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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
AUGUST 20, 1999
THE GOOD GUYS, INC.
EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER
Delaware 0-14134 94-2366177
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
7000 Marina Boulevard, Brisbane, California 94005-1830
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): 415/615-6000
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Item 5.
On August 20, 1999, the Registrant announced the completion of a private
placement of its securities, pursuant to which investors purchased 3.25 million
restricted shares of the Company's common stock at a price of $5.00 per share
and received warrants exercisable for three years to purchase 1.625 million
additional shares of common stock at a price of $6.125 a share. Net proceeds to
the Company from the offering will be approximately $15,350,000, after fees
payable to Morgan Keegan & Co., Inc., the placement agent, and other costs of
the offering; Morgan Keegan & Co., Inc. also received for its services a warrant
exercisable for three years to purchase 160,000 shares of the Company's common
stock at a price of $6.125 per share.
Item 7. Financial Statements and Exhibits.
(a) Exhibits
10.18 Stock Purchase Agreement, dated as of August 19, 1999, together with
the forms of Warrant to Purchase Shares of Common Stock and
Registration Rights Agreement executed in connection with private
placement.
(a) 99.2 Press Release, dated August 20, 1999
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE GOOD GUYS, INC
By: /s/ VANCE R. SCHRAM
--------------------------------
VANCE R. SCHRAM
Name: Vance R. Schram
Title: Controller and Secretary
-2-
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
10.18 Stock Purchase Agreement, dated as of August 19, 1999, together
with attached forms of Warrant to Purchase Share of Common Stock
and Registration Rights Agreement executed in connection with
private placement.
(a) 99.2 Press Release, dated August 20, 1999
</TABLE>
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Exhibit 10.18
STOCK PURCHASE AGREEMENT
by and between
THE GOOD GUYS, INC.
and
THE PURCHASERS LISTED ON SCHEDULE A
Dated as of August 19, 1999
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "AGREEMENT") is dated as of August
19, 1999 between The Good Guys, Inc., a Delaware corporation (the "COMPANY"),
and The Purchasers Listed On Schedule A (the "PURCHASERS"). The Company and the
Purchasers may hereinafter be referred to collectively as the "PARTIES" or
individually as a "PARTY." Except as otherwise indicated herein, capitalized
terms used herein are defined in Appendix A.
PRELIMINARY STATEMENTS
A. The Company wishes the Purchasers to make an equity investment in
the Company.
B. The Company and the Purchasers desire to enter into an agreement
pursuant to which the Purchasers will purchase from the Company, and the Company
will sell to the Purchasers, the restricted common stock and the warrants
described herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereof, and for other good, valuable and binding consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:
STATEMENT OF AGREEMENT
ARTICLE I
ISSUANCE AND PURCHASE OF SHARES
1.1 Issuance and Purchase of Common Stock. Subject to the terms and
conditions of this Agreement, the Company shall sell to the Purchasers, and the
Purchasers shall purchase from the Company, Three Million Two Hundred Fifty
Thousand (3,250,000) shares (the "SHARES") of the Company's common stock, par
value $.001 per share, together with warrants to purchase One Million Six
Hundred Twenty-Five Thousand (1,625,000) shares of Common Stock in the form
attached hereto as Exhibit A (the "WARRANTS") for an aggregate purchase price of
Sixteen Million Two Hundred Fifty and No/100 Dollars ($16,250,000) (the
"PURCHASE PRICE").
1.2 Settlement. The settlement of the transactions contemplated herein
(the "SETTLEMENT") shall take place at the offices of Bass, Berry & Sims PLC,
119 S. Main St., Suite 500, Memphis, Tennessee 38103 at 10:00 a.m. Memphis,
Tennessee time on or before August 19, 1999, or such other time, date or place
as the Parties may mutually agree (the "SETTLEMENT DATE"). At the Settlement,
(a) Purchasers shall pay to the Company, by wire transfer of immediately
available funds to such account or accounts designated in writing by the
Company, the Purchase Price; (b) the Company shall issue to Purchasers the
Shares and deliver to Purchasers certificates for the Shares duly registered in
the name of Purchasers; (c) the Company shall deliver the Warrants, registered
in the name of the Purchasers or such other names as may
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be designated by Purchasers and (d) the Company shall deliver a legal opinion
from the Company's counsel, Howard, Rice, Nemerovski, Canady, Falk & Rabkin,
P.C., in form and substance satisfactory to Purchasers, and expressing the
opinions identified on Schedule 1.2(d) hereto.
ARTICLE II
RESTRICTIONS ON TRANSFERABILITY
The Shares shall not be transferred before satisfaction of the
conditions specified in this Article II, which conditions are intended to ensure
compliance with the provisions of the Securities Act and applicable state
securities laws with respect to the transfer of any Shares. Purchasers, by
entering into this Agreement and accepting the Shares, agree to be bound by the
provisions of this Article II.
2.1 Restrictive Legend. Except as otherwise provided in this Article
II, each certificate representing Shares and Warrant Shares (together the
"RESTRICTED COMMON STOCK") shall be stamped or otherwise imprinted with a legend
in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT
BE SOLD OR OTHERWISE TRANSFERRED, UNLESS AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT AND ANY APPLICABLE SECURITIES LAWS, OR ANY
RULE OR REGULATION PROMULGATED THEREUNDER, IS AVAILABLE. SUCH
SECURITIES ARE SUBJECT TO THE RESTRICTIONS AND PRIVILEGES SPECIFIED IN
THE STOCK PURCHASE AGREEMENT, DATED AS OF AUGUST 19, 1999, BETWEEN THE
GOOD GUYS, INC. AND THE PURCHASERS LISTED ON SCHEDULE A THERETO, A COPY
OF WHICH IS ON FILE WITH THE SECRETARY OF THE GOOD GUYS, INC. AND WILL
BE FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
THE HOLDER OF THIS CERTIFICATE AGREES TO BE BOUND BY THE TERMS AND
CONDITIONS OF SUCH STOCK PURCHASE AGREEMENT."
2.2 Transfers. Each Holder agrees that it will not sell, transfer or
otherwise dispose of any shares of Restricted Common Stock, in whole or in part,
except pursuant to an effective registration statement under the Securities Act
or an exemption from registration thereunder. Each certificate, if any,
evidencing such shares of Restricted Common Stock issued upon such transfer
shall bear the restrictive legend set forth in Section 2.1, unless in the
written opinion of the transferee's or Holder's counsel delivered to the Company
in connection with such transfer (which opinion shall be reasonably satisfactory
to the Company) such legend is not required in order to ensure compliance with
the Securities Act.
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2.3 Termination of Restrictions. The restrictions imposed by this
Article II upon the transferability of the Restricted Common Stock and the
legend requirement of Section 2.1 shall terminate as to any particular Share or
Warrant Share (i) when and so long as such security shall have been registered
under the Securities Act and disposed of pursuant thereto, or (ii) when the
Holder thereof shall have delivered to the Company the written opinion of
counsel to such Holder, which opinion shall be reasonably satisfactory to the
Company, stating that such legend is not required in order to ensure compliance
with the Securities Act. Whenever the restrictions imposed by this Article II
shall terminate as to any Restricted Common Stock, as herein above provided, the
Holder thereof shall be entitled to receive from the Company, at the expense of
the Company, a new certificate representing such Common Stock, not bearing the
restrictive legend set forth in Section 2.1.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
As a material inducement to Purchasers entering into this Agreement and
purchasing the Shares and Warrants, the Company represents and warrants to
Purchasers as follows:
3.1 Corporate Status. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
The Company has all requisite corporate power and authority to own or lease, as
the case may be, its properties and to carry on its business as now conducted.
The Company and its Subsidiaries are qualified or licensed to conduct business
in all jurisdictions where its or their ownership or lease of property and the
conduct of its or their business requires such qualification or licensing,
except to the extent that failure to so qualify or be licensed would not have a
Material Adverse Effect on the Company. There is no pending, or to the knowledge
of the Company threatened, proceeding for the dissolution, liquidation or
insolvency of the Company or any of its Subsidiaries.
3.2 Corporate Power and Authority. The Company has the corporate power
and authority to execute and deliver this Agreement and the Warrants, to perform
its obligations hereunder and thereunder and consummate the transactions
contemplated hereby and thereby. The Company has taken all necessary corporate
action to authorize the execution, delivery and performance of this Agreement
and the Warrants and the transactions contemplated hereby and thereby.
3.3 Enforceability. Each of this Agreement and the Warrants has been
duly executed and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in equity.
3.4 No Violation. The execution and delivery by the Company of each of
this Agreement and the Warrants, the consummation of the transactions
contemplated hereby and
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thereby, and the compliance by the Company with the terms and provisions hereof
and thereof, will not (a) result in a violation or breach of, or constitute,
with the giving of notice or lapse of time, or both, a material default (or give
rise to any right of termination, cancellation or acceleration) under, any of
the terms, conditions or provisions of any Contract to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any material portion of the Company's or its Subsidiaries'
properties or assets may be bound, (b) violate any Requirement of Law applicable
to the Company or any of its Subsidiaries or any material portion of the
Company's properties or assets or (c) result in the imposition of any Lien upon
any of the properties or assets of the Company or any of its Subsidiaries;
except where any of the foregoing would not have a Material Adverse Effect on
the Company.
3.5 Consents/Approvals. No consent, approval, waiver or other action by
any Person under any Contract to which either the Company or any of its
Subsidiaries is a party, or by which any of their respective properties or
assets are bound, is required or necessary for the execution, delivery or
performance by the Company of this Agreement or the Warrants and the
consummation of the transactions contemplated hereby, except where the failure
to obtain such consents, filings, authorizations, approvals or waivers or make
such filings would not have a Material Adverse Effect on the Company.
