LICENSE AND TECHNICAL
ASSISTANCE AGREEMENT
between
WUHAN BLOWER CO.,
LTD.
and
MITSUBISHI HEAVY INDUSTRIES,
LTD.
INDEX
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Article 1.
Definitions
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1
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Article 2.
Grant of Rights
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3
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Article 3.
Technical Assistance
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3
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Article 4.
Payment
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5
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Article 5.
Property
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10
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Article 6.
Improvement
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11
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Article 7.
Secrecy
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12
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Article 8.
(Intentionally left blank)
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14
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Article 9.
Warranty
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14
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Article 10.
Delivery of documentation
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15
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Article 11.
Assignment
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16
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Article 12.
Trademark and Marking
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16
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Article 13.
Termination
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17
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Article 14.
Force Majeure
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19
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Article 15.
Arbitration
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19
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Article 16.
Governing Law
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20
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Article 17.
Period of Agreement
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20
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Article 18.
Ratification and Effective Date
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20
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Article 19.
Competitive Products
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20
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Article 20.
Subcontract for components
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20
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Article 21. No
agency Relationship
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23
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Article 22.
Entire Agreement and Variations
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23
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Article 23.
Notices
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23
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Article 24.
Attachments
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24
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Attachment
1: Content of Information
Attachment
2: Possible Collaboration Fields
Attachment
3: Conditions of WBC personnel Training in
Japan
Attachment
4: Conditions of MHI personnel dispatch
Attachment
5: Scope & Specification of Components to be
supplied by MHI
License and Technical Assistance
Agreement
This Agreement
made and entered into as of July 5, 2005, between Wuhan Blower Co.,
Ltd., a corporation organized and existing under the laws of the
People’s Republic of China, having its principal office at
Cang Long dao Science Park East Lake Technology Development Zone,
PRC (hereinafter called “WBC”), and Mitsubishi Heavy
Industries, Ltd., a corporation organized and existing under the
laws of Japan, having its principal office at 16-5, Konan 2-chome,
Minato-ku, Tokyo 108-8215 JAPAN (hereinafter called
“MHI”).
WITNESSETH:
WHEREAS, MHI
and Wuhan Blower Works made a license agreement for Centrifugal
Fans and Axial Flow Fans in December 1987, and its extension
agreement in January 1998. However, the extension agreement has
terminated in 2003, and
WHEREAS, Wuhan
Blower Works managed by the government was dissolved and WBC was
newly established as a private company in April 2004,
and
WHEREAS, MHI
has developed certain technologies for Centrifugal Fans and Axial
Flow Fans from those licensed to Wuhan Blower Works, and
WHEREAS, for
expanding its sales activities in P.R.C., WBC desires to obtain a
license to design, manufacture and sell Licensed Product (as
hereinafter defined) based on the technologies further developed by
MHI as mention above.
WHEREAS, MHI is
willing to license WBC the rights of the Licensed Product under the
know-how, technical information, owned and controlled by MHI and to
furnish WBC with technical services therefore.
NOW, THEREFORE,
in consideration of the premises and of the mutual covenants and
agreements herein contained, the parties hereto agree as
follows:
In this
Agreement, the following expressions have the following
meanings:
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1.1
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The term
“Licensed Product” means AXIAL FLOW FANS for more than
600MW-class developed, designed and commercially produced and sold
by MHI as of the date of execution hereof.
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1)
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The term
“Information” means MHI’s proprietary
confidential drawings, specifications and other technical
information necessary for the design, sales, assembly,
installation, operation and maintenance of the Licensed product and
any other services rendered hereinafter as described in Attachment
1 “Content of Information.”
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1.2
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The term
“Territory” means the territory of the People’s
Republic of China (hereinafter called “PRC”), excluding
Taiwan, Hong Kong and Macao.
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1.3
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“Effective Date” means the date when
both parties make signature of this Agreement.
