EXHIBIT 6
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement dated as of September 28, 2001
by and between Crown Media Holdings, Inc. ("Company") and Hallmark Entertainment
Distribution LLC ("Distribution).
WITNESSETH:
WHEREAS, the Company and Distribution are parties to that certain
Purchase and Sale Agreement dated as of April 10, 2001 whereby Distribution
has agreed to sell and Company has agreed to purchase certain film assets
defined therein (the "Asset Agreement"); and
WHEREAS, Distribution has agreed to accept common stock of the Company
as part of the consideration for such film assets; and
WHEREAS, it is a condition of closing for the Asset Agreement that the
parties execute this Registration Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
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.
"Applicable Securities" means in relation to a Registration Statement
the Registrable Securities identified in the related Demand Notice or Piggy-back
Notice.
"Class A Stock" means Class A common stock of the Company, par value
$.01 per share.
"Class B Stock" means Class B common stock of the Company, par value
$.01 per share.
"Commission" means the United States Securities and Exchange
Commission.
"Company Common Stock" means Class A Stock and Class B Stock.
"Demand" has the meaning set forth in Section 2(a).
"Demand Notice" has the meaning set forth in Section 2(a).
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"Effective Time" means the date on which the Commission declares a
Registration Statement effective or on which a Registration Statement otherwise
becomes effective.
"Effectiveness Period" means as to a Registration Statement the period
during which such Registration Statement is effective.
"Election" means, with respect to a Registration, that Distribution has
delivered a completed and signed Notice and Questionnaire to the Company in
accordance with the provisions hereof and provided such other information as may
be required by the Company to enable Distribution to use the related Prospectus
in connection with sales of such Applicable Securities.
"Intended Offering Notice" has the meaning set forth in Section 3(a).
"Notice and Questionnaire" means a Notice of Registration Statement and
Selling Securityholder Questionnaire substantially in the form of Exhibit A
hereto.
"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.
"Piggy-back Notice" has the meaning set forth in Section 3(a).
"Prospectus" means the prospectus (including, without limitation, any
preliminary prospectus, any final prospectus and any prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
Registration Statement in reliance upon Rule 430A under the Securities Act or
any successor rule thereto) included in a Registration Statement, as amended or
supplemented by any prospectus supplement with respect to the terms of the
offering of any portion of the Applicable Securities covered by a Registration
Statement and by all other amendments and supplements to such prospectus,
including all material incorporated by reference in such prospectus and all
documents filed after the date of such prospectus by the Company under the
Exchange Act and incorporated by reference therein.
"Registrable Securities" means (a) the shares of Class A Stock acquired
by Distribution pursuant to the Asset Agreement, (b) the shares of Class A Stock
otherwise acquired by Distribution up to a maximum of 5% of the outstanding
shares of Company Common Stock (calculated on a fully diluted basis) as of the
date of a Demand Notice or an Intended Offering Notice, as the case may be, and
(c) any securities of the Company issued or issuable with respect to any shares
of Class A Stock referred to in subdivision (a), (b) or (c) upon conversion of
such shares or by way of stock dividend or stock split or in connection with a
combination or conversion of shares, recapitalization, merger, consolidation or
other reorganization or otherwise, other than in each case Unrestricted
Securities.
"Registration" means a registration under the Securities Act effected
pursuant to Section 2 or Section 3.
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with any Registration of Registrable Securities
pursuant to this Agreement,
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including, without limitation, National Association of Securities Dealers, Inc.
fees, all fees and expenses of complying with securities or blue sky laws, all
word processing, duplicating and printing expenses, messenger and delivery
expenses, the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of any special audits or
"comfort" letters required by or incident to such performance and compliance,
premiums and other costs of policies of insurance obtained by the Company
against liabilities arising out of the public offering of Registrable Securities
being registered, but excluding fees and disbursements of counsel retained by
Distribution, premiums and other costs of policies of insurance obtained by
Distribution or its agents or underwriter against liabilities arising out of the
public offering of the Registrable Securities being registered, any fees and
disbursements of underwriters customarily paid by sellers of securities who are
not the issuers of such securities, all underwriting discounts and commissions
and transfer taxes, if any, and registration and filing fees relating to
Registrable Securities.
"Registration Statement" means a registration statement filed under the
Securities Act by the Company pursuant to the provisions of Section 2 or Section
3, including the Prospectus contained therein, any amendments and supplements to
such registration statement, including post-effective amendments, all exhibits
and all material incorporated by reference in such registration statement.
"Securities Act" means the United States Securities Act of 1933, as
amended.
"Underwriter" means any underwriter of Applicable Securities designated
pursuant to Section 2(f) hereof.
