1. Creating a Win-Win Deal; Key Elements of Licensing Contracts D.C. Toedt Wickford Georgetown Group, Inc Irene Kosturakis BMC Software, Inc.

2. Negotiations

3. 12 Ways to Speed Up Negotiations 12. “Scheduling order” 11. Process vs. outcome 10. Projector? 9. Timestamp all drafts 9. Timestamp all drafts 8. Term sheet 8. Term sheet 7. Playbook 7. Playbook 6. Reasonable positions 6. Reasonable positions 5. Accept redlines 4. Explanations in footnotes, Word comments 3. Small agreements early 2. Editable documents 1. Collaborative mindset

4. Negotiating a sales contract with “Jerky Boy” Importance of sales contracts Importance of sales contracts Client looking over your shoulder Client looking over your shoulder Sales commissions already “spent” Sales commissions already “spent” May need the deal for quarterly numbers May need the deal for quarterly numbers Who should decide when to kill the deal? Who should decide when to kill the deal?

5. Drafting

6. Who should (or might) make what happen? Who should (or might) make what happen? –Parties and their divisions, customers, suppliers, partners, financers –Competitors –Government Brainstorm the “what ifs” in the business relationship lifecycle: Brainstorm the “what ifs” in the business relationship lifecycle: –Startup; normal operations; trouble; big trouble; shutdown Contract as business plan

7. Contract Forms Whose forms? Whose forms? The fewer pages, the better (small fonts, 2 columns) The fewer pages, the better (small fonts, 2 columns) Use tables instead of run-on prose Use tables instead of run-on prose Include examples, sample calculations Include examples, sample calculations Concession packages – Ag / Au / Pt levels? Concession packages – Ag / Au / Pt levels?

8. Contract Drafting: Overall Tone Hardball Hardball –Eventually get more of what you want? –Negotiation time Reasonable for both parties? Reasonable for both parties? –E.g., mutuality of provisions –Less time to negotiate (can be important!) –Sets a tone for relationship –Better impression on execs, judge, jury?

9. 5 Key Clauses to Consider Licensing provisions – tightly drafted technology definitions and grant Licensing provisions – tightly drafted technology definitions and grant Warranties for deliverables Warranties for deliverables Indemnities for actions Indemnities for actions Termination rights – “out” clauses Termination rights – “out” clauses Assignability Assignability

10. Problem Clauses Fuzzy warranties, no liability limits Fuzzy warranties, no liability limits Most favored customer Most favored customer No assignment w/out consent No assignment w/out consent “Naked” caps on price increases “Naked” caps on price increases Promises for future deliverables Promises for future deliverables “Gross negligence,” “willful misconduct” “Gross negligence,” “willful misconduct”

11. Confidentiality Provisions Can be crucial Can be crucial Paper trail requirement? Paper trail requirement? Term of agreement? Term of agreement? Confidentiality period? Confidentiality period? Freedom-to-operate clauses? Freedom-to-operate clauses? Residuals clause? Residuals clause? PACTIX NDA (www.pactix.org) PACTIX NDA (www.pactix.org)www.pactix.org

12. Indemnity Provisions Initiation of Obligations (threat, judgment) Initiation of Obligations (threat, judgment) Rights to cure (modify, replace, license, refund) Rights to cure (modify, replace, license, refund) Competing obligations on code of two parties and modifications Competing obligations on code of two parties and modifications Issues in re software used in combination Issues in re software used in combination Use for intended purpose Use for intended purpose