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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

SCHEDULE 13D/A

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)

(Amendment No. 2)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box: [  ].

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CUSIP No. 228411 10 4
	1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
		Hallmark Cards, Incorporated
	2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
				(a) [  ]
				(b) [  ]
	3	SEC USE ONLY		[  ]
	4	SOURCE OF FUNDS
		WC, OO
	5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)       [  ]
	6	CITIZENSHIP OR PLACE OF ORGANIZATION    Missouri
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
		7	SOLE VOTING POWER    75,000 Shares of Class A common stock
		8	SHARED VOTING POWER    69,806,071 Shares of Class A common stock (1)
		9	SOLE DISPOSITIVE POWER    75,000 Shares of Class A common stock
		10	SHARED DISPOSITIVE POWER    69,806,071 Shares of Class A common stock (1)
	11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON                 69,881,071 Shares of Class A common stock (1)
	12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		[  ]
	13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)*    66.8% (2)
	14	TYPE OF REPORTING PERSON    CO

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CUSIP No. 228411 10 4
	1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
		Hallmark Entertainment, Inc.
	2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
				(a) [  ]
				(b) [  ]
	3	SEC USE ONLY
	4	SOURCE OF FUNDS    OO
	5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)       [  ]
	6	CITIZENSHIP OR PLACE OF ORGANIZATION    Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
		7	SOLE VOTING POWER    -0-
		8	SHARED VOTING POWER    69,806,071 Shares of Class A common stock (1)
		9	SOLE DISPOSITIVE POWER    -0-
		10	SHARED DISPOSITIVE POWER    69,806,071 Shares of Class A common stock (1)
	11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON    69,806,071 Shares of Class A common stock (1)
	12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
		[  ]
	13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)*    66.7% (2)
	14	TYPE OF REPORTING PERSON    CO

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This Schedule 13D/A Amendment No. 2 hereby amends and restates in its entirety the Schedule 13D, filed jointly by Hallmark Cards, Incorporated and Hallmark Entertainment, Inc. with respect to the securities of Crown Media Holdings, Inc.

ITEM 1. Security and Issuer.

        This Statement on Schedule 13D/A (this “Schedule 13D/A”) relates to shares of Class A common stock, par value $0.01 per share (the “Class A Common Stock”), of Crown Media Holdings, Inc., a Delaware corporation (the “Issuer”). The Issuer’s principal executive offices are located at 6430 S. Fiddlers Green Circle, Suite 500, Greenwood Village, Colorado 80111.

        Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), this Schedule 13D/A also relates to the shares of Class A Common Stock issuable upon conversion of shares of the Class B common stock, par value $0.01 per share (“Class B Common Stock”, and collectively with the Class A Common Stock, the “Common Stock”) of the Issuer. Holders of Class A Common Stock are entitled to one vote for each share held, and holders of Class B Common Stock are entitled to ten votes for each share held, on all matters presented to stockholders.

ITEM 2. Identity and Background.

        (a)  – (c) and (f): This Schedule 13D/A is being filed by Hallmark Cards, Incorporated (“Hallmark Cards”), a Missouri Corporation, and Hallmark Entertainment, Inc. (“Hallmark Entertainment”), a Delaware corporation and wholly owned subsidiary of Hallmark Cards, (together, the “Reporting Persons”). Hallmark Cards has its principal executive office at 2501 McGee, Kansas City, Missouri 64108. Hallmark Cards’ principal business is the manufacturing of greeting cards. Hallmark Entertainment has its principal executive office at 1325 Avenue of the Americas, 21st Floor, New York, New York 10019. Hallmark Entertainment’s principal business is the production of made-for-television movies, miniseries and series.

        (d)  and (e): The name, business address, present principal occupation or employment and citizenship of each director and executive officer of the Reporting Persons is set forth in Schedule I hereto and is incorporated herein by reference.

        During the last five years, neither of the Reporting Persons, nor, to the knowledge of the Reporting Persons, any of the persons listed on Schedule I hereto, (1) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (2) has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws.

ITEM 3. Source and Amount of Funds or Other Consideration.

        Films Transaction.    On September 28, 2001, Hallmark Entertainment received 33,319,528 shares of Class A Common Stock of the Issuer, as consideration in exchange for the transfer by Hallmark Entertainment Distribution LLC, a Delaware limited liability company and wholly owned subsidiary of Hallmark Entertainment, (“Hallmark Entertainment Distribution”) to

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the Issuer of certain made-for-television movies, specials, theatrical films, mini-series, series and made-for-video product consisting of 702 titles, along with related film properties and rights (the “film assets”) under that certain Purchase and Sale Agreement, dated as of April 10, 2001, by and between the Issuer and Hallmark Entertainment Distribution (the “Purchase and Sale Agreement”).

        The number of shares of Class A Common Stock included in the purchase price for the film assets was calculated as follows with the “average stock price” meaning the average of the closing price per share of the Class A Common Stock as reported on the Nasdaq National Market System on each trading day during the period beginning on November 6, 2000 (the date on which the Issuer publicly announced that it was investigating the possibility of a transaction) and ending on the trading date immediately prior to the closing date for the films transaction:

	•		if the average stock price was less than $17.00, then 35,294,118 shares;
	•		if the average stock price was greater than $18.70, then 32,085,562 shares; or
	•		if the average stock price was at least $17.00, but not greater than $18.70, then the number of shares was to equal $600,000,000 divided by the average stock price.

        Based on an average stock price of $17.78 from November 6, 2000, to September 27, 2001, the last trading day immediately prior the closing date of the films transaction, the Issuer issued 33,744,528 shares. Of the total number of shares issued in the transaction, 33,319,528 were delivered to Hallmark Entertainment and 425,000 shares were issued in escrow and will be returned to the Issuer if a proposed settlement of a lawsuit related to the films transaction (the “Stockholder Suit”) becomes final.

        Acquisition from Henson.    On July 27, 2001, Hallmark Entertainment purchased 5,377,721 shares of the outstanding Class A Common Stock of the Issuer from the Jim Henson Company (“Henson”), a subsidiary of German media company, EM.TV & Merchandising AG (“EM.TV”) for $90 million in cash. The shares were originally issued to Henson in March 2001 in exchange for Henson’s 22.5% interest in Odyssey Holdings, L.L.C. (now known as Crown Media United States, LLC) (referred to hereinafter as “CMUS” or “Odyssey”) and Henson’s 50% interest in H&H Programming-Asia, LLC. The source of funds used by Hallmark Entertainment to acquire the 5,377,721 shares of Class A Common Stock from Henson was working capital.

        Acquisition from Kirsch.    On November 14, 2000, Hallmark Cards purchased 360,000 shares of the outstanding Class A Common Stock of the Issuer from Kirsch Media Group for $5,850,000 cash. The source of funds used by Hallmark Cards to acquire the 360,000 shares of Class A Common Stock from Kirsch Media Group was working capital. On December 26, 2000, Hallmark Cards transferred these 360,000 shares together with an additional 78,400 shares of Class A Common Stock of the Issuer held by it to Hallmark Entertainment as a contribution of capital, valued at $14 per share. On the same date Hallmark Cards also transferred 7,000 shares of Class A Common Stock of the Issuer held by it to certain of its executive officers.

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        Contribution Agreement.    Hallmark Entertainment acquired 30,670,422 shares of Class B Common Stock on May 9, 2000 (the “IPO Date”) from the Issuer in exchange for its interest in Crown Media International, Inc. (formerly Crown Media, Inc.) pursuant to a Contribution Agreement dated as of January 27, 2000 (the “Contribution Agreement”) by and among the Issuer, Hallmark Entertainment, Crown Media International, Inc., Liberty Media Corporation, Vision Group Incorporated, VISN Management Corp., National Interfaith Cable Coalition, Inc. and Chase Equity Associates, L.P. (now known as J.P. Morgan Partners (BHCA), L.P.) A copy of the Contribution Agreement is incorporated by reference as an Exhibit hereto.

ITEM 4. Purpose of Transaction.

        Films Transaction.    On September 28, 2001, the Issuer and Hallmark Entertainment Distribution closed the films transaction pursuant to the Purchase and Sale Agreement. Pursuant to the Purchase and Sale Agreement, the Issuer issued to Hallmark Entertainment 33,319,528 shares of Class A Common Stock in exchange for the transfer by Hallmark Entertainment Distribution to the Issuer of the film assets. Hallmark Entertainment acquired the shares of Class A Common Stock as a result of the transfer of assets to the Issuer, and intends to hold the shares for investment purposes.

        Acquisition from Henson.    On July 27, 2001, Hallmark Entertainment purchased 5,377,721 shares of the outstanding Class A Common Stock of the Issuer from Henson for $90 million in cash. The shares were originally issued to Henson in March 2001 in exchange for Henson’s 22.5% interest in Odyssey and Henson’s 50% interest in H&H Programming — Asia, LLC. The purpose of Hallmark Entertainment’s purchase from Henson was for investment purposes.

        Acquisition from Kirsch.    On November 14, 2000, Hallmark Cards purchased 360,000 shares of the outstanding Class A Common Stock of the Issuer from Kirsch Media Group for $5,850,000 cash. The source of funds used by Hallmark Cards to acquire the 360,000 shares of Class A Common Stock from Kirsch Media Group was working capital. On December 26, 2000, Hallmark Cards transferred these 360,000 shares together with an additional 78,400 shares of Class A Common Stock of the Issuer held by it to Hallmark Entertainment as a contribution of capital, valued at $14 per share. On the same date Hallmark Cards also transferred 7,000 shares of Class A Common Stock of the Issuer held by it to certain of its executive officers. The purpose of Hallmark Entertainment’s purchase from Hallmark Cards was investment purposes.

