<PAGE> 1
SCHEDULE 13D
(RULE 13d-101)
Information to be Included in Statements Filed Pursuant to Rule 13d-1(a) and
Amendments Thereto Filed Pursuant to Rule 13d-2(a)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. _____)*
Rockford Corporation
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
77316P
- --------------------------------------------------------------------------------
(CUSIP Number)
Victoria L. Hodson
Rockford Corporation
546 S. Rockford Drive
Tempe, Arizona 85281
480-967-3565
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
April 19, 2000
- --------------------------------------------------------------------------------
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box.
Note. Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits. See
Rule 13d-7(b) for the other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in a
prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE> 2
CUSIP NO. 77316P 13D PAGE 1 OF 4
PAGES
1 Names of Reporting Persons/I.R.S. Identification Nos. of Above Persons
(Entities Only)
Timothy C. Bartol
2 Check the Appropriate Box if a Member of a Group (a)
(See Instructions) (b)
3 SEC Use Only
4 Source of Funds (See Instructions)
OO, PF
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Item
2(d) or 2(e) [ ]
Citizenship or Place of Organization United States of America
7 Sole Voting Power
Number of 3,021,153
Shares
Beneficially 8 Shared Voting Power
Owned by 642,875
Each
Reporting 9 Sole Dispositive Power
Person With 3,021,153
10 Shared Dispositive Power
642,875
11 Aggregate Amount Beneficially Owned by Each Reporting
Person 3,664,028
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ X ]
(See Instructions)
13 Percent of Class Represented by Amount in Row (11) 49.1%
14 Type of Reporting Person (See Instructions) IN
-2-
<PAGE> 3
SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER.
This schedule 13D relates to the common stock, $.001 per share par
value ("Common Stock"), of Rockford Corporation ("Rockford"). The address of the
principal executive offices of Rockford is:
546 S. Rockford Drive
Tempe, Arizona 85281
ITEM 2. IDENTITY AND BACKGROUND.
(a) Timothy C. Bartol
(b) 9200 Willow Pond Lane, Potomac, MD 20854
(c) Mr. Bartol is Director of Information Technology at Phillips
Publishing Inc, Wealth Division.
(d) None.
(e) None.
(f) Mr. Bartol is a citizen of the United States of America.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Mr. Bartol is the beneficial owner of 11,264 shares of
Rockford's Common Stock underlying $27,507.50 of Rockford's 8.5% Subordinated
Convertible Debentures, due May 1, 2002. The source of the funds to purchase
such shares was personal funds. On March 19, 1997 Mr. Bartol was granted an
option to purchase 8,600 shares of Rockford's Common Stock under Rockford's 1997
Stock Option Plan. The options are exercisable on March 19, 2000 at an exercise
price of $3.45 per share and expire on March 19, 2007.
Monument Investors Limited Partnership owns 3,001,289 shares
of Rockford's Common Stock which was inherited by the Bartol children upon the
death of their mother, Caroline S. Bartol. Mr. Bartol serves as the general
partner of Monument Investors Limited Partnership.
Boulder Investors Limited Partnership owns 602,493 shares of
Rockford's Common Stock. Mr. Bartol serves as a general partner of Boulder
Investors Limited Partnership.
GST Exempt Trust, of which Mr. Bartol is a beneficiary, owns
31,782 shares of Rockford's Common Stock.
ITEM 4. PURPOSE OF TRANSACTION.
Mr. Bartol owns the Common Stock, Common Stock Options and
Debentures as described above and holds each as an investment. Mr. Bartol
expects that Rockford's Common Stock will continue to be eligible for trading on
the NASDAQ National Market. Mr. Bartol may make purchases of Rockford's Common
Stock from time to time and may dispose of any or all of such shares held by
him, individually, at any time following the expiration of a lock up period of
180 days after the initial public offering of Rockford's Common Stock (pursuant
to the Lock Up Agreement described below). Mr. Bartol does not have present
plans nor does he contemplate any present proposals that would result in any of
the transactions described in Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
-3-
<PAGE> 4
Mr. Bartol is the beneficial owner of 3,664,028 shares of
Common Stock, representing 49.1% of the shares outstanding. Mr. Bartol holds
sole power to vote and dispose of 3,021,153 shares and has shared power to vote
and dispose of 642,875 shares.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE ISSUER.
Mr. Bartol has signed a lock up agreement in connection with
Rockford's initial public offering which restricts his disposition of his shares
of Rockford's Common Stock for a period of 180 days following the initial public
offering of Rockford's Common Stock. Monument Investors Limited Partnership,
Boulders Investors Limited Partnership, and GST Exempt Trust each have signed
lock up agreements in connection with Rockford's initial public offering which
restricts disposition of its shares of Rockford's Common Stock for a period of
180 days following the initial public offering of Rockford's Common Stock.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
a. Lock Up Agreement, dated July 10, 1999, by and between
Timothy C. Bartol and Dain Rauscher Wessels.
b. Lock Up Agreement, dated July 12, 1999, by and between
Monument Investors Limited Partnership and Dain Rauscher Wessels.
c. Lock Up Agreement, dated July 12, 1999, by and between
Boulder Investors Limited Partnership and Dain Rauscher Wessels.
d. Lock Up Agreement, dated July 12, 1999, by and between GST
Exempt Trust and Dain Rauscher Wessels.
e. Stock Option Agreement dated March 19, 1997 by and between
Rockford Corporation and Timothy C. Bartol.
f. 8.5% Subordinated Convertible Debentures dated May 25, 1995
due July 1, 2002 for $27,507.50 representing 11,264 underlying shares by and
between Rockford Corporation and Timothy C. Bartol.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: 5-5-2000
/s/ Timothy C. Bartol
------------------------------------
Timothy C. Bartol
-4-
<PAGE> 1
Exhibit 99.a
ROCKFORD CORPORATION
LOCK-UP AGREEMENT
July ___, 1999
DAIN RAUSCHER WESSELS
NEEDHAM & COMPANY, INC.
as Representatives of the several Underwriters
c/o Dain Rauscher Wessels
60 South Sixth Street
Minneapolis, Minnesota 55402-4422
Re: Rockford Corporation (the "Company")
Proposed Offering of Common Stock
Ladies and Gentlemen:
This letter is being delivered to you in accordance with the proposed
Underwriting Agreement (the "Underwriting Agreement") between the Company and
the Representatives, as Representatives of the several Underwriters named in
Schedule A thereto (the "Underwriters"), relating to a underwritten public
offering of common stock of the Company (the "Common Stock"). The undersigned,
the beneficial owner of shares of the Company's Common Stock and/or securities
evidencing the right to purchase shares of the Company's Common Stock,
understands that the Company intends to sell shares of Common stock of the
Company and to grant to the Underwriters an over-allotment option to purchase
additional shares of Common Stock (the "Offering"). All capitalized terms used
but not otherwise defined herein shall have the meanings ascribed to such terms
in the Underwriting Agreement.
In order to induce the Company and the Underwriters to enter into the
Underwriting Agreement and to proceed with the Offering, and in recognition of
the benefit that such Offering will confer upon the undersigned as a stockholder
of the company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned irrevocably
agrees, with each Underwriter to be named in the Underwriting Agreement, for the
benefit of the Company, you and the other Underwriters, that, should the
Offering be effected, the undersigned will not publicly announce any intention
to, will not allow any affiliate or subsidiary, if applicable, to, and will not
itself, without the prior written consent of Dain Rauscher Wessels on behalf of
the Underwriters, (i) offer, pledge, sell, offer to sell, contract to sell, sell
any option or contract to purchase, purchase any option to sell, grant any
option right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any of the shares of Common Stock or any securities
convertible into, or exercisable or exchangeable for, Common Stock, or (ii)
enter into any swap or other agreement that transfers, in whole or in part, any
of the economic consequences of ownership of the shares of Common Stock or any
securities convertible into, or exercisable or exchangeable for, shares of
Common Stock (whether any such transaction described in clause (i) or (ii) above
is to be settled by delivery of the shares of Common Stock or such other
securities, in cash or otherwise), in each case, beneficially owned (within the
meaning Rule 13d-3 under the Securities Exchange Act of 1934, as amended) or
otherwise controlled by the undersigned on the date hereof or hereafter
acquired, for a period beginning from the date of execution of the Underwriting
Agreement and continuing to and
<PAGE> 2
including the date 180 days after the date of the Prospectus (as such term in
defined in the Underwriting Agreement); provided, however, that, if the
undersigned is an individual, the undersigned may, without prior written consent
of Dain Rauscher Wessels on behalf of the Underwriters, transfer share of Common
Stock or any securities convertible into, or exercisable or exchangeable for,
Common Stock either during his or her lifetime or, on death, by will or
intestacy to members of the undersigned's immediate family or to trusts
exclusively for the benefit of members of the undersigned's immediate family or
in connection with bona fide gifts, provided that, prior to any such transfer,
such transferee executes an agreement, satisfactory to Dain Rauscher Wessels,
pursuant to which such transferee agrees to receive and hold such shares subject
to the provisions hereof and that there shall be no further transfer except in
accordance with the provisions hereof. For purposes of this paragraph,
"immediate family" shall mean the undersigned's spouse, lineal descendant,
father, mother, brother or sister.
The restrictions on transfers described in the immediately preceding
paragraph shall not apply to (a) the sale of shares of Common Stock to the
Underwriters pursuant to the Underwriting Agreement or (b) transfers in shares
of Common Stock acquired in open market transactions after completion of the
Offering.
In addition, the undersigned agrees that, without the prior written
consent of Dain Rauscher Wessels on behalf of the Underwriters, he, she or it
will not, during the period ending 180 days after the date of the Prospectus,
make any demand for or exercise any right with respect to, the registration of
any shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock.
