Consent and Waiver to Second Amended and Restated Stockholders Agreement
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Consent and Waiver (this "Consent"), dated as of March 11, 2003, in
connection with the Second Amended and Restated Stockholders Agreement, dated
as of August 30, 2001 (the "Stockholders Agreement"), by and among Hallmark
Entertainment Holdings, Inc. ("HEH") (as transferee of the shares of Class A
Stock and Class B Stock previously held by Hallmark Entertainment, Inc.),
Liberty Media Corporation, Liberty Crown, Inc. (as transferee of the shares of
Class A Stock previously held by Liberty Media Corporation), VISN Management
Corp., XX Xxxxxx Partners (BHCA), L.P., DIRECTV Enterprises, Inc.
(collectively, the "Stockholders") and Crown Media Holdings, Inc. (the
"Company"). (Capitalized terms used but not defined herein having the meanings
assigned to them in the Stockholders Agreement.)
WHEREAS, certain Stockholders desire to contribute to Hallmark
Entertainment Investments Co. ("HEIC") (the "Contribution") shares of Class A
Stock or shares of Class B Stock, in exchange for shares of Class A common
stock of HEIC, par value $.01 per share ("HEIC Class A Stock") and shares of
Class B common stock of HEIC, par value $.01 per share ("HEIC Class B Stock")
respectively, pursuant to a Contribution Agreement by and among HEIC and such
Stockholders (the "Contribution Agreement");
WHEREAS, in connection with the Contribution, pursuant to an
Acknowledgement and Agreement ("Acknowledgement and Agreement"), HEIC will
become a signatory to the Stockholders Agreement as transferee of HEH and
shall receive the same rights set forth therein and be bound by the same
obligations set forth therein as HEH;
WHEREAS, Hallmark Cards, Incorporated and the Company desire to enter
into a Tax Sharing Agreement, a copy of which has been provided to the
Stockholders (the "Tax Sharing Agreement");
WHEREAS, pursuant to Section 6.2 of the Stockholders Agreement, the
Stockholders Agreement may be amended, and waivers or consents to departures
from the provisions of the Stockholders Agreement may be given, only by a
written instrument duly executed by the Company and each Stockholder, or, in
the case of a waiver or consent, by each party against whom the waiver or
consent, as the case may be, is to be effective; and
WHEREAS, in connection with the Contribution, pursuant to, and in
accordance with Section 6.2 of the Stockholders Agreement, the Stockholders
desire to amend the Stockholders Agreement and to waive any conditions,
remedies and rights, if any, under the Stockholders Agreement that would arise
or that are exercisable pursuant to the entry into (i) the Tax Sharing
Agreement or (ii) the Contribution, and any transactions in connection
therewith.
NOW, THEREFORE, the undersigned agrees as follows:
1. Consent. The undersigned hereby consents to the amendment of the
Stockholders Agreement as follows:
(a) Substitution of HEIC. All references to Hallmark
Entertainment, Inc. (subsequently succeeded by HEH) shall be changed to HEIC
(as successor in interest to HEH) at such time as HEIC executes the
Acknowledgement and Agreement.
(b) Composition of the Board of Directors of the Company.
Section 2.1 of the Stockholders Agreement is deleted in its entirety and
replaced with the following:
Section 2.1. Composition of the Board of Directors of the
Company. Subject to Section 2.5, each of the Stockholders
hereby agrees to take, at any time and from time to time,
all action necessary such that the Board of Directors of the
Company (the "Board") shall consist of not less than fifteen
directors, who shall be nominated as follows: (a) VISN shall
have the right to nominate one member of the Board; (b) at
least two members of the Board shall be Independent
Directors nominated by the Board; and (c) HEIC shall have
the right to nominate all other members of the Board;
provided that one such nominee shall be the Chief Executive
Officer of the Company. Each Stockholder entitled to vote
for the election of directors to the Board shall vote its
shares of Company Voting Stock or execute written consents,
as the case may be, and shall take all other action
necessary in order to elect the nominees and to ensure
compliance with this Section 2.1. The Company shall take
such action as may be required under applicable law to and
shall otherwise use reasonable efforts to cause the
composition of the Board to be as set forth in this Section
2.1.
(c) Limitation on Transaction with Affiliates. In the last
paragraph of Section 2.6 of the Stockholders Agreement, the "and" between
"DIRECTV;" and "(viii)" shall be deleted and the phrase "and, in each case,
any amendments or modifications thereto." of such last paragraph shall be
deleted and replaced with the following:
; (ix) the transactions pursuant to the Contribution
Agreement and (x) the transactions pursuant to the Tax
Sharing Agreement and, in each case of clauses (i) through
(ix), any amendments or modifications thereto.
2. Waiver. The undersigned hereby waives all conditions, remedies and
rights, if any, under the Stockholders Agreement that would arise or that are
exercisable pursuant to the entry into the Tax Sharing Agreement or the
Contribution Agreement, and any transactions in connection therewith,
including Section 2.6 and Article III.
3. Governing Law. This Consent 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.
4. Headings. The headings in this Consent are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
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IN WITNESS WHEREOF, the undersigned has duly executed this Consent,
or caused this Consent to be duly executed, as of the date first above
written.
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