Exhibit 4.11
EXECUTION COPY
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PREFERENCE REGISTRATION RIGHTS AGREEMENT
Dated January 27, 1999
Among
@ ENTERTAINMENT, INC.
and
XXXXXX XXXXXXXX PRIVATE EQUITY LIMITED on behalf of
XXXXXX XXXXXXXX DEVELOPMENT CAPITAL SYNDICATION LIMITED,
XXXXXX XXXXX, XXXXXX XXXXX, XXXXX XXXXX
and THE XXXXXXX TRUST
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TABLE OF CONTENTS
Page
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1. Definitions...............................................................1
2. Registration Under the 1933 Act...........................................5
3. Registration Procedures...................................................6
4. Indemnification and Contribution. .......................................12
5. Miscellaneous............................................................15
PREFERENCE REGISTRATION RIGHTS AGREEMENT
THIS PREFERENCE REGISTRATION RIGHTS AGREEMENT (the "Agreement") is
made and entered into January 27, 1999, among @ENTERTAINMENT, INC., (the
"Company") a Delaware corporation, The Xxxxxxx Trust ("Xxxxxxx"), Xxxxx Xxxxx
("Xxxxx Xxxxx"), Xxxxxx Xxxxx ("Xxxxxx Xxxxx") and Xxxxxx Xxxxx ("Xxxxxx Xxxxx",
and together with Xxxxxxx, Xxxxx Chase and Xxxxxx Xxxxx, the "Xxxxx Purchasers")
and XXXXXX XXXXXXXX PRIVATE EQUITY LIMITED on behalf of XXXXXX XXXXXXXX
DEVELOPMENT CAPITAL SYNDICATION LIMITED ("MGPE", and together with the Chase
Purchasers, the "Purchasers").
This Agreement is made pursuant to (i) the Purchase Agreement dated
January 22, 1999, between the Company and MGPE (the "MGPE Purchase Agreement")
and (ii) the Purchase Agreement dated as of January 22, 1999 among the Company
and Xxxxxx Xxxxx, Xxxxx Xxxxx and Xxxxxx Xxxxx (the "Xxxxx Purchase Agreement",
and together with the MGPE Purchase Agreement, the "Purchase Agreements"), which
provide for the sale by the Company of 45,000 shares of the Company's Series A
12% Cumulative Preference Shares par value $0.01 per share (the "Series A
Preference Shares") to MGPE, the sale of 5,000 shares of the Company's Series B
12% Cumulative Preference Shares, par value $0.01 per share (the "Series B
Preference Shares" and together with the Series A Preference Shares, the
"Cumulative Preference Shares") to the Chase Purchasers and the sale to MGPE and
the Chase Purchasers of warrants (the "Preference Warrants") to purchase
5,500,000 shares of the Company's Common Stock (the "Preference Warrants"). In
order to induce the Purchasers to enter into the Purchase Agreements, the
Company has agreed to provide the Purchasers and their direct and indirect
transferees the registration rights set forth in this Agreement. The execution
of this Agreement is a condition to the closing under the Purchase Agreements.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from
time to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
2
"Board of Directors" shall mean the Board of Directors of the
Company or any duly authorized committee of such Board of Directors.
"Certificate of Designations" shall mean the certificate of
designations, preferences and rights of the Cumulative Preference Shares
filed with the Secretary of State of the State of Delaware.
"Closing Date" shall mean the Closing Date as defined in the
Purchase Agreement.
"Company" shall have the meaning set forth in the preamble and shall
also include the Company's successors.
"Common Stock" shall mean the shares of common stock, par value
$0.01 per share, of the Company.
"Cumulative Preference Shares" shall have the meaning set forth in
the preamble to this Agreement; in addition, it shall also mean any new
preference share which is issued by the Company upon the sale or other
disposition by MGPE of a Series A Preference Share.
"Dividend Payment Date" shall mean March 31 and September 30 of each
year.
"Holder" or "Holders" shall mean the Purchasers, for so long as they
own any Cumulative Preference Shares, and each of their successors,
assigns and direct and indirect transferees who become registered owners
of Cumulative Preference Shares.
