Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made on this 31st
day of October, 2001, by and among eGames, Inc., a Pennsylvania corporation (the
"Company"), and Fleet National Bank, successor in interest to Summit Bank, a
state banking corporation ("Fleet")
RECITALS
WHEREAS, on even date herewith, Fleet and the Company entered
into a Forbearance Agreement (the "Forbearance Agreement"), the terms of which
are incorporated herein by reference as if set forth in full herein, pursuant to
which Fleet agreed to temporarily forebear from exercising and enforcing certain
rights which Fleet has against the Company as the result of the Company's
default on a certain loan, the terms of which are more specifically set forth in
the Forbearance Agreement and the loan documents;
WHEREAS, in order to induce Fleet to enter into the Forbearance
Agreement, the Company is granting Fleet a warrant (the "Warrant") permitting
Fleet to acquire shares of the Company's Common Stock (the "Common Stock") under
the terms of the Warrant Agreement, a copy of which is attached hereto as
Exhibit A;
WHEREAS, Fleet and the Company hereby agree that this Agreement
shall govern the rights of Fleet to cause the Company to register the Common
Stock issuable upon exercise of the Warrants and certain other matters as set
forth herein; and
WHEREAS, Fleet and the Company have agreed, pursuant to the
Warrant Agreement, to enter into this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, the
covenants and conditions set forth herein, and certain other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:
1. Definitions. All terms used but not defined herein shall
have such meaning as is ascribed by the Warrant Agreement. In addition, the
following terms shall have the following respective meanings:
(a) "Commission" means the United States Securities and
Exchange Commission, or any other federal agency at the time administering the
Securities Act.
(b) "Exchange Act" means the Securities Exchange Act of
1934, as amended, or any similar federal statute, and the rules and regulations
of the Commission issued under such Act, as they each may, from time to time, be
in effect.
(c) "Registration Statement" means a registration statement
filed by the Company with the Commission for a public offering and sale of
Common Stock or securities exercisable for or convertible into Common Stock
(other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a similar limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).
(d) "Registration Expenses" means the expenses described in
Section 5 below.
(e) "Registrable Shares" means (i) the Common Stock and (ii)
any other securities issued or issuable in respect of such Common Stock (because
of stock splits (whether forward or reverse), split-ups, recapitalization,
mergers, consolidations, combinations, exchanges of Common Stock, separations,
reclassifications, reorganizations or liquidations); provided, however, that
Registrable Shares shall cease to be Registrable Shares upon any sale of such
shares pursuant to a Registration Statement or pursuant to Rule 144 under the
Securities Act where all transfer restrictions with respect thereto are removed
upon consummation of such Rule 144 sale; and further provided that Registrable
Shares shall cease to be Registrable Shares on the date that is seven (7) years
after the date of this Agreement or such earlier date as elsewhere provided in
this Agreement.
(f) "Securities Act" means the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
2. Required Registrations.
(a) Except as provided below, at any time after November 1,
2002, Fleet may request, in writing, that the Company effect the registration on
Form S-1 or Form S-2 (or any successor form) of Registrable Shares owned by
Fleet. Thereupon, the Company shall effect, as expeditiously as possible and in
any event not later than 60 days after receipt of such notice, the filing of a
Registration Statement on Form S-1 or Form S-2 (or any successor form) of all
Registrable Shares which the Company has been requested to so register, and
thereafter use its best efforts to effect as soon as practicable thereafter the
registration of such requested Registrable Shares. If Fleet intends to
distribute the Registrable Shares by means of an underwriting, it shall so
advise the Company in its request.
(b) At such time as the Company is eligible to file a
Registration Statement on Form S-3 (or any successor form relating to secondary
offerings), Fleet's rights under paragraph 2(a) above shall become null and void
and of no further effect, and Fleet may thereafter request the Company, in
writing, to effect the registration on Form S-3 (or such successor form), of
Registrable Shares. Thereupon, the Company shall, as expeditiously as possible
and in any event not later than 60 days after receipt of such notice, effect the
filing of a Registration Statement on Form S-3 (or any successor form) of all
Registrable Shares which the Company has been requested to so register, and
thereafter use its best efforts to effect as soon as practicable thereafter the
registration of such requested Registrable Shares. The Company shall advise
Fleet in writing from time to time whenever it is eligible to file a
Registration Statement on Form S-3.
