1.1 In this contract the terms hereinafter specified possess the following meanings:

1.1.1 The term Business Day shall mean a day on which banks are open for business in the principal place of business of Licensee.

1.1.2 The term “Licensed Products” means the products specified in Annex A–1 and bearing the Trademarks with respect to which this exclusive licence is granted.

1.1.3 “Licensor’s Corporate Image” is defined in Annex E.

1.1.4 The term “Territory” means the country(ies) specified in Annex A-2.

1.1.5 The term “Trademarks” means the Licensor’s trademarks listed in Annex B.

1.1.6 “Royalty” means the royalty specified in Annex C–2

1.1.7 “Minimum Royalty” means the minimum royalty specified in Annex C–3.

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1.1.8 The term “Net Sales Value”, relevant to the calculation of the Royalty, means the invoiced sales value of the Licensed Products, sold, directly or indirectly, by the Licensee; such Net Sales Value will not include, to the extent that they are evidenced in the invoice: a) normal sale discounts to the Licensee’s customers, b) insurance, packaging and transportation expenses of the Licensed Products and c) tax or duties paid by the Licensee on the sale of the Licensed Products.

1.1.9 The term “Contract” means this Licence contract together with its Annexes.

2.1 In carrying out their obligations under this Contract the parties will act in accordance with good faith and fair dealing.

2.2 The provisions of this Contract, as well as any statements made by the parties in connection with it, shall be interpreted in good faith.

3.1. Licensor hereby grants to Licensee, which accepts, upon the terms and conditions set out in this Contract, the exclusive right to use the Trademarks in connection with the Licensed Products in order to produce, distribute, promote and sell the Licensed Products in the Territory.

3.2 Licensee is not entitled to sublicense the trademark, unless it has received a prior written authorization to this effect from the Licensor.14

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5.1 The licence is exclusive.15

5.2 For the whole duration of this Contract, the Licensor will not use the Trademarks nor license to others the use of the Trademarks in the Territory in connection with the Licensed Products.

6.1 The parties shall establish and update from time to time a programme of the Licensed Products to be developed. The initial programme is provided in Annex D.

6.2 Licensee shall in due time submit to Licensor for approval sketches or designs of the products it proposes to manufacture. Once the design is approved the Licensee shall produce a prototype of each Product, which will be submitted for approval to Licensor. On the basis of Licensor’s remarks, Licensee shall make such modifications as are appropriate in order to meet Licensor’s standards.
After Licensor has definitively approved the prototype in writing, the manufacture of the Licensed Product can start.

6.3 Licensor must answer the request of approval of any design or prototype of a Product in writing within 6016 days from such request.

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6.4 A refusal may be justified where the Product does not meet Licensor’s quality standards or does not otherwise comply with Licensor’s Corporate Image. Licensor will indicate the reasons for its refusal to approve the proposed Product and will discuss with Licensee possible amendments or improvements. Licensor agrees not to unreasonably withhold its approval.

7.1 Licensee shall manufacture the Licensed Products itself in the place of manufacture indicated when the approval of a Product is requested, or have them manufactured by a third party approved in advance by Licensor.18 Licensor agrees not to unreasonably refuse such authorization.

7.2 Licensor may require any additional information as to the manufacturing process used and may at any time verify that the manufacture is carried out in compliance with its current quality standards. Licensee must take all reasonable steps to enable Licensor to access the production site and to control the production process of the Licensed Products.

7.3 In case Licensee entrusts third parties with the manufacture of the Licensed Products, Licensee shall be fully responsible for the activity carried out by such third parties.

7.4 Any change of the place of production of the Licensed Products must be approved in advance by Licensor.

8.1 Licensee warrants that all the Licensed Products comply with the prototypes approved by Licensor and in any case meet the quality standards approved by Licensor.

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8.2 Licensee furthermore warrants that the Licensed Products comply with the laws and regulations in force in the Territory regarding safety, materials used, labelling, etc.

8.3 In the event that Licensor determines that the quality of any Licensed Product does not meet the quality standards approved by Licensor, or any other standard agreed between the parties, or does not comply with rules or regulations in force in the Territory (Non-Conforming Products), Licensor shall give to Licensee a detailed written description of the specific substandard features and shall give Licensee thirty (30) Business Days to effect the necessary changes for approval.

8.4 The Licensee shall refrain from selling any Non-Conforming Products. Such products must be destroyed, unless the parties agree in writing on their sale at conditions that do not affect the Licensor’s Corporate Image. If Non- Conforming Products have already been sold when the non-conformity is discovered, Licensor may require that Licensee recall at its own cost the Non- Conforming Products to the extent this measure appears necessary for protecting its corporate image and the image of the Trademarks, and provided such recall is possible.

