Exhibit 99(c)
OPTION AGREEMENT
dated as of May 9, 1995
between
AUDIOVOX CORPORATION
and
XX. XXXX X. XXXXXX
OPTION AGREEMENT
Agreement, dated as of this 9th day of May, 1995, by
and between Audiovox Corporation, a Delaware corporation with an
office at 000 Xxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 (the
"Company") and Xx. Xxxx X. Xxxxxx ("Xxxxxx"). All capitalized
terms used herein and not otherwise defined shall have the
meaning set forth in the Warrant Agreement, dated as the date
hereof (the "Warrant Agreement"), between the Company and
Continental Stock Transfer & Trust Company as Warrant Agent.
W I T N E S S E T H :
WHEREAS, Xxxxxx has agreed to grant the Company options
to purchase up to 1,668,875 shares of Class A Common Stock of the
Company;
WHEREAS, the Company and Xxxxxx wish to define the
terms and provisions of the Options;
NOW, THEREFORE, in consideration of the premises and
the mutual agreements set forth herein, the parties hereto hereby
agree as follows:
Section 1. GRANT OF OPTION.
Xxxxxx hereby grants to the Company or its lawful
assigns, options (the "Options") to purchase, in whole or in
part, up to 1,668,875 shares of Class A Common Stock of the
Company which shares are in certificate number AVC 2956 and is
legended as in accordance with Section 3 (the "Option Shares");
provided, that the Company may, from time to time, only exercise
Options to acquire that number of Option Shares as are purchased
under the Company's warrants (the "Warrants") issued pursuant to
the Warrant Agreement and that the Company must execute such
Option or Options within 60 business days of the receipt of the
Certificate (as defined in Section 3 below). For purposes of
this Agreement, the term Class A Common Stock means the
Company's Class A Common Stock, par value $.01 per share or any
class of securities into which all of such Class A Common Stock
has been converted or combined. Each Option entitles the
Company, at any time on any Business Day during the period
commencing May 10, 1995 and ending 5:00 p.m., New York City time,
on March 15, 2001 (the "Expiration Date") to purchase from Xxxxxx
one share of the Option Shares, upon notice to Xxxxxx, at the
Option Exercise Price (as defined in Section 3 below).
Section 2. Exercise.
In order to exercise any or all of the Options, the Company
shall deliver a option exercise form to Xxxxxx on or prior to the
Expiration Date in substantially the following form:
OPTION EXERCISE FORM
Audiovox Corporation hereby irrevocably elects to exercise
________ of its Options under the Option Agreement dated as
of ______, 1995, between Audiovox and Xx. Xxxx X. Xxxxxx and
purchase the whole number of shares issuable and deliverable
upon exercise of such Options, and will, simultaneously with
delivery of such shares, tender payment for such shares by
certified check or wire transfer, as acceptable to Xx.
Xxxxxx, in the lawful currency of the United States of
America in immediately available funds which as of the time
of payment is legal tender for payment of public or private
debts. Attached to this Notice of Election are copies of
notices of exercise of Warrants with respect to shares of
Class A Common Stock equal to the number of Options being
exercised pursuant to this Notice of Election.
Options shall be deemed to have been exercised immediately
prior to the close of business on the date of the delivery of the
Option exercise form for exercise in accordance with the
foregoing provisions, and at such time the Company shall be
deemed to be the owner of the Option Shares underlying the
Options at the close of business on the date of such exercise,
notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such
Option Shares shall not then be actually delivered to the
Company. Xxxxxx agrees to deliver the Option Shares to the
Company at its principal executive offices, delivering the number
of Option Shares purchased by the Company, including delivering
the appropriate stock certificates with stock powers duly
endorsed in blank, upon exercise of the Option by the close of
business within ten days after such exercise. In determining
which share certificate for the Option Shares to be delivered,
Xxxxxx shall deliver the share certificate or certificates with
the lowest share certificate number or numbers (as set forth in
Section 4(a)) until a sufficient number of Option Shares have
been delivered. Simultaneously therewith, the Company agrees to
deliver payment of the exercise price of the Options by certified
check or wire transfer, as acceptable to Xxxxxx in the lawful
currency of the United States of America in immediately available
funds which as of the time of payment is legal tender for payment
of public or private debts.
No fractional Option Shares shall be sold upon exercise of
any Options. Accordingly, the Company may only exercise Options
in respect of a whole number of Option Shares.
