

MODEL SOFTWARE LICENSE DRAFT

Project In Progress

Working Draft 2.0

August 6, 1991


American Bar Association

Section on Patent, Trademark, & Copyright Law

Committee on Computer Programs






						Please send any comments or 
						suggestions to the Committee chair:

						D. C. Toedt III
						Arnold, White & Durkee
						750 Bering Drive, Suite 200 (77057)
						P.O. Box 4433
						Houston, Texas 77210-4433
						713-787-1400
						713-789-2679 (FAX)


       The Model Software License Draft, Working Draft 2.0, is a project in progress of the Committee on Computer Programs of the American Bar Association's Section on Patent, Trademark, and Copyright Law.  It is presented as a drafting aid for professional use by lawyers; while it is believed that nonlawyers may find it of interest as general information, it is not intended and should not be used as a substitute for legal advice.  Its terms have not been approved or endorsed by the ABA, by the Section on Patent, Trademark, and Copyright Law, or by the Committee on Computer Software.  Copies of all or part of Working Draft 2.0 may be made and distributed in any electronic or hard-copy medium, on a nonexclusive royalty-free basis, provided that this legend is prominently included in each such copy.  License agreements prepared by attorneys may also be based on Working Draft 2.0 for client or own use, again on a nonexclusive royalty-free basis.  All other use or reproduction is prohibited by the copyright laws.

		

                               SOFTWARE LICENSE AGREEMENT

                                    WHIZBANG Software





LICENSOR:

ABC Corporation
123 Main Street
Anytown, USA 12345
713-555-1212 (voice)
713-555-1213 (FAX)LICENSEE:

XYZ Corporation
321 Broad Way
Another Town, USA 67890
212-123-4567 (voice)
212-123-4568 (FAX)












                                   TABLE OF CONTENTS



ARTICLE 1.
LICENSE GRANT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
       	1.1	License Grant. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
       	1.2	No Other Rights Granted. . . . . . . . . . . . . . . . . . . . . . . .  2
       	1.3	Licensed Software as Confidential Information. . . . . . . . . . . . .  2
       	1.4	Authorized Licensee Delegates. . . . . . . . . . . . . . . . . . . . .  2
       	1.5	LICENSOR Not to License Competing Software . . . . . . . . . . . . . .  3
       	1.6	Prior Licenses.  . . . . . . . . . . . . . . . . . . . . . . . . . . .  3

ARTICLE 2.
TERM OF LICENSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
       	2.1	Term of License. . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
       	2.2	Evergreen Extensions of License Term . . . . . . . . . . . . . . . . .  4

ARTICLE 3.
DELIVERY; INSTALLATION; ACCEPTANCE . . . . . . . . . . . . . . . . . . . . . . . .  4
       	3.1	Testing of Software on LICENSEE-Selected Hardware. . . . . . . . . . .  4
       	3.2	Delivery of Licensed Software for Installation by LICENSEE . . . . . .  5
       	3.3	LICENSOR Installation. . . . . . . . . . . . . . . . . . . . . . . . .  5
       	3.4	Data Conversion. . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
       	3.5	Training of Licensee Personnel . . . . . . . . . . . . . . . . . . . .  6
       	3.6	Trial Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
       	3.7	Acceptance by LICENSEE . . . . . . . . . . . . . . . . . . . . . . . .  6

ARTICLE 4.
SOURCE CODE ESCROW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  7
       	4.1	Delivery of Source Code Into Escrow. . . . . . . . . . . . . . . . . .  7
       	4.2	Delivery of New Source Code Into Escrow. . . . . . . . . . . . . . . .  7
       	4.3	Verification of Source Code Delivery Package . . . . . . . . . . . . .  7
       	4.4	Escrow Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8
       	4.5	Release of Source Code from Escrow . . . . . . . . . . . . . . . . . .  8

ARTICLE 5.
GENERAL PROVISIONS CONCERNING USE RIGHTS . . . . . . . . . . . . . . . . . . . . .  8
       	5.1	Use on Authorized Computer Systems Only. . . . . . . . . . . . . . . .  8
       	5.2	Backup Copying Rights Included . . . . . . . . . . . . . . . . . . . .  8
       	5.3	Movement of Licensed Copy. . . . . . . . . . . . . . . . . . . . . . .  9
       	5.4	Cessation of Use Upon Termination or Expiration. . . . . . . . . . . .  9

ARTICLE 6.
IN-HOUSE DISSEMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  9
       	6.1	Definition of In-House Dissemination . . . . . . . . . . . . . . . . .  9
       	6.2	Copies to be Deemed Licensed Copies. . . . . . . . . . . . . . . . . .  9

ARTICLE 7.
GENERAL PROVISIONS RELATING TO DISTRIBUTION. . . . . . . . . . . . . . . . . . . . 10
       	7.1	Commencement of Distribution Activity. . . . . . . . . . . . . . . . . 10
       	7.2	Licensor Reserved Distribution Areas . . . . . . . . . . . . . . . . . 10
       	7.3	Cessation of LICENSOR Distribution Activity. . . . . . . . . . . . . . 10
       	7.4	Distribution Operations at Licensee's Discretion and Expense . . . . . 10
       	7.5	LICENSEE Not to Compete. . . . . . . . . . . . . . . . . . . . . . . . 11
       	7.6	Cessation of Distribution Upon Termination or Expiration . . . . . . . 11

ARTICLE 8.
REDISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
       	8.1	Written Orders of Licensor-Provided Copies . . . . . . . . . . . . . . 11
       	8.2	Payment for Redistribution Copies. . . . . . . . . . . . . . . . . . . 12
       	8.3	No Battle of the Forms . . . . . . . . . . . . . . . . . . . . . . . . 12
       	8.4	Minimum Order Sizes. . . . . . . . . . . . . . . . . . . . . . . . . . 12
       	8.5	Minimum Inventory Levels . . . . . . . . . . . . . . . . . . . . . . . 12
       	8.6	Shipment Means; Risk of Loss . . . . . . . . . . . . . . . . . . . . . 12
       	8.7	No Repackaging of Licensed Copies. . . . . . . . . . . . . . . . . . . 12
       	8.8	Returns of Licensed Copies . . . . . . . . . . . . . . . . . . . . . . 12
       	8.9	Promotional Materials. . . . . . . . . . . . . . . . . . . . . . . . . 12

ARTICLE 9.
SUBLICENSING DISTRIBUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
       	9.1	Sublicense Agreements. . . . . . . . . . . . . . . . . . . . . . . . . 13
       	9.2	Required Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE 10.
END-USER SUPPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
       	10.1	LICENSEE End-User Support Coordinators. . . . . . . . . . . . . . . . 16
       	10.2	Telephone End-User Support. . . . . . . . . . . . . . . . . . . . . . 16
       	10.3	LICENSEE End-User Support of Sublicensees . . . . . . . . . . . . . . 16
       	10.4	End-User Support of Existing Licensees. . . . . . . . . . . . . . . . 16

ARTICLE 11.
MAINTENANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
       	11.1	Maintenance Period. . . . . . . . . . . . . . . . . . . . . . . . . . 17
       	11.2	Bug Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
       	11.3	Maintenance Releases. . . . . . . . . . . . . . . . . . . . . . . . . 17
       	11.4	Corrective Maintenance by LICENSEE. . . . . . . . . . . . . . . . . . 18
       	11.5	Corrective Maintenance by LICENSEE. . . . . . . . . . . . . . . . . . 19

ARTICLE 12.
UPGRADE VERSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE 13.
TECHNICAL SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
       	13.1	Assignment of Licensor Personnel. . . . . . . . . . . . . . . . . . . 20
       	13.2	Technical Service Fees and Expenses . . . . . . . . . . . . . . . . . 20
       	13.3	Costs of Personnel Travel . . . . . . . . . . . . . . . . . . . . . . 20

ARTICLE 14.
EXPORT CONTROLS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

ARTICLE 15.
INSURANCE COVERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
       	15.1	Minimum Insurance Coverage. . . . . . . . . . . . . . . . . . . . . . 21
       	15.2	Certificates of Insurance . . . . . . . . . . . . . . . . . . . . . . 21
       	15.3	Notice of Cancellation or Expiration. . . . . . . . . . . . . . . . . 22

ARTICLE 16.
LICENSE FEES AND OTHER PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 22
       	16.1	<Initial> License Fee . . . . . . . . . . . . . . . . . . . . . . . . 22
       	16.2	Periodic License Fee. . . . . . . . . . . . . . . . . . . . . . . . . 22
       	16.3	In-House Dissemination License Fees . . . . . . . . . . . . . . . . . 23
       	16.4	Maintenance Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
       	16.5	Distribution License Fees . . . . . . . . . . . . . . . . . . . . . . 23
       	16.6	Running Royalties; Minimum Running Royalties. . . . . . . . . . . . . 24
       	16.7	Gross Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
       		     (a)	Basic Definition . . . . . . . . . . . . . . . . . . . . . . . . 24
       		     (b)	Gross Income from Affiliate Transactions . . . . . . . . . . . . 25
       		     (c)	Gross Income from Bundled or Promotional Transactions. . . . . . 25
       		     (d)	Exclusions from Gross Income . . . . . . . . . . . . . . . . . . 25
       		     (e)	Deductions from Gross Income . . . . . . . . . . . . . . . . . . 26
       	16.8	Travel Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
       	16.9	Form of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
       	16.10	Currency Conversion. . . . . . . . . . . . . . . . . . . . . . . . . 27
       	16.11	Sales and Use Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 27
       	16.12	Late Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
       	16.13	Dishonored Checks. . . . . . . . . . . . . . . . . . . . . . . . . . 28
       	16.14	Audit Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
       	16.15	Payments Upon Termination or Expiration. . . . . . . . . . . . . . . 28

ARTICLE 17.
PERIODIC REPORTS AND STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 29
       	17.1	In-House Dissemination Reports. . . . . . . . . . . . . . . . . . . . 29
       	17.2	Distribution Fee Reports. . . . . . . . . . . . . . . . . . . . . . . 29
       	17.3	Running Royalty Statements. . . . . . . . . . . . . . . . . . . . . . 29
       	17.4	Year-End Certificate of Payments Due. . . . . . . . . . . . . . . . . 29

ARTICLE 18.
LIMITED WARRANTIES AND REPRESENTATION, AND
LIMITED REMEDIES, CONCERNING THE LICENSED SOFTWARE . . . . . . . . . . . . . . . . 30
       	18.1	As-Documented Warranty. . . . . . . . . . . . . . . . . . . . . . . . 30
       	18.2	Exclusive Remedies for Breach of As-Documented Warranty . . . . . . . 30
       	18.3	Noninfringement Knowledge Representation re Exercise of License Rights 30
       	18.4	No-Surreptitious-Code Warranty. . . . . . . . . . . . . . . . . . . . 31
       	18.5	Physical Media Warranty . . . . . . . . . . . . . . . . . . . . . . . 32
       	18.6	Warranty Limitations. . . . . . . . . . . . . . . . . . . . . . . . . 32
       	18.7	Disclaimer of All Other Warranties and Representations. . . . . . . . 33

ARTICLE 19.
LICENSOR'S INFRINGEMENT-DEFENSE OBLIGATION . . . . . . . . . . . . . . . . . . . . 33
       	19.1	Limited Covenant to Defend. . . . . . . . . . . . . . . . . . . . . . 33
       	19.2	Conditions for LICENSOR Defense . . . . . . . . . . . . . . . . . . . 34
       	19.3	Actions Upon Preliminary Injunctive Relief. . . . . . . . . . . . . . 34
       	19.4	Actions Upon Successful Assertion of Infringement Claim . . . . . . . 35

ARTICLE 20.
BACKUP REMEDY DEFINITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

ARTICLE 21.
LIMITATION OF LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
       	21.1	Exclusion of Incidental and Consequential Damages . . . . . . . . . . 37
       	21.2	Maximum Aggregate Liability . . . . . . . . . . . . . . . . . . . . . 37

ARTICLE 22.
INDEMNITY AND DEFENSE OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . . . 38
       	22.1	Applicability of this Article . . . . . . . . . . . . . . . . . . . . 38
       	22.2	General Licensee Indemnity. . . . . . . . . . . . . . . . . . . . . . 38
       	22.3	General Licensor Indemnity. . . . . . . . . . . . . . . . . . . . . . 38
       	22.4	Defense Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . 38
       	22.5	Participation in and Control of Defense . . . . . . . . . . . . . . . 38
       	22.6	Offset of Indemnity Amounts . . . . . . . . . . . . . . . . . . . . . 39
       	22.7	No Defense or Indemnity for Own Negligence or Misconduct. . . . . . . 39

ARTICLE 23.
CONFIDENTIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
       	23.1	No Confidential Disclosures by LICENSEE . . . . . . . . . . . . . . . 39
       	23.2	Definition of Confidential Information. . . . . . . . . . . . . . . . 39
       	23.3	Illustrative Types of Confidential Information. . . . . . . . . . . . 40
       	23.4	Exclusions from Confidential-Information Status . . . . . . . . . . . 41
       	23.5	Security Conditions . . . . . . . . . . . . . . . . . . . . . . . . . 41
       	23.6	Non-Use Obligation. . . . . . . . . . . . . . . . . . . . . . . . . . 41
       	23.7	Non-Disclosure Obligation . . . . . . . . . . . . . . . . . . . . . . 41
       	23.8	No Unauthorized Copying . . . . . . . . . . . . . . . . . . . . . . . 42
       	23.9	Court-Ordered Disclosures . . . . . . . . . . . . . . . . . . . . . . 42
       	23.10	Confidentiality Legends. . . . . . . . . . . . . . . . . . . . . . . 42
       	23.11	Third-Party Misappropriation . . . . . . . . . . . . . . . . . . . . 42
       	23.12	Post-Termination Procedures. . . . . . . . . . . . . . . . . . . . . 42

ARTICLE 24.
TRADEMARK USE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
       	24.1	Display of the Licensed Marks . . . . . . . . . . . . . . . . . . . . 43
       	24.2	Approved Trademark Displays . . . . . . . . . . . . . . . . . . . . . 43
       	24.3	No Use of Other Marks . . . . . . . . . . . . . . . . . . . . . . . . 43
       	24.4	Use of Other Marks. . . . . . . . . . . . . . . . . . . . . . . . . . 44
       	24.5	No Use of Confusingly Similar Marks . . . . . . . . . . . . . . . . . 44
       	24.6	No Use of Marks in the Mark User's Name . . . . . . . . . . . . . . . 44
       	24.7	Ownership of the Licensed Marks . . . . . . . . . . . . . . . . . . . 44
       	24.8	Registered-User License Agreements. . . . . . . . . . . . . . . . . . 45
       	24.9	Jeopardy to the Licensed Marks. . . . . . . . . . . . . . . . . . . . 45

ARTICLE 25.
INVENTIONS AND WORKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
       	25.1	Ownership of Inventions and Works . . . . . . . . . . . . . . . . . . 45
       	25.2	Disclosure of Inventions and Works. . . . . . . . . . . . . . . . . . 46
       	25.3	Patent Applications; Copyright or Mask Work Registrations . . . . . . 46
       	25.4	No Other Assignments or Encumbrances. . . . . . . . . . . . . . . . . 47

ARTICLE 26.
INFRINGEMENT BY THIRD PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 47
       	26.1	LICENSOR in Charge of Litigation. . . . . . . . . . . . . . . . . . . 47
       	26.2	LICENSEE to Notify LICENSOR . . . . . . . . . . . . . . . . . . . . . 47
       	26.3	Conduct of Litigation . . . . . . . . . . . . . . . . . . . . . . . . 47
       	26.4	Allocation of Damage and Settlement Awards. . . . . . . . . . . . . . 47
       	26.5	No Obligation to Bring Suit . . . . . . . . . . . . . . . . . . . . . 48
       	26.6	Licensee Prosecution of Infringement Suits. . . . . . . . . . . . . . 48

ARTICLE 27.
TERMINATION OF LICENSE RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 48
       	27.1	Termination by Mutual Consent . . . . . . . . . . . . . . . . . . . . 48
       	27.2	Unilateral Termination by LICENSEE. . . . . . . . . . . . . . . . . . 48
       	27.3	Divisible Termination of License Rights . . . . . . . . . . . . . . . 48
       	27.4	Termination for Breach. . . . . . . . . . . . . . . . . . . . . . . . 48
       	27.5	Other Terminations. . . . . . . . . . . . . . . . . . . . . . . . . . 49
       	27.6	Post-Termination Procedures . . . . . . . . . . . . . . . . . . . . . 50

ARTICLE 28.
DISPUTE NEGOTIATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
       	28.1	Invocation of Progressive Dispute Negotiation . . . . . . . . . . . . 50
       	28.2	Progression of Management Involvement . . . . . . . . . . . . . . . . 50

ARTICLE 29.
ARBITRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

ARTICLE 30.
INTENTIONAL RISK ALLOCATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

ARTICLE 31.
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
       	31.1	Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
       	31.2	No Unauthorized Use of Trademarks . . . . . . . . . . . . . . . . . . 52
       	31.3	Security Interest and Security Agreement. . . . . . . . . . . . . . . 52
       	31.4	Authority and Other General Warranties. . . . . . . . . . . . . . . . 52
       	31.5	Survival of Representations and Warranties. . . . . . . . . . . . . . 53
       	31.6	Independent Parties . . . . . . . . . . . . . . . . . . . . . . . . . 53
       	31.7	Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . . . . . 53
       	31.8	Survival of Restrictive Covenants . . . . . . . . . . . . . . . . . . 53
       	31.9	Effect of Partial Invalidity. . . . . . . . . . . . . . . . . . . . . 53
       	31.10	Business Judgment. . . . . . . . . . . . . . . . . . . . . . . . . . 54
       	31.11	Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
       	31.12	Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
       	31.13	Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
       	31.14	Choice of Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
       	31.15	Jurisdiction and Venue . . . . . . . . . . . . . . . . . . . . . . . 55
       	31.16	Attorney's Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
       	31.17	No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
       	31.18	Binding on Successors. . . . . . . . . . . . . . . . . . . . . . . . 55
       	31.19	Article Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 55
       	31.20	Representation of Counsel; Mutual Negotiation. . . . . . . . . . . . 55
       	31.21	Disclaimer of UN Convention on Sale of Goods . . . . . . . . . . . . 56
       	31.22	English Language . . . . . . . . . . . . . . . . . . . . . . . . . . 56
       	31.23	Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

SCHEDULE A
                                           . . . . . . . . . . . . . . . . . . . . 58
       	A-1	Acceptance Tests . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
       	A-2	Additional Performance Standards . . . . . . . . . . . . . . . . . . . 58
       	A-3	Affiliates of LICENSEE . . . . . . . . . . . . . . . . . . . . . . . . 58
       	A-4	Authorized Computer Systems. . . . . . . . . . . . . . . . . . . . . . 58
       	A-5	Authorized Copy Limit. . . . . . . . . . . . . . . . . . . . . . . . . 58
       	A-6	Authorized Licensee Delegates. . . . . . . . . . . . . . . . . . . . . 58
       	A-7	Authorized Simultaneous User Limit . . . . . . . . . . . . . . . . . . 59
       	A-8	Authorized Users . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
       	A-9	Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
       	A-10	Dispute Negotiation Levels. . . . . . . . . . . . . . . . . . . . . . 59
       	A-11	Distribution License Fee. . . . . . . . . . . . . . . . . . . . . . . 59
       	A-12	End-User Support Coordinator. . . . . . . . . . . . . . . . . . . . . 59
       	A-13	Escrow Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
       	A-14	Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
       	A-15	Field of Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
       	A-16	Geographic Territory. . . . . . . . . . . . . . . . . . . . . . . . . 60
       	A-17	In-House Dissemination License Fee: . . . . . . . . . . . . . . . . . 60
       	A-18	Initial LICENSOR Deliverables . . . . . . . . . . . . . . . . . . . . 60
       	A-19	Key LICENSOR Personnel. . . . . . . . . . . . . . . . . . . . . . . . 60
       	A-20	License Commencement Date . . . . . . . . . . . . . . . . . . . . . . 61
       	A-21	License Expiration Date . . . . . . . . . . . . . . . . . . . . . . . 61
       	A-22	License Extension Performance Criteria  . . . . . . . . . . . . . . . 61
       	A-23	Licensed Marks. . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
       	A-24	Licensed Software . . . . . . . . . . . . . . . . . . . . . . . . . . 62
       	A-25	Maintenance Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
       	A-26	Pre-Acceptance Modifications to Licensed Software . . . . . . . . . . 63
       	A-27	Prior Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
       	A-28	Self-Help Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
       	A-29	Trial Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

SCHEDULE B
GENERAL DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
       	B-1	Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
       	B-2	Add-In Software. . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
       	B-3	Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
       	B-4	As-Documented Warranty . . . . . . . . . . . . . . . . . . . . . . . . 64
       	B-5	Authorized Computer System . . . . . . . . . . . . . . . . . . . . . . 64
       	B-6	Authorized Licensee Delegate . . . . . . . . . . . . . . . . . . . . . 64
       	B-7	Authorized User. . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
       	B-8	Authorized Simultaneous User Limit . . . . . . . . . . . . . . . . . . 64
       	B-9	Backup Copying . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
       	B-10	Breach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
       	B-11	Bug, Bug Report . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
       	B-12	Bundling. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
       	B-13	Business day. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
       	B-14	Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
       	B-15	Code Incorporation. . . . . . . . . . . . . . . . . . . . . . . . . . 65
       	B-16	Combination Use . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
       	B-17	Computer program. . . . . . . . . . . . . . . . . . . . . . . . . . . 65
       	B-18	Confidential Information. . . . . . . . . . . . . . . . . . . . . . . 65
       	B-19	Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
       	B-20	Copy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
       	B-21	Corrective Maintenance. . . . . . . . . . . . . . . . . . . . . . . . 66
       	B-22	Customized Documentation. . . . . . . . . . . . . . . . . . . . . . . 66
       	B-23	Customized Program. . . . . . . . . . . . . . . . . . . . . . . . . . 66
       	B-24	Date of Delivery. . . . . . . . . . . . . . . . . . . . . . . . . . . 66
       	B-25	Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
       	B-26	Defend, Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
       	B-27	Defending Party . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
       	B-28	Deliverables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
       	B-29	Derivative Copy . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
       	B-30	Derivative Documentation. . . . . . . . . . . . . . . . . . . . . . . 66
       	B-31	Derivative Program. . . . . . . . . . . . . . . . . . . . . . . . . . 66
       	B-32	Derivative Software . . . . . . . . . . . . . . . . . . . . . . . . . 66
       	B-33	Design documentation. . . . . . . . . . . . . . . . . . . . . . . . . 66
       	B-34	Direct Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
       	B-35	Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
       	B-36	Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
       	B-37	Documentation Customization . . . . . . . . . . . . . . . . . . . . . 67
       	B-38	Documentation Incorporation . . . . . . . . . . . . . . . . . . . . . 67
       	B-39	Emergency Corrective Maintenance. . . . . . . . . . . . . . . . . . . 67
       	B-40	End User. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
       	B-41	End-User Support. . . . . . . . . . . . . . . . . . . . . . . . . . . 67
       	B-42	End-User Support Coordinator. . . . . . . . . . . . . . . . . . . . . 67
       	B-43	Escrow Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
       	B-44	Escrow Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 67
       	B-45	Executable code . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
       	B-46	Exercise of a License Right . . . . . . . . . . . . . . . . . . . . . 67
       	B-47	Gross Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
       	B-48	Hard Copy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
       	B-49	Hereunder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
       	B-50	Include . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
       	B-51	Indemnity, Indemnify. . . . . . . . . . . . . . . . . . . . . . . . . 68
       	B-52	In-House Dissemination. . . . . . . . . . . . . . . . . . . . . . . . 68
       	B-53	Initial LICENSOR Deliverables . . . . . . . . . . . . . . . . . . . . 68
       	B-54	Intellectual Property Rights. . . . . . . . . . . . . . . . . . . . . 68
       	B-55	Internal Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
       	B-56	Invention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
       	B-57	Key LICENSOR Personnel. . . . . . . . . . . . . . . . . . . . . . . . 69
       	B-58	Knowledge Representation. . . . . . . . . . . . . . . . . . . . . . . 69
       	B-59	Licensable Activity . . . . . . . . . . . . . . . . . . . . . . . . . 69
       	B-60	License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
       	B-61	License Right . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
       	B-62	Licensed-Back . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
       	B-63	Licensed Copy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
       	B-64	Licensed Documentation. . . . . . . . . . . . . . . . . . . . . . . . 70
       	B-65	Licensed Mark . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
       	B-66	Licensed Program. . . . . . . . . . . . . . . . . . . . . . . . . . . 70
       	B-67	Licensed Software . . . . . . . . . . . . . . . . . . . . . . . . . . 70
       	B-68	Licensor Deliverables . . . . . . . . . . . . . . . . . . . . . . . . 70
       	B-69	Loss or Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
       	B-70	Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
       	B-71	Maintenance Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
       	B-72	Maintenance Period. . . . . . . . . . . . . . . . . . . . . . . . . . 70
       	B-73	Maintenance Release . . . . . . . . . . . . . . . . . . . . . . . . . 70
       	B-74	Mark. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
       	B-75	Mark Owner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
       	B-76	Mark User . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
       	B-77	Material. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
       	B-78	No-Knowledge Representation . . . . . . . . . . . . . . . . . . . . . 71
       	B-79	Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
       	B-80	Parent Company, . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
       	B-81	Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
       	B-82	Payor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
       	B-83	Permitted Trademark Use . . . . . . . . . . . . . . . . . . . . . . . 71
       	B-84	Person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
       	B-85	Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
       	B-86	Prior License . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
       	B-87	Private Label . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
       	B-88	Processor System. . . . . . . . . . . . . . . . . . . . . . . . . . . 72
       	B-89	Program Customization . . . . . . . . . . . . . . . . . . . . . . . . 72
       	B-90	Protected Party . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
       	B-91	Provided. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
       	B-92	Redistribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
       	B-93	Required Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
       	B-94	Self-Help Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
       	B-95	Service Bureau Use. . . . . . . . . . . . . . . . . . . . . . . . . . 72
       	B-96	Software. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
       	B-97	Source code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
       	B-98	Source Code Delivery Package. . . . . . . . . . . . . . . . . . . . . 73
       	B-99	Stand-Alone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
       	B-100	Sublicensing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
       	B-101	Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
       	B-102	Substantive Field. . . . . . . . . . . . . . . . . . . . . . . . . . 73
       	B-103	Technical Services . . . . . . . . . . . . . . . . . . . . . . . . . 73
       	B-104	Trademark Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
       	B-105	Travel Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 74
       	B-106	Trial Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
       	B-107	Unauthorized Code. . . . . . . . . . . . . . . . . . . . . . . . . . 74
       	B-108	Upgrade Version. . . . . . . . . . . . . . . . . . . . . . . . . . . 74
       	B-109	Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
       	B-110	Use Right. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
       	B-111	User documentation . . . . . . . . . . . . . . . . . . . . . . . . . 74
       	B-112	Verifier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
       	B-113	Warranting Party . . . . . . . . . . . . . . . . . . . . . . . . . . 75
       	B-114	Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
       	B-115	Wrap-Up Activity Rights. . . . . . . . . . . . . . . . . . . . . . . 75
       	B-116	Other Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 75

SUPPLEMENTARY ESCROW AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . .  1

PRIVATE TRIAL APPEALABLE ARBITRATION RULES . . . . . . . . . . . . . . . . . . . .  1

FINANCING STATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
                              SOFTWARE LICENSE AGREEMENT

	This Software License Agreement ("Agreement") is made effective the date written on the signature page, and in consideration of the covenants, representations, and warranties set forth herein and other good and valuable consideration, between the following parties:

       LICENSOR:  (XYZ Corporation)           , (a Delaware corporation)           , (Street Address)                          , (City/State/ZIP)                                , (Country)           , telephone (713-555-1212)                      , FAX (713-555-1212)                          

       LICENSEE:  (XYZ Corporation)           , (a Delaware corporation)           , (Street Address)                          , (City/State/ZIP)                                , (Country)           , telephone (713-555-1212)                      , FAX (713-555-1212)                                   

	Certain specific data relating to this Agreement are set forth in Schedule A, and capitalized terms are defined in Schedule B, both of which are attached to this Agreement.  Other exhibits and schedules are attached hereto, labeled with the article numbers in which they are defined or used.  All exhibits and schedules attached to this Agreement are incorporated by reference herein as though fully set forth.

		[COMMENT:  Basic instructions:  Angle brackets indicate optional clauses; superscripted letters indicate alternative choices within an optional clause.  Delete undesired provisions and edit as desired to generate a first working draft.    As a purely editorial matter, in many license agreements some of the specific data and definitions from Schedules A and B could be moved into the body of this Agreement.  

		Any additional background information can be recited here.  It is thought by many to be preferable to avoid "WHEREAS" clauses, and instead to recite specific factual representations by one or the other parties.]



ARTICLE 1.
LICENSE GRANT

1.1	License Grant.  Subject to the terms and conditions of this Agreement, LICENSOR hereby grants to LICENSEE, and LICENSEE hereby accepts subject to the terms and conditions of this Agreement, the "License," namely <[a] a nonexclusive license  [b] an exclusive license  [c] a license with the Exclusivity set forth in Schedule A-14> under any and all Intellectual Property Rights owned or otherwise assertable by LICENSOR, for Authorized Users to engage in certain Licensable Activities utilizing <the Executable Code only of> the ___(name of software)______________ <described in more detail in Schedule A-24> (the "Licensed Software"), in the __(field of use)_____________ <described in more detail in Schedule A-15> (the "Field of Use"), in __(territory)_____________ <described in more detail in Schedule A-16> (the "Geographic Territory"), such Licensable Activities being the following and no others:

		[COMMENT:  In many licenses the above references to Schedules could be replaced with brief statements of the field of use, exclusivity, geographic territory, etc., of the License]

	(a)	Internal Use;

	(b)	Service Bureau Use;

	(c)	In-House Dissemination;

	(d)	Sublicensing Distribution of Licensed Copies <on a Private-Label basis> <[a] on a Stand-Alone basis  [b] Bundled with the ___(name of other software)______________ software  [c] Bundled with one or more other software products in LICENSEE's discretion>;

	(e)	Redistribution (but not Sublicensing Distribution) of Licensed Copies <on a Private-Label basis> <[a] on a Stand-Alone basis  [b] Bundled with the ___(name of other software)______________ software  [c] Bundled with one or more other software products in LICENSEE's discretion>;

	(f)	Creation of Derivative Programs by Code Incorporation of <[a] all or part of the Licensed Program(s)  [b] ___________>, and <Internal Use> <In-House Dissemination> <Sublicensing Distribution> of the resulting Derivative Programs;

	(g)	Creation of Derivative Documentation by Documentation Incorporation of <[a] all or part of the Licensed Documentation  [b] ___________>, and <Internal Use> <In-House Dissemination> <Sublicensing Distribution> of the resulting Derivative Documentation;

	(h)	Program Customization;

	(i)	Documentation Customization;

	(j)	Trademark Use of the Licensed Marks identified in Schedule A-23, solely in connection with the Exercise of License Rights;

	(k)	Emergency Corrective Maintenance;

	(l)	Wrap-Up Activity with respect to any of the foregoing License Rights.

