-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HdPMgxcm9rQ9F6dnGhS54ibc60uNf3u4Eq6oYI3Ymc/LOaOPON0qoVHJC/zZBAI/ VyRq2XDTKfTYCadZG/2nDA== 0000912057-96-014046.txt : 19960709 0000912057-96-014046.hdr.sgml : 19960709 ACCESSION NUMBER: 0000912057-96-014046 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960623 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960708 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL JENSEN INC CENTRAL INDEX KEY: 0000853261 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 133346656 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19779 FILM NUMBER: 96591987 BUSINESS ADDRESS: STREET 1: 25 TRI STATE INTERNATIONAL OFFICE CENTER STREET 2: STE 400 CITY: LINCOLNSHIRE STATE: IL ZIP: 60069 BUSINESS PHONE: 7083173700 8-K 1 FORM 8-K - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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) ------------------------------ 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) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Page 1 of __ pages Exhibit Index at sequentially numbered page 4. 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, -2- 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. -3- 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 -4- 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 --------------------------------------- Marc T. Tanenberg Vice President Finance and Chief Financial Officer -5- EX-2.1 2 EXH 2.1 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 I-1 immediately following the date on which the last of the conditions set forth in Article VIII hereof is fulfilled or waived, or at such other time and place as Acquisition Sub and Jensen shall agree (the "Closing Date"). ARTICLE II THE SURVIVING CORPORATION Section 2.1 CERTIFICATE OF INCORPORATION; AMENDMENT. The Certificate of Incorporation of Acquisition Sub as in effect immediately prior to the Effective Time shall be the Certificate of Incorporation of the Surviving Corporation after the Effective Time until amended in accordance with the provisions of the GCL, except that Article FIRST shall be amended as of and from the Effective Time to read "The name of the Corporation shall be Recoton Audio Corporation." Section 2.2 BY-LAWS. The By-Laws of Acquisition Sub shall be the By-Laws of the Surviving Corporation after the Effective Time, and thereafter may be amended in accordance with their terms and as provided by the Certificate of Incorporation of the Surviving Corporation and the GCL. Section 2.3 DIRECTORS AND OFFICERS. (a) At the Effective Time, the Board of Directors of the Surviving Corporation shall consist of the following persons: Robert L. Borchardt Joseph H. Massot Stuart Mont Robert G. Shaw Marc T. Tanenberg (b) At the Effective Time, the officers of the Surviving Corporation shall be as follows:
OFFICE HOLDER - --------------------------------------------- --------------------------------------------- Chairman Robert L. Borchardt President & CEO Robert G. Shaw Vice President & CFO Marc T. Tanenberg Secretary Stuart Mont Treasurer & Assistant Secretary Joseph H. Massot
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 I-2 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 I-3 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. I-4 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 I-5 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 I-6 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 I-7 (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 I-8 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 I-9 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 I-10 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, I-11 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, I-12 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 I-13 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 I-14 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 I-15 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; I-16 (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; I-17 (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. I-18 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 I-19 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 I-20 "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. I-21 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 I-22 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 I-23 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 I-24 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 I-25 (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, I-26 (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 I-27 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 I-28 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. I-29 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 I-30 EX-2.2 3 EXH 2.2 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. II-1 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. II-2 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. II-3 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; II-4 (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. II-5 (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 II-6 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 II-7 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 II-8 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 II-9 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. II-10 (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 II-11 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 II-12 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 II-13 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 II-14 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. II-15 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. II-16 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 II-17 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. II-18 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. II-19 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. II-20 (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. II-21 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, II-22 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 II-23 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 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 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 SCHEDULE OF CERTAIN EXHIBITS TO AGREEMENT FOR PURCHASE AND SALE OF ASSETS
EXHIBITS TITLE - --------------- ------------------------------------------------------ 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
II-27 EX-2.3 4 EXH 2.3 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 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 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 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 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 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 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. 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 - ------------------------------------
VI-7 EXHIBIT A TRADEMARKS REGISTRATIONS
Trademark Country Registration No. - ----------------- ------------- ---------------- Acoustic Research United States 1,778,708 AR United States 1,430,911 AR United States 927,195
Additional trademarks are on attachment. UNREGISTERED TRADEMARKS None COPYRIGHT REGISTRATIONS AND APPLICATIONS None VI-8 EX-99.1 5 EXH 99.1 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. 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. EX-99.2 6 EXH 99.2 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. -----END PRIVACY-ENHANCED MESSAGE-----