Change of ownership at Universal?

[pilferk]

That is standard contact language when dealing with licensing or distributing rights. I know first hand because the company I was working was sold. We had to get a signed letter of intect from every one were in contract with that they were willing to continue on with the new owners. The basis of the sale price for the company was based on how many of the contracts were continue and not ended. I can not name any names, but about 25% of the contracts were voided by the sale because they did not like the company purchasing us.

There are different rules when companies get a contolling share of a company through stocks. This is not th case here. This is an out right sale of the park and its assets. That is why the partner either has to buy the other out or the whole park is up for sale. In terms of a sale, contracts are an intangliable asset that have value. And if it were to go to sale, all the licensing would probably be in question, Marvel, Harry Potter, Simpson, and even the Universal name on the park. When Cedar Fair (owner of Cedar Point) bought the Paramount parks, the Paramount name and all their licensing left with Paramount.

I have also not seen the contracts, but the companies will do anything protect their properties. If Warner/DC were to buy the park and Marvel did not have an out, Warner may not be able to change the Marvel areas of the park per contact but they could make a DC area that is three times bigger than the Marvel area making the DC characters seem more important and better than the Marvel characters. This in turn could hurt the image of the Marvel characters.

This whole conversation may be pointless because I think Universal would be crazy not to buy their partner out and have complete contol of the park.

1) It's NOT an outright sale of the parks, actually. It's sale of the company that owns the parks. That's actually very different, both in terms of contracts and procedurals. Essentially, they're selling a holding company, NOT a companies holdings.

Paramount Parks sold the assets owned by Paramount Parks to Cedar Fair. They didn't sell Paramount Parks (the company)...thus I would expect the licensing to go with them, because THEY (PP) held the contracts (not the assets, which can't hold contracts).

2) Marvel would not be effected. Again, the breakdown I saw, by someone who HAD seen the contracts, specifically talked about the fact that if Universal Theme Parks and Resorts was sold (as a company) the contracts perpetuated.

3) Again, in the DC/Marvel scenario above, it would likely breach the contract clauses concerning harming brand image/value. I'd expect there's likely also a specific exclusivity clause (much like deals with Coke/Pepsi) within the contract, though I haven't seen THAT mentioned. In any event, WB couldn't do any of what you propose without risking almost certain injunction and loss of rights...which would harm their investment in the company and value of the property.

4) The question is: Was your COMPANY sold (but was still a corporate entity unto itself, held by another company and operated separately)? Or were your company's assets, liabilities, and other holdings sold, and you now operate under a completely different corporate entity? And were your contracts for licensing or distribution? Licensing is slightly different than the distribution of a branded product (say, for example, a bottler).

I deal with this stuff A LOT (not remotely related to theme parks, though). I'm not a lawyer, but work more in Decision Support/Finance and we see this stuff a lot. I've never seen the type of language you're talking about, when dealing with ownership of a complete corporate entity. Assets: Yes.

There's a big difference between the two.

 

[Galen_50]

I work for a distributor. The LLC company is still around and using same name and tax id number, just a subsidary of a larger multistate company. I am now with the parent company it the finacne department. Most of our agreements were distribution rights, but we did have a few trademark agreements that we had to get permission before the sale.

This is wording that I found just doing a simple google search on tranmark licensing agreements:

4.2 Termination for Cause. Notwithstanding the provisions of
Section 4.1 of this Agreement, this Agreement and all rights granted
hereby, including but not limited to Licensee's right to use the
Trademark, shall automatically terminate without notice from Licensor
if (i) Licensee attempts to assign, sub-license, transfer or otherwise
convey, without first obtaining Licensor's written consent, any of the
rights granted to Licensee by or in connection with this Agreement;
(ii) Licensee fails to obtain Licensor's approval of Licensee's use of
the Trademark in accordance with Section 2 of this Agreement; (iii)
Licensee uses the Trademark in a manner in violation of, or otherwise
inconsistent with, the restrictions imposed by or in connection with
Section 3 of this Agreement; or (iv) Licensee uses the Trademark in a
manner not expressly permitted by this Agreement.


When we were going through our sale, according to the court, because it was an LLC, a sale of the company to another party was considered a transfer and we had to obtain written consent from everyone before the sale could be completed.

Again if Universal buys them out, there is no issue here. The only time this will be an issue if there is a third party purchase. Also I have not seen the contracts in question, but if a simple one found on the internet has this, I am sure a company protecting its trademarks is going to. I don't think we will ever truely know untill when and if there is an actual sale to a third party. I think Universal would be crazy to let that happen at this time, so this whole discussion may be for nothing.

