Document:

exv4w10

 

	 	 	 
	 	 	Exhibit 4.10
	 	 	 
	 	 	
Contract No.: 02188

DATED            April 2002

TRENCH LIMITED

AND

SHANGHAI INSTRUMENT TRANSFORMER WORKS CO LTD

SHANGHAI SITICO INTERNATIONAL TRADING COMPANY

AND

MWB (SHANGHAI) CO LTD

SERIES REACTOR TECHNOLOGY HEAD-LICENCE AGREEMENT

 

 

CONTENTS

	 	 	 	 	 
	CLAUSE	 	PAGE
	
	 	

	1. DEFINITIONS
	 	 	2	 
	 
	 	 	 	 
	2. SCOPE AND CONTENTS OF SERIES REACTOR TECHNOLOGY AND KNOW-HOW
	 	 	5	 
	 
	 	 	 	 
	3. COMPLIANCE WITH LAWS
	 	 	7	 
	 
	 	 	 	 
	4. PAYMENTS
	 	 	7	 
	 
	 	 	 	 
	5. TAX
	 	 	8	 
	 
	 	 	 	 
	6. TECHNICAL DOCUMENTATION
	 	 	8	 
	 
	 	 	 	 
	7. VERIFICATION AND ACCEPTANCE
	 	 	8	 
	 
	 	 	 	 
	8. QUALITY AND INSPECTION
	 	 	9	 
	 
	 	 	 	 
	9. CONFIDENTIALITY
	 	 	9	 
	 
	 	 	 	 
	10. CLAIMS AND INFRINGEMENTS
	 	 	9	 
	 
	 	 	 	 
	11. WARRANTIES
	 	 	10	 
	 
	 	 	 	 
	12. TERM AND TERMINATION
	 	 	11	 
	 
	 	 	 	 
	13. AGENCIES
	 	 	12	 
	 
	 	 	 	 
	14. FORCE MAJEURE
	 	 	12	 
	 
	 	 	 	 
	15. LIABILITY FOR BREACH
	 	 	13	 
	 
	 	 	 	 
	16. SETTLEMENT OF DISPUTES
	 	 	13	 
	 
	 	 	 	 
	17. ASSIGNMENT
	 	 	13	 
	 
	 	 	 	 
	18. APPROVAL AND REGISTRATION
	 	 	14	 
	 
	 	 	 	 
	19. NOTICES
	 	 	15	 
	 
	 	 	 	 
	20. GENERAL
	 	 	16	 
	 
	 	 	 	 
	SCHEDULE 1 LIST OF LICENCED PRODUCTS AND MAIN CONTENTS OF TECHNICAL DOCUMENTATION
	 	 	18	 
	 
	 	 	 	 
	SCHEDULE 2 EMPLOYEE CONFIDENTIALITY AGREEMENT
	 	 	20	 

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THIS SERIES REACTOR TECHNOLOGY HEAD-LICENCE AGREEMENT (the “Agreement”) is made
on      April 2002.

BETWEEN

	(1)	 	TRENCH LIMITED (“Licensor”), a company duly organised and existing under
the laws of Canada whose registered office is at 71 Maybrook Drive,
Scarborough, Ontario M1V 4B6, Canada;
	 
	(2)	 	SHANGHAI INSTRUMENT TRANSFORMER WORKS CO LTD (the “SITW”), a legal person
organised and existing under the laws of the PRC and registered with the
State Administration of Industry and Commerce whose legal address is at
427 Jumen Road, Shanghai, People’s Republic of China; and
	 
	(3)	 	SHANGHAI SITICO INTERNATIONAL TRADING COMPANY (the “SITICO”), a legal
person organised and existing under the laws of the PRC and registered
with the State Administration of Industry and Commerce whose legal address
is at 111 Jiu Jiang Road, Shanghai, the People’s Republic of China.
	 
	(4)	 	MWB (SHANGHAI) CO LTD (the “Joint Venture Company”), limited liability
equity joint venture company organised and existing under the laws of the
PRC and registered with the State Administration of Industry and Commerce
whose legal address is at No 3658 Jiangcheng Road, Shanghai, the People’s
Republic of China.
	 
	 	 	For the purposes of this Agreement, SITW shall be referred to as the
“Licensee” unless otherwise provided. SITICO shall act as the agent of
the Licensee only for the import of the Series Reactor Technology and
Know-how, which shall only be obliged to perform the payment obligations
and other related commercial obligations as agent for SITW related to the
import of the Series Reactor Technology and Know-how. SITICO shall not
acquire any rights in relation to this Series Reactor Technology and
Know-how as a result of entering into this Agreement. SITICO will not be
responsible for any breach by the Licensee and the Joint Venture Company.

WHEREAS

	(A)	 	Pursuant to a joint venture contract (the “Joint Venture Contract”) and
articles of association each dated 12 November 1992, the Licensee and MWB
High Voltage Systems GmbH (“MWB”) (which has since been restructured as
Trench Germany GmbH) established the Joint Venture Company.
	 
	(B)	 	Pursuant to the terms of the Restated JV Contract (as defined below), the
Combined Coil Products (as defined below) are to be added to the business
of the Joint Venture Company.
	 
	(C)	 	The Licensor is the owner of the Series Reactor Technology and Know-how
relating to the Licensed Products.
	 
	(D)	 	The Parties intend to enter into this Agreement for the license by the
Licensor to the Licensee of the right to sub-license the Series Reactor
Technology and Know-how relating to the Licensed

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	 	 	Products to the Joint Venture Company in the Licensed Territory (in each
case as defined below) upon the terms and conditions set forth herein.
	 
	 	 	NOW IT IS AGREED between the Parties and follows:
	 
	1.	 	DEFINITIONS
	 
	1.1	 	Unless otherwise defined in this Agreement, terms defined in the Restated
JV Contract shall have the same meanings when used in this Agreement.
	 
	1.2	 	In addition, the following words and expressions shall have the meanings
given to them below when used in this Agreement:
	 
	 	 	“Approval” means approval of the Amendment by the Examination and
Approval Authority.
	 
	 	 	“Approval Date” means the date on which the Approval is granted.
	 
	 	 	“Affiliate” means in relation to each Party, any person who is directly
or indirectly controlling or controlled by or under direct or indirect
common control with such Party and any parent of such Party. For the
purposes of this definition, “control” when used with respect to any
person means the ownership of over fifty percent (50%) of the voting
stock, registered capital or other interest of that person, directly or
indirectly, whether through the ownership of voting securities, by
contractor otherwise, or the power to appoint the manager or majority of
members of the management committee, board of directors or equivalent
decision making body.
	 
	 	 	“Amendment” means the Amendment to the Restated JV Contract and the
Amendment to the Restated Articles of Association dated on or about the
date of this Agreement.
	 
	 	 	“Center” has the meaning given in Clause 16.1.
	 
	 	 	“Combined Coil Products” means the Line Trap Products, Series Reactor
Products and Shunt Reactor Products.
	 
	 	 	“Combined Coil Technology Agreements” means this Agreement, the Line Trap
Technology Head Licence Agreement, and Shunt Reactor Technology Head
Licence Agreement.
	 
	 	 	“Combined Coil Technology and Know-how” means the Line Trap Technology
and Know-how, Series Reactor Technology and Know-how and Shunt Reactor
Technology and Know-how.
	 
	 	 	“Conversion Date” means, in relation to the conversion of Renminbi to US
Dollars for the purpose of paying the Technology Licence Fee hereunder,
the date falling five (5) banking days before the date on which the
Technology Licence Fee is due.
	 
	 	 	“Conversion Rate” means the official exchange rate published by the
People’s Bank of China, Shanghai Branch prevailing on the Conversion
Date.
	 
	 	 	“Effective Term” means the period commencing on the Approval Date and
expiring on the date of expiration of the Royalty Term.

2

 

	 	 	“Examination and Approval Authority” means the Ministry of Foreign Trade
and Economic Cooperation or the authority entrusted by such Ministry to
register this Agreement and approve the Amendment.
	 
	 	 	“Execution Date” means the date on which this Agreement is signed.
	 
	 	 	“Force Majeure” has the meaning given in Clause 14.1.
	 
	 	 	“Improvements” means any improvement, modification or alteration to the
Licensed Products or to the Series Reactor Technology and Know-how.
	 
	 	 	“Licensed Products” means the products defined in Schedule 1 under the
heading “Licensed Coverage”.
	 
	 	 	“Licensed Territory” means China (but excludes the Hong Kong SAR, Macau
and Taiwan).
	 
	 	 	“Line Trap Products” means the licensed products under the Line Trap
Technology Head Licence Agreement.
	 
	 	 	“Line Trap Technology and Know-how” has the meaning ascribed to it in the
Line Trap Technology Head Licence Agreement.
	 
	 	 	“Line Trap Technology Head Licence Agreement” means the Line Trap
Technology Head Licence Agreement between the parties dated on or about
the date of this agreement.
	 
	 	 	“Parties” means the Licensee, the Licensor and the Joint Venture Company,
and “Party” means any of them.
	 
	 	 	“PRC” or “China” means the People’s Public of China.
	 
	 	 	“Restated JV Contract” means the restated joint venture contract dated 7
April 2000 as amended by the Amendment between the SITW, Trench Germany
GmbH, Trench Switzerland AG and the Licensor.
	 
	 	 	“Royalty Term” means the period of 9 years and 8 months from the date of
issue by the Joint Venture Company of the first commercial invoice for
any of the Combined Coil Products.
	 
	 	 	“Series Reactor Products” means the Licensed Products under this
Agreement.
	 
	 	 	“Series Reactor Technology and Know-how” means the Licensor’s knowledge,
technology and methods necessary for the manufacture, management, quality
control, quality inspection, packaging and sale of the Licensed Products
and supplied in accordance with this Agreement, whether in written form,
drawing or otherwise, and which includes, without limitation, at least
the following:

	 	(a)	 	raw materials, product and process specifications, product
formulae, design information and drawings as well as technical
specifications of the production equipment and processing
specifications;

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	 	(b)	 	technology, techniques, quality control, quality inspection,
technology standards and good manufacturing practices required for
production;
	 
	 	(c)	 	information and experience required for installation,
testing, use, inspection, repair and maintenance of production
equipment;
	 
	 	(d)	 	information and experience for management of operation
procedures, production, quality control, marketing and sales;
	 
	 	(e)	 	information on marketing, label design, advertising,
promotional materials and other techniques;
	 
	 	(f)	 	information relating to the latest improvements, corrections
and developments to or of the technology and know-how licensed under
this Agreement; and
	 
	 	(g)	 	the detailed documents and appendices relating to the content
of the technology and know-how licensed under this Agreement, as
summarised in Schedule 1.

	 	 	“Series Reactor Technology Head Licence Agreement” means this Agreement.
	 
	 	 	“Shunt Reactor Products” means the licensed products under the Shunt
Reactor Technology Head Licence Agreement.
	 
	 	 	“Shunt Reactor Technology Head Licence Agreement” means the agreement
titled “Shunt Reactor Technology Head Licence Agreement” between the
parties dated on or about the same date as this agreement.
	 
	 	 	“Shunt Reactor Technology and Know-how” has the meaning ascribed to it in
the “Shunt Reactor Technology Head Licence Agreement.
	 
	 	 	“Sub-Licence Agreement” means the agreement entered into between SITW,
the Licensor and the Joint Venture Company for the license of Combined
Coil Technology and Know-how dated on or about the date of this
Agreement.
	 
	 	 	“Technical Documentation” means documentary materials relating to the
Combined Coil Technology and Know-how furnished to the Joint Venture
Company by the Licensor in accordance with this Agreement (as summarised
in Schedule 1) and the other Combined Coil Technology Agreements.
	 
	 	 	“Technical Service Agreement” means the agreement between the Licensor
and the Joint Venture Company for the provision of technical services
dated on or about the date of this Agreement.
	 
	 	 	“Technology Licence Fee” has the meaning given in Clause 4.1.
	 
	 	 	“US Dollar” or “US$” means the lawful currency of the United States of
America.
	 
	1.3	 	The table of contents and headings to the Clauses and Schedules are
inserted for convenience of reference only and shall be ignored in the
interpretation of this Agreement.

