SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. __________){1}
@Entertainment, Inc.
- -------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
- -------------------------------------------------------------------------------
(Title of Class of Securities)
045920 10 5
- -------------------------------------------------------------------------------
(CUSIP Number)
Terry Kasuga
Chase Enterprises
One Commercial Plaza, Hartford, Connecticut 06103-3585
(860) 549-1674
- -------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
Not Applicable
- -------------------------------------------------------------------------------
(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 which 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 / /.
Note: Schedules filed in paper format shall include a signed original and five
copies of this schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
(Continued on the following pages)
(Page 1 of 14 Pages)
**FOOTNOTES**
{1} The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the subject
class of securities, and for any subsequent amendment containing
information which would alter the disclosures provided in a prior cover
page.
The information required in the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that Section of the Act
but shall be subject to all other provisions of the Act (however, SEE the
NOTES).
<PAGE>
CUSIP No. 045920 10 5 13D Page 2 of 14 Pages
1 NAME OF REPORTING PERSONS
IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Polish Investments Holding L.P.
06-1326310
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /X /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) OR 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF See Item 5
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH See Item 5
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH See Item 5
10 SHARED DISPOSITIVE POWER
See Item 5
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,703,000 shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* /X/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
29.1%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Item 1. SECURITY AND ISSUER.
The class of equity securities to which this Statement on
Schedule 13D relates is the common stock, par value $.01 per share (the
"Common Stock"), of @Entertainment, Inc. (the "Company"), a Delaware
corporation whose principal executive offices are located at One Commercial
Plaza, Hartford, Connecticut 06103-3585.
Item 2. IDENTITY AND BACKGROUND.
(a) NAME:
Polish Investments Holding L.P.
(b) RESIDENCE OR BUSINESS ADDRESS:
c/o Chase Enterprises
One Commercial Plaza
Hartford, Connecticut 06103-3585
(c) PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT:
The reporting person is a limited partnership whose purpose is to
hold investments for the benefit of its partners.
Chase Polish Enterprises, Inc. ("CPEI") is the sole general
partner of the reporting person. CPEI's principal business is serving as
general partner of the reporting person and Cable Investments L.P.
("CILP"). Arnold L. Chase and Cheryl A. Chase each own 50% of the
outstanding capital stock of CPEI and are its sole directors and executive
officers. Arnold L. Chase's principal occupation is Executive Vice
President of D.T. Chase Enterprises, Inc. ("DTCE"), a holding company for
various Chase family interests. Cheryl A. Chase's principal employment is
Vice President and General Counsel of DTCE. The principal business address
of Arnold L. Chase and Cheryl A. Chase and the address of DTCE is One
Commercial Plaza, Hartford, Connecticut 06103-3585.
(d) During the past five years, none of the reporting person, CPEI,
Arnold L. Chase or Cheryl A. Chase has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors).
(e) During the past five years, none of the reporting person, CPEI,
Arnold L. Chase or Cheryl A. Chase has been a party to a civil proceeding
of a judicial or an administrative body of competent jurisdiction and as a
result of such proceeding is or was 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.
(f) CITIZENSHIP:
The reporting person is a Delaware limited partnership. CPEI is
a Delaware Corporation. Arnold L. Chase and Cheryl A. Chase are citizens
of the United States of America.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The reporting person is not reporting any purchases.
On January 27, 1999, Arnold L. Chase purchased 2,000 units from
the Company in a private transaction, each such unit consisting of one
Series B 12% Cumulative Preference Share, par value $.01, and one warrant
to purchase 110 shares of Common Stock. All such warrants (the "ALC
Warrants") are currently exercisable. The aggregate consideration for such
purchase was $2,000,000.00, including commissions and costs payable by the
Company. The funds to purchase such units were personal funds of Arnold L.
Chase.
On January 27, 1999, Cheryl A. Chase purchased 1,000 units from
the Company in a private transaction, each such unit consisting of one
Series B 12% Cumulative Preference Share, par value $.01, and one warrant
to purchase 110 shares of Common Stock. All such warrants (the "CAC
Warrants") are currently exercisable. The aggregate consideration for such
purchase was $1,000,000.00, including commissions and costs payable by the
Company. The funds to purchase such units were personal funds of Cheryl A.
Chase.
Item 4. PURPOSE OF TRANSACTION.
The reporting person is holding all of the shares of Common Stock
it beneficially owns for investment purposes. Based on the reporting
person's ongoing evaluation of the business, prospects and financial
condition of the Company, the market for and price of the Common Stock,
other opportunities available to the reporting person, offers for its
shares of Common Stock, general economic conditions and other future
developments, the reporting person reserves the right to change its plans
and intentions at any time, as it deems appropriate. In particular, the
reporting person may decide to sell or seek the sale of all or part of its
present or future beneficial holdings of Common Stock, or may decide to
acquire additional Common Stock, or securities convertible into or
exchangeable for Common Stock, either in the open market, in private
transactions, or by any other permissible means. The reporting person may
also decide to enter into derivative transactions relating to the Common
Stock. Any such transactions may be effected at any time and from time to
time. CPEI, Arnold L. Chase and Cheryl A. Chase are each holding the
shares of Common Stock beneficially owned by them for investment purposes.
Such persons reserve the same rights and may make the same evaluation as
the reporting person.
Other than the above, as of the date hereof, the reporting
person, CPEI, Arnold L. Chase and Cheryl A. Chase do not have any plans or
proposals that relate to or would result in any of the following:
(a) The acquisition by any person of additional securities of the
Company, or the disposition of securities of the Company;
(b) Any extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its
subsidiaries;
(c) A sale or transfer of a material amount of assets of the Company
or any of its subsidiaries;
(d) Any change in the present board of directors or management of the
Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board;
(e) Any material change in the present capitalization or dividend
policy of the Company;
(f) Any other material change in the Company's business or corporate
structure;
(g) Changes in the Company's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Company by any person;
(h) Causing a class of securities of the Company 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 Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); or
(j) Any action similar to any of those enumerated above.
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As of the date hereof, the reporting person beneficially owns
9,703,000 shares of Common Stock, representing approximately 29.1% of the
33,310,000 shares of Common Stock reported to be outstanding as of
September 30, 1998 (as reported in the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1998). As of the date hereof,
CPEI may be deemed to be a beneficial owner of the 9,703,000 shares
beneficially owned by the reporting person. As of the date hereof, Arnold
L. Chase beneficially owns 9,926,000 shares of Common Stock (including the
9,703,000 shares beneficially owned by the reporting person and 220,000
shares issuable upon the exercise of the ALC Warrants), representing
approximately 29.6% of the 33, 310,000 shares of Common Stock reported to
be outstanding as of September 30, 1998. As of the date hereof, Cheryl A.
Chase beneficially owns 10,546,000 shares of Common Stock (including the
9,703,000 shares beneficially owned by the reporting person and 110,000
shares issuable upon exercise of the CAC Warrants), representing
approximately 31.6% of the 33,310,000 shares of Common Stock reported to be
outstanding as of September 30, 1998.
This schedule does not relate to, and, in accordance with Rule
13d-4 under the Exchange Act, the reporting person expressly declares that
the filing of this statement shall not be construed as an admission that it
is, for purposes of Section 13(d) or 13(g) of the Exchange Act, the
beneficial owner of, any of (i) 110,000 shares of Common Stock, or
approximately 0.3% of the shares of Common Stock reported to be
outstanding, beneficially owned by Cheryl A. Chase, (ii) 733,000 shares of
Common Stock, or approximately 2.2% of the shares of Common Stock reported
to be outstanding, owned by the Cheryl A. Chase Marital Trust (the
"CACMT"), a trust of which Cheryl A. Chase and Kenneth N. Musen are the
trustees and Cheryl A. Chase and her children are the beneficiaries, (iii)
223,000 shares of Common Stock, or approximately 0.7% of the shares of
Common Stock reported to be outstanding, beneficially owned by Arnold L.
Chase, (iv) 615,000 shares of Common Stock, or approximately 1.8% of the
shares of Common Stock reported to be outstanding, beneficially owned by
Rhoda L. Chase, the mother of Arnold L. Chase and Cheryl A. Chase, or (v)
110,000 shares of Common Stock, or approximately 0.3% of the shares of
Common Stock reported to be outstanding, beneficially owned by The Darland
Trust, a trust of which Rothschild Trust Cayman Limited is trustee and
Cheryl A. Chase and her children are the beneficiaries.
(b) The reporting person is a limited partnership whose sole general
partner is CPEI. As general partner, CPEI manages the reporting person,
which includes directing the voting and disposition of the shares of Common
Stock owned by the reporting person. Arnold L. Chase and Cheryl A. Chase
each own 50% of the outstanding capital stock of CPEI and are its sole
directors and executive officers. As a result of their control over the
management of the reporting person, CPEI, Arnold L. Chase and Cheryl A.
Chase may be deemed to share the power to direct the vote and disposition
of the 9,703,000 shares of Common Stock owned by the reporting person.
The reporting person has a special class of partnership interests
(the "Preferred PIHLP Interests") which entitle the holders to a pro rata
right and preference to 1,050,000 of the shares of Common Stock held by the
reporting person and any proceeds related thereto. These interests are
held by the reporting person's limited partner, CILP, and its general
partner, CPEI. CILP has a special class of partnership interests (the
"Preferred CILP Interests") which entitle the holders to a pro rata right
and preference to all of the Preferred PIHLP Interests held by CILP, and
any assets and/or proceeds derived therefrom. These interests are held by
CPEI, as general partner, and Arnold L. Chase, the Sandra Chase Grantor
Trust, the Arnold Chase Spray Trust, the Cheryl Chase Spray Trust and Chase
Cable LLC, as limited partners.
As described in Item 6, below, the Preferred PIHLP Interests may
be redeemed for the 1,050,000 shares of Common Stock to which they relate,
and the Preferred CILP Interests may be redeemed for the Preferred PIHLP
Interests to which they relate. Alternatively, a holder of Preferred CILP
Interests may direct CPEI, as general partner of both the reporting person
and CILP, to redeem the related Preferred PIHLP Interests for shares of
Common Stock and then redeem the holder's Preferred CILP Interests for such
shares of Common Stock. In addition, the holders of the preferred
partnership interests may direct CPEI to effect the sale of the shares of
Common Stock to which such interests relate while such shares are held by
the reporting person or CILP. As a result of such rights, the holders of
the Preferred PIHLP Interests and Preferred CILP Interests (and the
trustees, managers and members of such holders) may be considered
beneficial owners of 1,050,000 of the shares of Common Stock held by the
reporting person.
CILP is a Delaware limited partnership whose purpose is to hold
investments for the benefit of its partners. The address of CILP is c/o
Chase Enterprises, One Commercial Plaza, Hartford, Connecticut 06103-3585.
The Sandra Chase Grantor Trust is a trust of which Kenneth N.
Musen is the trustee and Sandra M. Chase, the wife of Arnold L. Chase, is
the beneficiary. The Arnold Chase Spray Trust is a trust of which Kenneth
N. Musen is the trustee and Arnold L. Chase and his children are the
beneficiaries. The Cheryl Chase Spray Trust is trust of which Kenneth N.
Musen is the trustee and Cheryl A. Chase and her children are the
beneficiaries. Each such trust was formed under the laws of the state of
Connecticut. The address of each of these trusts is c/o Kenneth N. Musen,
Bergman, Horowitz & Reynolds, P.C., 157 Church Street, P.O. Box 426, New
Haven, Connecticut 06502.
Chase Cable LLC is a Delaware limited liability company of which
Arnold L. Chase and Cheryl A. Chase are the members and Kenneth N. Musen is
the manager. Its principal business is holding investments. Its address
is c/o Kenneth N. Musen, Bergman, Horowitz & Reynolds, P.C., 157 Church
Street, P.O. Box 426, New Haven, Connecticut 06502.
Kenneth N. Musen is an attorney. His principal business address
is Bergman, Horowitz & Reynolds, P.C., 157 Church Street, P.O. Box 426, New
Haven, Connecticut 06502. Kenneth N. Musen is a citizen of the United
States of America.
During the past five years, none of CILP, CPEI, Cheryl A. Chase,
Arnold L. Chase, the Sandra Chase Grantor Trust, the Arnold Chase Spray
Trust, the Cheryl Chase Spray Trust, Chase Cable LLC or Kenneth N. Musen
has been convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors). During the past five years, none of such persons
or entities has been a party to a civil proceeding of a judicial or an
administrative body of competent jurisdiction and as a result of such
proceeding is or was 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.
Upon the exercise of the ALC Warrants, Arnold L. Chase will have
the sole power to vote, direct the vote of, dispose of and direct the
disposition of 220,000 shares of Common Stock received by him as a result
of such exercise. In addition, Arnold L. Chase has the sole power to vote,
direct the vote of, dispose of and direct the disposition of 3,000 shares
of Common Stock held by him as custodian for his son.
Upon the exercise of the CAC Warrants, Cheryl A. Chase will have
the sole power to vote, direct the vote of, dispose of and direct the
disposition of the 110,000 shares of Common Stock received by her as a
result of such exercise. In addition, Cheryl A. Chase serves as joint
trustee with Kenneth N. Musen of the CACMT, a trust which holds 733,000 of
the shares of Common Stock. As trustees, the reporting person and Kenneth
N. Musen have the joint power to direct the vote and the disposition of
such shares on behalf of the CACMT.
(c) All transactions in the Common Stock effected by or on behalf of
the reporting person, CPEI, Arnold L. Chase and Cheryl A. Chase in the past
60 days are described in Item 3 hereof.
(d) As a result of the relationships and rights described in Item
5(b), CPEI, Arnold L. Chase and Cheryl A. Chase may be deemed to share the
power to direct the receipt of dividends from, and the proceeds from the
sale of, the 9,703,000 shares of Common Stock owned by the reporting person
and the holders of the Preferred PIHLP Interests and Preferred CILP
Interests (and the trustees, managers and members of such holders) may be
deemed to share the power to direct the receipt of dividends from, and the
proceeds from the sale of, 1,050,000 of such shares.
Upon the exercise of the ALC Warrants, Arnold L. Chase will have
the sole right to receive or the power to direct the receipt of dividends
from, and the proceeds from the sale of, the 220,000 shares of Common Stock
received by him as a result of such exercise. Dividends on, and the
proceeds from the sale of, the 3,000 shares of Common Stock held by Arnold
L. Chase as custodian for his son will be received by Arnold L. Chase as
such custodian.
Upon the exercise of the CAC Warrants, Cheryl A. Chase will have
the sole right to receive or the power to direct the receipt of dividends
from, and the proceeds from the sale of, the 110,000 shares of Common Stock
received by her as a result of such exercise. As a result of the
relationships and rights described in Item 5(b), the reporting person,
Kenneth N. Musen and the CACMT may be deemed to share the right to receive
or the power to direct the receipt of dividends from, and the proceeds from
the sale of, 733,000 shares of Common Stock beneficially owned by the
CACMT.
(e) Not applicable.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Pursuant to a Registration Rights Agreement (the "Registration
Rights Agreement"), dated June 22, 1997, as amended by an amendment thereto
(the "Amendment to Registration Rights Agreement"), dated as of June 22,
1997, each among the Company, the reporting person, ECO Holdings III
Limited Partnership ("ECO"), Roger M. Freedman, Steel LLC, the AESOP Fund,
L.P. and the CACMT, the Company has granted the other parties to the
Registration Rights Agreement certain registration rights with respect to
the Common Stock held by them. In particular, the reporting person and ECO
have the right, beginning after March 29, 1999, to demand that the Company
register their shares of Common Stock under the Securities Act of 1933, as
amended (the "Securities Act"). Each of the reporting person and ECO can
make three such demands. The reporting person and ECO also have the right,
beginning after March 29, 2001, to demand that the Company register their
shares of Common Stock in a shelf registration pursuant to Rule 415 under
the Securities Act. Each of the reporting person and ECO can make one such
demand. In addition, all of the parties to the Registration Rights
Agreement have the right to have their shares of Common Stock included in
certain registrations of the Company's securities which are effected by the
Company. All such registration rights expire on March 29, 2004, and are
subject to certain limitations and conditions contained in the Registration
Rights Agreement.
Pursuant to a letter agreement (the "PIHLP Letter Agreement"),
dated March 24, 1998, between CPEI, as general partner of the reporting
person, and all of the limited partners of the reporting person, CPEI, as
general partner of the reporting person, has agreed that, upon the request
of CILP, as holder of the limited Preferred PIHLP Interests, CPEI will (i)
redeem the Preferred PIHLP Interests for the shares of Common Stock to
which they relate or (ii) effect the sale of such shares of Common Stock
while such shares are held by the reporting person. The other limited
partners of the reporting person have agreed in such letter agreement not
to interfere with such transactions or with certain redemptions,
withdrawals, liquidations or transfers of Preferred PIHLP Interests. At
the time the PIHLP Letter Agreement was entered into, there were Preferred
PIHLP Interests relating to 1,650,000 shares of Common Stock. As of the
date hereof, the outstanding Preferred PIHLP Interests relate to 1,050,000
shares of Common Stock.
Pursuant to a letter agreement (the "CILP Letter Agreement"),
dated March 24, 1998, between CPEI, as general partner of the reporting
person and CILP, and all of the limited partners of CILP, CPEI, as general
partner of the reporting person and CILP, has agreed that, upon the request
of a holder of Preferred CILP Interests, CPEI will (i) redeem the Preferred
CILP Interests for the Preferred PIHLP Interests to which they relate, (ii)
redeem such Preferred PIHLP Interests for shares of Common Stock and then
redeem the Preferred CILP Interests for such shares of Common Stock, or
(iii) effect the sale of the shares of Common Stock to which the holder's
Preferred CILP Interests relate while such shares are held by either the
reporting person or CILP. The other limited partners of CILP have agreed
in such letter not to interfere with such transactions or with certain
redemptions, withdrawals, liquidations or transfers of Preferred
CILP Interests. At the time the CILP Letter Agreement was entered into,
there were Preferred CILP Interests relating to 1,633,000 shares of Common
Stock. As of the date hereof, the outstanding Preferred CILP Interests
relate to 1,033,000 shares of Common Stock.
On January 22, 1999, Arnold L. Chase, Cheryl A. Chase and Rhoda
L. Chase entered into a Purchase Agreement with the Company (the "Purchase
Agreement") relating to their purchase from the Company of an aggregate of
5,000 Series B 12% Cumulative Preference Shares (the "Cumulative Preference
Shares") and 5,000 warrants (the "Preference Warrants"), including the ALC
Warrants and the CAC Warrants, each entitling the holder to purchase 110
shares of Common Stock. Cheryl A. Chase assigned her right to purchase a
certain of such shares and warrants to the Darland Trust. The transactions
contemplated by the Purchase Agreement were consummated on January 27,
1999. In addition to provisions relating to such transactions, the
Purchase Agreement contains agreements by the purchasers to comply with
certain restrictions on the transfer of such securities, and agreements by
the Company to provide information in connection with resales by the
purchasers. The Purchase Agreement also contains customary indemnification
and contribution provisions.
The Preference Warrants are issued under a Preference Warrant
Agreement, dated January 27, 1999, between the Company and Bankers Trust
Company (the "Preference Warrant Agreement"), and are represented by
Preference Warrant Certificates (the "Preference Warrant Certificates").
Each Preference Warrant entitles the holder to purchase from the Company
110 shares of Common Stock at an exercise price of $10.00 per share.
The number of shares for which each Preference Warrant is exercisable
and the exercise price are subject to adjustment, as provided in the
Preference Warrant Certificates and the Preference Warrant Agreement.
The Preference Warrants expire on February 1, 2010. While the Preference
Warrants are currently exercisable, holders of the Preference Warrants may
not sell or otherwise dispose of the shares of Common Stock issuable upon
their exercise until January 27, 2000. After such date, such shares may be
sold if the Preference Warrant Stock Shelf Registration Statement (as
defined below) is effective or if such sale is exempt from the registration
requirements of the Securities Act.
The Preference Warrant Agreement provides that the initial
purchasers of the Preference Warrants (the "Initial Purchasers") will have
the right of first refusal to purchase, at the same per share price and on
the same terms and conditions, a pro rata share of New Securities (as
defined below) which the Company may, from time to time, sell or issue
after January 27, 1999. In general, an Initial Purchaser's "pro rata
share" is the ratio of the number of shares of Common Stock that such
Initial Purchaser has the right to acquire pursuant to the Preference
Warrants held by it immediately prior to the issuance of New Securities, to
the total number of shares of Common Stock outstanding immediately prior to
the issuance of New Securities, assuming full conversion of all outstanding
securities convertible into or exchangeable for Common Stock and exercise
of all outstanding rights, options and warrants for Common Stock. For the
purpose of the Initial Purchasers' pre-emptive rights, the term "New
Securities" means any Common Stock, whether now authorized or not, and any
rights, options or warrants to purchase any such Common Stock, and
securities of any type whatsoever that are, or may become, convertible into
Common Stock; provided that the term "New Securities" does not include: (i)
securities issued in connection with an acquisition by the Company of
another business entity or business segment of such an entity, whether by
merger, purchase of substantially all the assets, or by other
reorganization; (ii) certain securities issued to employees, consultants,
officers or directors of the Company pursuant to a stock option, stock
purchase, stock bonus or similar plan, provided that such securities have
an exercise price of no less than the fair market value of the Common Stock
on the date of the grant; (iii) securities issued in connection with any
stock split, stock dividend, recapitalization or other reorganization of
the Company; (iv) securities issued upon the exchange, exercise or
conversion of any security that was the subject of a right of first refusal
pursuant to the Preference Warrant Agreement; (v) treasury shares; (vi) any
right, option or warrant to acquire any security convertible solely into
the securities excluded from the definition of New Securities pursuant to
subsections (i) through (v) above; (vii) any Common Stock, or any rights,
options or warrants or shares convertible into or exchangeable for Common
Stock, which the Company was, on or before January 27, 1999, required to
issue; (viii) Common Stock or any rights, options or warrants or shares
convertible into or exchangeable for Common Stock which the Company shall
issue on January 27, 1999 in connection with its offering of certain senior
discount notes due 2009; or (ix) any Common Stock or any rights, options or
warrants, or shares convertible or exchangeable into Common Stock, issued
or sold to any Initial Purchaser by the operation of any rights described
in the Preference Warrant Agreement or pursuant to any other antidilution
arrangement with any other person. Upon the disposition by any Initial
Purchaser of all of its Preference Warrants, such Initial Purchaser shall
have no further pre-emptive rights under the Preference Warrant Agreement.
Pursuant to a Preference Registration Rights Agreement (the
"Preference Registration Rights Agreement"), dated as of January 27, 1999,
between the Company and Morgan Grenfell Private Equity Limited ("MGPE"),
Arnold L. Chase, Cheryl A. Chase, Rhoda L. Chase and The Darland Trust, the
Company has agreed that the it will use its best efforts to have declared
effective, by July 7, 1999, a shelf registration statement (the "Shelf
Registration Statement") with respect to resales of the Cumulative
Preference Shares. The Company will use reasonable efforts to keep such
registration statement effective until the expiration of the time period
referred to in Rule 144(k) under the Securities Act with respect to all
holders of Cumulative Preference Shares, provided, that the Company has the
right, under certain circumstances, to periodically suspend the
availability of such registration statement, as provided in the Preference
Registration Rights Agreement. If such shelf registration statement is not
effective within the time period set forth above or is unavailable for
periods in excess of those permitted under the Preference Registration
Rights Agreement, dividends will accrue on the Cumulative Preference Shares
at an annual rate of 13% of the accreted liquidation preference per share,
in lieu of the regular annual dividend rate of 12%, until such
effectiveness or availability.
Pursuant to a Preference Warrant Registration Rights Agreement
(the "Preference Warrant Registration Rights Agreement"), dated as of
January 27, 1999, between the Company and MGPE, Arnold L. Chase, Cheryl A.
Chase, Rhoda L. Chase and The Darland Trust, the Company has agreed to use
its best efforts to cause to be declared effective under the Securities
Act, no later than July 7, 1999, a shelf registration statement (the
"Preference Warrant Shelf Registration Statement") to provide for the
resale of the Preference Warrants. In addition, the Company has agreed to
use its best efforts to cause to be declared effective under the Securities
Act, no later than January 27, 2000, a shelf registration statement (the
"Preference Warrant Stock Shelf Registration Statement") to provide for the
issuance of the shares of Common Stock issuable upon the exercise of the
Preference Warrants. The Company is required to use reasonable efforts to
maintain the effectiveness of the Preference Warrant Shelf Registration
Statement and the Preference Warrant Stock Shelf Registration Statement
until such time as all Preference Warrants have expired or have been
exercised or redeemed, provided, that the Company has the right, under
certain circumstances, to periodically suspend the availability of such
registration statements, as provided in the Preference Warrant Registration
Rights Agreement.
In the event that the (i) the Preference Warrant Shelf
Registration Statement or the Preference Warrant Stock Shelf Registration
Statement has not been declared effective by the Commission on or prior to
the date specified for such effectiveness or (ii) following the date such
Preference Warrant Shelf Registration Statement or Preference Warrant Stock
Shelf Registration Statement is declared effective by the Commission, it
shall cease to be effective without being restored to effectiveness by
amendment or otherwise within the time period specified in the Preference
Warrant Registration Agreement (each such event referred to in clauses (i)
and (ii), a "Preference Warrant Shelf Registration Default"), the Company
shall pay as liquidated damages ("Liquidated Damages") to each holder of
Preference Warrants or Preference Warrant Shares an amount (the "Damage
Amount") equal to $.0025 per week per Preference Warrant for each week that
the Preference Warrant Shelf Registration Default continues. The amount of
Liquidated Damages will increase by an additional $.0025 per week per
Preference Warrant with respect to each subsequent 90-day period until such
Preference Warrant Shelf Registration Default has been cured, up to a
maximum amount of Liquidated Damages of $.0125 per week per Preference
Warrant.