        Contribution Agreement.    Prior to the consummation of the transactions contemplated by the Contribution Agreement, (i) Hallmark Entertainment owned 88.9% of the equity interest in Crown Media International, Inc. (“CMI”), which owned a 22.5% common equity interest in CMUS, (ii) J.P. Morgan Partners (BHCA), L.P. owned the remaining 11.1% equity interest in CMI, (iii) National Interfaith Cable Coalition, Inc. owned a 22.5% common equity interest in CMUS, and (iv) Liberty Media Corporation indirectly owned a 32.5% common equity interest in CMUS. The purpose of the transactions contemplated by the Contribution Agreement, which occurred simultaneously with the closing of the IPO, was to reorganize the foregoing interests in CMI and CMUS under the Issuer in exchange for shares of Common Stock and to facilitate the IPO. As a result of the reorganization, Hallmark Entertainment owns all of the outstanding

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shares of Class B Common Stock, which represent approximately 89.9% of the voting power of the outstanding shares of Common Stock. Accordingly, Hallmark Entertainment controls the Issuer, subject to the terms of the Stockholders Agreement described in Item 6 below.

        Hallmark Cards acquired the shares of Class A Common Stock in the IPO for investment purposes. Hallmark Entertainment acquired the shares of Class A Common Stock subsequent to the IPO for investment purposes.

        Except as set forth herein, neither of the Reporting Persons have any plans or proposals which relate to or would result in:

        (a)  the acquisition of any additional securities of the Issuer, or the disposition of any securities of the Issuer;

        (b)  an extraordinary corporate transaction, such as a merger, reorganization or liquidation involving the Issuer or any of its subsidiaries;

        (c)  a sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries;

        (d)  any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number or term of directors or to fill existing vacancies on the board;

        (e)  any material change in the present capitalization or dividend policy of the Issuer;

        (f)  any material change in the Issuer’s business or corporate structure;

        (g)  any change in the Issuer’s charter or by-laws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuer by any person;

        (h)  causing a class of equity securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association;

        (i)  a class of equity securities of the Issuer becoming ineligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or

        (j)  any action similar to the foregoing.

        Notwithstanding the foregoing, either of the Reporting Persons may determine to change their plans or proposals with respect to the Issuer at any time in the future. In reaching any conclusion as to their future course of action, the Reporting Persons will take into consideration various factors, such as the Issuer’s business and prospects, other developments concerning the Issuer, other business opportunities available to the Reporting Persons, developments with respect to the business of the Reporting Persons, and general economic and stock market conditions, including, but not limited to, the market price of the Common Stock of the Issuer.

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The Reporting Persons reserve the right, based on all relevant factors, to acquire additional shares of the Common Stock or, subject to the terms of the Stockholders Agreement and restrictions under applicable securities laws, dispose of shares of Common Stock.

ITEM 5. Interests in Securities of the Issuer.

        (a)-(b): Hallmark Entertainment owns 69,806,071 shares of Common Stock, representing a beneficial ownership of 66.7% of the shares of Class A Common Stock that would be outstanding upon the conversion of the 30,670,422 shares of Class B Common Stock held by Hallmark Entertainment. Hallmark Entertainment shares voting and dispositive power over such shares with Hallmark Cards.

        Hallmark Cards owns 75,000 shares of Class A Common Stock as to which Hallmark Cards has sole voting and dispositive power. Hallmark Cards shares voting and dispositive power over the 69,806,071 shares of Common Stock held by Hallmark Entertainment.

        The information requested by (a)-(b) of this Item 5 for each director and executive officer of Hallmark Cards and Hallmark Entertainment is set forth in Schedule II hereto and is incorporated herein by reference.

        (c): Hallmark Entertainment acquired 33,319,528 shares of Class A Common Stock within the past 60 days. Except as described in this Item 5(c), neither of the Reporting Persons, nor, to the best knowledge of the Reporting Persons, any of their directors or executive officers, has effected any transactions in shares of Common Stock during the past 60 days.

        (d): None

        (e): Not applicable.

ITEM 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

        Films Transaction.    On September 28, 2001, Hallmark Entertainment Distribution acquired 33,319,528 shares of Class A Common Stock from the Issuer as consideration for the transfer by Hallmark Entertainment Distribution to the Issuer of the film assets pursuant to the Purchase and Sale Agreement.

        Registration Rights Agreement.    Hallmark Entertainment Distribution is a party to a Registration Rights Agreement, dated September 28, 2001, by and between Crown Media Holdings, Inc. and Hallmark Entertainment Distribution. The Registration Rights Agreement confers on Hallmark Entertainment Distribution, or its assignee, the right, on not more than four occasions in the aggregate, and no more frequently than once every six months, to require the Issuer to register for offer and sale under the Securities Act of 1933, as amended, (the “Securities Act”) all or a portion of the Class A Common Stock acquired by Hallmark Entertainment Distribution pursuant to the Purchase and Sale Agreement (or as otherwise acquired up to a maximum 5% of the outstanding shares of the Issuer at the date of the registration demand), provided that the shares of Class A Common Stock for which a demand registration is made must represent at least 7% of the aggregate shares of the Issuer then issued and outstanding. In

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addition, Hallmark Entertainment Distribution has the right to participate, subject to certain restrictions, in any registered public offering filed by the Issuer under the Securities Act.

        Escrow Agreement.    Hallmark Entertainment Distribution is a party to an Escrow Agreement, dated as of September 28, 2001, (the “Escrow Agreement”) by and among Hallmark Entertainment Distribution, Crown Media Holdings, Inc. and Colorado State Bank and Trust (the “Escrow Agent”). Pursuant to the terms of the proposed settlement of the Stockholder Suit and the terms of the Escrow Agreement, the Issuer deposited with the Escrow Agent the stock certificate representing 425,000 shares of Class A Common Stock issued pursuant to the Purchase and Sale Agreement. The Escrow Agent is to hold the Escrowed Shares until receipt of instructions, executed by both the Issuer and Hallmark Entertainment Distribution, directing the Escrow Agent to deliver the Escrowed Shares to the Issuer. Such instructions will be issued if the proposed settlement of the Stockholder Suit becomes final. In the event that delivery instructions are not received by the Escrow Agent on or before March 1, 2002, the Escrowed Shares will be delivered to Hallmark Entertainment Distribution.

        Henson Acquisition.    On July 27, 2001, Hallmark Entertainment acquired 5,377,721 shares of outstanding Class A Common Stock from Henson for an aggregate purchase price of $90 million in cash. This purchase was made pursuant to a Stock Purchase Agreement, dated as of July 24, 2001, by and between Henson and Hallmark Entertainment.

        Amended and Restated Stockholders Agreement.    Hallmark Entertainment is a party to a Second Amended and Restated Stockholders Agreement, dated as of August 31, 2001, (the “Stockholders Agreement”) by and among Hallmark Entertainment, Liberty Media Corporation, Liberty Crown, Inc. VISN Management Corp., J.P. Morgan Partners (BHCA), L.P., DIRECTV Enterprises, Inc. and the Issuer. The Stockholders Agreement provides that the Issuer’s Board of Directors will consist of not less than 11 directors, with six nominated by Hallmark Entertainment, one nominated by each of Liberty Media Corporation, VISN Management Corp. and J.P. Morgan Partners (BHCA), L.P. and two independent directors who will not be officers or employees of any of the parties or their affiliates nominated by the Board of Directors. The rights of the parties to nominate a director will terminate on the later of (1) such party owning less than 5% of the Common Stock then outstanding or (2) such party ceasing to own at least 75% of the Common Stock such party owned immediately following the completion of the Issuer’s IPO.

        The parties to the Stockholders Agreement agree not to transfer more than 25% of the Common Stock owned by them immediately following the IPO until after the second anniversary of the Stockholders Agreement, except to their affiliates, another party to the Stockholder Agreement or their affiliates, to their executives under a stock-based compensation package, or in a transaction involving a merger, consolidation or business combination with, or sale of all of our common stock to, a third party that is not affiliated with the Issuer.

        In addition, the Stockholders Agreement provides that, in the event Hallmark Entertainment proposes to transfer 20% or more of the outstanding Common Stock to an unaffiliated third party, each other party to the Stockholders Agreement will have the right to participate on the same terms in that transaction with respect to the proportionate number of such other party’s shares. The Stockholders Agreement also provides that if the Issuer issues for cash

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an amount of the Common Stock, in either a public offering or private transaction, that causes Liberty Media Corporation and its affiliates to own, in the aggregate, less than 10% of the outstanding Common Stock, Liberty Media Corporation will have the right to purchase, at such public offering price or the average closing price of the Class A Common Stock over a five-day period prior to the closing of such private transaction, as applicable, an amount of the Class A Common Stock so as to restore its 10% ownership interest. Liberty Media Corporation must exercise such right not less than seven days prior to the closing of such issuance.

        Under the Stockholders Agreement, Hallmark Entertainment has the right to require the Issuer on four occasions, and the other parties, as a group, have the right to require the Issuer on two occasions, to register for sale the shares of the Common Stock they hold, so long as the number of shares they require the Issuer to register in each case is at least 7% of the Common Stock then outstanding. Hallmark Entertainment and the other parties also have an unlimited number of “piggy back” registration rights.

