-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Lgm4mPV8/dK7jiFItEC87DbhKcoSEG5wTwB2+bptNW419kz+O5ZLg1snYSFI9WXW yrHqiKZt5pL6+SKGZuoc3g== 0000950172-03-000769.txt : 20030312 0000950172-03-000769.hdr.sgml : 20030312 20030311173251 ACCESSION NUMBER: 0000950172-03-000769 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20030312 GROUP MEMBERS: LIBERTY CROWN, INC. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CROWN MEDIA HOLDINGS INC CENTRAL INDEX KEY: 0001103837 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 841524410 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-59037 FILM NUMBER: 03599918 BUSINESS ADDRESS: STREET 1: 6430 S FIDDLERS GREEN CIRCLE #500 CITY: GREENWOOD VILLAGE STATE: CO ZIP: 80111 BUSINESS PHONE: 3032207990 MAIL ADDRESS: STREET 1: 6430 S FIDDLERS GREEN CIRCLE #500 CITY: GREENWOOD VILLAGE STATE: CO ZIP: 80111 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: LIBERTY MEDIA CORP /DE/ CENTRAL INDEX KEY: 0001082114 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 841288730 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 12300 LIBERTY BLVD. CITY: ENGLEWOOD STATE: CO ZIP: 80112 BUSINESS PHONE: 7208755400 MAIL ADDRESS: STREET 1: 12300 LIBERTY BLVD. CITY: ENGLEWOOD STATE: CO ZIP: 80112 SC 13D/A 1 la313316.txt SC 13D/A _____________________ | OMB APPROVAL | |_____________________| |OMB Number: 3235-0145| UNITED STATES |Expires: | SECURITIES AND EXCHANGE COMMISSION | December 31, 2005| Washington, D.C. 20549 |Estimated Average | |Burden Hours | |Per Response ......11| |_____________________| SCHEDULE 13D/A Under the Securities Exchange Act of 1934 (Amendment No. 1)* Crown Media Holdings, Inc. ------------------------------------------------------------ (Name of Issuer) Class A Common Stock, par value $.01 per share ------------------------------------------------------------ (Title of Class and Securities) 228411 10 4 ------------------------------------------------------------ (CUSIP Number) Charles Y. Tanabe, Esq. Senior Vice President and General Counsel Liberty Media Corporation 12300 Liberty Boulevard Englewood, Colorado 80112 (720) 875-5400 ------------------------------------------------------------ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) March 11, 2003 ------------------------------------------------------------ (Date of Event which Requires Filing of this Statement) 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 Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. [ ] Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section 240.13d-7 for other parties to whom copies are to be sent. 1 - --------------- * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 2 SCHEDULE 13D CUSIP No. 228411 10 4 - ----------------------------------------------------------------- 1. NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only) Liberty Media Corporation, 84-1288730 - ----------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [ X ](1) (b) [ ] - ----------------------------------------------------------------- 3. SEC USE ONLY - ----------------------------------------------------------------- 4. SOURCE OF FUNDS* (See Instructions) 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 - ----------------------------------------------------------------- 7. SOLE VOTING POWER NUMBER OF 0 SHARES --------------------------------------------- BENEFICIALLY 8. SHARED VOTING POWER OWNED BY 83,817,071(2) shares of Class A common EACH stock REPORTING --------------------------------------------- PERSON 9. SOLE DISPOSITIVE POWER WITH 0 --------------------------------------------- 10. SHARED DISPOSITIVE POWER - -------- 1 Beneficial ownership is disclaimed with respect to certain securities of the Issuer. See footnotes 2 and 3 below. 3 83,817,071(2) - ----------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 89,529,096(2) (3) shares of Class A common stock - ----------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) [ ] - ----------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 85.7%(2) (3) - ----------------------------------------------------------------- 14. TYPE OF REPORTING PERSON (See Instructions) CO - ----------------------------------------------------------------- - -------- 2 The amount reported includes 30,670,422 shares of Class B Common Stock that are held by Hallmark Entertainment Investments Co. and are convertible at the option of Hallmark Entertainment Investments Co. into an equivalent number of shares of Class A Common Stock and 53,146,649 shares of Class A Common Stock that are held by Hallmark Entertainment Investments Co. that are deemed to be beneficially owned pursuant to Rule 13d-5(b)(1). Beneficial ownership of these 30,670,422 shares of Class B Common Stock and 53,146,649 shares of Class A Common Stock is disclaimed. The amount has been calculated assuming conversion of the shares of Class B Common Stock referred to above and using the number of shares of Class A Common Stock and Class B Common Stock outstanding on January 7, 2003. 3 The amount reported includes 5,712,025 shares of Class A Common Stock that are severally beneficially owned by VISN Management Corp. and JP Morgan Partners (BHCA), L.P. that are deemed to be beneficially owned pursuant to Rule 13d-5(b)(1). Beneficial ownership of these shares is disclaimed. 4 CUSIP No. 228411 10 4 - ----------------------------------------------------------------- 1. NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only) Liberty Crown, Inc. - ----------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [ X ](1) (b) [ ] - ----------------------------------------------------------------- 3. SEC USE ONLY - ----------------------------------------------------------------- 4. SOURCE OF FUNDS* (See Instructions) 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 - ----------------------------------------------------------------- 7. SOLE VOTING POWER NUMBER OF 0 SHARES --------------------------------------------- BENEFICIALLY 8. SHARED VOTING POWER OWNED BY EACH 83,817,071(2) - ---------------- 1 Beneficial ownership is disclaimed with respect to certain securities of the Issuer. See footnotes 2 and 3 below. 2 The amount reported includes 30,670,422 shares of Class B Common Stock that are held by Hallmark Entertainment Investments Co. and are convertible at the option of Hallmark Entertainment Investments Co. into an equivalent number of shares of Class A Common Stock and 53,146,649 shares of Class A Common Stock that are held by Hallmark Entertainment Investments Co. that are deemed to be beneficially owned pursuant to Rule 13d-5(b)(1). Beneficial ownership of these 30,670,422 shares of Class B Common Stock and 53,146,649 shares of Class A Common Stock is (continued) 5 REPORTING -------------------------------------------- PERSON 9. SOLE DISPOSITIVE POWER WITH 0 -------------------------------------------- 10. SHARED DISPOSITIVE POWER 83,817,071(2) - ------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 89,529,096(2) (3) shares of Class A common stock - ------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions) [ ] - ------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 85.7%(2) (3) - ------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON (See Instructions) CO - ------------------------------------------------------------------------------- 2 (continued) disclaimed. The amount has been calculated assuming conversion of the shares of Class B Common Stock referred to above and using the number of shares of Class A Common Stock and Class B Common Stock outstanding on January 7, 2003. 3 The amount reported includes 5,712,025 shares of Class A Common Stock that are severally beneficially owned by VISN Management Corp. and JP Morgan Partners (BHCA), L.P. that are deemed to be beneficially owned pursuant to Rule 13d-5(b)(1). Beneficial ownership of these shares is disclaimed. 6 Amendment No. 1 to Statement on Schedule 13D This Schedule 13D/A Amendment No. 1 hereby amends the Schedule 13D filed by Liberty Media Corporation with the Securities and Exchange Commission on May 19, 2000 (as amended, the "Schedule 13D" or the "Statement"), relating to shares of Class A Common Stock, $.01 par value per share of Crown Media Holdings, Inc., a Delaware corporation. Item 1 Security and Issuer Item 1 is hereby amended and restated to replace the previously disclosed information with the following information: This Statement 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 also relates to the equivalent number of 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. Item 2 is hereby amended and restated to replace the previously disclosed information with the following information: This Schedule 13D is being filed by Liberty Media Corporation ("Liberty"), a Delaware corporation and Liberty Crown, Inc. ("Liberty Crown"), a Delaware corporation and a wholly owned subsidiary of Liberty (Liberty and Liberty Crown, together, the "Reporting Persons"). Liberty and Liberty Crown each has its principal executive office at 12300 Liberty Boulevard, Englewood, Colorado 80112. The principal business of Liberty is the ownership of interests in a broad range of video programming, broadband distribution, interactive technology 7 services and communications businesses in the United States, Europe, South America and Asia. The principal business of Liberty Crown is the ownership of its interest in the Issuer and its interest in Hallmark Entertainment Investments Co. ("HEIC"). The prior Schedule 1 to this Statement is hereby deleted in its entirety and is replaced by the Schedule 1 attached hereto and incorporated herein by reference which contains the following information concerning each director, executive officer and controlling person of Liberty: (i) name; (ii) residence or business address; (iii) present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted; and (iv) citizenship. The prior Schedule 2 to this Statement is hereby deleted in its entirety and is replaced by the Schedule 2 attached hereto and incorporated herein by reference which contains the following information concerning each director, executive officer and controlling person of Liberty Crown: (i) name; (ii) residence or business address; (iii) present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted; and (iv) citizenship. During the last five years, none of the Reporting Persons, nor, to the knowledge of the Reporting Persons, any of the persons listed on Schedule 1 and Schedule 2 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 Item 3 is hereby amended and supplemented to include the following information: Liberty holds the Common Stock and the interests in Hallmark Entertainment Investments Co. (as described below) through its wholly owned subsidiary Liberty Crown. On December 18, 2001, Liberty Crown donated 88,184 shares of Class A Common Stock to Volunteers of America of Colorado in a gift transaction. 8 HEIC Contribution Agreement. Liberty Crown contributed 9,416,746 shares of Class A Common Stock to HEIC on March 11, 2003 pursuant to a Contribution Agreement dated as of March 11, 2003 (the "HEIC Contribution Agreement") by and among HEIC, Hallmark Entertainment Holdings, Inc. ("Hallmark Entertainment Holdings"), Liberty Crown, VISN Management Corp. ("VISN") and JP Morgan Partners (BHCA), L.P. ("JPM"). Pursuant to the HEIC Contribution Agreement, each of the parties other than HEIC contributed shares of Class A Common Stock and/or Class B Common Stock in exchange for Class A common stock, par value $.01 ("HEIC Class A Common Stock"), of HEIC and Class B common stock, par value $.01 ("HEIC Class B Common Stock", and collectively with the HEIC Class A Common Stock, the "HEIC Common Stock"), of HEIC, respectively. The foregoing summary of the terms of the HEIC Contribution Agreement is qualified in its entirety by reference to the full text of the Contribution Agreement that is filed as Exhibit 7(c) to this Statement and is incorporated herein by reference. Item 4 Purpose of Transaction Item 4 is hereby amended and supplemented to include the following information: HEIC Contribution Agreement. On March 11, 2003, Liberty Crown transferred (the "HEIC Contribution")9,416,746 shares of Class A Common Stock to HEIC pursuant to the HEIC Contribution Agreement in exchange for 9,417 shares of HEIC Class A Common Stock (or 17.7% of the outstanding shares of HEIC Class A Common Stock). Also pursuant to the Contribution Agreement, Hallmark Entertainment Holdings contributed its entire equity interest in the Issuer, comprised of 39,259,480 shares of Class A Common Stock and 30,670,422 shares of Class B Common Stock, in exchange for 39,260 shares of HEIC Class A Common Stock (or 73.9% of the outstanding shares of HEIC Class A Common Stock) and 30,670 shares of HEIC Class B Common Stock (or 100% of the outstanding shares of HEIC Class B Common Stock), VISN contributed 633,803 shares of Class A Common Stock in exchange for 634 shares of HEIC Class A Common Stock (or 1.2% of the outstanding shares of HEIC Class A Common Stock); and JPM contributed 3,836,620 shares of Class A Common Stock in exchange for 3,837 shares of HEIC Class A Common Stock (or 7.2% of the outstanding shares of HEIC Class A Common Stock). As a result of the transactions contemplated by the HEIC Contribution Agreement, the Issuer will be included in the consolidated federal tax return of Hallmark Cards, Inc ("Hallmark Cards"). Pursuant to a tax sharing agreement between Hallmark Cards and the Issuer, Hallmark Cards will pay the Issuer an amount based on the benefits realized by Hallmark Cards as a 9 result of consolidation, 75% of such amount in cash on a quarterly basis and the balance as the Issuer becomes a taxpayer, which is expected to provide the Issuer with substantial additional funding for the next few years. Under the tax sharing agreement, at Hallmark Cards' option, the balance payable to the Issuer may be applied as an offset against amounts owed by the Issuer to any member of the Hallmark consolidated group under any loan, line of credit or other payable, subject to any limitations under any loan indentures or contracts restricting such offsets. Stockholders Agreement Amendment. On March 11, 2003, in connection with the HEIC Contribution Agreement, each of VISN and DirecTV Enterprises, Inc. ("DirecTV") entered into a Consent and Waiver (the "Stockholders Agreement Waiver") to the Second Amended and Restated Stockholders Agreement (as amended, the "Stockholders Agreement") that was entered into on August 30, 2001 among