EXHIBIT 2.1 TO RECOTON
FORM 8-K FOR EVENT
OCCURRING JANUARY 30, 1996
________________________________________________________________
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
dated as of January 3, 1996,
among
RECOTON CORPORATION,
RC ACQUISITION SUB, INC.,
and
INTERNATIONAL ▇▇▇▇▇▇ INCORPORATED
________________________________________________________________
TABLE OF CONTENTS
ARTICLE I
THE MERGER
SECTION 1.1 The Merger
SECTION 1.2 Effective Time of the Merger
SECTION 1.3 Effects of the Merger
SECTION 1.4 Closing
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.1 Certificate of Incorporation; Amendment
SECTION 2.2 By-Laws
SECTION 2.3 Directors and Officers
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1 Conversion of ▇▇▇▇▇▇ Shares in the Merger
SECTION 3.2 Exchange of Certificates
SECTION 3.3 Stock Transfer Books
SECTION 3.4 Stock Options and Other Rights
SECTION 3.5 Dissenting Shares
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇
SECTION 4.1 Organization and Qualification
SECTION 4.2 ▇▇▇▇▇▇ Common Stock
SECTION 4.3 Subsidiaries
SECTION 4.4 Authority; Non-Contravention; Approvals
SECTION 4.5 Reports and Financial Statements; Derivative
Transactions
SECTION 4.6 Absence of Undisclosed Liabilities
SECTION 4.7 Absence of Certain Changes or Events
SECTION 4.8 Litigation
SECTION 4.9 Proxy Statement
SECTION 4.10 No Violation of Law
SECTION 4.11 Compliance with Agreements
SECTION 4.12 Taxes
SECTION 4.13 Customs
SECTION 4.14 Employee Benefit Plans; ERISA
SECTION 4.15 Material Defaults
SECTION 4.16 Labor Matters
SECTION 4.17 Environmental Matters
SECTION 4.18 Certain Business Practices
SECTION 4.19 No Excess Parachute Payments
SECTION 4.20 Trademarks, Etc.
SECTION 4.21 ▇▇▇▇▇▇ Stockholders' Approval
SECTION 4.22 State Takeover Statutes
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUISITION SUB AND RECOTON
SECTION 5.1 Organization and Qualification
SECTION 5.2 Recoton Common Stock
SECTION 5.3 Authority; Non-Contravention; Approvals
SECTION 5.4 Reports and Financial Statements
SECTION 5.5 Absence of Undisclosed Liabilities
SECTION 5.6 Absence of Certain Changes or Events
SECTION 5.7 Registration Statement
SECTION 5.8 No Violation of Law
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.1 Conduct of Business by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ the Merger
SECTION 6.2 Site Testing and Evaluation
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 Access to Information
SECTION 7.2 Registration Statement and Proxy Statement
SECTION 7.3 Stockholders' Approval
SECTION 7.4 Compliance with the Securities Act
SECTION 7.5 Nasdaq Listing
SECTION 7.6 Expenses
SECTION 7.7 Agreement to Cooperate
SECTION 7.8 Public Statements
SECTION 7.9 Accountants' Letters
SECTION 7.10 Indemnification of Certain Officers and Directors
SECTION 7.11 Employee Benefits
ARTICLE VIII
CONDITIONS
SECTION 8.1 Conditions to Each Party's Obligation to Effect the
Merger
SECTION 8.2 Conditions to Obligation of ▇▇▇▇▇▇ to Effect the
Merger
SECTION 8.3 Conditions to Obligation of Recoton and Acquisition
Sub to Effect the Merger
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1 Termination
SECTION 9.2 Effect of Termination
SECTION 9.3 Amendment
SECTION 9.4 Waiver
ARTICLE X
GENERAL PROVISION
SECTION 10.1 Non-Survival of Representations, Warranties and
Agreements
SECTION 10.2 Brokers
SECTION 10.3 Notices
SECTION 10.4 General Terms
SECTION 10.5 Interpretation
SECTION 10.6 Miscellaneous
SECTION 10.7 Counterparts
SECTION 10.8 Parties in Interest
SECTION 10.9 Right to Offset
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
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 ▇▇▇▇▇▇
INCORPORATED, a Delaware corporation ("▇▇▇▇▇▇").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Recoton, Acquisition Sub and
▇▇▇▇▇▇ have approved the merger of ▇▇▇▇▇▇ with and into
Acquisition Sub (the "Merger") pursuant to the terms and
conditions set forth in this Agreement and the sole stockholder
of Acquisition Sub has approved the Merger;
WHEREAS, for federal income tax purposes, it is intended that
Acquisition Sub and ▇▇▇▇▇▇ and their respective stockholders
will recognize no gain or loss for federal income tax purposes
under the Internal Revenue Code of 1986, as amended (the
"Code"), and the regulations thereunder as a result of the
consummation of the Merger except with respect to stockholders
who exercise dissenters' rights, or to the extent stockholders
receive cash in lieu of fractional shares, the Per Share Cash
Amount (as defined in Section 3.1) or a portion thereof; and
WHEREAS, ▇▇▇▇▇▇ and Recoton simultaneously herewith have entered
into an agreement (the "AR Agreement") by which ▇▇▇▇▇▇▇ has
acquired a license to and an option to purchase, and ▇▇▇▇▇▇ has
acquired an option to sell, the trademarks and associated
copyrights and other intellectual properties of ▇▇▇▇▇▇
associated with the name "Acoustic Research" or "AR" (the "AR
Rights"); and
WHEREAS, ▇▇▇▇▇▇ and IJI Acquisition Corp. ("IJI") simultaneous
herewith have entered into an agreement (the "OE Agreement") by
which ▇▇▇ has agreed to acquire the assets associated with the
original equipment business of ▇▇▇▇▇▇ (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 ▇▇▇▇▇▇, 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")
▇▇▇▇▇▇ shall be merged with and into Acquisition Sub in
accordance with this Agreement and the form of certificate of
merger attached hereto as Exhibit 1.1 (the "Certificate of
Merger") and the separate existence of ▇▇▇▇▇▇ shall thereupon
cease. Acquisition Sub shall be the surviving corporation in
the Merger (hereinafter sometimes referred to as the "Surviving
Corporation").
Section 1.2 Effective Time of the Merger. The Merger shall
become effective at such time (the "Effective Time") after the
Closing as 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 & ▇▇▇▇▇, ▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ on April 2, 1996 at 9:30 A.M. New
York time, or, if later, on the second business day immediately
following the date on which the last of the conditions set forth
in Article VIII hereof is fulfilled or waived, or at such other
time and place as Acquisition Sub and ▇▇▇▇▇▇ 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:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
(b) At the Effective Time, the officers of the Surviving
Corporation shall be as follows:
Office Holder
Chairman ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President & ▇▇▇▇▇▇ ▇. ▇▇▇▇
CEO
Vice President & ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
CFO
Secretary ▇▇▇▇▇▇ ▇▇▇▇
Treasurer & ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Assistant Secretary
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Conversion of ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ("▇▇▇▇▇▇
Common Stock") issued and outstanding immediately prior
to the Effective Time (excluding any treasury shares and
Dissenting Shares (as defined in Section 3.5)) shall be
converted into either
(i) the right to receive cash in the amount of $8.90
(hereinafter the "Per Share Cash Amount");
(ii) the right to receive such number of validly issued,
fully paid and nonassessable Common Shares, $0.20 par value, of
Recoton ("Recoton Common Stock") as shall be determined by
dividing the Per Share Cash Amount by the Average Stock Price
for Recoton Common Stock (as defined in Section 3.1(b)) carried
out to four decimal places (such number divided by one being
referred to hereinafter as the "Exchange Ratio"); or
(iii) the right to receive a combination of shares of
Recoton Common Stock valued at the Average Stock Price and cash
equal in the aggregate to the Per Share Cash Amount; provided,
however, that if the Average Stock Price is below $16.00, then
the Acquisition Sub shall have the right at least three days
prior to the meeting of the stockholders of ▇▇▇▇▇▇ being held to
vote upon the Merger (the "▇▇▇▇▇▇ Stockholders' Meeting") to
elect to have each share of the ▇▇▇▇▇▇ Common Stock converted
into the Per Share Cash Amount (such election, or an election
pursuant to Section 3.1(i) or pursuant to Section 8.1(h) being
hereinafter referred to as an "All-Cash Election"). At the
Effective Time, all shares of ▇▇▇▇▇▇ Common Stock shall no
longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each certificate
previously evidencing any such shares shall thereafter represent
the right to receive the Merger Consideration (as defined in
Section 3.2(b)). The holders of certificates previously
evidencing shares of ▇▇▇▇▇▇ Common Stock outstanding immediately
prior to the Effective Time shall cease to have any rights with
respect to shares of ▇▇▇▇▇▇ Common Stock except as otherwise
provided herein or by law. Certificates previously evidencing
shares of ▇▇▇▇▇▇ Common Stock shall be exchanged for (i)
certificates evidencing whole shares of Recoton Common Stock
issued in consideration therefor, (ii) the Per Share Cash Amount
multiplied by the number of shares previously evidenced by the
canceled certificate, or (iii) a combination thereof, in each
case in accordance with the election and allocation procedures
of this Section 3.1 and upon the surrender of such certificates
in accordance with the provisions of Section 3.2, without
interest. No fractional shares of Recoton Common Stock shall be
issued, and, in lieu thereof, a cash payment shall be made
pursuant to Section 3.2(e). The recipients of shares of Recoton
Common Stock issued in accordance with this Section 3.1 shall
also by receiving shares of Recoton Common Stock thereby receive
an associated Common Stock purchase right pursuant to
the Rights Agreement dated as of October 27, 1995, between
Recoton and Chemical Mellon Shareholder Services, L.L.C.
(b) The "Average Stock Price" shall mean the average of the per
share closing prices of the Recoton Common Stock on the Nasdaq
Stock Exchange ("Nasdaq") during the 20 consecutive trading days
ending the fifth trading day prior to the ▇▇▇▇▇▇ Stockholders'
Meeting, discarding the three highest and three lowest closing
prices, carried out to four decimal places.
(c) Notwithstanding the foregoing, if between the date of this
Agreement and the Effective Time the outstanding shares of
Recoton Common Stock or ▇▇▇▇▇▇ Common Stock shall have been
changed into a different number of shares or a different class,
by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the
Exchange Ratio and the Per Share Cash Amount shall be
correspondingly adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split,
combination or exchange of shares.
(d) Unless Recoton has made an All-Cash Election pursuant to
Sections 3.1(a), 3(i), or 8.1(h) or otherwise has elected
pursuant to Section 3.1(g) to increase the Target Stock Election
Number (as defined below), the number of shares of ▇▇▇▇▇▇ Common
Stock to be converted into the right to receive cash in the
Merger (including Dissenting Shares and Fractional Shares) shall
be 60% of the number of shares of ▇▇▇▇▇▇ Common Stock
outstanding immediately prior to the Effective Time (the "Target
Cash Election Number") and the number of shares of ▇▇▇▇▇▇ Common
Stock to be converted into the right to receive Recoton Common
Stock in the Merger shall be 40% of the number of shares of
▇▇▇▇▇▇ Common Stock outstanding immediately prior to the
Effective Time (the "Target Stock Election Number").
