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EXHIBIT 1.1
10,000,000 Shares
CROWN MEDIA HOLDINGS, INC.
Class A Common Stock
UNDERWRITING AGREEMENT
May __, 2000
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
▇▇▇▇▇▇ BROTHERS INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
DLJDIRECT INC.
As representatives of the several Underwriters
named in Schedule I hereto
c/▇ ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Crown Media Holdings, Inc., a Delaware corporation (the "COMPANY"),
proposes to issue and sell 10,000,000 shares of its Class A Common Stock, par
value $.01 per share (the "FIRM SHARES") to the several underwriters named in
Schedule I hereto (the "UNDERWRITERS"). ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities
Corporation, ▇▇▇▇▇▇ Brothers Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and DLJDirect Inc.
shall act as representatives (the "REPRESENTATIVES") of the several
Underwriters.
The Company also proposes to issue and sell not more than an additional
1,500,000 shares of its Class A Common Stock, par value $.01 per share (the
"ADDITIONAL SHARES") if requested by the Underwriters as provided in Section 2
hereof. The Firm Shares and the Additional Shares are hereinafter referred to
collectively as the "SHARES." The shares of all classes of common stock of the
Company to be outstanding after giving effect to the sales contemplated hereby
are hereinafter referred to as the "COMMON STOCK."
Section 1. Registration Statement and Prospectus. The Company has
prepared and filed with the Securities and Exchange Commission (the
"COMMISSION") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "ACT"), a registration statement on Form S-1, including a
prospectus, relating to the Shares.
The registration statement, as amended at the time it became effective,
including the information (if any) deemed to be part of the registration
statement at the
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time of effectiveness pursuant to Rule 430A under the Act, is hereinafter
referred to as the "REGISTRATION STATEMENT;" and the prospectus in the form
first used to confirm sales of Shares is hereinafter referred to as the
"PROSPECTUS." If the Company has filed or is required pursuant to the terms
hereof to file a registration statement pursuant to Rule 462(b) under the Act
registering additional shares of Common Stock (a "RULE 462(B) REGISTRATION
STATEMENT"), then, unless otherwise specified, any reference herein to the term
"REGISTRATION STATEMENT" shall be deemed to include such Rule 462(b)
Registration Statement.
Section 2. Agreements to Sell and Purchase and Lock-Up Agreements . On
the basis of the representations and warranties contained in this Agreement, and
subject to its terms and conditions, the Company agrees to issue and sell, and
each Underwriter agrees, severally and not jointly, to purchase from the
Company, at a price per Share of $ (the "PURCHASE PRICE") the number of Firm
Shares (subject to such adjustments to eliminate fractional shares as you may
determine) set forth opposite the name of such Underwriter in Schedule I hereto.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to issue
and sell to the Underwriters the Additional Shares and the Underwriters shall
have the right to purchase, severally and not jointly, up to 1,500,000
Additional Shares from the Company at the Purchase Price. Additional Shares may
be purchased solely for the purpose of covering over-allotments made in
connection with the offering of the Firm Shares. The Underwriters may exercise
their right to purchase Additional Shares in whole or in part from time to time
by giving written notice thereof to the Company within 30 days after the date of
this Agreement. You shall give any such notice on behalf of the Underwriters and
such notice shall specify the aggregate number of Additional Shares to be
purchased pursuant to such exercise and the date for payment and delivery
thereof, which date shall be a business day (i) no earlier than two business
days after such notice has been given (and, in any event, no earlier than the
Closing Date (as hereinafter defined)) and (ii) no later than ten business days
after such notice has been given. If any Additional Shares are to be purchased,
each Underwriter, severally and not jointly, agrees to purchase from the Company
the number of Additional Shares (subject to such adjustments to eliminate
fractional shares as you may determine) which bears the same proportion to the
total number of Additional Shares to be purchased from the Company as the number
of Firm Shares set forth opposite the name of such Underwriter in Schedule I
bears to the total number of Firm Shares.
The Company hereby agrees not to (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, or otherwise transfer
or dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock or
(ii) enter into any swap or other arrangement that transfers all or a portion of
the economic consequences associated with the ownership of any Common Stock
(regardless of whether any of the transactions described in clause (i) or (ii)
is to be settled by the delivery of Common Stock, or such other securities, in
cash
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or otherwise), except to the Underwriters pursuant to this Agreement, for a
period of 180 days after the date of the Prospectus without the prior written
consent of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation. Notwithstanding
the foregoing, during such period (i) the Company may grant stock options or
restricted stock pursuant to Company stock-based compensation plans and (ii) the
Company may issue shares of Common Stock upon the exercise of an option or
warrant or the conversion of a security outstanding on the date hereof. The
Company also agrees not to file any registration statement with respect to any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock for a period of 180 days after the date of the
Prospectus without the prior written consent of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation except for a registration statement on Form S-8. The
Company shall, prior to or concurrently with the execution of this Agreement,
deliver an agreement executed by (i) each of the directors and officers of the
Company listed on Annex I and (ii) each stockholder listed on Annex II hereto to
the effect that such person will not, during the period commencing on the date
such person signs such agreement and ending 180 days after the date of the
Prospectus, without the prior written consent of ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇
Securities Corporation, (A) engage in any of the transactions described in the
first sentence of this paragraph or (B) make any demand for, or exercise any
right with respect to, the registration of any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock,
except that such agreement shall provide that such individuals may nonetheless
(i) transfer shares of Common Stock by way of testate or intestate succession or
by operation of law, (ii) transfer shares to members of the individual's
immediate family or to a trust, partnership, limited liability company or other
entity, all of the beneficial interests of which are held by such individual or
members of the individual's immediate family, and (iii) transfer shares to
charitable organizations; provided, however, that, in the case of transfers
pursuant to clauses (i), (ii) and (iii) of this sentence, the transferee shall
have agreed to be bound by the restrictions on transfer contained in this
paragraph and such transfer is not effective until the agreement to be bound by
the restrictions on transfer is executed by the transferee and a copy of such
agreement is received by ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation.
Section 3. Terms of Public Offering. The Company is advised by you that
the Underwriters propose (i) to make a public offering of their respective
portions of the Shares as soon after the execution and delivery of this
Agreement as in your judgment is advisable and (ii) initially to offer the
Shares upon the terms set forth in the Prospectus.
