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EXHIBIT 10.89    
  

May 2,
2000 

Mr. Rick
Karo

Hearst Entertainment

1640 S. Sepulveda Blvd., 4th Floor

Los Angeles, CA 90025 

	

 	

Re:	
 	

Term Sheet: Hearst Entertainment/The Harvey Entertainment Company Joint Venture

Dear Rick: 

    This
letter shall confirm the terms of our agreement regarding the strategic alliance between The Harvey Entertainment Company ("Harvey") and Hearst Entertainment ("Hearst") in
connection with the licensing and merchandising activities of Harvey and the Harvey characters, as follows: 

	1.
	STRUCTURE: Harvey and will enter into a licensing representation agreement with Hearst, which be
negotiated between the parties in good faith. The Agreement shall grant to Hearst all licensing and merchandising rights to all of Harvey's characters now owned or acquired by Harvey during the Term
within the Territory, subject to contractual exclusions due to co-production agreements, distribution agreements, licensing agreements etc.

	2.
	TERM: Two years commencing June 15, 2000, subject to a mutually-agreed upon renewal for an
additional two year term. Hearst shall obtain Harvey's prior written approval before entering into any license agreements with any third parties, which would terminate later than twelve
(12) months subsequent to the end of the term of this Agreement. Harvey shall have the right to terminate this Agreement at any time during the term should Harvey undergo a change in control of
its corporate structure. (e.g. a merger, sale, or consolidation that substantially changes the current control of the
corporation), provided that, in the event of such termination, Hearst shall be given one of the following notice periods: a) in the event Harvey is acquired by or merged with an entity actively
involved in the licensing and merchandising business, six (6) months; or b) in the event Harvey is acquired by or merged with an entity not actively involved in the licensing and
merchandising business, one (1) year. The parties agree that any deals which Hearst has entered into prior to the receipt of notice of termination shall continue in place until the end of their
terms and Hearst shall be entitled to its full compensation for such agreements as set forth herein.

	3.
	TERRITORY: Worldwide excluding Central and South America.

	4.
	RIGHTS: All Licensing and Merchandising and promotional tie-in rights owned or controlled
by Harvey, excluding all internet rights.

	5.
	COMPENSATION: Hearst shall receive as compensation derived from the exploitation of the rights granted
by Harvey herein as follows: 

Revenue
Derived from the United States: 

	a)
	20%
of all gross revenues derived from the exploitation of the rights granted by Harvey herein on gross revenues between $0-1 million per 12 months; and

	b)
	35%
of all gross revenues derived from the exploitation of the rights granted by Harvey herein on gross revenues from $1 million—$3 million per
12 months; and

	c)
	40%
of all gross revenues derived from the exploitation of the rights granted by Harvey herein on gross revenues in excess of $3 million per 12 months. 

Revenue
Derived Outside of the United States: 

	a)
	15%
of net revenues with "net revenues" defined as all revenue received following the deduction of foreign licensing and merchandising agent commissions. 

 

	6.
	EXPENSES: Within thirty (30) days following the commencement of each twelve (12) month
period of the Term, Hearst shall present to Harvey a written plan of action setting out in detail Hearst's marketing and sales plan for the Harvey characters and the exploitation of the rights granted
by Harvey herein. Such plan shall include a complete budget of all projected out-of-pocket direct expenses that Hearst shall incur in connection with the exploitation of the
rights granted by Harvey herein. Harvey shall have the right to pre-approve all such direct, out-of-pocket expenses, and Hearst shall have the right to recoup only
those direct, out-of-pocket expenses pre-approved by Harvey pursuant to such budget. Notwithstanding the above, Hearst's ability to recoup its expenses, shall be
restricted further in that the total compensation as set forth above in Paragraph 5, plus recouped expenses, shall not exceed fifty (50%) percent of all gross revenues for each twelve
(12) month period of the Term. Hearst will waive any unrecouped expenses in excess of this limit.

	7.
	FOREIGN AGENTS: Hearst shall use its best efforts to work with the existing Harvey foreign agents but,
subject to Harvey's contractual commitments, Hearst shall have the right to recommend and modify such foreign agent representation in such instances as non-performance, strategic
opportunities and Harvey co-production initiatives.