(e) Subject to the allocation and election procedures set forth
in this Section 3.1, each record holder immediately prior to the
Effective Time of shares of ▇▇▇▇▇▇ Common Stock will be entitled
(i) to elect to receive cash for some or all of such shares (a
"Cash Election") and/or (ii) to elect to receive Recoton Common
Stock for some or all of such shares (a "Stock Election"), or
(iii) to indicate that such record holder has no preference as
to the receipt of cash or Recoton Common Stock for such shares
(a "Non-Election"). All such elections shall be made on a form
designed for that purpose (a "Form of Election"), which shall
also be the letter of transmittal for the certificates
representing such shares of Common Stock. Holders of record of
shares of ▇▇▇▇▇▇ Common Stock who hold such shares as nominees,
trustees or in other representative capacities (a
"Representative") may submit multiple Forms of Election,
provided that such Representative certifies that each such Form
of Election covers all the shares of ▇▇▇▇▇▇ Common Stock held by
such Representative for a particular beneficial owner.
(f) If the aggregate number of shares covered by Cash
Elections (the "Cash Election Shares") exceeds the Target Cash
Election Number, all shares of ▇▇▇▇▇▇ Common Stock covered by
Stock Elections (the "Stock Election Shares") and all shares of
▇▇▇▇▇▇ Common Stock covered by Non-Elections (the "Non-Election
Shares") shall be converted into the right to receive Recoton
Common Stock, and each Cash Election Share shall be converted
into the right to receive (i) an amount in cash, without
interest, equal to the product of (x) the Per Share Cash Amount
and (y) a fraction (the "Cash Fraction"), the numerator of which
shall be the Target Cash Election Number and the denominator
of which shall be the total number of Cash Election Shares, and
(ii) a number of shares of Recoton Common Stock equal to the
product of (x) the Exchange Ratio and (y) a fraction equal to
one minus the Cash Fraction.
(g) If the aggregate number of Stock Election Shares exceeds
the Target Stock Election Number, Recoton shall have the right
to elect to increase the Target Stock Election Number up to an
amount equal to the aggregate number of Stock Election Shares
and to reduce the Target Cash Election Number by an amount equal
to the increase in the Stock Election Number, but in no event
shall the Target Stock Election Number be increased beyond 50%
of the outstanding ▇▇▇▇▇▇ Common Stock. If the aggregate number
of Stock Election Shares exceeds the Target Stock Election
Number and Recoton does not elect to increase the Target Stock
Election Number up to the aggregate number of Stock Election
Shares, all Cash Election Shares and all Non-Election Shares
shall be converted into the right to receive cash, and each
Stock Election Share shall be converted into the right to
receive (i) a number of shares of Recoton Common Stock
equal to the product of (x) the Exchange Ratio and (y) a
fraction (the "Stock Fraction"), the numerator of which shall
be the Target Stock Election Number (as increased pursuant to
Recoton's election, if applicable) and the denominator of
which shall be the total number of Stock Election Shares, and
(ii) an amount in cash, without interest, equal to the
product of (x) the Per Share Cash Amount and (y) a fraction
equal to one minus the Stock Fraction.
(h) If neither Section 3.1(f) nor Section 3.1(g) is applicable
(including, by reason of an election by Recoton to
increase the Target Stock Election Number), all Cash Election
Shares shall be converted into the right to receive cash,
all Stock Election Shares shall be converted into the right to
receive Recoton Common Stock, and each Non-Election
Share shall be converted into the right to receive (i) an amount
in cash, without interest, equal to the product of (x) the
Per Share Cash Amount and (y) a fraction (the "Non-Election
Fraction"), the numerator of which shall be the amount
by which the Target Cash Election Number exceeds the total
number of Cash Election Shares and the denominator of
which shall be amount by which (A) the number of shares of
▇▇▇▇▇▇ Common Stock outstanding immediately prior to
the Effective Time exceeds (B) the sum of the total number of
Cash Election Shares and the total number of Stock
Election Shares and (ii) a number of shares of Recoton Common
Stock equal to the product of (x) the Exchange Ratio
and (y) a fraction equal to one minus the Non-Election Fraction.
(i) Notwithstanding the foregoing, if the difference between
the Average Share Price for Recoton Common Stock and the actual
share price for Recoton Common Stock as of the Effective Time
would render the Merger ineligible for treatment as a
reorganization under Sections 368(a)(1)(A) and 368(a)(1)(D) of
the Code, Recoton shall immediately prior to the Effective Time
elect in writing either to (1) issue shares of Recoton Common
Stock in lieu of payments of the Per Share Cash Amount as shall
be required to achieve such tax treatment (the methodology for
such election being substantially as set forth in Section
3.1(f)) or (2) make an All-Cash Election on the terms set forth
in Section 3.1(a).
(j) Elections shall be made by holders of ▇▇▇▇▇▇ Common Stock
by mailing to the Exchange Agent a Form of Election. To be
effective, a Form of Election must be properly completed, signed
and submitted to the Exchange Agent and accompanied by the
certificates representing the shares of ▇▇▇▇▇▇ Common Stock as
to which the election is being made (or by an appropriate
guaranty of delivery by a commercial bank or trust company in
the United States or a member of a registered national
securities exchange or the National Association of Securities
Dealers, Inc. (the "NASD")). Recoton will have the discretion,
which it may delegate in whole or in part to the Exchange Agent,
to determine whether Forms of Election have been properly
completed, signed and submitted or revoked and to disregard
immaterial defects in Forms of Election. The decision of
Recoton (or the Exchange Agent) in such matters shall be
conclusive and binding. Neither Recoton nor the Exchange Agent
will be under any obligation to notify any person of
any defect in a Form of Election submitted to the Exchange
Agent. The Exchange Agent shall also make all computations
contemplated by this Section 3.1 and all such computations shall
be conclusive and binding on the holders of ▇▇▇▇▇▇ Common Stock,
absent manifest error.
(k) For the purposes hereof, a holder of ▇▇▇▇▇▇ Common Stock
who does not submit a Form of Election which is received by the
Exchange Agent prior to the Election Deadline (as hereinafter
defined) shall be deemed to have made a Non-Election. If
Recoton or the Exchange Agent shall determine that any purported
Cash Election or Stock Election was not properly made, such
purported Cash Election or Stock Election shall be deemed to be
of no force and effect and the stockholder making such purported
Cash Election or Stock Election shall for purposes hereof, be
deemed to have made a Non-Election.
(l) ▇▇▇▇▇▇ shall mail a Form of Election to each stockholder
of ▇▇▇▇▇▇ as of the record date for the ▇▇▇▇▇▇ Stockholders'
Meeting (the "Record Date") with the Proxy Statement for the
▇▇▇▇▇▇ Stockholders' Meeting and shall use its best efforts to
mail the Form of Election to all persons who become holders of
▇▇▇▇▇▇ Common Stock during the period between the Record Date
and 10:00 a.m. New York time, on the date seven calendar days
prior to the anticipated Effective Time and to make the Form of
Election available to all persons who become holders of ▇▇▇▇▇▇
Common Stock subsequent to such day and no later than the close
of business on the business day prior to the Effective Time. A
Form of Election must be received by the Exchange Agent by the
close of business on the last business day prior to the
Effective Time (the "Election Deadline") in order to be
effective. All elections may be revoked until the Election
Deadline.
(m) Each share of ▇▇▇▇▇▇ Common Stock held in the treasury of
▇▇▇▇▇▇ and each share of ▇▇▇▇▇▇ Common Stock owned by Recoton or
any direct or indirect wholly owned subsidiary of Recoton or of
▇▇▇▇▇▇ immediately prior to the Effective Time shall be canceled
and extinguished without any conversion thereof and no payment
shall be made with respect thereto.
(n) If certificates for shares of ▇▇▇▇▇▇ Common Stock are
delivered to the Exchange Agent and this Agreement is
terminated prior to the effective time, Recoton shall use its
best efforts to cause the Exchange Agent to return tendered
certificates as promptly as practicable after such termination
date.
3.2 Exchange of Certificates.
(a) Exchange Agent. Promptly after completion of the
allocation and election procedures set forth in Section 3.1,
but prior to the Effective Time, Recoton or Acquisition Sub
shall deposit, or shall cause to be deposited, with a bank or
trust company designated by Recoton (the "Exchange Agent"), for
the benefit of the holders of shares of ▇▇▇▇▇▇ Common Stock, for
exchange in accordance with this Article III, through the
Exchange Agent, (i) certificates evidencing such number of
shares of Recoton Common Stock equal to (x) the Exchange Ratio
multiplied by (y) the Target Stock Election Number and (ii) cash
in the amount equal to the Per Share Cash Amount multiplied by
the Target Cash Election Number, including an amount as
estimated by the Exchange Agent as necessary to pay for
Fractional Shares minus an amount equal to the Dissenting Shares
multiplied by the Per Share Cash Amount (such certificates for
shares of Recoton Common Stock, together with any dividends or
distributions with respect thereto and cash, being
hereinafter referred to as the "Exchange Fund"); provided,
however, that should Acquisition Sub make an All-Cash
Election, Recoton or Acquisition Sub only shall deposit in the
Exchange Fund cash in the amount equal to the number
of shares of ▇▇▇▇▇▇ Common Stock outstanding multiplied by the
Per Share Cash Amount and provided, further, that the
cash and Recoton Common Stock to be deposited in the Exchange
Fund shall be adjusted as necessary to reflect any
adjustments pursuant to Section 3.1(i). The Exchange Agent
shall, pursuant to irrevocable instructions, deliver the
Recoton Common Stock and cash out of the Exchange Fund in
accordance with Section 3.1. Except as contemplated by
Section 3.2(f) hereof, the Exchange Fund shall not be used for
any other purpose.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, (i) the Exchange Agent shall
deliver the Merger Consideration (as hereinafter defined) to
each holder of record of a Certificate (as hereinafter
defined) who has theretofore submitted to the Exchange Agent an
effective Form of Election accompanied by the Certificate(s)
representing the shares covered by such Form of Election or the
appropriate guaranty of delivery, and (ii) the Surviving
Corporation shall instruct the Exchange Agent to promptly mail
to each holder of record of a certificate or certificates which
immediately prior to the Effective Time evidenced outstanding
shares of ▇▇▇▇▇▇ Common Stock (other than Dissenting Shares)
(the "Certificates") who did not submit a properly completed
Form of Election accompanied by the necessary stock certificates
or guaranty of delivery) (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other provisions as the Surviving
Corporation may reasonably specify) and (ii) instructions for
use in effecting the surrender of the Certificates in
exchange for certificates evidencing shares of Recoton Common
Stock and/or cash. Upon surrender of a Certificate for
cancellation to the Exchange Agent (or, in lieu thereof delivery
to the Exchange Agent of an appropriate affidavit of
loss and such other documents as may be required under Section
3.2(i)) together with such letter of transmittal, duly
executed, and such other customary documents as may be required
pursuant to such instructions, the holder of such Certificates
shall be entitled to receive, and shall instruct the Exchange
Agent to promptly deliver after the Effective Time, in exchange
therefor (A) certificates evidencing that number of whole shares
of Recoton Common Stock which such holder has the right to
receive in respect of the shares of ▇▇▇▇▇▇ Common Stock formerly
evidenced by such Certificate in accordance with Section 3.1,
(B) cash to which such holder is entitled to receive in
accordance with Section 3.1, (C) cash in lieu of fractional
shares of Recoton Common Stock to which such holder is entitled
pursuant to Section 3.2(e) and/or (D) any dividends or other
distributions to which such holder is entitled pursuant to
Section 3.2(c) (the shares of Recoton Common Stock, dividends,
distributions and cash described in clauses (A), (B), (C) and
(D) being collectively, the "Merger Consideration") and the
Certificate so surrendered shall forthwith be canceled. In the
event of a transfer of ownership of shares of ▇▇▇▇▇▇ Common
Stock which is not registered in the transfer records of
▇▇▇▇▇▇, a certificate evidencing the proper number of shares of
Recoton Common Stock and/or cash may be issued and/or paid in
accordance with this Article III to a transferee if the
Certificates evidencing such shares of ▇▇▇▇▇▇ Common Stock are
presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence
that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 3.2, each
Certificate shall be deemed at any time after the Effective Time
to evidence only the right to receive upon such surrender the
Merger Consideration.
