EXHIBIT 3
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of February 4, 1999 among
RECOTON CORPORATION, a New York corporation (the "Company"), and THE PRUDENTIAL
INSURANCE COMPANY OF AMERICA and ING (U.S.) INVESTMENTS CORPORATION (the
"PURCHASERS").
1. BACKGROUND. The Company is a party to a Securities Purchase
Agreement (the "PURCHASE AGREEMENT"), dated as of February 4, 1999 with the The
Prudential Insurance Company of America and ING (U.S.) Capital LLC (which has
assigned its right to receive the Warrants being purchsed by it to ING (U.S.)
Investments Corporation) pursuant to which the Company has agreed, among other
things, to issue Common Stock Purchase Warrants Expiring February 4, 2004
relating to 310,000 shares of Common Stock of the Company (the "PURCHASED
SECURITIES"). This agreement shall become effective upon the issuance of the
Purchased Securities pursuant to the Purchase Agreement.
2. REGISTRATION UNDER SECURITIES ACT, ETC.
2.1. REGISTRATION ON REQUEST.
(a) REQUEST. Upon the written request of the Requisite Holders,
requesting that the Company effect the registration under the Securities Act of
all or part of such holders' Registrable Securities and specifying the intended
method of disposition thereof and whether or not such requested registration is
to be an underwritten offering, the Company will promptly give written notice of
such requested registration to all other holders of Registrable Securities and
thereupon the Company will use its best efforts to effect the registration under
the Securities Act of:
(i) the Registrable Securities which the Company has been so requested
to register by such holders, and
(ii) all other Registrable Securities which the Company has been
requested to register by the holders thereof by written request given to
the Company within 30 days after the giving of such written notice by the
Company (which request shall specify the intended method of disposition of
such Registrable Securities), all to the extent requisite to permit the
disposition (in accordance with the intended methods thereof as aforesaid)
of the Registrable Securities so to be registered;
PROVIDED, HOWEVER, that (A) participation by any holder of ING Registrable
Securities (as defined below in this Section) in a Prudential Registration (as
so defined) shall be permitted only if approved by a majority of the Prudential
Registrable Securities at the time outstanding, and (B) participation by any
holder of Prudential Registrable Securities (as defined below in this Section)
in an ING Registration (as so defined) shall be permitted only if approved by a
majority of the ING Registrable Securities at the time outstanding.
The number of registrations which may requested under this Section 2.1
are as follows: (1) two Limited Demand Registrations, in each case at the
request of the holders of a majority of the ING Registrable Securities at the
time outstanding (each such registration being herein called an "ING
REGISTRATION"); (2) two Limited Demand Registrations, in each case at the
request of the holders of a majority of the Prudential Registrable Securities at
the time outstanding (each such registration being herein called a "PRUDENTIAL
Registration"); and (3) one Full Demand Registration at the request (a "FULL
DEMAND REQUEST") of the holders of a majority of Registrable Securities at the
time outstanding otherwise having rights to demand a Limited Demand Registration
("LIMITED DEMAND RIGHTS") pursuant to the foregoing provisions of this sentence,
provided, that the Limited Demand Rights with respect to one Limited Demand
Registration shall be surrendered in connection with such Full Demand Request.
If the only Registrable Securities are either ING Registrable Securities or
Prudential Registrable Securities, such Full Demand Registration shall be
considered either an ING Registration or a Prudential Registration, as the case
may be.
(b) REGISTRATION OF OTHER SECURITIES. Whenever the Company shall
effect a Full Demand Registration pursuant to this Section 2.1 in connection
with an underwritten offering by one or more holders of Registrable Securities,
no securities other than Registrable Securities shall be included among the
securities covered by such registration unless (a) the managing underwriter of
such offering shall have advised each holder of Registrable Securities to be
covered by such registration in writing that the inclusion of such other
securities would not adversely affect such offering or (b) the holders of all
Registrable Securities to be covered by such registration shall have consented
in writing to the inclusion of such other securities.
