CONFIDENTIALITY AGREEMENT & EVALUATION LICENSE

In connection with the consideration by ________________________________ “Licensor”) of the possible execution of a licensing agreement or other business arrangement with ____________________________ (“Licensee”), the Licensee has requested access to certain information, properties, and personnel of the Licensor; and

In consideration for and as a condition to the Licensor's furnishing access to the Confidential Information (as defined below), Licensor, in its sole discretion, agrees to make the Confidential Information available to the Licensee, and Licensee agrees as set forth in this agreement (“Agreement”) as follows:

1. Confidential & Proprietary Nature of Information. The Licensee acknowledges the confidential and proprietary nature of the Confidential Information (as defined below), agrees to hold and keep the same as provided herein, and otherwise agrees to each and every restriction and obligation herein.

1.1 Confidential Information.  “Confidential Information” means and includes any and all:

1. trade secrets (as defined in common law and as defined and used in Texas Civil Practice & Remedies Code § 134A.001, et seq.) concerning the business and affairs of the Licensor, unpublished “works” as defined in the Copyright Act of 1976, pending patent applications, product specifications, data, know-how, formulae, compositions, processes, designs, sketches, photographs, graphs, drawings, samples, inventions and ideas, past, current, and planned research and development, current and planned manufacturing or distribution methods and processes, customer lists, current and anticipated customer requirements, price lists, market studies, business plans, computer software and programs (including object code and source code), hardware, technology, computer software and database technologies, systems, structures and architectures (and related processes, formulae, composition, improvements, devices, know-how, inventions, discoveries, concepts, ideas, designs, methods and information), methodologies, and any other information, however documented;

2. information concerning the business and affairs of the Licensor (which includes historical financial statements, financial projections and budgets, historical and projected sales, capital spending budgets and plans, the names and backgrounds of key personnel, personnel training techniques and materials, however documented, that has been or may hereafter be provided or shown to the Licensee by the Licensor or by the directors, officers, employees, agents, consultants, advisors, or other representatives including legal counsel, accountants and financial advisors ("Representatives") of the Licensor (the "Licensor Representatives") or is otherwise obtained from review of Licensor documents or property or discussions with Licensor Representatives by the Licensee or the Licensee's Representatives (including current or prospective financing sources) or Representatives of the Licensee's Representatives irrespective of the form of the communication, and also includes all notes, analyses, compilations, studies, summaries, and other material prepared by the Licensee or the Licensee's Representatives containing or based, in whole or in part, on any information included in the foregoing. Any trade secrets of the Licensor will also be entitled to all of the protections and benefits under any applicable trade secrets law and any other applicable law. If any information that the Licensor deems to be a trade secret is found by a court of competent jurisdiction not to be a trade secret for purposes of this Agreement, then such information will be considered Confidential Information for purposes of this Agreement. In the case of trade secrets, the Licensee hereby waives any requirement that the Licensor submit proof of the economic value of any trade secret or post a bond or other security; and

3. the Licensor Documentation (as defined below); and

4. any other information not generally known to the public that, if misused or disclosed, could reasonably be expected to adversely affect Licensor’s business or give an advantage to a competitor.

2. Nondisclosure & Restrictions of Use. The Licensee agrees that the Confidential Information (i) will be kept confidential by the Licensee and (ii) without limiting the foregoing, will not be disclosed by the Licensee to any person (including current or prospective financing sources) except as expressly permitted by the terms of this Agreement. It is understood that the Licensee may disclose Confidential Information only to those of the Licensee's employees and representatives (“Licensee’s Representatives”) who (a) require such material for the purpose of evaluating a possible license transaction under an Exclusive License, Nonexclusive License or Measurements-Only License with Licensor (individually and collectively, a “Licensing Transaction”) (but to the extent practicable, only such part that is so required and without revealing the possible Licensing Transaction), and (b) are informed by the Licensee of the confidential nature of the Confidential Information and the obligations of this Agreement and are required to be bound by the terms hereof. The Licensee further agrees that the Licensee and the Licensee's Representatives will not use any of the Confidential Information either for any reason or purpose other than to evaluate a possible Licensing Transaction or in any way detrimental to the Licensor (it being acknowledged that any use other than evaluation of and negotiating the possible Licensing Transaction will be deemed detrimental to Licensor). The Licensee also agrees to be responsible, financially and otherwise, for enforcing the terms of this Agreement as to the Licensee’s Representatives and the confidentiality of the Confidential Information and to take such action, legal or otherwise, to the extent necessary to cause them to comply with the terms and conditions of this Agreement and thereby prevent any disclosure, or threatened disclosure, of the Confidential Information by any of the Licensee’s Representatives (including, without limitation, all actions that the Licensee would take to protect its own trade secrets and confidential information). Licensee is prohibited from attempting to reverse engineer, decompile, disassemble, discover, translate, attempting to derive the source code, or otherwise use the Confidential Information in any way except as permitted by any definitive Licensing Transaction entered into by and between Licensee and Licensor.

