15-Page Employment Agreement

Page 2Page 3Page 4Page 5Page 6Page 7Page 8Page 9Page
10Page 11Page 12Page 13Page 14Page 15

Page 2
Please click here to continue
Page 1Page 2Page 3Page 4Page 5Page 6Page 7Page 8Page 9Page
10Page 11Page 12Page 13Page 14

Page 2Page 3Page 4
1/1/2014
1
Introductory
Provisions
Stark Legal Education, Inc. © 2013
Preamble
Employment Agreement
Employment Agreement, dated as of
July 15, 200X, between ABC Corp., a
Delaware corporation (the “Company”),
and John Harrison[, a Massachusetts
resident] (the “Executive”).
Preamble
The first-year associate, a highly

neurotic type-A person, proofed the
document, an Agreement of Sale, three
times.
1/1/2014
2
Defining the Parties
the body of the agreement?
Statement of Consideration
NOW, THEREFORE, in consideration of $10.00
paid in hand, and other good and valuable
consideration the receipt of which is hereby
acknowledged, the parties agree as follows:
NOW, THEREFORE, in consideration of the
mutual promises set forth in this Agreement, the
parties agree as follows:
Accordingly, the parties agree:

1
Translating the
Business Deal into
Contract Concepts
Representation
e reliance is required for
a cause of action
Warranty
pay damages to the recipient of the statement
if the statement isn’t true and the recipient
suffers damages

2
Remedies for Misrepresentations
ry
and
-of-pocket
Measures of Damages for
Fraudulent Misrepresentations
-of-Pocket
minus $250 = $2250
Remedy for Breaches of Warranties

3
Why Receive Both Representations
and Warranties
restitutionary
recovery
component --
additional cause of
action
bargain damages
defendant’s scienter
Risk Allocation

Covenants
a promise to perform. It
can be a promise to do something or a
promise not to do something.
.
4
Rights
of Keesha, Keesha has a right to
Sam’s performance.
Covenants and Rights
premises.
premises heated.
Subject Matter Performance
Covenant
A covenant in which a party promises to
perform the main subject matter of the

contract.
5
Covenants
The Purchase and Sale. At the Closing, the
Owner shall sell Blackacre to the Buyer, and the
Buyer shall buy Blackacre from the Owner.
Agreement to Write and Publish. Subject to
the provisions of this Agreement, the Author shall
write her autobiography, and the Publisher shall
publish it.
Condition to an Obligation
A condition to an obligation is a
state of facts that must exist
before there is an obligation to
perform.
Condition to an Obligation
If the Retailer notifies the Manufacturer
that it requires Additional Merchandise,
then the Manufacturer shall ship the
Additional Merchandise to the Retailer no
later than three business days after it
receives notice from the Retailer.

6
Conditions and Walk-away Rights
The following are conditions to the
Buyer’s obligation to perform:
1. The Buyer must have received an
opinion from the Seller’s counsel,
substantially in the form of Exhibit A.
2. The Seller must have obtained all the
consents listed in Schedule 3.14.
Condition to the obligation
that is the subject matter
performance obligation
Condition is satisfied.
Party performs its subject
matter performance
obligation.
Condition is not
satisfied.
Party waives the failure to
satisfy the condition and
performs the subject matter
performance obligation,
although not obligated to
do so.
Party exercises its walk-
away right and does not
perform the subject

matter performance
obligation.
The obligation
that is the subject
matter
performance
obligation
Choice
This choice arises as the
common law consequence
of the failure to satisfy the
condition to the subject
matter performance
obligation.
Interplay of Contract Concepts in an
Acquisition
covenants.

7
Condition to Discretionary Authority
A condition to discretionary
authority is a state of facts that
must exist before a party may
exercise discretionary authority.
Discretionary Authority
ways:
choice.
es its holder
permission to act – often when it has been
previously denied.
any time by sending written notice to the
other party.
except the Borrower may invest in any wholly-
owned subsidiary of the Borrower.
8

Bank may exercise the following
remedies:
manuscript to the Publisher on or
before the deadline, the Publisher
may accept or reject it.
Declaration
parties agree, but with respect to which
neither party has any right or remedy
– need to be kicked into action
to have substantive, legal effect
– have legal effect on
their own
Declarations - Definitions
Definition
“Purchase Price” means $200,000.
Definition kicked into action
The Buyer shall pay the Seller the
Purchase Price at the Closing.
9
Declarations - Policy

rights in it vest in the Client. Despite the
preceding sentence, the Developer retains
all rights to all Developer Programming.
matters arising
under or relating to this Agreement,
including torts.
Conditions to a Declaration
A condition to a declaration is a state of
facts that must exist before a policy
has substantive consequences.
Conditions to a Declaration
If a purported assignment is made in
violation of this Section 9.3, it is void.
10
Parts of an Agreement
of agreement)
Parts of an Agreement

he key business provisions of a
contract
)
Action Sections and Contract
Concepts
– promises to
perform
-executing provisions –
performance occurs on signing
11
Provisions
Executory promises
The Purchase and Sale. At the Closing, the
Owner shall sell Blackacre to the Buyer, and the
Buyer shall buy Blackacre from the Owner.
Self-executing provisions
Grant of a Security Interest. By signing this
Security Agreement, the Borrower grants the
Lender a security interest in the Assets.

