REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of September 8, 1999 among
RECOTON CORPORATION, a New York corporation (the "COMPANY"), and each of the
parties whose signatures are set forth under the heading "LIFO Lenders" (the
"LIFO LENDERS").
1. BACKGROUND. The LIFO Lenders are the holders of certain existing
obligations of the Company and each of the LIFO Lenders, pursuant to, and
subject to the terms and conditions of (i) the Master Restructuring Agreement
(such term, and all other capitalized terms used in these Recitals without being
otherwise defined, having the meanings hereinafter referred to in Section 3
below), has agreed to restructure and modify the obligations of the Company owed
to it and (ii) the LIFO Credit Agreement, has agreed to provide the Company
additional working capital financing in an aggregate amount of up to
$50,000,000. As consideration for such actions on the part of each LIFO Lender,
the Company has agreed to issue to the LIFO Lenders (x) on the date hereof the
Fixed Facility Fee Warrants and the Cancelable Facility Fee Warrants referred to
in the Credit Agreement and (y) the Prepayment Warrants in the amounts and on
the conditions set forth in Section 2.7 of the Master Restructuring Agreement
(the Fixed Facility Fee Warrants, the Cancelable Facility Fee Warrants and the
Prepayment Warrants are hereinafter referred to collectively as the "WARRANTS").
This Agreement shall become effective upon the occurrence of the Closing Date in
accordance with the terms of the LIFO Credit 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.
The number of registrations which may requested under this Section 2.1
are as follows: (i) five (5) Limited Demand Registrations, in the aggregate, may
be requested of the Company by the Requisite Holders, and (ii) one (1) Full
Demand Registrations may be requested the "FULL DEMAND REQUEST") of the Company
by the Requisite Holders, PROVIDED, that upon the occurrence of the Full Demand
Request, the number of Limited Demand Registrations which may be requested
pursuant to this Section 2.1 shall be reduced by one.
(b) REGISTRATION OF OTHER SECURITIES. Whenever the Company shall
effect the 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 successor 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. The
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 the 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 requirements 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 the Full Demand
Registration) are not satisfied.
(f) SELECTION OF UNDERWRITERS. If the 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 the 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, FIRST, such Registrable Securities requested to be
included in such registration and held by a holder making the Full Demand
Request under this Section 2.1 (a "REQUESTING HOLDER"), allocated pro rata among
the Requesting Holders on the basis of the number of Registrable Securities
requested to be included by such Requesting Holders, and SECOND, such other
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 and in lieu of effecting such
requested registration, to purchase the Registrable Securities of each
Requesting Holder that each such Requesting Holder sought to include within such
requested registration at the Fair Value thereof. The Company shall exercise its
option by notice given to each holder thereof within ten (10) days after receipt
of the registration request (the "OPTION NOTICE") which shall include an offer
to purchase such holder's Registrable Securities on a date no later than thirty
(30) days after the Option Notice (the "PURCHASE DATE"). Each such 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 such holder on the Purchase Date for
cash. As to any such holder that rejects the Company's offer, the Company shall
then and thereafter have no further obligation to effect any registration of
such holder's Registrable Securities under any provision of this Section 2.1 and
such holder's Registrable Securities shall be deemed not to be "Registrable
Securities" for any purposes of this Agreement. As used herein "FAIR VALUE"
shall mean the fair market value of the Registrable Securities of the affected
holder thereof as of a date which is within five days of the Purchase Date (a)
determined by agreement between the Company and the affected holder, or (b) if
the Company and the affected 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 affected holder, either of
which firms may be an independent investment banking firm regularly retained by
the Company, or (c) if the Company or the affected holder shall fail so to
retain an independent investment banking firm within seven Business Days of the
retention of such a firm by the affected 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 affected 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 ▇-▇, ▇▇▇▇ ▇-▇ 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 Securities 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 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 1l(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 holders 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 redating 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
the 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 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 included 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 underwrites 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,
its affiliates, 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 which may
become subject under the Securities Act or otherwise, from and against any loss,
claim, damage or liability, or any action in respect thereof, 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 (i)
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 (ii)
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; PROVIDED, HOWEVER, that no such seller
shall be liable for any indemnity claims hereunder in excess of the amount of
net proceeds received by such seller from the sale of the Registrable Securities
pursuant to such registration statement. 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 party 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 (A) capitalized terms that are not
otherwise defined shall have the meanings assigned thereto in Appendix A to the
Master Restructuring Agreement and (B) 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.
FULL DEMAND REQUEST: As defined in Section 2.1(a).
LIFO LENDER: As defined in the introductory paragraph to this
Agreement.
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: As defined in Appendix A to the Master Restructuring
Agreement.
PURCHASED SECURITIES: As defined in Section 1.
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 any such 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: (a) In connection with a Limited Demand
Registration, the holders of not less than 17.5% of the aggregate number of
Registrable Securities at the time outstanding, and (b) in connection with the
Full Demand Registration, the holders of not less than a majority of the
aggregate number of Registrable Securities outstanding at the time of the Full
Demand Request.
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: As defined in Section 1.
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 holders of
not less than 51% of the Registrable Securities outstanding at the time of any
such amendment or waiver. 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 Master Restructuring 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 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇, Attention: 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
contemplated 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 hereby 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 Securityholders 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
----------------------------
Name: Stuart Mont
Title: Executive Vice President-Operations
LIFO LENDERS
THE CHASE MANHATTAN BANK
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Director
▇▇▇▇▇▇ TRUST AND SAVINGS BANK
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
HSBC BANK U.S.A. (formerly known as MARINE
MIDLAND BANK)
By: /S/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
FIRST UNION NATIONAL BANK
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇ ▇▇▇▇▇▇▇ MUTUAL LIFE INSURANCE COMPANY
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Authorized Officer
▇▇▇▇ ▇▇▇▇▇▇▇ VARIABLE LIFE INSURANCE COMPANY
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Authorized Officer
MELLON BANK, N.A., AS TRUSTEE FOR THE
LONG-TERM INVESTMENT TRUST, solely in its
capacity as Trustee and not in its individual
capacity (as directed by ▇▇▇▇ ▇▇▇▇▇▇▇ Mutual
Life Insurance Company)
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Authorized Signature
MELLON BANK, N.A. AS TRUSTEE FOR ▇▇▇▇ ATLANTIC
MASTER PENSION TRUST, solely in its capacity
as Trustee and not in its individual capacity
(as directed by ▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life
Insurance Company)
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Authorized Signature
THE NORTHERN TRUST COMPANY, AS TRUSTEE OF THE
LUCENT TECHNOLOGIES INC. MASTER PENSION TRUST
BY: ▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance
Company, as Investment Manager
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Authorized Officer
INVESTORS PARTNER LIFE INSURANCE COMPANY
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Authorized Officer