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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D/A
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 5)
CROWN MEDIA HOLDINGS, INC.
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(Name of Issuer)
CLASS A COMMON STOCK, PAR VALUE $0.01 PER SHARE
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(Title of Class of Securities)
228411 10 4
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(CUSIP Number)
JUDITH C. WHITTAKER, ESQ.
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
HALLMARK CARDS, INCORPORATED
DEPARTMENT 339
2501 MCGEE
KANSAS CITY, MISSOURI 64108
(816) 274-5583
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices of Communications)
MARCH 11, 2003
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(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 Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box: [ ]
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page 1 of 25
CUSIP No. 228411 10 4 SCHEDULE 13D/A
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1. Name of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Hallmark Cards, Incorporated
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2. Check the Appropriate Box if a Member of a Group
(a) |X|(1)
(b) [ ]
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3. SEC Use Only
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4. Source of Funds
WC, OO
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e)
[ ]
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6. Citizenship or Place of Organization
Missouri
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Number of 7. Sole Voting Power
Shares -0-
Beneficially Owned by
Each
Reporting
Person With
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8. Shared Voting Power
83,817,071 shares of Class A common stock(2)
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9. Sole Dispositive Power
-0-
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10. Shared Dispositive Power
83,817,071 shares of Class A common stock(2)
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
89,529,669 shares of Class A common stock(2)(3)
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
[ ]
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13. Percent of Class Represented by Amount in Row (11)
85.7%(3)
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14. Type of Reporting Person
CO
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(1) Beneficial ownership is disclaimed with respect to certain securities of
Crown Media Holdings, Inc. (the "Issuer"). See note 3.
(2) Includes 30,670,422 shares of Class B common stock, par value $0.01 per
share ("Class B Common Stock"), of the Issuer, which are convertible at the
option of the holder into an equivalent number of shares of Class A common
stock, par value $.01 per share ("Class A Common Stock"), of the Issuer.
(3) Assuming conversion of the shares of Class B Common Stock included in the
response to Items 8, 10 and 11, and calculated using the number of shares of
Class A Common Stock and Class B Common Stock outstanding on January 7,
2003. Includes 5,712,598 shares of Class A Common Stock, which 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 5,712,598 shares of Class A Common Stock is
disclaimed.
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CUSIP No. 228411 10 4 SCHEDULE 13D/A
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1. Name of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Hallmark Entertainment Holdings, Inc.
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2. Check the Appropriate Box if a Member of a Group
(a) |X|(1)
(b) [ ]
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3. SEC Use Only
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4. Source of Funds
OO
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e)
[ ]
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6. Citizenship or Place of Organization
Delaware
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Number of 7. Sole Voting Power
Shares
Beneficially Owned by -0-
Each
Reporting
Person With
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8. Shared Voting Power
83,817,071 shares of Class A common stock(2)
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9. Sole Dispositive Power
-0-
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10. Shared Dispositive Power
83,817,071 shares of Class A common stock(2)
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
89,529,669 shares of Class A common stock(2)(3)
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
[ ]
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13. Percent of Class Represented by Amount in Row (11)
85.7%(3)
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14. Type of Reporting Person
CO
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(1) Beneficial ownership is disclaimed with respect to certain securities of the
Issuer. See note 3.
(2) Includes 30,670,422 shares of Class B Common Stock, which are convertible at
the option of the holder into an equivalent number of shares of Class A
Common Stock.
(3) Assuming conversion of the shares of Class B Common Stock included in the
response to Items 8, 10 and 11, and calculated using the number of shares of
Class A Common Stock and Class B Common Stock outstanding on January 7,
2003. Includes 5,712,598 shares of Class A Common Stock, which 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 5,712,598 shares of Class A Common Stock is
disclaimed.
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CUSIP No. 228411 10 4 SCHEDULE 13D/A
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1. Name of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Hallmark Entertainment Investments Co.
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2. Check the Appropriate Box if a Member of a Group
(a) |X|(1)
(b) [ ]
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3. SEC Use Only
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4. Source of Funds
OO
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e)
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6. Citizenship or Place of Organization
Delaware
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Number of 7. Sole Voting Power
Shares
Beneficially Owned by -0-
Each
Reporting
Person With
------ ------------------------------------------------
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8. Shared Voting Power
83,817,071 shares of Class A common stock(2)
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9. Sole Dispositive Power
-0-
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10. Shared Dispositive Power
83,817,071 shares of Class A common stock(2)
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
89,529,669 shares of Class A common stock(2)(3)
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
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13. Percent of Class Represented by Amount in Row (11)
85.7%(3)
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14. Type of Reporting Person
CO
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(1) Beneficial ownership is disclaimed with respect to certain securities of the
Issuer. See note 3.
(2) Includes 30,670,422 shares of Class B Common Stock, which are convertible at
the option of the holder into an equivalent number of shares of Class A
Common Stock.
(3) Assuming conversion of the shares of Class B Common Stock included in the
response to Items 8, 10 and 11, and calculated using the number of shares of
Class A Common Stock and Class B Common Stock outstanding on January 7,
2003. Includes 5,712,598 shares of Class A Common Stock, which 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 5,712,598 shares of Class A Common Stock is
disclaimed.
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This Schedule 13D/A Amendment No. 5 hereby amends and restates in its entirety
the Schedule 13D, filed previously by Hallmark Cards, Incorporated and Hallmark
Entertainment Holdings, Inc. jointly with respect to the securities of Crown
Media Holdings, Inc. In this Amendment, Hallmark Entertainment Investments Co.
replaces Hallmark Entertainment Holdings, Inc. as the holder of shares of common
stock of Crown Media Holdings, Inc. for the reasons stated below. Hallmark
Entertainment Holdings, Inc. is a wholly-owned subsidiary of Hallmark Cards,
Incorporated, and Hallmark Entertainment Investments Co. is a majority-owned
subsidiary of Hallmark Entertainment Holdings, Inc.
ITEM 1. SECURITY AND ISSUER.
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This Statement on Schedule 13D/A (this "Schedule 13D/A") relates to
shares of Class A common stock, par value $0.01 per share (the "Class A Common
Stock"), of Crown Media Holdings, Inc., a Delaware corporation (the "Issuer").
