SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
International Jensen Incorporated
(Name of Issuer)
Common Stock $.01 par value
(Title of Class of Securities)
459721106
(CUSIP Number)
Stuart Mont
Recoton Corporation
2950 Lake Emma Road
Lake Mary, Florida 32746
(407) 333-8900
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 1, 1996
(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 which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for 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).
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SCHEDULE 13D
Item 7. Material to be Filed as Exhibits.
The following exhibits (each being a corrected copy of the
corresponding exhibit as initially filed on May 10, 1996) are filed
herewith:
1. Third Amended and Restated Merger Agreement by and among
International Jensen Incorporated, Recoton Corporation and RC
Acquisition Sub, Inc., a wholly-owned subsidiary of Recoton
Corporation, dated as of January 3, 1996 but executed May 10,
1996.
3. Spread Agreement by and among Recoton Corporation, RC
Acquisition Sub, Inc., a wholly-owned subsidiary of Recoton
Corporation, and Robert G. Shaw, a stockholder of
International Jensen Incorporated, dated as of May 1, 1996 but
executed May 10, 1996.
<PAGE>
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.
Dated: May 21, 1996 By: /s/ Stuart Mont
Name: Stuart Mont
Title: Executive Vice President
EXHIBIT 1
THIRD AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
THIRD AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of
January 3, 1996 (the "Agreement"), by and between RECOTON CORPORATION, a New
York corporation ("Recoton"), RC ACQUISITION SUB, INC., a Delaware corporation
("Acquisition Sub") and wholly-owned subsidiary of Recoton, and INTERNATIONAL
JENSEN INCORPORATED, a Delaware corporation ("Jensen").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Recoton, Acquisition Sub and
Jensen have approved the merger of Jensen with and into Acquisition Sub (the
"Merger") pursuant to the terms and conditions set forth in this Agreement and
the sole stockholder of Acquisition Sub has approved the Merger;
WHEREAS, for federal income tax purposes, it is intended that
Acquisition Sub and Jensen and their respective stockholders will recognize no
gain or loss for federal income tax purposes under the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations thereunder as a result of the
consummation of the Merger except with respect to stockholders who exercise
dissenters' rights, to the extent that income might be realized because of
differences in the price per share paid to different stockholders, or to the
extent stockholders receive cash in lieu of fractional shares, the Per Share
Cash Amount or the Principal Stockholders Per Share Cash Amount (both terms as
defined in Section 3.1) or a portion thereof; and
WHEREAS, Jensen and Recoton entered into an agreement on January 3,
1996 (the "AR Agreement") by which Recoton has acquired a license to and an
option to purchase, and Jensen has acquired an option to sell, the trademarks
and associated copyrights and other intellectual properties of Jensen associated
with the name "Acoustic Research" or "AR" (the "AR Rights"), which agreement is
being amended contemporaneous to execution of this Agreement; and
WHEREAS, Jensen and IJI Acquisition Corp. ("IJI") have entered into an
agreement, which is being amended contemporaneous to execution of this Agreement
(the "OE Agreement") by which IJI has agreed to acquire the assets associated
with the original equipment business of Jensen (the "Original Equipment
Business") and assume related liabilities prior to the Effective Time (as
defined in Section 1.2), which agreement Recoton has approved.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, Recoton,
Acquisition Sub and Jensen, intending to be legally bound hereby, agree as
follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
of this Agreement, at the Effective Time in accordance with the Delaware General
Corporation Law (the "GCL") Jensen shall be merged with and into Acquisition Sub
in accordance with this Agreement and the form of certificate of merger attached
hereto as Exhibit 1.1 (the "Certificate of Merger") and the separate existence
of Jensen shall thereupon cease. Acquisition Sub shall be the surviving
corporation in the Merger (hereinafter sometimes referred to as the "Surviving
Corporation").
Section 1.2 Effective Time of the Merger. The Merger shall become
effective at such time (the "Effective Time") after the Closing (as defined
below) as a copy of the duly completed Certificate of Merger (the "Merger
Filing") is delivered to the Secretary of State of the State of Delaware for
filing and is filed by the Secretary of State of the State of Delaware or at
such later time as the parties may agree to specify in the Certificate of
Merger.
Section 1.3 Effects of the Merger. The Merger shall have the effects
set forth in Section 259 of the GCL.
Section 1.4 Closing. The closing (the "Closing ") of the transactions
contemplated by this Agreement shall take place at the offices of Stroock &
Stroock & Lavan, 7 Hanover Square, New York, New York on June 27, 1996 at 9:30
A.M. New York time, or, if later, on the second business day immediately
following the date on which the last of the conditions set forth in Article VIII
hereof is fulfilled or waived, or at such other time and place as Acquisition
Sub and Jensen shall agree (the "Closing Date").
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation; Amendment. The Certificate
of Incorporation of Acquisition Sub as in effect immediately prior to the
Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation after the Effective Time until amended in accordance with the
provisions of the GCL, except that Article FIRST shall be amended as of and from
the Effective Time to read "The name of the Corporation shall be Recoton Audio
Corporation."
Section 2.2 By-Laws. The By-Laws of Acquisition Sub shall be the
By-Laws of the Surviving Corporation after the Effective Time, and thereafter
may be amended in accordance with their terms and as provided by the Certificate
of Incorporation of the Surviving Corporation and the GCL.
Section 2.3 Directors and Officers. (a) At the Effective Time, the
Board of Directors of the Surviving Corporation shall consist of the following
persons:
Robert L. Borchardt
Joseph H. Massot
Stuart Mont
Robert G. Shaw
Marc T. Tanenberg
(b) At the Effective Time, the officers of the Surviving Corporation
shall be as follows:
Office Holder
Chairman Robert L. Borchardt
President & Robert G. Shaw
CEO
Vice President & Marc T. Tanenberg
CFO
Secretary Stuart Mont
Treasurer & Joseph H. Massot
Assistant Secretary
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Conversion of Jensen Shares in the Merger.
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of any holder of any capital stock of Jensen except as set
forth in this Section 3.1, subject to the other provisions of this Section 3.1,
each share of common stock, par value $.01 per share, of Jensen ("Jensen Common
Stock") issued and outstanding immediately prior to the Effective Time
(excluding any treasury shares and Dissenting Shares (as defined in Section
3.5)) shall be converted into either
(i) the right to receive cash in the amount of $10.00 (hereinafter the
"Per Share Cash Amount") or $8.90 in the case of shares held beneficially
by Robert G. Shaw ("Shaw") and William Blair Leveraged Capital Fund, L.P.
("WBLCF") (WBLCF and Shaw being referred to herein as the "Principal
Stockholders") (the "Principal Stockholders Per Share Cash Amount");
(ii) the right to receive such number of validly issued, fully paid
and nonassessable Common Shares, $0.20 par value, of Recoton ("Recoton
Common Shares") as shall be determined by dividing the Per Share Cash
Amount (or the Principal Stockholders Per Share Cash Amount, in the case of
shares of Common Stock beneficially owned by the Principal Stockholders) by
the Average Recoton Share Price (as defined in Section 3.1(b)) carried out
to four decimal places (such number divided by one being referred to
hereinafter as the "Exchange Ratio") (or, in the case of the Principal
Stockholders, the "Principal Stockholders Exchange Ratio"); or
(iii) the right to receive a combination of Recoton Common Shares
valued at the Average Recoton Share Price and cash equal in the aggregate
to the Per Share Cash Amount or the Principal Stockholders Per Share Cash
Amount, as applicable;
provided, however, that if the Average Recoton Share Price is below $16.00, then
each share of the Jensen Common Stock shall be converted into the Per Share Cash
Amount or the Principal Stockholders Per Share Cash Amount, as applicable (the
conversion of all shares of Jensen Common Stock into the Per Share Cash Amount
or the Principal Stockholders Per Share Cash Amount in such event or in other
events detailed in this Agreement is referred to herein as an "All Cash
Transaction" and a transaction in which Jensen Common Stock is to be converted
into a combination of cash and Recoton Common Shares is referred to herein as a
"Cash and Stock Transaction").
At the Effective Time, all shares of Jensen Common Stock shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each certificate previously evidencing any such shares shall
thereafter represent the right to receive the Merger Consideration (as defined
in Section 3.2(b)). The holders of certificates previously evidencing shares of
Jensen Common Stock outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to shares of Jensen Common Stock except as
otherwise provided herein or by law. Certificates previously evidencing shares
of Jensen Common Stock shall be exchanged for (i) certificates evidencing whole
Recoton Common Shares issued in consideration therefor, (ii) the Per Share Cash
Amount or the Principal Stockholders Per Share Cash Amount, as applicable
multiplied by the number of shares previously evidenced by the canceled
certificate, or (iii) a combination thereof, in each case in accordance with the
election and allocation procedures of this Section 3.1 and upon the surrender of
such certificates in accordance with the provisions of Section 3.2, without
interest. No fractional Recoton Common Shares shall be issued, and, in lieu
thereof, a cash payment shall be made pursuant to Section 3.2(e). The recipients
of Recoton Common Shares issued in accordance with this Section 3.1 shall also
by receiving Recoton Common Shares thereby receive an associated Common Share
purchase right pursuant to the Rights Agreement dated as of October 27, 1995,
between Recoton and Chemical Mellon Shareholder Services, L.L.C.
(b) The "Average Recoton Share Price" shall mean the average of the
closing prices of Recoton Common Shares on the Nasdaq Stock Exchange ("Nasdaq")
during the 20 consecutive trading days ending the fifth trading day prior to the
meeting of the stockholders of Jensen being held to vote upon the Merger (the
"Jensen Stockholders' Meeting"), discarding the three highest and three lowest
closing prices, carried out to four decimal places.
(c) Notwithstanding the foregoing, if between the date of this
Agreement and the Effective Time the outstanding Recoton Common Shares or shares
of Jensen Common Stock shall have been changed into a different number of shares
or a different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
the Exchange Ratio, the Principal Stockholders Exchange Ratio, the Per Share
Cash Amount and the Principal Stockholders Per Share Cash Amount shall be
correspondingly adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares.
(d) Except as otherwise set forth in the proviso to Section 3.1(a) or
as set forth in Section 3.1(i), the number of shares of Jensen Common Stock to
be converted into the right to receive cash in the Merger (including Dissenting
Shares and Fractional Shares) shall be 54.7% of the number of shares of Jensen
Common Stock outstanding immediately prior to the Effective Time (as such number
may be decreased as set forth in Section 3.1(i), the "Target Cash Election
Number") and the number of shares of Jensen Common Stock to be converted into
the right to receive Recoton Common Shares in the Merger shall be 45.3% of the
number of shares of Jensen Common Stock outstanding immediately prior to the
Effective Time (as such number may be increased as set forth in Section 3.1(i),
the "Target Stock Election Number").
(e) Subject to the allocation and election procedures set forth in
this Section 3.1, each record holder immediately prior to the Effective Time of
shares of Jensen Common Stock will be entitled (i) to elect to receive cash for
some or all of such shares (a "Cash Election") and/or (ii) to elect to receive
Recoton Common Shares for some or all of such shares (a "Stock Election"), or
(iii) to indicate that such record holder has no preference as to the receipt of
cash or Recoton Common Shares for such shares (a "Non-Election"). All such
elections shall be made on a form designed for that purpose (a "Form of
Election"), which shall also be the letter of transmittal for the certificates
representing such shares of Common Stock. Each Holder of record of shares of
Jensen Common Stock who holds such shares as a nominee, trustee or in other
representative capacity (a "Representative") may submit multiple Forms of
Election, provided that such Representative certifies that each such Form of
Election covers all the shares of Jensen Common Stock held by such
Representative for a particular beneficial owner.
(f) If the aggregate number of shares covered by Cash Elections (the
"Cash Election Shares") exceeds the Target Cash Election Number, all shares of
Jensen Common Stock covered by Stock Elections (the "Stock Election Shares") and
all shares of Jensen Common Stock covered by Non-Elections (the "Non-Election
Shares") shall be converted into the right to receive Recoton Common Shares, and
each Cash Election Share shall be converted into the right to receive (i) an
amount in cash, without interest, equal to the product of (x) the Per Share Cash
Amount or the Principal Stockholders Per Share Cash Amount, as applicable and
(y) a fraction (the "Cash Fraction"), the numerator of which shall be the Target
Cash Election Number and the denominator of which shall be the total number of
Cash Election Shares, and (ii) a number of Recoton Common Shares equal to the
product of (x) the Exchange Ratio or the Principal Stockholders Exchange Ratio,
as applicable and (y) a fraction equal to one minus the Cash Fraction.
(g) If the aggregate number of Stock Election Shares exceeds the
Target Stock Election Number, all Cash Election Shares and all Non-Election
Shares shall be converted into the right to receive cash, and each Stock
Election Share shall be converted into the right to receive (i) a number of
Recoton Common Shares equal to the product of (x) the Exchange Ratio or the
Principal Stockholders Exchange Ratio, as applicable and (y) a fraction (the
"Stock Fraction"), the numerator of which shall be the Target Stock Election
Number and the denominator of which shall be the total number of Stock Election
Shares, and (ii) an amount in cash, without interest, equal to the product of
(x) the Per Share Cash Amount or the Principal Stockholders Per Share Cash
Amount, as applicable and (y) a fraction equal to one minus the Stock Fraction.
(h) If neither Section 3.1(f) nor Section 3.1(g) is applicable, all
Cash Election Shares shall be converted into the right to receive cash, all
Stock Election Shares shall be converted into the right to receive Recoton
Common Shares, and each Non-Election Share shall be converted into the right to
receive (i) an amount in cash, without interest, equal to the product of (x) the
Per Share Cash Amount or the Principal Stockholders Per Share Cash Amount, as
applicable and (y) a fraction (the "Non-Election Fraction"), the numerator of
which shall be the amount by which the Target Cash Election Number exceeds the
total number of Cash Election Shares and the denominator of which shall be the
amount by which (A) the number of shares of Jensen Common Stock outstanding
immediately prior to the Effective Time exceeds (B) the sum of the total number
of Cash Election Shares and the total number of Stock Election Shares and (ii) a
number of Recoton Common Shares equal to the product of (x) the Exchange Ratio
or the Principal Stockholders Exchange Ratio, as applicable and (y) a fraction
equal to one minus the Non-Election Fraction.
(i) Notwithstanding the foregoing, if the issuer of the tax opinion
required by Section 8.1(h) does not confirm its opinion at the Closing due to
differences between the market price of Recoton Common Shares at the Closing
Date and the Average Recoton Share Price then the Target Stock Election Number
shall be increased so as to allow the issuer of the tax opinion to confirm the
tax opinion; provided, however, that the Target Stock Election Number shall not
be increased to more than 50% of the number of shares of Jensen Common Stock
outstanding immediately prior to the Effective Time. If the issuer of the tax
opinion required by Section 8.1(h) does not confirm its opinion at the Closing
Date with a Target Stock Election Number of 50% or for any other reason, then
(A) if the stockholders of Jensen have approved at the Jensen Stockholders'
Meeting an All Cash Transaction in the event the tax opinion is not confirmed,
each share of the Jensen Common Stock shall be converted into the Per Share Cash
Amount or the Principal Stockholders Per Share Cash Amount, as applicable in an
All Cash Transaction or (B) if the stockholders of Jensen have not approved at
the Jensen Stockholders' Meeting an All Cash Transaction in such circumstances,
the Merger Agreement shall be terminated and such termination shall be deemed a
failure of the stockholders of Jensen to approve the Merger in accordance with
the provisions of Section 4.21 of this Agreement.
(j) Elections shall be made by holders of Jensen Common Stock by
mailing to the Exchange Agent (as defined in Section 3.2(a)) a Form of Election.
To be effective, a Form of Election must be properly completed, signed and
submitted to the Exchange Agent and accompanied by the certificates representing
the shares of Jensen Common Stock as to which the election is being made (or by
an appropriate guaranty of delivery by a commercial bank or trust company in the
United States or a member of a registered national securities exchange or the
National Association of Securities Dealers, Inc. (the "NASD")). Recoton will
have the discretion, which it may delegate in whole or in part to the Exchange
Agent, to determine whether Forms of Election have been properly completed,
signed and submitted or revoked and to disregard immaterial defects in Forms of
Election. The decision of Recoton (or the Exchange Agent) in such matters shall
be conclusive and binding. Neither Recoton nor the Exchange Agent will be under
any obligation to notify any person of any defect in a Form of Election
submitted to the Exchange Agent. The Exchange Agent shall also make all
computations contemplated by this Section 3.1 and all such computations shall be
conclusive and binding on the holders of Jensen Common Stock, absent manifest
error.
(k) For the purposes hereof, a holder of Jensen Common Stock who does
not submit a Form of Election which is received by the Exchange Agent prior to
the Election Deadline (as hereinafter defined) shall be deemed to have made a
Non-Election. If Recoton or the Exchange Agent shall determine that any
purported Cash Election or Stock Election was not properly made, such purported
Cash Election or Stock Election shall be deemed to be of no force and effect and
the stockholder making such purported Cash Election or Stock Election shall for
purposes hereof, be deemed to have made a Non-Election.
