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1. Agreement for provision of technical know-how:
   In respect of such agreements, the following issues may be considered:

   1. 1. Definition and characteristics of know-how:
      Since the main feature of this type of agreement is transfer of technical know-how, it is necessary that the term technical know-how should be defined with utmost care so as to make clear the rights and obligations of the parties concerned. Although the exact definition and specifications of know-how will largely depend upon the type of know-how which is intended to be transferred by the foreign party to the Indian party, it may be useful to refer to the normal composition of technical know-how, which consists of —

      1. Items : Sample, Designs, Models, Machines, Apparatus, Spare Parts, Tools, Special Accessories, etc.

      2. Technical Documents : Formulae, Calculations, Plans, Drawings, Inventions, Blue Prints, etc.

      3. Instructions : Notes concerning the design, manufacture or use of the product or process; Shop practices or practical advice on execution; Technical recipes; Explanations supplementing a patent; Data on the organization of work; Requirements in regard to building; Lay out of plant; Production routing and inspection methods; Calculations of personnel and data helpful economically such as costing data, etc.

      4. Patents and Trade-marks.

      Specimen clause:
      
      Technical know-how :
      means the latest and complete data, information and assistance, including the position and reliability of suppliers, price-wise and quality-wise; the Technical Maintenance and other Manuals and instructions; the entire secret and non-secret manufacturing technology, technical know-how and other knowledge, data drawings, designs (product design and tool design), production engineering, documentations pertaining to the plant & machinery, dies & moulds, assembly, etc., possessed by the licensor subsequent to such signing but during the validity period of this Agreement, in order to successfully perform, amongst others, the following activities :—

      1. lay-out of the Plant;

      2. acquisition, erection, installation and commissioning of the Plant (including foundation details);

      3. procurement from third parties of standard bought-out items and machinery for the acquisition, erection, installation and commissioning of the Plant;

      4. adoption/adaptation of data and information received under this Agreement to the conditions prevailing in the Plant in India;

      5. selection of raw-material (including chemical compositions and physical characteristics); and

      6. assembly and manufacturing of contract products.
         The said know-how is more precisely defined in Annexure.

      Contract Products:
      Shall include and mean the items as described in Annexure-I thereof of Guaranteed Quality to be manufactured in the India Co’s Plant in India.
      
      Patents:
      Means all patents or invention, owned by the Licensor at the date of singing of this Agreement, and shall include any subsequent patents, additions, improvements, innovations, knowledge and information concerning the Contract Products, acquired or gained by the Licensor subsequently during the validity period this Agreement.
       

   2. Element of Secrecy :
      Technical know-how normally consists of such elements which are regarded of a secret nature by the foreign party transferring the technical know-how to the Indian party. The secrecy is not necessarily permanent, but so far as there is a secret, and so long as it is not disclosed, each of its possessors enjoys an advantage over his competitors. In such a case, the grantor of technology may fear that if the secret is divulged by the grantee or by his staff, he will not have any satisfactory redress. On the other hand, the grantee may fear that the secret is already in possession of his competitors and therefore he has no sure basis for assessing any advantage and whose duration and scope are unknown to him. Therefore, it is important to contain a suitable clause in collaboration agreements safeguarding the secrecy of the technology.
       

   3. Transfer of know-how:
      The collaboration agreement should specifically mention the mode of transfer of know-how, the method to be employed for the said transfer, the time by which transfer should take place and the place where transfer should be made. Such clauses are specially important because under the Indian Income-tax Act, the place of transfer of technical know-how may assume great significance while determining the rate of income-tax payable by a foreign collaborator in India.
       
      The transfer of technical know-how may be once for all or the same may be a continuous transfer. In cases where the technology is intended to be transferred once for all, the agreement should specially state so, because this will affect the treatment of the cost paid by the transferee to the transferor.
       
      In case of continuous transfer of technology, the transfer does not take place at one time, but it may take place by a number of complex and successive procedures whose duration and phases should specified in the agreement.
       

   4. Performance Guarantee:
      It is desirable that the transferee of the know-how should be assured of the result to be obtained by use of the technology transferred to him. In such cases, a clause is generally incorporated in the collaboration agreements which is commonly known as "performance guarantee clause". It should not merely give a vague or ambiguous definition of the guarantee. In view of the importance of this obligation, and the consequences that its non-observance would entail, the agreement should specify the terms and conditions of the guarantee and the requirements necessary for its fulfillment. The agreement should lay down the technical parameters of the results to be achieved, qualities, standard of the product, quantities to be produced, minimum or normal performance, particular dimensions, and permitted tolerances, etc. The agreement should also provide for the remedies the transferee will be entitled to if the performance of the technology is not found to be satisfactory. The remedy may be in the shape of damages, or the transferor may be held responsible at his own costs to rectify the defect in the technology supplied by him.
       

