Document:

Unassociated Document

    
    
      Exhibit 10.1

       

       

      PATENT LICENSE
AGREEMENT

      

      This
Agreement by and between Laser Design International, LLC (“LDI”) and Crystal
Magic, Inc (“Crystal Magic” or “Licensee”) is entered into as of May 6, 2007
(hereinafter the “Effective date”).

      

      WHEREAS
LDI is the assignee and patentholder of U.S. Patent No. 5,206,496 and the
reexamination certificate 5,206,496 C1, pursuant to an agreement with Diageo
Scotland Ltd dated February 20, 2003; and

      

      WHEREAS
Crystal Magic desires to obtain a non-exclusive license under the Licensed
Patents (defined below) and LDI desires to grant to Crystal Magic a
non-exclusive license to these patents according to the terms and conditions set
forth below:

      

      NOW
THEREFORE, in view of the above premises and the following mutual covenants and
promises, the parties hereto agree as follows:

      

      Incorporation
of Recitals. The recitals set forth above are hereby incorporated as a part of
this Agreement.

      

      ARTICLE
I

      

      DEFINITIONS

      

      1.1.           The
“496 patent” shall mean United States Patent No, 5,206,496 to Clement et al.
issued on or about April 27, 1993, Reexamination Certificate No. 5,206,496 C1,
and any foreign counterparts thereto. The ‘496 patent is
sometimes referred to herein as the “Licensed Patents”

      

      1.2.           “Net
Sates” shall mean the proceeds actually received by Licensee or its affiliates
from the sale, lease, or other disposition of Laser Subsurface Engraving
Product, as hereinafter defined, as delivered to the purchaser by Licensee and
its Affiliates, before sales tax and excepting added items not described by the
Licensed Patents sold as accessories for payment actually received by Licensee
(such as display bases and presentation boxes), reduced by any units of such
products returned to and accepted by Licensee or its Affiliates to the extent
that the purchase price of such units has been refunded. For sales of licensed
products to an Affiliate, sister company, parent company, controlling company,
subsidiary, or entity otherwise related to the Licensee (hereinafter “Related
Company), the higher of the Related Company’s purchase or sale price for each
item will be included in Net Sales; provided however that the Net Sales to such
Related Company shall not be recognized for royalty calculations until sold by
the Related Company to a non-Related Company and shall then be recognized as a
sale at the higher of the Related Company’s purchase or sale price.

      

       

       

       

      CONFIDENTIAL                                           LDI                                 Crystal
magic                                           Page 1

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Patent
License Agreement

      

      1.3.           “Laser
Subsurface Engraving Machine” shall mean any laser marking device whose
construction or method of operation falls within the claims of the Licensed
Patents.

      

      1.4.           “Laser
Subsurface Engraving Product” shall mean objects that contain internal
decorative or indicative images that have been created inside a transparent
medium with a Laser Subsurface Engraving Machine, as described in the claims of
the Licensed Patents.

      

      1.5.           “Affiliates”
shall mean, respectively, a corporation or other entity that controls or is
controlled by LDI or Licensee.

      

      1.6.           “Improvement”
shall mean any modification of or improvement to a Laser Subsurface Engraving
Machine which enhances its operability, effectiveness, capability, or efficiency
in making Laser Subsurface Engraving Products under the claims of the Licensed
Patents.

      

      ARTICLE
II

      

      LICENSE
GRANT AND RELEASE

      

      2.1.           License
of the Licensed Patents. Subject to Licensee’s compliance with all material
terms of this Agreement LDI grants to Licensee under the Licensed Patents a
non-exclusive, non-transferable, royalty-bearing license to make, use, offer for
sale, sell, lease, or, otherwise dispose of Laser Subsurface Engraving Product,
For the purpose of this Agreement, all terms are deemed material with the
exception of the terms governed by the following sections; 8.3, 8.4, 8.5, and
8.6. Compliance with non-material terms may be enforced (subject to the notice
and cure requirements of section 6.2) through binding arbitration, with the
prevailing party recovering its costs and attorneys fees. The license granted
hereunder does not extend to providing manfacturing, etching or engraving
services to third parties on a fees for service basis unless said third party is
itself licensed.

      

      2.2,           Norwood
Consent, LDI represents that Norwood Operating Company has reconveyed any
exclusive rights it once held in the ‘496 patent to LDI and that LDI is able to
grant the licenses granted hereunder without the consent of any third
party.

      

      2.3,           Covenant
Not to Sue. Subject to Licensee’s compliance with the terms of this Agreement,
LDI shal not assert any claim or action against Licensee, its distributors,
or direct or indirect customers for practicing any method or process within the
scope of the Licensed Patents, in making, using, or selling any Laser Subsurface
Engraving Product for which all applicable royalties have been paid to LDI under
this Agreement

      

      2.4.           No
Implied Licenses. Except as expressly stated in this Article II, no other rights
or licenses are granted to Licensee or any other entity, express or implied, by
virtue of this Agreement.

       

       

       

      CONFIDENTIAL                                           LDI                                 Crystal
magic                                           Page 2

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Patent
License Agreement

      

      2.5.           Improvements, Licensee shall
promptly inform LDI of any Improvements. LDI shall have a right of first refusal
to obtain a non-exclusive royalty” free license from Licensee for any accepted
Improvement. If LDI fails to either refuse or accept any Improvement within
ninety (90) days after being informed by Licensee of the Improvement, then LDI
shall be deemed to have rejected the offer of the license.

      

      Should
LDI acquire additional patent rights which would be infringed by practicing
under the Licensed Patents, LDI will offer to Licensee a license of such rights
at no additional cost.

      

      2.6.           Insurance. Licensee will
throughout the term of this Agreement maintain product liability insurance of
such nature and such amount as LDI shall reasonably consider appropriate and
shall so state to Licensee. Licensee shall further produce copies of all
insurance certificates and renewal certificates to LDI within thirty days of
receipt of the same.

      

      ARTICLE
III

      

      CONSIDERATION

      

      3.1.           License Transfer Fee. The
Parties agree that Licensee has already paid a license transfer fee as part of
the litigation settlement associated with this license agreement

      

      3.2.           Royalty Payments and
Statements Licensee is obligated to pay royalties (in United States
dollars), as follows.

      

      a)           a
minimum royalty of $25,000 per year; plus

      

      b)           in
any year in which the sum of (i) 2.75% of Net Sales from locutions or through
channels other than Disney or Universal Studios locations plus (ii) 0.4% of Net
Sales from locations on Disney or Universal Studios properties, exceeds $25,000,
the amount of such excess to a maximum of $35,000.

      

      Such
royalties, including payments required in order to meet minimum royalty
requirements, will be calculated and paid on a calendar quarterly basis, within
30 days of the end of the quarter. In the event that Licensee ceases
distribution of Laser Subsurface Engraving Product, the minimum royalty
obligation set forth herein shall terminate pro rated as of the point in time
when distribution ceased.

      

      For all
sales by Licensee not in United States dollars, the total of Net Sales shall be
converted into United States dollars using the currency conversion rates listed
in the Wall Street Journal published on the last day of the calendar quarter or
the day closest to the end of the calendar quarter for which royalty payments
are calculated.

      

       

       

      CONFIDENTIAL                                           LDI                                 Crystal
magic                                           Page 3

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Patent
License Agreement

      

      33.           Records;
Audits.

      

      a)           Within
thirty (30) days after the end of each calendar quarter. Licensee will provide
LDI with a written report in spreadsheet format containing the data used by
Licensee to determine its royalty payment to LDI for such quarter, including,
without limitation, the quantity, price, product number, and product description
of all royalty-bearing produce and any other information that may be reasonably
requested by LDI from time to time for Licensor to determine whether Licensor is
paying the correct amount of royalties. Such a report shall be provided even if
Licensee pays only the minimum royalty required under this Agreement, Licensee
shall maintain the records from which such reports were created and any
additional records required in order to verify the accuracy of any such reports
for a period of three years following the termination of this
License.

      

      b)           LDI
will have the right, during normal business hours and upon at least fifteen (15)
days prior notice, to inspect Licensee’s facilities and audit Licensee’s records
relating to Licensee’s activities pursuant to this Agreement in order to verify
that Licensee has paid to LDI the correct amounts owed under this Agreement and
has otherwise complied with the terms of this Agreement. The audit will be
conducted at LDI’s expense, unless the audit reveals that Licensee has underpaid
the amounts owed to LDI by 10 percent (10%) or more in any quarter, in
which case Licensee will reimburse LDI for all costs and expenses incurred by
LDI in connection with such audit Such audits will be conducted no more than
once in any calendar year and may cover any period of time for which royalties
may have been due under this License. If Licensee fails to pay LDI any amounts
shown by any such audit to be owing within ten (10) days after notice thereof,
then LDI may immediately terminate Licensees rights under his
License.

      

      3.4.           Late Payments; Attorneys’
Fees. Licensee agrees to pay LDI a late charge of five percent (5%) of
any amounts not paid by Licensee when due, including of any sums identified in
an audit pursuant to section 3.3. In addition, interest wilt be due and payable
on past due amounts at the rate of one percent (1%) per month. Licensee agrees
to pay attorneys fees in the event of any successful court action undertaken for
collection.

      

      3.5           Most Favored Royalty. In the
event that LDI later executes a new license of the Licensed Patents to any other
person, granting substantially the same rights on substantially the same terms
where Licensee concurrently has rights under this Agreement, and said license
contains more favorable royalty terms than those enjoyed by Licensee, LDI shall
promptly notify Licensee and the royalty rate provided in paragraph 3.2 shall be
reduced by fifty (50) percent of the difference effective as of the date the
more favored license is granted.

       

       

       

      CONFIDENTIAL                                           LDI                                 Crystal
magic                                           Page 4

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Patent
License Agreement

      

      ARTICLE
IV

      

      LIMITED
WARRANTY AND INDEMNITY

      

      4.1           EXCEPT
AS EXPRESSLY STATED IN THIS ARTICLE IV, NO OTHER WARRANTIES OR REPRESENTATIONS
ARE GIVEN BY LDI UNDER THIS AGREEMENT, including but not limited to, any
warranty or representation: (a) as to the validity of the Licensed Patents; (b)
that any manufacture, importation, sale, lease, use, or other disposition of
Laser Subsurface Engraving Product will be free from infringement of another
party’s intellectual property rights; (c) that LDI will enforce any intellectual
property rights it may have in the Licensed Patents against third parties, or
(d) as to the quality of merchantability, or fitness for a particular purpose of
any Laser Subsurface Engraving Product

      

      LDI will
keep Licensee reasonably informed as to any final rulings in legal or government
proceedings which affect the claims of the Licensed Patents.

      

      4.2           Licensee
shall defend, indemnify, and hold harmless LDI and its directors, officers,
employees, and Affiliates, from and against any claims, liabilities, actions,
costs or damages (including fees of attorneys and other professionals) arising
from product liability claims related to Licensee’s manufacture) use, sale or
distribution of Laser Subsurface Engraving Produce provided LDI gives Licensee
notice of such claim, provides reasonable cooperation and assistance in
connection with such claim, and does not agree to any settlement without
Licensee’s consent.

      

      4.3           Licensee
will provide reasonable cooperation and assistance to LDI in connection with any
litigation concerning the Licensed Patents brought by or against a third party,
including but not limited to any action or claim involving alleged infringement
of the Licensed Patents. Said cooperation shall include but not be limited to a)
joining as a named party, if necessary; and b) furnishing relevant evidence and
testimony, all at the expense of LDI or other party initiating the action. Any
monetary award or damages resulting from such action shall be accorded to the
party bringing the action unless otherwise agreed by the parties.

