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As filed with the Securities and Exchange Commission on March 14, 2000
Registration Statement No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
THE GOOD GUYS, INC.
(Exact name of issuer as specified in its charter)
Delaware 94-2366177
(State of Incorporation) (IRS Employer Identification Number)
7000 Marina Boulevard
Brisbane, California 94005-1030
Telephone: (650) 615-5000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Vance R. Schram
The Good Guys, Inc.
7000 Marina Boulevard
Brisbane, California 95005-1030
Telephone: (650) 615-5000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Richard W. Canady, Esq.
Howard, Rice, Nemerovski, Canady, Falk & Rabkin
A Professional Corporation
Three Embarcadero Center, Suite 700
San Francisco, CA 94111
Telephone: (415) 434-1600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
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If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED PROPOSED AMOUNT OF
SECURITIES TO BE REGISTERED MAXIMUM MAXIMUM REGISTRATION
REGISTERED OFFERING PRICE AGGREGATE FEE
PER SHARE OFFERING PRICE
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<S> <C> <C> <C> <C>
Common Stock, $.001
par value 281,200 $4.9375(1) $1,388,425(1) $479
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933, as amended, based upon
the average of the high and low sale prices per share of the registrant's common
stock on March 13, 2000, as reported on the Nasdaq National Market.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
PROSPECTUS
THE GOOD GUYS, INC.
281,200 Shares of Common Stock
This prospectus covers 281,200 shares of The Good Guys, Inc. common stock,
par value $.001 per share, which may be offered for sale by the Selling
Shareholders who have acquired or will acquire such shares in transactions not
involving a public offering, including 200,400 shares which may be offered for
sale by the Selling Shareholders who may acquire such shares pursuant to the
exercise of 200,400 warrants granted to them. One of the Selling Shareholders,
Morgan Keegan & Company, Inc., received its warrants covering 160,000 shares in
connection with services rendered to us in a private placement of our shares
completed in August 1999. The other Selling Shareholder, Citron Haligman
Bedecarre, received 80,800 shares and warrants covering 40,400 shares in
connection with advertising services rendered to us. The warrants provide for
appropriate anti-dilutive adjustments in the number of shares of common stock
issuable upon their exercise, and any additional shares of common stock issued
pursuant to such adjustments will also be shares whose resale is covered by this
prospectus. We are registering the shares, including the shares underlying the
warrants, under the Securities Act of 1933, as amended, on behalf of the Selling
Shareholders in order to permit the public sale or other distribution of the
shares.
The shares may be offered and sold from time to time by the Selling
Shareholders through ordinary brokerage transactions, in negotiated transactions
or otherwise, at market prices prevailing at the time of sale or at negotiated
prices. We will not realize any proceeds from the sale of the shares by the
Selling Shareholders.
Our common stock trades on the Nasdaq National Market under the
symbol "GGUY." On March ___, 2000, the last reported sale price of the common
stock was $____.
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SEE NOTE REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTORS ON PAGE 5 FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN
INVESTMENT IN THE SECURITIES OFFERED HEREBY.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE SECURITIES TO BE ISSUED UNDER THIS
PROSPECTUS OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR ADEQUATE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS MARCH ___, 2000.
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY US OR ANY SELLING SHAREHOLDER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
OUR AFFAIRS SINCE SUCH DATE.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Where You Can Find More Information...................................................4
Note Regarding Forward-Looking Statements And Risk Factors............................5
The Company...........................................................................8
Use Of Proceeds.......................................................................8
Selling Shareholders..................................................................9
Plan Of Distribution..................................................................9
Legal Matters........................................................................12
Experts..............................................................................12
</TABLE>
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities Exchange Commission. You may read and copy any
document we file at the SEC's public reference rooms in Washington, D.C., New
York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0300 for
further information on the public reference rooms. Our SEC filings are also
available to the public at the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and later information filed with the SEC will
update and supersede this information. We incorporate by reference our Annual
Report on Form 10-K for the year ended September 30, 1999, and our Report on
Form 10-Q for the quarter ended December 31, 1999.
All documents filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 after the date of this prospectus and prior to
the termination of the offering of the common stock offered hereby shall be
deemed to be incorporated by reference in this prospectus on the date of filing
such documents. Any statement contained in a document or information
incorporated or deemed to be incorporated herein by reference shall be deemed to
be modified or superseded for purposes of this prospectus to the extent that a
statement contained in this prospectus or in any subsequently filed document
that also is, or is deemed to be, incorporated by reference, modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
prospectus.
The making of a modifying or superseding statement shall not be deemed an
admission that the modified or superseded statement, when made, constituted a
misrepresentation, an untrue statement of a material fact or an omission to
state a material fact that is required to be stated or that is necessary to make
a statement not misleading in light of the circumstances in which it was made.
We will furnish without charge to each person to whom this prospectus is
delivered, on the written or oral request of such person, a copy of any or all
of the documents incorporated herein by reference, except for the exhibits to
such documents. Request should be made to:
Vance R. Schram
Vice President, Finance, Controller
and Secretary
The Good Guys, Inc.
7000 Marina Boulevard
Brisbane, California 94005-1030
(650) 615-5000
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NOTE REGARDING FORWARD-LOOKING STATEMENTS AND
RISK FACTORS.
This prospectus and the documents incorporated in this prospectus by reference
may contain "forward-looking statements" within the meaning of Section 27A of
the Securities Act, and Section 21E of the Exchange Act. Forward-looking
statements are identified by words such as "believe," "anticipate," "expect,"
"intend," "plan," "will," "may" and other similar expressions. In addition, any
statements that refer to expectations, projections or other characterizations of
future events or circumstances are forward-looking statements. These
forward-looking statements reflect our current expectations and are based upon
currently available data. There are a variety of factors and risks that could
cause actual results experienced to differ materially from the anticipated
results or other expectations expressed in the forward-looking statements or
affect the decision to invest in our securities, including, but not limited to
those set forth in our Form 10-K Annual Report for the fiscal year ended
September 30, 1999 and the following:
FAILURE TO RETURN TO PROFITABILITY COULD MATERIALLY AFFECT OUR VENDER AND LENDER
RELATIONSHIPS.
