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AMENDMENT TO THE AGREEMENT

Joint Venture JV Agreement

AMENDMENT TO THE AGREEMENT | Document Parties: Diamond Lane Productions, Inc | Universal City Development Partners, Ltd | Steven Spielberg You are currently viewing:
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Diamond Lane Productions, Inc | Universal City Development Partners, Ltd | Steven Spielberg

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Title: AMENDMENT TO THE AGREEMENT
Governing Law: California     Date: 10/20/2009

AMENDMENT TO THE AGREEMENT, Parties: diamond lane productions  inc , universal city development partners  ltd , steven spielberg
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Exhibit 10.1

 

 

 

 

 

ASTERISKS INDICATE MATERIAL THAT HAS BEEN REDACTED, FOR WHICH

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED.

 

Execution Version

 

 

 

 

This AMENDMENT TO THE AGREEMENT (this " Amendment "), dated as of October 18, 2009 (the " Amendment Date "), is entered into by and among Steven Spielberg, in his personal capacity, Diamond Lane Productions, Inc., a California corporation (" DLP " and together with Steven Spielberg, " Steven "), and Universal City Development Partners, Ltd., a Florida limited partnership (as successor in interest to Universal City Florida Partners, the " Partnership "), such parties to be referenced individually as a " Party " and collectively as the " Parties ".

 

RECITALS

 

WHEREAS, Steven Spielberg and the Partnership are parties to that certain Agreement, dated as of January 20, 1987, and amended and/or modified as of January 5, 2001, July 15, 2003 and March 30, 2006 (collectively, the " Agreement "), with respect to Steven Spielberg rendering certain services to the Partnership as creative consultant in connection with certain projects;

 

WHEREAS Steven Spielberg by letter dated February 27, 1989, has directed that all payments to him by the Partnership under the Agreement be made to DLP;

 

WHEREAS, DLP is currently receiving payments for the Florida Project and one Comparable Project in Osaka, Japan;

 

WHEREAS, additional projects that could constitute Comparable Projects are currently contemplated in Singapore, Dubai, *** and ***;

 

WHEREAS, subject to the terms and conditions set forth herein, the Parties agree to amend the Agreement by way of this Amendment; and

 

WHEREAS, capitalized terms used but not defined in this Amendment shall have the meanings ascribed to them in the Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

 

ARTICLE I

 

AMENDMENTS TO THE AGREEMENT

 

1.1   Amendments to the Agreement .  Steven and the Partnership each hereby consents and agrees that the Agreement is hereby amended as follows:

 

(a)  

The first sentence of Paragraph 11(b) of the Agreement is hereby amended and restated in its entirety to read as follows:

 

"Subsequent to the above three-year period as to the Florida Project and for all years during the term of this agreement as to the Comparable Project in Osaka, Japan known as Universal Studios Japan (" USJ "), DLP shall be paid ***% of 100% of the gross revenues, gross rentals, sales price, etc. instead of the above provided ***%."

 

(b)  

Paragraph 11(d) of the Agreement is hereby amended and restated in its entirety to read as follows:

 

"DLP will be entitled to quarterly accountings and payments based thereon within 45 days from the end of each quarter.  On every June 30th during the term of this Agreement (or, if not a Business Day (as used herein, " Business Day " means any day that is not a Saturday, Sunday or other day on which commercial banks in Orlando, Florida are authorized or required by law to remain closed), on the next Business Day thereafter), (i) the Partnership will provide DLP with a three-year projection of the payments projected to be owed to DLP under this Agreement in respect of the Florida Project and (ii) Universal City Studios LLLP d/b/a Universal Parks and Resorts (" UPR ") will provide DLP with a three-year projection of the payments projected to be owed to DLP under this Agreement in respect of each Comparable Project.

 

Such projections will be based on management’s reasonable best estimates as to the future performance of the Florida Project and such Comparable Projects at the time prepared.  Steven acknowledges and agrees that such projections are for informational purposes only and actual performance may differ substantially from such projections.  Neither the Partnership nor UPR, nor any guarantor of the Partnership’s obligations under this Agreement, shall incur any liability with respect to such projections.  Steven shall keep all such projections confidential pursuant to (i) Paragraph 25 of this Agreement, (ii) that certain Confidentiality Agreement between DLP and UPR, dated as of May 1, 2009 and (iii) that certain Confidentiality Agreement between DLP and the Partnership, dated as of October 15, 2009."