In the case of the exercise of less than all the Options
represented hereby or the release of any Option Shares, Exhibit A
to this Option Agreement shall be amended to specify the number
of Options exercised or number of Option Shares released and the
number of Option Shares remaining.
Prior to the exercise of any Option represented hereby,
Xxxxxx shall be entitled to all rights of a stockholder of the
Company with respect to the Option Shares underlying the Option,
including, without limitation, the right to vote or to receive
dividends or other distributions.
Section 3. Option Exercise Price
The exercise price of each Option Share is (a) $7-1/8
per share plus, (b) in the event such amount is due and payable
hereunder, an amount equal to the Tax Amount Per Share. The Tax
Amount Per Share shall be calculated in accordance with the tax
rates existing on the date of exercise in accordance with the
following formula:
(A-B) x C + (BxD)
__________________
1-A
where A equals Xx. Xxxxxx'x combined marginal U.S. federal, state
and local ordinary income tax rates after reduction of the
federal rate for the benefit of the deductions for state and
local taxes; B equals Xx. Xxxxxx'x combined marginal U.S.
federal, state and local capital gains tax rates after reduction
of the federal rate for the benefit of the deductions for state
and local taxes; C equals the per share Warrant Exercise Price
without giving effect to any adjustment thereof resulting from a
Registration Default; and D equals Xxxxxx'x per share adjusted
tax basis in the Option Shares purchasable by the Company
pursuant to the Xxxxxx Option and includes any stepped up basis
of Xx. Xxxxxx'x Successors (as defined in Section 6 below).
The Tax Amount Per Share will be payable upon receipt from
Xxxxxx of a certificate (the "Certificate"), prepared in good
faith as promptly as reasonably practicable after receipt of the
option exercise form, stating that a Tax Amount Per Share is
required to reimburse Xxxxxx for additional taxes in accordance
with the foregoing formula, setting forth the calculation of the
Tax Amount Per Share and confirming that Xxxxxx will file his tax
return (the "Tax Return") with respect to the relevant period in
accordance with the facts set forth in the Certificate. The Tax
Amount Per Share will be due by certified check or wire transfer,
as acceptable to Xxxxxx (in the lawful currency of the United
States of America in immediately available funds which as of the
time of payment is legal tender for payment of public or private
debts), five business days prior to the date
the Tax Return is due to be filed as set forth in the
Certificate. Xxxxxx shall also send a notice to the Company
promptly after filing the Tax Return confirming that the
information in the Certificate remains accurate. In the event
that, for any reason (including (i) the receipt of the Option
Exercise Price ultimately being treated for federal income tax
purposes as the distribution of a dividend rather than as payment
for the sale of the Option Shares (or vice-versa) and (ii) a
change in applicable tax rates), the actual tax paid by Xxxxxx
with respect to receipt of the Option Exercise Price differs from
the amount set forth in the Certificate, the excess or shortfall
shall be paid by the Company to Xxxxxx or by Xxxxxx to the
Company, as the case may be, promptly upon determination of such
excess or shortfall.
Section 4. Legends on Stock Certificates
(a) Xxxxxx agrees to cause 1,668,875 of the Option Shares
represented by Share Certificate No. AVC 2956 (1,668,875 shares)
to be legended at all times until the expiration of the Options
with the following legend:
THE SHARES OF CLASS A COMMON STOCK REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE RIGHTS OF AUDIOVOX
CORPORATION (THE "COMPANY") UNDER AN OPTION AGREEMENT
DATED AS OF May 9, 1995 (THE "OPTION AGREEMENT"), BETWEEN
THE COMPANY AND XX. XXXX X. XXXXXX. ANY PERSON ACQUIRING
THESE SHARES SHALL BE ACQUIRING SUCH SHARES SUBJECT TO
THE RIGHTS OF THE COMPANY UNDER THE OPTION AGREEMENT AND
BY ACCEPTANCE OF THIS CERTIFICATE ACKNOWLEDGES THAT SUCH
PERSON IS AWARE OF SUCH RIGHTS AND CONFIRMS THAT IT HAS
ACQUIRED SUCH SHARES SUBJECT TO THE OBLIGATIONS AND
BENEFITS OF XX. XXXXXX UNDER THE OPTION AGREEMENT WITH
RESPECT TO THESE SHARES. A COPY OF THE OPTION AGREEMENT
IS ON FILE WITH THE COMPANY.