9.1 Licensee recognizes that compliance of the Licensed Products, their advertising and their promotion with Licensor’s Corporate Image is of substantial importance for Licensor. Licensor will keep Licensee informed about its corporate image strategies, in order to permit Licensee to conform its promotional action to any change. Changes to such strategy will be implemented by Licensee after a reasonable time from notice of such changes by the Licensor.

9.2 Any use of the Trademarks on the Licensed Products as well as on their packaging must strictly comply with the written indications given in advance by the Licensor.

9.3 Licensee shall submit in advance to Licensor for its approval all the creative works, documents, texts, websites and any other advertising and promotional material regarding the Licensed Products, and shall not start any advertising or promotional campaign without first having obtained approval in writing from Licensor, which shall not be unreasonably withheld.19

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9.4 Neither party shall carry out, without the consent of the other party, any linking or framing activity with the Internet websites of the other party.

9.5 Unless otherwise agreed in writing, Licensee shall not use the Trademarks for metatags and any additional technical means according to new IT standards.

9.6 The Licensee shall have the right to link the Trademarks to the Licensor’s homepage, www.xxxxxx.com. The Licensor’s homepage must open in its own window and must not be framed within any other web page. Deep links to lower web pages or sites of the Licensor are not permitted without the prior written consent of the Licensor. Upon notification by the Licensor, Licensee must immediately remove or modify the hyperlink as requested. Licensor retains the right to request Licensee to change, suspend or shut down the part of the Licensee’s website, where the Trademarks are used, at any time upon written notice.

10.1 Licensee is an independent contractor and shall sell the Licensed Products in the Territory, in its own name and on its own behalf, undertaking the marketing, delivery, invoicing, and any risk related to the distribution. Licensee shall not act as an agent of the Licensor.

10.2 Licensee shall use all commercially reasonable efforts to distribute, promote and sell the Licensed Products throughout the Territory, to maintain a business for the Licensed Products that is substantial, constant and expanding, and to promote the sale of the Licensed Products in the Territory in accordance with the prestige of the Trademarks.20

10.3 Licensee agrees to carry out the distribution of the Licensed Products in such a way as is appropriate for maintaining the highest standard and exclusive image of the Trademarks and of the Licensor’s Corporate Image, particularly with respect to the choice of the distribution channels, type of sales outlets supplied, etc.

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11.1 In exchange for the rights granted under this Contract, Licensee shall pay to Licensor the amounts indicated in the following paragraphs.

11.2 Licensee shall pay the lump sum set out in Annex C–1 as specified therein.

11.3 Licensee shall pay, during the whole duration of this Contract, the Royalty specified in Annex C–2, calculated on the Net Sales Value of the Licensed Products sold by Licensee. The right of Licensor to receive the Royalty will accrue at the moment when the Licensed Products are sold.

11.4 The Royalty will be calculated on an six-month basis and will be paid by Licensee to Licensor within 60 days from the end of each semester.

11.5 It is understood and agreed that independently from the quantity of Licensed Products sold, Licensee will pay to Licensor the minimum amount specified in Annex C–3 (Minimum Royalty).

11.6 Within 30 days from the end of each semester (1 January – 30 June and 1 July – 31 December), Licensee shall provide Licensor with a complete and detailed statement of the Royalty accrued in the course of such period, indicating the Net Sales Value and the quantity of Licensed Products sold. For the purpose of the above statement, Licensed Products shall be considered to be sold when invoiced or, if not invoiced, when shipped or delivered. Further, Licensee will provide the Licensor with all additional information that it may reasonably require.

11.7 Licensor, through an independent auditing firm appointed by it, will have free access to the accounts and any other document of Licensee, in order to check such information as is necessary for verifying that the Royalty calculation made by Licensee is correct.

11.8 In case, following the verifications mentioned in Article 11.7 here above, it is found that the Royalty has been paid to an extent of more than five per cent (5%) lower than the Royalty actually due for each semester, Licensor shall be entitled to obtain reimbursement for the cost of the said audits, and to terminate this Contract according to Article 16.

11.9 Any amount due by Licensee to Licensor shall not be considered as paid, until it has been credited on the account indicated by Licensor, net and without any deduction whatsoever.

11.10 Any delay in payments by the Licensee will accrue interest, to be paid to Licensor, up to the actual date of payment. The interest will be calculated at the official discount rate in force in the Country of the Licensor, increased by five points.

