Lexis Practice Advisor® Practice Insights—July 23, 2015

Lexis Practice Advisor® Practice Insights—July 23, 2015

 

LexisNexis partners with leading practitioners from across the country to develop Lexis Practice Advisor® practical guidance for transactional matters. Periodically InfoPro highlights the practical insights developed by these attorneys on specific topics in their area of expertise. These insights can be shared with your attorneys, used in your newsletters and on your intranet.  

The Credit Agreement: Events of Default and Remedies
Banking & Finance Insights by Sherry Mitchell

As all Banking & Finance attorneys understand, once a transaction closes, there is always a risk that the borrower defaults in some way. Some events of default, like non-payment or the institution of a bankruptcy proceeding by or against the borrower, are extremely serious defaults and require the lenders to take immediate action to protect their interests. Some events of default merely indicate that the borrower’s financial situation has deteriorated or it has decreased its likelihood of repaying the loans. In any case, upon an event of default, lenders will have the option to determine whether they want to enforce the remedies available to them under the loan documents or at law.

Learn more about events of default and remedies:

Sherry Mitchell, Esq., head of Lexis Practice Advisor® Banking & Finance, brings eleven years of experience to LexisNexis®, joining the team from Clifford Chance U.S. LLP.

Workouts and Compositions and Extensions
Bankruptcy Insights by Cody Tray

Prior to commencing a Chapter 11 proceeding, a debtor and its counsel should consider all options to best rehabilitate a troubled company. Counsel should immediately contemplate whether an out-of-court workout is achievable. Doing so may result in savings in terms of time and cost. Additionally, a company may opt to pursue an out-of-court contractual arrangement, known as a composition, with one or more creditors pursuant to which a creditor agrees to a partial payment in satisfaction of debts. Similarly, an extension is a contractual arrangement whereby a creditor agrees to extend the time for payment of outstanding debts.

Learn more about workouts and compositions and extensions:

Cody Tray, Esq., head of Lexis Practice Advisor® Financial Restructuring & Bankruptcy, brings nine years of bankruptcy experience to LexisNexis®, including experience at Davis Polk & Wardwell LLP and a clerkship with the Honorable Robert E. Gerber, SDNY Bankruptcy Judge.

Tortious Interference with a Contractual Relationship

Business Insights by Eric Bourget

Tortious interference with a contractual relationship occurs when a person intentionally, and without a privilege or justification, interferes with the contractual relationship between two other parties, causing injury to the plaintiff. Tortious interference with a contract is a specific form of the tort of interference with a business relationship. In commercial law, two of the most common scenarios involve exclusive supply agreements (e.g., where a vendor has an exclusive supply contract with a customer and the vendor’s competitor seeks to induce the vendor’s customer to defect from the vendor and become the competitor’s customer) and employment contracts (e.g., where a defecting employee joins a competitor or establishes a competing company and proceeds to raid the company’s employees or customers in violation of employment contracts with those employees).

Learn more about tortious interference with a contractual relationship:

Eric Bourget, Esq., Lexis Practice Advisor® Team Lead and Group Director of Specialized and Corporate offerings, brings ten years of both private and in-house practice experience to LexisNexis®.

The Importance of Clear and Unambiguous Language in Settlement Agreements

Business Insights by Eric Bourget

General contract interpretation rules apply to settlement agreements. For example, the parole evidence rule may allow parties to introduce communications outside of the four corners of an agreement to explain an ambiguity should litigation be brought to enforce or interpret the agreement. Therefore, it is important to define terms, give examples if need be, and use clear or unambiguous language. Overuse of legal jargon should be avoided for the sake of clarity. It is crucial that the parties to the agreement, as opposed to their counsel, be able to read and understand every material provision of the agreement. A primary component of a settlement agreement is the release provision, which like the agreement itself, must be clear and unambiguous, and an accurate expression of the intent of the parties. If a party is not represented by counsel, a provision requiring the party to acknowledge that he or she has had the opportunity to consult or has already consulted counsel should be included.

Learn more about the importance of clear and unambiguous language in settlement agreements:

Eric Bourget, Esq., Lexis Practice Advisor® Team Lead and Group Director of Specialized and Corporate offerings, brings ten years of both private and in-house practice experience to LexisNexis®.

