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EXHIBIT 10.7
AMENDED AND RESTATED
TRADEMARK LICENSE AGREEMENT
This Agreement is made and entered into as of December 1, 2000, by and
between HALLMARK CARDS, INCORPORATED ("Hallmark") and CROWN MEDIA INTERNATIONAL,
INC. ("Crown") f/k/a Crown Media, Inc.
WHEREAS, Hallmark and Crown have previously entered into an Amended and
Restated Trademark License Agreement dated January 26, 2000 ("Previous Trademark
Agreement") whereby Hallmark licensed to Crown certain rights to use the
trademark "Hallmark Entertainment" outside the United States and Canada; and
WHEREAS, Hallmark is the owner of or is in the process of filing for
trademark applications for the trademarks "Hallmark Entertainment" and
"Hallmark" in various countries outside the United States and Canada; and
WHEREAS, Crown desires to use the trademarks "Hallmark Entertainment"
and "Hallmark" and associated logos designated by Hallmark (the "Licensed
Marks") on the terms and subject to the conditions specified herein; and
WHEREAS, Hallmark desires to permit Crown to use the Licensed Marks
subject to the terms and conditions herein provided, and not otherwise.
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, the parties hereto hereby amend and restate the Previous
Agreement in its entirety as follows:
1. Grant. To the extent of its present and future ownership interest
therein, and subject to the terms and conditions of this Agreement, Hallmark
hereby grants to Crown the rights below listed for the term of this Agreement,
but only for so long as Hallmark and/or its wholly owned subsidiaries
collectively beneficially own at least 51% of the voting interest and 35% of the
equity interest of Crown Media Holdings, Inc. and designate a majority of the
Board of Directors of Crown Media Holdings, Inc. and no event of Default has
occurred hereunder:
a. The non-exclusive, royalty-free license outside the United
States and Canada to use the Licensed Marks in connection with
Crown's promotion, marketing, advertising, distribution and
sale of the Select Pictures (and not in connection with Other
HEDL Programs) (as defined in Section 3); and
b. The non-exclusive, royalty-free license to use the Licensed
Marks in connection with the promotion, marketing,
advertising, distribution and sale of Crown's Service (as
defined herein), in any country outside the United States and
Canada, but only for so long as the Select Pictures and Other
HEDL Programs (as defined in Section 3) constitute at least
50% of
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the hours of programming per month of the Service (as defined
in Section 3) in such country where the Service is
distributed; provided, however, that for the first six months
after a launch in any given country, the Select Pictures and
Other HEDL Programs need only constitute at least 20%.
2. Limitations. In no event shall Crown be permitted to use the
Licensed Marks, in combination with any other name besides Crown's. Crown agrees
not to use the Licensed Marks in its corporate name.
3. Select Pictures, Other HEDL Programs and the Service. "Select
Pictures" shall mean television motion pictures and mini-series produced by or
at the direction of Hallmark Entertainment Productions, LLC or its subsidiaries.
"Other HEDL Programs" shall mean all television motion pictures and mini-series
other than Select Pictures acquired by Crown from Hallmark Entertainment
Distribution, LLC. The "Service" shall mean the distribution of a channel (or
network presenting a channel) of the Select Pictures and Other HEDL Programs and
other high-quality, family oriented television programming of a character,
nature and quality consistent with the image of Hallmark ("Third Party
Programs").
4. Standards.
a. Crown acknowledges its familiarity with the high standards
of quality and guidelines maintained by Hallmark for the use
of the Licensed Marks and the name "Hallmark," and Crown
agrees to faithfully maintain these same standards in
connection with its programming of the Service, including but
not limited to complying with the broadcast standards set
forth on Schedule A, as amended by Hallmark from time to time.
Furthermore, Crown agrees to comply with any guidelines or
rules for use of the Licensed Marks as Hallmark may in its
sole discretion, from time to time, promulgate in order to
protect the quality image and reputation which the Licensed
Marks and the name "Hallmark" presently enjoy and such
guidelines or rules shall be incorporated herein as a part of
this Agreement.
b. Crown acknowledges that Hallmark Cards was founded in 1910,
is a privately owned company which enjoys a stellar reputation
for excellence, quality, adherence to high ethical and moral
values, and whose brand "Hallmark" consistently rates in the
top ten brands in the U.S. for consumer recognition, consumer
trust and quality. Further, "Hallmark Hall of Fame"
productions have won 78 Emmys over the past 40 years. Crown
further acknowledges that Hallmark would not grant this
trademark license if it did not control Crown and Hallmark's
wholly owned subsidiaries, Hallmark Entertainment, Inc.,
Hallmark Entertainment Productions, LLC and Hallmark
Entertainment Distribution, LLC, which produce and distribute
the Select Pictures and Other HEDL Programs for which use of
this license is granted.
