CROWN MEDIA HOLDINGS, INC. REGISTRATION RIGHTS AGREEMENT
Exhibit
4.2
CROWN
MEDIA HOLDINGS, INC.
REGISTRATION
RIGHTS AGREEMENT, dated as of
[
], 2010 (the “Agreement”), among H
C Crown Corp., a Delaware corporation (“HCC”), any Other HEIC
Stockholder that executes a Joinder (each, a “Joinder Party”) and
Crown Media Holdings, Inc., a Delaware corporation (the “Company”).
R E C I T A L
S
WHEREAS,
HCC and the Company are parties to that certain Master Recapitalization
Agreement, entered into on February 26, 2010, by and among Hallmark Cards, HCC,
HEH, HEIC, the Company, Crown Media United States, LLC and certain subsidiaries
of the Company (the “Recapitalization
Agreement”), pursuant to which, on the date hereof, the Company
refinanced its obligations to Hallmark through the issuance of new indebtedness,
shares of Series A Preferred Stock and shares of Common Stock;
WHEREAS,
the shares of Series A Preferred Stock are convertible into shares of Common
Stock in accordance with the terms set forth in the Certificate of Designation,
Powers, Preferences, Qualifications, Limitations, Restrictions and Relative
Rights of Series A Convertible Preferred Stock of the Company;
WHEREAS,
prior to the consummation of the transactions provided for in the
Recapitalization Agreement (the “Transactions”),
pursuant to the Second Amended and Restated Stockholders Agreement, dated August
30, 2001, by and among the Company and certain stockholders of the Company set
forth therein, HCC was entitled (indirectly through its ownership of HEH, which
owned HEIC, which owned a majority of the Company) to certain registration
rights with respect to the capital stock of the Company that it indirectly
owned; and
WHEREAS,
pursuant to the Recapitalization Agreement, the parties hereto have agreed to
enter into this Agreement to provide for certain rights and obligations in
respect of, among other things, the shares of Series A Preferred Stock and
Common Stock.
NOW,
THEREFORE, in consideration of the premises, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, agree as follows:
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SECTION
1.
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DEFINITIONS
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As used
in this Agreement, the following terms have the respective meaning set forth
below:
Affiliate: shall
mean “affiliate” as defined in Rule 405 promulgated under the Securities
Act;
Commission: shall
mean the Securities and Exchange Commission or any other federal agency at the
time administering the Securities Act;
Common
Stock: shall mean the Company’s Class A Common Stock, par
value $.01 per share;
Exchange
Act: shall mean the Securities Exchange Act of 1934, as
amended;
Hallmark
Cards: shall mean Hallmark Cards, Incorporated, a Missouri
corporation;
Hallmark
Debt: shall have the meaning set forth in the Recapitalization
Agreement;
HEH: shall
mean Hallmark Entertainment Holdings, Inc., a Delaware corporation;
HEIC: shall
mean Hallmark Entertainment Investments Co., a Delaware
corporation;
Holder: shall
mean any holder of Registrable Securities;
Joinder: shall
mean the Form of Joinder attached hereto as Schedule
A;
JPM: shall
mean JPMorgan Partners (BHCA), L.P., a Delaware limited
partnership;
Liberty: shall
mean Liberty Crown, Inc., a Delaware corporation;
Majority
Holders: shall mean the Holders of at least a majority of the
Registrable Securities;
Other HEIC
Stockholders: shall mean Liberty, JPM and VISN;
Person: shall
mean an individual, partnership, joint-stock company, limited liability company,
corporation, trust, estate or other incorporated or unincorporated organization,
and a government or agency or political subdivision thereof;
Register, Registered and Registration: shall
mean a registration effected by preparing and filing a registration statement in
compliance with the Securities Act (and any post-effective amendments filed or
required to be filed) and the declaration or ordering of effectiveness of such
registration statement;
Registrable
Securities: shall mean (A) shares of Common Stock issued to
HCC or any Joinder Party in connection with the merger of HEIC with and into the
Company and the merger of HEH with and into the Company, (B) shares of Common
Stock issued to HCC on the date hereof in connection with the exchange of
Hallmark Debt into Common Stock, (C) shares of Common Stock issuable upon
conversion of the shares of Series A Preferred Stock issued to HCC on the date
hereof in connection with the exchange of Hallmark Debt into Series A Preferred
Stock and (D) any additional shares of Common Stock acquired by HCC pursuant to
the “Subscription Rights” set forth in the Stockholders Agreement, dated as of
the date hereof, by and among HCC, Hallmark Cards and the Company and
(E) any stock of the Company issued as a dividend or other distribution
with respect to, or in exchange for or in replacement of, the shares of Common
Stock referred to in clauses (A), (B), (C) and (D) above;
Registration
Expenses: shall mean all expenses incurred by the Company in
compliance with Section 2(a), (b) and (c) hereof, including, without limitation,
all registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, fees and expenses of one counsel for all the Holders
selected by the Majority Holders, blue sky fees and expenses, all underwriting
discounts and selling commissions applicable to the sale of Registrable
Securities and the expense of any special audits incident to or required by any
such registration (and including the compensation of regular employees of the
Company, which shall be paid in any event by the Company);
Securities
Act: shall mean the Securities Act of 1933, as
amended;
Security,
Securities: shall have the meaning set forth in Section 2(1)
of the Securities Act;
Selling
Expenses: shall mean all fees and disbursements of counsel for
each of the Holders other than fees and expenses of one counsel for all the
Holders selected by the Majority Holders;
Series A Preferred
Stock: shall mean the Company’s Series A Convertible Preferred
Stock, par value $.01 per share; and
VISN: shall mean VISN
Management Corp., a Delaware corporation.
