Form Restricted Membership Interest (Profits Interest) Grant Agreement

This Form Restricted Membership Interest (Profits Interest) Grant Agreement has been prepared by Forefront Law Group for general information purposes only and does not constitute advertising, a solicitation, or legal advice. The information provided in this document and this website should not be relied upon without seeking legal advice from a licensed attorney in the reader’s state. Neither the transmission of this document nor the transmission of any information contained in this website is intended to create, and receipt hereof or thereof does not constitute formation of, an attorney-client relationship. You should never delay seeking legal advice, disregard legal advice, or commence or discontinue any legal action because of information on this website.

Additionally, the information contained in this website is provided only as general information and may or may not be correct or complete or reflect the most current legal developments. Forefront Law Group expressly disclaims all liability in respect to actions taken or not taken based on any or all the contents of this website. Furthermore, Forefront Law Group does not necessarily endorse, and is not responsible for, any third-party content that may be accessed through this website.

If you wish to find out more about the information in the materials published, please contact the Forefront Law Group.

Open Source Restricted Unit Grant Agreement

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Client Action Alert for All Employers: ACA Notices Must Be Sent by October 1 to Employees; ACA Offers Tax Credits to Small Employers Who Provide Health Care Benefits

The Patient Protection and Affordable Care Act (“ACA”) passed in 2010 has survived scrutiny and remains in effect. ACA is a complex statute with implications for almost all employers and guidance and updates are emerging almost daily from the federal government. Employers won a reprieve this summer, when the federal government announced they must provide coverage, or face penalties, for workers beginning in January 2015, instead of the date initially contemplated, January 2014. In the interim, small employers in particular need to contemplate and answer the following preliminary questions about the ACA:

All employers with one or more employees must provide notice on or before October 1, 2013 of the implications of ACA for them as employees and individuals and of their right to access coverage through the new state and federal health care exchanges.

A model notice may be found at http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf.

1. Does ACA require me to offer insurance? If you are an employer and have 50 or more full-time or full-time equivalent employees, you must either offer insurance, pay a certain amount to employees so that they can purchase their own, or pay a penalty (the “play or pay” rule). For purposes of counting, full-time employees are those who work at least a thirty-hour workweek or the equivalent thereof (there is a complex formula for counting part-time, temporary and seasonal W-2 employees, who may be required to be counted as a fraction of a full-time employee).

2. If I offer health insurance to my employees, does it meet the minimum value requirement? The ACA provides that plans must provide a minimum value to employees in order to avoid paying a penalty. To meet this requirement the plan (not the employees) must cover at least 60% of allowable costs. Any amounts paid by employees, including copayments and deductibles, are included in this calculation.

3. If I fail to properly insure employees under the ACA, what is the penalty for not offering minimum value benefits plan? The penalties range from $3,000 for each underinsured full-time employee to a maximum of $2,000 for each full-time employee (except the first 30). For more information on penalties and how they affect your particular company, please contact us.

4. Can I satisfy the minimum value requirement by paying a lump sum and letting my employees purchase their own insurance on public or private exchanges? ACA creates a federal exchange and state based exchanges as well as Small Business Health Options Program (“SHOP”) exchanges, where small business with up to 100 employees can purchase qualified coverage (different from the state and federal exchanges where individuals whose employers do not provide coverage may shop). “Many employers are beginning to offer lump-sum payments to employees so that they may purchase qualifying insurance on exchanges, in lieu of offering it themselves. There is a significant movement of employers considering Private Health Exchanges as the solution to the Affordable Care Act. Think of a Private Health Exchange as a Defined Contribution model for health care coverage, meets technology and in most cases, a Wellness strategy. This is the new world of consumerism in employer sponsored Employee Benefits!” says Rob Kreager of Willis, an insurance brokerage firm in the health benefits industry. The IRS has just issued Notice 2013-54 detailing the application of the ACA to this type of arrangement.

5. Is there an upside to offering benefits or allowances to help employees purchase insurance? The ACA creates tax credits for eligible small employers (25 or fewer employees and average wages under $50,000) to encourage the extension of health care benefits, and includes reporting and other requirements not addressed here.

