SPECIMEN PROVISIONS FROM TECHNOLOGY LICENSE AGREEMENTS

Please Note: • The following provisions do not constitute a

model license agreement. • They are not model or suggested terms. • They are provisions selected from many license

agreements to reflect the type of provisions you may encounter in your practice.

Mark S. Holmes C.E.O. PatentBridge LLC © 2002-17 Mark S. Holmes. All rights reserved. (Except excerpts from PATENT LICENSING AND SELLING: STRATEGY, NEGOTIATION & FORMS, which copyright is owned by the PLI.)

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SPECIMEN PROVISIONS FROM

PATENT LICENSE AGREEMENTS This PATENT LICENSE AGREEMENT (the "Agreement"), dated as of March 14, 2015 (the “Effective Date”), by and between OWNER Corporation, a California corporation with offices at 2440 Sand Hill Road, Menlo Park, CA 94025 ("OWNER") and LICENSEE Technology, Inc., a California corporation with offices at 1452 California Street, Mountain View, CA 94043 ("LICENSEE").

WITNESSETH: WHEREAS, OWNER is the owner of, or has acquired the rights to, OWNER Technology; and

WHEREAS, LICENSEE desires to obtain [a non-exclusive] [an exclusive] license to use and practice the Technology, and OWNER is willing to grant such [non-exclusive] [exclusive] license, upon and subject to the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and agreements of the Parties contained in this Agreement, the Parties agree as follows: 1. DEFINITIONS For the purposes of this Agreement, the following terms shall have the meanings set forth in this Section 1: 1.1 "Affiliate" shall mean any corporation or other entity that directly, or indirectly

through one or more intermediaries, controls, is controlled by, or is under common control with the designated party but only for so long as such relationship exists. For the purposes of this section, "Control" shall mean beneficial ownership of at least fifty percent (or such lesser percent as may be the maximum that may be owned by foreign interests pursuant to the applicable laws of the country of incorporation) of the shares of stock entitled to vote for directors in the case of a corporation and at least fifty percent (or such lesser percent as may be the maximum that may be owned pursuant to the applicable laws of the country of domicile) of the equity or interests in profits in the case of a business entity other than a corporation.

1.1 "Affiliate" shall mean any entity which controls, is controlled by or is under

common control with OWNER or LICENSEE. For purposes of this definition, "control" shall mean beneficial ownership (direct or indirect) of more than fifty percent (50%) of the shares of the subject entity entitled to vote in the election of

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directors (or, in the case of an entity that is not a corporation, for the election of the corresponding managing authority).

1.2 "Attorneys' Fees" shall mean the reasonable fees and expenses of counsel to the

parties hereto and fees billed for law clerks, paralegals, librarians and others not admitted to the bar but performing services under the supervision of an attorney. The term "Attorneys' Fees" shall include, without limitation, all such fees and expenses incurred with respect to appeals, mediations, arbitrations and bankruptcy proceedings.

1.3 "Best Efforts" means that the obligated party is required to make a diligent and good

faith effort to accomplish the applicable objective. Such obligation, however, does not require a material expenditure of funds or the incurrence of a material liability on the part of the obligated party, nor does it require that the obligated party act in a manner that would be contrary to normal commercial practices in order to accomplish the objective. The failure to accomplish a given objective is no indication and shall not be admitted as evidence in any proceeding to establish that the obligated party did not in fact utilize its Best Efforts in attempting to accomplish the objective.

1.4 "Business Day" shall mean any day other than a Saturday, Sunday, or U.S. federal

holiday. Any reference to "days" (unless Business Days are specified) shall mean calendar days.

1.5 “Change of Control” shall mean that (a) sole control of LICENSEE's management

is vested in a person, persons, entity, or entities, none of which, as of the Effective Date, control, or participate in control of, LICENSEE's management; and (B) an entity owns 50% or more of LICENSEE's capital or business assets, has the power to exercise 50% or more of the voting rights or to appoint 50% or more of the Board of Directors of LICENSEE, or otherwise has the right to control LICENSEE's affairs. A change in management personnel does not in and of itself indicate a change of control.

1.6 "Combination Product(s)" shall mean any product containing both a

pharmaceutically active agent or ingredient which constitutes a Licensed Product and one or more other pharmaceutically active agents or ingredients which do not constitute Licensed Products.

1.7 "Licensor Competitor" shall mean a person or entity that is in the business of

developing, marketing, or distributing for commercial purposes any service or product in the Field. Further, with respect to interests acquired after the Effective Date, any such corporation, company, or other entity shall be deemed to be a Subsidiary for only so long as such ownership or interest exists.

1.8 "Commercially Reasonable Efforts" means spending $500,000 in a single instance

or $2,000,000 in the aggregate for all costs (including without limitation reasonable

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attorney's, engineers, scientists, consultants and accountants fees and expenses) associated with a specific action or all actions, respectively, which are required to be taken under this Agreement.

1.9 "Confidential Data" shall mean all transferable technical information, including but

not limited to, data, reports, programs, methods, tapes, recorded notes, computer-generated data, tests, studies and other written documents or computer programs, and any and all other information embodied in a tangible form relating to the Licensed Technology or Licensed Products licensed pursuant to this Agreement and disclosed to the nontransferring party in tangible form. Such technical information, data and other items referenced in the preceding sentence shall be deemed to be "confidential" within the meaning hereof when, and so long as, it relates to the Licensed Technology or Licensed Products and applications thereof; is not in the possession of the transferring party without binder of secrecy prior to the disclosure thereof (except in the event same is wrongfully obtained by, or wrongfully disclosed to, the transferring party); or is not then and does not become part of the public knowledge and literature through the fault of the transferring party; or is not thereafter received from a third party other than an Affiliate without binder of secrecy. For purposes hereof, Confidential Data shall also mean all such information, data and other items referenced in the first sentence of this Section which relate to the Licensed Technology or Licensed Products, which information, data and other items are developed by OWNER or LICENSEE during the Term of this Agreement.

1.10 "Consideration" shall mean and include money, services, property and any other

thing of value such as payment of costs, cancellation or forgiveness of indebtedness, discounts, rebates, barter and the like. If any such consideration is in a form other than cash (such as in kind, equity interests, indebtedness earn-outs, or other deferred payments, consulting fees, etc.).

1.11 "Control" shall mean, except only for the purposes of Section __, possession of the

ability to grant a license or sublicense under this Agreement without violating the terms of any agreement or other arrangement with a third party.

1.12.1 "Field" means small molecule drugs for human therapeutic uses. 1.12.2 “Field of Use" shall mean all human therapeutic, prophylactic and diagnostic uses of

Licensed Products. Without limiting the foregoing, the Field of Use will specifically include all human therapeutic, diagnostic and prophylactic uses of both protein and DNA encoding Licensed Products.

1.12.3 “Field of Use” shall mean the field of secure communications in the following areas:

Virtual Private Networks (VPN); Secure Voice Over Internet Protocol (VoIP); Electronic Mail (E-mail); Video Conferencing; Communications Logging; Dynamic Uniform Resource Locators (URLs); Denial of Service; Prevention of Functional Intrusions; IP Hopping; Voice Messaging and Unified Messaging; Live Voice and IP PBX’s; Voice Web Video Conferencing and Collaboration; Instant Messaging (IM);

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Minimized Impact of Viruses; and Secure Session Initiation Protocol (SIP). The Field of Use is not limited by any predefined transport mode or medium of communication (e.g., wire, fiber, wireless, satellite or mixed medium).

1.13 "First Commercial Sale" of the Licensed Products in [name of Country] shall mean

the first sale for use or consumption by the general public of the Licensed Products in such country based on the required marketing and pricing approval granted by the governing health authority of [name of Country].

1.14 "GLP" shall mean the current Good Laboratory Practice Standards promulgated or

endorsed by the FDA (or in the case of foreign jurisdictions, comparable regulatory standards), including those procedures expressed or implied in the regulatory filings made with respect to the Drug Product with the FDA or foreign regulatory agents.

1.15 "GMP" shall mean good manufacturing practices as defined by the FDA in 21 CFR

Part 211. 1.16 "Improvements" shall mean any and all additions, alterations, modifications, design

changes, and other improvements to the Licensed Product which are individually or jointly Developed by OWNER, LICENSEE, any Sublicensee or any third parties at any time during the Term.

1.17 "Indication" shall mean any medical condition or set of symptoms for the treatment

of which a Product may be determined to be safe and efficacious. 1.18 “Patent Rights" shall mean the patents and patent applications set forth in Exhibit

A, together with any unlisted patents and patent applications from which any of the listed patents claim priority, and any and all patents that have issued or in the future issue from the foregoing patents and patent applications, including, provisional applications, utility models and design patents and certificates of invention, and all divisions, continuations, continuations-in-part, reissues, renewals, extensions or additions thereof claiming priority from any of the foregoing patents or patent applications heretofore or hereafter having legal force in any country to the extent that OWNER has the right to grant licenses, immunities, or rights thereunder or to assert rights thereunder, and under which OWNER has the right to grant immunities and non-assertions to its licensees.

