EXHIBIT 10.3
AGREEMENT OF PRODUCT SUPPLY
The "BUYER" : Amway Korea, Ltd.
The "VENDOR" : ▇▇▇▇▇▇ Science
This is an agreement between the BUYER and the VENDOR, regarding the supply and
delivery of the VENDOR's products.
ARTICLE 1. GENERAL RULES
1. The purpose of this agreement is to specify rights and obligations
regarding the product purchase order from the BUYER the product supply
by the VENDOR.
2. The coverage of the agreement is as stated in the attached product
specifications.
3. The BUYER and the VENDOR may have a separate agreement as an addendum
to this document. The addendum will be regarded as a part of this
agreement, with equivalent effect.
4. This agreement is effective until November 11, 2005.
ARTICLE 2. PRODUCTS AND PRICE
1. This agreement is regarding the following products that the VENDOR
manufactures and supplies:
(Currency: Korean won, plus applicable tax)
Product number Product name Unit price
-------------- ------------ ----------
LSP-0565K Cholfree Cooking Oil 4,830
LSP-0616K Cholfree Oil Gift Set 10,020
2. The unit price of the products cannot be changed during the agreed
contract period. After this period, the prices may be changed as both
parties agree, according to the manufacturing cost changes.
ARTICLE 3. DURATION OF THE PRODUCT SUPPLY
Duration of the initial product supply contract is one year from the
agreement date. The contract may be extended after this period, as both
parties agree.
ARTICLE 4. DESTINATION OF THE PRODUCT DELIVERY
The VENDOR will deliver the products to the place where the BUYER
designates. The VENDOR is responsible for shipping and handling costs.
ARTICLE 5. DELIVERY METHOD
1. The VENDOR should deliver the products prior to the delivery date
stated on each purchase order. However, the delivery date may be
changed at the BUYER's request.
2. Appropriate measures should be taken during shipping and handling for
safety of all products delivered. The BUYER may request assistance
regarding packaging and shipping of the products. However, the VENDOR
is solely responsible for all arrangements and costs regarding the
product packaging and shipping. The VENDOR is responsible for any
product damages during the delivery and any losses occurs to the BUYER
as a result of such damages.
3. The VENDOR should notify the BUYER upon the delivery completion.
4. The delivery should be made according to the BUYER's specification,
regarding the box size, number of products per box, shipping labels,
etc.
5. Lead-time for each product will be decided as both parties agree.
ARTICLE 6. PAYMENT METHOD
The BUYER will make the payment for the products delivered within 30 days
of each delivery completion, in cash. The payment method may be changed as
both parties agree.
ARTICLE 7. RETURNS
All returns will be made according to the BUYER's product return policy.
ARTICLE 8. ADDITIONAL COSTS
The VENDOR cannot request reimbursement for additional costs, except for
the agreed payment amount specified in the Article 2 of this agreement.
ARTICLE 9. DELEGATION OF RESPONSIBILITY
1. The VENDOR cannot delegate, convey, or transfer the rights and
responsibility stated herein to a third party, without an explicit
permission from the BUYER.
2. The BUYER is entitled to an exclusive use of the trademark rights for
the products supplied by the VENDOR, for two years after the product
supply contract expiration. For this period, the BENDOR should obtain
a prior permission from the BUYER for the use of the trademark rights
with any other parties.
ARTICLE 10. INSPECTION OF THE PRODUCTS
1. The BUYER will inspect the products supplied by the VENDOR upon
delivery. If the products fail the inspection, the VENDOR should
redeliver the products. The VENDOR is responsible for any delays in
delivery resulting from such inspection failure.
2. The product delivery is regarded as completed after the VENDOR
delivered the products to the destination of the BUYER's designation
and the delivered products pass the BUYER's inspection. The VENDOR
cannot object to the results of the BUYER's inspection. Additionally,
the VENDOR should submit a ▇▇▇▇ of taxes dated with the delivery
completion date, to the BUYER's accounting department.
3. Regarding the product defects found after the completion of the
delivery, the BUYER may request full exchanges at no charge, if both
parties agree such defects are due to the VENDOR's error during
manufacturing.
4. If damages in packaging occur to the products that the BUYER
distributed and were returned, the VENDOR will provide additional
packaging materials at no charge.
ARTICLE 11. SUBCONTRACTING
1. The VENDOR cannot delegate the manufacturing or supply of the products
to a third party subcontractor without an explicit permission from the
BUYER.
2. If the BUYER finds the subcontractor inappropriate for the tasks
assigned, the BUYER may demand the VENDOR to replace the
subcontractor.
ARTICLE 12. COMPENSATION FOR DELIVERY DELAYS
The VENDOR will compensate for delivery delays caused by reasons other than
the BUYER's faults or natural disasters and unavoidable accidents, and
delays caused by inspection failure specified in the Article 10. The
compensation amount is 3/1000 of the total payment amount, for each day of
the delay.
ARTICLE 13. PAYMENT DEDUCTION DUE TO DELIVERY DELAYS
In case the VENDOR owes the BUYER any delivery delay compensations and
other indemnities, the BUYER deduces the amount from the payment for the
products.