Action Sections and Contract
Concepts
(declaration) and separate covenant
to pay
Action Sections
ith a time
limitation)
financing)
financing)
12
Term
provision: The Landlord shall rent the Premises to
the Tenant, and the Tenant shall rent the Premises
from the Landlord for a period of three years
beginning on January 1, 20X4 and ending on
December 31, 20X6.

three years, beginning on January 1, 20X4 and
ending on December 31, 20X6.
Remaining Provisions
and warranties, covenants, rights, conditions,
discretionary authority, and declarations)
– a type of business provision
ignature lines
Endgame Provisions
13
General Provisions (“Boilerplate”)
y that tell the
parties how the agreement is to be managed

-assignment
Contract Concepts
enant
discretionary authority
Indemnities
ller
damages
limitations

obligations
14
0 500M
Indemnities
Assume $500M basket
500M0 750M
Indemnities
Assume $500M basket and $750M in
damages
500M 750M0
250MDeductible
Deductible Basket
15

500M 750M0
750M
First Dollar Basket
Adele Administrator/HHI Exercise
Administrator's employment for “cause,”
rts would pay
Administrator her salary through the date of
termination, plus reimbursement of any expenses
incurred through the date of termination. Healthy
Hearts must make such payment on the date of
the termination.
Adele Administrator/HHI Exercise
terminate the Administrator.
1/1/2014
1
Putting the Contract
Concepts into

Words
Drafting Representations and
Warranties, Covenants,
Conditions, Discretionary
Authority, and Declarations
Representations as to
Present and Past
3.1 Organization; Good Standing. The
Seller is a corporation duly organized, validly
existing and in good standing . . .
3.7 Tax Returns and Payments. The
Parent and each Subsidiary has duly filed all
federal, state and local tax returns and reports
required to be filed and each has duly paid or
established adequate reserves for the proper
payment of all taxes . . .
Representations as to the
Future
3.8 Consents. The Seller has
obtained, or will have obtained before
Closing, all consents required in connection
with the execution and delivery of this
Agreement and the consummation of the
transactions that this Agreement
contemplates.
1/1/2014

2
Future
3.8 Consents. Except at stated in
Schedule 3.8, the Seller has obtained all
consents required in connection with the
execution and delivery of this Agreement
and the consummation of the transactions
that this Agreement contemplates.
Future
Covenants
5.2 Consents. The Seller shall obtain
all the consents listed in Schedule 3.8 no
later than the Closing Date.
Future
Covenants
5.2 Consents. The Seller shall use
commercially reasonable efforts to obtain all
the consents listed in Schedule 3.8 no later
than the Closing Date.
1/1/2014

3
Future
Condition to Closing
8.4 Consents. The Seller must have
obtained all the consents listed in Schedule
3.8 no later than the Closing Date.
Use of Passive in Representations
and Warranties
20,000 miles.
miles.
Covenants – 7 Key Questions
hat?

1/1/2014
4
Covenants
premises in good condition and repair. However, if the
cost of maintenance exceeds $3000 in any month,
the Landlord shall pay the excess cost to the Tenant
no later than 10 Business Days after receipt of
appropriate documentation of the excess cost.
Covenants – General Rule
Use shall
The Athlete shall workout at least four days
a week.
Covenants - Exception
Use may if the sentence has a negative
subject: neither party or no party
Neither party may assign its rights or
delegate its performance under this
Agreement.

1/1/2014
5
Covenants - Exception
Neither party shall assign its rights or
delegate its performance under this
Agreement.
Shall means is obligated to
Neither party is obligated to assign its rights
or delegate its performance under this
Agreement.
Covenant Posing as a Declaration
– The security deposit will be $3000
due immediately in full upon the signing of the
Agreement.
– The security deposit is $3000, and
the Lessee shall pay the security deposit to the
Lessor upon the parties’ execution and delivery
of the Agreement.
Covenants – Degrees of
Obligations
Making the covenant v. the right to
performance
The Owner shall demolish and remove the
barn no later than the Closing.

The Owner shall cause the barn to be
demolished and removed no later than the
Closing.
1/1/2014
6
Conditions to Obligations
The Insured is to give the Company Notice
of an Event no later than ten Business Days
after the Event occurs.
Covenant or condition?
Covenant
The Insured shall give the Company written notice
of an Event no later than ten Business Days after
the Event occurs.
Condition
The Insured must give the Company written notice
of an Event no later than ten Business Days after
the Event occurs.
If/then

satisfy a condition (if the condition is not
satisfied, X is not obligated to perform
1/1/2014
7
To signal discretionary authority, use may.
Not is entitled to or is permitted
Between signing and Closing, the Seller
may rent the House to any third party.
and Discretionary Authority
Condition – stated in the present tense
Discretionary authority – use may
If the Executive misrepresents her
credentials, the Company may terminate her
employment.
Declarations
Draft in the present tense

This Agreement is the parties complete and
exclusive agreement on the matters
contained in this Agreement.
1/1/2014
8
Conditions to Declarations and
Declarations
Both the condition and the declaration
should be in the present tense.
If a Limited Partner assigns its Partnership
Interest, the assignee is not a Limited
Partner.

Page 2Page 3Page 4Page 5Page 6Page 7Page 8
Page 1Page 2Page 3Page 4Page 5Page 6Page 7Page 8
Chapter 16 – General Provisions
Exercise 16-1
Rewrite the following provision so that it is well drafted. What
drafting change would
you make if you wanted to increase the likelihood of the
provision’s enforceability as a
fully integrated agreement?
Entire Agreement. This Agreement, together with the
Confidentiality Agreement and the other Instruments delivered
in

connection herewith, embody the entire agreement and
understanding of
the parties hereto and supersede any prior agreement or
understanding
between the parties with respect to the subject matter of this
Agreement.
* * * * *
From the definitions section:
“Transaction Documents” mean this Agreement, the other
Instruments
delivered in connection with it, and the Confidentiality
Agreement.
Entire Agreement. This Agreement, together with the
Confidentiality Agreement and the other Instruments delivered
in
connection herewith,The Transaction Documents
(a) embody the entire final and exclusive agreement and
understanding of the parties hereto with respect to this
Agreement’s subject matter; and
(a)(b) supersede any prior agreement or understanding between
the
parties with respect to the this Agreement’s subject matter of
this
Agreement.

