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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): MAY 9, 1996
INTERNATIONAL JENSEN INCORPORATED
(Exact name of registrant as specified in its charter)
_____________________________
DELAWARE 0-19779 13-3346656
(State or other (Commission file number) (I.R.S. employer
jurisdiction of identification no.)
incorporation)
25 TRI-STATE 60069
INTERNATIONAL OFFICE (Zip Code)
CENTER, SUITE 400
LINCOLNSHIRE, ILLINOIS
(Address of principal executive office)
Registrant's telephone number, include area code: (847) 317-3700
NOT APPLICABLE
(Former name or former address, if changed since last year)
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Page 1 of __ pages
Exhibit Index at sequentially numbered page 6.
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ITEM 5. OTHER EVENTS.
On January 3, 1996, International Jensen Incorporated ("IJI") and Recoton
Corporation ("Recoton") jointly announced that Recoton had agreed to acquire IJI
pursuant to an Agreement and Plan of Merger (the "Merger Agreement"). The
Merger Agreement was amended and restated on January 30, 1996 (the "Amended and
Restated Merger Agreement"), and was filed with the Securities and Exchange
Commission (the "Commission") on or about January 30, 1996. On May 1, 1996, the
Amended and Restated Merger Agreement was further amended and restated (the
"Second Amended and Restated Merger Agreement") and certain other related
agreements were entered into between IJI and Recoton at that time. Copies of
the Second Amended and Restated Merger Agreement and certain related agreements
were filed by IJI with the Commission on or about May 8, 1996. On May 10, 1996,
the Second Amended and Restated Merger Agreement was further amended and
restated (the "Third Amended and Restated Merger Agreement") and certain of the
related agreements were also amended. This Form 8-K is being made for the
purpose of filing the Third Amended and Restated Merger Agreement, which is
included herewith as Exhibit 2.1, and certain other items described below.
The Third Amended and Restated Merger Agreement differs from the Second
Amended and Restated Merger Agreement in the following substantive respects:
- The price per share offered by Recoton to the IJI stockholders was
increased to $10.00 per share, except that the price per share to be
offered by Recoton to each of Robert G. Shaw and William Blair
Leveraged Capital Fund, L.P. was decreased to $8.90 per share.
- Subject to adjustment as noted below, the percentage of IJI common
stock to be converted to Recoton common shares was increased to 44.7%
and the corresponding percentage to be converted into cash was reduced
to 55.3%, with the merger intended to qualify as under the prior
versions of the merger agreement as a reorganization under the
Internal Revenue Code and to be treated as a tax-free transaction for
federal income tax purposes to the extent Recoton common shares are
received in exchange for shares of IJI common stock.
- The Termination Date was extended to July 15, 1996, from June 30,
1996.
- The termination fee provisions were revised substantially to provide
that (i) IJI is required to pay Recoton a termination fee of $1.5
million and/or documented expenses and costs of up to $2.5 million
under certain circumstances and (ii) Recoton is required to pay IJI a
termination fee of $1.5 million and/or documented expenses and costs
of up to $2.5 million under certain circumstances. The circumstances
under which such termination fees would be payable also were revised.
On January 3, 1996, IJI and IJI Acquisition Corp. ("IJI Acquisition")
entered into an Agreement for Purchase and Sale of the OEM Business of IJI by
and to IJI Acquisition (the "OEM Agreement"). The OEM Agreement was
subsequently amended and restated on May 1, 1996 (the "Amended and Restated OEM
Agreement"). Copies of the Amended and Restated
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OEM Agreement were filed with the Commission on or about May 8, 1996. On May
10, 1996, the Amended and Restated OEM Agreement was further amended (the
"Second Amended and Restated Merger Agreement") to increase the Purchase
Price (as defined therein) to $16,537,000, subject to certain adjustments
described therein which may increase or decrease the Purchase Price. The
Second Amended and Restated Merger Agreement is included herewith as
Exhibit 2.2.
Simultaneous with the execution of the Merger Agreement, Recoton and IJI
entered into an Exclusive World-Wide License and Option to Sell and Option to
Purchase Proprietary Rights agreement (the "AR Agreement"), pursuant to which
Recoton acquired from IJI a license to, and an option to purchase, all rights to
the "Acoustic Research" and "AR" trademarks (collectively, the "AR Marks"), and
IJI acquired an option to sell the AR Marks to Recoton, under certain
circumstances. The AR Agreement was dated as of January 3, 1996.
On May 9, 1996, Recoton and IJI amended the AR Agreement to provide Recoton
an option to purchase the AR Marks and IJI with an option to sell the AR Marks
upon termination of the Merger Agreement for $3.5 million. At the same time,
Recoton, IJI and Vedder, Price, Kaufman & Kammholz amended and restated the
Escrow Agreement dated as of May 1, 1996, to reflect the reduced option prices
for the AR Marks. A copy of the Amendment to the AR Agreement is included
herewith as Exhibit 2.3 and a copy of the Amended and Restated Escrow Agreement
is included herewith as Exhibit 2.4.
On May 1, 1996, IJI and Recoton entered into an agreement, filed with the
Commission on or about May 8, 1996, pursuant to which IJI has agreed not to
agree to any amendment to the OEM Agreement. The agreement was amended as of
May 9, 1996, to further provide that IJI would, at Recoton's request and
expense, assert whatever rights IJI may have under the OEM Agreement to seek to
compel specific performance by IJI Acquisition. The amended agreement is
included herewith as Exhibit 2.5.
On May 10 and May 14, 1996, IJI issued the press releases included herewith
as Exhibits 99.1 and 99.2, respectively.
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ITEM 7(c). EXHIBITS.
Exhibit 2.1 Third Amended and Restated Agreement and Plan of Merger among
Recoton Corporation, RC Acquisition Sub, Inc. and International
Jensen Incorporated dated as of January 3, 1996.
Exhibit 2.2 Second Amended and Restated Agreement for Purchase and Sale of
the Assets of the OEM Business of International Jensen
Incorporated by and to IJI Acquisition Corp. dated as of
January 3, 1996.
Exhibit 2.3 Amendment to Exclusive World-Wide License and Option to Sell and
Option to Purchase Proprietary Rights entered into as of May 9,
1996, between International Jensen Incorporated and Recoton
Corporation.
Exhibit 2.4 Amended and Restated Escrow Agreement made as of May 1, 1996,
between International Jensen Incorporated and Recoton
Corporation, but executed on May 9, 1996.
Exhibit 2.5 Agreement dated as of May 9, 1996, between Recoton Corporation
and International Jensen Incorporated.
Exhibit 99.1 International Jensen Incorporated Press Release dated May 10,
1996.
Exhibit 99.2 International Jensen Incorporated Press Release dated May 14,
1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERNATIONAL JENSEN INCORPORATED
Date: May 16, 1996 By: /s/ Marc T. Tanenberg
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Marc T. Tanenberg
Vice President Finance and Chief
Financial Officer
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INDEX TO EXHIBITS
2.1 Third Amended and Restated Agreement and Plan of Merger
among International Jensen Incorporated, Recoton
Corporation and RC Acquisition Sub, Inc. dated as of
January 3, 1996.
2.2 Second Amended and Restated Agreement for Purchase and
Sale of the Assets of the OEM Business of International
Jensen Incorporated by and to IJI Acquisition Corp.
dated as of January 3, 1996.
2.3 Amendment to Exclusive World-Wide License and Option to
Sell and Option to Purchase Proprietary Rights entered
into as of May 9, 1996, between International Jensen
Incorporated and Recoton Corporation.
2.4 Amended and Restated Escrow Agreement made as of May 1,
1996 between International Jensen Incorporated and
Recoton Corporation.
2.5 Agreement dated as of May 9, 1996, between Recoton
Corporation and International Jensen Incorporated.
99.1 International Jensen Incorporated Press Release dated
May 10, 1996.
99.2 International Jensen Incorporated Press Release dated
May 14, 1996.
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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").
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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
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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
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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
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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.
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(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
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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.
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(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.
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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
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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
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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.
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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
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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
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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
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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.
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(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.
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(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 Section 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.
Section 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. Section 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.
Section 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. Section 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)
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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
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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.
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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
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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.
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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;
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(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;
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(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)
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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.
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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
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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;
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(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.
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Section 8.3 CONDITIONS TO OBLIGATION OF RECOTON AND ACQUISITION SUB TO
EFFECT THE MERGER. The obligation of Recoton and Acquisition Sub to effect the
Merger shall be subject to the fulfillment at or prior to the Effective Time of
the additional following conditions:
(a) Jensen shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior
to the Effective Time and the representations and warranties of Jensen
contained in this Agreement shall be true and correct in all material
respects on and as of the date of this Agreement and on and as of the
Effective Time as if made on and as of such date, except as contemplated or
permitted by this Agreement, and Recoton and Acquisition Sub shall have
received a Certificate of the President and the Chief Financial Officer of
Jensen to that effect;
(b) Recoton and Acquisition Sub shall have received an opinion
from Vedder, Price, Kaufman & Kammholz, counsel to Jensen, or other counsel
reasonably acceptable to Recoton and Acquisition Sub, dated the Closing
Date, substantially in the form set forth in Exhibit 8.3(b);
(c) The Affiliate Agreements required to be delivered to
Acquisition Sub pursuant to Section 7.4 shall have been furnished as
required by Section 7.4;
(d) Recoton and Acquisition Sub shall have received the letters
of Coopers & Lybrand, LLP contemplated by Section 7.9;
(e) Since the date hereof, no Jensen Material Adverse Effect
shall have occurred;
(f) The closing of the sale of the assets of the Original
Equipment Business pursuant to the OE Agreement shall have occurred prior
to the Effective Time;
(g) Recoton shall not have elected to terminate due to the
results of the inspections or tests performed in accordance with Section
6.2;
(h) The number of Recoton Common Shares to be issued in the
Merger shall not equal or exceed 20% of the Recoton Common Shares
outstanding prior to the Effective Time; and
(i) The number of Dissenting Shares shall not exceed 10% of the
Jensen Common Stock outstanding.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
stockholders of Jensen or the shareholders of Acquisition Sub:
(a) by mutual written consent of Acquisition Sub and Jensen; or
(b) by either Acquisition Sub or Jensen if (i) the Merger shall
not have been consummated on or before July 15, 1996 or such later date as
may be designated by Recoton (but in no event later
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than December 31, 1996) (the "Termination Date"), (ii) the
requisite vote of the stockholders of Jensen to approve this
Agreement pursuant to Section 8.1(a) and the transactions
contemplated hereby shall not be obtained at the Jensen
Stockholders' Meeting (including, such of the proposals enumerated
in Section 4.21 as shall be required in order to effect the
Merger), or any adjournments thereof, (iii) any governmental or
regulatory body, the consent of which is a condition to the
obligations of Acquisition Sub and Jensen to consummate the
transactions contemplated hereby, shall have determined not to
grant its consent and any appeals of such determination shall have
been taken and have been unsuccessful or such body shall have
imposed conditions or limitations on its consent that would have a
material adverse effect on the prospects of the Surviving
Corporation and any appeals from such imposition shall have been
taken and have been unsuccessful, or (iv) any court of competent
jurisdiction in the United States, or any state or any country in
which there is a subsidiary of Jensen, shall have issued an order,
judgment or decree (other than a temporary restraining order)
restraining, enjoining or otherwise prohibiting the Merger and such
order, judgment or decree shall have become final and
nonappealable; or
(c) by Acquisition Sub (i) if the Board of Directors of Jensen
shall have withdrawn or modified in a manner adverse to Acquisition Sub its
approval or recommendation of the Merger, this Agreement or the
transactions contemplated hereby or shall have failed to reaffirm such
approval or recommendation upon Acquisition Sub's request, or shall have
resolved to do any of the foregoing, (ii) if Jensen or any of the other
persons or entities described in Section 6.1(c) or 6.1(h) shall take any of
the actions that would be proscribed by Section 6.1(c) or 6.1(h) but for
the PROVISO therein allowing certain actions to be taken if required by
fiduciary duty upon advice of counsel, (iii) if there has been (x) a
material breach of any covenant or agreement herein on the part of Jensen
which has not been cured or adequate assurance of cure given, in either
case within 15 business days following receipt of notice of such breach, or
(y) a representation or warranty of Jensen herein is or becomes untrue or
incorrect in a material respect which representation or warranty by its
nature cannot be made true and correct in all material respects prior to
the Termination Date or is not made true and correct prior to the
Termination Date, (iv) if (x) Jensen enters into an agreement with any
corporation, partnership, person, other entity or group (as defined in
Section 13(d)(3) of the Exchange Act) other than Recoton or Acquisition Sub
whereby such entity or group would directly or indirectly acquire all or
any substantial part of the assets or capital stock of Jensen, whether by
merger, share exchange, purchase of assets, consolidation, tender offer or
otherwise (other than with regard to the Original Equipment Business), (y)
any third party commences a tender or exchange offer for 25% or more of
Jensen's Common Stock and Jensen's Board of Directors does not recommend,
or ceases to recommend, to Jensen's stockholders that they reject such
offer, or (v) if any third party commences a tender or exchange offer for
25% or more of Jensen's Common Stock and shares have been tendered thereto
in an amount equal to the minimum amount for which the third party
conditioned such tender or exchange; or
(d) by Jensen if there has been (x) a material breach of any
covenant or agreement herein on the part of Acquisition Sub or Recoton
which has not been cured or adequate assurance of cure given, in either
case within 15 business days following receipt of notice of such breach or
(y) a representation or warranty of Recoton or Acquisition Sub herein is or
becomes untrue or incorrect in a material respect which representation or
warranty by its nature cannot be made true and correct in all material
respects prior to the Termination Date or is not made true and correct
prior to the Termination Date; or
(e) automatically, if the Jensen Board of Directors shall
recommend a Jensen Acquisition Transaction or authorize or approve the
entering into by Jensen of a Jensen Acquisition Transaction.
Notwithstanding the foregoing, if prior to the Closing Date, (i) any preliminary
or permanent injunction or other order or decree by any federal or state court
which prevents the consummation of the Merger shall
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have been issued, and remains in effect (each party agreeing to use all
reasonable efforts to have any such injunction, order or decree lifted); (ii)
any action shall have been taken, or any statute, rule or regulation shall
have been enacted, by any state, federal or foreign government or
governmental agency which would prevent the consummation of the Merger or
that would have a material adverse effect on the prospects of the Surviving
Corporation; or (iii) any governmental consents and approvals legally
required for the consummation of the Merger and the transactions contemplated
hereby, including, without limitation, approval (if required) by the DOJ, FTC
and the SEC (including the effectiveness of the Registration Statement and
the clearance of the Proxy Statement), shall not have been obtained or not be
in effect at the Effective Time on terms and conditions that would not have a
material adverse effect on the prospects of the Surviving Corporation, the
Termination Date shall be extended at the option of any party hereto for a
period of up to 120 days. If, at the end of such 120-day period, the matters
referred to in (i), (ii) or (iii) shall not have been satisfied to each
party's reasonable satisfaction, either party may terminate this Agreement
pursuant to the applicable provisions of this Section 9.1.
