EXHIBIT 2
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
MAY NOT BE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SUCH ACT.
RECOTON CORPORATION
COMMON STOCK PURCHASE WARRANT
EXPIRING FEBRUARY 4, 2004
No. R- __ New York, New York
PPN: 756268 2# 4 February 4, 1999
RECOTON CORPORATION (the "COMPANY"), a New York corporation, for value
received, hereby certifies that ______________ or its registered assigns is
entitled to purchase from the Company __________ duly authorized, validly
issued, fully paid and nonassessable common shares of the Company, par value
$0.20 per share (the "ORIGINAL COMMON Stock"), at an initial exercise price per
share of $18.2626 (the "INITIAL EXERCISE PRICE") at any time or from time to
time after the date hereof and prior to 5:00 p.m. (United States Eastern Time),
on February 4, 2004 (the "EXPIRATION DATE"), all subject to the terms,
conditions and adjustments set forth below in this Warrant; PROVIDED, HOWEVER,
that if on February 4, 2004, the Company is then required, pursuant to to an
effective request therefor under the Registration Rights Agreement (as defined
herein), or is in the process of effecting a registration under the Securities
Act for a public offering in which Warrant Shares (as defined herein) are
entitled to be included as provided in the Registration Rights Agreement, or if
the Company is in default of any of such obligations to register the sale of
such shares, the right to exercise this Warrant shall continue until 5:00 p.m.
(United States Eastern Time) on the 30th day following the date on which such
registration shall have become effective or on the 30th day following the date
all such defaults shall have been cured, whichever is the later date.
This Warrant is one of the Common Stock Purchase Warrants Expiring
February 4, 2004 (the "WARRANTS", such term to include all Warrants issued in
substitution therefor or upon transfer thereof) originally issued in connection
with the issue and sale by the Company of the Company's Senior Subordinated
Notes due February 4, 2004, in the aggregate principal amount of $35,000,000
(the "NOTES") pursuant to that certain Securities Purchase Agreement dated of
even date herewith (the "PURCHASE AGREEMENT") between the Company and original
purchasers of the Notes and Warrants (the "PURCHASERS"). The Warrants originally
so issued evidence rights to purchase an aggregate of 310,000 shares of Original
Common Stock, subject to adjustment as provided herein. The term "NOTES" as used
herein shall include each Note delivered pursuant to any provision of the
Purchase Agreement and each Note delivered in substitution or exchange for any
such Note pursuant to any such provision. Certain capitalized terms used in this
Warrant are defined in Section 13.
SECTION 1. EXERCISE OF WARRANT.
A. MANNER OF EXERCISE. This Warrant may be exercised by the holder
hereof, in whole or in part during normal business hours on any Business Day on
or after the date hereof to and including the Expiration Date, by surrender of
this Warrant, with the form of subscription at the end hereof (or a reasonable
facsimile thereof) duly executed by such holder, to the Company at the principal
office of the Company located at 0000 Xxxx Xxxx Xxxx, Xxxx Xxxx, XX 00000, or
such other location in the United States which shall at the time be the
principal office of the Company and of which the Company shall have notified the
holder hereof in writing (or, if such exercise shall be in connection with an
underwritten public offering of shares of Common Stock (or Other Securities)
subject to this Warrant, at the location at which the underwriters shall have
agreed to accept delivery thereof), accompanied by payment of an amount obtained
by multiplying (a) the number of shares of Original Common Stock (without giving
effect to any adjustment therein) designated in such form of subscription by (b)
the Initial Exercise Price (the "EXERCISE PAYMENT"). The Exercise Payment shall
be payable (i) in cash or its equivalent, (ii) in shares of Common Stock newly
acquired upon exercise of this Warrant (valued at the Market Price), (iii) by
surrendering to the Company the right to purchase a number of shares of Common
Stock issuable upon exercise of this Warrant (valued at the Market Price) equal
to the product obtained by multiplying the number of shares of Common Stock to
be purchased (including the shares relating to the surrendered rights) by a
fraction, the numerator of which is the Exercise Payment per share and the
denominator of which is the Market Price per share, or (iv) any combination of
(i), (ii) and (iii).
B. ADJUSTMENT TO NUMBER OF SHARES OF COMMON STOCK. The number of duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock
which the holder of this Warrant shall be entitled to receive upon each exercise
hereof shall be determined by multiplying the number of shares of Common Stock
which would otherwise (but for the provisions of Section 2) be issuable upon
such exercise, as designated by the holder hereof pursuant to this Section 1B,
by a fraction of which (x) the numerator is the Initial Exercise Price and (y)
the denominator is the Exercise Price in effect on the date of such exercise.
The "Exercise Price" shall initially be an amount equal to the Initial Exercise
Price per share, shall be adjusted and readjusted from time to time as provided
in Section 2 and, as so adjusted and readjusted, shall remain in effect until a
further adjustment or readjustment thereof is required by Section 2.
C. WHEN EXERCISE EFFECTIVE. Each exercise of this Warrant shall be
deemed to have been effected and the Exercise Price shall be determined
immediately prior to the close of business on the Business Day on which this
Warrant shall have been surrendered to the Company as provided in Section 1A,
and at such time the person or persons in whose name or names any certificate or
certificates for shares of Original Common Stock (or Other Securities) shall be
issuable upon such exercise as provided in Section 1C shall be deemed to have
become the holder or holders of record thereof.
D. DELIVERY OF STOCK CERTIFICATES, ETC. Promptly after the exercise of
this Warrant, in whole or in part, and in any event within three Business Days
thereafter (unless such exercise shall be in connection with an underwritten
public offering of shares of Common Stock (or Other Securities) subject to this
Warrant, in which event concurrently with such exercise), the Company at its
expense will cause to be issued in the name of and delivered to the holder
hereof or, subject to Section 8, as such holder may direct,
(1) a certificate or certificates for the number of duly
authorized, validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such holder shall be
entitled upon such exercise, and
(2) in case such exercise is in part only, a new Warrant or
Warrants of like tenor, specifying the aggregate on the face or faces
thereof the number of shares of Common Stock equal to the number of
such shares specified on the face of this Warrant minus the number of
such shares designated by the holder upon such exercise as provided in
Section 1A.
