TECHNOLOGY CONSULTING SERVICES AGREEMENT
This
Technology Consulting Services Agreement ("Agreement") is entered into on
December 15th,
2006,
(the "Effective Date") among the following parties:
PARTY
A: JILIN CITY HAITIAN BUSINESS CONSULTING CO., LTD.
LEGAL
ADDRESS: Xx.0-0 Xxxxx-xxxxxxx Xxxxxx, Xxxxxxx Economic Development Zone, Jilin
City, China
PARTY
B: JILIN HAITIAN INDUSTRIAL COMPANY, LTD.
LEGAL
ADDRESS: Xx.0-0 Xxxxx-xxxxxxx Xxxxxx, Xxxxxxx Economic Development Zone, Jilin
City, China
WHEREAS,
Party A
is a wholly foreign owned enterprise registered in The People's Republic of
China (the "PRC") under the laws of the PRC;
WHEREAS,
Advancetech Global Limited (“AGL”), an International Business Company
incorporated in the British Virgin Islands, owns all of the registered capital
of Party A;
WHEREAS,
Party B
is a domestic company with exclusively domestic capital registered in the PRC
and is engaged in the business of manufacturing chemicals (the
“Business”);
WHEREAS,
Party A
has established a business relationship with Party B by entering into an
Exclusive Business Consulting Agreement dated as of the same date hereof
(“Consulting Agreement”) and an Operating Agreement dated as of the same date
hereof (“Operating Agreement”);
WHEREAS,
pursuant to the Consulting Agreement and Operating Agreement between Party
A and
Party B, Party B shall pay Party A certain fees as set forth in the Consulting
Agreement and the Operating Agreement (“Other Fees”);
WHEREAS,
Party B
is an affiliated Chinese entity of Party A;
WHEREAS,
in
connection with the cooperation of the parties, Party B desires to obtain from
Party A, and Party A desires to provide to Party B, technology expertise and
practical experience with respect to the manufacture of chemicals pursuant
to
provisions of this Agreement.
NOW
THEREFORE,
Party A
and Party B through negotiations hereby agree as follows:
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1.
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EXCLUSIVE
TECHNOLOGY CONSULTING AND SERVICES; SOLE AND EXCLUSIVE
INTERESTS.
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1.1
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During
the term of this Agreement, Party A agrees to, as the exclusive technology
consulting and services provider of Party B, provide the exclusive
technology consulting and services to Party B (the content of services
is
specified in Appendix 1).
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1.2
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Party
B agrees to accept the exclusive technology consulting and services
provided by Party A and further agrees that, during the term of this
Agreement, it shall not accept such technology consulting and services
for
the aforesaid business provided by any third party without the prior
written consent of Party A.
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1.3
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Definitions.
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a.
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“Product
Technology” means any and all intellectual property developed by Party A
under this Agreement, including but not limited to, works of authorship,
inventions, schematics, documentation, designs, specifications,
descriptions, database types, development tools (including, without
limitation, testing, timing, verification and simulation tools),
software
(in source code and object code), know-how, files, records, mask
works,
ideas, technical data, methods, processes, and other
creations.
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b.
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“Use,”
with respect to the Product Technology or Technology, means make,
have
made, use, sell, offer to sell, import, reproduce, distribute,
perform or
display (publicly or otherwise), prepare derivative works based
on or
otherwise modify, transmit or otherwise exploit such Product Technology
or
Technology, or grant licenses (with the right to grant sublicenses)
of the
right to do the same.
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| 2. |
REPRESENTATIONS
AND WARRANTIES.
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2.1
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PARTY
A HEREBY REPRESENTS AND WARRANTS AS
FOLLOWS:
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2.1.1
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Party
A is a wholly foreign owned enterprise duly registered and validly
existing under the laws of the PRC and is authorized to engage in
the
business of consulting services.
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2.1.2
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Party
A has full right, power, authority and capacity and all consents
and
approvals of any other third party and government necessary to execute
and
perform this Agreement, which shall not be against any enforceable
and
effective laws or contracts.
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2.1.3
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Once
this Agreement has been duly executed by both parties, it will constitute
a legal, valid and binding agreement of Party A and is enforceable
against
it in accordance with its terms upon its
execution.
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| 2.1 |
PARTY
B HEREBY REPRESENTS AND WARRANTS AS
FOLLOWS:
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2.2.1
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Party
B is a domestic company with exclusively domestic capital duly registered
and validly existing under the laws of the PRC and is authorized
to engage
in the Business.
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2.2.2
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Party
B has full right, power, authority and capacity and all consents
and
approvals of any other third party and government necessary to execute
and
perform this Agreement, which shall not be against any enforceable
and
effective laws or contracts.
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2
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2.2.3
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Once
this Agreement has been duly executed by both parties, it will constitute
a legal, valid and binding agreement of Party B and is enforceable
against
it in accordance with its terms upon its
execution.