The undersigned, whether or not participating in the Offering, confirms
that he, she or it understands that the Underwriters and the Company will rely
upon the representations set forth in this agreement in proceeding with the
Offering. The undersigned agrees and consents to the entry of stop transfer
instructions with the company's transfer agent against the transfer of Common
Stock except in compliance with this agreement. This agreement shall be binding
on the undersigned and his, her or its respective successors, heirs, personal
representatives and assigns. If for any reason the Underwriting Agreement shall
be terminated prior to the Closing Date (as such term is defined in the
Underwriting Agreement), the agreement set forth above shall likewise be
terminated.
THE UNDERSIGNED AGREES TO KEEP CONFIDENTIAL ALL INFORMATION REGARDING
THE OFFERING, INCLUDING WITHOUT LIMITATION, THE ANTICIPATED DATE OF THE
OFFERING, THE TERMS OF THE OFFERING, AND THE IDENTITY OF THE UNDERWRITERS.
Sincerely,
---------------------------------------------
Signature
---------------------------------------------
Name
---------------------------------------------
Title (if applicable)
<PAGE> 1
Exhibit 99.b
ROCKFORD CORPORATION
LOCK-UP AGREEMENT
July ___, 1999
DAIN RAUSCHER WESSELS
NEEDHAM & COMPANY, INC.
as Representatives of the several Underwriters
c/o Dain Rauscher Wessels
60 South Sixth Street
Minneapolis, Minnesota 55402-4422
Re: Rockford Corporation (the "Company")
Proposed Offering of Common Stock
Ladies and Gentlemen:
This letter is being delivered to you in accordance with the proposed
Underwriting Agreement (the "Underwriting Agreement") between the Company and
the Representatives, as Representatives of the several Underwriters named in
Schedule A thereto (the "Underwriters"), relating to a underwritten public
offering of common stock of the Company (the "Common Stock"). The undersigned,
the beneficial owner of shares of the Company's Common Stock and/or securities
evidencing the right to purchase shares of the Company's Common Stock,
understands that the Company intends to sell shares of Common stock of the
Company and to grant to the Underwriters an over-allotment option to purchase
additional shares of Common Stock (the "Offering"). All capitalized terms used
but not otherwise defined herein shall have the meanings ascribed to such terms
in the Underwriting Agreement.
In order to induce the Company and the Underwriters to enter into the
Underwriting Agreement and to proceed with the Offering, and in recognition of
the benefit that such Offering will confer upon the undersigned as a stockholder
of the company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned irrevocably
agrees, with each Underwriter to be named in the Underwriting Agreement, for the
benefit of the Company, you and the other Underwriters, that, should the
Offering be effected, the undersigned will not publicly announce any intention
to, will not allow any affiliate or subsidiary, if applicable, to, and will not
itself, without the prior written consent of Dain Rauscher Wessels on behalf of
the Underwriters, (i) offer, pledge, sell, offer to sell, contract to sell, sell
any option or contract to purchase, purchase any option to sell, grant any
option right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any of the shares of Common Stock or any securities
convertible into, or exercisable or exchangeable for, Common Stock, or (ii)
enter into any swap or other agreement that transfers, in whole or in part, any
of the economic consequences of ownership of the shares of Common Stock or any
securities convertible into, or exercisable or exchangeable for, shares of
Common Stock (whether any such transaction described in clause (i) or (ii) above
is to be settled by delivery of the shares of Common Stock or such other
securities, in cash or otherwise), in each case, beneficially owned (within the
meaning Rule 13d-3 under the Securities Exchange Act of 1934, as amended) or
otherwise controlled by the undersigned on the date hereof or hereafter
acquired, for a period beginning from the date of execution of the Underwriting
Agreement and continuing to and
<PAGE> 2
including the date 180 days after the date of the Prospectus (as such term in
defined in the Underwriting Agreement); provided, however, that, if the
undersigned is an individual, the undersigned may, without prior written consent
of Dain Rauscher Wessels on behalf of the Underwriters, transfer share of Common
Stock or any securities convertible into, or exercisable or exchangeable for,
Common Stock either during his or her lifetime or, on death, by will or
intestacy to members of the undersigned's immediate family or to trusts
exclusively for the benefit of members of the undersigned's immediate family or
in connection with bona fide gifts, provided that, prior to any such transfer,
such transferee executes an agreement, satisfactory to Dain Rauscher Wessels,
pursuant to which such transferee agrees to receive and hold such shares subject
to the provisions hereof and that there shall be no further transfer except in
accordance with the provisions hereof. For purposes of this paragraph,
"immediate family" shall mean the undersigned's spouse, lineal descendant,
father, mother, brother or sister.
The restrictions on transfers described in the immediately preceding
paragraph shall not apply to (a) the sale of shares of Common Stock to the
Underwriters pursuant to the Underwriting Agreement or (b) transfers in shares
of Common Stock acquired in open market transactions after completion of the
Offering.
In addition, the undersigned agrees that, without the prior written
consent of Dain Rauscher Wessels on behalf of the Underwriters, he, she or it
will not, during the period ending 180 days after the date of the Prospectus,
make any demand for or exercise any right with respect to, the registration of
any shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock.
The undersigned, whether or not participating in the Offering, confirms
that he, she or it understands that the Underwriters and the Company will rely
upon the representations set forth in this agreement in proceeding with the
Offering. The undersigned agrees and consents to the entry of stop transfer
instructions with the company's transfer agent against the transfer of Common
Stock except in compliance with this agreement. This agreement shall be binding
on the undersigned and his, her or its respective successors, heirs, personal
representatives and assigns. If for any reason the Underwriting Agreement shall
be terminated prior to the Closing Date (as such term is defined in the
Underwriting Agreement), the agreement set forth above shall likewise be
terminated.
THE UNDERSIGNED AGREES TO KEEP CONFIDENTIAL ALL INFORMATION REGARDING
THE OFFERING, INCLUDING WITHOUT LIMITATION, THE ANTICIPATED DATE OF THE
OFFERING, THE TERMS OF THE OFFERING, AND THE IDENTITY OF THE UNDERWRITERS.
Sincerely,
---------------------------------------------
Signature
---------------------------------------------
Name
---------------------------------------------
Title (if applicable)
<PAGE> 1
Exhibit 99.c
ROCKFORD CORPORATION
LOCK-UP AGREEMENT
July ___, 1999
DAIN RAUSCHER WESSELS
NEEDHAM & COMPANY, INC.
as Representatives of the several Underwriters
c/o Dain Rauscher Wessels
60 South Sixth Street
Minneapolis, Minnesota 55402-4422
Re: Rockford Corporation (the "Company")
Proposed Offering of Common Stock
Ladies and Gentlemen:
This letter is being delivered to you in accordance with the proposed
Underwriting Agreement (the "Underwriting Agreement") between the Company and
the Representatives, as Representatives of the several Underwriters named in
Schedule A thereto (the "Underwriters"), relating to a underwritten public
offering of common stock of the Company (the "Common Stock"). The undersigned,
the beneficial owner of shares of the Company's Common Stock and/or securities
evidencing the right to purchase shares of the Company's Common Stock,
understands that the Company intends to sell shares of Common stock of the
Company and to grant to the Underwriters an over-allotment option to purchase
additional shares of Common Stock (the "Offering"). All capitalized terms used
but not otherwise defined herein shall have the meanings ascribed to such terms
in the Underwriting Agreement.
In order to induce the Company and the Underwriters to enter into the
Underwriting Agreement and to proceed with the Offering, and in recognition of
the benefit that such Offering will confer upon the undersigned as a stockholder
of the company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned irrevocably
agrees, with each Underwriter to be named in the Underwriting Agreement, for the
benefit of the Company, you and the other Underwriters, that, should the
Offering be effected, the undersigned will not publicly announce any intention
to, will not allow any affiliate or subsidiary, if applicable, to, and will not
itself, without the prior written consent of Dain Rauscher Wessels on behalf of
the Underwriters, (i) offer, pledge, sell, offer to sell, contract to sell, sell
any option or contract to purchase, purchase any option to sell, grant any
option right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any of the shares of Common Stock or any securities
convertible into, or exercisable or exchangeable for, Common Stock, or (ii)
enter into any swap or other agreement that transfers, in whole or in part, any
of the economic consequences of ownership of the shares of Common Stock or any
securities convertible into, or exercisable or exchangeable for, shares of
Common Stock (whether any such transaction described in clause (i) or (ii) above
is to be settled by delivery of the shares of Common Stock or such other
securities, in cash or otherwise), in each case, beneficially owned (within the
meaning Rule 13d-3 under the Securities Exchange Act of 1934, as amended) or
otherwise controlled by the undersigned on the date hereof or hereafter
acquired, for a period beginning from the date of execution of the Underwriting
Agreement and continuing to and
<PAGE> 2
including the date 180 days after the date of the Prospectus (as such term in
defined in the Underwriting Agreement); provided, however, that, if the
undersigned is an individual, the undersigned may, without prior written consent
of Dain Rauscher Wessels on behalf of the Underwriters, transfer share of Common
Stock or any securities convertible into, or exercisable or exchangeable for,
Common Stock either during his or her lifetime or, on death, by will or
intestacy to members of the undersigned's immediate family or to trusts
exclusively for the benefit of members of the undersigned's immediate family or
in connection with bona fide gifts, provided that, prior to any such transfer,
such transferee executes an agreement, satisfactory to Dain Rauscher Wessels,
pursuant to which such transferee agrees to receive and hold such shares subject
to the provisions hereof and that there shall be no further transfer except in
accordance with the provisions hereof. For purposes of this paragraph,
"immediate family" shall mean the undersigned's spouse, lineal descendant,
father, mother, brother or sister.
The restrictions on transfers described in the immediately preceding
paragraph shall not apply to (a) the sale of shares of Common Stock to the
Underwriters pursuant to the Underwriting Agreement or (b) transfers in shares
of Common Stock acquired in open market transactions after completion of the
Offering.
In addition, the undersigned agrees that, without the prior written
consent of Dain Rauscher Wessels on behalf of the Underwriters, he, she or it
will not, during the period ending 180 days after the date of the Prospectus,
make any demand for or exercise any right with respect to, the registration of
any shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock.
