Exhibit 10.1
Serial Number: 2003H-0119
-----------
FUTIAN Automobile Parts Purchase Contract
Party A: BeiQi FuTian Automobile CO., Ltd.
Party B: JingZhou HengLong Automotive Parts CO., Ltd.
The Place of Sign:Beijing The Date of Sign:Nov. 6th,2002
Catalogue
Chapter One Commercial Clause
Chapter Two Technology Clause
Chapter Three Quality Clause
Chapter Four Service Clause
Chapter Five The Selection Clause of Products After Stop-Supply
Chapter Six The Clause of Intellectual Property
Chapter Seven The Dispute and Other Clauses
Appendix 1 The list of Parts purchase
Party A and Party B through friendly negotiation and mutual benefit sign an
agreement as follows:
Chapter One: Commercial Clause
1.1 Party B should be clearly indicate the part name, type of model, budget
price, estimated quantity, batch discount rate to Party A (referred to
attachment 6 - "List of Material of unit"
1.2 Based on `share the benefit and share the risk', Party A will adjust the
unit price subject to demand of market. Party B should co-operate with Party A's
lower cost strategy to honor the contract after adjusted price.
1.3 The methods of Delivery:
1.3.1 Transportation: by truck.
1.3.2 Packing: Party B should specify the packing methods according Party A and
prove by Party A. Packing methods: Plastic bag, carton box, wooden box,
container, steel frame, steel box or others . For the cost of returned packing,
it should be negotiated by both parties.
1.3.3 Shipping destination: Party B should deliver to the location indicated by
Party A.
1.3.4 Shipping cost: The cost of shipment should bear by Party B.
1.4 Payment:
1.4.1 The way of payment: By Xxxx of Exchange by bank check.
1.4.2 The date of payment: Based on inventory of store of Party A and deducting
the quality ensuring deposit. 1.4.3 Party A will be based on quarter quote to
calculate and adjusting the amount of quality ensuring deposit quarterly.
1.5 Party A will inform Party B the quantity and delivery date monthly in
writing. Party B should have the delivery ability 100%.
1.6 i(degree)Estimated quantity of supply" of the contract, it means annual
indication, Party A have rights to adjust actual quantity subject to demand of
market. Party B should make production plan based on Party A's plan.
1.7 If Party B fail to supply to Party A agreed by the contract, Party B have
the rights to adjust the quantity or cancel the supply. Party B should pay all
losses to Party A.
1.8 If Party B cannot meet the supply schedule by any reason, Party B should
inform Party A in advance one month. If the reason is identified as accident or
force majeure, then Party B should inform Party A in writing or by phone to
explain the situation and possible shipment schedule.
1.9 If Party B does not meet shipment required by Party A then Party A have the
rights to require Party B take a express delivery to the location or store
indicated by Party A but Party B should bear all the cost.
1.10 Party A have the rights to audit, visit and investigate Party B's any
production process including raw materials, purchased items, process methods and
cost analyze...etc.
1.11 Party B guarantee to do the business with Party A always follow the rule of
fair competition. Party B will not offer free gift, dinner, free trip, expense
documentation to Party A's stuffs of purchasing, technical, service and sales
division.
1.12 Party B have the rights to report to Party A concerning their stuff ask the
commission during the executing the contract with evidence and Party A will
solve it according the regulations of company.
1.13 To the benefit of Party A and Party B, Party B does not have the rights to
disclose the price of contract to any third party, not allowed have the price of
other supplier, searching, stealing or take unfair way to get price information
from Party B. When it happens Party A will terminate the contract straight way.
1.14 If Party B are cancelled the certification of supplier during effective
period of the contract then the contract becomes terminated from the date of
cancellation. If Party B fail the normal supply to Party A within continued two
months then Party A have the rights to terminate the contract.
Technical Agreement
2.1 Party B should develop, manufacture, supply and offer service of contract
products for Party A which specified in the technical agreement.
2.2 Develop new products:
2.2.1 Party B should rationalize their system to increase ability of development
and co-operate with Party A's progress.
2.2.2 Party A will give the first selected candidate to the supplier
participating and develop the new products. Party A have the rights to terminate
the contract of the supplier is not co-operating and effecting developing
schedule and quality of the new contract products
Quality
3. 1 Quality control system requirement:
3.1.1 Party B should build up their quality control system according to
ISO/TS16949 or QS9000 and pass the audit to have the certificate in the end of
2004.
