EXHIBIT 10.98
WAIVER AND STANDBY PURCHASE
AGREEMENT
This WAIVER AND STANDBY PURCHASE
AGREEMENT (this “ Agreement ”) is entered into
as of March 21, 2006, by and among Hallmark Cards,
Incorporated, a Missouri corporation (“ Hallmark
”), HC Crown Corp., a Delaware corporation (“
HCC ”), Hallmark Entertainment Holdings, Inc., a
Delaware corporation (“ HEHI ” and together with
Hallmark and HCC the “ Hallmark Lenders ”) and
Crown Media Holdings, Inc., a Delaware corporation (“
Crown Holdings ”), Crown Media United States, LLC, a
Delaware limited liability company (“ CMUS ”),
and the subsidiaries of Crown Holdings listed as Guarantors on the
Credit Facility (the “ Guarantors ,” and,
together with Crown Holdings and CMUS, the “ Borrowers
”).
WHEREAS, the Borrowers are indebted
to the Hallmark Lenders pursuant to the obligations listed on
Exhibit A hereto in favor of one or more of the
Hallmark Lenders (collectively, the “ Subject
Obligations ”);
WHEREAS, the Hallmark Lenders are
willing to defer certain payments due under the Subject Obligations
and to agree to purchase from the Bank Lenders (as defined below)
certain obligations of the Borrowers, on the terms and subject to
the conditions set forth in this Agreement;
WHEREAS, the Borrowers are willing
to modify the Subject Obligations on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration for
the foregoing premises and the mutual covenants and agreements
contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, agree as
follows:
1.
Definitions and Rules of
Construction.
(a)
Definitions
. As used herein:
“ Agreement ” has
the meaning set forth in the introductory paragraph.
“ Bank Lenders ”
means the lenders from time to time under the Credit
Facility
“ Borrowers ” has
the meaning set forth in the introductory paragraph.
“Business
Day” shall mean any
day other than a Saturday or Sunday, or a day on which banking
institutions in the State of New York or the State of California
are authorized or obligated by law or executive order to remain
closed.
“ CMUS ” has the
meaning set forth in the introductory paragraph.
“ Credit Facility
” means the Credit, Security, Guaranty and Pledge Agreement
dated as of August 31, 2001 as amended by Amendments 1 through
9 thereto, dated as of December 14, 2001, December 31,
2001, March 29, 2002, May 14, 2002, February 5,
2003,
August 4, 2003, October 28, 2004,
March 1, 2005 and March 21, 2006, among Crown Media
Holdings, Inc., the guarantors named therein, the Hallmark
Lenders referred to therein and JPMorgan Chase Bank, N.A. (formerly
known as JPMorgan Chase Bank), as administrative agent.
“ Crown Holdings
” has the meaning set forth in the introductory
paragraph.
“Excess Cash
Flow” has the
meaning set forth in Section 6(d)(ii).
“ Guarantors ”
has the meaning set forth in the introductory paragraph.
“ Hallmark ” has
the meaning set forth in the introductory paragraph.
“ Hallmark Lenders
” has the meaning set forth in the introductory
paragraph.
“ HCC ” has the
meaning set forth in the introductory paragraph.
“ HEHI ” has the
meaning set forth in the introductory paragraph.
“ Indebtedness ”
includes all items that in accordance with generally acceptable
accounting principles would be included in determining total
liabilities as shown on the liability side of a balance sheet as at
the date as of which debt is to be determined, or to which
reference should be made by footnotes thereto, but (a) also
includes reimbursement obligations, guaranties, endorsements (other
than endorsements for collection or deposit in the ordinary course
of business), and other contingent obligations in respect of, or to
purchase or otherwise acquire or advance funds on account of or
otherwise service, obligations of others; and (b) excludes any
amounts payable to employees or directors of the Borrowers in
regard to restricted stock units.
“ Library Transaction
Payable ” has the meaning set forth in
Exhibit A.
“ Loan Documents
” include this Agreement, the Notes, from and after the date
as of which Hallmark is deemed to have purchased a participation in
the “Obligations” under the Credit Facility or
purchases the Indebtedness under the Credit Facility pursuant to
Section 3, the Credit Facility, and any and all other writings
which now or hereafter evidence or secure any portion of the
Subject Obligations, and any amendments, modifications or
substitutions of or for the foregoing.
“ Notes ” means
the 2001 Note, the 10.25% Note, the 2005 Note and the 2006
Note.
“ Participated
Obligation ” has the meaning set forth in
Exhibit A.
“ Released Matters
” has the meaning set forth in Section 8.
“ Released Parties
” has the meaning set forth in Section 8.
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“ Security Interest
” includes any lien, charge, mortgage, pledge, assignment, or
other encumbrance, retained title, or security interest, whether
created or arising voluntarily, involuntarily or by operation of
law.
“ Standby Purchaser
” has the meaning set forth in Section 3.
“ Subject Obligations
” has the meaning set forth in the recitals
hereto.
“ 10.25% Note ”
has the meaning set forth in Exhibit A.
“ 2001 Note ” has
the meaning set forth in Exhibit A.
“ 2005 Note ” has
the meaning set forth in Exhibit A.
“ 2006 Note ” has
the meaning set forth in Section 7(b).
“Waiver
Period” has the
meaning set forth in Section 2(a).
