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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): JUNE 23, 1996
INTERNATIONAL JENSEN INCORPORATED
(Exact name of registrant as specified in its charter)
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DELAWARE 0-19779 13-3346656
(State or other jurisdiction (Commission file number) (I.R.S. employer
of incorporation) identification no.)
25 TRI-STATE INTERNATIONAL
OFFICE CENTER, SUITE 400
LINCOLNSHIRE, ILLINOIS 60069
(Address of principal executive office) (Zip Code)
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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Exhibit Index at sequentially numbered page 4.
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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"). A copy of
the Merger Agreement was filed with the Securities and Exchange Commission
("SEC") on or about January 12, 1996. On January 30, 1996, the Merger Agreement
was amended and restated (the "Amended and Restated Merger Agreement") and a
copy of the Amended and Restated Merger Agreement was filed with the SEC on or
about January 30, 1996. On May 1, 1996 the Merger Agreement was further amended
and restated (the "Second Amended and Restated Merger Agreement") and certain
other related agreements were entered into between IJI and/or Recoton or other
parties at or about the same time. Copies of the Second Amended Merger
Agreement and certain related agreements were filed by IJI with the SEC on or
about May 8, 1996. On May 10, 1996 the Merger Agreement was further amended and
restated (the "Third Amended and Restated Merger Agreement") and certain of the
related agreements also were amended and restated. On June 23, 1996, the Merger
Agreement was further amended and restated (the "Fourth Amended and Restated
Merger Agreement") and certain of the related agreements also were amended and
restated. This Form 8-K is being made for the purpose of filing the Fourth
Amended and Restated Merger Agreement which is included herewith as Exhibit 2.1
and the other amended and restated agreements entered into between IJI and/or
Recoton or other parties at or about the same time, which are included herewith
as Exhibits 2.2 and 2.3.
Substantive changes in the Fourth Amended and Restated Merger Agreement, as
compared to the Third Amended and Restated Merger Agreement, include the
following:
- The price per share offered by Recoton to the IJI stockholders was
increased to $11.00 per share; the price offered to Robert G. Shaw and
William Blair Leveraged Capital Fund, L.P. (collectively, the
"Principal Stockholders"), however, remained at $8.90 per share.
- The merger consideration will be paid entirely in cash, and,
accordingly, the merger will not be tax free as it was before to the
extent that payment was previously made in stock.
- The Termination Date was moved back from July 15, 1996 to September 2,
1996 or such other date as Recoton may specify (but not later than
March 31, 1997).
- The period during which IJI has a contingent obligation to pay a
break-up fee upon the occurrence of certain events following
termination of the merger agreement was extended from nine months to
one year.
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,
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1996 (the "Amended and Restated OEM Agreement"). Copies of the Amended and
Restated OEM Agreement were filed with the Commission on or about May 8, 1996.
On May 10, 1996, the OEM Agreement was further amended to increase the Purchase
Price (as defined therein) to $16,537,000 (the "Second Amended and Restated OEM
Agreement"). The Second Amended and Restated OEM Agreement was filed with the
SEC on or about May 16, 1996. On June 23, 1996, the OEM Agreement was amended
further to increase the Purchase Price (as defined therein) to $18,405,000
subject to certain adjustments or modifications which may increase or decrease
the Purchase Price (the "Third Amended and Restated OEM Agreement"). The Third
Amended and Restated OEM Agreement is included herewith as Exhibit 2.2.
On January 3, 1996, IJI and Recoton entered into an agreement (the "AR
Agreement"), pursuant to which Recoton acquired from IJI an exclusive world-wide
license to and 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. Such agreement was
amended, and a related escrow agreement was entered into, on May 9, 1996. On
June 23, 1996, Recoton and IJI further amended the AR Agreement to extend the
license term until December 31, 2000, and to change the license fee, effective
January 1, 1997, to the greater of $120,000 per year (payable in monthly
installments) or four percent (4%) of net Shipments, as that term is defined in
the AR Agreement. A copy of the Amended and Restated AR Agreement is included
herewith as Exhibit 2.3.
On June 24 and June 26, 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 Fourth 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, but executed on
June 23, 1996.
Exhibit 2.2 Third Amended and Restated Agreement for Purchase and Sale of the
OEM Business of International Jensen Incorporated by and to IJI
Acquisition dated as of January 3, 1996, but executed on June 23,
1996.
Exhibit 2.3 Amended and Restated Exclusive World-Wide License and Option to
Sell and Option to Purchase Proprietary Rights between Recoton
Corporation and International Jensen Incorporated dated as of
January 3, 1996, but executed on June 23, 1996.
Exhibit 99.1 International Jensen Incorporated Press Release dated June 24,
1996.
Exhibit 99.2 International Jensen Incorporated Press Release dated June 26,
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: July 3, 1996 By: /s/ Marc T. Tanenberg
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Marc T. Tanenberg
Vice President Finance and Chief
Financial Officer
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EXHIBIT 2.1
FOURTH AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
FOURTH 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 Acquisition Sub with and into Jensen (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, 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") Acquisition Sub shall be merged with and into Jensen
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 Acquisition Sub shall thereupon cease. Jensen shall be the surviving
corporation in the Merger (hereinafter sometimes referred to as the "Surviving
Corporation").
Section 1.2 EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective at such time (the "Effective Time") after the Closing (as defined
below) as a copy of the duly completed Certificate of Merger (the "Merger
Filing") is delivered to the Secretary of State of the State of Delaware for
filing and is filed by the Secretary of State of the State of Delaware or at
such later time as the parties may agree to specify in the Certificate of
Merger.
Section 1.3 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in Section 259 of the GCL.
Section 1.4 CLOSING. The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place at the offices of Stroock &
Stroock & Lavan, 7 Hanover Square, New York, New York on August 15, 1996 at 9:30
A.M. New York time, or, if later, on the second business day
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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:
<TABLE>
<CAPTION>
OFFICE HOLDER
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Chairman Robert L. Borchardt
President & CEO Robert G. Shaw
Vice President & CFO Marc T. Tanenberg
Secretary Stuart Mont
Treasurer & Assistant Secretary Joseph H. Massot
</TABLE>
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 the right to receive merger consideration (the
"Merger Consideration") in the amount of $11.00 in cash (hereinafter the "Per
Share Cash Amount") or $8.90 in cash 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"). 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. 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
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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 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.
(b) Notwithstanding the foregoing, if between the date of this Agreement and
the Effective Time the outstanding 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 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.
(c) 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.
3.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. 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 cash in the amount equal to the sum of (i) the number
of shares of Jensen Common Stock outstanding excluding shares held beneficially
by the Principal Stockholders multiplied by the Per Share Cash Amount plus (ii)
the number of shares of Jensen Common Stock held beneficially by the Principal
Stockholders multiplied by the Principal Stockholders Per Share Cash Amount. The
Exchange Agent shall, pursuant to irrevocable instructions, deliver the 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. The Exchange Fund shall be invested by the Exchange Agent as directed
by Recoton (so long as such directions do not impair the rights of the holders
of the shares of Jensen Common Stock) in direct obligations of the United States
of America, obligations for which the full faith and credit of the United States
of America is pledged to provide for the payment of principal and interest,
commercial paper rated P-1 or better by Moody's Investors Services, Inc. or A-1
or better by Standard & Poor's Corporation or certificates of deposit issued by
the Exchange Agent or a commercial bank having at least $1,000,000,000 in
assets, and any net earnings with respect thereto shall be paid to Recoton as
and when requested by Recoton.
(b) Promptly after the Effective Time, Recoton will send, or will cause the
Exchange Agent to send, to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of Jensen Common Stock, other than holders of certificates
which represent Shares canceled and retired pursuant to Section 3.1(c) hereof,
(i) a letter of transmittal for use in such exchange (which shall specify that
the delivery shall be effected, and risk of loss and title shall pass, only upon
proper delivery of the certificates representing shares of Jensen Common Stock
to the Exchange Agent) and (ii) instructions for use in effecting the surrender
of certificates for payment therefor (the "Exchange Instructions").
(c) Each holder of certificates representing shares of Jensen Common Stock
that have been converted into a right to receive the Merger Consideration which
holders of such certificates are entitled to receive pursuant to this Article
III, upon surrender to the Exchange Agent of a certificate or certificates
representing such shares of Jensen Common Stock, together with a properly
completed and executed letter of transmittal covering such shares of Jensen
Common Stock and any other documents reasonably required by the Exchange
Instructions, will promptly receive the Merger
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Consideration payable in respect of such shares of Jensen Common Stock as
provided in this Article III, without any interest thereon, less any required
withholding of taxes, and the certificates so surrendered shall forthwith be
canceled. Until so surrendered, each such certificate shall, at and after the
Effective Time, represent for all purposes only the right to receive such Merger
Consideration.
