AGREEMENT made this _____ day of _____, 20_____, by and between _______________, located at _______________ (hereinafter referred to as LICENSOR) and _______________, located at ___________________________ __________________ (hereinafter referred to as LICENSEE).

Witnesseth:

WHEREAS, LICENSOR represents and warrants that it is the creator of _______________ (hereinafter referred to as the ITEM).

WHEREAS, LICENSOR hereby warrants that, to the best of its knowledge, information and belief, it is the sole and exclusive owner of all rights in the ITEM; that, to the best of its knowledge, information and belief, it has the sole and exclusive right to grant the license herein; and that it is not engaged in litigation or conflict of any nature whatsoever involving the ITEM; and

WHEREAS, LICENSEE is in the business of making and selling (enter type of product, e.g., shoes, faucets, toys, etc.); and

WHEREAS, LICENSEE wishes to obtain the sole and exclusive rights to manufacture and sell the ITEM (enter territories, e.g., worldwide, U.S. and its possessions, Europe, etc.)

NOW, THEREFORE, for and in consideration of the sum of One Dollar (US$1.00) and other good and valuable consideration, receipt of which is hereby acknowledged, and for the performance of the mutual covenants hereinafter to be performed, it is agreed as follows:

DEFINITIONS:

Item: As used in this Agreement, the term ITEM refers to the ITEM described hereinabove, and any Improvements, Accessories or Extensions thereto, whether developed by or for LICENSEE.

Improvements: As used in this Agreement, the term Improvements means any design or technical refinements or advances made by or for LICENSEE and reflected in the ITEM as marketed.

Accessories: As used in this Agreement, the term Accessories means any products making use of the ITEM, as well as equipment developed by or for LICENSEE designated for use with the ITEM.

Extensions: As used in this Agreement, the term Extensions means any products that are sold independently by LICENSEE under the ITEM trademark, i.e., products that trade on the name of the ITEM but are not necessarily marketed as accessories to the ITEM.

Collateral Merchandise: As used in this Agreement, the term Collateral Merchandise means products that are sold under the ITEM trademark or trade on its goodwill.

Note: You may not want to grant these rights. If not, omit this reference. Or you might want to allow for certain collateral merchandise and not others. If so, spell it out here. Collateral Merchandise could range from T-shirts to tennis rackets.

1.(a) LICENSOR hereby grants to LICENSEE the sole and exclusive right, privilege, and license to make, reproduce, modify, use and/or sell; to have made, reproduced, modified, used, and/or sold; and to sublicense others to make, reproduce, modify, use and/or sell the ITEM and any images, representations, and material associated with the ITEM, as well as the subject matter of a patent application which is to be filed on the ITEM pursuant to Paragraph 2(a) hereof.

(b) All rights and licenses not herein specifically granted to LICENSEE are reserved by LICENSOR and, as between the parties, are the sole and exclusive property of LICENSOR and may be used or exercised solely by LICENSOR. Included within this understanding is the right of LICENSOR to use whatever trademark LICENSEE markets the ITEM under; however, it is understood and agreed between the parties that LICENSOR will not license the concept to a third party for a product that would compete with the ITEM as marketed by LICENSEE.

(c) This Agreement shall continue for as long as the ITEM upon which royalties would be payable to LICENSOR, under provisions of this Agreement, shall continue to be manufactured or sold by LICENSEE.

2.(a) LICENSOR agrees to use its best efforts and to bear the expenses of obtaining patent protection in the USA, and any and all such patents will be in the name of and remain the property of LICENSOR during and following any termination or cancellation hereof.

(b) To the best of LICENSOR’s knowledge, information and belief the ITEM does not infringe any patent rights.

3.(a) LICENSEE shall pay LICENSOR (insert number) percent (_____%) of the “Net Sales” of the ITEM and its Improvements, Accessories, or Extensions. As used in this Agreement, “Net Sales” are defined as sales computed on prices charged by LICENSEE to its customers for the ITEM, less a deduction not to exceed seven and a half percent (7.5%) which provides for freight allowances, sales allowances actually credited, customary trade discounts (but not cash discounts), volume discounts (not to exceed usual industry practices), to the extent taken, directly applicable to the sale of licensed products, and less returns (but not for exchange) which are accepted and credited by LICENSEE. No deduction shall be made for noncollectible accounts. No costs incurred in the manufacture, sales, distribution, exploitation or promotion of the ITEM, its improvements, accessories or any adaptations thereof shall be deducted from any royalties payable by LICENSEE to LICENSOR, nor shall any deductions from due royalties be made for taxes of any nature. LICENSEE cannot barter or trade or do so-called “charge-backs” on the ITEM without computation of full royalties.

