CONFORMED COPY
UTSTARCOM, INC.
0000 Xxxxxx Xxx Xxxxxxx
Xxxxxxx, XX 00000
November 1, 2004
Xxxxxxx X. Xxxxxx
Audiovox Corporation
000 Xxxxxx Xxxx.
Xxxxxxxxx, XX 00000
Xxxxxx Xxxxxxxxxxx
Audiovox Communications Corp.
000 Xxxxxxxx Xxxx.
Xxxxxxxxx, XX 00000
Gentlemen:
Reference is hereby made to the Asset Purchase Agreement, dated as of June 11,
2004 (the "Purchase Agreement"), by and among Audiovox Communications Corp.,
Quintex Mobile Communications Corporation, Audiovox Communications Canada Co.,
UTStarcom, Inc., UTStarcom Canada Company and, with respect to specified
sections thereof, Audiovox Corporation. Terms used but not defined herein shall
have the respective meanings assigned to such terms in the Purchase Agreement.
References to Sections and definitions are those contained in the Purchase
Agreement. Please indicate your agreement to the following by signing below.
1. Closing Date. The Closing will occur on November 1, 2004, as soon as
practicable following the Audiovox Stockholders Meeting.
2. Date of Closing Balance Sheet.
a. Definition of Closing Statement of Inventories: The phrase "as of 5:30
p.m. EST on the date of the Closing" in the definition of Closing
Statement of Inventories shall be amended to read as follows:
"as of 11:59 p.m. New York City time on October 31, 2004";
b. Definition of Closing Statement of Net Assets: The phrase "as of the
close of business on the date of the Closing" in the definition of
Closing Statement of Net Assets shall be amended to read as follows:
"as of 11:59 p.m. New York City time on October 31, 2004";
c. Definition of Excluded Taxes: Clause (ii) of the second sentence of
the definition of "Excluded Taxes" shall be amended to read as
follows:
Exhibit 99.1
Xxxxxxx X. Xxxxxx
Xxxxxx Xxxxxxxxxxx Xxxx 2 November 1, 2004
"Taxes (other than Property Taxes) relating to the Purchased
Assets for the Pre-Closing Tax Period shall be computed as if
such taxable period ended at 11:59 p.m. New York City time on
October 31, 2004";
d. Definition of Post-Closing Tax Period: The definition of Post-Closing
Tax Period shall be amended to read:
"any taxable period (or portion thereof) beginning on November 1,
2004";
e. Definition of Pre-Closing Tax Period: The definition of Pre-Closing
Tax Period shall be amended to read:
"any taxable period (or portion thereof) ending on or prior to
October 31, 2004";
f. Definition of Preliminary Statement of Net Assets: The phrase "as of
the close of business on the date of the Closing" in the definition of
Preliminary Statement of Net Assets shall be amended to read:
"as of 11:59 p.m. New York City time on October 31, 2004";
g. Definition of Receivables Listing: The phrase "as of 5:30 p.m. EST on
the date of the Closing" in the definition of Receivables Listing
shall be amended to read:
"as of 11:59 p.m. New York City time on October 31, 2004";
h. Straddle Period: the definition of Straddle Period shall be amended to
read:
"means any taxable period beginning prior to and ending on or
after November 1, 2004;
i. Section 2.01(b)(viii): Section 2.01(b)(viii) shall be amended to read:
"all Receivables of the Business (except for the Acquired
Receivables) as of 11:59 p.m. on October 31, 2004";
j. Section 2.07(a)(ii): The phrase "as of the close of business on the
date of the Closing" shall be amended to read:
"as of 11:59 p.m. New York City time on October 31, 2004";
k. Section 5.14: the phrase "first ending after the Closing" in the
fourth sentence of Section 5.14 shall be amended to read:
"first ending after November 1, 2004;"
l. Section 5.18(a): The phrase "12:01 A.M on the day after the date of
the Closing" in Section 5.18(a) shall be amended to read:
Exhibit 99.1
Xxxxxxx X. Xxxxxx
Xxxxxx Xxxxxxxxxxx Xxxx 3 November 1, 2004
"12:01 A.M. New York City time on November 1, 2004";
m. Section 5.18(b): The phrase "12:01 A.M on the day after the date of
the Closing" in Section 5.18(b) shall be amended to read:
"12:01 A.M. New York City time on November 1, 2004";
n. Section 5.18(c): The phrase "from and after the day after the date of
the Closing" in Section 5.18(c) shall be amended to read:
"from and after November 1, 2004".