 

(c)  

Paragraph 11(e) of the Agreement is hereby amended and restated in its entirety to read as follows:

 

"Except as provided in the remainder of this Paragraph 11e, the payment to DLP of ***% of the Project’s revenues specified above in this Paragraph 11 shall, subject to Paragraphs 13e and 14e, apply also to Comparable Projects in which Steven becomes vested hereunder pursuant to Paragraph 12 while Steven has an obligation to render consulting services hereunder (as the term of his obligation to render consulting services may be extended pursuant to Paragraph 13).  "Gross revenues" of a Comparable Project shall be defined as set forth in Exhibit "A", as if the Partnership was the sole owner and operator of such Comparable Project.  Notwithstanding the foregoing to the contrary, with respect to any Comparable Project (other than USJ) in which DLP’s interest is vested hereunder pursuant to Paragraph 12 while Steven has an obligation to render consulting services hereunder (as the term of his obligation to render consulting services may be extended pursuant to Paragraph 13) (and are not exempted by Paragraphs 13e or 14e) and in which the Partnership and/or any Affiliate(s) do(es) not own or control at least 50% of the equity thereof, in lieu of all other sums provided above in this Paragraph 11, DLP shall receive a participation in 100% of the gross revenues, gross rentals and sales price, etc. of such Comparable Project equal to the greater of (i) ***% and (ii) the percentage figure determined by multiplying *** times the ratio that the Partnership’s (and/or any Affiliate’s) equity in such Comparable Project bears to 50%.  For example, if the Partnership and/or any Affiliates own 45% of the equity of a Comparable Project, then DLP shall receive ***% of 100% of the gross revenues, gross rental, sales price, etc., of such Comparable Project."

 

(d)  

Paragraph 12 of the Agreement is hereby amended and restated in its entirety to read as follows:

 

"12.           Vesting .                      Steven has earned the right to receive ***% of 100% of the gross revenues, gross rentals, sales price, etc., from the Florida Project and from USJ, each as in existence on the effectiveness of that certain Amendment to the Agreement (the " 2009 Amendment "), dated October 18, 2009 (such date of effectiveness, the " 2009 Amendment Date ") (which means that such compensation is "vested").  The term "vest" and "vested" as hereinafter used in this Agreement means Steven cannot be deprived of payments which are "vested" by reason of Steven’s death or disability or by reason of Steven’s default.  Steven is also deemed vested as of the 2009 Amendment Date in his right to receive the amounts set forth in Paragraph 11e in connection with the Comparable Projects contemplated as of the 2009 Amendment Date in Singapore, Dubai, *** and *** (the " Contemplated Projects ").  Steven’s right to compensation from any other Comparable Project (other than USJ and the Contemplated Projects) under Paragraph 11 shall vest with respect to each such Comparable Project if, on the date when construction of such Comparable Project commences, as evidenced by on-site physical work such as demolition, clearing or construction, Steven continues to have an obligation to render consulting services hereunder, this Agreement has not been terminated as a result of Steven’s material breach and Steven is not then deceased or permanently and substantially mentally disabled.  For the avoidance of doubt, nothing in this Agreement shall obligate the Partnership or any of its Affiliates, or UPR, to proceed with the development or opening of any Comparable Project (including but not limited to the Contemplated Projects).  Also for the avoidance of doubt, the fact that a Comparable Project has "vested", and therefore Steven cannot be deprived of payments which are "vested" by reason of the events noted above, shall not in and of itself mean that Steven has any right to receive compensation in respect of such Comparable Project pursuant to Paragraph 14b.  Nothing set forth herein deprives the Partnership of its right to damages (and its offset and other rights at law or in equity, if any) in the event of Steven's material breach hereof."

 

(e)  

Paragraph 13b is hereby amended by inserting the following sentence at the end thereof:

 

"The Partnership is deemed to have given Steven a timely written notice, pursuant to and in accordance with Paragraph 13a, pursuant to which the Partnership has declined to exercise its Extension Option for the Extension Year containing the 2009 Amendment Date, and Steven is deemed to have exercised Steven’s Option for each year that he has the right to do so, whether or not written notice is given as herein provided."