* * * * *
“Transaction Documents” mean this Agreement, the other
Instruments
delivered in connection with it, and the Confidentiality
Agreement.
Entire Agreement. The Transaction Documents
(a) embody the final and exclusive agreement and understanding
of
the parties with respect to the Transaction Documents’ subject
matter; and
(b) supersede any prior agreement or understanding between the
parties with respect to the Transaction Documents’ subject
matter.
Notes
1. The merger provision reads as if the parties are to deliver the
Instruments in
connection with the Confidentiality Agreement. The definition
of Transaction
Documents corrects that misimpression.
2. Subsection (a) inserts final and exclusive, words that courts
have held signal
complete integration. Other words work, but why not use
language courts have
blessed?

3. Both subsections (a) and (b) end with respect to the
Transaction Documents’
subject matter. As a matter of tabulation style, a drafter could
delete that
language in both subsections, skip a line after subsection (b),
and place the
language on its own line at the far left margin. But readers find
tripartite
tabulations difficult to assimilate, and drafters should avoid this
construction
when possible. Alternatively, the language could become an
introductory
prepositional clause to the entire provision.
Exercise 16-2
The following provision is intended as an anti-assignment
provision. How would you
rewrite it to fulfill the parties’ intent and to otherwise improve
the drafting? If your
client was the party most likely to be requesting consent, what
additional language
might you suggest?
Assignment. This Agreement may not be assigned by either
party without the prior written consent of the other.
* * * * *
Anti-Assignment. Neither party may assign any of its rights
under Tthis Agreement may not be assigned by either party
without

the other party’s the prior [written] consent of the other, and
that
other party shall not unreasonably withhold its consent.
* * * * *
Anti-Assignment. Neither party may assign any of its rights
under this Agreement without the other party’s prior [written]
consent, and the other party shall not unreasonably withhold its
consent.
Notes
1. To prohibit an assignment of rights under a contract, the
contract must do more
than prohibit the contract’s assignment. Cases hold that these
more limited
prohibitions actually prohibit only delegations. The anti-
assignment provision
must prohibit the assignment of rights under the agreement.
2. Depending on the contract’s governing law provision, the
other party’s obligation
not to unreasonably withhold its consent may not need to be
express. Some
states read in a reasonableness requirement that flows from the
implied
covenants of good faith and fair dealing. Including the language
may reduce the
number of open points in litigation.

3. Written is in brackets. The word may be superfluous if the
contract’s notice
provision requires that notices be in writing.
Exercise 16-3
Rewrite the following provision to improve its drafting. Are
change, waiver, discharge,
and termination redundant and legalese? Are modify, change,
and amend redundant
and legalese? What cardinal rule of good drafting does the
provision violate? How could
the heading be improved?
Amendments and Waivers. Neither this Agreement, the
Note, nor any terms hereof or thereof may be changed, waived,
discharged, or terminated, unless such change, waiver, or
discharge
is in writing signed by the Company and the Bank.
* * * * *
“Transaction Documents” mean this Agreement and the Note.
Amendments, and Waivers, Discharges, and Termination.
Neither this Agreement, the Note, nor any terms hereof or

thereofNo term of any Transaction Document may be changed,
waived, discharged, or terminated, unless except if the
Company
and the Bank approve thesuch change, waiver, or discharge or
termination [in writing] is in writing signed by the Company
and the
Bank.
* * * * *
“Transaction Documents” mean this Agreement and the Note.
Amendments, Waivers, Discharges, and Termination. No
term of any Transaction Document may be changed, waived,
discharged, or terminated, except if the Company and the Bank
approve the change, waiver, discharge, or termination [in
writing].
Notes
1. Modify, change, and amend are synonyms.
2. Change, waiver, discharge, and termination are not
synonyms.
(a) A change/amendment permanently changes the contract.
(b) A waiver is one-time dispensation from an obligation or a
condition.

(c) A discharge ends a contractual duty. The methods to
accomplish a
discharge are beyond the scope of this course.
(d) Termination ends a contractual relationship.
(e) In writing is probably superfluous because of the notice
provision’s
statement that all communications should be in writing.
Exercise 16-4
Rewrite the following provision to improve its drafting.
Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original,
but
all of which together shall constitute one and the same
document.
* * * * *
Version 1
Counterparts. The parties may execute this Agreement in one or
more counterparts to provide each party with a fully executed
original. In
addition, each party may execute a different counterpart, which
when

assembled with other executed counterparts constitute a fully
executed
agreement as if each of the parties had signed the same
document. The
counterparts are all originals, but all of which together
constitute only one
contract between the parties.
* * * * *
Version 2
The parties may execute this Agreement in multiple
counterparts,
each of which constitutes an original, and all of which,
collectively,
constitute only one agreement. The signatures of all of the
parties need
not appear on the same counterpart, and delivery of an executed
counterpart signature page by facsimile or PDF is as effective
as executing
and delivering this Agreement in the presence of the other
parties to this
Agreement.1
Notes
1. Both versions are redrafted in the active voice and
distinguish counterparts used
to create multiple originals from counterparts used to put to
together a complete

