STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS 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 CORPORATION, a
Delaware corporation ("AUDIOVOX"), and AUDIOVOX COMMUNICATIONS CORP., a Delaware
corporation ("ACC"). Toshiba and Audiovox are referred to herein collectively as
the "PARTIES" and each individually as a "PARTY".
RECITALS
A. ACC, Audiovox and Toshiba have entered into the Securities Purchase
Agreement dated as of the date hereof (the "SECURITIES PURCHASE AGREEMENT"),
pursuant to which Toshiba is acquiring (i) shares of ACC's Class B Common Stock,
no par value per share, and (ii) a subordinated convertible promissory note of
ACC (the "NOTE"). After giving effect to such acquisition, Audiovox will own
seventy-five percent (75%) and Toshiba will own twenty-five percent (25%),
respectively, of ACC's outstanding capital stock.
B. The Parties and ACC desire to enter into this Agreement at the Closing
as contemplated by the Securities Purchase Agreement.
C. Certain terms used herein have the meanings set forth for such terms in
the text of this Agreement or in Annex I hereto. Unless otherwise defined
herein, terms used herein that are defined in the Securities Purchase Agreement
shall have the same meanings set forth for such terms in the Securities Purchase
Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Parties and ACC hereby agree as follows:
AGREEMENT
1. OPERATION AND MANAGEMENT OF ACC.
1.1 BOARD OF DIRECTORS. ACC will be managed by its Board of Directors (the
"BOARD") in accordance with the terms of this Agreement, ACC's Organizational
Documents and applicable Law. The Board shall consist of five (5) directors
("DIRECTORS"), four (4) of whom shall be appointed by Audiovox and one (1) of
whom shall be appointed by Toshiba. Toshiba shall also have the right to appoint
one (1) Board observer, who shall be entitled to attend Board proceedings. Such
Board observer may share information with Toshiba and its representatives but
shall otherwise treat all information learned at such proceedings in confidence.
Each Party shall exercise all voting rights with respect to its Securities and
take such other necessary action in order to ensure that the composition of the
Board is as set forth in this Section 1.1. The Directors and all observers shall
be individuals of good moral character and unaffiliated with any competitor of
ACC.
1.2 REMOVAL; REAPPOINTMENT OF DIRECTORS. Each Party shall have the right,
in its
Exhibit 99.3
1
sole discretion, to remove at any time any Director appointed by such Party
pursuant to Section 1.1, effective upon delivery of written notice to ACC and
the other Party. In the case of a vacancy in the office of a Director for any
reason (including removal pursuant to the preceding sentence), the vacancy shall
be filled by the Party that appointed the Director to which such vacancy
relates. Toshiba may remove and/or replace its Board observer described in
Section 1.1 at any time at its sole discretion, effective upon delivery of
written notice to ACC and Audiovox.
1.3 BOARD MEETINGS.
(A) Each Director shall have the authority to convene Board meetings.
Absent a contrary decision by the Board, meetings shall be held on Business
Days at the offices of ACC. Directors may attend Board meetings in person
or by any other means of attendance permitted under applicable Law,
including by telephone.
(B) The Board shall meet at least quarterly, and written notice of all
Board meetings shall be given to each Director and each Party not less than
ten (10) days in advance of each meeting. The ten (10)-day period may be
shortened by written waiver of the Director in question or actual
attendance by such Director, without objection, at a Board meeting.
Additionally, each Director shall promptly cooperate in good faith to
attend or waive notice with respect to Board meetings that must be held on
less than ten (10) days notice due to operational emergencies (a Director's
failure to so cooperate in good faith with respect to any Board meeting
shall be deemed to constitute such Director's waiver of notice with respect
to such meeting). Minutes of Board meetings shall be prepared by ACC in
English, and shall be distributed to each Director reasonably promptly
following such meeting.
1.4 BOARD QUORUM; VOTING; RESOLUTIONS. Subject to Section 1.5, (a) a quorum
shall be deemed to exist for purposes of Board actions so long as at least three
(3) Directors are present, and (b) any action, determination or resolution of
the Board shall require the affirmative vote of a majority of Directors present
at a meeting at which a valid quorum pursuant to this Section 1.4 is present.
1.5 EXTRAORDINARY APPROVAL ITEMS. ACC shall not take or agree to take, and
shall not permit any of its controlled Affiliates to take or agree to take,
directly or indirectly, any of the following actions ("EXTRAORDINARY APPROVAL
ITEMS") without the prior written approval of Toshiba.
(A) Subject to Section 4.5, amend or modify any of its Organizational
Documents.
(B) Engage in any line of business that is outside the scope of the
Business.
(C) Other than in the ordinary course of the Business, make any
capital or other expenditures that, individually or together with all
related expenditures, exceed twenty percent (20%) of the fair value of the
total assets of ACC.
(D) Other than in the ordinary course of the Business, incur,
guarantee or
Exhibit 99.3
2
otherwise become liable for, or grant Liens with respect to, any
indebtedness that, individually or together with all related
indebtedness, exceeds twenty percent (20%) of the fair value of the
total assets of ACC.
(E) Issue or sell capital stock (or any rights to acquire capital
stock) other than common stock.
(F) Declare or pay any dividends or other distributions (in cash or
other property) on account of any equity securities, or redeem, retire,
purchase or otherwise acquire any equity securities, other than to or from
all stockholders on a pro rata basis in accordance with their respective
holdings.
