GT’s Barry Schindler Speaks Before Israel In-House IP Forum

Posted in Event, Intellectual Property, Israel

Earlier this week, the GT Tel Aviv office hosted 20 members of the Forum of In House IP Managers and Counsel, Israel, for an in-depth seminar about recent developments in the United States concerning obviousness rejections and other matters.

Barry Schindler, co-chair of the firm’s Global Patent Prosecution Group and member of Greenberg Traurig’s Israel Practice, led the event which attracted IP specialists from leading companies in Israel, both local and international.

Co-Chair of the Israel Practice, Bob Grossman, attended the seminar and delivered welcome remarks.

Barry Schindler and Bob Grossman

Barry Schindler and Bob Grossman

The seminar took place as part of the annual IP Best Practices Conference which Barry Schindler will be co-chairing in 2017. The conference is a top IP event in Israel and attracts a large crowd of IP experts from Israel and abroad.

Invitation to Attend September Berlin Tech M&A Update

Posted in Corporate, Corporate & Securities, Event, FinTech, Global, Israel, Mergers & Acquisitions

Software and Technology companies saw significant volume and valuation strength last year. But what impact will Brexit have on Tech M&A? What are the eight stages to get an optimal outcome in a M&A process? What are real deal disasters and how can you avoid them? Get an update on the latest trends, deal metrics and valuations for software companies by joining us for this Tech M&A Update especially designed for investors, founders, owners and executives of software, IT and related technology companies.

Tech

Thursday, September 29, 2016 9:00 a.m. – 11:00 a.m. (CET) Registration: 8:30 a.m. – 9:00 a.m.
Greenberg Traurig Germany
Potsdamer Platz 1 10785
Berlin, Germany

Agenda

  • Tech M&A Overview: Market Perspective
  • The impact of Brexit on Tech M&A in Europe
  • M&A Activity: Valuations and Structures- Recent Transactions in the DACH region
  • Optimal Outcome: 8 Required Stages of the M&A Process
  • Avoiding Deal Disasters / Due Diligence Landmines
  • Q&A

The conference is initiated by Corum Group International and supported by Greenberg Traurig Germany.
Please register no later than September 21, 2016 by emailing events@gtlaw.de to attend the conference as our guest for free.
(The general registration fee for the conference is 75,00 €)
View online invitation

Israel Posts Information and Schedule Regarding Upcoming Bidding Round for New Oil and Gas Exploration Licenses

Posted in Environmental, Israel

Israel’s Ministry of National Infrastructure, Energy and Water Resources has posted on a dedicated website new information concerning the first round of bidding for offshore oil and gas exploration activity.  Israel’s Exclusive Economic Zone (EEZ) in the Mediterranean Sea is divided into 69 exploration areas or blocks.  The Ministry plans to conduct successive rounds for new exploration areas in the EEZ.  In the first round, the Ministry will offer for competitive bidding 24 blocks that are located in the central part of the offshore area. The Ministry states that the 24 blocks were chosen based on seismic and geologic data indicating a high potential for promising geological structures; some of the blocks are adjacent to the substantial deep water gas discoveries in Israel’s EEZ, including the Tamar and Leviathan fields.  The Ministry’s website offers a map showing Israel’s offshore EEZ, including the blocks to be offered for bidding and blocks covered by existing leases and licenses.

The bid documents for the upcoming round contain all the required information for bidding, including a description of the offering, the required qualifications and assessment criteria, license model, instructions for submission and the relevant forms and tables for submitting an application.  Potential bidders can obtain the tender documents by contacting Dina Levant, Coordinator, Foreign Relations and Information, Natural Resources Administration, via email at dinal@energy.gov.il or phone (972-2-5316042).  Interested parties wishing to remain initially anonymous may also acquire the tender documents through legal counsel.   

