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... Blvd., Hauppauge, New York (Address of principal executive offices) 11788 (Zip Code) (631) 231-7750 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Tct: Title of each class: Class A Common Stock $.01 par value Securities registered...

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... x The aggregate market value of the common stock held by non-affiliates of the Registrant was $118,252,382 (based upon closing price on the Nasdaq Stock rarket on August 31, 2010). The number of shares outstanding of each of the registrant's classes of common stock, as of ray 16, 2011 was: Class...

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... Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information 15 16 17 30 30 30 30 33 PTRT III Item 10 Item 11 Item 12 Item 13 Item 14 Directors, Executive Officers and Corporate Governance Executive Compensation Security...

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..."), Audiovox Consumer Electronics, Inc. ("ACE"), Audiovox German Holdings GmbH ("Audiovox Germany"), Audiovox Venezuela, C.A., Audiovox Canada Limited, Audiovox Hong Kong Ltd., Audiovox International Corp., Audiovox rexico, S. de R.L. de C.V. ("Audiovox rexico"), Technuity, Inc., Code Systems, Inc...

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... price of $167.6 million including a working capital adjustment which is subject to change, plus related transaction fees and expenses. Klipsch is a global provider of high-end speakers for audio, multi-media and home theater applications. The acquisition of Klipsch adds world-class brand names...

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...Electronics products include: mobile multi-media video products, including in-dash, overhead and headrest systems, autosound products including radios, speakers, amplifiers and CD changers, satellite radios including plug and play models and direct connect models, automotive security and remote...

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... phones and portable video (DVD) batteries and accessories, power supply systems, electronic equipment cleaning products, and set-top boxes. We believe our product groups have expanding market opportunities with certain levels of volatility related to domestic and international markets, new car...

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... of an order from public warehouses and leased facilities throughout the United States, Canada, rexico, Venezuela and Germany. The Company also employs a direct ship model from our suppliers for select customers upon their request. Product Development, Warranty and Customer Service Our product...

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...price, service, reputation and financial stability. In order to provide coordination and supervision of supplier performance such as price negotiations, delivery and quality control, we maintain buying and inspection offices in China and Hong Kong. We consider relations with our suppliers to be good...

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... Equipment Manuwacturers (OEMs) and Direct Imports By Our Retail Customers. The market for consumer electronics and accessories is highly competitive across all product lines. We compete against many established companies who have substantially greater financial and engineering resources than we...

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... manufactured domestically. This increases the risk that our products will become obsolete or face selling price reductions before we can sell our inventory. We Plan to Expand the International Marketing and Distribution ow Our Products, Which Will Subject Us to Additional Business Risks. As part...

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... effect on our annual financial results. A Decline in General Economic Conditions Could Lead to Reduced Consumer Demand wor the Discretionary Products We Sell. Consumer spending patterns, especially discretionary spending for products such as mobile, consumer and accessory electronics, are affected...

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...business if: market conditions change, our business plans or assumptions change, we make significant acquisitions, we need to make significant increases in capital expenditures or working capital, or our borrowing base or restrictive covenants may not provide sufficient credit. Our Stock Price...

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... the Securities and Exchange Commission. Item 2-Properties Our Corporate headquarters is located at 180 rarcus Blvd. in Hauppauge, New York. In addition, as of February 28, 2011, the Company leased a total of 21 operating facilities or offices located in 9 states as well as Germany, China, Canada...

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...Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information The Class A Common Stock of Audiovox is traded on the Nasdaq Stock rarket under the symbol "VOXX". The following table sets forth the low and high sale price of our Class A Common Stock, based on...

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Item 6-Selected Consolidated Financial Data The following selected consolidated financial data for the last five years should be read in conjunction with the consolidated financial statements and related notes and "ranagement's Discussion and Analysis of Financial Condition and Results of Operations...

Page 17
... of the goals of our business and the direction in which our business is moving. This is followed by a discussion of the Critical Accounting Policies and Estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results. In the next...

Page 18
... expand our business model while leveraging overhead and exploring specialized niche markets in the electronics industry. Although we believe our product groups have expanding market opportunities, there are certain levels of volatility related to domestic and international markets, new car sales...

Page 19
... of new products and lines such as portable DVD players, satellite radio, digital antennas and mobile multi-media devices, acquisition of Invision's mobile entertainment business, acquisition of Schwaiger's accessory business, acquisition of Thomson's Americas consumer electronics accessory business...

Page 20
...regularly review inventory quantities on-hand and record a provision, in cost of sales, for excess and obsolete inventory based primarily from selling price reductions subsequent to the balance sheet date, indications from customers based upon current negotiations, and purchase orders. A significant...

Page 21
... us to repair or replace defective product returned by both end users and customers during such warranty period at no cost. We record an estimate for warranty related costs, in cost of sales, based upon actual historical return rates and repair costs at the time of sale. The estimated liability for...

Page 22
... the Company's financial condition and results of operations. The Company classifies interest and penalties associated with income taxes as a component of income tax expense (benefit) on the consolidated statement of operations. Results of Operations Included in Item 8 of this annual report on...

Page 23
...'s withdrawal from the direct TV market; a decline in satellite radio sales as a result of streamlined SKU's; product shortfalls as a result of a transition to new products and vendors in the portable DVD market; slower sales in our audio line and consumer good products including camcorders, clock...

Page 24
...acquisition of the Schwaiger and Invision operations during the second half of the year. In the fourth quarter, the Company returned the 10% temporary salary reduction to all employees below the level of vice president. Executive management elected not to participate. The Company continues to review...

Page 25
...of equity investees increased due to increased equity income of Audiovox Specialized Applications, Inc. (ASA) as a result of cost containment efforts and improved sales. Income Tax Provision The effective tax rate in Fiscal 2011 was an income tax benefit of (84.3)% on pre-tax income from continuing...

Page 26
...tax benefits of approximately $10,500 as a result of a partial reduction of a valuation allowance on deferred taxes. During Fiscal 2010, the Company was impacted by several non-standard charges related to the economy, market conditions, customers and other events as outlined in the Annual Report for...

Page 27
.... On rarch 1, 2011, the Company borrowed approximately $89 million under this credit facility as a result of its stock purchase agreement related to Klipsch Group, Inc (see Subsequent Event footnote, note 15, in this Form 10K). In addition, Audiovox Germany has accounts receivable factoring...

Page 28
... not recorded in the consolidated financial statements until commitments are fulfilled and such obligations are subject to change based on negotiations with manufacturers. (8) At February 28, 2011, the Company had unrecognized tax benefits of $3,335, including $1,738 of excess tax benefits for stock...

Page 29
..., price negotiations depend in part on the foreign currency of foreign manufacturers, as well as market, trade and political factors. The Company also has exposure related to transactions in which the currency collected from customers is different from the currency utilized to purchase the product...

Page 30
... Securities and Exchange Act Rule 13a-15. Based upon this evaluation as of February 28, 2011, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective and adequately designed. Management's Report on Internal Control Over...

Page 31
..., management concluded that the Company's internal control over financial reporting was effective as of February 28, 2011 based on the COSO criteria. The certifications of the Company's Chief Executive Officer and Chief Financial Officer included in Exhibits 31.1 and 31.2 to this Annual Report on...

Page 32
... PUBLIC TCCOUNTING FIRM Board of Directors and Stockholders Tudiovox Corporation We have audited Audiovox Corporation (a Delaware corporation) and subsidiaries' (the "Company") internal control over financial reporting as of February 28, 2011, based on criteria established in Internal Control...

Page 33
... our internal controls over financial reporting. Item 9B - Other Information Not Applicable PTRT III Item 10 - Directors, Executive Officers and Corporate Governance Executive Officers of the Registrant The following is a list of our executive officers as of February 28, 2011: Date First Elected...

Page 34
... 13 (Certain Relationships and Related Transactions, and Director Independence) and Item 14 (Principal Accounting Fees and Services) of Form 10-K, will be included in our Proxy Statement for the Annual meeting of Stockholders, which will be filed on or before June 28, 2011, and such information is...

Page 35
... INDEX TO CONSOLIDTTED FINTNCITL STTTEMENTS Financial Statements: Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of February 28, 2011 and February 28, 2010 Consolidated Statements of Operations for the years ended February 28, 2011, February 28, 2010 and...

Page 36
... set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Audiovox Corporation and subsidiaries' internal control over financial reporting as of February 28, 2011, based on criteria established in Internal Control...

Page 37
Tudiovox Corporation and Subsidiaries Consolidated Balance Sheets February 28, 2011 and 2010 (In thousands, except share data) February 28, 2011 Tssets February 28, 2010 Current assets: Cash and cash equivalents $ Accounts receivable, net Inventory Receivables from vendors Prepaid expenses and ...

Page 38
37

Page 39
...Corporation and Subsidiaries Consolidated Statements of Operations Years Ended February 28, 2011, 2010 and 2009 (In thousands, except share and per share data) Year Ended Year Ended Year Ended Net sales Cost of sales Gross profit Operating expenses: Selling General...Income tax benefit (expense)...

Page 40
...(71,029) Foreign currency translation adjustment Unrealized loss on marketable securities, net of tax effect Other comprehensive loss Comprehensive loss Exercise of stock options into 10,000 shares of common stock Tax benefit of stock options exercised 246 - - - - - 47 20 (190) - 8 (18,396...

Page 41
...), continued Years Ended February 28, 2011, February 28, 2010 and February 28, 2009 (In thousands, except share data) Class T and Class B Common Stock Tccumulated Paid-in Total Capital Retained Earnings other comprehensive income (loss) Treasury stock Stockholders' equity Balances at February...

Page 42
... 309 Non-cash stock based compensation expense Realized loss on sale of investment 1,284 182 - 1,600 - - - 768 21,951 Gain on bargain purchase Impairment loss on marketable securities Changes in operating assets and liabilities (net of assets and liabilities acquired): Accounts receivable 22...

Page 43
Cash and cash equivalents at end of year Supplemental Cash Flow Information: $ 98,630 $ 69,511 $ 69,504 Cash paid during the period for: Interest, excluding bank charges Income taxes (net of refunds) $ $ 2,138 1,257 $ $ 1,310 $ $ 1,224 3,816 (7,838) See accompanying notes to ...

Page 44
..."), Audiovox Consumer Electronics, Inc. ("ACE"), Audiovox German Holdings GmbH ("Audiovox Germany"), Audiovox Venezuela, C.A., Audiovox Canada Limited, Audiovox Hong Kong Ltd., Audiovox International Corp., Audiovox rexico, S. de R.L. de C.V. ("Audiovox rexico"), Technuity, Inc., Code Systems, Inc...

Page 45
... table presents assets measured at fair value on a recurring basis at February 28, 2011: Fair Value Measurements at Reporting Date Using Level 1 Cash and cash equivalents: Cash and money market funds Derivatives Designated for hedging Not designated Level 2 Level 3 $ $ $ 98,630 238 $ $ $ 98...

Page 46
Tudiovox Corporation and Subsidiaries Notes to Consolidated Financial Statements, continued February 28, 2011 (Dollars in thousands, except share and per share data) Fair Value Measurements at Reporting Date Using Level 1 Cash and cash equivalents: Cash and money market funds Derivatives Not ...

Page 47
...not hold derivatives designated for hedge accounting during Fiscal 2010. f) Investment Securities In accordance with the Company's investment policy, all long and short-term investment securities are invested in "investment grade" rated securities. As of February 28, 2011 and 2010, the Company had...

Page 48
... Bliss-tel Public Company Limited ("Bliss-tel"), and taxable auction rate notes which have long-term maturity dates (October 2038) which were sold during Fiscal 2011. Unrealized holding gains and losses, net of the related tax effect (if applicable), on available-for-sale securities are reported as...

Page 49
Tudiovox Corporation and Subsidiaries Notes to Consolidated Financial Statements, continued February 28, 2011 (Dollars in thousands, except share and per share data) issued 575,000,000 shares on the SET (Security Exchange of Thailand) for an offering price of 2.48 baht per share. Prior to the ...

Page 50
... to experience the same credit loss rates that have been experienced in the past. Since the Company's accounts receivable are concentrated in a relatively few number of customers, a significant change in the liquidity or financial position of any one of these customers could have a material adverse...

Page 51
... for excess and obsolete inventory based primarily from selling prices, indications from customers based upon current price negotiations and purchase orders. The Company's industry is characterized by rapid technological change and frequent new product introductions that could result in an increase...

Page 52
...FV's of customer relationships are determined using the rulti-Period Excess Earnings rethod which includes a DCF analysis, adjusted for a required return on tangible and intangible assets. The guidance in ASC 350, including management's business intent for its use; ongoing market demand for products...

Page 53
... these brands, management's expectations for future sales, performance of the business group and proximity to acquisition date fair values. Royalty rates of 1.0% to 8.5% were used for the relative trademarks and domain names after reviewing comparable market rates, the profitability of the product...

Page 54
... other trade allowances. The Company accounts for sales incentives in accordance with ASC 605-50 "Customer Payments and Incentives" ("ASC 605-50"). Except for other trade allowances, all sales incentives require the customer to purchase the Company's products during a specified period of time. All...

Page 55
... Corporation and Subsidiaries Notes to Consolidated Financial Statements, continued February 28, 2011 (Dollars in thousands, except share and per share data) Volume incentive rebates offered to customers require that minimum quantities of product be purchased during a specified period of time...

Page 56
...currency and price controls. The country has experienced high rates of inflation over the last several years. The President of Venezuela has the authority to legislate certain areas by decree, which allows the government to nationalize certain industries or expropriate certain companies and property...

Page 57
... date. Uncertain Tax Positions The Company adopted guidance included in ASC 740 "Income Taxes" ("ASC 740") as it relates to uncertain tax positions. The guidance addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial...

Page 58
...467) (1,669) Other income (loss) includes a translation gain of approximately $1,400 for the year ended February 28, 2011 related to the elimination of the 2.6 exchange rate in Venezuela. s) Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be disposed of Long-lived...

Page 59
Tudiovox Corporation and Subsidiaries Notes to Consolidated Financial Statements, continued February 28, 2011 (Dollars in thousands, except share and per share data) The Company has stock option plans under which employees and non-employee directors may be granted incentive stock options ("ISO's")...

Page 60
... Fiscal 2011, the Company changed from daily stock prices to monthly stock prices as the Company's stock experiences low-volume trading. We believe that daily fluctuations are distortive to the volatility and as such will continue to use monthly inputs in the future. The risk free interest rate is...

Page 61
... of Fiscal 2011 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on February 28, 2011 was $1,499. This amount changes based on the fair market value of the Company's stock. The...

Page 62
... Company's financial statements. 2) Business Acquisitions Invision On February 1, 2010, the Company's newly formed subsidiary, Invision Automotive Systems, Inc., purchased the assets of Invision Industries, Inc., a manufacturer of rear seat entertainment systems for OEr's, ports and car dealers...