We have experienced operating losses for the fiscal years ended September 30,
1998 and 1999 aggregating approximately $8.9 million and $39.3 million,
respectively. Operating results for fiscal 1999 include a one-time charge of
$9.3 million related to personnel reduction and inventory and accounts
receivable write-offs. Although we believe we will be able to return to
profitability in fiscal 2000 if we are able to successfully implement the
turn-around strategy discussed later in this prospectus, there can be no
assurance that we will be able to do so. Failure to return to profitability
could have a material adverse effect on our relationships with our vendors and
lenders.
LOSS OF KEY PERSONNEL COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
Our success depends upon the active involvement of senior management personnel,
particularly Ronald Unkefer, our Chairman and Chief Executive Officer. The loss
of the full-time services of Ronald Unkefer or other members of our senior
management team could have a material adverse effect on our results of
operations and financial condition. Except for an employment contract with
Ronald Unkefer and severance agreements with our officers, we do not have
employment agreements with any members of our senior management team.
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COMPETITIVE FACTORS COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
The retail consumer electronics industry is highly competitive. We currently
compete against a diverse group of retailers, including several national and
regional large format merchandisers and superstores, such as Circuit City and
Best Buy. Those competitors sell, among other products, audio and video consumer
electronics products similar and often identical to those we sell. Certain of
these competitors have substantially greater financial resources than we have. A
number of different competitive factors could have a material adverse effect on
our results of operations and financial condition, including, but not limited
to:
- Increased operational efficiencies of competitors;
- Competitive pricing strategies;
- Expansion by existing competitors;
- Entry by new competitors into markets in which The Good Guys
- Adoption by existing competitors of innovative store formats or
retail sales methods.
OUR SALES FLUCTUATE SEASONALLY AND QUARTERLY.
Like many retailers, our business is affected by seasonal shopping patterns. The
fourth calendar quarter, which is our first fiscal quarter and which includes
the December holiday shopping period, has historically contributed, and is
expected to continue to represent, a substantial portion of our operating
results for the entire fiscal year. As a result, any factors negatively
affecting us during results calendar quarter of any year, could have a material
adverse effect on our results of operations for the entire year. More generally,
our quarterly results of operations also may fluctuate based upon such factors
as:
- Competition;
- General regional and national economic conditions;
- Consumer trends;
- Changes in our product mix;
- Timing of promotional events;
- New product introductions; and
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- Our ability to execute our business strategy effectively.
CHANGES IN CONSUMER DEMAND MAY LOWER OUR SALES OR PROFITS.
Our success depends on our ability to anticipate and respond in a timely manner
to consumer demand and preferences regarding audio and video consumer products
and changes in such demand and preferences. Consumer spending patterns,
particularly discretionary spending for products such as those we offer, are
affected by, among other things, prevailing economic conditions. In addition,
the periodic introduction and availability of new products and technologies at
price levels which generate wide consumer interest stimulate the demand for
audio and video consumer electronics products. It is possible that these
products or other new products will never achieve widespread consumer
acceptance. Furthermore, the introduction or expected introduction of new
products or technologies may depress sales of existing products and
technologies. Significant deviations from the projected demand for products we
sell would have a materially adverse effect on our results of operations and
financial condition, either from lost sales or lower margins due to the need to
mark down excess inventory.
LOSS OF KEY SUPPLIERS COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
The success of our business and growth strategy depends to a significant degree
upon our maintaining a good relationship with our suppliers, particularly
brand-name suppliers of stereo and video equipment such as Sony, Mitsubishi,
JVC, and Panasonic. The loss of any of these key vendors or our failure to
establish and maintain relationships with these or other vendors could have a
material adverse effect on our results of operations and financial condition.
WE DEPEND UPON FOREIGN VENDORS.
We purchase a significant portion of our inventory from overseas vendors,
particularly vendors headquartered in Japan. Changes in trade regulations,
currency fluctuations or other factors may increase the cost of items we
purchase from foreign vendors or create shortages of such items, which could in
turn have a material adverse effect on our results of operations and financial
condition. Conversely, significant reductions in the cost of such items in U.S.
dollars may cause a significant reduction in retail price levels of those
products and may limit or eliminate our ability to successfully differentiate
The Good Guys, Inc. from other competitors, thereby resulting in an adverse
effect on our sales, margin or competitive position.
SALE OF SHARES ELIGIBLE FOR FUTURE SALE UNDER OPTIONS OR WARRANTS MAY ADVERSELY
AFFECT STOCK PRICE.
As of the date of this prospectus, we have outstanding stock options and
warrants to purchase an aggregate of 4,580,632 shares of common stock at
exercise prices ranging from $3.00 to $20.38 of which options and warrants to
purchase 2,402,283 shares are exercisable now. The sale of shares covered by
such options or warrants by the holders thereof, pursuant to existing
registration statements or registrations statements filed upon exercise of
registration rights given them or pursuant to exemptions from registration could
have an adverse effect on the market price for our common stock.
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THE COMPANY
We were incorporated in California in 1976. On March 4, 1992, we changed our
state of incorporation from California to Delaware by merging into a wholly
owned Delaware subsidiary formed for that purpose. On September 1995, we
transferred substantially all of our assets and liabilities to The Good Guys -
California, Inc., our wholly-owned operating subsidiary.
We are a leading specialty retailer of consumer electronics products and
currently operate 79 stores, 3/4 of which are located in California, with the
balance in Washington, Oregon and Nevada.
On July 1, 1999, our Founder, former Chairman and Chief Executive Officer,
Ronald A. Unkefer, rejoined us as our Chairman and Chief Executive Officer after
purchasing for $4.7 million in cash 1,450,000 restricted shares of our common
stock and acquiring warrants for an additional 1,435,000 shares of our common
stock, exercisable at a price of $3.39612 per share.
In July, 1999, we announced our profitability strategy that included the
following key elements:
- Elimination of the sale of computers and home office products from
our overall product mix;
- Implementation of cost reductions with respect to general and
administrative costs, as well as in store and other operating costs;
- Adoption of a new integrated branding and marketing campaign; and
- A focus on providing early adopters, product-savvy consumers and
middle and upper-income customers with a distinctive selection of
electronics products and services.
USE OF PROCEEDS
We will not receive any proceeds from the sale of any shares of common stock,
including the shares underlying warrants by the Selling Shareholders, but will
pay all expenses related to the registration of the shares, including the shares
underlying warrants. We could receive up to $1,229,975 from the exercise of the
warrants covered by this prospectus.