1.2	No Other Rights Granted.  Apart from the License Rights enumerated in this Agreement, the License does not include a grant to LICENSEE of any right to engage in any Licensable Activity, nor any ownership right, title, or interest, nor any security interest or other interest, in any Intellectual Property Rights relating to the Licensed Software nor in any Copy of any part of the Licensed Software.

1.3	Licensed Software as Confidential Information.  The <Licensed Program(s)> <Licensed Documentation> shall be deemed Confidential Information whose use and disclosure is subject to the provisions of Article 23.

		[COMMENT:  Whether the term "trade secret" can encompass executable code that is distributed through mass-market channels, e.g., over the counter or by mail order with a so-called "shrinkwrap license" is not settled.  

		Design documentation of computer programs will almost certainly be maintained as trade secrets.  Bear in mind, however, that seldom if ever will the user documentation of mass-marketed computer programs be likely to qualify as trade secrets.]


1.4	Authorized Licensee Delegates.  LICENSEE may delegate the exercise of License Rights to one or more Authorized Licensee Delegates as specified in Schedule A-6.

		[COMMENT:  This clause may be helpful, e.g., (a) if a Licensee wishes to have one or more contractors be able to use the Licensed Software on the Licensee's behalf; or (b) a Licensee having Distribution Rights wishes to utilize an Affiliate as a distributor in certain geographic regions.  

		Schedule A can conveniently specify which License Rights can be exercised by which Authorized Licensee Delegates.]

	(a)	The License Rights exercisable by any Authorized Licensee Delegate that is an Affiliate (or contractor) of LICENSEE may be exercised by such Person for so long and only so long as the Person remains an Affiliate (or contractor) of LICENSEE.  Any such exercise of License Rights shall take place solely on an Authorized Computer System; shall be solely for the benefit of LICENSEE; and shall be in strict accordance with the applicable provisions of this Agreement.

	(b)	Prior to any such exercise of License Rights, each Authorized Licensee Delegate <that is not a wholly owned Subsidiary of LICENSEE, or of which LICENSEE is not a wholly owned Subsidiary,> shall agree in writing to be bound by this Agreement to the same extent that the Authorized Licensee Delegate would be bound if it were an employee of LICENSEE.  

		[COMMENT:  The optional language in this clause excuses only 100% subsidiaries and parents of the Licensee from executing a writing agreeing to be bound by the License Agreement.  Depending on the relationship between the parties and the nature of the deal, counsel may wish to loosen this language up a little.]

	(c)	LICENSEE shall be responsible to LICENSOR for performance of all of LICENSEE's obligations hereunder, regardless whether LICENSEE or an Authorized Licensee Delegate is exercising a particular License Right (without prejudice to LICENSOR's right to seek injunctive relief for breach of this Agreement directly against such Authorized Licensee Delegate as and to the extent permitted hereby).

1.5	LICENSOR Not to License Competing Software.  LICENSOR agrees not to license the Licensed Software or any methods, data structures, or other proprietary technology therein to any third party for the purpose of developing, marketing, or sublicensing any software that competes with the Licensed Software.  

		[COMMENT:  This clause may be appropriate in an exclusive license, but normally will not be appropriate in a garden-variety nonexclusive license.]


1.6	Prior Licenses.  LICENSEE acknowledges that LICENSOR has previously granted certain Prior Licenses as indicated in Schedule A-27.  <LICENSEE acknowledges receiving, prior to the execution of this Agreement, copies of the agreements granting such License Rights, which copies LICENSOR represents are complete and accurate as of the effective date of this Agreement.>

		[COMMENT:  This clause may be appropriate when a distributor is taking an exclusive license to distribute a software package that has already been on the market.  It may be prudent for the Licensor to disclose expressly the existence of prior licenses to avoid possible accusations later on.

		Review of the earlier distribution agreements by the prospective exclusive distributor may (but will not necessarily) be appropriate as part of the distributor's prelicensing due diligence.]



ARTICLE 2.
TERM OF LICENSE

2.1	Term of License.  The License shall be in effect for a "License Term" period from and including <[a] __(date)_____________  [b] the License Commencement Date> through and including <[a] __(date)_____________  [b] the License Expiration Date>, and <(subject to the provisions of Article 2.2 concerning extensions)> shall expire automatically at the end of the License Term, unless sooner terminated in accordance with Article 27.

2.2	Evergreen Extensions of License Term.  The License Term shall be automatically extended <(absent notice of non-extension as provided in this Article 2.2)> for <up to ___________> successive <one-year> intervals <subject to LICENSEE's timely payment of Periodic Royalties in accordance with Article 16.2> (each interval sometimes referred to herein as a "License Term Extension"). 

	(a)	<[a] Either Party  [b] LICENSOR  [c] LICENSEE> may decline to extend the License Term for any reason or no reason by providing <[a] the other Party  [b] LICENSEE  [c] LICENSOR> with no less than <ninety> and no more than <120> days prior written notice of non-extension.

	(b)	If <[a] LICENSOR reminds LICENSEE  [b] LICENSEE reminds LICENSOR>, by notice, of the upcoming end of the License Term at least 120 and no more than 150 days prior to such end, then the deadline for <[a] LICENSEE's  [b] LICENSOR's> notice of non-extension shall be ninety days prior to such end; otherwise such deadline shall be thirty days prior to the end of the License Term.

		[COMMENT:  This is a variation on the previous subparagraph -- If the nonextension notice deadline is short, e.g., if a nonextending party can opt out on only 30 days notice, then it may be appropriate to permit the other party to force the non-extending party's hand at an earlier date by a reminder to the non-extending party]  

	(c)	LICENSOR may decline to extend the License Term if LICENSEE fails to achieve <[a] ___________  [b] the License Extension Performance Criteria set forth in Schedule A-22>, prior to the commencement of any License Term Extension by providing LICENSEE <[a] the other Party  [b] LICENSEE  [c] LICENSOR> with no less than <ninety> and no more than <120> days prior written notice of non-extension.  


ARTICLE 3.
DELIVERY; INSTALLATION; ACCEPTANCE

3.1	Testing of Software on LICENSEE-Selected Hardware.  LICENSOR shall test the Licensed Software on hardware provided, or contemplated for acquisition, by LICENSEE.

	(a)	No later than <[a] __(date)_____________  [b] thirty days after the effective date of this Agreement>, LICENSEE shall notify LICENSOR of the specific computer hardware configuration with which LICENSEE desires to Use the Licensed Software, in such detail as LICENSOR may reasonably request.

	(b)	Within 30 days after such notice, LICENSOR shall notify LICENSEE whether or not it has determined that the Licensed Software can be Used with such hardware and configuration.  If so requested by LICENSOR, either LICENSEE shall pay LICENSOR consulting fees and expenses in accordance with Article 13.1 for testing time reasonably required to test the hardware or configuration in question, or LICENSOR may notify LICENSEE that it cannot determine whether the Licensed Software will function with such hardware or configuration.

	(c)	If LICENSOR advises LICENSEE in writing that it has determined that the Licensed Software can be Used with the hardware configuration in question, then the As-Documented Warranty shall be deemed to include a warranty that the Licensed Software can be Used as so warranted with such hardware configuration.  

	(d)	If LICENSOR does not advise LICENSEE that the Licensed Software can be Used with the proposed hardware configuration, then LICENSEE may at its option:

		(1)	Attempt to select another hardware configuration for testing by LICENSOR pursuant to this Article 3.1; 

		(2)	Continue the License without a warranty or Knowledge Representation concerning the Licensed Software's ability to be Used on the selected hardware configuration; or

		(3)	Terminate the License in accordance with the procedures of Article 27, after which neither LICENSOR and LICENSEE need render any additional performance under this Agreement other than of post-termination obligations as set forth herein.

3.2	Delivery of Licensed Software for Installation by LICENSEE.  LICENSOR shall deliver to LICENSEE the Initial LICENSOR Deliverables <(including all pre-Acceptance modifications described in Schedule A-26)> on or before <[a] __(date)_____________  [b] the Delivery Target Date specified in Schedule A-9>.

	(a)	Such delivery shall be deemed to be complete when made to LICENSEE at the address for notice, or other delivery address, specified in this Agreement.  The date on which delivery is complete is referred to herein as the "Date of Delivery."

	(b)	All installation of the Initial LICENSOR Deliverables on LICENSEE's Authorized Computer <[a] System  [b] Systems>  is the responsibility of LICENSEE except as expressly provided otherwise in this Agreement.

3.3	LICENSOR Installation.  LICENSOR shall install the Initial LICENSOR Deliverables <(including all pre-Acceptance modifications described in Schedule A-26)> on LICENSEE's Authorized Computer <[a] System  [b] Systems> on or before <[a] __(date)_____________  [b] the Delivery Target Date specified in Schedule A-9>.  

	(a)	Such installation on <[a] such  [b] each such> Authorized Computer System shall be deemed complete on the latest of the respective dates on which (1) a copy of the Executable Code portion of the Initial LICENSOR Deliverables has been made in nonvolatile storage on the Authorized Computer System, (2) the executability of that Executable Code on the Authorized Computer System has <[a] in LICENSOR's judgment been sufficiently demonstrated  [b] passed the Acceptance Tests identified in Schedule A-1>, (3) the Licensed Documentation portion of the Initial LICENSOR Deliverables has been delivered to LICENSEE, and (4) LICENSOR notifies LICENSEE of the foregoing.  The date on which installation is completed is referred to herein as the "Date of Delivery";

	(b)	If a copy of any part of the Source Code is temporarily placed on an Authorized Computer System for purposes of installation of the Executable Code, then LICENSEE shall not examine or copy any portion thereof, nor permit any Person to do so; if LICENSEE's system automatically makes one or more backup copies of such Source Code in such circumstances, then LICENSEE shall immediately delete all such copies. 

3.4	Data Conversion.  [Reserved for possible future expansion]

3.5	Training of Licensee Personnel.  LICENSOR shall provide ___________ days of training, by at least one (but no more than ___________ qualified LICENSOR personnel, in the Use of the Licensed Software, to be attended by up to ___________ LICENSEE employees, at <[a] LICENSEE's premises at the address shown on the first page  [b] __(city/state)_____________> or at such other location as the Parties may agree.

	(a)	The starting dates of the training shall be as agreed by the parties, but in no case later than __(date)_____________.  

	(b)	LICENSEE shall be responsible for all cost and expenses of all trainees, including room, board, transportation, salary, insurance and other benefits, and other expenses, while attending the training.  Neither LICENSEE nor the trainees shall be entitled to any salary, overtime, or other compensation from LICENSOR for their participation in the training.

	(c)	LICENSEE shall pay the Travel Expenses of the LICENSOR personnel conducting the training, but the training will otherwise be at no additional charge to LICENSEE.  

	(d)	Each trainee shall execute an undertaking, in substantially the form of Exhibit 3.5(d), to be bound by the provisions of this Agreement relating to Confidential Information before attending the training.

	(e)	Any alleged deficiency in the training shall be deemed a Bug; LICENSEE'S SOLE REMEDIES FOR ANY SUCH ALLEGED DEFICIENCY, TO THE EXCLUSION OF ALL OTHER REMEDIES IN CONTRACT, TORT, OR OTHERWISE, SHALL BE THOSE SET FORTH IN THIS AGREEMENT WITH RESPECT TO BUGS IN THE LICENSED SOFTWARE.

3.6	Trial Period.  LICENSEE shall be entitled to a Trial Period <[a] of _______________ days  [b] as set forth in Schedule A-29>, in which to evaluate the Licensed Software and its suitability for LICENSEE's purposes and to decide whether to reject the Licensed Software.  The Trial Period shall end at 11:59 p.m. on the last day of the Trial Period, if a business day, otherwise on the first business day thereafter.

3.7	Acceptance by LICENSEE.  Acceptance of the Licensed Software by LICENSEE shall be deemed to have occurred <[a] on the Date of Delivery  [b] at the end of the Trial Period if LICENSEE does not notify LICENSOR of its decision to reject the Licensed Software prior to that time>, without prejudice to LICENSEE's remedies provided herein for any breach of the express warranties made herein by LICENSOR with respect to the Licensed Software that may subsequently occur or be discovered as set forth in this Agreement.  Upon request by LICENSOR, LICENSEE shall provide written confirmation of Acceptance within ten business days of such request.


ARTICLE 4.
SOURCE CODE ESCROW

4.1	Delivery of Source Code Into Escrow.  LICENSOR shall deliver a Source Code Delivery Package to the Escrow Agent, provided that LICENSOR, LICENSEE, and the Escrow Agent shall first enter into a supplementary escrow agreement in substantially the form attached hereto as Exhibit 4 ("Escrow Agreement").  LICENSOR and LICENSEE shall use their best efforts to enter into such an Escrow Agreement as soon as possible after the effective date of this Agreement.

		[COMMENT:  In some license agreements involving critical or high-dollar software, the licensee may wish instead to negotiate for escrowing of source code at the closing table.]


4.2	Delivery of New Source Code Into Escrow.  When and if, from time to time during the Maintenance Period, LICENSOR releases a Maintenance Release or an Upgrade Version of the Licensed Software for general availability to licensees, LICENSOR shall <within __(days)_____________ business days thereafter> deposit with the Escrow Agent, in accordance with Article 4.1, a Source Code Delivery Package for the Maintenance Release or Upgrade Version, and give LICENSEE notice of such delivery.

		[COMMENT:  Conceivably a Licensee who gets source code put into escrow may opt to cease paying for Maintenance Releases and/or Upgrade Versions - in such a case, the Licensor probably will not want to upgrade the source code escrow deposit.]


4.3	Verification of Source Code Delivery Package.  LICENSEE, at its option and expense, may request that the completeness and accuracy of any Source Code Delivery Package be verified.  

	(a)	Such verification may be requested once per Source Code Delivery Package, no later than <[a] thirty  [b] _______________> days after delivery thereof to the Escrow Agent by LICENSOR.  

	(b)	Such verification shall be conducted by the Escrow Agent or, upon at least ten business days' prior notice to LICENSOR, by another party (the "Verifier") reasonably acceptable to LICENSOR (after full disclosure to LICENSOR of information reasonably requested by LICENSOR about the Verifier).  

	(c)	Prior to conducting the verification, the Verifier shall first execute a form of confidentiality agreement substantially embodying the provisions of Article 23 hereof and precluding the Verifier from disclosing any information about the Source Code Delivery Package to LICENSEE other than whether the Source Code Delivery Package was found to be complete and accurate.

	(d)	Unless otherwise agreed at the time by LICENSOR and LICENSEE, verification shall be performed on-site at LICENSOR's premises, utilizing LICENSOR's equipment and software, at a time reasonably acceptable to LICENSOR.  LICENSOR shall make technical and support personnel available <[a] without charge  [b] in accordance with Article 13> as reasonably necessary for the verification.  

	(e)	LICENSOR may in its discretion designate a representative to accompany the Source Code Delivery Package at all times, and to be present at the verification.  The Verifier shall be LICENSEE's sole representative at the verification.

	(f)	The responsibility for the completeness and accuracy of the verification shall be solely that of the Verifier.  Neither the Escrow Agent nor LICENSOR shall have any responsibility or liability to LICENSEE for any incompleteness or inaccuracy of any verification.

4.4	Escrow Fees.  All fees and expenses charged by the Escrow Agent shall be borne by LICENSEE.  LICENSOR shall not be required to reimburse LICENSEE for any such fees, expenses, or other charges billed to LICENSEE by the Escrow Agent except as may be otherwise expressly agreed in writing by LICENSOR.

4.5	Release of Source Code from Escrow.  If the Source Code Delivery Package is released to LICENSEE by the Escrow Agent, then:

	(a)	LICENSEE shall maintain all materials and information comprising the Source Code Delivery Package in strict confidence in accordance with Article 23 and shall use and/or disclose such materials and information only in accordance with this Agreement; and

	(b)	LICENSEE shall promptly respond, fully and completely, to any and all requests for information from LICENSOR concerning LICENSEE's use or contemplated use of the Source Code Delivery Package and the names, employment histories, and affiliations of the individual(s) having access to the Source Code Delivery Package.


ARTICLE 5.
GENERAL PROVISIONS CONCERNING USE RIGHTS

5.1	Use on Authorized Computer Systems Only.  All Use of any Licensed Copy shall be on an Authorized Computer System (and no other computer system), by Authorized Users, but by <[a] no more than __(number)_____________ Authorized Users at any given time  [b] no more Authorized Users at any given time than the Authorized Simultaneous User Limit set forth in Schedule A-7.>

		[COMMENT:  The alternative choices for specifying a maximum number of Authorized Users at any given time may be useful in situations where the LICENSEE will be using the Licensed Software on a multi-user network.]


5.2	Backup Copying Rights Included.  All Use Rights include "Backup Copying Rights," namely the right to create a Backup Copy <or Copies> of the Licensed Program(s), <and of such portions of the Licensed Documentation as are Provided by LICENSOR in magnetic media (e.g., help files),> solely for backup purposes.  

	(a)	No more than <[a] one Backup Copy  [b] __(number)_____________ Backup Copies> <for each Authorized Computer System> may be made.  

	(b)	One such Backup Copy <in each city in which an Authorized Computer System is located> may be kept in off-site storage <in that city> that is (but only so long as it is) owned, leased, or otherwise under the physical control of LICENSEE.

		[COMMENT:  Article 117 of the U.S. Copyright Act, 17 U.S.C.  117, states somewhat ambiguously that lawful "owners" of copies of computer programs are entitled to certain backup-copying rights.  This Article attempts to grant reasonable backup rights to licensees with less ambiguity.

		Licensed Documentation is frequently distributed in hard copy, meaning that backup copying rights are normally not necessary.  This Article, however, permits counsel to specify that on-line documentation (e.g., help files) can be backed up by the Licensee.]


5.3	Movement of Licensed Copy.  A Licensed Copy <[a] may  [b] may not> be moved from one Authorized Computer System for Use on another Authorized Computer System without LICENSOR's prior written consent.  LICENSEE <[a] need not notify LICENSOR of  [b] shall notify LICENSOR within five business days after> any such movement of the Licensed Copy.

5.4	Cessation of Use Upon Termination or Expiration.  Upon termination or expiration for any reason of any Use <[a] Right  [b] Right, except to the extent otherwise permitted under Wrap-Up Activity Rights as set forth in Schedule 1.1>, LICENSEE <and all Authorized Licensee Delegates> shall cease all such Use of each Licensed Copy <[a] immediately  [b] within five business days after the effective date of such termination>.


ARTICLE 6.
IN-HOUSE DISSEMINATION

6.1	Definition of In-House Dissemination.  In-House Dissemination means the creation by LICENSEE <(or an Authorized Licensee Delegate)> of copies of the Licensed Program(s) <and of the Licensed Documentation> (but <[a] no more than __(number)_____________ such copies  [b] no more such copies than the Authorized Copy Limit set forth in Schedule A-5>) and the distribution of such copies to Authorized Users, solely for utilization on Authorized Computer Systems and in the Exercise of License Rights granted by this Agreement.  <In-House Dissemination Rights do not include the right to make copies of the Licensed Documentation, nor to distribute copies thereof except LICENSOR-Provided copies.>  LICENSEE may obtain additional Licensed Copies of the Licensed Documentation from LICENSOR <[a] at no charge  [b] at LICENSOR's cost  [c] at LICENSOR's then-current standard charge for such copies  [d] ___________>.

		[COMMENT:  Even when a Licensor is willing to grant In-House Dissemination rights with respect to a Licensed Program, it may insist that the Licensee obtain all copies of Documentation from the Licensor (perhaps at a nominal cost) -- thus giving the Licensor a rough way to keep tabs on how many copies are extant.]


6.2	Copies to be Deemed Licensed Copies.  Each copy created in the Exercise of In-House Dissemination Rights shall be deemed a Licensed Copy; shall bear the same legend(s) relating to copyright, confidentiality, and the like as the Licensed Copy or Copies Provided by LICENSOR; and all right, title, and interest in and to the physical media embodying such copy shall be deemed to have been conveyed to LICENSOR by the act of creating the copy.


ARTICLE 7.
GENERAL PROVISIONS RELATING TO DISTRIBUTION

7.1	Commencement of Distribution Activity.  LICENSEE <itself and/or through Authorized Licensee Delegates> shall commence active Distribution efforts no later than <[a] __(date)_____________  [b] the later of (a) __(date)_____________, or (b) if LICENSOR fails timely to make the modifications referred to in Schedule A-26, (and LICENSEE does not terminate the License for such failure), thirty days after completion of such modifications>.  LICENSEE shall give LICENSOR notice of such commencement.  <LICENSEE shall use ___all reasonable/commercially reasonable/best________ efforts to promote the Licensed Software.>

		[COMMENT:  Best-efforts clauses, and even commercially-reasonable-efforts clauses, can create the potential for disputes.  For example, a third party may offer the Licensor a better deal than the existing license agreement, but only if the existing agreement can be terminated.  The Licensor may then look for a reason to terminate the license.  

		With that in mind, attorneys for Licensees may recommend agreeing to concrete, measurable milestones or targets instead of to reasonable-efforts clauses, so that the Licensee and Licensor always know where they stand.  Counsel for Licensors, on the other hand, may want the "hammer" that can come with being able to allege a lack of required effort on the part of a Licensee.]


7.2	Licensor Reserved Distribution Areas.  LICENSEE's right to distribute Licensed Copies in accordance with this Agreement shall be subject to LICENSOR's right to distribute Licensed Copies (or to grant such a Distribution Right to a third party), by Sublicensing and/or by Redistribution, in potential or actual competition with LICENSEE, to any of the following:

	(a)	U.S. Government departments and agencies;

	(b)	___________.

7.3	Cessation of LICENSOR Distribution Activity.   LICENSOR may continue its present marketing and granting of licenses with respect to the Licensed Software <(including filling orders from existing distributors)> until receiving notice of LICENSEE's commencement of active Distribution efforts.  LICENSOR shall thereupon cease active marketing of the Licensed Software (but may complete any then-pending license transactions) and shall thereafter refer inquiries from potential licensees regarding the Licensed Software to LICENSEE.

		[COMMENT:  Even if the Licensee will immediately commence Distribution, the Licensee probably will not be able to fill up the pipeline and begin generating royalty revenue for the Licensor immediately (the provisions governing the Initial License Fee and Minimum Royalty can take this into account).  It may thus be appropriate for the Licensor to be able to continue marketing and licensing until the actual start-up of the Licensee's sublicensing operations.]


7.4	Distribution Operations at Licensee's Discretion and Expense.  Except to the extent expressly provided otherwise herein, all advertising, pricing, <diskette duplication, packaging, publication,> and other matters relating to LICENSEE's Distribution activities shall be (a) determined exclusively by LICENSEE in its sole discretion, and (b) at LICENSEE's sole expense.

7.5	LICENSEE Not to Compete.  LICENSEE shall not distribute copies of <[a] software directly competitive with the Licensed Software  [b] software performing functions similar to those of the Licensed Software  [c] __(description of competing software)_____________> without the prior written consent of LICENSOR.

7.6	Cessation of Distribution Upon Termination or Expiration.  Upon termination or expiration for any reason of Distribution Rights:

	(a)	<Except to the extent otherwise permitted under Wrap-Up Activity Rights as set forth in Schedule ,> LICENSEE shall immediately cease all such Distribution activities, including canceling any orders for <uncommenced subcontracted manufacturing of copies and/or> advertising of the Licensed Software.

	(b)	The rights of any third parties to whom LICENSEE may have distributed Licensed Copies pursuant to this Agreement <(other than Affiliates of LICENSEE who obtained Licensed Copies through In-House Dissemination)> shall be unaffected by the termination.

		[COMMENT:  The Licensee will probably want its customers (sublicensees) not to be left in the lurch just because its Distribution Rights are terminated.  As a practical matter, the Licensor may well feel the same way for PR reasons.]

	(c)	Within thirty days after the effective date of termination, LICENSEE shall deliver to LICENSOR, at LICENSEE's expense,

		(1)	a complete list of names, addresses, telephone numbers, and contact persons of all Persons to whom Licensed Copies have been distributed, <in machine-readable form in ASCII comma-delimited format or other field-delimited format,> and

		(2)	complete and accurate copies of all executed sublicense agreements, <to the extent that LICENSEE possesses such copies,> together with <[a] assignments  [b] an assignment> executed by LICENSEE assigning the sublicense agreements to LICENSOR.

		[COMMENT:  It may be impossible for a Licensee to provide names, addresses, and copies of "sublicense" agreements for all shrink-wrapped licensees of a mass-marketed software package.  The options built into this clause allow counsel to take this into account in the drafting process.]



ARTICLE 8.
REDISTRIBUTION

8.1	Written Orders of Licensor-Provided Copies.  LICENSEE may order Licensed Copies of <[a] the Licensed Software  [b] the Licensed Program(s) and/or the Licensed Documentation> from LICENSOR for Redistribution in accordance with this Agreement.  LICENSEE shall submit written orders for Licensed Copies to LICENSOR in sufficient time to enable LICENSOR to fill the orders in the usual course of its business.  Each such written order shall be deemed to incorporate this Agreement by reference.  Each written order for Licensed Copies is subject to acceptance by LICENSOR.  LICENSOR may partially accept and ship any <[a] order  [b] order, provided that at least ___________ Licensed Copies are shipped in any such partial shipment>.

8.2	Payment for Redistribution Copies.  LICENSEE shall pay LICENSOR a <nonrefundable> Distribution Fee for Licensed Copies Provided by LICENSOR for Redistribution according to the fee schedule set forth in Schedule A-11, together with all shipping charges and any charges for insurance requested by LICENSEE.

	(a)	Payment shall be due <[a] thirty days after invoicing by LICENSOR  [b] thirty days after the shipping date as indicated from shipping documents  [c] at or prior to delivery of the Licensed Copies by LICENSOR to a common carrier addressed to LICENSEE>.  

	(b)	LICENSOR reserves the right to require prepayment if, in LICENSOR's judgment, LICENSEE's financial condition or other circumstances do not warrant shipment in advance of payment. 

8.3	No Battle of the Forms.  No terms in any such written order that vary from the terms of this Agreement shall be of any force and effect, whether or not LICENSOR signs the order or otherwise indicates its acceptance, unless LICENSOR expressly refers to the specific variance(s) in question as a modification of this Agreement.

8.4	Minimum Order Sizes.  <LICENSEE's orders for Licensed Copies shall be in lots of ___________.>  <No order shall be for fewer than ___________ Licensed Copies.>  

8.5	Minimum Inventory Levels.  LICENSEE shall place orders in sufficient quantity to maintain a minimum inventory level <at each retail location> of ___________ Licensed Copies.

8.6	Shipment Means; Risk of Loss.  LICENSOR may ship Licensed Copies by U.S. Mail or by common carrier, at its option, except that LICENSOR will ship by either means if so requested by LICENSEE.  The risk of loss, delay, or damage to Licensed Copies ordered by LICENSEE shifts to LICENSEE when LICENSOR delivers the Licensed Copies to the U.S. Postal Service with postage attached or to a common carrier, in either case addressed to LICENSEE.  

8.7	No Repackaging of Licensed Copies.  LICENSEE shall not repackage any Licensed Copy into any packaging other than that Provided by LICENSOR.

8.8	Returns of Licensed Copies.  LICENSEE <[a] shall  [b] shall not> be entitled to return any Licensed Copies Provided by LICENSOR.  

		[COMMENT:  Insert any additional terms to govern returns if they are to be permitted.]


8.9	Promotional Materials.  Upon request by LICENSEE from time to time, LICENSOR shall provide LICENSEE with reasonable quantities of promotional materials for the Licensed Software.  <LICENSOR may charge LICENSEE a fee for such materials not to exceed LICENSOR's cost.>

ARTICLE 9.
SUBLICENSING DISTRIBUTION

9.1	Sublicense Agreements.  LICENSEE shall enter into only such forms of sublicense agreement with Sublicensees that provide adequate protection for LICENSOR's Intellectual Property Rights in the <[a] Licensed  [b] Derivative> Software, as set forth herein. 

	(a)	LICENSEE may use any form of sublicense agreement that provides the same or equivalent protection for LICENSOR's Intellectual Property Rights in the <[a] Licensed  [b] Derivative> Software as for LICENSEE's Intellectual Property Rights in its own proprietary software distributed to the public.

		[COMMENT:  This clause and the next are possible alternatives.  This clause gives the Licensee considerable flexibility.  It may be appropriate if the Licensee already has an established licensing operation for its own software with a suitable form of license agreement, and if the Licensed Software will be sublicensed as a part of (or adjunct to) the Licensee's own product line.]

	(b)	<LICENSEE may enter into sublicense agreements in substantially the form of Exhibit 9.1.>  Whenever LICENSEE proposes to use any form of sublicense agreement <(other than that of Exhibit 9.1)> for Distribution of <[a] Licensed  [b] Derivative> Copies, it shall provide LICENSOR with a copy of such proposed form.  LICENSOR shall have the right to approve or disapprove such proposed form, solely as to its provisions relating to LICENSOR's Intellectual Property Rights in the <[a] Licensed  [b] Derivative> <[a] Software  [b] Software, with approval not to be unreasonably withheld>.  If LICENSOR does not disapprove the proposed form by notice to LICENSEE within <[a] five  [b] ten> business days after receiving the proposed form, then LICENSOR shall be deemed to have approved the proposed form.  LICENSEE may thereafter use the proposed form in Sublicensing Distribution.