6. If I do offer insurance benefits, are they subject to the “Cadillac tax” on premium plans, and if so, should I change these benefits? If so, what resistance might I receive from, and what other compensatory pay should I offer to, employees? Beginning in 2018, health care premiums above a certain threshold will be taxed at the rate of 40% for premiums above $10,200 for individuals, and $27,500 for families. Health care premiums have been a traditional way to compensate employees on a tax-free basis, and the loss of premium benefits will potentially cause some employees to seek higher wages or other benefits.

7. Do my insurance policies cover me adequately for new potential claims and losses that may be created by or arise from ACA (or DOMA, discussed in next client alert by Forefront)? Carefully review your policies – from liability to D&O to Employment practices to Errors and Omissions insurance – and consult with counsel and your broker to ensure you are protected.

8. Must I do anything else? Among other things, the ACA also requires information reporting (pursuant to section 6055) by self-insuring employers, and by certain employers with respect to the health coverage offered to their full-time employees, but these requirements have been postponed to 2015.

The above is a brief summary of some of its key provisions and it is not intended to be comprehensive or construed as legal advice. If you seek assistance in understanding how the ACA affects your business, please feel free to contact us and we will help you understand the implications of ACA as it applies to your business.

* * * *
Allison Walsh is Forefront’s labor and employment specialist, having practiced in the area for over 20 years. Forefront provides its clients with responsive, practical advice on labor and employment matters. Allison has been with Forefront since its inception in 2011. For more information contact Allison at awalsh@the-forefront.com or Jason Gabbard at jgabbard@the-forefront.com.

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Forefront Law Becomes First Law Firm to Accept Bitcoin Payments

Innovative New York City law firm, Forefront Group Ltd, recently became the first prominent firm to accept Bitcoin for payment of legal fees. The new chapter in legal billings opened on June 25, 2013, with the launch of Forefront’s new web site.

Forefront itself was launched two years ago with a primary focus on serving growth companies from start-up through the entire company life cycle. Forefront’s highly experienced lawyers bring practical guidance and deep legal expertise to their clients. Nearly 50 growth companies now rely on Forefront as their “general counsel” providing strategic and legal advice from an experienced team of legal experts and entrepreneurs.

“As a former econ prof, I find the Bitcoin story irresistibly fascinating,” explains founding partner Don Carlson, who taught economic theory at Williams and Harvard and worked at Goldman Sachs before starting Forefront. “Bitcoin is rapidly establishing itself as an important new economic reality, with major implications for global markets. We want to be ‘on the Forefront’ of shaping the development of virtual currency. The best way for us to be on the cutting edge is for us to accept Bitcoin ourselves — so we have a real time feel for the practical pros and cons of this emerging currency.”

Forefront advises clients ranging from private equity firms to angel investors to entrepreneurs, breaking the traditional law firm mold by using novel pricing structures, creative lean staffing, and a flat team of senior expert lawyers. “As an entrepreneurial firm started just two years ago, we are in the start up game ourselves rather than advising from the sidelines,” says Founding Partner Jason Gabbard (ex-Cravath). “Together with scores of our clients, we understand the key pain points of the start-up community. Most important, we shoulder the responsibility for efficient staffing and delivery of legal services, so our clients don’t have to. The Forefront model brings certainty to legal fees and shifts the burden of worrying about cost from our clients to ourselves.”

For more information, contact Don Carlson or Jason Gabbard via info@the-forefront.com.

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In VC, Not Every Founder Will Be a Zuckerberg

It’s the dream of entrepreneurs to sell their company for millions of dollars. But the dirty secret of venture capital is that the dream can be dashed as the venture capitalists make millions in a sale, leaving the founders with nothing.

http://dealbook.nytimes.com/2013/04/30/in-venture-capital-deals-not-every-founder-will-be-a-zuckerberg/

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Forefront advises Trident on new fund formation

Forefront Law Group has advised investment manager client Trident Advantage Group on the formation of new investment fund named Trident Advantage Fund LP. This will be the first independent fund formed and managed by Joel Groen and Marvin Kurtz, both veterans of Gargoyle Strategic Investments.

The new fund will identify and exploit opportunities created by systemic mispricing of option spreads and volatility.