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SECTION
2.
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REGISTRATION
RIGHTS
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(a) Requested
Registration.
(i) Request for
Registration. If the Company shall receive from the Majority
Holders a written request that the Company effect any registration with respect
to all or a part of the Registrable Securities, the Company will:
(1) promptly
give written notice of the proposed registration, qualification or compliance to
all other Holders; and
(2) as soon
as practicable, use its commercially reasonable best efforts to effect such
registration (including, without limitation, the execution of an undertaking to
file post-effective amendments, appropriate qualification under applicable blue
sky or other state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act) as may be so requested and as would
permit or facilitate the sale and distribution of such Registrable Securities as
are specified in such request, together with all or such portion of the
Registrable Securities of any Holder or Holders joining in such request as are
specified in a written request received by the Company within ten (10) business
days after written notice from the Company is given under Section 2(a)(i)(1)
above; provided
that the Company shall not be obligated to effect, or take any action to effect,
any such registration pursuant to this Section 2(a):
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(A)
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in
any particular jurisdiction in which the Company would be required to
execute a general consent to service of process in effecting such
registration, qualification or compliance, unless the Company is already
subject to service in such jurisdiction and except as may be required by
the Securities Act or applicable rules or regulations
thereunder;
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(B)
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after
the Company has effected three (3) such registrations and all such
registrations have been declared or ordered effective and the sales of
Registrable Securities pursuant to all such registrations shall have
closed; or
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(C)
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if
the Registrable Securities requested by all Holders to be registered
pursuant to such request do not have an anticipated aggregate public
offering price (before any underwriting discounts and commissions) of at
least $5,000,000.
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The
registration statement filed pursuant to a request under this Section 2(a)(i)
may, subject to the provisions of Section 2(a)(ii) below, include other
securities of the Company which are held by Persons who, by virtue of agreements
with the Company, are entitled to include their securities in any such
registration (but specifically excluding the Holders) (“Other
Stockholders”). In the event any Holder(s) requests a
registration pursuant to this Section 2(a) in connection with a distribution of
Registrable Securities to its partners, members or stockholders, the
registration shall provide for the resale by such partners, members or
stockholders, if requested by such Holder(s).
The
registration rights set forth in this Section 2 may be assigned, in whole or in
part, to any Permitted Transferee.
(ii) Underwriting. If
the Majority Holders intend to distribute the Registrable Securities covered by
their request by means of an underwriting, they shall so advise the Company as a
part of their request made pursuant to Section 2(a). The Holders
shall offer to include the securities of such Other Stockholders in the
underwriting and may condition such offer on their acceptance of the further
applicable provisions of this Section 2. The Holders whose shares are
to be included in such registration and the Company shall (together with all
Other Stockholders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with the
representative of the underwriter or underwriters selected for such underwriting
by the Majority Holders and reasonably acceptable to the
Company. Notwithstanding any other provision of this Section 2(a), if
the representative advises the Holders in writing that marketing factors require
a limitation on the number of shares to be underwritten, the securities of the
Company held by Other Stockholders shall be excluded from such registration to
the extent so required by such limitation. If, after the exclusion of
such shares held by Other Stockholders, further reductions are still required,
the number of shares included in the registration by each Holder shall be
reduced on a pro rata basis (based on the number of shares held by such Holder),
by such minimum number of shares as is necessary to comply with such
request. No Registrable Securities or any other securities excluded
from the underwriting by reason of the underwriter’s marketing limitation shall
be included in such registration. If any of the Holders or any
officer, director or Other Stockholder who has requested inclusion in such
registration as provided above disapproves of the terms of the underwriting,
such Person may elect to withdraw therefrom by written notice to the Company,
the underwriter and the Majority Holders who originally requested such
registration. The securities so withdrawn shall also be withdrawn
from registration. If the underwriter has not limited the number of
Registrable Securities or other securities to be underwritten, the Company and
officers and directors of the Company may include its or their securities for
its or their own account in such registration if the representative so agrees
and if the number of Registrable Securities and other securities which would
otherwise have been included in such registration and underwriting will not
thereby be limited.