“ Waiver Termination
Date ” has the meaning set forth in
Section 2(c)
(b)
Agreement Controlling
. In the event of any inconsistency
between the terms of this Agreement and the Subject Obligations or
any other Loan Documents, this Agreement shall govern. Each
Borrower acknowledges that it has consulted with counsel and with
such other experts and advisors as it has deemed necessary in
connection with the negotiation, execution and delivery of this
Agreement. This Agreement shall be construed without regard to any
presumption or rule requiring that it be construed against the
party causing this Agreement or any part hereof to be
drafted.
(c)
Miscellaneous
. The headings herein are for
convenience only and shall not be deemed to be part of this
Agreement.
2.
Agreement to
Waive.
(a)
Waiver. Subject to Paragraph (b) of this
Section 2:
(i)
Except as set forth in clause
(b)(i) below and Section 6, all payments due from
Borrower with respect to the Subject Obligations during the period
(the “ Waiver Period ”) commencing on the date
hereof and ending on the Waiver Termination Date, shall be deferred
to the Waiver Termination Date, whereupon such amounts shall become
immediately due and payable;
(ii)
During the Waiver Period, the
Hallmark Lenders shall not:
(1)
accelerate the maturity of the
Subject Obligations or initiate proceedings for the collection of
the Subject Obligations or foreclose with respect to the collateral
security therefor; and
(2)
file, or join in the filing of, any
involuntary petition in bankruptcy with respect to the Borrowers,
or any of them, or otherwise
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initiate or participate in similar
insolvency reorganization, or moratorium proceedings for the
benefit of creditors of the Borrowers or any of them.
(b)
Permitted Actions.
Notwithstanding paragraph
(a) of this Section 2, during the Waiver
Period:
(i)
the Borrowers shall pay, and
Hallmark shall be entitled to collect, accrued interest in respect
of the Participated Obligation in accordance with the terms thereof
(to the extent not prohibited by the Credit Facility), which from
and after the maturity of the Participated Obligation through the
Waiver Termination Date shall accrue at the non-default
rate;
(ii)
interest on the Subject Obligations
shall continue to accrue in accordance with the terms and
conditions of the Subject Obligations (as the same are modified,
amended and restated in accordance with this Agreement); provided
that with respect to the 2005 Note, interest shall continue to
accrue from and after the Maturity Date (as defined therein) at the
rate set forth therein;
(iii)
the Hallmark Lenders may take
such action as not prohibited by the terms of the Subject
Obligations to further protect or perfect any lien on collateral
securing the Subject Obligations; and
(iv)
nothing in this Agreement shall
limit any right any of the Hallmark Lenders may have to offset
against the Subject Obligations, amounts that it owes any Borrower
pursuant to the Tax Sharing Agreement or pursuant to that certain
letter dated October 7, 2005 in which Hallmark agreed to
participate in the NICC settlement, or as otherwise agreed by Crown
Holdings.
(c)
Waiver Termination
Date . This Waiver shall
terminate automatically on May 31, 2007, unless terminated
earlier as set forth herein and such date of actual termination
shall be the “ Waiver Termination Date ”.
Hallmark Lenders shall have the right to terminate this Waiver upon
written notice upon the occurrence of any of the following in
clauses (i) through (iv). The Waiver shall automatically
terminate upon the occurrence of either of (v) or
(vi):
(i)
Any Borrower shall fail to pay any
principal or interest, regardless of amount, due in respect of any
Indebtedness, when and as the same shall become due and payable
(and after the expiration of any cure periods), (other than
Indebtedness under the Subject Obligations, including the Credit
Facility) with an aggregate principal amount in excess of $5
million, or any other event or condition occurs that results in any
such Indebtedness becoming due prior to its scheduled maturity
provided, however, that the Waiver will not terminate if the
Borrower reduces the principal amount of such aggregate
Indebtedness to $5 million or less within five Business Days of the
Lender’s written notice of termination;
(ii)
CMUS shall default in the payment of
licensing fees pursuant to that certain Second Amended and Restated
Program License Agreement dated as
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of January 1, 2005 with RHI
Entertainment, LLC (as it may be amended from time to
time);
(iii)
the representation and warranty of
any Borrower contained herein shall have been false or misleading
in any material respect;
(iv)
any Borrower shall fail to make the
payments required by Section 2(b)(i) hereof or to
perform any of its covenants or obligations contained herein
within five (5) Business Days after notice thereof by the
Hallmark Lenders;
(v)
An involuntary proceeding shall be
commenced or an involuntary petition shall be filed in a court of
competent jurisdiction seeking (1) relief in respect of any
Borrower or any subsidiary of any Borrower, or of a substantial
part of the property or assets of any Borrower or any
subsidiary of any Borrower, under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other
Federal, state or foreign bankruptcy, insolvency, receivership or
similar law, (2) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for any
Borrower or any subsidiary of any Borrower or for a substantial
part of the property or assets of any Borrower or any
subsidiary of any Borrower or (3) the winding-up or
liquidation of any Borrower or any subsidiary of any Borrower;
and
(vi)
any Borrower or any subsidiary of
any Borrower shall (1) voluntarily commence any proceeding or
file any petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other
Federal, state or foreign bankruptcy, insolvency, receivership or
similar law, (2) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or the
filing of any petition described in (c)(vi) above,
(3) apply for or c
