FORM OF REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of June __, 1998
by and between ELECTRONICS BOUTIQUE HOLDINGS CORP., a corporation organized
under the laws of the State of Delaware, with headquarters located at 000 Xxxxx
Xxxxxxx Xxxxxx, Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000 (the "COMPANY"), and EB NEVADA,
INC., a corporation organized under the laws of the State of Nevada ("EB NEVADA"
or the "INITIAL INVESTOR").
WHEREAS:
A. The Electronics Boutique, Inc., a corporation organized under the laws
of the Commonwealth of Pennsylvania ("EB"), currently owns (i) all of the
outstanding shares of capital stock of each of Electronics Boutique of
America Inc., a Pennsylvania corporation ("EBOA"), Elbo Inc., a Delaware
corporation, EB International Inc., a Pennsylvania corporation and
Electronics Boutique Canada Inc., an Ontario corporation (collectively, the
"OPERATING SHARES"), (ii) 25.1% of the outstanding shares of capital stock of
Electronics Boutique plc, a corporation incorporated under the laws of the
United Kingdom and Wales ("EB-UK"), (iii) cash, accounts receivable and the
cash surrender value of certain split-dollar life insurance policies and (iv)
the facility housing its distribution center and headquarters in West
Chester, Pennsylvania (the "DISTRIBUTION CENTER").
B. In contemplation of the initial public offering (the "OFFERING") of
shares of the Common Stock, par value $.01 per share, of the Company (the
"COMMON STOCK"), (i) EB intends to, immediately prior to the completion of
the Offering, (a) transfer to EB Nevada the Operating Shares and its shares
in EB-UK, (b) lease to EBOA the Distribution Center pursuant to a lease with
an option to purchase and (ii) EB Nevada intends to transfer the Operating
Shares to the Company in exchange for 15,794,100 shares of Common Stock while
retaining its interest in EB-UK (the "SHARE EXCHANGE").
C. EB Nevada intends to sell 1,875,000 shares of Common Stock in the
Offering; therefore, following completion of the Offering, EB Nevada will
hold 13,919,100 shares of Common Stock (the "Investor Shares").
D. To induce EB Nevada to engage in the Share Exchange and enter into the
related transactions contemplated as of the date hereof by the parties
hereto, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "SECURITIES
ACT"), and applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Initial
Investor hereby agree as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the following terms shall have the
following meanings:
(i) "INVESTORS" means the Initial Investor and any transferees
or assignees who agree to become bound by the provisions of this Agreement in
accordance with Section 8 hereof.
(ii) "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and the declaration or
ordering of effectiveness of such Registration Statement by the United States
Securities and Exchange Commission (the "SEC").
(iii) "REGISTRABLE SECURITIES" means the Investor Shares issued
or issuable and any shares of capital stock issued or issuable as a dividend
on or in exchange for or otherwise with respect to any of the foregoing.
(iv) "REGISTRATION STATEMENT" means a registration statement of
the Company under the Securities Act.
2. REGISTRATION.
(a) DEMAND REGISTRATION. If on any occasion one or more Investors
holding at least sixty percent (60%) of the Registrable Securities shall
notify the Company in writing that it or they intend to offer or cause to be
offered for public sale at least five percent (5%) of the Registrable
Securities, the Company will so notify all Investors, including all Investors
who hold Registrable Securities. Upon written request of any Investor given
within fifteen (15) days after the receipt by such Investor from the Company
of such notification, the Company will use its best efforts to cause such of
the Registrable Securities as may be requested by any holder thereof
(including the Investor(s) giving the initial notice of intent to offer) to
be registered under the Securities Act as expeditiously as possible. The
Company shall not be required to effect (i) more than three registrations
pursuant to this Section 2(a) or (ii) any registration pursuant to this
Section 2(a) until after that date which is three hundred sixty (360) days
after the Offering. If the Company determines to include shares to be sold
by it or by other selling shareholders in any registration request pursuant
to this Section 2(a), such registration shall be deemed to have been a "piggy
back" registration under Section 2(b), and not a "demand" registration under
this Section 2(a) if the Investors are unable to include in any such
Registration Statement eighty-five percent (85%) of the Registrable
Securities initially requested for inclusion in such Registration Statement.
