Document:

EXHIBIT 10.7

REDACTED COPY

EXECUTION

                               PURCHASE AGREEMENT
                                      [[*]]

     THIS PURCHASE  AGREEMENT (this "Agreement") is made this 7th day of August,
2001 (the "Effective  Date"),  by and between [*][*],  a California  corporation
("[*]"),  Onkyo America,  Inc., an Indiana  corporation  which is a wholly-owned
subsidiary  of  Global  Technovations,  Inc.,  a  Delaware  corporation  ("ONKYO
AMERICA").  [*] and  Onkyo  America  are  referred  to from time to time in this
Agreement  individually as a "Party" and together as the "Parties." From time to
time in this Agreement, [*] is referred to as the PURCHASER and ONKYO AMERICA is
referred to as the SUPPLIER.  The Parties  acknowledge that the customer for the
Products is [*] including its affiliates (the "Customer"),  and that the Parties
are acting  hereunder  to  fulfill  the  requirements  of the  Customer  for the
Customer's [*] program and [*] [*] branded systems program (the "Programs").

1.   DEFINITIONS

                  The following terms shall have the following meanings under
this Agreement:

                  "Documentation" means computations, configurations, data,
programming code, designs, drawings, manuals (including without limitation
installation manuals, owner's manuals and service manuals), models, photographs,
plans, renderings, samples, schematics, sketches, specifications and any other
written and tangible materials provided by PURCHASER or developed by SUPPLIER in
connection with this Agreement.

                  "Products" means those products identified on Schedule 1
attached hereto, and the parts and components thereof, manufactured by or for
SUPPLIER and sold to PURCHASER pursuant to this Agreement. The Products covered
by this Agreement may be changed from time to time upon the written consent of
both Parties.

                  "Specifications" means the descriptive material itemizing the
functional and operational requirements of the Products and such other technical
specifications, drawings and other material as identified in Schedule 2 attached
hereto. The Specifications covered by this Agreement may be changed from time to
time upon the written consent of both Parties.

                  "Trademarks" means those trademarks or trade names owned or
used by PURCHASER or its affiliates, or the Customer, and designated by
PURCHASER in its sole discretion for use in connection with the Products.

*Confidential portions omitted and filed separately with the Commission.

<PAGE>

2.   MANUFACTURE AND SUPPLY OF PRODUCTS

     2.1 Manufacture and Supply. SUPPLIER agrees to manufacture the Products, or
cause the Products to be manufactured, to conform to the Specifications,  and to
sell the Products to PURCHASER in  accordance  with the terms and  conditions of
this  Agreement.  Specific  quantities of Products shall be ordered by PURCHASER
for purchase by the placement of a purchase order issued by PURCHASER. PURCHASER
shall have no obligation to purchase,  and SUPPLIER  shall have no obligation to
supply,  any Products until  PURCHASER has placed a purchase order and then only
to the extent of the Products covered under the purchase order.

     2.2 Exclusivity.

(a) SUPPLIER shall not sell the Products to any party except  PURCHASER  without
PURCHASER's prior written consent,  which consent may be withheld in PURCHASER's
sole and absolute  discretion.  PURCHASER shall not be restricted as to its sale
or  use of the  Products  purchased  hereunder  including,  without  limitation,
worldwide marketing to any end user or remarketer,  and use by PURCHASER for its
benefit or for the benefit of others.  In addition,  this Agreement shall not be
construed as preventing PURCHASER from acquiring at any time products similar or
related  to the  Products  from any other  source  for uses not  related  to the
Programs;  provided,  however,  that  PURCHASER may not replace any Product with
similar or related  products in connection  with the Programs if the SUPPLIER is
not in breach of this Agreement.

(b)  Notwithstanding  anything  to the  contrary  in  this  Agreement,  if  this
Agreement is  terminated  because of a breach of this  Agreement by the SUPPLIER
which was caused, directly or indirectly,  by actions taken by [*] or one of its
affiliates,  then after such  termination,  the PURCHASER  shall not acquire any
Product, or similar or related products,  in connection with either Program from
[*] or any  affiliate of [*] before the later of (a) the  effective  date of the
termination  or  expiration  of  this  Agreement  with  respect  to one or  both
Programs,  and (b) the second anniversary of the Effective Date, other than with
the prior  written  consent of the  SUPPLIER,  which  consent the  SUPPLIER  may
withhold in its sole  discretion.  If this Agreement is terminated  because of a
breach of this  Agreement  by the  SUPPLIER  which was not  caused,  directly or
indirectly,  by actions taken by [*] or one of its  affiliates,  then after such
termination,  the  PURCHASER  shall have the right to acquire  any  Product,  or
similar or related  products,  in connection with either Program from [*] or any
affiliate of [*]. For  purposes of this Section 2.2,  "affiliates"  of [*] shall
not include Onkyo America or Global Technovations, Inc.

*Confidential portions omitted and filed separately with the Commission.

<PAGE>

     2.3 Termination Payment.

(a) In the  event of the  occurrence  of any of the  circumstances  set forth in
subsection (b) below and subject to the terms set forth in subsection (c) below,
the SUPPLIER  shall be entitled to  termination  payments  (each, a "Termination
Payment") from the PURCHASER in the total amount of (i) $[*] with respect to the
[*] [*] Program (the "[*]  Termination  Amount"),  and (ii) $[*] with respect to
the [*] Program (the "[*]  Termination  Amount").  Effective on the first day of
each  calendar  month  that this  Agreement  is in  effect,  the  amount of each
Termination  Payment  then in effect  shall  decrease  by 1/24th of the  initial
amount  of each  Termination  Payment;  provided,  however,  that on the  second
anniversary of the Effective Date the amount of each  Termination  Payment shall
be $[*]. For example,  from August 1, 2002 up to and including  August 31, 2002,
the [*] Termination Amount shall be $[*] and the [*] Termination Amount shall be
$[*].

(b) The PURCHASER  shall pay a Termination  Payment to the SUPPLIER  solely upon
the occurrence of any of the following circumstances:

(i)  (A) the Customer making a price reduction demand on the PURCHASER,  (B) the
     PURCHASER  in turn making a  proportionate  price  reduction  demand on the
     SUPPLIER  with  respect to any Product in  connection  with the  Customer's
     price reduction  demand, if such price reduction demand would result in the
     purchase  price the  PURCHASER  would pay to the  SUPPLIER for such Product
     being  reduced by more than [*]% from the price in effect on the  Effective
     Date, and (C) the SUPPLIER being unable or unwilling to satisfy such demand
     (for the avoidance of doubt, for example a [*]% price reduction demanded by
     the Customer to the  PURCHASER  on a $[*] sales price to the Customer  from
     the  PURCHASER  for a unit  incorporating  a Product,  wherein the purchase
     price to the PURCHASER  from the SUPPLIER for such Product was $[*],  would
     result in a "proportionate price reduction" of $[*] from the purchase price
     to the PURCHASER  from the SUPPLIER for such Product,  not a $[*] reduction
     for such Product); or

(ii) the  Customer  requiring  a  material  change in the  Specifications  which
     SUPPLIER is unable or unwilling to satisfy; or

(iii)the Customer requiring a material  accelerated delivery date which SUPPLIER
     is unable or unwilling to satisfy; or

(iv) the Customer  terminating  a Program with respect to the SUPPLIER  only and
     not as a result of any default by the Supplier under this Agreement.

(c) If the PURCHASER makes a Termination  Payment  required by this Section 2.3,
then the following terms shall apply.

*Confidential portions omitted and filed separately with the Commission.

