EXHIBIT 99.3
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FILE COPY
ATKINSON, ANDELSON, LOYA, RUUD & ROMO
A Professional Corporation
Mark T. Palin, State Bar No. 135398
Edward C. Ho, State Bar No. 176144
Scott K. Dauscher, State Bar No. 204105
17871 Park Plaza Drive, Suite 200
Cerritos, California 90703-8597
Telephone: (562) 653-3200 o (714) 826-5480
Facsimile: (562) 653-3333
Attorneys for DEFENDANTS PERSONAL
COMPUTING ENVIRONMENTS, INC. and
ALLAN QUATTRIN
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF ORANGE, CENTRAL JUSTICE CENTER
PERSONAL COMPUTING CASE NO. 04CC03735
ENVIRONMENTS KOREA, INC., a.k.a. PCE
KOREA, INC.; A THOUSAND STEPS, INC., FIRST AMENDED
BEN HYNES, AND JIMMY KIM, CROSS-COMPLAINT FOR:
Plaintiff, 1. Breach of Contract;
2. Fraud-Intentional Misrepresentation
v. 3. Negligent Misrepresentation;
4. Intentional Interference with
PERSONAL COMPUTING Business and Contractual Relations;
ENVIRONMENTS, INC., a.k.a. PCE, INC., 5. Intentional Interference with
a.k.a. P--CE COMPUTERS, INC.; BEN Prospective Economic Advantage;
MOGLIN; ALLAN QUATTRIN and DOES 1 6. Defamation
through 1000, inclusive,
JUDGE: Michael W. Hayes
Defendants. DEPT: C-24
PERSONAL COMPUTING ORIGINAL COMPLAINT FILED: 03/09/04
ENVIRONMENTS, INC. a.k.a. PCE, INC., TRIAL DATE: None
a.k.a. P--CE COMPUTERS, INC.,
Cross-Complainants
v.
PERSONAL COMPUTING
ENVIRONMENTS KOREA, INC., a.k.a. PCE
KOREA, INC.; BEN HINES, AND JIMMY
KIM; ROES 1-100, INCLUSIVE,
Cross-Defendants.
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FIRST AMENDED CROSS-COMPLAINT
Defendant PERSONAL COMPUTING ENVIRONMENTS, INC. ("Cross-Complainant")
hereby alleges as follows:
GENERAL ALLEGATIONS
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1. Cross-Complainant PERSONAL COMPUTING ENVIRONMENTS, INC. (herinafter
"PCE" or "Cross-Complainant") is a Nevada corporation registered to do business
as a foreign corporation in California.
2. Cross-Complainant, is informed and believes and based thereon alleges,
that Cross-Defendant PERSONAL COMPUTING ENVIRONMENTS KOREA, INC. a.k.a. PCE
KOREA (hereinafter "PCE KOREA"), is a Korean company registered to do business
as a foreign corporation in California.
3. Cross-Complainant, is informed and believes and based thereon alleges,
that Cross-Defendant BENJAMIN HYNES ("HYNES") is an individual and a resident of
California.
4. Cross-Complainant, is informed and believes and based thereon alleges,
that Cross-Defendant JIMMY KIM ("KIM") is an individual and a resident of
California.
5. Cross-Complainant is ignorant of the true names or capacities, whether
individual, corporate, partnership, or otherwise, of Cross-Defendants sued
herein as ROES 1 through 100, inclusive, and therefore Cross-Complainant sues
said Cross-Defendants by such fictitious names. Cross-Complainant is informed
and believes and based thereon alleges that each of the cross-defendants
designated herein as a ROE was/is responsible for the acts, errors and/or
omissions hereinafter alleged which proximately caused/will cause injury and
damages to Cross-Complainant.
6. PCE KOREA, HYNES, KIM and ROES 1 through 100 are collectively referred
to herein as "Cross-Defendants."
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FIRST AMENDED CROSS-COMPLAINT
7. Cross-Complainant is further informed and believes, and alleges based
upon such information and belief, that at all times herein mentioned,
Cross-Defendants in committing the acts and omissions hereinafter alleged, were
acting within the course and scope of said agency, employment and joint venture
with each other, with the advance knowledge, acquiescence or subsequent
ratification.
FIRST CAUSE OF ACTION
---------------------
(Breach of Contract- Against All Cross-Defendants)
8. Cross-Complainant realleges paragraphs 1 through 7, inclusive, and
incorporate them herein as though fully set forth.
9. On or about September 18, 2003, Cross-Complainant and Cross-Defendants
entered into an agreement consisting of two documents entitled "Memorandum of
Understanding" and "Personal Computing Environments International Distributor
Agreement" (hereinafter collectively referred to as the "Agreement") a true and
correct copy of which is attached hereto as Exhibit A and incorporated herein by
this reference. Pursuant to the Agreement, Cross-Defendants were to pay $30,000
to Cross-Complainant for exclusive distributorship rights to specified PCE
products in specified territories as defined in Exhibit B to the Agreement,
namely South and North Korea. As additional consideration for the exclusive
distributorship rights, Cross-Defendants promised and agreed to purchase not
less than the 1,000 units of product from PCE per quarter in each of the two
years of the term of the Agreement for a total of 4,000 units of product each
year. As additional consideration, Cross-Defendants promised to actively promote
PCE's products within the specified territory, which was to include advertising,
direct sales, public relations, participating in local trade shows, conducting
regular clinics on the use of the products, including the product in local
catalogues, and using their best efforts to develop the product market in the
territory.
