Royalty License Agreement

ROYALTY LICENSE AGREEMENT

This Royalty License Agreement (the Agreement) is made and entered into as of (Effective Date), by and between Licensor: , with principal place of business at , and Licensee: , with principal place of business at . Licensor and Licensee are hereinafter referred to individually as a Party and collectively as the Parties.

RECITALS

WHEREAS, Licensor is the owner of certain intellectual property and proprietary rights described as: (Licensed Property); and

WHEREAS, Licensee desires to obtain, and Licensor desires to grant, a license to exploit the Licensed Property on the terms and conditions set forth herein; and

WHEREAS, the Parties intend to set forth the royalty structure, accounting, audit rights and other obligations of the Parties with respect to the exploitation of the Licensed Property.

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, the Parties agree as follows:

1. GRANT OF LICENSE

1.1 License Grant. Subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensee a non-exclusive / exclusive (select applicable) license to use, reproduce, distribute and otherwise exploit the Licensed Property solely within the Field of Use: and within the Territory: .

1.2 Scope and Limitations. The license granted is limited to the Licensed Property as described in Section 1.1 and does not include the right to grant sublicenses except as expressly provided in Section 1.3. Licensee shall not make any material alteration of the Licensed Property without Licensor’s prior written consent.

1.3 Sublicensing. Licensee may allow sublicenses not allow sublicenses. If sublicensing is permitted, Licensee shall remain fully liable for compliance by its sublicensees with the terms of this Agreement.

2. ROYALTY PAYMENTS

2.1 Royalty Rate. Licensee shall pay Licensor a royalty equal to of Net Sales derived from products or services that incorporate the Licensed Property. "Net Sales" shall mean gross amounts invoiced less customary deductions actually taken.

2.2 Minimum Royalty. Licensee shall pay a minimum annual royalty of for each Contract Year, applied against amounts otherwise due. Minimum royalty payments shall be payable in advance on the first day of each Contract Year.

2.3 Payment Schedule. Royalties shall be reported and paid quarterly within days after the end of each calendar quarter, together with a written royalty report in accordance with Section 3.

3. ACCOUNTING; RECORDS; AUDIT

3.1 Reports. Licensee shall furnish Licensor with quarterly written reports stating in reasonable detail the Net Sales, royalties due, deductions taken, credits and the calculation of amounts payable under this Agreement.

3.2 Records. Licensee shall keep complete and accurate books and records relating to the exploitation of the Licensed Property and to the calculation of royalties for a period of at least years.

3.3 Audit Rights. Upon reasonable prior written notice and during normal business hours, Licensor or its designated auditor, not to exceed once per Contract Year, may audit Licensee’s relevant records to verify reported royalties. If an audit reveals an underpayment in excess of five percent (5%), Licensee shall reimburse Licensor for the reasonable cost of such audit and promptly pay all amounts found owing, together with interest at the lesser of 1.5% per month or the maximum lawful rate.

4. TERM AND TERMINATION

4.1 Term. This Agreement shall commence on the Effective Date and shall continue for an initial term of years (Initial Term) and shall automatically renew for successive one-year periods unless either Party provides written notice of non-renewal at least days prior to the end of the then-current term.

4.2 Termination for Cause. Either Party may terminate this Agreement upon thirty (30) days' written notice if the other Party materially breaches this Agreement and fails to cure such breach within the notice period. Termination shall be without prejudice to any rights or remedies accrued prior to termination.

4.3 Effect of Termination. Upon termination, Licensee shall immediately cease all use of the Licensed Property, deliver or destroy specified materials as directed by Licensor, and pay all outstanding amounts owed through the effective date of termination. Sections that by their nature survive termination shall survive.

5. INTELLECTUAL PROPERTY; OWNERSHIP

5.1 Ownership. Licensor retains all right, title and interest in and to the Licensed Property and all goodwill associated therewith. Licensee acknowledges that it acquires no ownership rights by virtue of this Agreement.

5.2 Infringement. Licensee shall promptly notify Licensor of any actual, threatened or suspected infringement of the Licensed Property. Licensor shall have the exclusive right, at its sole discretion, to institute and control actions to enforce the Licensed Property, unless Licensor elects not to proceed, in which case Licensee may pursue enforcement at its expense with prior written consent of Licensor.

6. REPRESENTATIONS AND WARRANTIES

6.1 Mutual Representations. Each Party represents and warrants that it has full corporate or individual power and authority to enter into this Agreement and to perform its obligations hereunder.

6.2 Licensor Warranty. Licensor represents that, to the best of its knowledge, it has the right to grant the license granted hereunder and that the Licensed Property does not infringe the rights of third parties. EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION, LICENSOR MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

7. INDEMNIFICATION

7.1 Indemnification by Licensee. Licensee shall indemnify, defend and hold harmless Licensor and its officers, directors and agents from and against any and all third-party claims, liabilities, losses, damages and expenses (including reasonable attorneys’ fees) arising out of Licensee’s use, marketing or distribution of products or services that incorporate the Licensed Property, except to the extent caused by Licensor’s gross negligence or willful misconduct.

7.2 Procedure. The indemnified Party shall promptly notify the indemnifying Party of any claim and shall cooperate in the defense. The indemnifying Party shall have the right to assume control of the defense and settlement of the claim, provided that no settlement imposing obligations on the indemnified Party shall be entered without the indemnified Party’s prior written consent.

8. CONFIDENTIALITY

8.1 Confidential Information. During the Term and for a period of three (3) years thereafter, each Party shall hold in confidence and not disclose Confidential Information of the other Party, except as required by law. "Confidential Information" includes non-public technical, financial or business information disclosed in connection with this Agreement.

8.2 Exceptions. Confidential Information shall not include information that is or becomes generally available to the public other than through a breach of this Agreement, or that is independently developed by the receiving Party without use of the disclosing Party’s Confidential Information.

9. NOTICES

All notices under this Agreement shall be in writing and delivered to the addresses set forth below:

10. AMENDMENTS; WAIVER; COUNTERPARTS

10.1 Amendments. This Agreement may be amended only by a written instrument executed by authorized representatives of both Parties.

10.2 Waiver. No waiver of any provision of this Agreement shall be effective unless in writing. The waiver of any breach shall not constitute a waiver of any subsequent breach.

10.3 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

11. GOVERNING LAW; ENTIRE AGREEMENT; SEVERABILITY

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

11.2 Entire Agreement. This Agreement, together with any schedules or exhibits expressly incorporated herein, constitutes the entire understanding of the Parties with respect to the subject matter and supersedes all prior agreements and understandings, oral or written.

11.3 Severability. If any provision of this Agreement is held invalid or unenforceable by a court of competent jurisdiction, the remaining provisions shall remain in full force and effect and shall be construed so as to best effectuate the Parties’ intent.

SCHEDULE A — DESCRIPTION OF LICENSED MATERIALS

ADDITIONAL TERMS

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