EXHIBIT 13
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STOCKHOLDERS AGREEMENT
by and among
HALLMARK ENTERTAINMENT INVESTMENTS CO.
HALLMARK ENTERTAINMENT HOLDINGS, INC.,
and
THE OTHER SIGNATORIES HERETO
dated as of
March 11, 2003
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{00001171.DOC / 15}
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1. Definitions..................................................1
ARTICLE II
CORPORATE GOVERNANCE
Section 2.1. Composition of the Board of Directors of the Company.........4
Section 2.2. Removal......................................................4
Section 2.3. Vacancies....................................................4
Section 2.4. Termination of Rights and Obligations........................4
Section 2.5. Limitation on Transactions with Affiliates...................5
Section 2.6. Extraordinary Transactions...................................5
Section 2.7. Voting of Crown Class A Stock and Crown Class B Stock........5
ARTICLE III
TRANSFERABILITY AND TAG-ALONG RIGHTS
Section 3.1. Restrictions on Transferability..............................6
Section 3.2. Restrictive Legend...........................................6
Section 3.3. Notice of Proposed Transfers; Securities Law Compliance......6
Section 3.4. Tag-Along Rights.............................................6
ARTICLE IV
ADDITIONAL RIGHTS
Section 4.1. Crown Board of Directors.....................................8
Section 4.2. Limitation of Crown's Transactions with Affiliates...........8
Section 4.3. Registration Rights..........................................9
ARTICLE V
GENERAL
Section 5.1. Entire Agreement.............................................9
Section 5.2. Amendment and Waiver.........................................9
Section 5.3. Notices.....................................................10
Section 5.4. Assignment; Benefit.........................................10
Section 5.5. Absence of Presumption......................................10
Section 5.6. Counterparts................................................10
Section 5.7. Headings....................................................10
Section 5.8. Governing Law; Jurisdiction and Forum.......................10
Section 5.9. Specific Enforcement........................................11
Section 5.10. Severability................................................11
Section 5.11. Covered Shares..............................................11
Appendix I List of Stockholders
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STOCKHOLDERS AGREEMENT
This STOCKHOLDERS AGREEMENT (this "Agreement"), dated as of March
11, 2003, by and among Hallmark Entertainment Investments Co., a Delaware
corporation (the "Company"), Hallmark Entertainment Holdings, Inc., a Delaware
corporation ("HEH"), Liberty Crown, Inc., a Delaware corporation ("Liberty"), ▇▇
▇▇▇▇▇▇ Partners (BHCA), L.P., a Delaware limited partnership, ("JPM") and VISN
Management Corp., a Delaware corporation ("VISN") (each of Liberty, JPM and VISN
shall be a "Minority Stockholder" and HEH and the Minority Stockholders will be
the "Initial Stockholders").
WITNESSETH:
WHEREAS, the Company and the Initial Stockholders are parties to the
Contribution Agreement, dated as of March 11, 2003 (as in effect the date hereof
the "Contribution Agreement"), pursuant to which the Stockholders acquired
shares of Class A common stock, par value $.01 per share ("Class A Stock"), of
the Company or shares of Class B common stock, par value $.01 per share ("Class
B Stock"), of the Company in exchange for the contribution to the Company of
shares of Class A common stock, par value $.01 per share ("Crown Class A
Stock"), of Crown Media Holdings, Inc., a Delaware corporation ("Crown"), or
shares of Class B common stock, par value $.01 per share ("Crown Class B
Stock"), of Crown, respectively; and
WHEREAS, pursuant to the Contribution Agreement, the Initial
Stockholders have acquired and own the number of shares of Class A Stock and
Class B Stock set forth opposite their respective names on Appendix I attached
hereto and hereby made a part hereof; and
WHEREAS, the parties hereto have agreed to enter into this Agreement
pursuant to the Contribution Agreement and the parties hereto desire to provide
for certain rights and obligations in respect of such shares of Class A Stock
and Class B Stock;
NOW THEREFORE, in consideration of the premises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. (a) As used in this Agreement the
following defined terms shall have the following meanings:
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
(a) the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise or (b) beneficial
ownership of 10% or more of the voting securities of such Person. For purposes
of this Agreement, Crown and its Subsidiaries shall be deemed not to be
Affiliates of any party to this Agreement.