The Ministry also published the following bid timeframe:

Publication of tender documents – Nov. 15, 2016

Roadshow event in Houston – November 2016 (date TBD)

End of Q&A – Jan. 31, 2017

Closing Date – March 28, 2017

The Ministry also states that it has prepared a data package for potential bidders containing comprehensive information on the Levant Basin’s geology including highlights of the Petroleum System and Basin Analysis study performed by Beicip FranLab in 2015.  Importantly, the Ministry states on its website that purchasing the tender documents, including the data package, is a pre-condition for participation in the bidding round.  Details on the cost of the package can be obtained from Dina Levant at the same contact information noted above.  The data package includes, among other things:  (1) information from 19 wells that were drilled offshore Israel between 1970 and 2013 (list of wells and location map); (2) 2D seismic data acquired between 1970 and 2013 covering the entire bid area (raw field tapes can be purchased for additional cost); and (3) bathymetric, gravity and magnetic data covering most of the bid area. 

Greenberg Traurig is the only major international law firm with a registered office in Israel.  Together with the firm’s Energy and Natural Resources practice group, we are positioned to support clients on a wide range of legal issues relevant to world energy markets, including the upcoming Israel offshore bidding process.  We will continue to provide updates on the latest developments in the offshore bidding process through our GT Israel Law Blog.

For additional information about the upcoming offshore bidding round, please contact Joey Shabot (Tel Aviv, Israel – shabotj@gtlaw.com), Ken Minesinger (Washington, DC – minesingerk@gtlaw.com), Allan Reiss (New York, NY – reissa@gtlaw.com) or Derek Anchondo (Houston, TX – anchondod@gtlaw.com).

Regulation D Standards and Filings

Posted in Commercial Agreements, Emerging Growth Companies, Global, Israel

15162-appoint

For Israeli startups and growth-stage companies that seek to raise capital from investors in the United States, it is imperative that they understand the various securities issues that can arise in a capital raise. Under the Securities Act of 1933, any offering of securities in a company must either be registered with the SEC or qualify for an exemption to the registration requirement. As most companies that are solely seeking capital are not ready to file their securities with the SEC (and effectively go public), an exemption to the registration requirement is often sought out. A common exemption for issuers is Section 4(a)(2) (the private placement exemption) which states that a registration is not needed in a nonpublic offering. The regulations implementing this statute are called Regulation D, which includes Rule 504, Rule 505, or Rule 506 (all described in detail below).  In addition, Section 4(a)(5) provides an exemption for offers and sales to accredited investors. In connection with the reliance on these Rules, issuers file a Form D online, which is a form that is used to file a notice of an exempt offering of securities with the SEC.

The Form D filing itself requires stating whether the SEC exemption that is being used is Rule 504, Rule 505, or Rule 506 of Regulation D, or Section 4(a)(5) of the 1933 act. A short summary of these exemptions is as follows:

  • Rule 504 provides an exemption from the registration requirements of the federal securities laws for some companies when they offer and sell up to $1 million of their securities in any 12-month period. Unless the securities are registered in one or more states requiring a substantive disclosure document, or are sold under state law permitting general solicitation to accredited investors, the exemption does not allow companies to solicit or advertise their securities to the public and purchasers receive restricted securities, meaning that they may not sell the securities without registration or an applicable exemption.
  • Rule 505 provides an exemption from the registration requirements of the federal securities laws for companies when they offer and sell securities. To qualify for this exemption, a company:
    • Can only offer and sell up to $5 million of its securities in any 12-month period;
    • May sell to an unlimited number of “accredited investors” and up to 35 other persons who do not need to satisfy the sophistication or wealth standards associated with other exemptions;
    • Must inform purchasers that they receive “restricted” securities, meaning that the securities cannot be sold for six months or longer without registering them; and
    • Cannot use general solicitation or advertising to sell the securities.
  • Rule 505 allows companies to decide what information to give to accredited investors, so long as it does not violate the antifraud prohibitions of the federal securities laws. However, companies are required to give nonaccredited investors disclosure documents that generally are equivalent to those used in registered offerings, including scaled financial statement information. If a company provides information to accredited investors, it must make this information available to nonaccredited investors as well. The company must also be available to answer questions by prospective purchasers.
  • Rule 506 allows for the raise of an unlimited amount of money. The Rule was recently amended and for a general summary of the changes please see the article “Navigating the Recent Changes to Regulation D Rule 506,” written by Greenberg Traurig Shareholders Rebecca Distefano and Bruce Rosetto. Rule 506 currently contains two distinct exemptions:
  • Under Rule 506(b), a company can be assured it is within the exemption by satisfying the following standards:
  • The company cannot use general solicitation or advertising to market the securities;
  • The company may sell its securities to an unlimited number of “accredited investors” and up to 35 other purchases. Unlike Rule 505, all nonaccredited investors, either alone or with a purchaser representative, must be sophisticated—they must have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment;
  • Companies must decide what information to give to accredited investors, so long as it does not violate the antifraud prohibitions of the federal securities laws. However, companies must give nonaccredited investors disclosure documents that are generally the same as those used in registered offerings. If a company provides information to accredited investors, it must make this information available to nonaccredited investors as well;
  • The company must be available to answer questions by prospective purchasers; and
  • Financial statement requirements are the same as for Rule 505.
  • Under Rule 506(c), a company can broadly solicit and generally advertise the offering, but still be deemed to be undertaking a private offering if:
  • The investors in the offering are all accredited investors; and
  • The company has taken reasonable steps to verify that its investors are accredited investors, which could include reviewing documentation, such as W-2s, tax returns, bank and brokerage statements, credit reports, and the like, or obtaining third-party verification of the investor’s status.