E. COMPANY TO REAFFIRM OBLIGATIONS. The Company will, at the time of
or at any time after each exercise of this Warrant, upon the request of the
holder hereof or of any shares of Common Stock (or Other Securities) issued upon
such exercise, acknowledge in writing its continuing obligation to afford to
such holder all rights to which such holder shall continue to be entitled after
such exercise in accordance with the terms of this Warrant, PROVIDED that if any
such holder shall fail to make any such request, the failure shall not affect
the continuing obligation of the Company to afford such rights to such holder.
F. FRACTIONAL SHARES. No fractional shares shall be issued upon
exercise of this Warrant and no payment or adjustment shall be made upon any
exercise on account of any cash dividends (except as provided in Section 2B) on
the Common Stock or Other Securities issued upon such conversion. If any
fractional interest in a share of Common Stock would, except for the provisions
of the first sentence of this Section 1F, be deliverable upon the exercise of
this Warrant, the Company shall, in lieu of delivering the fractional share
therefor, pay to the holder exercising this Warrant an amount in cash equal to
the Market Price of such fractional interest.
SECTION 2. PROTECTION AGAINST DILUTION OR OTHER IMPAIRMENT OF RIGHTS;
ADJUSTMENT OF EXERCISE PRICE.
A. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In case the Company,
at any time or from time to time after February -, 1999 (the "INITIAL DATE"),
shall issue or sell Additional Shares of Common Stock (including Additional
Shares of Common Stock deemed to be issued pursuant to Section 2C or 2D) without
consideration or for a consideration per share (determined pursuant to Section
2E) less than 95% of the Market Price in effect, in each case, on the date of
and immediately prior to such issue or sale (or, in the case of issuances where
the price has been fixed or finally determined by contract prior to the date of
such issuance or sale, as of the date that such price is fixed or finally
determined), then, and in each such case, subject to Section 2H, the Exercise
Price shall be reduced, concurrently with such issue or sale, to a price
(calculated to the nearest .001 of a cent) determined by multiplying such
Exercise Price by a fraction,
a) the numerator of which shall be (i) the number of shares of
Common Stock outstanding immediately prior to such issue or sale plus
(ii) the number of shares of Common Stock which the aggregate
consideration received by the Company for the total number of such
Additional Shares of Common Stock so issued or sold would purchase at
the Market Price, and
b) the denominator of which shall be the number of shares of
Common Stock outstanding immediately after such issue or sale,
PROVIDED that, for the purposes of this Section 2A, (x) immediately after any
Additional Shares of Common Stock are deemed to have been issued pursuant to
Section 2C or 2D, such Additional Shares shall be deemed to be outstanding, and
(y) treasury shares shall not be deemed to be outstanding.
B. EXTRAORDINARY DIVIDENDS AND DISTRIBUTIONS; PRO RATA REPURCHASES. In
case the Company at any time or from time to time after the date hereof shall
declare, order, pay or make a dividend or other distribution to the holders of
the Common Stock (including, without limitation, any distribution of other or
additional stock or other securities or property or Options by way of dividend
or spin-off, reclassification, recapitalization or similar corporate
rearrangement and any redemption or acquisition of any such stock or Options on
the Common Stock), other than (a) a dividend payable in Additional Shares of
Common Stock or in Options for Common Stock or (b) a regular periodic dividend
payable in cash and not constituting an Extraordinary Cash Dividend, then, and
in each such case, the Company shall pay over to the holder of this Warrant, on
the date on which such dividend or other distribution is paid to the holders of
Common Stock, the securities and property (including cash) which such holder
would have received if such holder had exercised this Warrant immediately prior
to the record date fixed in connection with such dividend or other distribution.
In case the Company or any subsidiary thereof shall make a Pro Rata Repurchase,
the Exercise Price shall be adjusted by dividing the Exercise Price in effect
immediately prior to such action by a fraction (which in no event shall be less
than one), the numerator of which shall be the product of (A) the number of
shares of Common Stock outstanding immediately before such Pro Rata Repurchase
minus the number shares of Common Stock repurchased in such Pro Rata Repurchase
and (B) the Market Price as of the date immediately preceding the first public
announcement by the Company of the intent to effect such Pro Rata Repurchase,
and the denominator of which shall be (A) the product of (x) the number of
shares of Common Stock outstanding immediately before such Pro Rata Repurchase
and (y) the Market Price as of the date immediately preceding the first public
announcement by the Company of the intent to effect such Pro Rata Repurchase
minus (B) the aggregate purchase price of the Pro Rata Repurchase.
C. TREATMENT OF OPTIONS AND CONVERTIBLE SECURITIES. In case the
Company, at any time or from time to time after the date hereof, shall issue,
sell, grant or assume, or shall fix a record date for the determination of
holders of any class of securities entitled to receive, any Options or
Convertible Securities, whether or not such Options or the right to convert or
exchange any such Convertible Securities are immediately exercisable, then, and
in each such case, the maximum number of Additional Shares of Common Stock (as
set forth in the instrument relating thereto, without regard to any provisions
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or, in the case of Convertible Securities and Options
therefor, issuable upon the conversion or exchange of such Convertible
Securities (or the exercise of such Options for Convertible Securities and
subsequent conversion or exchange of the Convertible Securities issued), shall
be deemed to be Additional Shares of Common Stock issued as of the time of such
issue, sale, grant or assumption of such Options or Convertible Securities or,
in case such a record date shall have been fixed, as of the close of business on
such record date., PROVIDED, that such Additional Shares of Common Stock shall
not be deemed to have been issued unless the consideration per share (determined
pursuant to Section 2E) of such shares would be less than 95% of the Market
Price in effect on the date of and immediately prior to such issue, sale, grant
or assumption or immediately prior to the close of business on such record date
or, if the Common Stock trades on an ex-dividend basis, on the date prior to the
commencement of ex-dividend trading, as the case may be, and PROVIDED, FURTHER,
that in any such case in which Additional Shares of Common Stock are deemed to
be issued,
a) if an adjustment of the Exercise Price shall be made upon the
fixing of a record date as referred to in the first sentence of this
Section 2C, no further adjustment of the Exercise Price shall be made
as a result of the subsequent issue or sale of any Options or
Convertible Securities for the purpose of which such record date was
set;
b) no further adjustment of the Exercise Price shall be made upon
the subsequent issue or sale of Additional Shares of Common Stock or
Convertible Securities upon the exercise of such Options or the
conversion or exchange of such Convertible Securities;
c) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any change in the
consideration payable to the Company, or change in the number of
Additional Shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof (by change of rate or otherwise), the
Exercise Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the record date with
