Exhibit 4.13
EXECUTION COPY
- --------------------------------------------------------------------------------
WARRANT
REGISTRATION RIGHTS AGREEMENT
Dated as of January 27, 1999
Between
@ENTERTAINMENT, INC.,
and
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
DEUTSCHE BANK SECURITIES INC.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
SECTION 1. Definitions........................................................1
SECTION 2. Registration Rights................................................5
2.1 (a) Warrant Shelf Registration Statement.........................5
(b) Blue Sky.....................................................6
(c) Accuracy of Disclosure.......................................6
(d) Liquidated Damages...........................................6
(e) Additional Acts..............................................7
(f) Listing of Warrant Shares....................................7
2.2 (a) Piggy-Back Registration......................................7
(b) Priority in Piggy-Back Registration..........................8
(c) Restrictions on Sale by Holders..............................9
2.3 Limitations, Conditions and Qualifications to
Obligations Under Registration Covenants....................10
2.4 Restrictions on Sale by the Company and Others..................11
2.5 Rule 144 and Rule 144A..........................................11
2.6 Underwritten Registrations......................................11
SECTION 3. [Reserved]. ......................................................12
SECTION 4. Registration Procedures...........................................12
SECTION 5. Indemnification and Contribution..................................19
SECTION 6. Miscellaneous.....................................................22
(a) Remedies........................................................22
(b) No Inconsistent Agreements......................................22
(c) [Intentionally Omitted].........................................22
(d) Amendments and Waivers..........................................22
(e) Notices.........................................................23
(f) Successors and Assigns..........................................23
(g) Counterparts....................................................24
(h) Governing Law...................................................24
(j) Severability....................................................24
(k) Headings........................................................24
(l) Entire Agreement................................................24
(m) Securities Held by the Company or Its Affiliates................24
WARRANT REGISTRATION RIGHTS AGREEMENT
This WARRANT REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into as of January 27, 1999, between @ENTERTAINMENT, INC., (the
"Company") a Delaware corporation, and MERRILL LYNCH & CO., MERRILL LYNCH,
PIERCE, FENNER & SMITH INCORPORATED ("Merrill Lynch") and Deutsche Bank
Securities Inc. (together with Merrill Lynch, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement dated as
of January 22, 1999, between the Company and the Initial Purchasers (the
"Purchase Agreement"), with respect to the issue and sale by the Company and the
purchase by the Initial Purchasers, severally, of the respective number of the
Company's Units (the "Units"), each 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 (the "Warrants"), each warrant initially
entitling the holder thereof to purchase 1.7656 shares of common stock, par
value $0.01 per share (the "Common Stock"), of the Company, set forth opposite
such Initial Purchaser's name on Schedule I to the Purchase Agreement. The
execution of this Agreement is a condition to the obligations of the Initial
Purchasers under the Purchase Agreement.
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.
2
"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.
"Deutsche Bank Securities" shall have the meaning ascribed to such
term in the preamble hereto.
"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 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
Warrants is declared effective under the Securities Act and (ii) July 7,
1999.
"Holder" shall mean each holder (including the Initial Purchasers)
of any Registrable Securities, and each of their successors, assigns and
direct and indirect transferees who become registered owners of such
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.
"Initial Purchasers" shall have the meaning ascribed to such term in
the preamble hereof.
"Inspectors" shall have the meaning ascribed to such term in Section
4(m) hereof.
3
"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 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.
"Merrill Lynch" shall have the meaning ascribed to such term in the
preamble hereto.
"Notes" 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.
"Piggy-Back Registration" shall have the meaning ascribed to such
term in Section 2.2(a) hereof.
"Piggy-Back Registration Statement" shall have the meaning ascribed
to such term in Section 2.2(c) hereof.
"Prospectus" shall mean the prospectus included in any 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 Agreement" shall have the meaning ascribed to such term in
the preamble hereof.
"Registrable Securities" shall mean any of (i) the Warrants, (ii)
the Warrant Shares and (iii) any other securities issued or issuable with
respect to the Warrants or 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
4
to any particular Registrable Securities, such securities shall cease to
be 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.
"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 of 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 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 as to securities and blue sky matters).
"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 Warrants, the Warrant Shares and any other
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.
"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.
5
"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 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" shall have the meaning ascribed to such term in the preamble
of this Agreement.