set of signatures.
Exercise 16-5
From a business perspective, what are the parties trying to
accomplish in the following
provision? In the first sentence, to what does the word
respective refer? The first
sentence uses the words assign or transfer. The second sentence
uses the words sell,
assign, transfer, or grant. Should sell and grant be deleted from
the second sentence?
Does the provision preclude the Company from delegating its
obligations under the
Agreement? If the Company were to negotiate the prior consent
exception, what
additional language could it ask for that might make it more
likely that the Bank would
consent? Rewrite the provision to correct drafting errors,
including formatting.
Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Company, the Bank, all
future
holders of the Note and their respective successors and assigns,
except that the Company may not assign or transfer any of its
rights
under this Agreement without the prior written consent of the
Bank. The Company acknowledges that the Bank may at any
time

sell, assign, transfer, or grant participations in the Loan to other
financial institutions (a “Transferee”). The Company agrees that
each Transferee may exercise all rights of payment (including
rights
1
Frances Kulka Browne, Counterparts, in Negotiating and
Drafting Contract Boilerplate 585.
of setoff) with respect to the portion of such loans held by it as
fully
as if such Transferee were the direct holder thereof.
* * * * *
From the definitions section
“Bank Transferees” means all of the Note’s future holders and
their respective
successor and assigns. [Draft in the singular: “Bank Transferee”
means each of the
Note’s future holders and is successors and assigns.]
“Company Transferees” means the Company’s successors and
assigns.

X.1 Anti-Assignment. except that tThe Company may shall not
assign or
transfer any of its rights under this Agreement without the
Bank’s prior written
consent, which the Bank shall not unreasonably withhold. of the
Bank.
X.2 Bank Sale of Loan Participations.
(a) The Company’s Acknowledgment of Bank’s Discretionary
Authority. The Company acknowledges that the Bank may at
any
time [and from time to time] [sell, assign, transfer, or grant]
participations in the Loan [but only] to other financial
institutions (a
“Transferee”)Bank Transferees that are financial institutions. [a
Bank Transferee that is a financial institution.]
(c)(b) Bank Transferee’s Setoff Rights. The Company agrees
that
eachEach Bank Transferee may exercise all rights of payment
(including rights of setoff) with respect to the portion of such
the
loans Loan held by it as fully as if such that Bank Transferee
were
the direct holder of that portion of the Loan thereof.
X.3 Successors and Assigns. This Agreement shall be
bindingbinds upon
and inure to the benefits of the Company, the Company
Transferees, the Bank,

and the Bank Transferees., all future holders of the Note and
their respective
successors and assigns,
* * * * *
From the definitions section
“Bank Transferees” means all of the Note’s future holders and
their respective
successor and assigns. [Draft in the singular: “Bank Transferee
means each of the Note’s
future holders and is successors and assigns.]
“Company Transferees” means the Company’s successors and
assigns.
X.1 Anti-Assignment. The Company shall not assign any of its
rights
under this Agreement without the Bank’s prior consent, which
the Bank shall not
unreasonably withhold.
X.2 Bank Sale of Loan Participations.
(a) The Company’s Acknowledgment of Bank’s Discretionary
Authority. The Company acknowledges that the Bank may at
any
time [and from time to time] [sell, assign, transfer, or grant]
participations in the Loan [but only] to Bank Transferees that
are
financial institutions. [a Bank Transferee that is a financial

institution.]
(b) Bank Transferee’s Setoff Rights. Each Bank Transferee may
exercise
all rights of payment (including rights of setoff) with respect to
the
portion of the Loan held by it as fully as if that Bank Transferee
were the direct holder of that portion of the Loan.
X.3 Successors and Assigns. This Agreement binds and benefits
the
Company, the Company Transferees, the Bank, and the Bank
Transferees.
* * * * *
Notes
1. The antecedent of respective is not clear and therefore opens
the door to
ambiguity.
2. The provision conflates an anti-assignment provision and a
successors and
assigns provision. The anti-assignment provision prohibits
assignments. The
successors and assigns provision addresses the consequences of
an assignment.
To clarify these provisions, the drafter should first separate
them into different
sections. The first section should be the anti-assignment
provision to indicate the

relative temporal sequence.
3. Section X.1 addresses only the assignment of rights. From the
Bank’s business
perspective, arguably, it should want the provision to address
also delegation of
performance.
4. Section X.2
(a) Section X.2 (a) includes the following: at any time [and
from time to time].
Using any can create ambiguity. It means all of the following:
any one, or
more than one, or all. The traditional legalese any and all tried
to convey
that variety of meaning, but drafters have banished it. The
problem now is
to construe any. Does it mean the Bank may at any one time sell
participations or at more than one time (whenever it wants)?
Case law is
no refuge. Although the bracketed language in the first line may
seem
overkill, it evidences the parties’ intent.
(b) Section X.2 uses the defined term Bank Transferees. The
definition of the
defined term did not limit the transferees to financial
institutions. That
substantive limitation belongs in the main agreement, not in the
definitions section.
(c) The original provision’s drafter erred in how he drafted the
Bank’s
discretionary authority. The provision permitted X, without
prohibiting Y.

The redraft adds the appropriate limiting language, so that only
X is
permitted.
(d) sell, assign, transfer, or grant – Legalese or necessary. Only
a bank lawyer
knows for sure. Don’t delete what you don’t understand, unless
you are
instructed to do so or you know why you are deleting after
doing some
research.
Exercise 16-6 – skip
Exercise 16-7
If you were drafting a counterparts provision that allowed each
party to sign a
different document, what language would you need to add to the
provision to create
certainty as to the agreement’s effective date?
Notes
1. The effective date is often keyed into the date that the last
party signed.
Alternatively, the parties can require receipt of the last
signature, so that
effectiveness requires both execution and delivery. See Chapter
32, Document 2,
Website Development Agreement:

(a) Definition of Effective Date.
(b) Section 3.1.
(c) Section 13.7.
Exercise 16-8
Find a notice provision precedent that addresses e-mail.
Notes
1. Here is mostly-unedited provision from an actual agreement
addressing
electronic communications.
Electronic Communications. The Seller or the Buyer may agree
to
accept electronic communications as notices and other
communications to
it under this Agreement in accordance with procedures that the
Seller or
the Buyer, as the case may be, approves. Despite the preceding
sentence,
the Seller or the Buyer may limit approval of electronic
communications to
particular notices or communications.
2. What contract concept is “may agree” – an unenforceable
agreement to agree?
Here’s an alternative, drafted as a condition to an obligation and
an obligation.
The Seller and the Buyer shall each accept electronic
communications

from the other as notices and other communications to it under
this
Agreement, if the sending party complies with the procedures
that the
receiving party approved.
Assignment 2 (F 2016) – Instructions and Other Material
Asset Purchase Agreement
The attached draft aircraft purchase agreement has many, many
drafting errors. There is legalese, provisions are way too long,
and there is a total lack of craftsmanship. Please clean it up.
Redraft the agreement to reflect the deal below. There will be a
fair amount of revision
. Do not use any supplementary sources, other than those
distributed to you in our course. Do not draft provisions other
than the ones I have specifically asked for or those that are
required because of the cascade effect (text pages 342-343).
Finally, please draft an agreement from the point of view of
your client, the seller.
General Instructions
· Draft an Agreement for Purchase and Sale of Assets
(“Purchase Agreement”) for your client who wants to sell a law
practice.
· Focus on the material covered in class (textbook, class notes,
TWEN, articles referenced, these instructions, Assignment,
including Chapters 1-12, 14, 16-18 and Chapter 32; plus the
Material Adverse Condition article on TWEN (“The MAC
Clause: An Emperor With No Clothes
”), and the following articles in the course reader: Parol
Evidence after Riverisland
; Liquidated Damages Clauses
; and the Indemnity Primer.
· Use the Aircraft Purchase Agreement

, which is posted on TWEN, as the base document on which you
will incorporate the information and the deal points.
· Clean up all language used from the form by applying what we
have covered (ie, use of “may”, “shall”, active form, no
legalese…)
· Do not include language that is clearly not requested.
· If given information to specify a date or amount, calculate
date or amount to get full credit.
· 13-page maximum for both documents, but the Promissory
Note cannot be longer than 1 page.
· Due no later than 09:00 a.m. Saturday, November 5, 2016 by
e-mail to [email protected]
Deal Overview (may apply to purchase agreement or the Note
exhibit)
· Your California client, a limited liability partnership whose
legal name is Bar None, LLP, but who does business as (dba)
The Top Law Firm, wants to sell substantially all of the assets
in connection with a law practice located at the building with an
address of 3333 Wilshire Blvd, Los Angeles, CA 90078 . As an
LLP, your client is an entity in which the attorney-owners are
partners, but no partner is liable to any creditor of the law firm
nor is any partner liable for any negligence on the part of any
other partner (i.e., each partner has limited liability). The
managing partner is J.D. Advocate. The buyer, on the other
hand, is Prince Law, but – because he also wants limited
liability – he does not want to practice as a sole proprietor so he
will create a California entity called Prince Law, P.C
. and register it
with the California State Bar and California Secretary of State.
The LLP is registered with
the California State Bar and California Secretary of State.
· Purchaser is willing to pay, as the purchase price for
substantially all of the assets of the practice, the amount of

$2,500,000, based on the value determined by the seller-ordered
appraisal of the going concern and the intangible property
(goodwill). However, the intangible property to be purchased
excludes the name of the business, “The Top Law Firm.”
That name carries a lot of value developed and earned through
the years of the firm providing outstanding legal work, and
seller registered (Trademarked) and owns the name, Buyer is
relying
on this fact. Instead, seller will “rent” or license the name of
the business to buyer for $5,000 per month, with the first
payment due at closing
, along with a signed Business Name Licensing Agreement.
Also, the assets transferred do not include the building. Buyer
will rent the building for another $5,000 per month, with the
first payment due at closing, along with a signed Building Lease
Agreement. The transferred assets include all personal property
within the building, including office equipment, etc., so that the
buyer purchases the practice ready to start practicing. While
you do not have to draft a building lease agreement or a
business name licensing agreement, your purchase agreement
does have to account for this information
.
· Purchaser will assume, at closing, a $500,000 mortgage on the
building on which the practice is located. Also due at closing
, buyer will make first mortgage payment and the parties will
exchange a signed Mortgage Assignment and Assumption
Agreement, along with the other Asset Assignment and
Assumption Agreement. While you do not have to draft an
assignment and assumption agreement for the mortgage or the
purchased/transferred assets, nor do you have to draft any
mortgage loan documents, your purchase agreement does have
to account for this information
.
· Because the purchase price, net of adjustments, is still a bit
too much for buyer, buyer must seek loan financing of $500,000
during the due diligence period. Buyer promises Seller he will