(l) Jensen shall mail a Form of Election to each stockholder of Jensen
as of the record date for the Jensen Stockholders' Meeting (the "Record Date")
with the Proxy Statement for the Jensen Stockholders' Meeting and shall use its
best efforts to mail the Form of Election to all persons who become holders of
Jensen Common Stock during the period between the Record Date and 10:00 a.m. New
York time, on the date seven calendar days prior to the anticipated Effective
Time and to make the Form of Election available to all persons who become
holders of Jensen Common Stock subsequent to such day and no later than the
close of business on the business day prior to the Effective Time. A Form of
Election must be received by the Exchange Agent by the close of business on the
last business day prior to the Effective Time (the "Election Deadline") in order
to be effective. All elections may be revoked until the Election Deadline.
(m) Each share of Jensen Common Stock held in the treasury of Jensen
and each share of Jensen Common Stock owned by Recoton or any direct or indirect
wholly owned subsidiary of Recoton or of Jensen immediately prior to the
Effective Time shall be canceled and extinguished without any conversion thereof
and no payment shall be made with respect thereto.
(n) If certificates for shares of Jensen Common Stock are delivered to
the Exchange Agent and this Agreement is terminated prior to the effective time,
Recoton shall use its best efforts to cause the Exchange Agent to return
tendered certificates as promptly as practicable after such termination date.
3.2 Exchange of Certificates.
(a) Exchange Agent. Promptly after completion of the allocation and
election procedures set forth in Section 3.1, but prior to the Effective Time,
Recoton or Acquisition Sub shall deposit, or shall cause to be deposited, with a
bank or trust company designated by Recoton (the "Exchange Agent"), for the
benefit of the holders of shares of Jensen Common Stock, for exchange in
accordance with this Article III, through the Exchange Agent, (i) certificates
evidencing such number of Recoton Common Shares equal to (x) the Exchange Ratio
multiplied by the Target Stock Election Number multiplied by a fraction the
numerator of which is the number of shares of Jensen Common Stock not owned by
the Principal Stockholders (the "Publicly Held Shares") and the denominator of
which is the number of shares of Jensen Common Stock plus (y) the Principal
Stockholders Exchange Ratio multiplied by the Target Stock Election Number
multiplied by a fraction the numerator of which is the number of shares of
Jensen Common Stock owned by the Principal Stockholders and the denominator of
which is the number of shares of Jensen Common Stock and (ii) cash in the amount
equal to the (x) Per Share Cash Amount multiplied by the Target Cash Election
Number (including an amount as estimated by the Exchange Agent as necessary to
pay for Fractional Shares minus an amount equal to the Dissenting Shares
multiplied by the Per Share Cash Amount) multiplied by a fraction the numerator
of which is the number of Publicly Held Shares and the denominator of which is
the number of shares of Jensen Common Stock plus (y) the Principal Stockholders
Per Share Cash Amount multiplied by the Target Cash Election Number multiplied
by a fraction the numerator of which is the number of shares of Jensen Common
Stock owned by the Principal Stockholders and the denominator of which is the
number of shares of Jensen Common Stock (such certificates for Recoton Common
Shares, together with any dividends or distributions with respect thereto and
cash, being hereinafter referred to as the "Exchange Fund"); provided, however,
that should there be an All Cash Transaction, Recoton or Acquisition Sub only
shall deposit in the Exchange Fund cash in the amount equal to the number of
shares of Jensen Common Stock outstanding multiplied by the Per Share Cash
Amount or the Principal Stockholders Per Share Cash Amount, as applicable and
provided, further, that the cash and Recoton Common Shares to be deposited in
the Exchange Fund shall be adjusted as necessary to reflect any adjustments
pursuant to Section 3.1(i). The Exchange Agent shall, pursuant to irrevocable
instructions, deliver the Recoton Common Shares and cash out of the Exchange
Fund in accordance with Section 3.1. Except as contemplated by Section 3.2(f)
hereof, the Exchange Fund shall not be used for any other purpose.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, (i) the Exchange Agent shall deliver the Merger Consideration
(as hereinafter defined) to each holder of record of a Certificate (as
hereinafter defined) who has theretofore submitted to the Exchange Agent an
effective Form of Election accompanied by the Certificate(s) representing the
shares covered by such Form of Election or the appropriate guaranty of delivery,
and (ii) the Surviving Corporation shall instruct the Exchange Agent to promptly
mail to each holder of record of a certificate or certificates which immediately
prior to the Effective Time evidenced outstanding shares of Jensen Common Stock
(other than Dissenting Shares) (the "Certificates") who did not submit a
properly completed Form of Election accompanied by the necessary stock
certificates or guaranty of delivery (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions as the
Surviving Corporation may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
evidencing Recoton Common Shares and/or cash. Upon surrender of a Certificate
for cancellation to the Exchange Agent (or, in lieu thereof delivery to the
Exchange Agent of an appropriate affidavit of loss and such other documents as
may be required under Section 3.2(i)) together with such letter of transmittal,
duly executed, and such other customary documents as may be required pursuant to
such instructions, the holder of such Certificates shall be entitled to receive,
and shall instruct the Exchange Agent to promptly deliver after the Effective
Time, in exchange therefor (A) certificates evidencing that number of whole
Recoton Common Shares which such holder has the right to receive in respect of
the shares of Jensen Common Stock formerly evidenced by such Certificate in
accordance with Section 3.1, (B) cash to which such holder is entitled to
receive in accordance with Section 3.1, (C) cash in lieu of fractional Recoton
Common Shares to which such holder is entitled pursuant to Section 3.2(e) and/or
(D) any dividends or other distributions to which such holder is entitled
pursuant to Section 3.2(c) (the Recoton Common Shares, dividends, distributions
and cash described in clauses (A), (B), (C) and (D) being collectively, the
"Merger Consideration") and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of shares of Jensen Common
Stock which is not registered in the transfer records of Jensen, a certificate
evidencing the proper number of Recoton Common Shares and/or cash may be issued
and/or paid in accordance with this Article III to a transferee if the
Certificates evidencing such shares of Jensen Common Stock are presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 3.2, each Certificate
shall be deemed at any time after the Effective Time to evidence only the right
to receive upon such surrender the Merger Consideration.
(c) Recoton Distribution with Respect to Unsurrendered Certificates of
Jensen. No dividends or other distributions declared or made after the Effective
Time with respect to Recoton Common Shares with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the Recoton Common Shares evidenced thereby, and no other part of the
Merger Consideration shall be paid to any such holder, until the holder of such
Certificate shall surrender such Certificate or complies with Section 3.2(i).
Subject to the effect of applicable laws, following surrender of any such
Certificate or compliance with Section 3.2(i), there shall be paid to the holder
of such Certificates promptly (i) the Merger Consideration and (ii) the amount
of dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole Recoton Common Shares and, at the
appropriate payment date, the amount of dividends or other distributions, with a
record date after the Effective Time but prior to surrender and a payment date
occurring after surrender, payable with respect to such whole Recoton Common
Shares. No interest shall be paid on the Merger Consideration or any dividends
or other distributions.
(d) No Further Rights in Jensen Common Stock. All Recoton Common
Shares issued and cash paid upon conversion of the shares of Jensen Common Stock
in accordance with the terms hereof shall be deemed to have been issued or paid
in full satisfaction of all rights pertaining to such shares of Jensen Common
Stock.
(e) No Fractional Shares. (i) No certificates or scrip evidencing
fractional Recoton Common Shares shall be issued upon the surrender for exchange
of Certificates, and such fractional share interests will not entitle the owner
thereof to vote or to any rights of a stockholder of Recoton. In lieu of any
such fractional shares, each holder of Jensen Common Stock upon surrender of a
Certificate for exchange pursuant to this Section 3.2 shall be paid an amount in
cash (without interest), rounded to the nearest cent, determined by multiplying
(a) the Average Recoton Share Price by (b) the fractional interest to which such
holder would otherwise be entitled (after taking into account all shares of
Jensen Common Stock then held of record by such holder).
(ii) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Jensen Common Stock with respect to any
fractional share interests, the Exchange Agent shall promptly pay such amounts
to such holders of Jensen Common Stock subject to and in accordance with this
Agreement.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of Jensen Common Stock for one year
after the Effective Time shall be delivered to the Surviving Corporation, upon
demand, and any holders of Jensen Common Stock who have not theretofore complied
with this Article III shall thereafter look only to the Surviving Corporation
for the Merger Consideration to which they are entitled.
(g) No Liability. Neither Recoton nor the Surviving Corporation shall
be liable to any holder of shares of Jensen Common Stock for any such Recoton
Common Shares or cash (or dividends or distributions with respect thereto) from
the Exchange Fund delivered in good faith to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(h) Withholding Rights. Recoton and/or the Surviving Corporation shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Jensen Common Stock such
amounts as Recoton and/or the Surviving Corporation is required to deduct and
withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Recoton and/or the Surviving Corporation, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Jensen Common Stock in respect of which such deduction
and withholding was made by Recoton and/or the Surviving Corporation.
(i) Lost Certificates. In the event any certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such certificate to be lost, stolen or destroyed and, if
reasonably required by the Surviving Corporation (which determination may be
delegated to the Exchange Agent), the posting by such person of a bond in such
amount as the Surviving Corporation or such Exchange Agent may determine is
reasonably necessary as indemnity against any claim that may be made against it
with respect to such certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed certificate the Merger Consideration deliverable
in respect thereof pursuant to this Agreement.
Section 3.3 Stock Transfer Books. At the Effective Time, the stock
transfer books of Jensen shall be closed and there shall be no further
registration of transfers of shares of Jensen Common Stock thereafter on the
records of Jensen. On or after the Effective Time, any certificates presented to
the Exchange Agent, Recoton or the Surviving Corporation for any reason shall be
converted into the Merger Consideration.
Section 3.4 Stock Options and Other Rights.
(a) At the Effective Time, each outstanding option to purchase shares
of Jensen Common Stock (a "Jensen Stock Option") issued pursuant to the Jensen
Stock Option Plan (1989), the Jensen 1991 Stock Incentive Plan and the 1994
Jensen Stock Option and Purchase Plan for Non-Employee Directors (together, the
"Jensen Stock Option Plans") shall be assumed by Recoton with each such option
becoming fully exercisable upon the Merger to the extent so required by the
applicable plan. Except for any such acceleration of the exercisability of the
Jensen Stock Options as provided in the preceding sentence, each Jensen Stock
Option shall be deemed to constitute an option to acquire, on the same terms and
conditions as were applicable under such Jensen Stock Option, the same number of
Recoton Common Shares as the holder of the Jensen Stock Option would have been
entitled to receive pursuant to the Merger had such holder exercised such option
in full immediately prior to the Effective Time and received in the Merger such
number of Recoton Common Shares equal to the number of shares of Jensen Common
Stock represented by such Jensen Stock Option multiplied by the Exchange Ratio,
at a price per share equal to (y) the aggregate exercise price for the shares of
Jensen Common Stock otherwise purchasable pursuant to such Jensen Stock Option
divided by (z) the number of full Recoton Common Shares deemed purchasable
pursuant to such Jensen Stock Option.
(b) As soon as practicable after the Effective Time, Recoton shall
deliver to the holders of Jensen Stock Options appropriate notices setting forth
such holders' rights pursuant to the Jensen Stock Option Plans and the
agreements evidencing the grants of such Jensen Stock Options shall continue in
effect on the same terms and conditions (subject to the adjustment required by
this Section 3.4 after giving effect to the Merger and the assumption by Recoton
as set forth above and until otherwise determined). Recoton shall comply with
the terms of the Jensen Stock Option Plans with respect to the Jensen Stock
Options.
(c) Pursuant to Section 3.2 of the 1994 Stock Option and Purchase Plan
For Non-Employee Directors (the "Jensen Directors Plan"), certain directors of
Jensen ("Deferred Holders") have elected to defer the receipt of shares of
Jensen Common Stock ("Deferred Shares") owed to them in lieu of directors' fees
pursuant to the Jensen Directors Plan. Immediately prior to the Effective Time,
Jensen shall terminate each such director's right to receive the Deferred
Shares, and in consideration thereof, Jensen shall make a cash payment to each
Deferred Holder at the time provided in the final two sentences of this Section
3.4(c) (and subject, in the case of each such Deferred Holder, to the receipt
from such Deferred Holder of a Cancellation Agreement, as that term is defined
in the next sentence), in an amount equal to the number of Deferred Shares held
by such Deferred Holder times the Per Share Cash Amount. Jensen shall use its
best efforts to obtain from each Deferred Holder a written agreement
substantially in the form of Exhibit 3.4 (a "Cancellation Agreement") prior to
the Effective Time. A Deferred Holder who has delivered to Jensen a Cancellation
Agreement prior to the Effective Time shall be paid pursuant to this Section
3.4(c) at or prior to the Effective Time. In the case of any Deferred Holder who
does not deliver a Cancellation Agreement to Jensen prior to the Effective Time,
Recoton shall cause the Surviving Corporation to pay such Deferred Holder after
the Effective Time the amount to which the Deferred Holder is entitled pursuant
to this Section 3.4(c) promptly after the receipt by the Surviving Corporation
from the Deferred Holder of a Cancellation Agreement.
Section 3.5 Dissenting Shares. Notwithstanding any other provisions of
this Agreement to the contrary, shares of Jensen Common Stock that are
outstanding immediately prior to the Effective Time and which are held by
stockholders who shall have not voted in favor of the Merger or consented
thereto in writing and who shall have demanded properly in writing appraisal for
such shares in accordance with Section 262 of the GCL (collectively, the
"Dissenting Shares") shall not be converted into or represent the right to
receive the Merger Consideration. Such stockholders shall be entitled to receive
payment of the appraised value of such shares of Jensen Common Stock held by
them in accordance with the provisions of such Section 262, except that all
Dissenting Shares held by stockholders who shall have failed to perfect or who
effectively shall have withdrawn or lost their rights to appraisal of such
shares of Jensen Common Stock under such Section 262 shall thereupon be deemed
to have been converted into and to have become exchangeable, as of the Effective
Time, for the right to receive, without any interest thereon, the Merger
Consideration, as if such shares of Jensen Common Stock were covered by
Non-Elections, upon surrender, in the manner provided in Section 3.2, of the
certificate or certificates that formerly evidenced such shares of Jensen Common
Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF JENSEN
Jensen represents and warrants to Recoton and Acquisition Sub as
follows:
Section 4.1 Organization and Qualification. Jensen is a corporation
duly organized, validly existing and in good standing under the laws of its
state of incorporation and has the requisite corporate power and authority to
own, lease and operate its assets and properties and to carry on its businesses
as it is now being conducted. Jensen is qualified to do business and is in good
standing in each jurisdiction in which the properties owned, leased or operated
by it or the nature of the businesses conducted by it makes such qualification
necessary, except where the failure to be so qualified and in good standing will
not, when taken together with all other such failures, have a Jensen Material
Adverse Effect. For purposes of this Agreement, a Jensen Material Adverse Effect
shall be a material adverse effect on the business, operations, properties,
assets, condition (financial or otherwise), results of operations or prospects
of Jensen and its subsidiaries taken as a whole, excluding the Original
Equipment Business (except that for purposes of determining whether a Jensen
Material Adverse Effect arising out of the matters described in Section 4.17 has
occurred, "Jensen Material Adverse Effect" shall mean potential liabilities and
costs that reasonably may exceed $5,000,000). True and complete copies of
Jensen's Certificate of Incorporation and By-Laws, as in effect on the date
hereof, including all amendments thereto, have heretofore been delivered to
Recoton.
Section 4.2 Jensen Common Stock. Jensen has 10,000,000 authorized
shares of Common Stock, of which 5,714,799 shares are outstanding as of November
30, 1995, all of which are or shall be validly issued and are fully paid,
nonassessable and free of preemptive rights. Except as set forth in Section 4.2
of the separate disclosure schedule executed and delivered by Jensen
simultaneous with the execution and delivery of the Agreement ("Jensen's
Disclosure Schedule"), as of the date hereof, there are no outstanding
subscriptions, options, warrants, rights, calls, contracts, voting trusts,
proxies or other commitments, understandings, restrictions, or arrangements,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement obligating Jensen to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of the capital stock of
Jensen or obligating Jensen or any subsidiary of Jensen to grant, extend or
enter into any such agreement or commitment except pursuant to this Agreement.