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	1.4	 	In this Agreement, unless the context otherwise requires:

	 	 	(a)	references to Clauses and Schedules are to the clauses of and
the schedules annexed to this Agreement;
	 
	 	 	(b)	words importing the plural shall include the singular, and
vice versa;
	 
	 	 	(c)	references to a “person” shall be construed as including
references to an individual, enterprise, firm, partnership,
consortium, joint venture, association, joint stock company, trust,
unincorporated organisation or governmental or non governmental
organisation, whether or not having separate legal personality; and
	 
	 	 	(d)	“including” and similar expressions are not words of
limitation.

	2.	 	SCOPE AND CONTENTS OF SERIES REACTOR TECHNOLOGY AND KNOW-HOW
	 
	2.1	 	Subject to the terms and conditions contained herein, the Licensor hereby
grants within the Licensed Territory to the Licensee and the Licensee
hereby accepts from the Licensor, an exclusive, non-transferable licence
of the Series Reactor Technology and Know-how for the Effective Term,
granted strictly in accordance with the terms of this Agreement and only
to the extent that the Licensee sub-licence, strictly in accordance with
the terms of the Sub-Licence Agreement, the Series Reactor Technology and
Know-how, together with the Line Trap Technology and Know-how and the
Shunt Reactor Technology and Know-how, to the Joint Venture Company in
connection with the manufacture and sale of the Combined Coil Products,
including the Licensed Products, by the Joint Venture Company in the
Licensed Territory. Nothing in this Agreement shall entitle the Licensee
to use the Series Reactor Technology and Know-how other than to
sub-licence the same to the Joint Venture Company.
	 
	2.2	 	The Licensor shall send experts or technical personnel and provide
complete, timely and adequate technical support to provide the Series
Reactor Technology and Know-how to the Joint Venture Company as specified
in the agreed training program pursuant to this Agreement, the Sub-Licence
Agreement and the Technical Service Agreement. The experts and technical
personnel may be employees of the Licensor or be retained by the Licensor
from other sources. The Series Reactor Technology and Know-how shall be
transferred after the training program has been formulated and agreed by
the Joint Venture Company and the Licensor.
	 
	2.3	 	In the event that the Licensee or the Joint Venture Company encounter
technical difficulties that the Parties recognise that the Licensee or, as
the case may be, the Joint Venture Company cannot resolve by itself, the
Licensor shall, send experts or technical personnel to assist in resolving
such technical problems as provided in Clause 3.2 of the Technical Service
Agreement.

	2.4	 	2.4.1	During the Effective Term, if the
Licensee and/or Joint Venture Company makes or acquires any Improvements relating to the Licensed
Products it shall, to the extent that it is not prohibited by any
applicable law:

5

 

	 	 	(a)	promptly notify the Licensor in writing giving
details of the Improvements and shall provide the Licensor
with such information or explanations as the Licensor may
request; and
	 
	 	 	(b)	procure that the Licensor may legally and
effectively own and use the Improvements to enable the
Licensor to grant the Licensee a non-exclusive licence to use
the Improvements free of charge for the sole purpose of
sub-licensing the same to the Joint Venture Company in
accordance with the Sub-Licence Agreement.

	 	 	2.4.2	If any applicable law prohibits ownership by Licensor of any
Improvement made or acquired by the Joint Venture Company then such
Improvement shall be owned and used by the Joint Venture Company
subject as provided below:

	 	 	(a)	Clause 2.4.2 shall by only relate to Improvements
made or acquired whilst the relevant prohibition is in force
in China;
	 
	 	 	(b)	The Joint Venture Company shall own and use the
Improvement subject to the same conditions as apply to its use
of the Series Reactor Technology and Know-how;
	 
	 	 	(c)	The relevant Improvement shall be forthwith
exclusively licensed to the Licensor for as long as required
by the Licensor free of charge and unconditionally; and
	 
	 	 	(d)	The Joint Venture Company shall not sell or
dispose of any interest in or to the Improvement without the
consent of the Licensor.

	2.5	 	If the Licensor makes or acquires any Improvements relating to the
Licensed Products it shall, within twelve (12) months after the
Improvements have been verified in commercial production by the Licensor,
provide the Licensee details of the Improvements and such information or
explanations as the Licensee may request for the sole purpose of
sub-licensing the Improvements to the Joint Venture Company, subject to
the restriction of Clause 2.1, free of charge.
	 
	2.6	 	The Licensee shall not (i) assign or otherwise transfer the Series
Reactor Technology and Know-how, or any other rights granted to it under
this Agreement, to any third party, or (ii) sub-license the Series Reactor
Technology and Know-how to any entity other than the Joint Venture Company
without the prior written consent of the Licensor.
	 
	2.7	 	Upon the expiry of this Agreement, the Licensee may continue to use the
Series Reactor Technology and Know-how (but solely to the extent and for
the purpose referred to in Clause 2.1) without entering into a new
technology licence agreement provided that the Licensee shall remain
subject to the following provisions of this Agreement: 2.4, 2.6, 2.11, 3,
9, 10, 12, 15, 16, 19, 20 and 21. However, if after the expiration of this
Agreement, the Licensee requests to use or licence any know-how newly
developed by the Licensor after the expiration of this Agreement for any
purpose whatsoever, the Parties shall enter into a new technology know-how
licence agreement and register the same with the Examination and Approval
Authority.

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	2.8	 	The Licensor and the Joint Venture Company shall formulate a training
program for personnel of the Joint Venture Company to master the Combined
Coil Technology and Know-how, including the Series Reactor Technology and
Know-how licensed hereunder, and shall specify the qualifications of
personnel suitable for receiving such training. The Licensor shall be
responsible for such training in order to ensure that employees of the
Joint Venture Company receive adequate training in the design and
manufacture of the Licensed Products.
	 
	2.9	 	If such training as aforesaid is to be conducted within the PRC, the
Licensor will be responsible for expenses relating to travel and lodging
(including food) of its personnel sent to the Joint Venture Company for
conducting such training and the Joint Venture Company shall bear all
other expenses relating thereto. If the Joint Venture Company retains
experts who are not employees of the Licensor or its Affiliates to conduct
training in China, the Joint Venture Company shall bear all related
expenses.
	 
	2.10	 	If such training as aforesaid is to be conducted outside the PRC, the
Joint Venture Company shall be responsible for expenses relating to travel
and lodging (including food) of personnel of the Joint Venture Company
sent for such training and the Joint Venture Company shall be responsible
for all other expenses relating thereto.
	 
	2.11	 	The Licensee shall obtain the prior written approval of the Licensor
before permitting the Joint Venture Company to proceed with each proposed
use by the Joint Venture Company of any of the Combined Coil Technology
and Know-how, including the Series Reactor Technology and Know-how. If the
proposed use is not in conformity with this Agreement, the Licensor may,
in its sole discretion, refuse to approve such a proposal, or may amend
the proposal to bring it into conformity with this Agreement within a
reasonable period from the receipt of the proposed use, and the Licensee
shall, accept such refusal or amendment.
	 
	3.	 	COMPLIANCE WITH LAWS
	 
	 	 	The Licensee shall, observe and comply with all laws, rules and
regulations applicable to the sub-licensing of the Licensed Products in
the Licensed Territory. The Licensee shall, at its own cost and expense,
secure and maintain all necessary governmental permits, licences and
approvals, and will fulfil all other requirements and undertakings
related to this Agreement which are or may become necessary under any law
or regulation, now or hereafter existing in the PRC, to enable the
Parties to exercise, enforce and enjoy all of the rights and obligations
contained in this Agreement, including, but not limited to, registration
certificate required from the Examination and Approval Authority and
approvals if any necessary to enable the payment and remittance of the
Technology Licence Fee to the Licensor in accordance with Clause 4.
	 
	4.	 	PAYMENTS
	 
	4.1	 	The Licensee shall pay through SITICO to the Licensor a technology
licence fee (the “Technology Licence Fee”) in an amount of Five Million
United States Dollars (US$5,000,000) immediately after the Approval Date
upon receipt by the Licensee and SITICO of the commercial invoice and
payment instruction issued by the Licensor and in any event, no later than
30 June 2002.

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	4.2	 	The Licensee and SITICO shall pay the Technology Licence Fee to such
account or accounts as shall be specified in writing by the Licensor to
the Licensee.
	 
	4.3	 	All relevant bank charges incurred with respect to the payment of the
Technology Licence Fee in the PRC shall be borne by the Licensee and
SITICO.
	 
	4.4	 	In the event the Licensee and SITICO are unable to pay the Technology
Licence Fee in US Dollars or another foreign currency acceptable to the
Licensor as a result of any change in the foreign exchange laws or
interpretation or application thereof, the Licensee and SITICO may, upon
obtaining the prior written agreement of the Licensor, pay the Technology
Licence Fee in RMB. In such case, the Licensee and SITICO shall assist the
Licensor to convert the RMB into US Dollars or another foreign currency
acceptable to the Licensor at the Conversion Rate on the Conversion Date,
but the foreign exchange risk and related costs shall be borne by the
Licensor.
	 
	5.	 	TAX
	 
	5.1	 	Where the Licensee and SITICO are required under PRC law to withhold tax
(including business tax) on the Technology Licence Fee receivable by the
Licensor under this Agreement, the Licensee and SITICO shall withhold the
same and pay over the same to the relevant PRC tax authority on behalf of
the Licensor. The Licensee and SITICO undertake to deliver promptly to the
Licensor all receipts, certificates or other proof evidencing each amount
withheld and paid by the Licensee and SITICO on account of such tax.
	 
	5.2	 	The Licensee and SITICO agree and undertake to assist the Licensor to the
greatest extent possible in applying for all tax benefits that the
Licensor may be entitled to under Chinese law.
	 
	5.3	 	All taxes to be levied inside and outside PRC on Licensor in connection
with the payment made to the Licensor under this Agreements shall be borne
by the Licensor.
	 
	6.	 	TECHNICAL DOCUMENTATION
	 
	 	 	The Licensor shall have the right to make necessary amendments to the
Technical Documentation from time to time.
	 
	7.	 	VERIFICATION AND ACCEPTANCE
	 
	7.1	 	As soon as is practicable after delivery of the Technical Documentation,
the Licensor and the Joint Venture Company shall conduct test-runs to
determine whether the equipment of the Joint Venture Company can produce
the Licensed Products at quality standards which satisfy the quality
standards specified by the Licensor’s Series Reactor Technology and
Know-how. After the conduct of successful test-runs, the Licensor and the
Joint Venture Company shall sign an acceptance certificate to such effect.
	 
	7.2	 	Test runs of equipment shall be conducted jointly by the Licensor and the
Joint Venture Company. A test run is the testing of installed machinery
with respect to performance (speed and capacity) and quality.

8

 

	7.3	 	Neither the Licensor nor the Licensee shall be responsible for the Joint
Venture Company’s losses resulting from:-

	 	 	(a)	the raw materials purchased by the Joint Venture Company
directly or indirectly not conforming to the raw material standards
in the Technical Documentation:
	 
	 	 	(b)	lack of experience of the Joint Venture Company’s personnel
in manufacturing the Licensed Products resulting in errors; or
	 
	 	 	(c)	Force Majeure.

	8.	 	QUALITY AND INSPECTION
	 
	8.1	 	The Licensee shall, sub-licence the Joint Venture Company to,
manufacture, store, analyse, test and sell the Licensed Products only in
strict accordance with the Series Reactor Technology and Know-how supplied
by the Licensor.
	 
	9.	 	CONFIDENTIALITY
	 
	9.1	 	The Licensee shall, on and from the Execution Date, during the term of
this Agreement and within five (5) years after its termination or
expiration for any reason, keep confidential and not, for any purpose
other than the performance of its obligations under this Agreement, make
use of or disclose to any other person otherwise than in accordance with
Clause 9.2 or with the prior written consent of the Licensor, the scope
and content of the Combined Coil Technology and Know-how, including the
Series Reactor Technology and Know-how, including but not limited to,
information contained in the Technical Documentation (if any has been
delivered to the Licensee), and any other information disclosed (whether
in writing, verbally or by other means) by or on behalf of the Licensor,
unless such technology and know-how is public knowledge or is otherwise
required by applicable laws or regulations or by an order of a court
having competent jurisdiction.
	 