(c) REGISTRATION STATEMENT FORM. Limited Demand Registrations shall be
on Form S-3 (or any similar sucessor form) with only such additional information
as shall be determined to be appropriate by the Company and as shall permit the
disposition of the Registrable Securities by the holders thereof. A Full Demand
Registration under this Section 2.1 shall be on such appropriate registration
form of the Commission (i) as shall be selected by the Company and as shall be
reasonably acceptable to the holders of a majority of the Registrable Securities
so to be registered and (ii) as shall permit the disposition of such Registrable
Securities in accordance with the intended method or methods of disposition
specified in their request for such registration. The Company agrees to include
in any such registration statement in connection with a Full Demand Registration
all information which holders of Registrable Securities being registered shall
reasonably request.
(d) EXPENSES. The Company will pay all Registration Expenses in
connection with any registration requested pursuant to this Section 2.1
(e) EFFECTIVE REGISTRATION STATEMENT. A registration requested
pursuant to this Section 2.1 shall not be deemed to have been effected (i)
unless a registration statement with respect thereto has become effective, (ii)
if after it has become effective, such registration is interfered with by any
stop order, injunction or other order or requirement of the Commission or other
governmental agency or court for any reason, or (iii) if the conditions to
closing specified in the purchase agreement or underwriting agreement entered
into in connection with such registration (in the case of a Full Demand
Registration) are not satisfied.
(f) SELECTION OF UNDERWRITERS. If a requested Full Demand Registration
pursuant to this Section 2.1 involves an underwritten offering, the underwriter
or underwriters thereof shall be selected by the Company with the reasonable
approval of the holders of a majority of the Registrable Securities to be so
registered.
(g) PRIORITY IN REQUESTED REGISTRATIONS. If a requested Full Demand
Registration pursuant to this Section 2.1 involves an underwritten offering, and
the managing underwriter shall advise the Company in writing (with a copy to
each holder of Registrable Securities requesting registration) that, in its
opinion, the number of securities requested to be included in such registration
exceeds the number which can be sold in such offering within a price range
acceptable to the holders of a majority of the Registrable Securities requested
to be included in such registration, the Company will include in such
registration to the extent of the number which the Company is so advised can be
sold in such offering, Registrable Securities requested to be included in such
registration, allocated pro rata among the holders thereof requesting such
registration on the basis of the numbers of such Registrable Securities
requested to be included by such holders. In connection with any registration as
to which the provisions of this clause (g) apply, no securities other than
Registrable Securities shall be covered by such registrations.
(h) COMPANY'S PURCHASE RIGHT. The Company shall have the right, in
connection with any request under this Section 2.1 by the holder or holders of
any Registrable Securities (a "REQUESTING HOLDER") and in lieu of effecting such
requested registration, to purchase the Registrable Securities of the Requesting
Holder at the Fair Value thereof. The Company shall exercise its option by
notice given to the holder thereof within ten (10) days after receipt of the
registration request (the "OPTION NOTICE") which shall include an offer to
purchase such Registrable Securities on a date no later than thirty (30) days
after the Option Notice (the "PURCHASE DATE"). The Requesting Holder may either
accept or reject the Company's offer after the Fair Value of the Registrable
Securities is determined. If the offer is accepted, the Company will purchase
the Registrable Securities of the Requesting Holder on the Purchase Date for
cash. If the offer is rejected by the Requesting Holder, the Company shall then
and thereafter have no further obligation to effect any registration of such
Requesting Holder's Registrable Securities under any provision of this Section
2.1. As used herein "FAIR VALUE" shall mean the fair market value of the
Registrable Securities of the Requesting Holder thereof as of a date which is
within five days of the Purchase Date (a) determined by agreement between the
Company and the Requesting Holder, or (b) if the Company and the Requesting
Holder 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 Requesting Holder, either of which firms may be an independent
investment banking firm regularly retained by the Company, or (c) if the Company
or the Requesting Holder shall fail so to retain an independent investment
banking firm within seven Business Days of the retention of such a firm by the
Requesting Holder 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 the
Requesting Holder shall be unable to reach a joint determination within ten
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.