"Majority Holders" shall mean the Holders of a majority of the
outstanding shares of Cumulative Preference Shares; provided that whenever
the consent or approval of Holders of a specified percentage of Cumulative
Preference Shares is required hereunder, Cumulative Preference Shares held
by the Company or any of its affiliates (as such term is defined in Rule
405 under the 0000 Xxx) (other than MGPE or subsequent holders of
Preference Shares and other than the Chase Purchasers and their affiliates
if such subsequent holders are deemed to be such affiliates solely by
reason of their holding of such Cumulative Preference Shares) shall not be
counted in determining whether such consent or approval was given by the
Holders of such required percentage or amount.
"MGPE" shall have the meaning set forth in the preamble to this
Agreement.
3
"Person" shall mean an individual, partnership, corporation, trust
or unincorporated organization, or a government or agency or political
subdivision thereof.
"Preference Offering" shall mean the offering of 50,000 shares of
the Company's 12% Cumulative Preference Shares and Preference Warrants
initially entitling the Holders thereof to purchase an aggregate 5,500,000
shares of Common Stock of the Company at a par value of $.01 per share.
"Preference Registration Expenses" shall mean any and all expenses
incident to performance of or compliance by the Company with this
Agreement, including without limitation: (i) all SEC, stock exchange or
National Association of Securities Dealers, Inc. registration and filing
fees, (ii) all fees and expenses incurred in connection with compliance
with state securities or blue sky laws (including reasonable fees and
disbursements of counsel for any Underwriters or Holders in connection
with blue sky qualification of any of the Cumulative Preference Shares),
(iii) all expenses of any Persons in preparing or assisting in preparing,
word processing, printing and distributing any Shelf Registration
Statement, any Prospectus, any amendments or supplements thereto, any
underwriting agreements, securities sales agreements and other documents
relating to the performance of and compliance with this Agreement, (iv)
all rating agency fees, if any, (v) the fees and disbursements of the
Transfer Agent and its counsel, (vi) the fees and disbursements of all
counsel for the Company (including all foreign counsel) and of counsel for
the Holders (including all foreign counsel) (which counsel shall be
selected by the Majority Holders and which counsel may also be counsel for
MGPE) and (vii) the fees and disbursements of the independent public
accountants of the Company, including the expenses of any special audits
or "cold comfort" letters required by or incident to such performance and
compliance, but excluding fees and expenses of counsel to the Underwriters
(other than fees and expenses set forth in clause (ii) above) or the
Holders and underwriting discounts and commissions and transfer taxes, if
any, relating to the sale or disposition of Cumulative Preference Shares
by a Holder (it being understood that Preference Registration Expenses
shall not include as to fees and expenses of counsel, the fees and
expenses of more than one counsel for the Holders and one counsel for the
Underwriters, and shall not include any underwriting discounts,
commissions or transfer taxes).
"Preference Registration Statements" shall include the Preference
Warranty Shelf Registration Statement and the Preference Warrant Stock
Shelf Registration Statement.
"Preference Warrants" shall have the meaning set forth in the
preamble.
4
"Prospectus" shall mean the prospectus included in a Shelf
Registration Statement, including any preliminary prospectus, and any such
prospectus as amended or supplemented by any prospectus supplement,
including a prospectus supplement with respect to the terms of the
offering of any portion of the Cumulative Preference Shares covered by a
Shelf Registration Statement, and by all other amendments and supplements
to such prospectus, and in each case including all material incorporated
by reference therein.
"Purchase Agreements" shall have the meaning set forth in the
preamble to this Agreement.
"Registration Right" shall mean the right attached to each
Cumulative Preference Share entitling the holder thereof to receive, under
certain circumstances, an additional dividend payment of the amount
specified pursuant to Section 2(c) hereof.
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company that covers the sale by the Holders of all of the
Cumulative Preference Shares on an appropriate form under Rule 415 under
the 1933 Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Transfer Agent" shall mean Continental Stock Transfer & Trust Co.
or its successors provided that any such successor is a participant in The
Depository Trust Company's full-FAST system.
"Underwriters" shall have the meaning set forth in Section 3 hereof.