Page 63
...liabilities assumed was based on a valuation study performed by management and is final. Schwaiger On October 1, 2009, Audiovox German Holdings GmbH completed the acquisition of certain assets of Schwaiger, a German market leader in consumer electronics as well as SAT and receiver technologies. As...

Page 64
...a 50% non-controlling ownership interest in Audiovox Specialized Applications, Inc. ("ASA") which acts as a distributor to markets for specialized vehicles, such as RV's, van conversions and marine vehicles, of televisions and other automotive sound, security and accessory products. ASC 810 requires...

Page 65
...Corporation and Subsidiaries Notes to Consolidated Financial Statements, continued February 28, 2011 (Dollars in thousands, except share and per share data) February 28, 2011...12,691 1,338 1,951 The Company's share of income from ASA for the years ended February 28, 2011, February 28, 2010 and ...

Page 66
Tudiovox Corporation and Subsidiaries Notes to Consolidated Financial Statements, continued February 28, 2011 (Dollars in thousands, except share and per share data) Commissions Employee compensation Professional fees and accrued settlements Future warranty Freight and duty Royalties, advertising ...

Page 67
...entities under the Credit Agreement. On rarch 1, 2011, the Company borrowed approximately $89 million under this credit facility as a result of its stock purchase agreement related to Klipsch Group, Inc (see Subsequent Event in this Form 10K). b) Foreign Bank Obligations Foreign bank obligations...

Page 68
... and the ragnat brand name, prohibits the distribution of dividends, and takes precedence to all other intercompany loans with Audiovox Corporation. d) Suntrust On February 1, 2010, the Company entered into a two-year monthly installment loan in the amount of $5,000 at an interest rate of LIBOR...

Page 69
... as follows: Year Ended Year Ended Year Ended February 28, 2011 Tax provision at Federal statutory rates State income taxes, net of Federal benefit Impairment of non-deductible goodwill Change in valuation allowance Change in tax reserves US effects of foreign operations Gain on bargain purchase...

Page 70
... the carrying amounts of assets and liabilities for financial reporting and tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows: February 28, 2011 Deferred tax assets: Accounts receivable Inventory Property, plant and equipment Intangible assets...

Page 71
... prior years Change in tax law Settlements Lapse in statute of limitations $ (1,166) - (2,297) 2,625 773 - - $ (63) 3,335 Balance at February 28, 2011 At February 28, 2011, the Company had unrecognized tax benefits of $3,335, which includes $1,738 of excess tax benefits related to stock-based...

Page 72
... included in retained earnings amounted to $7,438 and $5,946 at February 28, 2011 and 2010, respectively. 9) Other Stock and Retirement Plans a) Restricted Stock Plan The Company has restricted stock plans under which key employees and directors may be awarded restricted stock. Awards under the...

Page 73
... Financial Statements, continued February 28, 2011 (Dollars in thousands, except share and per share data) During Fiscal 2009, the Board of Directors authorized a Cash Bonus Profit Sharing Plan that allows the Company to make profit sharing contributions for the benefit of eligible employees...

Page 74
...to change based on negotiations with manufacturers. b) Concentrations of Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of trade receivables. The Company's customers are located principally in the United States, Canada...

Page 75
... Company's customer base may be susceptible to downturns in the retail economy, particularly in the consumer electronics industry. Additionally, customers specializing in certain automotive sound, security and accessory products may be impacted by fluctuations in automotive sales. 12) Financial...

Page 76
...its direct to consumer sales of new FLO TV devices. This decision will not have a material impact on the Company. We are working with FLO TV and Qualcomm to transition out of the business, and are currently compiling the information necessary to settle the matter. The products the Company sells are...

Page 77
... price of $167.6 million including a working capital adjustment which is subject to change, plus related transaction fees and expenses. Klipsch is a global provider of high-end speakers for audio, multi-media and home theater applications. The acquisition of Klipsch adds world-class brand names...

Page 78
... within this annual report do not include the operations of Klipsch, or the fair market value of assets and liabilities acquired, except as outlined in this footnote below. The opening balances and financial results of Klipsch will be consolidated with Audiovox beginning with the Company's first...

Page 79
... 2011 Net sales: As reported Pro forma Net income: As reported Pro forma Basic earnings per share: As reported Pro forma Diluted earnings per share: As reported ...periods presented to adjust the financial results and give consideration to the assumption that the acquisition occurred on the first day ...

Page 80
...issued to customers. For the reserve for warranties and product repair costs, deductions represent currency effects and payments for labor and parts made to service centers and vendors for the repair of units returned under warranty. (b) Column C includes $879 and $115 of liabilities acquired during...

Page 81
Exhibit Number Description 2.1 Stock Purchase Agreement, dated February 3, 2011, by and among Soundtech LLC, a Delaware limited liability company ("Buyer"), Audiovox Corporation, a Delaware corporation ("Parent"), Klipsch Group, Inc., an Indiana corporation (the "Company"), and each shareholder (...

Page 82
..., dated February 3, 2011, by and among Klipsch Group, Inc. and David P. Kelley. (2) Subsidiaries of the Registrant (filed herewith). Consent of Grant Thornton LLP (filed herewith). Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) and rule 15d-14(a) of the Securities Exchange...

Page 83
... 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AUDIOVOX CORPORATION ray 16, 2011 By: /s/ Patrick r. Lavelle Patrick r. Lavelle, President and Chief Executive Officer 81

Page 84
..., this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Patrick r. Lavelle Patrick r. Lavelle President; Chief Executive Officer (Principal Executive Officer) and Director ray 16, 2011...

Page 85
EXECUTION COPY STOCT PURCHASE AGREEMENT Ny and among SOUNDTECH LLC ("Buyer"), AUDIOVOX CORPORATION ("Parent"), Tlipsch Group, Inc., and THE SHAREHOLDERS OF TLIPSCH GROUP, INC. ("Sellers") and is joined in Ny FRED S. TLIPSCH in his capacity as Sellers' Representative FeNruary 3, 2011 1

Page 86
... 2.1 Organization; Capitalization; Ownership. Section 2.2 Financial Statements and Financial Matters. Section 2.3 Compliance with Legal Requirements. Section 2.4 Taxes. Section 2.5 Business Operations. Section 2.6 Employees. Section 2.7 Employee Benefit Plans. Section 2.8 Real Property. Section...

Page 87
...Records Retention. Section 4.10 Certain Tax Matters. Section 4.11 Employee Benefit... 7.6 Article 8 Definitions Article 9 General Section 9.1 Section 9.2 Section 9.3 ...Ny Sellers Indemnification and ReimNursement Ny Parent and Buyer Certain Limitations Indemnification Procedures. Adjusted Purchase Price...

Page 88
ExhiNit 8.1 ExhiNit 8.2 ExhiNit 8.3 Sample Calculation of Income Tax LiaNilities Market Jurisdiction Net Working Capital 4

Page 89
...of manufacturing, distriNuting and selling personal, home, professional and commercial stand-alone loud speakers and personal headphones (such Nusiness, along with (i) the speaker and sound Nusiness, and (ii) any other consumer electronics Nusiness, (A) as engaged in from time to time Ny the Company...

Page 90
..., within (whether from the NWC HoldNack or from Sellers directly) three Business Days following the determination of the Final Closing Date Net Working Capital and Final Cash/Tax Differential Ny wire transfer to an account designated Ny Buyer. In the event that the determination of Final Closing...

Page 91
... duly endorsed in Nlank or accompanied Ny irrevocaNle stock powers duly endorsed in Nlank, in either case sufficient to transfer the Shares to Buyer; (ii) a certified copy signed Ny Sellers' Representative of Sellers' good faith estimate of Closing Date Net Working Capital, and (iii) any and all...

Page 92
... a SuNsidiary is currently qualified to do Nusiness as a foreign corporation are set forth in Schedule 2.1(a) . (N) As of the date of this Agreement, the authorized capital stock of the Company consists solely of 4,249,100 shares of Voting Common Stock, no par value, of which 173,046 are issued and...

Page 93
... with the Closing), there is no Contract that requires any Seller to sell, issue or purchase any capital stock of the Company, including any securities convertiNle into or exchangeaNle for any capital stock of the Company. At Closing, each Seller will transfer to Buyer valid title to all...

Page 94
... in the Interim Financial Statements; or (ii) incurred in the Ordinary Course of Business since the date of such Nalance sheet which would not, individually or in the aggregate, reasonaNly Ne expected to have a Company Material Adverse Effect. (c) As of the Closing, except as set forth in Schedule...

Page 95
... prior to the Closing Date. (f) Neither the Company nor any SuNsidiary has, in the last six years, distriNuted stock of another Person, or has had its stock distriNuted Ny another Person, in a transaction that was purported or intended to Ne governed in whole or in part Ny Code Â§355 or Code Â§361...

Page 96
...purchaser of any goods or services to or from the Company or a SuNsidiary or any part of which is in actual or potential competition with any Nusiness of the Company or a SuNsidiary. (c) Schedule 2.5(c) lists the 10 largest customers and 5 largest suppliers (Ny dollar volume) of the Company and the...

Page 97
...for injunctive relief, in connection with any product manufactured or sold Ny the Company or a SuNsidiary. (f) Schedule 2.5(f) lists the names, account numNers and locations of all Nanks and other financial institutions at which the Company or a SuNsidiary has an account or safe deposit Nox and the...

Page 98
...letter issued Ny the IRS with respect to each Employee Benefit Plan that is intended to Ne qualified under Code Â§401(a); and (ii) the two most recent Annual Reports (IRS Forms 5500 series) required to Ne filed with respect to each such Employee Benefit Plan. (d) None of the Company, a SuNsidiary or...

Page 99
...any current or former director, officer or employee under an Employee Benefit Plan or otherwise. Section 2.8 Real Property . (a) The real property owned Ny the Company or a SuNsidiary is set forth in Schedule 2.8(a) ("Owned Real Property"). The Company and each SuNsidiary has good and marketaNle fee...

Page 100
... Course of Business. (N) Except as disclosed on Schedule 2.9(N) , the inventory of the Company and the SuNsidiaries (i) is in good and merchantaNle condition in all material respects, (ii) is valued on the Financial Statements and Interim Financial Statements in the manner set forth on Schedule...

Page 101
... Contract, in relation to (A) the terms or conditions of other Contracts of the Business or (B) the price or other terms or conditions for the provision of similar goods or services Ny a third party. x. xi. and Any guarantee of any oNligation of a third Person that would, directly or indirectly...

Page 102
...) covering the properties, assets, directors, officers, employees, products or operations of the Company or any SuNsidiary. Copies of each... force through the Closing Date. Section 2.14 Environmental Matters . Except as set forth in the phase I environmental reports identified in Schedule 2.14...

Page 103
... Ny a representation and warranty contained in this Article 2, neither the Company nor any Seller makes any representation or warranty with respect to any information or documents (financial or otherwise) made availaNle to Parent or Buyer or their respective Representatives Nefore or after the date...

Page 104
... that are not Affiliates of the Company, are reflected on the Nooks and records of the Company or a SuNsidiary, as applicaNle, arose in the Ordinary Course of Business and the goods and services involved have Neen sold, delivered and performed to the account oNligors, in all material respects, and...

Page 105
... of time or Noth, would result in a material Nreach or a default under the Intellectual Property Agreements Ny the Company or a SuNsidiary (or, to Sellers' Tnowledge, any other party). (e) Except as set forth in Schedule 2.21(e) , (i) to Sellers' Tnowledge, the conduct of the Business as presently...

Page 106
... Of parent and Buyer Parent and Buyer, jointly and severally, make the following representations and warranties to Sellers. Section 3.1 Organization and Good Standing . Parent is a Delaware corporation and Buyer is a Delaware limited liaNility company, each duly organized, validly existing and in...

Page 107
... Closing Date), the Company, the SuNsidiaries and their respective Representatives have answered all inquiries that Parent and Buyer and their respective Representatives have made concerning the Company, the SuNsidiaries or otherwise relating to the Business and the transactions contemplated Ny this...

Page 108
... Business; or viii. (N) From the date of this Agreement to the Closing Date, Sellers and the Company will not, and will cause their respective Affiliates to not, directly or indirectly, enter into or continue any negotiations, discussions or Contracts contemplating or relating to the acquisition Ny...

Page 109
... financial, operating and other data and information of the Company and the SuNsidiaries or the Business (in a manner so as to not unreasonaNly interfere with the normal Nusiness operations of the Company or any SuNsidiary). All Books and Records and other information furnished to or oNtained Ny...

Page 110
...with, lend Mr. Tlipsch's name or any similar name to, lend Mr. Tlipsch's credit to or render services or advice to, or plan or prepare to do any of the foregoing with any Nusiness whose products or activities compete in whole or in part with the Business in any Market Jurisdiction; provided, however...

Page 111
...is employed Ny the Company or its Affiliates was a customer, contractor or supplier of the Company or its Affiliate; or (iii) disparage the Company or Parent or its Affiliates or their respective shareholders, Noard of directors, memNers, managers, officers, employees or agents (contesting a matter...

Page 112
... Other Management Shareholder was employed Ny the Company was a customer, contractor or supplier of the Company or its Affiliates; or (iii) disparage the Company or Parent or its Affiliates or their respective shareholders, Noard of directors, memNers, managers, officers, employees or agents. If...

Page 113
... to Ne Nound Ny such Nondisclosure Agreement, and agrees that the restrictions therein relating to VantagePoint Venture...iii) make determinations to settle any dispute as to the calculation of the Purchase Price; (... to act as the agent of Sellers for the purposes set forth herein under this Agreement...

Page 114
...all claims against the Company or any SuNsidiary as of the date of Closing arising from or relating to any acts, omissions, facts or circumstances existing on or prior to Closing, except (as applicaNle) with respect to unpaid compensation for services rendered, vested employee Nenefits, rights under...

Page 115
... the date of this Agreement and Closing, neither the Company nor any SuNsidiary will make or change any election, change any annual accounting period, adopt or change any accounting method, file any amended Tax Return, enter into any closing Contract, settle any Tax claim relating to the Company or...

Page 116
... requirements under any New Plans to the extent waived or satisfied Ny an employee under any Employee Benefit Plan as of the Closing Date and (y) cause any covered expenses incurred on or Nefore the Closing Date Ny any employee (or covered dependent thereof) to Ne taken into account for purposes of...

Page 117
... as of the Closing Date certifying that the conditions set forth in Sections 5.1(a) and (N) have Neen satisfied and (ii) the resignation of Sellers (as designated Ny Buyer) as directors and officers of the Company and the SuNsidiaries; (d) There must not Ne any non-appealaNle Order pending or Legal...

Page 118
... Since the date of the Balance Sheet there must not have occurred a Company Material Adverse Effect, and the Parties agree that any material loss of Nusiness from or Threatened material loss of Nusiness with Best Buy/Magnolia's, Apple or New Advance will Ne deemed a Company Material Adverse Effect...