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SELLING SHAREHOLDERS
The following table sets forth information concerning the beneficial ownership
of our common stock and warrants by the Selling Shareholders as of the date of
this prospectus, the number of shares, including the shares underlying warrants,
included for sale in the offering and the beneficial ownership of common stock
by such Selling Shareholders after the offering (assuming sale of all of the
shares offered by all of the Shareholders). Such information was furnished to us
by the Selling Shareholders. Morgan Keegan & Company, Inc., which has acted as a
market maker in the Company's shares, received warrants covering 160,000 shares,
in connection with services rendered to us in a private placement of our shares
completed in August 1999 and the underlying shares are being registered herein.
Citron Haligman Bedecarre received 80,800 shares and warrants covering 40,400
shares in connection with advertising services rendered to us and such shares
including the shares underlying the warrants are being registered herein. Except
as just described, to our knowledge, none of the Selling Shareholders has had,
within the past three years any material relationship with us.
<TABLE>
<CAPTION>
Percentage Of
Shares Owned Shares To Be Shares To Be Shares To Be
Prior To The Sold In The Owned After Owned After The
Name Offering (1) Offering (1) the Offering Offering
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<S> <C> <C> <C> <C>
Citron Haligman 121,200 121,200 -0- -0-
Bedecarre
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Morgan Keegan & 160,000 160,000 -0- -0-
Company, Inc.
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</TABLE>
(1) Includes the shares of common stock issuable upon exercise of
warrants.
PLAN OF DISTRIBUTION
We are registering the shares, including shares underlying
warrants, on behalf of the Selling Shareholders. As used herein, "Selling
Shareholders" includes donees and pledgees, transferees or other
successors-in-interest selling shares and warrants received from a Selling
Shareholder as a gift, pledge, partnership distribution or other non-sale
related transfer after the date of this prospectus. All costs, expenses and fees
in connection with the registration of the shares, including the shares
underlying warrants, offered hereby will be borne by us. Brokerage commissions
and similar selling expenses, if any, attributable to the sale of shares,
including the shares underlying warrants, will be borne by the Selling
Shareholders. Sales of shares and warrants may be effected by Selling
Shareholders from time to time in one or more types of transactions (which may
include block transactions) on the Nasdaq National Market, in the
over-the-counter market, in negotiated private transactions not effected on any
exchange, through put or call options transactions relating to the shares,
including the shares underlying warrants, through short sales or a combination
of such methods of sale, at market prices
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prevailing at the time of sale, or at negotiated prices. Such transactions may
or may not involve brokers or dealers. The Selling Shareholders have advised us
that they have not entered into any agreements, understandings or arrangements
with any underwriter or coordinating broker acting in connection with the
proposed sale of shares by Selling Shareholders.
The Selling Shareholders may effect such transactions by selling
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions, or commissions from the Selling Shareholders and/or the
purchasers of shares and warrants for whom such broker-dealers may act as agents
or to whom they sell as principal, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions).
The Selling Shareholders and any broker-dealers that act in
connection with the sale of shares, including the shares underlying warrants,
might be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act, and any commissions received by such broker-dealers and any
profit on the resale of the shares, including the shares and underlying
warrants, sold by them while acting as principals might be deemed to be
underwriting discounts or commissions under the Securities Act. The Selling
Shareholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares, including the shares
underlying warrants, against certain liabilities, including liabilities arising
under the Securities Act.
Because Selling Shareholders may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act, the Selling
Shareholders will be subject to the prospectus delivery requirements of the
Securities Act. We have informed the Selling Shareholders that the
anti-manipulative provisions of Regulation M promulgated under the Exchange Act
may apply to their sales in the market.
Selling Shareholders also may resell all or a portion of the
shares, including shares underlying warrants, in open market transactions in
reliance upon Rule 144 under the Securities Act, provided they meet its criteria
and conform to its requirements.
Upon our notification by a Selling Shareholder that any material
arrangement has been entered into with a broker-dealer for a sale through a
block trade, special offering, exchange distribution or secondary distribution
or a purchase by a broker or dealer, a supplement to this prospectus will be
filed, if required, pursuant to Rule 424(b) under the Securities Act,
disclosing:
- the name of each such selling shareholder and of the participating
broker-dealer(s);
- the number of shares involved;
- the price at which such shares were sold;
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- the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
- that such broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in this
prospectus; and
- other facts material to the transaction.
In addition, upon our notification by a Selling Shareholder that a donee,
pledgee, transferee or other successor-in-interest intends to sell more than 500
shares, a supplement to this prospectus will be filed.
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DESCRIPTION OF CAPITAL STOCK
Common Stock. All of our outstanding shares of common stock are
fully paid and non-assessable. Subject to the prior rights to the holders of
preferred stock which may be issued in the future, the holders of common stock
are entitled to received dividends if and when declared by the Board of
Directors out of funds legally available therefor and in the event of our
dissolution, to share ratably in all assets remaining after payment of
liabilities and satisfaction of the liquidation preferences of the holders of
such preferred stock. Each holder of common stock is entitled to one vote for
each share held of record on all matters presented to a vote at a shareholders
meeting, including the election of directors. Holders of common stock have no
cumulative voting rights or preemptive rights to purchase or subscribe for any
stock or other securities and there are no conversion rights or redemption or
sinking fund provisions with respect to such stock. Additional shares of
authorized common stock may be issued without shareholder approval.
Our Transfer Agent and Registrar is Chase Mellon Shareholder
Services, 235 Montgomery Street, 23rd Floor, San Francisco, CA 94104.
Preferred Stock. We have authorized in our Certificate of
Incorporation 2,000,000 shares of preferred stock, $.001 par value per share,
none of which has been issued. Authorized but unissued preferred stock is
available for issuance from time to time at the discretion of our board of
directors without shareholder approval. Our board of directors has the authority
to prescribe for each series of preferred stock that it establishes the number,
designation, preferences, limitations and relative rights of the shares of such
series, subject to applicable law and provisions of any outstanding series of
preferred stock. The terms of any series of preferred stock, including, but not
limited to, dividend rate, redemption price, liquidation rights, sinking fund
provisions, conversion rights and voting rights, and any corresponding effect on
other shareholders, will be dependent largely on factors existing at the time of
issuance. Such terms and effects could include restrictions on dividends on the
common stock if dividends on the preferred stock are in arrears, dilution of the
voting power of other shareholders to the extent a series of the preferred stock
has voting rights and reduction of amounts available on liquidation as a result
of any liquidation preference granted to any series of preferred stock.
