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EXHIBIT 10.12
AMENDED AND RESTATED
INTERCOMPANY SERVICES AGREEMENT
This Amended and Restated Intercompany Services Agreement (this
"Agreement") is made and entered into as of January 1, 2000, by and between
Hallmark Cards, Incorporated, a Missouri corporation with headquarters in Kansas
City, Missouri ("Hallmark"), and Crown Media, Inc., a Delaware corporation with
headquarters in Englewood, Colorado ("Crown").
1. COMMENCEMENT AND TERM OF AGREEMENT.
a. Beginning as of the date hereof (the "Effective Date"), Hallmark
shall provide to Crown in a manner consistent with past practices those
services set forth in Section 2 of this Agreement ("Corporate Services").
b. The term of this Agreement shall be three (3) years from the
Effective Date unless terminated earlier by agreement of the parties hereto
or in accordance with the terms of this Agreement.
x. Xxxxxxxx may terminate this Agreement if at any time Hallmark no
longer directly or indirectly owns 40% or more of the equity of Crown.
2. CORPORATE SERVICES.
The Corporate Services provided under this Agreement shall include the
following as more specifically described in this Agreement:
1) Tax services
2) Risk management, health, safety and environmental advice and
Insurance
3) Legal services
4) Treasury and cash management
5) Real estate consulting
3. COSTS AND FEES FOR CORPORATE SERVICES.
a. In return for Corporate Services provided hereunder, Crown shall pay
Hallmark a fee of Five Hundred Thousand Dollars ($500,000) plus out of
pocket expenses and third party fees (as set forth in 3(b)) for each year
of the Agreement. Crown shall pay these costs and fees in arrears on the
last business day of each quarter of the Agreement.
b. In some cases, the Corporate Services provided to Crown by Hallmark
will include services provided by third parties (e.g. insurance brokers
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and carriers, accountants, actuaries, financial printers). Such third party
services shall be approved by Crown in advance and shall be billed directly
to Crown. In the event Crown denies approval of services to be provided by
any third party, Hallmark shall not be required to provide such services.
4. TAX SERVICES. Subject to the terms of that certain Contribution
Agreement and that certain Tax Sharing Agreement by and among Hallmark
Entertainment, Inc., Crown, Crown Media Holdings, Inc. and others, the Hallmark
tax department shall, except to the extent otherwise requested by Crown, provide
the tax services for Crown set forth below.
a. Tax compliance services which shall consist of the preparation and
timely filing of federal and state income tax returns (including quarterly
estimated payments) and state sales and use tax returns. Crown shall
furnish Hallmark with full and complete financial information necessary or
appropriate to prepare or timely file such returns. Crown shall promptly
reimburse Hallmark for any tax payments made by Hallmark on Crown's behalf.
Crown shall be responsible for all other tax compliance matters, including
without limitation, property tax and payroll tax.
b. Tax audit services which shall consist of the administration of each
audit agreement, representation of Crown at all administrative hearings,
and consultation with regard to any appeals through the judicial system,
including the selection of legal counsel.
c. Tax consulting services which shall consist of(1) periodic (no less
than semi-annual) reviews with Crown financial and operating personnel to
identify and implement tax savings opportunities, and (2) transactional tax
planning.
5. RISK MANAGEMENT AND INSURANCE. The Hallmark risk management department
shall provide the services set forth below.
a. Risk management services, which will include leading the process for
identifying and analyzing property and casualty risks (not business risks),
for developing loss prevention and risk control strategies, for developing
and implementing insurance programs and other loss funding programs and
for claims administration practices.
b. Advice and supervision with respect to health, safety and
environmental issues.