(d) If any portion of the Merger Consideration is to be paid to a person
other than the registered holder of the shares of Jensen Common Stock
represented by the certificate or certificates surrendered in exchange therefor,
it shall be a condition to such payment that the certificate or certificates so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person requesting such payment shall pay to the Exchange
Agent any transfer or other taxes required as a result of such payment to a
person other than the registered holder of such shares of Jensen Common Stock or
establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not payable. The Exchange Agent may make any tax withholdings required by
law if not provided with the appropriate documents.
(e) NO FURTHER RIGHTS IN JENSEN COMMON STOCK. All cash paid upon
conversion of the shares of Jensen Common Stock in accordance with the terms
hereof shall be deemed to have been paid in full satisfaction of all rights
pertaining to such shares of Jensen Common Stock.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund
(including, without limitation, all interest and other income received by the
Exchange Agent in respect of all funds made available to it) 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 cash 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 Internal Revenue
Code of 1986, as amended (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) Immediately prior to the Effective Time, each holder of then outstanding
options ("Options") to purchase shares (whether or not then presently
exercisable) granted under 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 (collectively, the "Option Plans") will be entitled to
receive, and shall receive, in settlement of each such Option a cash payment
from Jensen in an amount equal to the product of (i) the Merger Consideration
minus the exercise price per share of the Option and (ii) the number of shares
of Jensen Common Stock covered by such Option; PROVIDED, HOWEVER, that each
optionee shall receive a payment of at least $50. Jensen shall use its best
efforts to cause each holder of Options (whether or not then presently
exercisable) to execute an agreement consenting to the cancellation of such
Options as aforesaid.
(b) 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(b) (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(b) 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(b) promptly after the receipt by the Surviving Corporation
from the Deferred Holder of a Cancellation Agreement.
Section 3.5 DISSENTING SHARES. Notwithstanding any other provisions of
this Agreement to the contrary, shares of Jensen Common Stock that are
outstanding immediately prior to the Effective Time and which are held by
stockholders who shall have not voted in favor of the Merger or consented
thereto in writing and who shall have demanded properly in writing appraisal for
such shares in accordance with Section 262 of the GCL (collectively, the
"Dissenting Shares") shall not be converted into or represent the right to
receive the Merger Consideration. Such stockholders shall be entitled to receive
payment of the appraised value of such shares of Jensen Common Stock held by
them in accordance with the provisions of such Section 262, except that all
Dissenting Shares held by stockholders who shall have failed to perfect or who
effectively shall have withdrawn or lost their rights to appraisal of such
shares of Jensen Common Stock under such Section 262 shall thereupon be deemed
to have been converted into and to have become exchangeable, as of the Effective
Time, for the right to receive, without any interest thereon, the Merger
Consideration 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
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businesses as it is now being conducted. Jensen is qualified to do business and
is in good standing in each jurisdiction in which the properties owned, leased
or operated by it or the nature of the businesses conducted by it makes such
qualification necessary, except where the failure to be so qualified and in good
standing will not, when taken together with all other such failures, have a
Jensen Material Adverse Effect. For purposes of this Agreement, a Jensen
Material Adverse Effect shall be a material adverse effect on the business,
operations, properties, assets, condition (financial or otherwise), results of
operations or prospects of Jensen and its subsidiaries taken as a whole,
excluding the Original Equipment Business (except that for purposes of
determining whether a Jensen Material Adverse Effect arising out of the matters
described in Section 4.17 has occurred, "Jensen Material Adverse Effect" shall
mean potential liabilities and costs that reasonably may exceed $5,000,000).
True and complete copies of Jensen's Certificate of Incorporation and By-Laws,
as in effect on the date hereof, including all amendments thereto, have
heretofore been delivered to Recoton.
Section 4.2 JENSEN COMMON STOCK. Jensen has 10,000,000 authorized shares
of Common Stock, of which 5,714,799 shares are outstanding as of November 30,
1995, all of which are or shall be validly issued and are fully paid,
nonassessable and free of preemptive rights. Except as set forth in Section 4.2
of the separate disclosure schedule executed and delivered by Jensen
simultaneous with the execution and delivery of the Agreement ("Jensen's
Disclosure Schedule"), as of the date hereof, there are no outstanding
subscriptions, options, warrants, rights, calls, contracts, voting trusts,
proxies or other commitments, understandings, restrictions, or arrangements,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement obligating Jensen to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of the capital stock of
Jensen or obligating Jensen or any subsidiary of Jensen to grant, extend or
enter into any such agreement or commitment except pursuant to this Agreement.
Section 4.3 SUBSIDIARIES. Each direct and indirect subsidiary of Jensen is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has the requisite power and
authority to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted. Each of such subsidiaries is
qualified to do business, and is in good standing, in each jurisdiction in which
the properties owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified and in good standing will not, when taken together with all such
other failures, have a Jensen Material Adverse Effect. Except as set forth in
Section 4.3 of Jensen's Disclosure Schedule, all of the outstanding shares of
capital stock of each subsidiary are validly issued, fully paid, nonassessable
and free of preemptive rights, and those owned directly or indirectly by Jensen
are owned free and clear of any liens, claims, encumbrances, security interests,
equities, charges and options of any nature whatsoever. Except as set forth in
Section 4.3 of Jensen's Disclosure Schedule or in Jensen's Annual Report on Form
10-K for the year ended February 28, 1995 or the exhibits and schedules thereto
(the "Jensen 10-K" and, together with any reports filed by Jensen with the
Securities and Exchange Commission (the "SEC") under the Securities Exchange Act
of 1934, as amended, (the "Exchange Act") after the Jensen 10-K and prior to the
date of this Agreement, the "Jensen 1995 Reports"), Jensen owns directly or
indirectly all of the issued and outstanding shares of the capital stock of each
of its subsidiaries. Except as set forth in Section 4.3 of Jensen's Disclosure
Schedule or in the Jensen 1995 Reports, there are no outstanding subscriptions,
options, warrants, rights, calls, contracts, voting trusts, proxies or other
commitments, understandings, restrictions or arrangements relating to the
issuance, sale, voting, transfer, ownership or other rights affecting any shares
of capital stock of any subsidiary of Jensen, including any right of conversion
or exchange under any outstanding security, instrument or agreement. Section 4.3
of Jensen's Disclosure Schedule sets forth a list of all material corporations,
partnerships, joint ventures and other business entities in which Jensen or any
of its subsidiaries directly or indirectly owns an interest and such
subsidiaries' direct and indirect share, partnership or other ownership interest
of each such entity.
Section 4.4 AUTHORITY; NON-CONTRAVENTION; APPROVALS. (a) Jensen has full
corporate power and authority to enter into this Agreement and, subject to
Jensen Stockholders' Approval (as defined in
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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 (iv) the making of
the Merger Filing with the Secretary of State of the State of Delaware in
connection with the Merger (the filings and approvals referred to in clauses (i)
through (iv) are collectively referred to as the "Jensen Required Approvals"),
no declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any governmental or regulatory body or authority is
necessary for the execution and delivery of this Agreement by Jensen or the
consummation by Jensen of the transactions contemplated hereby.
Section 4.5 REPORTS AND FINANCIAL STATEMENTS; DERIVATIVE
TRANSACTIONS. Since February 28, 1995, Jensen and each of its subsidiaries
required to make filings under the Securities Act, the Exchange Act and
applicable state laws and regulations, as the case may be, have filed all forms,
statements, reports and documents (including all exhibits, amendments and
supplements thereto) required to be filed by them under each of the Securities
Act, the Exchange Act, applicable laws and regulations of Jensen's and its
subsidiaries' jurisdictions of incorporation and the respective rules and
regulations thereunder, all of which complied in all material respects with all
applicable requirements of the appropriate act and the rules and regulations
thereunder. Jensen has previously delivered to Recoton true and complete copies
of its (a) Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and
Current Reports on Form 8-K filed by Jensen or any of its subsidiaries with the
SEC from February 28, 1992, until the date hereof, (b) proxy and information
statements relating to all meetings of its stockholders (whether annual or
special) and actions by written consent in lieu of a stockholders' meeting from
February 28, 1992 until the date hereof and (c) all other reports or
registration statements filed by Jensen with the SEC from February 28, 1992
until the date hereof
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(collectively, the "Jensen SEC Reports"), and (d) audited consolidated financial
statements for the fiscal year ended February 28, 1995 and its unaudited
consolidated financial statements for the nine months ended November 30, 1995
(the "Nine Month Jensen Financial Statements") (collectively the "1995 Jensen
Financial Statements"). As of their respective dates, the Jensen SEC Reports did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited interim financial
statements of Jensen included in the Jensen SEC Reports and the 1995 Jensen
Financial Statements (collectively, the "Jensen Financial Statements") fairly
present the financial position of Jensen and its subsidiaries as of the dates
thereof and the results of their operations and cash flows for the periods then
ended in conformity with generally accepted accounting principles applied on a
consistent basis (except as may be indicated therein or in the notes thereto),
subject, in the case of the unaudited interim financial statements, to normal
year-end and audit adjustments and any other adjustments described therein.
Jensen and its subsidiaries do not, and will not, use any derivative financial
instruments other than as disclosed in Section 4.5 of Jensen's Disclosure
Schedule.