(c) Recoton Distribution with Respect to Unsurrendered
Certificates of ▇▇▇▇▇▇. No dividends or other distributions
declared or made after the Effective Time with respect to
Recoton Common Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Recoton Common Stock
evidenced thereby, and no other part of the Merger Consideration
shall be paid to any such holder, until the holder of
such Certificate shall surrender such Certificate or complies
with Section 3.2(i). Subject to the effect of applicable
laws, following surrender of any such Certificate or compliance
with Section 3.2(i), there shall be paid to the holder of
such Certificates promptly (i) the Merger Consideration and (ii)
the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with
respect to such whole shares of Recoton Common Stock and,
at the appropriate payment date, the amount of dividends or
other distributions, with a record date after the Effective
Time but prior to surrender and a payment date occurring after
surrender, payable with respect to such whole shares of
Recoton Common Stock. No interest shall be paid on the Merger
Consideration or any dividends or other distributions.
(d) No Further Rights in ▇▇▇▇▇▇ Common Stock. All shares of
Recoton Common Stock issued and cash paid upon conversion of the
shares of ▇▇▇▇▇▇ Common Stock in accordance with the terms
hereof shall be deemed to have been issued or paid in full
satisfaction of all rights pertaining to such shares of ▇▇▇▇▇▇
Common Stock.
(e) No Fractional Shares. (i) No certificates or scrip
evidencing fractional shares of Recoton Common Stock shall
be issued upon the surrender for exchange of Certificates, and
such fractional share interests will not entitle the owner
thereof to vote or to any rights of a stockholder of Recoton. In
lieu of any such fractional shares, each holder of ▇▇▇▇▇▇
Common Stock upon surrender of a Certificate for exchange
pursuant to this Section 3.2 shall be paid an amount in
cash (without interest), rounded to the nearest cent, determined
by multiplying (a) the Average Stock Price by (b) the
fractional interest to which such holder would otherwise be
entitled (after taking into account all shares of ▇▇▇▇▇▇
Common Stock then held of record by such holder).
(ii) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of ▇▇▇▇▇▇ Common
Stock with respect to any fractional share interests, the
Exchange Agent shall promptly pay such amounts to such holders
of ▇▇▇▇▇▇ Common Stock subject to and in accordance with this
Agreement.
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of
▇▇▇▇▇▇ Common Stock for one year after the Effective Time shall
be delivered to the Surviving Corporation, upon demand, and any
holders of ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
Common Stock for any such shares of Recoton Common Stock or cash
(or dividends or distributions with respect thereto) from the
Exchange Fund delivered in good faith to a public official
pursuant to any applicable abandoned property, escheat or
similar law.
(h) Withholding Rights. Recoton and/or the Surviving
Corporation shall be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this Agreement
to any holder of shares of ▇▇▇▇▇▇ Common Stock such amounts as
Recoton and/or the Surviving Corporation is required to deduct
and withhold with respect to the making of such payment under
the Code, or any provision of state, local or foreign tax law.
To the extent that amounts are so withheld by Recoton and/or the
Surviving Corporation, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the
holder of the shares of ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ shall be closed and there shall
be no further registration of transfers of shares of ▇▇▇▇▇▇
Common Stock thereafter on the records of ▇▇▇▇▇▇. On or after
the Effective Time, any certificates presented to the Exchange
Agent, Recoton or the Surviving Corporation for any reason shall
be converted into the Merger Consideration.
Section 3.4 Stock Options and Other Rights.
(a) At the Effective Time, each outstanding option to purchase
shares of ▇▇▇▇▇▇ Common Stock (a "▇▇▇▇▇▇ Stock Option") issued
pursuant to the ▇▇▇▇▇▇ Stock Option Plan (1989), the ▇▇▇▇▇▇ 1991
Stock Incentive Plan and the 1994 ▇▇▇▇▇▇ Stock Option and
Purchase Plan for Non-Employee Directors (together, the "▇▇▇▇▇▇
Stock Option Plans") shall be assumed by Recoton with each such
option becoming fully exercisable upon the Merger to the extent
so required by the applicable plan. Except for any such
acceleration of the exercisability of the ▇▇▇▇▇▇ Stock Options
as provided in the preceding sentence, each ▇▇▇▇▇▇ Stock Option
shall be deemed to constitute an option to acquire, on the same
terms and conditions as were applicable under such ▇▇▇▇▇▇ Stock
Option, the same number of shares of Recoton Common Stock as the
holder of the ▇▇▇▇▇▇ Stock Option would have been entitled to
receive pursuant to the Merger had such holder exercised such
option in full immediately prior to the Effective Time and
received in the Merger such number of shares of Recoton Common
Stock equal to the number of shares of ▇▇▇▇▇▇ Common Stock
represented by such ▇▇▇▇▇▇ Stock Option multiplied by the
Exchange Ratio, at a price per share equal to (y) the aggregate
exercise price for the shares of ▇▇▇▇▇▇ Common Stock otherwise
purchasable pursuant to such ▇▇▇▇▇▇ Stock Option divided by (z)
the number of full shares of Recoton Common Stock deemed
purchasable pursuant to such ▇▇▇▇▇▇ Stock Option.
(b) As soon as practicable after the Effective Time, Recoton
shall deliver to the holders of ▇▇▇▇▇▇ Stock Options
appropriate notices setting forth such holders' rights pursuant
to the ▇▇▇▇▇▇ Stock Option Plans and the agreements
evidencing the grants of such ▇▇▇▇▇▇ Stock Options shall
continue in effect on the same terms and conditions (subject to
the adjustment required by this Section 3.4 after giving effect
to the Merger and the assumption by Recoton as set forth
above and until otherwise determined). Recoton shall comply
with the terms of the ▇▇▇▇▇▇ Stock Option Plans with
respect to the ▇▇▇▇▇▇ Stock Options.
(c) Pursuant to Section 3.2 of the 1994 Stock Option and
Purchase Plan For Non-Employee Directors (the "▇▇▇▇▇▇
Directors Plan"), certain directors of ▇▇▇▇▇▇ ("Deferred
Holders") have elected to defer the receipt of shares of ▇▇▇▇▇▇
Common Stock ("Deferred Shares") owed to them in lieu of
directors' fees pursuant to the ▇▇▇▇▇▇ Directors Plan.
Immediately prior to the Effective Time, ▇▇▇▇▇▇ shall terminate
each such director's right to receive the Deferred
Shares, and in consideration thereof, ▇▇▇▇▇▇ shall make a cash
payment to each Deferred Holder at the time provided in
the final two sentences of this Section 3.4(c) (and subject, in
the case of each such Deferred Holder, to the receipt from
such Deferred Holder of a Cancellation Agreement, as that term
is defined in the next sentence), in an amount equal to
the number of Deferred Shares held by such Deferred Holder times
the Per Share Cash Amount. ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ a Cancellation Agreement prior to the
Effective Time shall be paid pursuant to this Section 3.4(c) at
or prior to the Effective Time. In the case of any Deferred
Holder who does not deliver a Cancellation Agreement to ▇▇▇▇▇▇
prior to the Effective Time, Recoton shall cause the Surviving
Corporation to pay such Deferred Holder after the Effective Time
the amount to which the Deferred Holder is entitled pursuant to
this Section 3.4(c) promptly after the receipt by the Surviving
Corporation from the Deferred Holder of a Cancellation
Agreement.
Section 3.5 Dissenting Shares. Notwithstanding any other
provisions of this Agreement to the contrary, shares of
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Common Stock
under such Section 262 shall thereupon be deemed to have been
converted into and to have become exchangeable, as of
the Effective Time, for the right to receive, without any
interest thereon, the Merger Consideration, as if such shares of
▇▇▇▇▇▇ Common Stock were covered by Non-Elections, upon
surrender, in the manner provided in Section 3.2, of the
certificate or certificates that formerly evidenced such shares
of ▇▇▇▇▇▇ Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇
▇▇▇▇▇▇ represents and warrants to Recoton and Acquisition Sub as
follows:
Section 4.1 Organization and Qualification. ▇▇▇▇▇▇ is a
corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation and has
the requisite corporate power and authority to own, lease
and operate its assets and properties and to carry on its
businesses as it is now being conducted. ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Material Adverse
Effect. For purposes of this Agreement, a ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ and
its subsidiaries taken as a whole, excluding the Original
Equipment Business (except that for purposes of determining
whether a ▇▇▇▇▇▇ Material Adverse Effect arising out of the
matters described in Section 4.17 has occurred, "▇▇▇▇▇▇
Material Adverse Effect" shall mean potential liabilities and
costs that reasonably may exceed $5,000,000). True and
complete copies of ▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇ Common Stock. ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
simultaneous with the execution and delivery of the Agreement
("▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇ to issue,
deliver or sell, or cause to be issued, delivered or sold,
additional shares of the capital stock of ▇▇▇▇▇▇ or obligating
▇▇▇▇▇▇ or any subsidiary of ▇▇▇▇▇▇ to ▇▇▇▇▇, extend or enter
into any such agreement or commitment except pursuant to this
Agreement.
Section 4.3 Subsidiaries. Each direct and indirect subsidiary
of ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
Material Adverse Effect. Except as set forth in Section 4.3 of
▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇'▇ Disclosure Schedule or in
▇▇▇▇▇▇'▇ Annual Report on Form 10-K for the year ended February
28, 1995 or the exhibits and schedules thereto (the "▇▇▇▇▇▇
10-K" and, together with any reports filed by ▇▇▇▇▇▇ with
the Securities and Exchange Commission (the "SEC") under the
Securities Exchange Act of 1934, as amended, (the "Exchange
Act") after the ▇▇▇▇▇▇ 10-K and prior to the date of this
Agreement, the "▇▇▇▇▇▇ 1995 Reports"), ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇'▇ Disclosure Schedule or in the ▇▇▇▇▇▇
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 ▇▇▇▇▇▇, including any right of conversion or
exchange under any outstanding security, instrument or
agreement. Section 4.3 of ▇▇▇▇▇▇'▇ Disclosure Schedule sets
forth a list of all material corporations, partnerships, joint
ventures and other business entities in which ▇▇▇▇▇▇ 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) ▇▇▇▇▇▇
has full corporate power and authority to enter into this
Agreement and, subject to ▇▇▇▇▇▇ Stockholders' Approval (as
defined in Section 4.18) and the ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ of the
transactions contemplated hereby have been duly authorized by
▇▇▇▇▇▇'▇ Board of Directors, and no other corporate proceedings
on the part of ▇▇▇▇▇▇ are necessary to authorize the execution
and delivery of this Agreement and the consummation by ▇▇▇▇▇▇ of
the transactions contemplated hereby, except for the ▇▇▇▇▇▇
Stockholders' Approval and the obtaining of the ▇▇▇▇▇▇ Required
Approvals. This Agreement has been duly and validly executed
and delivered by ▇▇▇▇▇▇ and constitutes a valid and legally
binding agreement of ▇▇▇▇▇▇ enforceable against it in accordance
with its terms.