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FIRST AMENDED CROSS-COMPLAINT
10. Cross-Defendants have breached the written Agreement by failing to
purchase the minimum number of units of product from PCE as required by the
terms of the Agreement, failing to actively promote PCE's products within the
specified territory (which was to include advertising, direct sales, public
relations, participating in local trade shows), conducting regular clinics on
the use of the products (including the product in local catalogues), and by
failing to use their best efforts to develop the product market in the
territory.
11. Cross-Complainant has performed all covenants, conditions and promises
required of it to be performed in accordance with the terms of the written
agreement and to the extent Cross-Complainant has not performed all covenants,
conditions and promises, such performance was and is excused by
Cross-Defendants' actions and omissions.
12. As a proximate result of the actions of Cross-Defendants,
Cross-Complainant has incurred damages in an amount not yet ascertained but to
be proven at trial.
SECOND CAUSE OF ACTION
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(Fraud-Intentional Misrepresentation- Against All Defendants)
13. Cross-Complainant realleges paragraphs 1 through 12, inclusive, and
incorporates them herein as though fully set forth.
14. On or about September 18, 2003, PCE entered into negotiations with PCE
KOREA for an agreement whereby PCE KOREA would obtain exclusive distributorship
rights to PCE's products within a specified territory. As part of these
negotiations Cross-Defendants YNES and KIM, acting in their capacities as agents
of PCE KOREA, falsely and fraudulently represented to Allan Quattrin
("QUATTRIN"), acting in his capacity as an agent of PCE, that PCE KOREA would
not purchase less than the 1,000 units of product from PCE per quarter in each
of the two years of the term of the Agreement for a total of 4,000 units of
product each year, represented that PCE KOREA would actively promote PCE's
products within the specified territory (which was to include advertising,
direct sales, public relations, participating in local trade shows, conducting
regular clinics on the use of the products, including the product in local
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FIRST AMENDED CROSS-COMPLAINT
catalogues), and further represented that they would use their best efforts to
develop the product market in the territory.
15. PCE is informed and believes and based thereon alleges that
Cross-Defendants, and each of them, made the above representations with the
intent of fraudulently inducing PCE to rely on those representations and enter
into an agreement whereby PCE KOREA would obtain the exclusive distributorship
rights to PCE's products within the specified territory.
16. Cross-Complainant is informed and believes and based thereon alleges
that Cross-Defendants, and each of them, at the time the above representations
were made knew them to be false and or materially misleading.
17. Cross-Complainant is informed and believes and based thereon alleges
that the true facts are that Cross-Defendants actually had no intention of
purchasing not less than the 1,000 units of product from PCE per quarter in each
of the two years of the term of the Agreement for a total of 4,000 units of
product each year and represented, had no intention of actively promoting PCE's
products within the specified territory, which was to include advertising,
direct sales, public relations, participating in local trade shows, conducting
regular clinics on the use of the products, including the product in local
catalogues, and further had no intention of using their best efforts to develop
the product market in the territory.
18. PCE was unaware of the falsity of the above representations at the
time that Cross-Defendants, and each of them, made those representations, and
Cross-Complainant reasonably acted in reliance on those representations by
entering into the Agreement and granting PCE KOREA exclusive distributorship
rights to PCE's products in the specified territories.
19. As a direct and proximate result of the fraudulent conduct on the part
of Cross-Defendants, and each of them, as alleged herein, Cross-Complainant has
been damaged in an amount of which is not yet ascertainable but which will be
proven at trial.
20. Cross-Complainant is informed and believes and based thereon alleges
that by doing the things mentioned hereinabove, Cross-Defendants, and each of
them, acted with malice, fraud, and oppression and in conscious disregard of
Cross-Complainant's rights so as to entitle Cross-Complainant to the recovery of
punitive damages.
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FIRST AMENDED CROSS-COMPLAINT
THIRD CAUSE OF ACTION
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(Negligent Misrepresentation- Against All Defendants)
21. Cross-Complainant realleges paragraphs 1 through 20, inclusive, and
incorporates them herein as though fully set forth.
22. On or about September 18, 2003, Cross-Complainant entered into
negotiations with Cross-Defendants for an agreement whereby Cross-Defendants
would obtain exclusive distributorship rights to PCE's products within a
specified territory. As part of these negotiations Cross-Defendants HYNES and
KIM, acting in their capacities as agents of PCE KOREA, represented to QUATTRIN
that PCE KOREA would purchase not less than the 1,000 units of product from PCE
per quarter in each of the two years of the term of the Agreement for a total of
4,000 units of product each year, represented that PCE KOREA would actively
promote PCE's products within the specified territory (which was to include
advertising, direct sales, public relations, participating in local trade shows,
conducting regular clinics on the use of the products, including the product in
local catalogues), and further represented that PCE KOREA would use its best
efforts to develop the product market in the territory.