Section 9.2 FEES AND EXPENSES.
(a) GENERAL. In the event of termination of this Agreement by either
Recoton, Acquisition Sub or Jensen as provided in Section 9.1 or any breach of
any party or any failure of condition giving rise to a right to terminate this
Agreement, there shall be no liability on the part of either Jensen or Recoton
or Acquisition Sub or their respective officers or directors except as set forth
in this Section 9.2 or in Section 7.1(c). Language appearing in brackets in this
Section 9.2 is for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. The agreements contained in this
Section 9.2 are an integral part of the transactions contemplated by this
Agreement and constitute liquidated damages or other appropriate payments and
not a penalty. If a party fails promptly pay to perform in accordance with
Article IX, such party shall pay the costs and expenses (including legal fees
and expenses) of the other party in connection with any action, including the
filing of any lawsuit or other legal action, taken to enforce the terms of this
Agreement. Except as otherwise set forth herein, payments under this Section
shall be made within five business days of, as applicable, termination of this
Agreement or the demand for reimbursement of Expenses.
(b) JENSEN PAYMENT OF BREAK-UP FEE. Jensen shall promptly, but in no
event later than five business days after the first to occur of any of the
following clauses (i) through (iii) (the "Payment Date"), pay to Recoton a fee
of $1,500,000, such amount to be paid on the Payment Date in cash in immediately
available funds by wire transfer to an account designated by Recoton if:
(i) the Agreement terminates pursuant to Section 9.1(e) [RECOMMENDING
OF A JENSEN ACQUISITION TRANSACTION];
(ii) either Acquisition Sub or Jensen shall become entitled to
terminate, and shall terminate, this Agreement pursuant to (1) Section
9.1(b)(i) [FAILURE TO CLOSE BY THE TERMINATION DATE] because of a failure
to satisfy any of the conditions set forth in Sections 8.3(a)(as to the
receipt of the Officer's Certificate only), 8.3(b), 8.3(c), or 8.3(d)
[CONDITIONS REQUIRING DELIVERY OF OFFICER'S CERTIFICATES, LEGAL OPINION,
COMFORT LETTER, AFFILIATE AGREEMENTS] provided that Jensen did not
diligently seek to fulfill or cause others to fulfill these conditions; (2)
Section 9.1(b)(i) [FAILURE TO CLOSE BY THE TERMINATION DATE] because of a
failure to satisfy the conditions set forth in Section 8.3(f) [OE SALE]
provided that this condition was not satisfied because IJI exercised a
right to terminate the OE Agreement because of a willful and material
breach of the OE Agreement by Jensen; or (3) Section 9.1(b)(ii) [FAILURE OF
JENSEN STOCKHOLDERS TO APPROVE THE MERGER AT THE STOCKHOLDERS' MEETING]
provided that contemporaneous with the Jensen Stockholders' Meeting there
shall be outstanding a competing Jensen Acquisition Transaction proposed by
a third party other than Recoton or Acquisition Sub; or
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(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:
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(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
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did not diligently seek to fulfill or cause other to fulfill these conditions;
(ii) Section 9.1(b)(i) [FAILURE TO CLOSE BY THE TERMINATION DATE] because of a
failure to satisfy any of the conditions set forth in Section 8.2(d) [DELIVERY
OF CASH/STOCK TO EXCHANGE FUND]; (iii) Section 9.1(d)(x) [MATERIAL BREACH OF
COVENANT OR AGREEMENT], including, but not limited to, a failure to proceed
diligently to obtain approval of the Registration Statement by the SEC and
failure to proceed diligently to seek the lifting of any injunction barring
completion of the Merger provided that the breach was willful; or (iv) Section
9.1(b)(i) [FAILURE TO CLOSE BY THE TERMINATION DATE] because of a failure to
diligently seek to obtain Nasdaq listing;
(f) RECOTON'S PAYMENT OF JENSEN EXPENSES. Recoton shall promptly, but in
no event later than five business days after the first to occur of any of the
events enumerated in (A) paragraph (e) or in (B) any of the following clauses
(i) through (ii) (such day of required payment being referred to as the "Payment
Date"), pay to Jensen an amount equal to Jensen's Expenses not to exceed
$2,500,000, such amount to be paid on the Payment Date in cash in immediately
available funds by wire transfer to an account designated by Jensen, if: (i)
either Acquisition Sub or Jensen shall become entitled to terminate, and shall
terminate, this Agreement pursuant to Section 9.1(b)(i) [FAILURE TO CLOSE BY THE
TERMINATION DATE] because of a failure to satisfy any of the conditions set
forth in Sections 8.2(b) or 8.2(c) [CONDITIONS REQUIRING DELIVERY OF LEGAL
OPINION, COMFORT LETTER] provided that Recoton diligently sought to fulfill or
cause others to fulfill these conditions; or (ii) either Acquisition Sub or
Jensen shall become entitled to terminate, and shall terminate, this Agreement
pursuant to Section 9.1(b)(i) [FAILURE TO CLOSE BY THE TERMINATION DATE]because
of a failure to satisfy the conditions set forth in Section 8.1(b) [FAILURE TO
OBTAIN NASDAQ REGISTRATION];
(g) DEFINITION OF EXPENSES, ETC. "Expenses" as used in this Agreement
shall include all reasonable out-of-pocket expenses (including without
limitation all fees and expenses of counsel, accountants, investment bankers,
experts and consultants to a party hereto and its affiliates) incurred by a
party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement and all of
the matters and agreements referred to herein or related hereto, the
preparation, printing, filing and mailing of the Registration Statement and the
Proxy Statement, the solicitation of stockholder approvals, defending or
prosecuting any litigation or other legal proceedings related to or arising out
of the transactions contemplated herein and all other matters related to the
closing of the transactions contemplated herein. Whenever a party shall be
obligated to pay the other party's Expenses, such payment shall be made within
five business days after the presentment of a demand for reimbursement, which
demands may be made up to two months after the event giving rise to the payment
of costs and expenses; PROVIDED, HOWEVER, that no expense payments need be made
once expense payments to such party equal to $2,500,000 have been made.
Section 9.3 AMENDMENT. This Agreement may be amended by the parties
hereto, at any time before or after approval hereof by the stockholders of
Jensen, but, after any such approval, no amendment shall be made which (a)
changes the procedure pursuant to which the Exchange Ratio (or the Principal
Stockholders Exchange Ratio) is calculated or the Per Share Cash Amount (or the
Principal Stockholders Per Share Cash Amount) or (b) changes any of the other
principal terms of this Agreement, in each case, without the further approval of
such stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
Section 9.4 WAIVER. At any time prior to the Effective Time, the parties
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein; PROVIDED, HOWEVER, that waiver of compliance with
any agreements or conditions herein shall not limit the parties' obligations to
comply with all other agreements or conditions herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid if set
forth in an instrument in writing signed on behalf of the parties.
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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
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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
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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]
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<PAGE>
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
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<PAGE>
SECOND AMENDED AND RESTATED
AGREEMENT FOR PURCHASE AND SALE
OF THE ASSETS OF THE OEM BUSINESS
OF
INTERNATIONAL JENSEN INCORPORATED
("SELLER")
BY AND TO
IJI ACQUISITION CORP.
("PURCHASER")
<PAGE>
SECOND AMENDED AND RESTATED
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
THIS SECOND AMENDED AND RESTATED AGREEMENT (this "Agreement"), dated as of
the 3rd day of January, 1996, is made by and between INTERNATIONAL JENSEN
INCORPORATED, a Delaware corporation (hereinafter referred to as "Seller"),
FUJICONE, INC., a Delaware corporation (hereinafter referred to as "FujiCone"),
and IJI ACQUISITION CORP., an Illinois corporation (hereinafter referred to as
"Purchaser").
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 PURCHASE AND SALE. In consideration of the purchase price and the
assumption by Purchaser of the "Assumed Liabilities" as defined in Section 1.4,
and subject to the terms and conditions set forth in this Agreement, Seller will
sell to Purchaser and Purchaser will purchase from Seller, at the Closing Date
(as hereinafter defined), all or substantially all of the assets of Seller's
original equipment manufacturer's business (the "OEM Business") as a going
concern, as the same are more specifically set forth in Section 1.2 hereof. For
purposes of this Agreement, the OEM Business consists of the business associated
with and the assets comprising (i) the loudspeaker assembly plant facility and
operations in Lumberton, North Carolina, (ii) the metal and plastic parts
manufacturing/home loudspeaker assembly plant facility and operations in
Punxsutawney, Pennsylvania, (iii) the magnet manufacturing and general offices
of the General Magnetic division in Dallas, Texas, (iv) the cone manufacturing
and general offices of FujiCone in Clinton, North Carolina, (v) the OEM
value-add facility in Livonia, Michigan, (vi) the Bingham Farms, Michigan sales
office, and (vii) the original equipment manufacturing portion of the
engineering, research and development center and distribution facility in
Schiller Park, Illinois (but only to the extent such operation can be
bifurcated).
1.2 PURCHASED ASSETS. The assets to be purchased are all of Seller's
assets, properties and rights (real and personal, tangible and intangible) to
the extent owned or used in the conduct of the OEM Business on November 30, 1995
(the "Financial Statement Date") and all of Seller's assets, properties and
rights (real and personal, tangible and intangible) acquired after said date to
the extent owned by Seller or used by Seller in the conduct of the OEM Business
on the Closing Date except for those assets which have since been sold,
transferred or disposed of in the ordinary and regular course of business and
except for the "Excluded Assets" (as defined in Section 1.6) (hereinafter
collectively referred to as the "Purchased Assets"). To the extent assets owned
or used by Seller are used in both the conduct of the OEM Business and other
businesses of Seller ("Joint Use Property"), the parties shall endeavor to agree
on an appropriate bifurcation or other allocation of such Joint Use Property; to
the extent that the parties cannot agree on such bifurcation or allocation by
the Closing Date, Seller shall retain such Joint Use Property subject to
Purchaser's right of reasonable access and/or use. The Purchased Assets shall
include, without limitation, the following (subject, however, to the provisions
set forth above regarding Joint Use Property) at the Closing Date:
<PAGE>
1.2.1 All of Seller's right, title and interest (including
leasehold interests as tenant, if any) in the lands, buildings and any and all
improvements thereon pertaining to the OEM Business to the extent noted in
Exhibit 1.2.1 hereto.
1.2.2 All of Seller's machinery, equipment, patterns, tools, dies,
furniture, office equipment, vehicles, fixtures, telephone numbers (toll-free
and others) and other personal property and all of Seller's fixed assets
pertaining to the OEM Business. A schedule thereof as of the Financial
Statement Date is set forth on Exhibit 1.2.2.
1.2.3 All of Seller's accounts receivable and all other
receivables of any other kind pertaining to the OEM Business. A schedule
thereof as of the Financial Statement Date is set forth on Exhibit 1.2.3.
1.2.4 All of FujiCone's assets, properties and rights (real and
personal, tangible and intangible) to the extent owned by FujiCone in the
conduct of its business as of the Financial Statement Date and all of FujiCone's
assets, properties and rights (real and personal, tangible and intangible)
acquired after said date to the extent owned by FujiCone or used by FujiCone in
the conduct of its business on the Closing Date except for those assets which
have since been sold, transferred or disposed of in the ordinary and regular
course of business and except for the "Excluded Assets" (as defined in
Section 1.6), but including, without limitation, as assets to be transferred all
of FujiCone's interests and rights to the FujiCone name and any common law
and/or registered trade names, trademarks and service marks relating or
pertaining to the FujiCone name.
1.2.5 All of Seller's books, financial and business records,
insurance policies and any claims and credits thereunder pertaining exclusively
to the OEM Business. Seller shall retain ownership of all books, financial and
business records, insurance policies and any claims and credits thereunder to
the extent not exclusively pertaining to the OEM Business, which shall be held
for the benefit of each of Seller and Purchaser as their interests may appear
and as to which Seller shall give Purchaser reasonable access.
1.2.6 All inventories and other supplies pertaining to the OEM
Business on hand or at third party premises or in transit, including raw
materials, work in process and finished goods, and including any rights of
Seller to warranties received from suppliers. A schedule thereof as of the
Financial Statement Date is set forth on Exhibit 1.2.6.
1.2.7 All of Seller's interests and rights to the corporate name
"International Jensen Incorporated" and the trade name "IJI" (for purposes of
corporate identification only), patents, copyrights, tradenames, service marks,
product designations, trade secrets, formulae, processes, know-how and other
intellectual property to the extent pertaining exclusively to the OEM Business
and set forth on Exhibit 1.2.7 ("Proprietary Rights") and all registrations,
applications, assignments, amendments, research, development, updates and
modifications pertaining thereto and all drawings, art work, designs, printing
plates, dies, molds, samples and the like exclusively related thereto. To the
extent the Proprietary Rights are currently used for both the OEM Business and
other businesses of Seller, Seller shall retain ownership of such
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<PAGE>
rights (other than ownership of the corporate name International Jensen
Incorporated and the IJI trade name for purposes of corporate identification)
subject to a perpetual nonassignable royalty-free worldwide license to
Purchaser; provided, however, that Seller's trademarks shall be licensed to
Purchaser as provided in Section 6.8.
1.2.8 All of Seller's right, title and interest in franchises,
licenses, permits, options and any inventions, developments and ideas to the
extent pertaining to the OEM Business and to the extent assignable or
sublicenseable. If such rights are not assignable or licensable, the parties
shall cooperate to effect an appropriate written agreement regarding the sharing
of such rights. A schedule of such rights, whether assignable or
sublicenseable, as of the Financial Statement Date is set forth on
Exhibit 1.2.8.
1.2.9 All of Seller's rights and privileges arising from Seller's
unshipped orders, prepaid expenses (including all insurance prepayments and
rights to refunds thereof), prepayments, deposits, customer contracts, customer
lists, outstanding offers, sales records, advertising materials, and all
agreements for the sale, purchase or lease of goods or services, and all other
contracts, agreements, assets and things of value beneficially owned as of the
date of this Agreement or acquired by Seller at or before the Closing Date,
whether tangible or intangible, real or personal, inchoate, partial or complete,
fixed or contingent, of every kind and description and wherever situated to the
extent pertaining to the OEM Business.
1.2.10 All of Seller's right, title and interest in and to the
assets comprising Seller's travel agency business.
1.3 PURCHASE PRICE.
(a) Subject to the terms and conditions of this Agreement, the
adjustments set forth herein and the transaction described in Section 1.8
hereof, if any, Purchaser agrees to pay to Seller at the Closing an aggregate
purchase price of $16,537,000, as it may be modified pursuant to this Agreement
(the "Purchase Price") by delivery of a certified or cashier's check or funds by
wire transfer to Seller's account.