(b) Except as set forth in Section 4.4(b) of ▇▇▇▇▇▇'▇
Disclosure Schedule, the execution and delivery of this
Agreement by ▇▇▇▇▇▇ does not, and the consummation by ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ or
any of its subsidiaries under any of the terms, conditions or
provisions of (i) the respective charters or By-Laws of ▇▇▇▇▇▇
or any of its subsidiaries, (ii) subject to obtaining the ▇▇▇▇▇▇
Required Approvals and the receipt of the ▇▇▇▇▇▇ Stockholders'
Approval, any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of
any court or governmental authority applicable to ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ or any of its subsidiaries is now a party or by
which ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
Material Adverse Effect.
(c) Except for (i) the filings by ▇▇▇▇▇▇ required by Title II
of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended (the "HSR Act"), (ii) any filings required by
comparable European or European Community regulation ("EC
Filings"), (iii) the filing of the Proxy Statement (as
hereinafter defined) with the SEC pursuant to the
Exchange Act, and the Securities Act of 1933, as amended (the
"Securities Act"), and the declaration of the effectiveness
thereof by the SEC and filings with various blue sky authorities
and (iv) the making of the Merger Filing with the Secretary of
State of the State of Delaware in connection with the Merger
(the filings and approvals referred to in clauses (i) through
(iv) are collectively referred to as the "▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ or the
consummation by ▇▇▇▇▇▇ of the transactions contemplated hereby.
Section 4.5 Reports and Financial Statements; Derivative
Transactions. Since February 28, 1995, ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇'▇ 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.
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ with the SEC from February 28, 1992 until the
date hereof (collectively, the "▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Financial Statements") (collectively the
"1995 ▇▇▇▇▇▇ Financial Statements"). As of their respective
dates, the ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ included in the ▇▇▇▇▇▇ SEC Reports and the 1995 ▇▇▇▇▇▇
Financial Statements (collectively, the "▇▇▇▇▇▇ Financial
Statements") fairly present the financial position of ▇▇▇▇▇▇ 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. ▇▇▇▇▇▇ and its subsidiaries do not, and will not, use
any derivative financial instruments other than as disclosed
in Section 4.5 of ▇▇▇▇▇▇'▇ Disclosure Schedule.
Section 4.6 Absence of Undisclosed Liabilities. Except as set
forth in Section 4.6 of ▇▇▇▇▇▇'▇ Disclosure Schedule
or in the ▇▇▇▇▇▇ 1995 Reports, neither ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇'▇ Disclosure Schedule or in
the ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ and its
subsidiaries, taken as a whole (excluding the original equipment
business), and ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 1995
Reports, the 1995 ▇▇▇▇▇▇ Financial Statements, or Section 4.8 of
▇▇▇▇▇▇'▇ Disclosure Schedule, (a) there are no claims, suits,
actions or proceedings pending or, to the knowledge of ▇▇▇▇▇▇,
threatened, nor to the knowledge of ▇▇▇▇▇▇ are there any
investigations or reviews pending or threatened, against,
relating to or affecting ▇▇▇▇▇▇ or any of its subsidiaries,
which, if adversely determined, would have a ▇▇▇▇▇▇ Material
Adverse Effect; (b) there have not been any developments since
the date of the ▇▇▇▇▇▇ 10-K with respect to such claims, suits,
actions, proceedings, investigations or reviews which,
individually or in the aggregate, may have a ▇▇▇▇▇▇ Material
Adverse Effect; and (c) except as contemplated by the ▇▇▇▇▇▇
Required Approvals, neither ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Material Adverse Effect.
Section 4.9 Proxy Statement. The proxy statement to be
distributed in connection with the ▇▇▇▇▇▇ Stockholders'
Meeting (the "Proxy Statement") and which shall be included in
the Registration Statement (as hereinafter defined) will
not at the time of the mailing of the Proxy Statement and any
amendment or supplement thereto, and at the time of the
▇▇▇▇▇▇ Stockholders' Meeting, contain any untrue statement of a
material fact or omit to state any material fact required
to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they are made, not misleading or necessary to correct any
statement in any earlier filing with the SEC of such Proxy
Statement or any amendment or supplement thereto or any earlier
communication to stockholders of ▇▇▇▇▇▇ 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
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇'▇ Disclosure Schedule, neither
▇▇▇▇▇▇ nor any of its subsidiaries is in violation of, or, to
the knowledge of ▇▇▇▇▇▇, 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 ▇▇▇▇▇▇ Material Adverse Effect. ▇▇▇▇▇▇ and its subsidiaries
have all material permits, licenses, franchises and other
governmental authorizations, consents and approvals (the "▇▇▇▇▇▇
Government Approvals") necessary to conduct their
businesses as presently conducted and, except as set forth in
Section 4.10 of ▇▇▇▇▇▇'▇ Disclosure Schedule, all such
▇▇▇▇▇▇ Government Approvals shall be transferred to the
Surviving Corporation.
Section 4.11 Compliance with Agreements. Except as disclosed
in the ▇▇▇▇▇▇ 1995 Reports, the ▇▇▇▇▇▇ 1995 Financial Statements
or Section 4.11 of ▇▇▇▇▇▇'▇ Disclosure Schedule, ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Material
Adverse Effect.
Section 4.12 Taxes. (a) ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
balance sheets (x) as of February 28, 1995, contained in the
▇▇▇▇▇▇ 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
▇▇▇▇▇▇'▇ Disclosure Schedule, (i) there are no material liens
for taxes upon any property or asset of ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇'▇
Disclosure Statement, which are being contested in good faith
through appropriate proceedings; (ii) ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ in future periods;
(iii) during the past three years neither ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ or any of its subsidiaries,
except any such notice of deficiency, proposed deficiency or
assessment which will not in the aggregate cause a ▇▇▇▇▇▇
Material Adverse Effect, and, any such deficiency or assessment
shown on such Section 4.12 of ▇▇▇▇▇▇'▇ Disclosure Schedule has
been paid or is being contested in good faith through
appropriate proceedings; (iv) the income tax returns for ▇▇▇▇▇▇
and its subsidiaries are not currently the subject of any audit
by the Internal Revenue Service (the "IRS") or any other
national taxing authority, and such federal income tax returns
have been examined by the IRS (or the applicable statutes of
limitation for the assessment of federal taxes for such periods
have expired) for all periods through and including February 28,
1990, and no material deficiencies were asserted as a result of
such examinations which have not been resolved and fully paid;
(v) there are no outstanding requests, agreements, consents or
waivers to extend the statutory period of limitations applicable
to the assessment of any taxes or deficiencies against ▇▇▇▇▇▇ or
any of its subsidiaries, and no power of attorney granted by
either ▇▇▇▇▇▇ or any of its subsidiaries with respect to any
taxes is currently in force; and (vi) neither ▇▇▇▇▇▇ nor any of
its subsidiaries is a party to any agreement providing for the
allocation or sharing of taxes. Neither ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇'▇ Disclosure Schedule,
▇▇▇▇▇▇ will not have any carryovers subject to limitation
under Section 382 or Section 383 of the Code immediately after
the Merger. ▇▇▇▇▇▇ and its subsidiaries, in accordance
with Section 482 of the Code, properly conducted intercompany
pricing studies for the tax year ended February 1995,
and is conducting such study in a timely manner with respect to
the tax year ending February 1996.
(b) The term "tax" shall include any tax, assessment, levy,
impost, duty, or withholding of any nature now or hereafter
imposed by a government authority and any interest, additional
tax, deficiency, penalty, charge or other addition thereon,
including without limitation any income, gross receipts,
profits, franchise, sales, use, property (real and
personal), transfer, payroll, unemployment, social security,
occupancy and excise tax and customs duty. The term "return"
shall include any return, declaration, report, estimate,
information return and statement required to be filed with or
supplied to any taxing authority in connection with any taxes.
Section 4.13 Customs. Except as set forth in the ▇▇▇▇▇▇ 1995
Reports or in Section 4.13 of ▇▇▇▇▇▇'▇ Disclosure Schedule,
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
Material Adverse Effect.
Section 4.14 Employee Benefit Plans; ERISA. (a) Section 4.14
of ▇▇▇▇▇▇'▇ Disclosure Schedule lists all material employee
benefit plans, employment contracts or other arrangements for
the provision of benefits for employees or former employees of
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇'▇ Disclosure
Schedule, neither ▇▇▇▇▇▇ 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
▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇
and its subsidiaries (the "▇▇▇▇▇▇ Plans"), other than ▇▇▇▇▇▇
Plans which are described in ▇▇▇▇▇▇ 1995 Reports or the Proxy
Statement for the 1995 Annual Meeting of Stockholders of ▇▇▇▇▇▇.
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 ▇▇▇▇▇▇ and its
subsidiaries described in the ▇▇▇▇▇▇ SEC Reports, the ▇▇▇▇▇▇
Plans listed on Section 4.14(a) of ▇▇▇▇▇▇'▇ Disclosure Schedule,
except for any multiemployer plans, and all contracts relating
thereto, or to the funding thereof (including, without
limitation, all trust agreements, insurance contracts,
investment management agreements, subscription and participation
agreements and recordkeeping agreements), each as will be in
effect at the Effective Time, has been provided to Recoton. In
the case of any employee benefit plan, employment contract or
other benefit arrangement which is not in written form, an
accurate description of such plan, contract or arrangement as
will be in effect at the Effective Time has been provided to
Recoton. A true and correct copy of the most recent annual
report, actuarial report, summary plan description, and Internal
Revenue Service determination letter with respect to each such
▇▇▇▇▇▇ 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, ▇▇▇▇▇▇ Plan, or benefit arrangement has been
provided to Recoton by ▇▇▇▇▇▇, and there have been no material
changes in the financial condition in the respective plans,
▇▇▇▇▇▇ Plans or benefit arrangements from that stated in such
annual report and actuarial reports.
(b) Except as disclosed in the ▇▇▇▇▇▇ 1995 Reports or as set
forth in Section 4.14(b) of ▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇ Plans which, assuming that the taxable period
of such transaction expired as of the date hereof, could subject
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ or any of its subsidiaries under Title IV
of ERISA with respect to any of the ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ under Section
4001 of ERISA or Section 414 of the Code (a "▇▇▇▇▇▇ ERISA
Affiliate"); (iii) all amounts which ▇▇▇▇▇▇ or its
subsidiaries are required to pay as contributions to the ▇▇▇▇▇▇
Plans have been timely made or have been reflected in the
▇▇▇▇▇▇ Financial Statements; (iv) none of the ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
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
▇▇▇▇▇▇ 10-K as of February 28, 1995; (vi) each of the ▇▇▇▇▇▇
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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Plans; (x) neither ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ERISA affiliate); and (xi) neither ▇▇▇▇▇▇ nor its
subsidiaries has any liability or contingent liability for
retiree life and health benefits under any of the ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇'▇ Disclosure Schedule.