LEGAL MATTERS
The legality of the common stock and warrants offered hereby will be
passed upon for us by Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A
Professional Corporation.
EXPERTS
The financial statements incorporated in this registration statement
by reference from the Company's Annual Report on Form 10-K for the year ended
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September 30, 1999 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses payable in connection with the issuance and distribution of
the securities being registered (estimated except in the case of the
registration fee) are as follows:
<TABLE>
<CAPTION>
Amount
<S> <C>
SEC registration.............................................. $ 479
Legal fees and expenses....................................... $10,000
Accounting fees and expenses.................................. $10,000
Miscellaneous................................................. $ 2,000
Total......................................................... $22,479
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</TABLE>
The above fees will be payable by the Company.
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by sections 102 and 145 of the Delaware General Corporation Law,
the Registrant's certificate of incorporation eliminates a director's personal
liability for monetary damages to the Registrant and its stockholders arising
from a breach or alleged breach of a director's fiduciary duty except for
liability under section 174 of the Delaware General Corporation Law or liability
for any breach of the director's duty of loyalty to the Registrant or its
stockholders, for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, or for any transaction
from which the director derived an improper personal benefit. The effect of this
provision in the certificate of incorporation is to eliminate the rights of the
Registrant and its stockholders (through stockholders' derivative suits on
behalf of the Registrant) to recover monetary damages against a director for
breach of fiduciary duty as a director (including breaches resulting from
negligent or grossly negligent behavior) except in the situations described
above.
The Registrant's bylaws provide for indemnification of its directors, officers
and agents, and the Company has entered into an indemnification agreement with
each of its officers and directors (an "Indemnity"). Under the bylaws and such
indemnification agreements, the Registrant must indemnify an Indemnity to the
fullest extent permitted by Delaware law for losses and expenses incurred in
connection with actions in which the Indemnity is involved by reason of having
been a director or officer of the Registrant. In certain circumstances, the
Registrant is also obligated to advance expenses an Indemnity may incur in
connection with such actions before any resolution of the action, and the
Indemnity may sue to enforce his or her right to indemnification or advancement
of expenses.
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The Registrant also maintains an insurance policy insuring its directors and
officers against liability for certain acts and omission while acting in their
official capacities.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act; (ii) to reflect
in the prospectus any facts or events arising after the effective date of this
Registration Statement (or the most recent post-effective amendment hereof)
which, individually or in the aggregate, represent a fundamental change in the
information in this Registration Statements. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total dollar value
of securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price set forth in the
Calculation of Registration Fee" table in the effective registration statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement; provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the
II-2
<PAGE> 18
opinion of the Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant ill, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-3
<PAGE> 19
ITEM 18. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT TITLE
----------- -------------
<S> <C>
4.1 Warrant Certificate, dated August 25, 1999 issued to
Citron Haligman Bedecarre containing registration rights
4.2 Warrant Certificate, dated August 19, 1999 issued to Morgan Keegan &
Company, Inc.
5.1 Opinion of Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A
Professional Corporation
23.1 Consent of Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A
Professional Corporation (Included in Exhibit 5.01)
23.2 Consent of Deloitte & Touche LLP, Independent Auditors
24.1 Power of Attorney
</TABLE>
- -------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Company certifies that it has reasonable grounds to believe that it
meets all requirements of filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Brisbane, California on this 14th day of March,
2000.
THE GOOD GUYS, INC.
By: /s/ RONALD A. UNKEFER
--------------------------------------
Ronald A. Unkefer, Chairman and Chief
Executive Officer
II-4
<PAGE> 20
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dated indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ RONALD A. UNKEFER Chairman and Chief March 14, 2000
- ------------------------------- Executive Officer
(Ronald A. Unkefer) (Principal Executive
Officer)
/s/ PAUL N. ERICKSON Chief Financial Officer March 14, 2000
- ------------------------------- (Principal Financial
(Paul N. Erickson) Officer)
/s/ VANCE R. SCHRAM Vice President/Finance March 14, 2000
- ------------------------------- and Controller
(Vance R. Schram) (Principal Accounting
Officer)
*STANLEY R. BAKER Director March 14, 2000
- -------------------------------
(Stanley R. Baker)
*RUSSELL M. SOLOMON Director March 14, 2000
- -------------------------------
(Russell M. Solomon)
*JOHN E. MARTIN Director March 14, 2000
- -------------------------------
(John E. Martin)
*W. HOWARD LESTER Director March 14, 2000
- -------------------------------
(W. Howard Lester)
*HORST H. SCHULZE Director March 14, 2000
- -------------------------------
(Horst H. Schulze)
*GARY M. LAWRENCE Director March 14, 2000
- -------------------------------
(Gary M. Lawrence)
*JOSEPH P. CLAYTON Director March 14, 2000
- -------------------------------
(Joseph P. Clayton)
*JOSEPH M. SCHELL Director March 14, 2000
- -------------------------------
(Joseph M. Schell)
By: /s/ Vance R. Schram
-------------------------
Vance R. Schram
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT TITLE
----------- -------------
<S> <C>
4.1 Warrant Certificate, dated August 25, 1999 issued to
Citron Haligman Bedecarre containing registration rights
4.2 Warrant Certificate, dated August 19, 1999 issued to Morgan Keegan &
Company, Inc.
5.1 Opinion of Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A
Professional Corporation
23.1 Consent of Howard, Rice, Nemerovski, Canady, Falk & Rabkin, A
Professional Corporation (Included in Exhibit 5.01)
23.2 Consent of Deloitte & Touche LLP, Independent Auditors
24.1 Power of Attorney
</TABLE>
- -------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT 4.1
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 25, 1999, BETWEEN THE GOOD GUYS,
INC. AND CITRON HALIGMAN BEDECARRE, 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.
WARRANT CERTIFICATE
To Purchase 40,400 Shares of Common Stock of:
THE GOOD GUYS, INC.
THIS IS TO CERTIFY THAT Citron Haligman Bedecarre (the "HOLDER") or
Holder's registered assigns, is entitled to purchase from THE GOOD GUYS, INC., a
Delaware corporation (the "COMPANY"), up to forty thousand four hundred (40,400)
shares of the Company's common stock, par value $.001 per share (the "COMMON
STOCK"), on the terms and conditions hereinafter set forth.
