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EXHIBIT 10.2
As of February 22, 2001
VISN Management Corp.
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
National Interfaith Cable Coalition, Inc.
00 Xxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xx Xxxxxx
Gentlemen:
The Odyssey Holdings, L.L.C. Amended and Restated Company Agreement, dated as of
November 13, 1998, (the "Odyssey LLC Agreement") and the Crown Media Holdings,
Inc. Shareholders Agreement of January 27, 2000 ("Crown Shareholders
Agreement"), both contain terms relating to the production and broadcast over
the Odyssey Channel of certain National Interfaith Cable Coalition ("NICC")
Programming and Faith and Values Programming. We have agreed to amend the
Odyssey LLC Agreement and the Crown Shareholders Agreement with new terms
designed to improve the quality and reach of the NICC and Faith and Values
programs while enabling Odyssey Channel to significantly strengthen its
programming schedule, ratings and distribution. With the programming changes
provided for in this Amendment, we also hope that Odyssey will be able to obtain
the needed consents to re-brand itself as the "Hallmark Channel". It is our
intention that this Amendment will serve as a starting point for a closer and
more collaborative relationship between NICC and Odyssey, one which will expand
beyond the bounds of the provisions set out below. The terms which we have
agreed upon are as follows:
1. Programming
The terms relating to NICC and Faith and Values Programming set out in the
Odyssey LLC Agreement and the Crown Shareholders Agreement, are amended to
provide for a commitment by Odyssey and NICC to the following programming:
a) A NICC-controlled programming block from 6:00 a.m. to 1:00 p.m.
on Sundays. (All time periods set out in this and the subsequent
subparagraphs refer to local LA and NY time, as applicable, in
Odyssey's East and West Coast programming feeds). NICC will own,
produce and have the final say on all matters relating to the
programming in this block, subject to Odyssey's "standards and
practices" and technical standards. The "standards and
practices" are
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those already incorporated in the Odyssey LLC agreement, which
currently govern the NICC programming on Odyssey. The technical
standards are those currently applied by Odyssey to the
programming produced by NICC and its members for the Sunday
morning block, however, NICC and its members will endeavor to
comply with the standards applied to other Odyssey programming,
if possible. In NICC's discretion, the block may consist in part
of up to three hours of worship services, airing in contiguous
hours before noon.
b) A NICC-controlled, daily, one-half hour programming segment to be
aired either at 6:30 a.m. or 7:00 a.m., Monday through Friday.
NICC and Odyssey have agreed that this segment will initially run
from 7 a.m. to 7:30 a.m. and that its effectiveness in this time
period will be reexamined after the first full year of its
broadcast. NICC will own, produce and have the final say on all
matters relating to the programming in this block, subject to
Odyssey's "standards and practices" and technical standards and
the understanding that the programming will deal with faith and
values issues, rather than worship programs.
c) A NICC "Signature" series owned by NICC and co-produced by NICC
and Odyssey. This series will be one hour in length and will be
aired between 8:00 a.m. and 1:00 p.m., Monday through Friday.
NICC and Odyssey have agreed that this series will initially run
from noon to 1 p.m. and that its effectiveness in this time
period will be re-examined after the first broadcast year. As
co-producers, NICC and Odyssey will each have all the customary
rights of co-producers including:
i) Approval over the executive producer and other key
"above-the-line" personnel;
ii) Approval over script and other key creative elements:
iii) Budget approval (for purposes of the budget, Odyssey
agrees to a reasonable NICC "overhead" fee, to be
negotiated in good faith, but such fee will be at least
10% of the budget);
iv) Credit as co-producer both on-screen and in advertising
and publicity.
As this Signature Show will be closely identified with NICC, NICC
will have the right to initially determine the subject matter of
the show, however, Odyssey will have the right to veto any
subject matter that does not meet its current program standards
or violates the current guidelines in its trademark licenses with
Hallmark Cards, Inc.
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d) Up to six NICC "Holiday Specials", to be broadcast in primetime
during holiday seasons. The number of Holiday Specials, as well
as the holidays they focus upon, will be determined by NICC. If
the specials are non-dramatic in nature, they will be solely
owned and produced by NICC, in "meaningful consultation" (as
described below) with Odyssey. If the specials are "dramatic",
for example a Christmas or Easter movie, NICC will co-produce and
co-own the specials with Hallmark Entertainment, Inc. ("HEI").