(c) Except as set forth in Section 4.14(c) of ▇▇▇▇▇▇'▇
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 ▇▇▇▇▇▇
employee agreement, plan or arrangement.
Section 4.15 Material Defaults. Except as set forth on Section
4.15 of ▇▇▇▇▇▇'▇ Disclosure Schedule, neither ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ or any of its
subsidiaries is a party or by which ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇'▇ Disclosure Schedule, there are no material
controversies pending or, to the knowledge of ▇▇▇▇▇▇, threatened
between ▇▇▇▇▇▇ or its subsidiaries and any representatives of
its employees, and, to the knowledge of ▇▇▇▇▇▇, there are no
material organizational efforts presently being made involving
any of the presently unorganized employees of ▇▇▇▇▇▇ or its
subsidiaries. ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇, asserted that ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 1995 Reports or in
Section 4.17 to ▇▇▇▇▇▇'▇ Disclosure Schedule, ▇▇▇▇▇▇ and its
subsidiaries have complied in all respects with all
Environmental Laws (as defined below in this Section). ▇▇▇▇▇▇
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 ▇▇▇▇▇▇'▇ Disclosure Schedule.
(b) Except as set forth in the ▇▇▇▇▇▇ 1995 Reports or in
Section 4.17 to ▇▇▇▇▇▇'▇ Disclosure Schedule, ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ thereunder. All products manufactured and
services provided by ▇▇▇▇▇▇ 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. ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
and its subsidiaries.
(c) Except as set forth in the ▇▇▇▇▇▇ 1995 Reports or Section
4.17 to ▇▇▇▇▇▇'▇ Disclosure Schedule, there is no pending or, to
▇▇▇▇▇▇'▇ knowledge, threatened civil, criminal or administrative
Action, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter that affects
or applies to ▇▇▇▇▇▇ 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
▇▇▇▇▇▇ or its subsidiaries thereunder.
(d) Except as set forth in the ▇▇▇▇▇▇ 1995 Reports or in
Section 4.17 to ▇▇▇▇▇▇'▇ Disclosure Schedule, there are no
past or present (or, to the knowledge of ▇▇▇▇▇▇, anticipated)
events, conditions, circumstances, activities, practices,
incidents, Actions or plans which may interfere with or prevent
compliance or continued compliance by ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ or its subsidiaries
thereunder, or which may give rise to any common law or legal
liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, notice of violation, study or
investigation, based on or related to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or
threatened release into the environment, by ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
Disclosure Schedule and except in accordance with a valid
governmental permit, license, certificate or approval listed in
Section 4.17 to ▇▇▇▇▇▇'▇ Disclosure Schedule there has
been no emission, spill, release or discharge by ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇ Material Adverse Effect, neither ▇▇▇▇▇▇ nor any of
its subsidiaries not any directors, officer, agents, or
employees of ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇'▇ Disclosure Schedule
set forth all written contracts, arrangements, or undertakings
(excluding ▇▇▇▇▇▇ Stock Options (as defined in Section
3.4)) pursuant to which any person may receive any amount or
entitlement from ▇▇▇▇▇▇ or the Surviving Corporation or
any of their respective subsidiaries (including cash or property
or the vesting of property) that may be characterized as
an "excess parachute payment" (as such term is defined in
Section 280G(B)(1) of the Code) (any such amount being an
"Excess Parachute Payment") as a result of any of the
transactions being contemplated by this Agreement. Except as
set forth in Section 4.14(c) of ▇▇▇▇▇▇'▇ Disclosure Schedule, no
person is entitled to receive any additional payment from
▇▇▇▇▇▇, 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 ▇▇▇▇▇▇ has not during the six months prior
to the date of this Agreement granted to any officer,
director, or employee of ▇▇▇▇▇▇ any right to receive any
Parachute Gross-Up Payment.
Section 4.20 Trademarks, etc. Section 4.20 of ▇▇▇▇▇▇'▇
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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇, 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. ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇'▇ Disclosure Schedule, ▇▇▇▇▇▇ 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
▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇ Material Adverse Effect.
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Stockholders' Approval. ▇▇▇▇▇▇ will take
all necessary action so that stockholder approval of this
Agreement and the transactions contemplated hereby, including
the Merger, will require the affirmative vote of (i) a majority
of the outstanding shares of ▇▇▇▇▇▇ Common Stock, and (ii) a
majority of the outstanding shares of ▇▇▇▇▇▇ Common Stock which
are voted at the ▇▇▇▇▇▇ Stockholders' Meeting other than shares
held directly or indirectly by ▇▇▇▇▇▇ ▇. ▇▇▇▇.
Section 4.22 State Takeover Statutes. The Board of Directors
of ▇▇▇▇▇▇ has approved the Merger. The Certificate of
Incorporation of ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ as follows:
Section 5.1 Organization and Qualification. Acquisition Sub
and Recoton are each corporations duly organized, validly
existing and in good standing under the laws of their states of
incorporation and have the requisite corporate power and
authority to own, lease and operate their assets and properties
and to carry on their businesses as they are now being
conducted. Acquisition Sub and Recoton are each qualified to do
business and is in good standing in each jurisdiction in which
the properties owned, leased or operated by each or the nature
of the businesses conducted by each makes such qualification
necessary, except where the failure to be so qualified and in
good standing will not, when taken together with all other such
failures, have a Recoton Material Adverse Effect. For purposes
of this Agreement, a Recoton Material Adverse Effect shall be a
material adverse effect on the business, operations, properties,
assets, condition (financial or otherwise), results of
operations or prospects of Recoton and its subsidiaries taken as
a whole. True and complete copies of Acquisition Sub's and
Recoton's Certificate of Incorporation and By-Laws, as in effect
on the date hereof, including all amendments thereto, have
heretofore been delivered to ▇▇▇▇▇▇. Recoton directly owns and
has the power to vote all of the outstanding capital stock of
Acquisition Sub, and, as the sole stockholder of Acquisition
Sub, has approved this Merger Agreement and the transactions
contemplated hereunder.
Section 5.2 Recoton Common Stock. Recoton has 25,000,000
authorized shares of Common Stock, of which 11,163,390 shares
are outstanding as of December 31, 1995. Acquisition Sub holds,
or by the Effective Time shall hold, a number of shares of
Recoton Common Stock sufficient to convert ▇▇▇▇▇▇ Common Stock
to Recoton Common Stock pursuant to Article III, all of which
are or shall be validly issued and are fully paid, nonassessable
and free of preemptive rights. Except as set forth in Section
5.2 of the separate disclosure schedule executed and delivered
by Recoton and Acquisition Sub simultaneous with the execution
and delivery of this Agreement ("Recoton's Disclosure Schedule")
or in Recoton's Annual Report on Form 10-K for the year ended
December 31, 1994 and the exhibits and schedules thereto (the
"Recoton 10-K" and, together with any reports filed by Recoton
with the SEC under the Exchange Act after the Recoton 10-K and
prior to the date of this Agreement, the "Recoton 1994-5
Reports") or any of the Recoton 1994-5 Reports, as of the date
hereof, there are no outstanding subscriptions, options,
warrants, rights, calls, contracts, voting trusts, proxies and
other commitments, understandings, restrictions and
arrangements, including any right of conversion or exchange
under any outstanding security, instrument or other agreement
obligating Recoton to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of the capital
stock of Recoton or obligating Recoton or any subsidiary of
Recoton to grant, extend or enter into any such agreement or
commitment except pursuant to this Agreement. The shares of
Recoton Common Stock to be issued to stockholders of ▇▇▇▇▇▇ in
the Merger will be at the Effective Time duly authorized,
validly issued, fully paid, nonassessable and free of preemptive
rights and each certificate evidencing such shares shall contain
a notation incorporating by reference that certain Rights
Agreement dated as of October 27, 1995 between Recoton and
Chemical Mellon Shareholder Services L.L.C.
Section 5.3 Authority; Non-Contravention; Approvals. (a)
Recoton and Acquisition Sub have full corporate power
and authority to enter into this Agreement and the Recoton
Required Approvals (as hereinafter defined), to consummate
the transactions contemplated hereby. The execution, delivery
and performance of this Agreement and the consummation by
▇▇▇▇▇▇▇ 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
▇▇▇▇▇▇, constitutes a valid and legally binding agreement of
Recoton and Acquisition Sub enforceable against them in
accordance with its terms.
(b) Except as set forth in Section 5.3(b) of Recoton's
Disclosure Schedule, the execution and delivery of this
Agreement by Recoton and Acquisition Sub does not, and the
consummation by Recoton and Acquisition Sub of the
transactions contemplated hereby will not, violate, conflict
with or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or
result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of
Recoton or Acquisition Sub or any of its subsidiaries under any
of the terms, conditions or provisions of (i) the respective
charters or By-Laws of Recoton or any of its subsidiaries, (ii)
subject to obtaining the Recoton Required Approvals, any
statute, law, ordinance, rule, regulation, judgment, decree,
order, injunction, writ, permit or license of any court or
governmental authority applicable to Recoton or any of its
subsidiaries or any of their respective properties or assets,
and (iii) any note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which ▇▇▇▇▇▇
or any of its subsidiaries is now a party or by which ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇, Acquisition Sub and
▇▇▇▇▇▇ required by Title II of the HSR Act, (ii) any
EC Filings, (iii) the filing of the Registration Statement (as
hereinafter defined) with the SEC pursuant to the Securities
Act, and the declaration of the effectiveness thereof by the SEC
and filings with various blue sky authorities, (iv) the
making of the Merger Filing with the Secretary of State of the
State of Delaware in connection with the Merger and (v)
the listing with Nasdaq of the additional shares of Recoton
Common Stock to be issued in the Merger (the filings and
approvals referred to in clauses (i) through (v) are
collectively referred to as the "Recoton Required Approvals"),
no declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or
regulatory body or authority is necessary for the execution and
delivery of this Agreement by Recoton or Acquisition
Sub or the consummation by Recoton or Acquisition Sub of the
transactions contemplated hereby, other than such
filings, registrations, authorizations, consents or approvals
the failure of which to make or obtain, as the case may be,
will not, in the aggregate, have a Recoton Material Adverse
Effect.
Section 5.4 Reports and Financial Statements. Since December
31, 1994, Recoton and each of its subsidiaries required to make
filings under the Securities Act, the Exchange Act and
applicable state laws and regulations, as the case may be, have
filed all forms, statements, reports and documents (including
all exhibits, amendments and supplements thereto) required to be
filed by them under each of the Securities Act, the Exchange
Act, applicable laws and regulations of Recoton's and its
subsidiaries' jurisdictions of incorporation and the respective
rules and regulations thereunder, all of which complied in all
material respects with all applicable requirements of the
appropriate act and the rules and regulations thereunder.
