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PLAYBOOK TEMPLATES

Strategic Alliance Agreement

A Strategic Alliance Agreement documents cooperative arrangements between entities for mutual benefit. This playbook highlights IP ownership, performance metrics, and termination strategies.

Termination Rights

Why This Matters: Well-defined termination rights prevent opportunistic exits and provide clear remedies for non-performance. Unbalanced terms could trap the client in an unfavorable deal or allow the counterparty to exit too easily.

Negotiation strategy

If you're the Buyer:

Ensure that termination rights are balanced to protect the company's interests. Negotiate for a reasonable notice period and ensure any break fees are manageable.

If you're the Seller:

Seek to include flexible termination rights that allow for exit in case of unforeseen circumstances. Aim for a fair notice period and minimal break fees.

Essential elements

1

Termination for Convenience

Exit with notice, no penalty.
2

Material Adverse Change

Exit if significant impact occurs.
3

Termination for Breach

Exit if breach not cured.

Action framework

ACCEPT

Propose edits if notice periods are too short or break fees are excessive.

EDIT

Reject if termination rights are heavily skewed against the client.

ADD

Add clauses for specific industry risks or additional exit conditions.

PRO TIP

Always ensure termination clauses align with your business strategy and risk tolerance.

Example clauses

FAVORABLE

Preferred Termination for Convenience

"Either party may terminate this Agreement for convenience upon providing the other party with thirty (30) days written notice. Such termination shall not incur any penalty or break fee, provided that all obligations incurred prior to the termination date are fulfilled."
NEUTRAL

Termination for Material Adverse Change

"Either party may terminate this Agreement if a material adverse change occurs that significantly impacts the ability of the affected party to perform its obligations under this Agreement. The party seeking termination must provide written notice to the other party, detailing the nature of the material adverse change and allowing a thirty (30) day period for the other party to remedy the situation, if possible."
UNFAVORABLE

Termination for Breach

"In the event of a breach of any material term of this Agreement by either party, the non-breaching party may terminate this Agreement by providing written notice to the breaching party. The breaching party shall have a period of thirty (30) days from the receipt of such notice to cure the breach. If the breach is not cured within this period, the Agreement shall terminate immediately."

Fallbacks

High-Risk Projects

In high-risk projects, ensure termination rights include specific conditions for risk mitigation and exit strategies.

Long-Term Contracts

For long-term contracts, include periodic review clauses to reassess termination rights and conditions.

Material Adverse Change in Specific Industries

If the contract involves industries prone to rapid changes (e.g., technology, pharmaceuticals), additional analysis is required to ensure the clause accounts for industry-specific risks.
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