Section 4.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
Section 4.6 of Jensen's Disclosure Schedule or in the Jensen 1995 Reports,
neither Jensen nor any of its subsidiaries had at February 28, 1995, or has
incurred since that date, any liabilities or obligations (whether absolute,
accrued, contingent or otherwise) of any nature, except liabilities, obligations
or contingencies (a) which are accrued or reserved against in the 1995 Jensen
Financial Statements or reflected in the notes thereto or (b) which were
incurred after February 28, 1995, and were incurred in the ordinary course of
business and consistent with past practices and, in either case, except for any
such liabilities, obligations or contingencies which (i) would not, in the
aggregate, have a Jensen Material Adverse Effect or (ii) have been discharged or
paid in full prior to the date hereof.
Section 4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Section 4.7 of Jensen's Disclosure Schedule or in the Jensen 1995 Reports, since
February 28, 1995 there has not been any material adverse change in the business
(including, without limitation, any actual or threatened loss of significant
customers (excluding customers of the Original Equipment Business) or any
cancellation or threatened cancellation of any orders with an aggregate value of
$1,000,000 or more (excluding orders of the Original Equipment Business)),
operations, properties, assets, liabilities, condition (financial or other),
results of operations or prospects of Jensen and its subsidiaries, taken as a
whole (excluding the original equipment business), and Jensen and its
subsidiaries have in all material respects conducted their respective businesses
in the ordinary course consistent with past practice.
Section 4.8 LITIGATION. Except as disclosed in the Jensen 1995 Reports,
the 1995 Jensen Financial Statements, or Section 4.8 of Jensen's Disclosure
Schedule, (a) there are no claims, suits, actions or proceedings pending or, to
the knowledge of Jensen, threatened, nor to the knowledge of Jensen are there
any investigations or reviews pending or threatened, against, relating to or
affecting Jensen or any of its subsidiaries, which, if adversely determined,
would have a Jensen Material Adverse Effect; (b) there have not been any
developments since the date of the Jensen 10-K with respect to such claims,
suits, actions, proceedings, investigations or reviews which, individually or in
the aggregate, may have a Jensen Material Adverse Effect; and (c) except as
contemplated by the Jensen Required Approvals, neither Jensen nor any of its
subsidiaries is subject to any judgment, decree, injunction, rule or order of
any court, governmental department, commission, agency, instrumentality or
authority or any arbitrator which prohibits or restricts the consummation of the
transactions contemplated hereby or may have a Jensen Material Adverse Effect.
Section 4.9 PROXY STATEMENT. The proxy statement to be distributed in
connection with the Jensen Stockholders' Meeting (the "Proxy Statement") 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
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with the SEC of such Proxy Statement or any amendment or supplement thereto or
any earlier communication to stockholders of Jensen with respect to the
transactions contemplated by this Agreement. The Proxy Statement will comply as
to form in all material respects with all applicable laws, including the
provisions of the Exchange Act and the rules and regulations promulgated
thereunder. Notwithstanding the foregoing, no representation is made by Jensen
with respect to information supplied by Recoton or Acquisition Sub or their
representatives specifically for inclusion in the Proxy Statement.
Section 4.10 NO VIOLATION OF LAW. Except as set forth in Section 4.10 of
Jensen's Disclosure Schedule, neither Jensen nor any of its subsidiaries is in
violation of, or, to the knowledge of Jensen, is under investigation with
respect to or has been given notice or been charged with any violation of, any
law, statute, order, rule, regulation, ordinance, or judgment of any
governmental or regulatory body or authority, except for violations which in the
aggregate do not have a Jensen Material Adverse Effect. Jensen and its
subsidiaries have all material permits, licenses, franchises and other
governmental authorizations, consents and approvals (the "Jensen Government
Approvals") necessary to conduct their businesses as presently conducted and,
except as set forth in Section 4.10 of Jensen's Disclosure Schedule, all such
Jensen Government Approvals shall be transferred to the Surviving Corporation.
Section 4.11 COMPLIANCE WITH AGREEMENTS. Except as disclosed in the Jensen
1995 Reports, the Jensen 1995 Financial Statements or Section 4.11 of Jensen's
Disclosure Schedule, Jensen and each of its subsidiaries are not in breach or
violation of or in default in the performance or observance of any term or
provision of, and no event has occurred which, with lapse of time or action by a
third party, could result in a default under, (i) the respective charters or
by-laws of Jensen or any of its subsidiaries or (ii) any contract, commitment,
agreement, indenture, mortgage, loan agreement, note, lease, bond, license,
approval or other instrument to which Jensen or any of its subsidiaries is a
party or by which any of them is bound or to which any of their property is
subject, which breaches, violations and defaults, in the case of clause (ii) of
this Section 4.11 would have, in the aggregate, a Jensen Material Adverse
Effect.
Section 4.12 TAXES. (a) Jensen and its subsidiaries have duly filed with
the appropriate federal, state, local, and foreign taxing authorities all tax
returns required to be filed by them on or prior to the Effective Time and such
tax returns are true and complete in all material respects, and duly paid in
full or made adequate provision for the payment of all taxes for all periods
ending at or prior to the Effective Time. The liabilities and reserves for taxes
reflected in the Jensen balance sheets (x) as of February 28, 1995, contained in
the Jensen 10-K, are adequate to cover all taxes for any period ending on or
prior to February 28, 1995; and (y) as of August 31, 1995, contained in the Form
10-Q filed with the SEC on or about October 15, 1995 (the "Six Month 1995
Financial Statements"), are adequate to cover all taxes for any period ending on
or prior to August 31, 1995; and (z) as of November 30, 1995, contained in the
Nine Month Financial Statements are adequate to cover all taxes for any period
ending on or prior to November 30, 1995. Except as set forth in Section 4.12 of
Jensen's Disclosure Schedule, (i) there are no material liens for taxes upon any
property or asset of Jensen or any subsidiary thereof, except for (x) liens for
taxes not yet due and (y) any such liens for taxes shown on such Section 4.12 of
Jensen's Disclosure Statement, which are being contested in good faith through
appropriate proceedings; (ii) Jensen has not made any change in accounting
method, received a ruling from any taxing authority or signed an agreement with
any taxing authority which will materially and adversely affect Jensen in future
periods; (iii) during the past three years neither Jensen nor any of its
subsidiaries has received any notice of deficiency, proposed deficiency or
assessment from any governmental taxing authority with respect to taxes of
Jensen or any of its subsidiaries, except any such notice of deficiency,
proposed deficiency or assessment which will not in the aggregate cause a Jensen
Material Adverse Effect, and, any such deficiency or assessment shown on such
Section 4.12 of Jensen's Disclosure Schedule has been paid or is being contested
in good faith through appropriate proceedings; (iv) the income tax returns for
Jensen and its subsidiaries are not currently the subject of any audit by the
Internal Revenue Service (the "IRS") or any other national taxing authority, and
such federal income tax returns have been examined by the IRS (or the applicable
statutes of
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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, except
that for purposes of Section 4.12(a), such term shall not include any amount
resulting from the Merger. The term "return" shall include any return,
declaration, report, estimate, information return and statement required to be
filed with or supplied to any taxing authority in connection with any taxes.
Section 4.13 CUSTOMS. Except as set forth in the Jensen 1995 Reports or in
Section 4.13 of Jensen's Disclosure Schedule, Jensen and its subsidiaries have
at all times been in compliance with all requirements administered and enforced
by the U.S. Customs Service, including, but not limited to the classification,
valuation, and marking of articles imported into the United States in a way so
as not to give rise to a Jensen Material Adverse Effect.
Section 4.14 EMPLOYEE BENEFIT PLANS; ERISA. (a) Section 4.14 of Jensen's
Disclosure Schedule lists all material employee benefit plans, employment
contracts or other arrangements for the provision of benefits for employees or
former employees of Jensen and its subsidiaries (other than its foreign
subsidiaries as to which such disclosure shall be provided within ten business
days after the date hereof and as to which the agreements, plans, contracts, or
other arrangements thereof shall not be unduly burdensome or out of the
ordinary), and, except as set forth in Section 4.14(a) of Jensen's Disclosure
Schedule, neither Jensen nor its subsidiaries have any commitment to create any
additional plan, contract or arrangement or to amend any such plan, contract or
arrangement so as to increase benefits thereunder, except as required under
existing collective bargaining agreements. Section 4.14(a) of Jensen's
Disclosure Schedule identifies all "employee benefit plans" within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), other than "multiemployer plans" within the meaning of
Section 3(37) of ERISA, covering current or former employees of Jensen and its
subsidiaries (the "Jensen Plans"), other than Jensen Plans which are described
in Jensen 1995 Reports or the Proxy Statement for the 1995 Annual Meeting of
Stockholders of Jensen. A true and correct copy of each of the employee benefit
plans, employment contracts and other arrangements for the provision of benefits
for employees and former employees of Jensen and its subsidiaries described in
the Jensen SEC Reports, the Jensen Plans listed on Section 4.14(a) of Jensen's
Disclosure Schedule, except for any multiemployer plans, and all contracts
relating thereto, or to the funding thereof (including, without limitation, all
trust agreements, insurance contracts, investment management agreements,
subscription and participation agreements and recordkeeping agreements), each as
will be in effect at the Effective Time, has been provided to Recoton. In the
case of any employee benefit plan, employment contract or other benefit
arrangement which is not in written form, an accurate description of such plan,
contract or arrangement as will be in effect at the Effective Time has been
provided to Recoton. A true and correct copy of
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the most recent annual report, actuarial report, summary plan description, and
Internal Revenue Service determination letter with respect to each such Jensen
plan, to the extent applicable, and a current schedule of assets (and the fair
market value thereof assuming liquidation of any asset which is not readily
tradeable) held with respect to any funded plan, Jensen Plan, or benefit
arrangement has been provided to Recoton by Jensen, and there have been no
material changes in the financial condition in the respective plans, Jensen
Plans or benefit arrangements from that stated in such annual report and
actuarial reports.