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c. Crown agrees to designate an individual at Crown's expense
who will be responsible for monitoring the use of the Licensed
Marks and ensuring that the Licensed Marks are utilized in
accordance with this Agreement and that all required requests
for approval are properly submitted to Hallmark.
5. Approval. Crown agrees to comply with the brand identity standards
of the branding committee established by Hallmark ("Branding Committee") which
standards shall include, but not be limited to, logo, program headers,
visual/verbal standards, uses and positioning of logo, application of logo to
any marketing materials, uses by any MSOs, uses in other media such as print
advertising. Further, Crown agrees that Select Pictures, Other HEDL Programs and
Third Party Programs shall also comply with the broadcast standards on Schedule
A as amended by Hallmark from time to time. Crown shall, at the request of
Hallmark, submit to Hallmark pictures, programs, film credits, press releases,
advertising and promotional materials, and other materials utilizing the
Licensed Marks or broadcast on the Service for Hallmark's approval, which may be
withheld for any reason. Submissions shall be directed to the attention of ▇▇▇
▇▇▇▇▇▇, or such other person designated by Hallmark from time to time. The logo
attached as Schedule B is approved for use in connection with the Service.
6. Trademark Protection.
a. Hallmark will use its reasonable efforts to maintain
existing registrations for the Licensed Marks for use by Crown
pursuant to the terms and conditions herein contained.
b. Crown agrees to cooperate with Hallmark in obtaining and
preserving for Hallmark trademark protection for the Licensed
Marks and the name "Hallmark," to execute all documents which
in Hallmark's judgment are necessary therefor, and to give
Hallmark advance notice of all contemplated uses of the
Licensed Marks. Crown agrees to recognize Hallmark's trademark
rights in the Licensed Marks and to do nothing in derogation
or dilution thereof, either during the term of this Agreement
or at any time thereafter. Crown, for itself, its successors
and assigns, does hereby absolutely grant, convey, and assign
to Hallmark any and all legal and equitable right, title and
interest, both tangible and intangible, which it has or may
hereafter acquire in the Licensed Marks, including, but not
limited to, any goodwill hereinafter generated or created by
it or anyone acting or claiming under it.
c. Crown, upon prior written approval from Hallmark, shall
have the right to enforce, at Crown's sole expense, its rights
in the Licensed Marks granted hereunder against third parties
that are or may be infringing the Licensed Marks so as to
affect Crown's rights granted hereunder.
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d. Except as expressly set forth herein, Hallmark shall have
the right to take any action without regard to the effect of
such action on the rights granted in Section 1 hereof.
7. Term. The term of this Agreement shall be two years from the date
hereof, provided that it is not terminated sooner in accordance with the terms
and conditions set forth herein. No course of dealing, lack of notice of intent
not to renew, implied consent or other doctrine of law or equity shall be deemed
to give Crown the right to continued use of the Licensed Marks beyond the stated
term of this Agreement, or to create any duty (fiduciary or otherwise) on
Hallmark to permit any such use beyond the term of this Agreement.
8. Default. It shall be a Default hereunder in the case of the
happening and during the continuance of any of the following:
a. Crown distributes any program or picture in connection with
the Service which in Hallmark's sole discretion fails to
comply with the standards set forth in Section 4 hereof and
Crown fails to remove and stop the distribution, exhibition
and broadcast of such non-complying program or picture within
10 days of written notice from Hallmark;
b. A Default occurs pursuant to Section 8(a) hereof three or
more times in any given 12 month period, regardless of whether
Crown has removed or stopped within 10 days of written notice
from Hallmark.
c. Crown uses any of the Licensed Marks other than in
accordance with the terms of the grant herein or Crown fails
to comply with any term or obligation of this Agreement (other
than 8(a) above) and, if curable, fails to cure such
unapproved use or breach within 10 days of the date of written
notice from Hallmark specifying such breach.
d. An event occurs (other than that described in 8(a) above)
which with the passage of time or the giving of notice, or
both, would constitute an event of default under that certain
Program License Agreement dated as of July 1, 1999, as amended
from time to time thereafter by and between Crown and Hallmark
Entertainment Distribution, LLC (the "Program Agreement"),
and, if curable, Crown fails to cure such event within 10 days
of written notice from Hallmark or if the Program Agreement
terminates for any reason.
e. Crown fails to make any payment when due under any loan
agreement with any financial institution and fails to make
such payment within 5 days thereafter.
f. Auditors determine that Crown is no longer an ongoing
concern.