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"Affiliate Transaction" has the meaning set forth in Section 2.5.
"Agreement" has the meaning set forth in the Preamble.
"Board" has the meaning set forth in Section 2.1.
"Class A Stock" has the meaning set forth in the Recitals.
"Class B Stock" has the meaning set forth in the Recitals.
"Commission" means the United States Securities and Exchange
Commission.
"Company" has the meaning set forth in the Preamble.
"Company Common Stock" means Class A Stock and Class B Stock.
"Company Voting Stock" means Class A Stock and Class B Stock and all
other securities of the Company entitling the holder thereof to vote for the
election of directors to the Board.
"Contribution Agreement" has the meaning set forth in the Recitals.
"Crown" has the meaning set forth in the Recitals.
"Crown Affiliate Transaction" has the meaning set forth in Section
4.2.
"Crown Class A Stock" has the meaning set forth in the Recitals.
"Crown Class B Stock" has the meaning set forth in the Recitals.
"Crown Minority Stockholders" means the "Minority Stockholders" as
defined in the Crown Stockholders Agreement.
"Crown Stock" means Crown Class A Stock and Crown Class B Stock.
"Crown Stockholders Agreement" means the Second Amended and Restated
Stockholders Agreement, dated as of August 30, 2001, by and among HEH (as
transferee of the shares of Crown Class A Stock and Crown Class B Stock
previously held by Hallmark Entertainment, Inc.), Liberty Media Corporation,
Liberty Crown, Inc. (as transferee of the shares of Crown Class A Stock
previously held by Liberty Media Corporation), VISN Management Corp., ▇▇ ▇▇▇▇▇▇
Partners (BHCA), L.P, DIRECTV Enterprises, Inc. and Crown, as amended from time
to time.
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended.
"HEH" has the meaning set forth in the Preamble.
"Minority Stockholder" has the meaning of set forth in the Preamble.
"Parent" of a Person means any other Person which is the beneficial
owner (within the meaning of Rule 13d-3 under the Exchange Act) of a majority of
the securities ordinarily entitled to vote for the election of directors (or
persons performing similar functions) or the specified Person or directly, or
indirectly, through one or more intermediaries, controls the Person specified.
For purposes
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of this definition, control of a Person means the power, direct or indirect, to
direct or cause the direction of the management or policies of such Person
whether by contract or otherwise.
"Person" means an individual, partnership, corporation, trust,
limited liability company or unincorporated organization, or other entity or
organization, including a government or agency or political subdivision thereof.
"Permitted Transfer" means (i) Transfers by a Stockholder to one or
more of its Affiliates, or to one or more of its executives pursuant to a
stock-based compensation plan, or to one or more other Stockholders, or to one
or more Affiliates of any other Stockholder, or upon its merger or other
consolidation to the surviving corporation, subject to the transferee executing
a signature page hereof and thereby becoming a party hereto (as a Stockholder)
and agreeing that it shall receive the same rights hereunder and be bound by the
same obligations hereunder as the transferring Stockholder; or (ii) Transfers by
a Stockholder pursuant to a merger, consolidation or other business combination
involving all of the outstanding Company Common Stock and a third party which,
prior to entering into an agreement with the Company with respect to such
business combination, was not an Affiliate of the Company or tender or exchange
offer for all of the outstanding Company Common Stock by a third party which,
prior to the commencement of such offer, was not an Affiliate of the Company.
"Securities Act" means the United States Securities Act of 1933, as
amended.
"Shares Allotment" has the meaning set forth in Section 3.4(a).
"Stockholders" means each Person, other than the Company, who has
executed this Agreement and each Person who is required to become a party to
this Agreement in the future in accordance with the terms hereof.
"Stockholders' Shares" has the meaning set forth in Section 3.4(a).
"Subsidiary" of any Person means any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the Board of Directors or other Persons performing similar
functions are at the time directly or indirectly owned or controlled by such
Person or one or more Subsidiaries of such Person.