Section 4.3 Subsidiaries. Each direct and indirect subsidiary of
Jensen is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has the requisite power
and authority to own, lease and operate its assets and properties and to carry
on its business as it is now being conducted. Each of such subsidiaries is
qualified to do business, and is in good standing, in each jurisdiction in which
the properties owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified and in good standing will not, when taken together with all such
other failures, have a Jensen Material Adverse Effect. Except as set forth in
Section 4.3 of Jensen's Disclosure Schedule, all of the outstanding shares of
capital stock of each subsidiary are validly issued, fully paid, nonassessable
and free of preemptive rights, and those owned directly or indirectly by Jensen
are owned free and clear of any liens, claims, encumbrances, security interests,
equities, charges and options of any nature whatsoever. Except as set forth in
Section 4.3 of Jensen's Disclosure Schedule or in Jensen's Annual Report on Form
10-K for the year ended February 28, 1995 or the exhibits and schedules thereto
(the "Jensen 10-K" and, together with any reports filed by Jensen with the
Securities and Exchange Commission (the "SEC") under the Securities Exchange Act
of 1934, as amended, (the "Exchange Act") after the Jensen 10-K and prior to the
date of this Agreement, the "Jensen 1995 Reports"), Jensen owns directly or
indirectly all of the issued and outstanding shares of the capital stock of each
of its subsidiaries. Except as set forth in Section 4.3 of Jensen's Disclosure
Schedule or in the Jensen 1995 Reports, there are no outstanding subscriptions,
options, warrants, rights, calls, contracts, voting trusts, proxies or other
commitments, understandings, restrictions or arrangements relating to the
issuance, sale, voting, transfer, ownership or other rights affecting any shares
of capital stock of any subsidiary of Jensen, including any right of conversion
or exchange under any outstanding security, instrument or agreement. Section 4.3
of Jensen's Disclosure Schedule sets forth a list of all material corporations,
partnerships, joint ventures and other business entities in which Jensen or any
of its subsidiaries directly or indirectly owns an interest and such
subsidiaries' direct and indirect share, partnership or other ownership interest
of each such entity.
Section 4.4 Authority; Non-Contravention; Approvals. (a) Jensen has
full corporate power and authority to enter into this Agreement and, subject to
Jensen Stockholders' Approval (as defined in Section 4.18) and the Jensen
Required Approvals (as defined in Section 4.4(c)), to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation by Jensen of the transactions contemplated
hereby have been duly authorized by Jensen's Board of Directors, and no other
corporate proceedings on the part of Jensen are necessary to authorize the
execution and delivery of this Agreement and the consummation by Jensen of the
transactions contemplated hereby, except for the Jensen Stockholders' Approval
and the obtaining of the Jensen Required Approvals. This Agreement has been duly
and validly executed and delivered by Jensen and constitutes a valid and legally
binding agreement of Jensen enforceable against it in accordance with its terms.
(b) Except as set forth in Section 4.4(b) of Jensen's Disclosure
Schedule, the execution and delivery of this Agreement by Jensen does not, and
the consummation by Jensen of the transactions contemplated hereby will not,
violate, conflict with or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of Jensen or any of its
subsidiaries under any of the terms, conditions or provisions of (i) the
respective charters or By-Laws of Jensen or any of its subsidiaries, (ii)
subject to obtaining the Jensen Required Approvals and the receipt of the Jensen
Stockholders' Approval, any statute, law, ordinance, rule, regulation, judgment,
decree, order, injunction, writ, permit or license of any court or governmental
authority applicable to Jensen or any of its subsidiaries or any of their
respective properties or assets, or (iii) any note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which Jensen or any of its
subsidiaries is now a party or by which Jensen or any of its subsidiaries or any
of their respective properties or assets may be bound or affected, excluding
from the foregoing clauses (ii) and (iii) such violations, conflicts, breaches,
defaults, terminations, accelerations or creations of liens, security interests,
charges or encumbrances that would not, in the aggregate, have a Jensen Material
Adverse Effect.
(c) Except for (i) the filings by Jensen required by Title II of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) any filings required by comparable European or European Community
regulation ("EC Filings"), (iii) the filing of the Proxy Statement (as
hereinafter defined) with the SEC pursuant to the Exchange Act, and the
Securities Act of 1933, as amended (the "Securities Act"), and the declaration
of the effectiveness thereof by the SEC and filings with various blue sky
authorities and (iv) the making of the Merger Filing with the Secretary of State
of the State of Delaware in connection with the Merger (the filings and
approvals referred to in clauses (i) through (iv) are collectively referred to
as the "Jensen Required Approvals"), no declaration, filing or registration
with, or notice to, or authorization, consent or approval of, any governmental
or regulatory body or authority is necessary for the execution and delivery of
this Agreement by Jensen or the consummation by Jensen of the transactions
contemplated hereby.
Section 4.5 Reports and Financial Statements; Derivative Transactions.
Since February 28, 1995, Jensen and each of its subsidiaries required to make
filings under the Securities Act, the Exchange Act and applicable state laws and
regulations, as the case may be, have filed all forms, statements, reports and
documents (including all exhibits, amendments and supplements thereto) required
to be filed by them under each of the Securities Act, the Exchange Act,
applicable laws and regulations of Jensen's and its subsidiaries' jurisdictions
of incorporation and the respective rules and regulations thereunder, all of
which complied in all material respects with all applicable requirements of the
appropriate act and the rules and regulations thereunder. Jensen has previously
delivered to Recoton true and complete copies of its (a) Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed by
Jensen or any of its subsidiaries with the SEC from February 28, 1992, until the
date hereof, (b) proxy and information statements relating to all meetings of
its stockholders (whether annual or special) and actions by written consent in
lieu of a stockholders' meeting from February 28, 1992 until the date hereof and
(c) all other reports or registration statements filed by Jensen with the SEC
from February 28, 1992 until the date hereof (collectively, the "Jensen SEC
Reports"), and (d) audited consolidated financial statements for the fiscal year
ended February 28, 1995 and its unaudited consolidated financial statements for
the nine months ended November 30, 1995 (the "Nine Month Jensen Financial
Statements") (collectively the "1995 Jensen Financial Statements"). As of their
respective dates, the Jensen SEC Reports did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited consolidated financial
statements and unaudited interim financial statements of Jensen included in the
Jensen SEC Reports and the 1995 Jensen Financial Statements (collectively, the
"Jensen Financial Statements") fairly present the financial position of Jensen
and its subsidiaries as of the dates thereof and the results of their operations
and cash flows for the periods then ended in conformity with generally accepted
accounting principles applied on a consistent basis (except as may be indicated
therein or in the notes thereto), subject, in the case of the unaudited interim
financial statements, to normal year-end and audit adjustments and any other
adjustments described therein. Jensen and its subsidiaries do not, and will not,
use any derivative financial instruments other than as disclosed in Section 4.5
of Jensen's Disclosure Schedule.
Section 4.6 Absence of Undisclosed Liabilities. Except as set forth in
Section 4.6 of Jensen's Disclosure Schedule or in the Jensen 1995 Reports,
neither Jensen nor any of its subsidiaries had at February 28, 1995, or has
incurred since that date, any liabilities or obligations (whether absolute,
accrued, contingent or otherwise) of any nature, except liabilities, obligations
or contingencies (a) which are accrued or reserved against in the 1995 Jensen
Financial Statements or reflected in the notes thereto or (b) which were
incurred after February 28, 1995, and were incurred in the ordinary course of
business and consistent with past practices and, in either case, except for any
such liabilities, obligations or contingencies which (i) would not, in the
aggregate, have a Jensen Material Adverse Effect or (ii) have been discharged or
paid in full prior to the date hereof.
Section 4.7 Absence of Certain Changes or Events. Except as set forth
in Section 4.7 of Jensen's Disclosure Schedule or in the Jensen 1995 Reports,
since February 28, 1995 there has not been any material adverse change in the
business (including, without limitation, any actual or threatened loss of
significant customers (excluding customers of the Original Equipment Business)
or any cancellation or threatened cancellation of any orders with an aggregate
value of $1,000,000 or more (excluding orders of the Original Equipment
Business)), operations, properties, assets, liabilities, condition (financial or
other), results of operations or prospects of Jensen and its subsidiaries, taken
as a whole (excluding the original equipment business), and Jensen and its
subsidiaries have in all material respects conducted their respective businesses
in the ordinary course consistent with past practice.
Section 4.8 Litigation. Except as disclosed in the Jensen 1995
Reports, the 1995 Jensen Financial Statements, or Section 4.8 of Jensen's
Disclosure Schedule, (a) there are no claims, suits, actions or proceedings
pending or, to the knowledge of Jensen, threatened, nor to the knowledge of
Jensen are there any investigations or reviews pending or threatened, against,
relating to or affecting Jensen or any of its subsidiaries, which, if adversely
determined, would have a Jensen Material Adverse Effect; (b) there have not been
any developments since the date of the Jensen 10-K with respect to such claims,
suits, actions, proceedings, investigations or reviews which, individually or in
the aggregate, may have a Jensen Material Adverse Effect; and (c) except as
contemplated by the Jensen Required Approvals, neither Jensen nor any of its
subsidiaries is subject to any judgment, decree, injunction, rule or order of
any court, governmental department, commission, agency, instrumentality or
authority or any arbitrator which prohibits or restricts the consummation of the
transactions contemplated hereby or may have a Jensen Material Adverse Effect.
Section 4.9 Proxy Statement. The proxy statement to be distributed in
connection with the Jensen Stockholders' Meeting (the "Proxy Statement") and
which shall be included in the Registration Statement (as hereinafter defined)
will not at the time of the mailing of the Proxy Statement and any amendment or
supplement thereto, and at the time of the Jensen Stockholders' Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not misleading
or necessary to correct any statement in any earlier filing with the SEC of such
Proxy Statement or any amendment or supplement thereto or any earlier
communication to stockholders of Jensen with respect to the transactions
contemplated by this Agreement. The Proxy Statement will comply as to form in
all material respects with all applicable laws, including the provisions of the
Exchange Act and the rules and regulations promulgated thereunder.
Notwithstanding the foregoing, no representation is made by Jensen with respect
to information supplied by Recoton or Acquisition Sub or their representatives
specifically for inclusion in the Proxy Statement.
Section 4.10 No Violation of Law. Except as set forth in Section 4.10
of Jensen's Disclosure Schedule, neither Jensen nor any of its subsidiaries is
in violation of, or, to the knowledge of Jensen, is under investigation with
respect to or has been given notice or been charged with any violation of, any
law, statute, order, rule, regulation, ordinance, or judgment of any
governmental or regulatory body or authority, except for violations which in the
aggregate do not have a Jensen Material Adverse Effect. Jensen and its
subsidiaries have all material permits, licenses, franchises and other
governmental authorizations, consents and approvals (the "Jensen Government
Approvals") necessary to conduct their businesses as presently conducted and,
except as set forth in Section 4.10 of Jensen's Disclosure Schedule, all such
Jensen Government Approvals shall be transferred to the Surviving Corporation.
Section 4.11 Compliance with Agreements. Except as disclosed in the
Jensen 1995 Reports, the Jensen 1995 Financial Statements or Section 4.11 of
Jensen's Disclosure Schedule, Jensen and each of its subsidiaries are not in
breach or violation of or in default in the performance or observance of any
term or provision of, and no event has occurred which, with lapse of time or
action by a third party, could result in a default under, (i) the respective
charters or by-laws of Jensen or any of its subsidiaries or (ii) any contract,
commitment, agreement, indenture, mortgage, loan agreement, note, lease, bond,
license, approval or other instrument to which Jensen or any of its subsidiaries
is a party or by which any of them is bound or to which any of their property is
subject, which breaches, violations and defaults, in the case of clause (ii) of
this Section 4.11 would have, in the aggregate, a Jensen Material Adverse
Effect.
Section 4.12 Taxes. (a) Jensen and its subsidiaries have duly filed
with the appropriate federal, state, local, and foreign taxing authorities all
tax returns required to be filed by them on or prior to the Effective Time and
such tax returns are true and complete in all material respects, and duly paid
in full or made adequate provision for the payment of all taxes for all periods
ending at or prior to the Effective Time. The liabilities and reserves for taxes
reflected in the Jensen balance sheets (x) as of February 28, 1995, contained in
the Jensen 10-K, are adequate to cover all taxes for any period ending on or
prior to February 28, 1995; and (y) as of August 31, 1995, contained in the Form
10-Q filed with the SEC on or about October 15, 1995 (the "Six Month 1995
Financial Statements"), are adequate to cover all taxes for any period ending on
or prior to August 31, 1995; and (z) as of November 30, 1995, contained in the
Nine Month Financial Statements are adequate to cover all taxes for any period
ending on or prior to November 30, 1995. Except as set forth in Section 4.12 of
Jensen's Disclosure Schedule, (i) there are no material liens for taxes upon any
property or asset of Jensen or any subsidiary thereof, except for (x) liens for
taxes not yet due and (y) any such liens for taxes shown on such Section 4.12 of
Jensen's Disclosure Statement, which are being contested in good faith through
appropriate proceedings; (ii) Jensen has not made any change in accounting
method, received a ruling from any taxing authority or signed an agreement with
any taxing authority which will materially and adversely affect Jensen in future
periods; (iii) during the past three years neither Jensen nor any of its
subsidiaries has received any notice of deficiency, proposed deficiency or
assessment from any governmental taxing authority with respect to taxes of
Jensen or any of its subsidiaries, except any such notice of deficiency,
proposed deficiency or assessment which will not in the aggregate cause a Jensen
Material Adverse Effect, and, any such deficiency or assessment shown on such
Section 4.12 of Jensen's Disclosure Schedule has been paid or is being contested
in good faith through appropriate proceedings; (iv) the income tax returns for
Jensen and its subsidiaries are not currently the subject of any audit by the
Internal Revenue Service (the "IRS") or any other national taxing authority, and
such federal income tax returns have been examined by the IRS (or the applicable
statutes of limitation for the assessment of federal taxes for such periods have
expired) for all periods through and including February 28, 1990, and no
material deficiencies were asserted as a result of such examinations which have
not been resolved and fully paid; (v) there are no outstanding requests,
agreements, consents or waivers to extend the statutory period of limitations
applicable to the assessment of any taxes or deficiencies against Jensen or any
of its subsidiaries, and no power of attorney granted by either Jensen or any of
its subsidiaries with respect to any taxes is currently in force; and (vi)
neither Jensen nor any of its subsidiaries is a party to any agreement providing
for the allocation or sharing of taxes. Neither Jensen nor any of its
subsidiaries has, with regard to any assets or property held, acquired or to be
acquired by any of them, filed a consent to the application of Section 341(f) of
the Code. Except as set forth on Section 4.12(b) of Jensen's Disclosure
Schedule, Jensen will not have any carryovers subject to limitation under
Section 382 or Section 383 of the Code immediately after the Merger. Jensen and
its subsidiaries, in accordance with Section 482 of the Code, properly conducted
intercompany pricing studies for the tax year ended February 1995, and is
conducting such study in a timely manner with respect to the tax year ending
February 1996.
(b) The term "tax" shall include any tax, assessment, levy, impost,
duty, or withholding of any nature now or hereafter imposed by a government
authority and any interest, additional tax, deficiency, penalty, charge or other
addition thereon, including without limitation any income, gross receipts,
profits, franchise, sales, use, property (real and personal), transfer, payroll,
unemployment, social security, occupancy and excise tax and customs duty. The
term "return" shall include any return, declaration, report, estimate,
information return and statement required to be filed with or supplied to any
taxing authority in connection with any taxes.
Section 4.13 Customs. Except as set forth in the Jensen 1995 Reports
or in Section 4.13 of Jensen's Disclosure Schedule, Jensen and its subsidiaries
have at all times been in compliance with all requirements administered and
enforced by the U.S. Customs Service, including, but not limited to the
classification, valuation, and marking of articles imported into the United
States in a way so as not to give rise to a Jensen Material Adverse Effect.
Section 4.14 Employee Benefit Plans; ERISA. (a) Section 4.14 of
Jensen's Disclosure Schedule lists all material employee benefit plans,
employment contracts or other arrangements for the provision of benefits for
employees or former employees of Jensen and its subsidiaries (other than its
foreign subsidiaries as to which such disclosure shall be provided within ten
business days after the date hereof and as to which the agreements, plans,
contracts, or other arrangements thereof shall not be unduly burdensome or out
of the ordinary), and, except as set forth in Section 4.14(a) of Jensen's
Disclosure Schedule, neither Jensen nor its subsidiaries have any commitment to
create any additional plan, contract or arrangement or to amend any such plan,
contract or arrangement so as to increase benefits thereunder, except as
required under existing collective bargaining agreements. Section 4.14(a) of
Jensen's Disclosure Schedule identifies all "employee benefit plans" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), other than "multiemployer plans" within the meaning of
Section 3(37) of ERISA, covering current or former employees of Jensen and its
subsidiaries (the "Jensen Plans"), other than Jensen Plans which are described
in Jensen 1995 Reports or the Proxy Statement for the 1995 Annual Meeting of
Stockholders of Jensen. A true and correct copy of each of the employee benefit
plans, employment contracts and other arrangements for the provision of benefits
for employees and former employees of Jensen and its subsidiaries described in
the Jensen SEC Reports, the Jensen Plans listed on Section 4.14(a) of Jensen's
Disclosure Schedule, except for any multiemployer plans, and all contracts
relating thereto, or to the funding thereof (including, without limitation, all
trust agreements, insurance contracts, investment management agreements,
subscription and participation agreements and recordkeeping agreements), each as
will be in effect at the Effective Time, has been provided to Recoton. In the
case of any employee benefit plan, employment contract or other benefit
arrangement which is not in written form, an accurate description of such plan,
contract or arrangement as will be in effect at the Effective Time has been
provided to Recoton. A true and correct copy of the most recent annual report,
actuarial report, summary plan description, and Internal Revenue Service
determination letter with respect to each such Jensen plan, to the extent
applicable, and a current schedule of assets (and the fair market value thereof
assuming liquidation of any asset which is not readily tradeable) held with
respect to any funded plan, Jensen Plan, or benefit arrangement has been
provided to Recoton by Jensen, and there have been no material changes in the
financial condition in the respective plans, Jensen Plans or benefit
arrangements from that stated in such annual report and actuarial reports.