All business and creative matters on the co-produced, dramatic
specials will be jointly agreed to by HEI and NICC, i.e., each
will have the rights of co-producer described above. NICC will
determine how many of the "Holiday Specials" are dramatic
specials. HEI will act as distributor of the dramatic Holiday
Specials it co-produces with NICC for a period of 25 years,
pursuant to its standard distribution agreement. The agreement
will provide for HEI's "off-the-top" recovery of the production
financing it has provided for the dramatic specials plus a 20%
distribution fee. NICC will have broadcast rights to these
specials, at no license fee, for the digital channel described
below. As with the "signature" series, with respect to these
co-produced holiday specials, Odyssey agrees to a reasonable NICC
"overhead" fee, to be negotiated in good faith, but such fee
will be at least 10% of the budget.
e) HEI will produce a "Faith and Values" weekly one-hour series, in
meaningful consultation with NICC ("meaningful consultation" will
include consultation on show content, scripts, on-air talent,
budget, producers, directors and writers and the right to view
and comment upon the "rough cut" of each program.) This series
will be aired once per week between 7:00 p.m. and 11:00 p.m.
Odyssey will have final say on all creative matters regarding
this programming and it will be owned by HEI.
The initial broadcast dates of all the foregoing programs and series
(except for the Sunday morning program block described in Paragraph 1(a)
which is expected to be implemented as soon as possible), will be
determined by mutual agreement, however, it is anticipated that most of
these programs will debut at the latest in the first quarter of 2002 and
that the holiday specials would debut throughout 2002. The number of
original episodes of each series required to be produced will be negotiated
in good faith based on industry norms for the type of series (generally 130
episodes for "talk shows" or similar formats and no less than 65 episodes
in any case).
2. Financial Commitment for Programming:
Odyssey and HEI will commit to the following financial contributions to the
programming described above:
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a) Odyssey will pay NICC a total license fee of $5,300,000 per year
for the entire Sunday morning block and daily one-half hour
program, with the CPI escalations currently provided for in
Paragraph 6.6 the Odyssey LLC Agreement. This license fee will be
paid in equal quarterly installments of one-quarter of the total
yearly fee. Any termination of Odyssey's obligation to make
payments pursuant to this subparagraph, will not effect its
obligations for payment of the "Additional NICC Budget", in
accordance with the terms of Paragraph 6.6 of the Odyssey LLC
Agreement, so long as VMC holds its Preferred Interest, as
defined in the Odyssey LLC Agreement. Until Odyssey's payment
obligations under this subparagraph a) end, however, the payments
hereunder will be in lieu of any payment obligations under
Paragraph 6.6 of the Odyssey LLC Agreement.
b) Odyssey and HEI will pay license fees or production financing
equal to the agreed upon production costs for the Signature
Series, up to a cap of $10,000,000 per year. The license fees or
production financing will be paid in accordance with a payment
schedule to be mutually agreed upon.
c) Odyssey will pay a license fee equal to NICC's production costs
for the non-dramatic Holiday Specials, up to a cap of $600,000
per special. This license fee will be paid in the customary
installments of one-sixth on Odyssey's approval of preliminary
treatment and budget, one-third at the start of production,
one-third on completion of principal photography and one-sixth on
delivery. For the dramatic Holiday Specials, Odyssey will pay
NICC a license fee equal to production costs up to a cap of
$1,000,000 per special. If the production costs for any of these
dramatic specials exceed $1,000,000, HEI will pick up the
production costs in excess of this license fee, up to a maximum
additional amount of $1,500,000 per special.
d) HEI will fund the production costs, up to a maximum of
$25,000,000, for the production of the weekly, one hour "Faith
and Values" series.
3. Digital Channel
Odyssey will provide turnkey management and operations services for a NICC
digital channel, which will launch within 36 months of the Effective Date
provided for below. (If the NICC digital channel does not launch within 36
months, either N1CC or Odyssey may, on written notice to the other,
terminate all provisions of this Paragraph 3). NICC will own the digital
channel and Odyssey will perform its management and operations services
under the direction and control of NICC. Odyssey's fee and the other terms
and conditions under which Odyssey will provide these management services
will
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be negotiated in good faith. For purposes of these negotiations, however,
Odyssey has specifically agreed to provide the following elements at no
cost or at rates indicated:
a) Playback and uplink facilities at no charge for at least three
years. (Odyssey will provide assistance in securing satellite
transponder space, however, the cost of the transponder will be
borne by NICC.)
b) Representation services in selling advertising for the digital
channel at a 15% commission.
c) 25 hours per week at no charge of dedicated assistance from
executive in Odyssey's affiliate sales group in securing
distribution for the digital channel;
d) Non-exclusive rights to 63 two-hour movies, six mini-series, and
3 series each year from the Hallmark Entertainment and Odyssey
libraries at no charge;
e) Broadcast and Internet (i.e. digital broadband and narrowband)
rights to any Faith and Values programming which Odyssey
controls, following its exclusive broadcast window on Odyssey.