		[COMMENT:  This alternative allows counsel to attach a preapproved form of sublicense as an exhibit.  The Licensee still has flexibility in its choice of sublicense agreement forms, but the Licensor can also look over the Licensee's shoulder in that respect.]

	(c)	If at any time LICENSOR gives LICENSEE notice of circumstances that in LICENSOR's business judgment make continued use of an approved form of sublicense agreement inappropriate to protect LICENSOR's Intellectual Property Rights, then LICENSEE shall discontinue use of that form.  If the circumstances in question are attributable to an erroneous act or omission of LICENSOR, then LICENSOR shall reimburse LICENSEE for all Direct Expenses of discontinuing such use and of changing to a new form of sublicense agreement, which must itself be approved by LICENSOR in accordance with this Agreement.   As used in the previous sentence, the term "erroneous act or omission" means, e.g., an error in judgment by LICENSOR in reviewing the approved form, but not changes in the law or in judicial interpretations thereof whether or not assertedly foreseeable by LICENSOR. 

	(d)	LICENSEE acknowledges that:

		(1)	Any review by LICENSOR and/or LICENSOR's counsel of any form of sublicense agreement is intended solely to protect LICENSOR's interests for LICENSOR's benefit;

		(2)	Neither LICENSOR nor its counsel warrants or represents that any form of sublicense agreement will protect LICENSEE's interests or otherwise meet any particular standard of suitability; 

		(3)	No attorney-client relationship is established between LICENSEE and LICENSOR's counsel by virtue of any such review.

	(e)	LICENSOR shall have no right to object to pricing terms in any proposed form of sublicense agreement.  

		[COMMENT:  Vertical price-fixing still has the potential to give rise to significant antitrust exposure.  If the license agreement is such that Licensor bears the economic risk of sublicense transactions (e.g., if Licensee is really more of a sales representative than a sublicensor), then it may be possible for Licensor to control sublicense pricing, but that obviously should be done with great caution.]

	(f)	Any form of sublicense agreement used by LICENSEE for transactions that involve the <[a] Licensed  [b] Derivative> Software with U.S. Government departments or agencies shall include a restricted-rights clause conforming to the Federal Acquisition Regulations (FARs) then in effect that apply to software developed entirely at private expense.

	(g)	Any form of sublicense agreement used by LICENSEE for <[a] Licensed  [b] Derivative> Software shall include a disclaimer of any warranty or representation made by LICENSOR to the Sublicensee, an exclusion of incidental, consequential, special, punitive, or exemplary damage remedies against LICENSOR, and a limitation of LICENSOR's maximum liability, <[a] substantially as set forth in this Agreement  [b] as set forth in Exhibit 9.1(g)>.  

		[COMMENT:  This provision attempts to deal with the possibility raised by Spagnol Enterprises v. Digital Equipment Corporation, 568 A.2d 948 (Pa. Super. 1989), in which a customer that had purchased hardware from a remarketer (not from the manufacturer) was able to recover from the manufacturer for breach of implied warranties of merchantability and fitness for a particular purpose because those manufacturer warranties had not been disclaimed in the sale to the customer.]

	(h)	Any form of sublicense agreement used by LICENSEE for <[a] Licensed  [b] Derivative> Software shall include the following provisions governing termination of LICENSEE's Sublicensing Distribution Rights, by termination of the License or otherwise:

		(1)	a provision for the automatic assignment of the sublicense agreement from LICENSEE to LICENSOR effective immediately upon such termination;

		(2)	a provision requiring the Sublicensee to make payments and otherwise deal directly with LICENSOR, and to cease paying or otherwise dealing with LICENSEE, immediately upon notice to the Sublicensee from LICENSOR of termination of LICENSEE's Sublicensing Distribution Rights.

		[COMMENT:  If the Licensed Software will be distributed to sublicensees subject to payment of Periodic License Fee charges by the sublicensees, it may be appropriate for the Licensor to do a "take-over" of the sublicense relationships upon termination of the Licensee's sublicensing Distribution Rights.  

		However, if sublicensees are providing a continuing revenue stream to both the Licensee and the Licensor, then the Licensee may well want to continue getting at least part of that revenue stream from existing sublicensees in the event of a termination of the Distribution Rights (see also Article 7.6, relating to termination of sublicensing rights).]


9.2	Required Legends.  LICENSEE shall ensure that each <[a] Licensed  [b] Derivative> Copy distributed pursuant to Sublicensing Rights bears all "Required Legends," defined below:

	(a)	The Required Legends are:

		(1)	a copyright legend indicating that LICENSOR is the copyright owner of the <[a] Licensed  [b] Derivative> Software;

		(2)	the legend "CONFIDENTIAL - LICENSED PROPRIETARY MATERIAL OF __(LICENSOR'S name)_____________]"; 

		(3)	such patent markings as LICENSOR may request (this subparagraph, however, does not constitute a representation or warranty by LICENSOR that any patent protection for the Licensed Software is or will be available);

		(4)	a restricted-rights legend conforming to the Federal Acquisition Regulations (FARs) then in effect that apply to software developed entirely at private expense;

		(5)	___________

	(b)	The Required Legends shall be placed on all <[a] Licensed  [b] Derivative> Copies and elsewhere as follows:

		(1)	printed or otherwise permanently inscribed (A) on the disk, tape, or other program storage device provided to a Sublicensee that embodies a copy of any portion of the <[a] Licensed  [b] Derivative> Software, or on a label securely affixed thereto, and (B) on each "hard copy" of any portion of the <[a] Licensed  [b] Derivative> Program(s) and/or <[a] Licensed  [b] Derivative> Documentation provided to a Sublicensee;

		(2)	displayed in a sign-on screen, boot-up screen, or similar screen display in a manner that will be visible to an End User each the time the End User commences Using the <[a] Licensed  [b] Derivative> Program(s);  

		[COMMENT:  The subparagraph above will normally not be appropriate unless the Licensee is getting compilable source code - if the Licensee is getting only executable code for sublicensing, the Licensor presumably has taken care of whatever legends it wants.]

		(3)	if so provided in this Agreement, displayed in a status line on the End User's display screen at substantially all times during the operation of the <[a] Licensed  [b] Derivative> Software; and

		(4)	___________.


ARTICLE 10.
END-USER SUPPORT

10.1	LICENSEE End-User Support Coordinators.  LICENSEE shall designate <[a] an individual  [b] one individual per Authorized Computer System  [c] ___________ individuals  [d] the individuals identified in Schedule A-12>  as "End-User Support Coordinators" to provide routine End-User Support concerning the Licensed Software.

		[COMMENT:  This clause addresses the question of who is to provide routine handholding for Licensee or Sublicensee personnel.]

	(a)	LICENSEE may designate substitutes for such individuals from time to time <[a] by notice to  [b] with the prior consent of> LICENSOR.

	(b)	LICENSEE shall take appropriate steps to educate End Users about the need to contact a LICENSEE End-User Support Coordinator when support is needed.  LICENSEE shall appropriately publicize the name, telephone number, and/or FAX number and/or electronic mail address if applicable, of the End-User Support Coordinators.

	(c)	As a matter of policy, LICENSOR will ordinarily attempt to respond promptly and courteously to an End-User Support request from any End User, but it shall always have the right to require the caller to work through a designated End-User Support Coordinator instead of directly with LICENSOR.

10.2	Telephone End-User Support.  During the Maintenance Period, LICENSOR shall make End-User Support available by telephone <[a] (toll-free)  [b] (toll-free in the United States)> to <[a] End Users  [b] LICENSEE's End-User Support Coordinator> at substantially all times <[a] during LICENSOR's normal business hours  [b] from __ a.m. until __ p.m. Central time each business day and from __ a.m. until __ p.m. Central time each other day>.  

10.3	LICENSEE End-User Support of Sublicensees.  LICENSEE shall provide End-User Support for Sublicensees <and Persons to whom LICENSOR has previously granted licenses with respect to the Licensed Software> as set forth in this Article.  LICENSEE shall be responsible for all dealings with Sublicensees in connection with the Licensed Software.  <LICENSEE shall not publish or otherwise disclose LICENSOR's address or telephone number as a source of support for the Licensed Software.> 

		[COMMENT:  Who will support sublicensees may be a significant issue for negotiation.  The optional clause in this Article relates to support of pre-License licensees, as discussed in more detail below.]


10.4	End-User Support of Existing Licensees.  <Upon receiving notice of LICENSEE's commencement of active Distribution,> LICENSOR shall provide LICENSEE with a complete list, in machine-readable form and in a <[a] dBASE  [b] Paradox  [c] field-delimited> format, of LICENSOR's existing licensees as of <[a] the date of such commencement  [b] the License Commencement Date> and their names, addresses, and telephone numbers (to the extent known by LICENSOR).  LICENSOR may refer to LICENSEE, and LICENSEE shall respond to, all subsequent requests for End-User Support from such licensees concerning the Licensed Software.

		[COMMENT:  The above clause may be appropriate if the Licensee is taking over all support responsibilities, even for preexisting licensees.]



ARTICLE 11.
MAINTENANCE

11.1	Maintenance Period.  The "Maintenance Period" for the Licensed Software begins <[a] __(date)_____________  [b] on the License Commencement Date> and ends <[a] ninety days  [b] one year> thereafter.  <The Maintenance Period may be extended at LICENSEE's election for successive one-year periods by timely payment of Maintenance Fees in accordance with Article 16.4 and Schedule A-25.>

		[COMMENT:  The Maintenance Period is an important point in this Agreement - it is the period during which the As-Documented Warranty and Licensor's maintenance obligations are effective.

		Note that the Maintenance Period is conceptually distinct from the License Term - the License Term might run for 25 years, but the Maintenance Period (and thus the Licensor's performance warranty and maintenance obligation) might run only for a year if Maintenance Fees aren't paid.

		In a sublicensing arrangement, the Licensee might insist that the Maintenance Period last for as long as royalties (or minimum royalties) are paid to the Licensor.]  

11.2	Bug Reports.  LICENSEE shall promptly provide LICENSOR with a report of any potentially Material Bug in the Licensed Software ("Bug Report"), by notice or by other reasonable means.  

	(a)	The Bug Report shall include, and LICENSEE shall continue to provide, all information reasonably requested by LICENSOR from time to time to assist LICENSOR in identifying and correcting the Bug.  

	(b)	LICENSEE shall pay all shipping charges, communications charges, and the like that are associated with providing such information to LICENSOR.  Upon request by LICENSEE, to be accompanied by reasonable backup documents, LICENSOR shall credit or reimburse LICENSEE for any amount by which such expenses during the Maintenance Period exceed <[a] $50  [b] $_______________> per calendar year in the aggregate.

11.3	Maintenance Releases.  During the Maintenance Period, LICENSOR shall <[a] offer  [b] provide> copies of Maintenance Release(s) of the Licensed Software, if any, to LICENSEE on the same basis as <[a] offered  [b] provided> to other licensees of the Licensed Software.  <Such offers may be conditioned on LICENSEE paying a charge to LICENSOR in an amount determined by LICENSOR in its sole discretion.>  Any copy of a Maintenance Release Provided by LICENSOR shall be deemed to be a Licensed Copy, and the Maintenance Release in question shall be deemed to be Licensed Software.

		[COMMENT:  This section is worth some thought by counsel.  In many license arrangements, Maintenance Releases are provided to the Licensee for a limited period of time at no charge, as part of the Initial License Fee (or as part of each Periodic License Fee).  

		In other arrangements, license fees on the one hand and charges for Maintenance Releases on the other hand may instead be "unbundled" -- that is, licensees need not pay for Maintenance Releases unless they so desire, but will not get them unless they pay for them.

		As a practical matter, the simplest course for a Licensor may be to ship Maintenance Releases automatically to all licensees who are still "in warranty" -- otherwise, the Licensor may find itself forced to provide warranty support for different versions of the Licensed Software.]


11.4	Corrective Maintenance by LICENSEE.  During the Maintenance Period, if (i) LICENSEE states in a Bug Report (or in a follow-up report) that a Bug in the Licensed Software is a Material one and identifies in reasonable detail the basis for such statement, and (ii) LICENSOR is able to reproduce the Bug in the applicable operating environment and verify that the Bug is in fact in the Licensed Software and not elsewhere, <and (iii) LICENSEE is using the then-current version of the Licensed Software,> then:

		[COMMENT:  Not all bugs will be worth hunting down and correcting immediately.  Some insignificant bugs, for example, may simply be left in place and/or fixed in the next Maintenance Release (or the Documentation may be adjusted to make the Bug a "feature").  Furthermore, some so-called Bugs may actually be the results of user error, equipment failure, or the like, or for those or other reasons may not be reproducible by the Licensor.  

		The philosophy of this subparagraph, however, is that in a negotiated license agreement the customer is always right -- during the Maintenance Period, if the Licensee believes a Bug to be Material and the Bug is reproducible, that's normally the end of the inquiry.  

		One possible exception to this philosophy:  If a Licensee has the option of taking or not taking a Maintenance Release, and elects not to do so, then the Licensor may wish not to be obligated to correct any Bug found in the old version still used by the Licensee.

		Caution:  Keep in mind that if the Licensor does not fix a Bug during the Maintenance Period because it disagrees that the bug is material, then the Licensee can elect to invoke the Backup Remedy.  As drafted in these Model Provisions, the Backup Remedy is a money-back remedy, meaning that the Licensor's downside is limited if such a disagreement arises.  The parties might negotiate a change of the Backup Remedy to a capped-damages remedy, however, in which case a disagreement over the materiality of a Bug might be dangerous for a Licensor.

	(a)	Within <[a] two  [b] five  [c] ___________> business days of receiving the Bug Report identifying a Material Bug as set forth above, LICENSOR shall either 

		(1)	provide LICENSEE with a correction or workaround sufficient to alleviate any Material adverse effect of the Bug on the utility of the Licensed Software, or 

		(2)	provide LICENSEE with a response describing LICENSOR's then-existing diagnosis of the Bug and outlining LICENSOR's then-existing plan and timetable for correcting or working around the Bug.  

	(b)	No more than ___________ times per year, LICENSOR may give LICENSEE at least five business days' notice that LICENSOR's personnel will be on vacation for the number of days specified in the notice (not to exceed ___________ business days per period), in which case the time for LICENSOR to provide its initial response in accordance with subparagraph (a) shall be ___________ business days.

	(c)	LICENSOR shall dedicate at least ___________ staff-hours per week <of the Key LICENSOR Personnel> to its efforts to correct or work around the Bug.

	(d)	If LICENSEE so requests, LICENSOR shall require that appropriate Key LICENSOR Personnel travel to LICENSEE's facilities for reasonable periods of time sufficient for LICENSOR to carry out its responsibilities hereunder (except that such travel need not exceed five business days per month without LICENSOR's consent).  In such event <[a] LICENSEE  [b] LICENSOR> shall pay all Travel Expenses incurred by such Key LICENSOR Personnel.

	(e)	After LICENSOR's initial report to LICENSEE as provided above, LICENSOR shall report its progress in correcting or working around the Bug to LICENSEE at least <[a] weekly  [b] daily>.

11.5	Corrective Maintenance by LICENSEE.  When (and solely to the extent) permitted by this Agreement, LICENSEE may attempt to correct or work around a Bug.  In such event, LICENSEE shall make the same periodic progress reports to LICENSOR as LICENSOR would be required to make to LICENSEE.  Any Invention or Work that may be created by LICENSEE Personnel during such attempts shall be a Licensed-Back Invention or Work.


ARTICLE 12.
UPGRADE VERSIONS

During the Maintenance Period, LICENSOR shall offer copies of Upgrade Versions of the Licensed Software, if any, to LICENSEE on the same basis as offered to other licensees of the Licensed Software.  Such offers may be conditioned on LICENSEE paying a charge to LICENSOR in an amount determined by LICENSOR in its sole discretion.  Any copy of an Upgrade Version Provided by LICENSOR shall be deemed to be a Licensed Copy, and the Upgrade Version in question shall be deemed to be Licensed Software.

		[COMMENT:  Any desired provisions requiring Licensor to produce upgrades or new versions could be inserted as additional Articles here.]



ARTICLE 13.
TECHNICAL SERVICES

If and to the extent so agreed by the Parties, LICENSOR may perform programming services, training, data conversion, and similar work ("Technical Services") for and at the request of LICENSEE.

		[COMMENT:  Any agreed technical support could conveniently be put into a Schedule 13, which could then be referred to in this Article 13.]

13.1	Assignment of Licensor Personnel.  LICENSOR may in its discretion (subject to any written agreement that may be entered into by LICENSOR and LICENSEE) assign one or more employees or other representatives, whom LICENSOR judges to be competent to do the work in question, to provide such Technical Services.  

	(a)	Unless otherwise agreed in writing by LICENSOR, LICENSOR's assignment of such personnel shall be subject to the reasonable availability of such personnel, the term "availability" encompassing without limitation the value of any such personnel in helping LICENSOR meet other commitments.

	(b)	LICENSOR retains at all times the right, in its sole discretion, to terminate the services of any particular one or ones of its own employees at any time with or without notice to LICENSEE. 

13.2	Technical Service Fees and Expenses.  For all Technical Services performed by LICENSOR at LICENSEE's request, LICENSOR shall invoice LICENSEE on a monthly basis (and LICENSEE shall pay all such invoices within 30 days of receipt) for:

	(a)	Travel Expenses of such LICENSOR personnel, and

	(b)	service fees <[a] at a rate per person per hour to be agreed by LICENSOR and LICENSEE  [b] of $_______________ per person per hour> for:

		(1)	time worked and 

		(2)	portal-to-portal travel time (excluding time not actually in transit and travel time in excess of eight hours per day) for travel requested or approved by LICENSEE, with a minimum eight-hour payment for each day in which each LICENSOR employee or representative is out of the office or plant to which he or she is regularly assigned.

13.3	Costs of Personnel Travel.  If a Party (the "Sending Party") causes one or more persons (other than Personnel of another Party) to travel anywhere in the world, including to a facility or facilities controlled by the other Party, for any purpose contemplated by this Agreement, then except as otherwise provided herein:

	(a)	the Sending Party shall bear all Travel Expenses, compensation, and other expenses for all such persons;

	(b)	the Sending Party shall Defend the other Party against any Claim, and Indemnify the other Party against any Loss or Expense:

		(1)	caused by any such person either (A) off of the other Party's premises, or (B) on the other Party's premises and either (i) intentionally and wrongfully or (ii) with gross negligence (but not with simple negligence); or

		(2)	incurred by any such person on or off of the other Party's premises, in either case whether or not resulting from the other Party's negligence of any kind (including gross negligence and contributory negligence).  

		[COMMENT:  The intent of this clause is to allocate essentially all "incidental" risks of an on-site visit to the party that is making the on-site visit.  Subparagraph (2) attempts to comply with the "express negligence" rule of Texas law, i.e., that an indemnity clause will not protect an indemnified party from the consequences of its own negligence unless expressly so stated in the clause.]



ARTICLE 14.
EXPORT CONTROLS

LICENSEE shall cooperate with LICENSOR as reasonably necessary to permit LICENSOR to comply with the laws and administrative regulations of the United States relating to the control of exports of commodities and technical data ("Export Laws").  LICENSEE hereby assures LICENSOR that LICENSEE will not export or re-export directly or indirectly (including via remote access) any part of the Licensed Software (including any Confidential Information) to any country for which a validated license is required for such export or re-export under the Export Laws without first obtaining such a validated license.  LICENSEE shall Defend LICENSOR against any and all Claims, and Indemnify LICENSOR against any and all Losses or Expenses, arising from or otherwise in respect of any asserted violation of the Export Laws by LICENSEE.


ARTICLE 15.
INSURANCE COVERAGE

15.1	Minimum Insurance Coverage.  During the License Term and any License Term Extension, LICENSEE shall maintain at its own expense comprehensive general liability insurance for claims for damages arising from bodily injury (including death) and property damages caused by, or arising out of, acts or omissions of its employees.  

	(a)	The minimum limits of such insurance shall be __$100,000.00_______ per individual; __$500,000.00_______ per accident involving bodily injury; and __$500,000.00_______ per accident involving property damage.  

	(b)	Maintenance of such insurance coverage shall not relieve LICENSEE of any responsibility under this Agreement for damage in excess of the insurance limits.

15.2	Certificates of Insurance.  Any Party required to maintain insurance under this Agreement shall furnish or cause to be furnished to the other Party a certificate of such insurance promptly upon request by the other Party.  <Each such certificate shall name the other Party as an additional named insured.>  

15.3	Notice of Cancellation or Expiration.  Any such insurance policy shall provide that the insurer will give the other Party at least thirty days prior written notice of any impending cancellation, nonrenewal, expiration, or reduction in coverage of the insurance.


ARTICLE 16.
LICENSE FEES AND OTHER PAYMENTS

[COMMENT:  Counsel drafting this section of a license agreement, as well as the next section on royalty fee payments, should carefully consider the implications of the October, 1988 amendments to the Bankruptcy Code, codified at 11 U.S.C.  365(n).  Generally speaking, if a Licensor-debtor rejects a license agreement, the Licensee can elect to continue using the Licensor's "intellectual property."  The Licensee can also exercise any right it has under the agreement or a "supplementary" agreement to obtain such intellectual property (e.g., to obtain source code from escrow pursuant to a supplementary escrow agreement).  An electing Licensee, however, cannot force the Licensor to perform its maintenance obligations under the license agreement, however, nor can the Licensee sue for damages, exercise setoff rights, or make a claim for administrative expenses with respect to such Licensor nonperformance.  See  365(n)(1)(B).  

In addition, the Licensee must continue to pay "royalty" amounts that come due under the license agreement.  See  365(n)(2)(B).  That raises the question whether Licensee payment obligations should be styled as royalties or as some combination of royalties and maintenance fees and, if the latter, whether the total amount payable should be allocated between the two.

Tax consideration:  In certain circumstances, a corporation owned by five or fewer people that derives more than a stated percentage of its income from "royalties" is considered a "personal holding company" under U.S. tax law, and thus can be subject to a personal holding company tax.]

16.1	<Initial> License Fee.  <[a] Simultaneously with the execution of this Agreement  [b] On or before __(date)_____________>, LICENSEE shall pay LICENSOR <[a] a "License Fee"  [b] an "Initial License Fee"> in the amount of $_______________, which shall be nonrefundable after LICENSEE'S Acceptance of the Licensed Software.

		[COMMENT:  The term "Initial License Fee" usually connotes an upfront payment, with more payments to follow; the term "License Fee," on the other hand, frequently means a fixed, one-time fee for a paid-up license.  

		The term "License Fee" is intentionally used instead of "royalty," in part because of convention and in part because it should not make much difference in the event of a Licensor bankruptcy.]


16.2	Periodic License Fee.  Within or after the <[a] thirty-day  [b] sixty-day> period prior to <[a] each anniversary of the effective date of this Agreement  [b] January 1 of each year  [c] __(date)_____________>, LICENSOR shall invoice LICENSEE for, and LICENSEE shall pay LICENSOR within <[a] thirty  [b] sixty> days after the date of the invoice, a "Periodic License Fee" in the amount of <[a] __(X%)_____________ of LICENSOR's then-existing Initial License Fee for the Licensed Software  [b] $_______________>.  

		[COMMENT:  Periodic Royalties are sometimes charged as part of extension of the License Term, e.g., in an evergreen license.  Even if notice of nonextension of an evergreen license is not given by a licensee, the licensee's failure to pay the Periodic License Fee will eventually lead to termination of the license for breach.]


16.3	In-House Dissemination License Fees.  At the same time as LICENSEE furnishes LICENSOR with each report of Licensed Copies distributed under In-House Dissemination Rights pursuant to Article 17.1, it shall pay LICENSOR an In-House Dissemination License Fee <[a] of $_______________  [b] in accordance with Schedule A-17> for each Licensed Copy so distributed.  

16.4	Maintenance Fees.  Within or after the <[a] thirty-day  [b] sixty-day  [c] ninety-day> period prior to the expiration of the Maintenance Period, and provided that LICENSOR continues to make Maintenance for the Licensed Software generally available to licensees thereof, LICENSOR shall send LICENSEE an invoice for a "Maintenance Fee" in the amount set forth in Schedule A-25.  

		[COMMENT:  In many respects a software license is a subscription business, in that licensees must pay maintenance fees to keep their licensed copies current.]

	(a)	LICENSOR's failure timely to send such an invoice, if LICENSOR continues to make Maintenance for the Licensed Software generally available to licensees thereof, shall operate to extend the Maintenance Period automatically as necessary (but no more than as necessary) to prevent the Maintenance Period from expiring sooner than thirty days after LICENSEE's receipt of such an invoice.

		[COMMENT:  Note that failure to send out an invoice (and thus the failure to give the Licensee an option to extend the Maintenance Period) automatically extends the As-Documented Warranty as well as the Maintenance Period, assuming that Maintenance has not been discontinued generally.]

	(b)	LICENSEE's failure to pay the Maintenance Fee, in response to an invoice from LICENSOR, prior to the date of such expiration shall constitute LICENSEE's election to allow the Maintenance Period to expire without further notice from LICENSOR.  LICENSOR may condition any subsequent reinstatement of the Maintenance Period after such expiration on payment by LICENSEE of an additional fee set by LICENSOR in its sole discretion; such reinstatement shall be prospective only and not retroactive to the expiration date unless otherwise agreed in writing by LICENSOR.

		[COMMENT:  The last sentence stems from the reluctance of most licensors to allow a licensee to skip several years of Maintenance Fee payments, then to demand reinstatement by payment of only one year's worth of Maintenance Fee, especially if several Maintenance Releases have occurred in the interim.]

16.5	Distribution License Fees.  At the same time as LICENSEE furnishes LICENSOR with each report of Licensed Copies distributed under Distribution Rights pursuant to Article 17.2, it shall pay LICENSOR a Distribution License Fee <[a] of $_______________  [b] in accordance with Schedule A-11> for each Licensed Copy so distributed.  

16.6	Running Royalties; Minimum Running Royalties.  At the same time as LICENSEE furnishes LICENSOR with each <quarterly> statement of Gross Income and Running Royalties under Article 17.3, LICENSEE shall pay LICENSOR <the greater of (1) a Minimum Running Royalty of $_______________ for the reporting period following that covered by the statement, and (2)> "Running Royalties" of __(X%)_____________ of Gross Income <[a] invoiced  [b] received  [c] received (but in no event later than _______________ days after invoicing)> by LICENSEE during the reporting period covered by that statement.  

	(a)	Minimum Running Royalties for the reporting period in which the effective date of this Agreement occurs shall be due <[a] __(date)_____________  [b] upon the execution of this Agreement.>

	(b)	Payments of Running Royalties in a given reporting period in excess of any Minimum Royalty obligation for that reporting period <[a] shall not  [b] shall> be credited to Minimum Running Royalty obligations for any other reporting period.

	(c)	LICENSEE's payment of the Initial License Fee <[a] shall not  [b] shall> be credited to LICENSEE's obligation to pay <[a] Running Royalties  [b] Running Royalties and Minimum Running Royalties> hereunder.

	(d)	If LICENSEE unilaterally terminates the License, it shall continue to pay Minimum Running Royalties for the balance of the then-current License Term or License Term Extension as though termination had not occurred.

		[COMMENT:  This clause raises a question:  when does the Licensor get its royalties?  Three basic possibilities are set out above:  
þ	When the Licensee invoices its own sublicensee (meaning that the Licensee will want a bad-debt deduction as set forth below); 
þ	When the Licensee gets its money (meaning that the Licensor shares the Licensee's collection risks, and that the bad-debt deduction will thus be inapplicable); or 
þ	When the Licensee gets its money, but subject to a cut-off period. 
If it does not appear that the Licensee will be strongly motivated to collect, then the Licensor may wish to negotiate the first or third options.  The third option may present some accounting headaches for the Licensee, but might be preferable to the first one.


16.7	Gross Income.

	(a)	Basic Definition.  "Gross Income" includes the following, as applicable, unless otherwise provided in this Agreement; provided, however, that the enumeration of Gross Income components below shall be deemed neither to expand nor to limit LICENSEE's License Rights as set forth in this Agreement:  

		[COMMENT:  Counsel should carefully examine the economics of the contemplated sublicensing- or other arrangements in drafting this clause and incorporating various subparagraphs below.]

		(1)	any and all royalties, sublicensing fees and other revenues realized by LICENSEE <[a] in connection with  [b] derived from> LICENSEE's Sublicensing of the Licensed Software to Third Parties;  

		[COMMENT:  The "in connection with" language is intended to include tag-along sales (but make sure this language is used consistently with the draft language below that expressly excludes tag-along sales from Gross Income).]

		(2)	maintenance fees and other revenues realized by LICENSEE in connection with the providing of maintenance or training services, or support fees charged by LICENSEE for special support for any such third party; and

		(3)	damages, interest thereon, and similar monetary awards (other than awards of attorneys' fees) paid by third parties to LICENSEE or any Affiliate thereof in connection with infringement of Intellectual Property Rights associated with any part of the Licensed Software.  

		[COMMENT:  This subparagraph should be included only if the Licensee may be enforcing Intellectual Property Rights in the Licensed Software (e.g., if the License is exclusive).  Also, consider whether it may be preferable to allocate damages, etc., between the Licensor and Licensee in accordance with some formula other than the royalty split (e.g., a 50-50 or 1/3 - 2/3 split, with enforcement costs coming off the top).]

	(b)	Gross Income from Affiliate Transactions.  The Gross Income in a transaction between LICENSEE and any Affiliate of LICENSEE or any Person which is otherwise associated with or acting in concert with LICENSEE, or in any other non-arm's length transaction, shall be the greater of:  

		(1)	the actual amount paid by the Affiliate or other company, or 

		(2)	the amount that would have been paid in a similar transaction at arm's length. 

