EXHIBIT 10.1
SECOND AMENDED AND RESTATED AGREEMENT
This Second Amended and Restated Agreement ("Second Amended
Agreement"), is made and entered into by and between LUNG HWA ELECTRONICS CO.,
LTD. ("LHE"), a Taiwan Corporation having its office and principal place of
business at 3F, 248, Pei Sheng Rd. Sec. 3, Sheng Keng, Taipei Hsien, Taiwan, R.
O. C., and I/OMAGIC CORPORATION ("IOMC"), a Nevada corporation, having its
office and principal place of business at 4 Marconi, Irvine, CA 92618, and is
dated May 3, 2006 for reference purposes only and is effective as of APRIL 1,
2006. LHE and IOMC are each referred to herein as a "Party" and together as the
"Parties."
RECITALS
This Second Amended Agreement is entered into with reference to the
following facts:
WHEREAS, LHE and IOMC have previously entered into a certain agreement
dated July 21, 2005 in connection with a $15 million trade credit facility
offered by LHE to IOMC (the "Amended Agreement").
WHEREAS, LHE and IOMC now desire to amend and restate the Amended
Agreement in its entirety to properly reflect the intent of both Parties and to
apply the terms of the Second Amended Agreement retroactively effective as of
April 1, 2006.
WHEREAS, IOMC desires to use LHE as IOMC's International Purchasing
Office hereafter referred to as "IPO") to purchase certain computer peripheral
products for IOMC.
WHEREAS, IOMC has the desire to purchase from LHE and LHE desires to
sell certain computer peripheral and digital entertainment products manufactured
by LHE ("OEM Sales").
NOW, THEREFORE, in consideration of the covenants and promises
contained herein, and for other good and valuable consideration, the existence
and sufficiency of which is hereby acknowledged, the Parties hereto agree as
follows:
AGREEMENT
Terms Applicable to IPO Business Model:
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1. IOMC may instruct LHE to purchase consumer/computer products from its
designated suppliers for IOMC in the territory of the North America.
2. PRICE TRANSPARENCY: LHE shall not renegotiate the price on IOMC's
purchase order to LHE for products to be purchased with the designated
suppliers, unless the supplier and LHE offer IOMC the same reduction in
price for such products. LHE agrees to provide and execute a Tri-Party
Agreement to be negotiated and entered into between IOMC, LHE and each
supplier that IOMC instructs LHE to purchase products from. LHE agrees
that the Tri-Party Agreement shall include, but not be limited to,
LHE's agreement that LHE shall not renegotiate prices with the
supplier.
LHE will make purchases from designated suppliers using a Letter of
Credit or Wire Transfer as required by designated supplier. However,
LHE can decide to use a Letter of Credit or Wire Transfer depending on
LHE's financial status. Purchase Orders will be processed by LHE in a
timely manor based on IOMC's reasonably requested time table to meet
its customers requirements. If there are any overdue payments from
IOMC, LHE has the right to refuse further Purchase Orders. If there are
any overdue payments from IOMC, LHE has the right to refuse further
Purchase Orders after two business days' notification to IOMC of
overdue payments.
3. HANDLING CHARGE AS BEING IPO
LHE shall charge 4.0% handling charge based on the supplier's unit
price.
4. RETURNS
IOMC shall return nonconforming or defective products directly to the
supplier. LHE agrees to issue IOMC a credit for the 4.0% handling
charge on the returned products in the event that the supplier issues a
return credit to LHE for IOMC returned products. Returns to suppliers
will be negotiated and handled pursuant to a Tri-Party Agreement
executed by LHE, IOMC, and supplier.
Terms Applicable to IPO and OEM Sales Business Model:
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1. PURCHASE ORDER
IOMC shall issue purchase orders to LHE during the term of this Second
Amended Agreement. The terms on all Purchase Orders shall be F.O.B.
I/OMagic's warehouse located at 4 Marconi, Irvine, CA 92618, unless
agreed upon otherwise in writing by both parties.
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2. CREDIT LINE US $15 MILLION
3. PAYMENT:
(a) Net 120 days from the date of LHE's invoice for the IPO Sales
Business Model; Net 90 days from the date of LHE's invoice for
the OEM Sales Business Model. LHE shall issue individual
invoices to IOMC for each shipment no earlier than the
shipment date of the Products to IOMC.