(b) Company
Registration.
(i) Each time
the Company determines to register any of its equity securities either for its
own account or for the account of Other Stockholders, other than a registration
relating solely to employee benefit plans, or a registration relating solely to
a Rule 145 transaction under the Securities Act, or a registration on any
registration form which does not permit secondary sales or does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of Registrable Securities, the Company
will:
(1) promptly
give to each of the Holders a written notice thereof (which shall include a list
of the jurisdictions in which the Company intends to attempt to qualify such
securities under the applicable blue sky or other state securities laws);
and
(2) include
in such registration (and any related qualification under blue sky laws or other
compliance), and in any underwriting involved therein, all the Registrable
Securities specified in a written request or requests, made by the Holders
within fifteen (15) days after receipt of the written notice from the Company
described in clause (i) above, except as set forth in Section 2(b)(ii)
below. Such written request may specify all or a part of the Holders’
Registrable Securities. In the event any Holder requests inclusion in
a registration pursuant to this Section 2(b) in connection with a distribution
of Registrable Securities to its partners, members or stockholders, the
registration shall provide for the resale by such partners, members or
stockholders, if requested by such Holder.
(ii) Underwriting. If
the registration for which the Company gives notice is a registered public
offering involving an underwriting, the Company shall so advise each of the
Holders as a part of the written notice given pursuant to Section
2(b)(i)(1). In such event, the right of each of the Holders to
registration pursuant to this Section 2(b) shall be conditioned upon such
Holders’ participation in such underwriting and the inclusion of such Holders’
Registrable Securities in the underwriting to the extent provided
herein. The Holders whose Registrable Securities are to be included
in such registration shall (together with the Company and the Other Stockholders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the representative of the
underwriter or underwriters selected for underwriting by the
Company. Notwithstanding any other provision of this Section 2(b), if
the representative determines that marketing factors require a limitation on the
number of shares to be underwritten, the representative may (subject to the
allocation priority set forth below) limit the number of Registrable Securities
to be included in the registration and underwriting to the extent necessary to
permit such underwriting to occur, but in no event shall the number of
Registrable Securities to be included in such underwriting be less than
twenty-five percent (25%) of the shares included therein (based on the number of
shares). The Company shall so advise all holders of securities
requesting registration, and the number of shares of securities that are
entitled to be included in the registration and underwriting shall be allocated
in the following manner: The securities of the Company held by
officers, directors and Other Stockholders of the Company shall be excluded from
such registration to the extent so required by such limitation, and if, after
the exclusion of such shares held by officers, directors and Other Stockholders,
further reductions are still required, the number of shares included in the
registration by each Holder shall be reduced on a pro rata basis (based on the
number of shares held by such Holder), by such minimum number of shares as is
necessary to comply with such request. If any of the Holders or any
officer, director or Other Stockholder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to the
Company and the underwriter. Any Registrable Securities or other
securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration.
(c) Form
S-3. The Majority Holders shall have the right to request
three (3) registrations on Form S-3 (such requests shall be in writing and shall
state the number of shares of Registrable Securities to be disposed of and the
intended method of disposition of shares by such holders), provided that the
Company shall not be obligated to effect, or take any action to effect, any such
registration pursuant to this Section 2(c):
(i) unless
the Holder or Holders requesting registration propose to dispose of shares of
Registrable Securities having an aggregate price to the public (before deduction
of Selling Expenses) of more than $2,500,000;
(ii) within
180 days of the effective date of the most recent registration pursuant to
Section 2(a) or (b) in which securities held by the Holders could have been
included for sale or distribution;
(iii) in any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance, unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act or
applicable rules or regulations thereunder.
The
Company shall give written notice to all Holders of the receipt of a request for
registration pursuant to this Section 2(c) and shall provide a reasonable
opportunity for other Holders to participate in the registration, provided that
if the registration is for an underwritten offering, the terms of Section
2(a)(ii) shall apply to all participants in such offering. Subject to
the foregoing, the Company will use its best efforts to effect promptly the
registration of all shares of Registrable Securities on Form S-3 to the extent
requested by the Holder or Holders thereof for purposes of
disposition. In the event any Holder requests a registration pursuant
to this Section 2(c) in connection with a distribution of Registrable Securities
to its partners, members or stockholders, the registration shall provide for the
resale by such partners, members or stockholders, if requested by such
Holder.