"Warrant Agent" shall mean Bankers Trust Company and any successor
warrant agent for the Warrants pursuant to the Warrant Agreement.
"Warrant Agreement" shall mean the Warrant Agreement dated as of the
date hereof, between the Company and the Warrant Agent, as amended or
supplemented from time to time in accordance with the terms thereof.
"Warrant Shares" shall mean shares of Common Stock issuable upon
exercise of the Warrants at an exercise price of $9.125 per share.
"Warrant Shelf Registration Statement" shall mean the Registration
Statement filed with the SEC pursuant to Section 2.1.
"Warrants" shall have the meaning ascribed to such term in the
preamble hereto.
Capitalized terms used herein but not defined shall have the meaning
ascribed thereto in the Warrant Agreement.
SECTION 2. Registration Rights.
2.1 (a) Warrant Shelf Registration Statement. The Company shall
cause to be filed
6
pursuant to Rule 415 (or any successor provision) of the Securities Act a shelf
registration statement covering the issuance of Warrant Shares to the Holders
upon exercise of the Warrants by the Holders thereof and the resale of the
Warrants and the Warrant Shares (the "Warrant Shelf Registration Statement") and
shall use its best efforts to cause the 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 Warrant Shelf Registration Statement until
such time as all Warrants have been exercised and the Warrant Shares resold. The
Company will pay all Registration Expenses in connection with the resale of
Warrants and Warrant Shares.
(b) Blue Sky. The Company shall use its reasonable efforts to
register or qualify the 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 Warrant Shares upon
the exercise of Warrants and shall use its reasonable efforts to maintain such
registration or qualification through such time as all Warrants have been
exercised and 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 Warrant Shelf
Registration Statement 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 Warrants or in connection with the
sale of 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 the Warrant Shelf 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 Warrant Shelf
Registration Statement is not declared effective by the SEC on or prior to July
7, 1999 or (ii) following the date such Warrant Shelf 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 Warrants or Warrant
Shares an amount (the "Damage Amount") in
7
an initial amount equal to $.0025 per week per 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 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 Warrant.
(e) Additional Acts. If the issuance or sale of any Warrant Shares
or other securities issuable upon the exercise of the 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 Warrant Shares. The Company shall use its best
efforts to register the Warrant Shares on the Nasdaq National Market by the
Exercise Date.
2.2 (a) Piggy-Back Registration. If at any time the Company proposes
to file a Registration Statement under the Securities Act with respect to an
offering by the Company for its own account or for the account of any of its
securityholders of Common Stock (other than (i) a registration statement on Form
S-4 or S-8 (or F-4 or F-8) (or any substitute form that may be adopted by the
SEC) or any other publicly registered offering pursuant to the Securities Act
pertaining to the issuance of shares of Common Stock or securities exercisable
therefor under any benefit plan, employee compensation plan, or employee or
director stock purchase plan, or (ii) a registration statement filed in
connection with an offer of securities solely to the Company's existing
securityholders), then the Company shall give written notice of such proposed
filing to the Holders of Registrable Securities as soon as practicable (but in
no event fewer than 15 days before the anticipated filing date or 10 days if the
Company is subject to filing reports under the Exchange Act and able to use Form
S-3 (or F-3) under the Securities Act), and such notice shall offer such Holders
the opportunity to register such number of shares of Registrable Securities as
each such Holder may request in writing within eight days after receipt of such
written notice from the Company (which request shall specify the Registrable
Securities intended to be disposed of by such Selling Holder and the intended
method of distribution thereof) (a "Piggy-Back Registration"). The Company shall
use its best efforts to keep such Piggy-Back Registration continuously effective
under the Securities Act in the qualifying jurisdictions until at least the
earlier of (A) 60 days after the effective date thereof or (B) the consummation
of the distribution by the Holders of all of the Registrable Securities covered
thereby. The Company shall use its best efforts to cause the managing
underwriter or underwriters, if any, of such proposed offering to permit the
Registrable Securities requested to be included in a Piggy-Back Registration to
be included on the same terms and conditions as any similar securities of the
Company or any other
8
securityholder included therein and to permit the sale or other disposition of
such Registrable Securities in accordance with the intended method of
distribution thereof. Any Selling Holder shall have the right to withdraw its
request for inclusion of its Registrable Securities in any Registration
Statement pursuant to this Section 2.2 by giving written notice to the Company
of its request to withdraw. The Company may withdraw a Piggy-Back Registration
at any time prior to the time it becomes effective or the Company may elect to
delay the registration; provided, however, that the Company shall give prompt
written notice thereof to participating Selling Holders. The Company will pay
all Registration Expenses in connection with each registration of Registrable
Securities requested pursuant to this Section 2.2, and each Holder of
Registrable Securities shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to a Registration Statement effected pursuant to
this Section 2.2.