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12.1 Licensor represents and warrants that

  1. the status of the Trademarks in the Territory corresponds to the indications contained in Annex B of this Contract;
  2. all applications for trademark registration relating to the Trademarks not yet registered, if any, have been properly presented and will be pursued with diligence by Licensor, who, however, does not guarantee any granting of the registrations;
  3. there are no opposition, annulment or cancellation proceedings pending or threatened in the Territory concerning the Trademarks, or any third party infringement proceeding pending against Licensor or started by Licensor against third parties alleged to have infringed the Trademarks.

12.2 Licensee shall notify Licensor of any actual or potential infringements of the Trademarks of which it has any knowledge. Licensee shall cooperate with the Licensor in prosecuting such action, the expenses of such prosecution being the sole responsibility of Licensor. Licensor shall have the sole right to determine whether or not any action shall be taken on account of any such infringements or limitations, but in doing so shall reasonably take into account the interest of Licensee. Any recovery shall belong solely to Licensor.

12.3 If Licensor elects not to pursue any such infringer, then Licensee may do so at its sole cost and expense upon the prior written approval of Licensor, which approval shall not be unreasonably withheld.21 Any recovery shall then belong solely to Licensee. Should Licensee undertake to pursue any infringer under this provision, it shall keep Licensor duly informed of all developments related to any such claims or suit and shall not resolve such by settlement without the prior written consent of Licensor, which consent shall not be unreasonably withheld.

12.4 Licensee undertakes not to file or cause to be filed in the Territory or anywhere else any trademark application for the Trademarks. It undertakes not to file or use, directly or indirectly, any trademark, tradename, or other intellectual property application in the Territory, or anywhere else, that is confusingly similar to the Trademarks.

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13.1 The ICC Force Majeure Clause 2003 is incorporated by reference into this Contract.22

13.2 The parties will be bound to confidentiality according to the ICC Confidentiality Clause 2006.23

14.1 This Contract enters into force at its signature and will remain in force for a period of five years until ......

14.2 After this term the contract will be automatically renewed for further periods of one year, unless terminated in writing at least six months before its respective expiry term.

15.1 Upon the termination or expiration of this Contract, all rights herein granted to Licensee shall revert to Licensor.

15.2 Except in the case of earlier termination by the Licensor according to Article 16 below, Licensee will be entitled to sell after termination or expiration of this Contract, for a period of three months, the Licensed Products already manufactured or in the process of being manufactured at that date, provided that all payments due to Licensor are first paid to Licensor. The exact number of these Licensed Products shall be indicated by the Licensee in writing at the moment of Contract termination.

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15.3 Licensor shall have the option, upon the expiration or termination of this Contract, to purchase from Licensee, at Licensee’s net book value, any or all of the Licensed Products already manufactured or in the process of being manufactured at that date, provided that Licensor notifies Licensee in writing of its exercise of the option on or before expiration or termination of this Contract.

16.1 Upon the occurrence of a material breach by a party, and the failure of such breaching party to remedy within thirty (30) days after receiving written notice thereof from the non-breaching party, this Contract may be terminated with immediate effect by the non-breaching party by giving written notice of termination to the breaching party.

16.2 The parties hereby agree that the following shall be inter alia considered as a material breach for the purpose of Article 16.1:

  1. Sales by Licensee outside the Territory in breach of Article 4;
  2. Manufacture of the Licensed Products by third parties without the approval of the Licensor in breach of Article 7;
  3. Sale by Licensee of Non-Conforming Products after their non-conformity has been discovered;
  4. Use by Licensee of Licensor’s Trademarks in breach of Article 9;
  5. A delay exceeding sixty (60) days in payment of the amounts due under Article 11;
  6. Statements made by Licensee as to sales of the Licensed Products showing amounts that are less that the actual ones, in excess of 5% as provided in Article 11.8;
  7. Filing of oppositions or any other challenge by Licensee against Licensor’s Trademarks.

16.3 Either party shall have the right to terminate this Contract with immediate effect by giving written notice of termination in the case of:

  1. Bankruptcy, moratorium, receivership, liquidation or any kind of arrangement between debtor and creditors, of the other party;

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  1. Licensee purchases, or in any other manner acquires, any kind of interest (including stock purchases etc.) in any competitor of the Licensor in the Territory or elsewhere
  2. any competitor of the Licensor, having its principal place of business in the Territory or elsewhere, purchases, or in any other manner acquires, any kind of interest (including stock purchases, etc.) in the Licensee’s business.

