Sino-German Model Contract for Know How- and Patent License ? ? (finalized on 11 December 2002) ? ? This Contract is made on ________ in________ between (Licensor) and ____________ (Licensee) ? Whereas Licensor possesses the Know-how, [ ] Patents and other related technical information relating to the licensed technology for [?] designing, [?] manufacturing and [?] installing of ____________________. ? Whereas Licensor has the?right?and?agrees to grant a non-exclusive, non-transferable right and license to Licensee to use the Know-how and [ ] Patents as mentioned above; ? Whereas Licensee wishes to obtain from Licensor the license and right to use Licensor’s Know-how [ ]?and Patents for [?] design, [?] manufacturing and [?] installing the Contract Products and as well as the right to sell the Contract Products, all as laid down in this Contract. ? ? Now, therefore, the Parties agree as follows: ? Operative provisions: ? Article 1 ? Definitions ? ? ? For the purposes of this Contract, the following words and expressions shall have the meanings as defined hereunder: ? ? 1.1 ”Acceptance” means the acceptance by Licensee in respect of any Acceptance Test required thereunder in accordance with Article 7 hereof. 1.2 ”Acceptance Test” means the test to be carried out in accordance with Art 7 and Annex 7 in the Contract Factory to ascertain that the Contract Products comply with the standard specified in Annex 7 to this Contract. ? 1.3 ”Annex” means any document which is attached to this Contract and which constitutes an integral part hereof. ? ? 1.4???”Commercial Production” means the normal production of the Contract Products by Licensee as defined in Annex 3. ? ? 1.5?? ”Contract” means this Contract, which is formed by Article 1 to Article 18 and Annex 1 to Annex ___, signed between Licensee and Licensor. ? 1.6???”Contract Factory” means the place in which Licensee manufactures the Contract Products by using the Know-how?[ ] and/or Contract Patents provided by Licensor that is ____________ factory, _____________ City,?_____________ Province, as defined in Annex 1. ? 1.7???”Contract Patents” means any granted patent and [?] applications therefore related to Contract Products which Licensor owns or has the right of granting the license, [?] and which are listed in Annex ___ [?] and copies of the respective published applications and patents to be delivered together with the Technical Documentation. ? ? 1.8???“Contract Products” means the products listed in Annex 1 to this Contract, which are [?] designed, [?] installed, [?] manufactured or produced by the use of the Know-how [?] and/or Contract Patents. ? 1.9???”Date of Effectiveness” means the date this Contract becomes effective in accordance with Article?17.1. ? 1.10?? ”Know-how” means all the technical knowledge communicated to Licensee by Licensor, e. g. data, indices, calculation formula, drawings with regard to the [ ] design [ ] manufacture [ ] assembly [ ] installation and [ ] maintenance of the Contract products which is used at the date this Contract is signed in the plant of Licensor at _______ and which is valuable and secret as well as other related technical information. ? ? 1.11??? ”Licensee” means ? ?????? [? ] ___________ Company, _____________ City, ____________ Country (Enduser) ? ???[? ] ___________ acting as Agent for Enduser ? ? 1.12??? ”Licensor” means ???[? ] ___________ Company,_____________ City, _____________Country ? ? ?1.13?? ”Net Selling Price” means [?] the amount of invoice value of the Contract Products, minus the charges for packing, freight, insurance premium, reasonable commission, commercial discount, taxes and other dues, as far as separately invoiced, as well as the value of the parts purchased from Licensor . ? [?] the amount of invoice value of the Contract Products minus ___ % thereof, such deduction representing all charges related to packing, freight, insurance premium, reasonable commission, commercial discount, taxes and other dues. ? [?] To the extent that the Contract Products have not been sold to independent third parties but used by Licensee or transferred to any affiliated company in which Licensee or its parent company owns or controls at least fifty percent (50%) of the voting stock, the term ”Net Selling Price” as used herein shall mean the weighted average net sales value of the Contract Products invoiced to independent third parties during the calendar quarter preceding the calendar quarter of such use or transfer. ? ? 1.14?? ”Parties” means collectively Licensee and Licensor. ? ? ? 1.15??“Technical Documentation” means the Know-how available in writing such as technical indices, drawings, designs and other documents, as stipulated?in Annex 2 to the Contract. ???? ? ? 1.16??”Technical Service” means the technical assistance including but not limited to instruction to be rendered by Licensor to Licensee, as stipulated in Annex 5?to the Contract. ? 1.17 ”Technical Training” means the technical training to be rendered by Licen- sor to Licensee in Germany and/or China with respect to?manufacturing [?] designing [?] installing [?] operating [?] inspection [?] maintenance [ ] of the Contract Products, as detailed in Annex 4 to the Contract. ? 1.18? ”Working Day” means the working days as stipulated by the laws of?Licensee’s country. ? Article 2 ? Scope of the Contract ? 2.1 Licensor has agreed to grant to Licensee and Licensee has agreed to obtain from Licensor the right to use the [ ]Know-how?