Section 4. Delivery and Payment. The Shares shall be represented by
definitive certificates and shall be issued in such authorized denominations and
registered in such names as ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation
shall request no later than two business days prior to the Closing Date or the
applicable Option Closing Date (as defined below), as the case may be. The
Company shall deliver the Shares with any transfer taxes thereon duly paid by
the Company, to ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation through the
facilities of The Depository Trust Company ("DTC"), for the respective accounts
of the several Underwriters, against payment to the Company
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of the Purchase Price therefore by wire transfer of Federal or other funds
immediately available in New York City. The certificates representing the
Shares shall be made available for inspection not later than 9:30 A.M., New
York City time, on the business day prior to the Closing Date or the applicable
Option Closing Date, as the case may be, at the office of DTC or its designated
custodian (the "DESIGNATED OFFICE"). The time and date of delivery and payment
for the Firm Shares shall be 9:00 A.M., New York City time, on May __, 2000 or
such other time on the same or such other date as ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇
Securities Corporation and the Company shall agree in writing. The time and
date of delivery and payment for the Firm Shares are hereinafter referred to as
the "CLOSING DATE." The time and date of delivery and payment for any
Additional Shares to be purchased by the Underwriters shall be 9:00 A.M., New
York City time, on the date specified in the applicable exercise notice given
by you pursuant to Section 2 or such other time on the same or such other date
as ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation and the Company shall
agree in writing. The time and date of delivery and payment for any Additional
Shares are hereinafter referred to as the "OPTION CLOSING DATE."
The documents to be delivered on the Closing Date or any Option Closing
Date on behalf of the parties hereto pursuant to Section 8 of this Agreement
shall be delivered at the offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, and the Shares shall be delivered at the Designated
Office, all on the Closing Date or such Option Closing Date, as the case may be.
Section 5. Agreements of the Company. The Company agrees with you:
(a) To advise you promptly and, if requested by you, to confirm such
advice in writing, (i) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or for
additional information, (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the suspension
of qualification of the Shares for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purposes, (iii) when any amendment to the
Registration Statement becomes effective, (iv) if the Company is required to
file a Rule 462(b) Registration Statement after the effectiveness of this
Agreement, when the Rule 462(b) Registration Statement has become effective and
(v) of the happening of any event during the period referred to in Section 5(d)
below which makes any statement of a material fact made in the Registration
Statement or the Prospectus untrue or which requires any additions to or changes
in the Registration Statement or the Prospectus in order to make the statements
therein not misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the Company will use
its best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(b) To furnish to you four signed copies of the Registration Statement
as first filed with the Commission and of each amendment to it, including all
exhibits, and to furnish to you and each Underwriter designated by you such
number of conformed
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copies of the Registration Statement as so filed and of each amendment to it,
without exhibits, as you may reasonably request.
(c) To prepare the Prospectus, the form and substance of which shall be
reasonably satisfactory to you, and to file the Prospectus in such form with the
Commission within the applicable period specified in Rule 424(b) under the Act;
during the period specified in Section 5(d) below, not to file any further
amendment to the Registration Statement and not to make any amendment or
supplement to the Prospectus of which you shall not previously have been advised
or to which you shall reasonably object after being so advised; and, during such
period, to prepare and file with the Commission, promptly upon your reasonable
request, any amendment to the Registration Statement or amendment or supplement
to the Prospectus which may be necessary or advisable in connection with the
distribution of the Shares by you, and to use its best efforts to cause any such
amendment to the Registration Statement to become promptly effective.
(d) (x) Prior to 10:00 A.M., New York City time, on the first business
day after the date of this Agreement and from time to time thereafter for such
period as in the opinion of counsel for the Underwriters a prospectus is
required by law to be delivered in connection with sales by an Underwriter or a
dealer, to furnish in New York City to each Underwriter and any dealer as many
copies of the Prospectus (and of any amendment or supplement to the Prospectus)
as such Underwriter or dealer may reasonably request.
(e) If during the period specified in Section 5(d), any event shall
occur or condition shall exist as a result of which, in the opinion of counsel
for the Underwriters, it becomes necessary to amend or supplement the Prospectus
in order to make the statements therein, in the light of the circumstances when
the Prospectus is delivered to a purchaser, not misleading, or if, in the
opinion of counsel for the Underwriters, it is necessary to amend or supplement
the Prospectus to comply with applicable law, forthwith to prepare and file with
the Commission an appropriate amendment or supplement to the Prospectus so that
the statements in the Prospectus, as so amended or supplemented, will not in the
light of the circumstances when it is so delivered, be misleading, or so that
the Prospectus will comply with applicable law, and to furnish to each
Underwriter and to any dealer as many copies thereof as such Underwriter or
dealer may reasonably request.
(f) Prior to any public offering of the Shares, to cooperate with you
and counsel for the Underwriters in connection with the registration or
qualification of the Shares for offer and sale by the several Underwriters and
by dealers under the state securities or Blue Sky laws of such jurisdictions as
you may reasonably request (or obtain exemptions from the application thereof),
to continue such registration or qualification in effect so long as required for
distribution of the Shares and to file such consents to service of process or
other documents as may be necessary in order to effect such registration or
qualification; provided, however, that the Company shall not be required in
connection therewith to qualify as a foreign corporation in any jurisdiction in
which it is not now so qualified or to take any action that would subject it to
general consent to
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service of process or taxation other than as to matters and transactions
relating to the Prospectus, the Registration Statement, any preliminary
prospectus or the offering or sale of the Shares, in any jurisdiction in which
it is not now so subject.
(g) To make generally available to its stockholders as soon as
practicable an earnings statement (which need not be audited) covering the
twelve-month period ending [June 30], 2001 that shall satisfy the provisions of
Section 11(a) of the Act, and to advise you in writing when such statement has
been so made available.
(h) During the period of three years after the date of this Agreement,
to furnish to you as soon as practicable copies of all reports or other
communications furnished to the record holders of Common Stock or furnished to
or filed with the Commission or any national securities exchange on which any
class of securities of the Company is listed and such other publicly available
information concerning the Company and its subsidiaries as you may reasonably
request.
