SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "AGREEMENT") is made and entered
into as of May 29, 2002 by and among TOSHIBA CORPORATION, a Japanese
corporation, acting through its Mobile Communications Company ("TOSHIBA"),
AUDIOVOX COMMUNICATIONS CORP., a Delaware corporation ("ACC"), and AUDIOVOX
CORPORATION, a Delaware corporation ("AUDIOVOX"). Toshiba, ACC and Audiovox are
referred to herein collectively as the "PARTIES" and each individually as a
"PARTY".
RECITALS
A. Toshiba desires to purchase shares of Class B Common Stock and a
convertible promissory note from ACC, and ACC desires to issue and sell such
securities to Toshiba, on the terms and subject to the conditions set forth
herein.
B. Certain terms used herein have the meanings set forth for such terms in
the text of this Agreement or in Annex I hereto.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Parties hereby agree as follows:
AGREEMENT
1. PURCHASE AND SALE OF THE SHARES AND THE NOTE.
Subject to the terms and conditions hereof, at the Closing, ACC shall sell
and issue to Toshiba, and Toshiba shall subscribe for and purchase from ACC, (a)
30.877192 shares (the "SHARES") of ACC's Class B Common Stock, no par value per
share ("CLASS B COMMON STOCK"), and (b) a Convertible Promissory Note dated the
date that ACC receives the Purchase Price pursuant to Section 2.2(b) in the
principal amount of $8,106,667 (the "NOTE"), which note shall be in the form of
Exhibit 1. The aggregate purchase price for the Shares and the Note shall be
Thirty-two Million Dollars ($32,000,000) (the "PURCHASE PRICE"), consisting of
an aggregate purchase price of $23,893,333 for the Shares and a purchase price
of $8,106,667 for the Note. The Purchase Price shall be payable in cash at the
Closing as provided in Section 2.2(b).
2. THE CLOSING.
2.1 THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") is taking place as of the date hereof at the offices
of Audiovox Communications Corp., 555 Wireless Blvd., Hauppauge, New York 11788.
The date and time of the Closing are referred to herein as the "CLOSING DATE".
2.2 ACTIONS OCCURRING AT THE CLOSING. At the Closing:
(A) DELIVERY OF THE SHARES AND THE NOTE. Concurrently with ACC's
receipt of the Purchase Price pursuant to Section 2.2(b), ACC shall issue
and deliver to Toshiba (i) a stock certificate or certificates registered
in the name of Toshiba, representing the Shares purchased hereunder, and
(ii) the Note, executed by ACC.
(B) PURCHASE PRICE. Toshiba shall deliver the Purchase Price within
five (5)
Exhibit 99.2
1
Business Days following the Closing Date by wire transfer of immediately
available funds to an account specified by ACC at least four (4) Business Days
prior to the Closing.
(C) TRANSACTION AGREEMENTS. Each of the following agreements and
instruments (collectively with this Agreement, the "TRANSACTION
AGREEMENTS") shall be entered into by each of the parties thereto:
(I) The Stockholders Agreement among the Parties in the form of
Exhibit 2.2(c)(i);
(II) The Distribution Agreement between Toshiba and ACC in the
form of Exhibit 2.2(c)(ii);
(III) The Employment Agreement between ACC and Philip Christopher
in the form of Exhibit 2.2(c)(iii);
(IV) The Trademark License Agreement between ACC and Audiovox in
the form of Exhibit 2.2(c)(iv);
(V) The Shared Services Agreement between ACC and Audiovox in the
form of Exhibit 2.2(c)(v);
(VI) The Note, which will be executed by ACC and delivered to
Toshiba in accordance with Section 2.2(a); and
(VII) The Intercompany Note in the form of Exhibit 2.2(c)(vii),
which will be executed by ACC and delivered to Audiovox in accordance
with Section 3.
(D) PERMITS AND APPROVALS. Toshiba shall receive satisfactory written
evidence that the Approvals described on Section 4.3(b) of the Disclosure
Schedule have been made or obtained.
(E) OFFICER'S CERTIFICATE OF ACC. ACC shall deliver to Toshiba:
(I) a copy of the Certificate of Incorporation and Bylaws of each
of ACC and Quintex Mobile Communications Corp., a Delaware corporation
("QUINTEX");
(II) a copy of the resolutions or minutes of the meetings of
ACC's board of directors and stockholders evidencing approval of the
Transaction Agreements and the matters contemplated thereby;
(III) a certificate of the Chief Financial Officer of ACC, dated
as of the Closing Date and in form and substance satisfactory to
Toshiba, as to the accuracy of the documents delivered to Toshiba
under clauses (i) and (ii), and the incumbency and signature of the
officers of ACC and Audiovox executing this Agreement and each other
Transaction Agreement to which ACC or Audiovox is a party; and
(IV) other documents as may reasonably be requested by Toshiba.
Exhibit 99.2
2
(F) AMENDED AND RESTATED CERTIFICATE OF INCORPORATION AND BYLAWS
OF ACC. ACC shall adopt its Amended and Restated Certificate of
Incorporation and Bylaws in the forms attached to the Stockholders
Agreement as Exhibit 1.9(a) and Exhibit 1.9(b), respectively.
(G) BOARD OF DIRECTORS. Concurrently with the Closing, the Board
of Directors of ACC shall be reconstituted as contemplated by Section
1.1 of the Stockholders Agreement.
(H) OFFICER'S CERTIFICATE OF TOSHIBA. Toshiba shall deliver to
ACC:
(I) a copy of the resolutions or minutes of the meetings of
Toshiba's board of directors evidencing approval of the
Transaction Agreements and the matters contemplated thereby;
(II) a certificate of an authorized officer of the Mobile
Communications Company of Toshiba, dated as of the Closing Date
and in form and substance satisfactory to ACC, as to the accuracy
of the documents delivered to ACC under clause (i), and the
incumbency and signature of the officers of Toshiba executing
this Agreement and each other Transaction Agreement to which
Toshiba is a party; and
(III) other documents as may reasonably be requested by ACC.
3. CLOSING PAYMENT OF INTERCOMPANY DEBT.
Promptly after receipt of the Purchase Price pursuant to Section 2.2(b),
ACC shall use the entire Purchase Price to make a repayment of Thirty-two
Million Dollars ($32,000,000) of the debt owed by ACC to Audiovox (the
"INTERCOMPANY DEBT"). At the Closing, ACC shall execute and deliver to Audiovox
a note (the "INTERCOMPANY NOTE") that evidences the Intercompany Debt and sets
forth its terms and conditions.
4. REPRESENTATIONS AND WARRANTIES OF ACC AND AUDIOVOX.
Except as otherwise indicated on ACC's disclosure schedule delivered to
Toshiba concurrently herewith, which is hereby incorporated as an integral
component of this Agreement (the "DISCLOSURE SCHEDULE"), ACC and Audiovox hereby
jointly and severally represent and warrant to Toshiba as follows:
4.1 ORGANIZATION AND RELATED MATTERS.
(A) ACC and Quintex (collectively, the "ACC ENTITIES") each is a
corporation duly incorporated, validly existing and in good standing under
the Laws of the State of Delaware. Except for Quintex, none of ACC's
controlled Affiliates conduct material business activities. Section 4.1(a)
of the Disclosure Schedule sets forth each foreign jurisdiction in which
the ACC Entities are qualified to do business. Audiovox is a corporation
duly incorporated, validly existing and in good standing under the Laws of
the State of Delaware.
(B) Each ACC Entity has all requisite organizational power and
authority to own its properties and to carry on its business. To ACC's
Knowledge, each ACC Entity is duly qualified or licensed to do business in
good standing in all jurisdictions in which the character or the location
of the assets owned or leased by it or the nature of its business requires
such licensing
Exhibit 99.2
3
or qualification. True and correct copies of the Organizational
Documents of each ACC Entity have been provided or made available to
Toshiba.