	9.2	 	During the Effective Term, the Licensee may disclose information which is
confidential under Clause 9.1 to the Joint Venture Company or their
respective employees, but only to the extent necessary for the purposes of
this Agreement and provided such employees have signed a confidentiality
agreement in the form set out in Schedule 2.
	 
	9.3	 	The Licensee shall at its own expense, take such steps as the Licensor
may require to enforce the terms of any confidentiality contract executed
pursuant to Clause 9.2 including, but not limited to, the initiation,
prosecution and enforcement of any legal proceedings.
	 
	10.	 	CLAIMS AND INFRINGEMENTS
	 
	10.1	 	The Licensee shall immediately notify the Licensor of any claim, or any
fact which may lead to a claim, of any nature by a third party that the
sub-licensing of the Series Reactor Technology and Know-how by the
Licensee the use of the Series Reactor Technology and Know-how by the
Joint Venture Company is or may be an infringement of a patent or other
proprietary right of such third party, but otherwise shall take no action
relating to such claim or infringement without the Licensor’s written
consent. The Licensor shall advise the Licensee whether it wishes

9

 

	 	 	to conduct a defence of any such claim. Should the Licensor elect to
conduct such a defence, it shall do so at its own expense, and the
Licensor shall have sole control of such defence and the Licensee shall
give all reasonable assistance to the Licensor to enable it to do so.
	 
	10.2	 	The Licensor shall indemnify the Licensee and bear related costs for any
claims, losses, damages, proceedings sustained by the Licensee in relation
to any claims that may be made against the Licensee pursuant to Clause
10.1, unless such claims, losses, damages, proceedings result from the
default by the Licensee of their obligations under this Agreement or the
use of Series Reactor Technology and Know-how by the Licensee otherwise
than in accordance with this Agreement.
	 
	10.3	 	If any third party takes any action in connection with the sub-licensing
of the Series Reactor Technology and Know-how by the Licensee and thereby
hinders the Licensee from sub-licensing the Series Reactor Technology
and Know-how to the Joint Venture Company for the manufacture, packaging
or sale of the Licensed Products, the Licensor shall be responsible for
taking action, including defending any legal claim or reconciling with a
third party to remove such hindrance.
	 
	10.4	 	In the event that the Licensor elects not to take action under Clause
10.3, the Licensee may, with the written consent of the Licensor, take
action in relation to the relevant infringement, and the Licensor shall
reimburse the Licensee for any costs and expenses incurred for taking such
action and give all reasonable assistance in connection therewith.
	 
	10.5	 	Notwithstanding the foregoing, the Licensee shall not enter into any
compromise, settlement or agreement with any person or entities relating
to the Series Reactor Technology and Know-how otherwise than with the
written consent of the Licensor.
	 
	11.	 	WARRANTIES
	 
	11.1	 	The Licensor hereby represents and warrants to the Licensee that it has
the right to license the Series Reactor Technology and Know-how to the
Licensee in accordance with this Agreement and such licensing does not
violate the relevant laws of the jurisdictions of the Licensor and shall
not infringe any third party rights, and that the Series Reactor
Technology and Know-how, and the relevant technical assistance, guidance
and training, shall be sufficient to enable the quality of the Licensed
Products to reach the specifications and standards required by this
Agreement.
	 
	11.2	 	The Licensor shall use all reasonable endeavours to ensure that the
Technical Documentation shall be readable, complete and accurate in
English. The Licensee shall notify the Licensor in writing within four (4)
months after receipt thereof if any of the Technical Documentation is not
readable, complete or accurate and the Licensor shall correct or replace
the defective portions of the Technical Documentation free of charge to
the Licensee. In the absence of a written notice from the Licensee to the
Licensor within the four (4) month period, the Technical Documentation in
question shall be deemed to have been approved and accepted by the
Licensee.

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	11.3	 	The Licensee and SITICO warrant that it will neither contest, deny or
dispute the exclusive right of the Licensor in the Series Reactor
Technology and Know-how or the validity or enforceability of the Series
Reactor Technology and Know-how in the PRC or any other country, nor will
they assist anyone else to do so. Each of the Licensee and SITICO agrees
that it shall not, take any action of any kind inconsistent with the
Licensor’s rights in the Series Reactor Technology and Know-how, and
acknowledges that nothing in this Agreement confers upon either the
Licensee or SITICO a proprietary interest of any kind in and to any of the
Series Reactor Technology and Know-how or simulations thereof.
	 
	12.	 	TERM AND TERMINATION
	 
	12.1	 	This Agreement shall take effect on the Execution Date and shall remain
in full force and effect thereafter until the last day of the Effective
Term subject to Clause 2.7 unless terminated earlier pursuant to Clause
12.2 provided that if the Restated JV Contract or the Sub-Licence
Agreement or any of the Combined Coil Technology Agreements is terminated
prior to the expiration of its term, this Agreement shall automatically
terminate with immediate effect from the date of termination of the
Restated JV Contract or the Sub-Licence Agreement or any of the Combined
Coil Technology Agreements (as the case may be), except that termination
shall not affect:

	 	 	(a)	The accrued rights and obligations of the Parties at the date
of termination; and
	 
	 	 	(b)	The continued existence and validity of the rights and
obligations of the Parties under those clauses which are expressed
to survive termination and any provisions of this Agreement
necessary for the interpretation or enforcement of this Agreement.

	12.2	 	This Agreement may be terminated:

	 	 	12.2.1	by any Party giving notice to the other Parties if another Party
has committed a material breach of this Agreement and such breach,
if capable of remedy, has not been so remedied within sixty (60)
days following receipt of such notice;
	 
	 	 	12.2.2	by any Party giving notice to the other Parties in the event that
an event of Force Majeure continues for a period of twelve (12)
consecutive months that causes the Joint Venture Company to cease
the production and sale of the Licensed Products and the Parties
have been unable to find an equitable solution pursuant to Clause
14;
	 
	 	 	12.2.3	by any Party giving notice to the other Parties if at any time
during the term of this Agreement, the government of the PRC or of
Canada or any agency thereof should require any material alteration
or modification or termination of the contractual rights or
obligations of any Party pursuant to this Agreement which has the
effect of preventing any Party from performing its contractual
obligations or from achieving its business objectives.
	 
	 	 	12.2.4	by any Party giving notice to the other Parties if another Party
becomes bankrupt, or insolvent, or is the subject of proceedings or
arrangements for liquidation or

11

 

	 	 	 	dissolution, or ceases to carry on business, or becomes unable to
pay its debts as they become due; or
	 
	 	 	12.2.5	by the Licensor giving notice to the Licensee and the Joint
Venture Company if the aggregate of the interests of the Licensor
and any of its Affiliates in the Joint Venture Company is or becomes
less than fifty percent (50%) of the registered capital of the Joint
Venture Company as a result of any change in or requirement of
Chinese law or any act of any Chinese governmental agency or court.

	12.3	 	Either Party electing properly to terminate this Agreement pursuant to
Clause 12.2 shall have no liability to the other Party for damages arising
solely from the exercise of such right.
	 
	12.4	 	Upon expiration or termination of this Agreement, all amounts then due
and unpaid to the Licensor by the Licensee hereunder shall forthwith
become due and payable by the Licensee to the Licensor.
	 
	12.5	 	All Combined Coil Technology and Know-how, including the Series Reactor
Technology and Know-how and the Technical Documentation (if any has been
delivered to the Licensee), recorded in any material form including but
not limited to any written records shall be returned by the Licensee to
the Licensor forthwith upon the termination of this Agreement. The
Licensee agrees on behalf of itself and its employees that no copies of
the Combined Coil Technology and Know-how, including the Series Reactor
Technology and Know-how, in any material form or of the Technical
Documentation shall be made or retained upon and after the termination of
this Agreement.
	 
	13.	 	AGENCIES
	 
	 	 	The Parties arc independent contractors, and nothing in this Agreement
shall be construed to constitute any Party to be the agent, partner,
legal representative, attorney or employee of any other Party for any
reason whatsoever except as specifically set out in this Agreement. No
Party shall have the power or authority to bind the other except as
specifically set out in this Agreement.
	 
	14.	 	FORCE MAJEURE
	 
	14.1	 	“Force Majeure” means all events which are beyond the control of the
Parties to this Agreement, and which are unforeseen, or if foreseen,
unavoidable, and which prevent total or partial performance by any Party.
Such events shall include but are not limited to any explosions,
shipwrecks, acts of nature or the public enemy, fires, flood, sabotage,
accidents, strikes, wars, riots, insurrections, and any other similar
contingency.
	 
	14.2	 	If an event of Force Majeure occurs, to the extent that any contractual
obligation of any Party cannot be performed as a result of such event,
such contractual obligation shall be suspended while the Force Majeure
subsists and the due date for performance thereof shall be automatically
extended, without penalty, for a period equal to such suspension.
	 
	14.3	 	The Party encountering Force Majeure shall, within fifteen (15) days of
the relevant event, notify the other Parties and furnish valid proof of
the occurrence of such Force Majeure. Within

12

 

	 	 	a reasonable period thereafter that Party shall provide the other Parties
with evidence of the Force Majeure issued by a relevant agency. The Party
encountering Force Majeure shall also use all reasonable endeavours to
minimise the Force Majeure.
	 
	14.4	 	In the event of Force Majeure, the Parties shall immediately consult with
each other in order to mutually agree an equitable solution (which may
involve early termination of this Agreement, deletion of certain
provisions thereof or extension of the term of this Agreement) and shall
use all reasonable endeavours to minimise the consequences of such Force
Majeure.
	 
	15.	 	LIABILITY FOR BREACH

	15.1	 	(1)	The Licensee shall indemnify and hold the Licensor indemnified
against all losses, liabilities, costs, claims, actions, damages, expenses
or demands, but excluding consequential loss or loss of profits, which the
Licensor may incur, or which may be made against the Licensor as a result
of or in relation to any breach by the Licensee of its obligations under
this Agreement or arising out of any use of the Series Reactor Technology
and Know-how by the Licensee which is not in accordance with this
Agreement. For the avoidance of doubt, the payments referred to in Clause
4 are not considered profit for the purpose of this Clause.
	 
	 	 	(2)	SITICO shall indemnify and hold the Licensor indemnified
against all losses, liabilities, costs, claims, actions, damages,
expenses or demands, but excluding consequential loss or loss of
profits, which the Licensor may incur, or which may be made against
the Licensor as a result of or in relation to any breach by SITICO
(for which SITICO is responsible) of its obligation to perform the
payment obligations and other related commercial obligations as
agent for SITW related to the import of the Series Reactor
Technology and Know-how.

	15.2	 	The Licensor shall each indemnify and hold the Licensee and SITICO
indemnified against all losses, liabilities, costs, claims, actions,
damages, expenses or demands, (but excluding consequential loss or loss of
profits), which the Licensee may incur, or which may be made against the
Licensee and SITICO as a result of or in relation to any breach by the
Licensor of its obligations under this Agreement.
	 
	15.3	 	If any of the obligations in this Agreement cannot be performed due to
the fault of all of the Parties, each party shall bear the responsibility
for breach of contract in accordance with the extent of each party’s
fault.
	 
	16.	 	SETTLEMENT OF DISPUTES
	 
	16.1	 	Any dispute or difference of any kind whatsoever arising out of or in
connection with this Agreement or any of the agreements contemplated
herein, including any question in connection with the existence,
construction, interpretation, validity, termination or implementation of
this Agreement or of any of the agreements contemplated herein, shall bc
referred to and finally settled by the Singapore International Arbitration
Center (the “Center”) in accordance with the applicable arbitration rules
of the United Nations Commission on International Trade Law.

13

 

	16.2	 	The arbitration tribunal shall be composed of three (3) arbitrators. The
Licensor and SITW each hereto shall be entitled to appoint one (1)
arbitrator and the Center shall appoint the third (the Chairman) who shall
not be a national of the country of incorporation of any Party. The place
of arbitration shall be Singapore. The language to be used in any
arbitration proceedings shall be English.
	 
	16.3	 	Any award made by the arbitration tribunal shall be final and binding on
all Parties, who hereby exclude any right of appeal to any court which
might otherwise have jurisdiction in the matter, and shall bc enforceable
in any country which is a signatory to the 1958 New York Convention.
	 
