AGREEMENT FOR PERMISSION OF TECHNICAL KNOW-HOW

AGREEMENT FOR PERMISSION  OF TECHNICAL KNOW-HOW

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 :

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                    The  terms “Contract Products”  means _______________________________________________ __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________.

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.

3                    The term “Documentation” means and comprise the written Technical  information and Improvements pertaining to Contract Products.

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.

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.

6                    The term ‘Germany’ means the  Federal Republic of Germany including the territory of West Berlin.

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.

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.

Article 2 : Technical  Assistance to be rendered by the Licensor

1                    The scope of technical  assistance will cover the following:-

2.1.1    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.

2.1.2    The Licensor shall train in adequate number  of personnel of the Licensee as set  forth in Article 3

2.1.3    The Licensor shall transmit  its Technical Information to the Licensee as set fourth  in Articlem4.

2.1.4    The Licensor shall transmit  its Technical  Information to the Licensee as  set  fourth in Article 5.

2.1.5    The Licensor shall upon request of the Licensee render addition assistance to the  Licensee under the provisions of Article 6.

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, traveling 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.

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.

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 fulfil 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.

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 therefore ;

(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 therefore 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.

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.

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 __________________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  invoice able   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.

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 non-exclusive, unlimited  license, including  the right  to sub-licensee a non-exclusive, unlimited  license, 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.

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.

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 license  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.

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.

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 therefore, 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

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.

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.

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.

Article 17:

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____________________________ .