when there is a TPP and will otherwise be
as set forth in the amendment.
o During the Preclusion Period:
- Xxxxxx and its film and television
producer/distributor licensees will not be
permitted to engage in promotional tie-ins
(except with respect to the 1997 Casper
direct-to-video), including fast food
promotions, or other merchandising
activities, other than Xxxxxx Family
Entertainment Centers and Xxxxxx Retail
Stores, provided Universal shall be given
prompt notice of any such permitted
promotional tie-ins. The merchandising
amendment will retain provisions
permitting Xxxxxx'x Existing Licensees
(merchandising) to sell merchandise during
the Preclusion Period and the provisions
restricting Xxxxxx'x New Licensees
(merchandising) from selling merchandise
during the Preclusion Period.
"Xxxxxx Retail Stores" shall be (i)
free-standing stores that have either the
Casper or Xxxxxx name in the name of the
store and that carry merchandise that is
primarily based on Xxxxxx Characters, and
(ii) clearly distinguishable
stores-within-stores meeting the following
criteria:
+ The store-within-a-store must be
comprised of at least 1,000 contiguous
square feet of space that is a
permanent installation (i.e., not
transitory or tied to any event or
season);
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+ The store-within-a-store must be in
place prior to the giving of the First
Notice with respect to the TPP in
question (or notice with respect to a
non-TPP Preclusion Period);
+ The stores-within-stores may not be
installed within the stores of more
than one major retailer per region (in
addition to a national retailer in the
U.S.);
+ Each store-within-a-store must carry
merchandise exclusively (except for de
minimis items) based on Xxxxxx
Characters and must have either the
Casper or Xxxxxx name in the title of
the distinguishable store-
within-a-store area; and
+ Xxxxxx will not sell from any such
store- within-a-store any Casper
related merchandise that has not been
purchased at arm's length from a third
party licensee, and if Universal does
not, under the merchandising amendment,
financially participate in Xxxxxx'x
arm's length purchase from a licensee
with respect to any such merchandise,
then Xxxxxx will pay Universal a
royalty upon the sale of such
merchandise (to be set forth in the
definitive merchandising amendment)
designed to place Universal and Xxxxxx
in roughly the same position as the
parties believe they would have been in
had such article of merchandise been
acquired by Xxxxxx during the
Preclusion Period from a Universal
licensee.
It is understood that Xxxxxx will not be
prohibited from purchasing merchandise for
its Family Entertainment Centers or Xxxxxx
Retail Stores from merchandising
licensees.
- The parties will not be required to
coordinate competing promotional
activities (because of the limitation upon
Xxxxxx'x activities during the
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Preclusion Period). However, in
negotiating the terms of the definitive
merchandising amendment, the parties will
consider articulating therein cooperative
strategies intended to address the need to
coordinate during a Preclusion Period the
activities of Xxxxxx'x then existing
merchandising licensees, Xxxxxx'x
enrollment of new licensees, Universal's
enrollment of feature-related
merchandising licensees, and the
activities of such feature-related
merchandising licensees, in ways that are
mutually beneficial to Xxxxxx and
Universal. If the parties cannot agree
upon such strategies, such strategies will
not be included in the amendment.
- Xxxxxx'x approval rights will remain
intact, except with respect to promotional
tie-ins related to the initial theatrical
and home video release of the First Sequel
(which will not require Xxxxxx'x approval
except for Character integrity as
described in Section 5(a)(C) of the
Distribution Agreement).
- Universal will not be precluded from
conducting fall promotions, subject to
Xxxxxx'x approval rights, to the extent
applicable.
o Universal's approval rights for merchandising
licenses covering New MCA Elements as defined
in the Distribution Agreement (e.g., Kat,
Whipstaff Manor) will continue in perpetuity,
whether or not for media produced, released
or distributed by Universal, such approval
not to be unreasonably withheld.
o Universal's merchandising participation for
New MCA Elements only and other rights for
New MCA Elements only (as defined in the
original Distribution Agreement) will survive
the Agreement's termination. All other
Universal participation in merchandising will
terminate on the expiration of the
merchandising amendment, subject to the PSO
Agreement and the Xxxx Xxxx Agreement,
subject to Casper television merchandising
set forth below, and subject to Universal's
Casper Feature merchandising rights.
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o During Universal's merchandising
distribution, Universal and Xxxxxx'x
participations will be as set forth in the
Pricing Letter. Once the merchandising
restrictions are in effect during a TPP,
Xxxxxx will be guaranteed the merchandising
advance.
o Subject to the restrictions during a
Preclusion Period, Universal will not have
approval rights over promotional tie- ins for
direct-to-videos produced by Xxxxxx or its
licensees. Xxxxxx will not have approval
rights over promotional tie- ins for the
initial theatrical and home video release of
the First Sequel (except for Character
integrity as described in Section 5(a)(C) of
the Distribution Agreement).
o Universal's participation in Casper animated
television merchandising revenues derived
from Universal's animated television series
will expire on the later of December 7, 2000
or 2-1/2 years after completion of production
of the last television series episode
produced under the PSO Agreement (it being
understood that Universal's financial
participation in Classic Casper Character
Merchandising not derived from the animated
series will expire December 7, 2000, subject
to Universal's Casper Feature Picture
rights).
o Promotional tie-in arrangements entered into
by either Xxxxxx or Universal or their
respective licensees with third parties will
be entered into on an arm's length basis, and
Xxxxxx or Universal, as the case may be, will
provide the other party hereto with copies of
all such agreements promptly after they are
executed. Each of the parties will
participate in revenues from such promotional
tie-ups in accordance with the terms of the
merchandising amendment.
