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STOCKHOLDERS AGREEMENT
by and among
HALLMARK ENTERTAINMENT INVESTMENTS CO.
HALLMARK ENTERTAINMENT HOLDINGS, INC.,
and
THE OTHER SIGNATORIES HERETO
dated as of
March 11, 2003
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TABLE OF CONTENTS
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Page
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ARTICLE I
DEFINITIONS
Section 1.1. Definitions.........................................................................................1
ARTICLE II
CORPORATE GOVERNANCE
Section 2.1. Composition of the Board of Directors of the Company................................................4
Section 2.2. Removal.............................................................................................4
Section 2.3. Vacancies...........................................................................................4
Section 2.4. Termination of Rights and Obligations...............................................................4
Section 2.5. Limitation on Transactions with Affiliates..........................................................5
Section 2.6. Extraordinary Transactions..........................................................................5
Section 2.7. Voting of Crown Class A Stock and Crown Class B Stock...............................................5
ARTICLE III
TRANSFERABILITY AND TAG-ALONG RIGHTS
Section 3.1. Restrictions on Transferability.....................................................................6
Section 3.2. Restrictive Legend..................................................................................6
Section 3.3. Notice of Proposed Transfers; Securities Law Compliance.............................................6
Section 3.4. Tag-Along Rights....................................................................................6
ARTICLE IV
ADDITIONAL RIGHTS
Section 4.1. Crown Board of Directors............................................................................8
Section 4.2. Limitation of Crown's Transactions with Affiliates..................................................8
Section 4.3. Registration Rights.................................................................................9
ARTICLE V
GENERAL
Section 5.1. Entire Agreement....................................................................................9
Section 5.2. Amendment and Waiver................................................................................9
Section 5.3. Notices............................................................................................10
Section 5.4. Assignment; Benefit................................................................................10
Section 5.5. Absence of Presumption.............................................................................10
Section 5.6. Counterparts.......................................................................................10
Section 5.7. Headings...........................................................................................10
Section 5.8. Governing Law; Jurisdiction and Forum..............................................................10
Section 5.9. Specific Enforcement...............................................................................11
Section 5.10. Severability.......................................................................................11
Section 5.11. Covered Shares.....................................................................................11
Appendix I List of Stockholders
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STOCKHOLDERS AGREEMENT
This
STOCKHOLDERS AGREEMENT (this "Agreement"), dated as of March 11,
2003, by and among Hallmark Entertainment Investments Co., a
Delaware
corporation (the "Company"), Hallmark Entertainment Holdings, Inc., a
Delaware
corporation ("HEH"), Liberty Crown, Inc., a
Delaware corporation ("Liberty"),
XX Xxxxxx Partners (BHCA), L.P., a
Delaware limited partnership, ("JPM") and
VISN Management Corp., a
Delaware corporation ("VISN") (each of Liberty, JPM
and VISN shall be a "Minority Stockholder" and HEH and the Minority
Stockholders will be the "Initial Stockholders").
WITNESSETH:
WHEREAS, the Company and the Initial Stockholders are parties to the
Contribution Agreement, dated as of March 11, 2003 (as in effect the date
hereof the "Contribution Agreement"), pursuant to which the Stockholders
acquired shares of Class A common stock, par value $.01 per share ("Class A
Stock"), of the Company or shares of Class B common stock, par value $.01 per
share ("Class B Stock"), of the Company in exchange for the contribution to
the Company of shares of Class A common stock, par value $.01 per share
("Crown Class A Stock"), of Crown Media Holdings, Inc., a
Delaware corporation
("Crown"), or shares of Class B common stock, par value $.01 per share ("Crown
Class B Stock"), of Crown, respectively; and
WHEREAS, pursuant to the Contribution Agreement, the Initial
Stockholders have acquired and own the number of shares of Class A Stock and
Class B Stock set forth opposite their respective names on Appendix I attached
hereto and hereby made a part hereof; and
WHEREAS, the parties hereto have agreed to enter into this Agreement
pursuant to the Contribution Agreement and the parties hereto desire to
provide for certain rights and obligations in respect of such shares of Class
A Stock and Class B Stock;
NOW THEREFORE, in consideration of the premises, covenants and
agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, and intending to
be legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. (a) As used in this Agreement the following
defined terms shall have the following meanings:
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), as used with respect to any Person,
shall mean (a) the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise or (b)
beneficial ownership of 10% or more of the voting securities of such Person.
