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Exhibit 10.21
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is dated as of March 7, 2002 by
and between GOOD GUYS, INC., a Delaware corporation located at 0000 Xxxxxx Xxx
Xxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000 (the "Company"), and the various purchasers
identified and listed on Schedule 1 attached hereto (each referred to herein as
a "Purchaser", and collectively as the "Purchasers").
SECTION 1.
Sale of Common Stock
Subject to the terms and conditions hereof, the Company will issue and sell to
the Purchasers and the Purchasers will buy from the Company a total of up to
4,090,909 shares of common stock, $.001 par value per share, of the Company (the
"Common Stock" or "Common Shares") for the purchase price of $2.00 per share,
with each Purchaser purchasing the number of shares of Common Stock for the
aggregate purchase price indicated on Schedule 1 attached hereto. The shares of
Common Stock to be issued and sold by the Company and purchased by the
Purchasers pursuant to this Agreement are herein referred to as the "Common
Shares." This Agreement and each Purchaser's obligation hereunder are not
conditioned on the sale of any minimum number of Common Shares.
As an inducement for the Purchasers to purchase the Common Stock, subject to the
terms and conditions hereof, the Company will issue to each Purchaser a warrant
to purchase a number of shares of Common Stock equal to 10% of the whole number
of shares on Common Stock purchased by each Purchaser herein (a "Warrant") at an
exercise price of $3.00 for a term of five years. Each Warrant will be issued in
substantially the form attached hereto as Exhibit A.
The Common Shares will be offered and sold and each Warrant will be issued to
the Purchasers without registration under the Securities Act of 1933, as amended
(the "Securities Act"), in reliance upon the exemption from registration
provided by Section 4(2) of the Securities Act and Regulation D thereunder. The
Company has prepared and delivered to each Purchaser copies of an Offering
Memorandum, dated January 28, 2002 (as it may be amended or supplemented, and
including the exhibits and/or schedules thereto, the "Offering Memorandum").
The Purchasers (and any subsequent transferees) will be entitled to the benefits
of a Registration Rights Agreement, to be dated as of the date hereof (as
attached hereto as Exhibit B, the "Registration Rights Agreement"), by and
between the Company and the Purchasers. Pursuant to the Registration Rights
Agreement, the Company will file with the Securities and Exchange Commission
(the "SEC" or the "Commission") a shelf registration statement on Form S-3
pursuant to Rule 415 under the Securities Act relating to the resale of the
Common Shares and the resale of shares of Common Stock issued upon exercise of
the Warrants ("Warrant Shares") by the Purchasers, and to use its commercially
reasonable best efforts to cause such shelf registration statement to be
declared effective.
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SECTION 2.
Closing; Delivery
2.1. Closing. The closing of the purchase and sale of the Common Shares
hereunder (the "Closing") shall be held at the executive offices of the Company,
or at such other place upon which the Company and the Purchasers shall agree.
The Closing shall occur simultaneously with or immediately after the execution
and delivery of this Agreement by the Purchasers and the Company, or on such
later date as the Company and the Purchasers may agree.
2.2. Delivery. At the Closing, or within a reasonable period of time thereafter,
the Company will deliver to each Purchaser (i) a certificate, registered in the
name of such Purchaser for the number of Common Shares to be purchased by such
Purchaser against payment of the purchase price therefor by wire transfer per
the Company's wiring instructions and (ii) a Warrant. If, at the time of
Closing, the Common Shares are eligible for clearance and settlement through The
Depository Trust Company ("DTC"), then the Company may deliver the Common Shares
to the Purchasers in book-entry form through DTC.
SECTION 3.
Representations and Warranties of the Company
The Company represents and warrants to the Purchasers as follows:
3.1. Organization and Standing; Charter and By-Laws. The Company is a
corporation duly organized and validly existing under, and by virtue of, the
laws of the State of Delaware and is in good standing under such laws. The
Company has requisite power and authority to own and operate its properties and
assets and to carry on its business as presently conducted and as now proposed
to be conducted. The Company is qualified to do business as a foreign
corporation in all jurisdictions where the ownership of its properties and
assets and the conduct of its business requires such qualification, except where
the failure to be so qualified will not have a material adverse effect on the
Company's business as now conducted or as now proposed to be conducted. The
Company has furnished, or as soon as practicable, and in no event later than the
day immediately prior to Closing, will furnish, to each of the Purchasers true
and correct copies of the Company's Certificate of Incorporation, as amended and
as in effect on the date hereof (the "Certificate of Incorporation") and
certified by the Secretary of State of the State of Delaware within the
preceding 10 business days, and the Company's Bylaws, as in effect on the date
hereof (the "Bylaws") certified by the Company's Secretary, and true, complete
and accurate copies of all documents evidencing all classes of securities
convertible into or exchangeable or exercisable for Common Stock and the
material rights of the holders thereof in respect thereto.
3.2. Corporate Power. The Company has all requisite legal and corporate power
and authority to execute and deliver this Agreement and to execute and deliver
the agreements set forth as Exhibits hereto (collectively referred to with this
Agreement as the "Agreements"), and at the Closing to sell and issue the Common
Shares and issue the Warrants and the Warrant Shares as set forth in the
Agreements, and to carry out and perform its obligations under the terms of the
Agreements.
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3.3. Subsidiaries. Other than Good Guys California, Inc., the Company has no
subsidiaries or affiliated companies and does not otherwise own or control,
directly or indirectly, any equity interest in any corporation, association or
business entity.
3.4. Capitalization. As of the date hereof, the authorized capital stock of the
Company consists of 40,000,000 shares of Common Stock and 2,000,000 shares of
Preferred Stock. As of December 31, 2001, there were 23,379,194 shares of Common
Stock issued and outstanding and no shares of Preferred Stock issued and
outstanding and no other shares of capital stock which are issued and
outstanding. As of December 31, 2001, there were options and warrants
outstanding issued by the Company to purchase an aggregate of 3,710,670 and
4,266,723 shares of Common Stock, respectively. All of the outstanding shares of
Common Stock and Preferred Stock are duly authorized, validly issued, fully paid
and nonassessable, and were issued in material compliance with applicable
federal and state securities laws, including exemptions therefrom, and none of
such issuances were made in violation of any pre-emptive or other rights. The
Company has reserved 663,922 shares of its Common Stock for issuance pursuant to
its stock option and stock purchase plans and 409,091 shares of Common Stock for
issuance upon exercise of the Warrants. Except as set forth above, there are no
options, warrants or other rights (including conversion, pre-emptive or other
rights) or agreements outstanding to purchase any of the Company's authorized
and unissued capital stock.
3.5. Authorization. All corporate action on the part of the Company, its
officers, directors and stockholders necessary for the authorization, execution,
delivery and performance of the Agreements by the Company, the authorization,
sale, issuance and delivery of the Common Shares, the authorization, sale,
issuance and delivery of the Warrants and the Warrant Shares and the performance
of all of the Company's obligations under the Agreements has been taken or will
be taken prior to the Closing. The Agreements and Warrants, when executed and
delivered by the Company, shall constitute valid and binding obligations of the
Company, enforceable in accordance with their terms, subject to the laws of
general application relating to bankruptcy, insolvency and the relief of debtors
and rules of law governing specific performance, injunctive relief or other
equitable remedies (the "Enforceability Limitations") and as to rights to
indemnification and contribution, by principles of public policy or federal or
state securities laws relating thereto. The Common Shares and Warrant Shares,
when issued in compliance with the provisions of this Agreement or the Warrant,
as applicable, will be validly issued, and fully paid and nonassessable.
3.6. Reports and Financial Statements. The Company has delivered to the
Purchasers prior to the execution of this Agreement a copy of the Company's
Annual Report for the year ended September 30, 2000, the Company's Transitional
Report on Form 10-K for the transition period from October 1, 2000 to February
28, 2001, the Company's Quarterly Report on Form 10-Q for the quarter ended
November 30, 2001, the definitive proxy statement for the Company's 2001 annual
meeting of stockholders and all Current Reports on Form 8-K filed since February
28, 2001 (as such documents have since the time of their filing been amended or
supplemented, the "SEC Reports"). The SEC Reports (a) complied as
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to form in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and (b) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and unaudited interim
consolidated financial statements (including, in each case, the notes, if any,
thereto) included in the SEC Reports complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be indicated therein or in the notes thereto and except with respect to
unaudited statements as permitted by Form 10-Q of the SEC) and fairly present
(subject, in the case of the unaudited interim financial statements, to normal,
recurring year-end audit adjustments not material in amount or effect and the
absence of footnotes) the consolidated financial position of the Company as at
the respective dates thereof and the consolidated results of its operations and
cash flows for the respective periods then ended.
3.7. Offering Memorandum. The Offering Memorandum (including any exhibits or
schedules thereto), as amended or supplemented, does not contain an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
3.8. Integration. Neither the Company nor its affiliates (as defined in Rule
501(b) under the Securities Act, "Affiliates") has, directly or through any
agent, during the six month period ending on the date of this Agreement, sold,
offered for sale, solicited offers to buy or otherwise negotiated in respect of,
any security (as defined in the Securities Act) in a manner that would cause the
offer and sale of the Common Shares to fail to be entitled to the exemption
afforded by Rule 506 of Regulation D, or under Section 4(2), of the Securities
Act.
3.9. Public Offering. Neither the Company nor its Affiliates has engaged, in
connection with the offering of the Common Shares, the Warrants or the Warrant
Shares (i) in any form of general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act, (ii) in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act, or
(iii) in any action which would violate applicable state securities, or "blue
sky," laws.
3.10. Conformity of Descriptions. The Common Shares conform in all material
respects to the descriptions contained in the Company's filings with the
Securities and Exchange Commission.
3.11. [Reserved]
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3.12. No Material Adverse Changes. Except as disclosed on Schedule 3.12 or in
the SEC Reports filed on Xxxxx at least five (5) business days prior to the date
hereof, since February 28, 2001, there has been no (i) material adverse change
in the business, results of operations, assets, cash flows (taking into
consideration the seasonality of the Company's business) or financial condition
of the Company, taken as a whole, whether or not arising in the ordinary course
of business (a "Material Adverse Effect"), or (ii) dividend or distribution of
any kind declared, paid or made by the Company on its capital stock.
3.13. No Conflicts. The execution, delivery and performance of the Agreements
and the Warrants and the issuance and delivery of the Common Shares, Warrants
and Warrant Shares by the Company and the consummation by the Company of the
transactions contemplated in the Agreements do not and will not (i) conflict
with or violate any provision of the Certificate of Incorporation, Bylaws or
other organizational documents of the Company, (ii) conflict with, or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or give to other Persons any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture, patent, license or
instrument (evidencing a Company debt or otherwise) to which the Company is a
party or by which any property or asset of the Company is bound or affected or
(iii) result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Company is subject (including federal and state securities laws and
regulations and the rules and regulations of the principal market, system or
exchange on which the Common Stock is traded, quoted or listed), applicable to
the Company, or by which any material property or asset of the Company is bound
or affected.
3.14. Consents and Approvals. The Company is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority, regulatory or self regulatory agency, or other Person in
connection with the execution, delivery and performance by the Company of the
Agreement or the Registration Rights Agreement, other than (i) the filing of a
registration statement with the Commission, which shall be filed in accordance
with and in the time periods set forth in the Registration Rights Agreement,
(ii)
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the application(s) or any letter(s) acceptable to the Nasdaq National Market
("Nasdaq") for the listing or quoting of the Common Shares on Nasdaq (and with
any other national securities exchange or market on which the Common Stock is
then traded, listed or quoted), and the notice required by Nasdaq Rule 4310
(iii) any filings, notices or registrations under applicable state securities
laws (collectively, the "Required Approvals"), (iv) the general disclosure
requirements of the Exchange Act, including, without limitation, the disclosure
requirements of Item 701 of the Commission's Regulation S-K, and (v) filing a
Form D with the Commission.
3.15. Litigation; Proceedings. There is no action, suit, notice of violation,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its respective assets or
properties before or by any court, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) or any
arbitrator, which (i) adversely affects or challenges the legality, validity or
enforceability of the Agreement, (ii) could reasonably be expected to,
individually or in the aggregate, have or result in a Material Adverse Effect,
or (iii) if adversely decided, could reasonably be expected to have a material
adverse effect on the issuance of the Common Shares, or the consummation of the
transactions contemplated by the Agreement.
3.16. No Default or Violation. Except for those that would not, individually or
in the aggregate, result in a Material Adverse Effect, the Company is not in (i)
default under or in violation of any indenture, loan or other credit agreement
or any other agreement or instrument to which it is a party or by which it or
any of its assets or properties is bound, or (ii) violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court, arbitrator or governmental authority applicable to it. The Company is not
in default under, or in violation of, its certificate of incorporation, bylaws
or other organizational documents, or in default under, or in violation of, any
of the listing or quotation requirements of Nasdaq, as in effect on the date
hereof, and the Company is not aware of any facts which would reasonably lead to
delisting or suspension of the Common Stock by Nasdaq in the foreseeable future.
The business of the Company is not being conducted, and shall not be conducted,
in violation of any law, statute, ordinance, rule or regulation of any
governmental authority, except where such violations have not resulted or are
not reasonably likely to result, individually or in the aggregate, in a Material
Adverse Effect. The Company is not in breach of any agreement where such breach,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect.
3.17. [Reserved]
3.18. Broker's Fees. No fees or commissions or similar payments with respect to
the transactions contemplated by the Agreements have been paid or will be
payable by the Company to any broker, financial advisor, finder, investment
banker or bank, other than fees payable to SunTrust Xxxxxxxx Xxxxxxxx Capital
Markets, as placement agent. The Purchasers shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section 3.12 that may be due in
connection with the transactions contemplated by the Agreements.
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3.19. Listing and Maintenance Requirements Compliance. The principal market on
which the Common Stock is currently traded is Nasdaq. Except as disclosed on
Schedule 3.19, the Company has not in the three (3) years preceding the date
hereof received notice (written or oral) from Nasdaq (or any stock exchange,
market or trading facility on which the Common Stock is or has been traded or
listed (or on which it has been quoted)) to the effect that the Company is not
in compliance with the listing or maintenance requirements of any such market,
exchange or trading facility. After giving effect to the transactions
contemplated by the Agreements, the Company is and will be in compliance with
all such maintenance requirements.
3.20. Intellectual Property Rights. The Company owns or possesses adequate
rights or licenses to use all trademarks, trademark applications, trade names
and service marks, whether or not registered, and all patents, patent
applications, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and intellectual property rights (collectively,
"Intellectual Property Rights") which are necessary for use in connection with
its business as now conducted and as described in the SEC Reports. To the
knowledge of the Company, it has not infringed and is not infringing on any of
the Intellectual Property Rights of any Person and, except as disclosed in the
Company's SEC Reports or the Offering Memorandum, there is no claim, action or
proceeding which has been made or brought against, or to the Company's
knowledge, is being made, brought or threatened against, the Company regarding
the infringement of any of the Intellectual Property Rights. The Company has
taken reasonable security measures to protect the secrecy, confidentiality and
value of all of its Intellectual Property Rights.
3.21. Registration Rights; Rights of Participation. Except as described on
Schedule 3.21, (i) the Company has not granted or agreed to grant to any Person
any rights (including "piggy-back" registration rights) to have any securities
of the Company registered with the Commission or any other governmental
authority which have not been satisfied and (ii) no Person, including, but not
limited to, current or former stockholders of the Company, underwriters, brokers
or agents, has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Agreements.
3.22. Title. Except as disclosed on Schedule 3.22, the Company has good and
marketable title in fee simple to all real property and personal property owned
by it which is material to the business of the Company, in each case free and
clear of all liens, except for liens that do not materially affect the value of
such property and do not interfere with the use made and proposed to be made of
such property by the Company. Any real property and facilities held under lease
by the Company are held by it under valid, subsisting and enforceable leases,
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and facilities by the Company.
3.23. Permits. The Company possesses all certificates, authorizations, licenses,
easements, consents, approvals, orders permits and approvals necessary to own,
lease and operate its properties and to conduct its business as currently
conducted except where the failure to possess such permits could not reasonably
be expected, individually or in the aggregate, to have a Material Adverse Effect
("Material Permits"), and there is no claim, action or proceeding pending, or,
to the knowledge of the
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Company, threatened relating to the revocation, modification, suspension or
cancellation of any Material Permit. The Company has fulfilled and performed all
of the material obligations with respect to such Permits, and no event or change
in condition has occurred which allows, or after notice or lapse of time would
allow, revocation or termination thereof or results in any other material
impairment of the rights of the holder of such Permit, except for such failures
which would not, individually or in the aggregate, have a Material Adverse
Effect. The Company is not in conflict with, in default under or in violation of
any Material Permit.
3.24. Insurance. The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as management
of the Company believes to be prudent in the business in which the Company is
engaged. The Company has no reason to believe that it will not be able to renew
its existing insurance coverages as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business, at a cost that would not materially and adversely affect the,
condition, financial or otherwise, or the earnings, business or operations of
the Company, taken as a whole.
3.25. Investment Company. The Company is not an "investment company" or a
company "controlled by" an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended, and the rules and regulations
thereunder.
3.26. Stabilization. Neither the Company nor any of its directors, officers or
controlling persons has taken, directly or indirectly, any action designed, or
which might reasonably be expected to cause or result, under the Exchange Act,
in, or which has constituted, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Common Shares.
3.27. Labor. No strike, labor problem, dispute, slowdown, work stoppage or
disturbance with the employees of the Company exists or, to the knowledge of the
Company, is threatened which, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect.
3.28. Stock and Other Plans. Other than as disclosed in the SEC Reports, the
Company does not have any profit sharing, deferred compensation, stock option,
stock purchase, phantom stock or similar plans, including agreements evidencing
rights to purchase securities or to share in the profits of the Company which is
material to the Company, taken as a whole.
3.29. Solvency. The Company is, and immediately after the Closing will be,
Solvent. As used herein, the term "Solvent" means, with respect to the Company
on a particular date, that on such date, (i) the fair market value of the assets
of each of the Company exceeds its liabilities (including, without limitation,
stated liabilities and identified contingent liabilities), (ii) the Company can
pay its debts as they come due, (iii) the fair market value of the Company's
total assets exceeds its total liabilities, including identified contingent
liabilities, by an amount at least equal to the total par value of its common
stock, both immediately
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prior to and after the sale of the Common Shares to the Purchasers, and (iv) the
Company is and will be able to pay its debts (including, without limitation,
stated liabilities and identified contingent liabilities) as such debts mature.
The Company has not taken any steps, and does not currently expect to take any
steps, to seek protection pursuant to any bankruptcy or similar law nor does the
Company have any knowledge or reason to believe that its creditors intend to
initiate involuntary bankruptcy proceedings.
3.30. Environmental. Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect (i) the Company is in
compliance with and not subject to any known liability under applicable
Environmental Laws (as defined below), (ii) the Company has made all filings and
provided all notices required under any applicable Environmental Law, and has,
and is in compliance with, all permits required under any applicable
Environmental Laws and each of them is in full force and effect, (iii) (a) there
is no pending civil, criminal or administrative action, or pending hearing or
suit, (b) the Company has not received any demand, claim, or notice of violation
and (c) to the knowledge of the Company, there is no investigation, proceeding,
notice or demand letter or request for information threatened against the
Company in the case of (a), (b) and (c), under any Environmental Law, (iv) no
lien, charge, encumbrance or restriction has been recorded under any
Environmental Law with respect to any assets, facility or property owned,
operated, leased or controlled by the Company, (v) the Company has not received
notice that it has been identified as a potentially responsible party under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), or any comparable state law, (vi) no property or facility of
the Company is (a) listed or, to the knowledge of the Company, proposed for
listing on the National Priorities List under CERCLA or is (b) listed in the
Comprehensive Environmental Response, Compensation, Liability Information System
List promulgated pursuant to CERCLA, or on any comparable list maintained by any
state or local governmental authority. For purposes of this Agreement,
"Environmental Laws" means all applicable federal, state and local laws or
regulations, codes, orders, decrees, judgments or injunctions issued,
promulgated, approved or entered thereunder, relating to pollution or protection
of public or employee health and safety or the environment, including, without
limitation, laws relating to (i) emissions, discharges, releases or threatened
releases of Hazardous Materials (as defined below) into the environment
(including, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata), (ii) the manufacture, processing, distribution,
use, generation, treatment, storage, disposal, transport or handling of
Hazardous Materials, and (iii) underground and above ground storage tanks and
related piping, and emissions, discharges, releases or threatened releases
therefrom. The term "Hazardous Material" means (a) any "hazardous substance," as
defined in the Comprehensive Environmental Response, the Resource Conservation
and Recovery Act, as amended, (b) any "hazardous waste," as defined by the
Resource Conservation and Recovery Act, as amended, (c) any petroleum or
petroleum product, (d) any polychlorinated biphenyl and (e) any pollutant or
contaminant or hazardous, dangerous or toxic chemical, material, waste or
substance.
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3.31. ERISA. The Company has not incurred any liability for any prohibited
transaction or funding deficiency or any complete or partial withdrawal
liability with respect to any pension, profit sharing or other plan which is
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), to which the Company makes or ever has made a contribution and in
which any employee of the Company is or has ever been a participant, which in
the aggregate would reasonably be expected to have a Material Adverse Effect.
With respect to such plans, the Company is in compliance in all respects with
all applicable provisions of ERISA, except where the failure to so comply would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
3.32. Form Eligibility. The Company is eligible for the filing of a registration
statement on Form S-3 relating to the resale of the Common Shares and the resale
of the Warrant Shares by the Purchasers.
3.33. Reserved.
3.34. Reserved
3.35. Tax Status. The Company has made or filed all federal and state income and
all other tax returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company has set
aside on its books provisions reasonably adequate for the payment of all unpaid
and unreported taxes) and has paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith.
There are no unpaid taxes in any material amount claimed to be due from the
Company by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
SECTION 4.
Covenants of the Company
The Company hereby covenants with the Purchasers as follows:
4.1. Notification of Certain Events. From the date hereof until the Effective
Date, as such term is defined in the Registration Rights Agreement, the Company
will immediately notify each Purchaser, and confirm such notice in writing, of
(i) any filing made by the Company relating to the offering of the Common
Shares, the Warrants and the Warrant Shares with any securities exchange or any
other regulatory body in the United States or any other jurisdiction, and (ii)
any material changes in or affecting the earnings or business affair of the
Company.
4.2. Public Offering. None of the Company or its Affiliates will solicit any
offer to buy or offer to sell the Common Shares by means of any form of general
solicitation or general advertising (as such terms are used in Regulation D
under the Securities Act) in any manner involving a public offering (within the
meaning of Section 4(2) of the Securities Act) prior to the Effective Date.
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4.3. Integration. Neither the Company nor its Affiliates will offer, sell or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in the Securities Act) in a manner that would cause the offer and sale
of the Common Shares, the Warrants and the Warrant Shares to fail to be entitled
to the exemption afforded by Rule 506 of Regulation D, or under Section 4(2), of
the Securities Act.
4.4. Disclosures. The Company shall, immediately following the filing of the
registration statement on Form S-3 pursuant to the Registration Rights
Agreement, (i) issue such press releases and make such filings under the
Exchange Act, including, without limitation, the filing of Form 8-K, which shall
include the information required to be disclosed pursuant to Item 701 of
Regulation S-K, to disclose the sale of the Common Shares and the filing of the
Registration Statement on Form S-3 pursuant to the Registration Rights
Agreement, as the Company, with the assistance of counsel, may deem appropriate,
and (ii) include in the filing of its next Form 10-Q or Form 10-K, as
applicable, appropriate disclosure relating to the sale of the Common Shares and
the filing of such Registration Statement on Form S-3, including, without
limitation, the disclosure required by Item 701 of Regulation S-K.
4.5. DTC Eligibility. The Company will use its commercially reasonable best
efforts in cooperation with the Purchasers to permit the Common Shares to be
eligible for clearance and settlement through DTC.
4.6. [Reserved]
4.7. Reservation of Common Stock. At all times prior to the expiration date of
the Warrants, the Company covenants and agrees to reserve 409,091 shares of
Common Stock for issuance upon exercise of the Warrants, provided this number of
reserved Common Shares shall be reduced by the number of Warrant Shares issued
upon exercise of the Warrants.
SECTION 5.
Representations and Warranties of the Purchasers
Each Purchaser, severally and not jointly, hereby represents and warrants to the
Company with respect to the purchase of the Common Shares by such Purchaser and
issuance of the Warrants to such Purchaser as follows:
5.1. Experience. Such Purchaser has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company so that such Purchaser is capable of evaluating the merits and
risks of its investment in the Company and has the capacity to protect its own
interests.
5.2. Investment Intent. Such Purchaser is acquiring the Common Shares and the
Warrants for investment for its own account, not as a nominee or agent, and not
with the view to, or for resale in connection with, any distribution thereof.
Such Purchaser understands that the Common Shares and Warrants to be purchased
and the Warrant Shares to be issued upon exercise of the Warrants have not been
registered under the Securities Act by reason of the exemption from the
registration provisions of the Securities Act contained in Rule 506 of
Regulation D, and Section 4(2), of the Securities Act, the availability of which
depends upon, among other things, the bona fide nature of the investment intent
and the accuracy of such Purchaser's representations as expressed herein.
5.3. Accredited Investor. Such Purchaser is a "qualified institutional buyer,"
as that term is defined in Rule 144A of the
Page 12
Securities Act, or an "accredited investor," as that term is defined in
Regulation D promulgated pursuant to the Securities Act.
5.4. Rule 144. Such Purchaser acknowledges that the Common Shares, the Warrants
and the Warrant Shares issuable upon exercise of the Warrants must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from such registration is available. Such Purchaser is aware of the
provisions of Rule 144 promulgated under the Securities Act which permit limited
resale of shares purchased in a private placement subject to the satisfaction of
certain conditions, including, among other things, the existence of a public
market for the shares, the availability of certain current public information
about the Company, the resale occurring not less than one year after a party has
purchased and fully paid for the security to be sold, the sale being effected
through a "broker's transaction" or in transaction directly with a "market
maker" and the number of shares being sold during any three-month period not
exceeding specified limitations.
5.5. Reliance. Such Purchaser understands and acknowledges that (i) the Common
Shares, Warrants and Warrant Shares are being offered and sold to such Purchaser
without registration under the Securities Act in a private placement that is
exempt from the registration provisions of the Securities Act under Section 4(2)
of the Securities Act and SEC Regulation D, Rule 506, promulgated thereunder and
(ii) the availability of such exemption depends in part on, and the Company will
rely upon the accuracy and truthfulness of, the representations set forth in
this Section 4 and such Purchaser hereby consents to such reliance.
5.6. Confidential Access to Information. Such Purchaser has had an opportunity
to discuss the Company's business, management and financial affairs with its
management. It has also had an opportunity to ask questions of officers of the
Company, which questions were answered to its satisfaction. Such Purchaser
understands that such discussions, as well as any written information issued by
the Company, were intended to describe certain aspects of the Company's business
and prospects. Pursuant to a confidentiality agreement, as contemplated by the
SEC's Regulation FD, such Purchaser acknowledges that it has been provided
access to material, non-public information and that the Purchaser will keep all
such information confidential except to the extent it becomes public through no
fault of the Purchaser. Further, the Purchaser acknowledges and understands the
fact that the Company is seeking to effect the private placement of the Common
Shares and Warrants is material non-public information and disclosure of such
information or use of such information by the Purchasers or anyone receiving
such information from the Purchasers in connection with the purchase, sale or
trade of the Company's securities (other than use by the Purchasers in acquiring
the Common Shares and the Warrants), or any hedging, derivative or similar
transactions or activities involving the Company's securities, is unlawful and
constitutes a violation of securities laws. Neither such inquiries nor any other
due diligence investigation conducted by such Purchaser or any of its advisors
or representatives shall modify, amend or affect such Purchaser's right to rely
on the Company's representations and warranties contained herein or
representations and warranties of the Company contained in the Agreements. The
Purchaser understands that its investment in the Common Shares, the Warrants and
the Warrant Shares involves a significant degree of risk.
Page 13
5.7. Organization; Authorization. Such Purchaser is a corporation or a limited
duration company or a limited liability company or limited partnership duly
formed, validly existing and in good standing under the laws of the jurisdiction
of its incorporation, organization or formation with the requisite power and
authority, corporate or otherwise, to enter into and to consummate the
transactions contemplated by the Agreements and otherwise to carry out its
obligations under the Agreement. The purchase by such Purchaser of the Common
Shares and the Warrants hereunder has been duly authorized by all necessary
action on the part of such Purchaser. This Agreement when executed and delivered
by such Purchaser will constitute a valid and legally binding obligation of the
Purchaser, enforceable in accordance with its terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
5.8. Brokers or Finders. The Company has not, and will not, incur, directly or
indirectly, as a result of any action taken by such Purchaser, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement.
5.9. Legend. Such Purchaser understands that the certificates evidencing the
Common Shares, will bear the following legends:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES, OR "BLUE SKY," LAWS OF ANY STATE OR OTHER
JURISDICTION. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH
ACT OR OTHER AVAILABLE EXEMPTION UNDER SUCH OR SUCH LAWS."
The certificates shall also bear any additional legends that are required by, or
are appropriate with respect to the rules and regulation of, any state, local,
foreign or other securities authorities. In addition, the Purchasers acknowledge
that each certificate for Common Shares shall bear any additional legend
required by any other applicable state securities or blue sky laws.
The Company's transfer agent and registrar will maintain stop transfer
instructions on record for the Common Shares until it has been notified by the
Company, upon the advice of counsel, that such instructions may be waived. Such
stop transfer instructions will limit the method of sale of the Common Shares,
consistent with Rule 144 or other available exemptions from registration under
the Securities Act. Any transfers other than pursuant to Rule 144 will require
an opinion of counsel reasonably satisfactory to the Company and its counsel
prior to such transfers.
5.10. Governmental Review. Such Purchaser understands that no United States
federal or state agency or any other government or governmental agency or
authority has passed upon or made any recommendation or endorsement of the
Common Shares.
5.11. Residency. Such Purchaser is a resident of the jurisdiction set forth
immediately below such Purchaser's name on Schedule 1 hereto.
Page 14
SECTION 6.
Conditions to Closing of Purchasers
The obligations of the Purchasers to purchase the Common Shares at the Closing
is, at the option of the Purchasers, subject to the fulfillment of the following
conditions:
6.1. Representations and Warranties Correct. The representations and warranties
made by the Company herein shall be true and correct in all material respects as
of the date when made and as of the Closing.
6.2. Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Closing shall have
been performed or complied with in all material respects.
6.3. No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated, endorsed or
threatened or is pending by or before any court or governmental authority of
competent jurisdiction which prohibits or threatens to prohibit the consummation
of any of the transactions contemplated by the Agreements.
6.4. No Suspensions of Trading in Common Stock. The trading in the Common Stock
shall not have been suspended by the Commission or Nasdaq (except for any
suspension of trading of limited duration solely to permit dissemination of
material information regarding the Company).
6.5. Listing of Common Stock. On the date of the Closing or as soon as possible
thereafter the Common Shares and Warrant Shares shall have been listed for
trading or quoted on Nasdaq.
6.6. Adverse Changes. Since the date of the financial statements included in the
Company's Quarterly Report on Form 10-Q, Annual Report on Form 10-K, or latest
Current Report on Form 8-K, whichever is more recent, last filed prior to the
date of this Agreement, no event which has had or could reasonably be expected
to have a Material Adverse Effect shall have occurred which has not been
disclosed in writing to the Purchaser.
6.7. Litigation. No action, proceeding or litigation shall have been instituted
or threatened against the Company which could reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect.
6.8. Change of Control. No Change of Control shall have occurred between the
date hereof and the Closing. As used herein, "Change of Control" means the
occurrence of any of (i) an acquisition after the date hereof by an individual
or legal entity or "group" (as described in Rule 13d-5(b)(1) promulgated under
the Exchange Act), other than the Purchasers or any of their Affiliates, of in
excess of 19.9% of the voting securities of the Company, (ii) a replacement of
more than one-half of the members of the Company's Board of Directors that is
not approved by a majority of those individuals who are members of the Board of
Directors on the date hereof, or their duly elected successors who are directors
immediately prior to such transaction, in one or a series of related
transactions, (iii) the merger of the Company with or into another Person,
unless following such transaction, the holders of the Company's securities
continue to hold at least 51% of such
Page 15
securities following such transaction, (iv) the consolidation or sale of all or
substantially all of the assets of the Company in one or a series of related
transactions or (v) the execution by the Company of an agreement to which the
Company is a party or by which it is bound, providing for any of the events set
forth above in clauses (i), (ii), (iii) or (iv).
6.9. Certificate of Incorporation. The Company shall have delivered to each of
the Purchasers a copy of a certificate evidencing the incorporation and good
standing of the Company in Delaware issued by the Secretary of State of Delaware
as of a date within ten (10) days of the Closing. The Company shall have
delivered to each of the Purchasers, or their representatives, acting on behalf
of all of the Purchasers, a copy of a certificate evidencing the qualification
and good standing of the Company in such other states or jurisdictions where the
Company's ownership or operation of its properties or the conduct of its
business require the Company to be qualified to do business as a foreign
corporation.
6.10. Compliance Certificate. Should the Closing occur as of a date other than
the date of this Agreement, the Company shall have delivered to the Purchaser a
certificate of the Company executed by the Chief Executive Officer of the
Company, dated as of the Closing certifying to the fulfillment of the conditions
specified in Section 6 of this Agreement.
6.11. Secretary's Certificate. The Company shall have delivered to the Purchaser
a certificate of the Company executed by the Secretary of the Company, dated as
of the Closing, certifying (i) resolutions adopted by the Board of Directors of
the Company authorizing the execution of the Agreements, and the transactions
contemplated hereby; (ii) the Certificate of Incorporation and Bylaws of the
Company, each as amended, and copies of the third party consents, approvals and
filings required in connection with the consummation of the transactions
contemplated by the Agreements; and (iii) such other documents relating to the
transactions contemplated by the Agreements.
6.12. Registration Rights Agreement. The Company and the Purchasers shall have
executed, entered into and delivered the Registration Rights Agreement, a form
of which is attached hereto as Exhibit B.
6.13. Opinion of Counsel. At the Closing, the Purchasers shall have received the
opinion of Howard, Rice, Nemerovski, Canady, Xxxx & Xxxxxx, A Professional
Corporation, dated as of Closing, substantially in the form set forth below and
otherwise reasonably satisfactory to the Purchasers and counsel for the
Purchasers, to the effect that:
(a) The Company has been duly incorporated and is validly existing under the
laws of the State of Delaware, with corporate power and authority to own, lease
and operate its assets and properties and conduct its business as currently
conducted and to enter into and perform its obligations under the Agreement, the
Registration Rights Agreement, the Warrant and the other documents and
agreements to be executed by the Company at the Closing in connection therewith
(collectively, the "Operative Documents");
(b) The execution, delivery and performance by the Company of each of the
Operative Documents to which the Company is a party has been duly authorized by
the Company;
Page 16
(c) No consent, waiver, approval, authorization, license, qualification or order
of or filing or registration with, any governmental or regulatory authority is
required for (i) the execution and delivery by the Company of the Agreement and
the Registration Rights Agreement, (ii) the issuance and sale of the Common
Shares and Warrant Shares in accordance with the terms of the other Operative
Documents, (iii) the performance by the Company of its obligations under the
Operative Documents, or (iv) for the consummation of the transactions
contemplated by the Operative Documents; except, such as may be required (a) in
connection with the registration under the Securities Act of the Common Shares
pursuant to the Registration Rights Agreement (including any filing with the
National Association of Securities Dealers, Inc.), or (b) under the "blue sky"
securities laws of any jurisdiction in connection with the purchase and
distribution of the Common Shares;
(d) The execution, delivery and performance by the Company of the Agreement and
the other Operative Documents (in each case assuming due authorization and
execution by each party other than the Company) and the consummation by the
Company of the transactions contemplated thereby and the compliance by the
Company with the terms of the foregoing (including the issuance, sale and
delivery of the Common Shares (other than with respect to the delivery in
book-entry form)), do not violate or constitute or result in a breach or
violation by the Company of (i) any provision of the Certificate of
Incorporation or By-laws of the Company, (ii) any of the terms or provisions of,
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) by the Company under, or give rise to any
right to accelerate the maturity or require the prepayment of any indebtedness
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company under any indenture or
similar material indebtedness agreement known to such counsel or (iii) any
published United States federal, California state or Delaware general
corporation law, statute, rule, or regulation which would ordinarily be expected
to apply to the Transaction, or any order, decree or judgment known to such
counsel to be applicable to the Company, of any court or governmental or
regulatory authority or arbitrator known to such counsel to have jurisdiction
over the Company or any of its properties or assets;
(e) This Agreement, the Registration Rights Agreement and the Warrants have each
been duly authorized, executed and delivered by the Company, and, assuming the
due execution and delivery thereof by the Purchasers, constitute valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms;
(f) When issued to a Purchaser against payment therefor in accordance with the
Agreement and other Operative Documents, each Common Share and Warrant Share,
respectively, will be duly and validly authorized and issued, fully paid and
nonassessable, and the Purchasers, as holders thereof, will not be subject to
personal liability by reason of being such holders;
(g) To the knowledge of such counsel, other than as described in the Offering
Memorandum, no legal, regulatory or governmental proceedings are pending or
threatened to which the Company is a party or to which the property or assets of
the Company are subject which, in the judgment of the Company, could reasonably
be expected to have a Material Adverse Effect;
Page 17
(h) The Company is not an "investment company" or a company "controlled by" or
required to register as an investment company as such terms are defined in the
Investment Company Act of 1940, as amended, and the rules and regulations
thereunder; and
(i) Assuming the accuracy of the Purchasers' representations and warranties in
Section 5 of the Agreement, the sale and issuance of the Common Shares as
contemplated by the Agreement is exempt from the registration requirements under
Section 5 of the Securities Act of 1933, as amended.
Such opinions may be subject to such assumptions, qualifications and
limitations as are reasonably requested by such counsel consistent with its
internal opinion protocols and applicable State Bar publications concerning the
opinion letters of California lawyers. Without limiting the foregoing, such
counsel (i) need not express any opinion with regard to choice of laws or the
application of laws of any jurisdiction other than the Federal law of the United
States and the General Corporation Law of the State of Delaware, (ii) may rely,
as to matters of fact, to the extent they deem proper on representations or
certificates of responsible officers of the Company and certificates of public
officials, (iii) may express no opinion as to the effect of (a) bankruptcy,
insolvency, reorganization, arrangements, fraudulent transfer, moratorium or
similar laws relating to or affecting the rights of creditors and (b) general
principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, the exercise of judicial
discretion, and the possible unavailability of specific performance or
injunctive relief, regardless of whether considered in a proceeding in equity or
at law, (iv) may express no opinion as to compliance with the anti-fraud or
information delivery provisions of applicable securities laws, (v) may express
no opinion as to compliance with the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, (vi) may express no opinion as to the enforceability of
the indemnification provisions of the Operative Documents to the extent the
provisions thereof may be subject to limitations of public policy and the effect
of applicable statutes and judicial decisions.
6.14. Other Documents. The Company shall have delivered to each Purchaser such
other documents relating to the transactions contemplated by the Agreements as
the Purchasers or their counsel may reasonably request.
SECTION 7.
Conditions to Closing of Company
The Company's obligation to sell and issue the Common Shares and the Warrants at
the Closing is, at the option of the Company, subject to the fulfillment as of
the Closing of the following conditions:
7.1. Representations. The representations made by the Purchasers herein shall be
true and correct when made, and shall be true and correct n the date made and on
the Closing.
7.2. Legal Matters. All material matters of a legal nature which pertain to this
Agreement, and the transactions contemplated hereby, shall have been reasonably
approved by counsel to the Company.
7.3. Performance by the Purchasers. Each Purchaser shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by the Agreements to be performed, satisfied or complied
with by such Purchaser at or before the Closing.
Page 18
7.4. No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated, endorsed or
threatened or is pending by or before any court or governmental authority of
competent jurisdiction which prohibits or threatens to prohibit the consummation
of any of the transactions contemplated by the Agreements.
SECTION 8.
Miscellaneous
8.1. Governing Law. This Agreement shall be governed in all respects by the
internal laws of the State of Delaware as applied to agreements entered into
among Delaware residents to be performed entirely within Delaware, without
reference to the principles of conflict of laws under Delaware law.
8.2. Survival. The representations, warranties, covenants and agreements made
herein shall survive any investigation made by the Purchasers and the closing of
the transactions contemplated hereby.
8.3. Successors and Assigns. Except as otherwise provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors and administrators of the parties hereto, provided,
however, that the rights of the Purchasers to purchase the Common Shares shall
not be assignable without the consent of the Company.
8.4. Entire Agreement; Amendment. This Agreement, the Warrants and the other
Agreements and documents delivered pursuant hereto at the Closing constitute the
full and entire understanding and agreement between the parties with regard to
the subjects hereof and thereof, and no party shall be liable or bound to any
other party in any manner by any warranties, representations or covenants except
as specifically set forth herein or therein. Except as expressly provided
herein, neither this Agreement nor any of the other Agreements nor any term
hereof may be amended, waived, discharged or terminated other than by a written
instrument signed by the party against whom enforcement of any such amendment,
waiver, discharge or termination is sought; provided, however, that holders of a
majority of the Common Shares issued or purchasable hereunder may, with the
Company's prior written consent, waive, modify or amend on behalf of the
Purchasers, any provision hereof or thereof.
8.5. Notices, etc. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by registered or certified
mail, postage prepaid, or by facsimile transmission, or otherwise delivered by
hand or by messenger, addressed (a) if to any Purchaser, at the Purchaser's
address set forth on Schedule 1, or at such other address as such Purchaser
shall have furnished to the Company in writing, or (b) if to any other holder of
any shares, at such address as such holder shall have furnished the Company in
writing, or, until any such holder so furnishes an address to the Company, then
to and at the address of the last holder of such shares who has so furnished an
address to the Company, or (c) if to the Company, one copy should be sent to its
address set forth on the cover page of this Agreement and addressed to the
attention of the Corporate Secretary, or at such other address as the Company
shall have furnished to the Purchasers.
Page 19
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and mailed as aforesaid, or if
by facsimile transmission, as indicated by the facsimile imprint date.
8.6. Delays or Omissions. Except as expressly provided herein, no delay or
omission to exercise any right, power or remedy accruing to any holder of any
shares, upon any breach or default of the Company under this Agreement, shall
impair any such right, power or remedy of such holder nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any holder of any breach or
default under this Agreement, or any waiver on the part of any holder of any
provisions or conditions of this agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.
8.7. Expenses. The Company will pay up to $5,000 of Columbus Capital Management,
LLC's legal expenses and costs with respect to this Agreement. Except as
provided in the immediately preceding sentence, the Company and the Purchasers
shall each bear their own legal and other expenses with respect to this
Agreement.
8.8. Counterparts. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other parties, it being understood that the parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
8.9. Severability. In the event that any provision of this Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided that no such severability shall be effective if it
materially changes the economic benefit of this Agreement to any party.
8.10. Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not considered in construing or interpreting
this Agreement.
8.11. No Third-Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto, SunTrust Xxxxxxxx Xxxxxxxx Capital Markets, as placement
agent (and its directors, officers, agents, Affiliates and controlling persons),
and their respective permitted successors and assigns and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person.
8.12. Independent Nature of Purchasers' Obligations and Rights. The obligations
of each Purchaser hereunder are several and not joint with the obligations of
the other Purchasers hereunder, and
Page 20
no Purchaser shall be responsible in any way for the performance of the
obligations of any other Purchaser hereunder. Nothing contained herein or in any
other agreement or document delivered at the Closing, and no action taken by any
Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind
of Person, or create a presumption that the Purchasers are in any way acting in
concert with respect to such obligations or the transactions contemplated by
this Agreement. Each Purchaser shall be entitled to protect and enforce its
rights, including without limitation the rights arising out of the Agreements,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose.
8.13. Further Assurances. Each party shall do and perform, or cause to be done
and performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as the other
parties may reasonably request in order to carry out the intent and accomplish
the purposes of this Agreement and the consummation of the transactions
contemplated hereby.
IN WITNESS WHEREOF, each Purchaser acknowledges receipt of the Offering
Memorandum Supplement dated as of March 7, 2002 attached hereto, and each
Purchaser and the Company, intending to be legally bound regardless of the
aggregate number of Common Shares actually sold to all Purchasers pursuant to
this Offering, have caused this Agreement to be executed by their respective
officers or officials there unto duly authorized as of the date first above
written.
Company:
GOOD GUYS, INC.
By: /s/ X.X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman and CEO
Purchaser:
Columbus Capital Partners, L.P.
Name of Purchaser
By: Columbus Capital Management, LLC
/s/ Xxxxxxx X. Xxxxxx
------------------------------
Title: Managing Member
Page 21
Xxxxxxxx Master Fund
Name of Purchaser
By: /s/ Xxxxx Xxxxxxxxxxx
------------------------------
Title: Manager
Xxxxxxx Capital/Zurich Capital Management
Name of Purchaser
By: /s/ Xxxxx Xxxxxxxxxxx
------------------------------
Title: Sub-Advisor
Sabre Institutional Partners
Name of Purchaser
By: /s/ Xxxxx Xxxxxxxxxxx
------------------------------
Title: Manager
Granite Capital, LP
Name of Purchaser
By: Granite Capital
/s/ Xxxxxx X. Xxxxxxxx, III
------------------------------
Title: Co-Chairman
Granite Capital II, LP
Name of Purchaser
By: Granite Capital
/s/ Xxxxxx X. Xxxxxxxx, III
------------------------------
Title: Co-Chairman
Granite Capital Overseas Limited
Name of Purchaser
By: Granite Capital, LP
/s/ Xxxxxx X. Xxxxxxxx, III
------------------------------
Title: Co-Chairman
Xxxxxx Value Fund
Name of Purchaser
By: Granite Capital
/s/ Xxxxxx X. Xxxxxxxx, III
------------------------------
Title: Co-Chairman
Page 22
Xxxx & Xxxxxxx Xxxxxxxx Living Trust
Name of Purchaser
/s/ Xxxx. X. Xxxxxxxx
--------------------------------------
Title: Trustee
Xxxx Xxxxxxxx Separate Property Trust
Name of Purchaser
/s/ Xxxx. X. Xxxxxxxx
--------------------------------------
Title: Trustee
/s/ Xxxxx X. Xxxxxx
--------------------------------------
/s/ X.X. Xxxxxx
--------------------------------------
/s/ Xxxxxxx Xxxxxxx
--------------------------------------
Page 23
Schedule I
Schedule of Purchasers
Name and Address No. of Common Shares Purchase Price
---------------- -------------------- --------------
Columbus Capital Partners, L.P.
Xxx Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000 1,000,000 $2,000,000
Columbus Capital Offshore, Ltd.
00 Xxx Xx Xxxxx Xxxx
Xxxxx 000
Xxxxxxxx XX00, Xxxxxxx 500,000 $1,000,000
Xxxxxxx X. Xxxxxx
Chairman, President and CEO
c/o Good Guys, Inc.
0000 Xxxxxx Xxx Xxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000 150,000 $ 300,000
Xxxxx X. Xxxxxx
Chief Operating Officer
c/o Good Guys, Inc.
0000 Xxxxxx Xxx Xxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000 75,000 $ 150,000
Xxxxxxxx Master Fund
c/o Barbary Coast Capital
Xxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000 96,400 $ 192,800
Xxxxxxx Capital
c/o Barbary Coast Capital
Xxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000 11,000 $ 22,000
Sabre Institutional Partners
c/o Barbary Coast Capital
Xxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000 17,600 $ 35,200
Page 24
Xxxx & Xxxxxxx Xxxxxxxx Living Trust
c/o Bellagio Partners
000 Xxxxx Xxxxx
Xxxxx 000
Xxxxx Xxxxxx, XX 00000 50,000 $ 100,000
The Xxxx X. Xxxxxxxx Separate Property Trust
c/o Bellagio Partners
000 Xxxxx Xxxxx
Xxxxx 000
Xxxxx Xxxxxx, XX 00000 150,000 $ 300,000
Granite Capital, LP
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000 402,500 $ 805,000
Granite Capital II, LP
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000 31,800 $ 63,600
Granite Capital Overseas Limited
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000 16,300 $ 32,600
Xxxxxx Value Fund
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000 149,400 $ 298,800
Xxxxxxx Xxxxxxx
00 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX00000 150,000 $ 300,000
2,800,000 $5,600,000
---------- ----------
Page 25
Exhibit A
Form of Common Stock Warrant
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED,
SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED OR DISPOSED OF ABSENT SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE ISSUER THAT SUCH
SECURITY MAY BE OFFERED, RESOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
OR DISPOSED OF, ONLY (1) (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, (B) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (C)
PURSUANT TO ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS)
OR (D) TO THE COMPANY, AND (2) IN EACH CASE, IN ACCORDANCE WITH APPLICABLE BLUE
SKY LAWS AND THE SECURITIES LAWS OF ANY OTHER APPLICABLE DOMESTIC OR FOREIGN
JURISDICTION. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY PURCHASER FROM IT THAT THE SECURITY EVIDENCED HEREBY IS SUBJECT TO THE
FOREGOING RESALE RESTRICTIONS.
THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS SECURITY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY OTHER STATE SECURITIES, OR "BLUE
SKY," LAWS, AND WILL BE RESTRICTED IN THE SAME MANNER AS THESE SECURITIES. SUCH
SHARES ARE ENTITLED TO THE BENEFIT OF A REGISTRATION RIGHTS AGREEMENT, DATED AS
OF MARCH 7, 2002, BY AND AMONG THE ISSUER AND THE PURCHASERS NAMED THEREIN, THAT
COVERS THE RESALE OF THE SHARES ACQUIRED UPON EXERCISE OF THESE WARRANTS. A COPY
OF THE REGISTRATION RIGHTS AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE
ISSUER.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
GOOD GUYS, INC.
DATE OF INITIAL ISSUANCE: March 7, 2002
THIS CERTIFIES THAT, for value received, _____________________________
(the "Holder") is entitled to purchase, subject to the exercise and other
provisions of this Warrant, from Good Guys, Inc., a Delaware corporation (the
"Company") at any time on or prior to 5:00 P.M. Eastern Time on March 7, 2007
(the "Expiration Date"), up to _______________ shares (as such number of shares
may be adjusted in accordance with Section 2 hereof, the "Warrant Shares") of
the Company's common stock, par value $.001 per share (the "Common Stock"), at
any time and from time to time, in whole or in part, at an exercise price per
share of $3.00 (subject to adjustment as provided in Section 2 hereof, the
"Exercise Price"). This Warrant shall expire on March 7, 2007, and shall become
void thereafter.
Page 26
WHEREAS, the Company proposes to sell, pursuant to a Stock Purchase
Agreement, dated as of the date hereof (the "Purchase Agreement"), by and among
the Company, the Holder and the other Purchasers named therein, an aggregate of
up to 4,090,909 shares of the Company's Common Stock and, as an inducement for
the Purchasers to purchase such shares, the Company also proposes to grant to
the Purchasers Warrants to purchase an aggregate of up to 409,091 shares of the
Company's Common Stock;
NOW, THEREFORE, in consideration of the premises, the mutual agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
Section 1. Exercise of Warrant.
1.1. Vesting. The Holder's rights under this Warrant are fully vested as
of the date hereof.
1.2. Exercisability. This Warrant shall be exercisable, in whole or in
part, at any time from the date hereof until the Expiration Date (such period,
the "Exercise Period").
1.3. Procedure for Exercise of Warrant.
(a) To exercise this Warrant in whole or in part, the Holder shall deliver to
the Company, at 0000 Xxxxxx Xxx Xxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000, Facsimile
No. (___) ___-____, Attention: _________, at any time prior to the Expiration
Date: (i) a completed and signed Notice of Exercise (including the Substitute
Form W-9, which forms a part thereof), as attached hereto as Schedule A; (ii)
cash or a certified or official bank check, payable to the order of the Company
in the amount of the aggregate Exercise Price for the Warrant Shares being
purchased; and (iii) this Warrant. Upon irrevocable payment in good collected
funds of the aggregate Exercise Price (rounded up to the nearest cent) for the
Warrant Shares being purchased, the Holder shall be deemed to be the holder of
record of such Warrant Shares, notwithstanding that the stock transfer books of
the Company may then be closed or that certificates representing such Warrant
Shares may not then be actually delivered to the Holder.
(b) The Company shall, as promptly as practicable after completion of the
actions specified in Section 1.3(a) above, and in no event later than five (5)
business days after the completion of such actions, cause to be executed, and
deliver to the Holder a certificate representing the aggregate number of Warrant
Shares specified in the Notice of Exercise. Each stock certificate so delivered
shall be in such denomination as may be requested by the Holder and shall be
registered in the name of the Holder. If this Warrant shall have been exercised
only in part, the Company shall, at the time of delivery of said stock
certificate or certificates, deliver to the Holder a new Warrant evidencing the
right of the Holder to purchase the remaining Warrant Shares covered by this
Warrant. The Company shall pay all expenses, stock transfer taxes and other
charges payable in connection with the preparation, execution and delivery of
such stock certificates.
Page 27
1.4. Restrictive Legend. Each certificate for Warrant Shares shall contain
the following legend:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED,
SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED OR DISPOSED OF ABSENT SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE ISSUER THAT SUCH
SECURITY MAY BE OFFERED, RESOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
OR DISPOSED OF, ONLY (1) (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, (B) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (C)
PURSUANT TO ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS)
OR (D) TO THE COMPANY, AND (2) IN EACH CASE, IN ACCORDANCE WITH APPLICABLE BLUE
SKY LAWS AND THE SECURITIES LAWS OF ANY OTHER APPLICABLE DOMESTIC OR FOREIGN
JURISDICTION. THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY PURCHASER FROM IT THAT THE SECURITY EVIDENCED HEREBY IS SUBJECT TO THE
FOREGOING RESALE RESTRICTIONS."
The certificates shall also bear any additional legends that are required by, or
are appropriate with respect to the rules and regulation of, any state, local,
foreign or other securities authorities. The Company's transfer agent and
registrar will maintain stop transfer instructions on record for the Warrant
Shares until it has been notified by the Company, upon the advice of counsel,
that such instructions may be waived. Such stop transfer instructions will limit
the method of sale of the Warrant Shares, consistent with Rule 144 or other
available exemptions from registration under the Securities Act of 1933, as
amended. Any transfers other than pursuant to Rule 144 will require an opinion
of counsel reasonably satisfactory to the Company and its counsel prior to such
transfers.
1.5. Character of Warrant Shares. The Company represents and warrants that
all Warrant Shares shall be duly authorized, validly issued, and, upon payment
of the Exercise Price therefor, fully paid and nonassessable, and free from all
taxes, liens, hypothecations, security interests, adverse claims or interests
and charges created in respect of the issue thereof. Each person in whose name
any such certificate for Warrant Shares is issued shall for all purposes be
deemed to have become the holder of record of the Common Stock represented
thereby on the Exercise Date of the Warrants resulting in the issuance of such
shares, irrespective of the date of issuance or delivery of such certificate.
Page 28
1.6 No Fractional Shares. The Company shall have no obligation to issue
fractional shares, or scrip representing fractional shares, of its Common Stock
under this Warrant, and, to the extent that the Holder would otherwise be
entitled to purchase and/or receive fractional shares of Common Stock hereunder,
such fractional shares shall instead be disregarded and shall be of no value or
consequence.
Section 2. Certain Adjustments.
2.1. Stock Dividends, Subdivisions and Combinations. If at any time the Company
shall:
(a) establish a record date for the determination of holders of record of its
Common Stock for the purpose of entitling them to receive a dividend payable in,
or other distribution of, additional shares of the Company's 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 (1) the Warrant Shares for which this Warrant is exercisable immediately
after 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 this 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 (2) the Exercise Price shall be adjusted to equal (x) the
Exercise Price multiplied by the Warrant Shares for which this Warrant is
exercisable immediately prior to the adjustment divided by (y) the Warrant
Shares for which this Warrant is exercisable immediately after such adjustment.
2.2. Adjustment Procedures. The following provisions shall be applicable to
adjustments to be made pursuant to Section 2.1 hereof:
(a) When Adjustments to be Made. The adjustments required by this Section 2
shall be made whenever and as often as any event requiring an adjustment shall
occur. For the purpose of any such adjustment, any event shall be deemed to have
occurred at the close of business on the date of its occurrence.
(b) Fractional Interests. In computing adjustments under this Section 2,
fractional interests in the Common Stock shall be taken into account to the
nearest 1/10th of a share. In no event, however, shall fractional shares or
scrip representing fractional shares be issued upon the exercise of this
Warrant.
(c) When Adjustment Not Required. If the Company shall establish a record date
for the determination of the holders of record of the Common Stock for the
purpose of entitling such holders to receive a dividend payable in Common Stock
and shall, thereafter and before the distribution to shareholders thereof,
legally abandon its plan to pay or deliver such dividend, then no adjustment
shall be required by reason of the establishment of such record date and any
such adjustment previously made in respect thereof shall be rescinded and
annulled.
Page 29
2.3. Reorganization, Reclassification, Merger, Consolidation or Share Exchange.
If the Company at any time reorganizes or reclassifies the outstanding shares of
Common Stock (other than a change in par value, or from no par value to par
value, or from par value to no par value, or as a result of a subdivision or
combination) or consolidates with, merges into, or effects a share exchange
with, another corporation (where the Company is not the continuing corporation
after such merger or consolidation), then the Holder shall thereafter be
entitled to receive upon exercise of this Warrant in whole or in part, the same
kind and number of shares of stock and other securities, cash or other property
(and upon the same terms and with the same rights) as would have been
distributed to the Holder upon such reorganization, reclassification,
consolidation, merger or share exchange had the Holder exercised this Warrant
immediately prior to such reorganization, reclassification, consolidation,
merger or share exchange (subject to subsequent adjustments under this Section
2), and the Exercise Price shall be adjusted appropriately to reflect such
action and adjustment.
If any such reorganization, reclassification, consolidation, merger or share
exchange results in a cash distribution in excess of the Exercise Price provided
by this Warrant, the Holder may, at the Holder's option, exercise this Warrant
without making payment of the Exercise Price, and in such case the Company or
its successors and assigns shall, upon distribution to such Holder, consider the
Exercise Price to have been paid in full, and in making settlement to such
Holder, shall deduct an amount equal to the Exercise Price from the amount
payable to such Holder. Notwithstanding anything herein to the contrary, the
Company will not effect any such reorganization, reclassification, merger,
consolidation or share exchange unless prior to the consummation thereof, the
corporation that may be required to deliver any stock, securities or other
assets upon the exercise of this Warrant shall agree by an instrument in writing
to deliver such stock, cash, securities or other assets to the Holder. A sale,
transfer or lease of all or substantially all of the assets of the Company to
another person shall be deemed a reorganization, reclassification,
consolidation, merger or share exchange for the foregoing purposes.
2.4. Officer's Certificate. Upon each adjustment of the Exercise Price and the
Warrant Shares issuable upon the exercise of this Warrant, and in the event of
any change in the rights of the Holder by reason of other events herein set
forth, then and in each such case, the Company will promptly prepare a
certificate of a responsible officer of the Company, stating the adjusted
Exercise Price, the adjusted number of Warrant Shares so issuable, and setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. The Company will promptly mail a copy of such
certificate to the Holder. Such calculation shall be final and binding on the
parties and shall be conclusive evidence of the correctness of the computation
with respect to any such adjustment of the Exercise Price and any such change in
the number of Warrant Shares so issuable, absent manifest error.
Page 30
2.5 Notice of Certain Proposed Actions. In the event the Company shall propose
to take any action of the types described in Sections 2.1 or 2.3 above, then the
Company shall forward, at the same time and in the same manner, to the Holder
such notice and related proxy or other materials, if any, that the Company gives
to the holders of the Common Stock. Failure to give such notice, or any defect
therein, however, shall not affect the legality or validity of any such action.
Section 3. Ownership and Transfer.
3.1. Ownership. The Company may deem and treat the person in whose name
this Warrant is registered as the Holder and owner hereof (notwithstanding any
notations of ownership or writing hereon made by anyone other than the Company)
for all purposes and shall not be affected by any notice to the contrary until
presentation of this Warrant to the Company for registration of transfer.
3.2. Transfers. Upon the sale, disposition, transfer or conveyance of this
Warrant, the purchaser, transferee or other recipient hereof shall, together
with the previous Holder hereof, promptly notify the Company of such sale,
disposition, transfer or conveyance and shall provide such recipient's name,
address and capacity in which this Warrant is held, and present such other
information as the Company may reasonably request, and such recipient will
thereafter be subject to, and bound by, the terms and provisions of, this
Warrant to the same extent as the previous Holder.
3.3. Replacement. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft or destruction of this Warrant, and of
indemnity or security reasonably satisfactory to it, or upon surrender of this
Warrant if mutilated, the Company will make and deliver a new Warrant of like
tenor, in lieu of this Warrant. This Warrant shall be promptly canceled by the
Company upon the surrender hereof in connection with any transfer or
replacement. Except as otherwise provided above in the case of the loss, theft
or destruction of a Warrant, the Company shall pay all expenses, taxes and other
charges payable in connection with any transfer or replacement of this Warrant.
Applicants for such substitute Warrants shall also comply with such other
reasonable regulations and pay such other reasonable charges incidental thereto
as the Company may reasonably prescribe. Any such new Warrant shall constitute
an original contractual obligation of the Company, whether or not the allegedly
lost, stolen, mutilated or destroyed Warrant shall at any time be presented.
3.4 Cancellation of Warrant. Any Warrant surrendered upon exercise or for
split up, combination, exchange or transfer, or purchased or otherwise acquired
by the Company, shall be cancelled and shall not be reissued by the Company;
and, except as provided herein in the case of the purchase of less than all of
the Warrant Shares that the Holder may purchase hereunder or in the case of a
split up, combination, exchange or transfer, no Warrant shall be issued
hereunder in lieu of such cancelled Warrant. Any Warrant so cancelled shall be
marked cancelled and destroyed by the Company.
Page 31
Section 4. Miscellaneous.
4.1 Reservation of Shares. The Company covenants that, at all times during
the Exercise Period, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of Common Stock
upon the exercise of this Warrant, as well as for the issuance of Common Stock
pursuant to any other outstanding warrants, options or other instruments
convertible or exercisable into the Company's Common Stock, and with respect to
any employee benefit or similar plans.
4.2 No Rights as Shareholder; Limitation of Liability. This Warrant shall
not entitle the Holder to any of the rights of a shareholder of the Company,
including, without limitation, the right to vote, to receive dividends and other
distributions, or to receive any notice of, or to attend, meetings of Company
shareholders, prior to exercise of this Warrant and irrevocable payment in good,
collected funds of the Exercise Price therefor.
4.3 Amendment. This Warrant may only be modified or amended and any
provision hereof may only be waived by a writing executed by the Company and the
Holder of this Warrant.
4.4 Successors and Assigns. This Warrant shall be binding upon, and inure
to the benefit of, the parties hereto and their respective success and assigns
permitted hereunder, and no other parties shall have any rights hereunder. The
Company will not merge or consolidate with or into any other corporation or
other entity or sell or otherwise transfer its property, assets and business
substantially as an entirety to a successor corporation or other entity, unless
the corporation or other entity resulting from such merger, consolidation, sale
or transfer (if not the Company) shall expressly assume, by supplemental
agreement, the due and punctual performance and observance of each and every
covenant and condition of this Warrant to be performed and observed by the
Company.
4.5 Governing Law. This Warrant shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware.
4.6 Entire Agreement; Other Benefits. The Holder is entitled, with respect
to his ownership of this Warrant and/or the Warrant Shares to the benefits of
the Purchase Agreement and the Registration Rights Agreement, dated as of the
date hereof (the "Registration Rights Agreement"), by and among the Company, the
Holder and the other Purchasers named in the Purchase Agreement. Except as
otherwise expressly provided herein, this Warrant (including the Purchase
Agreement, the Registration Rights Agreement and any other agreements,
instruments and other documents referred to herein or therein) constitutes the
entire agreement among the parties hereto with respect to the transactions
contemplated hereunder and supersedes all prior arrangements or understandings
with respect thereto, written or oral.
4.7 Standing. Nothing in this Warrant is intended, or shall be construed,
to confer upon, or give to, any person other than the Company and the Holder any
right, remedy or claim under or by reason of this Agreement or of any covenant,
condition, stipulation, promise or agreement contained herein. All covenants,
conditions, stipulations, promises and agreements
Page 32
contained in this Warrant shall be for the sole and exclusive benefit of the
Company and its successors, and the Holder, and no other person shall have any
other rights or interests herein, whether as third party beneficiaries or
otherwise.
4.8 Headings, etc. The descriptive headings of the articles and sections
of this Warrant are inserted for convenience of reference only and shall not
control or affect the meaning or construction of any of the provisions hereof.
As under herein, the singular shall include the plural and the terms "include"
and "including" shall mean without limitation by way of enumeration or
otherwise.
4.9 Counterparts. This Warrant may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the date
first written above.
GOOD GUYS, INC.
By:
-----------------------------------
Name:
-----------------------------
Title:
-----------------------------
THE HOLDER
Name:
----------------------------------
SCHEDULE A
NOTICE OF EXERCISE OF
WARRANT TO PURCHASE COMMON STOCK OF
GOOD GUYS, INC.
To: Good Guys, Inc.
The undersigned, the registered owner of this Warrant, hereby irrevocably
elects to exercise the purchase rights represented thereby for, and to purchase
thereunder, _________ shares of Common Stock of Good Guys, Inc. and herewith
makes payment of $__________ therefor, and requests that the certificates
evidencing such shares be issued in the name of and be delivered to:
Name:
---------------------------------
Address:
------------------------------
------------------------------
------------------------------
Social Security or
Tax I.D. Number:
-------------------
and if such shares shall not be all of the shares purchasable hereunder, that a
new Warrant of like tenor for the balance of the shares purchasable hereunder be
delivered to the undersigned.
Dated:
------------------
THE HOLDER
By:
----------------------------------------
Name:
SUBSTITUTE FORM W-9
Under the penalties of perjury, I certify that:
(1) the Social Security Number or Taxpayer Identification Number given below is
correct; and
(2) I am not subject to backup withholding either because I have not been
notified that I am subject to backup withholding as a result of a failure to
report all interest or dividends, or because the Internal Revenue Service has
notified me that I am no longer subject to backup withholding.
Important Instructions: You must cross out #2 above if you have been notified by
the Internal Revenue Service that you are subject to backup withholding because
of under reporting interest or dividends on your tax return and if you have not
received a notice from the Internal Revenue Service advising you that backup
withholding due to notified payee under reporting has terminated. For additional
instructions, please refer to the attached "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9."
Signature*:
----------------------------------
Date:
----------------------------------------,
----------------------
* If a corporation, please sign in full corporate name by president or other
authorized officer. When signing as officer, attorney, custodian, trustee,
administrator, guardian, etc., please give your full title as such. In case
of joint tenants, each person must sign.
THIS NOTICE OF EXERCISE SHALL NOT BE GIVEN EFFECT BY THE COMPANY UNLESS THE
HOLDER OF THE UNDERLYING WARRANT HAS PROPERLY COMPLETED AND SIGNED BOTH THE
NOTICE OF EXERCISE FORM AND THE SUBSTITUTE FORM W-9.
Exhibit B
Registration Rights Agreement
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and entered
into as of March 7, 2002, by and among GOOD GUYS, INC., a Delaware corporation
(the "Company"), and those purchasers of the Company's Common Stock and Warrants
set forth on Schedule I hereto (the "Purchasers").
This Agreement is made pursuant to the Stock Purchase Agreement, dated as of
March 7, 2002 (the "Stock Purchase Agreement"), by and between the Company and
the Purchasers, pursuant to which the Company is issuing and selling up to
4,090,901 shares of its common stock, $.001 par value per share (the "Common
Stock" or "Common Shares") and warrants to purchase up to 409,091 shares of the
Common Stock (the "Warrants") to the Purchasers. The Common Shares and Warrants
are being offered and sold to the Purchasers without registration under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance upon the
exemption from registration provided by Section 4(2) of the Securities Act, and
the provisions of Rule 506 of Regulation D, promulgated under the Securities
Act. In order to induce the Purchasers to enter into the Stock Purchase
Agreement, the Company has agreed to provide to the Purchasers (and their direct
and indirect transferees, if any) the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
closing (the "Closing") under the Stock Purchase Agreement.
In consideration of the foregoing premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. REGISTRATION RIGHTS
(a) Filing of Form S-3 "Resale" Registration Statement. As soon as practical
and, within fifteen (15) business days after the closing under the Stock
Purchase Agreement, the Company shall file with the Securities and Exchange
Commission (the "SEC" or the "Commission") a "resale" registration statement on
Form S-3 pursuant to Rule 415 under the Securities Act, or, in the event that
Form S-3 is unavailable to the Company, a registration statement on such other
SEC Form that is available to the Company (together with any exhibits,
amendments or supplements thereto, and any documents incorporated by reference
therein, the "Registration Statement"), with respect to the Common Shares and
the shares of Common Stock issuable pursuant to the exercise of the Warrants
(the "Warrant Shares"), and any securities of the Company issued as a dividend
or other distribution with respect to, or in exchange for or in replacement of,
the Common Shares or the Warrant Shares. The securities described in the
preceding sentence are collectively referred to herein as the "Registrable
Securities"; provided that the term "Registrable Securities" shall not include
securities subject to the Registration Statement or transferred to a person
other than a Permitted Transferee, as defined herein.
Page 2
The Registration Statement may not include securities of the Company other
than Registrable Securities.
(b) Effectiveness of Registration Statement. The Company shall, subject to
Section 6 hereof, use its commercially reasonable best efforts to cause the
Registration Statement to become effective within 90 days after the filing
thereof, and shall use its commercially reasonable best efforts to keep the
Registration Statement continuously effective from the date such Registration
Statement becomes effective until the earlier of (i) the date on which all
Securities have been resold under such Registration Statement, and (ii) the date
on which all Registrable Securities may be resold pursuant to SEC Rule 144(k).
In the event that the Registration Statement is not effective on or before the
100th day following the closing under the Stock Purchase Agreement (such date,
the "Additional Warrant Date"), then the Company shall issue and deliver to each
Purchaser additional Warrants to purchase a number of whole shares of Common
Stock equal to the product of: (i) .01, and (ii) the number of shares of Common
Stock purchased by such Purchaser pursuant to the Stock Purchase Agreement, as
set forth on Schedule I hereto, with any fractional shares resulting from such
calculation to be disregarded.
In addition, with respect to each 30 day period after the Additional Warrant
Date that the Registration Statement is not effective, the Company shall issue
and deliver to the Purchasers additional Warrants to purchase a number of whole
shares of Common Stock equal to the product of: (i) .01, and (ii) the number of
shares of Common Stock purchased by such Purchaser pursuant to the Stock
Purchase Agreement, as set forth on Schedule I hereto, with any fractional
shares resulting from such calculation to be disregarded.
Notwithstanding the foregoing provisions of this Section 1(b), but provided that
the Registration Statement has been timely filed and the Company has used its
commercially reasonable best efforts to cause such Registration Statement to
become effective, the Company shall not be required to issue any additional
Warrants under this Agreement with respect to any period of time during which
the Registration Statement is not effective if the Company's failure to make the
Registration Effective during such period directly results from any of the
following events: (i) any banking moratorium declared by any United States
federal or state authorities or other applicable authorities, including, without
limitation, regulatory authorities; or (ii) any outbreak or escalation of
hostilities, any declaration of war by the United States or any other national
or international calamity, crisis or emergency, or any act or acts of terrorism.
Page 3
(c) Supplements; Amendments. Subject to Section 6 hereof, the Company shall
supplement or amend the Registration Statement, (i)as required by Form S-3,
including, without limitation, the instructions applicable to Form S-3, or by
the Securities Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or the rules and regulations promulgated under the Securities
Act or the Exchange Act, respectively, and (ii)to include in the Registration
Statement any additional securities that become Registrable Securities by
operation of the definition thereof. The Company shall furnish to the holders of
the Registrable Securities, or their permitted transferees, as appropriate
(collectively, the "Holders"), to which the Registration Statement relates
copies of any such supplement or amendment sufficiently in advance (but in no
event less than five (5) business days in advance) of its use and/or filing with
the Commission to allow the Holders a meaningful opportunity to comment thereon
with respect to the information contained therein regarding the Holders and any
plan for resale of the Registrable Securities. The Holders acknowledge that they
have supplied the information regarding themselves and their plan of resale in
the Registration Statement to be filed within five (5) business days of the
Closing and hereby waive any notice of the initial filing of the Registration
Statement, and that such Holders and their successors and assigns will promptly
notify the Company of any changes in such information.
2. EXPENSES
The Company shall bear all expenses, fees and costs incurred in connection
with the preparation, filing, distribution and effectiveness of the Registration
Statement and any supplements or amendments thereto, whether or not the
Registration Statement becomes effective, and whether all, none or some of the
Registrable Securities are sold pursuant to the Registration Statement,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company, fees and state
securities, or "blue sky," fees and expenses and the expense of any special
audits incident to or required by, or in connection with the filing and
effectiveness of the Registration Statement (but excluding the compensation of
regular employees of the Company, which shall be paid in any event by the
Company), and the Holder shall pay all selling commissions, brokerage fees and
stock transfer taxes applicable to the securities sold by such Holder.
3. REGISTRATION PROCEDURES
The Company will advise the Holders as to the status of the preparation,
filing and effectiveness of the Registration Statement and, at the Company's
expense, will:
Page 4
(a) furnish to each Holder copies of the Registration Statement (including
all exhibits thereto) and any prospectus forming a part thereof and any
amendments and supplements thereto (including all documents incorporated or
deemed incorporated by reference therein prior to the effectiveness of the
Registration Statement and including each preliminary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, which documents, other
than documents incorporated or deemed incorporated by reference, will be subject
to the review of the Holders for a period of at least three (3) business days,
and the Company shall not file the Registration Statement or such prospectus or
any amendment or supplement to the Registration Statement or prospectus if any
Holder shall reasonably object within three (3) business days after the receipt
thereof; a Holder shall be deemed to have reasonably objected to such filing
only if the Registration Statement, amendment, prospectus or supplement, as
applicable, as proposed to be filed, contains a material misstatement or
omission with respect to such Holder or its plan of resale;
(b) furnish to each Holder one conformed copy of the Registration Statement
and of each amendment and supplement thereto (in each case including all
exhibits) and such number of copies of the prospectus forming a part of the
Registration Statement (including each preliminary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act, and such other documents, including, without
limitation, documents incorporated or deemed to be incorporated by reference
prior to the effectiveness of such Registration Statement, as each of the
Holders, from time to time may reasonably request;
(c) to the extent practicable, promptly upon the filing of any document that
is to be incorporated by reference into the Registration Statement or prospectus
forming a part thereof subsequent to the effectiveness thereof, and in any event
no later than five (5) business days after such document is filed with the
Commission, provide copies of such document to the Holders, if requested, and
make representatives of the Company available for discussion of such document
and other customary due diligence matters; and provide promptly to the Holders
upon request any document filed by the Company with the Commission pursuant to
the requirements of Section 13 and Section 15 of the Exchange Act;
Page 5
(d) use its commercially reasonable best efforts (i) to register or qualify
all Registrable Securities covered by the Registration Statement under state
securities, or "blue sky," laws of such States of the United States of America
as the Holders of Registrable Securities covered by the Registration Statement
shall reasonably request, (ii) to keep such registration or qualification in
effect for so long as the Registration Statement remains in effect, and (iii) to
take any other action which may be reasonably necessary or advisable to enable
the Holders to consummate the disposition in such jurisdictions of the
securities to be sold by the Holders, consistent with the plan of distribution
described in the prospectus included in the Registration Statement, except that
the Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction where it is not so
qualified, or to subject itself to taxation in any such jurisdiction, or to
execute a general consent to service of process in effecting such registration,
qualification or compliance, unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act or
applicable rules or regulations thereunder;
(e) subject to Section 6 hereof, promptly notify each Holder of Registrable
Securities covered by the Registration Statement (i) upon discovery that, or
upon the happening of any event as a result of which, the prospectus forming a
part of the Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, (ii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of proceedings for that purpose, (iii)
of any request by the Commission for (A) amendments to the Registration
Statement or any document incorporated or deemed to be incorporated by reference
in the Registration Statement, or (B) supplements to the prospectus forming a
part of the Registration Statement, or (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation of any proceeding for such purpose, and at the
request of any such Holder promptly prepare and file an amendment to the
Registration Statement or a supplement to the prospectus as the Company may deem
necessary so that, as thereafter delivered to the purchasers of such securities,
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 the light of the circumstances under which they were
made, not misleading; and furnish to each Holder a reasonable number of copies
of such supplement to, or amendment of, such prospectus, and, in the event of a
stop order, use its commercially reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of any the Registration
Page 6
Statement, or the lifting of any suspension of the qualification (or exemption
from qualification) of any of the Registrable Securities for sale in any
jurisdiction;
(f) if reasonably requested by any Holder or if required by law or SEC rule
or regulation, promptly incorporate in the Registration Statement by filing a
Form 8-K, or file a supplement to the prospectus, to reflect any change in the
information regarding the Holder;
(g) otherwise use its commercially reasonable best efforts to comply with
all applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least 12 months, but not more than 18 months,
beginning with the first full calendar month after the effective date of the
Registration Statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 promulgated thereunder; and
(h) use its commercially reasonable best efforts to cause all Registrable
Securities included in the Registration Statement to be listed on each
securities exchange on which securities of the same class are then listed, or,
if not then listed on any securities exchange, to be eligible for trading in any
over-the-counter market or trading system in which securities of the same class
are then traded.
4. INDEMNIFICATION
(a) Indemnification by the Company. The Company will
indemnify:
(i) each of the Holders, as applicable,
(ii) each of its officers, directors, members and partners, and
(iii) each individual, partnership, joint stock company, corporation,
trust, unincorporated organization, government agency or political subdivision
(each of the foregoing, a "Person") controlling each of the Holders,
Page 7
with respect to the Registration Statement, against all expenses, claims,
losses, damages and liabilities (or actions, investigations or proceedings in
respect thereof) (collectively, a "Claim") arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in the
Registration Statement or any prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to the registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any violation by the Company of the Securities Act or the Exchange Act or any
rule or regulation thereunder applicable to the Company and relating to action
or inaction required of the Company in connection with any such registration,
qualification or compliance, and will reimburse each of the Holders, each of its
officers, directors, members and partners, and each Person controlling each of
the Holders, for any legal and any other expenses reasonably incurred in
connection with investigating and defending any such Claim; provided, however,
that the Company will not be liable in any such case to the extent that any such
Claim arises out of or is based on any untrue statement or omission based upon
written information furnished to the Company by the Holders or their
Representatives and stated to be specifically for use therein.
(b) Indemnification by the Holders. Each of the Holders will, if Registrable
Securities held by it are included in the securities as to which such
Registration Statement is being effected, indemnify the Company, each of its
directors and officers, and each Person who controls the Company, against all
Claims arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in the Registration Statement,
prospectus, offering circular or other document made by or on behalf of such
Holder, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements by or on
behalf of such Holder therein not misleading, and will reimburse the Company,
its directors, officers, partners, members or control Persons for any legal or
any other expenses reasonably incurred in connection with investigating or
defending any such Claim, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in the Registration Statement, prospectus, offering memorandum
or other document in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Holder and stated to be
specifically for use therein; provided, however, that the obligations of each of
the Holders hereunder shall be limited to an amount equal to the net proceeds to
such Holder of securities sold as contemplated herein.
Page 8
(c) Procedures. Each party entitled to indemnification under this Agreement
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any Claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such Claim; provided
that counsel for the Indemnifying Party, who shall conduct the defense of such
Claim, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense (unless the Indemnified Party shall have
reasonably concluded that there may be a conflict of interest between the
Indemnifying Party and the Indemnified Party in such action, in which case the
fees and expenses of one such counsel for all Indemnified Parties shall be at
the expense of the Indemnifying Party), and provided further that the failure of
any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the
Indemnifying Party is materially prejudiced thereby. No Indemnifying Party, in
the investigation or defense of any such Claim shall, except with the consent of
each Indemnified Party (which consent shall not be unreasonably withheld or
delayed), consent to entry of any judgment or enter into any settlement or
compromise which does not include an unconditional release of the Indemnifying
Party from all liability in respect to such Claim. Each Indemnified Party shall
furnish such information regarding itself or the Claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with the investigation and defense of such Claim.
(d) Contribution. If the indemnification provided for in this Agreement is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any Claim, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party hereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such loss, liability,
claim, damage or expense in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one hand and of the Indemnified
Party on the other in connection with the statements or omissions which resulted
in such Claim, 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.
Page 9
5. PROVISION OF INFORMATION BY THE HOLDERS
Each of the Holders whose Registrable Securities are included in the
Registration Statement shall furnish to the Company such information regarding
such Holder 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, and shall promptly notify the Company
if such information becomes incorrect or misleading, or requires amendment or
updating. Each of the Holders agrees that the plan of distribution included in
any prospectus relating to the Registrable Securities shall be as set forth on
Schedule III hereto and that such Holder will not resell any Registrable
Securities in any manner other than as provided therein or herein. The
information regarding the Holders, other than the plan of distribution (which is
set forth on Schedule III hereto) required for the initial filing of the
Registration Statement has been provided by each Holder on Schedule II, and each
Holder represents, warrants and covenants to the Company that such information
is accurate and complete in all material respects consistent with Commission
Regulation S-K, Items 507 and 508.
6. HOLDBACK; POSTPONEMENT
Notwithstanding the other provisions of this Agreement, if (a) there is material
non-public information regarding the Company which the Company's Board of
Directors reasonably and in good faith determines not to be in the Company's
best interest to disclose and which the Company is not otherwise required to
disclose, or (b) there is a extraordinary business opportunity (including but
not limited to the acquisition or disposition of assets (other than in the
ordinary course of business) or any merger, consolidation, tender offer or other
similar extraordinary transaction not in the ordinary course of business)
available to the Company which the Company's Board of Directors reasonably and
in good faith determines not to be in the Company's best interest to disclose,
then the Company may postpone or suspend filing or effectiveness of a
registration statement for a period not to exceed 45 days, provided that the
Company may not postpone or suspend filing or effectiveness of a registration
statement for more than 90 days in the aggregate during any 365-day period and
there shall be an aggregate of not more than two (2) suspensions during any
365-day period; provided, however that no postponement or suspension shall be
permitted for consecutive 45 day periods arising out of the same set of facts,
circumstances or transactions.
Page 10
7. RULE 144 REPORTING
(a) With a view to making available the benefits of certain rules and
regulation of the Commission which may at any time permit the sale of the
Registrable Securities to the public without registration, until the second
anniversary of this Agreement, the Company will:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144 of the Securities Act ("Rule 144");
(ii) use its commercially reasonable best efforts to file with the
Commission in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act; and
(iii) so long as a Holder owns any Registrable Securities, furnish the
Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of Rule 144, and of the Securities
Act and the Exchange Act, a copy of the most recent annual or quarterly report
of the Company, and such other reports and documents of the Company and other
information in the possession of, or reasonably obtainable by, the Company as a
Holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing a Holder to sell any such securities without
registration.
8. MISCELLANEOUS
(a) Assignment. The registration rights set forth herein may be assigned, in
whole or in part, to any transferee of Registrable Securities permitted in
accordance with the Stock Purchase Agreement, which transferee, upon
registration on the Company's or its transfer agent's books and records as a
holder of record of Registrable Securities, shall be considered thereafter to be
a Holder (provided that any transferee who is not an affiliate of a Purchaser
shall be a Holder only with respect to such Registrable Securities so acquired
and any stock of the Company issued as a dividend or other distribution with
respect to, or in exchange for or in replacement of, such Registrable
Securities) and shall be bound by all obligations and limitations of this
Agreement and the Stock Purchase Agreement.
Page 11
(b) Interpretation.
(i) Directly or Indirectly. Where any provision in this Agreement refers
to action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such Person.
(ii) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
(iii) Section Headings. The headings of the sections and subsections of
this Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.
(c) Notices.
(i) All communications under this Agreement shall be in writing and
shall be delivered by facsimile or by hand or mailed by overnight courier or by
registered or certified mail, postage prepaid:
(A) if to the Company, to 0000 Xxxxxx Xxx Xxxxxxx, Xxxxxxx, Xxxxxxxxxx,
00000, (000) 000-0000, Attention: Xxxxxxx X. Xxxxxx, or at such other address as
it may have furnished in writing to the Purchasers;
(B) if to the Purchasers, at the addresses listed on Schedule I hereto, or
at such other addresses as may have been furnished the Company in writing.
(ii) Any notice so addressed shall be deemed to be given (A) if
delivered by hand, on the date of such delivery, (B) if sent by overnight mail
service, on the first business day following the date of such mailing, (C) if
delivered by facsimile, on the date of such facsimile, or (D) if mailed by
registered or certified mail, on the third business day after the date of such
mailing.
(d) Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon the successors and permitted assigns of each of the parties.
(e) Entire Agreement; Amendment and Waiver. This Agreement constitutes the
entire understanding of the parties hereto and supersedes all prior
understanding among such parties. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, only with the written
consent of the Company and the Holders of a majority of the then outstanding
Registrable Securities.
Page 12
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
(g) Remedies. Each Holder of Registrable Securities, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Agreement
and hereby agrees to waive the defense in any action for specific performance
that a remedy at law would be adequate.
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of the remaining provisions contained herein shall
not be in any way impaired thereby, and shall remain in full force and effect,
it being intended and understood that all of the rights and privileges of each
of the Holders shall be enforceable to the fullest extent permitted by law.
(i) Delays or Omissions. It is agreed that no delay or omission to exercise
any right, power or remedy accruing to the Holders, upon any breach or default
of the Company under this Agreement, shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach or default,
or any acquiescence therein, or of any similar breach or default thereafter
occurring; nor shall any wavier of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. It is
further agreed that any waiver, permit, consent or approval of any kind or
character by a Holder of any breach or default under this Agreement, or any
waiver by a Holder of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in the
writing, and that all remedies, either under this Agreement, or by law or
otherwise afforded to a Holder, shall be cumulative and not alternative.
(j) Attorney's Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
Page 13
IN WITNESS WHEREOF, the undersigned, thereunto duly authorized, have
executed this Agreement as of the date first set forth above.
GOOD GUYS, INC.
By:
------------------------------------
Name:
------------------------------
Title:
------------------------------
PURCHASERS:
By:
------------------------------------
Name:
------------------------------
Title:
------------------------------
By:
------------------------------------
Name:
------------------------------
Title:
------------------------------
By:
------------------------------------
Name:
------------------------------
Title:
------------------------------
Page 14
Schedule I
Schedule of Purchasers
Name and Address No. of Common Shares Purchase Price
---------------- -------------------- --------------
------------------- ------------------- -------------------
-------------------
-------------------
Facsimile #
-------------------
------------------- ------------------- -------------------
-------------------
-------------------
Facsimile #
-------------------
$
-------------------
Page 15
Schedule II
Pursuant to the Registration Rights Agreement, please provide us with the
following information:
1. The exact name that your Shares are
to be registered in (this is the name
that will appear on your stock certificate(s)).
You may use a nominee name if appropriate:
-------------------------
2. The relationship between the Purchaser
of the Shares and the Registered Holder listed
in response to item 1 above:
-------------------------
3. The mailing address of the Registered
Holder listed in response to item 1 above:
-------------------------
-------------------------
-------------------------
4. The Social Security Number or Tax
Identification Number of the Registered
Holder listed in response to item 1 above:
-------------------------
Page 16
Schedule III
Plan of Distribution
Any or all of the shares offered by the selling shareholders may be offered
for sale and sold by, or on behalf of, the selling shareholders from time to
time in varying amounts, including in block transactions, on the Nasdaq Stock
Market, or the over-the-counter market, in privately negotiated transactions,
or otherwise, at prices prevailing in such market or as may be negotiated at the
time of the sale. The shares may be sold by the selling shareholders directly to
one or more purchasers, through agents designated from time to time or to or
through broker- dealers designated from time to time. In the event the shares
publicly offered through broker-dealers or agents, the selling shareholders may
enter into agreements with respect thereto. Such broker-dealers or agents may
receive compensation in the form of discounts, concessions or commissions from
the selling shareholders, and any such broker-dealers or agents that participate
in the distribution of the shares may be deemed to be underwriters within the
meaning of the Securities Act, and any profit on the sale of the shares by them
and any discounts and commissions might be deemed to be underwriting discounts
or commissions under the Securities Act. Any such broker-dealers and agents may
engage in transactions with, and perform services for, the Company. At the time
a particular offer of shares is made by the selling shareholders, to the extent
required, a prospectus supplement will be distributed which will set forth the
aggregate number of shares being offered, and the terms of the offering,
including the public offering price thereof, the name or names of any
broker-dealers or agents, any discounts, commissions and other items
constituting compensation from, and the resulting net proceeds to, the selling
shareholders.
In order to comply with the securities laws of certain states, sales of
shares offered hereby to the public in such states may be made only through
broker-dealers who are registered or licensed in such states. Sales of shares
offered hereby must also be made by the selling shareholders in compliance with
other applicable state securities laws and regulations.