"Unrestricted Securities" means any shares of Company Common Stock that
(i) have been registered under an effective registration statement under the
Securities Act and have been disposed of pursuant to such effective registration
statement, (ii) have been transferred in compliance with Rule 144 or Rule 145
under the Securities Act (or in each case any successor provision thereto) under
circumstances in which any legend relating to restrictions on transfer under the
Securities Act is removed, (iii) are transferable pursuant to paragraph (k) of
Rule 144 or paragraph (d) of Rule 145 under the Securities Act (or in each case
any successor provision thereto), (iv) have otherwise been transferred and a new
security not subject to transfer restrictions under the Securities Act has been
delivered upon such transfer by or on behalf of the Company or (v) cease to be
outstanding.
(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 to 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
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.
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2. Demand Registration. (a) (i) Distribution shall have the right, on
not more than four occasions in the aggregate, and no more frequently than once
during any six-month period, to require the Company to register for offer and
sale under the Securities Act (a "Demand") all or a portion of the Registrable
Securities held by Distribution, subject to the restrictions set forth herein;
provided that Distribution shall not be entitled to make a Demand hereunder
unless the Registrable Securities subject to such Demand represent at least 7%
of the aggregate shares of Company Common Stock then issued and outstanding.
As promptly as practicable after the Company receives from Distribution
a notice pursuant to this Section 2(a) (a "Demand Notice"), demanding that the
Company register for offer and sale under the Securities Act Registrable
Securities, subject to Section 2(b), the Company shall (i) use all reasonable
efforts to file as promptly as reasonably practicable with the Commission a
Registration Statement relating to the offer and sale of the Applicable
Securities on such form as the Company may reasonably deem appropriate (provided
that the Company shall not, unless the Company otherwise determines, be
obligated to register any securities on a "shelf" registration statement or
otherwise to register securities for offer or sale on a continuous or delayed
basis) and, thereafter, (ii) after the filing of an initial version of the
Registration Statement, use reasonable efforts to cause such Registration
Statement to be declared effective under the Securities Act as promptly as
practicable after the date of filing of such Registration Statement; provided,
however, that Distribution shall not be entitled to be named as a selling
securityholder in the Registration Statement or to use the Prospectus forming a
part thereof for resales of Registrable Securities unless Distribution has made
an Election. Subject to Section 2(b), the Company shall use reasonable efforts
to keep each Registration Statement continuously effective in order to permit
the Prospectus forming a part thereof to be usable by Distribution for resales
of Registrable Securities for an Effectiveness Period ending on the earlier of
(i) 30 days from the Effective Time of such Registration Statement and (ii) such
time as all of such securities have been disposed of by the selling
securityholders.
(b) The Company shall have the right to postpone (or, if necessary or
advisable, withdraw) the filing, or delay the effectiveness, of a Registration
Statement, or fail to keep such Registration Statement continuously effective or
not amend or supplement the Registration Statement or included Prospectus, if
the Company determines based upon the advice of counsel that it would be
advisable to not disclose in the Registration Statement a planned or proposed
financing, acquisition or other corporate transaction or other material
information, and the Company shall have determined in good faith that such
disclosure is not in the best interests of the Company and its stockholders;
provided that no one such postponement shall exceed 90 days in any six-month
period and all such postponements shall not exceed 180 days in the aggregate.
The Company shall advise Distribution of any such determination as promptly as
practicable after such determination.
(c) In connection with an underwritten offering, if the managing
underwriter or underwriters advise the Company that in its or their opinion the
number of Applicable Securities subject to a Demand exceeds the number which can
be sold in such offering, the Company shall include in such Registration the
number of Applicable Securities that, in the opinion of such managing
underwriter or underwriters, can be sold in such offering.
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(d) The Company may include in any Registration requested pursuant to
Section 2(a) hereof other securities for sale for its own account or for the
account of another Person, subject to the following sentence. In connection with
an underwritten offering, if the managing underwriter or underwriters advise the
Company that in its or their opinion the number of Applicable Securities
requested by Distribution, together with other securities for sale for the
account of the Company or any other Person, to be registered exceeds the number
which can be sold in such offering, the Company shall include in such
Registration the number of Applicable Securities and other securities that, in
the opinion of such managing underwriter or underwriters, can be sold in such
offering as follows: (i) first, the Applicable Securities requested to be
registered by Distribution and (ii) second, any other securities requested to be
included in such Registration.
(e) Distribution shall have the right to withdraw any Demand (i) prior
to the time the Registration Statement in respect of such Demand has been
declared effective, (ii) upon the issuance by the Commission or any other
governmental agency of a stop order, injunction or other order which interferes
with such Registration, (iii) upon the Company's availing itself of Section
2(b), or (iv) if Distribution is prevented pursuant to Section 2(c) or (d) from
selling all of the Applicable Securities it requested to be registered.
