Exhibit 10.2
Chery Automobile Parts Purchase Contract
Party A: SAIC Chery Moto Co., Ltd.
Party B: JingZhou HengLong Automotive Parts CO., Ltd.
The Place of Sign:Wuhu The Date of Sign: Oct. 13th, 2003
PREFACE This agreement is made and effective on this 13th day of Oct. 2002
at City Wuhu. Between: SAIC Chery Moto Co., Ltd. (hereinafter referred to as
"Party A"), a Chinese Corporation organized and existing under the laws of China
and registered legal address as Xx. 0 Xxxxxxxxx Xxxx, Xxxxxxxxxxx Xxxx, Xxxx,
Xxxxx Xxxxxxxx.
Henglong Automotive Parts Co., Ltd. (hereinafter referred to as "Party B"),
a Corporation organized and existing under the laws of China and registered
legal address as Xx. 0 Xxxxxxxx Xxxx Yuqiao Economic Development Zone, Jingzhou,
Hubui. Province.
"The Party B" are manufacturing products refer to appendix 1 (hereinafter
referred to as Contract Products) and willing to sell to Party A.
"The Party A" is willing to buy the Contract Products manufactured by "The
Party B".
"The Party A" and "The Party B" should honor the signed "Supply agreement
of assembled units and materials" Subject to above items, both parties agreed
the following items and reach the agreement as follows:
Clause 1 Purchase Order:
1. "The Party A" should purchase the goods from "The Party B" via the purchase
order. The purchase order as a formal contract, it aimed to confirm the name,
price, quantity and destination of contract products. The purchase order will
come into force after signed by authorized person of both parties. The signed
purchase order becomes a part of the contract and have the same legal power as
the contract (referred to Appendix 1).
2. The purchase order is also acting as a delivery timetable by "The Party A" to
"The Party B". The aim of the purchase order is for "The Party B" to fulfills
the order in terms of delivery time and quantity. The signed purchase order
becomes a part of the contract and have the same legal power as the contract
(referred to Appendix 2).
3. The Party B should deliver the contract products to the destination location
specified by The Party A. The delivery time means the date of goods delivered to
The Party B's factory floor.
4. In order to guaranty the balanced production of The Party A. The Party B
should have at least half month of inventory to guaranty The Party A's
production .
5. The Party A have the rights to change/cancel the quantity of the purchase
order from the time to time according Party A's market and progress situation.
The above-mentioned change are based on quality, delivery time and after sales
service by Party B.
6. Party B should supply the contract products to Party A for their production
and after sale products. Party B should follow the specification specified by
Party A and it is not allowed to supply contract products and technical
information owned by Party A to third party by any way without previous agreed
by Party A. Otherwise Party A has the rights to claim penalty of RMB$500,000.00.
Clause 2 Modification of Technical Issues
Party A should inform any technical modification to Party B immediately. If
the mentioned modification will effect the jig and fixture, both parties should
negotiate with the increased cost.
Clause 3 Quality of the Contract Products
1. All the contract products should meet the specification of government quality
control standard and also meet the current quality control by Party A. The
quality of production process should final proved by Party A.
2. If the contract products are required a audit by Party A, then Party B should
supply the required samples to Party A free of charge.
3. If the location, process, materials and vendors have any change by Party B,
Party B should inform Party A in advance two months before it happens. If Party
B fail to inform Party A then Party A have the rights to claim the penalty of
RMB$100,000.
4. Party B should delivery the good contract products to Party A. If any
unqualified contract products have been delivered to Party A then Party B should
replace the faulty products within specified time and bear all the lose.
5. The faulty of vendor's quality refer to "Auto parts supply agreement".
Clause 4 Package of Contract Products
1. The package of contract products used by Party B should proved by Party A and
both parties should sign the agreement of Products Package
2. Part B should meet the package specifications specified be Party A except
specified otherwise.
3. Part B should meet the package specifications specified be Party A for spare
parts and after sale service parts except specified otherwise.
