AGREEMENT AND PLAN OF MERGER OF CROWN MEDIA HOLDINGS, INC. AND HALLMARK ENTERTAINMENT INVESTMENTS CO.
Exhibit
2.1
AGREEMENT
AND PLAN OF MERGER
OF
CROWN
MEDIA HOLDINGS, INC.
AND
HALLMARK
ENTERTAINMENT INVESTMENTS CO.
AGREEMENT
AND PLAN OF MERGER (this "Merger Agreement"), dated as
of February 26, 2010, between Crown Media Holdings, Inc., a Delaware corporation
("Crown"), and Hallmark
Entertainment Investments Co., a Delaware corporation ("HEIC"), pursuant to Section
251 of the Delaware General Corporation Law (the "DGCL"). Capitalized
terms used but not defined herein shall have the meanings ascribed to such terms
in the Master Recapitalization Agreement (as defined below).
W I T N E
S S E T H:
WHEREAS,
Crown proposes to enter into the Master Recapitalization Agreement, by and among
Hallmark Cards, Incorporated, H C Crown Corp., Hallmark Entertainment Holdings,
Inc., Crown, Crown Media United States, LLC and subsidiaries of Crown (the
“Master Recapitalization
Agreement”), the form of which is attached hereto (without its exhibits)
as Exhibit A,
in order to restructure certain of its obligations;
WHEREAS,
consummation of the transactions contemplated by this Merger Agreement is a
condition subsequent to the consummation of certain other transactions
contemplated by the Master Recapitalization Agreement;
WHEREAS,
the Board of Directors of Crown and the Board of Directors of HEIC have each
determined that it is advisable and in the best interests of each of them that
HEIC merge with and into Crown upon the terms and subject to the conditions
herein provided;
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:
Section
1. Merger. Upon the
filing of a Certificate of Merger with the Secretary of State of the State of
Delaware or at such later time as set forth therein and as agreed by the parties
(the "Effective Time"),
HEIC shall be merged with and into Crown (the "Merger"), and Crown shall be
the corporation surviving the Merger (hereinafter referred to as the "Surviving
Corporation").
Section
2. Directors, Officers and Governing
Documents. The directors of the Surviving Corporation
immediately after the Effective Time shall be the directors of Crown immediately
prior to the Effective Time. The officers of the Surviving
Corporation immediately after the Effective Time shall be the officers of Crown
immediately prior to the Effective Time. These officers and directors
shall hold office in accordance with the Certificate of Incorporation and
By-laws of the Surviving Corporation. The Certificate of
Incorporation and By-laws of Crown, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation and By-laws of the
Surviving Corporation.
Section
3. Name. The name of
the Surviving Corporation shall be: Crown Media Holdings,
Inc.
(a) Each
share of Class A Common Stock, par value $.01 per share, and Class B Common
Stock, par value $.01 per share, of HEIC (collectively, the “Class A and Class B HEIC
Stock”) outstanding immediately prior to the Effective Time, except for
those shares for which a demand for appraisal is properly made, shall be
converted into that number of shares of Class A Common Stock, par value $0.01
per share, of Crown (the “Common Stock”) equal to the
number of shares of Common Stock (including shares of Common Stock issuable upon
conversion of Class B Common Stock) owned by HEIC immediately prior to the
Effective Time divided by the total number of shares of Class A and Class B HEIC
Stock outstanding immediately prior to the Effective Time.
(b) All
shares of Common Stock outstanding immediately prior to the Effective Time and
held by HEIC shall be cancelled.
(c) All
shares of Common Stock outstanding immediately prior to the Effective Time,
other than those held by HEIC, shall remain outstanding and unaffected by the
Merger.
(d) Each
share of Class A and Class B HEIC Stock as to which a written demand for
appraisal is filed in accordance with Section 262 of the Delaware General
Corporation Law (the “DGCL”) and not withdrawn and
as to which no written consent to this Merger Agreement is filed (each, an
“Appraisal Share”)
shall not be converted into or represent a right to receive the applicable
merger consideration set forth in Section 4(c) hereof unless and until the
holder thereof shall have failed to perfect or shall have effectively withdrawn
or lost such right to appraisal of, and payment for, such share of Class A and
Class B HEIC Stock, at which time such share shall be converted into the right
to receive the applicable merger consideration set forth in Section 4(c)
hereof
.