      

      4.4.           LDI
represents and warrants that LDI has sufficient ownership interest in the
Licensed Patents to grant the licenses that are granted under this
Agreement

      

      ARTICLE
V

      

      PATENT
NOTICES

      

      Licensee
will mark each Laser Subsurface Engraving Product or its packaging as well as
sales brochures with a notice of U.S. Patent No. 5,206,496 or the numbers of
other of The Licensed Patents as applicable.

       

       

       

      CONFIDENTIAL                                           LDI                                 Crystal
magic                                           Page 5

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Patent
License Agreement

      ARTICLE
VI

      

      TERM
AND TERMINATION

      

      6.1.           Term.
In exchange for LDI’s covenant not sue contained in paragraph 2.3, the
obligation to pay royalties under the terms of this Agreement shall continue
until the earliest of (l) the expiration of the terms of all the Licensed
Patents, (2) after all possibility of appeal has been exhausted for any final
judgment or judgments which collectively declare all claims of the Licensed
Patents invalid, or (3) termination in accordance with paragraph 6.2,
below.

      

      6.2.           Termination.

      

      a)           If
there should occur a material breach, default or noncompliance by one party (the
“Defaulting Party”) of or with any term or condition hereof followed by written
notice from the other party (the “Non-Defaulting Party”) of such breach, default
or noncompliance and the failure of the Defaulting Party to remedy or correct
such breach, default or noncompliance within sixty (60) days after receipt, of
such notice, then in addition to any other remedy available at law or in equity
or under this Agreement, the Non-Defaulting Party may, at its election,
terminate this Agreement.

      

      b)           LDI
may, at its election, terminate this Agreement upon Licensee’s bankruptcy or
reorganization for the benefit of creditors.

      

      c)           Licensee
may terminate this Agreement by notifying LDI in writing that Licensee and all
of its affiliates are no longer conducting sales or manufacturing activities
which fall within the claims of the Licensed Patents,

      

      6.3.           In
the event that this Agreement is terminated in accordance with this Article VI,
then the license rights granted to Licensee by this Agreement shall immediately
terminate, except that Licensee shall have the right to sell any completed units
of in existence as of the date of termination, subject to, and provided Licensee
has at all times complied with, its obligations to pay royalties and submit to
audit in accordance with this Agreement. The provisions of Articles 1, 3, 4, 5,
7, and 8 and Sections 2.2 and 2.5 and any liability arising from breach of this
Agreement will survive termination of this Agreement except that if Licensee
terminates the agreement pursuant to Section 6.2(c) then Licensee shall no
longer be obligated to submit Statements under Section 3.2 as long as it does
not conduct manufacturing or sales activities which would otherwise trigger an
obligation to pay royalties under Section 3.2.

      

      ARTICLE
VII

      

      LIMITATION
OF LIABILITY

       

       

      CONFIDENTIAL                                           LDI                                 Crystal
magic                                           Page 6

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Patent
License Agreement

      

      IN NO
EVENT SHALL ANY PARTY BE LIABLE TO ANY OTHER PARTY OR
ANY OTHER PERSON FOR ANY SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE OR
CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS
OR DAMAGES TO THE OTHER PARTY’S BUSINESS REPUTATION HOWEVER CAUSED AND ON ANY
THEORY OF LIABILITY, WHETHER IN AN ACTION FOR CONTRACT, STRICT LIABILITY OR TORT
(INCLUDING NEGLIGENCE) OR OTHERWISE, WHETHER OR NOT THE OTHER PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGE AND NOTWITHSTANDING THE FAILURE OF
ESSENTIAL PURPOSE OF ANY REMEDY.

      

      ARTICLE
VIII

      

      GENERAL

      

      8.1.           No waiver. No waiver by LDI,
express or implied, of any breach of any term condition, or obligation of this
Agreement by Licensee shall be construed as a waiver of any subsequent breach of
that term, condition or obligation, or of any other term, condition, or
obligation of this Agreement of the same or different nature.

      

      8.2.           No Assignment or Sublicensing; No
Transfer of Machines Without Permission. Licensee shall not assign or
otherwise transfer, by contract, operation of law, or otherwise, without the
specific written consent of LDI, this Agreement or any license light granted
hereunder or any interest herein, or grant any sublicense for any purpose under
this Agreement, and any such assignment, transfer or sublicense shall be null
and void. Said written consent of LDI shall not be unreasonably withheld or
denied.

      

      Licensee
shall not sell, transfer, lease, franchise, or otherwise dispose of any Laser
Subsurface Engraving Machine which it may own or operate, however acquired, to
any other entity without prior specific written permission from LDI, said
permission not to be unreasonably withheld or denied. LDI may refuse permission
for any such transfer to an entity which does not have proper rights to practice
under the Licensed Patents.

      

      8.3.           Governing Law. This Agreement
shall be construed under the laws of the State of California and the United
States of America as though entered into between two parties residing in
California to be performed wholly within California. All parties to this
Agreement specifically consent to the jurisdiction of the courts of the U.S.
District Court, Northern District of California, and the courts of Santa Clara
County, California for purposes of enforcing this Agreement

      

      8.4.           Complete Agreement. This
Agreement sets forth the entire understanding between the parties and supersedes
all prior discussions, representations, and agreements between them as to me
subject matter of this Agreement. This Agreement cannot be modified or amended
except in a writing signed by duly authorized representatives of Licensee and
LDI.

       

       

       

      CONFIDENTIAL                                           LDI                                 Crystal
magic                                           Page 7

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Patent
License Agreement

      

      8.5           Export Control. Licensee shall
be responsible for ensuring it complies with all laws and regulations of the
country in which it operates, imports from, or to which it exports
products.

      

      8.6           Notices. A notice, request, or
statement hereunder shall be deemed to be sufficiently given or rendered when
sent by certified mail and addressed to such address as may be specified by
written notice.

      

      8.7.           Taxes, Licensee shall pay all taxes and other
charges that may be Imposed by any Governmental unit as a result of the
performance of this Agreement, including but not limited to capital, property,
turnover excise use, sales, and income taxes or other charges imposed by such
Governmental unit, other than income taxes levied against LDI.

      

      8.8.           Resolution of Disputes. Except
as provided below, any dispute between the parties which arises from this
Agreement and cannot be resolved informally between the parties shall be
referred to the Northern District of California court wherein the original
litigation which gave rise to this License was inducted unless otherwise agreed
by all of the parties. In the event that this Agreement is terminated pursuit to
Article VI, LDI may undertake any and all legal actions to collect any royalties
or other monies owed to them under this Agreement and LDI shall be free to
undertake any and all legal actions for patent infringement including but not
limited to actions to prevent Licensee, its affiliates, or distributors from
unlicensed manufacture, distribution, or sale activities that would otherwise
infringe any claim of the Licensed Patents and to recoup damages for such
activities. LDI shall at all times be free to undertake my and all legal actions
to prevent or stop infringement by Licensee, its affiliates, or distributors of
any rights in the Licensed Patents not granted to Licensee.

      

      IN
WITNESS THEREOF, the parties haves executed this Agreement.

      

      

      FOR
LDI:

      LASERDESIGN INTERNATIONAL,
LLC

      

      By: BRIAN D: LIDICOAT

      Its: President

      Date: October 14, 2007

      

      FOR
CRYSTAL MACIC, INC:

      

      Crystal Magic, Inc.

      

      /s/ Steven M. Rhodes

      Its: Presidcent

      Date: October 14, 2007

       

       

      CONFIDENTIAL                                           LDI                                 Crystal
magic                                           Page 8Unassociated Document

    
    
      Exhibit 10.2

     

     

    REVOCABLE
LICENSE AGREEMENT

    (CRYSTAL
MAGIC)

    

    THIS
REVOCABLE LICENSE AGREEMENT (“Agreement”), is made and
entered into as of November 18th,
2002 by and between CRYSTAL
MAGIC, INC., a Florida
corporation (“Crystal”)
and DISNEYLAND®
RESORT, A DIVISION OF WALT
DISNEY WORLD CO., a Florida corporation, (“Disney”) (Crystal and Disney
referred To individually as a “Party” and collectively, as
the “Parties”).

    

    WITNESSETH

    

    WHEREAS,
Disney owns and operates the entertainment, recreation and lodging complex known
as the Disneyland®
Resort (the “Resort”)
which currently includes Disneyland® park and Disney’s California AdventureTM
park (individually, the “Park” and collectively, the
“Parks”), Downtown Disney® District
(“Downtown Disney”)
(individually a “Location” and collectively,
the “Locations”), and
related facilities all located in Anaheim, California;

    

    WHEREAS,
Crystal is engaged in the generation of portraits and 3-D character, logo and/or
name drop (Mickey Mouse, Minnie Mouse;, Donald Duck, Goofy, Pluto, Disney’s California AdventureTM
Park icons as approved in advance by Disney and the Disney Merchandise
Brand department), sculpture reproductions inside optically transparent material
(i.e., a crystal glass cube) (collectively, the “Inventory”) and the
entertainment and show aspects associated therewith (collectively the “Services”); and

    

    WHEREAS,
Crystal desires to license space in the Parks and in Downtown Disney to provide
the Services and sell the Inventory, and Disney and Crystal desire that this
Agreement apply to Crystal’s license of space in such licensed areas in the
manner hereinafter described and on terms hereinafter provided.

    

    NOW,
THEREFORE, in consideration of the terms, covenants and conditions herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereto agree as
follows:

    

    1.           TERM OF
AGREEMENT.

    

    The term
of this Agreement shall commence as of October 1, 2002 and continue through and
including October 30, 2008 (the “Term”), unless earlier
terminated as provided herein. Neither Party shall be obligated to extend the
Term. Crystal hereby acknowledges and agrees that during the Term, the Parks and
Downtown Disney and their surrounding areas may undergo major construction and
renovation and agrees that such construction and renovation will not constitute
a breach by Disney of its obligations under this Agreement.

    

    2.           GRANT OF NON-EXCLUSIVE
LICENSE.

    

    Subject
to the terms and provisions of this Agreement, Disney hereby grants to Crystal a
non-exclusive revocable license to enter upon and use the Locations (as defined
below) for the sole purpose of providing the Services and producing and selling
the Inventory to guests of the Resort, The “Locations” shall mean those
certain areas at the Parks and Downtown Disney where Crystal shall provide the
Services and sell the Inventory, as designated by Disney in its sole and
absolute discretion. Disney shall be the owner of the Locations and the contents
therein, except for the Crystal Property (as defined in Section 20).
Notwithstanding anything herein to the contrary, Crystal shall not, without the
prior written consent of Disney in each instance, which consent may be granted
or withheld in Disney’s sole and absolute discretion, mortgage or grant a
security interest in either this Agreement or the Locations, CRYSTAL
ACKNOWLEDGES AND AGREES THAT THE LICENSE GRANTED HEREUNDER DOES NOT CONSTITUTE A
LEASEHOLD INTEREST OR OTHER INTEREST IN LAND.

    

     

    
 

    1

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    3.           PERMITTED USE: OPERATION OF
LOCATIONS.