(i) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses of the Company incident to the performance of the Company's obligations
under this Agreement, including: (i) the fees, disbursements and expenses of the
Company's counsel and the Company's accountants in connection with the
registration and delivery of the Shares under the Act and all other fees and
expenses in connection with the preparation, printing, filing and distribution
of the Registration Statement (including financial statements and exhibits), any
preliminary prospectus, the Prospectus and all amendments and supplements to any
of the foregoing, including the mailing and delivering of copies thereof to the
Underwriters and dealers in the quantities specified herein, (ii) all costs and
expenses related to the transfer and delivery of the Shares to the Underwriters,
including any transfer or other taxes payable thereon, (iii) all costs of
printing or producing this Agreement and any other agreements or documents in
connection with the offering, purchase, sale or delivery of the Shares, (iv) all
expenses in connection with the registration or qualification of the Shares for
offer and sale under the securities or Blue Sky laws of the several states and
any foreign jurisdiction in which the Shares are to be offered and all costs of
printing or producing any Preliminary and Supplemental Blue Sky Memoranda in
connection therewith (including the filing fees and reasonable fees and
disbursements of counsel for the Underwriters in connection with such
registration or qualification and memoranda relating thereto), (v) the filing
fees and reasonable disbursements of counsel for the Underwriters in connection
with the review and clearance of the offering of the Shares by the National
Association of Securities Dealers, Inc., (vi) all fees and expenses in
connection with the preparation and filing of the registration statement on Form
8-A relating to the Common Stock and all costs and expenses incident to the
listing of the Shares on the Nasdaq National Market, (vii) the cost of printing
certificates representing the Shares, (viii) the costs and charges of any
transfer agent, registrar and/or depositary, and (ix) all other costs and
expenses of the Company incident to the performance of the obligations of the
Company hereunder for which provision is not otherwise made in this Section
5(i), including all roadshow
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expenses. Except as provided in this Section 5, the Underwriters shall pay their
own costs and expenses, including the fees and disbursements of their counsel.
(j) To use its best efforts to list for quotation the Shares on the
Nasdaq National Market and use its reasonable best efforts to maintain the
listing of the Shares on the Nasdaq National Market for a period of three years
after the date of this Agreement.
(k) To use its reasonable best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by the
Company prior to the Closing Date or any Option Closing Date, as the case may
be, and to satisfy all conditions precedent to the delivery of the Shares.
(l) If the Registration Statement at the time of the effectiveness of
this Agreement does not cover all of the Shares, to file a Rule 462(b)
Registration Statement with the Commission registering the Shares not so covered
in compliance with Rule 462(b) by 10:00 P.M., New York City time, on the date of
this Agreement and to pay to the Commission the filing fee for such Rule 462(b)
Registration Statement at the time of the filing thereof or to give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the Act.
Section 6. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter that:
(a) The Registration Statement has become effective (other than any
Rule 462(b) Registration Statement to be filed by the Company after the
effectiveness of this Agreement); any Rule 462(b) Registration Statement filed
after the effectiveness of this Agreement will become effective no later than
10:00 P.M., New York City time, on the date of this Agreement; and no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or, to the best of the Company's
knowledge, threatened by the Commission.
(b) The Registration Statement (other than any Rule 462(b) Registration
Statement to be filed by the Company after the effectiveness of this Agreement),
when it became effective, did not contain and, as amended, if applicable, will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, (ii) the Registration Statement (other than any Rule 462(b)
Registration Statement to be filed by the Company after the effectiveness of
this Agreement) and the Prospectus comply in all material respects and, as
amended or supplemented, if applicable, will comply in all material respects
with the Act, (iii) if the Company is required to file a Rule 462(b)
Registration Statement after the effectiveness of this Agreement, such Rule
462(b) Registration Statement and any amendments thereto, when they become
effective (A) will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading and (B) will comply in all material respects
with the Act and (iv) the Prospectus does not contain and,
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as amended or supplemented, if applicable, will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, except that the representations and warranties set forth
in this paragraph do not apply to statements or omissions in the Registration
Statement or the Prospectus, or any amendments or supplements thereto, based
upon information relating to any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein.
(c) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Act, complied when so filed in all material
respects with the Act, and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and warranties
set forth in this paragraph do not apply to statements or omissions in any
preliminary prospectus based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein.
(d) Each of the Company and its Significant Subsidiaries (as defined in
Regulation S-X promulgated by the Commission) has been duly incorporated, is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and authority to carry
on its business as described in the Prospectus and to own, lease and operate its
properties, and each is duly qualified and is in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the nature
of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole (a
"MATERIAL ADVERSE EFFECT").
(e) There are no outstanding subscriptions, rights, warrants, options,
calls, convertible securities, commitments of sale or liens granted or issued by
the Company or any of its subsidiaries relating to or entitling any person to
purchase or otherwise to acquire any shares of the capital stock of the Company
or any of its subsidiaries, except as otherwise disclosed in the Registration
Statement.
(f) All the outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid, non-assessable and
not subject to any preemptive or similar rights; and the Shares to be issued and
sold by the Company have been duly authorized and, when issued and delivered to
the Underwriters against payment therefor as provided by this Agreement, will be
validly issued, fully paid and non-assessable, and the issuance of such Shares
will not be subject to any preemptive or similar rights.
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(g) All of the outstanding shares of capital stock, including member
interests, of each of the Company's subsidiaries have been duly authorized and
validly issued and are fully paid and non-assessable, and are owned by the
Company, directly or indirectly through one or more subsidiaries, free and clear
of any security interest, claim, lien, encumbrance or adverse interest of any
nature, except as otherwise disclosed in the Registration Statement.
(h) The authorized capital stock of the Company conforms in all
material respects as to legal matters to the description thereof contained in
the Prospectus.
(i) Neither the Company nor any of its subsidiaries is (A) in violation
of its respective charter or by-laws or (B) in default in the performance of any
obligation, agreement, covenant or condition contained in any indenture, loan
agreement, mortgage, lease or other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound, except, with respect to
clause (B) only, such defaults as would not have a Material Adverse Effect.
(j) The execution, delivery and performance of this Agreement by the
Company, the compliance by the Company with all the provisions hereof and the
consummation of the transactions contemplated hereby will not (i) require any
consent, approval, authorization or other order of, or qualification with, any
court or governmental body or agency (except such as have been obtained or made
by the Company or such as may be required under the securities or Blue Sky laws
of the various states or the Nasdaq National Market), (ii) conflict with or
constitute a breach of any of the terms or provisions of, or a default under,
the charter or by-laws of the Company or any of its subsidiaries or any
indenture, loan agreement, mortgage, lease or other agreement or instrument that
is material to the Company and its subsidiaries, taken as a whole, to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or their respective property is bound, (iii) violate or
conflict with any material law or any rule, regulation, judgment, order or
decree of any court or any governmental body or agency having jurisdiction over
the Company, any of its subsidiaries or their respective property, or (iv)
result in the suspension, termination or revocation of any Authorization (as
defined below) of the Company or any of its subsidiaries or any other impairment
of the rights of the holder of any such Authorization.
(k) There are no legal or governmental proceedings pending or, to the
best of the Company's knowledge, threatened to which the Company or any of its
subsidiaries is a party or to which any of their respective property is subject
that are required to be described in the Registration Statement or the
Prospectus and are not so described; nor are there any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not so described or filed as required.
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(l) Neither the Company nor any of its subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), any provisions of the
Employee Retirement Income Security Act of 1974, as amended, or any provisions
of the Foreign Corrupt Practices Act or the rules and regulations promulgated
thereunder, except for such violations which, singly or in the aggregate, would
not have a Material Adverse Effect.