Recoton has previously delivered to ▇▇▇▇▇▇ true and complete
copies of its (a) Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q, and Current Reports on Form 8-K filed by Recoton
or any of its subsidiaries with the SEC from December 31, 1991
until the date hereof, (b) proxy and information statements
relating to all meetings of its shareholders (whether annual or
special) and actions by written consent in lieu of a
shareholders' meeting from December 31, 1991 until the date
hereof and (c) all other reports or registration statements
filed by Recoton or its subsidiaries with the SEC from December
31, 1991, until the date hereof (collectively, the
"Recoton SEC Reports") and (d) audited consolidated financial
statements of Recoton for the fiscal year ended December 31,
1994 and its unaudited consolidated financial statements for the
nine months ended September 30, 1995 (the "1994-95 Recoton
Financial Statements"). As of their respective dates, the
financial statements of Recoton included in the Recoton SEC
Reports and the 1994-95 Recoton Financial Statements
(collectively, the "Recoton Financial Statements") fairly
present the financial position of Recoton and its subsidiaries
as of the dates thereof and the results of their operations and
cash flows for the periods then ended in conformity with
generally accepted accounting principles applied on a consistent
basis (except as may be indicated therein or in the notes
thereto) subject, in the case of the unaudited interim financial
statements, to normal year-end and audit adjustments and any
other adjustments described therein.
Section 5.5 Absence of Undisclosed Liabilities. Except as set
forth in Section 5.5 of Recoton's Disclosure Schedule or in the
Recoton 1994-5 Reports, neither Recoton nor any of its
subsidiaries had at December 31, 1994, or has incurred
since that date, any liabilities or obligations (whether
absolute, accrued, contingent or otherwise) of any nature,
except liabilities, obligations or contingencies (a) which are
accrued or reserved against in the 1994-1995 Recoton Financial
Statements or reflected in the notes thereto or (b) which were
incurred after December 31, 1994, and were incurred in
the ordinary course of business and consistent with past
practices and, in either case, except for any such liabilities,
obligations or contingencies which (i) would not, in the
aggregate, have a Recoton Material Adverse Effect or (ii) have
been discharged or paid in full prior to the date hereof.
Section 5.6 Absence of Certain Changes or Events. Except as
set forth in Section 5.6 of Recoton's Disclosure Schedule or in
the Recoton 1994-95 Reports, since December 31, 1994, there has
not been any material adverse change in the business,
operations, properties, assets, liabilities, condition
(financial or other), results of operations or prospects
of Recoton and its subsidiaries, taken as a whole, and Recoton
and its subsidiaries have in all material respects conducted
their respective businesses in the ordinary course consistent
with past practice.
Section 5.7 Registration Statement. The Prospectus forming
part of the Registration Statement on Form S-4 to be filed under
the Securities Act with the SEC by Recoton for the purpose of
registering the shares of Recoton Common Stock to be issued in
the Merger, including Recoton Common Stock that may be issued
upon the exercise of ▇▇▇▇▇▇ Stock Options after the Effective
Time (the "Registration Statement") will not at the time it
becomes effective and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they are made, not misleading or necessary to correct any
statement in any earlier filing with the SEC of such
Registration Statement or any amendment or supplement thereto.
The Registration Statement will comply as to form in all
material respects with all applicable laws, including the
provisions of the Securities Act and the rules and regulations
promulgated thereunder. Notwithstanding the foregoing, no
representation is made by Recoton with respect to
information supplied by ▇▇▇▇▇▇ or its representatives
specifically for inclusion therein.
Section 5.8 No Violation of Law. Except as disclosed in the
Recoton 1994-5 Reports or set forth in Section 5.8 of
Recoton's Disclosure Schedule, neither Recoton nor any of its
subsidiaries is in violation of, or, to the knowledge of
Recoton, is under investigation with respect to or has been
given notice or been charged with any violation of, any law,
statute, order, rule, regulation, ordinance, or judgment of any
governmental or regulatory body or authority, except for
violations which in the aggregate do not have a Recoton Material
Adverse Effect. Recoton and its subsidiaries have all
material permits, licenses, franchises and other governmental
authorizations, consent and approvals necessary to conduct
their businesses as presently conducted.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ the Merger.
Except as set forth in Section 6.1 of ▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇ shall be
solely responsible for its operations and those of its
subsidiaries in accordance with the provisions of this
Agreement), ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Common Stock on
Nasdaq;
(c) not (i) except for the issuance of shares of Common
Stock upon the exercise of currently outstanding ▇▇▇▇▇▇ Stock
Options, authorize the issuance of, or issue, sell, pledge or
dispose of, or agree to issue, sell, pledge or dispose of, any
additional shares of, or any options, warrants or rights of any
kind to acquire any shares of, their capital stock of any class
or any debt or equity securities convertible into or
exchangeable for such capital stock, (ii) except for the sale of
the assets associated with the Original Equipment Business as
described in Section 8.3(f) and the sale of the AR Rights
pursuant to the AR Agreement, sell (including, without
limitation, by sale/leaseback), pledge, dispose of, license or
encumber any material assets (including without limitation
intellectual property), or any interests therein, other than in
the ordinary course of business and consistent with past
practice; (iii) redeem, purchase, acquire or offer to purchase
or acquire any (x) shares of its capital stock, other than in
accordance with the governing terms of such securities or (y)
long-term debt, other than as required by the governing
instruments relating thereto; (iv) take or fail to take any
action which action or failure to take action would cause
Acquisition Sub, ▇▇▇▇▇▇ or their respective stockholders (except
to the extent that any stockholders perfect dissenters' rights
under Delaware law, or receive cash in lieu of fractional shares
or receive the Per Share Cash Amounts) to recognize gain or loss
for federal income tax purposes as a result of the consummation
of the Merger or (v) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing;
provided, however, that ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
advises the Board of Directors of ▇▇▇▇▇▇ or any of its
subsidiaries that the failure to take such action or actions
might reasonably subject ▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇ or its subsidiaries
taken as a whole (excluding the Original Equipment Business);
(g) not acquire, or publicly propose to acquire, all or
any substantial part of the business and properties or capital
stock of any person not a party to this Agreement, whether by
merger, purchase of assets, tender offer or otherwise;
(h) not, directly or indirectly, through any officer,
director, employee, representative, agent, or otherwise,
solicit, initiate or encourage the submission of any proposal or
offer from any person (including, without limitation, a "person"
as defined in Section 13(d)(3) of the Exchange Act) or entity
relating to any acquisition or purchase of all or (other than in
the ordinary course of business) any portion of the assets of,
or any equity interest in, or any merger or other business
combination with, ▇▇▇▇▇▇ or any of its subsidiaries, other than
with respect to the Original Equipment Business or the
transactions contemplated hereby (collectively, a "▇▇▇▇▇▇
Acquisition Transaction"); provided, however, that ▇▇▇▇▇▇ or any
of its subsidiaries may take any of the actions otherwise
prohibited by this Section 6.1(h) if counsel to ▇▇▇▇▇▇ advises
the Board of Directors of ▇▇▇▇▇▇ or any of its subsidiaries that
the failure to take such action or actions might reasonably
subject ▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇ Acquisition Transaction, ▇▇▇▇▇▇ may take
and disclose to ▇▇▇▇▇▇'▇ stockholders the position of the Board
of Directors of ▇▇▇▇▇▇ contemplated by Rule 14e-2 under the
Exchange Act or otherwise make appropriate disclosures to its
stockholders, (b) ▇▇▇▇▇▇ may furnish or cause to be furnished
information concerning its business, properties or assets to a
third party, and (c) ▇▇▇▇▇▇ may engage in discussions or
negotiations with a third party concerning a ▇▇▇▇▇▇ Acquisition
Transaction provided that ▇▇▇▇▇▇ shall notify Recoton promptly
(orally and in writing) of any such offer;
(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 ▇▇▇▇▇▇ and its
subsidiaries;
(l) not introduce any new product or plan which would
substantially increase the risk exposure of ▇▇▇▇▇▇ and its
subsidiaries taken as a whole;
(m) not enter into any material arrangement, agreement,
or contract with any third party (other than customers in the
ordinary course of business) which provides for an exclusive
arrangement with that third party or is substantially more
restrictive on ▇▇▇▇▇▇ or substantially less advantageous to
▇▇▇▇▇▇ than arrangements, agreements, or contracts existing on
the date hereof;
(n) not establish any new lines of credit or other
credit facilities or incur any indebtedness other than
pursuant to existing credit facilities except for trade
liabilities incurred in the ordinary course of business; and
(o) not agree in writing, or otherwise, to take any of
the foregoing actions or any other action which would make any
representation or warranty contained in Article IV untrue or
incorrect in any material respect as of the time of the Closing.
Section 6.2 Site Testing and Evaluation. Prior to the later of
March 1, 1996 or the date of the Proxy Statement (which Recoton
may cause to be delayed if it is still conducting its study and
testing), Recoton may at its own expense perform or have
performed such environmental site inspections and reasonable
testing relating to the real property owned or operated by
▇▇▇▇▇▇ 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
▇▇▇▇▇▇ prior to the date of the Proxy Statement.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information. (a) ▇▇▇▇▇▇ 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 rby 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. ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
Material Adverse Effect.
(b) Recoton and its subsidiaries shall afford to ▇▇▇▇▇▇ and its
accountants, counsel and other representatives full access
during normal business hours throughout the period prior to the
Effective Time to all of their respective properties, books,
contracts, commitments and records (including, but not limited
to, tax returns) and, during such period, shall furnish promptly
to ▇▇▇▇▇▇ (i) a copy of each report, schedule and other document
filed or received by any of them pursuant to the requirements of
federal or state securities laws or the HSR Act or filed or
received by any of them with or from the SEC, FTC or DOJ and
(ii) all other information concerning their respective
businesses, properties and personnel as ▇▇▇▇▇▇ may reasonably
request; provided, however, that no investigation pursuant to
this Section 7.1(b) shall affect any representations or
warranties made herein or the conditions to the obligations of
the respective parties to consummate the Merger. Recoton and
its subsidiaries shall promptly advise ▇▇▇▇▇▇ in writing of any
change or occurrence of any event after the date of this
Agreement having, or which, insofar as can reasonably be
foreseen, in the future may have, a Recoton Material Adverse
Effect.
(c) Any information received pursuant to Sections 7.1(a) and
7.1(b) above shall be considered Evaluation Material (as defined
in the letter agreements dated August 21, 1995 and October 16,
1995, as applicable (the "Confidentiality Agreements"), between
Recoton and ▇▇▇▇▇▇, and such information shall be held in
confidence by Recoton, Acquisition Sub and ▇▇▇▇▇▇ in accordance
with the terms of the Confidentiality Agreements.
Section 7.2 Registration Statement and Proxy Statement.
Recoton shall prepare and file with the SEC as soon as
reasonably practicable after the date hereof the Registration
Statement (in which the Proxy Statement shall be included)
and shall use all reasonable efforts to have the Registration
Statement declared effective by the SEC as promptly as
practicable. ▇▇▇▇▇▇ shall prepare and file with the SEC as soon
as reasonably practicable after the date hereof the Proxy
Statement. Recoton shall also take any action required to be
taken under applicable state blue sky or securities laws in
connection with the issuance of Recoton Common Stock in the
Merger; provided, however, that with respect to such
blue sky qualifications neither Recoton nor ▇▇▇▇▇▇ shall be
required to register or qualify as a foreign corporation or to
take any action which would subject it to service of process in
any jurisdiction (other than Delaware) where any such
entity is not now so subject, except as to matters and
transactions relating to or arising solely from the offer and
sale of Recoton Common Stock. Recoton and ▇▇▇▇▇▇ shall promptly
furnish to each other all information, and take such other
actions, as may reasonably be requested in connection with any
action by any of them in connection with the preceding
sentence. The information provided and to be provided by
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, respectively, (and by their auditors,
attorneys, financial advisors or other consultants or advisors)
to the other for use in the Registration Statement and
Proxy Statement shall be true and complete in all material
respects without omission of any material fact which is
required to make such information not false or misleading.
