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EXHIBIT 10.17
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of August
16, 2000, by and among THE GOOD GUYS, INC., a Delaware corporation (the
"Company") and the persons listed on Schedule A hereto (collectively, the
"Purchasers").
R E C I T A L S:
WHEREAS, the Purchasers have executed and delivered to the Company that
certain Stock and Warrant Purchase Agreement (the "Purchase Agreement") pursuant
to which they will purchase in a private placement (the "Offering") shares of
the $.001 par value per share common stock (the "Common Stock") of the Company
(the "Stock Purchase") and warrants to purchase Common Stock (the "Warrants");
WHEREAS, pursuant to the Purchase Agreement, the Company will issue and
sell to the Purchasers shares of Common Stock and Warrants; and
WHEREAS, as an inducement to and condition of the Purchasers consummating
the Stock Purchase, the Company desires to provide the Purchasers with the
registration under the Securities Act of 1933, as amended, of offers and resales
of Common Stock purchased by the Purchasers in the Offering (the "Primary
Shares") and Common Stock purchasable by the Purchasers upon exercise of the
Warrants (the "Warrant Shares").
NOW, THEREFORE, in consideration of the recitals made above and the mutual
covenants and agreements stated herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:
"Best Efforts" means the taking of all commercially reasonable steps to
cause or prevent any event or condition which would have been taken in similar
circumstances by a reasonably prudent business person engaged in a similar
business for the advancement or protection of his own economic interest in light
of the consequences of failure to cause or prevent the occurrence of such event
or condition.
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"Closing" means the closing of the Stock Purchase pursuant to the Purchase
Agreement.
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Common Stock" has the meaning set forth in the recitals above.
"Form S-3" means a registration statement on Form S-3 adopted by the
Commission under the Securities Act or any substantially similar form from time
to time in effect.
"Holder" means any holder of outstanding Registrable Securities which have
not been sold to the public, but only if such holder is a Purchaser.
"Primary Shares" has the meaning set forth in the recitals above.
"Purchase Agreement" has the meaning set forth in recitals above.
"Purchasers" has the meaning set forth in the preface above.
"Register," "Registered" and "Registration" refer to a registration of the
offer and sale of securities pursuant to the Securities Act effected by
preparing and filing a Registration Statement (defined below) in compliance with
the Securities Act, and the declaration or ordering of the effectiveness of such
registration statement.
"Registrable Securities" means (i) the Primary Shares issued to the
Purchasers pursuant to the Purchase Agreement; (ii) the Warrant Shares; (iii)
any Penalty Warrant Shares; and (iii) shares of Common Stock or shares or units
of other securities issued pursuant to any stock split, stock dividend,
reorganization, recapitalization, reclassification, or other distribution or
change in respect of the shares of the Common Stock.
"Registration Expenses" means all expenses excluding Selling Expenses
incurred by the Company in effecting any Registration pursuant to this Agreement
and in complying with SECTION 2 and SECTION 3 of this Agreement, including,
without limitation, all registration, qualification and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company and of
a single special counsel for the Holders (if different from the Company's
counsel), blue sky fees and expenses, and the expense of any special audits
incident to or required by any such Registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).
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"Registration Statement" means a registration statement on a form
prescribed by the Commission for use in registering the offer and resale of
securities under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time-to-time.
"Selling Expenses" means all underwriting discounts, selling commissions
and stock transfer taxes applicable to the sale of Registrable Securities
pursuant to a Registration Statement prepared pursuant to this Agreement.
"Stock Purchase" has the meaning set forth in the recitals above.
"Warrant" means a warrant to purchase Common Stock issued to a purchaser
pursuant to the Purchase Agreement.
"Warrant Shares" has the meaning set forth in the recitals above.
2. COVENANT TO EFFECT REGISTRATION.
(a) Filing of Shelf Registration Statement. Subject to exceptions and
limitations described herein, the Company shall within six months of the date
hereof cause a Registration Statement to be filed with the Commission on Form
S-3, if available, or, if Form S-3 is not available for the Registration of the
Registrable Securities, on such form as may be prescribed by the Commission,
providing for the resale of the Primary Shares and the Warrant Shares. Such
Registration Statement shall contain all appropriate undertakings necessary to
comply with Rule 415 under the Securities Act pertaining to "shelf registration"
or delayed offerings of securities. The Company shall use its Best Efforts to
cause the Commission to declare such Registration Statement effective and to
maintain the effectiveness of such Registration Statement pursuant to SECTION 5
below. In the event the Commission will not permit such Registration Statement
to become effective because of the inclusion therein of Warrant Shares that
shall not have been issued at the time effectiveness of the Registration
Statement shall have been requested, then the Company shall file an amendment to
such Registration Statement covering the resale of only the Primary Shares and
shall use its Best Efforts to cause the Commission to declare such amended
Registration Statement effective and to maintain the effectiveness thereof
pursuant to SECTION 5 below.
