THIS
AGREEMENT is made at ............. this... day of................. between M/s.
XYZ Co. Ltd., a Company incorporated under the laws of............. and having
its registered office at ................... hereinafter referred to as the
'Foreign Company, of the One Part and M/s. ABC Co. Ltd., a Company registered
under the Indian Companies Act, 1956, and having its registered office at...
hereinafter referred to as the 'Indian Company' of the Other Part.WHEREAS
the Foreign Company is carrying on business of manufacturing/fabricating the
Items of machinery/the products, the particulars of which are set out in the
Schedule hereunder written, at...AND
WHEREAS the Foreign Company has the exclusive expertise or know-how in respect
of the said items of machinery/product.AND
WHEREAS the Indian Company proposes to set up a factory at... with intent to
manufacture similar machinery/product and requested the Foreign Company to make
available the know-how to the Indian Company.AND
WHEREAS after the negotiations the Foreign Company has agreed to make available
to the Indian Company know-how on the following terms and conditions and which
are set out and now proposed to reduce to writing.AND
WHEREAS approval of the Government of India will be obtained to enter into this
agreement and this agreement will be subject to such approval.NOW
IT IS AGREED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:1. The Foreign Company
shall make available to the Indian Company all the expertise or know-how in
relation to the manufacture of the said items of machinery/product mentioned in
the Schedule hereunder written within a period of....... days from the date
hereof.2. The Foreign Company
shall supply to the Indian Company all the materials regarding such know-how,
such as the formulae, charts. Drawings, process sheets, calculation sheets,
standards and other Information as Is necessary to understand and utilise the
said know-how and to implement the same In the manufacture of the said items of
machinery/ products.3. All such material
referred to above shall be in the English language and shall be supplied to the
Indian Company by the Foreign Company within... days from the date hereof and
as and when required subsequently by the Indian Company.4. If the Foreign
Company effects any improvement or makes any additions or alterations in the
technology for the manufacture of the said items of machinery/product, the same
will be intimated to the Indian Company forthwith and all the literature, new
formulate, drawings and other information in respect of such new technology or
improvement, additions or alterations shall also be supplied to the Indian
Company forthwith.5. All the know-how and
other Information supplied to the Indian Company shall be kept secret by the
Indian Company and shall not he directly or indirectly passed on to any other
person In or outside India. The Indian Company will secure from its employees
who become acquainted with such know-how, proper agreements for maintaining the
secrecy of the know-how and supply copy thereof to the Foreign Company.6. The Foreign Company
will assist the Indian Company in selecting and buying the modern and up to
date machinery and equipment in India or abroad, suitable for the manufacture
the type of machinery /product aforementioned and supply the necessary
Information with the Foreign Company in connection with such machinery product.7. The material relating
to the know how mentioned above shall be in English language or If the original
is any other language it will be accompanied by English translation thereof and
measurement and weight figures will be as for metric system.8. The know-how material
will be handed over by the Foreign Company in.... at the registered office of
the Foreign Company to the authorised representative of the Indian Company with
utmost secrecy9. The Foreign Company
shall not enter into any agreement with any party for the use of the said know
how by such party in India.10. The Indian Company
may not grant a sub-licence or permission any party for manufacturing their
machinery /product with the help of the said know how except with written
consent of the Foreign Company and which consent maybe given on such terms and
conditions as may be agreed upon.11. The said machinery
/product will be according to the specification quality and standard envisaged
by the know-how. The Indian Company shall have the first production tested by
the Foreign company and if any deficiency is found the same will be rectified
by the Indian Company.12. On the termination of
this agreement by efflux of time (but not otherwise) Indian Company will be
entitled to use the know-how free of charge. But if the agreement is terminated
earlier as herein in after provided that the Indian Company shall-hot be
