Production Agreement between Beijing Dehaier Medical Technology Co., Ltd. and Friend of Health (Chuzhou) Medical Technology Co., Ltd.

Summary

Beijing Dehaier Medical Technology Co., Ltd. (Party A) hires Friend of Health (Chuzhou) Medical Technology Co., Ltd. (Party B) to manufacture air compressors and oxygen concentrators based on Party A’s technical requirements. Party A provides technical files, training, and core parts, and commits to purchasing a minimum quantity of products each year, with annual increases. Party B must follow Party A’s production guidelines, maintain inventory, and deliver products on credit with a 45-day payment period. Party B cannot sell the products outside Chuzhou without approval. Both parties agree to negotiate any unresolved issues.

EX-10.20 11 dex1020.htm EXHIBIT 10.20 Exhibit 10.20

Exhibit 10.20

Production Agreement

Party A: Beijing Dehaier Medical Technology Co., Ltd.

Party B: Friend of Health (Chuzhou) Medical Technology Co., Ltd.

Party A entrusts Party B to produce Party A’s products including a) air compressor and b) oxygen concentrator (please refer to the processing files provided by Party A for the requirements on production technology).

I. Liability of Party A

 

(a) Party A should provide complete technology files and processing files and offer worker training programs.

(b) Party A should help Party B build qualification systems and ISO 13485 quality system required by the country in order to ensuring the product quality.

(c) Party A should purchase all the products produced according to Party A’s arrangement. If Party A fails to fulfill the purchase, it should increase the price according to the actual purchase volume (RMB—per air compressor, while RMB—per oxygen concentrator).

(d) If Party A needs more products in an account period, it should make payment for getting the products.

(e) Party A should provide core parts (oxygen-chip) according to the stock of spare parts purchased by Party B. Party A should be responsible for the installation and after sales service of the products.

II. Liability of Party B

(a) Party B should purchase and produce according to the supplier list and processing files provided by Party A separately.

(b) If Party B has local purchasing and outsource processing, each part and processing file should be tested and approved by technology department of Party A before the mass production.

(c) Party B should provide—air compressors and—oxygen concentrators to Party A on credit. The account period is 45 days calculated from the day of delivery, while Party A should pay before the due date of the account period. Party B delivers products to the address appointed by Party A, while Party A pays for the carriage.

(d) Besides products within an account period, Party B should have at least the following stocks:

ü — air compressors (finished goods)

ü — oxygen concentrator (finished goods)

ü — sets of spare parts for the air compressor

ü — sets of spare parts for the oxygen concentrator

Note: The detailed production period should be arranged after discussion of production personnel of both parties.

(e) Party B should not sell the above two products in other territories except Chuzhou. When selling locally, Party A agrees to offer Party B a price which is —% lower than the price for distributors.


III. Settlement Price:

Current price of raw materials:

(a) Air Compressor Type A: RMB — for each; Type B: RMB — for each

Oxygen Concentrator: RMB — for each

(b) For each air compressor, Party B adds RMB — (exclude tax); for each oxygen concentrator, Party B adds RMB — (exclude tax).

(c) Price on invoice:

ü Air Compressor Type A: RMB —;

ü Air Compressor Type B: RMB —;

ü Oxygen Concentrator: RMB —

IV. Product and committed purchase quantity

Party A agrees to purchase no less than — sets of air compressor and — sets of oxygen concentrator during the first year of this agreement, the purchase volume should increase —% every year after that. (This article should under the articles II.(c) and II.(d) be met.)

V. Party B should in charge of all the administration of its own, Party A should provide technical support and production coordination. The financial personnel of Party A and Party B should check the settlement.

VI. For pending issues, Party A and Party will negotiate for settlements.

Party A: /s/ Beijing Dehaier Medical Technology Co., Ltd.

Party B: /s/ Friend of Health (Chuzhou) Medical Technology Co., Ltd.