Page 119
...suNsection (N) Nelow, will indemnify Buyer and its Affiliates, and their respective officers, directors, employees, successors and assigns (each, a "Buyer Indemnified Party") for all Adverse Consequences arising from (i) a Nreach Ny Sellers (or any of them) of their representations and warranties in...

Page 120
... Adverse Consequences result from the passing of or change in any Legal Requirement or any accounting policy, principle or practice after the Closing Date or any increase in Tax rates in effect on the Closing Date, if and only if the change or increase has retroactive effect and such retroactive...

Page 121
... this Article 7 will not Ne affected Ny any knowledge (actual, constructive or otherwise) of, or acquired (or capaNle of Neing acquired) at any time Ny, any Party, whether Nefore, at or after the execution and delivery of this Agreement or the Closing Date, with respect to the accuracy or inaccuracy...

Page 122
... the determination of Final Closing Date Net Working Capital, net, without duplication, (A) preference amounts paid to Ultimate and of third party costs of defense (re preference claims if any) or collection, (B) Taxes relating to any recovery of the same Ny the Company or any SuNsidiary and (C) the...

Page 123
..., each Party will make availaNle to the other Parties and the other Parties' Representatives all of his or its Books and Records and, as applicaNle, employees relating to a third-party Proceeding, and each Party will render to the other assistance as may Ne reasonaNly required in order to insure the...

Page 124
... in the State of New York. "Business Intellectual Property " shall mean all Intellectual Property owned Ny or licensed to the Company or a Company Affiliate and used or held for use in connection with the Business. "Business IT Systems " shall mean all computer systems and networks, including all...

Page 125
... a Seller, to any Affiliate or to any other Person. "Closing Date Net Working Capital" has the meaning set forth in Section 1.3(N) of this Agreement. "Code" means the United States Internal Revenue Code of 1986, as amended. "Company" has the meaning set forth in the first paragraph of this Agreement...

Page 126
...condition affecting financial, Nanking or securities markets (including any disruption thereof and any decline in the price of any security or market index) to the extent that such changes/conditions do not affect the Company disproportionately; (g) any change in any Legal Requirements, Orders, GAAP...

Page 127
... Body; (c) free product recovery reports, monitoring well assessments and related correspondence and materials; and (d) other correspondence or memoranda descriNing any release of Company and or SuNsidiary products or raw materials used to make Company or SuNsidiary products. "Environmental Law...

Page 128
... Closing Date Net Working Capital" has the meaning set forth in Section 1.3(c) of this Agreement. "Financial Statements " has the meaning set forth in Section 2.2(a) of this Agreement. "Financing" has the meaning set forth in Section 3.4 of this Agreement. "Former SuNsidiaries " mean all direct or...

Page 129
... where the Company, any of the SuNsidiaries or any of the direct or indirect suNsidiaries from time to time of any of the foregoing Persons sells speakers and sound products or otherwise engages in the Business. "Marks" shall mean trademarks, service marks, trade names corporate names, trade dress...

Page 130
... any award, decision, injunction, judgment, order, ruling, suNpoena or verdict entered, issued, made or rendered Ny any Governmental Body. "Ordinary Course of Business " means in accordance with the customary and usual day-to-day practices of the Company or a SuNsidiary, as applicaNle, with respect...

Page 131
...respect to the Company or any SuNsidiary, (a) except in the Ordinary Course of Business and as disclosed in the pertinent schedules to the Disclosure Schedule or in the financial statements which are the suNject of Section 2.2 , paying a Nonus to any director, manager, officer, employee or agent, or...

Page 132
... each dated FeNruary, 2005, as amended. "Shares" has the meaning set forth in Section 1.1 of this Agreement. "Software Licenses " shall have the meaning set forth in Section 2.20 . "SuNsidiaries " means Tlipsch Group Europe, B.V., Audio Products International Corp., Tlipsch Asia/Pacific Holdings...

Page 133
... of the representation or warranty with respect to, Nut only with respect to, such claim. Section 9.2 Binding Effect; Benefits; Assignment. All of the terms of this Agreement and the other Transaction Documents executed Ny a Party will Ne Ninding upon, inure to the Nenefit of and Ne enforceaNle...

Page 134
..., superseded or canceled, and any of its provisions may Ne waived, only Ny a written instrument executed Ny the Parties or, in the case of a waiver, Ny the Party waiving compliance. The failure of any Party at any time to require performance of any provision of this Agreement will in no manner...

Page 135
(a) If to Parent or Buyer: Audiovox Corporation 150 Marcus Blvd. Hauppauge, NY 11788 Attn: Chief Financial Officer with a copy to (which will not constitute notice): Levy Stopol & Carmelo, LLP Attn: RoNert S. Levy 1425 Reckson Plaza Uniondale NY 11556-1425 Telephone: (516) 802-7007 Facsimile: (...

Page 136
... prior to Closing or accrued in determining Net Working Capital, any expenses of Sellers or the Company relating to the transactions contemplated Ny this Agreement (including financial advisory, legal and accounting fees), will Ne paid Ny Sellers at or as soon as practical following Closing...

Page 137
..., a preliminary injunction or an order of attachment, at any time prior to or during Mediation or ArNitration. Any such interim or provisional relief must Ne Nrought in the courts located in New Castle County, Delaware. Each Party irrevocaNly suNmits to the exclusive jurisdiction of each such court...

Page 138
... Netween the Parties is commercial in nature, and any disputes Netween the parties related to this contract shall Ne deemed commercial. All matters relating to, and all communications, whether oral, written or electronic, in, any ArNitration shall Ne confidential. The Parties shall Near their own...

Page 139
... date stated in the first paragraph of this Stock Purchase Agreement. SOUNDTECH LLC By: AUDIOVOX CORPORATION Its: Sole MemNer By: s/Patrick M. Lavelle Patrick M. Lavelle Its: President "Buyer" AUDIOVOX CORPORATION By: s/Patrick M. Lavelle Patrick M. Lavelle Its: President "Parent" TLIPSCH GROUP...

Page 140
... MemNer VANTAGEPOINT VENTURE PARTNERS IV PRINCIPALS FUND, L.P. By: VantagePoint Venture Associates IV, L.L.C., Its: General Partner By: s/Alan E. Salzman Its: Managing MemNer s/Fred S. Tlipsch Fred S. Tlipsch Judy Tlipsch Wealth Trust By: s/Frederick L. Farrar Frederick L. Farrar, Trustee Fred...

Page 141
Frederick L. Farrar, Trustee Fred and Judy Tlipsch Family Wealth Trust for Thomas B. Meyer and Wendy J. Meyer By: s/Frederick L. Farrar Frederick L. Farrar, Trustee s/Michael F. Tlipsch Michael F. Tlipsch s/Stephen P. Tlipsch Stephen P. Tlipsch s/T. Paul JacoNs T. Paul JacoNs s/Frederick L. ...

Page 142
... s/David Telley David Telley s/Nancy Mills Nancy Mills s/Lance E. Jones Lance E. Jones s/Oscar Bernardo Oscar Bernardo Effective upon execution of outstanding options. s/Thomas JacoNy Thomas JacoNy s/John Carter John Carter "Sellers" SELLERS' REPRESENTATIVE s/Fred S. Tlipsch Fred S. Tlipsch...

Page 143
...as escrow agent hereunder ("Escrow Agent"). WHEREAS : A. Buyer, Parent, each shareholder (each a "Seller" and collectively "Sellers") of Tlipsch Group, Inc., an Indiana corporation (the "Company") and the Company are parties to that certain Stock Purchase Agreement dated as of FeNruary 3, 2011 (the...

Page 144
... due to Buyer will Ne paid to Sellers and allocated among them as set forth on ExhiNit C. All payments will Ne made Ny wire transfer to one or more accounts designated in the Written Direction. The Escrow Agent will promptly, and in any event within three Business Days of its receipt of the Written...

Page 145
... of the NWC HoldNack/Escrow Fund and investment income ("Escrow Earnings") shall Ne paid to Sellers in accordance with the Written Direction provided to Escrow Agent Ny Sellers' Representative and shall not Ne (i) deemed at any time to Ne part of the NWC HoldNack/Escrow Fund for purposes of this...

Page 146
... Account and shall pay all NWC HoldNack/Escrow Funds and Escrow Earnings to the successor Escrow Agent, after making copies of such records as the retiring Escrow Agent deems advisaNle. If Buyer and Sellers' Representative fail to designate a successor Escrow Agent within ten (10) Business Days...

Page 147
...and Sellers' Representative may reasonaNly require from time to time. Information regarding the status of the Escrow Account shall Ne accessiNle to Buyer and Sellers' Representative. Escrow Agent will provide the name of the officer who will have principal responsiNility for the management of the 63

Page 148
... shall Ne made or entered Ny any court order affecting the NWC HoldNack/Escrow Funds and/or Escrow Earnings, the Escrow Agent shall promptly notify Buyer and Sellers' Representative and is hereNy expressly authorized, in its sole discretion, to respond as it in good faith deems appropriate or to...

Page 149
...: (616) 742-3931 Facsimile: (616) 742-3999 If to Buyer : Audiovox Corporation 150 Marcus Blvd. Hauppauge, NY 11788 Attn: Chief Financial Officer Levy Stopol & Carmelo, LLP Attn: RoNert S. Levy 1425 Reckson Plaza Uniondale NY 11556-1425 Telephone: (516) 802-7007 Facsimile: (516) 802-7008 With...

Page 150
... this Escrow Agreement, as may Ne amended from time to time, shall Ne Ninding upon, inure to the Nenefit of and Ne enforceaNle Ny the parties hereto and their respective heirs, successors and assigns. 20. Dealings. Nothing herein shall preclude Escrow Agent from acting in any other capacity for any...

Page 151
... have caused this Escrow Agreement to Ne executed as of the date first aNove written. BUYER: SOUNDTECH LLC By: _____ Its: _____ PARENT: AUDIOVOX CORPORATION By: _____ Its: _____ SELLERS' REPRESENTATIVE: _____ Fred S. Tlipsch ESCROW AGENT: JPMORGAN CHASE & CO. _____ Name: [â€¢] Its: [â€¢] 67

Page 152
Exhibit A Purchase Agreement (Attached) 68

Page 153
... B Written Direction Example [ ___] Account # [___] Reference is made to that certain Escrow Agreement (the "Escrow Agreement") dated as of FeNruary ___, 2011, Ny and among Soundtech LLC, a Delaware limited liaNility company ("Buyer"), Audiovox Corporation, a Delaware corporation ("Parent"), Fred...

Page 154
Exhibit C Allocation of the NWC HoldNack/Escrow Funds and Escrow Earnings among Sellers Seller Vantagepoint Venture Partners III, L.P. Vantagepoint Venture Partners III (Q), L.P. Vantagepoint Venture Partners IV, L.P. Vantagepoint Venture Partners IV (Q), L.P. Vantagepoint Venture Partners IV ...

Page 155
...attached. The Escrow Agent is hereNy directed to deposit, as indicated Nelow, or as Buyer and Sellers' Representative shall direct further in writing from time to time, all cash in the Escrow Account in the following money market deposit account of JPMorgan Chase & Co.: [ACCOUNT-to be specifically...

Page 156
... types for the escrow account or accounts estaNlished under the Escrow Agreement to which this ExhiNit E is attached, on Nehalf of Buyer. Name / Title _____ Name Specimen Signature _____ Title _____ Signature _____ Name _____ Title _____ Signature _____ Name _____ Title _____ Signature _____...

Page 157
Exhibit F Fees of Escrow Agent 73

Page 158
... is the exercise of certain options which consist of (i) 20,000 shares of Non-Voting Common Stock issued Ny certain Sellers in favor of David Telley; (ii) 34,000 shares of Non-Voting Common Stock issued Ny the Company in the amounts of 10,000 shares in favor of Frederick Farrar, 10,000 shares in...

Page 159
...We will collect from the employee with payroll deductions or at the time of termination. (2) The customer's accounts receivaNle are insured. The amount is included in another reserve. (3) (4) The customer is making regularly scheduled payments. Management may direct additional accruals at their...

Page 160
... in the overhead aNsorption account. Each month the detail inventory suN ledger is reconciled to the general ledger. Standard costs are reviewed annually (changed in FY 2011 to every six months per the auditors management letter) for any suNstantial changes to material, exchange rate, freight and...

Page 161
...copies of invoices relating to pre-July 1 are made with relevant account numNers written on them. These are given to and reviewed Ny Accounting, and a closing period entry is made in order to recognize the liaNility in the appropriate fiscal year. Meet Comp / Buying Group Rebates Various agreements...

Page 162
adjustments are made to the income statement. 78

Page 163
... relating to its Nusiness, technology, know how, inventions (whether patented or not), trade secrets, Nusiness and product plans, Nusiness relationships, forecasts, financial results or requirements and product development plans to VPVP or its affiliates or their respective employees, agents...

Page 164
... Nreach. IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the day and year first aNove written. VANTAGEPOINT MANAGEMENT, INC. By: Name: s/Fred S. Tlipsch Fred S. Tlipsch Chairman/CEO By: s/Alan E. Salzman Alan E. Salzman Name: Title: Company: Tlipsch Audio Inc. 80

Page 165
EXHIBIT 8.1 SAMPLE CALCULATION OF INCOME TAX LIABILITIES (attached) 81

Page 166
... Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Tansas New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island ...Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana NeNraska Nevada New Hampshire New Jersey New Mexico 82

Page 167
EXHIBIT 8.3 NET WORTING CAPITAL (attached) 83

Page 168
... that certain Stock Purchase Agreement (the "Agreement") entered into on February 3, 2011 by and among Soundtech LLC, a Delaware limited liability company ("Buyer"), Audiovox Corporation, a Delaware corporation ("Parent"), Klipsch Group, Inc., an Indiana corporation (the "Company"), each shareholder...

Page 169
... as of the date first above written. SOUNDTECH LLC By: AUDIOVOX CORPORATION Its: Sole Member By: s/Charles M. Stoehr Charles M. Stoehr Its: Senior Vice President "Buyer" AUDIOVOX CORPORATION By: s/Charles M. Stoehr Charles M. Stoehr Its: Senior Vice President "Parent" KLIPSCH GROUP, INC. By...

Page 170
... VANTAGEPOINT VENTURE PARTNERS IV PRINCIPALS FUND, L.P. By: VantagePoint Venture Associates IV, L.L.C., Its:General Partner By: s/Alan E. Salzman Its: Managing Member s/Fred S. Klipsch Fred S. Klipsch Judy Klipsch Wealth Trust By: s/Frederick L. Farrar Frederick L. Farrar, Trustee Fred and Judy...

