The Negotiation and Drafting of International Contracts Course of Mr. Robert Simpson
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- Article 3. Duties of LICENSEE
LICENSE AGREEMENTThis LICENSE AGREEMENT (the “Agreement”) is made and entered into this day of , by and between: ______________, a French société par actions simplifiée, with its registered office at ___________, France, represented by its President, Martin Cellérier (hereinafter referred to as the "LICENSOR"); and __________________, a Dutch limited liability company with offices at ______________, The Netherlands, represented by _________, authorized agent (such company as well as any other member of its group of companies to which it may assign this Agreement and/or or its rights and obligations hereunder being referred to hereinafter as the "LICENSEE"). WITNESSETH: WHEREAS, LICENSOR is the owner of certain Patent Rights (as hereinafter defined), certain Trademark Rights (as hereinafter defined) and certain Technical Information (as hereinafter defined) relating to the Subject Products (as hereinafter defined); WHEREAS, LICENSEE desires to obtain for itself and/or other members of its group of companies, a non-exclusive license under said Patent Rights, Trademark Rights and Technical Information to make, use and sell Subject Products in the Territory (as hereinafter defined); and WHEREAS, LICENSOR is willing and able to grant LICENSEE such a non-exclusive license under the terms and conditions set forth hereinafter; NOW, THEREFORE, in consideration of the above and the mutual covenants and agreements contained herein, the parties hereto hereby agree as follows: Article 1. Definitions 1.1. The term "Subject Products" as employed herein shall mean and include all pigments, colors, inks and ink products useful in the graphic arts, including, but not necessarily limited to, printing inks, components thereof, and all chemical compositions or machines useful in the employment thereof and any other products developed, manufactured and/or sold by LICENSOR. 1.2. The term "Improvement" as employed herein shall mean new compositions and processes pertaining to the Subject Products, their manufacture, use and sale, including, but not limited to, new compositions comprising Subject Products, new techniques of using, applying or selling the Subject Products, and new methods, technology, processes and know-how for manufacturing the Subject Products. 1.3. The term "Patent Rights" as employed herein shall mean and include all patent applications and patents controlled, owned or possessed by LICENSOR or to which LICENSOR has rights which may be granted to LICENSEE hereunder, in the Territory, during the term of this Agreement, and which relate to Subject Products, including those listed or referred to in the Agreement for the Sale of Stock of even date herewith with respect to LICENSEE’s purchase of stock of LICENSOR. 1.4. The term "Trademark Rights" as employed herein shall mean and include all trademarks, trade names and trade designations which are controlled, owned and/or employed by the LICENSOR during the term of this Agreement, which relate to the Subject Products including those listed in Schedule B attached and as amended from time to time. 1.5. The term "Technical Information" as employed herein shall mean and include such “Soleau envelopes”, process technology, know-how, data, scientific, commercial or other information and Improvements relating to the Patent Rights and/or the manufacture, use and/or sale of Subject Products, including those listed or referred to in the Agreement for the Sale of Stock of even date herewith with respect to LICENSEE’s purchase of stock of LICENSOR, which are acquired, owned and/or controlled by the LICENSOR or to which LICENSOR has the right to use or license, during the term of this Agreement. 1.6. The term "Territory" as employed herein shall mean and include all countries of the World. 1.7. The term "Net Sales Receipts" as employed herein shall mean the gross amounts invoiced by LICENSEE on the sale of Subject Products manufactured by LICENSEE to an independent third party customer, less normal and customary trade and quantity allowances or credits to customers on account of settlement of complaints, price adjustments, rejection, or return of products; only to the extent any of the foregoing may be paid or allowed; PROVIDED that Subject Products shall be considered sold when shipped or billed out, whichever comes first. Article 2. Grant of Rights 2.1. During the term of this Agreement, LICENSOR shall and hereby does, to the extent it is legally able, grant to LICENSEE, the non-exclusive right and license under LICENSOR's Patent Rights, Trademark Rights, Improvements and Technical Information, and to make, use and sell Subject Products in the Territory. In connection with this grant of rights, LICENSOR shall provide LICENSEE with all Technical Information and any and all other documents and information and assistance as may be reasonably necessary for LICENSEE to make, use and sell Subject Products in the Territory. 2.2. The rights and licenses granted to LICENSEE hereunder shall not be transferable or assignable by the LICENSEE, except to other members of the Sun Chemical group of companies, without the express written consent of the LICENSOR. Article 3. Duties of LICENSEE3.1. LICENSEE agrees to employ its commercially reasonable efforts to make, use and sell Subject Products in the Territory. 3.2. LICENSEE hereby recognizes and acknowledges the validity and ownership of LICENSOR's Patent Rights, Trademark Rights, Technical Information, and Improvements and agrees not to contest such ownership or validity, directly or indirectly, by assisting other persons during the life of this Agreement. 