(m) Each of the Company and its subsidiaries has such permits,
licenses, consents, exemptions, franchises, authorizations and other approvals
(each, an "AUTHORIZATION") of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations and all
courts and other tribunals, including, without limitation, under any applicable
Environmental Laws, as are necessary to own, lease, license and operate its
respective properties and to conduct its business, except where the failure to
have any such Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a Material Adverse Effect. Each such
Authorization is valid and in full force and effect and each of the Company and
its subsidiaries is in compliance with all the terms and conditions thereof and
with the rules and regulations of the authorities and governing bodies having
jurisdiction with respect thereto; and the Company is not aware that any event
has occurred (including, without limitation, the receipt of any notice from any
authority or governing body) which allows or, after notice or lapse of time or
both, would allow, revocation, suspension or termination of any such
Authorization or results or, after notice or lapse of time or both, would result
in any other impairment of the rights of the holder of any such Authorization;
except where such failure to be valid and in full force and effect or to be in
compliance, the occurrence of any such event or the presence of any such
restriction would not, singly or in the aggregate, have a Material Adverse
Effect.
(n) Neither the Company nor any of its subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), any provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or any
provisions of the Foreign Corrupt Practices Act or the rules and regulations
promulgated thereunder, except for such violations which, singly or in the
aggregate, would not have a Material Adverse Effect.
(o) Except with respect to obligations that may arise if the Company is
a member of a group of corporations or trades or businesses under common control
or treated as a single employer (the "CONTROL GROUP") with respect to the Cash
Balance Retirement Plan of Hallmark Cards, Incorporated, the Binney & ▇▇▇▇▇
Employees' Retirement Plan and the Litho-Krome Company Retirement Plan, neither
the Company nor its subsidiaries has any obligation or liability, contingent or
otherwise, with respect to any pension plan subject to Section 412 of the
Internal Revenue Code of 1986, as amended (the "CODE") or under Title IV of
ERISA. The Company has executed an ERISA-sharing agreement with Hallmark Cards,
Incorporated and each of its subsidiaries
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that may be members of the Control Group, which agreement provides that the
Company will be indemnified by the other members of the Control Group, including
Hallmark Cards, Incorporated, for any amounts paid by the Company in respect of
obligations under pension plans of such other members of the Control Group that
may arise under the Code and ERISA.
(p) This Agreement has been duly authorized, executed and delivered by
the Company.
(q) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP are independent public accountants with respect
to the Company and its subsidiaries as required by the Act.
(r) The historical and pro forma consolidated financial statements
included in the Registration Statement and the Prospectus (and any amendment or
supplement thereto), together with related schedules and notes, present fairly
in all material respects the consolidated financial position, results of
operations and changes in financial position of the Company and its subsidiaries
on the basis stated therein at the respective dates or for the respective
periods to which they apply; such statements and related schedules and notes
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; the supporting schedules, if any, included in the Registration
Statement present fairly in all material respects in accordance with generally
accepted accounting principles the information required to be stated therein;
and the other financial and statistical information and data set forth in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto) present fairly, in all material respects the information set forth
therein and are prepared on a basis consistent with such financial statements
and the books and records of the Company. The pro forma financial statements
have been prepared on a basis consistent with such historical statements of the
Company, and give effect to assumptions made on a reasonable basis and in good
faith and present fairly in all material respects the historical and proposed
transactions contemplated by the Prospectus and this Agreement. The other
financial and statistical information and data included in the Prospectus,
historical and pro forma, have been derived from the financial records of the
Company (or its predecessors) and, in all material respects, have been prepared
on a basis consistent with such books and records of the Company (or its
predecessors).
(s) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described in
the Prospectus, will not be, an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended.
(t) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Act with respect to any securities of
the Company or to require the Company to include such securities with the Shares
registered pursuant to the Registration Statement, except as disclosed in the
Prospectus.
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(u) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there has not occurred any material adverse change or any development involving
a prospective material adverse change in the condition, financial or otherwise,
or the earnings, business, management or operations of the Company and its
subsidiaries, taken as a whole, (ii) there has not been any material adverse
change or any development involving a prospective material adverse change in the
capital stock or in the long-term debt of the Company or any of its subsidiaries
and (iii) neither the Company nor any of its subsidiaries has incurred any
material liability or obligation, direct or contingent.
(v) Each certificate signed by any officer of the Company and delivered
to the Underwriters or counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to the Underwriters as to the matters
covered thereby.
Section 7. Indemnification. (a) The Company agrees to indemnify and
hold harmless each Underwriter, its directors, its officers and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), from and against any and all losses, claims, damages, liabilities and
judgments (including, without limitation, any legal or other expenses reasonably
incurred in connection with investigating or defending any matter, including any
action, that could give rise to any such losses, claims, damages, liabilities or
judgments) (i) caused by any untrue statement or alleged untrue statement of a
material fact contained in (A) the Registration Statement (or any amendment
thereto), the Prospectus (or any amendment or supplement thereto) or any
preliminary prospectus or (B) in any documents, materials or other information
provided to investors or potential investors by, or with the approval of, the
Company in connection with the marketing of the offering of the Shares,
including any roadshow or investor presentations made to investors by the
Company (whether in person or electronically), or (ii) caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities or judgments are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished in writing to the Company by
such Underwriter through you expressly for use therein; provided, however, that
the foregoing indemnity agreement with respect to any preliminary prospectus
shall not inure to the benefit of any Underwriter who failed to deliver a
Prospectus, as then amended or supplemented, (so long as the Prospectus and any
amendment or supplement thereto was provided by the Company to the several
Underwriters in the quantity requested and on a timely basis following such
request to permit proper delivery on or prior to the Closing Date) to the person
asserting any losses, claims, damages, liabilities or judgments caused by any
untrue statement or alleged untrue statement of a material fact contained in
such preliminary prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, if such material misstatement or omission
or alleged material misstatement or
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omission was cured in the Prospectus, as so amended or supplemented, and such
Prospectus was required by law to be delivered at or prior to the written
confirmation of sale to such person.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act to the
same extent as the foregoing indemnity from the Company to such Underwriter but
only with reference to information relating to such Underwriter furnished in
writing to the Company by such Underwriter through you expressly for use in the
Registration Statement (or any amendment thereto), the Prospectus (or any
amendment or supplement thereto) or any preliminary prospectus.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 7(a) or 7(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all reasonable fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 7(a) and 7(b), the Underwriter shall not be
required to assume the defense of such action pursuant to this Section 7(c), but
may employ separate counsel and participate in the defense thereof, but the fees
and expenses of such counsel, except as provided below, shall be at the expense
of such Underwriter). Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the indemnified
party unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed after notice to assume the defense of such action or employ
counsel reasonably satisfactory to the indemnified party or (iii) the named
parties to any such action (including any impleaded parties) include both the
indemnified party and the indemnifying party, and the indemnified party shall
have been advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for (i) the fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel) for all Underwriters, their officers and
directors and all persons, if any, who control any Underwriter within the
meaning of either Section 15 of the Act or Section 20 of the Exchange Act and
(ii) the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for the Company, its directors and officers who
sign the Registration Statement
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and all persons, if any, who control the Company within the meaning of either