(G) Other than in the ordinary course of the Business, pay, purchase,
redeem, retire or otherwise acquire, directly or indirectly, any
indebtedness (including debt securities) that, individually or together
with all related indebtedness, exceeds twenty percent (20%) of the fair
value of the total assets of ACC, other than at maturity or pursuant to
fixed or mandatory prepayments, redemptions or sinking funds in accordance
with the terms of the applicable indebtedness.
(H) Merge or consolidate with or into another Person.
(I) Other than in the ordinary course of the Business, sell, lease or
otherwise dispose of assets that, individually or together with all related
disposed assets, exceed twenty percent (20%) of the fair value of the total
assets of ACC.
(J) Other than in the ordinary course of the Business, (1) purchase or
otherwise acquire (whether through a stock purchase, asset purchase, stock
swap or otherwise) any business or assets that, individually or together
with all related acquired businesses or assets, exceed twenty percent (20%)
of the fair value of the total assets of ACC, or (2) enter into, terminate
or materially amend the terms of any joint venture, partnership or similar
transaction that, individually or together with all related transactions
being undertaken, represent assets of ACC exceeding twenty percent (20%) of
the fair value of the total assets of ACC.
(K) Except for Contracts with underwriters in connection with an IPO,
enter into or amend any Contract that is outside the ordinary course of
ACC's Business and, individually or together with related Contracts,
involves aggregate commitments in excess of twenty percent (20%) of the
fair value of the total assets of ACC.
(L) Change its independent accountants.
(M) Enter into or amend any Contract between ACC or its controlled
Affiliates, on the one hand, and Audiovox or its Affiliates or their
respective Associates, on the other hand, except for any Contracts or
amendments thereto that are in good faith, in the ordinary course of the
Business, and on terms that are at least as favorable to ACC as those
available from third parties that are unaffiliated with Audiovox.
Exhibit 99.3
3
(N) File a petition for bankruptcy, dissolution or liquidation, make a
general assignment for the benefit of creditors, appoint a receiver or
trustee to take possession of all or substantially all of its assets, or
take any other action with respect to winding up and dissolution.
(O) Adopt or amend any employee equity incentive plan providing that
the holders' rights under the plan will be triggered or exercisable in case
of a change of control of ACC (whether through an acquisition of a majority
of ACC's capital stock, an acquisition of all or substantially all of ACC's
assets or a similar event conveying control of ACC).
1.6 OFFICERS.
(A) Toshiba shall have the right to designate individuals as officers
of ACC in the following capacities: Executive Vice President; Chief
Technology Officer for Toshiba Products; and Vice President for
Merchandizing -- Toshiba Products. Toshiba shall also have the right to
remove and replace its designees in a manner consistent with Section 1.2.
Such officers designated by Toshiba shall have the duties set forth on
Exhibit 1.6(a). Subject to the following conditions, the Board shall
appoint Toshiba's designees to these positions. Such individuals shall be
(1) qualified and competent in their positions in terms of experience,
expertise, moral character, ability to interface with other ACC officers
and employees and other relevant attributes, (2) unaffiliated with a
competitor of ACC, (3) not impose an unreasonable expense on ACC, and (4)
have the approval of the Chief Executive Officer (who may not withhold or
withdraw his approval without reasonable cause). The Chief Executive
Officer, in his discretion, may also hire additional individuals proposed
by Toshiba as employees of ACC, and the Board, in its discretion, may
appoint one or more of such individuals as officers of ACC.
(B) All other officers of ACC shall be appointed by the Board, in its
discretion, including the Chief Executive Officer and the Chief Financial
Officer.
(C) Each officer of ACC shall be qualified and competent for his
position in terms of experience, expertise, moral character and other
relevant attributes.
1.7 STOCKHOLDERS' MEETINGS. Each fiscal year ACC shall have an annual
stockholders meeting and such other stockholders meetings as may be convened by
the Board. Each stockholders meeting shall be convened at such time and place
determined by the Board. Stockholders of ACC shall receive notice of each
stockholders' meeting at least two (2) weeks before the scheduled date of the
meeting. Minutes of stockholders meetings shall be prepared by ACC in English,
and shall be distributed to each Party reasonably promptly following each
meeting.
1.8 BUDGETS AND PLANS. The CEO and the Executive Vice President appointed
by Toshiba shall prepare in consultation with Toshiba and submit to the Board
for its review and approval, and the Board shall approve (with such amendments
and modifications as it deems appropriate), the budgets and plans described in
this Section 1.8 based on ACC's Product roadmap and Product Plan provided for
under Section 7.3 and Section 7.4 of the Distribution Agreement.
Exhibit 99.3
4
(A) ANNUAL AND SEMI-ANNUAL BUDGETS. Annual and semi-annual budgets,
setting forth (1) profit and loss information, including sales and units
sold by supplier and gross margin by supplier, (2) balance sheet
information, including inventory by supplier, accounts receivable, accounts
payable and borrowings, (3) cash flow information, and (4) other budget
information determined by the Parties.
(B) MID-TERM BUSINESS PLAN. A mid-term business plan covering a three-
year period and setting forth ACC's business, sales and service strategy
and the information described in clauses (1) through (4) of Section 1.8(a).
1.9 ORGANIZATIONAL DOCUMENTS. The Organizational Documents of ACC shall be
in the form of Exhibit 1.9(a) (Certificate of Incorporation) and Exhibit 1.9(b)
(Bylaws), with such amendments and modifications as may be adopted in accordance
herewith.