3.6 Capitalization. The authorized capital stock of the Company
consists of 40,000,000 shares of Common Stock and 2,000,000 shares of Preferred
Stock. As of August 13, 1999, the Company had outstanding 16,347,333 shares of
Common Stock, all of which were duly authorized, validly issued, fully paid and
non-assessable and had no outstanding shares of Preferred Stock. Except (a) as
contemplated by this Agreement, (b) the Warrants, (c) options to acquire
1,431,847 shares of Common Stock under the Company's option plans, (d) warrants
held by Ronald A. Unkefer to acquire 1,435,500 shares of Common Stock, and (e)
as set forth in the Company's SEC Reports, there are (y) no rights, options,
warrants, convertible securities, subscription rights or other agreements,
calls, plans, contracts or commitments of any kind relating to the issued and
unissued capital stock of, or other equity interest in, the Company outstanding
or authorized and (z) no contractual obligations of the Company to repurchase,
redeem or otherwise acquire any shares of the Company Common Stock. Upon
delivery to the Purchasers of the certificates representing the Shares and
payment of the Purchase Price, the Purchasers will acquire good, valid and
marketable title, subject to the limitations on marketability contained in this
Agreement or imposed pursuant to the Securities Act, to and beneficial and
record ownership of the Shares, and the Shares will be validly issued, fully
paid and non-assessable. The Company has duly reserved, solely for purposes of
issuance upon exercise of the Warrants, the shares of Common Stock issuable upon
exercise of the Warrants.
3.7 SEC Reports and Nasdaq Eligibility. Since September 30, 1998, the
Company has made all filings (the "SEC REPORTS") required to be made by it under
the Securities Act of 1933 (the SECURITIES ACT") and the Securities Exchange Act
of 1934, (the "EXCHANGE ACT"). The SEC Reports, when filed, complied in all
material respects with all applicable requirements of the Securities Act and the
Exchange Act and the securities laws, rules and regulations of any state and
pursuant to any Requirements of Law. The SEC Reports, when filed, did not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein
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or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The Company has
delivered or made accessible to Purchasers true, accurate and complete copies of
the SEC Reports which were filed with the SEC since September 30, 1998. The
Company's Common Stock is currently eligible for trading on the Nasdaq National
Market.
3.8 Financial Statements. Each of the balance sheets included in the
SEC Reports (including any related notes and schedules) fairly presents in all
material respects the consolidated financial position of the Company and its
Subsidiaries as of its date, and each of the other financial statements included
in the SEC Reports (including any related notes and schedules) fairly presents
in all material respects the consolidated results of operations or other
information therein of the Company and its Subsidiaries for the periods or as of
the dates therein set forth in accordance with GAAP consistently applied during
the periods involved (except that the interim reports are subject to normal
recording adjustments which might be required as a result of year-end audit and
except as otherwise stated therein).
3.9 Undisclosed Liabilities. As of August 13, 1999, except for
liabilities and losses incurred in the ordinary course of business since June
30, 1999, the Company and its Subsidiaries do not have any material direct or
indirect indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, fixed or unfixed, choate or inchoate, liquidated or
unliquidated, secured or unsecured, subordinated or unsubordinated, matured or
unmatured, accrued, absolute, contingent, regulatory or administrative charges
or lawsuits brought, whether or not of a kind required by GAAP to be set forth
on a financial statement, that were not fully and adequately reflected or
reserved for in the financial statements contained in the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 1999 or otherwise
disclosed in the SEC Reports.
3.10 Material Changes. Except as set forth in the SEC Reports, since
June 30, 1999 there has been no Material Adverse Change in the Company. In
addition, the description of the Company's business contained in the Company's
Annual Report on Form 10-K for the fiscal year ended September 30, 1998 is not
materially inconsistent with its current operations. Except as set forth in the
SEC Reports, since June 30, 1999 there has not been (i) any direct or indirect
redemption, purchase or other acquisition by the Company of any shares of the
Common Stock or (ii) declaration, setting aside or payment of any dividend or
other distribution by the Company with respect of the Common Stock.
3.11 Litigation. Except as set forth in the SEC Reports, neither the
Company nor any of its Subsidiaries has received any notice of any outstanding
judgments, rulings, orders, writs, injunctions, awards or decrees of any court,
government or other authority against the Company or its Subsidiaries which
could have, or is party to any litigation or similar proceeding which could
have, if decided adversely to their interests, a Material Adverse Effect on the
Company.
3.12 Investment Company. The Company is not and after giving effect to
the sale of the Shares and Warrant Shares will not be an "investment company" or
an entity "controlled" by
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an "investment company" as such terms are defined in the Investment Company Act
of 1940, as amended.
3.13 No Commissions. Except for fees payable to Morgan Keegan &
Company, Inc., the Company has not incurred any obligation for any finder's or
broker's or agent's fees or commissions in connection with the purchase of the
Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
As a material inducement to the Company entering into this Agreement
and issuing and/or selling the Warrants and/or the Shares, each Purchaser
represents and warrants to the Company as follows:
4.1 Investment Intent. The Purchaser is acquiring the Shares and
Warrants hereunder and under the Warrant for the Purchaser's own account and
with no present intention of distributing or selling the Shares or Warrants or
any interest in the Shares or Warrants. The Purchaser agrees that it will not
sell or otherwise dispose of any of the Shares or Warrants or any interest in
the Shares or Warrants unless such sale or other disposition has been registered
or qualified (as applicable) under the Securities Act and applicable state
securities laws or, in the opinion of the Purchaser's counsel delivered to the
Company (which opinion shall be reasonably satisfactory to the Company) such
sale or other disposition is exempt from registration or qualification under the
Securities Act and applicable state securities laws. The Purchaser understands
that the sale of the Shares and Warrants acquired by the Purchaser hereunder has
not been registered under the Securities Act, but the Shares and Warrants are
issued through transactions exempt from the registration and prospectus delivery
requirements of Section 4(2) of the Securities Act, and that the reliance of the
Company on such exemption from registration is predicated in part on these
representations and warranties of the Purchaser. The Purchaser acknowledges that
pursuant to Section 2.1 a restrictive legend consistent with the foregoing has
been or will be placed on the certificates representing the Shares and the
Warrants until such legend is permitted to be removed under applicable law. The
Purchaser will have no right to require registration of the Shares and the
common stock underlying the Warrants, and the Company is under no obligation to
cause an exemption to be available, except as provided in the Registration
Rights Agreement attached as Exhibit B hereto.
4.2 Adequate Information. The Company has made available and the
Purchaser has reviewed such information that the Purchaser considers necessary
or appropriate to evaluate the risks and merits of an investment in the Shares
(including, without limitation, the Company's Form 10-K for the fiscal year
ended September 30, 1998, Form 10-Qs for the quarterly periods ended December
31, 1998, March 31, 1999 and June 30, 1999, and Current Reports on Form 8-K
since April 1, 1999.
4.3 Opportunity to Question. The Purchaser has had the opportunity to
question, and, to the extent deemed necessary or appropriate, has questioned
representatives of the Company so
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as to receive answers and verify information obtained in the Purchaser's
examination of the Company, including the information that the Purchaser has
reviewed in relation to its investment in the Shares and Warrants.
4.4 No Other Representations. No oral or written representations have
been made to the Purchaser in connection with the Purchaser's acquisition of the
Shares and Warrants which were in any way inconsistent with the information
reviewed by the Purchaser. The Purchaser acknowledges that no representations or
warranties of any type or description have been made to it by any Person with
regard to the Company, any of its Subsidiaries, any of their respective
businesses, properties or prospectus or the investment contemplated herein,
other than the representations and warranties set forth in Article III hereof.
The Purchaser has not made its decision to acquire Shares and Warrants or to
execute and deliver this Agreement on the basis of any belief that any officer,
director or affiliate of the Company or any current stockholder of the Company
would make an investment in the Company now or in the future.
4.5 Knowledge and Experience. The Purchaser is an accredited investor
as such term is defined in Rule 501 under the Securities Act. The Purchaser has
such knowledge and experience in financial, tax and business matters, including
substantial experience in evaluating and investing in common stock and other
securities (including the common stock and other securities of new and
speculative companies), so as to enable the Purchaser to utilize the information
made available to the Purchaser in order to evaluate the merits and risks of an
investment in the Shares and Warrants and to make an informed investment
decision with respect thereto.
4.6 Additional Representations. Each Purchaser will make such
additional representations and warranties and furnish such information regarding
the Purchaser's investment experience and financial position as the Company may
reasonably require, and if there should be any material change in the
information set forth herein or in the Purchaser Suitability Questionnaire prior
to the closing of the sale of the Common Stock, the Purchaser will immediately
furnish such revised or corrected information to the Company.
4.7 Offering Memorandum. The Purchaser has received a copy of the
Confidential Memorandum dated August 13, 1999 and any and all amendments,
supplements and Appendices thereto. Except for the information contained in the
Memorandum and except for the information that the Purchaser or its advisors, if
any, have requested, neither the Purchaser nor its advisors has been furnished
any offering material or literature by the Company.
4.8 Independent Decision. The Purchaser is not relying on the Company
or on any legal or other opinion in the materials reviewed by the Purchaser with
respect to the financial or tax considerations of the Purchaser relating to its
investment in the Shares and Warrants. The Purchaser has relied solely on the
representations, warranties, covenants and agreements of the Company in this
Agreement (including the Exhibits and Schedules hereto) and on its examination
and independent investigation in making its decision to acquire the Shares and
Warrants. The Purchaser has been afforded the opportunity to obtain, and has
been furnished, all material that it has requested relating to the proposed
operation of the Company, any other
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matters relating to the business and properties of the Company and the offering
and sale of the Shares and Warrants.
