**Exhibit 10.3**

 

**Guaranty Commitment**

 

This Guaranty Commitment dated as of September 2,2008 is by and between Hallmark Cards, Incorporated (“Hallmark”) and CrownMedia United States, LLC (“CMUS”).

 

WHEREAS, CMUS desires to enter into thatcertain Lease Agreement dated as of September 8, 2008 by and betweenParamount Group, Inc. as agent for 1325 Avenue of Americas, L.P.(“Landlord”) and CMUS for the office space at 1325 Avenue of the Americas, NewYork, New York 10019 (the “Lease Agreement”); and

 

WHEREAS, as a condition of executing theLease Agreement, the Landlord has required that CMUS provide a guaranty of theLease Agreement by Hallmark; and

 

WHEREAS, Hallmark has agreed to provide sucha guaranty upon the terms and conditions set forth herein (the “Guaranty”);

 

NOW, THEREFORE, the parties agree hereto asfollows:

 

1.             Guaranty. Hallmark agrees to provide the Guarantywhich shall contain terms and conditions agreeable to Landlord and Hallmark.

 

2.             Guaranty Fee. As an inducement for Hallmark toprovide this Guaranty, CMUS shall pay to Hallmark a fee in the amount of      %per annum of the outstanding Lease Obligation (the “Guaranty Fee”). TheGuaranty Fee shall be paid first upon the commencement of the Lease Agreementand then calculated for a 6-month period and paid in advance thereafter. Theinitial Lease Obligation amount shall be                     .For purposes of calculating the Guaranty Fee, the first Guaranty Fee shall bebased on the initial Lease Obligation amount and then on a Lease Obligation amountreduced by                        at the conclusion of each 6-month period.

 

3.             Payment Terms. In the event that Hallmark isrequired to pay any amounts pursuant to the Guaranty, CMUS shall be obligatedto reimburse Hallmark immediately for (i) any amount paid by Hallmark; (ii) anyfees and charges in connection with such payment; (iii) interest on suchamount for each day from and including the date of payment at a rate per annumequal to the lesser of (A) Libor + 5% and (B) the highest rate permittedby applicable law; and (iv) Hallmark’s costs and expenses in connectionwith the protection or enforcement of its rights under this Agreement.

 

4.             Obligations Absolute. CMUS’ payment obligationsunder this Agreement are absolute, unconditional and irrevocable and shall beperformed strictly in accordance with the terms of this Agreement under any andall circumstances including, without limitation: (i) any lack of validity,enforceability or legal effect of the Lease Agreement or this Agreement or anyterm or provision therein or herein; (ii) any claim that any claim forpayment or payment made pursuant to the Guaranty was inappropriate orinaccurate in any respect; (iii) the existence of any claim, set-off,defense or other right that CMUS may have against Landlord or Hallmark; and (iv) anyevent, circumstance, or conduct whatsoever that might constitute a legal orequitable defense to CMUS’ obligations hereunder.

 

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5.             Security. Any obligations arising hereunder shallbe included on Schedule A to that certain Security and Pledge Agreement datedas of July 27, 2007, by and among Crown Media Holdings, Inc. and itssubsidiaries and Hallmark and various of its subsidiaries (“SecurityAgreement”) and consequently such obligations shall be secured by the Collateral(as defined in the Security Agreement).

 

6.             Indemnification. CMUS shall indemnify and holdharmless Hallmark, its subsidiaries and each of their respective directors,officers, employees and agents (each, including Hallmark, an “IndemnifiedPerson”) from and against any and all claims, suits, judgments, costs, losses,fines, penalties, liabilities, and expenses, and legal fees, charges anddisbursements of any counsel for any Indemnified Person, arising out of, in connection with, or as a result of: (i) anypayment or claim for payment pursuant to this Agreement; (ii) any actionor proceeding arising out of or in connection with any payment or claim forpayment pursuant to this Agreement; (iii) any third party seeking toenforce the rights of Landlord or any other beneficiary; (iv) the fraud,forgery or illegal action of parties other than the Indemnified Person; (v) theenforcement of this Agreement or any of Hallmark’s rights or remedies under orin connection with this Agreement.

 

7.             Representation and Warranties. CMUS herebyrepresents and warrants as of the date of this Agreement that: (a) it hasall necessary power and authority to enter into and perform this Agreement; (b) ithas obtained all authorizations, consents and approvals required for it toenter into and perform this Agreement in accordance with its terms; (c) thisAgreement constitutes the legal, valid and binding obligation of CMUSenforceable against it in accordance with its terms; (d) the execution,delivery and performance of this Agreement by CMUS does not and will notcontravene (i) its charter, by-laws or other organizational documents, (ii) anyorder or writ binding on or affecting CMUS or its properties, or (iii) anyagreement or arrangement to which CMUS is a party or by which it or itsproperties may otherwise be bound, the Contravention of which agreement orarrangement would have a material adverse effect on CMUS.