New York Business Taxes (Statutory Update)

In-House Insights by Eric Bourget

Business taxes in New York follow familiar models. Income tax structures for sole proprietorships, partnerships and LLCs mirror the federal system. As a result of sweeping tax reform which eliminated the alternative minimum tax, income tax for corporations (i.e., franchise tax) comprises three alternative methods for calculating the tax due. Eventually, there will be two corporate tax bases because the capital base is gradually being phased out.

Learn more about New York business taxes:

Eric Bourget, Esq., Lexis Practice Advisor® Team Lead and Group Director of Specialized and Corporate offerings, brings ten years of both private and in-house practice experience to LexisNexis®.

Drafting an Effective Quality-Control Provision in a Trademark License
IP & Technology Insights by Lindsay Bringardner

A significant risk of trademark licensing is the potential damage or loss of trademark rights if a licensee’s products or services are of an inferior quality to those offered by the licensor. Thus, trademark license agreements must include appropriate quality-control provisions, which the licensor must affirmatively follow and enforce. These provisions should detail measures to ensure quality compliance, including review and approval of trademark uses, compliance with applicable laws and manufacturing facility inspections.

Learn more about drafting an effective quality-control provision in a trademark license:

Lindsay Bringardner, Esq., head of Lexis Practice Advisor® Intellectual Property & Technology, brings twelve years of legal experience to LexisNexis®, including experience at Latham & Watkins LLP and Pryor Cashman LLP.

Non-Competes
Labor & Employment Insights by Carrie Wright

State law governs whether or not a court will enforce non-competition, non-solicitation and confidentiality agreements. Across jurisdictions, the rules vary greatly. Some states have enacted statutes that regulate restrictive covenants whereas others rely on common law rules. Certain states give employers wide latitude to impose competitive restrictions on employees and others void most such restrictions. When counseling employers or drafting employment agreements, it is essential to understand where a particular jurisdiction stands.

Learn more about non-competes:

Carrie Wright, Esq., head of Lexis Practice Advisor® Labor & Employment, brings nearly fifteen years of legal experience to LexisNexis®, including experience at Epstein Becker & Green, P.C., Paul, Weiss, Rifkind, Wharton & Garrison LLP and Rabinowitz, Boudin, Standard, Krinsky & Lieberman, P.C.

Defending Against a Hostile Takeover
M&A Insights by Dana Hamada

Is your client facing a takeover bid from an unfriendly buyer? Your advice on how your client responds is critical at this time. In defending against a hostile takeover bid, you should work closely with the management and the board of directors and assess all available takeover defenses. Any defensive strategy would include assembling a response team, assessing takeover vulnerabilities, and taking action in response to the unsolicited offer.

Learn more about defending against a hostile takeover:

Dana Hamada, Esq., head of Lexis Practice Advisor® Mergers & Acquisitions, brings a wealth of legal experience to LexisNexis®, joining the team from Jenner & Block LLP and Gibson, Dunn & Crutcher LLP.

Aggregation of Multiple Parcels in Real Estate Acquisition Transactions
Real Estate Insights by Richard J. Sobelsohn

Developers frequently purchase multiple contiguous parcels of real property that may be owned by different sellers. The unique circumstances of such transactions should be reflected in the terms of the purchase agreements and the related due diligence. For example, the purchaser may seek to have its obligation to purchase one parcel be contingent on its purchase of a contiguous parcel being acquired. In addition, negotiating the same inspection periods and closing dates, and using the same title insurance company, for all parcels can help minimize costs.

Learn more about the aggregation of multiple parcels in real estate acquisition transactions:

Richard J. Sobelsohn, J.D., GGP, LEED Accredited Professional, Team Lead and Group Director of Lexis Practice Advisor® Financial Practice Area Modules, brings almost sixteen years of both private and in-house practice experience to LexisNexis®.

Understanding the Corporate Structure and Governance of an Investment Company
Securities Insights by Ron Llewellyn

Registered investment companies, or funds, in any corporate form are governed by boards of directors, trustees or persons in a similar capacity. Fund counsel is often relied upon to advise the board on various statutory requirements, certain business inquiries and other issues. Fund counsel should be knowledgeable about the roles and fiduciary duties of directors of funds and the boards on which they serve as well as some of the related regulations to which directors are subject.

Learn more about understanding the corporate structure and governance of an investment company:

Ron Llewellyn, Esq., head of Lexis Practice Advisor® Securities & Capital Markets, brings a wealth of expertise to LexisNexis®, including experience at Skadden, Arps, Slate, Meagher & Flom LLP, MasterCard Incorporated and Saks Incorporated.