For purposes of this Agreement, Crown and its Subsidiaries shall be deemed not
to be Affiliates of any party to this Agreement.
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"Affiliate Transaction" has the meaning set forth in Section 2.5.
"Agreement" has the meaning set forth in the Preamble.
"Board" has the meaning set forth in Section 2.1.
"Class A Stock" has the meaning set forth in the Recitals.
"Class B Stock" has the meaning set forth in the Recitals.
"Commission" means the United States Securities and Exchange
Commission.
"Company" has the meaning set forth in the Preamble.
"Company Common Stock" means Class A Stock and Class B Stock.
"Company Voting Stock" means Class A Stock and Class B Stock and all
other securities of the Company entitling the holder thereof to vote for the
election of directors to the Board.
"Contribution Agreement" has the meaning set forth in the Recitals.
"Crown" has the meaning set forth in the Recitals.
"Crown Affiliate Transaction" has the meaning set forth in Section
4.2.
"Crown Class A Stock" has the meaning set forth in the Recitals.
"Crown Class B Stock" has the meaning set forth in the Recitals.
"Crown Minority Stockholders" means the "Minority Stockholders" as
defined in the Crown
Stockholders Agreement.
"Crown Stock" means Crown Class A Stock and Crown Class B Stock.
"Crown
Stockholders Agreement" means the Second Amended and Restated
Stockholders Agreement, dated as of August 30, 2001, by and among HEH (as
transferee of the shares of Crown Class A Stock and Crown Class B Stock
previously held by Hallmark Entertainment, Inc.), Liberty Media Corporation,
Liberty Crown, Inc. (as transferee of the shares of Crown Class A Stock
previously held by Liberty Media Corporation), VISN Management Corp., XX
Xxxxxx Partners (BHCA), L.P, DIRECTV Enterprises, Inc. and Crown, as amended
from time to time.
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended.
"HEH" has the meaning set forth in the Preamble.
"Minority Stockholder" has the meaning of set forth in the Preamble.
"Parent" of a Person means any other Person which is the beneficial
owner (within the meaning of Rule 13d-3 under the Exchange Act) of a majority
of the securities ordinarily entitled to vote for the election of directors
(or persons performing similar functions) or the specified Person or directly,
or indirectly, through one or more intermediaries, controls the Person
specified. For purposes of this definition, control of a Person means the
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power, direct or indirect, to direct or cause the direction of the management
or policies of such Person whether by contract or otherwise.
"Person" means an individual, partnership, corporation, trust,
limited liability company or unincorporated organization, or other entity or
organization, including a government or agency or political subdivision
thereof.
"Permitted Transfer" means (i) Transfers by a Stockholder to one or
more of its Affiliates, or to one or more of its executives pursuant to a
stock-based compensation plan, or to one or more other Stockholders, or to one
or more Affiliates of any other Stockholder, or upon its merger or other
consolidation to the surviving corporation, subject to the transferee
executing a signature page hereof and thereby becoming a party hereto (as a
Stockholder) and agreeing that it shall receive the same rights hereunder and
be bound by the same obligations hereunder as the transferring Stockholder; or
(ii) Transfers by a Stockholder pursuant to a merger, consolidation or other
business combination involving all of the outstanding Company Common Stock and
a third party which, prior to entering into an agreement with the Company with
respect to such business combination, was not an Affiliate of the Company or
tender or exchange offer for all of the outstanding Company Common Stock by a
third party which, prior to the commencement of such offer, was not an
Affiliate of the Company.
"Securities Act" means the United States Securities Act of 1933, as
amended.
"Shares Allotment" has the meaning set forth in Section 3.4(a).
"Stockholders" means each Person, other than the Company, who has
executed this Agreement and each Person who is required to become a party to
this Agreement in the future in accordance with the terms hereof.
"Stockholders' Shares" has the meaning set forth in Section 3.4(a).
"Subsidiary" of any Person means any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the Board of Directors or other Persons performing similar
functions are at the time directly or indirectly owned or controlled by such
Person or one or more Subsidiaries of such Person.