(b) Except as disclosed in the Jensen 1995 Reports or as set forth in
Section 4.14(b) of Jensen's Disclosure Schedule, (i) there have been no
prohibited transactions within the meaning of Section 406 of ERISA or Section
4975 of the Code with respect to any of the Jensen Plans which, assuming that
the taxable period of such transaction expired as of the date hereof, could
subject Jensen or its subsidiaries to a material tax or penalty under Section
502(i) of ERISA or Section 4975 of the Code; (ii) no liability (except for
premiums due) has been or is expected to be incurred by Jensen or any of its
subsidiaries under Title IV of ERISA with respect to any of the Jensen Plans or
with respect to any ongoing, frozen or terminated "single employer plan" within
the meaning of Section 4001(a)(15) of ERISA currently or formerly maintained by
any of them, or by any entity which is considered a single employer with Jensen
under Section 4001 of ERISA or Section 414 of the Code (a "Jensen ERISA
Affiliate"); (iii) all amounts which Jensen or its subsidiaries are required to
pay as contributions to the Jensen Plans have been timely made or have been
reflected in the Jensen Financial Statements; (iv) none of the Jensen Plans has
incurred any "accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived; (v) the current value
of all "benefit liabilities" within the meaning of Section 4001(a)(16) of ERISA
(as determined on the basis of the actuarial assumptions used in the Plan's most
recent actuarial valuation) under each of the Jensen Plans which is subject to
Title IV of ERISA did not exceed the then current value of the assets of such
plan allocable to such benefit liabilities by more than the amount disclosed in
the Jensen 10-K as of February 28, 1995; (vi) each of the Jensen Plans has been
operated and administered in all material respects in accordance with applicable
laws, including, but not limited to, the reporting and disclosure requirements
of Part 1 of Subtitle I of ERISA and the group health plan continuation
requirements of Section 4980B of the Code and Part 6 of Subtitle B of Title I of
ERISA; (vii) each of the Jensen Plans which is intended to be "qualified" within
the meaning of Section 401(a) of the Code has been determined by the IRS to be
so qualified and Jensen is not aware of any circumstances likely to result in
revocation of any such determination; (viii) there are no material pending,
threatened or anticipated claims involving any of the Jensen Plans other than
claims for benefits in the ordinary course; (ix) no notice of a "reportable
event" within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived has been required to be filed for any
of the Jensen Plans; (x) neither Jensen nor any of its subsidiaries is a party
to, nor participates or has any liability or contingent liability with respect
to, any multiemployer plan (regardless of whether based on contributions of a
Jensen ERISA affiliate); and (xi) neither Jensen nor its subsidiaries has any
liability or contingent liability for retiree life and health benefits under any
of the Jensen Plans other than statutory liability for providing group health
plan continuation coverage under Part 6 of Subtitle B of Title I of ERISA and
Section 4980B of the Code, except as set forth on Section 4.14(b) of Jensen's
Disclosure Schedule.
(c) Except as set forth in Section 4.14(c) of Jensen's Disclosure Schedule,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will accelerate benefits or any payments under
any Jensen employee agreement, plan or arrangement.
Section 4.15 MATERIAL DEFAULTS. Except as set forth on Section 4.15 of
Jensen's Disclosure Schedule, neither Jensen nor its subsidiaries is, or has
received any notice or has any knowledge that any other party is, in default in
any respect under any contract, agreement, commitment, arrangement, lease,
insurance policy, or other instrument to which Jensen or any of its subsidiaries
is a party or by which Jensen or any of its subsidiaries or the assets,
business, or operations receives benefits,
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except for those defaults which would not have, individually or in the
aggregate, a Jensen Material Adverse Effect; and there has not occurred any
event that with the lapse of time or the giving of notice or both would
constitute such a default.
Section 4.16 LABOR MATTERS. Except as set forth on Section 4.16 of
Jensen's Disclosure Schedule, there are no material controversies pending or, to
the knowledge of Jensen, threatened between Jensen or its subsidiaries and any
representatives of its employees, and, to the knowledge of Jensen, there are no
material organizational efforts presently being made involving any of the
presently unorganized employees of Jensen or its subsidiaries. Jensen and its
subsidiaries have complied in all material respects with all laws relating to
the employment of labor, including, without limitation, any provisions thereof
relating to wages, hours, collective bargaining, and the payment of social
security and similar taxes, and no person has, to the knowledge of Jensen,
asserted that Jensen or its subsidiaries are is liable in any material amount
for any arrears of wages or any taxes or penalties for failure to comply with
any of the foregoing.
Section 4.17 ENVIRONMENTAL MATTERS.
(a) Except as set forth in the Jensen 1995 Reports or in Section 4.17 to
Jensen's Disclosure Schedule, Jensen and its subsidiaries have complied in all
respects with all Environmental Laws (as defined below in this Section). Jensen
and its subsidiaries have obtained and will maintain through the Closing Date
all permits, licenses, certificates and other authorizations which are required
with respect to its operation under any Environmental Laws and all such permits,
licenses, certificates and other authorizations are listed on Section 4.17 to
Jensen's Disclosure Schedule.
(b) Except as set forth in the Jensen 1995 Reports or in Section 4.17 to
Jensen's Disclosure Schedule, Jensen and its subsidiaries are in compliance in
all respects with all permits, licenses and authorizations required by any
Environmental Laws, and is also in full compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in any Environmental Laws or contained in any
regulation or code promulgated or approved under the Environmental Laws, or any
plan, order, decree, judgment, injunction, notice or demand letter issued to or
entered, against Jensen thereunder. All products manufactured and services
provided by Jensen or its subsidiaries prior to the date hereof are in
compliance with all Environmental Laws applicable thereto and all such products
and services so manufactured or provided prior to the Closing Date will as of
such date be in compliance with all Environmental Laws applicable thereto.
Jensen has hereto delivered to Buyer true and complete copies of all
environmental studies made in the last ten years relating to the business or
assets of Jensen and its subsidiaries.
(c) Except as set forth in the Jensen 1995 Reports or Section 4.17 to
Jensen's Disclosure Schedule, there is no pending or, to Jensen's knowledge,
threatened civil, criminal or administrative Action, demand, claim, hearing,
notice of violation, investigation, proceeding, notice or demand letter that
affects or applies to Jensen or its subsidiaries, their business or assets, the
products they have manufactured or the services they have provided relating in
any way to any Environmental Laws or any regulation or code promulgated or
approved under the Environmental Laws, or any plan, order, decree, judgment,
injunction, notice or demand letter issued to or entered against Jensen or its
subsidiaries thereunder.
(d) Except as set forth in the Jensen 1995 Reports or in Section 4.17 to
Jensen's Disclosure Schedule, there are no past or present (or, to the knowledge
of Jensen, anticipated) events, conditions, circumstances, activities,
practices, incidents, Actions or plans which may interfere with or prevent
compliance or continued compliance by Jensen or its subsidiaries with any
Environmental Laws or with any regulation or code promulgated or approved under
the Environmental Laws, or any plan, order, decree, judgment, injunction, notice
or demand letter issued to or entered against Jensen or its subsidiaries
thereunder, or which may give rise to any common law or legal liability, or
otherwise form the basis of any claim, action, demand, suit, proceeding,
hearing, notice of violation, study or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage,
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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 nor any directors, officers, agents,
or employees of Jensen or any of its subsidiaries has (i) used any funds for
unlawful contributions, gifts, entertainment, or other unlawful expenses
relating to political activity, (ii) made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns or violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended, or (iii) made any other unlawful payment.
Section 4.19 NO EXCESS PARACHUTE PAYMENTS. Sections 4.14(a), 4.14(b), and
4.14(c) of Jensen's Disclosure Schedule set forth all written contracts,
arrangements, or undertakings (excluding 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
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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.