The undersigned, whether or not participating in the Offering, confirms
that he, she or it understands that the Underwriters and the Company will rely
upon the representations set forth in this agreement in proceeding with the
Offering. The undersigned agrees and consents to the entry of stop transfer
instructions with the company's transfer agent against the transfer of Common
Stock except in compliance with this agreement. This agreement shall be binding
on the undersigned and his, her or its respective successors, heirs, personal
representatives and assigns. If for any reason the Underwriting Agreement shall
be terminated prior to the Closing Date (as such term is defined in the
Underwriting Agreement), the agreement set forth above shall likewise be
terminated.
THE UNDERSIGNED AGREES TO KEEP CONFIDENTIAL ALL INFORMATION REGARDING
THE OFFERING, INCLUDING WITHOUT LIMITATION, THE ANTICIPATED DATE OF THE
OFFERING, THE TERMS OF THE OFFERING, AND THE IDENTITY OF THE UNDERWRITERS.
Sincerely,
---------------------------------------------
Signature
---------------------------------------------
Name
---------------------------------------------
Title (if applicable)
<PAGE> 1
Exhibit 99.d
ROCKFORD CORPORATION
LOCK-UP AGREEMENT
July ___, 1999
DAIN RAUSCHER WESSELS
NEEDHAM & COMPANY, INC.
as Representatives of the several Underwriters
c/o Dain Rauscher Wessels
60 South Sixth Street
Minneapolis, Minnesota 55402-4422
Re: Rockford Corporation (the "Company")
Proposed Offering of Common Stock
Ladies and Gentlemen:
This letter is being delivered to you in accordance with the proposed
Underwriting Agreement (the "Underwriting Agreement") between the Company and
the Representatives, as Representatives of the several Underwriters named in
Schedule A thereto (the "Underwriters"), relating to a underwritten public
offering of common stock of the Company (the "Common Stock"). The undersigned,
the beneficial owner of shares of the Company's Common Stock and/or securities
evidencing the right to purchase shares of the Company's Common Stock,
understands that the Company intends to sell shares of Common stock of the
Company and to grant to the Underwriters an over-allotment option to purchase
additional shares of Common Stock (the "Offering"). All capitalized terms used
but not otherwise defined herein shall have the meanings ascribed to such terms
in the Underwriting Agreement.
In order to induce the Company and the Underwriters to enter into the
Underwriting Agreement and to proceed with the Offering, and in recognition of
the benefit that such Offering will confer upon the undersigned as a stockholder
of the company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned irrevocably
agrees, with each Underwriter to be named in the Underwriting Agreement, for the
benefit of the Company, you and the other Underwriters, that, should the
Offering be effected, the undersigned will not publicly announce any intention
to, will not allow any affiliate or subsidiary, if applicable, to, and will not
itself, without the prior written consent of Dain Rauscher Wessels on behalf of
the Underwriters, (i) offer, pledge, sell, offer to sell, contract to sell, sell
any option or contract to purchase, purchase any option to sell, grant any
option right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any of the shares of Common Stock or any securities
convertible into, or exercisable or exchangeable for, Common Stock, or (ii)
enter into any swap or other agreement that transfers, in whole or in part, any
of the economic consequences of ownership of the shares of Common Stock or any
securities convertible into, or exercisable or exchangeable for, shares of
Common Stock (whether any such transaction described in clause (i) or (ii) above
is to be settled by delivery of the shares of Common Stock or such other
securities, in cash or otherwise), in each case, beneficially owned (within the
meaning Rule 13d-3 under the Securities Exchange Act of 1934, as amended) or
otherwise controlled by the undersigned on the date hereof or hereafter
acquired, for a period beginning from the date of execution of the Underwriting
Agreement and continuing to and
<PAGE> 2
including the date 180 days after the date of the Prospectus (as such term in
defined in the Underwriting Agreement); provided, however, that, if the
undersigned is an individual, the undersigned may, without prior written consent
of Dain Rauscher Wessels on behalf of the Underwriters, transfer share of Common
Stock or any securities convertible into, or exercisable or exchangeable for,
Common Stock either during his or her lifetime or, on death, by will or
intestacy to members of the undersigned's immediate family or to trusts
exclusively for the benefit of members of the undersigned's immediate family or
in connection with bona fide gifts, provided that, prior to any such transfer,
such transferee executes an agreement, satisfactory to Dain Rauscher Wessels,
pursuant to which such transferee agrees to receive and hold such shares subject
to the provisions hereof and that there shall be no further transfer except in
accordance with the provisions hereof. For purposes of this paragraph,
"immediate family" shall mean the undersigned's spouse, lineal descendant,
father, mother, brother or sister.
The restrictions on transfers described in the immediately preceding
paragraph shall not apply to (a) the sale of shares of Common Stock to the
Underwriters pursuant to the Underwriting Agreement or (b) transfers in shares
of Common Stock acquired in open market transactions after completion of the
Offering.
In addition, the undersigned agrees that, without the prior written
consent of Dain Rauscher Wessels on behalf of the Underwriters, he, she or it
will not, during the period ending 180 days after the date of the Prospectus,
make any demand for or exercise any right with respect to, the registration of
any shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock.
The undersigned, whether or not participating in the Offering, confirms
that he, she or it understands that the Underwriters and the Company will rely
upon the representations set forth in this agreement in proceeding with the
Offering. The undersigned agrees and consents to the entry of stop transfer
instructions with the company's transfer agent against the transfer of Common
Stock except in compliance with this agreement. This agreement shall be binding
on the undersigned and his, her or its respective successors, heirs, personal
representatives and assigns. If for any reason the Underwriting Agreement shall
be terminated prior to the Closing Date (as such term is defined in the
Underwriting Agreement), the agreement set forth above shall likewise be
terminated.
THE UNDERSIGNED AGREES TO KEEP CONFIDENTIAL ALL INFORMATION REGARDING
THE OFFERING, INCLUDING WITHOUT LIMITATION, THE ANTICIPATED DATE OF THE
OFFERING, THE TERMS OF THE OFFERING, AND THE IDENTITY OF THE UNDERWRITERS.
Sincerely,
---------------------------------------------
Signature
---------------------------------------------
Name
---------------------------------------------
Title (if applicable)
<PAGE> 1
Exhibit 99.e
ROCKFORD CORPORATION
NON-QUALIFIED
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") made as of the
19 day of March, 1997, by and between Rockford Corporation ("Corporation") and
Timothy C. Bartol ("Optionee").
INTRODUCTION
Optionee is director of the Corporation and the Corporation
considers it in its best interests that Optionee be given an inducement to
acquire a proprietary interest in the Corporation.
AGREEMENTS
The parties agree as follows:
1. Grant of Option.
The Corporation grants to Optionee the option to purchase
2,000 shares of its common stock ("Stock") at a price of $14.85 per share,
pursuant to the Rockford Corporation 1994 Stock Option Plan ("Plan"). This
Option is not an "incentive option" as that term is defined in Section 422 of
the Internal Revenue Code of 1986.
2. Time of Exercise.
The Option shall be exercisable on the Grant Date (as defined
in the Plan), as to 25% of the shares. Thereafter, an additional 25% of the
original number of shares subject to the Option may be purchased after the
completion of each additional one year of employment measured from the Grant
Date. After three years of employment from the Grant Date, the Option shall be
fully exercisable. Notwithstanding the preceding exercisability schedule, if at
any time before the Option becomes fully exercisable (a) the Corporation's
shares become registered under the Securities Act of 1933, the Option shall
become fully exercisable upon the effective date of the registration and (b) the
Corporation enters into an agreement to sell all or substantially all of the
Corporation's shares or assets, the Option shall become fully exercisable upon
the date of Closing of the agreement to sell. An agreement for merger or
consolidation will be considered an "agreement to sell" under this section if,
after the merger, Corporation's shareholders do not continue to hold a
controlling interest in the surviving corporation.
3. Method of Exercise.
The Option shall be exercised by delivery of the notice in the
form attached as Exhibit A to the Secretary of the Corporation together with a
check in payment of the Option price for the number of shares specified plus
applicable federal and state withholding taxes. At
<PAGE> 2
the discretion of the Board, Optionee may pay for the Stock through delivery of
Stock with a fair market value equal to the Option price, plus applicable
federal and state withholding taxes. Options may be exercised only with respect
to whole shares. Fair market value shall be determined in good faith by the
Board of Directors of the Corporation.
4. Termination of Option.
The Option, to the extent not exercised, shall terminate upon
the first to occur of:
(a) termination of Corporation's agreement with
Grisanti, Galef, and Goldress (the "3G Agreement"); provided, however,
that the Option, to the extent exercisable on the date of termination
of the 3G Agreement, may be exercised by Optionee for a period of
ninety days after termination on account of Suttle's death; or
(b) ten years from the date of this Agreement.
5. Non-Transferability of Option.
Except as provided in Section 4(a), the Option is not
transferable by the Optionee.
6. Rights Prior to Exercise.
The Optionee shall have no rights as a shareholder with
respect to any Stock issued to the Optionee as a result of the exercise of an
Option under this Agreement and any Stock owned by the Optionee as a result of
Stock splits, Stock dividends or otherwise on the Stock issued as a result of
the exercise of an Option under this Agreement ("Option Stock") until the date
of issuance of a share certificate to the Optionee for such Option Stock.
7. Restrictions on Stock.
Option Stock shall be subject to the following restrictions:
(a) During the period beginning with the termination
of the 3G Agreement for any reason except death and ending six months
thereafter, the Corporation shall have the right to call any of the
Option Stock from the then current holder of the Option Stock at the
purchase price equal to the fair market value of the Stock as
determined in good faith by the Board. If the 3G Agreement is
terminated by Suttle's death, the Corporation's call option shall
expire nine months after Suttle's death. If the Corporation calls any
of the Option Stock, the then current holder of the Option Stock shall
surrender such Stock, duly endorsed for transfer, upon payment of the
purchase price.