"Transfer" means a sale, assignment, encumbrance, gift, pledge,
hypothecation or other disposition of Company Common Stock or any interest
therein; provided that a pledge of Company Common Stock to a financial
institution in a bona fide transaction shall not be deemed to be a Transfer
for the purposes of this Agreement, so long as the Stockholder retains full
voting power in such shares prior to any event of default, it being understood
that in the event of such default such transferee shall have no rights or
obligations under this Agreement.
"Transferor Stockholder" has the meaning set forth in Section 3.3.
(b) For the purposes hereof, (i) words in the singular shall be held
to include the plural and vice versa and words of one gender shall be held to
include the other gender as the context requires, (ii) the terms "hereof,"
"herein," and "herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Article, Section and paragraph
references are to the Articles, Sections and paragraphs of this Agreement
unless otherwise specified, (iii) the word "including" and words of similar
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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.
ARTICLE II
CORPORATE GOVERNANCE
Section 2.1. Composition of the Board of Directors of the Company.
Subject to Section 2.4, each of the Stockholders hereby agrees to take, at any
time and from time to time, all action necessary such that the Board of
Directors of the Company (the "Board") shall consist of three Class I
Directors having one vote each and six Class II Directors having two votes
each. The directors shall be nominated as follows: (a) HEH shall have the
right to nominate six Class II Directors and one Class I Director and (b)
Liberty and JPM shall each have the right to nominate one Class I Director.
Each Stockholder entitled to vote for the election of directors to the Board
shall vote its shares of Company Voting Stock or execute written consents, as
the case may be, and shall take all other action necessary in order to ensure
election of the nominees and compliance with this Section 2.1. The Company
shall take such action as may be required under applicable law and shall
otherwise use reasonable efforts to cause the composition of the Board to be
as set forth in this Section 2.1.
Section 2.2. Removal. Each Stockholder agrees that at any time that it
is then entitled to vote or execute a written consent for the removal or
replacement of any director of the Company, (a) it shall not vote or execute a
written consent for any of its shares of Company Voting Stock in favor of the
removal or replacement of any individual who shall have been nominated
pursuant to Section 2.1, unless the Stockholder entitled to nominate such
director shall have requested such removal or replacement in writing and (b)
it shall vote or execute a written consent for all of its shares of Company
Voting Stock in favor of and shall take all other action necessary to cause
the removal or replacement of an individual nominated pursuant to Section 2.1
if so requested in writing by the Stockholder entitled to nominate such
individual. Subject to Section 2.4, nothing contained in this Section 2.2
shall affect the right of any Stockholder to nominate a member of the Board
pursuant to Section 2.1.
Section 2.3. Vacancies. If, as a result of the death, disability,
retirement, resignation, removal or otherwise there shall exist or occur any
vacancy on the Board, then the Stockholder entitled under Section 2.1 to
nominate such director whose death, disability, retirement, resignation or
removal resulted in such vacancy, may, subject to the provisions of Section
2.4, designate another individual to fill such capacity and serve as a
director of the Company. Each Stockholder shall, if such Stockholder is then
entitled to vote for the election of such designee as a director of the
Company, vote or execute a written consent for its shares of Company Voting
Stock in order to ensure that such designee be elected to the Board and the
Company shall use reasonable efforts to cause such vacancy to be filled by
such designee.
Section 2.4. Termination of Rights and Obligations. The right of any
Stockholder to nominate or designate a member or members of the Board pursuant
to this Article II, and all related obligations of the Company and each other
Stockholder with respect thereto contained in this Article II and the rights
of any Stockholder pursuant to Section 2.7 and Section 4.1, shall terminate on
the later of such date as such Stockholder (i) ceases to beneficially own in
the aggregate at least 2.5% of the shares of Company Common Stock then issued
and outstanding and (ii) ceases to beneficially own at least 75% of the
Company Common Stock set forth opposite such Stockholder's name on Appendix I
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(appropriately adjusted for stock splits, dividends or combinations of shares
of Company Common Stock after the date hereof).