Hallmark Entertainment, Inc., Liberty, Liberty Crown, VISN, JPM, DirecTV and the Issuer. On March 5, 2003, the Board of directors of the Issuer increased the size of its Board of Directors from 11 to 15. Pursuant to the Stockholders Agreement Waiver, 12 members of the Board of Directors are to be nominated by HEIC (one of which must be the Chief Executive Officer of the Issuer), one member is to be nominated by VISN and at least two independent members are to be nominated by the Issuer's Board of Directors. The foregoing summary of the terms of the Stockholders Agreement Waiver is qualified in its entirety by reference to the full text of the Stockholders Agreement Waiver that is filed as Exhibit 7(d) hereto and hereby incorporated by reference. Item 5. Interest in Securities of the Issuer Item 5 is hereby amended and restated in its entirety to replace the previously disclosed information with the following information: (a) Liberty may be deemed to beneficially own the Class A Common Stock deemed to be owned by Liberty Crown. All of the shares reported as beneficially owned by Liberty Crown are included in the shares reported as beneficially owned by Liberty. Hallmark Cards, Hallmark Entertainment Holdings, HEIC, Liberty Crown, VISN and JPM may be deemed to have formed a group in connection with the execution of the HEIC Contribution Agreement and the consummation of the transactions contemplated thereunder. Pursuant to Rule 13d-5(b)(1), each member of the group is deemed to 10 beneficially own all shares of Common Stock held by each member of the group. HEIC currently owns 30,670,422 shares of Class B Common Stock and HEIC, VISN and JPM beneficially own 53,146,649, 5,704,225 and 7,800 shares of Class A Common Stock respectively. Consequently, assuming conversion of all outstanding shares of Class B Common Stock, each Reporting Person could be deemed to beneficially own 89,529,096 shares of Class A Common Stock or 85.7% of the shares of Class A Common Stock. However, each Reporting Person hereby disclaims beneficial ownership with respect to shares of Common Stock directly beneficially owned by each of HEIC, VISN and JPM. Except as described in the preceding paragraphs, to the knowledge of the Reporting Persons, none of the persons named on Schedule 1 to this Statement (the "Schedule 1 Persons") and none of the persons named on Schedule 2 to this Statement (the "Schedule 2 Persons") beneficially owns any shares of Class A Common Stock. (b) The shares of Class A Common Stock and Class B Voting Stock reported on in this statement are subject to shared voting and disposition as noted in Item 6. (c) Except for the disposition by Liberty Crown of 9,416,746 shares of Class A Common Stock pursuant to the HEIC Contribution Agreement, no transactions in the shares of Class A Common Stock have been effected by the Reporting Persons or, to the knowledge of the Reporting Persons, by any of the Schedule 1 Persons or Schedule 2 Persons during the past 60 days. (d) Not applicable. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. Item 6 is hereby amended and restated in its entirety to replace the previously disclosed information with the following information: Stockholders Agreement. The Stockholders Agreement, as amended, provides that the Issuer's Board of Directors will consist of not less than 15 directors, with 12 nominated by HEIC and one nominated by VISN and two independent directors who will not be 11 officers or employees of any of the parties or their affiliates and will be nominated by the Board of Directors. The rights of the parties to nominate a director will terminate on the later of (1) such party beneficially owning less than 5% of the Common Stock then outstanding or (2) such party ceasing to beneficially own at least 75% of the Common Stock such party owned immediately following the Issuer's IPO. In addition, the Stockholders Agreement provides that, in the event Hallmark Entertainment Holdings 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. Under the Stockholders Agreement, HEIC 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. HEIC 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 HEIC'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 liabilities under certain securities laws. Under the Stockholders Agreement, the Issuer also agreed that, for so long as (1) the Issuer or any of its affiliates are entitled to have a representative on the Crown Media United States, LLC ("CMUS")(formerly known as Odyssey Holdings, L.L.C.) governance committee, and (2) VISN and certain of its affiliates either (a) are entitled to nominate or designate a member of the Issuer's Board of Directors or (b) beneficially own any preferred interests in CMUS, then neither the Issuer nor any of its affiliates will, without the written consent of the member of the Issuer's Board of Directors nominated by VISN or a representative of the National Interfaith Cable Coalition, Inc., vote in favor of: 12 o any specified change in, or action described in the CMUS amended and restated company agreement that relates to VISN's preferred interest in CMUS or that relates to VISN's rights to programming on the CMUS Network or its programming budget; o any repayment or redemption of specified equity interests in CMUS; o any transfer of all or substantially all of CMU assets or any business combination involving CMUS where CMUS is not the surviving entity, unless the transferee assumes specified obligations under the CMUS amended and restated company agreement until the later of the fifth anniversary of the IPO or the second anniversary of the transfer or business combination; o the dissolution of CMUS, except in connection with a complete liquidation; o any transfer of all or substantially all of CMU assets to, or any business combination involving CMUS with, the Issuer or any of its affiliates, or any other material transaction with the Issuer or any of its affiliates, unless the Issuer complies 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; or o any amendment to CMUS' 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 or impact specified VISN's obligations under the CMUS amended and restated company agreement or specified interests with respect to VISN's preferred interests in CMUS. In addition, the Issuer has agreed not to transfer any of its interests in CMUS 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's 13 preferred interest in CMUS, except that the obligations of the transferee will expire upon dissolution of CMUS. The foregoing summary is qualified in its entirety by reference to the text of the Stockholders Agreement which is filed as Exhibit 7(a) hereto and the Stockholders Agreement Waiver which is filed as Exhibit 7(d) hereto, each of which is hereby incorporated by reference. In connection with the HEIC Contribution, each of Liberty, Liberty Crown and JPM acknowledged that it has no further rights under the Stockholders Agreement. HEIC Stockholders Agreement. Liberty Crown is a party to the Stockholders Agreement, dated as of March 11, 2003, (the "HEIC Stockholders Agreement") by and among HEIC, Hallmark Entertainment Holdings, Liberty Crown, VISN and JPM. The HEIC Stockholders Agreement provides that HEIC's Board of Directors will consist of three Class I Directors having one vote each and six Class II Directors having two votes each. Hallmark Entertainment Holdings has the right to nominate six Class II Directors and one Class I Director and each of Liberty Crown and JPM have the right to nominate one Class I Director. The rights of the parties to nominate directors will terminate on the later of (1) such party beneficially owning less than 2.5% of HEIC's common stock then outstanding or (2) such party ceasing to beneficially own at least 75% of the common stock specified for such party (which is equal to the number of shares such party held as of the date of the HEIC Stockholders' Agreement) appropriately adjusted for stock splits, dividends or combinations of shares of HEIC Common Stock. For so long as it owns at least 75% of the shares it held as of the date of the HEIC Stockholders' Agreement (as appropriately adjusted for stock splits, dividends or combinations of shares of HEIC Common Stock), VISN will be entitled to designate a non-voting observer to HEIC's Board of Directors. In addition, the HEIC Stockholders Agreement provides that, in the event Hallmark Entertainment Holdings proposes to transfer 20% or more of the outstanding HEIC Common Stock in a single transaction or series of related transactions occurring during a 6-month period or within a longer period if pursuant to a single agreement, each other party to the HEIC Stockholders Agreement other than HEIC 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 of HEIC and the Issuer (as adjusted). 14 Under the HEIC Stockholders Agreement, HEIC also agreed that, for so long as any party is entitled to nominate a director to the HEIC board of directors, HEIC may not take the following actions without the consent of all stockholders entitled to nominate a director to the HEIC board of directors: o any amendment or repeal of, or addition to HEIC certificate of incorporation; o issuance or redemption of capital stock of HEIC or securities exercisable or convertible into such capital stock; o any spin-off, merger, consolidation or other business combination of HEIC (other than arising out of or related to a merger, consolidation or other business combination involving the Issuer); o the dissolution, liquidation or conversion of HEIC; or o any sale, pledge or distribution or other transfer of shares of Common Stock, except in a merger, consolidation, tender offer, exchange offer or other business combination involving the Issuer and approved in accordance with the terms of the Stockholders Agreement. At any meeting of the stockholders of the Issuer or action by written consent of the Issuer stockholders, the board of directors of HEIC shall cause HEIC to vote its shares of Class A Common Stock and Class B Common Stock as directed by Hallmark Entertainment Holdings subject to certain exceptions. The HEIC Stockholders Agreement also provides that Hallmark Entertainment Holdings and its affiliates will not agree to any spin-off, merger, tender offer, exchange offer, consolidation or other business combination of HEIC or the Issuer in connection with which Hallmark Entertainment Holdings or any of its affiliates is entitled to registration rights with respect to any non-cash consideration it receives, unless, with respect to the non- cash consideration it receives, each other Stockholder of HEIC receives registration rights with terms no less favorable in any material respect than those received by Hallmark Entertainment Holdings or any of its affiliates. Under the HEIC Stockholders Agreement, each of Liberty 15 and JPM will be entitled to designate one of the directors nominated by HEIC to the Issuer's board of directors. The HEIC Stockholders Agreement also limits certain affiliate transactions with the parties to the HEIC Stockholders Agreement and with the Issuer, the Issuer's subsidiaries and any affiliate of Hallmark Entertainment Holdings. With respect to such affiliate transactions with an aggregate value of not more than $35 million, approval is required by a majority of the independent directors of the Issuer's Board of Directors With respect to such affiliate transactions with an aggregate value of more than $35 million, approval is required by a majority of the members of the Issuer's Board of Directors that are not nominated by any affiliate of Hallmark Entertainment Holdings; provided, that for this purpose the nominees designated by Liberty Crown and JPM in accordance with the previous paragraph are not treated as having been nominated by Hallmark Entertainment Holdings. The foregoing summary is qualified in its entirety by reference to the text of the HEIC Stockholders Agreement that is filed as Exhibit 7(c) hereto and hereby incorporated by reference. HEIC Contribution Agreement. See Items 3 and 4 above for a summary of the HEIC Contribution Agreement. Item 7 Material to be Filed as Exhibits ------ -------------------------------- Exhibit No. Exhibit ----------- ------- (a) Second Amended and Restated Stockholders Agreement, dated as of August 30, 2001, by and among Hallmark Entertainment, Inc., Liberty Media Corporation, Liberty Crown, Inc., VISN Management Corp., JP Morgan Partners (BHCA), L.P., DIRECTV Enterprises, Inc. and Crown Media Holdings, Inc. (previously filed as Exhibit 10.6 to the Quarterly Report on Form 10-Q of Crown Media Holdings, Inc, Commission File No.000-30700, filed on November 13, 2001 and incorporated herein by reference) (b) Contribution Agreement, dated as of March 11, 2003, by and among Hallmark Entertainment Investments, Co., Hallmark Entertainment Holdings, Inc., Liberty 16 Crown, Inc., VISN Management Corp., and JP Morgan Partners (BHCA), L.P. (c) Stockholders Agreement, dated as of March 11, 2003, by and among Hallmark Entertainment Investments, Co., Hallmark Entertainment Holdings, Inc., Liberty Crown, Inc., VISN Management Corp. and JP Morgan Partners (BHCA), L.P. (d) Form of Consent and Waiver, dated as of March 11, 2003, to the Second Amended and Restated Stockholders Agreement 17 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: March 11, 2003 LIBERTY MEDIA CORPORATION By: /s/ Charles Y. Tanabe ------------------------------ Name: Charles Y. Tanabe Title: Senior Vice President LIBERTY CROWN, INC. By: /s/ Charles Y. Tanabe ------------------------------ Name: Charles Y. Tanabe Title: Senior Vice President 18 SCHEDULE 1 OF THE STATEMENT IS HEREBY AMENDED AND RESTATED TO READ IN ITS ENTIRETY AS FOLLOWS: SCHEDULE 1 DIRECTORS AND EXECUTIVE OFFICERS OF LIBERTY MEDIA CORPORATION The name and present principal occupation of each director and executive officer of Liberty Media Corporation ("Liberty") are set forth below. The principal business of Liberty is the ownership of interests in a broad range of video programming, broadband distribution, interactive technology services and communications businesses in the United States, Europe, South America and Asia. Unless otherwise noted, the business address for each person listed below is c/o Liberty Media Corporation, 12300 Liberty Boulevard, Englewood, Colorado 80112. To the knowledge of the Reporting Persons, all executive officers and directors listed on this Schedule 1 are United States citizens, except for David J.A. Flowers, who is a Canadian citizen.
