TECHNOLOGY LICENSE AGREEMENT
This
Technology License Agreement ("Agreement") is entered into on June 24, 2005,
(the "Effective Date") among the following parties:
PARTY
A: TAIYUAN PUTAI BUSINESS CONSULTING CO., LTD.
LEGAL
ADDRESS: 000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxx Xxxxxxxx, Xxxxx
PARTY
B: SHANXI PUDA RESOURCES
CO., LTD.
LEGAL
ADDRESS: 000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxx Xxxxxxxx, Xxxxx
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,
Puda
Investment Holding Limited (“Puda”), 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 coal crushing, preparation and cleaning
(“Business”);
WHEREAS,
Party A
has established a business relationship with Party B by entering into an
Exclusive 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,
separately, Xxxx Xxxx and Xxxx Xxx have irrevocably assigned and transferred
to
Party A certain intellectual property rights owned by them with respect to
Party
B’s coal crushing, preparation and cleaning pursuant to a Technology Assignment
Agreement dated as of the same date hereof (“Business”);
WHEREAS,
in
connection with the cooperation of two parties, Party B desires to obtain
from
Party A, and Party A desires to provide to Party B, a license to use Party
A’s
water supported coal processing technology to permit Party B to use such
technology for its Business, pursuant to provisions of this
Agreement.
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NOW
THEREFORE,
Party A
and Party B through negotiations hereby agree as follows:
1. Definitions.
a. |
“Derivative
Products” means any product incorporating Product Technology that contains
options or features designed, developed or requested by Party
B.
|
b. |
“Designated
Markets” means the coal crushing, preparation and cleaning
market.
|
c. |
“Product
Technology”
means the water supported jig washing methods, processes and procedures
to
prepare and clean coal which have been irrevocably assigned by Xxxx
Xxxx
and Zhao Yao to Party A, together with any Technology related thereto,
and
any and all intellectual property rights (including patents) relating
to
any inventions now existing or hereafter made, conceived, created
or
otherwise developed by or for, or licensed to, Party A in connection
with
the
Business including, without limitation, any intellectual property
rights
owned by Party A and arising from or under the Exclusive Consulting
Agreement between the parties. .
|
d. |
“Technology”
means any and all 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.
|
e. |
“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.
|
2. License.
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 of the Product Technology
for
the purposes of: (i) using, designing, developing and manufacturing Derivative
Products, (ii) providing services by applying Derivative Products, or (3)
selling and otherwise distributing Derivative Products in the Designated
Markets. Party A will deliver the Product Technology to Party B at Party
B’s
request for Use in accordance with this paragraph. Such delivery will include
both the physical transfer of tangible embodiments of Product Technology
and the
oral and visual communication of non-tangible Product Technology. 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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3. Royalties.
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 royalty 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 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 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.
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3.3 Party
B's
obligation to pay royalties hereunder shall continue, whether or not Party
B
undertakes any Use of the Product Technology, until Party A’s decision not to
continue to provide such technology license due to Party B’s failure to satisfy
a material condition set forth in any of the agreements between Party A and
Party B including, without limitation, this Agreement, the Consulting Agreement
and the Operating Agreement to which Party A and Party B are parties.. Upon
such
termination, Party B shall cease all Use of the Product Technology.
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.
7. Confidential
Information.
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.
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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.
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 install and keep 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 accepts such Product Technology on an AS-IS, WHERE-IS
basis without warranty or representation of any kind.
9. Authority.
Each
party represents and warrants to the other party that it has full power to
enter
into this Agreement, and to perform its obligations hereunder.
10. 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.
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11. 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.
12. Proprietary
Rights.
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.
13. General.
13.1 This
Agreement shall be governed by and construed in accordance with the PRC
laws.
13.2 The
parties shall strive to settle any dispute arising from the interpretation
or
performance, or in connection with this Agreement through friendly negotiation.
Except as provided in Article 3.2, in case no settlement can be reached through
negotiation, either party may submit such dispute to China International
Economic and Trade Arbitration Commission ("CIETAC") for arbitration in
accordance with the current rules of CIETAC. The arbitration proceedings
shall
take place in Hong Kong and shall be conducted in English. The arbitration
award
shall be final and binding upon the parties.
13.3 Any
notice which is given by the parties hereto for the purpose of performing
the
rights, duties and obligations hereunder shall be in writing in the English
language. Where such notice is delivered personally, the time of notice is
the
time when such notice actually reaches the addressee; where such notice is
transmitted by telex or facsimile, the notice time is the time when such
notice
is transmitted. If such notice does not reach the addressee on business date
or
reaches the addressee after the business time, the next business day following
such day is the date of notice. The delivery place is the address first written
above of the parties hereto or the address advised in writing from time to
time.
The writing form includes facsimile and telex.
13.4 This
Agreement shall be executed by a duly authorized representative of each party
and shall become effective as of the date first written above.
13.5 Party
B
may 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.
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13.6 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.
13.7 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 that any other provision of this
Agreement invalid or unenforceable in any other jurisdiction.
13.8 Any
amendment and supplement of this Agreement shall come into force only after
a
written agreement in the English language is signed by all parties. The
amendment and supplement duly executed by all parties shall be part of this
Agreement and shall have the same legal effect as this Agreement.
[Remainder
of this page intentionally left blank.]
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IN
WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed on their behalf by a duly authorized representative as of the date
first written above.
PARTY
A: TAIYUAN PUTAI BUSINESS CONSULTING CO., LTD
By:
/s/ Zhao Xxxx
Xxxx
Ming, Chairman and CEO
PARTY
B: SHANXI PUDA RESOURCES CO., LTD.
By:
/s/ Zhao Xxxx
Xxxx
Ming, Chairman and CEO
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