(b) Each share certificate issued for Option Stock
shall bear a legend evidencing the restrictions contained in this
Section 7.
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<PAGE> 3
8. Repurchase in Certain Cases. If Optionee exercises
any Options and later his or her service as a director and within one year
thereafter engages in any activities, directly or indirectly, either as a
consultant, employee, shareholder, partner or otherwise with any business that
competes with the Corporation, Optionee, upon demand of the Corporation at any
time thereafter, shall surrender to the Corporation for repurchase, all shares
purchased on exercise of Options under this Agreement. The repurchase price,
payable in cash, shall be the lesser of the price Optionee paid for the shares
or the fair market value of the shares, as determined by the Board in its
discretion at the date of repurchase.
9. Miscellaneous.
This Agreement is subject to all the provisions of the
Rockford Corporation 1994 Stock Option Plan as it may be amended from time to
time.
10. Execution.
The parties hereto have executed this Agreement on the dates
shown below.
ROCKFORD CORPORATION
By: W. Gary Suttle
---------------------------------
President
OPTIONEE
/s/ Timothy C. Bartol
---------------------------------
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<PAGE> 4
EXHIBIT A
NOTICE OF EXERCISE
OF
NON-QUALIFIED STOCK OPTION
I hereby exercise the Option granted to me by Rockford
Corporation ("Corporation") pursuant to the Stock Option Agreement and notify
you of my desire to purchase 2,000 shares of Stock of the Corporation.
Enclosed is:
(a) my check in the amount of $__________, in full
payment for such shares and the federal and state withholding taxes due as a
result of such purchase; or
(b) a certificate for, or my binding and irrevocable
request that you withhold from the shares to be delivered pursuant to this
notice, shares of Stock of the Corporation having a fair market value on the
date of exercise equal to the full Option price for the shares purchased under
this notice and the federal and state withholding taxes due as a result of such
purchase.
I represent and warrant to the Corporation and agree as
follows:
1. Information, Experience and Economic Ability. I have
received a copy of the Plan, and as an employee, I have access to information
regarding the Corporation and have been afforded the opportunity to ask
questions and receive additional information from the Corporation regarding the
terms of an investment in the Stock, and my requests for information have been
satisfied. I have business experience and knowledge adequate to evaluate the
risks of an investment in the Stock, and I can bear the economic risk of losing
my entire investment in the Stock and can afford to hold the Stock for an
indefinite period of time. I have adequate means of providing for my current
needs and personal contingencies and have no need for liquidity in the Stock for
which I am exercising the Option. My overall commitment to investments which are
not readily marketable is not disproportionate to my net worth, and my
investment in the Stock will not cause such overall commitments to become
excessive. I acknowledge that I have been advised to consult my tax and legal
advisors regarding my investment in the Stock.
2. Restrictions on Transfer. I acknowledge that there are
substantial restrictions on the transferability of the Stock under securities
laws unless they are registered or an exemption from such registration is
available and established to the satisfaction of the Corporation; that investors
in the Stock have no rights to require that the Stock be registered under
federal or state securities laws or to require the Corporation to make available
the information that would enable the Stock to be sold pursuant to Rule 144
under the Act; that there may never be a public market for the Stock so that it
may never be possible for me to liquidate my investment in the Stock; and that
the certificates representing the Stock will bear a legend referring to the
foregoing transfer restrictions.
<PAGE> 5
3. No Distribution. The Stock to be delivered pursuant to the
exercise of the Option is being acquired solely for my own account, and not with
a view to or for the resale, distribution, subdivision or fractionalization
thereof.
4. Accuracy of Representations. I understand that the
Corporation will have the right to reject this Notice of Exercise if it believes
for any reason that the undersigned is unsuitable to invest in the Stock under
federal or state securities laws; that the Corporation is relying upon the
representations in this notice in determining my suitability as an investor in
the Stock; that I would not be permitted to purchase the Stock if any
representation or warranty were known to be materially false; that a false
representation may constitute a violation of law; and that any person who
suffers damage as a result of a false representation may have a claim against
me.
OPTIONEE
---------------------------
Timothy C. Bartol
Dated
---------------------
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<PAGE> 1
Exhibit 99.f
ROCKFORD CORPORATION
CONVERTIBLE SUBORDINATED DEBENTURE PURCHASE AGREEMENT
May 1, 1995
To the Purchasers of
Rockford Corporation
Convertible Subordinated Debentures
Identified on Exhibit A Below
Ladies and Gentlemen:
The undersigned Rockford Corporation, an Arizona corporation (the
"Company"), agrees with you as follows:
1. PURCHASE AND SALE OF DEBENTURES.
1.1 Authorization by the Company. The Company has authorized the
issue and sale to you of its 8.5% Convertible Subordinated
Debentures (the "Debentures"), with the terms and rights set
forth in the form of the Debenture attached to this Agreement
as Exhibit B. The Debentures will be in the total principal
amount, and will be divided among you, as shown on Exhibit A.
1.2 Agreement of Purchase and Sale. Subject to the terms and
conditions of this Agreement, and on the basis of the
representations and warranties set forth herein, the Company
will sell to you and you will purchase from the Company, on
the Closing Date, the principal amount of the Debentures set
forth on Exhibit A at a price equal to the principal amount.
The Debentures will be divided among you as set forth on
Exhibit A.
1.3 Closing of Purchase and Sale. The purchase and sale of the
Debentures (the "Closing") will take place at the office of
Lewis and Roca, 40 North Central Avenue, Phoenix, Arizona, on
May 1, 1995 (or on another date if you and the Company agree
in writing) (the "Closing Date"). On the Closing Date, the
Company will deliver to you Debentures against payment of the
purchase price by your certified or cashiers checks payable to
the order of the Company or wire transfer of immediately
available federal funds. The Debentures purchased by you will
be evidenced by appropriate certificates issued to each of
you, in definitive form as set forth in Exhibit B, divided
among you as set forth in Exhibit B, and registered in your
names or the names of your nominee or nominees.
2. REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company represents
and warrants to you as follows:
<PAGE> 2
2.1 Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of
Arizona. The Company has all requisite corporate power and
authority to own, lease, and operate its properties and to
carry on its business as now conducted and as proposed to be
conducted. On the Closing Date the Company will be duly
qualified or authorized to do business and in good standing in
each jurisdiction where the character of the property owned or
leased or the nature of the business transacted makes such
qualification or authorization necessary. The Company has no
subsidiaries or any direct or indirect interest (by way of
stock ownership or otherwise) in any firm or business except
as disclosed in Schedule 2.1. The Company has furnished you
with certified copies of its Certificate of Incorporation and
By-Laws, as amended to the date hereof.
2.2 Capitalization. The Company's authorized and outstanding
capital stock, and the outstanding securities convertible into
the Company's capital stock, is as set forth in Schedule 2.2.
All of the issued and outstanding shares of the Company's
Common Stock are duly authorized, validly issued, fully paid
and nonassessable. The Company has reserved the number of
shares of its Common Stock shown on Exhibit A for issuance
upon conversion of the Debentures. All outstanding shares of
the Common Stock of the Company were issued in compliance with
all applicable Federal and state securities or "blue sky"
laws. There are in existence or contemplated no options,
warrants, agreements or similar rights granted by the Company
for the issue or sale by it of any securities, other than the
transactions contemplated by this Agreement and the
transactions disclosed in Schedule 2.2.
2.3 Financial Position. The Company's Balance Sheets as at
September 30, 1993 and 1994, and Statements of Income and
Retained Earnings and of changes in Financial Position for its
two fiscal years then ended, as audited by Ernst & Young LLP
and in the form set forth in Schedule 2.3, are true and
correct in all material respects as at such dates and for the
periods then ended.
2.4 Duly Issued. The shares of the Common Stock issuable upon
conversion of the Debentures, upon such conversion, will be
validly issued, fully paid and nonassessable.
2.5 Authorization. The Company has duly authorized, executed and
delivered this Agreement. This Agreement constitutes the valid
and binding agreement of the Company, enforceable in
accordance with its terms except as enforcement may be limited
by bankruptcy, insolvency, moratorium and equitable principles
applicable to creditors generally. The Company has full power
and lawful authority to issue and sell the Debentures on the
terms and conditions set forth in this Agreement and to issue
the Common Stock issuable upon conversion of the Debentures.
2.6 Compliance with Laws. The Company is in compliance with all
laws, regulations and orders applicable to its business and
properties, and has all necessary permits and licenses.
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<PAGE> 3
2.7 Governmental Consents. Neither the execution and delivery of
this Agreement, nor the performance of the terms or
consummation of the transactions contemplated by the Company
under this Agreement, require any consent, approval,
authorization, or other order of any court, regulatory body,
administrative agency, or other governmental body, or any
filings pursuant to the Securities Act of 1933, as amended
(the "Securities Act"), or the securities laws of any state
other than those obtained prior to and effective as of the
Closing Date. Neither the Company nor any agent acting on its
behalf has offered, or will offer, to sell (or has solicited
or will solicit any offer to buy) the Debentures or any shares
of the Common Stock of the Company issuable upon the
conversion of the Debentures so as to require the registration
of any of such securities under the Securities Act other than
as contemplated by Article 4 of this Agreement. Based in part
on your representations which are set forth in Article 3 of
this Agreement, the offer, sale, and issuance of the
Debentures pursuant to this Agreement and the shares of the
Common Stock of the Company to be issued upon conversion of
the Debentures are exempt from the registration requirements
of the Securities Act.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASERS. You represent and warrant
to the Company and to the other purchasers of the Debentures:
3.1 Investment Representation. You are acquiring the Debentures,
together with the shares of the Common Stock issuable upon the
conversion of the Debentures, for your own account and not
with a view to or for sale in connection with any
distribution. You have no present intention of distributing
the Debentures or the shares of the Common Stock issuable upon
the conversion of the Debentures.