1.10 TERMINATION UPON ACC'S QUALIFIED IPO. This Section 1 shall terminate
upon the consummation by ACC of a Qualified IPO. Notwithstanding the foregoing,
so long as the shares of Common Stock owned by Toshiba and/or issuable to
Toshiba upon the conversion of the Note (to the extent that Toshiba is then
entitled to convert the Note into Common Stock in accordance with its terms)
collectively constitute at least ten percent (10%) of ACC's Common Stock then
issued and outstanding, Toshiba shall have the right to appoint one (1) Director
following the Qualified IPO; provided that Toshiba shall not have such Director
appointment right if, notwithstanding Audiovox's good faith efforts to preserve
Toshiba's Director appointment right, the managing underwriter for the Qualified
IPO advises the Board in writing that Toshiba's retention of its Director
appointment right following a Qualified IPO would harm ACC's prospects for
achieving a Qualified IPO.
2. FINANCING MATTERS.
2.1 PREEMPTIVE RIGHTS.
(A) Each Party shall have a preemptive right to purchase a pro rata
portion (equal to such Party's then current Company Interest) of any new
issuances of Securities by ACC, except for (i) warrants, stock options and
shares issued or granted to employees of ACC for services rendered or to be
rendered in accordance with equity incentive plans adopted by the Board,
and (ii) Common Stock issued by ACC in a Qualified IPO. ACC agrees to
notify each Party in writing of any proposed new issuance of Securities to
which the Parties have preemptive rights under this Section, setting forth
the terms of such issuance. Each Party shall notify the other Party and
ACC, within fourteen (14) days after receipt of such notice, of its
decision to participate in any proposed new issuance of Securities (failure
to provide such notification during such period shall constitute an
election not to participate). In the event that a Party elects not to
subscribe for such Party's full pro rata share of any newly issued
Securities, the other Party shall be entitled to purchase any of the
unsubscribed Securities.
(B) This Section 2.1 shall terminate upon the consummation by ACC of,
and shall not apply to ACC's issuance of shares in, a Qualified IPO.
Exhibit 99.3
5
2.2 DEBT FINANCING. Notwithstanding anything contained herein to the
contrary, neither Party shall be obligated to provide financing or financial
support to ACC of any kind or nature, including loans or guarantees to third
parties for ACC's benefit. This Section 2.2 shall not affect in any manner the
rights and obligations of Toshiba and ACC under Section 8.2 (Payment) of the
Distribution Agreement.
3. TRANSFER RESTRICTIONS; IPO; REGISTRATION RIGHTS.
3.1 GENERAL.
(A) Neither Party shall, directly or indirectly, sell, assign, dispose
of, pledge, collateralize, encumber or otherwise transfer ("TRANSFER") all
or any portion of its Securities or any interest therein other than in
accordance with this Section 3. Any transfer of Securities or any interest
therein contrary to the provisions of this Section 3 shall be null and
void. Notwithstanding the foregoing, transfers among members of each
Party's Control Group shall be permitted, provided that (i) no such
transfer shall be made unless the proposed Control Group transferee has
agreed in a writing satisfactory to the other Party to be bound by the
terms of this Agreement, and (ii) the Party who is the direct or indirect
parent of the Control Group transferee shall remain fully bound by the
terms hereof following such transfer and shall be responsible for any
breach by its Control Group transferee of the terms hereof.
(B) Each certificate representing Securities held by a Party shall
bear the following legend:
"Transfer of the securities represented by this certificate is
restricted pursuant to the Certificate of Incorporation of Audiovox
Communications Corp. and the Stockholders Agreement dated as of May
29, 2002, by and among Audiovox Corporation, Toshiba Corporation and
Audiovox Communications Corp., copies of which are on file at the
principal office of Audiovox Communications Corp."
3.2 NO TRANSFERS FOR ONE YEAR. Except for transfers among Control Group
members made in accordance with Section 3.1(a), neither Party shall transfer all
or any portion of its Securities or any interest therein for one (1) year
following the date hereof without the prior written consent of the other Party.
3.3 IPO. An initial public offering of ACC's Securities ("IPO") shall not
occur prior to the first anniversary of the date hereof.
3.4 FIRST REFUSAL AND TAG-ALONG RIGHTS PRIOR TO AN IPO.
(A) In the event that either Party wishes to transfer Securities at
any time after one (1) year following the date hereof, such Party (the
"TRANSFERRING PARTY") shall first deliver to the other Party (the "NOTIFIED
PARTY") a written notice (an "OFFER NOTICE") stating the Transferring
Party's desire to transfer Securities. The Offer Notice shall set out the
number of
Exhibit 99.3
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Securities proposed to be transferred (the "OFFERED SECURITIES"), the
identity of the proposed transferee and the price and all other material
terms and conditions of the proposed transfer.
(B) For a period of thirty (30) days following receipt of an Offer
Notice, the Notified Party shall have the right to elect either (i) to
purchase, at the same price and on the same terms and conditions set forth
in the Offer Notice, all, but not less than all, of the Offered Securities,
or (ii) to include in the proposed transfer the Notified Party's pro rata
share (equal to its then current Company Interest) of the Securities
covered by the Offer Notice (and there shall be a corresponding reduction
in the number of Offered Securities which the Transferring Party may
include in the proposed transfer). Any election by a Notified Party under
this Section 3.4(b) shall be made by delivering written notice of such
election to the Transferring Party prior to the expiration of the thirty
(30)-day exercise period. A Notified Party electing to purchase Offered
Securities may effect such purchase by directing ACC to consummate the
purchase, and if so directed ACC shall consummate the purchase in
accordance with this Section 3.4, subject to compliance with applicable
Law.