(b) Except as disclosed in the Jensen 1995 Reports or as set forth in
Section 4.14(b) of Jensen's Disclosure Schedule, (i) there have been no
prohibited transactions within the meaning of Section 406 of ERISA or Section
4975 of the Code with respect to any of the Jensen Plans which, assuming that
the taxable period of such transaction expired as of the date hereof, could
subject Jensen or its subsidiaries to a material tax or penalty under Section
502(i) of ERISA or Section 4975 of the Code; (ii) no liability (except for
premiums due) has been or is expected to be incurred by Jensen or any of its
subsidiaries under Title IV of ERISA with respect to any of the Jensen Plans or
with respect to any ongoing, frozen or terminated "single employer plan" within
the meaning of Section 4001(a)(15) of ERISA currently or formerly maintained by
any of them, or by any entity which is considered a single employer with Jensen
under Section 4001 of ERISA or Section 414 of the Code (a "Jensen ERISA
Affiliate"); (iii) all amounts which Jensen or its subsidiaries are required to
pay as contributions to the Jensen Plans have been timely made or have been
reflected in the Jensen Financial Statements; (iv) none of the Jensen Plans has
incurred any "accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived; (v) the current value
of all "benefit liabilities" within the meaning of Section 4001(a)(16) of ERISA
(as determined on the basis of the actuarial assumptions used in the Plan's most
recent actuarial valuation) under each of the Jensen Plans which is subject to
Title IV of ERISA did not exceed the then current value of the assets of such
plan allocable to such benefit liabilities by more than the amount disclosed in
the Jensen 10-K as of February 28, 1995; (vi) each of the Jensen Plans has been
operated and administered in all material respects in accordance with applicable
laws, including, but not limited to, the reporting and disclosure requirements
of Part 1 of Subtitle I of ERISA and the group health plan continuation
requirements of Section 4980B of the Code and Part 6 of Subtitle B of Title I of
ERISA; (vii) each of the Jensen Plans which is intended to be "qualified" within
the meaning of Section 401(a) of the Code has been determined by the IRS to be
so qualified and Jensen is not aware of any circumstances likely to result in
revocation of any such determination; (viii) there are no material pending,
threatened or anticipated claims involving any of the Jensen Plans other than
claims for benefits in the ordinary course; (ix) no notice of a "reportable
event" within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived has been required to be filed for any
of the Jensen Plans; (x) neither Jensen nor any of its subsidiaries is a party
to, nor participates or has any liability or contingent liability with respect
to, any multiemployer plan (regardless of whether based on contributions of a
Jensen ERISA affiliate); and (xi) neither Jensen nor its subsidiaries has any
liability or contingent liability for retiree life and health benefits under any
of the Jensen Plans other than statutory liability for providing group health
plan continuation coverage under Part 6 of Subtitle B of Title I of ERISA and
Section 4980B of the Code, except as set forth on Section 4.14(b) of Jensen's
Disclosure Schedule.
(c) Except as set forth in Section 4.14(c) of Jensen's Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will accelerate benefits or
any payments under any Jensen employee agreement, plan or arrangement.
Section 4.15 Material Defaults. Except as set forth on Section 4.15 of
Jensen's Disclosure Schedule, neither Jensen nor its subsidiaries is, or has
received any notice or has any knowledge that any other party is, in default in
any respect under any contract, agreement, commitment, arrangement, lease,
insurance policy, or other instrument to which Jensen or any of its subsidiaries
is a party or by which Jensen or any of its subsidiaries or the assets,
business, or operations receives benefits, except for those defaults which would
not have, individually or in the aggregate, a Jensen Material Adverse Effect;
and there has not occurred any event that with the lapse of time or the giving
of notice or both would constitute such a default.
Section 4.16 Labor Matters. Except as set forth on Section 4.16 of
Jensen's Disclosure Schedule, there are no material controversies pending or, to
the knowledge of Jensen, threatened between Jensen or its subsidiaries and any
representatives of its employees, and, to the knowledge of Jensen, there are no
material organizational efforts presently being made involving any of the
presently unorganized employees of Jensen or its subsidiaries. Jensen and its
subsidiaries have complied in all material respects with all laws relating to
the employment of labor, including, without limitation, any provisions thereof
relating to wages, hours, collective bargaining, and the payment of social
security and similar taxes, and no person has, to the knowledge of Jensen,
asserted that Jensen or its subsidiaries are is liable in any material amount
for any arrears of wages or any taxes or penalties for failure to comply with
any of the foregoing.
Section 4.17 Environmental Matters.
(a) Except as set forth in the Jensen 1995 Reports or in Section 4.17
to Jensen's Disclosure Schedule, Jensen and its subsidiaries have complied in
all respects with all Environmental Laws (as defined below in this Section).
Jensen and its subsidiaries have obtained and will maintain through the Closing
Date all permits, licenses, certificates and other authorizations which are
required with respect to its operation under any Environmental Laws and all such
permits, licenses, certificates and other authorizations are listed on Section
4.17 to Jensen's Disclosure Schedule.
(b) Except as set forth in the Jensen 1995 Reports or in Section 4.17
to Jensen's Disclosure Schedule, Jensen and its subsidiaries are in compliance
in all respects with all permits, licenses and authorizations required by any
Environmental Laws, and is also in full compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in any Environmental Laws or contained in any
regulation or code promulgated or approved under the Environmental Laws, or any
plan, order, decree, judgment, injunction, notice or demand letter issued to or
entered, against Jensen thereunder. All products manufactured and services
provided by Jensen or its subsidiaries prior to the date hereof are in
compliance with all Environmental Laws applicable thereto and all such products
and services so manufactured or provided prior to the Closing Date will as of
such date be in compliance with all Environmental Laws applicable thereto.
Jensen has hereto delivered to Buyer true and complete copies of all
environmental studies made in the last ten years relating to the business or
assets of Jensen and its subsidiaries.
(c) Except as set forth in the Jensen 1995 Reports or Section 4.17 to
Jensen's Disclosure Schedule, there is no pending or, to Jensen's knowledge,
threatened civil, criminal or administrative Action, demand, claim, hearing,
notice of violation, investigation, proceeding, notice or demand letter that
affects or applies to Jensen or its subsidiaries, their business or assets, the
products they have manufactured or the services they have provided relating in
any way to any Environmental Laws or any regulation or code promulgated or
approved under the Environmental Laws, or any plan, order, decree, judgment,
injunction, notice or demand letter issued to or entered against Jensen or its
subsidiaries thereunder.
(d) Except as set forth in the Jensen 1995 Reports or in Section 4.17
to Jensen's Disclosure Schedule, there are no past or present (or, to the
knowledge of Jensen, anticipated) events, conditions, circumstances, activities,
practices, incidents, Actions or plans which may interfere with or prevent
compliance or continued compliance by Jensen or its subsidiaries with any
Environmental Laws or with any regulation or code promulgated or approved under
the Environmental Laws, or any plan, order, decree, judgment, injunction, notice
or demand letter issued to or entered against Jensen or its subsidiaries
thereunder, or which may give rise to any common law or legal liability, or
otherwise form the basis of any claim, action, demand, suit, proceeding,
hearing, notice of violation, study or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or threatened release
into the environment, by Jensen or its subsidiaries of any pollutant,
contaminant, chemical, or industrial, toxic or hazardous substance or waste.
(e) Except as set forth in Section 4.17 to the Jensen Disclosure
Schedule and except in accordance with a valid governmental permit, license,
certificate or approval listed in Section 4.17 to Jensen's Disclosure Schedule
there has been no emission, spill, release or discharge by Jensen or its
subsidiaries, from any of their assets, from any site at which any of such
assets are or were located, into or upon (i) the air, (ii) soils or
improvements, (iii) surface water or ground water, or (iv) the sewer, septic
system or waste treatment, storage or disposal system servicing such assets of
any toxic or hazardous substances or wastes used, stored, generated, treated or
disposed at or from any of such assets (any of which events is hereinafter
referred to as "Hazardous Discharge").
(f) Prior to the Closing Date, there shall not occur any Hazardous
Discharge (except in accordance with a valid governmental permit, license,
certificate or approval listed in Section 4.17 to Jensen's Disclosure Schedule).
(g) The term "Environmental Laws" means all federal, state, local and
foreign environmental, health and safety laws, codes and ordinances and all
rules and regulations promulgated under the Environmental Laws, including,
without limitation laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals, or industrial, toxic
or hazardous substances or wastes into the environment (including, without
limitation, air, surface water, ground water, land surface or subsurface strata)
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants,
chemicals, or industrial, solid, toxic or hazardous substances or wastes. As
used in this Agreement, the term "hazardous substances or wastes" includes,
without limitation, (i) all substances which are designated pursuant to Section
311(b)(2)(A) of the Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C ss.
1251 et seq.; (ii) any element, compound, mixture, solution, or substance which
is designated pursuant to Section 102 of the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. ss. 9601 et seq.;
(iii) any hazardous waste having the characteristics which are identified under
or listed pursuant to Section 3001 of the Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. ss. 6901 et seq.; (iv) any toxic pollutant listed under
Section 307(a) of the FWPCA; (v) any hazardous air pollutant which is listed
under Section 112 of the Clean Air Act, 42 U.S.C. ss. 7401 et seq.; (vi) any
imminently hazardous chemical substance or mixture with respect to which action
has been taken pursuant to Section 7 of the Toxic Substances Control Act, 15
U.S.C. ss. 2601 et seq.; and (vii) waste oil.
(h) Notwithstanding anything in the foregoing to the contrary, the
representations and warranties contained in this Section 4.17 shall be deemed to
be true and correct unless the aggregate exposure to Recoton, Acquisition Sub
and/or the Surviving Corporation of undisclosed and disclosed liabilities which
have either arisen or which may arise under the Environmental Laws exceeds $5
million.
Section 4.18 Certain Business Practices. As of the date of this
Agreement, except for such action which would not have a Jensen Material Adverse
Effect, neither Jensen nor any of its subsidiaries not any directors, officer,
agents, or employees of Jensen or any of its subsidiaries has (i) used any funds
for unlawful contributions, gifts, entertainment, or other unlawful expenses
relating to political activity, (ii) made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns or violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended, or (iii) made any other unlawful payment.
Section 4.19 No Excess Parachute Payments. Sections 4.14(a), 4.14(b),
and 4.14(c) of Jensen's Disclosure Schedule set forth all written contracts,
arrangements, or undertakings (excluding Jensen Stock Options (as defined in
Section 3.4)) pursuant to which any person may receive any amount or entitlement
from Jensen or the Surviving Corporation or any of their respective subsidiaries
(including cash or property or the vesting of property) that may be
characterized as an "excess parachute payment" (as such term is defined in
Section 280G(B)(1) of the Code) (any such amount being an "Excess Parachute
Payment") as a result of any of the transactions being contemplated by this
Agreement. Except as set forth in Section 4.14(c) of Jensen's Disclosure
Schedule, no person is entitled to receive any additional payment from Jensen,
the Surviving Corporation, their respective subsidiaries, or any other person (a
"Parachute Gross-Up Payment") in the event that the 20 percent parachute excise
tax of Section 4999(a) of the Code is imposed on such person. The Board of
Directors of Jensen has not during the six months prior to the date of this
Agreement granted to any officer, director, or employee of Jensen any right to
receive any Parachute Gross-Up Payment.
Section 4.20 Trademarks, etc. Section 4.20 of Jensen's Disclosure
Schedule sets forth a true and complete list of all patents, trademarks
(registered or unregistered), trade names, service marks, and registered
copyrights and applications therefor owned, used, or filed by or licensed to
Jensen and its subsidiaries ("Intellectual Property Rights") and, with respect
to registered trademarks, contains a list of all jurisdictions in which such
trademarks are registered or applied for and all registration and application
numbers. Except as disclosed on Section 4.20 of Jensen's Disclosure Schedule,
the Intellectual Property Rights which are trademark or copyright registrations
and issued patents are valid and in good standing, and are owned by Jensen, free
and clear of all liens, encumbrances, equities, or claims and, along with
applications therefor, are not involved in any interferences, litigations,
oppositions, or cancellation proceedings. Jensen or its subsidiaries owns or has
the right to use, without payment to any other party, the patents, trademarks,
trade names, service marks, copyrights, and applications therefor referred to in
such Schedule or otherwise used by Jensen or its subsidiaries, and the
consummation of the transactions contemplated hereby will not alter or impair
such rights in any material respect. Except as set forth in Section 4.20 to
Jensen's Disclosure Schedule, Jensen is not a licensor or licensee in respect of
any Intellectual Property Rights, nor has it granted any rights thereto or
interest therein to any person or entity. Except as set forth in Section 4.20 of
Jensen's Disclosure Schedule, no claims are pending or threatened by any person
with respect to the ownership, validity, enforceability, or use of any such
Intellectual Property Rights challenging or questioning the validity or
effectiveness of any of the foregoing which claims reasonably could be expected
to have a Jensen Material Adverse Effect. Jensen shall make all required filings
to ensure the continued validity and enforceability of its Intellectual Property
Rights up to the Effective Time.
Section 4.21 Jensen Stockholders' Approval. Jensen will take all
necessary action so that stockholder approval of the Merger and the transactions
contemplated hereby will require the affirmative vote of (i) a majority of the
outstanding shares of Jensen Common Stock, and (ii) a majority of the
outstanding shares of Jensen Common Stock which are voted at the Jensen
Stockholders' Meeting other than shares held directly or indirectly by Robert G.
Shaw. Approval shall be sought of three separate proposals for the Merger: (a)
as a Cash and Stock Transaction ("Proposal 1"), (b) as an All Cash Transaction
if the Recoton Share Price is equal to or greater than $16.00 and the tax
opinion required by Section 8.1(h) is not confirmed at the Closing ("Proposal
2") and (c) as an All Cash Transaction because the Average Recoton Share Price
is below $16.00 ("Proposal 3"). Either (x) both Proposal 1 and Proposal 2 or (y)
Proposal 3 alone shall be voted on at the Jensen Stockholders Meeting, depending
on whether the Average Recoton Share Price is either equal to or above $16.00 or
is below $16.00. If Proposals 1 and 2 are submitted for a vote at the Jensen
Stockholders Meeting, the Merger shall not be deemed approved by the
stockholders unless Proposal 1 is approved and such tax opinion is confirmed at
the Closing or if both Proposals 1 and 2 are approved.
Section 4.22 State Takeover Statutes. The Board of Directors of Jensen
has approved the Merger. The Certificate of Incorporation of Jensen expressly
elects not to be governed by Section 203 of the GCL.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUISITION SUB AND RECOTON
Acquisition Sub and Recoton hereby jointly and severally represent and
warrant to Jensen as follows:
Section 5.1 Organization and Qualification. Acquisition Sub and
Recoton are each corporations duly organized, validly existing and in good
standing under the laws of their states of incorporation and have the requisite
corporate power and authority to own, lease and operate their assets and
properties and to carry on their businesses as they are now being conducted.
Acquisition Sub and Recoton are each qualified to do business and is in good
standing in each jurisdiction in which the properties owned, leased or operated
by each or the nature of the businesses conducted by each makes such
qualification necessary, except where the failure to be so qualified and in good
standing will not, when taken together with all other such failures, have a
Recoton Material Adverse Effect. For purposes of this Agreement, a Recoton
Material Adverse Effect shall be a material adverse effect on the business,
operations, properties, assets, condition (financial or otherwise), results of
operations or prospects of Recoton and its subsidiaries taken as a whole. True
and complete copies of Acquisition Sub's and Recoton's Certificate of
Incorporation and By-Laws, as in effect on the date hereof, including all
amendments thereto, have heretofore been delivered to Jensen. Recoton directly
owns and has the power to vote all of the outstanding capital stock of
Acquisition Sub, and, as the sole stockholder of Acquisition Sub, has approved
this Merger Agreement and the transactions contemplated hereunder.