23. Cross-Complainant is informed and believes and based thereon alleges
that Cross-Defendants HYNES and KIM, and each of them, at the time said
representations were made, had no reasonable basis for making said
representations but they knew Cross-Complainant would rely on those
representations and enter into the Agreement and grant Cross-Defendants
exclusive distributorship rights to PCE's products in the specified territories.
24. Cross-Complainant is informed and believes and based thereon alleges
that the true facts are that Cross-Defendants actually had no ability to
purchase not less than the 1,000 units of product from PCE per quarter in each
of the two years of the term of the Agreement for a total of 4,000 units of
product each year and represented, had no ability to actively promote PCE's
products within the specified territory, which was to include advertising,
direct sales, public relations, participating in local trade shows, conducting
regular clinics on the use of the products, including the product in local
catalogues, and further had no ability to develop the product market in the
territory.
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FIRST AMENDED CROSS-COMPLAINT
25. Cross-Complainant was unaware of the falsity of the above
representations at the time that Cross-Defendants, and each of them, made those
representations, and Cross-Complainant reasonably acted in reliance on those
representations by entering into the Agreement and granting PCE KOREA exclusive
distributorship rights to PCE's products in the specified territories.
26. As a direct and proximate result of the fraudulent conduct on the part
of Cross-Defendants, and each of them, as alleged herein, Cross-Complainant has
been damaged in an amount of which is not yet ascertainable but which will be
proven at trial.
FOURTH CAUSE OF ACTION
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(Intentional Interference with Business and Contractual Relations-
Against All Defendants)
27. Cross-Complainant realleges paragraphs 1 through 26, inclusive, and
incorporates them herein as though fully set forth.
28. Cross-Complainant had existing, valid contracts and ongoing business
relations with various customers in order to provide PCE's products and
services. Cross-Defendants and each of them had knowledge of these contracts and
business relationships.
29. Cross-Complainant is informed and believes and based thereon alleges
that Cross-Defendants, and each of them, intentionally interfered with these
contracts and ongoing business relationships and the ability of
Cross-Complainant to provide quality products and services to its customers in
that: Cross-Defendants have misrepresented the ability of PCE to provide
products and services to customers.
30. Cross-Complainant is informed and believes, and based thereon alleges,
that Cross-Defendants engaged in the aforementioned actions, which interfered
with Cross-Complainant's ongoing contractual and business relationships.
31. Cross-Complainant is informed and believes and based thereon alleges,
that the above mentioned actions by Cross-Defendants, and each of them, were
performed with the intent to interfere with Cross-Complainant's contracts and
business relationships with its customers.
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FIRST AMENDED CROSS-COMPLAINT
32. Cross-Complainant is informed and believes, and based thereon alleges,
that customers of Cross-Complainant have breached or will breach their contracts
with Cross-Complainant, or have ended or will end their business relationship
with Cross-Complainant or severely diminish their business relationship with
Cross-Complainant as a result of the actions of Cross-Defendants.
33. As a proximate result of the intentional interference with
Cross-Complainant's contractual and ongoing business relationships with its
customers, Cross-Complainant has suffered damages from the resultant decrease in
business in a sum subject to proof at trial.
34. Cross-Complainant further alleges that, in intentionally interfering
with the contractual and ongoing business relationships between
Cross-Complainant and its customers, Cross-Defendants and each of them, acted
with malice, fraud and oppression with conscience disregard of
Cross-Complainant's rights so as to entitle Cross-Complainant to the recovery of
punitive damages.
35. Cross-Complainant is informed and believes, and based thereon alleges,
that unless restrained, Cross-Defendants will continue to disrupt the
contractual and business relationship between Cross-Complainants and its
customers, all to Cross-Complainant's great and irreparable injury, for which
damages would not afford adequate remedy as damages would not completely
compensate for the injury to Cross-Complainant's business reputation and good
will.
FIFTH CAUSE OF ACTION
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(Intentional Interference with Prospective Economic Advantage -
Against all Defendants)
36. Cross-Complainant realleges paragraphs 1 through 35, inclusive, and
incorporates them herein as though fully set forth.
37. Through the existing contracts between Cross-Complainant and its
customers, Cross-Complainant had an ongoing business relationship with its
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FIRST AMENDED CROSS-COMPLAINT
customers, which provided Cross-Complainant with a significant probable future
economic benefit in the purchase by Cross-Complainant's customers of additional
products and services from Cross-Complainant and the continued service of those
products purchased by Cross-Complainant's customers.
38. Cross-Defendants intentionally engaged in wrongful conduct to
interfere with the contractual and on-going business relationships that existed
between Cross-Complainant and its customers as alleged above and to interfere
with Cross-Complainant's potential economic advantage, particularly by
representing to Cross-Complainant's customers that Cross-Complainant could not
fulfill its obligations to provide goods and services.
39. Cross-Complainant is informed and believes, and based thereon alleges,
that at all times herein mentioned, Cross-Defendants had knowledge of the
economic relationships between Cross-Complainant and its existing customers
regarding existing contracts and prospective purchases of products and services
in the future and therefore the probability of future economic benefits to be
derived from those existing contracts between Cross-Complainant and its
customers.