[Alternative Subsection 1.18] 1.18 "Patent Rights" means those patents and patent applications listed on Schedule A

and all Patents claiming priority thereto or arising therefrom. The term "Patent" includes patents and patent applications, whether domestic or foreign, including all provisional applications, and all divisions, continuations, continuations-in-part, reissues, renewals, extensions, supplementary protection certificates of any such patents and patent applications.

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1.19 "Licensed Product(s)" shall mean tangible materials which, in the course of manufacture, use, or sale would, in the absence of this Agreement, infringe one or more claims of the Licensed Patent Rights that have not been held invalid or unenforceable by an unappealed or unappealable judgment of a court of competent jurisdiction.

1.19 “Licensed Product” means any product, the manufacture, use, sale offer for sale,

lease or import of which would infringe or contribute to the infringement of any Licensed Patent Rights or any product manufactured using a process which would infringe the Licensed Patent Rights.

1.20 "Net Selling Price" shall mean the price at which LICENSEE invoices the sale or

lease of Licensed Products to its customers, less any reasonable charges for packing, shipping, installation, import duties, brokerage, and use or sales taxes. It is further understood and agreed that in respect of inter-company sales between LICENSEE and its related companies, the Net Selling Price shall mean the price at which LICENSEE ordinarily sells to its non-Affiliate distributors under similar circumstances. In such event no royalty shall accrue or be payable in respect of any subsequent resale of such equipment to a third party.

1.21 "Net Sales" shall mean LICENSEE's and its sublicensees' billings for Licensed

Products and Licensed Processes less the sum of the following items, providing that these items are payable by LICENSEE or deductible from LICENSEE's billings within sixty (60) days of receiving payments from LICENSEE's customer(s):

(a) discounts allowed in amounts customary in the trade for quantity purchases,

cash payments, prompt payments, wholesalers and distributors; (b) sales, tariff duties and/or use taxes directly imposed and with reference to

particular sales; (c) outbound transportation prepaid or allowed; (d) amounts allowed or credited on returns; and (e) allowance for bad debt, not to exceed five percent (5%) of Net Sales per

calendar year. No other deductions shall be made for commissions paid to individuals

whether they be with independent sales agencies or regularly employed by LICENSEE and on its payroll, or for the cost of collections. Licensed Products shall be considered "sold" ninety (90) days after billing or invoicing, or upon receipt of payment, whichever comes first, provided, however, that Licensed Products are actually shipped to customers. If a Licensed Product or Licensed Process is distributed or invoiced for a discounted price substantially lower than customary in the trade or distributed at no cost to Affiliates or otherwise,

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Net Sales shall be based on the customary amount billed for such Licensed Products or Licensed Processes.

1.22 "Person" means any legal person or entity, including without limitation any

individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated association, limited liability corporation, governmental entity, or other person or entity of similar nature.

1.23 "Sublicensee" as used in this Agreement shall mean any third party to whom

LICENSEE has granted a license to make, have made, use and/or sell the Product or Process under the Patent Rights, provided said third party has agreed in writing with LICENSEE to accept the conditions and restrictions agreed to by LICENSEE in this Agreement.

1.24.1 "Owner Technology" means any and all proprietary processes, trade secrets,

technical information, know-how and technology of OWNER, whether or not patented or patentable, existing as of the Effective Date and which are necessary or useful in the research, development, manufacture, use and sale of products for human only therapeutic applications, and which are owned, or have been acquired, developed, or licensed by OWNER as of the Effective Date, and as to which OWNER has the right to grant licenses or sublicenses in the Field.

1.24.2 "Subsequent Owner Technology" shall mean any and all proprietary processes,

trade secrets, technical information, know-how and technology with respect to cross-linked protein crystals, whether or not patented or patentable, which are necessary or useful in the research, development, manufacture, use and sale of products for human and animal therapeutic applications and which are acquired, developed, or licensed by OWNER during the five (5) year period beginning on the Effective Date, and as to which OWNER has the right to grant licenses or sublicenses in the Field.

1.25 "Technology" means any and all proprietary processes, trade secrets, technical

information, know-how and technology of OWNER claimed in or relating to the Licensed Patents, or which is necessary, beneficial or useful to practice the technology described in the Licensed Patents existing on the Effective Date and, on the Effective Date of this Agreement, owned or licensed to OWNER with the right to grant licenses or sublicenses thereunder, and (iii) any and all proprietary processes, trade secrets, technical information and know-how, whether or not patented or patentable, first developed, conceived or reduced to practice by OWNER within five (5) years after the Effective Date, which constitutes an Improvement to the technology described above, and as to which OWNER has the right to grant licenses or sublicenses.

1.26 "Technology" means any and all inventions, improvements, modifications,

alterations or enhancements that are related to Phenoxymorphone, including its release profile and metabolites, and that are made by OWNER or any of its Affiliates during the term of this Agreement.

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2. LICENSE GRANT 2.1 License to the Licensed Patent Rights. Subject to the terms and conditions of this

Agreement, Licensor hereby grants to Licensee and to Licensee’s Affiliates a perpetual, fully paid, irrevocable, world-wide, royalty-free, non-exclusive, non-transferable (except in accordance with Section ___ hereof), non-sub-licensable [right and] license to the Licensed Patent Rights, to make, have made, use, sell, offer to sell, lease, distribute, import, export, and market Licensed Products in the Field of Use.

2.2 Exhaustion of Rights. Licensee and its Affiliates may not grant sub-licenses under

the license granted above to any third party in connection with the Field of Use. Notwithstanding the above, for the avoidance of doubt, third parties who purchase a Licensed Product from Licensee, its Affiliates, or their distributors, shall automatically retain a non-exclusive license to use the Licensed Product to the same extent as the Licensee, Affiliate, or distributor from which it purchased the Licensed Product.

2. EXCLUSIVE GRANT; MARCH-IN RIGHTS; RESERVATION FOR

NONCOMMERCIAL USE 2.1 Subject to the terms and conditions of this Agreement, OWNER hereby grants to

LICENSEE the exclusive right and license to practice under the Patent Rights and, to make, have made, use, lease, sell and import Licensed Products and to practice the Licensed Processes until the expiration of the last to expire of the Patent Rights.

2.2 In order to establish a period of exclusivity for LICENSEE, OWNER hereby agrees

that it shall not grant any other license to the Licensed Patent Rights for the Field of Use, subject only to the royalty-free, nonexclusive license rights of the United States Government pursuant to 48 C.F.R. 52.227-14 (Civilian Agencies) or D.F.A.R.S. 252.227-7013 (Defense Agencies), or any similar federal law, during the period of time commencing with the Effective Date and terminating with the first to occur of:

(a) the expiration of ( ) years after the first commercial sale of a Licensed

Product or first commercial use of a Licensed Process; or (b) the expiration of ( ) after the Effective Date of this Agreement. 2.3 At the end of the exclusive period, the license granted hereunder shall become

nonexclusive and shall extend to the end of the term or terms for which any Patent Rights are issued, unless sooner terminated as hereinafter provided. The period of exclusivity may be extended with the written consent of OWNER, on a field of use basis, which consent shall not unreasonably be withheld, conditioned or delayed, provided that LICENSEE is a licensee in good standing, owing no fees, royalties or any other monies to OWNER, and having met all the diligence milestones pertaining

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to the particular field of use in which an extension of the period of exclusivity is under consideration.

2.4 OWNER reserves the right to practice under the Patent Rights for its own

noncommercial research purposes. [Alternative subsection 2.4] 2.4 OWNER shall retain the right to make and use the Licensed Product in its own

laboratories for scientific purposes and for continued research. Further, OWNER shall have the right to make the Licensed Product available to other scientific institutions and researchers for non-commercial scientific and research purposes, so long as the foregoing are strictly not-for-profit.

2.5 LICENSEE agrees that Licensed Products to be leased or sold in the United States

shall be manufactured substantially in the United States. 2.6 LICENSEE shall have the right to enter into sublicensing agreements for the rights,

privileges and licenses granted hereunder only during the exclusive period of this Agreement. Such sublicenses may extend past the expiration date of the exclusive period of this Agreement, but any exclusivity of such sublicenses shall expire upon the expiration of LICENSEE's exclusivity. Upon any termination of this Agreement, sublicensees' rights shall also terminate.

[Alternative Subsection 2.6] 2.6 LICENSEE shall have the right to sublicense the rights granted hereunder to third

parties. All sublicenses hereunder granted by LICENSEE may, at OWNER's option, be co-terminable with this Agreement to the extent OWNER's rights in the LICENSED PATENTS are involved.