(d) Expenses of
Registration. All Registration Expenses incurred in connection
with any registration, qualification or compliance pursuant to this Section 2
shall be borne by the Company, and all Selling Expenses shall be borne by the
Holders of the securities so registered.
(e) Registration
Procedures. In the case of each registration effected by the
Company pursuant to this Section 2, the Company will keep the Holders, as
applicable, advised in writing as to the initiation of each registration and as
to the completion thereof. At its expense, the Company
will:
(i) prepare
and, in any event within 45 days (30 days in the case of a Form S-3
registration) after a request for registration is given to the Company pursuant
to Section 2, file with the Commission a registration statement on an
appropriate form with respect to such Registrable Securities and use its
reasonable efforts to cause such registration statement to become effective;
provided, however, that the
Company may discontinue any registration of Securities which it has initiated
for its own account at any time prior to the effective date of the registration
statement relating thereto (and, in such event, the Company shall pay the
Registration Expenses incurred in connection therewith); provided, further, that before
filing a registration statement or prospectus, or any amendments or supplements
thereto, the Company will furnish to counsel for the sellers of Registrable
Securities covered by such registration statement copies of all documents
proposed to be filed, which documents will be subject to the review of such
counsel;
(ii) keep such
registration effective for a period not in excess of 270 days or until the
Holders (or in the case of a distribution to the partners, members or
stockholders of such Holder, such partners, members or stockholders), as
applicable, have completed the distribution described in the registration
statement relating thereto, whichever first occurs; provided, however, that
(A) such period shall be extended for a period of time equal to the period
during which the Holders or partners, members or stockholders, as applicable,
refrain from selling any securities included in such registration in accordance
with provisions in Section 2(i) hereof; and (B) in the case of any
registration of Registrable Securities on Form S-3 which are intended to be
offered on a continuous or delayed basis, such period shall be extended until
all such Registrable Securities are sold, provided that Rule 415, or any
successor rule under the Securities Act, permits an offering on a continuous or
delayed basis, and provided further that applicable rules under the Securities
Act governing the obligation to file a post-effective amendment permit, in lieu
of filing a post-effective amendment which (x) includes any prospectus
required by Section 10(a) of the Securities Act or (y) reflects facts or
events representing a material or fundamental change in the information set
forth in the registration statement, the incorporation by reference of
information required to be included in (x) and (y) above to be contained in
periodic reports filed pursuant to Section 12 or 15(d) of the Exchange Act in
the registration statement;
(iii) furnish
such number of copies of such registration statement and of each amendment and
supplement thereto (in each case including all exhibits filed therewith,
including any documents incorporated by reference), such number of prospectuses
(including each preliminary prospectus and summary prospectus), in conformity
with the requirements of the Securities Act, and other documents incident
thereto as each of the Holders, as applicable, from time to time may reasonably
request;
(iv) notify
each Holder of Registrable Securities covered by such registration at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing, and at the request of any such Holder,
prepare and furnish to such Holder a reasonable number of copies of an amended
or supplemental prospectus as may be necessary so that, as thereafter delivered
to the purchasers of such Registrable Securities, such prospectus shall not
include 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 in the light of the circumstances then existing;
(v) furnish,
on the date that such Registrable Securities are delivered to the underwriters
for sale, if such securities are being sold through underwriters or, if such
securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (1) an
opinion, dated as of such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering and reasonably satisfactory to a
majority in interest of the Holders participating in such registration,
addressed to the underwriters, if any, and to the Holders participating in such
registration and (2) a letter, dated as of such date, from the independent
certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering and reasonably satisfactory to a majority in
interest of the Holders participating in such registration, addressed to the
underwriters, if any, and if permitted by applicable accounting standards, to
the Holders participating in such registration;
(vi) otherwise
use its best efforts to comply with all applicable rules and regulations of the
Commission, and make available to its Security holders, as soon as reasonably
practicable (but not more than 18 months) after the effective date of the
registration statement, an earnings statement which shall satisfy the provisions
of Section 11(a) of the Securities Act;
(vii) make
available for inspection by any seller of such Registrable Securities covered by
such registration statement, by any underwriter participating in any disposition
to be effected pursuant to such registration statement and by any attorney,
accountant or other agent retained by any such seller or any such underwriter,
