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EXHIBIT 4.2
THIS WARRANT (THIS "WARRANT") HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR APPLICABLE STATE SECURITIES LAWS.
THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT
AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE GOOD GUYS, INC. (THE "COMPANY") THAT SUCH REGISTRATION IS
NOT REQUIRED.
Warrant Certificate Xx. 0
Xxxxxx 00, 0000
XXXXXXX TO PURCHASE SHARES OF COMMON STOCK
OF
THE GOOD GUYS, INC.
This certifies that Xxxxxx Xxxxxx & Company, Inc., or its successors
or assigns (the "Holder"), is entitled, subject to the terms set forth below, at
any time during the Exercise Period (defined in Section 3 hereof) to purchase
from THE GOOD GUYS, INC., a Delaware corporation, up to One Hundred Sixty
Thousand (160,000) fully paid and non-assessable shares (the "Warrant Shares")
of the Company's Common Stock, par value $.001 per share (the "Common Stock"),
at the purchase price per Warrant Share of SIX AND ONE HUNDRED TWENTY-FIVE ONE
HUNDREDTHS ($6.125) DOLLARS (the "Purchase Price"). The number of Warrant Shares
issuable upon exercise of this Warrant and the Purchase Price per Warrant Share
shall be subject to adjustment from time to time as provided in Section 5
hereto.
I. THIS WARRANT. This Warrant is issued to the Holder in connection with that
certain Stock Purchase Agreement, dated as of August 19, 1999, by and among the
persons listed on the signature page thereto (the "Stock Purchase Agreement").
This Warrant does not entitle the Holder to any rights as a stockholder of the
Company, except as set forth herein.
II. EXERCISE. During the period beginning on the date hereof and ending on the
third (3rd) anniversary hereof (the "Exercise Period"), this Warrant may be
exercised at an exercise price of $6.125 per Warrant Share (the "Exercise
Price"). The Warrant may be exercised at any time on any business day for all or
part of
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the Warrant Shares issuable hereunder by surrendering this Warrant at
the principal office of the Company at 0000 Xxxxxx Xxxxxxxxx, Xxxxxxxx,
Xxxxxxxxxx 00000 (or at such other office of the Company in the United States as
the Company may designate from time to time by notice in writing to the Holder),
with the subscription form attached hereto fully executed, together with payment
in cash or immediately available funds in the amount equal to the Purchase
Price.
III. PARTIAL EXERCISE. This Warrant may, in accordance with the provisions of
this Section 3, be exercised for less than the full number of Warrant Shares.
Upon any partial exercise, this Warrant shall be surrendered and a new Warrant
of the same tenor and for the purchase of that number of Warrant Shares not
purchased upon such partial exercise shall be issued by the Company to the
Holder. A Warrant shall be deemed to have been exercised immediately prior to
the close of business on the date of its surrender for exercise as provided
above, and the person entitled to receive the Warrant Shares issuable upon
exercise shall be treated for all purposes as the holder of such shares of
record as of the close of business on such date. As soon as practicable on or
after such date, and in any event within five (5) business days, the Company
shall issue and deliver to the person or persons entitled to receive the Warrant
Shares a certificate or certificates for the full number of Warrant Shares
issuable upon such exercise.
IV. NET ISSUE EXERCISE. Notwithstanding any provisions herein to the contrary,
if the fair market value of one share of Common Stock is greater than the
Purchase Price for one share of Common Stock (at the date of calculation, as set
forth below), in lieu of exercising this Warrant for cash, the Holder may elect
to receive shares of Common Stock equal to the value (as determined below) of
this Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company, together with the properly
endorsed Warrant Certificate, substantially in the form as attached hereto, in
which event the Company shall issue to the Holder that number of shares of
Common Stock computed using the following formula:
WS = WCS (FMV-PP)
FMV
WHERE:
WS equals the number of Warrant Shares to be issued to the Holder
WCS equals the number of shares of Common Stock purchasable under
the Warrant or, if only a portion of the Warrant is being
exercised, the portion of the Warrant being canceled (at the
date
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of such calculation)
FMV equals the fair market value of one share of Common Stock (at
the
PP equals the per share Purchase Price (as adjusted to the date
of such calculation) of the Warrant
As used in this Section 4, the term "Fair Market Value" of each
Share as of any date shall be the best bid price posted in respect of the Common
Stock in the NASDAQ Stock Market's automated dealer quotation system at the
close of trading on the day prior to such exercise, or, if the Common Stock
shall not then be so quoted, Fair Market Value shall be determined as follows:
(a) if the parties hereto can agree on the Fair Market Value, such agreed upon
value shall constitute the Fair Market Value; (b) if the parties cannot reach an
agreement as to the Fair Market Value within five (5) business days from the
onset of negotiations, then such parties shall jointly appoint an appraiser to
determine the Fair Market Value; (c) if the parties cannot agree upon the
selection of an appraiser within five (5) business days after such five (5) day
period, then each party shall deliver to the other a list of three (3)
appraisers on or before the third (3rd) business day immediately following the
expiration of said five (5) day period, each party shall select one appraiser
from the other party's list and notify such other party of its selection on or
before the fifth (5th) business day immediately following the expiration of the
three (3) day period; (d) if either party does not deliver to the other party a
list of appraisers within the three-day period or deliver its selection of the
appraiser from the other party's list within the five (5) day period, then the
first appraiser listed on the other party's list shall be deemed to have been
jointly selected to determine the Fair Market Value; (e) if both parties timely
select an appraiser from the other party's list, then the two appraisers so
selected shall jointly select a third appraiser, which third appraiser shall
independently calculate the Fair Market Value on or before the forty-fifth
(45th) day immediately following the date on which it was selected as an
appraiser. Any determination of the Fair Market Value made in accordance with
the terms hereinabove set forth shall be final and binding on the parties
hereto.
V. ADJUSTMENTS.
1.1 ADJUSTMENTS TO WARRANT RIGHTS. The number of Warrant Shares for which
Warrants are exercisable, and the Warrant Price of such shares shall be subject
to adjustment from time to time as set forth in this Section 5.
1.2 STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time the
Company shall:
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(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or
other distribution of, additional shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then (i) the number of Warrant Shares for which a Warrant is exercisable
immediately prior to the occurrence of any such event shall be adjusted to equal
the number of shares of Common Stock which a record holder of the same number of
shares of Common Stock for which a Warrant is exercisable immediately prior to
the occurrence of such event would own or be entitled to receive after the
happening of such event and (ii) the Warrant Price immediately prior to the
occurrence of such event shall be adjusted to equal the product of the Warrant
Price multiplied by a fraction, the numerator of which shall be the number of
Warrant Shares for which a Warrant is exercisable immediately prior to the
adjustment and the denominator of which shall be the number of Warrant Shares
for which a Warrant is exercisable immediately after such adjustment.
1.3 OTHER DIVIDENDS AND DISTRIBUTIONS. If the Company shall make or fix a
record date for the holders of Common Stock entitled to receive a dividend or
other distribution payable in securities of the Company other than shares of
Common Stock, then lawful and adequate provision shall be made so that Holder
shall be entitled to receive upon exercise of the Warrants, for the aggregate
Warrant Price in effect prior thereto, in addition to the number of Warrant
Shares immediately theretofore issuable upon exercise of the Warrants, the kind
and number of securities of the Company which Holder would have owned and been
entitled to receive had the Warrants been exercised immediately prior to that
date (pro rated in the case of any partial exercise).
1.4 RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If the Common Stock is
changed into the same or a different number of shares of any class or classes of
stock, whether by reclassification, exchange, substitution or otherwise (other
than a subdivision or combination of shares, stock dividend or a reorganization,
recapitalization, merger, consolidation or sale of assets, each as provided for
elsewhere in this Section 5) then the Holder of the Warrants shall be entitled
to receive upon exercise of the Warrants, in lieu of the Warrant Shares
immediately theretofore issuable upon exercise of the Warrants, for the
aggregate Warrant Price in effect prior thereto, the kind and amount of stock
and other securities and property receivable upon such reclassification,
exchange, substitution or other change, which Holder would have been entitled to
receive had the Warrants been exercised immediately prior to such
reclassification, exchange,
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substitution or change, which Holder would have been entitled to receive had
the Warrants been exercised immediately prior to such reclassification,
exchange, substitution or change (pro rated in the case of any partial
exercise).
1.5 LIQUIDATION. If the Company shall, at any time, prior to the
expiration of the Warrants, dissolve, liquidate or wind up its affairs, Holder
shall have the right, but not the obligation, to exercise the Warrants. Upon
such exercise, Holder shall have the right to receive, in lieu of the shares of
Common Stock that Holder otherwise would have been entitled to receive upon such
exercise, the same kind and amount of assets as would have been issued,
distributed or paid to Holder upon any such dissolution, liquidation or winding
up with respect to such shares of Common Stock had Holder been the holder of
record of such shares of Common Stock receivable upon exercise of the Warrants
on the date for determining those entitled to receive any such distribution. If
any such dissolution, liquidation or winding up results in any cash distribution
in excess of the Warrant Price, Holder may, at Holder's option, exercise the
Warrants without making payment of the applicable Warrant Price and, in such
case, the Company shall, upon distribution to Holder, consider the applicable
Warrant Price per Warrant Share to have been paid in full, and in making
settlement to Holder shall deduct an amount equal to the applicable Warrant
Price from the amount payable to Holder.
1.6 REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF ASSETS. If any of
the following transactions (each, a "Special Transaction") shall become
effective: (a) a capital reorganization or recapitalization (other than a
dividend or other distribution, subdivision, combination, reclassification,
substitution or exchange of shares provided for elsewhere in this Section 5),
(b) a consolidation or merger of the Company with and into another entity (where
the Company is not the surviving corporation or where there is a change in, or
distribution with respect to, the Common Stock), or (c) a sale or conveyance of
all or substantially all of the Company's assets, then, as a condition of the
Special Transaction, lawful and adequate provision shall be made so that Holder
shall thereafter have the right to purchase and receive upon exercise of the
Warrants, in lieu of the Warrant Shares immediately theretofore issuable upon
exercise of the Warrants, for the aggregate Warrant Price in effect immediately
prior to such consummation, such shares of stock, other securities, cash or
other assets ("Other Property") as may be issued or paid pursuant to the terms
of such Special Transaction to the holders of shares of Common Stock for which
such Warrants could have been exercised immediately prior to such Special
Transaction (pro rated in the case of any partial exercise). In connection with
any Special Transaction, appropriate provision shall be made with respect to the
rights and interests of Holder to the end that the provisions of the Warrants
(including without limitation provisions for adjustment of the Warrant Price and
the number of Warrant Shares issuable upon the exercise of the
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Warrants), shall thereafter be applicable, as nearly as may be practicable, to
any Other Property thereafter deliverable upon the exercise of the Warrants. The
Company shall not effect any Special Transaction unless prior to, or
simultaneously with, the closing, the successor entity (if other than the
Company), if any, resulting from such consolidation or merger or the entity
acquiring such assets shall assume by a written instrument executed and mailed
by certified mail or delivered to Holder at the address of Holder appearing on
the books of the Company, the obligation of the Company or such successor
corporation to deliver to Holder such Other Property, as in accordance with the
foregoing provisions, which Holder shall have the right to purchase.
1.7 NOTICE. Whenever the Warrants or the number of Warrant Shares issuable
hereunder is to be adjusted as provided herein or a dividend or distribution (in
cash, stock or otherwise and including, without limitation, any distributions
under Section 5.5) is to be declared by the Company, or a definitive agreement
with respect to a Special Transaction has been entered into, the Company shall
forthwith cause to be sent to the Holder at the last address of the Holder shown
on the books of the Company, by first-class mail, postage prepaid, at least 5
business days prior to the record date specified in Section 5.7(a)(i) below or
at least 10 business days before the date specified in Section 5.7(b) and
Section 5.7(a)(ii) below, a notice stating in reasonable detail the relevant
facts and any resulting adjustments and the calculation thereof, if applicable,
and stating (if applicable):
(a) the date to be used to determine (i) which holders of Common
Stock will be entitled to receive notice of such dividend,
distribution, subdivision or combination (the "Record Date"),
and (ii) the date as of which such dividend, distribution,
subdivision or combination shall be made; or, if a record is
not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution,
subdivision or combination are to be determined (provided,
that in the event the Company institutes a policy of declaring
cash dividends on a periodic basis, the Company need only
provide the relevant information called for in this Section
5.7(a) with respect to the first cash dividend payment to be
made pursuant to such policy and thereafter provide only
notice of any changes in the amount or the frequency of any
subsequent dividend payments), or
(b) the date on which a Special Transaction is expected to become
effective, and the date as of which it is expected that
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holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other
property deliverable upon consummation of the Special
Transaction (the "Exchange Date").
1.8 FRACTIONAL INTERESTS. The Company shall not be required to issue
fractions of shares of Common Stock upon the exercise of a Warrant. If any
fraction of a share of Common Stock would be issuable upon the exercise of a
Warrant, the Company shall, upon such issuance, purchase such fraction for an
amount in cash equal to the current value of such fraction, computed on the
basis of the Current Market Price on the last business day prior to the date of
exercise.
VI. PAYMENT OF TAXES. All Warrant Shares shall be validly issued, fully paid and
nonassessable and free of claims of preemptive rights, and the Company shall pay
all issuance taxes and similar governmental charges that may be imposed in
respect of the issue or delivery thereof, but in no event shall the Company pay
a tax on or measured by the net income or gain attributed to such exercise.
Notwithstanding the foregoing, the Company shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any certificate in a name other than that of the Holder, and the
Company shall not be required to issue or deliver any such certificate unless
and until the Holder shall have paid to the Company the amount of such tax or
shall have established to the satisfaction of the Company that such tax has been
paid.
VII. TRANSFER AND EXCHANGE. This Warrant shall be transferable in whole or in
part, except as otherwise provided herein and except that the Holder hereof
represents that it is acquiring this Warrant for its own account and for the
purpose of investment and not with a view to any distribution or resale thereof
within the meaning of the Securities Act. The Holder further agrees that it will
not sell, assign or transfer any of this Warrant unless this Warrant shall have
been registered for sale under the Securities Act or until the Company shall
have received from counsel for the Holder an opinion to the effect that the
proposed sale or other transfer of this Warrant by the Holder may be effected
without such registration. The Holder acknowledges that, in taking this
unregistered Warrant, it must continue to bear the economic risk of its
investment for an indefinite period of time because of the fact that such
Warrant has not been registered under the Securities Act and further realizes
that such Warrant cannot be sold unless it is subsequently registered under the
Securities Act or an exception from such registration is available. The Holder
also acknowledges that appropriate legends reflecting the status of this Warrant
under the Securities Act may be placed on the face of this Warrant certificate
at the time of their transfer and delivery to the
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Holder hereof. The transfer of Warrant Shares issuable upon exercise of this
Warrant is governed by Section 10 hereof.
VIII. LOSS OR MUTILATION. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or a
replacement hereof and, in the case of any such loss, theft or destruction, on
delivery of an indemnity agreement or security reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation, on surrender
and cancellation of this Warrant or a replacement, the Company at its expense
will execute and deliver in lieu thereof, a new warrant of like tenor.
IX. RESERVATION OF STOCK. The Company will at all times reserve and keep
available, solely for issuance and delivery on the exercise of this Warrant, all
Warrant Shares from time to time issuable upon the exercise of this Warrant and
all shares of the Common Stock from time to time issuable upon the conversion of
the Warrant Shares issuable upon the exercise of this Warrant.
X. NEGOTIABILITY. This Warrant is issued upon the following terms, to all of
which the Holder, by the taking hereof, consents and agrees:
(a) this Warrant is subject to the terms and provisions of the
Stock Purchase Agreement;
(b) title to this Warrant may be transferred by endorsement (by
the Holder executing the form of assignment at the end hereof)
and delivery in the same manner as in the case of a negotiable
instrument transferable by endorsement and delivery and any
person in possession of this Warrant properly endorsed is
authorized to represent himself as absolute owner hereof and
is empowered to transfer absolute title hereto by endorsement
and delivery hereof to a bona fide purchaser hereof for value;
each prior taker or owner waives and renounces all of his
equities or right in this Warrant in favor of each such bona
fide purchaser, and each such bona fide purchaser shall
acquire absolute title hereto and to all rights represented
hereby;
(c) until this Warrant is transferred on the books of the Company,
the Company may treat the registered Holder hereof as the
absolute owner hereof for all purposes, notwithstanding any
notice to the contrary; and
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(d) the Holder, by its acceptance hereof, represents that it is
acquiring this Warrant for investment purposes only and that
it does not have any present intention to resell this Warrant
or to sell or distribute any Warrant Shares for which this
Warrant may be exercised.
XI. NOTICES. All notices and other communications from the Company to the Holder
shall be mailed by first class registered or certified mail, postage prepaid, or
sent by express overnight courier service or electronic facsimile transmission
(with a copy by mail) at the address furnished to the Company in writing by the
last Holder of this Warrant who shall have furnished an address to the Company
in writing.
XII. CHANGE, WAIVER. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
XIII. HEADINGS. The headings in this Warrant are for purposes of convenience of
reference only and shall not be deemed to constitute a part hereof.
XIV. LAW GOVERNING. This Warrant shall be construed and enforced in accordance
with and governed by the internal laws of Delaware, without reference to the
conflicts of laws provisions in effect therein.
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IN WITNESS WHEREOF, the Company has executed this Warrant under seal as of
the date first written above.
ATTEST: THE GOOD GUYS, INC.
By:/s/ Xxxxx X. Xxxxxx By:/s/ Xxxxxx Xxxxxxx
------------------- ------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxx Xxxxxxx
Title: Vice President/Finance and Title: Chairman and Chief
Controller Executive Officer
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FORM OF EXERCISE
(To be signed only on exercise of Warrant)
TO: THE GOOD GUYS, INC.
The undersigned, the holder of the Warrant attached hereto, hereby
irrevocably elects to exercise this Warrant for, and to purchase thereunder,
___________ shares of the Common Stock of THE GOOD GUYS, INC., and herewith
makes payment of $______________ therefor, and requests that the certificates
for such shares be issued in the name of, and delivered to
__________________________ whose address is_________________________________.
Dated:
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(Signature must conform to name of Holder as
specified on the face of the Warrant)
--------------------------------------------
(Address)
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FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and
transfers unto ________________________________ the right represented by the
Warrant attached hereto to purchase ___________ shares of Common Stock of THE
GOOD GUYS, INC. to which the within Warrant relates, and appoints
____________________________________ Attorney-In-Fact to transfer such right on
the books of THE GOOD GUYS, INC. with full power of substitution in the
premises.
Dated:
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(Signature must conform to name of Holder as
specified on the face of the Warrant)
--------------------------------------------
(Address)
Signed in the presence of:
---------------------------------
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The Good Guys, Inc.
September 16, 1999
Page 2
EXHIBIT A
EXERCISE NOTICE
[To be executed only upon exercise of the Warrant]
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for the purchase of the number of shares of Common Stock of The
Good Guys, Inc. (the "COMPANY") as is set forth below, and herewith makes
payment therefor, all at the price and on the terms and conditions specified in
the attached Warrant Certificate and requests that certificates for the shares
of Common Stock hereby purchased (and any securities or other property issuable
upon such exercise) be issued in the name of and delivered to the person
specified below whose address is set forth below, and, if such shares of Common
Stock shall not include all of the shares of Common Stock now and hereafter
issuable as provided in the attached Warrant Certificate, then the Company
shall, at its own expense, promptly issue to the undersigned a new Warrant
Certificate of like tenor and date for the balance of the shares of Common Stock
issuable thereunder.
Date:
-----------------
Amount of Shares Purchased:
--------------------
Aggregate Purchase Price: $
-------------------
Printed Name of Registered Holder:
-------------------------------------
Signature of Registered Holder:
----------------------------------------
NOTICE: The signature on this Exercise Notice must correspond with the name
as written upon the face of the attached Warrant Certificate in
every particular, without alteration or enlargement or any change
whatsoever.
Stock Certificates to be issued and registered in the following name, and
delivered to the following address:
--------------------------------------------
(Name)
--------------------------------------------
(Street Address)
--------------------------------------------
(City) (State) (Zip Code)
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The Good Guys, Inc.
September 16, 1999
Page 3
EXHIBIT B
ASSIGNMENT NOTICE
[To be executed only upon transfer of the Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto the person named below, whose address is set forth below, the rights
represented by the attached Warrant Certificate to purchase the number of shares
of the Common Stock of The Good Guys, Inc. (the "COMPANY") as is set forth
below, to which the attached Warrant Certificates relates, and appoints
_________________ attorney to transfer such rights on the books of the Company
with full power of substitution in the premises. If such shares of Common Stock
of the Company shall not include all of the shares of Common Stock now and
hereafter issuable as provided in the attached Warrant Certificate, then the
Company, at its own expense, shall promptly issue to the undersigned a new
Warrant Certificate of like tenor and date for the balance of the Common Stock
issuable thereunder.
Date:
-------------------------
Amount of Warrants Transferred:
--------------------------
Printed Name of Registered Holder:
---------------------------------------
Signature of Registered Holder:
-------------------------------------------
NOTICE: The signature on this Assignment Notice must correspond with the
name as written upon the face of the attached Warrant Certificate
in every particular, without alteration or enlargement or any
change whatsoever.
The Warrant Certificate for transferred Warrants is to be issued and
registered in the following name, and delivered to the following address:
--------------------------------------------
(Name)
--------------------------------------------
(Street Address)
--------------------------------------------
(City) (State) (Zip Code)