	(c)	Gross Income from Bundled or Promotional Transactions.  The Gross Income in a unit-priced transaction (e.g., bundled transactions, discount or promotional offers, and the like) involving both (1) the Licensed Software, and (2) one or more other products or services provided by LICENSEE, shall be <[a] LICENSEE's standalone price associated with the Licensed Software in transactions involving the Licensed Software alone  [b] prorated between the Licensed Software and such other products and services in accordance with their respective standalone prices>.  

		[COMMENT:  A Licensor normally will not want a Licensee to "give away" the Licensed Software as a loss leader to help promote the Licensee's own software.]

	(d)	Exclusions from Gross Income.  Gross Income does not include:

		(1)	revenues realized by LICENSEE in connection with the licensing of separately identified and -priced software that is developed, licensed, or otherwise acquired by LICENSEE which LICENSEE may combine for distribution purposes with all or part of the Licensed Software; or  

		[COMMENT:  This excludes tag-along sales from the definition of Gross Income, and thus should be carefully reviewed by a Licensor's counsel.]

		(2)	amounts received by LICENSEE that are attributable to separately itemized and billed <travel expense reimbursement,> shipping costs and insurance, <or> sales taxes or similar taxes.  

		[COMMENT:  The exclusion of travel expense reimbursement may be appropriate when, e.g., the Licensee as sublicensor must send people to the sublicensee's site for installation and/or training.]

	(e)	Deductions from Gross Income.  The amounts set forth below may be deducted from Gross Income.  Any such deduction may be taken in the reporting period in which the expense is paid or incurred in accordance with generally accepted accounting principles, consistently applied.  Any unused deductions from a given reporting period <[a] may  [b] may not> be carried over to subsequent reporting periods.  The permissible deductions are:

		(1)	amounts due and remaining unpaid to LICENSEE after diligent collection efforts by LICENSEE;  

		[COMMENT:  If royalties accrue on Gross Income as-received (instead of as-invoiced), the foregoing bad-debt deduction may be inappropriate.]

		(2)	legal fees and disbursements paid by LICENSEE to outside counsel in connection with obtaining, maintaining, and enforcing Intellectual Property Rights for the Licensed Software (solely to the extent that LICENSEE is expressly authorized to do so hereunder) in accordance with this Agreement; and  

		[COMMENT:  See above concerning whether it is appropriate to include IP-enforcement revenues in Gross Income at all, and if so, on what basis.]

		(3)	up to (but no more than) __(X%)_____________ of Gross Income in any specific transaction in respect of commissions, agent's or representatives' direct expenses, and similar amounts paid by LICENSEE to third parties as a reward or incentive for causing or promoting the specific transaction;

		(4)	any and all amounts paid by LICENSEE (A) as damages for infringement by any part of the Licensed Software (or the use of such part for its intended purpose) of a third party's Intellectual Property Rights; or (B) in settlement of allegations of such infringement, or (C) as a license fee with respect to any such Intellectual Property Rights.  

		[COMMENT:  This clause should be carefully considered in conjunction with any infringement-defense obligation of the Licensor.]


16.8	Travel Expenses.  Travel Expenses of a Party that are payable by another Party under this Agreement shall be paid within <[a] thirty  [b] __(no. days)_____________> days after invoicing by the Party to be paid or reimbursed.

	(a)	As used herein, "Travel Expenses" means travel expenses and standard business-type lodging <[a] and meal expenses  [b] expenses (excluding restaurant charges, room service charges, entertainment charges, incidental or personal charges, and the like but including a meals allowance of $___________ per person per day)>, but not including personnel salaries or benefits.  <Only those Travel Expenses by a that conform to the policies of Schedule 16.8(a) shall be payable or reimbursable under this Agreement.>

		[COMMENT:  Some companies have limits on what travel expenses will be paid or reimbursed, e.g., no first-class air fare, nonluxury hotels, no alcohol consumption, etc.  These can be conveniently put into a Schedule, often by simply attaching a copy of an existing expense-reimbursement policy.]

	(b)	A Party whose Travel Expenses are to be paid or reimbursed by another Party under this Agreement shall furnish the other Party with reasonable backup documentation in the form of receipts and the like.

	(c)	To enable a Party that pays or reimburses another Party's Travel Expenses hereunder to take advantage of any available discount rates, upon request by the Party paying Travel Expenses, by notice or other reasonable means, the other Party shall book all travel and lodging through a travel agency and/or with carriers or hotels designated by the Party paying Travel Expenses for direct billing to the Party paying Travel Expenses.

16.9	Form of Payment.  Any payment made under the provisions of this Agreement shall be made <[a] by check drawn on a bank in the United States that is reasonably acceptable to the payee  [b] by cashier's check  [c] in immediately available funds>, or by other means of payment acceptable to the Payee.

16.10	Currency Conversion.  All payments hereunder in respect of amounts that are (x) denominated in U.S. dollars, or (y) converted to U.S. dollars by the payor (e.g., Running Royalties in respect of Gross Income where the Gross Income is denominated in or converted by LICENSEE to U.S. dollars), shall be payable in U.S. dollars.  All other payments shall, at the Payee's option, 

	(a)	be converted to U.S. dollars at the exchange rate customarily used by the Payor (e.g., the exchange rate offered by the Payor's usual bank) at the specific rate applicable on the due date of the payment (except that the Payee may elect for the Payor to convert late payments at the specific rate in effect on the date paid by giving notice to the Payor within five business days after such late payment), or

	(b)	be paid in the currency or currencies in which denominated.

16.11	Sales and Use Taxes.  In addition to all other amounts required by this Agreement, <[a] LICENSEE  [b] any Payor> shall pay or reimburse <[a] LICENSOR  [b] the Payee> for all federal, state, and local sales, excise, use, or similar taxes based on payments to be made hereunder.

	(a)	At the Payor's request, the Payee shall file any certificate or other document which may cause any tax that is so payable or reimbursable by the Payor to be avoided or reduced.   

	(b)	The Payor shall not be required to pay or reimburse the Payee for taxes based upon the net worth, capital, net income, or franchise of the Payee, nor taxes imposed upon  the Payee solely by reason of the Payee's doing business in or being incorporated in the jurisdiction imposing such taxes. 

	(c)	The Payor shall fully cooperate and provide such information as may be necessary for any reference which the Payee might wish to make to tax authorities for any purposes or reasons relating to taxation. 

	(d)	If the Payor in good faith contests any tax that is so payable or reimbursable by the Payor, the Payee shall cooperate in the contest at the Payor's expense. 

	(e)	The Payee shall pass on to the Payor any tax refunds received by the Payee with respect to the Payor's previous payment or reimbursement of applicable taxes hereunder, if any. 

16.12	Late Payments.  Any payment required hereunder that is made late (including unpaid portions of incomplete payments) shall bear interest, compounded monthly, at the lesser of __(X%)_____________ per annum or the highest interest rate permitted to be charged of the Payor by applicable law.

	(a)	Any payment received more than <[a] thirty  [b] __(no. days)_____________> days after becoming due shall be deemed late for purposes of this Agreement.

	(b)	Any interest charged or paid in excess of the maximum rate permitted by applicable law shall be deemed the result of a mistake and shall be credited or refunded (at the Payee's option) to the Payee, together with interest as set forth above from the date charged until the date credited or refunded.

16.13	Dishonored Checks.  If a payment due under this Agreement is made by the Payor's check and the check is dishonored, the payment may at the Payor's option be deemed not to have been made.  The Payee may at its option, by notice to the Payor, require subsequent payments to be made by cashier's check or equivalent currently available funds.

16.14	Audit Rights.  Any Payee to whom periodic payments are made hereunder shall have "Audit Rights," i.e., the right to audit or have audited the books and records of the Payor relating to such payments for the sole purpose of verifying the amounts due and payable hereunder, once per calendar year upon <[a] five  [b] __(no. days)_____________> business days' notice to the Payor.  

	(a)	The Payor shall maintain business records, books, account information, and related materials sufficient to permit the Payee to conduct such audits.

	(b)	Any such audit shall be performed by a firm of independent certified public accountants or equivalent in the jurisdiction in question (CPA firm) reasonably acceptable to the Payor.  Any such audit may at the audit firm's discretion include some or all of (1) discussing the Payor's affairs, finances, and accounts with the Payor's officers and/or directors (who shall cooperate fully in such audit), and (2) inspecting and copying such portions of the Payor's books and records relating to such payments as the audit firm deems appropriate in accordance with the ordinary professional standards applicable to the audit firm.  

		[COMMENT:  The intent of the last phrase is to make the audit firm's professional judgment about how to conduct the audit virtually conclusive.]

	(c)	The CPA firm <and each member or employee thereof participating in the audit> shall execute a written agreement not to disclose any information learned in the audit to any party, nor to use any such information, except for providing the Payee with a statement of payments due for the payment period(s) in question.

	(d)	The cost of such an audit shall normally be at the Payee's expense.  However, the Payor shall bear the cost of the audit if the audit reveals any underpayment which in the aggregate is greater than <[a] two percent (2%)  [b] three percent (3%)  [c] five percent (5%)> of the amount actually due for the period being audited.

	(e)	Such an audit may encompass the Payor's books and records for any payment period if the audit is commenced within three years of the date of the Payor's statement of payments due for that period.

	(f)	The Payor shall pay any shortfalls, plus interest as set forth above dating from the due dates in question, within thirty (30) days after notice from the Payee of the shortfall.  

16.15	Payments Upon Termination or Expiration.  Within <[a] five business days  [b] thirty days> after the effective date of termination or expiration of <[a] the License  [b] the last unterminated and unexpired License Right>, <[a] LICENSEE  [b] each Party> shall pay <[a] LICENSOR  [b] the other Party> any amounts that as of that effective date were due and owed thereto pursuant to this Agreement.  



ARTICLE 17.
PERIODIC REPORTS AND STATEMENTS

[COMMENT:  This "Periodic Reports" Article deals only with reports that are expected to be made routinely and periodically, e.g., royalty statements.  It is set out separately for the convenience of the Licensee's and Licensor's administrative personnel who will be preparing periodic reports.  

This Article does not address situational or contingency reports such as Bug Reports, reports of third-party infringement or infringement claims, and the like; reports of that type are handled in the provisions dealing with the related substantive issues.]

17.1	In-House Dissemination Reports.  No later than <[a] thirty  [b] sixty  [c] ninety> days after the end of each <calendar quarter>, LICENSEE shall furnish LICENSOR with a statement certified by _____________ of the number of Licensed Copies distributed in that <quarter> by LICENSEE pursuant to In-House Dissemination Rights and of the In-House Dissemination License Fees due as a result of such dissemination.

17.2	Distribution Fee Reports.  Within <[a] thirty  [b] sixty  [c] ninety> days after the end of each <calendar quarter>, LICENSEE shall furnish LICENSOR with a statement certified by ___________ of the number of Licensed Copies distributed in that <quarter> by LICENSEE pursuant to Distribution Rights and of the Distribution Fees due as a result of such distribution.

17.3	Running Royalty Statements.  No later than <[a] thirty  [b] sixty  [c] ninety> days after the end of each <calendar quarter>, LICENSEE shall furnish LICENSOR a detailed itemized statement setting forth Gross Income (with all deductions and bundled/promotional transaction categories separately itemized) in each applicable category of Gross Income and the Running Royalties due in each such <[a] category  [b] category as well as the Minimum Running Royalty then due>.

		[COMMENT:  Counsel should give some thought to how detailed the Gross Income statement should be, to aid in audits of the royalty records.  Note that this subparagraph does not require any particular Licensee officer to certify the statement but a requirement for an annual certificate by a Licensee officer is set forth below.  In some transactions, the Licensor may wish to obtain a certified statement each time instead of merely annually.]



17.4	Year-End Certificate of Payments Due.  No later than <[a] thirty  [b] ninety  [c] 120> days after the end of each of <[a] LICENSEE's  [b] a Payor's> fiscal years, <[a] LICENSEE  [b] the Payor> shall deliver to <[a] LICENSOR  [b] the Payee> a year-end statement of <[a] Gross Income and Running Royalties  [b] payments> due and payable for the fiscal year in question, <in the form set forth in Article 17.3,> certified <under oath> by <[a] LICENSEE's  [b] the Payor's> chief financial officer.


ARTICLE 18.
LIMITED WARRANTIES AND REPRESENTATION, AND
LIMITED REMEDIES, CONCERNING THE LICENSED SOFTWARE

LICENSOR provides the warranties and representation set forth below in this Article 18 ("LICENSOR's Warranties"), AND NO OTHER WARRANTIES OR REPRESENTATIONS, with respect to the Licensed Software.  

		[COMMENT:  A number of clauses are bold-faced, and/or set out in all-caps, to reduce the chance that a court might find that the clauses in question were insufficiently conspicuous to put the Licensee on notice of warranty/remedy limitations.]


18.1	As-Documented Warranty.  LICENSOR warrants to LICENSEE, SUBJECT TO THE REMEDY LIMITATIONS SET FORTH BELOW IN THIS ARTICLE 18.1 AND THE WARRANTY EXCLUSIONS SET FORTH IN ARTICLE 18.6, that during the Maintenance Period the Licensed Program(s) will operate in accordance with <[a] the Licensed Documentation  [b] the Licensed Documentation and the Additional Performance Standards set forth in Schedule 18.1>.  Such warranty is referred to herein as the "As-Documented Warranty."   The term of the As-Documented Warranty extends to cover any breach of or other noncompliance with the As-Documented Warranty (referred to herein as a "Bug") discovered by LICENSEE prior to <[a] one year  [b] ninety days> after expiration of the Maintenance Period.  <To the extent that the As-Documented Warranty may be held to run in favor of a Sublicensee of LICENSEE, such warranty shall extend in favor of such Sublicensee no later than the expiration of the term set forth in the sublicense agreement between LICENSEE and the Sublicensee.>

		[COMMENT:  The term of the Maintenance Period, and thus of the As-Documented Performance Warranty, may well be a matter for bargaining during negotiation of the Agreement.]


18.2	Exclusive Remedies for Breach of As-Documented Warranty.  LICENSEE'S SOLE REMEDIES for the occurrence of any Breach of the As-Documented Warranty, TO THE EXCLUSION OF ALL OTHER REMEDIES THEREFOR, IN CONTRACT, TORT, OR OTHERWISE, shall be:

	(a)	for LICENSOR to perform Corrective Maintenance in accordance with, and subject to LICENSEE's compliance with, the procedures set forth in Article 11; and/or,

	(b)	if Maintenance does not result in correction of the Bug within <[a] a reasonable period of time  [b] ___________ business days  [c] ___________ weeks> after LICENSOR's actual receipt of the Bug report, then LICENSEE may <(1) obtain the Source Code Delivery Package from the Escrow Agent in accordance with Article 4 for the sole purpose of performing Emergency Corrective Maintenance, offsetting all Direct Expenses associated with such Emergency Corrective Maintenance against unpaid amounts owed or becoming owed to LICENSOR by LICENSEE under this Agreement, up to a maximum offset of $___________; or (2) if LICENSEE elects not to perform Emergency Corrective Maintenance and/or is unsuccessful in correcting the Bug,> terminate the License in accordance with Article 27 and thereafter, if it so chooses, avail itself of the Backup Remedy set forth in Article 20.

18.3	Noninfringement Knowledge Representation re Exercise of License Rights.  LICENSOR makes a Knowledge Representation to LICENSEE that the Exercise of License Rights pursuant to this Agreement will not infringe any valid and subsisting Intellectual Property Right <in the Territory> owned by Persons other than the LICENSEE or an Affiliate of LICENSEE.  LICENSOR makes no representation, however, concerning any knowledge or lack thereof which it has or may have with respect to the possibility of such infringement by Combination Use of the Licensed Software, and the Parties agree that LICENSOR has no duty to investigate nor to warn LICENSEE of any such possibility of infringement.

		[COMMENT:  Only a no-knowledge rep is given on the subject of noninfringement instead of an outright warranty.  This may seem at first glance to be favorable treatment of licensors.  

		It is often impossible, however, for licensors to know with any certainty that some portion of the licensed software was not developed by an employee while working for a former employer, as in the Plains Cotton v. Goodpasture case, 807 F.2d 1256, 1262-64 (5th Cir. 1987), cert. denied, 108 S. Ct. 80 (1988).  Similarly, in the unreported Computer Associates v. Goal Systems case of July, 1990, according to trade-journal accounts an employee of the defendant had included in the defendant's software some routines that he had written while formerly employed by the plaintiff; reportedly the case settled quickly after the plaintiff executed an ex parte seizure of the defendant's software under the Copyright Rules.  

		Nor can a licensor readily know whether some third-party patent might dominate the licensed software -- a U.S. patent can issue years after the filing of the underlying patent application (and the application is kept secret until issuance), meaning that a dominating patent application could be pending without the licensor's knowledge.  

		Accordingly, as a compromise Licensor does not give an outright warranty, but is nevertheless required to defend against infringement charges pursuant to Article 19.]  


18.4	No-Surreptitious-Code Warranty.  LICENSOR warrants to LICENSEE, subject to the warranty exclusions set forth in Article 18.6, that no portion of the Licensed Program(s) contains or will contain any Self-Help Code <(except as set forth in Schedule A-28)> nor any Unauthorized Code (the "No-Surreptitious-Code Warranty").  LICENSOR shall Defend LICENSEE against any Claim, and Indemnify LICENSEE against any Loss or Expense, arising out of any breach of the No Surreptitious-Code Warranty pursuant to Article 22.

		[COMMENT:  Many if not most licensors should be able to give a flat-out warranty of the kind described in this Article, because they will be in control of their source code and/or can check out third-party executable code (e.g., compiler libraries) for viruses and the like.  Furthermore, regardless of the scope of other warranties (e.g., relating to performance or noninfringement), most licensees will expect their licensors to "stand behind" their code at least to the extent of a No Surreptitious-Code Warranty.

		If Self-Help Code is present in a Licensed Program, it should normally be disclosed to the Licensee, e.g., in a Schedule.]  


18.5	Physical Media Warranty.  LICENSOR warrants to LICENSEE, subject to the warranty exclusions set forth in this Article 18.5 and in Article 18.6, that each Licensed Copy of the Licensed Program(s) Provided by LICENSOR is and will be free from physical defects in the media that tangibly embodies the Copy (the "Physical Media Warranty"), subject to the following:

	(a)	The Physical Media Warranty does not apply to defects discovered more than <[a] thirty days  [b] ninety days> after the date of delivery of the Copy by LICENSOR.

	(b)	The Physical Media Warranty does not apply to defects arising from acts of non-LICENSOR personnel, misuse, theft, vandalism, fire, water, acts of God, or other peril.

	(c)	LICENSEE's sole remedy for breach of the Physical Media Warranty, TO THE EXCLUSION OF ALL OTHER REMEDIES THEREFOR, shall be replacement by LICENSOR of any Copy provided by LICENSOR that does not comply with the warranty at LICENSOR's expense, including shipping and handling costs.   

18.6	Warranty Limitations.  LICENSOR's WARRANTIES ARE LIMITED, AND APPLY ONLY, AS FOLLOWS:

	(a)	LICENSOR's Warranties do not extend to operation of the Licensed Program(s) on any hardware configuration, nor in any operating environment (e.g., operating system), other than as specified in the Licensed Documentation.

	(b)	LICENSOR's Warranties do not extend to operation of the Licensed Software in conjunction with any computer program (e.g., "terminate and stay resident" utility programs) other than as specified in the Licensed Documentation.

	(c)	Except as may be expressly agreed in writing by LICENSOR, LICENSOR's Warranties do not apply to:

		(1)	any copy of the Licensed Software that is modified by any Person other than LICENSOR; nor 

		(2)	Use of the Licensed Software other than in accordance with the most current operating instructions Provided by LICENSOR; nor

		(3)	Bugs caused by defects, problems, or failures of hardware or software not Provided by LICENSOR; nor

		(4)	Bugs caused by negligence of LICENSEE or any other Person except LICENSOR.

	(d)	Without limiting the generality of the exclusions set forth in this Article 18, LICENSOR's Warranties do not include any warranty:
	(1)	that the functions performed by the Licensed Program(s) will meet LICENSEE's requirements or will operate in the combinations that may be selected for use by LICENSEE, nor 
	(2)	that the operation of the Licensed Program(s) will be error free in all circumstances, nor
	(3)	that all defects in the Licensed Program(s) that are not Material with respect to the functionality thereof as set forth in the Licensed Documentation will be corrected, nor
	(4)	that the operation of the Licensed Program(s) will not be interrupted for short periods of time by reason of defect therein or by reason of fault on the part of LICENSOR.

	(e)	Without limiting the generality of the exclusions set forth in this Article 18, and except as otherwise provided in this Agreement, LICENSEE shall be exclusively responsible as between the Parties for, AND LICENSOR MAKES NO WARRANTY OR REPRESENTATION WITH RESPECT TO:

		(1)	determining whether the Licensed Software will achieve the results desired by LICENSEE;  

		(2)	selecting, procuring, installing, operating, and maintaining computer hardware to run the Licensed Software;

		(3)	training LICENSEE's Personnel in computer operations, other than such LICENSOR-provided training as is expressly set forth in this Agreement;

		(4)	ensuring the accuracy of any input data used with the Licensed Software;

		(5)	establishing adequate data backup provisions for backing up LICENSEE's data; and 

		(6)	establishing adequate operational backup provisions (e.g., alternate manual operation plans) in the event of a defect or malfunction that impedes the anticipated operation of the Licensed Software.

18.7	Disclaimer of All Other Warranties and Representations.  The express warranties and representation set forth in this Article 18 are in lieu of, and LICENSOR DISCLAIMS, ANY AND ALL OTHER WARRANTIES, CONDITIONS, OR REPRESENTATIONS (EXPRESS OR IMPLIED, ORAL OR WRITTEN), WITH RESPECT TO THE LICENSED SOFTWARE OR ANY PART THEREOF, INCLUDING ANY AND ALL IMPLIED WARRANTIES OR CONDITIONS OF TITLE, NONINFRINGEMENT, MERCHANTABILITY, OR FITNESS OR SUITABILITY FOR ANY PURPOSE (WHETHER OR NOT LICENSOR KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE), WHETHER ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE, OR BY COURSE OF DEALING.  IN ADDITION, LICENSOR EXPRESSLY DISCLAIMS ANY WARRANTY OR REPRESENTATION TO ANY PERSON OTHER THAN LICENSEE WITH RESPECT TO THE LICENSED SOFTWARE OF ANY PART THEREOF.


ARTICLE 19.
LICENSOR'S INFRINGEMENT-DEFENSE OBLIGATION

19.1	Limited Covenant to Defend.  As a covenant separate from the noninfringement Knowledge Representation, LICENSOR, at its own expense and subject to the terms and conditions of this Article 19, shall Defend Claims against LICENSEE by third parties (other than Affiliates of LICENSEE) that any of the following activities by LICENSEE <or an Authorized Licensee Delegate> constitutes infringement of an Intellectual Property Right under the laws of <[a] the United States or any of its states (referred to collectively as "U.S. Intellectual Property Rights") [b] the following jurisdictions:  ___________  [c] any jurisdiction anywhere in the world>.

		[COMMENT:  In many license arrangements, the Licensor will have more of its business at risk than a Licensee if a third-party infringement claim arises.  Furthermore, many Licensees will take the position in negotiations that they are paying for the right to use the Licensed Software free of third-party interference (similar to a covenant of quiet enjoyment in a real estate lease).  

		On the other hand, few Licensors can afford to bear all economic risks of third-party infringement claims.  

		Consequently, these Model Provisions set out a defense obligation, but one that is limited in the amount of risk that the Licensor must bear.]  

	(a)	any making, or distribution of copies of the Licensed Software that is expressly permitted by this Agreement (but not the creation of derivative works except as may be expressly agreed otherwise in writing by LICENSOR), EXCEPT FOR the making and/or distribution of copies of any alteration or modification of the Licensed Software created by any Person other than LICENSOR;

		[COMMENT:  When a licensee is creating derivative works based on licensed software pursuant to a license agreement, the licensor may well have absolutely no control over the nature of the derivative work and thus over whether it does or does not infringe anything.  Accordingly, derivative-work creation is excluded here from the definition of "Exercise of License Rights"]

	(b)	Use of the Licensed Software (unaltered and unmodified by any Person other than LICENSOR) in accordance with the Licensed Documentation for a purpose (or to achieve an effect) that is described in the Licensed Documentation and consistent with the terms and conditions of this Agreement, OTHER THAN Combination Use of the Licensed Software;

	(c)	Trademark Use as authorized by and in accordance with this Agreement.

19.2	Conditions for LICENSOR Defense.  To be entitled to Defense by LICENSOR against a third-party infringement Claim:

	(a)	LICENSEE shall advise LICENSOR of the existence of the Claim, by the most expeditious reasonable means, immediately upon learning of the assertion of the Claim against LICENSEE (whether or not litigation or other proceeding has been filed or served); and

	(b)	LICENSEE shall permit LICENSOR to have the sole right to control the Defense and/or settlement of all such Claims, in litigation or otherwise, so long as no such settlement adversely affects LICENSEE's ability to exercise the License Rights without LICENSEE's prior consent.  

		[COMMENT:  Because LICENSEE may have significant business interests riding on the Licensed Software, LICENSOR does not have the right to settle the case unilaterally by directing LICENSEE to cease using certain infringing functions of the software, as LICENSOR does after a final judgment, below.  Absent LICENSEE consent, LICENSOR's obligation is to defend the software to final judgment if a non-adverse settlement is not available.  

		After a final adverse judgment, however, LICENSEE can invoke the Backup Remedy, but otherwise the risk of loss is on LICENSEE.]


19.3	Actions Upon Preliminary Injunctive Relief.  In the event that a preliminary injunction is entered that completely enjoins LICENSEE from the Exercise of License Rights, LICENSEE may suspend payment of Minimum Running Royalties to LICENSOR <and instead make all such payments into an escrow account> until such time, if any, as the preliminary injunction is vacated or stayed.  Such a suspension, however, shall not affect LICENSEE's obligation to pay Running Royalties to LICENSOR.

		[COMMENT:  This clause will usually be appropriate only in a license arrangement involving sublicensing rights or other on-going royalty payments.  A suspension of Minimum Running Royalties might be OK, but if the Licensee continues to do business and generate Gross Income outside the jurisdiction of the preliminary injunction, the payment of Running Royalties (i.e., royalties earned on Gross Income actually generated) should be unaffected.]


19.4	Actions Upon Successful Assertion of Infringement Claim.  If a third-party infringement Claim Defended by LICENSOR pursuant to this Article 19 is sustained in a final judgment from which no further appeal is taken or possible, then LICENSOR shall, in its sole election and at its expense:

	(a)	procure for LICENSEE the right to continue to use the Licensed Software pursuant to this Agreement; or 

	(b)	replace or modify the Licensed Software to make it noninfringing; or

	(c)	direct LICENSEE to cease use of the Licensed Software or of the specific function(s) of the Licensed Software that resulted in the final judgment, whereupon LICENSEE shall have the option to terminate the License pursuant to Article 27 and to invoke the Backup Remedy set forth in Article 20.


ARTICLE 20.
BACKUP REMEDY DEFINITION

[COMMENT:  This Article is particularly important, and should be reviewed carefully in drafting a license.  See in particular the comments in Article 18.2, relating to disagreements between the Licensor and Licensee as to whether a given bug is "material."

The Article defines a(n exclusive) "pull the plug remedy" that becomes available to the Licensee in certain events when all other remedies set forth in the Agreement have failed, e.g.:
þ	the Licensor is unable to cure a bug in the Licensed Software that amounts to a material breach of the As-Documented Warranty;
þ	a third party successfully asserts an infringement claim that materially interferes with the Licensee's bargained-for use of the Licensed Software, and the Licensor is unable to make arrangements to avoid the claim.
The parties may of course provide in the Agreement that the Backup Remedy becomes available to the Licensee as a fallback when other remedies fail.

The underlying concept of the Backup Remedy is that of risk allocation.  The Licensor is normally in the business of "selling" software, not business insurance; the Licensor's pricing of its licenses typically reflects that fact.  Accordingly, the Agreement will normally limit the risk that the Licensor must assume, vis a vis the Licensee, in a pull-the-plug situation.

Two alternative structures for the Backup Remedy are set out here:  A fixed-sum monetary payment akin to "you get your money back"; and a capped-damages payment.  Counsel may come up with other structures (please consider passing them on to the Model Provisions drafters for inclusion in a future version).

In any event, the Backup Remedy is intended to be the Licensee's exclusive remedy in a pull-the-plug situation, and to be exercisable only in connection with termination of the License by the Licensee (unless the Agreement provides otherwise).]


The "Backup Remedy," TO THE EXCLUSION OF ALL OTHER REMEDIES AVAILABLE TO LICENSEE except as expressly stated otherwise in this Agreement, and exercisable only in connection with a termination of the License by the LICENSEE upon a failure of other remedies for breach of a warranty or covenant made by LICENSOR, shall be for LICENSOR to pay LICENSEE (and/or credit against any amounts owed to LICENSOR by LICENSEE): 

		[COMMENT:  Some drafting options are set out below.]  

	the <Initial> License Fee, to the extent paid or owed to LICENSOR.

	the <Initial> License Fee, to the extent paid or owed to LICENSOR, plus all fees paid or owed to LICENSOR relating to customization of the Licensed Software for LICENSEE.  <Such fees shall not be deemed to include Travel Expenses and similar disbursements to third parties incurred by LICENSOR or LICENSEE in connection with such customization.>

	the Periodic License Fee for the then-current period for which Periodic Royalties are paid under Article 16.2, plus a declining percentage of the Initial License Fee (as set forth in the next sentence), all to the extent paid or owed to LICENSOR.  The percentage of the Initial License Fee shall be 100% during the first year of the License Term, and shall decline 20% in each subsequent year of the Term to 80%, 60%, 40%, and 20% of the Initial License Fee in the second, third, fourth, and fifth years, and 0% thereafter.  

		[COMMENT:  Many software licenses are paid for with an initial fee and annual follow-on fees (sometimes styled "maintenance fees," but that term should be used carefully for reasons discussed in the preamble Comment to Article 16.  Some pull-the-plug problems might not arise until, say, the fifth year of a license term; a third-party patent, for example, might take that long to issue from the U.S. Patent and Trademark Office and to be successfully asserted against the Licensor.  In such a situation, the Licensor could legitimately take the position that it need not refund the entire amount of the initial fee because the Licensee has had the benefit of the software for at least four years].

