SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
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 [X]. (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). <PAGE>
SCHEDULE 13D
CUSIP No. 459721106 Page 2 of Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Recoton Corporation 11-1771737
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a)| |
(b)| |
3 SEC USE ONLY
4 SOURCE OF FUNDS*
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(d) OR 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
NUMBER OF 7 SOLE VOTING POWER 0
SHARES
BENEFICIALLY 8 SHARED VOTING POWER 1,487,500
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER 0
REPORTING
PERSON 10 SHARED DISPOSITIVE POWER 1,487,500
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,487,500
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12 | |
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
25.9%
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Item 1. Security and Issuer.
This statement on Schedule 13D, dated May 10, 1996, filed by Recoton
Corporation, relates to the common stock, par value of $.01 per share (the "IJI
Common Stock"), of International Jensen Incorporated, a Delaware corporation
(the "Issuer" or "IJI"). The principal executive offices of the Issuer are 25
Tri-State International Office Center, Suite 400, Lincolnshire, Illinois,
60069. All capitalized terms used herein shall have the definitions set forth
in the Schedule, except as may otherwise be provided herein.
Item 2. Identity and Background.
This statement is being filed by Recoton Corporation ("Recoton"), a New
York corporation engaged in the business of marketing consumer electronics
accessories. The principal place of business and principal offices of Recoton
are located at 2950 Lake Emma Road, Lake Mary, Florida, 32746.
During the last five years, none of the officers and directors of Recoton
have ever been convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors), nor has Recoton or any of its officers and directors
been party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of which Recoton was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The option to purchase IJI Common Stock (the "Option") was acquired in
consideration of Recoton entering into a revised merger agreement, as further
described below.
Item 4. Purpose of Transaction.
On January 3, 1996, IJI and Recoton jointly announced that Recoton had
agreed to acquire IJI pursuant to an Agreement and Plan of Merger (the "Merger
Agreement"). On January 30, 1996, the Merger Agreement was amended and restated
(the "Amended and Restated Merger Agreement"). On May 1, 1996 the Merger
Agreement was further amended and restated (the "Second Amended and Restated
Merger Agreement") and certain other related agreements were entered into. One
of such related agreements is the Stock Option and Voting Agreement (the "Stock
Option and Voting Agreement") effective as of May 1, 1996, between Recoton and
William Blair Leveraged Capital Fund, L.P. ("WBLCF"), which holds approximately
25.9% of the outstanding IJI Common Stock. On May 10, 1996 the Merger Agreement
was further amended and restated (the "Third Amended and Restated Merger
Agreement") and the Stock Option and Voting Agreement was amended and restated.
The purpose of the Stock Option and Voting Agreement was to induce Recoton to
enter into the revised merger agreement by giving Recoton assurance that the
shares held by WBLCF will be voted in favor of the merger and that Recoton has
the right to acquire such shares at the agreed upon price per share at any time
prior to December 31, 1996, subject to certain conditions.
Item 5. Interest in Securities of the Issuer.
As at May 10, 1996, Recoton is deemed to beneficially own 1,487,500 shares
of IJI Common Stock (approximately 25.9% of the IJI Common Stock outstanding),
covered by the Stock Option and Voting Agreement. The percentage of IJI Common
Stock outstanding is calculated based upon information contained in the
Issuer's Form 10-Q for the quarter ended November 30, 1995 as filed pursuant to
the Securities Exchange Act of 1934, as amended.
Upon exercise of the Option, Recoton will have sole power to vote or to
direct the vote, shared power to vote or direct the vote or sole power to
dispose or direct the disposition of any of the shares of IJI Common Stock of
which it is a beneficial owner. Prior to exercise of the Options, Recoton has
shared power to dispose or direct the disposition of the shares pursuant to the
terms of the Stock Option and Voting Agreement, as further described in Item 6
herein.
Recoton will have sole power to vote or direct the vote of the shares
should WBLCF breach any of its covenants contained in the Stock Option and
Voting Agreement, pursuant to an irrevocable proxy to be given in favor of
Recoton upon such breach and it shall have sole power to vote or direct the
vote of the shares and sole power to dispose or direct the disposing of the
shares to the extent that Recoton elects to exercise the option to purchase the
shares owned by WBLCF.
WBLCF has the right to receive and the power to direct the receipt of
dividends from such shares.