(b) Registration of Other Securities in Registration. Any Registration
Statement filed pursuant to SECTION 2(A) may include securities of the Company
other than Registrable Securities. The securities of the Company to be
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registered may include shares held by the Holders, shares held by other
shareholders, or shares to be issued by the Company.
(c) Blue Sky in Registration. In the event of any Registration pursuant
to this SECTION 2, the Company shall use its Best Efforts to register and/or
qualify the securities covered by the Registration Statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders participating in the Registration and as may be
reasonably appropriate for the distribution of such Registrable Securities,
provided, however, that notwithstanding anything in this Agreement to the
contrary, in the event any jurisdiction in which the securities shall be
qualified imposes a non-waivable requirement that expenses incurred in
connection with the qualification of the Registrable Securities be borne by
selling shareholders, the Holders shall pay their pro rata share of such
expenses.
3. PIGGYBACK REGISTRATION. The provisions of this SECTION 3 shall apply
only with respect to Warrant Shares that are not Registered pursuant to SECTION
2 above and Penalty Warrant Shares issuable pursuant to SECTION 9 below.
(a) Notice of Piggyback Registration. Subject to the exceptions and
limitations contained herein, if, at any time or from time-to-time, the Company
shall Register any of its securities, either for its own account or the account
of a security holder or holders other than (i) a Registration relating solely to
employee benefit plans, or (ii) a Registration relating solely to a transaction
described in Rule 145 under the Securities Act, the Company will: (i) promptly
give to each Holder written notice thereof (which notice shall include a list of
jurisdictions in which the Company intends to attempt to qualify such securities
under applicable Blue Sky or other state securities laws), and (ii) include in
such Registration (and any related registration and/or qualification under the
applicable Blue Sky or other state securities laws), and in any Underwritten
Offering pursuant to such Registration, all Registrable Securities specified in
a written request or requests delivered to the Company by any Holder within ten
(10) days after receipt of such written notice from the Company by such Holder.
(b) Piggyback Registration in Underwritten Offerings.
(i) Notice of Underwritten Offering. If the Registration of which
the Company gives notice is for an Underwritten Offering commenced at the
election of the Company (and not pursuant to the exercise of rights pursuant to
SECTION 2 hereof), the Company shall so advise the Holders as a part of the
written notice given pursuant to SECTION 3(A). In such event, the right of any
Holder to Registration shall be conditioned upon there being an Underwritten
Offering, and the inclusion of such Holder's Registrable Securities in such
Registration and
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Underwritten Offering to the extent provided in and in compliance with this
SECTION 3. All Holders proposing to distribute their securities through such
Underwritten Offering shall (together with the Company and any other holders
distributing securities through such underwriting) enter into an underwriting
agreement containing the terms and conditions agreed to by the Company. The
Holders shall have no right to participate in the selection of underwriters for
an offering pursuant to this SECTION 3.2.
(ii) Marketing Limitation in Piggyback Registration. In the event
the representative of the underwriters in any Underwritten Offering advises the
Company in writing that market factors (including, without limitation, the
aggregate number of shares of Common Stock requested to be Registered, the
general condition of the market, and the status of the persons proposing to sell
securities in the Underwritten Offering) require a limitation of the shares to
be offered and sold in the Underwritten Offering, then the number of shares to
be excluded from the Underwritten Offering shall be determined in the following
order: (i) first, securities held by persons who are not contractually entitled
to include securities in the Registration; and (ii) second, securities that are
contractually entitled to be included in the Registration including securities
Registrable pursuant to this SECTION 3. Any partial reduction in the number of
shares or securities included in the Underwritten Offering affecting any of the
two (2) classes set forth in the immediately preceding sentence shall be
allocated among the persons in any such class pro rata, as nearly as
practicable, based on the number of Registrable Securities held by each person
and included in the Registration as a percentage of the aggregate Registrable
Securities held by all persons and included in the Registration.
(iii) Withdrawal in Piggyback Registration. If any Holder who
shall exercise piggyback registration rights pursuant to this SECTION 3 shall
disapprove of the proposed terms of any Underwritten Offering, he may elect to
withdraw therefrom by written notice to the Company and the underwriters
delivered at least two (2) days prior to the effective date of the Registration
Statement. Any Registrable Securities or other securities excluded or withdrawn
from such Underwritten Offering shall be withdrawn from such Registration.
(c) Blue Sky in Piggyback Registration. In the event of any
Registration of Registrable Securities pursuant to SECTION 3, the Company will
use its best efforts to register and/or qualify the securities covered by the
Registration Statement under the securities or Blue Sky laws of such
jurisdictions as shall be reasonably appropriate for the distribution of the
Registrable Securities.