respect thereto), and any subsequent adjustments based thereon, shall,
upon any such change becoming effective, be recomputed to reflect such
change insofar as it affects such Options, or the rights of conversion
or exchange under such Convertible Securities, which are outstanding
at such time;
d) upon the expiration of any such Options or of the rights of
conversion or exchange under any such Convertible Securities which
shall not have been exercised (or upon purchase by the Company and
cancellation or retirement of any such Options which shall not have
been exercised or of any such Convertible Securities the rights of
conversion or exchange under which shall not have been exercised), the
Exercise Price computed upon the original issue, sale, grant or
assumption thereof (or upon the occurrence of the record date with
respect thereto), and any subsequent adjustments based thereon, shall,
upon such expiration (or such cancellation or retirement, as the case
may be), be recomputed as if:
(i) in the case of Options for Common Stock or in the case
of Convertible Securities, the only Additional Shares of Common
Stock issued or sold (or deemed issued or sold) were the
Additional Shares of Common Stock, if any, actually issued or
sold upon the exercise of such Options or the conversion or
exchange of such Convertible Securities and the consideration
received therefor was (x) an amount equal to (A) the
consideration actually received by the Company for the issue,
sale, grant or assumption of all such Options, whether or not
exercised, plus (B) the consideration actually received by the
Company upon such exercise, minus (C) the consideration paid by
the Company for any purchase of such Options which were not
exercised, or (y) an amount equal to (A) the consideration
actually received by the Company for the issue, sale, grant or
assumption of all such Convertible Securities which were actually
converted or exchanged, plus (B) the additional consideration, if
any, actually received by the Company upon such conversion or
exchange, minus (C) the excess, if any, of the consideration paid
by the Company for any purchase of such Convertible Securities,
the rights of conversion or exchange under which were not
exercised, over an amount that would be equal to the Fair Value
of the Convertible Securities so purchased if such Convertible
Securities were not convertible into or exchangeable for
Additional Shares of Common Stock, and
(ii) in the case of Options for Convertible Securities, only
the Convertible Securities, if any, actually issued or sold upon
the exercise of such Options were issued at the time of the
issue, sale, grant or assumption of such Options, and the
consideration received by the Company for the Additional Shares
of Common Stock deemed to have then been issued was an amount
equal to (x) the consideration actually received by the Company
for the issue, sale, grant or assumption of all such Options,
whether or not exercised, PLUS (y) the consideration deemed to
have been received by the Company (pursuant to Section 2E) upon
the issue or sale of the Convertible Securities with respect to
which such Options were actually exercised, minus (z) the
consideration paid by the Company for any purchase of such
Options which were not exercised; and
(e) no recomputation pursuant to subsection (c) or (d) above
shall have the effect of increasing the Exercise Price then in effect
by an amount in excess of the amount of the adjustment thereof
originally made in respect of the issue, sale, grant or assumption of
such Options or Convertible Securities.
Notwithstanding the foregoing provisions of this Section 2C, any
rights, options or warrants (herein called "SPECIAL OPTIONS") distributed by the
Company to all holders of Common Stock that entitle the holders thereof to
purchase shares of the Company"s capital stock (either initially or under
certain circumstances), and that, until the occurrence of an event (the "TRIGGER
EVENT") (i) are deemed to be transferred with the Common Stock, (ii) are not
exercisable and (iii) are also issued in respect of future issuances of Common
Stock, shall not be deemed to have been distributed for the purposes of this
Section 2C (and no adjustment of the Exercise Price shall be required) until the
occurrence of the earliest Trigger Event. In addition, in the event of any
distribution of Special Options, or any Trigger Event with respect thereto, that
shall have resulted in an adjustment of the Exercise Price under this Section
2C, (1) in the case of any Special Options that shall have been redeemed or
repurchased without exercise by any holders thereof, the Exercise Price shall be
readjusted upon such final redemption or repurchase to give effect to such
distribution or Trigger Event, as the case may be, as though it were an
Extraordinary Cash Dividend, equal to the per share redemption or repurchase
price received by a holder of Common Stock with respect to such Special Options
(assuming such holder had retained the same), made to all holders of Common
Stock as of the date of such redemption or repurchase, and (2) in the case of
any such Special Options all of which shall have expired or terminated without
having been exercised, redeemed or repurchased, the Exercise Price shall be
readjusted as if such distribution had not occurred.
D. TREATMENT OF STOCK DIVIDENDS, STOCK SPLITS, ETC. In case the
Company, at any time or from time to time after the date hereof, shall declare
or pay any dividend or other distribution on any class of securities of the
Company payable in shares of Common Stock, or shall effect a subdivision of the
outstanding shares of Common Stock into a greater number of shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in Common
Stock), then, and in each such case, Additional Shares of Common Stock shall be
deemed to have been issued (a) in the case of any such dividend or other
distribution, immediately after the close of business on the record date for the
determination of holders of any class of securities entitled to receive such
dividend or other distribution, or (b) in the case of any such subdivision, at
the close of business on the day immediately prior to the day upon which such
corporate action becomes effective.
E. COMPUTATION OF CONSIDERATION. For the purposes of this Warrant:
a) The consideration for the issue or sale of any Additional Shares of
Common Stock or for the issue, sale, grant or assumption of any Options or
Convertible Securities, irrespective of the accounting treatment of such
consideration,
(i) insofar as it consists of cash, shall be computed as the
amount of cash received by the Company, and insofar as it consists of
securities or other property, shall be computed as of the date
immediately preceding such issue, sale, grant or assumption as the
Fair Value of such consideration (or, if such consideration is
received for the issue or sale of Additional Shares of Common Stock
and the Market Price thereof is less than the Fair Value of such
consideration, then such consideration shall be computed as the Market
Price of such Additional Shares of Common Stock), in each case without
deducting any expenses paid or incurred by the Company, any
commissions or compensation paid or concessions or discounts allowed
to underwriters, dealers or other performing similar services and any
accrued interest or dividends in connection with such issue or sale,
and
(ii) in case Additional Shares of Common Stock are issued or sold
or Options or Convertible Securities are issued, sold, granted or
assumed together with other stock or securities or other assets of the
Company for a consideration which covers both, shall be the proportion
of such consideration so received, computed as provided in clause (i)
above, allocable to such Additional Shares of Common Stock or Options
or Convertible Securities, as the case may be, all as determined in
good faith by the Board of Directors of the Company.
