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Top 5 Legal Tips

Eliot Norman, Esq.enorman@williamsmullen.com www.williamsmullen.com

14587546 Paris April 6

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Votre Destination

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This is where is all starts

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HOMELAND SECURITY IS Still Running US

Immigration

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GREEN CARDS

LA PYRAMIDE DES VISAS AMERICAINS

L-1A/L-1B, E1/E2 Investors/Treaty Traders

H-1B/O-1

B-1/ F-1/J-1/H-3, H-2B

B-1/ 90 Day Visa Waivers

(B/2) (tourists)

EB-1 Multinational Managers/Executives & EB-1Extraordinary Ability and Outstanding Researchers;EB2/3 Labor Certifications for professionals, skilled/unskilled workers leading to Green Cards;;EB2Green Cards for National Interest Waivers, FAMILY SPONSORSHIP (marriage to U.S. Citizen or, Green Card Holder; Diversity Lottery

EXECUTIVES, MANAGERS, Specialists and Essential-Skills Employees for U.S. Offices of International Companies

PROFESSIONALS; Extraordinary Ability Scholars & Scientists

TRAINEES & FOREIGN STUDENTSResearch Scholars & Specialists; Temporary workers

BUSINESS VISITORS:Negotiate Contracts, Consult;Trainees, Install Equipmentif Purchased Overseas; Visa Waiver

6693462

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Smarter Visa Strategies for 2011• E-2 France-US Treaty Investor Visas

– First choice for French investors or employees who will work for French-owned companies in the USA

– Accelerated E-1/E-2 Visa Program in Paris• L-1: Parent-Subsidiary or Corporate Affiliate

Transferees – Benefits of E-2 and L-1 for spouse

• H-1Bs (Quota delays until October 1, 2011) • Alternatives: J-1, F-1 Practical Trainees/Interns (VIE) • New Rules: Export Controls Certifications

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Case Illustration: L-1 Intra-Company New Office Transfers

X&Z Cyber Security, Inc. Virginia USA

X&Z Cyber Security, SAParis, France

Managers, Executives Software Developers

Project Managersand SoftwareSpecialists

Cyber Security Software

Programmers

X&Z Systems, Ltd. Rabat, Maroc

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L-1A ou L-1B • Affiliation or control between U.S. and

Foreign company • Employee must have worked for French

or other foreign company for 1 year• Proof of Managerial/Executive Position

(L-1A) or • Proof of Specialized Knowledge (L-1B)

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L-1 pour le Nouveau Bureau • Très bon choix pour une PME • 4 critères

– business plan– un bail commercial– un an d’expérience avec

l’entreprise outre-mer comme employé

– Une entité américaine

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Attention: Nouveaux Règlements depuis le 21 février 2011

• Applies to companies and individuals involved in technologies subject to Export Controls: military applications, advanced computers, cybersecurity, lasers, robotics, etc.

• Export Controls “Immigration Certifications” (depuis le 21 février)

• Consequence: may lead to increased monitoring & enforcement of “Deemed Exports” rules in the US

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Formation de l’Entreprise Américaine

• Corporation or Limited Liability Company?

• Why for foreign investments the LLC may not be the way to go?

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“Flow Through” Tax TreatmentCorporation vs. LLC

• US corporations do not have "flow through" tax treatment and must file tax returns

• LLCs have "flow-through" tax treatment and are not required to file income tax returns

• Result: LLC’s French parent company must file income tax returns in the United States

• Result: LLC’s French parent company is subject to audit by U.S. IRS (Tax authorities)

• Most foreign companies do not want to file tax returns in US; do not want to be audited

• Result: The preferred form of entity for US operations of foreign companies most often is the corporation

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Where to Incorporate?• Delaware vs. other state

• Qualifying to do business in other states

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Ultimate Decision?Tax Driven

Additional Recent Tax Changes Favoring Corporation

• The 2009 Changes to the U.S.-French Tax Protocol. The Protocol has added transparent entity provisions and eliminated the withholding tax on certain cross-border direct dividends. These will have the greatest impact on French companies wishing to engage in M&A activity and/or direct investment into the US.