3.2 Stock Not Registered. You acknowledge that;
(a) neither the Debentures nor the shares of the Common
Stock issuable upon conversion of the Debentures have
been registered under the Securities Act or
applicable state securities laws on the ground that
the issuance to you is exempt from registration under
the Securities Act;
(b) the Company's reliance on such exemption is
predicated on your representations;
(c) the Debentures and shares of Common Stock must be
held indefinitely unless the offer and sale are
registered under the Securities Act, and applicable
state securities laws, or an exemption from
registration is available. In particular, you
acknowledge that the Debentures, and any Common Stock
issued on conversion, may not be sold pursuant to
Rule 144 promulgated under the Securities Act unless
all of the conditions of such rule are met. Among the
conditions for use of Rule 144 is the availability to
the public of current information about the Company.
Such information is not now available and the Company
has no present plans to make such information
available;
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<PAGE> 4
(d) in the absence of an effective registration statement
covering the Debentures, or any Common Stock issued
on conversion thereof, you will sell, transfer, or
otherwise dispose of the Debentures, or any Common
Stock issued on conversion, only in a manner
consistent with your representations and then only in
accordance with the provisions of Section 4.1 of this
Agreement;
(e) any certificate representing the Debentures, and the
shares of the Common Stock issuable upon conversion
of the Debentures, will bear the legend set forth in
Section 4.2 and that the Company may issue
appropriate "stop transfer" instructions to its
transfer agent, if any, with respect to such shares
or make appropriate notations to such effect in its
own stock transfer records; and
(f) any certificate representing the Debentures, and the
shares of the Common Stock issuable upon conversion
of the Debentures, may bear any legends required by
applicable state securities laws.
3.3 Investment Experience. You (a) have such knowledge and
experience in financial and business matters that you are
capable of evaluating the merits and risks of the purchase of
the Debentures, (b) have a net worth significantly in excess
of the amount of your investment in the Debentures and are
able to bear the economic risk of the purchase of the
Debentures, and (c) have had access to information with
respect to the Company necessary to permit you to make an
informed investment decision.
3.4 Organization. On the date of this Agreement, and on the
Closing Date, (a) if you are a corporation, you are duly
organized and validly existing under the laws of your state of
incorporation, you are and will be in good standing under such
laws and you have the requisite corporate power and authority
to enter into this Agreement, (b) if you are a general or
limited partnership, you are and will be a general or limited
partnership duly organized and validly existing under the laws
of your state of formation, and you are and will be in good
standing under such laws, and you have and will have all
requisite partnership power and authority to enter into this
Agreement, (c) you have duly authorized, executed and
delivered this Agreement to the Company, and (4) upon
execution and delivery by the Company, this Agreement
constitutes your valid and binding agreement, enforceable in
accordance with its terms. Enforceability of any agreement may
be limited by bankruptcy, insolvency, moratorium and equitable
principles applicable to creditors generally.
4. SECURITIES ACT AND RELATED MATTERS.
4.1 Transfer Restrictions. You will not offer for sale, sell or
transfer all or any part of the Debentures, or the shares of
the Common Stock or other securities into which the Debentures
are convertible, unless (1) the sale is registered under the
Securities Act, and all other qualifications and proceedings
required under other
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<PAGE> 5
state or federal laws or regulations have been obtained or
taken, or (2) an exemption from registration or qualification
under the Securities Act and any applicable state securities
or "blue sky" laws is available and the Company has received
an opinion of counsel reasonably satisfactory to the Company
that registration is not required.
4.2 Legend on Certificate. Each certificate representing the
Debentures, or any shares of the Common Stock or other
securities issued upon conversion of the Debentures, will bear
a legend in substantially the following form (unless the
Company has received in the opinion of counsel reasonably
satisfactory to the Company that a legend is not necessary):
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAW OF ANY STATE. THE
SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF EFFECTIVE REGISTRATION
STATEMENTS OR AN OPINION OF COUNSEL ACCEPTABLE TO
THIS COMPANY THAT REGISTRATION IS NOT REQUIRED."
Each certificate will also bear any legends required by
applicable state securities laws. In this Agreement
"Restricted Security" means the Debentures and shares of the
Common Stock or other securities issued upon conversion of the
Debentures and represented by certificates bearing the legend
set forth in this Section 4.2 and "Restricted Stock" means
shares of Common Stock issued upon conversion of the
Debentures and represented by certificates bearing the legend
set forth in this Section 4.2.
4.3 Registration Proposed by Company.
(a) Notice of Registration. If the Company proposes to
register any of its securities under the Securities
Act it will give written notice to every holder of a
Restricted Security except that the Company need not
give notice of (1) a registration solely to implement
an employee benefit plan, (2) a transaction to which
Rule 145 under the Securities Act is applicable, or
(3) a registration using any form that does not
permit secondary sales of securities.
(b) Participation by Holders. If any holder of a
Restricted Security delivers to the Company, within
30 days of the Company's notice to the holders, a
notice stating the number of shares of Restricted
Stock to be registered and the intended method of
disposition, the Company will use its best efforts to
register under the Securities Act the shares of
Restricted Stock requested to be registered (1) in
connection with the registrations of securities to be
sold for the Company's account, (2) at its own
expense to
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<PAGE> 6
the extent provided in Section 4.5, and (3) to the
extent required to permit disposition in accordance
with the intended method.
(c) Limitations on Company's Obligation. If the Company's
proposed registration relates to an underwritten
public offering by the Company, the Company is not
required to register shares of Restricted Stock
unless the requesting holders agree to include them
in the underwriting. If the sole or managing
underwriter of the offering determines that the
aggregate number of shares of Restricted Stock
included in the registration should be limited due to
market conditions or the necessity of including
shares to be sold for the account of the Company,
then each holder who has requested that shares of
Restricted Stock be included may sell only a prorata
portion of shares of Restricted Stock.
4.4 Registration Requested by Purchasers.
(a) Request for Registration. The holder or holders of
50% of the Restricted Securities may request that the
Company register Restricted Stock at any time (1)
before the Company gives written notice of its
intention to register its securities under Section
4.3 (but only if the registration becomes effective
within six months after the Company gives the notice)
and (2) after the later of (i) May ___, 1997 or (ii)
12 months after the effective date of any prior
registration statement covering shares of the
Company's stock. In determining whether 50% of the
holders of Restricted Securities have made a request,
Restricted Stock and other securities issued upon
conversion of the Debentures will be counted on the
basis of the amount of Debentures from which they
were converted.
(b) Content of Request. The request must state the number
of shares of Restricted Stock to be registered and
the intended method of disposition. The Company is
not obligated to file a registration statement if the
expected price to the public of the offering of
Restricted Stock is less than $15,000,000.
(c) Required Registration. Upon receipt of a request
that satisfies the requirements stated above, the
Company will upon one occasion (1) promptly give
written notice of the proposed registration to every
other holder of Restricted Securities and (2) as
expeditiously as possible (and in any event within 90
days) use its best efforts, at its own expense to the
extent provided in Section 4.5, to effect
registration under the Securities Act of
(i) the sale of the Restricted Stock which is
the subject of the written request referred
to above, and
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<PAGE> 7
\ (ii) all other Restricted Stock whose holders
make written request for registration to the
Company within 30 days after the Company
gives them notice of the proposed
registration
all to the extent required to permit the disposition by the
holders of the securities so registered. In connection with
any registration, the Company will execute any required
undertakings to file post-effective amendments.
(d) Limitations on Company's Obligation. The Company is
not obligated under this Section 4.4 after (1) one
registration, filed pursuant to any holder's request
under this Section 4.4 (other than a delayed
registration as described below), has become
effective or (2) you and your permitted transferees
hold less than 10% of the Restricted Securities
initially issued and sold pursuant to this Agreement.
(e) Delay of Registration. If, within ten days after the
Company receives a request for registration under
subsection (a), the Company furnishes a certificate
stating that the Company intends to file within 60
days a registration statement for an underwritten
public offering of securities for the Company's
account, then the Company is not obligated to file a
registration under this Section 4.4 for six months
from the date of the Company's certificate. The
Company must make all reasonable efforts to cause the
registration statement for the underwritten public
offering to become effective as soon as reasonably
practicable. The Company may invoke this subsection,
and delay a registration requested under Section 4.4,
only one time.
4.5 Costs and Expenses. The Company will pay all its costs and
expenses in connection with a registration of securities under
Sections 4.3 or 4.4, including Federal and state registration
and filing fees, printing expenses (including a reasonable
number of preliminary and final prospectuses, post-effective
amendments, and supplements requested by the holders of
Restricted Stock), and the fees and disbursements of counsel,
independent accountants, and other experts of the Company. The
Company will not pay underwriter's discounts and commissions
or the fees and disbursements of counsel, independent
accountants, or other experts of the holders of Restricted
Stock. The Company will use its best efforts to keep effective
any registration for the period reasonably necessary to effect
disposition in accordance with the intended methods described
in the requests for registration. If the Company is requested
or required to maintain the registration effective for more
than six months the holders of securities who have requested
that effectiveness be maintained, in order to continue with
the distribution, will pay (in such proportions as they may
agree upon) all out-of-pocket expenses of the Company incurred
in maintaining effectiveness after the initial six-month
period.
4.6 Information. The holders of Restricted Stock covered by a
registration statement under Sections 4.3 or 4.4 will furnish
to the Company (in writing)
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<PAGE> 8
any information regarding them, Restricted Securities held by
them, and the intended method of disposition of the Restricted
Stock as the Company reasonably requests or as is required in
connection with the registrations under Sections 4.3 or 4.4.
4.7 Blue Sky Registrations. In any registration under this Section
4, the Company will use its best efforts to register or
qualify the Restricted Stock for sale under the securities
laws of those states in which registration or qualification is
required, except that the Company is not required (a) to
execute a general consent to service or (b) to qualify to do
business in any state.