<PAGE>

(i)  The  PURCHASER  shall  have the right to  immediately  (A)  terminate  this
     Agreement,  with no right of the  SUPPLIER  to cure,  with  respect  to the
     affected  Program or, if in regard to both  Programs,  with  respect to the
     Agreement  in its  entirety,  and (B)  subject  to Section  2.2(b),  obtain
     Products,  or substitutes for the Products,  for such terminated Program(s)
     from any third party source of its sole choice.

(ii) The  PURCHASER  shall make the  Termination  Payment not later than fifteen
     days  after  receipt  of  written  notice  of  termination  and  the  final
     calculation of the amount of the Termination Payment due under this Section
     2.3.

(iii)The Termination  Payment shall be in full and complete  satisfaction of all
     claims by the SUPPLIER against the PURCHASER under this Agreement and shall
     relieve   PURCHASER  of  any  further  liability  to  SUPPLIER  under  this
     Agreement;  provided, however, that in the event of termination of only one
     Program,  then the PURCHASER shall be relieved of any further  liability to
     the SUPPLIER  solely as relates to Products  relevant to said Program;  and
     provided  further,  that nothing herein is intended to relieve PURCHASER of
     the  following  obligations  to the  SUPPLIER  existing  as of the date the
     PURCHASER  makes the  Termination  Payment:  (A) payment  for any  Products
     delivered by the  SUPPLIER but not paid for by the  PURCHASER on such date;
     (B) payment for any Products  subject to  then-pending  purchase orders not
     timely  cancelled  by the  PURCHASER  pursuant to Section  5.4; and (C) the
     terms of Section 12 and Section 13.

(iv) The  PURCHASER  shall have no obligation  to make the  Termination  Payment
     other than as required by subsection  (b) above.  Without  limitation,  the
     PURCHASER shall have no obligation to make the  Termination  Payment in the
     event of (A) the expiration of this Agreement,  (B) the termination of this
     Agreement after the expiration of the initial term of this  Agreement,  (C)
     the  termination  of this Agreement as a result of a breach by the SUPPLIER
     of any of its  representations  or obligations in this  Agreement,  (D) the
     termination of a Program by the Customer with respect to both the PURCHASER
     and  the  SUPPLIER,  or  (E)  the  SUPPLIER  becomes  the  subject  of  any
     proceedings under state,  federal or other law for the relief of debtors or
     other circumstances as set forth in Section 14.3.

     2.4 Alternate Production Facility.  With respect to the [*] Program, if the
SUPPLIER notifies the PURCHASER of its intent to transfer production of Products
to a  facility  outside  the  United  States  and the  PURCHASER  is  reasonably
satisfied as to the quality of  manufacture  of the  Products at said  alternate
production  facility,  then the  PURCHASER  will use its good  faith  efforts to
obtain Customer approval for such transfer and the Parties  acknowledge that the
purchase price for such Products  shall not be reduced if such transfer  occurs.
With respect to the [*] [*] Program,  if the SUPPLIER  notifies the PURCHASER of
its intent to  transfer  production  of  Products  from the  initial  production
facility  and  the  PURCHASER  is  reasonably  satisfied  as to the  quality  of
manufacture  of the Products at said  alternate  production  facility,  then the
PURCHASER will use its good faith efforts to obtain  Customer  approval for such
transfer and the Parties  acknowledge that the purchase price reduction for such
Products  set forth on Schedule 3 for such  Products  shall be  increased  by an
additional 1% point if such transfer  occurs (for a total annual price reduction
of 4%). Any such change in production facility location shall be contingent upon
sixty days prior  written  notice by the SUPPLIER to the  PURCHASER,  receipt of
written approval from the Customer,  and the SUPPLIER's continuing obligation to
satisfy the terms and conditions of this Agreement.

     2.5 Assembly Line  Shutdown.  If (a) a default under this  Agreement by the
SUPPLIER, including a delay in delivery of the Products pursuant to Section 5.1,
results in a shutdown of any portion of the Customer's  assembly lines,  and (b)
such default is solely  attributable to the acts or omissions of the SUPPLIER or
of its subcontractors, subsuppliers or agents, then the SUPPLIER shall reimburse
the PURCHASER for the full amount of all documented penalties and fees which may
be assessed by the Customer  against the PURCHASER as a result of said shutdown;
provided,  however,  that the PURCHASER  shall take all actions to defend itself
against the imposition of any such  penalties and fees that the PURCHASER  would
have taken in the absence of such reimbursement obligation.

     2.6 Ability to Perform.  The SUPPLIER  represents that, as of the Effective
Date  (a) it has the  financial,  management,  and  manufacturing  capacity  and
capabilities to perform its obligations under this Agreement,  including but not
limited to,  purchasing  the requisite raw materials and performing the services
necessary to manufacture  and deliver timely,  or cause to be  manufactured  and
delivered,  the Products, (b) no lender has accelerated any existing obligations
of the  SUPPLIER,  and (c) no  creditor  has  obtained  a judgment  against  the
SUPPLIER for any obligations owed by the SUPPLIER to such creditor which has not
been  satisfied by the  SUPPLIER.  If a third-party  arbitrator  selected by the
Parties  determines,  after the  completion  of a  proceeding  conducted by such
arbitrator under the rules of the American Arbitration Association,  that any of
the preceding representations are false, then the PURCHASER shall have the right
to immediately  terminate  this Agreement in its entirety,  with no right of the
SUPPLIER to cure, and without further obligation or liability on the part of the
PURCHASER, other than the following obligations of the PURCHASER to the SUPPLIER
existing as of the termination  date: (A) payment for any Products  delivered by
the SUPPLIER but not paid for by the PURCHASER on such date; (B) payment for any
Products  subject to then-pending  purchase  orders not timely  cancelled by the
PURCHASER  pursuant to Section  5.4; and (C) the terms of Section 12 and Section
13.

3.   ORDERS

     3.1 Placement.

(a)  PURCHASER  may place firm  purchase  orders for the delivery of Products by
SUPPLIER.  Each purchase order issued by the PURCHASER  after the Effective Date
shall  specify a delivery  date of not less than sixty (60) days  following  the
date of the  purchase  order.  Regardless  of any prior  agreement  between  the
Parties or the terms of any existing purchase order issued by the PURCHASER with
respect to any Products,  the delivery date of Products subject to such existing
purchase  orders  shall be deemed  to be sixty  days  following  the date of the
purchase order, or on such other date as the Parties may agree in writing.

(b) If, other than as the result of the demand by the  Customer,  the  PURCHASER
specifies an accelerated  delivery date in any purchase order, then the SUPPLIER
shall use its  commercially  reasonable  efforts to meet such  accelerated  date
without  having its employees  work  overtime;  provided,  however,  that if the
SUPPLIER  notifies the PURCHASER that, in order to meet such  accelerated  date,
the  SUPPLIER is  required  to (a) have raw  materials  and/or  component  parts
air-freighted  to it,  and/or  (b)  have its  employees  work  overtime  and the
PURCHASER  approves  such  action(s),  then the  PURCHASER  shall pay all of the
documented costs of such air-freight and shall reimburse the SUPPLIER for all of
the documented costs of such overtime.  If, however,  the PURCHASER specifies an
accelerated  delivery date in any purchase  order as the result of the demand of
the Customer, then the SUPPLIER shall use its commercially reasonable efforts to
meet such accelerated date without having its employees work overtime; provided,
however, that if the SUPPLIER notifies the PURCHASER that, in order to meet such
accelerated  date,  the  SUPPLIER is required to (i) have raw  materials  and/or
component  parts  air-freighted  to it,  and/or  (ii)  have its  employees  work
overtime and the PURCHASER approves such action(s), then (A) the PURCHASER shall
pay the  documented  costs of such  air-freight,  and (B) the Parties  shall use
their  good  faith  efforts  to have  the  Customer,  directly  or  through  the
PURCHASER,  reimburse the SUPPLIER for such overtime  costs.  If the Customer is
not willing to so  reimburse  the  SUPPLIER  for the  overtime  costs,  then the
PURCHASER shall pay all of the documented  costs of such air-freight and, solely
with respect to purchase orders issued by the PURCHASER to the SUPPLIER pursuant
to this Agreement  after the Effective  Date, the PURCHASER  shall reimburse the
SUPPLIER  one-half of the documented costs of such overtime.  The SUPPLIER shall
have no obligation to pay for the costs of any  air-freighting  in order to meet
any accelerated  delivery date and shall have no obligation to pay for the costs
of  overtime  in  order  to meet  any  accelerated  delivery  date  unless  such
acceleration is demanded by the Customer.

