1) Appointment of RETAILER:

AUDIO DYNAMICS appoints RETAILER and RETAILER agrees to serve as a non-exclusive retail RETAILER, upon the terms and conditions set forth in this Agreement at the location(s) above and/or additional locations set forth in Schedule A to this Agreement (“RETAILER Locations”) for AUDIO DYNAMICS brand products. RETAILER agrees to maintain, at all times, during the term of this Agreement, a retail store for the sale of AUDIO DYNAMICS brand products at each RETAILER location, and RETAILER agrees to promote and sell AUDIO DYNAMICS brand products within the market area immediately surrounding each such location to the best of the RETAILER’s ability. No other RETAILER Location(s) may be added without the prior written consent of AUDIO DYNAMICS. To request such consent, RETAILER shall submit a statement to AUDIO DYNAMICS setting forth the following information with regard to each proposed RETAILER Location: store name and address, managerial responsibility to be exercised by RETAILER, names of all persons holding ownership interests, and the type and percentage of ownership interests held by each such person.

2) RETAILER Location:

AUDIO DYNAMICS and RETAILER recognize that it is in their mutual best interest that AUDIO DYNAMICS brand products be sold through a selective RETAILER network whereby all RETAILERS selling AUDIO DYNAMICS products have the ability to provide those services to the public which AUDIO DYNAMICS requires, and that if the AUDIO DYNAMICS products are offered only through a planned number of outlets, RETAILER will be able to offer the maximum consumer value and services with respect to AUDIO DYNAMICS brand products, thereby enabling RETAILER to compete more effectively against RETAILERS selling competitive products. Accordingly, RETAILER agrees not to offer AUDIO DYNAMICS brand products for sale at any location other than those set forth herein and/or on Schedule A to this Agreement unless approved in advance by AUDIO DYNAMICS in writing. RETAILER also agrees not to sell and/or transship AUDIO DYNAMICS brand products to others for resale without having obtained AUDIO DYNAMICS’s advance written consent.

I agree

3) Sales Guidelines:

AUDIO DYNAMICS and RETAILER recognize that it is in their mutual best interest that AUDIO DYNAMICS brand products be sold through a selective RETAILER network whereby all RETAILERS selling AUDIO DYNAMICS products have the ability to provide those services to the public which AUDIO DYNAMICS requires, and that if the AUDIO DYNAMICS products are offered only through a planned number of outlets, RETAILER will be able to offer the maximum consumer value and services with respect to AUDIO DYNAMICS brand products, thereby enabling RETAILER to compete more effectively against RETAILERS selling competitive products. Accordingly, RETAILER agrees not to offer AUDIO DYNAMICS brand products for sale at any location other than those set forth herein and/or on Schedule A to this Agreement unless approved in advance by AUDIO DYNAMICS in writing. RETAILER also agrees not to sell and/or transship AUDIO DYNAMICS brand products to others for resale without having obtained AUDIO DYNAMICS’s advance written consent.

I agree

4) Export Sales:

RETAILER shall not sell or otherwise transfer AUDIO DYNAMICS brand products to any person or entity located outside the United States, for resale without prior written consent of AUDIO DYNAMICS.

5) Terms of Sale:

AUDIO DYNAMICS agrees to sell and RETAILER agrees to purchase and pay for such quantities of the products as RETAILER may reasonably request, equaling minimum of purchase requirements per calendar quarter as defined in Section 20 herein, for as long as the Agreement is in effect, at the prices then currently in effect. All sales are subject to the other terms and conditions of sale established by AUDIO DYNAMICS and in effect at the time of shipment. The RETAILER shall pay for all products in accordance with the invoice terms.

6) Obligation to Promote Product Sales:

RETAILER shall use its best efforts to stimulate interest in and to sell AUDIO DYNAMICS brand products to retail consumers. In particular, and without limiting the generality of the foregoing, the RETAILER shall: (a) acquire and maintain adequate facilities, display, and demonstration areas to personally explain and demonstrate the features of AUDIO DYNAMICS brand products to each indi vidual retail consumer; (b) maintain a representative inventory of models and styles of each of AUDIO DYNAMICS brand products in quantities sufficient to meet reasonably anticipated sales during a period of not less than one month; (c) to personally instruct each individual retail consumer with regard to the proper installation, operation, maintenance, and care of AUDIO DYNAMICS brand products; (d) prominently display all advertising and promotional materials provided by AUDIO DYNAMICS in connection with all promotional programs and sales training programs offered by AUDIO DYNAMICS; and (e) at no time make false, misleading, or disparaging representations regarding AUDIO DYNAMICS or any AUDIO DYNAMICS brand products.