"Underwritten Registration" or "Underwritten Offering" shall mean a
registration in which Cumulative Preference Shares are sold to an
Underwriter (as hereinafter defined) for reoffering to the public.
"Units Offering" shall mean the offering by the Company of units,
each consisting of $1000 principal amount at maturity of 14 1/2% Senior
Discount Notes due 2009 and four warrants, each initially entitling the
holder thereof to purchase 1.7656 shares of common stock, par value $.01
per share.
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2. Registration Under the 1933 Act.
(a) To the extent not prohibited by any applicable law or applicable
interpretation of the staff of the SEC, the Company shall cause a Shelf
Registration Statement to be filed and shall:
(i) use its best efforts to have such Shelf Registration
Statement declared effective on or before July 7, 1999 and
(ii) use reasonable efforts to keep such Shelf Registration
Statement continuously effective until the expiration of the
period referred to in Rule 144(k) of the 1933 Act with respect
to all Holders.
The Company further agrees to supplement or amend such Shelf
Registration Statement if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration Statement or by the 1933 Act or by any other rules and regulations
thereunder for shelf registration or if reasonably requested by a Holder with
respect to information relating to such Holder, and to use its best efforts to
cause any such amendment to become effective and such Shelf Registration
Statement to become usable as soon as thereafter practicable. The Company agrees
to furnish to the Holders of Cumulative Preference Shares copies of any such
supplement or amendment promptly after its being used or filed with the SEC, as
well as all legal opinions, comfort letters, officers certificates and any other
information and documents required to be delivered by the Company as stipulated
in Section (3) hereof.
(b) The Company shall pay all Registration Expenses in connection
with the registration pursuant to Section 2(a) hereof. Each Holder shall pay all
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Holder's Cumulative Preference Shares pursuant
to the Shelf Registration Statement.
(c) A Shelf Registration Statement pursuant to Section 2(a) hereof
will not be deemed to have become effective unless it has been declared
effective by the SEC; provided, however, that, if after it has been declared
effective the offering of Cumulative Preference Shares pursuant to a Shelf
Registration Statement is interfered with by any stop order, injunction or other
order or requirement of the SEC or any other governmental agency or court, such
Shelf Registration Statement will be deemed not to have become effective during
the period of such interference until the offering of Cumulative Preference
Shares pursuant to such Shelf Registration Statement may legally resume.
In the event a Shelf Registration Statement covering all Cumulative
Preference Shares (i) is not declared effective on or before July 7, 1999 or
(ii) is unavailable during any
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360-day period for a period of more than 60 days or two periods of more than an
aggregate of 90 days, (A) the dividend rate applicable to the Cumulative
Preference Shares shall increase by 1% per annum (to a total of 13% per annum)
from the date of the deficiency under (i) or (ii), as the case may be, until the
date such Shelf Registration Statement is declared effective or is made
available for use without any restrictions, so that during such a time period
dividends shall accrue on the Cumulative Preference Shares at an annual rate of
13% of the Accreted Liquidation Preference per share.
(d) In any 360-day period, the Company shall be entitled to suspend
the availability of a Shelf Registration Statement for no more than one period
of up to 60 days or two periods of no more than an aggregate of 90 days if the
Board of Directors determines that such suspension would be in the best
interests of the Company.
(e) Without limiting the remedies available to the Purchasers and
the Holders, the Company acknowledges that any failure by the Company to comply
with its obligations under Section 2(a) hereof may result in material
irreparable injury to the Purchasers or the Holders for which there is no
adequate remedy at law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of any such failure, the Purchasers or
any Holder may obtain such relief as may be required to specifically enforce the
Company's obligations under Section 2(a) hereof.