(C) Upon a Notified Party's valid delivery of its election notice to
purchase Offered Securities under clause (i) of Section 3.4(b), the
Transferring Party shall be legally obligated to sell, and the Notified
Party shall be legally obligated to purchase, the Offered Securities on the
terms and conditions set forth in the Offer Notice and in any event within
thirty (30) days from the delivery date of the exercise notice, subject to
the receipt of Approvals under applicable Law. If a Notified Party
exercises its right to include Securities in a transfer pursuant to clause
(ii) of Section 3.4(b), the Notified Party shall reasonably cooperate with
the Transferring Party in connection with the consummation of the transfer,
including by executing agreements relating to such transfer, making any
filings or applications required under applicable Law and delivering to the
transferee certificates (as applicable) representing the Notified Party's
Securities to be included in the transfer. Promptly after the consummation
of the transfer, the Transferring Party shall notify the Notified Party,
shall remit to the Notified Party the total consideration for the Notified
Party's Securities included in the transfer, and shall furnish such other
evidence of the completion and time of completion of the transfer as may be
reasonably requested by the Notified Party. Following any such transfer,
such Offered Securities shall continue to be Securities subject to the
terms of this Agreement. To evidence more fully that the Offered Securities
remain subject to this Agreement, the transferee party shall acknowledge
its agreement in writing to be bound by the terms of this Agreement as a
condition to such transfer, such acknowledgement to be in a form reasonably
acceptable to the Notified Party and its counsel. Upon satisfaction of such
condition, the transferee party shall be subject to all of the obligations
of the Transferring Party under this Agreement, subject to necessary
adjustments.
(D) If the Notified Party (i) fails within the applicable thirty
(30)-day period to deliver notice effecting the exercise of its rights to
purchase Offered Securities under clause (i) of Section 3.4(b) or include
Securities in a transfer under clause (ii) of Section 3.4(b) or (ii)
exercises its rights to purchase Offered Securities but fails to satisfy
its obligation to purchase all of the Offered Securities within thirty (30)
days from the delivery date of the exercise notice (subject to the receipt
of Approvals under applicable Law), then the Transferring Party shall have
the right for ninety (90) days after the expiration of the applicable
thirty (30)-day period to
Exhibit 99.3
7
transfer the Offered Securities on terms and conditions no less favorable
to the Transferring Party than those specified in the Offer Notice. If the
Offered Securities are not transferred within such ninety (90)-day period, such
Offered Securities shall again become subject to the rights of the Notified
Party set forth in Section 3.4(b).
3.5 REGISTRATION RIGHTS. Each Party shall have the registration rights and
related indemnity rights and obligations set forth in the attached Exhibit 3.5.
3.6 NO TRANSFERS OF INTERCOMPANY NOTE. Audiovox shall not, directly or
indirectly, transfer all or any portion of the Non-Negotiable Demand Note by ACC
to Audiovox dated the date hereof (the "INTERCOMPANY NOTE") or any interest
therein without the prior written consent of Toshiba, provided that transfers
among Audiovox's Control Group members made in accordance with Section 3.1(a)
shall be permitted. The Intercompany Note shall bear a legend consistent with
Section 3.1(b) giving notice of this transfer restriction.
3.7 TERMINATION UPON ACC'S QUALIFIED IPO. Sections 3.1, 3.2, 3.3, 3.4 and
3.6 shall terminate upon the consummation by ACC of, and shall not apply to
sales of ACC shares by a Party included in, a Qualified IPO; provided that:
(A) So long as a Party holds at least ten percent (10%) of ACC's
issued and outstanding shares of Common Stock (by way of clarification,
Toshiba's holdings of Common Stock for purposes of this Section 3.7 shall
include the shares issuable upon conversion of the Note, to the extent that
Toshiba is then entitled to convert the Note in accordance with its terms),
such Party shall have the first refusal and tag-along rights set forth in
Section 3.4 with respect to transfers of ACC Securities by the other Party
following the Qualified IPO, except for sales of Common Stock by a Party to
the public in one or more brokers transactions (as defined in Rule 144(g)
of the Securities Act) or other non-negotiated transactions at the market
price for the Common Stock then prevailing.
(B) Each Party shall be entitled to purchase any ACC shares that the
other Party would otherwise include for sale in a Qualified IPO, pursuant
to and subject to the purchasing Party's compliance with the following
procedures.
(I) At least thirty (30) days prior to ACC's filing with the SEC
of the registration statement containing the preliminary prospectus
that is used for the "road show" for the Qualified IPO (the
"PROSPECTUS FILING"), a Party that intends to include ACC shares for
sale in the Qualified IPO shall provide written notice to ACC and the
other Party of such intention and the number of ACC shares that the
Party intends to include for sale (the "INCLUDED SHARES") (such
Included Shares not to exceed the number of such Party's shares that
the managing underwriter believes can be included for sale in the
Qualified IPO without harming its prospects for success).
(II) Within ten (10) Business Days following the Prospectus
Filing, if the other Party desires at its option to purchase such
Included Shares, it shall deliver a written notice to ACC and the
selling Party firmly committing the purchasing Party to purchase all
(but not less than all) of the Included Shares at the IPO Price;
provided that the purchasing Party shall
Exhibit 99.3
8
have no obligation to purchase the Included Shares if the
Qualified IPO is not consummated within one hundred twenty (120) days
following the Prospectus Filing. The selling Party's receipt of such
notice shall firmly obligate the selling Party to sell its Included
Shares to the purchasing Party on the terms set forth in the notice.