Section 4.22 TAKEOVER PROVISIONS. The Board of Directors of Jensen has
approved this Agreement and the OE Agreement by a vote of a majority of the
disinterested directors within the meaning of Article EIGHTH of Jensen's
Certificate of Incorporation. 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 was
formed for the purpose of engaging in the Merger and has not and will not engage
prior to the Effective
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Time in any activities other than those necessary to effectuate the terms of
this Agreement. 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 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 5.2(b) (formerly 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, and (iii) 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 (iii) collectively are 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
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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.
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 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(e) 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 or Jensen to recognize gain or loss for federal income tax
purposes as a result of the consummation of the Merger or (v) enter into any
contract, agreement, commitment or arrangement with respect to any of the
foregoing; PROVIDED, HOWEVER, that Jensen or any of its subsidiaries, after
consulting with Recoton, may take any of the actions otherwise prohibited by
this Section 6.1(c) if counsel to Jensen advises the Board of Directors of
Jensen or any of its subsidiaries that the failure to take such action or
actions might reasonably subject Jensen's or any of its subsidiaries'
directors to liability for breach of their fiduciary duties;
(d) use their best efforts to preserve intact their respective business
organizations and goodwill, keep available the services of their respective
present officers and key employees, and preserve the goodwill and business
relationships with suppliers, distributors, customers, and others having
business relationships with them;
(e) confer on a regular and frequent basis with one or more
representatives of Recoton to discuss operational matters of materiality and
the general status of ongoing operations;
(f) promptly notify Recoton of any significant changes in the business,
properties, assets, financial condition, or results of operations or
prospects of (i) Jensen or its subsidiaries taken as a whole (excluding the
Original Equipment Business) or (ii) the Original Equipment Business
separately;
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(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 subject to appropriate confidentiality
restrictions, 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 in reasonable detail 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 (including the
material terms thereof to the extent not restricted by any other binding
agreement) 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
(excluding the Original Equipment Business);
(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;
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(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 has provided Jensen with information pursuant to the
Confidentiality Agreement and in the course of its performance under this
Agreement.
(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 PROXY STATEMENT. Jensen shall prepare and file with the SEC as
soon as reasonably practicable after the date hereof the Proxy Statement and any
revisions thereof as may be responsive to SEC comments or changed facts. The
information provided and to be provided by Recoton and Jensen and by their
auditors, attorneys, financial advisors or other consultants or advisors for use
in the 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.
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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 Proxy
Statement has been amended to satisfy all comments of the staff of the SEC and,
subject to the fiduciary duties of the Board of Directors of Jensen under
applicable law, shall recommend and 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.
Section 7.4 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 Proxy Statement and any drafts of
any registration statement required under prior versions of this Agreement.
Section 7.5 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 7.6 PUBLIC STATEMENTS. The parties shall release a press release
immediately upon the signing of this Agreement in the form set forth as Exhibit
7.6 (formerly 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 7.7 ACCOUNTANT'S LETTERS. Jensen shall use its best efforts to
cause to be delivered to Recoton letters of Coopers and Lybrand, LLP,
independent auditors for Jensen, dated the date of the Proxy Statement and the
Effective Time (or such other dates reasonably acceptable to Recoton) with
respect to certain financial statements and other financial information included
in the Proxy Statement, which letters shall be in customary form and substance
reasonably satisfactory to Recoton.
Section 7.8 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
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may substitute therefor policies of at least the same level of coverage
containing terms and conditions which are in the aggregate no less advantageous
so long as no lapse in coverage occurs as a result of such substitution) with
respect to all matters, including the transactions contemplated hereby,
occurring prior to and including the Effective Time. Notwithstanding the
foregoing, neither Recoton, Acquisition Sub nor the Surviving Corporation shall
be required to expend in excess of $150,000 in the aggregate pursuant to this
Section 7.8(b).
Section 7.9 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 shall have
been approved and adopted by the requisite vote of the stockholders of
Jensen pursuant to Section 4.21;
(b) 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;
(c) 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);
(d) 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 unacceptable to Recoton;
(e) 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 unacceptable to Recoton; and
(f) Jensen shall have received one or more letters from Lehman Brothers
dated the date of the Proxy Statement or reasonably prior thereto (or such
other dates reasonably acceptable to Jensen and Recoton), which letters
shall be of the opinion that (1) the Merger Consideration is
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"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 or the
waiver thereof by Jensen:
(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 (or, in the case of Acquisition Sub, its Secretary) 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); and
(c) Recoton shall have deposited the 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 cash.
Section 8.3 CONDITIONS TO OBLIGATION OF RECOTON AND ACQUISITION SUB TO
EFFECT THE MERGER. The obligation of Recoton and Acquisition Sub to effect the
Merger shall be subject to the fulfillment at or prior to the Effective Time of
the additional following conditions or the waiver thereof by Recoton and
Acquisition Sub:
(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) Recoton and Acquisition Sub shall have received the letters of
Coopers & Lybrand, LLP contemplated by Section 7.7;
(d) Since the date hereof, no Jensen Material Adverse Effect shall have
occurred;
(e) 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;
(f) Recoton shall not have elected to terminate due to the results of
the inspections or tests performed in accordance with Section 6.2; and
(g) The number of Dissenting Shares shall not exceed 10% of the Jensen
Common Stock outstanding.
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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:
(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 September 2, 1996 or such later date as may be
designated by Recoton (but in no event later than March 31, 1997) (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, 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
unacceptable to Recoton 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 five 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 five
business days following receipt of notice of such breach or (y) a
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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 Effective Time, (i) any
preliminary or permanent injunction or other order or decree by any federal or
state court which prevents the consummation of the Merger shall have been
issued, and remains in effect (each party agreeing to use all reasonable efforts
to have any such injunction, order or decree lifted); (ii) any action shall have
been taken, or any statute, rule or regulation shall have been enacted, by any
state, federal or foreign government or governmental agency which would prevent
the consummation of the Merger or that would have a material adverse effect on
the prospects of the Surviving Corporation; or (iii) any governmental consents
and approvals legally required for the consummation of the Merger and the
transactions contemplated hereby, including, without limitation, approval (if
required) by the DOJ, FTC and the SEC (including the satisfaction of the staff
of the SEC regarding 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 and thereafter if so requested by Recoton for a period
of up to an additional 60 days. If, at the end of such 120-day (or, if
applicable, such further 60-day period) 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 this
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 (as that term is defined
below).
(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) or 8.3(c) [CONDITIONS REQUIRING
DELIVERY
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OF OFFICER'S CERTIFICATES, LEGAL OPINION, COMFORT LETTER] 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(e)
[OE SALE] provided that this condition was not satisfied because IJI
exercised a right to terminate the OE Agreement because of a willful and
material breach of the OE Agreement by Jensen; or (3) Section 9.1(b)(ii)
[FAILURE OF JENSEN STOCKHOLDERS TO APPROVE THE MERGER AT THE STOCKHOLDERS'
MEETING] provided that contemporaneous with the Jensen Stockholders' Meeting
there shall be outstanding a competing Jensen Acquisition Transaction
proposed by a third party other than Recoton or Acquisition Sub; or
(iii) Acquisition Sub shall become entitled to terminate, and shall
terminate, this Agreement pursuant to (1) Section 9.1(c)(i) [JENSEN BOARD
WITHDRAWS APPROVAL OR RECOMMENDATION ETC.]; (2) Section 9.1(c)(ii) [JENSEN
SELLS ASSETS, ISSUES STOCK, OR SOLICITS JENSEN ACQUISITION PROPOSAL WITHOUT
FIDUCIARY RIGHT TO DO SO]; (3) Section 9.1(c)(iii)(x) [MATERIAL BREACH OF
COVENANT OR AGREEMENT BY JENSEN], (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 demand has been made pursuant to
Section 9.2(g) after the first to occur of any of the events enumerated in (A)
Section 9.2(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] 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) or 8.3(c) [CONDITIONS
REQUIRING DELIVERY OF LEGAL OPINION, COMFORT LETTER] 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(f) [FAILURE TO
OBTAIN FAIRNESS OPINION] or Section 8.1(b) [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(e) [OE SALE] provided that
this condition was not satisfied because IJI 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 Section 9.2(c) and within 12 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
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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 the first of such events occurring.