40. Cross-Complainant is informed and believes and based thereon alleges
that at all times mentioned, the Cross-Defendants willfully, intentionally and
maliciously, in concert with all other Cross-Defendants, interfered with these
relationships between Cross-Complainant and its customers and entered into a
course of conduct designed to subvert the economic relationship between
Cross-Complainants and its customers and prospective customers. This conduct was
wrongful because Cross-Complainants had a contractual duty to promote PCE's
business rather than try to undermine it by making disparaging and false remarks
to PCE's customers that PCE could not fulfill its obligations to provide goods
and services.
41. Cross-Complainant is informed and believes and based thereon alleges
that Cross-Defendants knew that their intentionally malicious conduct would
result in interference with Cross-Complainant's probability of future economic
benefit with its customers and that Cross-Complainant's would be denied the
economic benefits of their contractual relationship with existing and
prospective customers, and consciously disregarded those consequences.
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FIRST AMENDED CROSS-COMPLAINT
42. As a direct and foreseeable result of the aforementioned intentional
wrongful acts, Cross-Complainant's existing contracts, and, therefore, its
future business have been_disrupted, and have been made more burdensome and
expensive due to the unlawful conduct of the Cross-Defendants.
43. Cross-Complainant is informed and believes, and based on such
information and belief alleges that Cross-Defendants caused actual disruption to
the relationship between Cross-Complainant and its third party customers, which
has caused damage to Cross-Complainant in the form of a decrease in business
revenue in a sum subject to proof at trial.
44. Cross-Complainant is informed and believes, and based on such
information and belief allege that Cross-Defendants acted with oppression, fraud
and malice and Cross-Complainant is therefore entitled to punitive and
exemplarily damages in a sum subject to proof at trial.
SIXTH CAUSE OF ACTION
---------------------
(Defamation - Against All Defendants)
45. Cross-Complainant realleges paragraphs 1 through 44, inclusive, and
incorporates them herein as though fully set forth.
46. Cross-Complainant is informed and believes and based thereon alleges
that Cross-Defendants as individuals and on behalf of the other
Cross-Defendants, have made false, negative, derogatory and disparaging remarks
about Cross-Complainant's business performance and economic stability to its
customers and to numerous other persons unknown to Cross-Complainant but known
to Cross-Defendants. These remarks included, but were not limited to, statements
that Cross-Complainant was losing its ability to perform contracts for its
customers and, therefore, was not going to be able to perform its future
contracts.
47. Cross-Complainant is informed and believes and based thereon alleges
that at the time that Cross-Defendants made those comments, they knew that the
comments were false and/or should have known the comments to be false.
48. Cross-Complainant is informed and believes and based thereon alleges
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FIRST AMENDED CROSS-COMPLAINT
that customers and other individuals hearing these comments regarding the
business performance and economic conditions of Cross-Complainant understood
these comments to relate to the business performance and economic condition of
Cross-Complainant.
49. Cross-Complainant is informed and believes and based thereon alleges,
that as a result of the aforementioned false comments made about
Cross-Complainant, Cross-Complainant's customers and other individuals believed
that Cross-Complainant was a mismanaged and failing company and would not be
able to perform under its contracts.
50. As a proximate result of the aforementioned false comments about
Cross-Complainant to its customers, Cross-Complainant has suffered damages in an
amount subject to proof at trial.
51. Cross-Complainant further alleges that the aforementioned false
statements were made with malice, fraud, or oppression, with conscience
disregard of Cross-Complainant's rights. Cross-Defendants' statements were made
with evil motive and malice, willfully and wrongfully, and with intent to
injure, disgrace and defame Cross-Complainant and to damage its lawful business
with wanton and reckless disregard for the truth or falsity of the statements
made. As such, Cross-Complainant is entitled to the recovery of punitive and
exemplary damages in a sum subject to proof at trial.
GROUNDS FOR PRELIMINARY AND PERMANENT INJUNCTION AGAINST
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ALL DEFENDANTS
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52. Cross-Complainants reallege paragraphs 1 through 51, inclusive, and
incorporate them herein as though fully set forth.
53. Cross-Complainant is informed and believe and based thereon alleges
that Cross-Defendants will continue to hold themselves out to the public as
being the exclusive owners of the distribution rights to PCE's products and
services in Asia when in fact this is false as a result of the Cross-Defendants'
breaches herein described, all to the detriment and harm to Cross-Complainant
and its business reputation.
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FIRST AMENDED CROSS-COMPLAINT
54. Cross-Complainant alleges, therefore, that they are entitled to a
Temporary Restraining Order and Preliminary Injunction that Cross-Defendants and
each of them, and each of their respective agents, servants, employees and
representatives, and all persons acting by or under their authority, or in
privity, concert or participation with them, be enjoined and restrained during
the pendency of this action from doing or causing to be done, directly or
indirectly, any or all of the following acts or things:
(1) Holding themselves out, or otherwise communicating to members of the
general public, that they are the exclusive owners of the distribution
rights to PCE's products and services in Asia;
(2) Holding themselves out, or otherwise communicating to members of the
general public, that they are in any way or manner associated with
PCE's; and,
(3) From contacting any customer or potential customer of PCE and telling
that customer or potential customer that PCE cannot or may not be able
to perform under any contract for goods or services.