(b) The Purchase Price shall be increased or decreased, as the case
may be, on a dollar for dollar basis, to the extent that on the Closing Date the
"Pro Forma Shaw Payment," calculated utilizing the most recently available
Return on Investment Capital ("ROIC") balance sheet in consideration of the
transaction contemplated in Section 1.8, and in a manner consistent with
Exhibit 1.3 attached hereto is more or less than $16,537,000. The "Pro Forma
Shaw Payment" is the amount deemed to be due by Purchaser to Seller as of the
Closing Date. If the "Pro Forma Shaw Payment" exceeds $16,537,000, then
Purchaser shall have until thirty (30) days after the Closing to pay that
portion of the Purchase Price which exceeds $16,537,000. If the "Pro Forma Shaw
Payment" is less than $16,537,000, then Purchaser shall pay such lesser amount
on the Closing Date. Sixty (60) days after the Closing, the parties shall
prepare an actual ROIC balance sheet as of the Closing Date which shall
calculate the final actual Purchase Price ("Final Purchase Price") in
consideration of the transaction contemplated in Section 1.8, if any, and in a
manner consistent with Exhibit 1.3.
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<PAGE>
Any payments due either party after the preparation of the actual ROIC
balance sheet shall be made within thirty (30) days after the actual
calculation of the amount due. If the parties disagree as to the calculation
of the Final Purchase Price based upon the ROIC balance sheet as of the
Closing Date, each party shall submit a calculation of the Final Purchase
Price with supporting documentation to an accounting firm mutually acceptable
to the parties (the "accounting firm"). The accounting firm shall determine
the amount of the Final Purchase Price in accordance with the terms of this
Section 1.3 and Exhibit 1.3. The determination of the Final Purchase Price
by the accounting firm shall be made within ninety (90) days of submission of
the calculation to it and shall be binding upon the parties. Any payments
due to a party after the determination of the accounting firm shall be made
within thirty (30) days after such determination. The cost of such
accounting firm will be shared equally by the parties.
The "Pro Forma Shaw Payment" and the Final Purchase Price shall be
calculated in accordance with and in a manner consistent with the ROIC balance
sheet set forth on Exhibit 1.3. As set forth on Exhibit 1.3, the "Pro Forma
Shaw Payment" and the Final Purchase Price shall be calculated as follows:
(i) ROIC Equity (as that term is defined and calculated in a manner consistent
with Exhibit 1.3) for the OEM Business (plus or minus, as applicable, accrued
Seller corporate accounts attributable to the operations of the OEM Business);
less (ii) a discount of $10,063,000. For purposes of illustration and guidance,
Exhibit 1.3 sets forth the calculation of the "Pro Forma Shaw Payment" for the
months ended 10/95, 11/95, 12/95, 1/96, 2/96 and 3/96. Seller represents that
the "Pro Forma Shaw Payment" for each month-end as set forth on Exhibit 1.3 is
true and correct and based on such representation, the parties agree that the
"Pro Forma Shaw Payment" shall be based on the most recent available ROIC
balance sheet and the Final Purchase Price calculation shall be made on the
basis of the actual ROIC balance sheet on the day of Closing in a manner
consistent with Exhibit 1.3.
(c) In the event the parties elect to sell the accounts receivable
for the OEM Business as described in Section 1.8 hereof, the parties shall
calculate the "Pro Forma Shaw Payment" and the "Final Purchase Price" in a
manner consistent with subsection (b) above, provided that the "Pro Forma Shaw
Payment" shall be reduced by the face amount of the accounts receivable sold to
a third party. In addition, the "Final Purchase Price" shall be increased by
any amounts paid by Seller to the purchaser of the accounts receivable
subsequent to the sale of such accounts receivable, pursuant to the terms of
that transaction.
1.4 ASSUMPTION OF LIABILITIES. Provided that the transactions herein
contemplated are consummated, and as a precondition of the sale of the Purchased
Assets to Purchaser, Purchaser will assume and discharge, and will indemnify
Seller against all liabilities (whether known or unknown, matured or unmatured,
absolute or contingent, or otherwise) associated with, pertaining to, arising
out of, connected with or relating to the conduct of the OEM Business or the
Purchased Assets other than the Excluded Liabilities listed in Section 1.5 (the
"Assumed Liabilities"), including the following:
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<PAGE>
(a) all liabilities of Seller pertaining to the OEM Business shown in
the 1995 Seller Financial Statements (as defined in Section 2.5), except for
federal, state and local income taxes of Seller (including FujiCone) which shall
be Excluded Liabilities;
(b) any products liability (related to OEM Business products sold to
customers other than those customers in the markets listed in Paragraph 1(a) of
Exhibit 6.7 prior to the Closing), liability arising from or relating to
Environmental Laws (as defined herein) or other environmental matters, liability
for violations of laws (including customs laws), liability for termination of
employees working exclusively or primarily for the OEM Business prior to or
after the Closing (provided, however, that the outstanding balance of the
severance payments to be made to Donald J. Cowie and James B. Ross at Closing
shall be allocated between Seller and Purchaser in proportion to the percentage
of sales of the OEM Business and the non-OEM Business for the fiscal year ended
February 29, 1996 (the "Cowie/Ross Severance Payment")), or any other
liabilities in each case pertaining to, associated with, arising out of,
connected with or related to the conduct of the OEM Business (including acts or
omissions) prior to and after the Closing Date; and
(c) liabilities and obligations incurred by Seller in the ordinary
course of the OEM Business prior to the Financial Statement Date, between the
Financial Statement Date and the Closing Date and after the Closing Date under
leases, contracts, purchase orders, sales commitments, and outstanding offers
for purchase or sale or guarantees.
1.5 EXCLUDED LIABILITIES. Purchaser shall not be responsible for the
following liabilities (whether known or unknown, matured or unmatured, absolute
or contingent, or otherwise) (the "Excluded Liabilities"):
(a) liabilities incurred by Seller and FujiCone in connection with
this Agreement and the transactions contemplated herein as set forth in
Section 12.3(a);
(b) any liability of Seller insured against to the extent such
liability is paid by an insurer and does not thereby result in an increase in
Seller's premiums;
(c) any liability or obligation of Seller with respect to any
Excluded Asset;
(d) any federal, state or local income tax liability of Seller and
FujiCone;
(e) any liability or obligation of Seller pertaining to, associated
with, arising out of, connected with or related to any of Seller's employee
benefit plans (other than the FujiCone benefit plans);
(f) Seller's share of the Cowie/Ross Severance Payment;
(g) Note Agreement by and between Seller and Connecticut Mutual Life
Insurance Company; and
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<PAGE>
(h) Credit Agreement by and between Seller and Harris Trust and
Savings Bank.
1.6 EXCLUDED ASSETS. The term "Excluded Assets" shall mean:
(a) cash and cash equivalents pertaining to Seller's OEM Business;
(b) Leases for the leased facilities located in Lincolnshire,
Illinois and Schiller Park, Illinois;
(c) any right, title and interest in and to any of Seller's
registered trademarks and other intellectual property not pertaining to the OEM
Business; and
(d) any other asset of Seller to the extent that it does not pertain
to Seller's OEM Business.
1.7 ALLOCATION OF THE PURCHASE PRICE. The Purchase Price shall be
attributed to the Purchased Assets according to their respective fair market
values as of the Closing in conformity with the applicable provisions of the
Internal Revenue Code of 1986, as amended, governing transactions of this type
as determined by mutual agreement of the parties on or before the Closing.
1.8 INDEPENDENT ACCOUNTS RECEIVABLE TRANSACTION. Notwithstanding anything
to the contrary contained in this Agreement, the parties shall have the right to
designate a purchaser for all or any portion of Seller's accounts receivable
related to the OEM Business at any time prior to the Closing, which accounts
receivable sale shall take place prior to or simultaneous with the Closing Date.
In the event a purchaser is designated to purchase all or any portion of
Seller's accounts receivable related to the OEM Business as provided in this
Section 1.8 and such purchase is consummated upon terms and conditions
acceptable to the parties, then: (i) those accounts receivable which are not
purchased by Purchaser shall not be "Purchased Assets," but shall be "Excluded
Assets" for all purposes of this Agreement, including, without limitation, the
provisions of Section 1.4 (Assumption of Liabilities) and Section 11.2
(Indemnification by Purchaser); and (ii) the "Pro Forma Shaw Payment" and the
Final Purchase Price shall be calculated in accordance with Section 1.3(c)
above.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser, as follows:
2.1 ORGANIZATION AND QUALIFICATION. Seller is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation and has the requisite
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corporate power and authority to own, lease and operate its assets and
properties and to carry on the OEM Business as it is now being conducted.
Seller is qualified to do the OEM Business and is in good standing in each
jurisdiction in which the properties owned, leased or operated by it or the
nature of the OEM Business 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 material adverse effect on the
OEM Business; (financial or other), results of operations or prospects of
Seller and its subsidiaries as related to the OEM Business, taken as a whole
(a "Seller Material Adverse Effect"). True and complete copies of Seller's
Certificate of Incorporation and By-Laws, as in effect on the date hereof,
including all amendments thereto, have heretofore been delivered to Purchaser.
2.2 TITLE AND RELATED MATTERS. Except as set forth in Section 2.2 of
Seller's Disclosure Schedule, Seller has good and marketable title to all of the
properties and assets owned or used in the conduct of the OEM Business whether
reflected in the Seller Financial Statements or acquired after the date thereof
(except properties sold or otherwise disposed of since the date thereof in the
ordinary course of business and consistent with past practices) including,
without limitation, the specific assets referred to in paragraphs (a), (b)
and (c) below, free and clear of all mortgages, security interests, liens,
pledges, claims, escrows, options, rights of first refusal, indentures,
easements, licenses, security agreements or other agreements, arrangements,
contracts, commitments, understandings, obligations, charges or encumbrances of
any kind or character, except as reflected in the 1995 Seller Financial
Statements. Seller owns or leases, directly or indirectly, all of such assets
and properties, and is a party to all licenses and other agreements, presently
used or necessary to carry on its OEM Business, and its OEM Business operations
as presently conducted.
(a) REAL PROPERTY. Seller does not currently have, and in the past
has not had, any interest (as owner, tenant or otherwise) in any real property
related to the OEM Business except as disclosed in Section 2.2(a) of Seller's
Disclosure Statement.
(b) PERSONAL PROPERTY. Seller has good and marketable title to all
the personal property and assets, tangible or intangible, related to the OEM
Business shown in the 1995 Seller Financial Statements, except to the extent
sold or disposed of in transactions entered into in the ordinary course of
business consistent with past practices since the Financial Statement Date. The
personal property related to the OEM Business in the aggregate is in good
condition and working order, and each individual item of such personal property
which would cost in excess of $10,000 to replace is in good condition and
working order. None of such assets are subject to any (i) contracts of sale or
lease, except contracts for the sale of inventory in the ordinary and regular
course of business; or (ii) security interests, encumbrances, liens or charges
of any kind or character, except as set forth in Section 2.2(a) of Seller's
Disclosure Statement. Except as set forth in Section 2.2(a) of Seller's
Disclosure Statement, there are no lease restrictions with respect to the
personal property leased by Seller related to the OEM Business.
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<PAGE>
(c) INVENTORIES. In addition to subsection (b) of this Section, the
inventories of Seller related to the OEM Business included in the Seller
Financial Statements, to be included on interim balance sheets provided pursuant
to Section 4.8 and owned by Seller on the Closing Date: (i) are valued with
respect to each category of inventory at the lower of cost (on a LIFO basis) or
market; and (ii) do not include any items which are below standard quality,
damaged or spoiled, obsolete or of a quality or quantity not usable or saleable
in the normal course of the OEM Business as currently conducted within normal
inventory "turn" experience, the value of which has not been fully written down,
or with respect to which adequate reserves have not been provided. Seller has
the proper amount of inventories to conduct the OEM Business consistent with
past practices. There has not been since the Financial Statement Date any
provision for markdowns or shrinkage with respect to inventories of the OEM
Business other than in the ordinary and regular course of business consistent
with past activities or as otherwise consented to by Purchaser.
(d) NO DISPOSITION OF ASSETS. There has not been since the Financial
Statement Date any sale, lease or any other disposition or distribution by
Seller of any of the assets or properties of the OEM Business and any other
assets of the OEM Business now or hereafter owned by Seller, except transactions
in the ordinary and regular course of business consistent with past practices or
as otherwise consented to by Purchaser.
2.3 SUBSIDIARIES. FujiCone 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. FujiCone 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 Seller Material Adverse
Effect. Except as set forth in Section 2.3 of Seller's Disclosure Schedule or
in Seller's Annual Report on Form 10-K for the year ended February 28, 1995 or
the exhibits and schedules thereto (the "Seller 10-K") and, together with any
reports filed by Seller with the Securities and Exchange Commission (the "SEC")
under the Securities Exchange Act of 1934, as amended (the "Exchange Act") after
the Seller 10-K and prior to the date of this Agreement (the "Seller 1995
Reports"), Seller owns directly or indirectly all of the issued and outstanding
shares of the capital stock of FujiCone. Except as set forth in Section 2.3 of
Seller's Disclosure Schedule or in the Seller 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 Seller,
including any right of conversion or exchange under any outstanding security,
instrument or agreement. Section 2.3 of Seller's Disclosure Schedule sets forth
a list of all material corporations, partnerships, joint ventures and other
business entities in which Seller or any of its subsidiaries directly or
indirectly owns an interest which are involved in the OEM Business, and such
subsidiaries' direct and indirect share, partnership or other ownership interest
of each such entity. FujiCone
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is the only subsidiary of Seller which, directly or indirectly, conducts or
is involved in the OEM Business.
2.4 AUTHORITY; NON-CONTRAVENTION; APPROVALS.
(a) Seller has full corporate power and authority to enter into this
Agreement and, subject to Seller Stockholders' Approval (as defined in
Section 2.21) and the Seller Required Approvals (as defined in Section 2.4(c)),
to consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation by Seller of the transactions
contemplated hereby have been duly authorized by Seller's Board of Directors,
and no other corporate proceedings on the part of Seller are necessary to
authorize the execution and delivery of this Agreement and the consummation by
Seller of the transactions contemplated hereby, except for the Seller
Stockholders' Approval and the obtaining of the Seller Required Approvals. This
Agreement has been duly and validly executed and delivered by Seller and
constitutes a valid and legally binding agreement of Seller enforceable against
it in accordance with its terms.