2.7 LICENSEE agrees that any sublicenses granted by it shall provide that the

obligations to OWNER of Sections [Grant provision], [Records and Reports provision], [Infringement provision], [Dispute Resolution provision], [Termination], [U.S. Export Law Compliance provision], [Tradename Use Restriction], [Product Liability Limitation provision] and [Miscellaneous provisions] of this Agreement shall be binding upon the sublicensee as if it were a party to this Agreement. LICENSEE further agrees to incorporate or attach copies of these Sections to sublicense agreements.

2.8 LICENSEE agrees to forward to OWNER a copy of any and all sublicense

agreements promptly upon execution by the parties. 2.9 Non-Human Use Only. The Parties agree that LICENSEE is granted only rights for

non-human applications of the Licensed Technology and, unless otherwise set forth

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herein, that OWNER expressly reserves all rights for human applications of the Licensed Technology.

3. TERMINATION. Termination upon expiration of last patent; automatic termination

from failure to market or exploit in first 12 months; survival of confidentiality obligations

3.1 Unless earlier terminated by the mutual agreement of the parties or pursuant to

another provision of this Agreement, this Agreement shall continue in full force and effect and shall have a term expiring on the last date of expiration of any patent included in the Patent Rights. If however, the LICENSEE fails to market, promote, and otherwise exploit the Technology so that OWNER has not received at least $ in royalty payment as provided under Section [Royalty payment provisions] of this Agreement within twelve (12) months of the date hereof, this Agreement shall automatically terminate, without further notice from OWNER to the LICENSEE.

3.2 In the event of termination of the license rights granted hereunder for any reason(s)

whatsoever: (a) All obligations of confidentiality shall remain in full force and effect for the

full term of this Agreement; (b) LICENSEE shall return, deliver, and assign to OWNER all records regardless

of medium containing know-how, notebooks, reports, data, applications for approval, approvals and all writings, including magnetically recorded writings or legible and readable copies thereof, which relate to or describe the manufacture, use, sale, or characteristics of the Technology which are in its possession, custody, or control;

(c) LICENSEE shall not grant to any third-party any right to the Technology after

termination of the license hereunder; (d) All sublicenses granted hereunder shall inure to the benefit of OWNER and

OWNER shall become the OWNER with respect to the same. Such sublicenses shall continue according to the terms thereof and OWNER shall be entitled to all consideration and Royalty from the sublicensee therein. LICENSEE shall make such assignment of such sublicenses and execute all documents necessary and proper to substitute OWNER as the licensor therein.

4. ROYALTIES. Royalty advance; running royalty; sublicense royalties; stacking;

foreign currency conversion; currency exchange control; foreign sales 4.1 Royalty Advance. For the rights, privileges and license granted hereunder,

LICENSEE shall pay, or cause to be paid, to OWNER a onetime, non-refundable, up-front advance licensing fee of $1,500,000.00 (“Royalty Advance”). The Royalty

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Advance shall represent a credit against future royalty obligations of LICENSEE to OWNER up to a maximum of $1,500,000.00. LICENSEE shall pay the Royalty Advance to OWNER upon execution of this License Agreement.

4.2 Running Royalty. For the rights, privileges and license granted hereunder,

LICENSEE shall pay to OWNER a royalty equal to five percent (5%) of Net Sales generated by LICENSEE or its Affiliates. The five percent royalty shall be paid until such time as OWNER has received an aggregate of $1,500,000.00 in royalties, at which time the royalty percentage shall be decreased to four percent (4%) until such time as OWNER has received a second $1,500,000 in royalties, at which time the royalty percentage shall be decreased to three percent (3%) until this Agreement shall terminate. LICENSEE shall be responsible to OWNER for the payment of royalties due with respect to Net Sales by Affiliates of LICENSEE as though they were Net Sales of LICENSEE.

4.3 Sublicenses. In the event that LICENSEE enters into a sublicense and if no royalty

payment is payable to OWNER pursuant to Section 4.2, LICENSEE shall pay to OWNER thirty percent (30%) of any royalty payments received by LICENSEE under such sublicense with respect to the sale by the sublicense of Licensed Products within the claims of an issued patent which is part of the Patent Rights. In no event shall equity investments in LICENSEE or payments for research and development conducted by LICENSEE be considered to be royalty payments. LICENSEE shall not offer sublicense royalty rates less than the rate that would be due under Section 4.2 for Net Sales of LICENSEE without the written prior approval of OWNER, which approval shall not be unreasonably withheld, delayed or conditioned. In no event shall LICENSEE pay OWNER less than three percent (3%) of Net Sales by a sublicensee pursuant to this Section 4.3.

4.4 Royalty Stacking. To the extent that LICENSEE or any Affiliate of LICENSEE is

required, by order or judgment of any court to obtain in any jurisdiction any license from a third party in order to practice the rights purported to be granted to LICENSEE by OWNER under issued patents licensed hereunder in such jurisdiction, then up to percent ( %) of the royalties payable under such third party license in such jurisdiction may be deducted from royalties otherwise payable to OWNER, provided that in no event shall the aggregate royalties payable to OWNER in any semi-annual period in such jurisdiction be reduced by more than percent ( %) as a result of any such deduction, provided further that any excess deduction remaining as a result of such limitation may be carried forward to subsequent periods. Royalties shall be payable only once with respect to Net Sales regardless of the number of patents included in Technology which are incorporated in a Licensed Product.

4.5 Currency Conversion. Royalty payments shall be paid in United States dollars in

[City, State] or at such other place as OWNER may reasonably designate consistent with the laws and regulations controlling in any foreign country. If any currency conversion shall be required in connection with the payment of royalties hereunder,

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such conversion shall be made by using the exchange rate prevailing at the Chase Manhattan Bank (N.A.) on the last business day of the calendar month of the quarterly reporting period to which such royalty payments relate.

4.6 Currency Exchange Control. If at any time legal restrictions prevent the prompt

remittance of part or all of any royalties with respect to any country in the Territory where any Licensed Product is sold, payment shall be made through such lawful means or method as the parties reasonably shall determine, the parties agreeing to fully cooperate in effecting such remittance.

4.7 Foreign Sales. Notwithstanding the royalty rates set forth in Sections 4.1, 4.2 and

4.3, if any Licensed Product manufactured in the United States or Japan is sold or leased directly to an end user in a country other than the United States or Japan or to an intermediary who warrants in writing to LICENSEE that the end user is in a country other than the United States or Japan, then the royalty rate shall be reduced to two percent (2%) of the Net Selling Price for said sale or lease. This reduced rate shall also apply to sales or leases for Japanese end users after Japanese Patent No. ____________ has expired ([expiration date]).

Alternate Section 4 4. ROYALTIES AND PAYMENTS Running royalty; research royalty; sublicensee

and intercompany sales; license fee statements 4.1 Amount. (a) For the rights and privileges granted under this License Agreement,

LICENSEE shall pay to OWNER, in the manner hereinafter provided, a license fee of four percent (4%) of the Net Sales of each Licensed Product sold by LICENSEE, or an Affiliate, or any sublicensee, after reduction of said price for allowances actually made or paid by LICENSEE, any Affiliate, or any sublicensee, for claims, returns, promotional discounts and the like, and LICENSEE shall pay to OWNER two percent (2%) of the amount of any research and development contract received by LICENSEE or any Affiliate, or any sublicensee, which relates principally to the Licensed Products or Licensed Technology.

(b) Payment by LICENSEE, any Affiliate or any sublicensee to OWNER for

Licensed Products as provided in Section 4.1 shall be made commencing on the Commencement Date and on the fifth (5th) day of each month thereafter during the term hereof. The sums due pursuant to Section 4.1(a) shall be based on:

(i) payments received in the prior month by LICENSEE or an Affiliate or

any sublicensee,

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(ii) for Licensed Products sold and shipped, and (iii) amounts received pursuant to any research and development contract. (c) Sales or transfers to Affiliates, or sublicensees, or interdivisional sales or

transfers shall not be included in the payment calculation until the actual sale and shipment by such Affiliate, or sublicensee, to a third party except if such Affiliate or sublicensee is an end user of the Licensed Products. Under such circumstances, the license fee shall be based on the lowest sales price of Licensed Products charged to third parties for the calendar quarter in which the Licensed Product is shipped to such Affiliate or sublicensee which calendar quarter shall be the calendar quarter of payment; provided that such transactions with Affiliates shall be on prevailing market terms taking into account volumes of purchases, but for transactions with Affiliates, products may be offered at the maximum discounts available to any person. If no such shipment has occurred, such payment shall be based on the average sales price of the total quantity of the Licensed Products (separated as to category, if any) in the previous calendar quarter (exclusive of sales to Affiliates or sublicensees) in which sales have occurred. If no such sales have occurred, such payment shall be based on the then prevailing market price.

4.2. Liability of LICENSEE for Fees on Termination. In the event the Term hereof

expires or the License is terminated in accordance with the provisions of this Section 4, LICENSEE shall remain liable to pay such royalties to OWNER with respect to payment for Licensed Products which have been sold prior to expiration of the Term of the License.