b) All Additional Shares of Common Stock, Options or Convertible
Securities issued in payment of any dividend or other distribution on any
class of stock of the Company and all Additional Shares of Common Stock
issued to effect a subdivision of the outstanding shares of Common Stock
into a greater number of shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in Common Stock) shall be deemed to
have been issued without consideration.
c) Additional Shares of Common Stock deemed to have been issued for
consideration pursuant to Section 2C, relating to Options and Convertible
Securities, shall be deemed to have been issued for a consideration per
share determined by dividing
(i) the total amount, if any, received and receivable by the
Company as consideration for the issue, sale, grant or assumption of
the Options or Convertible Securities in question, PLUS the minimum
aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration)
payable to the Company upon the exercise in full of such Options or
the conversion or exchange of such Convertible Securities or, in the
case of Options for Convertible Securities, the exercise of such
Options for Convertible Securities and the conversion or exchange of
such Convertible Securities, in each case computing such consideration
as provided in the foregoing subsection (a), by
(ii) the maximum number of shares of Common Stock (as set forth
in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such Options or the conversion or exchange of
such Convertible Securities.
F. ADJUSTMENTS FOR COMBINATIONS, ETC. In case the outstanding shares
of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Exercise Price in
effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.
G. MINIMUM ADJUSTMENT OF EXERCISE PRICE. If the amount of any
adjustment of the Exercise Price required hereunder would be less than one
percent of the Exercise Price in effect at the time such adjustment is otherwise
so required to be made, such amount shall be carried forward and adjustment with
respect thereto made at the time of and together with any subsequent adjustment
which, together with such amount and any other amount or amounts so carried
forward, shall aggregate at least one percent of such Exercise Price; PROVIDED,
that upon the exercise of this Warrant all adjustments carried forward and not
theretofore made up to and including the date of such exercise shall be made to
the nearest .001 of a cent.
H. CHANGES IN COMMON STOCK. At any time while this Warrant remains
outstanding and unexpired, in case of any reclassification or change of
outstanding securities of the class issuable upon exercise of this Warrant
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination of
outstanding securities issuable upon the exercise of this Warrant) or in case of
any consolidation or merger of the Company with or into another corporation
(herein called a "TRANSACTION") (other than a merger with another corporation in
which the Company is a continuing corporation and which does not result in any
reclassification or change, other than a change in par value, or from par value
to no par value, or from no value to par value, or as a result of a subdivision
or combination of outstanding securities issuable upon the exercise of this
Warrant), the Company, or such successor corporation, as the case may be, shall,
without payment of any additional consideration therefor, execute and deliver to
the holder of this Warrant (upon surrender of this Warrant) a new Warrant
providing that the holder of this Warrant shall have the right to exercise such
new Warrant (upon terms not less favorable to the holder of this Warrant than
those then applicable to this Warrant) and to receive upon such exercise, in
lieu of each shares of Common Stock theretofore issuable upon exercise of this
Warrant, the kind and amount of shares of stock, other securities, money or
property receivable upon such reclassification, change, consolidation or merger,
by the holder of one Common Share issuable upon exercise of this Warrant had it
been exercised immediately prior to such reclassification, change, consolidation
or merger. Such new Warrant shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 2. Notwithstanding the foregoing, in the case of any Transaction which
pursuant to this Section 2I would result in the execution and delivery by the
Company or any successor of a new Warrant to the holder of this Warrant and in
which the holders of shares of Common Stock are entitled only to receive money
or other property exclusive of common equity securities, then in lieu of such
new Warrant being exercisable as provided above, the holder of this Warrant
shall have the right, at its sole option, to require the Company to purchase
this Warrant (without prior exercise by the holder of this Warrant) at its fair
value as of the day before such Transaction became publicly known, as determined
by an unaffiliated internationally recognized accounting firm or investment bank
selected by the holder of this Warrant and reasonably acceptable to the Company.
The provisions of this Section 2I shall similarly apply to successive
reclassifications, changes, consolidations, mergers, sales and transfers.
Notwithstanding anything contained herein to the contrary, the Company shall not
effect any Transaction unless prior to the consummation thereof each corporation
or entity (other than the Company) which may be required to deliver any
securities or other property upon the exercise of Warrants shall assume, by
written instrument delivered to each holder of Warrants, the obligation to
deliver to such holder such securities or other property as to which, in
accordance with the foregoing provisions, such holder may be entitled, and such
corporation or entity shall have similarly delivered to each bolder of Warrants
an opinion of counsel for such corporation or entity, satisfactory to each
holder of Warrants, which opinion shall state that all the outstanding Warrants,
shall thereafter continue in full force and effect and shall be enforceable
against such corporation or entity in accordance with the terms hereof and
thereof, together with such other matters as such holders may reasonably
request.
I. CERTAIN ISSUES EXCEPTED. Anything herein to the contrary
notwithstanding, the Company shall not be required to make any adjustment of the
Exercise Price in the case of the issuance of the Warrants (or any "Additional
Warrants" which may be issued to the holders of the Notes as provided in
paragraph 4G of the Purchase Agreement) and the issuance of shares of Common
Stock issuable upon exercise of the Warrants or such Additional Warrants.
J. NOTICE OF ADJUSTMENT. Upon the occurrence of any event requiring an
adjustment of the Exercise Price, then and in each such case the Company shall
promptly deliver to the holder of this Warrant an Officer's Certificate stating
the Exercise Price resulting from such adjustment and the increase or decrease,
if any, in the number of shares of Common Stock issuable upon the exercise of
this Warrant, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based. Within 90 days after each fiscal
year in which any such adjustment shall have occurred, or within 30 days after
any request therefor by the holder of this Warrant stating that such holder
contemplates the exercise of such Warrant, the Company will obtain and deliver
to the holder of this Warrant the opinion of its regular independent auditors or
another firm of independent public accountants of recognized national standing
selected by the Company's Board of Directors, which opinion shall confirm the
statements in the most recent Officer's Certificate delivered under this Section
2K.