(b) In event LICENSEE sells FOB direct from a foreign manufacturing location, LICENSEE shall pay LICENSOR (insert number) percent (_____%) of all Net Sales, as defined hereinabove, of the ITEM.

(c) LICENSEE may grant foreign manufacturing sublicenses on the ITEM upon any terms and conditions which it wishes to grant and establish so long as said terms and conditions are competitive and market prevailing; and provided that in the event LICENSEE does grant such sublicenses to manufacture and market the ITEM, LICENSEE shall pay to LICENSOR fifty percent (50%) of any and all moneys received, including, but not limited to royalties (which shall be no less than two and a half percent [2½%] of the sales of the ITEM), advances, guarantees, mold or pattern lease or rental fees, etc. as received by LICENSEE from any such sublicense or grant. LICENSEE agrees to send a copy of any sublicense agreement, or shall otherwise promptly inform LICENSOR in writing about the terms of the sublicense to manufacture the ITEM.

(d) In the event LICENSEE sells the ITEM as a premium, the royalty rate shall be (insert number) percent (_____%) of the revenue derived by LICENSEE from the sale of the ITEM as a premium. For purposes of this Agreement, the term premium shall be defined as including, but not necessarily limited to, combination sales and free or self-liquidating items offered to the public in conjunction with the sale or promotion of a product or service other than the ITEM, including traffic building or continuity visits by the consumer, customer, or any similar scheme or device, whose primary purpose in regard to each of the sales described above is not directed at the sale of the ITEM itself and the prime intent of which is to use the ITEM in such a way as to promote, publicize, and/or sell the products, services, or business image of the user of such ITEM rather than the ITEM itself.

(e) All royalties payable by LICENSEE to LICENSOR based upon LICENSEE’s sales of the ITEM shall accrue upon LICENSEE’s shipment and invoicing of the item.

(f) If payments are made to LICENSOR from a foreign country, LICENSEE assumes sole responsibility for procuring any permits and documents needed to make all payments under any exchange regulations, and all such royalties shall be made by LICENSEE to LICENSOR in U.S. dollars at the then prevailing rate of exchange as used by (insert name of major bank).

4.(a) Upon execution of this Agreement, LICENSEE shall pay to LICENSOR the sum of $____, as a nonrefundable, guaranteed advance against royalties. In no event shall such advance be repaid to LICENSEE other than in the form of deductions from payments due under Paragraphs 3 and 9 hereof.

(b) Should LICENSEE, for any reason, and at any time, decide not to manufacture the ITEM, or if in any calendar year the ITEM fails to generate $_____ in royalties for LICENSOR, LICENSOR shall have the right to terminate this Agreement. And should LICENSEE cease to manufacture said ITEM, or should this Agreement be terminated for a breach of conditions by LICENSEE, then all rights to the development work done on the ITEM on behalf of and/or paid for by LICENSEE (e.g., breadboards, models, etc.) shall belong to LICENSOR free-and-clear and LICENSEE shall have no further claim to the ITEM.

(c) The receipt or acceptance by LICENSOR of any written statements furnished pursuant to this Agreement or of any payments made hereunder (or cashing of any checks paid hereunder) shall not preclude LICENSOR from questioning the correctness thereof at any time.

5. LICENSEE agrees to introduce the ITEM on or before (date). LICENSEE agrees that during the term of this Agreement it will diligently and continuously manufacture, sell, distribute, and promote the ITEM, and that it will make and maintain adequate arrangements for the distribution of the ITEM and satisfy demand for the ITEM.

6. LICENSEE has the right to change the form of the ITEM as submitted by LICENSOR, and to produce and sell it under new form(s), provided, however, that all the provisions of this Agreement shall apply to said new form(s) of the ITEM.

7.(a) LICENSEE shall mark the ITEM and its packages, containers, and display cards with the words “Patent Pending” if advised that a patent application is pending and until advised that a patent has been issued on the ITEM, at which later time LICENSEE shall mark the ITEM, containers, and display cards with the specific patent number.

