EXHIBIT 10.2
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AMENDED AND RESTATED AGREEMENT
This Amended and Restated Agreement ("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 July 21, 2005 for
reference purposes only and is effective as of April 29, 2005. LHE and IOMC are
each referred to herein as a "Party" and together as the "Parties."
RECITALS
This Amended Agreement is entered into with reference to the following
facts:
WHEREAS, LHE and IOMC have previously entered into a certain agreement
dated June 6, 2005 in connection with a $15 million trade credit facility
offered by LHE to IOMC (the "Agreement").
WHEREAS, LHE and IOMC now desire to amend and restate the Agreement in its
entirety to properly reflect the intent of both Parties and to apply the terms
of the Agreement retroactively effective as of April 29, 2005.
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
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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.
3. 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 under either the IPO and/or OEM Sales Business models combined, 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.
4. 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.
Terms Applicable to IPO and OEM Sales Business Model:
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1. Purchase Order
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IOMC shall issue purchase orders to LHE during the term of this 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.
2. Credit Line
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US $15 million
3. Payment:
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(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
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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
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Upon effectiveness of this Amended Agreement, the amount of $1,500,000 US
dollars ("Early Payment Funds") shall be wired from IOMC to LHE. These funds
will be used to pay all IOMC invoices coming due for payment to LHE. Any Early
Payment Funds remaining after the payment of all IOMC outstanding invoices to
LHE three months after the date of this Agreement shall be refunded to IOMC
immediately. Once the Early Payment Funds have been used to pay all outstanding
IOMC invoices, or three months after the effective date of this Amended
Agreement has expired, whichever is sooner, as a down payment for products
ordered, 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
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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.
6. Shipment
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IOMC will pay for reasonable shipping expenses including transportation costs,
freight forwarder and related customs/duties fees.
7. Non-Competition
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During the term of, or any extension of the term of, this 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
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This Amended Agreement shall remain valid for one (1) year from the effective
date of this Amended Agreement. At the end of the term of this Amended
Agreement, if either party would like to terminate the Amended Agreement the
terminating party shall provide the other party with at least thirty (30) days
prior written notice of termination. Otherwise, the Amended Agreement will be
continuously valid without signing a new agreement.
9. Monthly Statements
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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
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Except as provided herein, this 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 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 Amended Agreement that are not fully
expressed herein.
10. Applicable Law
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This 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.)
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 7/21/2005
By: Tony Shahbaz By: Peter Pai
Its: President and CEO Its: CEO
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