The Preference Registration Rights Agreement and the Preference
Warrant Registration Rights Agreement include customary covenants on the
part of the Company and provide that the Company will indemnify the holders
of Cumulative Preference Shares, Preference Warrants and Preference Warrant
Shares included in any registration statement and any underwriter with
respect thereto against certain liabilities under the Securities Act and
the Exchange Act.
The foregoing description of the Registration Rights Agreement,
Amendment to Registration Rights Agreement, PIHLP Letter Agreement, CILP
Letter Agreement, Purchase Agreement, Preference Warrants, Preference
Warrant Agreement, Preference Warrant Certificates, Preference Warrant
Registration Rights Agreement and Preference Registration Rights Agreement
is subject to, and is qualified in its entirety by reference to, the
Registration Rights Agreement, Amendment to Registration Rights Agreement,
PIHLP Letter Agreement, CILP Letter Agreement, Purchase Agreement,
Preference Warrant Agreement, Form of Preference Warrant Certificate,
Preference Warrant Registration Rights Agreement and Preference Registration
Rights Agreement, each of which is filed as an exhibit to this Statement on
Schedule 13D.
Except as described in this Statement on Schedule 13D, the
reporting person knows of no contracts, arrangements, understandings or
relationships (legal or otherwise) between any of the persons named in Item
2 or between such persons and any other person with respect to any
securities of the Company, including, but not limited to, transfer or
voting of any of the securities, finder's fees, joint ventures, loan or
option arrangements, puts or calls, guarantees of profits, division of
profits or loss, or the giving or withholding of proxies.
The reporting person has not agreed to act together with any
other person or entity for the purpose of acquiring, holding, voting or
disposing of shares of Common Stock and the reporting person disclaims
membership in any "group" with respect to the Common Stock for purposes of
Section 13(d)(3) of the Exchange Act or Rule 13d-5(b) (1) adopted
thereunder.
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
(1) Registration Rights Agreement
(2) Amendment to Registration Rights Agreement
(3) PIHLP Letter Agreement
(4) CILP Letter Agreement
(5) Purchase Agreement
(6) Preference Warrant Agreement*
(7) Form of Preference Warrant Certificate
(8) Preference Warrant Registration Rights Agreement
(9) Preference Registration Rights Agreement
_____________________
* To be filed by amendment.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: February 11, 1999 POLISH INVESTMENTS HOLDING L.P.
By: Chase Polish Enterprises, Inc.
By: /s/ Cheryl A. Chase
------------------------------
Name: Cheryl A. Chase
Title: Exec. Vice President
EXHIBIT 1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement"), dated as of the
22nd day of June 1997 (the "Effective Date"), among @Entertainment, Inc., a
Delaware corporation (the "Company"), Polish Investments Holding L.P., a
Delaware limited partnership ("PIHLP"), ECO Holdings III Limited
Partnership, a Delaware limited partnership ("ECO"), Roger M. Freedman, an
individual resident of the State of Connecticut ("RMF"), Steele LLC., a
Connecticut limited liability company ("Steele"), The AESOP Fund, L.P., a
Delaware limited partnership ("AESOP"), and The Cheryl Anne Chase Marital
Trust, a Connecticut Trust ("CACMT"). PIHLP, ECO, RMF, Steele, AESOP and
CACMT shall hereinafter be referred to as the "Shareholders."
W I T N E S S E T H:
WHEREAS, the Company and the Shareholders are on this date entering
into a Contribution Agreement to which this Agreement is an Exhibit,
whereby the Shareholders will exchange certain of their shares of capital
stock of Poland Communications, Inc. ("PCI") for capital stock of the
Company in a tax-free reorganization pursuant to Section 351 of the
Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the Shareholders constitute all of the shareholders of the
Company and on this date are entering into that certain Shareholders
Agreement (the "Shareholders Agreement"), whereby the parties will agree,
among other things, to the terms upon which the Company will conduct its
activities and upon which the relations between the shareholders of the
Company will be regulated; and
WHEREAS, in order to induce the Shareholders to enter into and perform
the Contribution Agreement and the Shareholders Agreement, the Company has
agreed to provide the Shareholders with certain rights in respect of the
registration of its common stock, par value one cent ($0.01) per share
("Common Stock").
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Shareholders agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the respective meanings set forth below (such meanings to be
equally applicable to both the singular and plural forms of the terms
defined):
"DEMAND SHAREHOLDER" means PIHLP or ECO or, if used in the plural
form, means PIHLP and ECO, and permitted assignees of same under Section
5(g).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FOLLOWING SHAREHOLDER" means RMF, Steele, AESOP or CACMT or, if
used in the plural form, means RMF, Steele, AESOP and CACMT or any two of
them.
"NATIONAL SECURITIES EXCHANGE" means the New York Stock Exchange,
American Stock Exchange, National Association of Securities Dealers
Automated Quotation System, or National Market System of the National
Association of Securities Dealers, as selected by the Company, and
reasonably acceptable to the Demand Shareholder.
"PERSON" shall mean and include any individual, partnership,
joint venture, corporation, trust, unincorporated organization or
association or any other entity or association of any kind and any
authority, federal, state, local or foreign government, any political
subdivision of any thereof and any court, panel, judge, board, bureau,
commission, agency or other entity or body exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to any government.
"REGISTRABLE SHARES" means (i) shares of Common Stock held by any
of the Shareholders on the date hereof or acquired thereafter (including
any shares of Common Stock issuable upon conversion of Series B Preferred),
and (ii) any Common Stock issued in respect of such shares including,
without limitation, upon any stock split, stock dividend, recapitalization
or as a distribution; provided however, that Registrable Shares shall not
include any shares of Common Stock which have been sold pursuant to
registration under the Securities Act.
"REQUESTING SHAREHOLDER" means either of the Demand Shareholders
or any of the Following Shareholders when the same shall have requested the
Company to register some or all of its/their Registerable Shares pursuant
to this Agreement, and permitted assignees of same under Section 5(g).
"REQUESTING SHAREHOLDER REGISTRATION EXPENSES" means with respect
to any Requesting Shareholder, (i) underwriting discounts and commissions
relating to the sale of such Requesting Shareholder's Registrable Shares,
(ii) any transfer taxes attributable to the sale of such Registrable
Shares, and (iii) the fees and disbursements of counsel incurred by such
Requesting Shareholder on its own behalf.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHAREHOLDERS" means PIHLP, ECO, RMF, Steele, AESOP and CACMT,
and permitted assignees of same under Section 5(g).
"COMPANY REGISTRATION EXPENSES" means any and all expenses
incident to the Company's performance of its obligations under Section 2,
other than Requesting Shareholder Registration Expenses. Company
Registration Expenses shall include but not be limited to (i) registration
and filing fees with the SEC and a National Securities Exchange, (ii) fees
and expenses of compliance with state securities or "blue sky laws
(including reasonable fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of Registrable
Shares), (iii) printing expenses, (iv) registrars and transfer agents fees,
(v) the fees and expenses incurred in connection with the listing or
quotation of Registrable Shares on any National Securities Exchange, and
(vi) fees and expenses of counsel for the Company and the independent
certified public accountants for the Company.
2. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION. Each Demand Shareholder shall be
entitled to request that the Company effect a registration under the
Securities Act with respect to some or all of the Registrable Shares
held by it upon the following terms and conditions:
(i) REQUEST FOR REGISTRATION OF REGISTRABLE SHARES. In the
event that the Company shall receive from a Demand Shareholder a
written request that the Company effect a registration under the
Securities Act with respect to all or any part of the Registrable
Shares held by such Demand Shareholder, the Company shall use its
best efforts to effect, at the earliest practicable date, such
registration, qualification and compliance (including, without
limitation, the execution of an undertaking to file post-
effective amendments, the execution and filing of a listing
agreement with a National Securities Exchange, appropriate
qualification under applicable blue sky or other state securities
laws, and appropriate compliance with applicable regulations
issued under the Securities Act) as may be so requested and as
would permit or facilitate the sale and distribution of such
Registrable Shares on such National Securities Exchange as is
specified in such request (or if the Common Stock is then listed
on a National Securities Exchange, such National Securities
Exchange); PROVIDED that the Company shall not be obligated to
take any action to effect any such registration, qualification or
compliance pursuant to this Section 2(a): (A) if the Company has
effected a previous registration for any Demand Shareholder
pursuant to this Section 2(a)(i) during the preceding six-month
period; (B) if such Demand Shareholder has previously effected
three such registrations pursuant to this Section 2(a), which
registrations have been declared or ordered effective by the SEC;
(C) during the period stalling with the date sixty (60) days
prior to the Company's estimated date of filing of, and ending on
the date ninety (90) days immediately following the effective
date of, any registration statement pertaining to a pubic
offering of securities of the Company; or (D) prior to the third
anniversary of this Agreement.
Subject to the foregoing clauses (A) through (D) the Company
shall file a registration statement covering such Registrable
Shares so requested to be registered as soon as practicable after
receipt of the request of the Requesting Shareholder. Provided,
however, that the Company may upon giving notice to the
Requesting Shareholder postpone for a reasonable period, not to
exceed 90 days, the filing or the effectiveness of such
registration statement, if there exists at the time material non-
public information which, in the reasonable opinion of the
Company, if disclosed would have a material adverse effect on its
business. During such period the Company shall continue to use
its best efforts to prepare such registration statement and
update such registration statement with all information necessary
to make such registration statement ready for filing and
effectiveness as soon as practicable after the end of such
period.
ECO shall not be required to convert its Series B Preferred
shares into Common Stock prior to exercising its demand
registration rights hereunder with respect to shares of Common
Stock which would result from such conversion.
At no time shall any Demand Shareholder demand that less
than twenty-five percent (25%) of the number of shares of Common
Stock held by such Demand Shareholder on the date of execution of
this Agreement be registered pursuant to this Section 2(a);
provided, however, that if at any time such Demand Shareholder
holds less than twenty-five percent (25%) of the number of shares
of Common Stock held by such Demand Shareholder on the date of
execution of this Agreement, such Demand Shareholder shall have
the right to demand registration of all its Registrable Shares
pursuant to this Section 2(a).
(ii) UNDERWRITING. The right of the Requesting Shareholder
to registration pursuant to this Section 2(a) shall be
conditioned upon the Requesting Shareholder's participation in
the underwriting arrangements required by this Section 2 and the
inclusion in the underwriting of the Registrable Shares requested
to be registered.
The Company and the Requesting Shareholder shall enter into
an underwriting agreement in customary form with the managing
underwriter selected for such underwriting by the Company from
the following list: (A) Goldman, Sachs & Co.; (B) Morgan Stanley
& Co. Incorporated; (C) Merrill Lynch & Co., Inc.; (D) CS First
Boston Inc.; and (E) Donaldson, Lufkin and Jenrette Inc. the
Company may select a managing underwriter for such underwriting
not on the aforementioned list, so long as such managing
underwriter is acceptable to the Requesting Shareholder.
Notwithstanding any other provision of this Section 2(a), if the
managing underwriter determines, in good faith, that marketing
factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the number of
Registrable Shares to be included in the registration and
underwriting to the extent such managing underwriter deems
necessary. The Company shall so advise the Requesting
Shareholder, and the number of Registrable Shares that may be
included in the registration and underwriting shall be limited
accordingly.
(iii) OTHER HOLDERS OF COMMON STOCK. Other holders of
Common Stock (including, without limitation, the other Demand
Shareholder and the Following Shareholders) to whom the Company
has granted registration rights may include their respective
securities for their own accounts in such registration if the
managing underwriter so agrees. If the managing underwriter
determines, in good faith, that marketing factors require a
limitation of the number of shares to be underwritten, the
managing underwriter may limit the number of Registrable Shares
to be included by all holders of Common Stock requesting
registration hereunder (including the Demand Shareholder
exercising its demand rights under this Section 2(a)) based on
the ratio of the number of shares requested to be registered by
each such holder to the total number of shares requested to be
registered by all such holders.
(iv) EXPENSES OF REQUESTED REGISTRATION. The Company shall
pay all Company Registration Expenses incurred in connection with
each registration, qualification or compliance pursuant to
Section 2(a), and the Requesting Shareholder will pay its
Requesting Shareholder Registration Expenses.
(b) PIGGY-BACK REGISTRATION.
(i) REGISTRATION INITIATED BY THE COMPANY. If the Company
at any time proposes to register an offering of its securities
under the Securities Act other than registrations in connection
with employee stock ownership plans, offerings of debt securities
and shelf registrations made pursuant to Section 2(c), either for
its own account or for the account of a security holder or
holders, and the registration form to be used may be used for the
registration of Registrable Shares, the Company will:
(A) give written notice thereof to the Demand
Shareholders and the Following Shareholders (which shall
include a list of the jurisdictions in which the Company
intends to attempt to qualify such securities under the
applicable blue sky or other state securities laws) within
10 days of its receipt of a request from a security holder
or holders to register securities or from its decision to
effect a registration of securities for its own account; and
(B) use its best efforts to include in such
registration (and any related qualification under blue sky
laws or other compliance), and in any underwriting involved
therein, all the Registrable Shares specified in a written
request by any Demand Shareholder or Following Shareholder
made within 30 days after receipt of such written notice
from the Company, except as set forth in Sections 2(b)(ii)
and 2(b)(iii) below; PROVIDED, that if at any time after
giving written notice to the Demand Shareholders and the
Following Shareholders of its intention to register the
Company securities under the Securities Act (x) the Company
in good faith shall determine not to register such
securities, the Company may, at its election, give written
notice of such determination to the Demand Shareholders and
the Following Shareholders and, thereupon, shall be relieved
of its obligation to register such Registrable Shares
pursuant to this Section 2(a) in connection with such
registration, without prejudice, however, to any rights of
either Demand Shareholder to request that such registration
be effected as a registration under Section 2(a), or (y) the
Company shall determine to delay the registration of such
securities, the Company shall be permitted to delay the
registration of such Registrable Shares for the same period
as the delay in registering the securities to be registered
by the Company for its own account or for others.
(ii) AMOUNT TO BE INCLUDED. In the event that Registrable
Shares are requested to be included in any registration initiated
pursuant to Section 2(b)(i) that contemplates an underwritten
public offering, and if, in the good faith judgment of the
managing underwriting of such public offering, the inclusion of
all of the Registrable Shares covered by such request for
registration, together with the number or amount of securities
that were intended to be offered by the Company or other security
holders who hold registration rights, would interfere with the
successful marketing of such securities, then, such managing
underwriter may limit the number or amount of securities to be
included in the registration such that (A) the Company shall
include in such registration the securities it intended to offer
and (B) with respect to any additional securities which may be
included in such registration (after inclusion of the securities
referred to in clause (A)), all holders of securities (including
the holders of Registrable Shares) who hold registration rights
and who have requested registration (collectively, "Security
Holders") shall participate in the underwritten public offering
PRO RATA based upon the ratio of the number of shares requested
to be registered by each such Security Holder to the total number
of shares requested to be registered by all such Security
Holders.
(iii) UNDERWRITING. If the registration of which the
Company gives notice is for a registered public offering
involving an underwriting, the Company shall so advise the Demand
Shareholders and the Following Shareholders as a part of the
written notice given pursuant to Section 2(b)(i) (A). In such
event, the right of each Requesting Shareholder to registration
pursuant to this Section 2(b) shall be conditioned upon its
participation in such underwriting and the inclusion of the
Registrable Shares in the underwriting to the extent provided
herein. The Requesting Shareholder shall (together with the
Company and the other holders (if any) distributing their
securities through such underwriting) enter into an underwriting
agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company from the following
list: (A) Goldman, Sachs & Co.; (B) Morgan Stanley & Co.
Incorporated; (C) Merrill Lynch & Co.; (D) CS First Boston; and
(E) Donaldson, Lufkin & Jenrette Inc. The Company may select a
managing underwriter for such underwriting not on the
aforementioned list, so long as such managing underwriter is
acceptable to the Demand Shareholders participating in such
offering. If the Requesting Shareholder disapproves of the terms
of any such underwriting, it may elect to withdraw therefrom by
written notice to the Company and the underwriter. Any
Registrable Shares excluded or withdrawn from such underwriting
shall be withdrawn from such registration.
(iv) EXPENSES OF REGISTRATION. The Company shall bear all
Company Registration Expenses incurred in connection with each
registration, qualification or compliance pursuant to Section
2(b), and each Requesting Shareholder shall pay its own
Requesting Shareholder Registration Expenses.
(c) SHELF REGISTRATION.
(i) REGISTRATION FOLLOWING MARCH 29, 2001. In the event
that the Company shall receive from a Demand Shareholder a
written request that the Company effect a registration under the
Securities Act with respect to all of the Registrable Shares
pursuant to this Section 2(c). The Company will use its best
efforts to effect, at the earliest practicable date, a shelf
registration statement on an appropriate form pursuant to Rule
415 (or any successor provision then in force) under the
Securities Act with respect to such Registrable Shares; PROVIDED,
HOWEVER, that the Company shall not be obligated to take any such
action to effect any such registration pursuant to this SECTION
2(C): (A) if the Company has effected a previous registration
for such Demand Shareholder pursuant to this Section 2(c); (B) if
registration pursuant to Rule 415 (or any successor provision
then in force) is not available for such offering by the Demand
Shareholder; or (C) prior to March 29, 2001. The Company shall
use its best efforts to keep such registration statement
continuously effective until all of the Registrable Shares
covered by such registration are sold, and shall seek such
qualification and compliance (including, without limitation, the
execution of an undertaking to file post-effective amendments,
appropriate qualification under blue sky or other state
securities laws and appropriate compliance with applicable
regulations issued under the Securities Act) as may be requested
by the Requesting Shareholder.
(ii) EXPENSES OF SHELF REGISTRATION. The Company shall bear
all Company Registration Expenses incurred in connection with
each registration, qualification or compliance pursuant to
Section 2(c), and the Requesting Shareholder will pay its
Requesting Shareholder Registration Expenses.
(d) REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this
Section 2 pursuant to which Registrable Shares are included therein,
the Company will keep each Requesting Shareholder advised in writing
as to the initiation of such registration, qualification and
compliance and as to the completion thereof, at its expense, the
Company shall:
(i) prepare and file with the SEC any amendments (including
post-effective amendments) and supplements as may be necessary to
keep such registration, qualification or compliance current and
effective and to comply with the provisions of the Securities Act
and the rules and regulations promulgated thereunder, and the
rules and regulations of any applicable securities exchange, with
respect to the distribution of the Registrable Shares covered by
such registration, qualification and compliance for a period of
(x) in the case of a registration, qualification and compliance
pursuant to Sections 2(a) or 2(b) hereof at least 180 days or
until the Requesting Shareholder has completed the distribution
described in the registration statement relating thereto,
whichever first occurs or (y) in the case of a registration,
qualification and compliance pursuant to Section 2(c) until all
of the Registrable Shares have been sold;
(ii) immediately notify each Requesting Shareholder and the
underwriter, if any, and confirm such notification in writing (w)
when such registration statement becomes effective, (x) when the
filing of any post-effective amendment to such registration
statement or supplement to the prospectus is required, when the
same is filed and, in the case of a post-effective amendment,
when the same becomes effective, (y) of any request by the SEC
for any amendment of or supplement to such registration statement
or the prospectus or for additional information, and (z) of the
entry of any stop order suspending the effectiveness of such
registration statement or of the initiation of any proceedings
for that purpose, and, if such stop order shall be entered, the
Company shall use its best efforts promptly to obtain the lifting
thereof;
(iii) furnish to each Requesting Shareholder and any
underwriter acting on behalf of such Requesting Shareholder (x)
at a reasonable time prior to the filing thereof with the SEC a
copy of the registration statement in the form in which the
Company proposes to file the same, and not later than one day
prior to the filing thereof, a copy of any amendment (including
any post-effective amendment) to such registration statement, and
promptly following the effectiveness thereof, a conformed copy of
the registration statement as declared effective by the SEC and
of each post-effective amendment thereto, including financial
statements and all exhibits and reports incorporated therein by
reference, and (y) such number of copies of the preliminary, any
amended preliminary, and final prospectus and of each post-
effective amendment or supplement thereto, as may reasonably be
required in order to facilitate the disposition of the
Registrable Shares covered by such registration statement in
conformity with the requirements of the Securities Act and the
rules and regulations promulgated thereunder, but only while the
Company is required under the provisions hereof to cause the
registration statement to remain effective; and
(iv) list such Registrable Shares on each securities
exchange (if any) or qualify the Registrable Shares for trading
on any over the counter market (if any) on which the Common Stock
is then listed or traded, so long as such Registrable Shares are
eligible for such listing or qualification.
In connection with the registration of the Registrable Shares pursuant
to this Section 2, each Requesting Shareholder, for the purpose of Section
2(b) only hereby agrees as follows:
(v) the Requesting Shareholder shall cooperate with the
Company in connection with the preparation of the registration
statement, and for so long as the Company is obligated to file
and keep effective the registration statement, shall provide to
the Company, in writing, for use in the registration statement,
all such information regarding the Requesting Shareholder and its
plan of distribution of the Registrable Shares as may be
necessary to enable the Company to prepare the registration
statement and prospectus covering the Registrable Shares, to
maintain the currency and effectiveness thereof and otherwise to
comply with all applicable requirements of law in connection
therewith;
(vi) during such time as the Requesting Shareholder may be
engaged in a distribution of Registrable Shares, the Requesting
Shareholder shall comply with Rules l0b-2, l0b-6 and l0b-7
promulgated under the Exchange Act, to the extent applicable, and
pursuant thereto it shall, among other things: (w) not engage in
any stabilization activity in connection with the securities in
contravention of such Rules; (x) distribute the Registrable
Shares solely in the manner described in the registration
statement; (y) cause to be furnished to each broker through whom
the Registrable Shares may be offered, if any, or to the offeree
if an offer is not made through a broker, such copies of the
prospectus and any amendment or supplement thereto and documents
incorporated by reference therein as may be required by law; and
not bid for or purchase any securities of the Company or attempt
to induce any person to purchase any securities of the Company
other than as permitted under the Exchange Act;
(vii) upon receipt of a notice pursuant to Section
2(d)(ii)(x), (y) or (z), discontinue any distribution of
Registrable Shares if such discontinuance is required under the
Securities Act; and
(viii) at least five (5) days prior to any distribution of
the Registrable Shares other than in an underwritten offering,
the Requesting Shareholder will advise the Company in writing of
the dates on which the distribution is intended to commence and
terminate, the number of the Registrable Shares to be sold and
the terms and the manner of sale; such person also shall inform
the Company and any broker/dealers through whom sales of the
Registrable Shares may be made when each distribution of such
shares is completed.
(e) INDEMNIFICATION.
(i) If Registrable Shares held by a Demand Shareholder or a
Following Shareholder are included in the securities as to which
any registration, qualification or compliance is being effected,
the Company will indemnify each such Demand Shareholder and each
such Following Shareholder, each of its general and limited
partners, each of the officers and directors of it or any of its
general or limited partners and any person which controls, within
the meaning of Section 15 of the Securities Act, any of the
foregoing, each underwriter, if any, and each person who controls
any underwriter within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and
liabilities (and actions in respect thereof) ("Loss") arising out
of or based on any untrue statement (or alleged untrue statement)
of a material fact contained in any prospectus, offering circular
or other document (including any related registration statement,
notification or the like) incident to any such registration,
qualification or compliance, or based on 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 any violation by the Company of any rule or
regulation promulgated under the Securities Act, or of any other
federal, state or common law applicable to the Company and
relating to any action or inaction required of the Company in
connection with any such registration, qualification or
compliance, and will reimburse each such Demand Shareholder and
each such Following Shareholder, general or limited partners, or
such officers or directors of it or any of its general or limited
partners, any person which controls any of the foregoing and each
such underwriter and each person which controls such underwriter,
for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such Loss;
PROVIDED, that the Company will not be liable to so indemnify or
reimburse in any such case to the extent that any such Loss
arises out of or is based on any untrue statement or omission
resulting from written information furnished to the Company by or
on behalf of such Demand Shareholder or such Following
Shareholder or such underwriter for use therein.
(ii) The Requesting Shareholder will, if Registrable Shares
held by the Requesting Shareholder are included in the securities
as to which such registration, qualification or compliance is
being effected, indemnify the Company, each of its directors and
officers, each other Security Holder, each other Requesting
Shareholder, the independent accountants and legal counsel of the
Company, each underwriter, if any, of the Company's securities
covered by such a registration statement, and each person who
controls any of the foregoing within the meaning of Section 15 of
the Securities Act, against all Loss arising out of or based on
any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus,
offering circular or other document, or 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 any violation by the Requesting Shareholder of any
rule or regulation promulgated under the Securities Act, or of
any other federal, state or common law applicable to the
Requesting Shareholder and relating to any action or inaction
required by the Requesting Shareholder in connection with any
such registration, qualification or compliance, and will
reimburse the Company, such directors, officers, accountants,
counsel, Security Holders, the other Requesting Shareholders,
underwriters, officers, directors and controlling persons for any
legal or any other expenses reasonably incurred in connection
with investigating or defending any such Loss in each case to the
extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering
circular or other document in reliance upon and in conformity
with written information furnished to the Company by or on behalf
of such Requesting Shareholder for use therein; PROVIDED,
HOWEVER, that (i) such obligations of such Requesting Shareholder
hereunder shall be limited to an amount equal to the aggregate
public offering price of the Registrable Shares of such
Requesting Shareholder sold as contemplated herein, unless such
liability arises out of or is based upon willful misconduct by
such Requesting Shareholder and (ii) the indemnity for untrue
statements or omissions described above, and the reimbursements
obligation relating thereto, shall not apply if such Requesting
Shareholder provides the Company with such additional written
information prior to the effectiveness of the registration
statement as is required to make the previously supplied written
information true and complete, together with a description in
reasonable detail of the information previously supplied which
was untrue or incomplete.