Within ten (10) Business Days following the consummation of the
Qualified IPO, the purchasing Party shall make payment in full for the
Included Shares in immediately available funds against delivery of
such shares.
(III) The "IPO PRICE" means the price per share to the public for
shares issued by ACC in the Qualified IPO, less underwriting discounts
and commissions and offering expenses per share, in each case as
disclosed in the final prospectus for the Qualified IPO.
4. ADDITIONAL COVENANTS.
4.1 CONFIDENTIALITY; PUBLICITY.
(A) CONFIDENTIAL INFORMATION. The Parties (all references to "Party"
and "Parties" in this Section 4.1 shall be deemed to include ACC) 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.
(B) 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.
(C) EXCEPTIONS. Notwithstanding the provisions of Section 4.1(b), 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.
(D) DISPOSAL OF CONFIDENTIAL INFORMATION. Within thirty (30) days of
the
Exhibit 99.3
9
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).
(E) 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
Party, 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.
4.2 FINANCIAL STATEMENTS.
(A) ANNUAL FINANCIAL STATEMENTS. Within ninety (90) days after the end
of each fiscal year (or such shorter period for Form 10-K reporting that
may be required by the SEC in the future), the Board shall cause to be
prepared and delivered to each Party the statement of income (loss) and
statement of cash flows of ACC for such fiscal year, the balance sheet of
ACC as of the end of such fiscal year, and accompanying notes thereto. Such
financial statements shall be audited by an internationally recognized
accounting firm retained by ACC.
(B) QUARTERLY FINANCIAL STATEMENTS. Within forty-five (45) days after
the end of each quarter (or such shorter period for Form 10-Q reporting
that may be required by the SEC in the future), the Board shall cause to be
prepared and delivered to each Party an unaudited statement of income
(loss) and statement of cash flows of ACC for such quarter, an unaudited
balance sheet of ACC as of the end of such quarter and, if applicable,
accompanying notes thereto.
(C) MONTHLY FINANCIAL STATEMENTS. Within fifteen (15) days after the
end of each month, ACC shall prepare and deliver to each Party an unaudited
statement of income (loss) and statement of cash flows of ACC for such
month, an unaudited balance sheet of ACC as of the end of such month and,
if applicable, accompanying notes thereto. Monthly financial statements
issued after the end of a quarter shall be subject to adjustment after
review by ACC's officers responsible for financial affairs in the course of
preparing the applicable quarterly or annual financial statements of ACC.
4.3 INSPECTION RIGHTS. ACC shall permit Audiovox and Toshiba to visit and
inspect ACC's properties, to examine its financial books of account, records and
other information requested by a Party and to discuss ACC's affairs, finances
and accounts with ACC's Directors and employees, all at such reasonable times
and upon reasonable notice as may be requested by a Party, provided that ACC's
obligations of confidentiality to third parties are honored.
4.4 D&O LIABILITY INSURANCE. ACC shall maintain at all times a policy of
directors' and officers' insurance with coverage amounts and other terms and
conditions no less favorable
Exhibit 99.3
10
to ACC and its directors and officers than Audiovox's directors' and officers'
insurance policy in effect on the date hereof.
4.5 COOPERATION IN CONNECTION WITH IPO. In connection with ACC's efforts to
achieve an IPO, Toshiba and Audiovox shall reasonably cooperate in good faith
and take such action as is reasonably necessary to effect the IPO. Without
limiting the foregoing, notwithstanding Section 1.5(a), at a time reasonably
prior to ACC's anticipated Qualified IPO, Toshiba shall agree to, shall cause
its Director appointee to approve and shall vote its Securities to approve any
amendments, modifications or restatements to ACC's Organizational Documents that
are required in the good faith judgment of the Board upon consultation with
ACC's counsel to achieve the Qualified IPO, such amendments, modifications and
restatements to become effective immediately prior to the consummation of the
Qualified IPO. Toshiba acknowledges and agrees that such amendments,
modifications and restatements may include, without limitation, the
reclassification of ACC's Class A Common Stock and Class B Common Stock into a
single class of Common Stock. Notwithstanding the foregoing, except as provided
in the foregoing sentence and except to the extent that Toshiba's rights
hereunder terminate in case of a Qualified IPO in accordance with their terms,
Toshiba shall not be obligated to amend, waive or forfeit any of its rights
contained in the Transaction Agreements in order to achieve an IPO by ACC.
4.6 TERMINATION UPON ACC'S QUALIFIED IPO. Sections 4.2, 4.3 and 4.4 shall
terminate upon the consummation by ACC of a Qualified IPO.
5. REPRESENTATIONS AND WARRANTIES OF THE PARTIES.
Each Party hereby represents and warrants to the other Party as follows:
5.1 ORGANIZATION. Such Party is a corporation duly organized and validly
existing under the Laws of its jurisdiction of organization and has the
corporate power and authority to enter into and perform each Transaction
Agreement to which it is a party.
5.2 PERMITS; APPROVALS. Such Party holds all Approvals, the absence of
which would have a material adverse effect on such Party's ability to perform
its obligations under the Transaction Agreements (a "MATERIAL ADVERSE EFFECT"),
and there has been no default or violation under any such Approvals and there is
no proceeding or investigation that is pending or, to such Party's knowledge,
threatened under which any such Approval may be revoked, terminated or
suspended, except for matters that would not have a Material Adverse Effect with
respect to such Party.