(c) PURCHASER shall, in addition, provide to SUPPLIER a rolling updated forecast
of projected  purchases  covering  three (3) months  subsequent  to the delivery
month covered under  PURCHASER's most recent purchase order. Such forecast shall
be for  informational  purposes  only and shall not be construed as a commitment
for purchase thereof by PURCHASER.

     3.2  Acceptance.  SUPPLIER shall accept and acknowledge all purchase orders
which are placed by PURCHASER in conformance  with the terms of this  Agreement.
Any purchase  order not placed in  conformance  with the terms of this Agreement
must be rejected by written  notice from  SUPPLIER to PURCHASER  within ten (10)
working days after  receipt of such purchase  order.  In the event that SUPPLIER
uses a form of  acknowledgment  that conflicts in any way with this Agreement or
PURCHASER's  form of purchase order, the terms of this Agreement and PURCHASER's
purchase order shall be controlling.

4.   PAYMENT TERMS

     4. 1 Prices.  The purchase prices for the Products are setforth in Schedule
1 attached  hereto,  and  applicable  planned price  reductions are set forth in
Schedule 3 attached hereto.  Prices for the Products may be changed no more than
once a year by SUPPLIER providing PURCHASER with at least sixty (60) days notice
of the change and a new  Schedule 1. If the  PURCHASER  agrees to an  additional
price  reduction with the Customer,  such price reduction shall not apply to the
purchase  price for the applicable  Product  unless the SUPPLIER  agrees to such
price  reduction.  The Parties  acknowledge that Schedule 1 may be updated after
the date of this  Agreement to address new Products as agreed upon in writing by
the Parties.  If agreed upon in writing by the Parties,  such updated Schedule 1
shall  be  deemed  to be  part  of  this  Agreement.  If the  cost of any of the
SUPPLIER's  raw  materials  increases by 15% or more in any six month period and
the  SUPPLIER  notifies  the  PURCHASER,   and  provides  sufficient  supporting
documentation,  of such  increase,  then the Parties  shall use their good faith
efforts to have the Customer,  directly or through the PURCHASER,  reimburse the
SUPPLIER for the entire  amount of such  increase or as much of such increase as
the  Customer  is willing to pay.  The  PURCHASER  shall have no  obligation  to
reimburse  the  SUPPLIER  for such  increase  if the  Customer is not willing to
reimburse the SUPPLIER for such increase.

     4.2 Payment. Payment for each shipment of Products shall be net thirty (30)
days from the date of delivery of such shipment.

5.   DELIVERY

     5.1 Shipment. SUPPLIER will ship the Products F.O.B. SUPPLIER's facility in
Columbus, Indiana at PURCHASER's cost. Title to the Products and risk of loss or
damage shall pass from SUPPLIER to PURCHASER upon leaving  SUPPLIER's  facility.
PURCHASER  shall  determine  the carrier to be used for  shipment.  All shipping
containers  shall  bear such  information  and  markings  as shall be desired by
PURCHASER or required by law.

     5.2 On-Time  Delivery.  The SUPPLIER shall make the Products  available for
shipment by the PURCHASER in accordance with the terms of this Agreement.

     5.3  Acceptance.  PURCHASER  shall have the right to  conduct  an  incoming
inspection  and shall have  twenty  days after  delivery  to notify  SUPPLIER in
writing  whether  some or all of the  Products  are  rejected.  Any  Product not
rejected by PURCHASER within this twenty day period shall be deemed accepted. In
the event  PURCHASER  rejects  Products,  PURCHASER  shall  provide  a  detailed
explanation  therefor,  and  SUPPLIER  may  inspect  the  rejected  Products  at
PURCHASER's  premises,  replace the rejected  Products  without  requiring their
return,  or  require  the  return of the  rejected  Products,  freight  collect.
Rejected Products shall be repaired or replaced at SUPPLIER's expense, including
return freight to PURCHASER.

     5.4 Cancellation and Rescheduling.  The PURCHASER may cancel delivery dates
appearing in its purchase  orders at no charge  provided the PURCHASER  provides
written  notice of such  cancellation  to the  SUPPLIER not less than sixty (60)
days prior to the scheduled  delivery date to which the  cancellation  pertains.
The PURCHASER may not postpone  delivery dates appearing in its purchase orders.
The  PURCHASER  shall be obligated to purchase and take delivery of all Products
it orders which were not timely cancelled.

6.   TRADEMARKS

     6.1  SUPPLIER  shall  affix the  Trademarks  on all  Products  manufactured
pursuant to this Agreement,  and packaging therefor, in a manner as specified by
PURCHASER  or as agreed  upon in  writing  by the  Parties  in  response  to the
requirements  of  the  Customer.  SUPPLIER  acknowledges  PURCHASER's  exclusive
ownership of the Trademarks,  and SUPPLIER shall have no right or interest in or
claim to the Trademarks. SUPPLIER shall not use the Trademarks (i) in any manner
inconsistent with the instructions of PURCHASER,  or (ii) on any products except
for the Products manufactured pursuant to this Agreement,  except as agreed upon
in writing by the  Parties in  response  to the  requirements  of the  Customer.
Subject to Sections 14.1 and 14.4,  upon the  expiration or  termination of this
Agreement, SUPPLIER shall immediately discontinue the use of the Trademarks, and
thereafter shall not use the Trademarks,  or marks or names confusingly  similar
thereto,  directly or indirectly in connection  with its business or that of its
affiliates or principals.  SUPPLIER  shall not file any  application to register
any trademark or domain name composed or inclusive  of, or  confusingly  similar
to, the Trademarks in any country or region.  During the term of this Agreement,
SUPPLIER  will  promptly  notify  PURCHASER  in the event  that it learns of any
infringement or unauthorized use of the Trademarks by any person.

7.   RIGHTS IN DATA

     7.1 Ownership of  Proprietary  Rights.  The SUPPLIER and its affiliates are
the exclusive owners of all right,  title and interest in and to the proprietary
rights  associated  with or arising  from the  Products  and  related  software,
including,  but not  limited to, all patent  rights,  copyrights,  trade  secret
rights, trademarks, service marks and related goodwill.

     7.2  Ownership  of  Documentation.   The  Documentation  shall  remain  the
exclusive  property of the  SUPPLIER and its  affiliates  and shall be protected
from  disclosure  in  accordance  with  the  provisions  of  Article  12 of this
Agreement, unless the Customer owns the Documentation.  To the extent title does
not vest in the SUPPLIER by operation of law, the  PURCHASER  hereby  assigns to
the SUPPLIER all copyright,  patent and other proprietary rights arising from or
related  to  the   Documentation  on  a  worldwide  basis.  Upon  expiration  or
termination of this Agreement, however, the PURCHASER (a) at is own expense, may
make or keep copies of the  Documentation,  and (b) may use the Documentation in
accordance with the provisions of Article 12 of this Agreement.