3.3. In the event this Agreement must be approved by any governmental body or agency, LICENSEE shall exert its best efforts to obtain such approval. Article 4. Royalties and Payment 4.1. In consideration of the rights and licenses granted herein, LICENSEE agrees, during the term of this Agreement, to pay or cause to be paid to LICENSOR, the royalty rate annexed hereto, which rate may be changed from time to time by the parties, but which shall at no time exceed five percent (5%) of the LICENSEE’s Net Sales Receipts. 4.2. LICENSEE, within forty-five (45) days after the first day of January, April, July and October of each year this Agreement is in effect, shall deliver or cause to be delivered to LICENSOR, a true and accurate report of the Net Sales Receipts obtained during the preceding three (3) months under this Agreement as are pertinent to an accounting for royalties due thereunder. Simultaneously with the delivery of each such report, LICENSEE shall pay or cause to be paid to LICENSOR the royalties due for the period covered by such report. If no royalties are due, it shall be so reported. 4.3. LICENSEE shall keep true and accurate books of account containing all particulars which may be necessary for the purpose of showing the amounts payable to LICENSOR by way of royalties hereunder. Said books shall be kept at LICENSEE's place of business and shall be available and open at all reasonable times for two (2) years following the end of the calendar year to which they pertain, to the inspection of a certified public accountant selected by LICENSOR for the purpose of verifying the accuracy of the statements to be provided hereunder. 4.4. The royalties provided for herein shall be payable in full, less any amounts LICENSEE is required to withhold pursuant to any laws, statutes, regulations or requirements of any governmental body. Article 5. Technical Information 5.1 At the request of LICENSEE any time during the term of this Agreement, and at no additional cost to LICENSEE, LICENSOR shall, to the extent it is legally able to do so, disclose to LICENSEE and to the extent reasonably possible, in writing, such Technical Information as may then be acquired, possessed, controlled, developed or in the process of being developed by LICENSOR. 5.2. LICENSEE shall receive all such Technical Information and maintain same in strictest confidence and shall not reveal or disclose same to any third parties without the express written consent of the LICENSOR, and LICENSEE shall take all necessary measures to assure that no such unauthorized disclosure is made; PROVIDED that the foregoing prohibition as to disclosure shall not extend to such Technical Information which enters the public domain through no fault of LICENSEE. 5.3. It is understood and agreed that by virtue of the rights and licenses granted hereunder, LICENSOR shall not have any liability or responsibility for the products which may be made, used or sold by LICENSEE hereunder. LICENSEE shall and hereby does accept full and complete responsibility for such products and agrees to hold LICENSOR harmless from any claims which may arise relating to said products. 5.4. LICENSOR agrees, during the term of this Agreement and upon request of the LICENSEE, to provide LICENSEE with such technical assistance as may be reasonably necessary to permit LICENSEE to continue to make, use and sell Subject Products hereunder. Article 6. Patent Rights In the event any Patent of LICENSOR's Patent Rights is held invalid by the decision of a court of competent jurisdiction, and no reversal of that decision is or can be obtained by LICENSOR, then said Patent shall no longer be considered to be contained in LICENSOR's Patent Rights, on a country-by-country basis. Article 7. Term and Termination 7.1. It is understood that the license under this Agreement shall be activated only if: (a) LICENSOR approves its activation upon request by LICENSEE; or (b) LICENSOR elects to terminate its direct production and marketing operations; or (c) LICENSOR grants a license to any third party. 7.2. Unless sooner terminated as herein otherwise provided, the term of this Agreement shall commence on the date hereof and be for an initial period of ten (10) years from the date of the activation of the license set forth in 6.1 above, and shall be automatically renewed for additional periods of one (1) year each unless terminated by either party by giving written notice to the other party at least ninety (90) days prior to the end of the then current period. 7.3. Either party may terminate this Agreement in the event of a default of the other party in any of its substantial obligations hereunder; PROVIDED that the party not in default shall give written notice thereof to the defaulting party and if said default is not cured within thirty (30) days after said notice, this Agreement shall terminate forthwith. Article 8. Trademarks and Tradenames 8.1. LICENSOR agrees to give LICENSEE any necessary assistance to enable LICENSEE to file as a registered user of LICENSOR's trademarks in the Territory, to the extent such filings may be desirable or required by law. 8.2. LICENSEE shall follow any reasonable request of LICENSOR with respect to use of licensed marks, and LICENSEE shall obtain the approval of LICENSOR with respect to signs, labels, packaging material, advertising or the like bearing the licensed marks prior to the use thereof; PROVIDED that such approval shall not be unreasonably withheld. 8.3. LICENSEE agrees that nothing contained herein shall give LICENSEE any right, title or interest in the Licensed Marks (except the right to use the Licensed Marks in accordance with the terms of this Agreement), that the licensed marks are the sole property of LICENSOR and that any and all uses by LICENSEE of the licensed marks shall inure to the benefit of the LICENSOR. 