such Section, and all such fees and expenses shall be reimbursed as they are
incurred. In the case of any such separate firm for the Underwriters, their
officers and directors and such control persons of any Underwriters, such firm
shall be designated in writing by ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities
Corporation. In the case of any such separate firm for the Company and such
directors, officers and control persons of the Company, such firm shall be
designated in writing by the Company. The indemnifying party shall indemnify and
hold harmless the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written consent
if the settlement is entered into more than twenty business days after the
indemnifying party shall have received a request from the indemnified party for
reimbursement for the fees and expenses of counsel (in any case where such fees
and expenses are at the expense of the indemnifying party) and, prior to the
date of such settlement, the indemnifying party shall have failed to comply with
such reimbursement request unless the indemnifying party is disputing in good
faith the reasonableness of such fees and expenses. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the indemnified party
is or could have been a party and indemnity or contribution may be or could have
been sought hereunder by the indemnified party, unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability on claims that are or could have been the subject
matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) To the extent the indemnification provided for in this Section 7 is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Shares or (ii) if the allocation provided by clause 7(d)(i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause 7(d)(i) above but also the
relative fault of the Company on the one hand and the Underwriters on the other
hand in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other hand shall be deemed to be in the
same proportion as the total net proceeds from the offering (after deducting
underwriting discounts and commissions, but before deducting expenses) received
by the Company, and the total underwriting discounts and commissions received by
the Underwriters, bear to the total price to the public of the Shares, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault of the Company
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on the one hand and the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the
Underwriters on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such indemnified party in
connection with investigating or defending any matter, including any action,
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Section 7, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 7(d) are several in proportion to the respective number
of Shares purchased by each of the Underwriters hereunder and not joint.
(e) The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
Section 8. Conditions of Underwriters' Obligations. The several
obligations of the Underwriters to purchase the Firm Shares under this Agreement
are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company contained in
this Agreement shall be true and correct on the Closing Date with the same force
and effect as if made on and as of the Closing Date.
(b) If the Company is required to file a Rule 462(b) Registration
Statement after the effectiveness of this Agreement, such Rule 462(b)
Registration Statement shall have become effective by 10:00 P.M., New York City
time, on the date of this Agreement; and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been commenced or shall be pending
before or contemplated by the Commission.
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(c) You shall have received on the Closing Date a certificate dated the
Closing Date, signed by ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, in their
capacities as the President and Chief Executive Officer and Chief Financial
Officer of the Company, respectively, confirming the matters set forth in
Sections 6(u), 8(a) and 8(b) and that the Company has complied with all of the
agreements and satisfied all of the conditions herein contained and required to
be complied with or satisfied by the Company on or prior to the Closing Date.
(d) Since the respective dates as of which information is given in the
Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there shall not have occurred any change or any development involving a
prospective change in the condition, financial or otherwise, or the earnings,
business, management or operations of the Company and its subsidiaries, taken as
a whole, (ii) there shall not have been any change or any development involving
a prospective change in the capital stock or in the long-term debt of the
Company or any of its subsidiaries and (iii) neither the Company nor any of its
subsidiaries shall have incurred any liability or obligation, direct or
contingent, the effect of which, in any such case described in clause 8(d)(i),
8(d)(ii) or 8(d)(iii), in your judgment, is material and adverse and, in your
judgment, makes it impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
(e) You shall have received on the Closing Date an opinion, reasonably
satisfactory to you and counsel for the Underwriters, dated the Closing Date, of
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, counsel for the Company, to the effect that:
(i) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and authority
to carry on its business as described in the Prospectus and to own,
lease and operate its properties;
(ii) the Company is duly qualified and is in good standing as
a foreign corporation authorized to do business in each jurisdiction in
the United States in which the nature of its business or its ownership
or leasing of property requires such qualification, except where the
failure to be so qualified would not have a Material Adverse Effect;
(iii) all the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully
paid, non-assessable and, except as referenced in the Prospectus, not
subject to any preemptive or similar rights;
(iv) the Shares to be issued and sold by the Company hereunder
have been duly authorized and, when issued and delivered to the
Underwriters against payment therefor as provided by this Agreement,
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will be validly issued, fully paid and non-assessable, and the issuance
of such Shares will not be subject to any preemptive or similar rights;
(v) this Agreement has been duly authorized, executed and
delivered by the Company;
(vi) the authorized capital stock of the Company conforms as
to legal matters in all material respects to the description thereof
contained in the Prospectus under the caption "Description of Capital
Stock";
(vii) the Registration Statement has become effective under
the Act, no stop order suspending its effectiveness has been issued and
no proceedings for that purpose are, to the best of such counsel's
knowledge after due inquiry, pending before the Commission;
(viii) the statements under the captions "Reorganization
Transactions Occurring Simultaneously with the Closing of This
Offering," "Material U.S. Federal Income Tax Considerations for
Non-U.S. Holders" and "Description of Capital Stock" in the Prospectus
and Items 14 and 15 of Part II of the Registration Statement, insofar
as such statements constitute a summary of the legal matters, documents
or proceedings referred to therein, accurately summarize the matters
referred to therein in all material respects;
(ix) the Company is not (A) in violation of its charter or
by-laws and (B) to the best of such counsel's knowledge after due
inquiry, the Company is not in default in the performance of any
obligation, agreement, covenant or condition contained in any
indenture, loan agreement, mortgage, lease or other agreement or
instrument to which the Company is bound, except, with respect to
clause (B) only, such defaults as would not have a Material Adverse
Effect;
(x) the execution, delivery and performance of this Agreement
by the Company, the compliance by the Company with all the provisions
hereof and the consummation of the transactions contemplated hereby
will not, (A) require any consent, approval, authorization or other
order of, or qualification with, any U.S. federal, New York or Delaware
(with respect to matters relating to the Company's incorporation under
the Delaware General Corporate Law (the "DGCL")) court or governmental
body or agency (except such as have been obtained or made by the
Company or such as may be required under the securities or Blue Sky
laws of the various states), (B) conflict with or constitute a breach
of any of the terms or provisions of, or a default under, the charter
or by-laws of the Company or (C) violate or conflict with any provision
of the laws of the State of New York (other than its securities or Blue
Sky laws), the DGCL or the federal laws of the United States, that such
counsel, in the case of clause
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(C), in such counsel's experience are customarily applicable to
transactions of the type contemplated in, and companies of the type
executing, this Agreement;
(xi) the Company is not and, after giving effect to the
offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus, will not be, an "investment
company" as such term is defined in the Investment Company Act of 1940,
as amended;
(xii) (A) the Registration Statement and the Prospectus and
any supplement or amendment thereto (except for the financial
statements, financial statement schedules and other financial and
statistical data included therein as to which no opinion need be
expressed) comply as to form in all material respects with the Act, (B)
no facts have come to such counsel's attention that lead them to
believe that at the time the Registration Statement became effective
the Registration Statement and the prospectus included therein (except
for the financial statements, financial statement schedules and other
financial and statistical data as to which such counsel need not
express any belief) contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (C) no
facts have come to such counsel's attention that lead them to believe
that the Prospectus, as amended or supplemented, if applicable (except
for the financial statements, financial statement schedules and other
financial and statistical data, as aforesaid) contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering this opinion, such counsel may state that such opinion is
limited to matters arising under the laws of the State of New York, the DGCL and
the federal laws of the United States.