(d) SITUATIONS NOT REQUIRING PAYMENT. Except as provided by clause (i)
below of this Section 9.2(d), no payments shall be owed by Recoton, Acquisition
Sub or Jensen if:
(i) Any party shall become entitled to terminate, and shall terminate,
this Agreement pursuant to the last sentence of Section 9.1 [FAILURE TO
RESOLVE GOVERNMENTAL CLEARANCES OR TO LIFT INJUNCTION WITHIN 120 DAY
EXTENSION PERIOD]; PROVIDED, HOWEVER, that if within 12 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
the first of such events occurring, plus Recoton's Expenses (such Expenses
not to exceed $2,500,000) within five business days after the demand has
been made pursuant to Section 9.2(g);
(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(e) [GOVERNMENT ACTION]; Section 9.1(b)(iii)
[GOVERNMENTAL APPROVALS] or (3) Section 9.1(b)(iv) [INJUNCTION] provided
that the party terminating this Agreement shall have diligently sought to
satisfy these conditions; provided, however, that if within 12 months
following the date of termination of this Agreement by Jensen due to the
events noted in this clause (ii) (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 the first of such events occurring, plus
Recoton's Expenses (such Expenses not to exceed $2,500,000) within five
business days after the demand has been made pursuant to Section 9.2(g);
(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 BY JENSEN] 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(d) [JENSEN MATERIAL ADVERSE CHANGE]or (B) Section 8.3(g)
[DISSENTING SHARES]; or
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(iv) Jensen shall become entitled to terminate, and shall terminate, this
Agreement pursuant to Section 9.1(d) [MATERIAL BREACH OF COVENANT OR
AGREEMENT BY RECOTON]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 8.2(a) (as to the
Officer's Certificate, only) and 8.2(b) [CONDITIONS REQUIRING DELIVERY OF
OFFICER'S CERTIFICATES AND LEGAL OPINION] provided that Recoton did not
diligently seek to fulfill or cause other to fulfill these conditions; (ii)
Section 9.1(b)(i) [FAILURE TO CLOSE BY THE TERMINATION DATE] because of a
failure to satisfy any of the conditions set forth in Section 8.2(c) [DELIVERY
OF CASH TO EXCHANGE FUND]; or (iii) Section 9.1(d)(x) [MATERIAL BREACH OF
COVENANT OR AGREEMENT] (including, but not limited to, a failure to proceed
diligently to seek the lifting of any injunction barring completion of the
Merger) provided that the breach was willful.
(f) RECOTON'S PAYMENT OF JENSEN EXPENSES. Promptly, but in no event later
than five business days after demand has been made pursuant to Section 9.2(g)
after the first to occur of any of the events enumerated in paragraph (e) or 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] because of a failure to satisfy any of the conditions set
forth in Section 8.2(b) [CONDITIONS REQUIRING DELIVERY OF LEGAL OPINION]
provided that Recoton diligently sought to fulfill or cause others to fulfill
these conditions (such day of required payment being referred to as the "Payment
Date"), Recoton shall 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.
(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 Proxy Statement and any drafts
of registration statements required under any prior versions of this Agreement,
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 may be made in one or
more parts), 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 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,
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(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein; provided, however,
that waiver of compliance with any agreements or conditions herein shall not
limit the parties' obligations to comply with all other agreements or conditions
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid if set forth in an instrument in writing signed on behalf
of the parties.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. None of the representations, warranties and agreements in this
Agreement shall survive the Merger, except for the agreements contained in this
Section 10.1, Article III, and in Sections 2.3, 7.1(c), 7.4, 7.6, 7.8, 7.9, 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 LLC, 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 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
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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.
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IN WITNESS WHEREOF, Recoton, Acquisition Sub and Jensen have caused this
Agreement to be signed by their respective officers thereunto duly authorized on
the day of June, 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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EXHIBIT 2.2
THIRD AMENDED AND RESTATED
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
THIS THIRD 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:
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.
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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 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.
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1.2.10All 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
$18,405,000, 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 $18,405,000. 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 $18,405,000, then Purchaser shall have
until thirty (30) days after the Closing to pay that portion of the Purchase
Price which exceeds $18,405,000. If the "Pro Forma Shaw Payment" is less than
$18,405,000, 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. 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 $8,195,000. 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, 3/96, 4/96 and 5/96. 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.
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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:
(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
(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;
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(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 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.
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(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.
(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
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are involved in the OEM Business, and such subsidiaries' direct and indirect
share, partnership or other ownership interest of each such entity. FujiCone 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.
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
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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 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
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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.
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
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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 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 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.
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(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 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
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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.
(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
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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 (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.]
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
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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.
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
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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 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.
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.
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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 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
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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 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 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.
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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:
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.
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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 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 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.
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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 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,
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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 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 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
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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
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
II-24
<PAGE>
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 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
II-25
<PAGE>
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.
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
II-26
<PAGE>
SCHEDULE OF CERTAIN EXHIBITS TO
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
<TABLE>
<CAPTION>
EXHIBITS TITLE
- --------------- ------------------------------------------------------
<S> <C>
Exhibit 6.4 Management Services Agreement
Exhibit 6.5 Supply and Services Agreement
Exhibit 6.6 Shared Facilities Agreement
Exhibit 6.7 Non-Competition Agreement
Exhibit 6.8 License Agreement
Exhibit 7.10 Shaw Employment Agreement
</TABLE>
II-27
<PAGE>
EXHIBIT 2.3
AMENDED AND RESTATED EXCLUSIVE WORLD-WIDE LICENSE AND OPTION TO SELL AND OPTION
TO PURCHASE PROPRIETARY RIGHTS
THIS AMENDED AND RESTATED AGREEMENT made by and entered into as of the 3rd
day of January, 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").
W I T N E S S E T H:
WHEREAS, Jensen is the owner of the trademarks "Acoustic Research" and "AR"
and certain other trademarks (registered or unregistered), trademark
applications, service marks, trade names, copyrights, trade secrets, and similar
intangible rights associated with such trademarks, including the marks and other
rights described on Exhibit "A", and the good will associated therewith, whether
or not reflected on the books and records of Jensen (collectively, the
"Intellectual Property Rights"); and
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;
WHEREAS, the License and Option Agreement was amended on or about May 9,
1996 pursuant to a written amendment;
WHEREAS, the parties desire to further amend the License and Option
Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties mutually agree to amend and restate the
License and Option Agreement, as previously amended, to read as follows:
1. LICENSE OF PROPRIETARY RIGHTS.
(a) Jensen herewith grants to Recoton an exclusive worldwide license of
the Intellectual Property Rights (the "License") in consideration of a
payment of a License Fee (as provided for in Section 5, below) by Recoton to
Jensen during the term of the License. The License shall commence upon the
date hereof and expire upon the earlier of (i) the Effective Time as defined
in the Plan and Agreement of Merger between, INTER ALIA, Recoton and Jensen
dated the date hereof (the "Merger Agreement") or (ii) the date of the
exercise of either the Purchase Option (as defined below) or the Sale Option
(as defined below) (the Purchase Option and the Sale Option sometimes being
referred to collectively as the "Options") or (iii) December 31, 2000 (the
"Termination Date"). As used throughout this Agreement, the period from
January 1 (January 3 for 1996) through December 31 of each year during the
term of this Agreement is referred to herein as an "Annual Period."
2. OPTION TO PURCHASE AND OPTION TO SELL THE PROPRIETARY RIGHTS.
(a) Jensen herewith grants to Recoton an option to purchase all of the
Intellectual Property Rights together with the goodwill associated therewith
on a world-wide basis from Jensen (the "Purchase Option"), exercisable by
Recoton on at least five days prior written notice given at any time after
the date hereof such that the purchase shall occur at a time stated (the
"Purchase
VI-1
<PAGE>
Date") prior to the Termination Date. In consideration of the grant of the
Purchase Option, Recoton shall pay Jensen a fee of $4,000 per month from the
date hereof until exercise of either of the Options or until the Termination
Date.
(b) Recoton herewith grants to Jensen an option to sell all of the
Intellectual Property Rights together with the goodwill associated therewith
on a world-wide basis to Recoton (the "Sale Option"), exercisable by Jensen
at any time after the termination of the Merger Agreement and before the
Termination Date. The sale shall occur on the later of the fifth business
day following the day upon which the Merger Agreement is terminated or the
second business day following the exercise of the Sale Option (the "Purchase
Date"). In consideration of the grant of the Sale Option, Jensen shall pay
Recoton a fee of $4,000 per month from the date hereof until exercise of
either of the Options or until the Termination Date.
(c) On the Purchase Date, Recoton shall pay to Jensen $3.5 million (the
"Purchase Price") by wire transfer or by certified check and Jensen shall
execute and deliver to Recoton the Assignment of Trademarks and Assignment
of Copyrights and, if applicable, the Assignment of Patents attached hereto
as Exhibits "B", "C" and "D" respectively. All assets of Jensen other than
the Intellectual Property Rights are specifically excluded from the assets
subject to the Options.
3. EXTENSION OF TERM OF LICENSE AND OPTIONS. If any dispute should arise
between Jensen and Recoton during the term of the License or the Option
regarding or otherwise affecting the ability of Recoton or Jensen to exercise
one or both of the Options, or regarding the validity of the License, the
License shall remain in full force and effect notwithstanding any such dispute,
and the License and the Options shall otherwise continue on the terms and
conditions set forth herein, until the earlier of resolution of such dispute by
the parties or the expiration of 30 days following the time within which to
appeal any final judgement in any litigation arising from such dispute has
lapsed (the "Extended Termination Date") and all references herein to the
Termination Date shall be deemed references to the Extended Termination Date.