Section 2.5. Limitation on Transactions with Affiliates. The Company
shall not sell any of its material properties or assets to, or purchase any
material property or assets from, or enter into any material contract,
transaction, agreement, understanding, loan, advance or guaranty with, or for
the benefit of, any Affiliate of a Stockholder (each of the foregoing, an
"Affiliate Transaction"), unless such Affiliate Transaction is entered into in
good faith and on commercially reasonable terms and with respect to any
Affiliate Transaction that, together with all related Affiliate Transactions,
has an aggregate value of more than $2,000,000, such Affiliate Transaction
shall have been approved by a majority of the members of the Board not
nominated by such Stockholder.
The following Affiliate Transactions are hereby consented to by the
parties hereto: (i) transactions pursuant to the Contribution Agreement, as in
effect the date hereof; and (ii) transactions pursuant to the Tax Sharing
Agreement, dated as of March 11, 2003, by and between Hallmark Cards,
Incorporated and Crown Media Holdings, Inc., the Company and any of their
respective Subsidiaries.
Section 2.6. Extraordinary Transactions. For so long as any
Stockholder shall be entitled to nominate a director pursuant to Section 2.1,
the Company shall not, without the consent of all such Stockholders entitled
to nominate directors pursuant to Section 2.1, take any of the following
actions:
(i) any amendment or repeal of, or addition to the Company's
certificate of incorporation;
(ii) issue or redeem capital stock of the Company or securities
exercisable or convertible into such capital stock;
(iii) any spin-off, merger, consolidation or other business
combination of the Company (other than arising out of or related to
a merger, consolidation or other business combination involving
Crown);
(iv) the dissolution, liquidation or conversion of the Company;
or
(v) any sale, pledge, distribution or other transfer of shares
of Crown Stock, except in a merger, consolidation, tender offer,
exchange offer or other business combination involving Crown and
approved in accordance with the terms of the Crown
Stockholders
Agreement.
Section 2.7. Voting of Crown Stock. Subject to Article IV hereof, at
any meeting of the stockholders of Crown or action by written consent of Crown
stockholders, the Board shall take all action necessary to cause the Company
to vote, in person or by proxy or consent, its shares of Crown Stock as
directed by HEH.
Section 2.8 Board Observer. VISN shall have the right to designate a
non-voting observer (the "VISN Observer") to the Board, who shall be a Person
reasonably acceptable to the Board, and who shall have the right to notice of
and to attend all Board meetings. The Company shall provide to the VISN
Observer copies of all materials and full access to the information and
materials provided to any of the members of the Board (except where materials
are provided only to a committee that was appointed by the Board) at the same
time as the Board member(s) receive such materials subject to the limitation
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set forth herein. VISN shall be, and shall cause the VISN Observer to be,
obligated to hold in confidence any and all information received in any Board
meeting or otherwise in the VISN Observer's capacity as such, except to the
extent that such information is publicly disclosed by the Company provided
that the VISN Observer shall be entitled to report any and all information to
VISN. The right of VISN to nominate or designate the VISN Observer pursuant to
this Section and all related obligations of the Company and each other
Stockholder with respect thereto contained in this Section, shall terminate on
the date that VISN or any of its Affiliates ceases to collectively
beneficially own in the aggregate at least 75% of the shares of Company Common
Stock set forth opposite VISN's name on Appendix I (appropriately adjusted for
stock splits, dividends, or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization).
ARTICLE III
TRANSFERABILITY AND TAG-ALONG RIGHTS
Section 3.1. Restrictions on Transferability. No Company Common Stock
may be Transferred except upon compliance with the provisions of the
Securities Act and this Agreement, and any attempted Transfer other than in
accordance with the terms hereof is void ab initio and transfers no right,
title or interest in or to such Company Common Stock to the purported
transferee, buyer, donee, assignee or encumbrance holder.
Section 3.2 Restrictive Legend. Each certificate representing any
portion of Company Common Stock that is held by a Stockholder shall be stamped
or otherwise imprinted with a legend in substantially the following form (in
addition to any legend required under applicable state securities laws):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE
SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED
EXCEPT IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT, OR IN COMPLIANCE WITH RULE 144 OR
PURSUANT TO ANOTHER EXEMPTION. THE SECURITIES ARE ALSO SUBJECT TO
PROVISIONS OF A
STOCKHOLDERS AGREEMENT DATED MARCH 11, 2003, AS IT MAY BE
AMENDED FROM TIME TO TIME IN ACCORDANCE WITH THE PROVISIONS THEREOF.