This will include all Holiday Specials.
f) If Hallmark Cards approves the re-branding of the Odyssey Channel
to the "Hallmark Channel", the Hallmark Channel will transfer its
rights to the Odyssey trademark and related domain names to NICC.
This will permit NICC, at its election, to use this xxxx as the
name for either or both the digital channel and its Sunday
morning programming block on the Hallmark Channel.
NICC will have the right to terminate any services or facilities provided by
Odyssey for the NICC digital channel upon 90 days written notice, provided that
the terminated service or facility can be separated from the other services or
facilities still provided by Odyssey (i.e. the continuing services are not
dependent or priced based upon Odyssey also handling the terminated service) and
Odyssey will not incur any continuing third party expense or obligation for the
service or facility following the effective date of termination.
4. Marketing and Promotional Support:
Odyssey will provide marketing and promotional support for all NICC
Programs and the Faith and Values Programs no less favorable than what it
provides other programming in the same day parts. The nature of this
promotion is described in Attachment A.
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5. Consultation with NICC on Odyssey Programming Schedule
Odyssey's President and CEO would meet with NICC, once per quarter, to
review the Odyssey schedule. Odyssey would give serious consideration to
any views expressed by NICC regarding the schedule. Odyssey will use its
best efforts to ensure that any non-NICC programming placed by Odyssey
adjacent to the NICC and Faith and Values programming is appropriate in
nature as a transition into or out of the NICC and Faith and Values
programming, although the selection of such programming will be entirely in
Odyssey's discretion.
6. Consideration of Programming Proposals from NICC Members
In addition to the programs described above to be produced or co-produced
by NICC, Odyssey will give good faith, meaningful consideration to
broadcasting other programming concepts proposed by NICC or by NICC members
through NICC.
7. Term of Commitments
a) Except where specified to the contrary, the commitments described
in Paragraphs 1 through 6 above will have a term of five years,
measured from March 26, 2001 (the "Effective Date").
b) As to the programming and financing commitments described in
Paragraphs 1 and 2 above (the "Programming Commitments"), six
months prior to the end of the five year period, Odyssey will
negotiate in good faith with NICC regarding continuation of these
Programming Commitments. If, at the end of the negotiations, the
parties have not reached agreement and Odyssey is not willing to
continue the Programming Commitments at the same levels, NICC may
compel Odyssey's parent company, Crown Media Holdings, Inc.
("Crown"), to buy all of NICC's outstanding shares of Crown at
their then-current market value, by written notice given no later
than 60 days following the end of the five year period. The
market value of the shares will be calculated based on the
average share price during the 30 day period prior to and
following the date of notice.
c) In the event NICC sells more than 50% of its shares of Crown
Media Holdings, Inc. Class A common stock which it owns as of the
date hereof, the commitments described in Paragraphs 1, 2, 4 and
5 above will cease at the end of the then-current broadcast
season (approximately August 31st). Odyssey may terminate its
commitment to provide management services for the digital
channel, described in Paragraph 3, at any time after NICC sells
50% or more of its Crown interest, on one year's written notice.
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d) In the event there is a change of control of Crown, Crown will
require the buyer of the controlling interest to assume the
commitments in Paragraphs 1 through 6 for the remainder of three
year period measured from the Effective Date and will use
reasonable efforts to convince the buyer to accept the
commitments for the remainder of the five year period, measured
from the Effective Date. If the buyer does not agree to accept
all such commitments for the remainder of the five year period,
the buyer will be required, if NICC so elects, to buy the shares
of Crown stock held by NICC at their then current market value,
in the manner described in Paragraph 7(b) above.
If the foregoing accurately sets out the terms we have agreed upon, please
confirm your agreement to this amendment by countersigning where provided
below.
Odyssey Holdings, L.L.C.
By /s/ XXXXXXXX X. XXXXXX
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President and CEO 3-29-01
Accepted and Agreed to:
National Interfaith Cable Coalition, Inc.
By /s/ XXXXXX X. XXXXXX
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President and CEO 3/26/01
VISN Management Corp.