2.2 INCIDENTAL REGISTRATION.
(a) RIGHT TO INCLUDE REGISTRABLE SECURITIES. If the Company at any
time proposes to register any of its securities (which are the same type of
securities as Registrable Securities) under the Securities Act (other than by a
registration on Form X-0, Xxxx X-0 or any successor or similar forms and other
than pursuant to Section 2.1), whether or not for sale for its own account, it
will each such time give prompt written notice to all holders of Registrable
Securities of its intention to do so and of such holders' rights under this
Section 2.2. Upon the written request of any such holder made within 30 days
after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such holder and the
intended method of disposition thereof), the Company will use its best efforts
to effect the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the holders
thereof, to the extent requisite to permit the disposition (in accordance with
the intended methods thereof as aforesaid) of the Registrable Securities so to
be registered, PROVIDED that if, at any time after giving written notice of its
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each holder of Registrable Securities and, thereupon, in the
case of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection therewith
up to the date of receipt of such notice). Registrable Securites to be
registered pursuant to this Section 2.2 shall be sold or distributed (if
requested by the Company) in the same manner as the other other securities
subject to such registration statement are to be sold or distributed. The
Company will pay all Registration Expenses in connection with each registration
of Registrable Securities requested pursuant to this Section 2.2.
(b) PRIORITY IN INCIDENTAL REGISTRATIONS. If a registration pursuant
to this Section 2.2 involves an underwritten offering of the securities so being
registered to be distributed (on a firm commitment basis) by or through one or
more underwriters of recognized standing under underwriting terms appropriate
for such a transaction, the inclusion of Registrable Securities so requested to
be registered for sale for the account of holders of Registrable Securities is
subject to the provisions of Section 2.4 (b.
2.3. REGISTRATION PROCEDURES. If and whenever the Company is required
to use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Sections 2.1 and 2.2, the Company will
as expeditiously as possible:
(i) prepare and (as soon thereafter as possible or in any event no
later than 60 days after the end of the period within which requests for
registration may be given to the Company) file with the Commission the
requisite registration statement to effect such registration and thereafter
use its best efforts to cause such registration statement to become
effective, PROVIDED that the Company may discontinue any registration of
its securities which are not Registrable Securities (and, under the
circumstances specified in Section 2.2(a), its securities which are
Registrable Securities) at any time prior to the effective date of the
registration statement relating thereto;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement until such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the
Seller or sellers thereof set forth in such registration statement;
PROVIDED, HOWEVER, that, except as otherwise set forth in this Agreement,
the Company shall not be required to amend or supplement such Registration
Statement or prospectus after the expiration of 90 days from the effective
date of such Registration Statement;
(iii) furnish to each seller of Registrable Securities covered by such
registration statement such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus contained
in such registration statement (including each preliminary prospectus and
any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act in conformity with the requirements of the Securities
Act, and such other documents, as such seller may reasonably request;
(iv) use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement
under such other securities or blue sky laws of such jurisdictions as each
seller thereof shall reasonably request, to keep such registration or
qualification in effect for so long as such registration statement remains
in effect, and take any other action which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the securities owned by such seller, except that the
Company shall not for any such purpose be required to qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would
not but for the requirements of this clause (iv) be obligated to be so
qualified or to consent to general service of process in such jurisdiction;
(v) use its best efforts to cause all Registrable Securities covered
by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof to consummate the disposition of such
Registrable Securities;
(vi) furnish to each seller of Registrable Securities:
(x) an opinion of counsel for the Company, dated the effective
date of such registration statement (and, if such registration
includes an underwritten public offering, dated the date of the
closing under the underwriting agreement), addressed to and reasonably
satisfactory in form and substance to each such seller, and covering
substantially the same matters with respect to such registration
statement (and the prospectus included therein) as are customarily
covered in opinions of issues counsel delivered to the underwriters in
underwritten public offerings of securities and such other legal
matters as any such seller may reasonably request, and
(y) if such registration includes an underwritten public
offering, a copy of any "comfort" letter delivered to any underwriter
by the independent public accountants who have certified the Company's
financial statements included in such registration statement;
(vii) 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 upon discovery that or
upon 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 any material fact
required to be stated therein or necessary to make the statements therein
not misleading in the fight of the circumstances under which they were
made, and at the request of any such seller promptly prepare and furnish to
such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that as thereafter
delivered to the purchasers of such securities, 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 in the light of the circumstances under which they
were made;
(viii) 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 practicable, an earnings statement covering
the period of at least 12 months, but not more than 18 months, beginning
with the first fall calendar month after the effective date of such
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act, and furnish to each such
seller at least five business days prior to the filing thereof a copy of
any amendment or supplement to such registration statement or prospectus
and not file any thereof to which any such seller shall have reasonably
objected on the grounds that such amendment or supplement does not comply
in all material respects with the requirements of the Securities Act or of
the rules or regulations thereunder;
(ix) provide and cause to be maintained a transfer agent and registrar
for all Registrable Securities covered by such registration statement from
and after a date not later than the effective date of such registration
statement; and
(x) use its best efforts to list all Registrable Securities covered by
such registration statement on any securities exchange on which any
securities of the same class as such Registrable Securities are then
listed.
