Contract Research Agreement

Agreement for the Exploitation of a Secret Process with Option to Purchase Process

Agreement made on the , between (Name of Owner), a corporation organized and existing under the laws of the state of , with its principal office located at , referred to herein as Owner, and (Name of Manufacturer), a corporation organized and existing under the laws of the state of , with its principal office located at , referred to herein as Manufacturer.

Whereas, Owner has the exclusive knowledge, possession, and ownership of certain inventions, formulas, and processes, hereinafter called the Process, which Process may be generally described as ;

Owner has used the Process in making on a limited scale; and

Whereas, Manufacturer desires to manufacture and sell in profitable quantities, but it cannot do so without first obtaining the right to use the Process; and

Whereas, Owner is willing to grant such rights as Manufacturer requires on the terms set forth in this Agreement;

Now, therefore, for and in consideration of the mutual covenants contained in this agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1. Use of Process

Owner grants to Manufacturer the exclusive right to use the Process in the manufacture of and such other products as the parties may agree on from time to time. Owner will fully instruct and advise employees of Manufacturer in all aspects of the Process and in the practical application and use of the Process. From now on, Owner will devote to improvement and further development of the Process such time and effort as may be necessary for maximum feasible exploitation of the Process.

2. Warranty of Owner

Owner covenants and warrants that at no time previously has he imparted to anyone any part of the Process, that no person now has any knowledge obtained through Owner in regard to the same, and that he will at all times preserve the secrecy of the same.

3. Royalties

As consideration for the rights granted under this Agreement, Manufacturer will pay to Owner royalties according to the following schedule:

A. For an initial period ending (end date of period), % of the net selling price of all and other products manufactured and sold pursuant to this Agreement;

B. After said initial period, % of the net selling price of all and other products manufactured and sold pursuant to this Agreement.

C. Accrued royalties shall be paid on the day of each month. For purposes of this Agreement, net selling price means . Regardless of output and sales, the minimum royalty payable to Owner during the term of this Agreement shall be $ per month.

4. Best Efforts

Manufacturer shall begin manufacture and sale of , and such other products as are agreed on, without undue delay. It will devote its best efforts to establishing and expanding a market for the various products manufactured pursuant to this Agreement.

5. Accounting

Manufacturer shall keep complete and accurate records of all transactions relative to products manufactured and sold pursuant to this Agreement, and shall render statements to Owner on request. For the purpose of verifying such statements, Owner shall have the right to examine the books and records of Manufacturer relative to the transactions. Such examinations may be made at any time during regular business hours.

6. Option to Purchase Process

At any time within days from the date of this Agreement, Manufacturer shall have the right to purchase all rights of Owner in and to the Process. The purchase price shall be $. If Manufacturer elects to exercise the option, it shall give written notice to Owner, which notice shall designate a date, not later than the date set forth above, for effecting the transfer and paying the purchase price.

7. Owner’s Covenant not to Compete

As long as this Agreement is in force, Owner will not engage in any manner in the manufacture of products the same as or essentially similar to products manufactured and sold by Manufacturer pursuant to this Agreement, and Owner will not engage in any other enterprise that would tend to reduce the value of the Process or the rights granted under this Agreement.

8. Duration of Agreement and Termination

This Agreement shall continue in force until (date), unless, prior to that date, it becomes economically unfeasible to continue production of products through use of the Process. In the latter event, the Agreement will terminate on a date to be agreed on by the parties. For purposes of this Section 8, continuation of production will be economically unfeasible if and when . At the end of the initial term, the Agreement may be extended by mutual agreement of the parties. If either party elects not to extend the term, the Agreement will terminate on the above-mentioned date.

9. Liquidated Damages upon Breach

If either party defaults in performance required of the party under this Agreement, the other party shall be entitled to receive $ as liquidated damages from the defaulting party. Before either party may recover this sum, the other party shall have been given written notice of default or alleged default and a day period in which to remedy such default or alleged default.

10. Severability

The invalidity of any portion of this Agreement will not and shall not be deemed to affect the validity of any other provision. If any provision of this Agreement is held to be invalid, the parties agree that the remaining provisions shall be deemed to be in full force and effect as if they had been executed by both parties subsequent to the expungement of the invalid provision.

11. No Waiver

The failure of either party to this Agreement to insist upon the performance of any of the terms and conditions of this Agreement, or the waiver of any breach of any of the terms and conditions of this Agreement, shall not be construed as subsequently waiving any such terms and conditions, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred.

12. Governing Law

This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of .

13. Notices

Any notice provided for or concerning this Agreement shall be in writing and shall be deemed sufficiently given when sent by certified mail if sent to the respective address of each party as set forth at the beginning of this Agreement.

14. Attorney’s Fees

In the event that any lawsuit is filed in relation to this Agreement, the unsuccessful party in the action shall pay to the successful party, in addition to all the sums that either party may be called on to pay, a reasonable sum for the successful party's attorney fees.

15. Entire Agreement

This Agreement shall constitute the entire agreement between the parties and any prior understanding or representation of any kind preceding the date of this Agreement shall not be binding upon either party except to the extent incorporated in this Agreement.

16. Modification of Agreement

Any modification of this Agreement or additional obligation assumed by either party in connection with this Agreement shall be binding only if placed in writing and signed by each party or an authorized representative of each party.

17. Assignment of Rights

The rights of each party under this Agreement are personal to that party and may not be assigned or transferred to any other person, firm, corporation, or other entity without the prior, express, and written consent of the other party.

18. In this contract, any reference to a party includes that party's heirs, executors, administrators, successors and assigns, singular includes plural and masculine includes feminine.

WITNESS our signatures as of the day and date first above stated.