The Company shall not be required to effect a registration pursuant to this
Section 2(a) unless the aggregate market value of the Registrable Securities
and
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any other securities included in such registration statement made pursuant
thereto is at least $5,000,000, before calculation of underwriting discounts
and commissions.
(b) PIGGY-BACK REGISTRATIONS. If at any time prior to the sale by
the Investors of all of the Registrable Securities, the Company shall file
with the SEC a Registration Statement relating to an offering for its own
account or the account of others under the Securities Act of any of its
equity securities (other than on Form S-4 or Form S-8 or their then
equivalents relating to equity securities to be issued solely in connection
with any acquisition of any entity or business or equity securities issuable
in connection with stock option or other employee benefit plans), the Company
shall send written notice to each Investor and, if within fifteen (15) days
after the date of such notice, one or more Investors shall so request in
writing, the Company shall use its best efforts to include in such
Registration Statement all or any part of the Registrable Securities such
Investors requests to be registered, except that if, in connection with any
underwritten public offering for the account of the Company the managing
underwriter(s) thereof shall impose a limitation on the number of shares of
Common Stock which may be included in the Registration Statement because, in
such underwriter(s)' judgment, marketing or other factors dictate that such
limitation is necessary to facilitate public distribution, then the Company
shall be obligated to include in such Registration Statement only such
limited portion of the Registrable Securities with respect to which such
Investor has requested inclusion hereunder as such underwriter(s) shall
permit. Any exclusion of Registrable Securities shall be made pro rata among
the Investors seeking to include Registrable Securities, in proportion to the
number of Registrable Securities sought to be included by such Investors;
PROVIDED, HOWEVER, that the Company shall not exclude any Registrable
Securities unless the Company has first excluded all outstanding securities,
the holders of which are not entitled to inclusion of such securities in such
Registration Statement or are not entitled to pro rata inclusion with the
Registrable Securities; and PROVIDED, FURTHER, HOWEVER, that, after giving
effect to the immediately preceding proviso, any exclusion of Registrable
Securities shall be made pro rata with holders of other securities having the
right to include such securities in the Registration Statement other than
holders of securities entitled to inclusion of their securities in such
Registration Statement by reason of demand registration rights. No right to
registration of Registrable Securities under this Section 2(b) shall be
construed to limit any registration required under Section 2(a) hereof. If an
offering in connection with which an Investor is entitled to registration
under this Section 2(b) is an underwritten offering, then each Investor whose
Registrable Securities are included in such Registration Statement shall,
unless otherwise agreed by the Company, offer and sell such Registrable
Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same
terms and conditions as other shares of Common Stock included in such
underwritten offering.
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(c) REGISTRATIONS ON FORM S-3. In addition to the rights provided
the Investors in Sections 2(a) and 2(b) above, if the registration of
Registrable Securities under the Securities Act can be effected on Form S-3
(or any similar form promulgated by the SEC) at any time after that date
which is three hundred sixty (360) days after the Offering, then, upon the
written request of one or more Investors, the Company will so notify each
Investor, and then will, as expeditiously as possible, use its best efforts
to effect qualification and registration under the Securities Act on Form S-3
of all or such portion of the Registrable Securities as the Investor(s) shall
specify; PROVIDED, HOWEVER, the Company shall not be required to effect a
registration pursuant to this Section 2(c) unless the aggregate market value
of the Registrable Securities and any other securities included in such
registration statement to be sold in any such registration shall be estimated
to be at least $1,000,000 at the time of filing such Registration Statement,
and further provided that the Company shall not be required to effect more
than one (1) registration during any six (6) month period pursuant to this
Section 2(c).