4.8 Lockup Agreement. In connection with any registration of the
Company's securities, upon request of the underwriters
managing the offering, each holder of Restricted Securities
will execute an agreement not to sell, make a short sale of,
loan, grant an option for the purchase of, or otherwise
dispose of any Restricted Stock (other than shares included in
the registration or shares sold with the underwriters' prior
written consent) for up to 90 days after the effective date of
the registration.
4.9 Transferability. If the requirements of Section 4.1 have been
satisfied for the sale or transfer of a Restricted Security,
the transferee will be entitled to the rights and benefits of,
and will be subject to the requirements of, Sections 4.1
through 4.8.
5. COMPANY'S AFFIRMATIVE COVENANTS. The Company will comply with the
following requirements unless holders of more than 50% of the
outstanding Restricted Securities agree otherwise in writing. These
requirements will terminate upon the earlier of (1) the closing date of
an underwritten public offering of the Company's common stock pursuant
to an effective registration statement under the Securities Act or (2)
the date when less than 25% of the Restricted Securities are held by
the original holders of the Debentures or their permitted transferees.
These requirements may be amended by a written agreement between the
Company and holders of more than 50% of the outstanding Restricted
Securities. The financial covenants below are substantially the same as
the covenants established in the revolving credit facility entered into
between the Company and Norwest Business Credit, Inc. ("NBCI") as of
May 1994; you agree that, upon any revision or refinancing of the
Company's principal credit facility it is your intention to consent to
the amendment of the financial covenants in this Agreement so that they
are consistent with the terms of the new or revised credit facility.
5.1 Reporting Requirements. The Company will deliver to you each
of the following:
(a) Annual Financial Statements. No later than 90 days
after the end of each Company fiscal year, audited
financial statements including
(1) the Company's balance sheet as at the end of
the fiscal year, and
(2) the related statements of income, retained
earnings, and cash flows of the Company for
the fiscal year.
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<PAGE> 9
The financial statements will be in reasonable detail
and prepared in accordance with generally accepted
accounting principles consistently applied. The
financial statements will be accompanied by the
unqualified opinion of independent public accountants
selected by the Company and a certificate of the
Company's chief financial officer stating (i) that
the financial statements were prepared in accordance
with generally accepted accounting principles
consistently applied, (ii) whether such officer has
knowledge of the occurrence of any default under this
Agreement and, if so, a statement in reasonable
detail of the nature of the default, and (iii)
computations showing whether the Company is in
compliance with the financial covenants set forth in
this Agreement;
(b) Shareholder Information. Promptly upon their
distribution, copies of all financial statements,
reports and proxy statements the Company sends to its
stockholders;
(c) SEC Filings. Promptly after their filing, copies of
all regular and periodic financial reports the
Company files with the Securities and Exchange
Commission or any national securities exchange;
(d) Notice of Violations. Promptly upon knowledge
thereof, notice of the Company's violation of any
law, rule or regulation which could materially and
adversely affect the Company's business or financial
condition; and
(e) Other Information. From time to time, with reasonable
promptness, all other materials, reports, records, or
information relating to Company's financial
condition, operations, or affairs as you may
reasonably request.
5.2 Books and Records. The Company will keep accurate books,
records, and accounts of the Company's business and financial
condition.
5.3 Compliance with Laws; Environmental Indemnity. The
Company will
(a) comply with the requirements of applicable laws and
regulations whose violation would materially and
adversely affect the Company's business or financial
condition, and
(b) comply with all applicable Environmental Laws and
obtain any permits, licenses, or approvals required
by any such Environmental Laws. The Company will
indemnify, defend, and hold you harmless from and
against any claims, loss, or damage resulting from
any past, present, or future existence, use,
handling, storage, transportation, or disposal of any
hazardous waste, hazardous substance, or toxic
substance by the Company or on property owned,
leased, or controlled by the Company. This
indemnification agreement will survive the
termination of this Agreement and payment of the
indebtedness hereunder.
-9-
<PAGE> 10
5.4 Payment of Taxes and Other Claims. The Company will pay or
discharge, when due,
(a) all taxes, assessments, and governmental charges
levied or imposed upon it, upon its income or
profits, or upon any properties belonging to it. Such
amounts will be paid before the date when penalties
attach thereto,
(b) all federal, state, and local taxes required to be
withheld by it, and
(c) all lawful claims for labor, materials and supplies
which, if unpaid, might by law become a lien or
charge upon any properties of the Company.
The Company is not required to pay any tax, assessment,
charge, or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings.
5.5 Maintenance of Properties. The Company will maintain the
properties used in its business in good condition, repair, and
working order (normal wear and tear excepted). The Company
will replace or repair worn, defective, or broken parts, but
nothing in this section prevents the Company from
discontinuing the operation and maintenance of any of its
properties if such discontinuance is in its judgment
desirable.
5.6 Insurance. The Company will obtain and at all times maintain
insurance with insurers believed by the Company to be
responsible and reputable, in such amounts and against such
risks as is usually carried by companies engaged in similar
business and owning similar properties in the same general
areas in which the Company operates.
5.7 Preservation of Corporate Existence. The Company will preserve
and maintain its corporate existence and all rights,
privileges, and franchises necessary or desirable in the
conduct of its business. The Company will conduct its business
in an orderly, efficient, and regular manner.
5.8 Book Net Worth. The Company will maintain on the last day of
each quarter occurring in each of the periods set forth below,
a Book Net Worth (as that term is defined in the Company's
credit agreement with NBCI dated May 3, 1994) greater than or
equal to the amount set forth opposite such period:
<TABLE>
<CAPTION>
PERIOD BOOK NET WORTH
------ --------------
<S> <C>
Through June 29, 1995 ($2,650,000)
June 30, 1995 through September 29, 1995 ($1,000,000)
September 30, 1995 through December 30, 1995 ($ 800,000)
December 31, 1995 through March 30, 1996 ($ 900,000)
March 31, 1996 through June 29, 1996 ($ 400,000)
June 30, 1996 through September 29, 1996 $1,000,000
</TABLE>
-10-
<PAGE> 11
<TABLE>
<CAPTION>
PERIOD BOOK NET WORTH
------ --------------
<S> <C>
September 30, 1996 and thereafter $1,600,000
</TABLE>
5.9 Earnings Before Interest and Taxes. The Company will maintain
on each date set forth below operating income (determined in
accordance with generally accepted accounting principles but
before any deduction for interest expenses and income taxes
and calculated for the twelve months ending on such date)
greater than or equal to the amount set forth opposite such
date:
<TABLE>
<CAPTION>
DATE EBIT
---- ----
<S> <C>
June 30, 1995 $3,600,000
September 30, 1995 $3,800,000
December 31, 1995 $3,800,000
March 31, 1996 $4,000,000
June 30, 1996 $4,300,000
September 30, 1996 and each fiscal quarter $4,300,000
end thereafter
</TABLE>
Interest Coverage. The Company will maintain on each date set
forth below, the ratio of (i) the sum of its pre-tax net income, to (ii)
interest expense (in each case determined in accordance with generally accepted
accounting principles, and calculated for the twelve months ending on such date)
greater than or equal to the ratio set forth opposite such date:
<TABLE>
<CAPTION>
DATE RATIO
---- -----
<S> <C>
June 30, 1995 2.00 to 1
September 30, 1995 2.00 to 1
December 31, 1995 2.00 to 1
March 31, 1996 2.00 to 1
June 30, 1996 2.00 to 1
September 30, 1996 and each fiscal quarter 2.00 to 1
end thereafter
</TABLE>
5.10 Minimum Debt Service Coverage. The Company will maintain on
each date set forth below, the ratio of (i) the sum of its
after-tax net income, depreciation, and amortization expense
and interest expense, to (ii) the sum of its interest, capital
expenditures, and current maturities of long term debt
(excluding as long term debt, the indebtedness of the Company
to NBCI incurred pursuant to the credit agreement between
Company and NBCI, or any replacement of such indebtedness) (in
each case determined in accordance with generally accepted
accounting principles, and calculated for the twelve months
ending on such date) greater than or equal to the ratio set
forth opposite such date:
<TABLE>
<CAPTION>
DATE RATIO
---- -----
<S> <C>
June 30, 1995 1.50 to 1
September 30, 1995 1.50 to 1
December 31, 1995 1.50 to 1
</TABLE>
-11-
<PAGE> 12
<TABLE>
<CAPTION>
DATE RATIO
---- -----
<S> <C>
March 31, 1996 1.50 to 1
June 30, 1996 1.50 to 1
September 30, 1996 and each fiscal quarter 1.50 to 1
end thereafter
</TABLE>
6. COMPANY'S NEGATIVE COVENANTS. The Company will comply with the following
requirements unless holders of more than 50% of the outstanding Restricted
Securities agree otherwise in writing. These requirements will terminate
upon the earlier of (1) the closing date of an underwritten public offering
of the Company's common stock pursuant to an effective registration
statement under the Securities Act or (2) the date when less than 25% of
the Restricted Securities are held by the original holders of the
Debentures or their permitted transferees. These requirements may be
amended by a written agreement between the Company and holders of more than
50% of the outstanding Restricted Securities.
6.1 Dividends and Stock Repurchases. The Company will not declare or
pay any dividends (other than dividends payable solely in stock of
the Company) on any class of its stock or make any payment on
account of the purchase, redemption or other retirement of any
shares of such stock or make any distribution in respect thereof,
either directly or indirectly. If the Company becomes an S
Corporation (with your consent and after first providing such
supporting documentation as you may request) the Company may pay
dividends equal to the amount of state and federal income tax
which would be due for each shareholder with respect to income
allocated to each shareholder as a result of the Company's status
as an S Corporation at the highest marginal income tax rate for
federal and state income tax purposes (after taking into account
any deduction for state income taxes in calculating the federal
income tax liability and for the state or states in which each
shareholder is liable for income taxes).