(b) Except as set forth in Section 2.4(b) of Seller's Disclosure
Schedule, the execution and delivery of this Agreement by Seller does not, and
the consummation by Seller 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 of 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 Seller or any of its
subsidiaries under any of the terms, conditions or provisions of (i) the
respective charters or By-Laws of Seller or any of its subsidiaries,
(ii) subject to obtaining the Seller Required Approvals and the receipt of the
Seller Stockholders' Approval, any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any court or
governmental authority applicable to Seller 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 Seller
or any of its subsidiaries is now a party or by which Seller 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 Seller Material Adverse Effect.
(c) Except for the filing of the Proxy Statement (as hereinafter
defined) with the SEC pursuant to the Securities Exchange Act of 1934 (the
"Exchange Act") (the "Seller Required Approval"), 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 Seller or the consummation by Seller of the
transactions contemplated hereby.
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2.5 REPORTS AND FINANCIAL STATEMENTS. Since February 28, 1995, Seller 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
Seller'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. Seller has previously delivered to Purchaser true and
complete copies of its (a) Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q, and Immediate Reports on Form 8-K filed by Seller 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, (c) all
other reports or registration statements filed by Seller with the SEC from
February 28, 1992 until the date hereof (collectively, the "Seller SEC
Reports"), and (d) the audited consolidated financial statements of Seller 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 Seller
Financial Statements") (collectively the "1995 Seller Financial Statements").
As of their respective dates, the Seller SEC Reports and the 1995 Seller
Financial Statements 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 financial statements of Seller included in
the Seller SEC Reports and the 1995 Seller Financial Statements (collectively,
the "Seller Financial Statements") fairly represent the financial position of
Seller and its subsidiaries related to the OEM Business 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 the normal year-end
and audit adjustments and any other adjustments described therein.
2.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
Section 2.6 of Seller's Disclosure Schedule or in the Seller 1995 Reports,
neither Seller nor any of its subsidiaries had at February 28, 1995, or has
incurred since that date, any liabilities or obligations related to the OEM
Business (whether absolute, accrued, contingent or otherwise) of any nature,
except liabilities, obligations or contingencies (a) which are accrued or
reserved against in the 1995 Seller 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 Seller Material
Adverse Effect or (ii) have been discharged or paid in full prior to the date
hereof.
2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Section 2.7 of Seller's Disclosure Schedule or in the Seller 1995 Reports, since
February 28, 1995 there has not been any material adverse change in the OEM
Business (including, without limitation, any
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actual or threatened loss of significant customers or any cancellation or
threatened cancellation of any orders with an aggregate value of $500,000 or
more), operations, properties, assets, liabilities, condition (financial or
other), results of operations or prospects of Seller and its subsidiaries,
taken as a whole, and Seller and its subsidiaries have in all material
respects conducted the OEM Business in the ordinary course consistent with
past practice.
2.8 LITIGATION. Except as disclosed in the Seller 1995 Reports, the 1995
Seller Financial Statements, or Section 2.8 of Seller's Disclosure Schedule,
(a) there are no claims, suits, actions or proceedings pending or, to the
knowledge of Seller, threatened, nor to the knowledge of Seller are there any
investigations or reviews pending or threatened, against, relating to or
affecting Seller or any of its subsidiaries related to the OEM Business, which,
if adversely determined, would have a Seller Material Adverse Effect; (b) there
have not been any developments since the date of the Seller 10-K with respect to
such claims, suits, actions, proceedings, investigations or reviews which,
individually or in the aggregate, may have a Seller Material Adverse Effect; and
(c) except as contemplated by the Seller Required Approvals, neither Seller 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 Seller Material Adverse
Effect.
2.9 PROXY STATEMENT. The proxy statement to be distributed in connection
with the Seller stockholders' meeting (the "Proxy Statement") will not at the
time of the mailing of the Proxy Statement and any amendment or supplement
thereto, and at the time of the Seller 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 Seller 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 Seller with respect to information supplied by
Purchaser specifically for inclusion in the Proxy Statement.
2.10 NO VIOLATION OF LAW. Except as set forth in Section 2.10 of Seller's
Disclosure Schedule, neither Seller nor any of its subsidiaries is in violation
of, or, to the knowledge of Seller, 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 Seller Material Adverse Effect. Seller and its subsidiaries have all
material permits, licenses, franchises and other governmental authorizations,
consents and approvals necessary to conduct the OEM Business as presently
conducted.
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2.11 COMPLIANCE WITH AGREEMENTS. Except as disclosed in the Seller 1995
Reports, the Seller 1995 Financial Statements or Section 2.11 of Seller's
Disclosure Schedule, Seller and FujiCone 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 Seller or
FujiCone or (ii) any contract, commitment, agreement, indenture, mortgage, loan
agreement, note, lease, bond, license, approval or other instrument to which
Seller 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 2.11 would have, in the
aggregate, a Seller Material Adverse Effect.
2.12 TAXES.
(a) Seller 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 Closing Date as related to the OEM
Business and the Purchased Assets 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 Closing Date.
The liabilities and reserves for taxes as related to the OEM Business and the
Purchased Assets reflected in the Seller balance sheets as of February 28, 1995,
contained in the Seller 10-K, are adequate to cover all taxes for any period
ending on or prior to February 28, 1995 and as of October 31, 1995, are adequate
to cover all taxes for any period ending on or prior to October 31, 1995.
Except as set forth in Section 2.12 of Seller's Disclosure Schedule, (i) there
are no material liens for taxes upon any property or asset of Seller or any
subsidiary thereof as related to the OEM Business and the Purchased Assets,
except for liens for taxes not yet due and any such liens for taxes shown on
such Section 2.12 of Seller's Disclosure Statement are being contested in good
faith through appropriate proceedings; (ii) Seller 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
the OEM Business in future periods; (iii) during the past 10 years neither
Seller 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 Seller or any of its subsidiaries related to Seller's OEM
Business and, any such deficiency or assessment shown on such Section 2.12 of
Seller's Disclosure Schedule has been paid or is being contested in good faith
through appropriate proceedings; (iv) the federal income tax returns for Seller
and its subsidiaries are not currently the subject of any audit by the Internal
Revenue Service (the "IRS"), 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 were related to the OEM business which have
not been resolved and fully paid and similar adjustments cannot reasonably be
expected to be made for subsequent periods; (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
Seller or any of its subsidiaries, and no power of attorney granted by either
Seller or any of its subsidiaries with respect to any taxes is currently in
force; and (vi) neither Seller nor any of its subsidiaries is a party to any
agreement
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providing for the allocation or sharing of taxes which are related to or in
any way connected to the OEM Business. Neither Seller nor any of its
subsidiaries has, with regard to any assets or property held related to the
OEM Business, acquired or to be acquired by any of them, which assets or
properties are related to the OEM Business, filed a consent, to the
application of Section 341(f) of the Code. Seller and its subsidiaries, in
accordance with Section 482 of the Code, properly conducted intercompany
pricing studies related to the OEM Business for the tax year ended February
28, 1995, and is conducting such study in a timely manner with respect to the
tax year ending February 28, 1996.
(b) The term "tax" shall include any tax, assessment, levy, impost,
duty, or withholding of any nature now or hereafter imposed by a governmental
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.
2.13 CUSTOMS. Except as set forth in the Seller 1995 Reports or in
Section 2.13 of Seller's Disclosure Schedule, Seller and its subsidiaries have
at all times been in compliance with all requirements administered and enforced
by the U.S. Customs Service related to the OEM Business, 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 Seller Material Adverse
Effect.
2.14 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Section 2.14 of Seller'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 Seller and its
subsidiaries related to the OEM Business, and, except as set forth in
Section 2.14(a) of Seller's Disclosure Schedule, neither Seller nor its
subsidiaries have any commitment to create any additional plan, contract or
arrangement related to the OEM Business or to amend any such plan, contract or
arrangement related to the OEM Business so as to increase benefits thereunder,
except as required under existing collective bargaining agreements.
Section 2.14(a) of Seller'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 Seller and its subsidiaries (the "Seller Plans"), other than Seller
Plans which are described in Seller 1995 Reports or the Proxy Statement for the
1995 Annual Meeting of Stockholders of Seller. 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 Seller and its
subsidiaries related to the OEM Business described in the Seller SEC Reports,
the Seller Plans listed on Section 2.14(a) of Seller's Disclosure Schedule,
except for any multiemployer plans, and all contracts relating thereto, or to
the funding thereof including, without limitation, all trust
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agreements, insurance contracts, investment management agreements,
subscription and participation agreements and recordkeeping agreements), each
as will be in effect on the Closing Date, has been provided to Purchaser. In
the case of any employee benefit plan, employment contract or other benefit
arrangement related to the OEM Business which is not in written form, an
accurate description of such plan, contract or arrangement as will be in
effect on the Closing Date, has been provided to Purchaser. 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 Seller 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, Seller
Plan, or benefit arrangement has been provided to Purchaser by Seller, and
there have been no material changes in the financial condition in the
respective plans, Seller Plans or benefit arrangements from that stated in
such annual report and actuarial reports.
(b) Except as disclosed in the Seller 1995 Reports or as set forth
in Section 2.14(b) of Seller'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 Seller Plans which, assuming that
the taxable period of such transaction expired as of the date hereof, could
subject Seller 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 Seller or any of its
subsidiaries under Title IV of ERISA with respect to any of the Seller 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 Seller under Section 4001 of ERISA or Section 414 of the Code
(a "Seller ERISA Affiliate"); (iii) all amounts which Seller or its
subsidiaries are required to pay as contributions to the Seller Plans have
been timely made or have been reflected in the Seller Financial Statements;
(iv) none of the Seller 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 Seller 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 Seller 10-K as of February 28, 1995; (vi) each of the Seller 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 Seller 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 Seller 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 Seller 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 Seller Plans; (x) neither
Seller nor any of its subsidiaries is a party to, or participates or has any
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liability or contingent liability with respect to, any multiemployer plan
(regardless of whether based on contributions of a Jensen ERISA affiliate);
and (xi) neither Seller nor its subsidiaries has any liability or contingent
liability for retiree life and health benefits under any of the Seller 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 2.14(b) of Seller's Disclosure
Schedule; and each of (i) through (xii) being qualified to the extent such
matters relate to or are a party of the OEM Business.
(c) Except as set forth in Section 2.14(c) of Seller'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 Seller employee agreement, plan or arrangement related to
the OEM Business.
2.15 MATERIAL DEFAULTS. Except as set forth on Section 2.15 of Seller's
Disclosure Schedule, neither Seller 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 Seller or any of its subsidiaries is a party which
is related to the OEM Business or by which Seller 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 Seller Material
Adverse Effect, and there has not occurred any event that with the lapse of time
or the giving of notice or both could constitute such a default.
2.16 LABOR MATTERS. Except as set forth on Section 2.16 of Seller's
Disclosure Schedule, there are no material controversies pending or, to the
knowledge of Seller, threatened between Seller or its subsidiaries and any
representatives of its employees, and, to the knowledge of Seller, there are no
material organizational efforts presently being made involving any of the
presently unorganized employees of Seller or its subsidiaries related to the OEM
Business. With regard to the OEM Business, Seller 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 Seller, asserted that Seller or
its subsidiaries are liable in any material amount for any arrears of wages or
any taxes or penalties for failure to comply with any of the foregoing.
2.17 ENVIRONMENTAL MATTERS.
(a) Except as set forth in the Seller 1995 Reports or in Section 2.17
to Seller's Disclosure Schedule, Seller and its subsidiaries have complied in
all respects with all Environmental Laws (as defined below in this Section) in
connection with the OEM Business or the Purchased Assets. Seller has obtained
and will maintain through the Closing Date all permits, licenses, certificates
and other authorizations which are required with respect to the OEM Business
under any Environmental Laws and all such permits, licenses, certificates and
other authorizations are listed on Section 2.17 to Seller's Disclosure Schedule.
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(b) Except as set forth in the Seller 1995 Reports or in Section 2.17
to Seller's Disclosure Schedule, Seller and its subsidiaries are in compliance
in all respects with all permits, licenses and authorizations required by any
Environmental Laws for the OEM Business, and are 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 Seller
thereunder and related to the OEM Business. All products manufactured and
services provided by Seller or its subsidiaries related to the OEM Business
prior to the date hereof are in compliance with all Environmental Laws
applicable thereto. Seller has hereto delivered to Purchaser true and complete
copies of all environmental studies made in the last ten years relating to the
OEM Business and the Purchased Assets.
(c) Except as set forth in the Seller 1995 Reports or Section 2.17 to
Seller's Disclosure Schedule, there is no pending or, to Seller'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 the OEM Business or the Purchased Assets, the products the
OEM Business has manufactured or the services it has 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 Seller or its subsidiaries
related to the OEM Business.
(d) Except as set forth in the Seller 1995 Reports or in Section 2.17
to Seller's Disclosure Schedule, there are no past or present (or, to the
knowledge of Seller, anticipated) events, conditions, circumstances, activities,
practices, incidents, Actions or plans which may interfere with or prevent
compliance or continued compliance by Seller with any Environmental Laws or with
any regulation or code promulgated or approved under any Environmental Law, or
any plan, order, decree, judgment, injunction, notice or demand letter issued to
or entered against Seller 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, 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 Seller or its
subsidiaries of any pollutant, contaminant, chemical, industrial, toxic or
hazardous substance or waste; all as related to the OEM Business.
(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 2.17 to Seller's Disclosure Schedule,
there has been no emission, spill, release or discharge by Seller or its
subsidiaries, from any of its assets, from any site at which any of such assets
are or were located or at any other location or disposal site, 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 asset is any toxic or hazardous substances or wastes used,
stored, generated, treated or disposed at or from any of such assets
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(any of which events is hereinafter referred to as "Hazardous Discharge"),
all as related to the OEM Business.
(f) Prior to the Closing Date, there shall not occur any Hazardous
Discharge which occurs or is related to the OEM Business (except in accordance
with a valid governmental permit, license, certificate or approval listed in
Section 2.17 to Seller'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 Section 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.
Section 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. Section 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.
Section 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. Section 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 Purchaser of undisclosed
and disclosed liabilities which have either arisen or which may arise under
Environmental Laws exceeds in the aggregate $1 million.
2.18 CERTAIN BUSINESS PRACTICES. As of the date of this Agreement, except
for such action which would not have a Seller Material Adverse Effect, neither
Seller nor any of its subsidiaries, nor any directors, officers, agents, or
employees of Seller or any of its subsidiaries has (i) used any funds for
unlawful contributions, gifts, entertainment, or other unlawful expenses
relating to political activities, (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 unlawful payment.
2.19 [INTENTIONALLY OMITTED.]
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2.20 TRADEMARKS, ETC.. Section 2.20 of Seller'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 Seller 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 set forth in Section 2.20 of Seller's Disclosure Schedule, the Intellectual
Property Rights which are trademark or copyright registrations and issued
patents are valid and in good standing and, along with applications therefor,
are not involved in any interferences, oppositions, or cancellation proceedings,
and are owned by Seller, free and clear of all liens, encumbrances, equities, or
claims. Seller 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 Seller 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 2.20 to Seller's Disclosure Schedule,
Seller 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 2.20 to Seller'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 Seller Material Adverse
Effect. Seller shall make all required filings to ensure the continued validity
and enforceability of its Intellectual Property Rights up to the Closing Date.