all pertinent financial and other records, pertinent corporate documents and
properties of the Company, and cause all of the Company’s officers, directors
and employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement;
(viii) notify
counsel for the holders of Registrable Securities included in such registration
statement and the managing underwriter or agent, immediately, and confirm the
notice in writing (i) when the registration statement, or any post-effective
amendment to the registration statement, shall have become effective, or any
supplement to the prospectus or any amendment prospectus shall have been filed,
(ii) of the receipt of any comments from the Commission, (iii) of any request of
the Commission to amend the registration statement or amend or supplement the
prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the registration
statement or of any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the registration
statement for offering or sale in any jurisdiction, or of the institution or
threatening of any proceedings for any of such purposes;
(ix) provide
each Holder of Registrable Securities included in such registration statement
(or their representatives) reasonable opportunity to comment on the registration
statement, any post-effective amendments to the registration statement, any
supplement to the prospectus or any amendment to the prospectus;
(x) make
every reasonable effort to prevent the issuance of any stop order suspending the
effectiveness of the registration statement or of any order preventing or
suspending the use of any preliminary prospectus and, if any such order is
issued, to obtain the withdrawal of any such order at the earliest possible
moment;
(xi) if
requested by the managing underwriter or agent or any Holder of Registrable
Securities covered by the registration statement, promptly incorporate in a
prospectus supplement or post-effective amendment such information as the
managing underwriter or agent or such Holder reasonably requests to be included
therein, including, with respect to the number of Registrable Securities being
sold by such Holder to such underwriter or agent, the purchase price being paid
therefor by such underwriter or agent and with respect to any other terms of the
underwritten offering of the Registrable Securities to be sold in such offering,
and make all required filings of such prospectus supplement or post-effective
amendment as soon as practicable after being notified of the matters
incorporated in such prospectus supplement or post-effective
amendment;
(xii) cooperate
with the holders of Registrable Securities covered by the registration statement
and the managing underwriter or agent, if any, to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legends)
representing Securities to be sold under the registration statement, and enable
such Securities to be in such denominations and registered in such names as the
managing underwriter or agent, if any, or the Holders may request;
(xiii) use its
best efforts to make available the executive officers of the Company to
participate with the holders of Registrable Securities and any underwriters in
any “road shows” that may be reasonably requested by the holders in connection
with distribution of Registrable Securities;
(xiv) use its
best efforts to cause the Registrable Securities to be registered with or
approved by such governmental agencies or authorities as may be necessary to
enable the Holders to consummate the disposition of such Registrable
Securities;
(xv) provide a
transfer agent and registrar (which may be the same entity and which may be the
Company) for such Registrable Securities;
(xvi) obtain a
“cold comfort” letter or letters from the Company’s independent public
accountants in customary form and covering matters of the type customarily
covered by “cold comfort” letters as the Holders shall reasonably
request;
(xvii) list such
Registrable Securities on any national securities exchange on which any shares
of Common Stock are listed or, if the Common Stock is not then listed on a
national securities exchange, use its best efforts to qualify such Registrable
Securities for listing on such other national securities exchange as determined
by the Company and approved by the Majority Holders; and
(xviii) subject
to all the other provisions of this Agreement, use its best efforts to take all
other customary or necessary steps to effect the registration of such
Registrable Securities contemplated hereby.
(f) Indemnification.
(i) The
Company will indemnify each of the Holders and their respective directors and
officers or general and limited partners and each Person controlling any of the
foregoing, with respect to each registration which has been effected pursuant to
this Section 2, and each underwriter, if any, and each Person who controls any
underwriter (collectively, the “Company Indemnified
Persons”), against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus
(including any preliminary prospectus and any issuer free writing prospectus),
offering circular or other document (including any related registration
statement, notification or the like) incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by the Company of the
Securities Act or the Exchange Act or any rule or regulation thereunder
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance,
and will reimburse each Company Indemnified Person for any legal and any other
expenses reasonably incurred in connection with investigating and defending any
such claim, loss, damage, liability or action, provided that the Company will
not be liable to any Company Indemnified Person to the extent that any such
claim, loss, damage, liability or expense arises out of or is based on any
untrue statement or omission based upon written information furnished to the
Company by such Company Indemnified Person.
