Category Archives: Attorneys

Business Law Breakdown – Amendments to the Delaware General Corporation Law Prohibit Fee-Shifting and Endorse Forum Selection Clauses

Nick-Feldman-smNick Feldman’s practice focuses on corporate transactions, including mergers and acquisitions, dispositions, private equity transactions and general corporate matters for both public and private clients, focusing on middle-market and emerging growth companies. In addition, Nick counsels companies in connection with entity formation, corporate governance, federal and state securities laws and compliance, joint ventures, employee incentive plans, executive employment agreements and other executive compensation matters.  Nick also serves as an Adjunct Professor at Loyola Marymount University, where he lectures on media law topics.

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DelawareOn June 24, 2015, Delaware Governor Jack Markell signed several important amendments to the General Corporation Law of the State of Delaware (the “DGCL”) into law. The amendments, which will become effective on August 1, 2015, prohibit “fee-shifting” provisions and endorse forum selection provisions, among other changes.

Prohibition on Fee-Shifting

In response to the Delaware Supreme Court’s decision in ATP Tour, Inc. v. Deutscher Tennis Bund, 91 A.3d 554 (Del. 2014), the DGCL amendments invalidate “fee-shifting” provisions in certificates of incorporation or bylaws of stock corporations. In ATP, the Court upheld a bylaw imposing liability for legal fees of a nonstock corporation on certain members of the corporation participating in the litigation.

The new legislation narrows the ruling in ATP by way of new DGCL Section 102(f). That statute provides that a certificate of incorporation may not impose liability on a stockholder for the attorneys’ fees or expenses of the corporation in connection with an “internal corporate claim” as defined in new Section 115 (discussed below). The legislation also adds a similar restriction on fee-shifting provisions in corporate bylaws to Section 109(b). An amendment to Section 114 provides that the restrictions on fee-shifting provisions do not apply to nonstock corporations.

While the legislation invalidates fee-shifting provisions in certificates of incorporation and bylaws of stock corporations, it does not bar such provisions in stock purchase agreements or stockholders’ agreements.

Authorization of Delaware Forum Selection Clauses

The 2015 legislation confirms the holding of Boilermakers Local 154 Retirement Fund v. Chevron Corporation, 73 A.3d 934 (Del. Ch. 2013), adding a new Section 115 to the DGCL which confirms that a corporation’s certificate of incorporation or bylaws may require internal corporate claims to be brought exclusively in the courts of the State of Delaware. “Internal corporate claims” are defined to include claims of breach of fiduciary duty by current or former directors, officers, or controlling stockholders, or persons who aid and abet such a breach.

 Section 115 does not expressly authorize or prohibit provisions that select a forum other than Delaware courts as an additional, non-exclusive forum for internal corporate claims. However, it does invalidate any provision selecting courts outside of Delaware, or any arbitral forum, to the extent such a provision attempts to prohibit litigation of internal corporate claims in the Delaware courts. And, as with the fee-shifting amendments, it does not invalidate non-Delaware forum selection provisions in a stockholders’ agreement or other separate written agreements with stockholders.

Stock and Option Issuances

With respect to stock issuances, the new legislation amends Section 152 of the DGCL to clarify that the board of directors may authorize stock to be issued by the determination of a person or body other than the board, in one or more transactions and in such amounts and at such times as determined by the authorized party. In order to do so, the board must set certain parameters at the time it authorizes the issuance(s), including fixing the maximum number of shares that may be issued, the time frame during which such shares may be issued, and a minimum amount of consideration for which they may be issued.

Additionally, the legislation permits the board to delegate the ability to issue restricted stock to officers of the corporation on the same basis that the board may delegate the ability to issue options under Section 157 of the DGCL. Both Sections 152 and 157 are further amended to clarify that the board may determine the minimum consideration for such stock or options by way of a formula which references or is dependent upon extrinsic facts, including market prices.

Ratification of Defective Corporate Acts

The 2015 legislation makes several amendments to Section 204 of the DGCL, which sets forth the procedures for ratifying stock or corporate acts that would be void or voidable due to a “failure of authorization.” The amendments clarify and confirm certain provisions of the ratification process and provide additional guidance as to the specific requirements for the filing of certificates of validation, including: (1) confirming the requirements for a board of directors and stockholders to adopt and ratify one or more defective acts; (2) providing for ratification of the initial board of directors where it was not named in the original certificate of incorporation nor elected by the incorporator; (3) addressing the voting standards applicable to the ratification of the election of a director where the original vote obtained was defective; (4) clarifying the requirements for certificates of validation; (5) confirming the scope of acts by the board of directors or officers that may constitute a defective corporate act susceptible to cure by ratification; and (6) confirming that certain “voidable” acts may be cured by ratification under common law.