2.21 SELLER STOCKHOLDERS' APPROVAL. Seller will take all necessary action
so that stockholder approval of this Agreement and the transactions contemplated
hereby (the "Seller Stockholders' Approval"), will require only the affirmative
vote of the holders of (i) a majority of the outstanding shares of Seller Common
Stock, and (ii) a majority of the outstanding shares of Seller Common Stock
which are voted at the Seller stockholders' meeting other than shares held of
record or beneficially by Robert G. Shaw.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller, as follows:
3.1 CORPORATE ORGANIZATION. ETC. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Illinois and will be qualified to do business in Illinois on the Closing Date.
3.2 CAPITALIZATION. As of the date of this Agreement, Purchaser has
authorized capital stock consisting of 1,000 shares of common stock, no par
value per share.
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3.3 AUTHORIZATION, ETC. Purchaser has full corporate power and authority
to enter into this Agreement and to carry out the transactions contemplated
hereby. The Board of Directors of Purchaser has duly authorized the execution
and delivery of this Agreement and the transactions contemplated hereby, and no
other corporate proceedings on its part are necessary to authorize this
Agreement and the transactions contemplated hereby.
3.4 NO VIOLATION. Purchaser is not subject to or obligated under any
certificate of incorporation, bylaw, Law, or any agreement or instrument, or any
license, franchise or permit which would be breached or violated by its
execution, delivery or performance of this Agreement. Purchaser will comply
with all Laws in connection with its execution, delivery and performance of this
Agreement and the transactions contemplated hereby.
3.5 GOVERNMENTAL AUTHORITIES. Purchaser is not required to submit any
notice, report or other filing with and no consent, approval or authorization is
required by any governmental or regulatory authority in connection with
Purchaser's execution or delivery of this Agreement or the consummation of the
transactions contemplated hereby.
ARTICLE IV
COVENANTS OF SELLER
Except as otherwise consented to or approved by Purchaser in writing,
Seller covenants and agrees as follows:
4.1 REGULAR COURSE OF BUSINESS. Seller will operate the OEM Business in
the ordinary course, diligently and in good faith, consistent with past
management practices; will maintain all of the OEM Business properties in
customary repair, order and condition, reasonable wear and tear excepted; will
maintain (except for expiration due to lapse of time) all leases and contracts
described herein and related to the OEM Business in effect without change except
as expressly provided herein; will comply with the provisions of all Laws
applicable to the conduct of the OEM Business; will not engage in any
significant or unusual transaction related to the OEM Business; will not cancel,
release, waive or compromise any debt, claim or right in its favor having a
value in excess of $5,000 other than in connection with returns for credit or
replacement in the ordinary course of the OEM Business; will not convert its
assets into cash except in the ordinary course of business consistent with prior
practices; and will maintain insurance coverage up to the Closing Date in
amounts adequate to protect and insure Seller against perils which good business
practice demands be insured against or which are normally insured against by
other industry members similarly situated.
4.2 AMENDMENTS. Except as required for the transactions contemplated in
this Agreement and in that certain Third Amended and Restated Agreement and Plan
of Merger dated as of this date by and among Recoton Corporation, RC Acquisition
Sub, Inc. and Seller (the "Merger Agreement"), no change or amendment shall be
made in or to FujiCone's articles or
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certificate of incorporation or bylaws. Seller will not merge FujiCone into
or consolidate FujiCone with any other corporation or person, or change the
character of FujiCone's business.
4.3 CAPITAL CHANGES. Seller will not issue or sell any shares of
FujiCone's capital stock of any class or issue or sell any securities
convertible into, or options, warrants to purchase or rights to subscribe to,
any shares of FujiCone's capital stock of any class.
4.4 BONUSES. Except as set forth in Exhibit 4.4, Seller will not pay, set
aside, accrue, agree to or become liable in any manner for any bonus, of any
nature or type, to any employee or officer of the OEM Business.
4.5 CAPITAL AND OTHER EXPENDITURES. Seller will not make any capital
expenditures related to the OEM Business, or commitments with respect thereto,
in excess of $10,000, except as set forth in Exhibit 4.5. Except as set forth on
Exhibit 4.5, Seller will not pay any debt or obligation of the OEM Business
(except for prepaying trade accounts payable in the normal course of business to
take advantage of cash discounts) or make any other payments or distributions.
4.6 BORROWING. Except as disclosed on Exhibit 4.6, Seller will not incur,
assume or guarantee any indebtedness or capital leases in connection with the
OEM Business. Seller will not create or permit to become effective any
mortgage, pledge, lien, encumbrance or charge of any kind upon the Purchased
Assets other than in the ordinary course of business.
4.7 OTHER COMMITMENTS. Except in the ordinary course of business
consistent with past practices, Seller will not enter into any material
transaction related to the OEM Business, make any material commitment related to
the OEM Business or incur any material obligation related to the OEM Business.
4.8 FULL ACCESS AND DISCLOSURE.
(a) Seller shall afford to Purchaser and its lenders and their
respective counsel, accountants and other authorized representatives access
during business hours to Seller's plants, properties, books and records related
to the OEM Business in order that Purchaser and its lenders may have full
opportunity to make such reasonable investigations as they shall desire to make
of the affairs of Seller, and Seller will cause its officers and employees to
furnish such additional financial and operating data and other information
related to the OEM Business as Purchaser and its lenders shall from time to time
reasonably request.
(b) From time to time prior to the Closing Date, Seller will promptly
supplement or amend in writing information previously delivered to Purchaser
with respect to any matter hereafter arising which, if existing or occurring at
the date of this Agreement, would have been required to be set forth or
disclosed.
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4.9 CONSENTS. Seller will use all necessary means at its disposal to
obtain on or prior to the Closing Date all consents necessary to the
consummation of the transactions contemplated hereby.
4.10 BREACH OF AGREEMENT. Seller will not take any action which, if taken
prior to the Closing Date, would constitute a breach of this Agreement.
4.11 FURTHER ASSURANCES. Seller and Seller's counsel will furnish
Purchaser with such other and further documents, certificates, opinions,
consents and information as Purchaser shall reasonably request to enable
Purchaser to borrow funds from a bank or other lending entity or individual(s)
to acquire the Purchased Assets and to evidence compliance with the terms and
conditions of any credit agreement in existence or to be entered into between
Purchaser and a bank and/or other lending entities or individuals.
4.12 FULFILLMENT OF CONDITIONS. Seller will take all commercially
reasonable steps necessary or desirable and proceed diligently and in good faith
to satisfy each condition to the obligations of Purchaser contained in this
Agreement and will not take or fail to take any action that could reasonably be
expected to result in the nonfulfillment of any such condition.
4.13 TITLE AND SURVEY. Seller shall furnish to Purchaser as soon as
possible but in no event later than May 6, 1996, commitments from a title
company or companies designated by Purchaser and reasonably satisfactory to
Seller (the "Title Company"), to issue to Purchaser at Closing ALTA Form B
Extended Coverage Owner's Title Policies reasonably acceptable to Purchaser in
the amount of the appraised value of the real property to be conveyed by Seller
to Purchaser pursuant hereto (the "Subject Real Property") naming the Purchaser
as proposed insured. Seller shall procure all utility letters necessary for the
Title Company to issue its extended coverage endorsement. Seller shall also
cause to be delivered to Purchaser copies of all recorded documents listed in
Schedule B of the title commitment. Seller shall cause the Title Company to
issue an endorsement deleting all Schedule B general exceptions, a 3.1 zoning
endorsement and any other endorsements desired or requested by Purchaser or
Purchaser's lenders. Seller shall also furnish to Purchaser ALTA/ACSM surveys,
prepared by a surveyor designated by Purchaser and dated subsequent to the date
of this Agreement, certified in favor of the Purchaser, Purchaser's lenders and
the Title Company depicting each parcel comprising the Subject Real Property,
manholes, structures and utility lines in, over, under or upon each parcel
comprising the Subject Real Property, the locations of all easements upon each
parcel comprising the Subject Real Property or appurtenant thereto (identified
by the recorder's document number) and showing that there are no encroachments
from or upon adjoining property or upon any easements located on each parcel
comprising the Subject Real Property, and containing such certifications as may
be required by the Title Company to issue its extended coverage endorsements.
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ARTICLE V
COVENANTS OF PURCHASER
Purchaser hereby covenants and agrees with Seller that:
5.1 CONFIDENTIALITY. Purchaser will hold in strict confidence and not
disclose to any other party (other than its counsel and other advisors), without
Seller's prior consent, all information received by Purchaser from Seller, and
any of Seller's officers, directors, employees, agents, counsel or auditors in
connection with the transactions contemplated hereby except as may be required
by applicable law or as otherwise contemplated herein.
5.2 BOOKS AND RECORDS. Purchaser shall preserve and keep Seller's books
and records delivered hereunder for a period of not less than three (3) years
from the date hereof and shall, during such period, make such books and records
available to officers and directors of Seller for any reasonable purpose.
5.3 FULFILLMENT OF CONDITIONS. Purchaser will take all commercially
reasonable steps necessary or desirable and proceed diligently and in good faith
to satisfy each condition to the obligations of Seller contained in this
Agreement and will not take or fail to take any action that could reasonably be
expected to result in the non-fulfillment of any such condition.
ARTICLE VI
OTHER AGREEMENTS
Purchaser and Seller covenant and agree that:
6.1 AGREEMENT TO COOPERATE/DEFEND. In the event any action, suit,
proceeding or investigation of the nature specified in Section 7.5 or
Section 8.4 hereof is commenced, whether before or after the Closing Date, all
the parties hereto agree to cooperate and use their best efforts to defend
against and respond thereto.
6.2 CONSULTANTS, BROKERS AND FINDERS. Except for Lehman Brothers,
Seller's investment banking firm, whose fee arrangement has been disclosed to
Purchaser prior to the date hereof, each of Seller and Purchaser represents and
warrants to the other that each has not retained any consultant, broker or
finder in connection with the transactions contemplated by this Agreement.
Purchaser hereby agrees to indemnify, defend and hold Seller and its respective
officers, directors, employees and affiliates, harmless from and against any and
all claims, liabilities or expenses for any brokerage fees, commissions or
finders fees due to any consultant, broker or finder retained by Purchaser.
Seller hereby agrees to indemnify, defend and hold Purchaser and its officers,
directors, employees and affiliates, harmless from and against any and all
claims, liabilities or expenses for any brokerage fees, commissions or finders
fees due
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to any consultant, broker or finder retained by Seller, including, without
limitation, Lehman Brothers.
6.3 ASSUMPTION AGREEMENT. At the Closing, Purchaser and Seller will enter
into the Assumption Agreement, as contemplated by Section 9.2(e) hereof, in the
form set forth in Exhibit 6.3.
6.4 MANAGEMENT SERVICES AGREEMENT. At the Closing, Purchaser and Seller
will enter into a Management Services Agreement in the form set forth in
Exhibit 6.4.
6.5 SUPPLY AGREEMENT. At the Closing, Purchaser and Seller will enter
into a Supply Agreement in the form set forth in Exhibit 6.5.
6.6 SHARED FACILITIES AGREEMENT. At the Closing, Purchaser and Seller
will enter into a Shared Facilities Agreement in the form set forth in
Exhibit 6.6.
6.7 NONCOMPETITION AGREEMENT. At the Closing, Purchaser and Seller and
FujiCone will enter into a Noncompetition Agreement in the form set forth in
Exhibit 6.7.
6.8 LICENSE AGREEMENT. At the Closing, Purchaser and Seller will enter
into a limited license agreement for use of Seller's trademarks in connection
with the OEM Business in the form set forth in Exhibit 6.8.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF PURCHASER
Each and every obligation of Purchaser under this Agreement shall be
subject to the satisfaction, on or before the Closing Date, of each of the
following conditions unless waived in writing by Purchaser:
7.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The representations and
warranties made by Seller herein shall be true and correct in all material
respects on the date of this Agreement and on the Closing Date with the same
effect as though made on such date; Seller shall have performed and complied in
all material respects with all agreements, covenants and conditions required by
this Agreement to be performed and complied with by it prior to the Closing
Date; the Vice President of Seller shall have delivered to Purchaser a
certificate, dated the Closing Date, in the form designated Exhibit 7.1 hereto,
certifying to such matters and the other conditions contained in this Article
VII.
7.2 CONSENTS AND APPROVALS. All consents from and filings with third
parties, regulators and governmental agencies required to consummate the
transactions contemplated hereby, or which, either individually or in the
aggregate, if not obtained, would cause a
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materially adverse effect on Seller's financial condition or business shall
have been obtained and delivered to Purchaser.
7.3 OPINION OF COUNSEL TO SELLER. Purchaser shall have received an
opinion of counsel to Seller, dated the Closing Date, substantially in the form
attached hereto as Exhibit 7.3.
7.4 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change since the date of this Agreement in the business, prospects, financial
condition, earnings or operations of Seller's OEM Business.
7.5 NO PROCEEDING OR LITIGATION. No action, suit or proceeding before any
court or any governmental or regulatory authority shall have been commenced or
threatened, and no investigation by any governmental or regulatory authority
shall have been commenced or threatened against Seller or Purchaser or any of
their respective principals, officers or directors seeking to restrain, prevent
or change the transactions contemplated hereby or questioning the validity or
legality of any of such transactions or seeking damages in connection with any
of such transactions.
7.6 FINANCING. Purchaser shall have obtained, on terms satisfactory to
it, such financing as it deems necessary to enable it to consummate the
transactions contemplated hereby. It is expressly understood that all proposed
financing will be conditioned on completion of any environmental, business and
financial due diligence of Purchaser's proposed lender(s) and Seller's ability
to obtain any and all necessary consents to the proposed transactions in any
contracts or other agreements requiring such consents, provided, however, that
Purchaser shall have undertaken reasonable good faith efforts to obtain such
financing.
7.7 CONSUMMATION OF MERGER WITH RECOTON. The transactions contemplated in
the Merger Agreement shall be consummated as a post closing condition. In the
event the transactions contemplated by the Merger Agreement do not occur within
one (1) business day of the Closing of the transaction contemplated by this
Agreement, this transaction shall automatically be unwound and the Purchase
Price shall be immediately returned to Purchaser.
7.8 [INTENTIONALLY OMITTED.]