3.1.2 Party A should audit the Party B's quality control system on site when
supplied contract products have big quality problem or annual audit process.
Party B should fix the problems specified in Party A's audit report.
3.2 In-coming materials inspection and quality control:
3.2.1 Party B should attach the inspection report with delivery to Party A, The
quality standard should follow state and industry standard but agreed by Party
A.
3.2.2 When Party B have the certificate of ISO/TS16949 and grade A supplier
proved by Party A, Party A will agree to inspection free of supplied contract
products.
3.2.3 If Party A found defected parts on the production line, Party B should
come to fix it within 24 hours after received phone call or fax informed by
Party A but Party A have the rights to fix it by themselves in the case of
emergence. Party B should bear all the cost incurred.
3 .2.4 Party B should bear the compensate if Party B caused Party A stop to
produce and cause the loss in the reason of supply, quality, service, etc., the
compensation includes: profits with contract, administration expense, transports
expense, price for repairing, labor cost, travel charge.. Party A has the right
to carry on 2 times of claim of the actual compensation to Party B and take the
measure of adjusting the supply quantity, stopping supplying or terminate the
contract.
3.3 Quality control to vendors
3.3.1 Party B should require quality standard as ISO/TS1699 and QS9000 for
development and quality to vendors
3.3.2 Party A should have a copy of name list of qualified vendors and Party B
should inform Party A in case any change in the name list. Party A have the
rights to specify the responsibility of vendors according requirement of
quality.
3.3.3 Party A have the rights conducting quality audits on site to the vendors.
3.4 Products quality audit:
3.4.1 Party B should set up internal quality audit system and submit a
reliability test report of the function/safety components to Party A at least
once a year.
3.4.2 Party A have the rights to audit the quality via third party. Party A will
pay the cost if passed the audit but Party B will pay the cost if it cannot
passed the audit.
3.5 Stabilize quality level
3.5.1 Party B should control the process ability to satisfy the quality level.
3.5.2 According manual of PPAP, Party B should adapt their quality system in
case of any change in design, modification, materials and production site and
submit the report for prove by Party A.
3.6 Products reliability requirements:
------ --------------- -------- ------------------------------------------------
PPM MarketPPM value
Item Description Model
------ --------------- -------- ------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quaeter
------ --------------- -------- ----------- ----------- ----------- ------------
1 Steering gear 1027A 2559 2559 1706 1706
------ --------------- -------- ----------- ----------- ----------- ------------
3. 7 Quality problem
3.7.1 Party A should feedback to Party B all the quality problems incurred in
incoming material inspection, production process and after sales service. In
case request by Party B, Party A should present the faulty parts.
3.7.2 Party B should take a effective way to solve the quality problems and
report to Party A based on "8D" methods.
3.8 Penalty
3.8.1 Party A will evaluate PPM quarterly, if the value of PPM over 1% then
claim 0.01% of quarterly sales price but if over 5% will stop or cancel
qualification of Party B as a supplier.
3.8.2 Party A have the rights to take an action to return the contract products,
setting time frame to make modification, lower the quantity, stop supply and
cancel qualification if the products, process and quality system cannot meet the
requirements of Party A. Or make a penalty of RMB$5,000 - 500,000 to Party B.
3.8.3 In case of claims by Party A, Party A will present the claim list and
calculation documentation to Party B. Party B should agree within one week. The
account department of Party A will deducted claim amount from the payment of
Party B.
3.8.4 If Party A does not executing their claim. It is not means Party A relieve
the claiming rights but Party still have the rights for claim within effecting
period of the contract.
Service
4.1 Before market service:
4.1.1 If any quality problems incurred in production line of Party A, Party B
have the responsibility to solve the problem by site service people.
4.2 After market service:
4.2.1 Party B will do the warranty service on behalf of Party A and follow their
specification. 4.2.2 Party A will announce the "Service police of vehicle" same
time and it will be the warrantee service by joint service for FUZTIAN vehicle
end users between Party A and Party B and it becomes the police of service net
work to end users.
4.2.3 The service (including service news and cost and so on) will be monitored
and managed by Party A but the accuracy of information should be more than 90%.