"Transfer" means a sale, assignment, encumbrance, gift, pledge,
hypothecation or other disposition of Company Common Stock or any interest
therein; provided that a pledge of Company Common Stock to a financial
institution in a bona fide transaction shall not be deemed to be a Transfer for
the purposes of this Agreement, so long as the Stockholder retains full voting
power in such shares prior to any event of default, it being understood that in
the event of such default such transferee shall have no rights or obligations
under this Agreement.
"Transferor Stockholder" has the meaning set forth in Section 3.3.
(b) For the purposes hereof, (i) words in the singular shall be held
to include the plural and vice versa and words of one gender shall be held to
include the other gender as the context requires, (ii) the terms "hereof,"
"herein," and "herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Article, Section and paragraph
references are to the Articles, Sections and paragraphs of this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import when
used in this Agreement shall mean "including, without limitation," unless the
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context otherwise requires or unless otherwise specified, (iv) the word "or"
shall not be exclusive, and (v) provisions shall apply, when appropriate, to
successive events and transactions.
ARTICLE II
CORPORATE GOVERNANCE
Section 2.1. Composition of the Board of Directors of the Company.
Subject to Section 2.4, each of the Stockholders hereby agrees to take, at any
time and from time to time, all action necessary such that the Board of
Directors of the Company (the "Board") shall consist of three Class I Directors
having one vote each and six Class II Directors having two votes each. The
directors shall be nominated as follows: (a) HEH shall have the right to
nominate six Class II Directors and one Class I Director and (b) Liberty and JPM
shall each have the right to nominate one Class I Director. Each Stockholder
entitled to vote for the election of directors to the Board shall vote its
shares of Company Voting Stock or execute written consents, as the case may be,
and shall take all other action necessary in order to ensure election of the
nominees and compliance with this Section 2.1. The Company shall take such
action as may be required under applicable law and shall otherwise use
reasonable efforts to cause the composition of the Board to be as set forth in
this Section 2.1.
Section 2.2. Removal. Each Stockholder agrees that at any time that
it is then entitled to vote or execute a written consent for the removal or
replacement of any director of the Company, (a) it shall not vote or execute a
written consent for any of its shares of Company Voting Stock in favor of the
removal or replacement of any individual who shall have been nominated pursuant
to Section 2.1, unless the Stockholder entitled to nominate such director shall
have requested such removal or replacement in writing and (b) it shall vote or
execute a written consent for all of its shares of Company Voting Stock in favor
of and shall take all other action necessary to cause the removal or replacement
of an individual nominated pursuant to Section 2.1 if so requested in writing by
the Stockholder entitled to nominate such individual. Subject to Section 2.4,
nothing contained in this Section 2.2 shall affect the right of any Stockholder
to nominate a member of the Board pursuant to Section 2.1.
Section 2.3. Vacancies. If, as a result of the death, disability,
retirement, resignation, removal or otherwise there shall exist or occur any
vacancy on the Board, then the Stockholder entitled under Section 2.1 to
nominate such director whose death, disability, retirement, resignation or
removal resulted in such vacancy, may, subject to the provisions of Section 2.4,
designate another individual to fill such capacity and serve as a director of
the Company. Each Stockholder shall, if such Stockholder is then entitled to
vote for the election of such designee as a director of the Company, vote or
execute a written consent for its shares of Company Voting Stock in order to
ensure that such designee be elected to the Board and the Company shall use
reasonable efforts to cause such vacancy to be filled by such designee.
Section 2.4. Termination of Rights and Obligations. The right of any
Stockholder to nominate or designate a member or members of the Board pursuant
to this Article II, and all related obligations of the Company and each other
Stockholder with respect thereto contained in this Article II and the rights of
any Stockholder pursuant to Section 2.7 and Section 4.1, shall terminate on the
later of such date as such Stockholder (i) ceases to beneficially own in the
aggregate at least 2.5% of the shares of Company Common Stock then issued and
outstanding and (ii) ceases to beneficially own at least 75% of the Company
Common Stock set forth opposite such Stockholder's name on Appendix I
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(appropriately adjusted for stock splits, dividends or combinations of shares of
Company Common Stock after the date hereof).