 

(f)  

The first sentence of Paragraph 14 of the Agreement is hereby amended and restated in its entirety to read as follows:

 

"The "Termination Date" is defined to be June 7, 2017."

 

(g)  

Paragraph 14(b) of the Agreement is hereby amended and restated in its entirety to read as follows:

 

 

"(i)

Subject to this Paragraph 14b and Paragraph 14e, the Partnership will pay DLP, in accordance with the terms hereof, the fair market value of Steven's interest in the Florida Project and in all Comparable Projects which were vested pursuant to Paragraph 12 hereunder and open to the general public as of the date which is one year prior to the Stop Date (the " Put Payment "), which Put Payment will be determined in accordance with Exhibit D ( Put Payment ) attached hereto (the " Put Payment Formula ").

 

(ii)  

At any time prior to the Stop Date (but in no event later than June 7, 2017) and solely with respect to the Florida Project and Comparable Projects opened to the general public for greater than one year at the time of election (the Florida Project and such Comparable Projects, collectively, the " Qualifying Projects "), DLP may make a one-time election by written notice (the " Interim Adjustment Election "), which shall be dated the date of delivery to the Partnership, to provide for the calculation of an amount which DLP may choose to receive in lieu of the Put Payment (the " Alternative Payment ") if the Stop Date occurs on or before March 31, 2018; provided , however , that the calculation as to any such Qualifying Project which shall not have been opened to the general public at least three years when the Interim Adjustment Election is made (such Qualifying Project, a " Late Qualifying Project ") shall occur as set forth below on the third anniversary of its opening to the general public (the " Late Qualifying Adjustment Date ").  The Alternative Payment shall be calculated by adjusting the Applicable Discount Rate and the Applicable Base Payment (as such terms are defined in Exhibit D ) set forth in the Put Payment Formula (the " Interim Adjustments ") as of a date (the " Interim Adjustment Date ") that is (i) for the Qualifying Projects (other than the Late Qualifying Projects), 90 days after date of the Interim Adjustment Election and (ii) for any Late Qualifying Project, the Late Qualifying Adjustment Date.  DLP’s election to receive the Alternative Payment in lieu of the Put Payment (the " Payment Election ") shall be made within 10 Business Days after the amounts of the Put Payment and Alternative Payment are determined with respect to the Qualifying Projects that are not Late Qualifying Projects, and such Payment Election shall be required to apply to all but not less than all of the Qualifying Projects (including the Late Qualifying Projects) in connection with the calculation of the Put Payment or Alternative Payment, as the case may be.

 

(iii)  

In connection with the Interim Adjustment Election, the Interim Adjustments shall be applied to the Put Payment Formula in order to calculate the Alternative Payment as follows:

 

 

(A)

The Applicable Discount Rate for the Florida Project (as defined in Exhibit D ) and the Applicable Discount Rate for a Comparable Project (as defined in Exhibit D) that is a Qualifying Project, as the case may be, shall be calculated as follows:

 

two-thirds (2/3) multiplied by (x) the Applicable Discount Rate for the Florida Project on the Interim Adjustment Date or (y) the Applicable Discount Rate for such Comparable Project on the Interim Adjustment Date, as the case may be,

 

plus

 

one third (1/3) multiplied by (x) the Applicable Discount Rate for the Florida Project on the Stop Date or (y) the Applicable Discount Rate for such Comparable Project on the Stop Date, as the case may be; and

 

 

(B)

the Applicable Base Payment for the Florida Project (as defined in Exhibit D ) and the Applicable Base Payment for such Comparable Project (as defined in Exhibit D ), as the case may be, shall be calculated as of the Interim Adjustment Date, rather than as of the Stop Date.

 

(iv)  

DLP's right to choose to receive, on the Stop Date, the Alternative Payment in lieu of the Put Payment shall be inapplicable if the Stop Date does not occur on or prior to March 31, 2018.  For the avoidance of doubt, in the event DLP receives the Alternative Payment, it is acknowledged that the Alternative Payment shall be calculated only with respect to the Qualifying Projects (including Late Qualifying Projects, if any), and DLP will have no interest of any kind in, or right to receive any compensation whatsoever with respect to, any Comparable Projects that are not Qualifying Projects or Late Qualifying Projects, nor will Steven have any further obligation to render consulting services on any such Comparable Project that is not a Qualifying Project or Late Qualifying Project (regardless of whether such Comparable Project that is not a Qualifying Project or Late Qualifying Project opened to the general public more or less than one year before the Stop Date, or opened to the general public anytime after the Stop Date).