Robert Borchardt, Co-Chairman of the Board of Directors and Co-Chief
Executive Officer of Recoton, owns 4,500 shares of IJI Common Stock (less than
1% of the IJI Common Stock outstanding), which he purchased in two separate
transactions. On May 27, 1994, Mr. Borchardt purchased 2,500 shares of IJI
Common Stock, at a price of $7.50 per share. On October 7, 1994, Mr. Borchardt
purchased 2,000 shares for a purchase price of $8.25 per share. The shares
owned by Robert Borchardt are not included in the shares shown above as deemed
to be beneficially owned by Recoton.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Pursuant to the Stock Option and Voting Agreement with Recoton, WBLCF has
granted Recoton an option to purchase all of its shares of IJI Common Stock at
$8.90 per share plus (i) 50% of any net proceeds which Recoton may receive over
$8.90 per share upon the sale or other transfer of the shares purchased
pursuant to the Option from WBLCF on or before December 31, 1996 to the extent
the net proceeds do not exceed $10.90 per share, plus (ii) 100% of the net
proceeds which Recoton may receive over $10.90 per share upon the sale or other
transfer of the shares on or before December 31, 1996.
Pursuant to the Stock Option and Voting Agreement, WBLCF has agreed to (i)
vote all of its shares of IJI Common Stock in favor of the merger, the Third
Amended and Restated Merger Agreement and any transactions contemplated
thereby; (ii) vote its shares against any action or agreement that would result
in a breach in any material respect of any covenant, representation or warranty
or any other obligation of IJI under the Third Amended and Restated Merger
Agreement; and (iii) vote its shares against any action or agreement that would
materially impede, interfere with or attempt to discourage the merger including
any merger, consolidation, acquisition of all or substantially all of the
assets of IJI or any transaction involving the transfer of beneficial ownership
of or to vote securities representing, more than 50% of the total voting power
of IJI with any party other than Recoton or an affiliate, whether during the
term of the Third Amended and Restated Merger Agreement or after termination
thereof.
Recoton may exercise its stock option, in whole or in part, at any time or
from time to time, following the execution and delivery of the Third Amended
and Restated Merger Agreement until December 31, 1996.
The exercise of the Option is conditioned on there being no preliminary or
permanent injunction or other order by any court of competent jurisdiction
restricting, preventing or prohibiting the exercise of the stock option or the
delivery of WBLCF's shares in respect of such exercise.
WBLCF also has agreed to grant Recoton an irrevocable proxy in the event
that WBLCF breaches its covenants set forth in the Stock Option and Voting
Agreement, with full power of substitution, to vote and otherwise act (by
written consent or otherwise) with respect to all shares of IJI Common Stock
that WBLCF is entitled to vote at any meeting of stockholders of IJI.
Pursuant to an agreement between Recoton and Robert G. Shaw ("Shaw"), who
holds approximately 36.8% of the IJI Common Stock (the "Spread Agreement"),
Shaw will pay to Recoton promptly 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, subject to certain obligations of
Recoton to reimburse certain tax liabilities. Shaw shall retain all net
proceeds in excess of $10.90 per share. The agreement further provides that
Shaw shall retain any proceeds received in excess of $10.00 per share. The
agreement will terminate December 31, 1996.
Except as discussed herein, Recoton has no other contracts, arrangements,
understandings or relationships with respect to any securities of the Issuer,
including but not limited to transfer or voting of any of the securities of the
Issuer, finder's fees, joint ventures, loan or option agreements, puts or
calls, guarantees of profits, divisions of profits or loss, or the giving or
withholding of proxies.
Item 7. Material to be Filed as Exhibits.
The following exhibits 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.
2. Amended and Restated Stock Option and Voting Agreement by and among
Recoton Corporation, RC Acquisition Sub, Inc., a wholly-owned subsidiary of
Recoton Corporation, and William Blair Leveraged Capital Fund, L.P., a
stockholder of International Jensen Incorporated dated as of May 1, 1996 but
executed as of May 9, 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 10, 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;
(i) The number of Dissenting Shares shall not exceed 10% of the Jensen
Common Stock outstanding; and
(j) Recoton and Acquisition Sub shall have received a letter from Furman
Selz LLC, dated the Effective Date of the Registration Statement (or such other
date reasonably acceptable to Recoton), which letter shall be of the opinion
that the Merger Consideration is "fair from a financial point of view" to
Recoton.