	8.
	HARVEY STAFFING REQS: Harvey shall provide one Harvey employee to serve as liaison with Hearst and
provide Hearst with copies of and access to available style guide materials, reference and archive materials, historical contracts, foreign agent representative agreements and other timely information
on Harvey characters and filmed entertainment activities.

	9.
	MISCELLANEOUS: It is contemplated that Harvey and Hearst shall prepare longform document(s)
incorporating the terms and conditions herein, but until such time this agreement shall serve as a full and complete understanding of the agreement between Harvey and Hearst, and shall be binding upon
both Harvey and Hearst. This agreement shall be governed by the laws of the State of California. 

    We
look forward to our mutually beneficial relationship. Please indicate your agreement to the terms and conditions herein by signing in the space provided below. Please be advised
that Harvey's agreement shall be subject to approval by its Board of Directors. 

	

Best regards,	
 	

 
	

/s/ RICK MISCHEL   
 Rick Mischel
 President and COO	
 	

 
	
 Agreed and Accepted:	
 	

 
	

HEARST ENTERTAINMENT	
 	

 
	

By:	
 	

/s/ RICK KARO
	
 	

 
	

Its:	
 	

Exec. V.P.
	
 	

 
	

Date:	
 	

5/24/00
	
 	

 

2

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EXHIBIT 10.89<PAGE>

                                                                    EXHIBIT 4.1

                             [RSTAR CORPORATION LOGO]

COMMON STOCK                                                       COMMON STOCK
NUMBER                                                             SHARES
C-

THIS CERTIFICATE IS TRANSFERABLE IN                    CUSIP 74973F 10 4
  NEW YORK, NY OR CANTON, MA                 SEE REVERSE FOR CERTAIN DEFINITIONS

               INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

THIS CERTIFIES THAT

IS THE RECORD HOLDER OF

      FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, PAR VALUE $0.01
      PER SHARE, OF
                               rSTAR CORPORATION

transferable only on the books of the Corporation by the Holder hereof in
person or by duly authorized attorney upon surrender of this Certificate
properly endorsed. This Certificate not valid until countersigned and
registered by the Transfer Agent and Registrar.

    WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.

Dated:

/s/ David Wallace                                     /s/ Lance Mortensen
---------------------                                 -----------------------
SECRETARY                                             CHAIRMAN OF THE BOARD

         (rSTAR CORPORATION, CORPORATE SEAL JULY 22, 1999 DELAWARE)

Countersigned and Registered:
FLEET NATIONAL BANK

/s/ Timothy D. Ryan
------------------------

Transfer Agent and Registrar

Authorized Officer

<PAGE>

                                 rSTAR CORPORATION

    Keep this Certificate in a safe place. If it is lost, stolen or destroyed,
the Corporation will require a bond of indemnity as a condition to the
issuance of a replacement certificate.

    The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

TEN COM -- as tenants in common          UNIF GIFT MIN ACT--_____Custodian_____
TEN ENT -- as tenants by the                            (Cust)          (Minor)
           entireties                    under Uniform Gifts to Minors Act_____
JT TEN  -- as joint tenants with                                        (State)
           right of survivorship         UNIF TRF MIN ACT--_____Custodian(until
           and not as tenants in                          (Cust)       age____)
           common                        _________under Uniform Transfers
                                         (Minor)
                                         to Minors Act____________________
                                                           (State)

Additional abbreviations may also be used though not in the above list.

    FOR VALUE RECEIVED,___________hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

________________________________________________________________________________
   (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

________________________________________________________________________________

________________________________________________________________________________

__________________________________________________________________________Shares
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint

________________________________________________________________________Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.

Dated______________________

                                               X________________________________

                                               X________________________________
                                        NOTICE: THE SIGNATURE(S) TO THIS
                                                ASSIGNMENT MUST CORRESPOND WITH
                                                THE NAME(S) AS WRITTEN UPON
                                                THE FACE OF THE CERTIFICATE IN
                                                EVERY PARTICULAR WITHOUT
                                                ALTERATION OR ENLARGEMENT OR ANY
                                                CHANGE WHATEVER.

Signature(s) Guaranteed

By_____________________________________________________________
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15.

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