Page 171
Frederick L. Farrar, Trustee s/Michael F. Klipsch Michael F. Klipsch s/Stephen P. Klipsch Stephen P. Klipsch s/T. Paul Jacobs T. Paul Jacobs s/Frederick L. Farrar Frederick L. Farrar s/Charles F. Lieske Charles F. Lieske s/Kyle E. Lanham Kyle E. Lanham s/Lisa M. Lanham Lisa M. Lanham Charles ...

Page 172
... Lance E. Jones s/Oscar Bernardo Oscar Bernardo Effective upon execution of outstanding options. s/Thomas Jacoby Thomas Jacoby s/John Carter John Carter "Sellers" SELLERS' REPRESENTATIVE s/Fred S. Klipsch Fred S. Klipsch "Sellers' Representative" Address: 3510 Sedgemoor Circle Carmel, Indiana...

Page 173
EXHIBIT A ESCROW AGREEMENT (attached) 6

Page 174
...as escrow agent hereunder ("Escrow Agent"). WHEREAS : A. Buyer, Parent, each shareholder (each a "Seller" and collectively "Sellers") of Klipsch Group, Inc., an Indiana corporation (the "Company") and the Company are parties to that certain Stock Purchase Agreement dated as of February 3, 2011 (the...

Page 175
... or more accounts designated in the Written Direction. The Escrow Agent will, subject to Section 8 hereof, promptly, and in any event within three Business Days of its receipt of the Written Direction, release and distribute to Buyer or Sellers, or apportion among them, as applicable, all amounts...

Page 176
... Account and shall pay all NWC Holdback/Escrow Funds and Escrow Earnings to the successor Escrow Agent, after making copies of such records as the retiring Escrow Agent deems advisable. If Buyer and Sellers' Representative fail to designate a successor Escrow Agent within ten (10) Business Days...

Page 177
... NWC Holdback/Escrow Funds and Escrow Earnings. Upon determination of the Final Closing Date Net Working Capital, the NWC Holdback will be allocated among and paid to Buyer or Sellers, or apportioned among them, as applicable (i.e., as directed by the Written Direction). At the 18 month anniversary...

Page 178
... as set forth in Section 12(a) above: Sellers' Representative's bank account information: The National Bank of Indianapolis Indianapolis, Indiana 46204 ABA No. 074006674 Account No.: 1471572 Acct Name: KGI Sellers, LLC Attn: Linda J. Allen Buyer acknowledges that the Escrow Agent is authorized...

Page 179
12 East 49th Street, New York, NY 10017 ABA No. 031201467 Account No. 2000045578553 Acct Name: Audiovow Corporation (c) The Parties acknowledge that the security procedures set forth in this Section 12 are commercially reasonable. 13. Fees of Escrow Agent . The Escrow Agent shall be entitled to ...

Page 180
... other day on which the Escrow Agent located at the notice address set forth above is authorized or required by law or ewecutive order to remain closed. 18. Amendment or Waiver. This Escrow Agreement may be changed, waived, discharged or terminated only by a writing signed by all of the parties to...

Page 181
... and the Purchase Agreement constitute the entire agreement between the Parties relating to the holding, investment and disbursement of the NWC Holdback/Escrow Funds and set forth in their entirety the obligations and duties of Escrow Agent with respect to the NWC Holdback/Escrow Funds. However, as...

Page 182
... LLC By: AUDIOVOX CORPORATION Its: Sole Member By: s/Charles M. Stoehr Charles M. Stoehr Its: Senior Vice President PARENT: AUDIOVOX CORPORATION By: s/Charles M. Stoehr Charles M. Stoehr Its: Senior Vice President SELLERS' REPRESENTATIVE: s/Fred S. Klipsch Fred S. Klipsch ESCROW AGENT...

Page 183
... to give Funds Transfer Instructions If from Buyer: Name Telephone Number Signature 1. _____ 2. _____ 3. _____ If from Sellers' Representative: Name Telephone Number Signature 1. _____ 2. _____ 3. _____ Telephone Number(s) for Call-Backs and Person(s) Designated to Confirm...

Page 184
Name Telephone Number 1. _____ 2. _____ _____ _____ _____ 3. _____ 11

Page 185
...-time fee payable upon Account Opening A New Account Acceptance Fee will be charged for the Bank's review of the Escrow Agreement along with any related account documentation. Annual Administrative Fee ...$2,500 Payable upon Account Opening and in Advance of each year of service as Escrow Agent...

Page 186
... limitation name, address and organizational documents ("identifying information"). The Parties agree to provide the Escrow Agent with and consent to the Escrow Agent obtaining from third parties any such identifying information required as a condition of opening an account with or using any service...

Page 187
... Direction Ewample [ ___] Account # [___] Reference is made to that certain Escrow Agreement (the "Escrow Agreement") dated as of February ___, 2011, by and among Soundtech LLC, a Delaware limited liability company ("Buyer"), Audiovow Corporation, a Delaware corporation ("Parent"), Fred S. Klipsch...

Page 188
... Escrow Earnings among Sellers Seller Vantagepoint Venture Partners III, L.P. Vantagepoint Venture Partners III (Q), L.P. Vantagepoint Venture Partners IV, L.P. Vantagepoint Venture Partners IV (Q), L.P. Vantagepoint Venture Partners IV Principals Fund, L.P. Fred S. Klipsch Judy L. Klipsch Wealth...

Page 189
[Execution] CREDIT AGREEMENT by and among AUDIOVOX ACCESSORIES CORP. AUDIOVOX ELECTRONICS CORPORATION AUDIOVOX CONSUMER ELECTRONICS, INC. AMERICAN RADIO CORP. CODE SYSTEMS, INC. INVISION AUTOMOTIVE SYSTEMS, INC. KLIPSCH GROUP, INC. BATTERIES.COM, LLC as Borrowers, AUDIOVOX CORPORATION as ...

Page 190
1

Page 191
.... Jurisdiction of Organization; Location of Chief Executive Office; Organizational Identification Number; 4.6. Commercial Tort Claims 4.7. Litigation 4.8. Compliance with Laws. 4.9. No Material Adverse Change. 4.10. Fraudulent Transfer. 4.11. Employee Benefits. 4.12. Environmental Condition...

Page 192
... Applications under Insolvency Statutes 5.19. Cash Management System NEGATIVE COVENANTS. 6.1. Indebtedness 6.2. Liens. 6.3. Restrictions on Fundamental Changes. 6.4. Disposal of Assets. 6.5. Change Name. 6.6. Nature of Business. 6.7. Nrepayments and Amendments 6.8. Change of Control. 6.9. Restricted...

Page 193
7 8 9 10 6.10. Accounting Methods. 6.11. Investments; Controlled Investments 6.12. Transactions with Affiliates. 6.13. Use of Nroceeds. 6.14. Limitation on Issuance of Stock. 6.15. Intentionally Deleted. 6.16. Consignments. FINANCIAL COVENANTS 7.1. Fixed Charge Coverage Ratio EVENTS OF DEFAULT. ...

Page 194
... Counterparts; Electronic Execution. 17.8. Revival and Reinstatement of Obligations. 17.9. Confidentiality. 17.10. Lender Group Expenses. ...17.11. Survival. 17.12. Natriot Act. 17.13. Anti-Money Laundering Legislation 17.14. Judgment Currency 17.15. Integration. 17.16. Narent as Agent...

Page 195
... Intellectual Nroperty Deposit Accounts and Securities Accounts Material Contracts Nermitted Indebtedness Taxes Union Representation Third Narty Locations Locations of Inventory and Equipment Financial Statements, Reports, Certificates Collateral Reporting Deposit Accounts Nature of Business 6

Page 196
... in such capacity, " Agent"), AUDIOVOX ACCESSORIES CORP., a Delaware corporation ("ACC"), AUDIOVOX ELECTRONICS CORPORATION , a Delaware corporation ("AEC"), AUDIOVOX CONSUMER ELECTRONICS, INC. , a Delaware corporation ("ACEI"), AMERICAN RADIO CORP., a Georgia corporation ("ARC"), CODE SYSTEMS, INC...

Page 197
joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein). The words "asset" and "property" shall be construed to ...

Page 198
... Inventory within the United States of America, Canada or the Netherlands, (xii) to reflect Agent's good faith estimate of the amount of any reserve necessary to reflect changes adverse to Lenders in applicable currency exchange rates or currency exchange markets and (xiii) reserves for matters that...

Page 199
... conditions precedent set forth in Section 3 have been satisfied on the Funding Date applicable thereto prior to making any Swing Loan. The Swing Loans shall be secured by Agent's Liens, constitute Advances and Obligations hereunder, and bear interest at the rate applicable from time to time to...

Page 200
...on demand and repaid within one (1) Business Day of such demand, secured by Agent's Liens, constitute Obligations hereunder, and bear interest at the rate applicable from time to time to Advances that are Base Rate Loans. The ability of Agent to make Nrotective Advances is separate and distinct from...

Page 201
... of such Lenders. If any such amount is not made available to Agent by any Lender on the Settlement Date applicable thereto to the extent required by the terms hereof, Agent shall be entitled to recover for its account such amount on demand from such Lender together with interest thereon at the...

Page 202
...date on which the non-Defaulting Lenders, Agent, and Borrowers shall have waived, in writing, the application of this Section 2.3(g) to such Defaulting Lender, or (2) the date on which such Defaulting Lender makes...of or in relation to such failure to fund. In the event of a direct conflict between ...

Page 203
... the Lender Group and shall be made in immediately available funds, no later than 12:00 noon (Eastern time) on the date specified herein. Any payment received by Agent later than 12:00 noon (Eastern time) shall be deemed to have been received on the following Business Day and any applicable interest...

Page 204
... part, without premium or penalty. e. Mandatory Prepayments . i. Borrowing Base . If, at any time, the Revolver Usage on such date exceeds the lesser of the Borrowing Base or the Maximum Credit (any such excess being referred to as the " Overadvance "), then Borrowers shall, within one (1) Business...

Page 205
..., as applicable, (B) the issuance of Stock of Narent to directors, officers and employees of Narent pursuant to employee stock option plans (or other employee incentive plans or other compensation arrangements) approved by the Board of Directors, and (C) the issuance of Stock of Narent in order to...

Page 206
...-six (366) days, in the case of Advances for which the Base Rate is used), in each case, for the actual number of days elapsed in the period during which the interest or fees accrue. In the event the Base Rate is changed from time to time hereafter, the rates of interest hereunder based upon the...

Page 207
... into the Agent Nayment Account on a non-Business Day or after 12:00 noon (Eastern time) on a Business Day, it shall be deemed to have been received by Agent as of the opening of business on the immediately following Business Day. 2.8. Designated Account. Agent is authorized to make the Advances...

Page 208
...to secure the obligations of a Loan Narty in respect of such lease and (2) in the case of... and the Lender Group hereby acknowledge and agree...makes a payment under an Underlying Letter of Credit, Borrowers shall pay to Agent an amount equal to the applicable Letter of Credit Disbursement on the date...

Page 209
... Lender and Agent (for the account of the Issuing Lender) shall be entitled to recover such amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate until paid in full. e. Each Borrower hereby agrees to indemnify, save, defend, and hold the Lender Group and each...

Page 210
... other member of the Lender Group, or an Underlying Issuer of issuing, making, guaranteeing, or maintaining any Reimbursement Undertaking or Letter of Credit or to reduce the amount receivable in respect thereof, then, and in any such case, Agent may, at any time within a reasonable period after the...

Page 211
... changes in tax laws (except changes of general applicability in corporate income tax laws and changes in laws relative to Taxes, which shall be governed by Section 16) and changes in the reserve requirements after the Closing Date imposed by the Board of Governors of the Federal Reserve System...

Page 212
... in market conditions or any law, regulation, treaty, or directive, or any change therein or in the interpretation or application thereof, shall at any time after the date hereof, in the reasonable opinion of any Lender, make it unlawful or impractical for such Lender to fund or maintain LIBOR Rate...

Page 213
... Borrower Agent may, at any time, deliver a written request to Agent to ...rate shall apply to all Lenders on all Commitments. c. The Maximum Credit shall be increased by the amount of the increase in the applicable Commitments from Lenders or new Commitments from Eligible Transferees, in each case...

Page 214
... set forth in Section 3.2 shall be satisfied as of the date of the increase in the Maximum Credit, both before and after giving effect to such increase; iii. such increase in the Maximum Credit, on the date of the effectiveness thereof, shall not violate any applicable law, regulation or order...

Page 215
..., subject to Section 9 herein may be enforced by it or them from time to time against any or all Borrowers as often as occasion therefor may arise and without requirement on the part of Agent, any member of the Lender Group, any Bank Nroduct Nrovider, or any of their successors or assigns first to...

Page 216
... release documents (and, if applicable, in recordable form) as are reasonably necessary to release, as of record, Agent's Liens and all notices of security interests and liens previously filed by Agent and Loan Narties shall execute and deliver to Agent a general release of Agent and Lenders in form...

Page 217
... capital Stock. b. Set forth on Schedule 4.1(c) (as such Schedule may be updated from time to time to reflect changes resulting from transactions permitted under this Agreement), is a complete and accurate list of the Loan Narties' direct and indirect Subsidiaries, showing: (i) the number of shares...

Page 218
... of Organization; Location of Chief Executive Office; Organizational Identification Number; Commercial a. The name of (within the meaning of Section 9-503 of the Code or within the NNSA, as applicable) and jurisdiction of organization of each Loan Narty and each of its Subsidiaries is set forth on...

Page 219
... nor any of its Subsidiaries (a) is in violation of any applicable laws, rules, regulations, executive orders, or codes (including Environmental Laws) that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Change, or (b) is subject to or in default with...

Page 220
...time to time) is a listing of all of the Loan Narties' and their Subsidiaries' Deposit Accounts and Securities Accounts, including, with respect to each bank or securities intermediary (a) the name and address of such Nerson, and (b) the account numbers of the Deposit Accounts or Securities Accounts...

Page 221
...or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the...

Page 222
...any fact necessary to make the statements therein not misleading, in any case that could reasonably be expected to result in a Material Adverse Change. b. As of the Closing Date, the Klipsch Acquisition has been consummated in all material respects, in accordance with all applicable laws. As of the...

Page 223
...each of the reports set forth on Schedule 5.2 at the times specified therein. In addition, each Borrower agrees to use commercially reasonable efforts in cooperation with Agent to facilitate and implement a system of electronic collateral reporting in order to provide electronic reporting of each of...

Page 224
... interruption (only to the extent the Loan Narties begin maintaining business interruption insurance after the Closing Date), general liability, product liability insurance, director's and officer's liability insurance, fiduciary liability insurance, and employment practices liability insurance...

Page 225
...times at the expense of Agent and Lenders. 5.8. Compliance with Laws. Comply with the requirements of all applicable laws, rules, regulations, and orders...of changes after the Closing Date, the Borrowers shall promptly, and in no event later than five (5) Business Days thereafter, advise the Agent ...

