Just some thoughts -- and be aware that the university's role in society is
changing!:

What is your justification for expending university/state dollars on
something which appears to contribute to private profit?  Maybe you have an
economic development mission?  Who will control the amount of this
"investment/assistance" so you do not get bled to death?

Is it wise for the institution to take equity in a commercial
concern?  Might this not lead to Institutional Conflict of Interest
(remember, Congress has been afraid of this for some time, and has just
kicked NIH into gear on the subject)?  Can you separate official
responsibilities for decisions to make this expenditure (clearly you will
be missing some other opportunity to which the funds could be put) from
official responsibilities that reap the benefits?

If you take an equity position, will you expect the institution to have a
seat on the board?  Will this constitute COI?  Suppose the startup company
is owned/controlled by your faculty member?  And then suppose you gave her
company this sweetheart deal, but refused such a deal to Joe Doakes (whom,
unbeknownst to you, is the brother-in-law of the chair of your
legislature's higher education finance committee)?

"Future" equity positions?  Pie in the sky?  Or even current equity --
which will be diluted several times over before the company turns a profit
or makes an IPO?

Please understand that I'm just playing the devil's advocate here!

As solid advice, I strongly recommend that the terms of a master agreement
be very firm, and unchanged.  If you want to do something risky or
experimental, at least put it in a unique agreement that has a very high
picket fence around it!

Chuck

At 10:30 AM 7/13/00 -0700, you wrote:
>Has anyone out there had experience with establishing master agreements
>with for-profits that would allow faculty (and perhaps students) to do
>research as delineated in Project Agreements under the Master at no
>reimbursement with the anticipation of future negotiated agreements for
>a share of the company?  It is being proposed that we offer this type of
>agreement to "startup" companies.
>
>Some of the proposed language states:
>
>"In addition to or in lieu of the specifications delineated in this
>agreement, the Project Agreement Proposal may also address special
>conditions which differ from or add to the provisions specified in this
>Agreement, including Sections 8 (Intellectual Property and Inventions)
>and 9 (Grant of Rights), as well as the specification of any licenses,
>restrictions on fields of use, rights of the parties with respect to
>improvements or derivative works, or other legal or financial matters.
>These may include longer-term, less-defined collaborative development
>partnerships for which other mechanisms, such as a transfer of equity or
>royalties based on relative contributions to the development, may be
>negotiated.  Except to the extent provided in a Project Agreement
>Proposal explicitly referencing the portion(s) of this Master Agreement
>intended to be varied thereby, the terms of this Master Agreement will
>prevail."
>
>and
>
>"For projects which fall under the master agreement, work may be
>performed without reimbursement or with partial reimbursement in return
>for future equity position, or otherwise according to the terms of the
>executed Project Agreement Proposal covering same."
>
>Please share your experience and thoughts on this idea.  I am also
>concerned about indirect cost recovery on projects with less than full
>reimbursement, and establishing criteria for the term "start-up".
>
>Thanks as always for your help.
>
>Sharon Kuhlenschmidt
>Grants Development Analyst
>Building 38 Room 152
>California Polytechnic State University
>San Luis Obispo, CA 93407
>(805) 756-5963
>fax:  805/ 756-5466
>e-mail: xxxxxx@calpoly.edu
>
>
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Herbert B. Chermside, CRA
Director, Sponsored Programs Administration
Virginia Commonwealth University
PO BOX 980568
Richmond, VA  23298-0568
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