Every service station should be feed backed the "Products warrantee form" to the
service department of Party A and the faulty parts should keep two months for
identification of the response party, confirmation and quality analyzing. Party
A will with stuffs of service station jointly to process the faulty parts if no
request from application for faulty parts after two months.
4.2.4 Party A should inform the Party B all the information related to warranty
service and warrantee rate. If Party B have any questions should contact related
department within 15 days after receiving information. If it is necessary Party
B present actual faulty parts and all the cost incurred in shipment will be paid
by Party A.
4.2.5 Incurred the actual warranty cost will be paid in credit of Party B's
account monthly.
4.2.6 If quality problems occurred in batch or series then Party B should
departure their service people to indicate station informed by Party A.
Otherwise Party A have the rights to solve the quality problems by themselves
but occurred all cost will be deducted from Party B's account.
4.2.7 The quality penalty occurred in quality control monitoring program should
be paid by Party B.
4.2.8 Par Party A should audit the Party B's quality control system on site when
supplied contract products have big quality problem or annual audit process.ty A
will claim 3-5 times of actual cost occurred in call back the faulty cars
because of response party is party B.
4.3 Spare parts supply:
4.3.1 Party B should conduct the quality control and packing requirement
according government regulations and industrial technical standard. Party B
should not supply any spare parts with FUTIAN xxxx to third party or personnel.
4.3.2 Party B offer the warrantee condition will follow the car warrantee police
offered by Party A referred to clause 4.2 of the contract.
4.3.3 The quality of spare parts should as same as Clause "Quality".
4.4 Special condition service:
4.4.1(pound)(0)Party B will bear partial cost of warrantee maintenance service
(only applied to engine, gear box and steering) and occurred cost will credit to
Party B's account by Party A. The warrantee service cost will set as follows:
------------------ -------------- ------------- ------------ -------------------
Description Model Material Labor Total cost
------------------ -------------- ------------- ------------ -------------------
Steering unit 1027 18
------------------ -------------- ------------- ------------ -------------------
4.4.2 Party B will joint with Party A for market promotion after negotiating by
both parties.
4.5 The service of stop production and supply
4.5.1 Party B should supply the spare parts to Party A within five years after
production stopped.
4.5.2 The quality deposit will be not allowed to withdraw at least one year
after stop production. Bridge clause after stop supply
5.1 If the reason of stop supply if on the Party B side then this clause is not
apply.
5.2 Party B stop supply because of technical, quality and service, Party B will
apply the bridge sequence of supply and stock less then one month, the reject
parts are not put in count.
5.3 Party B stop the supply because of market price. In this case Party A will
apply bridge sequence but stock should less then one month.
5.4 Party B stop supply because of changed purchase police or other police and
Party A agree the bridge sequence but only apply for one-month stock.
5.5 Party B should submit the report in writing within 10 days in case of
mentioned situation otherwise will treat as no bridge sequence by Party A.
Intellectual property
6.1 The intellectual property of auto parts should be treated as belonged to
both parties.
6.2 Party B have the rights to use module, drawings and simples...etc. During
the contract effecting period. Party B should treat it as confidential and keep
in safety place.
6.3 Party B does not have the rights to disclosure any technical information to
third party including modules, drawings and samples without pre-agreed by Party
A. Party B should not manufacture the same products and supply to other users
after terminate the contract.
6.4 Party B should not supply the contract products to third party without
pre-agreed by Party A.
6.5 Party A have the rights require Party B to pay 5 times penalty of bleach the
contract if Party B bleach the above clause of the contract. The amount of the
penalty will deducted from Party B's account.
Arbitration
7.1 Any conflicts should solve by both parties through friendly negotiation. If
it can not solve the problems then put into local court.
7.2 Miscellaneous matters should solve by negotiation of both parties.
7.3 Three copies of the contract. One for Party A and one for Party B.
7.4 Contract effecting period(pound)(0)Nov. 6th 2002 to Dec. 31th 2004
7.5 The contract will become into force after stamping both parties company
seals.
Party A:Beiqi Futian Moto Co., Ltd.
Adress:Shayang Road, Changping District, Beijing
Authorized representative:
TEL: 000-00000000
FAX: 000-00000000
P.C.: 102206
Party B Jingzhou Henglong Automotive Parts Co., Ltd.