 

8.             Lease Amendment. CMUS shall not make anyamendments to or modify or waive any terms of the Lease Agreement without theprior written consent of Hallmark. Further, CMUS shall not be permitted to makemodifications to the lease space in excess of $400,000 in the aggregate for allimprovements during the term of the Lease Agreement without the prior writtenconsent of-Hallmark.

 

9.             Amendment; Waiver. Hallmark shall not be deemedto have amended or modified any term hereof, or waived any of its rights unlessHallmark consents in writing to such amendment, modification or waiver. No suchwaiver, unless expressly stated therein, shall be effective as to anytransaction which occurs subsequent to such waiver, nor as to any continuanceof a breach after such waiver. Hallmark’s consent to any amendment, waiver, ormodification does not mean that Hallmark shall consent or has consented to anyamendment, modification, or waiver of a term of the Lease Agreement unlessexplicitly stated therein.

 

10.           Applicable Law. This Agreement shall be governed byand construed in accordance with the laws of the State of Missouri, without regardto principles of conflict of laws.

 

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11.         No Third Party Beneficiary. This Agreementshall be binding upon and inure to the benefit of Hallmark and CMUS and theirrespective successors and permitted assigns. This Agreement shall not conferany right or benefit upon any person or entity (including the Landlord) otherthan the parties to this Agreement, the Indemnified Persons and theirrespective successors and permitted assigns.

 

12.           No Assignment. CMUS may not assign ortransfer this Agreement or the benefit of the Guaranty without the priorwritten consent of Hallmark. A change in control or a sale of substantially allof the assets of CMUS shall be considered an assignment. Any attempted assignmentor transfer without the prior written consent of Hallmark shall be void.

 

IN WITNESS WHEREOF, this Guaranty Commitmentis executed by the parties hereto as of the date first written above.

 
|   | CROWN MEDIA UNITED STATES, LLC |
|--------|--------------------------------|
|   |                           |
|   | By:                            | C. Stanford |
|   |                           |   |
|   | Title:                         | Vice President |
|   |                           |   |
|   |                           |
|   | HALLMARK CARDS, INCORPORATED   |
|   |                           |   |
|   |                           |   |
|   | By:                            |   |
|   |                           |   |
|   | Title:                         |   |

 

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GUARANTY

 

Hallmark Cards, Incorporated, a Missouricorporation (hereinafter called “Guarantor”), having an office at 2501 McGee,MD 339, Kansas City, MO 64108, has requested ParamountGroup, Inc., as agent for 1325 Avenue of the Americas, L.P. (hereinaftercalled “Landlord”), having an office c/o Paramount Group, Inc., 1633Broadway, Suite 1801, New York, NY 10019, to accept this Guaranty for thatcertain lease between Landlord and Crown Media United States, LLC, as Tenant(as the same may hereafter be amended, the “Lease”), covering certain premises(Premises) as more particularly described in the Lease in the building(Building) known as 1325 Avenue of the Americas, New York, New York. In orderto induce Landlord to enter into the Lease and in consideration of Landlord’sentering into the Lease and for other good and valuable consideration, thereceipt and sufficiency of which are hereby acknowledged, Guarantor herebyguarantees, unconditionally and absolutely, to Landlord, its successors andassigns (without requiring any notice of nonpayment, nonkeeping, nonperformanceor nonobservance or proof of notice or demand whereby to charge Guarantor, allof which Guarantor hereby expressly waives), the full and faithful keeping,performance and observance of all of the covenants, agreements, terms,provisions and conditions of the Lease provided to be kept, performed andobserved by Tenant (expressly including, without being limited to, the paymentas and when due of fixed rent, additional rent, charges, interest and damagespayable by Tenant under the Lease) and the payment of any and all other damagesfor which Tenant shall be liable by reason of any act or omission contrary toany of said covenants, agreements, terms, provisions or conditions.

 

Guarantor acknowledges that additionalconsideration for Guarantor giving this Guaranty to Landlord is the fact thatGuarantor indirectly owns a majority of Tenant and that Guarantor is issuingthis Guaranty to induce Landlord to enter into the Lease with Tenant. As a furtherinducement to Landlord to enter into the Lease and in consideration thereof,Guarantor represents and warrants that this Guaranty has been duly authorizedby all necessary corporate action on Guarantor’s part, has been duly executedand delivered by a duly authorized officer, and constitutes Guarantor’s validand legally binding agreement in accordance with its terms.