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Les Premiers 120 Jours • Visa• Corporation • Les prochaines étapes: un “checklist” juridique• Services juridiques “de démarrage”

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Services de conciergerie juridique1. Création de la Société Anonyme (U.S. corporation) 2. Visa 3. Les conseils à l’embauche des employés; droit du travail4. Dépot de marque5. Réservation d’un nom de domaine Internet6. IRS Employment Identification Number (EIN). SSA Numéro 7. Enregistrement de la société auprès des services locaux

compétents: introduction aux incitations locales/étatiques8. Examen du bail de votre bureau9. Planification à l’avance en matière de responsabiité du fait des

produits(des produits défectueux)«products liability »10. Introduction aux contrats governmentaux11. Introduction: réglementation douanière et droit des exportations12. Conseils: contrats de distribution, d’agence, de licence

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Fonctionnement des Services de Conciergerie Juridiques

• Consultation initiale, essentielle avant le départ aux Etats-Unis - choix de visa et de la forme du business américain est très critique

• Un cabinet qui offre toutes les services de démarrage: dangers de discontinuité

• Un forfait • Durée des premiers quatre mois• L’importance d’un bon démarrage

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Des exemples des services juridiques de démarrage

• Le droit du travail • Les contrats (style américain) • Comment vendre au gouvernement

fédéral ou aux gouvernements étatiques

• Gestion des risques: responsabilité du fait des produits (des produits défectueux) « products liability »

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Le Droit du Travail

• Première impression: ??? • Plus libéral ou non que le droit

français? • Rôle fédéral• Rôle des états• Syndicats: “right to work” states?

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Pro-Business Employment Laws• Employment “at will” – You can hire, fire “at will” (à discrétion

sans contrat écrit ou oral) • However, strong federal laws prohibit discrimination: race,

disabilities, sex, age• “Frivolous” discrimination claims are summarily dismissed • Employee Handbooks – Imposes duties on employee • Trade secrets are protected from misappropriation by disloyal

employees, still advisable to have written confidentiality or NDA (non-disclosure) agreement with key managers/technical employees

• Courts enforce non-compete, non-solicitation agreements• Flexibility in opening/closing/moving company operations as your

business grows

Préservation de la souplesse des effectifs (avantages juridiques americaines)

• Emploi « At will » (à discrétion) : En l'absence de contrat de travail pour une durée déterminée, il peut être mis fin à l'emploi au choix de l'employeur, avec ou sans motif justifié.

• Admet des restrictions contractuelles strictes en matière de concurrence par d'anciens employés

• 22/50 états: « Right to work laws » État avec droit au travail : décourage les syndicats dans la mesure où personne ne peut être contraint à payer des cotisations syndicales ou à adhérer à un syndicat pour conserver son emploi.

• les grèves par des employés publics sont interdites?

Compréhension des principales lois en matière de travail

• Bon sommaire: « S’Implanter aux Etats-Unis »• Salaire minimum et heures supplémentaires (FLSA)• Congé familial (congé sans solde dans le cadre de la

législation FMLA)• Lois en matière de lutte contre la discrimination (Title VII,

ADEA, ADA)• Exigences de discrimination positive pour les fournisseurs

et sous-traitants du gouvernement (EO11246)• Pratiques déloyales de travail (NLRA)• Prestations sociales des employés (ERISA)

Considérations clés en matière d'emploi

Un conseiller juridique peut vous aider à :• Préparer des contrats d'emploi, des règles de travail, des

manuels et des programmes de discrimination positive• Former la direction pour faire en sorte que le lieu de

travail reste sans présence syndicale et conforme à la législation

• Faciliter le maintien de la conformité aux lois en matière d'emploi et de prestations sociales

• Vous défendre dans le cadre des recours en vertu du droit du travail

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Les Contrats

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Americanize your Contracts• Advice on important contracts under

U.S. law – software and other license agreements– distribution and agency agreements– sales contracts – financing agreements– disputes resolution and remedies

Gestion des risques : Responsabilité du fait des produits

• Titre à sensation : des jurés américains accordent des dommages punitifs de plusieurs millions de dollars dans le cadre d'actions collectives.

• La realité juridique est différente

Gestion des risques : Responsabilité du fait des produits (des produits défectueux) • Adoptez les mêmes démarches de bon sens

que celles que vous suivez maintenant pour vendre dans le monde entier

• Assurance

• Médiation/Arbitrage

• les décisions judicaires sont prises rapidement par des tribunaux favorables aux entreprises

• les lois américains protègent les entreprises contre les procès frivoles

Gestion des risques : Responsabilité des produits défectueux

• Résultat : Les Etats-Unis est un pays où l'on peut gérer ces risques avec bon sens

• En quoi nous pouvons aider : planification à l'avance avec un conseiller en matière de responsabilité du fait des produits pour « amortir les chocs »

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Qualifying to do business with

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"Règles de jeu équitables”

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Doing Business with U.S. Government

• Can you sell to this customer? • Buy America • Recovery Act and other Incentives• Additional government customers:

– State Government Contracts and – Incentives (renewable energy)Case Study: UK Smart Card Software

Company= Smart use of Buy America

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How to Play in the Game? • Know the players and who keeps score • Who is going to

– Chase the deal ?– Negotiate and close ?– Negotiate changes ?– Perform the work ?– Enforce the agreement and get Paid?