In addition to the foregoing the Company will enter into such
agreements and take such other actions as the Requisite Holders shall reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities (including, without limitation, making its management reasonably
available to the extent reasonably requested by the Requisite Holders to
participate in marketing presentations to potential investors in connection with
any underwritten offering), and in that regard, will deliver to the holders of
the Registrable Securities being sold such documents and certificates as may be
reasonably requested by the Requisite Holders or, as applicable, the managing
underwriters, to evidence the Company's compliance with this Agreement,
including, in the case of any underwritten offering, using commercially
reasonable efforts to cause its independent accountants to deliver to the
managing underwriters an accountants' comfort letter substantially similar to
that in scope delivered in an underwritten public offering and covering audited
and interim financial statements included in the registration statement, or if
such letter cannot be obtained through the exercise of commercially reasonable
efforts, cause its independent accountants to deliver to the managing
underwriters a comfort letter based on negotiated procedures providing comfort
with respect to the Company's financial statements included or incorporated by
reference in the registration statement at the highest level permitted to be
given by such accountants under the then applicable standards of the American
Institute of Certified Public Accountants with respect to such Registration
Statement.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that upon receipt of any notice from the Company of the
happening of any event of the kind described in clause (vii) of this Section
2.3, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by clause (vii) of this Section
2.3 and, if so directed by the Company, will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in such
holder's possession of the prospectus relating to such Registrable Securities
current at the time of receipt of such notice. If the Company shall give such
notice, the 90-day time period mentioned in clause (ii) of this Section 2.3
shall be extended by the number of days during the period from and including the
date of the giving of such notice to and including the date when the holders
shall have received the copies of the supplemented or amended prospectus
contemplated by clause (vii) of this Section 2.3.
2.4. UNDERWRITTEN OFFERINGS.
(a) REQUESTED UNDERWRITTEN OFFERINGS. If requested by the underwriters
for any underwritten offering by holders of Registrable Securities pursuant to a
Full Demand Registration requested under Section 2.1, the Company will enter
into an underwriting agreement with such underwriters for such offering, such
agreement to be satisfactory in substance and form to each such holder and the
underwriters and to contain such representations and warranties by the Company
and such other terms as are generally prevailing in underwriting agreements of
the same type, including, without limitation, indemnities to the effect and to
the extent provided in Section 2.6. The holders of Registrable Securities to be
distributed by such underwriters shall be parties to such underwriting agreement
and may, at their option, require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters shall also be made to and for the benefit of
such holders of Registrable Securities and that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement shall also be conditions precedent to the obligations of such holders
of Registrable Securities. Any such holder of Registrable Securities shall not
be required to make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties or agreements
regarding such holder, such holder's Registrable Securities and such holder's
intended method of distribution and any other representation required by law.