(ii) Each of
the Holders will, if Registrable Securities held by it are included in the
securities as to which such registration, qualification or compliance is being
effected, indemnify the Company, each of its directors and officers and each
underwriter, if any, of the Company’s securities covered by such a registration
statement, each Person who controls the Company or such underwriter, each other
Holder and each Other Stockholder and each of their officers, directors, and
partners, and each Person controlling such Other Stockholder (collectively, the
“Holder Indemnified
Persons”), against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration
statement, prospectus (including any preliminary prospectus and any issuer free
writing prospectus), offering circular or other document made by such Holder, or
any omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements by such Holder therein not
misleading, and will reimburse the Company and such other Holders, Other
Stockholders, directors, officers, partners, Persons, underwriters or control
Persons for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to the Company by such Holder and stated to be specifically for use therein;
provided, however, that the obligations of each of the Holders hereunder shall
be limited to an amount equal to the net proceeds to such Holder of securities
sold in such registration.
(iii) Each
Company Indemnified Person or Holder Indemnified Person, as the case may be
(each an “Indemnified
Person”), shall give notice to the party required to provide
indemnification (the “Indemnifying Person”)
promptly after such Indemnified Person has actual knowledge of any claim as to
which indemnity may be sought, and shall permit the Indemnifying Person to
assume the defense of any such claim or any litigation resulting therefrom;
provided that counsel for the Indemnifying Person, who shall conduct the defense
of such claim or any litigation resulting therefrom, shall be approved by the
Indemnified Person (whose approval shall not unreasonably be withheld) and the
Indemnified Person may participate in such defense at such party’s expense
(unless the Indemnified Person shall have reasonably concluded that there may be
a conflict of interest between the Indemnifying Person and the Indemnified
Person in such action, in which case the fees and expenses of counsel shall be
at the expense of the Indemnifying Person), and provided further that the
failure of any Indemnified Person to give notice as provided herein shall not
relieve the Indemnifying Person of its obligations under this Section 2 except
to the extent the Indemnifying Person is materially prejudiced
thereby. No Indemnifying Person, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Person, consent
to entry of any judgment or enter into any settlement unless such judgment or
settlement includes, as an unconditional term thereof, the giving by the
claimant or plaintiff to such Indemnified Person of a release from all liability
in respect to such claim or litigation. Each Indemnified Person shall
furnish such information regarding itself or the claim in question as an
Indemnifying Person may reasonably request in writing and as shall be reasonably
required in connection with the defense of such claim and litigation resulting
therefrom.
(iv) If the
indemnification provided for in this Section 2(f) is held by a court of
competent jurisdiction to be unavailable to an Indemnified Person with respect
to any loss, liability, claim, damage or expense referred to herein, then the
Indemnifying Person, in lieu of indemnifying such Indemnified Person hereunder,
shall contribute to the amount paid or payable by such Indemnified Person as a
result of such loss, liability, claim, damage or expense in such proportion as
is appropriate to reflect the relative fault of the Indemnifying Person, on the
one hand, and of the Indemnified Person, on the other, in connection with the
statements or omissions which resulted in such loss, liability, claim, damage or
expense, as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Person and of the Indemnified Person shall be
determined by reference to, among other things, whether the untrue (or alleged
untrue) statement of a material fact or the omission (or alleged omission) to
state a material fact relates to information supplied by the Indemnifying Person
or by the Indemnified Person and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission;
provided, however, that the obligations of each of the Holders hereunder shall
be limited to an amount equal to the net proceeds to such Holder of securities
sold in such registration.
(v) Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into in connection
with any underwritten public offering contemplated by this Agreement are in
conflict with the foregoing provisions, the provisions in such underwriting
agreement shall be controlling.
(g) Information by the
Holders.
(i) Each of
the Holders holding securities included in any registration shall furnish to the
Company such information regarding such Holder and the distribution proposed by
such Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Section 2.
(ii) In the
event that, either immediately prior to or subsequent to the effectiveness of
any registration statement, any Holder shall distribute Registrable Securities
to its partners, members or stockholders, such Holder shall so advise the
Company and provide such information as shall be necessary to permit an
amendment to such registration statement to provide information with respect to
such partners, members or stockholders, as selling security
holders. Promptly following receipt of such information, the Company
shall file an appropriate amendment to such registration statement reflecting
the information so provided.
(h) Rule 144
Reporting.
With a
view to making available the benefits of certain rules and regulations of the
Commission which may permit the sale of restricted securities to the public
without registration, except as the Majority Holders may otherwise agree in
writing, the Company agrees to:
(i) make and
keep public information available as those terms are understood and defined in
Rule 144 under the Securities Act (“Rule 144”), at all
times;
(ii) use its
best efforts to file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
(iii) so long
as the Holder owns any Registrable Securities, furnish to the Holder upon
request, a written statement by the Company as to its compliance with the
reporting requirements of Rule 144 and of the Securities Act and the Exchange
Act, a copy of the most recent annual or quarterly report of the Company (if
such reports are not publicly available), and such other reports and documents
so filed as the Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing the Holder to sell any such securities
without registration.