3. OBLIGATIONS OF THE COMPANY
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:
(a) Prepare and file with the SEC a Registration Statement on the
appropriate form under the Securities Act, which form shall be available for the
sale of such Registrable Securities in accordance with the intended method or
methods of distribution thereof, and use its best efforts to cause such
Registration Statement to become effective (provided that before filing a
Registration Statement or prospectus or any amendments or supplements thereto,
the Company shall furnish to the counsel selected by the holders of a majority
of the Registrable Securities covered by such Registration Statement copies of
all such documents proposed to be filed, which documents shall be subject to the
review and comment of such counsel);
(b) Notify each holder of Registrable Securities of the effectiveness
of each Registration Statement filed hereunder and prepare and file with the SEC
such amendments, post-effective amendments and supplements to such Registration
Statement and the prospectus used in connection therewith as may be necessary or
appropriate to keep such Registration Statement effective for the period
referred to in Section 3(n) hereof, cause such prospectus as so supplemented to
be filed as required under the Securities Act, and comply with the provisions of
the Securities 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 or supplement to the prospectus;
(c) Furnish to each selling Investor a copy of each Registration
Statement, amendment and supplement thereto and such copies of each preliminary
and final prospectus and
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such other documents as said Investor may reasonably request to facilitate
the public offering of its Registrable Securities;
(d) Use its best efforts to register or qualify the Registrable
Securities covered by a Registration Statement under the applicable
securities or "blue sky" laws of such jurisdictions as any selling Investor
may reasonably request and do any and all other acts and things which may be
reasonably necessary or advisable to enable such selling Investor to
consummate the disposition in such jurisdictions of the Registrable
Securities owned by such selling Investor; PROVIDED, HOWEVER, that the
Company shall not be obligated to qualify to do business in any jurisdictions
where it is not then so qualified or to take any action which would subject
it to service of process in suits other than those arising out of the offer
or sale of the securities covered by the Registration Statement in any
jurisdiction where it is not then so subject;
(e) Furnish to each selling Investor a signed counterpart, addressed to
the selling Investors, of (i) an opinion of counsel for the Company, dated the
effective date of the Registration Statement and (ii) "comfort" letters signed
by the Company's independent public accountants who have examined and reported
on the Company's financial statements included in the Registration Statement, to
the extent permitted by the standards of the American Institute of Certified
Public Accountants, covering substantially the same matters with respect to the
Registration Statement (and the prospectus included therein) and (in the case of
the accountants' "comfort" letters) with respect to events subsequent to the
date of the financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' "comfort" letters delivered to the
underwriters in underwritten public offerings of securities, to the extent that
the Company is required to deliver or cause the delivery of such opinion or
"comfort" letters to the underwriters in an underwritten public offering of
securities;
(f) Notify each selling Investor of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon the happening of any event as a
result of which the prospectus included in such registration statement as then
in effect, contains an untrue statement of a material fact or omits to state any
fact necessary to make the statements therein not misleading in the light of the
circumstances under which they were made, and, at the request of any such
selling Investor, the Company shall prepare a supplement or amendment to such
prospectus so that, thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall not contain an untrue statement of a material
fact required to be stated therein or omit to state any fact necessary to make
the statements therein not misleading;
(g) Cause all such Registrable Securities to be listed on the principal
securities exchange or market on which similar securities issued by the Company
are then listed or traded;
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(h) Cooperate with the selling Investors of Registrable Securities
and the managing underwriters, if any, to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be sold
and not bearing any restrictive legends; and enable such Registrable
Securities to be in such denominations and registered in such names as the
selling Investors or the managing underwriters, if any, may request at least
ten (10) business days prior to any sale of Registrable Securities; and
provide a transfer agent and registrar for all such Registrable Securities
not later than the effective date of such registration statement;
(i) In the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification
of any common stock included in such registration statement for sale in any
jurisdiction, the Company shall use its best efforts promptly to obtain the
withdrawal of such order.