Principal Occupation and Name and Business Address Principal Business (if (if applicable) applicable) - ------------------------- ------------------------ John C. Malone Chairman of the Board and Director of Liberty Robert R. Bennett President, Chief Executive Officer and Director of Liberty Donne F. Fisher Director of Liberty; 9781 Meridian Blvd., #200 President of Fisher Capital Englewood, Colorado 80112 Partners, Ltd., a venture capital partnership Paul A. Gould Director of Liberty; 711 5th Avenue, 8th Floor Managing Director of Allen New York, New York 10022 & Company Incorporated, an investment banking services company Gary S. Howard Executive Vice President, Chief Operating Officer and Director of Liberty 19 Jerome H. Kern Director of Liberty; 4600 S. Syracuse St. Consultant, Kern Consulting Denver, Colorado 80237 LLC, a consulting company Kim Magness Director of Liberty David E. Rapley Director of Liberty Larry E. Romrell Director of Liberty David J.A. Flowers Senior Vice President and Treasurer of Liberty Elizabeth M. Markowski Senior Vice President of Liberty Albert E. Rosenthaler Senior Vice President of Liberty Christopher S. Shean Senior Vice President and Controller of Liberty Charles Y. Tanabe Senior Vice President, General Counsel and Secretary of Liberty
20 SCHEDULE 2 OF THE STATEMENT IS HEREBY AMENDED AND RESTATED TO READ IN ITS ENTIRETY AS FOLLOWS: SCHEDULE 2 DIRECTORS AND EXECUTIVE OFFICERS OF LIBERTY CROWN, INC. The name and present principal occupation of each director and executive officer of Liberty Crown, Inc. ("Liberty Crown") are set forth below. The principal business of Liberty Crown is the ownership of its interest in the Crown Media Holdings, Inc. and its interest in Hallmark Entertainment Investments Co. Unless otherwise noted, the business address for each person listed below is c/o Liberty Media Corporation, 12300 Liberty Boulevard, Englewood, Colorado 80112. To the knowledge of the Reporting Persons, all executive officers and directors listed on this Schedule 2 are United States citizens, except for David J.A. Flowers, who is a Canadian citizen.
Principal Occupation and Name and Business Address Principal Business (if (if applicable) applicable) - ------------------------- ------------------------ John C. Malone Chairman of the Board and Director of Liberty and Liberty Crown Robert R. Bennett President, Chief Executive Officer and Director of Liberty and Liberty Crown Gary S. Howard Executive Vice President, Chief Operating Officer and Director of Liberty and Liberty Crown David J.A. Flowers Senior Vice President and Treasurer of Liberty and Liberty Crown Elizabeth M. Markowski Senior Vice President of Liberty and Liberty Crown Albert E. Rosenthaler Senior Vice President of Liberty and Liberty Crown 21 Christopher W. Shean Senior Vice President and Controller of Liberty and Liberty Crown Charles Y. Tanabe Senior Vice President, General Counsel and Secretary of Liberty and Liberty Crown
22 EX-99 3 la313307.txt EX (B) STOCKHOLDERS AGREEMENT ================================================================================ STOCKHOLDERS AGREEMENT by and among HALLMARK ENTERTAINMENT INVESTMENTS CO. HALLMARK ENTERTAINMENT HOLDINGS, INC., and THE OTHER SIGNATORIES HERETO dated as of March 11, 2003 ================================================================================
TABLE OF CONTENTS ----------------- Page ---- ARTICLE I DEFINITIONS Section 1.1. Definitions.........................................................................................1 ARTICLE II CORPORATE GOVERNANCE Section 2.1. Composition of the Board of Directors of the Company................................................4 Section 2.2. Removal.............................................................................................4 Section 2.3. Vacancies...........................................................................................4 Section 2.4. Termination of Rights and Obligations...............................................................4 Section 2.5. Limitation on Transactions with Affiliates..........................................................5 Section 2.6. Extraordinary Transactions..........................................................................5 Section 2.7. Voting of Crown Class A Stock and Crown Class B Stock...............................................5 ARTICLE III TRANSFERABILITY AND TAG-ALONG RIGHTS Section 3.1. Restrictions on Transferability.....................................................................6 Section 3.2. Restrictive Legend..................................................................................6 Section 3.3. Notice of Proposed Transfers; Securities Law Compliance.............................................6 Section 3.4. Tag-Along Rights....................................................................................6 ARTICLE IV ADDITIONAL RIGHTS Section 4.1. Crown Board of Directors............................................................................8 Section 4.2. Limitation of Crown's Transactions with Affiliates..................................................8 Section 4.3. Registration Rights.................................................................................9 ARTICLE V GENERAL Section 5.1. Entire Agreement....................................................................................9 Section 5.2. Amendment and Waiver................................................................................9 Section 5.3. Notices............................................................................................10 Section 5.4. Assignment; Benefit................................................................................10 Section 5.5. Absence of Presumption.............................................................................10 Section 5.6. Counterparts.......................................................................................10 Section 5.7. Headings...........................................................................................10 Section 5.8. Governing Law; Jurisdiction and Forum..............................................................10 Section 5.9. Specific Enforcement...............................................................................11 Section 5.10. Severability.......................................................................................11 Section 5.11. Covered Shares.....................................................................................11
Appendix I List of Stockholders i STOCKHOLDERS AGREEMENT This STOCKHOLDERS AGREEMENT (this "Agreement"), dated as of March 11, 2003, by and among Hallmark Entertainment Investments Co., a Delaware corporation (the "Company"), Hallmark Entertainment Holdings, Inc., a Delaware corporation ("HEH"), Liberty Crown, Inc., a Delaware corporation ("Liberty"), JP Morgan Partners (BHCA), L.P., a Delaware limited partnership, ("JPM") and VISN Management Corp., a Delaware corporation ("VISN") (each of Liberty, JPM and VISN shall be a "Minority Stockholder" and HEH and the Minority Stockholders will be the "Initial Stockholders"). WITNESSETH: WHEREAS, the Company and the Initial Stockholders are parties to the Contribution Agreement, dated as of March 11, 2003 (as in effect the date hereof the "Contribution Agreement"), pursuant to which the Stockholders acquired shares of Class A common stock, par value $.01 per share ("Class A Stock"), of the Company or shares of Class B common stock, par value $.01 per share ("Class B Stock"), of the Company in exchange for the contribution to the Company of shares of Class A common stock, par value $.01 per share ("Crown Class A Stock"), of Crown Media Holdings, Inc., a Delaware corporation ("Crown"), or shares of Class B common stock, par value $.01 per share ("Crown Class B Stock"), of Crown, respectively; and WHEREAS, pursuant to the Contribution Agreement, the Initial Stockholders have acquired and own the number of shares of Class A Stock and Class B Stock set forth opposite their respective names on Appendix I attached hereto and hereby made a part hereof; and WHEREAS, the parties hereto have agreed to enter into this Agreement pursuant to the Contribution Agreement and the parties hereto desire to provide for certain rights and obligations in respect of such shares of Class A Stock and Class B Stock; NOW THEREFORE, in consideration of the premises, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS Section 1.1. Definitions. (a) As used in this Agreement the following defined terms shall have the following meanings: "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean (a) the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise or (b) beneficial ownership of 10% or more of the voting securities of such Person. For purposes of this Agreement, Crown and its Subsidiaries shall be deemed not to be Affiliates of any party to this Agreement. 1 "Affiliate Transaction" has the meaning set forth in Section 2.5. "Agreement" has the meaning set forth in the Preamble. "Board" has the meaning set forth in Section 2.1. "Class A Stock" has the meaning set forth in the Recitals. "Class B Stock" has the meaning set forth in the Recitals. "Commission" means the United States Securities and Exchange Commission. "Company" has the meaning set forth in the Preamble. "Company Common Stock" means Class A Stock and Class B Stock. "Company Voting Stock" means Class A Stock and Class B Stock and all other securities of the Company entitling the holder thereof to vote for the election of directors to the Board. "Contribution Agreement" has the meaning set forth in the Recitals. "Crown" has the meaning set forth in the Recitals. "Crown Affiliate Transaction" has the meaning set forth in Section 4.2. "Crown Class A Stock" has the meaning set forth in the Recitals. "Crown Class B Stock" has the meaning set forth in the Recitals. "Crown Minority Stockholders" means the "Minority Stockholders" as defined in the Crown Stockholders Agreement. "Crown Stock" means Crown Class A Stock and Crown Class B Stock. "Crown Stockholders Agreement" means the Second Amended and Restated Stockholders Agreement, dated as of August 30, 2001, by and among HEH (as transferee of the shares of Crown Class A Stock and Crown Class B Stock previously held by Hallmark Entertainment, Inc.), Liberty Media Corporation, Liberty Crown, Inc. (as transferee of the shares of Crown Class A Stock previously held by Liberty Media Corporation), VISN Management Corp., JP Morgan Partners (BHCA), L.P, DIRECTV Enterprises, Inc. and Crown, as amended from time to time. "Exchange Act" means the United States Securities Exchange Act of 1934, as amended. "HEH" has the meaning set forth in the Preamble. "Minority Stockholder" has the meaning of set forth in the Preamble. "Parent" of a Person means any other Person which is the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of a majority of the securities ordinarily entitled to vote for the election of directors (or persons performing similar functions) or the specified Person or directly, or indirectly, through one or more intermediaries, controls the Person specified. For purposes of this definition, control of a Person means the 2 power, direct or indirect, to direct or cause the direction of the management or policies of such Person whether by contract or otherwise. "Person" means an individual, partnership, corporation, trust, limited liability company or unincorporated organization, or other entity or organization, including a government or agency or political subdivision thereof. "Permitted Transfer" means (i) Transfers by a Stockholder to one or more of its Affiliates, or to one or more of its executives pursuant to a stock-based compensation plan, or to one or more other Stockholders, or to one or more Affiliates of any other Stockholder, or upon its merger or other consolidation to the surviving corporation, subject to the transferee executing a signature page hereof and thereby becoming a party hereto (as a Stockholder) and agreeing that it shall receive the same rights hereunder and be bound by the same obligations hereunder as the transferring Stockholder; or (ii) Transfers by a Stockholder pursuant to a merger, consolidation or other business combination involving all of the outstanding Company Common Stock and a third party which, prior to entering into an agreement with the Company with respect to such business combination, was not an Affiliate of the Company or tender or exchange offer for all of the outstanding Company Common Stock by a third party which, prior to the commencement of such offer, was not an Affiliate of the Company. "Securities Act" means the United States Securities Act of 1933, as amended. "Shares Allotment" has the meaning set forth in Section 3.4(a). "Stockholders" means each Person, other than the Company, who has executed this Agreement and each Person who is required to become a party to this Agreement in the future in accordance with the terms hereof. "Stockholders' Shares" has the meaning set forth in Section 3.4(a). "Subsidiary" of any Person means any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the Board of Directors or other Persons performing similar functions are at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person. "Transfer" means a sale, assignment, encumbrance, gift, pledge, hypothecation or other disposition of Company Common Stock or any interest therein; provided that a pledge of Company Common Stock to a financial institution in a bona fide transaction shall not be deemed to be a Transfer for the purposes of this Agreement, so long as the Stockholder retains full voting power in such shares prior to any event of default, it being understood that in the event of such default such transferee shall have no rights or obligations under this Agreement. "Transferor Stockholder" has the meaning set forth in Section 3.3. (b) For the purposes hereof, (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires, (ii) the terms "hereof," "herein," and "herewith" and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article, Section and paragraph references are to the Articles, Sections and paragraphs of this Agreement unless otherwise specified, (iii) the word "including" and words of similar 3 import when used in this Agreement shall mean "including, without limitation," unless the context otherwise requires or unless otherwise specified, (iv) the word "or" shall not be exclusive, and (v) provisions shall apply, when appropriate, to successive events and transactions. ARTICLE II CORPORATE GOVERNANCE Section 2.1. Composition of the Board of Directors of the Company. Subject to Section 2.4, each of the Stockholders hereby agrees to take, at any time and from time to time, all action necessary such that the Board