Section 7.3 Stockholders' Approval. Subject to the provisions
of Section 6.1(h) and 9.1(e) ▇▇▇▇▇▇ shall promptly submit this
Agreement and the transactions contemplated hereby for the
approval of its stockholders at the ▇▇▇▇▇▇ Stockholders' Meeting
to be held as soon as practicable after the Registration
Statement is declared effective by the SEC and, subject to the
fiduciary duties of the Board of Directors of ▇▇▇▇▇▇ under
applicable law, shall use its best efforts to obtain stockholder
approval (the "▇▇▇▇▇▇ Stockholders' Approval") of this Agreement
and the transactions contemplated hereby in accordance with
Section 4.21. Subject to the fiduciary duties of the Board of
Directors of ▇▇▇▇▇▇ under applicable law and the provisions of
Section 6.1(h) and 9.1(e), ▇▇▇▇▇▇ shall, through its Board of
Directors, recommend to its stockholders approval of this
Agreement and the transactions contemplated by this
Agreement.
Section 7.4 Compliance with the Securities Act. ▇▇▇▇▇▇ shall
use its best efforts to cause each principal executive
officer, each director and each other person who is an
"affiliate," as that term is used in paragraphs (c) and (d) of
Rule 145 under the Securities Act (an "Affiliate"), of ▇▇▇▇▇▇ to
deliver to Recoton and ▇▇▇▇▇▇ on or prior to the Effective
Time a written agreement (an "Affiliate Agreement") to the
effect that such person will not offer to sell, sell or
otherwise dispose of any shares of Recoton Common Stock issued
in the Merger, except, in each case, pursuant to an effective
registration statement or in compliance with Rule 145, as
amended from time to time, or in a transaction which, in the
opinion of legal counsel reasonably satisfactory to Recoton, is
exempt from the registration requirements of the Securities Act
and, in any case, until after the results covering 30 days of
post-merger combined operations of Recoton and ▇▇▇▇▇▇ have been
filed with the SEC, sent to shareholders of Recoton or otherwise
publicly issued.
Section 7.5 Nasdaq Listing. Recoton shall use its best efforts
to obtain the listing on Nasdaq, at or before the Effective Time
of the additional shares of Recoton Common Stock to be issued
pursuant to the Merger.
Section 7.6 Expenses. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses.
Section 7.7 Agreement to Cooperate. Subject to the terms and
conditions provided in this Agreement, each of the parties
hereto shall use all reasonable efforts to take, or cause to be
taken, all action to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions
contemplated by this Agreement, including using its reasonable
efforts to obtain all necessary or appropriate waivers, consents
and approvals and SEC "no-action" letters (including, but not
limited to, required approvals under applicable Delaware state
laws and regulations), to effect all necessary registrations and
filings (including, but not limited to, filings under the HSR
Act) and to lift any injunction or other legal bar to the Merger
(and, in such case, to proceed with the Merger as expeditiously
as possible), subject, however, to the provisions of Sections
6.1(h) and 9.1(e) and to the requisite votes of the stockholders
of ▇▇▇▇▇▇. Each party hereto agrees to allow the other to
review each regulatory filing made by such party prior to the
filing thereof during the term of this Agreement.
Section 7.8 Public Statements. The parties shall release a
press release immediately upon the signing of this Agreement in
the form set forth as Exhibit 7.8 to this Agreement. None of the
parties hereto shall issue any press release or make any other
public statements, in each case relating to or connected with or
arising out of this Agreement or the matters contained therein,
without obtaining the prior written approval of the other
parties to the contents and the manner of presentation and
publication thereof, provided, however, that nothing herein
shall prevent any party from making any disclosures required by
applicable law or regulation (including regulation of the SEC
and the NASD).
Section 7.9 Accountants' Letters. Each of Recoton and ▇▇▇▇▇▇
shall use its best efforts to cause to be delivered to
the other letters of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.,
independent auditors for Recoton, and Coopers and ▇▇▇▇▇▇▇,
independent auditors for ▇▇▇▇▇▇, respectively, dated the date of
the Proxy Statement, the effective date of the Registration
Statement and the Effective Time (or such other dates reasonably
acceptable to the parties) with respect to certain financial
statements and other financial information included in the
Registration Statement, which letters shall be in customary form
and substance reasonably satisfactory to the addressee.
Section 7.10 Indemnification of Certain Officers and Directors.
(a) To the extent permitted by applicable law, Recoton and
Acquisition Sub agree that all rights to indemnification from
▇▇▇▇▇▇ or any subsidiary of ▇▇▇▇▇▇ now existing in favor of the
directors, officers, employees or agents of ▇▇▇▇▇▇ and any
subsidiary of ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ and the subsidiaries of ▇▇▇▇▇▇ (provided
that the Surviving Corporation or Acquisition Sub may substitute
therefor policies of at least the same level of coverage
containing terms and conditions which are in the aggregate no
less advantageous so long as no lapse in coverage occurs
as a result of such substitution) with respect to all matters,
including the transactions contemplated hereby, occurring
prior to and including the Effective Time. Notwithstanding the
foregoing, neither Recoton, Acquisition Sub nor the
Surviving Corporation shall be required to expend in excess of
$150,000 in the aggregate pursuant to this Section
7.10(b).
Section 7.11 Employee Benefits. For a period of one year after
the Effective Time, the Surviving Corporation shall make
available to the current employees of ▇▇▇▇▇▇, 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 ▇▇▇▇▇▇, or similar
employee benefits on substantially the same terms and conditions
as the ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇. Employees of the Surviving Corporation shall
be given credit for prior service with ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ pursuant to Section 4.21;
(b) The additional shares of Recoton Common Stock
issuable in the Merger shall have been authorized for listing on
Nasdaq;
(c) The waiting period applicable to the consummation of
the Merger under the HSR Act shall have expired or been
terminated and any EC Filings shall have been made and no
additional requirements relating thereto shall be applicable;
(d) The Registration Statement shall have become
effective in accordance with the provisions of the Securities
Act, and no stop order suspending such effectiveness shall have
been issued and remain in effect;
(e) No preliminary or permanent injunction or other
order or decree by any federal or state court which prevents the
consummation of the Merger shall have been issued and remain in
effect (each party agreeing to use all reasonable efforts to
have any such injunction, order or decree lifted);
(f) No action shall have been taken, and no statute,
rule or regulation shall have been enacted, by any state,
federal or foreign government or governmental agency which would
prevent the consummation of the Merger or that would have a
material adverse effect on the prospects of the Surviving
Corporation;
(g) All governmental consents and approvals legally
required for the consummation of the Merger and the transactions
contemplated hereby, including, without limitation, approval (if
required) by the DOJ, FTC and the SEC, shall have been obtained
and be in effect at the Effective Time on terms and conditions
that would not have a material adverse effect on the prospects
of the Surviving Corporation;
(h) ▇▇▇▇▇▇ shall have received an opinion, and such
opinion shall not have been withdrawn at or prior to the
Effective Time, of a firm of professionals which is qualified to
render tax opinions in reorganizations under Section 368(a) (and
has rendered such opinions in other comparable reorganizations
of public companies) which firm of professionals is reasonably
satisfactory to both ▇▇▇▇▇▇ and Recoton, which opinion Recoton
shall be allowed to rely upon, subject to customary assumptions
and based on representations of ▇▇▇▇▇▇, ▇▇▇▇▇▇ Stockholders and
Recoton and Acquisition Sub dated the date of the Proxy
Statement, to the effect that Acquisition Sub and ▇▇▇▇▇▇
and their respective shareholders (except to the extent any
stockholders have perfected dissenters' rights under Delaware
law or ▇▇▇▇▇▇ stockholders have received (i) cash in lieu of
fractional shares or (ii) the Per Share Cash Amount or portion
thereof) will recognize no gain or loss for federal income tax
purposes as a result of consummation of the Merger and that the
transaction qualifies as a reorganization under Sections
368(a)(1)(A) and 368(a)(2)(D) of the Code; provided, however,
that if such opinion in form reasonably satisfactory to ▇▇▇▇▇▇
and Recoton has not been received by the date of the Proxy
Statement or is withdrawn prior to the Effective Time,
Recoton shall have the right to make an All-Cash Election, in
which case the condition set forth in this Section 8.1(h) shall
be deemed satisfied; and
(▇) ▇▇▇▇▇▇ shall have received letters from ▇▇▇▇▇▇
Brothers dated the date of this Agreement and the date of the
Proxy Statement (or such other dates reasonably acceptable to
▇▇▇▇▇▇ and Recoton), which letters shall be of the opinion that
(1) the Merger Consideration is "fair from a financial point of
view" to ▇▇▇▇▇▇'▇ stockholders; and (2) that the proceeds
received by ▇▇▇▇▇▇ from the sale of the assets of the Original
Equipment Business are "fair from a financial point of view" to
▇▇▇▇▇▇.
Section 8.2 Conditions to Obligation of ▇▇▇▇▇▇ to Effect the
Merger. The obligation of ▇▇▇▇▇▇ to effect the Merger
shall be subject to the fulfillment at or prior to the Effective
Time of the following additional conditions:
(a) Acquisition Sub and Recoton shall have performed in
all material respects their agreements contained in this
Agreement required to be performed on or prior to the Effective
Time and the representations and warranties of Acquisition Sub
and Recoton contained in this Agreement shall be true and
correct in all material respects on and as of the date of this
Agreement and on and as of the Effective Time as if made on and
as of such date, except as contemplated or permitted by this
Agreement, and ▇▇▇▇▇▇ shall have received a certificate of the
President and the Chief Operating Officer of each of Acquisition
Sub and Recoton to that effect;
(b) ▇▇▇▇▇▇ shall have received an opinion addressed to
▇▇▇▇▇▇ from ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to Recoton and
Acquisition Sub, or other counsel reasonably acceptable to
▇▇▇▇▇▇, dated the Closing Date, substantially in the form set
forth in Exhibits 8.2(b);
(▇) ▇▇▇▇▇▇ shall have received the letters of ▇▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP contemplated by Section 7.9;
(d) Since the date hereof, no Recoton Material Adverse
Effect shall have occurred; and
(e) Recoton shall have deposited the Recoton Common
Stock and cash into the Exchange Fund in accordance with Section
3.2(a) and the Exchange Agent shall have delivered to ▇▇▇▇▇▇ a
certificate acknowledging receipt of such stock and cash.
