VELCRO® and other marks are owned by Velcro BVBA © Confidential Velcro Companies Contract Drafting Principles Gemma M. Dreher Vice President and General Counsel Velcro Group Corporation AMAZING CONNECTIONS

VELCRO® and other marks are owned by Velcro BVBA © Confidential General Factors to Consider Prior to Drafting  The relationship between the parties.  Negotiation Leverage.  The size and scope of the transaction.  Creditworthiness and reputation of the Parties.  Each party's risk tolerance.  Contract standardization.  Exclusivity or not.  Antitrust considerations  Potential interplay between this contract and others.

VELCRO® and other marks are owned by Velcro BVBA © Confidential Principles of Contract Drafting  Contracts should be in plain English:  Write so that any ordinary person will understand the agreement.  Accuracy, Accuracy, Accuracy:  What is legal, what is factual, what is financial/business term  Your readers are your client, the other party, and potentially a judge.  Consistency is as important as accuracy  Format, headings, definitions, standard templates or models  Address controversial issues early in the process.  Ensure you are in complete alignment with your client prior to distribution, or reserve the right to change.

VELCRO® and other marks are owned by Velcro BVBA © Confidential Starting at the Beginning Cover Page if: Confidential agreement Long agreement Multiple agreements addressing transaction. Table of Contents for lengthy agreements. Title reflects the nature and purpose of agreement. Parties to the Contract Should any affiliates also be parties? Which entity is the appropriate counterparty? If there are more than two parties, are there any joint or several liability concerns?

VELCRO® and other marks are owned by Velcro BVBA © Confidential Starting at the Beginning  Contract Effective Date On execution? As of a specified past or future date? Upon the satisfaction of certain conditions? Recitals Frame the agreement; provide background. Avoid ambiguity. Avoid operative language. No definitions in the recitals. Defined Terms Use them to expand or limit dictionary meaning, terms of art and usage of trade and to express transaction‐specific concepts. Carefully review, and consider how each term is used. Ensure consistent use.

VELCRO® and other marks are owned by Velcro BVBA © Confidential Starting at the Beginning Contract Purpose Performance expected of each party. Consideration Description of product or service being sold.

VELCRO® and other marks are owned by Velcro BVBA © Confidential Term and Termination How is the term structured? Time‐based? Project‐based? Tied to another agreement? Rights of renewal: Unilateral or bilateral? Evergreen (automatic)? Conditions tied to renewal rights? Impact of renewal rights: Allow renegotiation? Periodic evaluation? Automatic price adjustment? Termination rights – For cause? For convenience? Include procedure.

VELCRO® and other marks are owned by Velcro BVBA © Confidential Term and Termination What is the basis for termination for cause? Failure to pay (single instance, or multiple instances within a certain period) Other uncured breaches (material only?) Insolvency (how do you make it enforceable). Cross‐default. Change of control or material asset transfer.

VELCRO® and other marks are owned by Velcro BVBA © Confidential Term and Termination Obligations Upon Termination Payment acceleration. Final accounting. Cancellation of pending orders, statements of work, etc. Return of tangible property including documents, raw material, tooling, and/or inventory Return or destruction of confidential information. Purchase remaining inventory.

VELCRO® and other marks are owned by Velcro BVBA © Confidential Representations and Warranties Assertions of fact made on or as of a specific date. Both general and contract specific. How do Reps and Warranties impact remedies Watch out for disguised covenants. Reps and warranties do not cover future performance. Are covenant breaches treated differently? Ways to limit reps and warranties : Add materiality and/or knowledge qualifiers. Limit survivability Include an anti‐sandbagging clause. Indemnification as the exclusive remedy for inaccuracy. Include limitations of liability

VELCRO® and other marks are owned by Velcro BVBA © Confidential Representations and Warranties Disclaim reps and warranties not expressed Non-Reliance Acknowledgement What is the interplay between reps and warranties and other provisions: Indemnification Termination rights Materiality Product or Service Warranty Does it supersede other express or implied warranties? Does this warranty extend to non-parties What invalidates the warranty? Remedies Warranty period

VELCRO® and other marks are owned by Velcro BVBA © Confidential Indemnification – Defining the Obligation Who is covered? What are the events qualify? What are the exceptions? Is indemnification covered by Limitation of Liability? Is it an exclusive remedy for covered losses? What are the procedures? What damages are recoverable? Direct damages or losses from third party claims? Only losses or unpaid liabilities? Alleged behavior or actual behavior?

VELCRO® and other marks are owned by Velcro BVBA © Confidential Limitation of Liability Mutual or unilateral? Per incident or aggregate? What is waived? What are the exceptions? Does it apply to the entire contract, or only specific provisions?

VELCRO® and other marks are owned by Velcro BVBA © Confidential Intellectual Property Rights Ownership What is being assigned and what is being licensed? Do you need a separate license agreement?

VELCRO® and other marks are owned by Velcro BVBA © Confidential Confidentiality Does obligation survive agreement? Supersede pre-contract NDA? What is the scope – does it include the contract terms; the contract relationship? Is all non-public information covered? Standards of Care Who has permission to obtain?

VELCRO® and other marks are owned by Velcro BVBA © Confidential Insurance What does your risk management department recommend? Mutual or unilateral? Is specific coverage required? What about third parties?

VELCRO® and other marks are owned by Velcro BVBA © Confidential Boilerplate Don’t overlook the boilerplate clauses – can have significant practical and legal implications. Are there exceptions? Choice of law and forum. Force majeure. Notice Dispute resolution Severability Survivability

VELCRO® and other marks are owned by Velcro BVBA © Confidential Traps for the Unwary Starting from scratch Inconsistent terms and definitions Missing key details. Not spending enough time on the boilerplate provisions. Not reviewing thoroughly with your client Knowing your templates and models Version control Sloppy writing, syntax, grammar.

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