I/OMAGIC CORP
LUNG HWA ELECTRONICS AGREEMENT
<DOCUMENT>
<TYPE>EX-10.18
<SEQUENCE>7
<FILENAME>doc6.txt
<DESCRIPTION>LUNG HWA ELECTRONICS AGREEMENT
<TEXT>
                                    Agreement

This  Agreement  is  made  on  the  date  of  January  23,  2003.
                                              -------------------

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
       ---------------
IOMC  instructs  LHE  to purchase consumer/computer products from its designated
suppliers  for  IOMC  in  the  territory  of  the  northern  America.

2.     Purchase  Order
       ---------------
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
       --------------------
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
       --------------------------------
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.

<PAGE>

5.     Credit  Line
       ------------
US$10  million

6.     Payment:
       -------
(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
       ---------------------
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
       ------------
If IOMC cancels the Purchase Order, the cancellation penalty would depend on the
supplier's  request  stated  on  quotation  or  contract.

9.     Returns
       -------
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

<PAGE>

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
     --------
IOMC  indicates  the  shipping  way  on  Purchase  Order

11.     Non-Competition
        ---------------
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
        --------
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
        -------------------
     LHE  shall fax a statement indicating all open items to IOMC within 15 days
after  the  end  of  each  month.

13.     Applicable  Law
        ---------------
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



</TEXT>
</DOCUMENT>