[?] and the Contract Patents for the Contract Products as set out in Art. 2.2. ? 2.2 Licensor hereby grants to Licensee a non exclusive, non-transferable license to exploit the Know-how [?] and the non-exclusive, non-transferable license to exploit Contract Patents for the [?] design [?] manufacture [?] assembly [?] installation and [?] maintenance of the Contract Products in the Contract Factory as well as the right to sell the Contract Products so manufactured in the territory of [?] China?[? ] Germany and to export the Contract Products so manufactured in the following [ ] countries______________ [? ] regions __________. Licensee?[ ] and Enduser is obliged not to sell or distribute Contract Products to buyer where he knows [ ] or should have known that the Contract Products will be exported to countries or regions other than referred to above. Sales and distribution other than provided in this Art. 2.2 are subject to Licensors’s prior written consent. ? 2.3 Upon a separate written agreement concluded by the Parties, the Licensee shall have the right, to sublicense to a third Party inside or outside the licensed territory of [? ]?China [? ]?Germany to exploit the Know how [ ]?and/or the Contract Patents. ? 2.4 Licensor shall provide Licensee with the Technical Documentation. Its contents, quantity and time of delivery are detailed in Annex 2?to the Contract. ? 2.5 The Licensor shall be responsible to make available his technical personnel for rendering the Technical Training as defined in Annex 4 and the Technical Service as detailed in Annex 5. ? [ ] 2.6 Licensor is obliged to supply Licensee subject to separate agree- ment to be agreed upon from time to time with (”components”) required for the manufacture of the Contract Products. ? Article 3 Contract Fees ? [Option I: Lump-sum] ? 3.1 The total contract fee, which is a lump-sum to be paid by Licensee to Licensor for Know-how [?] and Contract Patents, including Technical Documentation, Technical Training and Technical Service to be supplied by Licensor in accordance with the stipulation of Article 2 of this Contract, shall be _________ (say:_______), which shall be calculated and paid in ___________ currency [?] and shall be valid for a quantity of up to ______________ Contract Products based on which the total contract fee is calculated. If this quantity is exceeded, the Licensee shall pay an additional lump-sum on a pro rata basis, unless otherwise agreed upon.? 3.2 The breakdown price of the above total contract fee shall be as follows: a) Technology License Fee: ____________________ (say:_____________) b) Technology Documentation Fee: _____________ (say:_____________) c) Technical Training Fee: ____________________ (say:_____________) d) Technical Service Fee:_____________________ (say: _____________) ? 3.3 The above mentioned total contract fee shall be firm and fixed and shall include delivery of the Technical Documentation as determined in Article 5. ? ? [Option II: Initial fee and running royalty} ? 3.1 The fee to be paid by Licensee to Licensor for Know-how [?] and Contract Patents, including Technical Documentation, Technical Training and Technical Service to be supplied by Licensor in accordance with the stipulation of Article 2 of this Contract, shall be priced on the combination of initial fee and running royalty, which shall be?paid in __________ currency. ? 3.2 The above fee shall be calculated as follows: A. Initial fee : ____________________ ___________(say:____________) B. Running Royalty ??????[?]?a) Calculating base: Running Royalty shall be calculated on basis of the Net Selling Price of the Contract Products which are invoiced or dispatched or used by Licensee whichever is earlier. The Contract Products?which have been returned shall be excluded, unless sold again. b) Royalty Rate:__________ % ???? c) Royalty Period:?[??] duration of the Contract [?? ] ends _________ years after?start of Commercial?Production of Contract Products. ??????[ ]?a) Calculating base: Any Contract Product invoiced or dispatched or used by Licensee whichever is earlier. ?b) Royalty Rate:????? [currency] _____________ per unit of Contract Product c) Royalty Period:?? [? ]?? duration of Contract [?]? ends _____ years after start of Commercial Production of Contract Products. ? 3.3 Royalty under this Contract shall be calculated starting from the date on which Licensee starts sales or use, whichever is earlier, of Contract Products. The date of settling accounts for royalty shall be 31. December of each year in terms of calendar year [?] on semi annual basis at the end of the respective period [?] on an annual basis. ? 3.4 The statement of selling quantity, net selling amount of the Contract Products and royalty which Licensee should pay for [?] last calendar year??[?] semi annual period, shall be submitted to Licensor in written form by Licensee within 30 (thirty) days after the date of settling accounts for the royalty. The specific methods for calculating net selling amount and royalty in detail such as ________________________________________________________________________________________________________________ are listed in Annex 8?to this Contract. ? ? [Option III: Running Royalty] Subject to detailed negotiations and agreement between the Parties ? Article 4 Conditions of Payment ? [Option I: Lump-sum] ? 