4.9 Legal Existence and Authority. If the Purchaser is a corporation,
partnership, limited liability company, trust or other entity, the Purchaser has
been duly formed and is validly existing and in good standing under the laws of
the jurisdiction of its formation with full power and authority to acquire and
hold the Shares and Warrants and to execute, deliver and comply with the terms
of this Agreement and such other documents required to be executed and delivered
by the undersigned in connection with this subscription.
4.10. No Defaults or Conflicts. The execution and delivery of this
Agreement by the Purchaser and the performance of its obligations hereunder does
not conflict with or constitute a default under any instruments governing the
Purchaser, or any law, regulation, order or agreement to which the Purchaser is
a party or to which the undersigned is bound.
4.12. Validity; Enforceability; Binding Effect. This Agreement and the
Registration Rights Agreement delivered herewith have been duly and validly
authorized, executed and delivered by the Purchaser, and the agreements herein
and therein constitute valid, binding and enforceable agreements of the
Purchaser. The Purchaser is not a partnership, common trust fund, special trust,
pension fund, retirement plan or other entity in which the partners or
participants, as the case may be, may designate the particular investments to be
made or the allocation thereof.
4.13. Confidentiality. Unless required by law, the Purchaser shall not
disclose, and shall maintain confidential any non-public information related to
the Company, provided that the undersigned may disclose such information to any
of its advisors, attorneys and accountants, if such advisor, attorney and/or
accountant shall have agreed to be bound by this provision.
ARTICLE V
COVENANTS
5.1 Filings. Each of the Company and the Purchasers shall make on a
prompt and timely basis all governmental or regulatory notifications and filings
required to be made by it for the consummation of the transactions contemplated
hereby.
5.2 Further Assurances. Each of the Company and the Purchasers shall
execute and deliver such additional instruments and other documents and shall
take such further actions as may be necessary or appropriate to effectuate,
carry out and comply with all of the terms of this Agreement and the
transactions contemplated hereby.
5.3 Cooperation. Each of the Company and the Purchasers agree to
cooperate with the other in the preparation and filing of all forms,
notifications, reports and information, if any, required or reasonably deemed
advisable pursuant to any Requirement of Law in connection with
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the transactions contemplated by this Agreement and to use their respective best
efforts to agree jointly on a method to overcome any objections by any
Governmental Authority to any such transactions; provided that, any reasonable,
out-of-pocket expenses incurred by the Purchasers shall be reimbursed by the
Company. Except as may be specifically required hereunder, none of the Parties
or their respective Affiliates shall be required to agree to take any action
that in the reasonable opinion of such Party would result in or produce a
Material Adverse Effect on such Party.
5.4 Notification of Certain Matters. Each of the Company and the
Purchasers shall give prompt notice to the other of the occurrence, or
non-occurrence, of any event which would be likely to cause any representation
or warranty herein to be untrue or inaccurate, or any covenant, condition or
agreement herein not to be complied with or satisfied.
5.5 Share Maintenance. The Company covenants and agrees that (a) all
Warrant Shares, upon issuance in accordance with the terms thereof, and the
payment of the purchase price therefor, will be duly authorized, validly issued
and outstanding, fully paid and nonassessable, and free from all taxes, liens
and charges with respect to the issuance thereof other than those created by or
arising through the Purchasers, and all such Warrant Shares shall be sold to the
Purchasers pursuant to an exemption from registration under the Securities Act
or an effective registration statement, (b) the Company will from time to time
take all actions necessary to assure that the par value per share of the Common
Stock is at all times equal to or less than the applicable Warrant Price, and
(c) the Company will at all times during the exercise period have authorized and
reserved sufficient shares of Common Stock to provide for the exercise of the
Warrants in full.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification Generally. The Company, on the one hand, and the
Purchasers, on the other hand, shall indemnify the other from and against any
and all losses, damages, liabilities, claims, charges, actions, proceedings,
demands, judgments, settlement costs and expenses of any nature whatsoever
(including, without limitation, attorneys' fees and expenses) or deficiencies
resulting from any breach of a representation, warranty or covenant by the
Indemnifying Party (including indemnification by the Company of the Purchasers
for any failure by the Company to deliver, or for any failure by the Purchasers
to receive, stock certificates representing the Shares on the Settlement Date)
and all claims, charges, actions or proceedings incident to or arising out of
the foregoing ("LOSSES"). Notwithstanding the foregoing, the Indemnifying Party
shall not be liable for any Losses to the extent such Losses arise out of,
result from, or are increased by, the breach of this Agreement by, or the
fraudulent acts of, the Indemnified Party.
6.2 Indemnification Procedures. Each Person entitled to indemnification
under this Article VI (an "INDEMNIFIED PARTY") shall give notice as promptly as
reasonably practicable to
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each party required to provide indemnification under this Article VI (an
"INDEMNIFYING PARTY") of the commencement of any action, suit, proceeding or
investigation or threat thereof made in writing in respect of which indemnity
may be sought hereunder; provided, however, failure to so notify an Indemnifying
Party shall not relieve such Indemnifying Party from any liability that it may
have otherwise than on account of this indemnity agreement so long as such
failure shall not have materially prejudiced the position of the Indemnifying
Party. Upon such notification, the Indemnifying Party shall assume the defense
of such action if it is a claim brought by a third party, and after such
assumption the Indemnified Party shall not be entitled to reimbursement of any
expenses incurred by it in connection with such action except as described
below. In any such action, any Indemnified Party shall have the right to retain
its own counsel, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the contrary or (ii) the named
parties in any such action (including any impleaded parties) include both the
Indemnifying Party and the Indemnified Party and representation of both parties
by the same counsel would be inappropriate due to actual or potential differing
or conflicting interests between them. An Indemnifying Party who is not entitled
to, or elects not to, assume the defense of a claim shall not be obligated to
pay the fees and expenses of more than one counsel in any one jurisdiction for
all parties indemnified by such Indemnifying Party with respect to such claim,
unless in the reasonable judgment of any Indemnified Party a conflict of
interest may exist between such Indemnified Party and any other of such
Indemnified Parties with respect to such claim, in which event the Indemnifying
Party shall be obligated to pay the fees and expenses of such additional counsel
or counsels. The Indemnifying Party shall not be liable for any settlement of
any proceeding effected without its written consent (which shall not be
unreasonably withheld or delayed by such Indemnifying Party), but if settled
with such consent or if there be final judgment for the plaintiff, the
Indemnifying Party shall indemnify the Indemnified Party from and against any
loss, damage or liability by reason of such settlement or judgment.
ARTICLE VII
MISCELLANEOUS
7.1 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by certified
or registered mail (first class postage pre-paid), guaranteed overnight
delivery, or facsimile transmission if such transmission is confirmed by
delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such Party shall designate
in writing to the other Party):
(a) if to the Company to:
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<PAGE> 12
The Good Guys, Inc.
7000 Marina Boulevard
Brisbane, California 94005-1840
Attention: Ronald A. Unkefer
Telecopy: (650) 615-6291
with a copy to:
Howard, Rice, Nemerovski, Canady, Falk & Rabkin
Three Embarcadero Center
Seventh Floor
San Francisco, California 94111-4065
Attention: Richard A. Canady
Telecopy: (415) 217-5910
(b) if to a Purchaser, at its last known address appearing on
the books of the Company maintained for such purpose with a
copy to:
Bass, Berry & Sims PLC
119 S. Main St., Suite 500
Memphis, Tennessee 38103
Attention: John A. Good
Telecopy: (901) 312-9101
7.2 Loss or Mutilation. Upon receipt by the Company from any Holder of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of a certificate representing Shares and indemnity
reasonably satisfactory to it (it being understood that the written agreement of
the Holder or an Affiliate thereof shall be sufficient indemnity) and in case of
mutilation upon surrender and cancellation hereof or thereof, the Company will
execute and deliver in lieu hereof or thereof a new stock certificate of like
tenor to such Holder; provided, in the case of mutilation, no indemnity shall be
required if the certificate representing Shares in identifiable form is
surrendered to the Company for cancellation.
7.3 Survival. Each representation, warranty, covenant and agreement of
the parties set forth in this Agreement is independent of each other
representation, warranty, covenant and agreement. Each representation and
warranty made by any Party in this Agreement shall survive the Settlement
through the period ending on the date six months from the date of this
Agreement. Notwithstanding the foregoing, the Purchasers expressly acknowledges
that, pursuant to Section 2.1 a restrictive legend will be placed on the
certificates representing the Shares, the Warrant and the Warrant Shares until
such legend is permitted to be removed under applicable law.
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<PAGE> 13
7.4 Remedies.
(a) Each Party acknowledges that the other Parties would not have
an adequate remedy at law for money damages in the event that any of the
covenants or agreements of such Party in this Agreement was not performed in
accordance with its terms, and it is therefore agreed that each Party in
addition to and without limiting any other remedy or right such Party may have,
shall have the right to an injunction or other equitable relief in any court of
competent jurisdiction, enjoining any such breach and enforcing specifically the
terms and provisions hereof, and each Party hereby waives any and all defenses
such Party may have on the ground of lack of jurisdiction or competence of the
court to grant such an injunction or other equitable relief.
(b) All rights, powers and remedies under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise or beginning of the exercise of any
thereof by any Party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such Party.
7.5 Entire Agreement. This Agreement (including the exhibits,
appendices and schedules attached hereto) and other documents delivered at the
Settlement pursuant hereto, contain the entire understanding of the Parties in
respect of the subject matter hereof and supersede all prior agreements and
understandings between or among the Parties with respect to such subject matter.
The exhibits and schedules hereto constitute a part hereof as though set forth
in full above.
7.6 Expenses; Taxes. Except as otherwise provided in this Agreement,
the Parties shall pay their own fees and expenses, including their own counsel
fees, incurred in connection with this Agreement or any transaction contemplated
hereby. Further, except as otherwise provided in this Agreement, any sales tax,
stamp duty, deed transfer or other tax (except taxes based on the income of the
Purchasers) arising out of the sale of the Shares by the Company to the
Purchasers and consummation of the transactions contemplated by this Agreement
shall be paid by the Company.