entitled to make use of the know how and shall forthwith return all the
technical material relating to the know how to the Foreign Company.13. If and whenever
required by the Indian Company, the Foreign Company shall depute one or more
representatives who are specialised in the application of the said know-how
with a view to teach any one or more employees of the Indian Company for the
application of the said know-how and/or supervise the application of the
know-how in the factory of the Indian Company.14. The Indian Company
will bear and pay all the travelling charges to and from India of such
representatives of the Foreign Company 'as aforesaid and shall also bear and
pay the expenses incurred for their stay in India and other incidental charges.15. If so desired by the
Indian Company it may send one or more representatives to the factory of the
Foreign Company to get themselves acquainted with the Implementation of the
know how and with the process of manufacture of the said items of
machinery/product and in that case the Foreign Company shall render them all
facilities and assistance to achieve the said object. The Foreign Company will
make all arrangements for the stay of such representatives or representative of
the Indian Company. All the expenses on account of travelling from and to India
and of the stay of the said representative or representatives of the Indian
Company at the place where the factory of the Foreign Company is situate will
be borne and paid by the Indian Company.16. If any special tools,
Instruments and material are required in the application of the said know-how
and which are not available in the Indian market the same will be supplied by
the Foreign Company. The Indian Company will obtain the necessary Import
License for the same and the price thereof will be paid by the Foreign Company
opening a Letter of Credit on any Indian Bank through Foreign Bank in favour of
the Foreign Company. Such goods will be sent F.O.B. to some port In India.17. The Indian Company
shall not make any innovations or additions or alterations in the said know-how
and the process of manufacture without the written consent of the Foreign
Company and the Indian Company "I take care to see that the said items of
machinery/products will be In strict compliance with the specifications of
quality and standards laid down by the Foreign Company.18. The Indian Company in
all advertisements wherever made and other literature mention the fact that the
item of machinery/products are manufactured in collaboration with the Foreign
Company.19. The Foreign Company
will have the right to send its one or more representatives on its own but at
its own costs to India and to visit the factory of the Indian Company, to
supervise and cheek that the said know- how or expertise Is being utilised
properly and according to the requirements and the items of machinery/product
are according to the standards maintained by the Foreign Company.20. The items of
machinery/products manufactured by the Indian Company will be sold only in the
Indian market and not outside India except with the written consent of the
Foreign Company.21. The Indian Company
will furnish to the Foreign Company a statement every six months of the total
production of the said Items of machinery/products, and the total sale effected
to enable the Foreign Company to ascertain the response to the said items of
machinery/ products from the Indian market.22. Indian Company may
sell the said items of machinery/products, under its own trade mark or trade
name in India but shall not use the trade mark or trade name of the Foreign
Company without a separate written agreement to that effect between the Foreign
Company and the Indian Company.23. In consideration of
the Foreign Company making available to the Indian Company the said know-how
the Indian Company shall pay to the Foreign Company as follows:-a. A lump sum payment of
...... American Dollars in the manner hereinafter mentioned and (b) a royalty
at the rate of Rs.... on the ex-factory price of the each of the said items of
manufacture/product at the end of every three months as hereinafter stated. The
lump sum legally payable as aforesaid shall be paid to the foreign company in
three installments unless otherwise stipulated in the letter of the Reserve
Bank of India namely-I.
One
third of the said amount will be paid on the approval of this agreement by the
Reserve Bank of India and on this agreement being pledged with the authorised
dealer in foreign exchange.II.
The
second installment of one-third amount will be paid on the supply of the
know-how.III.
The
third installment of the balance will be paid after four years or on the
approval of the Reserve Bank and the agreement is filed with the authorised
dealer in foreign exchange whichever is earlier.IV.
All
remittances of money to be made to the Foreign Company under this agreement
will be forwarded as per the exchange rates prevailing on the date of
remittance.24. The Indian Company
will submit to the foreign company every three months from the date the first
item of machinery/product is produced and the statement of the total production
during the previous months duly certified by a Chartered Accountant and after
the same is verified and accepted by the Foreign Company. The India Company
will pay the amount of royalty at the rate aforesaid on such three months
production within one month from the date of such acceptance.25. The payment to be
made by the foreign company will be subject to payment of cess, if any payable
under the Research and Development Cess Act of 1986.26. The Indian Company
will also, be entitled to deduct from such payment the income tax, if any
payable under the Income Tax Act. 1961.27. Copy of this
agreement signed by both the parties will be filed with the several authorities
as required by law.28. The Indian company
will submit to the Foreign Company every three months from the date the first
item of machinery /product is produced, a statement of the total production
during the previous months duly certified by a Chartered Accountant and after
the same is verified and accepted by the Foreign Company, the Indian Company
will pay the amount of royalty at the rate aforesaid on such three months
production within one months from the date of such acceptance.29. The payment to be
made to the Foreign Company will be subject to payment of cess, if any payable
under the Research and Development Cess Act of 1986.30. The Indian Company
will also be entitled to deduct from such payment the income tax, if any
payable under the Income Tax Act, 1961.31. A copy of this
agreement signed by both the Parties will be filed with the several other
authorities as required by law.32. All payments to be
made by one party hereto to the other in Indian or foreign currency under this
agreement will be made subject to the approval of the Reserve Bank of India and
In the manner stipulated by the said Bank.33. The Letter of
approval of the Government of India hereinbefore recited shall be deemed to be
a part of this agreement and any term herein contained which is contrary to or
inconsistent with any term or condition contained In the said letter, shall be
treated as void and of no effect.34. This agreement will
remain in force for a period of... years from the date hereof subject to the
other terms hereof. The parties may extend the said period by mutual consent.35. This agreement will
be treated as terminated on the happening-of any of the events below mentioned.i.
If
any party hereto commits breach of any provisions of this agreement and the
party who is alleged to have committed breach is served with a notice by the
other party, three months prior to the intended date of termination by the
other party and the former party has failed to amend the breach within the said
period.ii.
If
any event happens which will make the performance of this agreement impossible
including any force majeure event.iii.
If
either the Indian Company or the Foreign Company goes into either voluntary or
compulsory liquidation according to or under the law by which it is governed.iv.
If
the parties hereto mutually agree to terminate this agreement.36. All the sanctions,
approvals, permissions, licenses and other requirements of the Government of
India and of any statutory authorities required for giving effect to all the
terms and conditions, of this agreement shall be obtained by the Indian
Company.37. In the event of any
dispute or difference arising between the parties hereto or as to the rights
and obligations under this agreement or as to any claim, monetary or otherwise
of one party against the other or as to the interpretation and effect of any terms
and conditions of this agreement, such dispute or difference shall be referred
to Arbitration of a common Arbitrator if agreed upon otherwise to two or more
Arbitrators, one to be appointed by each of the parties to this agreement and
such Arbitration shall be governed by the Indian Arbitration & Conciliation
Act, 1996. The venue for such Arbitration shall he in India.38. The validity of this
agreement and the effect or meaning of the terms hereof will be decided
according to the Indian Law.39. Any communication by
one party to the other shall be made by registered post through airmail. With
acknowledgement due or by telex or fax or cable. In case the communication is
made by telex or fax or cable, the same will be subsequently but immediately
thereafter confirmed by written communication sent by registered post as
aforesaid. Any evidence showing the communication was posted or telex, fax or
cable communication was made will be sufficient to prove the posting of sending
the communication.40. In this agreement the
expression 'know-how' shall include technical information such as Inventories
formulae process, engineering and manufacturing skill, scientific data.
Calculations, specifications, drawings, standards, sketches and all other
relevant information and knowledge.41. Each of the parties
hereto shall be deemed to include its successors or permitted assigns..THE SCHEDULE ABOVE
REFERRED TOIN
WITNESS WHEREOF the parties have put their respective seals the day and year
first hereinabove written.The
common seal of M/s. ABC Co. Ltd., is hereunto affixed pursuant to the
resolution of the Board of Directors dated ................ in the presence of
Mr........................,a Director duly authorised in that behalfThe
common seal of M/s. XYZ & Co. Ltd., is hereunto affixed pursuant to the
resolution of the Board of Directors dated................. in the presence of
Mr. .................. a Director, duly authorised In that behalf.Witnesses;1.2.