	LICENSEE's reasonably demonstrable direct damages, subject to the "cap" set forth below.  Direct damages <[a] means  [b] shall include> LICENSEE's costs of obtaining replacement software, including training, data conversion, and installation costs.  <Direct damages also includes all Losses or Expenses incurred by LICENSEE in connection with termination of sublicenses.>  The "cap" on (i.e., maximum aggregate amount of) LICENSOR's payment obligation for LICENSEE's direct damages of all kinds, in respect of any and all breaches of warranty, unsuccessful infringement Defenses, and all other events causing direct damages either before or after termination of the License, shall be $___________.  

		[COMMENT:  Caution -- See the comments in Article 18.2, relating to disagreements between the Licensor and Licensee as to whether a given Bug is "Material."]



ARTICLE 21.
LIMITATION OF LIABILITY

21.1	Exclusion of Incidental and Consequential Damages.  Independent of, severable from, and to be enforced independently of any other enforceable or unenforceable provision of this Agreement, OTHER THAN FOR INFRINGEMENT OF ONE PARTY'S INTELLECTUAL PROPERTY RIGHTS BY ANOTHER PARTY (INCLUDING ANY ENGAGEMENT IN LICENSABLE ACTIVITIES BY LICENSEE <OR AN AUTHORIZED LICENSEE DELEGATE> BEYOND THE SCOPE OF THE LICENSE RIGHTS) OR FOR BREACH OF A NONCOMPETITION COVENANT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY (NOR TO ANY PERSON CLAIMING RIGHTS DERIVED FROM THE OTHER PARTY'S RIGHTS) FOR INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE, OR EXEMPLARY DAMAGES OF ANY KIND, INCLUDING LOST PROFITS, LOSS OF BUSINESS, OR OTHER ECONOMIC DAMAGE, AND FURTHER INCLUDING INJURY TO PROPERTY, AS A RESULT OF BREACH OF ANY WARRANTY OR OTHER TERM OF THIS AGREEMENT, REGARDLESS OF WHETHER THE PARTY ALLEGEDLY LIABLE WAS ADVISED, HAD OTHER REASON TO KNOW, OR IN FACT KNEW OF THE POSSIBILITY THEREOF.  EACH PARTY ACKNOWLEDGES THAT THE FOREGOING SENTENCE REFLECTS AN INFORMED, VOLUNTARY ALLOCATION BETWEEN THE PARTIES OF THE RISKS (KNOWN AND UNKNOWN) THAT MAY EXIST IN CONNECTION WITH THIS AGREEMENT, THAT SUCH VOLUNTARY RISK ALLOCATION WAS A MATERIAL PART OF THE BARGAIN BETWEEN THE PARTIES, AND THAT THE ECONOMIC AND OTHER TERMS OF THIS AGREEMENT WERE NEGOTIATED AND AGREED TO BY THE PARTIES IN RELIANCE ON SUCH VOLUNTARY RISK ALLOCATION.

21.2	Maximum Aggregate Liability.  Independent of, severable from, and to be enforced independently of any other enforceable or unenforceable provision of this Agreement, IN NO EVENT SHALL LICENSOR'S AGGREGATE LIABILITY TO LICENSEE (INCLUDING LIABILITY TO ANY PERSON OR PERSONS WHOSE CLAIM OR CLAIMS ARE BASED ON OR DERIVED FROM A RIGHT OR RIGHTS CLAIMED BY LICENSEE), WITH RESPECT TO ANY AND ALL CLAIMS AT ANY AND ALL TIMES ARISING FROM OR RELATED TO THE SUBJECT MATTER OF THIS AGREEMENT, IN CONTRACT, TORT, OR OTHERWISE, EXCEED THE AGGREGATE AMOUNTS PAID TO LICENSOR BY LICENSEE, PLUS INTEREST AS PROVIDED HEREIN, COMPUTED AS OF THE DATE OF ANY FINAL JUDGMENT AGAINST LICENSOR.


ARTICLE 22.
INDEMNITY AND DEFENSE OBLIGATIONS

[COMMENT:  This Article, like the warranty and Backup Remedy articles, represents an attempt to allocate risk as clearly as possible between the Licensor and Licensee.]

22.1	Applicability of this Article.  The provisions of this Article 22 shall govern all Defenses against Claims, Indemnities against Losses or Expenses, and claims to entitlement to Defense or Indemnity.

22.2	General Licensee Indemnity.  LICENSEE shall Defend LICENSOR against any and all Claims, and Indemnify and hold LICENSOR harmless against any and all Losses or Expenses, SUBJECT TO THE EXCLUSION OF CONSEQUENTIAL DAMAGES HEREIN, arising from or otherwise in respect of:

	(a)	any Material inaccuracy in any representation, and any Material Breach of any warranty or covenant, of LICENSEE contained in this Agreement or in any certificate, document, or instrument delivered to LICENSOR by LICENSEE pursuant to this Agreement; and

	(b)	any Exercise of License Rights (other than as to matters for which LICENSOR is expressly made responsible hereunder), and any other use of the Licensed Software, by LICENSEE <and/or any Authorized Licensee Delegate> and the Authorized Users thereof (but this subparagraph shall not be construed to give LICENSEE or any other Person any right to use the Licensed Software apart from the License Rights).

22.3	General Licensor Indemnity.  LICENSOR shall Defend LICENSEE against any and all Claims, and hold LICENSEE harmless against any and all Losses or Expenses, SUBJECT TO THE LIMITATIONS OF WARRANTIES, REMEDIES, AND LIABILITY HEREIN, arising from or otherwise in respect of: 

	(a)	any Material inaccuracy in any representation, and any Material Breach of any warranty or covenant, of LICENSOR contained in this Agreement or in any certificate, document, or instrument delivered to LICENSEE by LICENSOR pursuant to this Agreement; and

	(b)	the operation of LICENSOR's business relating to the Licensed Software both before and after the date of this Agreement (other than as to matters for which LICENSEE is expressly made responsible hereunder).

22.4	Defense Procedure.  Each Protected Party seeking to be Defended against a Claim under this Agreement shall notify the Defending Party within 60 days of the assertion of any Claim(s) or discovery of any fact upon which the Protected Party intends to base a claim for Defense and/or indemnification under this Agreement.  The Protected Party's failure to so notify a Defending Party <to the prejudice of the Defense> shall relieve the Defending Party from any liability under this Agreement to the Protected Party with respect to Defense or Indemnity with respect to such Claim(s). 

22.5	Participation in and Control of Defense.  If a Defending Party Defends a Protected Party in a lawsuit, arbitration, negotiation, or other proceeding ("dispute") concerning a Claim pursuant to this Agreement, the Protected Party <[a] shall have the right to participate, at its own expense except as otherwise provided in this Agreement, jointly with the Defending Party in the Defense  [b] shall have the right to engage separate counsel, at the Defending Party's expense, to monitor and advise the Protected Party about the status and progress of the Defense>.

	(a)	With respect to any issue involved in such dispute as to which the Defending Party has acknowledged the obligation to Indemnify the Protected Party, the Defending Party shall have the sole right to control the Defense of (and/or to settle or otherwise dispose of) the dispute on such terms as the Defending Party in its judgment deems appropriate.  

	(b)	To be entitled to sole control of the Defense, upon request by the Protected Party the Defending Party shall demonstrate to the reasonable satisfaction of the Protected Party the Defending Party's financial ability to carry out its Defense obligations (and its Indemnity obligations if any).

22.6	Offset of Indemnity Amounts.  In any event requiring Indemnity of one Party by another hereunder, the Indemnitee may offset, against any payments subsequently due to the Indemnitor from the Indemnitee, any amount remaining unpaid under the Indemnity unless otherwise provided in this Agreement.

22.7	No Defense or Indemnity for Own Negligence or Misconduct.  Except as may be expressly provided otherwise in this Agreement, no Party shall be required to Defend or Indemnify any other Party with respect to Losses or Expenses finally adjudged to have been caused by the putative Indemnitee's own negligence, gross negligence, or willful misconduct (i.e., misconduct in bad faith).  Reasonable expenses incurred by a Protected Party who is or is threatened to be made a named defendant or respondent in a dispute may be paid or reimbursed by the Defending Party, in advance of the final disposition of the proceeding, after the Defending Party receives a written undertaking by or on behalf of the Protected Party to repay the amount paid or reimbursed, if and to the extent it is ultimately determined that the Protected Party was negligent or grossly negligent or had engaged in willful misconduct.

		[COMMENT:  The last sentence is adapted from a common provision in state corporation laws relating to indemnification and defense of directors.]



ARTICLE 23.
CONFIDENTIAL INFORMATION

This Article sets out procedures by which information regarded as confidential by a Party (referred to in this Article as "Proprietor") may be disclosed to another Party (referred to in this Article as "Receiving Party").  

23.1	No Confidential Disclosures by LICENSEE.  The Parties do not intend that LICENSEE will disclose to LICENSOR, and agree that LICENSEE will refrain from disclosing to LICENSOR, any information that LICENSEE regards as confidential.  LICENSEE warrants that all information disclosed to LICENSOR by LICENSEE is or will be free of any obligation of confidence.

23.2	Definition of Confidential Information.  As used herein, the term "Confidential Information" means information that:

	(a)	is disclosed in writing or other tangible form to the Receiving Party by the Proprietor or a Person having an obligation of confidence to the Proprietor (or, if disclosure is made orally, is reduced to or summarized in such a writing or other tangible form within thirty days after such oral disclosure) and is designated in such writing or tangible form as confidential in a writing by or on behalf a Proprietor,

		[COMMENT:  In an arms-length business relationship of comparatively narrow scope, it is generally undesirable to treat all business information indiscriminately as "confidential."  This may be true for no other reason than that such treatment can dilute the credibility of trade-secrecy assertions made about information that is truly confidential.  

		Accordingly, the parties may well desire to provide that, if information is to be treated as confidential, it must be so designated in writing.  

		In a broader or closer working relationship, however, it may well be preferable to omit the written-designation requirement, meaning that even oral disclosure of confidential information will be subject to a confidentiality obligation.]

	(b)	is not generally known in the relevant industry or industry segment, and

	(c)	affords possessors of the information a commercial or business advantage over others who do not have the information.  

		[COMMENT:  The last two subparagraphs are adapted from Section 757 of the Restatement of Torts, which includes a definition of "trade secret" that has been widely adopted by the courts of various states.]


23.3	Illustrative Types of Confidential Information.  Subject to the requirements of this Article 23, the term "Confidential Information" may include, by way of illustration but without limitation except as expressly set forth herein (the following enumeration of examples shall not be construed, in itself, to grant a Receiving Party by implication any rights with respect to any particular item of Confidential Information):

	(a)	any and all information relating to products manufactured by a Proprietor, processes therefor, apparatus and maintenance thereof, research, research programs, computer software, manufacturing techniques, processes, program files, developments for experimental work, flow charts, drawings, techniques, source and executable codes, standards, specifications, improvements, inventions, customer information, accounting data, statistical data, research projects, development and marketing plans, strategies, forecasts, customer lists, sales plans and sales and marketing information, and the like, that is/are in the possession of or may be acquired by or on behalf of the Proprietor, <whether or not tangibly embodied in a document, model, specimen, computer storage device, or other physical object,> including similar information with respect to any subsidiary or related companies of the Proprietor;  

		[COMMENT:  This is a standard catch-all list of examples of potential confidential information.]

	(b)	the fact of a Proprietor's selection and use of particular information in connection with this Agreement and its subject matter, whether or not the particular information is publicly available.

23.4	Exclusions from Confidential-Information Status.  The term "Confidential Information" does not include any information that, through no fault of the Receiving Party, is or becomes:

	(a)	<[a] fully  [b] substantially> described in an issued or published U.S. or non-U.S. patent; or

	(b)	<[a] fully  [b] substantially> described in <[a] an English-language printed publication  [b] a printed publication> distributed to more than 100 <[a] Persons  [b] Persons in the U.S. or Canada>; or 

	(c)	developed independently by or on behalf of the Receiving Party as shown by documentary evidence; or

	(d)	disclosed to the Receiving Party by a third Party not having an obligation of confidence to the Proprietor of the information as shown by documentary evidence.

No combination of information shall be deemed to be within any of the foregoing exceptions, however, regardless whether the component parts of the combination are within one or more exceptions, unless the combination itself and its economic value and principles of operation are themselves so excepted.  

23.5	Security Conditions.  Confidential Information shall be maintained under secure conditions by a Receiving Party, using at least <[a] the same security procedures used by the Receiving Party for the protection of its own Confidential Information  [b] the security procedures set forth in Schedule 23.5>.

23.6	Non-Use Obligation.  The Receiving Party shall not use any Confidential Information, except for the benefit of the Proprietor, without the express prior written consent of an authorized officer of the Proprietor, for a period ending <[a] five (5) years  [b] three (3) years> after the later of:

	(a)	the date of termination of the Receiving Party's right to possess and/or use Confidential Information (e.g., termination or expiration of the license), and 

	(b)	the date of the Receiving Party's actual cessation of such possession and/or use. 

		[COMMENT:  A Receiving Party's personnel may well remember general concepts and the like, learned through their exposure to Confidential Information, long after the tangible embodiments of Confidential Information have been returned to the Proprietor.  They may legitimately not be able to separate Confidential Information from nonconfidential information in their minds, however.  Accordingly, this subparagraph is intended to serve as the equivalent of a statute of repose.]


23.7	Non-Disclosure Obligation.  Except as may be otherwise permitted by this Agreement, no Receiving Party shall disclose any Confidential Information to any third party without the prior consent of the Proprietor.  

		[COMMENT:  Note that there is no statute of repose for the nondisclosure obligation as there is for the nonuse obligation above.]

	(a)	A Receiving Party may disclose appropriate portions of Confidential Information to those of its employees who have a substantial need to know the specific information in question in connection with the Receiving Party's exercise of rights or performance of obligations under this Agreement.  All such employees shall be instructed by the Receiving Party that the Confidential Information is subject to the obligation of confidence set forth by this License Agreement.  

	(b)	<With at least five business days' prior notice to the Proprietor,> a Receiving Party may disclose Confidential Information on a similar need-to-know basis to those Authorized Licensee Delegates who have executed an appropriate form of binding nondisclosure agreement or are otherwise obligated to preserve the Receiving Party's confidences, and/or to employees of the foregoing who have a similar need to know and who have been instructed about the obligation of confidence as set forth above.

23.8	No Unauthorized Copying.  Except as may be otherwise permitted by this Agreement, the Receiving Party shall not copy, duplicate, reverse engineer, reverse compile, disassemble, record, or otherwise reproduce any part of Confidential Information, nor attempt to do any of the foregoing, without the prior written consent of the Proprietor.  Any tangible embodiments of Confidential Information that may be generated by a Receiving Party, either pursuant to or in violation of this Agreement, shall be deemed to the sole property of the Proprietor and fully subject to the obligation of confidence set forth in this Article.

23.9	Court-Ordered Disclosures.  If a Receiving Party is ordered by a court or other governmental body of competent jurisdiction to disclose Confidential Information, or if it is served with or otherwise becomes aware of a motion or similar request that such an order be issued, then the Receiving Party shall not be liable to the Proprietor for disclosure of Confidential Information required by such order if the Receiving Party complies with the following requirements:

	(a)	if an already-issued order calls for immediate disclosure, then the Receiving Party shall immediately move for or otherwise request a stay of such order to permit the Proprietor to respond as set forth in this subparagraph;

	(b)	the Receiving Party shall immediately notify the Proprietor of the motion or order by the most expeditious possible means; and 

	(c)	the Receiving Party shall join or agree to (or at a minimum shall not oppose) a motion or similar request by the Proprietor for an order protecting the confidentiality of the Confidential Information, including joining or agreeing to (or nonopposition to) a motion for leave to intervene by the Proprietor.

23.10	Confidentiality Legends.  No Receiving Party shall remove, obscure, or deface any proprietary legend or copyright legend relating to the Proprietor's rights, on or from any tangible embodiment of any Confidential Information, without the Proprietor's prior written consent. 

23.11	Third-Party Misappropriation.  A Receiving Party shall immediately report to the Proprietor any attempt by any Person of which the Receiving Party has knowledge (a) to use or disclose Confidential Information without authorization from the Proprietor, or (b) to copy, reverse assemble, reverse compile or otherwise reverse engineer any part of the Licensed Software.

23.12	Post-Termination Procedures.  Upon any termination of the Receiving Party's right to possess and/or use Confidential Information (e.g., termination or expiration of the license), the Receiving Party shall turn over to the Proprietor (or, if agreed by the Proprietor, destroy) any disks, tapes, Documentation, drawings, blueprints, notes, memoranda, specifications, devices, documents, or any other tangible embodiments of any Confidential Information.


ARTICLE 24.
TRADEMARK USE

This Article governs Trademark Use by one Party (the "Mark User") of a Licensed Mark owned by one Party (the "Mark Owner").  This Article, however, does not in itself grant any license or other right to use any trademark, service mark, trade name, or trade dress; any such right must be expressly granted elsewhere in this Agreement.

[COMMENT:  This Article includes certain trademark provisions that are appropriate and even necessary in many sublicensing or service-bureau arrangement, but some of which may be regarded as onerous by a garden-variety Licensee (e.g., a confession of validity of Licensor's marks).]

24.1	Display of the Licensed Marks.  The Mark Owner is familiar with the Mark User's advertising practices; in view of that familiarity, the Mark User need not obtain the Mark Owner's prior approval of proposed advertising using the Licensed Marks, but shall instead furnish the Mark Owner with representative samples of such advertising from time to time or as reasonably requested by the Mark Owner.  The Mark Owner may, in its business judgment at any time and/or from time to time, give notice to the Mark User that subsequent such advertising will require prior approval by the Mark Owner in accordance with Article 24.2. 

		[COMMENT:  This optional provision is intended to give the Mark Owner maximum flexibility, yet still give the Mark Owner fall-back quality control over advertising using its marks if in the Mark Owner's business judgment the Mark User's advertising policies are materially changed.]

24.2	Approved Trademark Displays.  In connection with any Exercise of Trademark Use Rights, the Mark User shall display the Licensed Marks only in one or more "Approved Trademark Displays," namely such advertising, promotional material or product label, bearing the Licensed Marks in such form and style and with such notice of registration, as may be approved by <[a] the Mark Owner  [b] the Mark Owner (with such approval not to be unreasonably withheld)>.

	(a)	The Mark Owner shall be deemed to have approved any proposed advertising, promotional material, or product label as an Approved Trademark Display if (1) the Mark User submits specimens thereof to the Mark Owner for review together with complete particulars about the proposed use thereof, and the Mark User provides any additional information reasonably requested by the Mark Owner concerning such proposed use, and (2) the Mark Owner does not notify the Mark User of its disapproval within <[a] five  [b] ten> business days after such submission (extended as necessary to permit the Mark Owner the same length of time to evaluate any such additional information requested by the Mark Owner).

	(b)	The Mark Owner may direct the Mark User (by notice hereunder) to modify <subsequently produced copies of> such Approved Trademark Display as appropriate to reflect changes in <the Mark Owner's own use of the Licensed Marks and/or changes in> registration status of the Licensed Marks.

24.3	No Use of Other Marks.  The Mark User shall not affix any other mark, including any mark owned or claimed by the Mark User, to any copy of the Licensed Software.  This section, however, shall not preclude the Mark User from using its own trademark(s) in advertising that includes advertising for the Licensed Software, provided that appropriate footnotes or other notations are displayed to indicate the Mark Owner's ownership of its marks.

		[COMMENT:  This clause may well be inappropriate in many "bundling" arrangements, but may be very appropriate in straightforward distribution arrangements.  The purpose of this clause is to minimize the risk that a Licensee might "piggyback" its own trademark on the Licensor's trademark to obtain goodwill benefits for its own mark (possibly for use after license termination).]


24.4	Use of Other Marks.  The Mark User may use its own trademarks in conjunction with those of the Mark Owner.

24.5	No Use of Confusingly Similar Marks.  The Mark User shall not use or adopt, during the term of the License nor at any time thereafter, except as expressly permitted by this Agreement, in its business, in its business name, in its trading style, or in any of its services or on any of its products any trademark, service mark, name, style or dress which is so similar to, or so nearly resembles any of the Licensed Marks or any other trademark, service mark, trade name, trade dress or label of the Mark Owner as to be likely to cause or as to be calculated to cause deception or confusion, or which is graphically or phonetically similar to or is derived from or based upon any of the Licensed Marks.  If the Mark User does at any time adopt or use any trademark, service mark, name, dress or style which the Mark Owner regards as being in breach of this Article 24.5, then the Mark User shall immediately when requested upon by the Mark Owner discontinue such adoption or use. 

24.6	No Use of Marks in the Mark User's Name.  The Mark User shall not use any of the Licensed Marks in the Mark User's firm name or in any trade name, trademark, service mark, or trade dress of the Mark User.  Neither shall the Mark User use, in its stationery, letterhead, advertising, or otherwise, any of the Licensed Marks in such a way as may cause any confusion between the Mark User and the Mark Owner in respect to third parties.

24.7	Ownership of the Licensed Marks.  

	(a)	The Mark User acknowledges the validity of the Mark Owner's right, title and interest in and to the use of the Licensed Marks including the Mark Owner's right to register or to have registered as the owner of any or all of the Licensed Marks under the laws of any jurisdiction.  

	(b)	Apart from its License Rights under this Agreement, the Mark User shall not be deemed to acquire any right, title or interest in or any right to the use of any of the Licensed Marks during or after the term of the license.  

	(c)	The Mark User shall not at any time do or cause to be done, or omit to do or be done, any act or deed in any way impairing or intended to impair any part of such right, title or interest of the Mark Owner or of the validity of any of the Licensed Marks in any jurisdiction. 

		[COMMENT:  The foregoing clause is quite broad and, some might say, too indefinite for comfort.]

	(d)	All use of any of the Licensed Marks by the Mark User shall inure to the sole benefit of the Mark Owner in any and all jurisdictions. 

	(e)	If notwithstanding this Agreement the Mark User at any time develops, adopts or acquires (including development or acquisition as a matter of law), directly or indirectly, any right, title or interest in or to the use of any of the Licensed Marks in any jurisdiction, <or in any trademark or service mark similar either visually or phonetically to any of the Licensed Marks,> then the Mark User shall, at the Mark Owner's request whether during the License Term <(as extended)> or thereafter, assign to the Mark Owner or any designee of the Mark Owner all such right, title and interest together with any and all goodwill incident thereto.

	(f)	The Mark User agrees never to contest the Mark Owner's rights in and to the Licensed Marks, never to contest the validity of any registration thereon, and never to use or aid in the use of any of the Licensed Marks other than as licensed herein.

		[COMMENT:  No-challenge clauses such as this one may themselves be open to challenge in some jurisdictions.]


24.8	Registered-User License Agreements.  In any jurisdiction where the Mark User must be recorded as a registered user of the Licensed Marks in order for use by the Mark User to inure to the benefit of or be beneficial to the Mark Owner, the Mark User shall cooperate with the Mark Owner to execute such a registered user agreement in a form reasonably requested by the Mark Owner and to have it so recorded for the term of the License only.  

	(a)	The Mark User hereby irrevocably appoints the Mark Owner its attorney in fact (such appointment to be coupled with an interest) to act for it and represent it in canceling any registered user recordation in the event of termination of the license.

	(b)	Apart from such registered-user recordation, the Mark User shall not otherwise apply anywhere or at any time for any registration as owner or the Mark User of the Licensed Marks.  

	(c)	Upon any termination of the Mark User's Trademark Use Rights (by termination of the License or otherwise), the Mark User shall immediately, at its own expense, attend to the cancellation of any registered user registrations<, failing which it hereby irrevocably appoints the Mark Owner its attorney in fact (the appointment being coupled with an interest) to do so>.

24.9	Jeopardy to the Licensed Marks.  If in the business judgment of the Mark Owner any act or failure to act by the Mark User (including but not limited to failure to meet the requirements set forth in this Article) constitutes a danger to the value or validity or ownership of any of the Licensed Marks, then the Mark Owner may in lieu of or in addition to any other remedy available to it (including termination of the License) give notice to the Mark User describing the danger and may suspend in whole or in part the Mark User's right to use the Licensed Marks, effective on the Mark User's receipt of the notice.  The suspension shall continue until the Mark Owner determines that the danger no longer exists. 


ARTICLE 25.
INVENTIONS AND WORKS

25.1	Ownership of Inventions and Works.  The ownership of any Inventions or Works relating to the Licensed Software that may be made by LICENSOR Personnel or LICENSEE Personnel shall be as follows:

	(a)	Any such Inventions or Works that may be made solely by one or more LICENSEE Personnel or by one or more LICENSOR Personnel shall be owned entirely by LICENSEE or by LICENSOR, respectively. 

	(b)	Any such Inventions or Works made jointly by one or more LICENSEE Personnel and one or more LICENSOR Personnel shall be owned jointly by LICENSEE and LICENSOR.  

	(c)	LICENSEE may utilize any such an Invention or work of authorship that is owned entirely or jointly by LICENSOR only while and to the extent that such utilization comes within the scope of a License Right granted by this Agreement.  Any such Invention or work of authorship shall be deemed to be one of LICENSOR's Intellectual Property Rights relating to the Licensed Software.

	(d)	LICENSOR may utilize any such an Invention or work of authorship that is owned entirely by LICENSEE only in accordance with this Agreement. 

25.2	Disclosure of Inventions and Works.  <[a] LICENSEE  [b] Each Party> shall promptly disclose to <[a] LICENSOR  [b] the Other Party> all Inventions or Works that may be made by any of <[a] its  [b] the Disclosing Party's> Personnel, alone or jointly with any other Person and/or the Personnel of any other Person.  All such disclosures shall include:

	(a)	complete and accurate copies of all source code, executable code, design documentation, user documentation, work notes, test data, reports, samples, and other tangible evidence or results of such Invention or work of authorship; and

	(b)	all information available to <[a] LICENSEE  [b] the disclosing Party> concerning any third-party Intellectual Property Rights that may affect the utilization of the Invention or work of authorship, including any applicable third-party license agreements (which <[a] LICENSEE  [b] the disclosing Party> may at its option designate as Confidential Information for disclosure only to inside or outside counsel for <[a] LICENSOR  [b] the other Party>).

25.3	Patent Applications; Copyright or Mask Work Registrations.  LICENSOR shall make all determinations whether, when, and in which countries to seek patent protection or copyright or mask work registrations for Inventions or Works relating to the Licensed Software made by LICENSOR Personnel or LICENSEE Personnel, and shall bear all expenses associated with seeking such patent protection or registrations, subject to the following terms.

		[COMMENT:  Because applying for patent protection and/or copyright registrations usually entails disclosure of at least some of the technology in question, Licensors will normally want to control the application process to protect their confidential information.]

	(a)	Upon request by LICENSEE, LICENSOR shall advise LICENSEE of the extent of the patent protection or copyright or mask work registrations it intends to seek for any such Invention or Work.  If LICENSEE desires to pursue additional patent protection or registrations for the Invention or Work in question, it may do so at its own expense with the prior written consent of LICENSOR.

	(b)	Each Party shall provide at its own expense and without additional compensation all reasonable assistance requested or required by the other Party in seeking patent protection or registrations for such an Invention or Work in accordance herewith, including:

		(1)	executing any and all original, divisional, continuing, continuation-in-part, substitute, renewal, reissue, and all other patent applications, copyright registration applications, or mask work registrations;

		(2)	executing all rightful oaths, declarations, assignments, powers of attorney, and other papers;

		(3)	communicating to the other Party all facts known to the first Party relating to the Invention or Work and the history thereof; and

		(4)	generally doing everything possible which the other Party shall reasonably consider desirable to obtain patent protection or copyright or mask work registrations for the Invention or Work.

25.4	No Other Assignments or Encumbrances.  LICENSEE shall not assign, mortgage, license, or grant a security interest in any Invention or Work other than as set forth in this Agreement.


ARTICLE 26.
INFRINGEMENT BY THIRD PARTIES

26.1	LICENSOR in Charge of Litigation.  LICENSOR shall be in charge of all litigation against and settlement with third party infringers of LICENSOR's Intellectual Property Rights, <including any Sublicensee in violation of its sublicense agreement,> and LICENSEE shall cooperate in any such action, in accordance with this Article 26.  

26.2	LICENSEE to Notify LICENSOR.  LICENSEE shall promptly notify LICENSOR upon learning of any potential infringement by third parties of any of LICENSOR's marks, trade secrets, copyrights, or other exclusionary rights of LICENSOR.

26.3	Conduct of Litigation.  LICENSEE shall cooperate with LICENSOR as requested by LICENSOR, at LICENSOR's expense in accordance with this Article, in connection with any action taken by LICENSOR in its judgment against such potential infringer(s).  

	(a)	Such cooperation by LICENSEE shall include without limitation providing its personnel to appear as witnesses at depositions or in court, furnishing documents and information, executing all necessary documents, and being joined as a party to any legal proceedings.  

	(b)	The cost of any litigation or other action against potential infringers shall be borne entirely by LICENSOR.  LICENSOR shall reimburse LICENSEE, within thirty days after request from LICENSEE, for any Travel Expenses, photocopying expenses, and the like (but excluding salary or comparable expenses as well as fees and expenses charged by separate counsel, if any, engaged by LICENSEE) incurred by it at LICENSOR's request in connection with any such infringement action.

26.4	Allocation of Damage and Settlement Awards.  Any recovery of damages or attorney's fees in such actions, or in settlement of such actions or disputes, shall belong <[a] entirely to LICENSOR  [b] two-thirds to LICENSOR and one-third to LICENSEE after first deducting all costs and expenses associated with the action or dispute>.

26.5	No Obligation to Bring Suit.  LICENSOR shall have no obligation to LICENSEE to institute suit against any particular infringer.

26.6	Licensee Prosecution of Infringement Suits.  If LICENSOR declines to bring or continue suit against an infringer, LICENSEE may at its option and expense assume the prosecution of the suit, in which case all provisions of this Article 26 referring to LICENSOR shall be deemed to refer to LICENSEE and vice versa, mutatis mutandis.