	16.4	 	No arbitration of any dispute or difference shall commence unless the
Parties have attempted genuinely to settle the same amicably within a
period of thirty (30) days after the date of the giving of a written
notice of arbitration by one Party hereto to the other Parties, which
notice shall describe generally the nature of the dispute.
	 
	16.5	 	The costs of arbitration shall be borne by the losing Party or Parties,
unless otherwise determined by the arbitration award.
	 
	16.6	 	When any dispute occurs and when any dispute is under arbitration, except
for the matters under dispute, the Parties shall continue to fulfil their
respective obligations (and shall be entitled to exercise their rights)
under this Agreement.
	 
	17.	 	ASSIGNMENT
	 
	 	 	The Licensor may, without the written consent of the Licensee or the
Joint Venture Company and without any further registration with the
Examination and Approval Authority, have this Agreement in whole or in
part performed by any one or more of its Affiliates, and may assign this
Agreement to any company which may become a successor of the Licensor.
The Licensor is only required to give notice to the Licensee and the
Joint Venture Company of such an assignment.
	 
	18.	 	APPROVAL AND REGISTRATION AND FURTHER ASSURANCE
	 
	18.1	 	Within thirty (30) days of the Execution Date, the Licensee and SITICO
shall file an application for this Agreement (in Chinese and English) with
the Examination and Approval Authority for registration. The Licensee and
SITICO shall bear the costs in relation to such application.
	 
	18.2	 	Immediately after the Execution Date, the Licensee shall submit the
Amendment to the Examination and Approval Authority for Approval.
	 
	18.3	 	The Licensee shall advance all necessary fees and expenses for the
Approval and shall be reimbursed for the amounts so advanced from the
funds of the Joint Venture Company, provided that such fees and expenses
are fully and properly documented, and are paid directly to the relevant
government authority and not to any service company or intermediary and
are reasonably and necessarily incurred after consultation with the
Licensor.
	 
	18.4	 	Without limiting Clause 18.1, and Clause 18.2 each Party must promptly at
its own cost do all things necessary (including executing documents and
obtaining all necessary governmental

14

 

	 	 	permits, licenses and approvals which are or may become necessary under any law or regulation, now or hereafter
existing in the PRC) to enable the Parties to exercise, enforce and enjoy
all of the rights and obligations contained in this Agreement.
	 
	19.	 	NOTICES
	 
	19.1	 	Any notice or other communication provided for in this Agreement shall be
in writing in the English and Chinese languages and shall be delivered
personally or sent by telefax to the person, address or telefax referred
to below or to such other person, address or telefax number as a Party may
specify by notice in writing to all the other Parties:

	 	(a)	 	if to the Licensor, to:
	 
	 	 	 	Name: Trench Limited
	 
	 	 	 	Address: 71 Maybrook Drive, Scarborough, Ontario, M1V 4B6, Canada
	 
	 	 	 	Facsimile: 1-416-2987083
	 
	 	 	 	Marked for the attention of: John Finlay
	 
	 	(b)	 	if to the Licensee, to:
	 
	 	 	 	Name: Shanghai Instrument Transformer Works Co. Ltd.
	 
	 	 	 	Address: 427 Jumen Road, Shanghai, People’s Republic of China
	 
	 	 	 	Facsimile: 8621-63014591
	 
	 	 	 	Marked for the attention of: Zhang Wei Guo
	 
	 	(c)	 	if to SITICO
	 
	 	 	 	Name: Shanghai SITICO International Trading Company
	 
	 	 	 	Address: SITICO Building, 111 Jiu Jiang Road, Shanghai, China
	 
	 	 	 	Facsimile: 8621-63291824
	 	 	 	                  8621-63291096
	 
	 	 	 	Mark for the attention of: Zhang Le Shou
	 
	 	 	 	other.
	 
	 	(d)	 	if to the Joint Venture Company
	 
	 	 	 	Name: MWB (Shanghai) Co. Ltd.
	 
	 	 	 	Address: No 3658 Jiangcheng Road, Minhang Shanghai China 200245
	 
	 	 	 	Facsimile: 8621-64637828

15

 

	 	 	 	Mark for the attention of: Xu Ying

	19.2	 	In the absence of evidence of earlier receipt, any notice or other
communication shall be deemed to have been duly given:

	 	 	(a)	if delivered personally, when left at the address referred to
in Clause 19.1;
	 
	 	 	(b)	if sent by facsimile, when clearly received in full.

	19.3	 	Notices given under any of the Combined Coil Technology Agreements shall
be deemed to be a notice given under this Agreement and notice given under
this Agreement shall be deemed to be notice given under all of the
Combined Coil Technology Agreements.
	 
	20.	 	GENERAL
	 
	20.1	 	The failure to exercise or delay in exercising a right or remedy under
this Agreement shall not constitute a waiver of the right or remedy or a
waiver of any other rights or remedies and no single or partial exercise
of any right or remedy under this Agreement shall prevent any further
exercise of the right or remedy or the exercise of any other right or
remedy.
	 
	20.2	 	This Agreement shall be governed by and interpreted in accordance with
Hong Kong law.
	 
	20.3	 	This Agreement shall be written and executed in both Chinese and English
language versions. Each Party agrees that each language version is an
accurate translation of the other and that both versions carry the same
legal effect.
	 
	20.4	 	Should any Clause or any part of any Clause contained in this Agreement
be declared invalid or unenforceable for any reason whatsoever, all other
Clauses or parts of Clauses contained in this Agreement shall remain in
full force and effect.
	 
	20.5	 	This Agreement constitutes the entire agreement between the Parties
relating to the subject matter of this Agreement and supersedes all
previous agreements.
	 
	20.6	 	If there is any conflict or inconsistency between the provisions of this
Agreement and the Restated JV Contract, the provisions of the Restated JV
Contract shall prevail.
	 
	20.7	 	No variation of this Agreement shall be valid unless it is in writing and
signed by or on behalf of each of the Parties.
	 
	20.8	 	This Agreement shall be executed in six (6) originals in English and six
(6) in Chinese.
	 
	20.9	 	This Agreement, the Line Trap Technology Head Licence Agreement, the
Shunt Reactor Technology Head Licence Agreement are interdependent and
must be signed at the same time. Default by a party under the any of
these agreements may be treated by the other party as default under this
Agreement.

16

 

IN WITNESS WHEREOF each of the Parties hereto has caused this Agreement to be
executed by its duly authorised representative on the date first set forth
above.

 

TRENCH LIMITED

 

/s/ John Finlay

Name: John Finlay

Title: Executive Vice President, North America and International

Nationality: Canadian

 

SHANGHAI INSTRUMENT TRANSFORMER WORKS CO. LTD.

 

/s/ Zhang Wei Guo

Name: Zhang Wei Guo

Title: Director

Nationality: Chinese

 

SHANGHAI SITICO INTERNATIONAL TRADING COMPANY

 

/s/ Zhao Jun Bo

Name: Zhao Jun Bo

Title: General Manager

Nationality: Chinese

 

MWB (SHANGHAI) CO LTD

 

/s/ John Finlay

Name: John Finlay

Position: Authorised Signatory

Nationality: Canadian

17

 

SCHEDULE 1

LIST OF LICENCED PRODUCTS AND MAIN CONTENTS OF TECHNICAL DOCUMENTATION

	1.	 	Licensed coverage
	 
	 	 	Dry type air core coil technology for Series Reactors for applications
like: Short circuit limiting, Filter, Load Flow, Load balancing, Damping,
Neutral grounding, Capacitor discharge, HVDC — Smoothers.
	 
	2.	 	Main contents
	 
	2.1	 	Design & Know How
	 
	 	 	Complete designs and know how for the entire range according to IEC &
ANSI standard, such as:

	 	(1)	 	Design Software — Electrical & Mechanical
	 
	 	(2)	 	Design Costs — Material & Labour Hours
	 
	 	(3)	 	Standard labour hours
	 
	 	(4)	 	Standard parts drawings
	 
	 	(5)	 	Typical drawing for one specific rating of each

	2.2	 	Technical documentation, such as:

	 	(1)	 	Manufacturing Procedures
	 
	 	(2)	 	Material Specifications
	 
	 	(3)	 	QA Manual
	 
	 	(4)	 	List of required manufacturing equipment
	 
	 	(5)	 	List of required routine test equipment
	 
	 	(6)	 	Welding standards
	 
	 	(7)	 	Test & Inspection Plan
	 
	 	(8)	 	Incoming material inspections and tests
	 
	 	(9)	 	In-house quality test procedures
	 
	 	(10)	 	Inspection standards

18

 

	 	(11)	 	In-process and final test procedures
	 
	 	(12)	 	The drawings for main tools & equipment and operational
procedures for assembling.
	 
	 	(13)	 	Measures for quality assurance
	 
	 	(14)	 	Completed test items (incl. type test & routine test) and
procedures
	 
	 	(15)	 	The list & specification of test equipment for routine tests,
requirement on testing equipment and testing circuit, etc.
	 
	 	(16)	 	Other necessary documentation

19

 

SCHEDULE 2

EMPLOYEE CONFIDENTIALITY AGREEMENT

I                     
[name], [position] of Transformer Shanghai Instrument
Transformer Works (“SITW”) [or MWB (Shanghai) Co., Ltd. or name of
subcontractor] (“Employer”) hereby represent, warrant and agree to keep
confidential the Combined Coil Technology and Know-how, the Technology
Sub-Licence Agreement, dated [     ] between SITW, Trench Limited (as “Contractor”)
and MWB (Shanghai) Co Ltd (the “Joint Venture Company”) and the Line Trap
Reactor Head Licence Agreement, Shunt Reactor Technology Head Licence Agreement
and the Series Reactor Technology Head Licence Agreement all dated [     ]
between Trench Limited, SITW, Shanghai SITICO International Trading Company and
the Joint Venture Company, Technical Documentation and all other information,
technical data or know-how as follows:

	1.	 	During the term of my employment with the Employer and after the
termination thereof, I shall not, unless expressly required by law or a
court order in the PRC, directly or indirectly, disclose by any means to
any person, firm, enterprise, corporation or government agency or
organisation in or of the People’s Republic of China or any other country,
any information, whether in oral, written, pictorial, graphic or recorded
form, concerning the design, manufacture, application, inspection,
testing, maintenance, packaging, marketing or sale of the Combined Coil
Products or any part of them or any other relevant information which may
come to my knowledge or possession or be disclosed to me by the Joint
Venture Company or Trench Limited because of or as a result of my
employment by the Employer (hereinafter collectively referred to as the
“Confidential Information”).
	 
	2.	 	Without limiting in any way the foregoing agreement and obligation, I
hereby agree that all printed, written, recorded or other materials
containing or relating to the Confidential Information, prepared by me or
which comes into my possession or knowledge during my employment with the
Employer, are and shall remain to be the property of the Joint Venture
Company, the Contractor or SITW (as the case may be), and, if requested by
the Joint Venture Company, the Contractor or SITW or upon the termination
of my employment with the Employer, all such materials, including all
prints, copies or duplicates thereof, shall be either disposed of or
returned to the Joint Venture Company or the Contractor in accordance with
the Joint Venture Company’s, SITW’s or the Contractor’s instruction.
	 
	3.	 	In consideration of the disclosure to me of the Confidential Information,
I further agree that I will not, following termination of my employment
with the Employer, directly or indirectly, engage in the manufacture of
the Combined Coil Products or any part of them by making use of the
Confidential Information.
	 
	4.	 	I enter into this Contract with the express purpose and intent that
either the Joint Venture Company, SITW and the Contractor derive benefits
either herefrom, and I further understand and acknowledge that SITW, the
Joint Venture Company [name of subcontractor] and the Contractor or any of
them, shall have the right to enforce this Contract against me should I be
deemed to have violated this Contract in any manner.

20

 

Terms defined in the Technology Sub-Licence Agreement shall have the same
meanings when used in this Agreement.

 

Signed this                      day
of                     , 2002.

 

Name:

Position:

21

 

This Confidentiality Agreement is for the benefit of the undersigned:

 

TRENCH LIMITED

 

Name:

Position:

 

MWB (SHANGHAI) CO LTD

 

Name:

Position:

 

SHANGHAI INSTRUMENT TRANSFORMER WORKS CO., LTD.

