AGREEMENT FOR PERMISSION OF TECHNICAL
KNOW-HOW [CD1]
THIS AGREEMENT entered into
on the ……….day of …………….by and between a company registered in India under the
Companies Act, 1956 having its registered office at …………………… (hereinafter
referred to as the Licensee which expression shall, unless repugnant to the
context or meaning thereof, be deemed to include its successors and
assigns………………………………….and a German corporation, with place of registry in………………
and having an office at…………………….(hereinafter referred to as the Licensor which
expression shall, unless repugnant to the context or meaning thereof, be deemed
to include its successors and assigns.
WHEREAS the Licensor is
engaged in the manufacture of…………………..
AND WHEREAS the Licensor is
in possession of extensive know-how and technical information concerning the
manufacture of such products and has at its disposal skilled technical
personnel to assist in the transfer of such known-how and technical information
to a third party ;
AND WHEREAS the Licensee
desires to acquire from the Licensor know-how, technical information and
assistance to enable the Licensee to manufacture………………………………………………………..;
AND WHEREAS the Licensor is
willing to furnish to the Licensee such know-how and technical information and
assistance for the manufacture of
THEREFORE, the parties have
agreed as follows :
1.
Article 1 : Definitions:-
For the purpose of this
agreement , the terms set forth in this Article 1, when employed in this
agreement either in the singular or plural form, are defined to mean, unless
the context otherwise requires, the following
1.1.
The terms
“Contract Products” means
……………………………………………………………………………………………
1.2.
The terms ‘Technical Information’ means
engineering and manufacturing information available with the Licensor relating
to design, production methods, manufacture and testing of Contract Products as
well as information relating to materials used in the manufacture thereof,
insofar as such information has either been successfully incorporated in or
forms part of the manufacturing or engineering technique of the Licensor and is
applicable to the operations of the Licensee. With regard to materials used in
the manufacture of Contract Products, ‘Technical Information’ means instruction
on the required quantity, quality and characteristics and on their treatment in
the manufacture of the Contract Products as well as sources of supply.
1.3.
The term “Documentation” means and comprise
the written Technical information and Improvements pertaining to Contract
Products.
1.4.
The term “Improvements” means future
modification relating o designs, production methods, manufacture and testing of
Contract Products insofar as such modifications have either been successfully
incorporated in or form part of the manufacturing or engineering technique of
the Licensor and are applicable to the operations of the Licensee.
1.5.
The term ‘Documentation’ means and comprises
the written Technical information and Improvements pertaining to Contract
Products. The term ‘The Licensor’s Patent Rights’ means and includes all
patents of the Licensor that are in force during the term of his agreement, and
patent applications of the Licensor filed or having a priority date prior to
the termination of this agreement to the extent they apply to Contract Products
and/or cover information available to the Licensee under this agreement.
1.6.
The term ‘Germany’ means the Federal Republic
of Germany including the territory of West Berlin.
1.7.
The term “Effective Date of the Agreement”
means the date on which the agreement has been taken on record by the
Government of India after being duly signed by the two parties.
1.8.
The term ‘commencement of Regular Commercial
On-Line Production’ means the date on which the Licensee has delivered the
initial orders of Contract Products for a total……….of at least………………………………
production, to customers and said customers have accepted the delivered
Contract Products.
2.
Article 2 : Technical Assistance to be
rendered by the Licensor
2.1.
The scope of technical assistance will cover
the following :
2.2.
The Licensor shall assist the Licensee in
order to enable the Licensee to adapt its available plant, machinery and
equipment to the requirements for manufacture of Contract products by the
Licensee. The assistance will include information regarding additional
machinery any equipment required for the manufacture of Contract Products.
2.3.
The Licensor shall train in adequate number
of personnel of the Licensee as set forth in Article 3
2.4.
The Licensor shall transmit its Technical
Information to the Licensee as set fourth in Articlem4.
2.5.
The Licensor shall transmit its Technical
Information to the Licensee as set fourth in Article 5.
2.6.
The Licensor shall upon request of the
Licensee render addition assistance to the Licensee under the provisions of
Article 6.
3.
Article 3: Training of the Licensee’s
Personnel
3.1.