   5. Training of Personnel:
      Where the know-how relates to a specialised field in which the transferee of the know-how is inexperienced, the parties sometimes agree that the transferor will train the transferee’s staff in the methods of utilizing the technical know-how. In such cases, the agreement should clearly specify the terms and conditions of such assistance; the place where the training is to be given; the date and period for which training is envisaged; the number of trainees and instructors; the qualification of the instructors; working conditions of the trainees including their accommodation, transport and insurance; terms and conditions of payment of training fees, etc.
       

   6. Granting of Manufacturing Licence:
      Where the transferor of technical know-how grants a licence to the transferee for undertaking the manufacturing, there is no presumption that the licence granted would be an exclusive licence. Therefore, where the manufacturing licence is intended to be an exclusive one, it must be so stated in the collaboration agreement. The transferee of the technical know-how may take exclusive rights of exploitation of the know-how for manufacture and sale in a particular country. The transferee may also take rights for granting sub-licences with the consent of the transferor of technology. The collaboration agreement should specify the exclusivity of the licence and also the territory to which such licence extends.
      
      Granting of licence becomes all the more important in cases where the transferor of technology holds world wide patents. In such cases, a special mention of granting of patent rights should also be made in the collaboration agreement.

      Specimen clause of the Performance Guarantee.
      "The Foreign Company ensures and guarantees that the technical know-how to be provided by it to Indiaco under this Agreement will enable Indiaco to successfully acquire, install and commission the proposed manufacturing Plant in India; and to successfully set-up its own Research facilities pertaining to the Plant and manufacture of the Contract Products, obeying all reasonable operating instructions and guidance given by the Foreign Company.
      
      If the installation, commissioning or operation of the Plant and/or the manufacture and Marketing of the Contract products as per technical know-how and other documents/ services/supplies of machines, etc., provided by the Foreign Company under this Agreement, give rise to any notice, claim or suit for infringement of any Patent(s) existing on the date of this Agreement, or thereafter during the terms of this Agreement, Indiaco shall forthwith notify the Foreign Company, in writing of such fact. Upon such notice, the Foreign Company shall, at the expense of the Foreign Company, conduct and direct defence or disposal of any such notice, claim or suit, and shall hold Indiaco harmless from the results of such suits of disposal.
      
      The Foreign Company warrants that this Agreement does not and shall not infringe any existing or subsequent rights or licence of any third party.
      
      The Foreign Company further warrants that the rights of Indiaco under the present Agreement are not and shall not be infringed by any prior or subsequent Agreement, which may have been or may hereafter be entered into by the Foreign Company with another party in India".
       

   7. Communication of Improvements in Technology:
      In view of the rapidity of technical progress, the transferee of know-how often desires to take advantage of any improvements or modifications made to the know-how by the transferor of the technology. In cases where it is intended that the results of improvement of technology should also be communicated to the transferee, a specific clause should be contained for this purpose in the collaboration agreement.
      
      Likewise, where the transferor of know-how acquires patent rights subsequent to the date of collaboration agreement, and it is intended that such patent rights should also be available to the transferee during the tenure of collaboration agreement, the agreement should contain a specific provision in this regard.
       

   8. Payment for technical know-how:
      The payment for technical know-how may be made in one lump sum or it may be a regular payment in the shape of royalty or technical fees. In any case, the amount of payment for various types of services should be separately stated in the agreement.
      
      Where the payment is made in lump sum, it should be stated whether the payment is in one instalment or more than one installments. In all cases it is necessary to specify the amount of payment, the dates of payment, the place of payment and the currency in which payment is to be made. Place of payment is particularly important to determine the tax obligations of the foreign partner in the collaboration agreement.
      
      Where payment is made by way of royalty, the method of calculating royalty, the time when payment becomes due, the place of payment and the currency in which payment is to be made should be specifically mentioned in the agreement.
      
      When an Indian party makes payment to a foreign party, all payments are subject to approval of Reserve Bank of India. Therefore, while fixing the time of payment in the agreement, it should be kept in view that the formalities may take some time before the amount could actually be remitted to the foreign party.
      
      When the payment is made by the Indian party to a foreign party, the Indian party is obliged to deduct income-tax at source. However, the collaboration agreement should be specific about the payment of Indian taxes in India.
      