        The Stockholders Agreement also provides that the Issuer will be obligated to pay all expenses that result from the registration of Hallmark Entertainment’s and the other parties’ Common Stock under the Stockholders Agreement, other than registration and filing fees, attorneys fees, underwriter fees or expenses and underwriting discounts and commissions. The Issuer also agreed to indemnify such parties against any liabilities that may result from their sale of Common Stock, including Securities Act liabilities.

        Under the Stockholders Agreement, the Issuer also agreed that, for so long as the Issuer or any of its affiliates are entitled to have a representative on the Odyssey governance committee, and VISN Management Corp. and its affiliates either (a) are entitled to nominate to, or designate a member of, our Board of Directors or (b) beneficially own any preferred interests in Odyssey, then neither the Issuer nor any of its affiliates will, without the consent of the member of the Issuer’s Board of Directors nominated by VISN Management Corp. or a representative of the National Interfaith Cable Coalition, Inc., vote in favor of:

	•		any specified change in, or action described in, the Odyssey amended and restated company agreement that relates to VISN Management Corp.’s preferred interest in Odyssey or that relates to VISN Management Corp.’s rights to programming on the Odyssey Network or its programming budget;
	•		any repayment or redemption of specified equity interests in Odyssey;
	•		any transfer of all of Odyssey’s assets or any business combination involving Odyssey where Odyssey is not the surviving entity, unless the transferee assumes specified obligations under the Odyssey amended and restated company agreement until the later of the fifth anniversary of this offering or the second anniversary of the transfer or business combination;
	•		the dissolution of Odyssey, except in connection with a complete liquidation;
	•		any transfer of all of Odyssey’s assets to, or any business combination involving Odyssey with, the Issuer or any of its affiliates, or any other material transaction with

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			the Issuer or any of its affiliates, unless the Issuer comply with specified restrictions relating to any financial benefit the Issuer receives from the transaction that is more than what the Issuer would have received had the transaction been on an arm’s-length basis or on commercially reasonable terms;
	•		any transfer of all of Odyssey’s assets or any business combination involving Odyssey where Odyssey is not the surviving entity, prior to the second anniversary of the Issuer’s IPO; or
	•		any amendment to Odyssey’s amended and restated company agreement that would result in none of the Issuer or its affiliates having the right to consent to take any of the actions listed in the above bullet points.

        The Issuer also agreed under the Stockholders Agreement not to transfer any of its interest in Odyssey prior to the second anniversary of the IPO without the consent of the VISN Management Corp. or the National Interfaith Cable Coalition, Inc. In addition, the Issuer agreed not to transfer any of its interests in Odyssey after the second anniversary of the IPO unless the transfer is conditioned on the requirement that the transferee assume the Issuer’s obligations described above. Under the terms of the Stockholders Agreement, the transferee’s obligations will generally expire on the later of (1) the fifth anniversary of the IPO, (2) the second anniversary of the transfer or (3) the repayment of VISN Management Corp.’s preferred interest in Odyssey, except that the obligations of the transferee will expire upon dissolution of Odyssey.

        The foregoing summary is qualified in its entirety by reference to the text of the Stockholders Agreement which is filed as an Exhibit hereto and hereby incorporated by reference.

ITEM 7. Material to be Filed as Exhibits.

	(1)		Contribution Agreement, dated as of January 27, 2000, by and among Hallmark Entertainment, Inc., Crown Media, Inc., Liberty Media Corporation, Vision Group Incorporated, VISN Management Corp., National Interfaith Cable Coalition, Inc., Chase Equity Associates, L.P. and Crown Media Holdings, Inc. (previously filed as Exhibit 2.1 to the Registration Statement on Form S-1/A (Amendment No. 1) of Crown Media Holdings, Inc., Commission File No. 333-95573, filed on March 10, 2000, and incorporated herein by reference).
	(2)		Amended and Restated Stockholders Agreement, dated as of March 14, 2001, by and among Hallmark Entertainment, Inc., Liberty Media Corporation, Liberty Crown, Inc., VISN Management Corp., J.P. Morgan Partners (BHCA), L.P., The Jim Henson Company and Crown Media Holdings, Inc. (previously filed as Exhibit 10.1 to the Annual Report on Form 10-K of Crown Media Holdings, Inc, Commission File No.000-30700, filed on March 27, 2001 and incorporated herein by reference).
	(3)		Joint Filing Agreement, dated as of May 19, 2000, by and between Hallmark Cards, Incorporated and Hallmark Entertainment, Inc. (previously filed as Exhibit

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			3 to the Schedule 13D of the Reporting Persons, Commission File No. 005-59037, filed on May 19, 2000 and incorporated herein by reference).
	(4)		Purchase and Sale Agreement, dated as of April 10, 2001, by and between Hallmark Entertainment Distribution LLC and Crown Media Holdings, Inc. (previously filed as Appendix A to the definitive proxy materials of Crown Media Holdings, Inc. filed on May 7, 2001 and incorporated herein by reference).
	(5)		Stock Purchase Agreement, dated as of July 24, 2001, by and between The Jim Henson Company, Inc. and Hallmark Entertainment (previously filed as Exhibit 5 to the Schedule 13D/A Amendment No.1 of the Reporting Persons, Commission File No. 005-59037, filed on August 7, 2001 and incorporated herein by reference).
	(6)		Registration Rights Agreement, dated as of September 28, 2001, by and between Crown Media Holdings, Inc. and Hallmark Entertainment Distribution LLC.
	(7)		Escrow Agreement, dated as of September 28, 2001, by and between Hallmark Entertainment Distribution LLC, Crown Media Holdings, Inc. and Colorado State Bank and Trust.

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SIGNATURES

        After reasonable inquiry and to the best of our knowledge and belief, we certify that the information set forth in this statement is true, complete and correct.

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SCHEDULE I

        The name and present principal occupation of each director and executive officer of Hallmark Cards, Incorporated and Hallmark Entertainment, Inc. are set forth below. The business address for the directors and executive officers of Hallmark Cards, Incorporated is c/o Hallmark Cards, Incorporated, 2501 McGee, Kansas City, Missouri 64108. The business address for the directors and executive officers of Hallmark Entertainment, Inc. is c/o Hallmark Entertainment, Inc., 1325 Avenue of the Americas, 21st Floor, New York, New York 10019. All the directors and executive officers listed on this Schedule I are United States citizens.

Hallmark Cards, Incorporated

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Hallmark Entertainment, Inc.

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SCHEDULE II

        To the knowledge of the Reporting Persons, listed below are the names of their executive officers and directors who beneficially own Common Stock of the Issuer, along with the number of shares each such person beneficially owns. To the knowledge of the Reporting Persons, the persons listed below are the only persons on Schedule I who beneficially own Common Stock. To the knowledge of the Reporting Persons, (a) each person listed below has the sole power to vote or direct to vote and dispose or direct to dispose those shares of Common Stock beneficially owned by such person and (b) each person beneficially owns shares of Common Stock representing less than 1% of the Class A Common Stock outstanding. Except as otherwise noted, each person acquired his/her shares of Class A Common Stock on May 9, 2000 at the time of the closing of the IPO at a price per share of $14.