1. Grant of Warrant
1.1 Grant. The Company hereby grants the Holder Warrants to purchase
forty thousand four hundred (40,400) shares of Common Stock at a
purchase price of $6.1875 per share (as adjusted from time to time
pursuant to Section 2 hereof, the "WARRANT PRICE"), exercisable in
whole or in part at any time and from time to time during the three
year period beginning on the date hereof (the "ISSUE Date").
1.2 Shares To Be Issued: Reservation of Shares. The Company covenants
and agrees that (a) all Warrant Shares, upon issuance in accordance
with the terms hereof, and the payment of the purchase price
therefor, will be duly authorized, validly issued and outstanding,
fully paid, nonassessable and non-forfeitable, and free from all
taxes, liens and charges with respect to the issuance thereof other
than those created by or arising through Holder, and all such
Warrant Shares shall be sold to the Holder pursuant to an exemption
from registration under the Securities Act of 1933, and in
-1-
<PAGE> 2
accordance with any applicable blue sky laws, (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.
2. 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 2. The Company shall give Holder notice of any event
described below which requires an adjustment pursuant to this Section 2 within a
reasonable period of time, but in no event greater than 30 days.
2.1 Stock Dividends, Subdivisions and Combinations. If at any time the
Company shall:
2.1.1 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,
subdivide its outstanding shares of Common Stock into a larger number of
shares of Common Stock, or
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.
2.2 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
-2-
<PAGE> 3
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).
2.3 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 2) 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).
2.4 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 2), (b) a consolidation or
merger of the Company with and into 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,
-3-
<PAGE> 4
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.
2.5 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.
2.6 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 2.5) 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 2.6.1(a) below or at least 10 business days
before the date specified in Section 2.6.2 and Section 2.6.1(b)
below, a notice stating in reasonable detail the relevant facts and
any resulting adjustments and the calculation thereof, if
applicable, and stating (if applicable):
2.6.1 the date to be used to determine (a) which holders of Common
Stock will be entitled to receive notice of such dividend,
distribution, subdivision or combination (the "RECORD DATE"),
and
-4-
<PAGE> 5
(b) 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 dividends on a periodic basis, the Company need only
provide the relevant information called for in this Section
2.6.1 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
2.6.2 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").
2.7 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.
2.8 Effect of Alternative Securities. If at any time, as a result of an
adjustment made pursuant to this Section 2, Holder shall become
entitled to receive any securities of the Company other than shares
of Common Stock, then the number of such other securities receivable
upon exercise of the Warrants shall be subject to adjustment from
time to time on terms as nearly equivalent as practicable to the
provisions with respect to shares of Common Stock contained in this
Section 2.
2.9 Successive Application. The provisions of this Section 2 shall
similarly apply from time to time to successive events covered by
this Section 2.
2.10 When Adjustments Are To Be Made. The adjustments required by this
Section 2 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment to
the number of shares for which the Warrants are exercisable that
would otherwise be required may be postponed (except in the case of
a subdivision or combination of shares of the Common Stock, as
provided for in Section 2.1) up to, but not beyond, the date and
time of exercise of any Warrants if such adjustment, when taken in
the aggregate with all other adjustments not previously made, adds
or subtracts less than 1% to
-5-
<PAGE> 6
the number of shares of Common Stock for which the Warrants
initially issued pursuant to this Agreement are exercisable
immediately prior to the making of such adjustment. Any adjustment
representing a change of less than such minimum amount (except as
aforesaid) which is postponed shall be carried forward and made as
soon as such adjustment, together with all other adjustments
required by this Section 2 and not previously made, would result, in
the aggregate, in a minimum adjustment or on the date of exercise.
For the purpose of any adjustment, any specified event shall be
deemed to have occurred at the close of business on the date of its
occurrence.
2.11 When Adjustment Not Required. If the Company shall take a record of
the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase
rights and shall, thereafter and before the distribution to
stockholders thereof, legally abandon its plan to pay or deliver
such dividend, distribution, subscription or purchase rights, then
thereafter no adjustment shall be required by reason of the making
of such record and any such adjustment previously made in respect
thereof shall be rescinded and annulled.
2.12 Superseding Adjustment. If, at any time after any adjustment of the
Warrant Price shall have been made pursuant to this Section 2 as the
result of any issuance of warrants, options, rights or convertible
or exchangeable securities, and such warrants, options or rights, or
the right of conversion or exchange in such other convertible or
exchangeable securities, shall expire, and all or a portion of such
warrants, options or rights, or the right of conversion or exchange
with respect to all or a portion of such other convertible or
exchangeable securities, as the case may be, shall not have been
exercised, then such previous adjustment shall be rescinded and
annulled and, if applicable, the Warrant Price shall be recalculated
as if all such expired and unexercised warrants, or options, rights,
or convertible or exchangeable securities had never been issued,
provided that, if such expiration would result in an increase in the
Warrant Price then in effect, such increase shall not be effective
until 30 days after written notice thereof has been given to all
Holders.
3. Exercise
3.1 Exercise of Warrant.
3.1.1 Holder may exercise a Warrant by surrendering this Warrant
Certificate, with the form of exercise notice attached hereto
as Exhibit A duly executed by Holder, and making payment to
the Company of the aggregate Warrant Price for the applicable
Warrant Shares in cash, by certified check, bank check or wire
transfer to an account designated by the Company. Upon any
-6-
<PAGE> 7
partial exercise of the Warrants, the Company, at its expense,
shall promptly issue to Holder for its surrendered Warrant
Certificate a replacement Warrant Certificate identical in all
respects to this Warrant Certificate, except that the number
of Warrant Shares shall be reduced accordingly.
3.1.2 Each person in whose name any Warrant Share certificate is
issued upon exercise of any Warrants shall for all purposes be
deemed to have become the holder of record of the Warrant
Shares for which such Warrant was exercised, and such Warrant
Share certificate shall be dated the date upon which the
Warrant exercise notice was duly surrendered and payment of
the purchase price was tendered to the Company.