4. TERMINATION
(a) This Agreement shall continue until the end of the term provided in
Section 1 except that Jensen may at any time, immediately upon written
notice to Recoton, terminate this Agreement upon the occurrence of any of
the following events:
(1) Recoton (i) becomes subject to a receiver or trustee, (ii)
becomes insolvent, (iii) becomes subject to an involuntary petition under
the United States Bankruptcy Act, as amended, for whatever reason, or
(iv) makes an assignment for the benefit of its creditors and any of the
foregoing exists for more than 30 days, and Recoton or any person or
entity acting in its behalf fails to provide Jensen with adequate
assurance, as reasonably determined by Jensen, of Recoton's ability to
fully perform its obligations under this Agreement within 30 days of any
of the above-mentioned acts or events;
(2) Recoton materially breaches or fails to perform any material
obligation under this Agreement and such breach or failure continues for
30 days (or such other extended time as may be agreed upon between the
parties) after receiving written notice from Jensen of such breach or
failure; or
(3) any warranty or representation made by Recoton under Section 9 is
materially false or misleading.
Any such termination by Jensen shall be without prejudice to any of Jensen's
other rights or remedies.
(b) If the License should terminate other than pursuant to exercise of
the Options or effectiveness of the merger pursuant to the Merger Agreement,
Recoton shall cease manufacturing products bearing the licensed trademarks
and refrain from further use of the Intellectual
VI-2
<PAGE>
Property Rights; PROVIDED, HOWEVER, that Recoton shall, for a period of 12
months following the date of said termination have the right to continue to
sell products manufactured prior to such termination bearing the licensed
trademarks and use related advertising, promotion and packaging materials on
a non-exclusive basis.
5. ROYALTIES, RECORDS AND REPORTS
(a) For the rights and privileges granted under the License, Recoton
shall pay Jensen, in the manner hereinafter provided, the following
royalties:
(i) For the first Annual Period of this Agreement, royalties of
$10,000 per month, due by the tenth day of the succeeding month.
(ii) For the balance of the term of this Agreement, a sum equal to
the greater of (i) $10,000 per month (the "Minimum Royalty"), or (ii)
four percent (4%) of Net Shipments (the "Earned Royalties"). As used
throughout this Agreement, the term "Net Shipments" shall mean the
aggregate of the gross invoiced amounts of articles subject to this
License (the "Licensed Products") which are sold, shipped, distributed,
and/or provided by Recoton, less (1) refunds, credits, and allowances
made or allowed by Recoton to customers with respect to Licensed
Products, (2) freight charges paid by Recoton and (3) sales and excise
taxes paid by Recoton.
(b) The Minimum Royalty for each month during the terms of this
Agreement ending after January 1, 1997 shall be paid by the tenth day of the
succeeding month. Within 30 days of the end of each calendar quarter ending
after January 1, 1997, Recoton shall deliver to Jensen a report, giving such
particulars of the business conducted by Recoton and its affiliates during
the preceding three months under this Agreement as are required for a
determination of Earned Royalties due under this Agreement. The information
in such reports shall be held in confidence by Jensen and shall not be
disclosed to any other person or used for any purpose other than to verify
the activities of Recoton under this Agreement. Simultaneously with the
delivery of such report, Recoton shall pay to Jensen the Earned Royalties
under this Agreement for the periods covered by such report less the Minimum
Royalties for the months in such quarterly period previously paid or paid
therewith. If no Earned Royalties are due, the report shall so state. The
excess of Minimum Royalties for any quarterly period over the Earned
Royalties for such quarterly period shall be credited to any future payments
of Earned Royalties during such Annual Period.
6. BOOKS AND RECORDS
(a) Recoton shall keep true and accurate books of account containing all
particulars which may be necessary for the purpose of showing the amounts
due and payable to Jensen. Such books of account shall be kept at Recoton's
principal place of business. Said books and the supporting data shall be
open at reasonable times for three years following the end of the Annual
Period to which they pertain for the inspection of an independent certified
public accountant retained by Jensen and reasonably acceptable to Recoton
for the purpose of verifying Recoton's royalty statements. If any
underpayment is in excess of five percent (5%) and $10,000, the cost of any
such review by Jensen's independent certified public accountant shall be
borne by Recoton.
(b) Jensen and Recoton shall require any public accountant retained by
Jensen to hold in confidence any information the public accountant obtains
from such inspection, except to the extent of verifying to Jensen the
correctness of Recoton's reports and royalty payments as provided herein,
and Jensen shall not disclose to any competitor of Recoton the amount of the
Earned Royalties, sales or any other information provided by Recoton to
Jensen in said reports except as expressly required by applicable law, rule
or regulation.
VI-3
<PAGE>
7. TERMS OF LICENSE OR SALE
(a) The Intellectual Property Rights are being licensed or, if either of
the Options is exercised, sold by Jensen to Recoton free and clear of all
debts, mortgages, pledges, liens (including without limitation federal,
state, and local tax liens), taxes, claims, defaults, assessments, fines,
penalties, charges, security interests, encumbrances, options or other
restrictions (whether matured or unmatured) (together, the "Restrictions").
(b) Jensen shall pay any applicable sales, gains, documentary, use,
filing, transfer and similar taxes payable as a result of the licensing or,
if either of the Options is exercised, sale of the Intellectual Property
Rights and file all appropriate returns related thereto. Recoton shall
reasonably cooperate in the preparation of such returns, if necessary and,
if required, sign such returns if true and complete. All taxes on, or
measured by, the net income or revenues of Recoton or Jensen (including,
without limitation, income, gross receipts, and net-worth taxes) imposed or
levied by, or payable to, any federal, state, or local taxing authority
shall be paid or payable by the party upon which such taxes are imposed or
levied.
(c) Jensen shall promptly execute and deliver from time to time at the
request and expense of Recoton all such further instruments and further
assurances as may be required in order to effect the license to, or, if
either of the Options is exercised, the sale to, Recoton of, and the right
to use and enjoy, the Intellectual Property Rights.
(d) During the term of the License, the nature and quality of all
products manufactured by Recoton bearing the licensed trademark shall
conform to or exceed the quality of those speakers and consumer electronic
products, as appropriate, held in the inventory of Jensen as of January 1,
1996 which used the Acoustic Research brand.
8. REPRESENTATIONS AND WARRANTIES OF JENSEN. Jensen represents and warrants
to Recoton as follows:
(a) Jensen has the corporate power to execute and deliver this Agreement
and has taken all action required by law, its Certificate of Incorporation,
its By-Laws or otherwise to authorize such execution and delivery; this
Agreement has been, and the other agreements to be executed pursuant to this
Agreement by Jensen will be, duly executed and delivered by Jensen; and this
Agreement is a valid and binding agreement, and all such agreements will be
valid and binding agreements, of Jensen enforceable in accordance with the
terms thereof.
(b) Neither the execution and delivery of this Agreement nor the
performance of its terms will conflict with, be a breach of, or constitute a
default under, any agreement or instrument to which Jensen is a party.
(c) To the best of Jensen's knowledge, the Intellectual Property Rights
which are trademark or copyright registrations are valid, in good standing,
and are not involved in any interferences, litigation, oppositions, or
cancellation proceedings, and are owned by Jensen, free and clear of all
liens, encumbrances, equities, or claims. Jensen owns or has the right to
use, without payment to any other party, trademarks, trade names, service
marks, copyrights and applications therefor referred to in such Exhibit A
(all of which are being licensed herewith), and the consummation of the
transactions contemplated hereby will not alter or impair such rights in any
material respect. Jensen has no patents or patent rights covering the
products which are currently used in connection with the Intellectual
Property Rights. 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. 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.
VI-4
<PAGE>
9. REPRESENTATIONS AND WARRANTIES OF RECOTON. Recoton represents and
warrants to Jensen as follows:
(a) Recoton has the corporate power to execute and deliver this
Agreement and has taken all action required by law, its Certificate of
Incorporation, its By-Laws or otherwise to authorize such execution and
delivery; this Agreement has been, and the other agreements to be executed
pursuant to this Agreement by Recoton will be, duly executed and delivered
by Recoton; and this Agreement is a valid and binding agreement, and all
such agreements will be valid and binding agreements, of Recoton enforceable
in accordance with the terms thereof.
(b) Neither the execution and delivery of this Agreement, nor the
performance of its terms, will conflict with, be a breach of or constitute a
default under any agreement or instrument to which Recoton is a party.
10. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter contained herein and no
modification or addition hereto shall be binding unless in writing and signed by
both parties.
11. PARTIES IN INTEREST. This Agreement shall inure to the benefit of, and
be binding upon, the parties hereto, and their respective heirs, representatives
and permitted assigns.
12. EXPENSES. Except as otherwise provided in this Agreement, Jensen and
Recoton shall pay their own expenses incidental to the carrying out of this
Agreement, including all fees and expenses of counsel and accountants.
13. GENERAL LAWS; SERVICE OF PROCESS. This Agreement shall be governed by
the laws of the State of New York without reference to its choice-of-law rules.
Service of process may be made upon each of the parties hereto by using the
notification procedure set forth in Section 17. All disputes that arise with
respect to this Agreement shall be brought only in the Federal District Court
located in or having jurisdiction for New York County, New York or in a state
court in and for New York County, New York. To the fullest extent permitted by
law, the parties hereby waive all rights to a trial by jury in connection with
this Agreement. By execution and delivery of this Agreement, each of the parties
accepts for himself or itself the jurisdiction of the aforesaid courts, and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement.