(iii) Each person entitled to indemnification under this
Section 2(e) (the "Indemnified Party") shall give notice to the
party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; PROVIDED, that
counsel for the Indemnifying Party, who shall conduct the defense
of such claim or litigation, shall be approved by the Indemnified
Party (whose approval shall not unreasonably be withheld), and
the Indemnified Party may participate in such defense at such
Indemnified Party's expense, and PROVIDED FURTHER that the
failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its
obligations under this Section 2(e). After notice from the
Indemnifying Party to the Indemnified Party of its election to
assume the defense of such claim or litigation, the Indemnifying
Party will not be liable to such Indemnified Party for any legal
or other expenses subsequently incurred by such Indemnified Party
in connection with the defense thereof other than reasonable
costs of investigation, unless the Indemnifying Party abandons
the defense of such claim or litigation. No Indemnifying Party in
the defense of any such claim or litigation, shall, except with
the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.
(f) CONTRIBUTION. If the indemnification provided for in
subsections (i) or (ii) of Section 2(e) is unavailable to or
insufficient to hold the Indemnified Party harmless in respect of any
Loss referred to therein for any reason other than as specified
therein, then the Indemnifying Party shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Loss in
such proportion as appropriate to reflect the relative fault of the
Indemnifying Party, on the one hand, and such Indemnified Party, on
the other, in connection with the statements or omissions which
resulted in such Loss, as well as any other relevant equitable
considerations. The relative fault 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 (or omitted to be
supplied by) the Indemnifying Party or the Indemnified Party and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
amount paid or payable by an Indemnified Party as a result of Loss
referred to in this subsection (f) shall be deemed to include any
legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or
claim. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(g) INFORMATION FURNISHED BY THE REQUESTING SHAREHOLDERS. Each
Requesting Shareholder shall furnish to the Company such information
regarding itself, each of its general or limited partners, and each of
its directors and officers, and any person controlling any of the
foregoing, and the distribution proposed by such Requesting
Shareholder, as the Company may reasonably request in writing and as
shall be required in connection with any registration, qualification
or compliance referred to in this Section 2.
3. HOLDBACK AGREEMENTS. If any registration of Registrable Shares
or other securities of the Company pursuant to Section 2(a) or Section 2(b)
herein shall be in connection with an underwritten public offering, each
Requesting Shareholder agrees not to effect any public sale or
distribution, including any sale under Rule 144 (or any successor provision
then in effect) under the Securities Act, of any Registrable Shares or of
any shares of Common Stock or any security convertible into or exchangeable
or exercisable for any shares of Common Stock (in each case, other than as
part of such underwritten public offering) during the seven (7) days prior
to, and during the 180-day period (or such shorter period as may be
provided for in the applicable underwriting agreement) beginning on, the
effective date of the related registration statement.
4. TERMINATION.
(a) Notwithstanding any other provision of this Agreement, the
respective covenants, agreements and obligations contained in Section
2 of this Agreement shall continue until the latter of: (i) such date
as all of the Demand Shareholders and all of the Following
Shareholders cease to own any Registrable Shares; or (ii) March 29,
2004; provided that (x) such covenants, agreements and obligations
shall continue with respect to any request for registration of
Registrable Shares made hereunder March 29, 2004 of the date of this
Agreement, and (y) the indemnification obligations contained in
Section 2(e) and the contribution obligations contained in Section
2(f) shall survive for the period of the statute of limitations with
respect thereto.
5. MISCELLANEOUS.
(a) Each of the parties acknowledges and agrees that irreparable
damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent breaches
of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof in any court of the United States or any
state thereof having jurisdiction, in addition to any other remedy to
which they may be entitled at law or equity.
(b) All notices and other communications hereunder shall be in
writing and shall be deemed given (i) when delivered personally, (ii)
when received if sent by registered or certified mail, return receipt
requested, or by air courier or (iii) when received by facsimile
transmission with electronic verification, in each case to the parties
at the following addresses (or at such other address as a party may
specify by like notice):
(A) If to the Company, addressed to: @ Entertainment, Inc.,
One Commercial Plaza, Hartford, Connecticut 06103; facsimile:
(860) 293-4297, Attention: Cheryl Anne Chase; with a copy thereof
addressed to Baker & McKenzie, 815 Connecticut Avenue, N.W.,
Washington, D.C. 20006-4078; facsimile: (202) 452-7074,
Attention: Marc R. Paul, Esq.;
(B) If to PIHLP, addressed to: Chase Polish Enterprises,
Inc., One Commercial Plaza, Hartford, Connecticut 06103;
facsimile: (860) 293-4297, Attention: Cheryl Chase Freedman;
(C) If to ECO, addressed to: ECO Holdings III Limited
Partnership, c/o Advent International Corporation, 101 Federal
Street, Boston, Massachusetts 02110; facsimile: (617) 951-0571,
Attention: Ms. Janet Hennessy; with a copy thereof addressed to
Advent International Plc, 123 Buckingham Palace Road, London SW1W
9SL; facsimile: 44 (171) 333-0801, Attention: Mr. Scott
Lanphere;
(D) If to RMF, addressed to: Roger M. Freedman, 67 Prospect
Avenue, West Hartford, Connecticut 06106; facsimile: (860) 231-
0551, with a copy thereof addressed to Robinson & Cole, One
Commercial Plaza, Hartford, Connecticut 06103; facsimile: (860)
231-0551, Attention: Richard G. Schectman;
(E) As to Steele, addressed to: Steele LLC, 19 Warren
Terrace, Longmeadow, Massachusetts 01106; facsimile: (413) 567-
5160, Attention: Richard B. Steele, Managing Member; with a copy
thereof addressed to Bergman Horowitz, Connecticut Financial
Center, New Haven, Connecticut; facsimile: (860) 785-8127,
Attention: Jim Brockway, Esq.;
(F) If to CACMT, addressed to: Chase Polish Enterprises,
Inc., One Commercial Plaza, Hartford Connecticut 06103;
facsimile: (860) 293-4297, Attention: Cheryl Chase Freedman; and
(G) As to AESOP, addressed to: The AESOP Fund, L.P. c/o
Capital Investors, Inc., 1215 19th Street, N.W., Washington, D.C.
20036; facsimile: (202) 467-4426, Attention: Harry Huge; with a
copy thereof addressed to The AESOP Fund, L.P., 1119 Financial
Center Building, Seattle, Washington 98161; facsimile: (206) 292-
8075, Attention: Duff Kennedy.
(c) This Agreement supersedes all prior agreements between the
parties (written or oral) relating to registration of the Registrable
Shares under the Securities Act and is intended as a complete and
exclusive statement of the terms of the agreement between the parties
with respect to such matters.
(d) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware and shall be
construed and enforced in accordance with the laws of such state
without regard to principles of conflicts of laws thereof.
(e) The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Any term or provision of this Agreement may be waived at any
time by an instrument in writing signed by the party which is entitled
to the benefits thereof and this Agreement may be amended or
supplemented at any time by an instrument in writing signed by all
parties hereto.
(g) Except as otherwise provided herein, the Company shall not
assign this Agreement or any part hereof or any rights or obligations
hereunder without the prior written consent of all other parties
hereto. Each Shareholder shall be entitled, without the consent of
any other party hereto, to assign and transfer any or all of its
rights hereunder to any transferee of its Registrable Shares to which
it is permitted to transfer such Registrable Shares under the
provisions of the Shareholders Agreement; provided, however, that a
Demand Shareholder may only assign and transfer any of its demand
registration rights under Section 2(a) to a permitted transferee
holding at least twenty-five (25%) of the Common Stock held by such
Demand Shareholder at the date of execution of this Agreement, and any
exercise of such demand registration rights by such transferee shall
be counted as a demand registration effected on behalf of such Demand
Shareholder for the purposes of Section 2(a)(i)(B). No assignment
shall release any party of any of its obligations under this
Agreement. Except as otherwise provided herein, this Agreement shall
be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
(h) If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination
that any term or other provision is invalid, illegal or incapable of
being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
the transactions contemplated hereby are fulfilled to the extent
possible.
(i) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same agreement.
(j) The number of Registrable Shares and any references herein as
to specific number of shares shall be appropriately adjusted in the
event of any stock split, reverse split, stock dividend or other
reclassification or reorganization affecting the capital stock of the
Company which occurs after the date hereof.
(k) Any claim, suit, action, or proceeding among any or all of
the parties hereto relating to this Agreement, to any document,
instrument, or agreement delivered pursuant hereto, referred to
herein, or contemplated hereby, or in any other manner arising out of
or relating to the transactions contemplated by or referenced in this
Agreement, shall be commenced and maintained exclusively in the United
States District Court for the District of Delaware, or, if such Court
lacks jurisdiction over the subject matter, in a state court of
competent subject-matter jurisdiction sitting in the State of
Delaware. The parties hereby submit themselves unconditionally and
irrevocably to the personal jurisdiction of such courts. The parties
further agree that venue shall be exclusively in New Castle County in
the State of Delaware. The parties irrevocably waive any objection to
such personal jurisdiction or venue including, but not limited to, the
objection that any suit, action, or proceeding brought in the State of
Delaware has been brought in an inconvenient forum. The parties
irrevocably agree that process issuing from such courts may be served
on them, either personally or by certified mail, return receipt
requested, at the addresses given in Section 5(b) hereof; and further
irrevocably waive any objection to service of process made in such
manner and at such addresses, including without limitation any
objection that service in such manner and at such addresses is not
authorized by the local or procedural laws of the State of Delaware.
(l) In any suit or proceeding brought or instituted by any of the
parties to enforce or interpret any of the provisions of this
Agreement or on account of any damages claimed to be sustained by such
instituting party by reason of another party's violation of any of the
terms or provisions of this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' fees and court costs.
(m) This Agreement shall be effective as to all parties other
than AESOP as soon as all such other parties have signed it, and with
respect to AESOP's rights and obligations it shall be effective as
soon as all parties including AESOP have signed it.
IN WITNESS WHEREOF, the Company, PIHLP, ECO, RMF, Steele, AESOP and
CACMT have caused this Agreement to be duly executed by their respective
officers, each of whom is duly authorized, all as of the day and year first
above written.
@ ENTERTAINMENT, INC.,
a Delaware corporation
By: /s/ Robert E. Fowler, III
-------------------------------------
Name: Robert E. Fowler, III
------------------------------
Title: Chief Executive Officer
------------------------------
POLISH INVESTMENTS HOLDING L.P.,
a Delaware limited partnership
By: CHASE POLISH ENTERPRISES, INC.,
a Delaware corporation
MANAGING GENERAL PARTNER
By: /s/ Cheryl A. Chase
--------------------------------
Name: Cheryl A. Chase
Title: Exec. Vice President
ECO HOLDINGS III LIMITED PARTNERSHIP, a
Delaware limited partnership
By: Advent ECO III L.L.C., general partner
By: Global Private Equity II Limited
Partnership, member
By: Advent International Limited Partnership,
general partner
By: Advent International Corporation, general
partner
By: /s/ Janet L. Hennessy
------------------------------------
Name: Janet L. Hennessy
Title: Vice President
THE AESOP FUND, L.P.,
a Delaware limited partnership
By: Capitol Investments, Inc.
-------------------------------------
a General Partner
-------------------------------------
MANAGING GENERAL PARTNER
By: /s/ Duff Kennedy
------------------------------------
Name: Duff Kennedy
Title: Chairman
Roger M. Freedman
------------------------------------
Roger M. Freedman
STEELE LLC, a Connecticut limited liability
company
By: /s/ Richard B. Steele
------------------------------------
Name: Richard B. Steele
Title: Managing Member
THE CHERYL ANNE CHASE MARITAL TRUST
a Connecticut Trust
By: /s/ Cheryl A. Chase
-------------------------------------
Name: Cheryl A. Chase
Title: Trustee, and not individually
or in any other capacity
By: /s/ Kenneth Musen Trustee
-------------------------------------
Name: Kenneth Musen
Title: Trustee, and not individually
or in any other capacity
EXHIBIT 2
AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
This Amendment ("Amendment") to the Registration Rights Agreement (the
"Registration Rights Agreement"), dated as of June 22, 1997 among ECO
Holdings III Limited Partnership, Polish Investments Holding L.P., Roger M.
Freedman, The Cheryl Anne Chase Marital Trust, Steele LLC, the AESOP Fund,
L.P. and @Entertainment, Inc. is made this 9th day of July, 1997.
WITNESSETH:
WHEREAS, Section 5(f) the Registration Rights Agreement permits this
Amendment to be made in writing signed by all of the parties to the
Registration Rights Agreement;
WHEREAS, the undersigned are all of the parties to the Registration
Rights Agreement; and
WHEREAS, the undersigned agree that the Registration Rights Agreement
should be amended as set forth herein.
THEREFORE, in consideration of the foregoing recitals, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the undersigned agree as follows:
1. Section 2(a)(i)(D) of the Registration Rights Agreement is
amended by deleting the phrase "prior to the third anniversary of this
Agreement" and substituting therefor the phrase "prior to March 29, 1999."
2. Except as amended by paragraph 1 of this Amendment, all the terms
and provisions of the Registration Rights Agreement in effect on the date
hereof are hereby ratified and confirmed.
3. This Amendment may be executed in counterparts so that upon
execution of counterparts by all of the parties to the Registration Rights
Agreement this Amendment shall be in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed as of the day and year first above written.
@ENTERTAINMENT, INC.,
a Delaware corporation
By: /s/ Robert E. Fowler, III
------------------------------------
Name: Robert E. Fowler, III
Title: Chief Executive Officer
POLISH INVESTMENTS HOLDING L.P.,
a Delaware limited partnership
By: CHASE POLISH ENTERPRISES, INC.
a Delaware corporation
MANAGING GENERAL PARTNER
By: /s/ Cheryl A. Chase
------------------------------------
Name: Cheryl A. Chase
Title: Executive Vice President
ECO HOLDINGS III LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Advent ECO III L.L.C., general partner
By: Global Private Equity II Limited
Partnership, member
By: Advent International Limited
Partnership, general partner
By: Advent International Corporation,
general partner
By: /s/ Janet L. Hennessy
-------------------------------------
Name: Janet L. Hennessy
Title: Vice President
THE AESOP FUND, L.P.,
a Delaware limited partnership
By: Capital Investors, G.P.,
a ____________________ partnership
MANAGING GENERAL PARTNER
By: /s/ Duff Kennedy
-------------------------------------
Name: Duff Kennedy
Title: Chairman
/s/ Roger M. Freedman
-------------------------------------
Roger M. Freedman
STEELE LLC, a Connecticut limited liability
company
By: /s/ Richard B. Steele
-------------------------------------
Name: Richard B. Steele
Title: Managing Member
THE CHERYL ANNE CHASE MARITAL
TRUST, a Connecticut trust
By: /s/ Cheryl A. Chase
-------------------------------------
Name: Cheryl A. Chase
Title: Trustee, and not individually or
in any other capacity.
By: /s/ Kenneth Musen Trustee
-------------------------------------
Kenneth Musen
Trustee, and not individually or in any
other capacity
EXHIBIT 3
March 24, 1998
Ms. Cheryl A. Chase
Executive Vice President
Chase Polish Enterprises, Inc., General Partner
Polish Investments Holding L.P.
One Commercial Plaza
Hartford, CT 06103
Re: Access to @Entertainment Shares
Dear Ms. Chase:
By way of this letter Agreement, the undersigned, constituting all of
the Class A, Class B and Class C limited partners of Polish Investments
Holding LP., a Delaware limited partnership ("PIHLP"), hereby set forth our
understanding with you, in your capacity as the sole general partner of
PIHLP, in regard to 1,650,000 @Entertainment, Inc. common shares (the
"Shares"), owned by PIHLP. It is our intention that this Letter Agreement
serve as a instruction by us, constituting all of the limited partners of
PIHLP, to you, as general partner of PIHLP.
Our intention is that 99% of the Shares will eventually be held by
Cable Investment L.P., a Delaware limited partnership ("CILP"), as the sole
Class B Limited Partner of PIHLP and 1% of the Shares will eventually be
held by you, as the sole general partner of PIHLP. The current structure
is such that CILP owns a 99% Class B limited partnership interest in PIHLP
and that you own a 1% interest as the general partner of PIHLP. The Class
B PIHLP limited partnership interest indirectly owns rights to 99% of the
Shares. Eventually, it is intended that the Class B limited partnership
interest owned by CILP in PIHLP will be redeemed by PIHLP in exchange for a
transfer to CILP by PIHLP of 99% of the Shares. A portion of your general
partnership interest will also eventually be redeemed in exchange for a
transfer to you by PIHLP of 1% of such Shares.
You are the sole general partner of PIHLP. Documents have previously
been drafted to permit you, in your absolute discretion, to consummate the
above described redemptions. In accordance with this Letter Agreement, you
agree to complete these redemptions to the best of your ability upon the
request of the Class B limited partner of PIHLP. No other Class A limited
partner or Class C limited partner of PIHLP will interfere in any manner
whatsoever with your completing the transfer of the Shares from PIHLP to
CILP as the PIHLP Class B limited partner or to you as the PIHLP general
partner.
If the Class B limited partner of PIHLP wishes you to consider the
sale of any portion of such Shares which the Class B limited partner's
interest indirectly represents, CILP will request such from you and you
will effect such sale to the best of your ability in your capacity as
general partner. Such sale of all or a portion of the Shares may also may
be followed by a partial or complete redemption of the PIHLP Class B
limited partner's interest, in whole or in part, by way of the distribution
of the net proceeds resulting from the sale of the Shares. The other Class
A limited partners and the Class C limited partners of PIHLP agree to take
no action which will interfere with your efforts to sell all or a portion
of the Shares or to effect redemptions of the Class B limited partner's
interest or your interest as a general partner with respect to 1% of the
Shares with each action being taken in response to the Class B limited
partner's request.
Finally, as you know, the Class B limited partner of PIHLP is entitled
to request withdrawal from the Company or to request the liquidation of
such limited partner's interest. Such withdrawal or liquidation is possible
only with your consent as general partner of PIHLP. The Class B limited
partner also is entitled to transfer his or her limited partnership
interest in PIHLP by sale or otherwise, but only with your consent as
general partner. We, constituting all of the Class A limited partners and
Class C limited partners, will not block or otherwise interfere with such
withdrawal or liquidation request of the Class B limited partner or
interfere with the sale or liquidation of the Class B limited partner's
interest in any manner whatsoever. You, as general partner of PIHLP, may
consider a request of the Class B limited partner to withdraw from CILP in
whole or in part or to approve a transfer of the Class B limited partner's
interest. Each such action may be taken by you without the consent of any
other partner. We direct you to cause PIHLP to file such documents or
requests that are necessary with the SEC or any applicable state as to such
sales, redemptions, transfers or withdrawals. You are direct to obtain
advice of SEC Counsel at the expense of PIHLP to determine appropriate SEC
filing requirements. Each limited partner hereby agrees to indemnify you
and hold you harmless for all such actions or omissions, as provided for in
Section 5.5 of the Limited Partnership Agreement for PIHLP.
<PAGE>
This Letter Agreement is effective as of the date hereof and made by
and among the parties hereto. Any disputes hereunder shall be governed by
the laws of the State of Connecticut.
SIGNED AND AGREED:
/s/ Cheryl Anne Chase
-------------------------------------------
Cheryl Anne Chase, Class A Limited Partner
/s/ Arnold L. Chase
-------------------------------------------
Arnold Chase Accumulation Trust I, Class A
Limited Partner, acting by Arnold L. Chase,
Trustee
/s/ Cheryl Anne Chase
-------------------------------------------
Cheryl Chase Accumulation Trust I, Class A
Limited Partner, acting by Cheryl Anne Chase,
Trustee
Cable Investment L.P., as Class A, Class B
and Class C Limited Partner
By: /s/ Cheryl Anne Chase
---------------------------------------
Chase Polish Enterprises, Inc., General
Partner acting by Cheryl Anne Chase, Its
Executive Vice President
CONSENTED TO BY:
By: /s/ Cheryl Anne Chase
---------------------------------------
Chase Polish Enterprises, Inc., General
Partner of Polish Investments Holding
L.P., acting by Cheryl Anne Chase, Its
Executive Vice President
EXHIBIT 4
March 24, 1998
Ms. Cheryl A. Chase
President
Chase Polish Enterprises, Inc., General Partner
Cable Investment L.P.
Polish Investments Holding L.P.
One Commercial Plaza
Hartford, CT 06103
Re: Access to @Entertainment Shares
Dear Ms. Chase:
By way of this Letter Agreement, the undersigned, constituting all of
the Class A and Class B limited partners of Cable Investment LP., a
Delaware limited partnership ("CILP"), hereby set forth our understanding
with you, in your capacity as i) the sole general partner of CILP, and
(ii) the sole general partner of Polish Investments Holding L.P., a
Delaware limited partnership ("PIHLP"), in which CILP has its principal
investment in regard to 1,633,500 @Entertainment, Inc. common shares (the
"Shares"), owned by PIHLP and indirectly owned by CILP. It is our
intention that this Letter Agreement serve as a instruction by us,
constituting all of the limited partners of CILP, to you, as general
partner of CILP and PIHLP.
Our intention is that the Shares will eventually be held by CILP for
the benefit of its Class B limited partners and you, as CILP general
partner. The current structure is such that CILP owns a 99% Class B
limited partnership interest in PIHLP. The Class B PIHLP limited
partnership interest indirectly owns rights to the Shares. Eventually, it
is intended that the Class B limited partnership interest owned by CILP in
PIHLP will be redeemed by PIHLP in exchange for a transfer to CILP by PIHLP
of such Shares. It is also our intention to permit you, as general partner,
to redeem the interests of the Class B limited partners of CILP by making a
distribution of all or any portion of the Shares in full or partial
redemption of the Class B limited partner interests.
You are the sole general partner of PIHLP and CILP. Documents have
previously been drafted to permit you, in your absolute discretion, to
consummate the above described redemptions. In accordance with this Letter
Agreement, you agree to complete these redemptions to the best of your
ability. Upon the request of any Class B limited partner of CILP of CILP.
No other Class B limited partner or Class A limited partner of CILP will
interfere in any manner whatsoever with your completing the transfer of the
Shares from PIHLP to CILP and, in turn, from CILP to the Class B limited
partner or partners.
If a Class B limited partner of CILP wishes you to consider the sale
of any portion of such Shares which such Class B limited partner's interest
indirectly represents, that Class B limited partner will request such from
you and you will effect such sale to your best of your ability at the PIHLP
or CILP level in your capacity as general partner. Such sale of all or a
portion of the Shares may also may be followed by a partial or complete
redemption of the applicable CILP Class B limited partner's interests, in
whole or in part, by way of the distribution of the net proceeds resulting
from the sale of the Shares. The other Class B limited partners and the
Class A limited partners agree to take no action which will interfere with
your efforts to sell all or a portion of the Shares on behalf of CILP or to
effect such redemption of a Class B limited partner's interest as a
consequence of your actions in regard to the particular Class B limited
partner's request.
Finally, as you know, a Class B limited partner is entitled to request
withdrawal from the Company or to request the liquidation of such limited
partner's interest. Such withdrawal or liquidation is possible only with
your consent as general partner of CILP. A Class B limited partner also is
entitled to transfer his or her limited partnership interest in CILP by
sale or otherwise, but only with your consent as general partner. We,
constituting all of the Class A limited partners and Class B limited
partners, will not block or otherwise interfere with such withdrawal or
liquidation request of any Class B limited partner or interfere with the
sale or liquidation of a Class B limited partner's interest in any manner
whatsoever. You, as general partner of CILP, may consider a request of a
Class B limited partner to withdraw from CILP in whole or in part or to
approve a transfer of a Class B limited partner's interest. Each such
action may be taken by you without the consent of any other partner. We
direct you to cause CILP and/or PIHLP to file such documents or requests
that are necessary with the SEC or any applicable state as to such sales,
redemptions, transfers or withdrawals. You are direct to obtain advice of
SEC Counsel at the expense of CILP to determine appropriate SEC filing
requirements. Each limited partner hereby agrees to indemnify you and hold
you harmless for all such actions or omissions, as provided for in Section
5.4 of the Limited Partnership Agreement for CILP.
<PAGE>
This Letter Agreement is effective as of the date hereof and made by
and among the parties hereto. Any disputes hereunder shall be governed by
the laws of the State of Connecticut.
SIGNED AND AGREED:
/s/ Cheryl Anne Chase
-------------------------------------------
Cheryl Anne Chase, Class A and Class B
Limited Partner
/s/ Arnold L. Chase
-------------------------------------------
Arnold L. Chase, Class A and Class B
Limited Partner
/s/ Kenneth N. Musen Trustee
-------------------------------------------
Sandra Chase Grantor Trust, Class A and
Class B Limited Partner, by Kenneth N.
Musen, as Trustee and not in any other
capacity
/s/ Kenneth N. Musen Trustee
-------------------------------------------
Arnold L Chase Family
Family Spray Trust, Class A and Class B
Limited Partner, by Kenneth N. Musen, as
Trustee and not in any other capacity
/s/ Kenneth N. Musen Trustee
-------------------------------------------
Cheryl Anne Chase Family Spray Trust, Class
A and Class B Limited Partner, by Kenneth N.
Musen, as Trustee and not in any other
capacity
/s/ Kenneth N. Musen Trustee
-------------------------------------------
Chase Cable LLC, by Kenneth N. Musen, its
Manager
CONSENTED TO BY:
CHASE POLISH ENTERPRISES, INC.
By: /s/ Cheryl A. Chase
---------------------------------------
Its
In its capacity as General Partner of
Chase Investment Limited Partnership
and Polish Investments Holding L.P.
EXHIBIT 5
EXECUTION COPY
______________________________________________________________________________
______________________________________________________________________________
@ENTERTAINMENT, INC.