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
<PAGE>
(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'
<PAGE>
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:
<PAGE>
(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
<PAGE>
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.
<PAGE>
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.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
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 2
AMENDED AND RESTATED STOCK OPTION AND VOTING AGREEMENT
AMENDED AND RESTATED STOCK OPTION AND VOTING AGREEMENT (this "Agreement"),
effective 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 WILLIAM BLAIR
LEVERAGED CAPITAL FUND, L.P. (the "Stockholder"), a stockholder of
INTERNATIONAL JENSEN INCORPORATED, a Delaware corporation ("Jensen").
W I T N E S S E T H:
WHEREAS, Recoton and the Stockholder have entered into a Stock Option and
Voting Agreement dated as of May 1, 1996 (the "Agreement") pursuant to which
the Stockholder (i) granted Recoton the option to purchase all of the shares of
Jensen Common Stock now owned or which may hereafter be acquired by such
Stockholder (the "Shares") in certain circumstances, (ii) appointed Recoton as
the Stockholder's proxy to vote the Jensen Common Stock held by the Stockholder
(the "Shares") in connection with the Revised Merger Agreement under certain
circumstances, and (iii) with respect to certain questions put to stockholders
of Jensen for a vote, agreed to vote the Shares, in each case, in accordance
with the terms and conditions of the Agreement;
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 a fraction of a Common Share of Recoton for each share of Jensen Common
Stock, par value $0.01 per share ("Jensen Common Stock"); and
WHEREAS, as a condition to the willingness of Recoton to enter into the
Revised Merger Agreement, Recoton has required that the Stockholder agree, and
in order to induce Recoton to enter into the Revised Merger Agreement, the
Stockholder has agreed, among other things, to amend and restate the Agreement
as set forth herein.
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 that the Agreement is amended and restated as follows:
1. Stock Option.
1.1 Grant of Stock Option. The Stockholder hereby grants to Recoton an
irrevocable option (the "Stock Option") to purchase all of the Shares legally
and/or beneficially owned by such Stockholder, at such time as Recoton may
exercise the Stock Option during the Exercise Period (as defined below), at a
purchase price (the "Purchase Price") equal to the sum of (a) $8.90 per share
of Jensen Common Stock plus (b) 50% of any net proceeds which Recoton may
receive over $8.90 per share upon the sale or other transfer of the Shares on
or before December 31, 1996 to the extent the net proceeds do not exceed $10.90
per Share plus (c) 100% of the net proceeds which Recoton may receive over
$10.90 per share upon the sale or other transfer of the Shares on or before
December 31, 1996 to the extent that the net proceeds exceed $10.90 per share.
1.2 Exercise of Stock Option. (a) Subject to Section 1.3 hereof, the Stock
Option may be exercised by Recoton, in whole or in part, at any time or from
time to time, following the execution and delivery of the Revised Merger
Agreement until December 31, 1996 (the "Expiration Date").
(b) In the event Recoton wishes to exercise the Stock Option, Recoton
shall give a written notice (the "Exercise Notice") to the Stockholder of such
exercise, specifying the number of Shares to be purchased (the "Optioned
Shares"). The Exercise Notice shall be delivered to the Stockholder in
accordance with the requirements of Section 6.1, and shall specify a date
(which may be the date of such notice) not more than ten business days from the
date the Exercise Notice is given for the purchase of the Optioned Shares. The
closing of the purchase of the Optioned Shares (the "Stock Option Closing")
shall take place at the offices of Stroock & Stroock & Lavan, Seven Hanover
Square, New York, New York 10004 or at such other location as Recoton shall
elect. At the time of the Stock Option Closing, Recoton shall deliver the
portion of the Purchase Price set forth in Section 1.1 (a); payment of the
portion of the Purchase Price set forth in Section 1.1(b) and Section 1.1(c),
if applicable, shall be made by Recoton within five days after receipt of
payment by Recoton pursuant to any such sale. If any law or regulation shall
not permit the purchase of the Optioned Shares to be consummated on the date
specified in such Exercise Notice, the date for the Stock Option Closing shall
be as soon as practicable following the cessation of such restriction on
consummation, but in any event within two business days thereof.