Implications: Action Items for Delaware Corporations

A Delaware stock corporation that has adopted a fee-shifting provision should consider amending its charter and/or bylaws, as applicable, to remove the provision because it will no longer be enforceable once the new legislation takes effect.

Further, Delaware corporations that have not previously adopted a Delaware forum selection clause should consider adopting one. And, as with fee-shifting provisions, a Delaware corporation that has adopted a forum selection clause prohibiting litigation of internal corporate claims in the Delaware courts should amend the clause to make clear that such claims may be brought in Delaware in addition to, or instead of, the forum currently specified.

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For more information about services for your legal needs, contact Nick Feldman at nfeldman@stubbsalderton.com or (818) 444-4541.

SAM Client Iris.tv Raises $5.3 Million to Deliver Video Recommendations

Iris.tvSAM client Iris.tv has raised $5.3 million in Series A funding for technology that makes personalized video recommendations to viewers who watch short clips online.  The startup’s customers are lifestyle, entertainment, sports and news organizations that own and publish a lot of short videos online, and who want to drive audiences to watch more videos through their own apps or websites rather than on YouTube or Facebook.

Publishers or networks can generate more revenue from videos viewed through their own apps, potentially, said Iris.tv CEO Field Garthwaite, in part because there are fewer distractions there than on social media platforms.

If users do fast-forward past one clip to see another using Iris.tv, the next recommended clip will be a video from the same content company that is tailored around their interests.

Investors in Iris.tv’s funding round included Sierra Wasatch, BDMI, Progress Ventures and individual backers including Machinima founder Allen DeBevoise, Lions Gate CFO James Barge as well as executives from Nielsen and AEG.

SAM Partner Louis Wharton represented Iris.tv in this transaction.

To view the full press release in the Wall Street Journal, click here.

For more information on our Venture Capital & Emerging Growth practice, contact Louis at (818) 444-4509 or lwharton@stubbsalderton.com.

Business Law Breakdown – Five Reasons to Hire a Lawyer for Your Startup, and Five Things to Look For When You Do

Nick-Feldman-smNick Feldman’s practice focuses on corporate transactions, including mergers and acquisitions, dispositions, private equity transactions and general corporate matters for both public and private clients, focusing on middle-market and emerging growth companies. In addition, Nick counsels companies in connection with entity formation, corporate governance, federal and state securities laws and compliance, joint ventures, employee incentive plans, executive employment agreements and other executive compensation matters.  Nick also serves as an Adjunct Professor at Loyola Marymount University, where he lectures on media law topics.

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In a perfect world, a business lawyer isn’t the person you run to when things go sideways—it’s the trusted advisor you consult regularly to anticipate challenges and put you in the best position to succeed. While it may seem like a luxury for some startups, there are several important factors to consider that make hiring a lawyer earlier than later a smart decision.

 

 Five Reasons to Hire a Lawyer for Your Startup

Guidance

At the incorporation stage, the value of a lawyer has as much to do with helping you figure out what you need as it does with preparing documents. When it comes to what kind of entity to form, how to structure and distribute equity, or the best strategy to protect your intellectual property, a good lawyer will help guide you toward where you need to be—and then get you there.

 Ownership

 When people embark on a business venture together, it’s best to establish everyone’s rights and expectations at the outset in case there are disagreements down the road. It’s a lot easier to resolve a conflict before it arises, and you’d never imagine anything could break the bond between you and your co-founders… until it does.

 Intellectual Property

Intellectual property can be one of the biggest assets—and, if not protected, liabilities—of a startup company. Whether it means preparing nondisclosure agreements to protect trade secrets, drafting license agreements, defending trademarks, copyrights, or patents, or avoiding infringement of all of the above, a good lawyer will keep you protected.

 Taxes

It probably goes without saying that you don’t want to violate tax laws or incur unnecessary tax liability, and that you want pay the taxes you owe so as to avoid penalties. Tax laws can be complex, and a good lawyer will keep you ahead of the curve on tax issues and structure your business accordingly.

 Contracts

Finally, there’s the day-to-day legal that every startup encounters. Airtight vendor agreements, employment and contractor documents, and website terms of service and privacy policies are all invaluable for startups to get right—the first time.

 

Five Things to Look For When You Do

 Expertise

First and foremost, you want someone that is skilled and experienced with the types of legal issues you will face. This includes both the underlying business issues and the challenges specific to your industry—an attorney with knowledge relevant to your business is best positioned to become the advisor you need.

For many startups across the board, it’s extremely advantageous to hire an attorney (and law firm) with experience in both formation and financing. An attorney who regularly helps companies get “up and running” but is also frequently involved in seed-stage and venture capital financing will be able to give you better advice, and better facilitate accomplishing your goals.

 Fit

It’s also important that your lawyer (and his or her firm) is a good fit for your company. This means someone that you get along with and enjoy working with, but also someone who “gets” your business and industry and has the resources at their firm to serve all your potential needs. If a lawyer doesn’t speak the language of your business or understand the world in which you’re operating, it’s harder for him or her to adequately represent you.

 Responsiveness

It should go without saying that you want a lawyer who responds to your calls and emails in a timely manner. What’s equally important is how they respond. A good lawyer shouldn’t just tell you “no.” They respond to a problem with the right questions and a new suggestion of how to get what you want: “This is what you can do.”

 Connections

 You might be thinking about your lawyer in terms of connections or cache, and you wouldn’t be alone in that thought. While the expertise, fit, and responsiveness of an attorney should take precedence, the ability of your lawyer to introduce you to investors or potential partners—as well as their guidance in how to do so and the credibility they lend—is simply part of the value proposition.

 Fees

 Let’s be honest: one of the biggest considerations in hiring a lawyer is the bottom line. The lawyers most start-ups deal with typically bill by the hour, and the hourly billing rate may vary widely between junior and senior lawyers. Depending on the complexity of your issue, the lawyer may be able to offer a flat fee arrangement to offer you some predictability, or at least offer an estimate of the amount of time it will take to complete the task at hand.

 If you make the time and effort to find the right attorney and firm, you can get quality representation at a fair price. In the long run, hiring a lawyer for your startup is worth it—in time and money saved, and stress avoided, by starting down the best path in the beginning.

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For more information about services for your legal needs, contact Nick Feldman at nfeldman@stubbsalderton.com or (818) 444-4541.

SAM Encourages you to Attend: Opus Connect’s VC Chapter: “Building for an Exit” – May 28, 2015

Opus Connect

VC Chapter:
Building for an Exit

 

Thursday, May 28, 2015
8:00-10:00am

Venue:  Stubbs Alderton & Markiles, LLP
1453 3rd Street Promenade, Suite 300
Santa Monica, CA 90401

Register!

Entrepreneurs are driven by a passion to build companies. Inherent in this drive is the desire to create products or services that are superior to their predecessors, so that they make business more efficient, elevate the customer experience, or improve the quality or longevity of life. Of course, underpinning all entrepreneurial endeavors is the goal for profit and the maximization of enterprise value. While such value may be realized in many forms and through various mechanisms, it is the corporate “exit” with which most are keenly familiar. But, is it ever too early to plan for an “exit”? Should every CEO have an exit in mind when building a business? Does building for an exit conflict with the goal of entrepreneurship, which is to build great companies? Please join us for a lively breakfast discussion, where panelists will debate the merits and pitfalls of building early-stage companies for a corporate sale. Panelists will include seasoned entrepreneurs, investors, and bankers, with a range of perspectives on the topic at hand.

Moderator:

Kevin DeBré, Partner, Stubbs Alderton & Markiles, LLP – Kevin D. DeBré leads the intellectual property and technology transactions practice at Stubbs Alderton and Markiles, LLP, a corporate, securities, M&A and intellectual property law firm in Los Angeles and Santa Monica. Kevin is a business lawyer, a registered patent attorney and a former engineer. He advises entrepreneurs and companies that use intellectual property to build their businesses and also counsels clients on compliance with data security and privacy laws and regulations. Kevin received his J.D. degree from Hastings College of the Law and his B.S. degree from the University of California, Davis.

Panelists:

Roberta Jacobs, CEO at FANATTAC - Roberta Jacobs is a C-level executive who earned her global expertise in consumer technologies working for American and Japanese companies in Asia, Europe and Latin America. She was the decision-making executive for Viacom’s new media assets including Star Trek, Mission Impossible and SpongeBob. In between corporate positions she worked with well-known start-ups helping them to launch, get funded and/or acquired including Craigslist, WIRED, Hewlett Packard’s “portable music platform,” Sega, First Data Corporation and JVC Electronics. She has been instrumental in the sale of four different companies in part or in whole to First Data Corporation, eBay, Conde Nast and Forstmann Little.

Kambiz Aghili, Managing Partner at K2 Capital Partners  – Kambiz Aghili is a Managing Partner and a co-founder of K2 Capital Partners. He has more than a decade of experience in product strategy, management consulting, market and competitive positioning, intellectual property and operational advisory services. Prior to co-founding K2 Capital Partners, Mr. Aghili served as a managing partner at Eton & Stallion Capital, offering strategy consulting, capital formation, M&A and private to public structured products to family offices and lower/middle market firms. Mr. Aghili has served as a senior fellow for UCLA Anderson School of Management’s entrepreneurship center since 2009. In this capacity, he managed consultants and advised 100+ lower/middle market companies on growth and business strategy formation including business plan development, competitive positioning, sales/channel expansion, capital formation and post-merger integration. Previously as the managing director of the AFH Holding and Advisory family office in Beverly Hills, he led the placement of strategic private and public equity/debt investments. In his prior role as a director of product strategy and intellectual property for Teradata Corporation, Kambiz actively contributed to M&A engagements and strategic partnerships. He also led and contributed to numerous buy vs. build product roadmaps in emerging technologies, database management and big data analytics and managed large development teams across the U.S., India and China. Mr. Aghili earned executive training in business strategy from Harvard Business School, an M.B.A. from UCLA Anderson School of Management in business strategy and finance, as well as PhD and M.S. degrees in computer science from the University of California at Santa Barbara.

Brett Parker, Co-Founder & COO of Cargomatic, Inc - Brett Parker is Co-Founder and COO of Cargomatic, Inc., a technology platform that connects shippers and truckers in real-time (“Uber for Trucking”). Previously, as Managing Partner of The Triangle Group, Brett oversaw large national accounts, such as Dillard’s, Belk and Perry Ellis and was instrumental in Levi Strauss and Co.’s launch into Target and Walmart, considered one of the largest apparel launches in history. At Triangle, Brett was directly responsible for the strategic growth, as well as financial and operating performance of West Coast operations. Brett serves as a Board Member of the CSCMP, Southern California, earned a BA from University of Colorado, Boulder, and a JD from The Pepperdine University School of Law.

Jon Kraft, Managing Partner at LiftOff  – Jon Kraft has over 20 years of experience as an entrepreneur in software and consumer digital media, and is currently Managing Partner at LiftOff, a Business Accelerator, and an advisor for several early stage companies. He was most recently Chief Operating Officer and a member of the founding team at UberMedia, Idealab’s prominent Internet start-up which he helped build into the world’s leading independent developer of mobile social apps. Before that, he was Co-founder and Chief Operating Officer for Big Stage Entertainment, Inc., an advanced avatar platform company recognized by Forbes in 2009 as one of America’s 20 Most Promising Companies, and sold to Image Metrix (IMGX:OTC) in 2010. Jon previously served as Co-founder and CEO of Pandora Media, the largest and fastest growing online radio product in the world with over 150M registered users in the U.S. (NYSE: P). Jon was also a Co-founder of Stanford Technology Group, an innovator in the relational OLAP market, funded by Sequoia and Hummer Winblad, and acquired by Informix Corporation in 1995. Jon served four years as Chairman of the Technology Council of Southern California, and currently sits on that organization’s Board of Directors. Jon holds a B.A. from Stanford University. 

Stubbs Alderton & Markiles Attorneys Represent Vitesse Semiconductor Corporation in its Sale to Microsemi Corporation

vitesse homepageStubbs Alderton & Markiles, LLP announces that it represented client Vitesse Semiconductor Corporation (Nasdaq: VTSS) in its successful sale to Microsemi Corporation (Nasdaq: MSCC).  Microsemi acquired Vitesse through a cash tender offer and follow-on merger at a price of $5.28 per share, for a total transaction value of approximately $389 million.  SAM Attorneys John McIlveryJonathan Friedman and Daniel Kim represented Vitesse in this transaction that closed at the end of April.

For more information about the Public Securities Practice of Stubbs Alderton & Markiles, LLP, contact John McIlvery at (818) 444-4502 or jmcilvery@stubbsalderton.com

Press Contact:

Heidi Hubbeling
Director of Marketing
hhubbeling@stubbsalderton.com
(310) 746-9803

SAM Client ArtCraft Entertainment Raises Close to $1.8M on Kickstarter for New Game Crowfall

Crowfall

Congratulations to SAM Client ArtCraft Entertainment as they’ve raised close to $1.8M on their Kickstarter campaign that was set up to raise funds to launch their new MMO game Crowfall.  In just three days, the campaign surpassed their original goal of $1.5M.  That amount will continue to climb as development progresses, as developer ArtCraft Entertainment is maintaining its own in-house crowdfunding campaign at Crowfall.com.

To view the ArtCraft Entertainment Team’s “thank you” to the Crowfall community:

To read the PC Magazine article on the funding the Crowfall review, click here.

About ArtCraft Entertainment

ArtCraft Entertainment, Inc. is an Austin, Texas based independent developer and publisher of cutting-edge Massively Multiplayer Online Role Playing Games (MMORPGs). Their flagship title, Crowfall, was announced in January of 2015 and has quickly gained a loyal following of players looking for innovation and vision in the MMO genre.

For more information about our Interactive Entertainment & Video Game practice, contact Ryan Azlein at (818) 444-4504 or razlein@stubbsalderton.com.

 

SAM Client Vitesse Semiconductor Corporation to be Acquired by Microsemi Corporation

Vitesse-logo-PMS289-300dpi-e1355350965865.jpg

SAM Client Vitesse Semiconductor Corporation has announced that it has reached an agreement to be acquired by Microsemi Corporation for $389 million, furthering a drive toward consolidation in the semiconductor industry.

Vitesse, which has headquarters in Camarillo, CA, designs a diverse portfolio of high-performance semiconductors, application software, and integrated turnkey systems solutions for Carrier, Enterprise and Internet of Things (IoT) networks worldwide.

Based in Aliso Viejo, CA, Microsemi offers a comprehensive portfolio of semiconductor and system solutions for communications, defense & security, aerospace and industrial markets.

Stubbs Alderton & Markiles’ attorneys John McIlvery and Jonathan Friedman are representing Vitesse in this pending transaction.

For more information about our Public Securities practice, contact John McIlvery at (818) 444-4502 or jmcilvery@stubbsalderton.com.

Obtaining a Federal Trademark Registration

Trademark Registration

The Federal Circuit in Couture v. Playdom, No. 2014-1480 (Fed. Cir. March 2, 2015) clarified that in order to obtain a U.S. trademark or service mark registration there must be actual trademark “use” (15 U.S.C. 1051) prior to filing an application to register or filing a Statement of Use (intent-to-use applications) with the US Patent and Trademark Office.

Practical Pointers

1. A photograph on a website or the advertising of a product is not sufficient to establish “use”. A product must be shipped in commerce.  Keep documentation of earliest shipments.

2. A service offered on a website or simply advertised is not sufficient to establish “use”. The service must be provided in commerce. Keep records showing earliest provision of services.”

For more information regarding our Trademark & Copyright practice, contact Tony Keats at (310) 746-9802 or akeats@stubbsalderton.com.

 

SAM Represents Client HelloTech in Raising $2.5M to Bring On-Demand Convenience to In-Home IT Support

it-support

The on-demand market is quickly expanding.  Most recently, SAM client, HelloTech, a Los Angeles-based IT Company has joined the movement. The company today announced $2.5 million in seed funding from a Upfront Ventures, Accel Partners*, Crosscut Ventures, Amplify.LA, Ron Burkle, and other angels, as well as plans to launch its alpha service in West-LA in April. The company was founded by Richard Wolpert, a former Apple, Disney, and RealNetworks executive, co-founder of the Amplify.la accelerator, and a venture-partner at Accel.

Stubbs Alderton & Markiles, LLP attorneys Scott Alderton and Ryan Azlein represented HelloTech in the transaction.

To view the PandoDaily article regarding the transaction, click here.

For more information regarding our Venture Capital & Emerging Growth practice, contact Scott Alderton at (818) 444-4501 or salderton@stubbsalderton.com

SAM Encourages you to Attend the Webinar: “How to Raise Venture Capital: What’s Your Plan?” – February 3

VC-Stock-Image

Are you looking to raise investment capital?

If so, you need a plan.

The trick is to get investors to believe in you, in your company, in your vision, and in your ability to execute.

Join Ryan Azlein, Partner for Stubbs, Alderton & Markiles and Gadiel Morantes, Chief Revenue Officer for Early Growth Financial Services for simple tips to help you build your fundraising plan and get funded.

Ryan and Gadiel have worked with hundreds of successfully funded companies and know what works. Bring your questions and dig into topics such as:

– How to successfully target VCs
– Creating an effective executive summary
– Pitch deck essentials
– Top tips for telling your story
– And more…!

Register!