      Specimen Clause:
      In consideration of transfer of technical know-how and/or any assistance to be rendered by the Foreign Company as herein provided, Indiaco hereby agrees to pay a lumpsum of —————— equivalent to Indian Rupees —————————— only to the Foreign Company to be paid as follows:

      1. US $ ——— after the agreement is filed with the Reserve Bank of India.

      2. US $ ——— upon receipt of all documents pertaining to complete technology in the manufacture of Contract Product.

      3. US $ ——— upon commencement of commercial production of guaranteed quality.

      In addition to the abovementioned lumpsum fee, Indiaco also agrees to pay royalty to the Foreign Company to be calculated at the rate of 3% of the net ex-factory price of the Contract Product exclusive of excise duties, minus the cost of the standard bought out components and the landed cost of imported components, irrespective of the source of procurement including ocean freight, insurance, custom duty, etc. The royalty would not be payable beyond the period of the Agreement if the orders had not been executed during the period of the Agreement. However, where the order themselves took a long time to execute, then the royalty for an order booked during the period of the agreement, but executed after the period of the agreement, would be payable only after the Administrative Ministry certifies that the orders in fact have been firmly booked and execution begun during the period of Agreement, and the technical assistance was available on a continuing basis even after the period of the Agreement.
      
      Any payment due to be made herein by Indiaco to the Foreign Company shall be paid promptly and regularly in accordance with Clauses ———— above and in the event of any default thereto, the Foreign Company shall reserve the right to terminate this Agreement forthwith and to institute any legal proceedings to recover any monies due to the Foreign Company without any further reference to Indiaco.
      
      The lumpsum payment and royalties payable by Indiaco to the Foreign Company herein shall be inclusive of any tax which, if payable in India, shall be borne solely by the Foreign Company.
       

   9. Termination of Agreement:
      The collaboration agreement may be terminated for a breach by one of the parties to the agreement. The agreement should clearly provide for such contingencies. The agreement may be made liable to be terminated in cases of non-delivery of know-how, delay in supplying the know-how, unsatisfactory results obtained by the use of know-how, disclosure of secret information, default or delay in payment, insolvency of the parties, etc. It may also include a term for termination by mutual consent.
       

   10. Force Majeure:
       The parties to the agreement may have all genuine intention of honouring their commitment faithfully under the agreement. However, sometimes it happens that certain supervening circumstances render it impossible for a party to fulfil its obligations under the agreement. It is not always possible to foresee all possible future circumstances that may disable any of the parties from discharging its duties. It is, therefore, desirable to include in the agreement specific provisions defining the circumstances which would relieve them of their liability for non-performance of their obligations. Where the circumstances are such that it is beyond the control of the parties to fulfil their obligations, adequate provisions are kept in the agreement which are known as force majeure clauses. The result of such provisions is that the parties get discharged from their obligations under the agreement if the circumstances are such that it is beyond their control to fulfil their obligations.
        

   11. Law Applicable :
       It is desirable that the agreement should not give rise to disputes. But the parties cannot be sure that they have provided for all possible cases of disputes. Consequently, the collaboration agreement should specify the law which is to govern the agreement. Where the agreement is to be operated in India, it is usual to provide that the Indian law shall govern the agreement.
        

   12. Arbitration:
       It is usual to keep a specific clause for arbitration particularly because the parties involved belong to different countries. It is necessary to include provisions regarding amicable and quick settlement of disputes that may arise during the performance of the agreement through the media of arbitration. The arbitration may be an institutional arbitration or an ad hoc arbitration. In institutional arbitration, the parties are obliged to refer to the rules of arbitration of an arbitral organisation, or a chamber of commerce or a trade association which govern the conduct of arbitration proceedings. In an ad hoc arbitration, the parties specify the number and method of appointment of arbitrators and the procedure regarding the conduct of arbitration. In international transactions, it is usual to resort to institutional arbitration because of the complexity which may arise due to involvement of citizens of more than one country in the dispute. The collaboration agreement should contain a clear provision as to the kind of arbitration and also the place of arbitration.
        

2. Joint-Venture Agreements
   In joint-venture agreements, the foreign party does not confine itself only to the transfer of technical know-how to the Indian party, but also agrees for financial participation with the Indian party. For this purpose it is common to form a separate company in India which may be called a joint-venture company.
   
   Equity Participation:
   The foreign company to a joint venture agreement may take minority ownership, majority ownership, 50% ownership, minority ownership with controlling shares being held by an independent thirty, no ownership but having an option to acquire some or all shares at a later date etc. While drafting the agreement, the percentage of ownership to be taken by the respective parties should be very clearly defined. The agreement should also specify the type of share capital and the mode of payment for acquiring the shares by all the parties concerned. It is also common that the responsibility for formation of the joint venture company is undertaken by the Indian party primarily because of the physical location of the Indian party in India.
   Specimen clause:
   
   Payment for Equity Participation:
   In payment for the shares of the Joint Company to be acquired by the Foreign Company at the time of the incorporation of the Joint Company, Foreign Company shall assign and transfer to the Joint Company:

   1. Cash : (amount) in cash.
       

   2. Machinery and Equipment : all the machinery and equipment set forth in the Schedule — annexed hereto, which machinery shall become the sole property of the Joint Company, free and clear of all liens, charges and claims of any kind whatsoever.
       