4.2 AUTHORITY; ENFORCEABILITY; EFFECT OF TRANSACTION AGREEMENTS. ACC and
Audiovox each has all necessary organizational power and authority to execute,
deliver and perform each Transaction Agreement to which it is a party. Each
Transaction Agreement to which ACC or Audiovox is a party has been duly
authorized by all necessary organizational action of ACC or Audiovox, as
applicable. Each Transaction Agreement to which ACC or Audiovox is a party has
been duly executed and delivered by ACC or Audiovox, as applicable. Assuming the
due authorization, execution and delivery by the other party or parties thereto,
each Transaction Agreement to which ACC or Audiovox is a party constitutes a
valid and legally binding obligation of ACC or Audiovox, enforceable against ACC
or Audiovox, as applicable, in accordance with its terms, subject to limitations
imposed by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium and other Laws relating to or affecting creditors' rights generally
and general equitable principles.
4.3 NO CONFLICTS.
(A) The execution and delivery by ACC and Audiovox of each Transaction
Agreement to which it is a party does not, and the performance by ACC and
Audiovox of its obligations thereunder will not, conflict with, result in
any violation of or default (with or without notice or lapse of time or
both) under, give rise to a right of termination, cancellation or
acceleration of any obligation (in each case by any third party) or to the
loss of any benefit by any ACC Entity or Audiovox under, or result in or
require the creation, imposition or extension of any Lien (excluding
Permitted Liens) upon any asset of any ACC Entity or Audiovox under, (1)
the Organizational Documents of any ACC Entity or Audiovox, (2) any
Contract or Governmental Approval to which any ACC Entity or Audiovox is a
party or is otherwise bound, or to which any of their assets is subject, or
(3) any Legal Requirement applicable to any ACC Entity or Audiovox, except
in the case of Audiovox for any matters that would not be reasonably
expected to have a Material Adverse Effect.
(B) Section 4.3(b) of the Disclosure Schedule lists all Approvals
required to be made or obtained by or with respect to Audiovox or any ACC
Entity to consummate the transactions contemplated by this Agreement,
except in the case of Audiovox for any Approvals the failure of which to be
made or obtained would not have a Material Adverse Effect. Except as set
forth in Section 4.3(b) of the Disclosure Schedule and except in the case
of Audiovox for any Approvals the failure of which to be made or obtained
would not have a Material Adverse Effect, the execution and delivery of the
Transaction Agreements by Audiovox and ACC, the performance of their
respective obligations thereunder and the consummation of the transactions
contemplated thereby will not require any Approvals of or with any Person.
Exhibit 99.2
4
4.4 CAPITALIZATION.
(A) Section 4.4(a) of the Disclosure Schedule sets forth the
authorized, issued and outstanding capital stock and other Securities of
each ACC Entity. Section 4.4(a) of the Disclosure Schedule also identifies
each holder of outstanding Securities of each ACC Entity and the type and
amount of such Securities held (including with respect to any options,
warrants, conversion rights or other rights to acquire capital stock, the
unexpired term and the exercise, conversion or exchange price relating to
such rights). Other than as set forth in Section 4.4(a) of the Disclosure
Schedule, there are no issued or outstanding Securities of any ACC Entity,
or any subscription rights (including preemptive rights), calls or
Contracts obligating any ACC Entity now or at any time in the future to
issue Securities. There are no outstanding Contracts of any ACC Entity to
repurchase, redeem or otherwise acquire any Securities.
(B) All of the outstanding Securities of each ACC Entity have been
duly authorized and validly issued and are fully paid and non-assessable
and were not issued in violation of any preemptive rights, Liens or Legal
Requirements. The issuance of the Shares to Toshiba at the Closing
hereunder and the issuance of Class B Common Stock upon the conversion of
the Note in accordance with its terms have been duly authorized by all
necessary action of ACC and its shareholders. At the Closing, upon payment
therefor in accordance with the terms of this Agreement, the Shares will be
validly issued and fully paid and non-assessable and not issued in
violation of any preemptive rights, Liens or Legal Requirements. Upon the
conversion of the Note in accordance with its terms, the shares of Class B
Common Stock issuable upon such conversion shall be validly issued and
fully paid and non-assessable and not issued in violation of any preemptive
rights, Liens or currently existing Legal Requirements.
4.5 SEC DOCUMENTS AND PUBLIC DISCLOSURES. In each case to the extent that
the SEC Documents described in this Section, the information contained therein
and the exhibits thereto relate to ACC Entities:
(A) Except as set forth in Section 4.5(a) of the Disclosure Schedule,
Audiovox has timely filed all filings and reports filed or required to be
filed by Audiovox with the SEC pursuant to the Securities Laws, and has
provided Toshiba with true and correct copies of all such filings and
reports, together with all exhibits thereto (collectively, the "SEC
DOCUMENTS"). As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the applicable Securities
Laws.
(B) To ACC's Knowledge, the statements made in the SEC Documents are
true and correct.
4.6 FINANCIAL STATEMENTS.
(A) ACC has delivered to Toshiba true and correct copies of the
following unaudited financial statements (the "FINANCIAL STATEMENTS"):
(I) the consolidated balance sheet of ACC and its subsidiaries as
of November 30, 2001, and the related consolidated statements of
operations, changes in stockholders' equity and cash flows for the
fiscal year then ended;
(II) the consolidated balance sheet of ACC and its subsidiaries
as of
Exhibit 99.2
5
February 28, 2002, and the related consolidated statements of
operations, changes in stockholders' equity and cash flows for the
three-month period then ended; and
(III) the consolidated balance sheet of ACC and its subsidiaries
as of April 30, 2002, the related consolidated statements of
operations for the one-month period and the five-month periods then
ended, and the related consolidated statement of cash flows for the
five-month period then ended.
(B) To ACC's Knowledge:
(I) The Financial Statements have been prepared in conformity
with U.S. generally acceptable accounting principles ("GAAP") applied
on a consistent basis and have been certified to Toshiba by the Chief
Financial Officer of ACC.
(II) The statements of income and cash flows contained in the
Financial Statements present fairly in all material respects the
results of operations and the sources and uses of cash, respectively,
of ACC and its consolidated subsidiaries for the respective periods
covered by such statements of income and cash flows. The balance
sheets contained in the Financial Statements present fairly in all
material respects the financial condition of ACC and its consolidated
subsidiaries as of the respective dates of such balance sheets.
(III) The interim financial statements contained in the Financial
Statements reflect all adjustments necessary for a fair presentation.
Since November 30, 2001, there has been no change in any of the
significant accounting policies, practices or procedures of ACC and
its consolidated subsidiaries.
(C) Section 4.6(c) of the Disclosure Schedule contains a complete and
accurate description of all Liabilities of ACC to its customers and other
third parties with respect to cooperative advertising and market
development funds that are currently outstanding or were outstanding at any
time since December 1, 2000 (collectively, "MDF"). MDF is accurately
reflected in the Financial Statements, and to the Company's Knowledge, no
Person has challenged or threatened to challenge any reversals of
accounting accruals previously made by ACC with respect to any MDF. ACC has
adopted and is in the process of implementing all of KPMG's recommendations
in its reportable conditions letter dated March 8, 2002 with respect to
MDF.
4.7 LIABILITIES. To ACC's Knowledge, ACC and its subsidiaries have no
off-balance sheet financing or similar financial arrangements and no Liabilities
which are required to be provided for or reserved against on a balance sheet
prepared in accordance with GAAP, other than the following Liabilities:
(A) Liabilities provided for or reserved against in the Financial
Statements;
(B) Liabilities incurred in the ordinary course of business consistent
with past practice since November 30, 2001; and
(C) Liabilities identified in Section 4.7(c) of the Disclosure
Schedule.
4.8 NO MATERIAL ADVERSE CHANGES. Except as set forth in the Financial
Statements described in Section 4.6(a)(iii), to ACC's Knowledge, since November
30, 2001, whether or not
Exhibit 99.2
6
in the ordinary course of business, there has not been, occurred or arisen any
change in or event affecting any ACC Entity, Audiovox or their respective
business, assets or activities that has had or may reasonably be expected to
have a Material Adverse Effect.
