In the Marketplace
October 01, 2003
Highlights of the latest equipment leasing news from around the country.
Homeland Security Technology: An Investor's Perspective
October 01, 2003
When you look at the financial sections of newspapers and magazines over the past few months, you get the sense that capital, entrepreneurs and technology innovators are flowing toward a new homeland security space ' a market in which the buyer is essentially one customer: the federal government.
Venture Capitalists: They're No Angels
October 01, 2003
Although angels invest at a lower price, VCs usually ask for and get better terms for their money. Why don't angels do the same? Angel investor. Venture capitalist. Many investors would like to be one or both. Yet few know the distinction between the two - or which is more advantageous.
Shadow Directors and Controlling Shareholders: Duties and Liability
October 01, 2003
The meltdown and the consequent disappointments have produced a wave (actual and threatened) of litigation, alleging the VCs, through the board seats of their appointees, were in "control" of failed companies (dot-coms and others), and therefore obligated to exercise "fiduciary" care over the fortunes of minority shareholders. And, the deep-pocketed VCs have, of course, been taking evasive action. Their time-honored gambits are, first, to eschew a board seat and substitute instead "observer" or "visitation" rights ' the right to sit in attendance at all board meetings and speak one's piece - but not vote. Given the muscle the VCs enjoy, by keeping their hand on the money spigot, this usually amounts to the same thing as a board seat. This is a practice known in the UK as "shadow directors." I am informed by my UK compadres that liability can attach as if the individual VC was, <i>de jure as well as <i>de facto, sitting on the board.
Arbitration Altercation
October 01, 2003
It's not unusual for parties to wrangle over the appointment of neutrals in an arbitration, but a long-running battle in broker-dealer arbitrations revolves around who has the right to represent investors at the proceedings.
Rough Justice or Fair Cop? The Reality of Anti-dilution Provisions
October 01, 2003
We need protection against dilution if you engage in future down rounds," said venture capitalists 3 years ago, not really believing that they would need to call upon this protection. However, the unexpected and significant decline in valuations for companies over recent years has focused the attention of VCs and VC-backed companies on anti-dilution provisions. In today's investment climate, VCs are not only more selective with their potential investments, but are also demanding more favorable financial and control provisions in term sheets. In particular, protection against downside risk is of much more significant importance.
Employment Essentials
October 01, 2003
Few would consider employment agreements as exciting or cutting-edge as other technology contracts. Yet they can be critical for an entrepreneur's protection during times of change. For example, an employment agreement can define what rights the founder keeps to grow the business after he sells control, or attracts investors.
The Incredible Shrinking Privilege Strategies for Corporate Criminal Defense After the Thompson Memorandum
October 01, 2003
The headlines reporting multi-million dollar corporate guilty pleas often miss a point widely understood among white-collar practitioners: The driving force behind the corporate plea is often not the merits of the government's charge, but the corporation's need to reach a global settlement resolving administrative and criminal sanctions that could put the company out of business. Considering the role of prosecutorial discretion and the draconian consequences of a corporate conviction, corporations often have little choice but to plead guilty and cooperate with the government. Recently, the feds have raised the ante in this process by defining "cooperation" to include waiving the attorney-client privilege. Thus, corporations and counsel alike are forced into a Hobson's choice where at least partial waiver may be inevitable.
Comply or Die: Corporate Record Keeping in a Digital World
October 01, 2003
Although compliance is generally thought of in a regulatory sense, every corporation that could be involved in litigation needs to consider the implications of how and what information is stored. In a sense, heavily regulated industries such as health care, securities, banking, and commodities are in a better position since the specifics of record keeping are set out in great detail. All industries that interact with the government can assume that their time will come. Other corporations may not discover whether they are adequately preserving information until they are faced with a discovery request. In either event, failure to comply can have dire financial consequences.