K. OTHER NOTICES. In case at any time:
a) the Company shall declare or pay any dividend upon Common Stock
payable in stock or make any dividend or other distribution to the holders
of Common Stock;
b) the Company shall offer for subscription pro rata to the holders of
Common Stock any additional shares of stock of any class or other rights;
c) there shall be any capital reorganization, or reclassification of
the capital stock of the Company, or consolidation or merger of the Company
with, or sale of all or substantially all of its assets to, another
corporation or other entity (other than a merger or consolidation with a
directly or indirectly wholly-owned subsidiary of the Company in which the
Company is the survivor);
d) there shall be a voluntary or involuntary dissolution, liquidation
or winding-up of the Company;
e) there shall be made any tender offer for any shares of capital
stock of the Company; or
f) there shall be any other Transaction;
then, in any one or more of such cases, the Company shall give to the holder of
this Warrant (i) at least 15 days prior to the record date for any dividend or
distribution referred to in subsection (a) above, at least 30 days prior to any
event referred to in subsection (b), (c) or (d) above, and within five days
after it has knowledge of any pending tender offer or other Transaction, written
notice of the date on which the books of the Company shall close or a record
shall be taken for such dividend, distribution or subscription rights or for
determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
winding-up or Transaction or the date by which shareholders must tender shares
in any tender offer and (ii) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
winding-up or tender offer or Transaction known to the Company, at least 30 days
prior written notice of the date (or, if not then known, a reasonable
approximation thereof by the Company) when the same shall take place. Such
notice in accordance with the foregoing clause (i) shall also specify, in the
case of any such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto, and such notice in
accordance with the foregoing clause (ii) shall also specify the date on which
the holders of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
winding-up, tender offer or Transaction, as the case may be. Such notice shall
also state that the action in question or the record date is subject to the
effectiveness of a registration statement under the Securities Act or to a
favorable vote of security holders or any other approval requirement, if such is
required.
L. CERTAIN EVENTS. If any event occurs as to which, in the good faith
judgment of the Board of Directors of the Company, the other provisions of this
Warrant are not strictly applicable or if strictly applicable would not fairly
protect the exercise rights of the holders of the Warrants in accordance with
the essential intent and principles of such provisions, then the Board of
Directors of the Company shall make such adjustments, if any, on a basis
consistent with such essential intent and principles, necessary to preserve,
without dilution, the rights of the holders of the Warrants; PROVIDED, that no
such adjustment shall have the effect of increasing the Exercise Price as
otherwise determined pursuant to this Warrant. The Company may make such
reductions in the Exercise Price as it deems advisable, including any reductions
necessary to ensure that any event treated for Federal income tax purposes as a
distribution of stock or stock rights not be taxable to recipients.
M. PROHIBITION OF CERTAIN ACTIONS. The Company will not, by amendment
of 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 to be observed or performed hereunder by the Company, but will
at all times in good faith assist in the carrying out of all the provisions of
this Warrant and in the taking of all such action as may be necessary in order
to protect the exercise privilege of the holder of this Warrant against dilution
or other impairment, consistent with the tenor and purpose of this Warrant.
Without limiting the generality of the foregoing, the Company (a) will not
increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the Exercise Price then in effect, (b) will 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 all Warrants from time to time outstanding, and (c) will
not take any action which results in any adjustment of the Exercise Price if the
total number of shares of Common Stock or Other Securities issuable after the
action upon the exercise of all of the Warrants would exceed the total number of
shares of Common Stock or Other Securities then authorized by the Company's
certificate of incorporation and available for the purpose of issue upon such
conversion.
SECTION 3. STOCK TO BE RESERVED. The Company will at all times reserve
and keep available out of the authorized Common Stock, solely for the purpose of
issue upon the exercise of the Warrants as herein provided, such number of
shares of Common Stock as shall then be issuable upon the exercise of all
outstanding Warrants and the Company will maintain at all times all other rights
and privileges sufficient to enable it to fulfill all its obligations hereunder.
The Company covenants that all shares of Common Stock which shall be so issuable
shall, upon issuance, be duly authorized, validly issued, fully paid and
nonassessable, free from preemptive or similar rights on the part of the holders
of any shares of capital stock or securities of the Company or any other Person,
and free from all taxes, liens and charges with respect to the issue thereof
(not including any income taxes payable by the holders of Warrants being
exercised in respect of gains thereon), and the Exercise Price will be credited
to the capital and surplus of the Company. The Company will take all such action
as may be necessary to assure that such shares of Common Stock may be so issued
without violation of any applicable law or regulation, or of any applicable
requirements of the National Association of Securities Dealers, Inc. and of any
domestic securities exchange upon which the Common Stock may be listed.
SECTION 4. REGISTRATION OF COMMON STOCK. If any shares of Common Stock
required to be reserved for purposes of the exercise of Warrants require
registration with or approval of any governmental authority under any Federal or
State law (other than the Securities Act, registration under which is governed
by the Registration Rights Agreement), before such shares may be issued upon the
exercise thereof, the Company will, at its expense and as expeditiously as
possible, use its best efforts to cause such shares to be duly registered or
approved, as the case may be. Shares of Common Stock issuable upon exercise of
the Warrants shall be registered by the Company under the Securities Act or
similar statute then in force if required by the Registration Rights Agreement
and subject to the conditions stated in such agreement. At any such time as the
Common Stock is listed on any national securities exchange or quoted by the
Nasdaq National Market or any successor thereto or any comparable system, the
Company will, at its expense, obtain promptly and maintain the approval for
listing on each such exchange or quoting by the Nasdaq National Market or such
successor thereto or comparable system, upon official notice of issuance, the
shares of Common Stock issuable upon exercise of the then outstanding Warrants
and maintain the listing or quoting of such shares after their issuance so long
as the Common Stock is so listed or quoted; and the Company will also cause to
be so listed or quoted, will register under the Exchange Act and will maintain
such listing or quoting of, any Other Securities that at any time are issuable
upon exercise of the Warrants, if and at the time that any securities of the
same class shall be listed on such national securities exchange by the Company.
