THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Ultimate Electronics, Inc. (Retired) (ULTEQ.PK.X)

5/24/2004 Proxy Information

Mr. Pearse was Chief Executive Officer of Ultimate Electronics, Inc. from 1968 to 1997.

The Company leases its store in Colorado Springs, Colorado from Pearse Investment Company, L.L.L.P., an entity controlled by William J. Pearse, Chairman and a significant stockholder of the Company. The Company has extended the term of the lease to July 1, 2005, and the lease can be cancelled by the Company with nine months notice to the landlord. The Company paid $128,400 in lease payments during fiscal 2004 for the property. In addition, the Company is responsible for all real property taxes and insurance premiums on the property.

The Company also leases its store in Fort Collins, Colorado from Pearse Investment Company, L.L.L.P. The lease is for a term of 15 years and expires in April 2005. The rent increases annually at a rate equal to the lesser of (i) $6,000 or (ii) an amount based upon the increase, if any, over the prior year in the Denver Consumer Price Index. The Company paid $165,528 in lease payments during fiscal 2004 for the property. The Company is also responsible for all real property taxes and insurance premiums on the property.

During the fiscal year ended January 31, 2001, the Company purchased land and constructed a retail building in a new location in Colorado Springs, Colorado. The new store opened in November 2000. In February 2001, the Company sold the land and the building to Pearse Investment Company, L.L.L.P. for $4.5 million and at no gain or loss to the Company. The Company also entered into a lease for a term of 15 years at an annual base rent of $427,500. Effective March 1, 2006 and March 1, 2011, the annual base rent increases to $470,265 and $517,272, respectively. The Company paid $427,500 in lease payments during fiscal 2004 for the property. The Company is responsible for all real property taxes and insurance premiums on the property. The disinterested directors of our Board approved this sale and leaseback transaction.

Although the Company did not obtain independent appraisals in connection with these transactions, the Company believes that the terms of all of the foregoing transactions were better for the Company than the terms that it would have obtained with independent third parties. All future transactions with Pearse Investment Company, L.L.L.P. or any other affiliate of the Company will be subject to the approval of the Audit Committee and will be on terms believed by the Audit Committee to be no less favorable to the Company than those available from unaffiliated third parties.

The Company employs William J. Pearse, III, the son of William J. and Barbara A. Pearse, as Senior Vice President—Marketing and Merchandising. In fiscal 2004, Mr. Pearse III's total compensation from the Company was $168,000. The Company employs Daniel N. Workman, the brother of David J. Workman, as a Regional Sales Manager. In fiscal 2004, Mr. Workman's total compensation from the Company was $128,000.

Effective February 1, 2004, the Company entered into a Consulting Agreement (the "Consulting Agreement") with Beale International, Inc., a Colorado corporation ("Beale International"), of which Robert W. Beale, one of the Company's non-employee directors, is the President. Under the Consulting Agreement, Beale International has agreed to recruit candidates for certain key management positions for the Company, as designated by the Company. Pursuant to the Consulting Agreement, the Company shall pay Beale International $54,960 per year, payable in equal monthly installments of $4,580, in addition to any reimbursements for reasonable business and travel expenses. The Consulting Agreement has a term of three years, with an automatic renewal for an additional one year, and includes customary proprietary rights assignment and confidentiality provisions.

5/29/2003 Proxy Information

From February 2002 through June 2002, Mr. Beale performed management consulting services and received $9,604 as payment for such services.

The Company leases its store in Colorado Springs, Colorado from Pearse Investment Company, L.L.L.P., an entity controlled by William J. Pearse, Chairman and a significant stockholder of the Company. The Company has extended the term of the lease to July 1, 2005, and the lease can be cancelled by the Company with nine months notice to the landlord. The Company paid $128,400 in lease payments during fiscal 2003 for the property. In addition, the Company is responsible for all real property taxes and insurance premiums on the property.

The Company also leases its store in Fort Collins, Colorado from Pearse Investment Company, L.L.L.P. The lease is for a term of 15 years and expires in April 2005. The rent increases annually at a rate equal to the lesser of (i) $6,000 or (ii) an amount based upon the increase, if any, over the prior year in the Denver Consumer Price Index. The Company paid $161,179 in lease payments during fiscal 2003 for the property. The Company is also responsible for all real property taxes and insurance premiums on the property.

During the fiscal year ended January 31, 2001, the Company purchased land and constructed a retail building in a new location in Colorado Springs, Colorado. The new store opened in November 2000. In February 2001, the Company sold the land and the building to Pearse Investment Company, L.L.L.P. for $4.5 million and at no gain or loss to the Company. The Company also entered into a lease for a term of 15 years at an annual base rent of $427,500. Effective March 1, 2006 and March 1, 2011, the annual base rent increases to $470,265 and $517,272, respectively. The Company paid $427,500 in lease payments during fiscal 2003. The Company is responsible for all real property taxes and insurance premiums on the property. The disinterested directors of our board approved this sale and leaseback transaction.

Although the Company did not obtain independent appraisals in connection with these transactions, the Company believes that the terms of all of the foregoing transactions were better for the Company than the terms that it would have obtained with independent third parties. All future transactions with Pearse Investment Company, L.L.L.P. or any other affiliate of the Company will be subject to the approval of the Audit Committee and will be on terms believed by the Audit Committee to be no less favorable to the Company than those available from unaffiliated third parties.

The Company employs William J. Pearse III, the son of William J. and Barbara A. Pearse, as Vice President of Marketing. In fiscal 2003, the Company paid him a salary and bonus of $147,500. The Company employs Daniel N. Workman, the brother of David J. Workman, as a Regional Sales Manager. In fiscal 2003, the Company paid him a salary and bonus of $133,188.