6.2 Sale or Transfer of Assets; Suspension of Business Operations. The
Company will not sell, lease, assign, transfer, or otherwise
dispose of (a) the stock of any domestic Subsidiary or (b) all or
a substantial part of its assets to any other person (other than
the sale of Inventory in the ordinary course of business) and will
not liquidate, dissolve or suspend business operations. The
Company will not transfer any material property without receipt of
full and adequate consideration. This Agreement does not restrict
any sale or other disposition of Company subsidiaries organized in
connection with the Company's operations outside the United
States.
6.3 Accounting. The Company will not adopt any material change in
accounting principles other than as required by generally accepted
accounting principles. The Company will not adopt, permit or
consent to any change in its fiscal year.
7. CONDITIONS OF OBLIGATION TO ISSUE AND SELL. The obligation of the Company
to issue and sell the Debentures to you at the Closing is subject to the
condition that the representations and warranties stated in Article 3 of
this Agreement must be correct when made and as of the time of the Closing.
-12-
<PAGE> 13
8. CONDITIONS OF OBLIGATION TO PURCHASE. Your obligation to purchase and pay
for the Debentures at the Closing is subject to the following conditions:
8.1 Representations and Warranties Correct. The representations and
warranties contained in Article 2 of this Agreement must be correct
when made and as of the time of the Closing.
8.2 Performance. The Company must have performed and complied with all
agreements and conditions contained in this Agreement and required to
be performed or complied with by it prior to or at the Closing.
8.3 Closing Certificate. The Company must have delivered to you a
certificate, dated the Closing Date, certifying that the conditions
specified in Sections 8.1 and 8.2 have been fulfilled.
8.4 Directors and Officers. The persons named in Schedule 8.4 must have
been duly elected to the respective positions of directors and officers
of the Company as set forth in Schedule 8.4.
8.5 Opinion of Counsel. The Company must have delivered to you the opinion
of Lewis and Roca in substantially the form set forth in Schedule 8.5.
9. MISCELLANEOUS.
9.1 Expenses. The parties will each pay their own expenses incurred in
connection with the purchase and sale of the Debentures.
9.2 Survival of Representations and Warranties. All covenants, agreements,
representations and warranties made in writing in this Agreement will
survive the execution and delivery of this Agreement and the issuance,
sale, and delivery of the Debentures.
9.3 Binding Effect. All covenants, agreements, representations, and
warranties in this Agreement bind, and inure to the benefit of, the
respective heirs, legal representatives, successors, and assigns of the
parties. The rights of any transferee of a Restricted Security,
however, are subject to compliance with Section 4.1.
9.4 Notices. All notices and other communications under this Agreement
must be in writing. They will be deemed given and received when
delivered or five days after deposit in the United States mail, first
class postage prepaid, addressed to Company at:
648 South River Drive
Tempe, Arizona 85281
Attention: President
with a copy to:
-13-
<PAGE> 14
Lewis and Roca
40 North Central Avenue, Suite 1500
Phoenix, Arizona 85004
Attention: Kevin Olson, Esq.
and addressed to you at the address stated in Exhibit A. Any party may
change the person, officer, or address to which notices and
communications are to be sent to it by giving notice.
9.5 Amendments and Waivers. Neither this Agreement nor any of its terms may
be changed, waived, discharged, or terminated except in a writing
signed by the Company and by holders of more than 50% of the
outstanding Restricted Securities.
9.6 Controlling Law. This Agreement is being executed and delivered, and
the Debentures are being delivered, in Arizona and will be governed by
the laws of Arizona.
9.7 Counterparts. This Agreement may be executed in several counterparts
and each counterpart, when executed and delivered and whether or not
each counterpart is executed by all the parties, will constitute an
original instrument. All the separate counterparts will together
constitute this Agreement and are parts of the same instrument.
If you are in agreement with the foregoing, please sign the form of
acceptance appearing as part of the Subscription Agreement for purchase of the
Debentures and return the same to the Company. This Agreement will become a
binding agreement between you and the undersigned upon the Company's acceptance
of your executed Subscription Agreement for the Debentures.
Yours very truly,
ROCKFORD CORPORATION
By:/s/
---------------------------------
President
Attest /s/
------------------------------
Assistant Secretary
-14-
<PAGE> 15
<PAGE> 16
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAW OF ANY
STATE. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF EFFECTIVE
REGISTRATION STATEMENTS OR AN OPINION OF COUNSEL
ACCEPTABLE TO THIS COMPANY THAT REGISTRATION IS NOT
REQUIRED."
ROCKFORD CORPORATION
8.5% CONVERTIBLE SUBORDINATED DEBENTURE DUE MAY 1, 2002
$1,760.00 May 1, 1995
1. PAYMENT OF PRINCIPAL AND INTEREST. Rockford Corporation, an Arizona
corporation (the "Company"), for value received, promises to pay to Mark
Albers or transferee, (the "Holder") the principal amount of $1,760.00 on
May 1, 2002 and to pay interest thereon at the rate of eight and one-half
percent (8.5%) per annum. Interest will accrue from the date hereof and
will be paid quarterly, on each January 15th, April 15th, July 15th, and
October 15th hereafter (commencing on July 15, 1995) until the principal is
fully paid. Interest will be paid on the basis of a 360-day year of twelve
30-day months.
2. REDEMPTION PRIOR TO MATURITY. Subject to the following conditions, the
Company may, at its option, redeem all or part of this Debenture prior to
maturity at a redemption price of par (plus any interest accrued but unpaid
to the date fixed for redemption).
2.1 Conditions. The Company may redeem this Debenture only after (a) the
Company's Common Stock becomes publicly traded and trades at a bid or
closing price at least equal to one hundred fifty percent (150%) of
the then applicable Conversion Price of this Debenture for a period of
30 consecutive trading days or (b) the sale of all or substantially
all of the Company's business and assets to, or the merger or
consolidation of the Company with or into, any company whose stock is
publicly traded and whose stock trades at a bid or closing price at
least equal to one hundred fifty percent (150%) of the then applicable
Conversion Price of this Debenture for a period of 30 consecutive
trading days.
2.2 Notice of Redemption. The Company must give notice of a redemption not
less than thirty (30) days, but not more than ninety (90) days, before
the date fixed for redemption. By the date fixed for redemption, the
Holder must surrender this Debenture to the Company at its principal
executive offices in exchange for payment therefor. Upon due tender of
the redemption price by the Company, this Debenture will not be deemed
to be outstanding for any purpose subsequent to the close of business
on the date fixed for redemption.
<PAGE> 17
3. SUBORDINATION AND PRIORITY. The indebtedness evidenced by this
Debenture, including the principal and accrued interest, is expressly
subordinate and subject in right of payment and upon liquidation to the
prior payment in full of all "Senior Debt," whether now outstanding or
hereafter created, incurred, assumed, or guaranteed.
3.1 Definition of "Senior Debt". The term "Senior Debt" means the
principal, premium (if any), and interest on (a) indebtedness
(other than this Debenture or any previously subordinated
debenture) of the Company evidenced by notes or similar
obligations for money borrowed from or guaranteed to persons,
firms, or corporations which engage in lending money,
including, but without limitation, individuals, banks, trust
companies, insurance companies and other financing
institutions, and charitable trusts, pension trusts, and other
investing entities or organizations, (b) indebtedness of the
Company evidenced by notes or debentures issued under the
provisions of an indenture or similar instrument between the
Company and a bank or trust company, (c) the indebtedness of
the Company evidenced by the Company's Senior Notes in an
aggregate principal amount of $2,000,000 (due January 12,
1998) and $1,680,000 (due February 3, 1999), and (d)
indebtedness incurred, assumed or guaranteed by the Company in
connection with the acquisition by it of any property or asset
unless, in each case, by the terms of the instrument creating
or evidencing the indebtedness it is expressly provided that
such indebtedness is not superior in right of payment to this
Debenture.
3.2 Exclusions from Senior Debt. Senior Debt excludes, and the
indebtedness evidenced by this Debenture is expressly senior
and entitled to priority in payment and upon liquidation with
respect to, all capital stock of the Company. Senior Debt
excludes, and the indebtedness evidenced by this Debenture is
expressly of equal priority in payment and upon liquidation
with respect to, (a) indebtedness outstanding on the original
issue date of this Debenture and convertible into shares of
the Company's Common Stock and (b) any indebtedness issued
after the date of this Debenture and convertible into shares
of the Company's Common Stock.
4. EVENTS OF DEFAULT. An Event of Default will be deemed to
occur upon the occurrence of any of the following events:
4.1 Default in the payment of interest on this Debenture when it
becomes due and payable, and continuance of such default for a
period of ten (10) days after notice;
4.2 Default in the payment of the principal of this Debenture when
it becomes due and payable;
4.3 Default by the Company under an acceleration prior to maturity
of, or the failure to pay at maturity, any third party
indebtedness of the Company aggregating $250,000 or more for a
period of thirty (30) days after the same may become payable;
-2-
<PAGE> 18
4.4 The failure of the Company to comply, for a period of 30 days
after notice of default, with any affirmative or negative
covenant contained in the Purchase Agreement of even date
herewith between the Company and the original Holder hereof;
4.5 The failure of the Company to pay final judgments (not covered
by insurance or then subject to any appeal) aggregating
$500,000 or more for 30 days;
4.6 The entry of a decree or order by a court having jurisdiction
adjudging the Company a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjustment, or composition of or in respect of the Company
under the Federal Bankruptcy Act or any other applicable
Federal or State law, or appointing a receiver, liquidator,
assignee, trustee, or other similar official of the Company or
of any substantial part of its property, or ordering the
winding up or liquidation of its affairs, and the continuance
of any such decree or order unstayed and in effect for a
period of 60 days; or
4.7 The institution by the Company of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by it to
the institution of bankruptcy or insolvency proceedings
against it, or the filing by it of a petition or answer or
consent seeking reorganization or relief under Federal or
State law, or the consent by it to the filing of any such
petition or to the appointment of a receiver, liquidator,
assignee, trustee, or other similar official of the Company or
of any substantial part of its property, or the making by it
of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts
generally as they become due, or the taking of corporate
action by the Company in furtherance of any such action.