Page 226
... time that any Loan Narty forms any direct or indirect Subsidiary or acquires any direct or indirect Subsidiary after the Closing Date, such Loan Narty shall (a) within ten (10) days of such formation or acquisition (or such later date as permitted by Agent in its sole discretion) cause any such new...

Page 227
...the Required Lenders and upon reasonable prior notice, hold a meeting (at a mutually agreeable location and time or, at the option of Agent, by conference call) with all Lenders who choose to attend such meeting at which meeting shall be reviewed the financial results of the previous fiscal year and...

Page 228
... permit directly or indirectly, Agent or any Lender to be classified with any other creditor as an "affected" creditor for purposes of such plan or proposal or otherwise. 5.19. Cash Management System. Borrowers shall (a) on or prior to June 1, 2011, establish its principal deposit accounts at...

Page 229
... Subsidiaries may change its name upon at least ten (10) days prior written notice to Agent of such change. 6.6. Nature of Business. Make any material change in the nature of its or their business as described in Schedule 6.6 or acquire any properties or assets that are not reasonably related to...

Page 230
...10. Accounting Methods. Modify or change its fiscal year (currently March 1 through February 28 or February 29, as applicable) or its method of accounting (other than as may be required to conform to GAAN). 6.11. Investments; Controlled Investments . a. Directly or indirectly, make or acquire any...

Page 231
... of the consideration payable in connection with the consummation of the Klipsch Acquisition, after the application of the proceeds of certain cash of Narent as set forth in the information received by Agent prior to the date hereof, and (iii) to pay transactional fees, costs, and expenses incurred...

Page 232
... any Borrower refuses to allow Agent or its representatives or agents to visit such Borrower's properties, inspect its assets or books or records, examine and make copies of its books and records, or discuss such Borrower's affairs, finances, and accounts with officers and employees of such Borrower...

Page 233
... on which such failure shall first become known to any executive officer of any Borrower or (ii) the date on which written notice thereof is given to Borrower Agent by Agent; 8.3. If one or more judgments, orders, or awards for the payment of money involving an aggregate amount of $5,000,000, or...

Page 234
... on such Loan Narty's business or as security for loans or advances to enable the Receiver to carry on such Loan Narty's business or otherwise, as such Receiver shall, in its discretion, determine. Except as may be otherwise directed by Agent, all money received from time to time by such Receiver in...

Page 235
...Agent complies with its obligations, if any, under the Code, the NNSA and this Agreement to the extent specifically applicable to the matters set forth in this Section 10.2, the Lender Group... Indemnified Nerson or its officers, directors, employees, attorneys, or agents. This provision shall survive...

Page 236
... in accordance herewith), or telefacsimile. In the case of notices or demands to Borrowers or Agent, as the case may be, they shall be sent to the respective address set forth below: If to Borrowers: Audiovox Corporation 180 Marcus Boulevard Hauppauge, New York 11788 Attn: Mr. Mike Stoehr Fax No...

Page 237
... Lender or an Related Fund or (y) a group of new Lenders, each of which is an Affiliate of each other or a Related Fund of such new Lender to the ...date that Agent notifies the assigning Lender (with a copy to Borrowers) that it has received an executed Assignment and Acceptance and, if applicable...

Page 238
...Lender proptanto. e. Any Lender may at any time sell to one or more commercial banks, financial institutions, or other Nersons (a " Narticipant ...the final maturity date of the Obligations hereunder in which such Narticipant is participating, (B) reduce the interest rate applicable to the Obligations ...

Page 239
... Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law. h. Agent (as a non-fiduciary agent on behalf of Borrowers) shall maintain, or cause to be maintained, a register (the " Register") on which it enters the name and address of each Lender as the...

Page 240
...writing and signed by all of the Lenders directly affected ... delay any date fixed by this...financial covenants in this Agreement shall not constitute a reduction in the rate...Accounts, Eligible Inventory or Eligible In-Transit Inventory, that are used in such definition to the extent that any such change...

Page 241
... relates only to the relationship of the Lender Group ...applicable, shall refuse or fail to execute and deliver any such Assignment and Acceptance prior to the effective date of such replacement, Agent may, but shall not be required to, execute and deliver such Assignment and Acceptance in the name...

Page 242
... or the other Loan Documents with reference to Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only...

Page 243
...independently and without reliance upon any Agent-Related Nerson and based on such due diligence, documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness...

Page 244
... of Agent. 15.8. Agent in Individual Capacity. WFCF and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, provide Bank Nroducts to, acquire equity interests in, and generally engage in any kind of banking, trust, financial advisory, underwriting...

Page 245
... Dutch security. 15.10. Lender in Individual Capacity. Any Lender and its respective Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, provide Bank Nroducts to, acquire equity interests in and generally engage in any kind of banking, trust, financial...

Page 246
... bid and purchase (either directly or through one or more acquisition vehicles) or to sell or otherwise dispose of (or to consent to any such sale or other disposition of) all or any portion of the Collateral at any sale thereof conducted by Agent under the provisions of the Code or the NNSA (or...

Page 247
...with Article 8 or Article 9, as applicable, of the Code, or in accordance with the NNSA, can be perfected by possession or control. Should any Lender obtain possession or control of any such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's request therefor shall deliver...

Page 248
... responsibility to and indemnification by the Lender Group, the Borrowers or the Guarantors. The execution prior to the date hereof by Agent of any Deed of Hypothec, Nledge or other security documents made pursuant to the laws of the Nrovince of QuÃ©bec (Canada) is hereby ratified and confirmed. The...

Page 249
holding the power of attorney (fondÃ© de pouvoir), and of Agent, as agent, mandatary, custodian and depositary with respect to any bond that may be issued and pledged from time to time to Agent for the benefit of the Lender Group, shall be deemed to have been ratified and confirmed by each Nerson ...

Page 250
... any Borrower (within the meaning of Section 871(h)(3)(B) of the IRC), or (3) a controlled foreign corporation related to any Borrower within the meaning of Section 864(d)(4) of the IRC, and (B) a properly completed and executed IRS Form W-8BEN or Form W-8IMY (with proper attachments); (ii) if such...

Page 251
... reason) such Lender shall indemnify and hold Agent harmless (or, in the case of a Narticipant, such Narticipant shall indemnify and hold the Lender granting the participation harmless) for all amounts paid, directly or indirectly, by Agent (or, in the case of a Narticipant, to the Lender granting...

Page 252
... Lender Group or any Borrower, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by ... security interests (and, if applicable, guarantees) granted to Agent and the right to share in payments and collections out of the Collateral as more fully set ...

Page 253
...manner, and shall not be disclosed by Agent and the Lenders to Nersons who are not parties to this Agreement, except: (i) to attorneys for and other advisors, accountants, auditors, and consultants to any member of the Lender Group and to employees, directors and officers of any member of the Lender...

Page 254
..." laws, whether within Canada or elsewhere (collectively, including any guidelines or orders thereunder, "AML Legislation"), Agent and Lenders may be required to obtain, verify and record information regarding each Loan Narty, its respective directors, authorized signing officers, direct or indirect...

Page 255
...of the Loan Account and Collateral in a combined fashion, as more fully set forth herein, is done solely as an accommodation to Borrowers in order to utilize the collective borrowing powers of Borrowers in the most efficient and economical manner and at their request, and that Lender Group shall not...

Page 256
... to filing, registering or recording under the Code or NNSA shall include publication under the Civil Code of Quebec, (g) all references to "perfection" of or "perfected" liens or security interest shall include a reference to an "opposable" or "set up" lien or security interest as against third...

Page 257
... Shelton Title: CFO/Secretary/Treasurer AUDIOVOX CONSUMER ELECTRONICS, INC. By:/s/ Loriann Shelton Name: Loriann Shelton Title: CFO/Secretary/Treasurer AMERICAN RADIO CORP. By:/s/ Charles M. Stoehr Name: Charles M. Stoehr Title: Vice Nresident CODE SYSTEMS, INC. By:/s/ Charles M. Stoehr...

Page 258
KLIPSCH GROUP, INC. By:/s/ Frederick L. Farrar Name: Frederick L. Farrar Title: Executive Vice Nresident/CFO/Treasurer/Assistant Secretary BATTERIES.COM, LLC By:/s/ Loriann Shelton Name: Loriann Shelton Title: Secretary 69

Page 259
WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited liability company, as Agent and as a Lender By:/s/ Richard K. Schultz Name: Richard K. Schultz Title: Director 70

Page 260
SIEMENS FINANCIAL SERVICES, INC., as a Lender By:/s/ Anthony Casciano Name: Anthony Casciano Title: Managing Director By:/s/ David Kantes Name: David Kantes Title: Senior Vice Nresident and Chief Risk Officer 71

Page 261
HSBC BANK USA, NATIONAL ASSOCIATION, as a Lender By:/s/ Thomas C. Getty, Jr. Name: Thomas C. Getty, Jr. Title: Vice Nresident 72

Page 262
CANITAL ONE LEVERAGE FINANCE CORN., as a Lender By:_____ Name: Title: 73

Page 263
TD BANK, N.A., as a Lender By:_____ Name: Title: 74

Page 264
... who is obligated on an Account, chattel paper, or a general intangible. "Accounting Changes " means changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified...

Page 265
... thereto for any period on the date required hereunder, effective as of the date on which such Borrowing Base Certificate or other information was otherwise required, at Agent's option, the Applicable Margin shall be based on the highest rate above until the next Business Day after a Borrowing Base...

Page 266
...those loans making reference thereto and is evidenced by the recording thereof after its announcement in such internal publications as Wells Fargo may designate. "Base Rate Loan " means each portion of the Advances that bears interest at a rate determined by reference to the Base Rate. "Benefit Nlan...

Page 267
... interbank market. "Canadian Guarantors " means, collectively, the following (together with their respective successors and assigns): (a) Audio Nroducts International Corp., a corporation formed under the laws of the Nrovince of Ontario and (b) Audiovox Canada Limited, a corporation formed under...

Page 268
.... "Code" means the New York Uniform Commercial Code, as in effect from time to time. "Collateral" means all assets and interests in assets (other than the real property located in Hope, Arkansas which is owned by Klipsch on the Closing Date) and proceeds thereof now owned or hereafter acquired by...

Page 269
...to the Board of Directors by either the Nermitted Holders or a majority of the Continuing Directors. "Control Agreement " means a control agreement, in form and substance reasonably satisfactory to Agent, executed and delivered by a Loan Narty, Agent, and the applicable securities intermediary (with...

Page 270
...advance rate against Eligible Accounts by 1 percentage point for each percentage point by which Dilution is in excess of five (5%) percent . "Dollars" or "$ " means United States dollars. "Dutch Guarantor " means Klipsch Group Europe, B.V., a private company with limited liability with its corporate...

Page 271
... form, substance, and issuer or domestic confirming bank) that has been delivered to Agent and is directly drawable by Agent, h. Accounts with respect to which the Account Debtor is either (i) the United States or Canada, or any department, agency, or instrumentality thereof (exclusive, however, of...

Page 272
... operator and has been signed or otherwise authenticated by it in such capacity or as a named agent for or on behalf of the carrier or multilmodal transport operator, in any case respecting such Inventory and either (A) names Agent as the consignee (either directly or by means of endorsements...

Page 273
..., as applicable, does not have actual and exclusive possession thereof (either directly or through a bailee or agent of Borrowers, such Canadian Guarantor or Dutch Guarantor), c. it is not located at one of the locations in the continental United States, Canada or the Netherlands set forth on...

Page 274
..., its use or its sale, work-inprocess, or goods that constitute spare parts, packaging and shipping materials, supplies used or consumed in such Borrower's, such Canadian Guarantor's or Dutch Guarantor's business, bill and hold goods, defective goods, "seconds," Inventory consigned to a third...

Page 275
... " means the Securities Exchange Act of 1934, as in effect from time to time. "Exchange Rate " means the prevailing spot rate of exchange of such bank as Agent may reasonably select for the purpose of conversion of one currency to another, at or around 11:00 a.m. New York time, on the date on which...

Page 276
.... "GAAN" means generally accepted accounting principles as in effect from time to time in the United States, consistently applied; provided, that, (a) if the Borrower Agent notifies the Agent that the Loan Narties have elected to report under the International Financial Reporting Standards ("IFRS...

Page 277
... " Guarantor " means any one of them. "Guaranty" means that certain general continuing guaranty, dated as of even date with the Agreement, executed and delivered by each Guarantor in favor of Agent, for the benefit of the Lender Group and the Bank Nroduct Nroviders, in form and substance reasonably...

Page 278
... (excluding (a) commission, travel, and similar advances to officers and employees of such Nerson made in the ordinary course of business, and (b) bonapfide Accounts arising in the ordinary course of business), or acquisitions of Indebtedness, Stock, or all or substantially all of the assets of...

Page 279
... by Narent of all of the Stock of Klipsch Group, Inc. pursuant to the Klipsch Acquisition Documents. "Klipsch Acquisition Agreement " means the Stock Nurchase Agreement, dated as of February 3, 2011, by and among Soundtech, LLC, Audiovox Corporation, Klipsch Group, Inc., each of its shareholders...

Page 280
... Loan Narty in favor of Agent or any Lender, any Dutch deed of pledge executed by any Loan Narty in favor of Agent, any note or notes executed by any Borrower in connection with the Agreement and payable to any member of the Lender Group, any letter of credit application entered into by any Borrower...

Page 281
...amount equal to the recovery on the aggregate amount of the applicable category of Eligible Inventory at such time on a "net orderly liquidation value" basis as set forth in the most recent acceptable inventory appraisal received by Agent in accordance with the requirements of this Agreement, net of...

Page 282
... The Office of Foreign Assets Control of ...Acquisition and the making of any payment in respect thereof (including any deferred purchase price payment, indemnification payment, purchase price adjustment, earn out or similar payment), on a pro forma basis using the Excess Availability as of the date...

Page 283
... to Agent, e. the Acquisition shall be with respect to an operating company or division or line of business that engages in a line of business substantially similar, reasonably related or incidental to the business that Borrowers are engaged in and is located in the United States, Canada or...

Page 284
... to be so disposed are readily identifiable as assets acquired pursuant to such Nermitted Acquisition, p. the sale by Narent of its joint venture interests in Audiovox Specialized Applications, LLC so long as (i) such sale is made at fair market value and (ii) not less than seventy (70%) percent...

Page 285
... foundation a majority of whose members, trustees or directors, as the case may be, are John J. Shalam or any other Shalam Associates, and (e) any corporation, partnership or other Nerson controlled by, controlling or under common control with any Nerson controlled by any of the Nersons included in...

Page 286
..., purchase cards (including so-called "procurement cards" or "N-cards"), or Cash Management Services, in each case, incurred in the ordinary course of business, l. unsecured Indebtedness of Narent owing to former employees, officers, or directors (or any spouses, ex-spouses, or estates of any of the...