5.3 AUTHORIZATION; EXECUTION AND DELIVERY; ENFORCEABILITY. All corporate
action on the part of such Party necessary for the authorization, execution and
delivery of each Transaction Agreement to which such Party is a party and for
the performance of all of such Party's obligations thereunder has been taken.
This Agreement has been duly executed and delivered by such Party. This
Agreement constitutes a valid and legally binding obligation of such Party,
enforceable against such Party in accordance with its terms.
5.4 GOVERNMENT AND OTHER CONSENTS. No Approvals of any Governmental
Exhibit 99.3
11
Authority or any other Person is required in connection with such Party's
execution, delivery and performance of the Transaction Agreements to which such
Party is a party, or if any such consent is required, such Party has satisfied
the applicable requirements, except in each case for matters that would not have
a Material Adverse Effect with respect to such Party.
5.5 EFFECT OF AGREEMENT. Such Party's execution, delivery and performance
of each Transaction Agreement to which it is a party will not (i) violate the
Organizational Documents of such Party or any provision of applicable Law, (ii)
violate any judgment, order, writ, injunction or decree of any Governmental
Authority applicable to such Party, (iii) result in the breach of, give rise to
a right of termination, cancellation or acceleration of any obligation with
respect to (presently or with the giving of notice, the passage of time or
both), or otherwise be in conflict with any term of, or affect the validity or
enforceability of, any Approval, Contract or commitment to which such Party is a
party or is otherwise subject, or (iv) result in the creation of any Lien upon
any assets of such Party, except in the case of clauses (ii), (iii) and (iv) for
matters that would not have a Material Adverse Effect with respect to such
Party.
5.6 PROCEEDINGS. There are no Proceedings pending or, to such Party's
knowledge, threatened, against such Party before any Governmental Authority
which question such Party's right to enter into or perform any Transaction
Agreement to which such Party is a party, or which question the validity of this
Agreement or any of the other Transaction Agreements.
6. TERM AND TERMINATION.
6.1 TERM. This Agreement shall become effective as of the date hereof and
shall continue in effect hereafter until terminated pursuant to Section 6.2.
6.2 TERMINATION. This Agreement may only be terminated as follows:
(A) Upon the mutual written agreement of the Parties.
(B) At the election of either Party, if the other Party commences a
voluntary case or other proceeding seeking liquidation, reorganization, or
other relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or taking possession by any such official in any involuntary
case or other proceeding commenced against it, or makes a general
assignment for the benefit of creditors, or fails generally to pay its
debts as they become due, or take any corporate action to authorize any of
the foregoing.
(C) At the election of either Party, if an involuntary case or other
proceeding is commenced against the other Party seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official for such Party or any substantial part of its
property, and such involuntary case or other proceeding remains undismissed
and unstayed for a period of one hundred twenty (120) days.
(D) At the election of Toshiba, if the Distribution Agreement is
terminated by
Exhibit 99.3
12
ACC in accordance with Section 17.2(f) thereof and, at the time of
such termination, Toshiba is in material compliance with all of its
obligations under the Distribution Agreement.
(E) At the election of Toshiba, if the Distribution Agreement is
terminated by Toshiba in accordance with Section 17.2(e) thereof.
(F) At the election of Audiovox, if the Distribution Agreement is
terminated by Toshiba in accordance with Section 17.2(f) thereof and, at
the time of such termination, ACC is in material compliance with all of its
obligations under the Distribution Agreement.
6.3 EFFECT. A Party may exercise an election to terminate this Agreement
pursuant to Section 6.2(b), 6.2(c), 6.2(d), 6.2(e) or 6.2(f), as applicable, by
giving ACC and the other Party ten (10) days notice in accordance with Section
8.4. In the event of the termination of this Agreement pursuant to Section 6.2,
this Agreement shall cease to have further force or effect and no Party shall
have any liability to any other Party in respect to this Agreement, provided
that:
(A) Termination of this Agreement for any reason shall not release any
Party from any liability which has already accrued as of the effective date
of such termination, and shall not constitute a waiver or release of, or
otherwise be deemed to prejudice or adversely affect, any rights, remedies
or claims, whether for damages or otherwise, which a Party may have
hereunder, at Law, equity or otherwise or which may arise out of or in
connection with such termination; and
(B) Section 4.1, Section 7 and Section 8 (other than Section 8.1)
shall survive such termination and remain in full force and effect.
7. PUT AND CALL RIGHTS UPON TERMINATION.
7.1 TOSHIBA PUT RIGHT. In the event that Toshiba elects to terminate this
Agreement in accordance with Section 6.2(d) or 6.2(e), Toshiba shall have the
right (exercisable by written notice delivered within thirty (30) days following
the termination hereof) to require Audiovox to purchase all (but not less than
all) of the Securities of ACC then held by Toshiba for an amount equal to the
fair market value of such Securities, as determined pursuant to Section 7.3.
Upon delivery of such notice, Audiovox shall be bound to purchase and Toshiba
shall be bound to sell Toshiba's Securities for such fair market value as
provided in this Section 7.
7.2 AUDIOVOX CALL RIGHT. In the event that Audiovox elects to terminate
this Agreement in accordance with Section 6.2(f), Audiovox shall have the right
(exercisable by written notice delivered within thirty (30) days following the
termination hereof) to require Toshiba to sell to Audiovox all (but not less
than all) of the Securities of ACC then held by Toshiba for an amount equal to
the fair market value of such Securities, as determined pursuant to Section 7.3.