(i) “Market Stand-off”
Agreement. Each of the Holders agrees, if requested by the
Company and an underwriter of equity securities of the Company, not to sell or
otherwise transfer or dispose of any Registrable Securities held by such Holder
during the 120-day period following the effective date of a registration
statement of the Company filed under the Securities Act, provided that all
officers and directors of the Company enter into similar
agreements. If requested by the underwriters, the Holders shall
execute a separate agreement to the foregoing effect. The Company may
impose stop-transfer instructions with respect to the shares (or securities)
subject to the foregoing restriction until the end of said 120-day
period. The provisions of this Section 2(i) shall be binding upon any
transferee who acquires Registrable Securities.
(j) Termination. The
registration rights set forth in Sections 2(a) and 2(c) shall not be available
to any Holder if (i) in the written opinion of counsel to the Company, all of
the Registrable Securities then owned by such Holder could be sold in any 90-day
period pursuant to Rule 144 or (ii) all of the Registrable Securities held by
such Holder have been sold in a registration pursuant to the Securities Act or
pursuant to Rule 144.
(k) Additional
Rights. The Company shall not grant to any other holders of
securities any rights to request the Company to effect the registration under
the Securities Act of any such securities on terms inconsistent with or more
favorable to such holder than the terms set forth in this Section
2.
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SECTION
3.
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MISCELLANEOUS
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(a) Notices. All
notices, demands or other communications to be given or delivered under or by
reason of the provisions of this Agreement shall be in writing and shall be
deemed to have been given (i) when delivered personally to the recipient, (ii)
when sent to the recipient by telecopy (receipt electronically confirmed by
sender’s telecopy machine) if during normal business hours of the recipient,
otherwise on the next business day, (iii) one (1) business day after the date
when sent to the recipient by reputable express courier service (charges
prepaid), or (iv) seven (7) business days after the date when mailed to the
recipient by certified or registered mail, return receipt requested and postage
prepaid. Such notices, demands and other communications shall be sent
to the parties at the addresses indicated below:
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If
to the Company:
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Xxxxxx
Xxxx, XX 00000
Attention: Chief
Executive Officer
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With
a copy to:
(which
shall not constitute notice)
|
00000
Xxxxxxx Xxxxxxxxx
Xxxxxx
Xxxx, XX 00000
Attention: Chief
Financial Officer
00000
Xxxxxxx Xxxxxxxxx
Xxxxxx
Xxxx, XX 00000
Attention: General
Counsel
|
|
If
to HCC:
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Hallmark
Cards, Incorporated
0000
XxXxx Xxxxxxxxxx
Xxxxxx
Xxxx, XX 00000
Attention: Chief
Financial Officer
MD
342
|
|
With
a copy to:
(which
shall not constitute notice)
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Xxxxxxx
Xxxx & Xxxxxxxxx LLP
000
Xxxxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx
X. Xxxxxxx, Esq.
Facsimile
No.: (000) 000-0000
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If
to any Joinder Party:
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To
the address or facsimile number listed on such Joinder Party’s Joinder or
to such other address or facsimile number as may be furnished to the
Company in writing by such Joinder
Party
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or to
such other address as either party hereto may, from time to time, designate in
writing delivered pursuant to the terms of this Section.
(b) Amendments. The
terms, provisions and conditions of this Agreement may not be changed, modified
or amended in any manner except by an instrument in writing duly executed by the
Company and the Majority Holders.
(c) No
Waiver. No failure on the part of the parties hereto to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy.
(d) Assignment and Parties in
Interest. Neither this Agreement nor any of the rights,
duties, or obligations of any party hereunder may be assigned or delegated (by
operation of law or otherwise) by any of the parties hereto except with the
prior written consent of the other parties hereto; provided that any Holder may
assign its rights hereunder to an Affiliate of such Holder to which it transfers
Registrable Securities. This Agreement shall not confer any rights or
remedies upon any person or entity other than the parties hereto and their
respective permitted successors and assigns.
(e) Expenses. Except
as expressly set forth in this Agreement, each party to this Agreement shall
bear all legal, accounting, investment banking and other expenses incurred by it
or on its behalf in connection with this Agreement.
(f) Entire Agreement; No
inconsistent Agreements. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof,
supersedes and is in full substitution for any and all prior agreements and
understandings among them relating to such subject matter, and no party shall be
liable or bound to the other party hereto in any manner with respect to such
subject matter by any warranties, representations, indemnities, covenants, or
agreements except as specifically set forth herein.