Adress:Henglong Road, Development zone, City Jingzhou, Hubei Province,
Authorized representative:
TEL: 0000-0000000
FAX: 0000-0000000
P.C.: 434000
Appendix 1
---------------------------- -------------- ------------ ---------- ------------
Part Description Part No. Unit Price Quantity Extension
---------------------------- -------------- ------------ ---------- ------------
Rack & Pinion Power 3401010-06 1620.00 16580 26859600.00
Steering Gear
---------------------------- -------------- ------------ ---------- ------------
Right Supporter Assembly 3403020-06 14.30 16580 237094.00
---------------------------- -------------- ------------ ---------- ------------
Right Supporter Bushing 3403026-00 8.90 16580 147562.00
---------------------------- -------------- ------------ ---------- ------------
Left Supporter Assembly 3403030-06 14.30 16580 237094.00
---------------------------- -------------- ------------ ---------- ------------
Left Supporter Bushing 3403036-00 8.20 16580 135956.00
---------------------------- -------------- ------------ ---------- ------------
Left Dust Boot Assembly 3403070-00 16.60 16580 275228.00
---------------------------- -------------- ------------ ---------- ------------
Right Dust Boot Assembly 3403080-00 18.50 16580 306730.00
---------------------------- -------------- ------------ ---------- ------------
Adjustable Steering Column 3404020-06 470.70 16580 7804206.00
Assembly
---------------------------- -------------- ------------ ---------- ------------
Steering Column Bracket 3404050-06 23.50 16580 389630.00
Assembly
---------------------------- -------------- ------------ ---------- ------------
Lower Shaft 3404070-06 119.60 16580 1982968.00
---------------------------- -------------- ------------ ---------- ------------
Block 3404084-00 2.80 16580 46424.00
---------------------------- -------------- ------------ ---------- ------------
Clamp 3404085-00 3.20 16580 53056.00
---------------------------- -------------- ------------ ---------- ------------
Retarder Assembly 3404110-06 226.00 16580 3747080.00
---------------------------- -------------- ------------ ---------- ------------
Oil Pipe Assembly 3406020-06 14.50 16580 240410.00
---------------------------- -------------- ------------ ---------- ------------
High pressure Hose Assembly 3406030-06 173.70 16580 2879946.00
---------------------------- -------------- ------------ ---------- ------------
Wahser 3406041-06 1.80 16580 29844.00
---------------------------- -------------- ------------ ---------- ------------
Steering Pump Assembly 3407010-06 548.00 16580 9085840.00
---------------------------- -------------- ------------ ---------- ------------
Reservior 3408010-06 110.00 16580 1823800.00
---------------------------- -------------- ------------ ---------- ------------
Idler & supporter ASM. 3412010-06 65.50 16580 1085990.00
---------------------------- -------------- ------------ ---------- ------------
Pump Pulley 3412021-06 33.50 16580 555430.00
---------------------------- -------------- ------------ ---------- ------------
Pump Pulley 3412031-06 33.50 16580 555430.00
---------------------------- -------------- ------------ ---------- ------------
Pump Bracket 3412040-06 45.40 16580 752732.00
---------------------------- -------------- ------------ ---------- ------------
V Belt 3412045-06 13.80 16580 228804.00
---------------------------- -------------- ------------ ---------- ------------
Bolt Kits 3412050-06 3.30 16580 54714.00
---------------------------- -------------- ------------ ---------- ------------
Nut Kits 3412060-06 1.80 16580 29844.00
---------------------------- -------------- ------------ ---------- ------------
Bolt 900119-08171 3.70 16580 61346.00
---------------------------- -------------- ------------ ---------- ------------
Bolt 90401-16014 3.70 16580 61346.00
---------------------------- -------------- ------------ ---------- ------------
Bolt 91612-61025 3.30 16580 54714.00
---------------------------- -------------- ------------ ---------- ------------
Small Clamp 90467-16008 9.00 16580 149220.00
---------------------------- -------------- ------------ ---------- ------------
Big Clamp 90467-21005 8.90 16580 147562.00
---------------------------- -------------- ------------ ---------- ------------
Total 60019600.00
---------------------------- -------------- ------------ ---------- ------------