No registration effected under this Section 2.2, and no failure to
effect a registration under this Section 2.2, shall relieve the Company of its
obligation to effect a registration upon the request of Holders of Registrable
Securities pursuant to Section 2.1 hereof, and no failure to effect a
registration under this Section 2.2 and to complete the sale of securities
registered thereunder in connection therewith shall relieve the Company of any
other obligation under this Agreement.
(b) Priority in Piggy-Back Registration. In a registration pursuant
to this Section 2.2 involving an underwritten offering, if the managing
underwriter or underwriters of such underwritten offering have informed, in
writing, the Company and the Selling Holders requesting inclusion in such
offering that in such underwriter's or underwriters' reasonable opinion the
total number of securities which the Company, the Selling Holders and any other
persons desiring to participate in such registration intend to include in such
offering is such as to materially and adversely affect the success of such
offering, including the price at which such securities can be sold, then the
Company will be required to include in such registration only the amount of
securities which it is so advised should be included in such registration. In
such event: (x) in cases only involving the registration for sale of Common
Stock for the Company's own account (which may include securities included
pursuant to the exercise of piggy-back rights herein and in other contractual
commitments of the Company), securities shall be registered in such offering in
the following order of priority: (i) first, the Common Stock which the Company
proposes to register, (ii) second, provided that no Common Stock sought to be
included by the Company have been excluded from such registration, the Common
Stock which have been requested to be included in such registration by the
Holders of Registrable Securities pursuant to this Agreement (such securities
for the account of the Holders to be allocated among the Holders pro rata based
on the amount of securities sought to be registered by the Holder) and (iii)
third, provided that no Common Stock sought to be included by the Company or the
Holders have been excluded from such registration, the securities of other
Persons entitled to exercise "piggy-back" registration rights pursuant to
contractual commitments of the Company (pro rata based on the amount of
securities sought to be registered by such Persons); and (y) in cases not
involving the
9
registration for sale of Common Stock for the Company's own account only,
securities shall be registered in such offering in the following order of
priority: (i) first, Common Stock to be sold for the account of the Company and
the securities of any Person whose exercise of a "demand" registration right
pursuant to a contractual commitment of the Company is the basis for the
registration (provided that if such Person is a Holder of Registrable
Securities, as among Holders of Registrable Securities there shall be no
priority and Registrable Securities sought to be included by Holders of
Registrable Securities shall be included pro rata based on the amount of
securities sought to be registered by such Persons), (ii) second, provided that
no securities of the Company or such Person referred to in the immediately
preceding clause (i) have been excluded from such registration, the securities
requested to be included in such registration by the Holders of Registrable
Securities pursuant to this Agreement (such securities for the account of the
Holders to be allocated among the Holders pro rata based on the total amount of
securities sought to be registered by the Holders) and (iii) third, provided
that no securities of such Person referred to in the immediately preceding
clause (i) or of the Holders have been excluded from such registration,
securities of other Persons entitled to exercise "piggy-back" registration
rights pursuant to contractual commitments (pro rata based on the amount of
securities sought to be registered by such Persons).
If, as a result of the provisions of this Section 2.2(b), any
Selling Holder shall not be entitled to include all Registrable Securities in a
Piggy-Back Registration that such Selling Holder has requested to be included,
such Selling Holder may elect to withdraw his request to include Registrable
Securities in such registration.
(c) Restrictions on Sale by Holders. Each Holder of Registrable
Securities whose Registrable Securities are covered by a Registration Statement
filed pursuant to this Section 2.2 (a "Piggy-Back Registration Statement") and
are to be sold thereunder agrees, if and to the extent reasonably requested by
the managing underwriter or underwriters in an underwritten public offering, not
to effect any public sale or distribution of Registrable Securities or of
securities of the Company of the same class as any securities included in such
Piggy-Back Registration Statement, including a sale pursuant to Rule 144 (except
as part of such underwritten offering), during the 30-day period prior to, and
during the 180-day period beginning on, the closing date of each underwritten
offering made pursuant to such Piggy-Back Registration Statement, to the extent
timely notified in writing by the Company or such managing underwriter or
underwriters.