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| 3. |
TECHNOLOGY
CONSULTING FEES.
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3.1
Within 30 days after execution hereof, Party B will pay Party A USD$50,000
in cash or a promissory note on terms to be negotiated by the parties.
3.2
In
addition to the payment described in Section 3.1 above, Party B agrees to pay
Party A a fee (“Fee”) equal to 20% of Party B’s Operating Cash Flow. The Fee
shall be paid monthly by Party B to Party A within 10 days following the end
of
each month based on the Operating Cash Flow for such month as estimated by
Party
A and Party B in good faith (“Estimated Monthly Amount”). Within sixty (60) days
after the end of each fiscal quarter, Party A and Party B shall make a final
determination of the actual Operating Cash Flow for such quarter (“Final
Quarterly Amount”) based on the financial statements of Party B, which have been
reviewed or audited by the Parties’ registered certifying accountant for U.S.
financial reporting purposes (“Accountant”). To the extent the Final Quarterly
Amount is greater than the Estimated Monthly Amounts for such quarter, the
Fee
shall be adjusted and Party B shall promptly remit to Party A the additional
Fee
due and owing. To the extent the Final Quarterly Amount is less than the
Estimated Monthly Amounts for such quarter, the Fee shall be adjusted and Party
A shall promptly remit to Party B the amount by which the Fee was overpaid.
Notwithstanding
anything to the contrary contained in this Agreement, for each fiscal year
of
Party B, (i) in the event that 20% of Party B’s Net Income (as defined below)
for the fiscal year is less than the Fee for such fiscal year, the Fee shall
be
adjusted such that it shall be equal to 20% of Party B’s Net Income for such
fiscal year, and (ii) in the event that 20% of Party B’s Net Income is greater
than the Fee for such fiscal year, the Fee shall be increased such that it
shall
be equal to 20% of Party B’s Net Income for such fiscal year.
For
purposes of this Agreement, the determination and calculation of Net Income
and
Operating Cash Flow shall made in accordance with U.S. generally accepted
accounting principles (“U.S. GAAP”) as reflected on Party B’s U.S. GAAP
financial statements, which have been reviewed or audited by the Accountant,
before giving effect to the Fee paid or payable hereunder and the Other Fees
paid or payable under the Consulting Agreement and the Operating Agreement.
Any
disputes with respect to the determination or calculation of the Fee, Net Income
or Operating Cash Flow shall be resolved by the Accountant, and such
determination shall be final.
3.3 Party
B's
obligation to make the payments required hereunder shall continue, whether
or
not Party B undertakes any Use of the Product Technology, until Party A
terminates this Agreement. Upon such termination, Party B shall cease all Use
of
the Product Technology.
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4. Notification;
Reports. When
Party A develops Product Technology, it will promptly give notice of such
Product Technology to Party B, and will provide Party B with a report describing
in detail such Product Technology. In addition, Party B may request that Party
A
periodically report to Party B all Product Technology developed or under
development, and upon such request, Party A will render a report to Party B
within a reasonable time describing in detail any Product Technology.
5. Delivery.
Party B
may request units, copies, samples, models and prototypes of and information
pertaining to the Product Technology. Party A will provide such items to Party
B, in a form reasonably requested by Party B, within fifteen (15) days after
a
request for such items from Party B, together with any other related materials
constituting or relating to the Product Technology.
6. Support.
Party A
will provide Party B, at no additional charge, with maintenance and support
for
the Product Technology as reasonably requested by Party B. Such support will
include, without limitation, assistance with the design and development of
derivative products as reasonably requested by Party B. Party A will also
provide Party B, at no additional charge, with technical training for the
Product Technology as reasonably requested by Party B.
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CONFIDENTIAL
INFORMATION.
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7.1
Each
party agrees to maintain all Confidential Information of the other party in
confidence to the same extent that it protects its own similar Confidential
Information, to refrain from disclosing such Confidential Information to third
parties, and to use such Confidential Information only as permitted under this
Agreement.
“Confidential
Information”
means
any and all information and material disclosed by the disclosing party to the
receiving party that is confidential. Each party agrees to take all reasonable
precautions to prevent any unauthorized disclosure or use of Confidential
Information of the other party. The
foregoing restrictions on disclosure and use will not apply to any Confidential
Information which: (a) was
or
becomes publicly known through no fault of the receiving party; (b) was
rightfully known or becomes rightfully known to the receiving party without
confidential or proprietary restriction from a source other than the disclosing
party; (c) is
independently developed by the receiving party; or
(d) the
receiving party is legally compelled to disclose such Confidential Information,
provided, however, that prior to any such compelled disclosure, the receiving
party will (i) assert
the privileged and confidential nature of the Confidential Information against
the third party seeking disclosure and (ii) cooperate
fully with the disclosing party in protecting against any such disclosure and/or
obtaining a protective order narrowing the scope of such disclosure and/or
use
of the Confidential Information. In the event that such protection against
disclosure is not obtained, the receiving party will be entitled to disclose
the
Confidential Information, but only as and to the extent necessary to legally
comply with such compelled disclosure.