4.3 License Fee Statements. LICENSEE shall furnish OWNER statements supporting

license fee payments in sufficient detail so that the basis for the payment can be readily ascertained which statements should be similar to that currently furnished to OWNER. OWNER at reasonable times and places and with five (5) calendar days notice to LICENSEE shall have the right to have its representatives [Note: Inspection may be limited to independent Certified Public Accountants] inspect the relevant records of LICENSEE in order to confirm the correctness of the license fee payment; provided that such representatives [Certified Public Accountants] agree in writing to maintain the confidentiality of the matters disclosed to them in connection therewith except as may be required in accordance with generally accepted accountancy practices. If such inspection shall reveal that an error in the amount of five percent (5%) or more of any royalty payment made, LICENSEE shall pay the reasonable costs of such inspection. LICENSEE shall maintain and allow OWNER to inspect all necessary records at reasonable times and places.

Alternate Section 4 [Excerpted from PATENT LICENSING: STRATEGY,

NEGOTIATION & FORMS] 4. Royalties 4.1 For the rights, privileges, and license granted hereunder, LICENSEE shall pay

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royalties to OWNER in the manner hereinafter provided to the end of the term of the Patent Rights or until this Agreement shall be terminated:

(a) Running Royalties in an amount equal to Percent ( %) of Net Sales of the

Licensed Products used, leased or sold by or for LICENSEE or its sublicensees. Royalty payments shall be due January 1 of each year under this Agreement.

(b) In addition to Running Royalties, Fifty Percent (50%) of any payments,

including, but not limited to, sublicense fees, received from sublicensees in consideration for the Licensed Products.

4.2 All payments due hereunder shall be paid in full, without deduction of taxes or other

fees which may be imposed by any government and which shall be paid by LICENSEE.

4.3 For purposes of determining royalties, only a single royalty shall be paid to OWNER

for each Licensed Product and royalties for use of the Know-how shall be waived so long as LICENSEE is paying royalties to OWNER on the same product for use of any Licensed Patent. Royalties for the use of patents shall be paid for the life of each patent. Royalties for use of the Know-how shall begin on the Effective Date of the Agreement and continue until ten (10) years from the date of First Commercial Production. To encourage development and commercialization of the Licensed Products, the applicable royalty for sales made in each of the first two years of this Agreement shall be Percent ( %). If a United States patent is not issued, and LICENSEE wishes to commercialize the Licensed Product utilizing the Know-how, both parties agree to negotiate in good faith an applicable royalty, if any.

4.4 Royalty payments shall be paid in United States dollars in [City, State] , or at such

other place as OWNER may reasonably designate consistent with the laws and regulations controlling in any foreign country. If any conversion of foreign currency to U.S. dollars shall be required in connection with the payment of royalties hereunder, such conversion shall be made by using the exchange rate existing in the United States (as reports in the Wall Street Journal) on the last business day of the calendar quarterly reporting period to which such royalty payments relate.

4.5 Notwithstanding anything in this Agreement to the contrary, no payment obligations

shall be due with respect to any sale or sublicense covering any Licensed Product or Licensed Process in a country if:

(a) There are no issued Patent Rights underlying such Licensed Product in

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such country; or (b) To the extent that a patent application is pending, there is no claim within

such patent application on which a royalty herein can reasonably be based which has been pending for less than seven (7) years since the initial filing date.

Alternate Section 4 [Excerpted from PATENT LICENSING: STRATEGY, NEGOTIATION &

FORMS] 4. RECORDS. Reports; audit. 4.1 For the purpose of computing the royalties due to OWNER hereunder, the year shall

be divided into two parts ending on June 30 and December 31. Not later than forty-five thirty (45) days after each December and June in each Calendar Year during the term of the License, LICENSEE shall submit to OWNER a full and detailed report of royalties or payments due OWNER under the terms of this Agreement for the preceding half year (hereinafter "the Half-Year Report"), setting forth the Net Sales of each of LICENSEE and each Affiliate, and each sublicensee of LICENSEE or any Affiliate permitted under Section [sublicensing provision of the Grant section] or lump sum payments and all other payments or consideration from sublicensees upon which such royalties are computed, including at least the following information:

(a) number of Licensed Products manufactured. (b) number of Licensed Products sold. (c) total billings for Licensed Products sold. (d) accounting for all Licensed Processes used . (e) accounting for all Licensed Processes sold. (f) deductions applicable as provided in Sections [Royalty Payment provisions] . (g) total royalties due. (h) names and addresses of all sublicensees of LICENSEE. (i) A progress report on patent filings in each country, including the serial

number, name of patent application, name of inventors and status of each patent application covering Licensed Products or Licensed Processes.

If no royalties or other payments are due, a statement shall be sent to OWNER stating such fact. Payment of the full amount of any royalties or other payments due to OWNER for the preceding half year shall accompany each Half-Year Report on

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royalties and payments. LICENSEE shall keep for a period of at least three (3) years after the date of entry, full, accurate and complete books and records consistent with sound business and accounting practices and in such form and in such detail as to enable the determination of the amounts due to OWNER pursuant to the terms of this Agreement.

4.2 Within ninety (90) days after the end of each Calendar Year, commencing on the

Date of First Commercial Sale LICENSEE shall furnish OWNER with a report (hereinafter the "Annual Report" ), certified by an independent certified public accountant, relating to the royalties and other payments due to OWNER pursuant to this Agreement in respect of the Calendar Year covered by such Annual Report and containing the same details as those specified in Section 4.1 above in respect of the Half-Year Report.

4.3 On reasonable notice and during regular business hours, OWNER or its authorized

representative shall each have the right to inspect and copy the books of accounts, records and other relevant documentation of LICENSEE or of any Affiliate and the sublicensees of LICENSEE insofar as they relate to the production, marketing and sale of the Licensed Products, in order to ascertain or verify the amount of royalties and other payments due to OWNER hereunder, and the accuracy of the information provided to OWNER in the aforementioned reports. OWNER shall also have the right, not more than once each calendar year, to audit LICENSEE's books and financial records for the purpose of verifying full payment by LICENSEE of its royalty obligations hereunder. Such audits shall be conducted during normal business hours and shall not unreasonably interfere with LICENSEE's conduct of its business. Each such audit shall be at OWNER's expense, unless a particular audit reveals an underpayment of ten percent (10%) or more of the amount that should have been paid to OWNER for the period audited, in which case LICENSEE shall bear the expense of such audit. In the event of any underpayment of royalties, LICENSEE shall promptly remit to OWNER all amounts due plus interest pursuant to Section [Late Payment provision].

5. PROSECUTION 5.1. Patent Prosecution. OWNER shall have the exclusive right, at its expense, to

prepare, prosecute and maintain patent applications, and to maintain and enforce patents comprising OWNER’s Patent Rights and, except as expressly otherwise set forth herein, otherwise deal in and with and enforce rights associated with the Licensed Technology. In the event that OWNER elects not to prepare, prosecute or maintain any patent application or any patent rights constituting Licensed Patent Rights, OWNER shall promptly notify LICENSEE, and LICENSEE shall have the right to prepare, prosecute and maintain any such application or right at LICENSEE's expense.

5.2. Cooperation. LICENSEE agrees to cause each of its employees and agents to take

all actions and to execute, acknowledge and deliver all instruments or agreements

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reasonably requested by OWNER, and necessary for the perfection, maintenance, enforcement or defense of OWNER's rights as set forth above.

5.3. During the term of this Agreement, the prosecution, filing and maintenance of all

Patent Rights and applications in the United States and in the foreign countries shall be the primary responsibility of OWNER; provided, however, LICENSEE shall have reasonable opportunities to advise OWNER and shall cooperate with OWNER in such prosecution, filing and maintenance. All final decisions with respect to prosecution of any application, provisional applications, continuations, continuations-in-part and reissue applications, and selection of patent counsel are reserved to OWNER.

5.4. Payment of all fees and costs relating to the filing, prosecution, and maintenance of

the Patent Rights incurred after the date of this Agreement shall be the responsibility of LICENSEE. OWNER is not financially obliged to maintain and prosecute patents or any Patent Rights.

5.5. OWNER agrees that LICENSEE may take a life of license cumulative credit for

expenditures on the Patent Rights, such credit not to exceed $ _____________ and to be taken according to the following schedule:

(a) LICENSEE may credit their above-referenced patent prosecution and

maintenance expenditures incurred in a given calendar year against up to one third of License Maintenance Fees due the following July 1 under Section [Royalty provisions].

(b) In the event that Royalties exceed the License Maintenance Fee for a given

year, and LICENSEE owes OWNER Royalties in addition to the License Maintenance Fee already paid, then LICENSEE may use their patent prosecution and maintenance credit against up to one half of the Royalties due under Section [Royalty provisions].