The Issuer's principal executive offices are located at 6430 S. Fiddlers Green
Circle, Suite 500, Greenwood Village, Colorado 80111.
Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), this Schedule 13D/A also relates to the shares of
Class A Common Stock issuable upon conversion of shares of the Class B common
stock, par value $0.01 per share ("Class B Common Stock", and collectively with
the Class A Common Stock, the "Common Stock") of the Issuer. Holders of Class A
Common Stock are entitled to one vote for each share held, and holders of Class
B Common Stock are entitled to ten votes for each share held, on all matters
presented to stockholders.
ITEM 2. IDENTITY AND BACKGROUND.
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(a) - (c) and (f): This Schedule 13D/A is being filed by Hallmark
Cards, Incorporated ("Hallmark Cards"), a Missouri corporation, Hallmark
Entertainment Holdings, Inc. ("Hallmark Entertainment Holdings"), a Delaware
corporation and a wholly owned subsidiary of Hallmark Cards, and Hallmark
Entertainment Investments Co. ("HEIC"), a Delaware corporation and a
majority-owned subsidiary of Hallmark Entertainment Holdings (Hallmark Cards,
Hallmark Entertainment Holdings and HEIC, together, the "Reporting Persons").
Hallmark Cards and HEIC each has its principal executive office at 2501 McGee,
Kansas City, Missouri 64108. Hallmark Entertainment Holdings has its principal
executive office at 1325 Avenue of the Americas, 21st Floor, New York, New York
10019. Hallmark Cards' principal business is the manufacturing of greeting
cards. Hallmark Entertainment Holdings' principal business is as a holding
company of Hallmark Entertainment, LLC (formerly Hallmark Entertainment, Inc.
and referred to herein as "Hallmark Entertainment"), which has as its principal
business the production of made-for-television movies, mini-series and series.
HEIC's principal business is holding shares of Common Stock and evaluating media
investment opportunities in which Crown does not have an interest. The name,
business address, present principal occupation or employment and citizenship of
each director and executive officer of the Reporting Persons is set forth in
Schedule I hereto and is incorporated herein by reference.
(d) and (e): 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 I hereto, (1) has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (2) has
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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.
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HEIC Contribution Agreement. HEIC acquired 53,146,649 shares of Class A
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Common Stock and 30,670,422 shares of Class B Common Stock 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,
Liberty Crown, Inc. ("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. A copy of
the HEIC Contribution Agreement is incorporated by reference as an Exhibit
hereto.
Acquisition by Hallmark Entertainment Holdings. On December 31, 2001,
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Hallmark Entertainment transferred to Hallmark Entertainment Holdings its entire
interest in the Issuer, comprised of 39,135,649 shares of Class A Common Stock
and 30,670,422 shares of Class B Common Stock, as a distribution to Hallmark
Entertainment Holdings.
Films Transaction. On September 28, 2001, Hallmark Entertainment
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received 33,319,528 shares of Class A Common Stock, as consideration in exchange
for the transfer by Hallmark Entertainment Distribution, LLC, a Delaware limited
liability company and wholly owned subsidiary of Hallmark Entertainment,
("Hallmark Entertainment Distribution") to the Issuer of certain
made-for-television movies, specials, theatrical films, mini-series, series and
made-for-video product consisting of 702 titles, along with related film
properties and rights (the "film assets") under that certain Purchase and Sale
Agreement, dated as of April 10, 2001, by and between the Issuer and Hallmark
Entertainment Distribution (the "Purchase and Sale Agreement").
The number of shares of Class A Common Stock included in the purchase
price for the film assets was calculated as follows with the "average stock
price" meaning the average of the closing price per share of the Class A Common
Stock as reported on the Nasdaq National Market System on each trading day
during the period beginning on November 6, 2000 (the date on which the Issuer
publicly announced that it was investigating the possibility of a transaction)
and ending on the trading date immediately prior to the closing date for the
films transaction:
o if the average stock price was less than $17.00, then
35,294,118 shares;
o if the average stock price was greater than $18.70, then
32,085,562 shares; or
o if the average stock price was at least $17.00, but not greater
than $18.70, then the number of shares was to equal
$600,000,000 divided by the average stock price.
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Based on an average stock price of $17.78 from November 6, 2000, to
September 27, 2001, the last trading day immediately prior the closing date of
the films transaction, the Issuer issued 33,744,528 shares. Of the total number
of shares issued in the transaction, 33,319,528 were delivered to Hallmark
Entertainment and 425,000 shares were issued in escrow and were later returned
to the Issuer in connection with a stockholder litigation settlement.
Acquisition from Henson. On July 27, 2001, Hallmark Entertainment
-----------------------
purchased 5,377,721 shares of the outstanding Class A Common Stock from The Jim
Henson Company ("Henson"), a subsidiary of German media company, EM.TV &
Merchandising AG ("EM.TV") for $90 million in cash. The shares were originally
issued to Henson in March 2001 in exchange for Henson's 22.5% interest in Crown
Media United States, LLC ("CMUS") (formerly known as Odyssey Holdings, L.L.C.)
and Henson's 50% interest in H&H Programming-Asia, LLC. The source of funds used
by Hallmark Entertainment to acquire the 5,377,721 shares of Class A Common
Stock from Henson was working capital.
Acquisition from Kirsch. On November 14, 2000, Hallmark Cards purchased
-----------------------
360,000 shares of the outstanding Class A Common Stock from Kirsch Media Group
for $5,850,000 cash. The source of funds used by Hallmark Cards to acquire the
360,000 shares of Class A Common Stock from Kirsch Media Group was working
capital. On December 26, 2000, Hallmark Cards transferred these 360,000 shares
together with an additional 78,400 shares of Class A Common Stock held by it to
Hallmark Entertainment as a contribution of capital, valued at $14 per share. In
June 2001, Hallmark Cards also transferred 7,000 shares of Class A Common Stock
held by it to certain of its executive officers.
