month after the date of Effectiveness of the Contract in terms of Calendar Year. The date of settling accounts shall be December 31 of each year.
3.3 Royalty at the rate of_________% (say_________percent) shall be calculated in terms of net selling price after the Contract Products are sold in this year.
3.4 Licensee shall provide Licensor with accurate written report within__________________days from the date of settling accounts, specifying the selling quantity, net selling amount of the Contract Products and Royalty which should be paid last year. The specific methods for calculating net selling amount and Royalty are detailed in Appendix 3 to the Contract. If Licensor find any mistakes or inconsistencies in the report, Licensor should notify Licensee within 10 days from the date receiving the report. Such mistakes or inconsistencies should be rectified immediately by Licensee.
3.5 Licensee agrees to keep accurate books of account and records covering all transactions relating to the license hereby granted. If Licensor demands to audit the accounts of Licensee, it shall notice Licensee within 10 days after receiving the written report of Licensee in accordance with Section 3.4 of the Contract. The specific content and procedure of auditing accounts are detailed in Appendix 4 to the Contract.
Section 4 Condition of Payment
4.1 Royalty stipulated in Section 3 to the Contract shall be effected by Licensee to Licensor through the Bank_________(the business Bank of Licensee) and the Bank_________(the business Bank of Licensor). The payment shall be settled in US dollars.
4.2 Licensor shall immediately issue the related documents after receiving the written report submitted by Licensee in accordance with Section 3.4 of the Contract. The royalty shall be paid by Licensee to Licensor within 30 days after Licensee has received the following documents which are provided by Licensor and found them in conformity with the stipulations of the Contract:
A: Four copies of the statement on calculation of the royalty;
B: Four copies of the commercial invoice;
C: Two copies of the sight draft.
4.3 Licensee shall have the right to deduct from any of the above mentioned payment the penalties and/or compensation which Licensor shall pay to Licensee in accordance with the stipulations of the Contract.
Section 5 Delivery of the Documents
5.1 The name, content and related situation which Licensor applied for the registration from China Trademark Office shall be provided by Licensor to Licensee in accordance with stipulations in Appendix 2 to the Contract.
5.2 The documents stipulated in Section 5.1 to the Contract shall be provided by Licensor to Licensee while the Contract is signing.
Section 6 Quality of Contract Products
6.1 Licensee agrees that the Contract Products covered by this Contract shall be of high standard and of such style, appearance and quality as to be adequate and situated to their exploitation to the best advantage and to the protection and enhancement of the Trademark and good will pertaining thereto. The quality of the Contract Products should be up to the standard specified in Appendix 2 to the Contract, and will be in accordance with all laws where the Contract Products are manufactured, sold and distributed. The manufacture, sale and distribution of the Contract Products shall not reflect adversely upon the good name of Licensor or any of its program or the Registered Trademark.
6.2 For the end mentioned in Section 6.1 of the Contract, Licensee shall, before selling or distributing any of the Contract Products, furnish to Licensor free of cost, for its written approval, a reasonable number of samples of each Contract Product, its cartons, containers and packing and wrapping material. The quality and style of the Contract Products as well as of any carton, container or packing and wrapping material shall be subject to the approval of Licensor. Any item submitted to Licensor shall not be deemed approved unless and until the samples are approved by Licensor in writing. After samples have been approved pursuant to this paragraph, Licensee shall not depart therefrom in any material respect without Licensors prior written consent, and Licensor shall not withdraw its approval of the approved samples except on_______________days prior notice to Licensee.
6.3 From time to time after Licensee has commenced selling the Contract Products and upon Licensors request, Licensee shall furnish without cost to Licensor not more than_______________additional random samples of each article being manufactured and sold by Licensee hereunder, together with any cartons, containers and packing and wrapping material used in connection therewith.
Section 7 Infringements and Guarantees
7.1 Licensor guarantees that Licensor is the legitimate owner of the Registered_________Trademark under the Contract, and that Licensor is lawful in a position to authorize Licensee to utilize the Registered Trademark upon or in connection with manufacture, sale and distribution of the Contract Products. In the course of implementation of the Contract, if any third party accuses Licensee of infringement, Licensor shall be responsible for approaching the third party about the accusation and bear all the economic and legal responsibilities which may arise.
7.2 Licensee hereby undertakes to defend Licensee and/or Licensor against and hold Licensor harmless from any claims, suit, loss and damage arising out of any allegedly unauthorized use of any trademark, patent, process, idea, method or device by Licensee in connection with the articles covered by this Contract or any other alleged action by Licensee and also from any claims, suits, loss and damage arising out of alleged defects in the articles.