(c) Upon receipt of the Exercise Notice, the Stockholder shall be
obligated to deliver to Recoton a certificate or certificates representing the
number of Shares held by the Stockholder, in accordance with the terms of this
Agreement, on the later of the date specified in such Exercise Notice and the
first business day on which the conditions specified in Section 1.3 shall be
satisfied. The date specified in such Exercise Notice may be as early as one
business day after the date of such Exercise Notice.
1.3 Conditions to Delivery of the Shares. The obligation of the
Stockholder to deliver the Shares upon exercise of the Stock Option is subject
to the following conditions:
(a) All waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, applicable to the exercise of the Stock Option and the
delivery of the Shares shall have expired or been terminated; and
(b) There shall be no preliminary or permanent injunction or other order
by any court of competent jurisdiction restricting, preventing or prohibiting
the exercise of the Stock Option or the delivery of the Shares in respect of
such exercise (a "Court Order"). The Expiration Date shall be extended by a
period of time equal to the period of any Court Order.
1.4 Stock Option Closings. At the Stock Option Closing, the Stockholder
will deliver to Recoton a certificate or certificates evidencing the number of
Shares owned by the Stockholder, each such certificate being duly endorsed in
blank and accompanied by such stock powers and such other documents as may be
necessary in Recoton's judgment to transfer record ownership of the Shares into
Recoton's name on the stock transfer books of Jensen, and Recoton will purchase
the delivered Shares at the Purchase Price. All payments made by Recoton to the
Stockholder pursuant to this Section 1.4 shall be made by wire transfer of
immediately available funds or by certified bank check payable to the
Stockholder, in an amount for the Stockholder equal to the product of (a) the
Purchase Price and (b) the number of Shares delivered by the Stockholder in
respect of the Stock Option Closing.
1.5 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 number and kind of the Shares and the
consideration payable in respect of the Shares shall be appropriately and
equitably adjusted to restore to Recoton its rights and privileges under this
Agreement. Without limiting the scope of the foregoing, in any such event, at
the option of Recoton, the Stock Option shall represent the right to purchase,
in addition to the number and kind of Shares which Recoton would be entitled to
purchase pursuant to the immediately preceding sentence, whatever securities,
cash or other property the Shares subject to the Stock Option shall have been
converted into or otherwise exchanged for, together with any securities, cash
or other property which shall have been distributed with respect to such
Shares.
2. No Disposition or Encumbrance of Shares; No Acquisition of Shares. The
Stockholder covenants and agrees that, except as contemplated by this Agreement
or pursuant to the Revised Merger Agreement, it shall not, and it shall not
offer or agree to, sell, transfer, tender, assign, hypothecate or otherwise
dispose of, or create any security interest, lien, claim, pledge, option, right
of first refusal, agreement, limitation on such Stockholder's voting rights,
charge or other encumbrance of any nature whatsoever with respect to the Shares
now legally and/or beneficially owned by, or that may hereafter be acquired by,
the Stockholder.
3. Covenants of Recoton and RC Acquisition Sub.
3.1 No Sale. Neither Recoton nor RC Acquisition Sub will sell, offer to
sell or otherwise dispose of the Shares in violation of the Securities Act of
1993, as amended.
3.2 Performance. Recoton and RC Acquisition Sub shall perform in all
material respects all of their respective obligations under the Revised Merger
Agreement.
4. Voting Agreement; Proxy of Stockholder.
4.1 Voting Agreement. The Stockholder hereby agrees that, during the time
this Agreement is in effect, at any meeting of the stockholders of Jensen,
however called, and in any action by written consent of the stockholders of
Jensen, the Stockholder shall (i) vote all of the Shares legally and/or
beneficially owned by such Stockholder in favor of the Merger, the Revised
Merger Agreement (as amended from time to time) and any of the transactions
contemplated by the Revised Merger Agreement; (ii) vote such Shares against any
action or agreement that would result in a breach in any material respect of
any covenant, representation or warranty or any other obligation of Jensen
under the Revised Merger Agreement; and (iii) vote the Shares against any
action or agreement that would materially impede, interfere with or attempt to
discourage the Merger including any merger, consolidation, acquisition of all
or substantially all of the assets of Jensen or any transaction involving the
transfer of beneficial ownership of securities representing, or the right to
acquire beneficial ownership of or to vote securities representing, more than
50% of the total voting power of Jensen with any party other than Recoton or an
affiliate, whether during the term of the Revised Merger Agreement or after
termination thereof. The covenants of the Stockholder under this Section 6.1
relate only to the Stockholder in its capacity as stockholder and not to any
other capacity in which such person or its affiliates may be acting.