 

[doconeill]

I work for a distributor. The LLC company is still around and using same name and tax id number, just a subsidary of a larger multistate company. I am now with the parent company it the finacne department. Most of our agreements were distribution rights, but we did have a few trademark agreements that we had to get permission before the sale.

This is wording that I found just doing a simple google search on tranmark licensing agreements:

4.2 Termination for Cause. Notwithstanding the provisions of
Section 4.1 of this Agreement, this Agreement and all rights granted
hereby, including but not limited to Licensee's right to use the
Trademark, shall automatically terminate without notice from Licensor
if (i) Licensee attempts to assign, sub-license, transfer or otherwise
convey, without first obtaining Licensor's written consent, any of the
rights granted to Licensee by or in connection with this Agreement;
(ii) Licensee fails to obtain Licensor's approval of Licensee's use of
the Trademark in accordance with Section 2 of this Agreement; (iii)
Licensee uses the Trademark in a manner in violation of, or otherwise
inconsistent with, the restrictions imposed by or in connection with
Section 3 of this Agreement; or (iv) Licensee uses the Trademark in a
manner not expressly permitted by this Agreement.


When we were going through our sale, according to the court, because it was an LLC, a sale of the company to another party was considered a transfer and we had to obtain written consent from everyone before the sale could be completed.

Again if Universal buys them out, there is no issue here. The only time this will be an issue if there is a third party purchase. Also I have not seen the contracts in question, but if a simple one found on the internet has this, I am sure a company protecting its trademarks is going to. I don't think we will ever truely know untill when and if there is an actual sale to a third party. I think Universal would be crazy to let that happen at this time, so this whole discussion may be for nothing.

IANAL, but from that wording if the licensee is the company that is selling - i.e. if Blackstone is the licensee and they are selling the parks, they would need to transfer the license, and that would require approval. If the licensee is "Universal Resorts Florida" (or whatever the name is), a wholly owned subsidiary or other similar entity, and Blackstone is selling that company, then the license isn't actually transferring.

I think it has a lot to do with the wording of the clauses in this particular case and who the licensee really is.

Regardless, I'm sure that a sale would be contingent on getting that license transferred if necessary, and if JK does not give approval, the sale will not go through.

 

[pilferk]

I work for a distributor. The LLC company is still around and using same name and tax id number, just a subsidary of a larger multistate company. I am now with the parent company it the finacne department. Most of our agreements were distribution rights, but we did have a few trademark agreements that we had to get permission before the sale.

This is wording that I found just doing a simple google search on tranmark licensing agreements:

4.2 Termination for Cause. Notwithstanding the provisions of
Section 4.1 of this Agreement, this Agreement and all rights granted
hereby, including but not limited to Licensee's right to use the
Trademark, shall automatically terminate without notice from Licensor
if (i) Licensee attempts to assign, sub-license, transfer or otherwise
convey, without first obtaining Licensor's written consent, any of the
rights granted to Licensee by or in connection with this Agreement;
(ii) Licensee fails to obtain Licensor's approval of Licensee's use of
the Trademark in accordance with Section 2 of this Agreement; (iii)
Licensee uses the Trademark in a manner in violation of, or otherwise
inconsistent with, the restrictions imposed by or in connection with
Section 3 of this Agreement; or (iv) Licensee uses the Trademark in a
manner not expressly permitted by this Agreement.

When we were going through our sale, according to the court, because it was an LLC, a sale of the company to another party was considered a transfer and we had to obtain written consent from everyone before the sale could be completed.

Again if Universal buys them out, there is no issue here. The only time this will be an issue if there is a third party purchase. Also I have not seen the contracts in question, but if a simple one found on the internet has this, I am sure a company protecting its trademarks is going to. I don't think we will ever truely know untill when and if there is an actual sale to a third party. I think Universal would be crazy to let that happen at this time, so this whole discussion may be for nothing.

The above contract terminology specifically refers to selling assets (or reassigning them), NOT the entire corporate entity changing hands as part of sale of the holding company. It says you can't sell the license as an asset.

That's exactly what I understood....and, in fact, it's almost the exact terminology I had in mind during this discussion.

IF the Licensee continues to exist as a seperate corporate entity (owned by a parent company), it's not actually selling anything or re-assigning anything. It continues to hold the license, just with new people holding the majority of their stock/ownership.

LLC's might be slightly different than wholly owned corporate entities, I guess. It might also be that the procedurals of your situation were different (how the company was transferred, etc). And Distribution is DEFINITELY different than straight licensing.

I guess we'll have to wait and see what the outcome is.