4. The package should withstander any damage during the shipment to protect the
contract products.
5. Part A have no reasonability for return the empty package, if any should sign
the "Return package agreement"
Clause 5 Delivery
1. If the Party B have the accident during delivery, Party B should take the
fast methods to guarantee the delivery to avoid the stoppage of Party A's
production.
2. Party B delivery contract products should supply with "packing list"
specified part number, name, quantity, number of boxes, code, production date,
order number and batch number...etc. The test report and quality certificate
should be attached with delivery. If Party B failed, it will apply a penalty of
5% of price supplied.
3. Party B have the responsibility of shipment, If any damage or lose happened
during shipment, Party B should make replacement/recover the contract products
and pay the lose to Party A.
4. Party A found any mis-assembly, missing parts during receiving the contract
products should inform Party B for exchange or replace. Party B should bear all
the cost.
5. Party A found any defected parts should inform Party B in writing. Party B
should fix all the defected parts within specified time and bear all the cost.
6. Party B should pay the direct lose because of late delivery.
7. If Party B can not meet the specified delivery time, quantity and quality
specified in the contract caused Party A stoppage of production or force Party A
alternate the supplier, Party B should pay all the lose.
Clause 6 Payment
1. Party A should pay the price of "purchase order" to Party B.
2. The period of payment: According the "Table of Inventory", Party A should
make a payment of 90 days via bank. It required Party B issue the invoice. If
Party B delivered the contract products in advance, Party A should make the same
payment period through the bank.
3. Party A have the rights deduct the amount of defect parts, missing parts and
late delivered parts.
4. Party B should offer the real accounts to Party A. unless there is Party A to
agree in writing in advance, Party A does not take the obligation to pays the
third party the payment for goods.
5. Party B should provide the special invoices of increasing taxes with standard
form. Party B should mail by express or send directly the invoices to appointed
purchasing department of Party A and require "invoice receipt". Otherwise cause
payment overdue or lose the invoice, the consequence is undertaken by Party B.
Chapter Seven Product Duty
1. If the third party accuse Party A of the defect contract products cause
automobile damaged or personal/property lossed, which the products was offered
and installed by Party B, and claim for compensation or prosecute, then Party A
should inform Party B with the fax or the telephone immediately .
2. Party B should participate in the investigation, technical inspection,
technologic arbitrage and offer all essential/necessary information during the
above-mentioned arbitrate. If the lawsuit takes place, the- both sides should
participate in dealing with arbitrate together .
3. The costs relevant to claim compensation of products duty should undertake by
the Responsibility side.
4. Both parties should determine the reason of the claim compensation basis of
information, appeal and judgment (If have).
5. If the product responsibility totally caused by Party B's fault, then Party B
should agree and undertaken that Party A is free of bearing all expenses related
to what the third party put forward claim and lawsuit, Including attorney fee,
court costs, etc.
6. If the product responsibility totally caused by Party A's fault,, then Party
A should agree and undertaken that Party B is free of bearing all expenses
related to what the third party put forward claim and lawsuit, Including
attorney fee, court costs, etc.
7. If the products responsibility imputed to this both sides. Both sides should
consult each other on how to state the claim most effectively.
8. Responsibility should include:
The compensation of the damage of the automobile or its parts
Bodily injury and property loss that the third party suffered; other costs that
relevant to claim compensation and lawsuit, such as: Investigation fee,
technical inspection, technologic arbitrate cost, attorney fee, court cost.
Chapter Eight Confidentiality
1. Have not been agreed in writing in advance, Party B should not disclose any
technology from Party A to the third party.
2. Party B should get the permission from Party A if there is necessary to offer
the technology of Party to Subordinate supplier who will also take the
confidentiality obligation.
3. Party B should require its worker to take the corresponding confidential
obligation in written form.
4. Party A also should take the confidential obligation with the technology
which relevant to develop parts of contract.
5. The supplier of party B have the right to use the technology that Party A
offered within this contract period, and it will not bring the transformation of
the technological ownership.
