Royalty Agreement Template

ROYALTY AGREEMENT

This Royalty Agreement ("Agreement") is made and entered into as of Effective Date: by and between Licensor Name: , having its principal place of business at , and Licensee Name: , having its principal place of business at . Each of Licensor and Licensee may be referred to herein as a "Party" and collectively as the "Parties."

RECITALS

WHEREAS, Licensor is the owner of certain intellectual property, know-how, products, or works described herein and has the right to grant licenses and receive royalties therefrom; and

WHEREAS, Licensee desires to obtain, and Licensor is willing to grant, a license to use, produce, distribute, or exploit the Licensed Products in the Territory on the terms and conditions set forth in this Agreement; and

WHEREAS, the Parties desire to set forth their respective rights and obligations with respect to royalties, payments, reporting, audits, and related matters.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. DEFINITIONS

For purposes of this Agreement, the following terms shall have the meanings set forth below:

"Licensed Products" means the products, services, compositions, or works specifically described as: .

"Territory" means the geographic area in which Licensee is authorized to exploit the Licensed Products: .

"Royalty Rate" means the royalty payable to Licensor as set forth in Section 3: percent of Net Sales.

2. GRANT OF LICENSE

Subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensee a non-exclusive/non-transferable (select one): Non-Exclusive Exclusive license to manufacture, market, distribute and sell the Licensed Products in the Territory for the Term defined in Section 6.

The license granted herein does not transfer title to any intellectual property rights, and all rights not expressly granted are reserved by Licensor.

3. ROYALTIES

Licensee shall pay Licensor royalties equal to Royalty Rate of Net Sales of Licensed Products. "Net Sales" shall mean gross invoice price actually received by Licensee from third-party sales of Licensed Products, less customary and reasonable deductions for returns, sales taxes, freight, and trade discounts in the ordinary course of business.

Royalties shall be calculated on a basis and shall be payable in U.S. Dollars to the account specified by Licensor or to the payment address specified in Section 12.

4. REPORTS AND PAYMENTS

Licensee shall provide to Licensor quarterly written statements reporting Net Sales, units sold, adjustments, and royalty calculations for the preceding quarter. Reports shall be delivered within days after the end of each calendar quarter, together with payment of all royalties due for that period.

5. RECORDS AND AUDIT

Licensee shall keep accurate books and records relating to sales of Licensed Products and shall retain such records for a period of at least years following the date of each reported transaction. Licensor may, upon reasonable prior written notice, inspect and audit such records no more than once per calendar year during regular business hours to verify the accuracy of reports and payments.

If an audit reveals an underpayment, Licensee shall promptly pay the amount owed plus interest at a rate of % per month and reimburse Licensor's reasonable audit costs if the underpayment exceeds % of the royalties due for the audited period.

6. TERM AND TERMINATION

The Term of this Agreement shall commence on the Effective Date and continue for an initial period of years, unless earlier terminated as provided herein. Thereafter, this Agreement shall automatically renew for successive one-year periods unless either Party provides written notice of non-renewal at least days prior to the expiration of the then-current term.

Either Party may terminate this Agreement for material breach by the other Party if such breach remains uncured for days after written notice specifying the breach. Upon termination, Licensee shall cease use of Licensor's intellectual property and pay all accrued but unpaid royalties through the effective date of termination.

7. INTELLECTUAL PROPERTY

Licensor represents and warrants that it owns or is authorized to license the rights granted herein and that exploitation of the Licensed Products pursuant to this Agreement, when performed in compliance with Licensor's specifications, will not infringe third-party intellectual property rights to the best of Licensor's knowledge. Licensee acknowledges Licensor's ownership of all trademarks, patents, copyrights, and trade secrets related to the Licensed Products.

8. REPRESENTATIONS AND WARRANTIES

Each Party represents and warrants that it has the full power and authority to enter into this Agreement and to perform its obligations hereunder, and that this Agreement constitutes a valid and binding obligation enforceable in accordance with its terms.

9. INDEMNIFICATION

Each Party (the "Indemnifying Party") shall indemnify, defend and hold harmless the other Party (the "Indemnified Party") from and against any and all claims, losses, liabilities, damages and expenses, including reasonable attorneys' fees, arising out of the Indemnifying Party's breach of any representation, warranty or covenant contained in this Agreement or arising from the Indemnifying Party's negligence or willful misconduct.

10. CONFIDENTIALITY

Each Party shall keep confidential and shall not disclose to any third party confidential information of the other Party disclosed in connection with this Agreement. Confidential obligations shall survive termination for a period of years, except that trade secrets shall remain protected for as long as they qualify as trade secrets under applicable law.

11. ASSIGNMENT

Neither Party may assign or transfer its rights or obligations under this Agreement without the prior written consent of the other Party, except that either Party may assign this Agreement without consent in connection with a merger, acquisition, or sale of all or substantially all of its assets, provided that the assignee assumes the assigning Party's obligations hereunder.

12. NOTICES

All notices required or permitted under this Agreement shall be in writing and delivered by hand, nationally recognized overnight courier, or certified mail (return receipt requested) to the addresses set forth below or to such other address as a Party may specify by notice to the other Party.

13. AMENDMENTS; WAIVER; COUNTERPARTS

This Agreement may be amended only by a written instrument signed by authorized representatives of both Parties. No failure or delay by either Party in exercising any right shall operate as a waiver, nor shall any single or partial exercise of any right preclude other or further exercise of that right. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

14. GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the State of , without regard to its conflict of laws principles.

15. ENTIRE AGREEMENT

This Agreement, together with any exhibits, schedules, or attachments expressly incorporated herein, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous negotiations, representations, and agreements, whether written or oral.

16. SEVERABILITY

If any provision of this Agreement is held to be invalid, illegal or unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect and the Parties shall negotiate in good faith to replace the invalid provision with a valid provision achieving, to the extent possible, the economic, legal and commercial objectives of the invalid provision.

17. MISCELLANEOUS

The headings in this Agreement are for convenience only and shall not affect its interpretation. The obligations of the Parties that by their nature would survive termination or expiration shall survive.

EXHIBIT A — ROYALTY SCHEDULE (OPTIONAL)

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