(b) Upon expiration of the Options or, with respect to that
number of Option Shares equal to the number of shares of Class A
Common Stock underlying the Warrants which have been exercised
and with respect to which the Board of Directors of the Company
has determined not to exercise the Options, at the request of
Xxxxxx, the Company shall remove such legend and issue new shares
of Class A Common Stock representing shares of Class A Common
Stock underlying the unexercised portion of the Options. The
Company hereby agrees to notify Xxxxxx if it elects not to
exercise the Xxxxxx Option upon the exercise of a Warrant or
Warrants. In determining which share certificate shall have its
legend removed, the Company shall cause the Transfer Agent for
the Class A Common Stock to remove such legend from the share
certificate or
certificates with the lowest share certificate number or numbers
(as set forth in Section 4(a)) until a sufficient number of
Option Shares have had their legends removed. The Company shall
cause the Transfer Agent for the Class A Common Stock to issue
new share certificates with respect to any Option Shares which
must be legended if a portion of the share certificate underlying
such Option Shares may have its legend removed in accordance with
the prior sentences. For purposes of this Section and Section 2,
if a new share certificate is issued in respect for any Option
Shares for any reason such share certificate shall be deemed to
have the share certificate number which the Option Shares had on
the date of this Option Agreement as set forth in Section 4(a)
whether or not such new share certificate has the same number.
If a certificate representing Option Shares is divided into more
than one certificate, each such certificate shall be deemed to
have the share certificate number which the Option Shares had on
the date of this Option Agreement and the Company shall exercise
its Option, or remove the legend from such certificate, pro rata
with respect to such Option Shares as if such certificate were
still one certificate.
Section 5. Adjustment of Exercise Price.
The Exercise Price and the number of Option Shares shall be
subject to adjustment and modification as follows in the
circumstances provided:
(a) In case the Company shall pay or make a dividend or
other distribution on the Option Shares in shares of Class A
Common Stock, the Exercise Price in effect at the opening of
business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend
or other distribution shall be reduced by multiplying such
Exercise Price by a fraction of which the numerator shall be the
number of Option Shares outstanding at the close of business on
the date fixed for such determination and the denominator shall
be the sum of such number of Option Shares and the total number
of shares of Class A Common Stock constituting a stock dividend
or other distribution on such Option Shares, such reduction to
become effective immediately after the opening of business on the
day following the date fixed for such determination.
(b) In case the outstanding Option Shares shall be
subdivided into a greater number of shares of Class A Common
Stock, the Exercise Price in effect at the opening of business on
the day following the day upon which such subdivision becomes
effective shall be proportionately reduced, and, conversely, in
case the outstanding Option Shares shall be combined into a
smaller number of shares of Class A Common Stock, the exercise
price in effect at the opening of business on the day following
the day upon which such combination becomes effective shall be
proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of
business on the day following the day upon which such subdivision
or combination becomes effective.
(c) The reclassification of the Option Shares into
securities other than Common Stock (other than any
reclassification upon a consolidation or merger to which Section
8 applies) shall be deemed to involve (i) a distribution of such
securities other than Class A Common Stock to the holders of the
Option Shares (and the effective date of such reclassification
shall be deemed to be "the date fixed for the determination of
stockholders entitled to receive such distribution" and "the date
fixed for such determination" within the meaning of paragraph (a)
of this Section), and (ii) if the number of Option Shares
outstanding is changed as a result of such reclassification, then
a subdivision or combination, as the case may be, of the number
of Option Shares outstanding immediately prior to such
reclassification into the number of Option Shares outstanding
immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon which such
subdivision becomes effective" or "the day upon which such
combination becomes effective," as the case may be, and "the day
upon which such subdivision or combination becomes effective"
within the meaning of paragraph (b) of this Section).
(d) Xxxxxx may, in his sole discretion, reduce the Exercise
Price for the Options, in addition to any reductions required by
paragraphs (a) or (b) of this Section 5.
(e) No adjustment will be made in the Exercise Price as
required by paragraphs (a) or (b) of this Section unless such
adjustment would require a change of at least 1% in the Exercise
Price then in effect, but any adjustment that would otherwise be
required to be made shall be carried forward and taken into
account in any subsequent adjustment.
(f) If any adjustment in the Exercise Price is made
pursuant to a provision of this Section 5, no further adjustment
in the Exercise Price shall be made on account of the same event.