During
the term of this agreement the Licensor shall receive the Licensee’s personnel
for training in its Plant in Germany. Such personnel will be trained by the
Licensor in the functions relating to the design manufacture and testing of
Contract Products and materials used therein and maintenance of plant and
equipment. The Training shall be for such periods and for such numbers as may
form time to time be agreed upon by the parties, but altogether for not more
than twelve working man-months. The Licensor shall endeavor to ensure that
training of the Licensee’s personnel in the above fields will be adequate to
impart complete competency in the respective fields to enable them to undertake
eventual independent performance of these functions for the Licensee. The
Licensee shall obtain the prior approval of the Government authorities
concerned, wherever, applicable, for the delegation of their personnel to the
Licensor.
3.2. The
Licensee shall be responsible for and shall pay all such salaries, living
allowances, travelling expenses and other remuneration and expenses to which
its personnel delegated to the Licensor may-be entitled.
3.3. The
Licensee’s personnel deputed to the Licensor shall have sufficient knowledge in
their respective lines and actively participated in their respective functions.
They shall also have sufficient working knowledge of the German language.
3.4. A
man-month as used in this Article 3 is based upon and regular working time of
five days per week with eight hours each, with no working on holiday in
Germany.
3.5. The
Licensee’s personnel shall during their training observe all the rules and
regulations of the Licensor as applicable to the Licensor’s own employees.
3.6. The
Licensor shall not charge any additional remuneration apart from the payment
provided for in Article 8.1 for the training of the Licensee’s personnel in its
factory.
4.
Article 4 : Delegation of the Licensor’s
Personnel
4.1.
Subject to the Licensee obtaining the prior
approval of the Government authorities concerned, and upon mutual agreement of
the parties, the Licensor shall delegate to the Licensee for periods to be
agreed upon by the parties suitable specialists who are required in India in
order to train personnel at the Licensee’s factory and to provide general
technical assistance by active participation in establishing production,
quality control and testing at the Licensee’s factory of Contract Products.
4.2.
The delegation of the Licensor’s technical
personnel to India shall be on the terms and conditions and for the periods to
be mutually agreed upon.
5.
Article 5 : Termination of Technical
Information
5.1.
During the terms of this Agreement, the
Licensor shall transmit to the Licensee the Technical Information and
Improvements except Technical Information and Improvements that the Licensor is
precluded from passing on to the Licensee in view of contractual obligations
under other agreements of the Licensor. In spite of the above restrictions, the
Licensor confirms that the Technical Information that will be transmitted by
the Licensor under this Agreement is sufficient to permit the manufacture to
complete Contract Products and will enable the Licensee to fulfill the
objectives of this Agreement.
5.2.
The time and extent of the transmission of
Technical Information and Improvements will be mutually determined by the
progress of the Licensee in the respective manufacturing stages.
5.3.
The Documentation to be supplied to the
Licensee by the Licensor hereunder shall be in the metric system and in
English, if available, otherwise in German.
5.4.
The Documentation shall be given in a form of
suitable reproducible available with the Licensor such as transparencies,
microfilms, etc. If it cannot be furnished in the form of such reproducible,
then the Licensor shall furnish on duplicate copy without additional charge.
5.5.
The Licensor shall deliver documentation to
the Licensee in Germany by either dispatching by airfreight, destination the
Licensee, or at the request of the Licensee it shall be made available by the
Licensor to personnel of the Licensee delegated to the Licensor or to a
representative of the Licensee in Germany.
6.
Article 6 : Additional Assistance –
6.1.
Provided sufficient engineering capacity not
required for other purposes is available at the Licensor and at the request of
the Licensee, the Licensor is prepared.
a.
to provide assistance to the Licensee with
regard to problems of import substitution, production techniques, variation in
designs, etc., to manufacture the Contract Products suitable for the specific
requirements of the Indian and Foreign Market ;
b.
to undertake engineering development with
respect to Contract Products or to the design and layout of the Licensee’s
factory and equipment (such as the preparation of engineering and manufacturing
information specially prepared at the request of the Licensee) and provide
additional Information, resulting therefrom ;
c.
to supply or give assistance to the Licensee
to obtain tools and other manufacturing equipment required for the manufacture
of Contract Products as parts or components
of Contract Products
or materials therefor at reasonable prices ;
d.
to give the Licensee advice and assistance
for the adaptation of design, drawings and other manufacturing data furnished
by the Licensor to Indian Standards.
6.2.