The foregoing provisions of Section 2.2(c) shall not apply to any
Holders of Registrable Securities if such Holder is prevented by applicable
statute or regulation from entering into any such agreement; provided, however,
that any such Holder shall undertake, in its request to participate in any such
underwritten offering, not to effect any public sale or distribution of any
Registrable Securities commencing on the date of sale of such Registrable
Securities unless it has provided 45 days' prior written notice of such sale or
distribution to the managing underwriter or underwriters.
10
2.3 Limitations, Conditions and Qualifications to Obligations Under
Registration Covenants. The obligations of the Company set forth in Sections
2.1, 2.2 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 up to two 30- day consecutive-day
periods in any 12-month period and provided further, that the Suspension
Period may not occur during the 30-consecutive-day period immediately
after the Exercise Date and during the 30-consecutive-day period
immediately prior to February 1, 2009. 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 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 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.
11
2.4 Restrictions on Sale by the Company and Others. The Company
covenants and agrees that (i) it shall not, and that it shall not cause or
permit any of its subsidiaries to, effect any public sale or distribution of any
securities of the same class as any of the Registrable Securities or any
securities convertible into or exchangeable or exercisable for such securities
(or any option or other right for such securities) during the 30-day period
prior to, and during the 90-day period beginning on, the commencement of any
underwritten offering of Registrable Securities pursuant to a Piggy-Back
Registration which has been scheduled, prior to the Company or any of its
subsidiaries publicly announcing its intention to effect any such public sale or
distribution; (ii) the Company will not, and the Company will not cause or
permit any subsidiary of the Company to, after the date hereof, enter into any
agreement or contract that conflicts with or limits or prohibits the full and
timely exercise by the Holders of Registrable Securities of the rights herein to
join in any Piggy-Back Registration subject to the other terms and provisions
hereof; and (iii) upon request of the Holders of not less than a majority of the
Registrable Securities to be included in such Registration Statement or any
underwriter, it shall use its reasonable best efforts to secure the written
agreement of each of its officers and directors to not effect any public sale or
distribution of any securities of the same class as the Registrable Securities
(or any securities convertible into or exchangeable or exercisable for an such
securities), or any option or right for such securities during the period
described in clause (i) of this Section 2.4.
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 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 Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
Holder to sell 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 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 Registrable Securities
may participate in any underwritten registration pursuant to a Registration
Statement filed under this Agreement unless such Holder (a) agrees to (i) sell
such Holder's 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 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.
12
If the Company has complied with all its obligations under this
Agreement with respect to a Piggy-Back Registration relating to an underwritten
public offering, all holders of Warrants or Warrant Shares, upon request of the
lead managing underwriter with respect to such underwritten public offering,
will be required to not sell or otherwise dispose of any Warrants or 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.
13
SECTION 3. [Reserved].
SECTION 4. Registration Procedures. In connection with the
obligations of the Company with respect to any Registration Statement pursuant
to Sections 2.1, 2.2 and 2.6 hereof, the Company shall, except as otherwise
provided:
(a) At least five days prior to the initial filing of a 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 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 Merrill Lynch. The Company shall not file any such Registration
Statement or related Prospectus or any amendments or supplements thereto
which the Holders of a majority of the Registrable Securities included in
such Registration Statement shall reasonably object on a timely basis.
(b) Prepare and file with the SEC such amendments, including
post-effective amendments to each Registration Statement as may be
necessary to keep such 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 Registration
Statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration
Statement as so amended or in such Prospectus as so supplemented.
(c) Notify the Holders of 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 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 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
14
any court of any stop order suspending the effectiveness of such
Registration Statement or of any order or injunction suspending or
enjoining the use of a Prospectus or the effectiveness of a 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 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 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 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 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 Registrable Securities being sold
pursuant to such 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
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 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 Registrable Securities to be sold
pursuant to a
15
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 Registrable
Securities and the underwriters or agents, if any, in connection with the
offering and sale of the Registrable Securities covered by such Prospectus
and any amendment or supplement thereto.