Section 2.5. Limitation on Transactions with Affiliates. The Company
shall not sell any of its material properties or assets to, or purchase any
material property or assets from, or enter into any material contract,
transaction, agreement, understanding, loan, advance or guaranty with, or for
the benefit of, any Affiliate of a Stockholder (each of the foregoing, an
"Affiliate Transaction"), unless such Affiliate Transaction is entered into in
good faith and on commercially reasonable terms and with respect to any
Affiliate Transaction that, together with all related Affiliate Transactions,
has an aggregate value of more than $2,000,000, such Affiliate Transaction shall
have been approved by a majority of the members of the Board not nominated by
such Stockholder.
The following Affiliate Transactions are hereby consented to by the
parties hereto: (i) transactions pursuant to the Contribution Agreement, as in
effect the date hereof; and (ii) transactions pursuant to the Tax Sharing
Agreement, dated as of March 11, 2003, by and between Hallmark Cards,
Incorporated and Crown Media Holdings, Inc., the Company and any of their
respective Subsidiaries.
Section 2.6. Extraordinary Transactions. For so long as any
Stockholder shall be entitled to nominate a director pursuant to Section 2.1,
the Company shall not, without the consent of all such Stockholders entitled to
nominate directors pursuant to Section 2.1, take any of the following actions:
(i) any amendment or repeal of, or addition to the Company's
certificate of incorporation;
(ii) issue or redeem capital stock of the Company or securities
exercisable or convertible into such capital stock;
(iii) any spin-off, merger, consolidation or other business
combination of the Company (other than arising out of or related to
a merger, consolidation or other business combination involving
Crown);
(iv) the dissolution, liquidation or conversion of the Company;
or
(v) any sale, pledge, distribution or other transfer of shares
of Crown Stock, except in a merger, consolidation, tender offer,
exchange offer or other business combination involving Crown and
approved in accordance with the terms of the Crown Stockholders
Agreement.
Section 2.7. Voting of Crown Stock. Subject to Article IV hereof, at
any meeting of the stockholders of Crown or action by written consent of Crown
stockholders, the Board shall take all action necessary to cause the Company to
vote, in person or by proxy or consent, its shares of Crown Stock as directed by
HEH.
Section 2.8. Board Observer. VISN shall have the right to designate
a non-voting observer (the "VISN Observer") to the Board, who shall be a Person
reasonably acceptable to the Board, and who shall have the right to notice of
and to attend all Board meetings. The Company shall provide to the VISN Observer
copies of all materials and full access to the information and materials
provided to any of the members of the Board (except where materials are provided
only to a committee that was appointed by the Board) at the same time as the
Board member(s) receive such materials
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subject to the limitation set forth herein. VISN shall be, and shall cause the
VISN Observer to be, obligated to hold in confidence any and all information
received in any Board meeting or otherwise in the VISN Observer's capacity as
such, except to the extent that such information is publicly disclosed by the
Company provided that the VISN Observer shall be entitled to report any and all
information to VISN. The right of VISN to nominate or designate the VISN
Observer pursuant to this Section and all related obligations of the Company and
each other Stockholder with respect thereto contained in this Section, shall
terminate on the date that VISN or any of its Affiliates ceases to collectively
beneficially own in the aggregate at least 75% of the shares of Company Common
Stock set forth opposite VISN's name on Appendix I (appropriately adjusted for
stock splits, dividends, or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization).
ARTICLE III
TRANSFERABILITY AND TAG-ALONG RIGHTS
Section 3.1. Restrictions on Transferability. No Company Common
Stock may be Transferred except upon compliance with the provisions of the
Securities Act and this Agreement, and any attempted Transfer other than in
accordance with the terms hereof is void ab initio and transfers no right, title
or interest in or to such Company Common Stock to the purported transferee,
buyer, donee, assignee or encumbrance holder.