(g) In the event of an adjustment in the Exercise Price
pursuant to this Section 5 (an "Exercise Price Adjustment"), the
number of Option Shares issuable upon exercise of the Options
shall also be adjusted so that the same shall equal (i) the
number of shares of Option Shares exercisable immediately prior
to the Exercise Price Adjustment, multiplied by (ii) a fraction,
of which the numerator shall be the Exercise Price in effect
immediately prior to the Exercise Price Adjustment, and the
denominator shall be the Exercise Price immediately following
such Exercise Price Adjustment. Any adjustment to the number of
shares of Option Shares pursuant to this paragraph (g) shall
become effective at the same time as such Exercise Price
Adjustment.
Section 6. Transfer of Class A Common Stock.
During the Exercise Period, Xxxxxx may sell, transfer,
pledge, encumber or subject to any lien or restriction, or assign
or otherwise dispose of, or enter into any contract,
option or other arrangement or understanding with respect to the
disposition of any Option Shares (collectively, a "Transfer") to
any Person (a "Successor") by contract, gift, through his estate
upon his death or in any other manner; provided, that Xxxxxx
notifies the Company of such Transfer and the number or numbers
of the Option Shares certificate or certificates transferred and
the Option Shares transferred to such Successor contain the
legend set forth in Section 4(a). Any Successor will acquire
such Option Shares subject to the terms of this Option Agreement
and, by receipt of the Option Shares, such Successor shall be
deemed to have acknowledged that it is subject to the obligations
of Xxxxxx with respect to the Option Shares acquired by such
Successor and shall be entitled to the benefits of Xxxxxx for
purposes of the Agreement hereunder and shall be deemed a party
hereto. The name of such Successor shall be substituted for
Xxxxxx with respect to the Option Shares acquired by the
Successor was as if such Successor an initial party hereto.
A Successor may Transfer to any Person (a "Subsequent
Successor") by contract, gift, through his estate upon his death
or in any other manner; provided, that such Successor notifies
the Company of such Transfer and the number or numbers of the
Option Shares certificate or certificates transferred and the
Option Shares transferred to such Subsequent Successor contain
the legend set forth in Section 4(a). Any Subsequent Successor
will acquire such Option Shares subject to the terms of this
Option Agreement and, by receipt of the Option Shares, such
Subsequent Successor shall be deemed to have acknowledged that it
is subject to the obligations of the Successor with respect to
the Option Shares acquired by such Subsequent Successor and shall
be entitled to the benefits of the Successor hereunder and shall
be deemed a party hereto. The name of such Subsequent Successor
shall be substituted for the Successor for purposes of the
Agreement with respect to the Option Shares acquired by the
Subsequent Successor as if such Subsequent Successor was an
initial party hereto.
Section 7. Taxes on Exercises.
The Company shall pay any and all taxes that may be payable
in respect of the issue or delivery of Option Shares of Class A
Common Stock on exercise of the Options pursuant hereto, except
that Xxxxxx shall be required to pay any tax which may be payable
in respect of the income of Xxxxxx.
Section 8. Provisions in Case of Consolidation, Merger or Sale
of Assets
In case of any consolidation of the Company with, or merger
of the Company into, any other Person, any merger of another
Person into the Company (other than a merger which does not
result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Class A Common Stock of the
Company) or any sale or transfer of all or substantially all of
the assets of the Company (each, a "Transaction"), the Company
and Xxxxxx shall and each shall cause the Person formed by such
Transaction or which acquires such assets, as the case may be
(the "Acquiror"), to execute and deliver to, prior to the
consummation of the Transaction, an agreement (the "Acquiror
Agreement") providing that the Company (or its successor) shall
have the right, during the period the Options shall be
exercisable as specified in Section 1, to exercise such Options
only into the kind and amount of securities, cash and other
property (collectively, the "Consideration") receivable upon such
Transaction by a holder of the number of Option Shares into which
such Option might have been exercised immediately prior to such
Transaction, assuming such holder of Class A Common Stock of the
Company (i) is not a Person with which the Company consolidated
or into which the Company merged or which merged into the Company
or to which such sale or transfer was made, as the case may be (a
"constituent person"), or an affiliate of a constituent person
and (ii) failed to exercise his or her rights of election, if
any, as to the kind or amount of Consideration receivable upon
such Transaction (provided that if the kind or amount of
Consideration receivable upon such Transaction is not the same
for each share of Class A Common Stock held immediately prior to
such Transaction by Persons other than a constituent Person or an
affiliate thereof and in respect of which such rights of election
shall not have been exercised ("non-electing share"), then for
the purpose of this Section the kind and amount of consideration
receivable upon such Transaction by each non-electing share shall
be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares). Xxxxxx shall not exchange
the Option Shares for securities of the Acquiror pursuant to the
transaction without the consent of the Company. Such agreement
shall provide for adjustments upon the occurrence of events with
respect to the Acquiror similar to the events described in
Section 5(a) and (b) hereof which, for events subsequent to the
effective date of such Agreement, shall be as nearly equivalent
as may be practicable to the adjustments provided for in this
Article. The above provisions of this Section shall similarly
apply to successive Transactions. The Company shall also cause
the Acquiror Agreement to contain provisions that would enable
Xxxxxx to be able to comply with the provisions of this
Section 8.
