1. © 2014 Armstrong Teasdale LLP Square One Program David Jennings Sept 2014

2. © 2014 Armstrong Teasdale LLP Technology Related Agreements / Early Stage Company Transactions & Agreements Associated with the Transfer and Exploitation of Technology and Intellectual Property Rights Confidentiality Agreements / Material Transfer Agreements Services Agreements Employment and Consulting Agreements License Agreements

3. © 2014 Armstrong Teasdale LLP Technology vs. Intellectual Property  Technology is Tangible and Intangible Things Processes, techniques, know-how, databases, software, etc. Intellectual Property = Legal Rights Do you need to address one or both? −Don’t give up more than necessary

4. © 2014 Armstrong Teasdale LLP Confidentiality Agreements  Create the contractual framework within which one party discloses to another confidential and proprietary information.  Typically arise in the context of evaluation of a business transaction in which the disclosure of such information is necessary or desirable to enable substantive discussions regarding the potential transaction to proceed.

5. © 2014 Armstrong Teasdale LLP Confidentiality Agreements  Important considerations What defines “protected” or “confidential information” Will the agreement cover Trade Secret or Proprietary Information Are there exceptions to “confidential information” to be aware of What are the nature of the nondisclosure and non-use obligations? What are permitted uses? Available remedies? Is there an obligation to return information? One Way In or Out / Two Way? Term of Agreement and term of confidentiality obligation Any warranties or disclaimers?

6. © 2014 Armstrong Teasdale LLP Confidentiality Agreements As used herein, the term “Confidential Information” shall mean all information disclosed by a disclosing Party to the receiving Party pertaining to the products and operations of the disclosing Party, including but not limited to, any present or potential business opportunities, pricing, production techniques, application knowledge, samples, materials, compositions, methods, research and product development, processing information, technical data, operational information and customers.

7. © 2014 Armstrong Teasdale LLP Confidentiality Agreements  Permitted Use of Information The agreement should specify the purpose for which the receiving party may use the information and should specifically and expressly prohibit any other use. The best approach is simply to recite that the information may be used only to assist the receiving party in evaluating the proposed transaction, which the agreement may describe with the desired degree of specificity. Avoid ambiguous language regarding prohibited uses, such as, "use in any way detrimental to the disclosing party."

8. © 2014 Armstrong Teasdale LLP Confidentiality Agreements  No Obligation to Proceed; No License The disclosing party should include a specific statement that, until the execution and delivery of a definitive agreement, the parties are under no obligation with respect to the proposed transaction by virtue of the confidentiality agreement or of any other written or oral understanding or agreement. No express or implied license is granted to the receiving party to use the Confidential Information except in conjunction with the Project.

9. © 2014 Armstrong Teasdale LLP Services Agreements (Consultants, Programmers, Web Designers, Lab Services, Testing Services, etc.)  Key Issues / Problem Areas What is the Scope of Services (be as clear & definite as possible) Who Owns What? −The Default Rules will Surprise You!! −Get the Proper Assignment Clauses How do I get out of this mess? Plan for failure as well as success GET THE WORK PLAN IN PLACE

10. © 2014 Armstrong Teasdale LLP Services Agreements  Key Issues / Problem Areas Will the Service Provider Stand Behind the Work? Look for Proper Warranties −Compliance with Agreed Specifications −Warranties of Non-Infringement Indemnification Plan for failure as well as success

11. © 2014 Armstrong Teasdale LLP Employee Agreements  Key Issues / Problem Areas Confidentiality Ownership of Work Product −The Default Rules will Surprise You!! −Get the Proper Assignment Clauses Non-Compete Issues At-Will Employment

12. © 2014 Armstrong Teasdale LLP Employee Agreements  Confidentiality Employee shall not use, publish or otherwise disclose (except as Employee's Company duties may require), either during or subsequent to Employee's employment by the Company, any secret or confidential information or data of the Company (or any Company subsidiary or affiliate) or any information or data of others which the Company is obligated to maintain in confidence. Employee shall not disclose or utilize in Employee's work with the Company any secret or confidential information of others (including any prior employers), or any inventions or innovations of Employee's own which are not included within the scope of this agreement. Employee shall deliver promptly to the Company at the termination of Employee's employment by the Company, or at any other time the Company may request, without retaining any copies, notes or excerpts thereof, all items which belong to the Company or which by their nature are for the use of Company employees only, including, without limitation, all memoranda, diaries, notes, records, plats, sketches, plans, specifications or other documents relating, directly or indirectly, to the business of the Company or Company subsidiaries or affiliates. The provisions of this paragraph shall continue in full force and effect after termination of Employee's employment by the Company or Employee, whether such termination is with of without cause or voluntary or involuntary.

13. © 2014 Armstrong Teasdale LLP Employee Agreements  Innovations Employee shall promptly disclose to the Company any and all discoveries, improvements, inventions, and technical or business innovations made, developed, or conceived by Employee solely or with others during the period of Employee’s employment by the Company that (a) are along the lines of the business, work or investigations of the Company or Company subsidiaries or affiliates to which Employee’s employment relates or as to which Employee may receive information due to Employee’s employment by the Company, or (b) result from or are suggested by any work which Employee may do for the Company, or (c) are otherwise made through the use of Company time, facilities or materials (collectively, “Employee Innovations”). Employee agrees to assign, and hereby does assign, all of Employee’s right, title and interest in and to all such Employee Innovations. Employee shall make and maintain for the Company adequate and current written records of all such Employee Innovations and shall, without additional compensation or consideration, execute all necessary papers and otherwise provide proper assistance (at the Company’s expense), during and subsequent to Employee’s employment, to enable the Company to obtain for itself or its nominees, patents, copyrights, or other legal protection for such Employee Innovations in any and all countries.

