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.
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:
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