Section 4(a)(5) exempts from registration offers and sales of securities to accredited investors when the total offering price is less than $5 million and no public solicitation or advertising is made. Note, however, that this section is not commonly used as a stand-alone exemption, as much of this statutory exemption generally fits under the exemptions of Regulation D that are described above.

In addition, the Form D requires listing certain detailed information with respect to the issuer and the offering, and the filed forms are then available for public viewing on the SEC’s website. The form must be filed within 15 days after the first sale of securities in the offering, which is the date on which the first investor is irrevocably contractually committed to invest. Since the form is a filing with respect to federal law, counsel should be consulted regarding state law requirements (so called blue sky laws). Securities sold under Rule 506 are “covered securities” under the Securities Act of 1933, and under federal preemption standards, the states may not perform a substantive review of an offering and are limited to obtaining a copy of the Form D filed federally together with a fee and a consent to service.  Rule 504 and Rule 505, and Section 4(a)(5), are not covered securities and compliance with state securities law is required.

Conclusion

As discussed in this summary, there are very specific restrictions involved in the exemptions that permit a company to file a Form D and thereby sell exempt securities. With an international presence consisting of attorneys around the globe, Greenberg Traurig is uniquely situated to advise our clients on matters relating to raising capital raises and the issuance of securities.

USCIS Proposes International Entrepreneur Rule to Spur Innovation and Job Creation

Posted in Global, Government Law and Policy, Homeland Security, Immigration

While the EB-5 visa has proven popular with a number of Israeli investors who have obtained a green card using the EB-5 program, options U.S. immigration visas for Israeli entrepreneurs who do not qualify for the EB-5 visa remain limited. The following post, originally published on the Inside Business Immigration blog and written by Matthew Virkstis, a Practice Group Attorney in Greenberg Traurig’s Business Immigration & Compliance Practice, sheds light on a propose USCIS rule which may, when finalized broaden the options for such individuals.

On Aug. 26, 2016, U.S. Citizenship and Immigration Services (USCIS) announced a notice of proposed rulemaking for an International Entrepreneur Rule, and provided an advance version of the proposed rule for public review.

According to an announcement from USCIS, the proposed rule will allow the Department of Homeland Security (DHS) to exercise discretion, on a case-by-case basis, to provide parole for foreign entrepreneurs who are directing the development of a startup business entity in the United States and whose involvement in the startup would provide a significant public benefit.  USCIS proposes to amend its regulations in connection with Section 212(d)(5) of the INA to provide a “transparent framework” for the exercise of agency discretion and the case-by-case adjudication of parole requests for start-up entrepreneurs.

In order to be considered for parole under the proposed rule, an immigrant entrepreneur would be required to:

  • Own at least 15 percent of the startup and be actively involved in its operation
  • Have formed the business in the United States within the previous three years.

The entrepreneur must also demonstrate that his or her business the potential for job creation and growth by showing:

  • Investment of a minimum of $345,000 from qualified U.S. investors with success in prior investments
  • The receipt of grants or awards from federal, state, or local government entities.

The proposed rule also provides flexibility for an entrepreneur who may only partially satisfy one or both of the above criteria, by permitting the entrepreneur to provide evidence of the start-up’s potential for growth and job creation.