 

(v)  

If DLP receives the Put Payment (and not the Alternative Payment) set forth in clause (i) above, and on the Stop Date any Comparable Project (including any Contemplated Project) which has vested hereunder, has been opened to the general public as of the date which is one year prior to the Stop Date, and has not then been opened to the general public for at least 3 years prior to the Stop Date, the Put Payment with respect to such Comparable Project shall occur within 10 Business Days following the date, if any, that such Comparable Project has been opened to the general public for 3 years (it being understood that the Applicable Base Payment and the Applicable Discount Rate for any such Comparable Project shall be calculated as of the date that such Comparable Project has been opened to the general public for 3 years, and not as of the Stop Date), and DLP shall continue to receive its quarterly compensation payments pursuant to Paragraph 11 hereunder on such Comparable Project until such Put Payment is made."

 

(h)  

The last two sentences of Paragraph 15 of the Agreement are hereby amended and restated in their entirety to read as follows:

 

"If the Partnership and/or its Affiliates transfer ownership of their equity interests, if any, in the Florida Project and any then-existing Comparable Projects as a unit to a new owner, provided that as of the date of such change of ownership, the financial condition of the new owner reasonably appears to Steven to be sufficiently strong to enable the new owner to comply with its obligations to Steven and such new owner assumes for Steven’s benefit all of the Partnership’s obligations to Steven in writing, Steven will look solely to the new owner for any obligations accruing or arising after said date and the guarantees by MCA Inc. and Cineplex Odeon Corporation, as well as, in the event the transfer occurs after June 7, 2017, the guarantee by NBC Universal, Inc. (" NBCU "), referred to in Paragraph 22 will terminate.  Except as set forth above, no transfer of ownership shall affect the rights and obligations of the parties."

 

(i)  

The reference to "Paragraph 14b" in the seventh sentence of Paragraph 16 of the Agreement is hereby deleted and replaced with "Paragraph 20".

 

(j)  

Paragraph 20 of the Agreement is hereby amended by inserting the following sentence at the end thereof:

 

"In the event either Steven or the Partnership commences any such arbitration against the other party with respect to this Agreement, the parties agree that the prevailing party (as determined by the arbitral panel before whom such proceeding is commenced) shall be entitled to recover reasonable attorneys' fees and costs as may be incurred in connection therewith in addition to any such other relief or award as may be granted."

 

(k)  

Paragraph 22 of the Agreement is hereby amended and restated in its entirety to read as follows:

 

"22.            Guarantees and Security; Powers of Attorney; Costs of Perfection .

 

a.            Guarantees .  Credit support for the Partnership's obligations hereunder will be provided (i) by a joint and several Guarantee, dated November 4, 1988, of MCA, Inc. and Cineplex Odeon Corporation and (ii) by the Guarantee (the " NBCU Guarantee "), dated October 18, 2009, of NBCU attached as Appendix B to the 2009 Amendment.

 

b.            Security .  Credit support for the Partnership's obligations hereunder will also be provided pursuant to security documentation executed and delivered in conformity with Paragraphs 3.1(b) and (c) to the 2009 Amendment, by which, among other things, the Partnership's obligations arising in respect of the Florida Project shall be secured by a perfected junior security interest and mortgage lien on the Partnership's tangible personal and real property included in the Florida Project, which security interest and mortgage lien will apply to the property described in, and shall have the terms and be subordinated and junior to the extent set forth in, Paragraphs 3.1(b) and (c) of the 2009 Amendment.

 

The security documentation securing the Partnership's obligations arising in respect of the Florida Project will not restrict the Partnership's ability to operate, manage, alter or sell any or all of the property representing collateral or contain any covenants or obligations, other than to grant and perfect for Steven's benefit a security interest in the enumerated classes of property.