Chapter Nine Industrial Property Right
1. Party B should bear all the responsibility and claim compensation, if use the
contract parts purchased according to this contract terms infringe the third
party's industrial property with responsibility of Party B
2. Party B should guarantee that Party A and its customer do not bear any
responsibility with above-mentioned industrial properties . The following case
will not belong to the regulation if Party B produce and supply contract
products with the drawing of Party A offered and it is impossible to know that
has already infringed the third party's industrial property. In case of this,
Party A should guarantee that Party B will not get any claim compensation or
loss from the third party
3. When Party A put forward the request, Party B should inform Party A as to all
the things of industrial property related to contract products, No matter these
industrial properties belong to Party B , or is permitted using, or any
industrial property given special approval to.
4. The trade xxxx of Gmcherry should only used for supplying Party A with
production or after sale.
Chapter Ten The Responsibility for Breach of Contract
1. Party B should change or repair the defect one as soon as possible
immediately if supplies defect products and undertake the responsibility of
overdue supply.
2. Party B should supply contract products according to Party A's requirement.If
supply quantity less than Party A's requirement supplies, Party B should
supplying the remaining parts, and the remaining parts will deal with overdue
supply.
3. Party B should bear the costs that Party A take the rational measures for
preventing or reduce the fault loss from Party B .
4. If Party A will claim the compensation with the responsibility of Party B
according to above-mentioned regulations, Party A should inform Party B and
offer them suitable period to investigation.
5. If Party B exceed the time limit to Party B or break the contract, the
delinquent party should pay penalties to the other according to the regulation
of" contract law of the People's Republic of China".
6. If one party have break the contract as following shows, the other party have
the right to rescission of the contract and claim the economic losses of
compensation.
Party B terminate the contract unilaterally without reason, stopping to make and
supply the contract products or give the contract relevant right to the third
party without the permission of Party A.
Party B violate the contract (Clause 1,item 6) offer the contract products to
the third party
Party B have supplied constantly the defect contract products
Either party violate the regulation of Clause 8.
Party A terminate the contract unilaterally without reason, refuses Party B to
supply the contract parts midway.
Chapter Eleven Force Majeure
1.The either party should bearing any obligation or responsibility, If fail to
fulfill a contract during force majeure occurs, but still comply with the other
clause of the contract. Both party should try their best to solve the matter
properly through the negotiation.
2. The party who suffer from the force majeure should inform another party
immediately by mail or fax or telegram, and have the obligation to prove the
influence from force majeure, duration and the influence of contract.
Chapter Twelve Contract Duration
The contract will become into force after stamping both parties company seals.
Contract duration is one year. Namely from Jan. 1th, 2003 to Dec. 31th, 2004
With the Party A cooperate with Party B lasting and stability , This contract
will automatically prolong if the either party has not propose terminate the
contract after expire in three months in this contract.
After this contract is terminate, Party B should stop the production of contract
products at the same time , And return all technological files to Party A .
Chapter Thirteen Arbitration
All disputes in connextion with the contract or execution thereof shall be
settled friendly through negotiations. In case no settlement can be reached ,the
case may then be submitted for arbitration according to " contract law of the
People's Republic of China". The arbitration shall take place in Wuhu city,
Anhui province.
Three copies of the contract in Chinese. Two for Party A and one for Party B.
Party A: SAIC Chery Moto Co., Ltd. Party B: JingZhou HengLong
Automotive Parts CO., Ltd.
Representative: Representative:
Appendix 1
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Part Description Part No. Unit Price Quantity Extension
------------------------- --------------- ------------ ---------- -------------
P/S Gear assembly A11-3400010BC 1150 45000 51750000.00
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Mechanic Steering Gear A11-3400010 630 1200 756000.00
Assembly
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High Pressure Hose A11-3406100 45 10000 450000.00
Assembly
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P/S Gear assembly S11-3400010BB 790 7000 5530000.00
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58486000.00
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