Document:

Document

Exhibit 10.9
***Certain identified information has been omitted from this exhibit because it is both (i) not material and (ii) would likely cause competitive harm to the Registrant if publicly disclosed. Such omitted information is indicated by brackets (“[...***...]”) in this exhibit. ***

PURCHASE AGREEMENT

Dated as of May 23, 2019

between

DEI SALES, INC., herein referred to as SOUND UNITED

and

ANAM Electronics Co., Ltd

This PURCHASE AGREEMENT (this “Agreement”), dated as of May 23, 2019 (the “Effective Date”), is made and entered into by and between DEI Sales, Inc., and its subsidiary Sound United, LLC, having a principal place of business 1 Viper Way, Vista, CA 92081 (“SOUND UNITED”), and ANAM Electronics Co. Ltd, a Korea corporation having its principal place of business at 27,digital-ro 27ga-gil, Guro-gu, Seoul, Korea (“Supplier”).  SOUND UNITED and/or Supplier may hereafter be referred to individually as a “Party” and collectively as the “Parties”.
WHEREAS, SOUND UNITED is in the business of manufacturing and selling audio products under various trademarks (the “Trademark”);
WHEREAS, Supplier wishes to, and SOUND UNITED wishes Supplier to develop and manufacture for SOUND UNITED and supply to SOUND UNITED certain audio products under the Trademarks to be marketed and sold by SOUND UNITED.
NOW, THEREFORE, in consideration of the mutual covenants and premises herein contained, the Parties agree as follows:

1.GENERAL

1.1This Agreement specifies the basic terms and conditions under which Supplier will develop and manufacture the audio products specified by one or more award letters issued by SOUND UNITED from time to time (each, an “Award Letter”; the business being awarded by the Award Letter, the “Award”; and such products, the “Products”) and supply the Products to SOUND UNITED in accordance with the purchase orders (the “Purchase Orders”) issued by SOUND UNITED as set forth in this Agreement.  This Agreement also specifies in Schedule I the basic terms and conditions under which Supplier will supply to SOUND UNITED spare parts of the Products for after-service purposes (the “Spare Parts”).

1.2The specifications (the “Specifications”), schedule (the “Schedule”) and other requirements specific to a Product (collectively, the “Requirements”) are set forth in the applicable Award Letter and the documents referenced in the Award Letter.  Once an Award Letter is issued by SOUND UNITED, the Requirements shall be incorporated into and constitute a part of this Agreement.  The Requirements may be modified from time to time by mutual agreement of the Parties in writing.

1.3In the event of any inconsistency between the Requirements and the terms of this Agreement, the Requirements shall control.

2.TEAM AND GOVERNANCE
Each Party shall designate team members responsible for each relevant function for the performance of its obligations hereunder.  Each Party shall use its best efforts to maintain continuance of such team members and promptly inform the other Party in the event a change is necessitated.  Each Party shall also establish an internal escalation path for resolution in the event any dispute arises between the Parties hereunder.

3.PRODUCT DESIGN AND DEVELOPMENT

3.1Supplier shall design and develop the Products in accordance with the Requirements and the milestone processes specified by SOUND UNITED as set forth in Schedule II, as well as other instructions provided by SOUND UNITED from time to time (such act of designing and developing, the “Development Work”).  Supplier shall obtain SOUND UNITED’s written approvals at each milestone required in Schedule II.

3.2Upon SOUND UNITED’s request from time to time, Supplier shall produce a written report with respect to the progress of the Development Work, in the form separately designated by SOUND UNITED.
2

3.3In the event Supplier becomes aware of any factor which adversely affects or may reasonably adversely affect the progress of the Development Work, Supplier shall notify SOUND UNITED immediately and propose to SOUND UNITED possible alternative course(s) of action reasonably acceptable to SOUND UNITED.  Any alternative course of action agreed by the Parties to be taken shall be reduced to writing by Supplier and approved by SOUND UNITED.  Compliance with this Section or acceptance by SOUND UNITED of any alternative course of action shall not prejudice SOUND UNITED’s right to claim for damages, losses, demands, costs and expenses, including but not limited to reasonable attorneys’ fees and court costs (collectively, the “Damages”) under this Agreement.

3.4The Parties acknowledge and agree that performance of the Development Work in accordance with the Schedule is critical in the timely launch of a new Product or a model of a Product and that any delay in the Schedule may cause SOUND UNITED to incur Damages, which may include, without limitation, additional costs and expenses to speed up any processes or to take alternative courses of action relating to the Development Work to make up for the delay in the Schedule (e.g., sending of SOUND UNITED staff to Supplier’s facility to assist or give instructions to Supplier’s staff; expedited shipment of the Products (including samples); updating of software in the Products in warehouse; procurement of replacement goods and services from an alternate source; etc.).  Accordingly, any delay in the Development Work caused by Supplier or a situation where departure from the Schedule is inevitable due to causes attributable to Supplier will entitle SOUND UNITED to (i) compensation by Supplier for such Damages incurred thereby; and (ii) at SOUND UNITED’s option, cancel the applicable Award and terminate this Agreement.  Supplier’s compliance with Section 3.3 above will not prejudice SOUND UNITED’s right to claim for Damages under this Section or otherwise.  Without limiting any other rights SOUND UNITED may have under this Agreement or otherwise, to the extent the Award Letter specifies any development fees to be payable by SOUND UNITED to Supplier for the Development Work, SOUND UNITED may, at its option, set-off such fees by the amount of Damages entitled to SOUND UNITED hereunder.

4.PRODUCTION PILOT RUN AND MASS PRODUCTION

4.1Supplier shall proceed with the production “pilot run” (a process under which production capability of Supplier is verified) and mass production of the Products in accordance with Schedule II and other instructions provided by SOUND UNITED from time to time.  Supplier shall obtain SOUND UNITED’s written approvals at each milestone as required in Schedule II.

4.2Upon SOUND UNITED’s request from time to time, Supplier shall produce a written report with respect to the progress of the production pilot run and mass production of the Products, in the form separately designated by SOUND UNITED.

4.3In the event Supplier becomes aware of any factor which adversely affects or may reasonably adversely affect the progress of the production pilot run or mass production, Supplier shall notify SOUND UNITED immediately and propose to SOUND UNITED possible alternative course(s) of action reasonably acceptable to SOUND UNITED.  Any alternative course of action agreed by the Parties to be taken shall be reduced to writing by Supplier and approved by SOUND UNITED.  Compliance with this Section or acceptance by SOUND UNITED of any alternative course of action shall not prejudice SOUND UNITED’s right to claim for Damages under this Agreement.
3

5.QUALITY CONTROL

5.1Supplier shall provide and maintain a quality control system acceptable to SOUND UNITED, which, at minimum, satisfies the standards set forth in Schedule III.  All manufactured Products may be subject to inspection or verification by SOUND UNITED during manufacture or otherwise prior to shipment, and final inspection and acceptance at destination, notwithstanding any prior payment, inspection or acceptance.  Upon SOUND UNITED’s request, Supplier shall accommodate SOUND UNITED’s employees, representatives or agents at one or more of its manufacturing facilities for purposes of such inspection or verification.

5.2Supplier shall be responsible for setting up and maintaining controlled documentation of traceability by Product at appropriate levels during all stages of receipt, production and distribution.  At minimum, all Products must be traced by lot/batch, and any change in engineering, process, component, subcontractor and anything else that has or may have any effect on the Product shall be documented and traced by lot/batch.

5.3Supplier shall maintain detailed quality control-related records of each Product for periods from the date of delivery described below,.
•records to be kept for three (3) years:
•Vietnam Factory Quality Inspection Documents (Vietnam Factory 品質検査成績書)
•IQC Inspection Documents (IQC 成績書)
•OQC Inspection Documents (OQC 成桢书)
•The others Related Quality Inspection Documents (その他の関連品質検査成績書)
•records to be kept for ten (10) years:
•Safety Standard related Certificates & Test Reports (安全规格朋速害颓)
•Safety Certificate & Test report
•EMC Certificate & Test report
•RF Certificate & Test report
•The others Certificates & Test Reports (その他の承認書)
Upon SOUND UNITED’s request, Supplier shall provide copies of such records to SOUND UNITED without delay.

6.RESPONSIBILITY FOR PROPERTY AND TOOLING

6.1Title to property and tooling furnished to Supplier for purposes of this Agreement by SOUND UNITED or paid for by SOUND UNITED either directly or indirectly as part of the unit price of the Products or otherwise (such property and tooling, “SOUND UNITED Property”) shall remain with SOUND UNITED.  Supplier shall not alter or use SOUND UNITED Property for any purpose other than in performance under this Agreement without the express prior written consent of SOUND UNITED.  Supplier agrees to store, protect, preserve, repair and maintain SOUND UNITED Property in accordance with sound commercial practice.  Supplier shall be liable for any loss or destruction of, or damage to, any SOUND UNITED Property caused by the negligence or wrongful acts or omissions of Supplier or Supplier’s employees, representatives or agents.

6.2Intentionally omitted
4

6.3To the extent Supplier provides any of SOUND UNITED Property to any of its subsidiary or affiliate, or to any third party parts supplier, directly or through its subsidiary or affiliate, Supplier shall: (i) maintain written records of location and custody of each SOUND UNITED Property and provide to SOUND UNITED upon request; (ii) impose on such subsidiary, affiliate or third party obligations equivalent to those under this Section 6 with respect to SOUND UNITED Property and ensure compliance therewith; and (iii) Supplier shall remain responsible for such SOUND UNITED Property under this Agreement regardless of the actual custody thereof.

6.4Unless otherwise agreed by the Parties in writing, all tooling or other property required for the performance hereunder, other than SOUND UNITED Property, if any, shall be furnished by Supplier, maintained in good condition and replaced when necessary at Supplier’s expense.

7.CHANGES

7.1Each of SOUND UNITED and Supplier may, from time to time, propose to each other in the form of change request, changes in the Specifications.  If any such proposed change may cause an increase or decrease in the costs of or the time required for Supplier’s performance, Supplier shall immediately notify SOUND UNITED and the Parties shall agree on an equitable adjustment in prices or other terms, which shall be set forth in in writing.  No change will be binding on SOUND UNITED unless agreed to in writing by SOUND UNITED.  Without limiting any of the foregoing and notwithstanding anything to the contrary that may be provided in this Agreement, in no event shall Supplier make any changes in the design, material or processes that affect the form, fit, function, interchangeability, quality or reliability of the Products without the prior written consent of SOUND UNITED.  SOUND UNITED may choose to return the lot to Supplier at Supplier’s expense or hold the lot until appropriate testing and validation demonstrate that the Product meets or exceeds the original specification.  Costs associated with re-testing and re-validation of products with unapproved or undisclosed changes will be the sole expense of Supplier.

7.2If Supplier learns or reasonably foresees that any part or component used for the manufacture of any Product will become or has become unavailable, Supplier shall immediately notify SOUND UNITED and, to the extent necessary, the Parties shall agree on: (i) the alternative part(s) / component(s); (ii) any adjustments in the Specifications and/or manufacturing processes; and (iii) anything else affected by such unavailability.  It shall be Supplier’s sole responsibility to make the last buy in sufficient number of the part or component that will become unavailable and/or procure, at its cost, alternative parts and components in timely fashion and in sufficient number, so as to minimize any disruption to the manufacture or any adverse effect on the quality of the Product.  SOUND UNITED reserves the right to recover from Supplier any Damages SOUND UNITED suffers from the unavailability of any part or component.