Notwithstanding such request to withdraw the Demand, the Registration requested
by Distribution shall nonetheless be deemed to have been effected (and,
therefore, requested) for purposes of Section 2(a) hereof if Distribution
withdraws any Demand (A) pursuant to clause (i) of the preceding sentence after
the Commission filing fee is paid with respect thereto or (B) pursuant to clause
(iv) of the preceding sentence in circumstances where at least 50% of the
Applicable Securities requested to be included in such Registration by
Distribution could have been included, and in each case, (x) the Company has not
availed itself of Section 2(b) with respect to such Registration request or (y)
the Company has availed itself of Section 2(b) and the withdrawal request is not
made within 10 days after the termination of the suspension period occasioned by
the Company's exercise of its rights under Section 2(b). If Distribution
withdraws a Demand but the Company nevertheless determines to complete, within
30 days after such withdrawal, the Registration so requested as to securities
other than the Applicable Securities, Distribution shall be entitled to
participate in such Registration pursuant to Section 3, but in such case the
Intended Offering Notice shall be required to be given to Distribution at least
five business days prior to the anticipated filing date of the Registration
Statement, or if such Registration Statement has already been filed, within 10
business days after receipt of the request to withdraw Demand from Distribution
and Distribution shall be required to give the Piggy-back Notice no later than 3
business days after the Company's delivery of such Intended Offering Notice.
(f) In the event that any Registration pursuant to this Section 2 shall
involve, in whole or in part, an underwritten offering, one co-lead managing
underwriter shall be selected by the Company and shall be reasonably acceptable
to Distribution, and the other co-lead underwriter shall be selected by
Distribution, and shall be reasonably acceptable to the Company. Any additional
co-managing underwriters shall be selected by the Company.
3. Piggy-back Registration. (a) If at any time the Company intends to
file on its behalf or on behalf of any of its securityholders a Registration
Statement under the Securities Act in connection with a public offering of any
securities of the Company on a form and in a manner that would permit the
registration for offer and sale under the Securities Act of Registrable
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Securities, other than a registration statement on Form S-8 or Form S-4, then
the Company shall give written notice (an "Intended Offering Notice") of such
intention to Distribution at least 20 business days prior to the anticipated
filing date of such registration statement. Such Intended Offering Notice shall
offer to include in such registration statement for offer to the public such
number of Registrable Securities as Distribution may request, subject to the
conditions set forth herein, and shall specify, to the extent then known, the
number and class of securities proposed to be registered, the proposed date of
filing of such registration statement, any proposed means of distribution of
such securities, any proposed managing underwriter or underwriters of such
securities and a good faith estimate by the Company of the proposed maximum
offering price of such securities, as such price is proposed to appear on the
facing page of such registration statement. Distribution shall advise the
Company in writing (such written notice being a "Piggy-back Notice") not later
than 10 business days after the Company's delivery of the Intended Offering
Notice, if Distribution desires to participate in such offering. The Piggy-back
Notice shall set forth the number of Registrable Securities Distribution desires
to have included in the registration statement and offered to the public. If
Distribution elects to participate in the offering, upon the request of the
Company, Distribution shall enter into such underwriting, custody and other
agreements as are customary in connection with registered secondary offerings or
necessary or appropriate in connection with the offering. Distribution shall not
be entitled to be named as a selling securityholder in the Registration
Statement or to use the Prospectus forming a part thereof for sales of
Registrable Securities unless Distribution has made an Election.
(b) In connection with an underwritten offering, if the managing
underwriter or underwriters advise the Company in writing that in its or their
opinion the number of securities proposed to be registered exceeds the number
that can be sold in such offering, the Company shall include in such
Registration the number of securities that, in the opinion of such managing
underwriter or underwriters, can be sold as follows: (i) first, the securities
that the Company proposes to sell or, if the Registration is in response to a
demand by any securityholders of the Company with registration rights ("Other
Registering Stockholders"), the securities that demanding Other Registering
Stockholders propose to sell, (ii) second, Applicable Securities requested to be
included in such Registration by Distribution and other securities requested to
be included by any Other Registering Stockholders, and, if the Registration is
in response to a demand by any Other Registering Stockholder, the securities
that the Company proposes to sell (pro rata in proportion to the number of
Applicable Securities requested to be included by Distribution, other securities
requested to be included by any Other Registering Stockholder, and, if
applicable, the Company) and (iii) third, other securities requested to be
included in such Registration.