8.   WARRANTY

     8.1  SUPPLIER   warrants   that  (i)  the  Products  will  conform  to  the
Specifications,  (ii) the Products will comply in all material respects with all
applicable national,  federal, state, provincial and local governmental laws and
regulations and industry  standards as may be in effect from time to time, (iii)
the Products will be free from defects in material and workmanship, for a period
of twelve (12) months from the date of sale by PURCHASER,  its distribu- tors or
its  dealers  to an  end-user,  and  (iv)  the  manufacture,  sale or use of the
Products does not infringe upon any  copyright,  trademark,  patent or any other
proprietary rights of any third parties.  The foregoing warranty shall not apply
to any failure or  malfunction  of the Products or breach which results from any
of the following events (if applicable):

   improper design of a Product by PURCHASER;

   (b)      components, parts or materials supplied by PURCHASER and used in
            the Product;

   (c)      improper maintenance, operation or use of a Product;

   (d)      any modification of a Product performed without SUPPLIER's written
            approval;

   (e)      any combination of a Product with another product not provided or
            approved by SUPPLIER; or

   (f)      use of the Trademarks to the extent that SUPPLIER strictly complies
            with Article 6 above.

     8.2 SUPPLIER  will either  repair or replace any Product which is in breach
of the foregoing  warranty.  Shipment to SUPPLIER shall be at SUPPLIER's expense
and shall be by the SUPPLIER's  designated shipper, and SUPPLIER shall be liable
for cost of  shipping  and for  damages  sustained  during  shipment;  provided,
however,  that the PURCHASER shall use  commercially  reasonable care in packing
such  Products for shipment to the SUPPLIER.  SUPPLIER will pay return  shipping
cost, and assume  responsibility  for damages  incurred during return  shipping.
Additional  warranty,  service and parts support obligations of SUPPLIER are set
forth in the Service and Quality  Support  Agreement  (the "Service  Agreement")
attached  hereto as Schedule 4 and to be  executed  by the Parties  concurrently
herewith.

9.   QUALITY ASSURANCE

     9.1  Production  Part  Approval  Process  (PPAP).  Each Party  follows AIAG
QS-9000 guidelines for production part approval.  SUPPLIER shall comply with the
PPAP  requirements  set forth in Schedule 5 attached  hereto and shall otherwise
comply with AIAG QS-9000 guidelines.

     9.2  Quality.  SUPPLIER  shall employ  appropriate  quality  assurance  and
quality  control  methods to assure  that  delivered  Products  comply  with the
Specifications.  SUPPLIER  shall not deliver any  non-compliant  Products.  Upon
request by  PURCHASER,  SUPPLIER  shall  provide  the  inspection  record of the
finished Products.

     9.3  Traceability.  SUPPLIER shall give each Product a unique serial number
which shall be recorded for purposes of defect and  warranty  traceability,  and
SUPPLIER  shall  maintain  a  recordkeeping  system  with such data and  provide
PURCHASER with access to such data as is reasonably necessary.

     9.4 Changes.  Any change in design,  material or manufacturing  process for
the Products  (whether or not requested by  PURCHASER)  shall be subject to PPAP
approval  pursuant  to  Section  9.1  of  this  Agreement.  SUPPLIER  shall  not
incorporate  such change into its  production  of Products  until the change has
been approved in writing by PURCHASER pursuant to PPAP.

     9.6 Facility Inspection.  SUPPLIER shall from time to time permit PURCHASER
or its agent to inspect the facilities,  conditions regarding quality assurance,
records and documents of SUPPLIER  relating to the  Products,  and of SUPPLIER's
suppliers and  subcontractors,  in order for PURCHASER to determine  whether the
Products are being  manufactured under appropriate  quality controls;  provided,
however,  that such  inspections  will be conducted  during normal working hours
with prior notification to SUPPLIER. Any information disclosed to or observed by
PURCHASER  or  its  agent  during  such  inspections   shall  be  deemed  to  be
Confidential  Information within the meaning of and subject to the provisions of
Article 12 of this Agreement.

     9.7  Abnormalities.  Each Party  shall  promptly  notify  each other of any
abnormalities with respect to the Products or the manufacturing process relating
to the Products if a Party  believes such  abnormalities  materially  affect the
quality or function  of the  Products.  In such case,  SUPPLIER  shall  promptly
report  to  PURCHASER  any  determination  made  as to  the  root  cause  of the
abnormality and the countermeasures taken by SUPPLIER in response thereto.

     9.8  Meetings.  The Parties shall meet  periodically  and from time to time
when necessary during each year of the term of this Agreement to discuss quality
assurance  and product  improvement  matters and various  other aspects of their
business relationship.

10.  PRODUCT LIABILITY INSURANCE.

     During the term of this Agreement and for a reasonable  period  thereafter,
the SUPPLIER shall maintain in full force and effect adequate product  liability
insurance  protecting  itself and the Purchaser against claims and liability for
injury,  death,  or property  damage  which arise out of or relate to the use or
operation of the Products purchased under this Agreement. Such product liability
insurance  policy  shall have a minimum  limit of One Million  Dollars and shall
include the PURCHASER as named  insured.  Within thirty (30) days  following the
date of this Agreement,  SUPPLIER shall provide the PURCHASER with a certificate
of insurance  regarding  such policy  which  provides  that the  PURCHASER is an
additional  named  insured on such policy and that the insuror  shall not cancel
such policy without providing a minimum of thirty (30) days prior written notice
to  the  PURCHASER.  The  SUPPLIER  shall  furnish  additional  certificates  of
insurance to the PURCHASER on an annual basis during the term of this Agreement.

11.  INDEMNIFICATION

     11.1  Indemnification.  The  SUPPLIER  shall  defend,  indemnify  and  hold
harmless  the  PURCHASER,  its  parent,  subsidiaries  and  affiliates,  and the
officers, directors, shareholders,  employees, agents, successors and assigns of
the PURCHASER and the  distributors,  dealers,  purchasers  and end-users of the
Products (collectively, the "Indemnified Parties"), from and against any and all
losses, damages, liabilities,  obligations,  judgments,  settlements,  costs and
other expenses,  incurred or suffered by the Indemnified Parties, arising out of
or in connection  with (i) the breach by the SUPPLIER of any of its  obligations
under this  Agreement or any act or omission of the  SUPPLIER,  its employees or
agents,  (ii) a claim  by a third  party  that  the use or sale of the  Products
infringes a copyright,  patent,  trade secret or other proprietary right of such
third party,  (iii) the failure of the Products supplied by the SUPPLIER to meet
all applicable federal and state safety  requirements  including but not limited
to National Highway Transportation Safety Administration  requirements,  or (iv)
any claim for personal injuries  (including death) or loss or damage to property
if caused or allegedly caused by a defect in the design, material or workmanship
of the Products (collectively, the "Claims").

     11.2 Indemnification Procedure.

     (a) Within a reasonable  period of time after receipt of notice  concerning
the  commencement or threatened  commencement of any civil,  administrative,  or
investigative   action  or  proceeding  involving  the  Claims  covered  by  the
SUPPLIER's  indemnification  obligations  under this  Article 11, the  PURCHASER
shall provide written notice of such Claims to the SUPPLIER. Notwithstanding the
foregoing,  no failure to notify the SUPPLIER  shall relieve the SUPPLIER of its
obligations  under this Agreement  except to the extent that it can  demonstrate
damages attributable to the PURCHASER's failure to notify.

     (b) The  SUPPLIER,  at its sole  expense,  shall be obligated to assume the
defense of any claim as to which it has an indemnification obligation hereunder.
Any of the Indemnified Parties shall have the right to be represented by its own
attorneys at its own  expense.  If the defense is not so assumed by the SUPPLIER
within ten (10) days after receipt of written notice,  the  Indemnified  Parties
shall  have the right to assume  their own  defense,  and shall be  entitled  to
reimbursement  by the SUPPLIER for any and all reasonable  expenses  (including,
but not limited to,  attorneys' and experts' fees) incurred in such defense,  in
addition to the SUPPLIER's other indemnity obligations hereunder.