Section 3.2. Restrictive Legend. Each certificate representing any
portion of Company Common Stock that is held by a Stockholder shall be stamped
or otherwise imprinted with a legend in substantially the following form (in
addition to any legend required under applicable state securities laws):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE
SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED
EXCEPT IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT, OR IN COMPLIANCE WITH RULE 144 OR
PURSUANT TO ANOTHER EXEMPTION. THE SECURITIES ARE ALSO SUBJECT TO
PROVISIONS OF A STOCKHOLDERS AGREEMENT DATED MARCH 11, 2003, AS IT MAY BE
AMENDED FROM TIME TO TIME IN ACCORDANCE WITH THE PROVISIONS THEREOF.
Section 3.3. Notice of Proposed Transfers; Securities Law
Compliance. Prior to any proposed Transfer of any Company Common Stock, unless
there is in effect a registration statement under the Securities Act covering
the proposed Transfer, the Stockholder intending to Transfer such Company Common
Stock (the "Transferor Stockholder") shall give written notice to the Company of
such Transferor Stockholder's intention to effect such Transfer. Each such
notice shall set forth the name of the proposed transferee, the number of shares
proposed to be Transferred and the proposed amount and form of consideration to
be paid for such Company Common Stock (other than for a Permitted Transfer).
Notwithstanding anything herein to the contrary, no Stockholder shall be
permitted to transfer its Company Common Stock if such transfer or series of
transfers would subject the Company to the reporting requirements of Section 13
or 15(d) of the Exchange Act.
Section 3.4. Tag-Along Rights. (a) Except for Permitted Transfers,
if HEH, at any time or from time to time, in a single transaction or series of
related transactions occurring within a six-month period, or within a longer
period if pursuant to a single agreement, proposes to Transfer
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20% or more of the outstanding shares of Company Common Stock (a "Tag-Along
Sale"), then each Minority Stockholder shall have the right, but not the
obligation, to participate in such Tag-Along Sale by selling the number of
shares of Company Common Stock owned by it as calculated in the following
manner. Such shares of Company Common Stock that were acquired by the Minority
Stockholders pursuant to the Contribution Agreement and that are owned by the
Minority Stockholders or their Affiliates which are Parties to this Agreement
are hereinafter referred to as the "Stockholders' Shares"; provided, however
that shares of Company Common Stock transferred from another Stockholder to a
Minority Stockholder or its Affiliates (other than an Affiliate of such
transferring Stockholder) shall not be deemed to be Stockholders' Shares. The
maximum number of shares of Company Common Stock that each Minority Stockholder
shall be entitled to include in such Tag-Along Sale (the "Shares Allotment")
shall equal the product of (i) the total number of shares of Company Common
Stock proposed to be Transferred pursuant to the Tag-Along Sale or such greater
number of shares that the proposed purchaser in the Tag-Along Sale shall agree
to purchase or otherwise acquire multiplied by (ii) a fraction, the numerator of
which shall equal the number of Stockholders' Shares owned by such Minority
Stockholder and its Affiliates which are parties to this Agreement on the date
of the Sale Notice and the denominator of which shall equal the sum of (A) the
number of shares of Company Common Stock owned by HEH and its Affiliates on the
date of the Sale Notice plus the number of Stockholders' Shares owned by all
Minority Stockholders and their Affiliates which are parties to this Agreement
on the date of the Sale Notice, without duplication.
(b) Any such sales by the Minority Stockholders shall be on the same
terms and conditions as the proposed Tag-Along Sale by HEH; provided, however
that no participating Minority Stockholder shall be required to make any
representation or warranty in connection with the Tag-Along Sale, other than as
to the enforceability of each agreement entered into in connection with such
Tag-Along Sale with respect to the Minority Stockholder and its ownership and
authority to sell, free of consent and approval requirements, liens, claims and
encumbrances, the shares of Company Common Stock proposed to be sold by it. Each
participating Minority Stockholder shall (and hereby agrees to), without
limitation as to time, indemnify and hold harmless, to the full extent permitted
by law, each of the other Stockholders against all losses, claims, damages,
liabilities, costs (including costs of preparation) and expenses (including
attorneys' fees and disbursements) arising out of or relating to any
representation or warranty made by, or covenant of, such participating Minority
Stockholder or any agent, employee, officer, or director of such participating
Minority Stockholder in connection with or relating to or under the terms of
each agreement entered into in connection with such Tag-Along Sale, except
insofar as the same are based solely upon written information furnished in
writing to such participating Minority Stockholder by such other Minority
Stockholder expressly for use therein.