8.(a) LICENSEE shall annually furnish LICENSOR, free-of-charge, (enter number) samples of each ITEM and its packaging prior to its availability at retail for purposes of quality control. In the case of the ITEM as made by LICENSEE’s foreign sublicensees, LICENSEE shall annually furnish, free-of-charge, to LICENSOR (enter number) samples of each and its packaging.

9.(a) The rights to sublicense the ITEM in foreign countries covered by this Agreement are conditioned upon introduction of the ITEM on or before (enter date). In the event LICENSEE has not entered into a fully executed sublicense agreement or made formal, documented arrangements to sell the ITEM through a distributor in a foreign country prior to (enter date, usually one year after domestic release), all rights with respect to such foreign country shall automatically revert to LICENSOR. However, LICENSEE shall be entitled, after expiration of any manufacturing sublicense agreement or distributor arrangement in any foreign country entered into prior to (enter cut-off date) to enter into a new agreement or arrangement in such foreign country.

(b) When either party considers it necessary or desirable to obtain patent protection in a foreign country covered by this Agreement (other than the USA), it shall notify the other party of that decision and, upon the agreement of said other party, LICENSOR shall, if obtaining the foreign patent protection is not barred by prior use or publication, promptly file such foreign application and the expenses thereof shall be shared equally by both parties. In the event the parties do not agree to share the expense of obtaining such patent protection, the party requesting the foreign patent protection may proceed alone, at its own expense, and all rights obtained shall belong to that party alone, notwithstanding any other provisions of this Agreement. If LICENSEE has not timely requested the filing of a patent application in a foreign country, LICENSOR is under no obligation to file such foreign application, and in the event that neither party has filed a patent application in a particular foreign country, or the parties have agreed not to file an application or have agreed to discontinue an application or patent, then the royalties for such foreign country shall be payable to LICENSOR as if the patent protection had been obtained in that country and the expenses shared equally by the parties.

(c) LICENSEE may sublicense its rights hereunder to use the ITEM on Collateral Merchandise under the terms and conditions it wishes to grant and establish as long as they are competitive and market prevailing; and provided that, in the event LICENSEE grants such sublicenses, LICENSEE shall pay to LICENSOR the sum of (insert number) percent (_____%) of any and all moneys received, including, but not limited to, royalties, advances, guarantees, and consultation fees it may receive.

(d) In the case of sublicenses of Collateral Merchandise, LICENSEE shall ensure that sublicensees cause the above trademark notices, if one or both trademarks are used by LICENSEE, to appear on all collateral merchandise, its packaging, containers, advertising, etc.

10.(a) LICENSOR agrees to indemnify, defend, and save harmless LICENSEE against actions brought against LICENSEE with respect to any claim or suit that LICENSOR is not the originator of the Item.

(b) LICENSOR agrees to indemnify LICENSEE against losses, claims, and expenses with respect to losses, claims, or expenses that arise only from an act or omission by LICENSOR that is done in bad faith.

(c) LICENSOR shall not indemnify LICENSEE on claims whereby LICENSEE has been said to have been previously shown an ITEM similar to the ITEM by the claimant. LICENSEE warrants that it has never seen an item similar to the subject ITEM.

(d) LICENSOR agrees to indemnify and hold harmless LICENSEE from and against any claim of infringement of trade secrets arising out of LICENSEE’s sale of the ITEM.

(e) LICENSEE will conduct its own patent, copyright, and trademark searches and satisfy itself that the ITEM does not infringe anything in any of these fields, and once satisfied, LICENSEE agrees to indemnify, defend, and save harmless LICENSOR from and against all damages, costs, and attorney fees resulting from all claims, demands, actions, suits, or prosecutions for patent, copyright, or trademark based upon use of the ITEM or its components and all forms of the ITEM as produced and sold by LICENSEE, its subsidiaries, affiliates, and sublicensees. LICENSEE shall be given prompt notice of any claim against LICENSOR and shall have the right to defend such claim with counsel selected by LICENSEE. LICENSOR agrees to cooperate with LICENSEE in connection with the defense of any such claim.

(f) LICENSEE agrees to indemnify, defend, and save harmless LICENSOR from and against all damages, costs, and attorney fees resulting from all claims, demands, actions, suits, or prosecutions for personal injury or property damage. LICENSEE agrees to cover LICENSOR under its product liability insurance, with an insurance company providing protection for itself and LICENSOR against any such claims or suits relating to personal injury, product manufacture, property damage, or materials failure, but in no event in amounts less than (enter number) million dollars or the limits of its policy, whichever is greater, and within thirty (30) days before manufacture of the ITEM, LICENSEE will submit to LICENSOR a certificate of insurance naming LICENSOR as an insured party, and covering LICENSOR requiring that the insurer shall not terminate or materially modify such without written notice to LICENSOR at least twenty (20) days in advance thereof.