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(d) Right to Terminate Registration. The Company shall have the right
to terminate or withdraw any Registration initiated by it that triggers
piggyback registration rights pursuant to this SECTION 3 prior to the
effectiveness of such Registration, whether or not any Holder has elected to
include securities in such registration.
4. EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration pursuant to SECTION 2 and SECTION 3 shall be
borne by the Company. All Selling Expenses shall be allocated among the persons
participating in any Registration based, in an Underwritten Offering, on the
relative gross proceeds allocable to each such person and, in a non-Underwritten
Offering, based on the Selling Expenses actually incurred with respect to the
sale of Registrable Securities of each person whose shares were included in the
Registration.
5. REGISTRATION PROCEDURES. The Company will keep each Holder whose
Registrable Securities are included in any Registration pursuant to this
Agreement advised in writing as to the initiation and completion of such
registration. The Company shall cause any registration statement filed pursuant
to SECTION 2(a) above to comply with the requirements of Rule 415 and shall use
its best efforts to comply with the undertakings required thereby to qualify the
registration as a "shelf registration" pursuant to Rule 415. At its expense, the
Company shall: (a) use its best efforts to keep such Registration Statement
effective for so long as the Holder or Holders whose Registrable Securities are
included in the Registration Statement are subject to the volume or manner of
resale restrictions set forth in Rule 144 under the Securities Act or until the
Holder or Holders have completed the distribution described in the Registration
Statement relating thereto, whichever first occurs; (b) furnish such number of
prospectuses (including preliminary prospectuses) and other documents as a
Holder from time-to-time reasonably may request; (c) prepare and file with the
Commission such amendments and supplements to such Registration Statement and
the prospectus used in connection with such Registration Statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities covered by such Registration
Statement; (d) notify each seller of Registrable Securities covered by such
Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing, and at the request of any such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
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amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing; (e) cause all such
Registrable Securities registered on such Registration Statement to be listed on
each securities exchange or automated quotation service (including the National
Market of The Nasdaq Stock Market) on which similar securities issued by the
Company are then listed; (f) provide a transfer agent and registrar for all
Registrable Securities registered pursuant to such Registration Statement and a
CUSIP number for all such Registrable Securities, in each case not later than
the effective date of such Registration; and (g) otherwise use its Best Efforts
to comply with all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicably, an
earnings statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first month after the effective date of
the Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act.
6. INFORMATION FURNISHED BY HOLDER. It shall be a condition precedent to
the Company's obligations under this Agreement that each Holder of Registrable
Securities included in any Registration furnish to the Company such information
regarding such Holder and the distribution proposed by such Holder or Holders as
the Company may reasonably request in writing and as shall be reasonably
required.
7. INDEMNIFICATION.
(a) Company's Indemnification of Holders. The Company shall indemnify
and hold harmless each Holder, each of its agents, legal counsel and accountants
and each (i) person controlling such Holder within the meaning of Section 15 of
the Securities Act ("Controlling Person"); and (ii) each underwriter and each
Controlling Person of such underwriter, with respect to which Registration,
qualification or compliance of Registrable Securities has been effected pursuant
to this Agreement against all claims, losses, damages, expenses or liabilities
(or actions in respect thereof) to the extent such claims, losses, damages,
expenses or liabilities (or actions, proceedings or settlements in respect
thereto) arise out of or are based upon any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus or other document
prepared by the Company (including any related Registration Statement
notification or the like) incident to any such Registration, qualification or
compliance, or are based on any omission (or alleged omission) to state therein
a
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material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by the Company of the
Securities Act or any rule or regulation promulgated under the Securities Act
applicable to the Company and relating to action or inaction required of the
Company in connection with any such Registration, qualification or compliance;
and the Company will reimburse each such indemnified party and each Controlling
Person, for any legal and any other expenses reasonably incurred in connection
with investigating, defending or settling any such claim, loss, damage,
liability or action; provided, however, that the indemnity contained in this
Section 7(a) shall not apply to amounts paid in settlement of any such claim,
loss, damage, liability or action if settlement is effected without the consent
of the Company; and provided, further, that the Company will not be liable in
any such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based upon any untrue statement or omission based
upon written information furnished to the Company by such Holder, Controlling
Person of such Holder and stated to be specifically for use therein, in which
case such Holder or Controlling Person of such Holder shall likewise indemnify
the Company.
