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MBBP Client DraftKings Raises $300M in Funding 07/30/2015

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MBBP Client DraftKings, the leading provider of daily fantasy sports announced on Monday, that Fox Sports will provide about $150 million for an 11 percent stake in the company.  Other investors include the Kraft Group, Wellington Management, and several sports leagues and franchises.

Morse, Barnes-Brown & Pendleton served as one of the counsel and advised DraftKings in connection with negotiation and documentation of the transaction. Read the full announcement.

So what’s a company to do with all this funding?  Why expand of course!  Read the latest news on how DraftKings is going global.

Congratulation DraftKings!

IC-DISC Structure Provides Permanent Tax Deferral for Exporters 07/07/2015

Posted by Morse, Barnes-Brown Pendleton in Taxation.
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Tax Attorney Robert FinkelExporters, are you taking full advantage of an important U.S. export incentive to achieve Federal income tax savings, known as the Interest Charge Domestic International Sale Corporation or “IC-DISC”? If not, this short but informative article describes how IC-DISCs generate Federal income tax savings for exporters and the basic IC-DISC requirements.

Please contact the article’s authors, Robert M. Finkel and Diana C. Española, to learn more about IC-DISCs.Tax Attorney Diana Espanola

Summer Angel / Entrepreneur Panel – Registration Open! 07/06/2015

Posted by Morse, Barnes-Brown Pendleton in Events, Venture Capital & Private Equity.
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Pitfalls, Perspectives and Possibilities of Angel Investments – Register Today!

With the proliferation of angel groups in the Boston area over the past several years, it has become increasingly challenging for entrepreneurs to navigate the process of raising money from angel investors. Better understanding the angel network and process can be extremely helpful to entrepreneurs as they go through this process.

Please join us for a lively discussion with our distinguished panel of angel investors and entrepreneurs which will address:

  • What criteria do angels use when considering an investment in portfolio companies?   How do they evaluate startup business plans? 
  • How should entrepreneurs prepare when targeting various angel groups? 
  • What common mistakes do companies make during the due diligence process?  
  • How can angels add value to their portfolio companies? 

Panelists:
Monica Brady-Myerov, Founder ListenCurrent
Paul Liberman, Co-founder, DraftKings
Ryan Moore, Partner, Accomplice (f/k/a Atlas Ventures) 
Vinit Nijhawan, Co-founder & Board Member, LearnLaunch

Get details here.

Recent Amendment to Delaware General Corporation Law 07/06/2015

Posted by Morse, Barnes-Brown Pendleton in Legal Developments, Public Companies.
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By Joe Marrow

Corporate Attorney Joseph MarrowAs expected, on June 24, 2015, Delaware Governor Jack Markell signed into law legislation amending the Delaware General Corporation Law (DGCL) that will (1) prohibit “fee shifting” provisions in corporate “charter documents” (certificate of incorporation and by-laws) and (2) permit the use of forum selection clauses in charter documents.  The amendments become effective August 1, 2015.

The prohibition against “fee shifting” provisions was adopted in response to the Delaware Supreme Court’s 2014 decision in ATP Tour, Inc. v. Deutscher Tennis Bund (ATP Tour).  In ATP Tour, the Delaware Supreme Court upheld a by-law provision that required that a party suing a nonstock corporation must pay attorneys’ fees and other costs related to intracorporate litigation.  As a result of the ATP Tour decision, many Delaware stock corporations adopted “fee shifting” provisions in by-laws.  The legislation amending the DGCL prohibits the use of “fee shifting” provisions in the charter documents of Delaware stock corporations (the new legislation does not impact the use of such provision in nonstock corporations).  New DGCL Section 109(f) provides that a certificate of incorporation may not contain any provision imposing liability on a stockholder for the attorneys’ fees or costs of any other party in connection with an “internal corporate claim.”  Similarly, new DGCL Section 109(b) provides for the same prohibition in by-laws.  New DGCL Section 115 defines internal corporate claims as “claims, including claims in the right of the corporation, (i) that are based upon a violation of a duty by a current or former director or officer or stockholder in such capacity, or (ii) as to which this title confers jurisdiction upon the Court of Chancery.”  The amendment to the DGCL does not prohibit privately-negotiated contractual fee-shifting provisions (i.e., as contained in a stockholders agreement).

