Audiovox 2006 Annual Report Download - page 15

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the Company may be subject to legal proceedings and claims for alleged infringement by its suppliers
or distributors, of third party patents, trade secrets, trademarks or copyrights. Any claims relating to
the infringement of third-party proprietary rights, even if not meritorious, could result in costly
litigation, divert management’s attention and resources, or require the Company to either enter into
royalty or license agreements which are not advantageous to the Company or pay material amounts of
damages.
Under the asset purchase agreement for the sale of the Company’s Cellular business to UTSI, the
Company agreed to indemnify UTSI for any breach or violation by ACC and its representations,
warranties and covenants contained in the asset purchase agreement and for other matters, subject to
certain limitations. Significant indemnification claims by UTSI could have a material adverse effect on
the Company’s financial condition and results of operation. The Company is not aware of any such
claim(s) for indemnification.
Item 4 — Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the quarter ended February 28,
2007.
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