7.7 Amendment. This Agreement may be modified or amended or the
provisions hereof waived with the written consent of the Company and the
Purchasers.
7.8 Waiver. No failure to exercise, and no delay in exercising, any
right, power or privilege under this Agreement shall operate as a waiver, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude the exercise of any other right, power or privilege. No waiver of any
breach of any provision shall be deemed to be a waiver of any preceding or
succeeding breach of the same or any other provision, nor shall any waiver be
implied from any course of dealing between the Parties. No extension of time for
performance of any obligations or other acts hereunder or under any other
agreement shall be deemed to be an extension of the time for performance of any
other obligations or any other acts. The rights and
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<PAGE> 14
remedies of the Parties under this Agreement are in addition to all other rights
and remedies, at law or equity, that they may have against each other.
7.9 Binding Effect; Assignment. The rights and obligations of this
Agreement shall bind and inure to the benefit of the Parties and their
respective successors and legal assigns. The provisions of this Agreement are
intended to be for the benefit of all Holders from time to time of the Shares
and shall be enforceable by any such Holder.
7.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
7.11 Headings. The headings contained in this Agreement are for
convenience of reference only and are not to be given any legal effect and shall
not affect the meaning or interpretation of this Agreement.
7.12 GOVERNING LAW; INTERPRETATION. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED FOR ALL PURPOSES BY THE LAWS OF THE STATE OF
DELAWARE.
7.13 Severability. The parties stipulate that the terms and provisions
of this Agreement are fair and reasonable as of the date of this Agreement.
However, if any provision of this Agreement shall be determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated. If, moreover, any of those provisions shall for any reason be
determined by a court of competent jurisdiction to be unenforceable because
excessively broad or vague as to duration, geographical scope, activity or
subject, it shall be construed by limiting, reducing or defining it, so as to be
enforceable.
[Signature Page Follows.]
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<PAGE> 15
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
THE GOOD GUYS, INC.
By:
-----------------------------------
Name: Ronald A. Unkefer
Title: Chief Executive Officer
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<PAGE> 16
APPENDIX A
DEFINITIONS
1. Defined Terms. As used herein the following terms shall have the following
meanings:
"AGREEMENT" means this Stock Purchase Agreement.
"BUSINESS DAY" means any day that is not a Saturday or Sunday or a day
on which banks are required or permitted to be closed in the State of Delaware.
"COMMON STOCK" means the common stock, $.001 par value per share, of
the Company, as constituted on the date hereof, and any capital stock into which
such Common Stock may thereafter be changed, and shall also include (i) capital
stock of the Company of any other class (regardless of how denominated) issued
to the holders of shares of Common Stock upon any reclassification thereof which
is also not preferred as to dividends or assets over any other class of stock of
the Company and which is not subject to redemption and (ii) shares of common
stock of any successor or acquiring corporation received by or distributed to
the holders of Common Stock of the Company.
"THE COMPANY" has the meaning set forth in the Preamble of this
Agreement.
"CONTRACT" means any agreement, indenture, lease, sublease, license,
sublicense, promissory note, evidence of indebtedness, insurance policy,
annuity, mortgage, restriction, commitment, obligation or other contract,
agreement or instrument (whether written or oral).
"CONVERTIBLE SECURITIES" means evidences of indebtedness, shares of
stock or other securities which are convertible into or exchangeable, with or
without payment of additional consideration in cash or property, for additional
shares of Common Stock, either immediately or upon the occurrence of a specified
date or a specified event.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations promulgated
thereunder, all as the same shall be in effect from time to time.
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, and any entity or official exercising
executive, legislative, judicial, regulatory or administrative functions of, or
pertaining to, government.
"HOLDER" means each Person in whose name the Shares are registered on
the books of the Company maintained for such purpose.
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"INDEMNIFIED PARTY" has the meaning set forth in Section 6.2 of this
Agreement.
"INDEMNIFYING PARTY" has the meaning set forth in Section 6.2 of this
Agreement.
"LIEN" means any mortgage, pledge, security interest, assessment,
encumbrance, lien, lease, sublease, adverse claim, levy, or charge of any kind,
or any conditional Contract, title retention Contract or other contract to give
or refrain from giving any of the foregoing.
"LOSSES" has the meaning set forth in Section 6.1 of this Agreement.
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means, with
respect to any Person, any change or effect that is or is reasonably likely to
be materially adverse to the financial condition, business or results of
operations of such Person.
"PERSON(S)" means any individual, sole proprietorship, partnership,
joint venture, trust, limited liability company, incorporated organization,
association, corporation, institution, public benefit corporation, entity or
government (whether federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
"PURCHASE PRICE" has the meaning set forth in Section 1.1 of this
agreement.
"PURCHASERS" has the meaning set forth in the Preamble of this
Agreement.
"REQUIREMENT OF LAW" means as to any Person, the articles of
incorporation, bylaws or other organizational or governing documents of such
Person, and any domestic or foreign and federal, state or local law, rule,
regulation, statute or ordinance or determination of any arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its properties or to which such Person or any of its property
is subject.
"RESTRICTED COMMON STOCK" has the meaning set forth in Section 2.1 of
this Agreement.
"SEC" means the Securities and Exchange Commission.
"SEC REPORTS" has the meaning set forth in Section 3.7 of this
Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations promulgated thereunder,
all as the same shall be in effect at the applicable time.
"SETTLEMENT" has the meaning set forth in Section 1.2 of this
Agreement.
"SETTLEMENT DATE" has the meaning set forth in Section 1.2 of this
Agreement.
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<PAGE> 18
"SHARES" has the meaning set forth in Section 1.1 of this Agreement.
"SUBSIDIARY" means each of those Persons of which another Person,
directly or indirectly owns beneficially securities having more than 50% of the
voting power in the election of directors (or persons fulfilling similar
functions or duties) of the owned Person (without giving effect to any
contingent voting rights).
"WARRANTS" has the meaning set forth in Section 1.1 of this Agreement.
"WARRANT SHARES" means those shares of the Company's common stock, par
value $.001 per share, which Purchasers are entitled to purchase pursuant to the
Warrant.
2. Other Definitional Provisions.
(a) All references to "dollars" or "$" refer to currency of the United
States of America.
(b) Terms defined in the singular shall have a comparable meaning when
used in the plural, and vice versa.
(c) All matters of an accounting nature in connection with this
Agreement and the transactions contemplated hereby shall be determined in
accordance with GAAP.
(d) As used herein, the neuter gender shall also denote the masculine
and feminine, and the masculine gender shall also denote the neuter and
feminine, where the context so permits.
(e) The words "hereof," "herein" and "hereunder," and words of similar
import, when used in this Agreement shall refer to this Agreement as a whole
(including any exhibits or schedules hereto) and not to any particular provision
of this Agreement.
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<PAGE> 19
EXHIBIT A
FORM OF WARRANT
<PAGE> 20
THIS WARRANT (THIS "WARRANT") HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR APPLICABLE STATE SECURITIES LAWS.
THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT
AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE GOOD GUYS, INC. (THE "COMPANY") THAT SUCH REGISTRATION IS
NOT REQUIRED.
Warrant Certificate No. _________
August 19, 1999
WARRANT TO PURCHASE SHARES OF COMMON STOCK
OF
THE GOOD GUYS, INC.
This certifies that [ ], or its successors or assigns (the "Holder"),
is entitled, subject to the terms set forth below, at any time during the
Exercise Period (defined in Section 3 hereof) to purchase from THE GOOD GUYS,
INC., a Delaware corporation, up to _______________ (____________) fully paid
and non-assessable shares (the "Warrant Shares") of the Company's Common Stock,
par value $.001 per share (the "Common Stock"), at the purchase price per
Warrant Share of SIX AND ONE HUNDRED TWENTY-FIVE ONE HUNDREDTHS ($6.125) DOLLARS
(the "Purchase Price"). The number of Warrant Shares issuable upon exercise of
this Warrant and the Purchase Price per Warrant Share shall be subject to
adjustment from time to time as provided in Section 5 hereto.
1. THIS WARRANT. This Warrant is issued to the Holder in connection with that
certain Stock Purchase Agreement, dated as of August 13, 1999, by and among the
persons listed on the signature page thereto (the "Stock Purchase Agreement").
This Warrant does not entitle the Holder to any rights as a stockholder of the
Company, except as set forth herein.
2. EXERCISE. During the period beginning on the date hereof and ending on the
third (3rd) anniversary hereof (the "Exercise Period"), this Warrant may be
exercised at an exercise price of $6.125 per Warrant Share (the "Exercise
Price"). The Warrant may be exercised at any time on any business day for all or
part of the Warrant Shares issuable hereunder by surrendering this Warrant at
the principal office of the Company at 7000 Marina Boulevard, Brisbane,
California 94005 (or at such other office of the Company in the United States as
the Company may designate from time to time by notice in writing to the Holder),
with the subscription form attached hereto fully executed, together with payment
in cash or immediately available funds in the amount equal to the Purchase
Price.
3. PARTIAL EXERCISE. This Warrant may, in accordance with the provisions of this
Section 3, be exercised for less than the full number of Warrant Shares. Upon
any partial exercise, this Warrant shall be surrendered and a new Warrant of the
same tenor and for the purchase of that number of Warrant Shares not purchased
upon such partial exercise shall be issued by the Company to the Holder. A
Warrant shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided
<PAGE> 21
above, and the person entitled to receive the Warrant Shares issuable upon
exercise shall be treated for all purposes as the holder of such shares of
record as of the close of business on such date. As soon as practicable on or
after such date, and in any event within five (5) business days, the Company
shall issue and deliver to the person or persons entitled to receive the Warrant
Shares a certificate or certificates for the full number of Warrant Shares
issuable upon such exercise.
