ABC is a developer of computer hardware equipment who has created a device which DEF, a manufacturer and seller of computer hardware equipment intends to build and sell. This licensing agreement will provide the terms and conditions of the agreement between ABC who shall be called the ‘licensor’ and DEF who shall be called the ‘licensee’ relating to the manufacture and sale of the product which shall be called the ‘device’ for the purposes of this licensing agreement. The effective date of this agreement shall be dd/mm/yyyy
1. Grant of License
As per licensing agreements, the licensor agrees to grant an irrevocable license to the licensee to manufacture and sell the device.
1.1. This licensing agreement requires the licensor to provide to the licensee all documents, drawings, designs and programming codes relating to the device to facilitate quick and easy manufacture of the device.
1.2. In return for the license to manufacture and sell the device, according to licensing agreements, the licensee shall pay the licensor a royalty in consideration of this assignment. The rate of royalty and its increase over the next 10 years is contained in Exhibit A of the Annexure to this licensing agreement.
2. Royalty Payment Modalities
According to licensing agreements, the following procedures have been outlined to regularize the payment of the royalty detailed in section 1.2 of this document.
2.1. This licensing agreement provides that royalty shall be paid as and when it accrues to the licensee. Every month the licensee shall send the licensor a sales report indicating the volume of sales along with the associated royalty liability.
2.2. According to licensing agreements, if the licensee has received part payment for any bulk orders, royalty shall be paid to the licensor on a pro rata basis.
2.3. At the start of each financial year, the licensee shall pay an amount of $20,000 as an advance payment against future royalties during the year. This payment is to keep the licensing agreement in force for the duration of the year.
2.4. As is customary with licensing agreements in the state of XXX, all payments shall be made in USD.
2.5. The licensing agreement requires that the licensee maintain accurate and audited records of manufacture and sale of the device so that the royalty payable can be effectively verified by the licensor.
3. Term and Termination of the Licensing Agreement
According to irrevocable licensing agreements, the term of the contract shall extend indefinitely unless any party undertakes any activity that would be sufficient ground for termination of the contract. Termination of the contract may be initiated in the following occasions:
3.1. Licensing agreements provide that in the event that there is evidence that either party has participated in some activity that violates any of the clauses contained in the contract, the aggrieved party has grounds to terminate the contract.
3.2. On discovery of such material breach, the aggrieved party must provide 30 days notice to the other party before terminating the agreement.
This licensing agreement is binding on both parties, their heirs, successors and assigns. Both ABC and DEF fully understand the nature of the agreement and their obligations and undertake to conduct their business in accordance with the clauses contained in the document.