Under the proposed rule, a qualifying entrepreneur may receive parole for a two-year period, and may be eligible for renewal based upon the success of the start-up.

When finalized, the proposed rule may hold potential for Israeli nationals who find themselves caught in current U.S. immigrant visa backlogs, or with limited immigrant visa options, given the close of the 2016 H1-B lottery and the still-pending reciprocal Israeli E-2 visa legislation.  Further analysis of the proposed rule may also illuminate potential opportunities for Israeli EB-5 investors who are awaiting the availability of a visa number.

Upon publication of the rule in the Federal Register, the public will have 45 days during which to provide comment on the rule.

As we review the text of the proposed rule thoroughly, we will provide additional insights and discussion about the potential opportunities it could present to immigrants in different contexts.

Cloud Migration Demystified

Posted in Cybersecurity, Data protection, Technology

Migration is already underway, but some of the world’s largest organizations are still reluctant. They handle proprietary data and a staggering volume of transactions.  They want to marshal information and deliver nuanced results.  But a lack of appreciation for the Cloud’s promise, together with questions surrounding security and cost, make many CTOs and COOs cling to legacy systems.

CLOUDshutterstock_110126165_778x360-300x139

At the surface, the Cloud is seemingly straightforward even for occasional users; using encryption and/or password protection, individuals log on to a website, smartphone app, or similar “thin” interface. They may send an email, manage ‘Internet-of-things’ controls, reserve a seat, store a document, access a data base, or subscribe to an online tool for accounting or lead tracking.  While it’s clear that the “back office” intelligence sits someplace else, users probably don’t appreciate the architecture.

Understanding the Cloud’s capabilities and shortcomings is key to a thoughtful migration strategy. Can organizations really save money by replacing their on-premise solutions?  How do they comply with regulations around the world addressing the collection, use and transfer of personal data?  When migrating, do they retain control of their systems?  What about cyber security?  Here’s a simplified description for non-technologists!

Physical Server Farms and Virtual Capacity

The Cloud consists of millions of interconnected components and specially-configured resources that leverage them. By negotiating dark and lit fiber agreements, rights of use to subsea cables, data center leases, and related managed services, my colleagues and I help assemble the hard-wired network of computers and other facilities underpinning the Cloud.

Sophisticated programs pool capacity and various capabilities across dozens, hundreds or even thousands of servers to enable a virtual computing environment. The “-aaS” moniker – Software-, Platform- or Infrastructure-as-a-Service – denotes which combination of resources (among, for example, networks, servers, storage, runtime, applications) an organization manages for itself and which are outsourced.

The “Public Cloud” constitutes such outsourced capacity. An organization avails itself in part because the Cloud Provider does the worrying about how devices and connectivity within its sphere are employed.  An organization can self-provision such resources, facilitate broad access, and scale for volume-based offerings or other needs.  High-speed Internet access and ever-friendlier dashboards or other web page interfaces enable organizations and their users and customers to tap in.

But the Cloud’s great promise invites precautions too. For example, cheap and plentiful storage by big-name Cloud Providers should not lull focus from security and privacy measures and associated risks.  Similarly, while the Cloud promises that organizations can work with their data seamlessly and remotely without necessarily having to think about the placement, cost, or other characteristics of the hardware, country-specific data regulations override and can quickly draw back the focus to the physical location of the data.  And flexibility in employing capacity based on changing levels of need may be curtailed if an organization is subject to minimum contract terms or early termination charges.

How is the Cloud Used?

Ubiquitous storage and capacity is utilized in different ways depending on the program or task. Wide dissemination of information from a single source may be important.  A desired result could require constant updates to multiple databases.  Sometimes complex analytics are involved.

For instance, an organization must figure out how best to reach its users. Content is placed on one or many servers, depending on the popularity of the program and where it is accessed.  By using multiple servers in different locations, an organization can balance meeting the demand for content without having any physical presence in the locations where the users reside.  Remember the weather feed on nearly every website you visit?  The Cloud allows a weather website to accommodate billions of daily global hits by provisioning capacity and disseminating the latest local forecasts according to user browsing patterns.  Similarly, television or cable companies can efficiently stream live fútbol or cache content for video on demand close to users.