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Page 17 of 17 Pages EX-99.6 3 d91309a2ex99-6.txt EX-99.6 REGISTRATION RIGHTS AGREEMENT EXHIBIT 6 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement dated as of September 28, 2001 by and between Crown Media Holdings, Inc. ("Company") and Hallmark Entertainment Distribution LLC ("Distribution). WITNESSETH: WHEREAS, the Company and Distribution are parties to that certain Purchase and Sale Agreement dated as of April 10, 2001 whereby Distribution has agreed to sell and Company has agreed to purchase certain film assets defined therein (the "Asset Agreement"); and WHEREAS, Distribution has agreed to accept common stock of the Company as part of the consideration for such film assets; and WHEREAS, it is a condition of closing for the Asset Agreement that the parties execute this Registration Agreement. NOW, THEREFORE, the parties hereto agree as follows: 1. Definitions. (a) As used in this Agreement the following defined terms shall have the following meanings: "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean (a) the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise or (b) beneficial ownership of 10% or more of the voting securities of such Person. "Applicable Securities" means in relation to a Registration Statement the Registrable Securities identified in the related Demand Notice or Piggy-back Notice. "Class A Stock" means Class A common stock of the Company, par value $.01 per share. "Class B Stock" means Class B common stock of the Company, par value $.01 per share. "Commission" means the United States Securities and Exchange Commission. "Company Common Stock" means Class A Stock and Class B Stock. "Demand" has the meaning set forth in Section 2(a). "Demand Notice" has the meaning set forth in Section 2(a). 1 "Effective Time" means the date on which the Commission declares a Registration Statement effective or on which a Registration Statement otherwise becomes effective. "Effectiveness Period" means as to a Registration Statement the period during which such Registration Statement is effective. "Election" means, with respect to a Registration, that Distribution has delivered a completed and signed Notice and Questionnaire to the Company in accordance with the provisions hereof and provided such other information as may be required by the Company to enable Distribution to use the related Prospectus in connection with sales of such Applicable Securities. "Intended Offering Notice" has the meaning set forth in Section 3(a). "Notice and Questionnaire" means a Notice of Registration Statement and Selling Securityholder Questionnaire substantially in the form of Exhibit A hereto. "Person" means an individual, partnership, corporation, trust, limited liability company or unincorporated organization, or other entity or organization, including a government or agency or political subdivision thereof. "Piggy-back Notice" has the meaning set forth in Section 3(a). "Prospectus" means the prospectus (including, without limitation, any preliminary prospectus, any final prospectus and any prospectus that discloses information previously omitted from a prospectus filed as part of an effective Registration Statement in reliance upon Rule 430A under the Securities Act or any successor rule thereto) included in a Registration Statement, as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Applicable Securities covered by a Registration Statement and by all other amendments and supplements to such prospectus, including all material incorporated by reference in such prospectus and all documents filed after the date of such prospectus by the Company under the Exchange Act and incorporated by reference therein. "Registrable Securities" means (a) the shares of Class A Stock acquired by Distribution pursuant to the Asset Agreement, (b) the shares of Class A Stock otherwise acquired by Distribution up to a maximum of 5% of the outstanding shares of Company Common Stock (calculated on a fully diluted basis) as of the date of a Demand Notice or an Intended Offering Notice, as the case may be, and (c) any securities of the Company issued or issuable with respect to any shares of Class A Stock referred to in subdivision (a), (b) or (c) upon conversion of such shares or by way of stock dividend or stock split or in connection with a combination or conversion of shares, recapitalization, merger, consolidation or other reorganization or otherwise, other than in each case Unrestricted Securities. "Registration" means a registration under the Securities Act effected pursuant to Section 2 or Section 3. "Registration Expenses" means all expenses incident to the Company's performance of or compliance with any Registration of Registrable Securities pursuant to this Agreement, 2 including, without limitation, National Association of Securities Dealers, Inc. fees, all fees and expenses of complying with securities or blue sky laws, all word processing, duplicating and printing expenses, messenger and delivery expenses, the fees and disbursements of counsel for the Company and of its independent public accountants, including the expenses of any special audits or "comfort" letters required by or incident to such performance and compliance, premiums and other costs of policies of insurance obtained by the Company against liabilities arising out of the public offering of Registrable Securities being registered, but excluding fees and disbursements of counsel retained by Distribution, premiums and other costs of policies of insurance obtained by Distribution or its agents or underwriter against liabilities arising out of the public offering of the Registrable Securities being registered, any fees and disbursements of underwriters customarily paid by sellers of securities who are not the issuers of such securities, all underwriting discounts and commissions and transfer taxes, if any, and registration and filing fees relating to Registrable Securities. "Registration Statement" means a registration statement filed under the Securities Act by the Company pursuant to the provisions of Section 2 or Section 3, including the Prospectus contained therein, any amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all material incorporated by reference in such registration statement. "Securities Act" means the United States Securities Act of 1933, as amended. "Underwriter" means any underwriter of Applicable Securities designated pursuant to Section 2(f) hereof. "Unrestricted Securities" means any shares of Company Common Stock that (i) have been registered under an effective registration statement under the Securities Act and have been disposed of pursuant to such effective registration statement, (ii) have been transferred in compliance with Rule 144 or Rule 145 under the Securities Act (or in each case any successor provision thereto) under circumstances in which any legend relating to restrictions on transfer under the Securities Act is removed, (iii) are transferable pursuant to paragraph (k) of Rule 144 or paragraph (d) of Rule 145 under the Securities Act (or in each case any successor provision thereto), (iv) have otherwise been transferred and a new security not subject to transfer restrictions under the Securities Act has been delivered upon such transfer by or on behalf of the Company or (v) cease to be outstanding. (b) For the purposes hereof, (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires, (ii) the terms "hereof," "herein," and "herewith" and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article, Section and paragraph references are to the Articles, Sections and paragraphs to this Agreement unless otherwise specified, (iii) the word "including" and words of similar import when used in this Agreement shall mean "including, without limitation," unless the context otherwise requires or unless otherwise specified, (iv) the word "or" shall not be exclusive, and (v) provisions shall apply, when appropriate, to successive events and transactions. 3 2. Demand Registration. (a) (i) Distribution shall have the right, on not more than four occasions in the aggregate, and no more frequently than once during any six-month period, to require the Company to register for offer and sale under the Securities Act (a "Demand") all or a portion of the Registrable Securities held by Distribution, subject to the restrictions set forth herein; provided that Distribution shall not be entitled to make a Demand hereunder unless the Registrable Securities subject to such Demand represent at least 7% of the aggregate shares of Company Common Stock then issued and outstanding. As promptly as practicable after the Company receives from Distribution a notice pursuant to this Section 2(a) (a "Demand Notice"), demanding that the Company register for offer and sale under the Securities Act Registrable Securities, subject to Section 2(b), the Company shall (i) use all reasonable efforts to file as promptly as reasonably practicable with the Commission a Registration Statement relating to the offer and sale of the Applicable Securities on such form as the Company may reasonably deem appropriate (provided that the Company shall not, unless the Company otherwise determines, be obligated to register any securities on a "shelf" registration statement or otherwise to register securities for offer or sale on a continuous or delayed basis) and, thereafter, (ii) after the filing of an initial version of the Registration Statement, use reasonable efforts to cause such Registration Statement to be declared effective under the Securities Act as promptly as practicable after the date of filing of such Registration Statement; provided, however, that Distribution shall not be entitled to be named as a selling securityholder in the Registration Statement or to use the Prospectus forming a part thereof for resales of Registrable Securities unless Distribution has made an Election. Subject to Section 2(b), the Company shall use reasonable efforts to keep each Registration Statement continuously effective in order to permit the Prospectus forming a part thereof to be usable by Distribution for resales of Registrable Securities for an Effectiveness Period ending on the earlier of (i) 30 days from the Effective Time of such Registration Statement and (ii) such time as all of such securities have been disposed of by the selling securityholders. (b) The Company shall have the right to postpone (or, if necessary or advisable, withdraw) the filing, or delay the effectiveness, of a Registration Statement, or fail to keep such Registration Statement continuously effective or not amend or supplement the Registration Statement or included Prospectus, if the Company determines based upon the advice of counsel that it would be advisable to not disclose in the Registration Statement a planned or proposed financing, acquisition or other corporate transaction or other material information, and the Company shall have determined in good faith that such disclosure is not in the best interests of the Company and its stockholders; provided that no one such postponement shall exceed 90 days in any six-month period and all such postponements shall not exceed 180 days in the aggregate. The Company shall advise Distribution of any such determination as promptly as practicable after such determination. (c) In connection with an underwritten offering, if the managing underwriter or underwriters advise the Company that in its or their opinion the number of Applicable Securities subject to a Demand exceeds the number which can be sold in such offering, the Company shall include in such Registration the number of Applicable Securities that, in the opinion of such managing underwriter or underwriters, can be sold in such offering. 4 (d) The Company may include in any Registration requested pursuant to Section 2(a) hereof other securities for sale for its own account or for the account of another Person, subject to the following sentence. In connection with an underwritten offering, if the managing underwriter or underwriters advise the Company that in its or their opinion the number of Applicable Securities requested by Distribution, together with other securities for sale for the account of the Company or any other Person, to be registered exceeds the number which can be sold in such offering, the Company shall include in such Registration the number of Applicable Securities and other securities that, in the opinion of such managing underwriter or underwriters, can be sold in such offering as follows: (i) first, the Applicable Securities requested to be registered by Distribution and (ii) second, any other securities requested to be included in such Registration. (e) Distribution shall have the right to withdraw any Demand (i) prior to the time the Registration Statement in respect of such Demand has been declared effective, (ii) upon the issuance by the Commission or any other governmental agency of a stop order, injunction or other order which interferes with such Registration, (iii) upon the Company's availing itself of Section 2(b), or (iv) if Distribution is prevented pursuant to Section 2(c) or (d) from selling all of the Applicable Securities it requested to be registered. Notwithstanding such request to withdraw the Demand, the Registration requested by Distribution shall nonetheless be deemed to have been effected (and, therefore, requested) for purposes of Section 2(a) hereof if Distribution withdraws any Demand (A) pursuant to clause (i) of the preceding sentence after the Commission filing fee is paid with respect thereto or (B) pursuant to clause (iv) of the preceding sentence in circumstances where at least 50% of the Applicable Securities requested to be included in such Registration by Distribution could have been included, and in each case, (x) the Company has not availed itself of Section 2(b) with respect to such Registration request or (y) the Company has availed itself of Section 2(b) and the withdrawal request is not made within 10 days after the termination of the suspension period occasioned by the Company's exercise of its rights under Section 2(b). If Distribution withdraws a Demand but the Company nevertheless determines to complete, within 30 days after such withdrawal, the Registration so requested as to securities other than the Applicable Securities, Distribution shall be entitled to participate in such Registration pursuant to Section 3, but in such case the Intended Offering Notice shall be required to be given to Distribution at least five business days prior to the anticipated filing date of the Registration Statement, or if such Registration Statement has already been filed, within 10 business days after receipt of the request to withdraw Demand from Distribution and Distribution shall be required to give the Piggy-back Notice no later than 3 business days after the Company's delivery of such Intended Offering Notice. (f) In the event that any Registration pursuant to this Section 2 shall involve, in whole or in part, an underwritten offering, one co-lead managing underwriter shall be selected by the Company and shall be reasonably acceptable to Distribution, and the other co-lead underwriter shall be selected by Distribution, and shall be reasonably acceptable to the Company. Any additional co-managing underwriters shall be selected by the Company. 