For the services agreed to be rendered by the
Licensor pursuant to Article 6.1, the Licensee shall obtain the prior approval
of the Government authorities concerned and pay to the Licensor charges to be
mutually agreed upon. Such charges shall be paid by the Licensee to the
Licensor in the Federal Republic of Germany in Deutsche Marl of the Deutsche
Bundes bank. The Licensor shall give an estimate of the charges and obtain the
Licensee’s clearance to go ahead commencing work.
6.3.
The technical information originating from
the service rendered by the Licensor under Article
6.1 shall otherwise be deemed to be Technical Information
as defined under Article 1.2.
7.
Article 7: Manufacturing Patent and Selling
Rights-
7.1.
The Licensor for the period of this Agreement
grants to the Licensee under its Technical Information and Improvement
furnished by the Licensor to the Licensee pursuant to this agreement as well as
under relevant patents of the Licensor which the Licensor has filed or will
file for said Technical Information, non-exclusive, non-transferable rights to
manufacture Contract Products in India and to sell Contract Products in
accordance with Article 7.2.
7.2.
The Licensee shall make arrangements for the
marketing of Contract Products in consultation with the Licensor. In the same
way, the offer for export of Contract Products may be arrange to other
countries all over the would , except where the Licensor has manufacturing or
contractual relationship (e.g. licensing ) regarding Contract Products, from
time to time.
Currently, the
Licensor has arrangement in the following countries
:---------------------------------------------------------------------------------------------------------
7.3.
During the term of this arrangement, the
Licensor undertakes not to enter into a similar collaboration agreement with a
third party for the manufacture of Contract Product in India without the prior
written consent of the Licensee, which consent shall not be withheld
unreasonably.
7.4.
The Licensee shall have the right to
sub-licence the rights granted hereunder to any other party in with the prior
written approval of the Licensor and the Government authorities, on terms and
conditions to be mutually agreed upon by the parties hereto.
8.
Article 8: Consideration-
8.1.
In consideration of the documentation
prepared and transmitted in Germany and the technical assistance rendered in
Germany comprising the training of the Licensee’s personnel by the Licensor in
Germany as per Article 3, the Licensee shall pay to the Licensor a lump sum
payment of DM____________subject to the applicable Indians taxes, in three
equal installments as detailed below :
a.
1/3 on the agreement having been taken on
record by the Central Government.
b.
1/3 at the time of transfer of technical
documentation.
c.
1/3 within one month after the commencement
of commercial production, or 4 years after the agreement is taken on record,
whichever is earlier.
8.2.
In consideration of the grant of the
Licensor’s Patent and other rights and use of Technical Information and
Improvements as well as the technical assistance rendered in India, the
Licensee shall pay to the Licensor a royalty of……..% (……………) of the ex-factory
selling price of all Contract Products and parts thereof manufactured and sold
or leased or used commercially by the Licensee during the validity of this
Agreement as defined in Article 13.1. All payments of royalty shall be subject
to the then applicable Indian taxes. According to Indian law, the liability to
pay taxes lies with the Licensor. The Licensee shall be free to deduct such
taxes at source on behalf of the Licensor from the royalty payable to the
Licensor. In case any taxes are paid by the Licensee on behalf of the Licensor,
the Licensee shall submit a tax receipt certificate to the Licensor.
8.3.
Whenever Regular Commercial On-Line
Production of a Contract Product commence, the Licensee shall immediately
inform the Licensor in writing in this regard, i.e., of the date of delivery
and acceptance of the respective orde4 as defined in Article 1.8.
8.4.
With regard to this Agreement, Contract
Product shall be considered as sold when invoiced by the Licensee to the
purchaser or, if not invoiced, when delivered, dispatched or set apart for the
own use of the Licensee, and term “ex-factory price” shall mean the net
invoiced amount ( or the current invoiceable value when not invoiced) of the
Licensee excluding all charges and expenses relating to packing, freight,
insurance as well as taxes and duties, if any, levied on the Contract Products
and less the cost of standard brought out components and the landed cost of
imported components, but not materials, made by the Licensor (or any other
company abroad ) and contained in such Contract Products.
8.5.
Within two months after March 31st and
September 30the of each year beginning with the Commencement of regular
Commercial On Line Productions, the Licensee shall render to the Licensor a
report showing the total ex-factory selling prices of each of the Contract
Products manufactured and sold by the Licensee during the preceding half year,
the amount invoiced for foreign supplies in components in accordance with
Article 8.4 as well as the corresponding royalties due.