The opinion of Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇ described in Section 8(e)
above shall be rendered to you at the request of the Company and shall so state
therein.
(f) You shall have received on the Closing Date an opinion, dated the
Closing Date, of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President and General Counsel of
Hallmark Cards, Incorporated, to the effect that:
(i) each of Crown Media, Inc. ("CROWN MEDIA") and Odyssey
Holdings L.L.C. ("ODYSSEY") has been duly incorporated or formed, is
validly existing as a corporation or other entity in good standing
under the laws of the State of Delaware and has the power and authority
to carry on its business as described in the Prospectus and to own,
lease and operate its properties;
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(ii) each of Crown Media and Odyssey is duly qualified and is
in good standing as a foreign corporation or other entity authorized to
do business in each jurisdiction in the United States in which the
nature of its business or its ownership or leasing of property requires
such qualification, except where the failure to be so qualified would
not have a Material Adverse Effect;
(iii) all of the outstanding shares of capital stock or
ownership interests of each of Crown Media and Odyssey have been duly
authorized and validly issued and are fully paid and non-assessable, in
accordance with the laws of the State of Delaware and, except as
otherwise disclosed in the Prospectus, are owned by the Company,
directly or indirectly through one or more subsidiaries, free and clear
of any security interest, claim, lien, encumbrance or adverse interest
of any nature.
In rendering this opinion, except as noted above, such counsel may
state that such opinion is limited to matters arising under the laws of the
State of Missouri and that such counsel does not opine as to matters arising
under the laws of any other state or foreign jurisdiction.
The opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ described in Section 8(f) above
shall be rendered to you at the request of the Company and shall so state
therein.
(g) You shall have received on the Closing Date an opinion, dated as of
the Closing Date, of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Senior Vice President - Legal and
Business Affairs of Crown Media, to the effect that:
(i) Crown Media is not (A) in violation of its charter or
by-laws and (B) is not in default in the performance of any obligation,
agreement, covenant or condition contained in any indenture, loan
agreement, mortgage, lease or other agreement or instrument to which
Crown Media is bound, except, with respect to clause (B) only, such
defaults as would not have a Material Adverse Effect;
(ii) the execution, delivery and performance of this Agreement
by the Company, the compliance by the Company with all the provisions
hereof and the consummation of the transactions contemplated hereby
will not (A) conflict with or constitute a breach of any of the terms
or provisions of, or a default under, the charter or by-laws of Crown
Media or any indenture, loan agreement, mortgage, lease or other
agreement or instrument listed as an exhibit to the Registration
Statement, to which Crown Media is a party or by which the Company or
Crown Media or their respective property is bound, (B) violate or
conflict with any applicable law or any rule, regulation, judgment,
order or decree of any court or any governmental body or agency having
jurisdiction over the Company or Crown Media or their respective
property or (C) based on a
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review of materials prepared by, discussions with and advice of counsel
practicing in foreign jurisdictions in which Crown Media operates,
result in the suspension, termination or revocation of any
authorization, approval, consent, license, order, qualification or
decree under any foreign broadcasting or similar law or of any
governmental entity responsible for enforcing such laws (a "FOREIGN
AUTHORIZATION") of the Company or Crown Media or any impairment of the
rights of the holder of any such Foreign Authorization in those
jurisdictions;
(iii) after due inquiry, such counsel does not know of any
legal or governmental proceedings pending or threatened to which the
Company or Crown Media is or could be a party or to which any of their
respective property is or could be subject, that are required to be
described in the Registration Statement or the Prospectus and are not
so described; and
(iv) to the best of such counsel's knowledge after due
inquiry, except as otherwise disclosed in the Registration Statement or
the Prospectus, there are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the Act with
respect to any securities of the Company or to require the Company to
include such securities with the Shares registered pursuant to the
Registration Statement, except as disclosed in the Prospectus; and
(v) based on a review of materials prepared by, discussions
with and advice of counsel practicing in foreign jurisdictions in which
Crown Media operates, each of the Company and Crown Media has Foreign
Authorizations of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals under any applicable
laws relating to broadcasting, as are necessary to own, lease, license
and operate its respective properties and to conduct its business,
except where the failure to have any such Foreign Authorizations or to
make any such filing or notice would not, singly or in the aggregate,
have a Material Adverse Effect. Based on a review of materials prepared
by, discussions with and advice of counsel practicing in foreign
jurisdictions in which Crown Media operates, and based on such
counsel's understanding of the operations of the business of the
Company and Crown Media, each such Foreign Authorization is valid and
in full force and effect and each of the Company and Crown Media is in
compliance with all the terms and conditions thereof and with the rules
and regulations of the authorities and governing bodies having
jurisdiction with respect thereto; and no event has occurred
(including, without limitation, the receipt of any notice from any
authority or governing body) which allows or, after notice or lapse of
time or both, would allow, revocation, suspension or termination of any
such Foreign Authorizations or results or, after notice or lapse of
time or
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both, would result in any other impairment of the rights of the holder
of any such Foreign Authorizations; and such Foreign Authorizations
contain no restrictions that are burdensome to the Company or Crown
Media, except where such failure to be valid and in full force and
effect or to be in compliance, the occurrence of any such event or the
presence of any such restriction would not, singly or in the aggregate,
have a Material Adverse Effect.
In rendering this opinion, such counsel may state that such opinion is
limited to matters arising under the laws of the States of Massachusetts and New
York and under the DGCL and that such counsel does not opine as to matters
arising under the laws of any other state or foreign jurisdiction.
The opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ described in Section 8(g) above shall
be rendered to you at the request of the Company and shall so state therein.
(h) You shall have received on the Closing Date an opinion, dated the
Closing Date, of ▇▇▇▇▇▇▇ ▇▇▇▇, counsel for Odyssey, to the effect that:
(i) Odyssey is not (A) in violation of its organizational
agreement and (B) Odyssey is not in default in the performance of any
obligation, agreement, covenant or condition contained in any
indenture, loan agreement, mortgage, lease or other agreement or
instrument listed as an exhibit to the Registration Statement to which
Odyssey is a party or by which Odyssey or its property is bound, except
for such as would not have a Material Adverse Effect;
(ii) the execution, delivery and performance of this Agreement
by the Company, the compliance by the Company with all the provisions
hereof and the consummation of the transactions contemplated hereby
will not (A) conflict with or constitute a breach of any of the terms
or provisions of, or a default under, the organizational documents of
Odyssey or any indenture, loan agreement, mortgage, lease or other
agreement or instrument listed as an exhibit to the Registration
Statement, to which Odyssey is a party or by which Odyssey or its
property is bound or (B) violate or conflict with any applicable law or
any rule, regulation, judgment, order or decree of any court or any
governmental body or agency having jurisdiction over Odyssey or their
respective property.
(iii) after due inquiry, such counsel does not know of any
legal or governmental proceedings pending or threatened to which
Odyssey is or could be a party or to which any of its property is or
could be subject, that are required to be described in the Registration
Statement or the Prospectus and are not so described;
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In rendering this opinion, such counsel may state that such opinion is
limited to matters arising under the laws of the State of California and under
the DGCL and that such counsel does not opine as to matters arising under the
laws of any other state or foreign jurisdiction.
The opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ described in Section 8(h) above shall be
rendered to you at the request of the Company and shall so state therein.
(i) The Underwriters shall have received on the Closing Date an
opinion, dated the Closing Date, of Wiley, Rein & Fielding, special counsel to
the Company, to the effect that:
(i) the execution, delivery and performance of this Agreement
by the Company, the compliance by the Company with all the provisions
hereof and the consummation of the transactions contemplated hereby
will not result in the suspension, termination or revocation of any
authorization, approval, consent, license, order, qualification or
decree of the Federal Communications Commission (the "FCC") or require
any filing or registration with, or authorization, approval, consent,
license, order, qualification or decree of the FCC under the
Communications Act of 1934, as amended, and the rules, regulations and
administrative orders promulgated thereunder (collectively, the
"FEDERAL COMMUNICATIONS LAWS").
(ii) to our knowledge after due inquiry, each of the Company,
Crown Media and Odyssey has obtained all authorizations, approvals,
consents, licenses, orders, qualifications or decrees of the FCC under
the Federal Communications Laws ("FCC AUTHORIZATIONS"), and has made
all filings with and notices to, the FCC, as are necessary to own,
lease, license and operate its respective properties and to conduct its
business, except where the failure to have any such FCC Authorization
or to make any such filing or notice would not, singly or in the
aggregate, have a Material Adverse Effect; each such FCC Authorization
is valid and in full force and effect and each of the Company, Crown
Media and Odyssey is in compliance with all the terms and conditions
thereof and with the rules and regulations of the FCC; and no event has
occurred (including, without limitation, the receipt of any notice from
the FCC) which allows or, after notice or lapse of time or both, would
allow, revocation, suspension or termination of any such FCC
Authorization or results or, after notice or lapse of time or both,
would result in any other impairment of the rights of the holder of any
such FCC Authorization; and such FCC Authorizations contain no
restrictions that are burdensome to the Company, Crown Media or
Odyssey, except where such failure to be valid and in full force and
effect or to be in compliance, the occurrence of any such event or the
presence of any such restriction would not, singly or in the aggregate,
have a Material Adverse Effect.
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The opinion of Wiley, Rein & Fielding described in Section 8(j) above
shall be rendered to you at the request of the Company and shall so state
therein.
(j) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Weil, Gotshal & ▇▇▇▇▇▇ LLP, counsel for the Underwriters, as to
the matters referred to in Sections 8(e)(iv), 8(e)(v) (but only with respect to
the Company), 8(e)(viii) (but only with respect to the statements under the
caption "Description of Capital Stock" and "Underwriting") and 8(e)(xii).
In giving such opinions with respect to the matters covered by Section
8(e)(xii), counsel for the Company and counsel for the Underwriters may state
that their opinion and belief are based upon their participation in the
preparation of the Registration Statement and Prospectus and any amendments or
supplements thereto and review and discussion of the contents thereof, but are
without independent check or verification except as specified.
(k) You shall have received, on each of the date hereof and the Closing
Date, a letter dated the date hereof or the Closing Date, as the case may be, in
form and substance reasonably satisfactory to you, from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
independent public accountants, containing the information and statements of the
type ordinarily included in accountants' "comfort letters" to Underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(l) The Company shall have delivered to you the agreements specified in
Section 2 hereof which agreements shall be in full force and effect on the
Closing Date.
(m) The Shares shall have been duly listed for quotation on the Nasdaq
National Market, subject to official notice of issuance.
(n) The Company shall not have failed on or prior to the Closing Date
to perform or comply with any of the agreements herein contained and required to
be performed or complied with by the Company on or prior to the Closing Date.
The several obligations of the Underwriters to purchase any Additional
Shares hereunder are subject to the delivery to you on the applicable Option
Closing Date of such documents prepared, provided or executed by the Company as
you may reasonably request with respect to the good standing of the Company, the
due authorization and issuance of such Additional Shares and other matters
related to the issuance of such Additional Shares.
Section 9. Effectiveness of Agreement and Termination. This Agreement
shall become effective upon the execution and delivery of this Agreement by the
parties hereto.
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This Agreement may be terminated at any time on or prior to the Closing
Date by you by written notice to the Company if any of the following has
occurred: (i) any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic conditions or in the
financial markets of the United States or elsewhere that, in your judgment, is
material and adverse and, in your judgment, makes it impracticable to market the
Shares on the terms and in the manner contemplated in the Prospectus, (ii) the
suspension or material limitation of trading in securities or other instruments
on the New York Stock Exchange, the American Stock Exchange, the Chicago Board
of Options Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade
or the Nasdaq National Market or limitation on prices for securities or other
instruments on any such exchange or the Nasdaq National Market, (iii) the
suspension of trading of any securities of the Company on any exchange or in the
over-the-counter market, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of any
court or other governmental authority which in your opinion materially and
adversely affects, or will materially and adversely affect, the business,
prospects, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, (v) the declaration of a banking moratorium by
either federal or New York State authorities or (vi) the taking of any action by
any federal, state or local government or agency in respect of its monetary or
fiscal affairs which in your opinion has a material adverse effect on the
financial markets in the United States.