3. Piggy-back Registration. (a) If at any time the Company intends to file on its behalf or on behalf of any of its securityholders a Registration Statement under the Securities Act in connection with a public offering of any securities of the Company on a form and in a manner that would permit the registration for offer and sale under the Securities Act of Registrable 5 Securities, other than a registration statement on Form S-8 or Form S-4, then the Company shall give written notice (an "Intended Offering Notice") of such intention to Distribution at least 20 business days prior to the anticipated filing date of such registration statement. Such Intended Offering Notice shall offer to include in such registration statement for offer to the public such number of Registrable Securities as Distribution may request, subject to the conditions set forth herein, and shall specify, to the extent then known, the number and class of securities proposed to be registered, the proposed date of filing of such registration statement, any proposed means of distribution of such securities, any proposed managing underwriter or underwriters of such securities and a good faith estimate by the Company of the proposed maximum offering price of such securities, as such price is proposed to appear on the facing page of such registration statement. Distribution shall advise the Company in writing (such written notice being a "Piggy-back Notice") not later than 10 business days after the Company's delivery of the Intended Offering Notice, if Distribution desires to participate in such offering. The Piggy-back Notice shall set forth the number of Registrable Securities Distribution desires to have included in the registration statement and offered to the public. If Distribution elects to participate in the offering, upon the request of the Company, Distribution shall enter into such underwriting, custody and other agreements as are customary in connection with registered secondary offerings or necessary or appropriate in connection with the offering. Distribution shall not be entitled to be named as a selling securityholder in the Registration Statement or to use the Prospectus forming a part thereof for sales of Registrable Securities unless Distribution has made an Election. (b) In connection with an underwritten offering, if the managing underwriter or underwriters advise the Company in writing that in its or their opinion the number of securities proposed to be registered exceeds the number that can be sold in such offering, the Company shall include in such Registration the number of securities that, in the opinion of such managing underwriter or underwriters, can be sold as follows: (i) first, the securities that the Company proposes to sell or, if the Registration is in response to a demand by any securityholders of the Company with registration rights ("Other Registering Stockholders"), the securities that demanding Other Registering Stockholders propose to sell, (ii) second, Applicable Securities requested to be included in such Registration by Distribution and other securities requested to be included by any Other Registering Stockholders, and, if the Registration is in response to a demand by any Other Registering Stockholder, the securities that the Company proposes to sell (pro rata in proportion to the number of Applicable Securities requested to be included by Distribution, other securities requested to be included by any Other Registering Stockholder, and, if applicable, the Company) and (iii) third, other securities requested to be included in such Registration. (c) The rights of Distribution pursuant to Section 2 hereof and this Section 3 are cumulative, and the exercise of rights under one such Section shall not exclude the subsequent exercise of rights under the other such Section (except to the extent expressly provided otherwise herein). Notwithstanding anything herein to the contrary, the Company may abandon and/or withdraw any registration as to which any right under Section 3 may exist at any time and for any reason without liability hereunder. In such event, the Company shall notify Distribution to the extent that it has delivered a Piggy-back Notice to Distribution to participate therein. 6 4. Registration Procedures. In connection with a Registration Statement, the following provisions shall apply: (a) The Company shall furnish to Distribution, prior to the Effective Time, a copy of the Registration Statement as initially filed with the Commission, and each amendment thereto and each amendment or supplement, if any, to the Prospectus included therein. (b) Subject to Section 2(b) and in respect of a Registration Statement under Section 2, the Company shall use reasonable best efforts to promptly take such action as may be necessary so that (i) each of the Registration Statement and any amendment thereto and the Prospectus forming part thereof and any amendment or supplement thereto (and each report or other document incorporated therein by reference in each case), when it becomes effective, complies in all material respects with the Securities Act and the Exchange Act and the Rules and Regulations, (ii) each of the Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) each of the Prospectus forming part of the Registration Statement, and any amendment or supplement to such Prospectus, does not at any time during the period during which the Company is required to keep a Registration Statement effective under Section 2(a) include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (c) The Company shall, promptly upon learning thereof, advise Distribution, and shall confirm such advice in writing if so requested: (i) when a Registration Statement and any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective; (ii) of any request by the Commission for amendments or supplements to the Registration Statement or the Prospectus included therein or for additional information with respect to the Registration Statement and Prospectus; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for such purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of the securities included in the Registration Statement for sale in any jurisdiction or the initiation of any proceeding for such purpose; and (v) following the effectiveness of any Registration Statement, of the happening of any event or the existence of any state of facts that requires the making of any changes in the Registration Statement or the Prospectus included therein so that, as of such date, such Registration Statement and Prospectus do not contain an untrue statement of a material fact and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in light of the 7 circumstances under which they were made) not misleading (which advice shall be accompanied by an instruction to Distribution to suspend the use of the Prospectus until the requisite changes have been made, which instruction Distribution agrees to follow). (d) In respect of a Registration Statement under Section 2 (and not Section 3), the Company shall use all reasonable efforts to prevent the issuance, and if issued to obtain the withdrawal, of any order suspending the effectiveness of the Registration Statement at the earliest possible time. (e) The Company shall furnish to Distribution, without charge, at least one copy of the Registration Statement and all post-effective amendments thereto, including financial statements and schedules, and, if Distribution so requests in writing, all reports, other documents and exhibits that are filed with or incorporated by reference in the Registration Statement. (f) The Company shall, during the period during which the Company is required to keep a Registration Statement continuously effective under Section 2(a) or elects to keep such effective under Section 3, deliver to Distribution, without charge, as many copies of the Prospectus (including each preliminary Prospectus) included in the Registration Statement and any amendment or supplement thereto Distribution may reasonably request, and the Company consents (except during the continuance of any event described in Section 2(b) or Section 4(c)(v) hereof) to the use of the Prospectus, with any amendment or supplement thereto, by Distribution in connection with the offering and sale of the Applicable Securities covered by the Prospectus and any amendment or supplement thereto during such period. (g) Prior to any offering of Applicable Securities pursuant to the Registration Statement, the Company shall use reasonable efforts to (i) register or qualify or cooperate with Distribution and its counsel in connection with the registration or qualification of such Applicable Securities for offer and sale under the securities or "blue sky" laws of such jurisdictions within the United States as Distribution may reasonably request, (ii) keep such registrations or qualifications in effect and comply with such laws so as to permit the continuance of offers and sales in such jurisdictions for the period during which the Company is required to keep a Registration Statement continuously effective under Section 2(a) and (iii) take any and all other reasonable actions requested by Distribution which are necessary to enable the disposition in such jurisdictions of such Applicable Securities; provided, however, that in no event shall the Company be obligated to (1) qualify as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to so qualify but for this Agreement or (2) file any general consent to service of process or subject itself to tax in any jurisdiction where it is not so subject. (h) The Company shall cooperate with Distribution to facilitate the timely preparation and delivery of certificates representing Applicable Securities to be sold pursuant to the Registration Statement, which certificates shall comply with the requirements of any United States securities exchange upon which any Applicable Securities are listed (provided that nothing herein shall require the Company to list any Registrable Securities on any securities exchange on which they are not currently listed) or the NASD Rules, as applicable, and which certificates shall be free of any restrictive legends and in such permitted denominations and registered in 8 such names as Distribution may request in connection with the sale of Applicable Securities pursuant to the Registration Statement. (i) The Company shall use reasonable efforts to: (i) make such reasonable representations and warranties in the applicable underwriting agreement to the Underwriters, in form, substance and scope as are customary; (ii) in connection with any underwritten offering, obtain opinions of counsel to the Company (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the Underwriters) addressed to the Underwriters, covering such matters as are customary to the extent reasonably required by the applicable underwriting agreement; (iii) in connection with any underwritten offering, obtain "cold comfort" letters and updates thereof from the independent public accountants of the Company (and, if necessary, from the independent public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed to Distribution (if Distribution has provided such letter, representations or documentation, if any, required for such cold comfort letter to be so addressed) and the Underwriters, in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with secondary underwritten offerings of equity securities; and (iv) in connection with any underwritten offering, deliver such documents and certificates as may be reasonably requested by Distribution and the Underwriters, if any, including, without limitation, certificates to evidence compliance with any conditions contained in the underwriting agreement or other agreements entered into by the Company. (j) In respect of a Registration Statement under Section 2 (and not Section 3), the Company shall use reasonable efforts to take all other steps reasonably necessary to effect the timely registration, offering and sale of the Applicable Securities covered by the Registration Statements contemplated hereby. 5. Registration Expenses. The Company shall bear the Registration Expenses in connection with the performance of its obligations under Sections 2, 3 and 4. Distribution shall bear all other expenses relating to any Registration or sale in which Distribution participates pro rata with any other Stockholders participating therein, including all of the fees and expenses of Distribution's counsel, any applicable underwriting discounts or commissions and registration or filing fees with respect to the Applicable Securities. 