(c) HEH shall promptly provide each of the Minority Stockholders
with written notice (the "Sale Notice") not less than 15 days prior to the
proposed date of the Tag-Along Sale (the "Tag-Along Sale Date"). In order to
facilitate the prompt delivery of the Sale Notice, the Company hereby covenants
to provide HEH and the Minority Stockholders participating in a Tag-Along Sale
access to the stock record books of the Company. Each Sale Notice shall set
forth:
(i) the name of each proposed transferee or purchaser of Company
Common Stock in the Tag-Along Sale;
(ii) the number of shares of Company Common Stock proposed to be
Transferred by HEH and, if applicable, such greater number of shares
that the proposed purchaser is willing to purchase in connection
with the Tag-Along Sale;
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(iii) the proposed amount and form of consideration to be paid
for such shares of Company Common Stock and the material terms and
conditions of payment offered by each proposed transferee or
purchaser;
(iv) confirmation that the proposed purchaser or transferee has
been informed of the "Tag-Along Rights" provided for herein and has
agreed to purchase shares of Company Common Stock in accordance with
the terms hereof;
(v) such Minority Stockholder's Shares Allotment; and
(vi) the Tag-Along Sale Date.
Each Minority Stockholder who wishes to participate in the Tag-Along
Sale shall provide written notice (or oral notice confirmed immediately in
writing) (the "Tag-Along Notice") to HEH not less than seven days prior to the
Tag-Along Sale Date. The Tag-Along Notice shall set forth the number of shares
of Company Common Stock that such Minority Stockholder elects to include in the
Tag-Along Sale, which shall not exceed such Minority Stockholder's Shares
Allotment.
HEH shall determine the aggregate number of shares of Company Common
Stock to be sold by each participating Minority Stockholder in any given
Tag-Along Sale in accordance with the terms hereof, and the Tag-Along Notices
given by the Minority Stockholders shall constitute their binding agreements to
sell such shares at the price and on the terms and conditions applicable to such
sale.
If a Tag-Along Notice is not received by HEH from a Minority
Stockholder prior to the seven-day period specified above, HEH shall have the
right to Transfer the number of shares of Company Common Stock specified in the
Sale Notice to the proposed purchaser or transferee without any participation by
such Minority Stockholder, but only at a price and upon terms and conditions no
more favorable to HEH than stated in such Sale Notice and only if such sale
occurs on a date within 60 days of the Tag-Along Sale Date.
ARTICLE IV
ADDITIONAL RIGHTS
Section 4.1. Crown Board of Directors. Subject to Section 2.4, the
Company agrees that each of Liberty and JPM shall have the right to designate
one person as one of the directors to the Board of Directors of Crown that HEH
is entitled to nominate in accordance with Section 2.1 of the Crown Stockholders
Agreement or otherwise, and that HEH shall direct the Company to vote its shares
of Crown Stock or execute written consents, as the case may be, and take all
other action necessary in order to ensure the election of each such nominee. In
the event of the death, disability, retirement, resignation or removal of any
director nominated by Liberty or JPM, then the party entitled to designate such
director shall designate another individual to fill such capacity and serve as a
director of Crown and HEH shall direct the Company to vote its shares of Crown
Stock or execute a written consent in order to ensure that such designee be
elected to the Board of Directors of Crown.
Section 4.2. Limitation on Crown's Transactions with Affiliates.