Each
Appraisal Share held by a stockholder who has perfected and has not effectively
withdrawn or lost such right to appraisal of such share of Class A and B HEIC
Stock shall only entitle its holder to such rights as are granted by the DGCL
and shall not entitle such holder to vote or to exercise any other rights of a
stockholder of the Surviving Corporation, except as provided by the
DGCL. Each holder of Appraisal Shares who becomes entitled to payment
therefor pursuant to the DGCL shall receive such payment from the Surviving
Corporation in accordance with the DGCL. The holders of any Appraisal
Shares shall be required to look solely to the Surviving Corporation (subject to
abandoned property, escheat and similar laws) as general creditors thereof with
respect to any merger consideration.
(e) The
Merger shall also have the effect set forth in Section 259 of the
DGCL.
Section
5. Representations of
Crown. All of the representations and warranties of Crown set
forth in Article III of the Master Recapitalization Agreement are incorporated
herein by reference and shall be deemed made by Crown in this Section
5.
Section
6. Representations and Warranties of
HEIC.
(a) Organization. HEIC
is duly organized, validly existing and in good standing under the laws of its
state of incorporation and has all requisite corporate power to own its
properties and assets and to conduct its business as now
conducted. HEIC is duly qualified to do business as a foreign
corporation and is in good standing in every jurisdiction in which the character
of the properties owned or leased by it or the nature of the business conducted
by it makes such qualification necessary, except where the failure to be so
qualified or in good standing would not, individually or in the aggregate,
materially impair HEIC's ability to consummate the Transactions.
(b) Authorization and Validity of
Agreement. HEIC has all requisite power and authority to enter
into this Merger Agreement and, subject to receipt of the requisite stockholder
approval, to carry out its obligations hereunder. The board of
directors of HEIC has duly adopted resolutions approving the execution of this
Merger Agreement and the Transactions. This Merger Agreement has been
duly executed by HEIC and, assuming due execution and delivery by the other
parties hereto, shall constitute its valid and binding obligation, enforceable
against it in accordance with its terms, subject to (i) the effect of
bankruptcy, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting the enforcement of creditors' rights generally and
(ii) general equitable principles (whether considered in a proceeding in equity
or at law).
(c) Consents and Approvals; No
Violations. None of the execution, delivery or performance of
this Merger Agreement by HEIC will: (i) conflict with or result in any
breach of any provision of the organizational documents of HEIC,
(ii) require any filing by HEIC with, notice to, or permit, authorization,
consent or approval of, any Governmental Entity other than the Secretary of
State of the State of Delaware, (iii) result in a violation or breach by
HEIC of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any agreement or other
instrument or obligation to which HEIC is a party or by which its properties or
assets may be bound, or (iv) violate any Legal Requirements, excluding from
the foregoing clauses (ii), (iii) and (iv) such filings, notices, permits,
authorizations, consents, approvals, violations, breaches or defaults which
would not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the ability of HEIC to perform its obligations under
this Merger Agreement.
(d) No
Liabilities. Except for (a) liabilities incurred pursuant to
this Merger Agreement, and (b) liabilities or obligations discharged or
paid in full prior to the date of this Merger Agreement in the ordinary course
of business consistent with past practice, HEIC does not have any liabilities or
obligations of any nature whatsoever (whether accrued, absolute, matured,
determined, contingent or otherwise) other than non-material liabilities related
to the maintenance of its existence as a corporation. There are no
proceedings pending or, to the knowledge of HEIC, threatened against HEIC, other
than any such proceedings that would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on Crown following
the Merger. Neither HEIC nor any of its properties is or are subject
to any order, writ, judgment, injunction, decree or award, except for those that
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Crown following the Merger.
