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The 73-year-old Holt was born in Torrance, Miss., in 1937.
The marker was placed this week at the site of where Holt's mother, Pinky Holt Taylor, operated a restaurant called Queen's Eat Shop.
The marker was the second in Grenada. The first honored Sam "Magic Sam" Maghett.
Holt played guitar with Maghett, who gave Holt his nickname, in the 1950s.
Holt recorded his first song "Scufflin" in 1966. He returned to Chicago and his brothers, Nick and Douglas, joined The Teardrops band in 1967, with Nick playing bass guitar and Douglas playing drums.