From the date hereof, the Company shall not permit Crown, and shall not permit
any of Crown's Subsidiaries to, directly or indirectly, sell any of its material
properties or assets to, or purchase any material property or assets from, or
enter into any material contract, transaction, agreement, understanding, loan,
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advance or guaranty with, or for the benefit of, any Affiliate of HEH (each of
the foregoing, a "Crown Affiliate Transaction"), unless such Crown Affiliate
Transactions are entered into in good faith and on commercially reasonable terms
and (i) with respect to any Crown Affiliate Transaction that, together with all
related Crown Affiliate Transactions, have an aggregate value of not more than
$35,000,000, such transactions are approved by a majority of the Independent
Directors (as defined in the Crown Stockholders Agreement) and (ii) with respect
to any Crown Affiliate Transactions that, together with all related Crown
Affiliate Transactions have an aggregate value of more than $35,000,000, such
Crown Affiliate Transactions are approved by a majority of the members of the
Board of Directors of Crown that are not nominated by any Affiliate of HEH;
provided, however, that for such purposes the directors designated by Liberty
and JPM in accordance with Section 4.1 will be treated as not nominated by any
Affiliate of HEH. Furthermore, neither the Company nor any of its Affiliates
will agree to consent to any amendment, termination or waiver of, or consent to
any departures from, the provisions of the Crown Stockholders Agreement as in
the effect as of the date of such proposed amendment, termination, waiver or
consent unless each of Liberty and JPM has consented in writing to the proposed
amendment, termination, waiver or consent.
Notwithstanding the foregoing, the following shall be deemed not to
be Crown Affiliate Transactions: (i) transactions pursuant to the Contribution
Agreement and (ii) the transactions pursuant to the Tax Sharing Agreement, in
each case as in effect as of the date hereof.
Section 4.3. Registration Rights. Commencing on the earlier of (i)
the effective date of an initial public offering of Company Common Stock
pursuant to a registration statement filed under the Securities Act and (ii) the
date the Company becomes subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, the Company shall grant each Minority Stockholder
registration rights provided to the Crown Minority Stockholders in the Crown
Stockholders Agreement as in effect as of the date hereof. Notwithstanding
anything herein to the contrary, HEH and its Affiliates will not agree to any
spin-off, merger, tender offer, exchange offer, consolidation or other business
combination of the Company or Crown in connection with which HEH or any of its
Affiliates is entitled to registration rights with respect to any non-cash
consideration it receives, unless, with respect to the non-cash consideration it
receives, each Minority Stockholder receives registration rights with terms no
less favorable in any material respect than those received by HEH or any of its
Affiliates.
ARTICLE V
GENERAL
Section 5.1. Entire Agreement. This Agreement and the Crown
Stockholders Agreement contain the entire agreement between the parties hereto
with respect to the subject matter hereof and there are no agreements,
understandings, representations or warranties between the parties hereto other
than those set forth or referred to herein.
Section 5.2. Amendment and Waiver. This Agreement, including this
Section 5.2, may be amended, and waivers or consents to departures from the
provisions hereof may be given, only by a written instrument duly executed, in
the case of an amendment, by the Company and each Stockholder, or in the case of
a waiver or consent, by each party against whom the waiver or consent, as the
case may be, is to be effective.
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Section 5.3. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission)
and shall be given as set forth on Appendix I hereto.
Section 5.4. Assignment; Benefit. The terms and provisions of this
Agreement shall not be assignable or transferable and except as otherwise
expressly provided herein there shall be no third party beneficiaries hereto;
provided, however, that if a Stockholder Transfers all but not less than all, of
its shares of Company Common Stock to an Affiliate of such Stockholder in
accordance with the terms of this Agreement, such Person may, by executing a
signature page to this Agreement, become a party hereto and have the same rights
and obligations as the Transferring Stockholder. All the terms and provisions of
this Agreement shall be binding upon, shall inure to the benefit of and shall be
enforceable by the respective legal successors and permitted assigns of the
parties hereto.
Section 5.5. Absence of Presumption. This Agreement shall be
construed without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to be
drafted.
