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Exclusive License To Exploit Patent
1. Introduction. Agreement dated [date] between [name], residing at [address] (Licensor), and [name], with offices at [address] (Licensee).
2. Licensor's Representations. Licensor is the sole owner of U.S. Letters Patent No. [number], covering the following invention: [description]. Licensor has not granted to any person or entity any right to or license under that Patent. Licensor has the right to grant the exclusive license given to Licensee by this Agreement.
3. Grant of License. Licensor grants to Licensee under Licensor's Letters Patent the exclusive, nontransferable right and license to manufacture and sell the invention and its improvements throughout the world. Licensee may grant sublicenses if the terms and conditions of the sublicenses are consistent with the terms and conditions of this license.
4. Future Inventions. The grant of this exclusive right and license to Licensee applies to all inventions, improvements, patent applications, or letters patent pertaining to the invention that Licensor may hereafter devise or obtain.
5. Advance Against Royalties. Upon the execution of this Agreement, Licensee shall pay Licensor the sum of ........ dollars ($........) as a nonreturnable advance to be recovered only from the first royalties due to Licensor under this Agreement.
6. Royalties. During the life of this Agreement, Licensee shall pay Licensor the sum of ........ dollars ($........) for each [product] manufactured and sold or used by Licensee or by Licensee's sublicensees under the grant of rights contained in Paragraph 3.
6. Royalties. During the life of this Agreement, Licensee shall pay Licensor ........ percent (........%) of the wholesale selling price for each [product] manufactured and sold or used by Licensee or Licensee's sublicenses under the grant of rights contained in Paragraph 3.
7. Payment of Royalties. Royalties shall be paid semiannually on or before July 31 and January 31 of each year for each [product] manufactured and sold during the prior six months that ended June 30 and December 31, respectively. The first royalty payment shall be for the period ended [date] and shall be due no later than [date].
8. Royalty Statements. The payment of royalties shall be accompanied by a statement showing each [product] manufactured and sold or used by Licensee and its sublicensees during the period covered by the royalty payment together with a computation of the royalties due.
9. Records to Be Maintained by Licensee. Licensee shall at all times keep an accurate record of all transactions covered by this Agreement and shall cause Licensee's sublicenses to maintain similar records.
10. Licensor's Right to Audit Records. Licensor may, at Licensor's expense, audit Licensee's books and records for the purpose of verifying the royalty statements. This right shall terminate, with regard to each royalty statement, [number] years after the statement has been rendered. The audit must be made by a certified public accountant or certified public accounting firm, during regular business hours, and upon [number] days' notice to Licensee. In making any sublicensing agreements, Licensee shall obtain for Licensor a similar right to audit the sublicensee's books and records.
11. Licensee to Exercise Good Faith. Licensee shall exploit the invention in good faith and in accordance with the usual business customs of the [type of industry].
12. Term. The license granted by this Agreement shall end upon the expiration of the last Letters Patent on the invention and any improvements to the invention.
13. Termination of Agreement Upon Occurrence of Events. Subject to the conditions of Paragraph 14, the party designated may terminate this Agreement upon the occurrence of any of the following events:
a. Failure to Pay Royalties. Licensee's failure to pay royalties or render royalty statements within [number] days after they are due shall give Licensor the option to terminate this Agreement.
b. Licensee's Bankruptcy. Licensee's adjudication as a bankrupt shall give Licensor the option to terminate this Agreement.
c. Licensee's Insolvency. Licensee's insolvency, the appointment of a receiver of Licensee's assets, the making of an assignment for the benefit of Licensee's creditors, or Licensee's entering into a composition with Licensee's creditors, shall give Licensor the option to terminate this Agreement.
d. Breach of Other Conditions of Agreement. The breach by Licensor or Licensee of any of the other terms or conditions of this Agreement shall give the nonbreaching party the option to terminate this Agreement.
e. Invalidity of Patent. The holding by a court of final competent jurisdiction that the Letters Patent described in Paragraph 2 are invalid, or by an inferior court of competent jurisdiction if a timely appeal from the holding is not taken, shall give Licensee the option to terminate this Agreement.
14. Manner in Which Option to Terminate Agreement Is to Be Exercised. If either party wishes to exercise the option to terminate this Agreement in accordance with the terms of Paragraph 13, written notice that the Agreement is terminated must be given by the party exercising the option to the other no later than [number] weeks after the occurrence of the event upon which the termination of this Agreement is based.
15. Licensor's Rights Following Termination of Agreement. Upon the termination of this Agreement for any cause, Licensor's rights to receive royalty payments and royalty statements for periods during which this Agreement was in effect shall continue, as shall Licensor's rights to audit Licensee's book and records and those of Licensee's sublicensees for the same periods.
16. Actions for Infringement. Licensee, at Licensee's own cost and expense, shall defend all infringement suits that may be brought against Licensee or Licensor on account of the manufacture, use, or sale of the invention. If Licensee learns that others are unlawfully infringing on the rights granted in this Agreement, Licensee shall diligently prosecute any infringer at Licensee's own cost and expense. In connection with such suits, Licensor, at Licensee's cost and expense and at Licensee's request, shall give evidence and execute such documents as Licensee may reasonably require.
17. Notices. All notices required by this Agreement shall be given by registered or certified mail, return receipt requested, addressed to the party to whom notice is given at the address set out in this Agreement or such other address that the party to whom notice is given may have given the other party notice of ______________________.
18. Assignment by Licensee. Licensee shall not assign this Agreement or any part of it without first receiving Licensor's written consent.
IN WITNESS WHEREOF, the parties have signed this Agreement, the day and year first above written.