EXHIBIT 10.29
MANAGEMENT STOCK REPURCHASE AGREEMENT
This Management Stock Repurchase Agreement, dated as of February 19, 1997
(this "AGREEMENT"), is among Guitar Center, Inc., a Delaware corporation (the
"COMPANY"), and the employees of the Company listed on the signature pages
hereto (the "MANAGEMENT STOCKHOLDERS").
RECITALS
A. The Board of Directors of the Company has determined that it is in the
best interests of the Company to obtain additional financing for the operations
of the Company by effecting an initial public offering ("IPO") of Common Stock,
par value $.01 per share ("COMMON STOCK").
B. Contemporaneous with the closing of the IPO, all shares of the Junior
Preferred Stock will be mandatorily converted into shares of Common Stock (the
"CONVERSION").
C. In connection with the Conversion, a significant amount of non-cash
income will be deemed to have been earned by the Management Stockholders for
federal and state income tax purposes in connection with compensation deemed
earned by them in their capacity as employees of the Company (whether or not the
Management Stockholders have received any cash with respect to the underlying
stock). To ensure that the Management Stockholders have sufficient cash to
finance a portion of such federal and state income tax obligations, the Company
and the Management Stockholders, severally and not jointly, have agreed to enter
into this Agreement.
D. The repurchase arrangements between the Company and each Management
Stockholder provided for herein have been approved by the Board of Directors of
the Company and by a majority of the disinterested directors as being in the
best interest of the Company.
AGREEMENT
In consideration of the premises and the mutual covenants herein contained
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
1. STOCK REPURCHASE.
(a) In connection with the Conversion, the Company agrees to
repurchase from the Management Stockholders, and the Management Stockholders,
severally and not jointly, agree to sell to the Company, that aggregate number
of shares of Common Stock that can be repurchased for a total of $18,417,266,
allocated among each of the Management Stockholders as set forth on the
signature pages hereof (the "REPURCHASE AMOUNT").
(b) For purposes of this Agreement, the aggregate number of shares of
Common Stock to be repurchased by the Company from each Management Stockholder
(the "REPURCHASED SHARES"), in the case of each Management Stockholder, shall be
the (i) Repurchase Amount for such Management Stockholder divided by (ii) the
initial public offering price set forth on
the cover page of the final prospectus, less the gross underwriting discount
actually paid by the Company (net of any reimbursed expenses) (the
"COMMISSION"). Fractional shares shall be rounded to the nearest whole share.
(c) In connection with the determination of the number of Repurchased
Shares, the parties hereto agree that the Chief Financial Officer of the Company
shall, at the time of pricing of the IPO, fill in the blanks on the signature
pages hereof associated with each Management Stockholder's Repurchased Shares in
accordance with the mathematical calculation called for by Section 1(b), above.
(d) The Management Stockholders, severally and not jointly,
acknowledge that the initial public offering price and the Commission in the IPO
will be binding upon each Management Stockholder. The Management Stockholders,
severally and not jointly, acknowledge that they will not be consulted during
the determination of the initial public offering price or Commission and, should
the Company decide not to pursue the IPO, that each will be similarly bound by
that decision.
(e) In connection with this Agreement, each Management Stockholder
agrees to deliver to the Company on or prior to the closing date of the IPO:
(i) a duly executed spousal consent (in substantially the form
of Exhibit A attached hereto); and
(ii) the certificate(s) representing his Repurchased Shares.
Upon delivery of such instruments at the closing of the IPO, the Company will
pay the related Repurchase Price in cash by wire transfer.
(f) It is expressly agreed that the obligation of the Company to
repurchase, and the Management Stockholders, severally and not jointly, to sell,
the Repurchased Shares is conditioned upon, and shall only occur concurrently
with, the consummation of the IPO.
(g) The Company confirms that this Agreement and the related terms of
the disposition of shares of Common Stock to the Company has been approved by
the Board of Directors of the Company in advance of the effectiveness hereof and
represents that the repurchase of the Repurchased Shares as contemplated hereby
does not violate Section 160 of the Delaware General Corporation Law, the
Restated Certificate of Incorporation of the Company or any indenture,
instrument or agreement to which the Company is a party or by which it is bound.
(h) Upon the consummation of the repurchase of the Repurchased Shares
as contemplated hereby, the Company will acquire sole and exclusive record and
beneficial ownership of such shares, free and clear of any adverse claims of any
sort whatsoever.
2. MISCELLANEOUS.
2.1. COOPERATION. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective
2
at the times contemplated herein the agreements provided for herein and the
actions contemplated by this Agreement.
2.2. TERMINATION. This Agreement shall be terminated automatically
without liability to any party if the IPO has not been consummated on or prior
to June 30, 1997.
2.3. WAIVER; AMENDMENT. Subject to applicable law, at any time prior
to the consummation of the IPO, any party hereto may waive compliance as to such
party with any of the agreements of any other party or with any conditions to
its own obligations. Any agreement on the part of a party to any such waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party by a duly authorized officer. No party hereto shall be bound by any
waiver which it has not signed.
2.4. INTERPRETATION. All defined terms herein include the plural as
well as the singular. The words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Section or other subdivision. This Agreement shall not be construed
for or against any party hereto by reason of the authorship or alleged
authorship of any provisions hereof or by reason of the status of the respective
parties hereto. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
2.5. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each of such counterparts shall, for all purposes, constitute
one agreement binding on all the parties hereto, notwithstanding that all
parties are not signatories to the same counterpart.