4.9 TAXES.
(A) To ACC's Knowledge, each Tax Return required to be filed by any of
the ACC Entities or by Audiovox relating in whole or in part to any ACC
Entity or the Business ("BUSINESS TAX RETURNS"), to the extent required by
applicable Law to be filed before the date hereof (taking into account any
applicable extensions), has been filed, and each filed Business Tax Return
is true, correct and complete in all material respects. To ACC's Knowledge,
all Taxes shown to be payable on such Business Tax Returns or on subsequent
assessments with respect thereto have been paid in full on a timely basis,
and no other Taxes are payable relating in whole or in part to any ACC
Entity or the Business, whether or not shown on such Business Tax Returns,
for any period ending prior to or including the Closing Date, except for
Taxes shown as a current liability in the Financial Statements.
(B) ACC has delivered or made available to Toshiba correct and
complete copies of all Business Tax Returns filed by the ACC Entities or
Audiovox for all periods ending on or after December 31, 1998, and copies
of all Tax examination reports and notices of deficiency or assessment with
respect to any Business Tax Returns received by any ACC Entity or Audiovox
after December 31, 1998.
(C) To ACC's Knowledge: (i) no ACC Entity has any Liability for Taxes
by Contract with any other Person (including any tax sharing or tax
indemnity agreement); (ii) there are no Liens for Taxes on the assets of
any ACC Entity, other than Permitted Liens, statutory liens for Taxes not
yet due or Liens for Taxes being contested in good faith; and (iii) no ACC
Entity has ever been the member of any group for Tax purposes other than a
group consisting solely of Audiovox, ACC and/or any ACC Entity.
(D) Except as indicated in Section 4.9(d) of the Disclosure Schedule,
no Business Tax Return filed or required to be filed within seven (7) years
prior to the date hereof has been audited or is currently the subject of
audit or any Tax-related Proceeding by any Governmental Authority and, to
ACC's Knowledge, no such audit or Proceeding is threatened. Except as
indicated in Section 4.9(d) of the Disclosure Schedule, none of the ACC
Entities or Audiovox has waived any statute of limitations in respect of
any Tax related to the Business, which waiver remains in effect.
(E) Except as indicated in Section 4.9(e) of the Disclosure Schedule,
no ACC Entity is the party to or the subject of any closing agreement,
private letter ruling, technical advice memoranda or advance pricing
agreement relating to Taxes with any Governmental Authority.
4.10 MATERIAL CONTRACTS.
(A) Section 4.10(a) of the Disclosure Schedule lists each Material
Contract. True copies of all written Material Contracts and summaries of
all oral Material Contracts, including all amendments and supplements
thereto, have been delivered to Toshiba.
(B) To ACC's Knowledge:
Exhibit 99.2
7
(I) Each Material Contract is valid and in full force and effect.
Each ACC Entity has duly performed its obligations under each Material
Contract. No breach of or default under any Material Contract by any
ACC Entity, and no event which would (with the passage of time, the
giving of notice or otherwise) cause or give rise to such a breach or
default by any ACC Entity, has occurred or as a result of the
Transaction Agreements will occur.
(II) No breach of or default under any Material Contract by any
Person other than the ACC Entities, and no event which would (with the
passage of time, the giving of notice or otherwise) cause or give rise
to such a breach or default by any such Person, has occurred or as a
result of the Transaction Agreements will occur.
4.11 REAL AND PERSONAL PROPERTY. To ACC's Knowledge, each ACC Entity has
good and marketable title to or other valid right to use, free of Liens, all
items of real property (including fees, leaseholds and all other interests in
real property) and such other assets and properties owned or used by the ACC
Entity in its business, subject only to Permitted Liens and Liens described in
Section 4.11 of the Disclosure Schedule. All material tangible properties of the
ACC Entities are generally in a good state of maintenance and repair (except for
ordinary wear and tear) and are generally adequate for the purpose for which
they are used. All real and material personal properties held by the ACC
Entities as lessee are held under valid, binding and enforceable leases. To the
Knowledge of ACC, there is no pending or threatened Proceeding that would
materially interfere with the use of any such leased property by any ACC Entity.
4.12 INTELLECTUAL PROPERTY. Each ACC Entity owns or otherwise has the valid
right to use, as presently used in the ordinary course of its business, all of
its Intellectual Property, and such ownership rights and rights to use are not
subject to any Liens that limit or restrict any ACC Entity from using its
Intellectual Property as currently used in its business in any material respect.
Section 4.12 of the Disclosure Schedule contains a complete list of all
registered trademarks, patents and registered copyrights of the ACC Entities,
all pending applications therefor, and all Material Contracts of the ACC
Entities to use their Intellectual Property. The ACC Entities have taken
commercially reasonable measures to protect all of their Intellectual Property.
To the Knowledge of ACC, there is no infringement of any Intellectual Property
of the ACC Entities by any Person.
4.13 ACCOUNTS RECEIVABLE. To ACC's Knowledge:
(A) Section 4.13(a) of the Disclosure Schedule sets forth an accurate,
correct and complete list as of April 30, 2002 of all accounts receivable
of the ACC Entities. Each such account receivable is fairly valued as of
April 30, 2002 in accordance with GAAP.
(B) Each such account receivable is a valid and legally binding
obligation of the account debtor, enforceable in accordance with its terms,
and represents products or services actually provided to and accepted by or
on behalf of the account debtor.
4.14 INVENTORY. To ACC's Knowledge, all items of inventory of the ACC
Entities, whether physically held by the ACC Entities or by third parties (other
than inventory purchased from Toshiba, which shall not be covered by this
Section) are fairly valued in the Financial Statements as of the respective
dates of such Financial Statements in accordance with GAAP. To ACC's Knowledge,
the physical inventory has been counted and is on hand as of February 28, 2002.
Exhibit 99.2
8
4.15 CUSTOMERS, DISTRIBUTORS AND SUPPLIERS. Section 4.15 of the Disclosure
Schedule sets forth an accurate, correct and complete list of (i) the 20 largest
customers of the ACC Entities, determined on the basis of revenues, for each of
the fiscal years ended November 30, 1999, 2000 and 2001; and (ii) the 20 largest
suppliers of the ACC Entities, determined on the basis of costs of items
purchased, for each of the fiscal years ended November 30, 1999, 2000 and 2001.
Except as set forth in the Contracts listed on Section 4.15 of the Disclosure
Schedule, no ACC Entity is restricted by Contract from selling, licensing or
otherwise providing products or services to any customers, in any geographic
area, during any period of time or in any market segment. No ACC Entity is
subject to any Contract which provides that any supplier will be the exclusive
supplier of any ACC Entity to any customers, in any geographic area, during any
period of time or in any market segment. No ACC Entity is subject to any
Contract requiring any ACC Entity to purchase the entire output of a supplier.
4.16 WARRANTIES. Section 4.16 of the Disclosure Schedule identifies the
standard warranties and warranty policies of the ACC Entities currently in
effect. True and correct copies of such warranties and warranty policies have
been provided or made available to Toshiba.
4.17 PROCEEDINGS. Section 4.17 of the Disclosure Schedule identifies each
pending Proceeding against or affecting any of the ACC Entities, their
respective assets or businesses or the transactions contemplated by this
Agreement. ACC has delivered to Toshiba true, accurate and complete copies of
all pleadings, correspondence and other documents relating to such Proceedings.
4.18 LEGAL REQUIREMENTS. To ACC's Knowledge, each of the ACC Entities has
substantially complied, and is in substantial compliance, with all Legal
Requirements that are applicable to the Business.
4.19 ACCOUNTING RECORDS; INTERNAL CONTROLS. To ACC's Knowledge: the ACC
Entities (a) make and keep books and records that are accurate in all material
respects, and (b) maintain internal accounting controls which provide reasonable
assurance that (i) transactions are executed in accordance with management's
authorization, (ii) transactions are recorded as necessary to permit preparation
of their financial statements and to maintain accountability for their assets,
(iii) access to their assets is permitted only in accordance with management's
authorization, and (iv) reported accountability for their assets is compared
with existing assets at reasonable intervals.
4.20 INSURANCE. Section 4.20 of the Disclosure Schedule lists all insurance
policies and bonds with respect to the ACC Entities, including, without
limitation, all policies insuring directors and officers of the ACC Entities.
ACC has delivered to Toshiba true, accurate and complete copies of all such
policies and bonds. To ACC's Knowledge, the ACC Entities have timely filed
claims with their respective insurers with respect to all material matters and
occurrences for which they believe they have coverage. Except as set forth in
Section 4.20 of the Disclosure Schedule, Audiovox has received no written notice
or other written indication from any insurer or agent of any intent to cancel or
not renew any of such insurance policies or bonds.