Section 5.6. Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
Section 5.7. Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
Section 5.8. Governing Law; Jurisdiction and Forum. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE, WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
THE PARTIES HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE COURTS OF THE
STATE OF DELAWARE SOLELY IN RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE
PROVISIONS OF THIS AGREEMENT AND IN RESPECT OF THE TRANSACTIONS CONTEMPLATED
HEREBY, AND HEREBY WAIVE, AND AGREE NOT TO ASSERT, AS A DEFENSE IN ANY ACTION,
SUIT OR PROCEEDING FOR THE INTERPRETATION OR ENFORCEMENT HEREOF, THAT IT IS NOT
SUBJECT THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS
NOT MAINTAINABLE IN SAID COURTS OR THAT THE VENUE THEREOF MAY NOT BE APPROPRIATE
OR THAT THIS AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS, AND THE PARTIES
HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO SUCH ACTION OR
PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH A DELAWARE STATE COURT. THE
PARTIES HEREBY CONSENT TO AND GRANT ANY SUCH COURT JURISDICTION OVER SUCH
PARTIES AND OVER THE SUBJECT MATTER OF SUCH DISPUTE AND AGREE THAT MAILING OF
PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE
MANNER PROVIDED IN SECTION 5.3 OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY
LAW SHALL BE VALID AND SUFFICIENT SERVICE THEREOF.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH
10
PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS
WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH PARTY HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.8.
Section 5.9. Specific Enforcement. Each party hereto acknowledges
that remedies at law may be inadequate to protect any other party against any
actual or threatened breach of this Agreement by the other parties and, without
prejudice to any other rights and remedies otherwise available to any party,
each party agrees to the granting of injunctive relief in any other party's
favor without proof of actual damages. In the event of litigation relating to
this Agreement, if a court of competent jurisdiction determines that this
Agreement has been breached by a party, then such party shall reimburse the
other party for costs and expenses (including, but not limited to, reasonable
legal fees and expenses) incurred in connection with all such litigation.
Section 5.10. Severability. The provisions of this Agreement shall
be deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions hereof.
If any provision of this Agreement, or the application thereof to any Person or
entity or any circumstance, is invalid or unenforceable, (a) a suitable and
equitable provision shall be substituted therefor in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such original
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons, entities or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
Section 5.11. Covered Shares. All of the provisions of this
Agreement shall apply to and include (a) Company Common Stock acquired pursuant
to the Contribution Agreement; (b) Company Common Stock acquired from another
Stockholder; and (c) to the extent received in respect of shares of Company
Common Stock acquired pursuant to the Contribution Agreement, all securities and
instruments (i) received by a Stockholder as a dividend or other payment, or
(ii) issued in connection with a split of such shares or as a result of any
exchange for or reclassification of such shares or a reorganization,
recapitalization, consolidation or merger. Appendix I hereto identifies those
shares of Company Common Stock subject to the provisions of this Agreement as of
the date hereof.
11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective authorized officers as of the day and year first
above written.
HALLMARK ENTERTAINMENT INVESTMENTS CO.
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
HALLMARK ENTERTAINMENT HOLDINGS, INC.
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
LIBERTY CROWN, INC.
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President
VISN MANAGEMENT CORP.
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Title: Chair - VMC
▇▇ ▇▇▇▇▇▇ PARTNERS (BHCA), L.P.,
By JPMP MASTER FUND MANAGER, L.P.,
its general partner
By JPMP CAPITAL CORP.,
its general partner
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
12
APPENDIX I
-----------------------------------------------------------------------------
Stockholder Class A Stock Class B Stock
----------- ------------- -------------
-----------------------------------------------------------------------------
Hallmark Entertainment Holdings, Inc. 39,260 30,670
-----------------------------------------------------------------------------
Liberty Crown, Inc. 9,417
-----------------------------------------------------------------------------
▇▇ ▇▇▇▇▇▇ Partners (BHCA), L.P. 3,837
-----------------------------------------------------------------------------
VISN Management Corp. 634
-----------------------------------------------------------------------------
Address for Notices
-------------------
If to the Company or Hallmark Entertainment Holdings, Inc. to:
Hallmark Cards, Incorporated
Department 339
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Executive Vice President, General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
Hallmark Entertainment, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Liberty Crown, Inc. to:
Liberty Crown, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Senior Vice President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
1
With a copy to:
Liberty Media Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
And to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇ ▇▇▇▇▇▇ Partners (BHCA), L.P. to:
▇▇ ▇▇▇▇▇▇ Partners (BHCA), L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to VISN Management Corp. to:
VISN Management Corp.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
2
With a copy to:
Cowan, DeBaets, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
3