By /s/ XXXXXXX X. XXXX
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Chairman 3/27/01
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ATTACHMENT A
March 20, 2001
Draft #4
ODYSSEY MARKETING AND PROMOTIONAL SUPPORT
FOR NICC AND FAITH-AND-VALUE PROGRAMMING
Marketing and promotional activities for NICC and co-produced programming may be
initiated and implemented by either Odyssey or NICC. In that regard, both
parties will have the right to sign-off on specific pieces. Marketing personnel
from Odyssey and NICC will meet on a quarterly basis to review strategic
marketing opportunities.
ON-AIR SUPPORT
PSAs (produced or presented by NICC)
Minimum of 80 :30 units per month
Effectiveness of campaign to be evaluated on a bi-quarterly basis
Recommended Schedule: The PSAs would average approximately 3 per day and
would air throughout the channel's schedule, at least one between 6 PM and
midnight.
PROGRAMMING TUNE-IN (NICC AND CO-PRODUCED PROGRAMMING)
Minimum of 35 :30 promo units per month (produced by Odyssey in
consultation with NICC)
Effectiveness of campaign to be evaluated on a bi-quarterly basis
Recommended Schedule; The promos would average approximately 1 per day and
would air throughout the channel's schedule, at least two per week between 6 PM
and midnight.
DIRECT MARKETING
Promoting NICC programming within existing or future direct marketing pieces
will be determined based on programming priorities. Co-Produced programming will
be promoted in a manner proportionate with that done for programming in similar
day parts. Exclusive programming grids highlighting NICC and Faith-and-Values
programming will be produced on a as requested basis for promotional and event
usage, subject to budgetary constraints.
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MARKETING MATERIALS
Sell-sheets for at least 5 NICC or co-produced programs will be prepared
specifically for NICC promotional usage and made available to the channels Ad
Sales Division. Odyssey usage of these sell-sheets will be determined on an
ongoing basis and subject to current business needs. All co-production sell
sheets produced will be represented at national and international shows (NAPTE,
MIP, etc.) to the extent Odyssey participates in these shows.
Odyssey will provide current/approved artwork and logo usage at no additional
charge (i.e., usage fees for existing key art). Usage of the channel's logo is
subject to prior approval by the channel. Furthermore, if additional production
is required, appropriate fees will be charged on a case-by-case basis (i.e., net
cost with no associated xxxx-up).
ONLINE
Odyssey will transfer all related Odyssey domain names, listed on the attached
page, to NICC. Odyssey will provide to NICC the xxxxxxxxxxxxxx.xxx web-site
which includes: all related web-graphics, web-pages, source code and odyssey
store infrastructure. NICC will be responsible for establishing Affiliate
partnerships with e-commerce partners of their choice such as Xxxxxx.xxx or
other direct commerce providers such as Video Library. The xxxxxxxxxxxxxx.xxx
site is built to run on a Windows NT web-server. NICC will be responsible for
establishing a Web-Hosting solution for the xxxxxxxxxxxxxx.xxx site, which will
need to be a Windows NT web-server. The xxxxxxxxxxxxxx.xxx web-site can also run
on a UNIX server with minor modifications.
Odyssey will continue to provide online promotional support for NICC Programming
and Co-Produced Programming to include: program specific Web pages for
Co-Produced Programming; hotlinks to xxx.xxxxxxxxxxxxxx.xxx; hotlinks to NICC
program specific Web pages which may include video and audio streaming of
program segments. NICC may also hotlink to Odyssey websites from NICC and NICC
member sites.
Odyssey will create and manage Web Pages for Co-Produced Programming. NICC will
create and manage Web Pages for NICC Programming.
Odyssey will continue to utilize the e-mail newsletter to promote NICC
productions and co-productions as appropriate.
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PUBLICITY
NICC productions and co-productions will be represented in program publicity
initiatives as appropriate. This Includes public relations, program publicity
and media relations initiatives. NICC will be responsible for implementing
publicity initiatives for NICC programming. Odyssey will represent co-produced
programming in xxxxxx xxxxx kits and media guides as determined to be
appropriate by the channel and based on current business needs. Odyssey will
work with NICC to assure that available photos of NICC programming and
co-produced programming are accessible to both parties and available to the
press.
Odyssey will manage the distribution of press materials developed by the network
for publicity campaigns as determined by the network, including absorbing the
expenses associated with postage, fulfillment (press material mailings and
contact lists) and clipping service fees (i.e., for capturing related articles,
stories).
All non-scheduling questions regarding NICC programming will be forwarded to
NICC for direct response. NICC will be provided a record of all NICC-related
viewer inquiries.
MAILING LISTS
NICC will have the right to receive names, addresses or other contact
information for all viewers inquiries about NICC programming or co-produced
programming.
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