(g) Descriptive
Headings. The descriptive headings of the several sections of
this Agreement are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
(h) Counterparts. For
the convenience of the parties, any number of counterparts of this Agreement may
be executed by any one or more parties hereto, and each such executed
counterpart shall be, and shall be deemed to be, an original, but all of which
shall constitute, and shall be deemed to constitute, in the aggregate but one
and the same instrument. Facsimile signatures will be treated as
originals.
(i) Additional
Parties.
(i) Each
Other HEIC Stockholder shall have the right, by executing a Joinder and
delivering such executed Joinder to the Company with a copy to HCC not later
than sixty (60) days after the date hereof, to become a Joinder
Party.
(ii) The
parties (including any and all such Joinder Parties) agree and understand that
each such Joinder Party shall be a party to this Agreement in all respects,
including, without limitation, being subject to all rights and obligations of
Holders under this Agreement.
(j) Governing Law;
Jurisdiction.
(i) This
Agreement and the legal relations between the parties hereto shall be governed
by and construed in accordance with the laws of the State of Delaware,
applicable to contracts made and performed therein.
(ii) Any and
all claims arising out of, relating to or in connection with this Agreement or
the subject matter hereof, shall be brought exclusively in the Court of Chancery
of the State of Delaware or, if under applicable law exclusive jurisdiction over
the matter is vested in the federal courts, the United States District Court for
the District of Delaware (the “Designated Court”). Each of the
parties hereto hereby irrevocably submits with regard to any such action or
proceeding for itself and in respect of its property, generally and
unconditionally, to the personal jurisdiction of the Designated Court and agrees
that it will not bring any action whether in tort, contract or otherwise arising
out of, relating to or in connection with this Agreement or the subject matter
hereof in any court other than the Designated Court. Each of the
parties hereto hereby irrevocably waives, and agrees not to assert as a defense,
counterclaim or otherwise, in any action or proceeding with respect to this
Agreement, (a) any claim that it is not personally subject to the jurisdiction
of the Designated Court, (b) any claim that it or its property is exempt or
immune from jurisdiction of the Designated Court or from any legal process
commenced in such the Designated Court (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise) and (c) to the fullest extent permitted
by applicable law, any claim that (I) the suit, action or proceeding in such
Designated Court is brought in an inconvenient forum, (II) the venue of such
suit, action or proceeding is improper or (III) this Agreement, or the subject
matter hereof, may not be enforced in or by such Designated Court.
(iii) 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. 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 3(j).
(k) Severability. In
the event that any one or more of the provisions contained in this Agreement or
in any other instrument referred to herein, shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, then to the maximum extent
permitted by law, such invalidity, illegality or unenforceability shall not
affect any other provision of this Agreement or any other such
instrument. Furthermore, in lieu of any such invalid or unenforceable
term or provision, the parties hereto intend that there shall be added as a part
of this Agreement a provision as similar in terms to such invalid or
unenforceable provision as may be possible and be valid and
enforceable.
(l) Specific
Performance. Without limiting or waiving in any respect any
rights or remedies of the Holders under this Agreement now or hereinafter
existing at law or in equity or by statute, each of the parties hereto shall be
entitled to seek specific performance of the obligations to be performed by the
other in accordance with the provisions of this Agreement.
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first set forth above.
CROWN
MEDIA HOLDINGS, INC.
By:_________________________
Name:
Title:
H C CROWN
CORP.
By:
Name:
Title:
Schedule
A
JOINDER
Joinder
to the Registration Rights Agreement, dated as of [_____ __], 2010, by and among
HCC, any Other HEIC Stockholder that executes a Joinder in the form hereof and
the Company (the “Agreement”). Capitalized
terms used in this Joinder but not otherwise defined herein have the meanings
ascribed thereto in the Agreement.
1. The
undersigned agrees to be bound by the terms of the Agreement, effective as of
the date hereof, as if the undersigned were a signatory to the
Agreement.
2. All
notices to be provided to the undersigned as a Holder under the Agreement shall
be sent to the undersigned at the address and facsimile number listed on the
signature page hereto.
3. This
Joinder shall be governed by and construed in accordance with the laws of the
State of Delaware applicable to contracts made and to be performed entirely
within such State.
4. This
Joinder shall inure to the benefit of and be binding upon the successors and
permitted assigns of the undersigned.
[The
Remainder of This Page is Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned has
executed this Joinder as of the date first above written.
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HOLDER: ___________________________
|
|
|
By: _________________________________
|
|
|
Name:
|
|
|
Title:
|
ADDRESS
& FACSIMILE NUMBER:
____________________________
____________________________
____________________________
____________________________
____________________________