(c) The rights of Distribution pursuant to Section 2 hereof and this
Section 3 are cumulative, and the exercise of rights under one such Section
shall not exclude the subsequent exercise of rights under the other such Section
(except to the extent expressly provided otherwise herein). Notwithstanding
anything herein to the contrary, the Company may abandon and/or withdraw any
registration as to which any right under Section 3 may exist at any time and for
any reason without liability hereunder. In such event, the Company shall notify
Distribution to the extent that it has delivered a Piggy-back Notice to
Distribution to participate therein.
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4. Registration Procedures. In connection with a Registration
Statement, the following provisions shall apply:
(a) The Company shall furnish to Distribution, prior to the Effective
Time, a copy of the Registration Statement as initially filed with the
Commission, and each amendment thereto and each amendment or supplement, if any,
to the Prospectus included therein.
(b) Subject to Section 2(b) and in respect of a Registration Statement
under Section 2, the Company shall use reasonable best efforts to promptly take
such action as may be necessary so that (i) each of the Registration Statement
and any amendment thereto and the Prospectus forming part thereof and any
amendment or supplement thereto (and each report or other document incorporated
therein by reference in each case), when it becomes effective, complies in all
material respects with the Securities Act and the Exchange Act and the Rules and
Regulations, (ii) each of the Registration Statement and any amendment thereto
does not, when it becomes effective, 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 not misleading and (iii) each of the Prospectus
forming part of the Registration Statement, and any amendment or supplement to
such Prospectus, does not at any time during the period during which the Company
is required to keep a Registration Statement effective under Section 2(a)
include an untrue statement of a material fact or omit 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.
(c) The Company shall, promptly upon learning thereof, advise
Distribution, and shall confirm such advice in writing if so requested:
(i) when a Registration Statement and any amendment thereto has
been filed with the Commission and when the Registration Statement or
any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus included
therein or for additional information with respect to the Registration
Statement and Prospectus;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for such purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the securities
included in the Registration Statement for sale in any jurisdiction or
the initiation of any proceeding for such purpose; and
(v) following the effectiveness of any Registration Statement, of
the happening of any event or the existence of any state of facts that
requires the making of any changes in the Registration Statement or
the Prospectus included therein so that, as of such date, such
Registration Statement and Prospectus do not contain an untrue
statement of a material fact and do not omit to state a material fact
required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the
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circumstances under which they were made) not misleading (which advice
shall be accompanied by an instruction to Distribution to suspend the
use of the Prospectus until the requisite changes have been made,
which instruction Distribution agrees to follow).
(d) In respect of a Registration Statement under Section 2 (and not
Section 3), the Company shall use all reasonable efforts to prevent the
issuance, and if issued to obtain the withdrawal, of any order suspending the
effectiveness of the Registration Statement at the earliest possible time.
(e) The Company shall furnish to Distribution, without charge, at least
one copy of the Registration Statement and all post-effective amendments
thereto, including financial statements and schedules, and, if Distribution so
requests in writing, all reports, other documents and exhibits that are filed
with or incorporated by reference in the Registration Statement.
(f) The Company shall, during the period during which the Company is
required to keep a Registration Statement continuously effective under Section
2(a) or elects to keep such effective under Section 3, deliver to Distribution,
without charge, as many copies of the Prospectus (including each preliminary
Prospectus) included in the Registration Statement and any amendment or
supplement thereto Distribution may reasonably request, and the Company consents
(except during the continuance of any event described in Section 2(b) or Section
4(c)(v) hereof) to the use of the Prospectus, with any amendment or supplement
thereto, by Distribution in connection with the offering and sale of the
Applicable Securities covered by the Prospectus and any amendment or supplement
thereto during such period.
(g) Prior to any offering of Applicable Securities pursuant to the
Registration Statement, the Company shall use reasonable efforts to (i) register
or qualify or cooperate with Distribution and its counsel in connection with the
registration or qualification of such Applicable Securities for offer and sale
under the securities or "blue sky" laws of such jurisdictions within the United
States as Distribution may reasonably request, (ii) keep such registrations or
qualifications in effect and comply with such laws so as to permit the
continuance of offers and sales in such jurisdictions for the period during
which the Company is required to keep a Registration Statement continuously
effective under Section 2(a) and (iii) take any and all other reasonable actions
requested by Distribution which are necessary to enable the disposition in such
jurisdictions of such Applicable Securities; provided, however, that in no event
shall the Company be obligated to (1) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not otherwise be
required to so qualify but for this Agreement or (2) file any general consent to
service of process or subject itself to tax in any jurisdiction where it is not
so subject.