Section 3.3. Notice of Proposed Transfers; Securities Law Compliance.
Prior to any proposed Transfer of any Company Common Stock, unless there is in
effect a registration statement under the Securities Act covering the proposed
Transfer, the Stockholder intending to Transfer such Company Common Stock (the
"Transferor Stockholder") shall give written notice to the Company of such
Transferor Stockholder's intention to effect such Transfer. Each such notice
shall set forth the name of the proposed transferee, the number of shares
proposed to be Transferred and the proposed amount and form of consideration
to be paid for such Company Common Stock (other than for a Permitted
Transfer). Notwithstanding anything herein to the contrary, no Stockholder
shall be permitted to transfer its Company Common Stock if such transfer or
series of transfers would subject the Company to the reporting requirements of
Section 13 or 15(d) of the Exchange Act.
Section 3.4. Tag-Along Rights. (a) Except for Permitted Transfers, if
HEH, at any time or from time to time, in a single transaction or series of
related transactions occurring within a six-month period, or within a longer
period if pursuant to a single agreement, proposes to Transfer 20% or more of
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the outstanding shares of Company Common Stock (a "Tag-Along Sale"), then each
Minority Stockholder shall have the right, but not the obligation, to
participate in such Tag-Along Sale by selling the number of shares of Company
Common Stock owned by it as calculated in the following manner. Such shares of
Company Common Stock that were acquired by the Minority Stockholders pursuant
to the Contribution Agreement and that are owned by the Minority Stockholders
or their Affiliates which are Parties to this Agreement are hereinafter
referred to as the "Stockholders' Shares"; provided, however that shares of
Company Common Stock transferred from another Stockholder to a Minority
Stockholder or its Affiliates (other than an Affiliate of such transferring
Stockholder) shall not be deemed to be Stockholders' Shares. The maximum
number of shares of Company Common Stock that each Minority Stockholder shall
be entitled to include in such Tag-Along Sale (the "Shares Allotment") shall
equal the product of (i) the total number of shares of Company Common Stock
proposed to be Transferred pursuant to the Tag-Along Sale or such greater
number of shares that the proposed purchaser in the Tag-Along Sale shall agree
to purchase or otherwise acquire multiplied by (ii) a fraction, the numerator
of which shall equal the number of Stockholders' Shares owned by such Minority
Stockholder and its Affiliates which are parties to this Agreement on the date
of the Sale Notice and the denominator of which shall equal the sum of (A) the
number of shares of Company Common Stock owned by HEH and its Affiliates on
the date of the Sale Notice plus the number of Stockholders' Shares owned by
all Minority Stockholders and their Affiliates which are parties to this
Agreement on the date of the Sale Notice, without duplication.
(b) Any such sales by the Minority Stockholders shall be on the same
terms and conditions as the proposed Tag-Along Sale by HEH; provided, however
that no participating Minority Stockholder shall be required to make any
representation or warranty in connection with the Tag-Along Sale, other than
as to the enforceability of each agreement entered into in connection with
such Tag-Along Sale with respect to the Minority Stockholder and its ownership
and authority to sell, free of consent and approval requirements, liens,
claims and encumbrances, the shares of Company Common Stock proposed to be
sold by it. Each participating Minority Stockholder shall (and hereby agrees
to), without limitation as to time, indemnify and hold harmless, to the full
extent permitted by law, each of the other Stockholders against all losses,
claims, damages, liabilities, costs (including costs of preparation) and
expenses (including attorneys' fees and disbursements) arising out of or
relating to any representation or warranty made by, or covenant of, such
participating Minority Stockholder or any agent, employee, officer, or
director of such participating Minority Stockholder in connection with or
relating to or under the terms of each agreement entered into in connection
with such Tag-Along Sale, except insofar as the same are based solely upon
written information furnished in writing to such participating Minority
Stockholder by such other Minority Stockholder expressly for use therein.