(b) INCIDENTAL UNDERWRITTEN OFFERINGS. If the Company at any time
proposes to register any of its securities under the Securities Act as
contemplated by Section 2.2 and such securities are to be distributed by or
through one or more underwriters, the Company will, if requested by any holder
of Registrable Securities as provided in Section 2.2 and subject to the
provisions of Section 2.2(b), arrange for such underwriters to include all the
Registrable Securities to be offered and sold by such holder among the
securities to be distributed by such underwriters. In the event that the
managing underwriter of such underwritten offering shall inform the Company and
the holders of the Registrable Securities requesting the inclusion of
Registrable Securities in such offering by letter of its belief that the number
of securities requested to be included in such offering exceeds the number which
can be sold in such offering, then the Company may include in such offering all
securities proposed by the Company to be sold for its own account and will
include in such registration, to the extent of the number which the Company is
so advised can be sold in such offering, FIRST, all securities proposed by the
Company to be sold for its own account, SECOND, such Registrable Securities
requested to be included in such offering pro rata on the basis of the numbers
of such Registrable Securities so requested to be include and THIRD, all other
securities of the Company requested to be included in such registration pro rata
on the basis of the numbers of such securities so requested to be included). The
holders of Registrable Securities to be distributed by such underwriters shall
be parties to the underwriting agreement between the Company and such
underwriters and may, at their option, require that any or all; of the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Securities and that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement shall also be conditions precedent to the obligations of
such holders of Registrable Securities. Any such holder of Registrable
Securities shall not be required to make any representations or Warranties to or
agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such holder, such holder's Registrable
Securities and such holder's intended method of distribution and any other
representation required by law.
2.5. PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, their underwriters, if
any, and their respective counsel and accountants, the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers and the independent public accountants who have certified its financial
statements as shall be necessary, in the opinion of such holders' and such
underwriters' respective counsel, to conduct a reasonable investigation within
the meaning of the Securities Act.
2.6. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. In the event of any registration
of any securities of the Company under the Securities Act, the Company will, and
hereby does, indemnify and hold harmless the seller of any Registrable
Securities covered by such registration statement, its directors and officers,
each other Person who participates as an underwriter in the offering or sale of
such securities and each other Person, if any, who controls such seller or any
such underwriter within the meaning of the Securities Act, or any such director
or officer or underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company will
reimburse such seller and each such director, officer, underwriter and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigation or defending any such loss, claim,
liability, action or proceeding; PROVIDED that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, any such preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement in reliance upon
and in conformity with written information finished to the Company through an
instrument duly executed by such seller specifically stating that it is for use
in the preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such seller or any such
director, officer, underwriter or controlling person and shall survive the
transfer of such securities by such sellers.
(b) INDEMNIFICATION BY THE SELLERS. The Company may require, as a
condition to including any Registrable Securities in any registration statement
filed pursuant to Section 2.3, that the Company shall have received an
undertaking satisfactory to it from the prospective seller of such Registrable
Securities, to indemnify and hold harmless (in the same manner and to the same
extent as set forth in Section 2.6(a)) the Company, its directors and officers
and each other Person, if any, who controls the Company within the meaning of
the Securities Act, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein. or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company through an instrument duly executed
by such seller specifically stating that it is for use in the preparation of
such registration statement, preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement. Such indemnity shall remain in full force
and effect, regardless of any investigation made by or on behalf of the Company
or any such director, officer or controlling person and shall survive the
transfer of such securities by such seller.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in Section 2.6(a) or 2.6(b), such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action, PROVIDED that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under Section 2.6(a) or
2.6(b), as the case may be, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such action is
brought against an indemnified party, unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying party
shall be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified parry of a release from all liability
in respect to such claim or litigation.
(d) OTHER INDEMNIFICATION. Indemnification similar to that specified
in this Section 2.6 (with appropriate modifications) shall be given by the
Company and each seller of Registrable Securities with respect to any required
registration or other qualification of securities under any Federal or state law
or regulation of any governmental authority other than the Securities Act.
(e) INDEMNIFICATION PAYMENTS. The indemnification required by this
Section 2.6 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
2.7. ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The Company will
not effect or permit to occur any combination or subdivision of shares which
would adversely affect the ability of the holders of Registrable Securities to
include such Registrable Securities in any registration of its securities or the
marketability of such Registrable Securities under any such registration.
3. DEFINITIONS. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:
COMMISSION: The Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
COMPANY: As defined in the introductory paragraph of this
Agreement.
EXCHANGE ACT: The Securities Exchange Act of 1934, or any similar
Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference
to a particular section of the Securities Exchange Act of 1934 shall
include a reference to the comparable section, if any, of any such
similar Federal statute.