8.6.
The royalties which are due shall, after
conversion into Deutsche Mark of the Deutsche Bundesbank at the lawful selling
rate (most favorable to the Licensor) , be remitted to the Licensor, arriving
at their bank account in the Federal Republic of Germany within four months
after the end of the respective half year defined in article 8.5. The Licensee
shall send a copy of the respective documents (application for transfer of
royalties) to the Licensor within two months along with the report of the
royalties due.
8.7.
The Licensee shall keep proper books and
records giving full information regarding the turnover subject to royalties
payable to the Licensor. The Licensor shall be entitled to have these records
and relevant documents examined by independent chartered accountants. For the
purpose of examination, the Licensee is obliged to grant such chartered
accountants inspection of its books and record and access to its offices.
9.
Article 9: Improvements and Modification by
the Licensee-
During the term of this
agreement, the Licensee shall communicate to the Licensor all improvements and
modifications developed by the Licensee with respect to Contract Products.
Under such information and under any respective patents of the Licensee, the
Licensee hereby grants to the Licensor a nonexclusive, unlimited licence,
including the right to sub-licensee a non-exclusive, unlimited licence,
including the right to sub-licensee to third parties. In case the Licensor or
its sub-licensee make use of patents of the Licensee, the Licensor shall pay to
the Licensee a reasonable patent royalty for such patent use, the amount of
which shall be determined by mutual agreement.
10. Article
10 : Limitation of Liability-
10.1. The
Licensor shall proceed with its usual care in preparing, selecting and
transmitting Documentation, Technical information and/or Improvements to the
Licensor. However, the Licensor shall not be responsible for any bon fide
oversight, which may occur in spite of such care.
The Licensor shall not be
responsible for the Contract Products manufactured by the Licensee under
Documentation, Technical Information, Patents of the Licensor and/ or
Improvements of the Licensor or for the claims of third parties with respect to
Contract Products.
10.2. Neither
party to this Agreement shall be liable for any failure or delay on its part in
performing any of its obligations under this Agreement or for any loss,
damages, costs, charges or expenses incurred or suffered by the other party by
reason of such failure or delay, if and so far as such failure or delay shall
be the result of or arising out of force majeure.
11. Article
11 : Standard of Quality : Designation of Contract Products_
11.1. Subject
to the Licensor providing the necessary Technical Information and Improvements,
the Licensee shall take all reasonable measures to ensure that the Contract
Products made under the Technical Information and Improvement of the Licensor
conform to the quality laid down in such Technical Information.
11.2. The
Contract Products made by the Licensee according to the designs of the Licensor
and conforming to the quality laid down in the corresponding Technical
Information and Improvements furnished to the Licensee shall-if requested or at
the request of the Licensee agreed to by the Licensor-be marked with a
designation indicating that they are made under licence of the Licensor. The
layout of the designation and any other markings on the Contract Products as
well as the use and layout of name of the Licensor shall be made with the prior
written approval of the Licensor
11.3. The
Licensee forthwith, whenever called upon by the licensor in that regard, cease
using any reference to the name of the Licensor.
11.4. Upon
termination of this Agreement, the Licensee shall forthwith cease using any
name, marking or other term or designation indicating that the Contract
Products are made according to the Licensor’s design, unless otherwise agreed
to by and between the parties hereto in writing.
12. Article
12 : Secrecy-
The Licensee is obliged to
use the Documentation, Technical information and Improvements furnished to it
under this Agreement only in the manufacture of Contract Products and keep
confidential the same until the same has become public knowledge. The
obligation shall survive the termination of this Agreement for five years.
13. Article
: Validity
13.1. This
agreement shall come into force on the Effective Date of the Agreement and it
shall be valid for a period of five years therefrom, or where Regular
Commercial On-Line Production of any of the Contract Products is commences
after the Effective Date of this Agreement, for five years from the date of
commencement of regular Commercial On-Line Production of the respective
Contract Products, provided such production is not delayed beyond three years
from the Effective Date of the Agreement (i.e. maximum period of period of
eight years from the Effective Date of the Agreement and to the terms of any
such extension shall be taken up one year prior to the expiry of this
Agreement. Extension shall, however, be subjected to approval, if any, required
of the respective Government authorities.
