Contracts Archives - John Dorsey PLLC

#MeToo: Use a “Morals Clause” in Contracts to Deter and Quash Perpetrators of Misconduct

Morals clauses (or morality clauses) have long been part of celebrity, musician, athlete and other talent contracts. With widespread revelations of sexual harassment and other misconduct in the wake of the #MeToo movement, the use of morals causes is expanding beyond traditional talent contracts to executive employment, consulting, distribution, and other contractual arrangements.A morals clause gives one party the right to terminate the contract if the other party does not meet a certain behavioral standard. The standard is ...

Jmdorsey2023-02-23T10:09:39-08:00

Beware of “Hotel California” Contracts

Beware of what I call "Hotel California" contracts. These are contracts that may be easy to enter into but difficult to leave (i.e., terminate). Before you sign a new contract, train yourself to think like a spy entering a hotel lobby, "Where are my exits if things go awry?" For more on this, please read my article: "Your Right to Terminate: Quite Possibly the Most Important Right in Your Business Contract." Relationships change, and some ...

Jmdorsey2023-02-23T10:52:20-08:00

How to Create a Simple Cash Bonus Plan to Incentivize and Attract Employees

Your employees, like wide receiver Rod Tidwell (Cuba Gooding Jr.) in the classic movie Jerry McGuire, are valuable commodities. They will stay with you if offered proper incentives, especially if you "show them the money." One of the best ways to do this is to create a simple cash bonus plan. A cash bonus plan offers employees a financial reward for achievement of corporate, business unit and/or individual goals. The goals can be short-term (e.g., annual or quarterly) ...

Jmdorsey2023-02-23T10:50:12-08:00

The Top 8 Issues in Sponsorship Sales/Strategy Consulting Agreements

Maximizing sponsorship revenue for an event or brand often requires greater resources than those available within a rights-holder's internal organization. Fortunately, there are several reputable consulting companies that provide sponsorship sales and strategy consulting to bridge the gap. The consultants, which range from big players such as IEG/ESP Properties and Legends to boutiques like Caravel Marketing, provide a range of sponsorship-related services, including valuation, packaging, content creation, branding, analytics, activation strategies, customer engagement and sales representation. I have helped clients negotiate successful arrangements with sponsorship consultants and ...

Jmdorsey2021-06-11T13:11:20-07:00

Sponsorship Agreements: Rights of First Negotiation (ROFNs) and Rights of Last Refusal (ROLR)

In a previous article, I discussed Rights of First Offer (ROFOs) and Why You Need Them in your sponsorship agreement if you are a sponsor. But if you are not the sponsor and instead you are the event or other sponsorship rights-holder, the ROFO will limit competitive bidding for your valuable sponsorship rights and may therefore decrease your sponsorship revenue. For this reason, if a sponsor seeks to include a ROFO in a sponsorship agreement, the event or other rights-holder should usually either ...

Jmdorsey2021-06-11T13:11:20-07:00

Sponsorship Agreements: ROFOs and Why You Need Them

Imagine that last year you sponsored a wonderful event with a return on investment that exceeded expectations. The sponsorship agreement has now expired by its terms, and you have learned that the event is seeking alternative sponsors for your former rights, as well as partners for new properties, including digital and internet-of-things partners (See, e.g., SAP digital tools). You would have loved to have the first seat at the table in negotiating a renewal and for the new opportunities, but you must now negotiate new terms ...

Jmdorsey2023-02-23T10:49:55-08:00

Term Sheets: Five Legal Tricks To Make Them Work For You

One of my first questions when asked to draft the agreement for a client's new business deal is whether a term sheet (also known as a letter of intent or summary of terms) has been prepared. A term sheet is a short and sweet document that sets out the parties' mutual understanding of the main terms they will agree on in a later definitive agreement. The key word is mutual: while you and your counterpart may have agreed a deal over a nice wine dinner, your ...

Jmdorsey2021-06-11T13:11:20-07:00

Your Right to Terminate: Quite Possibly the Most Important Right In Your Business Contract

It's almost inevitable. At least three or four times a year, the phone will ring or an email will arrive with the client saying something like this: "John, it's not going as we had hoped. We need to know how to get out of this deal, and the consequences. How soon can you review the contract? Rewind 6-12 months prior to this message, when the sky was blue, the birds were singing, and this was going to be the best deal in history. Indeed, ...

Jmdorsey2021-06-11T13:11:20-07:00

How to Maximize Your Minority Rights in Small-Scale Private Equity Investments

Even if you consider yourself a small-scale investor in private companies relative to today's private equity giants, you should seek certain basic minority rights to protect your investment and enhance your exit opportunities. In fact, most minority protections that a small-scale investor should seek are exactly the same as those that any larger PE fund would require. Among my clients, these small-scale private equity investments generally range from $100,000-$3,000,000 for purchases of 10%-30% of a company's outstanding equity. They ...

Jmdorsey2021-06-11T13:11:20-07:00

Top 9 Warning Signs in a Business Deal

One of the benefits of being a corporate lawyer is the opportunity to participate in a variety of interesting deals. In these, you encounter a motley crew of characters. You witness a range of negotiating styles and tactics, and learn which are effective and which are not. You see some ventures succeed and many others fail. In the great theatre of the deal, there are rare moments in which something may not feel right to the lawyer or the client about a proposed business ...

Jmdorsey2021-06-11T13:11:21-07:00