FULL DEMAND REGISTRATION: A registration requested pursuant to
Section 2.1 and specified as such by the holders of Registrable
Securities requesting the same, and in respect of which such holders
may require that it be an underwritten registration.
ING REGISTRABLE SECURITIES: Registrable Securities originally
issued to (and whether or not still held by) ING (U.S.) Investments
Corporation and any Registrable Securities derived from, or issued in
respect of, such originally issued Registrable Securities.
LIMITED DEMAND REGISTRATION: A registration requested pursuant to
Section 2.1 and specified as such by the holders of Registrable
Securities requesting the same, and in respect of which such holders
may not require that it be an underwritten registration.
PERSON: A corporation, an association, a partnership, a business,
an individual, a governmental or political subdivision thereof or a
governmental agency.
PRUDENTIAL REGISTRABLE SECURITIES: Registrable Securities
originally issued to (and whether or not still held by) The Prudential
Insurance Company of America and any Registrable Securities derived
from, or issued in respect of, such originally issued Registrable
Securities.
PURCHASE AGREEMENT: As defined in Section 1.
PURCHASED SECURITIES: As defined in Section 1.
PURCHASERS: As defined in the introductory paragraph of this
Agreement.
REGISTRABLE SECURITIES: (a) the Warrants, (b) the shares of
Common Stock or other equity securities issued or issuable pursuant to
the Warrants or issued to the holders thereof as such holders, (c) any
securities purchased upon exercise, or issued upon conversion or
exchange, of other Registrable Securities, and (d) any securities
issued or issuable with respect to any other Registrable Securities by
way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or
other reorganization or otherwise. As to any particular Registrable
Securities, once issued such securities shall cease to be Registrable
Securities when (i) a registration statement with respect to the sale
of such securities shall have become effective under the Securities
Act and such securities shall have been disposed of in accordance with
such registration statement, (ii) such securities shall have been
distributed to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act, (iii) such securities shall have
been otherwise transferred, new certificates for them not bearing a
legend restricting further transfer shall have been delivered by the
Company and subsequent disposition of them shall not require
registration or qualification of them under the Securities Act or any
similar state law then in force, (iv) such securities shall be free to
be sold under Rule 144(k) (or any successor provision) under the
Securities Act, or (v) such securities shall have ceased to be
outstanding.
REGISTRATION EXPENSES: All expenses incident to the Company's
performance of or compliance with Section 2, including, without
limitation, all registration, filing and National Association of
Securities Dealers fees, all fees and expenses of complying with
securities or blue sky laws, all word processing, duplicating and
printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance, the fees and disbursements incurred by the holders of
Registrable Securities to be registered (including the fees and
disbursements of any counsel and accountants retained by the Requisite
Holders), premiums and other costs of policies of insurance against
liabilities arising out of the public offering of the Registrable
Securities being registered obtained by the Company and any fees and
disbursements of underwriters customarily paid by issuers or sellers
of securities, the fees and expenses incurred in connection with the
listing of Registrable Securities on each securities exchange on which
Company securities of the same class are then listed or with the
Nasdaq National Market System; (but excluding underwriting discounts
and commissions and transfer taxes, if any).
REQUISITE HOLDERS: With respect to any registration of
Registrable Securities by the Company pursuant to Section 2, any
holder or holders of a majority of the Registrable Securities to be so
registered.
SECURITIES Act: The Securities Act of 1933, or any similar
Federal statute, and the rules and regulations of the Commission
thereunder, all as of the same shall be in effect at the time.
References to a particular section of the Securities Act of 1933 shall
include a reference to the comparable section, if any, of any such
similar Federal Statute.
WARRANTS: The Company's Warrants as defined in and issued under
the Purchase Agreement and any Additional Warrants (as defined in the
Purchase Agreement) to the extent issued as provided in the Purchase
Agreement.
All references herein to the holder or holders of Registrable
Securities shall also include holders of the Warrants, with the number of shares
of Registrable Securities being held by such holder being the number issuable
upon exercise of such Warrants.