(h) The Company shall cooperate with Distribution to facilitate the
timely preparation and delivery of certificates representing Applicable
Securities to be sold pursuant to the Registration Statement, which certificates
shall comply with the requirements of any United States securities exchange upon
which any Applicable Securities are listed (provided that nothing herein shall
require the Company to list any Registrable Securities on any securities
exchange on which they are not currently listed) or the NASD Rules, as
applicable, and which certificates shall be free of any restrictive legends and
in such permitted denominations and registered in
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such names as Distribution may request in connection with the sale of Applicable
Securities pursuant to the Registration Statement.
(i) The Company shall use reasonable efforts to:
(i) make such reasonable representations and warranties in the
applicable underwriting agreement to the Underwriters, in form,
substance and scope as are customary;
(ii) in connection with any underwritten offering, obtain
opinions of counsel to the Company (which counsel and opinions (in
form, scope and substance) shall be reasonably satisfactory to the
Underwriters) addressed to the Underwriters, covering such matters as
are customary to the extent reasonably required by the applicable
underwriting agreement;
(iii) in connection with any underwritten offering, obtain "cold
comfort" letters and updates thereof from the independent public
accountants of the Company (and, if necessary, from the independent
public accountants of any subsidiary of the Company or of any business
acquired by the Company for which financial statements and financial
data are, or are required to be, included in the Registration
Statement), addressed to Distribution (if Distribution has provided
such letter, representations or documentation, if any, required for
such cold comfort letter to be so addressed) and the Underwriters, in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with secondary underwritten
offerings of equity securities; and
(iv) in connection with any underwritten offering, deliver such
documents and certificates as may be reasonably requested by
Distribution and the Underwriters, if any, including, without
limitation, certificates to evidence compliance with any conditions
contained in the underwriting agreement or other agreements entered
into by the Company.
(j) In respect of a Registration Statement under Section 2 (and not
Section 3), the Company shall use reasonable efforts to take all other steps
reasonably necessary to effect the timely registration, offering and sale of the
Applicable Securities covered by the Registration Statements contemplated
hereby.
5. Registration Expenses. The Company shall bear the Registration
Expenses in connection with the performance of its obligations under Sections 2,
3 and 4. Distribution shall bear all other expenses relating to any Registration
or sale in which Distribution participates pro rata with any other Stockholders
participating therein, including all of the fees and expenses of Distribution's
counsel, any applicable underwriting discounts or commissions and registration
or filing fees with respect to the Applicable Securities.
6. Indemnification and Contribution. (a) Upon the effectiveness of the
Registration of Applicable Securities pursuant to Section 2 or 3, the Company
shall indemnify and hold harmless Distribution and each Underwriter or selling
agent, and its Affiliates, officers and directors (each such Person being
sometimes referred to as an "Indemnified Person") from and against any losses,
claims, damages or liabilities, joint or several, (or actions in respect
thereof)
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to which such Indemnified Person may become subject under the Securities Act,
the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement under which such Applicable Securities are registered
under the Securities Act, or any Prospectus contained therein or furnished by
the Company to any Indemnified Person, or any amendment or supplement thereto in
each case relating to the sale of Applicable Securities, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and the Company hereby agrees to reimburse such Indemnified Person
for any reasonable legal or other expenses reasonably incurred by it in
connection with investigating or defending any such loss, claim, damage or
liability (or action in respect thereof) as such expenses are incurred;
provided, however, that (i) the Company shall not be liable to any such
Indemnified Person in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
Registration Statement or Prospectus, or amendment or supplement, in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of such Indemnified Person or by or on behalf of Distribution
expressly for use therein; (ii) the Company shall not be liable to the extent
that any loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon (a) the use of any Prospectus
after such time as the obligation of the Company to keep the same effective and
current has expired, or (b) the use of any Prospectus after such time as the
Company has advised Distribution in writing that a post-effective amendment or
supplement thereto is required, except such Prospectus as so amended or
supplemented; and (iii) the Company shall not be liable to any Person who
participates as an Underwriter in the offering or sale of Registrable Securities
or any other Person, if any, who controls such Underwriter within the meaning of
the Securities Act, to the extent that any loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of the matters
described in the first proviso of this sentence or in (a) or (b) above or such
Person's failure to send or give a copy of the final prospectus or supplement to
the Persons asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation of the sale
of Registrable Securities to such Person if such statement or omission was
timely corrected in such final prospectus or supplement.