3. Registration Procedures.
In connection with the obligations of the Company with respect to
the Shelf Registration Statement pursuant to Section 2(a) hereof, the Company
shall:
(a) prepare and file with the SEC a Shelf Registration Statement on
the appropriate form under the 1933 Act, which form shall (i) be selected
by the Company and (ii) be available for the sale of the Cumulative
Preference Shares by the selling Holders thereof and (iii) comply as to
form in all material respects with the requirements of the applicable form
and include all financial statements required by the SEC to be filed
therewith, and use its best efforts to cause such Shelf Registration
Statement to become effective and remain effective in accordance with
Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration Statement as may be necessary to
keep such Shelf Registration Statement effective for the applicable period
and cause each Prospectus to be supplemented by any required prospectus
supplement and, as so supplemented, to be filed pursuant to Rule 424 under
the 1933 Act and keep each Prospectus current;
7
(c) furnish to each Holder of Cumulative Preference Shares, counsel
for the Holders and each Underwriter of an Underwritten Offering of
Cumulative Preference Shares, if any, without charge, as many copies of
each Prospectus, including each preliminary Prospectus, and any amendment
or supplement thereto and such other documents as such Holder or
Underwriter may reasonably request, in order to facilitate the public sale
or other disposition of the Cumulative Preference Shares; and the Company
consents to the use of such Prospectus and any amendment or supplement
thereto in accordance with applicable law by each of the selling holders
of Cumulative Preference Shares and any such Underwriters in connection
with the offering and sale of the Cumulative Preference Shares covered by
and in the manner described in such Prospectus or any amendment or
supplement thereto in accordance with applicable law;
(d) use its best efforts (i) to register or qualify, by the time the
Shelf Registration Statement is declared effective by the SEC, the
Cumulative Preference Shares under all applicable state securities or
"blue sky" laws and (ii) to cooperate with such Holder in connection with
any filings required to be made with the National Association of
Securities Dealers, Inc. and do any and all other acts and things which
may be reasonably necessary or advisable to enable such Holder to
consummate the disposition in each such jurisdiction of such Cumulative
Preference Shares owned by such Holder; provided, however, that the
Company shall not be required to (A) qualify as a foreign corporation or
as a dealer in securities in any jurisdiction where it would not otherwise
be required to qualify but for this Section 3(d), (B) file any general
consent to service of process or (C) subject itself to taxation in any
such jurisdiction if it is not otherwise so subject;
(e) notify each Holder of Cumulative Preference Shares and counsel
for the Holders promptly and, if requested by any such Holder or counsel,
confirm such advice in writing (i) when a Shelf Registration Statement has
become effective and when any post-effective amendment thereto has been
filed and becomes effective, (ii) of any request by the SEC or any state
securities authority for amendments and supplements to a Shelf
Registration Statement and Prospectus or for additional information after
the Shelf Registration Statement has become effective, (iii) of the
issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Shelf Registration Statement or the
initiation of any proceedings for that purpose, (iv) if, between the
effective date of a Shelf Registration Statement and the closing of any
sale of Cumulative Preference Shares covered thereby, the representations
and warranties of the Company contained in any underwriting agreement,
securities sales agreement or other similar agreement, if any, relating to
the offering cease to be true and correct in all material respects or if
the Company receives any notification with respect to the suspension of
the qualification of the Cumulative Preference Shares for sale in any
jurisdiction or the initiation of any proceeding for such purpose, (v) of
the happening of
8
any event during the period a Shelf Registration Statement is effective
which makes any statement made in such Shelf Registration Statement or the
related Prospectus untrue in any material respect or which requires the
making of any changes in such Shelf Registration Statement or Prospectus
in order to make the statements therein not misleading and (vi) of any
determination by the Company that a post-effective amendment to a Shelf
Registration Statement would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Shelf Registration Statement at
the earliest possible moment and provide immediate notice to each Holder
of the withdrawal of any such order;
(g) furnish to each Holder of Cumulative Preference Shares, without
charge, at least one conformed copy of the Shelf Registration Statement
and any post-effective amendment thereto (without documents incorporated
therein by reference or exhibits thereto, unless requested);
(h) cooperate with the selling Holders of Cumulative Preference
Shares to facilitate the timely preparation and delivery of certificates
representing Cumulative Preference Shares to be sold and not bearing any
restrictive legends and enable such Cumulative Preference Shares to be in
such denominations and registered in such names as the selling Holders may
reasonably request at least two business days prior to the closing of any
sale of Cumulative Preference Shares;
(i) upon the occurrence of any event contemplated by Section 3(e)(v)
hereof, use its best efforts to prepare a supplement or post-effective
amendment to a Shelf Registration Statement or the related Prospectus or
any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of the
Cumulative Preference Shares, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading. The Company agrees to notify the Holders
to suspend use of the Prospectus as promptly as practicable after the
occurrence of such an event, and the Holders hereby agree to suspend use
of the Prospectus until the Company has amended or supplemented the
Prospectus to correct such misstatement or omission;
(j) within a reasonable time prior to the filing of any Shelf
Registration Statement, any Prospectus, any amendment to a Shelf
Registration Statement or amendment or supplement to a Prospectus or any
document which is to be incorporated by reference into a Shelf
Registration Statement or a Prospectus after the initial filing of a Shelf
Registration Statement, provide copies of such document to the Purchasers
and
9
their counsel and the Holders and their counsel and make such of the
representatives of the Company as shall be reasonably requested by the
Purchasers or their counsel and the Holders or their counsel, available
for discussion of such document, and shall not at any time file or make
any amendment to the Shelf Registration Statement, any Prospectus or any
amendment of or supplement to a Shelf Registration Statement or a
Prospectus or any document which is to be incorporated by reference into a
Shelf Registration Statement or a Prospectus, of which the Purchasers and
their counsel and the Holders and their counsel, shall not have previously
been advised and furnished a copy or to which the Purchasers or their
counsel and the Holders or their counsel shall object;
(k) obtain a CUSIP number for all Cumulative Preference Shares not
later than the effective date of a Shelf Registration Statement;
(l) make available for inspection by a representative of the Holders
of the Cumulative Preference Shares, any Underwriter participating in any
disposition pursuant to a Shelf Registration Statement, and attorneys and
accountants designated by the Holders, at reasonable times and in a
reasonable manner, all financial and other records, pertinent documents
and properties of the Company, and cause the respective officers,
directors and employees of the Company to supply all information
reasonably requested by any such representative, Underwriter, attorney or
accountant in connection with a Shelf Registration Statement;
(m) if reasonably requested by any Holder of Cumulative Preference
Shares covered by a Shelf Registration Statement, (i) promptly incorporate
in a Prospectus supplement or post-effective amendment such information
with respect to such Holder as such Holder reasonably requests to be
included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as the Company has
received notification of the matters to be incorporated in such filing;
(n) enter into such customary agreements and take all such other
actions in connection therewith (including those requested by the Holders
of a majority of the Cumulative Preference Shares being sold) in order to
expedite or facilitate the disposition of such Cumulative Preference
Shares including, but not limited to, an Underwritten Offering;
(o) to the extent possible, make such representations and warranties
to any Holder or Underwriters of such Cumulative Preference Shares with
respect to the business of the Company and its subsidiaries, the Shelf
Registration Statement, Prospectus and documents incorporated by reference
or deemed incorporated by reference, if any, in each case, in form,
substance and scope as are customarily made
10
by issuers to underwriters in underwritten offerings and confirm the same
if and when requested,
(p) obtain opinions of counsel to the Company, including foreign
counsel, (which counsel and opinions, in form, scope and substance, shall
be reasonably satisfactory to such Underwriters and their respective
counsel) addressed to the Holders and each Underwriter of Cumulative
Preference Shares, covering the matters customarily covered in opinions
requested in underwritten offerings,
(q) use reasonable efforts to obtain "cold comfort" letters from the
independent certified public accountants of the Company (and, if
necessary, any other certified public accountant of any subsidiary of the
Company, or of any business acquired by the Company for which financial
statements and financial data are or are required to be included in the
Shelf Registration Statement) addressed to each Underwriter of Cumulative
Preference Shares, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in
connection with underwritten offerings, and
(r) to evidence the continued validity of the representations and
warranties of the Company made pursuant to clause (i) above and to
evidence compliance with any customary conditions contained in an
underwriting agreement (a) deliver such documents, opinions and
certificates as may be reasonably requested by the Holders of a majority
of the Cumulative Preference Shares being sold and (b) deliver such
documents, opinions and certificates as may be reasonably requested by the
Underwriters and which are customarily delivered in underwritten
offerings.
The Company may require each Holder of Cumulative Preference Shares
to furnish to the Company such information regarding the Holder and the proposed
distribution by such Holder of such Cumulative Preference Shares as the Company
may from time to time reasonably request in writing.
Each Holder agrees that, upon receipt of any notice from the Company
of the happening of any event of the kind described in Section 3(e)(v) hereof,
such Holder will forthwith discontinue disposition of Cumulative Preference
Shares pursuant to a Shelf Registration Statement until such Holder's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
3(i) hereof, and, if so directed by the Company, such Holder will deliver to the
Company (at its expense) all copies in its possession, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
Cumulative Preference Shares current at the time of receipt of such notice. If
the Company shall give any such notice to suspend the disposition of Cumulative
Preference Shares pursuant to a Shelf Registration Statement, the Company shall
extend the period during which the Shelf
11
Registration Statement shall be maintained effective pursuant to this Agreement
by the number of days during the period from and including the date of the
giving of such notice to and including the date when the Holders shall have
received copies of the supplemented or amended Prospectus necessary to resume
such dispositions.
At any time after the Shelf Registration Statement is declared
effective, by issuance of a written notice to the Company of a request to
undertake an Underwritten Offering, the Holders of Cumulative Preference Shares
covered by a Shelf Registration Statement who desire to do so may sell such
Cumulative Preference Shares in an Underwritten Offering. In any such
Underwritten Offering, the investment banker or investment bankers and manager
or managers (the "Underwriters") that will administer the offering will be
selected by the Majority Holders of the Cumulative Preference Shares included in
such offering. To assist such Holders of the Cumulative Preference Shares to
complete an Underwritten Offering, the Company shall enter into such customary
agreements and take all such other actions in connection therewith in order to
expedite or facilitate the disposition of such Cumulative Preference Shares
including, but not limited to,
(i) to the extent possible, make such representations and warranties
to any Underwriters of such Cumulative Preference Shares with respect to
the business of the Company and its subsidiaries, the Shelf Registration
Statement, Prospectus and documents incorporated by reference or deemed
incorporated by reference, if any, in each case, in form, substance and
scope as are customarily made by issuers to underwriters in underwritten
offerings and confirm the same if and when requested,
(ii) obtain opinions of counsel to the Company, including foreign
counsel, (which counsel and opinions, in form, scope and substance, shall
be reasonably satisfactory to such Underwriters and their respective
counsel) addressed to each Underwriter of Cumulative Preference Shares,
covering the matters customarily covered in opinions requested in
underwritten offerings,
(iii) obtain "cold comfort" letters from the independent certified
public accountants of the Company (and, if necessary, any other certified
public accountant of any subsidiary of the Company, or of any business
acquired by the Company for which financial statements and financial data
are or are required to be included in the Shelf Registration Statement)
addressed to each Underwriter of Cumulative Preference Shares, such
letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
underwritten offerings,
(iv) make available for inspection by a representative of the
Holders of the Cumulative Preference Shares, any Underwriter participating
in any disposition
12
pursuant to a Shelf Registration Statement, and attorneys and accountants
designated by the Holders, at reasonable times and in a reasonable manner,
all financial and other records, pertinent documents and properties of the
Company, and cause the respective officers, directors and employees of the
Company to supply all information reasonably requested by any such
representative, Underwriter, attorney or accountant in connection with a
Shelf Registration Statement, and
(v) to evidence the continued validity of the representations and
warranties of the Company made pursuant to clause (i) above and to
evidence compliance with any customary conditions contained in an
underwriting agreement (a) deliver such documents, opinions and
certificates as may be reasonably requested by the Holders of a majority
of the Cumulative Preference Shares being sold and (b) deliver such
documents, opinions and certificates as may be reasonably requested by the
Underwriters and which are customarily delivered in underwritten
offerings.
4. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Purchaser, each Holder and each person, if any, who controls any Purchaser or
any Holder within the meaning of either Section 15 of the 1933 Act or Section 20
of the 1934 Act, or is under common control with, or is controlled by, any
Purchaser or any Holder, from and against all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred by any Purchaser, any Holder or any such controlling or
affiliated person in connection with defending or investigating any such action
or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in any Shelf Registration Statement (or any amendment
thereto) pursuant to which Cumulative Preference Shares were registered under
the 1933 Act, including all documents incorporated therein by reference, or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or caused by any untrue statement or alleged untrue statement of a
material fact contained in any Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact necessary
to make the statements therein in light of the circumstances under which they
were made not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Purchaser or
any Holder furnished to the Company in writing by any Purchaser or any selling
Holder expressly for use therein. In connection with any Underwritten Offering
permitted by Section 3, the Company will also indemnify the Underwriters, if
any, selling brokers, dealers and similar securities industry professionals
participating in the distribution, their officers and directors and each Person
who controls such Persons (within the meaning of the 1933 Act and the 0000 Xxx)
to the same
13
extent as provided above with respect to the indemnification of the Holders, if
requested in connection with any Shelf Registration Statement.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, the Purchasers and the other selling Holders, and
each of their respective directors, officers who sign the Shelf Registration
Statement and each Person, if any, who controls the Company, the Purchasers and
any other selling Holder within the meaning of either Section 15 of the 1933 Act
or Section 20 of the 1934 Act to the same extent as the foregoing indemnity from
the Company to the Purchasers and the Holders, but only with reference to
information relating to such Holder furnished to the Company in writing by such
Holder expressly for use in any Shelf Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto).
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or paragraph (b) above,
such person (the "indemnified party") shall promptly notify the person against
whom such indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for (a) the fees and expenses of more than one separate
firm (in addition to any local counsel) for the Purchasers and all persons, if
any, who control the Purchasers within the meaning of either Section 15 of the
1933 Act or Xxxxxxx 00 xx xxx 0000 Xxx, (x) the fees and expenses of more than
one separate firm (in addition to any local counsel) for the Company, its
directors, its officers who sign the Shelf Registration Statement and each
person, if any, who controls the Company within the meaning of either such
Section and (c) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Holders and all persons, if any, who
control any Holders within the meaning of either such Section, and that all such
fees and expenses shall be reimbursed as they are incurred. In such case
involving the Purchasers and persons who control the Purchasers, such firm shall
be designated in writing by the Purchasers. In such case involving the Holders
and such persons who control Holders, such firm shall be designated in writing
by the Majority Holders. In all other cases, such firm shall
14
be designated by the Company. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent but, if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second and third sentences of this paragraph,
the indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party for such fees and expenses of counsel in accordance with such
request prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which such
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) If the indemnification provided for in paragraph (a) or
paragraph (b) of this Section 4 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the indemnifying party or parties on the one hand and of the indemnified
party or parties on the other hand in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative fault of the
Company and the Holders shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Holders and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Holders' respective obligations to contribute
pursuant to this Section 4(d) are several in proportion to the respective number
of shares of Cumulative Preference Shares of such Holder that were registered
pursuant to a Shelf Registration Statement.
(e) The Company and each Holder agree that it would not be just or
equitable if contribution pursuant to this Section 4 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages
and liabilities referred to in paragraph (d) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
15
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 4, no Holder shall be required to indemnify or contribute any amount in
excess of the amount by which the total price at which the Cumulative Preference
Shares were sold by such Holder exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 4 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
The indemnity and contribution provisions contained in this Section
4 shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
either Purchaser, any Holder or any person controlling either Purchaser or any
Holder, or by or on behalf of the Company, its officers or directors or any
person controlling the Company, (iii) acceptance of any of the Cumulative
Preference Shares and (iv) any sale of Cumulative Preference Shares pursuant to
a Shelf Registration Statement.
5. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not entered into,
and on or after the date of this Agreement will not enter into, any agreement
which is inconsistent with the rights granted to the Holders of Cumulative
Preference Shares in this Agreement or otherwise conflicts with the provisions
hereof. The rights granted to the Holders hereunder do not in any way conflict
with and are not inconsistent with the rights granted to the holders of the
Company's other issued and outstanding securities under any such agreements. The
Preference Registration Statements may also include securities issued in the
Units Offering and securities issuable upon conversion of such securities.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least a majority of the outstanding shares of Cumulative Preference Shares
affected by such amendment, modification, supplement, waiver or consent;
provided, however, that no amendment, modification, supplement, waiver or
consents to any departure from the provisions of Section 5 hereof shall be
effective as against any Holder of Cumulative Preference Shares unless consented
to in writing by such Holder.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail,
16
telex, telecopier, or any courier guaranteeing delivery by a specific date (i)
if to a Holder, at the most current address given by such Holder to the Company
by means of a notice given in accordance with the provisions of this Section
5(c), which address initially is, with respect to Xxxxxx Xxxxxxxx Private Equity
Limited, 00 Xxxxxxxx Xxxxxx, Xxxxxx, XX0X 0X0, Attention: Xxxxx Xxxxxxxx; in the
case of Xxxxxx Xxxxx, Xxxxxx Xxxxx or Xxxxx Xxxxx, to such person c/o Chase
Enterprises, Inc., Xxx Xxxxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000-0000 Attn:
Xxxx Xxxxxxx; and, in the case of Xxxxxxx, to The Xxxxxxx Trust, c/o Chase
Enterprises, Inc., Xxx Xxxxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxxx Xxxxxxx with a copy to Rothschild Trust Guernsey Limited, X.X.
Xxx 000, Xx. Xxxxx'x Xxxxx, Xx Xxxxxxx, Xx. Peter's Port, Guernsey, Channel
Islands GY1 6AX, attention X.X. Xxxxxxx; and (ii) if to the Company, initially
at Xxx Xxxxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxxx, 00000-0000, Attention: Xxxxxx X.
Xxxxxx III, with a copy to Xxxxx & XxXxxxxx, 000 Xxxxxxxxxxx Xxxxxx, X.X., Xxxxx
000, Xxxxxxxxxx X.X. 00000, Attention: Xxxx X. Xxxx, and thereafter at such
other address, notice of which is given in accordance with the provisions of
this Section 5(c).
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the business day scheduled for delivery if timely delivered to an air courier
guaranteeing delivery on a specific date.
Copies of all such notices, demands, or other communications shall
be concurrently delivered by the person giving the same to the Transfer Agent,
at Continental Stock Transfer & Trust Co., 0 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxx X. Xxxxxx.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors, assigns and transferees of each
of the parties, including, without limitation and without the need for an
express assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of outstanding
shares of Cumulative Preference Shares in violation of the terms of the Purchase
Agreement. If any transferee of any Holder shall acquire outstanding shares of
Cumulative Preference Shares, in any manner, whether by operation of law or
otherwise, such then outstanding shares of Cumulative Preference Shares shall be
held subject to all of the terms of this Agreement, and by taking and holding
such outstanding shares of Cumulative Preference Shares, such person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement and such person shall be entitled to
receive the benefits hereof. The Purchasers shall have no liability or
obligation to the Company with respect to any failure by a Holder to comply
with, or any breach by any Holder of, any of the obligations of such Holder
under this Agreement.
17
(e) Purchases and Sales. The Company shall not, and shall use its
best efforts to cause its affiliates (as defined in Rule 405 under the 0000 Xxx)
not to, purchase and then resell or otherwise transfer any Cumulative Preference
Shares.
(f) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Purchasers, on the other hand, and shall have the right to enforce
such agreements directly to the extent it deems such enforcement necessary or
advisable to protect its rights or the rights of Holders hereunder.
(g) 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.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
18
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
@ENTERTAINMENT, INC.
By /s/ Xxxxxx X. Xxxxxx, III
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Title: Chief Executive Officer
By /s/ Xxxxxx Xxxxxx Xxxxx
--------------------------------------
Title: Chief Financial Officer
Confirmed and accepted as of
the date first above written:
XXXXXX XXXXXXXX PRIVATE EQUITY LIMITED
By /s/ Xxxxx Xxxxxxxx /s/ Xxxxxx Xxxxxx
---------------------------------------
/s/ Xxxxxx Xxxxx
---------------------------------------
/s/ Xxxxxx Xxxxx
---------------------------------------
/s/ Xxxxx Xxxxx
---------------------------------------
THE XXXXXXX TRUST
By
-------------------------------------
Name:
Title:
