Adding corporate flexibility to IT-related commercial contracts can make seemingly unrelated mergers and acquisitions (M&A) transactions a bit less complex. Although many contracting parties already consider assignment rights and restrictions in relation to certain successor scenarios, the divestiture scenario—where contractual rights are not simply transferred in whole—deserves a closer look.
NEWS FOR LAWYERS AND SOURCING PROFESSIONALS
Although many companies are already revisiting contractual provisions relating to nonperformance, like force majeure clauses, as the coronavirus (COVID-19) pandemic continues to wreak havoc on public health and the economy, other proactive (but less publicized) contractual measures can facilitate early discovery and mitigation of potential nonperformance.
In a prior series of posts, we discussed issues relating to intellectual property indemnification, including some exceptions, remedies, and allocation of liability. Given that these provisions often involve taxing negotiations and that many technologies have become intertwined, below we explore some nuanced—and frequently sticky—issues regarding third-party products and how they can be resolved.
In an ideal outsourcing relationship, technology transformation through innovation, continuous improvement, and future project work is never really “over.” When documenting an initial transformation program and individual project statements of work, however, there are typically specific end dates in mind to achieve the desired outcomes. But defining when transformation is “done” is not as simple as agreeing on the end date or even the final deliverable.
Earlier this month, we discussed the significance of the transformation workstream in outsourcing transactions and outlined important topics and points to consider when documenting the overall transformation methodology exhibit. Depending on the scope and timing of the transformation, there may be a need to document individual projects in separate statements of work or project schedules.
Transition services agreements (TSAs) are often an integral part of a transaction when a buyer or a seller needs to use the other’s services, infrastructure, or resources for an agreed-upon period of time after an acquisition.
The following is a list of key considerations for both buyers and sellers in connection with negotiating a TSA.
- Definition of Services. The definition of “services” should include all the services the parties agree will be included as transition services. The schedules should also set forth the length of time the services will be provided, and any specific fees for each service. A party that is receiving services should consider adding a “catch-all” phrase to ensure that any services that are necessary for the operation of the business in the 12-month period prior to the closing will be included, regardless of whether or not the services are accurately listed on the schedule. The parties should also document any specifically agreed-upon exclusions to the definition of services.
In April, we shared a LawFlash Outsourcing and Managed Services Agreements During COVID-19: Our Perspective. With the continued and unprecedented impact of the coronavirus (COVID-19) pandemic on business operations, we thought it would be timely to provide a brief update on five top-of-mind issues that we are addressing with outsourcing and managed services clients.
- Many outsourcing and managed services agreements include strict requirements on the location of personnel, including the location of certain personnel onsite at a customer site and/or the location of offshore personnel at secure delivery centers with no permitted remote working. These physical location restrictions often are coupled with requirements with respect to the type of technology that can be used when connecting to or accessing the customer’s systems or interacting with end users (such as hardened desktops only, no personal devices), security requirements and detailed connectivity and bandwidth requirements (particularly if there are end user facing activities such as call centers).
Transformation is often a critical component of outsourcing and managed services transactions. The transition of core or non-core functions to a third-party provider can provide an opportunity for the customer to leverage the service provider’s expertise and experience to transform its underlying systems to more modernized and flexible technology. For instance, a customer running a business platform on old mainframe technology may want to move off the mainframe to a cloud solution that enables the customer to better respond to market needs and offer enhanced services and products to its clients.
The conditions created by the coronavirus (COVID-19) pandemic and resulting government shutdown orders have raised questions across various industries regarding contractual rights and obligations during the crisis. One contract provision in particular is garnering signification attention: the force majeure clause. Recently, these clauses have evolved from boilerplate provisions at the end of a contract to now being front and center in many contract negotiations. In this blog post, we will review considerations for drafting force majeure clauses within the current environment.
Please join us as we examine highlights from the Contract Corner feature on our Tech & Sourcing @ Morgan Lewis blog. The series reviews essential issues and practical pointers for technology, outsourcing, and commercial agreements.
Partners Peter M. Watt-Morse and Mike Pierides will discuss the following topics:
- Analysis of contract rights
- Bankruptcy impact
- Termination and renewal issues
- Cybersecurity and data protection
- Licensing and IP rights
We hope you’ll join us on Tuesday, May 12, at 12:00–1:00 pm ET, 9:00–10:00 am PT, and 5:00–6:00 pm GMT.