(g) In the event of infringement of any patent that may be issued to LICENSOR on the ITEM and upon notice thereof from LICENSEE, LICENSOR shall, within thirty (30) days, notify LICENSEE of its election to prosecute or not prosecute a suit for infringement. If LICENSOR prosecutes said suit, it may select legal counsel and pay legal fees and costs of prosecution subject to being reimbursed therefore from any recovery in said suit. The balance of any recovery shall be divided equally between LICENSOR and LICENSEE. If LICENSOR elects not to prosecute any infringement suit, LICENSEE may do so after notice to LICENSOR of that intention. LICENSEE may then select legal counsel and shall bear all the legal fees and costs subject to reimbursement therefore from any recovery in said suit. The balance of any recovery shall be distributed as follows: one-fourth (¼) to LICENSOR and three-fourths (¾) to LICENSEE.

11. LICENSEE shall, within thirty (30) days following the end of each calendar quarter, starting with the month following the quarter in which sales of the ITEM commence, submit to LICENSOR a report covering the sales of the ITEM during the preceding quarter, and LICENSEE shall therewith send to LICENSOR payment of the amount due under Paragraphs 3 and 9 hereof. Such quarterly statements shall be submitted whether or not they reflect any sales.

12.(a) LICENSEE agrees to keep full and accurate books of account, records, data, and memoranda respecting the manufacture and sales of the ITEM in sufficient detail to enable the payments hereunder to LICENSOR to be determined, and LICENSEE gives LICENSOR the right, upon notice, at its own expense, to examine said books and records, only insofar as they concern the ITEM and not more often than twice in any calendar year, for the purpose of verifying the reports provided for in this Agreement. In the event LICENSOR shall examine the records, documents, and materials in the possession or under the control of LICENSEE with respect to the subject matter, such examination shall be conducted in such a manner as to not unduly interfere with the business of LICENSEE. LICENSOR and its representative shall not disclose to any other person, firm, or corporation any information acquired as a result of any such examination; provided, however, that nothing herein contained shall be construed to prevent LICENSOR and/or its duly authorized representative from testifying, in any court of competent jurisdiction, with respect to the information obtained as a result of such examination in any action instituted to enforce the rights of LICENSEE under the terms of this Agreement.

(b) In the event that LICENSEE has understated Net Shipments or underpaid royalties by five percent (5%) or more for any contract year, LICENSEE shall forthwith and upon written demand also pay to LICENSOR all reasonable costs, fees, and expenses incurred by LICENSOR in conducting such audit.

(c) Payments found to be due LICENSOR as a result of a delay or an examination shall be paid immediately at the prime rate quoted by (insert name of major bank) at the close of business on the due date plus (enter number) percent (_____%) per annum until paid.

13.(a) LICENSEE agrees to send all payments and reports due hereunder to LICENSOR at address noted in this Agreement’s preamble.

14.(a) If LICENSEE shall at any time default by failing to make any payment hereunder, or by failing to make any report required under this Agreement, or by making a false report, or for cause, and LICENSEE shall fail to remedy such default within ten (10) days for money, and thirty (30) days for reports, after notice thereof by LICENSOR, LICENSOR may, at its option, terminate this Agreement and the license granted herein by notice to that effect, but such act by LICENSOR shall not relieve LICENSEE of its liabilities accruing up to the time of termination. In the case of subsequent default, the time period which to remedy the default shall be reduced to fifteen (15) days.

(b) Should a third default take place, LICENSOR may, at its option, terminate this Agreement.

15. It is understood and agreed that if LICENSEE does not introduce the ITEM on or before (enter date) or does not sell the ITEM for a period of ninety (90) consecutive days or more except as provided in Paragraph 16 hereof, LICENSOR may give notice to LICENSEE of its desire to terminate this Agreement for that reason, and if LICENSEE does not within thirty (30) days resume producing and selling of the ITEM, this Agreement and the license granted herein shall terminate as of the end of that thirty-day (30) period.