55. Cross-Complainant has no plain, speedy or adequate remedy at law for
the injuries currently being suffered in that the Cross-Defendants continue to
hold themselves out and otherwise communicated to members of the general public
that they are the exclusive owners of the distribution rights to PCE's products
and services in Asia; hold themselves out and otherwise communicate to members
of the general public that they are associated with PCE's; and contact customers
and potential customers of PCE and tell that customer or potential customer that
PCE cannot or may not be able to perform under any contract for goods or
services.
56. Unless restrained and enjoined from doing the acts herein allege,
Cross-Complainant will continue to suffer irreparable harm and damage to its
business and reputation.
GROUNDS FOR RESCISSION OF AGREEMENT
-----------------------------------
(Fraud and Lack of and Failure of Consideration)
57. Cross-Complainant realleges paragraphs 1 through 56, inclusive, and
incorporates them herein as though fully set forth.
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FIRST AMENDED CROSS-COMPLAINT
58. As set forth in Cross-Complainant's causes of action for Fraud -
Intentional Misrepresentation and Negligent Misrepresentation stated herein,
Cross-Defendants have committed fraud upon the Cross-Complainant.
59. Additionally, pursuant to the Agreement, Cross-Defendants were to pay
$30,000 to PCE for exclusive distributorship rights to specified PCE products in
specified territories as defined in Exhibit B to the Agreement, namely South and
North Korea. As additional consideration for the exclusive distributorship
rights, Cross-Defendants promised and agreed to purchase not less than the 1,000
units of product from PCE per quarter in each of the two years of the term of
the Agreement for a total of 4,000 units of product each year and promised to
actively promote PCE's products within the specified territory, which was to
include advertising, direct sales, public relations, participating in local
trade shows, conducting regular clinics on the use of the products, including
the product in local catalogues, and using their best efforts to PCE's products
within the specified territory.
60. Cross-Defendants have failed to purchase the minimum number of units
of product from PCE as required by the terms of the Agreement and have failed to
actively promote PCE's products within the specified territory. Consequently
there has been a complete failure of consideration under the Agreement which
entitles PCE to rescind the contract.
61. Further, Cross-Complainant is informed and believes and based thereon
alleges that the breaches of the Agreement described herein above were and are
so dominant and/or pervasive such that there has been a failure of consideration
and/or frustration of purpose of the undertaking.
62. Based on the foregoing, Cross-Complainant is entitled to a rescission
of the Agreement and return of all consideration paid to Cross-Defendants.
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FIRST AMENDED CROSS-COMPLAINT
63. Cross-Complainant intends for service of this cross-complaint to
constitute notice to Cross-Defendants of the rescission of the Agreement, its
offer to restore any consideration received by it thereunder, and its demand
that Cross-Defendants restore to it any and all consideration its had received
under the Agreement.
WHEREFORE, Cross-Complainant prays judgment against the Cross-Defendants
and each of them as follows:
1. Temporary Restraining Order, Preliminary Injunction and permanent
Injunction that Cross-Defendants and each of them, and each of their respective
agents, servants, employees and representatives, and all persons acting by or
under their authority, or in privity, concert or participation with them, be
enjoined and restrained during the pendency of this action from doing or causing
to be done, directly or indirectly, any or all of the following acts or things:
(a) Holding themselves out, or otherwise communicating to members of the
general public, that they are the exclusive owners of the distribution rights to
PCE's products and services in Asia;
(b) Holding themselves out, or otherwise communicating to members of the
general public, that they are in any way or manner associated with PCE's; and
(c) From contacting any customer or potential customer of PCE and telling
that customer or potential customer that PCE cannot or may not be able to
perform under any contract for goods or services.
2. For rescission of the "Memorandum of Understanding" and "Personal
Computing Environments International Distributor Agreement" ("Agreement").
3. For special damages in an amount to be proven at trial;
4. For general damages in an amount to be proven at trial;
5. For punitive and exemplary damages in an amount to be proven at
arbitration;
6. For prejudgment interest;
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FIRST AMENDED CROSS-COMPLAINT
7. For attorneys' fees and costs of suit; and
8. For such other relief which the Court deems just and proper.
DATED: August 5, 2004
ATKINSON, ANDELSON, LOYA, RUUD & ROMO
/s/ Scott K. Dauscher
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Scott K. Dauscher
Attorneys for DEFENDANTS PERSONAL
COMPUTING ENVIROMENTS, INC. and
ALLAN QUATTRIN
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FIRST AMENDED CROSS-COMPLAINT
MEMORANDUM OF UNDERSTAINDING
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This Binding Agreement is made as of September 17, 2003 between Personal
Computing Environments Inc. a Nevada company having offices at Palm Springs, CA,
("PCE") and Personal Computing Environments Korea Inc. (PCE Korea) a Korean
Company having offices at Yoi-Do, Seoul Korea.