Upon delivery of such notice, Audiovox shall be bound to purchase and Toshiba
shall be bound to sell Toshiba's Securities for such fair market value as
provided in this Section 7.
7.3 DETERMINATION OF FAIR MARKET VALUE. In case of Toshiba's exercise of
its put right pursuant to Section 7.1 or Audiovox's exercise of its call right
pursuant to Section 7.2, the
Exhibit 99.3
13
fair market value of Toshiba's Securities shall be determined as follows:
(A) As soon as practicable after delivery of the put or call notice,
as applicable, the Parties shall engage in mutual good faith discussions to
determine the fair market value of Securities to be purchased or sold.
(B) If the Parties are unable to agree on the fair market value of
Toshiba's Securities within fifteen (15) days after delivery of the
applicable notice, then each Party shall select an independent appraiser
with international experience to determine the fair market value of
Toshiba's Securities. Each appraiser will promptly render a written good
faith appraisal of the fair market value of Toshiba's Securities in light
of all relevant factors (if the appraiser provides a valuation range, the
midpoint of the range shall be the fair market value of the appraised
Securities). Each appraiser shall be instructed to complete its appraisal
as promptly as possible and, in any event, within thirty (30) days after
its appointment. The appraisals shall be submitted to the Parties
simultaneously. The Parties shall take all actions reasonably necessary to
cause the appraisers to complete their appraisals in an expeditious and
competent manner within such period.
(C) The fair market value of Toshiba's Securities to be purchased
shall be the average of the two appraisals submitted by the independent
appraisers under Section 7.3(b); provided that, if the two appraisals
differ in value by more than twenty percent (20%), the two independent
appraisers shall jointly appoint a third independent appraiser, who will
promptly render a written good faith appraisal of the fair market value of
Toshiba's Securities in light of all relevant factors and in accordance
with the timing and procedures contained in Section 7.3(b). In case of an
appraisal by a third independent appraiser, the fair market value of the
Securities to be purchased shall be the average of (1) the appraisal
submitted by the third independent appraiser and (2) the appraisal
submitted under Section 7.3(b) that is closest in value to the appraisal of
the third independent appraiser. Any determination of fair market value
pursuant to this Section 7.3 shall be conclusive and binding upon the
Parties for purposes of determining the fair market value of Toshiba's
Securities to be purchased under this Section 7. Each Party shall bear
fifty percent (50%) of the costs of any appraisal pursuant to this Section
7.3.
7.4 CLOSING OF PUT OR CALL EXERCISE. The Parties shall consummate the
purchase and sale of Toshiba's Securities under this Section 7 as soon as
practicable following the determination of the appraised purchase price pursuant
to Section 7.3 by Toshiba's receipt of cash via wire transfer of immediately
available funds equal to the purchase price. At Audiovox's option some or all of
Toshiba's Securities may be purchased by ACC, provided that Audiovox shall
remain responsible for the timely payment of the purchase price for Toshiba's
Securities.
8. GENERAL PROVISIONS.
8.1 VOTING AGREEMENT. Each Party shall hold and exercise all voting rights
with respect to its Securities subject to and in accordance with the provisions
of this Agreement, and to the extent legally permissible shall cause the
Directors nominated by such Party to act to effect the terms hereof.
Exhibit 99.3
14
8.2 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 8.3
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.
8.3 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 Party. 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 any Party.
(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. Each Party shall appoint one (1) arbitrator, and the two (2)
arbitrators appointed by the Parties 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) Each Party 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 (notwithstanding Section 6.2) the termination of this
Agreement. Notwithstanding the foregoing, either Party 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.
8.4 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:
Exhibit 99.3
15
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
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 8.4.
8.5 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
Exhibit 99.3
16
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.
8.6 AMENDMENTS. This Agreement may be amended or modified only by a written
instrument signed by each Party.
8.7 WAIVER. Any waiver by a Party of an instance of the other Party's or
ACC'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 the other Party's or ACC's noncompliance hereunder.
8.8 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 and ACC. Nothing in this Agreement shall confer any rights upon
any Person other than the Parties, ACC and their respective successors and
permitted assigns. Neither Party nor ACC may assign this Agreement or its rights
hereunder to any Person without the written consent of the other Party; provided
that the registration rights provided for in Section 3.5 shall be exercisable by
any holders of Registrable Shares, including after transfers of Registrable
Shares. 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 8.8 shall be void and of no effect.
8.9 CONSTRUCTION. This Agreement has been negotiated by the Parties, ACC
and their respective counsel and shall be fairly interpreted in accordance with
its terms and without any strict construction in favor of or against either of
the Parties or ACC.
8.10 INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT. Unless the context
shall 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.
Exhibit 99.3
17
8.11 DISCLAIMER OF AGENCY. This Agreement shall not constitute any Party or
ACC as a legal representative or agent of any other Party or ACC, nor shall a
Party or ACC 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 the other Party, ACC or any of their respective Affiliates.
8.12 LANGUAGE. The Parties and ACC have negotiated this Agreement in the
English language, which shall be the governing language of this Agreement.
8.13 RELATIONSHIP OF THE PARTIES AND ACC. Nothing contained in this
Agreement is intended to, or shall be deemed to, create a partnership or joint
venture relationship among the Parties, ACC or any of their respective
Affiliates for any purpose, including tax purposes. Neither of the Parties, ACC
nor any of their respective Affiliates will take a position contrary to the
foregoing.