If on the Closing Date or on an Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase the
Firm Shares or Additional Shares, as the case may be, which it has or they have
agreed to purchase hereunder on such date and the aggregate number of Firm
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase is not more
than one-tenth of the total number of Firm Shares or Additional Shares, as the
case may be, to be purchased on such date by all Underwriters, each
non-defaulting Underwriter shall be obligated severally, in the proportion which
the number of Firm Shares set forth opposite its name in Schedule I bears to the
total number of Firm Shares which all the non-defaulting Underwriters have
agreed to purchase, or in such other proportion as you may specify, to purchase
the Firm Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date; provided, however, that in no event shall the number of Firm Shares or
Additional Shares, as the case may be, which any Underwriter has agreed to
purchase pursuant to Section 2 hereof be increased pursuant to this Section 9 by
an amount in excess of one-ninth of such number of Firm Shares or Additional
Shares, as the case may be, without the written consent of such Underwriter. If
on the Closing Date any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased by all Underwriters and arrangements satisfactory to you
and the Company for purchase of such Firm Shares are not made within 48 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter or the Company.
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25
In any such case which does not result in termination of this Agreement, either
you or the Company shall have the right to postpone the Closing Date, but in no
event for longer than seven days, in order that the required changes, if any, in
the Registration Statement and the Prospectus or any other documents or
arrangements may be effected. If, on an Option Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Additional Shares and the
aggregate number of Additional Shares with respect to which such default occurs
is more than one-tenth of the aggregate number of Additional Shares to be
purchased on such date, the non-defaulting Underwriters shall have the option to
(i) terminate their obligation hereunder to purchase such Additional Shares or
(ii) purchase not less than the number of Additional Shares that such
non-defaulting Underwriters would have been obligated to purchase on such date
in the absence of such default. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
any such Underwriter under this Agreement.
Section 10. Directed Share Program. It is understood that approximately
of the Firm Shares ("DIRECTED SHARES") will initially be reserved by the
Underwriters for offer and sale to employees and persons having business
relationships with the Company and its subsidiaries or affiliates ("DIRECTED
SHARE PARTICIPANTS") upon the terms and conditions set forth in the Prospectus
and in accordance with the rules and regulations of the Securities and Exchange
Commission and the National Association of Securities Dealers, Inc.
(a) Under no circumstances will any Underwriter be liable to the
Company or to any Directed Share Participant for any action taken or omitted to
be taken in good faith in connection with such Directed Share Program. To the
extent that any Directed Shares are not affirmatively reconfirmed for purchase
by any Directed Share Participant on or immediately after the date of this
Agreement, such Directed Shares may be offered to the public as part of the
public offering contemplated hereby.
(b) The Company agrees to pay all reasonable fees and disbursements
incurred by the Underwriters in connection with the Directed Share Program,
including counsel fees, filing expenses and any stamp duties or other taxes
incurred by the Underwriters in connection with the Directed Share Program.
(c) In connection with the offer and sale of the Directed Shares, the
Company agrees, promptly upon a request in writing, to indemnify and hold
harmless each Underwriter from and against any loss, claim, damage, expense,
liability or action which (i) arises out of, or is based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
material prepared by or with the approval of the Company for distribution to
Directed Share Participants in connection with the Directed Share Program or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii)
arises out of the failure of any Directed Share Participant to pay for and
accept delivery of Directed Shares that such Participant agreed to purchase, or
(iii) is otherwise related to the Directed Share Program, other than losses,
claims, damages or liabilities (or expenses relating thereto) that are finally
judicially determined to have resulted directly
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from the gross negligence or willful misconduct of any Underwriter, except
insofar as such loss, claim, damage, expense, liability or action is caused by
any such untrue statement or omission or alleged untrue statement or omission
based upon information relating to any Underwriter furnished in writing to the
Company by such Underwriter through you expressly for use therein.
Section 11. Miscellaneous. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (i) if to the Company, to Crown
Media Holdings, Inc., Department 339, 2501 ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq., with copies to Crown Media Holdings, Inc.,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and to Wachtell,
Lipton, ▇▇▇▇▇ & ▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq. and (ii) if to any Underwriter or to you, to you c/▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Syndicate Department, with a copy to Weil, Gotshal &
▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, or in any case to such other address as the person to be notified may
have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company and the several Underwriters set
forth in or made pursuant to this Agreement shall remain operative and in full
force and effect, and will survive delivery of and payment for the Shares,
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of any Underwriter, the officers or directors of any
Underwriter, any person controlling any Underwriter, the Company, the officers
or directors of the Company, or any person controlling the Company, (ii)
acceptance of the Shares and payment for them hereunder and (iii) termination of
this Agreement.
If for any reason the Shares are not delivered by or on behalf of the
Company as provided herein (other than as a result of any termination of this
Agreement pursuant to Section 9), the Company agrees to reimburse the several
Underwriters for all out-of-pocket expenses (including the reasonable fees and
disbursements of counsel) incurred by them in connection with the proposed
offering. Notwithstanding any termination of this Agreement, the Company shall
be liable for all expenses which it has agreed to pay pursuant to Section 5(i)
hereof. The Company also agrees to reimburse the several Underwriters, their
directors and officers and any persons controlling any of the Underwriters for
any and all fees and expenses (including, without limitation, the reasonable
fees and disbursements of counsel) incurred by them in connection with enforcing
their rights hereunder (including, without limitation, pursuant to Section 7
hereof).
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the
Underwriters, the Underwriters' directors and officers, any controlling persons
referred to herein, the Company's directors and the Company's officers who sign
the Registration Statement, and their respective successors and assigns, all as
and to the extent provided in this
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Agreement, and no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" shall not include a
purchaser of any of the Shares from any of the several Underwriters merely
because of such purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
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Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
CROWN MEDIA HOLDINGS, INC.
By:
-----------------------------------
Name:
Title:
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
▇▇▇▇▇▇ BROTHERS INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
DLJDIRECT INC.
Acting severally on behalf of
themselves and the several
Underwriters named in
Schedule I hereto
By ▇▇▇▇▇▇▇▇▇, LUFKIN & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
By
-----------------------------
-----------------------------
S-1
29
SCHEDULE I
Underwriters Number of Firm Shares to be
Purchased
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities
Corporation
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
DLJDirect Inc.
Total
30
Annex I
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Irvine ▇. ▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇. Mascotte
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇. Brilliant
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. Grenside
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇
31
Annex II
Liberty Media Corporation
LMC Capital LLC
Vision Group Incorporated
VISN Management Corp.
National Interfaith Cable Coalition, Inc.
Chase Equity Associates, ▇▇
▇▇