6. Indemnification and Contribution. (a) Upon the effectiveness of the Registration of Applicable Securities pursuant to Section 2 or 3, the Company shall indemnify and hold harmless Distribution and each Underwriter or selling agent, and its Affiliates, officers and directors (each such Person being sometimes referred to as an "Indemnified Person") from and against any losses, claims, damages or liabilities, joint or several, (or actions in respect thereof) 9 to which such Indemnified Person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Registration Statement under which such Applicable Securities are registered under the Securities Act, or any Prospectus contained therein or furnished by the Company to any Indemnified Person, or any amendment or supplement thereto in each case relating to the sale of Applicable Securities, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company hereby agrees to reimburse such Indemnified Person for any reasonable legal or other expenses reasonably incurred by it in connection with investigating or defending any such loss, claim, damage or liability (or action in respect thereof) as such expenses are incurred; provided, however, that (i) the Company shall not be liable to any such Indemnified Person in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such Registration Statement or Prospectus, or amendment or supplement, in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Indemnified Person or by or on behalf of Distribution expressly for use therein; (ii) the Company shall not be liable to the extent that any loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon (a) the use of any Prospectus after such time as the obligation of the Company to keep the same effective and current has expired, or (b) the use of any Prospectus after such time as the Company has advised Distribution in writing that a post-effective amendment or supplement thereto is required, except such Prospectus as so amended or supplemented; and (iii) the Company shall not be liable to any Person who participates as an Underwriter in the offering or sale of Registrable Securities or any other Person, if any, who controls such Underwriter within the meaning of the Securities Act, to the extent that any loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of the matters described in the first proviso of this sentence or in (a) or (b) above or such Person's failure to send or give a copy of the final prospectus or supplement to the Persons asserting an untrue statement or alleged untrue statement or omission or alleged omission at or prior to the written confirmation of the sale of Registrable Securities to such Person if such statement or omission was timely corrected in such final prospectus or supplement. (b) Distribution agrees as a consequence of the inclusion of Applicable Securities in such Registration Statement, and each Underwriter or selling agent shall agree, as a consequence of facilitating such disposition of Applicable Securities, severally and not jointly, to (i) indemnify and hold harmless the Company and each other participating stockholder, their respective directors and officers and each Person, if any, who controls the Company or each other participating stockholder, within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, against any losses, claims, damages or liabilities (or actions in respect thereof) to which the Company or each other participating stockholder, or such other Persons may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in such Registration Statement or Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, unless such untrue 10 statement or alleged untrue statement or omission or alleged omission was subsequently remedied in an amendment or supplement to such Registration Statement or Prospectus and the Company failed to comply with the delivery requirements of the Securities Act, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by or on behalf of Distribution, the Underwriter or selling agent or its agent, expressly for use therein, and (ii) subject to the limitation set forth immediately preceding this clause (ii), reimburse the Company and each other participating stockholder, for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such action or claim as such expenses are incurred. (c) Promptly after receipt by any Person entitled to indemnity (an "Indemnitee") under Section 6(a) or (b) hereof of notice of the commencement of any action or claim, such Indemnitee shall, if a claim in respect thereof is to be made against an indemnifying Person (an "Indemnitor") under this Section 6, notify such Indemnitor in writing of the commencement thereof, but the omission so to notify the Indemnitor shall not relieve it from any liability which it may have to any Indemnitee except to the extent of any actual prejudice. In case any such action shall be brought against any Indemnitee, it shall notify an Indemnitor of the commencement thereof, such Indemnitor shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other Indemnitor similarly notified, to assume the defense thereof, with counsel satisfactory to such Indemnitee, and, after notice from the Indemnitor to such Indemnitee of its election so to assume the defense thereof, such Indemnitor shall not be liable to such Indemnitee under this Section 6 for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such Indemnitee, in connection with the defense thereof. No Indemnitor shall, without the prior written consent of the Indemnitee, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the Indemnitee is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the Indemnitee from all liability arising out of such action or claim and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act, by or on behalf of any Indemnitee. Notwithstanding the foregoing, an Indemnitee shall have the right to employ separate counsel reasonably acceptable to the Indemnitor in any such proceeding and to participate in (but not control, other than as provided in (3) below) the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnitee unless (1) the Indemnitor has agreed to pay such fees and expenses; (2) the Indemnitor shall have failed after notice to assume the defense of such proceeding; or (3) the named parties to any such proceeding (including any impleaded parties) include both such Indemnitee and the Indemnitor or any of its affiliates or controlling persons, and a conflict of interest will exist if such counsel represents such Indemnitee and the Indemnitor (or such affiliate or controlling person) and in the case of (3), the Indemnitee shall have the right to control the Indemnitee's defense and in each of the cases, if such Indemnitee notifies the Indemnitor in writing that it elects to employ separate counsel, the reasonable fees and expenses of such counsel shall be at the expense of the Indemnitor; it being understood, however, that the Indemnitor shall not, in connection with any one such proceeding or separate but substantially similar or related proceedings in the same jurisdiction, arising out of 11 the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for all such Indemnitees, which firm shall be designated by the Indemnitee that had the largest number of shares included in the applicable registration statement. An Indemnitor shall not be liable for any settlement of an action effected without its written consent. (d) If the indemnification provided for in this Section 6 is unavailable to or insufficient to hold harmless an Indemnitee under Section 6(a) or (b) hereof in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each Indemnitor shall contribute to the amount paid or payable by such Indemnitee as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Indemnitor and the Indemnitee in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault of such Indemnitor and Indemnitee shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such Indemnitor or by such Indemnitee, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6(d) were determined solely by pro rata allocation (even if each participating stockholder or any Underwriters or selling agents or all of them were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 6(d). The amount paid or payable by an Indemnitee as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such Indemnitee in connection with investigating or defending any such action or claim. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The obligations of Distribution and any Underwriters or selling agents in this Section 6(d) to contribute shall be several in proportion to the number of Applicable Securities registered or underwritten or sold, as the case may be, by them and not joint. Notwithstanding any other provision of this Section 6(d), Distribution shall not be required to contribute any amount in excess of the amount by which the net proceeds received by Distribution from the sale of Company Common Stock pursuant to a Registration Statement exceeds the amount of damages which Distribution has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. (e) The obligations of the Company under this Section 6 shall be in addition to any liability which the Company may otherwise have to any Indemnitee and the obligations of any Indemnified Person under this Section 6 shall be in addition to any liability which such Indemnified Person may otherwise have to the Company. The remedies provided in this Section 6 are not exclusive and shall not limit any rights or remedies that may otherwise be available to an Indemnitee at law or in equity. 12 7. Other Provisions. (a) The respective indemnities, agreements and other provisions set forth in this Agreement or made pursuant to this Agreement shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of Distribution, any director, officer or partner of Distribution, any agent or Underwriter, any director, officer or partner of such agent or Underwriter, or any Affiliate of any of the foregoing, and shall survive the registration, offering and sale of the Applicable Securities of Distribution. (b) Distribution shall cooperate with respect to any Registration effected under this Agreement and shall provide such information, documents, and instruments as may be reasonably requested in connection therewith. (c) Distribution agrees, if so requested by the managing underwriter in any underwritten offering of the Company's securities, not to effect any public sale or distribution of Registrable Securities (other than pursuant to such underwritten offering) during the 30 days prior to and the 90 days after any registration statement for any such underwritten offering of the Company's securities (either for its own account or for the benefit of the holders of any securities of the Company) has become effective (or such period of time shorter than 90 days that is sufficient and appropriate, in the sole opinion of the managing underwriter, in order to complete the sale and distribution of securities included in such registration). (d) Distribution agrees to keep confidential the fact that the Company has exercised its rights under Section 2(b), any advice of the Company pursuant to Section 4(c) and any other confidential information provided by the Company in connection with this Agreement. (e) The Company shall use reasonable best efforts to file all reports required to be filed with respect to the Company under Section 13 or Section 15(d) of the Exchange Act during such time as there are any Registrable Securities. 8. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmission) and shall be given as follows: (a) if to the Company to: Crown Media Holdings, Inc. 6430 South Fiddlers Green Circle Suite 500 Englewood, CO 80111 Attention: Vice President, Legal Affairs Telephone: (303) 967-4683 Facsimile: (303) 221-3779 13 (b) if to Distribution to: Hallmark Cards, Incorporated Department 339 2501 McGee Kansas City, MO 64108 Attention: Judith C. Whittaker, Vice President, General Counsel Telephone: (816) 274-5583 Facsimile: (816) 274-7171 9. Assignment; Benefit. The terms and provisions of this Agreement shall be assignable provided that Distribution and all of its assignees may not exercise more Demands in the aggregate or in any six-month period, than are permitted under Section 2 hereof. There shall be no third party beneficiaries hereto except for Indemnitees and as otherwise expressly provided herein. All the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the respective legal successors and permitted assigns of the parties hereto. 10. Absence of Presumption. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted. 11. Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 12. Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 13. Governing Law; Jurisdiction and Forum. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS. THE PARTIES HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE SOLELY IN RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT AND IN RESPECT OF THE TRANSACTIONS CONTEMPLATED HEREBY, AND HEREBY WAIVE, AND AGREE NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR THE INTERPRETATION OR ENFORCEMENT HEREOF, THAT IT IS NOT SUBJECT THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SAID COURTS OR THAT THE VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS, AND THE PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH A DELAWARE STATE COURT. THE PARTIES HEREBY CONSENT TO AND GRANT ANY SUCH COURT JURISDICTION OVER SUCH PARTIES 14 AND OVER THE SUBJECT MATTER OF SUCH DISPUTE AND AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 6.3 OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW SHALL BE VALID AND SUFFICIENT SERVICE THEREOF. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13. 14. Specific Enforcement. Each party hereto acknowledges that remedies at law may be inadequate to protect any other party against any actual or threatened breach of this Agreement by the other parties and, without prejudice to any other rights and remedies otherwise available to any party, each party agrees to the granting of injunctive relief in any other party's favor without proof of actual damages. In the event of litigation relating to this Agreement, if a court of competent jurisdiction determines that this Agreement has been breached by a party, then such party shall reimburse the other party for costs and expenses (including, but not limited to, reasonable legal fees and expenses) incurred in connection with all such litigation. 15. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or entity or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such original provision and (b) the remainder of this Agreement and the application of such provision to other Persons, entities or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction. 16. Covered Shares. All of the provisions of this Agreement shall apply to and include Class A Stock acquired pursuant to the Asset Agreement and to the extent received in respect of shares of Class A Stock acquired pursuant to the Asset Agreement, all securities and instruments (i) received by Distribution as a dividend or other payment, or (ii) issued in connection with a split of such shares or as a result of any exchange for or reclassification of 15 such shares or a reorganization, recapitalization, consolidation or merger. Appendix I hereto identifies those shares of Class A Stock subject to the provisions of this Agreement as of the date hereof. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective authorized officers as of the day and year first above written. CROWN MEDIA HOLDINGS, INC. By: /s/ WILLIAM ALIBER ------------------------------------- Name: William Aliber Title: EVP & CFO HALLMARK ENTERTAINMENT DISTRIBUTION LLC By: /s/ ROBERT HALMI, JR. ------------------------------------- Name: Robert Halmi, Jr. Title: 16 APPENDIX I

