Subsidiary agreements are legal documents that are designed to support and reinforce the provisions of a main agreement, typically a contract or an agreement between two or more parties. In essence, subsidiary agreements are ancillary contracts that are entered into between the parties to a main agreement in order to clarify, supplement, or modify the rights, obligations, and duties of each party under the main agreement. These agreements can come in various forms and serve different purposes, depending on the nature and complexity of the main agreement.
One common type of subsidiary agreement is the confidentiality agreement. Often used in commercial transactions and employment relationships, this type of agreement requires one or both parties to the main agreement to keep certain information confidential and not disclose it to unauthorized parties. Confidentiality agreements can cover a wide range of sensitive information, such as trade secrets, customer data, financial information, and proprietary technology. By signing a confidentiality agreement, parties can protect themselves from the risks of unauthorized disclosure and use of confidential information by others.
Another type of subsidiary agreement is the indemnification agreement. This type of agreement requires one party to the main agreement to indemnify or compensate the other party for losses or damages incurred as a result of the first party`s breach of the main agreement. Indemnification agreements are common in construction contracts, where the contractor is required to indemnify the owner for any damages caused by the contractor`s construction activities.
Subsidiary agreements can also be used to modify the main agreement in certain ways. For example, a side letter agreement may be used to grant additional rights or benefits to one party under the main agreement, without amending the main agreement itself. This can be useful when the parties want to make a change that is relatively minor or does not affect the core provisions of the main agreement.
In the context of mergers and acquisitions, subsidiary agreements are often used to address certain issues that are not covered by the main acquisition agreement. For example, a transition services agreement may be used to cover the period after the acquisition when the acquiring company needs certain services or support from the target company to ensure a smooth transition. Another type of subsidiary agreement used in M&A deals is the non-compete agreement, which prohibits the target company`s owners or key employees from competing with the acquiring company for a certain period of time after the acquisition.
Overall, subsidiary agreements play an important role in clarifying, supplementing, and modifying the provisions of a main agreement. They can help parties to the agreement to manage risks, protect their interests, and achieve their objectives more effectively. As a professional, it is important to understand the role subsidiary agreements play in legal transactions and ensure that any content related to them is accurate and informative.