(a Delaware corporation)
5,000 Shares of Series B Cumulative Preference Stock and
5,000 Warrants to Purchase an Aggregate of
550,000 Shares of Common Stock
PURCHASE AGREEMENT
Dated: January 22, 1999
______________________________________________________________________________
______________________________________________________________________________
<PAGE>
Table of Contents
PURCHASE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . 3
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. . . . . . . . 3
(i) SIMILAR OFFERINGS . . . . . . . . . . . . . . . . . 3
(ii) PREFERENCE OFFERING MEMORANDUM. . . . . . . . . . . 3
(iii) INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . 4
(iv) FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . 4
(v) NO MATERIAL ADVERSE CHANGE IN BUSINESS. . . . . . . 4
(vi) GOOD STANDING OF THE COMPANY. . . . . . . . . . . . 4
(vii) CORPORATE STANDING OF DESIGNATED SUBSIDIARIES . . . 5
(viii) RESTRICTIONS ON PAYMENTS OF DIVIDENDS . . . . . . . 5
(ix) CAPITALIZATION. . . . . . . . . . . . . . . . . . . 6
(x) AUTHORIZATION OF AGREEMENT. . . . . . . . . . . . . 6
(xi) AUTHORIZATION OF THE PREFERENCE REGISTRATION RIGHTS
AGREEMENT . . . . . . . . . . . . . . . . . . . . . 6
(xii) AUTHORIZATION OF THE CERTIFICATE OF DESIGNATION AND
THE PREFERENCE SHARES . . . . . . . . . . . . . . . 6
(xiii) AUTHORIZATION OF THE PREFERENCE WARRANT AGREEMENT . 6
(xiv) AUTHORIZATION OF THE PREFERENCE WARRANTS. . . . . . 7
(xv) AUTHORIZATION OF THE PREFERENCE WARRANT SHARES. . . 7
(xvi) AUTHORIZATION OF THE PREFERENCE WARRANT REGISTRATION
RIGHTS AGREEMENT. . . . . . . . . . . . . . . . . . 7
(xvii) AUTHORIZATION OF THE INDENTURE. . . . . . . . . . . 8
(xviii) AUTHORIZATION OF THE NOTES. . . . . . . . . . . . . 8
(xix) AUTHORIZATION OF THE NOTE REGISTRATION RIGHTS
AGREEMENT . . . . . . . . . . . . . . . . . . . . . 8
(xx) AUTHORIZATION OF THE NOTE WARRANT AGREEMENT . . . . 8
(xxi) AUTHORIZATION OF THE NOTE WARRANT REGISTRATION
RIGHTS AGREEMENT. . . . . . . . . . . . . . . . . . 9
(xxii) DESCRIPTION OF THE PREFERENCE REGISTRATION RIGHTS
AGREEMENT, THE PREFERENCE WARRANT REGISTRATION
RIGHTS AGREEMENT, THE PREFERENCE SHARES, THE
PREFERENCE WARRANTS, THE COMMON STOCK, THE
PREFERENCE WARRANT AGREEMENT, THE MG SECURITIES, THE
NOTE SECURITIES, AND THE NOTE AGREEMENTS. . . . . . 9
(xxiii) ABSENCE OF DEFAULTS AND CONFLICTS . . . . . . . . . 9
(xxiv) ABSENCE OF LABOR DISPUTE. . . . . . . . . . . . . .10
(xxv) ABSENCE OF PROCEEDINGS. . . . . . . . . . . . . . .10
(xxvi) POSSESSION OF INTELLECTUAL PROPERTY . . . . . . . .11
(xxvii) ABSENCE OF FURTHER REQUIREMENTS . . . . . . . . . .11
(xxviii) POSSESSION OF LICENSES AND PERMITS. . . . . . . . .12
(xxix) NO ADDITIONAL DOCUMENTS . . . . . . . . . . . . . .12
(xxx) MANAGEMENT AGREEMENTS . . . . . . . . . . . . . . .12
(xxxi) TITLE TO PROPERTY . . . . . . . . . . . . . . . . .13
(xxxii) TAX RETURNS . . . . . . . . . . . . . . . . . . . .13
(xxxiii) ENVIRONMENTAL LAWS. . . . . . . . . . . . . . . . .13
(xxxiv) INVESTMENT COMPANY ACT. . . . . . . . . . . . . . .14
(xxxv) INTERNAL CONTROLS . . . . . . . . . . . . . . . . .14
(xxxvi) TAXES ON SUBSIDIARY INDEBTEDNESS. . . . . . . . . .14
(xxxvii) INSURANCE . . . . . . . . . . . . . . . . . . . . .15
(xxxviii)RULE 144A ELIGIBILITY . . . . . . . . . . . . . . .15
(xxxix) NO GENERAL SOLICITATION . . . . . . . . . . . . . .15
(xl) NO REGISTRATION REQUIRED. . . . . . . . . . . . . .15
(xli) REPORTING COMPANY . . . . . . . . . . . . . . . . .15
(xlii) FUNDS . . . . . . . . . . . . . . . . . . . . . . .15
(xliii) SUBSCRIBERS . . . . . . . . . . . . . . . . . . . .16
(b) OFFICERS' CERTIFICATES . . . . . . . . . . . . . . . . . . .16
SECTION 2. SALE AND DELIVERY TO THE PURCHASER; CLOSING. . . . . . . . .16
(a) PREFERENCE SECURITIES. . . . . . . . . . . . . . . . . . . .16
(b) PAYMENT. . . . . . . . . . . . . . . . . . . . . . . . . . .16
(c) QUALIFIED INSTITUTIONAL BUYER. . . . . . . . . . . . . . . .16
(d) DENOMINATIONS; REGISTRATION. . . . . . . . . . . . . . . . .16
SECTION 3. COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . . . .17
(a) PREFERENCE OFFERING MEMORANDUM . . . . . . . . . . . . . . .17
(b) NOTICE AND EFFECT OF MATERIAL EVENTS . . . . . . . . . . . .17
(c) RESERVED . . . . . . . . . . . . . . . . . . . . . . . . . .17
(d) RESERVED . . . . . . . . . . . . . . . . . . . . . . . . . .17
(e) RESERVED . . . . . . . . . . . . . . . . . . . . . . . . . .17
(f) DTC. . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
(g) USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . .17
(h) RESERVED . . . . . . . . . . . . . . . . . . . . . . . . . .17
(I) NOTIFICATION OF CURRENT ACCUMULATED EARNINGS AND PROFITS . .17
SECTION 4. PAYMENT OF EXPENSES. . . . . . . . . . . . . . . . . . . . .17
(a) EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . .17
(b) TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . .18
SECTION 5. CONDITIONS OF THE CHASE PURCHASERS' OBLIGATIONS. . . . . . .18
(a) RESERVED . . . . . . . . . . . . . . . . . . . . . . . . . .18
(b) RESERVED . . . . . . . . . . . . . . . . . . . . . . . . . .18
(c) RESERVED . . . . . . . . . . . . . . . . . . . . . . . . . .18
(d) OFFICERS' CERTIFICATE. . . . . . . . . . . . . . . . . . . .18
(e) RESERVED . . . . . . . . . . . . . . . . . . . . . . . . . .18
(f) RESERVED . . . . . . . . . . . . . . . . . . . . . . . . . .19
(g) CONSUMMATION OF SALE OF MG SECURITIES AND NOTE SECURITIES. .19
(h) RESERVED . . . . . . . . . . . . . . . . . . . . . . . . . .19
(i) ADDITIONAL DOCUMENTS . . . . . . . . . . . . . . . . . . . .19
(j) EXECUTION OF AGREEMENTS. . . . . . . . . . . . . . . . . . .19
(k) TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . .19
SECTION 6. RESALES OF THE PREFERENCE SECURITIES . . . . . . . . . . . .19
(a) REPRESENTATION AND WARRANTY OF THE CHASE PURCHASERS. . . . .19
(c) COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . . . .20
(i) DUE DILIGENCE . . . . . . . . . . . . . . . . . . . .20
(ii) INTEGRATION . . . . . . . . . . . . . . . . . . . . .20
(iii) RULE 144A INFORMATION . . . . . . . . . . . . . . . .20
(d) RESALES. . . . . . . . . . . . . . . . . . . . . . . . . . .21
(e) OFFERS AND SALES IN POLAND AND THE NETHERLANDS . . . . . . .21
(f) OFFERS AND SALES IN THE UNITED KINGDOM . . . . . . . . . . .21
(g) DARLAND. . . . . . . . . . . . . . . . . . . . . . . . . . .22
SECTION 7. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . .22
(a) INDEMNIFICATION OF THE CHASE PURCHASERS. . . . . . . . . . .22
(b) INDEMNIFICATION OF THE COMPANY, DIRECTORS AND OFFICERS . . .22
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. . . . . . . . . . . .23
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE . . . . .23
SECTION 8. CONTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . .23
SECTION 9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY . . . . . . . . . . . . . . . . . . . . . . . . . .25
SECTION 10. TERMINATION OF AGREEMENT. . . . . . . . . . . . . . . . . .25
(a) TERMINATION; GENERAL. . . . . . . . . . . . . . . . . . . .25
(b) LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . .26
SECTION 11. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . .26
SECTION 12. PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . .26
SECTION 13. GOVERNING LAW AND TIME. . . . . . . . . . . . . . . . . . .26
SECTION 14. EFFECT OF HEADINGS. . . . . . . . . . . . . . . . . . . . .26
SECTION 15. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . .26
EXHIBITS
Exhibit A - Form of Certificate of Designation . . . . . . . . . .A-1
Exhibit B - Form of Preference Warrant Agreement . . . . . . . . .B-1
Exhibit C - Form of Preference Registration Rights Agreement . . .C-1
Exhibit D - Form of Preference Warrant Registration Rights
Agreement. . . . . . . . . . . . . . . . . . . . . . .D-1
<PAGE>
@ENTERTAINMENT, INC.
(a Delaware corporation)
5,000 Shares of Series B Cumulative Preference Stock and
5,000 Warrants to Purchase an Aggregate of
4,950,000 Shares of Common Stock
PURCHASE AGREEMENT
------------------
January 22, 1999
Mr. Arnold Chase
Ms. Cheryl Chase
Ms. Rhoda Chase
c/o Chase Enterprises
One Commercial Plaza
Hartford, Connecticut 06103-3585
Ladies and Gentlemen:
@Entertainment, Inc., a Delaware corporation (the "Company"), confirms
its agreement with Mr. Arnold Chase, Ms. Cheryl Chase and Ms. Rhoda Chase
(the "Chase Purchasers") with respect to the issue and sale by the Company
and the purchase by the Chase Purchasers, severally and not jointly, of an
aggregate of 5,000 of the Company's Series B Cumulative Preference Shares
(the "Preference Shares") and 5,000 warrants (each a "Preference Warrant"
and collectively, the "Preference Warrants" and, together with the
Preference Shares, the "Preference Securities"). The Preference Warrants
entitling the holders thereof to purchase an aggregate of 550,000 shares of
common stock, par value $0.01 per share (the "Common Stock"), of the
Company. The number of Preference Shares and Preference Warrants to be
purchased, severally and not jointly, by each of the Chase Purchasers is
set forth on Schedule A. The Preference Shares and Preference Warrants are
more fully described in Schedule B hereto. The Preference Shares are to be
issued pursuant to the Certificate of Designation of the Company in
substantially the form attached hereto as Exhibit A and the Preference
Warrants are to be issued pursuant to a warrant agreement dated as of
January 27, 1999 (the "Preference Warrant Agreement"), between the Company
and Bankers Trust Company, as warrant agent (the "Preference Warrant
Agent") in substantially the form attached hereto as Exhibit A. Under the
Preference Warrant Agreement, the Chase Purchasers will have certain
preemptive rights in relation to the Company's Common Stock. Preference
Securities issued in book-entry form will be issued to Cede & Co. as
nominee of The Depository Trust Company ("DTC") pursuant to a letter
agreement, to be dated as of the Closing Time (as defined in Section 2(b))
(the "DTC Agreement"), among the Company, the Trustee and DTC.
Concurrently, the Company has entered into a separate purchase
agreement (the "MG Purchase Agreement") for the sale of an aggregate of
45,000 of the Company's Series A Cumulative Preference Shares (the "Series
A Preference Shares") and 45,000 Warrants (the MG Warrants") to purchase
and aggregate of 4,950,000 shares of Common Stock to Morgan Grenfell
Private Equity Limited (the "MG Purchaser"). The MG Warrants will be
issued pursuant to the Preference Warrant Agreement. The Series A
Preference Shares and the MG Warrants being sold to the MG Purchaser are
sometimes hereinafter referred to as the "MG Securities."
The holders of Preference Shares and the Series A Preference Shares
will be entitled to the benefits of a Registration Rights Agreement, in
substantially the form attached hereto as Exhibit C with such changes as
shall be agreed to by the parties hereto and the MG Purchaser (the
"Preference Registration Rights Agreement"), pursuant to which the Company
will file a registration statement (the "Preference Registration
Statement") with the Securities and Exchange Commission (the "Commission")
registering the Preference Shares and the Series A Preference Shares under
the Securities Act of 1933, as amended (the "1933 Act").
The holders of Preference Warrants and the MG Warrants will be
entitled to the benefits of a Preference Warrant Registration Rights
Agreement in substantially the form attached hereto as Exhibit D, with such
changes as shall be agreed to by the parties hereto and the MG Purchaser
(the "Preference Warrant Registration Rights Agreement") which provides for
the registration of the Preference Warrants and the MG Warrants under the
1933 Act under certain circumstances set forth therein.
Pursuant to the terms of the Preference Securities, investors that
acquire Preference Securities may only resell or otherwise transfer such
Preference Securities if such Preference Securities are hereafter
registered under the 1933 Act or if an exemption from the registration
requirements of the 1933 Act is available (including the exemption afforded
by Rule 144A ("Rule 144A") of the rules and regulations promulgated under
the 1933 Act by the Commission).
The Company has prepared and will deliver to the Chase Purchasers, on
the date hereof or the next succeeding day, copies of an offering
memorandum dated January 22, 1999 which was prepared by the Company in
connection with the sale of the MG Securities. "Preference Offering
Memorandum" means with respect to any date or time referred to in this
Agreement, the final Preference Offering Memorandum (including any
amendment or supplement thereto) including exhibits thereto and any
documents incorporated by reference, which has been prepared and delivered
by the Company to the Chase Purchasers in connection with the sale of the
MG Securities.
Simultaneously with the execution of this Agreement , the Company is
entering into a separate purchase agreement (the "Note Purchase Agreement")
for the sale of 256,800 the Company's units (the "Note Units"), each Note
Unit consisting of $1,000 aggregate principal amount at maturity of the
Company's 14 1/2 Senior Discount Notes due 2009 (the "Notes") and four
warrants (each a "Note Warrant" and collectively, the "Note Warrants" and,
together with the Note Units and the Notes, the "Note Securities"). The
Note Warrants entitle the holders thereof to purchase an aggregate of
1,813,665 shares of Common Stock. The Notes are to be issued pursuant to
an indenture dated as of January 27, 1999 (the "Indenture") between the
Company and Bankers Trust Company, as trustee (the "Trustee") and the Note
Warrants are to be issued pursuant to a warrant agreement dated as of
January 27,1999 (the "Note Warrant Agreement") between the Company and
Bankers Trust Company, as warrant agent (the "Note Warrant Agent"). The
holders of the Note and the Note Warrants will be entitled to the benefits
of two Registration Rights Agreements (the "Note Registration Rights
Agreement" and the "Note Warrant Registration Rights Agreement",
respectively) which provide for the registration of the Notes and the Note
Warrants under the 1933 Act under certain circumstances set forth therein.
The Indenture, the Note Warrant Agreement, the Note Registration Rights
Agreement and the Note Warrant Registration Rights Agreement are sometimes
referred to herein as the "Note Agreements."
All references in this Agreement to financial statements and schedules
and other information which are "contained," "included" or "stated" in the
Preference Offering Memorandum (or other references of like import) shall
be deemed to mean and include all such financial statements and schedules
and other information, if any, which are incorporated by reference in the
Preference Offering Memorandum.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company
represents and warrants to the Chase Purchasers as of the date hereof and
as of the Closing Time referred to in Section 2(b) hereof, and agrees with
the Chase Purchasers as follows:
(i) SIMILAR OFFERINGS. The Company and its Affiliates (as
defined in Section 1(a)(xxxv)) have not, directly or indirectly,
solicited any offer to buy or offered to sell, and will not, directly
or indirectly, solicit any offer to buy or offer to sell, in the
United States or to any United States citizen or resident, any
security which is or would be integrated with the sale of the
Preference Securities in a manner that would require the Preference
Securities to be registered under the 1933 Act.
(ii) PREFERENCE OFFERING MEMORANDUM. Neither of its date nor as
of the Closing Time the Preference Offering Memorandum, including any
amendment or supplement thereto, includes or will include an untrue
statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(iii) INDEPENDENT ACCOUNTANTS. The accountants who certified the
financial statements and supporting schedules included in the
Preference Offering Memorandum are independent certified public
accountants with respect to the Company and its subsidiaries within
the meaning of Regulation S-X under the 1933 Act.
(iv) FINANCIAL STATEMENTS. The financial statements, together
with the related schedules and notes, of the Company included in the
Preference Offering Memorandum present fairly the financial position
of the Company and its consolidated subsidiaries at the dates
indicated and the statement of operations, stockholders' equity and
cash flows of the Company and its consolidated subsidiaries for the
periods specified; said financial statements have been prepared in
conformity with United States generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods
involved. The supporting schedules, if any, included in the
Preference Offering Memorandum present fairly in accordance with GAAP
the information required to be stated therein. The selected financial
data and the summary financial information included in the Preference
Offering Memorandum present fairly the information shown therein and
have been compiled on a basis consistent with that of the audited
financial statements included in the Preference Offering Memorandum.
(v) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective
dates as of which information is given in the Preference Offering
Memorandum, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or
in the earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise (a "Material Adverse
Effect"), whether or not arising in the ordinary course of business,
(B) there have been no transactions entered into by the Company or any
of its subsidiaries, other than transactions entered into in the
ordinary course of business, which are material with respect to the
Company and its subsidiaries considered as one enterprise, and
(C) there has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock.
(vi) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Preference Offering Memorandum and to
enter into and perform its obligations under this Agreement, the
Preference Warrant Agreement, the Preference Registration Rights
Agreement, the Preference Warrant Registration Rights Agreement, the
Certificate of Designation, the Note Securities, the Note Agreements,
and the Preference Securities; and the Company is duly qualified as a
foreign corporation to transact business and is in good standing in
each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be
in good standing would not result in a Material Adverse Effect.
(vii) CORPORATE STANDING OF DESIGNATED SUBSIDIARIES. Each
subsidiary of the Company that (i) is a "significant subsidiary" (as
that term is defined in Regulation S-X under the 1933 Act) or (ii)
that holds any valid permits or licenses to operate the cable
television business in Poland or a digital direct-to-home business
uplinking from the United Kingdom is listed on Schedule C hereto (each
subsidiary listed on Schedule C hereto is hereinafter referred to as a
"Designated Subsidiary" and, collectively, the "Designated
Subsidiaries"), and has been duly organized and is validly existing as
a corporation under the laws of the jurisdiction of its incorporation,
has corporate power and corporate authority to own, lease and operate
its properties and to conduct its business as described in the
Preference Offering Memorandum and is not required to be qualified as
a foreign corporation to transact business or to own or lease property
in any jurisdiction where it owns or leases property or transacts
business; except as otherwise disclosed in the Preference Offering
Memorandum or in Schedule C, all of the issued and outstanding capital
stock of each Designated Subsidiary has been duly authorized and
validly issued, is fully paid and non-assessable and is owned by the
Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity, except for (i) in the case of any Polish limited liability
company, any statutory liability for taxes, (ii) the pledge of
3,583,457 shares of Polska Telewizja Kablowa Warszawa S.A. and of
2,514,291 shares of Polska Telewizja Kablowa Krak<o'>w S.A. held by
Poland Cablevision (Netherlands) B.V. ("PCBV") and 2,400 shares of
Polska Telewizja Kablowa Lublin S.A. held by Poltelkab Sp. z o.o. as
security for the loan of $6.5 million granted on August 28, 1996 by
the American Bank in Poland to Poland Communications, Inc. ("PCI"),
and (iii) the pledge of 1,818 shares of Szczeci<n~>ska Telewizja
Kablowa Sp. z o.o. ("SzTK") for the security of certain obligations
undertaken by PTK Szczecin Sp. z o.o. ("PTK Szczecin") with respect to
the sellers of those shares (collectively, the "Share Pledges"); none
of the outstanding shares of capital stock of the Designated
Subsidiaries was issued in violation of any preemptive or similar
rights arising by operation of law, or under the statute or by-laws
(or other similar organizational documents) of any Designated
Subsidiary or under any agreement to which the Company or any
Designated Subsidiary is a party. The subsidiaries of the Company
other than the Designated Subsidiaries, considered in the aggregate as
a single subsidiary, do not constitute a "significant subsidiary" as
defined in Rule 1-02 of Regulation S-X.
(viii) RESTRICTIONS ON PAYMENTS OF DIVIDENDS. There are no
restrictions (legal, contractual or otherwise) on the ability of the
Designated Subsidiaries to declare and pay dividends or make any
payment or transfer of property or assets to their shareholders other
than those referred to in the Preference Offering Memorandum and
except for (i) restrictions relating to the Share Pledges, (ii)
encumbrances on certain assets of Telewizja Kablowa GOSAT Sp. z o.o.
("GOSAT") consisting of the transfer of title to such assets as
security for the loan of $0.5 million granted on October 7, 1996 by
Polski Bank Rozwoju (which was bought by Bank Rozucju Eksportu S.A. in
July of 1998) to GOSAT, and (iii) the restrictions discussed in
Schedule D to the Indenture (collectively, the "Asset Encumbrances").
(ix) CAPITALIZATION. The authorized, issued and outstanding
capital stock of the Company at September 30, 1998 was as set forth
under the caption "Capitalization" under the heading "Actual" in the
Preference Offering Memorandum and, as of the date hereof, there has
been no material change in the authorized, issued and outstanding
capital stock since the date of the Preference Offering Memorandum other
than (i) issuances of shares of Common Stock upon the exercise of options
disclosed to be outstanding in the Preference Offering Memorandum and
(ii) the authorization and issuance of the Preference Shares, the
Warrants, the Series A Preference Shares, the MG Warrants and the Note
Securities as described in The Preference Offering Memorandum. The
shares of issued and outstanding capital stock of the Company have
been duly authorized and validly issued and are fully paid and non-
assessable; none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive or other similar
rights of any securityholder of the Company.
(x) AUTHORIZATION OF AGREEMENT. This Agreement has been duly
authorized, executed and delivered by the Company.
(xi) AUTHORIZATION OF THE PREFERENCE REGISTRATION RIGHTS
AGREEMENT. The Preference Registration Rights Agreement has been duly
authorized by the Company, and, at the Closing Time, will have been
duly executed and delivered by the Company and, when executed and
delivered by the MG Purchaser and the Chase Purchasers, will
constitute a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms except as (x) the
enforceability thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating
to or affecting enforcement of creditors' rights generally, (y) the
enforceability thereof may be limited by general principles of equity
(regardless of whether enforcement is considered in a proceeding in
equity or at law) and (z) any rights to indemnity and contribution may
be limited by federal and state securities laws and public policy
considerations.
(xii) AUTHORIZATION OF THE CERTIFICATE OF DESIGNATION AND THE
PREFERENCE SHARES. The Certificate of Designation has been duly
authorized by the Board of Directors of the Company and, at the
Closing Time, will have been duly filed with the Secretary of State of
Delaware. The Preference Shares have been duly authorized by the
Company for issuance and sale to the Chase Purchasers pursuant to this
Agreement and the Preference Shares when issued and delivered against
payment therefor in accordance with the terms hereof, will be validly
issued, fully paid and non-assessable and the Chase Purchasers will
receive title to the Preference Shares free and clear of all liens and
encumbrances. The security holders of the Company have no preemptive
rights with respect to the Preference Shares.
(xiii) AUTHORIZATION OF THE PREFERENCE WARRANT AGREEMENT. The
Preference Warrant Agreement has been duly authorized by the Company
and, at the Closing Time, will have been duly executed and delivered
by the Company and, when duly executed and delivered by the Preference
Warrant Agent, will constitute a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms,
except as enforceability thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or other similar
laws relating to or affecting enforcement of creditors' rights
generally or by general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
(xiv) AUTHORIZATION OF THE PREFERENCE WARRANTS. The Preference
Warrants have been duly authorized by the Company and, at the Closing
Time, will have been duly executed by the Company and, when executed
and issued in the manner provided for in the Preference Warrant
Agreement and delivered against payment of the purchase price therefor
as provided in this Agreement, (A) will constitute valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a
proceeding in equity or at law), and (B) will be in the form
contemplated by, and entitled to the benefits of, the Preference
Warrant Agreement and the Preference Warrant Registration Rights
Agreement.
(xv) AUTHORIZATION OF THE PREFERENCE WARRANT SHARES. The shares
of Common Stock issuable upon exercise of the Preference Warrants (the
"Preference Warrant Shares") have been duly authorized and reserved by
the Company and, when executed by the Company and countersigned by the
Preference Warrant Agent and issued and delivered upon exercise of the
Preference Warrants in accordance with the terms of the Preference
Warrants and the Preference Warrant Agreement, will be validly issued,
fully paid and non-assessable and will not be subject to any
preemptive or similar rights.
(xvi) AUTHORIZATION OF THE PREFERENCE WARRANT REGISTRATION RIGHTS
AGREEMENT. The Preference Warrant Registration Rights Agreement has
been duly authorized by the Company and, at the Closing Time, will
have been duly executed and delivered by the Company and, when
executed and delivered by the MG Purchaser and the Chase Purchasers,
will constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms except as
(x) the enforceability thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or other similar
laws relating to or affecting enforcement of creditor's rights
generally, (y) the enforceability thereof may be limited by general
principles of equity (regardless of whether enforcement is considered
in a proceeding in equity or at law) and (z) any rights to indemnity
and contribution may be limited by federal and state securities laws
and public policy considerations.