try to get such a loan before closing, but if he is unable to get
the loan, Purchaser will have a walk-away right. Your client
tells you to ensure you provide appropriate qualifications so
that this is not an easy walk away right
. Trying to get a loan is not enough.
· Buyer does have and agrees to loan seller, upon signing the
Purchase Agreement, the amount of $250,000, which $250,000
loan will be evidenced by a promissory note. The loan funds
are to be used by Seller solely to pay some outstanding tax
debts on the law practice
. The $250,000 loan amount will become a deposit
upon signing the Purchase Agreement. If the parties do not
proceed to a sale (i.e. the deal does not close), the loan will be
repaid by Seller within six months.
· The remainder of the balance
is due at closing and will be paid by wire transfer, and the
closing will be in person (face-to-face) at the location where the
asset is to be transferred.
More Deal Points
Purchase and Sale Agreement
· Closing is on December 3, 2016). Signing date is November 8,
2016. Effective date is October 8,2016
· Add recitals noting details of the promissory note, building
lease, name license, and the assignment of the mortgage
, in addition to a generic purchase and sale recital, plus any
other information that should be included in recitals, based on
the textbook.
· Include a complete definitions section
, with at least 10 defined terms.
· The purchase price will be paid as noted above.
· Any confidentiality is indefinite.
· Buyer requested that a MAC clause be included. Your client

wants to ensure that buyer isn’t able to get out of the deal easily
if there is a change in economic conditions that affects the
industry or economy
.
· For items in which knowledge is at issue
, draft appropriate knowledge qualifiers to protect your client
from overbroad reps, warranties and covenants, yet have buyer’s
reps, warranties and covenants be as broad as possible.
· California law applies.
· There are no schedules, so make sure there is no reference to
schedules
.
· Make sure that all exhibits are consistent with respect to party
names [preambles], knowable dates, and signature blocks.
· In addition to the general provisions specifically requested
elsewhere, other additional boilerplate language
should address the following: this is the entire agreement and
any changes have to be in writing; exhibits are part of the
agreement; all notices are via email only; time is of the essence;
any illegal or unenforceable provision does not invalidate the
agreement; because parties will sign the agreement
simultaneously and in person, then it canNOT be signed
separately with originals later compiled. The boilerplate for all
documents (purchase agreement and exhibits should be
identical).
Please also take into account the following, if not already
addressed:
1.
Seller promised buyer that between now and the Closing, all
liens (if any) on the assets purchased/transferred would be
removed. This point needs to be covered wherever appropriate
in the Agreement. At Closing, the practice (not including assets
not transferred) will be delivered with title free and clear of all

liens and encumbrances of any nature whatsoever. If all liens
are not removed by Closing, buyer would like the right not to
close as well as the right to sue for damages
. As seller’s counsel, use appropriate qualifications to protect
you client.
2.
Delete in whole or in part any representation and warranty,
covenant, or condition that is inapplicable to our situation, or
change it to fit the facts as described in our case. Buyer cannot
represent and warrant that it has financing now. He asks that
you draft a financing out. Do so from your client’s perspective.
A financing out provides a buyer with a walk-away right
if it is unable to obtain financing. Sellers generally dislike
financing outs, fearing that they transform an obligation to
purchase into an option to purchase. Specifically, they worry
that a buyer may decide it dislikes a deal and then try to get out
of it by claiming it could not obtain any financing or could not
obtain financing on commercially reasonable terms. If that
happens, a seller could end up losing other sale opportunities,
while tied up for months in a contract with the buyer.
3.
Do not delete from your agreement Sections 7.4 and 7.5 and
Sections 8.4 and 8.5. (Redraft to clean up and include
appropriate qualifiers to benefit your client, but do not delete.)
4.
Please move all substantive provisions that are in the
definitions article or recitals of the Agreement to the
appropriate section in the body of the agreement. Also include
whatever representations and warranties, covenants, and
conditions that the Deal Points and instructions require.
5.
Seller told Buyer that The Top Law Firm is a registered
trademark. Please make sure that the contract includes this
information using the appropriate contract concept.

6.
The representations and warranties have lots of language
dealing with material adverse changes (MAC) to Seller’s
business. Please come up with a material adverse change type
standard that is more transaction specific and to your client’s
benefit.
7.
Seller has agreed to have the exterior of the building painted by
the Closing. But the paint shop may have trouble fitting in the
job in between now and the Closing. If the exterior of the
building is not painted on time, the parties have agreed that
buyer doesn’t have to close.
8.
Only some of the restrictions on Section 5.5 make sense for our
deal. Choose those that you think apply and make them
transaction specific.
9.
The Seller and the Buyer each have conditions to their closing
obligations related to litigation. Please decide whether each
condition should cover litigation against the Seller and the
Buyer or against just one party, and if so, which party.
10.
Buyer has to pay $3 million if the deal doesn’t close because of
something Buyer did wrong. Please figure out how this interacts
with the financing out. For clarity, the $3 million payment is
intended by the parties to be liquidated damages
. Make sure the provision is enforceable.
11.
Eliminate references to any schedules
. You could always omit the schedule and put the information in
the agreement – if appropriate.
12.

Seller is the current registered owner of Bar None, LLP. Buyer
wants to make sure that Seller gives it any documentation that
Buyer needs from Seller so that Buyer can become the owner
of this entity. Recall, Buyer is purchasing the business, and
among the assets transferred is the entity.
13.
Buyer requests you add a representation and warranty about
existing litigation. Use appropriate language to protect your
client.
14.
Additional information with respect to Buyer’s financing plans:
He is currently negotiating with three banks and has submitted
full applications to two: First National Bank of Lex and Lex
Banking, N.A. Buyer mentioned this to Seller, and it gave Seller
comfort to know this. He wants it in the agreement – of course.
15.
Please include the necessary provisions so that the Agreement,
once signed, supersedes other agreements prior to that point on
the subject matter hereof.
16.
Include the appropriate signature lines.
17.
Add only endgame provisions based on the information
provided in these instructions.
Deal Points
Promissory Note
· Assuming the $250,000 loan amount does not become a
deposit because the deal falls through, then the loan will be
repaid by Seller within six months from the signing date. It is a
six-month loan (not a day more