7.9 ENVIRONMENTAL DUE DILIGENCE REVIEW. Prior to April 2, 1996 (which
date may be extended if Purchaser is still conducting its study and testing),
Purchaser may perform or have performed such environmental site inspections and
reasonable testing relating to the real properties owned or operated by Seller
and FujiCone in which the OEM Business is operated as Purchaser may deem
appropriate. If based upon the written reports of independent environmental
consultants, Purchaser 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
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Laws in an aggregate amount of $1 million or greater, Purchaser may terminate
this Agreement by written notice to Seller. The parties acknowledge that
Recoton has engaged certain environmental consultants to perform certain
tests and inspections on the real properties described above as to which
Purchaser shall have full access and Purchaser shall be entitled to rely upon
such reports prepared or generated by such consultants as the written reports
of independent environmental consultants referred to above. In consideration
for access to such Recoton-retained consultants and resulting reports,
Purchaser shall make available to Recoton its consultants, if any, and any
resulting reports.
7.10 SHAW EMPLOYMENT AGREEMENT. At the Closing, the employment agreement
with Robert G. Shaw in the form set forth in Exhibit 7.10 shall be effective.
7.11 TRANSFER/ASSIGNMENT OF LICENSES. Purchaser shall have received and
entered in a satisfactory license agreement or sublicense agreement regarding
the Goodman Speaker Licenses referenced in Exhibit 1.2.8.
7.12 OTHER DOCUMENTS. Seller will furnish Purchaser with such other and
further documents and certificates of Seller's officers and others as Purchaser
shall reasonably request to evidence compliance with the conditions set forth in
this Agreement.
7.13 OTHER AGREEMENTS. The agreements described in Article VI shall have
been entered into and delivered.
7.14 GOVERNMENTAL APPROVALS, ETC. Purchaser, its legal counsel,
consultants and others appointed by Purchaser shall have received satisfactory
evidence that all governmental, regulatory and third-party approvals required to
complete the acquisition of the Purchased Assets have been obtained.
7.15 MSP LETTERS. At the Closing, Recoton Corporation shall have delivered
a letter to each of the persons described as "MSPs" in the Management Services
Agreement between Seller and Purchaser ("MSA") stating that the services being
performed under the MSA by such MSP does not violate such MSP's Transitional
Employment Agreement.
7.16 ACCOUNTS RECEIVABLE SALE. If the parties designate a purchaser of the
accounts receivable pursuant to Section 1.8 hereof, such sale shall have been
consummated.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF SELLER
Each and every obligation of Seller under this Agreement shall be subject
to the satisfaction, on or before the Closing Date, of each of the following
conditions unless waived in writing by Seller:
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8.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The representations and
warranties made by Purchaser herein shall be true and correct in all material
respects on the date of this Agreement and on the Closing Date with the same
effect as though made on such date; Purchaser shall have performed and complied
with in all material respects all agreements, covenants and conditions required
by this Agreement to be performed and complied with by it prior to the Closing
Date; Purchaser shall have delivered to Seller a certificate of its President,
dated the Closing Date, certifying to the fulfillment of the conditions set
forth herein, in the form designated as Exhibit 8.1 and the other conditions
contained in this Article VIII.
8.2 STOCKHOLDER APPROVAL. The Agreement and the transaction contemplated
hereby shall have been approved and adopted by the vote of the stockholders of
Seller in accordance with Section 2.21.
8.3 FAIRNESS OPINION. Seller shall have received from Lehman Brothers an
opinion letter stating that the transaction contemplated by this Agreement is
"fair from a financial point of view" to Seller.
8.4 NO PROCEEDING OR LITIGATION. No action, suit or proceeding before any
court or any governmental or regulatory authority shall have been commenced, or
threatened, and no investigation by any governmental or regulatory authority
shall have been commenced, or threatened, against Seller, Purchaser or any of
their respective principals, officers or directors, seeking to restrain, prevent
or change the transactions contemplated hereby or questioning the validity or
legality of any of such transactions or seeking damages, in connection with any
of such transactions.
8.5 OPINION OF COUNSEL. Seller shall have received an opinion of counsel
to Purchaser dated the Closing Date substantially in the form of Exhibit 8.5.
8.6 [INTENTIONALLY OMITTED.]
8.7 PAYMENT. The payment described in Section 1.3 shall have been made.
8.8 OTHER DOCUMENTS. Purchaser will furnish Seller with such other
documents and certificates to evidence compliance with the conditions set forth
in this Article as may be reasonably requested by Seller.
8.9 OTHER AGREEMENTS. The agreements described in Article VI shall have
been entered into and delivered.
8.10 CONSUMMATION OF MERGER WITH RECOTON. The transactions contemplated in
the Merger Agreement shall be consummated as contemplated on Section 7.7.
8.11 CONSENTS AND APPROVALS. All consents from and filings with third
parties, regulators and governmental agencies required to consummate the
transactions contemplated
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hereby, or which, either individually or in the aggregate, if not obtained,
would cause a materially adverse effect on Seller's financial condition or
business shall have been obtained and delivered to Seller.
8.12 GOVERNMENTAL APPROVALS, ETC. Seller, its legal counsel, consultants
and others appointed by Seller shall have received satisfactory evidence that
all governmental, regulatory and third-party approvals required to complete the
acquisition of the Purchased Assets have been obtained.
ARTICLE IX
CLOSING
9.1 CLOSING. Unless this Agreement shall have been terminated or
abandoned pursuant to the provisions of Article X hereof, a closing (the
"Closing") shall be held at the location of the closing of the Merger,
immediately prior to such closing.
9.2 DELIVERIES AT CLOSING.
(a) At the Closing, Seller and/or FujiCone, as applicable, shall
transfer and assign to Purchaser all of the Purchased Assets, and the other
agreements, certifications and other documents required to be executed and
delivered hereunder at the Closing shall be duly and validly executed and
delivered by the parties thereto. Notwithstanding anything to the contrary
contained in this Agreement, Purchaser shall have the right at any time prior to
Closing to direct Seller and/or FujiCone, as applicable, to convey title to all
or any portion of the Subject Real Property to a corporation, limited
partnership, or limited liability company which is under common control with
Purchaser. In the event of such direction, the recipient of the Subject Real
Property shall become a party to the Noncompetition Agreement described in
Exhibit 6.7.
(b) At and after the Closing, Seller and/or FujiCone, as applicable,
shall have the right to review and obtain copies of any financial records of
Seller and/or FujiCone, as applicable, in the possession of Purchaser, necessary
for the preparation of Seller's and/or FujiCone's, as applicable, tax returns,
and Purchaser agrees to retain such records until the statute of limitations
pertaining to the final tax returns filed by Seller and/or FujiCone, as
applicable, expires, and Purchaser shall have the right to review and obtain
copies of the minute book, stock book and stock register of Seller and/or
FujiCone, as applicable.
(c) At the Closing, Seller and/or FujiCone shall deliver to
Purchaser, in form reasonably satisfactory to counsel for Purchaser, such bills
of sale, assignments, deeds or other conveyances and all third party consents as
may be appropriate or necessary to effect the transfer to Purchaser of the
property and rights as contemplated herein.
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(d) From time to time after the Closing, at Purchaser's request and
without further consideration from Purchaser, Seller and/or FujiCone shall
execute and deliver such other instruments of conveyance and transfer and take
such other action as Purchaser reasonably may require to convey, transfer to and
vest in Purchaser and to put Purchaser in possession of any assets or property
to be sold, conveyed, transferred and delivered hereunder.
(e) The assumption of liabilities and obligations hereunder shall be
by assumption agreement (as set forth in Exhibit 6.3). Purchaser and its
successors and assigns will forever defend, indemnify and hold Seller and/or
FujiCone harmless from any and all liabilities and obligations of Seller and/or
FujiCone which have been assumed by Purchaser at the Closing, or which shall
arise from any acts or omissions of Purchaser after the Closing. Purchaser
agrees at Seller's and/or FujiCone's request from time to time (but no earlier
than ninety (90) days after the Closing) to supply to Seller and/or FujiCone
proof of or a certificate by its Chief Financial Officer of the payment and
satisfaction by Purchaser of liabilities and obligations of Seller and/or
FujiCone due to date and assumed by Purchaser.
9.3 LEGAL ACTIONS. If, prior to the Closing Date, any action or
proceeding shall have been instituted by any third party before any court or
governmental agency to restrain or prohibit this Agreement or the consummation
of the transactions contemplated herein, the Closing shall be adjourned at the
option of any party hereto for a period of up to one hundred twenty (120) days.
If, at the end of such 120-day period, the action or proceeding shall not have
been favorably resolved, any party hereto may, by written notice thereof to the
other party or parties, terminate its obligation hereunder.
9.4 SPECIFIC PERFORMANCE. The parties agree that if any party hereto is
obligated to, but nevertheless does not, consummate this transaction, then any
other party, in addition to all other rights or remedies, shall be entitled to
the remedy of specific performance mandating that the other party or parties
consummate this transaction. In an action for specific performance by any party
against any other party, the other party shall not plead adequacy of damages at
law.
9.5 BULK SALES AND BULK TRANSFER LAWS. Subject to the indemnification
provisions set forth in this Agreement, Seller and Purchaser hereby waive all
filings required and/or permitted under the Illinois bulk sales statutes
(Section 9-902(d) of the Illinois Income Tax Act (35 ILCS 210/2(d), Section 5j
of the Illinois Retailers' Occupation Tax Act (35 ILCS 120/5j) and Section 2600
of the Illinois Unemployment Compensation Act (820 ILCS 405/2600)).
9.6 NAME CHANGE. Upon the Closing, Seller shall change its name to
another name different from its present name and do such other things as shall
be necessary or desirable to permit Purchaser to assume and use the corporate
name "International Jensen Incorporated" and the trade name "IJI" for corporate
identification purposes, including, without limitation, the filing of a charter
amendment with the Delaware Secretary of State and appropriate amendatory
documentation with the Secretaries of State of each State were Seller is
qualified to do business as a foreign corporation as of the Closing. Upon the
Closing, FujiCone shall change its name to another name different from its
present name and do such other things as shall be necessary
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or desirable to permit Purchaser to assume and use the FujiCone name,
including, without limitation, (i) the filing of a charter amendment with the
Delaware Secretary of State and appropriate amendatory documentation with the
Secretary of State of each state where FujiCone is qualified to do business
as a foreign corporation as of the Closing, and (ii) the filing with the U.S.
Patent and Trademark Office and any state trademark office appropriate
transfers of any trademark, trade name or service mark registrations relating
or pertaining to the FujiCone name, to the extent requested by and prepared
by Purchaser.
ARTICLE X
TERMINATION AND ABANDONMENT
10.1 METHODS OF TERMINATION. This Agreement may be terminated and the
transactions herein contemplated may be abandoned at any time (notwithstanding
approval by the Board of Directors of Purchaser):
(a) by mutual consent of Purchaser and Seller;
(b) by either Seller or Purchaser if (i) such party is not in breach
hereunder and the other party is in breach hereunder, and (ii) this Agreement is
not consummated on or before the Closing Date, including extensions; or
(c) by either Seller or Purchaser if (i) such party is not in breach
hereunder and (ii) this Agreement is not consummated because one or more of the
conditions contained in Article VII or Article VIII, whichever is appropriate,
was not satisfied and the other party did not waive such condition.
10.2 PROCEDURE UPON TERMINATION. In the event of termination and
abandonment pursuant to Section 10.1 hereof, this Agreement shall terminate and
shall be abandoned, without further action by any of the parties hereto. If
this Agreement is terminated as provided herein:
(a) each party will upon request redeliver all documents and other
materials of any other party relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof, to the party
furnishing the same;
(b) no party hereto shall have any liability or further obligation to
any other party to this Agreement; and
(c) each party shall bear its own expenses; provided, however, that
if this Agreement is terminated as provided herein and Purchaser is not in
breach hereunder and the Merger has not occurred, all expenses incurred by
Purchaser and/or Robert G. Shaw in furtherance of this Agreement (including,
without limitation, reasonable attorneys' fees and
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costs) shall be promptly reimbursed by Seller upon submission of invoices,
statements or other expense documentation by Purchaser and/or Robert G. Shaw.
ARTICLE XI
INDEMNIFICATION
11.1 INDEMNIFICATION BY SELLER. Seller shall indemnify Purchaser and its
shareholders, officers and directors against, and save and hold them harmless
from, any and all liability, loss, cost, expense or damage (including reasonable
attorneys' fees) ("Damages") incurred or sustained by Purchaser or any of its
shareholders, officers or directors as a result of, by reason of, or arising
from: (a) the failure of Seller and/or FujiCone to perform promptly any
covenant or agreement made by Seller and/or FujiCone in this Agreement to be
performed in any period after the Closing Date; or (b) any liability of
Purchaser arising out of or in any way related to the Excluded Liabilities.
11.2 INDEMNIFICATION BY PURCHASER. Purchaser shall indemnify Seller and
its shareholders, officers and directors against, and save and hold them
harmless from, any and all Damages incurred or sustained by Seller or any of its
shareholders, officers or directors as a result of, by reason of, or arising
from: (a) the failure of Purchaser to perform promptly any covenant or agreement
made by Purchaser in this Agreement to be performed in any period after the
Closing Date; or (b) any Assumed Liability.
11.3 MECHANICS. Any notice of a claim by either party shall state the
facts giving rise to such claim and the alleged basis for the claim and, if
known by the party giving notice, the amount of liability asserted by reason
thereof. If an indemnified Party ("Indemnitee") shall give notice of claim for
indemnity to the other Party ("Indemnitor"), Indemnitor shall have the right, at
its own expense, to be represented by counsel of its choosing, and to contest or
defend any claim asserted by any third person (including any governmental agency
or department) against Indemnitee which constitutes the basis of the notice of
claim made by Indemnitee. If Indemnitor elects to make such contest or defense,
it shall give written notice of such election within fifteen (15) days following
receipt of the notice of claim from Indemnitee and indemnification shall be
suspended until the final determination of the claim asserted by such third
person against Indemnitee. Indemnitor shall have such access to records, files
and personnel of Indemnitee as it may reasonably require in connection with
contesting or defending any such claim, and Indemnitee shall reasonably
cooperate in such defense. If Indemnitor does not elect to make such contest or
defense, Indemnitee may, at Indemnitor's expense, contest or defend against,
such claim in such manner as it may deem appropriate including, but not limited
to, settling such claim on such terms as Indemnitee may deem appropriate,
provided that no settlement shall be made without the written consent of
Indemnitor which consent shall not be unreasonably withheld. Indemnitor shall
reimburse Indemnitee for its costs (including reasonable attorneys' fees and any
cost of settlement) and no action taken by Indemnitee in accordance with such
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defense and settlement shall relieve Indemnitor of its indemnification
obligations herein provided.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 AMENDMENT AND MODIFICATION. Subject to applicable law, this Agreement
may be amended, modified and supplemented only by written agreement of Seller
and Purchaser with the prior written consent of Recoton Corporation.
12.2 WAIVER OF COMPLIANCE; CONSENTS. Any failure of Seller on the one
hand, or Purchaser on the other hand, to comply with any obligation, covenant,
agreement or condition herein may be waived in writing by Purchaser or by
Seller, respectively, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this
Section 12.2.
