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According to ABC's counsel, there is a royalty attached to the license. If that is true, and it does not appear in any of the contract language that you have previously posted here, then I would accept the ABC interpretation, because it is exchanging the royalty for the licensing right.
If there is no royalty, then my position would be that ABC's licence renewal right would be in exchange for nothing, if it cancelled the service agreement, and as such, the licensing renewal right would be unenforceable for lack of contractual consideration.
Hope this helps.
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6.6 Royalty Fees. Until the earlier of expiration of the Term or ABC's exercise of the Perpetual
License Option, XYZ shall be entitled to a royalty for each Sale of an XYZ Stand-Alone Software Product, and
each Sale of a ABC Product that incorporates the Software Product, equal to fifty percent (50%) of all Net
Revenue from such Sale. For this purpose (a) "Sale" means a sale by ABC or a ABC Affiliate during the
Term to a party that is not a ABC Affiliate and (b) "Net Revenue" means, for each Sale, the total perpetual
license fees or recurring user fees received by ABC during the Term for the XYZ Stand-Alone Software
Product or, in the case of a sale of a ABC Product incorporating the Software Product, the portion of such
amounts attributable solely to the Software Product, in all cases, excluding (or if otherwise included, reduced by)
returns, taxes (including without limitation sales, use and value added tax), discounts and or rebates actually
granted or given. During the Term, ABC shall provide a quarterly statement that outlines the number of
ABC Product units incorporating the Software Product and the number of XYZ Stand-Alone Software
Product units licensed by ABC, or its Affiliates or assigns, and the Net Revenue received for such licenses.
The above contractual language creates a separately enforceable contract for the license. So, I would agree that ABC can cancel service and support and maintain its use and distribution rights.
Sorry, I know that's not what you wanted to read, but I cannot avoid the obvious.
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