Collection of data is another hallmark of the Cloud, even if it’s also a challenge given the security and privacy concerns as identified below. Credit card billings, toll gate readings, stock trades, website visits, security incidents, package tracking and other commercial transactions generate enormous data.  Systems are increasingly being trained to “phone home” so that analytics can detect trends and predict outages.  Newer generation aircraft engines, for example, produce terabytes of operational details per flight!  The Cloud enables an organization to disperse its worldwide data processing and storage presence and thereby collect information for later processing.

The Cloud lets organizations harness additional tiers of capacity as needed to accommodate testing, staging, and other complex tasks requiring high throughput. For example:

  • Airlines – Carriers routinely run complex programs to manage revenue, booking, and flow of equipment, fuel, catering, crew, passengers and baggage. A blizzard or afternoon thunderstorm require even more capacity as algorithms reassign resources and notify vendors and passengers.
  • Automakers – Self-driving cars will run based on real-time processing of coordinates, landmarks, signage, road conditions, traffic and other inputs.
  • Broadcast – According to market research and consulting firm Devoncroft Partners, the Cloud reduces dependences on compression and per-channel facilities and streamlines transcoding, editing and playout.
  • Healthcare – Providers are increasingly reimbursed based on successful outcomes, benchmarking diagnoses, medical history, current medications, interventions, complications, and readmissions across entire populations.
  • Manufacturing – The Cloud has redefined product deviation analysis, brought new precision to just-in-time inventory, and effected infinite simulations for fluidics and wind.
  • Pharmaceuticals – Drug researchers now simultaneously run innumerable models with the human genome to discern the meaning of mutations, pathogen characteristics and cell susceptibility. The data can also hone precision medicine.
  • Retail – Using proximity and other management capabilities, stores know customers by analyzing their preferences.

In short, the Cloud permits an organization to exercise control of vast resources.

Migration Considerations

Organizations already imagining themselves in the Cloud navigate the important concerns associated with a migration strategy. Among numerous advantages, there are sensitivities and pitfalls too.

  • Cost – The Cloud carries an alluring narrative about cost savings. Naturally, enjoying true savings depends on numerous factors. On the one hand, old systems can be a drag on budgets. Organizations have sometimes provisioned the maximum required capacity even when it is rarely exploited. Equipment breaks or becomes outdated. Non-standard systems demand specialized personnel and custom tools. But it can be amortized and, like anything else once bought and paid for, it is bought and paid for. On the other hand, a Public Cloud theoretically allows a customer to ‘pay as you go,’ which is great insofar as it goes. However, the customer keeps paying. And paying for only the needed capacity may be belied by the sheer difficulty of managing it; savings may be mitigated by minimum commitments in Cloud contracts. It should be noted that while efficient use of the Cloud may reduce costs, it also reshapes a company’s financials — ongoing operating expense for usage fees, licensing and data center leases could be reflected in a noticeably new line item.
  • Security – For specialized data integrity or auditing needs, an enterprise may stick with a Private Cloud, which could consist of infrastructure deployment in leased raw data center space or an outsourced deal through which a Cloud Provider hosts and manages dedicated servers. But users of both Private Clouds and Public Clouds maintain cybersecurity by choosing authentication protocols, encryption levels and firewalls. Cloud Providers provide physical security, partition capacity to enable compliance with data laws, and facilitate monitoring of vulnerabilities. To be clear, they rarely guarantee data security. But even if not definitively, their offerings are increasingly viewed as more secure than individually-managed hardware. First, they can point to prominent reference accounts that require compliance with PCI credit card security standards, HIPAA security rules, and other common security regimes. Second, given that security is the biggest migration concern, many take comfort that competition among Cloud Providers drives such providers to make continual improvements.
  • Redundancy – A key risk that has evolved for organizations – especially for public companies – is whether they have adequate diversity and redundancy to ensure preservation of mission critical data. Data centers suffer outages. Cloud Providers and their customers should maintain failover solutions for disaster recovery by facilitating backup and parallel connectivity.
  • Scalability – The beauty of an outsourced solution is that resources can be quickly added or subtracted depending on the need at that moment. For example, organizations that maintain their own data on-premises may quickly need thousands of parallel computing cycles for crunching huge sets of variables. Again, minimum capacity requirements or other contract restrictions could hinder such nimbleness.
  • Service Levels – Cloud Providers offer guarantees within the range of most users’ fault tolerance and latency sensitivity. Larger organizations will find that SLAs are negotiable. In any case, organizations should keep in mind that remedies are often limited to credits against monthly recurring charges. Those with unique requirements may maintain certain functionality locally or set up different criteria in a hosted Private Cloud.
  • Physical Arrangements – While hosted Private Cloud arrangements draw on many of the same benefits available with Public Cloud offerings, data center leases demand their own attention. To avoid hidden costs, Private Clouds need to take a smart approach to determining fitting capacity, power charges, cooling, security, and connectivity. Leasing also involves allocation of expenses and risk, expansion options, and assurances of capacity portability and continuity.