Contribution Agreement. Hallmark Entertainment acquired 30,670,422
----------------------
shares of Class B Common Stock on May 9, 2000 (the "IPO Date") from the Issuer
in exchange for its interest in Crown Media International, Inc. (formerly Crown
Media, Inc.) pursuant to a Contribution Agreement dated as of January 27, 2000
(the "Contribution Agreement") by and among the Issuer, Hallmark Entertainment,
Crown Media International, Inc., Liberty Media Corporation ("Liberty Media"),
Vision Group Incorporated, VISN, National Interfaith Cable Coalition, Inc. and
Chase Equity Associates, L.P. (now known as JPM). A copy of the Contribution
Agreement is incorporated by reference as an Exhibit hereto.
ITEM 4. PURPOSE OF TRANSACTION.
-----------------------
HEIC Contribution Agreement. On March 11, 2003, HEIC received
---------------------------
53,146,649 shares of Class A Common Stock and 30,670,422 shares of Class B
Common Stock pursuant to the HEIC Contribution Agreement. Pursuant to the HEIC
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 (the "Transferred Shares"),
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).
Also pursuant to the HEIC Contribution Agreement, Liberty Crown contributed
9,416,746 shares of Class A Common Stock 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); 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
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outstanding shares of HEIC Class A Common Stock); and 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). HEIC
intends to hold the shares of Common Stock and evaluate media investment
opportunities in which the Issuer does not have an interest.
Hallmark Cards will include the Issuer in its consolidated federal
income tax return. Accordingly, Hallmark Cards will benefit from future tax
losses which may be generated by the Issuer. Pursuant to a tax sharing agreement
between Hallmark Cards and the Issuer, Hallmark Cards will pay the Issuer all of
the benefits realized by Hallmark Cards as a result of consolidation, 75% in
cash on a quarterly basis and the 25% 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 Card's option,
this 25% balance may also 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.
As a result of the transactions pursuant to the HEIC Contribution
Agreement, assuming conversion of the Class B Common Stock, HEIC would own 80.2%
of the outstanding shares of Class A Common Stock. Accordingly, because Hallmark
Entertainment Holdings controls HEIC, Hallmark Entertainment Holdings has
increased its voting power in the Issuer, subject to the terms of the HEIC
Stockholders Agreement described in Item 6 below.
HEIC intends to hold the shares for investment purposes. Hallmark Cards
remains the beneficial owner of the Transferred Shares. Hallmark Entertainment
Holdings originally acquired the Transferred Shares in the transactions further
described below.
Consent and Waiver. On March 11, 2003, in connection with the HEIC
------------------
Contribution Agreement, each of the Issuer, VISN and DirecTV Enterprises, Inc.
executed a Consent and Waiver (the "Stockholders Agreement Waiver") to the
Second Amended and Restated Stockholders Agreement (as amended, the
"Stockholders Agreement"). Pursuant to the Stockholders Agreement Waiver, one
director of the Issuer's Board of Directors will be nominated by VISN, at least
two independent directors will be nominated by the Board of Directors and the
remaining directors will be nominated by HEIC; provided that one such nominee
shall be the Chief Executive Officer of the Issuer.
Acquisition by Hallmark Entertainment Holdings. On December 31, 2001,
----------------------------------------------
Hallmark Entertainment Holdings received from Hallmark Entertainment, its
wholly-owned subsidiary, the entire equity interest held by Hallmark
Entertainment in the Issuer, comprised of 39,135,649 shares of Class A Common
Stock and 30,670,422 shares of Class B Common Stock, as a distribution to
Hallmark Entertainment Holdings and as part of an internal reorganization of
assets between the two companies as parent/subsidiary. Hallmark Entertainment
Holdings held the shares for investment purposes.
Films Transaction. On September 28, 2001, the Issuer and Hallmark
-----------------
Entertainment Distribution closed the films transaction pursuant to the Purchase
and Sale Agreement. Pursuant to the Purchase and Sale Agreement, the Issuer
issued to Hallmark Entertainment 33,319,528
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shares of Class A Common Stock in exchange for the transfer by Hallmark
Entertainment Distribution to the Issuer of the film assets. Hallmark
Entertainment acquired the shares of Class A Common Stock as a result of the
transfer of assets to the Issuer, and held the shares for investment purposes.
Acquisition from Henson. On July 27, 2001, Hallmark Entertainment
-----------------------
purchased 5,377,721 shares of the outstanding Class A Common Stock from Henson
for $90 million in cash. The shares were originally issued to Henson in March
2001 in exchange for Henson's 22.5% interest in CMUS and Henson's 50% interest
in H&H Programming -- Asia, LLC. The purpose of Hallmark Entertainment's
purchase from Henson was for investment purposes.
Acquisition from Kirsch. On November 14, 2000, Hallmark Cards purchased
-----------------------
360,000 shares of the outstanding Class A Common Stock from Kirsch Media Group
for $5,850,000 cash. The source of funds used by Hallmark Cards to acquire the
360,000 shares of Class A Common Stock from Kirsch Media Group was working
capital. On December 26, 2000, Hallmark Cards transferred these 360,000 shares
together with an additional 78,400 shares of Class A Common Stock held by it to
Hallmark Entertainment as a contribution of capital, valued at $14 per share. In
June 2001, Hallmark Cards also transferred 7,000 shares of Class A Common Stock
held by it to certain of its executive officers. The purpose of Hallmark
Entertainment's purchase from Hallmark Cards was investment purposes.
Contribution Agreement. Prior to the consummation of the transactions
----------------------
contemplated by the Contribution Agreement, (i) Hallmark Entertainment owned
88.9% of the equity interest in Crown Media International, Inc. ("CMI"), which
owned a 22.5% common equity interest in CMUS, (ii) JPM owned the remaining 11.1%
equity interest in CMI, (iii) National Interfaith Cable Coalition, Inc. owned a
22.5% common equity interest in CMUS, and (iv) Liberty Media indirectly owned a
32.5% common equity interest in CMUS. The purpose of the transactions
contemplated by the Contribution Agreement, which occurred simultaneously with
the closing of the initial public offering of the Issuer (the "IPO"), was to
reorganize the foregoing interests in CMI and CMUS under the Issuer in exchange
for shares of Common Stock and to facilitate the IPO. As a result of the
reorganization, Hallmark Entertainment owned all of the outstanding shares of
Class B Common Stock, which represented approximately 89.9% of the voting power
of the outstanding shares of Common Stock. Accordingly, Hallmark Entertainment
(and now Hallmark Entertainment Holdings) controlled the Issuer, subject to the
terms of the Stockholders Agreement described in Item 6 below.