7.2 Party
B
acknowledges that Product Technology is confidential and represents Party A's
trade secrets. As a result, Party B will promptly report to Party A any
infringement or violation of the confidentiality of the Product Technology
of which it becomes aware. At Party A's written request, Party B will
identify any person to whom the Product Technology has been made available,
and
will fully cooperate with Party A in seeking injunctive or other relief against
such person if such Product Technology is improperly used in violation of the
terms of this Agreement.
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7.3 Party
B
acknowledges that the Product Technology (including all modifications,
derivatives and alterations) is a trade secret of Party A, the disclosure of
which would cause substantial harm to Party A that could not be remedied by
payment of damages alone. Accordingly, Party A will be entitled to preliminary
and permanent injunctive relief and other equitable relief for any breach of
this Agreement.
7.4 Party
A
agrees that Party B will work with other companies only if it will not prejudice
Party A’s business interests or create a conflict of interest. Party B needs to
get a written approval from Party A before working with those companies for
any
business based on the Product Technology.
7.5 Party
B
shall keep all documentation related to the Product Technology only at Party
B’s
principal business office location in a secured environment at all times.
8. NO
WARRANTIES.
Party A
makes no warranties or representations of any kind with respect to the Product
Technology, and Party B will accept such Product Technology on an AS-IS,
WHERE-IS basis without warranty or representation of any kind.
9. DISCLAIMER
OF WARRANTIES. EXCEPT
AS
OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES (AND EACH
PARTY HEREBY EXPRESSLY DISCLAIMS) ANY OTHER REPRESENTATIONS OR WARRANTIES,
WHETHER EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION,
ANY
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE
OR NON-INFRINGEMENT, AND ALL WARRANTIES THAT MAY ARISE FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE.
10. LIMITATION
OF LIABILITY.
IN NO
EVENT WILL EITHER PARTY BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OF ANY KIND OR NATURE WHATSOEVER, EVEN IF APPRISED OF
THE
POSSIBILITY OF SUCH DAMAGES, INCLUDING,
WITHOUT LIMITATION,
LOST
PROFITS, BUSINESS INTERRUPTIONS, OR OTHER ECONOMIC LOSSES ARISING OUT OF,
RELATING TO OR IN CONNECTION WITH THIS AGREEMENT.
11. PROPRIETARY
RIGHTS.
11.2 Party
B
acknowledges and agrees that Party A has and will retain all ownership rights
in
the Product Technology, including all patent rights, copyrights, copyright
registrations, trade secrets, trademarks, service marks, trademark and service
xxxx registrations, related goodwill and confidential and proprietary
information. Party B will have no rights in the Product Technology except as
explicitly stated in this Agreement.
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11.3 Party
A
hereby grants and agrees to grant to Party B a non-exclusive, world-wide,
revocable license, under any and all copyrights, patents, trade secrets, mask
work rights, and other
intellectual property rights
now owned or hereafter acquired by Party A, to use the Product Technology
exclusively for the purposes of producing chemical products in the ordinary
course of its business. Party B is authorized to sub-license to any third
parties, subject to the terms of this Agreement, provided that a prior written
approval from Party A is obtained and a sharing of royalty agreement is reached
between Party A and Party B for such sub-license.
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INDEMNITY
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Party
B
shall indemnify and hold harmless Party A from and against any loss, damage,
obligation and cost arising out of any litigation, claim or other legal
procedure against Party A resulting from the contents of the technology
consulting and services demanded by Party B under this Agreement.
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EFFECTIVE
DATE AND TERM
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This
Agreement shall be executed and come into effect as of the date first set forth
above. The term of this Agreement is ten (10) years, unless earlier terminated
as set forth in this Agreement. This Agreement shall be automatically renewed
for additional ten (10) year periods upon the expiration of the initial term
hereof or any renewal term, unless this Agreement has been previously terminated
as provided herein.
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TERMINATION
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14.2 Early
Termination.
During
the initial term of this Agreement or any renewal term, Party B shall not
terminate this Agreement. Notwithstanding the above stipulation, Party A shall
have the right to terminate this Agreement at any time by issuing a thirty
days’
prior written notice to Party B.
14.3 Survival.
Article
7, 8, 9, 11,12 and 16 shall survive after the termination or expiration of
this
Agreement.
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SETTLEMENT
OF DISPUTES
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The
parties shall strive to settle any dispute arising from the interpretation
or
performance in connection with this Agreement through friendly negotiation.