8.FORECAST, PURCHASE ORDER AND ACCEPTANCE

8.1Each month, SOUND UNITED will submit a two-month rolling, binding forecast of its requirements for the Products, to be renewed every month, covering the N+3 and N+4 months (e.g., the forecast submitted in December shall represent its potential requirements in the months of March and April).
Details of forecast and lead time shall be described as Exhibit D

8.2Each month, SOUND UNITED will submit a Purchase Order setting forth the Product(s), quantity and requested delivery date(s) for the N+2 month (e.g., the Purchase Order issued in December shall be for deliveries over the month of February).
5

8.3A Purchase Order shall be deemed accepted by Supplier without any modification upon acknowledgement or if Supplier does not provide any acknowledgment or indicate any objection to such Purchase Order within five (5) business days after issuance of such Purchase Order by SOUND UNITED.  Supplier shall use its best efforts to accept Purchase Orders from SOUND UNITED without any modification, An accepted Purchase Order becomes the exclusive agreement and supersedes any and all prior or contemporaneous communications or agreements between the Parties pertaining to such Purchase Order, except to the extent inconsistent with subsequent written agreement signed by both Parties, if any.

9.PACKING, SHIPPING AND DELIVERY DOCUMENTS
Unless otherwise specified or agreed to by SOUND UNITED separately in writing:

9.1All packing and crating by Supplier shall be in compliance with carrier’s tariffs and in containers suitable in handling with a mechanical device for protection from exposure in shipment and storage.

9.2In case any Product requires anti-static proof to preserve its quality in every respect, Supplier shall apply anti-static processed packaging for transportation.

9.3Supplier will externally mark each container with necessary lifting, loading and shipping information, including the Purchase Order number, date of shipment, name and address of SOUND UNITED and Supplier, other packing slip information and, if required, bar coding.

9.4Each shipment must include a complete packing list specifying applicable Purchase Order number, Line item number, SOUND UNITED’s Part number, Revision number, Manufacturer’s Part number (if any), date of shipment, requester’s name, and quantity of Products shipped.

9.5All invoices and bills of lading must include SOUND UNITED’s Purchase Order number.

9.6The price(s) include all charges for Supplier’s packing and crating.  All shipments made on the same day and via the same route shall be consolidated in order to obtain the lowest transportation rate.  Supplier will bear the expense of any premium transportation charges.

9.7The delivery terms shall be FOB or otherwise as designated on the face of each Purchase Order.  Title and risk of loss or damage shall not pass to SOUND UNITED until receipt by SOUND UNITED of the Products at the applicable delivery point.  If applicable, Supplier will assign duty drawback rights to SOUND UNITED.

9.8Supplier will timely provide SOUND UNITED with material safety data sheets and other documentation reasonably necessary to enable SOUND UNITED to comply with applicable laws and regulations.  Upon SOUND UNITED’s request, Supplier will promptly provide SOUND UNITED with a certificate of origin for all items and with applicable customs documentation for items wholly or partially manufactured outside of the country of import.

9.9Any losses accruing from deviation from SOUND UNITED’s routing instructions shall be charged to Supplier’s account.  Supplier shall forward to SOUND UNITED, with the invoice, the express receipt or bill of lading, signed by the carrier, evidencing the fact that shipment was made.

10.PRICE AND PAYMENT

10.1Price(s) on a Purchase Order shall be fixed in accordance with the applicable Award Letter for the Product or with any other subsequent written agreement between the Parties.
6

10.2Supplier warrants that the prices specified in each Purchase Order do not exceed prices charged for like quantities of the same or substantially similar products to any other purchaser.  If Supplier sells the same or substantially similar products to other customers at prices less than those set forth in the relevant Purchase Order, Supplier shall accordingly lower the price of any Products sold to SOUND UNITED and provide SOUND UNITED with a credit for any such Products sold to SOUND UNITED (for the difference between the price sold to SOUND UNITED and the lowest price of the same or substantially similar products sold to others) during the period in which Supplier was selling such same or substantially similar products at the lower price.

10.3All applicable national and local taxes, duties, tariffs and other governmental charges in effect on the date of a Purchase Order are included in the price(s) indicated on the Purchase Order, unless otherwise stated therein.  All other taxes lawfully required to be collected by Supplier with respect to the Product provided by Supplier to SOUND UNITED shall be paid by Supplier.  In the event of repeal of taxes or the reduction of rates, prices shall be adjusted accordingly.

10.4Unless otherwise agreed in writing by SOUND UNITED, invoices shall be sent no earlier than the date on which each delivery is made.

10.5Upon receipt of an undisputed invoice, SOUND UNITED shall pay Supplier by way of wire transfer into the bank account designated by Supplier within sixty (60) days.

10.6Subject to the approval of Korean Government, SOUND UNITED shall have the right at any time to set-off any amount owed by Supplier to SOUND UNITED against any amount due and owed to Supplier under any Purchase Order or otherwise.  SOUND UNITED may apply a return credit issued by Supplier to SOUND UNITED to offset Supplier’s invoice on any Purchase Order.  Exercising an offset for future Product orders is at the sole discretion of SOUND UNITED.  If at any time SOUND UNITED determines not to use a credit to offset an invoice on a future Product order, then SOUND UNITED may bill Supplier net thirty (30) day terms for the full amount owed.

11.DELIVERIES, RESCHEDULES AND INSPECTIONS

11.1Supplier shall inspect all Products immediately before shipment, and upon SOUND UNITED’s request, deliver records of such inspection to SOUND UNITED without delay.

11.2SOUND UNITED’s sales schedules are based upon Supplier’s understanding and agreement that Products will be delivered to SOUND UNITED on the date specified on each Purchase Order, and, therefore, TIME IS OF THE ESSENCE with respect to Supplier’s delivery obligations pursuant to each Purchase Order.  Supplier shall notify SOUND UNITED without delay if Supplier is unable, or has reasons to believe that it may be unable, to make any scheduled delivery and state the reason therefor.  If any delivery of the Products is not made at the specified time, SOUND UNITED may choose to do any of the following, in any combination: (i) require Supplier to use expedited shipment method of SOUND UNITED’s choice for delivery of the Products at Supplier’s expense; (ii) cancel all or part of the Purchase Order; and/or (iii) hold Supplier accountable for the expenses incurred by SOUND UNITED due to such delay, which may include, without limitation, expedited shipment of Products to various locations after delivery by Supplier to SOUND UNITED.

11.3Any Products delivered in advance of the delivery schedule may, at SOUND UNITED’s option, either be returned to Supplier (collect) for proper delivery or be accepted by SOUND UNITED.
7

11.4If SOUND UNITED discovers that any delivered Products were defective or otherwise not in conformity with the requirements of a Purchase Order or this Agreement, SOUND UNITED may, at its option: (i) rescind the Purchase Order in whole or in part and require refund from Supplier, if already paid; (ii) accept such Products and rework the Products at the Supplier’s expense or require the Supplier to rework the Products; or (iii) reject such Products and require delivery of replacements.  If SOUND UNITED chooses to rework the Products, Supplier shall provide full cooperation to SOUND UNITED in connection with such rework at its cost, including but not limited to supplying necessary information, data and parts and components and arranging and paying for any necessary services to be provided by third party contractors.  If Products are rejected, Supplier will provide SOUND UNITED with a return material authorization (RMA) number upon notification of rejection, SOUND UNITED will return such Products at Supplier’s risk and expense, and Supplier will deliver replacements to SOUND UNITED at its risk and expense without delay.  Rights granted to SOUND UNITED and obligations of Supplier under this Section survive any payment, inspection or acceptance by SOUND UNITED and are in addition to any other rights or remedies provided elsewhere hereunder or by law. 
It is understood that this Sub-Section 11.4 shall not apply where Supplier clearly proved that SOUND UNITED is responsible for defective or non-conformity with the requirements.

11.5SOUND UNITED may inspect, at any time during business hours on any working day, with a reasonable advance notice not less than forty-eight (48) hours to Supplier, the manufacturing site of the Products for any purpose under this Agreement.

12.REQUIRED PARTS AND COMPONENTS

12.1Supplier shall, at all times, maintain in sufficient number in its stock all required parts and components to manufacture the Products based on the Purchase Orders accepted by Supplier pursuant to Section 8.2 (the “Required Parts and Components”).

12.2Supplier shall exercise its best business judgment based on various factors, including but not limited to its relevant knowledge and experience in its industry, most recently-available market information, the binding rolling forecast provided by SOUND UNITED pursuant to Section 8.1, to procure the Required Parts and Components so as to meet the requirement under Section 12.1 above but not in unreasonable excess of such requirement, at the best obtainable price under the particular circumstances at the time of procurement thereof.  Specifically, Supplier shall always take into consideration such factors as the current number of Required Parts and Components left in its stock, the changing nature of SOUND UNITED’s binding rolling forecast and the minimum order quantity (the “MOQ”) which may be imposed by the suppliers of the Required Parts and Components from time to time, in determining the most appropriate quantity of the Required Parts and Components to procure at any given time.

12.3Notwithstanding Section 12.2 above but subject to Section 12.4 below, to the extent Supplier is left with unused Required Parts and Components after the last manufacture of the relevant Product (such Product, the “EOL Product”), SOUND UNITED and Supplier shall discuss in good faith regarding compensation by SOUND UNITED for the amounts paid by Supplier for such Required Parts and Components with respect to those Required Parts and Components procured on the basis of SOUND UNITED’s last submitted forecast for the N+3 month and the N+4 month.  Supplier may choose to procure Required Parts and Components outside the scope above but shall do so entirely at its own risk and SOUND UNITED shall not be held liable for any unused portion of such Required Parts and Components.  In addition, in no event shall SOUND UNITED be responsible for any Required Parts and Components purchased in excess of the applicable MOQ.
Details of forecast and lead time shall be described as Exhibit D
8

12.4Any compensation by SOUND UNITED under Section 12.3 above is subject to the requirement by Supplier to demonstrate, to SOUND UNITED’s reasonable satisfaction, that the relevant Required Parts and Components could not be reasonably used for any purpose other than the manufacturing of the relevant EOL Product, including but not limited to utilizing them in another product manufactured by Supplier for SOUND UNITED or any other customer or reselling to a third party.

13.OBLIGATION TO CONTINUE PRODUCTION; END OF LIFE BY SUPPLIER

13.1Supplier is obligated to continue production of a Product or a model of a Product at least for two (2) years after first production thereof, unless otherwise agreed between the Parties in writing.

13.2If, after expiration of the period referred to in Section 13.1, Supplier has justifiable reasons for ceasing to manufacture any Product, Supplier shall provide at least twelve (12) months’ written notice to SOUND UNITED prior to the envisaged last delivery thereof, and obtain SOUND UNITED’s written consent, which shall not be unreasonably withheld.  Supplier shall then provide SOUND UNITED opportunities to place one or more Purchase Orders for the EOL Products in such quantity as SOUND UNITED may require before the envisaged final delivery date, and Supplier shall accept such Purchase Orders at the then prevailing price.

14.SPARE PARTS
The terms and conditions relating to spare parts of the Products to be supplied by Supplier to SOUND UNITED hereunder are set forth in Schedule I attached hereto.

15.CONFIDENTIALITY OF SOUND UNITED INFORMATION

15.1Supplier agrees to keep in confidence any and all information of SOUND UNITED as well as information of third parties held by SOUND UNITED that Supplier receives or otherwise acquires in connection with this Agreement or otherwise, including but not limited to the Requirements and demand and pricing information of the Products (“SOUND UNITED Information”) and that it will not directly or indirectly disclose or disseminate the same to any third party or use the same for any purpose other than in connection with the performance of its obligations and the exercise of its rights hereunder.  The existence and the content of this Agreement shall also constitute SOUND UNITED Information.