Section 9. No Change of Agreement Necessary.
Irrespective of any adjustment in the Exercise Price or in
the number or kind of shares or other property issuable upon
exercise of the Options, this Agreement need not be amended but
may continue to express the same Exercise Price and number and
kind of shares issuable upon exercise per Warrant as are stated
in the Warrant Certificates initially issued pursuant to this
Agreement.
Section 10. Amendment of Agreement.
This agreement may only be amended with the written consent
of the Company and Xxxxxx or their successors or assigns.
Section 11. Counterparts.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed and original, and all of which
together shall constitute the same instrument.
SECTION 12. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAW PROVISIONS THEREOF.
Section 13. Descriptive Headings.
The descriptive headings of this Agreement are for
convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement.
Section 14. Notices.
Any notice, request or other document permitted or required
hereunder to be given to any party shall be sufficiently given if
in writing and mailed first-class postage prepaid, to such party,
at its principal address. Any notice required hereunder to be
given to any other party may be waived in writing by the party
entitled to receive such notice, either before or after the
event, and such waiver shall be the equivalent of such notice.
Section 15. Successors and Assigns.
All covenants and agreements in this Agreement by Xxxxxx
shall survive the death or incapacity of Xxxxxx and shall bind
his successors whether so expressed or not. All covenants and
agreements in this Agreement of the Company shall bind its
successors and assigns, whether expressed or not. This agreement
may not be assigned by the Company, except to an Acquiror in
connection with a transaction if the Options are then exercisable
for securities of the Acquiror. This agreement may be assigned
by Xxxxxx or any Successors pursuant to the provisions of
Section 6 hereto.
Section 16. Separability.
In case any provision in this Option Agreement shall be
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
Section 17. Persons Having Rights under Agreement.
Nothing in this Option Agreement, expressed or implied, is
intended, or shall be construed, to give any person, other than
the parties hereto and their successors
hereunder, any benefit, right, remedy or claim under or by reason
of this Option Agreement.
Section 18. Specific Performance.
Xxxxxx acknowledges that this Agreement and the Option
Shares are unique and that the Company will not have an adequate
remedy at law if Xxxxxx breaches any covenant herein or fails to
perform any of his obligations hereunder. Accordingly, the
parties agree that the Company shall have the right, in addition
to any other rights and remedies which such party may have, to
specific performance and equitable injunctive relief if Xxxxxx
shall fail, or threaten to fail, to perform any of his
obligations under this Agreement.
The Company acknowledges that this Agreement and the Option
Shares are unique and that Xxxxxx will not have an adequate
remedy at law if the Company breaches any covenant herein or
fails to perform any of his obligations hereunder. Accordingly,
the parties agree that Xxxxxx shall have the right, in addition
to any other rights and remedies which such party may have, to
specific performance and equitable injunctive relief if the
Company shall fail, or threaten to fail, to perform any of his
obligations under this Agreement.
IN WITNESS WHEREOF, the Company and Xxxxxx
have caused this Agreement to be executed as of the date first
set forth above.
AUDIOVOX CORPORATION
By /s/ C. Xxxxxxx Xxxxxx
_________________________
Name:
Title:
XXXX X. XXXXXX
/s/ Xxxx X. Xxxxxx
_________________________
Exhibit A
Number of Options Number of Options Company Xxxxxx
Date of Action Prior to Exercise Exercised or Option Remaining Options Signature Signature
Shares Released
1,668,875