3. Nondisclosure of Possible Licensing Transaction. Except as permitted by the previous paragraph and except as expressly permitted by a subsequent definitive licensing agreement, if any, entered into by the Licensee and Licensor, the Licensee and the Licensee's Representatives are prohibited, in perpetuity, from disclosing to any person the fact that the Confidential Information has been made available to the Licensee or the Licensee’s Representatives or that the Licensee or the Licensee’s Representatives have inspected any portion of the Confidential Information. Except with the prior written consent of the other party and except as expressly permitted by a definitive licensing agreement, if any, entered into between the Licensee and Licensor, the Licensee and the Licensee’s Representatives are prohibited from disclosing the fact that any discussions or negotiations are taking place concerning a possible Licensing Transaction, including the status of such discussions or negotiations.

4. Exceptions. The foregoing obligations and restrictions do not apply to that part of the Confidential Information that the Licensee demonstrates (i) was or becomes generally available to the public other than as a result of a disclosure by the Licensee or the Licensee's Representatives or (ii) was available, or becomes available, to the Licensee on a non-confidential basis prior to its disclosure to the Licensee by the Licensor or a Licensor Representative, but only if (a) the source of such information is not bound by the Confidentiality Agreement with the Licensor or is not otherwise prohibited from transmitting the information to the Licensee or the Licensee’s Representatives by a contractual, legal, fiduciary, or other obligation and (b) the Licensee provides the Licensor with written notice of such prior possession either (A) prior to the execution and delivery of this Agreement or (B) if the Licensee later becomes aware of (through disclosure to the Licensee or otherwise through the Licensee’s work on the Licensing Transaction) any aspect of the Confidential Information of which the Licensee had prior possession, promptly upon the Licensee becoming aware of such aspect.

5. Evaluation License. Three types of potential licenses for a Licensing Transaction are available to a Licensee: an Exclusive License, a Nonexclusive License, and a Measurements-Only License. Each of these types of licenses contains an initial 30-day evaluation period, the terms of which are set forth in this Agreement. Upon entering into a Licensing Transaction with Licensor, the terms of this Agreement are incorporated by reference in the Exclusive License, Nonexclusive License and Measurements-Only License, and terms of this Exclusive License, Nonexclusive License and Measurements-Only License are incorporated into this Evaluation License, as the case may be.

5.1. Definitions

“Evaluation License Effective Date” means the date on which the last of the following events occurs, provided both events occur: (i) execution of this Agreement, and (ii) payment of the Evaluation Fee.

“Licensor Documentation” means the due diligence, documents, data, user manuals, instructions, materials and other information provided by the Licensor hereunder for evaluating a possible Licensing Transaction.

5.2. Evaluation Fee & License Terms. Licensee shall pay to Licensor an evaluation fee of ________ [Licensor insert] (“Evaluation Fee”) immediately upon the execution of this Agreement. Execution of this Agreement and payment of the Evaluation Fee grants to Licensee the exclusive, non-sublicensable, non-transferable, right to evaluate the Licensor Documentation for a period of 30 days from the Evaluation License Effective Date (“Evaluation Period”), solely for the purpose of determining whether Licensee desires to enter into a Licensing Transaction with Licensor. Upon the expiration of the Evaluation Period, this Evaluation License automatically terminates unless Licensee timely pays the Monthly Licensee Fee for an Exclusive License, Nonexclusive License Fee, or Measurements-Only License Fee, as the case may be, as set forth in those respective licenses. Upon entering into an Exclusive License, Nonexclusive License, or a Measurements-Only License, the terms of this Agreement and are incorporated by reference in each such license entered into by and between Licensor and Licensee. Licensee’s obligations under this Agreement, and all other obligations that would be reasonably expected to survive the termination of this Confidentiality Agreement & Evaluation License shall survive the expiration and termination hereof.

6. Legal Proceedings. If the Licensee or any of the Licensee's Representatives are requested or become legally compelled (by oral questions, interrogatories, requests for information or documents, subpoena, civil or criminal investigative demand, or similar process) or is required by a regulatory body to make any disclosure that is prohibited or otherwise constrained by this Agreement, the Licensee or such Representative, as the case may be, will provide the Licensor with prompt notice of such request so that it may seek an appropriate protective order or other appropriate remedy. Subject to the foregoing, the Licensee or such Representative may furnish that portion (and only that portion) of the Confidential Information that, in the written opinion of its counsel, at Licensee’s sole cost, reasonably acceptable to the Licensor, the Licensee is legally compelled or is otherwise required to disclose or else stand liable for contempt or suffer other material censure or material penalty; provided, however, that the Licensee and the Licensee's Representatives must use reasonable efforts to obtain reliable assurance that confidential treatment will be accorded any Confidential Information so disclosed.

7. Contact With Employees. Without the prior written consent of the Licensor (i) the Licensee and the Licensee's Representatives are prohibited from initiating or causing to be initiated (other than through the Licensor) any communication with any employee of the Licensor concerning the Confidential Information or any possible Licensing Transaction, and (ii) the Licensee and the Licensee’s Representatives will not, for a period of two years after the date of this Agreement, solicit or cause to be solicited the employment of or employ, any person who is now employed by the Licensor.