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9. Termination.
a. This Agreement shall terminate immediately and
automatically without notice in the event that
i. Crown attempts to assign, sublicense, pledge,
transfer or otherwise convey by operation of law or
otherwise, all or any interest in, directly or
indirectly ("Transfer") its rights hereunder;
ii. Crown is adjudicated bankrupt, becomes insolvent,
makes any assignment for the benefit of its
creditors, has its assets placed in the hands of a
receiver, files a petition in bankruptcy, has filed
against it a petition in bankruptcy which is not
discharged within 60 days after its filing, or is
dissolved or liquidated (in which case, Crown, its
receivers, representatives, trustees, agents, or
successors shall have no right to exploit or in any
way utilize the Licensed Marks).
b. This Agreement shall terminate immediately with respect to
any specific country in the event that the Select Pictures and
Other HEDL Programs, collectively comprise less than 50% of
the programming of the Service, determined in each country
based on actual hours broadcast in such country.
c. This Agreement shall terminate immediately upon the
occurrence of an event of Default pursuant to Section 8
hereof.
d. Upon the termination or expiration of this Agreement, or
the Program Agreement, Crown agrees to immediately and
permanently discontinue the use of the Licensed Marks,
including any adaptations thereof except that in the case of
Section 9(b) above, such use shall cease only in such country.
e. Crown hereby acknowledges that its misuse of the Licensed
Marks or failure to cease the use of the Licensed Marks upon
the termination or expiration of such rights or this Agreement
will result in damage to Hallmark for which there is no
adequate remedy at law. Accordingly, in the event of such
misuse or failure, Hallmark shall be entitled to equitable
relief by way of temporary and permanent injunctions and such
other relief as any court of competent jurisdiction may deem
just and proper.
10. Additional Agreement. Crown hereby agrees that Hallmark and its
affiliates shall not have any liability or obligation to Crown on account of the
exercise of any of Hallmark's rights or remedies hereunder. Crown hereby waives
and releases any right to commence or pursue any legal action (whether suit,
counterclaim, cross claim or other action) against Hallmark or any of its
affiliates challenging the termination by
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Hallmark of the trademark license granted herein based on a theory of breach of
fiduciary obligation or conflicts of interest of Hallmark or any of its
affiliates or similar theories or premised on the exercise of control or
influence over management by Hallmark or its affiliates.
11. Third Party Infringement. Crown shall promptly notify Hallmark of
any apparent infringement of any rights granted by Hallmark to Crown hereunder.
Hallmark shall have the exclusive right to institute legal action (at its own
expense) against the infringer or to otherwise terminate such infringement.
Crown shall have no right to make any demands or claims, bring suit, effect any
settlements or take any other action with respect to such an infringement
without the prior written consent of Hallmark. Crown agrees to cooperate at its
cost with Hallmark with respect to any suits or other action taken under this
paragraph and that all recoveries for such infringements shall belong to
Hallmark. Hallmark may name Crown as a party to any suit against third party
infringers if Hallmark, in its sole opinion, determines that it is desirable to
any infringement suit.
12. Nonassignability. Crown agrees that without the prior written
consent of Hallmark it may not Transfer the rights granted hereunder or permit
any third party to utilize the Licensed Marks (e.g. as a channel name) other
than third party use incidental to Crown's use described in Section 1(b) hereof
and any such Transfer shall be null and void ab initio upon such proposed
Transfer.
13. Applicable Law. The validity, construction and performance of this
Agreement shall be governed by, and interpreted in accordance with, the laws of
the State of Missouri. In any dispute relating to this Agreement, the parties
hereto submit themselves to the exclusive jurisdiction of the tribunals of the
State of Missouri and the United States Courts within the State of Missouri,
expressly waiving any venue to which they may be entitled by their present or
future domiciles and any objection based on forum non conveniens.
14. No Agency. Nothing in this Agreement shall be construed to make
either party hereto the agent or representative of the other party and neither
party shall so hold itself out nor shall either party be liable or be bound by
any act or omission of the other party.
15. Waiver. Failure of either party at any time to require the
performance of any provision under this Agreement shall not affect the right of
such party to require full performance thereafter and a waiver by either party
of a breach of any provision of this Agreement shall not be taken or held to be
a waiver of any further or similar breach or as nullifying the effectiveness of
such provision.