4.2 Irrevocable Proxy. In the event that the Stockholder shall breach its
covenant set forth in Section 4.1, the Stockholder (without any further action
on such Stockholder's part) shall be deemed to have hereby irrevocably
appointed Recoton as the attorney and proxy of such Stockholder pursuant to the
provisions of Section 212 of the Delaware General Corporation Law ("DGCL"),
with full power of substitution, to vote, and otherwise act (by written consent
or otherwise) with respect to all shares of Jensen Common Stock, including the
Shares, that the Stockholder is entitled to vote at any meeting of stockholders
of Jensen (whether annual or special and whether or not an adjourned or
postponed meeting) or consent in lieu of any such meeting or otherwise, to vote
such shares as set forth in Section 4.1 above; provided that in any such vote
or other action pursuant to such proxy, Recoton shall not have the right (and
such proxy shall not confer the right) to vote to reduce the consideration
payable to the stockholders of Jensen pursuant to the Revised Merger Agreement
or to otherwise modify or amend the Revised Merger Agreement to reduce the
rights or benefits of Jensen or any stockholders of Jensen (including the
Stockholders) under the Merger Agreement or to reduce the obligations of
Recoton and/or RC Acquisition Sub thereunder; and provided further, that this
proxy shall irrevocably cease to be in effect at any time that Recoton or RC
Acquisition Sub shall be in violation of the terms of this Agreement. THIS
PROXY AND POWER OF ATTORNEY IS IRREVOCABLE AND COUPLED WITH AN INTEREST. The
Stockholder hereby revokes, effective upon the execution and delivery of the
Merger Agreement by the parties thereto, all other proxies and powers of
attorney with respect to the Shares that the Stockholder may have heretofore
appointed or granted, and no subsequent proxy or power of attorney (except in
furtherance of the Stockholder's obligations under Section 4.1 hereof) shall be
given or written consent executed (and if given or executed, shall not be
effective) by the Stockholder with respect thereto so long as this Agreement
remains in effect. The Stockholder shall forward to Recoton any proxy cards
that the Stockholder receives with respect to the Revised Merger Agreement.
5. Effectiveness; Termination; No Survival. This Agreement shall become
effective upon its execution by each of the parties hereto and upon the
execution of the Revised Merger Agreement. This Agreement may be terminated at
any time by mutual written consent of the parties hereto. Other than the Stock
Option, which shall be governed by Section 1.2(a), this Agreement shall
terminate, without any action by the parties hereto, on the later of the date
on which the Revised Merger Agreement terminates in accordance with its terms
or the Termination Date. No such termination shall relieve any party from
liability for any breach of this Agreement.
6. Miscellaneous.
6.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally or
sent by registered or certified mail, postage prepaid, with return receipt
requested, as follows:
If to Recoton or RC Acquisition Sub, 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
Seven Hanover Square
New York, New York 10004-2594
Attention: Theodore S. Lynn
If to the Stockholder, to:
William Blair Leverage
Capital Fund, L.P.
222 West Adams
Chicago, IL 60606
Attn.: David G. Chandler
with a copy to:
Kirkland & Ellis
200 East Randolph
Chicago, IL 60001
Attn.: James L. Learner
6.2 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.
6.3 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.
6.4 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.
6.5 Remedies. Recoton and RC Acquisition Sub, on the one hand, and the
Stockholder, 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 the breaches 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.
6.6 Expenses. Each of the parties shall pay its own expenses in connection
with the negotiation, execution and performance of the Agreement.
6.7 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.
6.8 Governing Law; Etc. 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 laws. 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. To the fullest extent permitted by law, the
parties hereby waive all rights to a trial by jury in connection with this
Agreement. 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.
6.9 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.
6.10 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 on May 9,
1996 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
WILLIAM BLAIR LEVERAGED CAPITAL FUND, L.P.
By: WILLIAM BLAIR LEVERAGED
CAPITAL MANAGEMENT, L.P.
By: WILLIAM BLAIR & COMPANY,
L.L.C., ITS GENERAL PARTNER
By:/s/David G.Chandler
David G. Chandler,
Its Principal
<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 Second
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 $9.15 or $9.00 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 $9.00 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 $10.00 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 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 or
any additional payment due from 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 York10004-2594
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, IL60606
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