1. 4000 Units sold through PCE Korea initiates new agreement for
exclusive distribution rights to Asia.
2. If Korea can produce units chosen for sale more cost effectively than
its parent PCE and all its Distributors will purchase unit from PCE
Korea as they would have been chosen for best quality and lowest
price.
3. PCE Korea will have optioned the exclusive rights for the Asian market
for a period of 12 months from the completion of a sellable product in
a box.
4. PCE will receive a royalty of $200 USD on the sale of PCE Korea's
first 4000 sales. PCE Korea will always be priced below PCE's lowest
wholesale selling price.
5. Upon signing of this MOU, PCE Asia is allowed upon written consent or
verbal from a Director of PCE Parent to sell anywhere in the World
until 4000 unit sales are reached.
6. Benjamen Hynes and Jimmy Kim are recognized for creating the
relationships with Hyunju Computers, AMD, Pavonine and Xenos and will
continue mediate these relations.
7. PCE will retain controls by keeping an open book policy on all private
enties and distributors in the group.
8. The new Entity PCE Asia will have exclusive distribution rights of the
all PCE products and services in the Asian region.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above indicated.
Personal Computing Environments:
Allan Quattrin Sept 18/03
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Name and Title Date
/s/ Allan Quattrin
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Signature
Personal Computing Environments Korea:
Benjamen Hynes President 9-19-2003
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Name and Title Date
/s/ Benjamen Hynes
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Signature
Jimmy H. Kim 9-18-2003
/s/ Jimmy H. Kim
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Ben Moglin 9-18-2003
/s/ Ben Moglin
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PERSONAL COMPUTING ENVIRONMENTS
INTERNATIONAL DISTRIBUTOR AGREEMENT
This Distribution Agreement (the "Agreement") is made as of September 18,
2003 between Personal Computing Environments, Inc, a Nevada company registered
as P--CE Computers, Inc., having offices at Palm Springs, CA, ("PCE") and PCE
Korea a Korean Company, a [country / state entity], having offices at Seoul,
Korea ("DISTRIBUTOR").
WHEREAS, PCE is in the business of marketing, producing and selling certain
goods under a distinctive trademark (the "PRODUCTS") described in Exhibit A;
WHEREAS, DISTRIBUTOR desires to purchase PRODUCTS from PCE or PCE approved
vendors to sell in the geographic area described in Exhibit B (the "TERRITORY")
and to advance PCE's interest in the TERRITORY; and,
WHEREAS, PCE and DISTRIBUTOR believe it is in their mutual best interests
to establish DISTRIBUTOR as PCE's primary DISTRIBUTOR in the TERRITORY.
NOW THEREFORE, the parties hereto agree, in consideration of the foregoing
premises and the conditions and covenants and representations contained herein
as follows:
1. APPOINTMENT AND AUTHORITY OF DISTRIBUTOR
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1.1 Appointment and Territory: Subject to the terms of this Agreement, PCE
appoints DISTRIBUTOR, and DISTRIBUTOR accepts appointment, as the
exclusive distributor of the PRODUCTS with responsibility for sales of
the PRODUCTS in the TERRITORY. DISTRIBUTOR is authorized to sell the
PRODUCTS, at prices and on terms determined by the DISTRIBUTOR, only
to DEALERS (as described below) in the TERRITORY.
1.2 Consideration: In exchange for being appointed as the exclusive
distributor in the TERRITORY, and in addition to all other monies due
and payable to PCE under this agreement, DISTRIBUTOR shall remit
$30,000.00 [U.S. Dollars] upon execution of this Agreement. Exhibit D;
1.3 Exclusivity: PCE hereby grants DISTRIBUTOR the right to use the entity
name "PCE Korea" in its dealings with third parties. DISTRIBUTOR'S
right to use the name "PCE Korea" shall be concurrent with its rights
under this Agreement, and shall be continued if DISTRIBUTOR continues
to meet minimum purchase requirements described under Exhibit D.
DISTRIBUTOR shall provide PCE with a fully executed package of all of
the documents required under Korean law to either cancel or transfer
the ownership of the name "PCE Korea" to PCE upon the termination of
this Agreement. PCE shall maintain possession of the transfer package
and is authorized to file such documents in Korea any time after this
Agreement is terminated.
1.4 Indemnification: DISTRIBUTOR will indemnify, defend and hold PCE and
its directors, officers, agents and employees harmless from any and
all liabilities, claims, obligations, suits, judgments and expenses
whatsoever, including court costs and attorneys' fees, which PCE may
incur or which may be asserted against PCE, and which arise or occur
with respect to the operation of business as it relates to this
Agreement. Such indemnity shall extend to all Licensed Products,
notwithstanding the approval of samples thereof by PCE, and to any
and all liabilities and claims incurred after the termination of this
Agreement but which are based on acts of DISTRIBUTOR or events of
which proximate cause arose during this Agreement. PCE shall have the
right to defend any such action or proceeding with attorneys of its
own selection. Visa Versa for the Distributer ie. Patent infringement.