16. Amendments. This Agreement expresses the entire understanding of
the parties hereto and replaces any prior oral or written agreements concerning
the subject matter hereof and Licensee acknowledges that it has not executed
this Agreement in reliance upon any promise, agreement, representation or
warranty not expressly set forth in this Agreement. No amendment modification,
or supplementation hereof shall be
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effective or binding on either party hereto unless reduced to writing and
executed by the duly authorized representatives of both parties hereto.
17. Security Interest. Crown hereby acknowledges the difficulty of
determining the amount of any damage arising from Crown's use of the Licensed
Marks other than in accordance with the grant in this Agreement, particularly
inasmuch as no payment or royalty is required for the license granted herein.
Therefore, to secure Crown's performance pursuant to this Agreement and
compensation for any damage to Hallmark's name or reputation due to a breach of
this Agreement, the parties have entered into that Security Agreement dated as
of August 1, 1999 between the parties and Crown hereby ratifies Hallmark's first
and prior lien and security interest in and to all of Crown's right and interest
in and to this Agreement pursuant to such security agreement.
IN WITNESS WHEREOF, this Agreement is executed as of the date first
written above.
HALLMARK CARDS, INCORPORATED
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
By ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Title Executive Vice President
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CROWN MEDIA INTERNATIONAL, INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
By ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
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Title President/Chief Executive
Officer
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SCHEDULE A
GUIDELINES FOR CROWN MEDIA PROGRAMMING
This section sets forth a summary of Broadcast Standards and Practices policies
with which all entertainment programming produced for telecast on the Crown
Media Service must conform. Programs must meet appropriate standards of taste
and comply with all applicable governmental regulations.
A. PURPOSE OF CROWN MEDIA PROGRAMMING
The purpose of Crown Media's programming is to provide families with positive
meaningful experiences through high quality entertainment that celebrates the
human spirit and caring relationships. The programming should strive to
reinforce positive social values, educate and inspire.
B. SPECIFIC ISSUES
1. DRUGS AND ALCOHOL
Drug and alcohol abuse are among society's most serious social problems. Crown
Media has a duty to ensure that any depiction of drug or alcohol consumption is
presented in an appropriate and responsible manner.
All portrayals of alcohol consumption and/or use of legal or illegal drugs
should be restricted to situations necessary to plot and/or character
delineation. The use of illegal drugs and/or the abuse of legal drugs or alcohol
is destructive behavior and shall not be shown as desirable, beneficial or as an
effective problem-solver.
Drug and alcohol use should not be glamorized and, when substance abuse is
noted, attention should be directed to the adverse consequences of such abuse
(e.g. the dangers of driving while intoxicated).
2. LANGUAGE
Language and dialogue must be judged generally acceptable to a mass audience and
appropriate to a public medium. Coarse or vulgar language should be avoided.
Blasphemy and obscenity are unacceptable.
3. SEXUAL MATERIAL
Sexual scenes must be sensitively handled and contribute to plot or
characterization. Gratuitous or overly explicate sexual action is unacceptable
and the depiction of physical coercion intended to satisfy prurient interests is
to be avoided. The depiction of the act of sexual intercourse is prohibited.
Particular care must be taken in scenes where sex is coupled with violence. Rape
must be portrayed as an act of violence, not a sexual act.
In general, nudity is unacceptable. Partial nudity and degrees of undress shall
not be used for prurient or exploitative purposes.
4. STEREOTYPES
Characters in Crown Media programs should reflect the wide diversity of our
audience, keeping in mind the importance of dignity to every human being.
Sensitivity is necessary in the presentation of material relating to age, sex,
race, religion, sexual orientation, ethnicity or national derivation to avoid
demeaning stereotypes.
Special precautions must be taken to avoid portrayals and terminology which
ridicule or patronize those who are physically or mentally disabled.
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5. VIOLENCE
Explicit, excessive gratuitous violence is to be avoided. Programs are not to
glamorize violence and/or promote violence as the solution to problems.
Depictions of violence in any form must be essential to the development of
theme, plot or characterization. The intensity and frequency of violent acts
must be limited.
Exceptional care must be taken where children are victims of, or are threatened
by acts of violence.
C. GENERAL ISSUES
ADVISORIES
There should be no programming for which circumstances (subject matter,
treatment, and time period) require the use of special audience advisories in
programs or program promotions.
ANIMALS
The use and handling of animals must conform to accepted standards of humane
treatment.
CHARITIES
Solicitations within the body of an entertainment program for charities or other
non-profit organizations are generally not permitted.