16. It is understood and agreed that in the event an act of government, or war conditions, or fire, flood, or labor trouble in the factory of LICENSEE, or in the factory of those manufacturing parts necessary for the manufacture of the ITEM, prevents the performance by LICENSEE of the provisions of this Agreement, then such nonperformance by LICENSEE shall not be considered a breach of this Agreement and such nonperformance shall be excused, but for no longer than a period of six (6) months on any single occurrence.

17. This Agreement shall continue for as long as the ITEM covered by this Agreement shall continue to be manufactured by LICENSEE, or unless sooner terminated under the provisions of this Agreement.

18. LICENSEE agrees that if this Agreement is terminated under any of its provisions, LICENSEE will not itself, or through others, thereafter manufacture and sell the ITEM, and all rights to the ITEM and to any patents filed hereunder shall revert to LICENSOR.

19.(a) LICENSOR agrees that LICENSEE may assign this Agreement to any affiliate corporation, provided, however, that such assignee shall thereafter be bound by the provisions of this Agreement.

(b) LICENSEE may not assign this Agreement, or any part thereof, without the expressed written permission of LICENSOR, which shall not be unreasonably withheld, unless it is selling its entire business as a going concern, and the same restriction shall be binding upon successors and assigns of LICENSEE.

(c) Should LICENSEE wish to sell its rights in the ITEM or transfer this Agreement to any person or corporation that does not plan to purchase LICENSEE’s entire business as a going concern, but has an interest only in said ITEM, then said prospective buyer will have to strike a separate deal with LICENSOR for its consent to the sale.

20.(a) In case of the Receivership or Bankruptcy of LICENSEE, by reason of which LICENSEE is prevented from carrying out the spirit of this Agreement, after written notice thereof by LICENSOR, LICENSOR may, at its option, terminate this Agreement and the license granted herein by notice to that effect, but such act shall not relieve LICENSEE of its liabilities accruing up to the time of termination.

(b) If LICENSEE, at any time after the execution of this Agreement and prior to and during the preparation of said ITEM for production, display, and offering for sale, shall elect not to produce, display, offer, or produce said ITEM, which election shall be in writing sent by Registered or Certified or Express Mail to LICENSOR, then LICENSOR’s sole and exclusive remedy shall be to keep the advance against royalties, as provided for in Paragraph 4 hereof, for breach of this Agreement, and such Agreement shall thereafter be of no further force and effect, and the license shall be deemed canceled and neither party shall have claim against the other.

(c) Immediately upon expiration or termination of this Agreement, for any reason whatsoever, all the rights granted to LICENSEE hereunder shall cease and revert to LICENSOR, who shall be free to license others to use any or all of the rights granted herein effective on and after such date of expiration or termination, and to this end, LICENSEE will be deemed to have automatically assigned to LICENSOR upon such expiration or termination, all copyrights, trademarks and service mark rights, equities, goodwill, titles, designs and concepts, and other rights in or to the ITEM. LICENSEE will, upon the expiration or termination of this license, execute any instruments requested by LICENSOR to accomplish or confirm the foregoing. Any assignments shall be without consideration other than mutual covenants and considerations of this Agreement. In addition, for whatever reasons, LICENSEE will forthwith refrain from any further use of the trademarks or copyrights of any further reference to any of them, direct or indirect.

(d) In the event of termination of this Agreement, for any reason other than for failure to pay or make reports due hereunder to LICENSOR, LICENSEE shall have the right to dispose of its existing inventory for a period of 60 days. Further, upon termination of this Agreement, LICENSEE agrees to assign to LICENSOR the right to receive directly any royalties due to LICENSOR from any collateral merchandise sublicensee of the ITEM.

21. All notices wherever required in this Agreement shall be in writing and sent by Certified Mail, Registered Mail, or Express Mail to the addresses first above written.

22. If any provisions of this Agreement are for any reason declared to be invalid, the validity of the remaining provisions shall not be affected thereby.

23. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns as herein provided and said successors and assigns shall be libel hereunder. LICENSOR may assign its rights to receive royalties under this Agreement.

24. It is expressly agreed that LICENSOR is in no way the legal representative of LICENSEE and has no authority, expressed or implied, on behalf of LICENSEE to bind LICENSEE or to pledge its credit.

25. (Optional) It is a condition of this license that, if LICENSEE decides to market the ITEM under LICENSOR’s trademark, (insert trademark), LICENSEE shall cause the following notice to appear on the ITEM and its advertising, promotional, packaging, and display materials therefore:

26. This Agreement shall be construed in accordance with the laws of the State of _______________.

IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate originals the day/year first hereinabove written.