Forefront provides comprehensive services to fund sponsors in forming, structuring, raising funds for and managing private equity funds, venture capital funds, hedge funds, funds-of-funds and other pooled investment vehicles. On the investment side, we advise institutional and high net worth investors making investments in funds, co-investment vehicles and other vehicles. We have represented fund sponsors and investors in connection with funds in all major asset classes, including venture capital, traditional private equity, real estate, tax-based, distressed debt, and renewable energy.

Attorneys Joe Lonetto and Tom Morgan led the mandate on behalf of Forefront.

Jason Gabbard, co-founder of Forefront, notes “Forefront will disrupt this market. Much of the legal work in this arena has been commoditized. For that reason, we can shave double digit percentages off the fees of our competitors. And with seasoned lawyers drawn from the likes of Schulte Roth and Morgan Lewis, we have the experts to add value where it counts.”

For more information contact Jason Gabbard at 646.290.9001.

New York, New York
29 January 2013

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Forefront adds Farzam Kamel

“We are very excited that Farzam has decided to join us at the forefront”, said Forefront co-founder Don Carlson. Mr. Kamel previously practiced at Paul Hastings, LLP and co-founded Edition01, a successful start-up.

Mr. Kamel stated, “I share the partners’ vision for developing a preeminent corporate boutique. I love the fresh approach to staffing, the use of technology and the fantastic client base. I think that Forefront provides the ideal platform for me to leverage my skills and network to build a remarkable business.” He also said, “I am looking forward to being at a firm that is acutely focused on its corporate practice and is not saddled with the vestiges and inefficiencies prevalent in big-law.”

Co-founder Jason Gabbard notes “Our expansion is not done yet. We’ll be adding more lawyers in the coming months and we plan to continue taking market share from our competitors.”

Over the previous 12 months, Forefront has added four new lawyers to its growing practice, including Kamel. Matt Weinbaum, from Chadbourne & Parke, joined the firm in August, Rick Bigelow, a seasoned IP lawyer, came on board in mid summer and senior lawyer Tom Morgan joined the firm in the spring of 2012.

Gabbard goes on to note, “Having young lawyers of the stature of Farzam and Matt is a great, positive step for us here at Forefront. These are super smart, young, hungry lawyers that will be the nucleus of the next generation of Forefront.”

Forefront Law Group is a unique and innovative New York City-based corporate law firm with expertise in venture capital, private equity, securities, M&A, banking and real estate.

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Leading VC and M&A lawyer Jason Gabbard advises AxialMarket on $6.5 million Series A round led by Redpoint Ventures.

New York, NY (PRWEB) May 22, 2012

Jason Gabbard, a leading venture capital and middle market M&A lawyer in New York City recently advised AxialMarket on $6.5 million Series A round led by Redpoint Ventures. AxialMarket deploys a disruptive technology on its platform to help private companies manage and execute mergers and other financial transactions. Redpoint Ventures led the round, and was joined by family office Cove Point Holdings and return backers First Round Capital and Windcrest Partners.

The Forefront Law Group was founded by Cravath, Swaine & Moore alumnus Jason Gabbard, along with Don Carlson, who formerly held senior positions at Goldman Sachs and Axiom. The firm focuses on small and medium size enterprises, as well as the institutions that finance and advise them. Forefront is truly a unique firm. Gabbard notes “Our clients love our innovative approach to pricing, and the inversion of BigLaw’s staffing model. We staff deals and matters with seasoned attorneys who actually do the work, dispensing with the hordes of inefficient associates and the costs of training them.”

Gabbard and Carlson are also active angel investors.

AxialMarket was founded in 2010 by Peter Lehrman, who had worked in private equity with SFW Capital Partners and was part of the founding team at Gerson Lehrman Group.

 

(c) 2012 The Forefront Group Ltd.   Attorney Advertising. Prior results do not guarantee a similar outcome.

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Forefront Launch Press Release

1 March 2012

The Forefront Law Group formally launched its entrepreneurial law practice with more than two dozen initial clients, including venture stage and growth companies in technology, software and social media, luxury and retail, real estate, and renewable energy.  On the asset management side, Forefront’s client base spans angel and venture investors, a global investment bank, and several innovative hedge funds and investment managers.