14. © 2014 Armstrong Teasdale LLP Employee Agreements  Non-Compete During Employee’s employment and, if the employment of Employee is terminated for any reason whatsoever, whether by Employee or Company and whether with cause or without cause, for a period of two (2) years after the date of such termination (the “Termination Date”), Employee agrees that Employee will not, either personally or as an employee, agent, director, officer, shareholder, associate, partner, manager, agent, advisor, independent contractor, proprietor, consultant or otherwise: (i) engage in any business which is the same as or similar to any business in which Company is engaged or which is otherwise competitive with any business in which Company is engaged during Employee’s employment with Company or as of the Termination Date; (ii) solicit business from any customers of Company for products or services that are sold by Company during Employee’s employment with Company or as of the Termination Date; (iii) solicit, divert or take away from Company the services of any of the employees or agents of Company, or induce in any way any non- performance of any of the obligations of such employees or agents to Company ; and (iv) undertake, or engage in, any employment or business activities involving the disclosure or use of Company ‘s secret, confidential or proprietary matters.

15. © 2014 Armstrong Teasdale LLP Employee Agreements  Non-Compete During Employee’s employment and, if the employment of Employee is terminated for any reason whatsoever, whether by Employee or Company and whether with cause or without cause, for a period of two (2) years after the date of such termination (the “Termination Date”), Employee agrees that Employee will not, either personally or as an employee, agent, director, officer, shareholder, associate, partner, manager, agent, advisor, independent contractor, proprietor, consultant or otherwise: (i) engage in any business which is the same as or similar to any business in which Company is engaged or which is otherwise competitive with any business in which Company is engaged during Employee’s employment with Company or as of the Termination Date; (ii) solicit business from any customers of Company for products or services that are sold by Company during Employee’s employment with Company or as of the Termination Date; (iii) solicit, divert or take away from Company the services of any of the employees or agents of Company, or induce in any way any non- performance of any of the obligations of such employees or agents to Company ; and (iv) undertake, or engage in, any employment or business activities involving the disclosure or use of Company ‘s secret, confidential or proprietary matters.

16. © 2014 Armstrong Teasdale LLP Employee Agreements  At-Will Employment Employee understands and acknowledges that, except as may be otherwise explicitly provided in a separate written agreement between Employee and the Company, Employee’ s relationship with the Company is and shall continue to be at-will, as defined under applicable law, meaning that either Employee or the Company may terminate the relationship at any time for any reason or no reason, without further obligation or liability, other than those provisions of this Agreement that explicitly survive the termination of the relationship.

17. © 2014 Armstrong Teasdale LLP For Our Purposes; What’s a license?  Fundamentally, it is a “permission” to do something(s).  A license conveys rights to intangible property created and defined by statute and to technology deriving value solely from proprietary possession to the exclusion of others.

18. © 2014 Armstrong Teasdale LLP Licenses  What is this “intangible property” that is the subject of a license? Patents 35 USC 271(a) Except as otherwise provided in this title [35 USCS §§ 1 et seq.], whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.

19. © 2014 Armstrong Teasdale LLP Licenses  What is this “intangible property” that is the subject of a license? Trademarks (1) Any person who shall, without the consent of the registrant-- (a) use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive; or (b) reproduce, counterfeit, copy, or colorably imitate a registered mark and apply such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive, shall be liable in a civil action by the registrant for the remedies hereinafter provided.

20. © 2014 Armstrong Teasdale LLP Licenses What is this “intangible property” that is the subject of a license?  Copyrights (software, literary works, artwork, musical compositions, etc.) Anyone who violates any of the exclusive rights of the copyright owner as provided by sections 106 through 122, or of the author as provided in section 106A(a), or who imports copies or phonorecords into the United States in violation of section 602, is an infringer of the copyright or right of the author, as the case may be. (to reproduce, to prepare derivative works, to distribute copies or phonorecords, to perform, and to display)

21. © 2014 Armstrong Teasdale LLP Licenses  What is this “intangible property” that is the subject of a license? Trade Secrets (know-how; patent applications) / State Law −1. …a complainant is entitled to recover damages for misappropriation. Damages can include both the actual loss caused by misappropriation and the unjust enrichment caused by misappropriation that is not taken into account in computing actual loss. In lieu of damages measured by any other methods, the damages caused by misappropriation may be measured by imposition of liability for a reasonable royalty for a misappropriator's unauthorized disclosure or use of a trade secret. −2. If misappropriation is outrageous because of the misappropriator's evil motive or reckless indifference to the rights of others, the court may award punitive damages.

22. © 2014 Armstrong Teasdale LLP License Agreements  Different Types of Licenses: Exclusive Non-Exclusive Field Limited −Geographical territory / Time limited −Specific customers −Specific applications/products Purpose Limited Time Limited

23. © 2014 Armstrong Teasdale LLP License Agreements Technology is Tangible and Intangible Things Intellectual Property = Legal Rights Do you need to address one or both? Don’t give up more than necessary

24. © 2014 Armstrong Teasdale LLP Summary  Identified some of the key issues arising in early stage company transactions  Discussed various approaches and pitfalls associated with these issues  What to take away? These agreements can have material impact on value of your company The legal issues can be complex and surprising −Contract principles apply as well as statutory and common law governing subject intangible property rights −Be precise in preparation and analysis Lots of room for problems; Failure of the agreement could have significant adverse effect on Company