(xvii) AUTHORIZATION OF THE INDENTURE. The Indenture has been
duly authorized by the Company and, at the Closing Time, will have
been duly executed and delivered by the Company and, when executed and
delivered by the Trustee, will constitute a valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or
other similar laws relating to or affecting enforcement of creditors'
rights generally or by general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law)
and the waiver contained in Section 514 thereof may be unenforceable
due to interests of public policy.
(xviii) AUTHORIZATION OF THE NOTES. The Notes have been duly
authorized and, at the Closing Time, will have been duly executed by
the Company and, when authenticated in the manner provided for in the
Indenture and delivered against payment of the purchase price therefor
will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except
as the enforceability thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating
to or affecting enforcement of creditors' rights generally or by
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law), and will be in the
form contemplated by, and entitled to the benefits of, the Indenture
and the Note Registration Rights Agreement.
(xix) AUTHORIZATION OF THE NOTE REGISTRATION RIGHTS AGREEMENT.
The Note Registration Rights Agreement has been duly authorized by the
Company, and, at the Closing Time, will have been duly executed and
delivered by the Company and will, when executed and delivered by the
Initial Purchasers, constitute a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms
except as (x) the enforceability thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to or
affecting enforcement of creditors' rights generally, (y) the
enforceability thereof may be limited by general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law) and (z) any rights to indemnity and contribution may be limited
by federal and state securities laws and public policy considerations.
(xx) AUTHORIZATION OF THE NOTE WARRANT AGREEMENT. The Note
Warrant Agreement has been duly authorized by the Company and, at the
Closing Time, will have been duly executed and delivered by the
Company and, when duly executed and delivered by the Note Warrant
Agent, will constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except
as enforceability thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating
to or affecting enforcement of creditors' rights generally or by
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(xxi) AUTHORIZATION OF THE NOTE WARRANT REGISTRATION RIGHTS
AGREEMENT. The Note Warrant Registration Rights Agreement has been duly
authorized by the Company and, at the Closing Time, will have been duly
executed and delivered by the Company and, when executed and delivered by
the Initial Purchasers, will constitute a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms
except as (x) the enforceability thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to or
affecting enforcement of creditor's rights generally, (y) the
enforceability thereof may be limited by general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law) and (z) any rights to indemnity and contribution may be limited
by federal and state securities laws and public policy considerations.
(xxii) DESCRIPTION OF THE PREFERENCE REGISTRATION RIGHTS
AGREEMENT, THE PREFERENCE WARRANT REGISTRATION RIGHTS AGREEMENT, THE
PREFERENCE SHARES, THE PREFERENCE WARRANTS, THE COMMON STOCK, THE
PREFERENCE WARRANT AGREEMENT, THE MG SECURITIES, THE NOTE SECURITIES,
AND THE NOTE AGREEMENTS. The Preference Registration Rights
Agreement, the Preference Warrant Registration Rights Agreement, the
Preference Shares, the Preference Warrants, the Common Stock, the
Preference Warrant Agreement, the MG Securities, the Note Securities
and the Note Agreements will conform in all material respects to the
respective statements relating thereto contained in the Preference
Offering Memorandum and will be in substantially the respective forms
previously delivered to the Chase Purchasers.
(xxiii) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company
nor any of its subsidiaries is (1) in violation of its charter or
statute, as applicable, or by-laws (or other similar organizational
documents), (2) in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which or any of
them may be bound, or to which any of the property or assets of the
Company or any of its subsidiaries is subject (collectively,
"Agreements and Instruments"), except as described in the Preference
Offering Memorandum and except for such defaults that would not result
in a Material Adverse Effect or (3) in violation of any applicable
law, statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any
of their assets or properties, except as described in the Preference
Offering Memorandum; and the execution, delivery and performance of
this Agreement, the Preference Warrant Agreement, the Preference
Registration Rights Agreement, the Preference Warrant Registration
Rights Agreement, the Certificate of Designation, the Preference
Securities, the Note Securities, the Note Agreements, and any other
agreement or instrument entered into or issued or to be entered into
or issued by the Company or any Designated Subsidiary in connection
with the transactions contemplated hereby or thereby or in the
Preference Offering Memorandum and the consummation of the
transactions contemplated herein and in the Note Purchase Agreement
and the Preference Offering Memorandum (including the issuance and
sale of the Preference Securities and the Note Securities and the use
of the proceeds from the sale of the Preference Securities and the
Note Securities as described in the Preference Offering Memorandum
under the caption "Use of Proceeds") and compliance by the Company
with its obligations hereunder have been duly authorized by all
necessary corporate action and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to, the Agreements and Instruments
except for such conflicts, breaches, Repayment Events or defaults or
liens, charges or encumbrances that, singly or in the aggregate, would
not result in a Material Adverse Effect, nor will such action result
in any violation of the provisions of the charter or statute, as
applicable, or by-laws (or other similar organizational documents) of
the Company or any of its subsidiaries or any applicable law, statute,
rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any of its subsidiaries or any of
their assets or properties, assuming that the Chase Purchasers comply
with all of its obligations under Section 6 hereof. As used herein, a
"Repayment Event" means any event or condition which gives the holder
of any note, debenture or other evidence of indebtedness (or any
person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any of its subsidiaries.
(xxiv) ABSENCE OF LABOR DISPUTE. No labor dispute with the
employees of the Company or any of its subsidiaries exists or, to the
knowledge of the Company, is imminent, and the Company is not aware of
any existing or imminent labor disturbance by the employees of any of
its or any of its subsidiaries' principal suppliers, customers or
contractors, which, in either case, may reasonably be expected to
result in a Material Adverse Effect.
(xxv) ABSENCE OF PROCEEDINGS. Except as disclosed in the
Preference Offering Memorandum, there is no action, suit, proceeding,
inquiry or investigation before or by any court or governmental agency
or body, domestic or foreign, now pending, or, to the knowledge of the
Company, threatened, against or affecting the Company or any
subsidiary thereof, which would be required to be disclosed in the
Preference Offering Memorandum (other than as disclosed therein) if it
were a prospectus filed as part of a registration statement on Form S-
1 under the 1933 Act, or which might reasonably be expected to result
in a Material Adverse Effect, or which might reasonably be expected to
adversely affect the properties or assets of the Company or any of its
subsidiaries in a manner that is material and adverse to the Company
and its subsidiaries considered as one enterprise or the consummation
of the transactions contemplated by this Agreement, the Preference
Warrant Agreement, the Preference Registration Rights Agreement, the
Preference Warrant Registration Rights Agreement, the Certificate of
Designation, the Preference Securities, the Note Securities or the
Note Agreements, or the performance by the Company of its obligations
hereunder or thereunder. The aggregate of all pending legal or
governmental proceedings to which the Company or any subsidiary
thereof is a party or of which any of their respective property or
assets is the subject which are not described in the Preference
Offering Memorandum, including ordinary routine litigation incidental
to the business, could not reasonably be expected to result in a
Material Adverse Effect.
(xxvi) POSSESSION OF INTELLECTUAL PROPERTY. Except as disclosed
in the Preference Offering Memorandum, the Company and its
subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property")
necessary to carry on the business now operated by them. Except as
disclosed in the Preference Offering Memorandum, neither the Company
nor any of its subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of
others with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity
or inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.
(xxvii) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency (other than (A) under the 1933 Act and the rules and
regulations thereunder with respect to the Preference Registration
Rights Agreement, the Preference Warrant Registration Rights
Agreement, the Note Registration Rights Agreement, the Note Warrant
Registration Rights Agreement, and the transactions contemplated
thereunder, (B) under the securities or "blue sky" laws of the various
states and (C) the Polish Anti-Monopoly Act) is necessary or required
(x) for the performance by the Company of its obligations hereunder,
in connection with the offering, issuance or sale of the Preference
Securities hereunder or the consummation of the transactions
contemplated by this Agreement, the Preference Warrant Agreement, the
Preference Registration Rights Agreement, the Preference Warrant
Registration Rights Agreement, the Note Registration Rights Agreement,
the Note Warrant Registration Rights Agreement, or the Preference
Offering Memorandum or (y) to permit the Company to (1) effect
payments of dividends on or redemption of the Preference Shares, or
(2) perform its other obligations under the Certificate of
Designation, the Preference Warrant Agreement, the Preference Warrant
Registration Rights Agreement, the Note Registration Rights Agreement,
and the Note Warrant Registration Rights Agreement.
(xxviii) POSSESSION OF LICENSES AND PERMITS. Except as disclosed
in the Preference Offering Memorandum, the Company and its subsidiaries
possess such permits, licenses, approvals, concessions, consents and
other authorizations (including, without limitation, all permits
required for the operation of the business of the Company and its
subsidiaries by the Republic of Poland and the United Kingdom)
(collectively, "Governmental Licenses") issued by the appropriate
domestic or foreign regulatory agencies or bodies, other governmental
authorities or self regulatory organizations necessary to conduct the
business now operated by them or any business currently proposed to be
conducted by them as described in the Preference Offering Memorandum;
the Company and its subsidiaries, except as disclosed in the
Preference Offering Memorandum and except where the failure to so
comply would not, singly or in the aggregate, have a Material Adverse
Effect, are in compliance with the terms and conditions of all such
Governmental Licenses; all of the Governmental Licenses are valid and
in full force and effect, except as disclosed in the Preference
Offering Memorandum and except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to
be in full force and effect would not have a Material Adverse Effect;
and except as disclosed in the Preference Offering Memorandum, neither
the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in
a Material Adverse Effect. To the knowledge of the Company, except as
described in the Preference Offering Memorandum, there exists no
reason or cause that could justify the variation, suspension,
cancellation or termination of any such Governmental Licenses held by
the Company or any of its subsidiaries with respect to the
construction or operation of their respective businesses, which
variation, suspension, cancellation or termination could reasonably be
expected to have a Material Adverse Effect.
(xxix) NO ADDITIONAL DOCUMENTS. There are no contracts or
documents of a character that would be required to be described in the
Preference Offering Memorandum, if it were a prospectus filed as part
of a registration statement on Form S-3 under the 1933 Act, that are
not described as would be so required. All such contracts to which
the Company is party have been duly authorized, executed and delivered
by the Company and constitute valid and binding agreements of the
Company.
(xxx) MANAGEMENT AGREEMENTS. Each of the Management Agreements
(as such term is defined in the Indenture) to which any subsidiary of
the Company is a party has been duly authorized, executed and
delivered by each of the parties thereto and constitutes a valid and
binding agreement of each of the parties thereto.
(xxxi) TITLE TO PROPERTY. The Company and its subsidiaries own no
real property, except as described in the Preference Offering
Memorandum and except for approximately 3,200 square meters of real
property owned by a Designated Subsidiary, and have good title to all
other properties owned by them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (a) are described in the
Preference Offering Memorandum or (b) do not, singly or in the
aggregate, materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property
by the Company or any of its subsidiaries; and all of the leases and
subleases material to the business of the Company and its
subsidiaries, considered as one enterprise, and under which the
Company or any of its subsidiaries holds properties described in the
Preference Offering Memorandum, are in full force and effect, and
neither the Company nor any of its subsidiaries has any notice of any
claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any of its subsidiaries under any of the
leases or subleases mentioned above, or affecting or questioning the
rights of the Company or any subsidiary thereof to the continued
possession of the leased or subleased premises under any such lease or
sublease, except for such claims as could not reasonably be expected
to result in a Material Adverse Effect.
(xxxii) TAX RETURNS. Except as disclosed in the Preference Offering
Memorandum, the Company and its subsidiaries have filed all domestic
and foreign tax returns that are required to be filed or have duly
requested extensions thereof and have paid all taxes required to be
paid by any of them and any related assessments, fines or penalties,
except for any such tax, assessment, fine or penalty that is being
contested in good faith and by appropriate proceedings, and except for
such claims as could not result in a Material Adverse Effect; and
adequate charges, accruals and reserves have been provided for in the
financial statements referred to in Section 1(a)(iv) above in respect
of all domestic and foreign taxes for all periods as to which the tax
liability of the Company or any of its subsidiaries has not been
finally determined or remains open to examination by applicable taxing
authorities.
(xxxiii) ENVIRONMENTAL LAWS. Except as described in the Preference
Offering Memorandum and except such matters as would not, singly or in
the aggregate, result in a Material Adverse Effect, (A) neither the
Company nor any of its subsidiaries is in violation of any domestic or
foreign statute, law, rule, regulation, ordinance, code, policy or
rule of common law or any judicial or administrative interpretation
thereof including any judicial or administrative order, consent,
decree or judgment, relating to pollution or protection of human
health, the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating
to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials")
or to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials
(collectively, "Environmental Laws"), (B) the Company and its
subsidiaries have all permits, authorizations and approvals required
under any applicable Environmental Laws and are each in compliance
with their requirements, (C) there are no pending or threatened
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against
the Company or any of its subsidiaries and (D) there are no events or
circumstances that might reasonably be expected to form the basis of
an order for clean-up or remediation, or an action, suit or proceeding
by any private party or governmental body or agency, against or
affecting the Company or any of its subsidiaries relating to Hazardous
Materials or Environmental Laws.
(xxxiv) INVESTMENT COMPANY ACT. The Company is not, and upon the
issuance and sale of the Preference Securities, the MG Securities and
the Note Securities as herein contemplated and the application of the
net proceeds therefrom as described in the Preference Offering
Memorandum will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "1940 Act").
(xxxv) INTERNAL CONTROLS. The Company and each of its subsidiaries
maintain a system of internal accounting controls sufficient to
provide reasonable assurances that (A) transactions are executed in
accordance with management's general or specific authorization;
(B) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (C) access to
assets is permitted only in accordance with management's general or
specific authorization; and (D) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. The
Company and its subsidiaries have not made, and, to the knowledge of
the Company, no employee or agent of the Company or any subsidiary has
made, any payment of the Company's funds or any subsidiary's funds or
received or retained any funds (A) in violation of the Foreign Corrupt
Practices Act, as amended, or (B) in violation of any other applicable
law, regulation or rule (except, in the case of this clause (B), for
such violations as could not reasonably be expected to result in a
Material Adverse Effect) or that would be required to be disclosed in
the Preference Offering Memorandum if it were a prospectus filed as
part of a registration statement on Form S-1 under the 1933 Act.
(xxxvi) TAXES ON SUBSIDIARY INDEBTEDNESS. Except as described in
the Preference Offering Memorandum, as of the date hereof, no material
income, stamp or other taxes or levies, imposts, deductions, charges,
compulsory loans or withholdings whatsoever are or will be, under
applicable law in the Republic of Poland, imposed, assessed, levied or
collected by the Republic of Poland or any political subdivision or
taxing authority thereof or therein or on or in respect of principal,
interest, premiums, penalties or other amounts payable under any
indebtedness of any of the Company's subsidiaries held by the Company.
(xxxvii) INSURANCE. Except as otherwise disclosed in the Preference
Offering Memorandum, the Company and each of its subsidiaries carry,
or are covered by, insurance in such amounts and covering such risks
as is adequate for the conduct of their respective businesses and the
value of their respective properties and as is customary for companies
engaged in similar businesses or similar industries in similar
locations.
(xxxviii) RULE 144A ELIGIBILITY. The Preference Securities are
eligible for resale pursuant to Rule 144A and will not be, at the
Closing Time, of the same class as securities listed on a national
securities exchange registered under Section 6 of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), or quoted in a U.S.
automated interdealer quotation system.
(xxxix) NO GENERAL SOLICITATION. None of the Company, its
affiliates, as such term is defined in Rule 501(b) under the 1933 Act
("Affiliates"), or any person acting on its or any of their behalf
(other than Chase Purchasers, the MG Purchaser and the Initial
Purchasers, as to whom the Company makes no representation) has
engaged or will engage, in connection with the offering of the
Preference Securities, in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the 1933 Act.
(xl) NO REGISTRATION REQUIRED. Subject to compliance by the
Chase Purchasers with the representations and warranties set forth in
Section 2 and the procedures set forth in Section 6 hereof, it is not
necessary in connection with the offer, sale and delivery of the
Preference Securities to the Chase Purchasers in the manner
contemplated by this Agreement, the Preference Warrant Agreement and
the Preference Offering Memorandum to register the Preference
Securities under the 1933 Act.
(xli) REPORTING COMPANY. The Company is subject to, and has
complied with all applicable reporting requirements of Section 13 or
Section 15(d) of the 1934 Act.
(xlii) FUNDS. With the net proceeds of the sale of the Preference
Securities and the MG Securities pursuant to this Agreement and the MG
Purchase Agreement, respectively, the sales of the Note Securities
pursuant to the Note Purchase Agreement and the sale of the Company's
Series C Senior Discount Notes which was consummated on January 20,
1999, together with cash on hand, the Company has sufficient capital
to fulfill its current business plan and to fund its commitments until
the Company achieves positive cash flow from operations, subject to
the matters disclosed in the Preference Offering Memorandum.
(xliii) SUBSCRIBERS. As of December 31, 1998, the Company had at
least 675,000 basic cable subscribers and had sold approximately
125,000 Wizja TV packages to authorized retailers in Poland (as
described in the Preference Offering Memorandum).
(b) OFFICERS' CERTIFICATES. Any certificate titled "Officers'
Certificate" or "Secretary's Certificate" signed by any officer of the
Company or any of its subsidiaries which is delivered to the Chase
Purchasers or to counsel for the Chase Purchasers shall be deemed a
representation and warranty by the Company to the Chase Purchasers as to
the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO THE PURCHASER; CLOSING.
(a) PREFERENCE SECURITIES. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein
set forth, the Company agrees to sell to the Chase Purchasers and the Chase
Purchasers, severally and not jointly, agree to purchase from the Company,
at an aggregate purchase price of $5,000,000 (less a commission of
$150,000), the aggregate number of Preference Shares and Preference
Warrants set forth in Schedule A opposite its name.
(b) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Preference Securities shall be made at the office of
Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022, or at
such other place as shall be agreed upon by the Chase Purchasers and the
Company, at 9:00 A.M. on the third business day after the date hereof
(unless postponed in accordance with the provisions of Section 11), or such
other time not later than ten business days after such date as shall be
agreed upon by the Chase Purchasers and the Company (such time and date of
payment and delivery being herein called the "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against
delivery to each of the Chase Purchasers for the account of such Chase
Purchasers of certificates for the Preference Securities to be purchased by
it.
(c) QUALIFIED INSTITUTIONAL BUYER. Each Chase Purchaser represents
and warrants to, and agrees with, the Company that it is an "accredited
investor" within the meaning of Rule 501(a) under the 1933 Act (an
"Accredited Investor").
(d) DENOMINATIONS; REGISTRATION. Certificates for the Preference
Securities shall be in such denominations and registered in such names as
the Chase Purchasers may request in writing at least one full business day
before the Closing Time. The certificates representing the Preference
Shares and the Preference Warrants shall be registered in the name of Cede
& Co. pursuant to the DTC Agreement and shall be made available for
examination and packaging by the Chase Purchasers in the City of New York
not later than 10:00 A.M. on the last business day prior to the Closing
Time.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with the
Chase Purchasers as follows:
(a) PREFERENCE OFFERING MEMORANDUM. The Company, as promptly as
possible, will furnish to each Chase Purchaser, without charge, such number
of copies of the Preference Offering Memorandum and any amendments and
supplements thereto and documents incorporated by reference therein as the
Chase Purchaser may reasonably request.
(b) NOTICE AND EFFECT OF MATERIAL EVENTS. The Company will
immediately notify the Chase Purchasers, and confirm such notice in
writing, of any filing made by the Company of information relating to the
offering of the Preference Securities with any securities exchange or any
other regulatory body in the United States or any other jurisdiction.
(c) RESERVED.
(d) RESERVED.
(e) RESERVED.
(f) DTC. The Company will cooperate with the Chase Purchasers and
use its best efforts (i) to permit the Preference Securities to be eligible
for clearance and settlement through the facilities of DTC.
(g) USE OF PROCEEDS. The Company will use the net proceeds received
by it from the sale of the Preference Securities in the manner specified in
the Preference Offering Memorandum under "Use of Proceeds."
(h) RESERVED.
(i) NOTIFICATION OF CURRENT ACCUMULATED EARNINGS AND PROFITS. The
Company will disclose its current and accumulated earnings and profits, if
any, for each fiscal year in its annual report on Form 10-K so long as it
is required to file such a report. Thereafter, the Company will provide
such information to any holder of Preference Securities upon receipt of a
written request from such holder.
SECTION 4. PAYMENT OF EXPENSES.
(a) EXPENSES. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and any filing of the Preference Offering Memorandum
(including financial statements and any schedules or exhibits and any
document incorporated therein by reference) and of each amendment or
supplement thereto, (ii) the preparation, printing and delivery to the
Chase Purchasers of this Agreement, the Preference Warrant Agreement, the
Preference Registration Rights Agreement, the Preference Warrant
Registration Rights Agreement, the Certificate of Designation and such
other documents as may be required in connection with the offering,
purchase, sale, issuance or delivery of the Preference Securities,
(iii) the preparation, issuance and delivery of the certificates for the
Preference Securities to the Chase Purchasers, including any charges of DTC
in connection therewith, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) any filing for review of the
offering with the National Association of Securities Dealers (the "NASD"),
and (vi) any fees payable to the NASD.
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Chase Purchasers in accordance with the provisions of Section 5 or
Section 10(a)(i) hereof, the Company shall reimburse the Chase Purchasers
for all of its out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Chase Purchasers incurred through the date
of termination.
SECTION 5. CONDITIONS OF THE CHASE PURCHASERS' OBLIGATIONS. The
obligations of the Chase Purchasers hereunder are subject to the accuracy
of the representations and warranties of the Company contained in Section 1
hereof or in certificates of any officer of the Company or any of its
subsidiaries delivered pursuant to the provisions hereof, to the
performance by the Company of its covenants and other obligations
hereunder, and to the following further conditions:
(a) RESERVED
(b) RESERVED
(c) RESERVED
(d) OFFICERS' CERTIFICATE. At the Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Preference Offering Memorandum, any material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, and the Chase Purchasers shall have received a
certificate of the chief executive officer of the Company and of the chief
financial or chief accounting officer of the Company, dated as of the
Closing Time, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties in Section 1 hereof
are true and correct with the same force and effect as though expressly
made at and as of the Closing Time, and (iii) the Company has complied with
all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Time.
(e) RESERVED
(f) RESERVED
(g) CONSUMMATION OF SALE OF MG SECURITIES AND NOTE SECURITIES. The
sale of the Note Securities and the sale of MG Securities to the MG
Purchasers pursuant to the MG Purchase Agreement shall have been
consummated at the Closing Time.
(h) RESERVED
(i) ADDITIONAL DOCUMENTS. At the Closing Time, counsel for the Chase
Purchasers shall have been furnished with such documents and opinions as it
may require for the purpose of enabling it to pass upon the issuance and
sale of the Preference Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the
Preference Securities as herein contemplated shall be satisfactory in form
and substance to the Chase Purchasers and counsel for the Chase Purchasers.
(j) EXECUTION OF AGREEMENTS. At the Closing Time, the Preference
Warrant Agreement, the Preference Registration Rights Agreement, the
Preference Warrant Registration Rights Agreement and the Certificate of
Designation, each in form and substance reasonably satisfactory to the
Chase Purchasers, shall have been duly executed and delivered and shall be
in full force and effect.
(k) TERMINATION OF AGREEMENT. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement may be terminated by the Chase Purchasers by notice to the
Company at any time at or prior to the Closing Time, and such termination
shall be without liability of any party to any other party except as
provided in Section 4 and except that Sections 1, 7, 8 and 9 shall survive
any such termination and remain in full force and effect.
SECTION 6. RESALES OF THE PREFERENCE SECURITIES.
(a) REPRESENTATION AND WARRANTY OF THE CHASE PURCHASERS. Each Chase
Purchaser represents and agrees that (i) it has not entered and will not
enter into any contractual arrangements with respect to the distribution of
the Preference Securities, except with its affiliates or with the prior
written consent of the Company; (ii) it has received and carefully reviewed
the Preference Offering Memorandum prior to the execution of this
Agreement; (iii) it has been furnished by the Company during the course of
this transaction with all information regarding the Company which it had
requested or desired to know, all documents which could be reasonably
provided have been made available for its inspection and review and it has
been afforded the opportunity to ask questions of and receive answers from
duly authorized officers or other representatives of the Company concerning
the terms and conditions of the offering and any additional information
which it had requested; (iv) except as set forth herein, no representations
or warranties have been made to it by the Company or any agent, employee or
affiliate of the Company and in entering into this transaction, it is not
relying on any information, other than that contained herein or in the
Preference Offering Memorandum and the results of its independent
investigation; (v) no person other than the Company has made any
representations to the Chase Purchaser concerning this Offering and the
Chase Purchaser has relied on no representations or documentation other
than that supplied by the Company and in particular, for avoidance of
doubt, the Chase Purchaser is not relying on information supplied in
connection with (X) the concurrent sale of the Note Securities by the
Initial Purchasers or (Y) the sale of the Company's Series C Senior
Discount Notes which was consummated on January 20, 1999; (vi) it is
purchasing the Preference Securities for investment purposes only for its
account and not with any view toward a distribution thereof; and (vii) it
has evaluated the risks of investing in the Preference Securities and has
determined that the Preference Securities are a suitable investment, and
that it can bear the economic risk of this investment and can afford a
complete loss of its investment.
(b) RESTRICTIONS ON TRANSFER. The transfer restrictions and the
other provisions set forth in the Preference Offering Memorandum under the
heading "Notice to Investors", including the legend required thereby, shall
apply to the Preference Securities except as otherwise agreed by the
Company and the Chase Purchasers.