4. NET ISSUE EXERCISE. Notwithstanding any provisions herein to the contrary, if
the fair market value of one share of Common Stock is greater than the Purchase
Price for one share of Common Stock (at the date of calculation, as set forth
below), in lieu of exercising this Warrant for cash, the Holder may elect to
receive shares of Common Stock equal to the value (as determined below) of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant at
the principal office of the Company, together with the properly endorsed Warrant
Certificate, substantially in the form as attached hereto, in which event the
Company shall issue to the Holder that number of shares of Common Stock computed
using the following formula:
WS = WCS (FMV-PP)
------------
FMV
WHERE:
WS equals the number of Warrant Shares to be issued to the Holder
WCS equals the number of shares of Common Stock purchasable under the
Warrant or, if only a portion of the Warrant is being exercised,
the portion of the Warrant being canceled (at the date of such
calculation)
FMV equals the fair market value of one share of Common Stock (at the
date of such calculation)
PP equals the per share Purchase Price (as adjusted to the date of
such calculation) of the Warrant
As used in this Section 4, the term "Fair Market Value" of each Share
as of any date shall be the best bid price posted in respect of the Common Stock
in the NASDAQ Stock Market's automated dealer quotation system at the close of
trading on the day prior to such exercise, or, if the Common Stock shall not
then be so quoted, Fair Market Value shall be determined as follows: (A) if the
parties hereto can agree on the Fair Market Value, such agreed upon value shall
constitute the Fair Market Value; (B) if the parties cannot reach an agreement
as to the Fair Market Value within five (5) business days from the onset of
negotiations, then such parties shall jointly appoint an appraiser to determine
the Fair Market Value; (C) if the parties cannot agree upon the selection of an
appraiser within five (5) business days after such five (5) day period, then
each party shall deliver
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to the other a list of three (3) appraisers on or before the third (3rd)
business day immediately following the expiration of said five (5) day period,
each party shall select one appraiser from the other party's list and notify
such other party of its selection on or before the fifth (5th) business day
immediately following the expiration of the three (3) day period; (D) if either
party does not deliver to the other party a list of appraisers within the
three-day period or deliver its selection of the appraiser from the other
party's list within the five (5) day period, then the first appraiser listed on
the other party's list shall be deemed to have been jointly selected to
determine the Fair Market Value; (E) if both parties timely select an appraiser
from the other party's list, then the two appraisers so selected shall jointly
select a third appraiser, which third appraiser shall independently calculate
the Fair Market Value on or before the forty-fifth (45th) day immediately
following the date on which it was selected as an appraiser. Any determination
of the Fair Market Value made in accordance with the terms hereinabove set forth
shall be final and binding on the parties hereto.
5. ADJUSTMENTS.
5.1 ADJUSTMENTS TO WARRANT RIGHTS. The number of Warrant Shares for which
Warrants are exercisable, and the Warrant Price of such shares shall be subject
to adjustment from time to time as set forth in this Section 5.
5.2 STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time the
Company shall:
(a) take a record of the holders of its Common Stock for the purpose of
entitling them to receive a dividend payable in, or other distribution of,
additional shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a larger number
of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller number
of shares of Common Stock,
then (i) the number of Warrant Shares for which a Warrant is exercisable
immediately prior to the occurrence of any such event shall be adjusted to equal
the number of shares of Common Stock which a record holder of the same number of
shares of Common Stock for which a Warrant is exercisable immediately prior to
the occurrence of such event would own or be entitled to receive after the
happening of such event and (ii) the Warrant Price immediately prior to the
occurrence of such event shall be adjusted to equal the product of the Warrant
Price multiplied by a fraction, the numerator of which shall be the number of
Warrant Shares for which a Warrant is exercisable immediately prior to the
adjustment and the denominator of which shall be the number of Warrant Shares
for which a Warrant is exercisable immediately after such adjustment.
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<PAGE> 23
5.3 OTHER DIVIDENDS AND DISTRIBUTIONS. If the Company shall make or fix a
record date for the holders of Common Stock entitled to receive a dividend or
other distribution payable in securities of the Company other than shares of
Common Stock, then lawful and adequate provision shall be made so that Holder
shall be entitled to receive upon exercise of the Warrants, for the aggregate
Warrant Price in effect prior thereto, in addition to the number of Warrant
Shares immediately theretofore issuable upon exercise of the Warrants, the kind
and number of securities of the Company which Holder would have owned and been
entitled to receive had the Warrants been exercised immediately prior to that
date (pro rated in the case of any partial exercise).
5.4 RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If the Common Stock is
changed into the same or a different number of shares of any class or classes of
stock, whether by reclassification, exchange, substitution or otherwise (other
than a subdivision or combination of shares, stock dividend or a reorganization,
recapitalization, merger, consolidation or sale of assets, each as provided for
elsewhere in this Section 5) then the Holder of the Warrants shall be entitled
to receive upon exercise of the Warrants, in lieu of the Warrant Shares
immediately theretofore issuable upon exercise of the Warrants, for the
aggregate Warrant Price in effect prior thereto, the kind and amount of stock
and other securities and property receivable upon such reclassification,
exchange, substitution or other change, which Holder would have been entitled to
receive had the Warrants been exercised immediately prior to such
reclassification, exchange, substitution or change (pro rated in the case of any
partial exercise).
5.5 LIQUIDATION. If the Company shall, at any time, prior to the expiration
of the Warrants, dissolve, liquidate or wind up its affairs, Holder shall have
the right, but not the obligation, to exercise the Warrants. Upon such exercise,
Holder shall have the right to receive, in lieu of the shares of Common Stock
that Holder otherwise would have been entitled to receive upon such exercise,
the same kind and amount of assets as would have been issued, distributed or
paid to Holder upon any such dissolution, liquidation or winding up with respect
to such shares of Common Stock had Holder been the holder of record of such
shares of Common Stock receivable upon exercise of the Warrants on the date for
determining those entitled to receive any such distribution. If any such
dissolution, liquidation or winding up results in any cash distribution in
excess of the Warrant Price, Holder may, at Holder's option, exercise the
Warrants without making payment of the applicable Warrant Price and, in such
case, the Company shall, upon distribution to Holder, consider the applicable
Warrant Price per Warrant Share to have been paid in full, and in making
settlement to Holder shall deduct an amount equal to the applicable Warrant
Price from the amount payable to Holder.
5.6 REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF ASSETS. If any of
the following transactions (each, a "SPECIAL TRANSACTION") shall become
effective: (a) a capital reorganization or recapitalization (other than a
dividend or other distribution, subdivision, combination, reclassification,
substitution or exchange of shares provided for elsewhere in this Section 5),
(b) a consolidation or merger of the Company with and into
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<PAGE> 24
another entity (where the Company is not the surviving corporation or where
there is a change in, or distribution with respect to, the Common Stock), or (c)
a sale or conveyance of all or substantially all of the Company's assets, then,
as a condition of the Special Transaction, lawful and adequate provision shall
be made so that Holder shall thereafter have the right to purchase and receive
upon exercise of the Warrants, in lieu of the Warrant Shares immediately
theretofore issuable upon exercise of the Warrants, for the aggregate Warrant
Price in effect immediately prior to such consummation, such shares of stock,
other securities, cash or other assets ("OTHER PROPERTY") as may be issued or
paid pursuant to the terms of such Special Transaction to the holders of shares
of Common Stock for which such Warrants could have been exercised immediately
prior to such Special Transaction (pro rated in the case of any partial
exercise). In connection with any Special Transaction, appropriate provision
shall be made with respect to the rights and interests of Holder to the end that
the provisions of the Warrants (including without limitation provisions for
adjustment of the Warrant Price and the number of Warrant Shares issuable upon
the exercise of the Warrants), shall thereafter be applicable, as nearly as may
be practicable, to any Other Property thereafter deliverable upon the exercise
of the Warrants. The Company shall not effect any Special Transaction unless
prior to, or simultaneously with, the closing, the successor entity (if other
than the Company), if any, resulting from such consolidation or merger or the
entity acquiring such assets shall assume by a written instrument executed and
mailed by certified mail or delivered to Holder at the address of Holder
appearing on the books of the Company, the obligation of the Company or such
successor corporation to deliver to Holder such Other Property, as in accordance
with the foregoing provisions, which Holder shall have the right to purchase.
5.7 NOTICE. Whenever the Warrants or the number of Warrant Shares issuable
hereunder is to be adjusted as provided herein or a dividend or distribution (in
cash, stock or otherwise and including, without limitation, any distributions
under Section 5.5) is to be declared by the Company, or a definitive agreement
with respect to a Special Transaction has been entered into, the Company shall
forthwith cause to be sent to the Holder at the last address of the Holder shown
on the books of the Company, by first-class mail, postage prepaid, at least 5
business days prior to the record date specified in Section 5.7(a)(i) below or
at least 10 business days before the date specified in Section 5.7(b) and
Section 5.7(a)(ii) below, a notice stating in reasonable detail the relevant
facts and any resulting adjustments and the calculation thereof, if applicable,
and stating (if applicable):
(a) the date to be used to determine (i) which holders of Common Stock
will be entitled to receive notice of such dividend, distribution,
subdivision or combination (the "RECORD DATE"), and (ii) the date as of which
such dividend, distribution, subdivision or combination shall be made; or, if
a record is not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distribution, subdivision or
combination are to be determined (provided, that in the event the Company
institutes a policy of declaring cash
5
<PAGE> 25
dividends on a periodic basis, the Company need only provide the relevant
information called for in this Section 5.7(a) with respect to the first cash
dividend payment to be made pursuant to such policy and thereafter provide
only notice of any changes in the amount or the frequency of any subsequent
dividend payments), or
(b) the date on which a Special Transaction is expected to become
effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their shares of Common Stock
for securities or other property deliverable upon consummation of the Special
Transaction (the "EXCHANGE DATE").