). The $250,000 loan amount will bear interest at a rate of 10%
per annum, simple
(not compound). Monthly payments will be interest-only,
retrospectively paid on the first of the month, with the first
payment including interest from and including the signing date
of the purchase agreement through the end of the previous
month. The last payment will not be for a full month of interest
but it will also include the principal amount (balloon payment).
In accounting for stub periods, assume a 30-day month.
Prepayment is allowed without penalty.
· Dated same as signing date.
· Boilerplate should be identical
to that of purchase agreement.
· Signature block(s) should not include any party that has no
obligations under the note.
· Preamble information should be consistent with purchase
agreement.
Other Points (may apply to purchase agreement or the note
exhibit)
· Buyer wants seller to represent that the appraisal is accurate.
Recall: you represent the client!
· Buyer also wants a representation that since the appraisal,
there has not been a "Material Adverse Condition" (MAC) with
respect to the Seller or any partners. This includes any change
or occurrence that is materially adverse to the assets, liabilities,
business, results of operations and financial condition of such
entity and its partners, taken as a whole, but excluding any
effect resulting from or relating to (i) general economic
conditions, or changes affecting the industry in which such
entity primarily operates which do not disproportionately affect
such entity as compared to such entity's competitors or (ii) any
change in financial markets or economic conditions in the
United States or elsewhere.
· Purchaser’s obligation to acquire the assets of the business
pursuant to a Purchase Agreement shall be subject to the

Purchaser’s satisfaction with the results of its due diligence
investigation of the business, but not as determined by the
Purchaser in its sole and absolute discretion, as the buyer
proposes. The Purchaser shall have reasonable access to all
documents in the possession or control of the Seller, its agents
and affiliates with respect to the business.
· Other than with the express prior written consent of the other
party hereto, or to the extent required by law, neither the
Purchaser nor the Seller will disclose to the public or to any
third party the existence of the purchase agreement, the terms
thereof, the fact that the Purchaser and the Seller are
considering a proposed purchase and sale of the assets, nor the
facts and circumstances related to such transaction.
Notwithstanding the foregoing, the parties hereto may disclose
the purchase agreement, and the terms thereof, to their
respective agents, representatives, consultants, advisors,
officers, directors, employees, partners, investors or lenders,
and each party’s respective legal counsel, each of whom shall
be directed to uphold similar standards of confidentiality.
· Seller shall indemnify, defend, hold harmless, and reimburse
Buyer against and in respect of claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries, and
deficiencies, including interest and penalties, that Buyer may
incur or suffer that arise, result from, or relate to any failure by
Seller to pay or discharge any of Seller’s liabilities and
obligations prior to Closing.
· Seller does not know, or have reason to know, of any matters,
occurrences, or other information that has not been disclosed to
Buyer and that would materially and adversely affect the assets
purchased by Buyer or its conduct of the business involving
such assets. Moreover, no representation or warranty by Seller
in this Agreement, or any documents furnished to Buyer by
Seller, contains any untrue statement of a material fact, or omit
to state a material fact necessary to make the statements
contained in these sources accurate.
· MAC is a representation, warranty, covenant and condition to

closing.
· Purchaser wants his efforts to obtain financing to be only a
representation and condition to closing. In representing your
client, you disagree with buyer’s request
and draft accordingly (i.e. to client’s benefit).
· If not already included, add language that the purchase
agreement may not be amended or modified except by a writing
signed by all of the parties; it is binding upon and inure to the
benefit of the successors, assigns, personal representatives and
heirs, as applicable, of Seller and Purchaser; all parties
represent and warrant that they possess all necessary capacity
and authority to sign and enter into the agreement. Each
individual signing the agreement for a party which is a
corporation, a partnership, or other legal entity, or signing
under a power of attorney or as a trustee, guardian, conservator,
or in any other legal capacity, represents and warrants that he
has the necessary capacity and authority to act for, sign, and
bind the respective entity or principal on whose behalf he is
signing.
Instructions Addendum
· In using language from the Aircraft Purchase Agreement form,
do not simply copy and paste. For full credit, you must “clean”
up language using what we have learned throughout the
semester (no legalese, active voice unless we are focusing on
the action instead of the actor, use of “may” instead of “right”
to signal discretionary authority, use of “shall” to signal
covenant, etc…). Also, clean up language in the Promissory
Note, in addition to including the required information.
· Do not include language that I have specifically requested not
be included. This will lead to deductions. I do not deduct
points when language not requested is included. However, if
the instructions state NOT to include an item and you include it,
then I will deduct points.
· If provided information to specify a date or amount, calculate
date/amount to get full credit.

· This is intended to be a “closed” assignment in that I do not
want you to do outside research. All the material needed, and
on which you will be graded, is in the instructions, textbook,
class notes, TWEN, course reader and other class material.
· Recall that there are contract parts that must be included in
every agreement even if not specifically requested. We have
gone over this numerous times in class.
· This is an agreement with a “gap” period. You must apply
concepts related to “closings,” including but not limited to the
latter part of Chapter 8 and relevant exemplars in Chapter 32.
· Note that the “Action” section for this agreement will include
items not covered in Assignment 1. Read Chapter 8 closely,
especially but not limited to issues with closings.
· Each party needs its own stand-alone contract-concept-based
sections related to the “gap” period – (i) reps & warranties; (ii)
covenants; and (iii) conditions to closing. In addition, contract
concepts will appear in other contract parts throughout the
agreement.
· Buyer has justifiably relied on the following things said by
Seller, some of which are also – or should also be - promises,
and all of which are conditions to closing: (i) there is no actual
or pending litigation involving Seller its managing partner
knows of as of signing date – add knowledge qualifier; (ii)
Seller is unaware of any information that has not been disclosed
to Buyer and that would materially and adversely affect the
assets to be purchased by buyer or the conduct of the business
to be purchased; (iii) Seller will not let anyone else use the
practice name of the business being transferred; (iv) as far as
managing partner is concerned, the practice is in compliance
with all relevant/applicable laws.
· Don’t forget to include a non-contravention representation and
warranty for both parties.
· At closing or before, the following items need to be delivered
by seller (in addition to other items discussed elsewhere in the
instructions): Bill of Sale, financial statements (audited and
unaudited balance sheets, income statements and cash flow