(j) Permit each selling Investor or its counsel or other
representatives to inspect and copy such corporate documents and records as
may reasonably be requested by them;
(k) Furnish to each selling Investor a copy of all documents filed
with and all correspondence from or to the SEC in connection with any such
offering of securities;
(l) Use its best efforts to insure the obtaining of all necessary
approvals from the National Association of Securities Dealers, Inc.;
(m) Otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the period
of at least twelve months, but not more than eighteen months, beginning with
the first month after the effective date of the Registration Statement
covering the Offering, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder;
(n) The Company will use its best efforts to maintain the
effectiveness for up to one hundred eighty (180) days (or such shorter period
of time as the underwriters need to complete the distribution of the
registered offering, or one (1) year in the case of a "shelf" Registration
Statement on Form S-3) of any Registration Statement pursuant to which any of
the Registrable Securities are being offered, and from time to time will
amend or supplement such Registration Statement and the prospectus contained
therein to the extent necessary to comply with the Securities Act and any
applicable state securities statute or regulation. The Company will also
provide each Investor with as many copies of the prospectus contained in any
such Registration Statement as it may reasonably request;
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(p) If there is an underwriter, enter into underwriting agreements
in customary form; and
(q) Use reasonable efforts to cooperate and cause the Company's
officers, directors, employees and independent accountants to use reasonable
efforts to cooperate with the selling Investors of Registrable Securities and
the managing underwriters, if any, in the sale of the Registrable Securities.
Whenever under the preceding paragraphs of this Section 3, the Investors
are registering Registrable Securities pursuant to any Registration
Statement, each such Investor agrees to timely provide to the Company, at its
request, such information and materials as it may reasonably request in order
to effect the registration of such Registrable Securities.
4. EXPENSES OF REGISTRATION. All expenses incident to the Company's
performance of or compliance with this Agreement, including, without
limitation, all registration and filing fees (including, if applicable, the
fees and expenses of any "qualified independent underwriter" and its counsel
as may be required under the rules and regulations of the NASD), fees for
listing the securities to be registered on each securities exchange on which
similar securities issued by the Company are then listed or on the Nasdaq
Market System, fees and expenses of compliance with securities or blue sky
laws (including fees and disbursements of counsel for the underwriters or
selling Investors in connection with blue sky qualifications and
determination of their eligibility for investment under applicable laws),
printing expenses, messenger, telephone and delivery expenses, fees and
disbursements of custodians, and fees and disbursements of counsel for the
Company and all independent certified public accountants (including the
expenses of any special audit and "cold comfort" letters required by or
incident to such performance), underwriters (excluding underwriters'
discounts and commissions) and other persons employed or retained by the
Company and the reasonable fees and disbursements of one counsel for the
selling Investors in connection with the registration of their Registrable
Securities, shall be borne and paid by the Company, regardless of whether the
Registration Statement becomes effective ; PROVIDED, HOWEVER, that the
Company shall have no obligation to pay or otherwise bear any portion of the
underwriters' commissions or discounts attributable to the Registrable
Securities being offered and sold by the Investors, or the fees and expenses
of more than one counsel for the selling Investors in connection with the
registration of the Registrable Securities. The Company shall also pay all
expenses of the Investors in connection with any registration initiated
pursuant to this Agreement which is withdrawn, delayed or abandoned at the
request of the Company, except if such withdrawal, delay or abandonment is
caused by the fraud, material misstatement or omission of a material fact by
an Investor to be included in such registration.
