1. 1 Starting Up: Balancing Your Roles / Things You’d Wish You Knew Stephen C. Hall, Esq. Stoll Keenon Ogden PLLC 2000 PNC Plaza Louisville, KY 40202 (502) 333-6000 steve.hall@skofirm.com FOR: OVALS / Business Bootcamp III April 15, 2010

2. 2 Three Principles Build your message around the key features and benefits. Relationships are vital. Cultivate relationships. Technology is dynamic, not static.

3. 3 Practical Pointers #1.Recognize issues. #2.Understand the legal significance of patent ownership. #3.Measure your technology by the investor’s yardstick. #4.Know the key business terms.

4. 4 Emphasize Key Features and Benefits At least 3 ways to describe an invention:  Describe the result - what the invention does.  Describe the technical details - how the invention works. OR  Focus on the key features and the main benefits from the listener’s perspective.

5. 5 Technology is Dynamic, Not Static Background technology: the technology each partner brings into the partnership for mutual use and benefit. Foreground technology: occurs when a research partnership leads to invention, ranging from incremental advance to industry revolution.

6. 6 When foreground technology = an advancement to background technology Partner “A” owns the background technology... and A solely contributed to the advance. Partner “A” owns the background technology... and B solely contributed to the advance. Partner “A” owns the background technology... A + B jointly contributed to the advance.

7. 7 Wisconsin Alumni Research Fund v. Xenon Pharmaceuticals Participants in the joint research program WARF University researchers Xenon Pharmaceuticals, a Canadian biotech company

8. 8 Wisconsin Alumni Research Fund v. Xenon Pharmaceuticals Numerous agreements: Employment agreements Research Agreement 1 and Research Agreement 2 Sponsor Option Agreement Exclusive License Agreement Consulting agreements

9. 9 Ownership Under Patent Law Every person who makes a substantial contribution to at least one claim of an issued patent is a co-owner. Each co-owner possesses an equal undivided interest in the entire patent.

10. 10 What if an extra claim were added... U.S. Patent 5,678,562 (1997) "Ambulatory Physiological Monitor With... Wireless Modem", Fig. 3

11. 11 Yardstick (See Table) Funding Consistent and stable progress The market Cost and reimbursement Reputation

12. 12 Selected Definitions (See Glossary) Pre-money Valuation: The value of the company immediately prior to the investment that is agreed upon by the company and the investors. It is generally expressed as a total dollar amount, but it may also be expressed as a price per share.

13. 13 Selected Definitions Post-money Valuation: The value of the company immediately after the investment. It is determined by adding the amount that is invested in the financing to the Pre-money Valuation of the company.

14. 14 Selected Definitions Dilution: A decrease in the percentage ownership of a stockholder as a result of the issuance by the company of additional equity securities.

15. 15 Selected Definitions Common Stock: The basic ownership interest in a company, albeit subordinate to the rights of creditors and holders of Preferred Stock. Preferred Stock is designated by series, such as Series A, Series B, and so forth.

16. 16 Thank You for Your Attention, Insights, and Questions!