8.4. In the event of the termination of this Agreement for any reason whatsoever, LICENSEE shall have the right, for a period not to exceed six (6) months, to continue to sell Subject Products then on hand bearing licensed marks; PROVIDED that at the expiration of said six (6) month period, LICENSEE shall cease to use said licensed arks, and shall deliver to LICENSOR, free of charge, all remaining signs, labels, packaging materials, advertising or the like, bearing licensed marks which are then in the possession of LICENSEE. 8.5. LICENSEE agrees to notify LICENSOR of any adverse uses in the Territory of marks confusingly similar to the licensed marks and agrees to take no action of any kind with respect thereto except with the express written authorization of LICENSOR. 8.6. LICENSEE may only use licensed marks in their standard form and style as they appear upon the Subject Products or as instructed in writing by LICENSOR. No other letter(s), word(s), design(s), symbol(s), or other matter of any kind shall be superimposed upon, associated with or shown in such proximity to the licensed marks so as to tend to alter or dilute them and the LICENSEE further agrees not to combine or associate any of such licensed marks with any other trademark or tradename. 8.7. Every licensed mark used or displayed by the LICENSEE may be identified as a trademark owned by LICENSOR and such identification can be accomplished by placing as asterisk (*) adjacent to the trademark with the asterisk referring to a footnote reading: "Licensed Trademark(s) of (LICENSOR). Article 9. Confidentiality 9.1. Each party shall treat as strictly confidential and secret all oral and written communications, lists, circulars and other documents with which it has been entrusted and which can be regarded from the normal commercial viewpoint or upon special indication by the other as trade secret or confidential information. Each party recognizes as confidential the terms and conditions of this Agreement, including price lists. 9.2. Each party shall impose similar obligations on its employees and others who may be required to have knowledge of any information in the ordinary course of business. Article 10. Resolution of Disputes 10.1. The parties shall endeavor to resolve amicably any and all disputes arising out of or in connection with this Agreement and undertake to meet as soon as either party advises the other of the existence of a dispute. If the parties are unable to meet or to settle their dispute amicably, such dispute shall be referred to arbitration pursuant to 10.2 below. 10.2. If at any time during the continuance of this Agreement, there shall be any question or dispute with respect to the construction, meaning or effect hereof, or any provision hereof, or arising out of or in connection herewith, or concerning the rights or obligations hereunder, which cannot be resolved amicably, such question or dispute shall be referred to: (a) a sole arbitrator to be selected by the parties hereto; or (b) failing agreement in selecting such arbitrator within seven (7) days, to a panel of three arbitrators, one to be appointed by the LICENSOR, one by the LICENSEE and the third by the two arbitrators so chosen. The arbitration shall take place in_______, France and shall be conducted in the English language. 10.3. The award rendered by such sole arbitrator or a majority of the three arbitrators, as the case may be, shall be final and binding on the parties and judgment upon such award may be entered in any court having jurisdiction. Article 11. Miscellaneous Provisions 11.1. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto; PROVIDED that LICENSEE may not assign its rights or obligations hereunder, except to any other members of the Sun Chemical group of companies, without the express prior written consent of LICENSOR. 11.2. The failure to insist in any instance on the strict performance of any provision of this Agreement or to exercise any right hereunder shall not constitute a waiver of such provision or right in any other instance. 11.3. Both LICENSOR and LICENSEE shall act as principals in all respects concerning this Agreement and neither of them shall hold itself out as the agent of the other. LICENSOR and LICENSEE shall keep the other party hereto free from all expenses and costs other than those as may be specifically authorized by the other in writing. 11.4. The applicable law shall be the express provisions of this Agreement and the intent of the parties as expressed herein, as may be supplemented, if necessary, by principles of French law. 11.5. No modification of this Agreement shall be effective unless in a writing signed by both parties hereto. 11.6. All notices, required or permitted to be given hereunder shall be in writing and shall be valid and sufficient if delivered in person against a receipt or sent by prepaid registered priority mail (return receipt requested) or via facsimile which shall be confirmed by such registered priority mail without undue delay, directed to the parties at the addresses set forth above or to such other address as a party may specify in a notice given in accordance with this Article. 11.7. The termination of this Agreement shall not act to relieve either party hereto from performing any accrued obligations hereunder, including payments of any amounts then due. 11.8. If any provision hereof shall be unenforceable, the remaining provisions of this Agreement shall not be effected thereby and shall remain in full force and effect. 