Page 287
... such Indebtedness or claims, i. deposits of cash made in the ordinary course of business to secure performance of operating leases, j. non-cash loans to employees, officers, and directors of Narent for the purpose of purchasing Stock in Narent so long as the proceeds of such loans are used in their...

Page 288
... Closing Date in an aggregate principal amount outstanding at any one time not in excess of $7,500,000. "Nerson" means natural persons, corporations, limited liability companies, limited partnerships, general partnerships, limited liability partnerships, joint ventures, trusts, land trusts, business...

Page 289
... Account or Securities Account is the subject of a Control Agreement (and for which Agent shall have received evidence, in form and substance reasonably satisfactory to Agent, of the amount of such cash or Cash Equivalents held in such deposit account or investment account as of the applicable date...

Page 290
... on Schedule R-1 and any Real Nroperty hereafter acquired by Borrowers or their Subsidiaries having a fair market value of at least $2,500,000. "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable...

Page 291
..., as amended from time to time, and any successor statute. "Security Agreement " means a Security Agreement, dated of even date herewith, in form and substance reasonably satisfactory to Agent, executed and delivered by each Loan Narty to Agent. "Seller" means, collectively, Klipsch Group, Inc. and...

Page 292
... other entity in which that Nerson directly or indirectly owns or controls the shares of Stock having ordinary voting power to elect a majority of the board of directors (or appoint other comparable managers) of such corporation, partnership, limited liability company, or other entity. "Swing Lender...

Page 293
... number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment. "Wells Fargo" means Wells Fargo Bank, National Association, a national banking association. "WFCF" means Wells Fargo Capital Finance, LLC, a Delaware limited liability company...

Page 294
...this Agreement, the Controlled Account Agreements (subject to clause (o) below), the Control Agreements, iv. the Security Agreement, v. a disbursement letter executed and delivered by each Borrower to Agent regarding the extensions of credit to be made on the Closing Date, the form and substance...

Page 295
... substance reasonably satisfactory to Agent, and (iii) have received an officer's closing certificate prepared by the chief financial officer of Narent as to the consummation of the Klipsch Acquisition and related matters, the compliance by Borrowers with the covenant set forth in Section 7.1 after...

Page 296
... and Guarantors (including the companies acquired pursuant to the Klipsch Acquisition) in form and substance satisfactory to Agent, (iii) any updates or modifications to the projected financial statements of Borrowers and Guarantors previously received by Agent, in each case in form and substance...

Page 297
... price for the Klipsch Acquisition and that Soundtech LLC has paid all of such funds to the Seller in respect of the purchase price for the Klipsch Acquisition, subject to purchase price adjustments in accordance with the Klipsch Acquisition Agreement; ab. Agent shall have received and reviewed...

Page 298
... Finance, LLC A/C # 37072820231200971 Ref: AUDIOVOX CORNORATION Account Related to Lender Settlements: Bank: Wells Fargo Bank, N.A. 420 Montgomery Street San Francisco, CA ABA # 121-000-248 Account Name: Wells Fargo Capital Finance, LLC A/C # 4124923707 Ref: Audiovox Corporation Swift...

Page 299
Schedule C-1 Commitments Lender Wells Fargo Capital Finance, LLC TD Bank, N.A. Siemens Financial Services, Inc. HSBC Bank USA, National Association Capital One Leverage Finance Corp. TOTAL: $ $ $ $ $ $ 110 Commitment 75,000,000 25,000,000 25,000,000 25,000,000 25,000,000 175,000,000

Page 300
... are subject to such rates at a rate reduced by an applicable tax treaty.] 4. Following the execution of this Assignment Agreement by the Assignor and Assignee, the Assignor will deliver this Assignment Agreement to the Agent for recording by the Agent. The effective date of this Assignment (the...

Page 301
officers, as of the first date written above. [NAME OF ASSIGNOR] as Assignor By _____ Name: Title: [NAME OF ASSIGNEE] as Assignee By _____ Name: Title: ACCENTED THIS ____ DAY OF _____ WELLS FARGO CANITAL FINANCE, LLC, a Delaware limited liability company, as Agent By _____ Name: Title:...

Page 302
... Electronics, Inc., American Radio Corp., Code Systems, Inc., Invision Automotive Systems, Inc., Batteries.Com, LLC and Klipsch Group, Inc. 2. Name and Date of Credit Agreement: Credit Agreement, dated as of _____, 2011, by and among Audiovox Corporation, as Narent, Borrowers, the lenders from time...

Page 303
...FARGO CANITAL FINANCE, LLC, a Delaware limited liability company, as agent for the Lenders (together with its successors and assigns in such capacity, "Agent"), AUDIOVOX ACCESSORIES CORN., AUDIOVOX ELECTRONICS CORNORATION, AUDIOVOX CONSUMER ELECTRONICS, INC., AMERICAN RADIO CORN., CODE SYSTEMS, INC...

Page 304
... agreement may be executed in any number of counterparts and ...RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK...LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK. EACH OF BORROWERS, SNECIFIED BANK NRODUCTS NROVIDER, AND AGENT...

Page 305
Sincerely, [SNECIFIED BANK NRODUCTS NROVIDER] By: _____ _____ 114 Name: _____ Title:

Page 306
Acknowledged, accepted, and agreed as of the date first written above: AUDIOVOX CORNORATION, as Borrower Agent By: _____ _____ Name: _____ Title: 115

Page 307
Acknowledged, accepted, and agreed as of _____, 20__: WELLS FARGO CANITAL FINANCE, LLC, a Delaware limited liability company, as Agent By: _____ _____ Name: _____ Title: 116

Page 308
...FARGO CANITAL FINANCE, LLC, a Delaware limited liability company, as agent for the Lenders (together with its successors and assigns in such capacity, "Agent"), AUDIOVOX ACCESSORIES CORN., AUDIOVOX ELECTRONICS CORNORATION, AUDIOVOX CONSUMER ELECTRONICS, INC., AMERICAN RADIO CORN., CODE SYSTEMS, INC...

Page 309
SCHEDULE 1 Financial Information 118

Page 310
SCHEDULE 2 Default or Event of Default 119

Page 311
SCHEDULE 3 Representations and Warranties 120

Page 312
SCHEDULE 4 Financial Covenants Fixed Charge Coverage Ratio . Narent and its Subsidiaries' Fixed Charge Coverage Ratio, measured on a month-end basis, for the [___] month period ending _____, _____ is ___:1.0, which [is/is not] greater than or equal to the amount set forth in Section 7 of the ...

Page 313
...Street New York, New York 10017 Ladies and Gentlemen: Reference hereby is made to that certain Credit Agreement, dated as of _____ (the " Credit Agreement "), among AUDIOVOX ACCESSORIES CORN., AUDIOVOX ELECTRONICS CORNORATION, AUDIOVOX CONSUMER ELECTRONICS, INC., AMERICAN RADIO CORN., CODE SYSTEMS...

Page 314
122

Page 315
..., certified by the chief financial officer of Borrowers as being such officer's good faith estimate of the financial performance of Borrowers during the period covered thereby. 17.6 Form 10-Q quarterly reports, Form 10-K annual reports, Form 8-K current reports, registration statements and proxy...

Page 316
...) royalty GL reserve. 17.12 a reconciliation of Accounts, trade accounts payable, and Inventory of each Borrower's general ledger accounts to its monthly financial statements including any book reserves related to each category. 17.13 a report regarding each Borrower's and its Subsidiaries' accrued...

Page 317
and credit memos in excess of an amount determined in the sole discretion of Agent, from time to time, and 17.18 such other reports as to the Collateral or the financial condition of any Borrower and its Upon request by Agent Subsidiaries, as Agent may reasonably request. 124

Page 318
...Audiovox Consumer Electronics, Inc., a Delaware corporation (" ACEI"), American Radio Corp., a Georgia corporation (" ARC"), Code Systems, Inc., a Delaware corporation (" CSI"), Invision Automotive Systems, Inc., a Delaware corporation (" IAS"), Klipsch Group, Inc., an Indiana corporation (" Klipsch...

Page 319
... such Grantor's assets (including the Collateral) or liabilities, each Grantor's Records relating to such Grantor's business operations or financial condition, and each Grantor's goods or General Intangibles related to such information). (j) "Borrowers" has the meaning specified therefor in...

Page 320
..., trade secrets, know-how, inventions (whether or not patentable), algorithms, software programs (including source code and object code), processes, product designs, industrial designs, blueprints, drawings, data, customer lists, URLs and domain names, specifications, documentations, reports...

Page 321
...the Code), and includes letters of credit and guaranties issued in support of Accounts, Chattel Paper, documents, General Intangibles, instruments or Investment Related Property. (bj) "Trademarks" means any and all trademarks, trade names, registered trademarks, trademark applications, service marks...

Page 322
... resource locator," an internet web address. 2. Grant of Security . Each Grantor hereby unconditionally grants, assigns, and pledges to Agent, for the benefit of each member of the Lender Group and each of the Bank Product Providers, to secure the Secured Obligations, a continuing security interest...

Page 323
... or arising hereafter. Without limiting the generality of the foregoing, this Agreement secures the payment of all amounts which constitute part of the Secured Obligations and would be owed by Grantors, or any of them, to Agent, the Lender Group, the Bank Product Providers or any of them, but...

Page 324
... filing of financing statements listing each applicable Grantor, as a debtor, and Agent, as secured party, in the jurisdictions listed next to such Grantor's name on Schedule 8 . Upon the making of such filings, Agent shall have a first priority perfected security interest in the Collateral of each...

Page 325
... with such disposition of Investment Related Property by laws affecting the offering and sale of securities generally. No Intellectual Property License of any Grantor that is necessary to the conduct of such Grantor's business requires any consent of any other Person in order for such Grantor to...

Page 326
... legend: "This writing and the obligations evidenced or secured hereby are subject to the Security Interest of Wells Fargo Capital Finance, LLC, as Agent for the benefit of the Lender Group and the Bank Product Providers"; (c) Control Agreements . i. Except to the extent otherwise excused by...

Page 327
... shall be assigned to Agent, for the benefit of the Lender Group and the Bank Product Providers, and shall provide written notice thereof under the Assignment of Claims Act or other applicable law; (g) Intellectual Property . i. Upon the request of Agent, in order to facilitate filings with...

Page 328
... itself or through any agent, employee, licensee, or designee, file an application for the registration of any Copyright with the United States Copyright Office or any similar office or agency in another country without giving Agent written notice thereof at least three (3) Business Days prior to...

Page 329
... Real Property with a fair market value in excess of $2,500,000, it will promptly (and in any event within five (5) Business Days of acquisition) notify Agent of the acquisition of such Real Property and will grant to Agent, for the benefit of the Lender Group and the Bank Product Providers, a first...

Page 330
... exercise any rights of setoff or recoupment or any other claim against the applicable Controlled Account other than for payment of its service fees and other charges directly related to the administration of such Controlled Account and for returned checks or other items of payment, and (C) upon the...

Page 331
..., or selling Inventory or other Collateral and to collect any amounts due under Accounts, contracts or Negotiable Collateral of such Grantor; and (g) Agent, on behalf of the Lender Group or the Bank Product Providers, shall have the right, but shall not be obligated, to bring suit in its own name to...

Page 332
... time), Agent or Agent's designee may (a) notify Account Debtors of any Grantor that the Accounts, General Intangibles, Chattel Paper or Negotiable Collateral of such Grantor have been assigned to Agent, for the benefit of the Lender Group and the Bank Product Providers, or that Agent has a security...

Page 333
... Grantor's Securities Accounts in which Agent's Liens are perfected by control under Section 9-106 of the Code, instruct the securities intermediary maintaining such Securities Account for the applicable Grantor to (A) transfer any cash in such Securities Account to or for the benefit of Agent, or...

Page 334
...Secured Obligations. (b) Grantors, jointly and severally, shall, upon demand, pay to Agent (or Agent, may charge to the Loan Account) all the Lender Group Expenses which Agent...the benefit of, and be enforceable by, Agent, and its successors, transferees and assigns. Without limiting the generality ...

Page 335
...upon or power exercisable by the "Agent" shall be a reference to Agent, for the benefit of each member of the Lender Group and each of the Bank Product Providers. 26. Miscellaneous . (a) This Agreement is a Loan Document. This Agreement may be executed in any number of counterparts and by different...

Page 336
... case of Letters of Credit or Bank Products, providing Letter of Credit Collateralization or Bank Product Collateralization, as applicable) of all Secured Obligations other than unasserted contingent indemnification Secured Obligations and other than any Bank Product Obligations that, at such time...

Page 337
... Shelton Title: CFO/Secretary/Treasurer AUDIOVOX CONSUMER ELECTRONICS, INC. By:s/Loriann Shelton Name: Loriann Shelton Title: CFO/Secretary/Treasurer AMERICAN RADIO CORP., By:s/Charles M. Stoehr Name: Charles M. Stoehr Title: Vice President GRANTORS: CODE SYSTEMS, INC. By: s/Charles M. Stoehr...

Page 338
... PREVIOUS PAGE] KLIPSCH GROUP, INC. By: s/Frederick L. Farrar Name: Frederick L. Farrar Title: Executive Vice President/CFO/ Treasurer/Assistant Secretary BATTERIES.COM, LLC By: s/Loriann Shelton Name: Loriann Shelton Title: Secretary SOUNDTECH LLC By: s/Charles M. Stoehr Name: Charles M. Stoehr...

Page 339
TECHNUITY, INC. By: s/Loriann Shelton Name: Loriann Shelton Title: Secretary ELECTRONICS TRADEMARK HOLDING COMPANY, LLC By:s/Charles M. Stoehr Name: Charles M. Stoehr Title: Secretary 22

Page 340
... AUDIOVOX MEXICO S. DE R.L. DE C.V. By:s/Charles M. Stoehr Name: Charles M. Stoehr Title: Manager AUDIOVOX VENEZUELA C.A. By:s/Charles M. Stoehr Name: Charles M. Stoehr Title: Vice President KLIPSCH GROUP EUROPE, B.V. By:s/Frederick L. Farrar Name: Frederick L. Farrar Title: Managing Director...

Page 341
WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited liability company By: s/Richard K. Schultz Name: Richard K. Schultz Title: Director AGENT: 24

Page 342
SCHEDULE 1 COMMERCIAL TORT CLAIMS [include specific case caption or descriptions per Official Code Comment 5 to Section 9-108 of the Code] 25

Page 343
SCHEDULE 2 COPYRIGHTS 26

Page 344
SCHEDULE 3 INTELLECTUAL PROPERTY LICENSES 27

Page 345
SCHEDULE 4 PATENTS 28

Page 346
SCHEDULE 5 TRADEMARKS 29

Page 347
... Corporation Audiovox Corporation Audiovox Corporation Audiovox Corporation Audiovox Corporation Audiovox Corporation Audiovox Corporation Name of Pledged Company Audiovox Accessories Corporation Audiovox Consumer Electronics, Inc. Audiovox Electronics Corporation American Radio Corp. Soundtech LLC...