In an effort to limit litigation filed in multiple jurisdictions, many Delaware corporations have adopted forum selection clauses in their charter documents.  These clauses require that litigation asserting “internal corporate claims” may be brought exclusively in Delaware courts.  The new legislation codifies the Delaware Chancery Court’s holding in Boilermakers Local 154 Retirement Fund v. Chevron Corporation in which the court upheld the validity of a Delaware corporation’s adoption of a forum selection clause in its corporate by-laws.  New DGCL Section 115 authorizes Delaware charter documents to require that “internal corporate claims” be brought exclusively in Delaware courts.  The amendment to the DGCL does not prohibit Delaware corporations from selecting a forum other than Delaware as an additional forum to hear internal corporate claims.  In addition, the new legislation does not prohibit parties from privately contracting for the selection of a forum outside of Delaware as an exclusive forum to hear such disputes.

Delaware corporations should carefully review existing charter documents to determine if amendments are warranted by the new legislation.

Any questions regarding this topic, please feel free to contact Joe Marrow.

MBBP’s Joe Martinez Elected to MITEF Board 06/25/2015

Posted by Morse, Barnes-Brown Pendleton in Attorney News, MBBP news.
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Corporate Attorney Joseph MartinezMBBP Corporate attorney Joe Martinez has been elected to the MIT Enterprise Forum of Cambridge Board of Directors. Joe takes over a seat formerly held by MBBP’s Jon Gworek, a longtime participant in MITEF.

The mission of the MIT Enterprise Forum is to inform, connect, and coach technology entrepreneurs—enabling them to rapidly transform ideas into world-changing companies, which makes it a natural fit with MBBP and our attorneys. While certainly not restricting our client base to start-ups and tech companies, we have always had a particular understanding of the needs common to them. As such, MBBP has been an active member and sponsor of MITEF since our earliest days.

MBBP is proud to continue a longstanding relationship with the Forum and congratulates Joe on his new role.

Bureau of Economic Analysis – Five-Year Benchmark Survey 06/25/2015

Posted by Morse, Barnes-Brown Pendleton in Corporate, Legal Developments.
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By Joshua E. French

frenchWhat is this?

The Bureau of Economic Analysis (BEA) regularly analyzes data related to US investment in foreign corporations.  Many large companies are specifically requested to provide data which is included in semi-annual and annual reports.  Every five years, however, the BEA produces a more comprehensive five-year benchmark survey (the last one occurred for fiscal year 2009).

How does this affect me?

At the end of last year, the BEA adopted a new rule pursuant to the International Investment and Trade in Services Survey Act, which changed the requirements for who had to report data for the benchmark survey.  Whereas prior benchmark surveys only required responses from those companies specifically requested by the BEA, the new rule mandates that U.S. Persons (including individuals, business entities, trusts, funds, etc.) that owned, directly or indirectly, at least 10% of the voting securities of a “Foreign Affiliate” (essentially any entity governed by the laws of another country) during 2014, must complete the reporting requirements for themselves and each such foreign affiliate.

What are some examples?

  • A U.S. parent entity with foreign subsidiaries.
  • The general partner of a U.S. private fund which has investments in foreign portfolio companies.
  • A U.S. person which manages an offshore private fund.

What if I don’t fill it out?

Failing to file could result in civil penalties of up to $25,000 or injunctive relief.  Willful failure to file could even result in criminal penalties of up to a $10,000 fine and imprisonment for up to one year.

What does this report entail?

Each U.S. Reporter must file one BE-10A form for its domestic consolidated business.  If the domestic business enterprise’s total assets, sales or gross operating revenues excluding sales taxes or net income after taxes exceeds $300 million (either positive or negative), you must complete the entire form.  If the U.S. Reporter doesn’t meet this threshold, it only needs to report certain sections.  The BE-10A form asks for information regarding the U.S. Reporter’s business sector, sales and employment information, contract manufacturing services, financial data (limited if the $300 million threshold is not met, more significant if the threshold is met) and import and export data.

What about for the foreign affiliates?

For each “Foreign Affiliate” for which the U.S. Reporter is required to provide data, you must file a Form BE-10B, BE-10C or BE-10D.

  • You file a Form BE-10B if the Foreign Affiliate (i) is majority-owned by the U.S. Reporter AND (ii) its total assets, sales or gross revenue (excluding taxes) or net income (after foreign income tax) exceed $80 million (positive or negative).
  • You file a Form BE-10C if the Foreign Affiliate (i) (1) is minority-owned by the U.S. Reporter AND (2) its total assets, sales or gross revenue (excluding taxes) or net income (after foreign income tax) exceed $80 million (positive or negative); OR (ii) if its total assets, sales or gross revenue (excluding taxes) or net income (after foreign income tax) exceeds $25 million but is less than $80 million (positive or negative); OR (iii) if the Foreign Affiliate is the parent of another Foreign Affiliate which has to file a Form BE-10B or BE-10C.
  • You file a Form BE-10D if the Foreign Affiliate doesn’t meet any of the above criteria.