17.1 Licensee may, upon written notice to Licensor, at its sole discretion, register the licence at a Trademark Registry (or at any other office or competent public authority) in the Territory or any part of the Territory. In such event, Licensor shall approve and complete all documents that Licensee may request to this effect, and it shall do whatever may be reasonably required for the registration of the Licence.

17.2 Licensee shall, upon termination of the Licence, if possible under the applicable law, cancel such registration at the Trademark Registry.

17.3 The costs of any such registration or cancellation shall be borne by Licensee.

18.1 In the event of any dispute arising out of or in connection with the present Contract, the parties agree to submit the matter to settlement proceedings under the ICC ADR Rules.24 If the dispute has not been settled pursuant to the said Rules within 45 days following the filing of a request for ADR or within such other period as the parties may agree in writing, such dispute shall be finally settled in accordance with Article 18.2 hereunder.

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20.1 The English text of this Contract is the only to be considered as original.

20.2 Recitals and schedules to this Contract form an integral part of it.

20.3 This Contract supersedes all previous understandings, whether oral or in writing, between the parties on the same subject.

20.4 Any amendment to this Contract shall be in writing.

20.5 This Contract cannot be assigned or transferred by any party in whole or in part without the previous written consent of the other party, except that Licensor is entitled to assign all or part of this Contract, without the previous consent of Licensee, to the assignee of the Trademarks.

20.6 Any provision to be found invalid or unenforceable shall not affect the validity of the Contract as a whole. The parties undertake in good faith to replace the invalid provisions with valid provisions having equivalent or similar content.

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20.7 All notices or other communications given pursuant to this Contract shall be in writing in English, shall be effective upon receipt, and shall be delivered by certified or registered airmail with postage prepaid, by e-mail, by facsimile or cable communications, or by hand. Such communications shall be deemed given and received upon dispatch or hand delivery, if sent by telex, cable or personal delivery, or within five (5) days of mailing, if sent by certified or registered air mail, and shall be addressed as follows:

If to the Licensor: (address)

Telephone………… Facsimile: .............

If to the Licensee: (address)

Telephone………… Facsimile: ............

or to such other address the party concerned may thereafter give to the other party in writing.

20.8 If the parties have not made a choice between the alternative solutions provided in Article 4, alternative A shall apply if the Licensee is established outside the European Union and alternative B if the Licensee is established within the European Union.

20.9 If the parties have not made a choice between the alternative solutions provided in Articles 18.2 and/or 19.1, alternative A shall apply.

13
This sentence should be modified if the licensor does not own the trademarks in part of the contractual territory: see Introduction, § 8.

14
Of course, the prohibition to sublicense in no way prevents the licensee from requesting that those to whom it subcontracts the manufacture of the licensed products to put the trademarks on the products on its behalf, since in this case the third party is not a sublicensee.

15
Parties may wish to maintain specific situations outside the exclusivity. For instance, the licensor may wish to retain the right to market promotional products in the Territory, to be offered free of charge to its customers, which belong to the same category of licensed products, but come under a totally different quality and price range: e.g. licensee makes luxury watches under the licence and licensor wishes to sell low-cost watches bearing the same trademarks as promotional materials.

16
A shorter or longer time limit may be appropriate according to the circumstances of the case.

17
Such a provision might be formulated thus: “The parties have shared their respective corporate codes of conduct and each is satisfied that the other is conducting business in a responsible manner. Each party has put in place a process to alert the other of situations raising ethical issues, and to pursue discussions and appropriate actions regarding such issues. The parties agree to meet at least yearly to exchange updates of their codes of conduct and to discuss their compliance. Licensee shall also conduct regular audits at the premises of its suppliers and sub-contractors, and inform Licensor of any violation discovered as a result of such audits that might affect the Licensed Products or Licensor’s Corporate Image.”

18
In some cases, where it is essential that the licensed products are manufactured in a certain country (e.g. because it is important that they can bear the indication “made in ...”), the place of manufacture may be crucial.

19
In some cases, where the licensor wishes to retain a strict control over all activities involving its image, the advertising campaigns will be created by the licensor and carried out by the licensee.

20
Parties may also agree upon minimum sales figures or minimum royalties, particularly where the licensee is exclusive.

21
It should be noted that under article 22(4) of Regulation 40/94 on the Community trademark, an exclusive licensee has the right to bring proceedings for infringement of the trademark even if the proprietor of the trademark refuses its consent.

22
The full text of the ICC Force Majeure Clause 2003 can be found in Appendix I.

23
The full text of the ICC Confidentiality Clause can be found in Appendix II.

24
The ICC ADR Rules can be found on the website www.iccadr.org.

25
Before choosing the law of a given country, parties should check if the provisions of this model contract conform with such law.