Section 8.3 Conditions to Obligation of Recoton and Acquisition
Sub to Effect the Merger. The obligation of Recoton and
Acquisition Sub to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the additional
following conditions:
(▇) ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ to that
effect;
(b) Recoton and Acquisition Sub shall have received an
opinion from ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to
▇▇▇▇▇▇, or other counsel reasonably acceptable to Recoton and
Acquisition Sub, dated the Closing Date, substantially in the
form set forth in Exhibit 8.3(b);
(c) The Affiliate Agreements required to be delivered to
Acquisition Sub pursuant to Section 7.4 shall have been
furnished as required by Section 7.4;
(d) Recoton and Acquisition Sub shall have received the
letters of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ contemplated by Section 7.9;
(e) Since the date hereof, no ▇▇▇▇▇▇ Material Adverse
Effect shall have occurred;
(f) The closing of the sale of the assets of the
Original Equipment Business pursuant to the OE Agreement shall
have occurred prior to the Effective Time;
(g) Recoton shall not have elected to terminate due to
the results of the inspections or tests performed in accordance
with Section 6.2;
(h) The number of shares of Recoton Common Stock to be
issued in the Merger shall not equal or exceed 20% of the
Recoton Common Stock outstanding prior to the Effective Time;
(i) The number of Dissenting Shares shall not exceed 10%
of the ▇▇▇▇▇▇ Common Stock outstanding; and
(j) Recoton and Acquisition Sub shall have received a
letter from ▇▇▇▇▇▇ ▇▇▇▇ LLC, dated the Effective Date of the
Registration Statement (or such other date reasonably acceptable
to Recoton), which letter shall be of the opinion that the
Merger Consideration is "fair from a financial point of view" to
Recoton.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after
approval by the shareholders of ▇▇▇▇▇▇ or Acquisition Sub:
(a) by mutual written consent of Acquisition Sub and
▇▇▇▇▇▇; or
(b) by either Acquisition Sub or ▇▇▇▇▇▇ if (i) the
Merger shall not have been consummated on or before
June 30, 1996 (the "Termination Date"), (ii) the requisite vote
of the stockholders of ▇▇▇▇▇▇ to approve this Agreement pursuant
to Section 8.1(a) and the transactions contemplated hereby shall
not be obtained at the ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ to consummate the transactions
contemplated hereby, shall have determined not to grant its
consent and any appeals of such determination shall have been
taken and have been unsuccessful or such body shall have imposed
conditions or limitations on its consent that would have a
material adverse effect on the prospects of the Surviving
Corporation and any appeals from such imposition shall
have been taken and have been unsuccessful, or (iv) any court of
competent jurisdiction in the United States, or any state or any
country in which there is a subsidiary of ▇▇▇▇▇▇, 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
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ which has not
been cured or adequate assurance of cure given, in either case
within 15 business days following receipt of notice of such
breach, or (y) a representation or warranty of ▇▇▇▇▇▇ 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
(iv) if (x) ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇, whether by merger,
share exchange, purchase of assets, consolidation, tender offer
or otherwise (other than with regard to the Original Equipment
Business) or (y) any third party commences a tender or exchange
offer for 25% or more of ▇▇▇▇▇▇'▇ Common Stock and ▇▇▇▇▇▇'▇
Board of Directors does not recommend, or ceases to recommend,
to ▇▇▇▇▇▇'▇ stockholders that they reject such offer; or
(d) by ▇▇▇▇▇▇ if there has been (x) a material breach of
any covenant or agreement herein on the part of Acquisition Sub
or Recoton which has not been cured or adequate assurance of
cure given, in either case within 15 business days following
receipt of notice of such breach or (y) a representation or
warranty of Recoton or Acquisition Sub herein is or becomes
untrue or incorrect in a material respect which representation
or warranty by its nature cannot be made true and correct in all
material respects prior to the Termination Date or is not made
true and correct prior to the Termination Date; or
(e) automatically, if the ▇▇▇▇▇▇ Board of Directors
shall recommend a ▇▇▇▇▇▇ Acquisition Transaction or
authorize or approve the entering into by ▇▇▇▇▇▇ of a ▇▇▇▇▇▇
Acquisition Transaction.
Notwithstanding the foregoing, if prior to the Closing Date, (i)
any preliminary or permanent injunction or other order
or decree by any federal or state court which prevents the
consummation of the Merger shall have been issued, and
remains in effect (each party agreeing to use all reasonable
efforts to have any such injunction, order or decree lifted);
(ii) any action shall have been taken, or any statute, rule or
regulation shall have been enacted, by any state, federal or
foreign government or governmental agency which would prevent
the consummation of the Merger or that would have a
material adverse effect on the prospects of the Surviving
Corporation; or (iii) any governmental consents and approvals
legally required for the consummation of the Merger and the
transactions contemplated hereby, including, without
limitation, approval (if required) by the DOJ, FTC and the SEC,
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 on the prospects of the Surviving
Corporation, the Termination Date shall be extended at the
option of any party hereto for a period of up to 120 days.
If, at the end of such 120-day period, the matters referred to
in (i), (ii) or (iii) shall not have been satisfied to each
party's reasonable satisfaction, either party may terminate this
Agreement pursuant to the applicable provisions of this
Section 9.1.
Section 9.2 Effect of Termination.
(a) In the event of termination of this Agreement by either
▇▇▇▇▇▇▇, Acquisition Sub or ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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).
(b) If this Agreement is terminated pursuant to (i) Section
9.1(b)(i) due to failure to satisfy the conditions set forth
in Section 8.1(a), 8.1(h) (if caused by ▇▇▇▇▇▇'▇ willful act),
8.1(i) (if caused by ▇▇▇▇▇▇'▇ willful act), 8.3(a) due to
failure to obtain officer's certificate under circumstances in
which ▇▇▇▇▇▇ has otherwise performed in all material
respects its agreements contained in this Agreement required to
be performed on or prior to the Effective Time and in
which the representations and warranties of ▇▇▇▇▇▇ contained in
this Agreement are 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, 8.3(b)
(if caused by ▇▇▇▇▇▇'▇ willful act), 8.3(c) (if caused by
▇▇▇▇▇▇'▇ willful act) or 8.3(d) (if caused by ▇▇▇▇▇▇'▇ willful
act), (ii) Section 9.1(b)(ii), (iii) Section 9.1(c)(i), (iv)
Section 9.1(c)(ii), (v) Section 9.1.(c)(iii)(x) (if caused by
▇▇▇▇▇▇'▇ willful act), (vi) Section 9.1(c)(iv) or (vii) Section
9.1(e), then ▇▇▇▇▇▇ shall pay Recoton $6,000,000.
(c) If this Agreement is terminated pursuant to (i) Section
9.1(b)(i) due to failure to satisfy the conditions set forth
in Section 8.1(c) or 8.3(f) or (ii) Section 9.1(b)(iii) (but
only if the condition set forth in Section 8.1(c) is the basis
for the termination under Section 9.1(b)(iii)), then ▇▇▇▇▇▇
shall pay Recoton $1,500,000.
(d) If this Agreement is terminated pursuant to (i) Section 6.2
or (ii) Section 9.1(b)(i) due to failure to satisfy a
condition set forth in Section 8.1(b), 8.1(d), 8.1(e), 8.1(f),
8.1(g), 8.1(h) (unless caused by ▇▇▇▇▇▇'▇ willful act), 8.1(i)
(unless caused by ▇▇▇▇▇▇'▇ willful act), 8.2(a), 8.2(b), 8.2(c),
8.2(d), 8.2(e), 8.3(a) due to failure to obtain officer's
certificate except under the circumstances set forth in Section
9.2(b), 8.3(b) (unless caused by ▇▇▇▇▇▇'▇ willful act),
8.3(c) (unless caused by ▇▇▇▇▇▇'▇ willful act), 8.3(d) (unless
caused by ▇▇▇▇▇▇'▇ willful act), 8.3(e), 8.3(g), 8.3(h), 8.3(i)
or 8.3(j), (iii) Section 9.1(b)(iii) (other than under the
circumstances set forth in Section 9.2(c)(ii)), (iv) Section
9.1(b)(iv), (v) Section 9.1(c)(iii)(x) (unless caused by
▇▇▇▇▇▇'▇ wilful act), (vi) Section 9.1(c)(iii)(y), or (vii)
Section 9.1(d), no payment shall be due from ▇▇▇▇▇▇, Recoton or
Acquisition Sub.
(e) The agreements contained in this Section 9.2 are an
integral part of the transactions contemplated by this
Agreement and constitute liquidated damages or other appropriate
payments and not a penalty. If a party fails promptly
pay to perform in accordance with Article IX, such party shall
pay the costs and expenses (including legal fees and
expenses) of the other party in connection with any action,
including the filing of any lawsuit or other legal action,
taken to enforce the terms of this Agreement. Payments by
▇▇▇▇▇▇ under this Section shall be made within five
business days after termination of this Agreement.
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 ▇▇▇▇▇▇, but, after any such approval, no
amendment shall be made which (a) changes the Exchange Ratio or
Per Share Cash Amount or (b) changes any of the other principal
terms of this Agreement, in each case, without the further
approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of
each of the parties hereto.
Section 9.4 Waiver. At any time prior to the Effective Time,
the parties hereto may (a) extend the time for the performance
of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein; provided, however,
that waiver of compliance with any agreements or conditions
herein shall not limit the parties' obligations to comply with
all other agreements or conditions herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be
valid if set forth in an instrument in writing signed on behalf
of the parties.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations, Warranties and
Agreements. None of the representations, warranties and
agreements in this Agreement shall survive the Merger, except
for the agreements contained in this Section 10.1, Article III,
and in Sections 2.3, 7.1(c), 7.6, 7.8, 7.10, 7.11, and Article
IX. This Section 10.1 shall not limit any covenant or agreement
of the parties which by its terms contemplates performance after
the Effective Time of the Merger.
Section 10.2 Brokers. ▇▇▇▇▇▇ represents and warrants that,
except for its investment banking firm, ▇▇▇▇▇▇ 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
▇▇▇▇▇▇. Acquisition Sub and Recoton represent and warrant that,
except for its investment banking firm, ▇▇▇▇▇▇ ▇▇▇▇
Incorporated, whose fee arrangement has been disclosed to ▇▇▇▇▇▇
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
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇, Chief Operating Officer
with a copy to:
Stroock & Stroock & ▇▇▇▇▇
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
(b) If to ▇▇▇▇▇▇, to:
International ▇▇▇▇▇▇ Incorporated
25 Tri-State International Office Center
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chief Financial Officer
with a copy to:
Vedder, ▇▇▇▇▇, ▇▇▇▇▇▇▇ & Kammholz
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇, 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 ▇▇▇▇▇▇.
(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; and
(d) shall be governed in all respects, including validity,
interpretation and effect, by the laws of the State of Delaware
(without giving effect to the provisions thereof relating to
conflicts of law) and service of process may be made upon any
party by using the notification procedure set forth in Section
10.3; (e) 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 Right to Offset. Payments due under this Agreement
or any other agreements or obligation between Recoton (or any
affiliate thereof) and ▇▇▇▇▇▇ (or any affiliate thereof) may, at
the election of either party, be set off against each other
including by way of (but not limited to) cancellation of
outstanding notes.
IN WITNESS WHEREOF, ▇▇▇▇▇▇▇, Acquisition Sub and ▇▇▇▇▇▇
have caused this Agreement to be signed by their respective
officers thereunto duly authorized as of the date first written
above.
RECOTON CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
Executive Vice President-Operations &
Chief Operating Officer
RC ACQUISITION SUB, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
Secretary
INTERNATIONAL ▇▇▇▇▇▇ INCORPORATED
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President & Chief Financial
Officer