5.8 FRACTIONAL INTERESTS. The Company shall not be required to issue
fractions of shares of Common Stock upon the exercise of a Warrant. If any
fraction of a share of Common Stock would be issuable upon the exercise of a
Warrant, the Company shall, upon such issuance, purchase such fraction for an
amount in cash equal to the current value of such fraction, computed on the
basis of the Current Market Price on the last business day prior to the date of
exercise.
6. PAYMENT OF TAXES. All Warrant Shares shall be validly issued, fully paid and
nonassessable and free of claims of preemptive rights, and the Company shall pay
all issuance taxes and similar governmental charges that may be imposed in
respect of the issue or delivery thereof, but in no event shall the Company pay
a tax on or measured by the net income or gain attributed to such exercise.
Notwithstanding the foregoing, the Company shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the Holder, and the
Company shall not be required to issue or deliver any such certificate unless
and until the Holder shall have paid to the Company the amount of such tax or
shall have established to the satisfaction of the Company that such tax has been
paid.
7. TRANSFER AND EXCHANGE. This Warrant shall be transferable in whole or in
part, except as otherwise provided herein and except that the Holder hereof
represents that it is acquiring this Warrant for its own account and for the
purpose of investment and not with a view to any distribution or resale thereof
within the meaning of the Securities Act. The Holder further agrees that it will
not sell, assign or transfer any of this Warrant unless this Warrant shall have
been registered for sale under the Securities Act or until the Company shall
have received from counsel for the Holder an opinion to the effect that the
proposed sale or other transfer of this Warrant by the Holder may be effected
without such registration. The Holder acknowledges that, in taking this
unregistered Warrant, it must continue to bear the economic risk of its
investment for an indefinite period of time because of the fact that such
Warrant has not been registered under the Securities Act and further realizes
that such Warrant cannot be sold unless it is subsequently registered under the
Securities Act or an exception from such registration is available. The Holder
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<PAGE> 26
also acknowledges that appropriate legends reflecting the status of this Warrant
under the Securities Act may be placed on the face of this Warrant certificate
at the time of their transfer and delivery to the Holder hereof. The transfer of
Warrant Shares issuable upon exercise of this Warrant is governed by Section 10
hereof.
8. LOSS OR MUTILATION. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or a
replacement hereof and, in the case of any such loss, theft or destruction, on
delivery of an indemnity agreement or security reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation, on surrender
and cancellation of this Warrant or a replacement, the Company at its expense
will execute and deliver in lieu thereof, a new warrant of like tenor.
9. RESERVATION OF STOCK. The Company will at all times reserve and keep
available, solely for issuance and delivery on the exercise of this Warrant, all
Warrant Shares from time to time issuable upon the exercise of this Warrant and
all shares of the Common Stock from time to time issuable upon the conversion of
the Warrant Shares issuable upon the exercise of this Warrant.
10. NEGOTIABILITY. This Warrant is issued upon the following terms, to all of
which the Holder, by the taking hereof, consents and agrees:
(a) this Warrant is subject to the terms and provisions of the Stock
Purchase Agreement;
(b) title to this Warrant may be transferred by endorsement (by the Holder
executing the form of assignment at the end hereof) and delivery in the same
manner as in the case of a negotiable instrument transferable by endorsement
and delivery and any person in possession of this Warrant properly endorsed
is authorized to represent himself as absolute owner hereof and is empowered
to transfer absolute title hereto by endorsement and delivery hereof to a
bona fide purchaser hereof for value; each prior taker or owner waives and
renounces all of his equities or right in this Warrant in favor of each such
bona fide purchaser, and each such bona fide purchaser shall acquire absolute
title hereto and to all rights represented hereby;
(c) until this Warrant is transferred on the books of the Company, the
Company may treat the registered Holder hereof as the absolute owner hereof
for all purposes, notwithstanding any notice to the contrary; and
(d) the Holder, by its acceptance hereof, represents that it is acquiring
this Warrant for investment purposes only and that it does not have any
present intention to resell this Warrant or to sell or distribute any Warrant
Shares for which this Warrant may be exercised.
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<PAGE> 27
11. NOTICES. All notices and other communications from the Company to the Holder
shall be mailed by first class registered or certified mail, postage prepaid, or
sent by express overnight courier service or electronic facsimile transmission
(with a copy by mail) at the address furnished to the Company in writing by the
last Holder of this Warrant who shall have furnished an address to the Company
in writing.
12. CHANGE, WAIVER. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
13. HEADINGS. The headings in this Warrant are for purposes of convenience of
reference only and shall not be deemed to constitute a part hereof.
14. LAW GOVERNING. This Warrant shall be construed and enforced in accordance
with and governed by the internal laws of Delaware, without reference to the
conflicts of laws provisions in effect therein.
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<PAGE> 28
IN WITNESS WHEREOF, the Company has executed this Warrant under seal as of
the date first written above.
ATTEST: THE GOOD GUYS, INC.
By: By:
---------------------------- -------------------------------
Name: Name:
Title: Title:
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<PAGE> 29
FORM OF EXERCISE
(To be signed only on exercise of Warrant)
TO: THE GOOD GUYS, INC.
The undersigned, the holder of the Warrant attached hereto, hereby
irrevocably elects to exercise this Warrant for, and to purchase thereunder,
___________ shares of the Common Stock of THE GOOD GUYS, INC., and herewith
makes payment of $______________ therefor, and requests that the certificates
for such shares be issued in the name of, and delivered to
__________________________ whose address is
____________________________________.
Dated: ________________
-----------------------------------------------------------
(Signature must conform to name of Holder as
specified on the face of the Warrant)
---------------------------------------------------
(Address)
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<PAGE> 30
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers
unto ________________________________ the right represented by the Warrant
attached hereto to purchase ___________ shares of Common Stock of THE GOOD GUYS,
INC. to which the within Warrant relates, and appoints
____________________________________ Attorney-In-Fact to transfer such right on
the books of THE GOOD GUYS, INC. with full power of substitution in the
premises.
Dated: ________________
--------------------------------------------------------------
(Signature must conform to name of Holder as
specified on the face of the Warrant)
---------------------------------------------------
(Address)
Signed in the presence of:
- ---------------------------------
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<PAGE> 31
EXHIBIT D
Form 4 Registration Rights Agreement
--------------------
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of August
19, 1999, by and among THE GOOD GUYS, INC., a Delaware corporation (the
"Company") and the persons listed on SCHEDULE A hereto (collectively, the
"Purchasers").
R E C I T A L S:
WHEREAS, the Purchasers have executed and delivered to the Company that
certain Stock Purchase Agreement (the "Purchase Agreement") pursuant to which
they will purchase in a private placement (the "Offering") shares of the $.001
par value per share common stock (the "Common Stock") of the Company (the "Stock
Purchase") and warrants to purchase Common Stock (the "Warrants");
WHEREAS, pursuant to the Purchase Agreement, the Company will issue and
sell to the Purchasers shares of Common Stock and Warrants; and
WHEREAS, as an inducement to and condition of the Purchasers consummating
the Stock Purchase, the Company desires to provide the Purchasers with the
registration under the Securities Act of 1933, as amended, of offers and resales
of Common Stock purchased by the Purchasers in the Offering (the "Primary
Shares"), the Warrants and Common Stock purchasable by the Purchasers upon
exercise of the Warrants (the "Warrant Shares").
NOW, THEREFORE, in consideration of the recitals made above and the mutual
covenants and agreements stated herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. CERTAIN DEFINITIONS . As used in this Agreement, the following terms
shall have the following meanings:
"Best Efforts" means the taking of all commercially reasonable steps to
cause or prevent any event or condition which would have been taken in similar
circumstances by a reasonably prudent business person engaged in a similar
business for the advancement or protection of his own economic interest in light
of the consequences of failure to cause or prevent the occurrence of such event
or condition.
"Closing" means the closing of the Stock Purchase pursuant to the Purchase
Agreement.
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Common Stock" has the meaning set forth in the recitals above.
<PAGE> 32
"Company" has the meaning set forth in the preface above.
"Form S-3" means a registration statement on Form S-3 adopted by the
Commission under the Securities Act or any substantially similar form from time
to time in effect.
"Holder" means any holder of outstanding Registrable Securities which have
not been sold to the public, but only if such holder is a Purchaser.
"Penalty Warrants" has the meaning set forth in SECTION 9.11 below.
"Penalty Warrant Shares" means shares of Common Stock issued pursuant to
the exercise of Penalty Warrants.
"Primary Shares" has the meaning set forth in the recitals above.
"Purchase Agreement" has the meaning set forth in recitals above.
"Purchasers" has the meaning set forth in the preface above.
"Register," "Registered" and "Registration" refer to a registration of the
offer and sale of securities pursuant to the Securities Act effected by
preparing and filing a Registration Statement (defined below) in compliance with
the Securities Act, and the declaration or ordering of the effectiveness of such
registration statement.
"Registrable Securities" means (i) the Primary Shares issued to the
Purchasers pursuant to the Purchase Agreement; (ii) the Warrants; (iii) the
Warrant Shares; (iv) any Penalty Warrant Shares; and (v) shares of Common Stock
or shares or units of other securities issued pursuant to any stock split, stock
dividend, reorganization, recapitalization, reclassification, or other
distribution or change in respect of the shares of the Common Stock.
"Registration Expenses" means all expenses excluding Selling Expenses
incurred by the Company in effecting any Registration pursuant to this Agreement
and in complying with SECTION 2 and SECTION 3 of this Agreement, including,
without limitation, all registration, qualification and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company and of
a single special counsel for the Holders (if different from the Company's
counsel), blue sky fees and expenses, and the expense of any special audits
incident to or required by any such Registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).