14. SURVIVAL. All warranties, representations, and covenants made by each
party in or pursuant to this Agreement shall survive for the benefit of the
other parties notwithstanding the significance thereof or any examination,
examination opportunity or knowledge (whether implied or actual).
15. HEADINGS. The headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
16. EXECUTION IN COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
shall constitute one and the same instrument.
17. 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 Recoton, to:
c/o Recoton Corporation
2950 Lake Emma Road
Lake Mary, FL 32746
Attn: Stuart Mont, Chief Operating Officer
VI-5
<PAGE>
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, IL 60069
Attn: Marc T. Tanenberg
with a copy to:
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, IL 60601-1003
Attn: John R. Obiala, Esq.
Notice of any change in any such address shall be given in the manner set forth
above. Whenever the giving of notice is required, the giving of such notice may
be waived by the Party entitled to receive such notice. Notice shall be
effective upon receipt.
18. FURTHER ASSURANCES. Recoton and Jensen shall execute all documentation
necessary or appropriate to effect the agreements set forth in this Agreement,
including without limitation any assignment of patents or patent rights if the
representation regarding the lack of patents made in Section 8(c) is incorrect.
19. ASSIGNMENT. No party may assign its rights or obligations hereunder
without the written consent of the other parties.
20. EXHIBITS. References to Exhibits and Schedules shall be references to
the exhibits of, and schedules, to this Agreement. Such Exhibits and Schedules,
whether attached to or provided subsequent to the execution of, this Agreement
form an integral part of this Agreement and are hereby incorporated in this
Agreement.
21. ENFORCEABILITY. If any provision of this Agreement is held illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability will
not affect any other provision hereof. This Agreement shall, in such
circumstances, be deemed modified to the extent necessary to render enforceable
the provisions hereof.
22. COSTS OF COLLECTION. Each party shall pay all costs of litigation,
including reasonable attorney's fees, incurred by the other party in
successfully enforcing any provision of this Agreement.
23. WAIVER. The failure of any party to insist upon strict performance of
any of the terms or conditions of this Agreement will not constitute a waiver of
any of its rights hereunder.
24. RIGHT TO OFFSET. Payments due under this Agreement or any other
agreements 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. If the provisions of Section 3 hereof are applicable and the terms of the
License and Options are extended thereunder, payments otherwise due from Jensen
(or any affiliate thereof) to Recoton (or any affiliate thereof) at any time up
to the amount of the Purchase Price shall not be due and payable until the
earlier of payment of the Purchase Price by Recoton to Jensen or the Extended
Termination Date.
VI-6
<PAGE>
25. REMEDIES. If any party shall fail to make payment in full of any fees
due pursuant to Section 2 or Section 5(a)(i), such failure shall not give the
other party the right to terminate this Agreement unless such payment has not
been made within 30 days after entry of a final judgment requiring such payment.
IN WITNESS WHEREOF, the parties have hereto executed this Agreement on the
23rd day of June, 1996 as of the date set forth above.
<TABLE>
<S> <C>
INTERNATIONAL JENSEN INCORPORATED
Witnesses:
By: /s/ Marc T. Tanenberg
-----------------------------------
Marc T. Tanenberg
Vice President and Chief
Financial Officer
- ------------------------------------
RECOTON CORPORATION
By: /s/ Stuart Mont
-----------------------------------
Stuart Mont
Executive Vice President
and Chief Operating Officer
- ------------------------------------
</TABLE>
VI-7
<PAGE>
EXHIBIT A
TRADEMARKS REGISTRATIONS
<TABLE>
<CAPTION>
Trademark Country Registration No.
- ----------------- ------------- ----------------
<S> <C> <C>
Acoustic Research United States 1,778,708
AR United States 1,430,911
AR United States 927,195
</TABLE>
Additional trademarks are on attachment.
UNREGISTERED TRADEMARKS
None
COPYRIGHT REGISTRATIONS AND APPLICATIONS
None
VI-8
<PAGE>
Exhibit 99.1
IJI PRESS RELEASE
DATED JUNE 24, 1996
Lincolnshire, IL., June 24, 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 ("Recoton").
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 $11.00 per share and for Mr. Shaw and the Blair Fund to receive $8.90
per share. The consideration to stockholders will be paid all in cash rather
than in a combination of cash and stock as provided in the previously announced
Recoton transactions. 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. IJI Acquisition Corp. has agreed to increase the purchase price for
the OEM business by approximately $1.9 million.
As previously announced, a Special Committee of IJI's Board was appointed
earlier this year to consider and negotiate the offers of Emerson Radio Corp.
("Emerson") and Recoton to acquire IJI. Over the last several weeks the Special
Committee and its advisors have conducted discussions and negotiations with
Emerson and Recoton and have repeatedly requested the highest, best and final
offer from each of them. Emerson submitted four different proposals as follows:
(1) a $10.25 per share all cash proposal for all outstanding shares; (ii) $10.75
per share in cash for the shares of all stockholders other than Mr. Shaw and
$8.90 per share in cash for shares held by Mr. Shaw, (iii) $10.75 per share in
cash for the shares of all stockholders if Mr. Shaw purchases the OEM business
for $27.6 million; and (iv) $10.75 per share with aggregate consideration
composed of 55% cash and 45% in face value of a new issue of Emerson preferred
stock, with such preferred stock being convertible into Emerson common stock at
$4.00 per share for the first four years (escalating 15% per year thereafter),
having cumulative dividends (or, alternatively, PKK dividends) of 8% per annum
and being callable after one year.
On June 20, 1996 Emerson was notified that the Special Committee had been
advised that Recoton was prepared to submit a new proposal. On June 21, 1996
Recoton submitted its enhanced proposal. Emerson was notified on June 21, 1996
that Recoton had submitted an enhanced proposal and that the Special Committee
would consider such proposal and the pre-existing Emerson proposals on June 23,
1996. At a meeting of the Special Committee on June 23, 1996, the IJI Special
Committee concluded that the enhanced Recoton offer was in the best interest of
IJI stockholders and recommended proceeding with the enhanced Recoton
transaction.
IJI expects to mail proxy materials to stockholders in the near future and
anticipates closing with Recoton in August.
<PAGE>
As previously announced, the Blair Fund, which owns approximately 26% of
the shares of IJI, has entered into a Stock Option and Voting Agreement which
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 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 connection with Recoton's enhanced offer, Mr. Shaw amended a prior agreement
with Recoton to provide that in the event a third party other than Recoton
acquires IJI on or prior to March 31, 1997, he will pay to Recoton half of the
spread between (a) the net proceeds per share received by Mr. Shaw, but not to
exceed $10.65 per share, and (b) $8.90 per share, subject to certain obligations
of Recoton to reimburse possible tax liabilities.
<PAGE>
EXHIBIT 99.2
JENSEN PRESS RELEASE
DATED JUNE 26, 1996
Lincolnshire, IL., June 26, 1996 - International Jensen Incorporated ("IJI")
(Nasdaq National Market: IJIN) announced today that its Board of Directors,
based upon a recommendation of the Special Committee of the Board, has rejected
Emerson's latest proposal to acquire IJI, which had been announced by Emerson on
June 25, 1996, and has reaffirmed the enhanced Recoton Agreement announced by
IJI on June 24, 1996.
The latest Emerson proposal describes the following two-tier payment
structure -- $12.00 per share to stockholders other than Robert G. Shaw and
William Blair Leveraged Capital Fund, L.P. ("Blair Fund") but only $8.90 per
share to Mr. Shaw and the Blair Fund. However, neither Mr. Shaw nor the Blair
Fund has agreed to accept less from Emerson than is being paid to other
stockholders and both have advised the Special Committee that they would vote
against this Emerson proposal if it was submitted to IJI's stockholders. Absent
their consent to the lesser amount, and a vote in favor of a merger on such
terms, the Special Committee concluded, based on the advice of its Delaware
counsel, that the Emerson proposal could not be consummated due to the lack of
the necessary stockholder vote and that it would be improper to recommend the
two-tier proposal as a matter of Delaware law in the light fiduciary duties owed
to all stockholders, including Mr. Shaw and the Blair Fund.
As previously announced, the Blair Fund, which owns approximately 26% of
the shares of IJI, has entered into a voting agreement with Recoton pursuant to
which the Blair Fund has agreed to vote its shares in favor of the Recoton
transaction and against any agreement that would materially impede, interfere
with or attempt to discourage the Recoton transaction.
In rejecting the Emerson proposal, the Special Committee also took into
account the fact that a number of terms in Emerson's proposed form of merger
agreement were unacceptable to IJI and had not been resolved despite numerous
attempts to negotiate more favorable terms.
With respect to the Recoton transaction, IJI expects to mail proxy
materials to stockholders in the near future and anticipates a closing with
Recoton in August.