4.21 GOVERNMENTAL APPROVALS. To ACC's Knowledge, each ACC Entity has
obtained and is in compliance with all Governmental Approvals that are necessary
in connection with its ownership and operation of its assets and business, and
all of such Governmental Approvals are
Exhibit 99.2
9
in full force and effect. To ACC's Knowledge, there is no pending or threatened
Proceeding with respect to the suspension, termination, revocation,
cancellation, limitation or impairment of any such Governmental Approval, and no
fines or penalties are due and payable in respect of any such Governmental
Approval or any violation thereof.
4.22 EMPLOYEE MATTERS.
(A) Except as indicated in Section 4.22(a) of the Disclosure Schedule,
none of the employees of the ACC Entities ("EMPLOYEES") has been granted
the right to continued employment or engagement by any ACC Entity or to any
compensation following or in connection with termination of employment or
engagement with any ACC Entity, subject to any rights to receive such
compensation pursuant to applicable Legal Requirements.
(B) Except as indicated in Section 4.22(b) of the Disclosure Schedule,
neither the execution and delivery of the Transaction Agreements nor the
consummation of the transactions contemplated thereby will result in or
give rise to (i) any liability by any Person to make any severance,
retention, termination, "golden parachute" or other payment to any
Employee, or (ii) the acceleration of any other rights or benefits to any
Employee (including vesting and payments with respect to equity incentives
and other rights under Benefits Plans), in each case whether pursuant to
Benefit Plan, Contract, Legal Requirement or otherwise.
(C) Except as indicated in Section 4.22(c) of the Disclosure Schedule,
to ACC's Knowledge, there are no claims, disputes, controversies or
Proceedings against or affecting any ACC Entity pending or threatened by or
pertaining to any Employee. Each ACC Entity has substantially complied with
all Legal Requirements related to the employment or engagement of its
employees, including Legal Requirements related to wages, hours, leaves of
absence, equal opportunity, occupational health and safety, workers'
compensation, severance, employee handbooks or manuals, collective
bargaining, unfair labor practices and the payment of social security and
other Taxes and withholding obligations relating thereto.
(D) None of the ACC Entities is a party to or is otherwise subject to
any obligations relating to any collective bargaining Contract. There is no
labor strike, slowdown or stoppage and there are currently no union
organizing activities among the Employees pending or threatened against any
of the ACC Entities.
4.23 BENEFIT PLANS.
(A) Section 4.23(a) of the Disclosure Schedule lists all employee
benefit plans, collective bargaining, employment and severance Contracts
and other similar arrangements to which any ACC Entity is a party or is
otherwise subject, including plans and arrangements provided by Audiovox
(the "BENEFIT PLANS"), including, without limitation, (i) profit-sharing,
deferred compensation, bonus, stock option, stock purchase, pension,
retainer, consulting, retirement, severance, welfare or incentive plans or
Contracts, (ii) benefits relating to vacation, child care, parenting,
sabbatical, sick leave, medical, dental, hospitalization, life insurance
and other types of insurance, and (iii) employment Contracts.
(B) ACC has delivered to Toshiba true and complete copies of all
documents and summary plan descriptions with respect to the Benefit Plans,
or summary descriptions of any Benefit Plans not in writing. ACC Entities
and Audiovox are in substantial compliance with all
Exhibit 99.2
10
Legal Requirements applicable to the Benefit Plans and have performed
in all material respects all of their obligations under the Benefit Plans.
To ACC's Knowledge, there are no Proceedings pending or threatened against
or with respect to any Benefit Plans.
4.24 CERTAIN INTERESTS. To the extent that Audiovox is required to disclose
certain relationships and related transactions pursuant to Legal Requirements
and assuming that such disclosure is complete and accurate through the date
hereof, Section 4.24 of the Disclosure Schedule accurately identifies all
Contracts, courses of dealing and other relationships with and between any ACC
Entity, on the one hand, and Audiovox or any of its Affiliates or Associates, on
the other hand, and ACC has delivered to Toshiba true, accurate and complete
copies of all written Contracts relating thereto. Except as set forth in Section
4.24 of the Disclosure Schedule, neither Audiovox nor any of its Associates or
Affiliates has any ownership interest in any property used in or pertaining to
the business of the ACC Entities; no such Person is indebted or otherwise
obligated to the ACC Entities; and none of the ACC Entities is indebted or
otherwise obligated to any such Person. Except as set forth in Section 4.24 of
the Disclosure Schedule, no ACC Entity is subject to any liability to Audiovox
or any of its Affiliates or Associates that is required to be disclosed pursuant
to Legal Requirements and assuming that such disclosure is complete and accurate
through the date hereof.
4.25 ENVIRONMENTAL COMPLIANCE. Except as provided for or reserved against
on the Financial Statements or as have not had and would not reasonably be
likely to have a Company Material Adverse Effect, to ACC's Knowledge:
(A) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by Audiovox or any ACC
Entity at, upon or from any of the properties now or previously owned or
leased by Audiovox or any ACC Entity in violation of any Legal Requirement
or Approval, or which would require remedial action under any Legal
Requirement or Approval.
(B) There has been no material spill, discharge, leak, emission,
injection, escape, dumping or release of any kind onto such property or
into the environment surrounding such property of any toxic wastes, medical
wastes, solid wastes, hazardous wastes or hazardous substances due to or
caused by Audiovox or any ACC Entity. The terms "hazardous wastes", "toxic
wastes", "hazardous substances" and "medical wastes" shall have the
meanings specified for such terms or any similar terms in any applicable
local, state, federal and foreign Laws with respect to environment
protection.
4.26 NO BROKERS OR FINDERS. Except for Berenson Minella & Company, whose
fees will be borne by Audiovox, no agent, broker, finder, investment or
commercial banker, or other Person engaged by or acting on behalf of any ACC
Entity in connection with the negotiation, execution or performance of this
Agreement or the transactions contemplated by this Agreement, is or will be
entitled to any brokerage or finder's or similar fee or other commission as a
result of this Agreement or such transactions.
4.27 ACCURACY OF INFORMATION. To ACC's Knowledge, all information provided
by ACC or its agents and representatives to Toshiba or its agents and
representatives in connection with this Agreement is true and correct in all
material respects as of the respective dates of such information and does not
omit any material fact necessary to make the statements therein, in light
Exhibit 99.2
11
of the circumstances under which they were made, not misleading as of the
respective dates of such information; provided that no representation or
warranty is made by ACC or Audiovox as to any financial forecasts or projections
furnished to Toshiba or its agents or representatives, except that such
financial forecasts and projections have been prepared in good faith based on
assumptions that are believed by ACC to have been reasonable at the time or
times made.
5. REPRESENTATIONS AND WARRANTIES OF TOSHIBA.
Toshiba hereby represents and warrants to Audiovox and ACC as follows:
5.1 ORGANIZATION; AUTHORITY; ENFORCEABILITY; EFFECT OF TRANSACTION
AGREEMENTS. Toshiba is a corporation duly organized and validly existing under
the Laws of Japan. Toshiba has all necessary organizational power and authority
to execute, deliver and perform the Transaction Agreements to which it is a
party. Each Transaction Agreement to which Toshiba is a party has been duly
authorized by all necessary organizational action of Toshiba. Each Transaction
Agreement to which Toshiba is a party has been duly executed and delivered by
Toshiba. Assuming the due authorization, execution and delivery by the other
party or parties thereto, each Transaction Agreement to which Toshiba is a party
constitutes a valid and legally binding obligation of Toshiba, enforceable
against Toshiba in accordance with its terms, subject to limitations imposed by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and
other Laws relating to or affecting creditors' rights generally and general
equitable principles.
