Navigating contracts can be treacherous. This presentation highlights the "need to knows" when reading and writing any contract. Specification from the start can help prevent headaches, extra expenses and lawsuits later on whether you´re subscribing to a cloud-based service or doing business with a friend. NDAs, Terms of Use and software licensing are also discussed.

1. CONTRACTS: THE BASICS
Andrew T. Mirsky
Mirsky & Company, PLLC
Mirsky & Company, PLLC (“Kenyon”) has provided this presentation for general informational purposes only. It is not intended as professional
counsel and should not be used as such. You should contact your attorney to obtain advice with respect to any particular issue or problem.

2. Andrew T. Mirsky, Esq.
• Principal, Mirsky & Company, PLLC, DC and NY
• Formerly in-house counsel with National Journal
and Atlantic Monthly magazines
• Clients in new media and technology, including
intellectual property, corporate and finance,
privacy, joint ventures and partnerships, and
employment and HR matters.
• Founder, Media Future Now
(www.mediafuturenow.com)

3. What Matters in Contracts?

4. Limitation of Liability
Governing Law
Arbitration
Indemnification/Hold Harmless Where does this matter?
Sales/Mergers, any situation where a
contract party faces legal exposure
from something the other party did
Payment Terms

5. Specific Responsibilities
Deliverables
•Why important? Spend time up-front to manage expectations and pre-empt disputes about what you said you would and
would not do.
•Instead of “we will provide training”, instead define scope of training, what is and what is not covered, time limitations,
billings costs beyond scope, etc.
Termination
• Specifically, what happens upon termination? (HANDOUT: pre-REMS/post-REMS)
Buyouts and split-ups
•e.g. partnerships, JVs: Who owns jointly-developed assets? (A: The partnership. Ok, but what if partnership splits up?)
Integration/“entire agreement” clause
•What is this and why is this important?
Ownership Rights
•Who owns what? If there are important assets at stake, be clear and address in writing
IP Ownership
•Especially licensed software, but who owns new developments?

6. Employment/Offer Letters Work-for-Hire
•Many states (DC, NY) require written •Must be in writing before work
statement of compensation terms. begins; needed for ICs, not needed
•Offer letters good to manage for EEs. Independent Contractor
expectations, especially about “at-
will” employment.
Services Agreement NDAs
•specification of deliverables •enforceable?
Partnership •Turns out YES! Also: VERY important
Agreements/LLCs/JVs to make clear no noncompete (e.g.
Campaign Grid)
Software and Development
Agreements

7. Don’t rely too much on
lawyers
Know whom you’re
Write contracts in plain
contracting with. Do a
English. What does this
Google search. Check
mean?
social media.

8. Company Responsibilities: Company expressly acknowledges that (i)
the Services to be provided by Service Provider may be dependent on
Company facilitating the provision of certain data, information and/or
assistance by the RPA Participants, and if the parties agree that
certain Services are to be performed at Company’s facility, such
Services may be dependent on Company providing access to
Company’s facilities and suitable work space, and (ii) such
cooperation may be essential to the performance of Services by
Service Provider. Company acknowledges and agrees that any delay
or failure by Service Provider to provide Services hereunder which is
caused in whole or in part by Company’s failure to timely and fully
facilitate the provision of such cooperation or assistance reasonably
requested by Service Provider shall not be deemed to be a breach of
Service Provider’ performance obligations under this Agreement.”
-If client is expected to provide certain assistance, highly
useful to specify in the contract.
-Why useful? Manage client expectations. Keeping disputes
at the level of business disputes rather than legal.

9. 1. Specificity on Who Does
What
2. Spelling out What
Happens on Contract
Termination
3. Big problem with
Ambiguous Contract
Terms
4. Making Clear that NDA
Does Not Restrict Your
Business Activity
(Noncompete)
5. Partner Impasses- What to
Do if Two Partners Can’t
Agree? Buy-Sell
6. Very Specific Deliverables

10.  Example: Specific Duties
◦ (i) X. X shall provide high-level and managerial personnel in
information technology (IT) to staff the following three job
functions for the Company and for Company clients: A, B and C. X
shall have responsibility for managing the provision of business
services to the Company’s clients, including (at a minimum)
engaging appropriate staffing, directing technology investment
and maintenance, and managing client relationships. Subject to
and as more fully set forth in an employment agreement between
the Company and X, X (individually) shall dedicate an average of at
least 32 hours per 5-day work week to servicing projects and
portfolio clients of Y and Y affiliates, as directed by Y.
◦ (ii) Y. Y and its affiliates shall direct financing opportunities into
the Company, including originating venture capital or other
financing on at least as favorable terms as Y concurrently makes
available to portfolio companies at any time. Y and its affiliates
shall direct client engagements for outsourced IT development and
operations into the Company, and shall have responsibility for
marketing the business services of the Company.