The BE-10B is extremely detailed, seeking information regarding location, when it was formed, the ownership breakdown, what industries it is involved in, financial and operating data, and investments and transactions between the U.S. Reporter and the Foreign Affiliate.  The entire form is 24 pages and you would have to complete one form for each Foreign Affiliate that meets the criteria set forth above.

The BE-10C is slightly less burdensome (16 pages) and covers much of the same information as above, with slightly less detail.

The BE-10D is very straightforward.  A U.S. Reporter can list every Foreign Affiliate which meets the criteria for BE-10D on one form and only needs to list for such affiliate its name, location, industry code, number of employees, the U.S. Reporter’s ownership percentage, total assets, total liabilities, gross revenues, net income or loss after income tax, and any intercompany debt between the Foreign Affiliate and the U.S. Reporter.

Is this confidential?

Yes.  The BEA is not permitted to identify the individual respondents to the Benchmark Survey and may not share responses with other government agencies (including the IRS).  The information provided may only be used for analytical and statistical purposes.

When is it due?

The deadline is June 30, 2015.  There is an opportunity to request an extension through no later than August 31, 2015, but the request must be filed by June 30, 2015.

For more information contact Josh French.

M&A Video Clip: Investment Banker Engagement Letters 06/22/2015

Posted by Morse, Barnes-Brown Pendleton in Corporate, Legal Developments, M&A, New Resources.
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The second video in MBBP’s M&A Clip Series addresses the necessity of Investment Banker Engagement Letters. Corporate attorney Shannon Zollo gives a brief overview.

Catch Shannon next week discussing another common issue in M&A transactions: Cash vs. Equity

SSZvideo

Did you miss last week’s topic? No problem. Check our archive.

Insight Venture Partners Leads $92 Million Financing in Virgin Pulse 06/22/2015

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VirginShortly after Virgin Pulse launched its next generation workforce well-being platform, the company completed a $92 million funding transaction. Insight Venture Partners led the round of funding, along with existing investor Virgin Group.

Joe Martinez was the lead corporate attorney on MBBP’s team, which also included attorneys Shannon Zollo, Diana Española, Jonathan Calla, David Dinwoodey and Stan Chalvire.

Morse, Barnes-Brown & Pendleton serves as counsel to Virgin Pulse, and advised it in connection with the structuring, negotiation and documentation of this transaction.

More information on the transaction can be found here.

Sports Psychologist and Author George Mumford on NPR’s OnPoint 06/19/2015

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Mindful AthleteSports psychologist and author George T. Mumford was a guest recently on NPR’s OnPoint program discussing mindfulness and meditation in the NBA as a competitive edge. Mumford, who has served as “meditation master” to superstars such as Kobe Bryant, Shaquille O’Neal and Michael Jordan, is the author of a new book, The Mindful Athlete Secrets to Pure Performance.

Listen to the full broadcast at OnPoint Radio at this link:
Zen and the Art of the Free Throw

Mumford is a trademark client of Morse, Barnes-Brown & Pendleton. Congratulations George on your new book!

To learn more about the book or to purchase online, visit George’s website mindfulathlete.org.

Hot Off the Press: Basic Tax Issues In Choosing a Business Entity 06/18/2015

Posted by Morse, Barnes-Brown Pendleton in Legal Developments, New Resources, Taxation.
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Tax Attorney Robert FinkelHot off the press! MBBP tax attorneys Robert Finkel and Diana Española recently released an updated version of their article entitled “Basic Tax Issues In Choosing a Business Entity”. This article provides insight on numerous factors to consider when choosing to start a business as a C corporation, S corporation or LLC.

The full article can be accessed here.

Please feel free to contact Robert and Diana directly with any questions on this topic.Tax Attorney Diana Espanola

MBBP Client OtoSense Wins Red Herring Top 100 Award 06/16/2015

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downloadMBBP Client OtoSense, developer of applications based on a new generation of sound recognition engines, was among the Top 100 North America award winners selected by Red Herring.  Each year Red Herring’s editorial team analyzes hundreds of privately financed companies with cutting edge technologies and evaluates them on quantitative and qualitative criteria.  Companies recognized in the past include Facebook, Twitter and Google, just to name a few.

Congratulations OtoSense!

VIDEO: Common Issues in M&A Transactions: Deal Structure 06/15/2015

Posted by Morse, Barnes-Brown Pendleton in Corporate, Legal Developments, M&A, New Resources.
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Head on over to MBBP’s YouTube page and enjoy the 1st in our 2015 M&A Clips Series. Attorney Scott Bleier discusses Deal Structure and other common issues in M&A transactions, as well as practical information on how to avoid complicated, expensive and time-consuming pitfalls.

Make sure to visit the M&A Blog too. You won’t want to miss Video 2 – Investment Banker Engagement Letters!

Also – have you registered for next week’s seminar: Tax Issues in M&A Transactions? Space is filling quickly!

SRBvideo

MBBP Attorneys Deliver Live Broadcast for myLawCLE 06/15/2015

Posted by Morse, Barnes-Brown Pendleton in Attorney News, Events, M&A.
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IMG_1232myLawCLE develops hundreds of new CLE programs each year and covers a wide-variety of legal topics from civil litigation to criminal law to federal programs.

MBBP Attorneys Mark J. Tarallo and Robert M. Finkel spoke today for myLawCLE. The topic of discussion was LLCs vs S-CORPs: Tax Considerations, Non-Tax Differences & Common Mistakes to Avoid. The live broadcast also included 1 hour of ethics.

If you didn’t have a chance to sit in on the broadcast (or even if you did) and would like to learn more, you can meet both Mark and Robert on June 26th where they, along with a distinguished panel, will discuss Tax Issues in M&A Transactions.

Visit our event page for more information.

FTC Reaches Settlement in First Crowdfunding Case 06/15/2015

Posted by Morse, Barnes-Brown Pendleton in Games & Interactive Entertainment.
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It took the Federal Trade Commission (“FTC”) less than 48 hours to settle its first ever crowdfunding case against a deceptive Kickstarter campaign, The Doom That Came to Atlantic City!

According to the FTC’s complaint, project creator Erik Chevalier raised more than $122,000 from 1,246 backers to purportedly “develop, produce, and distribute” a board game entitled The Doom That Came to Atlantic City.

Chevalier launched his Doom campaign in May 2012 with a funding goal of $35,000. Only 30 days later, Chevalier nearly quadrupled his goal –“But, after 14 months, Chevalier announced that he was cancelling the project and refunding his backers’ money.”

Chevalier did not provide refunds to his backers. According to the FTC’s complaint, “Chevalier spent most of the money on unrelated personal expenses such as rent, moving himself to Oregon, personal equipment, and licenses for a different project.”

Under the settlement order, Chevalier is required to honor stated refund policies and prohibited from making misrepresentations about any future crowdfunding campaign, including:

(a) the purposes for which funds raised from consumers will be used;

(b) that by making a contribution, consumers will receive a specific good, service, or other reward deliverable;

(c) the performance, efficacy, nature, or central characteristics of such good, service, or other reward deliverable; or

(d) the qualifications or expertise of any person associated with the crowdfunding campaign.

Although the settlement order also imposes a $111,793.71 judgment against Chevalier, project backers are unlikely to see any return on their contribution – at least for the foreseeable future – as the fine has been suspended “due to Chevalier’s inability to pay.”

The FTC’s action against Chevalier highlights the shortcomings of self-regulation. Kickstarter, and others like it, provide project backers with limited protection, generally dictated by the site’s terms of service.

“Many consumers enjoy the opportunity to take part in the development of a product or service through crowdfunding, and they generally know there’s some uncertainty involved in helping start something new,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “But consumers should be able to trust their money will actually be spent on the project they funded.”

In its press release, the FTC provides:

This case is part of the FTC’s ongoing work to protect consumers taking advantage of new and emerging financial technology, also known as FinTech. As technological advances expand the ways consumers can store, share, and spend money, the FTC is working to keep consumers protected while encouraging innovation for consumers’ benefit.

The Commission vote authorizing the staff to file the complaint and proposed stipulated order in federal court was 5-0.

For Kickstarter campaigners, an important lesson is to be learned – keep your promises when crowdfunding. Use funds collected for a specific purpose only for that purpose. Provide refunds when necessary and rewards when promised. Or be prepared to suffer the potential legal consequences.

FitLinxx’s Wearable Device Expected to Launch in the Fall 06/15/2015

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MBBP Client FitLinxx may soon have athletes monitoring their heart rate, physical activity, temperature and sleep with the AmpStrip.  The product campaign on Indiegogo has proven its place in the market by generating nearly $500,000 in pre-sales since late February.

FitLinxx is leading the industry by developing wellness applications, activity monitors and health tracking devices, and with consumers taking fitness to a new level – think 10,000 steps a day – they don’t want to stop there!  See how they’re exploring the use of the device in a broader range of health care applications here.

Just in time for football season!

MBBP’s Joe Martinez to Discuss Fundamentals of Raising Start-Up Capital Through the Internet – Upcoming MCLE Program 06/12/2015

Posted by Morse, Barnes-Brown Pendleton in Corporate, Events, Public Companies.
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Corporate Attorney Joseph MartinezMBBP Corporate Attorney Joseph R. Martinez will be among the faculty presenting at MCLE New England‘s upcoming program “Fundamentals of Raising Start-Up Capital Through the Internet” on Thursday, June 18th from 8:00 am to 12:00 pm.

In this new program, leading practitioners in the field will analyze the legal and business points of internet-based fundraising in a small, highly-focused, fast-paced conversational setting.

To learn more or to register for this event, please visit MCLE.

For more information, please feel free to contact Joe Martinez directly.

Stories from Formation to Exit – One Week from TODAY! 06/11/2015

Posted by Morse, Barnes-Brown Pendleton in Events, Venture Capital & Private Equity.
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TiE BostonJoin TiE-Boston serial entrepreneurs Deepak Taneja and Gaugarin Oliver for a fireside chat as they discuss the life cycles of their companies from formation to acquisition.

Hear two success stories; get two perspectives. One entrepreneur raised venture capital and the other grew his company organically. One offered a IT security solution and the other a marketing platform. Both of their companies were acquired by industry leaders.

Come to hear their stories and participate in an interactive Q&A session on important legal issues related to startup companies.
Recent data related to current trends in early-stage venture capital financings will also be presented and discussed. 

Moderated by MBBP’s Scott Bleier.

Limited Seating – Register Today!

Augmented Reality Startup Brings “Holodeck” Effect to Architecture 06/09/2015

Posted by Morse, Barnes-Brown Pendleton in Client News.
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It sounds like something out of Star Trek where you can place yourself in an augmented reality. Only this time it’s not on the holodeck, but on an iPad or iPhone. MBBP client, Building Conversation, a Boston-based startup was featured in the Boston Business Journal this week for its app (called arc) that places an architectural design rendering into a “live view” of the environment.

“In effect, you get to see and walk around a full-scale hologram of the proposed architecture through the iPad,” said Building Conversation’s CEO Terrence Masson, who founded the company with George Thrush, the director of the School of Architecture at Northeastern University.

Masson, a former professor and head of animation at Northeastern’s College of Arts, Media and Design who started working on the technology as part of a Capstone project at Northeastern about three years ago, is quoted saying, “It’s going to be a disruptive business.”

See full BBJ article here. Learn more at buildingconversation.com.

Live long and prosper!

MBBP Has Busy Month with a Number of Noteworthy Deals 06/04/2015

Posted by Morse, Barnes-Brown Pendleton in Client News, Deal News, M&A.
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VirginMBBP Client Virgin Pulse received $92 Million in venture financing from Insight Venture Partners enabling Virgin Pulse to accelerate the growth of the market-leading products that replenish and recharge employees by providing tools that build better habits.

imagesIn addition Serruya Capital Partners, a Toronto based private equity firm, acquired MBBP Client Tivoli Audio, a global premium audio products company. This complex transaction required engagement with foreign legal counsel in Europe.

Capping off the month was the acquisition of MBBP Client Diversified Project Management, a construction management services firm to STV, a national construction management firm.M0785161

Shannon Zollo was the lead corporate attorney on MBBP’s team.

Morse, Barnes-Brown & Pendleton served as counsel to all three clients, and advised them in connection with the structuring, negotiation and documentation of these transactions.

To learn more, read the full press release.

MBBP Attorneys to Host Office Hours at TechSandBox 6/4/2015 06/03/2015

Posted by Morse, Barnes-Brown Pendleton in Attorney News, Corporate, Events.
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IP and Technology Licensing Attorney Howard ZaharoffOn June 4th MBBP Attorneys Howard Zharoff and Daniele Ouellette Levy will host Office Hours at TechSandBox providing legal guidance on topics that include copyright, trademark and licensing work. These pro bono sessions give you access to experts in topics such as intellectual property, business formation, benefits, taxes, marketing, sales  funding, IT and technology commercialization. Access is offered to Members and Non-members as space allows.

Corporate Attorney Daniele Ouellette LevySign up today to reserve your time slot by visiting TechSandBox!

 

 

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