7) Advertising:

Unless otherwise authorized by AUDIO DYNAMICS in advance, RETAILER shall use AUDIO DYNAMICS’s name, trademarks, trade names, and copyrighted materials only for the purposes of advertising and promoting sales of AUDIO DYNAMICS brand products, and shall not use any such name or materials in any advertising or other communications which is damaging to AUDIO DYNAMICS, or in any unlawful manner, or in any way which tends directly or indirectly to lessen the value and goodwill of the AUDIO DYNAMICS brand or products or in connection with the sale of another product or group of products not manufactured by AUDIO DYNAMICS, whether or not components made by AUDIO DYNAMICS are in such group, without specifically stating which components are AUDIO DYNAMICS products provided nothing herein shall transfer to RETAILER any interest or ownership in any such name, trademark, trade name, or copyright, or in any patent application, patent right, or license in or to any of said products and provided further RETAILER’s right to use such materials and names shall terminate upon the termination of this Agreement. RETAILER shall not advertise or engage in promotional activities concerning AUDIO DYNAMICS brand products unless RETAILER has in stock a sufficient supply of the advertised product or products to meet anticipated demand. Failure to comply with this requirement shall be grounds for termination of this Agreement by AUDIO DYNAMICS.

8) MAP (Minimum Advertised Price):

AUDIO DYNAMICS in no way intends to dictate the actual selling price of AUDIO DYNAMICS brand products. AUDIO DYNAMICS does, however, desire to establish a high perceived value for AUDIO DYNAMICS brand products. Accordingly, RETAILER and AUDIO DYNAMICS agree that RETAILER shall not advertise for sale any products for less than the “Direct Price” from AUDIO DYNAMICS’s website, www.adcaraudio.com. “Direct Price” shall be defined as the Internet Price then in effect as described in the then current RETAILER Price Sheet. From time to time AUDIO DYNAMICS may offer additional discounts on products. Any adjustment to “Direct Price”, related or unrelated to such discount, will be specified in writing and will be supplied to the RETAILER in advance. In all cases the most recent “Direct Price” specifications will apply. The phrase “ shall not advertise for sale” as it relates to “Direct Price” shall be construed to mean, the RETAILER will not advertise in any media, TV, radio, newsprint, direct mail, billboard, or on RETAILER’s demonstration board or other in store media, AUDIO DYNAMICS brand products for sale at any price below the then current Internet Price. RETAILERS advertising AUDIO DYNAMICS brand products below Internet Price (Direct Price) as described above shall be considered in breach of MAP terms and will be subject to immediate termination.

I agree

9) Terms of Agreement and Termination:

This agreement shall begin on the date written above and shall continue until terminated. Either AUDIO DYNAMICS or RETAILER may terminate this Agreement as follows: Where the termination is without cause, thirty (30) days written notice, pursuant to the terms of this Agreement must be given to the other party. Where the termination is for cause, such thirty (30) days’ advance written notice may, but need not, be given. As of the effective date of termination, unfilled RETAILER orders shall be deemed canceled and for thirty (30) days from that date AUDIO DYNAMICS shall have the sole option to purchase from RETAILER and RETAILER agrees to sell to AUDIO DYNAMICS all or any part of the products then in the RETAILER’s stock at the net prices paid for the products by the RETAILER, less any discounts and any unearned allowance paid to RETAILER. Upon exercise of this option, RETAILER agrees to ship, at AUDIO DYNAMICS’s expense, the products to AUDIO DYNAMICS at the address set forth above or such place as AUDIO DYNAMICS may designate. Upon receipt of products, AUDIO DYNAMICS reserves the right to evaluate the products and, at the sole desecration of AUDIO DYNAMICS, reassign the value of any product, in part or in whole. Reassignment of product value may be based on, but not limited to, damage, missing components, etc. AUDIO DYNAMICS will notify RETAILER of product reassignment value, via email, within thirty (30) days of receipt of said product. RETAILER is responsible for any costs and or expenses, including the difference between the initial by-pack pricing and value reassignment, based on the AUDIO DYNAMICS evaluation and value reassignment. Upon termination, RETAILER agrees to cease representing itself as an AUDIO DYNAMICS RETAILER and to ship to AUDIO DYNAMICS, at such location as AUDIO DYNAMICS may designate, at AUDIO DYNAMICS’s expense, all advertising and sales materials bearing AUDIO DYNAMICS’s name and any other advertising and promotional material owned by AUDIO DYNAMICS. Neither AUDIO DYNAMICS nor RETAILER shall be liable to the other for damages of any kind, including incidental or consequential damages, on account of termination of the Agreement.