11.  Example: Major Decisions – Notwithstanding
the grant of authority to the Managing
Members as set forth in this Agreement, the
written approval of Members with at least
sixty-six and two-thirds percent (66 2/3%) of
the Percentage Interests, shall be required to
authorize each of the following actions of the
Company:

12.  (a) Purchase, sell, lease, convey, exchange or
otherwise dispose of any real property owned by the
Company or an Affiliate;
 (b) Finance, refinance, borrow against or otherwise
encumber any real property or borrow for any pre-
development costs;
 (c) Submit or materially change any site plan,
subdivision or zoning of any real property owned by
the Company or an Affiliate;
 (d) Adopt, materially change or materially deviate
from any Development Plan or Operating Plan;
 (e) Authorize any expenditure that is not otherwise
contemplated in any Development Plan or Operating
Plan and which exceeds $30,000;

13.  (f) Enter into any material property management, leasing,
development or similar agreements;
 (g) Set salaries and bonus levels payable to employees and
Members alike;
 (h) Authorize the distribution of cash or property to any or
all of the Members;
 (i) Admit new members to the Company;
 (j) Enter into any contract, agreement, lease or other
arrangement, where the consideration is in excess of
$15,000, for the furnishing to or by the Company of
goods, services or space with any Affiliate of a Member;
and
 (k) Merge or to consolidate the Company with, or sell
substantially all of the Company’s assets to, a Person that
is not a Controlled Affiliate of the Company.

14.  Good Example: Effect of Termination – Upon any termination or
expiration of this Agreement or any Statement of Work:
◦ (a) Service Provider shall be compensated for Services
performed through the date of termination in an amount equal
to the prorated portion of fees due or (ii) hourly fees for work
performed as of the date of termination based on Service
Provider’s then-applicable rates (consulting services at $XXX
per hour and development services at $YYY per hour), and shall
be reimbursed for all pre-approved expenses incurred through
and up to the effective date of termination. Upon the
effectiveness of termination, Service Provider shall promptly
invoice Client for such amounts, which invoice shall be payable
net thirty (30) days from invoice receipt. (b) Service Provider
shall be compensated for all Software license fees for the
remaining portion of the then-applicable term of any Software
license set forth in a Statement of Work.

15.  "Contractor shall submit an invoice for each product that is
produced and mailed (delivered). Invoice will include actual
postage costs accrued for each shipping fulfillment. Initial
payment to the contractor will be made based upon pre-sale
orders and followed with subsequent payments based on
continual orders. Payment of pre-sale orders will be made to
contractor once verification is completed that orders have
been mailed. Postage would be paid to Contractor prior to
mail drop based on $XXX/unit."

16.  Each party acknowledges that the other party may develop
information internally, or receive information from other
parties, that may be similar to Confidential Information.
Accordingly, nothing in this Agreement shall prevent either
party from developing products for itself or others, providing
such products are not based on or derived from (in whole or
in part) Confidential Information received from the other party
pursuant to this Agreement.

17.  Section 1. Impasse
◦ In the event that the Members cannot reach an agreement
with respect to a Major Decision and are at an impasse, the
Members shall cause the Company to dispose of all or
substantially all of its assets within ninety (90) days of such
impasse. If, due to the nature of disposing of real property
assets, disposition of all or substantially all of the
Company’s assets is not practical within such ninety (90)
day period, then the Members may agree by unanimous
consent to extend such ninety (90) period for an additional
ninety (90) day period in order to effect such disposition. If
the Members do not or are unable to agree to extend such
ninety (90) day period for an additional ninety (90) day
period, any Member may make a Buy-Sell Offer in
accordance with Section 2 below.

18.  Section 2. Buy-Sell Offer for the Company
(a) As permitted by Section 1, a Member may make a Buy-Sell
Offer by delivering an Offer Notice to the other Member in
accordance with this Section 2. The party giving the Offer Notice
is referred to in this Section as the “Offeror” and the party
receiving the Offer Notice is referred to in this Section as the
“Offeree.” The Offer Notice shall state an amount (the “Stated
Value”) to be used as the Gross Asset Value of the assets of the
Company in computing the Net Equity of each of the Members’
Interests, and shall be given to the Offeree. The Offer Notice
shall also provide:

19.  (i) The terms and conditions upon which, the Offeror is willing to
purchase all of the Offeree’s Membership Interest and to indemnify the
Offeree against the liabilities of the Company, if any, for which the
Offeree may be personally liable;
 (ii) A statement that the Offeror is willing either (A) to purchase from the
Offeree all of the Offeree’s Membership Interest, or (B) to sell to the
Offeree all of the Offeror’s Membership Interest, for the price calculated
in paragraph (c) below and upon the terms and conditions stated in the
Offer Notice;
 (iii) A statement of (A) all contingent and unmatured liabilities of the
Company of which the Offeror has knowledge and (B) the terms and
details of any material business opportunities, including refinancing or
proposed sale, pertaining to the Company or the Company’s assets that
the Offeror has entertained, negotiated or discussed during the
preceding 180 days with any third party; and
 (iv) A deposit in the amount of five percent (5%) of the Buy-Sell Price.