Alternate Section 5 [Excerpted from PATENT LICENSING: STRATEGY, NEGOTIATION &

FORMS] 5. PATENT PROSECUTION AND MAINTENANCE 5.1 Patent Rights. LICENSEE shall, in the name of OWNER, apply for, seek issuance

of, and maintain during the term of this Agreement the Patent Rights in the United States and in foreign countries. The prosecution, filing and maintenance of all Patent Rights and applications shall be the primary responsibility of LICENSEE. LICENSEE shall seek patent extension for patents licensed under the Patent Rights in the United States and in such foreign countries as may be designated by LICENSEE, under such applicable laws and regulations throughout such countries, where such patent extension rights are available currently or are available in the future. LICENSEE shall keep OWNER advised as to all developments with respect to the Patent Rights and shall supply to OWNER copies of all correspondence and

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papers received in connection therewith within ten (10) business days of receipt or filing thereof. LICENSEE shall provide all correspondence to and advise OWNER in a timely manner in order to permit OWNER to comment on all actions before they are taken by LICENSEE's patent counsel. All final decisions with respect to prosecution of the Patent Rights are reserved to OWNER.

5.2 Expenses of Patent Right Prosecution. Payment of all fees and costs, including

without limitation attorneys’ fees, relating to the filing, prosecution, and maintenance of the Patent Rights shall be the responsibility of LICENSEE.

5.3 Invention Rights Prosecution. If LICENSEE directs that a patent application be

filed on any Invention, LICENSEE shall promptly prepare, file and prosecute a patent application or applications (including provisional applications) in OWNER's name, and any pertinent provisional applications, continuation, continuation-in-part and reissue application(s) thereof in the United States directed to such Inventions. LICENSEE shall bear all expenses incurred in connection with such preparation, filing and prosecution of U.S. and foreign patent application(s) and patents directed to any Invention. OWNER shall cooperate with LICENSEE to assure that such application or applications, and any such continuation, continuation-in-part and reissue application(s) thereof will cover, to the best of OWNER's knowledge, all items of commercial interest and importance. LICENSEE shall keep OWNER advised as to all developments with respect to such application or applications, and continuation, continuation-in-part and reissue application(s) and shall supply to OWNER copies of all papers received within ten (10) business days of receipt and in sufficient time for OWNER to comment thereon. OWNER shall have the right to advise and cooperate with LICENSEE in such prosecution, and such advice shall not be rejected unreasonably. All final decisions with respect to prosecution of any applications, provisional applications, continuations, continuations-in-part and reissue applications, and selection of patent counsel are reserved to OWNER.

5.4 Licensor’s Takeover Rights. If LICENSEE elects not to exercise its option

pursuant to this Agreement, or decides to discontinue the financial support of the prosecution or maintenance of the protection of the Patent Rights in the United States and in foreign countries, or is grossly negligent in its prosecution or maintenance of the protection thereof, OWNER shall be free to file or continue prosecution or maintain any applications, and to maintain any protection issuing thereon in the U.S. and in any foreign country at OWNER's sole expense.

5.5 Attorney in Fact. OWNER agrees that if LICENSEE is unable because of

OWNER's unavailability, dissolution, mental or physical incapacity, or for any other reason, to secure OWNER's signature to apply for or to pursue any application for any United States or foreign patents covering the Inventions above, then OWNER hereby irrevocably designates and appoints LICENSEE and its duly authorized officers and agents as OWNER's agent and attorney in fact, to act for and in

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OWNER's behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of patents thereon with the same legal force and effect as if executed by OWNER.

6. INFRINGEMENT 6.1. Notice of Infringement. LICENSEE shall inform OWNER promptly in writing of

any alleged infringement of Patent Rights licensed in the Territory hereunder to LICENSEE by a third party of which it has knowledge and provide any available evidence of such infringement to OWNER.

6.2. Prosecution by OWNER of Patent Rights. OWNER has the first right to prosecute

at its own expense any infringements of Patent Rights in the Territory at OWNER's expense.

6.3. Prosecution by LICENSEE. In the event that OWNER chooses not to prosecute

such infringement of the Patent Rights in the Territory or, within six (6) months of receiving notice of such infringement, is unsuccessful in causing the alleged infringer to desist and shall not have brought or is not diligently enforcing an infringement action, LICENSEE shall have the right to enforce such Patent Rights at its own cost and expense, and LICENSEE shall retain OWNER's share of any recoveries subject to Section 6.4 below. In such event, LICENSEE shall have the right, if OWNER is a legally indispensable party, to bring such suit or action in the name of OWNER (in addition to the right to bring the action in Invention Owner's name). OWNER shall have the right to join any such suit or action brought by LICENSEE and, in such event, shall pay one-half of the cost of such suit or action.

6.4. Recovery. Provided that OWNER has joined in the action and shared the costs

thereof as stated in Section 6.3 above, no settlement, consent judgment or other voluntary final disposition of the suit may be entered into without the consent of OWNER, which consent shall not unreasonably be withheld, conditioned or delayed. Any recovery or damages derived from such action shall first be used to reimburse LICENSEE for all legal expenses relating to the suit in excess of the amount of withheld royalties and thereafter to be used to reimburse OWNER for all of its legal expenses relating to the suit if it has joined the suit or action. Any recovery or damages still remaining shall thereafter be distributed

(a) to pay LICENSEE its lost profits attributable to the infringement, or a

reasonable royalty on the sales of the infringer, whichever standard the court may have applied, and

(b) to reimburse OWNER for the amount of royalties not received by OWNER as

a result of such infringement.

Any remaining recovery or damages shall be divided among the parties in proportion to their contributions to the action.

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6.5. Declaratory Actions. In the event that a declaratory judgment action alleging

invalidity or non-infringement of any of the Patent Rights in the Territory shall be brought against LICENSEE, LICENSEE shall notify OWNER in writing, and the parties shall consult concerning the action to be taken. OWNER, at its option, shall have the right within thirty (30) days after commencement of such action to intervene and take over the sole defense of the action at its expense. LICENSEE shall have no obligation to defend any such action, but LICENSEE shall have the right to join in the defense of any such suit or action by OWNER, and in such event, shall pay _______% of the cost of such suit or action. In such event, OWNER will confer with LICENSEE prior to making any decision regarding settlement or other significant decisions regarding the suit or action and no such decision will be made without LICENSEE's consent, which consent will not be unreasonably withheld, conditioned or delayed.

Alternate Section 6 [Excerpted from PATENT LICENSING: STRATEGY, NEGOTIATION&

FORMS] 6. INFRINGEMENT 6.1 LICENSEE shall inform OWNER promptly in writing of any alleged infringement

of the Patent Rights by a third party and of any available evidence thereof. 6.2 During the term of this Agreement, OWNER shall have the right, but not the

obligation, to prosecute at its own expense any infringement of the Patent Rights. If OWNER prosecutes any infringement, LICENSEE agrees that OWNER may include LICENSEE as a co-plaintiff in any such suit, without the consent of, or the expense to, LICENSEE. The total cost of any infringement action commenced or defended solely by OWNER shall be borne by OWNER and OWNER shall keep all recovery or damages for past infringement derived therefrom.

6.3 If after five (5) months of having been notified of any alleged infringement or such

shorter time proscribed by law, OWNER shall: a. have been unsuccessful in persuading the alleged infringer to desist, or b. has not brought and has not been diligently prosecuting an infringement

action, or c. if OWNER notifies LICENSEE at any time prior thereto of its intention not

to bring suit against any alleged infringer, then, and in those events only, LICENSEE shall have the right, but not the obligation, to prosecute at its own expense any infringement of the Patent Rights, and LICENSEE may, for such purposes, use the name of OWNER as party plaintiff; provided, however, that

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such right to bring an infringement action shall remain in effect only for so long as the license granted herein remains exclusive. No settlement, consent judgment or other voluntary final disposition of the suit may be entered into without the consent of OWNER, which consent shall not unreasonably be withheld, conditioned or delayed; provided, however, that LICENSEE shall indemnify OWNER against any order for costs that may be made against OWNER in such proceedings or any action arising therefrom, including without limitation, abuse of process and malicious prosecution.

6.4 In the event that LICENSEE shall undertake the enforcement or defense of the Patent Rights by litigation, LICENSEE may withhold up to fifty percent (50%) of the royalties thereafter due OWNER under this Agreement and apply the same toward reimbursement of its expenses, including reasonable attorneys' fees, in connection therewith. Said withholding of royalties shall begin no earlier than the date LICENSEE first receives a bill for professional services or expenses associated with the enforcement or defense of the Patent Rights. Any recovery of damages by LICENSEE for any such suit shall be applied first in satisfaction of any unreimbursed expenses and legal fees of LICENSEE relating to the suit, and next toward reimbursement of OWNER for any royalties past due or withheld with interest.