Section 5.2 Recoton Common Shares. Recoton has 25,000,000 authorized
Common Shares, of which 11,163,390 shares are outstanding as of December 31,
1995. Acquisition Sub holds, or by the Effective Time shall hold, a number of
Recoton Common Shares sufficient to convert Jensen Common Stock to Recoton
Common Shares pursuant to Article III, all of which are or shall be validly
issued and are fully paid, nonassessable and free of preemptive rights. Except
as set forth in Section 5.2 of the separate disclosure schedule executed and
delivered by Recoton and Acquisition Sub simultaneous with the execution and
delivery of this Agreement ("Recoton's Disclosure Schedule") or in Recoton's
Annual Report on Form 10-K for the year ended December 31, 1994 and the exhibits
and schedules thereto (the "Recoton 10-K" and, together with any reports filed
by Recoton with the SEC under the Exchange Act after the Recoton 10-K and prior
to the date of this Agreement, the "Recoton 1994-5 Reports") or any of the
Recoton 1994-5 Reports, as of the date hereof, there are no outstanding
subscriptions, options, warrants, rights, calls, contracts, voting trusts,
proxies and other commitments, understandings, restrictions and arrangements,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement obligating Recoton to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of the capital stock of
Recoton or obligating Recoton or any subsidiary of Recoton to grant, extend or
enter into any such agreement or commitment except pursuant to this Agreement.
The Recoton Common Shares to be issued to stockholders of Jensen in the Merger
will be at the Effective Time duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights and each certificate evidencing such
shares shall contain a notation incorporating by reference that certain Rights
Agreement dated as of October 27, 1995 between Recoton and Chemical Mellon
Shareholder Services L.L.C.
Section 5.3 Authority; Non-Contravention; Approvals. (a) Recoton and
Acquisition Sub have full corporate power and authority to enter into this
Agreement and the Recoton Required Approvals (as hereinafter defined), to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation by Recoton and Acquisition
Sub of the transactions contemplated hereby have been duly authorized by
Recoton's and Acquisition Sub's Boards of Directors, and no other corporate
proceedings on the part of Recoton and Acquisition Sub are necessary to
authorize the execution and delivery of this Agreement and the consummation by
Recoton and Acquisition Sub of the transactions contemplated hereby except for
the obtaining of the Recoton Required Approvals. This Agreement has been duly
and validly executed and delivered by Recoton and Acquisition Sub, and, assuming
the due authorization, execution and delivery hereof by Jensen, constitutes a
valid and legally binding agreement of Recoton and Acquisition Sub enforceable
against them in accordance with its terms.
(b) Except as set forth in Section 5.3(b) of Recoton's Disclosure
Schedule, the execution and delivery of this Agreement by Recoton and
Acquisition Sub does not, and the consummation by Recoton and Acquisition Sub of
the transactions contemplated hereby will not, violate, conflict with or result
in a breach of any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of Recoton or Acquisition Sub or any of its subsidiaries
under any of the terms, conditions or provisions of (i) the respective charters
or By-Laws of Recoton or any of its subsidiaries, (ii) subject to obtaining the
Recoton Required Approvals, any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any court or
governmental authority applicable to Recoton or any of its subsidiaries or any
of their respective properties or assets, and (iii) any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind to which Jensen
or any of its subsidiaries is now a party or by which Jensen or any of its
subsidiaries or any of their respective properties or assets may be bound or
affected, excluding from the foregoing clauses (ii) and (iii) such violations,
conflicts, breaches, defaults, terminations, accelerations or creations of
liens, security interests, charges or encumbrances that would not, in the
aggregate, have a Recoton Material Adverse Effect.
(c) Except for (i) the filings by Recoton, Acquisition Sub and Jensen
required by Title II of the HSR Act, (ii) any EC Filings, (iii) the filing of
the Registration Statement (as hereinafter defined) with the SEC pursuant to the
Securities Act, and the declaration of the effectiveness thereof by the SEC and
filings with various blue sky authorities, (iv) the making of the Merger Filing
with the Secretary of State of the State of Delaware in connection with the
Merger and (v) the listing with Nasdaq of the additional Recoton Common Shares
to be issued in the Merger (the filings and approvals referred to in clauses (i)
through (v) are collectively referred to as the "Recoton Required Approvals"),
no declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any governmental or regulatory body or authority is
necessary for the execution and delivery of this Agreement by Recoton or
Acquisition Sub or the consummation by Recoton or Acquisition Sub of the
transactions contemplated hereby, other than such filings, registrations,
authorizations, consents or approvals the failure of which to make or obtain, as
the case may be, will not, in the aggregate, have a Recoton Material Adverse
Effect.
Section 5.4 Reports and Financial Statements. Since December 31, 1994,
Recoton and each of its subsidiaries required to make filings under the
Securities Act, the Exchange Act and applicable state laws and regulations, as
the case may be, have filed all forms, statements, reports and documents
(including all exhibits, amendments and supplements thereto) required to be
filed by them under each of the Securities Act, the Exchange Act, applicable
laws and regulations of Recoton's and its subsidiaries' jurisdictions of
incorporation and the respective rules and regulations thereunder, all of which
complied in all material respects with all applicable requirements of the
appropriate act and the rules and regulations thereunder. Recoton has previously
delivered to Jensen true and complete copies of its (a) Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed by
Recoton or any of its subsidiaries with the SEC from December 31, 1991 until the
date hereof, (b) proxy and information statements relating to all meetings of
its shareholders (whether annual or special) and actions by written consent in
lieu of a shareholders' meeting from December 31, 1991 until the date hereof and
(c) all other reports or registration statements filed by Recoton or its
subsidiaries with the SEC from December 31, 1991, until the date hereof
(collectively, the "Recoton SEC Reports") and (d) audited consolidated financial
statements of Recoton for the fiscal year ended December 31, 1994 and its
unaudited consolidated financial statements for the nine months ended September
30, 1995 (the "1994-95 Recoton Financial Statements"). As of their respective
dates, the financial statements of Recoton included in the Recoton SEC Reports
and the 1994-95 Recoton Financial Statements (collectively, the "Recoton
Financial Statements") fairly present the financial position of Recoton and its
subsidiaries as of the dates thereof and the results of their operations and
cash flows for the periods then ended in conformity with generally accepted
accounting principles applied on a consistent basis (except as may be indicated
therein or in the notes thereto) subject, in the case of the unaudited interim
financial statements, to normal year-end and audit adjustments and any other
adjustments described therein.
Section 5.5 Absence of Undisclosed Liabilities. Except as set forth in
Section 5.5 of Recoton's Disclosure Schedule or in the Recoton 1994-5 Reports,
neither Recoton nor any of its subsidiaries had at December 31, 1994, or has
incurred since that date, any liabilities or obligations (whether absolute,
accrued, contingent or otherwise) of any nature, except liabilities, obligations
or contingencies (a) which are accrued or reserved against in the 1994-1995
Recoton Financial Statements or reflected in the notes thereto or (b) which were
incurred after December 31, 1994, and were incurred in the ordinary course of
business and consistent with past practices and, in either case, except for any
such liabilities, obligations or contingencies which (i) would not, in the
aggregate, have a Recoton Material Adverse Effect or (ii) have been discharged
or paid in full prior to the date hereof.
Section 5.6 Absence of Certain Changes or Events. Except as set forth
in Section 5.6 of Recoton's Disclosure Schedule or in the Recoton 1994-95
Reports, since December 31, 1994, there has not been any material adverse change
in the business, operations, properties, assets, liabilities, condition
(financial or other), results of operations or prospects of Recoton and its
subsidiaries, taken as a whole, and Recoton and its subsidiaries have in all
material respects conducted their respective businesses in the ordinary course
consistent with past practice.
Section 5.7 Registration Statement. The Prospectus forming part of the
Registration Statement on Form S-4 to be filed under the Securities Act with the
SEC by Recoton for the purpose of registering the Recoton Common Shares to be
issued in the Merger, including Recoton Common Shares that may be issued upon
the exercise of Jensen Stock Options after the Effective Time (the "Registration
Statement") will not at the time it becomes effective and at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not misleading
or necessary to correct any statement in any earlier filing with the SEC of such
Registration Statement or any amendment or supplement thereto. The Registration
Statement will comply as to form in all material respects with all applicable
laws, including the provisions of the Securities Act and the rules and
regulations promulgated thereunder. Notwithstanding the foregoing, no
representation is made by Recoton with respect to information supplied by Jensen
or its representatives specifically for inclusion therein.
Section 5.8 No Violation of Law. Except as disclosed in the Recoton
1994-5 Reports or set forth in Section 5.8 of Recoton's Disclosure Schedule,
neither Recoton nor any of its subsidiaries is in violation of, or, to the
knowledge of Recoton, is under investigation with respect to or has been given
notice or been charged with any violation of, any law, statute, order, rule,
regulation, ordinance, or judgment of any governmental or regulatory body or
authority, except for violations which in the aggregate do not have a Recoton
Material Adverse Effect. Recoton and its subsidiaries have all material permits,
licenses, franchises and other governmental authorizations, consent and
approvals necessary to conduct their businesses as presently conducted.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by Jensen Pending the Merger. Except
as set forth in Section 6.1 of Jensen's Disclosure Schedule or as otherwise
contemplated by this Agreement, after the date hereof and prior to the Effective
Time or earlier termination of this Agreement, unless Recoton shall otherwise
agree in writing (it being agreed, however, that Jensen shall be solely
responsible for its operations and those of its subsidiaries in accordance with
the provisions of this Agreement), Jensen shall and shall cause each of its
subsidiaries, to:
(a) conduct their respective businesses in the ordinary and usual
course of business and consistent with past practice;
(b) not (i) amend or propose to amend their respective charters or
by-laws; (ii) split, combine or reclassify their outstanding capital stock
or declare, set aside or pay any dividend or distribution payable in cash,
stock, property or otherwise; or (iii) knowingly take any action which
would result in a failure to maintain the trading of Jensen Common Stock on
Nasdaq;
(c) not (i) except for the issuance of shares of Common Stock upon the
exercise of currently outstanding Jensen Stock Options, authorize the
issuance of, or issue, sell, pledge or dispose of, or agree to issue, sell,
pledge or dispose of, any additional shares of, or any options, warrants or
rights of any kind to acquire any shares of, their capital stock of any
class or any debt or equity securities convertible into or exchangeable for
such capital stock, (ii) except for the sale of the assets associated with
the Original Equipment Business as described in Section 8.3(f) and the sale
of the AR Rights pursuant to the AR Agreement, sell (including, without
limitation, by sale/leaseback), pledge, dispose of, license or encumber any
material assets (including without limitation intellectual property), or
any interests therein, other than in the ordinary course of business and
consistent with past practice; (iii) redeem, purchase, acquire or offer to
purchase or acquire any (x) shares of its capital stock, other than in
accordance with the governing terms of such securities or (y) long-term
debt, other than as required by the governing instruments relating thereto;
(iv) take or fail to take any action which action or failure to take action
would cause Acquisition Sub, Jensen or their respective stockholders
(except to the extent that any stockholders perfect dissenters' rights
under Delaware law, realize income because of differences in the price per
share paid to different stockholders, or receive cash in lieu of fractional
shares or receive the Per Share Cash Amounts) to recognize gain or loss for
federal income tax purposes as a result of the consummation of the Merger
or (v) enter into any contract, agreement, commitment or arrangement with
respect to any of the foregoing; provided, however, that Jensen or any of
its subsidiaries, after consulting with Recoton, may take any of the
actions otherwise prohibited by this Section 6.1(c) if counsel to Jensen
advises the Board of Directors of Jensen or any of its subsidiaries that
the failure to take such action or actions might reasonably subject
Jensen's or any of its subsidiaries' directors to liability for breach of
their fiduciary duties;
(d) use their best efforts to preserve intact their respective
business organizations and goodwill, keep available the services of their
respective present officers and key employees, and preserve the goodwill
and business relationships with suppliers, distributors, customers, and
others having business relationships with them;
(e) confer on a regular and frequent basis with one or more
representatives of Recoton to discuss operational matters of materiality
and the general status of ongoing operations;
(f) promptly notify Recoton of any significant changes in the
business, properties, assets, financial condition, or results of operations
or prospects of Jensen or its subsidiaries taken as a whole (excluding the
Original Equipment Business);
(g) not acquire, or publicly propose to acquire, all or any
substantial part of the business and properties or capital stock of any
person not a party to this Agreement, whether by merger, purchase of
assets, tender offer or otherwise;
(h) not, directly or indirectly, through any officer, director,
employee, representative, agent, or otherwise, solicit, initiate or
encourage the submission of any proposal or offer from any person
(including, without limitation, a "person" as defined in Section 13(d)(3)
of the Exchange Act) or entity relating to any acquisition or purchase of
all or (other than in the ordinary course of business) any portion of the
assets of, or any equity interest in, or any merger or other business
combination with, Jensen or any of its subsidiaries, other than with
respect to the Original Equipment Business or the transactions contemplated
hereby (collectively, a "Jensen Acquisition Transaction"); provided,
however, that Jensen or any of its subsidiaries may take any of the actions
otherwise prohibited by this Section 6.1(h) if counsel to Jensen advises
the Board of Directors of Jensen or any of its subsidiaries that the
failure to take such action or actions might reasonably subject Jensen's or
any of its subsidiary's directors to liability for breach of their
fiduciary duties; and provided, further however, that notwithstanding the
foregoing sentence, (a) following receipt of a bona fide unsolicited
written offer to consummate a Jensen Acquisition Transaction (an
"Acquisition Proposal"), Jensen may take and disclose to Jensen's
stockholders the position of the Board of Directors of Jensen contemplated
by Rule 14e-2 under the Exchange Act or otherwise make appropriate
disclosures to its stockholders, (b) Jensen may furnish or cause to be
furnished information concerning its business, properties or assets to a
third party, and (c) Jensen may engage in discussions or negotiations with
a third party concerning a Jensen Acquisition Transaction. If Jensen should
receive an Acquisition Proposal or take any action described in (b) or (c)
above, Jensen shall promptly inform Recoton of the material details of such
Acquisition Proposal and/or its actions in response thereto or its actions
described in clauses (b) or (c) and shall thereafter keep Recoton
reasonably and promptly informed of all material facts and material
circumstances relating to such Acquisition Proposal and Jensen's actions
shall include the actions of its advisors, agents and representatives.
(i) not enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment or other similar
arrangements or agreements with any directors, officers or key employees,
except with the prior written approval of Recoton;
(j) not adopt, enter into or amend any bonus, profit sharing,
compensation (except ordinary course salary adjustments consistent with
historic practice), stock option, pension, retirement, deferred
compensation, health care, employment or other employee benefit plan,
agreement, trust, fund or arrangement for the benefit or welfare of any
employee or retiree, except as required to comply with changes in
applicable law occurring after the date hereof, except with the prior
written approval of Recoton;
(k) maintain with financially responsible insurance companies,
insurance on its tangible assets and its businesses in such amounts and
against such risks and losses as are consistent with past practice and
customary for companies engaged in the business engaged in by Jensen and
its subsidiaries;
(l) not introduce any new product or plan which would substantially
increase the risk exposure of Jensen and its subsidiaries taken as a whole;
(m) not enter into any material arrangement, agreement, or contract
with any third party (other than customers in the ordinary course of
business) which provides for an exclusive arrangement with that third party
or is substantially more restrictive on Jensen or substantially less
advantageous to Jensen than arrangements, agreements, or contracts existing
on the date hereof;
(n) not establish any new lines of credit or other credit facilities
or incur any indebtedness other than pursuant to existing credit facilities
except for trade liabilities incurred in the ordinary course of business;
and
(o) not agree in writing, or otherwise, to take any of the foregoing
actions or any other action which would make any representation or warranty
contained in Article IV untrue or incorrect in any material respect as of
the time of the Closing.
Section 6.2 Site Testing and Evaluation. Prior to the later of March
1, 1996 or the date of the Proxy Statement (which Recoton may cause to be
delayed if it is still conducting its study and testing), Recoton may at its own
expense perform or have performed such environmental site inspections and
reasonable testing relating to the real property owned or operated by Jensen or
its subsidiaries as it may deem appropriate. If based upon the written reports
of independent environmental consultants, Recoton determines in its sole and
reasonable discretion that the results of the inspections or tests performed
indicate that any of such property or a number of such properties is, or that
there is a material risk that such property(ies) may be, contaminated in a way
as to give rise to possible liability, contingent or otherwise, under the
Environmental Laws in an aggregate amount of $5,000,000 or greater, Recoton may
terminate this Agreement by notice to Jensen prior to the date of the Proxy
Statement.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information. (a) Jensen and its subsidiaries
shall afford to Recoton and Acquisition Sub and its accountants, counsel, and
other representatives full access during normal business hours throughout the
period prior to the Effective Time to all of their respective properties, books,
contracts, commitments and records (including, but not limited to, tax returns)
and to their customers, vendors, employees, consultants and professional
advisors and, during such period, shall furnish promptly to Recoton and
Acquisition Sub (i) a copy of each report, schedule and other document filed or
received by any of them pursuant to the requirements of federal or state
securities laws or the HSR Act or filed or received by any of them with or from
the SEC, Federal Trade Commission ("FTC") or Department of Justice ("DOJ") and
(ii) all other information concerning their respective businesses, properties
and personnel as Acquisition Sub may reasonably request; provided, however, that
no investigation pursuant to this Section 7.1(a) shall affect any
representations or warranties made herein or the conditions to the obligations
of the respective parties to consummate the Merger. Jensen and its subsidiaries
shall promptly advise Recoton and Acquisition Sub in writing of any change or
occurrence of any event after the date of this Agreement having, or which,
insofar as can reasonably be foreseen, in the future may have, a Jensen Material
Adverse Effect.