20. (b) The Offeree shall have the right, exercisable by delivery of an
Election Notice to the Offeror within thirty (30) days from the receipt of
the Offer Notice, to elect either
◦ (i) To sell to the Offeror all of the Offeree’s right, title and interest
in and to Offeree’s Membership Interest for the price calculated
pursuant to paragraph (c) below and upon the terms and
conditions provided in the Offer Notice; or
◦ (ii) To purchase from the Offeror all of the Offeror’s right, title and
interest in and to the Offeror’s Membership Interest for the price
calculated pursuant to paragraph (c) below and upon the terms
provided in the Offer Notice.

21. (c) The price at which the interest of any Member is purchased and sold
under this Section 2 (the “Buy-Sell Price”) shall equal the Net Equity
thereof, determined as of the date of the Offer Notice as if the Gross
Asset Value of the aggregate assets of the Company were equal to the
Stated Value. Sale of a Membership Interest by a Member (the “Seller”)
to the other Member (the “Purchaser”) shall be effected at a closing to
occur no sooner than 120 days and no later than 180 days after the
date the Election Notice is delivered and shall be held at the principal
office of the Company, unless otherwise mutually agreed.

22. (c) Continued from previous slide- The purchase price shall be paid to
the Seller in accordance with the terms and conditions of the Buy-Sell
Offer for the Membership Interest being purchased. The Seller shall
deliver to the Purchaser good title, free and clear of any liens, claims,
encumbrances, security interests or options, to such Seller’s
Membership Interest thus purchased. At closing, the Members shall
execute such documents and instruments of conveyance as may be
reasonably necessary or appropriate to effectuate the transactions
contemplated hereby, including, without limitation, the Transfer of the
Seller’s Membership Interest to the Purchaser and the indemnification
by the Purchaser against any personal liability for the debts, claims and
obligations of the Company, if any, for which the Seller may be
personally liable.

23. (d) The “Net Equity” of a Member’s Interest in the Company, as of any
day, shall be the amount that would be distributed to such Member
upon liquidation of the Company if (i) all of the Company’s assets
were sold for their Gross Asset Value, (ii) the Company paid its
accrued, but unpaid liabilities and established reserves (as required
herein) for the payment of contingent liabilities, and (iii) the
Company distributed the remaining proceeds to the Members in
liquidation, all as of such day.

24.  Section 3
◦ Default; Specific Performance. Any Member shall be entitled
to enforce its rights under this Article XIV by specific
performance. If the Offeror defaults under this Article XIV, it
shall forfeit the five percent deposit required in Section
2(a)(iv) and it shall have no right to make any future Buy-Sell
Offer. If the Offeree defaults, then the Offeror shall have the
right to purchase the Offeree’s Membership Interest. No
Buy-Sell Offer may be made until all periods for making
elections and performing obligations under any previous
Buy-Sell Offer pursuant to this Article XIV shall have
terminated.

25.  Methodology
◦ Implementation work will be broken down into two
phases each consisting of five work streams. The
first phase will consist of all modules necessary at
the primary launch of the system including ________,
_______, ________ and ______. The second phase will
focus on Reconciliation and Reporting. [Service
Provider] will start Phase 2 after completion of
requirements for Phase 1.

26. Implementation – Phase 1
 Information Gathering, Process Development
and SOPs (1 Week)
i. Meet with key stakeholders
ii. Review current process
iii. Identify key elements of current system
iv. Identify additional features for new system
v. Revise process to ensure industry best practice
vi. Create Process maps for each module
vii. Obtain sign off an approval with small group of
Client designees. Pricing includes 2 cycles of
approvals

27.  Requirements Gathering (3 Weeks)
◦ Identify and document requirements for system
data and workflow
◦ Identify and document customizations to forms
◦ Identify system communications, lists and users
◦ Sign off on requirements of Client stakeholders

28.  System Customizations and System
Development (4 Weeks)
◦ Customize application as per requirements
◦ Implement form changes
◦ Customize system communications, lists and users
◦ Implement technical requirements
◦ Implement reporting requirements
◦ Develop test scripts

29.  Test System and Train
◦ System testing
◦ User acceptance testing with Client
◦ Client sign-off system
◦ Develop training material
◦ Deliver training

30.  Launch System and Support (1 Weeks+)
◦ Go live with system
◦ Provide support for user issues and system bugs
◦ Troubleshoot issues and release enhancement
packages as necessary

31. Andrew T. Mirsky
andy@mirskylegal.com
(202) 339-0303
www.mirskylegal.com
@mirskylegal
2301 N Street, NW 318 West 14th Street
Suite 313 4th Floor
Washington, DC 20037 New York, NY 10014