SECTION 5. EXPENSES The Company will pay, and save each Person which
is or has been the holder of a Warrant (a "WARRANTHOLDER") harmless against
liability for the payment of, all out-of-pocket expenses arising in connection
with the transactions conemplated by the Warrants, including (i) all document
production and duplication charges and the reasonable fees and expenses of any
counsel engaged by any Warrantholder in connection with the Warrants or, the
transactions contemplated thereby and any subsequent proposed modification,
amendment or waiver of, or proposed consent under, the Warrants, whether or not
such proposed modification, amendment or waiver shall be effected or proposed
consent granted, and (ii) the costs and expenses, including reasonable
attorneys' fees, incurred by any Warrantholder in enforcing or defending (or
determining whether or how to enforce or defend) any rights under the Warrants
or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with the Warrants or the transactions
contemplated thereby or by reason of the Warrantholder's having acquired any
Warrant or any securities issuable upon exercise thereof, including without
limitation costs and expenses (including the costs and expenses of financial
advisors) incurred in any bankruptcy case or in connection with any work-out or
restructuring of the transactions contemplated by the Warrants. The Company will
pay, and will save each Warrantholder harmless from all claims in respect of any
fees, costs or expenses, if any, of brokers and finders (other than those
retained by any such holder). The issuance of certificates for shares of Common
Stock upon exercise of the Warrants shall be made without charge to the
Warrantholders for any issuance tax or other governmental charge in respect
thereof, all of which shall be paid by the Company. The obligations of the
Company under this Section 5 shall survive the transfer or exercise of any
Warrant or any portion thereof or interest therein by the Warrantholder.
SECTION 6. CLOSING OF BOOKS. The Company will at no time close its
transfer books to the transfer of any Warrant or of any share of Common Stock
issued or issuable upon the exercise of any Warrant in any manner which
interferes with the timely exercise of such Warrant.
SECTION 7. NO RIGHTS OR LIABILITIES AS STOCKHOLDERS. This Warrant
shall not entitle the holder thereof to any of the rights of a stockholder of
the Company, except as expressly contemplated herein. No provision of this
Warrant, in the absence of the actual exercise of such Warrant and receipt by
the holder thereof of Common Stock issuable upon such conversion, shall give
rise to any liability on the part of such holder as a stockholder of the
Company, whether such liability shall be asserted by the Company or by creditors
of the Company.
SECTION 8. RESTRICTIVE LEGENDS. Except as otherwise permitted by this
Section 8, each Warrant originally issued and each Warrant issued upon direct or
indirect transfer or in substitution for any Warrant pursuant to this Section 8
shall be stamped or otherwise imprinted with a legend in substantially the
following or a comparable form:
"This Warrant and any shares acquired upon the exercise of this Warrant
have not been registered under the Securities Act of 1933 and may not
be transferred in the absence of such registration or an exemption
therefrom under such Act."
Except as otherwise permitted by this Section 8, (a) each certificate for shares
of Common Stock (or Other Securities) issued upon the exercise of any Warrant,
and (b) each certificate issued upon the direct or indirect transfer of any such
Common Stock (or Other Securities) shall be stamped or otherwise imprinted with
a legend in substantially the following or a comparable form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and may not be transferred in the
absence of such registration or an exemption therefrom under such Act."
The holder (or its transferee, as applicable) of any Restricted Securities shall
be entitled to receive from the Company, without expense, new securities of like
tenor not bearing the applicable legend set forth above in this Section 8 when
such securities shall have been (a) effectively registered under the Securities
Act and disposed of in accordance with the registration statement covering such
Restricted Securities, (b) disposed of pursuant to the provisions of Rule 144 or
any comparable rule under the Securities Act, or (c) when, in the written
reasonable opinion of independent counsel for the holder thereof experienced in
Securities Act matters, such restrictions are no longer required in order to
insure compliance with the Securities Act (including when the provisions of Rule
144(k) or any comparable rule under the Securities Act have been satisfied). The
Company will pay the reasonable fees and disbursements of counsel for any holder
of Restricted Securities in connection with all opinions rendered pursuant to
this Section 8.
SECTION 9. AVAILABILITY OF INFORMATION. The Company will cooperate
with each holder of any Restricted Securities in supplying such information as
may be necessary for such holder to complete and file any information reporting
forms presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any
Restricted Securities. The Company will furnish to each holder of any Warrants,
promptly upon their becoming available, copies of all financial statements,
reports, notices and proxy statements sent or made available generally by the
Company to its stockholders, and copies of all regular and periodic reports and
all registration statements and prospectuses filed by the Company with any
securities exchange or with the Commission.
SECTION 10. INFORMATION REQUIRED BY RULE 144A. The Company will, upon
the request of the holder of this Warrant, provide such holder, and any
qualified institutional buyer designated by such holder, such financial and
other information as such holder may reasonably determine to be necessary in
order to permit compliance with the information requirements of Rule 144A under
the Securities Act in connection with the resale of Warrants, except at such
times as the Company is subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act. For the purpose of this Section 10, the term
"qualified institutional buyer" shall have the meaning specified in Rule 144A
under the Securities Act.
SECTION 11. REGISTRATION RIGHTS AGREEMENT. The holder of this Warrant
and the holders of any securities issued or issuable upon the exercise hereof
are each entitled to the benefits of the Registration Rights Agreement.
SECTION 12. OWNERSHIP, TRANSFER AND SUBSTITUTION OF WARRANTS.
A. OWNERSHIP OF WARRANTS. Except as otherwise required by law, the
Company may treat the Person in whose name any Warrant is registered on the
register kept at the principal office of the Company as the owner and holder
thereof for all purposes, notwithstanding any notice to the contrary except
that, if and when any Warrant is properly assigned in blank, the Company, in its
discretion, may (but shall not be obligated to) treat the bearer thereof as the
owner of such Warrant for all purposes, notwithstanding any notice to the
Company to the contrary. Subject to Section 8, a Warrant, if properly assigned,
may be exercised by a new holder without first having a new Warrant issued.
B. TRANSFER AND EXCHANGE OF WARRANTS. Upon the surrender of any
Warrant, properly endorsed, for registration of transfer or for exchange at the
principal office of the Company, the Company at its expanse will (subject to
compliance with Section 8, if applicable) execute and deliver to or upon the
order of the holder thereof a new Warrant or Warrants of like tenor, in the name
of such holder or as such holder (upon payment by such holder of any applicable
transfer taxes) may direct, calling in the aggregate on the face or faces
thereof for the number of shares of Original Common Stock called for on the face
or faces of the Warrant or Warrants so surrendered.
C. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction of any Warrant
held by a Person other than a Purchaser, upon delivery of its unsecured
indemnity reasonably satisfactory to the Company in form and amount or, in the
case of any such mutilation, upon surrender of such Warrant for cancellation at
the principal office of the Company, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
SECTION 13. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"ACQUIRING COMPANY" shall have the meaning specified in Section 2I.
"ACQUIRER'S COMMON STOCK" shall have the meaning specified in Section
2I.
"ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares (including
treasury shares) of Common Stock issued or sold (or, pursuant to Section 2C or
2D deemed to be issued) by the Company after the date hereof, whether or not
subsequently reacquired or retired by the Company, other than shares of Common
Stock issued upon the exercise or partial exercise of the Warrants, any
Additional Warrants (as defined in the Purchase Agreement) and shares issuable
upon exercise of options, warrants or rights granted to employees or consultants
or directors of the Company or its subsidiariesunder shareholder approved plans
and other options, warrants or rights in each case providing for an exercise
price of at least 95% of Market Price at the date of grant.
"AFFILIATE" shall have the meaning specified in the Purchase
Agreement.
"ANNOUNCEMENT DATE" shall have the meaning specified in Section 2I.
"BUSINESS DAY" shall mean any day on which banks are open for business
in New York City (other than a Saturday, Sunday or legal holiday in the State of
New York or the State of New Jersey), PROVIDED, that any reference to "days"
(unless Business Days are specified) shall mean calendar days.
"COMMISSION" shall mean the Securities and Exchange Commission or any
successor federal agency having similar powers.
"COMMON STOCK" shall mean the Original Common Stock, any stock into
which such stock shall have been converted or changed or any stock resulting
from any reclassification of such stock and all other stock of any class or
classes (however designated) of the Company the holders of which have the right,
without limitation as to amount, either to all or to a share of the balance of
current dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference.
"COMPANY" shall mean Recoton Corporation, a New York corporation, and
its permitted successors hereunder.
"CONSUMMATION DATE" shall have the meaning specified in Section 2I.
"CONVERTIBLE SECURITIES" shall mean any evidences of indebtedness,
shares of stock (other than Common Stock) or other securities directly or
indirectly convertible into or exchangeable for Additional Shares of Common
Stock.
"EXCHANGE ACT" shall mean the Securities and Exchange Act of 1934, as
amended.
"EXERCISE PRICE" shall have the meaning specified in Section 1B.
"EXPIRATION DATE" shall have the meaning specified in the opening
paragraphs of this Warrant.
"EXTRAORDINARY CASH DIVIDEND" shall mean, with respect to any
consecutive 12-month period, the amount, if any, by which the aggregate amount
of all cash and non-cash dividends or distributions on any shares of Common
Stock occurring in such 12-month period (or, if such Common Stock was not
outstanding at the commencement of such 12-month period, occurring in such
shorter period during which such Capital Stock was outstanding) exceeds on a per
share basis 5% of the average of the daily Market Prices per share of such
Common Stock over such 12-month period (or such shorter period during which such
Common Stock was outstanding); PROVIDED that, for purposes of the foregoing
definition, the amount of cash and non- cash dividends paid on a per share basis
will be appropriately adjusted to reflect the occurrence during such period of
any stock dividend or distribution of shares of capital stock of the Company or
any subdivision, split, combination or reclassification of shares of such Common
Stock.
"FAIR VALUE" shall mean with respect to any securities or other
property, the fair value thereof as of a date which is within 15 days of the
date as of which the determination is to be made as determined by the Board of
Directors of the Company in good faith, unless such determination is to be made
in connection with a transaction with an Affiilate in which case such fair value
shall be (a) determined by agreement between the Company and the Required
Holders, or (b) if the Company and the Required Holders fail to agree,
determined jointly by an independent investment banking firm retained by the
Company and by an independent investment banking firm retained by the Required
Holders, either of which firms may be an independent investment banking firm
regularly retained by the Company, or (c) if the Company or the Required Holders
shall fail so to retain an independent investment banking firm within 10
Business Days of the retention of such a firm by the Required Holders or the
Company, as the case may be, determined solely by the firm so retained, or (d)
if the firms so retained by the Company and by such holders shall be unable to
reach a joint determination within 15 Business Days of the retention of the last
firm so retained, determined by another independent investment banking firm
which is not a regular investment banking firm of the Company chosen by the
first two such firms.
"INITIAL DATE" shall have the meaning specified in Section 2A.
"MARKET PRICE" shall mean on any date specified herein, (a) with
respect to Common Stock or to common stock (or equivalent equity interests) of
an Acquiring Person or its Parent, the amount per share equal to (i) the last
sale price of shares of Common Stock, regular way, or of shares of such common
stock (or equivalent equity interests) on such date or, if no such sale takes
place on such date, the average of the closing bid and asked prices thereof on
such date, in each case as officially reported on the principal national
securities exchange on which the same are then listed or admitted to trading, or
(ii) if no shares of Common Stock or no shares of such common stock(or
equivalent equity interests), as the case may be, are then listed or admitted to
trading on any national securities exchange, the last sale price of shares of
Common Stock, regular way, or of shares of such common stock (or equivalent
equity interests) on such date, in each case or, if no such sale takes place on
such date, the average of the reported closing bid and asked prices thereof on
such date as quoted in the Nasdaq National Market or other over-the-counter
market or, if no shares of Common Stock or no shares of such common stock (or
equivalent equity interest), as the case may be, are then quoted in the Nasdaq
National Market or other over-the-counter market, as published by the National
Quotation Bureau, Incorporated or any similar successor organization, and in any
such case as reported by any member firm of the New York Stock Exchange selected
by the Company, or (iii) if no shares of Common Stock or no shares of such
common stock (or equivalent equity interests), as the case may be, are then
listed or admitted to trading on any national securities exchange or quoted or
published in the over-the-counter market, the higher of (x) the book value
thereof as determined by any firm of independent public accountants of
recognized standing selected by the Board of Directors of the Company, as of the
last day of any month ending within 60 days preceding the date as of which the
determination is to be made or (y) the Fair Value thereof, and (b) with respect
to any other securities, the Fair Value thereof.
"NOTES", shall have the meaning specified in the opening paragraphs of
this Warrant.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the name of
the Company by its President, one of its Vice Presidents or its Treasurer.
"OPTIONS" shall mean rights, options or warrants to subscribe for,
purchase or otherwise acquire either Additional Shares of Common Stock or
Convertible Securities.
"ORIGINAL COMMON STOCK" shall have the meaning specified in the
opening paragraphs of this Warrant.
"OTHER SECURITIES" shall mean any stock (other than Common Stock) and
any other securities of the Company or any other Person (corporate or otherwise)
which the holders of the Warrants at any time shall be entitled to receive, or
shall have received, upon the exercise of the Warrants, in lieu of or in
addition to Common Stock, or which at any time shall be issuable or shall have
been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 2I or otherwise.