of Directors of the Company (the "Board") shall consist of three Class I Directors having one vote each and six Class II Directors having two votes each. The directors shall be nominated as follows: (a) HEH shall have the right to nominate six Class II Directors and one Class I Director and (b) Liberty and JPM shall each have the right to nominate one Class I Director. Each Stockholder entitled to vote for the election of directors to the Board shall vote its shares of Company Voting Stock or execute written consents, as the case may be, and shall take all other action necessary in order to ensure election of the nominees and compliance with this Section 2.1. The Company shall take such action as may be required under applicable law and shall otherwise use reasonable efforts to cause the composition of the Board to be as set forth in this Section 2.1. Section 2.2. Removal. Each Stockholder agrees that at any time that it is then entitled to vote or execute a written consent for the removal or replacement of any director of the Company, (a) it shall not vote or execute a written consent for any of its shares of Company Voting Stock in favor of the removal or replacement of any individual who shall have been nominated pursuant to Section 2.1, unless the Stockholder entitled to nominate such director shall have requested such removal or replacement in writing and (b) it shall vote or execute a written consent for all of its shares of Company Voting Stock in favor of and shall take all other action necessary to cause the removal or replacement of an individual nominated pursuant to Section 2.1 if so requested in writing by the Stockholder entitled to nominate such individual. Subject to Section 2.4, nothing contained in this Section 2.2 shall affect the right of any Stockholder to nominate a member of the Board pursuant to Section 2.1. Section 2.3. Vacancies. If, as a result of the death, disability, retirement, resignation, removal or otherwise there shall exist or occur any vacancy on the Board, then the Stockholder entitled under Section 2.1 to nominate such director whose death, disability, retirement, resignation or removal resulted in such vacancy, may, subject to the provisions of Section 2.4, designate another individual to fill such capacity and serve as a director of the Company. Each Stockholder shall, if such Stockholder is then entitled to vote for the election of such designee as a director of the Company, vote or execute a written consent for its shares of Company Voting Stock in order to ensure that such designee be elected to the Board and the Company shall use reasonable efforts to cause such vacancy to be filled by such designee. Section 2.4. Termination of Rights and Obligations. The right of any Stockholder to nominate or designate a member or members of the Board pursuant to this Article II, and all related obligations of the Company and each other Stockholder with respect thereto contained in this Article II and the rights of any Stockholder pursuant to Section 2.7 and Section 4.1, shall terminate on the later of such date as such Stockholder (i) ceases to beneficially own in the aggregate at least 2.5% of the shares of Company Common Stock then issued and outstanding and (ii) ceases to beneficially own at least 75% of the Company Common Stock set forth opposite such Stockholder's name on Appendix I 4 (appropriately adjusted for stock splits, dividends or combinations of shares of Company Common Stock after the date hereof). Section 2.5. Limitation on Transactions with Affiliates. The Company shall not sell any of its material properties or assets to, or purchase any material property or assets from, or enter into any material contract, transaction, agreement, understanding, loan, advance or guaranty with, or for the benefit of, any Affiliate of a Stockholder (each of the foregoing, an "Affiliate Transaction"), unless such Affiliate Transaction is entered into in good faith and on commercially reasonable terms and with respect to any Affiliate Transaction that, together with all related Affiliate Transactions, has an aggregate value of more than $2,000,000, such Affiliate Transaction shall have been approved by a majority of the members of the Board not nominated by such Stockholder. The following Affiliate Transactions are hereby consented to by the parties hereto: (i) transactions pursuant to the Contribution Agreement, as in effect the date hereof; and (ii) transactions pursuant to the Tax Sharing Agreement, dated as of March 11, 2003, by and between Hallmark Cards, Incorporated and Crown Media Holdings, Inc., the Company and any of their respective Subsidiaries. Section 2.6. Extraordinary Transactions. For so long as any Stockholder shall be entitled to nominate a director pursuant to Section 2.1, the Company shall not, without the consent of all such Stockholders entitled to nominate directors pursuant to Section 2.1, take any of the following actions: (i) any amendment or repeal of, or addition to the Company's certificate of incorporation; (ii) issue or redeem capital stock of the Company or securities exercisable or convertible into such capital stock; (iii) any spin-off, merger, consolidation or other business combination of the Company (other than arising out of or related to a merger, consolidation or other business combination involving Crown); (iv) the dissolution, liquidation or conversion of the Company; or (v) any sale, pledge, distribution or other transfer of shares of Crown Stock, except in a merger, consolidation, tender offer, exchange offer or other business combination involving Crown and approved in accordance with the terms of the Crown Stockholders Agreement. Section 2.7. Voting of Crown Stock. Subject to Article IV hereof, at any meeting of the stockholders of Crown or action by written consent of Crown stockholders, the Board shall take all action necessary to cause the Company to vote, in person or by proxy or consent, its shares of Crown Stock as directed by HEH. Section 2.8 Board Observer. VISN shall have the right to designate a non-voting observer (the "VISN Observer") to the Board, who shall be a Person reasonably acceptable to the Board, and who shall have the right to notice of and to attend all Board meetings. The Company shall provide to the VISN Observer copies of all materials and full access to the information and materials provided to any of the members of the Board (except where materials are provided only to a committee that was appointed by the Board) at the same time as the Board member(s) receive such materials subject to the limitation 5 set forth herein. VISN shall be, and shall cause the VISN Observer to be, obligated to hold in confidence any and all information received in any Board meeting or otherwise in the VISN Observer's capacity as such, except to the extent that such information is publicly disclosed by the Company provided that the VISN Observer shall be entitled to report any and all information to VISN. The right of VISN to nominate or designate the VISN Observer pursuant to this Section and all related obligations of the Company and each other Stockholder with respect thereto contained in this Section, shall terminate on the date that VISN or any of its Affiliates ceases to collectively beneficially own in the aggregate at least 75% of the shares of Company Common Stock set forth opposite VISN's name on Appendix I (appropriately adjusted for stock splits, dividends, or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization). ARTICLE III TRANSFERABILITY AND TAG-ALONG RIGHTS Section 3.1. Restrictions on Transferability. No Company Common Stock may be Transferred except upon compliance with the provisions of the Securities Act and this Agreement, and any attempted Transfer other than in accordance with the terms hereof is void ab initio and transfers no right, title or interest in or to such Company Common Stock to the purported transferee, buyer, donee, assignee or encumbrance holder. Section 3.2 Restrictive Legend. Each certificate representing any portion of Company Common Stock that is held by a Stockholder shall be stamped or otherwise imprinted with a legend in substantially the following form (in addition to any legend required under applicable state securities laws): "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED EXCEPT IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT, OR IN COMPLIANCE WITH RULE 144 OR PURSUANT TO ANOTHER EXEMPTION. THE SECURITIES ARE ALSO SUBJECT TO PROVISIONS OF A STOCKHOLDERS AGREEMENT DATED MARCH 11, 2003, AS IT MAY BE AMENDED FROM TIME TO TIME IN ACCORDANCE WITH THE PROVISIONS THEREOF. Section 3.3. Notice of Proposed Transfers; Securities Law Compliance. Prior to any proposed Transfer of any Company Common Stock, unless there is in effect a registration statement under the Securities Act covering the proposed Transfer, the Stockholder intending to Transfer such Company Common Stock (the "Transferor Stockholder") shall give written notice to the Company of such Transferor Stockholder's intention to effect such Transfer. Each such notice shall set forth the name of the proposed transferee, the number of shares proposed to be Transferred and the proposed amount and form of consideration to be paid for such Company Common Stock (other than for a Permitted Transfer). Notwithstanding anything herein to the contrary, no Stockholder shall be permitted to transfer its Company Common Stock if such transfer or series of transfers would subject the Company to the reporting requirements of Section 13 or 15(d) of the Exchange Act. Section 3.4. Tag-Along Rights. (a) Except for Permitted Transfers, if HEH, at any time or from time to time, in a single transaction or series of related transactions occurring within a six-month period, or within a longer period if pursuant to a single agreement, proposes to Transfer 20% or more of 6 the outstanding shares of Company Common Stock (a "Tag-Along Sale"), then each Minority Stockholder shall have the right, but not the obligation, to participate in such Tag-Along Sale by selling the number of shares of Company Common Stock owned by it as calculated in the following manner. Such shares of Company Common Stock that were acquired by the Minority Stockholders pursuant to the Contribution Agreement and that are owned by the Minority Stockholders or their Affiliates which are Parties to this Agreement are hereinafter referred to as the "Stockholders' Shares"; provided, however that shares of Company Common Stock transferred from another Stockholder to a Minority Stockholder or its Affiliates (other than an Affiliate of such transferring Stockholder) shall not be deemed to be Stockholders' Shares. The maximum number of shares of Company Common Stock that each Minority Stockholder shall be entitled to include in such Tag-Along Sale (the "Shares Allotment") shall equal the product of (i) the total number of shares of Company Common Stock proposed to be Transferred pursuant to the Tag-Along Sale or such greater number of shares that the proposed purchaser in the Tag-Along Sale shall agree to purchase or otherwise acquire multiplied by (ii) a fraction, the numerator of which shall equal the number of Stockholders' Shares owned by such Minority Stockholder and its Affiliates which are parties to this Agreement on the date of the Sale Notice and the denominator of which shall equal the sum of (A) the number of shares of Company Common Stock owned by HEH and its Affiliates on the date of the Sale Notice plus the number of Stockholders' Shares owned by all Minority Stockholders and their Affiliates which are parties to this Agreement on the date of the Sale Notice, without duplication. (b) Any such sales by the Minority Stockholders shall be on the same terms and conditions as the proposed Tag-Along Sale by HEH; provided, however that no participating Minority Stockholder shall be required to make any representation or warranty in connection with the Tag-Along Sale, other than as to the enforceability of each agreement entered into in connection with such Tag-Along Sale with respect to the Minority Stockholder and its ownership and authority to sell, free of consent and approval requirements, liens, claims and encumbrances, the shares of Company Common Stock proposed to be sold by it. Each participating Minority Stockholder shall (and hereby agrees to), without limitation as to time, indemnify and hold harmless, to the full extent permitted by law, each of the other Stockholders against all losses, claims, damages, liabilities, costs (including costs of preparation) and expenses (including attorneys' fees and disbursements) arising out of or relating to any representation or warranty made by, or covenant of, such participating Minority Stockholder or any agent, employee, officer, or director of such participating Minority Stockholder in connection with or relating to or under the terms of each agreement entered into in connection with such Tag-Along Sale, except insofar as the same are based solely upon written information furnished in writing to such participating Minority Stockholder by such other Minority Stockholder expressly for use therein. (c) HEH shall promptly provide each of the Minority Stockholders with written notice (the "Sale Notice") not less than 15 days prior to the proposed date of the Tag-Along Sale (the "Tag-Along Sale Date"). In order to facilitate the prompt delivery of the Sale Notice, the Company hereby covenants to provide HEH and the Minority Stockholders participating in a Tag-Along Sale access to the stock record books of the Company. Each Sale Notice shall set forth: (i) the name of each proposed transferee or purchaser of Company Common Stock in the Tag-Along Sale; (ii) the number of shares of Company Common Stock proposed to be Transferred by HEH and, if applicable, such greater number of shares that the proposed purchaser is willing to purchase in connection with the Tag-Along Sale; 7 (iii) the proposed amount and form of consideration to be paid for such shares of Company Common Stock and the material terms and conditions of payment offered by each proposed transferee or purchaser; (iv) confirmation that the proposed purchaser or transferee has been informed of the "Tag-Along Rights" provided for herein and has agreed to purchase shares of Company Common Stock in accordance with the terms hereof; (v) such Minority Stockholder's Shares Allotment; and (vi) the Tag-Along Sale Date. Each Minority Stockholder who wishes to participate in the Tag-Along Sale shall provide written notice (or oral notice confirmed immediately in writing) (the "Tag-Along Notice") to HEH not less than seven days prior to the Tag-Along Sale Date. The Tag-Along Notice shall set forth the number of shares of Company Common Stock that such Minority Stockholder elects to