1.5 Territorial Limitation: DISTRIBUTOR shall not advertise, sell, lease
or ship the PRODUCTS outside the TERRITORY without the prior written
consent of PCE, which consent may be given or withheld at the
discretion of PCE. Any unauthorized sale shall be a material breach of
this Agreement.
1.6 No Competition
a. In the event DISTRIBUTOR directly or indirectly owns or acts as
an officer, director, employee or paid consultant to any company,
firm, business or other entity in direct competition with PCE,
PCE shall have the option to terminate this agreement and all
DISTRIBUTOR's rights hereunder to use the marks and Licensed
Products after first providing DISTRIBUTOR thirty days written
notice. Such termination does not constitute the default of
DISTRIBUTOR or PCE under this agreement.
b. So long as DISTRIBUTOR uses the trade name "PCE Korea,"
DISTRIBUTOR agrees not to sell within the Territory goods
competing with Licensed Products without prior consultation and
written approval from PCE.
1.7 Promotion Efforts: DISTRIBUTOR will actively promote the PRODUCTS within
the TERRITORY, which activities shall include without limitation the
follwing:
a. Advertising;
b. Direct sales;
c. Public relations;
d. Participating in appropriate local trade shows;
e. Conducting regular clinics on the use of the PRODUCTS;
f. Including the PRODUCTS in DISTRIBUTOR'S local catalogues; and
g. Using its best efforts to develop the PRODUCT market in the TERRITORY,
including, but not limited to catering to specific markets targeted by
PCE, informing customers and potential customers of the availability
and desirability of the PRODUCTS, and promptly responding to all
inquiries, questions, correspondence and orders.
h. All advertising, merchandising and promotional materials used by
DISTRIBUTOR (or portions thereof relating to the PRODUCTS) to
distribute the PRODUCTS must be approved by PCE prior to the final
production or placement of such materials. This includes but is not
limited to copy, scripts, comps, proofs, press releases, and
advertising materials.
i. DISTRIBUTOR shall make available to PCE all marketing, promotion,
advertising, and merchandising materials and assets for use by PCE in
the United States and other regions and countries to promote PCE
products and accessories. Any out-of-pocket expenses for copy,
transfer or shipping of those assets will be the responsibility of
PCE.
j. DISTRIBUTOR is required to submit a marketing and business plan to PCE
upon contract agreement, and quarterly marketing activity reports
thereafter.
k. PCE shall provide DISTRIBUTOR with reasonable quantities of marketing
and merchandising information and materials as well as reasonable
quantities of brochures, catalogues, photographs, instructional
2
material, advertising literature and other PRODUCT data, with all such
materials printed in the English language. Any modification or
translation of the material provided by PCE shall be subject to PCE's
prior written approval.
2. TERM AND TERMINATION
--------------------
2.1 Term: The term of this Agreement is two (2) years beginning July
22, 2003 and ending July 21, 2004 or when the 4000 units
sold is reached. Then PCE Asia is commenced.
2.2 Minimum Purchase: DISTRIBUTOR shall purchase not less than the minimum
net value of PRODUCTS as set forth in Exhibit C from PCE
through a quarterly purchase order. If DISTRIBUTOR fails to
purchase the minimum amount set forth for any period, PCE
may, at its discretion and without penalty, immediately
terminate this Agreement by written notice to DISTRIBUTOR;
provided, however, that in the case of PCE's termination of
this Agreent for DISTRIBUTOR's failure to meet minimum
purchase requirements, DISTRIBUTOR's shall be discharged
from any financial obligations to PCE relating or pertaining
to minimum purchase requirements.
2.3 Termination by Notice: This Agreement may be terminated without
penalty by either party by providing 60 days prior written
notice to the other party.
2.4 Termination for Cause: Either party may, without, penalty, terminate
this Agreement upon written notice to the other party in
either one of the following events:
a. The other party breaches this Agreement and such breach
remains uncured for 15 days following written notice of
breach by the non-breaching party, unless such breach
is incurable in which event termination shall be
immediately upon receipt of written notice; or
b. A petition for relief under any bankruptcy law is filed
by or against the other party, or the other party makes
an assignment for the benefit of creditors, or a
receiver is appointed for all of a substantial part of
the other party's assets, and such petition, assignment
or appointment is not dismissed or vacated within 60
days.
2.5 Ownership Transfer: PCE shall have the right to terminate this
Agreement, without penalty, by written notice to DISTRIBUTOR
in the event of a transfer of ownership of DISTRIBUTOR,
whether by sale of stock, sale of assets, merger, operation
of law or otherwise. For the purpose of this section, a
transfer of ownership shall include (a) the sale or transfer
of twenty percent (20%) or more of the voting securities or
assets of DISTRIBUTOR; (b) the admission or removal of a
partner of DISTRIBUTOR; (c) a change in the management of
DISTRIBUTOR;
2.6 Effect of Termination: Termination of this Agreement shall not relieve
or release either party from making payments that may be owed to the
other party under the terms of this Agreement. In addition, upon
termination, DISTRIBUTOR shall, at PCE's request, return all
advertising, promotional and other materials in its possession
relating to the PRODUCT.
3. EXHIBITS: All exhibits attached hereto are hereby incorporated by
reference.