(b) Distribution agrees as a consequence of the inclusion of Applicable
Securities in such Registration Statement, and each Underwriter or selling agent
shall agree, as a consequence of facilitating such disposition of Applicable
Securities, severally and not jointly, to (i) indemnify and hold harmless the
Company and each other participating stockholder, their respective directors and
officers and each Person, if any, who controls the Company or each other
participating stockholder, within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any losses, claims,
damages or liabilities (or actions in respect thereof) to which the Company or
each other participating stockholder, or such other Persons may become subject,
under the Securities Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in such Registration Statement or Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, unless such untrue
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statement or alleged untrue statement or omission or alleged omission was
subsequently remedied in an amendment or supplement to such Registration
Statement or Prospectus and the Company failed to comply with the delivery
requirements of the Securities Act, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of Distribution, the
Underwriter or selling agent or its agent, expressly for use therein, and (ii)
subject to the limitation set forth immediately preceding this clause (ii),
reimburse the Company and each other participating stockholder, for any legal or
other expenses reasonably incurred by it in connection with investigating or
defending any such action or claim as such expenses are incurred.
(c) Promptly after receipt by any Person entitled to indemnity (an
"Indemnitee") under Section 6(a) or (b) hereof of notice of the commencement of
any action or claim, such Indemnitee shall, if a claim in respect thereof is to
be made against an indemnifying Person (an "Indemnitor") under this Section 6,
notify such Indemnitor in writing of the commencement thereof, but the omission
so to notify the Indemnitor shall not relieve it from any liability which it may
have to any Indemnitee except to the extent of any actual prejudice. In case any
such action shall be brought against any Indemnitee, it shall notify an
Indemnitor of the commencement thereof, such Indemnitor shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other Indemnitor similarly notified, to assume the defense thereof, with counsel
satisfactory to such Indemnitee, and, after notice from the Indemnitor to such
Indemnitee of its election so to assume the defense thereof, such Indemnitor
shall not be liable to such Indemnitee under this Section 6 for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such Indemnitee, in connection with the defense thereof. No
Indemnitor shall, without the prior written consent of the Indemnitee, effect
the settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
Indemnitee is an actual or potential party to such action or claim) unless such
settlement, compromise or judgment (i) includes an unconditional release of the
Indemnitee from all liability arising out of such action or claim 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 any Indemnitee.
Notwithstanding the foregoing, an Indemnitee shall have the right to
employ separate counsel reasonably acceptable to the Indemnitor in any such
proceeding and to participate in (but not control, other than as provided in (3)
below) the defense thereof, but the fees and expenses of such counsel shall be
at the expense of such Indemnitee unless (1) the Indemnitor has agreed to pay
such fees and expenses; (2) the Indemnitor shall have failed after notice to
assume the defense of such proceeding; or (3) the named parties to any such
proceeding (including any impleaded parties) include both such Indemnitee and
the Indemnitor or any of its affiliates or controlling persons, and a conflict
of interest will exist if such counsel represents such Indemnitee and the
Indemnitor (or such affiliate or controlling person) and in the case of (3), the
Indemnitee shall have the right to control the Indemnitee's defense and in each
of the cases, if such Indemnitee notifies the Indemnitor in writing that it
elects to employ separate counsel, the reasonable fees and expenses of such
counsel shall be at the expense of the Indemnitor; it being understood, however,
that the Indemnitor shall not, in connection with any one such proceeding or
separate but substantially similar or related proceedings in the same
jurisdiction, arising out of
11
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all such Indemnitees, which firm
shall be designated by the Indemnitee that had the largest number of shares
included in the applicable registration statement. An Indemnitor shall not be
liable for any settlement of an action effected without its written consent.
(d) If the indemnification provided for in this Section 6 is
unavailable to or insufficient to hold harmless an Indemnitee under Section 6(a)
or (b) hereof in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each Indemnitor shall
contribute to the amount paid or payable by such Indemnitee as a result of such
losses, claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the Indemnitor and
the Indemnitee in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative fault of such
Indemnitor and Indemnitee shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by such Indemnitor or by such Indemnitee, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 6(d) were determined
solely by pro rata allocation (even if each participating stockholder or any
Underwriters or selling agents or all of them 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 this Section 6(d). The amount
paid or payable by an Indemnitee as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such
Indemnitee in connection with investigating or defending any such action or
claim. No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation. The obligations
of Distribution and any Underwriters or selling agents in this Section 6(d) to
contribute shall be several in proportion to the number of Applicable Securities
registered or underwritten or sold, as the case may be, by them and not joint.
Notwithstanding any other provision of this Section 6(d), Distribution
shall not be required to contribute any amount in excess of the amount by which
the net proceeds received by Distribution from the sale of Company Common Stock
pursuant to a Registration Statement exceeds the amount of damages which
Distribution has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have to any Indemnitee
and the obligations of any Indemnified Person under this Section 6 shall be in
addition to any liability which such Indemnified Person may otherwise have to
the Company. The remedies provided in this Section 6 are not exclusive and shall
not limit any rights or remedies that may otherwise be available to an
Indemnitee at law or in equity.