In
case no settlement can be reached through negotiation, except as provided in
Article 2, each party can submit such matter to China International Economic
and
Trade Arbitration Commission (the "CIETAC"). The arbitration shall follow the
current rules of CIETAC, and the arbitration proceedings shall be conducted
in
English and shall take place in Hong Kong. The arbitration award shall be final
and binding upon the parties and shall be enforceable in accordance with its
terms.
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FORCE
MAJEURE
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16.1 Force
Majeure, which includes acts of governments, acts of nature, fire, explosion,
typhoon, flood, earthquake, tide, lightning, war, means any event that is beyond
the party's reasonable control and cannot be prevented with reasonable care.
However, any shortage of credit, capital or finance shall not be regarded as
an
event of Force Majeure. The affected party who is claiming to be not liable
for
its failure of fulfilling this Agreement by Force Majeure shall inform the
other
party, without delay, of the delay in the performance of this Agreement by
the
affected party.
16.2 In
the
event that the affected party is delayed in or prevented from performing its
obligations under this Agreement by Force Majeure, only within the scope of
such
delay or prevention, the affected party will not be responsible for any damage
by reason of such a failure or delay of performance. The affected party shall
take appropriate means to minimize or remove the effects of Force Majeure and
attempt to resume performance of the obligations delayed or prevented by the
event of Force Majeure. After the event of Force Majeure is removed, both
parties agree to resume performance of this Agreement with their best
efforts.
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NOTICES
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Notices
or other communications required to be given by any party pursuant to this
Agreement shall be written in English and shall be deemed to be duly given
when
it is delivered personally or sent by registered mail or postage prepaid mail
or
by a recognized courier service or by facsimile transmission to the address
of
the relevant party or parties set forth below.
Party
A:
Jilin City Haitian Business Consulting Co., Ltd.
Xx.0-0
Xxxxx-xxxxxxx Xxxxxx, Xxxxxxx Economic Development Zone, Jilin City,
China
Party
B:
Jilin Haitian Industry Company, Ltd.
Xx.0-0
Xxxxx-xxxxxxx Xxxxxx, Xxxxxxx Economic Development Zone, Jilin City,
China
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NO
ASSIGNMENT OR SUBLICENSE BY THE
LICENSEE
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Party
A
and Party B may not assign their rights or obligations under this Agreement
to
any third party without the prior written consent of the other
party.
| 19. |
SEVERABILITY
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Any
provision of this Agreement that is invalid or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or unenforceability, without affecting in any way the remaining provisions
hereof in such jurisdiction or rendering any other provision of this Agreement
invalid or unenforceable in any other jurisdiction.
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AMENDMENT
AND SUPPLEMENT
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Any
amendment and supplement of this Agreement shall come into force only after
a
written agreement in the English language is signed by both parties. The
amendment and supplement duly executed by both parties shall be part of this
Agreement and shall have the same legal effect as this Agreement.
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GOVERNING
LAW
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This
Agreement shall be governed by and construed in accordance with the PRC
laws.
| 22. |
LANGUAGE
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This
Agreement is executed in English only, and the executed English language
Agreement shall prevail in all cases. This Agreement may be executed in
counterparts, each of which shall constitute one and the same agreement, and
by
facsimile or electronic signature.
[Reminder
of this page intentionally left blank.]
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IN
WITNESS THEREOF,
the
parties hereto have caused this Agreement to be duly executed on their behalf
by
a duly authorized representative as of the date first set forth
above.
PARTY
A: JILIN CITY HAITIAN BUSINESS CONSULTING CO., LTD
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By: /s/
Wang Xxxxxx
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Xxxx
Xitian, Chairman and CEO
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PARTY
B: JILIN HAITIAN INDUSTRIAL COMPANY, LTD.
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By: /s/
Wang Xxxxxx
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Xxxx
Xitian, Chairman and CEO
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APPENDIX
1
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Assist
in the development of computer software with respect to all aspects
of the
business of Party B. In connection with such software, assist in
the
installation and integration of such software in Party B’s business. Party
A shall continue analyzing ways in which Party B’s computer software
systems can be improved and Party A shall make recommendations with
respect to such improvements.
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Perform
research and development work in connection with the technology that
Party
B has licensed from Jilin Institute of Chemical Technology so as
to make
improvements (“Improvements”) in Party B’s production methods with respect
to TDDM. This work shall continue throughout the term of this agreement
and recommendations shall be made from Part A to Party B from time
to
time.
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Assist
Party B in the implementation of the Improvements in Party B’s production
process.
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Assist
in the creation of production, technology and processing plans used
by
Party B in the production of TDDM and recommend improvements thereto.
Party A shall continue to analyze such plans and recommend improvements
thereto from time to time.
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Party
A shall provide to Party B such technological services as Part B
shall
reasonable request from time to
time.
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