Deferral Agreement between Hallmark Cards, Incorporated and Crown Media Regarding Payment Obligations (August 1, 2005)
Hallmark Cards, Incorporated agrees not to demand payment from Crown Media on certain notes and payables totaling $725 million, as well as license fees and potential letter of credit reimbursements, until at least August 31, 2006. If Crown Media sells most or all of its assets before that date, Hallmark may reconsider the repayment schedule. In return, Crown Media will convert certain license fees into interest-bearing debt or may repay them by increasing its bank facility. This agreement provides Crown Media with temporary relief from immediate repayment obligations.
EXHIBIT 10.1
August 1, 2005
Mr. William Aliber
Chief Financial Officer
Crown Media
6430 South Fiddlers Green Circle
Greenwood Village, CO 80111
Dear Mr. Aliber,
Pursuant to your request, Hallmark Cards, Incorporated confirms to you that Hallmark Cards will not instruct its wholly-owned subsidiaries to demand, nor will Hallmark Cards or any of its wholly-owned subsidiaries demand payment from Crown Media on any of the following obligations until August 31, 2006, at the earliest:
$75.0 million Note payable to HC Crown plus accrued interest thereon from time to time
$400.0 million Note payable to HC Crown plus accrued interest thereon from time to time
$100.0 million payables to Hallmark Entertainment Holdings incurred in conjunction with the library transaction
$150.0 million of license fees payable to Hallmark Entertainment Distribution (HED) Company
It would be Hallmark’s intent to re-evaluate the loan repayment schedule if all or substantially all of the assets of Crown Media were sold to a third party prior to August 31, 2006.
Finally, in the event that at any time prior to May 31, 2006 Crown Media’s banks draw on the Letter of Credit provided by Citibank N.A. in support of Crown Media’s Revolving Credit Agreement,, Hallmark will not request reimbursement from Crown Media for such amounts prior to August 31, 2006. It would be Hallmark’s intent to re-evaluate this repayment schedule if all or substantially all of the assets of Crown Media were sold to a third party prior to August 31, 2006.
Hallmark is agreeing to the above items in exchange for Crown Media agreeing to convert HED License Fees into an interest bearing debt item with interest being assessed at a rate equal to Crown Media bank facilities in existence (presently, Libor plus 300). As an alternative to the Fees becoming interest bearing, Crown Media can elect to increase its Bank facility (subject to a Hallmark Guarantee) and repay all HED obligations with borrowings.
Sincerely,
| /s/ ROBERT DRUTEN |
| /s/ WILLIAM ALIBER |
|
| Robert Druten | William Aliber | ||
| Chief Financial Officer | Chief Financial Officer | ||