12.3 EXPENSES. In the event the Closing under this Agreement and the
transactions contemplated in the Merger Agreement occur:
(a) Seller shall pay the following expenses related to the
transaction contemplated by this Agreement:
(i) all legal (including all fees of Stroock & Stroock & Lavan
and Vedder Price Kaufman & Kammholz), accounting and other expenses incurred by
Seller and/or FujiCone or on its behalf in connection with this Agreement and
the transactions contemplated herein.
(ii) all investment banking fees payable in connection with the
transactions contemplated herein, including without limitation, all fees of
Lehman Brothers, Inc. and Furman Selz Incorporated, but excluding fees for any
investment bankers retained by Purchaser.
(iii) up to $43,000.00 for the cost of environmental site
testing and evaluation as contemplated by Section 7.9 hereof plus the cost of
any additional environmental site testing and evaluations commissioned solely by
Seller; and
(iv) up to $100,000.00 for the following: (A) sales, transfer,
stamp, excise and other taxes (other than income taxes), foreign or domestic,
federal or state, required to be paid in respect to or as a result of Seller's
and/or FujiCone's conveyance, assignment or
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<PAGE>
transfer of the Purchased Asset to Purchaser; (B) costs of title policies and
all related endorsements, surveys, recording charges and escrow charges as
set forth in Section 4.13; (C) all costs of environmental site testing and
evaluation, to the extent such costs exceed the amounts incurred pursuant to
Section 12.3(a)(iii) above, including, without limitation, reasonable
attorneys' fees related to the procurement and evaluation of environmental
reports incurred by Purchaser.
(b) Purchaser shall pay the following expenses:
(i) all legal (including all fees of Wildman, Harrold, Allen &
Dixon (other than those set forth in Section 12.3(a)(iv)(C) above)), accounting
and other expenses incurred by or on its behalf in connection with this
Agreement and the transactions contemplated herein;
(ii) all fees and expenses incurred by Purchaser in
connection with obtaining the financing described in Section 7.6 hereof; and
(iii) to the extent the expenses listed in (a)(iv) above
exceed $100,000.00, Purchaser shall be responsible for such excess.
12.4 NOTICES. Any notice, request, consent or communication (collectively
a "Notice") under this Agreement shall be effective only if it is in writing and
(i) personally delivered, (ii) sent by certified or registered mail, return
receipt requested, postage prepaid, (iii) sent by a nationally recognized
overnight delivery service, with delivery confirmed, or (iv) telexed or
telecopied, with receipt confirmed, addressed as follows:
(a) If to Seller and/or FujiCone:
International Jensen Incorporated
25 Tri-State International Office Center
Suite 400
Lincolnshire, Illinois 60069
Attention: Mr. Marc T. Tanenberg
Telecopier: (847) 317-3855
Telephone: (847) 317-3700
in each case with a copy to each of:
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, Illinois 60601-1003
Attention: John R. Obiala
Telecopier: (312) 609-5005
Telephone: (312) 609-7522
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<PAGE>
Stroock & Stroock & Lavan
Seven Hanover Square
New York, New York 10004
Attention: Theodore S. Lynn
Telecopier: (212) 806-6006
Telephone: (212) 806-5400
(b) If to Purchaser to:
IJI Acquisition Corp.
25 Tri-State International Office Center
Suite 400
Lincolnshire, Illinois 60069
Attention: Mr. Robert G. Shaw
Telecopier: (847) 317-3774
Telephone: (847) 317-3777
with a copy to:
Wildman, Harrold, Allen & Dixon
225 West Wacker Drive
Chicago, Illinois 60606-1229
Attention: 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.
12.5 DEFINITIONS. For the purpose of this Agreement, "Laws" shall include,
without limitation, all foreign, federal, state and local laws, statutes, rules,
regulations, codes, ordinances, plans, orders, judicial decrees, writs,
injunctions, notices, decisions or demand letters issued, entered or promulgated
pursuant to any foreign, federal, state or local law. For the purpose of this
Agreement, "generally accepted accounting principles" shall mean such
principles, applied on a consistent basis, as set forth in Opinions of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and/or in statements of the Financial Accounting Standards Board
which are applicable in the circumstances as of the date in question, and the
requirement that such principles be applied on a "consistent basis" means that
accounting principles observed in the current period are comparable in all
material respects to those applied in the preceding periods, except as change is
permitted or required under or
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<PAGE>
pursuant to such accounting principles. For purposes of this Agreement,
"material" means one or more matters having in aggregate an economic
consequence in excess of $25,000. References herein to "Seller" shall mean
the Surviving Corporation (as defined in the Merger Agreement) after the
Merger.
12.6 ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, successors and permitted assigns, but neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by Seller
without the prior written consent of Purchaser.
12.7 GOVERNING LAW; WAIVER OF JURY TRIAL. This Agreement shall be governed
by the laws of the state of Illinois (regardless of the laws that might
otherwise govern under applicable Illinois principles of conflicts of law of the
state of Illinois) as to all matters including, but not limited to, matters of
validity, construction, effect, performance and remedies. IN THE EVENT OF ANY
LITIGATION WITH RESPECT TO ANY MATTER CONNECTED WITH THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREUNDER THE PARTIES HERETO WAIVE ALL RIGHTS TO A
TRIAL BY JURY.
12.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.9 NEUTRAL INTERPRETATION. This Agreement constitutes the product of the
negotiation of the parties hereto and the enforcement hereof shall be
interpreted in a neutral manner, and not more strongly for or against any party
based upon the source of the draftsmanship hereof.
12.10 HEADINGS. The article and section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
12.11 ENTIRE AGREEMENT. This Agreement, which term as used throughout
includes the Exhibits hereto, embodies the entire agreement and understanding of
the parties hereto in respect of the subject matter contained herein. There are
no restrictions, promises, representations, warranties, covenants or
undertakings other than those expressly set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
12.12 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None
of the representations, warranties and agreements in this Agreement shall
survive the Closing, except for the agreements contained in this Section 12.12,
Sections 1.4, 1.5, 5.1, 5.2, 6.1, 6.2, 10.2, Article XI and Section 12.3. This
Section 12.12 shall not limit any covenant or agreement of the parties which by
its terms, contemplates performance after the Closing Date.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as
of the date first hereinabove set forth.
PURCHASER:
IJI ACQUISITION CORP.
/s/ Robert G. Shaw
---------------------------------
By: Robert G. Shaw
Its: President
SELLER:
INTERNATIONAL JENSEN INCORPORATED
/s/ Marc T. Tanenberg
---------------------------------
By: Marc T. Tanenberg
Its: Vice President
FUJICONE, INC.
/s/ Marc T. Tanenberg
---------------------------------
By: Marc T. Tanenberg
Its: Vice President
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<PAGE>
AMENDMENT TO EXCLUSIVE WORLD-WIDE LICENSE AND
OPTION TO SELL AND OPTION TO PURCHASE PROPRIETARY RIGHTS
THIS AGREEMENT is entered into effective as of the 9th day of May, 1996, by
and between International Jensen Incorporated, a Delaware corporation, with its
principal place of business at 25 Tri-State International Office Center, Suite
400, Lincolnshire, IL 60069 ("Jensen") and Recoton Corporation, a New York
corporation, with its principal place of business at 2950 Lake Emma Road, Lake
Mary, FL 32746 ("Recoton").
WHEREAS, Jensen and Recoton entered into an agreement captioned "EXCLUSIVE
WORLD-WIDE LICENSE AND OPTION TO SELL AND OPTION TO PURCHASE PROPRIETARY RIGHTS"
effective as of January 3, 1996 (the "License and Option Agreement") pursuant to
which Jensen granted to Recoton, INTER ALIA, an option to purchase the
trademarks "Acoustic Research" and "AR" (the "Marks") from Jensen and Recoton
granted to Jensen an option to sell the Marks to Recoton under certain
conditions in consideration for a purchase price of $6 million (the "Purchase
Price";
WHEREAS, contemporaneous with entering into the License and Option
Agreement, Jensen and Recoton entered into an Agreement and Plan of Merger (as
amended, the "Merger Agreement") pursuant to which Jensen would be merged into a
subsidiary of Recoton upon satisfaction of certain conditions;
WHEREAS, pursuant to the Merger Agreement Jensen would be obligated to pay
to Recoton certain amounts under certain circumstances if the merger between
Recoton's subsidiary and Jensen did not occur (the "Break-Up Fee"), which Break-
Up Fee could be as high as $6 million;
WHEREAS, the Board of Directors had determined at the time of entering into
the License and Option Agreement that the fair market value of the Marks is
significantly less than $6 million;
WHEREAS, the Purchase Price and the Break-Up Fee were originally structured
to offset each other;
WHEREAS, Jensen and Recoton have contemporaneously herewith agreed to amend
the Merger Agreement to reduce the maximum amount of the Break-Up Fee to $1.5
million plus documented out-of-pocket expenses not to exceed $2.5 million, to
increase the amount to be paid to stockholders of Jensen other than Robert G.
Shaw and William Blair Leveraged Capital Fund, L.P. and to make certain other
changes;
<PAGE>
WHEREAS, as a condition to amending the Merger Agreement as set forth in
the prior recital, Recoton has required that Jensen agree to reduce the Purchase
Price.
NOW, THEREFORE, the parties hereto agree that the definition of Purchase
Price, and all references in the License and Option Agreement to the Purchase
Price, as "$6 million" are hereby changed to "$3.5 million".
IN WITNESS WHEREOF, Recoton and Jensen have each caused this Agreement to
be executed on its behalf by a duly authorized officer as of the day and year
first above written.
RECOTON CORPORATION
By: /s/ Stuart Mont
-----------------------------
Name: Stuart Mont
Title: Executive Vice
President-Operations
INTERNATIONAL JENSEN INCORPORATED
By: /s/ Marc T. Tanenberg
-----------------------------
Name: Marc T. Tanenberg
Title: Vice President Finance
and Chief Financial
Officer
<PAGE>
AMENDED AND RESTATED ESCROW AGREEMENT
THIS AMENDED AND RESTATED ESCROW AGREEMENT (the "Agreement") is made
as of May 1, 1996 between International Jensen Incorporated, a corporation
organized and existing under the laws of the State of Delaware ("Jensen"), and
Recoton Corporation, a corporation organized and existing under the laws of the
State of New York ("Recoton").
WHEREAS, Recoton and Jensen have entered into an agreement dated as of
January 3, 1996 (the "License and Option Agreement") providing for the license
by Jensen to Recoton of rights in the trademarks Acoustic Research and AR and
granting to Recoton an option to purchase such trademarks from Jensen (the
"Purchase Option") and granting to Jensen an option to sell such trademarks to
Recoton (the "Sale Option");
WHEREAS, upon exercise of the Purchase Option or the Sale Option and
payment as required in the License and Option Agreement (including without
limitation payment by way of setoff), Jensen is required under the License and
Option Agreement to execute and deliver to Recoton a form of trademark
assignment attached to the License and Option Agreement (the "Assignment");
WHEREAS, in order to ensure the full performance of the License and
Option Agreement, the parties desire that Jensen execute the Assignment at this
time and deliver the executed Assignment to an escrow agent to hold in escrow
pending receipt of certain notices as provided for herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and in the License and Option Agreement, the parties
hereto do hereby agree as follows:
1. APPOINTMENT. Vedder, Price, Kaufman & Kammholz is hereby
appointed escrow agent ("Escrow Agent") to hold and dispose of the Assignment
as provided for in this Section 1. Jensen has herewith delivered to the Escrow
Agent a fully executed copy of the Assignment, receipt of which is hereby
acknowledged by the Escrow Agent. The Escrow Agent shall deliver the Assignment
and any other items delivered hereafter to the Escrow Agent pursuant to this
Agreement as follows:
(a) upon receipt of a notice of exercise of the Purchase Option in
the form attached hereto as Exhibit 1 or a notice of exercise of
the Sale Option in the form attached hereto as Exhibit 2 and
payment of the purchase price for the Purchase Option or the Sale
Option by either (i) payment to
<PAGE>
the Escrow Agent by wire transfer or certified check in
the amount of $3.5 million or (ii) payment to the
Escrow Agent by wire transfer or certified check in the
amount of $1.5 million and delivery to the Escrow Agent of a
notice, substantially in the form set forth in Exhibit 3 attached
hereto, of cancellation of $2 million of indebtedness of Jensen
owing to Recoton represented by that certain Promissory Note
dated January 3, 1996, in the original principal amount of $2
million, accompanied by the original canceled promissory note,
the Escrow Agent shall, within 20 days after its receipt of such
items, deliver the Assignment to Recoton and deliver to Jensen
the payments received by the Escrow Agent along with the notice
of cancellation and the original canceled promissory note, if
applicable; or
(b) within five business days after receipt of the joint written
instructions of Jensen and Recoton substantially in the form set
forth in Exhibit 4 attached hereto, the Escrow Agent shall act in
accordance therewith; or
(c) within five business days after receipt of a certified copy of a
determination by final order, decree or judgment of a court of
competent jurisdiction in the United States of America (the time
for appeal having expired with no appeal having been taken) in a
proceeding to which Jensen and Recoton are parties (the "Final
Decree") accompanied by a written notice from Jensen or Recoton
substantially in the form of Exhibit 5 attached hereto, the
Escrow Agent shall act in accordance with the requirements of the
Final Decree;
PROVIDED, HOWEVER, that the Escrow Agent shall have no obligation to deliver the
Assignment or any other items delivered into escrow to Recoton, Jensen or any
other person if it shall have been enjoined from performing hereunder.
2. NOTICES. Any notices or other communications required or
permitted hereunder shall be sufficiently given if sent by registered mail or
certified mail, postage prepaid, or by telegraph, charges prepaid, addressed as
follows:
(a) If to Recoton:
Recoton Corporation
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<PAGE>
2950 Lake Emma Road
Lake Mary, FL 32746
Attn: Secretary
with a copy to:
Stroock & Stroock & Lavan
7 Hanover Square
New York, NY 10004
Attn: Theodore S. Lynn, Esq.
(b) If to Jensen:
International Jensen Incorporated
25 Tri-State International Office Center
Suite 400
Lincolnshire, IL 60069
Attn: Mark T. Tanenberg
with a copy to:
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, IL 60601-1003
Attn: John R. Obiala, Esq.
(c) If to Escrow Agent:
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, IL 60601-1003
Attn: John R. Obiala, Esq.
or such other addresses as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
so mailed or as of the date deposited with a public telegraph company for
transmittal with all charges prepaid except notices or communications to the
Escrow Agent which shall be deemed to have been given when received by it. Any
notice given in any other manner shall be deemed to have been duly given when
received.