(c) COVENANTS OF THE COMPANY. The Company covenants with the Chase
Purchasers as follows:
(i) DUE DILIGENCE. In connection with the original purchase of
the Preference Securities, the Company agrees that, prior to any offer
or resale of the Preference Securities by the Chase Purchasers, the
Chase Purchasers and counsel for the Chase Purchasers shall have the
right to make reasonable inquiries into the business of the Company
and its subsidiaries.
(ii) INTEGRATION. The Company agrees that it will not and will
cause its Affiliates not to solicit any offer to buy or make any offer
or sale of, or otherwise negotiate in respect of, securities of the
Company of any class if, as a result of the doctrine of "integration"
referred to in Rule 502 under the 1933 Act, such offer or sale would
render invalid (for the purpose of the sale of the Preference
Securities by the Company to the Chase Purchasers the exemption from
the registration requirements of the 1933 Act provided by Section 4(2)
thereof or otherwise.
(iii) RULE 144A INFORMATION. The Company agrees that, in order
to render the Preference Securities eligible for resale pursuant to
Rule 144A under the 1933 Act, while any of the Preference Securities
remain outstanding, it will make available, upon request, to any
holder of Preference Securities or prospective purchasers of
Preference Securities the information specified in Rule 144A(d)(4),
unless the Company furnishes information to the Commission pursuant to
Section 13 or 15(d) of the 1934 Act (such information, whether made
available to holders or prospective purchasers or furnished to the
Commission, is herein referred to as "Additional Information").
(d) RESALES. The Chase Purchasers understand that the Preference
Securities have not been and will not be registered under the 1933 Act and
may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except pursuant to an exemption from
the registration requirements of the 1933 Act. Each Chase Purchaser
represents and agrees, that it will offer and sell Preference Securities at
any time only in accordance with an applicable exemption from the
registration provisions of the 1933 Act. Each Chase Purchaser agrees that,
at or prior to confirmation of a sale of Preference Securities it will have
sent to each distributor, dealer or person receiving a selling concession,
fee or other remuneration that purchases Preference Securities from it or
through it during the restricted period a confirmation or notice to
substantially the following effect:
"The securities covered hereby have not been registered
under the United States Securities Act of 1933 (the
"Securities Act") and may not be offered or sold within
the United States or to or for the account or benefit
of U.S. persons as part of their distribution at any
time except in accordance with an exemption from the
registration requirements of the Securities Act."
(e) OFFERS AND SALES IN POLAND AND THE NETHERLANDS. Each Chase
Purchaser has advised the Company and hereby represents and warrants to and
agrees with the Company that it will not offer or sell the Preference
Securities in Poland except in accordance with Polish foreign exchange
regulations under circumstances which do not constitute a public offering
or distribution of securities under Polish laws and regulations. Each
Chase Purchaser further agrees it will not offer or sell the Preference
Securities in The Netherlands except under circumstances which do not
constitute a public offering or distribution (AANBOD BUITEN BESLOTEN KRING)
of securities under the laws and regulations of The Netherlands.
(f) OFFERS AND SALES IN THE UNITED KINGDOM. Each Chase Purchaser
hereby represents, warrants and agrees that (i) it has not offered or sold
and prior to the expiration of the period six months after the date of
issue of the Preference Securities will not offer to sell by means of any
document any Preference Securities to persons in the United Kingdom except
to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations
1995; (ii) it has complied and will comply with all applicable provisions
of the Financial Services Act 1986 with respect to anything done by it in
relation to the Preference Securities in, from or otherwise involving the
United Kingdom and (iii) it has only issued or passed on, and will only
issue or pass on in the United Kingdom any document received by it in
connection with the issue of the Preference Securities to a person who is
of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1995 or is a person to whom
such document may otherwise lawfully be issued or passed on.
(g) DARLAND. Cheryl Chase may assign any or all of her right to
purchase Preference Securities to The Darland Trust and the Company hereby
consents to such assignment.
SECTION 7. INDEMNIFICATION.
(a) INDEMNIFICATION OF THE CHASE PURCHASERS. The Company agrees to
indemnify and hold harmless each of the Chase Purchasers and each person,
if any, who controls the Chase Purchasers within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in the
Preference Offering Memorandum (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 7(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the
Purchaser), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, to the extent that any
such expense is not paid under (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information furnished to
the Company by the Chase Purchasers or the Initial Purchasers expressly for
use in the Preference Offering Memorandum (or any amendment thereto) and
provided further that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission which was, at
any time prior to the sales of the Preference Securities by the Chase
Purchaser, known or believed to be untrue or omitted by the Chase
Purchaser seeking indemnification.
(b) INDEMNIFICATION OF THE COMPANY, DIRECTORS AND OFFICERS. Each
Chase Purchaser agrees to indemnify and hold harmless the Company and each
person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section, as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions,
made in the Preference Offering Memorandum in reliance upon and in
conformity with written information furnished to the Company by the Chase
Purchasers expressly for use in the Preference Offering Memorandum.
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party
shall give notice as promptly as reasonably practicable to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof
and in any event shall not relieve it from any liability which it may have
otherwise than on account of this indemnity agreement. In the case of
parties indemnified pursuant to Section 7(a) above, counsel to the
indemnified parties shall be selected by Arnold Chase, and, in the case of
parties indemnified pursuant to Section 7(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying
party may participate at its own expense in the defense of any such action;
PROVIDED, HOWEVER, that counsel to the indemnifying party shall not (except
with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable
for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions
in the same jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior written
consent of the indemnified parties, settle or compromise or consent to the
entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened,
or any claim whatsoever in respect of which indemnification or contribution
could be sought under this Section 7 or Section 8 hereof (whether or not
the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional
release of each indemnified party from all liability arising out of such
litigation, investigation, proceeding or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act
by or on behalf of any indemnified party.
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for reasonable fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 7(a)(ii) effected without
its written consent if (i) such settlement is entered into more than 45
days after receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party shall have received notice of the terms of
such settlement at least 30 days prior to such settlement being entered
into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 8. CONTRIBUTION. If the indemnification provided for in
Section 7 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities,
claims, damages or expenses referred to therein, then each indemnifying
party shall contribute to the aggregate amount of such losses, liabilities,
claims, damages and expenses incurred by such indemnified party, as
incurred, (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Chase Purchasers
on the other hand from the offering of the Preference Securities pursuant
to this Agreement or (ii) if the allocation provided by clause (i) is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and of the Chase
Purchasers on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as
well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Chase Purchasers on the other hand in connection with the offering of the
Preference Securities pursuant to this Agreement shall be deemed to be in
the same respective proportions as the total net proceeds from the offering
of the Preference Securities pursuant to this Agreement (before deducting
expenses) received by the Company and the total commission received by the
Chase Purchasers, bear to the aggregate initial offering price of the
Preference Securities.
The relative fault of the Company on the one hand and the Chase
Purchasers on the other hand shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Chase Purchasers
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Chase Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
Section 8. The aggregate amount of losses, liabilities, claims, damages
and expenses incurred by an indemnified party and referred to above in this
Section 8 shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission.
Notwithstanding the provisions of this Section 8, the Chase Purchasers
shall not be required to contribute any amount in excess of the amount by
which the total price at which the Preference Securities purchased by it
and distributed to the subsequent purchasers were offered to the subsequent
purchasers exceeds the amount of any damages which the Chase Purchasers 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 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who controls the
Chase Purchasers within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as
the Chase Purchasers, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act shall have the same rights to contribution as the Company.
SECTION 9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of
the Chase Purchasers or controlling person, or by or on behalf of the
Company, and shall survive delivery of the Preference Securities to the
Chase Purchasers.
SECTION 10. TERMINATION OF AGREEMENT.
(a) TERMINATION; GENERAL. The Chase Purchasers may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing
Time (i) if there has been, since the time of execution of this Agreement
or since the respective dates as of which information is given in the
Preference Offering Memorandum, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial
markets in the United States, the Republic of Poland or the international
financial markets, any outbreak of hostilities or escalation thereof or
other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or
economic conditions, or in Polish taxation affecting the Company or any
subsidiary thereof or the transactions contemplated by the Preference
Offering Memorandum, or currency exchange rates for the U.S. dollar into
the Polish Zloty or exchange controls applicable to the U.S. dollar or the
Polish Zloty, in each case the effect of which is such as to make it, in
the judgment of the Chase Purchasers, impracticable to market the
Preference Securities or to enforce contracts for the sale of the
Preference Securities, or (iii) if trading in any securities of the Company
has been suspended or materially limited by the Commission, or if trading
generally on the American Stock Exchange, the New York Stock Exchange or in
the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges
for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the National Association of Securities
Dealers, Inc. or any other governmental authority, or (iv) if a banking
moratorium has been declared by Polish, United States Federal or New York
authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any
other party except as provided in Section 4 hereof, and PROVIDED FURTHER
that Sections 1, 7, 8 and 9 shall survive such termination and remain in
full force and effect.
SECTION 11. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed,
sent by courier or express delivery company or transmitted by any standard
form of telecommunication. Notices to the Chase Purchasers shall be
directed to the Chase Purchasers c/o Chase Enterprises, Inc., One
Commercial Plaza, Hartford, Connecticut 06103-3585, attention of John
Redding. Notices to the Company shall be directed to it at One Commercial
Plaza, Hartford, Connecticut 06103-3585, attention of Robert E. Fowler,
III.
SECTION 12. PARTIES. This Agreement shall inure to the benefit of and
be binding upon the Chase Purchasers and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended
or shall be construed to give any person, firm or corporation, other than
the Chase Purchasers and the Company and their respective successors and
the controlling persons and officers and directors referred to in
Sections 7 and 8 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or
any provision herein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of
the Chase Purchasers and the Company and their respective successors, and
said controlling persons and officers and directors and their heirs and
legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Preference Securities from the Chase
Purchasers shall be deemed to be a successor by reason merely of such
purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. EFFECT OF HEADINGS. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not
affect the construction hereof.
SECTION 15. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and when a counterpart has been executed by each party,
all such counterparts taken together shall constitute one and the same
agreement.
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a
binding agreement between the Chase Purchasers and the Company in
accordance with its terms.
Very truly yours,
@ENTERTAINMENT, INC.
By /s/ Robert E. Fowler III
------------------------
Title:
By /s/ Donald Miller-Jones
------------------------
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
ARNOLD CHASE CHERYL CHASE
/s/ Arnold Chase /s/ Cheryl Chase
- ------------------- ---------------------
Arnold Chase Cheryl Chase
RHODA CHASE
/s/ Rhoda Chase
- -------------------
Rhoda Chase
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number of Number of
Name Preference Shares Preference Warrants
Price
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$2,000,000 (less a
Arnold Chase 2,000 2,000
commission of $60,000)
$2,000,000 (less a
Cheryl Chase* 2,000 2,000
commission of $60,000)
$1,000,000 (less a
Rhoda Chase 1,000 1,000
commission of $30,000)
________ _______
$5,000,000 (less
Total . . . . . . . 5,000 5,000
commissions of $150,000)
======== ========
</TABLE>
* Cheryl Chase has assigned her right to purchase 1,000 Preference Shares
and 1,000 Preference Warrants for a price of $1,000,000 (less a commission
of $30,000) to The Darland Trust.
<PAGE>
SCHEDULE B
@ENTERTAINMENT, INC.
[Separately Attached]
<PAGE>
SCHEDULE C
LIST OF DESIGNATED SUBSIDIARIES
1. ETV Sp. z o.o.
2. Telewizja Kablowa GOSAT Sp. z o.o.
3. Ground Zero Media Sp. z o.o.
4. Otwocka Telewizja Kablowa Sp. z o.o.
5. Polska Telewizja Kablowa S.A.
6. Polska Telewizja Kablowa Krakow S.A.
7. Polska Telewizja Kablowa Lublin S.A.
8. Polska Telewizja Kablowa Operator Sp. z o.o.
9. Polska Telewizja Kablowa Szczecin Sp. z o.o.
10. Polska Telewizja Kablowa Warszawa S.A.
11. Poltelkab Sp. z o.o.
12. Szczecinska Telewizja Kablowa Sp. z o.o.
13. TV Kabel Sp. z o.o.
14. At Entertainment Limited
15. Poland Communications, Inc.
16. Poland Cablevision (Netherlands) B.V.
17. Sereke Holding B.V.
18. Wizja TV Sp. z o.o.
19. WPTS Sp. z o.o.
20. @Entertainment Programming, Inc.
21. ProCable Sp. z o.o.
EXHIBIT 7
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE OR
OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR
AN "ACCREDITED INVESTOR" (AS DEFINED IN REGULATION D UNDER THE SECURITIES
ACT), (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE WHICH IS TWO YEARS
(OR SHORTER PERIOD AS MAY BE PRESCRIBED BY RULE 144(K)(OR ANY SUCCESSOR
PROVISION THEREOF) UNDER THE SECURITIES ACT) AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS SECURITY) OR THE
LAST DAY ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER
OF THIS SECURITY OR ANY PREDECESSOR OF THIS SECURITY AND (Y) SUCH LATER
DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE "RESALE
RESTRICTION TERMINATION DATE"), OFFER, SELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO THE ISSUER OR ITS SUBSIDIARY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES
THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THESE SECURITIES WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE
HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF
RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE
WARRANT AGENT. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER
AFTER THE RESALE RESTRICTION TERMINATION DATE.
<PAGE>
CUSIP No. 045920 15 4
No. __ ________ Preference Warrants
PREFERENCE WARRANT CERTIFICATE
@ENTERTAINMENT, INC.
This Preference Warrant Certificate certifies that ____________,
or his registered assigns, is the registered holder of _____ Preference
Warrants (the "PREFERENCE WARRANTS") to purchase an aggregate of _______
shares of Common Stock, par value $0.01 per share, issuable upon exercise
of the Preference Warrants (the "PREFERENCE WARRANT SHARES") of
@ENTERTAINMENT, INC., a Delaware corporation (the "COMPANY," which term
includes its successors and assigns). Each Preference Warrant entitles the
holder to purchase from the Company at any time from 9:00 a.m. New York
City time on or after the Exercise Date until 5:00 p.m., New York City
time, on February 1, 2010 (the "PREFERENCE EXPIRATION DATE"), 110 fully
paid, registered and non-assessable Preference Warrant Shares, subject to
adjustment as provided in Article V of the Preference Warrant Agreement, at
a preference exercise price of $10.00 for each share purchased (the
"PREFERENCE EXERCISE PRICE"); upon surrender of this Preference Warrant
Certificate and payment of the Preference Exercise Price (i) in cash or by
certified or official bank check, (ii) by a Cashless Exercise or (iii) by
any combination of (i) and (ii), at any office or agency maintained for
that purpose by the Company (the "PREFERENCE WARRANT EXERCISE OFFICE"),
subject to the conditions set forth herein and in the Preference Warrant
Agreement. For purposes of this Warrant, a "CASHLESS EXERCISE" shall mean
an exercise of a Preference Warrant in accordance with the immediately
following two sentences. To effect a Cashless Exercise, the holder may
exercise a Preference Warrant or Preference Warrants without payment of the
Preference Exercise Price in cash by surrendering such Preference Warrant
or Preference Warrants (represented by one or more Preference Warrant
Certificates) and in exchange therefor, receiving such number of shares of
Common Stock equal to the product of (1) that number of shares of Common
Stock for which such Preference Warrant or Preference Warrants are
exercisable and which would be issuable in the event of an exercise with
payment of the Preference Exercise Price and (2) the Cashless Exercise
Ratio. The "CASHLESS EXERCISE RATIO" shall equal a fraction, the numerator
of which is the excess of the Current Market Value (calculated as set forth
in this Preference Warrant) per share of Common Stock on the date of
exercise over the Preference Exercise Price per share of Common Stock as of
the date of exercise and the denominator of which is the Current Market
Value per share of Common Stock on the date of exercise. Upon surrender of
a Preference Warrant Certificate representing more than one Preference
Warrant in connection with the holder's option to elect a Cashless
Exercise, the holder must specify the number of Preference Warrants for
which such Preference Warrant Certificate is to be exercised (without
giving effect to the Cashless Exercise). All provisions of the Preference
Warrant Agreement shall be applicable with respect to a Cashless Exercise
of a Preference Warrant Certificate for less than the full number of
Preference Warrants represented thereby. Capitalized terms used herein
without being defined herein shall have the definitions ascribed to such
terms in the Preference Warrant Agreement.
"CURRENT MARKET VALUE" per share of Common Stock of the Company
or any other security at any date shall mean (i) if the security is not
registered under the Exchange Act, (a) the value of the security,
determined in good faith by the board of directors of the Company and
certified in a board resolution, based on the most recently completed
arm's-length transaction between the Company and a person other than an
affiliate of the Company and the closing of which occurs on such date or
shall have occurred within the six-month period preceding such date, or (b)
if no such transaction shall have occurred on such date or within such six-
month period, the fair market value of the security as determined by a
nationally or regionally recognized Independent Financial Expert (as
defined herein) (PROVIDED that in the case of the calculation of Current
Market Value for determining the cash value of fractional shares, any such
determination within six months that is, in the good faith judgment of the
Board, a reasonable determination of value, may be utilized) or (ii)(a) if
the security is registered under the Exchange Act, the average of the daily
closing sales prices of the securities for the 20 consecutive trading days
immediately preceding such date, or (b) if the security has been registered
under the Exchange Act for less than 20 consecutive trading days before
such date, then the average of the daily closing sales prices for all of
the trading days before such date for which closing sales prices are
available, in the case of each of (ii)(a) and (ii)(b), as certified by the
president, the chief executive officer, any vice president or the chief
financial officer of the Company in a writing delivered to the Preference
Warrant Agent. The closing sales price for each such trading day shall be:
(A) in the case of a security listed or admitted to trading on any U.S.
national securities exchange or quotation system, the closing sales price,
regular way, on such day, or if no sale takes place on such day, the
average of the closing bid and asked prices on such day, (B) in the case of
a security not then listed or admitted to trading on any U.S. national
securities exchange or quotation system, the last reported sale price on
such day, or if no sale takes place on such day, the average of the closing
bid and asked prices on such day, as reported by a reputable quotation
source designated by the Company, (C) in the case of a security not then
listed or admitted to trading on any U.S. national securities exchange or
quotation system and as to which no such reported sale price or bid and
asked prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a reputable quotation service, or
a newspaper of general circulation in the Borough of Manhattan, The City
and State of New York customarily published on each Business Day,
designated by the Company, or, if there shall be no bid and asked prices on
such day, the average of the high bid and low asked prices, as so reported,
on the most recent day (not more than 30 days prior to the date in
question) for which prices have been so reported and (D) if there are not
bid and asked prices reported during the 30 days prior to the date in
question, the Current Market Value shall be determined as if the securities
were not registered under the Exchange Act.
"INDEPENDENT FINANCIAL EXPERT" means a U.S. investment banking
firm of national standing in the United States, (i) which does not, and
whose directors, officers and employees or affiliates do not have a direct
or indirect material financial interest for its proprietary account in the
Company or any of its affiliates and (ii) which, in the judgment of the
board of directors of the Company, is otherwise independent with respect to
the Company and its affiliates and qualified to perform the task for which
it is to be engaged.
"PERSON" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof or any other entity, including any predecessor of any
such entity.
The Company has initially designated the principal corporate
trust office of the Preference Warrant Agent in the Borough of Manhattan,
The City of New York, as the initial Preference Warrant Agent Office. The
number of shares of Common Stock issuable upon exercise of the Preference
Warrants ("EXERCISE RATE") is subject to adjustment upon the occurrence of
certain events set forth in the Preference Warrant Agreement.
Any Warrants not exercised on or prior to 5:00 p.m., New York
City time, on February 1, 2010 shall thereafter be void.
If the Company in a single transaction or through a series of
related transactions, consolidates with or merges with or into any other
person or sells, assigns, transfers, leases, conveys or otherwise disposes
of all or substantially all of its properties and assets to another person
or group of affiliated persons or is a party to a merger or binding share
exchange which reclassifies or changes its outstanding Common Stock (a
"Fundamental Transaction"), as a condition to consummating any such
transaction the person formed by or surviving any such consolidation or
merger if other than the Company or the person to whom such transfer has
been made (the "Surviving Person") shall enter into a supplemental
preference warrant agreement. The supplemental preference warrant
agreement shall provide (a) that the holder of a Preference Warrant then
outstanding may exercise it for the kind and amount of securities, cash or
other assets which such holder would have received immediately after the
Fundamental Transaction if such holder had exercised the Preference Warrant
immediately before the effective date of the transaction (regardless of
whether the Preference Warrants were then exercisable and without giving
effect to the Cashless Exercise option), assuming (to the extent
applicable) that such holder (i) made no election with respect to the form
of consideration payable in such transaction and (ii) was treated alike
with the plurality of non-electing holders, and (b) that the Surviving
Person shall succeed to and be substituted for every right and obligation
of the Company in respect of the Preference Warrant Agreement and the
Preference Warrants. The Surviving Person shall mail to holders of
Preference Warrants at the addresses appearing on the Warrant Register a
notice briefly describing the supplemental warrant agreement. If the
issuer of securities deliverable upon exercise of Preference Warrants is an
affiliate of the Surviving Person, that company shall join in the
supplemental warrant agreement.
Notwithstanding the foregoing, (i) if the Company enters into a
Fundamental Transaction and the consideration payable to holders of the
Common Stock (or other securities) issuable or deliverable upon exercise of
the Preference Warrants in connection with such Fundamental Transaction
consists solely of cash or (ii) there is a dissolution, liquidation or
winding up of the issuer, then the holders of Preference Warrants shall be
entitled to receive distributions on the date of such event on an equal
basis with holders of Common Stock (or other securities issuable or
delivered upon exercise of the Preference Warrants) as if the Preference
Warrants had been exercised immediately prior to such event, less the
Exercise Price therefor. Upon receipt of such payment, if any, the rights
of a holder of a Preference Warrant shall terminate and cease and such
holder's Preference Warrants shall expire.
Reference is hereby made to the further provisions on the reverse
hereof which provisions shall for all purposes have the same effect as
though fully set forth at this place.
This Preference Warrant Certificate shall not be valid unless
authenticated by the Preference Warrant Agent, as such term is used in the
Preference Warrant Agreement.
The Holders of Preference Warrants have agreed with the Company
that while they may exercise their Preference Warrants at any time, in
whole or in part, prior to the Preference Expiration Date, such Holder of
Preference Warrants will not be allowed to sell or otherwise dispose of the
Preference Warrant Shares prior to one year from the date hereof.
THIS PREFERENCE WARRANT CERTIFICATE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
WITNESS the facsimile seal of the Company and facsimile
signatures of its duly authorized officers.
Dated: January 27, 1999
@ENTERTAINMENT, INC.
By:
------------------------------------
Name:
Title:
By: ------------------------------------
Name:
Title:
Certificate of Authentication:
This is one of the Preference Warrants
referred to in the within
mentioned Preference Warrant Agreement:
BANKERS TRUST COMPANY,
Preference Warrant Agent
By:
-----------------------------------
Authorized Signatory
<PAGE>
@ENTERTAINMENT, INC.
The Preference Warrants evidenced by this Preference Warrant
Certificate are part of a duly authorized issue of Preference Warrants
expiring at 5:00 p.m., New York City time, on February 1, 2010 (the
"PREFERENCE EXPIRATION DATE"). Each Preference Warrant represents the
right to purchase at any time on or after the Preference Exercise Date (as
defined in the Preference Warrant Agreement) and on or prior to the
Preference Expiration Date 110 Preference Warrant Shares, subject to
adjustment as set forth in the Preference Warrant Agreement. The
Preference Warrants are issued pursuant to a Preference Warrant Agreement
dated as of January 27, 1999 (the "PREFERENCE WARRANT AGREEMENT"), duly
executed and delivered by the Company to Bankers Trust Company, as
Preference Warrant Agent (the "PREFERENCE WARRANT AGENT"), which Preference
Warrant Agreement is hereby incorporated by reference in and made a part of
this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Preference Warrant Agent, the Company and the holders (the words "HOLDERS"
or "HOLDER" meaning the registered holders or registered holder) of the
Preference Warrants.
Preference Warrants may be exercised by (i) surrendering at any
Preference Warrant Exercise Office this Preference Warrant Certificate with
the form of Election to Exercise set forth hereon duly completed and
executed and (ii) to the extent such exercise is not being effected through
a Cashless Exercise by paying in full, in cash or by certificated or
official bank check, the Warrant Preference Exercise Price for each such
Preference Warrant exercised and any other amounts required to be paid
pursuant to the Preference Warrant Agreement.
If all of the items referred to in the last sentence of the
preceding paragraph are received by the Preference Warrant Agent at or
prior to 11:00 a.m., New York City time, on a Business Day, the exercise of
the Preference Warrant to which such items relate will be effective on such
Business Day. If any items referred to in the last sentence of the
preceding paragraph are received after 11:00 a.m., New York City time, on a
Business Day, the exercise of the Preference Warrants to which such item
relates will be deemed to be effective on the next succeeding Business Day.
Notwithstanding the foregoing, in the case of an exercise of Preference
Warrants on February 1, 2010, if all of the items referred to in the last
sentence of the preceding paragraph are received by the Preference Warrant
Agent at or prior to 5:00 p.m., New York City time, on such Preference
Expiration Date, the exercise of the Preference Warrants to which such
items relate will be effective on the Preference Expiration Date.
As soon as practicable after the exercise of any Preference
Warrant or Preference Warrants, the Company shall issue or cause to be
issued to or upon the written order of the registered holder of this
Preference Warrant Certificate, a certificate or certificates evidencing
such Preference Warrant Share or Preference Warrant Shares to which such
holder is entitled, in fully registered form, registered in such name or
names as may be directed by such holder pursuant to the Election to
Exercise, as set forth on the reverse of this Preference Warrant
Certificate. Such certificate or certificates evidencing the Preference
Warrant Share or Preference Warrant Shares shall be deemed to have been
issued and any persons who are designated to be named therein shall be
deemed to have become the holder of record of such Preference Warrant Share
or Preference Warrant Shares as of the close of business on the date upon
which the exercise of this Preference Warrant was deemed to be effective as
provided in the preceding paragraph.