(c) While the Company is not eligible to file a Registration
Statement on Form S-3, Fleet shall be entitled to demand one registration
pursuant to paragraph 2(a) above. At such time as the Company is eligible to
file a Registration Statement on Form S-3 (an any successor form relating to a
secondary offering), Fleet shall be entitled to demand one registration per
12-month period pursuant to paragraph 2(b) above; provided, however, that the
Company shall not be required to file any registration pursuant to paragraph
2(a) or (b) above unless Fleet requests registration of 100% of the Registrable
Shares; and provided further, that the Company may defer making such filing for
a reasonable period after the date of any such request for registration (but not
in excess of 90 days) if in the good faith judgment of the Company's Board of
Directors such filing would, at such time, (i) require the disclosure of
material information that the Company has a bona fide business purpose for
preserving as confidential, (ii) require the providing of information required
by the Commission that at such time the Company would be unable to provide, or
(iii) adversely affect active negotiations or planning for a proposed or pending
merger or acquisition. The Company's obligations with respect to paragraphs 2(a)
and 2(b) above shall be deemed satisfied only when a registration statement
covering the applicable Registrable Shares shall have (A) become effective or
(B) been withdrawn at the request of Fleet (other than as a result of
information concerning the business or financial condition of the Company which
is made known to Fleet after the date on which such registration was requested).
(d) Not later than fifteen (15) days after receipt of a
demand for a registration pursuant to paragraph 2(a) above, the Company may in
its sole discretion elect to purchase from Fleet all of the Registrable Shares
which the Company has been requested to so register, at a price per share equal
to the Current Market Price of the Company's Common Stock on the date of the
Company's receipt of such demand, in which event Fleet shall be obligated to
sell such Registrable Shares to the Company and whereupon the Company shall have
no further obligation under paragraph 2(a) hereof.
3. Incidental Registration.
(a) Whenever the Company proposes to file a Registration
Statement at any time and from time to time, it will, prior to such filing, give
written notice to Fleet of its intention to do so and, upon the written request
of Fleet, given within 10 business days after the Company provides such notice
(which request shall state the intended method of disposition of such
Registrable Shares), the Company shall use its best efforts to cause all
Registrable Shares specified by Fleet to be registered under the Securities Act
to the extent necessary to permit their sale or other disposition in accordance
with the intended methods of distribution specified in the request of Fleet;
provided, however, that the Company shall have the right to postpone or withdraw
any registration effected pursuant to this Section 3(a) without obligation to
Fleet.
(b) In connection with any registration under paragraph 3(a)
above that shall involve an underwriting, the Company shall not be required to
include any Registrable Shares in such registration unless Fleet accepts the
terms of the underwriting as agreed upon between the Company and the
underwriters selected by it. If in the opinion of the managing underwriter it is
desirable because of marketing or other factors to limit the number of
Registrable Shares to be included in the offering, then the Company shall be
required to include in the registration only that number of Registrable Shares,
if any, which the managing underwriter believes should be included therein.
4. Registration Procedures. If and whenever the Company is
required by the provisions of this Agreement to use its best efforts to effect
the registration of any of the Registrable Shares under the Securities Act, the
Company shall:
(a) file with the Commission a Registration Statement with
respect to such Registrable Shares and use its best efforts to cause that
Registration Statement to become effective;
(b) in accordance with the requirements and in the time
periods set forth in the Securities Act prepare and file with the Commission any
amendments and supplements to the Registration Statement and the prospectus
included in the Registration Statement as may be necessary to keep the
Registration Statement effective;
(c) promptly furnish to Fleet a copy of the prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as Fleet may reasonably request in
order to facilitate the public sale or other disposition of the Registrable
Shares owned by Fleet; and
(d) use its best efforts to register or qualify the
Registrable Shares covered by the Registration Statement under the securities or
Blue Sky laws of such states as Fleet shall reasonably request in writing;
provided, however, that the Company shall not be required in connection with
this Section 4 to qualify as a foreign corporation or execute a general consent
to service of process in any jurisdiction.