Forefront is a practice of legal experts focused on the needs of entrepreneurs, growth companies, and the investors who finance them. With eight senior lawyers – and growing rapidly – Forefront serves as the sole general counsel for 13 corporate entities, providing the full panoply of legal services for these entrepreneurial clients. “Through Forefront we get all the services that an in-house general counsel would provide, plus access to all the specialized legal advice we need in employment, commercial contracts, technology, and intellectual property. Rather than a single in-house counsel serving as concierge to expensive outside law firms, Forefront delivers it all in one package,” commented John Cooper, CEO of BrightWire, a global foreign language news summary service.  “When we secured large scale venture capital funding from Matrix and Silicon Valley Bank last summer, Forefront handled the entire transaction for Brightwire, from inception through negotiation and closing. As deal lawyers, I would put the Forefront team up against any firm in the country.”

Only months into this new form of practice, Forefront has already completed four venture capital transactions, with six more in the works. Forefront’s unique model deploys a team of seasoned, mid-career experts to handle client demands efficiently. Forefront lawyers enjoy doing the work themselves, without the added expense of training new associates or churning docs through a pyramid structure. Without the need to support cadres of associates and their learning curves — and extremely low overhead — Forefont operates like a start up company itself and delivers high value legal services at reasonable cost.

Forefront’s founding partner, Jason Gabbard, a veteran of Cravath Swaine & Moore, had led scores of major securities, M&A and real estate transactions.  He also led an internal legal team for Morgan Stanley’s London-based private equity funds (traditional PE, real estate and infrastructure).  Subsequent to Morgan Stanley, Jason has been representing entrepreneurial clients for four years in independent practice.  He has completed a dozen major venture capital transactions (both equity and debt) and has represented his clients in extensive negotiations with investors, vendors, and clients.  Jason also has significant experience with complicated transactions in the fashion and music industries.

Founding partner Don Carlson was a senior executive in the legal and investment banking divisions at Goldman Sachs & Co.  He also headed the financial institutions practice at Axiom Legal during a phase of unprecedented growth.  After rounding out his legal training as a law clerk on the First Circuit Court of Appeals and as a trial lawyer at Williams & Connolly in Washington, DC, Don turned to the business side of the legal profession. He has been a CEO or senior officer of four growth companies himself (Axiom Legal, Corporate Executive Board, Business Intelligence Advisors, Matterhorn Transactions) and serves on the boards of several others as an advisor and active angel investor.  Don has specialized in complex commercial negotiations since his law school days working with Professor Roger Fisher (author of Getting to Yes) and the Harvard Negotiation Project.

Forefront’s founding team also includes a number of other senior lawyers including the former general counsel of Calvin Klein, Kinkos, and Nexxar; an experienced commercial lawyer from Morgan Lewis; and a tax expert from BCRS; and a fund formation expert from Fried Frank. The team is growing at a steady clip in response to the specific legal needs of Forefront’s expanding client base.  As Carlson puts it:  “The way we practice law is shaped by the fact that every one of our founders and lawyers is an entrepreneur at heart. We have a passion for problem-solving and finding ways to help our clients grow their business.”

Forefront recently relocated to larger offices on the corner of Wall Street in the financial district of Manhattan.  The firm expects to continue growing at a rapid clip.  As Gabbard notes: “We aim to grow aggressively over the coming three years and I fully expect to quadruple revenues and client base during that time period.  I wouldn’t be surprised to see Forefront offices in both San Francisco and London in the near future.”

The Forefront Model

Forefront is a firm founded on acute focus to both client satisfaction and low overhead.  Forefront currently serves as exclusive general counsel for more than a dozen companies, providing the full panoply of legal services for these entrepreneurial clients. The firm eschews hourly billing whenever possible and actively encourage clients to opt for project-based or flat fee pricing.  Forefront willingly shoulders the burden of efficiently managing legal costs on behalf of its clients.

Forefront’s preferred structure is to set a fixed monthly fee for comprehensive legal service. For less than the cost of one general counsel, clients receive all the services that a general counsel would provide along with access to all the specialized legal advice they require.  They do not have to resort to outside counsel to get the actual legal work done. For companies on the cusp of needing to hire an in-house lawyer, this solution is irresistible.

Some clients opt for flat fee quotes on legal projects in order to scope out the work needed in discreet increments.  Forefront welcomes performance-based fees to more perfectly align the firm’s interests with those of its clients. In every case, Forefront strives to find creative ways to move away from the outmoded, unimaginative and inefficient system of billable hours.