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1.4
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“Net
Sales Price” in respect of a Licensed Product means the total
selling price invoiced by WBC to its customers, distributors or
dealers in respect of the Licensed Product, less only costs for (i)
packing, transportation and shipping insurance, (ii) value added
tax and import duty, (iii) the subcontract price for components
and/or parts supplied by MHI pursuant to this Agreement, and (iv)
components purchased by WBC with no technical relation to
Information such as motors. In any case in which the Net Sales
Price is reduced by reason of any subsidies, such subsidies shall
be added to such Net Sales Price before calculating the Royalty
payable to MHI pursuant to Article 4.
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1.5
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“Unusual
Development” shall mean significant development or
improvement made by either party regarding Information or Licensed
Products, particularly the development or improvement which
consumes major expenditure for such development or improvement, or
offers a considerable commercial advantage.
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1.6
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“Technical Collaboration Meeting”
means the meeting that shall be held at MHI Nagasaki Machinery
Works between MHI and WBC, for three days term at most, once a year
maximum, for discussing not about specific projects, but about
general technical issues and market strategy.
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Article
2. Grant of Rights
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2.1
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Subject to the
provisions of this Agreement, MHI hereby grants to WBC a
non-exclusive right to make, use and sell the Licensed Product in
the Territory under the Information owned and controlled by MHI as
specified in the Article 1 hereof and technical assistance rendered
to WBC pursuant to this Agreement
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2.2
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WBC may sell
the Licensed Product outside the Territory, on condition that WBC
shall discuss its conducting sales promotion with MHI in advance
and obtain the prior written consent on selling the Licensed
Product to outside the Territory from MHI of each
project.
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2.3
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No right to
grant a sub-license hereunder to any third parties is granted to
WBC without the prior written consent of MHI.
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2.4
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MHI agrees to
supply WBC, upon the request of WBC, with the parts and/or
components of the Licensed Product under the terms and prices
provided in Article 20 and WBC agrees to purchase such parts and/or
components of the Licensed Product from MHI where necessary. The
supply of such materials, parts, equipment, tooling and instruments
shall be contracted separately.
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2.5
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MHI shall
provide suitable recommended sub-vender list to WBC. Further WBC
can purchase any components, any parts outside of Territory from
MHI’s recommended sub-vender list with prior consent of
MHI.
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Article
3. Technical Assistance
In accordance
with any Article of this Agreement, the following technical
assistances shall be provided by MHI to WBC to the extent
considered necessary by MHI hereunder.
MHI, whichever
later within sixty (60) days after the Effective Date of this
agreement, or within thirty (30) days after MHI’ receipt of 1
st installment of the Initial Fee in accordance with
Article 4.2.1 hereof; will furnish WBC with such Information as the
documentation relating to the Licensed Product listed Attachment 1.
Technical Documents means the existing documents that are used in
MHI at the Effective Date.
At the request
of WBC, during the term hereof, MHI will accept the one time
training in Japan at MHI’s factory for technical instruction
and training, according to the terms and conditions in Article 4
and Attachment 3.
Contents of
Training shall be limited to;
- Maximum 8
trainees per training mission
- Maximum 30
days per training mission
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3.3.1
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Engineering
Service in the Territory
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At the request
of WBC, even in the case of the request from WBC derived from
MHI’s recommendation, during the term of this Agreement,
under the availability of MHI’s engineer, MHI will provide
WBC, in the Territory, with reasonable number of MHI’s
technical personnel to assist WBC in manufacturing and/or producing
the Licensed Product, according to the terms and conditions in
Article 4.5 and Attachment 4.
In case WBC
requires MHI to dispatch his personnel to promote WBC sales, MHI
agree to dispatch his technical and/or commercial personnel to the
Territory under the same condition of this Article.
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3.3.2
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Engineering
Service at MHI’s office in Japan
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At the request
of WBC by way of e-mail or telefax during the terms of this
Agreement, under the availability of MHI’s engineer, MHI will
review the works of WBC by MHI’s engineer at their own office
in Japan after the technical documents provided to WBC, according
to the terms and conditions in Article 4.5 and Attachment 4. In
case MHI will accept to render such services, MHI shall inform WBC
of the records of Man-Hours for the required services in weekly
basis during the period of the service. WBC and MHI shall mutually
discuss and agree with the claimed Man-Hours in good
faith.