Next Steps

Organizations don’t necessarily take the plunge – a thoughtful approach using available resources is important.

The evolution of Cloud computing is instructive for an organization’s planning. Historically, offsite capacity was simply used for storage, retrieval and backup.  Software-as-a-Service began as a way to alleviate the need of customers to download and maintain large software files in numerous locations.  When web transactions became rote and repetitious, the Cloud’s breadth became an obvious means to manage them.  Similarly, organizations can start their migration with the most common or resource-intensive functionality.

Incremental migration still takes time. Organizations must account for the possibility of long-term arrangements with providers and a variety of contractual contingencies that could limit their flexibility in making a quick change.  They also need a plan for defining security parameters, initially moving vast stores of data, and balancing workloads.

To avoid reinventing the wheel, there are plentiful programs to ensure proper back-office functionality. Vendors can help organizations run popular software, configure databases, move data between different Public Clouds, and leverage in-memory capabilities for better computing.  Off-the-shelf dashboards facilitate the control of systems virtually and economically.

No matter the industry, those seeking virtual availability of content, high-throughput computing, and global connectivity need to understand migration mechanics and issues.

Greenberg Traurig’s Gary M. Epstein Named in the 23rd Edition of Best Lawyers in America

Posted in Corporate & Securities, Israel

epsteingNamed in the 23rd Edition of Best Lawyers in America, Greenberg Traurig’s Gary M. Epstein has been recognized, for five consecutive years, on Best Lawyers’ “Lawyer of the Year” list.

Gary is the Managing Shareholder of the firm’s Tel Aviv office; Co-Chair of its Israel Practice and the Senior Chair of GT’s Global Corporate & Securities Practice. For more please visit our website.

 

Israel Reopens Offshore Areas to New Gas Exploration; Encourages Foreign Bidders To Participate

Posted in Environmental, Israel

shutterstock_72680935In a highly anticipated announcement, earlier today, the Petroleum Council of the Ministry of National Infrastructures, Energy, and Water Resources approved the reopening of Israel’s economic waters to new oil and gas exploration. Based on the recommendation of the Council to the Minister of Energy Yuval Steinitz, 24 offshore exploration blocks will be offered in an international bidding process by which energy companies will tender for rights to participate in exploration for oil and natural gas in Israel’s economic waters. Due to the proximity of these blocks to a large number of known major gas deposits (including the Leviathan and Tamar fields), it is expected that the bidding process will draw bidders from around the world. The Council’s recommendation was based on independent research recently commissioned by the Ministry that estimated potential undiscovered offshore resources totaling approximately 6.6 billion barrels of oil and 2,137 billion cubic meters of natural gas.

Expressed through numerous decisions and announcements, including the Government’s approval of a revised Natural Gas Regulatory Framework designed to promote investment in the sector, Israel’s government has taken a strategic decision to open up Israel’s gas exploration market to international participants. The public policy of Israel is strongly in favor of encouraging world class non-Israeli operators to enter this exciting marketplace.

Greenberg Traurig’s Energy and Natural Resources group brings together integrated, multidisciplinary teams from across the firm’s many practice areas to advise energy companies, utilities, project developers, investors, regulators, governments, and other energy industry participants in important aspects of their business. As the only international law firm with a registered office in Israel, we are positioned to support both Israeli and foreign clients in a range of legal issues relevant to world energy markets, including the upcoming offshore bidding process.

LexBlog