(c) HEH shall promptly provide each of the Minority Stockholders with
written notice (the "Sale Notice") not less than 15 days prior to the proposed
date of the Tag-Along Sale (the "Tag-Along Sale Date"). In order to facilitate
the prompt delivery of the Sale Notice, the Company hereby covenants to
provide HEH and the Minority Stockholders participating in a Tag-Along Sale
access to the stock record books of the Company. Each Sale Notice shall set
forth:
(i) the name of each proposed transferee or purchaser of
Company Common Stock in the Tag-Along Sale;
(ii) the number of shares of Company Common Stock proposed to
be Transferred by HEH and, if applicable, such greater number of
shares that the proposed purchaser is willing to purchase in
connection with the Tag-Along Sale;
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(iii) the proposed amount and form of consideration to be paid
for such shares of Company Common Stock and the material terms and
conditions of payment offered by each proposed transferee or
purchaser;
(iv) confirmation that the proposed purchaser or transferee has
been informed of the "Tag-Along Rights" provided for herein and has
agreed to purchase shares of Company Common Stock in accordance with
the terms hereof;
(v) such Minority Stockholder's Shares Allotment; and
(vi) the Tag-Along Sale Date.
Each Minority Stockholder who wishes to participate in the Tag-Along
Sale shall provide written notice (or oral notice confirmed immediately in
writing) (the "Tag-Along Notice") to HEH not less than seven days prior to the
Tag-Along Sale Date. The Tag-Along Notice shall set forth the number of shares
of Company Common Stock that such Minority Stockholder elects to include in
the Tag-Along Sale, which shall not exceed such Minority Stockholder's Shares
Allotment.
HEH shall determine the aggregate number of shares of Company Common
Stock to be sold by each participating Minority Stockholder in any given
Tag-Along Sale in accordance with the terms hereof, and the Tag-Along Notices
given by the Minority Stockholders shall constitute their binding agreements
to sell such shares at the price and on the terms and conditions applicable to
such sale.
If a Tag-Along Notice is not received by HEH from a Minority
Stockholder prior to the seven-day period specified above, HEH shall have the
right to Transfer the number of shares of Company Common Stock specified in
the Sale Notice to the proposed purchaser or transferee without any
participation by such Minority Stockholder, but only at a price and upon terms
and conditions no more favorable to HEH than stated in such Sale Notice and
only if such sale occurs on a date within 60 days of the Tag-Along Sale Date.
ARTICLE IV
ADDITIONAL RIGHTS
Section 4.1 Crown Board of Directors. Subject to Section 2.4, the
Company agrees that each of Liberty and JPM shall have the right to designate
one person as one of the directors to the Board of Directors of Crown that HEH
is entitled to nominate in accordance with Section 2.1 of the Crown
Stockholders Agreement or otherwise, and that HEH shall direct the Company to
vote its shares of Crown Stock or execute written consents, as the case may
be, and take all other action necessary in order to ensure the election of
each such nominee. In the event of the death, disability, retirement,
resignation or removal of any director nominated by Liberty or JPM, then the
party entitled to designate such director shall designate another individual
to fill such capacity and serve as a director of Crown and HEH shall direct
the Company to vote its shares of Crown Stock or execute a written consent in
order to ensure that such designee be elected to the Board of Directors of
Crown.
Section 4.2 Limitation on Crown's Transactions with Affiliates. From
the date hereof, the Company shall not permit Crown, and shall not permit any
of Crown's Subsidiaries to, directly or indirectly, sell any of its material
properties or assets to, or purchase any material property or assets from, or
enter into any material contract, transaction, agreement, understanding, loan,
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advance or guaranty with, or for the benefit of, any Affiliate of HEH (each of
the foregoing, a "Crown Affiliate Transaction"), unless such Crown Affiliate
Transactions are entered into in good faith and on commercially reasonable
terms and (i) with respect to any Crown Affiliate Transaction that, together
with all related Crown Affiliate Transactions, have an aggregate value of not
more than $35,000,000, such transactions are approved by a majority of the
Independent Directors (as defined in the Crown
Stockholders Agreement) and
(ii) with respect to any Crown Affiliate Transactions that, together with all
related Crown Affiliate Transactions have an aggregate value of more than
$35,000,000, such Crown Affiliate Transactions are approved by a majority of
the members of the Board of Directors of Crown that are not nominated by any
Affiliate of HEH; provided, however, that for such purposes the directors
designated by Liberty and JPM in accordance with Section 4.1 will be treated
as not nominated by any Affiliate of HEH. Furthermore, neither the Company nor
any of its Affiliates will agree to consent to any amendment, termination or
waiver of, or consent to any departures from, the provisions of the Crown
Stockholders Agreement as in the effect as of the date of such proposed
amendment, termination, waiver or consent unless each of Liberty and JPM has
consented in writing to the proposed amendment, termination, waiver or
consent.