    

    (a)           The
Locations shall be used by Crystal to provide the Services and produce and sell
the Inventory and for customers to view the “show” aspects of Inventory creation
and for no other purpose whatsoever. Crystal shall provide, at its sole cost and
expense, (i) the Services and the Inventory; and (ii) except for the shelving
loaned to Crystal by Disney, all of the equipment and supplies, including
additions thereto and replacements and renewals thereof, necessary to produce
and sell the Inventory at the Locations (collectively, “Equipment”) as set forth on
Exhibit C.
attached hereto and fully made a part hereof. Subject to Disney’s approval,
which approval Disney may grant or withhold in Disney’s sole and absolute
discretion, Crystal shall upgrade and replace, at Crystal’s sole expense.
Crystal’s Inventory and Equipment as necessary to ensure the Locations
continually produce first-class products and services. Notwithstanding anything
herein to the contrary, Crystal shall not, without the prior written consent of
Disney in each instance, which consent Disney may grant or withhold in Disney’s
sole and absolute discretion, mortgage or grant a security interest in or suffer
to permit any encumbrance to be placed on this Agreement, any Location, the
Equipment or the Inventory. Crystal shall have full responsibility and
obligation for the operation of the Locations and for all direct costs
(calculated pursuant to Section 5(f) hereinbelow) incurred by Disney for
Crystal’s operation including, but not limited to, the provision of custodial
service, merchandise bags and other guest service expense items. All Equipment
and Inventory provided by Crystal at any time during the Term of this Agreement
is subject to Disney’s prior written approval, which approval may be granted or
withheld in Disney’s sole and absolute discretion. Crystal shall be responsible
for the daily care and maintenance of the equipment and supplies necessary to
handle the sale of the Inventory (e.g., sales register) at the Locations, the
costs of which shall be borne by Crystal.

    

    (b)           Disney,
at its sole cost and expense, shall provide trash pickup and reasonable amounts
of utilities (other than telephone) to certain locations within the Locations
for the Term of this Agreement, subject to any interruptions that may occur due
to construction and/or renovation of the Locations and/or causes beyond Disney’s
control. In no event shall Disney be liable or responsible for any interruption
or disruption of utility service, and Crystal hereby waives any and all claims
against Disney for any loss, damage and/or expense arising out of, and/or
incurred in connection with, any such interruption and/or disruption. Crystal
shall not make connection to the utilities except by or through existing
outlets.

    

    (c)           All
freight, handling and similar charges or costs incurred in connection with the
shipment of the Inventory, equipment and supplies to the Locations shall be
borne by Crystal. Crystal shall bear the risk of loss for, and shall procure and
maintain adequate insurance against, any delays and/or damages to the Inventory,
equipment and/or supplies during shipment.

    

    (d)           During
the Term, Crystal shall be responsible, at its sole cost and expense, to provide
telephone/data service (including. without limitation, high speed internet
connections such as DSL, etc,). Crystal shall, at its sole cost and expense,
provide the Services and the Inventory at the Locations in a safe and efficient
manner and in compliance with all applicable laws, rules, regulations and
ordinances and shall keep the Locations free from trash and debris. Crystal
shall be responsible, at its sole cost and expense, for obtaining any and all
licenses and permits required for the operation of its business at the
Locations.

    

    (e)           Disney
shall have the right to approve, in its reasonable discretion, the prices
charged by Crystal for-the Services and the Inventory. All proposed changes to
the pricing must be approved by Disney in writing in advance in Disney’s
reasonable discretion. Notwithstanding the foregoing, except for the calendar
year 2003, Crystal shall have the right to increase the prices charged by
Crystal for Inventory up to ten percent (10%) in any calendar year during the
Term without obtaining the prior written approval of Disney.

     

     

     

    2

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    (f)           Disney
will provide all uniforms for Crystal and its employees. Crystal acknowledges
and agrees that Crystal has no ownership rights in the uniforms. Crystal shall
return the uniforms to Disney for cleaning and maintenance as Disney may require
during the Term. Crystal shall keep such uniforms clean and professional at all
times in accordance with Disney’s safety and appearance standards, the condition
of which shall be acceptable to Disney, in its sole and absolute discretion, or
to any other persons or entities designated by Disney to make such
determination, in their sole and absolute discretion, whenever Crystal or its
employees are performing the Services. Upon expiration or sooner termination of
this Agreement, Crystal shall immediately return the uniforms to Disney. Crystal will be responsible for
reimbursing Disney for Disney’s uniform cleaning, maintenance and /or
replacement costs for Crystal and Crystal’s employees upon receipt of a monthly
invoice from Disney. To the extent any of the uniforms are lost or
substantially damaged, as determined by Disney in its sole and absolute
discretion. Crystal agrees to reimburse Disney for the replacement costs of such
uniforms at fair market value. Crystal shall cause its employees to wear Disneyland® Resort nametags,
to display Disneyland®
Resort parking stickers on their vehicles, and to obtain Disneyland® Resort
identification cards, and Disney may charge Crystal for such nametags, parking
stickers, and identification cards pursuant to Disney’s standard terms and
prices set for such items, which terms and prices are subject to change without
notice. Crystal’s employees shall be responsible for paying Disney for the
replacement cost of lost nametags, parking stickers and identification
cards.

    

    (h)           Crystal
shall, at its sole cost and expense, maintain the Locations to Disney’s
specifications and standards, including, without limitation, janitorial, pest
control, warehousing and laundry.

    

    (i)           Crystal
shall comply with and abide by, and shall cause its agents, employees, invitees
and licensees to comply with and abide by, all rules, policies and standards of
Disney (including, without limitation, those grooming standards outlined in the
Disney Look brochure, and background checks of employees) with respect to the
Locations or any portion thereof of which Crystal has received notice. Crystal
shall cause its employees and agents to comply with and abide by the rules of
conduct and appearance standards established by Disney for its own employees.
Crystal shall cause its agents, invitees and licensees to comply with all rules
and standards that Disney uses when Disney hires employees including, without
limitation, necessary background checks of such employees prior to employment.
Disney may, from time to time during the Term of this Agreement and in its sole
and absolute discretion, make changes in, additions to and deletions from
Disney’s rules, policies and standards. Disney shall give prior written notice
to Crystal of any such changes, additions or deletions. In no event shall
Disney’s failure to advise Crystal in advance of any such change, addition or
deletion relieve Crystal of its obligation to comply therewith. Disney shall
have the right to deny access to the Locations to any employee of Crystal who,
in Disney’s sole and absolute discretion, does not meet applicable standards
and/or comply with applicable rules or policies. Employees of Crystal shall, at
Crystal’s sole cost and expense, participate in Disney-sponsored orientation and
training programs prior to beginning employment and on a periodic basis
thereafter as deemed appropriate by Disney in its sole and absolute discretion.
Disney shall have the right to deny access to the Park to any employee of
Crystal who, in Disney’s sole discretion, does not meet applicable standards or
comply with applicable rules or policies. Disney shall permit Crystal’s
employees working at the Locations to use all employee facilities at the Parks
and to park in the applicable Disneyland® Resort employee
parking areas if such employees have Disney parking stickers.

    

    (j)           Crystal
acknowledges that the employees used by Crystal to operate its business at the
Locations are employees of Crystal and not employees of Disney. When hiring such
employees for the Locations, Crystal, at its sole cost and expense, shall comply
with all rules and standards that Disney uses when Disney hires employees
including, without limitation, necessary background checks of such employees
prior to employment. Crystal shall be responsible for all salaries, employee
benefits, social security taxes, federal and state unemployment insurance and
any and all similar taxes relating to its employees and for Workers’
Compensation coverage with respect thereto pursuant to applicable law and shall
file all required returns and reports with respect to the foregoing. Crystal
shall defend, indemnify and hold Disney and all of its parent, subsidiary,
related and affiliated companies and the officers, directors, agents, employees
and assigns of each, harmless from and against any and all claims for such
salary, tax and/or benefit payments. Neither Crystal nor Crystal’s employees
shall be entitled to participate in, or to receive, any of Disney’s employee
benefit or welfare plans, specifically including, but not limited to, coverage
under Disney’s Worker’s Compensation program, and neither Crystal nor Crystal’s
employees shall be deemed an agent of Disney for purposes of this Agreement.
Disney may (if requested by Crystal), but shall not be required to, assist
Crystal in its hiring efforts for the Locations. Disney shall have no obligation
whatsoever to compensate Crystal or Crystal’s employees on account of any
damages and/or injuries which may be sustained as a result of or in the course
of performance of Crystal’s Services hereunder. The indemnification provisions
contained in this paragraph shall survive, indefinitely, the expiration or
earlier termination of this Agreement and shall not be limited by the amount of
any insurance required to be maintained hereunder.

     

    

    

    

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    (k)           Crystal
shall not sell food or beverages in the Locations. Crystal shall not offer for
sale or otherwise distribute any merchandise other than the Inventory at or from
the Locations without the express prior written consent of Disney, which consent
Disney may grant or withhold in its sole and absolute discretion. Crystal shall
not offer for sale or otherwise distribute any merchandise similar to
merchandise sold by Disney at other locations in the Resort. Disney shall have
the right to approve, in its reasonable discretion, the prices charged by
Crystal for any Inventory offered for sale from the Locations.

    

    (I)           Disney
shall have the right to approve the design and quality of the Services and the
Inventory, including, without limitation, theming, packaging, quality, safety,
quantity and appropriateness, which approvals Disney may grant or withhold in
its sole and absolute discretion; provided, however, that nothing contained in
this sentence shall relieve Crystal of its obligation to ensure that all
Inventory produced, sold and/or offered for sale in the Locations is in
compliance with applicable federal and state law as well as local codes. Disney
shall have the right to provide any signage and additional equipment at
Crystal’s sole expense as deemed necessary in Disney’s sole and absolute
discretion.

    

    (m)           Crystal
shall produce and provide the Inventory for sale at the Locations on each day
the applicable Park and/or Downtown Disney is open during the hours specified by
Disney from time to time (unless otherwise Instructed or approved by Disney).
Upon request by Disney, Crystal shall provide the Services and the Inventory
during certain events held at the Parks and Downtown Disney, including, without
limitation, private parties and Grad Nites. Crystal acknowledges that these
events may be held after the scheduled closing time of the applicable Park
and/or Downtown Disney.

    

    (n           Disney
may close either Park and/or Downtown Disney, or both Parks and/or Downtown
Disney, and/or portions thereof (and may instruct Crystal to close the
Locations, or portions thereof), for up to forty five (45) days per calendar
year during the Term hereof (“Excused Closings”), which
may or may not be consecutive, for any maintenance, repair and/or rehabilitation
of the applicable Park and/or Downtown Disney (and/or for any construction,
maintenance, repair and/or rehabilitation within the applicable Park and/or
Downtown Disney which affects the operation of the Locations) which Disney deems
necessary or desirable, in its sole and absolute discretion, and for such other
business reason as Disney deems appropriate, in its sole and absolute
discretion. Any Excused Closings of the applicable Park and/or Downtown Disney,
the Locations or portions thereof as aforesaid shall be without claim by or
compensation to Crystal. Prior to the expiration of the Term of this Agreement,
a determination will be made as to whether Disney has caused the Locations to be
closed to the public after the opening thereof in excess of the number of days
permitted under this paragraph (hereinafter referred to as a “Non-excused Closing”), If
there has been a Non-excused Closing, Disney shall grant to Crystal an extension
of the Term with respect to Crystal’s operation of the Locations for a period of
time equivalent to the period of such Non-excused Closing, such extension to
constitute Crystal’s sole remedy as a result thereof.

    

    (o)           Crystal
shall place no signs, posters or similar materials in or about the Locations or
Locations without the prior written approval of Disney, which approval Disney
may grant or withhold in its sole and absolute discretion.

    

     

    

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    (p)           Disney
shall have access to the Locations and all portions thereof at all reasonable
times for purposes of inspecting the operation, sanitation and maintenance
thereof and reviewing the level of Crystal’s compliance with its obligations
under this Agreement and with all applicable laws.