(b) Recoton and its subsidiaries shall afford to Jensen and its
accountants, counsel and other representatives full access during normal
business hours throughout the period prior to the Effective Time to all of their
respective properties, books, contracts, commitments and records (including, but
not limited to, tax returns) and, during such period, shall furnish promptly to
Jensen (i) a copy of each report, schedule and other document filed or received
by any of them pursuant to the requirements of federal or state securities laws
or the HSR Act or filed or received by any of them with or from the SEC, FTC or
DOJ and (ii) all other information concerning their respective businesses,
properties and personnel as Jensen may reasonably request; provided, however,
that no investigation pursuant to this Section 7.1(b) shall affect any
representations or warranties made herein or the conditions to the obligations
of the respective parties to consummate the Merger. Recoton and its subsidiaries
shall promptly advise Jensen in writing of any change or occurrence of any event
after the date of this Agreement having, or which, insofar as can reasonably be
foreseen, in the future may have, a Recoton Material Adverse Effect.
(c) Any information received pursuant to Sections 7.1(a) and 7.1(b)
above shall be considered Evaluation Material (as defined in the letter
agreements dated August 21, 1995 and October 16, 1995, as applicable (the
"Confidentiality Agreements"), between Recoton and Jensen, and such information
shall be held in confidence by Recoton, Acquisition Sub and Jensen in accordance
with the terms of the Confidentiality Agreements.
Section 7.2 Registration Statement and Proxy Statement. Recoton shall
prepare and file with the SEC as soon as reasonably practicable after the date
hereof the Registration Statement (in which the Proxy Statement shall be
included) and shall use all reasonable efforts to have the Registration
Statement declared effective by the SEC as promptly as practicable. Jensen shall
prepare and file with the SEC as soon as reasonably practicable after the date
hereof the Proxy Statement. Recoton shall also take any action required to be
taken under applicable state blue sky or securities laws in connection with the
issuance of Recoton Common Shares in the Merger; provided, however, that with
respect to such blue sky qualifications neither Recoton nor Jensen shall be
required to register or qualify as a foreign corporation or to take any action
which would subject it to service of process in any jurisdiction (other than
Delaware) where any such entity is not now so subject, except as to matters and
transactions relating to or arising solely from the offer and sale of Recoton
Common Shares. Recoton and Jensen shall promptly furnish to each other all
information, and take such other actions, as may reasonably be requested in
connection with any action by any of them in connection with the preceding
sentence. The information provided and to be provided by Recoton and Jensen,
respectively, (and by their auditors, attorneys, financial advisors or other
consultants or advisors) to the other for use in the Registration Statement and
Proxy Statement shall be true and complete in all material respects without
omission of any material fact which is required to make such information not
false or misleading.
Section 7.3 Stockholders' Approval. Subject to the provisions of
Section 6.1(h) and 9.1(e), Jensen shall promptly submit this Agreement and the
transactions contemplated hereby for the approval of its stockholders at the
Jensen Stockholders' Meeting to be held as soon as practicable after the
Registration Statement is declared effective by the SEC and, subject to the
fiduciary duties of the Board of Directors of Jensen under applicable law, shall
use its best efforts to obtain stockholder approval (the "Jensen Stockholders'
Approval") of this Agreement and the transactions contemplated hereby in
accordance with Section 4.21, including approval of the separate proposals
enumerated in, and in accordance with, Section 4.21. Subject to the fiduciary
duties of the Board of Directors of Jensen under applicable law and the
provisions of Section 6.1(h) and 9.1(e), Jensen shall, through its Board of
Directors, recommend to its stockholders approval of the proposals enumerated in
Section 4.21.
Section 7.4 Compliance with the Securities Act. Jensen shall use its
best efforts to cause each principal executive officer, each director and each
other person who is an "affiliate," as that term is used in paragraphs (c) and
(d) of Rule 145 under the Securities Act (an "Affiliate"), of Jensen to deliver
to Recoton and Jensen on or prior to the Effective Time a written agreement (an
"Affiliate Agreement") to the effect that such person will not offer to sell,
sell or otherwise dispose of any Recoton Common Shares issued in the Merger,
except, in each case, pursuant to an effective registration statement or in
compliance with Rule 145, as amended from time to time, or in a transaction
which, in the opinion of legal counsel reasonably satisfactory to Recoton, is
exempt from the registration requirements of the Securities Act and, in any
case, until after the results covering 30 days of post-merger combined
operations of Recoton and Jensen have been filed with the SEC, sent to
shareholders of Recoton or otherwise publicly issued.
Section 7.5 Nasdaq Listing. Recoton shall use its best efforts to
obtain the listing on Nasdaq, at or before the Effective Time of the additional
Recoton Common Shares to be issued pursuant to the Merger.
Section 7.6 Expenses. Except as otherwise set forth in Section 9.2,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses; provided, however, that Recoton and Jensen shall share equally the
expenses of printing, filing and mailing the Registration Statement on Form S-4
and the Proxy Statement-Prospectus.
Section 7.7 Agreement to Cooperate. Subject to the terms and
conditions provided in this Agreement, each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all action to do, or cause to
be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including using its reasonable efforts to obtain all necessary
or appropriate waivers, consents and approvals and SEC "no-action" letters
(including, but not limited to, required approvals under applicable Delaware
state laws and regulations), to effect all necessary registrations and filings
(including, but not limited to, filings under the HSR Act) and to lift any
injunction or other legal bar to the Merger (and, in such case, to proceed with
the Merger as expeditiously as possible), subject, however, to the provisions of
Sections 6.1(h) and 9.1(e) and to the requisite votes of the stockholders of
Jensen. Each party hereto agrees to allow the other to review each regulatory
filing made by such party prior to the filing thereof during the term of this
Agreement.
Section 7.8 Public Statements. The parties shall release a press
release immediately upon the signing of this Agreement in the form set forth as
Exhibit 7.8 to this Agreement. None of the parties hereto shall issue any press
release or make any other public statements, in each case relating to or
connected with or arising out of this Agreement or the matters contained
therein, without obtaining the prior written approval of the other parties to
the contents and the manner of presentation and publication thereof, provided,
however, that nothing herein shall prevent any party from making any disclosures
required by applicable law or regulation (including regulation of the SEC and
the NASD).
Section 7.9 Accountants' Letters. Each of Recoton and Jensen shall use
its best efforts to cause to be delivered to the other letters of Cornick,
Garber & Sandler, LLP, independent auditors for Recoton, and Coopers and
Lybrand, LLP, independent auditors for Jensen, respectively, dated the date of
the Proxy Statement, the effective date of the Registration Statement and the
Effective Time (or such other dates reasonably acceptable to the parties) with
respect to certain financial statements and other financial information included
in the Registration Statement, which letters shall be in customary form and
substance reasonably satisfactory to the addressee.
Section 7.10 Indemnification of Certain Officers and Directors. (a) To
the extent permitted by applicable law, Recoton and Acquisition Sub agree that
all rights to indemnification from Jensen or any subsidiary of Jensen now
existing in favor of the directors, officers, employees or agents of Jensen and
any subsidiary of Jensen as provided in their respective certificates of
incorporation or charters, as the case may be, or by-laws, as in effect on the
date of this Agreement, shall survive the Merger and shall continue in full
force and effect and be honored by Recoton, Acquisition Sub and the Surviving
Corporation for a period of not less than five years from the Effective Time;
provided, however, that in the event any claim or claims are asserted or made
within such five-year period, all such rights shall continue until final
disposition of any such claim or claims.
(b) Recoton and Acquisition Sub will use their best efforts, and will
cause the Surviving Corporation to use its best efforts, to cause to be
maintained in effect a tail, for not less than three years from the Effective
Time, on the current policies of directors' and officers' liability insurance
maintained by Jensen and the subsidiaries of Jensen (provided that the Surviving
Corporation or Acquisition Sub may substitute therefor policies of at least the
same level of coverage containing terms and conditions which are in the
aggregate no less advantageous so long as no lapse in coverage occurs as a
result of such substitution) with respect to all matters, including the
transactions contemplated hereby, occurring prior to and including the Effective
Time. Notwithstanding the foregoing, neither Recoton, Acquisition Sub nor the
Surviving Corporation shall be required to expend in excess of $150,000 in the
aggregate pursuant to this Section 7.10(b).
Section 7.11 Employee Benefits. For a period of one year after the
Effective Time, the Surviving Corporation shall make available to the current
employees of Jensen, so long as such persons continue after the Effective Time
to hold positions as employees with the Surviving Corporation, the same employee
benefits that are currently in effect at Jensen, or similar employee benefits on
substantially the same terms and conditions as the Jensen plans, including, but
not limited to, health care and life insurance, pension and retirement benefits
and vacation and sick pay. Thereafter, the Surviving Corporation shall provide a
benefits package at least comparable to the benefit package provided by Recoton
to its own employees. Recoton and the Surviving Corporation shall use their best
efforts to insure that employees of the Surviving Corporation shall not be
subject to any waiting periods or pre-existing condition restrictions under
employee benefit plans offered by Recoton or the Surviving Corporation to the
extent that such periods are longer or such periods impose a greater limitation
than the period or limitations imposed under employee benefit plans currently
offered by Jensen. Employees of the Surviving Corporation shall be given credit
for prior service with Jensen for purposes of crediting periods of service for
eligibility and vesting of all such substitute employee benefits offered by
Recoton or the Surviving Corporation.
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) This Agreement and the transactions contemplated hereby (including
such of the proposals enumerated in Section 4.21 as shall be required in
order to effect the Merger) shall have been approved and adopted by the
requisite vote of the stockholders of Jensen pursuant to Section 4.21;
(b) The additional Recoton Common Shares issuable in the Merger shall
have been authorized for listing on Nasdaq;
(c) The waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated and any EC Filings
shall have been made and no additional requirements relating thereto shall
be applicable;
(d) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, and no stop order
suspending such effectiveness shall have been issued and remain in effect;
(e) No preliminary or permanent injunction or other order or decree by
any federal or state court which prevents the consummation of the Merger
shall have been issued and remain in effect (each party agreeing to use all
reasonable efforts to have any such injunction, order or decree lifted);
(f) No action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any state, federal or foreign
government or governmental agency which would prevent the consummation of
the Merger or that would have a material adverse effect on the prospects of
the Surviving Corporation;
(g) All governmental consents and approvals legally required for the
consummation of the Merger and the transactions contemplated hereby,
including, without limitation, approval (if required) by the DOJ, FTC and
the SEC, shall have been obtained and be in effect at the Effective Time on
terms and conditions that would not have a material adverse effect on the
prospects of the Surviving Corporation;
(h) Jensen shall have received an opinion, and such opinion shall not
have been withdrawn at or prior to the Effective Time if the Average
Recoton Share Price is equal to or greater than $16.00, of a firm of
professionals which is qualified to render tax opinions in reorganizations
under Section 368(a) (and has rendered such opinions in other comparable
reorganizations of public companies) which firm of professionals is
reasonably satisfactory to both Jensen and Recoton, which opinion Recoton
shall be allowed to rely upon, subject to customary assumptions and based
on representations of Jensen, Jensen Stockholders and Recoton and
Acquisition Sub dated the date of the Proxy Statement, to the effect that
Acquisition Sub and Jensen and their respective shareholders (except to the
extent any stockholders have perfected dissenters' rights under Delaware
law or Jensen stockholders have received (i) cash in lieu of fractional
shares or (ii) the Per Share Cash Amount or portion thereof) will recognize
no gain or loss for federal income tax purposes as a result of consummation
of the Merger and that the transaction qualifies as a reorganization under
Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code; provided, however, that
if such opinion in form reasonably satisfactory to Jensen and Recoton has
not been received by the date of the Proxy Statement or is withdrawn prior
to the Effective Time, the conditions of this Section 8.1(h) shall be
satisfied if the stockholders of Jensen have approved at the Jensen
Stockholders' Meeting an All Cash Transaction and such other proposals as
shall be required pursuant to Section 4.21; and
(i) Jensen shall have received one or more letters from Lehman
Brothers dated the date of the Proxy Statement (or such other dates
reasonably acceptable to Jensen and Recoton), which letters shall be of the
opinion that (1) the Merger Consideration is "fair from a financial point
of view" to Jensen's stockholders; and (2) that the proceeds received by
Jensen from the sale of the assets of the Original Equipment Business are
"fair from a financial point of view" to Jensen.
Section 8.2 Conditions to Obligation of Jensen to Effect the Merger.
The obligation of Jensen to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) Acquisition Sub and Recoton shall have performed in all material
respects their agreements contained in this Agreement required to be
performed on or prior to the Effective Time and the representations and
warranties of Acquisition Sub and Recoton contained in this Agreement shall
be true and correct in all material respects on and as of the date of this
Agreement and on and as of the Effective Time as if made on and as of such
date, except as contemplated or permitted by this Agreement, and Jensen
shall have received a certificate of the President and the Chief Operating
Officer of each of Acquisition Sub and Recoton to that effect;
(b) Jensen shall have received an opinion addressed to Jensen from
Stroock & Stroock & Lavan, counsel to Recoton and Acquisition Sub, or other
counsel reasonably acceptable to Jensen, dated the Closing Date,
substantially in the form set forth in Exhibits 8.2(b);
(c) Jensen shall have received the letters of Cornick Garber &
Sandler, LLP contemplated by Section 7.9;
(d) Recoton shall have deposited the Recoton Common Shares and cash
into the Exchange Fund in accordance with Section 3.2(a) and the Exchange
Agent shall have delivered to Jensen a certificate acknowledging receipt of
such stock and cash.
Section 8.3 Conditions to Obligation of Recoton and Acquisition Sub to
Effect the Merger. The obligation of Recoton and Acquisition Sub to effect the
Merger shall be subject to the fulfillment at or prior to the Effective Time of
the additional following conditions:
(a) Jensen shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior
to the Effective Time and the representations and warranties of Jensen
contained in this Agreement shall be true and correct in all material
respects on and as of the date of this Agreement and on and as of the
Effective Time as if made on and as of such date, except as contemplated or
permitted by this Agreement, and Recoton and Acquisition Sub shall have
received a Certificate of the President and the Chief Financial Officer of
Jensen to that effect;
(b) Recoton and Acquisition Sub shall have received an opinion from
Vedder, Price, Kaufman & Kammholz, counsel to Jensen, or other counsel
reasonably acceptable to Recoton and Acquisition Sub, dated the Closing
Date, substantially in the form set forth in Exhibit 8.3(b);
(c) The Affiliate Agreements required to be delivered to Acquisition
Sub pursuant to Section 7.4 shall have been furnished as required by
Section 7.4;
(d) Recoton and Acquisition Sub shall have received the letters of
Coopers & Lybrand, LLP contemplated by Section 7.9;
(e) Since the date hereof, no Jensen Material Adverse Effect shall
have occurred;
(f) The closing of the sale of the assets of the Original Equipment
Business pursuant to the OE Agreement shall have occurred prior to the
Effective Time;
(g) Recoton shall not have elected to terminate due to the results of
the inspections or tests performed in accordance with Section 6.2;
(h) The number of Recoton Common Shares to be issued in the Merger
shall not equal or exceed 20% of the Recoton Common Shares outstanding
prior to the Effective Time; and
(i) The number of Dissenting Shares shall not exceed 10% of the Jensen
Common Stock outstanding.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
stockholders of Jensen or the shareholders of Acquisition Sub:
(a) by mutual written consent of Acquisition Sub and Jensen; or
(b) by either Acquisition Sub or Jensen if (i) the Merger shall not
have been consummated on or before July 15, 1996 or such later date as may
be designated by Recoton (but in no event later than December 31, 1996)
(the "Termination Date"), (ii) the requisite vote of the stockholders of
Jensen to approve this Agreement pursuant to Section 8.1(a) and the
transactions contemplated hereby shall not be obtained at the Jensen
Stockholders' Meeting (including, such of the proposals enumerated in
Section 4.21 as shall be required in order to effect the Merger), or any
adjournments thereof, (iii) any governmental or regulatory body, the
consent of which is a condition to the obligations of Acquisition Sub and
Jensen to consummate the transactions contemplated hereby, shall have
determined not to grant its consent and any appeals of such determination
shall have been taken and have been unsuccessful or such body shall have
imposed conditions or limitations on its consent that would have a material
adverse effect on the prospects of the Surviving Corporation and any
appeals from such imposition shall have been taken and have been
unsuccessful, or (iv) any court of competent jurisdiction in the United
States, or any state or any country in which there is a subsidiary of
Jensen, shall have issued an order, judgment or decree (other than a
temporary restraining order) restraining, enjoining or otherwise
prohibiting the Merger and such order, judgment or decree shall have become
final and nonappealable; or
(c) by Acquisition Sub (i) if the Board of Directors of Jensen shall
have withdrawn or modified in a manner adverse to Acquisition Sub its
approval or recommendation of the Merger, this Agreement or the
transactions contemplated hereby or shall have failed to reaffirm such
approval or recommendation upon Acquisition Sub's request, or shall have
resolved to do any of the foregoing, (ii) if Jensen or any of the other
persons or entities described in Section 6.1(c) or 6.1(h) shall take any of
the actions that would be proscribed by Section 6.1(c) or 6.1(h) but for
the proviso therein allowing certain actions to be taken if required by
fiduciary duty upon advice of counsel, (iii) if there has been (x) a
material breach of any covenant or agreement herein on the part of Jensen
which has not been cured or adequate assurance of cure given, in either
case within 15 business days following receipt of notice of such breach, or
(y) a representation or warranty of Jensen herein is or becomes untrue or
incorrect in a material respect which representation or warranty by its
nature cannot be made true and correct in all material respects prior to
the Termination Date or is not made true and correct prior to the
Termination Date, (iv) if (x) Jensen enters into an agreement with any
corporation, partnership, person, other entity or group (as defined in
Section 13(d)(3) of the Exchange Act) other than Recoton or Acquisition Sub
whereby such entity or group would directly or indirectly acquire all or
any substantial part of the assets or capital stock of Jensen, whether by
merger, share exchange, purchase of assets, consolidation, tender offer or
otherwise (other than with regard to the Original Equipment Business), (y)
any third party commences a tender or exchange offer for 25% or more of
Jensen's Common Stock and Jensen's Board of Directors does not recommend,
or ceases to recommend, to Jensen's stockholders that they reject such
offer, or (v) if any third party commences a tender or exchange offer for
25% or more of Jensen's Common Stock and shares have been tendered thereto
in an amount equal to the minimum amount for which the third party
conditioned such tender or exchange; or
(d) by Jensen if there has been (x) a material breach of any covenant
or agreement herein on the part of Acquisition Sub or Recoton which has not
been cured or adequate assurance of cure given, in either case within 15
business days following receipt of notice of such breach or (y) a
representation or warranty of Recoton or Acquisition Sub herein is or
becomes untrue or incorrect in a material respect which representation or
warranty by its nature cannot be made true and correct in all material
respects prior to the Termination Date or is not made true and correct
prior to the Termination Date; or
(e) automatically, if the Jensen Board of Directors shall recommend a
Jensen Acquisition Transaction or authorize or approve the entering into by
Jensen of a Jensen Acquisition Transaction.