   3. Land : the absolute title, free and clear of all liens, charges and claims of any kind whatsoever, to the real property and all buildings and other structures thereon, including all fixtures, equipment and machinery located therein, situated at —————————————’ which said real property, buildings, structures, fixtures, equipment and machinery are more specifically described in the Schedule annexed hereto.
       

   4. Industrial Property:

      1. Assignments: Patents: Foreign company’s entire right, title and interest in and to all unexpired patents and patent applications theretofore issued or assigned to or filed by Foreign Company anywhere in the world to the Licensed products or to the production, manufacture or use thereof ( a list of such patents and patent applications heretofore issued or assigned to or filed by the Foreign Company being set out in the attached Schedule), together with all rights which Foreign Company then has to apply for patents in the territory on inventions relating to the Licensed Products or to their production, manufacture or use, and including all of Foreign Company’s rights with respect to patents which may thereafter issue anywhere in the territory or any such patent applications and with respect to divisions, patents of addition, continuation, renewals, re-issues and extensions of all such patents, patent applications and patents which may issued on such patent applications;
          

      2. Trade Marks and Trade Names : Foreign company’s entire rights, title and interest in and to all rights in the territory which it then has to all of the following trade marks and trade names, namely : (to all the trade marks and trade names set out in the schedule);
          

      3. Licences : Foreign Co. shall enter into a Licence Agreement with the Joint Company in the form as set out in Schedule—hereto annexed, under which said Licence Agreement, the Joint company shall become the exclusive licensee for the world for all unexpired patents and patent applications of the Foreign Company for the Licensed Products or to the production, manufacture or use thereof, together with all rights which Foreign Company then has to apply for patents in the territory on inventions relating to the Licensed Products or to their production, manufacture or use, and including all of foreign company’s rights with respect to patents which may thereafter issue anywhere in the territory or any such patent applications and with respect to divisions, patents of addition, continuations, renewals re-issues and extensions of all such patents, patent applications and patents which may issue on such patent applications.

   Technical Data :
   Foreign Company’s entire right, title and interest and to the use in the territory of all Technical Data which Foreign Company is then entitled to use anywhere in the world; and thereafter during the term of this Agreement, Foreign Company shall assign and transfer promptly to the Joint Company any and all rights in the territory with respect to Technical Data relating to the Licensed Products and all other products being manufactured by the Joint Company, which Foreign Company shall acquire during such term incidental or relating to such products.
   
   Direction & Management :
   The Joint Venture Agreement should specify the size of the Board of Directors, representation on the Board of Directors, election and replacement of Directors decision of the Board of Directors, particularly as representation in the Board has also to be given to the Foreign Company. Therefore, it must provided that how many representatives shall be nominated by each party.
   
   Financial Policies:
   The joint venture agreement should specify whether the profits of the joint venture company are to be retained or distributed to the shareholders. It should lay down some formula or at least a guideline regarding declaration of dividend. The agreement should also provide for obligations of the parties concerned in case of increase in the requirement of finances by the joint venture company and conversely in case where the funds become surplus.
   
   Marketing:
   The foreign party frequently desires that the joint venture company should confine the supply and sale of its products only to the local market, and sometimes to neighbouring countries and also to such countries where the foreign company does not have any interest. On the other hand, the Indian party may desire to have a wider market area for its products. It is considered unreasonable by the foreign party to open a very wide area to a joint venture company especially when it amounts to competing with itself. It is therefore necessary that the market area should be properly defined in the agreement. Besides defining the market area, specific provisions should be made for use of trade marks and trade names.
   
   Change in Ownership Ratio:
   Since the joint venture company is normally formed on the basis of agreed ratio of ownership between the foreign party and Indian party, it is common to stipulate in the agreement that no transfer of shares may be made without the consent of the other party. But sometimes, situations do arise when it becomes necessary to change the ratio of ownership interest. Therefore, there should be specific provision in the agreement for purchase of shares of one party by the other party wherever a party desires to sell its shares. It is generally provided that when a party desires to sell its shares, it will be obliged to offer the shares to the other party of the agreement first. It is only when the other party to the agreement refuses to take shares, the shares may be transferred to a third party. Method for valuation of shares should also be specified.
    