3.1.3 Notwithstanding any other provision hereof, if an exercise of
any portion of any Warrant is to be made in connection with
any Special Transaction, the exercise of such portion may, at
the election of the holder of such portion, be conditioned
upon the consummation of such Special Transaction, in which
case such exercise shall not be deemed to be effective until
the consummation of such transaction.
3.2 Issuance of Warrant Shares. The Warrant Shares purchased shall be
issued to the holder exercising the Warrants as of the close of
business on the date on which all actions and payments required to
be taken or made by Holder, pursuant to Section 3.1, shall have been
so taken or made. Certificates for the Warrant Shares so purchased
shall be delivered to Holder within 10 days after the Warrants are
surrendered.
4. Rights of Holder
4.1 Rights Prior to Exercise. Holder shall not, solely by virtue of the
Warrants and prior to the issuance of the Warrant Shares upon the
exercise thereof, be entitled to any rights of a shareholder in the
Company, including without limitation the right to receive cash
dividends payable to the Company's shareholders. No provision
hereof, in the absence of affirmative action by Holder to purchase,
and no enumeration herein of the rights or privileges of the Holder
shall give rise to any liability for the Warrant Price of the Common
Stock acquirable by exercise hereof or as a shareholder of the
Company.
4.2 Issuance of Warrant Shares. The Company shall not by any action
including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of the Warrants, but
-7-
<PAGE> 8
will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of Holder against impairment,
including assisting Holder in making any governmental filings
necessary prior to or in connection with any exercise of the
Warrants. Without limiting the generality of the foregoing, the
Company will (a) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of Common Stock upon the
exercise of the Warrants and (b) use its best efforts to obtain all
such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof as may be necessary to
enable the Company to perform its obligations with respect to the
Warrants.
Upon the request of Holder, the Company will at any time during the period
this Warrant is outstanding acknowledge in writing, in form satisfactory to
Holder, the continuing validity of the Warrants and the obligations of the
Company hereunder.
4.3 Closing of Books. Unless the Company is closing its books with
respect to all shares of Common Stock, the Company shall not close
its books against the transfer of any Warrant or Warrant Share
issued or issuable upon exercise of the Warrants.
5. Transferability
Subject to the requirements of the Securities Act or any applicable state
securities laws, Holder may sell, assign, transfer or otherwise dispose of all
or any portion of the Warrants or the Warrant Shares acquired upon any exercise
hereof at any time and from time to time. Upon the sale, assignment, transfer or
other disposition of all or any portion of the Warrants, Holder shall deliver to
the Company a written notice of such in the form attached hereto as Exhibit B,
duly executed by Holder, which includes the identity and address of any
purchaser, assignor or transferee.
6. Legend On Warrant Shares
Certificates evidencing the Warrant Shares shall bear the following legend
until such time as the terms of the Stock Purchase Agreement have expired:
"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
-8-
<PAGE> 9
AUGUST 25, 1999, BETWEEN THE GOOD GUYS, INC. AND CITRON HALIGMAN BEDECARRE, 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."
7. Piggy-back and Demand Registration
7.1 Piggy-back Registration.
(a) Right to Include Registrable Securities. If the Company
at any time, after the elapse of six months from the
Issue Date intends to register any of its debt or equity
securities, or any instrument convertible into or
exchangeable for its debt or equity securities
("SECURITIES"), of the type and the class of Securities
issuable, from time to time, upon exercise of this
Warrant, under the Securities Act of 1933, (the
"SECURITIES ACT") (other than by a registration on Form
S-8 or S-4 or any successor or similar form), whether or
not for sale for its own account, it will each such time
give prompt written notice to Holder of its intention to
do so and of Holder's rights under this Section 7.1. If
the Holder so elects, the Company will use its best
efforts to effect the registration under the Securities
Act of all Securities which the Company has been so
requested to register by the Holder. The Company will
pay all Registration Expenses in connection with each
registration of Securities requested pursuant to this
Section 7.1.
(b) Priority. Holder's right to include Registrable
Securities in such offering shall be subject to usual
and customary cut-back restrictions.
(c) Number of Incidental Registrations. Holder shall be
entitled to have Holder's Securities included in an
unlimited number of registrations pursuant to this
Section 7.1.
7.2 Demand Registration.
(a) Request. At any time following the elapse of six months
from the Issue Date and upon the written request of
Holder requesting that the Company effect the
registration under the Securities Act of all or part of
Holder's Securities and
-9-
<PAGE> 10
specifying the intended method of disposition thereof,
the Company will, subject to the terms of this
Agreement, effect the registration under the Securities
Act of Securities which the Company has been so
requested to register by Holder for disposition in
accordance with the intended method of disposition
stated in such request, all to the extent requisite to
permit the disposition of the Securities, so to be
registered. Usual and customary deferral provisions, not
to exceed one hundred eighty (180) days, shall apply.
(b) Registration Statement Form. Registrations under this
Section 7.2 shall be on such appropriate registration
form of the Securities and Exchange Commission (the
"COMMISSION") (i) as shall be selected by the Company
and reasonably acceptable to Holder and (ii) as shall
permit the disposition of such Securities in accordance
with the intended method or methods of disposition
specified in its request for such registration.
(c) Expenses. The Company will pay all Registration Expenses
in connection with any registration required pursuant to
this Section 7.2.
(d) Effective Registration Statement. A registration
statement pursuant to this Section 7.2 shall not be
deemed to have been effected (i) unless a registration
statement with respect thereto has become effective,
(ii) if, after it has become effective, such
registration becomes subject to any stop order,
injunction or other order or requirement of the
Commission or court for any reason which is not lifted,
or (iii) the conditions to closing specified in the
purchase agreement or underwriting agreement, if any,
entered into in connection with such registration are
not satisfied, other than by reason of some act or
omission by Holder.
(e) Number of Requested Registrations. The Company shall be
obligated to effect only one demand registration,
regardless of the number of owners of the Warrants or
any Securities issued pursuant to exercise of such
Warrants.
7.3 Limitation on Registration. Notwithstanding the foregoing, the
Company need not include the Holder's Securities in any registration
statement provided for in this Section 7 if all of the Securities
the Holder intends to sell can then be sold pursuant to the
provisions of Rule 144 under the Securities Act.
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<PAGE> 11
7.4 Securities Covered. The Securities of the Holder covered by this
Section 7 shall include the Securities issued to the Holder pursuant
to the Stock Purchase Agreement between the Company and the Holder,
dated as of August 25, 1999.
8. Miscellaneous
8.1 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 prepaid), or
guaranteed overnight delivery, to the Company at the address at
which its principal business office is located from time to time,
and Holder at the address of which it advises the Company in
writing.
8.2 Payment of Taxes. The Company shall pay all expenses in connection
with, and all taxes and other governmental charges that may be
imposed with respect to, the issuance or delivery of Warrant Shares,
unless such tax or charge is imposed by law upon Holder, in which
case such taxes or charges shall be paid by Holder. The Company
shall not be required, however, to pay any tax or other charge
imposed in connection with any transfer involved in the issue of any
certificate for Warrant Shares in any name other than that of
Holder, and in such case the Company shall not be required to issue
or deliver any stock certificate until such tax or other charge has
been paid or it has been established to the satisfaction of the
Company that no such tax or other charge is due.
8.3 Amendment; Waiver. This Warrant Certificate may not be modified,
amended, supplemented, canceled or discharged, except by written
instrument executed by the Company and Holder. No failure to
exercise, and no delay in exercising, any right, power or privilege
under this Warrant Certificate 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 Company and Holder. 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 time for
performance of any other obligations or any other acts.
8.4 Headings. The headings contained in this Warrant Certificate 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
Warrant Certificate.
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<PAGE> 12
8.5 Governing Law; Interpretation. This Warrant Certificate shall be
construed in accordance with and governed for all purposes by the
laws of the State of Delaware.
8.6 Warrant Exchangeable for Different Denominations. The Warrants are
exchangeable, upon the surrender hereof by Holder at the principal
office of the Company, for new Warrants of like tenor representing
in the aggregate the purchase rights hereunder, and each of such new
Warrants shall represent such portion of such rights as is
designated by the Holder at the time of such surrender. The date the
Company initially issues this Warrant shall be deemed to be the
"ISSUE Date" hereof regardless of the number of times new
certificates representing the unexpired and unexercised rights
formerly represented by the Warrants shall be issued.
8.7 Replacement. Upon receipt of evidence reasonably satisfactory to the
Company (an affidavit of the Holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any
certificate evidencing any Warrant, and in the case of any such
loss, theft or destruction, upon the posting by such Holder of a
bond in such reasonable amount as the Company may direct as
indemnity against any claim that may be made against it with respect
to such Warrant or receipt of indemnity reasonably satisfactory to
the Company (provided that if the Holder is a financial institution
or other institutional investor its own agreement shall be
satisfactory), or, in the case of any such mutilation upon surrender
of such certificate, the Company shall (at its expense) execute and
deliver in lieu of such certificate a new certificate of like kind
representing the same rights represented by such lost, stolen,
destroyed or mutilated certificate and dated the date of such lost,
stolen, destroyed or mutilated certificate.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 13
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed and delivered as of the 25th day of August, 1999.
THE GOOD GUYS, INC.
By: /s/ Ronald A. Unkefer
---------------------------------
Name: Ronald A. Unkefer
-------------------------------
Title: Chief Executive Officer
------------------------------
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<PAGE> 1
EXHIBIT 4.2
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. 3
August 19, 1999
WARRANT TO PURCHASE SHARES OF COMMON STOCK
OF
THE GOOD GUYS, INC.
This certifies that Morgan Keegan & Company, Inc., 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 One Hundred Sixty
Thousand (160,000) 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.
I. THIS WARRANT. This Warrant is issued to the Holder in connection with that
certain Stock Purchase Agreement, dated as of August 19, 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.
II. 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
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<PAGE> 2
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.
III. 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
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.
IV. 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
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<PAGE> 3
of such calculation)
FMV equals the fair market value of one share of Common Stock (at
the
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 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.
V. ADJUSTMENTS.
1.1 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.
1.2 STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time the
Company shall:
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<PAGE> 4
(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.
1.3 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).
1.4 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,
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<PAGE> 5
substitution or 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).
1.5 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.
1.6 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 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
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<PAGE> 6
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.
1.7 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 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
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<PAGE> 7
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").
1.8 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.
VI. 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.
VII. 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
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
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<PAGE> 8
Holder hereof. The transfer of Warrant Shares issuable upon exercise of this
Warrant is governed by Section 10 hereof.
VIII. 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.
IX. 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.
X. 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
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<PAGE> 9
(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.
XI. 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.
XII. 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.
XIII. HEADINGS. The headings in this Warrant are for purposes of convenience of
reference only and shall not be deemed to constitute a part hereof.
XIV. 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> 10
IN WITNESS WHEREOF, the Company has executed this Warrant under seal as of
the date first written above.
ATTEST: THE GOOD GUYS, INC.
By:/s/ Vance R. Schram By:/s/ Ronald Unkefer
------------------- ------------------
Name: Vance R. Schram Name: Ronald Unkefer
Title: Vice President/Finance and Title: Chairman and Chief
Controller Executive Officer
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<PAGE> 11
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> 12
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> 13
The Good Guys, Inc.
September 16, 1999
Page 2
EXHIBIT A
EXERCISE NOTICE
[To be executed only upon exercise of the Warrant]
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for the purchase of the number of shares of Common Stock of The
Good Guys, Inc. (the "COMPANY") as is set forth below, and herewith makes
payment therefor, all at the price and on the terms and conditions specified in
the attached Warrant Certificate and requests that certificates for the shares
of Common Stock hereby purchased (and any securities or other property issuable
upon such exercise) be issued in the name of and delivered to the person
specified below whose address is set forth below, and, if such shares of Common
Stock shall not include all of the shares of Common Stock now and hereafter
issuable as provided in the attached Warrant Certificate, then the Company
shall, at its own expense, promptly issue to the undersigned a new Warrant
Certificate of like tenor and date for the balance of the shares of Common Stock
issuable thereunder.
Date:
-----------------
Amount of Shares Purchased:
--------------------
Aggregate Purchase Price: $
-------------------
Printed Name of Registered Holder:
-------------------------------------
Signature of Registered Holder:
----------------------------------------
NOTICE: The signature on this Exercise Notice must correspond with the name
as written upon the face of the attached Warrant Certificate in
every particular, without alteration or enlargement or any change
whatsoever.
Stock Certificates to be issued and registered in the following name, and
delivered to the following address:
--------------------------------------------
(Name)
--------------------------------------------
(Street Address)
--------------------------------------------
(City) (State) (Zip Code)
<PAGE> 14
The Good Guys, Inc.
September 16, 1999
Page 3
EXHIBIT B
ASSIGNMENT NOTICE
[To be executed only upon transfer of the Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto the person named below, whose address is set forth below, the rights
represented by the attached Warrant Certificate to purchase the number of shares
of the Common Stock of The Good Guys, Inc. (the "COMPANY") as is set forth
below, to which the attached Warrant Certificates relates, and appoints
_________________ attorney to transfer such rights on the books of the Company
with full power of substitution in the premises. If such shares of Common Stock
of the Company shall not include all of the shares of Common Stock now and
hereafter issuable as provided in the attached Warrant Certificate, then the
Company, at its own expense, shall promptly issue to the undersigned a new
Warrant Certificate of like tenor and date for the balance of the Common Stock
issuable thereunder.
Date:
-------------------------
Amount of Warrants Transferred:
--------------------------
Printed Name of Registered Holder:
---------------------------------------
Signature of Registered Holder:
-------------------------------------------
NOTICE: The signature on this Assignment Notice must correspond with the
name as written upon the face of the attached Warrant Certificate
in every particular, without alteration or enlargement or any
change whatsoever.
The Warrant Certificate for transferred Warrants is to be issued and
registered in the following name, and delivered to the following address:
--------------------------------------------
(Name)
--------------------------------------------
(Street Address)
--------------------------------------------
(City) (State) (Zip Code)
<PAGE> 1
EXHIBIT 5.1
March 13, 2000
The Good Guys, Inc.
7000 Marina Boulevard
Brisbane, California 95005-1030
Re: The Good Guys, Inc.
Dear Ladies and Gentlemen:
You have requested our opinion as counsel for The Good Guys, Inc., a
Delaware corporation (the "Company"), in connection with the registration under
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder of 281,200 shares of The Good Guys, Inc. Common Stock,
par value $.001 per share (the "Shares"), which may be offered for sale by
certain shareholders of the Company (the ""Selling Shareholders""), who have
acquired shares or rights to acquire shares in transactions not involving a
public offering which may be offered for sale by public offering, which include
200,400 shares which may be offered for sale by Selling Shareholders who may
acquire such shares pursuant to the exercise of warrants covering such shares
(the "Warrants") granted them.
We have examined the Company's Registration Statement on Form S-3 in
the form to be filed with the Securities and Exchange Commission on the date of
this opinion (the "Registration Statement"). We further have examined the
Certificate of Incorporation of the Company as certified by the Secretary of
State of the State of Delaware and the Bylaws of the Company. In addition, we
have examined such corporate records, certificates and other documents (of which
we are aware) and such questions of law as we have considered necessary or
appropriate for the purposes of this opinion.
Based on the foregoing examination, we are of the opinion that the
Shares and the Warrants have been duly authorized by appropriate corporate
action of the Company, and when the Shares have been duly issued and/or sold as
described in the Registration Statement, any amendment thereto, the prospectus
and any supplement thereto, the Shares will be legally issued, fully paid and
non-assessable.
<PAGE> 2
The Good Guys, Inc.
March 13, 2000
Page 2
In connection with this opinion we have assumed the following: (a)
the authenticity of original documents and the genuineness of all signatures;
(b) the conformity to the originals of all documents submitted to us as copies;
(c) the truth, accuracy and completeness of the information, representations and
warranties contained in the instruments, documents, records and certificates we
have reviewed; (d) the due authorization, execution and delivery on behalf of
the respective parties thereto of the documents referred to herein and, except
with respect to such parties; and (e) the absence of any evidence extrinsic to
the provisions of the written agreements between the parties that the parties
intended a meaning contrary to that expressed by those provisions. We have not
independently verified such assumptions.
We express no opinion as to laws other than the substantive laws of
the State of California (without regard to conflicts-of-laws or choice-of-law
principles), the General Corporation Law of the State of Delaware and the
federal laws of the United States of America, in each case to the extent
applicable and not excepted from the scope of the opinions expressed above.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name wherever it appears in the
Registration Statement, any amendment thereto, the prospectus and any supplement
thereto.
Very truly yours,
Howard, Rice, Nemerovski, Canady,
Falk & Rabkin
A Professional Corporation
/s/ RICHARD W. CANADY
-------------------------
Richard W. Canady
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
The Good Guys, Inc. on Form S-3 of our report dated November 3, 1999, appearing
in and incorporated by reference in the Annual Report on Form 10-K of The Good
Guys, Inc. for the year ended September 30, 1999 and to the reference to us
under the heading "Experts" in this Registration Statement.
DELOITTE & TOUCHE LLP
San Francisco, California
March 14, 2000
<PAGE> 1
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints Ronald A. Unkefer, Paul N. Erickson and
Vance R. Schram, and each of them, his attorneys-in-fact and agents, each with
the power of substitution, for him and in his name, place and stead, in any and
all capacities to sign a Registration Statement on Form S-3 (and any and all
amendments thereto, including post-effective amendments) covering (1) 80,800
shares of Common Stock of this Corporation issued to Citron Haligman Bedecarre
and warrants covering 40,400 shares of such Common Stock and/or the shares
underlying such warrants granted to Citron Haligman Bedecarre, and (2) warrants
covering 160,000 shares of such Common Stock and/or the shares underlying such
warrants granted to Morgan Keegan & Company, Inc. and to sign any registration
statement for the offerings covered by such registration statement that is to be
effective upon filing pursuant to Rule 462(b) promulgated under the Securities
Act of 1933, and all post-effective amendments thereto, and to file the same,
with all exhibits thereto and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or his or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
This power of attorney may be executed in any number of
counterparts.
Dated: January 26, 2000
/s/ W. Howard Lester
-----------------------------
W. Howard Lester
/s/ Russell M. Solomon
-----------------------------
Russell M. Solomon
/s/ Gary M. Lawrence
-----------------------------
Gary M. Lawrence
/s/ John E. Martin
-----------------------------
John E. Martin
/s/ Stanley R. Baker
-----------------------------
Stanley R. Baker
/s/ Horst H. Schulze
-----------------------------
Horst H. Schulze
/s/ Joseph P. Clayton
-----------------------------
Joseph P. Clayton
/s/ Joseph M. Schell
-----------------------------
Joseph M. Schell