3. Waiver of 404 Condition. The condition set forth in Section 7.02(j) of the
Purchase Agreement and any obligation of the Seller to satisfy such condition
shall be waived and shall not be applicable. Neither the Seller nor the
Purchaser shall have any obligations pursuant to Section 5.25 of the Purchase
Agreement.
4. Return of Inventory. Exhibit A to the Purchase Agreement (Rules for Valuing
Inventory) shall be amended by adding the following paragraph at the end of such
Exhibit:
"In addition, if, during the Collection Period, a Customer returns
Inventories and the Per Customer Amount of such Customer is reduced,
the Closing Statement of Inventories shall be adjusted upward as if
such Inventories had been owned by the Sellers as of October 31, 2004;
provided, that, notwithstanding anything to the contrary in this
Exhibit A, such returned Inventories shall be valued in accordance
with GAAP at the time such Inventories are returned ."
5. Vendor and Quintex Receivables.
a. Additional Definitions: The Agreement shall be amended to include the
following defined terms in the appropriate alphabetical order:
""Acquired Receivables" means the Quintex Receivables and the
Specified Vendor Receivables."
""Quintex Receivables" means any and all accounts receivable,
notes and other amounts receivable from third parties, including
Vendors, customers and employees, arising from the conduct of the
Business and owed to Quintex, whether or not in the ordinary
course, together with any unpaid financing charges accrued
thereon, as determined in accordance with GAAP."
""Specified Vendor Receivables" means the Receivables of the
Vendors set forth on Exhibit B hereto."
b. Addition of Exhibit B to the Purchase Agreement: A new Exhibit B shall
be added to the Purchase Agreement in the form set forth as Annex A to
this letter.
Exhibit 99.1
Xxxxxxx X. Xxxxxx
Xxxxxx Xxxxxxxxxxx Xxxx 4 November 1, 2004
c. Definition of Interim Statement of Net Assets: The definition of
"Interim Statement of Net Assets" shall be amended to read as follows:
""Interim Statement of Net Assets" means the statement of Net
Assets (including a calculation of the Net Working Capital
Balance) of the Business, dated as of February 29, 2004, a copy
of which is set forth in Section 3.04(a)(i) of the Disclosure
Schedule; provided; however, that the Interim Statement of Net
Assets shall not include the Acquired Receivables."
d. Definition of Net Assets: Clause (a) of the definition of Net Assets
shall be amended to read as follows:
"(a) the sum of Acquired Receivables, Inventories, Prepaids and
other Current Assets, Property, Plant and Equipment, and Other
Long-Term Assets Included in the Purchased Assets and"
e. Definition of Net Working Capital Balance: Clause (a) of the
definition of "Net Working Capital Balance" shall be amended to read
as follows:
"(a) the sum of Acquired Receivables, Inventories and Prepaids
and other Current Assets, and"
f. Definition of Preliminary Net Working Capital Balance: Clause (a) of
the definition of "Preliminary Net Working Capital Balance" shall be
amended to read as follows:
"(a) the sum of Acquired Receivables, Inventories and Prepaids
and other Current Assets, and"
g. Definition of Receivables Listing: The last sentence of the definition
of "Receivables Listing" shall be amended to read as follows:
"The Receivables Listing shall not include any Vendor Receivables
or Acquired Receivables."
h. Section 2.01(iv): Section 2.01(iv) shall be amended to read as
follows:
"the Acquired Receivables and all Inventories;"
b. Section 2.09(a): The proviso in Section 2.09(a) shall be amended to
(x) delete the word "and" prior to the "(ii)" and replace it with ","
and (y) add the following language at the end of the proviso:
" and (iii) the foregoing provisions of this Section 2.09(a)
shall not apply to the Acquired Receivables".
6. Letters of Credit. If, from and after November 1, 2004, any letter of credit
established by Audiovox or Seller for the benefit of the Business is properly
drawn down or used, UTStarcom shall pay to Audiovox or Seller, as applicable,
Exhibit 99.1
Xxxxxxx X. Xxxxxx
Xxxxxx Xxxxxxxxxxx Xxxx 5 November 1, 2004
an amount equal to the amount by which the letter of credit was drawn down or
used. Such payment shall be made by UTStarcom to Audiovox or Seller, as
applicable, by wire transfer of immediately available funds within two Business
Days after receiving notice of such draw down or use to Xxxxx San Xxxxxx or his
designee.
7. Pre-Payments to Vendors. The definition of "Prepaids and other Current
Assets" shall be amended to read:
"(i) pre-payments made to Vendors of the Business related to operating
costs or for raw materials, components, spare parts, supplies, goods,
merchandise or services, which have not been used or provided, (ii)
pre-payments of real estate taxes and (iii) the value of non-cash assets
used in the Business due within one year as determined in accordance with
GAAP.".