12
7. Other Provisions. (a) The respective indemnities, agreements and
other provisions set forth in this Agreement or made pursuant to this Agreement
shall remain in full force and effect, regardless of any investigation (or any
statement as to the results thereof) made by or on behalf of Distribution, any
director, officer or partner of Distribution, any agent or Underwriter, any
director, officer or partner of such agent or Underwriter, or any Affiliate of
any of the foregoing, and shall survive the registration, offering and sale of
the Applicable Securities of Distribution.
(b) Distribution shall cooperate with respect to any Registration
effected under this Agreement and shall provide such information, documents, and
instruments as may be reasonably requested in connection therewith.
(c) Distribution agrees, if so requested by the managing underwriter in
any underwritten offering of the Company's securities, not to effect any public
sale or distribution of Registrable Securities (other than pursuant to such
underwritten offering) during the 30 days prior to and the 90 days after any
registration statement for any such underwritten offering of the Company's
securities (either for its own account or for the benefit of the holders of any
securities of the Company) has become effective (or such period of time shorter
than 90 days that is sufficient and appropriate, in the sole opinion of the
managing underwriter, in order to complete the sale and distribution of
securities included in such registration).
(d) Distribution agrees to keep confidential the fact that the Company
has exercised its rights under Section 2(b), any advice of the Company pursuant
to Section 4(c) and any other confidential information provided by the Company
in connection with this Agreement.
(e) The Company shall use reasonable best efforts to file all reports
required to be filed with respect to the Company under Section 13 or Section
15(d) of the Exchange Act during such time as there are any Registrable
Securities.
8. Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including facsimile transmission) and shall be
given as follows:
(a) if to the Company to:
Crown Media Holdings, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Vice President, Legal Affairs
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
13
(b) if to Distribution to:
Hallmark Cards, Incorporated
Department 339
0000 XxXxx
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Vice President,
General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
9. Assignment; Benefit. The terms and provisions of this Agreement
shall be assignable provided that Distribution and all of its assignees may not
exercise more Demands in the aggregate or in any six-month period, than are
permitted under Section 2 hereof. There shall be no third party beneficiaries
hereto except for Indemnitees and as otherwise expressly provided herein. 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.
10. 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.
11. 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.
12. Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
13. 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
14
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 6.3 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 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 13.
14. 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.
15. 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.
16. Covered Shares. All of the provisions of this Agreement shall apply
to and include Class A Stock acquired pursuant to the Asset Agreement and to the
extent received in respect of shares of Class A Stock acquired pursuant to the
Asset Agreement, all securities and instruments (i) received by Distribution 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
15
such shares or a reorganization, recapitalization, consolidation or merger.
Appendix I hereto identifies those shares of Class A Stock subject to the
provisions of this Agreement as of the date hereof.
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.
CROWN MEDIA HOLDINGS, INC.
By: /s/ XXXXXXX XXXXXX
-------------------------------------
Name: Xxxxxxx Xxxxxx
Title: EVP & CFO
HALLMARK ENTERTAINMENT DISTRIBUTION LLC
By: /s/ XXXXXX XXXXX, XX.
-------------------------------------
Name: Xxxxxx Xxxxx, Xx.
Title:
16
APPENDIX I
Name Class A Stock
---- -------------
Hallmark Entertainment Distribution LLC
----------
17
[NAME OF ISSUER]
Notice of Registration Statement
and
Selling Securityholder Questionnaire
(Date)
Reference is hereby made to the
Registration Rights Agreement (the
"Agreement") between Hallmark Entertainment Distribution LLC, a
Delaware limited
liability corporation ("Stockholder"), and Crown Media Holdings, Inc., a
Delaware corporation (the "Company"). Pursuant to the Agreement, the Company
[has filed] with the United States Securities and Exchange Commission (the
"Commission") a registration statement on Form ____ (the "Registration
Statement") for the registration and resale under the Securities Act of 1933, as
amended (the "Securities Act"), of shares of Company Common Stock. All
capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Agreement.
The Stockholder is entitled to have the Registrable Securities owned by
it included in the Registration Statement. In order to have Registrable
Securities included in the Registration Statement, this Notice of Registration
Statement and Selling Securityholder Questionnaire ("Notice and Questionnaire")
must be completed, executed and delivered to the Company's counsel at the
address set forth herein for receipt ON OR BEFORE [DEADLINE FOR RESPONSE]. If
the Stockholder does not complete, execute and return this Notice and
Questionnaire by such date, the Stockholder (i) will not be named as a selling
securityholder in the Registration Statement and (ii) may not use the Prospectus
forming a part thereof for resales of Registrable Securities.
Certain legal consequences arise from being named as a selling
securityholder in the Registration Statement and related Prospectus.