5. RIGHTS UPON DEFAULT; ACCELERATION OF INDEBTEDNESS. Upon the occurrence
of an Event of Default:
5.1 The entire outstanding balance of the Debenture, including the
entire balance of principal and all accrued interest, will
accelerate and become immediately due and payable upon written
notice to the Company by the Holder; and
5.2 The Company may not pay dividends or make distributions to
holders of any class of its stock, or redeem or repurchase all
or any part of any class of its stock.
6. CONVERSION OF DEBENTURE. This Debenture is convertible, at the option
of the Holder, into shares of the Company's Common Stock on the
following basis:
6.1 Conversion Price. A conversion may be made, at any time before
the close of business on the business day before the maturity
or redemption date, at the rate of $10.50 per share, subject
to adjustment as provided in this Debenture (the "Conversion
Price"). The Company is not required to issue fractional
shares of Common Stock or other capital stock upon conversion
of this Debenture and, in lieu thereof, will pay a cash
adjustment based upon the then current fair market
-3-
<PAGE> 19
value of the Common Stock as determined by the Board of
Directors on the last business day before the date of
conversion.
6.2 Adjustment Based Upon Stock Dividends Combination of Shares or
Recapitalization. The Conversion Price and the number of
Shares will be adjusted if the Company, at any time after the
original issuance of this Debenture,
(a) pays a stock dividend on its Common Stock,
(b) subdivides its outstanding shares of Common Stock
into a greater number of shares,
(c) combines its outstanding shares of Common Stock into
a smaller number of shares,
(d) issues by reclassification of its shares of Common
Stock any other special capital stock of the Company,
or
(e) distributes to all holders of its Common Stock
evidences of indebtedness or assets (excluding cash
dividends) or rights or warrants to subscribe for
Common Stock (other than those mentioned above).
On or after the occurrence of an event or events requiring
adjustment of the Conversion Price, the Holder upon surrender
of this Debenture for conversion will be entitled to receive
the number of shares of Common Stock or other securities of
the Company which the Holder would have owned or been entitled
to receive had this Debenture been converted immediately
before the happening of the event requiring adjustment of the
Conversion Price.
6.3 Adjustment Based Upon Stock Issuances. The Conversion Price
will be adjusted if, at any time after the original issuance
of this Debenture, the Company issues Common Stock, issues
rights or warrants to subscribe for or purchase Common Stock,
or issues securities convertible into or exchangeable for
Common Stock at less than the Conversion Price. Upon the
occurrence of an event or events requiring adjustment of the
Conversion Price under this section the Conversion Price will
be adjusted to be equal to the price of the new issue. An
adjustment under this section will not increase the number of
shares of Common Stock, or other securities, which the Holder
will be entitled to receive upon surrender of this Debenture
for conversion, but will only reduce the Conversion Price
which the Holder must pay to acquire such Common Stock or
other securities. Any amount of this Debenture not required to
be used in a conversion, because of an adjustment of the
Conversion Price under this section, must be paid by the
Company to the Holder upon any redemption or upon maturity of
this Debenture.
6.4 Adjustment Based Upon Merger or Consolidation. In case of any
consolidation or merger to which the Company is a party (other
than a merger in which the Company is the surviving entity and
which does not result in any reclassification
-4-
<PAGE> 20
of or change in the outstanding Common Stock of the Company)
or in case of any sale or conveyance to another person, firm,
or corporation of the property of the Company as an entirety
or substantially as an entirety, the Holder will have the
continuing right to convert this Debenture into the kind and
amount of securities and property (including cash) receivable
upon such consolidation, merger, sale, or conveyance by a
holder of the number of shares of Common Stock into which this
Debenture might have been converted immediately before the
consolidation, merger, sale, or conveyance.
6.5 No Adjustment for Outstanding Conversion and Option Rights
and Certain Other Securities. Notwithstanding any other
section of this Agreement, no adjustment of the Conversion
Price will be made upon the issuance by the Company of
(a) Common Stock upon conversion or exchange of
securities convertible or exchangeable into Common
Stock and outstanding on or before the date of this
Debenture,
(b) Common Stock upon exercise of any employee's stock
option outstanding on or before the date of this
Debenture, or
(c) Common Stock or securities convertible into Common
Stock, not amounting to more than 10% of the
Company's issued and outstanding Common Stock, issued
after the date of this Debenture pursuant to an
employee benefit plan of the Company.
6.6 Exercise of Conversion Privilege. The Conversion Privilege is
exercisable by the Holder upon written notice to the Company
(or its successor) and the surrender of this Debenture in
exchange for the number of shares of Common Stock (or other
securities and property, including cash, in the event of an
adjustment of the Conversion Price) into which this Debenture
is convertible based upon the Conversion Price. Conversion
rights will expire at the close of business on the business
day before the maturity or redemption date.
7. CORPORATE STATUS OF SHARES TO BE ISSUED. All shares of the Company's
Common Stock (or other securities in the event of an adjustment of the
Conversion Price) issued upon the conversion of this Debenture will,
upon issuance, be fully paid and nonassessable.
8. ISSUANCE OF STOCK CERTIFICATE. Upon conversion of this Debenture, the
Company will forthwith issue to the Holder a certificate or
certificates representing the number of shares of its Common Stock (or
other securities in the event of an adjustment of the Conversion Price)
to which the conversion relates.
9. STATUS OF HOLDER OF DEBENTURE. This Debenture does not entitle the
Holder to any voting rights or other rights as a shareholder of the
Company. No dividends are payable or accrue in respect of this
Debenture, or the securities issuable upon conversion, unless and until
this Debenture is converted. Upon the conversion of this Debenture, the
Holder will (to the extent permitted by law) be deemed to be the holder
of record of the shares of
-5-
<PAGE> 21
Common Stock issuable upon conversion, notwithstanding that
the stock transfer books of the Company are then closed or
that the certificates representing the shares of Common Stock
are not then actually delivered.
10. LOSS OR DESTRUCTION OF DEBENTURE. The Company will execute and deliver
a new debenture of like tenor and date upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction, or
mutilation of this Debenture and (a) in the case of loss, theft, or
destruction, of an indemnity by the Holder, (b) in case of any
transfer, upon such terms as are satisfactory to the Company, or (c) in
the case of mutilation, upon surrender and cancellation of this
Debenture.
11. RESERVATION OF SHARES. The Company will reserve out of its authorized
shares of Common Stock (and other securities in the event of an
adjustment of the Conversion Price) a number of shares sufficient to
enable it to comply with its obligation to issue shares of Common Stock
(and other securities in the event of an adjustment of the Conversion
Price) upon the conversion of this Debenture.
12. STATUS UNDER SECURITIES LAWS.
12.1 No Registration. This Debenture has not been, and the
securities issuable upon conversion hereof will not be,
registered under the Securities Act of 1933 (the "1933 Act"),
the Arizona Securities Act (the "Arizona Act") or the
securities laws of any other jurisdiction. This Debenture, and
such securities, must be held indefinitely without any
transfer, sale, or other disposition unless (a) subsequently
registered under the 1933 Act, the Arizona Act and the
securities laws of any other applicable jurisdiction or (b) in
the opinion of counsel acceptable to the Company, registration
is not required under such Acts or laws.
12.2 Legend. There will be endorsed on this Debenture, and on the
certificates evidencing any securities issued upon the
conversion of this Debenture, a legend substantially to the
following effect:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAW OF ANY
STATE. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF EFFECTIVE
REGISTRATION STATEMENTS OR AN OPINION OF COUNSEL
ACCEPTABLE TO THIS COMPANY THAT REGISTRATION IS NOT
REQUIRED."
12.3 Restriction on Other Securities. Except in certain limited
circumstances, the restrictions on the transfer of this
Debenture will also apply to (a) securities issued upon
conversion of this Debenture and (b) shares of capital stock
or other securities issued or otherwise acquired on account of
the Debenture (or securities issued upon conversion of the
Debenture) including, without limitation, shares
-6-
<PAGE> 22
and securities issued or acquired as a result of a stock
dividend, stock split or exchange, or any distribution of
shares or securities pursuant to any corporate reorganization,
reclassification, or similar event.
12.4 Refusal to Transfer. The Company may refuse to effect a
transfer, sale or other disposition of this Debenture, or the
shares issuable upon conversion, by the Holder or its
successors or assigns otherwise than as expressly permitted by
this Debenture.
13. MISCELLANEOUS.
13.1 Purchase Agreement. This Debenture, and the indebtedness
evidenced hereby, is issued and incurred subject to the terms
of the Purchase Agreement between the Company and the original
Holder, the terms and conditions of which are binding upon any
subsequent Holder or transferee of this Debenture.
13.2 Governing Law. This Debenture, and all questions relating to
its validity, interpretation, performance, and enforcement is
governed by and will be construed in accordance with the laws
of Arizona, notwithstanding any Arizona or other
conflict-of-law provisions to the contrary.
13.3 Binding Nature of Debenture. This Debenture is binding upon
any successors and assigns of the Company and will inure to
the benefit of the Holder and its successors and assigns,
except that the Holder may not assign or transfer its rights
under this Debenture otherwise than by gift or bequest, by
operation of law, or as expressly permitted by this Debenture.
13.4 Notices. All notices and other communications under this
Debenture must be in writing and will be deemed given and
received when delivered or five days after they are deposited
in the United States mails, first class postage prepaid
addressed as set forth in the Purchase Agreement. Either party
may alter the person, office or address to which
communications or copies are to be sent by giving notice.
13.5 Amendment and Waivers. Neither this Agreement nor any of its
terms may be changed, waived, discharged, or terminated except
in a writing signed by the Company and by holders of more than
50% of the outstanding Restricted Securities (as that term is
defined in the Purchase Agreement).
14. EXECUTION DATE. The Company has caused this Debenture to be duly
executed on the date written above.
ROCKFORD CORPORATION
By:/s/
-----------------------------------
President
Attest:/s/
-------------------------------
Secretary
-7-