     (c) The SUPPLIER may not  compromise  or settle any such suit or proceeding
without first  consulting  with and  obtaining the prior written  consent of the
PURCHASER, whose consent shall not be unreasonably withheld or delayed.

     (d)  In  the  event  that  the  PURCHASER  or  the  distributors,  dealers,
purchasers or end-users of the Products are precluded  from selling or using the
Products  because  the  Product  infringes  on the patent or other  intellectual
property  rights of a third party,  SUPPLIER  shall,  at its option and expense,
either (i) procure for PURCHASER and the distributors,  dealers,  purchasers and
end-users of the Products the right to continue  selling or using the  Products,
(ii) modify the  Products so as to render them  non-infringing,  or (iii) accept
the return of the Products and refund the purchase price.

     11.3  Exclusions.  Except  where  SUPPLIER  contributes  to or induces  the
Claims,  SUPPLIER's obligations under the provisions of Section 11.1 above shall
not apply to any claims,  allegations,  suits, actions or proceedings  resulting
solely from (i) the  Specifications  provided by PURCHASER,  (ii) the Trademarks
(to the extent that SUPPLIER  strictly  complies with Article 6 above), or (iii)
misuse,  abuse or other fault directly  attributable to the Indemnified Parties.
PURCHASER  agrees to pay all  damages  or costs  awarded,  including  reasonable
attorneys' fees and settlements with respect to any suit,  judgment,  proceeding
or action in which  SUPPLIER  is relieved  of its  obligations  pursuant to this
section.

12.  CONFIDENTIALITY

     By virtue of this  Agreement,  the Parties will have access to  information
and material that is confidential  to one another,  including but not limited to
(i) requests for proposals, (ii) marketing materials, (iii) pricing information,
(iv) identity,  contacts and other  business  information  regarding  employees,
customers  and leads,  including  but not  limited to names,  telephone  and fax
numbers,  addresses  and  e-mail  addresses,  (v)  contracts,  (vi)  proprietary
software  and  documents  of  either  Party  including  but not  limited  to the
Documentation and other drawings, manuals, samples, schematics,  specifications,
and  written  and  tangible  materials  disclosed  to  the  other  Party;  (vii)
non-public financial information  concerning either Party, (viii) either Party's
research and  development,  new product and  marketing  plans,  unless and until
publicly  announced,  and (ix) any  information  designated as  confidential  in
writing at or prior to disclosure (collectively the "Confidential Information").
Neither Party shall disclose  Confidential  Information,  including the contents
and details or operations of the  businesses  of the  respective  Parties to any
person or entity other than to fulfill its duties and responsibilities  pursuant
to this Agreement, nor use Confidential Information except for purposes relating
to this Agreement.

     The foregoing  confidentiality and non-use obligations shall not apply with
respect to any information which:

     is or becomes  public  knowledge  through no wrongful act of the  receiving
Party;

     (b) is already known to the receiving Party;

     (c) is independently developed by the receiving Party;

     (d) is  rightfully  obtained  by the  receiving  Party from any third party
without  similar  restriction  and without breach of any obligation  owed to the
disclosing Party; or

     (e)  is  disclosed  pursuant  to  a  lawful  requirement  or  request  of a
governmental agency.

13.  NON-SOLICITATION.

     13.1 Non-Solicitation of Employees and Consultants. During the term of this
Agreement and for a period of two (2) years after the  termination or expiration
of this Agreement,  the Parties each agree not to hire or solicit for employment
or otherwise  engage any of the other  Party's  senior  management  employees or
anyone in the sales,  marketing,  business unit or engineering function,  unless
agreed  to in  writing  by the  other  Party or any  independent  contractor  or
consultant providing services to a Party in such areas.

     13.2  Non-Solicitation of Customers.  During the term of this Agreement and
for a period of two years after the termination or expiration of this Agreement,
SUPPLIER  may not,  directly  or  indirectly,  sell or  solicit  the sale of the
Products or any products  substantially  similar to the Products to the Customer
or  any  other  third  party  for  the  Programs,   without  the  prior  written
authorization  of  PURCHASER,  which  authorization  PURCHASER  may, in its sole
discretion, choose not to provide.

14.  TERM AND TERMINATION

     14.1 Term.  This Agreement shall have an initial term of two (2) years from
the Effective Date and shall thereafter be automatically  renewed for successive
one (1) year terms  unless  notice of  termination  is given by one Party to the
other at least sixty (60) days prior to the termination date of the initial term
or any renewal term, or unless earlier  terminated  under Sections 14.2 or 14.3.
Notwithstanding  the  foregoing but subject to Section 2.3, if the Parties agree
on a Product to be subject to this Agreement and the terms and conditions of the
purchase and supply of such a Product,  then SUPPLIER shall supply such Product,
and, unless the Customer terminates the Program of which particular Products are
a part, the PURCHASER shall purchase such Product,  on such terms and conditions
and in accordance  with this  Agreement  for a period  lasting not less than two
years from the initiation of mass production by the SUPPLIER.

     14.2  Termination  for Default.  In the event that either Party defaults in
the  performance  of any of the terms,  conditions,  obligations,  undertakings,
covenants,  or liabilities  set forth in this  Agreement,  the other Party shall
give the  defaulting  Party notice of such default.  In the event the defaulting
Party has not  remedied the default  within  thirty (30) days  following  notice
thereof,  the Party giving notice may  immediately  terminate  this Agreement by
providing the defaulting Party with written notice of termination.

     It shall be deemed to be an event of default under this Agreement if either
Party defaults in the performance of any term, provision,  covenant,  condition,
undertaking  or obligation  under the Service  Agreement and, if such default is
not remedied within thirty (30) days following notice thereof,  the Party giving
notice may  immediately  terminate  this  Agreement by providing the  defaulting
Party with written notice of termination.

     Notwithstanding  anything to the contrary in this  Agreement,  in the event
that SUPPLIER  defaults in the timely delivery of Products  hereunder and either
(a) the Customer advises the PURCHASER of the Customer's  intent to shutdown its
assembly  line as a result of such untimely  delivery,  or (b) the SUPPLIER does
not make  complete  delivery  of such late  Products  within  seven  days of the
applicable  delivery date, then no right to cure such untimely delivery shall be
available  to  SUPPLIER  hereunder,  and  PURCHASER  shall  have  the  right  to
immediately  terminate  this  Agreement  and,  subject  to  Section  2.2(b),  to
immediately obtain Products or substitutes for the Products from any third party
source of its sole choice.

     14.3 Automatic Termination. This Agreement shall terminate immediately upon
written  notice by a Party in the event that the other Party  ceases to carry on
its business,  becomes the subject of any  proceedings  under state,  federal or
other law for the relief of debtors,  otherwise  become  insolvent  or bankrupt,
makes an assignment for the benefit of creditors,  or upon the  appointment of a
receiver or the reorganization for the benefit of creditors. The Agreement shall
also terminate  immediately  upon written notice by PURCHASER to SUPPLIER as set
forth in Sections 2.3, 2.6, and 14.1.

     14.4 Effect of Expiration and Termination. The expiration or termination of
this Agreement  shall not relieve either Party from its  obligations  which have
accrued  pursuant to the  provisions of this  Agreement or release  either Party
from  any  obligations  which  have  been  incurred  as a result  of  operations
conducted under this Agreement. Neither Party shall be liable for damages of any
kind as a result of exercising its right to terminate  this Agreement  according
to its terms,  and  termination  shall not  affect any other  right or remedy of
either Party. The rights and obligations of Articles 6, 7, 8, 10, 11, 12, and 13
and Sections 15.6 and 15.8 shall survive the  expiration or  termination of this
Agreement.