"Registration Statement" means a registration statement on a form
prescribed by the Commission for use in registering the offer and resale of
securities under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time-to-time.
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<PAGE> 33
"Selling Expenses" means all underwriting discounts, selling commissions
and stock transfer taxes applicable to the sale of Registrable Securities
pursuant to a Registration Statement prepared pursuant to this Agreement.
"Stock Purchase" has the meaning set forth in the recitals above.
"Warrant" means a warrant to purchase Common Stock issued to a purchaser
pursuant to the Purchase Agreement.
"Warrant Shares" has the meaning set forth in the recitals above.
2. COVENANT TO EFFECT REGISTRATION .
(a) Filing of Shelf Registration Statement. Subject to exceptions and
limitations described herein, the Company shall as soon as practicable cause a
Registration Statement to be filed with the Commission on Form S-3, if
available, or, if Form S-3 is not available for the Registration of the
Registrable Securities, on such form as may be prescribed by the Commission,
providing for the resale of the Primary Shares and the Warrant Shares. Such
Registration Statement shall contain all appropriate undertakings necessary to
comply with Rule 415 under the Securities Act pertaining to "shelf registration"
or delayed offerings of securities. The Company shall use its Best Efforts to
cause the Commission to declare such Registration Statement effective and to
maintain the effectiveness of such Registration Statement pursuant to SECTION 5
below. In the event the Commission will not permit such Registration Statement
to become effective because of the inclusion therein of Warrant Shares that
shall not have been issued at the time effectiveness of the Registration
Statement shall have been requested, then the Company shall file an amendment to
such Registration Statement covering the resale of only the Primary Shares and
shall use its Best Efforts to cause the Commission to declare such amended
Registration Statement effective and to maintain the effectiveness thereof
pursuant to SECTION 5 below.
(b) Registration of Other Securities in Registration. Any Registration
Statement filed pursuant to SECTION 2(a) may include securities of the Company
other than Registrable Securities. The securities of the Company to be
registered may include shares held by the Holders, shares held by other
shareholders, or shares to be issued by the Company.
(c) Blue Sky in Registration. In the event of any Registration pursuant to
this SECTION 2, the Company shall use its Best Efforts to register and/or
qualify the securities covered by the Registration Statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders participating in the Registration and as may be
reasonably appropriate for the distribution of such Registrable Securities,
provided, however, that notwithstanding anything in this Agreement to the
contrary, in the event any jurisdiction in which the securities shall be
qualified imposes a non-waivable requirement that expenses incurred in
connection with the qualification of the Registrable Securities be borne by
selling shareholders, the Holders shall pay their pro rata share of such
expenses.
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<PAGE> 34
3. PIGGYBACK REGISTRATION. The provisions of this SECTION 3 shall apply
only with respect to Warrant Shares that are not Registered pursuant to SECTION
2 above and Penalty Warrant Shares issuable pursuant to SECTION 9 below.
(a) Notice of Piggyback Registration. Subject to the exceptions and
limitations contained herein, if, at any time or from time-to-time, the Company
shall Register any of its securities, either for its own account or the account
of a security holder or holders other than (i) a Registration relating solely to
employee benefit plans, or (ii) a Registration relating solely to a transaction
described in Rule 145 under the Securities Act, the Company will: (i) promptly
give to each Holder written notice thereof (which notice shall include a list of
jurisdictions in which the Company intends to attempt to qualify such securities
under applicable Blue Sky or other state securities laws), and (ii) include in
such Registration (and any related registration and/or qualification under the
applicable Blue Sky or other state securities laws), and in any Underwritten
Offering pursuant to such Registration, all Registrable Securities specified in
a written request or requests delivered to the Company by any Holder within
twenty (20) days after receipt of such written notice from the Company by such
Holder.
(b) Piggyback Registration in Underwritten Offerings.
(i) Notice of Underwritten Offering. If the Registration of which the
Company gives notice is for an Underwritten Offering commenced at the election
of the Company (and not pursuant to the exercise of rights pursuant to SECTION 2
hereof), the Company shall so advise the Holders as a part of the written notice
given pursuant to SECTION 3(a). In such event, the right of any Holder to
Registration shall be conditioned upon there being an Underwritten Offering, and
the inclusion of such Holder's Registrable Securities in such Registration and
Underwritten Offering to the extent provided in and in compliance with this
SECTION 3. All Holders proposing to distribute their securities through such
Underwritten Offering shall (together with the Company and any other holders
distributing securities through such underwriting) enter into an underwriting
agreement containing the terms and conditions agreed to by the Company. The
Holders shall have no right to participate in the selection of underwriters for
an offering pursuant to this SECTION 3.2.
(ii) Marketing Limitation in Piggyback Registration. In the event the
representative of the underwriters in any Underwritten Offering advises the
Company in writing that market factors (including, without limitation, the
aggregate number of shares of Common Stock requested to be Registered, the
general condition of the market, and the status of the persons proposing to sell
securities in the Underwritten Offering) require a limitation of the shares to
be offered and sold in the Underwritten Offering, then the number of shares to
be excluded from the Underwritten Offering shall be determined in the following
order: (i) first, securities held by persons who are not contractually entitled
to include securities in the Registration; and (ii) second, securities that are
contractually entitled to be included in the Registration including securities
Registrable pursuant to this SECTION 3. Any partial reduction in the number of
shares or securities included in the Underwritten Offering affecting any of the
two (2) classes set forth in the immediately preceding sentence shall be
allocated among the persons in any such class pro
4
<PAGE> 35
rata, as nearly as practicable, based on the number of Registrable Securities
held by each person and included in the Registration as a percentage of the
aggregate Registrable Securities held by all persons and included in the
Registration.
(iii) Withdrawal in Piggyback Registration. If any Holder who shall
exercise piggyback registration rights pursuant to this SECTION 3 shall
disapprove of the proposed terms of any Underwritten Offering, he may elect to
withdraw therefrom by written notice to the Company and the underwriters
delivered at least two (2) days prior to the effective date of the Registration
Statement. Any Registrable Securities or other securities excluded or withdrawn
from such Underwritten Offering shall be withdrawn from such Registration.
(c) Blue Sky in Piggyback Registration. In the event of any Registration
of Registrable Securities pursuant to SECTION 3, the Company will use its best
efforts to register and/or qualify the securities covered by the Registration
Statement under the securities or Blue Sky laws of such jurisdictions as shall
be reasonably appropriate for the distribution of the Registrable Securities.
(d) Right to Terminate Registration. The Company shall have the right to
terminate or withdraw any Registration initiated by it that triggers piggyback
registration rights pursuant to this SECTION 3 prior to the effectiveness of
such Registration, whether or not any Holder has elected to include securities
in such registration.
4. EXPENSES OF REGISTRATION . All Registration Expenses incurred in
connection with any registration pursuant to SECTION 2 and SECTION 3 shall be
borne by the Company. All Selling Expenses shall be allocated among the persons
participating in any Registration based, in an Underwritten Offering, on the
relative gross proceeds allocable to each such person and, in a non-Underwritten
Offering, based on the Selling Expenses actually incurred with respect to the
sale of Registrable Securities of each person whose shares were included in the
Registration.
5. REGISTRATION PROCEDURES. The Company will keep each Holder whose
Registrable Securities are included in any Registration pursuant to this
Agreement advised in writing as to the initiation and completion of such
registration. The Company shall cause any registration statement filed pursuant
to SECTION 2(a) above to comply with the requirements of Rule 415 and shall use
its best efforts to comply with the undertakings required thereby to qualify the
registration as a "shelf registration" pursuant to Rule 415. At its expense, the
Company shall: (a) use its best efforts to keep such Registration Statement
effective for so long as Holders who are not affiliates of the Company whose
Registrable Securities are included in the Registration Statement are subject to
the volume or manner of resale restrictions set forth in Rule 144 under the
Securities Act or until the Holder or Holders have completed the distribution
described in the Registration Statement relating thereto, whichever first
occurs; (b) furnish such number of prospectuses (including preliminary
prospectuses) and other documents as a Holder from time-to-time reasonably may
request; (c) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in connection
with such Registration Statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such
5
<PAGE> 36
Registration Statement; (d) notify each seller of Registrable Securities covered
by such Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing, and at the request of any such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not include 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 not misleading or
incomplete in the light of the circumstances then existing; (e) cause all such
Registrable Securities registered on such Registration Statement to be listed on
each securities exchange or automated quotation service (including the National
Market of The Nasdaq Stock Market) on which similar securities issued by the
Company are then listed; (f) provide a transfer agent and registrar for all
Registrable Securities registered pursuant to such Registration Statement and a
CUSIP number for all such Registrable Securities, in each case not later than
the effective date of such Registration; and (g) otherwise use its Best Efforts
to comply with all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicably, 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, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act.
6. INFORMATION FURNISHED BY HOLDER. It shall be a condition precedent to
the Company's obligations under this Agreement that each Holder of Registrable
Securities included in any Registration furnish to the Company such information
regarding such Holder and the distribution proposed by such Holder or Holders as
the Company may reasonably request in writing and as shall be reasonably
required.