Accordingly, the Stockholder is advised to consult its own securities law
counsel regarding the consequences of being named or not being named as a
selling securityholder in the Registration Statement and related Prospectus.
18
ELECTION
The Stockholder (the "Selling Securityholder") hereby elects to include
in the Registration Statement the Registrable Securities beneficially owned by
it and listed below in Item (3). The Selling Securityholder, by signing and
returning this Notice and Questionnaire, agrees to be bound with respect to such
Registrable Securities by the terms and conditions of this Notice and
Questionnaire.
The Selling Securityholder hereby provides the following information to
the Company and represents and warrants that such information is accurate and
complete:
19
QUESTIONNAIRE
(1) Full Legal Name of Selling Securityholder:
(2) Address for Notices to Selling Securityholder:
Telephone:
Fax:
Contact Person:
(3) Except as set forth below in this Item (3), the undersigned does not
beneficially own any shares of any class of Company Common Stock.
(a) Number of Registrable Securities and shares of each class of
Company Common Stock beneficially owned:
(b) Number of Registrable Securities which the undersigned wishes to be
included in the Registration Statement:
(4) Beneficial Ownership of Other Securities of the Company:
Except as set forth below in this Item (4), the undersigned Selling
Securityholder is not the beneficial or registered owner of any shares of any
class of Company Common Stock or any other securities of the Company, other than
the Registrable Securities and shares of Company Common Stock listed above in
Item (3).
State any exceptions here:
(5) Relationships with the Company:
Except as set forth below, neither the Selling Securityholder nor any
of its affiliates, officers, directors or principal equity holders (5% or more)
has held any position or office or has
20
had any other material relationship with the Company (or its predecessors or
affiliates) during the past three years.
State any exceptions here:
(6) Plan of Distribution:
Except as set forth below, the undersigned Selling Securityholder
intends to distribute the Registrable Securities listed above in Item (3) only
as follows (if at all): Such Registrable Securities may be sold from time to
time directly by the undersigned Selling Securityholder or, alternatively,
through underwriters, broker-dealers or agents. Such Registrable Securities may
be sold in one or more transactions at fixed prices, at prevailing market prices
at the time of sale, at varying prices determined at the time of sale, or at
negotiated prices. Such sales may be effected in transactions (which may involve
crosses or block transactions) (i) on any national securities exchange or
quotation service on which the Registered Securities may be listed or quoted at
the time of sale, (ii) in the over-the-counter market, (iii) in transactions
otherwise than on such exchanges or services or in the over-the-counter market,
or (iv) through the writing of options. In connection with sales of the
Registrable Securities or otherwise, the Selling Securityholder may enter into
hedging transactions with broker-dealers, which may in turn engage in short
sales of the Registrable Securities in the course of hedging the positions they
assume. The Selling Securityholder may also sell Registrable Securities short
and deliver Registrable Securities to close out such short positions, or loan or
pledge Registrable Securities to broker-dealers that in turn may sell such
securities.
State any exceptions here:
By signing below, the Selling Securityholder acknowledges that it
understands its obligation to comply, and agrees that it will comply, with the
provisions of the Exchange Act and the Rules and Regulations, particularly
Regulation M.
By signing below, the Selling Securityholder consents to the disclosure
of the information contained herein in its answers to Items (1) through (6)
above and the inclusion of such information in the Registration Statement and
related Prospectus. The Selling Securityholder understands that such information
will be relied upon by the Company in connection with the preparation of the
Registration Statement and related Prospectus.
In accordance with the Selling Securityholder's obligation under the
Agreement to provide such information as may be required by law for inclusion in
the Registration Statement, the Selling Securityholder agrees to promptly notify
the Company of any inaccuracies or changes in the information provided herein
which may occur subsequent to the date hereof at any time while the Registration
Statement remains in effect. All notices hereunder and pursuant to the
21
Agreement shall be made in writing, by hand-delivery or air courier guaranteeing
overnight delivery as follows:
(i) To the Company:
[Name of Issuer]
[Address]
(ii) With a copy to:
[Company Counsel]
[Address]
Once this Notice and Questionnaire is executed by the Selling
Securityholder and received by the Company's counsel, the terms of this Notice
and Questionnaire, and the representations and warranties contained herein,
shall be binding on, shall inure to the benefit of and shall be enforceable by
the respective successors, heirs, personal representatives, and assigns of the
Company and the Selling Securityholders. This Agreement shall be governed in all
respects by the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned, by authority duly given, has
caused this Notice and Questionnaire to be executed and delivered either in
person or by its duly authorized agent.
Dated:
-----------------
Selling Securityholder
By:
Name:
Title:
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON
OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY'S COUNSEL AT:
[Company Counsel]
[Address]
22