     14.5  Repurchase of Inventory.  Upon the  expiration or termination of this
Agreement,  PURCHASER shall have the right, but not the obligation,  to purchase
SUPPLIER's  current inventory of the Products at the prices determined  pursuant
to this Agreement.  During a thirty (30) day period  following the expiration or
termination of this  Agreement,  SUPPLIER  shall permit  PURCHASER to enter onto
SUPPLIER's  premises to inspect  SUPPLIER's  current  inventory of the Products.
Within  fifteen (15) days following such  inspection,  PURCHASER  shall have the
right to purchase any or all of such inventory.  Such purchase shall be pursuant
to all of the  terms  and  conditions  of this  Agreement,  including  price and
freight charges.

14.6 Purchase of Tooling.

     (a) Except as provided  below,  upon the  expiration or termination of this
Agreement,  PURCHASER  shall  purchase  all  tooling  and molds  acquired by the
SUPPLIER for the production of Products, at an aggregate purchase price equal to
the SUPPLIER's  balance of unamortized  book value for such tooling and molds as
of the effective date of the expiration or  termination of this  Agreement.  The
parties  have agreed upon the  amortization  schedule set forth on Schedule 6 to
this  Agreement  for certain  tooling and molds and, with respect to tooling and
molds to be  acquired  by the  SUPPLIER  after the date of this  Agreement,  the
parties  shall  agree  on an  applicable  amortization  schedule  prior  to  the
SUPPLIER's acquisition of such items. The amortization schedules,  and therefore
the purchase price to be paid by the PURCHASER  pursuant to this section,  shall
be based on the  projected  annual  volume  of parts to be  produced  using  the
particular  tooling and molds as agreed upon by the parties,  regardless  of the
volumes  the  SUPPLIER  actually  produces.  The  Parties  acknowledge  that the
purchase  price for the Products  will not be reduced as a result of the tooling
and molds  being  fully  amortized.  The Parties  further  acknowledge  that any
payment under this section  shall be contingent  upon (i) such tooling and molds
being free and clear of all liens and being in proper  working  order,  ordinary
wear and tear excepted, and (ii) the PURCHASER having access, within thirty days
after the expiration or termination  of this  Agreement,  to remove such tooling
and molds from their  location.  The  PURCHASER  shall make such payment  within
thirty days of the SUPPLIER giving the PURCHASER notice of such access.

     (b) After the tooling and molds have been fully  amortized,  the  PURCHASER
shall be the  owner of such  tooling  and  molds;  provided,  however,  that the
SUPPLIER  shall  maintain  possession  of such  tooling  and  molds  while  this
Agreement  is in effect and shall have the right to use such  tooling  and molds
solely in connection  with the  production of Products,  and provided,  further,
that the SUPPLIER shall promptly  relabel said tooling and molds as "Property of
[*],"  provide  evidence of same to the PURCHASER,  and promptly  provide the
PURCHASER  with a bill of sale  transferring  title  to the  PURCHASER  and with
release(s) executed by then-current lienholders (if any), and provided, further,
that upon the expiration or termination of this  Agreement,  the PURCHASER shall
have the right to remove all such tooling and molds from their  location.  While
the SUPPLIER or its  designee  possesses  such  tooling and molds,  the SUPPLIER
shall take commercially  reasonable actions maintain and repair such tooling and
molds,  or cause them to be maintained and repaired,  which actions shall be not
less rigorous than the actions taken by the SUPPLIER with respect to tooling and
molds owned by the SUPPLIER.

     (c) The PURCHASER  shall not be obligated to purchase all tooling and molds
as provided  above in the event of  termination of this Agreement as a result of
failure to timely deliver Products or other default by SUPPLIER;  termination of
this Agreement as a result of breach of any  representations  by the SUPPLIER in
this  Agreement;  termination  of the  Programs  by  Customer  with  respect  to
PURCHASER and SUPPLIER;  or bankruptcy of SUPPLIER or other circumstances as set
forth in Section 14.3.

15.  MISCELLANEOUS

     15.1   Relationship  of  Parties.   This  Agreement  does  not  create  the
relationship  of  principal  and  agent  between  the  Parties  nor  shall it be
construed as creating any form of legal arrangement which would impose liability
upon one Party for the act or omission of the other Party.

     15.2  Notices.  All  notices,  requests,  demands and other  communications
hereunder  shall be in writing and shall be  delivered  personally  or mailed by
registered  or  certified  mail,  return  receipt  requested,  or  delivered  by
overnight  air  courier  guaranteeing  next  day  delivery,   to  the  following
addresses:

                  If to Onkyo America:

                           Onkyo America, Inc.
                           1757 Larchwood Avenue
                           Troy, MI 48083-2224
                           Attention:       Mr. Kevin Martin
                           Telephone:       (248) 619-0070, x109
                           Facsimile:       (248) 619-0078
                           Email:           kmartin@onkyo-america.com

                           [*][*]
                           [*]
                           Attention:       [*]
                           Telephone:       [*]
                           Facsimile:       [*]

*Confidential portions omitted and filed separately with the Commission.

<PAGE>

     Either Party may change its address upon notice given to the other Party in
the foregoing manner. If mailed, notices shall be effective three (3) days after
mailing and if delivered by air courier,  notices  shall be effective on the day
after it is sent by air courier.

     15.3  Severability.  If any provision of this Agreement shall be determined
by a court of competent  jurisdiction to be invalid,  illegal, or unenforceable,
the validity,  legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.

     15.4 Entire Agreement. With the exception of the Service Agreement and that
certain Joint  Development  and Supplier  Agreement dated February 4, 2000, this
Agreement   (including  any  schedules  attached  hereto)  contains  the  entire
agreement of the Parties with respect to the  transactions  contemplated  herein
(except for any  additional  terms or  conditions  which may be contained in any
purchase  order which may be issued by  PURCHASER  pursuant to this  Agreement).
Should there be any  conflict  between the  contents of this  Agreement  and the
Service  Agreement,  this Agreement shall have  precedence.  Any modification or
amendment  of any term or  provision  of this  Agreement  shall  not be valid or
binding  unless  the same is in  writing  and  signed by each  Party;  provided,
however,  that an exchange of  electronic  mail shall not be deemed a sufficient
writing for this purpose.

     15.5  Assignment.   Neither  Party  shall  assign  any  of  its  rights  or
obligations  under this Agreement without the prior written consent of the other
Party,  which  consent may be withheld at the other  Party's  sole and  absolute
discretion;  provided,  however,  that each  Party may  assign  its  rights  and
obligations  under this Agreement to any of its affiliates  without the need for
any consent by the other Party. For purposes of this Agreement,  "affiliates" of
Onkyo America shall include Global Technovations,  Inc. and, solely for purposes
of this section,  [*]. This  Agreement  shall be binding upon and shall inure to
the benefit of the legal successors and assigns of the Parties.

     15.6  Governing  Law and Venue.  This  Agreement  shall be  governed by and
construed in accordance with the laws of the State of California,  including the
provisions of the Uniform Commercial Code as adopted in the State of California,
and not the Convention for the  International  Sale of Goods.  The Parties agree
that any  litigation  relating  directly or indirectly to this Agreement must be
brought before a court of competent jurisdiction within the State of California.

     15.7 Waivers. No waiver of any of the terms or conditions of this Agreement
by either  Party  shall be valid or binding  unless  the same is in writing  and
signed by an authorized  officer of the waiving  Party. A waiver by either Party
of a breach of any of the provisions of this Agreement shall not be construed as
a waiver of any further breach of the same  provision or of any other  provision
of this Agreement.