The Company shall not be required to issue fractional Preference
Warrant Shares upon exercise of the Preference Warrants or distribute
Preference Warrant Certificates that evidence fractional Preference Warrant
Shares. In lieu of fractional Preference Warrant Shares, there shall be
paid to the registered Holder of this Preference Warrant Certificate at the
time such Preference Warrant Certificate is exercised an amount in cash
equal to the same fraction of the Current Market Value per share of Common
Stock on the Business Day preceding the date this Preference Warrant
Certificate is surrendered for exercise.
Preference Warrant Certificates, when surrendered at any office
or agency maintained by the Company for that purpose by the registered
holder thereof in person or by legal representative or attorney duly
authorized in writing, may be exchanged for a new Preference Warrant
Certificate or new Preference Warrant Certificates evidencing in the
aggregate a like number of Preference Warrants, in the manner and subject
to the limitations provided in the Preference Warrant Agreement, without
charge except for any tax or other governmental charge imposed in
connection therewith.
Upon due presentment for registration of transfer of this
Preference Warrant Certificate at any office or agency maintained by the
Company for that purpose, a new Preference Warrant Certificate evidencing
in the aggregate a like number of Preference Warrants shall be issued to
the transferee in exchange for this Preference Warrant Certificate, subject
to the limitations provided in the Preference Warrant Agreement, without
charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Preference Warrant Agent may deem and treat
the registered holder hereof as the absolute owner of this Preference
Warrant Certificate (notwithstanding any notation of ownership or other
writing hereon made by anyone) for the purpose of any exercise hereof and
for all other purposes, and neither the Company nor the Preference Warrant
Agent shall be affected by any notice to the contrary.
The term "Business Day" shall mean any day on which (i) banks in
The City of New York, (ii) the principal U.S. securities exchange or
market, if any, on which any Common Stock is listed or admitted to trading
and (iii) the principal U.S. securities exchange or market, if any, on
which the Preference Warrants are listed or admitted to trading, are open
for business.
EXHIBIT 8
______________________________________________________________________________
______________________________________________________________________________
PREFERENCE WARRANT
REGISTRATION RIGHTS AGREEMENT
Dated as of January 27, 1999
Among
@ENTERTAINMENT, INC.,
and
MORGAN GRENFELL PRIVATE EQUITY LIMITED on behalf of
MORGAN GRENFELL DEVELOPMENT CAPITAL SYNDICATION LIMITED,
ARNOLD CHASE, CHERYL CHASE, RHODA CHASE
and THE DARLAND TRUST
______________________________________________________________________________
______________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. PREFERENCE REGISTRATION RIGHTS. . . . . . . . . . . . . . . . 7
2.1(a) (i) PREFERENCE WARRANT SHELF REGISTRATION STATEMENT. . . . . 7
(ii) PREFERENCE WARRANT STOCK SHELF REGISTRATION STATEMENT. . 8
(b) BLUE SKY. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) ACCURACY OF DISCLOSURE. . . . . . . . . . . . . . . . . . . . 8
(d) LIQUIDATED DAMAGES. . . . . . . . . . . . . . . . . . . . . . 9
(e) ADDITIONAL ACTS . . . . . . . . . . . . . . . . . . . . . . . 9
(f) LISTING OF PREFERENCE WARRANT SHARES. . . . . . . . . . . . . 9
2.2 [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3 LIMITATIONS, CONDITIONS AND QUALIFICATIONS TO OBLIGATIONS
UNDER REGISTRATION COVENANTS. . . . . . . . . . . . . . . . 9
2.4 [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.5 RULE 144 AND RULE 144A. . . . . . . . . . . . . . . . . . . . 10
2.6 UNDERWRITTEN REGISTRATIONS. . . . . . . . . . . . . . . . . . 11
SECTION 3. [RESERVED]. . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4. REGISTRATION PROCEDURES . . . . . . . . . . . . . . . . . . . 11
SECTION 5. INDEMNIFICATION AND CONTRIBUTION. . . . . . . . . . . . . . . 17
SECTION 6. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 21
(a) REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(b) NO INCONSISTENT AGREEMENTS. . . . . . . . . . . . . . . . . . 21
(c) [INTENTIONALLY OMITTED] . . . . . . . . . . . . . . . . . . . 21
(d) AMENDMENTS AND WAIVERS. . . . . . . . . . . . . . . . . . . . 21
(e) NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(f) SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . . . 22
(g) COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . 22
(h) GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . 22
(j) SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . 22
(k) HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(l) ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . 23
(m) SECURITIES HELD BY THE COMPANY OR ITS AFFILIATES. . . . . . . 23
<PAGE>
EXECUTION COPY
PREFERENCE WARRANT REGISTRATION RIGHTS AGREEMENT
This PREFERENCE WARRANT REGISTRATION RIGHTS AGREEMENT (the
"AGREEMENT") is made and entered into as of January 27, 1999, among
@ENTERTAINMENT, INC., (the "COMPANY") a Delaware corporation, The Darland
Trust ("DARLAND"), Rhoda Chase ("RHODA CHASE"), Arnold Chase ("ARNOLD
CHASE") and Cheryl Chase ("CHERYL CHASE", and together with Darland, Rhoda
Chase and Arnold Chase, the "CHASE PURCHASERS") and MORGAN GRENFELL PRIVATE
EQUITY LIMITED on behalf of MORGAN GRENFELL 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 Arnold Chase, Rhoda Chase and Cheryl Chase (the
"CHASE PURCHASE AGREEMENT"), and together with the MGPE Purchase Agreement,
the "PURCHASE AGREEMENTS"), in which the Company has agreed to sell to the
Purchasers (i) an aggregate of 50,000 shares of the Company's Series A and
Series B 12% Cumulative Preference Shares (the "PREFERENCE SHARES"), and
(ii) warrants (the "PREFERENCE WARRANTS"), initially entitling the holders
thereof to purchase an aggregate of 5,500,000 shares of Common Stock of the
Company, par value $0.01 per share (the "Common Stock"). The execution of
this Agreement is a condition to the obligations of the Purchasers under
the Purchase Agreements.
In consideration of the foregoing, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the following
defined terms shall have the following meanings:
"ADVICE" has the meaning ascribed to such term in Section 4
hereof.
"AGREEMENT" shall have the meaning ascribed to such term in the
preamble hereto.
"BUSINESS DAY" shall mean a day that is not a Legal Holiday.
"CAPITAL STOCK" shall mean, with respect to any Person, any and
all shares, interests, partnership interests, participations, rights
in or other equivalents (however designated and whether voting or
non-voting) of such person's capital stock, and any rights (other than
debt securities convertible into capital stock), warrants or options
exchangeable for or convertible into such capital stock whether
outstanding on the issue date or issued after the issue date.
"CHANGE OF CONTROL" shall have the meaning ascribed to such term
in the Indenture.
"COMPANY" shall have the meaning ascribed to such term in the
preamble of this Agreement and shall also include the Company's
permitted successors and assigns.
"COMMON STOCK" shall have the meaning ascribed to such term in
the preamble of this Agreement.
"CONVERTIBLE PREFERRED STOCK" shall mean any securities
convertible or exercisable or exchangeable into Common Stock of the
Company, whether outstanding on the date hereof or thereafter issued.
"DAMAGE AMOUNT" shall have the meaning ascribed to such term in
Section 2.1(d) hereof.
"DTC" shall have the meaning ascribed to such term in Section
4(i) hereof.
"EFFECTIVENESS PERIOD" shall mean the respective periods for
which the Company is obligated to use its reasonable efforts to keep a
Registration Statement effective pursuant to Sections 2.1(a) and
2.2(a).
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"EXERCISE DATE" shall mean the earlier of (i) the date that a
shelf Registration Statement covering the sale of Common Stock
underlying the Preference Warrants is declared effective under the
Securities Act and (ii) January 27, 1999.
"HOLDER" shall mean each holder (including the Purchasers) of any
Preference Registrable Security and each of their successors, assigns
and direct and indirect transferees who become registered owners of
such Preference Registrable Securities.
"INDEMNIFIED PARTY" and "INDEMNIFYING PARTY" shall have the
respective meanings ascribed to such term in Section 5(c).
"INDENTURE" shall mean the Indenture, dated as of the date
hereof, between the Company and Bankers Trust Company, as Trustee,
pursuant to which the Notes are issued.
"INSPECTORS" shall have the meaning ascribed to such term in
Section 4(m) hereof.
"LEGAL HOLIDAY" shall mean a Saturday, a Sunday or a day on which
(i) banking institutions in The City of New York are required or
authorized by law or other government action to be closed and (ii) the
principal U.S. securities exchange or market, if any, on which any
Common Stock is listed or admitted to trading and the principal U.S.
securities exchange or market, if any, on which the Preference
Warrants are listed or admitted to trading are closed for business.
"LIQUIDATED DAMAGES" shall have the meaning ascribed to such term
in Section 2.1(d) hereof.
"MGPE" shall have the meaning ascribed to such term in the
preamble hereto.
"PERSON" shall mean any individual, corporation, limited
liability company, partnership, joint venture, association, joint-
stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof or any other entity, including
any predecessor of any such entity.
" PREFERENCE REGISTRABLE SECURITIES" shall mean any of (i) the
Preference Warrants, (ii) the Preference Warrant Shares and (iii) any
other securities issued or issuable with respect to the Preference
Warrants or Preference Warrant Shares by way of stock dividend or
stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or
otherwise. As to any particular Preference Registrable Securities,
such securities shall cease to be Preference Registrable Securities
when (a) a registration statement with respect to the offering of such
securities by the holder thereof shall have been declared effective
under the Securities Act and such securities shall have been disposed
of by such holder pursuant to such registration statement, (b) such
securities have been sold to the public pursuant to, or are eligible
for sale to the public without volume or manner of sale restrictions
under, Rule 144(k) (or any similar provision then in force, but not
Rule 144A) promulgated under the Securities Act, (c) such securities
shall have been otherwise transferred and new certificates for such
securities not bearing a legend restricting further transfer shall
have been delivered by the Company or its transfer agent and
subsequent disposition of such securities shall not require
registration or qualification under the Securities Act or any similar
state law then in force, or (d) such securities shall have ceased to
be outstanding.
"PREFERENCE WARRANT REGISTRATION EXPENSES" shall mean all
expenses incident to the Company's performance of or compliance with
this Agreement, including, without limitation, all SEC and stock
exchange or National Association of Securities Dealers, Inc.
registration and filing fees and expenses, fees and expenses incurred
in connection with compliance with securities or blue sky laws
(including, without limitation, reasonable fees and disbursements of
counsel for the underwriters and the Holders in connection with blue
sky qualifications of the Registrable Securities), printing expenses,
messenger, telephone and delivery expenses, fees and disbursements of
counsel for the Company, counsel for the underwriters, if any, the
Warrant Agent and all independent certified public accountants, and
other reasonable out-of-pocket expenses of Holders (it being
understood that Preference Warrant Registration Expenses shall not
include as to the 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 STATEMENT" shall mean any appropriate
registration statement of the Company filed with the SEC pursuant to
the Securities Act which covers any of the Preference Warrants, the
Preference Warrant Shares and any other Preference Registrable
Securities pursuant to the provisions of this Agreement and all
amendments and supplements to any 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. "Preference Registration
Statement" shall include the Preference Warrant Shelf Registration
Statement and the Preference Warrant Stock Shelf Registration
Statement.
"PREFERENCE WARRANT AGENT" shall mean Bankers Trust Company and
any successor warrant agent for the Preference Warrants pursuant to
the Preference Warrant Agreement.
"PREFERENCE WARRANT AGREEMENT" shall mean the Preference Warrant
Agreement dated as of the date hereof, between the Company and the
Preference Warrant Agent, as amended or supplemented from time to time
in accordance with the terms thereof.
"PREFERENCE WARRANT SHARES" shall mean shares of Common Stock
issuable upon exercise of the Preference Warrants initially at an
exercise price of $10.00 per share.
"PREFERENCE WARRANT SHELF REGISTRATION STATEMENT" shall mean the
Preference Registration Statement filed with the SEC pursuant to
Section 2.1(a)(i).
"PREFERENCE WARRANT STOCK SHELF REGISTRATION STATEMENT"shall mean
the Preference Registration Statement filed with the SEC pursuant to
Section 2.1(a)(ii).
"PREFERENCE WARRANTS" shall have the meaning ascribed to such
term in the preamble hereto.
"PROSPECTUS" shall mean the prospectus included in any Preference
Registration Statement (including, without limitation, any prospectus
subject to completion and a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under
the Securities Act), as amended or supplemented by any prospectus
supplement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
"PURCHASE AGREEMENTS" shall have the meaning ascribed to such
term in the preamble hereof.
"RULE 144" shall mean Rule 144 promulgated under the Securities
Act, as such Rule may be amended from time to time, or any similar
rule (other than Rule 144A) or regulation hereafter adopted by the SEC
providing for offers and sales of securities made in compliance
therewith resulting in offers and sales by subsequent holders that are
not affiliates of an issuer of such securities being free of the
registration and prospectus delivery requirements of the Securities
Act.
"RULE 144A" shall mean Rule 144A promulgated under the Securities
Act, as such Rule may be amended from time to time, or any similar
rule (other than Rule 144) or regulation hereafter adopted by the SEC.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended from time to time.
"SELLING HOLDER" shall mean a Holder who is selling Preference
Registrable Securities in accordance with the provisions of Section
2.2.
"SHELF REGISTRATION DEFAULT" shall have the meaning ascribed to
such term in Section 2.1(d).
"SUSPENSION PERIOD" shall have the meaning ascribed to such term
in Section 2.3(a).
"UNITS OFFERING" shall mean the Company's offering, which is
simultaneous with the offering of Preference Shares and Preference
Warrants, of 256,800 units consisting of 14 1/2 % Senior Discount Notes
due 2009 and 1,207,200 warrants to purchase 1,813,665 shares of common
stock.
Capitalized terms used herein but not defined shall have the
meaning ascribed thereto in the Preference Warrant Agreement.
SECTION 2. PREFERENCE REGISTRATION RIGHTS.
2.1 (a)(i) PREFERENCE WARRANT SHELF REGISTRATION STATEMENT. The
Company shall cause to be filed pursuant to Rule 415 (or any successor
provision) of the Securities Act a shelf registration statement covering
the resale of the Preference Warrants (the "Preference Warrant Shelf
Registration Statement") and shall use its best efforts to cause the
Preference Warrant Shelf Registration Statement to be declared effective
under the Securities Act on or before July 7, 1999. Subject to Section
2.3(a) hereof, the Company shall use reasonable efforts to maintain the
effectiveness of the Preference Warrant Shelf Registration Statement until
such time as all Preference Warrants have expired or have been exercised or
redeemed.
(ii) PREFERENCE WARRANT STOCK SHELF REGISTRATION STATEMENT. The
Company shall also caused to be filed pursuant to Rule 415 (or any
successor provision) of the Securities Act, a shelf registration statement
covering the issuance of the Preference Warrant Shares (the "Preference
Warrant Stock Shelf Registration Statement") and shall use its best efforts
to cause the Preference Warrant Stock Shelf Registration Statement to be
declared effective under the Securities Act by January 27, 2000. Subject
to Section 2.3(a) hereof, the Company shall use reasonable efforts to
maintain the effectiveness of the Warrant Stock Shelf Registration
Statement until such time as all the Preference Warrants have expired or
have been exercised or redeemed.
(iii) The Company will pay all Preference Warrant Registration
Expenses in connection with the resale of Preference Warrants and the
issuance of the Preference Warrant Shares.
(iv) The Preference Registration Statements may also include
securities issued in the Units Offering and securities issuable upon
conversion of such securities.
(b) BLUE SKY. The Company shall use its reasonable efforts to
register or qualify the Preference Warrant Shares under all applicable
securities laws, blue sky laws or similar laws of all jurisdictions in the
United States and Canada in which any Holder may or may be deemed to
purchase Preference Warrant Shares upon the exercise of Preference Warrants
and shall use its reasonable efforts to maintain such registration or
qualification through such time as all Preference Warrants have expired or
have been exercised or redeemed and Preference Warrant Shares have been
resold; PROVIDED, HOWEVER, that the Company shall not be required to
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 2.1(b) or to take any
action which would subject it to general service of process or to taxation
in any such jurisdiction where it is not then so subject.
(c) ACCURACY OF DISCLOSURE. The Company represents and warrants
to each Holder and agrees for the benefit of each Holder that (i) the
Preference Registration Statements and any amendment thereto will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
contained therein not misleading; and (ii) each of the Prospectuses
furnished to such Holder for delivery in connection with the exercise of
Preference Warrants or in connection with the sale of Preference Warrant
Shares, as the case may be, and the documents incorporated by reference
therein will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements contained therein, in light of the circumstances under which
they were made, not misleading; provided, however, that the Company shall
have no liability under clause (i) or (ii) of this Section 2.1(c) with
respect to any such untrue statement or omission made in a Preference
Registration Statement in reliance upon and in conformity with information
furnished to the Company by or on behalf of the Holders specifically for
inclusion therein.
(d) LIQUIDATED DAMAGES. In the event that (i) the Preference
Warrant Shelf Registration Stock Statement is not declared effective by the
SEC on or prior to July 7, 1999 or (ii) the Preference Warrant Stock Shelf
Registration Statement is not declared effective by the SEC on or prior to
January 27, 2000, or following the dates either such Preference
Registration Statement is declared effective but thereafter ceases to be
effective or usable without being restored to effectiveness by amendment or
otherwise, except during such time periods indicated in Section 2.3(a)
(each of the events referred to in clauses (i) and (ii) above, a "SHELF
REGISTRATION DEFAULT"), then the Company shall pay liquidated damages
("LIQUIDATED DAMAGES") to each Holder of Preference Warrants or Preference
Warrant Shares, as the case may be, an amount (the "DAMAGE AMOUNT") in an
initial amount equal to $.0025 per week per Preference Warrant for each
week that the Shelf Registration Default continues for the first 90-day
period following such Shelf Registration Default. The Damage Amount shall
be increased by an additional $.0025 per week per Preference Warrant with
respect to each subsequent 90-day period until such Shelf Registration
Default has been cured, up to a maximum amount of Liquidated Damages of
$0.0125 per week per Preference Warrant.
(e) ADDITIONAL ACTS. If the issuance or sale of any Preference
Warrant Shares or other securities issuable upon the exercise of the
Preference Warrants requires registration or approval of any governmental
authority (other than the registration requirements under the Securities
Act), or the taking of any other action under the laws of the United States
of America or any political subdivision thereof before such securities may
be validly offered or sold in compliance with such laws, then the Company
covenants that it will, in good faith and as expeditiously as reasonably
possible, use all reasonable efforts to secure and maintain such
registration or approval or to take such other action, as the case may be.
(f) LISTING OF PREFERENCE WARRANT SHARES. The Company shall use
its best efforts to register the Preference Warrant Shares on the Nasdaq
National Market by the Exercise Date.
2.2 [Reserved]
2.3 LIMITATIONS, CONDITIONS AND QUALIFICATIONS TO OBLIGATIONS
UNDER REGISTRATION COVENANTS. The obligations of the Company set forth in
Sections 2.1 and 2.6 hereof are subject to each of the following
limitations, conditions and qualifications:
(a) Subject to the next sentence of this paragraph, the Company
shall be entitled to postpone, for a reasonable period of time, the
filing of, or suspend the effectiveness of, any registration statement
or amendment thereto, or suspend the use of any prospectus and shall
not be required to amend or supplement the registration statement, any
related prospectus or any document incorporated therein by reference
(other than an effective registration statement being used for an
underwritten offering); PROVIDED that the duration of such
postponement or suspension (a "SUSPENSION PERIOD") may not exceed
during any 360 day period a period of more than 60 days or two periods
of more than an aggregate of 90 days. Such Suspension Period may be
effected only if (i) the Company's Board determines in its good faith
that there is a valid business purpose for such suspension and (ii)
provides notice that such determination was made by the Company's
Board to the Holders of the Preference Warrants; PROVIDED, HOWEVER,
that in no event shall the Company be required to disclose the
business purpose for such suspension if the Company determines in good
faith that such business purpose must remain confidential; and
PROVIDED FURTHER, HOWEVER, that the Effectiveness Period shall be
extended by the number of days in any Suspension Period. The Company
may further suspend effectiveness for a period not in excess of 5
Business Days to allow for the updating of the financial statements
included in a Registration Statement to the extent required by law,
such suspension for updating financial statements not to exceed 45
calendar days in aggregate in any 12-month period. If the Company
shall so postpone the filing of a Registration Statement it shall, as
promptly as possible, deliver a certificate signed by the chief
executive officer of the Company to the Selling Holders as to such
determination, and the Selling Holders shall (1) have the right, in
the case of a postponement of the filing or effectiveness of a
Registration Statement, upon the affirmative vote of the Holders of
not less than a majority of the Preference Registrable Securities to
be included in such Registration Statement, to withdraw the request
for registration by giving written notice to the Company within
10 days after receipt of such notice or (2) in the case of a
suspension of the right to make sales, receive an extension of the
registration period equal to the number of days of the suspension.
(b) The Company's obligations shall be subject to the obligations
of the Selling Holders, which the Selling Holders acknowledge, to
furnish all information and materials and to take any and all actions
as may be required under applicable federal and state securities laws
and regulations to permit the Company to comply with all applicable
requirements of the SEC, if applicable, and to obtain any acceleration
of the effective date of such Registration Statement.
2.4 [Reserved]
2.5 RULE 144 AND RULE 144A. The Company covenants that it will
file the reports required to be filed by it under the Securities Act and
the Exchange Act and the rules and regulations adopted by the SEC
thereunder in a timely manner and, if at any time the Company is not
required to file such reports, it will, upon the request of any Holder or
beneficial owner of Preference Registrable Securities, make available such
information necessary to permit sales pursuant to Rule 144A under the
Securities Act. The Company further covenants that it will take such
further action as any Holder of Preference Registrable Securities may
reasonably request, all to the extent required from time to time to enable
such Holder to sell Preference Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided
by (a) Rule 144(k) and Rule 144A under the Securities Act, as such Rules
may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC. Upon the request of any Holder of Preference
Registrable Securities, the Company will in a timely manner deliver to such
Holder a written statement as to whether it has complied with such
information requirements.
2.6 UNDERWRITTEN REGISTRATIONS. No Holder of Preference
Registrable Securities may participate in any underwritten registration
pursuant to a Preference Registration Statement filed under this Agreement
unless such Holder (a) agrees to (i) sell such Holder's Preference
Registrable Securities on the basis provided in and in compliance with any
underwriting arrangements approved by the Holders of not less than a
majority of the Preference Registrable Securities to be sold thereunder and
(ii) comply with Rules 101, 102 and 104 of Regulation M under the Exchange
Act and (b) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
If the Company has complied with all its obligations under this
Agreement all holders of Preference Warrants or Preference Warrant Shares,
upon request of the lead managing underwriter with respect to an
underwritten public offering, will be required to not sell or otherwise
dispose of any Preference Warrants or Preference Warrant Shares owned by
them for a period not to exceed 30 days prior to and 180 days after the
consummation of such underwritten public offering.
SECTION 3. [RESERVED].
SECTION 4. REGISTRATION PROCEDURES. In connection with the
obligations of the Company with respect to any Preference Registration
Statement pursuant to Sections 2.1 and 2.6 hereof, the Company shall,
except as otherwise provided:
(a) At least five days prior to the initial filing of a
Preference Registration Statement or Prospectus and at least two days
prior to the filing of any amendment or supplement thereto (including
any document that would be incorporated or deemed to be incorporated
therein by reference), furnish to the Preference Warrant Agent, the
Holders and the managing underwriters, if any, copies of all such
documents proposed to be filed, which documents (other than those
incorporated or deemed to be incorporated by reference) shall be
subject to the review of such Holders, and such underwriters, if any,
and cause the officers and directors of the Company, counsel to the
Company and independent certified public accountants to the Company to
respond to such reasonable inquiries as shall be necessary, in the
opinion of counsel to such underwriters, to conduct a reasonable
investigation within the meaning of the Securities Act; PROVIDED that
the foregoing inspection and information gathering shall be
coordinated on behalf of the Holders by MGPE. The Company shall not
file any such Preference Registration Statement or related Prospectus
or any amendments or supplements thereto to which the Holders of a
majority of the Preference Registrable Securities included in such
Preference Registration Statement shall reasonably object on a timely
basis.
(b) Prepare and file with the SEC such amendments, including
post-effective amendments to each Preference Registration Statement as
may be necessary to keep such Preference Registration Statement
continuously effective for the applicable time period required
hereunder; cause the related Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in force)
promulgated under the Securities Act; and comply with the provisions
of the Securities Act and the Exchange Act with respect to the
disposition of all securities covered by such Preference Registration
Statement during such period in accordance with the intended methods
of disposition by the sellers thereof set forth in such Preference
Registration Statement as so amended or in such Prospectus as so
supplemented.
(c) Notify the Holders of Preference Registrable Securities to be
sold and the managing underwriters, if any, promptly, and (if
requested by any such person) confirm such notice in writing, (i)(A)
when a Prospectus or any Prospectus supplement or post-effective
amendment is proposed to be filed, and (B) with respect to a
Preference Registration Statement or any post-effective amendment,
when the same has become effective, (ii) of any request by the SEC or
any other Federal or state governmental authority for amendments or
supplements to a Preference Registration Statement or related
Prospectus or for additional information, (iii) of the issuance by the
SEC, any state securities commission, any other governmental agency or
any court of any stop order suspending the effectiveness of such
Preference Registration Statement or of any order or injunction
suspending or enjoining the use of a Prospectus or the effectiveness
of a Preference Registration Statement or the initiation of any
proceedings for that purpose, (iv) of the receipt by the Company of
any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Preference Registrable
Securities for sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose, and (v) of the
happening of any event, the existence of any information becoming
known that makes any statement made in a Preference Registration
Statement or related Prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, not misleading, and that in
the case of the Prospectus, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(d) Use its best efforts to avoid the issuance of or, if issued,
obtain the withdrawal of any order enjoining or suspending the
effectiveness of the Preference Registration Statement or the use of a
Prospectus or the lifting of any suspension of the qualification (or
exemption from qualification) of any of the Preference Registrable
Securities covered thereby for sale in any jurisdiction described in
Section 4(h) at the earliest practicable moment.