 

Name:

Position:

22exv4w11

 

	 	 	 
	 	 	Exhibit 4.11
	 	 	 
	 	 	
Contract No.: 02189

DATED            April 2002

TRENCH LIMITED

AND

SHANGHAI INSTRUMENT TRANSFORMER WORKS CO LTD

SHANGHAI SITICO INTERNATIONAL TRADING COMPANY

AND

MWB (SHANGHAI) CO LTD

LINE TRAP TECHNOLOGY HEAD-LICENCE AGREEMENT

 

 

CONTENTS

	 	 	 	 	 
	CLAUSE	 	PAGE
	
	 	

	1. DEFINITIONS
	 	 	2	 
	 
	 	 	 	 
	2. SCOPE AND CONTENTS OF LINE TRAP TECHNOLOGY AND KNOW-HOW
	 	 	5	 
	 
	 	 	 	 
	3. COMPLIANCE WITH LAWS
	 	 	7	 
	 
	 	 	 	 
	4. PAYMENTS
	 	 	8	 
	 
	 	 	 	 
	5. TAX
	 	 	8	 
	 
	 	 	 	 
	6. TECHNICAL DOCUMENTATION
	 	 	8	 
	 
	 	 	 	 
	7. VERIFICATION AND ACCEPTANCE
	 	 	8	 
	 
	 	 	 	 
	8. QUALITY AND INSPECTION
	 	 	9	 
	 
	 	 	 	 
	9. CONFIDENTIALITY
	 	 	9	 
	 
	 	 	 	 
	10. CLAIMS AND INFRINGEMENTS
	 	 	10	 
	 
	 	 	 	 
	11. WARRANTIES
	 	 	10	 
	 
	 	 	 	 
	12. TERM AND TERMINATION
	 	 	11	 
	 
	 	 	 	 
	13. AGENCIES
	 	 	12	 
	 
	 	 	 	 
	14. FORCE MAJEURE
	 	 	12	 
	 
	 	 	 	 
	15. LIABILITY FOR BREACH
	 	 	13	 
	 
	 	 	 	 
	16. SETTLEMENT OF DISPUTES
	 	 	13	 
	 
	 	 	 	 
	17. ASSIGNMENT
	 	 	13	 
	 
	 	 	 	 
	18. APPROVAL AND REGISTRATION
	 	 	14	 
	 
	 	 	 	 
	19. NOTICES
	 	 	15	 
	 
	 	 	 	 
	20. GENERAL
	 	 	16	 
	 
	 	 	 	 
	SCHEDULE 1 LIST OF LICENCED PRODUCTS AND MAIN CONTENTS OF TECHNICAL DOCUMENTATION
	 	 	19	 
	 
	 	 	 	 
	SCHEDULE 2 EMPLOYEE CONFIDENTIALITY AGREEMENT
	 	 	21	 

1

 

THIS LINE TRAP TECHNOLOGY HEAD-LICENCE AGREEMENT (the “Agreement”) is made on
           April 2002.

BETWEEN

	(1)	 	TRENCH LIMITED (“Licensor”), a company duly organised and existing under
the laws of Canada whose registered office is at 71 Maybrook Drive,
Scarborough, Ontario M1V 4B6, Canada;
	 
	(2)	 	SHANGHAI INSTRUMENT TRANSFORMER WORKS CO LTD (the “SITW”), a legal person
organised and existing under the laws of the PRC and registered with the
State Administration of Industry and Commerce whose legal address is at
427 Jumen Road, Shanghai, People’s Republic of China; and
	 
	(3)	 	SHANGHAI SITICO INTERNATIONAL TRADING COMPANY (the “SITICO”), a legal
person organised and existing under the laws of the PRC and registered
with the State Administration of Industry and Commerce whose legal address
is at 111 Jiu Jiang Road, Shanghai, the People’s Republic of China.
	 
	(4)	 	MWB (SHANGHAI) CO LTD (the “Joint Venture Company”), limited liability
equity joint venture company organised and existing under the laws of the
PRC and registered with the State Administration of Industry and Commerce
whose legal address is at No 3658 Jiangcheng Road, Shanghai, the People’s
Republic of China.
	 
	 	 	For the purposes of this Agreement, SITW shall be referred to as the
“Licensee” unless otherwise provided. SITICO shall act as the agent of
the Licensee only for the import of the Line Trap Technology and
Know-how, which shall only be obliged to perform the payment obligations
and other related commercial obligations as agent for SITW related to the
import of the Line Trap Technology and Know-how. SITICO shall not acquire
any rights in relation to this Line Trap Technology and Know-how as a
result of entering into this Agreement. SITICO will not be responsible
for any breach by the Licensee and the Joint Venture Company.

WHEREAS

	(A)	 	Pursuant to a joint venture contract (the “Joint Venture Contract”) and
articles of association each dated 12 November 1992, the Licensee and MWB
High Voltage Systems GmbH (“MWB”) (which has since been restructured as
Trench Germany GmbH) established the Joint Venture Company.
	 
	(B)	 	Pursuant to the terms of the Restated JV Contract (as defined below), the
Combined Coil Products (as defined below) are to be added to the business
of the Joint Venture Company.
	 
	(C)	 	The Licensor is the owner of the Line Trap Technology and Know-how
relating to the Licensed Products.
	 
	(D)	 	The Parties intend to enter into this Agreement for the license by the
Licensor to the Licensee of the right to sub-license the Line Trap
Technology and Know-how relating to the Licensed

1

 

	 	 	Products to the Joint Venture Company in the Licensed Territory (in each
case as defined below) upon the terms and conditions set forth herein.

NOW IT IS AGREED between the Parties and follows:

	1.	 	DEFINITIONS
	 
	1.1	 	Unless otherwise defined in this Agreement, terms defined in the Restated
JV Contract shall have the same meanings when used in this Agreement.
	 
	1.2	 	In addition, the following words and expressions shall have the meanings
given to them below when used in this Agreement:
	 
	 	 	"Approval” means approval of the Amendment by the Examination and
Approval Authority.
	 
	 	 	"Approval Date” means the date on which the Approval is granted.
	 
	 	 	"Affiliate” means in relation to each Party, any person who is directly
or indirectly controlling or controlled by or under direct or indirect
common control with such Party and any parent of such Party. For the
purposes of this definition, “control” when used with respect to any
person means the ownership of over fifty percent (50%) of the voting
stock, registered capital or other interest of that person, directly or
indirectly, whether through the ownership of voting securities, by
contractor otherwise, or the power to appoint the manager or majority of
members of the management committee, board of directors or equivalent
decision making body.
	 
	 	 	"Amendment” means the Amendment to the Restated JV Contract and the
Amendment to the Restated Articles of Association dated on or about the
date of this Agreement.
	 
	 	 	"Center” has the meaning given in Clause 16.1.
	 
	 	 	"Combined Coil Products” means the Line Trap Products, Series Reactor
Products and Shunt Reactor Products.
	 
	 	 	"Combined Coil Technology Agreements” means this Agreement, Series
Reactor Technology Head Licence Agreement and Shunt Reactor Technology
Head Licence Agreement
	 
	 	 	"Combined Coil Technology and Know-how” means the Line Trap Technology
and Know-how, Series Reactor Technology and Know-how and Shunt Reactor
Technology and Know-how.
	 
	 	 	"Conversion Date” means, in relation to the conversion of Renminbi to US
Dollars for the purpose of paying the Technology Licence Fee hereunder,
the date falling five (5) banking days before the date on which the
Technology Licence Fee is due.
	 
	 	 	"Conversion Rate” means the official exchange rate published by the
People’s Bank of China, Shanghai Branch prevailing on the Conversion
Date.
	 
	 	 	"Execution Date” means the date on which this Agreement is signed.

2

 

	 	 	"Effective Term” means the period commencing on the Approval Date and
expiring on the date of expiration of the Royalty Term.
	 
	 	 	"Examination and Approval Authority” means the Ministry of Foreign Trade
and Economic Cooperation or the authority entrusted by such Ministry to
register this Agreement and approve the Amendment.
	 
	 	 	"Force Majeure” has the meaning given in Clause 14.1.
	 
	 	 	"Improvements” means any improvement, modification or alteration to the
Licensed Products or to the Line Trap Technology and Know-how.
	 
	 	 	"Licensed Products” means the products defined in Schedule 1 under the
heading “Licensed Coverage”.
	 
	 	 	"Licensed Territory” means China (but excludes the Hong Kong SAR, Macau
and Taiwan).
	 
	 	 	"Line Trap Products” means the Licensed Products under this Agreement.
	 
	 	 	"Line Trap Technology and Know-how” means the Licensor’s knowledge,
technology and methods necessary for the manufacture, management, quality
control, quality inspection, packaging and sale of the Licensed Products
and supplied in accordance with this Agreement, whether in written form,
drawing or otherwise, and which includes, without limitation, at least
the following:

	 	 	(a)	raw materials, product and process specifications, product
formulae, design information and drawings as well as technical
specifications of the production equipment and processing
specifications;
	 
	 	 	(b)	technology, techniques, quality control, quality inspection,
technology standards and good manufacturing practices required for
production;
	 
	 	 	(c)	information and experience required for installation,
testing, use, inspection, repair and maintenance of production
equipment;
	 
	 	 	(d)	information and experience for management of operation
procedures, production, quality control, marketing and sales;
	 
	 	 	(e)	information on marketing, label design, advertising,
promotional materials and other techniques;
	 
	 	 	(f)	information relating to the latest improvements, corrections
and developments to or of the technology and know-how licensed under
this Agreement; and
	 
	 	 	(g)	the detailed documents and appendices relating to the content
of the technology and know-how licensed under this Agreement, as
summarised in Schedule 1.

	 	 	"Line Trap Technology Head Licence Agreement” means this Agreement.

3

 

	 	 	“Line Trap Test Date” means the date on which Licensor and the Joint
Venture Company sign a test report to certify that the 500kv Line Trap
manufactured according to Chinese standard specifications using the Line
Trap Technology and Know-how has been successfully type tested.
	 
	 	 	“Parties” means the Licensee, the Licensor and the Joint Venture Company,
and “Party” means any of them.
	 
	 	 	“PRC” or “China” means the People’s Public of China.
	 
	 	 	“Restated JV Contract” means the restated joint venture contract dated 7
April 2000 as amended by the Amendment between the SITW, Trench Germany
GmbH, Trench Switzerland AG and the Licensor.
	 
	 	 	“Royalty Term” means the period of 9 years and 8 months from the date of
issue by the Joint Venture Company of the first commercial invoice for
any of the Combined Coil Products .
	 
	 	 	“Series Reactor Products” means the licensed products under the Series
Reactor Technology Head Licence Agreement.
	 
	 	 	“Series Reactor Technology and Know-how” has the meaning ascribed to it
in the Series Reactor Technology Head Licence Agreement.
	 
	 	 	“Series Reactor Technology Head Licence Agreement” means the agreement
titled “Series Reactor Technology Head Licence Agreement” between the
parties dated on or about the same date as this Agreement.
	 
	 	 	“Shunt Reactor Products” means the licensed products under the Shunt
Reactor Technology Head Licence Agreement.
	 
	 	 	“Shunt Reactor Technology and Know-how” has the meaning ascribed to it in
the “Shunt Reactor Technology Head Licence Agreement.
	 
	 	 	“Shunt Reactor Technology Head Licence Agreement” means the agreement
titled “Shunt Reactor Technology Head Licence Agreement” between the
parties dated on or about the same date as this Agreement.
	 
	 	 	“Sub-Licence Agreement” means the agreement entered into between SITW,
the Licensor and the Joint Venture Company for the license of Combined
Coil Technology and Know-how dated on or about the date of this
Agreement.
	 
	 	 	“Technical Documentation” means documentary materials relating to the
Combined Coil Technology and Know-how furnished to the Joint Venture
Company by the Licensor in accordance with this Agreement (as summarised
in Schedule 1) and the other Combined Coil Technology Agreements.

4

 

	 	 	“Technical Service Agreement” means the agreement between the Licensor
and the Joint Venture Company for the provision of technical services
dated on or about the date of this Agreement.
	 
	 	 	“Technology Licence Fee” has the meaning given in Clause 4.1.
	 
	 	 	“US Dollar” or “US$” means the lawful currency of the United States of
America.
	 