Releases Xxxxxx and Universal mutually release each other
and their respective affiliates, officers,
employees, etc. from claims arising from or
related to the Distribution Agreement and the
agreements related thereto (including the
agreements referred to in the last paragraph
under "FNFR" above), other than with respect to
rights to payment and audit, including without
limitation claims relating to merchandising,
television, Xxxxxx'x 1997 Xxxxxx direct-to-video
and other filmed Products.
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Consultation on
Casper Filmed
Products and
Merchandising In addition to the approval rights under the
merchandising amendment, Universal will have the
right to be apprised of creative and business
matters and to consult with respect to Xxxxxx'x
Xxxxxx Character Products and Exploitation,
including Casper Character merchandising. Xxxxxx
will have this same consultation right with
respect to exploitation of the rights granted to
Universal by Xxxxxx as well as the approval
rights previously granted in the Distribution
Agreement. Such consultation rights will,
subject to legal restrictions and requirements,
include the right of each party to be reasonably
informed of anticipated video release dates.
Make-up If a Final Notice for a TPP right is exercised
and a sequel movie is not "released" (on 800 or
more screens) at all for other than force
majeure reasons, Xxxxxx will be entitled to
receive the maximum fixed fee to which it would
have been entitled had the cancelled sequel been
released and the release of the video containing
it been delayed past the second July 15 of the
TPP in question -- i.e., Xxxxxx'x fixed fee will
increase by the maximum delay amount set forth
in the Pricing Letter. Such amount shall be paid
to Xxxxxx no later than the second July 15 of
the Preclusion Period. The payments for the
Rights Fee or for "delay" shall not be credited
against any future payments for sequels or
otherwise.
Credits Xxxx Xxxxxxxxxx is to receive the same executive
producer credit as provided in the original
film, and Xxxxxx will indemnify Universal
against claims from third parties for any
executive or co-executive producer credit due as
a result of grants from Xxxxxx. Xxxxxx will
receive a "Xxxxxx Entertainment in association
with" credit immediately following the Amblin'
credit (or Universal credit, if no Amblin'
credit), if the Amblin' credit is above the
title credit, and immediately prior to the
Amblin' credit if the Amblin' credit is in the
end titles. The Xxxxxx Entertainment logo will
appear on screen and in advertising to the same
extent as provided in Section II.5(b) of the
Distribution Agreement and when the Universal or
Amblin' logo appear.
Press Releases, Etc The specific terms of this Term Sheet, the
Pricing Letter, the merchandising amendment and
the restated agreement will remain confidential
(subject to customary exclusions) and all
written or scripted public statements and
interviews regarding the same will be
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subject to mutual approval, subject to legal
requirements, including legally required public
reporting obligations of the parties. The
parties will reasonably cooperate in seeking
confidential treatment in their respective
public filings of any financial terms requested
by either to be kept confidential, and each of
the party's will reasonably cooperate with the
other in providing the other with information
required for its public filings related to the
restated agreement.
Efficacy THIS TERM SHEET WILL BE BINDING UPON ITS
EXECUTION BY THE PARTIES AND SUPERSEDES THE 1997
INTERIM MERCHANDISING LETTERS UNDER WHICH THE
PARTIES HAVE BEEN OPERATING. ALL REFERENCES TO
WHAT THE RESTATED AGREEMENT OR MERCHANDISING
AMENDMENT WILL CONTAIN SHALL BE GIVEN THE SAME
EFFECT AS THOUGH THE RESTATED AGREEMENT AND
MERCHANDISING AMENDMENT EXISTED AS OF THE DATE
HEREOF CONTAINING THE TERMS SET FORTH HEREIN.
NOTWITHSTANDING THE FOREGOING, THE PARTIES
INTEND TO NEGOTIATE A DEFINITIVE LONG- FORM
AGREEMENT OR AGREEMENTS INCORPORATING THE TERMS
SET FORTH HEREIN. IF THE PARTIES HAVE FAILED TO
AGREE UPON AND EXECUTE SUCH DEFINITIVE AGREEMENT
OR AGREEMENTS WITHIN THE TIME PERIOD SET FORTH
IN THE PRICING LETTER, THEN EITHER PARTY MAY
INITIATE THE PROCEDURE CONTEMPLATED BY SUCH
LETTER TO FINALIZE A DEFINITIVE AGREEMENT OR
AGREEMENTS.
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IN WITNESS WHEREOF, the parties have executed this Term Sheet (which may be done
in counterpart) as of May 15, 1997.
THE XXXXXX ENTERTAINMENT UNIVERSAL STUDIOS,
COMPANY INC.
By: [SIG] By: [SIG]
---------------------- ----------------------
Title: E.V.P. Title: Asst. Secretary
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