15.2If Supplier is required to disclose any SOUND UNITED Information to Supplier’s suppliers or any other third party in furtherance of this Agreement or otherwise, Supplier shall obtain SOUND UNITED’s prior written consent for such disclosure as well as binding commitments from such suppliers or third parties to protect SOUND UNITED’s rights in, and to maintain the confidentiality of, such SOUND UNITED Information, in a manner consistent with this Agreement.

15.2Supplier shall promptly return or destroy, at its own cost and expense, any and all SOUND UNITED Information, including any copies thereof, when it is no longer required by Supplier, upon SOUND UNITED’s request or upon termination of this Agreement, and follow all instructions of SOUND UNITED in connection thereto.  Upon SOUND UNITED’s request, Supplier shall provide a written certificate of any return or destruction hereunder.
9

16.TRADEMARK

16.1All Products manufactured by Supplier under this Agreement shall bear the Trademark in accordance with the Requirements.  Relevant logos and other relevant materials necessary to bear Trademark on Products shall be provided by SOUND UNITED and shall not be used for any purpose other than the foregoing.  Supplier shall have no right, title or interest in or to any of SOUND UNITED’s (or its affiliates or subsidiaries) names, trade names, or trademarks, registered or not, anywhere in the world.  Supplier’s sole privilege under this Agreement is a non-exclusive, limited license to manufacture and sell Product to SOUND UNITED, some of which bear in whole or in part trademarks owned by SOUND UNITED or its affiliates or subsidiaries, as applicable.  Upon termination or expiration of this Agreement, Supplier’s limited privilege to sell Products using such trademarks shall immediately cease.  Any trademark used in the course of this Agreement must be reviewed and approved in advance, in writing, by SOUND UNITED.

16.2Supplier expressly recognizes and agrees that any and all proprietary rights to the Trademark belong solely to SOUND UNITED and it shall acquire no right, title or interest in or to the Trademark by the terms of this Agreement or by performance of its obligations hereunder.  Supplier shall not use the Trademark for any purpose other than in furtherance of this Agreement, and Supplier shall not at any time claim any right or property therein or apply to register, register or cause to be registered in any part of the world any trademark, trade name, copyright or other intellectual property right or design similar to or a colorable imitation of any Trademark, trade name, copyright or other intellectual property right or design which is the property of SOUND UNITED.

16.3Trademark Use.  Supplier shall affix the trademark on all Products manufactured pursuant to this Agreement, and packaging therefore, in a manner specified by SOUND UNITED.  Supplier shall not use the trademarks in any manner inconsistent with the instructions of SOUND UNITED nor on any products except as manufactured pursuant to this Agreement.  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 any mark or any name confusingly similar thereto (including in the form of domain names), directly or indirectly in connection with its business or that of any SOUND UNITED subsidiary or affiliates or principals.  During the term of this Agreement, Supplier will promptly notify SOUND UNITED in the event that it learns of any infringement or unauthorized use of a trademark by any person.  All use of any trademarks shall inure to the benefit of SOUND UNITED.

16.4Validity and Title.  Supplier acknowledges SOUND UNITED’s full right and title to the trademarks.  Supplier shall not at any time do or permit to be done any act or thing which it knows or should know will in any way impair the rights of SOUND UNITED.  Supplier agrees that it will not, while this Agreement is in effect, or thereafter attack the validity of SOUND UNITED’s exclusive rights to the trademarks.

16.5Proprietary Designs and Information.  Supplier agrees that all documentation, proprietary design and other information related to the Product manufactured pursuant to this Agreement (herein “Documentation”), that are provided to Supplier by SOUND UNITED are the property of SOUND UNITED and shall only be used in the manufacturing of Product for SOUND UNITED exclusively.  Supplier shall not use the documentation, proprietary designs or information for the benefit of any of Supplier’s other customers.
10

16.6SOUND UNITED’s ownership of Proprietary Rights.  In connection with the Product, SOUND UNITED (and its subsidiaries and affiliates, as applicable) are the exclusive owners of all right, title and interest in and to the intellectual property and other proprietary rights associated with or arising from the Products and related software that it has provided to Supplier to develop.
Supplier agrees to and does hereby sell, assign and transfer to SOUND UNITED the right, title and interest throughout the world to all works, inventions, discoveries, and improvements that are conceived or first actually reduced to practice in connection with the Product during the performance of this Agreement or the development of any Product.  Supplier understands that its duties to SOUND UNITED include the preparation of materials, including hardware, software, written or graphic materials, schematics, layouts, tooling, and that any such materials conceived or written by Supplier shall be done as a “work made for hire” within the meaning of United States Copyright and other applicable laws.  Supplier understands that since the work is a “work made for hire”, SOUND UNITED will retain ownership of all rights in said materials, including all patent, copyright and trademark rights so far as the work is paid in any manner (e.g. as NRE, Overhead etc.) by SOUND UNITED.  If SOUND UNITED exercises its right to second source Product pursuant to this Agreement, SOUND UNITED shall have a worldwide, royalty-free non-exclusive license from Supplier to make, use and sell all intellectual property owned or licensed by Supplier and incorporated into the Product including but not limited to patent, proprietary design, trade secret, software code or proprietary process, however said license shall extend only to product produced for SOUND UNITED.  If Supplier sells Product to SOUND UNITED that incorporates third party software or intellectual property, Supplier represents and warrants that it has a license or right to license or convey such software or intellectual property and Supplier agrees to notify SOUND UNITED in writing and in advance of incorporating it into the Product.  The Supplier will indemnify SOUND UNITED from all legal matters related to the use of patented technologies or other intellectual properties in the Product.
Supplier may indicate that as to certain specific IP rights, such rights are out of scope of this Sub-Section 16.6 by clearly itemize each of such rights in the Requirements.

16.7Tooling and Moldings.  Supplier agrees that all tooling and molding or modifications thereof which are made at the request of or on behalf of SOUND UNITED and related to Products manufactured pursuant to this Agreement (“Tooling”) shall only be used for the manufacturing of Product for SOUND UNITED exclusively.  Supplier shall not use any Tooling for the benefit of any other of Supplier’s customers.  SOUND UNITED shall at all times retain all rights, title, and interest in all Tooling paid for by SOUND UNITEED, and Supplier agrees to return to SOUND UNITED (or SOUND UNITED’s designated agent) such Tooling at any time upon request by SOUND UNITED.  Supplier agrees to supply SOUND UNITED photographs of SOUND UNITED’s tools, which show that the Tooling has been clearly engraved to indicate that the Tooling is the property of SOUND UNITED.  Supplier shall properly title and mark all Tooling belonging to SOUND UNITED.

16.8Ownership of Documentation.  The Documentation shall remain the exclusive property of SOUND UNITED and shall be protected from disclosure in accordance with this Agreement.  Upon expiration or termination of this Agreement, the Documentation shall be promptly returned to SOUND UNITED and Supplier shall erase copies from any digital media.

17.NON-INFRINGEMENT; IP RIGHTS; THIRD PARTY LICENSES

17.1Supplier warrants and represents to SOUND UNITED that the manufacture, sale, distribution or use of the Products furnished hereunder do not and will not infringe any patents, trademarks, trade names, copyrights, trade secrets or other intellectual property and proprietary rights of any third party in any jurisdiction (the “IP Rights”).

17.2In the event of any action or claim in which such infringement is alleged (an “IP Claim”), SOUND UNITED may, at its option, require Supplier to do one or more of the following at Supplier’s sole expense:
(A)settle the IP Claim;
11

(B)procure for SOUND UNITED the right to sell such Products without any restriction;
(C)replace or modify such Products to avoid infringement;
(D)defend SOUND UNITED against the JP Claim using attorneys that are reasonably acceptable to SOUND UNITED; and/or
(E)remove the affected Products from SOUND UNITED’s inventory and grant SOUND UNITED a credit or refund thereon at the prices paid by SOUND UNITED;
(F)cooperate and cause its counsel to cooperate with SOUND UNITED and its counsel, if SOUND UNITED chooses to retain its own counsel to participate in the defense of any IP Claim, which cooperation may include, without limitation, providing relevant documentation and information concerning such IP Claim.

17.3Supplier shall indemnify and hold SOUND UNITED, its parent, affiliate or subsidiary or related companies and each of their shareholders, officers, directors, employees, agents, representatives, successors and assigns and each of their customers (the “lndemnitees”) harmless from any Damages arising out or of relating to an infringement or alleged infringement of IP Rights with respect to any Product.  
It is understood that this Sub-Section 17.3 shall not apply where Supplier clearly proved that SOUND UNITED is responsible for an infringement or alleged infringement of IP Rights.

17.4Supplier shall indemnify, defend and hold SOUND UNITED, its parent, affiliate or subsidiary or related companies and each of their shareholders, officers, directors, employees, agents, representatives, successors and assigns and each of their customers (the “lndemnitees”) harmless from and against any and all claims, allegations, suits, actions, proceedings, damages, judgments, decrees, orders and liabilities whatsoever, asserted by any person or entity resulting directly or indirectly from any claims or actions related to (i) any act, omission or commission, whether reckless or negligent of Supplier for negligence; or (ii) product liability of whatever specie, including, without limitation, claims or actions for strict liability, improper design, breach of warranty, express or implied, wherever such claims or actions may be asserted and regardless of where the events on which such claims or actions are based or occurred, or (iii) for any breach of representation or warranty stated herein.  Supplier will also provide SOUND UNITED with written verification of conformance with any required royalty payments to third parties.
It is understood that this Sub-Section 17.4 shall not apply where Supplier clearly proved that SOUND UNITED is responsible for claims, allegations, suits, actions, proceedings, damages, judgments, decrees, orders and liabilities.

17.5Claim.  In the event of a claim, Supplier shall not enter any settlement of a claim which adversely impacts or makes an admission of liability without SOUND UNITED’s written consent.

17.6Defense Costs.  The indemnification set forth herein shall include, without limitation thereto, attorney’s fees, expert fees, costs related to defense, and other such fees.  Supplier, at its sole expense, shall defend all such claims and actions against SOUND UNITED and/or SOUND UNITED’s customers, whether brought informally or thought court or administrative procedures, provided however that SOUND UNITED or the affected customer of SOUND UNITED shall have the right of approval of counsel in all situations and, further, that SOUND UNITED or the affected customer of SOUND UNITED shall be consulted regarding settlement of any such claim before a settlement agreement is finalized.
It is understood that this Sub-Section 17.6 shall not apply where Supplier clearly proved that SOUND UNITED is responsible for such claims and actions against SOUND UNITED and/or SOUND UNITED’s customers.
12

17.7Damages.  Under no circumstances will SOUND UNITED, its parent, affiliates, subsidiaries, successors or assigns, be liable for any consequential, indirect, special, punitive, incidental damages or lost profits, whether foreseeable or unforeseeable, based on claims of Supplier or its affiliates, even if previously advised of the possibility of such damages, arising out of breach of contract, misrepresentation, negligence, strict liability, in tort or otherwise.

17.8Except as otherwise agreed between the Parties in the Requirements, Award Letter or another document signed by the Parties, Supplier shall obtain third party licenses necessary for the manufacture, sale, distribution or use of each Product that are set forth in the Requirements (the “Third Party Licenses”) and shall maintain such licenses in effect until they are no longer necessary.  Supplier represents and warrants that, other than the Third Party Licenses set forth in the Requirements, no third party license is required to be procured by Supplier or SOUND UNITED in relation to any Product.