c. At Crown's request, Hallmark will arrange or assist in arranging for
insurance coverage for Crown ("Insurance"). Hallmark may arrange for an
insurance policy covering only Crown's risks or interests or may include
Crown in Hallmark's or Hallmark's subsidiaries' insurance coverages, at
Hallmark's
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discretion. If Hallmark arranges for an insurance policy covering only
Crown's risks or interests, Crown shall pay the costs of such policy at the
direction of Hallmark, either to Hallmark or to the insurance provider. If
Hallmark arranges for an insurance policy that covers risks or interests of
Hallmark or its subsidiaries in addition to Crown, then the following terms
and conditions shall apply:
1) Crown shall, within 30 days of its receipt of a reasonably
detailed invoice from Hallmark, pay the portion of the premiums and
other charges for the Insurance attributable to the coverage provided to
Crown. The portion of such premiums and other charges payable by Crown
shall be allocated in good faith by Hallmark in a manner to reflect the
cost to Hallmark of the insurance premiums and other charges that are
properly attributable to Crown. The Insurance provided shall be subject
to such policies of insurance or self-insurance, and such guidelines or
procedures in respect of insurance or self-insurance, as Hallmark shall
determine. In the event the terms of the Insurance materially change
from those terms in effect immediately prior to the date hereof,
Hallmark agrees (i) to the extent Hallmark is aware of a material change
prior to the effective date of the change, to provide notice to Crown of
the change prior to its effective date, or (ii) otherwise to provide
notice to Crown upon becoming aware of the change. It is expressly
agreed by Crown and Hallmark that any self-insurance, retention or
deductible shall be for the account of and be an obligation of Crown,
and that Crown's obligations in respect of such self-insurance,
retention or deductible shall survive the termination of this Agreement.
2) Either Crown or Hallmark may terminate all or any portion of the
Insurance placed in policies specific to Crown at any time on 90 days'
prior written notice to the other party hereto. Notwithstanding the
foregoing, so long as Hallmark directly or indirectly owns 50% or more
of the voting power of all then-outstanding shares of capital stock of
Crown, Crown may not, without the prior written consent of Hallmark,
terminate all or any portion of the Insurance without providing evidence
satisfactory to Hallmark in Hallmark's sole discretion that Crown has
obtained, or upon termination of such Insurance will obtain, comparable
insurance coverage. In the event all or any portion of the Insurance is
terminated, if appropriate, the charges therefor shall be adjusted
equitably to reflect such termination.
3) Notwithstanding anything herein to the contrary, the parties
hereto recognize that Hallmark is neither an insurance broker nor an
insurance carrier. At no time will Hallmark be required by this
Agreement or otherwise by Crown to act as an insurance broker or
carrier.
6. LEGAL SERVICES. Hallmark shall provide general legal services of the
type previously provided to Crown not including advice previously provided by
outside
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counsel, advice regarding securities laws, telecommunications law and other
specialized areas for which Hallmark does not have in-house expertise. It is
contemplated that Hallmark will not act as general counsel for Crown but will
coordinate or recommend services of outside counsel as appropriate.
7. TREASURY. The Hallmark finance department will provide treasury services
which shall include cash management, foreign exchange, arranging debt or letters
of credit, managing investments (both corporate and benefit plans) and assisting
in structuring financing leasing arrangements.
8. REAL ESTATE. The Hallmark real estate department shall assist Crown in
identifying and analyzing office space and negotiating leases in connection with
such space.
9. COOPERATION. Hallmark and Crown shall cooperate with each other with
respect to all provisions of this Agreement and the Corporate Services and
Insurance (if any) provided hereunder. Hallmark may agree to provide additional
Corporate Services at its discretion.
10. LIMITATION OF LIABILITY. Except as may be provided in Section 11 below,
Hallmark, its subsidiaries, affiliates, directors, officers, employees, agents
and permitted assigns (each, a "Hallmark Party") shall not be liable to Crown,
any subsidiary or any affiliate, director, officer, employee, agent or permitted
assign of Crown or any of its subsidiaries, (each, a "Crown Party") for any
liabilities, claims, damages, losses or expenses, including, but not limited to,
any special, indirect, incidental or consequential damages, of a Crown Party
arising in connection with this Agreement, the Corporate Services or the
Insurance.
11. HALLMARK INDEMNIFICATION. Hallmark shall indemnify, defend and hold
harmless each of the Crown Parties from and against all liabilities, claims,
damages, losses, settlements and expenses (including, but not limited to, court
costs and reasonable attorneys' fees) (collectively referred to as "Damages") of
any kind or nature, of any third party unrelated to any Crown Party caused by or
arising in connection with the gross negligence or willful misconduct of any
employee of Hallmark in connection with the performance of the Corporate
Services, or provision of the Insurance, except to the extent that Damages were
caused directly or indirectly by acts or omissions of any Crown Party.