8.14 SPECIFIC PERFORMANCE. The Parties and ACC agree that each other Party
and ACC, as applicable, shall be entitled to obtain an injunction or injunctions
in accordance with the dispute resolution procedures contained in Section 8.3 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. Neither Party nor ACC shall be liable
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 or ACC,
as applicable.
8.16 ENTIRE AGREEMENT. The provisions of this Agreement and the other
Transaction Agreements set forth the entire agreement and understanding between
the Parties and ACC as to the subject matter hereof and supersede all prior
agreements, oral or written, and all other prior communications between the
Parties and ACC relating to the subject matter hereof. Without limiting the
generality of the foregoing, Articles VIII (Information Rights), IX (Public
Offering), X (Right of First Refusal) and XI (Registration Rights) of the Stock
Purchase Agreement dated March 15, 1999 between the Parties are hereby
terminated and shall cease to have further force or effect.
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 99.3
18
IN WITNESS WHEREOF, the Parties and ACC have caused their respective duly
authorized representatives to execute this Stockholders 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 99.3
19
ANNEX I
CERTAIN DEFINITIONS
"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 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.
"COMMON STOCK" shall mean collectively the Class A Common Stock of the
Company, no par value per share, and the Class B Common Stock of the Company, no
par value per share (in each case as the same may be reclassified, recapitalized
or similarly affected).
"COMPANY INTEREST" means, as to any Party at any time, the number of shares
of Fully Diluted Common Stock that such Party owns at such time, divided by the
total number of shares of Fully Diluted Common Stock at such time.
"CONTRACT" means any contract, agreement, lease, plan, instrument or other
document,
Exhibit 99.3
20
commitment, arrangement, undertaking, practice, understanding or authorization,
in each case whether or not in writing.
"CONTROL GROUP" of a Party means the Party and its direct and indirect
wholly-owned subsidiaries.
"DISTRIBUTION AGREEMENT" means the Distribution Agreement dated as of the
date hereof between Toshiba and ACC.
"FULLY DILUTED" means at any time, with respect to Common Stock and without
duplication, (a) all shares of Common Stock then outstanding and (b) all shares
of Common Stock issuable upon the exercise of all options, warrants, convertible
securities, exchangeable securities and other outstanding rights to acquire
Common Stock, with or without consideration, but only to the extent that the
applicable Party is then entitled to exercise such rights to acquire Common
Stock pursuant to the terms of such rights.
"GOVERNMENT APPROVAL" means any Approval of, to or with any Governmental
Authority.
"GOVERNMENTAL AUTHORITY" means any domestic or foreign government,
governmental authority, court, tribunal, agency or other regulatory,
administrative or judicial agency, commission or organization, and any
subdivision, branch or department of any of the foregoing.
"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.
"LIEN" means 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.
"ORGANIZATIONAL DOCUMENTS" of a Person means its Certificate of
Incorporation, Bylaws or other organizational documents.
"PERSON" means a natural individual, Governmental Authority, partnership,
firm, corporation or other entity.
"PROCEEDING" means any action, litigation, arbitration, suit, claim,
proceeding or investigation or review of any nature, civil, criminal, regulatory
or otherwise, before any Governmental Authority.
"QUALIFIED IPO" means a public offering of Common Stock by ACC registered
under the Securities Act in which (i) the proceeds received by ACC for the sale
of shares is at least Fifty Million Dollars ($50,000,000) net of underwriting
discounts and commissions, or (ii) Common Stock sold to public investors (which
for purposes of clarification shall not include Audiovox or
Exhibit 99.3
21
its Affiliates or Associates) represents at least ten percent (10%) of the
outstanding Common Stock upon the consummation of the offering.
"SECURITIES" means shares of Common Stock, other equity securities of ACC,
and options, warrants, convertible securities, exchangeable securities or other
rights to acquire Common Stock or other equity securities of ACC.
"STRATEGIC PERSON" means any of Motorola, Nokia, Ericsson, Kyocera, Sanyo,
Sharp or other similar companies that compete with a Party in the Business.
"TRANSACTION AGREEMENTS" means this Agreement; the Securities Purchase
Agreement; the Distribution Agreement; the Employment Agreement dated as of the
date hereof between ACC and Philip Christopher; the Trademark License Agreement
dated as of the date hereof between Audiovox and ACC; the Shared Services
Agreement dated as of the date hereof between Audiovox and ACC; the
Non-Negotiable Subordinated Convertible Promissory Note by ACC to Toshiba; and
the Intercompany Note.
Exhibit 99.3
22
EXHIBIT 1.6(A)
DUTIES OF TOSHIBA'S OFFICER DESIGNEES
Executive Vice President
Supervises the Chief Technology Officer for Toshiba Products and the Vice
President for Merchandizing -- Toshiba Products.
Participates in the decision making of ACC, including through executive
meetings.
Chief Technology Officer for Toshiba Products
Responsible for technology matters for Toshiba Products.
Represents ACC on matters relating to Toshiba technology in coordination
with Hino Works and other applicable Toshiba facilities.
Vice President for Merchandizing -- Toshiba Products
Coordinates and participates in the production, sale and inventory of
Toshiba Products.
Coordinates and participates in product planning for Toshiba Products,
including concept proposals for Toshiba Products.
Supports sale promotion of Toshiba Products.
Exhibit 99.3
23