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5. INDEMNIFICATION
(a) INDEMNIFICATION OF INVESTORS. In the event that the Company
registers any of the Registrable Securities under the Securities Act, the
Company will indemnify and hold harmless each Investor and each underwriter
of the Registrable Securities (including the officers, directors, employees,
agents, affiliates and partners of each such Investor and underwriter) so
registered (including any broker or dealer through whom such shares may be
sold) and each Person (as defined in Section 2(2) of the Securities Act), if
any, who controls such Investors or any such underwriter within the meaning
of Section 15 of the Securities Act from and against any and all losses,
claims, damages, expenses or liabilities, joint or several, to which they or
any of them become subject under the Securities Act, applicable state
securities laws or under any other statute or at common law or otherwise, as
incurred, and, except as hereinafter provided, will reimburse each such
Investor, each such underwriter and each such controlling Person, if any, for
any legal or other expenses reasonably incurred by them or any of them in
connection with investigating or defending any actions whether or not
resulting in any liability, as incurred, insofar as such losses, claims,
damages, expenses, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement, in any preliminary or amended preliminary
prospectus or in the final prospectus (or the Registration Statement or
prospectus as from time to time amended or supplemented by the Company) or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary in order
to make the statements therein not misleading, or any violation by the
Company of any rule or regulation promulgated under the Securities Act or any
state securities laws applicable to the Company and relating to action or
inaction required of the Company in connection with such registration, unless
(i) such untrue statement or alleged untrue statement or omission or alleged
omission was made in such Registration Statement, preliminary or amended
preliminary prospectus or final prospectus in reliance upon and in conformity
with information furnished in writing to the Company in connection therewith
by any such Investor (in the case of indemnification of such Investor), any
such underwriter (in the case of indemnification of such underwriter) or any
such controlling Person (in the case of indemnification of such controlling
Person) expressly for use therein, or UNLESS (ii) in the case of a sale
directly by such Investor (including a sale of such Registrable Securities
through any underwriter retained by such Investor to engage in a distribution
solely on behalf of such Investor), such untrue statement or alleged untrue
statement or omission or alleged omission was contained in a preliminary
prospectus and corrected in a final or amended prospectus copies of which
were delivered to such Investor or such underwriter on a timely basis, and
such Investor or such underwriter failed to deliver a copy of the final or
amended prospectus at or prior to the confirmation for the sale of the
Registrable Securities to the Person asserting any such loss, claim, damage
or liability in any case where such delivery is required by the Securities
Act.
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Promptly after receipt by any Investor, any underwriter or any
controlling Person of notice of the commencement of any action in respect of
which indemnity may be sought against the Company, such Investor, or such
underwriter or such controlling Person, as the case may be, will notify the
Company in writing of the commencement thereof (PROVIDED, that failure to so
notify the Company shall not relieve the Company from any liability it may
have hereunder) and, subject to the provisions hereinafter stated, the
Company shall be entitled to assume the defense of such action (including the
employment of counsel, who shall be counsel reasonably satisfactory to such
Investor, such underwriter or such controlling Person, as the case may be),
and the payment of expenses insofar as such action shall relate to any
alleged liability in respect of which indemnity may be sought against the
Company.
Such Investor, any such underwriter or any such controlling Person shall
have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
subsequent to any assumption of the defense by the Company shall not be at
the expense of the Company unless (a) the employment of such counsel has been
specifically authorized in writing by the Company or (b) the representation
of both the Company and the indemnified party(ies) by the same counsel would
be inappropriate due to actual or potential conflicts of interest between
them. The Company shall not be liable to indemnify any Investor, underwriter
or controlling Person for any settlement of any such action effected without
the Company's written consent (which shall not be unreasonably withheld). The
Company shall not, except with the approval of each party being indemnified
under this Section 5(a), 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 the parties being so indemnified of a release
from all liability in respect to such claim or litigation.