include in the Tag-Along Sale, which shall not exceed such Minority Stockholder's Shares Allotment. HEH shall determine the aggregate number of shares of Company Common Stock to be sold by each participating Minority Stockholder in any given Tag-Along Sale in accordance with the terms hereof, and the Tag-Along Notices given by the Minority Stockholders shall constitute their binding agreements to sell such shares at the price and on the terms and conditions applicable to such sale. If a Tag-Along Notice is not received by HEH from a Minority Stockholder prior to the seven-day period specified above, HEH shall have the right to Transfer the number of shares of Company Common Stock specified in the Sale Notice to the proposed purchaser or transferee without any participation by such Minority Stockholder, but only at a price and upon terms and conditions no more favorable to HEH than stated in such Sale Notice and only if such sale occurs on a date within 60 days of the Tag-Along Sale Date. ARTICLE IV ADDITIONAL RIGHTS Section 4.1 Crown Board of Directors. Subject to Section 2.4, the Company agrees that each of Liberty and JPM shall have the right to designate one person as one of the directors to the Board of Directors of Crown that HEH is entitled to nominate in accordance with Section 2.1 of the Crown Stockholders Agreement or otherwise, and that HEH shall direct the Company to vote its shares of Crown Stock or execute written consents, as the case may be, and take all other action necessary in order to ensure the election of each such nominee. In the event of the death, disability, retirement, resignation or removal of any director nominated by Liberty or JPM, then the party entitled to designate such director shall designate another individual to fill such capacity and serve as a director of Crown and HEH shall direct the Company to vote its shares of Crown Stock or execute a written consent in order to ensure that such designee be elected to the Board of Directors of Crown. Section 4.2 Limitation on Crown's Transactions with Affiliates. From the date hereof, the Company shall not permit Crown, and shall not permit any of Crown's Subsidiaries to, directly or indirectly, sell any of its material properties or assets to, or purchase any material property or assets from, or enter into any material contract, transaction, agreement, understanding, loan, 8 advance or guaranty with, or for the benefit of, any Affiliate of HEH (each of the foregoing, a "Crown Affiliate Transaction"), unless such Crown Affiliate Transactions are entered into in good faith and on commercially reasonable terms and (i) with respect to any Crown Affiliate Transaction that, together with all related Crown Affiliate Transactions, have an aggregate value of not more than $35,000,000, such transactions are approved by a majority of the Independent Directors (as defined in the Crown Stockholders Agreement) and (ii) with respect to any Crown Affiliate Transactions that, together with all related Crown Affiliate Transactions have an aggregate value of more than $35,000,000, such Crown Affiliate Transactions are approved by a majority of the members of the Board of Directors of Crown that are not nominated by any Affiliate of HEH; provided, however, that for such purposes the directors designated by Liberty and JPM in accordance with Section 4.1 will be treated as not nominated by any Affiliate of HEH. Furthermore, neither the Company nor any of its Affiliates will agree to consent to any amendment, termination or waiver of, or consent to any departures from, the provisions of the Crown Stockholders Agreement as in the effect as of the date of such proposed amendment, termination, waiver or consent unless each of Liberty and JPM has consented in writing to the proposed amendment, termination, waiver or consent. Notwithstanding the foregoing, the following shall be deemed not to be Crown Affiliate Transactions: (i) transactions pursuant to the Contribution Agreement and (ii) the transactions pursuant to the Tax Sharing Agreement, in each case as in effect as of the date hereof. Section 4.3 Registration Rights. Commencing on the earlier of (i) the effective date of an initial public offering of Company Common Stock pursuant to a registration statement filed under the Securities Act and (ii) the date the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall grant each Minority Stockholder registration rights provided to the Crown Minority Stockholders in the Crown Stockholders Agreement as in effect as of the date hereof. Notwithstanding anything herein to the contrary, HEH and its Affiliates will not agree to any spin-off, merger, tender offer, exchange offer, consolidation or other business combination of the Company or Crown in connection with which HEH or any of its Affiliates is entitled to registration rights with respect to any non-cash consideration it receives, unless, with respect to the non-cash consideration it receives, each Minority Stockholder receives registration rights with terms no less favorable in any material respect than those received by HEH or any of its Affiliates. ARTICLE V GENERAL Section 5.1. Entire Agreement. This Agreement and the Crown Stockholders Agreement contain the entire agreement between the parties hereto with respect to the subject matter hereof and there are no agreements, understandings, representations or warranties between the parties hereto other than those set forth or referred to herein. Section 5.2. Amendment and Waiver. This Agreement, including this Section 5.2, may be amended, and waivers or consents to departures from the provisions hereof may be given, only by a written instrument duly executed, in the case of an amendment, by the Company and each Stockholder, or in the case of a waiver or consent, by each party against whom the waiver or consent, as the case may be, is to be effective. 9 Section 5.3. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmission) and shall be given as set forth on Appendix I hereto. Section 5.4. Assignment; Benefit. The terms and provisions of this Agreement shall not be assignable or transferable and except as otherwise expressly provided herein there shall be no third party beneficiaries hereto; provided, however, that if a Stockholder Transfers all but not less than all, of its shares of Company Common Stock to an Affiliate of such Stockholder in accordance with the terms of this Agreement, such Person may, by executing a signature page to this Agreement, become a party hereto and have the same rights and obligations as the Transferring Stockholder. All the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the respective legal successors and permitted assigns of the parties hereto. Section 5.5. Absence of Presumption. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted. Section 5.6. Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Section 5.7. Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. Section 5.8. Governing Law; Jurisdiction and Forum. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS. THE PARTIES HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE SOLELY IN RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT AND IN RESPECT OF THE TRANSACTIONS CONTEMPLATED HEREBY, AND HEREBY WAIVE, AND AGREE NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR THE INTERPRETATION OR ENFORCEMENT HEREOF, THAT IT IS NOT SUBJECT THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SAID COURTS OR THAT THE VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS, AND THE PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH A DELAWARE STATE COURT. THE PARTIES HEREBY CONSENT TO AND GRANT ANY SUCH COURT JURISDICTION OVER SUCH PARTIES AND OVER THE SUBJECT MATTER OF SUCH DISPUTE AND AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 5.3 OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW SHALL BE VALID AND SUFFICIENT SERVICE THEREOF. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND 10 ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.8. Section 5.9. Specific Enforcement. Each party hereto acknowledges that remedies at law may be inadequate to protect any other party against any actual or threatened breach of this Agreement by the other parties and, without prejudice to any other rights and remedies otherwise available to any party, each party agrees to the granting of injunctive relief in any other party's favor without proof of actual damages. In the event of litigation relating to this Agreement, if a court of competent jurisdiction determines that this Agreement has been breached by a party, then such party shall reimburse the other party for costs and expenses (including, but not limited to, reasonable legal fees and expenses) incurred in connection with all such litigation. Section 5.10. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or entity or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such original provision and (b) the remainder of this Agreement and the application of such provision to other Persons, entities or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction. Section 5.11. Covered Shares. All of the provisions of this Agreement shall apply to and include (a) Company Common Stock acquired pursuant to the Contribution Agreement; (b) Company Common Stock acquired from another Stockholder; and (c) to the extent received in respect of shares of Company Common Stock acquired pursuant to the Contribution Agreement, all securities and instruments (i) received by a Stockholder as a dividend or other payment, or (ii) issued in connection with a split of such shares or as a result of any exchange for or reclassification of such shares or a reorganization, recapitalization, consolidation or merger. Appendix I hereto identifies those shares of Company Common Stock subject to the provisions of this Agreement as of the date hereof. 11 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective authorized officers as of the day and year first above written. HALLMARK ENTERTAINMENT INVESTMENTS CO. By: /s/Judith Whittaker/s/ -------------------------------------- Name: Judith Whittaker Title: Vice President HALLMARK ENTERTAINMENT HOLDINGS, INC. By: /s/Judith Whittaker/s/ -------------------------------------- Name: Judith Whittaker Title: Vice President LIBERTY CROWN, INC. By: /s/David B. Koff/s/ -------------------------------------- Name: David B. Koff Title: Senior Vice President VISN MANAGEMENT CORP. By: /s/Wilford V. Bane, Jr./s/ -------------------------------------- Name: Wilford V. Bane, Jr. Title: Chair - VMC JP MORGAN PARTNERS (BHCA), L.P., By JPMP MASTER FUND MANAGER, L.P., its general partner By JPMP CAPITAL CORP., its general partner By: /s/Michael R. Hannon/s/ -------------------------------------- Name: Michael R. Hannon Title: Managing Director 12 APPENDIX I - ---------------------------------------- -------------------- ------------------ Stockholder Class A Stock Class B Stock - ---------------------------------------- -------------------- ------------------ - ---------------------------------------- -------------------- ------------------ Hallmark Entertainment Holdings, Inc. 39,260 30,670 - ---------------------------------------- -------------------- ------------------ - ---------------------------------------- -------------------- ------------------ Liberty Crown, Inc. 9,417 - ---------------------------------------- -------------------- ------------------ - ---------------------------------------- -------------------- ------------------ JP Morgan Partners (BHCA), L.P. 3,837 - ---------------------------------------- -------------------- ------------------ - ---------------------------------------- -------------------- ------------------ VISN Management Corp. 634 - ---------------------------------------- -------------------- ------------------ Address for Notices If to the Company or Hallmark Entertainment Holdings, Inc. to: Hallmark Cards, Incorporated Department 339 2501 McGee Kansas City, MO 64108 Attention: Judith C. Whittaker, Executive Vice President, General Counsel Telephone: (816) 274-5111 Facsimile: (816) 274-8203 With copies to: Hallmark Entertainment, Inc. 1325 Avenue of the Americas New York, NY 10019 Attention: Robert Halmi, Jr. Telephone: (212) 977-9001 Facsimile: (212) 977-9049 If to Liberty Crown, Inc. to: Liberty Crown, Inc. 12300 Liberty Boulevard Englewood, CO 80112 Attention: David B. Koff, Senior Vice President Facsimile: (720) 875-5448 1 With a copy to: Liberty Media Corporation 12300 Liberty Boulevard Englewood, CO 80112 Attention: Charles Tanabe Facsimile: (720) 875-5440 And to: Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue Los Angeles, CA 90071-3144 Attention: Rod Guerra Facsimile: (213) 687-5600 If to JP Morgan Partners (BHCA), L.P. to: JP Morgan Partners (BHCA), L.P. 1221 Avenue of the Americas, 40th Floor New York, NY 10020 Attention: Arnold Chavkin Telephone: (212) 899-3100 Facsimile: (212) 899-3101 With a copy to: Mayer, Brown & Platt 1675 Broadway, Suite 1900 New York, NY 10019 Attention: Mark S. Wojciechowski, Esq. Telephone: (212) 506-2500 Facsimile: (212) 262-1910 If to VISN Management Corp. to: VISN Management Corp. 819 Cammack Court Nashville, TN 37205 Attention: Wilford V. Bane Telephone: (615) 352-5288 Facsimile: (615) 356-4273 2 With a copy to: Cowan, DeBaets, Abrahams & Sheppard LLP 41 Madison Avenue, 34th Floor New York, NY 10010 Attention: Robert Freedman, Esq. Telephone: (212) 974-7474 Facsimile: (212) 974-8474 3 EX-99 4 la313306a.txt EX (C) CONTRIBUTION AGREEMENT ================================================================================ CONTRIBUTION AGREEMENT by and among HALLMARK ENTERTAINMENT INVESTMENTS CO., HALLMARK ENTERTAINMENT HOLDINGS, INC. and THE OTHER SIGNATORIES HERETO dated as of March 11, 2003 ================================================================================