17.9SOUND UNITED shall have a non-exclusive, royalty-free license under Supplier’s IP Rights to use and resell the Products purchased hereunder, and to use and reproduce Supplier’s applicable literature, such as operating and maintenance manuals, technical publications, and other similar support documentation and sales literature.  If any Purchase Order includes experimental development or research effort and such work is paid for in whole or in part by SOUND UNITED, Supplier agrees to disclose to SOUND UNITED all confidential processes, know how, trade secrets, inventions and other work product relating thereto, and Supplier agrees to assign, and hereby does irrevocably assign, to SOUND UNITED any and all IP Rights in and to such work product, so far as Supplier does not clearly itemize each of above-mentioned rights and indicate that such rights are out of scope of this Sub-Section 17.9 in the Requirements.

18.SUPPLIER’S REPRESENTATIONS AND WARRANTIES

18.1Supplier represents and warrants that:
(A)all Products furnished under this Agreement are and will:
(a)be free from defects in design, material and workmanship;
(b)comply with the applicable Requirements hereunder;
(c)comply with applicable national, federal, state, provincial and local governmental laws and regulations and industry standards;
(d)be new and not used or reconditioned;
(e)be merchantable; and
(f)be suitable for the particular purpose or use for which they are purchased by SOUND UNITED;
(g)not infringe any patent, copyright, trademark, trade secret or similar intellectual property or proprietary right.
(B)Supplier will, at all times, be in full compliance with: (a) SOUND UNITED’s Supplier Code of Conduct; and (b) Memorandum of Understanding in relation to Environmental Conservation, attached hereto as Exhibit A and Exhibit B, respectively, or as updated from time to time by SOUND UNITED upon written notice;
(C)Supplier acknowledges and supports SOUND UNITED’s Conflict Minerals Policy, attached hereto as Exhibit C or as updated from time to time by SOUND UNITED upon written notice, and agrees to meet SOUND UNITED’s expectations from suppliers as set forth therein;
13

(D)Supplier has obtained, at its expense, all standard government, environmental, consumer protection and safety approvals required by applicable laws with respect to the Products, including but not limited to those expressly set forth in the Requirements, and will provide, upon SOUND UNITED’s request, all relevant documentations relating thereto; and
(E)Supplier will be responsible for compliance with any and all applicable export laws and regulations in connection with exporting of the Products to the delivery locations designated in the applicable Purchase Order.

18.2SOUND UNITED’s approval of Supplier’s designs and/or selections with respect to any aspect of the Products shall not relieve Supplier of its obligations under this Agreement.  All warranties of Supplier shall survive inspection, acceptance and payment and shall run to the lndemnitees.

18.3In the event of Supplier’s breach of any of the representations and warranties hereunder, SOUND UNITED may, at its option, require Supplier to retrieve the Products within a period specified by SOUND UNITED at Supplier’s cost and expense and: (i) provide replacements; (ii) repair the Products or (iii) provide SOUND UNITED full refund of the retrieved Products.  In addition, Supplier shall indemnify and hold harmless the lndemnitees from and against any and all Damages incurred by the lndemnitees arising out of or relating to Supplier’s breach of its representations and/or warranties hereunder, including but not limited to any costs and expenses incurred by the lndemnitees in connection with retrieval and replacement of the Products under the custody of distributors, dealers, end-users or any other party or person, provided that this Sub-Section 18.3 shall not apply where Supplier clearly proved that SOUND UNITED is solely responsible for such Damages.

19.WARRANTY

19.1The Supplier warrants that the rate of defective products among the Products within the initial period which is prescribed at 19.3 from the first date that the Products are shipped out from the Supplier, shall not exceed the Warranty Level.  If the rate of defective products exceeds the Warranty Level, the Supplier shall:
(A)suspend the shipment of the Products immediately, and follow Buyer’s directions regarding shipment; and
(B)indemnify the Buyer for all damages, costs, fees and expenses incurred by the Buyer.

19.2The Supplier shall be liable for any direct, indirect or consequential damages the Buyer suffers as the result of the Supplier’s breach of the warranty contained herein.  The Buyer may determine with Supplier:
(A)the extent of damages suffered by the Buyer which the Supplier shall indemnify; and
(B)the handling of Products that breaches the warranty contained herein.

19.3Warranty Level (This is defined by the accumulated failure rate within the period described item (A),(B), and accumulated failure rate is defined as item (C).
(A)Failure rate within [...***...] months is [...***...] and within [...***...] months is [...***...]
This failure rate is applied for any single function products (which means any products with single function provided that AV receiver with Tuner shall be regarded as single function products); or
(B)Failure rate within [...***...] months is [...***...] and within 14 months is [...***...].
his failure rate is applied for multiple function products (which means any products with multiple functions such as DVD plus AV amp.)
14

(C)Accumulated failure rate = (Total defective units)/(Total shipped out units) Accumulate failure rate can be estimated by using certain local defective rate.

19.4For the avoidance of doubt, this Section 19 applies in case of WARRNTY in addition to Section 18.3, and application of this Section 19 does not prejudice in any way application of Section 18.3

20.PRODUCT LIABILITY
Supplier hereby agrees to defend, indemnify (including without limitation court costs and reasonable fees of attorneys and other professionals) and hold SOUND UNITED, other Indemnitees and their respective customers of the Products harmless against any third party claims, demands, actions or proceedings resulting from personal injury or property damage caused or alleged to have been caused by any defect in the Products sold to SOUND UNITED under this Agreement.
It is understood that this Section 20 shall not apply where Supplier clearly proved that SOUND UNITED is responsible for such third party claims, demands, actions or proceedings.

21.INDEMNIFICATION

21.1If Supplier, its employees, agents, subcontractors, or representatives enter premises occupied by or under the control of SOUND UNITED or third parties in the performance hereunder, Supplier shall indemnify and hold harmless the lndemnitees from any and all Damages by reason of property damage or personal injury to any person, including Supplier’s employees, of whatsoever nature or kind arising out of, as a result of, or in connection with such performance occasioned in whole or in part by the actions or omissions of Supplier, its employees, agents, subcontractors, or representatives.  If requested by SOUND UNITED, Supplier shall also defend SOUND UNITED against any claims, suits or proceedings relating thereto.

21.2Supplier shall fully comply with all applicable foreign, national and local laws, regulations and ordinances in its manufacture and sale of the Products.  Supplier shall indemnify and hold harmless the Indemnitees from any Damages arising out of or relating to Supplier’s non-compliance or any other negligence or wrongful acts or omissions by Supplier or those acting on Supplier’s behalf.  lf requested by SOUND UNITED, Supplier shall also defend SOUND UNITED against any claims, suits or proceedings relating thereto.
It is understood that this Sub-Section 21.2 shall not apply where Supplier clearly proved that SOUND UNITED is responsible for Damages.

22.LIMITATION OF LIABILITY
SOUND UNITED’s liability hereunder shall be limited to the unpaid balance of amounts due under the Purchase Orders and additional 2 month Forecast from SU.  Its amount of liability including additional 2 months order forecast shall be agreed upon with both Parties.  IN NO EVENT SHALL SOUND UNITED BE LIABLE FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY OR SPECIAL DAMAGES.

23.TERM AND TERMINATION

23.1The term of this Agreement shall commence on the Effective Date and, unless sooner terminated pursuant to this Section 23, continue for three (3) years (the “Initial Term”), and thereafter the term of this Agreement shall be automatically renewed for periods of one (1) year each (the “Extended Term”), unless either Party notifies the other Party in writing at least twelve (12) months prior to the expiry of the Initial Term or any Extended Term, indicating its intention not to renew.  Supplier hereby agrees not to unreasonably refuse to renew without an economically justifiable cause.
15

23.2Either Party may terminate this Agreement and/or any Award, and/or cancel any Purchase Order, upon written notice if the other Party is in material breach or default of any obligation under this Agreement or the relevant Purchase Order, which breach or default is not cured or cannot be cured within thirty (30) business days of written notice of such breach or default.

23.3Either Party may terminate this Agreement and/or any Award, and/or cancel any Purchase Order, upon written notice if:
(i)the other Party commences a judicial or administrative proceeding under a law relating to insolvency for the purpose of reorganizing or liquidating the debtor or restructuring its debt;
(ii)anyone commences any such proceeding against the other Party and either (A) the proceeding is not dismissed by midnight at the end of the sixtieth (60th) day after commencement or (B) any court before which the proceeding is pending issues an order approving the case;
(iii)a receiver, trustee, administrator, or liquidator (however each is referred to) is appointed or authorized, by law or under a contract, to take charge of property of the other Party for the purpose of enforcing a lien against that property, or for the purpose of general administration of that property for the benefit of the other Party’s creditors; and
(iv)the other Party makes a general assignment for the benefit of creditors.

23.4In the event of a sale of more than 50% of Supplier’s voting stock, a sale of all or substantially all of Supplier’s assets or a change in the majority of the board members of Supplier (such event, a “Change of Control”), SOUND UNITED may terminate this Agreement and any Award or to cancel any Purchase Order immediately by giving Supplier a written notice.  If SOUND UNITED does not exercise the foregoing right to terminate or cancel, then Supplier shall use its best efforts to maintain, or have maintained, this Agreement, existing Awards, existing Purchase Orders and any future transactions under this Agreement in the ordinary course with no material change.

23.5When this Agreement is terminated for any reason, all outstanding Purchase Orders for which Products have not yet been delivered and all Awards shall also be canceled or terminated automatically, unless otherwise agreed by the Parties in writing.  If the Parties agree to continue any of the Purchase Orders and Awards beyond the termination of this Agreement, then this Agreement shall survive with respect to such Purchase Order(s) and Award(s) until all deliveries and payments therefor are completed.

23.6Upon termination of this Agreement, Supplier shall promptly return to SOUND UNITED any and all tooling, SOUND UNITED Information or any other property of SOUND UNITED furnished by SOUND UNITED to Supplier for purposes of this Agreement in accordance with instructions provided by SOUND UNITED.

24.GENERAL

24.1Subcontracting.  Supplier shall not subcontract any of its obligations hereunder without the prior written consent of SOUND UNITED.  In the event Supplier subcontracts any of its obligations hereunder to a subcontractor with SOUND UNITED’s consent, Supplier shall be and remain responsible and liable for any failure by any subcontractor or subcontractor personnel to perform in accordance with this Agreement or to comply with any duties or obligations imposed on Supplier under this Agreement to the same extent as if such failure to perform or comply was committed by Supplier or its personnel.  Without limiting the foregoing, Supplier warrants and covenants that in no event will any provision of this Agreement, or any right or benefit of SOUND UNITED provided for under this Agreement, be reduced, limited or otherwise adversely affected as a consequence of performance by or through subcontractors.
16

24.2Insurance.
Supplier shall maintain appropriate insurance for SOUND UNITED.

24.3Financial Information.  Supplier shall provide SOUND UNITED with its financial statements for every business year during the term of this Agreement.

24.4Contractual Relationship.  It is understood and agreed that, in performing its obligations under this Agreement, Supplier acts as an independent contractor and none of its employees shall be considered an employee of SOUND UNITED or any of its subsidiaries, affiliates, divisions or other related corporate entities for any purpose whatsoever.  This Agreement shall not establish any fiduciary relationship or other relationship of partnership, joint venture, employment, franchise or agency between them.  In addition, Supplier and its employees shall not have any authority to enter into any commitments on behalf of or otherwise bind SOUND UNITED or any of its subsidiaries, affiliates, divisions or other related corporate entities.

