PERMISSION OF TECHNICAL KNOW-HOW
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.
the Licensor is engaged in the manufacture of…………………..
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 ;
WHEREAS the Licensee desires to acquire from the Licensor know-how, technical
information and assistance to enable the Licensee to
WHEREAS the Licensor is willing to furnish to the Licensee such know-how and
technical information and assistance for the manufacture of
the parties have agreed as follows :
1 : Definitions:-
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
1.3. The term “Documentation” means and
comprise the written Technical information and Improvements pertaining to
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
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
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
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
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
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
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
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:
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-
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 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
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
12. Article 12 : Secrecy-
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:
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 :
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
if to the Licensor, to _______________________________________________
other correspondence shall be sent to such address as the party to receive the
same may direct.
16: Applicable Charges-
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 ;
b. by the Licensee when
such charges are due under any governmental, state or other local of law of
Agreement shall be subject to Indian Laws, IN WITNESS WHEREOF the parties
hereto have hereunto set their respective hands and seals.
sealed and delivered by_____________
Common seal of ___________________________________________
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………………………………….