3. Agreement for Supply of Plant & Machinery
   
   Specification of Plant and Machinery :
   Since the term Plant and Machinery is general, it is necessary to give complete specifications of the plant and machinery which is to be supplied by the foreign party to the Indian party. It is also common to provide for the quality and quantity inspection of the material before the same is shipped to India. The Indian party may also like to have various certificates of measurement, weight, quantity, quality, analysis, specifications, etc., issued by the competent authorities at the time or before the shipment of the goods. It is also desirable to specify the packing details in all its technical aspects.
   
   Place and Time of Delivery:
   The Agreement should contain the dates on which shipment of plant and machinery shall take place. The place of delivery is of special significance in India. If the delivery of the plant and machinery takes place in India, the foreign party may become liable to pay taxes in India. Therefore, it is generally intended that the foreign party should deliver the plant and machinery to the Indian party outside India. The agreement should be specific on this point. For this purpose, the payment of cost of freight and cost of insurance become very important inasmuch as these factors decide the place where the property in the goods passes from the seller to the buyer. If the property in the goods passes to the Indian buyer in India, then the foreign party may become liable to pay taxes in India. The agreement therefore should contain specific provision relating to the passing of property and passing of the risk. The agreement may provide that the rights of the seller in the goods shall pass to the buyer and the goods shall be warranted free from the rights or claim of a third person from the date and time when the goods have passed the ship’s rail at the port of shipment. Likewise, all the risks relating to the goods shall pass from the seller to the buyer from the time when they have passed the ship’s rail at the port of shipment. In order to ensure the passing of property and risk outside India, it is advisable that the cost of foreign and insurance should be borne by the Indian party.
   
   Payment:
   Payment for the plant and machinery may be made by the Indian party in India or outside India. If the payment is made in India, it is possible that the foreign party may have to pay income-tax on the profits made on the supply of plant and machinery. Therefore, it is common to specify in the agreement that the payment for the plant and machinery shall be made by the Indian party outside India. The agreement may also provide that the payment shall be made in foreign currency. It should however be noted that if the payment is collected by a foreign party at its own instance through its bankers or other agents in India, the payment shall be deemed to have been made in India. Therefore, all due precautions should be taken in the agreement to ensure that payment is made and received outside India. Care should also be taken to see that it does not lead to establishment of business connection in India. Therefore, the agreement should be principal to principal basis and should avoid any agent in between.
   
   Agreement for Specific Projects in India:
   International contracts for specific projects may involve a set of participants whose number and functions may vary from case to case. One or more parties may be suppliers of plant & machinery, the other party may be responsible for the erection and installation and yet another party may undertake the building and civil engineering job. In addition to that, there may be another party acting as consulting engineers. There are also cases in which suppliers of technology or of documentation may be involved as one of the contracting parties. Such specific projects, particularly where more than one foreign parties are involved, or, in other words, where a consortium is formed by the foreign parties, present some peculiar problems which are to be taken care of while drafting the agreement for all the parties concerned. Such agreements may be mainly of the following three types:

   1. Separate agreements:
      Where each party undertakes its own responsibilities under a separate agreement which is directly entered into by such parties with the client in India.
       

   2. Comprehensive agreement:
      Where one agreement is entered into with the Indian client covering all the functions as per the requirement of the project.
       

   3. Turnkey agreement:
      Where the holder of the turnkey agreement assumes vis-a-vis the client the total responsibility of the project and takes the client’s place vis-a-vis the other participants in the project, the agreement is known as a turnkey agreement.

   Separate Agreement:
   When the parties to the project enter into separate agreements with the client in India, the rights and obligations of each party should be clearly defined in their respective agreements. However, since the client is only one party directly bound to all the others, it naturally becomes his responsibility to co-ordinate work and supply so as to ensure that the various participants do not hamper each other and that their work is performed in the correct sequence. In these cases, where a consultant is also appointed by the Indian party, such consultant may be entrusted with the co-ordination work of the various parties. While drafting the agreements, it should be ensured that there is proper co-ordination of the work by all concerned.
   
   Comprehensive Agreement:
   In comprehensive agreement, there will be one main party who is usually the supplier of plant and machinery and other important material. The main party then gives sub-contracts to other foreign and Indian parties in order to complete the entire project. All the parties involved may be made signatories to the comprehensive agreement.
   
   The main difficulty which may arise in comprehensive agreement is the tax liability of the foreign party in India. Since such contracts establish a clear business relationship in India, the foreign parties shall be responsible for payment of income-tax on their profits earned on such projects in India. Even that part of the agreement which, if independently entered into, would be outside the tax net becomes liable for taxation in India. Such comprehensive agreements are generally, therefore, entered into when the Indian client undertakes the responsibility for payment of taxes of the foreign parties in India. It is, therefore, advisable, if possible, to avoid such comprehensive agreements and enter into separate agreements with each of the parties.
   
