Category Archives: Commercial Agreements

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Banks Without a Remedy for Fraudulent Check Cashing Scheme?

In a recent Seventh Circuit Case, the dangers of a bank cashing a fraudulent check based on an electronic image raises important business banking concerns.  In a recent Commercial Banking Law Case, an attorney’s client Fumiko Anderson asked attorney Goodson … Continue reading

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Leveraging Long Term Supply Agreements to Finance additional R&D and Expansion!

One often, overlooked method of financing growth is long term supply agreements with specific unit and pricing requirements.  Once, these long term supply agreements are finalized the supplier can rely on them for planning future growth.  The supplier gets a … Continue reading

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Change Management Protocols and Drafting Good Master Technology Service Agreements!

How do you draft a good Master Technology Service Agreement?  What do you consider?  What is reasonable? What is foreseeable?  What is too remote? How do you respond to an Evidence Preservation Letter? What is your clients’ doom and gloom fears?  These are all things that all technology and information technology consultants and teams have to consider and make good decisions on.  Without having a good team of professionals that can identify the areas of risk for the clients, the method and means of exploiting known or identified vulnerabilities, and creating a prompt data security protection protocol you may end up losing out from a change in ISPs or IT vendors.

Having good change management procedures is vital to the success of your clients and to protect them from many would be competitors looking to acquire your clients’ knowledge, trade secrets and intellectual property.  A good first step for protecting your clients is using good provisions in your Master Technology Service Agreements that all vendors have to comply with to ensure that the proper procedures are followed to ensure that key personnel, key clients, key vulnerabilities, key consultants and key terms and caveats are negotiated and drafted to protect against reasonably anticipated problems.

The Master TSA allows for a method of interjecting vital controls that can be adapted to the needs of the clients–sometimes all that is needed is a wise and seasoned Chief Technology Officer (“CTO”).  Other times–key schedules and predefined procedures to follow for implement changes in information technology services or hardware.  Sometimes good limitations on damages, warranties and representations and third party indemnification provisions are required to ensure that your clients are protected from potential errors in the change management procedures.

Finally, having good enforcement and corrective actions predefined and provided for in the Master TSA will save you a lot of headaches down the line–including delays based on the need for board or shareholder’s approval, manager or member’s approval, or similar delays that may be required in following corporate formalities.  Sometimes a rigid adherence to corporate formalities can allow a problem to become bigger over time and based on delays–it is generally advisable to deal with these types of data security problems sooner rather than later.

For more go to: http://www.bipeblawg.com, http://www.vrplawgroup.com, http://www.eebrunchclub.com

EEBC-It’s Just Brunch Club! Fall 2014 Start Up Competition–Special Thank You to the Panelists!

Third Installment of the Fall 2014 Competition Thank You to the Panelists! Paul Durbin of Miller and Canfield, Lt. Governor Sheila Simon running for Comptroller of Illinois, Ron Kirschner founder of Heartland Angels, Tom Kastner Woodbridge International and GP Ventures, William Bennett of Level Office and Vihar R. Patel  Founder of EEBC-It’s Just Brunch Club! and Managing Attorney for VRP Law Group.

This was a special privilege and honor to have the collective experience, guidance and wisdom of all the panelists to be a great opportunity for the sharing and exchanging of ideas and knowledge for the benefit of Chicago Entrepreneurs and the StartUp Community!

For more go to: http://www.eebrunchclub.com or http://www.vrplawgroup.com Fall2014EEBC_Thank You_Announced_Press Release_102314

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Attorneys’ Fees and Business, Civil and Commercial Litigation: What can be released and what cannot?

In an interesting Ruling from the IL First District Appellate Court, a panel found that it was not possible for the parties to a divorce proceeding to contractually waive the attorneys’ right to legal fees or file a fee petition. … Continue reading

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New E-Book for Entrepreneurs: A Guide for Entrepreneurs and Business Owners!

We recommend a new book that has been published relating to a Beginner’s Series of Guides for Entrepreneurs relating to acquisition of angel, capital, funds, seed or VC funding for undertaking new efforts to try out and test out the … Continue reading

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Corporate Risk Management: Creating an Effective Compliance System.

There are a variety challenges that must be overcome before a fair, good and just system can be created. It is subject to human frailty,emotions, misperceptions, miscommunications, lack of cohesiveness, and lack of full disclosure or access to a complete … Continue reading

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Buying or Selling a Company or Substantially All of the Company’s Assets!

Many people do not realize that an asset transaction or purchase may not be an asset purchase if, it includes substantially all of the assets of the Company may become a sale of business transaction.  It does not matter what form the assets are in or where they are located, if the purchase is a transaction involving substantially all of the Company’s assets, then it is not necessarily a simple asset transaction.  You may want to make sure that the Company is still operational and able to conduct some form of legitimate business activity using the remainder or excludes assets.

However, this often gets a bit more complicated, because of having to define substantially all of the Company’s Assets, what does that mean?  Honestly, there is some disagreement between state and federal courts, and disagreement between the judges of those courts.  However, generally, substantially all of the Company’s assets really does have to do with maintaining the business of the Company as an ongoing concern after the asset purchase.

So, you purchasing the most valuable asset or the assets that generate the most revenues, gross or net profit generally, does not qualify as a sale of substantially all of the company’s assets or a sale of business transaction as long as, the business of the Seller or Selling company is still an ongoing concern.  This is where people sometimes fail to recognize the impact of negative covenants, non-competition, confidentiality, or intellectual property provisions on the Seller’s ability to continue as an ongoing concern.

If restrictive covenants, non-competition and non-solicitation provisions are overly broad the Seller may be overly cautious in light of your agreement, and you may be opening the door to a sale of business transaction or a sale of substantially all of the Company’s assets. Be vary of doing so. Not, because of the Seller possibly, asserting that the transaction was a sale of business transaction, but because the Creditors of the Seller may want to find a way to satisfy outstanding claims.  So, successor liability from a sale of business transaction or a sale of substantially all of the assets of the Company may be a method of satisfying those Creditors.  For example,

1) The IRS or IDOR back taxes the Seller or the Company of the Seller owes for employee withholdings, corporate taxes, penalties and interests, and affordable health care act penalties;

2) The employees looking to collect unpaid wages, bonuses, commissions or retirement benefits;

3) The contractors or sales representatives looking to acquire their commissions or payments;

4) The lenders looking to satisfy outstanding balances on loans, lines of credit, or credit card companies;

5) The suppliers or vendors holding unsatisfied accounts receivables;

6) The IP holder holding an IP infringement claim or breach of a licensing agreement; and many more.

So, thanks for identifying the risk or problem, but what is the solution?  Well, creative lawyers, legal teams and professionals looking to problem solve and make a deal happen is the first thing, the Buyer will require.  As for some potential solutions, the Buyer, may, want a requirement that the Seller continue business operations for a reasonable period after the closing of the transaction.

Maybe, tie the reasonable period to an earn out payment that is paid to the Seller based on milestones for reaching time periods set out by the Buyer.  Maybe, have the Buyer place an order(s) or agree to order a certain percentage of the raw materials, or supplies needed from the Seller for a reasonable period to ensure sales and operations as an ongoing concern.  Have the Buyer pay a consulting fee to help streamline operations procedures and incorporation of Seller’s Assets into the business of the Company. If you require other options, then feel free to contact us at: http://www.vrplawgroup.com or check out http://www.corporateacquisitionsattorney.com