2.6. BINDING EFFECT. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their administrators, successors, legal representatives and assigns.
2.7. MISCELLANEOUS. This Agreement (i) constitutes the entire
agreement and supersedes all other prior agreements and undertakings, both
written and oral, among the parties hereto, or any of them, with respect to the
subject matter hereof; (ii) is not intended to confer upon any other person any
rights or remedies hereunder; (iii) shall not be assigned, except by Company to
a directly or indirectly wholly owned subsidiary of the Company which, in a
written instrument shall agree to assume all of the Company's obligations
hereunder and be bound by all of the terms and conditions of this Agreement;
PROVIDED, HOWEVER, that no such assignment shall relieve the assigning party of
the obligations hereunder; and (iv) shall be governed in all respects, including
validity, interpretation and effect, by the internal laws of the State of
Delaware, without giving effect to the
principles of conflict of laws thereof.
(SIGNATURE PAGES FOLLOW)
S-1
IN WITNESS WHEREOF, the parties hereto have caused this Management
Stock Repurchase Agreement to be executed as of the date first written above.
GUITAR CENTER, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
--------------------------
Authorized Signatory
S-2
IN WITNESS WHEREOF, the parties hereto have caused this Management
Stock Repurchase Agreement to be executed as of the date first written above.
Number of Shares of /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
Common Stock Sold -------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
---------------
(To Be Completed By Chief Financial
Officer pursuant to Section 1(c))
$6,706,145
Repurchase Price
S-3
IN WITNESS WHEREOF, the parties hereto have caused this Management
Stock Repurchase Agreement to be executed as of the date first written above.
Number of Shares of /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Common Stock Sold -------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------
(To Be Completed By Chief Financial
Officer pursuant to Section 1(c))
$4,470,756
Purchase Price
S-4
IN WITNESS WHEREOF, the parties hereto have caused this Management
Stock Repurchase Agreement to be executed as of the date first written above.
Number of Shares of /s/ ▇▇▇ ▇▇▇▇▇▇
Common Stock Sold -------------------------
▇▇▇ ▇▇▇▇▇▇
---------------
(To Be Completed By Chief Financial
Officer pursuant to Section 1(c))
$793,433
Purchase Price
S-5
IN WITNESS WHEREOF, the parties hereto have caused this Management
Stock Repurchase Agreement to be executed as of the date first written above.
Number of Shares of /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
Common Stock Sold -------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
---------------
(To Be Completed By Chief Financial
Officer pursuant to Section 1(c))
$1,154,084
Purchase Price
S-6
IN WITNESS WHEREOF, the parties hereto have caused this Management
Stock Repurchase Agreement to be executed as of the date first written above.
Number of Shares of /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
Common Stock Sold -------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------
(To Be Completed By Chief Financial
Officer pursuant to Section 1(c))
$793,433
Purchase Price
S-7
IN WITNESS WHEREOF, the parties hereto have caused this Management
Stock Repurchase Agreement to be executed as of the date first written above.
Number of Shares of /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
Common Stock Sold -------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------
(To Be Completed By Chief Financial
Officer pursuant to Section 1(c))
$577,042
Purchase Price
S-8
IN WITNESS WHEREOF, the parties hereto have caused this Management
Stock Repurchase Agreement to be executed as of the date first written above.
Number of Shares of /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Common Stock Sold -------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------
(To Be Completed By Chief Financial
Officer pursuant to Section 1(c))
$323,332
Purchase Price
S-9
IN WITNESS WHEREOF, the parties hereto have caused this Management
Stock Repurchase Agreement to be executed as of the date first written above.
Number of Shares of /s/ ▇▇▇ ▇▇▇▇▇▇
Common Stock Sold -------------------------
▇▇▇ ▇▇▇▇▇▇
---------------
(To Be Completed By Chief Financial
Officer pursuant to Section 1(c))
$245,958
Purchase Price
S-10
IN WITNESS WHEREOF, the parties hereto have caused this Management
Stock Repurchase Agreement to be executed as of the date first written above.
Number of Shares of THE ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
REVOCABLE LIVING TRUST
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------- ------------------------
Common Stock Sold ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
(To Be Completed By Chief Financial Trustee
Officer pursuant to Section 1(c))
$3,353,083
Purchase Price
S-11
EXHIBIT A
CONSENT AND AGREEMENT OF SPOUSE
I, ________________________, am the spouse of ______________________, one
of the stockholders of Guitar Center, Inc., a Delaware corporation (the
"COMPANY"). I understand that my spouse is a party to that certain Management
Stock Repurchase Agreement dated as of February 19, 1997 by and among the
Company and certain of its stockholders (the "AGREEMENT"), and that I have
reviewed the Agreement.
The Agreement contains certain provisions regarding my spouse selling or
retaining any equity securities, or rights to receive equity securities (the
"SECURITIES") issued by the Company. I agree that my spouse may sell any
Securities in compliance with the terms of the Agreement and that I will not
sell any such Securities in violation of the Agreement.
Executed as of February 19, 1997.
-----------------------------------
(Signature)
Name:
------------------------------
(Please print name)
A-1