24.5Notices.  Notices required to be given hereunder shall be in writing, cost prepaid, and addressed to the other Party at the address first set forth above, or to such other address as may be designated by a written notice given in accordance with this Section.  Any such notices shall be deemed properly given when: (i) delivered personally; (ii) seven (7) business days have passed after having been sent by airmail; or (iii) three (3) business days have passed after deposit with express courier service.

24.6Publicity.  Neither Party may identify the other Party, in any media releases, public announcement or disclosures, marketing materials or otherwise, without the prior written consent of the other Party.

24.7Amendments.  This Agreement (including the attached Schedules but not including the Exhibits) may be altered, amended, modified or superseded only by a writing executed by duly authorized representatives of both Parties.  Exhibits attached hereto may be altered, amended, modified or superseded by written notice from SOUND UNITED to Supplier.

24.8Assignment Supplier shall not delegate or subcontract any duties, nor assign any Purchase Order or this Agreement or any rights or claims under any Purchase Order or this Agreement, whether by operation or law or otherwise, without prior written consent of SOUND UNITED, and any such attempted delegation or assignment shall be null and void.  This Agreement and the Purchase Orders shall be binding upon and inure to the benefit of each party and its successors and permitted assigns.

24.9No Waiver.  No waiver of or failure to exercise any option, right or privilege under the terms of this Agreement by either of the Parties hereto on any occasion or occasions shall be construed to be a waiver of the same or of any other option, right or privilege on any other occasion.

24.10Entire Agreement.  This Agreement embodies the entire understanding between the Parties with respect to the subject matter of this Agreement and supersedes any and all prior negotiations, correspondence, understandings and agreements between the Parties with respect to the subject matter of this Agreement.

24.11No Other Representations or Warranties.  Supplier acknowledges that it has not been induced to enter into this Agreement by any representation or warranty other than those contained in this Agreement and, having negotiated and freely entered into this Agreement, agrees that it shall have no remedy in respect of any other such representation or warranty except in case of fraud.

24.12Severability.  In the event that any provision of this Agreement is found by a court of competent jurisdiction to be unenforceable or invalid, such unenforceability or invalidity shall not render this Agreement unenforceable or invalid as a whole, and, in such event, such provision shall be changed and interpreted so as to best accomplish the objectives of such unenforceable or invalid provision within the limits of applicable law or court decisions.
17

24.13Survival.  Sections 5, 6, 15, 16, 17, 18, 19, 20, 21, 22, 23.5, 23.6 and 24, and any other provision which shall reasonably be interpreted to survive, shall survive any termination of this Agreement, Award or any Purchase Order for any reason.

24.14

24.15Governing Law and Venue.  This Agreement and each Purchase Order shall be governed by and interpreted in accordance with the laws of the State of California and shall be treated, in all respects, as a California contract,.  The parties agree that the U.N. Convention for the International Sale of Goods shall not apply to this Agreement, and the provisions thereof are expressly excluded from the Agreement.  Each party agrees (i) that any action or proceeding brought by the parties relating to this Agreement shall be brought in a court in San Diego county, California, and for that purpose now irrevocably and unconditionally attorns and submits to the jurisdiction of the courts located there; (ii) not to oppose any action or proceeding in (i) above on the basis of forum non conveniens or for any other reason; and (iii) not to oppose the enforcement against it in any other jurisdiction of any judgment or order duly obtained from a court as contemplated by this section.

24.16Non-solicitation.  Supplier agrees that while this Agreement is in effect and for a period two years after termination of this Agreement, Supplier shall not directly or indirectly solicit for employment or hire any of the officer or employees of SOUND UNITED, provided that public advertising for employment opportunities shall not be restricted.

24.17Counterparts.  The original of this Agreement may be executed in counterparts, each of which shall be an original as against any Party whose signature appears on such counterpart and each of which together shall constitute one and the same instrument.

[Signature page follows.]
18

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute and deliver this Agreement.

SOUND UNITED HOLDINGS INC. (SOUND UNITED)

By:

/s/ Patrick Zaun                    
Print Name:   Patrick Zaun                                            
Title:   VP. Procurement                                                
Date: _____May 23, 2019______________________

ANAM Electronics Co., Ltd

By:

/s/ Tae Soo Kim                    
Print Name:   Tae Soo Kim                                            
Title:               CEO                                                        
Date:              May 23, 2019                                          
19

Schedule I

SPARE PARTS
Supplier agrees to the following terms and conditions regarding the supply of Spare Parts to SOUND UNITED:

A.SPARE PARTS ORDER & SUPPLY FLOW; PARTS LIST

A.1As for initial new parts, Supplier and SOUND UNITED agree that the flow of Spare Parts order and supply shall generally be as set forth in Annex 1 to this Schedule.  Without limiting the generality of the foregoing, Supplier shall provide SOUND UNITED, and update as appropriate, the list of parts that comprise a Product (the “Parts List”) in accordance with the schedule set forth in Annex 1.

A.2As for all new parts for new model and all normal parts for other models, Supplier shall try to ship parts within amount of time specified below for each parts category after receipt of Purchase Order.
•Common Electronic parts; [...***...
•Semiconductors; [...***...]
•Cosmetic parts/Manual/Remote controls; [...***...]
•Packaging Materials; [...***...]
•Semi Assembled parts; [...***...] 
In the event of violation by Supplier of contents of above contents, the Parties shall seek and cooperate in a satisfactory manner.

B.PRICES

B.1Together with the Parts List, or as soon as practicable after the Parts List is provided to SOUND UNITED, Supplier shall propose to SOUND UNITED the price list of the parts listed on the Parts List that may be purchased by SOUND UNITED as Spare Parts, and Supplier and SOUND UNITED shall negotiate in good faith and agree on the final prices in accordance with the following guidelines:
(i)The price of each Spare Part is the unit price to be purchased individually by SOUND UNITED.
(ii)The price of each Spare Part includes appropriate packing materials such as antistatic packages and cushioning materials and packing related labor costs which include necessary assembling, pairing and outgoing inspection costs of the Spare Parts so Supplier supplies the proper Spare Parts to SOUND UNITED without any damage.
(iii)The price of each Spare Part does not exceed prices charged for like quantities of the same or substantially similar part to any other purchaser.
(iv)the price of the Spare Parts whose cost is more than [...***...] USD shall not exceed [...***...] of the cost.  The Spare Parts include the Assemblies such as PCB assembly in the assembled form.

B.2If:
(a)the price of each Spare Part proposed by Supplier requires Minimum Order Quantity (the “MOQ”), SOUND UNITED has the right to reject such price and Supplier shall use its best efforts to sell the Spare Parts individually.
(b)Supplier sells any Spare Part or substantially similar part to another customer at a price less than the price to SOUND UNITED, Supplier shall accordingly lower the price of such Spare Part sold to SOUND UNITED and provide SOUND UNITED with a credit for any such Spare Part sold to SOUND UNITED (for the difference between the price sold to SOUND UNITED and the lowest price the Spare Part or substantially similar part were sold to others) during the period in which Supplier was selling such Spare Part or substantially similar part at the lower price.
20

(c)the price of more than [...***...] USD cost Spare Parts exceeds [...***...] of the cost, SOUND UNITED has the right to reject such price and Supplier shall use its best efforts to modify the proposed price for such Spare Part so that it is within[...***...] of the cost of the Spare Part.

B.3Supplier shall supply Spare Parts to SOUND UNITED hereunder at prices no more than the prices on the final price list of Spare Parts as agreed pursuant to Section B.1 above (the “Spare Parts Price List”), and the Spare Parts Price List shall not be modified without the mutual written agreement of both Parties.  In the event it becomes, in the view of Supplier, economically inevitable, reasonable and justifiable, to increase any price of Spare Parts, Supplier shall: (i) notify SOUND UNITED in writing regarding the potential increase as soon as practicable; (ii) provide evidence of the cause of increase that is economically inevitable, reasonable and justifiable; (iii) discuss with SOUND UNITED regarding the potential increase and possible ways to minimize the increase, if any; and (iv) obtain SOUND UNITED’s prior written consent to any increase.

B.4To the extent Supplier had accepted a Purchase Order for Spare Parts before the Spare Parts Price List had been finalized, the prices on the Spare Parts Price List shall apply to such Purchase Order retroactively.  Notwithstanding anything to the contrary provided herein or otherwise, SOUND UNITED’s obligation of payment for such order shall arise only after there is a mutually-agreed Spare Parts Price List and the relevant Spare Parts have been delivered and accepted.

C.PURCHASE ORDERS
Unless otherwise agreed between the Parties, SOUND UNITED may submit a Purchase Order for Spare Parts to Supplier at any time.  A Purchase Order for Spare Parts shall set forth the relevant Spare Parts, quantity, requested delivery date(s) and any other requests, and Section 8.3 of the Agreement shall apply with respect to such Purchase Orders.

D.PACKAGING, DELIVERY AND PAYMENT
Sections 9 through 11 of this Agreement shall apply with respect to the Spare Parts as if references to the Products referred to the Spare Parts, except as otherwise set forth in this Schedule II (which takes priority in interpretation) or agreed between the Parties in writing.

E.SERVICE PERIOD
Supplier shall make available the Spare Parts for purchase by SOUND UNITED in accordance with this Agreement through EOL of the relevant Product (the “Service Period”).
Supplier shall supply the Spare Parts to SOUND UNITED without MOQ during the Service Period.  Supplier shall include the Spare Parts needs by SOUND UNITED with the last production run of the relevant Product so that Supplier supplies the Spare Parts to SOUND UNITED without MOQ.  After the Service Period, if SOUND UNITED asks the availability of a Spare Part, Supplier shall cooperate as much as possible to make the Spare Part available.

F.LAST BUY AND REPLACEMENT AND SUBSTITUTE SPARE PARTS
a.If Supplier learns or reasonably foresees that any Spare Part will be or may become unavailable during the Service Period, Supplier shall notify SOUND UNITED as soon as practicable the last date on which Supplier can accept Purchase Orders from SOUND UNITED for such Spare Parts (such last purchase by SOUND UNITED, the “Last Buy”); provided, if no Purchase Order for Last Buy can be accepted, then Supplier shall use its best efforts to find a functionally equivalent replacement or substitute to the unavailable Spare Part that is reasonably acceptable to SOUND UNITED and obtain SOUND UNITED’s prior written approval with respect to the use of any replacement or substitute.
b.Notwithstanding any approval by SOUND UNITED with respect to a replacement or substitute for any Spare Part in accordance with the preceding paragraph, SOUND UNITED reserves the right to recover any Damages SOUND UNITED suffers from the unavailability of any Spare Part during the Service Period, which may include, without limitation, the price difference between the unavailable Spare Part and the replacement or substitute, and the price 
21

of the Product from which the unavailable Spare Part was extracted for purposes of repair prior to a replacement or substitute becoming available.

G.WARRANTY AGAINST DEFECT
Supplier represents and warrants that all Spare Parts supplied to SOUND UNITED hereunder shall be free from defects in design, material and workmanship, and recognizing that defects in Spare Parts are often not found until they are actually used in service, Supplier agrees, without limiting any other rights SOUND UNITED may have under this Agreement, to replace or provide refund in full for any defective Spare Parts that are found any time after payment, inspection or acceptance of such Spare Parts by SOUND UNITED.