6
<PAGE> 37
7. INDEMNIFICATION.
(a) Company's Indemnification of Holders. The Company shall indemnify and
hold harmless each Holder, each of its agents, legal counsel and accountants and
each (i) person controlling such Holder within the meaning of Section 15 of the
Securities Act ("Controlling Person"); and (ii) each underwriter and each
Controlling Person of such underwriter, with respect to which Registration,
qualification or compliance of Registrable Securities has been effected pursuant
to this Agreement against all claims, losses, damages, expenses or liabilities
(or actions in respect thereof) to the extent such claims, losses, damages,
expenses or liabilities (or actions, proceedings or settlements in respect
thereto) arise out of or are based upon any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus or other document
prepared by the Company (including any related Registration Statement
notification or the like) incident to any such Registration, qualification or
compliance, or are based on any omission (or alleged omission) to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by the Company of the
Securities Act or any rule or regulation promulgated under the Securities Act
applicable to the Company and relating to action or inaction required of the
Company in connection with any such Registration, qualification or compliance;
and the Company will reimburse each such indemnified party and each Controlling
Person, for any legal and any other expenses reasonably incurred in connection
with investigating, defending or settling any such claim, loss, damage,
liability or action; provided, however, that the indemnity contained in this
Section 7(a) shall not apply to amounts paid in settlement of any such claim,
loss, damage, liability or action if settlement is effected without the consent
of the Company; and provided, further, that the Company will not be liable in
any such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based upon any untrue statement or omission based
upon written information furnished to the Company by such Holder, Controlling
Person of such Holder and stated to be specifically for use therein, in which
case such Holder or Controlling Person of such Holder shall likewise indemnify
the Company.
(b) Indemnification Procedure. Promptly after receipt by an indemnified
party under this SECTION 7 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this SECTION 7, notify the indemnifying party in
writing of the commencement thereof and generally summarize such action. The
indemnifying party shall have the right to participate in and to assume the
defense of such claim; provided, however, that the indemnifying party shall be
entitled to select counsel for the defense of such claim with the approval of
any parties entitled to indemnification, which approval shall not be
unreasonably withheld; provided further, however, that if either party
reasonably determines that there may be a conflict between the position of the
Company and the Holders in conducting the defense of such action, suit or
proceeding by reason of recognized claims for indemnity under this SECTION 7,
then counsel for such party shall be entitled to conduct the defense to the
extent reasonably determined by such counsel to be necessary to protect the
interest of such party. The failure to notify an indemnifying party promptly of
the commencement of any such action, if prejudicial to the ability of the
indemnifying party to defend such action, shall relieve such indemnifying party,
to the extent so prejudiced, of any
7
<PAGE> 38
liability to the indemnified party under this SECTION 7, but the omission so to
notify the indemnifying party will not relieve such party of any liability that
such party may have to any indemnified party otherwise other than under this
SECTION 7.
8. MARKET STAND-OFF. In consideration of the granting to the Purchaser of
the registration rights pursuant to this Agreement, each of them agrees that,
for so long as such Holder holds Common Stock, except as permitted by SECTION 2
and SECTION 3 above, such Holder will not sell, transfer or otherwise dispose
of, including, without limitation, through the use of any put or call option,
short sale or other derivative arrangement, shares of Common Stock in the ten
days prior to the effectiveness of any Registration Statement (other than a
registration statement on Form S-8 or Form S-4, or any successor form) with
respect to shares of Common Stock pursuant to which such Common Stock will be
offered for sale to the public (except pursuant to the Registration Statements
described in SECTION 2 or SECTION 3 above), and for up to one hundred eighty
(180) days following the effectiveness of such Registration Statement, provided
that the underwriters of any such offering shall reasonably request that the
Stockholders be bound by such restrictions.
9. MISCELLANEOUS.
9.1 Assignment. Except as otherwise provided in this Agreement, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties to this Agreement.
9.2 Third Parties . Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties to this Agreement, and
their respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
9.3 Governing Law . This Agreement shall be governed by and construed
under the laws of the State of Delaware in the United States of America without
giving effect to the conflicts of laws principles thereof.
9.4 Counterparts . This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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<PAGE> 39
9.5 Notices. All notices,
requests, demands, claims, and other
communications hereunder shall be in
writing and shall be given by registered
or certified mail, return receipt
requested, postage prepaid, by telecopier
or by national overnight delivery
service, and addressed to the intended
recipient as set forth below
IF TO THE COMPANY: The Good Guys, Inc.
7000 Marina Boulevard Brisbane, CA 94005
Attention: Chief Executive Officer
Facsimile: (650) 615-6291
IF TO PURCHASER: To the Purchasers listed
on Schedule A, at the addresses listed on
Schedule A.
Any notice given in the manner aforesaid shall be deemed to have been served,
and shall be effective for all purposes hereof if sent by registered or
certified mail, on the earlier of the second day following the day on which it
is posted or the date of its receipt by the party to be notified, if sent by
telecopier, the day actually received as evidenced by a written receipt of
transmission and if sent by overnight delivery service, the day after such
notice has been delivered by the party to said service. Any Party may change the
address to which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Party notice in the manner
herein set forth
9.6 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, portions of such provisions, or such
provisions in their
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<PAGE> 40
entirety, to the extent necessary, shall be severed from this Agreement, and the
balance of this Agreement shall be enforceable in accordance with its terms.
9.7 Amendment and Waiver . Any provision of this Agreement may be amended
or waived with the written consent of the Company and the Holders of at least a
majority of the outstanding shares of the Registrable Securities, so long as the
effect is to treat all Holders equally. Any amendment or waiver of this
Agreement shall require the written consent of any Holder who is
disproportionately adversely affected by such amendment or waiver. Any amendment
or waiver effected in accordance with this paragraph shall be binding upon each
Holder of Registrable Securities and the Company. In addition, the Company may
waive performance of any obligation owing to it, as to some or all of the
Holders of Registrable Securities, or agree to accept alternatives to such
performance, without obtaining the consent of any Holder of Registrable
Securities. In the event that an underwriting agreement is entered into between
the Company and any Holder, and such underwriting agreement contains terms
differing from this Agreement, as to any such Holder the terms of such
underwriting agreement shall govern.
9.8 Effect of Amendment or Waiver . The Purchasers and their successors
and assigns acknowledge that by the operation of SECTION 9.7 of this Agreement
the holders of a majority of the outstanding Registrable Securities, acting in
conjunction with the Company, will have the right and power to diminish or
eliminate any or all rights or increase any or all obligations pursuant to this
Agreement.
9.9 Rights of Holders . Each holder of Registrable Securities shall have
the absolute right to exercise or refrain from exercising any right or rights
that such holder may have by reason of this Agreement, including, without
limitation, the right to consent to the waiver or modification of any obligation
under this Agreement, and such holder shall not incur any liability to any other
holder of any securities of the Company as a result of exercising or refraining
from exercising any such right or rights.
9.10 Delays or Omissions . No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement, upon any breach or
default of the other party, shall impair any such right, power or remedy of such
non-breaching party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be made in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either
under this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
9.11 Failure to Effect Registration. If the Company shall fail to obtain
the effectiveness of the Registration Statement referred to in SECTION 2(a)
hereof with respect to the Primary Shares by December 16, 1999, then, with
respect to each month after such date for which such Registration contemplated
thereby shall not have been effected, the Company will
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<PAGE> 41
issue to the Puchasers additional warrants, of like tenor with and having the
same terms and exercise price as the Warrants, to purchase Common Stock
aggregating five percent (5%) of the number of Primary Shares issued in the
Offering (the "Penalty Warrants"). The Company shall issue and to deliver to the
Purchasers any Penalty Warrants on December 17, 1999 and on the same day (or
first business day thereafter) of each subsequent month if, between the previous
issue date of Penalty Warrants and such date the Registration shall not have
been effected.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COMPANY:
THE GOOD GUYS, INC.
By:
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Title:
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THE SIGNATURE OF THE PURCHASE AGREEMENT BY EACH PURCHASER IS INTENDED AS A
SIGNATURE OF THIS REGISTRATION RIGHTS AGREEMENT.
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Exhibit 99.2
[THE GOOD GUYS! LETTERHEAD]
PRESS RELEASE
For more information, contact:
Kristen Malacarne
ph: 214.665.1335
pgr: 888.613.2159
THE GOOD GUYS! COMPLETES
$16.25 MILLION PRIVATE PLACEMENT
SAN FRANCISCO, August 20, 1999 -- The Good Guys! (Nasdaq: GGUY), a
leading specialty retailer of consumer entertainment electronics, today
announced the completion of a private placement of $16.25 million, or 3.25
million shares, of its common stock.
The proceeds of the offering will be used to support the enhancement of
the company's inventory to reflect a focus on digital and high-tech consumer
entertainment electronics, in advance of the holiday season. In addition,
proceeds will facilitate the previously announced restructuring, which includes
the elimination of computers and home office products from The Good Guys!
product line.
"This is a critical milestone in our overall strategy to return The
Good Guys! to profitability," said Ronald A. Unkefer, founder, chairman and CEO,
The Good Guys!. "This infusion of cash gives us greater flexibility to adjust
our product mix and will help us achieve our short-term goals faster and more
efficiently."
Under the terms of the private placement agreement, investors purchased
3.25 million restricted shares of the company's common stock at $5 a share and
received warrants exercisable for three years to purchase 1.625 million
additional common shares at a price of $6.125 a share. Net proceeds to the
company from the offering will be approximately $15,350,000.
The private placement, primarily to institutional investors, was led by
the investment firm of Morgan Keegan & Company. With the completion of the
offering, The Good Guys! has a total of 19,597,333 shares of common stock
outstanding.
The Good Guys! also reported that it is negotiating a bank credit
facility to provide an expanded borrowing capacity. The three-year facility
would increase the company's line of credit to $100 million.
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The Good Guys! is a leading specialty retailer of consumer
entertainment electronics, operating a total of 79 stores in California,
Washington, Oregon and Nevada, and marketing a broad range of high quality, name
brand products and related services. For more information on The Good Guys!,
including news releases, product information and store locations, visit
www.thegoodguys.com.
To the extent this news release contains forward-looking statements, such
statements are subject to risks and uncertainties, including, but not limited
to, the Company's current restructuring program, increases in promotional
activities of competitors, changes in consumer buying attitudes, the presence or
absence of new products or product features in the Company's merchandise
categories, changes in vendor support for advertising and promotional programs,
changes in the Company's merchandise sales mix and economic conditions.
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