8. Assignment; Designation. Pursuant to Section 10.05, the Purchaser has
designated its wholly-owned subsidiary, UTStarcom Personal Communications, LLC
("UPC LLC"), as the entity to which the Seller will convey certain of the
Purchased Assets and which will assume certain of the Assumed Liabilities and
has assigned to UPC LLC certain of its rights and obligations under the Purchase
Agreement. The Purchaser acknowledges and agrees that, notwithstanding such
assignment (or any further assignment by UPC LLC or its assignees), it shall
remain fully liable for all of its obligations as well as the obligations of
Purchaser's Affiliates under the Purchase Agreement, any Ancillary Agreement and
the transactions contemplated by the Purchase Agreement.
9. Third Party Consents. For purposes of clarity, nothing contained in any third
party consent delivered in connection with the Closing or pursuant to the
Purchase Agreement shall modify or amend the provisions of the Purchase
Agreement as between the Seller and the Purchaser.
10. Replication Service. Pursuant to Section 5.22 of the Purchase Agreement,
Audiovox and the Seller were to have completed the Replication Service on or
prior to the Closing. The following portions of the Replication Service will not
be completed by Closing and the Parties hereby agree as follows:
a. Within ninety days of Closing, Audiovox shall separate out Purchaser's
JDE environments (test and production) onto hardware separate from
Audiovox's hardware. The Purchaser's JDE environments shall provide
the same functionality and level of service as ACC was getting as of
the time just prior to Closing and shall also be integrated with the
back-end Webstore that Audiovox will continue to use. The hardware
brand and configuration used will be mutually agreed upon by Purchaser
and Seller in good faith prior to implementation.
b. Within ninety days of Closing, Audiovox shall separate out Purchaser's
Lotus Notes email environment from Audiovox's environment onto a
separate server for Purchaser so that Purchaser's email environment
can be operated and managed independently.
c. Within ninety days of Closing, Audiovox shall separate out the
DNS/DHCP Services for Purchaser onto a separate server so that
Purchaser's network can be independent of Audiovox's network.
Exhibit 99.1
Xxxxxxx X. Xxxxxx
Xxxxxx Xxxxxxxxxxx Xxxx 6 November 1, 2004
d. With respect to the website xxx.xxxxxxxx.xxx, effective on Closing and
continuing for the Term of the Transition Services Agreement, Audiovox
will make and maintain the appropriate, agreed upon changes within the
Wireless Products webpages to reflect the UTStarcom acquisition and
Audiovox will also continue to support, on behalf of Purchaser, the
Wireless Products accessories transaction sales that come through the
webpages to the webstore.
e. Purchaser shall not be obligated to make any other payments to
Audiovox or Seller with respect to completion of the work set forth in
(a) -(d) (including any expenses incurred by Audiovox or Seller for
hardware acquisition and maintenance) beyond the $70,000 limit
referenced in Section 5.22 of the Purchase Agreement.
Except as set forth herein or as later modified, amended or waived in accordance
with the Purchase Agreement, all other provisions of the Purchase Agreement
shall remain in full force and effect.
This letter agreement shall be governed by, and construed in accordance with,
the laws of the State of New York applicable to contracts executed in and to be
performed in that State. All disputes arising out of this letter agreement shall
be resolved in accordance with Section 10.09 of the Purchase Agreement.
Exhibit 99.1
Xxxxxxx X. Xxxxxx
Xxxxxx Xxxxxxxxxxx Xxxx 7 November 1, 2004
This letter agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
agreement.
Sincerely,
UTSTARCOM, INC.
By: /s/ Hong Xxxxx Xx
------------------------------------------
Name: Hong Xxxxx Xx
Title: Chairman, President and Chief
Executive Officer
UTSTARCOM CANADA COMPANY
By: /s/ Hong Xxxxx Xx
------------------------------------------
Name: Hong Xxxxx Xx
Title: Chairman, President and Chief
Executive Officer
Accepted and agreed to as of the date set forth above:
AUDIOVOX CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Sr. Vice President and Chief
Financial Officer
Exhibit 99.1
Xxxxxxx X. Xxxxxx
Xxxxxx Xxxxxxxxxxx Xxxx 8 November 1, 2004
AUDIOVOX COMMUNICATIONS CORP.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
QUINTEX MOBILE COMMUNICATIONS
CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
AUDIOVOX COMMUNICATIONS
CANADA CO.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
cc: Xxxxxx X. Xxxx
Xxxxxxxx Xxxxx
Xxxxxx Xxxxx
Exhibit 99.1
