Executive Termination – Planning for the End

There are some phrases that show up in contracts and simultaneously amuse me and remind me of the importance of careful legal drafting. One such phrase refers to the right of a company to “terminate the Executive” on certain grounds. After conjuring up images of Arnold Schwarzenegger in one of his most famous roles, I correct the language to say “terminate the employment of the Executive” or something like that.

But that’s not what this post is about. This post is about the need to differentiate between types of terminations and, indeed, types of resignations. Whether I am representing the company or the executive, I believe it is important to think in a disciplined manner about each such type and the consequences that should follow a termination or resignation of that type. Read more

The Often-Signed, Rarely Read ‘Confidentiality Agreement’

A confidentiality agreement is seldom a strategically important agreement. But you can make a strategically important mistake in signing one. The risk of this is exacerbated if you are among the droves of managers who sign confidentiality agreements (sometimes called non-disclosure agreements, or NDAs) without really reading them.

Here’s the key risk:  some confidentiality agreements, especially those offered up by potential business partners, will contain restrictions on your engaging in a competitive business (a ‘non-compete’) or on your soliciting or hiring employees, customers, suppliers, etc. (a ‘non-raid’). If you do nothing else before signing a confidentiality agreement, check to see if it contains one of these extraordinary restrictions. Read more

The ‘Non-Competition’ Covenant

Non-competition provisions appear in several different types of agreements, including employment agreements, consulting agreements and acquisition agreements, among others. Most attorneys and clients recognize that the basic issues to negotiate are the scope, territory and duration of the non-compete.

What I think is often overlooked is the practical reality that the very existence of the non-compete can greatly harm a client’s interests. There are at least two reasons for this. Read more

The ‘Notices’ Provision

This section is often given short shrift by lawyers and clients alike. However, it can be quite meaningful. Three key issues to consider are (1) the method or methods by which notices must be sent, (2) the time at which notices are deemed to be effectively given, and (3) who should be copied on the notices besides the primary contact (e.g., legal counsel).

Many Notices provisions will permit notices by first class mail, fax and sometimes email. That’s okay for unimportant notices. But, in circumstances where a notice can have dramatic importance (for example, a money release demand under an escrow agreement), I wouldn’t want my client’s money hinging on whether they saw and acted on a regular letter, fax or email. Rather, I prefer to require that important notices be sent by overnight courier or perhaps registered or certified mail. My sense is that FedEx packages or certified letters are treated with more urgency than more ordinary forms of communication. The key is to ensure that the client doesn’t inadvertently lose a right. Read more