8. Return of Confidential Information. If the Licensee determines that it does not wish to proceed with a Licensing Transaction (the failure to enter into definitive Exclusive licen within 30 days of the date of execution of this Agreement will be deemed the Licensee's determination that it does not wish to proceed), or if the Licensor notifies the Licensee that it does not wish the Licensee to consider the Licensing Transaction any further, then (i) the Licensee (a) will promptly destroy all documents or other materials furnished by the Licensor or any Licensor Representative to the Licensee or the Licensee’s Representatives constituting Confidential Information, together with all copies and summaries thereof in the possession or under the control of the Licensee or the Licensee's Representatives, and (b) will destroy all materials generated by the Licensee or the Licensee's Representatives that include or refer to any part of the Confidential Information, without retaining a copy of any such material.

9. No Obligation. The Licensor reserves the right, in its sole discretion, to reject any and all proposals made by the Licensee or the Licensee's Representatives with regard to a Licensing Transaction and to terminate discussions and negotiations with the Licensee and the Licensee's Representatives at any time. Without limiting the preceding sentence, nothing in this Agreement requires either the Licensee or the Licensor to enter into a Licensing Transaction or to negotiate such transaction for any specified period of time.

10. No Representations or Warranties. The Licensor retains the right to determine, in its sole discretion, what information, properties, and personnel it wishes to make available to the Licensee, and neither the Licensor nor its Representatives make any representation or warranty (express or implied) concerning the completeness or accuracy of the Confidential Information, except pursuant to representations and warranties that may be made to the Licensee in a definitive licensing agreement for a Licensing Transaction if, when, and as executed and subject to such limitations and restrictions as may be specified therein. The Licensee also agrees that if the Licensee determines to engage in a Licensing Transaction, the Licensee's determination will be based solely on the terms of such definitive licensing agreement and on the Licensee's own investigation, analysis, and assessment. Moreover, unless and until such a definitive licensing agreement is entered into, neither the Licensor nor the Licensee will be under any legal obligation of any kind with respect to such a Licensing Transaction except for the matters specifically agreed to in this Agreement or in another written agreement.

11. Remedies. The Licensee agrees to defend, indemnify and hold the Licensor and its shareholders harmless from any damages, loss, cost, or liability (including legal fees and the cost of enforcing this indemnity) arising out of or relating to any unauthorized use or disclosure by the Licensee or the Licensee's Representatives of the Confidential Information or other violation of this Agreement. In addition, because an award of money damages (whether pursuant to the foregoing sentence or otherwise) would be inadequate for any breach of this Agreement by the Licensee or the Licensee's Representatives and any such breach would cause the Licensor irreparable harm, the Licensee also agrees that, in the event of any breach or threatened breach of this Agreement, the Licensor will also be entitled, without the requirement of posting a bond or other security, to equitable relief, including injunctive relief and specific performance. Such remedies will not be the exclusive remedies for any breach of this Agreement but will be in addition to all other remedies available at law or equity to the Licensor.

12. Modification. The agreements set forth in this Agreement may be modified or waived only by a separate writing signed by the Licensor and the Licensee expressly modifying or waiving such agreements.

13. Cumulative Remedies; No Waiver. The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any party in exercising any right, power, or privilege under this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law, (i) no claim or right arising out of this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (ii) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (iii) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement.

14. Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect. If any of the covenants or provisions of this Agreement are determined to be unenforceable by reason of its extent, duration, scope or otherwise, then the parties contemplate that the court making such determination shall reduce such extent, duration, scope or other provision and enforce them in their reduced form for all purposes contemplated by this Agreement.

15. Costs. The Licensee agrees that if it is held by any court of competent jurisdiction to be in violation, breach, or nonperformance of any of the terms of this Agreement, then it will pay all costs of such action or suit, including reasonable attorneys' fees.

16. Assigns. This Agreement may not be sublicensed, subcontracted, assigned or transferred (including any transfer by operation of law) by Licensee without the prior written consent of Licensor. This Agreement shall inure to the benefit of, Licensor’s successors or assigns, and Licensee’s permitted assigns, as the case may be.

17. Governing Law; Jurisdiction. The validity, interpretation, and performance of this Agreement shall be governed by the laws of the State of Texas without giving effect to the principles of comity or conflicts of laws thereof. The parties irrevocably agree that the courts situated in Harris County, Texas shall have exclusive jurisdiction and venue over any and all claims arising under or relating to this Agreement.

18. Entire Agreement; Counterparts. This Agreement, including all exhibits, schedules and addenda hereto, which are incorporated herein by reference, constitutes the entire agreement between the parties hereto concerning the subject matter hereof, and supersedes all prior memoranda, correspondence, conversations, negotiations and agreements, all of which are merged herein. The parties are not relying on any statement or representation unless it is expressly set forth herein.

19. Acknowledgments. Licensor and Licensee have been given the opportunity to have this Agreement reviewed by their respective independent counsel prior to signing it. Licensor and Licensee each understand the purposes and effects of this Agreement. Licensor and Licensee have either elected to have this Agreement reviewed by their respective independent counsel of their own choosing, or has voluntarily elected not to do so.