4.1 All the payments stipulated in the Contract shall be effected in ____ (currency) by [ ] telegraphic transfer (T/T) [ ] mail transfer (M/T) through the Bank of?____________ (here it is the business Bank of Licensee) and the Bank of ____________ ( here it is the business Bank of Licensor). All the Banking charges incurred inside Licensee’s country shall be borne by Licensee, and all the banking charges incurred outside Licensee’s country shall be borne by Licensor. ? 4.2 The payment of total contract fee stipulated in Article 3 of the Contract shall be made by Licensee to Licensor according to the following manner: 4.2.1 ___ % (__percent) of the total contract fee, namely ___ (say: ____) shall be paid by?Licensee to Licensor within 30 (thirty) days after Licensee has received the following documents provided by Licensor in conformity with the stipulations of the Contract. [?]?(1) One photostat copy of a valid export license issued by the relevant authorities of Licensor or one copy of a written statement by the competent authorities of Licensor or by Licensor, certifying that the valid export licence is not required; (2) One?original of an irrevocable letter of guarantee (L/G) in favor of Licensee by ____________ (Bank) for a sum of __________ (say:___________). The specimen of the letter of guarantee is enclosed as Annex 6a to this Contract. The validity of the L/G shall expire at the delivery date of the Technical Documentation; (3) Four copies of the proforma invoice concerning the total contract fee; (4) Four copies of commercial invoice; [?]?(5)?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 ___________/China, for a sum of _____________ (say:___________) (up to 70 % of the total contract fee) in favour of Licensor . The specimen of the letter of guarantee is enclosed as Annex 6b to the Contract. 4.2.2 ____% (______percent) of the total contract fee, namely ____ (say:____) shall be paid by Licensee to Licensor within 30 (thirty) days after Licensee has received the following documents provided by Licensor in conformity with the stipulations of the Contract: (1) Four Copies of the commercial invoice [? ]???(2)? Two copies of the sight draft (3) Four copies of the airway bill for delivering the Technical Documentation (or the written notice confirming the Licensee’s receipt of Technical Documentation in case of Article 5.9). [ ] 4.2.3??_____ %?( ____ percent) of the total contract fee, namely ______ ( Say: ______) shall be paid by Licensee to Licensor?within 30 (thirty) days after Licensee has received the following documents provided by the Licensor in conformity with the stipulations of the Contract: (1) Four copies of the commercial invoice; [??]?? (2) Two copies of the sight draft (3) Two copies of the letter of Licensor?stating that the Licensor offered to start Technical Training. 4.2.4? _____ %?( ____ percent) of the total contract fee, namely ______ ( Say: ______) shall be paid by Licensee to Licensor?within 30 (thirty) days after Licensee has received the following documents provided by?Licensor in conformity with the stipulations of the Contract: (1) Four copies of the commercial invoice; [?? ]??(2) Two copies of the sight draft (3) Two copies of the certificate signed by both parties stating that the Technical Training has been performed in accordance with Annex . However, such payment has to be made at the latest _____ months upon the date?Licensor offered in writing to start the Technical Training in accordance with the Contract, unless Licensee can evidence that the non-performance of the Technical Training is due to Licensor’s reason. 4.2.5 ______ %?( ____ percent) of the total contract fee, namely _________?( Say: ______) shall be paid by Licensee to Licensor?within 30 (thirty) days after Licensee has received the following documents provided by?Licensor in conformity with the stipulations of the Contract: (1) Four copies of the commercial invoice: [?? ]??(2) Two copies of the sight draft (3) Two copies of the?certificate signed by both parties stating that the Technical Service has been performed. However, such payment has to be made at the latest _____ months upon the date Technical Service was offered by Licensor, unless Licensee can evidence that the non-performance of the Technical service is due to Licensor’s reason. [?] 4.2.6_____ %?( ____ percent) of the total contract fee, namely ______ ( Say: ______) shall be paid by Licensee to Licensor?within 30 (thirty) days after Licensee has received the following documents provided by the Licensor in conformity with the stipulations of the Contract: (1) Four copies of the commercial invoice: [?? ]??(2) Two copies of the sight draft (3) Two copies of the?certificate signed by both Parties stating that the Acceptance Test has been performed in accordance with Annex 7. However, such payment has to be made at the latest?______ months upon the Date of Effectiveness of this Contract, unless Licensee can evidence that the non-issuance of the Acceptance Certificate is due to Licensor’s reason. 4.3? Licensee shall have the right to deduct, from any of the above-mentioned payments, the penalties and/or compensation which (i) Licensor has separately acknowledged in writing to pay to Licensee or (ii) have been determined by arbitration award in accordance with the stipulations of the Contract, or (iii) become due because the delivery date as per [ ] 5.2 [ ] 5.9 has not been met. ?

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