TABLE OF CONTENTS ----------------- Page ---- ARTICLE I - DEFINITIONS...............................................................................................1 1.1 Definitions.........................................................................................1 ARTICLE II - THE CLOSING..............................................................................................4 2.1 The Closing.........................................................................................4 2.2 Related Documents...................................................................................4 ARTICLE III - THE EXCHANGES...........................................................................................4 3.1 The Exchanges.......................................................................................4 3.2 Delivery of Share Certificates......................................................................4 ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF HEH....................................................................4 4.1 Corporate Existence.................................................................................4 4.2 Power and Authority.................................................................................4 4.3 Enforceability, etc.................................................................................5 4.4 Capitalization......................................................................................5 4.5 Consents and Approvals..............................................................................6 4.6 No Liabilities......................................................................................6 4.7 Brokers, etc........................................................................................6 ARTICLE V - REPRESENTATIONS AND WARRANTIES OF THE MINORITY CONTRIBUTORS...............................................6 5.1 Existence; Power and Authority......................................................................6 5.2 Enforceability, etc.................................................................................7 5.3 Ownership...........................................................................................7 5.4 Consents and Approvals..............................................................................7 5.5 Purchase for Investment.............................................................................7 5.6 Financial Matters...................................................................................7 5.7 Brokers, etc........................................................................................8 ARTICLE VI - INDEMNIFICATION..........................................................................................8 6.1 Indemnification.....................................................................................8 6.2 Procedure for Indemnification.......................................................................8 6.3 Time Limitations on Indemnity.......................................................................9 6.4 Limitations on Indemnity............................................................................9 ARTICLE VII - GENERAL PROVISIONS; OTHER AGREEMENTS....................................................................9 7.1 Expenses............................................................................................9 7.2. Governing Law; Jurisdiction and Forum...............................................................9 7.3. Further Assurances..................................................................................9 7.5 Headings...........................................................................................10 7.6 Notices............................................................................................10 7.7 Parties in Interest................................................................................10 7.8 Entire Agreement...................................................................................10 7.9 Counterparts.......................................................................................10 i 7.10 Amendment..........................................................................................10 7.11 Gender, etc........................................................................................10 7.12 Severability.......................................................................................10 7.13 No Waiver..........................................................................................11
Item 4.4 Company Capitalization Schedule Item 4.4(a) Liens on Crown Stock Item 5.1 Jurisdiction of Organization Item 5.4 Minority Shareholder Required Consents Appendix I Contributors and Contributions Appendix II Notices ii This CONTRIBUTION AGREEMENT, dated as of March 11, 2003, (this "Agreement"), by and among Hallmark Entertainment Investments Co., a Delaware corporation (the "Company"), Hallmark Entertainment Holdings, Inc., a Delaware corporation ("HEH"), and the other parties hereto (each such other party a "Minority Contributor," together with HEH, the "Contributors"). WHEREAS, the Parties desire to consummate the transactions contemplated herein, pursuant to which each Contributor will contribute to the Company the number of shares of Class A common stock, par value $.01 per share ("Crown Class A Stock"), of Crown Media Holdings, Inc., a Delaware corporation ("Crown"), and, if any, the number of shares of Class B common stock, par value $.01 per share (" Crown Class B Stock"), of Crown set forth across from its name in Appendix I in exchange for the number of shares of Class A common stock, par value $.01 per share ("Class A Stock"), of the Company and, if any, Class B common stock, par value $.01 per share ("Class B Stock"), of the Company set forth across from its name in Appendix I; and WHEREAS, for Federal income tax purposes, it is intended that the contributions will qualify as transfers to a controlled corporation under the provisions of Section 351 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury Regulations thereunder; NOW, THEREFORE, in consideration of the premises and the representations, warranties and agreements herein contained, the Parties agree as follows: ARTICLE I - DEFINITIONS 1.1 Definitions. As used herein, the following terms shall have the following meanings: "Actions" means all complaints, actions, suits, proceedings or investigations. "Adverse Consequences" means all claims, judgments, damages, penalties, fines, costs, losses, liabilities or other monetary obligations (including all reasonable attorney and expert fees incurred to enforce the terms of this Agreement) net of any recovery from any third party including, without limitation, insurance proceeds. "Agreement" has the meaning set forth in the Preamble. "Blue Sky Laws" has the meaning set forth in Section 4.4(a). "Class A Stock" has the meaning set forth in the Recitals. "Class B Stock" has the meaning set forth in the Recitals. "Closing" has the meaning set forth in Section 2.1. "Closing Date" has the meaning set forth in Section 2.1. "Code" has the meaning set forth in the Recitals. "Commission" means the Securities and Exchange Commission. "Common Stock" means, collectively, the Class A Stock and the Class B Stock. "Company" has the meaning set forth in the Preamble. "Company Capitalization Schedule" has the meaning set forth in Section 4.4(a). "Company Indemnified Persons" has the meaning set forth in Section 6.1(c). "Company Stockholders Agreement" means the Stockholders Agreement to be entered into by and among the Company and the Contributors substantially in the form set forth in Exhibit B. "Consent and Waiver" means a consent and waiver pursuant to the Crown Stockholders Agreement with respect to this Agreement and the transactions contemplated hereunder. "Contributor" has the meaning set forth in the Preamble. "Contributor Indemnified Persons" has the meaning set forth in Section 6.1(a). "Crown" has the meaning set forth in the Recitals. "Crown Class A Stock" has the meaning set forth in the Recitals. "Crown Class B Stock" has the meaning set forth in the Recitals. "Crown Stockholders Agreement" means the Second Amended and Restated Stockholders Agreement, dated as of August 30, 2001, by and among HEH (as transferee of the shares of Crown Class A Stock and Crown Class B Stock held by Hallmark Entertainment, Inc.), Liberty Media Corporation, Liberty Crown, Inc., VISN Management Corp., JP Morgan Partners (BHCA), L.P., DIRECTV Enterprises, Inc. and Crown. "Encumbrance" means any security interest, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), charge against or interest in property to secure payment of a debt or performance of an obligation or other priority or preferential arrangement of any kind or nature whatsoever, including the interest of a vendor, lessor or licensor under any conditional sale, capitalized lease, exclusive license or other title retention agreement. "Governmental Entity" means any Federal, state or local government or any court, administrative agency or commission or other governmental authority or agency, domestic or foreign. "HEH" has the meaning set forth in the Preamble. 2 "Indemnified Party" has the meaning set forth in Section 6.2. "Indemnifying Party" has the meaning set forth in Section 6.2. "Interest" means any evidence of equity ownership of any Person, whether represented by common stock, preferred stock, securities, options, warrants or other rights to repurchase or acquire any equity ownership of such Person (including convertible debentures, notes or other securities convertible or exchangeable into or exercisable for the purchase or other acquisition of capital stock), trust certificates, general or limited partnership interests or any other type of capital stock or equity interest. "Law" means any law, statute, regulation, rule, ordinance, requirement or other binding action or requirement of any governmental, regulatory or administrative body, agency or authority or any court of judicial authority. "Material Adverse Effect" means a material adverse effect on (i) with respect to the Company or HEH, the business, results of operation or financial condition of the Company and its Subsidiaries taken as a whole or HEH and its Subsidiaries taken as a whole, as applicable; and (ii) with respect to any of the Contributors, the legal ability of such Contributor to consummate the transactions contemplated by this Agreement, other than by reason of the inability of the other Contributors to consummate such transactions. "Minority Contributor" has the meaning set forth in the Preamble. "Order" means any decree, order, judgment, writ, award, injunction, stipulation or consent of or by any governmental, regulatory or administrative body, agency or authority or any court or judicial authority. "Party" means any of the Company or any of the Contributors. "Person" means any individual, corporation, general or limited partnership, joint venture, association, limited liability company, joint stock company, trust, business trust, bank, trust company, estate (including any beneficiaries thereof), unincorporated entity, cooperative, association, government branch, agency or political subdivision thereof or organization of any kind. "Related Documents" means the Company Stockholders Agreement. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations issued in respect thereto. "Subsidiary" of any Person means any corporation or other entity of which securities or other ownership interests having voting power to elect a majority of the Board of Directors or other Persons performing similar functions are at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person. "Written Notice" has the meaning set forth in Section 6.2. 3 ARTICLE II - THE CLOSING 2.1 The Closing. The closing of the transactions contemplated herein (the "Closing") shall take place at the offices of the Company, Kansas City, Missouri, on the date of this Agreement (the "Closing Date"). 2.2 Related Documents. Simultaneously, at the Closing, a Consent and Waiver is being executed and delivered by DIRECTV Enterprises, Inc., and the Company Stockholders Agreement is being executed and delivered by the Company, HEH and the other signatories thereto. ARTICLE III - THE EXCHANGES 3.1 The Exchanges. At the Closing, each of the Contributors shall contribute to the Company the number of shares of Crown Class A Stock and, if any, the number of shares of Crown Class B Stock set forth opposite its name on Appendix I hereto, and the Company shall issue to such Stockholder the number of shares of Class A Stock and, if any, Class B Stock set forth opposite its name on Appendix I hereto. 3.2 Delivery of Share Certificates. At the Closing, each of the Contributors will deliver to the Company share certificates or other documents, which certificates or other documents shall be either duly endorsed in blank or accompanied by stock powers duly executed in blank, representing its respective shares of Crown Class A Stock and, if any, Crown Class B Stock to be contributed to the Company pursuant to Section 3.1, and the Company will deliver to the Contributors share certificates representing the Common Stock to be issued to the Contributors pursuant to Section 3.1. ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF HEH HEH hereby represents and warrants as follows as of the date hereof: 4.1 Corporate Existence. Each of the Company and HEH is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware, and is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the ownership or use of any of its assets or properties, or the conduct or nature of its business, makes such qualification necessary, except for any jurisdictions in which the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect on HEH or the Company, respectively. The Company has all requisite power and authority to conduct its business and own its properties as now conducted and owned, except for such failure to have such power and authority which could not reasonably be expected to have a Material Adverse Effect on the Company. HEH has previously provided to each of the Contributors true and complete copies of the Certificate of Incorporation and By-laws of the Company as in effect on the date hereof. 4.2 Power and Authority. Each of the Company and HEH has the requisite power and authority, and has taken all required action necessary, to execute, deliver and perform this Agreement and all Related Documents to which 4 it is a party. None of the foregoing actions will (i) violate any provision of the By-laws, Certificate of Incorporation or other organizational document of the Company or any of its Subsidiaries, or HEH (ii) result in the breach of or constitute a default under any material contract, lease, license, franchise, permit, indenture, mortgage, deed of trust, note, agreement or other instrument to which the Company or any of its Subsidiaries is a party or by which any of them is bound, (iii) result in the creation or imposition of any material lien, claim or encumbrance on any asset of the Company or any of its Subsidiaries, (iv) give any Person rights to terminate any contracts or agreements of the Company or otherwise to exercise rights against the Company or (v) to the knowledge of HEH, give any Person rights to terminate any contracts or agreements of the Company's Subsidiaries or otherwise to exercise rights against the Company's Subsidiaries or (vi) violate any Law or Order applicable to or bearing upon the Company or any of its Subsidiaries or their assets or businesses except, in the case of each of clauses (ii), (iii), (iv), (v) or (vi) for such violations, breaches, defaults, rights and impairments that could not reasonably be expected to have a Material Adverse Effect on the Company and its Subsidiaries taken as a whole. 