5.2 NO CONFLICTS.
(A) The execution and delivery by Toshiba of each Transaction
Agreement to which it is a party does not, and the performance by Toshiba
of its obligations thereunder will not, conflict with, result in any
violation of or default (with or without notice or lapse of time or both)
under, give rise to a right of termination, cancellation or acceleration of
any obligation (in each case by any third party) or to the loss of any
benefit by Toshiba under, or result in or require the creation, imposition
or extension of any Lien upon any asset of Toshiba under, (1) the
Organizational Documents of Toshiba, (2) any Contract or Governmental
Approval to which Toshiba is a party or is otherwise bound, or to which any
of its assets is subject, or (3) any Law applicable to Toshiba, except for
any matters that would not be reasonably expected to have a material
adverse effect on Toshiba's ability to perform its obligations under the
Transaction Agreements.
(B) Toshiba's execution and delivery of the Transaction Agreements to
which it is a party, Toshiba's performance of its obligations thereunder
and the consummation of the transactions contemplated thereby will not
require any Approvals of or with any Person, except for Toshiba's
post-Closing filing under the Foreign Exchange and Foreign Trade Law of
Japan relating to its acquisition of the Shares and the Note, and for any
matters that would not be reasonably expected to have a material adverse
effect on Toshiba's ability to perform its obligations under the
Transaction Agreements.
5.3 NO BROKERS OR FINDERS. Except for any entities affiliated with Goldman
Sachs (Japan) Ltd., whose fees will be borne by Toshiba, no agent, broker,
finder, investment or commercial banker, or other Person engaged by or acting on
behalf of Toshiba in connection with the negotiation, execution or performance
of this Agreement or the transactions contemplated by
Exhibit 99.2
12
this Agreement, is or will be entitled to any brokerage or finder's or similar
fee or other commission as a result of this Agreement or such transactions.
5.4 PURCHASE FOR TOSHIBA'S OWN ACCOUNT. The Shares and the Note are being
acquired hereunder for investment for Toshiba's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof.
Toshiba is not subject to any Contract and has no present intention to sell,
grant any participation in or otherwise distribute any of the Shares or the
Note.
5.5 SOPHISTICATED INVESTOR.
(A) Toshiba acknowledges that it is able to fend for itself with
respect to evaluating its investment in the Shares and the Note; can bear
the economic risk of its investment in the Shares and the Note; can hold
the Shares and the Note for an indefinite period of time; and has such
knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of its investment in the Shares
and the Note.
(B) Toshiba has undertaken its own due diligence investigation of the
ACC Entities and the Business, has had a complete opportunity to discuss
the ACC Entities and the Business with ACC's management, and has been
provided with and has evaluated such documents and information as it has
deemed necessary to enable it to make an informed and intelligent decision
with respect to the execution, delivery and performance of this Agreement
and the purchase of the Shares and the Note hereunder. Toshiba acknowledges
that the ACC Entities have given Toshiba reasonable access to the ACC
Entities and the key employees, documents and facilities of the Business.
Toshiba has undertaken such further investigation and has requested such
additional documents and information as it deems necessary. Toshiba agrees
to accept the Shares and the Note on the Closing Date upon the terms and
conditions contained herein based upon its own examination and
determination with respect to the ACC Entities and the Business as to all
matters, and without reliance upon any express or implied representations
or warranties of any nature made by or on behalf of or imputed to Audiovox
or the ACC Entities, except as expressly set forth in this Agreement.
Notwithstanding the foregoing, this Section shall not affect in any manner
the representations or warranties of ACC and Audiovox contained herein, or
Toshiba's ability to rely thereon or Toshiba's rights with respect thereto.
5.6 RESTRICTED SECURITIES. Toshiba understands that the Shares and the Note
are characterized as "restricted securities" under the Securities Laws inasmuch
as they are being acquired from ACC in a transaction not involving a public
offering, and that under the Securities Laws, the Shares and the Note may be
resold without registration under the Securities Act only in certain limited
circumstances. Toshiba is familiar with SEC Rule 144, as presently in effect,
and understands the resale limitations imposed thereby and by the Securities
Act. Toshiba understands that no public market now exists for the Shares or the
Note, and that ACC has made no assurances that a public market will ever exist
for the Shares or the Note.
5.7 LEGENDS. Toshiba understands that, in addition to any legend required
by the Stockholders Agreement or applicable Laws, the certificates evidencing
the Shares and the Note at Closing shall bear the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
Exhibit 99.2
13
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE
REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE UNITED STATES FEDERAL,
STATE AND FOREIGN SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM."
5.8 AVAILABILITY OF FUNDS. Toshiba has sufficient funds available to enable
it to pay the Purchase Price to ACC in full pursuant to the terms of this
Agreement and to perform its other obligations hereunder. Toshiba represents and
warrants that its obligations under this Agreement are not subject to any
condition regarding its ability to obtain funding.
6. SURVIVAL; INDEMNIFICATION.
6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Parties contained in or made pursuant to this Agreement shall
expire one (1) year after the Closing, except that (i) the representations and
warranties contained in Section 4.4 (Capitalization), Section 4.9 (Taxes),
Section 4.16 (Warranties), Section 4.23 (Benefit Plans) and Section 4.25
(Environmental Compliance) shall continue through the expiration of the
applicable statute of limitations as the same may be extended, and (ii) if a
claim or notice is given under this Section 6 with respect to any representation
or warranty prior to the applicable expiration date, such representation or
warranty shall continue indefinitely until such claim is finally resolved.
6.2 INDEMNIFICATION BY ACC AND AUDIOVOX. ACC and Audiovox shall jointly and
severally indemnify and hold harmless Toshiba and its employees, Associates,
Affiliates, representatives, advisors, agents and assigns (collectively, the
"TOSHIBA INDEMNIFIED PERSONS") from and against any and all Losses as a result
of, based upon or arising from:
(A) Any inaccuracy in or breach of any representation or warranty by
ACC or Audiovox contained herein or in any schedule or certificate
delivered by or on behalf of ACC or Audiovox at or prior to the Closing
pursuant hereto.
(B) Any breach by ACC or Audiovox of, or any failure by either of them
to perform or comply with, any of their respective obligations contained in
this Agreement.
6.3 INDEMNIFICATION BY TOSHIBA. Toshiba shall indemnify and hold harmless
ACC, Audiovox and their respective employees, Associates, Affiliates,
representatives, advisors, agents and assigns from and against any and all
Losses as a result of, based upon or arising from:
(A) Any inaccuracy in or breach of any representation or warranty by
Toshiba contained herein or in any schedule or certificate delivered by or
on behalf of Toshiba at or prior to the Closing pursuant hereto.
(B) Any breach by Toshiba of, or any failure by Toshiba to perform or
comply with, any of its obligations contained in this Agreement.
6.4 LIMITS ON INDEMNIFICATION. Notwithstanding anything herein to the
contrary, ACC and Audiovox shall not be obligated to indemnify the Toshiba
Indemnified Persons under this Section 6 (i) unless the aggregate of
indemnifiable Losses incurred by the Toshiba Indemnified Parties exceeds
$500,000 (the "INDEMNIFICATION THRESHOLD"), in which case the Indemnified
Persons shall be entitled to recover the difference between their aggregate
indemnifiable Losses
Exhibit 99.2
14
and a deductible amount of $100,000, or (ii) to the extent that the aggregate of
all of the indemnifiable Losses of the Toshiba Indemnified Parties exceeds the
Purchase Price (the "INDEMNIFICATION CAP"); provided, however, that the
Indemnification Threshold, the Indemnification Cap and the deductible amount
shall not apply to any indemnification obligation of ACC or Audiovox (1) arising
out of, relating to or resulting from fraud or intentional misrepresentation by
ACC or Audiovox, or (2) from a breach of any of the representations or
warranties of ACC and Audiovox contained in Section 4.4 (Capitalization) or
Section 4.9 (Taxes).
6.5 INDEMNIFICATION PROCEDURE.
(A) CLAIMS FOR INDEMNIFICATION. Whenever any claim shall arise for
indemnification under this Section 6, the indemnified person making such
claim shall promptly notify the indemnifying person in writing of the claim
and, when known, the facts constituting the basis for such claim; provided
that failure to give such notice shall not affect any rights or remedies of
the indemnified person hereunder except to the extent that the indemnifying
person is materially prejudiced thereby.