In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which any Investor
exercising rights under this Agreement, or any controlling Person of any such
Investor, makes a claim for indemnification pursuant to this Section 5(a),
but it is judicially determined (by the entry of a final judgment or decree
by a court of competent jurisdiction and the expiration of time to appeal or
the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 5(a)
provides for indemnification in such case, then the Company and such Investor
will contribute to the aggregate losses, claims, damages or liabilities to
which they may be subject (after contribution from others) in such proportion
as is appropriate to reflect the relative fault of the Company on the one
hand and of the Investor on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative fault of
the Company on the one hand and of the Investor on the other shall be
determined by reference to, among other things, whether the 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 on the one
hand or by the Investor
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on the other, and each party's relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
PROVIDED, HOWEVER, that, in any such case, (A) no such Investor will be
required to contribute any amount in excess of the proceeds received by such
Investor from the sale of all such Registrable Securities sold pursuant to
such Registration Statement; and (B) no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(b) INDEMNIFICATION OF COMPANY. In the event that the Company
registers any of the Registrable Securities under the Securities Act, each
Investor for which Registrable Securities were registered will indemnify and
hold harmless the Company, each of its directors, each of its officers who
have signed or otherwise participated in the preparation of the Registration
Statement, each underwriter of the Registrable Securities so registered
(including any broker or dealer through whom such of the shares may be sold)
and each Person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act from and against any and all losses, claims,
damages, expenses or liabilities, joint or several, to which they or any of
them may become subject under the Securities Act, applicable state securities
laws or under any other statute or at common law or otherwise, and, except as
hereinafter provided, will reimburse the Company and each such director,
officer, underwriter or controlling Person for any legal or other expenses
reasonably incurred by them or any of them in connection with investigating
or defending any actions, whether or not resulting in any liability, insofar
as such losses, claims, damages, expenses, liabilities or actions arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, in any preliminary or
amended preliminary prospectus or in the final prospectus (or in the
Registration Statement or prospectus as from time to time amended or
supplemented) or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, but only
insofar as any such statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Company in connection
therewith by such Investor expressly for use therein; PROVIDED, HOWEVER, that
such Investor's obligations hereunder shall be limited to an amount equal to
the proceeds received by such Investor in connection with Registrable
Securities sold pursuant to such registration.
Promptly after receipt of notice of the commencement of any action in
respect of which indemnity may be sought against such Investor, the Company
will notify such Investor in writing of the commencement thereof (PROVIDED,
that failure to so notify such Investor shall not relieve such Investor from
any liability it may have hereunder), and such Investor shall, subject to the
provisions hereinafter stated, be entitled to assume the defense of such
action (including the employment of counsel, who shall be counsel reasonably
satisfactory to the Company) and the payment of expenses insofar as such
action shall relate to the alleged liability in respect of which
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indemnity may be sought against such Investor. The Company and each such
director, officer, underwriter or controlling Person shall have the right to
employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel subsequent to any
assumption of the defense by such Investor shall not be at the expense of
such Investor, unless employment of such counsel has been specifically
authorized in writing by such Investor. Such Investor shall not be liable to
indemnify any Person for any settlement of any such action effected without
such Investor's written consent.
In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which the Company
exercising its rights under this Agreement, makes a claim for indemnification
pursuant to this Section 5(b), but it is judicially determined (by the entry
of a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding that
this Section 5(b) provides for indemnification, in such case, then the
Company and such Investor will contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (after contribution from
others) in such proportion as is appropriate to reflect the relative fault of
the Company on the one hand and of the Investor on the other in connection
with the statements or omissions which resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of the
Investor on the other shall be determined by reference to, among other
things, whether the 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 on the one hand or by the Investor on the other, and
each party's relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission; PROVIDED,
HOWEVER, that in any such case, (A) no such Investor will be required to
contribute any amount in excess of the proceeds received by such Investor
from the sale of all such Registrable Securities sold pursuant to such
Registration Statement; and (B) no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
6. LIMITATIONS ON THE COMPANY.
(a) MERGERS, ETC. The Company shall not, directly or indirectly,
enter into any merger, consolidation or reorganization in which the Company
shall not be the surviving corporation unless the proposed surviving
corporation shall, prior to such merger, consolidation or reorganization,
agree in writing to assume the obligations of the Company under this
Agreement, and, for that purpose, references hereunder to Registrable
Securities shall be deemed to be references to the securities which the
Investors would be entitled to receive in exchange for Registrable Securities
under any such merger, consolidation or reorganization; PROVIDED,
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HOWEVER, that the provisions of this Section 6(a) shall not apply in the
event of any merger, consolidation, or reorganization in which the Company is
not the surviving corporation if (x) all stockholders are entitled to receive
in exchange for their Registrable Securities, consideration consisting solely
of (i) cash, (ii) securities of the acquiring corporation which may be
immediately sold to the public without registration under the Securities Act,
or (iii) securities of the acquiring corporation which the acquiring
corporation has agreed to register, within ninety (90) days of completion of
the transaction, for resale to the public pursuant to the Securities Act and
(y) Investors are given at least thirty (30) days written notice prior to the
record date of such merger, consolidation or reorganization.