6.5 In the event that a declaratory judgment action alleging invalidity or

noninfringement of any of the Patent Rights shall be brought against LICENSEE, OWNER, shall have the right but not the obligation, within thirty (30) days after commencement of such action, to intervene and assume sole control of the defense of the action at OWNER’s own expense.

6.6 In any infringement suit as either party may institute to enforce the Patent Rights

pursuant to this Agreement, the other party hereto shall, at the request and expense of the party initiating such suit, cooperate in all respects and, to the extent possible, have its employees testify when requested and make available relevant records, papers, information, samples, specimens, and the like.

7. INDEMNIFICATION. 7.1 LICENSEE's Right to Indemnification. OWNER shall indemnify LICENSEE

Indemnitees, pay on demand and protect, defend, save and hold harmless each LICENSEE Indemnitee from and against, on an after-tax basis, any and all Claims incurred by or asserted against any LICENSEE Indemnitee of whatever kind or nature, including, without limitation, any claim or liability based upon negligence, warranty, strict liability, violation of government regulation or infringement of patent or other proprietary rights, arising from or occurring as a result of:

(a) the use of the Licensed Technology by OWNER or any Affiliate, agent or

sublicensee of OWNER (other than LICENSEE), or

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(b) subject to Section [provision disclaiming punitive or consequential damages],

any breach of this Agreement by OWNER, except to the extent that any Claims shall have arisen from the negligence or willful misconduct of any LICENSEE Indemnitee.

Such LICENSEE Indemnitee shall promptly notify OWNER of any Claim with respect to which such LICENSEE Indemnitee is seeking indemnification hereunder, upon becoming aware thereof, and permit OWNER at OWNER's cost to defend against such Claim and shall cooperate in the defense thereof. Neither OWNER nor such LICENSEE Indemnitee shall enter into, or permit, any settlement of any such Claim without the express written consent of the other Party which consent shall not be unreasonably withheld, conditioned or delayed. Such LICENSEE Indemnitee may, at its option and expense, have its own counsel participate in any proceeding which is under the direction of OWNER and will cooperate with OWNER or its insurer in the disposition of any such matter; provided, however, that if OWNER shall not defend such Claim, such LICENSEE Indemnitee shall have the right to defend such Claim itself and recover from OWNER all reasonable attorneys' fees and expenses incurred by it during the course of such defense.

7.2 OWNER’s Right to Indemnification. LICENSEE shall indemnify the Owner

Indemnitees, pay on demand and protect, defend, save and hold harmless each OWNER Indemnitee from and against, on an after-tax basis, any and all Claims incurred by or asserted against any OWNER Indemnitee of whatever kind or nature, including, without limitation, any claim or liability based upon negligence, warranty, strict liability, violation of government regulation or infringement of patent or other proprietary rights, arising from or occurring as a result of:

(a) the use of any Licensed Technology by LICENSEE or any permitted sublicensee

of LICENSEE (other than OWNER), or (b) subject to Section [provision disclaiming punitive or consequential damages],

any breach of this Agreement by LICENSEE, except to the extent that any Claims shall have arisen from the negligence or willful misconduct of any OWNER Indemnitee.

Such OWNER Indemnitee shall promptly notify LICENSEE of any Claim with respect to which such OWNER Indemnitee is seeking indemnification hereunder, upon becoming aware thereof, and permit LICENSEE at LICENSEE's cost to defend against such Claim and shall cooperate in the defense thereof, provided, however, that OWNER shall have the right, but not the obligation, to control the defense, at its expense, of any such Claims involving OWNER Patent Rights. Neither such OWNER Indemnitee nor LICENSEE shall enter into, or permit, any settlement of any such Claim without the express written consent of the other Party, which shall not unreasonably be withheld, conditioned or delayed. Such OWNER Indemnitee may, at its option and expense, have its own counsel participate in any proceeding

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which is under direction of LICENSEE and will cooperate with LICENSEE and its insurer in the disposition of any such matter; provided, however, that if LICENSEE shall not defend such Claim, such OWNER Indemnitee shall have the right to defend such Claim itself and recover from LICENSEE all reasonable attorneys' fees and expenses incurred by it during the course of such defense.

7.3 Failure to Defend. With respect to any action which pursuant to Section 7.1 or 7.2

the Indemnitor shall fail to promptly and adequately defend, the Indemnitor shall not thereafter question the liability of the Indemnitor hereunder to the Indemnitee for any Loss (including counsel fees and other expenses of defense).

7.4 Threshold for Indemnity Claims. No indemnification payment obligation will arise

under this Section 7 unless and until the aggregate amount of any Loss claimed by the Indemnitee under this Section 7 exceeds $150,000 (the "Claim Threshold"); provided, however, that once the Claim Threshold is exceeded, all Damages of the Indemnitee, including the first $150,000 (in the aggregate) of any Loss claimed by the Indemnitee, will be subject to the indemnity provisions of this Section 7.

7.5. Claims Period. Notwithstanding the foregoing, the indemnification provisions of

Sections 7.1 and 7.2 hereof shall survive termination or expiration of this Agreement, but only with respect to Claims which arose from acts or circumstances which occurred prior to termination.

7.6 Covenant Not to Sue. Notwithstanding anything to the contrary in this Agreement

or any other agreement or instrument delivered by OWNER or LICENSEE pursuant to this Agreement, LICENSEE and LICENSEE, on behalf of themselves, their Affiliates and designees, agree not to sue or initiate legal action on any legal theory against any of OWNER's or LICENSEE's past, current or future shareholders, officers, or directors.

. Alternate Section 7 [Excerpted from PATENT LICENSING: STRATEGY, NEGOTIATION &

FORMS] 7. INDEMNIFICATION 7.1 Losses Defined. For purposes of this Agreement, the terms "Loss" or "Losses" shall

mean each and all of the following items, namely, claims, losses, liabilities, damages, fines, penalties, costs and expenses (including, without limitation, interest which may be imposed in connection therewith), expenses of investigation, reasonable fees and disbursements of counsel and other experts, and the cost to the person seeking indemnification (the "Indemnitee") of any funds expended by reason of the occurrence of any of the events enumerated in Section 7.2 hereof or Section 7.3 hereof, as the case may be, or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof or in enforcing the provisions of this Agreement, without giving effect to any insurance reimbursement or tax savings which may inure to the Indemnitee.

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7.2 Indemnification by OWNER. OWNER shall defend, indemnify and hold harmless

LICENSEE, its affiliates, their respective officers, directors, employees, agents and representatives and any person claiming by or through any of them from and against any and all Losses arising out of or resulting from:

(i) any breach of any of the representations or warranties made by OWNER in

this Agreement; (ii) any failure by OWNER to perform any of its covenants or agreements

contained in this Agreement; (iii) copyright infringement arising out of any material published by OWNER; (iv) misappropriation or infringement by OWNER of the trade secrets of any

party as the result of information conveyed by OWNER to LICENSEE or employed by OWNER in development of the Licensed Product;

(v) infringement predicated on manufacture, use or sale of Licensed Product of

any patent issued or applied for on or before the Effective Date of which OWNER is aware;

(vi) infringement predicated on manufacture, use or sale of Licensed Product of

patents issued or applied for after the Effective Date, whether or not OWNER is aware of such patent or application;

(vii) manufacture of the Licensed Product by or on behalf of OWNER; and (viii) design defects in the Licensed Product. Notwithstanding anything to the contrary contained herein, OWNER's liability under

this Section 7.2 shall not exceed $5,000,000. 7.3 Indemnification by LICENSEE. LICENSEE shall defend, indemnify and hold

harmless OWNER, its affiliates, their respective officers, directors, employees, agents and representatives and any person claiming by or through any of them from and against any and all Losses arising out of or resulting from:

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(i) any breach of any of the representations or warranties made by LICENSEE in this Agreement;

(ii) any failure by LICENSEE to perform any of its covenants or agreements

contained in this Agreement; (iii) trademark or trade dress infringement arising out of the use of any

trademark or trade dress by LICENSEE in connection with the sale of Licensed Product;

(iv) copyright infringement arising out of any material published by

LICENSEE;

(v) misappropriation or infringement by LICENSEE of the trade secrets of any party as the result of information conveyed by LICENSEE to OWNER or employed by LICENSEE in development of the Licensed Product;

(vi) infringement predicated on the manufacture, use or sale of Licensed

Product of any patents applied for subsequent to the Effective Date; (vii) infringement predicated on the manufacture, use or sale of Licensed

Product of any patents covering solely use of the Licensed Product in combination with another product or technology;

(viii) manufacture of the Licensed Product by or on behalf of LICENSEE; and (ix) marketing, sale and labeling of Licensed Product by LICENSEE.

Notwithstanding anything to the contrary contained herein, LICENSEE's liability in this Section 7.3 shall not exceed $5,000,000.

7.4 Procedure. (a) In the event that an Indemnitee shall suffer a Loss which is not the subject

of a claim, demand, action, suit, proceeding, arbitration, investigation or inquiry (each and all of the foregoing items being herein referred to as "LITIGATION"), the Indemnitee shall give notice thereof to the party from whom such indemnification is being sought (the "INDEMNITOR").