22Document

Exhibit 10.10
***Certain identified information has been omitted from this exhibit because it is both (i) not material and (ii) information that the Registrant treats as private or confidential. Such omitted information is indicated by brackets (“[...***...]”) in this exhibit. ***

OEM/ODM Agreement

Between

D&M Holdings Inc
as D&M
and

Tymphany HK Ltd
as Supplier

relating to

Manufacture of Speaker Products

DATED: 2012/Feb/24th

CONTENTS

									
	1	Definitions
	2

	2	Production and Sale
	3

	3	Design Phase
	3

	4	Order Procedures
	5

	5	Price
	6

	6	Delivery
	7

	7	Inspections
	7

	8	Intellectual Property
	8

	9	Warranties
	9

	10	Product Documentation.
	10

	11	Technical Support
	10

	12	Confidential Information
	10

	13	Term and Termination
	11

	14	Force Majeure.
	12

	15	Miscellaneous Provisions
	12

	Schedule 1	Preliminary Specifications	15

	Schedule 2	Special Design Elements	
	Schedule 3	Third Party Intellectual Property Rights	
	Schedule 4	Time Schedule	
	Schedule 5	Purchase Order	
	Schedule 6	Prices	
	Schedule 7	Spare Parts	
	Schedule 8	Quality Requirements	

    
        
        
        
        
        
        
        
1

THIS AGREEMENT (“Agreement”) is dated the 13th_day of Feb 2012 made
BETWEEN
D&M Holdings Inc. (“D&M”), a Japanese corporation having its principal place of business at 7-35-1 Sagamiono, Sagamihara, Kanagawa 228-8505; and
Tymphany HK Ltd (the “Supplier”), a Hong Kong corporation having its principal place of business at Room 1307 - 8 Dominion Centre, 43 - 59 Queen’s Road East, Wan Chai, Hong Kong
WHEREAS:
(A)D&M sells the Products (as defined in this Agreement) with own trademark, [Denon, Marantz, and Boston Acoustics] (“Trademarks”); and
(B)The Supplier wishes to develop and manufacture the Products to be sold by D&M under the Trademark.
(C)D&M and the Supplier (each of them referred to as the “Party” and collectively the “Parties”) have agreed that the Supplier will develop and manufacture the Products on behalf of D&M for the duration of this Agreement upon the following terms.
NOW IT IS HEREBY AGREED as follows:

1.DEFINITIONS
1.1“Confidential Information” shall mean confidential information as defined in Section 12 including, without limitation, the Preliminary Specifications, the Specifications, the Technical Documentations and any other information disclosed in confidence by one Party to the other Party in relation to the Product.
1.2“Design Phase” shall mean the approval procedures set out in Section 3.
1.3“Preliminary Specifications” shall mean the functional requirements, specifications and other requirements of the Product detailed in Schedule 1, updated in accordance with the procedures in this Agreement.
1.4“Product(s)” shall mean [Speaker product(s)] to be developed by the Supplier based on the Preliminary Specifications and after successful development through the Design Phase, produced by the Supplier based on the Specifications determined and agreed between the Parties.
1.5“Purchase Order” shall mean the purchase order for the Products and/or spare parts placed by D&M in accordance with Section 4 in the form set out in Schedule 5.
1.6“Quality Requirements” shall mean the quality requirements specified by D&M as set out in Schedule 8.
1.7“Specifications” shall mean the final functional requirements, specifications and other requirements of the Product to be agreed between the Parties during the Design Phase.
1.8“Special Design Elements” shall mean those elements of the design of the Product that are unique to the Product as identified in Schedule 2.
1.9“Technical Documentation” shall mean the technical documentation including, without limitation, electrical diagrams and parts lists, to be supplied by the Supplier during the Design Phase.
1.10“Third Party Intellectual Property Rights” shall mean the intellectual property rights owned by any third party which will be required to manufacture the Products in accordance with Preliminary Specifications and more specifically listed in Schedule 3.
1.11“Time Schedule” shall mean the time schedule attached hereto as Schedule 4.
2

2.PRODUCTION AND SALE
2.1General
The Supplier agrees to manufacture and sell the Products exclusively to D&M and D&M agrees to purchase the Products in accordance with the terms and conditions of this Agreement.
2.2Manufacturing Rights
The Supplier agrees not to manufacture or sell to persons not a party to this Agreement any Products or any other products having the Special Design Elements which are solely determined by D&M.
2.3Exclusive Right to Resale
D&M shall have the sole right to resell the Products.  The Supplier shall not solicit or otherwise promote the sale of the Products for or on behalf of D&M.
2.4No Financial Interest
No provision of this Agreement shall be construed to entitle the Supplier to any financial interest in respect of resale of the Products by D&M.

3.DESIGN PHASE
3.1Production of the Prototypes
In accordance with the Time Schedule, the Supplier undertakes to manufacture and supply to D&M two (2) complete and fully operational prototypes of each agreed versions of the Product (the “Prototypes”) based on the Preliminary Specifications.  Prototypes will be supplied by the Supplier at material cost
3.2Test of the Prototype
In accordance with the Time Schedule, D&M shall execute such tests as D&M reasonably requires in order to satisfy itself that the Prototypes conform to the requirements specified in the Preliminary Specifications and D&M shall keep the Supplier informed of the results of the tests.  D&M shall give the Supplier a reasonable opportunity to be present at such tests at the Supplier’s costs and expenses.
(A)If, as a result of these tests, D&M is of the reasonable opinion to be confirmed in writing that certain additions, alterations or modifications in the Prototypes are required in order that they comply with the Preliminary Specifications and applicable requirements, the Supplier undertakes to modify and to make the same in the Prototypes and to supply free of charge to D&M the new Prototypes.
(B)If, as a result of these tests, D&M desires modifications or enhancements of the Prototypes in excess of the Preliminary Specifications and which were not earlier agreed upon, then, if the parties hereto so agree, the Supplier will provide a quotation and a revised Time Schedule for D&M’s approval.
3.3Agreed Specifications
Upon the finalization of the tests as per Section 3.2 hereof including tests of the Prototypes thus modified, and if D&M is satisfied that the Prototypes confirm to the Preliminary Specifications, the Parties will agree and establish the Specifications as evidenced by a written confirmation of that agreement.
3.4Pre-production Samples
After establishment of the Specifications and in accordance with the Time Schedule, the Supplier shall manufacture and supply to D&M two (2) production samples of each of agreed versions of the Product (“Pre-production Samples”) in accordance with the Specifications and shall supply to D&M such documentation and information necessary to finalize D&M’s acceptance tests of the Product.  The Pre-production Samples shall, unless otherwise agreed in writing between the Parties, be made with components, materials, technologies and processes identical to those to be applied during series production of Products.  These Pre-production Samples are destined for type-approval by D&M.  Pre-production samples will be provided by the supplier at the agreed selling price of the product.
3

3.5Technical Documentation
Together with the Pre-production Samples, the Supplier shall provide D&M with the Technical Documentation and the necessary technical service information.
3.6Type-approval Tests
In accordance with the Time Schedule, D&M shall execute such type-approval tests as D&M reasonably requires to confirm that the Pre-production Samples conform to the requirements specified in the Specifications and D&M shall keep the Supplier informed of the results of the tests.  D&M shall give the Supplier a reasonable opportunity to be present at such type-approval tests at the Supplier’s costs and expenses.
(A)If, as a result of these tests, D&M is of the reasonable opinion to be confirmed in writing that certain additions, alterations or modifications in the Pre-production Samples are required in order that they will comply with the Specifications or to eliminate faulty or substandard workmanship and /or material, the Supplier undertakes to modify and to make the same in the Pre-production Samples and to supply to D&M the changed Pre-production Samples.  If samples are required because Supplier made an error then samples are at Supplier’s expense.  If samples are required due to a design change by D&M then samples will be at D&M’s expense.
(B)If, as result of these tests, D&M desires modifications or enhancements of the Pre-production Samples in excess of the Specifications and which were not earlier agreed upon, then, if the Parties so agree, the Supplier will provide a quotation and a revised Time Schedule for D&M’s approval.
3.7Issue of Type-Approval Certificate
Upon completion of the tests pursuant to Section 3.6 hereof (including tests of the Pre-production Samples modified pursuant to Section 3.6(B) above), D&M shall, if it is satisfied that the Pre-production Samples conform to the Specifications, provide the Supplier with a Type-Approval Certificate signed by D&M.
3.8No modification
Once the Product is accepted by D&M as evidenced by a signed Type-Approval Certificate, the Supplier shall not make any changes or modifications in the Product without prior written consent of D&M.  This requirement, however, does not preclude the Supplier from using equivalent components and parts that do not affect form, fit, function or interchangeability of spare parts.  If the Supplier uses such equivalent components and/or parts, the Supplier shall immediately inform D&M and provide D&M with an updated version of the Technical Documentation as soon as possible and at the Supplier’s costs.
3.9Commercial Samples
D&M may request for any number of additional Pre-production Samples for commercial purposes (“Commercial Samples”) to be supplied at the same time as the delivery of the Pre-production Sample.
(A)The price to be paid by D&M for the Commercial Samples is specified in Schedule 4 and shall be paid by D&M within 30 days after the receipt of invoice from the Supplier following approval of the Pre-production Sample in accordance with Section 3.7 above.
(B)However, in case the Pre-production Samples and Commercial Samples do not comply with the Specifications and after modification fail to comply with the Specifications, D&M shall, without prejudice to any other rights accruing under this Agreement or in law, be entitled to return the Commercial Samples to the Supplier and D&M shall not be responsible for payment as set out in this Section 3.9(A) above and the Supplier shall reimburse D&M all payments for such Commercial Samples or other payments for the development of the Product actually received from D&M by the Supplier, if any, upon D&M’s first request.
4

3.10Expert suggestions
During the Design Phase, D&M’s technical, quality and service experts are entitled to make suggestions and proposals, but such suggestions and proposals shall not be binding on any of the Parties unless they are confirmed in writing signed by authorized representatives of the Parties.
3.11Successor models
Any successor model of the Product or any other unit model agreed upon between the Parties to be incorporated this Agreement shall be subject to the procedure set forth in this Design Phase.
3.12Manufacturing tools and moulds
(A)D&M shall bear the costs for D&M’s exclusive tools and moulds required to manufacture the Products (the “Tools”), as the same shall be agreed upon between the Parties and in writing.
(B)D&M will pay 50% of the costs of Tools at the start of the Design Phase, and 50% at the issue of the Type-Approval Certificate in accordance with Section 3.7 above.
(C)The property of the Tools shall remain with D&M once paid for in full and the Supplier shall sign a document evidencing D&M’s rights.  Any of the Tools shall not be used by the Supplier other than for carrying out its obligations under the Purchase Orders placed by D&M and the Supplier shall not sell, lease or otherwise dispose of any of the Tools to any third party without D&M’s prior written approval.
(D)The Supplier shall insure the Tools at its expense against such hazards as the Supplier normally insures such as fire and theft.
(E)The Supplier shall keep the Tools separate from other goods and materials.
(F)The Supplier shall immediately inform D&M in the event of fire, theft, or third parties claiming rights on the Tools and in other exceptional cases.
(G)The Tools shall be replaced at D&M’s costs, if such replacement is required by normal wearing out of the Tools, as the same is characterized by a minimum number of one million shots per mould.  Repair costs for any Tools due to misuse shall be for the account of the Supplier.
3.13Quality Control
D&M shall have the right to observe the Products in the process of manufacture and to inspect finished Products at any time during normal business hours, either at the manufacturing facilities or at the storage facilities of the Supplier.  The Supplier shall, upon at its expense, provide adequate space and facilities necessary for D&M’s personnel to conduct such observation and/or inspection.  Upon the Supplier’s request, D&M agrees to be bound by reasonable scheduling and non-disclosure obligations in connection with such observation and inspection.
3.14Spare Parts
The Supplier shall provide spare parts of the Products in accordance with the terms and conditions set forth in Schedule 7.