Name Class A Stock ---- ------------- Hallmark Entertainment Distribution LLC ----------

17 [NAME OF ISSUER] Notice of Registration Statement and Selling Securityholder Questionnaire (Date) Reference is hereby made to the Registration Rights Agreement (the "Agreement") between Hallmark Entertainment Distribution LLC, a Delaware limited liability corporation ("Stockholder"), and Crown Media Holdings, Inc., a Delaware corporation (the "Company"). Pursuant to the Agreement, the Company [has filed] with the United States Securities and Exchange Commission (the "Commission") a registration statement on Form ____ (the "Registration Statement") for the registration and resale under the Securities Act of 1933, as amended (the "Securities Act"), of shares of Company Common Stock. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Agreement. The Stockholder is entitled to have the Registrable Securities owned by it included in the Registration Statement. In order to have Registrable Securities included in the Registration Statement, this Notice of Registration Statement and Selling Securityholder Questionnaire ("Notice and Questionnaire") must be completed, executed and delivered to the Company's counsel at the address set forth herein for receipt ON OR BEFORE [DEADLINE FOR RESPONSE]. If the Stockholder does not complete, execute and return this Notice and Questionnaire by such date, the Stockholder (i) will not be named as a selling securityholder in the Registration Statement and (ii) may not use the Prospectus forming a part thereof for resales of Registrable Securities. Certain legal consequences arise from being named as a selling securityholder in the Registration Statement and related Prospectus. Accordingly, the Stockholder is advised to consult its own securities law counsel regarding the consequences of being named or not being named as a selling securityholder in the Registration Statement and related Prospectus. 18 ELECTION The Stockholder (the "Selling Securityholder") hereby elects to include in the Registration Statement the Registrable Securities beneficially owned by it and listed below in Item (3). The Selling Securityholder, by signing and returning this Notice and Questionnaire, agrees to be bound with respect to such Registrable Securities by the terms and conditions of this Notice and Questionnaire. The Selling Securityholder hereby provides the following information to the Company and represents and warrants that such information is accurate and complete: 19 QUESTIONNAIRE (1) Full Legal Name of Selling Securityholder: (2) Address for Notices to Selling Securityholder: Telephone: Fax: Contact Person: (3) Except as set forth below in this Item (3), the undersigned does not beneficially own any shares of any class of Company Common Stock. (a) Number of Registrable Securities and shares of each class of Company Common Stock beneficially owned: (b) Number of Registrable Securities which the undersigned wishes to be included in the Registration Statement: (4) Beneficial Ownership of Other Securities of the Company: Except as set forth below in this Item (4), the undersigned Selling Securityholder is not the beneficial or registered owner of any shares of any class of Company Common Stock or any other securities of the Company, other than the Registrable Securities and shares of Company Common Stock listed above in Item (3). State any exceptions here: (5) Relationships with the Company: Except as set forth below, neither the Selling Securityholder nor any of its affiliates, officers, directors or principal equity holders (5% or more) has held any position or office or has 20 had any other material relationship with the Company (or its predecessors or affiliates) during the past three years. State any exceptions here: (6) Plan of Distribution: Except as set forth below, the undersigned Selling Securityholder intends to distribute the Registrable Securities listed above in Item (3) only as follows (if at all): Such Registrable Securities may be sold from time to time directly by the undersigned Selling Securityholder or, alternatively, through underwriters, broker-dealers or agents. Such Registrable Securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Such sales may be effected in transactions (which may involve crosses or block transactions) (i) on any national securities exchange or quotation service on which the Registered Securities may be listed or quoted at the time of sale, (ii) in the over-the-counter market, (iii) in transactions otherwise than on such exchanges or services or in the over-the-counter market, or (iv) through the writing of options. In connection with sales of the Registrable Securities or otherwise, the Selling Securityholder may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the Registrable Securities in the course of hedging the positions they assume. The Selling Securityholder may also sell Registrable Securities short and deliver Registrable Securities to close out such short positions, or loan or pledge Registrable Securities to broker-dealers that in turn may sell such securities. State any exceptions here: By signing below, the Selling Securityholder acknowledges that it understands its obligation to comply, and agrees that it will comply, with the provisions of the Exchange Act and the Rules and Regulations, particularly Regulation M. By signing below, the Selling Securityholder consents to the disclosure of the information contained herein in its answers to Items (1) through (6) above and the inclusion of such information in the Registration Statement and related Prospectus. The Selling Securityholder understands that such information will be relied upon by the Company in connection with the preparation of the Registration Statement and related Prospectus. In accordance with the Selling Securityholder's obligation under the Agreement to provide such information as may be required by law for inclusion in the Registration Statement, the Selling Securityholder agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein which may occur subsequent to the date hereof at any time while the Registration Statement remains in effect. All notices hereunder and pursuant to the 21 Agreement shall be made in writing, by hand-delivery or air courier guaranteeing overnight delivery as follows: (i) To the Company: [Name of Issuer] [Address] (ii) With a copy to: [Company Counsel] [Address] Once this Notice and Questionnaire is executed by the Selling Securityholder and received by the Company's counsel, the terms of this Notice and Questionnaire, and the representations and warranties contained herein, shall be binding on, shall inure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives, and assigns of the Company and the Selling Securityholders. This Agreement shall be governed in all respects by the laws of the State of New York. IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent. Dated: ----------------- Selling Securityholder By: Name: Title: PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY'S COUNSEL AT: [Company Counsel] [Address] 22 EX-99.7 4 d91309a2ex99-7.txt EX-99.7 ESCROW AGREEMENT EXHIBIT 7 [COLORADO STATE BANK AND TRUST LOGO] A TRADITION OF SERVICE AND TRUST SINCE 1908 ESCROW AGREEMENT This Escrow Agreement (the "Agreement") is among HALLMARK ENTERTAINMENT DISTRIBUTION, L.L.C. and CROWN MEDIA HOLDINGS, INC. (The "Parties") and Colorado State Bank and Trust (the "Escrow Agent"). RECITALS WHEREAS the Parties agree to place in escrow certain funds, securities, documents, and/or other property and the Escrow Agent agrees to hold and distribute such funds, securities, documents, and/or other property in accordance with the instructions of the Parties, the Escrow Agent and the Parties make this agreement as follows: ARTICLE 1: DIRECTIONS 1.01 ESCROWED PROPERTY: The Parties will deposit with the Escrow Agent the property described in Schedule A (the "Escrowed Property"), attached hereto and incorporated herein by reference. 1.02 INSTRUCTIONS: The Escrow Agent shall hold, invest, if applicable, and disburse the Escrowed Property pursuant to the the instructions set forth in Schedule B, attached hereto and incorporated herein by reference. 1.03 ASSIGNMENT OF INTEREST: The assignment, transfer, conveyance, or hypothecation of any right, title, or interest in and to the subject matter of this Agreement (referred to under this Section 1.03 as "Assignment") shall be binding upon the Escrow Agent upon delivery of notice to the Escrow Agent of the Assignment and payment to the Escrow Agent of all of its fees, in connection with the Assignment, provided the Escrow Agent has given its written assent to the Assignment. ARTICLE 2: COMPENSATION OF THE ESCROW AGENT The Parties agree, jointly and severally, to pay the Escrow Agent: a. Its fees, charges, and expenses for all services rendered by it under Schedule C; and b. Reasonable compensation for services rendered in connection with this Agreement but not expressly provided for herein and reimbursement for those expenses incurred by the Escrow Agent in rendering such services, including, but not limited to Court costs and attorney's fees incurred as a result of any dispute arising out of the Agreement. The Escrow Agent shall have a first and prior lien upon the Escrowed Property to secure the payments described under paragraphs a. and b. of this Article 2. If any such payment is not timely received by the Escrow Agent, the Parties authorize the Escrow Agent to deduct such payment from the Escrowed Property. All such payments due but not paid within 30 days shall accrue interest at the rate of 19 percent per annum. ARTICLE 3: PROVISIONS CONCERNING ESCROW AGENT 3.01 AUTHORITY OF PARTIES: The Escrow Agent shall be under no duty or obligation to ascertain the identity, authority, and/or rights of the Parties or their agents. 3.02 OTHER AGREEMENTS: The Escrow Agent shall not be a party to, or bound by, any agreement between the Parties other than this Agreement whether or not a copy and/or original of such agreement is held as Escrowed Property; and, the Escrow Agent shall have no duty to know or inquire as to the performance or nonperformance of any provision of any such agreement between the Parties. 3.03 DEPOSITED INSTRUMENTS AND/OR FUNDS: The Escrow Agent assumes no responsibility for the validity or sufficiency of any instrument held as Escrowed Property, except as expressly and specifically set forth in this Agreement. 