   Turnkey Agreements:
   A turnkey agreement is in fact a more developed and complete form of a comprehensive agreement. In both types of agreements, the client seeks a single contracting party who shall be responsible for all or for a large part of the work; the difference between the two is essentially of the degree of delegation of work to third parties. Like in comprehensive agreements, a turnkey agreement holder will also be liable to pay tax on its entire profits resulting from the project in India.
   
   The tax planning aspects of comprehensive agreements or turnkey agreements should be taken note of. However, I consider these aspects beyond the scope of this Article.
   
   Drafting of the Agreement:
   As stated earlier, it is very difficult to give a specimen draft covering all the topics concerning foreign collaboration agreement as each case defers from the other as regards their requirements under the agreement. As such, some general guidelines may be given while drafting such agreements which are as under :

   1. All the parties to the agreement should be clearly defined.

   2. The obligations of each party should be separately specified.

   3. As far as possible, one party should be made responsible for the co-ordination of the work of all the parties.

   4. The Indian client may insist on a performance guarantee or performance bond from the main contracting party. The said guarantee or bond should cover the areas of other parties as well.

   5. The main contracting party which has given the performance bond should in turn take similar performance bonds from other parties.

   6. If possible, there should be separate agreement for supply of equipment to the Indian client because such supplies may remain outside the tax net in India.

   7. Where the foreign party is obliged to undertake erection and installation work also, the foreign party may enter into a separate agreement for erection and installation job, because the activity of erection and installation is liable to tax in India. The foreign party may however keep the function of supervision of erection and installation with itself because, in some cases, the Indian client does not agree for total assignment of erection or installation work to any other party.

   It is difficult to give a model draft agreement for foreign collaboration which could be adopted to all kinds of such agreements. However, a model deed for Technical Collaboration is given hereunder

1. DEFINITIONS

   "Affilated Companies"	means in relation to either Party its subsidiary company or companies or body corporate, which are or shall come under the control or responsibility of A from time to time during the term of this Agreement.
   "this Agreement"	means this Agreement as the same may be amended in writing by the Parties hereto from time to time.
   "Commercially"	means generally exploited and used in the ordinary course of business operations as distinguished from use for studies, research and/or experiment;
   "Copyrights"	the term "Copyrights" shall mean every Copyrights in India in published or unpublished works (including unpublished works containing computer software in physical form) relating to the technical field, which is created prior to the termination of this Agreement and which is owned by or licensed to A, to the extent that A has the right to grant license herein granted without obligation to pay royalties or other consideration to third party relating to writing instruments;
   "Know-how"	the term "Know-how" used herein shall include all business commercial and state of the art technical Know-how, expertise, data and information relevant to the technical field, either owned by A or acquired by A till the termination date of this agreement, to the extent that A has the right to grant license herein granted without obligation to pay royalties or other consideration to a third party including formulae, patterns, information, data, software, manuals, designs, processes charts etc. owned and possessed and Commercially exploited and practiced by A on the date of this Agreement, relating to the writing instruments;
   "Marketing Network"	includes but is not limited to, the distribution network, the channel partners and other associates of the Parties concerned;
   "Party"	means a Party to this Agreement;
   "Parties"	means all the Parties to this Agreement;
   "Patent Rights"	the term "Patent Rights" shall mean any and all the existing Patent Rights and patent applications filed in India prior to the termination date of this Agreement, based upon inventions relating to the technical field and owned by or licensed to A, to the extent that A has the right to grant the license herein granted without obligation to pay royalties or other consideration to a third party relating to writing instruments;
   "the Said Products"	means all kinds of writing commodities and such other products as may be agreed upon in writing between both the Parties hereto in that behalf;
   "Technology"	means the technology used in the manufacturing writing instruments and related products, including but not limited to moulds, ink and assembly parts etc;
   "Territory"	means and shall include the territory of India and shall include all other territories as may be agreed upon as per the Agreement;
   "USD"	means United States Dollar.

2. LICENCE OF KNOW-HOW

   1. Except as other wise hereinafter provided, A shall grant to B an exclusive right for the use of the Know-how, for the production of the said products to use, sell and distribute the said products within India and in any Territory outside India as may be agreed upon between the Parties.

   2. A shall as soon as may be reasonably practicable, impart disclose and make available the Know-how to B for the manufacture, sale and distribution of their said products within India and in any Territory outside India as may be agreed between the parties from time to time.

   3. The Know-how and all documents, materials and other data manually shall be delivered and imparted by A to B in India, Korea or elsewhere to a representative of B as may be authorised by B in that behalf.

   4. The time, manner and extent of the licensed Know-how made available shall be mutually discussed and agreed by the Parties bearing in mind their mutual convenience and interests.
       