4.3 Enforceability, etc. Assuming the due authorization, execution and delivery of each other party thereto, this Agreement and each of the Related Documents have been duly executed and delivered by each of the Company and HEH, and constitute the legal, valid and binding obligation of each of the Company and HEH, as applicable, enforceable against them in accordance with their respective terms, subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and (ii) general equitable principles (whether considered in a proceeding in equity or at law). 4.4 Capitalization. (a) Item 4.4 of the Disclosure Schedule sets forth, as of the date of this Agreement and, upon completion of the exchange set forth in Section 3.1, a true and complete statement of the outstanding Interests of the Company (the "Company Capitalization Schedule"). Except as set forth on the Company Capitalization Schedule, the Company has not issued any Interests, nor are any such Interests (or any rights to acquire or purchase any such Interests) outstanding. Except for Encumbrances set forth on Item 4.4(a) of the Disclosure Schedule, the shares of Crown Class A Stock and Crown Class B Stock owned by HEH are owned, and will be delivered to the Company, free and clear of any Encumbrances, preemptive rights, escrows, options, rights of first refusal or other agreements, arrangements, commitments, understandings or obligations, whether written or oral, or any other restrictions affecting rights and other incidents of record and beneficial ownership, other than (i) as set forth herein or in the Related Documents and (ii) restrictions on transferability imposed generally under the Securities Act and under the securities laws of the several states and the rules and regulations issued in respect thereto (such state laws, rules and regulations being, collectively, "Blue Sky Laws"). (b) The Class A Stock and Class B Stock to be delivered to the Contributors, when issued and delivered to the Contributors pursuant to this Agreement against payment of the consideration set forth herein, will be duly authorized, validly issued, fully paid and non-assessable and will be free and clear of any Encumbrances, preemptive rights, escrows, options, rights of first refusal or other agreements, arrangements, commitments, understandings 5 or obligations, whether written or oral, or any other restrictions affecting rights and other incidents of record and beneficial ownership, other than (i) as set forth herein or in the Related Documents and (ii) restrictions on transferability imposed generally under the Securities Act and under Blue Sky Laws. (c) The issuance and delivery of the Common Stock to the Contributors on the terms and conditions contemplated herein are exempt from the registration requirements of the Securities Act and the Blue Sky Laws or will be qualified as may be necessary. 4.5 Consents and Approvals. Except as set forth on Item 4.5 of the Disclosure Schedule, neither the execution, delivery and performance of this Agreement or any Related Documents by the Company or HEH, nor the consummation by the Company or HEH of any transaction related hereto or thereto, nor the issuance or delivery of the Common Stock will require any consent, approval, Order or authorization of, filing, registration, declaration or taking of any other action with, or notice to, any Person, other than such consents, approvals, filings or actions (i) under the Federal securities laws or the Blue Sky Laws, (ii) the failure of which to take or obtain would not reasonably be expected to have a Material Adverse Effect on the Company or HEH, as applicable or (iii) which have already been obtained. 4.6 No Liabilities. The Company was incorporated on July 14, 1998. The Company currently has no liabilities (contingent or otherwise). There are no actions, suits proceedings, orders, investigations or claims pending or threatened against the Company. 4.7 Brokers, etc. None of HEH or the Company is obligated to pay any fee or commission to any broker, finder or other similar Person in connection with the transaction contemplated hereby or any of the transactions contemplated by this Agreement or the Related Documents. ARTICLE V - REPRESENTATIONS AND WARRANTIES OF THE MINORITY CONTRIBUTORS Each Minority Contributor, severally and not jointly, represents and warrants as to those matters pertaining to itself only (and not the other Minority Contributors) as follows as of the date hereof: 5.1 Existence; Power and Authority. Such Minority Contributor is duly organized, validly existing and in good standing under the laws of the jurisdiction set forth opposite its name as set forth on Item 5.1 of the Disclosure Schedule. Such Minority Contributor has all requisite power and authority and has taken all required action necessary to execute and deliver and perform this Agreement, the Related Documents and each other document or instrument related hereto or thereto to which it is a party, and to carry out the terms hereof and thereof. None of the foregoing actions will (i) violate any provision of the organizational documents of such Minority Contributor, (ii) result in the breach of or constitute a default under any material contract, lease, license, franchise, permit, indenture, mortgage, deed of trust, note, agreement or other instrument to which such Minority Contributor is a party or is bound, (iii) violate any Law or Order applicable to or bearing upon such Minority Contributor or any of their respective assets or 6 business, except, in the case of (ii) and (iii), for such conflicts, violations, breaches, rights and impairments that could not reasonably be expected to have a Material Adverse Effect on such Minority Contributor. 5.2 Enforceability, etc. Assuming the due authorization, execution and delivery by each other party thereto, this Agreement and the Related Documents have been duly executed and delivered by such Minority Contributor and constitute the legal, valid and binding obligation of such Minority Contributor, enforceable against it in accordance with their respective terms, subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally and (ii) general equitable principles (whether considered in a proceeding in equity or at law). 5.3 Ownership. The shares of Crown Class A Stock to be contributed by such Minority Contributor to the Company are owned, and will be delivered to the Company, free and clear of any Encumbrances, preemptive rights, escrows, options, rights of first refusal or other agreements, arrangements, commitments, understandings or obligations, whether written or oral, or any other restrictions affecting rights and other incidents of record and beneficial ownership, other than (i) as set forth herein or in the Related Documents and (ii) restrictions on transferability imposed generally under the Securities Act and under Blue Sky Laws. 5.4 Consents and Approvals. Except as set forth on Item 5.4 of the Disclosure Schedule, neither the execution, delivery and performance of this Agreement or any Related Document by such Minority Contributor, nor the consummation by such Minority Contributor of any transaction related hereto or thereto will require any consent, approval, Order or authorization of, filing, registration, declaration or taking of any other action with, or notice to, any Person, other than such consents, approvals, filings or actions (i) under the Federal securities laws or the Blue Sky Laws, (ii) the failure of which to take or obtain would not reasonably be expected to have a Material Adverse Effect on such Minority Contributor or (iii) which have already been obtained. 5.5 Purchase for Investment. Such Minority Contributor, as applicable, is acquiring the Class A Stock pursuant to Section 3.1 for its own account for investment purposes and not as a nominee or agent for any other Person and with no present intention of distribution thereof within the meaning of the Securities Act. Such Minority Contributor understands that the Class A Stock must be held indefinitely unless it is registered under the Securities Act or an exemption from such registration becomes available. 5.6 Financial Matters. Such Minority Contributor acquiring Class A Stock pursuant to Section 3.1 represents and understands that the acquisition of the Class A Stock involves substantial risk and that such Minority Contributor's financial condition and investments are such that it is in a financial position to hold the Class A Stock for an indefinite period of time and to bear the economic risk of, and withstand a complete loss of, such Class A Stock. Such Minority Contributor that is acquiring Class A Stock pursuant to Section 3.1 represents that it is an "accredited investor" as that term is defined in Regulation D promulgated under the Securities Act, and that it is a sophisticated investor, capable of evaluating the merits and risks of investing in the Company given its current stage of development. 7 5.7 Brokers, etc. Such Minority Contributor is not obligated to pay any fee or commission to any broker, finder or other similar Person in connection with the transaction contemplated hereby or any of the transactions contemplated by this Agreement or the Related Documents. ARTICLE VI - INDEMNIFICATION 6.1 Indemnification. (a) HEH agrees from and after the Closing to (i) indemnify and hold harmless the Minority Contributors, all of their respective officers, directors, affiliates, employees and agents, and each of the successors and assigns of any of the foregoing (the "Contributor Indemnified Persons") from and against any Adverse Consequences (but excluding any consequential damages of the Contributor Indemnified Persons), and (ii) defend the Contributor Indemnified Persons against any Actions, to the extent such Adverse Consequences or Actions arise out of or result from (A) the breach or inaccuracy of any representation or warranty of HEH or the Company contained in Article IV or the corresponding Items of the Disclosure Schedules hereto or (B) activities of the Company prior to the date hereof. (b) Each of the Minority Contributors, severally and not jointly, agrees from and after Closing to (i) indemnify and hold harmless the Company, all of its officers, directors, affiliates, employees and agents, and each of the successors and assigns of any of the foregoing (the "Company Indemnified Persons") from and against, and waive any claim for contribution against the Company with respect to, any Adverse Consequences (but excluding any consequential damages of the Company Indemnified Persons), and (ii) defend the Company Indemnified Persons against any Actions, to the extent such Adverse Consequences or Actions arise out of or result from the breach or inaccuracy of any of its representations or warranties contained in Article V or the corresponding Items of the Disclosure Schedule hereto. To clarify the intention of the Parties with respect to the indemnification obligations of the Company, HEH, and the Minority Contributors under this Section 6.1, the Parties hereto acknowledge that if the indemnification of any Indemnified Person(s) pursuant to this Section 6.1 directly or indirectly reduces or eliminates the Adverse Consequences suffered by any other Indemnified Person(s), the Indemnifying Party shall not be required to indemnify such other Indemnified Person(s) to the extent that such Adverse Consequences have been reduced or eliminated. The Contributors will have the right to cause the Company to assert a claim for indemnification under this Section 6.1 and will have the right to conduct and control any resulting action against the Indemnifying Party (at such Contributor(s)' expense subject to any indemnification obligation of the Indemnifying Party in respect thereof). 6.2 Procedure for Indemnification. If any Person shall claim indemnification (the "Indemnified Party") hereunder for any claim other than a third party claim, the Indemnified Party shall promptly give written notice to the other party from whom indemnification is sought (the "Indemnifying Party") of the nature and amount of the claim. If an Indemnified Party shall claim indemnification hereunder arising from any claim or demand of a third party, the Indemnified Party shall promptly give written notice (a "Written Notice") 8 to the Indemnifying Party of the basis for such claim or demand, setting forth the nature of the claim or demand in detail. The Indemnifying Party shall have the right to compromise or, if appropriate, defend at its own cost and through counsel of its own choosing (reasonably acceptable to the Indemnified Party), any claim or demand set forth in a Written Notice giving rise to such claim for indemnification. In the event the Indemnifying Party undertakes to compromise or defend any such claim or demand, it shall promptly (and in any event, no later than thirty (30) days after receipt of the Written Notice) notify the Indemnified Party in writing of its intention to do so. If the Indemnifying Party fails to notify the Indemnified Party of its intent to undertake the compromise or defense of such claim or demand, then the Indemnified Party may do so at the expense of the Indemnifying Party. The parties shall fully cooperate in the defense or compromise of any indemnified claim or demand. After the assumption of the defense by the Indemnifying Party, the Indemnifying Party shall not be liable for any legal or other expenses subsequently incurred by the Indemnified Party, in connection with such defense, but the Indemnified Party may participate in such defense at its own expense. No settlement of a third party claim or demand defended by the Indemnifying Party shall be made without the written consent of the Indemnified Party, such consent not to be unreasonably withheld. The Indemnifying Party shall not, except with written consent of the Indemnified Party, consent to the entry of a judgment or settlement which does not include as an unconditional term thereof, the giving by the claimant or plaintiff to the Indemnified Party of an unconditional release from all liability in respect of such third party claim or demand. 6.3 Time Limitations on Indemnity. The representations and warranties made herein by the Parties and the corresponding indemnifications contained in Section 6.1 shall survive the Closing without limitation. 6.4 Limitations on Indemnity. The sole and exclusive remedies of the Parties with respect to breaches of this Agreement shall be pursuant to this Article VI; provided, that nothing herein shall limit the rights of any Party to seek any relief in equity or limit in any way any Party's remedies in respect of fraud by another party in connection herewith or the transactions contemplated hereby. ARTICLE VII - GENERAL PROVISIONS; OTHER AGREEMENTS 7.1 Expenses. The Company shall pay for all of its expenses incurred in connection with the transactions contemplated by this Agreement. Each Contributor shall bear its own expenses incurred in connection with the transactions contemplated by this Agreement. 