Agreement
This Agreement is made on the date of January 23, 2003.
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BETWEEN:
(1) Lung Hwa Electronics Co., Ltd. (hereafter referred to as LHE) a Taiwan
Corporation having its office and principal place of business at 3F, NO. 248,
Sec. 3, Pei Shiang Rd., Shen Keng, Taipei Hsien, Taiwan, ROC.
(2) I/OMAGIC CORPORATION (hereafter referred to as IOMC), a California based
US company, having its office and principal place of business at 1300 E. Wakeham
Avenue, Santa Ana, CA 92705 USA.
WHEREAS:
IOMC had the desires to let LHE purchase the assigned products for them as
International Purchasing Office (hereafter referred to as IPO) business.
NOW, THEREFORE, in consideration of the mutual covenants and Agreements herein
contained, the parties hereto agree as follow:
1. Business Model
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IOMC instructs LHE to purchase consumer/computer products from its designated
suppliers for IOMC in the territory of the northern America.
2. Purchase Order
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IOMC shall issue purchase orders to LHE during the term of this Agreement.
3. Price Transparency: LHE shall not renegotiate the price on IOMC's
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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.
4. Handling Charge as Being IPO
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LHE shall charge 5% handling charge based on the supplier's unit price. If IOMC
reaches an average running monthly purchasing volume of $750,000 per month, LHE
shall reduce the handling charge by 2% as a volume discount to IOMC. LHE shall
credit any volume discounts on handling charges to IOMC by issuing a credit note
based on the invoices.
5. Credit Line
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US$10 million
6. Payment:
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(a) Net 120 days
Payment should be made at the 121st days counted from the date invoice issued
Wire transfer to below banking account (hereinafter referred to as "Bank")
(b) 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
(c) Interest shall accrue on any past due accounts at a rate of 0.5% per month.
7. Deposit in Security
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The deposit in security would be the amount of USD one million five hundred
($1,500,000). IOMC shall wire transfer to LHE after both parties sign the
Agreement. The amount of USD $250,000 shall be wired by IOMC every week for (7)
sequential weeks after the Agreement is signed, except the one week of February
1, 2003, for a total of six (6) payments. The deposit in security will be
pledged in LHE for 6 months and after 6 months the half of it would be returned
to IOMC. At any time, IOMC shall have the right to offset any monies owed to
LHE with such security deposit.
8. Cancellation
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If IOMC cancels the Purchase Order, the cancellation penalty would depend on the
supplier's request stated on quotation or contract.
9. Returns
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IOMC shall return nonconforming or defective products directly to the supplier.
LHE agrees to issue IOMC a credit for the 3% or 5% 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.
10. Shipment
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IOMC indicates the shipping way on Purchase Order
11. Non-Competition
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During the term of, or any extension of the term of, this Agreement, LHE shall
no 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 Northern of America.
12. Duration
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This Agreement shall remain valid for 1 year from the signing of this Agreement
onwards. In the end of the term of this Agreement if either party would like to
terminate the Agreement the terminating party shall provide the other party with
at least 30 days written notice of termination. Otherwise, the Agreement will
be continuously valid without signing a new Agreement.
13. Monthly Statements
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LHE shall fax a statement indicating all open items to IOMC within 15 days
after the end of each month.
13. Applicable Law
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This 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.)
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their
duly authorized representatives on the date and year first above written.
I/OMAGIC CORPORATION Lung Hwa Electronics INC.
Signature: /s/ Tony Shahbaz Signature: /s/ Peter Pai Jan 24/2003
Name: Tony Shahbaz Name: Peter Pai
Designation: CEO Designation: CEO