4.ORDER PROCEDURES
4.1Placing orders
D&M shall submit around 20th of every month a monthly Purchase Order which shall specify the quantity, items and requested delivery dates of the Products.  Any change to a Purchase Order relating to quantity and shipping schedule shall be agreed between D&M and the Supplier, and be reflected in a revised Purchase Order form from D&M to the Supplier.
4.2Forecasts
As soon as feasible, D&M shall provide the Supplier with a two months rolling forecast of its needs for the Products to be renewed every month and issued to the Supplier around 20th of every month according to the following schedule:
5

(A)before 20th of each month D&M agrees to give firm commitment by means of a Purchase Order to cover the N + 3 month (e.g. by the 20th of December D&M shall issue a Purchase Order for deliveries over the month of March).
(B)a Purchase Order placed by D&M shall be acknowledged by the Supplier within one week of the date of the Purchase Order in writing the receipt, and confirmation.  If no such written confirmation is received by D&M within one week, it is deemed that such a Purchase Order is accepted by the Supplier.
4.3Delay in delivery
(A)If the Supplier does not deliver the Products by or on the delivery date specified in the agreed Purchase Order, for any reason attributable to the Supplier, the Supplier shall indemnify D&M any damages that D&M suffered as a result of such delay without prejudice to any other rights accruing under this Agreement or in law, in particular D&M’s right to cancel this Agreement, without notice of default or recourse to any court.  Should the agreement be cancelled by D&M under 4.3A then D&M will be responsible for any materials made obsolete by this action and will reimburse the Supplier for these materials at the Suppliers purchase price.  If Supplier terminates the agreement, D&M is not liable for obsolete materials.
(B)Supplier is required to do best effort, including overtime production support if it is required, to meet schedule which is requested by D&M with reasonable lead time.  In case of delay in shipment more than two weeks, D&M have the rights to request the Supplier to make air-shipment at the Supplier’s cost,
4.4Supplier’s obligation to manufacture
The Supplier hereby guarantees to produce and supply to D&M the Products during a period of at least 2 years starting as from the signing date of the Type-Approval-Certificate referred to in Section 3.7 above.  If the Supplier wishes to stop production of the Products after such a guaranteed period, the Supplier shall inform D&M as early as possible in writing, but at least 12 months prior to the date of envisaged production stop and D&M shall then have an opportunity to place a Purchase Order for Products in such quantity as D&M may require and the Supplier shall accept such Purchase Orders at the then prevailing price.
4.5Lack of components/Spare Parts
Notwithstanding Section 4.4 above, if the Supplier is no longer able to or envisages that it shall not (at short notice) be able to supply the Products to D&M due to shortage or lack of components and/or Spare Parts,
(A)the Supplier shall immediately inform D&M the circumstances in details;
(B)the Supplier shall then be fully responsible for a proper re-design of the Product without affecting form, fit or function thereof, all at the Supplier’s costs; and
(C)The re-designed product shall be subject to the procedure in the Design Phase.

5.PRICE
5.1Agreed Price
The Supplier shall supply Products to D&M at prices which are specified in Schedule 6.
5.2Price review
Any of the Parties may initiate negotiations on price changes.
(A)In the event of unforeseen circumstances affecting any of the Parties or in the event the price/performance ratio of the Products deteriorates as compared to competitive products, the Parties will jointly review the situation and attempt to find a solution reasonably acceptable to the Parties.
6

(B)When price negotiations referred to in this Section 5 extend beyond the price-validity period the prices valid for the previous period will continue to remain in effect until such time as the Parties have reached mutual agreement on the new price.
5.3Supplier’s warranty on price
The Supplier shall do the best to grant D&M its best prices and discounts.
(A)The Supplier warrants that the prices charged for the Products purchased by D&M are equivalent to prices charged to other similarly situated customers for contemporaneous sales in the same country on similar terms and conditions for any products which are the same or substantially similar to the Products and have the same or substantially similar volume, manufacturing costs, quality requirements, and service requirements.
(B)The Supplier acknowledges that, due to the new and unique nature of Products, the market price may be volatile and subject to significant change during the term of this Agreement.  The Supplier agrees to make best efforts to maintain D&M in a competitive position and to minimize D&M’s loss due to unforeseen market price erosion.

6.DELIVERY
6.1Delivery terms
Products shall be delivered to designated F.O.B. point..  Title in the Product shall pass to D&M upon completion of manufacture by the Supplier.  Risk in the Product shall pass to D&M upon delivery.
6.2Packaging
The Products shall be supplied in suitable packing to withstand all normal methods of transport by rail, truck, airplane or ship, in a form to be approved by D&M and as specified in the Specifications.  Changes in approved packing may be introduced only on D&M’s written request or after D&M’s prior written approval.
6.3Labeling
Packing and the Products shall be labeled by the Supplier in accordance with D&M’s instructions and as specified in the Specifications.
6.4Manufactured Products
The manufactured Products and any material supplied by D&M to the Supplier for the production of the Products including logo of the trademarks (“Production Materials”) shall at all times remain the property of D&M and for so long as this Agreement remains in force the Supplier undertakes:
(A)to keep all manufactured Product and the Production Materials in its own possession and under its own control;
(B)not to sell, offer for sale, assign, pledge, mortgage, charge or transfer any of the manufactured Product nor the Production Materials nor do or suffer anything to be done whereby the same may be seized, taken in execution, attached, destroyed or damaged; and
(C)not to use all (i) the manufactured Products, (ii) the Production Materials and (iii) intellectual properties and know-how included in (i) and (ii), for any purpose other than the purposes of this Agreement, and not to allow any other person or party to use the same, except with the prior written consent of D&M.  For clarification and as an example, using D&M’s intellectual property of Hardware and/or Software or know-how of those to achieve aimed audio quality for the D&M product, for the purpose of the development or manufacturing of the product for third party is prohibited hereunder.

7.INSPECTIONS
7.1By the Supplier
The Supplier shall inspect all Products immediately before shipping of the Products, and shall deliver the written records of such inspections without delay.
7

7.2By D&M
D&M shall inspect all the Products within seven business days of the date when such Products are delivered to D&M’s warehouse after customs clearance (the “Receipt Date”).  If that D&M believes there is a discrepancy between the quantity, type, or quality of the Product which has been invoiced to D&M by the Supplier and those shipped to and received by D&M from the Supplier pursuant to such invoice, D&M shall provide written notice of such discrepancy to the Supplier within fourteen business days of the Receipt Date.
7.3Right to inspect
D&M may inspect at any time (between 9:00 and 17:00) on any working day with a reasonable notice not less than 48 hours to the Supplier the manufacturing site of the Supplier or its affiliated company where the Products are manufactured for any purposes in accordance with this Agreement.
7.4Discrepancy, Quality Requirements and Defected Products
The Supplier shall be liable for the discrepancy in quantity and type of the Products supplied and any Products which fail to meet warranty under Section 9 below and the Quality Requirements.  The Supplier shall replace such Products or refund the price subject to D&M’s option.  If D&M selects a refund, D&M may not offset such credit with a future purchase of the Products under this Agreement.
7.5Delay in shipment
If shipment for resale of the Products by D&M is made by air due to delay in delivery to D&M for two weeks or more by the Supplier, the Supplier shall bear such additional costs incurred by D&M unless the reason for the delay it outside of the reasonable control of Supplier

8.INTELLECTUAL PROPERTY
8.1Trademark
All Products manufactured by the Supplier under this Agreement shall bear such Trademark(s).  The logos of Trademark(s) and other relevant materials necessary to bear Trademark(s) on Products (“Logo”) shall be provided by D&M free of charge.  The Supplier expressly recognizes and agrees that any and all proprietary rights to the Trademark(s) belong solely to D&M and it shall acquire no right, title or interest in or to the Trademark(s) by the terms of this Agreement or by performance of its obligations hereunder.
8.2Third party licenses
The Supplier warrants that it has obtained necessary license to use all Third Party Intellectual Property Rights as listed in Schedule 3 from such third party rights holder to manufacture any and all Products under this Agreement.
8.3No infringement of third party intellectual property rights
The Supplier warrants and covenants that in all respects, the Products shall not infringe upon nor violate any patent or any other proprietary right of any person not a party to this Agreement.
(A)If D&M or Brand Company receives any claim or notice of suit alleging such infringement, D&M and/or Brand Company shall promptly notify the Supplier and give the Supplier information, but D&M shall not give monetary assistance nor grant exclusive authority to defend and/or settle such claim.
(B)The Supplier shall then, at its sole expense and option
(i)settle such claim;
(ii)procure that D&M obtains the right to sell such Products;
(iii)replace or modify such Products to avoid infringement;
(iv)remove the affected Products from D&M’s inventory and grant D&M a credit or refund thereon; or
(v)defend D&M against such claim.
8

(C)The Supplier shall indemnify, defend, protect and hold harmless D&M from and against any damages and all costs, expenses, fees (including reasonable attorney’s fees) and liability arising from or in connection with such claim, actually proved.
8.4D&M’s warranty
D&M warrants that, in all respects, the Trademarks do not and shall not infringe upon nor violate any trademark or other proprietary right of any person not a party to this Agreement.  In the event that the Supplier receives a claim or notice of suit alleging such infringement, the Supplier shall promptly notify D&M and give D&M information, no monetary assistance and exclusive authority to defend and/or settle such claim.
8.5General
All trade marks, trade names, copyrights, and other intellectual property rights and designs in relation to the Product, Logo and the Production Materials supplied by or on behalf of D&M shall be and remain the property of D&M.  The Supplier shall not at any time claim any right or property therein or register or cause to be registered in any part of the world any trademark, trade name, copyright or design similar to or a colourable imitation of any trademark, trade name, copyright or design which is the property of D&M.

9.WARRANTIES
9.1Supplier’s Warranty on quality
The Supplier hereby warrants that the Products supplied to D&M shall conform to all the Quality Requirements specified in Schedule 8 and be free from defects in materials, workmanship and design.
9.2Breach of Warranty
If, within two (2) years from the delivery date in D&M’s purchase order, any of the Products is found not to conform to any of the Quality Requirement or to have any defect (“Defective Products”), D&M may choose, any of the following options:
(A)to require the Supplier to retrieve the Defective Products within the period specified by D&M, and, if the Supplier fails to retrieve the Defective Products within such period, D&M may, at the Supplier’s costs and expenses, return such Defective Products to the Supplier or dispose of such Defective Products; or
(B)to require the Supplier to supply replacements of the Defective Products in accordance with D&M’s instructions; or
(C)to require the Supplier to repair the Defective Products at the Supplier’s costs and expenses; or
(D)to repair or cause any third party to repair the Defective Products at the Supplier’s costs and expenses.
9.3Willful breach or gross negligence
Even if Defective Products are found after two (2) years from delivery, D&M shall be entitled to exercise any of the rights set forth in Section 9.2 above, if production or occurrence of such Defective Products is attributable to the Supplier’s willful act or gross negligence.
9.4Product Liability
For so long as the relevant laws or regulations relating to product liability are applicable to the Supplier, D&M or Products, the Supplier hereby agrees to defend, indemnify (including without limitation court costs and reasonable fees of attorneys and other professionals) and hold D&M and their respective customers of the Products, harmless against any third party claims, demands, actions or proceedings resulting from personal injury of property damage caused or alleged to have been caused by any defect in the manufacture or performance of the Products, sold to D&M under this Agreement.
9

9.5Regulatory approvals
The Supplier warrants that, for each Product, it has obtained (as indicated by a filing number) or agrees that it will obtain all standard government, environmental, consumer protection and safety approvals required by the applicable laws, if any, necessary to place the Products in possession of D&M.  Supplier will provide all requested safety certifications if requested to by D&M.  Safety certification costs will be paid by D&M.
9.6Export and Import regulations
The Parties shall promptly provide any information reasonably required by the other in order to lawfully import or export the Products.
(A)With respect to any Products manufactured outside Japan, the Supplier shall be responsible for compliance with any governmental export regulations applicable to the delivery of Products to D&M or to its designees, including obtaining any necessary government approvals.
(B)D&M shall be responsible for obtaining any necessary import licenses.  If requested in writing by D&M, the Supplier shall provide a certificate of origin for the products.

