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know-how contract

By Beth Freeman,2014-02-28 11:37
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know-how contract

    FROM OF LICENCE

    CONTRACT FOR TECHNICAL

    KNOW-HOW

    Contents of the Contract

Article 1 Definition

    Article 2 Scope of the Contract

    Article 3 Price of the Contract

    Article 4 Conditions of Payment

    Article 5 Delivery of the Technical Documentation

    Article 6 Technical Service and Personnel Training

    Article 7 Tests and Acceptances

    Article 8 Guarantees and Claims

    Article 9 Infringements and Confidentiality

    Article 10 Taxes and Duties

    Article 11 Force Majeure

    Article 12 Disputes Settlement

    Article 13 Effectiveness of the Contract and Miscellaneous

    Article 14 Legal Addresses

     Annexes

    Annex 1 Name, Models, Specification and Technical Indices of the Contract Products. (Omitted) Annex 2 The Contents, Numbers and Schedules of Delivery for the Technical Documentation. (Omitted)

    Annex 3 Test procedure and Acceptance Standard of the Contract Products. (Omitted) Annex 4 The Contents and Requirements of the Technical Serve of Licensor. (Omitted) Annex 5 The Contents and Requirements for Training of Licensees Personnel. (Omitted)

    Annex 6 Specimen for Irrevocable Letter of Guarantee Issued by the Licensors Bank.

    Annex 7 Specimen for Irrevocable Letter of Guarantee Issued by the Licensees Bank.

    The Licence Contract for ……….Know-how.

     Signature Date:

     Signature place:

     Contract No:

    China, Beijing, ________Company (hereinafter referred to as Licenses) on the one hand an

    ________Company, ________City, ________Country (hereinafter referred to as Licensor) on

    the other hand;

    Whereas Licensor has the Technical Know-how which design, manufacture, install and sell the ________products;

    Whereas Licensor has right and agreed to transfer the above-mentioned technical know-how to Licensee;

    Whereas Licensee hopes to use the technical know-how of Licensor to design, manufacture, sell

and export the ________products;

    The authorized representatives of both parties, through friendly negotiations, have agreed to enter into the Contract under the terms and conditions as stipulated below:

Article 1 definition

    1.1 Licensee means China ________Company or the legal representative, agent and inheritor to

    the property of the Company.

    1.2 Licensor means _________Company, _________City, _______Country or the legal

    representative, agent and inheritor to the property of the Company.

    1.3 The Contract products means all the products, model and specifications as stipulated in

    Annex 1 to the Contract.

    1.4 The Technical Documentation means all the technical indices, drawing, and design and

    other documents relating to the calculation, operation, maintenance and inspection of the

    Contract Products as stimulated in Annex 2 to the Contract.

    1.5 The Contract Factory means the place where Licensee manufactures the Contract Products

    by using the Technical Documentation and know-how supplied by Licensor. That is

    ________Factory, ________City, _________Province.

    1.6 Net Selling Price means the remaining amount of invoice value of the Contract Products,

    deducted by the charges for packing, freight, insurance premium, commission, commercial

    discount, taxation and other dues as well as the value of the parts purchased from out-side the

    factory.

    1.7 The Technical Service means the technical instruction and the technical training to be

    rendered by Licensor to Licensee with respect to the design, manufacture, assembly,

    inspection, adjustment, operation and other work of the Contract Products as stipulated in

    Annex 4 and Annex 5 to the Contract.

    1.8 Commercial Production means the date of approval for the Contract is made in the Contract

    Factory.

    1.9 The Date of Effectiveness means the date of approval for the Contract by the competent

    authorities of both parties’ Government, whichever comes later.

    (Notes; the abovementioned definition may be more or less in accordance with the specific project,)

    Article 2 Scope of the Contract

    2.1 Licensor has agreed to transfer to Licensee and Licensee has agreed to obtain from Licensor the technical know-how for the design, manufacture, sale, install and maintain of the Contract Products. The name, model, specification and technical indices if the Contract Products are detailed in Annex 1 to the Contract.

    2.2 The Licensor has agreed to grant Licensee to license and right to design, manufacture, and use. Sell and export the Contract Products in the Peoples Republic of China. The license and

    right are nonexclusive and non-transferable.

    2.3 The Licensor has been responsible to provide Licensee with the relevant know-how and technical documentations related to the Contract Products. Their contents, quantity and time of delivery are detailed in Annex 2 to the Contract.

    2.4 Licensor will be responsible to dispatch his technical personnel to China for explaining the technical documentations and rendering technical instruction and service on design,

    manufacturing, assembly, inspection and acceptance test of the Contract products. The specific contents and requirements of the technical instruction and service are detailed in Annex 4 to the Contract.

     2.5 Licensor will be responsible to receive and arrange for technical training of the Licensee’s

    personnel in the Licensors factory, Licensor shall make his best effects to satisfy the needs of Licensee so that the said technical personnel are able to master the above mentioned know-how. The specific training contents and requirements are detailed in Annex 5 to the Contract.

     2.6 Licensor shall be obligated to supply Licensee at the most favorable price with the parts, components, raw materials and standard parts for the Contract Products, when Licensee so requires. Both parties shall have consultation and sign the new contract for the specific contents of supplying in due time.

     2.7 Licensor agrees that Licensee has the right to use the Licensors trade mark. The Contract

    products can also be adopted combination trade mark of both parties or marked the words:Made

    in China under license of Licensor.

     2.8 After the Contract Products manufactured by Licensee are up to standard through the acceptance tests, Licensor agrees to buy-back a part of the Contract Products in accordance with stipulations in Article 8.9 of the Contract.

    Article 3 Price of the Contract

    3.1 The total Contract price which shall be paid by Licensee to Licensor in accordance with the contents and scopes stipulated in Article 2 to the Contract shall be__________U.S. Dollars (Say:__________). Their breaks down prices are as follow:

    A. the technology transfer fee is__________U.S. Dollars. (Say :__________) (or the license

    fee)

    B. design fee is __________U.S. Dollars. (Say :__________)

    C. technical documentation fee is __________ U.S. Dollars. (Say :__________)

    D. personnel training fee is __________ U.S. Dollars. (Say :__________)

    3.2 The above-mentioned total Contract price shall be firm and fixed, all their technical documentation price shall be all expenses incurred before delivery of the technical documentation at the airport. (Note: the airport shall be the international airport which is close to the Contract Factory of Licensee.)

    Selection Proposal 1

    Suitable for the contracts to be priced on

    Royalty of products

    3.1 In accordance with the contents and scopes stipulated in Article 2 to the Contract, this Contract shall be priced on royalty of products made by Licensee. The Contract currency shall be U.S. Dollar.

    3.2 Royalty of the Contract shall be calculated starting from the date which both parties sign the acceptance certificate for the Contract Products, the date of settling accounts shall be 31, December of each year in terms of Calendar year.

    3.3 Royalty at the rate of _____% shall be calculated in terms of net selling price after the Contract products sold in those years. The Contract Products which not sold shall not be included.

    3.4 The quantity of selling, net selling amount and Royalty which Licensee shall pay for the Contract products in last year shall be submitted to Licensor in written forms by Licensee within

    10 (ten) days after the date of settling accounts for the Royalty. The specific methods which calculate net selling amount and royalty are detailed in Annex__________ to the Contract.

    3.5 The fee of the Technical Service and personnel training of the Contract shall be calculated according to the real workday. The standard of day work wage and calculating methods are detailed in Annex__________ to the Contract.

    3.6 If Licensor demand to audit accounts of Licensee, it shall notice Licensee within 10 (ten) days after receiving the written notice issued by Licensee in accordance with the stipulation of Clause 3.4 The specific contents, procedure and methods of audit are detailed in Annex__________ to the Contract.

    Selection Proposal 2

    Suitable for the contents to be priced one

    Combination of fixed price and Royalty

    3.1 The initial payment and Royalty shall be adopted in calculating the prices of the Contract in accordance with the contents and scopes stipulated in Article 2 to the Contract. The Contract currency shall be U.S Dollar.

    3.2 The initial payment of the Contract shall be __________U.S. Dollars (Say :__________), and shall be fixed price.

    3.3 The royalty of the Contract shall be calculated starting from the date which both parties sign the acceptance certificate of the Contract products in terms of Calendar year, the date of settling accounts shall be 31, December of each year. Royalty at rate of _____% shall be calculated in terms of net selling price after the Contract products sold in those years. The specific calculating methods is the same with Clause 3.4 of Selection Proposal 1.

    3.4 The calculating methods of fee for technical service and personnel training is the same with Clause 3.5 of Selection proposal 1.

    3.5 The procedure, contents and methods of audit are the same with Clause 3.6 of Selection proposal 1.

    Article 4 Conditions of Payment

    4.1 All the cost stipulated in the Contract shall be effected in U.S. Dollar by telegraphic transfer or mail transfer through the Bank of China, Beijing and the Bank of __________, All the Bank charged incurred inside China shall be borne by Licensee, and all the bank charges incurred inside China shall be borne by Licensee, and all the bank charges incurred outside China shall be borne by Licensor.

    4.2 The total Contract price stipulated in Article 3 to the Contract shall be effected by Licensee to Licensor according to the following manner:

    (1) % ( percent) of the total Contract price, namely US Dollars (Say: ) shall be paid by Licensee to Licensor within 30 (thirty) days after Licensee has received the following documentation which are provided by Licensor and has found them in conformity with the Stipulations of the Contract:

     A. One photostat copy of the valid export licence issued by the relevant authorities of

    Licensor, or one copy of the letter issued by the relevant authorities of Licensor stating

    that the valid export licence is not required;

    B. One original of the irrevocable letter of guarantee issued by Licensor’s Bank for a sum of

    US Dollars (Say: ) in favor of Licensee. The specimen of

    the letter of guarantee is detailed in Annex 6 to the Contract;

    C. Four copies of the Performa invoice covering the total Contract price;

    D. Two copies of the sight draft.

    When making the above-mentioned payment, Licensee shall submit to Licensor one original of the irrevocable, letter of guarantee issued by the Bank of China, Beijing for a sum of US Dollars(Say: )in favor of Licensor. The specimen of the letter of guarantee is detailed in Annex 7 to the Contract.

    (2) % ( percent) of the total Contract price, namely US Dollars (Says ) shall be paid by Licensee to Licensor after Licensor has delivered the last batch of the technical documentation stipulated in Annex 2 to the Contract and within 30 (thirty) days after Licensee has received the following documents which are provided by Licensor and has found them in conformity with the stipulations of the Contract:

    A. Four copies of the commercial invoice;

     B. Two copies of the sight draft;

    C. Four copies of the airway bill for delivering Technical Documentation.

    (3) %( percent) of the total Contract price, namely US Dollars (Say: ) shall be paid by licensee to Licensor within 30 (thirty) days after Licensee has received the following documents and has found them in conformity with the stipulations of the Contract:

    A. Four copies of the commercial invoice;

     B. Two copies of the sight draft;

     C. Two copies of the certificate signed by both parties stating that the performance

    guarantee period of the Contract Factory has started.

     (4) % ( percent) of the total Contract price, namely US Dollars (Say: ) shall be paid by Licensee to Licensor within 30 (thirty) days after Licensee has received the following documents which are provided by Licensor and, has found them in conformity with the stipulations of the Contract:

    A. Four copies of the commercial invoice;

    B. Two copies of the sight draft;

    C. Two copies of the certificate for the test and acceptance of the Contract Products signed by both parties.

    4.3 Licensee shall have the right to defunct from any of the above-mentioned payments the penalties and/or compensation which Licensor shall pay in accordance with the stipulations of the Contract.

    Selection proposal 1

    Suitable for the contracts to be priced on Royalty of Products

    4.1 The royalty stipulated in Article 3 to the Contract shall be paid by Licensee after the Contract Products is up to standard in the acceptance test.

    4.2 The real selling quantity and net selling amount of the Contract Products in last calendar year shall be submitted by Licensee to Licensor within 10 (ten)days after the date of ,settling accounts to Royalty. The royalty shall be paid by Licensee to Licensor within 30 (thirty) days after Licensee has received the following documents which are provided by Licensor and has found

them in Conformity with the stipulations of the Contract:

     A. Four copies of the statement on calculation of Royalty within this period;

     B. Four copies of the commercial invoice;

    C. Two copies of the sight draft.

    4.3 The payment of the fee for technical service and personnel training under the Contract is detailed in Annex to the Contract.

    4.4 Licensee shall have the right to deduct from any of the above-mentioned payments the penalties and/or compensation which Licensor shall pay in accordance with the stipulations of the Contract.

    Selection proposal 2

     Suitable for the contracts to be priced on combination of fixed price and Royalty

    4.1 The initial payment stipulated in Article 3 to the Contract shall be in the same paying method with Clause 4.2. The number of their payments is decided according to the requirement of specific contract; the documents which are demanded in each payment are the same with Clause 4.2.

    4.2 The payment of Royalty is the same with Clause 4.2 of the Selection Proposal 1.

    4.3 The methods of payment for the fee of service and personnel training under the Contract are detailed in Annex to the Contract.

    4.4 The way of payment for the penalties and compensation is the same with Clause 4.3 of this Contract.

    Article 5 Delivery of the Technical Documentation

    5.1 Licensor shall deliver to Licensee the technical documentation at airport in accordance with the con tents, quantity and time stipulated in Annex 2 to the Contract. The risk of the technical documentation shall be transferred from Licensor to Licensee after its arrival at airport, China.

    5.2 The date stamped, by airport, China shall be the actual date of delivering the technical documentation.

    5.3 Licensor shall, within 24(twenty-four) hours after dispatching each batch of the technical documentation, inform Licensee by telex or cable of the Contract number, airway bill date, documentation number, number of parcels, weight, flight and expected arrival date, and at the same time, shall Licensee two copies of the airway bill and the detailed list of the technical documentation.

    5.4 In case of any loss, damages or shortage caused to the technical documentation in the airway, Licensor shall make supplementary or replaceable delivery to Licensee within 30 (thirty) days after receiving Licensees written notice without any charge.

    5.5 The technical documentation shall be packed in strong cases suitable for long distance transportation and numerous handlings with protective measures against moisture and rain.

    5.6 The following contents shall be maked on the cover of each package of the technical documentation in English;

    A. contract number;

    B. consignee;

    C. destination airport;

    D. marks;

    E. weight (kg);

F. case No./piece No.;

    G. consignee code.

    5.7 There shall be two copies of the detailed list of the technical documentation marked the order number, documentation code, name and page inside each package.

    Article 6 Technical Service and Personnel training

    6.1 Licensor shall send his skilled, healthy and competent personnel to the Contract Factory of Licensee to provide technical service on side in accordance with the stipulations of the Contract. The number of people, specialty, task, content and duration in China are detailed in Annex 4 to the Contract.

    6.2 Licensee shall provide facilities for entry and exit visa, work and live in China for Licensors

    technical service personnel. The treatment conditions of Licensors technical personnel in China

    are detailed in Annex 4 to the Contract.

    6.3 Licensors personnel of the technical service shall observe the law of the Peoples Republic of

    China and rules and regulations of the Contract Factory in the period of service in China. 6.4 Licensee have right to send his technical personnel or operative workers to the relevant factory of Licensor to be training. The number of people, specialty, content, time and requirement of training are detailed in Annex 5to the Contract.

    6.5 Licensor shall provide facility for entry and exit visa and training conditions for the Licensees

    trainees. The treatment conditions of the trainees in Licensors country are detailed in Annex 5 to

    the Contract.

    6.6 The Licensees trained personnel shall observe the law of the Licensors country and the rules

    and regulations of the Licensors factory in the period of training.

    Article 7 Tests and Acceptances

    7.1 In order to verity the correctness and reliability of the technical documentation supplied by Licensor, Licensor shall send the representative to test an inspect the Contract Produces jointly with the technical personnel of Licensee in the Contract Factory. The specific procedure of tests and inspection and the standard of the acceptance are detailed in Annex 3 to the Contract. 7.2 If the standard of the acceptance specified in Annex 3 to the Contract are achieved in the joint tests, both parities’ authorized representative shall sign four copies of the acceptance certificate for the Contract Products, two copies for each party.

    7.3 If the technical performance of the Contract Products are not achieved the technical indices stipulated in the Contract in the acceptance tests, both parties shall friendly consult and jointly discuss, analyse the causes and take measures. The second test shall be done after the products defect has been eliminated. Both parties shall sign the acceptance certificate in accordance with the stipulations of Clause 7.2 after the acceptance test has been up to standard. 7.4 if the responsibility for the failure of the first test lies with Licensor, Licensor shall again send his technical personnel to participate in the second test and shall bear all the expenses; if the responsibility for the failure of the first test lies with Licensee, Licensee shall bear all the expenses.

    7.5 If it is due to Licensors responsibility that the acceptance standard of the Contract products are still not achieved upon the second test, Licensor must compensate related loss suffered by licensee, and send at his own expenses his technical personnel to participate in the third test of the Contract Products; if the responsibility for the failure of the second test lies with Licensee, licensee shall bear all the expenses.

    7.6 If it is due to Licensors responsibility that the acceptance standard of the Contract Products are still not achieved upon the above-mentioned three tests, Licensee shall have right to terminate the Contract and Licensor shall compensate all related loss suffered by licensee in accordance with the stipulations in Article 8 to the Contract; if the responsibility for the failure of the above-mentioned three tests lies with Licensee, then both parties shall discuss and agree upon further execution of the Contract.

    (Note: the number of the tests and acceptance shall be determined in terms of specific circumstance.)

    Article 8Guarantees and Claims

    8.1 Licensor guarantees that the Technical Documentation supplied by Licensor to Licensee in accordance with the contract shall be of the latest Technical Documentation which are actually used by Licensor and the improved and developed technical documentation shall be supplied in time by Licensor to licensee in the course of implementation of the Contract. 8.2 Licensor guarantees that the Technical Documentation supplied by Licensor to Licensee in accordance with the Control shall be complete, correct and clear, and shall be delivered in time in accordance with the stipulated in Annex 2 to the Contract.

     8.3 The period of performance guarantee supplied by Licensor to the Contract Factory shall be ____ (________) moths. The starting and termination date of the period of performance guarantee are detailed in Annex 3 to the Contract.

     8.4 If it is found by Licensee that the Technical Documentation supplied by Licensor is not conformity with stipulation in Clause 8.2to the Contract, Licensor shall send the related technical documentation by air to Licensee free of charge within 30(thirty) days after receiving Licensee’s

    written notice.

     8.5 If the Technical Documentation can’t be delivered by Licensor in accordance with date stipulated in Annex 2 to the Contract, Licensor shall pay to Licensor penalty for late delivery of the Technical Documentation at the following rates:

    _______%(________percent)of the total Contract price for each week of late delivery from the first week to the fourth week;

    _______%(________percent)of the total Contract price for each week of late delivery from the fifth week to the eighth week;

    _______%(________percent)of the total Contract price for each week of late delivery exceeding eight weeks;

    The above-mentioned total penalty shall not exceed_____%(______percent)of the total Contract price, if the days less than one week of the delievery, it shall be counted as one week.

     8.6 penalty made by Licensor’s Technical Documentation delays over 6(six) months, Licensee shall be entitled to determinate the Contract. In such case, Licensor shall return ro Licensee the total amount which Licensee has already paid plus _____% interest per annum thereon.

     8.8 If it is due to Licensor’s responsibility that the Contract Products is not still up to standard upon the _____test, this case shall be dealt with the following methods in accordance with the stipulations in Article 7 to the Contract

    (1) Due to the unqualified products, Licensee can not put into production and has to terminate

    the Contract, in this case, Licensor shall return to the Licensee the total amount which has

    already been paid by Licensee plus______% interest per annum thereon;

    (2) If only some part of the Contract Products can not achieve the acceptance standards, but

    Licensee still can put into production, Licensor shall compensate Licensor’s loss

    according to the following stipulations:

    A: If performance target of the Contract Products come down ____%,Licensor shall compensate Licensee _____%of the total Contract price;

    B: If performance target of the Contract Products come down_____%, Licensor shall compensate Licensee____-%of the total Contract Initial payment;

    C: If performance target of the Contract Products come down_____%, the compensation of Licensor to the Licensee will be the reduction of royalty rate ____%.

    (Note: the penalty of late delivery and the performance claims may be added or subtracted some clauses in accordance with specific contract.)

     8.9 After the Contract Products is up to standard upon the acceptance tests, Licensor agrees to buy from Licensee a part of the contract products year by year. The model and quantity of buy-back are detailed in Annex_____to the Contract.

     Article 9 Infringements and Confidentiality

     9.1 Licensor guarantees that Licensor has lawful ownership of all the know-how and Technical Documentation supplied by Licensor to the Licensee in accordance with the Contract, and that Licensor has the right to transfer them to Licensee. In case a third party brings a charge of infringement, ;Licensor shall take up the matter with the third party and bear all legal and financial responsibilities which may arise.

     9.2 Licensee agree to keep the know-how and Technical Documentation supplied by Licensor under secret conditions within the validity period of the contract. If a part or the whole of the above-mentioned Know-how orTechnical Documentation will be opened to the public by Licensor or any third party, Licensee is no longer to have the secret obligations to the opened parts.

     9.3 Licensor shall keep secret for the information of hydrology, geology and production of the Contract Factory supplied by Licensee. The secret period shall be kept as long as Licensee requires.

     9.4 Licensee shall have the right to use the know-how and Technical Documentation supplied by Licensor, and design, manufacture and sell the contract products after the ternmination ofg the contract.

    Article 10 Taxes and Duties

     10.1 All the taxes and duties in connection with and in the execution of the Contract to be levied by the Government of the People’s Republic of China on Licensee in accordance with the

    tax law in effect shall be paid by Licensee.

     10.2 All the taxes and duties in connection with and in the execution of the Contract to be levied by the Government of the People’s Republic of China on licensor shall be paid by Licensor.

    In accordance with the stipulation of Article 11 of the Income Tax Law of the People’s Republic of China Concerning Foreign Enterprises, the with-holding tax to be levied on Licensor will be deducted from the payment under Article 4 of the Contract by Licensee and on behalf of Licensor paid to China tax Authority. Licensee shall send to Licensor one original copy of tax receipt issued bu the Chinese tax Authority. The rest taxes and duties will be paid by Licensor, and the tax

formalities will be gone through by Licensor itself in China Tax Authority.

    10.3 All the taxes and duties in connection with and in the execution of the Contract to be levied outside China shall be paid by licensor.

    Selection proposal 1

    Suitable for those enterprises whose government already signed the taxation agreement with our government already signed the avoidance of Double taxation signed by the government of peoples Republic of china and the

    __________Government on ___________. The Agreement was put into effect on ___________. Licensor and Licensee shall observe the stipulations of the Agreement.

    10.2 The ________ tax and the ________ tax to be levied on Licensor by the Government of Peoples Republic of China in accordance with the _______Tax Low and the __________ tax Low will be dealt with according to Article ____ and Article of the Agreement for the Avoidance of Double Taxation.

    Selection Proposal 2

    Suitable for those projects which has already got

    the tax reduction or tax exemption from

    Chinese Tax Authority

    10.1 In the course of implementation of the Contract, Licensor shall have the obligations to pay the ________ tax and the __________ tax in accordance with the Peoples Republic of China Tax Law in effect.

    10.2 The Tax Authority of the Peoples Republic of China decided on

    ___________ that the ___________ tax and the ______________ tax to be paid by Licensor would be reduced (or exempted), the specific methods of reducing and/or exemption is detailed in Annex _______ of the Contract.

    Article 11 Force Majeure

     11.1 If either of the contracting parties is prevented from executing the Contract by such cases of force majeure as war, serious flood, file, typhoon and earthquake or other cases which are agreed upon by both parties as cases of force majeure, the time for performance of the Contract shall be extended by a period equivalent to the effect of such cases.

     11.2 The effected party shall notify the other party of the cases of force majeure occurred by telex or cable as soon as possible and shall send by registered airmail, within 14 (fourteen) days thereafter, a certificate issued by the authorities or departments concerned to the other party for confirmation.

    1.3 Should the effect of the force majeure cases last for more than 120 (one 1

    hundred and twenty) days, both parties shall settle the problem of e\further execution of the Contract through friendly consultations as soon as possible.

    Article 12 Disputes Settlement

    12.1 All the disputes in connection with or in the execution of the Contract shall be settled by both parties though friendly consultations. Incase no settlement to the disputes can be reached by both parties though such consultations, the disputes

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