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(b) (i) Promptly after receipt by an Indemnitee of written notice of the

assertion or the commencement of any Litigation with respect to any matter referred to in Section 7.2 or 7.3 hereof, the Indemnitee shall give written notice thereof (the "NOTICE") to the Indemnitor and shall thereafter keep the Indemnitor reasonably informed with respect thereto, provided that failure of the Indemnitee to give the Indemnitor prompt notice as provided herein shall not relieve the Indemnitor of any of its obligations hereunder unless such failure materially prejudices the Indemnitor. In case any such Litigation is brought against any Indemnitee, the Indemnitor shall be entitled to assume and control the defense thereof, by written notice to the Indemnitee within 30 calendar days after receipt of the Notice of its intention to do so, with counsel reasonably satisfactory to the Indemnitee at the Indemnitor's own expense. If the Indemnitor shall assume the defense of such Litigation, it shall not settle such Litigation unless such settlement includes as an unconditional term thereof the giving by the claimant or the plaintiff of a release of the Indemnitee, satisfactory to the Indemnitee, from all liability with respect to such Litigation. Notwithstanding the assumption by the Indemnitor of the defense of any Litigation as provided in this subsection, the Indemnitee shall be permitted to join in the defense of such Litigation and to employ counsel at its own expense.

(ii) If the Indemnitor shall fail to notify the Indemnitee of its desire to

assume the defense of any such Litigation within the prescribed period of time, or shall notify the Indemnitee that it will not assume the defense of any such Litigation, then the Indemnitee may assume the defense of any such Litigation, in which event it may do so in such manner as it may deem appropriate, and the Indemnitor shall be bound by any determinations made in such Litigation or any settlement thereof effected by the Indemnitee. The Indemnitor shall be permitted to join in the defense of such Litigation and to employ counsel at its own expense.

7.5 Indemnitee Acts. Notwithstanding anything contained herein to the contrary, the

indemnification rights granted pursuant to this Section 7 shall not apply to the extent to which any Loss would not have arisen but for a voluntary act or omission after the Effective Date on the part of the Indemnitee or which could reasonably have been avoided without material cost, expense or business detriment to the Indemnitee.

[Alternate Section 7.5] 7.5 Indemnitee Acts. Notwithstanding anything contained herein to the contrary, the

indemnification rights granted pursuant to this Section 7 shall not apply with respect

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to any cost, expense or business detriment suffered, incurred or sustained by the Indemnitee or to which it becomes subject, to the extent such cost, expense or business detriment arises from or was caused by actions taken or failed to be taken by the Indemnitee or any of its Affiliates.

7.6 Mitigation. The Indemnitor shall have no liability for any damages, losses,

liabilities, costs and expenses to the extent the Indemnitee could have mitigated such damages, losses, liabilities, costs and expenses.

[Alternate Section 7.6 ] 7.6 Mitigation. Notwithstanding anything contained herein to the contrary, the

indemnification rights granted pursuant to this Section 7 shall not apply with respect to any cost, expense or business detriment that the Indemnitee had an opportunity, but failed, in good faith to mitigate, including but not limited to its failure to use commercially reasonable efforts to recover under a policy of insurance or under a contractual right of set-off or indemnity, to the extent that failure to so mitigate would result in a reduction in damages recoverable under applicable principles of contract law.

7.7 Survival. The provisions of this Section 7 shall not survive the termination of this

Agreement (except for termination pursuant to Section [Termination for Breach of Agreement provision]), or expiration of the License Term in each country in the Territory.

7.8 Escrow; Offset. a) OWNER agrees that, should a third party institute any Litigation against

LICENSEE or any of its affiliates or sublicensees, in any country of the Territory, that gives rise to an Indemnification obligation of OWNER pursuant to Section 7.2, LICENSEE shall have the right during the pendency of such litigation to withhold in escrow in an interest bearing account such amounts of the royalties in respect of Net Sales in such country then due OWNER that equal Losses incurred by LICENSEE through the time such royalties are due.

(b) In the event that such Litigation is successfully defended, LICENSEE shall,

upon final determination thereof, pay to OWNER all royalties held in escrow, less the attorneys' fees and costs incurred by LICENSEE in connection with such Litigation, which fees and costs will not exceed the total amount of royalties held in escrow.

(c) In the event that such Litigation is not successfully defended, the escrowed

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royalties provided for in this Section ___ shall be used first to pay the reasonable attorneys' fees and costs incurred by LICENSEE in connection with such Litigation, and then to pay damages, settlement fees or license fees that LICENSEE must pay to a third party as a result of the unsuccessful defense of Litigation. LICENSEE shall pay the remainder of the escrowed royalties, if any, to OWNER.

(d) In the event that an Indemnitee is entitled to any payment in respect of the

indemnification granted pursuant to Section ____ or ____ hereof, such amount shall be promptly paid by the Indemnitor. Without limiting the generality of the foregoing, if the Indemnitor shall fail to properly pay such amounts, the Indemnitee shall be entitled to offset such amounts against any amounts payable to the Indemnitee hereunder.

8. EXPORT CONTROLS OWNER and LICENSEE acknowledge that the laws and regulations of the United

States may restrict the export and re-export of technical data of United States origin, including the Licensed Products, the Licensed Technology, the Patent Rights and the Confidential Data. The parties agree that they will not export or re-export any of the Licensed Products, the Licensed Technology, the Patent Rights and the Confidential Data, or any portion of them in any form without the appropriate United States and foreign government licenses.

9. USE OF NAMES LICENSEE shall not use the names of the OWNER nor of any of OWNER's

employees, nor any adaptation thereof, in any advertising, promotional or sales literature without prior written consent obtained from OWNER in each case, except that LICENSEE may state that it is licensed by OWNER under one or more of the patents and applications comprising the Patent Rights.

10. REPRESENTATIONS AND WARRANTIES 10.1. OWNER represents and warrants to LICENSEE that to OWNER's best knowledge,

after reasonable investigation: (a) OWNER has the sole, exclusive and unencumbered right to grant the licenses

and rights herein granted to LICENSEE, (b) Schedule 1 contains a summary of the Technology existing as of the

Effective Date, (c) there are no agreements with any Third Parties that relate to the Technology

existing as of Effective Date,

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(d) that it has not granted any option, license, right or interest in or to the

Technology to any Third Party which would conflict with the rights granted by this Agreement, and

(e) that the true inventors of the subject matter claimed are named in the Patents

and all such inventors have irrevocably assigned all their rights and interests therein to OWNER.

10.2. OWNER and LICENSEE each represent and warrant to and for the benefit for each

other that the execution of this Agreement by them and the full performance and enjoyment of the rights of them under this Agreement will not breach the terms and conditions of any license, contract, understanding or agreement, whether express, implied, written or oral between them and any Third Party.

10.3 In addition to any other indemnifications provided for herein, OWNER shall

indemnify and hold harmless LICENSEE and its Affiliates and their respective employees, agents, partners, officers and directors from and against any claims, losses, liabilities or damages (including reasonable attorneys’ fees and expenses) incurred or sustained by the Company arising out of or in connection with any breach of any representation, covenant, warranty or obligation by OWNER hereunder.

Alternate Section 10 [Excerpted from PATENT LICENSING: STRATEGY, NEGOTIATION & FORMS] 10.1 OWNER represents and warrants as follows: (a) He is the sole inventor of and has not assigned any of his rights, title or interest

in or to the inventions covered by the Licensed Patents or, if there are other inventors, he has received and currently holds valid and effective assignments of all such inventors' rights to the inventions covered by the Licensed Patents, and, [to the best of OWNER's knowledge], no employer or former employer of his or any other inventor may claim rights to such inventions.

(b) He is the sole holder of all rights, title and interest in the Licensed

Technologies and he does not hold any other rights to technology, inventions, patent applications or patents necessary or useful to the Licensed Patents or use of the Licensed Technologies in the Field.

(c) No patent application within the Licensed Patents is the subject of any pending

interference, opposition, cancellation, protest, or other challenge or adversarial proceeding.

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(d) He has neither assigned nor granted any license or other rights to the Licensed Technologies and he is under no obligation to grant any such license or rights to any Third Party.

(e) There are no outstanding liens, encumbrances, third party rights, agreements or

understandings of any kind, either written, oral or implied, regarding the Licensed Technologies which are inconsistent or in conflict with any provision of this Agreement.

11. DUE DILIGENCE 11.1 LICENSEE shall use diligent efforts to bring one or more Licensed Products or

Licensed Processes to market through a thorough, vigorous and diligent program for exploitation of the Patent Rights to attain maximum commercialization of Licensed Products and Licensed Processes.

11.2 LICENSEE's failure to perform in accordance with Section ___ shall be grounds for

OWNER [in its sole discretion] to terminate this Agreement pursuant to Section [Termination provisions] hereof.