3
4. PCE'S REPRESENTATIONS WARRANTIES TO DISTRIBUTOR.
4.1 PCE hereby represents and warrants to DISTRIBUTOR that the PRODUCTS
and the use, manufacture, importation, or sale thereof as permitted
hereunder will not infringe upon or violate any copyright or trade secret
of any third party.
4.2 Indemnity: PCE will defend, at its expense, and will indemnify
DISTRIBUTOR against any loss, cost, expense or liability arising out of any
claim by a third party against DISTRIBUTOR asserting or involving a breach
of the representation and warranty made in Section 4.1 above. PCE's
obligations under this Section shall be contingent on DISTRIBUTOR's
providing to PCE (i) prompt written notice of such claim, (ii) sole control
and authority over the defense and settlement thereof, and (iii) reasonable
information and assistance to settle and/or defend any such claim or
action.
4.3 If an injunction or order is obtained against DISTRIBUTOR's use or
distribution of any PRODUCTS, or if PCE determines that any PRODUCT is
likely to become the subject of a claim of infringement or violation of a
patent, copyright or trade secret of a third party, PCE may (but need not),
in its sole discretion, (a) procure for DISTRIBUTOR the right to continue
using such PRODUCT, or (b) replace or modify the same so that it becomes
noainfringing provided such modification or replacement does not materially
and adversely affect the specifications for or the use or operation of the
PRODUCT, or (c) accept the return of inventory and refund the purchase
price, manufacturing cost and/or any royalties paid hereunder with respect
thereto.
5. ADDITIONAL CONTRACT TERMS: Following the launch of PCE Korea in August, PCE
will furnish additional contractual terms to be executed with DISTRIBUTOR.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above indicated.
DISTRIBUTOR:
- ------------
Jimmy H. Kim /s/ Jimmy H. Kim 18 Sept 2003
- ------------------------------- ---------------
[name and title] Date
Ben Hynes President Sept -18 -03
- ------------------------------- ---------------
[name and title] Date
/s/ Ben Hynes
PERSONAL COMPUTING ENVIRONMENTS:
- --------------------------------
45-630 Citrus Street, Suite E
Indio, CA 92201
/s/ Ben Moglin Sept 18/03
- ------------------------------- ---------------
[name and title] Date
Ben Moglin
4
Allan Quattrin Pres/CEO Sept 18/03
- ------------------------------- ---------------
[name and title] Date
/s/ Allan Quattrin
5
EXHIBITS:
A. Products: All authorized PCE products and accessories
B. Territory: Exclusive rights to South and North Korea. Can distribute in
following countries, but without exclusive rights ownership; including but
not limited to Australia, China, Japan, India, Malaysia, Philippines,
Thailand.
C. Minimum Purchase Requirements: 1,000 units per quarter for contract years
one and two
Contract Year. Total Minimum Amount
-------------- --------------------
First 4,000
Second 4,000
D. $30,000 has been paid to PCE from PCE Korea.
6
PROOF OF SERVICE
(Code Civ. Proc. Section 1013a(3))
STATE OF CALIFORNIA, COUNTY OF LOS ANGELES
I am employed in the County of Los Angeles, State of California. I am over
the age of 18 years and am not a party to the within action; my business address
is 17871 Park Plaza Drive, Suite 200, Cerritos, CA 90703-8597.
On August 9, 2004, I served the following document(s) described as FIRST
AMENDED COMPLAINT on the interested parties in this action as follows:
by placing a true copy thereof enclosed in sealed envelopes addressed as
follows:
Reuben D. Nathan, Esq. Attorneys For Plaintiffs and Cross-
AZIMY & NATHAN, LLP Defendants
18500 Von Kaman Avenue, Suite 500
Irvine, CA 92612
[X] BY MAIL: I deposited such envelope in the mail at Cerritos, California. The
envelope(s) was mailed with postage thereon fully prepaid. I am readily
familiar with the firm's practice of collection and processing
correspondence for mailing. It is deposited with U.S. postal service on
that same day in the ordinary course of business. I am aware that on motion
of party served, service is presumed invalid if postal cancellation date or
postage meter date is more than one day after date of deposit for mailing
in affidavit.
[_] BY OVERNIGHT COURIER: I sent such document(s) on August 9, 2004, by with
postage thereon fully prepaid at Cerritos, California.
[_] BY FAX: I sent such document by use of facsimile machine telephone number
(562) 653-3333. Facsimile cover sheet and confirmation is attached hereto
indicating the recipients' facsimile number and time of transmission
pursuant to California Rules of Court Rule 2008(e). The facsimile machine I
used complied with California Rules of Court Rule 2003(3) and no error was
reported by the machine.
[_] BY PERSONAL SERVICE: I delivered such envelope by hand to the offices of
the addressee(s).
I declare under penalty of perjury under the laws of the State of
California that the foregoing is true and correct.
Executed on August 9, 2004, at Cerritos, California.
/s/ Susan Jaragosky
--------------------------------
Susan Jaragosky
- --------------------------------------------------------------------------------
FIRST AMENDED CROSS-COMPLAINT