7.2 Governing Law; Jurisdiction; Forum. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, including, without limitation, Sections 5-1401 and 5-1402 of the New York General Obligations Law and New York Civil Practice Laws and Rules 327(b). The Parties agree that the appropriate and exclusive forum for any disputes between the Parties arising out of this Agreement or the transactions contemplated hereby will be any state or federal court in the States of New York. 7.3 Further Assurances. Each Party agrees to use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other Parties in doing, all things 9 necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement and the Related Documents to which it is a Party, including the execution and delivery of any additional instruments necessary to consummate the transactions contemplated by, and to fully carry out the purposes of, this Agreement and the Related Documents. 7.4 Headings. Article and Section headings used in this Agreement are for convenience only and shall not affect the meaning or construction of this Agreement. 7.5 Notices. All notices, requests, demands or other communications required by or otherwise with respect to this Agreement shall be in writing and shall be deemed to have been duly given to any Party when delivered by hand, by messenger or by a nationally recognized overnight delivery company, when delivered by facsimile and confirmed by return facsimile, or when delivered by first class mail, postage prepaid and return receipt requested, in each case to the applicable addresses set forth on Appendix II. 7.6 Parties in Interest. All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns; provided, that, except as otherwise expressly set forth in this Agreement, neither the rights nor the obligations of any Party may be assigned or delegated without the prior written consent of each of the other Parties and any purported assignment in violation hereof shall be null and void. 7.7 Entire Agreement. This Agreement, the Related Documents, and any agreements set forth as an exhibit to this Agreement or any Related Document constitute the entire agreement between the Parties hereto and thereto and supersede all prior agreements, representations, warranties and understandings, both written and oral, with respect to the subject matter hereof or thereof. 7.8 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be considered an original, but all of which together shall constitute the same instrument. 7.9 Amendment. This Agreement may be modified or amended only by an instrument in writing signed by all of the Parties. 7.10 Gender, etc. Whenever the context may require, any pronouns used herein shall be deemed to refer to the masculine, feminine, or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural, and vice versa. Whenever used herein, the terms "include," "includes" and "including" shall mean to include without limitation. 7.11 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provisions shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 10 7.12 No Waiver. No failure to exercise and no delay in exercising any right, power or privilege granted under this Agreement shall operate as a waiver of such right, power or privilege. No single or partial exercise of any right, power or privilege granted under this Agreement shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. ************************************************* SIGNATURE PAGE FOLLOWS 11 IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of the date first written above. HALLMARK ENTERTAINMENT INVESTMENTS, CO. By: /s/Judith Whittaker/s/ ----------------------------------- Name: Judith Whittaker Title: Vice President HALLMARK ENTERTAINMENT HOLDINGS, INC. By: /s/Judith Whittaker/s/ ----------------------------------- Name: Judith Whittaker Title: Vice President LIBERTY CROWN, INC. By: /s/David B. Koff/s/ ----------------------------------- Name: David B. Koff Title: Senior Vice President VISN MANAGEMENT CORP. By: /s/Wilford V. Bane, Jr./s/ ----------------------------------- Name: Wilford V. Bane, Jr. Title: Chair - VMC JP MORGAN PARTNERS (BHCA), L.P., By JPMP MASTER FUND MANAGER, L.P., its general partner By JPMP CAPITAL CORP., its general partner By: /s/Michael R. Hannon/s/ ----------------------------------- Name: Michael R. Hannon Title: Managing Director [SIGNATURE PAGE TO THE CONTRIBUTION AGREEMENT] Item 4.4 Hallmark Entertainment Investments Co. Capitalization Schedule -------------------------------------------------------------- - ---------------------------------------- ------------------- ------------------- Stockholder Class A Stock Class B Stock - ---------------------------------------- ------------------- ------------------- Hallmark Entertainment Holdings, Inc. 39,260 30,670 - ---------------------------------------- ------------------- ------------------- Liberty Crown, Inc. 9,417 - ---------------------------------------- ------------------- ------------------- JP Morgan Partners (BHCA), L.P. 3,837 - ---------------------------------------- ------------------- ------------------- VISN Management Corp. 634 - ---------------------------------------- ------------------- ------------------- Item 4.4(a) Liens on Crown Stock -------------------- The shares are subject to Robert Halmi, Jr.'s option to acquire 3.4 million shares of Crown Class A Stock pursuant to his existing employment agreement with Hallmark Entertainment Holdings, Inc. Item 5.1 Jurisdiction of Organization ---------------------------- - ------------------------------------- ------------------------------------------ Minority Contributor Jurisdiction - ------------------------------------- ------------------------------------------ Liberty Crown, Inc. Delaware corporation - ------------------------------------- ------------------------------------------ JP Morgan Partners (BHCA), L.P. Delaware limited partnership - ------------------------------------- ------------------------------------------ VISN Management Corp. Delaware corporation - ------------------------------------- ------------------------------------------ Item 5.4 Minority Shareholder Required Consents -------------------------------------- None
APPENDIX I - ------------------------- ---------------------------------------------- --------------------------------------------- Shares of Crown Common Stock Contributed Shares of Common Stock to Be Received - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- Contributor Crown Class A Common Crown Class B Common Class A Stock Class B Stock Stock Stock - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- Hallmark Entertainment 39,259,480 30,670,422 39,260 30,670 Holdings, Inc. - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- Liberty Crown, Inc. 9,416,746 9,417 - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- JP Morgan Partners 3,836,620 3,837 (BHCA), L.P. - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- VISN Management Corp. 633,803 634 - ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
APPENDIX II Notices ------- If to the Company or Hallmark Entertainment Holdings, Inc. to: Hallmark Cards, Incorporated Department 339 2501 McGee Kansas City, MO 64108 Attention: Judith C. Whittaker, Executive Vice President, General Counsel Telephone: (816) 274-5111 Facsimile: (816) 274-8203 With copies to: Hallmark Entertainment, Inc. 1325 Avenue of the Americas New York, NY 10019 Attention: Robert Halmi, Jr. Telephone: (212) 977-9001 Facsimile: (212) 977-9049 If to Liberty Crown, Inc. to: Liberty Crown, Inc. 12300 Liberty Boulevard Englewood, CO 80112 Attention: David B. Koff, Senior Vice President Facsimile: (720) 875-5448 With a copy to: Liberty Media Corporation 12300 Liberty Boulevard Englewood, CO 80112 Attention: Charles Tanabe Facsimile: (720) 875-5440 And to: Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue Los Angeles, CA 90071-3144 Attention: Rod Guerra Facsimile: (213) 687-5600 If to JP Morgan Partners (BHCA), L.P. to: JP Morgan Partners (BHCA), L.P. 1221 Avenue of the Americas, 40th Floor New York, NY 10020 Attention: Arnold Chavkin Telephone: (212) 899-3100 Facsimile: (212) 899-3101 With a copy to: Mayer, Brown & Platt 1675 Broadway, Suite 1900 New York, NY 10019 Attention: Mark S. Wojciechowski Telephone: (212) 506-2500 Facsimile: (212) 262-1910 If to VISN Management Corp. to: VISN Management Corp. 819 Cammack Court Nashville, TN 37205 Attention: Wilford V. Bane Telephone: (615) 352-5288 Facsimile: (615) 356-4273 With a copy to: Cowan, DeBaets, Abrahams & Sheppard LLP 41 Madison Avenue, 34th Floor New York, NY 10010 Attention: Robert Freedman, Esq. Telephone: (212) 974-7474 Facsimile: (212) 974-8474 EX-99 5 la313304.txt EX (D) CONSENT AND WAIVER Consent and Waiver to Second Amended and Restated Stockholders Agreement ------------------------------------------------------------------------ Consent and Waiver (this "Consent"), dated as of March 11, 2003, in connection with the Second Amended and Restated Stockholders Agreement, dated as of August 30, 2001 (the "Stockholders Agreement"), by and among Hallmark Entertainment Holdings, Inc. ("HEH") (as transferee of the shares of Class A Stock and Class B Stock previously held by Hallmark Entertainment, Inc.), Liberty Media Corporation, Liberty Crown, Inc. (as transferee of the shares of Class A Stock previously held by Liberty Media Corporation), VISN Management Corp., JP Morgan Partners (BHCA), L.P., DIRECTV Enterprises, Inc. (collectively, the "Stockholders") and Crown Media Holdings, Inc. (the "Company"). (Capitalized terms used but not defined herein having the meanings assigned to them in the Stockholders Agreement.) WHEREAS, certain Stockholders desire to contribute to Hallmark Entertainment Investments Co. ("HEIC") (the "Contribution") shares of Class A Stock or shares of Class B Stock, in exchange for shares of Class A common stock of HEIC, par value $.01 per share ("HEIC Class A Stock") and shares of Class B common stock of HEIC, par value $.01 per share ("HEIC Class B Stock") respectively, pursuant to a Contribution Agreement by and among HEIC and such Stockholders (the "Contribution Agreement"); WHEREAS, in connection with the Contribution, pursuant to an Acknowledgement and Agreement ("Acknowledgement and Agreement"), HEIC will become a signatory to the Stockholders Agreement as transferee of HEH and shall receive the same rights set forth therein and be bound by the same obligations set forth therein as HEH; WHEREAS, Hallmark Cards, Incorporated and the Company desire to enter into a Tax Sharing Agreement, a copy of which has been provided to the Stockholders (the "Tax Sharing Agreement"); WHEREAS, pursuant to Section 6.2 of the Stockholders Agreement, the Stockholders Agreement may be amended, and waivers or consents to departures from the provisions of the Stockholders Agreement may be given, only by a written instrument duly executed by the Company and each Stockholder, or, in the case of a waiver or consent, by each party against whom the waiver or consent, as the case may be, is to be effective; and WHEREAS, in connection with the Contribution, pursuant to, and in accordance with Section 6.2 of the Stockholders Agreement, the Stockholders desire to amend the Stockholders Agreement and to waive any conditions, remedies and rights, if any, under the Stockholders Agreement that would arise or that are exercisable pursuant to the entry into (i) the Tax Sharing Agreement or (ii) the Contribution, and any transactions in connection therewith. NOW, THEREFORE, the undersigned agrees as follows: 1. Consent. The undersigned hereby consents to the amendment of the Stockholders Agreement as follows: (a) Substitution of HEIC. All references to Hallmark Entertainment, Inc. (subsequently succeeded by HEH) shall be changed to HEIC (as successor in interest to HEH) at such time as HEIC executes the Acknowledgement and Agreement. (b) Composition of the Board of Directors of the Company. Section 2.1 of the Stockholders Agreement is deleted in its entirety and replaced with the following: Section 2.1. Composition of the Board of Directors of the Company. Subject to Section 2.5, each of the Stockholders hereby agrees to take, at any time and from time to time, all action necessary such that the Board of Directors of the Company (the "Board") shall consist of not less than fifteen directors, who shall be nominated as follows: (a) VISN shall have the right to nominate one member of the Board; (b) at least two members of the Board shall be Independent Directors nominated by the Board; and (c) HEIC shall have the right to nominate all other members of the Board; provided that one such nominee shall be the Chief Executive Officer of the Company. Each Stockholder entitled to vote for the election of directors to the Board shall vote its shares of Company Voting Stock or execute written consents, as the case may be, and shall take all other action necessary in order to elect the nominees and to ensure compliance with this Section 2.1. The Company shall take such action as may be required under applicable law to and shall otherwise use reasonable efforts to cause the composition of the Board to be as set forth in this Section 2.1. (c) Limitation on Transaction with Affiliates. In the last paragraph of Section 2.6 of the Stockholders Agreement, the "and" between "DIRECTV;" and "(viii)" shall be deleted and the phrase "and, in each case, any amendments or modifications thereto." of such last paragraph shall be deleted and replaced with the following: ; (ix) the transactions pursuant to the Contribution Agreement and (x) the transactions pursuant to the Tax Sharing Agreement and, in each case of clauses (i) through (ix), any amendments or modifications thereto. 2. Waiver. The undersigned hereby waives all conditions, remedies and rights, if any, under the Stockholders Agreement that would arise or that are exercisable pursuant to the entry into the Tax Sharing Agreement or the Contribution Agreement, and any transactions in connection therewith, including Section 2.6 and Article III. 3. Governing Law. This Consent shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any provisions relating to conflicts of laws. 4. Headings. The headings in this Consent are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 2 IN WITNESS WHEREOF, the undersigned has duly executed this Consent, or caused this Consent to be duly executed, as of the date first above written. 3 -----END PRIVACY-ENHANCED MESSAGE-----