(B) DEFENSE. In connection with any claim giving rise to indemnity
hereunder and upon request of the indemnified person seeking
indemnification, the indemnifying person at its sole cost and expense shall
assume the defense of any such claim and thereafter diligently conduct the
defense thereof with counsel reasonably acceptable to the indemnified
person. The indemnified person shall be entitled to participate in the
defense of any claim assumed by an indemnifying person with the indemnified
person's counsel and at its own expense. If the indemnifying person does
not assume the defense of such action within thirty (30) days after written
notice thereof from the indemnified person, and if the indemnified person
elects at its option to assume the claim itself, the indemnified person may
defend against such claim in such manner and on such terms as it may deem
appropriate, including but not limited to settling such claim, such defense
to be at the sole cost and expense of the indemnifying person.
Notwithstanding the foregoing, without the prior written consent of the
indemnified person, the indemnifying person shall not consent to the entry
of any judgment or enter into any settlement (or have any liability for
Losses with respect thereto) which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to the indemnified
persons a release from all liability with respect to such claims.
(C) REASONABLE COOPERATION. The indemnified persons shall reasonably
cooperate at the indemnifying person's expense in any Proceedings with
respect to any claim in respect of which indemnity is provided pursuant to
this Section 6, including, but not limited to, by providing the
indemnifying person with reasonable access to employees and officers
(including as witnesses) and other information.
6.6 NOTICE BY INDEMNIFYING PERSONS. The indemnifying persons shall notify
the indemnified persons of any Liabilities, claims or misrepresentations,
breaches or other matters covered by this Section 6 upon discovery or receipt of
notice thereof, whether before or after the Closing.
6.7 REDUCTION OF INTERCOMPANY NOTE. Audiovox may, at its option and to the
extent that there are amounts outstanding under the Intercompany Note, satisfy
its indemnification obligations hereunder by reducing the outstanding balance of
the Intercompany Note by the amount of any Losses suffered by a Toshiba
Indemnified Person that are indemnifiable by
Exhibit 99.2
15
Audiovox under this Section 6; provided that the Toshiba Indemnified Persons
shall be entitled to receive cash as reimbursement for any cash payments made to
third parties in respect of Losses that are indemnifiable by Audiovox under this
Section 6.
6.8 NO RIGHT OF SUBROGATION. Audiovox shall have no right of subrogation,
reimbursement or similar right against any ACC Entity with respect to Audiovox's
indemnity obligations under this Section 6. Audiovox hereby irrevocably waives
all such rights, and agrees not to institute any Proceedings against Toshiba or
the ACC Entities with respect to the same.
6.9 NOT EXCLUSIVE REMEDY. This Section 6 shall not be deemed to preclude or
otherwise limit in any way the exercise of any other rights or the pursuit of
any other remedies for the breach of this Agreement or with respect to any
inaccuracy of representations or warranties contained herein.
6.10 NO DUPLICATION. No indemnified person shall be entitled to any
duplication of reimbursement or indemnification with respect to any claims which
constitute a breach of more than one representation, warranty, covenant or
agreement contained in this Agreement, provided that such claims are reimbursed
or indemnified to the full extent provided for hereunder.
7. CONFIDENTIALITY; PUBLICITY.
7.1 CONFIDENTIAL INFORMATION. The Parties recognize that, in connection
with the performance of the transactions contemplated hereby, each Party (in
such capacity, the "DISCLOSING PARTY") may disclose Confidential Information to
the other Parties (each in such capacity, the "RECEIVING PARTY"). For purposes
of this Agreement, "CONFIDENTIAL INFORMATION" means any and all information
(whether owned by the Disclosing Party or any Person to whom the Disclosing
Party owes a non-disclosure obligation) regarding the Disclosing Party and its
business which is (i) in written or other tangible form and marked with a legend
which identifies the information as confidential, or (ii) in oral or visual
form, identified as being confidential at the time of disclosure and thereafter
summarized in a writing which identifies the information as confidential and is
transmitted to a Receiving Party within thirty (30) days after such oral or
visual disclosure.
7.2 CONFIDENTIALITY OBLIGATION. Each Receiving Party agrees for a period of
two (2) years after the receipt of any Confidential Information (i) to protect
the Confidential Information and not to disclose the Confidential Information to
any Person, utilizing the same degree of care the Receiving Party utilizes to
protect its own confidential information of a similar nature, and (ii) not to
utilize the Confidential Information for any purpose other than in connection
with the transactions contemplated hereby. The Parties agree to restrict
distribution of the Confidential Information to those Persons involved in the
subject of the discussions who have a "need to know" such information in
connection with the discussions.
7.3 EXCEPTIONS. Notwithstanding the provisions of Section 7.2, each
Receiving Party shall have no obligation to maintain the confidentiality of any
information, and the Confidential Information shall not include any information,
that (i) is or becomes generally available in the public domain other than
through unauthorized or improper disclosure by the Receiving Party, (ii) was
validly in the Receiving Party's possession prior to disclosure by a Disclosing
Party, (iii) was independently developed by the Receiving Party, or (iv) was
received by the Receiving Party from another Person without violation of any
confidentiality obligations.
Exhibit 99.2
16
7.4 DISPOSAL OF CONFIDENTIAL INFORMATION. Within thirty (30) days of the
termination of this Agreement, upon the applicable Disclosing Party's request,
each Receiving Party shall return to the Disclosing Party or destroy all
Confidential Information (including copies and electronic records thereof).
7.5 PUBLICITY. Subject to applicable Law and the applicable rules or
regulations of any stock exchange on which the securities of any Party are then
traded, no Party shall issue any press release, publicity statement,
communication with stockholders, public notice or other public disclosure
relating directly to this Agreement or the transactions contemplated hereby
without prior notice to, consultation with, and the consent of the other Party.
Notwithstanding the foregoing, so long as the disclosing Party reasonably
attempts to consult with and obtain the consent of the other Parties, limits the
applicable disclosure to the extent practicable and provides a copy of the
disclosure to the non-disclosing Party concurrently with or in advance of its
public release, such consultation and consent shall not be required if a Party
must make a public disclosure on an emergency basis in order to comply with
applicable securities Laws.
8. GENERAL PROVISIONS.
8.1 GOVERNING LAW. This Agreement shall be construed and interpreted in
accordance with and governed by the Laws of the State of New York, U.S.A.,
including, without limitation, Section 5-1401 of the General Obligations Law of
the State of New York (without regard to the choice of law provisions thereof).
Judgement upon an award rendered by the arbitrators pursuant to Section 8.2
shall be entered in the courts of the State of New York, and the Parties hereby
submit to the exclusive jurisdiction of such courts for the purpose of any such
entry. The Parties agree and consent that services of process may be made upon
the Parties in any legal proceedings relating hereto by any means allowed under
applicable Law.
8.2 DISPUTE RESOLUTION.
(A) The Parties intend that all disputes between the Parties arising
out of this Agreement shall be settled by the Parties amicably through good
faith discussions upon the written request of either Toshiba or Audiovox.
In the event that any such dispute cannot be resolved thereby within a
period of sixty (60) calendar days after such notice has been given, such
dispute shall be finally settled by binding arbitration at the request of
Toshiba or Audiovox.
(B) Each arbitration hereunder shall be conducted in the English
language in New York, New York, and shall be administered by the American
Arbitration Association under its Commercial Arbitration Rules then in
effect, before three (3) independent arbitrators to be appointed as
follows. Toshiba and Audiovox shall each appoint one (1) arbitrator, and
the two (2) arbitrators so appointed shall appoint a third arbitrator in
accordance with paragraph (c) of AAA Rule R-15 (Appointment of Neutral
Arbitrator by Party-Appointed Arbitrators or Parties) currently in effect.
However, in all events, these arbitration provisions shall govern over any
conflicting rules which may now or hereafter be contained in the applicable
rules.
(C) Toshiba and Audiovox each may demand arbitration by filing a
written demand with the other Party within one hundred eighty (180)
calendar days after the expiration of the sixty (60) day period described
above. The arbitrators shall have the authority to grant any equitable and
legal remedies that would be available in any judicial proceeding intended
to resolve a dispute, including the termination of this Agreement.
Notwithstanding the foregoing, Toshiba
Exhibit 99.2
17
and Audiovox each shall be entitled to seek preliminary injunctive
relief from any court of competent jurisdiction, pending the final decision
or award of the arbitrators. The award rendered in an arbitration hereunder
shall be final and non-appealable.
