http://ultimateclassicrock.com/tom-petty-prince-hall-of-fame/
As the New York Times reports, it came together when Joel Gallen, the producer and director of the ceremony, wrote to Prince asking him to play lead guitar he was already going to be there because he was being inducted. But when it came time to rehearse, there were problems. Marc Mann, Jeff Lynnes guitarist, recreated Eric Claptons famous solo in the middle note-for-note. And we get to the big end solo, Gallen says, and Prince again steps forward to go into the solo, and this guy starts playing that solo too!
Before leaving, Prince reassured Gallen that, even though they didnt get to rehearse it the way Gallen envisioned it, everything would be fine when it came time to the performance. Let Mann do the first solo, he told Gallen, and he would take over for the end. They never rehearsed it, really, Gallen continued. Never really showed us what he was going to do, and he left, basically telling me, the producer of the show, not to worry. And the rest is history. It became one of the most satisfying musical moments in my history of watching and producing live music.
The next day, Prince stepped out of the darkness and blew the roof off of the Waldorf-Astoria hotel. Petty, who had a perfect view of the proceedings, recalled it with awe. You see me nodding at him, to say, Go on, go on,' he said. I remember I leaned out at him at one point and gave him a This is going great! kind of look. He just burned it up. You could feel the electricity of something really bigs going down here.
But theres still one pressing question from the evening: What happened to the guitar that Prince threw up in the air after his solo? As you can see above, although the camera lingers on Prince for several seconds, it doesnt seem to land. Its something thats puzzzled Steve Ferrone, Pettys drummer. I didnt even see who caught it, he said. I just saw it go up, and I was astonished that it didnt come back down again. Everybody wonders where that guitar went, and I gotta tell you, I was on the stage, and I wonder where it went, too.