Hallmark Cards acquired the shares of Class A Common Stock in the IPO
for investment purposes. Hallmark Entertainment acquired the shares of Class A
Common Stock subsequent to the IPO for investment purposes.
Except as set forth herein, none of the Reporting Persons have any
plans or proposals which relate to or would result in:
(a) the acquisition of any additional securities of the Issuer, or the
disposition of any securities of the Issuer;
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(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving the Issuer or any of its subsidiaries;
(c) a sale or transfer of a material amount of assets of the Issuer or
any of its subsidiaries;
(d) any change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number or term of
directors or to fill existing vacancies on the board;
(e) any material change in the present capitalization or dividend policy
of the Issuer;
(f) any other material change in the Issuer's business or corporate
structure;
(g) any change in the Issuer's charter or by-laws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Issuer by any person;
(h) causing a class of equity securities of the Issuer to be delisted
from a national securities exchange or to cease to be authorized to be quoted in
an inter-dealer quotation system of a registered national securities
association;
(i) a class of equity securities of the Issuer becoming ineligible for
termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or
(j) any action similar to the foregoing.
Notwithstanding the foregoing, any of the Reporting Persons may
determine to change its plans or proposals with respect to the Issuer at any
time in the future. In reaching any conclusion as to their future course of
action, the Reporting Persons will take into consideration various factors, such
as the Issuer's business and prospects, other developments concerning the
Issuer, other business opportunities available to the Reporting Persons,
developments with respect to the business of the Reporting Persons, and general
economic and stock market conditions, including, but not limited to, the market
price of the Common Stock. The Reporting Persons reserve the right, based on all
relevant factors, to acquire additional shares of the Common Stock or, subject
to the terms of the Stockholders Agreement and the HEIC Stockholders Agreement
and restrictions under applicable securities laws, dispose of shares of Common
Stock.
ITEM 5. INTERESTS IN SECURITIES OF THE ISSUER.
--------------------------------------
(a)-(b): Upon the conversion of the 30,670,422 shares of Class B Common
Stock held by HEIC, HEIC would own 83,817,071 shares of Common Stock, which
would comprise 80.2% of the shares of Class A Common Stock that would then be
outstanding. HEIC shares dispositive power over such shares with Hallmark Cards,
Hallmark Entertainment Holdings, Liberty Crown, VISN and JPM. HEIC shares voting
power over such shares with Hallmark Cards and Hallmark Entertainment Holdings.
Hallmark Entertainment Holdings owns no shares of Common Stock.
Hallmark Entertainment Holdings shares dispositive power over the 83,817,071
shares of Common Stock held
10 of 25
by HEIC with HEIC, Hallmark Cards, Liberty Crown, VISN and JPM. Hallmark
Entertainment Holdings shares voting power over such shares with Hallmark Cards
and HEIC.
Hallmark Cards owns no shares of Common Stock. Because Hallmark
Entertainment Holdings is a wholly owned subsidiary of Hallmark Cards, Hallmark
Cards shares dispositive power over the 83,817,071 shares of Common Stock held
by HEIC with HEIC, Hallmark Entertainment Holdings, Liberty Crown, VISN and JPM.
Because Hallmark Entertainment Holdings is a wholly owned subsidiary of Hallmark
Cards, Hallmark Cards shares voting power over such shares with Hallmark
Entertainment Holdings and HEIC.
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 beneficially own all shares of Common Stock held by
each member of the group. According to the definitive proxy materials of the
Issuer filed on April 29, 2002 and excluding the shares of Class A Common Stock
contributed to HEIC pursuant to the Contribution Agreement, VISN and JPM
beneficially own 5,704,225 and 8,373 shares of Class A Common Stock
respectively. Consequently, assuming conversion of all outstanding shares of
Class B Common Stock, each Reporting Person is deemed to beneficially own
89,529,669 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 VISN and JPM.
The information requested by (a)-(b) of this Item 5 for each director
and executive officer of Hallmark Cards, Hallmark Entertainment Holdings and
HEIC is set forth in Schedule II hereto and is incorporated herein by reference.
(c): On March 11, 2003, HEIC acquired 53,146,649 shares of Class A
Common Stock and 30,670,422 shares of Class B Common Stock in exchange for
shares of HEIC. On March 11, 2003, Hallmark Entertainment Holdings transferred
39,259,480 shares of Class A Common Stock and 30,670,422 shares of Class B
Common Stock to HEIC in exchange for shares of HEIC Common Stock; Liberty Crown
transferred 9,416,746 shares of Class A Common Stock to HEIC in exchange for
shares of HEIC Class A Common Stock, JPM transferred 3,836,620 shares of Class A
Common Stock to HEIC in exchange for shares of HEIC Class A Common Stock; and
VISN transferred 633,803 shares of Class A Common Stock to HEIC in exchange for
shares of HEIC Class A Common Stock. See Item 4.
Except as described in this Item 5(c), neither of the Reporting
Persons, nor, to the best knowledge of the Reporting Persons, any of their
directors or executive officers, has effected any transactions in shares of
Common Stock during the past 60 days.
(d): None
(e): Not applicable.
11 of 25
Item 6. Contracts, Arrangements, Understandings or Relationships with
-------------------------------------------------------------
Respect to Securities of the Issuer.
------------------------------------
HEIC Stockholders Agreement. Hallmark Entertainment Holdings and HEIC
---------------------------
are parties 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 shall have the right to nominate six Class II Directors,
and each of Hallmark Entertainment Holdings, Liberty Crown and JPM have the
right to nominate one Class I Director. VISN is entitled to designate a
non-voting observer to HEIC's Board of Directors. In addition, each of Liberty
and JPM have the right to designate one person as one of the directors to the
Issuer's Board of Directors that affiliates of Hallmark Entertainment Holdings
are entitled to nominate under the Stockholders Agreement or otherwise.
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.