 

[pilferk]

IANAL, but from that wording if the licensee is the company that is selling - i.e. if Blackstone is the licensee and they are selling the parks, they would need to transfer the license, and that would require approval. If the licensee is "Universal Resorts Florida" (or whatever the name is), a wholly owned subsidiary or other similar entity, and Blackstone is selling that company, then the license isn't actually transferring.

I think it has a lot to do with the wording of the clauses in this particular case and who the licensee really is.

Your first paragraph is exactly the way I understand it. It's also exactly the way our corporate attorneys explained it to me (or at least the way I understood their explanations).

I could be TOTALLY wrong on this....again, not a lawyer.

 

[TisBit]

The above contract terminology specifically refers to selling assets (or reassigning them), NOT the entire corporate entity changing hands as part of sale of the holding company. It says you can't sell the license as an asset.

That's exactly what I understood....and, in fact, it's almost the exact terminology I had in mind during this discussion.

IF the Licensee continues to exist as a seperate corporate entity (owned by a parent company), it's not actually selling anything or re-assigning anything. It continues to hold the license, just with new people holding the majority of their stock/ownership.

LLC's might be slightly different than wholly owned corporate entities, I guess. It might also be that the procedurals of your situation were different (how the company was transferred, etc). And Distribution is DEFINITELY different than straight licensing.

I guess we'll have to wait and see what the outcome is.

I agree we have to wait and see, but the counter argument here is that the Universal Resorts is a subsidiary of the two companies....which can mean an asset. They are not a separate entity entirely, because they are owned and fall under the reach of the main companies. If the subsidiary is being sold, it very well could give Marvel (Disney) an out on the contract. I think a lot of it will come down to how the park is sold as well, do they sell the park or the company. You not only have to look at the licensing contracts but also the contracts between Blackstone and NBCUniversal, they may dissolve Universal Resorts and merely sell the land, not the naming, etc.

Again, these contracts are written to permit them to be broken if there is ANY change in conditions or something could be harmful. I would expect Disney to do their best to pull the Marvel characters out of Universal if the sale happens and it will most likely land in court. I doubt Harry Potter would be pulled, it is mutually beneficial to both parties to continue a relationship.

 

[pilferk]

I agree we have to wait and see, but the counter argument here is that the Universal Resorts is a subsidiary of the two companies....which can mean an asset. They are not a separate entity entirely, because they are owned and fall under the reach of the main companies. If the subsidiary is being sold, it very well could give Marvel (Disney) an out on the contract. I think a lot of it will come down to how the park is sold as well, do they sell the park or the company. You not only have to look at the licensing contracts but also the contracts between Blackstone and NBCUniversal, they may dissolve Universal Resorts and merely sell the land, not the naming, etc.

Again, these contracts are written to permit them to be broken if there is ANY change in conditions or something could be harmful. I would expect Disney to do their best to pull the Marvel characters out of Universal if the sale happens and it will most likely land in court. I doubt Harry Potter would be pulled, it is mutually beneficial to both parties to continue a relationship.

Functionally, Universal Orlando Theme Parks and Resort are a separate corporation (with their own executive structure, board of directors, etc) wholly owned by some sort of partnership (either another corporation or an LLP). They're definitely not an "asset"...of that I'm sure. HOW their corporate structure is set up....I can't tell because I can't find public record of their articles of incorporation/partnership.

From what I've read, Universal Orlando Theme Parks and Resorts would not get disolved. The company gets sold as a whole. Again, given the way this has been explained to me, that would be the whole purpose of forming UOTPR...to ensure you can maintain the continuity of licenses and assets. I can't imagine any contract between NBCUniversal and Blackstone forcing the company to be disolved as it would devalue the property/assets by more than 1/2. Why would anyone do business that way? It makes no sense.

Really, what's potentially up for sale is a piece of (or the entirety of) the controlling partnership/corporation.

And, again,not having seen the contracts, I fall back to the breakdown I saw on the Marvel contract back when Disney bought them. Sale of Universal Orlando Theme Parks and Resorts was specifically addressed in that breakdown, and they said it would NOT effect the Marvel deal.

As an aside, I asked my main legal contact at work about this yesterday. He thinks (again, without having seen any contracts, etc, and going entirely by small pieces of info we have, even he's speculating) I've got it right. He compared it to the situation with the YES network (the Yankees Sport and Entertainment Network), and the ownership group of Yankees Global (who also own the Yanks), the former New Jersey Nets ownership (who sold the team but kept their stake of the partnership that owns YES) and Goldman Sachs. Sachs has been trying to sell their stake for some time, now. Current Nets ownership is NOT part of the YES ownership group. Even if Sachs sells their share of the holding company/partnership, YES would not lose broadcast rights to the Nets games because technically YES isn't being sold...and that's who the contract resides with.

Guess we'll all just have to wait and see how it plays out.