Exhibit 2
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
THIS AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT (the
"Agreement") is dated as of May 28,
1999, among Guitar Center, Inc., a
Delaware Corporation (the
"Company"), and the Shareholders
(as defined below).
RECITALS:
WHEREAS, the predecessor to the Company by merger, Guitar
Center Management Company, Inc., a California corporation, entered into a
Registration Rights Agreement (the "Original Registration Rights Agreement"),
dated as of June 5, 1996 among it and the shareholders identified on the
signature pages thereto governing the terms and conditions upon which the
Company was obligated to register certain of its equity securities under the
Securities Act (as defined below).
WHEREAS, by operation of Rule 144 and Rule 144(k) promulgated
under the Securities Act, the only remaining "Shareholders" subject to the
Original Registration Rights Agreement are Chase Venture Capital Associates,
L.P., Xxxxx Fargo Small Business Investment Company, Inc., Weston Presidio
Capital II, L.P., Xxxxx Xxxxxx, Xxxxx Xxxxxxxxx, and certain trusts and other
related entities associated with Messrs. Xxxxxx and Xxxxxxxxx (collectively, the
"Remaining Shareholders").
WHEREAS, pursuant to the terms of that certain Agreement and
Plan of Merger (the "Merger Agreement"), dated as of May 13, 1999, between the
Company, EMIC Acquisition Corporation, Musician's Friend, Inc. ("MFI") and the
stockholders of MFI, each of whom is identified on Annex I thereto, the Company
is issuing shares of its common stock to the former stockholders of MFI in a
transaction exempt from registration under the Securities Act (all such shares
of Common Stock to be issued pursuant to the Merger Agreement being referred to
as the "MFI Shares"). Upon the terms and subject to the conditions of this
Agreement, the Company desires to agree to register the MFI Shares for resale
under the Securities Act.
WHEREAS, the Remaining Shareholders along with the Company
have the authority, pursuant to Section 18(f) of the Original Registration
Rights Agreement, to amend that agreement, and desire to exercise that authority
to amend and restate the Original Registration Rights Agreement in order to
include the MFI Shares in the amended and restated agreement, thereby providing
a single, unified agreement governing the registration obligations of the
Company.
AGREEMENT:
NOW THEREFORE, in consideration of the premises and mutual
covenants and obligations hereinafter set forth, the Company and the
Shareholders hereby agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms have the
following meanings:
"Board" means the Board of Directors of the Company.
"Business Day" means any day that is not a Saturday, Sunday or
a day on which banking institutions in New York, New York are not required to be
open.
"Commission" means the Securities and Exchange Commission or
any other governmental body or agency succeeding to the functions thereof.
"Common Stock" means the common stock, par value $.01 per
share, of the Company.
"Demand Registration" means a registration requested by a
Shareholder or group of Shareholders pursuant to Section 2 or Section 4.
"Exchange Act" means the Securities Exchange Act of 1934 or
any successor Federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Majority Of Registering Shareholders" means, with respect to
a registration that includes Registrable Shares, those Shareholders who, at the
time in question, hold at least a majority of the Registrable Shares included or
proposed to be included in such registration.
"Majority Of Shareholders" means those Shareholders who at the
time in question hold at least a majority of the Registrable Shares then held by
all Shareholders.
"Majority Of MFI Shareholders" means those MFI Shareholders
who at the time in question hold at least a majority of the Registrable Shares
then held by all Shareholders.
"Material Transaction" means any material transaction in which
the Company or any of its Subsidiaries proposes to engage or is engaged,
including a purchase or sale of assets or securities, financing, merger,
consolidation, tender offer, and with respect to which the Board reasonably has
determined in good faith that compliance with this Agreement may reasonably be
expected to either materially interfere with the Company's or such Subsidiary's
ability to consummate such transaction in a timely fashion or require the
Company to disclose material, non-public information prior to such time as it
would otherwise be required to be disclosed.
"MFI Shareholder" means a Shareholder who holds Restricted
Shares that constitute MFI Shares.
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"MOU" means that certain Amended and Restated Memorandum of
Understanding and Stock Option Agreement dated as of December 30, 1996.
"Other Securities" means at any time those shares of Common
Stock or other securities convertible into, or exchangeable for, shares of
Common Stock and which do not constitute Primary Shares or Registrable Shares.
"Person" shall be construed broadly and shall include an
individual, a partnership, a corporation, an association, a joint stock company,
a limited liability company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.
"Primary Shares" means at any time the authorized but unissued
shares of Common Stock and shares of Common Stock held by the Company in its
treasury or any security convertible into or exchangeable for unissued shares of
Common Stock.
"Prospectus" means the prospectus included in a Registration
Statement, including any prospectus subject to completion, and any such
prospectus as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Shares and, in
each case, by all other amendments and supplements to such prospectus, including
post-effective amendments, and in each case including all material incorporated
by reference therein.
"Public Offering" means the closing of a public offering of
Common Stock pursuant to a Registration Statement declared effective under the
Securities Act, except that a Public Offering shall not include an offering of
securities to be issued as consideration in connection with a business
acquisition or an offering of securities issuable pursuant to an employee
benefit plan.
"Registrable Shares" means Restricted Shares that constitute
Common Stock.
"Registration Date" means the date upon which the Registration
Statement pursuant to which the Company shall have initially registered shares
of Common Stock under the Securities Act for sale in a Public Offering shall
have been declared effective by the Commission.
"Registration Statement" shall mean any registration statement
of the Company which covers any of the Registrable Shares and all amendments and
supplements to any such Registration Statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Restricted Shares" means shares of Common Stock, and includes
(i) shares of Common Stock which may be issued as a dividend or distribution,
(ii) any other securities which by their terms are exercisable or exchangeable
for or convertible into Common Stock, and (iii) any securities received in
respect of the foregoing (including securities described in Section 13), in each
case in clauses (i) through (iii) which at any time are held by the
Shareholders. As to any particular Restricted Shares, such Restricted Shares
shall cease to be Restricted Shares when (A)
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they have been registered under the Securities Act, the Registration Statement
in connection therewith has been declared effective and they have been disposed
of pursuant to and in the manner described in such effective Registration
Statement, (B) they, along with all Restricted Shares of a Shareholder, may be
sold or distributed pursuant to Rule 144 by such Shareholder within a
three-month period, (C) they have been otherwise transferred and new
certificates or other evidences of ownership for them not bearing a restrictive
legend and not subject to any stop transfer order or other restriction on
transfer have been delivered by the Company or the issuer of other securities
issued in exchange for the Restricted Shares, or (D) they have ceased to be
outstanding.
"Rule 144" means Rule 144 promulgated under the Securities Act
or any successor rule thereto or any complementary rule thereto.
"Securities Act" means the Securities Act of 1933 or any
successor Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
"Shareholders" means, collectively, each of the Shareholders
listed on the signature pages hereto, and includes any successor to, of
Restricted Shares or transferee of Restricted Shares of, any such Person who or
which agrees in writing to be treated as a Shareholder hereunder and to be bound
by the terms and comply with all applicable provisions hereof (including without
limitation any Person who may acquire shares of Common Stock pursuant to the
MOU).
"Subsidiary" means, with respect to any Person, any other
Person of which the securities having a majority of the ordinary voting power in
electing the board of directors (or other governing body), at the time as of
which any determination is being made, are owned by such first Person either
directly or through one or more of its Subsidiaries.
2. REQUIRED REGISTRATION.
(a) Subject to Sections 2(b) and 2(d), if the Company shall be
requested by (i) a Majority of Shareholders at any time or (ii) by a majority of
MFI Shareholders at any time prior to the first anniversary of the date of this
Agreement, to effect the registration under the Securities Act of Registrable
Shares, the Company shall use its reasonable best efforts promptly to effect the
registration under the Securities Act of the Registrable Shares which the
Company has been so requested to register.
(b) Promptly after receiving such request pursuant to Section 2(a)
above, the Company shall provide written notice thereof to all Shareholders
(other than the Shareholders that made the request pursuant to Section 2(a)
above). Any Shareholder may, within 15 Business Days of the date of such notice
by the Company, give written notice to the Company that such Shareholder wishes
to participate in the proposed registration and shall specify the number of
Registrable Shares such Shareholder desires to include in such registration.
(c) Anything contained in Section 2(a) to the contrary
notwithstanding, the Company shall not be obligated to effect any registration
under the Securities Act pursuant to Section 2(a) except in accordance with the
following provisions:
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(i) the Company shall not be obligated to file and cause to
become effective any Registration Statement during any period in which
any other Registration Statement (other than on Form S-4 or Form S-8
promulgated under the Securities Act or any successor forms thereto)
pursuant to which Primary Shares are to be or were sold has been filed
and not withdrawn or has been declared effective within the prior 90
days;
(ii) the Company may delay the filing or effectiveness of any
Registration Statement for a period of up to 90 days after the date of
a request for registration pursuant to this Section 2 if at the time of
such request (A) the Company is engaged, or has fixed plans to engage
within 90 days of the time of such request, in a firm commitment
underwritten public offering of Primary Shares in which the holders of
Registrable Shares may include Registrable Shares pursuant to Section 3
or (B) a Material Transaction exists at such time, provided that the
Company may only so delay the filing or effectiveness of a particular
Registration Statement once pursuant to this Section 2(c)(ii);
(iii) at any time prior to the effectiveness of a Registration
Statement, the Company may, in its sole discretion, convert a
registration pursuant to Section 2 into a registration pursuant to
Section 3, in which case the provisions (including those governing
inclusion of shares) set forth in Section 3 shall apply and such
registration so converted will not count as a registration pursuant to
this Section 2;
(iv) with respect to any registration pursuant to this Section
2, the Company may include in such registration any Primary Shares,
Other Securities and/or other securities; provided, however, that if
the managing underwriter advises the Company that the inclusion of all
Registrable Shares, Primary Shares, Other Securities and/or other
securities proposed to be included in such registration would interfere
with the successful marketing (including pricing) of the Registrable
Shares proposed to be included in such registration, then the number of
Registrable Shares; Primary Shares, Other Securities and/or other
securities proposed to be included in such registration shall be
included in the following order:
(A) FIRST, all Registrable Shares requested to be included
in such registration by (1) the Majority of Shareholders or
Majority of MFI Shareholders (as the case may be) who requested
such registration pursuant to Section 2(a) and (2) the other
Shareholders who requested the inclusion of their Registrable
Shares in such registration pursuant to Section 2(b), pro rata
among all such Shareholders based on the number of Registrable
Shares owned by each such Shareholder;
(B) SECOND, the Primary Shares;
(C) THIRD, the Other Securities; and
(D) FOURTH, other securities requested to be registered
pursuant to agreements providing registration rights to other
Persons;
(v) at any time before the Registration Statement covering
Registrable Shares becomes effective, the Shareholder or group of
Shareholders which requested
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such registration pursuant to Section 2(a) may request the Company to
withdraw or not to file the Registration Statement; and
(vi) the Company may, at its sole option, elect to satisfy a
request for a Demand Registration pursuant to Section 2(a) on Form S-2
or Form S-3 promulgated under the Securities Act (or any successor
forms thereto), if such forms are then available to the Company.
(d) Notwithstanding any provision of this Agreement to the
contrary, the Company shall not be obligated to register any MFI Shares under
this Agreement (whether under Section 2, 3 or 4) except as follows: (i) forty
percent (40%) of the MFI Shares shall constitute Registrable Shares for all
purposes of this Agreement (the "Base Shares"); and (ii) MFI Shares in excess of
the Base Shares may constitute Registrable Shares hereunder if, but only if,
approved in advance by the Chairman of the Board of the Company in writing, it
being understood that such approval may be granted or withheld by the Chairman
in his sole, absolute and binding discretion, and which approval may be granted
on any number of shares as determined by the Chairman. The right to register
shall be pro rata among all MFI Shareholders; provided, however, that if any MFI
Shareholder does not participate to the full extent of its pro rata share, then
the participating MFI Shareholders shall have the right to register that amount
of additional shares. The Base Shares must include the shares contained in the
Tax Audit Escrow Fund (as defined in the Merger Agreement), which must also be
the first shares of the Base Shares registered and sold hereunder.
3. PIGGYBACK REGISTRATION.
If the Company at any time proposes for any reason to register
(whether for itself or others) any of its securities under the Securities Act
(other than on Form S-4 or Form S-8 promulgated under the Securities Act or any
successor forms thereto) other than pursuant to Section 2 hereof, it shall
promptly give written notice to the Shareholders of its intention to so register
such shares and, upon the written request, delivered to the Company within 15
Business Days after the date of such notice by the Company, of the Shareholders
to include in such registration Registrable Shares (which request shall specify
the number of Registrable Shares proposed to be included in such registration),
the Company shall use its reasonable best efforts to cause all such Registrable
Shares to be included in such registration on the same terms and conditions as
the securities otherwise being sold in such registration; provided, however,
that if the managing underwriter advises the Company that the inclusion of any
or all Registrable Shares and other securities requested to be included in such
registration would materially interfere with the successful marketing (including
pricing) of the Primary Shares or other securities proposed to be registered by
the Company, then the number of Primary Shares, Registrable Shares, Other
Securities and other securities proposed to be included in such registration
shall be included in the following order:
(a) FIRST, in the case of a registration proposed by the Company for
its own account (including by operation of Section 2(c)(iii)), all securities
proposed by the Company to be sold for its own account, or in the case of any
securities initially proposed to be registered by the Company for the accounts
of other Persons pursuant to the exercise of demand registration rights granted
pursuant to an applicable registration rights agreement between the Company and
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such other Person, the securities requested to be registered by such Person but
only in such amount and to the extent required by such agreement;
(b) SECOND, such Registrable Shares requested to be included in such
registration pursuant to this Agreement and any securities required to be
included in such registration by other Persons who have incidental registration
rights, on a pro rata basis with respect to each type of security.
4. REGISTRATIONS ON FORM S-3.
(a) Anything contained in Section 2 to the contrary notwithstanding,
at such time as the Company shall have qualified for the use of Form S-3
promulgated under the Securities Act or any successor form thereto, each
Shareholder (acting alone or with other Shareholders) shall have the right to
request in writing registration of Registrable Shares on Form S-3 or such
successor form, which request or requests shall (i) specify the number of
Registrable Shares intended to be sold or disposed of and the holders thereof,
(ii) state the intended method of disposition of such Registrable Shares and
(iii) relate to Registrable Shares having an anticipated aggregate gross
offering price (before underwriting discounts and commissions) of at least
$5,000,000, and upon receipt of any such request, the Company shall use its
reasonable best efforts promptly to effect the registration under the Securities
Act of the Registrable Shares so requested to be registered; provided that the
Company shall not be obligated to effect more than two registrations under the
Securities Act pursuant to this Section 4(a) in any twelve month period.
(b) Promptly after receiving such request pursuant to Section 4(a)
above, the Company shall provide written notice thereof to all Shareholders
(other than the Shareholder(s) that made the request pursuant to Section 4(a)
above). Any Shareholder may, within 15 Business Days of the date of the notice
from the Company, give written notice to the Company that such Shareholder
wishes to participate in the proposed registration and shall specify the number
of Registrable Shares such Shareholder desires to include in such registration.
(c) The provisions of Section 2(c) are incorporated into this
Section 4 by reference, with each reference to Section 2 (or any subsection or
clause thereof) being a reference to this Section 4 (or the corresponding
subsection or clause hereof).
5. HOLDBACK AGREEMENT.
(a) If the Company at any time shall register its securities under
the Securities Act for sale to the public pursuant to an underwritten offering
(excluding a registration initiated pursuant to Section 4), to the extent the
following restrictions are legally permitted, the Shareholders shall not sell
publicly, make any short sale of, grant any option for the purchase of, or
otherwise dispose publicly of, any securities of the Company similar to those
being registered (other than securities included in such registration) without
the prior written consent of the Company, for a period designated by the Company
in writing to the Shareholders, which period shall not begin earlier than 10
days prior to the effectiveness of the Registration Statement pursuant to which
such public offering shall be made and shall not last more than 90 days after
the closing of the sale of securities pursuant to such Registration Statement.
The Company shall
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obtain the agreement of any Person permitted to sell securities in a
registration to be bound by and to comply with this Section 5 with respect to
such registration as if such Person was a Shareholder hereunder. The restriction
contained in this paragraph may be enforced by the entry of stop transfer
instructions with the Company's transfer agent.
(b) If the Company at any time pursuant to Section 2 of this
Agreement shall register under the Securities Act Registrable Shares held by
Shareholders for sale to the public pursuant to an underwritten offering, the
Company shall not, without the prior written consent of a Majority of
Shareholders, effect any public sale or distribution of securities similar to
those being registered, or any securities convertible into or exercisable or
exchangeable for such securities (other than issuances pursuant to compensatory
plans, issuances made in connection with acquisitions, issuances the Company is
obligated to make pursuant to commitments made prior to such holdback period or
securities included in such registration), for such period as shall be
determined by the managing underwriters, which period shall not begin more than
10 days prior to the effectiveness of the Registration Statement pursuant to
which such public offering shall be made and shall not last more than 60 days
after the closing of the sale of shares pursuant to such Registration Statement.
6. PREPARATION AND FILING.
(a) If and whenever the Company is under an obligation pursuant to
the provisions of this Agreement to use its reasonable best efforts to effect
the registration of, and keep effective a Registration Statement for, any
Registrable Shares, the Company shall, as expeditiously as practicable:
(i) use its reasonable best efforts to cause a Registration
Statement that registers such Registrable Shares to become and remain
effective for a period of 90 days (extended for such period of time as
the Shareholders are required to discontinue disposition of Registrable
Shares pursuant to Section 6(b) below) or until all of such Registrable
Shares have been disposed of (if earlier);
(ii) furnish, at least five Business Days before filing a
Registration Statement that relates to the registration of such
Registrable Shares, a Prospectus relating thereto or any amendments or
supplements relating to such a Registration Statement or Prospectus, to
one counsel (the "Shareholders' Counsel") selected by a Majority of
Registering Shareholders, copies of all such documents proposed to be
filed (it being understood that such five business day period need not
apply to successive drafts of the same document proposed to be filed so
long as such successive drafts are supplied to the Shareholders'
Counsel in advance of the proposed filing by a period of time that is
customary and reasonable under the circumstances);
(iii) notify the Shareholders whose Registrable Shares are
included therein of the effectiveness of such Registration Statement
and prepare and promptly file with the Commission such amendments and
supplements to such Registration Statement and the Prospectus used in
connection therewith as may be necessary to (A) keep such Registration
Statement effective for at least a period of 90 days (extended for such
period of time as Shareholders are required to discontinue disposition
of Registrable Shares
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pursuant to Section 6(b) below) or until all of such Registrable Shares
have been disposed of (if earlier), (B) correct any statements or
omissions if any event with respect to the Company shall have occurred
as a result of which any such Registration Statement or Prospectus as
then in effect would include an untrue statement of material fact or
omit to state any material fact necessary to make the statements
therein not misleading, and (C) comply with the provisions of the
Securities Act with respect to the sale or other disposition of such
Registrable Shares;
(iv) notify in writing the Shareholders' Counsel, and the
Shareholders whose Registrable Shares may be included in such
Registration Statement, promptly of (A) the receipt by the Company of
any notification with respect to any comments by the Commission with
respect to such Registration Statement or Prospectus or any amendment
or supplement thereto or any request by the Commission for the amending
or supplementing thereof or for additional information with respect
thereto, (B) the receipt by the Company of any notification or written
information with respect to the issuance or threatened issuance by the
Commission of any stop order suspending the effectiveness of such
Registration Statement or Prospectus or any amendment or supplement
thereto or the initiation or threatening of any proceeding for that
purpose (and the Company shall use its reasonable best efforts to
prevent the issuance thereof or, if issued, to obtain its withdrawal)
and (C) the receipt by the Company of any notification with respect to
the suspension of the qualification of such Registrable Shares for sale
in any jurisdiction or the initiation or threatening of any proceeding
for such purposes;
(v) use its reasonable best efforts to register or qualify such
Registrable Shares under such other securities or blue sky laws of such
domestic jurisdictions as the Shareholders reasonably request and do
any and all other acts and things which may be reasonably necessary or
advisable to enable the Shareholders to consummate the disposition in
such jurisdictions of the Registrable Shares owned by the Shareholders;
provided, however, that the Company will not be required to qualify
generally to do business, subject itself to general taxation or consent
to general service of process in any jurisdiction where it would not
otherwise be required to do so but for this clause (v) or to provide
any material undertaking or make any changes in its By-laws or
Certificate of Incorporation which the Board determines to be contrary
to the best interests of the Company;
(vi) furnish to the Shareholders holding such Registrable Shares
such number of copies of a Prospectus, including a preliminary
Prospectus, in conformity with the requirements of the Securities Act,
and such other documents as such Shareholders may legally require and
may reasonably request in order to facilitate the public sale or other
disposition of such Registrable Shares;
(vii) use its reasonable best efforts to cause such Registrable
Shares to be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the business
and operations of the Company to enable the Shareholders holding such
Registrable Shares to consummate the disposition of such Registrable
Shares;
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(viii) notify the Shareholders holding such Registrable Shares
on a timely basis at any time when a Prospectus relating to such
Registrable Shares is required to be delivered under the Securities Act
within the appropriate period mentioned in clause (i) of this Section
6(a), of the happening of any event as a result of which the Prospectus
included in such Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and prepare and furnish to such Shareholders a reasonable
number of copies of, and file with the Commission, a supplement to or
an amendment of such Prospectus as may be necessary so that, as
thereafter delivered to the offerees of such shares, such Prospectus
shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading;
(ix) subject to the execution of confidentiality agreements in
form and substance satisfactory to the Company, make available upon
reasonable notice and during normal business hours, for inspection by
the Shareholders holding Registrable Shares requested to be included in
such registration, any underwriter participating in any disposition
pursuant to such Registration Statement and any attorney, accountant or
other agent retained by the Shareholders or underwriter (collectively,
the "Inspectors"), all pertinent financial and other records, pertinent
corporate documents and properties of the Company (collectively, the
"Records"), and cause the Company's officers, directors and employees
to supply all information (together with the Records, the
"Information") reasonably requested by any such Inspector, in each case
as shall be reasonably necessary to enable them to exercise their due
diligence responsibility in connection with such Registration
Statement; provided, however, that any of the Information that the
Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, shall not be disclosed by
the Inspectors unless (A) the disclosure of such Information is
necessary to avoid or correct a misstatement or omission in the
Registration Statement or Prospectus, (B) the release of such
Information is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction or, upon the written advice of counsel,
is otherwise required by law, or (C) such Information has been made
generally available to the public, and the Shareholders agree that they
will, upon learning that disclosure of such Information is sought in a
court of competent jurisdiction, give notice to the Company and allow
the Company, at the Company's expense, to undertake appropriate action
to prevent disclosure of the Information deemed confidential;
(x) use its reasonable best efforts to obtain from its
independent certified public accountants "cold comfort" letters in
customary form and at customary times and covering matters of the type
customarily covered by cold comfort letters to the extent such a letter
may be obtained under then-prevailing guidelines applicable to
independent certified public accountants;
(xi) use its reasonable best efforts to obtain from its counsel
an opinion or opinions in customary form naming the Shareholders as
additional addressees or parties who may rely thereon;
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(xii) provide a transfer agent and registrar (which may be the
same entity and which may be the Company) for such Registrable Shares;
(xiii) issue to any underwriter to which the Shareholders
holding such Registrable Shares may sell shares in such offering
certificates evidencing such Registrable Shares;
(xiv) list such Registrable Shares on any national securities
exchange on which any shares of the Common Stock are listed or, if the
Common Stock is not listed on a national securities exchange, use its
reasonable best efforts to qualify such Registrable Shares for
inclusion on the Nasdaq Stock Market;
(xv) otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission and make
available to its securityholders, as soon as reasonably practicable,
earnings statements (which need not be audited) covering a period of 12
months beginning within three months after the effective date of the
Registration Statement, which earnings statements shall satisfy the
provisions of Section 1 l(a) of the Securities Act; and
(xvi) use its reasonable best efforts to take all other steps
necessary to effect the registration of, and maintain an effective
Registration Statement with respect to, such Registrable Shares
contemplated hereby.
(b) Each holder of the Registrable Shares, upon receipt of any
notice from the Company of any event of the kind described in Section 6(a)(viii)
or Section 7 hereof, shall forthwith discontinue disposition of the Registrable
Shares pursuant to the Registration Statement covering such Registrable Shares
until such holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 6(a)(viii) hereof, and, if so directed by the
Company, such holder shall deliver to the Company all copies, other than
permanent file copies then in such holder's possession, of the most recent
Prospectus covering such Registrable Shares at the time of receipt of such
notice.
7. SUSPENSION.
Anything contained in this Agreement to the contrary
notwithstanding, the Company may, by notice in writing to each holder of
Registrable Shares to which a Prospectus relates, require such holder to
suspend, for up to 90 days (the "Suspension Period"), the use of any Prospectus
included in a Registration Statement filed under Section 2, 3 or 4 hereof if a
Material Transaction exists that would require an amendment to such Registration
Statement or supplement to such Prospectus (including any such amendment or
supplement made through incorporation by reference to a report filed under
Section 13 of the Exchange Act). The Company may (but shall not be obligated to)
withdraw the effectiveness of any Registration Statement subject to this
provision.
8. EXPENSES.
All expenses (other than underwriting discounts and
commissions relating to the Registrable Shares, as provided in the last sentence
of this Section 8) incurred by the Company
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in complying with Section 6, including, without limitation, all registration and
filing fees (including all expenses incident to filings with the National
Association of Securities Dealers, Inc.), fees and expenses of complying with
securities and blue sky laws, printing expenses, fees and expenses of the
Company's counsel and accountants and fees and expenses of the Shareholders'
Counsel, shall be paid by the Company; provided, however, that all underwriting
discounts and selling commissions applicable to the Registrable Shares and Other
Shares shall be borne by the holders selling such Registrable Shares and Other
Shares, in proportion to the number of Registrable Shares and Other Shares sold
by each such holder.
9. INDEMNIFICATION.
(a) In connection with any registration of any Registrable Shares
under the Securities Act pursuant to this Agreement, the Company shall indemnify
and hold harmless, to the fullest extent permitted by law, each holder of
Registrable Shares, each underwriter, broker or any other Person acting on
behalf of the holders of Registrable Shares and each other Person, if any, who
controls any of the foregoing Persons within the meaning of the Securities Act
(each such indemnified Person being referred to herein as an "Indemnified
Person") against any losses, claims, damages or liabilities, joint or several
(or actions in respect thereof), to which any of the foregoing Persons may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or allegedly untrue statement of a material
fact contained in or incorporated by reference in the Registration Statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary Prospectus or final Prospectus contained therein or otherwise
filed with the Commission, any amendment or supplement thereto or any document
incident to registration or qualification of any Registrable Shares, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or, with respect to any Prospectus, necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or any violation by the Company of the Securities Act or state
securities or blue sky laws applicable to the Company and relating to action or
inaction required of the Company in connection with such registration or
qualification under such state securities or blue sky laws; and shall promptly
reimburse the Indemnified Persons for any legal or other expenses reasonably
incurred by any of them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company
shall not be liable in any such case to any such Indemnified Person to the
extent that any such loss, claim, damage, liability or action (including any
legal or other expenses incurred) arises out of or is based upon an untrue
statement or allegedly untrue statement or omission or alleged omission made in
said Registration Statement, preliminary Prospectus, final Prospectus,
amendment, supplement or document incident to registration or qualification of
any Registrable Shares in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Indemnified Person
specifically for use in the preparation thereof; provided further, however, that
the foregoing indemnity agreement is subject to the condition that, insofar as
it relates to any untrue statement, allegedly untrue statement, omission or
alleged omission made in any preliminary Prospectus but eliminated or remedied
in the final
12
Prospectus (filed pursuant to Rule 424 of the Securities Act), such indemnity
agreement shall not inure to the benefit of any Indemnified Person from whom the
Person asserting any loss, claim, damage, liability or expense purchased the
Restricted Shares which are the subject thereof, if a copy of such final
Prospectus had been made available to such Indemnified Person and such final
Prospectus was not delivered to such Person with or prior to the written
confirmation of the sale of such Registrable Shares to such Person.
(b) In connection with any registration of Registrable Shares under
the Securities Act pursuant to this Agreement, each holder of Registrable Shares
being registered shall, severally and not jointly, to the fullest extent
permitted by law, indemnify and hold harmless (in the same manner and to the
same extent as set forth in Section 9(a) above) the Company, each director of
the Company, each officer of the Company who shall have signed such Registration
Statement, each agent, underwriter, broker or other Person acting on behalf of
the Company, each other holder of Registrable Shares or Other Shares and each
Person who controls any of the foregoing Persons within the meaning of the
Securities Act with respect to any statement or omission from such Registration
Statement, any preliminary Prospectus or final Prospectus contained therein or
otherwise filed with the Commission, any amendment or supplement thereto or any
document incident to registration or qualification of any Registrable Shares, if
such statement or omission was made in reliance upon and in conformity with
written information furnished to the Company or such underwriter by or on behalf
of such holder specifically for use in connection with the preparation of such
Registration Statement, preliminary Prospectus, final Prospectus, amendment,
supplement or document; provided, however, that the maximum amount of liability
in respect of such indemnification shall be limited, in the case of each holder
of Registrable Shares, to an amount equal to the net proceeds actually received
by such holder from the sale of Registrable Shares effected pursuant to such
registration.
(c) Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in Section 9(a) or (b),
such indemnified party will, if a claim in respect thereof is made against an
indemnifying party, give written notice to the latter of the commencement of
such action; provided, however, that the indemnified party's failure to give
such notice shall not release, relieve or in any way affect the indemnifying
party's obligation hereunder to indemnify the indemnified party unless and only
to the extent that the rights of the indemnifying party are prejudiced thereby.
In case any such action is brought against an indemnified party, the
indemnifying party will be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its selection so to assume the defense thereof, the
indemnifying party shall not be responsible for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof; provided, however, that if any indemnified party shall have reasonably
concluded (based on the written advice of counsel) that there may be one or more
legal or equitable defenses available to such indemnified party which are
additional to or conflict with those available to the indemnifying party, or
that such claim or litigation involves or could have an effect upon matters
beyond the scope of the indemnity agreement provided in this Section 9, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party and such indemnifying party shall reimburse
such indemnified party and any Person controlling such indemnified party for
that portion of the fees and expenses reasonably incurred by counsel retained by
the indemnified party which is reasonably related to the matters covered by the
indemnity agreement provided in this Section 9.
13
(d) If the indemnification provided for in this Section 9 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, claim, damage, liability or action referred to herein
(other than as a result of the applicability of the two provisos in Section
9(a)), then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amounts paid or payable by such
indemnified party as a result of such loss, claim, damage, liability or action
in such proportion as is appropriate to reflect the relative fault of the
indenmifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions which resulted in such loss, claim,
damage, liability or action as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
10. UNDERWRITING AGREEMENT.
(a) Notwithstanding the provisions of Sections 5, 6, 8 and 9, to the
extent that the Company and at least the Majority of Registering Shareholders
shall enter into an underwriting or similar agreement that contains provisions
which conflict with any provision of any such Sections, the provisions contained
in such agreement shall control with respect to such underwritten offering.
(b) If any registration pursuant to Section 2 is requested to be an
underwritten offering, the Company shall negotiate in good faith to enter into a
reasonable and customary underwriting agreement with the underwriters thereof.
The Company shall be entitled to receive indemnities from lead institutions,
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, to the same extent as provided
above with respect to information so furnished in writing by such Persons
specifically for inclusion in any Prospectus or Registration Statement and to
the extent customarily given their role in such distribution.
(c) No Shareholder may participate in any registration hereunder
that is underwritten unless such Shareholder agrees to (i) sell such
Shareholder's Registrable Shares proposed to be included therein on the basis
provided in any underwriting arrangements approved by the Company and the
Majority of Registering Shareholders (which approval shall not be unreasonably
withheld by such Shareholders) and (ii) as expeditiously as possible, notify the
Company of the occurrence of any event concerning such Shareholder as a result
of which the Prospectus relating to such registration contains an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
11. NOMINEES FOR BENEFICIAL OWNERS.
In the event that any Registrable Shares are held by a nominee
for the beneficial owner thereof, the beneficial owner thereof may, at its
election by written notice to the Company effective upon receipt by the Company,
be treated as a Shareholder for purposes of any request
14
or other action by any Shareholder pursuant to this Agreement or any
determination of any number or percentage of shares of Registrable Shares held
by any Shareholder contemplated by this Agreement. If the beneficial owner of
any Registrable Shares so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Shares. Prior to receipt by the Company of written notice contemplated hereby,
any action taken by any nominee shall be binding upon any such beneficial owner.
12. INFORMATION BY HOLDER.
The Shareholders shall furnish to the Company such written
information regarding the Shareholders and the distribution proposed by the
Shareholders as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement.
13. EXCHANGE ACT COMPLIANCE.
From the Registration Date or such earlier date as a
Registration Statement filed by the Company pursuant to the Exchange Act
relating to any class of the Company's securities shall have become effective,
the Company shall comply with all of the reporting requirements of the Exchange
Act applicable to it and shall comply with all other public information
reporting requirements of the Commission which are conditions to the
availability of Rule 144 for the sale of the Common Stock. The Company shall
cooperate with the Shareholders in supplying such information as may be
necessary for the Shareholders to complete and file any information reporting
forms presently or hereafter required by the Commission as a condition to the
availability of Rule 144.
14. MERGERS, Etc.
The Company shall not, directly or indirectly, enter into any
merger, consolidation or reorganization in which the Company shall not be the
surviving corporation unless the surviving corporation shall, prior to such
merger, consolidation or reorganization, agree in writing to assume the
obligations of the Company under this Agreement, and for that purpose references
hereunder to "Registrable Shares" shall be deemed to include the shares of
common stock, if any, that the Shareholders would be entitled to receive in
exchange for Common Stock under any such merger, consolidation or
reorganization; provided, however, that, to the extent the Shareholders receive
securities that are by their terms convertible into shares of common stock of
the issuer thereof, then only such shares of common stock as are issued or
issuable upon conversion of said convertible securities shall be included within
the definition of "Registrable Securities."
15. NEW CERTIFICATES.
As expeditiously as possible after the effectiveness of any
Registration Statement filed pursuant to this Agreement, the Company will
deliver in exchange for any legended certificate evidencing Restricted Shares so
registered, new stock certificates not beating any restrictive legends, provided
that in the event less than all of the Restricted Shares evidenced by such
legended certificate are registered, the holder thereof agrees that a new
certificate evidencing such unregistered shares will be issued beating the
appropriate restrictive legend.
15
16. NO CONFLICT OF RIGHTS; SELECTION OF UNDERWRITER.
The Company shall not, at any time after the date hereof,
grant any registration rights that conflict with, or have any priority over, the
registration rights granted hereby. In any Public Offering, the managing
underwriter shall be a nationally recognized investment banking xxxx chosen by
the Board.
17. TERMINATION.
This Agreement shall terminate and be of no further force or
effect when there shall no longer be any Registrable Shares outstanding.
18. MISCELLANEOUS.
(a) Successors and Assigns. This Agreement shall bind and inure to
the benefit of the Company and the Shareholders and, subject to Section 18(b),
the respective successors and assigns of the Company and the Shareholders.
Except as otherwise expressly provided in Sections 2, 3 and 5, this Agreement is
not intended to create any third party beneficiaries.
(b) Assignment. Each Shareholder may assign its rights hereunder to
any purchaser or transferee of Registrable Shares; provided, however, that such
purchaser or transferee shall, as a condition to the effectiveness of such
assignment, be required to execute a counterpart to this Agreement agreeing to
be treated as an Shareholder, whereupon such purchaser or transferee shall have
the benefits of and shall be subject to the restrictions contained in this
Agreement as if such purchaser or transferee was originally included in the
definition of a Shareholder and had originally been a party hereto. For purposes
of this Agreement, any trust, charitable foundation, family partnership or
similar entity that is a transferee of Xx. Xxxxxx or Xx. Xxxxxxxxx shall be
considered a Shareholder under this Agreement provided they counterpart of this
Agreement as contemplated by the immediately preceding sentence.
(c) Severability. It is the desire and intent of the parties hereto
that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. Notwithstanding the foregoing, if such provision could be
more narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
(d) Entire Agreement. This Agreement and the other writings referred
to herein or delivered pursuant hereto contain the entire agreement among the
parties with respect to the subject matter hereof and thereof and supersede all
prior and contemporaneous arrangements or understandings with respect hereto and
thereto.
16
(e) Notices. All communications hereunder to any party shall be
deemed to be sufficient if contained in a written instrument delivered in person
or sent by telecopy, nationally-recognized overnight courier guaranteeing next
day delivery or first class registered or certified mail, return receipt
requested, postage prepaid, addressed to such party at its address below or such
other address as such party may hereafter designate in writing:
if to the Company, to:
Guitar Center, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxx Xxxxx, XX 00000
Attention: Chief Executive Officer
Telecopier: (000) 000-0000;
with copies to:
Guitar Center, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Telecopier: (000) 000-0000
and to:
Xxxxxx & Xxxxxxx
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telecopier: (000) 000-0000
and if to any Shareholder, to such Shareholder at the address indicated on the
signature pages hereto.
All such notices, requests, consents and other communications
shall be deemed to have been given and received (i) in the case of personal
delivery or delivery by telecopy, on the date of such delivery, (ii) in the case
of dispatch by nationally-recognized overnight courier, on the next Business Day
following such dispatch and (iii) in the case of mailing, on the fifth Business
Day after the posting thereof.
(f) Modifications; Amendments; Waivers. The terms and provisions of
this Agreement may not be modified or amended, nor may any provision be waived,
except pursuant to a writing signed by the Company and the Majority of
Shareholders; provided, however, that no such modification, amendment or waiver
that would treat any Shareholder in a non-ratable, discriminatory manner shall
be made without the prior written consent of such Shareholder; and provided,
further, that a modification, amendment or waiver to Section 2(d) shall require
only the consent of the Company and the Majority of MFI Shareholders proposing
to participate in a given registration. The failure of any party to enforce any
of the provisions of this Agreement shall in no way be construed as a waiver of
such provisions and shall not affect the fight of such
17
party thereafter to enforce each and every provision of this Agreement in
accordance with its terms. The Shareholders, to the fullest extent permitted by
applicable laws, release the members of the Board from any and all claims for
breach of fiduciary duty arising out of the application of this Section 18(1).
(g) Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
(h) Headings. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be a part of this Agreement.
(i) Governing Law. This agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without giving effect to
any choice of law or conflicting provision or rule that would cause the laws of
any jurisdiction other than the State of Delaware to be applied. In furtherance
of the foregoing, the internal laws of the State of Delaware will control the
interpretation and construction of this agreement, even if under such
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
(j) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(k) Nouns and Pronouns. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice-versa.
(l) Construction. Where specific language is used to clarify by
example a general statement contained herein, such specific language shall not
be deemed to modify, limit or restrict in any manner the construction of the
general statement to which it relates. The language used in this Agreement shall
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction shall be applied against any party.
(m) Approval of Amendment and Restatement. By execution of this
Agreement, the undersigned, constituting all holders of Registrable Securities
under the Original Registration Rights Agreement, hereby approve the amendment
and restatement of that agreement made by this Agreement.
(Signature pages follow)
18
IN WITNESS WHEREOF, the parties hereto have executed this
Amended and Restated Registration Rights Agreement on the date first written
above.
GUITAR CENTER, INC.
By:
------------------------------------
Xxxxx Xxxxxx
Co-Chief Executive Officer
CHASE VENTURE CAPITAL ASSOCIATES,
L.P.
By: Chase Capital Partners
Its General Partner
By:
------------------------------------
A General Partner
Address for Notice:
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Administrative Officer
Telecopy: (000) 000-0000
WESTON PRESIDIO CAPITAL II, L.P.
By: Weston Presidio Capital Management
II, L.P., Its General Partner
By:
------------------------------------
Xxxxxxx X. Xxxxxxx
General Partner
Address for Notice:
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
XXXXX FARGO SMALL BUSINESS INVESTMENT
COMPANY, INC.
By:
------------------------------------
Xxxxxx X. Xxxxx
Managing Director
Address for Notice:
Norwest Equity Partners
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
----------------------------------------
Xxxxx Xxxxxx
Address for Notice:
--------------------------
--------------------------
Telecopy:
-----------------
----------------------------------------
Xxxxx Xxxxxxxxx
Address for Notice:
--------------------------
--------------------------
Telecopy:
-------------------------------
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
THE MFI STOCKHOLDERS
AMAZING GRACE FOUNDATION
By:
------------------------------------
Xxxxxx X. Xxxxxxx
Trustee
By:
------------------------------------
XxXxxx X. Xxxxxxx
Trustee
THE EMMANUEL FOUNDATION
By:
------------------------------------
Xxxxx X. Xxxxxxx
Trustee
By:
------------------------------------
Xxxxxxxx Xxxxxxx
Trustee
MIDAS TOUCH INVESTMENTS TRUST
By:
------------------------------------
Xxxxxx X. Xxxxxxx
Trustee
By:
------------------------------------
XxXxxx X. Xxxxxxx
Trustee
STERLING INVESTMENTS TRUST
By:
------------------------------------
Xxxxx X. Xxxxxxx
Trustee
By:
------------------------------------
Xxxxxxxx Xxxxxxx
Trustee
SYRINGA INVESTMENTS TRUST
By:
------------------------------------
Xxxxxx X. Xxxxxxx
Trustee
By:
------------------------------------
Xxxxxx X. Xxxxxxx
Trustee
EIGER MOUNTAIN REAL ESTATE TRUST
By:
------------------------------------
Xxxxxx X. Xxxxxxx
Trustee
By:
------------------------------------
XxXxxx X. Xxxxxxx
Trustee
PROMISE LAND REAL ESTATE DEVELOPMENT TRUST
By:
------------------------------------
Xxxxx X. Xxxxxxx
Trustee
By:
------------------------------------
Xxxxxxx Xxxxxxx
Trustee
MUSICIAN'S FRIEND TRUST
By:
------------------------------------
Xxxxxx X. Xxxxxxx
Trustee
By:
------------------------------------
XxXxxx X. Xxxxxxx
Trustee
By:
------------------------------------
Xxxxx X. Xxxxxxx
Trustee