ARTICLE 14. TERMINATION AND CANCELLATION OF THE CONTRACT
The BUYER may cancel or terminate the product supply contract in the
following cases:
1. The VENDOR fails to complete the delivery within 15 days of agreed
delivery deadline, or after failure of an inspection
2. The products supplied do not match the product description as stated
in the attached specifications
3. The BUYER decides that the VENDOR is not capable of completing the
delivery before the agreed delivery deadline
4. A note or check issued by the VENDOR is identified as dishonored; or
the VENDOR is under an order for provisional seizure, provisional
disposition, property attachment, liquidation, or other compulsory
execution; or the BUYER decides that there is a possibility of such
compulsory execution for the VENDOR
5. The VENDOR fails to fulfill the terms and conditions in the agreement
6. The VENDOR receives more than two warnings from the BUYER, due to
dissatisfaction of the delivery, product quality, or services provided
by the VENDOR
7. Termination of the contract based on the above conditions (clauses
1-6) does not affect the VENDOR's indemnity obligations.
8. If the BUYER decides to discontinue the products, the BUYER may give a
written notice to the VENDOR, and terminate the contract after one
month from the date of the notice.
ARTICLE 16. INDEMNITY
1. The VENDOR is responsible for quality and performance of the products
supplied according to this agreement. The VENDOR should compensate for
any losses that occur to the BUYER, or any indemnity the BUYER is
obliged by a third party, resulting from defects of the products
supplied by the VENDOR.
2. The VENDOR is responsible for any civil and criminal indemnities
resulting from defects of the products supplied by the VENDOR.
3. The VENDOR guarantees and is responsible for such guarantees that the
products will be supplied in compliance with the quality requirements
due to BUYER's requests and other business regulations. If defects are
found in the products supplied by the VENDOR, the VENDOR should
replace, exchange, repair, or substitute the defective products with
the equivalent.
4. The VENDOR guarantees that all products supplied by the VENDOR are
free from any violations of a third party's intellectual property
rights. The BUYER is exempt from indemnities resulting from such
violations.
5. The VENDOR guarantees that it has taken sufficient measures to ensure
safety of product users, through exhaustive inspections on product
design, material and parts, supervision of manufacturing processes,
equipment testing, announcements of safety precautions and warnings,
etc., in order to prevent any financial losses, bodily injuries or
life losses due to defective products.
6. The VENDOR should maintain all documentation and data regarding
product specifications, design, manufacturing processes,
experimentation, evaluation, material and part inspections, production
supervision, etc., for five years from the last product
delivery date, and should submit original copies of such documentation
immediately at the BUYER's request. However, the required period may
be shortened with the BUYER's permission.
7. In case of lawsuits filed against the BUYER due to the product
defects, the VENDOR should provide all evidences as the BUYER
requests, at the VENDOR's cost.
8. The VENDOR is responsible for any legal verdicts against the BUYER and
monetary indemnities resulting from such verdicts due to the product
defects other than those caused by the BUYER's fault, and should pay
the BUYER the equivalent amount and all related costs regarding the
lawsuits including law consultation fees, at the time of confirmation
of such verdicts or execution orders. However, the BUYER should obtain
the VENDOR's permission prior to any reconciliation or mediation with
the accusing party.
9. The VENDOR is responsible for any reputation damages occurred to the
BUYER due to the product defects other than those caused by the
BUYER's fault, and in case the BUYER spends reasonable costs for
advertisement to recover such damages, the VENDOR should compensate
the BUYER with the equivalent amount of the advertising expenses.
10. The previous clauses remain effective after the contract expiration,
as long as the corresponding products are being distributed.
ARTICLE 17. RESPONSIBILITY FOR CONFIDENTIALITY
1. The BUYER and the VENDOR should not reveal any information about each
other obtained through the agreed contract to a third party, or use
such information for self or a third party, during and after the
duration of the agreed contract.
2. Any documents provided by the BUYER or the VENDOR to each other should
not be reproduced or transmitted without the other party's permission.
ARTICLE 18. RULING LAWS AND COURTS
The BUYER and the VENDOR agree that all terms and conditions set out herein
are ruled by Korean laws and regulations, and any disputes stemming from
this agreement and related obligations will be brought to Seoul District
Court.
ARTICLE 19. MISCELLANEOUS
1. This agreement will set into effect upon signing.
2. Both parties should collaborate to resolve disputes regarding the
matters that are not set out in this document, and refer to the
commercial law, commercial practice law, and customary regulations in
commerce and business.
3. Two copies of the document will be produced and signed by both the
BUYER and the VENDOR. Each party will keep one copy of the agreement.
4. Both parties will discuss and agree upon any product price changes.
Agreement date: November 11, 2004
The BUYER: Se-▇▇▇ ▇▇▇▇, CEO, Amway Korea Ltd.
Fabric ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇-▇▇ ▇▇▇▇▇▇-▇-▇▇▇▇,
▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇, ▇▇▇▇▇
The VENDOR: ▇▇▇▇▇-▇▇▇▇ Noh, CEO, ▇▇▇▇▇▇ Science
▇▇-▇ ▇▇▇▇-▇▇▇▇, ▇▇▇▇▇▇-▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