Notwithstanding the foregoing, Hallmark shall not be liable for any special,
indirect, incidental, or consequential damages relating to such Damages. In the
event that Crown has actual knowledge of a claim that may be the subject of
indemnification under this Section, it shall promptly notify Hallmark of such
claim and Hallmark, in its sole discretion, may defend, settle, or otherwise
litigate such claim.
12. CROWN INDEMNIFICATION. Crown shall indemnify, defend and hold harmless
each of the Hallmark Parties, from and against all Damages of any kind or
nature, caused by or arising in connection with this Agreement, the performance
of Corporate Services, or provision of the Insurance so long as (i) Hallmark
acted in good
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faith pursuant to and within the scope of authority granted to it by this
Agreement and in a manner it believed to be in the best interest of Crown and
(ii) Crown's conduct did not constitute gross negligence or willful misconduct.
In the event that Hallmark has actual knowledge of a claim that may be the
subject of indemnification under this Section 12, it shall promptly notify Crown
of such claim and Crown, in its sole discretion, may defend, settle, or
otherwise litigate such claim.
13. INFORMATION. Subject to applicable law, each party hereto covenants and
agrees to provide the other party with all information regarding itself and
transactions under this Agreement as are required by such other party to comply
with all applicable federal, state, county and local laws, ordinances,
regulations and codes, including, but not limited to, securities laws and
regulations.
14. ASSIGNMENT. Neither party may assign or transfer any of its rights or
duties under this Agreement to any person or entity without the prior written
consent of the other party.
15. NOTICES. Any notice, instruction, direction or demand under the terms
of this Agreement required to be in writing will be duly given upon delivery, by
hand, facsimile transmission or intercompany mail, or five (5) days after
posting if sent by U.S. mail, return receipt requested to the following
addresses:
Hallmark Cards, Incorporated
2501 XxXxx
X.X. Xxx 000000
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Attn: General Counsel
Fax No.: (000) 000-0000
Crown Media, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxx
Fax No.: (000) 000-0000
or to such other address as either party may have furnished to the other in
writing in accordance with this Section 15.
16. GOVERNING LAW. This Agreement shall be construed in accordance with and
governed by the laws of the State of Missouri except its choice of law rules and
except to the extent preempted by federal law.
17. SUSPENSION. The obligations of any party to perform any acts hereunder
may be suspended if such performance is prevented by fires, strikes, embargoes,
riot,
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invasions, governmental interference, inability to secure goods or materials, or
other circumstances outside the control of the parties.
18. SEVERABILITY. If any provision of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall not render the entire
Agreement invalid. Rather, the Agreement shall be construed as if not containing
the particular invalid or unenforceable provision, and the rights and
obligations of each party shall be construed and enforced accordingly.
19. RIGHTS UPON ORDERLY TERMINATION; SURVIVAL. Upon termination or
expiration of this Agreement or any of the Corporate Services or Insurance
described herein, each party shall, upon request, forthwith return to the other
party all reports, paper, materials and other information required to be
provided to the other party by this Agreement. In addition, each party shall
assist the other in the orderly termination of this Agreement or any of the
Corporate Services or Insurance described herein. Notwithstanding any
termination of this Agreement, the obligations of the parties hereto to make
payments hereunder and the provisions of Sections 10, 11 and 12 shall survive.
20. AMENDMENT. This Agreement may only be amended by a written agreement
executed by all of the parties hereto.
21. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties, and supersedes all prior agreements, representations,
negotiations, statements or proposals related to the subject matter hereof.
22. COUNTERPARTS. This Agreement may be executed in separate counterparts,
each of which deemed an original and all of which, when taken together, shall
constitute one agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their duly authorized representatives.
HALLMARK CARDS, INCORPORATED
By /s/ XXXXXX XXXXXXXXX
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Title Vice President - General Counsel
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CROWN MEDIA, INC.
By /s/ XXXXXXX X. XXXXXX
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Title CFO
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