8.3 NOTICES AND OTHER COMMUNICATIONS. Any and all notices, requests,
demands and other communications required or otherwise contemplated to be made
under this Agreement shall be in writing and in English and shall be provided by
one or more of the following means and shall be deemed to have been duly given
(a) if delivered personally, when received, (b) if transmitted by facsimile, on
the first (1st) Business Day following receipt of a transmittal confirmation, or
(c) if by international courier service, on the third (3rd) Business Day
following the date of deposit with such courier service, or such earlier
delivery date as may be confirmed in writing to the sender by such courier
service. All such notices, requests, demands and other communications shall be
addressed as follows:
If to Toshiba:
Toshiba Corporation
Mobile Communications Company
1-1, Shibaura 1-chome, Minato-ku
Tokyo 105-8001
Japan
Attention: General Manager, International Operations
Telephone: -81-3-3457-3241
Facsimile: -81-3-3457-8194
If to Audiovox:
Audiovox Corporation
150 Marcus Blvd.
P.O. Box 18000
Hauppauge, NY 11788-1800
U.S.A.
Attention: Charles M. Stoehr
Telephone: (631) 436-6505
Facsimile: (631) 231-1370
If to ACC:
Audiovox Communications Corp.
555 Wireless Boulevard
Hauppauge, New York 11788
U.S.A.
Attention: Philip Christopher
Telephone: (631) 233-3300
Facsimile: (631) 951-0784
Exhibit 99.2
18
With a copy to:
Levy & Stopol, LLP
East Tower, 14th Floor
190 EAB Plaza
Uniondale, NY 11556-0190
Telephone: (516) 802-7007
Facsimile: (516) 802-7008
or to such other address or facsimile number as a Party may have specified to
the other Parties in writing delivered in accordance with this Section 8.3.
8.4 SEVERABILITY. If any provisions of this Agreement shall be held to be
illegal, invalid or unenforceable, the Parties agree that such provisions will
be enforced to the maximum extent permissible so as to effect the intent of the
Parties, and the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby. If necessary to effect the intent of the Parties, the Parties will
negotiate in good faith to amend this Agreement to replace the unenforceable
language with enforceable language which as closely as possible reflects such
intent.
8.5 AMENDMENTS. This Agreement may be amended or modified only by a written
instrument signed by each Party.
8.6 WAIVER. Any waiver by a Party of an instance of another Party's
noncompliance with any obligation or responsibility herein contained shall be in
writing and signed by the waiving Party and shall not be deemed a waiver of
other instances of another Party's noncompliance hereunder.
8.7 NO ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and permitted assigns
of the Parties. Nothing in this Agreement shall confer any rights upon any
Person other than the Parties and their respective successors and permitted
assigns. No Party may assign this Agreement or its rights hereunder to any
Person without the written consent of the other Parties. No assignment by any
Person of this Agreement or of any of such Person's rights hereunder shall
release such Person from any of its obligations hereunder. Any attempted
assignment of this Agreement in violation of this Section 8.7 shall be void and
of no effect.
8.8 EXPENSES. Toshiba shall bear all out-of-pocket costs and expenses
(including, without limitation, attorney's, accountant's and financial advisor's
fees) incurred by it in connection with the negotiation and execution of the
Transaction Agreements. Audiovox shall bear all out-of-pocket costs and expenses
(including, without limitation, attorney's, accountant's and financial advisor's
fees) incurred by it, the ACC Entities or their respective Affiliates or
Associates in connection with the negotiation and execution of the Transaction
Agreements.
8.9 CONSTRUCTION. This Agreement has been negotiated by the Parties and
their respective counsel and shall be fairly interpreted in accordance with its
terms and without any strict construction in favor of or against any Party.
8.10 INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT. Unless the context
shall
Exhibit 99.2
19
otherwise require, any pronoun shall include the corresponding masculine,
feminine and neuter forms, and words using the singular or plural number shall
also include the plural or singular number, respectively. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". All references herein to Articles, Sections, Annexes, Exhibits and
Schedules shall be deemed to be references to Articles and Sections of, and
Annexes, Exhibits and Schedules to, this Agreement unless the context shall
otherwise require. The headings of the Articles and Sections are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretations of this Agreement. Unless the context shall
otherwise require, any reference to any agreement or other instrument or statute
or regulation is to such agreement, instrument, statute or regulation as amended
and supplemented from time to time (and, in the case of a statute or regulation,
to any successor provision). Any reference in this Agreement to a "day" or a
number of "days" (without the explicit qualification of "Business") shall be
interpreted as a reference to a calendar day or number of calendar days. If any
action or notice is to be taken or given on or by a particular calendar day, and
such calendar day is not a Business Day, then such action or notice shall be
deferred until, or may be taken or given, on the next Business Day.
8.11 DISCLAIMER OF AGENCY. This Agreement shall not constitute any Party as
a legal representative or agent of any other Party, nor shall a Party have the
right or authority to assume, create or incur any Liability of any kind,
expressed or implied, against or in the name or on behalf of another Party or
any of its Affiliates.
8.12 LANGUAGE. The Parties have negotiated this Agreement in the English
language, which shall be the governing language of this Agreement.
8.13 RELATIONSHIP OF THE PARTIES. Nothing contained in this Agreement is
intended to, or shall be deemed to, create a partnership or joint venture
relationship among the Parties or any of their Affiliates for any purpose,
including tax purposes. None of the Parties nor any of their respective
Affiliates will take a position contrary to the foregoing.
8.14 SPECIFIC PERFORMANCE. The Parties agree that each other Party shall be
entitled to obtain an injunction or injunctions in accordance with the dispute
resolution procedures contained in Section 8.2 to prevent breaches of the
provisions of this Agreement, or any agreement contemplated hereunder and to
enforce specifically the terms and provisions hereof, in each instance without
being required to post bond or other security, without being required to prove
irreparable harm, and in addition to, and without having to prove the adequacy
of, other remedies at Law.
8.15 CONSEQUENTIAL AND OTHER DAMAGES. No Party shall be liable to the other
Party under any contract, negligence, strict liability or other theory for any
indirect, incidental, consequential, punitive or other special damages
(including without limitation lost profits) asserted by the other Party.
8.16 ENTIRE AGREEMENT. The provisions of this Agreement, the Schedules and
Exhibits hereto and the other Transaction Agreements set forth the entire
agreement and understanding among the Parties as to the subject matter hereof
and supersede all prior agreements, oral or written, and all other prior
communications among the Parties relating to the subject matter hereof.
Exhibit 99.2
20
8.17 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be binding as of the date first written above,
and all of which shall constitute one and the same instrument. Each such
counterpart shall be deemed an original, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one such
counterpart.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
Exhibit 99.2
21
IN WITNESS WHEREOF, the Parties have caused their respective duly
authorized representatives to execute this Securities Purchase Agreement as of
the date first above written.
TOSHIBA CORPORATION,
a Japanese corporation, acting through its
Mobile Communications Company
By: s/ Tetsuya Mizoguchi
--------------------------------------
Name: Tetsuya Mizoguchi
Title: President and CEO,
Mobile Communications
Company
AUDIOVOX COMMUNICATIONS
CORP.,
a Delaware corporation
By: s/ Philip Christopher
--------------------------------------
Name: Philip Christopher
Title: Chief Executive Officer
AUDIOVOX CORPORATION,
a Delaware corporation
By: s/ John J. Shalam
--------------------------------------
Name: John J. Shalam
Title: Chief Executive Officer
Exhibit 99.2
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ANNEX I
CERTAIN DEFINITIONS
"ACC'S KNOWLEDGE" or the "KNOWLEDGE OF ACC" shall mean the knowledge of
Philip Christopher, Michael Stoehr and Neil Levine after reasonable
investigation of the matter in question.
"AFFILIATE" of a specified Person means any Person that controls, is
controlled by or is under common control with such specified Person. For
purposes of this definition, "CONTROL" shall mean the possession, directly or
indirectly, of power to direct or cause the direction of management or policies
(whether through ownership of securities or other ownership interests, by
contract or otherwise).