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3.4
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Personnel of
either MHI or WBC during the period that they are on the premises
of the other party shall act in accordance with all rules and
regulations prevailing on the premises of such other party.
However, such personnel of either party shall be considered for any
purposes to be an employee of the other.
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3.5
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All documents,
drawings or otherwise assistances delivered or furnished hereunder
will be basically in English or sometimes in Japanese due to MHI
own reasons as agreed between the parties hereto and contain
metrical system measurements, qualities and standards normally used
by MHI and giving the necessary standards if necessary, and MHI
will not be required to provide interpreters or translating
services in any case. If any reasonable doubt appears, MHI agree to
clarify it as soon is possible.
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3.6
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In addition to
the Information listed in Attachment 1, MHI and WBC may discuss and
conclude further license agreement regarding the technologies as
per Attachment 2.
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3.7
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Based on the
request from WBC, under MHI’s engineers’ availability,
Technical Collaboration Meeting can be held at Nagasaki, without
Engineer Service Fee as per Article 4.5. All of the expense
regarding the Collaboration Technical Meeting such as accommodation
and transportation shall be born by WBC.
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In
consideration of the Licenses granted to Article 2 and of
Information provided under Article 3, WBC shall pay to MHI the
following initial fee, royalties and charges by T.T. Remitance or
Letter of Credit.
Initial Fee of
JPY 33,000,000 (Thirty Three Million Japanese Yen) shall be paid in
the two installments by Letter of Credit;
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4.2.1
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JPY 13,200,000
shall be paid by WBC to MHI after the Effective Date of this
Agreement in the following terms and conditions.
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WBC shall open
the irrevocable Letter of Credit issued by a first class bank in
favor of MHI, covering forty (40) percent of Initial Fee, within 30
days after the Effective Date. The Credit shall be available
against MHI’s draft(s) drawn at Sight on the opening bank for
100 percent of the invoiced value accompanied by the copy of this
Agreement with endorsements of both parties. Payment shall be
effected by the opening bank telegraphic transfer against
presentation to them aforesaid draft(s) and document. The Letter of
Credit shall be valid until the 60 days after the Effective
Date.
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4.2.2
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JPY 19,800,000
shall be paid by WBC to MHI after WBC receives shipping advice of
the Technical Document from MHI. WBC shall 30 days prior to the
date of the delivery, open the irrevocable Letter of Credit issued
by a first class bank in favor of MHI, covering sixty (60) percent
of Initial Fee. The Credit shall be available against MHI’s
draft(s) drawn at Sight on the opening bank for 100 percent of the
invoiced value accompanied by the copy of the following documents.
Payment shall be effected by the opening bank telegraphic transfer
against presentation to them aforesaid draft(s) and documents, The
Letter of Credit shall be valid until the 30 days after shipment is
effected.
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Airway bill and
list of the documentation as per Attachment 1 in one (1) copy
each
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A commercial
invoice covering sixty (60) percent of the total Initial Fee in
five (5) copies
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A sight draft
covering sixty (60) percent of the total Initial Fee in five (5)
copies
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The banking
charges of both parties incurred in China in the execution of the
contract shall be borne by WBC and those incurred outside of china
shall be borne by MHI.
Royalties shall
he paid as hereinafter provided in respect of all the Licensed
Product manufactured and used and/or sold by WBC during the
continuance of this Agreement.
a)
Licensed Product sold in
Territory
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(i)
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New project at
the rate of 3.0 percent on Net Sale Price
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(ii)
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After sales
service at the rate of 3.0 percent on Net Sales Price
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b)
Licensed Product sold outside
Territory, according to 2.2 hereof
(i) New project at the rate of 3.5 percent on Net
Sale Price
(ii) After sales service at the rate of 3.5 percent
on Net Sales Price
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4.3.2
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Half year
payment and report
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Payment of the
royalties specified above in this Article shall be made MHI within
sixty (60) days after the expiration of each half-yearly period,
ending on the 30 th day of June and the 31 st
day of December in each calendar year in respect of the Licensed
Product manufactured, used and/or sold in each half-yearly
period.