10) Warranties:

RETAILER shall make no warranties or guarantees with respect to AUDIO DYNAMICS brand products or the use of AUDIO DYNAMICS brand products except as may be authorized by AUDIO DYNAMICS in writing. Sales shall be made under AUDIO DYNAMICS’s warranty as in effect at the time of sale and shall be extended to purchasers at retail from RETAILER. RETAILER must send AUDIO DYNAMICS product to AUDIO DYNAMICS with proof of purchase receipt to obtain warranty service.

11) Product Changes:

AUDIO DYNAMICS may at any time add, change, or cease making product available without notice to RETAILER and RETAILER shall have no claim against AUDIO DYNAMICS for failure to furnish product of the model, design, or type previously sold.

12) Product Liability:

RETAILER agrees not to modify any AUDIO DYNAMICS brand products for use other than that specified by the relevant owner’s manual and installation guide. AUDIO DYNAMICS shall not be responsible for any damages or liabilities and RETAILER indemnifies AUDIO DYNAMICS against any such claims, civil or criminal in relation to any such AUDIO DYNAMICS brand product modification caused by RETAILER which may cause, but not limited to, serious bodily injury, death and/or property damage.

I agree

13) No Agency:

Nothing contained in this Agreement shall be deemed to constitute the RETAILER an agent, representative, or employee of AUDIO DYNAMICS for any purpose. RETAILER is not granted, and shall not represent in any way, that it possesses any right or authority to assume any obligation or make any agreement or commitment, express or implied, on behalf of or in the name of AUDIO DYNAMICS except as specifically provided herein.

14) Non-Assignment:

RETAILER shall have no right to assign, transfer or sell its rights under this Agreement without the prior written consent of AUDIO DYNAMICS. For purposes of this Agreement, assignment shall include, without limitation, any change in the current management personnel of RETAILER and any assignment, sale or transfer, whether or not by operation of law, of any interest in RETAILER which results in any change in the present ownership interest(s) in RETAILER.

15) Indemnification:

RETAILER agrees to indemnify and hold AUDIO DYNAMICS harmless from and against any and all claims, damages, and liabilities whatsoever, asserted by any person or entity resulting directly or indirectly from any breach by RETAILER of this Agreement and such indemnification shall include the payment of all costs and reasonable attorney’s fees expended by AUDIO DYNAMICS in defending such claims. RETAILER shall be required to reimburse AUDIO DYNAMICS for costs and reasonable attorney’s fees in the event that AUDIO DYNAMICS institutes litigation against RETAILER because of any breach by RETAILER of this Agreement and AUDIO DYNAMICS prevails therein.

16) Notice:

Notice by either party shall be in writing and shall be deemed sufficient if deposited in the United States mail, in a sealed envelope, registered or certified, with postage prepaid addressed to the other party at the address set forth herein or at such other address as the parties shall have previously designated by notice given in accordance with this paragraph.

17) Waivers:

No waiver of any requirement or of any default in respect of the terms of this Agreement shall be deemed a waiver of any other requirement or default.

18) Governing Law:

This Agreement shall be governed and construed in accordance with the laws of the State of California. In the event that any of the provisions of this Agreement shall be held by a court of competent jurisdiction to be unenforceable, the remaining provisions of the Agreement shall remain in full force and effect.

19) Entire Agreement:

This Agreement constitutes the entire agreement and understanding between the parties and supersedes all prior discussions, negotiations, and agreements between the parties, whether written or oral, with respect to the subject matter hereof. This Agreement may not be altered, amended or modified except in a written agreement executed by both parties.

I agree