3. USER OF KNOW-HOW
   B hereby expressly agrees and undertakes that it shall use the Know-how and any other information disclosed to it and/or data disclosed to or made available by or to which B has access under, by virtue or pursuant to this Agreement solely for the purposes of this Agreement.
    

4. 4. TRAINING OUTSIDE INDIA

   1. A shall arrange for the training of such number of qualified technical personnel of the B as may be agreed upon between the Parties hereto in the manufacture of the said Products using their said Know-how at any of A’s training centers in Korea or in any other Territory.

   2. A shall be entitled to select such technicians and personnel of B on the basis of their qualifications, skill and experience, after consultation with B.

   3. Duration of the stay of B personnel and technicians outside India shall be for such period, as A may deem appropriate.

   4. A shall make available suitable instructors for the training of B personnel at any of A’s training centers outside India, the costs of which will be borne by A.
       

5. TECHNICAL ASSISTANCE IN INDIA

   1. Subject to the requisite approval if any, of the appropriate authorities in Korea and in India including the Reserve Bank of India under the Foreign Exchange Management Act, 1999, A made available to B competent technical personnel to assist and train the technical personnel of B in India with regard to the manufacture of the Said Products for such period as may be agreed upon in writing between the Parties from time to time.

   2. Such of the employees of A sent to India as aforesaid shall at all times remain the employees of A and the salaries shall be borne and paid by A, provided that all travelling, boarding and lodging expenses and other living expenses what so ever of and relating to such personnel and their visits to India and during their stay in India shall be borne and paid B, A shall bear and pay all costs of international travel of such personnel.
       

6. IMPROVEMENTS

   1. During the term of this Agreement and thereafter, A shall forthwith disclose to B from time to time all inventions, other discoveries, improvements and modifications in the Know-how and to the said products or any of them as maybe Commercially exploited and practice by A at its plants.

   2. A shall assign royalty-free, non-exclusive and non-assignable license to B to use the improvements during the term and solely and exclusively for the purpose of this Agreement.

   3. At the request either of A or B, the Parties shall co-operate in acquiring Patent Rights for any such improvements in any specified Territory, the cost to be borne by the party requesting the patent protection or, if the protection is required by both the Parties, to be shared equally.
       

7. DELEGATION
   B shall be and shall be deemed to be entitled from time to time to use the services of any of its Affiliated Companies, other body corporate, whether Affiliated Companies or not and shall also be entitled to delegate any of its rights and benefits and duties and obligations hereunder and/or relating to the implementation of this Agreement to any such Affiliated Company and/or body corporate and/or personnel thereof subject to the approval of A.
    

8. CONSIDERATION

   1. In consideration of the license of Know-how by A to B and the technical assistance rendered by A to B, B shall pay A a sum of 1.27 Million USD subject to the Indian taxes in three equal instalments as detailed below:

      1. One-third on the Agreement having been filed with the Reserve Bank of India or the Central Government.

      2. One-third at the time of transfer of Know-how;

      3. One-third within one month after the commencement of commercial production or four years after the Agreement is filed with the Reserve Bank of India, whichever is earlier.

   2. In consideration of the grant of A’s Patent Rights and other rights and use of technical information and improvements as well as the technical assistance rendered in India, B shall pay A a royalty of ____% (_______) of the ex-factory selling price of all the Said Products thereof manufactured and sold or leased and used Commercially by B during this Agreement.

   3. All payments of royalty shall be subject to the applicable Indian taxes according to India law. The liability to pay taxes on such royalty received lies with A. B shall be free to deduct such taxes at source on behalf of A fro the royalty payable to A. In case any taxes are paid by B on behalf of A, B shall submit a tax receipt certificate to A for the same.
       

9. DIRECTIONS, STANDARDS AND SPECIFICATIONS
   B shall follow all directions, standards and specifications from time to time prescribed by A with the regard to design, processing, manufacture, sale and distribution of the said products and B shall after giving an intimation to A, modify in any respect what so ever either the physical or chemical constituents or other properties or characteristics whatsoever of the said products.
    

10. INSPECTION
    B shall, as and when required by A so to do, permit the duly authorized representatives of A to examine or inspect or cause to be examined and inspected all said products, inventories, manufacturing facilities and method and processes and good of B for the purpose of determining whether or not B is complying with the terms, conditions and stipulations contained herein, subject to the written permission obtained by A from B.
     

11. CONFIDENTIALITY

    1. B shall keep secret and confidential at all times the Know-how information data and or Technology (other than Know-how, information and data that has come to the public donation or is available to the public generally other than by way of breach of A of it confidentiality obligation under this Agreement) it has acquired under pursuant or virtue of this Agreement from A.

    2. B shall not divulge to any of its Affiliates or any third parties except to the extent reasonably necessary for its business operations the know-how, received under this Agreement so long as such information has not been made public.
        