Notwithstanding the foregoing, the following shall be deemed not to
be Crown Affiliate Transactions: (i) transactions pursuant to the Contribution
Agreement and (ii) the transactions pursuant to the Tax Sharing Agreement, in
each case as in effect as of the date hereof.
Section 4.3 Registration Rights. Commencing on the earlier of (i) the
effective date of an initial public offering of Company Common Stock pursuant
to a registration statement filed under the Securities Act and (ii) the date
the Company becomes subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, the Company shall grant each Minority Stockholder
registration rights provided to the Crown Minority Stockholders in the Crown
Stockholders Agreement as in effect as of the date hereof. Notwithstanding
anything herein to the contrary, HEH and its Affiliates will not agree to any
spin-off, merger, tender offer, exchange offer, consolidation or other
business combination of the Company or Crown in connection with which HEH or
any of its Affiliates is entitled to registration rights with respect to any
non-cash consideration it receives, unless, with respect to the non-cash
consideration it receives, each Minority Stockholder receives registration
rights with terms no less favorable in any material respect than those
received by HEH or any of its Affiliates.
ARTICLE V
GENERAL
Section 5.1. Entire Agreement. This Agreement and the Crown
Stockholders Agreement contain the entire agreement between the parties hereto
with respect to the subject matter hereof and there are no agreements,
understandings, representations or warranties between the parties hereto other
than those set forth or referred to herein.
Section 5.2. Amendment and Waiver. This Agreement, including this
Section 5.2, may be amended, and waivers or consents to departures from the
provisions hereof may be given, only by a written instrument duly executed, in
the case of an amendment, by the Company and each Stockholder, or in the case
of a waiver or consent, by each party against whom the waiver or consent, as
the case may be, is to be effective.
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Section 5.3. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission)
and shall be given as set forth on Appendix I hereto.
Section 5.4. Assignment; Benefit. The terms and provisions of this
Agreement shall not be assignable or transferable and except as otherwise
expressly provided herein there shall be no third party beneficiaries hereto;
provided, however, that if a Stockholder Transfers all but not less than all,
of its shares of Company Common Stock to an Affiliate of such Stockholder in
accordance with the terms of this Agreement, such Person may, by executing a
signature page to this Agreement, become a party hereto and have the same
rights and obligations as the Transferring Stockholder. All the terms and
provisions of this Agreement shall be binding upon, shall inure to the benefit
of and shall be enforceable by the respective legal successors and permitted
assigns of the parties hereto.
Section 5.5. Absence of Presumption. This Agreement shall be
construed without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to be
drafted.
Section 5.6. Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
Section 5.7. Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
Section 5.8. Governing Law; Jurisdiction and Forum. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE, WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF
LAWS. THE PARTIES HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE COURTS
OF THE STATE OF
DELAWARE SOLELY IN RESPECT OF THE INTERPRETATION AND
ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT AND IN RESPECT OF THE
TRANSACTIONS CONTEMPLATED HEREBY, AND HEREBY WAIVE, AND AGREE NOT TO ASSERT,
AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR THE INTERPRETATION OR
ENFORCEMENT HEREOF, THAT IT IS NOT SUBJECT THERETO OR THAT SUCH ACTION, SUIT
OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SAID COURTS OR THAT
THE VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS AGREEMENT MAY NOT BE
ENFORCED IN OR BY SUCH COURTS, AND THE PARTIES HERETO IRREVOCABLY AGREE THAT
ALL CLAIMS WITH RESPECT TO SUCH ACTION OR PROCEEDING SHALL BE HEARD AND
DETERMINED IN SUCH A
DELAWARE STATE COURT. THE PARTIES HEREBY CONSENT TO AND
GRANT ANY SUCH COURT JURISDICTION OVER SUCH PARTIES AND OVER THE SUBJECT
MATTER OF SUCH DISPUTE AND AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN
CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN
SECTION 5.3 OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW SHALL BE VALID
AND SUFFICIENT SERVICE THEREOF.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
10
ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 5.8.