Solution ???

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Conseil Juridique (legal tip)• Do not try initially to sell directly• Use

– Subcontracts– Teaming Agreements– Joint Ventures – M&A

• Look for the “Clusters” to find the Players

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Example of Cluster: Market Value $22 billion

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366 Entreprises Etrangeres                           

                                                                                              

English

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Subcontracting Opportunities • Small business “set-asides”

• Need for niche technologies by the systems integrators and other large defense contractors

• Result: large percentage of federal business going to foreign companies

• Case Example

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Cyber-Security: Big Business: 10% to 20% “set-aside”

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Teaming Agreements• Teaming Agreement: Defined• Major Elements and Protections

for French Company as Teaming Partner & subcontractor: exclusivity, scope of work, data exchange subject to NDA, pricing within prime contractor’s target ranges, easy termination.

• Sample Teaming Agreement Checklist: PDF from enorman@williamsmullen.com

• Substantial advantages over typical prime contractor-subcontractor relationships

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Joint Venture • Definition • Use of LLC (Limited Liability Company) • Key Elements and Issues:

– Protection of Technologies and Trade Secrets– Intellectual Property considerations – Clearly defined business objectives – Each Venture should bring something different to the table

that the other does not have– What percentage participation and management roles of each

joint venture – Contributions of capital and ownership rights to IP – Division of profits and Indemnification – Termination/liquidation of the JV and any buy-out provisions– Confidentiality and non-compete that survives Indemnification

Joint Venture • CASE EXAMPLE: French Food Manufacturer

– Division of profits; – Liability: one venturer binds the other– Resolution of disputes– What acts can be undertaken

independent of and outside the JV– Termination and grounds for withdrawal

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Exception: Vente Directe: Patrouilleur selon le “Schedule

GSA”

• 27' Extreme Patrol/SAR Aluminum-Hull Rigid Inflatable Boat (A-RIB) with a 42oz polyurethane collar or Foam Hybrid Collar. Set-up for inboard(s) or outboard(s) machinery package. Select center console or full cabin configuration. See option Manufacturer: NORTHWIND MARINE INC.Contractor: NORTHWIND MARINE, INC. [GS-07F-0416N] (s) $113,622.00 EA120 days delivered ARO

• BUY AMERICA ACT: facile a manipuler

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Nos Prestations

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L’application des dispositions de la loi « Acheter américain » contredit les engagements américains par rapport aux accords internationaux ;

Les États-Unis et la plupart des pays européens, y compris la France, sont signataires de l’ OMC (Organisation Mondiale du Commerce) AMP

L’OMC interdit l’application de la loi ACHETER AMÉRICAIN aux passations de marchés réalisés en vertu du Recovery Act par les Agences fédérales, et par 37 autorités d’État ou gouvernementales

Les dispositions de la loi « Acheter Américain » concernant les projets publics

de construction du Recovery Act n’empêchent pas une société française

d’être prestataire ou fournisseur lorsque :

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Nouvelles Opportunities • Pour le marche étatique• d’autres conseils juridiques exigés• Exemple: l’Energie Renouvelable

RPS Policies

Renewable portfolio standardRenewable portfolio goal

www.dsireusa.org

Solar water heating eligible *† Extra credit for solar or customer-sited renewablesIncludes non-renewable alternative resources

WA: 15% x 2020*

CA: 33% x 2020

NV: 25% x 2025*

AZ: 15% x 2025

NM: 20% x 2020 (IOUs) 10% x 2020 (co-ops)

HI: 40% x 2030

Minimum solar or customer-sited requirement

TX: 5,880 MW x 2015

UT: 20% by 2025*

CO: 30% by 2020 (IOUs)10% by 2020 (co-ops & large

munis)*

MT: 15% x 2015 ND: 10% x

2015

SD: 10% x 2015

IA: 105 MW

MN: 25% x 2025

(Xcel: 30% x 2020)

MO: 15% x 2021

WI: Varies by utility;

10% x 2015 statewide

MI: 10% + 1,100 MW x 2015*

OH: 25% x 2025†

ME: 30% x 2000New RE: 10% x 2017

NH: 23.8% x 2025MA: 22.1% x 2020 New RE: 15% x 2020

(+1% annually thereafter)

RI: 16% x 2020CT: 23% x 2020

NY: 29% x 2015

NJ: 22.5% x 2021

PA: ~18% x 2021†

MD: 20% x 2022DE: 25% x 2026*DC: 20% x 2020

VA: 15% x 2025*

NC: 12.5% x 2021 (IOUs)10% x 2018 (co-ops & munis)

VT: (1) RE meets any increase in retail sales x

2012; (2) 20% RE & CHP x 2017

KS: 20% x 2020

OR: 25% x 2025 (large utilities)*

5% - 10% x 2025 (smaller utilities)

IL: 25% x 2025

WV: 25% x 2025*†

29 states + DC and PR have an RPS

(7 states have goals)

DCOK: 15% x 2015

PR: 20% x 2035

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CCAM: Rolls Royce et d’autres Sociétés Etrangères

• Different type of STATE INCENTIVE. • Other companies in addition to Rolls-Royce that have joined CCAM as founding

members are:• Newport News Shipbuilding, the Newport News-based division of

Huntington Ingalls Industries which designs, builds and maintains ships for the U.S. Navy and Coast Guard.