     15.8.  Attorneys' Fees. In the event that any action at law or in equity is
brought to enforce or interpret the provisions of this Agreement, the prevailing
Party shall be entitled to a reasonable  attorneys'  fee which may be set by the
Court in the same action or in a separate  action  brought for that purpose,  in
addition to any other relief to which the prevailing Party may be entitled.

          * * * * * * * * * * * * * * * * * *

         IN WITNESS WHEREOF, the Parties have executed this Purchase Agreement
as of the date set forth above.

[*]

By: ________________________________

Name: ________________________________

Title: ________________________________

ONKYO AMERICA, INC.

By: ________________________________

Name: ________________________________

Title: ________________________________

*Confidential portions omitted and filed separately with the Commission.

<PAGE>

                                   SCHEDULE 1

                                    PRODUCTS

[*] Program

[*] Program

*Confidential portions omitted and filed separately with the Commission.

<PAGE>

                                   SCHEDULE 2

                                 SPECIFICATIONS

         Part Number                        Change Level               Date
         -----------                        ------------               ----
[*]                                         [*]                        [*]

*Confidential portions omitted and filed separately with the Commission.

<PAGE>

                                   SCHEDULE 3

                            PLANNED PRICE REDUCTIONS

[*] Program

[*] [*] Program

*Confidential portions omitted and filed separately with the Commission.

<PAGE>

                                   SCHEDULE 4

                      QUALITY AND SERVICE SUPPORT AGREEMENT

This QUALITY AND SERVICE SUPPORT  AGREEMENT is made on this _____ day of August,
2001 by and between [*][*], a [*] corporation ("[*]"), and Onkyo America,  Inc.,
an  Indiana   corporation   which  is  a   wholly-owned   subsidiary  of  Global
Technovations,  Inc., a Delaware  corporation  ("Onkyo America").  [*] and Onkyo
America are referred to from time to time in this  Agreement  individually  as a
"Party" and together as the "Parties."

1.0      DEFINITIONS

         1.1 From time to time, each Party may deliver Products to the other
         Party. In this Agreement, the Party supplying Product is referred to as
         the SUPPLIER and the Party purchasing Products is referred to as the
         PURCHASER. All other definitions shall be as specified in the Purchase
         Agreement between the Parties dated as of the same date as this
         Agreement (the "Purchasing Agreement").

2.0      PRODUCT QUALITY

2.1      The PURCHASER will verify quality of Product delivered by the SUPPLIER
         against engineering specifications, acceptance standards, approved
         samples and/or other applicable documentation. Verification may be by
         receiving sample inspection, certification of SUPPLIER's quality
         system, review of SUPPLIER's inspection records, or by a combination
         thereof. Expenses incurred by the PURCHASER for such verification shall
         be absorbed in full by the PURCHASER.

2.2      In the event that verification as defined in Section 2.1 indicates that
         Product does not conform to established acceptance criteria, and if the
         consent of nonconforming Product within any single lot delivered by
         SUPPLIER to PURCHASER exceeds 50 parts-per-million, then additional
         costs incurred by the PURCHASER to contain nonconforming Product shall
         be reimbursed in full by SUPPLIER. See section 2.5.

2.3      In the event that the PURCHASER's  customer incurs expenses for
         containment of  nonconforming  Product, and bills such expenses to the
         PURCHASER, the SUPPLIER shall reimburse the PURCHASER in full. See
         section 2.5

2.4      SUPPLIER shall replace, rework to original specifications or reimburse
         at full purchase price any nonconforming Product delivered to the
         PURCHASER or its customer, as mutually agreed case by case. Freight and
         other handling expenses related to the return of such Product to
         SUPPLIER (or to other location designated by SUPPLIER) shall be the
         sole responsibility of SUPPLIER.

*Confidential portions omitted and filed separately with the Commission.

<PAGE>

2.5      Whenever feasible, the PURCHASER shall provide evidence of
         nonconforming Product (samples or descriptions) to SUPPLIER and allow
         SUPPLIER a reasonable opportunity to review such evidence and propose
         alternative solutions prior to proceeding with actions defined in
         sections 2.1 through 2.4 for which SUPPLIER will have a cost liability.
         SUPPLIER shall respond to such matters in a timely and constructive
         manner.

2.6      Any damage to Product resulting from inspection, handling or storage by
         PURCHASER, and related rework expenses incurred by SUPPLIER, shall be
         the responsibility of PURCHASER.

3.0      WARRANTY

3.1      SUPPLIER warrants that Product will conform to the specifications
         established between the PURCHASER and the SUPPLIER and be free of
         defects in materials and workmanship for the full duration of the OEM
         warranty term provided by the PURCHASER to its customer. Unless
         otherwise negotiated, this warranty term shall be as follows:

(a)      Product installed at customer's factory:  36 months or 36,000 miles,
         whichever occurs first.

(b)      Product installed at automotive  dealerships:  12 months or the
         remainder of the original 36 month/36,000  miles vehicle warranty,
         whichever occurs last.

3.2      Product which is determined by the PURCHASER's customer to be defective
         during the warranty term defined in Section 3.1 or during the
         subsequent out-of-warranty phase, shall be serviced under the general
         procedure defined in Section 4.0.

3.3      Warranty expenses billed to the PURCHASER by its customer for labor,
         freight, materials, handling and other reasonable "industry standard"
         expenses incurred by its automotive dealers (so called "R&R" claims),
         shall be reimbursed in full by SUPPLIER.

4.0      SERVICE METHOD

4.1      Unless otherwise requested by the PURCHASER's customer, the Product
         shall be serviced by replacement with new Product through the
         customer's Parts Distribution Center (PDC), per the following basic
         steps:

(a)  the  PURCHASER  sells new Product to its customer at normal sales price for
     PDC inventory purposes.

(b)  the  PURCHASER's  customer sells the Product to the automotive  dealer as a
     service part at the customer's normal dealer net price.

(c)  The  automotive  dealer  uses the new  Product  to  replace  the  defective
     Product.

(d)  In case of in-warranty  replacement,  the automotive  dealer recovers parts
     and labor  expenses  by  submitting  a  warranty  claim to the  PURCHASER's
     customer. Reference Section 3.3.

(e)  Unless other  arrangement is requested  from time to time by SUPPLIER,  the
     PURCHASER, or the customer, the automotive dealer disposes of the defective
     Product. Reference Section 4.2.

4.2      SUPPLIER and/or the PURCHASER may from time to time request access to
         defective Product that has been replaced by automotive dealers (per
         Section 4.1, items c and e) in order to perform quality analysis or
         related activities. Any costs billed to the PURCHASER by its customer
         for such retrieval shall be reimbursed in full by SUPPLIER.

4.3      SUPPLIER shall maintain Product availability for service purposes for a
         minimum of ten (10) years from the date of last sale of Product to end
         user, in compliance with applicable federal and state regulations.

5.0      REPORTING AND DOCUMENTATION

5.1      SUPPLIER shall provide the PURCHASER a minimum of ten (10) service
         manuals for each Product model free of charge, including parts lists
         with part numbers, schematics and exploded view drawings, encompassing
         all parts, subassemblies and other materials and/or information. (To be
         used for internal technical reference).

5.2      [*] uses a "FRACAS" program (Failure Reporting Analysis and Corrective
         Action System) and Onkyo America uses an 8D corrective active process
         program, each of which are in compliance with ISO-9000 and QS-9000 to
         request corrective action from SUPPLIER in the event of Product and/or
         procedural noncompliance. SUPPLIER shall respond promptly and
         effectively to such requests. [*] and Onkyo America will provide
         general instructions for the FRACAS process and the an 8D corrective
         active process program, respectively, at the time of its first use.