Section 5.9. Specific Enforcement. Each party hereto acknowledges
that remedies at law may be inadequate to protect any other party against any
actual or threatened breach of this Agreement by the other parties and,
without prejudice to any other rights and remedies otherwise available to any
party, each party agrees to the granting of injunctive relief in any other
party's favor without proof of actual damages. In the event of litigation
relating to this Agreement, if a court of competent jurisdiction determines
that this Agreement has been breached by a party, then such party shall
reimburse the other party for costs and expenses (including, but not limited
to, reasonable legal fees and expenses) incurred in connection with all such
litigation.
Section 5.10. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If
any provision of this Agreement, or the application thereof to any Person or
entity or any circumstance, is invalid or unenforceable, (a) a suitable and
equitable provision shall be substituted therefor in order to carry out, so
far as may be valid and enforceable, the intent and purpose of such original
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons, entities or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or
the application thereof, in any other jurisdiction.
Section 5.11. Covered Shares. All of the provisions of this Agreement
shall apply to and include (a) Company Common Stock acquired pursuant to the
Contribution Agreement; (b) Company Common Stock acquired from another
Stockholder; and (c) to the extent received in respect of shares of Company
Common Stock acquired pursuant to the Contribution Agreement, all securities
and instruments (i) received by a Stockholder as a dividend or other payment,
or (ii) issued in connection with a split of such shares or as a result of any
exchange for or reclassification of such shares or a reorganization,
recapitalization, consolidation or merger. Appendix I hereto identifies those
shares of Company Common Stock subject to the provisions of this Agreement as
of the date hereof.
11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective authorized officers as of the day and year
first above written.
HALLMARK ENTERTAINMENT INVESTMENTS CO.
By: /s/Xxxxxx Xxxxxxxxx/s/
--------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
HALLMARK ENTERTAINMENT HOLDINGS, INC.
By: /s/Xxxxxx Xxxxxxxxx/s/
--------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
LIBERTY CROWN, INC.
By: /s/Xxxxx X. Xxxx/s/
--------------------------------------
Name: Xxxxx X. Xxxx
Title: Senior Vice President
VISN MANAGEMENT CORP.
By: /s/Xxxxxxx X. Xxxx, Xx./s/
--------------------------------------
Name: Xxxxxxx X. Xxxx, Xx.
Title: Chair - VMC
XX XXXXXX PARTNERS (BHCA), L.P.,
By JPMP MASTER FUND MANAGER, L.P.,
its general partner
By JPMP CAPITAL CORP.,
its general partner
By: /s/Xxxxxxx X. Xxxxxx/s/
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
12
APPENDIX I
---------------------------------------- -------------------- ------------------
Stockholder Class A Stock Class B Stock
---------------------------------------- -------------------- ------------------
---------------------------------------- -------------------- ------------------
Hallmark Entertainment Holdings, Inc. 39,260 30,670
---------------------------------------- -------------------- ------------------
---------------------------------------- -------------------- ------------------
Liberty Crown, Inc. 9,417
---------------------------------------- -------------------- ------------------
---------------------------------------- -------------------- ------------------
XX Xxxxxx Partners (BHCA), L.P. 3,837
---------------------------------------- -------------------- ------------------
---------------------------------------- -------------------- ------------------
VISN Management Corp. 634
---------------------------------------- -------------------- ------------------
Address for Notices
If to the Company or Hallmark Entertainment Holdings, Inc. to:
Hallmark Cards, Incorporated
Department 339
0000 XxXxx
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Executive Vice President, General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copies to:
Hallmark Entertainment, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx, Xx.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Liberty Crown, Inc. to:
Liberty Crown, Inc.
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx, Senior Vice President
Facsimile: (000) 000-0000
1
With a copy to:
Liberty Media Corporation
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000
And to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxx Xxxxxx
Facsimile: (000) 000-0000
If to XX Xxxxxx Partners (BHCA), L.P. to:
XX Xxxxxx Partners (BHCA), L.P.
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxx, Xxxxx & Xxxxx
0000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to VISN Management Corp. to:
VISN Management Corp.
000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
2
With a copy to:
Cowan, DeBaets, Xxxxxxxx & Xxxxxxxx LLP
00 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
3