13.2. Either
party hereto may, by notice in writing to the party terminate this Agreement if
any order shall be made or effective resolution passed for the winding up of
such other party or if a receiver shall be appointed of such other party’s
undertaking and assets or, any part thereof.
13.3. Should
there be at any time a change in the existing management and /or control of the
Licensee whether through the alienation
of shares, or through the increase of capital and the
issue of new shares,
otherwise howsoever, or should a different company form be chosen, then the
Licensor shall forthwith be informed thereof by the Licensee by a registered
letter. On receipt of such letter, the Licensor and the Licensee shall
negotiate with each other with a view of to arriving at a mutually satisfactory
arrangement with regard to the subject-matter of this Agreement, and upon such
arrangement being arrived at, the parties shall give effect to it. In the event
of no such mutually satisfactory arrangement being arrived at in six months’
time, the licensor shall be at liberty to terminate this Agreement by giving 90
days’ notice in writing to the Licensee in that behalf.
13.4. Furthermore,
if the Licensor does not decide within the period indicated in section 13.3 to
terminate the Agreement, the Licensor shall still be entitled later on to
terminate the Agreement if, in the opinion of the Licensor, the actions of the
Licensee as a result of the change referred to in article 13.3 above the
prejudicial to the business interest of the Licensor.
13.5. The
provisions of articles 13.3 and 13.4 also apply should the changes referred to
therein occur repeatedly.
13.6. Should
the Licensee make arrangements with a third party relating to manufacturing
assistance in the same field without prior consent of the Licensor, the
Licensor, the Licensor may at any time terminate this Agreement on giving 90
days’ notice if in the judgment of the Licensor there is a danger that the
Technical Information/Improvements furnished or to be furnished by the Licensor
under this Agreement may pass to such third party.
13.7. After
the termination of the Agreement according to Article 13.1 hereof, the Licensee
may continue to use the Technical Information/Improvements and Indian Patent
Rights of the Licensor, and the Licensor may continue to use the Information
and patent rights of the Licensee furnished to them under this Agreement free
of charge.
13.8. After
the termination of this Agreement according to any other Clause hereof, except
for completion of work in progress under contract and orders already booked,
the rights acquired by the Licensee under Technical Information, Improvements
and Patent Rights shall expire with the termination.
13.9. Independent
of the cause for termination, the Licensee shall remain obliged to pay all
royalties accrued until such termination and accruing according to Article
13.8, if any
14. Article
14: Arbitration-
Any dispute or difference or
claim arising out of or in relation to this Agreement including the
construction, validity, performance or breach thereof which the parties thereto
cannot settle by reaching a mutual understanding, shall be referred to the
Indo-German Chamber of Commerce, Bombay for settlement under the Arbitration
Rules then in force, and the Award of the Arbitration Court of the Chamber shall
be final and binding on both the parties to this Agreement.
15. Article15
: Miscellaneous –
15.1. Neither
this Agreement nor any rights hereunder in whole or part shall be assignable or
otherwise transferable by one party without prior written permission of the
other party to this Agreement.
15.2. This
Agreement constitutes the full and complete understanding between the parties
with respect to Contract products. This Agreement cannot be modified except by
a written instrument signed by the Licensee and the licensor.
15.3. The
correspondence in all matters concerning the validity , life interpretation,
modification or extension of this Agreement or of the rights and obligations of
the parties or the accounting the payment shall be addressed, if to the
Licensee, to
__________________________________________________________and,
if to the Licensor, to _______________________________________________
All other correspondence
shall be sent to such address as the party to receive the same may direct.
16. Article
16: Applicable Charges-
Except otherwise expressly
provided elsewhere in this Agreement, all governmental applicable charges
relating to or arising out of this Agreement or of any rights, granted in the
form of permits, stamp duties, registration fees, contributions or taxes of any
governmental or local law of any degree shall be paid as follows :
a.
by the Licensor when such charges are due
under any federal, state or other local law of Germany ; and
b.
by the Licensee when such charges are due
under any governmental, state or other local of law of India.
17. Article
This Agreement shall be
subject to Indian Laws, IN WITNESS WHEREOF the parties hereto have hereunto set
their respective hands and seals.
Signed sealed and delivered
by_____________
The Common seal of ___________________________________________ ___________________________________________________________
was hereunto affixed
pursuant to a Resolution of its Board of Directors passed in that behalf in the
presence of Mr…………..a Director and Mr………………Its secretary who have signed in the
presence of………………………………….
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