11.9. This Agreement, including the Schedules annexed hereto, contains the entire agreement of the parties and supersedes and terminates any prior agreements between the parties hereto relating to the subject matter hereof. IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first above written. LICENSOR By: _________________________________ LICENSEE By: __________________________________ 9. Distribution Agreement International Distribution Agreement (Check list for the international negotiator) Parties Whereas clauses Essential definitions Products. Right to sell similar products developed by Company? Territory - Exclusive or non exclusive or mixture? Term - Initial period, renewal periods, tacit renewal? Appointment of Distributor a. Right to sell similar products? How to define similar products Possibility of assignment of rights to other companies of the Distributor’s group? How to define such group (usually based on notion of control) Use of sub-distributors? Rights retained by the Company? Duties of Distributor Acceptation of appointment by Distributor Representations as to the Distributor’s ability to perform Use of best efforts (or commercially reasonable efforts?) by the Distributor to promote the distribution and sale of the Products At its own expense? Any participation by the Company, e.g., as to marketing, furnishing standard technical and marketing documents, etc.? Compliance with all applicable laws and regulations (e.g., concerning sale, use, packaging and labeling of Products) Agreement not to make changes in the Products (without prior approval) Providing of after-sale services to customers? Purchase of Products Requirement as to minimum orders? Annual, monthly? Rattrapage? Agreements concerning placing of orders (annual, monthly or other regular order forecasts? Sending of orders by specific dates? Agreement to stock minimum amount of Products? Defective Products? Delivery Issues of place of delivery, passing of risk, insurance, etc. Choice of applicable INCOTERM Prices Initial prices for Products How to handle future prices - Indexation Advance notification of new prices - Applicable INCOTERM - Prices net of taxes (payable by Distributor) Terms of payment Manner of payment (documentary letter of credit?) Currency Dates for payment Duties of the Company Supply the Products with trademarks (trademarks of the Company, the Distributor or of a client)? If so, grant of right to use trademarks Provisions concerning private label sales Provisions concerning packaging Technical or marketing training made available to the Distributor? Under what terms and conditions? At whose cost? Keep Distributor advised of modifications or improvements in the Products? How to handle defective Products Compliance of Products with applicable laws and regulations Specific undertakings of the Distributor Act as principal and not as agent of the Company Not to damage, misuse or bring the Products or the Company into disrepute Not to create any expense or liability chargeable to the Company Not to contest the Company’s rights re the Products, copyrights, trademarks, patents or technology. Confidentiality During the term of the agreement After the agreement? How long? Each party to impose confidentiality obligation on employees or others who may receive confidential information Warranty, limited warranty, limitation of liability and indemnification Extent of warranty (freedom from defects in material and workmanship) Limitation of warranty (need to determine legality of any such limitation in the different countries of the Territory (national and European laws concerning limitations of liability, hidden defects, etc.) Which party will be required to commence or defend against legal actions? Which party will bear the costs? Does one party hold the other harmless with respect to certain matters? Requirement of notifying the other party of any legal action. Will the parties be required to cooperate with respect to certain legal actions? Defaults and remedies Liability for breach of any material provision of the contract - Definition of what specific elements each party considers as material (payment, timely delivery, quality of goods, bankruptcy of a party, a non-permitted assignment under the contract, etc.)? Notice of breach to be given within certain time frame Cure period? Right to resort to remedy of anticipatory breach? Under what circumstances? Damages for breach of contract. Compensatory damages? Consequential damages(lost profits)? Liquidated damages? Mitigation of damages? Termination Right to terminate - Under what circumstances (material breaches as defined)? b. Notice of termination c. Termination not to prejudice right to remedies including damages Effect of expiration or termination Distributor to cease sale of Products. What to do with unsold Products – Distributor to sell or return? Return of confidential information Shall Distributor be entitled to any compensation or indemnity? Suppose the Distributor has built up a very valuable clientele? Need to review any national or European laws protecting distributors Waiver of termination rights by the Distributor? Resolution of disputes National courts or arbitration? If arbitration, ad hoc or institutional? Other provisions concerning arbitration (number and choice of arbitrators, language of arbitration, place of arbitration, etc.) Miscellaneous provisions Agreement binding on successors and assigns Assignability or non-assignability of agreement and/or rights and obligations under the agreement Failure to insist on performance does not constitute a waiver for the future Parties acting as principals and independent contractors (and not as principal and agent, partners or joint venturers). One party cannot bind the other to third parties Force majeure - hardship clauses? Good faith - further steps Applicable law Interpretation (headings and sections for convenience purposes only) Amendments - In writing? Notices under the agreement Partial enforceability Partial invalidity clause Execution in counterparts Language Expenses Entire agreement (“merger clause”) Miscellaneous legal issues Need to review any applicable laws concerning the legality of exclusive distribution agreements Need to review laws affecting imports and exports - European directives covering many sectors of the economy - Quality criteria? Quotas? 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