Each payment
shall be accompanied by a statement in writing certified as correct
by a responsible officer of WBC and showing the number or quantity
itemized by each type of Licensed Product, name of customer, name
of project, and value with price breakdown into each component
covering the purchased components such as motors as well as the
licensed components of all the Licensed Product manufactured, used
and/or sold by WBC during the relevant half-yearly
period.
For the purpose
of calculating the amounts due to MHI in respect of the half-yearly
periods referred to above, any Net Sales Price of WBC expressed in
currencies other than Japanese Yen shall be converted into Japanese
Yen based on the nominal central rate quoted by the Bank of China
in the Territory on the day next after the end of the half-yearly
period in respect of which payment is to be made.
The payment
hereof shall be made as per Article 4.7. within 30 days after WBC
receives 5 copies of commercial invoice covering the amount of
royalty of each half year term.
Fee for
Training as per Article 3.2 shall be included in Initial Fee as per
Article 4.2. In case that additional Training would be executed,
the compensation shall be made as follows;
WBC shall pay
350,000 Japanese Yen per day inclusive of trainer, training text
and necessary facilities.
Amount due
pursuant to this provision shall be paid to MHI by WBC within sixty
(60) days after 30 th day of June and 31 st
day of December in each year for Training rendered by MHI during
the six (6) month period preceding such date. The payment hereof
shall be made as per Article 4.7 within 30 days after WBC receives
the following documents.
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(a)
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5 copies of
invoice covering 100 percent amount to be paid
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(b)
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1 original
training record certified by representative of WBC and
MHI
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(c)
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1 sight draft
covering the above same amount
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4.5.1
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Engineering
Service in the Territory
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For all
personnel furnished by MHI, including commercial personnel for
business support, in accordance with Article 3.3 hereof, WBC shall
pay 120,000 Japanese Yen per each MHI’s
engineer/day.
Amount due
pursuant to this provision shall be paid to MHI by WBC within sixty
(60) days after 30 th day of June and 31 rd
day of December in each year for the technical services rendered by
MHI during the six (6) month period preceding such date.
Personnel
dispatched from MHI shall not stay continuously in the Territory
more than 183 days.
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4.5.2
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Engineering
Service at MHI’s office in Japan
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In case of the
Service of MHI rendered at their own office in Japan, after
WBC’s receipt of Technical Documents provided by MHI as per
Article 3.1, the fee for such services as the above shall be JPY
15,000 per Man-Hour.
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4.5.3
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Payment for
Engineering Service
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The payment
hereof shall be made as per Article 4.7 within 30 days after WBC
receives the following documents.
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(a)
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5 copies of
invoice covering 100 percent amount to be paid
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(b)
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1 original
working record certified by representative of WBC and
MHI
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(c)
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1 sight draft
covering the above same amount
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4.6
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All payments
under this Agreement shall be inclusive of withholding tax (income
tax) and exclude other taxes imposed on MHI in P.R.C. WBC may
deduct from payments of royalties to MHI withholding taxes (income
taxes) imposed by the taxation authorities of PRC under the
relevant convention between Japan and PRC for the avoidance of
double taxation with respect to income tax, provided that WBC
provides to MHI tax receipt issued by P.R.C. tax authorities and
any other documents if necessary to enable MHI to claim a credit
for that withholding tax in Japan. If any other taxes are imposed
on MHI in respect of such amounts by authorities of P.R.C. in
prevailing laws and regulation, WBC shall compensate MHI for such
taxes.
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4.7
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All of the
payments due hereunder shall be made in the currency of Japanese
Yen and shall be made by WBC via telegraphic transfer to
MHI’s account as specified hereunder, any bank charges
incurred in PRC to be borne by WBC:
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