Notwithstanding the foregoing, if prior to the Closing Date, (i) any preliminary
or permanent injunction or other order or decree by any federal or state court
which prevents the consummation of the Merger shall have been issued, and
remains in effect (each party agreeing to use all reasonable efforts to have any
such injunction, order or decree lifted); (ii) any action shall have been taken,
or any statute, rule or regulation shall have been enacted, by any state,
federal or foreign government or governmental agency which would prevent the
consummation of the Merger or that would have a material adverse effect on the
prospects of the Surviving Corporation; or (iii) any governmental consents and
approvals legally required for the consummation of the Merger and the
transactions contemplated hereby, including, without limitation, approval (if
required) by the DOJ, FTC and the SEC (including the effectiveness of the
Registration Statement and the clearance of the Proxy Statement), shall not have
been obtained or not be in effect at the Effective Time on terms and conditions
that would not have a material adverse effect on the prospects of the Surviving
Corporation, the Termination Date shall be extended at the option of any party
hereto for a period of up to 120 days. If, at the end of such 120-day period,
the matters referred to in (i), (ii) or (iii) shall not have been satisfied to
each party's reasonable satisfaction, either party may terminate this Agreement
pursuant to the applicable provisions of this Section 9.1.
Section 9.2 Fees and Expenses.
(a) General. In the event of termination of this Agreement by either
Recoton, Acquisition Sub or Jensen as provided in Section 9.1 or any breach of
any party or any failure of condition giving rise to a right to terminate this
Agreement, there shall be no liability on the part of either Jensen or Recoton
or Acquisition Sub or their respective officers or directors except as set forth
in this Section 9.2 or in Section 7.1(c). Language appearing in brackets in this
Section 9.2 is for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. The agreements contained in this
Section 9.2 are an integral part of the transactions contemplated by this
Agreement and constitute liquidated damages or other appropriate payments and
not a penalty. If a party fails promptly pay to perform in accordance with
Article IX, such party shall pay the costs and expenses (including legal fees
and expenses) of the other party in connection with any action, including the
filing of any lawsuit or other legal action, taken to enforce the terms of this
Agreement. Except as otherwise set forth herein, payments under this Section
shall be made within five business days of, as applicable, termination of this
Agreement or the demand for reimbursement of Expenses.
(b) Jensen Payment of Break-Up Fee. Jensen shall promptly, but in no
event later than five business days after the first to occur of any of the
following clauses (i) through (iii) (the "Payment Date"), pay to Recoton a fee
of $1,500,000, such amount to be paid on the Payment Date in cash in immediately
available funds by wire transfer to an account designated by Recoton if:
(i) the Agreement terminates pursuant to Section 9.1(e)
[RECOMMENDING OF A JENSEN ACQUISITION TRANSACTION];
(ii) either Acquisition Sub or Jensen shall become entitled to
terminate, and shall terminate, this Agreement pursuant to (1) Section
9.1(b)(i) [FAILURE TO CLOSE BY THE TERMINATION DATE] because of a
failure to satisfy any of the conditions set forth in Sections 8.3(a)(as
to the receipt of the Officer's Certificate only), 8.3(b), 8.3(c), or
8.3(d) [CONDITIONS REQUIRING DELIVERY OF OFFICER'S CERTIFICATES, LEGAL
OPINION, COMFORT LETTER, AFFILIATE AGREEMENTS] provided that Jensen did
not diligently seek to fulfill or cause others to fulfill these
conditions; (2) Section 9.1(b)(i) [FAILURE TO CLOSE BY THE TERMINATION
DATE] because of a failure to satisfy the conditions set forth in
Section 8.3(f) [OE SALE] provided that this condition was not satisfied
because IJI exercised a right to terminate the OE Agreement because of a
willful and material breach of the OE Agreement by Jensen; or (3)
Section 9.1(b)(ii) [FAILURE OF JENSEN STOCKHOLDERS TO APPROVE THE MERGER
AT THE STOCKHOLDERS' MEETING] provided that contemporaneous with the
Jensen Stockholders' Meeting there shall be outstanding a competing
Jensen Acquisition Transaction proposed by a third party other than
Recoton or Acquisition Sub; or
(iii) Acquisition Sub shall become entitled to terminate, and shall
terminate, this Agreement pursuant to (1) Section 9.1(c)(i) [JENSEN
BOARD WITHDRAWS APPROVAL OR RECOMMENDATION ETC.]; (2) Section 9.1(c)(ii)
[JENSEN SELLS ASSETS, ISSUES STOCK, OR SOLICITS JENSEN ACQUISITION
PROPOSAL WITHOUT FIDUCIARY RIGHT TO DO SO]; (3) Section 9.1(c)(iii)(x)
[MATERIAL BREACH OF COVENANT OR AGREEMENT], including, but not limited
to, a failure to proceed diligently to obtain approval of the Proxy
Statement by the SEC and failure to proceed diligently to seek to lift
any injunction barring completion of the Merger provided that the breach
was willful; (4) Section 9.1(c)(iv)(x) [JENSEN ENTERS INTO AN
ACQUISITION AGREEMENT WITH A PERSON OTHER THAN RECOTON OR ACQUISITION
SUB]; (5) Section 9.1(c)(iv)(y) [COMMENCEMENT OF TENDER OFFER AND JENSEN
DOES NOT RECOMMEND OR CEASES TO RECOMMEND REJECTION OF OFFER]; or (6)
Section 9.1(c)(v) [SUCCESSFUL TENDER OFFER].
(c) Jensen Payment of Recoton Expenses. Jensen shall promptly, but in no
event later than five business days after the first to occur of any of the
events enumerated in (A) paragraph (b) or in (B) any of the following clauses
(i) through (v) (such date of required payment being referred to as the "Payment
Date"), pay to Recoton an amount equal to Recoton's Expenses (as defined below)
not to exceed $2,500,000, such amount to be paid on the Payment Date in cash in
immediately available funds by wire transfer to an account designated by
Recoton, (i) if either Acquisition Sub or Jensen shall become entitled to
terminate, and shall terminate, this Agreement pursuant to Section 9.1(b)(i)
[FAILURE TO CLOSE BY THE TERMINATION DATE] and the Stockholders Meeting has not
been held by the Termination Date (as such Termination Date has been extended
pursuant to the penultimate sentence of Section 9.1) unless the provisions of
the last sentence of Section 9.1 are applicable; (ii) if either Acquisition Sub
or Jensen shall become entitled to terminate, and shall terminate, this
Agreement pursuant to Section 9.1(b)(ii) [FAILURE OF JENSEN STOCKHOLDERS TO
APPROVE AT STOCKHOLDERS' MEETING -- NO COMPETING OFFER] provided that
contemporaneous with the Jensen Stockholders' Meeting there shall be no
outstanding competing Jensen Acquisition Transaction proposed by a third party
other than Recoton or Acquisition Sub; (iii) if either Acquisition Sub or Jensen
shall become entitled to terminate, and shall terminate, this Agreement pursuant
to Section 9.1(b)(i) because of a failure to satisfy any of the conditions set
forth in Sections 8.3(b), 8.3(c), or 8.3(d) [CONDITIONS REQUIRING DELIVERY OF
LEGAL OPINION, COMFORT LETTER, AFFILIATE AGREEMENTS] provided that Jensen
diligently sought to fulfill or cause others to fulfill these conditions; (iv)
if either Acquisition Sub or Jensen shall become entitled to terminate, and
shall terminate, this Agreement pursuant to Section 9.1(b)(i) because of a
failure to satisfy any of the conditions set forth in Section 8.1(i) [FAILURE TO
OBTAIN FAIRNESS OPINION] or Section 8.1(c) [HSR/EC FILINGS]; or (v) if either
Acquisition Sub or Jensen shall become entitled to terminate, and shall
terminate, this Agreement pursuant to Section 8.3(f) [OE SALE] provided that
this condition was not satisfied because IJI Acquisition exercised a right to
terminate for failure to satisfy a condition under the OE Agreement other than
the financing condition and Jensen has not otherwise willfully and materially
breached the OE Agreement. If Jensen is required to make any payment to Recoton
pursuant to clause (B) of the first sentence of this paragraph (c) and within
nine months following the date of termination of this Agreement (1) the Board of
Directors of Jensen recommends or approves a Jensen Acquisition Transaction by
or with a third party other than Recoton or Acquisition Sub, or enters into or
consummates an agreement with respect to any merger, sale of all of or
substantially all of the assets or shares of capital stock of Jensen, or one of
a series of similar transactions involving Jensen and/or its Subsidiaries having
a comparable effect on Jensen taken as a whole; (2) any third party commences a
tender or exchange offer for 25% or more of Jensen's Common Stock and Jensen's
Board of Directors does not recommend or ceases to recommend to Jensen's
stockholders that they reject such offer; or (3) a third party succeeds in
acquiring by tender offer or exchange offer 25% or more of the Jensen Common
Stock, then Jensen shall pay to Recoton a fee of $1,500,000 within five business
days of such events occurring.
(d) Situations Not Requiring Payment. Except as provided by clause (i)
below of this paragraph (d), no payments shall be owed by Recoton, Acquisition
Sub or Jensen if:
(i) Any party shall become entitled to terminate, and shall
terminate, this Agreement pursuant to the last sentence of Section 9.1
[FAILURE TO RESOLVE GOVERNMENTAL CLEARANCES OR TO LIFT INJUNCTION WITHIN
120 DAY EXTENSION PERIOD]; provided, however, that if within nine months
following the date of termination of this Agreement pursuant to the last
sentence of Section 9.1 (1) the Board of Directors of Jensen recommends
or approves a Jensen Acquisition Transaction by or with a third party
other than Recoton or Acquisition Sub, or enters into or consummates an
agreement with respect to any merger, sale of all of or substantially
all of the assets or shares of capital stock of Jensen, or one of a
series of similar transactions involving Jensen and/or its Subsidiaries
having a comparable effect on Jensen taken as a whole; (2) any third
party commences a tender or exchange offer for 25% or more of Jensen's
Common Stock and Jensen's Board of Directors does not recommend or
ceases to recommend to Jensen's stockholders that they reject such
offer; or (3) a third party succeeds in acquiring by tender offer or
exchange offer 25% or more of the Jensen Common Stock, then Jensen shall
pay to Recoton a fee of $1,500,000 within five business days of such
events occurring, plus Recoton's Expenses (such Expenses not to exceed
$2,500,000);
(ii) Jensen or Acquisition Sub shall become entitled to terminate,
and shall terminate, this Agreement pursuant to (1) Section 9.1(b)(i)
[FAILURE TO CLOSE BY THE TERMINATION DATE] because of a failure to
satisfy the conditions of Section 8.1(f) [GOVERNMENT ACTION] or Section
8.3(i) [DISSENTING SHARES]; or (2) Section 9.1(b)(iii) [GOVERNMENTAL
APPROVALS] because of a failure to satisfy Section 8.1(d)[SEC CLEARANCE]
or Section 8.1(e) [NO INJUNCTIONS] provided that Recoton, Acquisition
Sub and Jensen, as applicable, shall have diligently sought to satisfy
these conditions; provided, however, that if within nine months
following the date of termination of this Agreement by Jensen pursuant
to item (2) of this clause (ii)the Board of Directors of Jensen
recommends or approves a Jensen Acquisition Transaction by or with a
third party other than Recoton or Acquisition Sub, or enters into or
consummates an agreement with respect to any merger, sale of all of or
substantially all of the assets or shares of capital stock of Jensen, or
one of a series of similar transactions involving Jensen and/or its
Subsidiaries having a comparable effect on Jensen taken as a whole; (2)
any third party commences a tender or exchange offer for 25% or more of
Jensen's Common Stock and Jensen's Board of Directors does not recommend
or ceases to recommend to Jensen's stockholders that they reject such
offer; or (3) a third party succeeds in acquiring by tender offer or
exchange offer 25% or more of the Jensen Common Stock, then Jensen shall
pay to Recoton a fee of $1,500,000 within five business days of such
events occurring, plus Recoton's Expenses (such Expenses not to exceed
$2,500,000);
(iii) Acquisition Sub shall become entitled to terminate, and shall
terminate, this Agreement pursuant to (1) 9.1(c)(iii) [MATERIAL BREACH
OF COVENANT OR AGREEMENT] provided that the breach was not willful; or
(2) Section 9.1(b)(i) [FAILURE TO CLOSE BY THE TERMINATION DATE] because
of Section 8.3(e) [JENSEN MATERIAL ADVERSE CHANGE]; or
(iv) Jensen shall become entitled to terminate, and shall
terminate, this Agreement pursuant to Section 9.1(d) [MATERIAL BREACH OF
COVENANT OR AGREEMENT] provided that the breach was not willful.