Section
7. Further
Assurances. From time to time, as and when required by the
Surviving Corporation or by its successors and assigns, there shall be executed
and delivered on behalf of HEIC such deeds and other instruments, and there
shall be taken or caused to be taken by the Surviving Corporation all such
further and other actions, as shall be appropriate or necessary in order to
vest, perfect or confirm in the Surviving Corporation the title to and
possession of all property, interests, assets, rights, privileges, immunities,
powers and authority of HEIC, and otherwise to carry out the purposes of this
Merger Agreement. The officers and directors of the Surviving
Corporation are fully authorized, on behalf of the Surviving Corporation or
HEIC, to take any and all such actions and to execute and deliver any and all
such deeds, documents and other instruments.
Section
8. Conditions. The
obligations of Crown and HEIC to consummate the Merger are subject to the
satisfaction of the following conditions:
(a) This
Merger Agreement shall have been approved and adopted by the stockholders of
Crown and the stockholders of HEIC in accordance with the DGCL;
(b) All
conditions to the “Closing Date” set forth in the Master Recapitalization
Agreement shall have been satisfied or waived, and the “Closing” shall occur
concurrent with the Effective Time; and
(c) At the
Effective Time, HEIC shall have no material liabilities other than guarantees of
liabilities of Crown and its subsidiaries.
Section
9. Termination. This
Merger Agreement will terminate automatically, whether before or after the
adoption of this Merger Agreement by the stockholders of Crown and the
stockholders of HEIC, upon the termination of the Master Recapitalization
Agreement without the “Closing” having occurred thereunder. In
addition, this Merger Agreement may be terminated, and the Merger herein
provided for may be abandoned, by mutual consent of the Boards of Directors of
Crown and HEIC at any time prior to the Effective Time notwithstanding adoption
of this Merger Agreement by the stockholders of Crown and HEIC.
Section
10. Amendment. At any
time prior to the Effective Time, the Boards of Directors of each of Crown and
HEIC may, to the fullest extent permitted by law, amend, modify or supplement
this Merger Agreement in such manner as they may determine.
Section
11. Tax Treatment. This
Merger Agreement is intended to constitute a “plan of reorganization” with
respect to the Merger for United States federal income tax purposes pursuant to
which, for such purposes, the Merger is to be treated as a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the “Code”). Neither
Crown nor HEIC will take any position on any United States federal, state or
local income or franchise tax return, or take any other tax reporting position,
that is inconsistent with the treatment of the Merger as a reorganization within
the meaning of Section 368(a) of the Code, unless required by a “determination”
(as defined in Section 1313(a)(1) of the Code) or by applicable state or local
income or franchise tax law. Prior to the Effective Time, each of
Crown and HEIC shall use its best efforts to cause the Merger to qualify as a
368 Reorganization and shall not take any action reasonably likely to cause the
Merger not so to qualify.
Section
12. Assignment; Third Party
Beneficiaries. Neither
this Merger Agreement, nor any right, interest or obligation hereunder, shall be
assigned by any of the parties hereto without the prior written consent of the
other parties. This Merger Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. This Agreement is not intended to confer any rights or benefits upon
any person other than the parties hereto and their respective successors and
assigns.
Section
13. Governing Law;
Jurisdiction. This Merger 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.
Any and
all claims arising out of, relating to or in connection with this
Merger Agreement or any of the transactions contemplated hereby 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
Merger Agreement or any of the transactions contemplated hereby 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 Merger 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 Merger Agreement, or
the subject matter hereof, may not be enforced in or by such Designated
Court.
Each
party acknowledges and agrees that any controversy which may arise under this
Merger 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 Merger Agreement or
the Merger. Each party certifies and acknowledges that (i) 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, (ii) each party understands and has considered
the implications of this waiver, (iii) each party makes this waiver
voluntarily, and (iv) each party has been induced to enter into this agreement
by, among other things, the mutual waivers and certifications in this Section
13.
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of page intentionally left blank]
IN
WITNESS WHEREOF, the undersigned have executed this Merger Agreement as of the
date first above written.
CROWN
MEDIA HOLDINGS, INC.
By: /s/
XXXXXXX
XXXXXXXX
Name:
XXXXXXX XXXXXXXX
Title: EXECUTIVE
VICE PRESIDENT
HALLMARK
ENTERTAINMENT INVESTMENTS CO.
By: /s/
XXXXX X.
XXXXXXX
Name:
XXXXX X. XXXXXXX
Title:
PRESIDENT