3.04 LATE PAYMENTS OR PERFORMANCE: The Escrow Agent may accept any payment or performance required under this Agreement after the date such payment or performance is due, unless subsequent to such date, but prior to the actual date of payment or performance, the Escrow Agent is instructed in writing by the Parties not to accept such payment or performance. 3.05 ESCHEAT: The Parties are aware that under Colorado law, Escrowed Property which is presumed abandoned may escheat to the State. The Escrow Agent shall have no liability to the Parties, their respective heirs, legal representatives, successors, and assigns, should any or all of the Escrowed Property become escheatable or escheat by operation of law. 3.06 NON-LIABILITY: The Escrow Agent shall not be liable for any act or omission while acting in good faith and in the exercise of its own best judgment. Any act or omission by the Escrow Agent pursuant to the advice of its attorneys shall be conclusive evidence of such good faith. The Escrow Agent shall have the right to consult with counsel at the expense of the Parties whenever any question arises concerning the Agreement and shall incur no liability for any delay reasonably required to obtain such advice of counsel. The Escrow Agent shall not be liable for the alteration, modification or elimination of any right permitted or given under the instructions set forth in Schedule B and/or in any document deposited under the Agreement pursuant to any Statute of Limitations or by reason of laches. The Escrow Agent shall have no further responsibility or liability whatsoever to any or all of the Parties following a partial or complete distribution of the Escrowed property pursuant to this Agreement. The Escrow Agent shall not incur any liability with respect to any act or omission in reliance upon any document, including any written notice or instruction provided for in the Escrow Agreement. In performing its obligations hereunder, the Escrow Agent shall be entitled to presume, without inquiry, the due execution, validity and effectiveness of all documents it receives, and also the truth and accuracy of any information contained therein. The Escrow Agent shall not be responsible or liable for any diminution of principal of the Escrowed Property or any interest penalty, whatsoever, for any reason. 3.07 INDEMNIFICATION: The Parties agree, jointly and severally, to indemnify and hold harmless the Escrow Agent from any liability, cost, or expense whatsoever, including, but not limited to, attorney's fees incurred by reason of accepting the Agreement and/or Escrowed Property. 3.08 DISAGREEMENTS: If any disagreement or dispute arises between the Parties to this Agreement concerning the meaning or validity of any provision hereunder or concerning any other matter relating to this Agreement, the Escrow Agent: a. Shall be under no obligation to act, except under process or order of court, or until it has been adequately indemnified to its full satisfaction, and shall sustain no liability for its failure to act pending such process, court order or indemnification; and b. May, in its sole and absolute discretion, interplead the Escrowed Property or that portion of Escrowed Property it then holds with the District Court of the City and County of Denver, State of Colorado, and name the Parties in such interpleader action. Upon filing the interpleader action, the Escrow Agent shall be relieved of all liability as to the Escrowed Property and shall be entitled to recover from the Parties its reasonable attorneys' fees and other costs incurred in commencing and maintaining such action. The Parties by signing this Agreement submit themselves to the jurisdiction of such court and do appoint the Clerk of such Court as their agent for the service of all process in connection with such proceedings. In no event shall the institution of such interpleader action impair the rights of the Escrow Agent described in Section 3.06 of this Article. ARTICLE 4: GENERAL TERMS AND CONDITIONS 4.01 EXTENSION OF BENEFITS: This agreement shall be binding upon, inure to the benefit of, and be enforceable by, the respective heirs, legal representatives, successors, and assigns of all of the Parties and the Escrow Agent. 4.02 GOVERNING LAW: This Agreement shall be construed and enforced in accordance with the laws of the State of Colorado. 4.03 NOTICES: All notices, requests, demands, and other communications required under this Agreement shall be in writing and shall be deemed to have been duly given if delivered personally or by certified mail, return receipt requested, and postage prepaid. If any notice is mailed, it shall be deemed given on the date such notice is deposited in the United States mail. If any notice is personally delivered, it shall be deemed given upon the date of such delivery. If notice is given to a party, it shall be mailed or delivered to the addresses set forth below the signature blocks. It shall be the responsibility of the Parties to notify the Escrow Agent in writing of any name or address changes. 4.04 ENTIRE AGREEMENT: This Agreement sets forth the entire agreement and understanding of the Parties hereto. 4.05 AMENDMENT: This Agreement may be amended, modified, superseded, rescinded, or canceled only by a written instrument executed by the Parties and the Escrow Agent. 4.06 WAIVERS: The failure of any party to the Agreement at any time or times to require performance of any provision under this Agreement shall in no manner affect the right at a later time to enforce the same performance. A waiver by any party to the Agreement of any such condition or breach of any term, covenant, representation, or warranty contained in this Agreement, in any one or more instances, shall neither be construed as a further or continuing waiver of any such condition or breach nor a waiver of any other condition or breach of any other term, covenant, representation, or warranty contained in this Agreement. 4.07 HEADINGS: Section headings of this Agreement have been inserted for convenience of reference only and shall in no way restrict or otherwise modify any of the terms or provisions of this Agreement. 4.08 COUNTERPARTS: This Agreement may be executed in one or more counterparts, each of which when executed shall be deemed to be an original, and such counterparts shall together constitute one and the same instrument 4.09 RESIGNATION OR REMOVAL OF ESCROW AGENT: The Escrow Agent may resign at any time by furnishing written notice of its resignation to the Parties. The Parties may remove the Escrow Agent at any time by furnishing to the Escrow Agent a written notice of its removal. Such resignation or removal, as the case may be, shall be effective upon delivery of such notice. IN WITNESS WHEREOF, the Parties to this Agreement have each caused this Agreement to be duly executed on this _______________day of ___________________2001. Corporate Name: HALLMARK ENTERTAINMENT Corporate Name: DISTRIBUTION, L.L.C. CROWN MEDIA HOLDINGS, INC. By: /s/ DEANNE STEDEM By: /s/ WILLIAM ALIBER --------------------------------- -------------------------------- Title: Title: EVP & CFO ------------------------------ ----------------------------- Address: Address: ---------------------------- ---------------------------- Telephone: Telephone: -------------------------- -------------------------- Tax I.D. No. Tax I.D. No. ------------------------ ------------------------ ------------------------------------ ------------------------------------ The Escrow Agent, by affixing its signature below, hereby acknowledges receipt of the Escrowed Property described in Schedule A and agrees to hold, administer, and dispose of the Escrowed Property in accordance with the terms, conditions, and instructions of this Agreement and any amendments thereto, including those set forth in Schedules A, B and C. COLORADO STATE BANK AND TRUST Escrow Agent 1600 Broadway Denver, Colorado 80202-4999 Phone: (303) 864-7206 FAX: (303) 864-7300 E-mail: almartin@mail.csbt.com Date: 10/2/01 By: /s/ A. LENORE MARTINEZ ------------------------------ --------------------------------- Account No. Title: Vice President ------------------------ ------------------------------ SCHEDULE A (DEPOSITS) 1. Stock Certification Number ______ for 425,000 shares of the Class A Common Stock of Crown Media Holdings, Inc. (the "Crown Stock Certificate"). SCHEDULE B (INSTRUCTIONS) The Escrow Agent will deliver the Crown Stock Certificate by messenger to Crown Media Holdings, Inc. c/o Charles Stanford, Esq., General Counsel, 6430 South Fiddlers Green Circle, Suite 5000, Greenwood Village, CO 80111, upon receipt of a letter, executed by an officer of both Crown Media Holdings, Inc. and Hallmark Entertainment Distribution, L.L.C., directing such delivery (the "Delivery Instruction"). If the Escrow Agent does not receive the foregoing Delivery Instruction on or before March 1, 2002, it will promptly deliver the escrowed Crown Stock Certificate by overnight mail to Hallmark Entertainment Distribution, L.L.C. c/o Judith Whittaker, Esq., General Counsel, Hallmark Cards, Inc., 2500 McGee, Kansas City, MO 64141-6580. SCHEDULE C ESCROW FEE SCHEDULE The following fees are for Trust Escrow Services. The Acceptance Fee and First Year Administration Fee are due and payable upon execution of the agreement and opening of the account. Thereafter, the Annual Administration Fee is due in advance on the anniversary date on which the account was opened. Fees are not prorated. ACCEPTANCE FEE $ 500.00 WAIVED AS A COURTESY. ANNUAL ADMINISTRATION FEE $ 1,500.00 TRANSACTION CHARGES Security Transactions $ 25.00 Wire Transfers $ 25.00 Receipts $ 5.00 Disbursements $ 5.00 Preparing and Filing Taxpayer Reports Each 1099 $ 125.00 EXTRAORDINARY SERVICES Additional reasonable compensation will be charged for extraordinary services based on our then current standard hourly charge. Extraordinary services include, but are not limited to, attending escrow closings, processing assignments of escrow interest, reviewing and accepting modifications or amendments to the escrow agreement, and letter of credit draws. REIMBURSABLES All out-of-pocket expenses incurred in the administration of the account, including, but not limited to, postage, telephone charges, insurance, photocopies, supplies, and legal fees, with the exception of legal fees incurred at the inception of the account, will be billed to the customer at cost. 12(b)1 FEES In addition to the above fees, Colorado State Bank and Trust may collect and retain all 12(b)1 and sub-transfer agent fees to which the bank is entitled.