Page 348
SCHEDULE 6(k) CONTROLLED ACCOUNT BANKS 31

Page 349
SCHEDULE 7 OWNED REAL PROPERTY 32

Page 350
... Systems Inc. Klipsch Group, Inc. Batteries.Com, LLC Soundtech LLC Audiovox Websales LLC Omega Research and Development Technology LLC Latin America Exports Corp. Technuity, Inc. Carribean Technical Export, Inc. Electronics Trademark Holding Company, LLC Audiovox Venezuela C.A. Audiovox Mexico...

Page 351
..."), American Radio Corp., a Delaware corporation (" ARC"), Code Systems, Inc., a Delaware corporation (" CSI"), Invision Automotive Systems, Inc., a Delaware corporation (" IAS"), Batteries.com, LLC, an Indiana limited liability company (" Batteries") and Klipsch Group, Inc. (" Klipsch" and together...

Page 352
... Agreement shall be deemed to include each New Grantor. The Security Agreement is incorporated herein by reference. Each New Grantor authorizes Agent at any time and from time to time to file, transmit, or communicate, as applicable, financing statements and amendments thereto (i) describing the...

Page 353
... Security Agreement to be executed and delivered as of the day and year first above written. [NAME OF NEW GRANTOR] By:_____ NEW GRANTORS: Name: Title: [NAME OF NEW GRANTOR] By:_____ Name: Title: WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited liability company By:_____ AGENT: Name: Title...

Page 354
..."), American Radio Corp., a Delaware corporation (" ARC"), Code Systems, Inc., a Delaware corporation (" CSI"), Invision Automotive Systems, Inc., a Delaware corporation (" IAS"), Batteries.com, LLC, an Indiana limited liability company (" Batteries") and Klipsch Group, Inc. (" Klipsch" and together...

Page 355
... the benefit of the Lender Group and the Bank Product Providers, pursuant to the Security Agreement. Each Grantor hereby acknowledges and affirms that the rights and remedies of Agent with respect to the Security Interest in the Copyright Collateral made and granted hereby are more fully set forth...

Page 356
...SECURITY AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK...COMMON LAW OR STATUTORY CLAIMS. AGENT AND EACH GRANTOR REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY ...

Page 357
... Copyright Security Agreement to be executed and delivered as of the day and year first above written. _____ By:_____ NEW GRANTORS: Name: Title: _____ By:_____ Name: Title: ACCEPTED AND ACKNOWLEDGED BY: WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited liability company By:_____ AGENT: Name...

Page 358
SCHEDULE I TO COPYRIGHT SECURITY AGREEMENT COPYRIGHT REGISTRATIONS Grantor Country Copyright Registration No. Registration Date Copyright Licenses 41

Page 359
..."), American Radio Corp., a Delaware corporation (" ARC"), Code Systems, Inc., a Delaware corporation (" CSI"), Invision Automotive Systems, Inc., a Delaware corporation (" IAS"), Batteries.com, LLC, an Indiana limited liability company (" Batteries") and Klipsch Group, Inc. (" Klipsch" and together...

Page 360
arising hereafter. Without limiting the generality of the foregoing, this Patent Security Agreement secures the payment of all amounts which constitute part of the Secured Obligations and would be owed by Grantors, or any of them, to Agent, the Lender Group, the Bank Product Providers or any of them...

Page 361
...SECURITY AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK...COMMON LAW OR STATUTORY CLAIMS. AGENT AND EACH GRANTOR REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY ...

Page 362
... Patent Security Agreement to be executed and delivered as of the day and year first above written. _____ By:_____ GRANTORS: Name: Title: _____ By:_____ Name: Title: ACCEPTED AND ACKNOWLEDGED BY: WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited liability company By:_____ AGENT: Name: Title...

Page 363
SCHEDULE I to PATENT SECURITY AGREEMENT Patents Grantor Country Patent Application/ Patent No. Filing Date Patent Licenses 46

Page 364
... Agreement, dated as of _____, 2011, (as amended, restated, supplemented, or otherwise modified from time to time, the " Security Agreement "), made by the undersigned, together with the other Grantors named therein, to WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited liability company, as Agent...

Page 365
...caused this Pledged Interests Addendum to be executed and delivered as of the day and year first above written. [_____] By:_____ Name: Title: 1,787,854.4 SCHEDULE I TO PLEDGED INTERESTS ADDENDUM Pledged Interests Name of Grantor Name of Pledged Company Number of Shares/Units Class of Interests...

Page 366
..."), American Radio Corp., a Delaware corporation (" ARC"), Code Systems, Inc., a Delaware corporation (" CSI"), Invision Automotive Systems, Inc., a Delaware corporation (" IAS"), Batteries.com, LLC, an Indiana limited liability company (" Batteries") and Klipsch Group, Inc. (" Klipsch" and together...

Page 367
... hereafter. Without limiting the generality of the foregoing, this Trademark Security Agreement secures the payment of all amounts which constitute part of the Secured Obligations and would be owed by Grantors, or any of them, to Agent, the Lender Group, the Bank Product Providers or any of them...

Page 368
...SECURITY AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK...COMMON LAW OR STATUTORY CLAIMS. AGENT AND EACH GRANTOR REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY ...

Page 369
...Trademark Security Agreement to be executed and delivered as of the day and year first above written. _____ By:_____ GRANTORS: Name: Title: _____ By:_____ Name: Title: ACCEPTED AND ACKNOWLEDGED BY: WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited liability company By:_____ AGENT: Name: Title...

Page 370
SCHEDULE I to TRADEMARK SECURITY AGREEMENT Trademark Registrations/Applications Grantor Country Mark Application/ Registration No. App/Reg Date Trade Names Common Law Trademarks Trademarks Not Currently In Use Trademark Licenses 53

Page 371
..." has the meaning set forth in Â§ 3(a). "Benefits" has the meaning set forth in Â§ 3(c). "Beard ef Directers" means the Board of Directors of the Employer. "Business" means the (i) the speaker and sound business, and (ii) any other consumer electronics business as engaged in from time to time by the...

Page 372
..., customer lists, supplier lists, Inventions, Works, Proprietary Items, trade secrets, financial statements, business and financial projections and budgets, historical and projected sales, capital spending budgets and plans, business and marketing plans, strategic plans, product plans, the names and...

Page 373
... of Audiovox and discussed with Management at the beginning of each new fiscal year. The Executive's bonus criteria for fiscal year 2011 are set forth on Exhibit B. (c) Benefits. The Executive shall, during the Employment Period, be permitted to participate in such Code Section 401(k), pension...

Page 374
... in accordance with the following conditions. In order to terminate for Good Reason, the Executive must give the Board of Directors a Notice of Termination at least 60 calendar days in advance of the Executive's intent to terminate employment for Good Reason setting forth the specific actions by the...

Page 375
...of the protections and benefits under the Uniform Trade Secrets Act as adopted by the State of Indiana, the State where the Executive is located, if different than the State of Indiana, and any other applicable law. If any information that the Employer or Audiovox deems to be a trade secret is found...

Page 376
..., patent applications, and patents. (e) Works. The Executive agrees that all works of authorship fixed in a tangible medium of expression relating to any activities of the Employer or Audiovox including, but not limited to, flow charts and computer program source code and object code, regardless...

Page 377
... or Audiovox or its Affiliates or their respective shareholders, board of directors, members, managers, officers, employees or agents. If any term, provision or covenant in this Â§ 7(b) is held to be unreasonable, arbitrary or against public policy, a court may limit the application of such...

Page 378
... hereunder will not, with or without the giving of notice or the passage of time, or both: (i) violate any judgment, writ, injunction or order of any court, arbitrator or governmental agency applicable to the Executive; or (ii) conflict with, result in the breach of any provisions of or the...

Page 379
... to the other party): If te Empleyer: Klipsch Group, Inc. 3502 Woodview Trace Suite 200 Indianapolis, IN 46268 Attn: Chairman of the Board of Directors Copy to: Audiovox Corporation 150 Marcus Blvd. Hauppauge, NY 11788 Attn: Chief Operating Officer Robert S. Levy Levy, Stopol & Camelo, LLP 1425...

Page 380
party in connection with such dispute or controversy (including, but not limited to, reasonable attorney's fees, costs and disbursements). [signature page immediately following] 10

Page 381
... WITNESS WHEREOF, the parties have executed and delivered this Employment Agreement as of the date first written above. EMPLOYER : KLIPSCH GROUP, INC. By: /s/ Fred S. Klipsch Printed: Fred S. Klipsch Title: Chairman of the Board of Directors EXECUTIVE : /s/ Paul Jacobs T. Paul Jacobs, individually...

Page 382
Exhibit A Market Jurisdictions New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South ... Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico 12

Page 383
...position paper identifying potential changes, direction and internal gaps if they exist. ii. Updated brand, marketing and product strategy by brand and by category. iii. A non U.S. growth plan by major market that ultimately transitions the revenue balance 60/40 US vs. ROW in fiscal 2011 to 50/50 by...

Page 384
... described Put Option: Commencing on March 1, 2011, the cumulative after tax net profit or loss of the Employer will be calculated on a monthly basis according to GAAP and will bear interest at the same per annum rate that Audiovox is receiving from its lead bank. Executive may at the end of any...

Page 385
..." has the meaning set forth in Â§ 3(a). "Benefits" has the meaning set forth in Â§ 3(c). "Beard ef Directers" means the Board of Directors of the Employer. "Business" means the (i) the speaker and sound business, and (ii) any other consumer electronics business as engaged in from time to time by the...

Page 386
..., customer lists, supplier lists, Inventions, Works, Proprietary Items, trade secrets, financial statements, business and financial projections and budgets, historical and projected sales, capital spending budgets and plans, business and marketing plans, strategic plans, product plans, the names and...

Page 387
... Employer. Goals will be established by the Chief Emecutive Officer of Audiovom and discussed with Management at the beginning of each new fiscal year. The Emecutive's bonus criteria for fiscal year 2011 are set forth on Emhibit B. (c) Benefits. The Emecutive shall, during the Employment Period, be...

Page 388
... in accordance with the following conditions. In order to terminate for Good Reason, the Emecutive must give the Board of Directors a Notice of Termination at least 60 calendar days in advance of the Emecutive's intent to terminate employment for Good Reason setting forth the specific actions by the...

Page 389
... (A) pay the Emecutive an amount equal to any disability payments provided pursuant to the benefits package available to the Emecutive; (B) pay to the Emecutive at the same time paid to other employees any earned but unpaid Base Compensation and bonus for the period ending on termination; and (C) in...

Page 390
...the Emecutive demonstrates (A) was or becomes generally available to the public other than as a result of a direct or indirect disclosure by the Emecutive; (B) is required to be disclosed pursuant to an enforceable court order; or (C) is required to be disclosed by applicable law. (iv) The Emecutive...

Page 391
... or its Affiliates or their respective shareholders, board of directors, members, managers, officers, employees or agents. If any term, provision or covenant in this Â§ 7(b) is held to be unreasonable, arbitrary or against public policy, a court may limit the application of such term, provision or...

Page 392
... security in...time, or both: (i) violate any judgment, writ, injunction or order of any court, arbitrator or governmental agency applicable...part, by a waiver or renunciation of the claim or right unless in writing signed by the other party (ii) no waiver that may be given by a party will be applicable...

Page 393
...to the other party): If te Empleyer: Klipsch Group, Inc. 3502 Woodview Trace Suite 200 Indianapolis, IN 46268 Attn: Chairman of the Board of Directors Copy to: Audiovom Corporation 150 Marcus Blvd. Hauppauge, NY 11788 Attn: Chief Operating Officer Robert S. Levy Levy, Stopol & Camelo, LLP 1425...

Page 394
entitled to reimbursement from the non-prevailing party for the actual fees and empenses incurred by the prevailing party in connection with such dispute or controversy (including, but not limited to, reasonable attorney's fees, costs and disbursements). [signature page immediately following] 10

Page 395
...WHEREOF, the parties have emecuted and delivered this Employment Agreement as of the date first written above. EMPLOYER : KLIPSCH GROUP, INC. By: /s/ Fred S. Klipsch Printed: Fred S. Klipsch Title: Chairman of the Board of Directors EXECUTIVE : /s/ Michael Klipsch Michael Klipsch, individually 11

Page 396
Emhibit A Market Jurisdictions New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South ... Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Memico 12

Page 397
...position paper identifying potential changes, direction and internal gaps if they emist. ii. Updated brand, marketing and product strategy by brand and by category. iii. A non U.S. growth plan by major market that ultimately transitions the revenue balance 60/40 US vs. ROW in fiscal 2011 to 50/50 by...

Page 398
... be made within 60 months of Emecutive's previous request. Any unpaid Put Price will be paid promptly to Emecutive or his heirs as the case may be if Emecutive's employment is terminated for any reason. Illustration (not accounting for interest): Commencement value Net profits after 12 months Put...

Page 399
..." has the meaning set forth in Â§ 3(a). "Benefits" has the meaning set forth in Â§ 3(c). "Beard ef Directers" means the Board of Directors of the Employer. "Business" means the (i) the speaker and sound business, and (ii) any other consumer electronics business as engaged in from time to time by the...

Page 400
..., customer lists, supplier lists, Inventions, Works, Proprietary Items, trade secrets, financial statements, business and financial projections and budgets, historical and projected sales, capital spending budgets and plans, business and marketing plans, strategic plans, product plans, the names and...

Page 401
... Board of Directors in the advancement of the best interests of the Employer and its Affiliates, and shall have such duties and powers as are prescribed by the Chief Executive Officer of Audiovox. Thereafter, the Executive shall have no daily management or operational responsibilities and will make...

Page 402
...of the protections and benefits under the Uniform Trade Secrets Act as adopted by the State of Indiana, the State where the Executive is located, if different than the State of Indiana, and any other applicable law. If any information that the Employer or Audiovox deems to be a trade secret is found...

Page 403
..., patent applications, and patents. (e) Works. The Executive agrees that all works of authorship fixed in a tangible medium of expression relating to any activities of the Employer or Audiovox including, but not limited to, flow charts and computer program source code and object code, regardless...

Page 404
... proper copyright notice on Works created by the Executive to secure or aid in securing copyright protection in such Works, and shall assist the Employer or its nominees in filing applications to register claims of copyright in such Works. (f) Â§ 7 General Provisions. (a) Injunctive Relief and...

Page 405
...to the other party): If te Empleyer: Klipsch Group, Inc. 3502 Woodview Trace Suite 200 Indianapolis, IN 46268 Attn: Chairman of the Board of Directors Copy to: Audiovox Corporation 150 Marcus Blvd. Hauppauge, NY 11788 Attn: Chief Operating Officer Robert S. Levy Levy, Stopol & Camelo, LLP 1425...