	1.3	 	The table of contents and headings to the Clauses and Schedules are
inserted for convenience of reference only and shall be ignored in the
interpretation of this Agreement.
	 
	1.4	 	In this Agreement, unless the context otherwise requires:

	 	 	(a)	references to Clauses and Schedules are to the clauses of and
the schedules annexed to this Agreement;
	 
	 	 	(b)	words importing the plural shall include the singular, and
vice versa; and
	 
	 	 	(c)	references to a “person” shall be construed as including
references to an individual, enterprise, firm, partnership,
consortium, joint venture, association, joint stock company, trust,
unincorporated organisation or governmental or non governmental
organisation, whether or not having separate legal personality.

	2.	 	SCOPE AND CONTENTS OF LINE TRAP TECHNOLOGY AND KNOW-HOW
	 
	2.1	 	Subject to the terms and conditions contained herein, the Licensor hereby
grants within the Licensed Territory to the Licensee and the Licensee
hereby accepts from the Licensor, an exclusive, non-transferable licence
of the Line Trap Technology and Know-how for the Effective Term, granted
strictly in accordance with the terms of this Agreement and only to the
extent that the Licensee sub-licence, strictly in accordance with the
terms of the Sub-Licence Agreement the Line Trap Technology and Know-how,
together with the Series Reactor Technology and Know-how and Shunt Reactor
Technology and Know-how, to the Joint Venture Company in connection with
the manufacture and sale of the Combined Coil Products, including Licensed
Products by the Joint Venture Company in the Licensed Territory. Nothing
in this Agreement shall entitle the Licensee to use the Line Trap
Technology and Know-how other than to sub-licence the same to the Joint
Venture Company.
	 
	2.2	 	The Licensor shall send experts or technical personnel and provide
complete, timely and adequate technical support to provide the Line Trap
Technology and Know-how to the Joint Venture Company as specified in the
agreed training program pursuant to this Agreement, the Sub-Licence
Agreement and the Technical Service Agreement. The experts and technical
personnel may be employees of the Licensor or be retained by the Licensor
from other sources. The Line Trap Technology and Know-how shall be
transferred after the training program has been formulated and agreed by
the Joint Venture Company and the Licensor.
	 
	2.3	 	In the event that the Licensee or the Joint Venture Company encounter
technical difficulties that the Parties recognise that the Licensee or, as
the case may be, the Joint Venture Company
cannot resolve by itself, the Licensor shall, send experts or technical
personnel to assist in

5

 

	 	 	resolving such technical problems as provided in Clause 3.2 of the Technical Service Agreement.

	2.4	 	2.4.1	During the Effective Term, if the Licensee
and/or Joint Venture Company makes or
acquires any Improvements relating to the
Licensed Products it shall, to the extent
that it is not prohibited by any
applicable law:

	 	 	(a)	promptly notify the Licensor in writing giving
details of the Improvements and shall provide the Licensor
with such information or explanations as the Licensor may
request; and
	 
	 	 	(b)	procure that the Licensor may legally and
effectively own and use the Improvements to enable the
Licensor to grant the Licensee a non-exclusive licence to use
the Improvements free of charge for the sole purpose of
sub-licensing the same to the Joint Venture Company in
accordance with the Sub-Licence Agreement.

	 	 	2.4.2	If any applicable law prohibits ownership by Licensor of any
Improvement made or acquired by the Joint Venture Company then such
Improvement shall be owned and used by the Joint Venture Company
subject as provided below:

	 	 	(a)	Clause 2.4.2 shall by only relate to Improvements
made or acquired whilst the relevant prohibition is in force
in China;
	 
	 	 	(b)	The Joint Venture Company shall own and use the
Improvement subject to the same conditions as apply to its use
of the Line Trap Technology and Know-how;
	 
	 	 	(c)	The relevant Improvement shall be forthwith
exclusively licensed to the Licensor for as long as required
by the Licensor free of charge and unconditionally; and
	 
	 	 	(d)	The Joint Venture Company shall not sell or
dispose of any interest in or to the Improvement without the
consent of the Licensor.

	2.5	 	If the Licensor makes or acquires any Improvements relating to the
Licensed Products it shall, within twelve (12) months after the
Improvements have been verified in commercial production by the Licensor,
provide the Licensee details of the Improvements and such information or
explanations as the Licensee may request for the sole purpose of
sub-licensing the Improvements to the Joint Venture Company, subject to
the restriction of Clause 2.1, free of charge.
	 
	2.6	 	The Licensee shall not (i) assign or otherwise transfer the Line Trap
Technology and Know-how, or any other rights granted to it under this
Agreement, to any third party, or (ii) sub-license the Line Trap
Technology and Know-how to any entity other than the Joint Venture Company
without the prior written consent of the Licensor.

6

 

	2.7	 	Upon the expiry of this Agreement, the Licensee may continue to use the
Line Trap Technology and Know-how (but solely to the extent and for the
purpose referred to in Clause 2.1) without entering into a new technology
licence agreement provided that the Licensee shall remain subject to the
following provisions of this Agreement: 2.4, 2.6, 2.11 3, 9, 10, 12, 15,
16, 19, 20 and 21. However, if after the expiration of this Agreement, the
Licensee requests to use or licence any know-how newly developed by the
Licensor after the expiration of this Agreement for any purpose
whatsoever, the Parties shall enter into a new technology know-how licence
agreement and register the same with the Examination and Approval
Authority.
	 
	2.8	 	The Licensor and the Joint Venture Company shall formulate a training
program for personnel of the Joint Venture Company to master the Combined
Coil Technology and Know-how, including the Line Trap Technology and
Know-how licensed hereunder, and shall specify the qualifications of
personnel suitable for receiving such training. The Licensor shall be
responsible for such training in order to ensure that employees of the
Joint Venture Company receive adequate training in the design and
manufacture of the Licensed Products.
	 
	2.9	 	If such training as aforesaid is to be conducted within the PRC, the
Licensor will be responsible for expenses relating to travel and lodging
(including food) of its personnel sent to the Joint Venture Company for
conducting such training and the Joint Venture Company shall bear all
other expenses relating thereto. If the Joint Venture Company retains
experts who are not employees of the Licensor or its Affiliates to conduct
training in China, the Joint Venture Company shall bear all related
expenses.
	 
	2.10	 	If such training as aforesaid is to be conducted outside the PRC, the
Joint Venture Company shall be responsible for expenses relating to travel
and lodging (including food) of personnel of the Joint Venture Company
sent for such training and the Joint Venture Company shall be responsible
for all other expenses relating thereto.
	 
	2.11	 	The Licensee shall obtain the prior written approval of the Licensor
before permitting the Joint Venture Company to proceed with each proposed
use by the Joint Venture Company of any of the Combined Coil Technology
and Know-how, including the Line Trap Technology and Know-how. If the
proposed use is not in conformity with this Agreement, the Licensor may,
in its sole discretion, refuse to approve such a proposal, or may amend
the proposal to bring it into conformity with this Agreement within a
reasonable period from the receipt of the proposed use, and the Licensee
shall, accept such refusal or amendment.
	 
	3.	 	COMPLIANCE WITH LAWS
	 
	 	 	The Licensee shall, observe and comply with all laws, rules and
regulations applicable to the sub-licensing of the Licensed Products in
the Licensed Territory. The Licensee shall, at its own cost and expense,
secure and maintain all necessary governmental permits, licences and
approvals, and will fulfil all other requirements and undertakings
related to this Agreement which are or may become necessary under any law
or regulation, now or hereafter existing in the PRC, to enable the
Parties to exercise, enforce and enjoy all of the rights and obligations
contained in this Agreement, including, but not limited to, registration
certificate required from the Examination and Approval Authority and
approvals if any necessary to enable the

7

 

	 	 	payment and remittance of the Technology Licence Fee to the Licensor in
accordance with Clause 4.
	 
	4.	 	PAYMENTS
	 
	4.1	 	The Licensee shall pay through SITICO to the Licensor a technology
licence fee (the “Technology Licence Fee”) in an amount of One Million US
Dollars (US$1,000,000) on or before 30 June 2003. This date may be
extended to the Line Trap Test Date if the Line Trap Test Date is later
than 30 June 2003 although it is expected that the Line Trap Test Date
shall not be later than 30 June 2003. In any event, payment shall only be
required after receipt by Licensee and SITICO of the commercial invoice
and payment instruction issued by the Licensor.
	 
	4.2	 	The Licensee and SITICO shall pay the Technology Licence Fee to such
account or accounts as shall be specified in writing by the Licensor to
the Licensee.
	 
	4.3	 	All relevant bank charges incurred with respect to the payment of the
Technology Licence Fee in the PRC shall be borne by the Licensee and
SITICO.
	 
	4.4	 	In the event the Licensee and SITICO are unable to pay the Technology
Licence Fee in US Dollars or another foreign currency acceptable to the
Licensor as a result of any change in the foreign exchange laws or
interpretation or application thereof, the Licensee and SITICO may, upon
obtaining the prior written agreement of the Licensor, pay the Technology
Licence Fee in RMB. In such case, the Licensee and SITICO shall assist the
Licensor to convert the RMB into US Dollars or another foreign currency
acceptable to the Licensor at the Conversion Rate on the Conversion Date,
but the foreign exchange risk and related costs shall be borne by the
Licensor.
	 
	5.	 	TAX
	 
	5.1	 	Where the Licensee and SITICO are required under PRC law to withhold tax
(including business tax) on the Technology Licence Fee receivable by the
Licensor under this Agreement, the Licensee and SITICO shall withhold the
same and pay over the same to the relevant PRC tax authority on behalf of
the Licensor. The Licensee and SITICO undertake to deliver promptly to the
Licensor all receipts, certificates or other proof evidencing each amount
withheld and paid by the Licensee and SITICO on account of such tax.
	 
	5.2	 	The Licensee and SITICO agree and undertake to assist the Licensor to the
greatest extent possible in applying for all tax benefits that the
Licensor may be entitled to under Chinese law.
	 
	5.3	 	All taxes to be levied inside and outside PRC on Licensor in connection
with the payment made to the Licensor under this Agreements shall be borne
by the Licensor.
	 
	6.	 	TECHNICAL DOCUMENTATION
	 
	 	 	The Licensor shall have the right to make necessary amendments to the
Technical Documentation from time to time.
	 
	7.	 	VERIFICATION AND ACCEPTANCE

8

 

	7.1	 	As soon as is practicable after delivery of the Technical Documentation,
the Licensor and the Joint Venture Company shall conduct test-runs to
determine whether the equipment of the Joint Venture Company can produce
the Licensed Products at quality standards which satisfy the quality
standards specified by the Licensor’s Line Trap Technology and Know-how.
After the conduct of successful test-runs, the Licensor and the Joint
Venture Company shall sign an acceptance certificate to such effect.
	 
	7.2	 	Test runs of equipment shall be conducted jointly by the Licensor and the
Joint Venture Company. A test run is the testing of installed machinery
with respect to performance (speed and capacity) and quality.
	 
	7.3	 	Neither the Licensor nor the Licensee shall be responsible for the Joint
Venture Company’s losses resulting from:-

	 	 	(a)	the raw materials purchased by the Joint Venture Company
directly or indirectly not conforming to the raw material standards
in the Technical Documentation:
	 
	 	 	(b)	lack of experience of the Joint Venture Company’s personnel
in manufacturing the Licensed Products resulting in errors; or
	 
	 	 	(c)	Force Majeure.

	8.	 	QUALITY AND INSPECTION
	 
	8.1	 	The Licensee shall, sub-licence the Joint Venture Company to,
manufacture, store, analyse, test and sell the Licensed Products only in
strict accordance with the Line Trap Technology and Know-how supplied by
the Licensor.
	 
	9.	 	CONFIDENTIALITY
	 
	9.1	 	The Licensee shall, on and from the Execution Date, during the term of
this Agreement and within five (5) years after its termination or
expiration for any reason, keep confidential and not, for any purpose
other than the performance of its obligations under this Agreement, make
use of or disclose to any other person otherwise than in accordance with
Clause 9.2 or with the prior written consent of the Licensor, the scope
and content of the Combined Coil Technology and Know-how including the
Line Trap Technology and Know-how, including but not limited to,
information contained in the Technical Documentation (if any has been
delivered to the Licensee), and any other information disclosed (whether
in writing, verbally or by other means) by or on behalf of the Licensor,
unless such technology and know-how is public knowledge or is otherwise
required by applicable laws or regulations or by an order of a court
having competent jurisdiction.
	 