(b) Payment should be made on the 121st day for IPO Sales and the
91st day for OEM Sales, beginning on the date the invoice is
issued with funds paid via wire transfer to bank account
specified below (hereinafter referred to as "Bank"):
(c) Bank information
Bank: CHANG HWA COMMERCIAL BANK, LTD. PEI HSIN BRANCH
Account name: LUNG HWA ELECTRONICS CO., LTD.
Account No. 5623-22-06271-500
SWIFT CODE: CCBCTWTP562
(d) Interest shall accrue on any past due accounts at a rate of
0.5% per month.
4. EARLY PAYMENT
IOMC shall pay LHE 10% of the purchase price on any purchase orders
issued to LHE within ten (10) days of LHE's invoice date.
5. CANCELLATION
If IOMC cancels the Purchase Order, the cancellation penalty will
depend on the supplier's request stated on quotation or contract. LHE
will send a debit note to IOMC for the cancellation fee of the Letter
of Credit or any other related expenses, not to exceed actual expenses.
6. SHIPMENT
IOMC will pay for reasonable shipping expenses including transportation
costs, freight forwarder and related customs/duties fees.
7. NON-COMPETITION
During the term of, or any extension of the term of, this Second
Amended Agreement, LHE shall not export, market, design, manufacture or
sell any products similar to, or which either alone in conjunction with
some other goods, perform as or which might otherwise compete with IOMC
in the North America.
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8. DURATION
The terms and conditions shall remain valid for one (1) year from the
effective date of this Second Amended Agreement. Before or at the end
of the term, if either party would like to terminate the agreement,
they must provide at least thirty (30) days prior written notice via
certified mail. If either party wishes to revise the Second Amended
Agreement, that party shall provide notice to the other party at least
thirty (30) days prior to the effective date of the revision. The
revisions shall take place, provided that both parties mutually agree
to and execute a new amendment to this agreement. Otherwise, the Second
Amended Agreement will be continuously valid without signing a new
agreement.
9. MONTHLY STATEMENTS
LHE shall fax or e-mail a statement indicating all open items to IOMC
within 15 days after the end of each month.
10. ENTIRE AGREEMENT
Except as provided herein, this Second Amended Agreement contains the
entire agreement of the parties, and supersedes all existing
negotiations, representations, or agreements and all other oral,
written, or other communications between them concerning the subject
matter of the Agreement and this Second Amended Agreement. There are no
representations, agreements, arrangements, or understandings, oral or
written, between and among the parties hereto relating to the subject
matter of this Second Amended Agreement that are not fully expressed
herein.
10. APPLICABLE LAW
This Second Amended Agreement shall be subject to the laws of
California and each party hereby submits to the exclusive jurisdiction
of the courts in Orange County, California and irrevocably waives any
rights it may have to bring proceedings in any other jurisdiction
(including without limitation on the grounds of inconvenient forum.)
11. ARBITRATION
If a dispute or claim shall arise between the parties with respect to
any of the terms or provisions of this Second Amended Agreement, or
with respect to the performance by any of the parties under this Second
Amended Agreement, then the parties agree that the dispute shall be
arbitrated in Orange County, California, before a single arbitrator, in
accordance with the rules of either the American Arbitration
Association ("AAA") or Judicial Arbitration and Mediation Services,
Inc./Endispute ("JAMS/Endispute"). The selection between AAA and
JAMS/Endispute rules shall be made by the claimant first demanding
arbitration. The arbitrator shall have no power to alter or modify any
express provisions of this Agreement or to render any award, which by
its terms, affects any such alteration or modification. The parties
agree that the judgment award rendered by the arbitrator shall be
considered binding and may be entered in any court having jurisdiction
of this Second Amended Agreement. The provisions of this Paragraph
shall survive the termination of this Second Amended Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Amended
Agreement by their duly authorized representatives on the date and year first
above written.
I/OMAGIC CORPORATION LUNG HWA ELECTRONICS CO., LTD.
/s/ Tony Shahbaz /s/ Peter Pai
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By: Tony Shahbaz By: Peter Pai
Its: President and CEO Its: CEO
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