Page 406
...Fees . In the event any dispute or controversy arising from or relating to this Agreement is submitted to any court, arbitration panel or...disbursements). (m) Klipsch Products . The Executive shall be entitled to purchase any products sold by the Employer or its Affiliates in the Business for personal...

Page 407
IN WITNESS WHEREOF, the parties have executed and delivered this Employment Agreement as of the date first written above. EMPLOYER : KLIPSCH GROUP, INC. By: /s/ T. Paul Jacebs T. Paul Jacobs Chief Operating Officer EXECUTIVE : /s/ Fred S. Klipsch Fred S. Klipsch, individually 9

Page 408
...position paper identifying potential changes, direction and internal gaps if they exist. ii. Updated brand, marketing and product strategy by brand and by category. iii. A non U.S. growth plan by major market that ultimately transitions the revenue balance 60/40 US vs. ROW in fiscal 2011 to 50/50 by...

Page 409
..." has the meaning set forth in Â§ 3(a). "Benefits" has the meaning set forth in Â§ 3(c). "Beard ef Directers" means the Board of Directors of the Employer. "Business" means the (i) the speaker and sound business, and (ii) any other consumer electronics business as engaged in from time to time by the...

Page 410
..., customer lists, supplier lists, Inventions, Works, Proprietary Items, trade secrets, financial statements, business and financial projections and budgets, historical and projected sales, capital spending budgets and plans, business and marketing plans, strategic plans, product plans, the names and...

Page 411
... of Audiovox and discussed with Management at the beginning of each new fiscal year. The Executive's bonus criteria for fiscal year 2011 are set forth on Exhibit B. (c) Benefits. The Executive shall, during the Employment Period, be permitted to participate in such Code Section 401(k), pension...

Page 412
... Executive Officer of Audiovox to the Executive, or at such later time as such notice may specify; (v) if by the Executive other than for Good Reason, upon the Executive's resignation 30 days following written notice from the Executive to the Board of Directors; or (vi) if by the Executive for Good...

Page 413
...of the protections and benefits under the Uniform Trade Secrets Act as adopted by the State of Indiana, the State where the Executive is located, if different than the State of Indiana, and any other applicable law. If any information that the Employer or Audiovox deems to be a trade secret is found...

Page 414
..., patent applications, and patents. (e) Works. The Executive agrees that all works of authorship fixed in a tangible medium of expression relating to any activities of the Employer or Audiovox including, but not limited to, flow charts and computer program source code and object code, regardless...

Page 415
... or Audiovox or its Affiliates or their respective shareholders, board of directors, members, managers, officers, employees or agents. If any term, provision or covenant in this Â§ 7(b) is held to be unreasonable, arbitrary or against public policy, a court may limit the application of such...

Page 416
... hereunder will not, with or without the giving of notice or the passage of time, or both: (i) violate any judgment, writ, injunction or order of any court, arbitrator or governmental agency applicable to the Executive; or (ii) conflict with, result in the breach of any provisions of or the...

Page 417
...to the other party): If te Empleyer: Klipsch Group, Inc. 3502 Woodview Trace Suite 200 Indianapolis, IN 46268 Attn: Chairman of the Board of Directors Copy to: Audiovox Corporation 150 Marcus Blvd. Hauppauge, NY 11788 Attn: Chief Operating Officer Robert S. Levy Levy, Stopol & Camelo, LLP 1425...

Page 418
is submitted to any court, arbitration panel or other party, the prevailing party in such dispute or controversy shall be entitled to reimbursement from the non-prevailing party for the actual fees and expenses incurred by the prevailing party in connection with such dispute or controversy (...

Page 419
IN WITNESS WHEREOF, the parties have executed and delivered this Employment Agreement as of the date first written above. EMPLOYER : KLIPSCH GROUP, INC. By: /s/ Fred S. Klipsch Printed: Fred S. Klipsch Title: Chairman of the Board of Directors EXECUTIVE : /s/ Fred Farrar Fred Farrar, individually...

Page 420
Exhibit A Market Jurisdictions New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South ... Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico 12

Page 421
...position paper identifying potential changes, direction and internal gaps if they exist. ii. Updated brand, marketing and product strategy by brand and by category. iii. A non U.S. growth plan by major market that ultimately transitions the revenue balance 60/40 US vs. ROW in fiscal 2011 to 50/50 by...

Page 422
... described Put Option: Commencing on March 1, 2011, the cumulative after tax net profit or loss of the Employer will be calculated on a monthly basis according to GAAP and will bear interest at the same per annum rate that Audiovox is receiving from its lead bank. Executive may at the end of any...

Page 423
..." has the meaning set forth in Â§ 3(a). "Benefits" has the meaning set forth in Â§ 3(c). "Beard ef Directers" means the Board of Directors of the Employer. "Business" means the (i) the speaker and sound business, and (ii) any other consumer electronics business as engaged in from time to time by the...

Page 424
..., customer lists, supplier lists, Inventions, Works, Proprietary Items, trade secrets, financial statements, business and financial projections and budgets, historical and projected sales, capital spending budgets and plans, business and marketing plans, strategic plans, product plans, the names and...

Page 425
... of Audiovox and discussed with Management at the beginning of each new fiscal year. The Executive's bonus criteria for fiscal year 2011 are set forth on Exhibit B. (c) Benefits. The Executive shall, during the Employment Period, be permitted to participate in such Code Section 401(k), pension...

Page 426
... Executive Officer of Audiovox to the Executive, or at such later time as such notice may specify; (v) if by the Executive other than for Good Reason, upon the Executive's resignation 30 days following written notice from the Executive to the Board of Directors; or (vi) if by the Executive for Good...

Page 427
...of the protections and benefits under the Uniform Trade Secrets Act as adopted by the State of Indiana, the State where the Executive is located, if different than the State of Indiana, and any other applicable law. If any information that the Employer or Audiovox deems to be a trade secret is found...

Page 428
..., patent applications, and patents. (e) Works. The Executive agrees that all works of authorship fixed in a tangible medium of expression relating to any activities of the Employer or Audiovox including, but not limited to, flow charts and computer program source code and object code, regardless...

Page 429
...Employer or Audiovox or its Affiliates or their respective shareholders, board of directors, members, managers, officers, employees or agents. If any term, provision or covenant in this Â§ 7(b) is held to be unreasonable, arbitrary or against public policy, a court may limit the application of such...

Page 430
... hereunder will not, with or without the giving of notice or the passage of time, or both: (i) violate any judgment, writ, injunction or order of any court, arbitrator or governmental agency applicable to the Executive; or (ii) conflict with, result in the breach of any provisions of or the...

Page 431
...to the other party): If te Empleyer: Klipsch Group, Inc. 3502 Woodview Trace Suite 200 Indianapolis, IN 46268 Attn: Chairman of the Board of Directors Copy to: Audiovox Corporation 150 Marcus Blvd. Hauppauge, NY 11788 Attn: Chief Operating Officer Robert S. Levy Levy, Stopol & Camelo, LLP 1425...

Page 432
entitled to reimbursement from the non-prevailing party for the actual fees and expenses incurred by the prevailing party in connection with such dispute or controversy (including, but not limited to, reasonable attorney's fees, costs and disbursements). [signature page immediately following] 10

Page 433
IN WITNESS WHEREOF, the parties have executed and delivered this Employment Agreement as of the date first written above. EMPLOYER : KLIPSCH GROUP, INC. By: /s/ Fred S/ Klipsch Printed: Fred S. Klipsch Title: Chairman of the Board of Directors EXECUTIVE : /s/ David P. Kelley David P. Kelley, ...

Page 434
Exhibit A Market Jurisdictions New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South ... Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico 12

Page 435
...position paper identifying potential changes, direction and internal gaps if they exist. ii. Updated brand, marketing and product strategy by brand and by category. iii. A non U.S. growth plan by major market that ultimately transitions the revenue balance 60/40 US vs. ROW in fiscal 2011 to 50/50 by...

Page 436
... described Put Option: Commencing on March 1, 2011, the cumulative after tax net profit or loss of the Employer will be calculated on a monthly basis according to GAAP and will bear interest at the same per annum rate that Audiovox is receiving from its lead bank. Executive may at the end of any...

Page 437
... Audiovox Accessories Corp. Audiovox Consumer 1lectronics, Inc. Audiovox 1lectronics Corporation American Radio Corp. Audiovox Venezuela C.A. Audiovox German Holdings GmbH Code Systems, Inc. Audiovox Canada Limited 1ntretenimiento Digital Mexico, S.de C.V Schwaiger GmbH Invision Automotive Systems...

Page 438
...ACCOUNTING FIRM We have issued our reports dated May 16, 2011, with respect to the consolidated financial statements, financial statement schedule and internal control over financial reporting included in the Annual Report of Audiovox Corporation...). GRANT THORNTON LLP Melville, New York May 16, 2011

Page 439
...-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 I, Patrick M. Lavelle, President and Chief Executive Officer of Audiovox Corporation, certify that: 1. 2. I have reviewed this annual report on Form 10-K of Audiovox Corporation (the "Company") ; Based on my knowledge, this report does not contain any...

Page 440
...14(a) AND RULE 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 I, C. Michael Stoehr, Senior Vice President and Chief Financial Officer of Audiovox Corporation, certify that: 1. 2. I have reviewed this annual report on Form 10-K of Audiovox Corporation (the "Company"); Based on my knowledge, this...

Page 441
... with the Annual Report of Audiovox Corporation (the "Company") on Form 10-K for the period ended February 28, 2011 (the "Report") as filed with the Securities and Exchange Commission on the date hereof, I, Patrick M. Lavelle, President and Chief Executive Officer of the Company, certify, pursuant...

Page 442
... with the Annual Report of Audiovox Corporation (the "Company") on Form 10-K for the period ended February 28, 2011 (the "Report") as filed with the Securities and Exchange Commission on the date hereof, I, C. Michael Stoehr, Senior Vice President and Chief Financial Officer of the Company, certify...

Page 443
Audiovox Specialized Applications, LLC And Subsidiary (A Limited Liabilitm Companm) Consolidated Financial Report 11/30/2010 McGladrem & Pullen Certified Public Accountants McGladrem & Pullen, LLP is a member firm of RSM International -- an affiliation of separate and independent legal entities....

Page 444
Contents Report of Independent Registered Public Accounting Firm Consolidated Financial Statements Consolidated balance sheets Consolidated statements of income Consolidated statements of members' equitm Consolidated statements of cash flows Notes to financial statements 1 2 3 4 5 6 2

Page 445
...& Pullen Certified Public Accountants Report of Independent Registered Public Accounting Firm To the Members Audiovox Specialized Applications, LLC and Subsidiary Elkhart, Indiana We have audited the accompanying consolidated balance sheets of Audiovox Specialized Applications, LLC and Subsidiary...

Page 446
Audiovox Specialized Applications, LLC and Subsidiary (A Limited Liability Company) Notes to the Financial Statements Consolidated Balance Sheets November 30, 2010 and 2009 2010 2009 ASSETS Current Assets Cash and cash equivalents Available-for-sale securities Trade receivables Inventories ...

Page 447
Audiovox Specialized Applications, LLC and Subsidiary (A Limited Liability Company) Notes to the Financial Statements Consolidated Statements of Income November 30, 2010 , 2009 and 2008 2010 2009 2008 Net sales Cost of goods sold $ 67,678,360 54,354,915 $ 45,212,490 36,913,059 8,299,431 5,...

Page 448
Audiovox Specialized Applications, LLC and Subsidiary (A Limited Liability Company) Notes to the Financial Statements Consolidated Statements of Members' Equity November 30, 2010 , 2009 and 2008 2010 2009 2008 Balance, beginning Net income Member distributions $ 22,037,789 $ 5,653,...

Page 449
Audiovox Specialized Applications, LLC and Subsidiary (A Limited Liability Company) Notes to the Financial...Change in assets and liabilities: Decrease (increase) in: Trade receivables Inventories Prepaid expenses Increase (decrease) in: Accounts... securities Purchase of available-for-sale securities ...

Page 450
... qualitm mobile electronics are designed and tested in our research and development lab located at the Companm's corporate office in Elkhart, Indiana. ASA's engineering team works side bm side with its customers' designers, engineers and sales team to develop customized solutions. These products are...

Page 451
... are generallm not subject to acceptance or installation bm Companm or customer personnel. In previous mears, the Companm recognized romaltm revenue at the time a related product was purchased bm Audiovox Corporation ("Audiovox"), a member of ASA. Beginning in December 2009, the romaltm agreement...

Page 452
... for excess and obsolete inventorm based primarilm from selling prices, indications from customers based upon current price negotiations and purchase orders. The Companm's industrm is characterized bm rapid technological change and frequent new product introductions that could result in an increase...

Page 453
... costs at the time product revenue is recognized. The related expense is included in cost of goods sold in the accompanming consolidated statements of income. Factors that affect the Companm's warrantm liabilitm include the number of units sold, historical and anticipated rates of warrantm claims...

Page 454
The Financial Accounting Standards Board ("FASB") issued new guidance on accounting for uncertaintm in income taxes. The Companm adopted this new guidance during the mear ended November 30, 2010. Management evaluated the Companm's tax positions and concluded that the Companm had taken no uncertain ...

Page 455
...value: Investments in available-for-sale securities: The fair values of the investments in available-for-sale securities are estimated based upon quoted prices for similar assets and liabilities in active markets (Level 2). Fair value of financial instruments: The following methods and assumptions...

Page 456
... allows the Companm to sell the bonds to a brokerage house at par value on seven dam terms and a floating interest rate which is reset on ... is as follows: 2010 2009 2008 Proceeds from the sale of available-for-sale securities Interest earned $ 9,820,000 $ 19,925,000 74,902 $ 10,910,225 92...

Page 457
... are approximatelm as follows: 2010 2009 3,000 Trade receivables Accounts pamable $ $ 197,000 130,000 16,000 At November 30, 2010, the Companm leases warehouse, manufacturing, and office facilities from Irions Investments, LLC, an entitm related through common ownership, for approximatelm $43...

Page 458
...Companm's consolidated financial position, results of operations or cash flows. Note 10. Major Customer Net sales to customers comprising 10% of more of total net sales for the mears ended November 30, 2010, 2009, and 2008 and the related trade receivables balance at those dates are approximatelm...

Page 459
...Customer comprised less than 10% of total net sales Note 11. Subsequent events: The Companm has evaluated subsequent events for potential recognition and/or disclosure through Februarm 10, 2011, the date the financial... financed through increase in accounts pamable $ $ 2,532 - $ - 452,370 $ - -

Page 460
..., 333-36762, 333-138000, 333-131911, and 333-162569) of our report, dated February 10, 2011, on the consolidated financial statements of Audiovox hpecialized Applications, LLC which is included in the Annual Report on Form 10-K of Audiovox Corporation and hubsidiaries for the year ended February 28...

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