5.3      Whenever requested by the PURCHASER, the SUPPLIER shall provide
         technical reports of warranty returns retrieved per Section 4.2 (or
         other method), including so called "Pareto and Paynter" analysis and
         description of corrective actions. A standard report format shall be
         used that is acceptable to the PURCHASER and its customer.

6.0      GENERAL

6.1      SUPPLIER may delegate certain duties under this agreement to its
         suppliers. However, SUPPLIER shall be fully responsible for the proper
         execution by its suppliers of delegated duties in compliance with the
         terms of this agreement.

6.2      With the exception of the Purchasing Agreement, this agreement
         constitutes the entire understanding between the parties and supersedes
         all previous written or oral negotiations and commitments with respect
         to the transactions contemplated herein. Should there be any conflict
         between the contents of this agreement and the Purchasing Agreement,
         the Purchasing Agreement shall have precedence.

6.3      This agreement shall not be modified except in writing executed by a
         duly authorized representative of each party, which writing makes
         specific reference to this agreement.

  IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the
date first written above

[*]

By (signature):___________________________________________

Name (printed):__________________________________________

Title:___________________________________________________

ONKYO AMERICA, INC.

By (signature):___________________________________________

Name (printed):__________________________________________

Title:___________________________________________________

*Confidential portions omitted and filed separately with the Commission.

<PAGE>

                                   SCHEDULE 5

                    PRODUCTION PARTS APPROVAL PROCESS (PPAP)

1.   PPAP submittal is required prior to initial production and shall be
     approved by PURCHASER before any shipment may be
     dispatched by SUPPLIER.

2.   After initial PPAP submittal, SUPPLIER shall submit to PURCHASER a
     "Supplier Request for Approval" and a revised PPAP whenever the
     SUPPLIER implements:

o    Engineering changes.
o    Materials changes (use of alternative materials and parts).
o    Tooling changes (additions, refurbishment, replacements,
     modifications, etc.)
o    Manufacturing process changes.
o    Manufacturing site changes.
o    Reactivation of tooling that has been inactive longer than 12 months.
o    Resumption of shipment after PURCHASER suspense due to quality concerns.

3.   PPAP requirements specific to this Agreement shall be as follows.
     S = Submit to PURCHASER and retain copy at SUPPLIER. R = Retain at
     SUPPLIER and provide copy to PURCHASER upon request. N/A = Not
     applicable to this Agreement.

4.   PPAP submittals shall be made utilizing the formats attached hereto.
     PURCHASER will accept, as an alternative, Automotive Industry Action
     Group (AIAG) QS9000 formats. PURCHASER recommends that SUPPLIER
     utilizes reference materials published by AIAG to assist in
     understanding the PPAP requirements.

<PAGE>
                                   SCHEDULE 6

                              AMORTIZATION SCHEDULE

[*] Program

[*] Program

*Confidential portions omitted and filed separately with the Commission.Exhibit 10.1

                                 August 17, 2001

BY FACSIMILE (203) 862-6990

Holders of Series B 7% Convertible Preferred Stock
(Identified on the attached Consent to Amendment
    Holders Signature Page)
c/o Amaranth Trading LLC
Two American Lane
Greenwich, Connecticut 06836-2571
Attention: Michael S. Katz, Esq.

                  Re:      Consent to Amendment

Gentlemen:

     This will confirm the agreement between you (each a "Holder" and
collectively, the "Holders") and Educational Video Conferencing, Inc. ("EVCI")
regarding EVCI's Certificate of Designations (the "COD") of Series B 7%
Convertible Preferred Stock ("Series B Preferred"):

     1. Each Holder hereby irrevocably (subject to the voiding of this agreement
pursuant to Paragraph 4 below) consents to the amendment (the "Amendment") of
Section 19(a) of the COD to delete the entirety of such Section contained after
the first sentence thereof (the "Amendment Consent").

     2. Each Holder hereby irrevocably waives (subject to the voiding of this
agreement pursuant to Paragraph 4 below) any claim of any kind to the payment of
dividends pursuant to Section 4(a) of the COD for the period beginning September
22, 2000 and ending September 21, 2001 (the "Waiver"). The Waiver is without
prejudice to any legal position EVCI or such Holder may take in the future
regarding its right to receive, and EVCI's obligation to pay, any dividends
pursuant to Section 4 of the COD with respect to any period commencing after
September 21, 2001.

     3. EVCI is simultaneously herewith issuing to Holders its promissory note
for $910,000, in the form attached hereto as Exhibit A (the "Note"). EVCI is
delivering the Note into escrow, pursuant to the Escrow Agreement referred to in
the Note.

     4. This agreement and the Note shall be null and void and of no effect if,
prior to October 10, 2001, Nasdaq Stock Market Inc. shall have notified EVCI

<PAGE>

August 17, 2001
Page 2

that the Nasdaq Listing Qualifications Panel (the "Panel"), before which EVCI
appeared in July 2001, has decided that EVCI's common stock will be delisted
from the Nasdaq SmallCap Market for any reason other than the failure to meet
the minimum bid requirement.

     5. Each Holder represents and warrants to EVCI that it is the record and
beneficial owner of the percentage of outstanding shares of Series B Preferred
of EVCI set forth parenthetically opposite its name on the attached Consent to
Amendment Holders Signature Page.

     6. This agreement constitutes the entire agreement among the Holders and
EVCI with respect to this subject matter and may not be amended except by a
writing signed by all parties. Any waiver of any provision of this agreement
shall be in writing and signed by the party granting the waiver.

     7. This agreement shall be governed by and interpreted in accordance with
the laws of the State of New York.

     8. In the event of a breach of this agreement, the parties shall have all
remedies available to them at law or in equity except that, under no
circumstances, other than this agreement becoming null and void under paragraph
4 above, shall the Amendment Consent be revoked, changed, conditioned or
otherwise affected.

     9. This letter supercedes in all respects the letter dated August 7, 2001
from EVCI to Amaranth Trading LLC.

     Please indicate your agreement to the foregoing, by signing the Consent to
Amendment Holders Signature Page, delivering the executed original thereof to
EVCI by mail and a copy by facsimile to (914) 395-4898. For this agreement to
become effective, the facsimile of your signed copies thereof must be received
by 2:00 p.m. New York City time on August 17, 2001, unless we waive this
requirement in writing.

                                            Sincerely yours,

                                            /s/ Dr. Arol I. Buntzman
                                            ------------------------------------
                                            Dr. Arol I. Buntzman
                                            Chairman and CEO

AIB:sd

<PAGE>

                              Consent to Amendment
                             Holders Signature Page

AMARANTH TRADING LLC (77%)

By:  Amaranth Advisors, LLC
     (Managing Member)

     By: /s/ Nicholas M. Maounis
        ----------------------------------
         Name:  Nicholas M. Maounis
         Title:    Managing Member

SENECA CAPITAL INTERNATIONAL, LTD. (10%)

By:  /s/ Michael Rosenthal
   ---------------------------------------
     Name:  Michael Rosenthal
     Title: Partner

SENECA CAPITAL, L.P. (5%)

By:  /s/ Michael Rosenthal
   ---------------------------------------
     Name:  Michael Rosenthal
     Title: Partner

MERCED PARTNERS LIMITED PARTNERSHIP (4%)

By:  Global Capital Management, Inc.,
     General Partner

     By:  /s/ Julie K. Braun
        ----------------------------------
         Name:  Julie K. Braun
         Title: Vice President

LAKESHORE INTERNATIONAL, LTD. (4%)

By:  Hunter Capital Management, L.L.C.,
     Investment Manager

By:  Global Capital Management, Inc.
     Member

     By:  /s/ Julie K. Braun
        ----------------------------------
         Name:  Julie K. Braun
         Title: Vice President

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