(e) The Company shall not be required to maintain the
effectiveness of any registration statement effected pursuant to this Agreement
beyond the date that is two (2) years after the date of filing of the
registration statement.
If the Company has delivered a preliminary or final prospectus to Fleet and
after having done so the prospectus is amended to comply with the requirements
of the Securities Act, the Company shall promptly notify Fleet and, if
requested, Fleet shall immediately cease making offers of Registrable Shares and
return all prospectuses to the Company. The Company shall promptly provide Fleet
with a revised prospectus and, following receipt of the revised prospectus,
Fleet shall be free to resume making offers of the Registrable Shares.
If, after a registration statement becomes effective, the Company becomes
engaged in any activity which in the good faith determination of the Company's
Board of Directors, involves information that would have to be disclosed in the
Registration Statement but which the Company desires to keep confidential for
valid business reasons, then the Company may at its option, by notice to Fleet,
require that Fleet cease sales of such Registrable Shares under such
Registration Statement for a period not in excess of three months from the date
of such notice, such right to be exercised by the Company not more than twice in
any 12-month period. If, in connection therewith, the Company considers it
appropriate for such Registration Statement to be amended, the Company shall so
amend such Registration Statement as promptly as practicable and Fleet shall
suspend any further sales of its Registrable Shares until the Company advises it
that such Registration Statement has been amended. The time periods referred to
herein during which such Registration Statement must be kept effective shall be
extended for an additional number of days equal to the number of days during
which the right to sell Registrable Shares was suspended pursuant to this
paragraph.
5. Allocation of Expenses.
The Company will pay all Registration Expenses of all registrations under this
Agreement. For purposes of this Section 5, the term "Registration Expenses"
shall mean all expenses incurred by the Company in complying with Section 4
hereof, including, without limitation, all registration and filing fees,
exchange listing fees, printing expenses, fees and expenses of counsel for the
Company, state Blue Sky fees and expenses, and the expense of any special audits
incident to or required by any such registration, but excluding underwriting
discounts, selling commissions and the fees and expenses of Fleet's own counsel.
6. Indemnification and Contribution.
(a) In the event of any registration of any of the
Registrable Shares under the Securities Act pursuant to this Agreement, the
Company will indemnify and hold harmless Fleet, each underwriter of Registrable
Shares sold by Fleet, and each other person, if any, who controls Fleet or such
underwriter within the meaning of the Securities Act or the Exchange Act against
any losses, claims, damages or liabilities, joint or several, to which Fleet,
such underwriter or such controlling person may become subject under the
Securities Act, the Exchange Act, state securities or Blue Sky laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to such Registration Statement, or
arise out of or are based upon the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Company will reimburse Fleet, such underwriter
and each such controlling person for any legal or any other expense reasonably
incurred by Fleet, such underwriter or such controlling person in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any such case
to Fleet, such underwriter or such controlling person to the extent that any
such loss, claim, damage or liability arises out of or is based upon any untrue
statement or omission made in such Registration Statement, preliminary
prospectus or final prospectus, or any such amendment or supplement, in reliance
upon and in conformity with information furnished to the Company, in writing, by
or on behalf of Fleet, such underwriter or such controlling person specifically
for use in the preparation thereof.