4. RULE 144. If the Company shall have filed a registration statement
pursuant to the requirements of Section 12 of the Exchange Act or a registration
statement pursuant to the requirements of the Securities Act, the Company will
file the reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the Commission thereunder
(or, if the Company is not required to file such reports, will, upon the request
of any holder of Registrable Securities, make publicly available other
information) and will take such further action as any holder of Registrable
Securities may reasonably request, all to the extent required from time to time
to enable such holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by (a) Rule
144 under the Securities Act, as such Rule may be amended from time to time, or
(b) any similar rule or regulation hereafter adopted by the Commission. Upon the
request of any holder of Registrable Securities, the Company will deliver to
such holder a written statement as to whether it has complied with such
requirements.
5. AMENDMENTS AND WAIVERS. This Agreement may be amended and the
Company may take any action herein prohibited or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the Requisite
Holders. Each holder of any Registrable Securities at the time or thereafter
outstanding shall be bound by any consent authorized by this Section 5, whether
or not such Registrable Securities shall have been marked to indicate such
consent.
6. NOMINEES FOR BENEFICIAL OWNERS. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election, be treated as the holder of such
Registrable Securities for purposes of any request or other action by any holder
or holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of Registrable Securities held by any
holder or holders of Registrable Securities contemplated by this Agreement. If
the beneficial owner of any Registrable Securities so elects, the Company may
require assurances reasonably satisfactory to it of such owner's beneficial
ownership of such Registrable Securities.
7. NOTICES. All communications provided for hereunder shall be sent by
first-class mail, by nationwide overnight delivery service (with charges
prepaid) or by facsimile transmission (confirmed by delivery by nationwide
overnight delivery service sent on the day of the sending of such facsimile
transmission) and (a) if addressed to a party other than the Company, addressed
to such party in the manner set forth in the Purchase Agreement, or at such
other address as such party shall have furnished to the Company in writing, or
(b) if addressed to the Company, at 0000 Xxxx Xxxx Xxxx, Xxxx Xxxx, XX 00000,
Attrntion: Corporate Secretary (Facsimile no. 407-444-0559) or at such other
address, or to the attention of such other officer, as the Company shall have
furnished to each holder of Registrable Securities at the time outstanding
PROVIDED, HOWEVER, that any such communication to the Company may also, at the
option of any of the parties hereunder, be either delivered to the Company at
its address set forth above or to any officer of the Company.
8. EXPENSES. The Company will pay, and save each Person which is or
has been the holder of a Warrant or Registrable Securities issuable upon
exercise thereof (a "Securityholder") harmless against liability for the payment
of, all out-of-pocket expenses arising in connection with the transactions
conemplated by this Agreement, including (i) all document production and
duplication charges and the reasonable fees and expenses of any counsel engaged
by any Securityholder in connection with this Agreement, the transactions
contemplated thereby and any subsequent proposed modification, amendment or
waiver of, or proposed consent under, this Agreement, 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 Securityholder in enforcing or defending (or determining whether
or how to enforce or defend) any rights under this Agreement or in responding to
any subpoena or other legal process or informal investigative demand issued in
connection with this Agreement or the transactions contemplated thereby or by
reason of the Securityholder's having acquired any Warrant or Registrable
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 this Agreement. The Company will pay, and will
save each Securityholder 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 obligations of the Company under this Section 5 shall survive
the transfer or exercise of any Warrant or Registrable Securities or any portion
thereof or interest therein by the Securityholder.
9. ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and assigns. In addition, and whether or not any express assignment
shall have been made, the provisions of this Agreement which are for the benefit
of the parties hereto other than the Company shall also be for the benefit of
and enforceable by any subsequent holder of any Registrable Securities.
10. DESCRIPTIVE HEADINGS. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof
11. SPECIFIC PERFORMANCE. The parties hereto recognize and agree that
money damages may be insufficient to compensate the holders of any Registrable
Securities for breaches by the Company of the terms hereof and, consequently,
that the equitable remedy of specific performance of the terms hereof will be
available in the event of any such breach.
12. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of New York.
13. COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
RECOTON CORPORATION
By: /S/ STUART MONT
----------------------------------
Title: Executive Vice President
and Chief Operating Officer
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /S/ XXXXX X. XXXXXX
-----------------------------------
Title:
ING (U.S.) INVESTMENTS CORPORATION
By: /S/ XXXXX X. XXXXXX
-----------------------------------
Title: Vice President