	9.2	 	During the Effective Term, the Licensee may disclose information which is
confidential under Clause 9.1 to the Joint Venture Company or their
respective employees, but only to the extent
necessary for the purposes of this Agreement and provided such employees
have signed a confidentiality agreement in the form set out in Schedule 2.

9

 

	9.3	 	The Licensee shall at its own expense, take such steps as the Licensor
may require to enforce the terms of any confidentiality contract executed
pursuant to Clause 9.2 including, but not limited to, the initiation,
prosecution and enforcement of any legal proceedings.
	 
	10.	 	CLAIMS AND INFRINGEMENTS
	 
	10.1	 	The Licensee shall immediately notify the Licensor of any claim, or any
fact which may lead to a claim, of any nature by a third party that the
sub-licensing of the Line Trap Technology and Know-how by the Licensee the
use of the Line Trap Technology and Know-how by the Joint Venture Company
is or may be an infringement of a patent or other proprietary right of
such third party, but otherwise shall take no action relating to such
claim or infringement without the Licensor’s written consent. The Licensor
shall advise the Licensee whether it wishes to conduct a defence of any
such claim. Should the Licensor elect to conduct such a defence, it shall
do so at its own expense, and the Licensor shall have sole control of such
defence and the Licensee shall give all reasonable assistance to the
Licensor to enable it to do so.
	 
	10.2	 	The Licensor shall indemnify the Licensee and bear related costs for any
claims, losses, damages, proceedings sustained by the Licensee in relation
to any claims that may be made against the Licensee pursuant to Clause
10.1, unless such claims, losses, damages, proceedings result from the
default by the Licensee of their obligations under this Agreement or the
use of Line Trap Technology and Know-how by the Licensee otherwise than in
accordance with this Agreement.
	 
	10.3	 	If any third party takes any action in connection with the sub-licensing
of the Line Trap Technology and Know-how by the Licensee and thereby
hinders the Licensee from sub-licensing the Line Trap Technology and
Know-how to the Joint Venture Company for the manufacture, packaging or
sale of the Licensed Products, the Licensor shall be responsible for
taking action, including defending any legal claim or reconciling with a
third party to remove such hindrance.
	 
	10.4	 	In the event that the Licensor elects not to take action under Clause
10.3, the Licensee may, with the written consent of the Licensor, take
action in relation to the relevant infringement, and the Licensor shall
reimburse the Licensee for any costs and expenses incurred for taking such
action and give all reasonable assistance in connection therewith.
	 
	10.5	 	Notwithstanding the foregoing, the Licensee shall not enter into any
compromise, settlement or agreement with any person or entities relating
to the Line Trap Technology and Know-how otherwise than with the written
consent of the Licensor.
	 
	11.	 	WARRANTIES
	 
	11.1	 	The Licensor hereby represents and warrants to the Licensee that it has
the right to license the Line Trap Technology and Know-how to the Licensee
in accordance with this Agreement and such licensing does not violate the
relevant laws of the jurisdictions of the Licensor and shall
not infringe any third party rights, and that the Line Trap Technology
and Know-how, and the relevant technical assistance, guidance and
training, shall be sufficient to enable the quality of the Licensed
Products to reach the specifications and standards required by this
Agreement.

10

 

	11.2	 	The Licensor shall use all reasonable endeavours to ensure that the
Technical Documentation shall be readable, complete and accurate in
English. The Licensee shall notify the Licensor in writing within four (4)
months after receipt thereof if any of the Technical Documentation is not
readable, complete or accurate and the Licensor shall correct or replace
the defective portions of the Technical Documentation free of charge to
the Licensee. In the absence of a written notice from the Licensee to the
Licensor within the four (4) month period, the Technical Documentation in
question shall be deemed to have been approved and accepted by the
Licensee.
	 
	11.3	 	The Licensee and SITICO warrant that it will neither contest, deny or
dispute the exclusive right of the Licensor in the Line Trap Technology
and Know-how or the validity or enforceability of the Line Trap Technology
and Know-how in the PRC or any other country, nor will they assist anyone
else to do so. Each of the Licensee and SITICO agrees that it shall not,
take any action of any kind inconsistent with the Licensor’s rights in the
Line Trap Technology and Know-how, and acknowledges that nothing in this
Agreement confers upon either the Licensee or SITICO a proprietary
interest of any kind in and to any of the Line Trap Technology and
Know-how or simulations thereof.
	 
	12.	 	TERM AND TERMINATION
	 
	12.1	 	This Agreement shall take effect on the Execution Date and shall remain
in full force and effect thereafter until the last day of the Effective
Term subject to Clause 2.7 unless terminated earlier pursuant to Clause
12.2 provided that if the Restated JV Contract or the Sub-Licence
Agreement of any of the Combined Coil Technology Agreements is terminated
prior to the expiration of its term, this Agreement shall automatically
terminate with immediate effect from the date of termination of the
Restated JV Contract or the Sub-Licence Agreement of any of the Combined
Coil Technology Agreements (as the case may be), except that termination
shall not affect:

	 	 	(a)	The accrued rights and obligations of the Parties at the date
of termination; and
	 
	 	 	(b)	The continued existence and validity of the rights and
obligations of the Parties under those clauses which are expressed
to survive termination and any provisions of this Agreement
necessary for the interpretation or enforcement of this Agreement.

	12.2	 	This Agreement may be terminated:

	 	 	12.2.1	by any Party giving notice to the other Parties if another Party
has committed a material breach of this Agreement and such breach,
if capable of remedy, has not been so remedied within sixty (60)
days following receipt of such notice;
	 
	 	 	12.2.2	by any Party giving notice to the other Parties in the event that
an event of Force Majeure continues for a period of twelve (12)
consecutive months that causes the Joint
Venture Company to cease the production and sale of the Licensed
Products and the Parties have been unable to find an equitable
solution pursuant to Clause 14;

11

 

	 	 	12.2.3	by any Party giving notice to the other Parties if at any time
during the term of this Agreement, the government of the PRC or of
Canada or any agency thereof should require any material alteration
or modification or termination of the contractual rights or
obligations of any Party pursuant to this Agreement which has the
effect of preventing any Party from performing its contractual
obligations or from achieving its business objectives.
	 
	 	 	12.2.4	by any Party giving notice to the other Parties if another Party
becomes bankrupt, or insolvent, or is the subject of proceedings or
arrangements for liquidation or dissolution, or ceases to carry on
business, or becomes unable to pay its debts as they become due; or
	 
	 	 	12.2.5	by the Licensor giving notice to the Licensee and the Joint
Venture Company if the aggregate of the interests of the Licensor
and any of its Affiliates in the Joint Venture Company is or becomes
less than fifty percent (50%) of the registered capital of the Joint
Venture Company as a result of any change in or requirement of
Chinese law or any act of any Chinese governmental agency or court.

	12.3	 	Either Party electing properly to terminate this Agreement pursuant to
Clause 12.2 shall have no liability to the other Party for damages arising
solely from the exercise of such right.
	 
	12.4	 	Upon expiration or termination of this Agreement, all amounts then due
and unpaid to the Licensor by the Licensee hereunder shall forthwith
become due and payable by the Licensee to the Licensor.
	 
	12.5	 	All the Combined Coil Technology and Know-how, including the Line Trap
Technology and Know-how and the Technical Documentation (if any has been
delivered to the Licensee), recorded in any material form including but
not limited to any written records shall be returned by the Licensee to
the Licensor forthwith upon the termination of this Agreement. The
Licensee agrees on behalf of itself and its employees that no copies of
the Combined Coil Technology and Know-how, including the Line Trap
Technology and Know-how, in any material form or of the Technical
Documentation shall be made or retained upon and after the termination of
this Agreement.
	 
	13.	 	AGENCIES
	 
	 	 	The Parties are independent contractors, and nothing in this Agreement
shall be construed to constitute any Party to be the agent, partner,
legal representative, attorney or employee of any other Party for any
reason whatsoever except as specifically set out in this Agreement. No
Party shall have the power or authority to bind the other except as
specifically set out in this Agreement.
	 
	14.	 	FORCE MAJEURE
	 
	14.1	 	“Force Majeure” means all events which are beyond the control of the
Parties to this Agreement, and which are unforeseen, or if foreseen,
unavoidable, and which prevent total or partial performance by any Party.
Such events shall include but are not limited to any

12

 

	 	 	explosions, shipwrecks, acts of nature or the public enemy, fires, flood, sabotage,
accidents, strikes, wars, riots, insurrections, and any other similar
contingency.
	 
	14.2	 	If an event of Force Majeure occurs, to the extent that any contractual
obligation of any Party cannot be performed as a result of such event,
such contractual obligation shall be suspended while the Force Majeure
subsists and the due date for performance thereof shall be automatically
extended, without penalty, for a period equal to such suspension.
	 
	14.3	 	The Party encountering Force Majeure shall, within fifteen (15) days of
the relevant event, notify the other Parties and furnish valid proof of
the occurrence of such Force Majeure. Within a reasonable period
thereafter that Party shall provide the other Parties with evidence of the
Force Majeure issued by a relevant agency. The Party encountering Force
Majeure shall also use all reasonable endeavours to minimise the Force
Majeure.
	 
	14.4	 	In the event of Force Majeure, the Parties shall immediately consult with
each other in order to mutually agree an equitable solution (which may
involve early termination of this Agreement, deletion of certain
provisions thereof or extension of the term of this Agreement) and shall
use all reasonable endeavours to minimise the consequences of such Force
Majeure.
	 
	15.	 	LIABILITY FOR BREACH

	15.1	 	(1)	The Licensee shall indemnify and hold the Licensor indemnified
against all losses, liabilities, costs, claims, actions, damages, expenses
or demands, but excluding consequential loss or loss of profits, which the
Licensor may incur, or which may be made against the Licensor as a result
of or in relation to any breach by the Licensee of its obligations under
this Agreement or arising out of any use of the Line Trap Technology and
Know-how by the Licensee which is not in accordance with this Agreement.
For the avoidance of doubt the payments referred to in Clause 4 are not
considered profit for the purpose of this Clause.
	 
	 	 	(2)	SITICO shall indemnify and hold the Licensor indemnified
against all losses, liabilities, costs, claims, actions, damages,
expenses or demands, but excluding consequential loss or loss of
profits, which the Licensor may incur, or which may be made against
the Licensor as a result of or in relation to any breach by SITICO
(for which SITICO is responsible) of its obligation to perform the
payment obligations and other related commercial obligations as
agent for SITW related to the import of the Line Trap Technology and
Know-how.

	15.2	 	The Licensor shall each indemnify and hold the Licensee and SITICO
indemnified against all losses, liabilities, costs, claims, actions,
damages, expenses or demands, (but excluding consequential loss or loss of
profits,) which the Licensee may incur, or which may be made against the
Licensee and SITICO as a result of or in relation to any breach by the
Licensor of its obligations under this Agreement.
	 
	15.3	 	If any of the obligations in this Agreement cannot be performed due to
the fault of all of the Parties, each party shall bear the responsibility
for breach of contract in accordance with the extent of each party’s
fault.

13

 

	16.	 	SETTLEMENT OF DISPUTES
	 
	16.1	 	Any dispute or difference of any kind whatsoever arising out of or in
connection with this Agreement or any of the agreements contemplated
herein, including any question in connection with the existence,
construction, interpretation, validity, termination or implementation of
this Agreement or of any of the agreements contemplated herein, shall
be
referred to and finally settled by the Singapore International Arbitration
Center (the “Center”) in accordance with the applicable arbitration rules
of the United Nations Commission on International Trade Law.
	 
	16.2	 	The arbitration tribunal shall be composed of three (3) arbitrators. The
Licensor and SITW each hereto shall be entitled to appoint one (1)
arbitrator and the Center shall appoint the third (the Chairman) who shall
not be a national of the country of incorporation of any Party. The place
of arbitration shall be Singapore. The language to be used in any
arbitration proceedings shall be English.
	 