(e) Recoton Payment of Break-Up Fee. Recoton shall promptly, but in no
event later than five business days after the first to occur of any of the
following clauses (i) through (iv) (the "Payment Date"), pay to Jensen a fee of
$1,500,000, such amount to be paid on the Payment Date in cash in immediately
available funds by wire transfer to an account designated by Jensen if Jensen
shall become entitled to terminate, and shall terminate, this Agreement pursuant
to (i) 9.1(b)(i) [FAILURE TO CLOSE BY THE TERMINATION DATE] because of a failure
to satisfy any of the conditions set forth in Sections 8.1(b), 8.2(a)(as to the
Officer's Certificate, only), 8.2(b) or 8.2(c) [CONDITIONS REQUIRING DELIVERY OF
OFFICER'S CERTIFICATES, LEGAL OPINION, AND COMFORT LETTER] provided that Recoton
did not diligently seek to fulfill or cause other to fulfill these conditions;
(ii) Section 9.1(b)(i) [FAILURE TO CLOSE BY THE TERMINATION DATE] because of a
failure to satisfy any of the conditions set forth in Section 8.2(d) [DELIVERY
OF CASH/STOCK TO EXCHANGE FUND]; (iii) Section 9.1(d)(x) [MATERIAL BREACH OF
COVENANT OR AGREEMENT], including, but not limited to, a failure to proceed
diligently to obtain approval of the Registration Statement by the SEC and
failure to proceed diligently to seek the lifting of any injunction barring
completion of the Merger provided that the breach was willful; or (iv) Section
9.1(b)(i) [FAILURE TO CLOSE BY THE TERMINATION DATE] because of a failure to
diligently seek to obtain Nasdaq listing;
(f) Recoton's Payment of Jensen Expenses. Recoton shall promptly, but
in no event later than five business days after the first to occur of any of the
events enumerated in (A) paragraph (e) or in (B) any of the following clauses
(i) through (ii) (such day of required payment being referred to as the "Payment
Date"), pay to Jensen an amount equal to Jensen's Expenses not to exceed
$2,500,000, such amount to be paid on the Payment Date in cash in immediately
available funds by wire transfer to an account designated by Jensen, if: (i)
either Acquisition Sub or Jensen shall become entitled to terminate, and shall
terminate, this Agreement pursuant to Section 9.1(b)(i) [FAILURE TO CLOSE BY THE
TERMINATION DATE] because of a failure to satisfy any of the conditions set
forth in Sections 8.2(b) or 8.2(c) [CONDITIONS REQUIRING DELIVERY OF LEGAL
OPINION, COMFORT LETTER] provided that Recoton diligently sought to fulfill or
cause others to fulfill these conditions; or (ii) either Acquisition Sub or
Jensen shall become entitled to terminate, and shall terminate, this Agreement
pursuant to Section 9.1(b)(i) [FAILURE TO CLOSE BY THE TERMINATION DATE]because
of a failure to satisfy the conditions set forth in Section 8.1(b) [FAILURE TO
OBTAIN NASDAQ REGISTRATION];
(g) Definition of Expenses, Etc. "Expenses" as used in this Agreement
shall include all reasonable out-of-pocket expenses (including without
limitation all fees and expenses of counsel, accountants, investment bankers,
experts and consultants to a party hereto and its affiliates) incurred by a
party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement and all of
the matters and agreements referred to herein or related hereto, the
preparation, printing, filing and mailing of the Registration Statement and the
Proxy Statement, the solicitation of stockholder approvals, defending or
prosecuting any litigation or other legal proceedings related to or arising out
of the transactions contemplated herein and all other matters related to the
closing of the transactions contemplated herein. Whenever a party shall be
obligated to pay the other party's Expenses, such payment shall be made within
five business days after the presentment of a demand for reimbursement, which
demands may be made up to two months after the event giving rise to the payment
of costs and expenses; provided, however, that no expense payments need be made
once expense payments to such party equal to $2,500,000 have been made.
Section 9.3 Amendment. This Agreement may be amended by the parties
hereto, at any time before or after approval hereof by the stockholders of
Jensen, but, after any such approval, no amendment shall be made which (a)
changes the procedure pursuant to which the Exchange Ratio (or the Principal
Stockholders Exchange Ratio) is calculated or the Per Share Cash Amount (or the
Principal Stockholders Per Share Cash Amount) or (b) changes any of the other
principal terms of this Agreement, in each case, without the further approval of
such stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
Section 9.4 Waiver. At any time prior to the Effective Time, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein; provided, however, that waiver of
compliance with any agreements or conditions herein shall not limit the parties'
obligations to comply with all other agreements or conditions herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid if set forth in an instrument in writing signed on behalf of the parties.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations, Warranties and
Agreements. None of the representations, warranties and agreements in this
Agreement shall survive the Merger, except for the agreements contained in this
Section 10.1, Article III, and in Sections 2.3, 7.1(c), 7.6, 7.8, 7.10, 7.11,
and Article IX. This Section 10.1 shall not limit any covenant or agreement of
the parties which by its terms contemplates performance after the Effective Time
of the Merger.
Section 10.2 Brokers. Jensen represents and warrants that, except for
its investment banking firm, Lehman Brothers, whose fee arrangement has been
disclosed to Recoton prior to the date hereof, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the Merger or the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Jensen. Acquisition Sub and
Recoton represent and warrant that, except for its investment banking firm,
Furman Selz Incorporated, whose fee arrangement has been disclosed to Jensen
prior to the date hereof, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the Merger
or the transactions contemplated by this Agreement based upon arrangements made
by or on behalf of Acquisition Sub.
Section 10.3 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or mailed
by registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) If to Acquisition Sub or Recoton, to:
c/o Recoton Corporation
2950 Lake Emma Road
Lake Mary, FL 32746
Attn: Stuart Mont, Chief Operating Officer
with a copy to:
Stroock & Stroock & Lavan
7 Hanover Square
New York, NY 10004
Attn: Theodore S. Lynn, Esq.
(b) If to Jensen, to:
International Jensen Incorporated
25 Tri-State International Office Center
Suite 400
Lincolnshire, Illinois 60069
Attn: Marc T. Tanenberg, Chief Financial Officer
with a copy to:
Vedder, Price, Kaufman & Kammholz
222 North La Salle Street
Chicago, IL 60601-1003
Attn: John R. Obiala, Esq.
Section 10.4 General Terms. The following definitions shall apply to
the extent not otherwise defined, or used in capitalized form, in this
Agreement:
(a) The terms "agreements" and "contracts" shall include any contract,
purchase or sales order, franchise, insurance policy, license, undertaking,
arrangement, understanding, commitment, document, lease, sublease, deed,
mortgage plan, plan, indenture, bill of sale, assignment, proxy, voting trust or
other agreement or instrument.
(b) The term "approval" shall include any consent, waiver, license,
permit, certificate or authorization.
(c) The term "breach" shall include any default, event of default or
event, occurrence, condition or act which, with notice or lapse of time or both,
would constitute a breach, default, or event of default or give the other party
or parties a right to accelerate any obligation under the applicable agreement.
(d) The term "governmental authority" means any agency,
instrumentality, department, commission, court, tribunal or board of any
government, whether foreign or domestic and whether national, federal, state,
provincial or local.
(e) The term "law" shall mean, unless specifically stated otherwise
herein, means laws, rules, regulations, codes, orders, ordinances, judgments,
injunctions, decrees and government policies.
(f) The terms "liability" and "liabilities" shall include any direct
or indirect indebtedness, claim, loss, damage, penalty, deficiency (including
deferred income tax and other net tax deficiencies), cost, expense, obligation,
duties or guarantee, whether accrued, absolute, or contingent, known or unknown,
fixed or unfixed, liquidated or unliquidated, matured or unmatured or secured or
unsecured.
(g) The term "person" shall include an individual, a partnership, a
joint venture, a corporation, a limited liability company, a trust, an
unincorporated organization and a government or other legal body thereof.
(h) The term "subsidiary" shall include each entity controlled by
Jensen.
(i) The term "transfer" shall include any sale, pledge, gift,
assignment, conveyance, lease or disposition and the term "transferred" shall
include sold, pledged, gave, assigned, conveyed, leased or disposed of.
Section 10.5 Interpretation. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes," or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
Section 10.6 Miscellaneous. This Agreement (including the documents
and instruments referred to herein) (a) together with the Confidentiality
Agreements, constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof; (b) is not intended to
confer upon any other person any rights or remedies hereunder; (c) shall not be
assigned by operation of law or otherwise; (d) shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Delaware (without giving effect to the provisions thereof relating to
conflicts of law) and service of process may be made upon any party by using the
notification procedure set forth in Section 10.3; (e) all disputes that arise
with respect to this Agreement shall be brought only in the Federal District
Court, located in or having jurisdiction for New York County, New York or in a
state court in and for New York County, New York; (f) to the fullest extent
permitted by law, the parties hereby waive all rights to a trial by jury in
connection with this Agreement; (g) by execution and delivery of this Agreement,
each of the parties accepts for himself or itself the jurisdiction of the
aforesaid courts, and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement; (h) references to Exhibits and
Schedules shall be references to the exhibits of, and schedules, to this
Agreement. Such Exhibits and Schedules form an integral part of this Agreement
and are hereby incorporated in this Agreement. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
Section 10.7 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section 10.8 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under this Agreement.
Section 10.9 Severability; Enforceability. Any term or provision of
this Agreement which is invalid or unenforceable in any jurisdiction shall, as
to that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement in any other jurisdiction. Such term or
provision, however, shall be modified to the extent allowable by law so that it
becomes enforceable to the greatest extent permissible, as modified, and shall
be enforced as any other term or provision hereof. The parties further agree to
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the greatest extent
possible.
Section 10.10 Right to Offset. Payments due under this Agreement or
any other agreements or obligation between Recoton (or any affiliate thereof)
and Jensen (or any affiliate thereof) may, at the election of either party, be
set off against each other including by way of (but not limited to) cancellation
of outstanding notes.
IN WITNESS WHEREOF, Recoton, Acquisition Sub and Jensen have caused
this Agreement to be signed by their respective officers thereunto duly
authorized on the 10th day of May, 1996 as of the date first written above.
RECOTON CORPORATION
By: /s/ Stuart Mont
Stuart Mont
Executive Vice President-Operations &
Chief Operating Officer
RC ACQUISITION SUB, INC.
By: /s/ Stuart Mont
Stuart Mont
Secretary
INTERNATIONAL JENSEN INCORPORATED
By: /s/ Marc T. Tanenberg
Marc T. Tanenberg
Vice President & Chief Financial
Officer
<PAGE>
EXHIBIT 3
AMENDED AND RESTATED AGREEMENT
This AGREEMENT (the "Agreement") is dated as of May 1, 1996, by and
among RECOTON CORPORATION, a New York corporation ("Recoton"), RC ACQUISITION
SUB, INC., a Delaware corporation and a wholly-owned subsidiary of Recoton ("RC
Acquisition Sub"), and ROBERT G. SHAW ("Shaw"), solely in his capacity as a
stockholder of INTERNATIONAL JENSEN INCORPORATED, a Delaware corporation
("Jensen").
W I T N E S S E T H:
WHEREAS, Recoton, RC Acquisition Sub and Jensen are entering into a
Third Amended and Restated Agreement and Plan of Merger (the "Revised Merger
Agreement") pursuant to which Jensen will be merged with and into RC Acquisition
Sub (the "Merger") and each stockholder of Jensen will receive merger
consideration (the "Merger Consideration") of $10.00 or $8.90 in cash and or
equivalent shares of Common Share of Recoton for each share of Jensen Common
Stock, par value $0.01 per share ("Jensen Common Stock").
WHEREAS, as a condition to the willingness of Recoton to enter into the
Revised Merger Agreement, Recoton has required that Shaw agree, and in order to
induce Recoton to enter into the Revised Merger Agreement, Shaw has agreed,
among other things, to pay to Recoton certain amounts if Shaw sells his shares
of Jensen Common Stock for greater than $8.90 per share, in accordance with the
terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the adequacy of
which is hereby acknowledged, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Sale and Payment. From the date hereof through the Termination Date
(as hereinafter defined), if Shaw transfers all or any portion of his shares of
Jensen Common Stock (including without limitation by merger or tender offer) to
a third party other than Recoton for greater than $8.90 per share, Shaw shall
promptly pay to Recoton upon Shaw's receipt of the proceeds from the sale of
Shaw's shares 50% of the difference between (a) the net proceeds per share
received by Shaw, but not to exceed $10.90 per share, for each share sold by
Shaw, and (b) the sum of $8.90 per share. Shaw shall retain all net proceeds in
excess of $10.90 per share. If Shaw is required to pay any Federal or state
income taxes which are incurred by him as a result of Recoton's receipt of any
portion of the sales proceeds, Recoton agrees that it will reimburse Shaw for
50% of such Federal and state income tax. Any reimbursement due to Shaw shall be
made upon the filing of the appropriate tax return and/or upon the final
determination by the Internal Revenue Service or the Illinois Department of
Revenue of the taxes due. For purposes of this Agreement, payment of applicable
Federal and state income taxes shall mean any such income tax payable at or
before the date on which Shaw files his income tax return for the taxable year
(and any amended returns) or any amounts otherwise payable as a result of a
determination by the Internal Revenue Service or the Illinois Department of
Revenue that such taxes are due and owing.
1.1 Effective Date/Termination Date. This Agreement shall become
effective upon the execution and delivery of the Revised Merger Agreement and
shall terminate December 31, 1996.
1.2 Adjustments Upon Changes in Capitalization. In the event of any
change in the number of issued and outstanding shares of Jensen Common Stock by
reason of any stock dividend, subdivision, merger, recapitalization,
combination, conversion or exchange of shares, or any other change in the
corporate or capital structure of Jensen (including, without limitation, the
declaration or payment of an extraordinary dividend of cash or securities) which
would have the effect of diluting or otherwise adversely affecting Recoton's
rights and privileges under this Agreement, the consideration payable in respect
of the sale of Jensen Common Stock by Shaw shall be appropriately and equitably
adjusted.
2. Covenants of Shaw. Shaw covenants and agrees that he shall not, and
shall not offer to agree to, acquire any additional shares of Jensen Common
Stock, or options, warrants or other rights to acquire shares of Jensen Common
Stock, without the prior written consent of Recoton, unless such shares are made
subject to this Agreement.
3. Covenants of Recoton and RC Acquisition Sub. Recoton and RC
Acquisition Sub shall perform in all material respects all of their
respective obligations under the Revised Merger Agreement.
4. Miscellaneous.
4.1 Notices. Any notice, request, consent or communication
(collectively "Notice") sent under this Agreement shall be effective only if it
is in writing and (a) personally delivered, (b) sent by certified or registered
mail, return receipt requested, postage prepaid, (c) sent by a nationally
recognized overnight delivery service, with delivery confirmed, or (d) telexed
or telecopied with receipt confirmed, addressed as follows:
If to Recoton or RC Acquisition Sub, to:
c/o Recoton Corporation
2950 Lake Emma Road
Lake Mary, FL 32746
Attention: Stuart Mont, Chief Operating Officer
Telecopier: (407) 333-8903
Telephone: (407) 333-8900
with a copy to:
Stroock & Stroock & Lavan
Seven Hanover Square
New York, New York 10004-2594
Attention: Theodore S. Lynn
Telecopier: (212) 806-6006
Telephone: (212) 806-5400
If to Shaw, to:
IJI Acquisition Corp./International Jensen Incorporated
25 Tri-State International Officer Center
Suite 400
Lincolnshire, IL 60606
Attention: Robert G. Shaw
Telecopier: (847) 317-3774
Telephone: (847) 317-3777
with a copy to:
Wildman, Harrold, Allen & Dixon
225 West Wacker Drive
Suite 3000
Chicago, Illinois 60606-1229
Attn: Richard B. Thies
Telecopier: (312) 201-2555
Telephone: (312) 201-2521
or such other persons or addresses as shall be furnished in writing by any party
to the other party. A Notice shall be deemed to have been given as of the date
when (i) personally delivered, (ii) five (5) days after the date when deposited
with the United States mail properly addressed, (iii) when receipt of a Notice
sent by an overnight delivery service is confirmed by such overnight delivery
service, or (iv) when receipt of the telex or telecopy is confirmed, as the case
may be, unless the sending party has actual knowledge that a Notice was not
received by the intended recipient.
4.2 Waiver and Amendment. Any provision of this Agreement may be
waived at any time by the party which is entitled to the benefits thereof and
this Agreement may be amended or supplemented at any time. No such waiver,
amendment or supplement shall be effective unless in writing and signed by the
party sought to be bound thereby.
4.3 No Prior Agreements. This Agreement and the Revised Merger
Agreement contain the entire agreement, and supersede all other prior agreements
and understandings, both written and oral, among the parties hereto with respect
to the subject matter hereof. This Agreement is not intended to confer upon any
other person any rights or remedies hereunder.
4.4 Successors and Assigns. This Agreement shall not be assignable,
except that Recoton or RC Acquisition Sub may assign its rights under this
Agreement to another direct or indirect wholly-owned subsidiary of Recoton, but
such assignment shall not relieve Recoton or RC Acquisition Sub of their
respective obligations hereunder. This Agreement shall be binding upon, inure to
the benefit of and be enforceable by and against the parties hereto and their
successors (including administrators and executors of individuals) and permitted
assigns.
4.5 Remedies. Recoton and RC Acquisition Sub, on the one hand, and
Shaw, on the other hand, each acknowledge and agree that the other would be
irreparably damaged in the event any of the provisions of this Agreement were
not performed by the other in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that each party shall be entitled
to an injunction or injunctions to redress any breach of this Agreement and to
specifically enforce the terms and provisions hereof in any action instituted in
any court of the United States or any state thereof having jurisdiction, in
addition to any other remedy to which such party may be entitled at law or in
equity.
4.6 Expenses. Each of the parties shall pay its own expenses
in connection with the negotiation, execution and performance of the
Agreement.
4.7 Counterparts. This Agreement and any amendments hereto may be
executed in two or more counterparts, each of which shall be considered to be an
original, but of which together shall constitute the same instrument.
4.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the state of Delaware, without
regard to the principles of conflicts of law.
4.9 Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
4.10 Effect of Headings. The section headings herein are for
convenience only and shall not affect the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement to take
effect as of the date set forth above.
RECOTON CORPORATION
By: /s/ Stuart Mont
Name: Stuart Mont
Title: Executive Vice President
RC ACQUISITION SUB, INC.
By: /s/ Stuart Mont
Name: Stuart Mont
Title: Secretary
/s/ Robert G. Shaw
Robert G. Shaw