12. NON-COMPETITION
    Except as otherwise agreed in writing A shall not, during the existence of this Agreement and thereafter, invest in companies in India one or more of which companies may be engaged in activities in fields similar or allied to those of B nor shall A license the Know-how, its trade mark or grant a franchise to any India party other than B who may be engaged in activities or in fields similar or allied to those of B. Further, A and/or its group companies and/or its subsidiaries and/or Affiliated Companies at any time during the subsistence and after the termination of this Agreement shall not invest in India to inter-alia operate any business including but limited to the business presently being carried on by B without obtaining a no objection certificate and prior consent in writing from B.
     

13. WARRANTY
    A represents and warrants to B that the Know-how granted hereunder should be the same as is used by A in its world wide operations and shall conform to the standards practice in the international writing standards.
     

14. INDEMNITY

    1. A shall defend and hold B, its employees and directors harmless with respect to any claim or liability arising out the alleged breach of the intellectual property rights including without limitations. Copy Rights, Patent Rights, industrial designs rights which may be asserted against B by a third party as a result of or in connection with this Agreement.

    2. Each party shall indemnify and hold the other party its employees, directors and affiliates harmless with respect to any consequential or indirect loss including without limitation, loss or use of assets arising out or in connection with this Agreement howsoever caused.

    3. It is the intention of the parties that the insurance taken out by B in respect of its writing, manufacturing operations and management contracts should cover the potential losses of A and its Affiliates.
        

15. TERM AND TERMINATION

    1. This Agreement shall come into force on and with effect from the effective date and shall thereafter continue to remain in full force or effect for a period of _________ years from the effective date.

    2. Either party may terminate this Agreement only upon the other party becoming bankrupt or insolvent or having made an assignment for the benefit of creditors or having commenced or having been commenced against its dissolution or winding up proceedings.
        

16. FORCE MAJEURE
    Neither party shall be in default under this Agreement by reason of its failure or delay in the performance of its obligations (except in respect of payments due hereunder) if such failure or delay is caused by acts of God, Government laws and Regulations, strike, war or any other cause beyond its control and is without its fault or negligence.
     

17. WAIVER
    The failure with or without intent of any party hereto to insist upon the performance by another party of any term or provision of this Agreement in strict conformity with the requirements hereof shall not be treated or deemed to constitute a modification of any provision hereof nor any such failure or election be deemed to constitute a waiver of the right of such party at any time whatsoever hereafter to insist upon performance by the other strictly in accordance with any provision hereof.
     

18. ARBITRATION
    Any dispute arising in connection with this agreement which cannot be settled by mutual or amicable agreement shall be finally settled under the rules of Constitution of Arbitration under the International /chamber of Commerce by one or more Arbitrators appointed in accordance with the said Rules. The Arbitration proceedings shall be held in Mumbai in English language. The Arbitrators may adopt such rules of procedure as they deem appropriate of the Arbitration and Conciliation Act, 1996. The decision and award resulting from such Arbitration shall be final and binding on the Parties. Any Court of competent jurisdiction may render judgement upon the Arbitration Award or application may be made to such court for a judicial acceptance of the Award and an order of enforcement. In the event of action for judgment or execution is brought before a Court of Competent Jurisdiction on the Arbitration Award or on the judgement rendered thereon, the Parties waive all rights to object thereto insofar as permissible under the applicable laws.
     

19. ASSIGNMENT
    This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assignees provided that neither Party shall assign any or all rights or sub contract any of the rights or obligations of this Agreement without the written prior consent of the Party.
     

20. AMENDMENTS
    No amendment or variation of this Agreement shall have any effect unless in writing and signed by or on behalf of the Parties to this Agreement.
     

21. APPROVALS
    The rights and obligations hereunder shall be subject to the required governmental approvals. A shall use their best efforts to assist B, in obtaining all necessary Government approvals.
     

22. INVALIDITY
    The invalidity or unenforceability of any terms of or any right arising from this Agreement shall not in any way affect the remaining terms or rights.
     

23. GOVERNING LAW
    This Agreement shall be governed and interpreted by and in accordance with the laws of India.
     

24. NOTICES
    All Notices, requests, demands, and other communications made or given under the terms of this Agreement or in connection herewith shall be in writing and shall be either personally delivered, transmitted by postage pre-paid registered mail (airmail if international) or by fax or by e-mail (confirmed in writing by postage pre-paid, registered mail airmail if international) and shall be addressed to teh appropriate Party at the following address or to such other addresses or place as such Party may from time to time designate

At the end, I gratefully acknowledge the help I received from Shri H. P. Agarwal’s Masterly treatise on "Business Collaboration in India"

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