statements for the twelve months ending on the signing date); a
list of all assets owned by the law practice; proof that all taxes
– on personal property, real property and otherwise – are paid
up; certified copies of all resolutions of the appropriate entity
board approving this deal; certificate of good standing from
relevant state of the relevant entity. Delivery of these
documents is a condition to closing only. Delivery of other
items discussed elsewhere in the instructions may be reps and
warranties and/or covenants, as well.
· At closing or before, the following items need to be delivered
by buyer (in addition to other items discussed elsewhere in the
instructions): certified copies of all resolutions of the
appropriate entity board of directors approving this deal.
Delivery of these is a condition to closing only. Payment
amount in requested form and other items discussed elsewhere
in the instructions may be reps and warranties and/or covenants,
as well.
· Seller is obligated to close if the following conditions are
satisfied or waived (in addition to others noted elsewhere): (i)
all reps and warranties are true and correct on Closing Date; (ii)
all covenants are true and correct on Closing Date ; (iii) buyer
has provided proof of financing. Buyer is obligated to close if
the following conditions are satisfied or waived (in addition to
others noted elsewhere): (i) all reps and warranties are true and
correct on Closing Date; (ii) all covenants are true and correct
on Closing Date ; (iii) buyer has obtained financing; (iv) no
MAC between signing and closing.
Sale of a Law Practice
Account for the following:
· Giving notice to clients regarding sale of practice
· Obtaining clients’ consent to remain represented by the law
firm after the sale.

· Warranty that every client account has a written fee agreement
in the file.
· Buyer wants all current attorneys to remain.
· Buyer wants seller to guarantee that practice’s fee income for
the year after the sale will not decrease from prior year’s.
· How will cases in process with partially earned or contingency
fees be accounted?
· Read and comply with California Rules of Professional
Conduct, Rule 2-300 Sale or Purchase of a Law Practice of a
Member, Living or Deceased, found at
·
http://rules.calbar.ca.gov/Rules/RulesofProfessionalConduct/Cu
rrentRules/Rule2300.aspx
�Consider starting from scratch?
�There is a “What to Do” Section in the article. Please read.
“Target” company refers to sellers.
�There is a “Practical Suggestions” section.
�See “General Rules” and “No Penalties” sections.
�Judgement call whether you start from scratch [using same
basic (skeletal) framework] or force the information into the
document.

�So who is the buyer that needs to be listed on the preamble?
The individual! You have to consider what happens if the entity
is not created – is there a closing? How can you – or can you –
be assured that the entity will be created or that Prince will do
anything to create it.
�Contract concept?
�Contract concept?
�This answer a question that came up in class regarding
whether some of the intangible is being purchased.
�Hm
�We discussed closing deliverables in class (see Chapter 8 and
32)
�In several places.
�Closing deliverable?
�In several places
�Chapters 9 and 10 are helpful. Qualified statements make a
difference.

�In which of the two agreements (or both?) do we include this
statement and what contract concept is applicable?
�From class, the $250,000 is a loan or deposit, depending on
whether the deal closes.
�See Chapter 8 regarding various forms of consideration. We
discussed several in class on 10.29.2016, and this exercise
includes several, in addition to $.
�Name of each agreement and parties (if known) is sufficient.
In practice, you would provide more information.
�Three parts.
�Read article on point.
�We covered this in class during review of Chapters 9 and 10.
�Use “Find” function.
�Use the 4-pageBoilerplate handout on Twen and that is part of
these instructions, along with Chapters 16 and 32.
�For the following numbered items, use the Model Answer to
Exercise 31.2, which I emailed you on 10.23.2016. It will help

with several of these.
�To see how this is done, please see the first two subsections in
the Conditions to Closing articles in Chapter 32, Document 1.
The model answer to exercise 31.2 is also helpful. This saves
space and time.
�This is a helpful FYI.
�Tie this the appropriate agreement.cussed this in class on
10.29.2016. Need to properly refernce cuments that are part of
the transactioto the article on liquidated damages.
�Use Word!
�We mentioned this in class on 10.29.2017. What is the
“receipt” called for asset purchases? You don’t have to draft it
but must account for it, in the same way you are accounting for
other documents that are part of the transaction (even though
you are not asked to draft these other documents).
�Recall class discussion on 10.29.2016. Time frames should
not add an extra day.
�Multiple to get the annual interest amount, then determine
what the monthly amount is.
�Note is only page. We discussed this in class on 10.29.2016.

Need to properly reference the appropriate agreement
�Please continue doing the analysis shown in the comments
above as you read the remaining instructions. I hope the above
is helpful. Thanks.
�What other contract concept can you use to seller’s
advantage?
Page 1 of 6

15-Page Employment Agreement

Recommended

Recommended

More Related Content

Similar to 15-Page Employment Agreement

Similar to 15-Page Employment Agreement (20)

More from bunyansaturnina

More from bunyansaturnina (20)

Recently uploaded

Recently uploaded (20)

15-Page Employment Agreement