Representative transactions in the past year include:

  • Acted as lead counsel for Brightwire in connection with $9.3M series B round led by Matrix Partners. Deal involved LLC to C Corporation conversion, as well as tax-free spinoff of one division.  (Forefront also has been engaged as counsel for the sale of the spinoff company.)
  • Advised management team of NY-based luxury goods and apparel company in connection with management buyout of the business from its original parent company, a multi-billion dollar publicly traded company.
  • Acted as lead counsel for NY-based financial technology company in connection with $2.5M Series A round co-led by First Round Capital and Windcrest Ventures, a family office active in the east coast venture capital arena.
  • Acted as lead counsel for New York-based financial software company in connection with $1M convertible note offering.
  • Advised investment group in connection with both Series B and Series C investment rounds in OnDeck Capital, with First Round Capital, Village Ventures, Ron Conway and Khosla Ventures all involved in the transactions.
  • Advised NY-based social media company in connection with $1.5M seed round led by Tudor Investments.
  • Represented Brightwire in significant venture debt financing with Silicon Valley Bank.
  • Served as counsel for management team in complex negotiated reorganization of Lincoln Square Advisors (opposite Akin Gump and Sidley Austin).
  • Currently advising Brazilian investment manager in connection with equity investment / joint venture with multi-billion dollar US insurance company.
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NLRB Rules Global Prohibition of Class Actions in Arbitration Agreements Unenforceable

The National Labor Relations Board (“NLRB”) recent ruling in D.R. Horton, Inc. and Michael Cuda makes clear that mandatory arbitration agreements which prohibit employees from asserting class actions in court as well as in arbitration violate the National Labor Relations Act (“NLRA”).

The Mutual Arbitration Agreement (the “Agreement”) contemplated in D.R. Horton, Inc. entirely waived an employee’s ability to resolve an employment-related dispute with D.R. Horton (the “Company”) in court and required resolution of disputes through arbitration. In addition, the Agreement restricted the arbitrator to only hearing individual claims and expressly prohibited the arbitrator from consolidating claims or constructing a class or collective action.  New and current employees were required to enter into the Agreement.

In 2008, a former employee, Michael Cuda, notified the Company that he intended to arbitrate a nationwide class action, based on the allegations that the Company improperly classified superintendents as exempt from the Fair Labor Standards Act.  Mr. Cuda had been a superintendent at the Company from July 2005 to April 2006 and had signed the Agreement, as he was required to do.  When the Company attempted to bar Mr. Cuda’s action pursuant to the Agreement, Mr. Cuda’s attorney filed an unfair labor practice charge with the NLRB.

The NLRB had to consider whether the Agreement violated Section 8(a)(1) of the NLRA, which prohibits employers from interfering with employee rights under the NLRA.  Such interference is deemed an unfair labor practice.  The NLRB determined that the employee’s rights contained in Section 7 to “engage in concerted action for mutual aid or protection” were subjected to inappropriate interference by the Company, thereby violating Section 8(a)(1).  The NLRB also determined that its decision was consistent with the statutory provisions of the Federal Arbitration Act.

In order to provide certainty, the NLRB clearly set forth at the end of its decision what class-action rights may be restricted by an employment arbitration agreement. The NLRB explained, “we hold only that employers may not compel employees to waive their NLRA right to collectively pursue litigation of employment claims in all forums, arbitral and judicial.”  In other words, as long as an arbitration agreement allows employees to pursue class-action claims in at least the arbitral or judicial forum, employee rights under Section 7 the NLRA will not be violated.

It is strongly advised that employers review their employee arbitration agreements to determine whether the agreements permit employees to bring class-action claims in court or through arbitration. If so, the agreements are likely still enforceable. However, if the agreements entirely disregard an employee’s ability to bring a class or collective action, the enforceability of the agreement is likely in question, and the agreement should be reconsidered with the assistance of legal counsel.

All comments contained in this alert are subject to change pending an appeal of the NLRB decision in D.R. Horton to the U.S. Court of Appeals.

This material is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This communication may be deemed advertising under applicable state laws. Prior results do not guarantee a similar outcome.

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