3. TERMS AND CONDITIONS TO ESCROW AGENT'S ACCEPTANCE. (a) Acceptance
by the Escrow Agent of its duties under this Agreement is subject to the
following terms and conditions, which the parties to this Agreement hereby agree
shall govern and control the rights, duties and immunities of the Escrow Agent:
(i) The duties and obligations of the Escrow Agent shall be
determined solely by the express provisions of this Agreement and the
Escrow Agent shall not be liable except for the performance of such
duties
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<PAGE>
and obligations as are specifically set out in this Agreement;
(ii) The Escrow Agent shall not be responsible in any manner
whatsoever for any failure or inability of the parties of this
Agreement, or of any one else, to deliver monies or other property to
the Escrow Agent or otherwise to honor any of the provisions of this
Agreement;
(iii) Each of Jensen and Recoton shall hold the Escrow Agent
harmless from, and indemnify the Escrow Agent against, any loss,
liability, expense (including reasonable attorneys' fees and
expenses), claim or demand arising out of or in connection with the
performance of its obligations under this Agreement, except for any of
the foregoing arising out of the bad faith or willful misconduct of
the Escrow Agent. The foregoing indemnification obligations shall
survive the termination of this Agreement. The Escrow Agent is
attorney for Jensen and, in the event of a dispute hereunder
(including a dispute concerning the disposition of the Assignment),
may represent Jensen while it continues to act as the Escrow Agent;
(iv) The Escrow Agent shall be equally reimbursed by Jensen and
Recoton for all fees, expenses, disbursements and advances, including
reasonable attorneys' fees, incurred by the Escrow Agent in connection
with carrying out its duties in administering this Agreement. Jensen,
on the one hand, and Recoton, on the other hand, agree that if the
Escrow Agent shall incur or suffer any other costs, charges, damages
or attorneys' fees on account of being the Escrow Agent or on account
of having received the Assignment hereunder (including, without
limitation, costs, charges, damages and reasonable attorneys' fees as
a result of litigation involving this Agreement or the Assignment
other than by reason of the bad faith or willful misconduct of the
Escrow Agent), then such costs, charges, damages or fees (including,
without limitation, reasonable attorneys' fees incurred by the Escrow
Agent in connection with any litigation) shall be paid one half by
Jensen and one half by Recoton, or, in the case of any cost, charge,
damage or fee arising as a result of litigation, in such manner as the
court in which such litigation occurs may direct;
(v) The Escrow Agent shall be fully protected in acting on and
relying upon any written notice, direction, request, waiver, consent,
receipt or other paper or document which the Escrow Agent in good
faith
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<PAGE>
believes to be genuine and to have been signed or presented by
the proper party or parties;
(vi) The Escrow Agent shall not be liable for any error of
judgment, or for any act done or step taken or omitted by it in good
faith or for any mistake in fact or law, or for anything which it may
do or refrain from doing in connection herewith, except its own
willful misconduct; and
(vii) The Escrow Agent may seek the advice of legal counsel in
the event of any dispute or question as to the construction of any of
the provisions of this Agreement or its duties hereunder, and it shall
incur no liability and shall be fully protected in respect of any
action taken, omitted or suffered by it in good faith in accordance
with the advice of such counsel.
(b) If a controversy arises between the parties hereto, or
between the parties hereto and any person not a party hereto, as to whether or
not, or to whom, the Escrow Agent shall deliver the Assignment or any portion
thereof or as to any other matter arising out of or relating to this Escrow
Agreement or the Assignment deposited hereunder, the Escrow Agent shall not be
required to determine same and need not make any delivery of the Assignment but
may retain the same until the rights of the parties to the dispute shall have
finally been determined by agreement or by final order of a court of competent
jurisdiction, in accordance with Section 1(c) hereof. The Escrow Agent shall be
entitled to assume that no such controversy has arisen unless it has received a
written notice that such a controversy has arisen which refers specifically to
this Escrow Agreement and identifies by name and address the adverse claimants
to the controversy.
(c) This Agreement shall terminate upon the distribution of the
Assignment by the Escrow Agent in accordance with this Agreement.
Notwithstanding any termination of this Agreement, the provisions of Section
3(a) hereof shall survive such termination and remain in full force and effect.
(d) The Escrow Agent may resign and be discharged from its
duties hereunder at any time by giving at least 30 days' notice of such
resignation to Jensen and Recoton, specifying a date upon which such resignation
shall take effect (the "Resignation Notice"); PROVIDED, HOWEVER, that the Escrow
Agent shall continue to serve until its successor accepts the Assignment. Upon
receipt of any Resignation Notice, a successor Escrow Agent shall be appointed
by Jensen and Recoton, such successor Escrow Agent to become the Escrow Agent
hereunder on the later of the date set forth in the Resignation Notice and the
date on which the successor Escrow Agent accepts the Assignment.
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<PAGE>
If an instrument of acceptance by a successor Escrow Agent shall not have
been delivered to the resigning Escrow Agent within 15 days after delivery of
the Resignation Notice, the resigning Escrow Agent may petition any court of
competent jurisdiction for the appointment of a successor Escrow Agent.
Jensen and Recoton, acting jointly, may at any time substitute a new Escrow
Agent by giving 20 days' notice thereof to the current Escrow Agent and
paying all fees and expenses of the current Escrow Agent as provided in
Section 3(a)(iii) hereof
4. BINDING AGREEMENT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns.
IN WITNESS WHEREOF, Recoton and Jensen have each caused this Agreement
to be executed on its behalf by a duly authorized officer as of the day and year
first above written.
RECOTON CORPORATION
By: /s/ Stuart Mont
-----------------------------
Name: Stuart Mont
Title: Executive Vice
President-Operations
INTERNATIONAL JENSEN INCORPORATED
By: /s/ Marc Tanenberg
-----------------------------
Name: Marc Tanenberg
Title: Vice President
The undersigned, by its duly
authorized partner, hereby
accepts appointment as Escrow
Agent pursuant to the foregoing
Agreement.
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
By: /s/ John R. Obiala
------------------------------
Name: John R. Obiala
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<PAGE>
EXHIBIT 2.5
AGREEMENT
RECOTON CORPORATION ("Recoton") and INTERNATIONAL JENSEN INCORPORATED
("Jensen") hereby agree as of May 9, 1996 as follows:
1. Recoton hereby consents to the execution of the Second Amended and
Restated Agreement for Purchase and Sale of Assets between Jensen and
IJI Acquisition Corp. ("IJI Acquisition") dated as of January 3, 1996
(the "OE Agreement").
2. Jensen shall not agree to any amendment to the OE Agreement (including
without limitation any exhibits or schedules thereto), nor shall it
agree to any language for exhibits stated "to be attached subsequent
to execution" nor shall it agree to the sale of any portion of
Jensen's accounts receivable related to the OEM Business (as defined
in the OE Agreement) pursuant to Section 1.8 of the OE Agreement at a
discount in excess of an aggregate of $200,000 off of the face amount
of such receivables, without in each case Recoton's prior written
approval.
3. If requested by Recoton, Jensen shall at Recoton's expense assert
whatever rights it may have under the OE Agreement to seek to compel
specific performance by IJI Acquisition.
IN WITNESS WHEREOF, the parties hereto have entered into this agreement as
of the date set forth above.
RECOTON CORPORATION
By: /s/ Stuart Mont
-------------------------------
Name: Stuart Mont
Title: Executive Vice
President - Operations
INTERNATIONAL JENSEN INCORPORATED
By: /s/ Marc Tanenberg
-------------------------------
Name: Marc Tanenberg
Title: Vice President
<PAGE>
EXHIBIT 99.1
INTERNATIONAL JENSEN INCORPORATED
PRESS RELEASE DATED MAY 10, 1996
Lincolnshire, IL, May 10, 1996 -- International Jensen Incorporated ("IJI")
(Nasdaq National Market: IJIN) announced today that its Board of Directors has
approved an enhanced agreement to merge with Recoton Corporation. In general,
the agreement provides for all stockholders, other than Robert G. Shaw and
William Blair Leveraged Capital Fund, L.P. (the "Blair Fund"), to receive $10.00
per share and for Mr. Shaw and the Blair Fund to receive $8.90 per share. The
agreement continues to require IJI to sell its Original Equipment Manufacturing
("OEM") business prior to the closing to IJI Acquisition Corp., a newly formed
company controlled by Mr. Shaw, IJI's CEO and President, but IJI Acquisition
Corp. has agreed to increase the purchase price for the OEM Business by
approximately $1,300,000. The consideration to stockholders in the Recoton
transaction will be approximately 55% in cash and 45% in stock, subject to
certain conditions, with stockholders having the right to receive cash and/or
Recoton stock subject to certain allocation procedures.
A Special Committee of IJI's Board consisting of IJI's Board of Directors,
with the exception of Messrs. Shaw and Chandler, considered the latest proposals
of Emerson Radio Corp. ("Emerson") and the enhanced Recoton proposal in meetings
on May 8, 1996 and May 9, 1996. The Special Committee recommended the enhanced
Recoton Agreement to the IJI Board which approved the transaction unanimously on
May 10, 1996, with Mr. Shaw abstaining.
The IJI Special Committee concluded that the enhanced Recoton offer was in
the best interest of IJI's stockholders and recommended proceeding with the
enhanced Recoton transaction because, among other things:
- - The $10.00 per share consideration offered to the public stockholders in
the enhanced Recoton transaction exceeds the price reflected in two of
Emerson's three latest proposals. In addition, Emerson's latest proposal
indicated Emerson would pay IJI stockholders $9.90 per share in cash, but
included a condition that the Blair Fund sign a voting agreement with
Emerson that the Blair Fund was not willing to sign.
- - The third Emerson proposal describes a payment of $9.90 per share plus
possible additional payments to stockholders other than Mr. Shaw and the
Blair Fund but stipulates a payment of $9.00 per share for Mr. Shaw and the
Blair Fund, neither of which had agreed to accept less from Emerson than
other stockholders. Absent their consent, the Special Committee deemed it
improper to recommend the proposal as a matter of Delaware law and in light
of fiduciary duties owed to all stockholders, including Mr. Shaw and the
Blair Fund.
- - Mr. Shaw, who owns approximately 37% of IJI's shares, does not support any
of the Emerson proposals received to date.
-1-
<PAGE>
- - The Blair Fund, which owns 26% of IJI's shares, does not support any of the
Emerson proposals received to date.
- - Recoton is likely to be able to consummate the transaction within the
contemplated time period.
- - The termination fee payable by IJI under the enhanced Recoton transaction
is essentially the same as (or less than, depending on expenses) the
termination fee required under Emerson's latest proposal.
IJI expects to mail proxy materials to stockholders in the near future and
anticipates closing with Recoton by late June.
The enhanced Recoton transaction includes revisions of the termination fee
provisions of the Recoton Agreement and the agreement regarding the AR
trademarks which originally were structured to provide offsetting payments upon
termination of the Recoton Agreement, under certain circumstances. The amended
agreement regarding the AR trademarks now provides Recoton an option to acquire
those trademarks, and IJI an option to sell those trademarks upon termination of
the Recoton Agreement, for $3,500,000, an amount believed by IJI's Special
Committee and IJI's Board of Directors to be more than fair value for the
trademarks. The amended termination fee provisions of the Recoton Agreement now
provide that (i) IJI is required to pay Recoton a termination fee of $1,500,000
plus expenses of up to $2,500,000 under certain circumstances and (ii) Recoton
is required to pay to IJI a termination fee of $1,500,000 plus expenses of up to
$2,500,000 under certain circumstances.
In connection with Recoton's enhanced offer, the Blair Fund, which owns
approximately 26% of the shares of IJI, amended a prior Stock Option and Voting
Agreement which now provides (i) an option to Recoton to purchase the Blair
Fund's shares for $8.90 per share plus half of any net proceeds which Recoton
receives upon sale of such shares to the extent such net proceeds are between
$8.90 and $10.90 per share plus 100% of the net proceeds which Recoton may
receive over $10.90 per share upon such sale, and (ii) an agreement to vote its
shares in favor of the Recoton transaction and to provide a proxy to Recoton to
vote its shares under certain circumstances. In addition, Mr. Shaw amended a
prior agreement with Recoton to provide that in the event a third party other
than Recoton acquires IJI, he will pay to Recoton half of the spread between (a)
the net proceeds per share received by Mr. Shaw, but not to exceed $10.90 per
share and (b) $8.90 per share, subject to certain obligations of Recoton to
reimburse possible tax liabilities.
On May 9, 1996, IJI was told that a lawsuit by a stockholder had been filed
in the Court of Chancery of the State of Delaware against IJI, its directors,
Recoton Corporation, RC Acquisition Sub, Inc., IJI Acquisition Corp., William
Blair & Company and the Blair Fund. A copy of the Complaint was telecopied to
IJI at 11:45 a.m. on May 9, 1996. The lengthy Complaint is in three counts.
Count I alleges breaches of fiduciary duty by IJI directors and affiliates of
some of the directors by taking various actions, including approving and
continuing to pursue the OEM sale to Mr. Shaw, refusing to pursue the allegedly
higher price Emerson proposal and imposing allegedly inappropriate asset lockups
and termination fees. Count II alleges that all of the defendants have aided
and abetted the breaches of fiduciary duty described
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<PAGE>
in Count I. Count III alleges that various agreements of IJI with Recoton
and others are invalid as a matter of Delaware Law. The plaintiff requests
temporary and permanent injunctive and declaratory relief, rescission of
various transactions, such other equitable or damage relief as the court
finds proper and an award of attorney's fees and expenses.
IJI believes the Complaint is without basis in fact or law and based upon
misleading information. IJI and its directors intend to oppose the litigation
vigorously.
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<PAGE>
EXHIBIT 99.2
INTERNATIONAL JENSEN INCORPORATED
PRESS RELEASE DATED MAY 14, 1996
Lincolnshire, IL, May 14, 1996 -- International Jensen Incorporated ("IJI")
(Nasdaq National Market: IJIN) announced today that a federal district court in
Chicago entered the following temporary restraining order against Emerson Radio
Corp., and its President Eugene Davis ("Defendants"):
"Defendants and all persons acting in concert with them are enjoined from
further solicitation of Jensen shareholders or their representatives until
Emerson has filed a Proxy Statement with the SEC which complies with
the provisions of Regulation 14A of the Securities Exchange Act of 1934;
from making further solicitation containing false or misleading statements
of material fact or material omissions; and from disclosing confidential
information in violation of the Confidentiality Agreement."
The order was entered on Monday, May 13, 1996 in a case which IJI had filed on
Friday, May 10, 1996 complaining of allegedly improper proxy solicitation,
misleading statements and disclosure of IJI's confidential information.
A Special Committee of the IJI Board of Directors is considering the Emerson
proposals to acquire IJI described in Emerson's May 13, 1996 press release and
IJI is continuing to work on the proxy materials relating to the Recoton
transaction.
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