(b) Indemnification Procedure. Promptly after receipt by an indemnified
party under this SECTION 7 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this SECTION 7, notify the indemnifying party in
writing of the commencement thereof and generally summarize such action. The
indemnifying party shall have the right to participate in and to assume the
defense of such claim; provided, however, that the indemnifying party shall be
entitled to select counsel for the defense of such claim with the approval of
any parties entitled to indemnification, which approval shall not be
unreasonably withheld; provided further, however, that if either party
reasonably determines that there may be a conflict between the position of the
Company and the Holders in conducting the defense of such action, suit or
proceeding by reason of recognized claims for indemnity under this SECTION 7,
then counsel for such party shall be entitled to conduct the defense to the
extent reasonably determined by such counsel to be necessary to protect the
interest of such party. The failure to notify an indemnifying party promptly of
the commencement of any such action, if prejudicial to the ability of the
indemnifying party to defend such action, shall relieve such indemnifying party,
to the extent so prejudiced, of any liability to the indemnified party under
this SECTION 7, but the omission so to notify the indemnifying party will not
relieve such party of any liability that such party may have to any indemnified
party otherwise other than under this SECTION 7.
8. MARKET STAND-OFF. In consideration of the granting to the Purchaser of
the registration rights pursuant to this Agreement, each of them agrees that,
for so
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long as such Holder holds Common Stock, except as permitted by SECTION 2 and
SECTION 3 above, such Holder will not sell, transfer or otherwise dispose of,
including, without limitation, through the use of any put or call option,
short sale or other derivative arrangement, shares of Common Stock in the ten
days prior to the effectiveness of any Registration Statement (other than a
registration statement on Form S-8 or Form S-4, or any successor form) with
respect to shares of Common Stock pursuant to which such Common Stock will be
offered for sale to the public (except pursuant to the Registration Statements
described in SECTION 2 or SECTION 3 above), and for up to one hundred eighty
(180) days following the effectiveness of such Registration Statement, provided
that the underwriters of any such offering shall reasonably request that the
Stockholders be bound by such restrictions.
9. MISCELLANEOUS.
9.1 Assignment. Except as otherwise provided in this Agreement, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties to this
Agreement.
9.2 Third Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties to this Agreement, and
their respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
9.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Delaware in the United States of America without
giving effect to the conflicts of laws principles thereof.
9.4 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
9.5 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be given by registered or
certified mail, return receipt requested, postage prepaid, by telecopier or by
national overnight delivery service, and addressed to the intended recipient as
set forth below
IF TO THE COMPANY:
The Good Guys, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
IF TO THE PURCHASER:
At the last known address appearing on the books of the Company maintained
for such purpose.
Any notice given in the manner aforesaid shall be deemed to have been served,
and shall be effective for all purposes hereof if sent by registered or
certified mail, on the earlier of the second day following the day on which it
is posted or the date of its receipt by the party to be notified, if sent by
telecopier, the day actually received as evidenced by a written receipt of
transmission and if sent by overnight delivery service, the day after such
notice has been delivered by the party to said service. Any Party may change the
address to which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Party notice in the manner
herein set forth.
9.6 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, portions of such provisions, or such
provisions in their entirety, to the extent necessary, shall be severed from
this Agreement, and the balance of this Agreement shall be enforceable in
accordance with its terms.
9.7 Amendment and Waiver. Any provision of this Agreement may be
amended or waived with the written consent of the Company and the Holders of at
least a majority of the outstanding shares of the Registrable Securities, so
long as the effect is to treat all Holders equally. Any amendment or waiver of
this Agreement shall require the written consent of any Holder who is
disproportionately adversely affected by such amendment or waiver. Any amendment
or waiver effected in accordance with this paragraph shall be binding upon each
Holder of Registrable Securities and the Company. In addition, the Company may
waive performance of any obligation owing to it, as to some or all of the
Holders of Registrable Securities, or agree to accept alternatives to such
performance, without obtaining the consent of any Holder of Registrable
Securities. In the event that an underwriting agreement is entered into between
the Company and any Holder, and such underwriting agreement contains terms
differing from this Agreement, as to any such Holder the terms of such
underwriting agreement shall govern.
9.8 Effect of Amendment or Waiver. The Purchasers and their successors
and assigns acknowledge that by the operation of SECTION 9.7 of this
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Agreement the holders of a majority of the outstanding Registrable Securities,
acting in conjunction with the Company, will have the right and power to
diminish or eliminate any or all rights or increase any or all obligations
pursuant to this Agreement.
9.9 Rights of Holders. Each holder of Registrable Securities shall have
the absolute right to exercise or refrain from exercising any right or rights
that such holder may have by reason of this Agreement, including, without
limitation, the right to consent to the waiver or modification of any obligation
under this Agreement, and such holder shall not incur any liability to any other
holder of any securities of the Company as a result of exercising or refraining
from exercising any such right or rights.
9.10 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement, upon any breach or
default of the other party, shall impair any such right, power or remedy of such
non-breaching party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be made in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either
under this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
COMPANY:
THE GOOD GUYS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Chairman and CEO
THE SIGNATURE OF THE PURCHASE AGREEMENT BY EACH PURCHASER IS INTENDED AS A
SIGNATURE OF THIS REGISTRATION RIGHTS AGREEMENT.
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