 

As a further inducement to Landlord to enterinto the Lease and in consideration thereof, Guarantor hereby expresslycovenants and acknowledges as follows:

 

1.                                       The obligations hereunder of Guarantor shallnot be terminated or affected in any way or manner whatsoever by reason ofLandlord’s resort, or Landlord’s omission to resort, to any summary or otherproceedings, actions or remedies for the

 

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enforcement of any ofLandlord’s rights under the Lease or with respect to the Premises therebydemised or by reason of any extensions of time or indulgences granted byLandlord, or by reason of the assignment or surrender of all or any part of theLease or the term and estate thereby granted or all or any part of the Premisesdemised thereby except to the extent that Tenant is released in writing byLandlord from any obligation in connection with any such assignment orsurrender. The liability of Guarantor is coextensive with that of Tenant andalso joint and several, and action or suit may be brought against Guarantor andcarried to final judgment and/or completion and recovery had, either with or withoutmaking Tenant a party thereto. Insofar as the payment by Tenant of any sums ofmoney to Landlord is involved, this Guaranty is a guaranty of payment and notof collection and shall remain in full force and effect until payment in fullto Landlord of all sums payable under this Lease. Guarantor waives any right torequire that any action be brought against Tenant or to require that resort behad to any security or to any other credit in favor of Tenant. Landlord shallnot be required to apply any security deposit held by it to the reduction ofany of Guarantor’s obligations hereunder and the amount of any such securitydeposit as may be applied by Landlord shall not be credited to the benefit ofGuarantor.

 

2.                                       Guarantor acknowledges and agrees that thisGuaranty and Guarantor’s obligations under this Guaranty are and shall at alltimes continue to be absolute, present, primary and unconditional in allrespects, and shall at all times be valid and enforceable irrespective of anyother agreements or circumstances of any nature whatsoever which mightotherwise constitute a defense to this Guaranty and the obligations ofGuarantor under this Guaranty or the obligations of any other person or party(including, without limitation, Tenant) relating to this Guaranty or theobligations of Guarantor hereunder or otherwise with respect to the Lease. TheGuaranty sets forth the entire agreement and understanding of Landlord andGuarantor, and Guarantor absolutely, unconditionally and irrevocably waives anyand all right to assert any defense, set-off, counterclaim or cross-claim ofany nature whatsoever with respect to this Guaranty or the obligations ofGuarantor under this Guaranty or the obligations of any other person or party(including, without limitation, Tenant) relating to this Guaranty or theobligations of Guarantor under the Guaranty or otherwise with respect to theLease in any action or proceeding brought by Landlord with respect to the Leaseor the obligations of Guarantor under this Guaranty. Guarantor acknowledgesthat no oral or other agreements, understandings, representations or warrantiesexist with respect to this Guaranty or with respect to the obligations ofGuarantor under this Guaranty except as specifically set forth in thisGuaranty.

 

3.                                       If the Lease shall be renewed, or its termextended or

 

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held over by Tenant for any period beyond the date specified in theLease for the expiration of said term, of if additional space shall be includedin, or substituted for all or any part of, the Premises demised by the Lease,or if the Lease be modified by agreement between Landlord and Tenant in anyother similar or dissimilar respect, the obligations hereunder of Guarantorshall extend and apply with respect to the full and faithful keeping,performance and observance of all of the covenants, agreements, terms,provisions and conditions which under such renewal of the Lease or extension ofits term and/or with respect to any such additional space, or which under anysupplemental indenture or new lease or modifications agreement, entered intofor the purpose of expressing or confirming any such renewal, extension,inclusion, substitution or modification, are to be kept, performed and observedby Tenant (expressly including, without being limited to, the payment as andwhen due of Fixed Rent, additional rent, charges and damages provided forthereunder) and the payment of any and all other damages for which Tenant shallbe liable by reason of any act or omission contrary to any of said covenants,agreements, terms, provisions or conditions. Notwithstanding the foregoing, inthe event Landlord and Tenant enter into an agreementwhereby Tenant leases additionalspace in the Building or the term of the Lease is renewed or extended or theFixed Rent is increased (such lease of additional space, renewal or extensionnot pursuant to the terms of any options or rights contained in the Lease),Guarantor’s obligations hereunder shall extend and apply to such lease of additionalspace, renewal or extension or increase in Fixed Rent only if Guarantor hasconsented to such lease of additional space, renewal or extension or increasein Fixed Rent (provided Guarantor’s obligations hereunder shall remainunimpaired with respect to the Lease without regard to the lease of additionalspace, renewal or extension or increase in Fixed Rent).

 

4.                             Neither the giving nor the withholding byLandlord of any consent or approval provided for in the Lease shall affect inany way the obligations hereunder of Guarantor.