• Canon Virginia Inc., a Newport News-based division of Japan-based Canon that repairs and refurbishes Canon cameras, video recorders and office products.

• Chromalloy Gas Turbine Corp., an Orangeburg, N.Y.-based company that provides parts, repairs, maintenance and overhauls of gas turbines used in aviation and in land-based applications.

• Sandvik Coromant, a Swedish company that makes tools for turning, milling and drilling, and

• Siemens, a German industrial engineering company that provides software and other tools to improve manufacturing processes.

• Aerojet, a California-based provider of rocket propulsion systems, joined CCAM last month as a tier-two member.

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Conseils Juridiques• Focus is now on the States,

– ex. secteur de l’energie renovelable• Negotiation of state and local incentive

packages• Evaluation of the “deals”• Requires multidisciplinary approach• [il faut trouver des cabinets expérimentés

dans le domaine du droit du développement économique]

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Dernière Stratégie juridique qui aide l’entrée dans les marchés:

Les Acquisitions

• Marchés publics• Marchés privés• Facteurs juridiques qui favorisent

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Number of Deals (Foreign Acquisitions of U.S. Companies) by Primary Sector

(2005 – 2010 YTD)

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(Acquisitions rather than M&A) • IT sectors leads the statistics • Market Entry Strategy• Can solve security clearance and export controls issues

– May require FOCI Mitigation, NID and CFIUS (Comm. on For. Inv. in the US) approval

• Cobham PLC recent purchase of Argotek, Inc. for $36.2 million

• will continue to be operated as separate corporation, 70 employees, all with U.S. security clearances

• Key contract with: CNIC (Comprehensive National Cyber Initiative)

.

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M&A Legal Considerations 1. Do the Tax Planning early; domestic & international2. Due Diligence, Negotiations Style in the U.S.3. The Stock/Asset Purchase Agreement: Reps and

Warranties 4. Financing the M&A Deal 5. Closing the Deal 6. Post-Acquisition Operations/Risk Management 7. Post-Acquisition: U.S. Immigration: recruiting/retaining

global talent post-acquisition. 8. SSA/Proxy Agreement to access Classified Federal

Markets or deal with Export Controls (ITAR, EAR)

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Conclusion: Le “Top 5” for your Legal Checklist

1. Your Visa Choices impact your transfer of key personnel and technology

2. Form initially a U.S. corporation3. Establish and use a “Legal checklist” ou “services cles de

démarrage” during the first 120 days; 4. Recognize the advantages of U.S. employment laws,

Americanize your contracts, and Adoptez les mêmes démarches de bon sens que vous suivez maintenant concernant la Responsabilité des produits défectueux;

5. Use Subcontracts, Teaming Agreements, Joint Ventures, & Acquisitions for market entry and expansion in public and private markets.

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Final Thoughts• There are any of 50 states where you

can set up to do business• Each has their own distinct legal system

at the State Level • What are the legal criteria that you

should be looking for?

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• Value of State and Local Incentive Packages?• State Ranking by the U.S. Chamber of Commerce’s

2010 study for having the “Best Legal System”? • Strong protections of trade secrets, enforcement of

non-competition and confidentiality agreements?• “Rocket Docket” or smooth functioning court

systems: good forum for resolution of IP and patent disputes?

• Conservative, pro-business, products liability, intellectual property, and other state laws?

• “Right-to-work” laws if unions are an issue? • Pro-management or pro-investor incorporation

statutes?• Efficient regulatory systems, including environmental

and corporate permits and registrations?• Well-managed corporate state tax systems; AAA bond

rating• Result can be…

The Legal Criteria for International Businesses

A soft landing and rapid expansion for your French company

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Questions? Questions? Eliot Norman, Esq.enorman@williamsmullen.com001.804.420.6482 Williams Mullen 1666 K St. Suite 1200Washington, DC 20006 www.williamsmullen.com/immigration

References: S’implanter aux Etats-Unis: Ubifrance 2009

Guide for Foreign Companies Establishing Operations in the United States: http://tinyurl.com/guideUSA2010