(h) Prior to any offering of Registrable Securities, use its best
efforts to register or qualify or cooperate with the Holders of
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 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
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 Registrable Securities covered by
the applicable 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 Registrable
Securities that will result in such securities no longer being Registrable
Securities, cooperate with the Holders of Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing 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 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 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 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
16
the circumstances under which they were made, not misleading.
(k) Prior to the effective date of a Registration Statement, (i)
provide the registrar for the Warrants and 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 Registrable
Securities being sold) in order to expedite or facilitate the disposition
of such 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 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 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
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 Registration
Statement), addressed (where reasonably possible) to each Selling Holder
of Registrable Securities and 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 Holder 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 Registrable Securities
covered by such 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 Registrable Securities being
sold and the managing underwriters or underwriters to evidence the
17
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 Registrable Securities, any underwriter participating in any
such disposition of Registrable Securities, if any, and any attorney,
consultant or accountant retained by such representative of the selling
Holders of 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
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 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 Registrable Securities by Merrill Lynch.
(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 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 Registration
Statement, which statements shall cover said such period, consistent with
the requirements of Rule 158 under the Securities Act.
18
(o) Use its best efforts to cause all Warrant Shares relating to
such 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 Registrable Securities to
facilitate the timely preparation and delivery of certificates
representing 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 Registrable Securities.
(q) Cooperate with each seller of Registrable Securities covered by
any Registration Statement and each underwriter, if any, participating in
the disposition of such Warrants or 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 Registrable Securities to be
included in a Registration Statement to furnish to the Company such information
regarding (i) the intended method of distribution of such Registrable Securities
(ii) such Holder and (iii) the Registrable Securities held by such Holder as is
required by law to be disclosed in such Registrable Statement and the Company
may exclude from such Registration Statement the Registrable Securities of any
Holder who fails to furnish such information within a reasonable time after
receiving such request.
If any such 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 Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.
Each Holder of Registrable Securities agrees by acquisition of such
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
Registrable Securities covered by the 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
19
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 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 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 Initial Purchaser, each Holder, each
underwriter, if any, who participates in an offering of 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 Registration
Statement (or any amendment thereto) pursuant to which 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
Merrill Lynch), reasonably
20
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 Registration Statement and corrected or
included in a subsequent Prospectus or 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 Registrable
Securities, any Holder, or any underwriter expressly for use in the 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), 2.2(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 Registrable Securities, each
Holder agrees, severally and not jointly, to indemnify and hold harmless the
Company, each Initial Purchaser, each underwriter, if any, who participates in
an offering of Registrable Securities and the other Selling Holders and each of
their respective directors and officers (including each officer of the Company
who signed the Registration Statement) and each Person, if any, who controls the
Company, any Initial 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 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 Warrants
and Registrable Securities pursuant to such 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
21
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
Initial Purchasers and the Holders of the
22
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 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 an Initial 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 Initial Purchaser or Holder, and each director of the
Company, each officer of the Company who signed the 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 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
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 Warrants and
23
each class and series of Registrable Securities; provided, however, that, for
the purposes of this Agreement, Warrants and Registrable Securities that are
owned, directly or indirectly, by the Company or any of its 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 Registrable Securities, which address initially is, with
respect to each Initial Purchaser, the address set forth with respect to such
Initial Purchaser in the Purchase Agreement; and (ii) if to the Company,
initially at One Commercial Plaza, Hartford, Connecticut 06103-3585, Attention:
Robert E Fowler III, 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 a specific date, 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 Registrable Securities, in any manner, whether by
operation of law or otherwise, such Registrable Securities shall be held subject
to all of the terms of this Agreement, and by taking and holding such
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 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.
24
(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
Agreement and the Warrant 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 Purchase
Agreement and the 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 Registrable
Securities is required hereunder, Registrable Securities held by the Company or
by any of its affiliates (as such term is defined in Rule 405 under the
Securities Act) 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]
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
@ ENTERTAINMENT, INC.
By: /S/ ROBERT E. FOWLER, III
------------------------------
Title: CHIEF EXECUTIVE OFFICER
By: /S/ DONALD MILLER JONES
------------------------------
Title: CHIEF FINANCIAL OFFICER
Confirmed and accepted as of
the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /S/ MARISA DREW
-------------------
Title: DIRECTOR
DEUTSCHE BANK SECURITIES
DEUTSCHE BANK SECURITIES INC.
By: DEUTSCHE BANK SECURITIES INC.
By: /S/ R. MOHAMED
------------------
Title: