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EXHIBIT 10.15
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "AGREEMENT") is dated as of June 1,
1999 between The Good Guys, Inc., a Delaware corporation (the "COMPANY"), and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "PURCHASER"). The Company and the Purchaser may hereinafter
be referred to collectively as the "PARTIES" or individually as a "PARTY."
Except as otherwise indicated herein, capitalized terms used herein are defined
in Appendix A.
PRELIMINARY STATEMENTS
A. The Company wishes Purchaser to make an equity investment in the
Company.
B. The Company and the Purchaser desire to enter into an agreement
pursuant to which the Purchaser will purchase from the Company, and the Company
will sell to the Purchaser, the restricted common stock and the warrants
described herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereof, and for other good, valuable and binding consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:
STATEMENT OF AGREEMENT
ARTICLE I
ISSUANCE AND PURCHASE OF SHARES
1.1 Issuance and Purchase of Common Stock. Subject to the terms and
conditions of this Agreement, the Company shall sell to the Purchaser and the
Purchaser shall purchase from the Company, One Million Four Hundred and Fifty
Thousand (1,450,000) shares (the "SHARES") of the Company's common stock, par
value $.001 per share, together with warrants to purchase One Million Four
Hundred and Thirty-Five Thousand Five Hundred (1,435,500) shares of Common Stock
in the form attached hereto as Exhibit A (the "WARRANTS") for an aggregate
purchase price of Four Million Six Hundred Eighty Nine Thousand Eight Hundred
Eighty and No/100 Dollars ($4,689,880.00) (the "PURCHASE PRICE").
1.2 Settlement. The settlement of the transactions contemplated herein
(the "SETTLEMENT") shall take place at the offices of Akin, Gump, Strauss, ▇▇▇▇▇
& ▇▇▇▇, L.L.P., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ at 10:00
a.m. Dallas, Texas time on or before June 8, 1999, or such other time, date or
place as the Parties may mutually agree (the "SETTLEMENT DATE"). At the
Settlement, (a) Purchaser shall pay to the Company, by wire transfer of
immediately available funds to such account or accounts designated in writing by
the Company, the Purchase Price; (b) the Company shall issue to Purchaser the
Shares and deliver to Purchaser certificates for the Shares duly registered in
the name of Purchaser; (c) the Company shall deliver the Warrants, registered in
the name of the Purchaser or such other name as may be designated by Purchaser
and (d) the Company shall deliver a legal opinion from the Company's counsel,
Howard, Rice, Nemerovski, Canady, ▇▇▇▇ & Rabkin, P.C., in form and substance
satisfactory to Purchaser, and expressing the opinions identified on Schedule
1.2(d) hereto.
ARTICLE II
RESTRICTIONS ON TRANSFERABILITY
The Shares shall not be transferred before satisfaction of the
conditions specified in this Article II, which conditions are intended to ensure
compliance with the provisions of the Securities Act and applicable state
securities
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laws with respect to the transfer of any Shares. Purchaser, by entering into
this Agreement and accepting the Shares, agrees to be bound by the provisions of
this Article II.
2.1 Restrictive Legend. Except as otherwise provided in this Article
II, each certificate representing Shares and Warrant Shares (together the
"RESTRICTED COMMON STOCK") shall be stamped or otherwise imprinted with a legend
in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT
BE SOLD OR OTHERWISE TRANSFERRED, UNLESS AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT AND ANY APPLICABLE SECURITIES LAWS, OR ANY
RULE OR REGULATION PROMULGATED THEREUNDER, IS AVAILABLE. SUCH
SECURITIES ARE SUBJECT TO THE RESTRICTIONS AND PRIVILEGES SPECIFIED IN
THE STOCK PURCHASE AGREEMENT, DATED AS OF JUNE 1, 1999, BETWEEN THE
GOOD GUYS, INC. AND ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE GOOD GUYS, INC. AND WILL BE FURNISHED WITHOUT CHARGE
TO THE HOLDER HEREOF UPON WRITTEN REQUEST. THE HOLDER OF THIS
CERTIFICATE AGREES TO BE BOUND BY THE TERMS AND CONDITIONS OF SUCH
STOCK PURCHASE AGREEMENT."
2.2 Transfers. Each Holder agrees that it will not sell, transfer or
otherwise dispose of any shares of Restricted Common Stock, in whole or in part,
except pursuant to an effective registration statement under the Securities Act
or an exemption from registration thereunder. Each certificate, if any,
evidencing such shares of Restricted Common Stock issued upon such transfer
shall bear the restrictive legend set forth in Section 2.1, unless in the
written opinion of the transferee's or Holder's counsel delivered to the Company
in connection with such transfer (which opinion shall be reasonably satisfactory
to the Company) such legend is not required in order to ensure compliance with
the Securities Act.
2.3 Termination of Restrictions. The restrictions imposed by this
Article II upon the transferability of the Restricted Common Stock and the
legend requirement of Section 2.1 shall terminate as to any particular Share or
Warrant Share (i) when and so long as such security shall have been registered
under the Securities Act and disposed of pursuant thereto, or (ii) when the
Holder thereof shall have delivered to the Company the written opinion of
counsel to such Holder, which opinion shall be reasonably satisfactory to the
Company, stating that such legend is not required in order to ensure compliance
with the Securities Act. Whenever the restrictions imposed by this Article II
shall terminate as to any Restricted Common Stock, as herein above provided, the
Holder thereof shall be entitled to receive from the Company, at the expense of
the Company, a new certificate representing such Common Stock, not bearing the
restrictive legend set forth in Section 2.1.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
As a material inducement to Purchaser entering into this Agreement and
purchasing the Shares and Warrants, the Company represents and warrants to
Purchaser as follows:
3.1 Corporate Status. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
The Company has all requisite corporate power and authority to own or lease, as
the case may be, its properties and to carry on its business as now conducted.
The Company and its Subsidiaries are qualified or licensed to conduct business
in all jurisdictions where its or their ownership or lease of property and the
conduct of its or their business requires such qualification or licensing,
except to the extent that failure to so qualify or be licensed would not have a
Material Adverse Effect on the Company. There is no pending, or to the knowledge
of the Company threatened, proceeding for the dissolution, liquidation or
insolvency of the Company or any of its Subsidiaries.
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3.2 Corporate Power and Authority. The Company has the corporate power
and authority to execute and deliver this Agreement and the Warrants, to perform
its obligations hereunder and thereunder and consummate the transactions
contemplated hereby and thereby. The Company has taken all necessary corporate
action to authorize the execution, delivery and performance of this Agreement
and the Warrants and the transactions contemplated hereby and thereby.
3.3 Enforceability. Each of this Agreement and the Warrants has been
duly executed and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in equity.
3.4 No Violation. The execution and delivery by the Company of each of
this Agreement and the Warrants, the consummation of the transactions
contemplated hereby and thereby, and the compliance by the Company with the
terms and provisions hereof and thereof, will not (a) result in a violation or
breach of, or constitute, with the giving of notice or lapse of time, or both, a
material default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any Contract
to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or any material portion of the Company's or
its Subsidiaries' properties or assets may be bound, (b) violate any Requirement
of Law applicable to the Company or any of its Subsidiaries or any material
portion of the Company's properties or assets or (c) result in the imposition of
any Lien upon any of the properties or assets of the Company or any of its
Subsidiaries; except where any of the foregoing would not have a Material
Adverse Effect on the Company.
3.5 Consents/Approvals. No consent, approval, waiver or other action by
any Person under any Contract to which either the Company or any of its
Subsidiaries is a party, or by which any of their respective properties or
assets are bound, is required or necessary for the execution, delivery or
performance by the Company of this Agreement or the Warrants and the
consummation of the transactions contemplated hereby, except where the failure
to obtain such consents, filings, authorizations, approvals or waivers or make
such filings would not have a Material Adverse Effect on the Company.
3.6 Capitalization. The authorized capital stock of the Company
consists of 40,000,000 shares of Common Stock and 2,000,000 shares of Preferred
Stock. As of May 28, 1999 the Company had outstanding 14,532,350 shares of
Common Stock, all of which were duly authorized, validly issued, fully paid and
non-assessable and had no outstanding shares of Preferred Stock. Except (a) as
contemplated by this Agreement, (b) the Warrants, (c) as set forth on Schedule
3.6 hereto and (d) as set forth in the Company's SEC Reports, there are (y) no
rights, options, warrants, convertible securities, subscription rights or other
agreements, calls, plans, contracts or commitments of any kind relating to the
issued and unissued capital stock of, or other equity interest in, the Company
outstanding or authorized and (z) no contractual obligations of the Company to
repurchase, redeem or otherwise acquire any shares of the Company Common Stock.
Upon delivery to the Purchaser of the certificates representing the Shares and
payment of the Purchase Price, the Purchaser will acquire good, valid and
marketable title, subject to the limitations on marketability contained in this
Agreement or imposed pursuant to the Securities Act, to and beneficial and
record ownership of the Shares, and the Shares will be validly issued, fully
paid and non-assessable. The Company has duly reserved, solely for purposes of
issuance upon exercise of the Warrants, the shares of Common Stock issuable upon
exercise of the Warrants.
3.7 SEC Reports and Nasdaq Eligibility. Since September 30, 1998, the
Company has made all filings (the "SEC REPORTS") required to be made by it under
the Securities Act of 1933 (the SECURITIES ACT") and the Securities Exchange Act
of ▇▇▇▇, (▇▇▇ "▇▇▇▇▇▇▇▇ ▇▇▇"). The SEC Reports, when filed, complied in all
material respects with all applicable requirements of the Securities Act and the
Exchange Act and the securities laws, rules and regulations of any state and
pursuant to any Requirements of Law. The SEC Reports, when filed, did not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. The Company has delivered or made accessible to Purchasers true,
accurate and complete copies of the SEC Reports which were filed with the SEC
since September 30, 1998. The Company's Common Stock is currently eligible for
trading on the Nasdaq National Market.
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3.8 Governing Documents. The Company made available to the Purchaser
true, accurate and complete copies of the Company's Certificate of Incorporation
and Bylaws in effect as of the date hereof.
3.9 Financial Statements. Each of the balance sheets included in the
SEC Reports (including any related notes and schedules) fairly presents in all
material respects the consolidated financial position of the Company and its
Subsidiaries as of its date, and each of the other financial statements included
in the SEC Reports (including any related notes and schedules) fairly presents
in all material respects the consolidated results of operations or other
information therein of the Company and its Subsidiaries for the periods or as of
the dates therein set forth in accordance with GAAP consistently applied during
the periods involved (except that the interim reports are subject to normal
recording adjustments which might be required as a result of year-end audit and
except as otherwise stated therein).
3.10 Undisclosed Liabilities. Except as set forth on Schedule 3.10
hereto, as of May 28, 1999, the Company and its Subsidiaries do not have any
material direct or indirect indebtedness, liability, claim, loss, damage,
deficiency, obligation or responsibility, fixed or unfixed, ▇▇▇▇▇▇ or inchoate,
liquidated or unliquidated, secured or unsecured, subordinated or
unsubordinated, matured or unmatured, accrued, absolute, contingent, regulatory
or administrative charges or lawsuits brought, whether or not of a kind required
by GAAP to be set forth on a financial statement, that were not fully and
adequately reflected or reserved for in the financial statements contained in
the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 1999 or otherwise disclosed in the SEC Reports.
3.11 Material Changes. Except as set forth on Schedule 3.11 or in the
SEC Reports, since March 31, 1999 there has been no Material Adverse Change in
the Company. In addition, the description of the Company's business contained in
the Company's Annual Report on Form 10-K for the fiscal year ended September 30,
1998 is not materially inconsistent with its current operations. Except as set
forth in the SEC Reports, since March 31, 1999 there has not been (i) any direct
or indirect redemption, purchase or other acquisition by the Company of any
shares of the Common Stock or (ii) declaration, setting aside or payment of any
dividend or other distribution by the Company with respect of the Common Stock.
3.12 Litigation. Except as set forth in the SEC Reports, neither the
Company nor any of its Subsidiaries has received any notice of any outstanding
judgments, rulings, orders, writs, injunctions, awards or decrees of any court,
government or other authority against the Company or its Subsidiaries which
could have, or is party to any litigation or similar proceeding which could
have, if decided adversely to their interests, a Material Adverse Effect on the
Company.
3.13 Investment Company. The Company is not and after giving effect to
the sale of the Shares and Warrant Shares will not be an "investment company" or
an entity "controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended.
3.14 No Commissions. The Company has not incurred any obligation for
any finder's or broker's or agent's fees or commissions in connection with the
purchase of the Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As a material inducement to the Company entering into this Agreement
and issuing and/or selling the Warrants and/or the Shares, the Purchaser
represents and warrants to the Company as follows:
4.1 Power and Authority. The Purchaser is an individual resident of the
State of Texas with competence and authority under applicable law to execute and
deliver, and to perform his obligations under, this Agreement and the Warrant
and consummate the transactions contemplated hereby and thereby, and has all
necessary authority to execute, deliver and perform this Agreement and the
transactions contemplated hereby and thereby.
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4.2 Enforceability. This Agreement has been, and the Warrant when
delivered will be, duly executed and delivered by the Purchaser and constitute
legal, valid and binding obligations of the Purchaser, enforceable against the
Purchaser in accordance with their terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditor's rights generally and
general equitable principles regardless of whether enforceability is considered
in a proceeding at law or in equity.
4.3 No Violation. The execution and delivery by the Purchaser of this
Agreement and the Warrant and the consummation of the transactions contemplated
hereby and thereby, and the compliance by the Purchaser with the terms and
provisions hereof and thereof, will not (a) result in a violation or breach of,
or constitute, with or without due notice or lapse of time or both, a material
default (or give rise to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of any Contract to which the
Purchaser is a party or by which Purchaser or any material portion of
Purchaser's properties or assets may be bound, (b) violate any Requirement of
Law applicable to the Purchaser or any material portion of the Purchaser's
properties or assets or (d) result in the imposition of any Lien upon any of the
properties or assets of the Purchaser; except where any of the foregoing would
not have a Material Adverse Effect on the Purchaser.
4.4 Consents/Approvals. No consent, approval, waiver or other action by
any Person under any Contract to which the Purchaser is a party, or by which any
of the Purchaser's properties or assets are bound, is required or necessary for
the execution, delivery or performance by the Purchaser of this Agreement or the
Warrant and the consummation of the transactions contemplated hereby and
thereby, except where the failure to obtain such consents, filings,
authorizations, approvals or waivers or make such filings would not prevent or
delay the consummation of the transactions contemplated by this Agreement or the
Warrant or otherwise prevent the Purchaser from performing the Purchaser's
obligations hereunder or thereunder or have a Material Adverse Effect on
Purchaser.
4.5 Investment Intent.ERROR! REFERENCE SOURCE NOT FOUND. The Purchaser
is acquiring the Shares and Warrants hereunder and under the Warrant for the
Purchaser's own account and with no present intention of distributing or selling
the Shares or Warrants or any interest in the Shares or Warrants. The Purchaser
agrees that the Purchaser will not sell or otherwise dispose of any of the
Shares or Warrants or any interest in the Shares or Warrants unless such sale or
other disposition has been registered or qualified (as applicable) under the
Securities Act and applicable state securities laws or, in the opinion of the
Purchaser's counsel delivered to the Company (which opinion shall be reasonably
satisfactory to the Company) such sale or other disposition is exempt from
registration or qualification under the Securities Act and applicable state
securities laws. The Purchaser understands that the sale of the Shares and
Warrants acquired by the Purchaser hereunder has not been registered under the
Securities Act, but the Shares and Warrants are issued through transactions
exempt from the registration and prospectus delivery requirements of Section
4(2) of the Securities Act, and that the reliance of the Company on such
exemption from registration is predicated in part on these representations and
warranties of the Purchaser. The Purchaser acknowledges that pursuant to Section
2.1 a restrictive legend consistent with the foregoing has been or will be
placed on the certificates representing the Shares and the Warrants until such
legend is permitted to be removed under applicable law.
4.6 Adequate Information. The Company has made available and the
Purchaser has reviewed such information that the Purchaser considers necessary
or appropriate to evaluate the risks and merits of an investment in the Shares
(including, without limitation, the Company's Form 10-K for the fiscal year
ended September 30, 1998, Form 10-Q for the quarterly period ended December 31,
1998, Form 10-Q for the quarterly period ended March 31, 1999, Current Report on
Form 8-K dated April 30, 1999, Current Report on Form 8-K dated April 15, 1999,
and Form S-8 filed on November 19, 1998.
4.7 Opportunity to Question. The Purchaser has had the opportunity to
question, and, to the extent deemed necessary or appropriate, has questioned
representatives of the Company so as to receive answers and verify information
obtained in the Purchaser's examination of the Company, including the
information that the Purchaser has reviewed in relation to its investment in the
Shares and Warrants.
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4.8 No Other Representations. No oral or written representations have
been made to the Purchaser in connection with the Purchaser's acquisition of the
Shares and Warrants which were in any way inconsistent with the information
reviewed by the Purchaser. The Purchaser acknowledges that no representations or
warranties of any type or description have been made to it by any Person with
regard to the Company, any of its Subsidiaries, any of their respective
businesses, properties or prospectus or the investment contemplated herein,
other than the representations and warranties set forth in Article III hereof.
4.9 Knowledge and Experience. The Purchaser is an accredited investor
as such term is defined in Rule 501 under the Securities Act. The Purchaser has
such knowledge and experience in financial, tax and business matters, including
substantial experience in evaluating and investing in common stock and other
securities (including the common stock and other securities of new and
speculative companies), so as to enable the Purchaser to utilize the information
made available to the Purchaser in order to evaluate the merits and risks of an
investment in the Shares and Warrants and to make an informed investment
decision with respect thereto.
4.10 Independent Decision. The Purchaser is not relying on the Company
or on any legal or other opinion in the materials reviewed by the Purchaser with
respect to the financial or tax considerations of the Purchaser relating to its
investment in the Shares and Warrants. The Purchaser has relied solely on the
representations, warranties, covenants and agreements of the Company in this
Agreement (including the Exhibits and Schedules hereto) and on its examination
and independent investigation in making its decision to acquire the Shares and
Warrants.
4.11 No Commissions. The Purchaser has not incurred any obligation for
any finder's or broker's or agent's fees or commissions in connection with the
purchase of the Shares and Warrants.
4.12 Litigation. The Purchaser has not received any notice of any
outstanding judgments, rulings, orders, writs, injunctions, awards or decrees of
any court, government or other authority against the Purchaser which, if decided
adversely to Purchaser`s interests, would restrain or prohibit the consummation
of the transactions contemplated hereby or under the Warrant.
4.13 Current Holdings. As of the date hereof, neither Purchaser nor any
of its affiliates is the record or beneficial owner of any shares of the
Company's equity securities.
ARTICLE V
COVENANTS
5.1 Filings. Each of the Company and the Purchaser shall make on a
prompt and timely basis all governmental or regulatory notifications and filings
required to be made by it for the consummation of the transactions contemplated
hereby.
5.2 Public Announcements. Neither the Company nor the Purchaser shall
make any press release or other public announcement with respect to the
transactions contemplated hereby without the prior consent of the other party
hereto, except that, where the Company has been advised by its counsel that
disclosure is required by law, in which event the Company shall take all
reasonable steps to consult with and receive the consent of the Purchaser prior
to making any such disclosure.
5.3 Further Assurances. Each of the Company and the Purchaser shall
execute and deliver such additional instruments and other documents and shall
take such further actions as may be necessary or appropriate to effectuate,
carry out and comply with all of the terms of this Agreement and the
transactions contemplated hereby.
5.4 Cooperation. Each of the Company and the Purchaser agree to
cooperate with the other in the preparation and filing of all forms,
notifications, reports and information, if any, required or reasonably deemed
advisable pursuant to any Requirement of Law in connection with the transactions
contemplated by this Agreement and to use their respective best efforts to agree
jointly on a method to overcome any objections by any Governmental
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Authority to any such transactions; provided that, any reasonable, out-of-pocket
expenses incurred by the Purchaser shall be reimbursed by the Company. Except as
may be specifically required hereunder, none of the Parties or their respective
Affiliates shall be required to agree to take any action that in the reasonable
opinion of such Party would result in or produce a Material Adverse Effect on
such Party.
5.5 Notification of Certain Matters. Each of the Company and the
Purchaser shall give prompt notice to the other of the occurrence, or
non-occurrence, of any event which would be likely to cause any representation
or warranty herein to be untrue or inaccurate, or any covenant, condition or
agreement herein not to be complied with or satisfied.
5.7 Share Maintenance. The Company covenants and agrees that (a) all
Warrant Shares, upon issuance in accordance with the terms thereof, and the
payment of the purchase price therefor, will be duly authorized, validly issued
and outstanding, fully paid and nonassessable, and free from all taxes, liens
and charges with respect to the issuance thereof other than those created by or
arising through the Purchaser, and all such Warrant Shares shall be sold to the
Purchaser pursuant to an exemption from registration under the Securities Act,
and in accordance with any applicable blue sky laws, (b) the Company will from
time to time take all actions necessary to assure that the par value per share
of the Common Stock is at all times equal to or less than the applicable Warrant
Price, and (c) the Company will at all times during the exercise period have
authorized and reserved sufficient shares of Common Stock to provide for the
exercise of the Warrants in full.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification Generally. The Company, on the one hand, and the
Purchaser, on the other hand, shall indemnify the other from and against any and
all losses, damages, liabilities, claims, charges, actions, proceedings,
demands, judgments, settlement costs and expenses of any nature whatsoever
(including, without limitation, attorneys' fees and expenses) or deficiencies
resulting from any breach of a representation, warranty or covenant by the
Indemnifying Party (including indemnification by the Company of the Purchaser
for any failure by the Company to deliver, or for any failure by the Purchaser
to receive, stock certificates representing the Shares on the Settlement Date)
and all claims, charges, actions or proceedings incident to or arising out of
the foregoing ("LOSSES"). Notwithstanding the foregoing, the Indemnifying Party
shall not be liable for any Losses to the extent such Losses arise out of,
result from, or are increased by, the breach of this Agreement by, or the
fraudulent acts of, the Indemnified Party.
6.2 Indemnification Procedures. Each Person entitled to indemnification
under this Article VI (an "INDEMNIFIED PARTY") shall give notice as promptly as
reasonably practicable to each party required to provide indemnification under
this Article VI (an "INDEMNIFYING PARTY") of the commencement of any action,
suit, proceeding or investigation or threat thereof made in writing in respect
of which indemnity may be sought hereunder; provided, however, failure to so
notify an Indemnifying Party shall not relieve such Indemnifying Party from any
liability that it may have otherwise than on account of this indemnity agreement
so long as such failure shall not have materially prejudiced the position of the
Indemnifying Party. Upon such notification, the Indemnifying Party shall assume
the defense of such action if it is a claim brought by a third party, and after
such assumption the Indemnifying Party shall not be entitled to reimbursement of
any expenses incurred by it in connection with such action except as described
below. In any such action, any Indemnified Party shall have the right to retain
its own counsel, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the contrary or (ii) the named
parties in any such action (including any impleaded parties) include both the
Indemnifying Party and the Indemnified Party and representation of both parties
by the same counsel would be inappropriate due to actual or potential differing
or conflicting interests between them. An Indemnifying Party who is not entitled
to, or elects not to, assume the defense of a claim shall not be obligated to
pay the fees and expenses of more than one counsel in any one jurisdiction for
all parties indemnified by such Indemnifying Party with respect to such claim,
unless in the reasonable judgment of any Indemnified Party a conflict of
interest may exist between such Indemnified Party and any other of such
Indemnified Parties with respect to such claim, in which event the Indemnifying
Party shall be obligated to pay the fees and
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expenses of such additional counsel or counsels. The Indemnifying Party shall
not be liable for any settlement of any proceeding effected without its written
consent (which shall not be unreasonably withheld or delayed by such
Indemnifying Party), but if settled with such consent or if there be final
judgment for the plaintiff, the Indemnifying Party shall indemnify the
Indemnified Party from and against any loss, damage or liability by reason of
such settlement or judgment.
ARTICLE VII
MISCELLANEOUS
7.1 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by certified
or registered mail (first class postage pre-paid), guaranteed overnight
delivery, or facsimile transmission if such transmission is confirmed by
delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such Party shall designate
in writing to the other Party):
(a) if to the Company to:
The Good Guys, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
Howard, Rice, Nemerovski, Canady, ▇▇▇▇ & Rabkin
Three ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Purchaser, at its last known address appearing on
the books of the Company maintained for such purpose with a
copy to:
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
7.2 Loss or Mutilation. Upon receipt by the Company from any Holder of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of a certificate representing Shares and indemnity
reasonably satisfactory to it (it being understood that the written agreement of
the Holder or an Affiliate thereof shall be sufficient indemnity) and in case of
mutilation upon surrender and cancellation hereof or thereof, the Company will
execute and deliver in lieu hereof or thereof a new stock certificate of like
tenor to such Holder; provided, in the case of mutilation, no indemnity shall be
required if the certificate representing Shares in identifiable form is
surrendered to the Company for cancellation.
7.3 Survival. Each representation, warranty, covenant and agreement of
the parties set forth in this Agreement is independent of each other
representation, warranty, covenant and agreement. Each representation and
warranty made by any Party in this Agreement shall survive the Settlement
through the period ending on the date six months from the date of this
Agreement. Notwithstanding the foregoing, the Purchaser expressly acknowledges
that, pursuant to Section 2.1 a restrictive legend will be placed on the
certificates representing the Shares, the Warrant and the Warrant Shares until
such legend is permitted to be removed under applicable law.
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7.4 Remedies.
(a) Each Party acknowledges that the other Parties would not
have an adequate remedy at law for money damages in the event that any of the
covenants or agreements of such Party in this Agreement was not performed in
accordance with its terms, and it is therefore agreed that each Party in
addition to and without limiting any other remedy or right such Party may have,
shall have the right to an injunction or other equitable relief in any court of
competent jurisdiction, enjoining any such breach and enforcing specifically the
terms and provisions hereof, and each Party hereby waives any and all defenses
such Party may have on the ground of lack of jurisdiction or competence of the
court to grant such an injunction or other equitable relief.
(b) All rights, powers and remedies under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise or beginning of the exercise of any
thereof by any Party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such Party.
7.5 Entire Agreement. This Agreement (including the exhibits and
schedules attached hereto) and other documents delivered at the Settlement
pursuant hereto, contain the entire understanding of the Parties in respect of
the subject matter hereof and supersede all prior agreements and understandings
between or among the Parties with respect to such subject matter. The exhibits
and schedules hereto constitute a part hereof as though set forth in full above.
7.6 Expenses; Taxes. Except as otherwise provided in this Agreement,
the Parties shall pay their own fees and expenses, including their own counsel
fees, incurred in connection with this Agreement or any transaction contemplated
hereby. Further, except as otherwise provided in this Agreement, any sales tax,
stamp duty, deed transfer or other tax (except taxes based on the income of the
Purchaser) arising out of the sale of the Shares by the Company to the Purchaser
and consummation of the transactions contemplated by this Agreement shall be
paid by the Company.
7.7 Amendment. This Agreement may be modified or amended or the
provisions hereof waived with the written consent of the Company and the
Purchaser.
7.8 Waiver. No failure to exercise, and no delay in exercising, any
right, power or privilege under this Agreement shall operate as a waiver, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude the exercise of any other right, power or privilege. No waiver of any
breach of any provision shall be deemed to be a waiver of any preceding or
succeeding breach of the same or any other provision, nor shall any waiver be
implied from any course of dealing between the Parties. No extension of time for
performance of any obligations or other acts hereunder or under any other
agreement shall be deemed to be an extension of the time for performance of any
other obligations or any other acts. The rights and remedies of the Parties
under this Agreement are in addition to all other rights and remedies, at law or
equity, that they may have against each other.
7.9 Binding Effect; Assignment. The rights and obligations of this
Agreement shall bind and inure to the benefit of the Parties and their
respective successors and legal assigns. The provisions of this Agreement are
intended to be for the benefit of all Holders from time to time of the Shares
and shall be enforceable by any such Holder.
7.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
7.11 Headings. The headings contained in this Agreement are for
convenience of reference only and are not to be given any legal effect and shall
not affect the meaning or interpretation of this Agreement.
7.12 GOVERNING LAW; INTERPRETATION. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED FOR ALL PURPOSES BY THE LAWS OF THE STATE OF
DELAWARE.
9
10
7.13 Severability. The parties stipulate that the terms and provisions
of this Agreement are fair and reasonable as of the date of this Agreement.
However, if any provision of this Agreement shall be determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated. If, moreover, any of those provisions shall for any reason be
determined by a court of competent jurisdiction to be unenforceable because
excessively broad or vague as to duration, geographical scope, activity or
subject, it shall be construed by limiting, reducing or defining it, so as to be
enforceable.
[Signature Page Follows.]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
THE GOOD GUYS, INC.
By:
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------
Title: Chief Executive Officer
------------------------
PURCHASER
By:
-----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------
Tax ID No. ###-##-####
-----------------------------
Address For Notices:
c/o ▇▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇
----------------------------------------
Tenth Floor
----------------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
(▇▇▇) ▇▇▇-▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
----------------------------------------
(Phone) (Fax)
State of Residence or Incorporation
of Purchaser (as applicable)
Texas
----------------------------------------
11
12
APPENDIX A
DEFINITIONS
1. Defined Terms. As used herein the following terms shall have the following
meanings:
"AGREEMENT" means this Stock Purchase Agreement.
"BUSINESS DAY" means any day that is not a Saturday or Sunday
or a day on which banks are required or permitted to be closed in the State of
Delaware.
"COMMON STOCK" means the common stock, $.001 par value per
share, of the Company, as constituted on the date hereof, and any capital stock
into which such Common Stock may thereafter be changed, and shall also include
(i) capital stock of the Company of any other class (regardless of how
denominated) issued to the holders of shares of Common Stock upon any
reclassification thereof which is also not preferred as to dividends or assets
over any other class of stock of the Company and which is not subject to
redemption and (ii) shares of common stock of any successor or acquiring
corporation received by or distributed to the holders of Common Stock of the
Company.
"THE COMPANY" has the meaning set forth in the Preamble of
this Agreement.
"CONTRACT" means any agreement, indenture, lease, sublease,
license, sublicense, promissory note, evidence of indebtedness, insurance
policy, annuity, mortgage, restriction, commitment, obligation or other
contract, agreement or instrument (whether written or oral).
"CONVERTIBLE SECURITIES" means evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable,
with or without payment of additional consideration in cash or property, for
additional shares of Common Stock, either immediately or upon the occurrence of
a specified date or a specified event.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations
promulgated thereunder, all as the same shall be in effect from time to time.
"GAAP" means generally accepted accounting principles in
effect in the United States of America from time to time.
"GOVERNMENTAL AUTHORITY" means any nation or government, any
state or other political subdivision thereof, and any entity or official
exercising executive, legislative, judicial, regulatory or administrative
functions of, or pertaining to, government.
"HOLDER" means each Person in whose name the Shares are
registered on the books of the Company maintained for such purpose.
"INDEMNIFIED PARTY" has the meaning set forth in Section 6.2
of this Agreement.
"INDEMNIFYING PARTY" has the meaning set forth in Section 6.2
of this Agreement.
"LIEN" means any mortgage, pledge, security interest,
assessment, encumbrance, lien, lease, sublease, adverse claim, levy, or charge
of any kind, or any conditional Contract, title retention Contract or other
contract to give or refrain from giving any of the foregoing.
"LOSSES" has the meaning set forth in Section 6.1 of this
Agreement.
"MATERIAL ADVERSE CHANGE" or "MATERIAL ADVERSE EFFECT" means,
with respect to any Person, any change or effect that is or is reasonably likely
to be materially adverse to the financial condition, business or results of
operations of such Person.
"PERSON(S)" means any individual, sole proprietorship,
partnership, joint venture, trust, limited liability company, incorporated
organization, association, corporation, institution, public benefit corporation,
entity or government
▇▇
(▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof).
"PURCHASE PRICE" has the meaning set forth in Section 1.1 of
this agreement.
"PURCHASER" has the meaning set forth in the Preamble of this
Agreement.
"REQUIREMENT OF LAW" means as to any Person, the articles of
incorporation, bylaws or other organizational or governing documents of such
Person, and any domestic or foreign and federal, state or local law, rule,
regulation, statute or ordinance or determination of any arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its properties or to which such Person or any of its property
is subject.
"RESTRICTED COMMON STOCK" has the meaning set forth in Section
2.1 of this Agreement.
"SEC" means the Securities and Exchange Commission.
"SEC REPORTS" has the meaning set forth in Section 3.7 of this
Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
or any successor federal statute, and the rules and regulations promulgated
thereunder, all as the same shall be in effect at the applicable time.
"SETTLEMENT" has the meaning set forth in Section 1.2 of this
Agreement.
"SETTLEMENT DATE" has the meaning set forth in Section 1.2 of
this Agreement.
"SHARES" has the meaning set forth in Section 1.1 of this
Agreement.
"SUBSIDIARY" means each of those Persons of which another
Person, directly or indirectly owns beneficially securities having more than 50%
of the voting power in the election of directors (or persons fulfilling similar
functions or duties) of the owned Person (without giving effect to any
contingent voting rights).
"WARRANTS" has the meaning set forth in Section 1.1 of this
Agreement.
"WARRANT SHARES" means those shares of the Company's common
stock, par value $.001 per share, which Purchaser is entitled to purchase
pursuant to the Warrant.
2. Other Definitional Provisions.
(a) All references to "dollars" or "$" refer to currency of
the United States of America.
(b) Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) All matters of an accounting nature in connection with
this Agreement and the transactions contemplated hereby shall be determined in
accordance with GAAP.
(d) As used herein, the neuter gender shall also denote the
masculine and feminine, and the masculine gender shall also denote the neuter
and feminine, where the context so permits.
(e) The words "hereof," "herein" and "hereunder," and words of
similar import, when used in this Agreement shall refer to this Agreement as a
whole (including any exhibits or schedules hereto) and not to any particular
provision of this Agreement.
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14
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY APPLICABLE
STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED, UNLESS AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE
SECURITIES LAWS, OR ANY RULE OR REGULATION PROMULGATED THEREUNDER, IS AVAILABLE.
SUCH SECURITIES ARE SUBJECT TO THE RESTRICTIONS AND PRIVILEGES SPECIFIED IN THE
STOCK PURCHASE AGREEMENT, DATED AS OF JUNE 1, 1999, BETWEEN THE GOOD GUYS, INC.
AND ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE GOOD
GUYS, INC. AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON
WRITTEN REQUEST. THE HOLDER OF THIS CERTIFICATE AGREES TO BE BOUND BY THE TERMS
AND CONDITIONS OF SUCH STOCK PURCHASE AGREEMENT.
WARRANT CERTIFICATE
No. 001
To Purchase 1,435,500 Shares of Common Stock of:
THE GOOD GUYS, INC.
THIS IS TO CERTIFY THAT ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "HOLDER") or Holder's
registered assigns, is entitled to purchase from THE GOOD GUYS, INC., a Delaware
corporation (the "COMPANY"), up to One Million Four Hundred Thirty-Five Thousand
Five Hundred (1,435,500) shares of the Company's common stock, par value $.001
per share (the "COMMON STOCK"), on the terms and conditions hereinafter set
forth.
1 GRANT OF WARRANT
1.1 GRANT. The Company hereby grants the Holder Warrants to purchase
One Million Four Hundred Thirty-Five Thousand Five Hundred (1,435,500) shares of
Common Stock at a purchase price of $3.39612 per share (as adjusted from time to
time pursuant to Section 2 hereof, the "WARRANT PRICE"), as follows:
(a) Series A Warrants to purchase 478,500 shares of Common Stock at
the Warrant Price, exercisable in whole or in part at any time
and from time to time during the five year period beginning on
the first anniversary of the date hereof (the "ISSUE DATE") or,
if such date is not a regular business day, on the next occurring
regular business day (as adjusted from time to time pursuant to
Section 2 hereof, the "FIRST TRANCHE WARRANTS").
(b) Series B Warrants to purchase 478,500 shares of Common Stock at
the Warrant Price, exercisable in whole or in part at any time
and from time to time during the five year period beginning on
the second anniversary of the Issue Date or, if such date is not
a regular business day, on the next occurring regular business
day (as adjusted from time to time pursuant to
15
Section 2 hereof, the "SECOND TRANCHE WARRANTS").
(c) Series C Warrants to purchase 478,500 shares of Common Stock at
the Warrant Price, exercisable in whole or in part at any time
and from time to time during the five year period beginning on
the third anniversary of the Issue Date or, if such date is not a
regular business day, on the next occurring regular business day
(as adjusted from time to time pursuant to Section 2 hereof, the
"THIRD TRANCHE WARRANTS," and together with the First Tranche
Warrants and the Second Tranche Warrants, the "WARRANTS," and the
shares of Common Stock to be issued upon the exercise of the
Warrants are the "WARRANT SHARES").
1.2 SHARES TO BE ISSUED: RESERVATION OF SHARES. The Company covenants
and agrees that (a) all Warrant Shares, upon issuance in accordance with the
terms hereof, and the payment of the purchase price therefor, will be duly
authorized, validly issued and outstanding, fully paid and nonassessable, and
free from all taxes, liens and charges with respect to the issuance thereof
other than those created by or arising through Holder, and all such Warrant
Shares shall be sold to the Holder pursuant to an exemption from registration
under the Securities Act of 1933, and in accordance with any applicable blue sky
laws, (b) the Company will from time to time take all actions necessary to
assure that the par value per share of the Common Stock is at all times equal to
or less than the applicable Warrant Price, and (c) the Company will at all times
during the exercise period have authorized and reserved sufficient shares of
Common Stock to provide for the exercise of the Warrants in full.
2 ADJUSTMENTS TO WARRANT RIGHTS. The number of Warrant Shares for which
Warrants are exercisable, and the Warrant Price of such shares shall be subject
to adjustment from time to time as set forth in this Section 2. The Company
shall give Holder notice of any event described below which requires an
adjustment pursuant to this Section 2 within a reasonable period of time, but in
no event greater than 30 days.
2.1 STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time the
Company shall:
2.1.1 take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, additional shares of Common Stock,
2.1.2 subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
2.1.3 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
2
16
Stock which a record holder of the same number of shares of Common Stock for
which a Warrant is exercisable immediately prior to the occurrence of such event
would own or be entitled to receive after the happening of such event and (ii)
the Warrant Price immediately prior to the occurrence of such event shall be
adjusted to equal the product of the Warrant Price multiplied by a fraction, the
numerator of which shall be the number of Warrant Shares for which a Warrant is
exercisable immediately prior to the adjustment and the denominator of which
shall be the number of Warrant Shares for which a Warrant is exercisable
immediately after such adjustment.
2.2 OTHER DIVIDENDS AND DISTRIBUTIONS. If the Company shall make or
fix a record date for the holders of Common Stock entitled to receive a dividend
or other distribution payable in securities of the Company other than shares of
Common Stock, then lawful and adequate provision shall be made so that Holder
shall be entitled to receive upon exercise of the Warrants, for the aggregate
Warrant Price in effect prior thereto, in addition to the number of Warrant
Shares immediately theretofore issuable upon exercise of the Warrants, the kind
and number of securities of the Company which Holder would have owned and been
entitled to receive had the Warrants been exercised immediately prior to that
date (pro rated in the case of any partial exercise).
2.3 RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If the Common Stock
is changed into the same or a different number of shares of any class or classes
of stock, whether by reclassification, exchange, substitution or otherwise
(other than a subdivision or combination of shares, stock dividend or a
reorganization, recapitalization, merger, consolidation or sale of assets, each
as provided for elsewhere in this Section 2) then the Holder of the Warrants
shall be entitled to receive upon exercise of the Warrants, in lieu of the
Warrant Shares immediately theretofore issuable upon exercise of the Warrants,
for the aggregate Warrant Price in effect prior thereto, the kind and amount of
stock and other securities and property receivable upon such reclassification,
exchange, substitution or other change, which Holder would have been entitled to
receive had the Warrants been exercised immediately prior to such
reclassification, exchange, substitution or change (pro rated in the case of any
partial exercise).
2.4 REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF ASSETS. If
any of the following transactions (each, a "SPECIAL TRANSACTION") shall become
effective: (a) a capital reorganization or recapitalization (other than a
dividend or other distribution, subdivision, combination, reclassification,
substitution or exchange of shares provided for elsewhere in this Section 2),
(b) a consolidation or merger of the Company with and into another entity (where
the Company is not the surviving corporation or where there is a change in, or
distribution with respect to, the Common Stock), or (c) a sale or conveyance of
all or substantially all of the Company's assets, then, as a condition of the
Special Transaction, lawful and adequate provision shall be made so that Holder
shall thereafter have the right to purchase and receive upon exercise of the
Warrants, in lieu of the Warrant Shares immediately theretofore issuable upon
exercise of the Warrants, for the aggregate Warrant Price in effect immediately
prior to such consummation, such shares of stock, other securities, cash or
other assets ("OTHER PROPERTY") as may be issued or paid pursuant to the terms
of such Special Transaction to the holders of shares of Common Stock for which
such Warrants could have been exercised immediately prior to such Special
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17
Transaction (pro rated in the case of any partial exercise). In connection with
any Special Transaction, appropriate provision shall be made with respect to the
rights and interests of Holder to the end that the provisions of the Warrants
(including without limitation provisions for adjustment of the Warrant Price and
the number of Warrant Shares issuable upon the exercise of the Warrants), shall
thereafter be applicable, as nearly as may be practicable, to any Other Property
thereafter deliverable upon the exercise of the Warrants. The Company shall not
effect any Special Transaction unless prior to, or simultaneously with, the
closing, the successor entity (if other than the Company), if any, resulting
from such consolidation or merger or the entity acquiring such assets shall
assume by a written instrument executed and mailed by certified mail or
delivered to Holder at the address of Holder appearing on the books of the
Company, the obligation of the Company or such successor corporation to deliver
to Holder such Other Property, as in accordance with the foregoing provisions,
which Holder shall have the right to purchase.
2.5 LIQUIDATION. If the Company shall, at any time, prior to the
expiration of the Warrants, dissolve, liquidate or wind up its affairs, Holder
shall have the right, but not the obligation, to exercise the Warrants. Upon
such exercise, Holder shall have the right to receive, in lieu of the shares of
Common Stock that Holder otherwise would have been entitled to receive upon such
exercise, the same kind and amount of assets as would have been issued,
distributed or paid to Holder upon any such dissolution, liquidation or winding
up with respect to such shares of Common Stock had Holder been the holder of
record of such shares of Common Stock receivable upon exercise of the Warrants
on the date for determining those entitled to receive any such distribution. If
any such dissolution, liquidation or winding up results in any cash distribution
in excess of the Warrant Price, Holder may, at Holder's option, exercise the
Warrants without making payment of the applicable Warrant Price and, in such
case, the Company shall, upon distribution to Holder, consider the applicable
Warrant Price per Warrant Share to have been paid in full, and in making
settlement to Holder shall deduct an amount equal to the applicable Warrant
Price from the amount payable to Holder.
2.6 NOTICE. Whenever the Warrants or the number of Warrant Shares
issuable hereunder is to be adjusted as provided herein or a dividend or
distribution (in cash, stock or otherwise and including, without limitation, any
distributions under Section 2.5) is to be declared by the Company, or a
definitive agreement with respect to a Special Transaction has been entered
into, the Company shall forthwith cause to be sent to the Holder at the last
address of the Holder shown on the books of the Company, by first-class mail,
postage prepaid, at least 5 business days prior to the record date specified in
Section 2.6.1(a) below or at least 10 business days before the date specified in
Section 2.6.2 and Section 2.6.1(b) below, a notice stating in reasonable detail
the relevant facts and any resulting adjustments and the calculation thereof, if
applicable, and stating (if applicable):
2.6.1 the date to be used to determine (a) which holders of
Common Stock will be entitled to receive notice of such dividend,
distribution, subdivision or combination (the "RECORD DATE"), and (b) the
date as of which such dividend, distribution, subdivision or combination
shall be made; or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend,
distribution,
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subdivision or combination are to be determined (provided, that in the
event the Company institutes a policy of declaring cash dividends on a
periodic basis, the Company need only provide the relevant information
called for in this Section 2.6.1 with respect to the first cash dividend
payment to be made pursuant to such policy and thereafter provide only
notice of any changes in the amount or the frequency of any subsequent
dividend payments), or
2.6.2 the date on which a Special Transaction is expected to
become effective, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon consummation of the
Special Transaction (the "EXCHANGE DATE").
2.7 FRACTIONAL INTERESTS. The Company shall not be required to issue
fractions of shares of Common Stock upon the exercise of a Warrant. If any
fraction of a share of Common Stock would be issuable upon the exercise of a
Warrant, the Company shall, upon such issuance, purchase such fraction for an
amount in cash equal to the current value of such fraction, computed on the
basis of the Current Market Price on the last business day prior to the date of
exercise.
2.8 EFFECT OF ALTERNATIVE SECURITIES. If at any time, as a result of
an adjustment made pursuant to this Section 2, Holder shall become entitled to
receive any securities of the Company other than shares of Common Stock, then
the number of such other securities receivable upon exercise of the Warrants
shall be subject to adjustment from time to time on terms as nearly equivalent
as practicable to the provisions with respect to shares of Common Stock
contained in this Section 2.
2.9 SUCCESSIVE APPLICATION. The provisions of this Section 2 shall
similarly apply from time to time to successive events covered by this Section
2.
2.10 WHEN ADJUSTMENTS ARE TO BE MADE. The adjustments required by this
Section 2 shall be made whenever and as often as any specified event requiring
an adjustment shall occur, except that any adjustment to the number of shares
for which the Warrants are exercisable that would otherwise be required may be
postponed (except in the case of a subdivision or combination of shares of the
Common Stock, as provided for in Section 2.1) up to, but not beyond, the date
and time of exercise of any Warrants if such adjustment, when taken in the
aggregate with all other adjustments not previously made, adds or subtracts less
than 1% to the number of shares of Common Stock for which the Warrants initially
issued pursuant to this Agreement are exercisable immediately prior to the
making of such adjustment. Any adjustment representing a change of less than
such minimum amount (except as aforesaid) which is postponed shall be carried
forward and made as soon as such adjustment, together with all other adjustments
required by this Section 2 and not previously made, would result, in the
aggregate, in a minimum adjustment or on the date of exercise. For the purpose
of any adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.
2.11 WHEN ADJUSTMENT NOT REQUIRED. If the Company shall take a record
of the
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holders of its Common Stock for the purpose of entitling them to receive a
dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders thereof, legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by reason of the making
of such record and any such adjustment previously made in respect thereof shall
be rescinded and annulled.
2.12 SUPERSEDING ADJUSTMENT. If, at any time after any adjustment of
the Warrant Price shall have been made pursuant to this Section 2 as the result
of any issuance of warrants, options, rights or convertible or exchangeable
securities, and such warrants, options or rights, or the right of conversion or
exchange in such other convertible or exchangeable securities, shall expire, and
all or a portion of such warrants, options or rights, or the right of conversion
or exchange with respect to all or a portion of such other convertible or
exchangeable securities, as the case may be, shall not have been exercised, then
such previous adjustment shall be rescinded and annulled and, if applicable, the
Warrant Price shall be recalculated as if all such expired and unexercised
warrants, or options, rights, or convertible or exchangeable securities had
never been issued, provided that, if such expiration would result in an increase
in the Warrant Price then in effect, such increase shall not be effective until
30 days after written notice thereof has been given to all Holders.
3 EXERCISE
3.1 EXERCISE OF WARRANT.
3.1.1 Holder may exercise a Warrant by surrendering this Warrant
Certificate, with the form of exercise notice attached hereto as Exhibit A
duly executed by Holder, and making payment to the Company of the aggregate
Warrant Price for the applicable Warrant Shares (i) in cash, by certified
check, bank check or wire transfer to an account designated by the Company
or (ii) by surrender of the appropriate part of this Warrant determined in
accordance with the provisions of Section 3.1.2, or by a combination of the
foregoing. Upon any partial exercise of the Warrants, the Company, at its
expense, shall promptly issue to Holder for its surrendered Warrant
Certificate a replacement Warrant Certificate identical in all respects to
this Warrant Certificate, except that the number of Warrant Shares shall be
reduced accordingly.
3.1.2 Should the Holder elect to make payment of all or any part
of the Warrant Price attributable to the Warrant Shares being purchased by
surrender of this Warrant, the Warrant may be exercised by being exchanged
in whole or in part for a number of Warrant Shares having an aggregate
Current Market Price on the date of such exercise equal to the amount that
is equal to (x) the aggregate Current Market Price of the Warrant Shares
subject to the Warrant designated by the Holder hereof on the date of the
exercise minus (y) the aggregate Warrant Price of such designated Warrant
Shares (the "WARRANT CONSIDERATION AMOUNTS"). Upon any such cashless
exercise, the number of Warrant Shares purchasable upon exercise of the
Warrant shall be reduced by such designated number of Warrant Shares, and
if a balance of purchasable Warrant Shares remains after
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such exercise, the Company shall execute and deliver to the Holder hereof a
new Warrant for such balance of Warrant Shares. In the event of any
exercise of the rights represented by this Warrant, unless this Warrant has
expired, a new Warrant representing the number of Warrant Shares equal to
the number of Warrant Shares purchasable under this Warrant less the number
of Warrant Shares purchased hereunder shall be issued to the Holder hereof
within such time. For purposes of this Agreement, "CURRENT MARKET PRICE"
shall mean, in respect of any share of Common Stock on any date herein
specified, (a) if there shall then be a public market for the Common Stock,
the last sale price on the Nasdaq National Market ("NASDAQ") or principal
stock exchange on which such Common Stock is then listed on the third
business day immediately preceding such date, (ii) if no sale takes place
on such day on any such exchange, the average of the last reported closing
bid and asked prices on such day as officially quoted on Nasdaq or such
principal exchange, (iii) if the Common Stock is not then listed or
admitted to trading on Nasdaq or any stock exchange, the average of the
last reported closing bid and asked prices on such day in the
over-the-counter market, as furnished by the quotation systems upon which
the Common Stock is then quoted, provided that such quotation systems are
operated by the National Association of Securities Dealers ("NASD") or its
affiliates or the National Quotation Bureau, Inc. or its affiliates, (iv)
if none of such entities at the time is engaged in the business of
reporting such prices, as furnished by any similar firm then engaged in
such business, or (v) if there is no such firm, as furnished by any member
of the NASD then routinely making price quotations in the Company's Common
Stock selected by the Company; or (b) at any time that there is no public
market for the Common Stock, the fair market value per share of Common
Stock on such date as determined in good faith by the Board of Directors of
the Company.
3.1.3 Each person in whose name any Warrant Share certificate is
issued upon exercise of any Warrants shall for all purposes be deemed to
have become the holder of record of the Warrant Shares for which such
Warrant was exercised, and such Warrant Share certificate shall be dated
the date upon which the Warrant exercise notice was duly surrendered and
payment of the purchase price was tendered to the Company.
3.1.4 Notwithstanding any other provision hereof, if an exercise
of any portion of any Warrant is to be made in connection with any Special
Transaction, the exercise of such portion may, at the election of the
holder of such portion, be conditioned upon the consummation of such
Special Transaction, in which case such exercise shall not be deemed to be
effective until the consummation of such transaction.
3.2 ISSUANCE OF WARRANT SHARES. The Warrant Shares purchased shall be
issued to the holder exercising the Warrants as of the close of business on the
date on which all actions and payments required to be taken or made by Holder,
pursuant to Section 3.1, shall have been so taken or made. Certificates for the
Warrant Shares so purchased shall be delivered to Holder within 10 days after
the Warrants are surrendered.
4 RIGHTS OF HOLDER
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4.1 RIGHTS PRIOR TO EXERCISE. Holder shall not, solely by virtue of
the Warrants and prior to the issuance of the Warrant Shares upon the exercise
thereof, be entitled to any rights of a shareholder in the Company, including
without limitation the right to receive cash dividends payable to the Company's
shareholders. No provision hereof, in the absence of affirmative action by
Holder to purchase, and no enumeration herein of the rights or privileges of the
Holder shall give rise to any liability for the Warrant Price of the Common
Stock acquirable by exercise hereof or as a shareholder of the Company.
4.2 ISSUANCE OF WARRANT SHARES. The Company shall not by any action
including, without limitation, amending its certificate of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of the Warrants,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of Holder against impairment, including assisting Holder in
making any governmental filings necessary prior to or in connection with any
exercise of the Warrants. Without limiting the generality of the foregoing, the
Company will (a) take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of the Warrants and (b)
use its best efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations with respect to the Warrants.
Upon the request of Holder, the Company will at any time during the
period this Warrant is outstanding acknowledge in writing, in form satisfactory
to Holder, the continuing validity of the Warrants and the obligations of the
Company hereunder.
4.3 CLOSING OF BOOKS. Unless the Company is closing its books with
respect to all shares of Common Stock, the Company shall not close its books
against the transfer of any Warrant or Warrant Share issued or issuable upon
exercise of the Warrants.
5 TRANSFERABILITY
Subject to the requirements of the Securities Act or any applicable state
securities laws, Holder may sell, assign, transfer or otherwise dispose of all
or any portion of the Warrants or the Warrant Shares acquired upon any exercise
hereof at any time and from time to time. Upon the sale, assignment, transfer or
other disposition of all or any portion of the Warrants, Holder shall deliver to
the Company a written notice of such in the form attached hereto as Exhibit B,
duly executed by Holder, which includes the identity and address of any
purchaser, assignor or transferee.
6 LEGEND ON WARRANT SHARES
Certificates evidencing the Warrant Shares shall bear the following legend
until such time as the terms of the Stock Purchase Agreement have expired:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED, UNLESS AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT AND ANY APPLICABLE SECURITIES LAWS, OR ANY RULE OR
REGULATION PROMULGATED THEREUNDER, IS AVAILABLE. SUCH SECURITIES ARE
SUBJECT TO THE RESTRICTIONS AND PRIVILEGES SPECIFIED IN THE STOCK PURCHASE
AGREEMENT, DATED AS OF JUNE 1, 1999, BETWEEN THE GOOD GUYS, INC. AND ▇▇▇▇▇▇
▇▇▇▇▇▇▇, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE GOOD GUYS,
INC. AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN
REQUEST. THE HOLDER OF THIS CERTIFICATE AGREES TO BE BOUND BY THE TERMS AND
CONDITIONS OF SUCH STOCK PURCHASE AGREEMENT."
7 PIGGY-BACK AND DEMAND REGISTRATION
7.1 Piggy-back Registration.
(a) Right to Include Registrable Securities. If the Company at any
time intends to register any of its debt or equity securities, or any instrument
convertible into or exchangeable for its debt or equity securities
("SECURITIES"), of the type and the class of Securities issuable, from time to
time, upon exercise of this Warrant, under the Securities Act of 1933, (the
"SECURITIES ACT") (other than by a registration on Form S-8 or S-4 or any
successor or similar form), whether or not for sale for its own account, it will
each such time give prompt written notice to Holder of its intention to do so
and of Holder's rights under this Section 7.1. If the Holder so elects, the
Company will use its best efforts to effect the registration under the
Securities Act of all Securities which the Company has been so requested to
register by the Holder. The Company will pay all Registration Expenses in
connection with each registration of Securities requested pursuant to this
Section 7.1.
(b) Priority. Holder's right to include Registrable Securities in such
offering shall be subject to usual and customary cut-back restrictions.
(c) Number of Incidental Registrations. Holder shall be entitled to
have Holder's Securities included in an unlimited number of registrations
pursuant to this Section 7.1.
7.2 Demand Registration.
(a) Request. At any time following the second anniversary of the Issue
Date and upon the written request of Holder requesting that the Company effect
the registration under the Securities Act of all or part of Holder's Securities
and specifying the intended method of
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disposition thereof, the Company will, subject to the terms of this Agreement,
effect the registration under the Securities Act of Securities which the Company
has been so requested to register by Holder for disposition in accordance with
the intended method of disposition stated in such request, all to the extent
requisite to permit the disposition of the Securities, so to be registered.
Usual and customary deferral provisions, not to exceed one hundred eighty (180)
days, shall apply.
(b) Registration Statement Form. Registrations under this Section 7.2
shall be on such appropriate registration form of the Securities and Exchange
Commission (the "COMMISSION") (i) as shall be selected by the Company and
reasonably acceptable to Holder and (ii) as shall permit the disposition of such
Securities in accordance with the intended method or methods of disposition
specified in its request for such registration.
(c) Expenses. The Company will pay all Registration Expenses in
connection with any registration required pursuant to this Section 7.2.
(d) Effective Registration Statement. A registration statement
pursuant to this Section 7.2 shall not be deemed to have been effected (i)
unless a registration statement with respect thereto has become effective, (ii)
if, after it has become effective, such registration becomes subject to any stop
order, injunction or other order or requirement of the Commission or court for
any reason which is not lifted, or (iii) the conditions to closing specified in
the purchase agreement or underwriting agreement, if any, entered into in
connection with such registration are not satisfied, other than by reason of
some act or omission by Holder.
(e) Number of Requested Registrations. The Company shall be obligated
to effect only one demand registration, regardless of the number of owners of
the Warrants or any Securities issued pursuant to exercise of such Warrants.
7.3 Reference to Holders. If any registration statement refers to Holder
by name or otherwise as the holder of any Securities of the Company, then Holder
shall have the right to require (x) the insertion therein of language, in form
and substance satisfactory to Holder to the effect that the holding by Holder of
such Securities does not necessarily make Holder a "controlling person" of the
Company within the meaning of the Securities Act and is not to be construed as a
recommendation by Holder of the investment quality of the Company's debt or
equity securities covered thereby and that such holding does not imply that
Holder will assist in meeting any future financial requirements of the Company,
or (y) in the event that such reference to Holder by name or otherwise is not
required by the Securities Act or any rules and regulations promulgated
thereunder, the deletion of the reference to Holder.
8 MISCELLANEOUS
8.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by certified
or registered mail (first class, postage prepaid), or guaranteed overnight
delivery, to the Company at the address at which its
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principal business office is located from time to time, and Holder at the
address of which it advises the Company in writing.
8.2 PAYMENT OF TAXES. The Company shall pay all expenses in connection
with, and all taxes and other governmental charges that may be imposed with
respect to, the issuance or delivery of Warrant Shares, unless such tax or
charge is imposed by law upon Holder, in which case such taxes or charges shall
be paid by Holder. The Company shall not be required, however, to pay any tax or
other charge imposed in connection with any transfer involved in the issue of
any certificate for Warrant Shares in any name other than that of Holder, and in
such case the Company shall not be required to issue or deliver any stock
certificate until such tax or other charge has been paid or it has been
established to the satisfaction of the Company that no such tax or other charge
is due.
8.3 AMENDMENT; WAIVER. This Warrant Certificate may not be modified,
amended, supplemented, canceled or discharged, except by written instrument
executed by the Company and Holder. No failure to exercise, and no delay in
exercising, any right, power or privilege under this Warrant Certificate shall
operate as a waiver, nor shall any single or partial exercise of any right,
power or privilege hereunder preclude the exercise of any other right, power or
privilege. No waiver of any breach of any provision shall be deemed to be a
waiver of any preceding or succeeding breach of the same or any other provision,
nor shall any waiver be implied from any course of dealing between the Company
and Holder. No extension of time for performance of any obligations or other
acts hereunder or under any other agreement shall be deemed to be an extension
of time for performance of any other obligations or any other acts.
8.4 HEADINGS. The headings contained in this Warrant Certificate are for
convenience of reference only and are not to be given any legal effect and shall
not affect the meaning or interpretation of this Warrant Certificate.
8.5 GOVERNING LAW; INTERPRETATION. This Warrant Certificate shall be
construed in accordance with and governed for all purposes by the laws of the
State of Delaware.
8.6 WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. The Warrants are
exchangeable, upon the surrender hereof by Holder at the principal office of the
Company, for new Warrants of like tenor representing in the aggregate the
purchase rights hereunder, and each of such new Warrants shall represent such
portion of such rights as is designated by the Holder at the time of such
surrender. The date the Company initially issues this Warrant shall be deemed to
be the "ISSUE DATE" hereof regardless of the number of times new certificates
representing the unexpired and unexercised rights formerly represented by the
Warrants shall be issued.
8.7 REPLACEMENT. Upon receipt of evidence reasonably satisfactory to the
Company (an affidavit of the Holder shall be satisfactory) of the ownership and
the loss, theft, destruction or mutilation of any certificate evidencing any
Warrant, and in the case of any such loss, theft or destruction, upon the
posting by such Holder of a bond in such reasonable amount as the Company may
direct as indemnity against any claim that may be made against it with respect
to such Warrant or receipt of indemnity reasonably satisfactory to the Company
(provided that if the Holder is a financial institution or other institutional
investor its own agreement shall be
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satisfactory), or, in the case of any such mutilation upon surrender of such
certificate, the Company shall (at its expense) execute and deliver in lieu of
such certificate a new certificate of like kind representing the same rights
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly
executed and delivered as of the 1st day of June, 1999.
THE GOOD GUYS, INC.
By:
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
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EXHIBIT A
EXERCISE NOTICE
[To be executed only upon exercise of Series _____ Warrant]
The undersigned registered owner of this Series _____ 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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EXHIBIT B
ASSIGNMENT NOTICE
[To be executed only upon transfer of Series _____ 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 Series _____ 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)
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