	16.3	 	Any award made by the arbitration tribunal shall be final and binding on
all Parties, who hereby exclude any right of appeal to any court which
might otherwise have jurisdiction in the matter, and shall be enforceable
in any country which is a signatory to the 1958 New York Convention.
	 
	16.4	 	No arbitration of any dispute or difference shall commence unless the
Parties have attempted genuinely to settle the same amicably within a
period of thirty (30) days after the date of the giving of a written
notice of arbitration by one Party hereto to the other Parties, which
notice shall describe generally the nature of the dispute.
	 
	16.5	 	The costs of arbitration shall be borne by the losing Party or Parties,
unless otherwise determined by the arbitration award.
	 
	16.6	 	When any dispute occurs and when any dispute is under arbitration, except
for the matters under dispute, the Parties shall continue to fulfil their
respective obligations (and shall be entitled to exercise their rights)
under this Agreement.
	 
	17.	 	ASSIGNMENT
	 
	 	 	The Licensor may, without the written consent of the Licensee or the
Joint Venture Company and without any further registration with the
Examination and Approval Authority, have this Agreement in whole or in
part performed by any one or more of its Affiliates, and may assign this
Agreement to any company which may become a successor of the Licensor.
The Licensor is only required to give notice to the Licensee and the
Joint Venture Company of such an assignment.
	 
	18.	 	APPROVAL AND REGISTRATION AND FURTHER ASSURANCE
	 
	18.1	 	Within thirty (30) days of the Execution Date, the Licensee and SITICO
shall file an application for this Agreement (in Chinese and English) with
the Examination and Approval Authority for registration. The Licensee and
SITICO shall bear the costs in relation to such application.

14

 

	18.2	 	Immediately after the Execution Date, the Licensee shall submit the
Amendment to the Examination and Approval Authority for Approval.
	 
	18.3	 	The Licensee shall advance all necessary fees and expenses for the
Approval and shall be reimbursed for the amounts so advanced from the
funds of the Joint Venture Company, provided that such fees and expenses
are fully and properly documented, and are paid directly to the relevant
government authority and not to any service company or intermediary and
are reasonably and necessarily incurred after consultation with the
Licensor.
	 
	18.4	 	Without limiting Clause 18.1, and Clause 18.2 each Party must promptly at
its own cost do all things necessary (including executing documents and
obtaining all necessary governmental permits, licenses and approvals which
are or may become necessary under any law or regulation, now or hereafter
existing in the PRC) to enable the Parties to exercise, enforce and enjoy
all of the rights and obligations contained in this Agreement.
	 
	19.	 	NOTICES
	 
	19.1	 	Any notice or other communication provided for in this Agreement shall be
in writing in the English and Chinese languages and shall be delivered
personally or sent by telefax to the person, address or telefax referred
to below or to such other person, address or telefax number as a Party may
specify by notice in writing to all the other Parties:

	 	(a)	 	if to the Licensor, to:
	 
	 	 	 	Name: Trench Limited
	 
	 	 	 	Address: 71 Maybrook Drive, Scarborough, Ontario, M1V 4B6, Canada
	 
	 	 	 	Facsimile: 1-416-2987083
	 
	 	 	 	Marked for the attention of: John Finlay
	 
	 	(b)	 	if to the Licensee, to:
	 
	 	 	 	Name: Shanghai Instrument Transformer Works Co. Ltd.
	 
	 	 	 	Address: 427 Jumen Road, Shanghai, People’s Republic of China
	 
	 	 	 	Facsimile: 8621-63014591
	 
	 	 	 	Marked for the attention of: Zhang Wei Guo
	 
	 	(c)	 	if to SITICO
	 
	 	 	 	Name: Shanghai SITICO International Trading Company
	 
	 	 	 	Address: SITICO Building, 111 Jiu Jiang Road, Shanghai, China
	 
	 	 	 	Facsimile: 8621-63291824

                  8621-63291096

15

 

	 	 	 	Mark for the attention of: Zhang Le Shou
	 
	 	 	 	other.
	 
	 	(d)	 	if to the Joint Venture Company
	 
	 	 	 	Name: MWB (Shanghai) Co. Ltd.
	 
	 	 	 	Address: No 3658 Jiangcheng Road, Minhang Shanghai China 200245
	 
	 	 	 	Facsimile: 8621-64637828
	 
	 	 	 	Mark for the attention of: Xu Ying

	19.2	 	In the absence of evidence of earlier receipt, any notice or other
communication shall be deemed to have been duly given:

	 	 	(a)	if delivered personally, when left at the address referred to
in Clause 19.1;
	 
	 	 	(b)	if sent by facsimile, when clearly received in full.

	19.3	 	Notices given under any of the Combined Coil Technology Agreements shall
be deemed to be a notice given under this Agreement and notice given under
this Agreement shall be deemed to be notice given under all of the
Combined Coil Technology Agreements.
	 
	20.	 	GENERAL
	 
	20.1	 	The failure to exercise or delay in exercising a right or remedy under
this Agreement shall not constitute a waiver of the right or remedy or a
waiver of any other rights or remedies and no single or partial exercise
of any right or remedy under this Agreement shall prevent any further
exercise of the right or remedy or the exercise of any other right or
remedy.
	 
	20.2	 	This Agreement shall be governed by and interpreted in accordance with
Hong Kong law.
	 
	20.3	 	This Agreement shall be written and executed in both Chinese and English
language versions. Each Party agrees that each language version is an
accurate translation of the other and that both versions carry the same
legal effect.
	 
	20.4	 	Should any Clause or any part of any Clause contained in this Agreement
be declared invalid or unenforceable for any reason whatsoever, all other
Clauses or parts of Clauses contained in this Agreement shall remain in
full force and effect.
	 
	20.5	 	This Agreement constitutes the entire agreement between the Parties
relating to the subject matter of this Agreement and supersedes all
previous agreements.
	 
	20.6	 	If there is any conflict or inconsistency between the provisions of this
Agreement and the Restated JV Contract, the provisions of the Restated JV
Contract shall prevail.
	 
	20.7	 	No variation of this Agreement shall be valid unless it is in writing and
signed by or on behalf of each of the Parties.

16

 

	20.8	 	This Agreement shall be executed in six (6) originals in English and six
(6) in Chinese.
	 
	20.9	 	This Agreement, the Series Reactor Technology Head Licence Agreement, the
Shunt Reactor Technology Head Licence Agreement are interdependent and
must be signed at the same time. Default by a party under the any of
these agreements may be treated by the other party as default under this
Agreement.

17

 

IN WITNESS WHEREOF each of the Parties hereto has caused this Agreement to be
executed by its duly authorised representative on the date first set forth
above.

TRENCH LIMITED

 

/s/ John Finlay

Name: John Finlay

Title: Executive Vice President, North America and International

Nationality: Canadian

 

SHANGHAI INSTRUMENT TRANSFORMER WORKS CO. LTD.

 

/s/ Zhang Wei Guo

Name: Zhang Wei Guo

Title: Director

Nationality: Chinese

 

SHANGHAI SITICO INTERNATIONAL TRADING COMPANY

 

/s/ Zhao Jun Bo

Name: Zhao Jun Bo

Title: General Manager

Nationality: Chinese

 

MWB (SHANGHAI) CO LTD

 

/s/ John Finlay

Name: John Finlay

Position: Authorised Signatory

Nationality: Canadian

18

 

SCHEDULE 1

LIST OF LICENCED PRODUCTS AND MAIN CONTENTS OF TECHNICAL DOCUMENTATION

	1.	 	Licensed coverage
	 
	 	 	Dry type air core coil technology for Line Traps 69 — 800KV.
	 
	2.	 	Main contents
	 
	2.1	 	Design & Know How
	 
	 	 	Complete designs and know how for the entire range according to IEC &
ANSI standard, such as:

	 	(1)	 	Design Software — Electrical & Mechanical
	 
	 	(2)	 	Design Costs — Material & Labour Hours
	 
	 	(3)	 	Standard labour hours
	 
	 	(4)	 	Standard parts drawings
	 
	 	(5)	 	Typical drawing for one specific rating of each

	2.2	 	Technical documentation, such as:

	 	(1)	 	Manufacturing Procedures
	 
	 	(2)	 	Material Specifications
	 
	 	(3)	 	QA Manual
	 
	 	(4)	 	List of required manufacturing equipment
	 
	 	(5)	 	List of required routine test equipment
	 
	 	(6)	 	Welding standards
	 
	 	(7)	 	Test & Inspection Plan
	 
	 	(8)	 	Incoming material inspections and tests
	 
	 	(9)	 	In-house quality test procedures
	 
	 	(10)	 	Inspection standards
	 
	 	(11)	 	In-process and final test procedures
	 
	 	(12)	 	The drawings for main tools & equipment and operational
procedures for assembling.

19

 

	 	(13)	 	Measures for quality assurance
	 
	 	(14)	 	Completed test items (incl. type test & routine test) and
procedures
	 
	 	(15)	 	The list & specification of test equipment for routine tests,
requirement on testing equipment and testing circuit, etc.
	 
	 	(16)	 	Other necessary documentation

20

 

SCHEDULE 2

EMPLOYEE CONFIDENTIALITY AGREEMENT

I                     
[name], [position] of Transformer Shanghai Instrument
Transformer Works (“SITW”) [or MWB (Shanghai) Co., Ltd. or name of
subcontractor] (“Employer”) hereby represent, warrant and agree to keep
confidential the Combined Coil Technology and Know-how, the Technology
Sub-Licence Agreement, dated [        ] between SITW, Trench Limited (as “Contractor”)
and MWB (Shanghai) Co Ltd (the “Joint Venture Company”) and the Line Trap
Reactor Head Licence Agreement, Shunt Reactor Technology Head Licence Agreement
and the Series Reactor Technology Head Licence Agreement all dated [        ]
between Trench Limited, SITW, Shanghai SITICO International Trading Company and
the Joint Venture Company, Technical Documentation and all other information,
technical data or know-how as follows:

	1.	 	During the term of my employment with the Employer and after the
termination thereof, I shall not, unless expressly required by law or a
court order in the PRC, directly or indirectly, disclose by any means to
any person, firm, enterprise, corporation or government agency or
organisation in or of the People’s Republic of China or any other country,
any information, whether in oral, written, pictorial, graphic or recorded
form, concerning the design, manufacture, application, inspection,
testing, maintenance, packaging, marketing or sale of the Combined Coil
Products or any part of them or any other relevant information which may
come to my knowledge or possession or be disclosed to me by the Joint
Venture Company or Trench Limited because of or as a result of my
employment by the Employer (hereinafter collectively referred to as the
“Confidential Information”).
	 
	2.	 	Without limiting in any way the foregoing agreement and obligation, I
hereby agree that all printed, written, recorded or other materials
containing or relating to the Confidential Information, prepared by me or
which comes into my possession or knowledge during my employment with the
Employer, are and shall remain to be the property of the Joint Venture
Company, the Contractor or SITW (as the case may be), and, if requested by
the Joint Venture Company, the Contractor or SITW or upon the termination
of my employment with the Employer, all such materials, including all
prints, copies or duplicates thereof, shall be either disposed of or
returned to the Joint Venture Company or the Contractor in accordance with
the Joint Venture Company’s, SITW’s or the Contractor’s instruction.
	 
	3.	 	In consideration of the disclosure to me of the Confidential Information,
I further agree that I will not, following termination of my employment
with the Employer, directly or indirectly, engage in the manufacture of
the Combined Coil Products or any part of them by making use of the
Confidential Information.
	 
	4.	 	I enter into this Contract with the express purpose and intent that
either the Joint Venture Company, SITW and the Contractor derive benefits
either herefrom, and I further understand and acknowledge that SITW, the
Joint Venture Company [name of subcontractor] and the Contractor or any of
them, shall have the right to enforce this Contract against me should I be
deemed to have violated this Contract in any manner.

21

 

Terms defined in the Technology Sub-Licence Agreement shall have the same
meanings when used in this Agreement.

Signed this                      day
of                     , 2002.

 

Name:

Position:

22

 

This Confidentiality Agreement is for the benefit of the undersigned:

 

TRENCH LIMITED

 

Name:

Position:

 

MWB (SHANGHAI) CO LTD

 

Name:

Position:

 

SHANGHAI INSTRUMENT TRANSFORMER WORKS CO., LTD.

 

Name:

Position:

23

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