"APPROVAL" means, as to any Person, any consent, approval, authorization,
waiver, grant, concession, license, exemption or order of, registration,
certificate, declaration or filing with, or report or notice to, such Person.
"ASSOCIATE" of a Person means:
(i) any officer or director of such Person, or other Person serving in
a similar role with respect to such Person;
(ii) any corporation or other entity (other than Audiovox or any ACC
Entity) of which such Person or any Person specified in clause (i) is an
officer, partner, manager or Person serving in a similar role, or is,
directly or indirectly, the beneficial owner of 5% or more of any class of
equity securities;
(iii) any trust or other estate in or as to which such Person or any
Person specified in clauses (i) or (ii) has a 10% or greater beneficial
interest or serves as trustee or in a similar capacity; or
(iv) any relative or spouse of such Person or any Person specified in
clause (i), or any relative of such spouse.
"BUSINESS" means the research, development, design, manufacture, marketing,
sale and/or service of Products.
"BUSINESS DAY" means a day on which commercial banks in New York City are
generally open to conduct their regular banking business.
"CONTRACT" means any contract, agreement, lease, plan, instrument or other
document, commitment, arrangement, undertaking, practice, understanding or
authorization, in each case whether or not in writing.
"GOVERNMENT APPROVAL" means any Approval of, to or with any Governmental
Authority.
"GOVERNMENTAL AUTHORITY" shall mean any federation, nation, state,
sovereign or government, any federal, supranational, regional, state, local or
municipal political subdivision,
Exhibit 99.2
23
any governmental or administrative body, instrumentality, department or agency,
or any court, administrative hearing body, arbitrator, commission or other
similar dispute resolving panel or body, and any other entity exercising
executive, legislative, judicial, regulatory or administrative functions of a
government.
"INTELLECTUAL PROPERTY" means all patents, trademarks, service marks, trade
names, copyrights, trade secrets, know-how, technology, software and other
intellectual property and proprietary rights owned by the ACC Entities that are
material to or reasonably necessary to the conduct of the ACC Entities' business
as presently conducted or presently proposed by the Company to be conducted;
provided, however, that computer software, computer programs and source disks,
and related program documentation, tapes, manuals, forms, guides and other
materials that are licensed to Audiovox or any ACC Entity shall not constitute
or be deemed to constitute Intellectual Property for any purposes of this
Agreement.
"LAWS" means all applicable provisions of all (i) constitutions, treaties,
statutes, laws (including common law), rules, regulations, ordinances or codes
of any Governmental Authority, and (ii) orders, decisions, injunctions,
judgments, awards and decrees of any Governmental Authority.
"LEGAL REQUIREMENT" shall mean any federal, state, regional, local,
municipal, foreign or other Law, statute, legislation, constitution, principle
of common law or equity, resolution, ordinance, code, edict, decree,
proclamation, treaty, convention, rule, regulation, permit, ruling, directive,
pronouncement, requirement (licensing or otherwise), specification,
determination, decision, opinion or interpretation that is, has been or may in
the future be issued, enacted, adopted, passed, approved, promulgated, made,
implemented or otherwise put into effect by or under the authority of any
Governmental Authority.
"LIABILITY" shall mean any direct or indirect liability, indebtedness,
obligation, expense, cost, claim, loss, damage, deficiency, guaranty or
endorsement of or by any Person, absolute or contingent, accrued or unaccrued,
due or to come due, liquidated or unliquidated, whether or not made or asserted,
in each case to the extent required by GAAP to be reflected or reserved against
on a balance sheet.
"LIEN" shall mean any lien, mortgage, security interest, pledge,
restriction on transferability, defect of title or other claim, charge or
encumbrance of any nature whatsoever on any property or property interest,
including any restriction on the use, voting, transfer, receipt of income or
other exercise of any attributes of ownership.
"LOSS" means any Proceeding, cost, damage, disbursement, expense,
liability, loss, deficiency, diminution in value, obligation, penalty or
settlement of any kind or nature, whether foreseeable or unforeseeable,
including, without limitation, interest or other carrying costs, penalties,
legal, accounting and other professional fees and expenses incurred in the
investigation, collection, prosecution and defense of claims and amounts paid in
settlement, that may be imposed on or otherwise incurred or suffered by the
specified Person.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the ACC
Entities or their respective business, assets, results of operation, financial
condition or prospects, taken as a whole, or the ability of Audiovox or ACC to
perform its respective obligations under the Transaction Agreements.
Exhibit 99.2
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"MATERIAL CONTRACTS" means all Contracts that are material to the ACC
Entities, including all Contracts (i) obligating any ACC Entity to pay an amount
of $1,000,000 or more; (ii) expressly limiting or restricting the ability of any
ACC Entity to compete or otherwise to conduct its business in any manner or
place; (iii) pursuant to which any ACC Entity has incurred or may incur money
indebtedness of $1,000,000 or more; (iv) providing for the use of or limiting
the use of any Intellectual Property; (v) all leases of real property or
material personal property; (vi) any joint venture, partnership, cooperative
arrangement or any other Contract involving a sharing of profits; and (vii) any
Contract related to the acquisition of a business of or an ownership interest in
any other Person.
"ORGANIZATIONAL DOCUMENTS" of a Person means its Certificate of
Incorporation, Bylaws or other organizational documents.
"PERMITTED LIENS" means (i) Liens reserved against in the Financial
Statements (including any notes thereto) to the extent so reserved, (ii)
mechanics', carriers', workers', repairers', materialmen's, warehousemen's and
other similar Liens arising out of operation of Law with respect to a Liability
incurred in the ordinary course of business, (iii) Liens for Taxes which are
being contested in good faith by appropriate Proceedings or Liens for Taxes not
yet due, (iv) Liens disclosed on Section 4.11 of the Disclosure Schedule, and
(v) such other Liens that have not had and would not be reasonably likely to
materially detract from the value of or impair the use of the property subject
thereto.
"PERSON" means a natural individual, Governmental Authority, partnership,
firm, corporation or other entity.
"PROCEEDING" shall mean any action, litigation, arbitration, suit, claim,
proceeding or investigation or review of any nature, civil, criminal, regulatory
or otherwise, before any Governmental Authority.
"PRODUCTS" shall have the meaning set forth in the Distribution Agreement.
"SEC" means the U.S. Securities Exchange Commission.
"SECURITIES" of a Person means shares of capital stock, other equity
securities of the Person, and options, warrants, convertible securities,
exchangeable securities or other rights to acquire capital stock or other equity
securities of the Person.
"SECURITIES ACT" means the U.S. Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SECURITIES LAWS" means the Securities Act, the U.S. Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.
"TAX RETURN" shall mean any return, statement, declaration, notice,
certificate or other document that is or has been filed with or submitted to, or
required to be filed with or submitted to, any Governmental Authority in
connection with the determination, assessment, collection or payment of any Tax
or in connection with the administration, implementation or enforcement of or
compliance with any Legal Requirement related to any Tax.
Exhibit 99.2
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"TAXES" shall mean (i) all taxes, charges, fees, levies, or other
assessments, imposed by any taxing authority, including income, gross receipts,
excise, property, sales, use, transfer, payroll, license, ad valorem, value
added, withholding, social security, national insurance (or other similar
contributions or payments), franchise, estimated, severance and stamp taxes
(including any interest, fines, penalties or additions attributable to, or
imposed on or with respect to, any such taxes, charges, fees, levies or other
assessments), (ii) liability of a Person for the payment of any amounts of the
type described in clause (i) as a result of being a member of an affiliated,
consolidated, combined, unitary or similar group, and (iii) liability of a
Person for the payment of any amounts of the type described in clause (i) as a
result of any express or implied obligation to indemnify any other Person.
Exhibit 99.2
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LIST OF EXHIBITS
Exhibit 1 Non-Negotiable Subordinated Convertible Promissory Note
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Exhibit 2.2(c)(i) Stockholders Agreement
Exhibit 2.2(c)(ii) Distribution Agreement
Exhibit 2.2(c)(iii) Philip Christopher Employment Agreement
Exhibit 2.2(c)(iv) Trademark License Agreement
Exhibit 2.2(c)(v) Shared Services Agreement
Exhibit 2.2(c)(vii) Non-Negotiable Demand Note
Exhibit 99.2
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