COMMERCIAL MENTIONS/SPONSOR REFERENCES
Extraneous commercial mentions or exposure of commercial names, products or
trademarks included in program content are to be minimized and are subject to
prior approval by identification of, or references to, a program's sponsor other
than previously accepted commercial announcements, billboards, and program
titles must be specifically approved in advance by the Hallmark Branding
Committee.
CONTROVERSIAL TOPICS
Issues of social importance or controversy must be handled with care. A decision
to present such subject matter in an entertainment program should include a
determination that the particular program involved is appropriate for the
presentation contemplated.
HYPNOSIS
Actual hypnosis techniques may not be demonstrated in detail.
INSTRUCTIONAL CRIMINAL BEHAVIOR
Scenes containing complete and accurate instructions in the use of illegal
drugs, harmful devices or weapons, or describing imitable techniques for other
illegal activities or evasion of apprehension are not permitted.
MISLEADING DRAMATIZATIONS, SIMULATIONS AND RECREATIONS
Crown Media programs may not be deceptive to the viewing public in any material
respect. In cases where the audience might be misled, appropriate disclaimers
are to be used. Programming purporting to present
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non-fictional material in a non-fictional manner must be accurate with respect
to material facts or statements.
The use of techniques or language such as "we interrupt this program" which may
cause viewers to believe an actual news report is being presented is not
permitted.
PROFESSIONAL PROCEDURES
Dramatization or actual presentation of professional advice and procedures must
be accurate and comply with recognized professional practices.
PROMOTIONAL ELEMENTS
Promotional elements such as "teasers" and "trailers," including "promos," must
properly reflect the actual nature and content of the program. Certain material
acceptable in the context of the program may not be appropriate for inclusion in
promotional elements.
PSEUDO-SCIENCES
Program material should not promote belief in the efficacy of occultism,
astrology, mind-reading or other pseudo-sciences.
SUBLIMINAL MESSAGES
Audio and video content which is inserted within the body of a program which
attempts to convey information below the level of normal viewer awareness is
prohibited.
D. SPECIALIZED PROGRAM TYPES
1. PROGRAMS INTENDED TO BE VIEWED PRIMARILY BY CHILDREN
Crown Media must be sensitive to the special needs of young people. Crown Media
should present educational and pro-social materials and require that producers
avoid program content that would have an adverse effect on a child's behavior or
development. Acknowledging the audiences' expectation that children's programs
will provide young viewers with a positive entertainment experience, producers
of children's programs should not only observe the general standards guidelines
contained herein, but should be particularly careful with respect to the
following:
a. Characters should not be placed in situations that would provoke
excessive or prolonged anxiety in children. Catastrophe and jeopardy
should not be extreme as to frighten younger viewers. References to
death and/or suicide should be handled with extreme caution.
b. Characters should reflect the ethnic and racial diversity of Crown
Media's audience. It is encouraged that women, minorities, disabled
persons and distinctive characters with whom viewers would personally
identify (e.g. kids who wear glasses) should be included, but,
derogatory stereotypes should be avoided.
c. Violence should not be depicted as glamorous or shown as an
acceptable solution to problems. The negative consequences of violence
should be stressed. To mitigate violence, action sequences should
emphasize unrealistic settings, fantasy weapons, and superhuman feats.
d. Dangerous behavior which could prompt a child to place himself or
others in jeopardy should not be shown. Special care should be taken
with respect to depicting fire-making
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techniques or use of electrical devices, especially when such materials
are readily available in the viewer's home. Depicting household items
as weapons must also be avoided.
e. Characters should not engage in unlawful, anti-social or
self-destructive behavior without suffering negative consequences for
their actions. Whenever possible, protagonists should be shown
following generally accepted rules of safety (e.g. wearing seatbelts).
f. Romantic storylines which include acts of affection are generally
considered appropriate but should be handled with discretion. Language
and storylines that are sexual in nature should be avoided.
g. Commercial products and references may only be included in programs
with Crown Media's approval and must serve a valid entertainment
purpose.
h. Children's programs are generally required to have Separator Devices
before and after commercial messages.
2. FACT-BASED PROGRAMS
There shall be no broadcast of any deceptive or misleading programs or program
material. Fact-based dramas and presentation must be reviewed for accuracy and
producers must provide substantiation when deemed necessary.
3. THEATRICAL FILMS
Theatrical or other programs originally produced for another medium must be
reviewed before broadcast and shall comply with all Crown Media Broadcast
Standards and Practices.
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