(b) In the event of any registration of any of the
Registrable Shares under the Securities Act pursuant to this Agreement, Fleet
will indemnify and hold harmless the Company, each of its directors and officers
and each underwriter (if any) and each person, if any, who controls the Company
or any such underwriter within the meaning of the Securities Act or the Exchange
Act, against any losses, claims, damages or liabilities, joint or several, to
which the Company, such directors and officers, underwriter or controlling
person may become subject under the Securities Act, Exchange Act, state
securities or Blue Sky laws or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement under which such Registrable Shares were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement, or arise out of or are based upon any
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the Securities Act, any preliminary prospectus or
final prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, or arise out of or are based upon the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, if the
statement or omission was made in reliance upon and in conformity with
information relating to such seller furnished in writing to the Company by or on
behalf of Fleet specifically for use in connection with the preparation of such
Registration Statement, prospectus, amendment or supplement, provided, however,
that the obligations of Fleet hereunder shall be limited to an amount equal to
the gross proceeds to Fleet from the Registrable Shares sold in connection with
such registration.
(c) Each party entitled to indemnification under this
Section 6 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; provided, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim of litigation,
shall be reasonably satisfactory to the Indemnified Party (whose approval shall
not be unreasonably withheld); and, provided further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 6, unless and except to
the extent that the Indemnifying Party is prejudiced by the failure of the
Indemnified Party to provide timely notice. The Indemnified Party may
participate in such defense at such party's expense; provided, however, that the
Indemnifying Party shall pay such reasonable expenses if there would be a
conflict of interest (and counsel for the Indemnified Party has advised the
Indemnified Party in writing of such conflict) if counsel retained by the
Indemnifying Party represented both the Indemnified Party and the Indemnifying
Party in such proceeding.. No Indemnifying Party, in the defense of any such
claim or litigation shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect of such
claim or litigation, and no Indemnified Party shall consent to entry of any
judgment or settle such claim or litigation without the prior written consent of
the Indemnifying Party.
(d) In order to provide for just and equitable contribution
to joint liability under the Securities Act in any case in which either (A)
Fleet or any controlling person of Fleet, makes a claim for indemnification
pursuant to this Section 6 but it is judicially determined (A) 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 6 provides for indemnification in such case, or (B) contribution
under the Securities Act may be required on the part of Fleet or any such
controlling person in circumstances for which indemnification is provided under
this Section 6; then, in each such case, the Company and Fleet will contribute
to the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportions so that Fleet are
responsible for the portion represented by the percentage that the public
offering price of its Registrable Shares offered by the Registration Statement
bears to the public offering price of all securities offered by such
Registration Statement, and the Company is responsible for the remaining
portion; provided, however, that, in any such case, (x) Fleet shall not be
required to contribute any amount in excess of the gross proceeds to it of all
Registrable Shares sold by it pursuant to such Registration Statement, and (y)
no person or entity guilty of fraudulent misrepresentation, within the meaning
of Section 11(f) of the Securities Act, shall be entitled to contribution from
any person or entity who is not guilty of such fraudulent misrepresentation.
7. Information by Fleet. Fleet shall furnish to the Company in
writing such information regarding Fleet and the distribution proposed by Fleet
as the Company may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification or compliance
referred to in this Agreement.
8. Rule 144 Requirements. The Company agrees commencing no
later than November 1, 2002 and thereafter during the Exercise Period and for so
long as Fleet beneficially owns any Registrable Shares to:
(a) Comply with the requirements of Rule 144(c) under the
Securities Act with respect to current public information about the Company;
(b) Use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) Furnish to Fleet upon request (i) a written statement by
the Company as to its compliance with the requirements of said Rule 144(c), and
the reporting requirements of the Securities Act and the Exchange Act (at any
time after it has become subject to such reporting requirements), (ii) a copy of
the most recent annual or quarterly report of the Company, and (iii) such other
reports and documents of the Company as Fleet may reasonably request to avail
itself of any similar rule or regulation of the Commission allowing it to sell
any such securities without registration.
9. Assignment. These provisions shall be binding upon and inure to the
benefit of the Company, Fleet and their respective successors. This agreement
may only be assigned by Fleet to a permitted assignee of the Warrants as
permitted under the Warrant Agreement, and any such assignee must agree in
writing to be subject to the terms and conditions of this Agreement.
10. Choice of Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.
EGAMES, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx, VP Finance, CFO
FLEET NATIONAL BANK
By: /s/ Xxxxxxx Xxxxxx, AVP
-----------------------