 

5.                             The undersigned waives and releases any claim(within the meaning of 11 U.S.C. § 101) which it may have against Tenantarising from a payment made by the undersigned under this Guaranty and agreesnot to assert or take advantage of any subrogation rights to proceed againstTenant for reimbursement. It is expressly understood that the waivers andagreements of the undersigned set forth above constitute additional andcumulative benefits given to Landlord for its security and as an inducement forits entering into the Lease with Tenant. Neither Guarantor’s obligation to makepayment in accordance with the terms of this Guaranty nor any remedy for theenforcement thereof shall be impaired, modified, changed, stayed, released or limitedin any

 

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manner whatsoever by any impairment, modification, change, release,limitation or stay of the liability of Tenant or its estate in bankruptcy orany remedy for the enforcement thereof, resulting from the operation of anypresent or future provision of the Bankruptcy Code of the United States orother statute or from the decision of any court interpreting any of the same,and Guarantor shall be obligated under this Guaranty as if no such impairment,stay, modification, change, release or limitation had occurred. This Guarantyshall continue to be effective or shall be reinstated (as the case may be) ifat any time payment of all or any part of any sum payable pursuant to the Leaseis rescinded or otherwise required to be returned by Landlord upon theinsolvency, bankruptcy, or reorganization of Tenant, all as though such paymentto Landlord had not been made, regardless of whether Landlord contested theorder requiring the return of such payment.

 

6.                                       Until all the covenants and conditions in theLease on the Tenant’s part to be performed and observed are fully performed andobserved, the Guarantor: (a) shall have no right of subrogation againstthe Tenant by reason of any payments or acts of performance by the Guarantor,in compliance with the obligations of the Guarantor hereunder; (b) waivesany right to enforce any remedy which the Guarantor now or hereafter shall haveagainst the Tenant by reason of any one or more payment or acts of performancein compliance with the obligations of the Guarantor hereunder; and(c) subordinates any liability or indebtedness of the Tenant now orhereafter held by the Guarantor to the obligations of the Tenant to theLandlord under the Lease. Nothing contained in this Guaranty shall preventTenant from making payments to Guarantor in the ordinary course of business solong as Tenant is not in default under any of its obligations under this Lease.

 

7.                                       This Guaranty, and all of the terms hereof,shall be binding on Guarantor and the successors, assigns, and legal representatives of Guarantor.

 

8.                                       Guarantor hereby waives the right to trial byjury in any action or proceeding that may hereafter be instituted by Landlordagainst Guarantor in respect of this Guaranty.

 

9.                                       All of Landlord’s rights and remedies underthe Lease or under this Guaranty are intended to be distinct, separate andcumulative, and no such right or remedy therein or herein mentioned is intendedto be in exclusion of or a waiver of any of the others.

 

10.                                 This Guaranty shall be deemed to have beenmade in the State of New York, Guarantor consents to the jurisdiction of thecourts of the State of New York, and the rights and liabilities of Landlord andGuarantor shall be determined in accordance with

 

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the laws of the State of New York. Guarantor agrees that it will be conclusivelybound by the judgment in any action by Landlord against Tenant (whereverbrought) as if Guarantor were a party to such action, even though Guarantor isnot joined as a party in such action. In addition, if Guarantor cannot beeffectively served with process pursuant to the laws of the State of New Yorkbecause Guarantor does not have sufficient contacts with New York or for anyother reason, then Guarantor agrees that effective service of process uponTenant shall constitute effective service of process upon Guarantor as well.

 

11.                                 Guarantor will pay to Landlord all Landlord’sexpenses, including, but not limited to, reasonable attorneys’ fees andexpenses, in enforcing this Guaranty.

 

12.                                 This Guaranty shall survive the terminationof the Lease.

 

Date:                    September 8, 2008

 

 
|   | HALLMARK CARDS, INCORPORATED |
|--------|------------------------------|
|   |                         |   |
|   |                         |   |
|   | By:                          | /s/ Brian E. Gardner |
|   |                         | Name:   Brian E. Gardner |
|   |                         | Title:   Executive Vice President |
|        |                              |  |  |

 

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| State of Missouri  | ) |   |
|--------------------|---|--------|
|               | ) | ss.:   |
| County  of Jackson | ) |   |

 

On the 8th day of September in theyear 2008 before me, the undersigned, Notary Public in and for said State,personally appeared Brian E. Gardner personally known to me or proved to me onthe basis of satisfactory evidence to be the individual whose name issubscribed to the within instrument and acknowledged to me that he executed thesame in his capacity, and that by his signature on the instrument, theindividual, or the person upon behalf of which the individual acted, executedthe instrument.

 

 
|   | /s/ Becky J. Long               |
|--------|---------------------------------|
|   | Notary public                   |
|   |                            |
| SEAL   | Becky J. Long - Notary  Public  |
|   | Notary Seal, State of           |
|   | Missouri - Bates County         |
|   | Commission #05694823            |
|   | My Commission Expires 4/12/2009 |

 

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