The rights of Hallmark Entertainment Holdings, Liberty and JPM to
nominate directors to HEIC's Board of Directors, the rights of Liberty and JPM
to designate one person as one of the directors to the Issuer's Board of
Directors that affiliates of Hallmark Entertainment Holdings are entitled to
nominate and the right of Hallmark Entertainment Holdings to direct the vote of
the Common Stock held by HEIC will terminate on the later of (1) such party
owning less than 2.5% of HEIC Common Stock then outstanding or (2) such party
ceasing to own at least 75% of the HEIC 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. The right of VISN to nominate a
non-voting observer to the HEIC Board of Directors shall terminate when VISN
ceases to own at least 75% of the HEIC Common Stock specified (which is equal to
the number of shares VISN held as of the date of the HEIC Stockholders'
Agreement) appropriately adjusted for stock splits, dividends or combinations of
shares of HEIC Common Stock, mergers, recapitlizations, consolidations or other
reorganizations.
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 series of related transactions during a
6-month period or pursuant to one agreement during any longer period, 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.
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
such stockholders entitled to nominate a director to the HEIC board of
directors:
o any amendment or repeal of, or addition to HEIC's certificate of
incorporation;
12 of 25
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.
The HEIC Stockholders Agreement also limits certain affiliate
transactions with HEIC and the parties to the HEIC Stockholders Agreement and
with the Issuer or the Issuer's subsidiaries and any affiliate of Hallmark
Entertainment Holdings. With respect to certain transactions with an aggregate
value of not more than $35 million with the Issuer or the Issuer's subsidiaries
and any affiliate of Hallmark Entertainment Holdings, approval is required by a
majority of the independent directors of the Issuer's Board of Directors. With
respect to certain transactions with an aggregate value of more than $35 million
with the Issuer or the Issuer's subsidiaries and any affiliate of Hallmark
Entertainment Holdings, 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 Liberty Crown and JPM
nominees shall not be treated as having been nominated by an affiliate of
Hallmark Entertainment Holdings.
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, Liberty Crown, JPM, and VISN each receive
registration rights with terms no less favorable in any material respect than
those received by Hallmark Entertainment Holdings or any of its affiliates.
The foregoing summary is qualified in its entirety by reference to the
text of the HEIC Stockholders Agreement which is filed as an Exhibit hereto and
hereby incorporated by reference.
HEIC Contribution Agreement. See Items 3 and 4 for a summary of the
---------------------------
HEIC Contribution Agreement.
Option of Robert A. Halmi, Jr. Pursuant to a provision in an employment
------------------------------
agreement between Hallmark Entertainment Holdings and Robert A. Halmi, Jr.,
dated October 1, 2001, Hallmark Entertainment Holdings agreed to grant Mr. Halmi
stock options to purchase from Hallmark Entertainment Holdings up to 3.4 million
shares of Class A Common Stock at a price per share of $11.13. The stock options
will vest on September 30, 2004, and will expire on Sep-
13 of 25
tember 30, 2006. In the event of termination of the employment of Mr. Halmi,
depending on the circumstances, all unvested stock options will either become
vested or be forfeited. By written notice delivered to Hallmark Entertainment
Holdings in October of 2004, 2005 or 2006, Mr. Halmi will have the right to put
to Hallmark Entertainment Holdings any shares of Common Stock acquired by Mr.
Halmi under the stock options at a price per put share equal to fair market
value for Common Stock as of the date of Hallmark Entertainment Holdings'
receipt of Mr. Halmi's put notice. The fair market value shall mean, as of any
given date, the highest average closing price of the Common Stock on the Nasdaq
Stock Market, as of the close of business hours of the Nasdaq Stock Market,
without regard to any after-hours trading, or if the Common Stock is not listed
on the Nasdaq Stock Market, on any national securities exchange on which the
Common Stock is listed, for (1) the five-day trading period ending on the fifth
trading date immediately preceding such date, (2) the five-day trading period on
the tenth trading date immediately preceding such date, (3) the five-day trading
period ending on the fifteenth trading date immediately preceding such date or
(4) the five-day trading period ending on the twentieth trading date immediately
preceding such date. If there is no regular public trading market for such
Common Stock, the put price shall be determined by the Board of Directors of
Hallmark Entertainment Holdings in good faith. The put price (less $11.13) shall
be reduced by 10% as to shares of Common Stock for which Mr. Halmi exercises a
put option in 2004 and by 5% as to shares of Common Stock for which Mr. Halmi
exercises a put option in 2005. The shares transferred by Hallmark Entertainment
Holdings pursuant to the Contribution Agreement were subject to Mr. Halmi's
stock options.
Films Transaction. On September 28, 2001, Hallmark Entertainment
-----------------
Distribution acquired 33,319,528 shares of Class A Common Stock from the Issuer
as consideration for the transfer by Hallmark Entertainment Distribution to the
Issuer of the film assets pursuant to the Purchase and Sale Agreement.
Registration Rights Agreement. HEIC is a party to a Registration Rights
-----------------------------
Agreement, dated September 28, 2001, by and between Crown Media Holdings, Inc.
and Hallmark Entertainment Distribution, LLC, as assigned by assignments dated
September 28, 2001, December 31, 2001 and March 11, 2003. The Registration
Rights Agreement confers on HEIC, or its assignee, the right, on not more than
four occasions in the aggregate, and no more frequently than once every six
months, to require the Issuer to register for offer and sale under the
Securities Act of 1933, as amended, (the "Securities Act") all or a portion of
the Class A Common Stock acquired by Hallmark Entertainment Distribution (and
now held by HEIC) pursuant to the Purchase and Sale Agreement (or as otherwise
acquired up to a maximum 5% of the outstanding shares of the Issuer at the date
of the registration demand), provided that the shares of Class A Common Stock
for which a demand registration is made must represent at least 7% of the
aggregate shares of the Issuer then issued and outstanding. In addition, HEIC
has the right to participate, subject to certain restrictions, in any registered
public offering filed by the Issuer under the Securities Act.
Henson Acquisition. On July 27, 2001, Hallmark Entertainment acquired
------------------
5,377,721 shares of outstanding Class A Common Stock from Henson for an
aggregate purchase price of $90 million in cash. This purchase was made pursuant
to a Stock Purchase Agreement, dated as of July 24, 2001, by and between Henson
and Hallmark Entertainment.
14 of 25
Stockholders Agreement. The Stockholders Agreement, as amended,
----------------------
provides that the Issuer's Board of Directors will consist of not less fifteen
members, with one director being nominated by VISN, at least two independent
directors who will not be officers or employees of any of the parties or their
affiliates nominated by the Board of Directors and the remaining directors
nominated by HEIC; provided that one such nominee shall be the Chief Executive
Officer of the Issuer. The rights of the parties to nominate a director will
terminate on the later of (1) such party owning less than 5% of the Common Stock
then outstanding or (2) such party ceasing to own at least 75% of the Common
Stock such party owned immediately following the completion of the IPO.
The parties to the Stockholders Agreement agree not to transfer more
than 25% of the Common Stock owned by them on August 30, 2001 until May 9, 2002,
subject to exceptions, such as transfers to their affiliates, another party to
the Stockholders Agreement or their affiliates, to their executives under a
stock-based compensation package, or in a transaction involving a merger,
consolidation or business combination with, or a tender offer for all of the
Common Stock by, a third party that is not affiliated with the Issuer.
In addition, the Stockholders Agreement provides that, in the event
HEIC 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 Securities Act liabilities.
Under the Stockholders Agreement, the Issuer also agreed that, for so
long as the Issuer or any of its affiliates are entitled to have a
representative on the CMUS governance committee, and VISN and its affiliates
either (a) are entitled to nominate to, 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 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:
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;
15 of 25
o any repayment or redemption of specified equity interests in CMUS;
o any transfer of all or substantially all of CMUS 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 CMUS 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 comply with specified
restrictions relating to any financial benefit the Issuer receives
from the transaction that is more than what the Issuer would have
received had the transaction been on an arm's-length basis or on
commercially reasonable terms;
o any transfer of all or substantially all of CMUS assets or any
business combination involving CMUS where CMUS is not the
surviving entity, prior to the second anniversary of the IPO; 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.
The Issuer also agreed under the Stockholders Agreement not to transfer
any of its interest in CMUS prior to the second anniversary of the IPO without
the consent of the VISN or the National Interfaith Cable Coalition, Inc. In
addition, the Issuer agreed not to transfer any of its interests in CMUS after
the second anniversary of the IPO unless the transfer is conditioned on the
requirement that the transferee assume the Issuer's obligations described above.
Under the terms of the Stockholders Agreement, the transferee's obligations will
generally expire on the later of (1) the fifth anniversary of the IPO, (2) the
second anniversary of the transfer or (3) the repayment of VISN's preferred
interest in CMUS, except that the obligations of the transferee will expire upon
dissolution of CMUS.
The Stockholders Agreement also limits certain affiliate transactions
with the parties to the Stockholders Agreement, requiring approval by a majority
of the independent directors of the Issuer's Board of Directors for certain
transactions with an aggregate value of not more than $35 million and requiring
approval by a majority of the members of the Issuer's Board of Directors that
are not nominated by such stockholder that is a party to the affiliated
transaction for certain transactions with an aggregate value of more than $35
million.
In connection with the transactions pursuant to the HEIC Contribution
Agreement, each of Liberty, Liberty Crown and JPM acknowledged that it has no
further rights under the Stockholders Agreement. In addition, pursuant to an
Acknowledgment and Agreement dated as of March 11, 2003, HEIC became a signatory
to the Stockholders Agreement, receiving the same rights and bound by the same
obligations as Hallmark Entertainment Holdings, except as provided in certain
transfer restrictions and tag-along provisions of the Stockholders Agreement.
16 of 25
The foregoing summary is qualified in its entirety by reference to the
text of the Stockholders Agreement and the Stockholders Agreement Waiver, each
of which is filed as an Exhibit hereto and hereby incorporated by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
---------------------------------
(1) Contribution Agreement, dated as of January 27, 2000, by and among
Hallmark Entertainment, Inc., Crown Media, Inc., Liberty Media
Corporation, Vision Group Incorporated, VISN Management Corp., National
Interfaith Cable Coalition, Inc., Chase Equity Associates, L.P. and
Crown Media Holdings, Inc. (previously filed as Exhibit 2.1 to the
Registration Statement on Form S-1/A (Amendment No. 1) of Crown Media
Holdings, Inc., Commission File No. 333-95573, filed on March 10, 2000,
and incorporated herein by reference)
(2) 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)
(3) Purchase and Sale Agreement, dated as of April 10, 2001, by and between
Hallmark Entertainment Distribution LLC and Crown Media Holdings, Inc.
(previously filed as Appendix A to the definitive proxy materials of
Crown Media Holdings, Inc. filed on May 7, 2001 and incorporated herein
by reference)
(4) Stock Purchase Agreement, dated as of July 24, 2001, by and between The
Jim Henson Company, Inc. and Hallmark Entertainment (previously filed
as Exhibit 5 to the Schedule 13D/A Amendment No.1 of the Reporting
Persons filed on August 7, 2001 and incorporated herein by reference)
(5) Registration Rights Agreement, dated as of September 28, 2001, by and
between Crown Media Holdings, Inc. and Hallmark Entertainment
Distribution LLC (previously filed as Exhibit 6 to the Schedule 13D/A
Amendment No. 2 of the Reporting Persons, filed on October 16, 2001 and
incorporated herein by reference)
(6) Agreement, dated as of December 31, 2001, by and between Hallmark
Entertainment, Inc. and Hallmark Entertainment Holdings, Inc.
(previously filed as Exhibit 8 to the Schedule 13D/A Amendment No. 3 of
the Reporting Persons, filed on January 18, 2002 and incorporated
herein by reference)
(7) Acknowledgement and Agreement, dated December 31, 2001, by Hallmark
Entertainment Holdings, Inc. (previously filed as Exhibit 10 to the
Schedule 13D/A Amendment No. 3 of the Reporting Persons, filed on
January 18, 2002 and incorporated herein by reference)
17 of 25
(8) Assignment Acknowledgment, dated September 28, 2001, by and between
Hallmark Entertainment Distribution, LLC and Crown Media Holdings, Inc.
(previously filed as Exhibit 11 to the Schedule 13D/A Amendment No. 3
of the Reporting Persons, filed on January 18, 2002 and incorporated
herein by reference)
(9) Assignment Acknowledgment, dated December 31, 2001, by and between
Hallmark Entertainment, LLC and Crown Media Holdings, Inc. (previously
filed as Exhibit 12 to the Schedule 13D/A Amendment No. 3 of the
Reporting Persons, filed on January 18, 2002 and incorporated herein by
reference)
(10) Option of Robert A. Halmi, Jr., dated October 31, 2001, by and between
Hallmark Entertainment Holdings, Inc. and Robert A. Halmi, Jr.
(previously filed as Exhibit 13 to the Schedule 13D/A Amendment No. 4
of the Reporting Persons, filed on March 22, 2002 and incorporated
herein by reference)
(11) Joint Filing Agreement, dated as of March 13, 2003, by and between
Hallmark Cards, Incorporated, Hallmark Entertainment Holdings, Inc. and
Hallmark Entertainment Investments, Co.
(12) Contribution 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.
(13) 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.
(14) Form of Consent and Waiver, dated as of March 11, 2003, to the Second
Amended and Restated Stockholders Agreement, dated as of August 30,
2001, by and among Hallmark Entertainment Investments Co., Liberty
Media Corporation, Liberty Crown, Inc., VISN Management Corp., JP
Morgan Partners (BHCA), L.P., DirecTV Enterprises, Inc. and Crown Media
Holdings, Inc.
(15) Acknowledgment and Agreement, dated as of March 11, 2003, by Hallmark
Entertainment Investments Co.
(16) Assignment and Assumption Agreement, dated as of March 11, 2003, by and
between Hallmark Entertainment Holdings, Inc. and Hallmark
Entertainment Investments Co.
18 of 25
Signatures
After reasonable inquiry and to the best of our knowledge and belief,
we certify that the information set forth in this statement is true, complete
and correct.
Dated: March 13, 2003 HALLMARK CARDS, INCORPORATED
By: /s/ Judith Whittaker
-------------------------------
Name: Judith Whittaker
Title: Executive Vice President
HALLMARK ENTERTAINMENT HOLDINGS, INC.
By: /s/ Judith Whittaker
-------------------------------
Name: Judith Whittaker
Title: Vice President
HALLMARK ENTERTAINMENT INVESTMENTS CO.
By: /s/ Judith Whittaker
-------------------------------
Name: Judith Whittaker
Title: Vice President
19 of 25
SCHEDULE I
The name and present principal occupation of each director and executive officer
of Hallmark Cards, Incorporated, Hallmark Entertainment Holdings, Inc. and
Hallmark Entertainment Investments Co. are set forth below. The business address
for the directors and executive officers of Hallmark Cards, Incorporated and
Hallmark Entertainment Investments Co. is c/o Hallmark Cards, Incorporated, 2501
McGee, Kansas City, Missouri 64108. The business address for the directors and
executive officers of Hallmark Entertainment Holdings, Inc. is c/o Hallmark
Entertainment Holdings, Inc., 1325 Avenue of the Americas, 21st Floor, New York,
New York 10019. All the directors and executive officers listed on this Schedule
I are United States citizens.
HALLMARK CARDS, INCORPORATED
--------------------------------------------------------------------------------
Name Title
--------------------------------------------------------------------------------
Donald J. Hall Director; Chairman of the Board
Donald J. Hall, Jr. Director; Vice Chairman, President and Chief Executive
Officer
John F. Akers Director; Retired
Nancye L. Green Director; President, Donovan & Green
David E. Hall Director; Senior Vice President, Human Resources
John P. Mascotte Director; Retired
William D. Perez Director; President and CEO of S.C. Johnson & Son, Inc.
Herman Cain Director; Chairman of the Board, Godfather's Pizza, Inc.
Donald H. Fletcher President - Hallmark North America
Robert J. Druten Executive Vice President - Chief Financial Officer
Judith C. Whittaker Executive Vice President, General Counsel, Secretary
Steve Paoletti Senior Vice President - Sales
Anil Jagtiani Senior Vice President - Corporate Strategy
James Welch Senior Vice President - Marketing
Wayne Herran Group Vice President - Operations
HALLMARK ENTERTAINMENT HOLDINGS, INC.
--------------------------------------------------------------------------------
Name Title
--------------------------------------------------------------------------------
Robert A. Halmi, Jr. Director; President
Donald J. Hall, Jr. Director; Vice Chairman, President and Chief
Executive Officer of Hallmark Cards
Robert J. Druten Director; Executive Vice President and CFO of
Hallmark Cards
Peter von Gal Chief Operating Officer
Timothy Clyne Executive Vice President, Finance
20 of 25
HALLMARK ENTERTAINMENT INVESTMENTS CO.
--------------------------------------------------------------------------------
Name Title
--------------------------------------------------------------------------------
Wilford V. Bane Director
Arnold L. Chavkin Director
Robert J. Druten Director; President
David J. Evans Director
Donald J. Hall, Jr. Director
Robert A. Halmi, Jr. Director; Chairman
Irvine O. Hockaday, Jr. Director
David B. Koff Director
John P. Mascotte Director
Judith C. Whittaker Vice President
Deanne R. Stedem Vice President
21 of 25
SCHEDULE II
To the knowledge of the Reporting Persons, listed below are the names
of their executive officers and directors who beneficially own Common Stock,
along with the number of shares each such person beneficially owns. To the
knowledge of the Reporting Persons, the persons listed below are the only
persons on Schedule I who beneficially own Common Stock. To the knowledge of the
Reporting Persons, (a) each person listed below has the sole power to vote or
direct to vote and dispose or direct to dispose those shares of Common Stock
beneficially owned by such person and (b) each person beneficially owns shares
of Common Stock representing less than 1% of the Class A Common Stock
outstanding.
Name Number of Shares
----------------------------- ------------------------------------------
Donald J. Hall, Jr. 2,500
Nancye L. Green 10,000
David E. Hall 2,500
John F. Akers 5,000
William D. Perez 24,300
Donald H. Fletcher 1,000
Robert J. Druten 9,500
Peter von Gal 12,000
Robert A. Halmi, Jr. 175,000
John P. Mascotte 18,373(1)
Timothy Clyne 13,000
Steve Doyal 1,500
Anil Jagtiani 8,000
Wilford V. Bane, Jr. 8,373(2)
--------
1 Includes 8,373 shares of stock underlying options that are vested or will vest
within 60 days.
2 Consists of shares of stock underlying options that are vested
or will vest within 60 days.
22 of 25
Name Number of Shares
----------------------------- ------------------------------------------
Arnold L. Chavkin 89,529,669(3)
David J. Evans 1,192,975(4)
Irvine O. Hockaday, Jr. 20,000
David B. Koff 8,373(2)
--------
3 Includes 8,373 shares of stock underlying options that are vested or will vest
within 60 days. Mr. Chavkin shares investment and voting power with JPMorgan
Partners (BHCA), L.P., but disclaims beneficial ownership of such shares.
4 Includes 1,180,975 shares of stock underlying options that are vested or will
vest within 60 days.
23 of 25
EXHIBIT INDEX
Exhibit Number Description
--------------------------------------------------------------------------------
(1) Contribution Agreement, dated as of January 27,
2000, by and among Hallmark Entertainment, Inc.,
Crown Media, Inc., Liberty Media Corporation,
Vision Group Incorporated, VISN Management Corp.,
National Interfaith Cable Coalition, Inc., Chase
Equity Associates, L.P. and Crown Media Holdings,
Inc. (previously filed as Exhibit 2.1 to the
Registration Statement on Form S-1/A (Amendment
No. 1) of Crown Media Holdings, Inc., Commission
File No. 333-95573, filed on March 10, 2000, and
incorporated herein by reference)
(2) 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)
(3) Purchase and Sale Agreement, dated as of April 10,
2001, by and between Hallmark Entertainment
Distribution LLC and Crown Media Holdings, Inc.
(previously filed as Appendix A to the definitive
proxy materials of Crown Media Holdings, Inc.
filed on May 7, 2001 and incorporated herein by
reference)
(4) Stock Purchase Agreement, dated as of July 24,
2001, by and between The Jim Henson Company, Inc.
and Hallmark Entertainment (previously filed as
Exhibit 5 to the Schedule 13D/A Amendment No. 1 of
the Reporting Persons filed on August 7, 2001 and
incorporated herein by reference)
(5) Registration Rights Agreement, dated as of
September 28, 2001, by and between Crown Media
Holdings, Inc. and Hallmark Entertainment
Distribution LLC (previously filed as Exhibit 6 to
the Schedule 13D/A Amendment No. 2 of the
Reporting Persons, filed on October 16, 2001 and
incorporated herein by reference)
(6) Agreement, dated as of December 31, 2001, by and
between Hallmark Entertainment, Inc. and Hallmark
Entertainment Holdings, Inc. (previously filed as
Exhibit 8 to the Schedule 13D/A Amendment No. 3 of
the Reporting Persons, filed on January 18, 2002
and incorporated herein by reference)
(7) Acknowledgement and Agreement, dated December 31,
2001, by Hallmark Entertainment Holdings, Inc.
(previously filed as Exhibit 10 to the
24 of 25
Exhibit Number Description
--------------------------------------------------------------------------------
Schedule 13D/A Amendment No. 3 of the Reporting
Persons, filed on January 18, 2002 and
incorporated herein by reference)
(8) Assignment Acknowledgment, dated September 28,
2001, by and between Hallmark Entertainment
Distribution, LLC and Crown Media Holdings, Inc.
(previously filed as Exhibit 11 to the Schedule
13D/A Amendment No. 3 of the Reporting Persons,
filed on January 18, 2002 and incorporated herein
by reference)
(9) Assignment Acknowledgment, dated December 31,
2001, by and between Hallmark Entertainment, LLC
and Crown Media Holdings, Inc. (previously filed
as Exhibit 12 to the Schedule 13D/A Amendment No.
3 of the Reporting Persons, filed on January 18,
2002 and incorporated herein by reference)
(10) Option of Robert A. Halmi, Jr., dated October 31,
2001, by and between Hallmark Entertainment
Holdings, Inc. and Robert A. Halmi, Jr.
(previously filed as Exhibit 13 to the Schedule
13D/A Amendment No. 4 of the Reporting Persons,
filed on March 22, 2002 and incorporated herein by
reference)
(11) Joint Filing Agreement, dated as of March 13,
2003, by and between Hallmark Cards, Incorporated,
Hallmark Entertainment Holdings, Inc. and Hallmark
Entertainment Investments, Co.
(12) Contribution 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.
(13) 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.
(14) Form of Consent and Waiver, dated as of March 11,
2003, to the Second Amended and Restated
Stockholders Agreement, dated as of August 30,
2001, by and among Hallmark Entertainment
Investments Co., Liberty Media Corporation,
Liberty Crown, Inc., VISN Management Corp., JP
Morgan Partners (BHCA), L.P., DirecTV Enterprises,
Inc. and Crown Media Holdings, Inc.
(15) Acknowledgment and Agreement, dated March 11,
2003, by Hallmark Entertainment Investments Co.
(16) Assignment and Assumption Agreement, dated as of
March 11, 2003, by and between Hallmark
Entertainment Holdings, Inc. and Hallmark
Entertainment Investments Co.
25 of 25
EXHIBIT 11
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(k)(1) promulgated under the Securities Exchange
Act of 1934, as amended, the undersigned agree to the joint filing of a
Statement on Schedule 13D (including any and all amendments thereto) with
respect to the shares of Class A common stock, par value $0.01 per share, of
Crown Media Holdings, Inc., and further agree that this Joint Filing Agreement
(this "Agreement") be included as an Exhibit thereto. In addition, each party to
this Agreement expressly authorizes each other party to this Agreement to file
on its behalf any and all amendments to such Statement.
Dated: March 13, 2003 HALLMARK CARDS, INCORPORATED
By: /s/ Judith Whittaker
-----------------------------
Name: Judith Whittaker
Title: Executive Vice President
HALLMARK ENTERTAINMENT HOLDINGS, INC.
By: /s/ Judith Whittaker
-----------------------------
Name: Judith Whittaker
Title: Vice President
HALLMARK ENTERTAINMENT INVESTMENTS CO.
By: /s/ Judith Whittaker
-----------------------------
Name: Judith Whittaker
Title: Vice President