10.PRODUCT DOCUMENTATION
The Supplier shall supply to D&M, without charge, and on a regularly updated basis, complete sets of documentation for each Product, including but not limited to the following: a Product model, applicable test or other safety and regulatory approval documents, operator and service manuals as may be distributed by the Supplier from time to time.

11.TECHNICAL SUPPORT
D&M shall provide technical support and information in relation to the Product to the Supplier, as further specified in Schedule 9.

12.CONFIDENTIAL INFORMATION
12.1Definition
The following information shall, as to the party receiving such information from the other, be deemed “Confidential Information”:
(A)Technical information contained in the Preliminary Specifications and Special Design Elements; and
(B)Sales, manufacturing and marketing information; and
(C)Information contained in documents marked “Confidential”.
12.2The receiving Party shall keep the Confidential Information of the disclosing Party confidential and secret and shall not use or disclose or make the Confidential Information available, directly or indirectly, to any person other than its officers and employees who need the Confidential Information to enable the receiving Party perform its obligations under this Agreement and provided that such officers and employees are also obliged to keep such Confidential Information confidential and secret.
12.3The obligations in the Section 12.2 above shall not apply to any information acquired by the receiving Party which:
(A)at the time of its acquisition was in the public domain; or
(B)at a later date comes into the public domain through no fault of the Supplier.
12.4The receiving hereby agrees and undertakes:
(A)that all Confidential Information shall be and shall remain at all times the sole and exclusive property of disclosing Party; and
(B)that its right to use Confidential Information shall wholly cease upon the termination of this Agreement.
10

12.5Effect of Termination
The receiving Party shall, upon termination of this Agreement, return all Confidential Information, and all reproductions and products thereof, to the party from whom it was received.  Without limiting the foregoing, the parties agree not to use, and to cause persons who have received the Confidential Information through them not to use, the Confidential Information for any purpose following termination of this Agreement.

13.TERM AND TERMINATION
13.1Term
The term of this Agreement shall be one year from the date of its execution.  This Agreement shall be automatically extended for periods of one year each, unless one party notifies the other parties otherwise six months prior to the expiry of this Agreement or any extension thereof.
13.2Termination by one party
(A)Default
This Agreement may be terminated by one party for failure by the other to cure a default in any material term or condition of this Agreement.  Such termination shall be effective thirty (30) days following written notice of the default, unless the default is cured within such notice period.
(B)Financial Condition
This Agreement may be terminated by any party, effective immediately upon receipt, if:
(i)a receiver is appointed for the other party or its property,
(ii)any proceedings are commenced by or for the other party under any bankruptcy, insolvency or debtor’s relief law, or
(iii)one party liquidates or dissolves, or attempts to liquidate or dissolve, except by way of merger.
(C)Termination by Convenience
D&M may terminate this Agreement at any time with three (3) months prior written notice to the Supplier.  The Supplier may terminate this Agreement at any time with one (1) year written notice to D&M.
(1)Under any of the above reasons for termination D&M and Supplier will work together in good faith to minimize the amount of obsolete materials.  Any remaining obsolete materials shall be purchased by D&M from the Supplier at the Suppliers purchase price of the obsolete materials if D&M causes termination.  In the event Supplier terminates the agreement the D&M is not liable for obsolete materials.
13.3Continuing Obligations
(A)Survival
The following provisions shall survive termination of this Agreement: provisions relating to Supplier Rights (Section 2.2), Intellectual Property (Section 8), Warranties (Section 9), and Confidential Information (Section 12).  Such provisions shall continue in full force and effect in accordance with their terms, not withstanding termination of this Agreement.
11

(B)Purchase Orders
All Purchase Orders placed by D&M prior to effective termination shall be honored by the Supplier in accordance with the terms of manufacture, sale, delivery and support provided by this Agreement, unless the parties agree otherwise in writing.  Provided that, if this Agreement is terminated by either party, in accordance with this Section 13, the terminating party may cancel all outstanding Purchase Orders not yet shipped.  The cost of any obsolete materials resulting from termination will be the responsibility of the party causes termination.  If the reason for termination is a shared responsibility both parties will negotiate the liability for obsolete parts in good faith.

14.FORCE MAJEURE
14.1Events of Force Majeure
Neither party shall be in breach of this Agreement or responsible for damages caused by delay or failure to perform in full or in part its obligations hereunder, provided that there is due diligence in attempted performance under the circumstances and that such delay or failure is due to one of the following events of force majeure: fire, earthquake, unusually severe weather, strikes, government sanctioned embargo, flood, act of God, war, act of any public authority or sovereign government, civil disorder, delay or destruction caused by public carrier, or any other circumstance substantially beyond the control of the party to be charged, and which cannot be reasonably forecast or prevented.
14.2Excuse of Performance
Each party agrees to notify the others promptly upon discovery of an event of force majeure, as set forth above, which may cause a failure or delay in performance hereunder.  Notwithstanding the foregoing Section, a delay in performance due to an event of force majeure shall be excused only so long as the event continues or until a commercially reasonable alternative method of performance can be implemented.  If performance by any party hereunder is delayed more than thirty (30) days due to an event of force majeure, then the others may terminate this Agreement upon five (5) days notice, if the event of force majeure has not ceased during such period.  The cost of any obsolete materials arising from termination by D&M will be paid for by D&M.  If Supplier terminates the agreement, D&M are not liable for obsolete materials.

15.MISCELLANEOUS PROVISIONS
15.1Insurance
Each party shall separately maintain, throughout the term of this Agreement, policies of general and products liability insurance reasonably acceptable to the others.
15.2Financial Information
The Supplier shall provide D&M with its financial statement for every business year during the term of this Agreement.
15.3Contractual Relationship
All the Parties represent and warrant that they have entered into no contracts, and are subject to no obligations, which prevent or adversely affect their performance under this Agreement.  It is understood and agreed that D&M and the Supplier are, and at all times during the term of this Agreement shall remain, independent contractors.  In no event shall any party at any time have authority to make any contracts, commitments or undertake any obligations on behalf of the other parties.  Without limiting the foregoing, the Supplier agrees that it will not, during or after the term of this Agreement, represent to any person that it acts for or on behalf of D&M or make use of D&M’s name, or advertise its relationship with D&M, without D&M’s express written consent in each instance.
12

15.4NOTICES
(A)Address
Any notice required or permitted by this Agreement shall be in writing and in the English language and may be delivered personally or may be sent by telex, telecopy (facsimile), electronic mail, cable or prepaid registered or certified mail, addressed to the parties as follows:
If to D&M:
Facsimile: [...***...]
ATTENTION: Masato Takahashi
Email: [...***...]
If to the Supplier:
Facsimile: [...***...]
ATTENTION: Stuart Croxford
Email: [...***...]
(B)Receipt
Any notice shall be deemed to have been received as follows:
(i)Personal delivery: upon receipt
(ii)Telex, Telecopy (Facsimile) or Electronic Mail: twenty-four (24) hours after dispatch by the telex or facsimile operator, providing a copy is also sent by registered or certified mail return receipt requested within twenty-four (24) hours of dispatch.
(iii)Cable: twenty-four (24) hours after delivery to the cable company by the party serving the notice.
(iv)Registered or certified mail: seven (7) days after delivery to the postal authorities by the party serving the notice.
(C)Verbal Notices
Nothing contained herein shall justify or excuse failure to give verbal notice for the purpose of informing the other party thereof when prompt notification is appropriate, but such verbal notice shall not satisfy the requirement of written notice.
15.5Assignment
No party shall assign or otherwise transfer any rights nor obligations under this Agreement without the prior written consent of the other parties, except that any party may, upon reasonable written notice to the others, assign its rights and/or obligations under this Agreement to its controlling parent or a controlled subsidiary or affiliate, or to a party acquiring all or substantially all of a party’s assets, assuming no competitive harm to the other parties occurs.
15.6Set off
Neither Party shall be entitled to withhold payment of any sums after they become due by reason of any right of set-off or counterclaim which the Party may have or allege to have or for any other reason whatsoever.
15.7Illegality
In the event that one or more of the provisions in this Agreement shall, for any reason, beheld by a court of competent jurisdiction to be invalid, void or unenforceable in any respect, such holding shall not affect any other provisions of this Agreement.
13

15.8Waiver
The failure of either party to insist, in one or more instances, upon strict performance of the obligations of this Agreement, or to exercise any right contained herein shall not be construed as a waiver, or relinquishment for the future, of such obligation or right, which shall remain and continue in full force and effect.
15.9Entire Agreement
(A)This Agreement, together with Schedules and any documents referred to in it, constitutes the whole agreement between the parties relating to its subject matter and supersedes and extinguishes any prior drafts, agreements, undertakings, representations, warranties and arrangements of any nature, whether in writing or oral, relating to such subject matter.
(B)The Supplier acknowledges that it has not been induced to enter into this Agreement by any representation or warranty other than those contained in this Agreement and, having negotiated and freely entered into this Agreement, agrees that it shall have no remedy in respect of any other such representation or warranty except in the case of fraud.
(C)No variation of this Agreement shall be effective unless made in writing.
15.10Law and Jurisdiction
(A)This Agreement shall be governed, and construed in accordance with, Japanese Law.
(B)In relation to any legal action or proceedings to enforce this Agreement or arising out of or in connection with this Agreement (“proceedings”) each of the parties irrevocably submits to the exclusive jurisdiction of the Tokyo District Court of Japan and waives any objection to proceedings in such courts on the grounds of venue or on the grounds that the proceedings have been brought in an inconvenient forum

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives in duplicates as of the date first set forth above, each party retaining one copy thereof, respectively.

/s/ D&M Holdings, Inc.                                     
Signed by Vice President, Procurement
for and on behalf of D&M Holdings Inc

/s/ Tymphany HK Ltd.                                        
Signed by Managing Director Asian Operations
for and on behalf of Tymphany HK Ltd.
14

Schedule 1    Preliminary Specifications
[...***...]
15

Schedule 2    Special Design Elements
[...***...]
16

Schedule 3    Third Party Intellectual Property Rights
[...***...]
17

Schedule 4    Time Schedule
[...***...]
18

Schedule 5    Purchase Order
[...***...]
19

Schedule 6    Prices
[...***...]
20

Schedule 7    Spare Parts
[...***...]
21

Schedule 8    Quality Requirements
[...***...]
22

Schedule 9    Technical Support
[...***...]
23

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00347-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00347-of-00352.parquet"}]]