(b) LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after
the date of this Agreement, the Company shall not, without the prior written
consent of Investors holding at least a majority of the Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder of any securities of the Company the right to require the Company to
initiate any registration of any securities of the Company unless such rights
are subordinate to or PARI PASSU with the rights of the Investors. Any right
given by the Company to any holder or prospective holder of the Company's
securities in connection with the registration of securities shall be
conditioned such that it shall be consistent with the provisions of this
Agreement and with the rights of the holder provided in this Agreement. This
Agreement shall not limit the right of the Company to enter into any
agreements with any holder or prospective holder of any securities of the
Company giving such holder or prospective holder the right to require the
Company, upon any registration of any of its securities, to include, among
the securities which the Company is then registering, securities owned by
such holder if such rights are subordinate to or PARI PASSU with the rights
of the Investors.
7. TRANSFERABILITY. The rights to register securities granted by the
Company under this Agreement may be assigned by any Investor provided that
(i) such transfer is effected in accordance with applicable securities laws;
and (ii) such assignee or transferee agrees in writing to be bound by all of
the provisions of this Agreement.
8. MISCELLANEOUS
(a) This Agreement shall be enforced, governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements
made and to be performed entirely within such State. In the event that any
provision of this Agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to
the extent that it may conflict therewith and shall be deemed modified to
conform with such statute or rule of law. Any provision hereof which may
prove invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision hereof.
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(b) This Agreement (including all schedules and exhibits thereto)
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
and therein with respect to the subject matter hereof and thereof. This
Agreement supersedes all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof and thereof.
(c) Subject to the requirements of Section 7 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns
of each of the parties hereto.
(d) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
(e) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute one
and the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this
Agreement.
(f) Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as the
other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(g) All consents and other determinations to be made by the
Investors pursuant to this Agreement shall be made by the Investors holding a
majority of the Registrable Securities.
(h) The Company recognizes and agrees that the Investors will not
have an adequate remedy if the Company fails to comply with this Agreement
and that damages may not be readily ascertainable, and the Company expressly
agrees that, in the event of such failure, it shall not oppose an application
by an Investor or any other Person entitled to the benefits of this Agreement
requiring specific performance of any and all provisions hereof or enjoining
the Company from continuing to commit any such breach of this Agreement.
(i) Any notices required or permitted to be given under the terms of
this Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed telecopy,
and shall be effective five (5) days after being placed in the mail, if
mailed, or upon receipt or refusal of receipt, if delivered personally or by
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courier or confirmed telecopy, in each case addressed to a party. The
addresses for such communications shall be:
If to the Company:
Electronics Boutique Holdings Corp.
000 Xxxxx Xxxxxxx Xxxxxx
Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxxx
with a copy to:
Klehr, Harrison, Xxxxxx, Xxxxxxxxx & Xxxxxx LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Fax: 000-000-0000
Attn: Xxxxxxx X. Xxxxxxx, Esquire
and if to any Investor, at such address as such Investor shall have provided in
writing to the Company, or at such other address as each such party furnishes by
notice given in accordance with this Section 8(i).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
ELECTRONICS BOUTIQUE HOLDINGS CORP.
By:
--------------------------------
Name:
------------------------------
Its:
-------------------------------
INITIAL INVESTOR:
EB NEVADA INC.
By:
--------------------------------
Name:
------------------------------
Its:
-------------------------------
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