(e) If requested by the managing underwriters, if any, or if
none, by the Holders of a majority of the Preference Registrable
Securities being sold pursuant to such Preference Registration
Statement, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the managing
underwriters, if any, or if none, such Holders reasonably believe
should be included therein, and (ii) make all required filings of such
Prospectus supplement or such post-effective amendment under the
Securities Act as soon as practicable after the Company has received
notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment; PROVIDED, HOWEVER, that the
Company shall not be required to take any action pursuant to this
Section 4(e) that would in the opinion of counsel for the Company,
violate applicable law.
(f) Upon written request to the Company, furnish to each Holder
of Preference Registrable Securities to be sold pursuant to a
Registration Statement and each managing underwriter, if any, without
charge, at least one conformed copy of the Preference Registration
Statement and each amendment thereto, including financial statements
and schedules, all documents incorporated or deemed to be incorporated
therein by reference, and all exhibits to the extent requested
(including those previously furnished or incorporated by reference) as
soon as practicable after the filing of such documents with the SEC.
(g) Deliver to each Holder of Preference Registrable Securities
to be sold pursuant to a Preference Registration Statement and each
managing underwriter, if any, without charge, as many copies of each
Prospectus (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request; and the
Company hereby consents to use of such Prospectus and each amendment
or supplement thereto and each document supplemental thereto by each
of the selling Holders of Preference Registrable Securities and the
underwriters or agents, if any, in connection with the offering and
sale of the Preference Registrable Securities covered by such
Prospectus and any amendment or supplement thereto.
(h) Prior to any offering of Preference Registrable Securities,
use its best efforts to register or qualify or cooperate with the
Holders of Preference Registrable Securities to be sold, the managing
underwriter or underwriters, if any, and their respective counsel in
connection with the registration or qualification (or exemption from
such registration or qualification) of such Preference Registrable
Securities for offer and sale under the securities or Blue Sky laws of
such jurisdictions as any such Holder or underwriter reasonably
requests in writing; keep each such registration or qualification (or
exemption therefrom) effective during the period such Preference
Registration Statement is required to be kept effective hereunder and
do any and all other acts or things necessary or advisable to enable
the disposition in such jurisdictions of the Preference Registrable
Securities covered by the applicable Preference Registration
Statement; PROVIDED, HOWEVER, that the Company shall not be required
to (i) qualify generally to do business in any jurisdiction where it
is not then so qualified or (ii) take any action that would subject it
to general service of process in any such jurisdiction where it is not
then so subject or to taxation in any jurisdiction where it is not so
subject.
(i) In connection with any sale or transfer of Preference
Registrable Securities that will result in such securities no longer
being Preference Registrable Securities, cooperate with the Holders of
Preference Registrable Securities and the managing underwriters, if
any, to facilitate the timely preparation and delivery of certificates
representing Preference Registrable Securities to be sold, which
certificates shall not bear any restrictive legends whatsoever and
shall be in a form eligible for deposit with The Depository Trust
Company ("DTC"); and to enable such Preference Registrable Securities
to be in such denominations and registered in such names as the
managing underwriter or underwriters, if any, or such Holders may
reasonably request at least two business days prior to any sale of
Preference Registrable Securities.
(j) Upon the occurrence of any event contemplated by Section
4(c)(v) above, as promptly as practicable prepare a supplement or
amendment, including if appropriate a post-effective amendment to each
Preference Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
(k) Prior to the effective date of a Preference Registration
Statement, (i) provide the registrar for the Preference Warrants and
Preference Registrable Securities with certificates for such
securities in a form eligible for deposit with DTC and (ii) provide
CUSIP numbers for such securities.
(l) Enter into such agreement (including an underwriting
agreement in such form, scope and substance as is customary in
underwritten offerings) and take all such other reasonable actions in
connection therewith (including those reasonably requested by the
managing underwriters, if any, or the Holders of a majority of the
Preference Registrable Securities being sold) in order to expedite or
facilitate the disposition of such Preference Registrable Securities,
and, whether or not an underwriting agreement is entered into and
whether or not the registration is an underwritten registration, (i)
make such representations and warranties to the Holders of such
Preference Registrable Securities and the underwriter or underwriters,
if any, with respect to the business of the Company and the
subsidiaries of the Company (including with respect to businesses or
assets acquired or to be acquired by any of them), and the Preference
Registration Statement, Prospectus and documents, if any, incorporated
or deemed to be incorporated by reference therein, in each case, in
form, substance and scope as are customarily made by issuers to
underwriters in underwritten offerings, and confirm the same if any
when requested; (ii) obtain opinions of counsel to the Company and
updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing
underwriters, if any, addressed to each selling Holder of Preference
Registrable Securities and each of the underwriters, if any), covering
the matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by
such underwriters; (iii) use their best efforts to obtain customary
"cold comfort" letters and updates thereof from the independent
certified public accountants of the Company (and, if necessary, any
other independent certified public accountants of any subsidiary of
the Company or of any business acquired by the Company for which
financial statements and financial data are, or are required to be,
included in the Preference Registration Statement), addressed (where
reasonably possible) to each of the underwriters, if any, 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) if an underwriting agreement is entered into, the same
shall contain customary indemnification provisions and procedures no
less favorable to the Selling Holders and the underwriters, if any,
than those set forth in Section 5 hereof (or such other provisions and
procedures acceptable to Holders of a majority of Preference
Registrable Securities covered by such Preference Registration
Statement and the managing underwriter, if any); and (v) deliver such
documents and certificates as may be reasonably requested by the
Holders of a majority of the Preference Registrable Securities being
sold and the managing underwriters or underwriters to evidence the
continued validity of the representations and warranties made pursuant
to clause (i) above and evidence compliance with any customary
conditions contained in the underwriting agreement or other agreements
entered into by the Company.
(m) Make available for inspection by a representative of the
selling Holders of Preference Registrable Securities, any underwriter
participating in any such disposition of Preference Registrable
Securities, if any, and any attorney, consultant or accountant
retained by such representative of the selling Holders of Preference
Registrable Securities or underwriter (collectively, the
"INSPECTORS"), at the offices where normally kept, during the
reasonable business hours, all financial and other records, pertinent
corporate documents and properties of the Company and the subsidiaries
of the Company (including with respect to businesses and assets
acquired or to be acquired to the extent that such information is
available to the Company), and cause the officers, directors, agents
and employees of the Company and its subsidiaries of the Company
(including with respect to businesses and assets acquired or to be
acquired to the extent that such information is available to the
Company) to supply all information in each case reasonably requested
by any such Inspector in connection with such Preference Registration
Statement; PROVIDED, HOWEVER, that such persons shall first agree in
writing with the Company that any information that is reasonably and
in good faith designated by the Company in writing as confidential at
the time of delivery of such information shall be kept confidential by
such Persons, unless (i) disclosure of such information is required by
court or administrative order or is necessary to respond to inquiries
of regulatory authorities, (ii) disclosure of such information is
required by law (including any disclosure requirements pursuant to
U.S. securities laws in connection with the filing of the Preference
Registration Statement or the use of any Prospectus), (iii) such
information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard such information by
such person or (iv) such information becomes available to such person
from a source other than the Company and its subsidiaries and such
source is not bound by a confidentiality agreement; PROVIDED, FURTHER
that the foregoing investigation shall be coordinated on behalf of the
selling Holders of Preference Registrable Securities by MGPE.
(n) Comply with all applicable rules, regulations and policies of
the SEC and make generally available to its securityholders earnings
statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder no later than 60 days after the
end of any 12-month period (or 135 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the end of
any fiscal quarter in which Preference Registrable Securities are sold
to an underwriter or to underwriters in a firm commitment or
reasonable efforts underwritten offering and (ii) if not sold to an
underwriter or to underwriters in such an offering, commencing on the
first day of the first fiscal quarter of the Company after the
effective date of the relevant Preference Registration Statement,
which statements shall cover said such period, consistent with the
requirements of Rule 158 under the Securities Act.
(o) Use its best efforts to cause all Preference Warrant Shares
relating to such Preference Registration Statement to be listed on
each securities exchange, if any, on which similar securities issued
by the Company are then listed.
(p) Cooperate with each seller of Preference Registrable
Securities to facilitate the timely preparation and delivery of
certificates representing Preference Registrable Securities to be sold
and not bearing any restrictive legends 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 Preference Registrable
Securities.
(q) Cooperate with each seller of Preference Registrable
Securities covered by any Preference Registration Statement and each
underwriter, if any, participating in the disposition of such
Preference Warrants or Preference Registrable Securities and its
respective counsel in connection with any filings required to be made
with the National Association of Securities Dealers, Inc.
The Company may require a Holder of Preference Registrable
Securities to be included in a Preference Registration Statement to furnish
to the Company such information regarding (i) the intended method of
distribution of such Preference Registrable Securities (ii) such Holder and
(iii) the Preference Registrable Securities held by such Holder as is
required by law to be disclosed in such Preference Registrable Statement
and the Company may exclude from such Registration Statement the Preference
Registrable Securities of any Holder who fails to furnish such information
within a reasonable time after receiving such request.
If any such Preference Registration Statement refers to any
Holder by name or otherwise as the Holder of any securities of the Company,
then such Holder shall have the right to require (i) the insertion therein
of language, in form and substance reasonably satisfactory to such Holder,
to the effect that the holding by such Holder of such securities is not to
be construed as a recommendation by such Holder of the investment quality
of the Company's securities covered thereby and that such holding does not
imply that such Holder will assist in meeting any future financial
requirements of the Company, or (ii) in the event that such reference to
such Holder by name or otherwise is not required by the Securities Act, the
deletion of the reference to such Holder in such amendment or supplement to
the Preference Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.
Each Holder of Preference Registrable Securities agrees by
acquisition of such Preference Registrable Securities that, upon receipt of
any notice from the Company of the happening of any event of the kind
described in Section 4(c)(ii), 4(c)(iv) or 4(c)(v) hereof, such Holder will
forthwith discontinue disposition of such Preference Registrable Securities
covered by the Preference Registration Statement or Prospectus until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 4(j) hereof, or until it is advised in writing (the
"ADVICE") by the Company that the use of the applicable Prospectus may be
resumed, and in either case has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus. If the Company shall give any such notice,
the Effectiveness Period shall be extended by the number of days during
such periods from and including the date of the giving of such notice to
and including the date when each seller of Preference Registrable
Securities covered by such Registration Statement shall have received
(x) the copies of the supplemented or amended Prospectus contemplated by
Section 4(j) hereof or (y) the Advice, and, in either case, has received
copies of any additional or supplemental filings that are incorporated or
deemed to be incorporated by reference in such Prospectus.
Holders of the Preference Registrable Securities shall be
obligated to keep confidential the existence of a Suspension Period or any
confidential information communicated by the Company to the Holder with
respect thereto.
SECTION 5. INDEMNIFICATION AND CONTRIBUTION. (a) The Company
agrees to indemnify and hold harmless each Purchaser, each Holder, each
underwriter, if any, who participates in an offering of Preference
Registrable Securities, their respective affiliates, and their respective
directors, officers, employees, agents and each Person, if any, who
controls any of such parties within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in any
Preference Registration Statement (or any amendment thereto) pursuant
to which Preference Registrable Securities were registered under the
1933 Act, including all documents incorporated therein by reference,
or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading or arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Prospectus (or
any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever, in each case, based upon any
such untrue statement or omission, or any such alleged untrue
statement or omission; PROVIDED that (subject to Section 5(d) below)
any such settlement is effected with the written consent of the
Company; and
(iii) against any and all expenses whatsoever, as incurred
(including the reasonable fees and disbursements of one counsel chosen
by MGPE), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
court or governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, to the extent that any
such expense is not paid under subparagraph (i) or (ii) of this
Section 5(a);
PROVIDED, HOWEVER, that this indemnity agreement does not apply to any
loss, liability, claim, damage or expense to the extent (i) arising out of
an untrue statement or omission or alleged untrue statement or omission (A)
made in or omitted from a preliminary Prospectus or Preference Registration
Statement and corrected or included in a subsequent Prospectus or
Preference Registration Statement or any amendment or supplement thereto
made in reliance upon and in conformity with written information furnished
to the Company by the Selling Holders of Preference Registrable Securities,
any Purchaser, any Holder, or any underwriter expressly for use in the
Preference Registration Statement (or any amendment thereto) or the
Prospectus (or any amendment or supplement thereto) or (B) resulting from
the use of the Prospectus during a period when the use of the Prospectus
has been suspended for sales thereunder in accordance with Sections 2.1(b),
2.1(c), 2.3, 2.4 or 2.6 hereof, PROVIDED, in each case, that Holders
received prior notice of such suspension or other unavailability.
(b) In the case of any registration of Preference Registrable
Securities, each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, each Purchaser, each underwriter, if any, who
participates in an offering of Preference Registrable Securities and the
other Selling Holders and each of their respective directors and officers
(including each officer of the Company who signed the Preference
Registration Statement) and each Person, if any, who controls the Company,
any Purchaser, any underwriter or any other Selling Holder within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, against any and all loss, liability, claim, damage and expense
described in the indemnity contained in Section 5(a) hereof, as incurred,
but only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in the Registration Statement (or any
amendment thereto) or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information
furnished to the Company by such Holder expressly for use in the Preference
Registration Statement (or any amendment thereto), or the Prospectus (or
any amendment or supplement thereto); PROVIDED, HOWEVER, that no such
Holder shall be liable for any claims hereunder in excess of the amount of
net proceeds received by such Holder from the sale of Preference Warrants
and Preference Registrable Securities pursuant to such Preference
Registration Statement.
(c) In case any action shall be commenced involving any Person
in respect of which indemnity may be sought pursuant to either paragraph
(a) or (b) above, such Person (the "INDEMNIFIED PARTY") shall give notice
as promptly as reasonably practicable to each Person against whom such
indemnity may be sought (the "indemnifying party"), but failure to so
notify an indemnifying party shall not relieve such indemnifying party from
any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability
which it may have otherwise than on account of this indemnity agreement.
An indemnifying party may participate at its own expense in the defense of
such action; PROVIDED, HOWEVER, that counsel to the indemnifying party
shall not (except with the consent of the indemnified party) also be
counsel to the indemnified party. In no event shall the indemnifying party
or parties be liable for the fees and expenses of more than one counsel (in
addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. No indemnifying party shall, without
the prior written consent of the indemnified parties, settle or compromise
or consent to the entry of any judgment with respect to any litigation, or
any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 5
(whether or not the indemnified parties are actual or potential parties
thereof), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising
out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a
failure to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 5(a)(ii) hereof effected
without its written consent if (i) such settlement is entered into more
than 45 days after receipt by such indemnifying party of the aforesaid
request, (ii) such indemnifying party shall have received notice of the
terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed
such indemnified party in accordance with such request prior to the date of
such settlement.
(e) If the indemnification provided for in any of the indemnity
provisions set forth in this Section 5 is for any reason unavailable to or
insufficient to hold harmless an indemnified party in respect of any
losses, liabilities, claims, damages or expenses referred to therein, then
each indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, in such proportion as is appropriate to
reflect the relative fault of such indemnifying party or parties on the one
hand, and such indemnified party or parties on the other hand, in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party or
parties on the one hand, and such indemnified party or parties on the other
hand shall be determined by reference to, among other things, whether any
such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied
by such indemnifying party or parties or such indemnified party or parties
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company,
the Purchaser and the Holders of the Preference Registrable Securities
agree that it would not be just and equitable if contribution pursuant to
this Section 5 were determined by pro rata allocation (even if the Selling
Holders of Preference Registrable Securities were treated as one entity,
and the Holders were treated as one entity, for such purpose) or by another
method of allocation which does not take account of the equitable
considerations referred to above in Section 5. The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 5 shall be deemed
to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by an governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any 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 Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 5, each Person, if any, who controls a Purchaser
or Holder within the meaning of this Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution
as such Purchaser or Holder, and each director of the Company, each officer
of the Company who signed the Preference Registration Statement, and each
Person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as the Company.
SECTION 6. MISCELLANEOUS.
(a) REMEDIES. In the event of a breach by the Company of any of
its obligations under this Agreement, each Holder, in addition to being
entitled to exercise all rights provided herein, in the Preference Purchase
Agreement or granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The
Company agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of any of the provisions of
this Agreement.
(b) NO INCONSISTENT AGREEMENTS. The Company will not enter into
any agreement which is inconsistent with the rights granted to the Holders
of Preference Registrable Securities 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, if any, under any such agreements.
(c) [INTENTIONALLY OMITTED].
(d) 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, otherwise than with the prior written consent of
the Holders of not less than a majority of the then outstanding Preference
Warrants and each class and series of Preference Registrable Securities;
PROVIDED, HOWEVER, that, for the purposes of this Agreement, Preference
Warrants and Preference Registrable Securities that are owned, directly or
indirectly, by the Company or any of its affiliates (other than MGPE, the
Chase Purchasers and their affiliates) are not deemed outstanding.
Notwithstanding the foregoing, a waiver or consent to depart from the
provisions hereof with respect to a matter that relates exclusively to the
rights of one or more Holders and that does not directly or indirectly
affect the rights of other Holders may be given by a majority of the
Holders so affected; PROVIDED, HOWEVER, that the provisions of this
sentence may not be amended, modified or supplemented except in accordance
with the provisions of the immediately preceding sentence. Notwithstanding
the foregoing, no amendment, modification, supplement, waiver or consent
with respect to Section 5 shall be made or given otherwise than the prior
written consent of each Person affected thereby.
(e) NOTICES. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand delivery,
registered first-class mail, facsimile, or any courier guaranteeing
delivery by a specific date (i) if to a Holder, at the most current address
of such Holder as set forth in the register for the Preference Registrable
Securities, which address initially is, with respect to each Purchaser, the
address set forth with respect to such Purchaser in the relevant Preference
Purchase Agreement and, in the case of Darland, to The Darland Trust, c/o
Chase Enterprises, Inc., One Commercial Plaza, Hartford, Connecticut 06103-
3585 Attention: John Redding with a copy to Rothschild Trust Guernsey
Limited, P.O. Box 472, St. Peter's House, Le Bordage, St. Peter's Port,
Guernsey, Channel Islands GY1 6AX, attention D.N. Allison; and (ii) if to
the Company, initially to @Entertainment, Inc., c/o WIVJATV
Sp. z.o.o./@Entertainment, Inc., ul. Pawinskiego 5A, blok D, 02-106 Warsaw,
Poland, Attention: Przemylslaw Szmyt, facsimile no.: 011 48 22 668 7200,
and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 6(e), with a copy to Baker &
McKenzie, 815 Connecticut, N.W., Washington, D.C. 20006-4078, Attention:
Marc R. Paul, Esq., facsimile no.: (202) 452-7074, and thereafter at such
other address notice of which is given in accordance with the provisions of
this Section 6(e).
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 by a specific date.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each
of the parties and shall inure to the benefit of each Holder. If any
transferee of any Holder shall acquire Preference Registrable Securities,
in any manner, whether by operation of law or otherwise, such Preference
Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Preference Registrable Securities
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 Company may
not assign any of its rights or obligations hereunder without the prior
written consent of each Holder of Preference Registrable Securities.
Notwithstanding the foregoing, no successor or assignee of the Company
shall have any rights granted under the Agreement until such person shall
acknowledge its rights and obligations hereunder by a signed written
statement of such person's acceptance of such rights and obligations.
(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) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(j) SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their best efforts to find
and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of
the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(k) HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(l) ENTIRE AGREEMENT. This Agreement, together with the
Purchase Agreements and the Preference Warrant Agreement and the Preference
Registration Rights Agreement, is intended by the parties as a final
expression of their agreement, and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein and therein. This
Agreement, the Preference Purchase Agreement and the Preference Warrant
Agreement supersede all prior agreements and understandings between the
parties with respect to such subject matter.
(m) SECURITIES HELD BY THE COMPANY OR ITS AFFILIATES. Whenever
the consent or approval of Holders of a specified percentage of Preference
Registrable Securities is required hereunder, Preference Registrable
Securities held by the Company or by any of its affiliates (as such term is
defined in Rule 405 under the Securities Act) (other than MGPE, the Chase
Purchasers and their affiliates) shall not be counted (in either the
numerator or the denominator) in determining whether such consent or
approval was given by the Holders of such required percentage.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
@ ENTERTAINMENT, INC.
By: /s/ Robert E. Fowler III
-------------------------
Name:
Title:
By: /s/ Donald Miller-Jones
-------------------------
Name:
Title:
Confirmed and accepted as of the date first above written:
MORGAN GRENFELL PRIVATE EQUITY LIMITED
MORGAN GRENFELL PRIVATE EQUITY LIMITED
By: /s/ [Illegible]
----------------------------
Name:
Title:
/s/ Arnold Chase
----------------------------
Arnold Chase
/s/ Cheryl Chase
----------------------------
Cheryl Chase
/s/ Rhoda Chase
----------------------------
Rhoda Chase
The Darland Trust
By: Rothschild Trust Guernsey Limited
By: /s/ C.P. Ward
--------------------
Title Director
By: /s/ HJ Salter
--------------------
Title
Authorised Signatory<PAGE>
EXHIBIT 9
______________________________________________________________________________
______________________________________________________________________________
PREFERENCE REGISTRATION RIGHTS AGREEMENT
Dated January 27, 1999
among
@ENTERTAINMENT, INC.
and
MORGAN GRENFELL PRIVATE EQUITY LIMITED on behalf of
MORGAN GRENFELL DEVELOPMENT CAPITAL SYNDICATION LIMITED,
ARNOLD CHASE, CHERYL CHASE, RHODA CHASE
and THE DARLAND TRUST
______________________________________________________________________________
______________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
PAGE
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1
2. REGISTRATION UNDER THE 1933 ACT . . . . . . . . . . . . 4
3. REGISTRATION PROCEDURES . . . . . . . . . . . . . . . . 6
4. INDEMNIFICATION AND CONTRIBUTION. . . . . . . . . . . . 12
5. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 15
<PAGE>
EXECUTION COPY
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 Darland Trust ("DARLAND"), Rhoda
Chase ("RHODA CHASE"), Arnold Chase ("ARNOLD CHASE") and Cheryl Chase
("CHERYL CHASE", and together with Darland, Rhoda Chase and Arnold Chase,
the "CHASE PURCHASERS") and MORGAN GRENFELL PRIVATE EQUITY LIMITED on
behalf of MORGAN GRENFELL DEVELOPMENT CAPITAL SYNDICATION LIMITED ("MGPE",
and together with the Chase Purchasers, the "PURCHASERS").
This Agreement is made pursuant to 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 Arnold Chase, Rhoda Chase and Cheryl Chase (the
"Chase 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 vaue $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. 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.
"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 1933 Act) (other than MGPE or subsequent holders of
Preference Shares if such subsequent holders are deemed to be such
affiliates solely by reason of their holding of such Cumulative Preference
Shares, and other than the Chase Purchasers and their affiliates) 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.
"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 STATEMENT" shall include the Preference
Warrant Shelf Registration Statement and the Preference Warrant Stock Shelf
Registration Statement.
"PREFERENCE WARRANTS" shall have the meaning set forth in the
preamble.
"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 Company
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.
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 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 or that during such 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;
(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 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 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 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 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 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 1934 Act) to the same 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 Section 20 of
the 1934 Act, (b) 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 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 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 1933 Act)
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 the Purchasers, any Holder or any person controlling the Purchasers 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, 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 Morgan Grenfell Private Equity Limited, 20 Finsbury Circus,
London, EC2M 1N8, Attention: Scott Lanphere; in the case of Arnold Chase,
Cheryl Chase or Rhoda Chase to such person c/o Chase Enterprises, Inc., One
Commercial Plaza, Hartford, Connecticut 06103-3585 Attn: John Redding;
and, in the case of Darland, to The Darland Trust, c/o Chase Enterprises,
Inc., One Commercial Plaza, Hartford, Connecticut 06103-3585 Attention:
John Redding with a copy to Rothschild Trust Guernsey Limited, P.O. Box
472, St. Peter's House, Le Bordage, St. Peter's Port, Guernsey, Channel
Islands GY1 6AX, attention D.N. Allison; and (ii) if to the Company,
initially at One Commercial Plaza, Hartford, Connecticut, 06103-3585,
Attention: Robert E. Folwer III, with a copy to Baker & McKenzie, 815
Connecticut Avenue, N.W., Suite 900, Washington D.C. 2006, Attention: Marc
R. Paul, 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 Company, 2 Broadway, New York, New
York 10004, Attention: Steve G. Nelson.
(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.
(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 1933
Act) 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.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
@ENTERTAINMENT, INC.
By /s/ Robert E. Fowler III
-------------------------
By /s/ Donald Miller-Jones
-------------------------
Confirmed and accepted as of
the date first above written:
MORGAN GRENFELL PRIVATE EQUITY LIMITED
MORGAN GRENFELL PRIVATE EQUITY LIMITED
By /s/ [Illegible]
--------------------------
Name:
Title:
/s/Arnold Chase
- ----------------------
Arnold Chase
/s/Cheryl Chase
- ----------------------
Cheryl Chase
/s/Rhoda Chase
- ----------------------
Rhoda Chase
The Darland Trust
By: Rothschild Trust Guernsey Limited
By: /s/ C.P. Ward
-----------------------
Title Director
By: /s/ HJ Salter
-----------------------
Title
Authorised Signatory