    

    (q)           Disney
shall have the right to approve the design and quality of all items, if any,
selected by Crystal for use in the sale of the Inventory and the operation of
the Locations such as equipment, fixtures, decorations, signage, etc., which
approval Disney may grant or withhold in its sole and absolute
discretion.

    

    4.           THIRD
PARTY AGREEMENTS.

    

    (a)           Disney
shall have the right to enter into agreements with third parties pursuant to
which said third parties are identified in signage, on magazines and/or
otherwise in and/or at the Locations, and any fees payable by any said third
party shall be for Disney’s account. Should Crystal enter into any agreements
with third parties pursuant to which said third parties are so identified, which
it may do only with the prior express written approval of Disney (which approval
Disney may grant or withhold in its sole and absolute discretion), then any fees
collected from any said third party shall be for Disney’s account. Nothing
herein contained shall be deemed to authorize Crystal to grant to third parties
any of the rights granted to it by Disney pursuant to this
Agreement.

    

    (b)           Crystal
recognizes that certain agreements entered into by Disney with third parties
contain provisions obligating the use and/or availability of said third parties’
products and/or services, and/or restricting the use and/or availability of
products and/or services which compete with said third parties, in the Parks,
the Locations and/or in the Locations. Accordingly, Crystal shall, if requested
by Disney, conform its use of, the merchandise sold in, and the operation of the
Locations in accordance with provisions agreed to by Disney in such agreements
with third parties. Disney may, in its sole and absolute discretion, hereafter
enter into any agreements with third parties which contain such commitments
affecting the Locations, and Crystal shall, if requested by Disney, conform its
use of, the merchandise sold in, and the operation of the Locations with such
provisions at Disney’s cost.

    

    5.           FEE FOR
SERVICES/OTHER PAYMENTS,

    

    (a)           Crystal’s
compensation for the Services shall be based solely on the Services
provided.

    

    (b)           All
sales at the Locations are to be handled by Disney’s personnel whether on-site
or by mail order or drop shipping. Crystal shall not accept any money from
guests but shall refer all sales transactions, including, without limitation,
special orders and mail orders, to Disney personnel for processing through cash
registers in accordance with Disney’s standard sales procedures.

    

    (c)           Disney
shall collect the compensation from the guests and shall pay to Crystal a fee
(“Fee”) of sixty percent (60%) of gross revenues from retail sales from the
Locations, less applicable sales, use, excise or other taxes. Disney shall
retain the remaining gross revenues from retail sales from the Locations. The
term “gross revenues from retail sales from the Locations” is defined as “all
monies and other things of value received by, or paid to, Disney and all credit
extended by Disney, arising upon, out of or in connection with the Locations
during the Term, plus the amount of any applicable sales, use, excise or other
Taxes, less the amount of any of Crystal’s merchandise and/or products which are
returned to Disney or replaced by Disney, less the amount of any refunds made by
Disney in connection with the Locations, less the amount of any cancelled orders
for Crystal’s merchandise or products, and less the amount of any shipping
charges for merchandise and/or products shipped to guests”. The Fee shall be
payable within fifteen (15) business days of the close of previous fiscal
month’s retail sales; however, six (6) months after the commencement of the
Term, Disney agrees to reevaluate whether, based on Disney’s financial system
upgrade, Disney can pay the Fee to Crystal on a weekly or bi-weekly
schedule.

     

     

    

    

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    (d)           Disney
shall maintain complete and accurate records evidencing the gross revenues from
retail sales from the Locations. Disney agrees to make available to Crystal once
each calendar year, upon thirty (30) days’ prior written request by Crystal, a
full, permanent and accurate set of Disney’s accounting books and records
relating solely to gross revenues from retail sales from the Locations. Crystal
will have the right, at its sole cost and expense, to audit said books and
records. Disney agrees to keep all such books and records for at least three (3)
years following the expiration or sooner termination of this
Agreement.

    

    (e)           Disney
reserves the exclusive right, throughout the Term hereof, to have sole control
over the Locations and Crystal shall have no rights or interest therein, which
control may include, but is not limited to: admission to the Parks and Downtown
Disney and to the various facilities therein and to approve, in its reasonable
discretion, the rates and prices for the services and merchandise at the
Locations, all of which shall be for Disney’s account, the establishment of the
hours of operation at the Locations which need not be the same as the hours of
operation of the Parks or Downtown Disney or the various facilities therein, the
establishment of the schedule for maintenance, repair and rehabilitation of the
Locations, the promulgation of strict standards and rules for the appearance,
sanitation, cleanliness and maintenance of the Locations and for the conduct,
courteousness and appearance of persons employed therein, and the promulgation
of strict standards and rules for the preservation of good order with respect to
the Locations and for the health, comfort and convenience of the patrons and
guests thereof. At all times, Crystal shall have no rights or interest, implied
or otherwise, in any revenues realized from the Locations (other than from the
sale of the Inventory), the sale of food, beverage, merchandise or any other
items offered or the various facilities therein.

    

    (f)           Any
services of Disney’s personnel which are subject to reimbursement by Crystal
shall be invoiced at Disney’s direct costs for such services (i.e. payroll
costs, including, without limitation, payroll taxes and fringe benefit costs)
(at the Disney composite rate, as computed annually) plus overhead items
directly related to those services, such as supervision, small tools, owned
equipment, training, etc, (expressed as a percentage of direct labor costs and
recomputed annually) plus twenty percent (20%) of all direct labor costs to
cover administrative overhead. Materials shall be invoiced at net cost to
Disney, plus three percent (3%) thereof to cover overhead. Any other services
performed on behalf of Disney by any person not a party to this Agreement shall
be billed at net cost to Disney, plus five percent (5%) to cover
overhead.

    

    (g)           Disney
shall be entitled to reduce by the same percentages that Disney does so for its
own employees (provided, however
that the highest percentage shall not exceed thirty-five (35%)), the
sales price of Inventory sold to employees of Disney and of its parent,
subsidiary, related and affiliated companies, and Disney shall reduce by the
following percentages the sales price of merchandise and/or services in any
Disney-owned and operated retail shop sold to Crystal employees if Disney does
so for its own employees with respect to the same merchandise and/or services
and in the same retain shop. Said percentages are currently as
follows:

    

    (i)           all
employees who have at least three (3) years of service based on their hire date
(and their spouses), who are currently receiving a thirty-five percent (35%)
reduction shall continue to receive a thirty-five percent (35%) reduction;
and

    

    (ii)           all
other employees not otherwise described above and their spouses shall receive a
twenty percent (20%) reduction; provided, however, that if any of Crystal’s
employees are already receiving a thirty-five percent (35%) reduction as
discussed in subsection (i) above, such employee shall continue to receive a
thirty-five percent (35%) reduction.

    

    6.           MAINTENANCE
AND REPAIR.

    

    (a)           Disney’s
obligation to provide the Locations, as set forth in Section 2, shall include
the obligation to routinely clean and maintain the surrounding area of the
Locations, at Disney’s sole cost and expense. Crystal shall be responsible for
the maintenance costs of and all other costs and expenses for all items and
elements in the Locations, including, but not limited to, the following:
equipment, supplies, signs, decorations, and Crystal’s Property (as defined in
Section 20 below).

     

    

    

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    (b)           Unless
otherwise approved by Disney, Disney shall provide all repair and rehabilitation
of the Locations which it reasonably deems necessary or desirable, in its sole
and absolute discretion, at Crystal’s sole cost and expense, except for those
items which are at Disney’s expense pursuant to Section 6(a). If the Parties
determine that a major rehabilitation of the Locations is required, then Disney
shall perform the work and Crystal shall reimburse Disney for all costs and
expenses incurred by Disney in connection with such repair and/or
rehabilitation, in accordance with Section 5(f) above. Disney may, but shall not
be required to, permit Crystal to provide some or all of such repair and
rehabilitation work, provided that any such repair or rehabilitation work shall
be subject to such conditions as Disney may establish in its sole and absolute
discretion.

    

    7.           SALES
TAX.

    

    Amounts
retained by Disney or paid to Disney under this Agreement may be subject to tax.
Accordingly, the applicable sales, use, excise or other taxes on such amounts
shall be deducted from Crystal’s Fee and retained by Disney or paid to Disney by
Crystal, as appropriate. Crystal shall be responsible for and shall pay any and
all personal property taxes and/or assessments on Crystal’s Property, the
Inventory, and the Equipment.

    

    8.           WARRANTIES.

    

    Crystal
hereby represents and warrants to Disney:

    

    (a)           that
Crystal has the experience and skill to operate its business as required
hereunder;

    

    (b)           that
Crystal shall comply with all applicable federal, state and local laws and
regulations, including, without limitation, all professional registrations, the
comprehensive operating plan therefor prepared by Crystal and having the prior
approval of Disney, which approval Disney may withhold in its sole and absolute
discretion, and such rules, regulations and standards as Disney may establish
from time to time, and that Crystal shall provide Disney, on an annual basis
during the Term of this Agreement, copies of any applicable business licenses
including, but not limited to, its City of Anaheim Business License to evidence
such compliance;

    

    (c)           that
Crystal shall operate its business in a manner consistent with the quality of
the operation of the Parks Downtown Disney and shall provide its customers that
same professional level of customer service as the Parks and Downtown Disney
accord their guests;

    

    (d)           that
Crystal is adequately financed to meet any financial obligation it may be
required to incur hereunder;

    

    (e)           that
Crystal is not, and will not be, under any disability, restriction or
prohibition with respect to Crystal’s right to fully perform hereunder in
accordance with the terms and conditions of the Agreement;

    

    (f)           that
Crystal has the requisite power and authority to execute, deliver and perform
its obligations under this Agreement, that all consents, approvals, notices
and/or filings with any other person (including, without limitation,
shareholders and/or affiliates) required for the execution, delivery and
performance of its obligations under this Agreement have been obtained or
waived, without violation or breach of any applicable law and/or agreement,
understanding and/or arrangement to which it is a party and/or by which its
property is bound:

    

     

    

    

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    (g)           that
Crystal shall provide the Inventory and otherwise perform the Services hereunder
in accordance with generally accepted professional standards, and that all
Inventory and Services shall be in good taste with due regard to Disney’s
reputation and standards as determined by Disney in its sole and absolute
discretion; and

    

    (h)           that
the Inventory shall not contain any images which are profane, obscene, insulting
or otherwise unsuitable for family-oriented entertainment including, but not
limited to, any images which portray any Disney character in such a manner, as
determined by Disney in its sole and absolute discretion.

    

    All
representations and warranties made by Crystal in this Agreement shall survive
the expiration or earlier termination of this Agreement,

    

    9.           PROMOTIONAL
RIGHTS OF DISNEY.

    

    Notwithstanding
any other provision of this Agreement to the contrary, Disney and. its parent,
related, affiliated, and subsidiary companies shall have the right to
photograph, take motion pictures of, televise, make miniatures of and/or
otherwise reproduce in any manner and/or through any media the Inventory, the
Locations or any portion thereof, and to display, use, sell, license and/or
exploit in any manner any such pictures and/or other reproductions for any
purpose whatsoever, commercial and/or otherwise, connected with promoting,
advertising and/or publicizing the Inventory and/or the Locations. Crystal shall
obtain, for Disney’s benefit, releases, clearances and/or other instruments from
its employees necessary to permit Disney to make and use and/or permit to be
made and used any photographs, motion pictures and/or other reproductions for
any of the purposes herein provided. The provisions of this section shall
survive the expiration or sooner termination of this Agreement.

    

    10.           USE OF
DISNEY NAME.

    

    Crystal
acknowledges and agrees that it shall acquire no interest in any copyrights,
trademarks, service marks, other intellectual property or intellectual property
rights of Disney, its parent, or any of its related, affiliated or subsidiary
companies. Without limiting the generality of the foregoing, except to the
extent permitted above by this Agreement, Crystal shall acquire no right to use,
and shall not use the name “Disney” (either
alone or in conjunction with or as part of any other word or name),
“Disneyland,” “Disney’s California Adventure,” “Downtown Disney”, “Disneyland
Hotel,” “Disney’s Paradise Pier Hotel” or “Disney’s Grand Californian Hotel” or
any fanciful characters (such as, but not limited to, Mickey Mouse), designs or
other intellectual property of Disney or any of its parent, related, affiliated
or subsidiary companies; (a) in any of Crystal’s advertising, publicity or
promotion; (b) to express or imply any endorsement by Disney of Crystal’s
business or Inventory; or (c) in any other manner or for any purpose whatsoever
(whether or not similar to the uses prohibited by Sections 10(a) and 10(b)
hereinabove). The provisions of this Section 10 shall survive the expiration or
earlier termination of this Agreement.

    

    11.           INSURANCE:
INDEMNIFICATION.

    

    (a)           Crystal
shall provide and keep in force during the Term of this Agreement:

    

    (i)           a
policy or policies of Commercial General Liability Insurance (including products
liability and contractual coverage) and Automobile Liability Coverage (for all
vehicles), with minimum limits of Two Million Dollars ($2,000,000) and One
Million Dollars ($1,000,000), respectively, combined single limit per
occurrence, protecting Crystal, Disney, Disney’s parent, related, affiliated and
subsidiary companies and the officers, directors, agents, employees and assigns
of each, from any and all losses and/or liability resulting from personal
injury, death and/or property damage (i) arising from and/or occurring in and/or
about the Locations and/or (ii) by reason of the operation and/or maintenance of
the same and/or (iii) by reason of the use, consumption, sale and/or offer for
sale of the Inventory therein and/or therefrom and/or (iv) from and/or in
connection with the performance of the Services hereunder and/or out of any act
and/or omission of Crystal, its officers, directors, agents and/or
employees;

    

    

    

    

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      (ii)           All-Risk
Extended Coverage Property Damage insurance, or Crystal may self-insure for the
coverage required under this subsection, for Crystal’s Property and Equipment
within the Locations, all on a replacement cost basis;

      

      (iii)           Workers’
Compensation insurance, as required by law, covering all persons employed by
Crystal in connection with the performance of the Services of any nature in
and/or about the Locations, and employers’ liability insurance with minimum
limits of One Million Dollars ($1,000,000) per occurrence with respect to any
employee not covered by Workers’ Compensation;

      

      (iv)           Fire
legal liability insurance in the amount of Two Hundred Fifty Thousand Dollars
($250,000) per occurrence covering any damage to or destruction of the Locations
and/or loss of its contents, from whatever cause; provided, however, that Disney
shall have the right, from time to time, to require Crystal to increase the
amount of such insurance to the amount of the deductible on any fire and
extended coverage policy Disney maintains in respect of the
Locations;

      

      (v)           Professional
Liability insurance (including, without limitation, contractual coverage), with
a minimum limit of One Million Dollars ($1,000,000), protecting it and Disney
from errors and omissions of Crystal in connection with the performance of
Crystal’s services hereunder during and for a period of at least three (3) years
after the expiration or earlier termination of this Agreement (including,
without limitation, an endorsement covering the indemnification provisions
herein); and

      

      (vi)           such
further insurance as Disney may request, upon written notice by Disney to
Crystal, in adequate amounts, against reasonable and foreseeable risks commonly
insured against in the case of similar operations.

      

      All such
insurance policies shall be issued by responsible companies approved by Disney,
which approval Disney may grant or withhold in Disney’s sole and absolute
discretion, who have a BEST Guide rating of at least B+VII or better.
Certificates of insurance (or copies of policies, if required by Disney) shall
be furnished by Crystal or its insurance agent to Disney at the address listed
below, and such policies shall include Disney, its parent, and all affiliated,
subsidiary and related companies as additional insureds and contain a waiver of
subrogation against additional insureds (The additional insured requirement
shall apply to all coverages except Workers’ Compensation and Employer’s
Liability. The waiver of subrogation shall apply to all coverages). All policies
shall require thirty (30) days’ unrestricted prior written notice to Disney of
any cancellation thereof or change affecting coverage thereunder at the
following address;

      

      DISNEYLAND
RESORT

      Attn:
Vice President, Merchandise

      1313
South Harbor Boulevard

      Anaheim,
CA 92803

      

      (b)           Crystal
shall indemnify, defend (at Disney’s request with counsel acceptable to Disney),
and hold Disney and its parent, related, affiliated and subsidiary companies and
the officers, directors, agents, employees and assigns of each, harmless from
and against any and all claims, suits, demands, damages, causes of action,
losses, liabilities, costs and expenses (whether based on tort, breach of
contract, patent and/or copyright infringement, product liability and/or
otherwise), including, without limitation, attorneys’ fees and costs and other
costs of litigation (collectively, “Losses”), arising in any way
from and/or out of and/or based on Crystal’s use and/or operation of the
Locations; the falsity of any warranties set out herein; the use, consumption,
sale and/or offer for sale of the Inventory therein and/or therefrom; any act
and/or omission of Crystal, its officers, directors, agents and/or employees;
and/or any breach and/or alleged breach of any of Crystal’s representations,
warranties,
obligations and/or agreements hereunder. The provisions of this Section 1 l(b)
shall survive, indefinitely, the expiration or earlier termination of this
Agreement and the indemnities set forth in this Agreement shall not be limited
by the amount of insurance required to be maintained hereunder.

        

        

        

        

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      12.           RIGHT TO
RELOCATE.

      

      Disney
shall have the right to relocate the Locations, or any portion thereof, within
the Parks and/or Downtown Disney due to redevelopment and/or enhancement of
either or both Parks and/or Downtown Disney and/or for other business reasons in
Disney’s sole and absolute discretion, provided that:

      

      (a)           The
new Locations need not be the same size, dimension and configuration as the
current Locations, or portion thereof, but shall be reasonably acceptable to
Crystal;

      

      (b)           The
physical relocation of Crystal’s Equipment and decorations within the Locations,
or portion thereof, shall be accomplished by Crystal at its sole cost and
expense; and

      

      (c)           Disney
gives Crystal at least three (3) days’ notice of Disney’s intention to relocate
the Locations, or portion thereof.

      

      13.           TERMINATION.

      

      (a)           During
the Term of this Agreement, either Party may terminate and cancel this Agreement
for its own convenience and for any or no reason upon not less than thirty (30)
days’ prior written notice of termination to the other Party. Any notice, of
termination or otherwise, of this Agreement by either Party shall be in writing
and, unless a later effective time is set forth therein, shall be effective upon
deposit thereof in the U.S. mail, registered or certified mail, or, if otherwise
delivered, upon receipt thereof by the other Party hereto. The provisions of
Sections 3(j), 5, 6, 7, 8, 9, 10, 11, 18, 20, 25, 29, 30, 32 and 33 shall
survive the expiration or earlier termination of this Agreement

      

      (b)           Disney
may immediately cancel and terminate this Agreement if any license or permit
required by applicable law for the operation of Crystal’s business at the
Locations or any part thereof (including, but not limited to, business licenses,
health permits, etc.) is suspended or revoked through no fault of Disney or if
Crystal breaches its obligations under Section 10.

      

      (c)           Except
as otherwise specifically provided herein, either Party may cancel and terminate
this Agreement if the other Party shall fail to perform any other term, covenant
or condition hereof on its part to be performed and such non-performance shall
continue for a period of twenty-four (24) hours after notice thereof to the
Party so failing to perform (or if such performance cannot be accomplished
reasonably within such twenty-four (24) hour period, said Party has not in good
faith commenced such performance within such twenty-four (24) hour period and
has not thereafter diligently proceeded to completion of the cure).

      

      (d)           Upon
the termination of this Agreement, Crystal shall pay Disney any sums due it in
the same manner as provided in Section 5 hereof, pursuant to applicable laws,
and Crystal shall immediately and peaceably vacate and surrender the Locations.
The parties shall further reconcile between themselves any amounts due and owing
to each other under this Agreement up to the date of said termination. The
rights and remedies set forth in this Section 13 shall constitute the sole
rights and remedies of each party as a result of the other party’s breach
hereof.

      

      (e)           Upon
the expiration or earlier termination of this Agreement, for whatever reason,
Crystal shall assign to Disney, to the extent permitted by law (and shall
execute any and all documents necessary to effect such assignment) any and all
licenses and permits obtained by Crystal in connection with its operation of the
Locations, at no cost to Disney, 

        

        

        

        

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      (f)           Crystal
hereby irrevocably waives any right to injunctive relief or right of recision,
and hereby agrees that Crystal’s sole and exclusive remedy in the event of any
breach and/or alleged breach, termination and/or cancellation of this Agreement
by Disney shall be an action for monetary damages.

      

      (g)           Any
termination of this Agreement by Disney shall be without prejudice to any other
rights, remedies and/or defenses available to Disney under this Agreement, under
law, in equity and/or otherwise.

      

      14.           CASUALTY
LOSS.

      

      In the
event of a casualty loss resulting in substantial damage to, or destruction of,
the Locations, or any portion thereof, Disney shall have the option of restoring
the same at its own cost and expense (except for Crystal’s Property which
Crystal shall replace at its sole cost and expense) or of terminating this
Agreement without liability or obligation to Crystal.

      

      15.           CRYSTAL’S
INSOLVENCY.

      

      Notwithstanding
anything to the contrary contained in the Agreement, either (a) the appointment
of a receiver to take possession of all or substantially all of the assets of
Crystal, or (b) a general assignment is made by Crystal for the benefit of
creditors, or (c) any petition filed by Crystal under the Federal Bankruptcy Act
or the insolvency law of any state, or (d) any petition filed against Crystal
under the Federal Bankruptcy Act or the insolvency law of any state, which
appointment, assignment or petition is nor discharged within ninety (90) days of
the date on which the petition is filed, the assignment is made, or the
appointment is made shall entitle Disney to cancel the Agreement, immediately
upon notice to Crystal.

      

      16.           ABANDONMENT.

      

      Crystal
shall not vacate or abandon the Locations at any time during the Term. If
Crystal shall abandon, vacate or surrender any of the Locations, or be
dispossessed by process of law, or otherwise, any personal property belonging to
Crystal and left at the Locations shall be deemed abandoned, at the option of
Disney, except such property as may be mortgaged to Disney. After receipt by
Crystal of written notice of abandonment the absence of Crystal and its agents
from the Locations or the failure of Crystal to be open for business in
accordance with Section 3 hereof for seven (7) consecutive business days shall
conclusively be deemed an abandonment.

      

      17.           UNLAWFUL
OCCUPANCY.

      

      Notwithstanding
anything to the contrary contained in the Agreement, if through no fault or lack
of diligence on the part of Crystal, Crystal is unable to obtain, retain or
renew any of the legal approvals, conditional use permits or other governmental
approvals needed for its lawful occupancy of the Locations for the permitted use
hereunder, or if following the execution of this Agreement a new law,
governmental regulation or zoning or regulatory condition shall be enacted which
shall have the effect of materially restricting or taxing Crystal’s proposed
operations in the Locations for the permitted use, Crystal may, in either such
event, terminate this Agreement upon seven (7) days’ prior written notice to
Disney and upon such termination, Disney shall have no further liability or
obligation to Crystal whatsoever in connection with this Agreement.

      

      18.           DETERMINATION OF
DISPUTES.

      

      Except as
otherwise provided herein, any dispute, difference, claim and/or counterclaim
between Crystal and Disney arising out of and/or in connection with this
Agreement, and/or arising out of and/or in any way connected with the Locations
and/or its operation and/or maintenance shall be submitted to the Superior Court
in and for the County of Orange, California (or if the Superior Court shall not
have jurisdiction over the subject matter thereof, then to such other court in
Orange County having subject matter jurisdiction) for trial and determination.
The Parties hereby consent to the jurisdiction of such courts. Crystal consents
to the service of process outside of the State of California pursuant to the
requirements of such court in any matter so to be submitted to it and expressly
waives all rights to a trial by jury regarding any such matters. 

        

        

        

        

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      19.           FORCE
MAJEURE.

      

      If the
performance by either Party of its respective non-monetary obligations under
this Agreement is delayed or prevented in whole or in part by acts of God, fire,
floods, storms, explosions, accidents, epidemics, war, civil disorders, strikes
and/or other labor difficulties, shortages and/or failure of supply of
materials, labor, fuel, power, equipment, supplies and/or transportation, and/or
by any law, rule, regulation, order and/or other action adopted and/or taken by
any national, regional and/or local governmental authority and/or by any other
cause not reasonably within its control, whether or not specifically mentioned
herein (“Force Majeure”), it shall be excused, discharged and released of
performance to the extent such performance or obligation is so limited or
prevented by such cause without liability of any kind provided that such Party
shall give prompt notice of the existence, anticipated effect and anticipated
duration of the Force Majeure, and act with reasonable diligence to minimize its
effect and duration. Nothing herein contained shall be construed as requiring
Disney to accede to any demands of labor or labor unions, suppliers or others
not a party hereto. A revocation or suspension by a governmental authority of a
license or permit required for the operation of the Locations or any portion
thereof shall not be an event of Force Majeure if an act and/or omission of
Crystal gave rise thereto.

      

      20.           OWNERSHIP AND DISPOSITION OF
PROPERTY.

      

      (a)           Crystal
has no rights of ownership in or to the Locations, the Locations or the contents
thereof; provided, however, that Crystal shall hold title to and be the owner of
all personal property within the Locations and/or any storage areas at the
Locations brought by Crystal, including, without limitation, the Equipment and
Inventory (the “Crystal
Property”) subject to the limitations hereinafter set forth:

      

      (i)           All
of the property, including, without limitation, the Crystal Property, which is
an integral part of the Locations shall remain in and part of such Locations
during the Term of this Agreement; provided, however, that Crystal may, from
time to time, replace its Inventory and/or Equipment with more updated or modern
versions of the same or similar type, subject to Disney’s approval, which
approval may be granted or withheld in Disney’s sole and absolute
discretion.

      

      (ii)           Except
as provided herein, none of the Crystal Property created, designed, manufactured
or assembled for Crystal by Disney, its parent, related, affiliated and/or
subsidiary companies, shall be moved from the Locations or assigned, sold,
pledged or mortgaged by Crystal, and Crystal shall not have the right to
otherwise use or transfer any copyrights, proprietary rights or information of
Disney to said Crystal Property.

      

      (iii)           Notwithstanding
Crystal’s ownership of the Crystal Property, Disney shall retain the right to
otherwise use, in any manner it deems appropriate, the patent rights,
copyrights, ideas, inventions, know-how and other confidential and proprietary
rights and information relating to the Crystal Property created, designed,
manufactured and/or assembled for Crystal by Disney, its parent, related,
affiliated and/or subsidiary companies.

      

      (b)           Crystal
shall bear all risk of loss of (including, without limitation, theft), and/or
damage to, the Crystal Property. Crystal hereby waives, on its own behalf and on
behalf of anyone claiming by, through and/or under it (whether by way of
subrogation and/or otherwise), any rights it may now have and/or hereafter have
against Disney, its parent, and/or any related, affiliated and subsidiary
companies of Disney arising out of said loss and/or damage. 

        

        

        

        

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      (c)           Crystal
shall remove the Crystal Property at its sole cost and expense upon the
expiration or earlier termination of this Agreement and repair any damage to
Disney’s property and/or the Locations resulting from such removal unless such
damage is caused solely by Disney. If Crystal shall fail to so remove the
Crystal Property, Disney may, at its option, either remove and dispose of any or
all of the same at Crystal’s expense or retain the same, in which latter event
all right, title and interest therein shall pass to and vest in
Disney.

      

      21.           CHANGE OF NAMES, SUCCESSORS
AND ASSIGNS.

      

      (a)           Crystal
recognizes that Disney would not have entered into this Agreement but for the
favorable reputation of Crystal and its name. Accordingly, Disney shall have the
right to terminate this Agreement by giving written notice of termination to
Crystal if, at any time during the Term, Disney reasonably believes that the
public acceptance and/or popularity of Crystal’s corporate name, trade name
and/or reputation should become impaired, if Crystal should become involved in
matters which could detract therefrom, and/or if Crystal’s business and/or
nature reasonably changes from that in existence as of the date of this
Agreement.

      

      (b)           Crystal
shall have no right to license, sub-license, lease or assign any of its rights
hereunder, nor shall the same be assignable by operation of law, without the
prior written consent of Disney, which consent Disney may grant or withhold in
its sole and absolute discretion. If the ability to control Crystal shall pass
from Steven Rhodes, either voluntarily or by operation of law, to any other
person, firm or corporation (other than, in the event of the death of Steven
Rhodes, to his executor or administrator and then to his heirs), such transfer
shall be deemed an assignment of this Agreement requiring the prior written
approval of Disney.

      

      (c)           This
Agreement shall inure to the benefit of and be binding upon Disney’s successors
and assigns, and Disney shall have the right to pledge, hypothecate, create a
security interest in, assign and/or otherwise transfer any or all of its rights
under this Agreement, including, without limitation, the right to mortgage
and/or create a security interest in the Locations and/or the Locations, the
fees to be derived by Disney pursuant to this Agreement and/or revenues to be
derived by Disney from admission and/or entry fees and charges.

      

      22.           CONDEMNATION.

      

      If the
Locations and/or the Locations shall be taken or condemned for any public or
quasi-public use or purpose, or if the use thereof shall be so taken or
condemned for any period of time by right of eminent domain or by purchase in
lieu thereof, then this Agreement shall terminate as of the date of the vesting
of title (or possession, if title is not taken) in the condemning authority.
Crystal shall not be entitled to share in any award to Disney as a result of the
taking.

      

      23.           WAIVERS.

      

      Any
failure by either Party to insist upon or enforce performance by the other Party
of any of the provisions of this Agreement or to exercise any rights or remedies
under this Agreement or otherwise by law shall not be construed as a waiver or
relinquishment of such Party’s right to assert or rely upon the provision,
right, or remedy in that or any other-instance; rather the provision, right, or
remedy shall be and remain in full force and effect.

      

      24.           NOTICES.

      

      
        

        

        

        

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      If to
Crystal:                                                      Crystal
Magic, Inc.

      Attn:
Steven Rodes

      2120
Hidden Pine Lane

      Apopka,
FL 32712

      

      If to
Disney:                                                      Disneyland
Resort

      Attn:
Vice President Merchandise

      700 W.
Ball Road

      Anaheim,
California 92802

      

      With a
copy
to:                                           Disneyland
Resort

      Attn:
Office of Counsel

      1313
South Harbor Blvd.

      Anaheim,
California 92803

      

      or to
such other address as either Party may direct by notice given to the other as
hereinabove provided.

      

      25.           NONDISCLOSURE OF
CONFIDENTIAL INFORMATION

      

      Crystal
may, during the course of providing the Services hereunder, have access to
and/or acquire confidential and/or proprietary information of and/or relating
to, Disney, its parent, related, affiliated and/or subsidiary companies and/or
information of advantage and/or value to Disney, its parent, related, affiliated
and/or subsidiary companies and which is not accessible or known by the general
public. Any such information, regardless of form, acquired by Crystal in the
course of providing its services herein, whether or not receipt of such
confidential information is inadvertently obtained shall not be used, published
or divulged, in any form, (i) by Crystal to any other person, firm or
corporation, (ii) in any advertising or promotion regarding Crystal, or (iii) in
any manner or connection whatsoever without first having obtained Disney’s prior
written permission, which permission Disney may grant or withhold in its sole
and absolute discretion. Crystal agrees that any suggestions, ideas,
information, documents or things which it discloses to Disney shall not be
subject to an obligation of confidentiality by Disney, and Disney shall not be
liable for any use or disclosure thereof, unless there is a prior written
agreement to the contrary between the Parties. The provisions of this Section
shall survive the expiration or earlier termination of this
Agreement.

      

      26.           SIGNATURE AUTHORITY/NO
OFFER.

      

      The
person who executes this Agreement on behalf of either party hereto expressly
represents and warrants that he/she has full and complete authority to do so,
knowing that the other party intends to rely solely thereon. This document does
not constitute an offer by any Party to the other Party. When executed by any
Party, it shall constitute an offer by said Party to the other Party irrevocable
for a period of five (5) days after receipt by the other Party and, upon
execution by all Parties, and delivery to all Parties, shall constitute a
binding agreement between the Parties.

      

      27.           ENTIRE
AGREEMENT.

      

      The
provisions contained herein constitute the entire agreement between the Parties,
with respect to the subject matter hereof and supersede any prior negotiations,
agreements, understandings and/or arrangements between the Parties with respect
to the subject matter hereof. Further, no statement or inducement with respect
to the subject matter hereof by either Party or by any agent or representative
of either Party which is not contained in this Agreement shall be valid or
binding as between the Parties. This Agreement may not be amended except by a
subsequent written agreement executed by the Parties hereto. 

        

        

        

        

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      28.           SEVERABIUTY.

      

      If any
term, provision, covenant or condition of this Agreement is held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable, the
remainder of the provisions shall remain in full force and effect.

      

      29.           GOVERNING
LAW.

      

      This
Agreement is made in and shall be governed by the laws of the State of
California applicable to contracts made and to be fully performed in California
without regard to any choice of law provisions thereof. Any legal proceeding of
any nature brought by either Party against thy other to enforce any right or
obligation under this Agreement, or arising out of any matter pertaining to this
Agreement shall be submitted for trial, without jury, before the Superior Court
in and for Orange County, California; or, if the Superior Court does not have
jurisdiction, then before the United States District Court for the Central
District of California; or, if neither of such courts shall have Jurisdiction,
then before any other court sitting in Orange County, California, having subject
matter jurisdiction. The Parties hereby consent to the jurisdiction of such
court and to the service of process outside the State of California pursuant to
the requirements of such court in any matter so to be submitted to it, and
expressly waive all rights to trial by jury regarding any such
matters.

      

      30.           EXCEPT
FOR THE INDEMNITY IN SECTION 11(b) AND EXCEPT FOR PERSONAL INJURY (INCLUDING,
WITHOUT LIMITATION, DEATH) AND PROPERTY DAMAGE, IN NO EVENT SHALL DISNEY BE
LIABLE TO CRYSTAL UNDER OR IN CONNECTION WITH THIS AGREEMENT FOR ANY LOSS OF
PROFIT OR ANY OTHER COMMERCIAL DAMAGE, INCLUDING, WITHOUT LIMITATION,
INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY, PUNITIVE OR OTHER DIRECT OR
INDIRECT DAMAGES OF ANY NATURE, FOR ANY REASON, INCLUDING, WITHOUT LIMITATION,
THE BREACH OF THIS AGREEMENT OR ANY EXPIRATION OR EARLIER TERMINATION OF THIS
AGREEMENT, WHETHER SUCH LIABILITY IS ASSERTED ON THE BASIS OF CONTRACT, TORT
(INCLUDING, WITHOUT LIMITATION, NEGLIGENCE AND/OR STRICT LIABILITY) OR
OTHERWISE, EVEN IF DISNEY HAS BEEN WARNED OF THE POSSIBILITY OF SUCH DAMAGE
OCCURRING. THE PROVISIONS OF THIS SECTION 30 SHALL SURVIVE THE EXPIRATION OR
EARLIER TERMINATION OF THIS AGREEMENT.

      

      31.           NO
AGENCY.

      

      In the
performance of Crystal’s Services hereunder, Crystal shall be an independent
contractor and not an agent, employee, partner or joint venturer of Disney or
its parent, related, affiliated or subsidiary companies, and Crystal shall not
interfere with Disney’s operations.

      

      32.           BROKER AND
COMMISSION.

      

      All
negotiations relating to this Agreement have been conducted by and between
Disney and Crystal without the intervention of any person or other party as
agent or broker. Disney and Crystal represent and warrant to each other that
there are and will be no broker’s commissions or fees payable in connection with
this Agreement by reason of their respective dealings, negotiations or
communications.

      

      33.           LICENSE TO USE DISNEY
CHARACTERS.

      

      (a)           Disney
hereby grants to Crystal a revocable, non-transferable, royalty-free,
non-exclusive license to use the characters identified on Exhibit A, attached
hereto and fully made a part hereof, only on the merchandise identified on
Exhibit A. Crystal acknowledges that Disney has adopted the Code of Conduct for
Manufacturers (the “Code”) set forth on Exhibit B. attached hereto and fully
made a part hereof, If Crystal, at any time, desires to utilize a third party to
manufacture or produce any of the merchandise identified on Exhibit A, Crystal
will notify Disney of the names and physical street addresses of such third
parties (individually, a “Third Party” and collectively, the “Third Parties”).
Disney shall have the right, in its sole and absolute discretion, to approve in
writing all of the Third Parties. If Disney does not approve in writing any
Third Party, Crystal shall not use such Third Party to manufacture or produce
the merchandise identified on Exhibit A. If Disney approves a Third Party in
writing. Crystal may use such Third Party to manufacture or produce the
merchandise identified on Exhibit A. 

        

        

        

        

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      (b)           To
the extent Crystal wishes to manufacture or produce any of the merchandise
identified on Exhibit
A itself. Crystal shall adopt the Code and shall evidence such adoption
by executing a copy of the Code and delivering the originally executed copy of
the Code to Disney prior to Crystal’s commencement of the manufacture or
production of the merchandise identified on Exhibit
A.

      

      (c)           Disney
shall have the right, in its sole and absolute discretion, to withdraw its
approval of any Third Party at any time. If Disney withdraws its approval of any
Third Party, Crystal shall immediately stop using such Third Party to
manufacture or produce the merchandise identified on Exhibit A. provided,
however, that Crystal shall be permitted to sell all of such merchandise in its
inventory, unless Disney requires otherwise in writing to Crystal.

      

      (d)           Disney
shall have the right to evaluate and monitor Crystal to ensure that Crystal is
only using Third Parties approved by Disney hereunder to manufacture and produce
the merchandise identified on Exhibit A including, but not limited to, on-site
inspections of the Locations and reviews of Crystal’s books and
records.

      

      (e)           Crystal
shall not sell or use the merchandise identified on Exhibit A at any
other location or for any purpose other than in connection with the Locations,
unless approved by Disney, which approval Disney may grant or withhold in its
sole and absolute discretion. Upon the expiration or earlier termination of this
Agreement, Crystal shall return to Disney any remaining inventory of such
merchandise.

      

      34.           MISCELLANEOUS.

      

      The GENERAL
TERMS AND CONDITIONS attached to this Agreement are hereby fully
incorporated herein by reference.

      

      IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed effective as of the day and year first above written.

      

      
      	CRYSTAL MAGIC, INC.
        DISNEYLAND RESORT, A DIVISION OF, WALT DISNEY

      WORLD CO.

      

      
      	By (Signature): /s/ Steven M. Rhodes
      	By (Signature):
      

      
      	Name: Steven M. Rhodes
        Name:Michael J. Griggs
      

      
      	Title: President
        Titles: Vice President, Store Operations/Merchandise
        

        

        

        

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      GENERAL TERMS AND
CONDITIONS

      

      A.           Control of the
Premises. Nothing in this Agreement is intended or shall be deemed or
construed to grant to or confer upon Crystal any rights whatsoever in respect of
the Locations, including, without limitation, rights in connection with the
closing, alteration, discontinuance, condemnation or casualty loss thereof.
Accordingly, without limiting the generality of the foregoing, Disney shall have
ultimate and unfettered control over the Locations.

      

      B.           No Represent at ion or
Warranties by Disney. Disney makes no representations or warranties
whatsoever in connection with this Agreement, including, without limitation, the
condition of the Locations, their suitability for the use described herein or
for any other use, the visibility of the Locations to the guests of the
Premises, the profitability of the Services to be provided at the Locations or
the success or failure of the Services to be provided at the
Locations.

      

      C.           Participants. Crystal
acknowledges that Disney and its parent, related, affiliated and subsidiary
companies are parties to certain participant agreements and that Disney and its
parent, related, affiliated and subsidiary companies may enter into additional
participant agreements in the future, Crystal agrees to comply with the
provisions of such participant agreements as they exist from time to time,
Disney shall disclose the relevant provisions of such agreements to
Crystal.

      D.           Licenses. Crystal and
its employees shall be licensed as required by law. Crystal shall obtain and
maintain throughout the Term, all professional, occupational, equipment, and
other licenses and permits required by law to perform the Services and shall
provide copies of such licenses to Disney upon request.

      E.           Disney Orientation/Guest
Surveys/Meetings. Crystal and its employees shall enroll in, at Crystal’s
expense, and complete the Orientation class and any other Disney class that
Disney deems necessary prior to commencement of the Services or at any time
thereafter as Disney may determine in its sole and absolute discretion. Crystal
and its employees shall, if requested by Disney: (i) conduct or participate in
guest evaluation and experience surveys at periodic intervals relating to the
Premises and/or the Concession and (ii) attend meetings called by
Disney.

      F.           Parking Passes/ID
Cards. Disney shall provide Crystal and its employees with parking passes
and ID cards to gain admission to the Premises and to cast parking near the
Locations. Upon the expiration or sooner termination of this Agreement, Crystal
shall return to Disney all parking passes and ID cards issued to Crystal and its
employees pursuant to this Agreement.

      G.           Additional Services/Disney
Standard. Crystal shall pay Disney for any and all services provided by
Disney which are requested by Crystal, including, without limitation, the
installation of water lines and fixtures, electricity lines and sanitary sewer.
In addition, to the extent Disney determines that Crystal needs additional
equipment to provide the Services, including, without limitation, lightning
rods, Disney shall have the option of either requiring Crystal to acquire and
install such equipment at Crystal’s sole cost and expense or acquiring and
installing such equipment itself and then billing Crystal for such equipment and
installation. Further, to the extent Disney determines that any of the
equipment, supplies, signage or any other items or materials used by Crystal in
connection with the Services do not satisfy the Disney standard, as determined
by Disney from time to time, Disney shall have the option of either requiring
Crystal to bring such equipment, supplies, signage or any other items or
materials into compliance at Crystal’s sole cost and expense or taking whatever
actions are required, as determined by Disney in its sole and absolute
discretion, to bring such equipment, supplies, signage or any other kerns or
materials into compliance and then billing Crystal for such
actions.

      H.           Late Charges. Any
amounts payable by Crystal pursuant to this Agreement which are not paid when
due shall bear interest from the date due until the date paid at the lesser of
the maximum rate allowed by law or the annual rate of eighteen percent (18%) and
such interest shall be payable on demand. Crystal shall be responsible for all
costs and expenses that Disney, or its designee, may incur in collecting any
amount due from Crystal hereunder or in enforcing any of Disney’s other rights
or remedies under this Agreement, including, without limitation, attorneys’ fees
and fees of other professionals.

      I.           Guest Claims. Crystal
shall promptly inform Disney of any guest claims or complaints and any such
claims or complaints will be handled exclusively by Disney’s personnel in
accordance with Disney’s policies and procedures then existing.

      J.           Change of Location.
Disney reserves the right to change the location of the Locations at which
Crystal performs the Services upon seven (7) days’ prior notice to Crystal.
Additionally, Disney reserves the right to introduce new vendors at any location
at the Locations who may or may not be in direct competition with
Crystal.

      K.           Personal Property.
All personal property placed upon the Locations by Crystal or any of its
employees (including, but not limited to, inventory, Equipment and supplies)
shall remain Crystal’s or its employees’ property, and shall be placed upon the
Premises at Crystal’s or its employees’ sole risk. Disney shall not be
responsible for any loss (including, without limitation, theft) of or damage to
any of Crystal’s or its employees’ personal property on the Locations, except to
the extent such loss or damage was caused solely by the gross negligence or
willful misconduct of Disney. If requested by Disney, Crystal shall give Disney
prompt written notice or any occurrence, incident or accident occurring on the
Locations that causes, or threatens to cause, damage or loss to the Locations or
any property contained therein. 

        

        

        

        

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        L.           Crystal’s
Employees.

        i.           Crystal’s
employees, if any, shall be under Crystal’s direct supervision and control. In
addition, Crystal shall comply with, and Crystal shall ensure that each of its
employees complies with, all of Disney’s standards, rules, and
regulations which may be in effect from time to time and applicable to employees
of entities sponsoring attractions or corporate displays at the Disneyland®
Resort, or any part thereof, including, but not limited to, the rules of conduct
and personal appearance standards established by Disney for its own
employees.

      

      ii.           Crystal
and its employees, shall: (a) not insult use offensive or profane language or
gestures toward or in the presence of, or argue with or be discourteous to, any
guests of the Locations, or any of Disney’s employees or representatives; (b)
not use, possess or be under the influence of alcohol, narcotics, drugs or other
hallucinatory agents while on Disney’s premises; and (c) otherwise comply with
any and all rules and regulations promulgated by Disney from time to time for
the protection and safety of Disney’s guests and for their comfort and
convenience.

      

      iii.           Crystal
hereby assumes, and releases Disney from, any and all risks to Crystal and its
employees in connection with the Services. Accordingly, Disney shall have no
obligation whatsoever to compensate Crystal, or its employees, on account of any
injuries or property damage which Crystal, or its employees, may sustain as a
result of the performance of the Services hereunder, except to the extent such
injuries or damage were caused solely by the gross negligence or willful
misconduct of Disney, and Crystal hereby waives, on its own behalf and on behalf
of any persons claiming by, through or under Crystal, any and all rights of
recovery which Crystal., or its employees, may now or hereafter have against
Disney on account of any such injury or property damage sustained by Crystal, or
its employees, as a result of the performance of the Services. The provisions of
this Section shall survive the expiration or sooner termination of this
Agreement.

      

      iv.           Any
persons that assist Crystal in the performance of the Services shall be
Crystal’s employees and not the employees of Disney or its parent, related,
affiliated or subsidiary companies, and they, as well as Crystal, shall not be
entitled to participate in any of Disney’s employee benefit or welfare plans, or
to receive any of Disney’s employee benefits. Crystal will pay all salaries and
all social security taxes, federal and state unemployment insurance and any and
all similar taxes relating to Crystal and its employees. Crystal shall provide
to Disney, upon request, evidence that Crystal and its employees possess valid
visas, passports or other documentation to enable Crystal and its employees,
respectively, to perform the Services.

      

      v.           Crystal
acknowledges that Disney has a policy relating to criminal background checks,
which policy is applicable to all prospective new employees and certain existing
employees of Disney and its parent related, affiliated and subsidiary companies
employed in connection with the Disneyland Resort, as well as all prospective
new employees and certain existing employees of third panics operating
businesses in the Disneyland Resort. Accordingly, Crystal agrees that, with
respect to all prospective new employees of Crystal employed in connection with
the Locations and certain existing employees of Crystal that may be assigned to
work in the Locations from time to time during the Term, Crystal will conduct,
at its own expense, criminal background checks in compliance with the
requirements and procedures set forth in such policy, as the same may be amended
from time to time during the Term. Crystal shall comply with such requirements
and procedures to the minimum extent set forth in the policy, and Crystal may,
consistent with all applicable laws, wish to conduct more comprehensive or
inclusive employee criminal background searches on its own accord. Crystal
shall, at Crystal’s expense, comply with all laws applicable to the initial
retrieval and subsequent use and disclosure of the information it obtains from
conducting such criminal background checks (including, without limitation, the
Fair Credit Reporting Act).

      

      P.           Representations and
Warranties. Crystal hereby warrants and represents to Disney that: (i)
Crystal has the experience, staff, skill and authority to perform the Services;
(ii) Crystal shall comply with all applicable federal, state and local laws,
rules, regulations, codes, statutes, ordinances, and orders of any governmental
or regulatory authority relating to safety; (iii) Crystal is adequately financed
to meet any financial obligation Crystal may be required to incur hereunder;
(iv) Crystal has obtained all licenses and permits required to observe and
perform the terms, covenants, conditions and other provisions on its part to be
observed or performed under this Agreement; (v) any material or work product
provided by Crystal under this Agreement shall not infringe upon any patent,
trademark or copyright, or otherwise violate the rights of, any person, firm or
corporation; (vi) Crystal has obtained and will maintain during the Term, all
necessary licenses; consents, permissions and releases (including, without
limitation, any necessary licenses from third parties for the artwork which is
used in Crystal’s performance of the Services), and will timely make all
payments to third parties, that may be required to provide the Services; (vii)
to the extent Crystal is a corporation. Crystal is duly organized, validly
existing and in good standing in its state of incorporation, (viii) in providing
the Services. Crystal shall use good moral judgment; (ix) there is no actual or
potential conflict of interest between the Services to be performed by Crystal
under this Agreement and Crystal’s family, business, financial or other
interests, and Crystal shall immediately notify Disney of any actual or
potential conflict of interest of which Crystal becomes aware during the Term;
and (x) Crystal will not engage any current employee of Disney or any of its
parent, related, affiliated or subsidiary companies or any person who was
employed by Disney or any of its parent, related, affiliated or subsidiary
companies within the past twelve (12) months to perform any part of the
Services.

      Q.           Year 2000. Crystal
represents and warrants to Disney that any equipment and software, including,
without limitation, any embedded software, necessary for Crystal to fulfill its
obligations under this Agreement will process dates correctly prior to, during
and after the calendar year 2000. This shall include,
but not be limited to, century recognition, calculations that accommodate same
century and multicentury formulas and date values, and interface values that
reflect the century. In the event Crystal becomes aware that any such equipment
or software will not or does not process data containing any date subsequent to
the year 1999 correctly, Crystal shall immediately notify Disney of that fact
and promptly correct or replace the equipment or software to eliminate such
processing problem. If Crystal fails to correct or replace any equipment or
software that does not meet the foregoing warranty within a reasonable period of
time, Disney shall have the right (but not the obligation) to correct or replace
the inadequate equipment and software at Crystal’s expense and receive full
reimbursement from Crystal for the costs incurred.

        

        

        

        

        18

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      R.           Recordation of this
Agreement. This Agreement shall not be recorded.

      

      S.           Liens.

      i.           The
Locations shall nor be subjected to liens of any nature by reason of Crystal’s
construction, alteration, repair, restoration, replacement or by reason of any
other act or omission of Crystal (or of any person claiming by, through or under
Crystal). All persons dealing with Crystal are hereby placed on notice that such
persons shall not look to Disney or to Disney’s credit or assets for payment or
satisfaction of any obligations incurred in connection with the construction,
alternation, repair, restoration, replacement, use or reconstruction of the
Locations by or on behalf of Crystal. Crystal has no power, right or authority
to subject Disney to any lien or claim of lien including, but not limited to,
mechanics or other materialmen’s liens. Crystal shall not create or permit to be
created any lien, encumbrance or charge against the Locations or any part
thereof.

      ii.           To
secure the payment of all compensation due and to become due hereunder and the
faithful performance of this Agreement by Crystal, Crystal hereby gives to
Disney an express first and prior contract lien and security interest on all
property (including, without limitation, Crystal’s merchandise, inventory,
supplies. Equipment, etc.,) which may be placed in the Locations, and also, upon
all proceeds of any insurance which may accrue to Crystal by reason of
destruction of or damage to any such property. Such property shall not be
removed from the Locations without the prior written approval of Disney (which
approval may be granted or withheld by Disney in its sole and absolute
discretion) until all arrearages in compensation then due to Disney hereunder
shall first have been paid. If requested by Disney, Crystal shall execute and
deliver to Disney, Uniform Commercial Code Financing Statements in sufficient
form so that when properly filed, the security interest hereby given shall
thereupon be perfected.

      T.           Regulatory Inspection
Reports. Crystal shall deliver to Disney, immediately following receipt
by Crystal, copies of any inspection or evaluation report, or any notice of
violation of or failure to comply with any law, rule or regulation applicable to
the Locations or the performance of Crystal’s Services at the Locations, which
is delivered to Crystal by any governmental authority. 

        

        

        

        

        19

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      EXHIBIT
A

      

      Merchandise: Guest
portraits with 3-D Disney characters, logos and/or name drop, and sculptured
reproductions inside optically transparent material (crystal glass), as approved
by Disney.

      

      3-D
Disney characters, logos and/or name drop and sculptured reproductions inside
optically transparent material (crystal glass); as approved by
Disney.

      

      Light
Bases and Stands with or without 3-D Disney characters, logos and/or name drop,
as approved by Disney. Other items as approved by Disney.

      

      Characters:
Mickey Mouse, Minnie Mouse, Donald Duck, Goofy, Pluto, Disney’s California
AdventureTM Park icons and any other Disney character, logo, graphic, icon, name
drop and/or art that is approved in advance, by Disney and the Disney
Merchandise Brand department. 

        

        

        

        

        20

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      EXHIBIT
B

      

      CODE OF CONDUCT FOR
MANUFACTURERS

      

      At The
Walt Disney Company, we are committed to:

      

      a
standard of excellence in every aspect of our business and in every comer of the
world;

      ethical
and responsible conduct in all of our operations;

      respect
for the rights of all individuals; and

      respect
for the environment.

      

      We expect
these same commitments to be shared by all manufacturers of Disney merchandise.
At a minimum, we
require that all manufacturers of Disney merchandise meet the following
standards:

       

      
        
          	Child
      Labor	
                  Manufacturers will
      not use child labor.

                   

                  The
      term “child” refers to a person younger than 15 (or 14 where local law
      allows) or, if higher, the local legal minimum age for employment or the
      age for completing compulsory education.

                   

                  Manufacturers
      employing young persons who do not fall within the definition of
      “children” will also comply with any laws and regulations applicable to
      such persons.

                

        

         

      

      
        
          
            	Involuntary
      Labor 	Manufacturers will
      not use any forced or involuntary labor, whether prison, bonded,
      indentured or otherwise.

          

      

       

      
        
          	 Coercion
      and Harassment	 Manufacturers
      will treat each employee with dignity and respect, and will not use
      corporal punishment, threats of violence or other forms of physical,
      sexual, psychological or verbal harassment or
abuse.

        

                                                  

      

      
         

        
          	 Nondiscrimination	 Manufacturers
      will not discriminate in hiring and employment practices, including
      salary, benefits, advancement, discipline, termination or retirement, on
      the basis of race, religion, age, nationality, social or ethnic origin,
      sexual orientation, gender, political opinion or
  disability.

        

         

      

      
        
          	 Association	 Manufacturers
      will respect the rights of employees to associate, organize and bargain
      collectively in a lawful and peaceful manner, without penalty or
      interference.

        

         

      

      
        
          	 Health
      and Safety	 Manufacturers
      will provide employees with a safe and healthy workplace in compliance
      with all applicable laws and regulations, ensuring at a minimum reasonable
      access to potable water and sanitary facilities; fire safety; and adequate
      lighting and ventilation. Manufacturers will also ensure that the same
      standards of health and safety are applied in any housing that they
      provide for employees.

        

         

      

      
        
          	 Compensation	
                   We
      expect manufacturers to recognize that wages are essential to meeting
      employees’ basic needs. Manufacturers will, at a minimum, comply with all
      applicable wage and hour laws and regulations, including those relating to
      minimum wages, overtime, maximum hours, piece rates and other elements of
      compensation, and provide legally mandated benefits. Except in
      extraordinary business circumstances, manufacturers will not require
      employees to work more than the lesser of (a) 48 hours per week and 12
      hours overtime or (b) the limits on regular and overtime hours allowed by
      local law or, where local law does not limit the hours of work, the
      regular work week plus 12 hours overtime. In addition, except in
      extraordinary business circumstances, employees will be entitled to at
      least one day off in every seven-day period.

                   

                  
                    Manufacturers
      will compensate employees for overtime hours at such premium rate as is
      legally required or, if there is no legally prescribed premium rate, at a
      rate at least equal to the regular hourly compensation rate.

                    

                    Where
      local industry standards are higher than applicable legal requirements, we
      expect manufacturers to meet the higher
  standards.

                  

                

        

         

         

         

         

      

      
        21

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
         

        
          
            	 Protection
      of the Environment	 Manufacturers
      will comply with all applicable environmental laws and
    regulations.

          

           

          
            
              
                	Other
      Laws	 Manufacturers
      will comply with all applicable laws and regulations, including those
      pertaining to the manufacture, pricing, sale and distribution of
      merchandise. All references to “applicable laws and regulations” in this
      Code of Conduct include local and national codes, rules and regulations as
      well as applicable treaties and voluntary industry
  standards.

              

               

            

          

        

                                       

      

      
        

        

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      EXHIBIT
C

      

      FIXTURES AND
EQUIPMENT

      

      As part
of this Agreement, Crystal shall provide the following Equipment if requested by
Disney:

      

      1.            
Laser safety
provisions:

      ANSI
Class IV laser system

      Interlocked
and labeled enclosure per ANSI ZI36.1

      Keyswitch
and emergency stop

      

      2.            
Laser
Subsystem:

      Ultra GRM
1064, standard specifications

      Wavelength:
1064 nm (Nd: YAG fundamental)

      

      3.           
 Positioner
Subsystem:

      Stepper-driven
3-axis positioning system with motors, drives, and indexer

      

      4.           
 System
Controller:

      PC-platform
including, but not limited to

      Intel
PII-350 MHz or better processor

      128 MB
RAM

      10 GB
internal mass storage (hard drive)

      1.44MB
removable mass Storage (floppy drive)

      Multi-protocol
network card

      Frame
grabber card

      17” color
monitor

      Keyboard

      RS-232
serial interface

      Operating
system: Windows 98

      

      5.            
Video Display System:

      Color CCD
camera and macro lens

      Incandescent
“top light”

      Visible
red targeting diode laser

      Video
output signal

      

      Crystal
shall provide the following fixtures at its sole cost and expense for each
Location;

      

      1.           Freestanding
themed floor fixture (including, without limitation, installation of same)

        

        

        

        

        23

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