		[COMMENT:  Normally, only an exclusive licensee can be given the power to bring a suit for infringement against third parties.]



ARTICLE 27.
TERMINATION OF LICENSE RIGHTS

27.1	Termination by Mutual Consent.  The Parties may terminate the License or any License Right by mutual consent upon such terms as they may agree in writing.

27.2	Unilateral Termination by LICENSEE.  <Subject to the restrictions on termination associated with particular License Rights,> LICENSEE may unilaterally terminate the License at any time, effective immediately upon notice to LICENSOR in accordance herewith.  

		[COMMENT:  Some License Rights may restrict the Licensee's right to terminate unilaterally.  For example, the Minimum Royalty clause provides that, if the Licensee terminates the License unilaterally, it must still pay minimum running royalties for the balance of the license term.]


27.3	Divisible Termination of License Rights.  In the event of a termination by <[a] LICENSOR  [b] either Party>, <[a] LICENSOR  [b] the terminating Party> in its sole discretion may terminate one or more License Rights divisibly without terminating other License Rights (e.g., termination of Distribution Rights without affecting LICENSEE's Internal Use Rights).  <LICENSEE, however, may not terminate License Rights divisibly except as otherwise provided in this Agreement.>

27.4	Termination for Breach.  The following procedures shall govern termination of the License in the event of a <Material> Breach:

	(a)	The Party not in breach ("Nonbreaching Party") shall give the Party in breach (the "Breaching Party") notice describing the Breach and stating the time within which it must be cured.

		(1)	No cure period is required, except as may be otherwise provided in this Agreement, if:

			(A)	this Agreement sets forth specific deadline dates for the obligation allegedly breached, or

			(B)	the termination is to be in connection with the LICENSEE's invocation of the Backup Remedy in accordance herewith, or

			(C)	this Agreement otherwise states that no cure period is required in connection with the termination in question.

		(2)	If the Breach is of an obligation to pay money, or a nonwillful Breach of an obligation of <[a] LICENSEE  [b] the Breaching Party> relating to <[a] LICENSOR  [b] the Nonbreaching Party> Intellectual Property Rights or relating to <[a] LICENSEE's  [b] the Breaching Party's> compliance with applicable export control regulations, then the Breaching Party shall have ten business days to cure the Breach after written notice of such Breach by the Nonbreaching Party.

		(3)	If the Breach is a willful breach of an obligation of <[a] LICENSEE  [b] the Breaching Party> relating to <[a] LICENSOR  [b] the Nonbreaching Party> Intellectual Property Rights or relating to <[a] LICENSEE's  [b] the Breaching Party's> compliance with applicable export control regulations, then <[a] LICENSOR  [b] the Nonbreaching Party> may specify in the notice of Breach that the License is terminated immediately, with no cure period.

		(4)	If the Breach is other than a breach of the kind described in subparagraphs (1) through (3), then the cure period shall be <[a] thirty  [b] ___________> days after the effective date of notice of the Breach from the Nonbreaching Party.

	(b)	The Breaching Party shall be deemed to have cured such Breach if within the cure period it takes steps reasonably adequate to alleviate any damage to <[a] LICENSOR  [b] the Nonbreaching Party> resulting from the Breach and to prevent a similar future Breach.

	(c)	If a Breach has not been cured at the end of its cure period (if any), then the License <or the License Right in question> shall terminate immediately upon expiration of that cure period without the need for further action on the part of the Nonbreaching Party.

27.5	Other Terminations.  The License shall terminate automatically, to the extent permitted by applicable law in the jurisdiction or jurisdictions in question (e.g., bankruptcy law), in any of the following events:

	(a)	If <[a] LICENSEE  [b] either Party> files a petition in bankruptcy (or is the subject of an involuntary petition in bankruptcy that is not dismissed within sixty days after the effective filing date thereof); or is or becomes insolvent; or admits of a general inability to pay its debts as they become due; then the License shall immediately terminate automatically and without notice.

	(b)	<[a] LICENSOR  [b] Either Party> may terminate the License upon the de facto or de jure nationalization or expropriation of <[a] LICENSEE  [b] the other Party> by governmental or military action, whether or not with valid authority.

	(c)	<[a] LICENSOR  [b] Either Party> may terminate the License immediately upon the discovery by <[a] LICENSOR  [b] that Party> of any <Material> false statement or other <Material> misrepresentation made or submitted to <[a] LICENSOR  [b] that Party> by <[a] LICENSEE  [b] the other Party>.

	(d)	<[a] LICENSOR  [b] Either Party> may terminate the License immediately upon any failure by <[a] LICENSEE  [b] the other Party> to provide, within ten (10) business days after notice, satisfactory and adequate assurances to <[a] LICENSOR  [b] the terminating Party> that <[a] LICENSEE  [b] the other Party> is able and willing to fully and effectively perform its obligations under this Agreement.  

		[COMMENT:  This is analogous to a lender's contractual right to accelerate a loan if it deems itself insecure -- counsel drafting a license agreement should think carefully whether or not such a clause is appropriate.]


27.6	Post-Termination Procedures.  

	(a)	Upon termination or expiration for any reason of a License Right, LICENSEE shall take the post-termination actions, if any, set forth herein for that License Right, e.g.,

		(1)	Article 5.4, relating to termination or expiration of Use Rights;

		(2)	Article 7.6, relating to termination or expiration of Distribution Rights;

		(3)	Article 16.15, relating to post-termination payments; and

		(4)	Article 23.12, relating to post-termination procedures for Confidential Information.

	(b)	In addition, upon termination of the last remaining unterminated and unexpired License Right, LICENSEE shall surrender to LICENSOR (or, at LICENSEE's option with LICENSOR's consent, destroy and provide LICENSOR with a certificate signed by an executive officer of LICENSEE attesting to the destruction of) all copies of the Licensed Software remaining in the possession of <[a] LICENSEE  [b] LICENSEE or any Authorized Licensee Delegate>.


ARTICLE 28.
DISPUTE NEGOTIATION

28.1	Invocation of Progressive Dispute Negotiation.  If any dispute between the Parties arising from or related to the subject matter of this Agreement is not resolved by agreement between the Parties, then prior to the filing of any suit with respect to the dispute (other than a suit seeking injunctive relief with respect to Intellectual Property Rights), the Party believing itself aggrieved (the "Invoking Party") shall call for progressive management involvement in the dispute negotiation by notice to the other Party.  Such a notice shall be without prejudice to the Invoking Party's right to any other remedy permitted by this Agreement, e.g., termination of <[a] the License  [b] a License Right> for <a Material> Breach.

28.2	Progression of Management Involvement.  The Parties shall use their best efforts to arrange personal meetings and/or telephone conferences as needed, at mutually convenient times and places, between negotiators for the Parties at the successive management levels set forth in Schedule A-10.  

	(a)	The negotiators at each management level shall have a period of allotted time as specified below in which to attempt to resolve the dispute.  The allotted time for the first-level negotiators shall begin on the effective date of the Invoking Party's notice.  The allotted time for each management level except the final one shall be ten business days; the allotted time for the final management level shall be thirty days.

	(b)	If a resolution is not achieved by negotiators at any given management level at the end of their allotted time, then the allotted time for the negotiators at the next management level, if any, shall begin immediately.

	(c)	If a resolution is not achieved by negotiators at the final management level within their allotted time, then either Party may bring suit to resolve the dispute in a court of competent jurisdiction and venue.


ARTICLE 29.
ARBITRATION

All disputes arising out of or relating to the subject matter of this Agreement that are not resolved by agreement between the Parties <(other than actions by a proprietor of Intellectual Property Rights that include claims for injunctive relief to enforce such Intellectual Property Rights)> shall be arbitrated in accordance with the <[a] Private Trial Appealable Arbitration rules set forth in Exhibit 29  [b] Patent Arbitration Rules of the American Arbitration Association  [c] Commercial Arbitration Rules of the American Arbitration Association>.   <In no event shall the arbitrator have the power to include any element of punitive damages or incidental or consequential damages in the arbitration award.>  Judgment on the arbitration award in accordance with this Agreement may be entered in any state or federal court of competent jurisdiction.

		[COMMENT:  See the comment at the beginning of Exhibit 29 concerning the Private Trial Appealable Arbitration Rules.

		Many counsel recommend excluding disputes over intellectual property rights from the arbitrator's jurisdiction when traditional arbitration rules (e.g., those of the AAA) are to be used.  Such an exclusion, of course, eliminates any dispute whether the arbitrator has authority to grant injunctive relief and/or punitive damages - it would be a court, not the arbitrator, that would decide whether to grant such relief.]


ARTICLE 30.
INTENTIONAL RISK ALLOCATION

LICENSOR and LICENSEE each acknowledges that the provisions of this Agreement were negotiated to reflect an informed, voluntary allocation between them of all risks (both known and unknown) associated with the transactions associated with this Agreement.  The warranty disclaimers and limitations in this Agreement are intended to limit the circumstances of liability.  The remedy limitations, and the limitations of liability, are separately intended to limit the forms of relief available to the Parties.

		[COMMENT:  This language is adapted from language in Ritchie Enterprises v. Honeywell Bull, Inc., 730 F. Supp. 1041, 1045 (D. Kan. 1990), in which the court rejected a buyer's claim that failure of an exclusive remedy of its essential purpose operated to revive certain disclaimed implied warranties.]



ARTICLE 31.
GENERAL PROVISIONS

31.1	Entire Agreement. Except as may be expressly provided otherwise herein, this Agreement constitutes the entire agreement between the Parties concerning the subject matter thereof.  No prior or contemporaneous representations, inducements, promises, or agreements, oral or otherwise, between the Parties with reference thereto shall be of any force or effect.  No modification or amendment to this Agreement shall be valid or binding unless reduced to writing and duly executed by the party or Parties to be bound thereby.

31.2	No Unauthorized Use of Trademarks.  In order to preserve the value of each Party's name and/or any trademarks, service marks, trade names, or trade dress adopted and/or used by that Party from time to time, the other Party shall not make any use of any of the same for any reason (e.g., in advertising, press releases, or other publicity) except solely as may be expressly authorized by this Agreement or otherwise authorized in writing by that Party.

31.3	Security Interest and Security Agreement.  To secure LICENSEE's performance of its obligations under this Agreement, this Agreement shall constitute a security agreement in which LICENSEE as debtor hereby grants LICENSOR as secured party a security interest, under the Uniform Commercial Code or equivalent law, in <the License Rights granted hereunder> <LICENSEE's Gross Income> as collateral.  

	(a)	To aid in perfecting this security interest, LICENSEE shall execute a financing statement in substantially the form of Exhibit 31.3 contemporaneously with the execution of this Agreement. 

	(b)	LICENSEE shall execute additional financing statements from time to time as reasonably requested by LICENSOR, without additional consideration, to perfect the security interest granted hereby.  All such financing statements shall be in substantially the form of Exhibit 31.3 or in such other form as LICENSOR may reasonably request to comply with applicable law.

	(c)	LICENSEE consents to the filing with the appropriate authorities, by or on behalf of LICENSOR, of any and all financing statements executed by LICENSEE.  A carbon, photographic, or other reproduction of any financing statement executed pursuant to the above security agreement may be filed in lieu of the original of such financing statement.

	(d)	LICENSEE shall execute such other documents from time to time for purposes of evidencing, recording, or perfecting this security interest as LICENSOR may reasonably request, without additional consideration.

31.4	Authority and Other General Warranties.  Each Party warrants to the other that:

	(a)	the Warranting Party, if a corporation, partnership, limited partnership, or other nonnatural Person, is duly organized and subsisting under the laws of the jurisdiction of its incorporation or existence; 

	(b)	the Warranting Party has full power and authority to enter into this Agreement; 

	(c)	the execution and/or performance of this Agreement does not and will not violate or interfere with any other agreement of the Warranting Party, which violation or interference would have a Material adverse effect on the Warranting Party;

	(d)	the Warranting Party will not enter into any agreement the execution and/or performance of which would violate or interfere with this Agreement and have a Material adverse effect on the other Party; 

	(e)	the Warranting Party is not a party to any agreement calling for the payment to, or receipt from, any third party by the Warranting Party of any commission, gratuity, "kickback," or other similar thing or amount in consideration of either Party's entry into this Agreement;

	(f)	the Warranting Party is not presently the subject of a voluntary or involuntary petition in bankruptcy, does not presently contemplate filing any such voluntary petition, and is not aware of any intention on the part of any other Person to file such an involuntary against it;

	(g)	the Warranting Party is not presently the subject of, nor the proponent of, any Claim that would have a Material adverse effect on the other Party; and

	(h)	the Person(s) executing this Agreement on behalf of the Warranting Party has actual authority to bind the Warranting Party to this Agreement.

31.5	Survival of Representations and Warranties.  The representations and warranties made herein shall survive the execution of this Agreement and the termination of the License <or any License Right> except as may be expressly indicated otherwise.

31.6	Independent Parties.  The Parties are independent contractors.  Except as may be expressly and unambiguously provided in this Agreement, no partnership or joint venture is intended to be created by this Agreement, nor any principal-agent or employer-employee relationship.  

	(a)	Except to the extent expressly provided in this Agreement, neither Party has, and neither Party shall attempt to assert, the authority to make commitments for or to bind the other Party to any obligation.  

	(b)	Although this Agreement contains covenants with respect to Confidential Information, the Parties disclaim any other intent to create a confidential or fiduciary relationship between them.

31.7	Injunctive Relief.  <[a] LICENSEE  [b] Each Party> acknowledges that any violation by <[a] LICENSEE  [b] that Party> of its covenants in this Agreement relating to Intellectual Property Rights <or noncompetition> would result in damage to <[a] LICENSOR  [b] the other Party> that is largely intangible but nonetheless real, and that is incapable of complete remedy by an award of damages.  Accordingly, any such violation shall give <[a] LICENSOR  [b] the other Party> the right to a court-ordered injunction or other appropriate order to specifically enforce those covenants.  <[a] LICENSEE  [b] the Party against whom any such injunction is entered> agrees to pay <[a] LICENSOR  [b] the other Party> as damages any reasonable expenses, including but not limited to attorney fees, incurred in obtaining such specific enforcement (in addition to any other relief to which the other Party may be entitled).

31.8	Survival of Restrictive Covenants.  The covenants herein concerning Intellectual Property Rights <and noncompetition> shall be construed as independent of any other provision hereof.  The existence of any claim or cause of action by <[a] LICENSEE  [b] a Party> against <[a] LICENSOR  [b] the other Party>, whether predicated on this Agreement or otherwise, shall not constitute a defense to enforcement by <[a] LICENSOR  [b] the Other Party> of such covenants.

31.9	Effect of Partial Invalidity.  If any one or more of the provisions of this Agreement should be ruled wholly or partly invalid or unenforceable by a court or other government body of competent jurisdiction, then: 

	(a)	the validity and enforceability of all provisions of this Agreement not ruled to be invalid or unenforceable shall be unaffected;

	(b)	the effect of the ruling shall be limited to the jurisdiction of the court or other government body making the ruling; 

	(c)	the provision(s) held wholly or partly invalid or unenforceable shall be deemed amended, and the court or other government body is authorized to reform the provision(s), to the minimum extent necessary to render them valid and enforceable in conformity with the Parties' intent as manifested herein; and

	(d)	if the ruling, and/or the controlling principle of law or equity leading to the ruling, is subsequently overruled, modified, or amended by legislative, judicial, or administrative action, then the provision(s) in question as originally set forth in this Agreement shall be deemed valid and enforceable to the maximum extent permitted by the new controlling principle of law or equity.

31.10	Business Judgment.  In any circumstance where this Agreement provides for either Party to make a determination in its judgment, that judgment shall be conclusive and binding, regardless of any allegation of malice or bad faith on the part of that Party, unless it be shown by clear and convincing evidence that a prudent person in the management of his or her own affairs could not have made the judgment in question in the same circumstances.

31.11	Assignment.  No Party may assign any right under this Agreement, and any purported assignment shall be null and void and a breach of this Agreement, except for the following or as otherwise provided herein:

	(a)	Either Party may assign this Agreement with the express prior written consent of the other Party.

	(b)	Any Party may assign all of its rights indivisibly to a Parent Company or Subsidiary of that Party.  The Parent Company or Subsidiary in question must agree in writing to comply with the Party's obligations under, and to be bound by, this Agreement.

	(c)	Either Party may assign all of its rights indivisibly (but not divisibly) in connection with a sale or other disposition of substantially all the assets of that Party's business relating to the Licensed Software to a single acquiring Person.  The acquiring Person must agree in writing to comply with the assigning Party's obligations under, and to be bound by, this Agreement.

31.12	Notices.  Notices hereunder shall be delivered and effective as follows:

	(a)	Every notice required or contemplated by this Agreement to be given by either Party may be delivered in person or may be sent by courier, telecopy, express mail, telex, telegraph or postage prepaid certified or registered air mail (or its equivalent under the laws of the country where mailed), addressed to the Party for whom it is intended, at the address specified in this Agreement.  Either Party may change its address for notice by giving notice to the other Party of the change.

	(b)	Any written notice shall be effective no later than the date actually received.  Unless otherwise provided in this Agreement, notice by courier, express mail, certified mail, or registered mail shall be effective on the date it is officially recorded as delivered by return receipt or equivalent and in the absence of such record of delivery it shall be rebuttably presumed to have been delivered on the <[a] third  [b] seventh> business day after it was deposited, first-class postage prepaid, in the mails.  Notice by telex or telegraph shall be deemed given at the time it is recorded by the carrier in the ordinary course of business as having been delivered, but in any event no later than one business day after dispatch.  Notice not given in writing shall be effective only if acknowledged in writing by a duly authorized officer of the Party to whom it was given.  As used in this section concerning notices, references to a particular date means the date itself, if a business day, otherwise the first business day after the date.

		[COMMENT:  Consider whether and how notices by electronic data interchange (EDI) or other forms of electronic mail are to be effective.  The parties may have separately entered into an EDI agreement that makes EDI notices effective.]


31.13	Remedies.  Except as otherwise provided herein or in this Agreement, the remedies set forth herein or in this Agreement are not exclusive, and either Party shall be entitled alternatively or cumulatively to damages for breach of this Agreement or to any other remedy available under applicable law.

31.14	Choice of Law.  This Agreement shall be interpreted and enforced in accordance with the law of __the State of_______ applicable to agreements made and performed entirely in that __State_______ by Persons domiciled therein.

31.15	Jurisdiction and Venue.  Suit to enforce this Agreement or any provision thereof shall be brought exclusively in the state or federal courts of __County and State_______.

31.16	Attorney's Fees.  If litigation or other action is commenced between the Parties concerning any dispute arising out of or relating to this Agreement, the prevailing Party shall be entitled, in addition to any other award that may be made, to recover all court costs or other official costs and all reasonable expenses associated with the action, including without limitation reasonable attorney's fees and expenses.

31.17	No Waiver.  The failure of either Party at any time to require performance by the other Party of any provision of this Agreement shall in no way affect the right of such Party to require performance of that provision.  Any waiver by either Party of any breach of any provision of this Agreement shall not be construed as a waiver of any continuing or succeeding breach of such provision, a waiver of the provision itself or a waiver of any right under this Agreement.

31.18	Binding on Successors.  This Agreement shall be binding upon and inure to the benefit of the Parties and their successors and assigns permitted by this Agreement.

31.19	Article Headings.  The article headings contained in this Agreement are for reference purposes only and shall not in any way control the meaning or interpretation of this Agreement.

31.20	Representation of Counsel; Mutual Negotiation.  Each Party has <[a] been  [b] had the opportunity to be> represented by counsel of its choice in negotiating this Agreement.  This Agreement shall therefore be deemed to have been negotiated and prepared at the joint request, direction, and construction of the Parties, at arms length, with the advice and participation of counsel, and shall be interpreted in accordance with its terms without favor to any Party.

31.21	Disclaimer of UN Convention on Sale of Goods.  PURSUANT TO ARTICLE 6 OF THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (UN CONVENTION), THE PARTIES AGREE THAT THE UN CONVENTION SHALL NOT APPLY TO THIS AGREEMENT.

31.22	English Language.  The parties have required that this Agreement and all documents relating thereto be drawn up in English.  Les parties ont demande que cette convention ainsi que tous les documents que s'y attachent soient rediges en anglais.

31.23	Counterparts.  This Agreement may be executed in separate counterparts, each of which so executed and delivered shall constitute an original, but all such counterparts shall together constitute one and the same instrument.  Any such counterpart may comprise one or more duplicates or duplicate signature pages any of which may be executed by less than all of the Parties provided that each Party executes at least one such duplicate or duplicate signature page.  The Parties stipulate that a photostatic copy of an executed original shall be admissible in evidence for all purposes in any proceeding as between the Parties.

                               (SIGNATURE PAGE FOLLOWS)

	Each person signing below represents that (s)he has read this Agreement in its entirety (including all Schedules and Exhibits), understands its terms, and <[a] agrees to be [b] on behalf of the Party indicated below by his or her name agrees that such Party shall be> bound by those terms.

	Executed the dates written below, to be effective __(date)_____________.



___LICENSOR NAME________



By:	_______________________
	__NAME_______, 
	__TITLE_______


	_______________________
	Date___LICENSEE NAME________



By:	_______________________
	__NAME_______, 
	__TITLE_______


	_______________________
	Date

                                      SCHEDULE A
                                           
See Schedule B for definitions of capitalized terms.  The specific information set forth in this Schedule is qualified in its entirety by the remaining terms and conditions of this Agreement.


A-1	Acceptance Tests for Licensed Software (see Article 3.7):  

		<Process two LICENSEE month-end billing cycles and one quarterly financial report>


A-2	Additional Performance Standards for the Licensed Software:  

		<Average terminal operator response time to be no more than 50 seconds during peak periods (7:00 a.m. to 5:00 p.m. business days), no more than 20 seconds at other times>


A-3	Affiliates of LICENSEE:  

		<Who-Is-This G.m.b.H., a German corporation, [street address] Munich, Germany, telephone [phone], FAX [FAX].>


A-4	Authorized Computer Systems:

		System identification:  BIG-IRON XYZ-1234, Serial No. 54321-123A, located at 1234 Main Street, Suite 1408, Anytown, Texas 77002.  Number of Licensed Copies authorized for Use with this system:  One (1).  LICENSEE contact person for this system:  Jane Roe, telephone 713-555-1212.

System identification:  Any computer system owned or leased by <[a] LICENSEE  [b] LICENSEE or an Authorized Licensee Delegate>.


A-5	Authorized Copy Limit for In-House Dissemination:

		50 Licensed Copies of the Licensed Program(s) <and Licensed Documentation>


A-6	Authorized Licensee Delegates:  

		ABC Corporation (wholly owned subsidiary of LICENSEE), 1234 Main Street, Anytown, Texas 77002.  Contact:  Mr. J. P. Programmer, telephone 713-555-1212, FAX 713-555-1234.  License Rights Exercisable:  Internal Use Rights in connection with LICENSEE's business only.

		Any Affiliate of LICENSEE, for any License Right authorized by LICENSEE.


A-7	Authorized Simultaneous User Limit (see Article 5.1):

		Five Authorized Users per Licensed Copy

		[Describe authorized-user structure for specific Authorized Computer Systems]


A-8	Authorized Users (see Article 1.1):  

		John Q. Jones, Senior Developer, telephone 713-555-1212.

		Any officer, director, or employee of LICENSEE.

		Any officer, director, or employee of LICENSEE or of an Authorized Licensee Delegate.


A-9	Delivery <[a] Target Date  [b] Deadline> for Initial LICENSOR Deliverables:

		Within five (5) business days after the effective date of this Agreement 

		No later than __(date)_____________


A-10	Dispute Negotiation Levels:

						LICENSOR			LICENSEE

		First Level			___Manager________			___Manager________

		Second Level			___VP________			___VP________

		Third Level			___CEO________			___CEO________


A-11	Distribution License Fee:

		$___________ per Licensed Copy.


A-12	End-User Support Coordinator for LICENSEE:  

		Bud Jones, telephone 713-555-1212.


A-13	Escrow Agent (see Article 4):  

		XYZ Escrow Company, 1234 Any Street, Dallas, Texas, telephone 214-555-1212, FAX 214-555-1213


A-14	Exclusivity:  

		License is exclusive in the United States including its territories, but nonexclusive elsewhere.


A-15	Field of Use:  

		<Retail furniture distribution>


A-16	Geographic Territory:

		
<California, Washington, Oregon only.>

		[COMMENT:  Consider whether it may be appropriate to treat various License Rights separately in their Geographic Territories, Fields of Use, and/or Exclusivity.]


A-17	In-House Dissemination License Fee: 

		$___AMOUNT________ per Licensed Copy


A-18	Initial LICENSOR Deliverables (see Article 3):

		One copy of the Executable Code of the Licensed Program(s) <including modifications in accordance with Schedule A-26,> on a 3.5-inch 1.44 mb IBM AT compatible disk

		Five copies of the Licensed Documentation


		[COMMENT:  enumerate any other deliverables.]

A-19	Key LICENSOR Personnel:   

		John A. Jones, Senior Software Architect


A-20	License Commencement Date (see Article 2):

		The effective date of this Agreement.

		The Delivery Date (see Article 3).

		__(date)_____________

		The date of execution of this Agreement by the last Party to do so.


A-21	License Expiration Date (see Article 2):

		The <[a] twenty-fifth  [b] thirty-fifth  [c] ninety-ninth> anniversary of the License Commencement Date.

		__(date)_____________



		[COMMENT:  Some commentators believe that perpetual licenses may cause difficulties in some foreign countries, and/or make the license transaction appear to be a "sale."  Hence, the option of a 25-year license is set forth.  

		As a practical matter, in many transactions the licensed software is likely to be obsolete long before the end of a 25-year license term.  

		Also keep in mind that, to the extent a computer program constitutes copyrightable subject matter, the U.S. Copyright Act, 17 U.S.C.  203, permits the author of a non-"work for hire" copyrighted work to terminate existing assignments and licenses unilaterally during a five-year period beginning roughly 35 to 40 years after the grant.

		Finally, remember that any patent protection for the Licensed Program(s) will expire no later than 17 years after the patent's issuance (in the U.S.) or 20 years after the filing of the patent application (in most other countries).  Copyright protection will expire, for works made for hire, 75 years after the date of first publication (if publication has occurred) or 100 years after the creation of the software.


A-22	License Extension Performance Criteria (see Article 2.2(c)):  

		LICENSEE to achieve Gross Sales during the License Term and License Term Extensions as follows:

		License Term                                                      $___________     
1st License Term Extension                                          $___________     
2d License Term Extension                                           $___________     
3d License Term Extension                                           $___________     
Each subsequent License Term Extension                              $___________     


A-23	Licensed Marks (see Article 24):  

		<WHIZBANG and design (U.S. Trademark Registration No. 1,234,456, issued January 1, 1999).>


A-24	Licensed Software

		
WHIZBANG version 2.03, namely the following <[a] Licensed Programs  [b] Licensed Programs and associated User Documentation>:

		File Name			Size			Date		Time
swlic11.2			182579	6-13-91	                    8:24 
swlic11.3			190186	6-29-91	                   17:16 
swlic11.4			209989	7-13-91	                    6:46 
swlic11.5			180284	6-13-91	                    5:38 

			[COMMENT:  A very short description of the Licensed Software may be adequate.  Many sophisticated software packages, however, will comprise more than one computer program and very possibly more than one version and/or one or more releases within a given version.  

		If ambiguity is a possibility, it may be helpful for the Schedule to include a "directory listing" of the specific computer programs comprising the Licensed Software, i.e., a list that sets forth the name, file size in bytes, and creation/ last-modification date of each program.

		A detailed file listing may be especially appropriate if the program has been through several versions, and/or if what is labeled as "version 2.03" has had one or more bug fixes applied to it.  (This happened to Word Perfect 5.1 - early releases of version 5.1 had bugs in it that were fixed in later releases of version 5.1.]

A-25	Maintenance Fee:

<___(percentage)________ of LICENSOR's then-current Initial License Fee for the Licensed Software>

<___$_______________, subject to change upon 90 days prior notice to LICENSEE>.

A-26	Pre-Acceptance Modifications to Licensed Software (see Article 3):

		<Not applicable>

		<Change Licensed Software name to "WHIZBANG PLUS by ABC Corporation" in boot-up screens and Documentation no later than __(date)_____________>

		<Translate Licensed Documentation into French no later than __(date)_____________>

		<See Schedule 3.>


A-27	Prior Licenses granted by LICENSOR:  

		<Nonexclusive license to DEF, Inc., San Francisco, California>


A-28	Self-Help Code Included in Licensed Software:  

		None

		A reauthorization code must be keyed in by LICENSEE for the Licensed Program to remain functional after __(date)_____________; LICENSOR will provide the reauthorization code upon receipt of LICENSEE's Periodic License Fee payment due __(date)_____________.


A-29	Trial Period for LICENSEE:  

		<[a] One month  [b] ___________ days after the Delivery Date>



SCHEDULE B
GENERAL DEFINITIONS

[COMMENT:  This Definitions section includes comparatively little "hard" data, most of which is segregated in Schedule A for convenience in drafting.]

B-1	Acceptance - see Article 3.7.

B-2	Add-In Software, with respect to a first computer program, means a second, separately compiled and/or assembled and executable computer program that can be Used in conjunction with the first computer program, together with any associated documentation.

B-3	Affiliate, as to any Person, means <[a] a second Person that directly or indirectly is under common Control with the first Person, including a Subsidiary or Parent Company of the first Person  [b] the Persons identified in Schedule A-3>.  

B-4	As-Documented Warranty - see Article 18.1.

B-5	Authorized Computer System - see Schedule A-4.  

B-6	Authorized Licensee Delegate - see Schedule A-6; see also Article 1.4.  

B-7	Authorized User - see Schedule A-8.

B-8	Authorized Simultaneous User Limit means the number of Authorized Users who may Use a given Licensed Copy at any given time as set forth in Schedule A-7.

B-9	Backup Copying - see Article 5.2.

B-10	Breach means (a) a breach by a Party of a covenant or warranty herein, or (b) a misrepresentation made hereunder (see also "Material").