"PARENT" shall have the meaning specified in Section 2I.
"PERSON" shall mean and include an individual, a partnership, an
association, a joint venture, a corporation, a trust, a limited liability
company, an unincorporated organization and a government or any department or
agency thereof.
"PRO RATA REPURCHASE" shall mean any purchase of shares of Common
Stock by the Company or by any of its subsidiaries whether for cash, shares of
Common Stock of the Company, other securities of the Company, evidences of
indebtedness of the Company or any other Person or any other property
(inlcuding, without limitation, shares of capital stock, other securities or
evidences of indebtedness of a subsidiary of the Company), or any combination
thereof, which purchase is subject to Section 13(e) of the Securities Exchange
Act of 1934, as amended, or is made pursuant to an offer made available to all
holders of shares of Common Stock.
"PURCHASE AGREEMENT" shall have the meaning specified in the opening
paragraphs of this Warrant.
"PURCHASERS" shall have the meaning specified in the opening
paragraphs of this Warrant.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement dated as February 4, 1999, among the Company and The Prudential
Insurance Company of America and ING.(U.S.) Investments Corporation.
"REQUIRED HOLDERS" shall mean the holders of at least 66 2/3% of all
the Warrants at the time outstanding, determined on the basis of the number of
shares of Common Stock then purchasable upon the exercise of all Warrants then
outstanding.
"RESTRICTED SECURITIES" shall mean (a) any Warrants bearing the
applicable legend set forth in Section 8 and (b) any shares of Common Stock (or
Other Securities) which have been issued upon the exercise of Warrants and which
are evidenced by a certificate or certificates bearing the applicable legend set
forth in such section, and (c) unless the context otherwise requires, any shares
of Common Stock (or Other Securities) which are at the time issuable upon the
exercise of Warrants and which, when so issued, will be evidenced by a
certificate or certificates bearing the applicable legend set forth in such
section.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"TRANSACTION" shall have the meaning specified in Section 21.
"WARRANT" shall have the meaning specified in the opening paragraphs
of this Warrant.
SECTION 14. REMEDIES. The Company stipulates that the remedies at law
of the holder of this Warrant in the event of any default or threatened default
by the Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
SECTION 15. NOTICES. All notices and other communications under this
Warrant shall be in writing and shall be sent (a) by registered or certified
mail, return receipt requested, or (b) by a recognized overnight delivery
service, addressed (i) if to any holder of any Warrant or any holder of any
Common Stock (or Other Securities), at the registered address of such holder as
set forth in the applicable register kept at the principal office of the
Company, or (ii) if to the Company, to the attention of its Secretary at its
principal office, PROVIDED that the exercise of any Warrant shall be effected in
the manner provided in Section 1.
SECTION 16. MISCELLANEOUS.
a) This Warrant and any term hereof may be changed, waived, discharged
or terminated only by an instrument in writing signed by the party against
which enforcement of such change, waiver, discharge or termination is
sought.
b) The agreements of the Company contained in this Warrant other than
those applicable solely to the Warrants and the holders thereof shall inure
to the benefit of and be enforceable by any holder or holders at the time
of any Common Stock (or Other Securities) issued upon the exercise of
Warrants, whether so expressed or not.
c) This Warrant shall be construed and enforced in accordance with and
governed by the laws of the State of New York.
d) The section headings in this Warrant are for purposes of
convenience only and shall not constitute a part hereof.
IN WITNESS WHEREOF, this Warrant has been executed and delivered on
behalf of Recoton Corporation by one of its duly authorized officers as of the
date first above written.
RECOTON CORPORATION
By: /S/ STUART MONT
-------------------------------------
Name: Stuart Mont
Title: Executive Vice
President-Operations
and Chief Operating Officer
FORM OF SUBSCRIPTION
(To be executed only upon exercise of Warrant)
To RECOTON CORPORATION
The undersigned registered holder of the within Warrant hereby
irrevocably exercises such Warrant for, and purchases thereunder,1 shares of
Original Common Stock of RECOTON CORPORATION, [and herewith makes payment of
$______________________therefor]2 [in a "cashless exercise" pursuant to Section
1A of the within Warrant]3, and requests that the certificates for such shares
be issued in the name of, and delivered to _________________whose address
is_____________________.
Dated:_____________________
-----------------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of this Warrant)
-----------------------------------------
(Street Address)
-----------------------------------------
(City) (State) (Zip Code)
--------
1 Insert here the number of shares called for on the face of this Warrant
(or, in the case of a partial exercise, the portion thereof as to which
this Warrant is being exercised), in either case without making any
adjustment for additional Common Stock or any other stock or other
securities or property or cash which, pursuant to the adjustment provisions
of this Warrant, may be delivered upon exercise. In the case of a partial
exercise, a new Warrant or Warrants will be issued and delivered,
representing the unexercised portion of this Warrant, to the holder
surrendering the same.
2 Use in connection with an exercise involving a delivery of funds to the
Company.
3 Use in connection with a cashless exercise.
FORM OF ASSIGNMENT
(To be executed only upon transfer of Warrant)
For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto _____________________ the right
represented by such Warrant to purchase ___________________ 4 shares of Original
Common Stock of RECOTON CORPORATION, to which such Warrant relates, and appoints
_________________ Attorney to make such transfer on the books of RECOTON
CORPORATION, maintained for such purpose, with full power of substitution in the
premises.
Dated: _____________________
-----------------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of this Warrant)
-----------------------------------------
(Street Address)
-----------------------------------------
(City) (State) (Zip Code)
Signed in the presence of:
--------
4 Insert here the number of shares called for on the face of the within
Warrant (or, in the case of a partial assignment, the portion thereof as to
which this Warrant is being assigned), in either case without making any
adjustment for additional Common Stock or any other stock or other
securities or property or cash which, pursuant to the adjustment provisions
of the within Warrant, may be delivered upon exercise. In the case of a
partial assignment, a new Warrant or Warrants will be issued and delivered,
representing the portion of the within Warrant not being assigned, to the
holder assigning the same.
VARING TERMS IN WARRANTS ISSUED:
WARRANT ISSUED TO THE PRUDENTIAL INSURANCE COMPANY OF AMERICA:
NO. R-1 FOR 177,143 SHARES
WARRANT ISSUED TO ING (U.S.) INVESTMENTS CORPORATION:
NO. R-2 FOR 132,857 SHARES