 

The parties agree that the security interest and mortgage lien with respect to the Florida Project granted to Steven pursuant to Paragraphs 3.1(b) and (c) of the 2009 Amendment will by their terms terminate and be released in full at such time that the senior liens contemplated by such Paragraphs 3.1(b) and (c) of the 2009 Amendment is released, provided that at that time no other security interest and mortgage lien in the Florida Project shall have been granted by the Partnership to any other lender.  The security interest and mortgage lien would not be released under circumstances where Steven is seeking to realize against the collateral and the senior lien contemplated by such Paragraphs 3.1(b) and (c) of the 2009 Amendment is released as a result of the application of proceeds of realization against the collateral.  Under such circumstances, the junior security interest and mortgage lien will be released on the collateral foreclosed upon, but not on collateral that is not foreclosed upon (and not on any proceeds of foreclosure remaining after payment in full of any prior obligations).

 

If after the release of the liens granted to Steven, the Partnership subsequently grants to any lender a security interest with respect to property included in the Florida Project, the Partnership will at that time grant to Steven a junior security interest and mortgage lien with respect to such property to the extent it includes the tangible personal and real property of the type included in the previously released junior security interest and mortgage lien as described and subject to the terms set forth above and in Paragraphs 3.1(b) and (c) of the 2009 Amendment; provided , however , that if the subsequent security interest and mortgage lien is a purchase money lien limited to the property being purchased, then no such junior security interest shall be required.  For the avoidance of doubt, such terms include those set forth in Appendix C to the 2009 Amendment.  Also, it is agreed that any existing or subsequent senior secured debt may not exceed in the aggregate the greater of $975 million and an amount equal to the product of 3.75 times the EBITDA of the Partnership (determined at the time of the incurrence of any term loans or at the time of increasing any revolving commitments or at the time of incurring any other senior secured debt, as the case may be, with "EBITDA" being defined in and calculated pursuant to the relevant provisions of the senior secured credit facilities referenced in Paragraph 3.1(c) of the 2009 Amendment).

 

The parties agree that the security interest and mortgage lien with respect to the Florida Project granted to Steven pursuant to Paragraphs 3.1(b) and (c) of the 2009 Amendment will contain self-executing provisions that state that, in the event of the release of any collateral from the lien of any security interest and/or mortgage securing the Partnership’s then-existing senior secured credit facilities, the same collateral, if encumbered by any security interest and/or mortgage lien with respect to the Florida Project granted to Steven pursuant to Paragraphs 3.1(b) and (c) of the 2009 Amendment, will automatically be deemed to be released therefrom.  Such self-executing automatic release provisions shall be in addition to, not in lieu of, the powers of attorney described in Paragraph 3.1(c) of the 2009 Amendment, and shall not derogate from the powers of the attorneys-in-fact under such powers of attorney.  In the event the Partnership determines to issue Incremental Obligations (as defined in the Appendix C to the 2009 Amendment), then Steven will enter into an intercreditor agreement and provide a power of attorney with respect to such Incremental Obligations having substantive terms comparable to and based on those set forth in Appendix C to the 2009 Amendment and Paragraph 22c below.

 

c.            Powers of Attorney .                                Referring to the General Power of Attorney described in Appendix C to the 2009 Amendment, Steven shall, from time to time, as applicable, provide a power of attorney having similar terms for any agent which shall succeed any agent acting for the benefit of the first lien secured parties and for any such agent in any subsequent senior financing described above, within 10 days of being furnished with a form of power of attorney for execution.

 

Furthermore, in addition to the General Power of Attorney described in Appendix C to the 2009 Amendment, Steven shall provide, on or before the 2009 Amendment Date, and from time to time thereafter (within 10 days of being furnished with a form of power of attorney for execution), as applicable in the case off successors, an irrevocable, unconditional and recordable General Power of Attorney in favor of NBCU (and its successors as guarantors under the NBCU Guarantee), pursuant to which Steven shall authorize NBCU (and its successors as guarantors under the NBCU Guarantee) to execute and record, in the name and on behalf of Steven, (i) a release (x) each time that the first lien secured parties execute and record a similar such release or (y) in connection with any sale or transfer, in whole or in part, of any or all of the real or personal property in which a collateral interest is granted pursuant to this Paragraph 22, and (ii) a subordination (x) each time that the first lien secured parties execute and record a similar such subordination or (y) in connection with any refinancing, in whole or part, of the senior security interests and mortgage liens encumbering the Florida Project or any portion thereof or interest therein.

 

d.            Costs of Perfection .                &n


 
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