B-11	Bug, Bug Report - see Article 18.1.

B-12	Bundling or Bundled refers to the Redistribution or Sublicensing of a copy of a computer program and/or of user documentation in a transaction that includes the distribution of a copy or copies of one or more other computer programs.

B-13	Business day includes every day except Saturdays, Sundays, and legal holidays in the jurisdiction in question.

B-14	Claim, in connection with a defense obligation, encompasses any and all claims, counterclaims, crossclaims, and the like for monetary or injunctive relief in respect of any alleged or proven injury (including bodily injury or death) in or before any court, administrative agency, or other forum having the legal power to adjudicate disputes, and any and all demands not yet matured into one or more of the foregoing.

B-15	Code Incorporation means incorporation of all or part of a computer program into another computer program to create a Derivative Program based on the incorporated computer program.  A grant of Code Incorporation Rights includes a grant of Internal Use Rights for the Derivative Program, but does not per se include In-House Dissemination Rights or Distribution Rights (e.g., Sublicensing Distribution Rights), which must be separately granted.

B-16	Combination Use of software (with respect to, e.g., exclusion from a noninfringement knowledge representation and/or from an infringement defense obligation concerning the software or the Use thereof), means Use of the software in combination or conjunction with any of the following (unless such Use is shown to be infringing when not in combination or conjunction with any of the following, or unless such use is expressly described in the user documentation or expressly identified as noninfringing in this Agreement):

	(a)	any software other than the software in question;

	(b)	any apparatus; and/or

	(c)	any non-Use activities by any Person.

		[COMMENT:  Conceivably, capabilities or functions in Licensed Software that are not themselves infringing could be used by LICENSEE as a component in an infringing system or to control a infringing process.   Such use is not covered by the defense obligation of Article 19 except in circumstances that amount to inducement of infringement or contributory infringement by LICENSOR.]


B-17	Computer program (in lower case) means a set of statements or instructions, to be used directly or indirectly in a computer in order to bring about a certain result.  A computer program may comprise any or all of source code and executable code, but unless otherwise clear from the context, the term means executable code only.  When capitalized, the term the term Computer Program has the same meaning as Licensed Program.

		[COMMENT:  The first clause in the definition of "computer program" is taken directly from the U.S. Copyright Act of 1976, as amended, 17 U.S.C.  101.]


B-18	Confidential Information - see Article 23.2.

B-19	Control of one Person by another Person means that the controlling Person owns, directly or indirectly, stock or other interest in the controlled entity representing more than <[a] 50%  [b] 10%  [c] ___X%________> of the aggregate stock or other interest entitled to vote for the election of directors or other managing authority or other decisions reserved to a vote by owners of such stock or other interest.

B-20	Copy means a material object, including a phonorecord, in which a work is fixed by any method now known or later developed, and from which the work can be communicated, either directly or with the aid of a machine or device.  The term "copy" includes the material object, including a phonorecord, in which a work is first fixed.  

		[COMMENT:  This definition is adapted from that in the U.S. Copyright Act of 1976, 17 U.S.C.  101, except that the term "copy" includes phonorecords whereas the statutory definition does not.]


B-21	Corrective Maintenance means attempts to correct or work around a Bug in a computer program.

B-22	Customized Documentation - see Documentation Customization.

B-23	Customized Program - see Program Customization.

B-24	Date of Delivery - see Article 3.2(a), 3.3(a).

B-25	Day means calendar day, including every day of the year, unless specified to the contrary.

B-26	Defend, Defense, and similar terms relate to defense against Claims pursuant to Article 22.

B-27	Defending Party means a Party who is obligated under this Agreement to Defend against Claim.

B-28	Deliverables - see Initial Licensor Deliverables.

B-29	Derivative Copy means a copy of Derivative Software or of a part thereof (e.g., of a Derivative Program or Derivative Documentation), as appropriate from the context.

B-30	Derivative Documentation - see Documentation Incorporation.

B-31	Derivative Program - see Code Incorporation.

B-32	Derivative Software includes Derivative Programs and Derivative Documentation (if any).

B-33	Design documentation (in lower case) means documentation describing the data flows, data structures, and control logic of a computer program.  When capitalized, the term Design Documentation means design documentation relating to a Licensed Program.

B-34	Direct Expense, with respect to an activity, means reasonable salary and benefit charges for personnel time spent engaging in the activity, plus reasonable cost of goods and outside services used in the activity, plus <___10%________> of the foregoing in respect of overhead.

B-35	Distribution is a generic term that encompasses both Redistribution and Sublicensing, but only to the extent that this Agreement grants License Rights to engage therein.

B-36	Documentation (in lower case) means textual and/or graphic material, perceivable directly by humans and/or with the aid of a device or machine, relating to a computer program.  When capitalized, the term Documentation has the same meaning as Licensed Documentation.  

B-37	Documentation Customization means minor modification of documentation, e.g., to include specific working examples, to create Customized Documentation.  A grant of Documentation Customization Rights includes Internal Use Rights for the Customized Documentation, but does not per se include In-House Dissemination Rights or Distribution Rights (e.g., Sublicensing Distribution Rights) for the Customized Documentation, which must be separately granted.

B-38	Documentation Incorporation means incorporation of all or part of documentation for a computer program into other documentation to create Derivative Documentation based on the incorporated documentation.  A grant of Documentation Incorporation Rights includes a grant of Internal Use Rights for the Derivative Documentation, but does not per se include In-House Dissemination Rights or Distribution Rights (e.g., Sublicensing Distribution Rights) for the Derivative Documentation, which must be separately granted.

B-39	Emergency Corrective Maintenance means the performance of Corrective Maintenance for a computer program by a Person other than an Owner of the computer program.

B-40	End User means a Person Using a computer program.  The term encompasses Sublicensees as well as Persons to whom copies of a computer program are Redistributed.

B-41	End-User Support means information and assistance concerning the Use of the Licensed Software provided to one or more End Users (see generally Article 10).

B-42	End-User Support Coordinator - see Article 10.1.

B-43	Escrow Agent -  see Schedule A-13 and Article 4.

B-44	Escrow Agreement  -  see Article 4; the form of Escrow Agreement is included as Exhibit 4.

B-45	Executable code (in lower case) means a series of one or more instructions executable after suitable processing by a computer or other programmable machine, without compilation or assembly.  When capitalized, the term Executable Code means executable code of a Licensed Program.

		[COMMENT:  The term "executable code" is used here in place of the less precise "object code."]


B-46	Exercise of a License Right granted by this Agreement means the engagement by an Authorized User in one or more Licensable Activities encompassed by the License Right.

B-47	Gross Income - see Article 16.7.

B-48	Hard Copy means a printed, typed, microfiched, or other visually readable copy.

B-49	Hereunder, herein, and similar terms refer to this Agreement.

B-50	Include and similar terms (e.g., includes, including, included, comprises, comprising, e.g., for example), when used as part of a phrase including one or more specific items, are used by way of example and not of limitation.  

		[COMMENT:  This definition is intended to obviate the need to recite "including but not limited to" 400 times in a single agreement.]


B-51	Indemnity, Indemnify, and similar terms relate to indemnification in accordance with this Agreement (see Article 22).

B-52	In-House Dissemination - see Article 6.  

B-53	Initial LICENSOR Deliverables means the items set forth in <[a] Schedule A-18  [b] Schedule A-18, as modified in accordance with Schedule A-26>; see also Article 3.

B-54	Intellectual Property Rights means any and all rights to exclude existing from time to time in a specified jurisdiction under patent law, copyright law, moral rights law, trade-secret law, semiconductor chip protection law, trademark law, unfair competition law, or other similar rights.  

		[COMMENT:  This is a blanket definition that encompasses many different kinds of IP rights.  When reference is made to such rights, e.g., in connection with infringement of third-party rights, care should be taken to specify (i) what kind of IP rights, and (ii) the jurisdiction in which the IP rights in question exist, e.g., anywhere in the world, in the U.S. only, or in the Geographic Territory only.]


B-55	Internal Use means Use of one or more copies of a computer program in the course of the user's business.  See generally Article 5.  Internal Use Rights do not themselves include any other License Right; for example, Internal Use Rights do not include Service Bureau Use Rights, Sublicensing Rights, Redistribution Rights, or Derivative Work Rights, each of which must be expressly granted by this Agreement in order to be Exercised.

B-56	Invention means any invention, discovery, process, art, method (including mathematical algorithms), machine, manufacture, composition of matter, or improvement thereof, whether or not patentable, to the extent that it is the subject of an Intellectual Property Right.

		[COMMENT:  This broad definition encompasses any "invention" that is the subject of any Intellectual Property Right, not just patentable inventions.  However, an invention must be subject to at least some intellectual-property protection in order to qualify as an Invention.]


B-57	Key LICENSOR Personnel means the individuals identified in Schedule A-19.  If so agreed by LICENSEE, LICENSOR may at its option designate a replacement for any individual referred to in the previous sentence or for any replacement for such an individual.

B-58	Knowledge Representation means a representation that, to the best of the representing Party's knowledge (based on the knowledge of the individual executing this Agreement on behalf of the representing Party, who need not have conducted any particular inquiry), the specified matter or matters are true (see also "No-Knowledge Representation").

	(a)	A party making a Knowledge Representation has a duty to apprise the party to whom the representation is made, at the time the representation is made, of any fact that it knows is necessary to prevent the Knowledge Representation from being misleading.

	(b)	Except as expressly provided otherwise in this Agreement, a party making a Knowledge Representation has no duty to amend or supplement its representation after the representation is made.

	(c)	A Knowledge Representation may be referred to using a shorthand expression similar to one used herein for a corresponding warranty; for example, a term such as "no-infringement Knowledge Representation" may be used to denote a Knowledge Representation that no infringement exists.

B-59	Licensable Activity means an activity encompassed by one or more Intellectual Property Rights, i.e., an activity which, absent a license, would give rise to liability for infringement (or inducement of infringement or contributory infringement) of the Intellectual Property Right(s).

B-60	License means the license granted by this Agreement, comprising one or more License Rights.  

B-61	License Right means a right granted by this Agreement to engage in a Licensable Activity.  A License Right may be referred to for convenience by the name of the corresponding Licensable Activity, e.g., "Internal Use Rights" for the right to engage in Internal Use.

		[COMMENT:  The License Rights currently "built in" for possible use in these Model Provisions are listed in Article 1.1.  Other License Rights can be added in as needed.]


B-62	Licensed-Back, with respect to an Invention or Work created by one or more LICENSEE Personnel (alone or jointly with one or more LICENSOR Personnel), means that LICENSOR has a worldwide, nonexclusive, royalty-free, irrevocable license to engage in any and all Licensable Activities utilizing the Invention or Work that are encompassed by one or more Intellectual Property Rights owned or assertable by LICENSEE.

B-63	Licensed Copy means a copy of a Licensed Program or of Licensed Documentation that is either (a) furnished by LICENSOR (or an authorized representative of LICENSOR), or (b) made by LICENSEE <or an Authorized Licensee Delegate> in accordance with this Agreement.

B-64	Licensed Documentation means documentation relating to a Licensed Program.  Unless otherwise specified herein, Licensed Documentation means User Documentation only and not Design Documentation.

B-65	Licensed Mark means a trademark, service mark, trade name, or trade dress identified in Schedule A-23 (see also Article 24).

B-66	Licensed Program means a computer program comprising part of the Licensed Software.  

B-67	Licensed Software means the computer programs and documentation described in Schedule A-24.

B-68	Licensor Deliverables - see Initial Licensor Deliverables.

B-69	Loss or Expense, in connection with an indemnity obligation, encompasses any and all losses, damages, costs, and expenses, of every kind, nature, and description, including costs of court and reasonable attorneys' fees and disbursements (limited as set forth below), that is or are based upon, arising out of, or otherwise in respect of a specified matter.  If, however, a Defending Party is defending an indemnitee against a Claim, then the term "Loss or Expense" in respect of such Claim includes attorneys' fees and disbursements incurred by separate counsel for the indemnitee if (and only if) the respective interests of the indemnitee and Defending Party with respect to the Claim are shown to be sufficiently disparate that the Defending Party's counsel is or should be disqualified from representing the indemnitee in connection with such defense. 

B-70	Maintenance - see Article 11.

B-71	Maintenance Fee - see Article 16.4.

B-72	Maintenance Period - see Article 11.1.

	Maintenance Release means a version of a computer program designated as such (or with a similar term) by its Owner.  A maintenance release is normally a version that incorporates one or more Bug corrections but that does not necessarily include additional capability or functionality for the computer program.

		[COMMENT:  In the software industry, especially in the mainframe and minicomputer software industry segments, interim maintenance releases are sometimes distributed by licensors in order to put corrected versions of a computer program into the hands of licensees, whether or not any given licensee has reported a particular bug or other problem with the program.] 


B-74	Mark - see Licensed Mark.

B-75	Mark Owner - see Article 24.

B-76	Mark User - see Article 24.

B-77	Material, with respect to a Breach, means that the Breach is shown to affect adversely (a) the rights and benefits of the other Party under this Agreement; or (b) the ability of the other Party to perform its obligations hereunder; in either case to such a degree that a reasonable person in the management of his or her own affairs would be more likely than not to decline to enter into this Agreement in view of the Breach.

		[COMMENT:  This definition of "Material" is intended for "amicable" agreements in which, generally speaking, the parties plan to live and work with each other on an on-going basis.  It deliberately sets up a bias against having every arguable breach take on the status of a potentially major dispute.

		In other, more-antagonistic relationships (e.g., litigation settlements), the substantive provisions below which refer to "Material" breaches could be reworded to refer to breaches "not shown not to be Material" (or breaches "not shown to be Immaterial"), thus putting more of the burden of proof on the breaching party.  Alternatively, the materiality concept could be eliminated entirely, thus putting a hair trigger on disputes over breaches.]


B-78	No-Knowledge Representation means a Knowledge Representation that a specified condition does not exist.  Unless otherwise provided in this Agreement, a No-Knowledge Representation does not include any representation or warranty that any particular investigation has been performed by the representing Party in connection with the specified matter(s).

B-79	Owner, as to software, means a Person that can grant licenses to engage in Licensable Activities utilizing the software.

		[COMMENT:  This definition comes into play, e.g., in the definition of Self-Help Code.  The term "Owner" is used generically for licensors because "Licensor" is too close to LICENSOR, which is used only for the Licensor of this Agreement.]


B-80	Parent Company, as to any Person, means a second Person that controls the first Person.

B-81	Party means a party to this Agreement unless otherwise clear from the context.

B-82	Payor means a Party who pays or is obligated to pay money to another Party, which other party is referred to as a Payee.

B-83	Permitted Trademark Use - see Article 31.2

B-84	Person means a natural person, a corporation (for profit or not-for-profit), an association, a partnership (general or limited), a joint venture, a trust, a government or political department, subdivision, or agency, or any other entity.  

B-85	Personnel, with respect to a Person (e.g., LICENSOR Personnel, LICENSEE Personnel), means an officer, director, partner, employee, or other representative of that Person.  

B-86	Prior License - see Article 1.6 and Schedule A-27.

B-87	Private Label, with respect to the Sublicensing or Redistribution of a computer program, means Sublicensing or Redistribution in association with a trademark owned by a Person other than the Owner of the computer program.

B-88	Processor System means a central processing unit (CPU) and one or more co-processors (e.g., math or graphics co-processors) associated with the CPU.

B-89	Program Customization means minor modification of a computer program, e.g., to be Useable on a particular computer system or to conform to particular End User requirements.  A grant of Program Customization Rights includes Internal Use Rights for the customized program, but does not per se include In-House Dissemination Rights or Distribution Rights, which must be separately granted.

B-90	Protected Party means a Party who is entitled to Defense by a Defending Party under this Agreement.

B-91	Provided by a Person means provided by that Person or by an authorized agent or other representative of that Person.  For example, "Licensed Copies Provided by LICENSOR" are Licensed Copies that are provided either by LICENSOR or by an authorized representative of LICENSOR.

B-92	Redistribution means the marketing, advertising, and distribution of copies of software Provided by the Owner of the software, with the permission of the Owner, but does not include the making of such copies.  

		[COMMENT:  Compare Redistribution with Sublicensing Distribution.]

B-93	Required Legend - see Article 9.2.

B-94	Self-Help Code means any back door, time bomb, drop dead device, or other software routine designed to disable a computer program automatically with the passage of time or under the positive control of a person other than a licensee of the program.  Self-Help Code does not include software routines in a computer program, if any, designed to permit an Owner of the computer program (or other person acting by authority of the Owner) to obtain access to a licensee's computer system(s) (e.g., remote access via modem) for purposes of maintenance or technical support.

B-95	Service Bureau Use means the Use of software to process input data that is supplied by one or more Persons other than the User (e.g., a licensee) and to generate output data (in the form of reports, charts, graphs or other pictorial representations, or the like) that is sold or licensed to such Person or Persons.  

		[COMMENT:  This definition should be reviewed carefully in the context of the specific transaction, because Internal Use is defined as not including Service Bureau Use.  

		In the definition above, the term "processing" of input data is thought to be more specific to Service Bureau Use than "utilization" of input data -- use of the latter term could encompass a law firm's utilization of a word processing program to generate client memoranda, which would in turn constitute Service Bureau Use.]

B-96	Software includes computer programs and associated documentation.

B-97	Source code (in lower case) means a series of instructions or statements in an English-like high-level computer language such as FORTRAN, C, PASCAL, or LISP, or in a relatively low-level language such as the assembly language for a particular processor.  Source code is normally readily readable by humans trained in the particular computer language in question.  It is normally transformed by an interpreter or compiler into machine-readable executable code for actual use on a computer.  When capitalized, the term Source Code means source code of a Licensed Program.

B-98	Source Code Delivery Package, as to a computer program, means the following:

	(a)	a complete copy in machine-readable form of the source code and executable code of the computer program;

	(b)	a complete copy of any design documentation and user documentation for the computer program; and

	(c)	complete instructions for compiling and linking every part of the source code referred to in subparagraph (a) into executable forms, for purposes of enabling verification of the completeness of the source code as provided below.  Such instructions include precise identification of all compilers, library packages, and linkers used to generate executable code.

B-99	Stand-Alone, with respect to Redistribution or to Sublicensing Distribution, means the Redistribution or Sublicensing Distribution of copies of software other than in a Bundled transaction.

B-100	Sublicensing Distribution means the making, marketing, advertising, distribution, and licensing the Use of, copies of the executable code <and source code> of a computer program(s) and of user documentation to one or more Persons ("Sublicensees") by a Person other than the Owner of the computer program, with the permission of the Owner.  

		[COMMENT:  Compare Sublicensing with Redistribution.]


B-101	Subsidiary, as to any Person, means a second Person that is controlled by the first Person.

B-102	Substantive Field, as to a computer program, means the field, area, or discipline (e.g., oil and gas exploration; telecommunications management; medical diagnosis) in which that computer program is used.

B-103	Technical Services - see Article 13

B-104	Trademark Use means use of a Licensed Mark in accordance with and subject to the terms and conditions of this Agreement.

B-105	Travel Expenses - see Article 16.8.

B-106	Trial Period - see Schedule A-29; see also Article 3.6.

B-107	Unauthorized Code means any virus, Trojan horse, worm, or other software routines or hardware components designed to permit unauthorized access; to disable, erase, or otherwise harm software, hardware, or data; or to perform any other such actions.  The term Unauthorized Code does not include Self-Help Code.

B-108	Upgrade Version, as to a computer program, means a version of the program that incorporates additional capability or functionality and that, as a practical matter, is not distributed to licensees without charge.

B-109	Use.  

	(a)	Use of a computer program means the performance of the following steps only:  

		(1)	copying some or all of a copy of the computer program into memory accessible by a Processor System (main memory, extended memory, expanded memory, or virtual memory), solely for the purpose of making the copy accessible to the Processor System for execution of the computer program (specifically not including making other copies of the computer program in disk storage or other permanent storage; see also "Backup Copying"); and

		(2)	causing that Processor System to execute the computer program.

	(b)	Use of documentation means the reading of a copy of the documentation by a human (with or without the aid of a machine or device) in connection with the Use of the computer program, but no other utilization of the documentation nor of the copy thereof.

		[COMMENT:  This definition is intended to preclude assertions that authorized "use" of a computer program or documentation can encompass, e.g., reverse engineering.]

	(c)	Trademark Use - see Trademark Use in this Schedule.

B-110	Use Right means a License Right authorizing Use of Software (e.g., Internal Use, Service Bureau Use).

B-111	User documentation (in lower case) means documentation that describes the function and use of a computer program in sufficient detail to permit use of the computer program.  

	(a)	Except as may be otherwise provided in this Agreement, user documentation does not include (1) instructions concerning the Substantive Field in which the computer program is used, nor (2) instructions concerning the use of a computer system(s), nor (3) instructions concerning use of software (e.g., operating systems) other than the computer program.

	(b)	When capitalized, the term User Documentation means user documentation relating to a Licensed Program.  

B-112	Verifier - see Article 4.3.

B-113	Warranting Party means a Party giving a warranty or making a representation pursuant to this Agreement.

B-114	Work means (a) a work of authorship protectable under the copyright laws of an applicable jurisdiction, or (b) a mask work.

B-115	Wrap-Up Activity Rights means the right to engage in a Licensable Activity after termination or expiration of a License Right for that Licensable Activity, if and only to the extent granted by this Agreement, as follows: 

	(a)	Any Wrap-Up Activity Rights granted under this Agreement may be Exercised by LICENSEE <or an Authorized Licensee Delegate> solely to the minimum extent necessary to perform any binding obligation that was entered into by LICENSEE <or an Authorized Licensee Delegate> prior to termination or expiration.  

	(b)	Any Exercise of a License Right pursuant to Wrap-Up Rights shall be in the same manner and shall have the same effect as if such Exercise had occurred prior to termination or expiration.

B-116	Other Definitions.  As used herein, the terms below have the meanings set forth below except as the context indicates otherwise.  

	(a)	The male, female, and neutral genders shall be interpreted to mean any other gender as indicated by the context;

	(b)	References to Articles are to sections of this Agreement; 

	(c)	The singular includes the plural and vice versa as indicated by the context;

	(d)	Any term defined elsewhere in this Agreement shall have the meaning set forth in that definition wherever the term is used herein, except as otherwise provided or as the context indicates otherwise.
                            SUPPLEMENTARY ESCROW AGREEMENT

(Exhibit 4 to License Agreement Between
___LICENSOR NAME________ and ___LICENSEE NAME________)

	This Supplementary Escrow Agreement ("Agreement") is made effective the date written on the signature page, between ___________, a ___________ corporation having a regular and established place of business at ___________ and an address for notice of ___________ ("LICENSOR"); ___________, a ___________ corporation having a regular and established place of business at ___________ and an address for notice of ___________ ("LICENSEE"); and the escrow agent identified on the signature page hereof ("the Escrow Agent").  

1.	BACKGROUND

	1.1	LICENSOR and LICENSEE have entered into a software license agreement dated ___________ (the "License Agreement").  This Agreement is intended to be supplementary to the License Agreement.  All terms used herein shall have the meaning used in the License Agreement except as otherwise indicated herein or the context otherwise requires.  

	1.2	The License Agreement calls for certain materials comprising "embodiments of software," as that term is used in Section 365(n) of the U.S. Bankruptcy Code ("Code"), 11 U.S.C.  365(n), to be deposited into escrow for the protection of LICENSEE's rights in the software that is the subject of the License Agreement.  Any set of such materials is referred to herein as a "Deposit."   The Escrow Agent is willing to act as escrow agent for such Deposits.

	1.3	The parties intend that this Agreement be an "agreement supplemental to any license agreement" within the meaning of section 365(n) of the Code.  The parties enter into this Agreement in consideration of this background and of the covenants set forth herein.


2.	DEPOSIT PROCEDURES

	2.1	From time to time, LICENSOR may deliver a Deposit to the Escrow Agent.  Any such Deposit shall be accompanied by a Deposit Registration in substantially the form of Exhibit A attached to this Agreement.  The Escrow Agent shall not be obliged to accept any materials for deposit unless accompanied by such a Deposit Registration.  

	2.2	Upon receipt of any Deposit, the Escrow Agent shall verify that the identifying information on the labeling of the Deposit matches the identifying information set forth in the Deposit Registration, and shall notify LICENSEE upon completion of such verification.  The Escrow Agent shall not be required to verify the existence, completeness, or accuracy of any Deposit, nor to determine whether what is deposited is or is not proprietary data, other than as set forth in the previous sentence.  

	2.3	LICENSOR may from time to time remove a Deposit from escrow, with the prior consent of LICENSEE, by delivering to the Escrow Agent a written consent signed by LICENSEE and setting forth the same identifying information about the Deposit as in the Deposit Registration for that Deposit.  The written consent may condition LICENSEE's consent on LICENSOR's deposit of a substitute Deposit in accordance herewith.  The Escrow Agent shall verify that the identifying information on the labeling of the Deposit being removed matches the identifying information set forth in the written consent; verify any substitute Deposit in accordance with Section 2.2; and notify LICENSEE upon completion of such verification.  The Escrow Agent shall have no other obligation to determine the contents of the Deposit materials being removed.  


3.	VERIFICATION OF ESCROW DEPOSIT

	3.1	From time to time, by joint notice to the Escrow Agent from LICENSEE and LICENSOR, LICENSEE may cause the Deposit(s) to be temporarily removed from escrow by a third party identified in the notice (the "Verifier") for the purpose of verifying the completeness and accuracy thereof.  

	3.2	The responsibility for the completeness and accuracy of the verification shall be solely that of the Verifier.  Neither the Escrow Agent nor LICENSOR shall have any responsibility or liability to LICENSEE for any incompleteness or inaccuracy of any verification.


4.	SECURITY OF DEPOSIT MATERIALS

	4.1	The Escrow Agent shall establish one or more safe-deposit boxes or other receptacles in which it shall place all Deposits.  Each safe-deposit box shall be kept by the Escrow Agent under the control of one or more of the Escrow Agent's officers, selected by the Escrow Agent from time to time, whose identity shall be available to LICENSOR at all times.

	4.2	The Escrow Agent shall not permit any person (including Escrow Agent employees and LICENSOR or LICENSEE personnel) to have access to any Deposit except in accordance with and for purposes permitted by this Agreement.

	4.3	The Escrow Agent shall ensure that any person who is given access to Deposit materials in accordance herewith is, or is accompanied at all times by, an Escrow Agent employee.  The Escrow Agent shall log each such access in its written records, specifying (1) the identity of the person who was given access, (2) the date and time of entry and exit, (3) the stated purpose of the access, and (4) the identity of the accompanying Escrow Agent employee if other than such an employee.

	4.4	Without limiting the foregoing, the Escrow Agent shall exercise the same high level of care in safeguarding the Deposit(s) as a prudent person would use to safeguard similar valuable and confidential proprietary information that belonged to the Escrow Agent.

	4.5	The Escrow Agent shall not divulge or disclose any information contained in any Deposit materials to any person or entity, nor otherwise make such information available to any person or entity, nor make any use of it, nor permit any use to be made of it, except to the minimum extent required for performance of the Escrow Agent's duties under this Agreement, without the express prior written consent of LICENSOR.  

	4.6	If the Escrow Agent is ordered to disclose or provide any portion of the Deposit(s) by a court or administrative body, the Escrow Agent shall immediately notify both LICENSOR and LICENSEE.  The Escrow Agent shall not oppose any motion by LICENSOR for an order by the court or administrative body protecting the confidentiality of the Deposit(s) materials, and/or for leave to intervene to seek such an order.

	4.7	The Escrow Agent shall keep a complete written log or logs of the activities undertaken and materials deposited or withdrawn pursuant to this Agreement, in a form reasonably acceptable to LICENSOR.  LICENSOR shall be entitled to inspect (a) the Escrow Agent's facilities and records pertaining to Deposits, and (b) the physical and technical status and condition of the Deposits (in compliance with the security provisions of this Agreement), at reasonable times during normal business hours and, at the Escrow Agent's election, upon at least one (1) business day's notice to the Escrow Agent.

	4.8	LICENSEE shall be entitled to inspect the Escrow Agent's records pertaining to the status of the Deposit(s) at reasonable times during normal business hours and, at the Escrow Agent's election, upon at least one (1) business day's notice to the Escrow Agent.


5.	DEPOSIT TERM; ESCROW AGENT FEES

	5.1	The Escrow Agent's obligation to retain the Deposit(s) ("Deposit retention obligation") shall run for one year from the effective date of this Agreement, renewable for additional one-year periods upon receipt by the Escrow Agent of the Escrow Agent's then-standard one-year renewal fee.  

	5.2	The Escrow Agent shall invoice LICENSEE for its then-standard one-year renewal fee at least thirty days but no more than ninety days prior to each forthcoming expiration of the Deposit retention obligation, and shall send a copy of such invoice to LICENSOR.  If the renewal fee has not been received by the Escrow Agent prior to such expiration, the Deposit retention obligation shall expire without further notice, and the Escrow Agent shall carry out the provisions of Section 7.


6.	RELEASE OF DEPOSIT MATERIALS

	6.1	The Escrow Agent shall release the materials comprising a Deposit to LICENSEE strictly and solely in accordance with this Section.

	6.2	To obtain a release of the Deposit(s), LICENSEE may submit to the Escrow Agent, in accordance with this Agreement's notice provisions with a copy to LICENSOR, a release request accompanied by a sworn affidavit executed by an officer of LICENSEE.  The affidavit shall state (a) that under the then-existing circumstances, LICENSEE is entitled to the release of the Deposit(s) under the License Agreement and (b) that LICENSEE has complied with all conditions prerequisite to such a release of the Deposit(s) as set forth in the License Agreement. 

	6.3	The Escrow Agent shall give LICENSOR notice of LICENSEE's release request.  LICENSOR or its successor may object to the requested release by giving notice to the Escrow Agent and LICENSEE within five business days after receiving the Escrow Agent's notice.  Upon such objection, the Escrow Agent shall retain custody of the Deposit(s) until either (a) LICENSOR and LICENSEE agree on a course of action, or (b) a court of competent jurisdiction orders the Deposit(s) to be released.  If LICENSOR does not timely object to release, the Escrow Agent shall immediately deliver the Deposit(s) to LICENSEE by overnight courier or by registered U.S. Mail.


7.	TERMINATION OF CUSTODY

	7.1	LICENSOR may terminate the Escrow Agent's custody of the Deposit(s) upon termination of LICENSEE's license, by notice to the Escrow Agent with a copy by regular mail to LICENSEE.

	7.2	LICENSOR may terminate the Escrow Agent's custody of a Deposit by notice to the Escrow Agent if LICENSOR, in its business judgment, is not satisfied with the physical security or recordkeeping provided by the Escrow Agent.  LICENSOR shall notify LICENSEE within ten (10) days after such a termination.

	7.3	LICENSOR may terminate the Escrow Agent's custody of a Deposit at any time for any other reason by notice to the Escrow Agent and thirty (30) days' prior notice to LICENSEE.

	7.4	Upon any termination of the Escrow Agent's custody of the Deposit(s) or expiration of the Deposit retention obligation, the Escrow Agent shall (a) immediately return all materials comprising the Deposit to LICENSOR, and (b) notify LICENSEE of the return.


8.	GENERAL PROVISIONS

	8.1	The Escrow Agent shall not, by reason of its execution of this Agreement, assume any responsibility or liability for any transaction between LICENSOR and LICENSEE, other than the performance of its obligations under this Agreement.  LICENSOR and LICENSEE shall defend the Escrow Agent against any Claim, and indemnify the Escrow Agent against any Loss or Expense, arising out or relating to the Escrow Agent's performance of its obligations under this Agreement, except in the event of a judgment which specifies that the Escrow Agent acted with gross negligence or willful misconduct.  

		(a)	The term "Claim" is used here to encompass any and all claims, counterclaims, crossclaims, and the like for monetary or injunctive relief in any court or other forum, and any and all demands not yet matured into one or more of the foregoing.

		(b)	The term "Loss or Expense" is used here to encompass any and all losses, damages, costs, and expenses, including costs of court and reasonable attorneys' fees and disbursements (other than attorneys' fees and disbursements incurred by separate counsel for the Escrow Agent at a time when LICENSOR or LICENSEE is also defending the Escrow Agent, unless separate counsel is required by conflicts of interest between the Escrow Agent and LICENSOR or LICENSEE during such defense), of every kind, nature, and description that is or are based upon, arising out of, or otherwise in respect of a specified matter.

	8.2	Entire Agreement. Except as may be expressly provided otherwise herein, this Agreement constitutes the entire agreement between the parties concerning the subject matter thereof.  No prior or contemporaneous representations, inducements, promises, or agreements, oral or otherwise, between the parties with reference thereto shall be of any force or effect.  No modification or amendment to this Agreement shall be valid or binding unless reduced to writing and duly executed by the party or parties to be bound thereby.

	8.3	Assignment.  The Escrow Agent may not assign any right nor delegate any obligation under this Agreement, and any purported assignment or delegation shall be null and void and a breach of this Agreement, except with the express prior written consent of LICENSOR and LICENSEE.

	8.4	Notices.  Notices hereunder shall be delivered and effective as follows:

		(a)	Every notice required or contemplated by this Agreement to be given by either party may be delivered in person or may be sent by courier, telecopy, express mail, telex, telegraph or postage prepaid certified or registered air mail (or its equivalent under the laws of the country where mailed), addressed to the party for whom it is intended, at the address specified in this Agreement.  Any party may change its address for notice by giving notice to the other parties of the change.

		(b)	Any written notice shall be effective no later than the date actually received.  Unless otherwise provided in this Agreement, notice by courier, express mail, certified mail, or registered mail shall be effective on the date it is officially recorded as delivered by return receipt or equivalent and in the absence of such record of delivery it shall be rebuttably presumed to have been delivered on the third business day after it was deposited, first-class postage prepaid, in the mails.  Notice by telex or telegraph shall be deemed given at the time it is recorded by the carrier in the ordinary course of business as having been delivered, but in any event no later than one business day after dispatch.  Notice not given in writing shall be effective only if acknowledged in writing by a duly authorized officer of the party to whom it was given.  As used in this section concerning notices, references to a particular date means the date itself, if a business day, otherwise the first business day after the date.

	8.5	Binding on Successors.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns permitted by this Agreement.

	8.6	No Joint Venture or Partnership.  This Agreement shall not be construed as establishing a joint venture or partnership between any two or more of LICENSOR, LICENSEE, and/or the Escrow Agent.

	8.7	English Language.  The parties have required that this Agreement and all documents relating thereto be drawn up in English.  Les parties ont demande que cette convention ainsi que tous les documents que s'y attachent soient rediges en anglais.

	8.8	Counterparts.  This Agreement may be executed in separate counterparts, each of which so executed and delivered shall constitute an original, but all such counterparts shall together constitute one and the same instrument.  Any such counterpart may comprise one or more duplicates or duplicate signature pages any of which may be executed by less than all of the parties provided that each party executes at least one such duplicate or duplicate signature page.  The parties stipulate that a photostatic copy of an executed original shall be admissible in evidence for all purposes in any proceeding as between the parties.

	Executed the dates written below, to be effective __(date)_____________.



___LICENSOR NAME________



By:	_______________________
	__NAME_______, 
	__TITLE_______


	_______________________
	Date___LICENSEE NAME________



By:	_______________________
	__NAME_______, 
	__TITLE_______


	_______________________
	Date

___ESCROW AGENT NAME________



By:	_______________________
	__NAME_______, 
	__TITLE_______


	_______________________
	Date
                      PRIVATE TRIAL APPEALABLE ARBITRATION RULES

                       (Exhibit 29 to Software License Agreement
            between ___LICENSOR NAME________ and ___LICENSEE NAME________)

[COMMENT:  Arbitrations are greatly favored by the courts, but gravely mistrusted by many counsel.  Arbitrators have virtually unfettered discretion to enter awards as they deem appropriate.  Under the Federal Arbitration Act and most state acts, the awards are essentially unappealable.

These Private Trial Appealable Arbitration Rules represent an attempt to use the Federal Arbitration Act and various state arbitration acts as a vehicle for conducting an appealable trial to a private judge.  The Rules are set out in the hope of promoting discussion.  

Key features of these Rules include:
	(1)	fast track, litigation-like proceedings, with an arbitrator or panel of arbitrators serving in the role of a private judge in a bench trial, including the adjudication of prehearing disputes and the rendering of findings of fact and conclusions of law; 
	(2)	an arbitration award that is nonbinding unless the parties acquiesce (the award is thus "appealable") -  but, in any subsequent court proceedings, the record from the arbitration hearing becomes the agreed record at trial and the arbitration award becomes the report of a special master; and
	(3)	an "English rule" concerning attorneys' fees; that is, prevailing parties are entitled to attorneys' fees in prehearing proceedings (e.g., discovery disputes) as well as at the final hearing and in any subsequent court proceedings.

1.	BACKGROUND.  

	1.1	These Private Trial Appealable Arbitration Rules (Rules) are appended as an Exhibit to, and incorporated by reference in, an agreement as described above (the Agreement).  All defined terms have the meanings used in the Agreement except as otherwise set forth herein. 

	1.2	The Parties desire to avoid as much as possible of the expense and time required to resolve disputes through traditional legal proceedings.  They do not wish, however, to subject themselves to the uncertainties often associated with traditional arbitration proceedings, notably the lack of discovery, the lack of constraints on awards, and the absence of meaningful appellate review. 

	1.3	The Parties desire instead that disputes specified in the Agreement be resolved in accordance with streamlined litigation-like arbitration procedures, including a limited right of appeal, as set forth in these Rules.

2.	COMMENCEMENT OF ARBITRATION PROCEEDINGS

	2.1	Call for Arbitration.  Either Party may call for arbitration by a notice to the other Party that is generally in the form of a complaint under the Federal Rules of Civil Procedure, but including a detailed statement of proposed findings of facts and conclusions of law (with appropriate citations of authority) which allegedly entitle the calling Party to relief in accordance with applicable (nonarbitration) law.

		[COMMENT:  Part of the purpose of this clause is to get the real issues of the dispute out on the table, in case that has not already happened, and also to encourage the Parties to state their settlement positions.]


	2.2	Response.  A Party upon whom a call for arbitration is served shall serve a responsive statement within twenty (20) business days of such service.  The responsive statement shall take the form and have the effect of an answer (and counterclaim if applicable) under the Federal Rules of Civil Procedure, and shall likewise include a detailed statement of proposed findings of facts and conclusions of law (with appropriate citations of authority) which the responding Party asserts as denying relief to the calling Party or entitling the responding Party to relief.  

3.	SELECTION OF ARBITRATOR

	To minimize the expense of the arbitration process, the Parties shall attempt to agree on a single arbitrator.  If no such agreement is reached within thirty (30) days after the call for arbitration, then a three-person panel of arbitrators shall be selected as follows.

	3.1	Within thirty-five (35) days after the call for arbitration, each Party shall designate one arbitrator ("non-neutral arbitrator") by giving notice to the other Party as set forth herein.  Neither non-neutral arbitrator may be an employee of the designating Party, but neither need he or she be strictly neutral as set forth below for the third arbitrator.

	3.2	If the Parties agree to a designation of a third ("neutral") arbitrator, then that designation shall be given effect.  Otherwise, the two non-neutral arbitrators shall attempt to designate, by agreement between them, a neutral arbitrator who shall be neutral in the spirit of the Canons of Judicial Ethics, and to give notice to both Parties if they reach such an agreement.

	3.3	If neither the Parties nor the non-neutral arbitrators are able to agree to a designation of a neutral arbitrator, they shall attempt to agree on a procedure for making such a designation.  Any procedure agreed to by the Parties shall be used in lieu of a different procedure agreed to by the non-neutral arbitrators.  

	3.4	If a neutral arbitrator cannot be designated as set forth above within sixty (60) days after the call for arbitration, then:  

		(a)	At the end of that sixty-day period each Party shall give notice to the other of its nomination of a proposed neutral arbitrator.  Within five (5) business days thereafter, each Party may submit a request to the American Arbitration Association (AAA) that the AAA designate its nominee to be the neutral arbitrator.  If each Party nominates a proposed neutral arbitrator, then the AAA shall be asked to designate one or the other of the two; if only one Party makes such a nomination, its nominee shall automatically be designated as the neutral arbitrator.  A nominee so designated shall serve as the neutral arbitrator.  Designation of a neutral arbitrator in this manner shall not be construed as constituting the Parties' agreement to arbitration pursuant to AAA rules.

		(b)	All fees charged by the AAA for designating a neutral arbitrator in this manner, and all reasonable attorneys' fees and expenses incurred in connection with the designation of a neutral arbitrator by the Party whose nominee was so designated, shall be paid by the Party whose nominee was not so designated within ten (10) business days after the AAA designation.  The arbitrators may issue an order compelling the payment of such fees and expenses in accordance herewith.

	3.5	If one Party fails timely to designate its non-neutral arbitrator, the designation of that arbitrator shall be made by the AAA, with the Party in question bearing all AAA fees for making such designation.  

	3.6	If both Parties fail timely (a) to designate their respective non-neutral arbitrators, or (b) to make their respective nominations of neutral arbitrators to the AAA, then the call for arbitration and all proposed awards shall be deemed to have been withdrawn without prejudice (subject to any applicable statute of limitations or similar time limit for future calls relating to the same dispute); each Party shall bear its own attorneys' fees and expenses in connection with the withdrawn proceedings.

	3.7	Any designation of a neutral or non-neutral arbitrator in accordance with this Section shall be nonchallengeable by either Party except as may be expressly provided herein.

	3.8	Arbitrators may be replaced as follows.  Either Party may replace its non-neutral arbitrator for any reason at any time prior to the commencement of the evidentiary hearing.  The neutral arbitrator may be replaced, at any time prior to the arbitrators' adoption of an award, by agreement of the Parties but not by agreement only of the non-neutral arbitrators.  If the neutral arbitrator should resign, die, withdraw, refuse, be disqualified, or be otherwise unable to perform his or her duties, then the vacancy shall be filled in accordance with the procedures set forth herein for designation of the neutral arbitrator.  Unless otherwise agreed by the Parties, if such inability occurs after the arbitration hearing but before the adoption of an award by the arbitrators, the case shall be reheard after a replacement neutral arbitrator is designated.

	3.9	The Parties desire that the persons selected as arbitrators be knowledgeable in the subject matter of the dispute or in related areas.  Toward that end, the Parties anticipate that they and the non-neutral arbitrators will consult a wide range of local, regional, and/or national professional and trade organizations to identify competent persons who could serve as arbitrators.  These Rules, however, shall not be construed as mandating any particular qualification requirements on any arbitrator except as may be expressly set forth herein or in this Agreement.

	3.10	All references herein to a single arbitrator shall apply mutatis mutandis to a panel of arbitrators.  All decisions by such a panel shall be by written majority vote.

4.	FEDERAL RULES OF CIVIL PROCEDURE AS MODEL.  

	The pre-hearing and hearing proceedings in the arbitration shall be generally governed by the Federal Rules of Civil Procedure and the judicial precedent interpreting those rules, as modified herein.  The judicial interpretations announced by the Supreme Court of the United States and by the United States Court of Appeals and United States District Court <[a] having jurisdiction in the arbitration forum  [b] for the ___________ District of ___________> shall be controlling in the event of a conflict among the courts as to any interpretation of the Federal Rules.  In the event of a conflict between the Federal Rules and judicial interpretations and the specific provisions of this Section, the provisions of this Section shall control.  

5.	DISCOVERY

	The Parties do not wish to incur the expense and inconvenience associated with the "wide-open" discovery normally available under the Federal Rules.  Except as otherwise set forth herein or agreed by the Parties:  

		[COMMENT:  Courts traditionally have been very reluctant to get involved in discovery in arbitration proceedings.  See, e.g., Suarez-Valdez v. Shearson Lehman/ American Express, Inc., 858 F.2d 648, 649 (11th Cir. 1988) (agreement to arbitrate is an agreement to proceed under arbitration and not under court rules); Recognition Equipment, Inc., v. NCR Corp., 532 F. Supp. 271, 273-75 & n.2 (N.D. Tex. 1981); Mississippi Power Co. v. Peabody Coal Co., 69 F.R.D. 558 (S.D. Miss. 1976); Levin v. Ripple Twist Mills, Inc., 416 F. Supp. 876, 880-81 (E.D. Pa. 1976), app. dism'd, 549 F.2d 795 (3d Cir. 1977).  Contra:  International Assoc. of Heat and Frost Insulators and Asbestos Workers v. Leona Lee Corp., 434 F.2d 192 (5th Cir. 1970) (allowing arbitration discovery virtually without comment), distinguished in Recognition Equipment, 532 F. Supp. at 273-75 & n.2. 

		The better approach is probably for courts to support compulsory discovery when the parties' arbitration agreement provides for it.  Such a result would flow naturally from the rationale of the Midland Metals case, discussed below.  A court that refuses such assistance could be unwittingly forcing parties to choose between litigating all of their case or none of it before the court.  Such a forced choice might discourage parties from agreeing to arbitrate; the court might see an entire dispute, instead of an ancillary part of it, ending up on the docket.  By making arbitration less attractive than it could be, such refusals serve to discourage arbitration and add to the congestion in the courts.]


	5.1	Either Party may discover matters from the other Party in accordance with the procedures set forth in the Federal Rules as modified herein.  

	5.2	No Party may seek discovery from third parties except by agreement of the Parties or on motion granted by the arbitrator upon a showing of substantial likely prejudice if the discovery is not had.  Any such third-party discovery shall be taken in accordance with the Federal Rules, including compulsory discovery in conjunction with a civil action in support of the arbitration pursuant to Section 7 of these Rules.

	5.3	The Parties desire that discovery shall be had only for matters of demonstrated relevance or demonstrated substantial likelihood to lead to discovery of relevant evidence.  While this subsection shall not be construed as setting out specific requirements in this respect, in any discovery dispute the burden of proof of the propriety of particular requested discovery (both the burden of coming forward and the risk of nonpersuasion) shall always be on the requesting Party.

	5.4	Unless otherwise agreed by the Parties, all discovery requests shall be responded to within ten (10) business days after service of the request in the manner prescribed for notice to the Party being served. 

	5.5	A Party to whom an interrogatory is directed may respond with a designation of a person to testify on behalf of that Party and an offer to permit that person to be deposed in a deposition under Rule 30(b)(6) of the Federal Rules, analogous to that Party's right to respond to an interrogatory seeking the identity of documents by producing responsive documents instead of identifying them.

	5.6	The arbitrator may enter orders compelling discovery in accordance with these Rules.  The provisions of these Rules governing ancillary proceedings shall apply to all such orders.

	5.7	Electronic recording of depositions is agreed to, subject to the rules governing agreed electronic recordings of depositions as set forth in the Federal Rules.

	5.8	The discovery period shall end four (4) months after the call for arbitration; all depositions shall be completed, and all requests for other discovery shall be served, prior to that time.  

	5.9	If the Parties are unable to agree on a confidentiality agreement ("protective order") to protect confidential information, each Party shall submit a proposed protective order to the arbitrator, who shall adopt one or the other proposed protective order.  The Parties shall be deemed to have agreed to the protective order so selected.  The provisions of these Rules governing ancillary proceedings shall apply to all disputes about protective orders.

6.	ANCILLARY PROCEEDINGS

	In any "ancillary" proceeding before the arbitrator pursuant to these Rules (e.g., a proceeding to select a form of protective order, to obtain an order compelling discovery, to determine the reasonableness of awards of fees and expenses requested hereunder by either Party, or to resolve any other dispute between the Parties as to the procedural conduct of the arbitration), the following rules shall apply:

	6.1	Each Party shall submit a proposed order, which may but need not include proposed findings of fact and conclusions of law, and if desired a written brief.  A nonmoving Party shall submit its response, if any, within ten (10) business days after the moving Party's submission.  

	6.2	The arbitrator may hold a telephone hearing or, if agreed by the Parties, an in-person hearing.  

	6.3	Unless otherwise agreed by the Parties, the arbitrator shall render findings of fact and conclusions in deciding the ancillary matter in question.

	6.4	If a Party fails to comply with an order by the arbitrator compelling discovery, the arbitrator shall, upon motion by the other Party and at least ten (10) business days' notice to the noncompliant Party, make an Award on the merits against the noncompliant Party by default, unless the arbitrator makes specific factual findings, based on clear and convincing evidence, and concludes that the interest of justice manifestly requires excusing the noncompliant Party from its noncompliance.  Such an Award shall be appealable and enforceable in the same manner as any other Award.

	6.5	A decision of the arbitrator in an ancillary proceeding shall be appealable (in the manner set forth below for an appeal of the Award) prior to the entry of the Award only to the extent that an appeal could be taken from a similar decision rendered on an interlocutory basis by a United States district court.  

7.	CIVIL ACTION IN SUPPORT OF ARBITRATION

	7.1	The Parties desire that they be able to request the aid of the courts as necessary in support of the arbitration.  Accordingly, either Party may invoke the aid of a court, of competent jurisdiction and proper venue pursuant to this Agreement (the "Supervisory Court"), by filing an action against the other Party to the arbitration, for a declaratory judgment or for affirmative relief, as appropriate.  Once such an action has been filed, no other such action shall be filed unless the first action is dismissed without prejudice in an order from which no further appeal is taken or possible.

	7.2	The Party filing the action shall contemporaneously file with the court a joint motion for a stay of all proceedings in the Supervisory Court, including a postponement of the defendant's time to answer, move, or otherwise plead, except those proceedings pertaining to seeking discovery from third Parties.  The joint motion shall state that the motion is filed on behalf of both Parties pursuant to this Article; unless otherwise required by applicable law or court rules, the joint motion need not be signed by the Party against whom the action is filed.

	7.3	If the Supervisory Court does not become the venue for an enforcement or appeal proceeding as set forth below, then immediately after the arbitration award becomes nonappealable the Parties shall jointly move the Supervisory Court for dismissal of all claims and counterclaims without prejudice.

8.	ARBITRATION HEARING

	8.1	Except as set forth herein, or unless otherwise agreed by the Parties, within six (6) months after the call for arbitration, the Parties and the arbitrator shall meet in the forum city or state specified for arbitration in the Agreement for a presentation of evidence and argument.  

	8.2	Unless otherwise agreed by the Parties, the arbitrator shall fix the date and specific location of the hearing, and shall give the Parties at least sixty (60) days advance notice of the date and location.  

	8.3	Unless otherwise agreed by the Parties, the hearing shall continue from day to day on business days from the hours of 9:00 a.m. until 5:00 p.m., with a two-hour lunch break each day.  

	8.4	The hearing shall proceed in the manner of a nonjury trial under the Federal Rules of Civil Procedure.  The arbitrator shall entertain such presentation of sworn testimony and other evidence, written briefs, and/or oral argument as the Parties may wish to present with respect to the dispute.  

	8.5	Unless otherwise agreed by the Parties, a qualified court reporter shall record and transcribe the proceeding; either Party may request electronic recording of the hearing (e.g., by videotaping) at its own expense.

	8.6	Any Party may be represented by counsel at the hearing. 

	8.7	Any Party may invoke "the rule" to exclude witnesses from the hearing except during their own testimony.  

	8.8	The Federal Rules of Evidence shall control, except that objections (other than objections of privilege) shall go only to the weight to be accorded the evidence in question and not to its admissibility.  In particular, testimony may be presented by videotape.  

	8.9	All evidence shall be presented to all the arbitrators together or separately (e.g., separate viewings of the same testimony on videotape) and to all of the Parties, except where any of the Parties is absent in default or has waived the right to be present.  

	8.10	The evidentiary record may be reopened after its close only in accordance with the principles applied in nonjury federal civil trials.

9.	ARBITRATION AWARD

	9.1	Within five (5) business days after the close of the arbitration hearing, the arbitrator shall render and sign an "Award" that include the arbitrator's findings of fact and conclusions of law.  In a multi-arbitrator arbitration, each arbitrator shall sign the Award, indicating whether he or she voted in favor of the Award.  The arbitrator shall notify the Parties of the Award, including its contents, by the most expeditious possible means (e.g., FAX or Federal Express).

	9.2	No arbitrator shall otherwise discuss the Award with either Party except with the prior written consent of the other Party.

	9.3	Either Party may move for reconsideration by the arbitrator by filing and serving a motion to that effect within five (5) business days after the Award.  The provisions herein governing "ancillary proceedings" shall apply to such a motion, except that if the Award is vacated on motion for reconsideration, the moving Party need not bear the nonmoving Party's attorney's fees incurred in connection with the motion unless the arbitrator makes specific factual findings on the question and states a conclusion that such a result is necessary in the interest of justice.  

10.	APPEAL OF AWARD

	10.1	A Party who has lost a motion for reconsideration and who desires to appeal shall give notice thereof to the other Party no later than five (5) business days after the arbitrator's denial of the motion for reconsideration.  The other Party may in turn give notice to the appealing Party of the other Party's desired venue for the appeal no later than five (5) business days after receipt of the appealing Party's notice of intent to appeal.

		[COMMENT:  Normally, for practical purposes "arbitration" awards are essentially unappealable.  See e.g., Ottley v. Schwartzberg, 819 F.2d 373, 376 (2d Cir. 1987) (reviewing extremely limited statutory grounds for appeal under Federal Arbitration Act).   In the Midland Metals case,  however, one influential district court wisely recognized that when the parties have so agreed, a district court should indeed review an arbitration award under a standard agreed by the parties instead of under the more limited traditional standard.   Fils et Cables D'Acier de Lens v. Midland Metals Corp. ["Midland Metals"], 584 F. Supp. 240, 243-44 (S.D.N.Y. 1984).

		In Midland Metals, the court reviewed an arbitration award under the "substantial evidence" standard because the arbitration agreement expressly so provided.  The "appellee" (the winner of the arbitration) wanted the court to be bound by the stricter statutory appeal standard instead of the agreed substantial-evidence standard.  The court declined to be limited by the statutory standard, pointing out that arbitration is a creature of contract and so the parties are free to vary the rules, including the appellate standard.  Id.

		The Midland Metals court also noted that even with an expanded appeal, the arbitration reduced the burden on the court.   It observed that neither party could be compelled to arbitrate under rules to which it did not agree, and that absent an expanded appeal provision, one or both parties might not have agreed to arbitrate at all.  Thus, absent the expanded appeal route, the court might have been forced to try the entire case and render a decision, instead of merely reviewing the award and the record.  See id.]

	10.2	An appealing Party who has complied with the motion and notice provisions above may appeal the Award by filing an action for affirmative or declaratory relief concerning the subject matter of the arbitration, but for no other relief, exclusively in a court having general trial jurisdiction that includes the matter in controversy.  If such a court exists within the venue specified by the nonappealing Party pursuant to the previous paragraph, the action shall be filed in that venue.  Such an action shall be filed no later than ten (10) business days after the date of the denial of the appealing Party's motion for reconsideration.  

	10.3	The nonappealing Party may counterclaim for enforcement of the Award.  Alternatively, the nonappealing Party may "cross-appeal" by counterclaiming for affirmative or declaratory relief concerning the subject matter of the arbitration but for no other relief.

	10.4	An award from which an appeal permitted by this Agreement is timely taken shall not be a "binding" award, but nevertheless shall be filed with the court as follows.  

		(a)	The Parties agree that the findings of fact and conclusions of law set forth in the Award shall be filed with the court as the report of a special master, in the manner and with the effect prescribed by Rule 53(e) of the Federal Rules of Civil Procedure.  The findings of fact shall not be final but shall be subject to review under the clearly-erroneous standard as prescribed by Rule 53(e)(2) and (4).  

		(b)	The Parties agree that the record in the arbitration hearing shall automatically become the agreed record in the action, subject to re-opening only in accordance with the principles governing new trials to the court under the Federal Rules of Civil Procedure.

		(c)	If the action is filed in a state court or other forum other than a United States district court, the Parties agree that the stipulations in this subsection shall nevertheless apply in the same manner as if the action had been filed in a United States district court.

	10.5	The running of any statute of limitations applicable to a claim or counterclaim made in the arbitration proceeding shall be tolled during the arbitration proceeding to the extent that the claim or counterclaim was not barred by limitations when made.

	10.6	If an Award is appealable under this Article, and an appeal is not timely made in accordance with the procedures of this Article, then the Award shall automatically become final, binding as between the Parties, and nonappealable for any reason.  The award may thereafter be confirmed or enforced by either Party in any court of competent jurisdiction by the filing of an appropriate action.  Each Party shall be deemed to have conclusively waived any and all defenses against enforcement that could have been made in an appeal pursuant to this Article, including any and all defenses that would otherwise be available under the Federal Arbitration Act.

11.	MISCELLANEOUS PROVISIONS

	11.1	Unless otherwise agreed by the Parties or provided in the Award, the prevailing Party at the arbitration hearing and/or any ancillary or judicial proceedings shall be entitled to recover from the nonprevailing Party all fees and expenses paid or incurred by the prevailing Party in connection with the arbitration hearing or ancillary or judicial proceeding in question, including without limitation the prevailing Party's reasonable pre-hearing or pre-proceeding attorneys' fees and expenses.  Fees and expenses incurred by either Party in connection with an ancillary or judicial proceeding at which fees and expenses were awarded to the Party prevailing at that proceeding shall not be deemed incurred in connection with any other ancillary or judicial proceeding or with the arbitration hearing.  

	11.2	The arbitrator shall have no power or authority to make awards or orders of any kind except as expressly permitted by this Article.  In particular, without limiting the generality of this subsection, if this Agreement limits the relief available to one or both Parties (e.g., by prohibiting awards of incidental or consequential damages or otherwise limiting the liability of any Party in any respect in a manner consistent with applicable nonarbitration law), then the arbitrator shall have no power or authority to adopt an award of either Party that provides for any such relief.

	11.3	In any judicial proceeding contemplated by this Article, each Party consents to service of process by the Party filing the action upon the other Party's counsel of record in the arbitration or upon any member of said counsel's firm.  This subsection shall not prohibit service in any manner permitted by the Federal Rules of Civil Procedure or other applicable law or rules.   

	11.4	To the extent that either Party would be entitled to a jury in a judicial proceeding contemplated under these Rules, each Party waives that right to minimize the expense and inconvenience of the proceeding.

	11.5	A Party who successfully brings a judicial action to compel arbitration hereunder shall be entitled to recover its reasonable attorneys' fees and expenses from the other Party.

		[COMMENT:  Contract litigation accounts for an increasing part of the congestion in the courts, according to one empirical study.  Galanter, The Life and Times of the Big Six:  The Federal Courts Since the Good Old Days, 1988 Wis. L. Rev. 921.

		It is possible to imagine amending the Statute of Frauds to require certain contract litigants to bring to court not only the written contract, but a trial record with findings and conclusions as well.  In a large sense the Statute is an evidentiary rule.  It requires parties to a contract to provide the court with the proper tools to do its job, i.e., a writing.  There is no glaring reason why contracting parties in selected types of cases could not be required to bring even more judicial tools to court, i.e., findings, conclusions, and a record.  This could shift more of the cost of resolving disputes arising from private consensual relationships onto the parties themselves, and away from the judicial system.]
                                  FINANCING STATEMENT

                                 (adapted from UCC 1)

                      Exhibit 31.3 to Software License Agreement


This is a financing statement covering a security interest granted by the below-named Debtor to the below-named Secured Party.  The security interest is in and to certain License Rights granted by the Secured Party to the Debtor as licensee pursuant to a Software License Agreement dated __________________.  One or more photocopies of this financing statement may be filed with all appropriate authorities with the same effect as if each photocopy were an executed original.


Debtor:	__ABC, Inc._______, __a Delaware corporation_______, __(Street Address)_____________, __(City/State/ZIP)_____________, __Country_______, telephone __(713-555-1212)_____________, FAX __(713-555-1212)_____________  


Secured Party:__XYZ Corporation_______, __a Delaware corporation_______, __(Street Address)_____________, __(City/State/ZIP)_____________, __Country_______, telephone __(713-555-1212)_____________, FAX __(713-555-1212)_____________  




						DEBTOR:


Date:  ________________			By:	_______________________
							Signature


							_______________________
							Printed name and title