11.3 OWNER agrees that in the discretion of LICENSEE commercialization efforts may

be directed first to industrialized nations of the world commencing with the United States of America, and only subsequently to other regions as reasonably and commercially practicable for LICENSEE given its strategies and resources.

Alternate Section 11 [Excerpted from PATENT LICENSING: STRATEGY, NEGOTIATION & FORMS] 11.1 Commercialization Plan. LICENSEE shall plan and implement appropriate

research and development, testing and production efforts directed toward commercialization of the Licensed Product in the Field at a commercially practicable date and shall provide to OWNER a copy of such plan.

11.2 Plan Implementation; Termination for Failure to Implement. Commencing with

the Effective Date, LICENSEE shall implement in reasonable commercial fashion and with reasonable commercial dispatch the plan for developing and commercializing the Licensed Product in the Field. OWNER shall be entitled to terminate this Agreement in accordance with Section [Termination provisions] in the event that either:

(a) OWNER gives written notice to LICENSEE that it intends to elect to terminate

the license because of LICENSEE'S failure to implement the plan in any material respect and LICENSEE, after such written notice from OWNER as provided in Section [Termination provision], fails to provide written evidence

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to OWNER of present, attempted or anticipated commercialization in a manner and on a schedule reasonably commensurate with the scope of the country or countries in question and LICENSEE's resources. OWNER agrees that:

(1) evidence provided by LICENSEE that it has an ongoing and

active or anticipated research, development, manufacturing, marketing or licensing program as appropriate, directed toward production and sale of a Licensed Product shall be deemed satisfactory evidence;

(2) in the discretion of LICENSEE commercialization efforts may be

directed first to industrialized nations of the world commencing with the United States of America, and only subsequently to other regions as reasonably and commercially desirable for LICENSEE given its strategies and resources; and,

(3) that LICENSEE may in the exercise of prudent business

judgment elect to defer commercialization efforts in particular fields until the Licensed Product has undergone substantial and appropriate further development; or

(b) LICENSEE shall fail to make the first commercial sale within [one (1)] year

from the receipt of approval from the U.S. Food and Drug Administration ("FDA") for a Licensed Product, if such approval is required for the Licensed Product, or within [one (1)] year from the completion of the Licensed Product if FDA approval is not required for the Licensed Product, and such failure is not excused by:

(1) causes beyond LICENSEE's direct control; (2) OWNER's failure to meet its obligations hereunder; (3) infringement of third party patents; or, (4) actions or inaction of any federal or state agency whose approval

is required for commercial sales. 11.3 Status Reports. LICENSEE shall provide periodic status reports to OWNER, at

least annually, indicating progress and difficulties to date in commercialization in the Field, and a forecast and schedule of major events required to market the Licensed

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Product in the Field.

11.4 Abandonment or Suspension. If at any time LICENSEE abandons or suspends its marketing or its intent to market the Licensed Product in the Field for a period exceeding [45] days, LICENSEE shall immediately notify OWNER giving reasons and a statement of its intended actions.

11.5 Secondary Fields. Regarding LICENSEE’s efforts toward commercialization of the

Licensed Product in a Secondary Field, the parties agree that LICENSEE shall have up to [one (1)] year from the date hereof in which to provide to OWNER a proposed plan for developing and commercializing the Licensed Product in a Secondary Field. If LICENSEE provides OWNER with such a business plan within [one (1)] year, LICENSEE shall then implement with commercially reasonable diligence the plan for such development and commercialization of the Licensed Product in a Secondary Field and Sections ___ to ___ inclusive, shall also apply to LICENSEE's commercialization of the Licensed Technology in the Secondary Field. However, in the event that LICENSEE does not provide OWNER with such a business plan within [one (1)] year, then OWNER may give notice to LICENSEE pursuant to Section [Termination provisions] of its intent to terminate its grant of license in the Secondary Field. The license granted to LICENSEE hereunder in respect of the Licensed Technology in relation to the Field, shall not be affected by the provisions of this Section ___.

12. NONDISCLOSURE

12.1 Definition. "Confidential Information" [Note: the definition often appears in the Definitions section of the agreement] means any information disclosed by either party to the other party, either directly or indirectly, in writing, orally or by inspection of tangible objects (including without limitation documents, prototypes, samples, plant and equipment), which is designated as "Confidential," "Proprietary" or some similar designation. Information communicated orally shall be considered Confidential Information if such information is confirmed in writing as being Confidential Information within a reasonable time after the initial disclosure. Confidential Information may also include information disclosed to a disclosing party by third parties. Confidential Information shall not, however, include any information which:

(i) was publicly known and made generally available in the public domain prior

to the time of disclosure by the disclosing party; (ii) becomes publicly known and made generally available after disclosure by the

disclosing party to the receiving party through no action or inaction of the receiving party;

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(iii) is already in the possession of the receiving party at the time of disclosure by the disclosing party as shown by the receiving party's files and records immediately prior to the time of disclosure;

(iv) is obtained by the receiving party from a third party without a breach of such

third party's obligations of confidentiality; (v) is independently developed by the receiving party without use of or reference

to the disclosing party's Confidential Information, as shown by documents and other competent evidence in the receiving party's possession; or

(vi) is required by law to be disclosed by the receiving party, provided that the

receiving party gives the disclosing party prompt written notice of such requirement prior to such disclosure and assistance in obtaining an order protecting the information from public disclosure.

12.2 Non-Use and Non-Disclosure. Neither party shall use any Confidential Information

of the other party for any purpose except to exercise its rights and perform its obligations under this Agreement. Neither party shall disclose any Confidential Information of the other party to third parties or to such party's employees, except to those employees of the receiving party with a need to know. Notwithstanding the above, either party may disclose information on a "need-to-know" basis to potential business associates with the approval of the other party, which will not be unreasonably withheld. Neither party shall reverse engineer, disassemble or decompile any prototypes, software or other tangible objects that embody the other party's Confidential Information and that are provided to the party hereunder.

12.3 Maintenance of Confidentiality. Each party shall take reasonable measures to

protect the secrecy of and avoid disclosure and unauthorized use of the Confidential Information of the other party. Without limiting the foregoing, each party shall take at least those measures that it takes to protect its own most highly confidential information and shall ensure that its employees who have access to Confidential Information of the other party have signed a non-use and non-disclosure agreement in content similar to the provisions hereof prior to any disclosure of Confidential Information to such employees. Neither party shall make any copies of the Confidential Information of the other party unless the same are previously approved in writing by the other party. Each party shall reproduce the other party's proprietary rights notices on any such approved copies, in the same manner in which such notices were set forth in or on the original.

Section 13 [Excerpted from Patent Licensing: Strategy, Negotiation & Forms] 13. ALTERNATIVE DISPUTE RESOLUTION 13.1 Exclusive Dispute Resolution Mechanism. The parties agree the procedures set forth

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in this Section ___ shall be the exclusive mechanism for resolving any bona fide disputes that arise from time to time pursuant to this Agreement relating to any party's rights and/or obligations hereunder that cannot be resolved through good faith negotiation between the parties.

13.2 Executive Mediation. Any such dispute must first be submitted to the officers

designated below or their successors, for attempted resolution by good faith negotiations for a period of at least thirty (30) days. Said designated officers are as follows:

For OWNER - [Title, i.e., V.P. Licensing and Franchising] For LICENSEE - [Title, i.e., General Counsel] In the event the designated officers are not able to resolve such dispute within such thirty (30) day period, any party may invoke the provisions below. 13.3 Initiation of Alternative Dispute Resolution. If a party intends to begin an

Alternative Dispute Resolution ("ADR") to resolve a dispute, such party shall provide written notice (the "ADR Request") to counsel for the other party informing such other party of such intention and the issues to be resolved. From the date of the ADR Request and until such time as any matter has been finally settled by ADR, the running of the time periods contained in this Agreement within which party must cure a breach of this Agreement shall be suspended as to the subject matter of the dispute.

13.4 Selection of Arbitrator. Within ten (10) business days after the receipt of the ADR

Request, the other party may, by written notice to the counsel for the party initiating ADR, add additional issues to be resolved. Within twenty (20) business days following the receipt of the ADR Request a arbitrator shall be selected by the then-President of the Center for Public Resources ("CPR"), 366 Madison Ave., New York, New York 10017. The arbitrator shall be an individual who shall preside in resolution of any disputes between the parties. The arbitrator selected shall be a member of the Judicial Panel of the CPR and shall not be an employee, director or shareholder of any party or of an Affiliate of either party. Either party shall have ten (10) business days from the date the arbitrator is selected to object in good faith to the selection of that person. If any party makes such an objection, the then-President of the CPR shall, as soon as possible thereafter, elect another arbitrator under the same conditions set forth above. This second selection shall be final.

13.5 Hearing. No later than ninety (90) days after selection, the arbitrator