Monday, April 29, 2013

HARP Has Been Extended to December 2015!

The Federal Housing Finance Agency (FHFA) announced the extension of the Home Affordable Refinance Program (HARP) for an additional two years. It was set to expire this year, but now it won’t expire until December 31, 2015.

The program was originally set up to in March 2009 to help underwater and near-underwater homeowners refinance their mortgages. The objective of HARP is to help homeowners refinance their current mortgage to obtain better terms, such as a lower interest rate and smaller payments. Almost one million people have taken advantage of the program.

Of course, not everyone is eligible. Generally speaking, your mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac. Further, you must be current on your mortgage and not have had a late payment in the past six months. Also, you must have the reasonable ability to pay under new, presumably better, mortgage payments.

How do you know if Fannie Mae or Freddie Mac owns or guarantees your loan? Check out the following websites and enter your information: and

For more information about HARP, review the website at

Thursday, April 25, 2013

Your In House Lawyer: How Specific Should Your Non-Compete Clause Be?

Your In House Lawyer: How Specific Should Your Non-Compete Clause Be?: When drafting a non-compete clause from the perspective of the employer, it is important to ensure that it is tailored for each employee or ...

Wednesday, April 17, 2013

Tax Credits - How Hollywood Can Help You

If you're like me, you spend too much money on movies.  Here's how to possibly get some back.... 

The Georgia Entertainment Industry Investment Act could help save you thousands of dollars. In an effort to attract Hollywood, and the money that goes with it, the State of Georgia provides companies with up to a 30% tax credit for spending $500,000 or more on production and post-production activities in Georgia. What an outstanding opportunity for you and I!

How you might ask? How could we possibly benefit from a tax credit given to a Hollywood movie maker? Easy, buy the credits from them at a discount. Some of the high-rolling production companies end up with millions of dollars in Georgia tax credits, many millions more than the company’s Georgia tax liability.

Under certain circumstances, those tax credits granted to a company under the Act may be transferred or sold to Georgia-based tax payers. Keep in mind, though, you’ll want to do your homework. Always consult a certified CPA prior to considering any such purchase to determine the tax effect on your situation and whether or not such a move would be in financially in your best interest.

In addition, consider the legal aspects of the transaction. The seller will need to make a number of important legal representations and warranties concerning its authority to sell the credits to you and the status of the credits. For example, you’ll want to ensure the seller has a certification letter from the Georgia Department of Economic Development, which letter states at least the following: the certification number, the project at issue meets the certification requirements of the Act, that the seller is eligible to claim the tax credits, and for what year the seller may claim the credits. After all, the credits aren’t valid forever.

Furthermore, you’ll want to ensure that the seller indemnifies, defends and holds you harmless from any claims or damages that may arise out of any false claim the seller makes in connection with the transferred tax credit. Accordingly, to ensure that indemnification clause is worthwhile, you’ll want to be sure that the company selling you the tax credits is a financially strong and viable company.

There are many other financial and legal considerations in connection with purchasing such tax credits, but hopefully this article got you thinking….

Wednesday, June 1, 2011

How Specific Should Your Non-Compete Clause Be?

When drafting a non-compete clause from the perspective of the employer, it is important to ensure that it is tailored for each employee or contractor. One size does not fit all. The time restriction, i.e. two years, can generally be the same across the board, but the territory must be carefully considered. Most importantly, keep in mind that where a restrictive covenant is not limited to an area where an employee worked, it will generally be considered overly broad per se, unless a strong justification exists for such a restriction.

Take, for example, a doctor's contract with a particular practice. The law is well established in Georgia that non-competition covenants in employment contracts for physicians will be upheld. However, the provisions must be narrowly tailored and reasonable. The restriction should not operate to force the doctor to abstain from practicing the profession during a particular time or in a particular place when such a restriction would not have a corresponding benefit on the practice.

Recently, the Georgia Court of Appeals ruled on an issue dealing specifically with the territorial restriction in a physician's contract (Peachtree Fayette Women Specialists LLC v. Turner). Dr. Turner is a physician who had an employment contract with Peachtree Fayette Women Specialists. The restrictive clause states:

Non-Competition. Employee acknowledges that Employer has expended and will expend considerable time, effort and capital to develop its medical practice, including its patient base and referral sources.   Employee further acknowledges that Employer has a legitimate business interest in protecting its medical practice.   In furtherance of the foregoing, Employee agrees that she will not, during the Restricted Period, provide obstetrical and gynecology medical services (either for his [sic] own account or benefit, or for or on behalf of any other person, firm, partnership, association, corporation, business organization or entity other than Employer), within the Restricted Territory.
“Restricted Territory” is defined as a two year period and to mean (1) a five (5) mile radius from Employer's office located at 1267 Hwy 54 West, Fayetteville, Georgia, (2) at Piedmont Fayette Hospital, Fayetteville, Georgia, and (3) at Piedmont Hospital, Atlanta, Georgia. ..  Employee acknowledges that she will provide services on behalf of Employer during the term of this Agreement at each of the locations described in clauses (1), (2), and (3) of this subsection.
At first glance, one would think the above non-competition clause would be upheld because it is very specific and narrowly tailored to the particular doctor. However, the key problem with the covenant is that it is too specific. Dr. Turner never performed services at Piedmont Hospital in Atlanta while employed by Peachtree Fayette Women Specialists. The Court concluded that the above clause is overreaching; the restrictions are not reasonably necessary to protect the business interest of the practice because the doctor is prohibited from working in a territory in which she never treated patients during her employment.

What to do? Ensure that the person responsible for your contracts is well trained in the area of restrictive covenants and well aware of the particular employee's duties. Restrictive covenants should be clear, but not overly specific. The covenants should be drafted to include territories in which the employee performs services, but the definition of "territory" should not be so specific that you have to amend the agreement with every change in the employee's duties. In addition, it is helpful to draft the language in such a way that the employee understands and agrees that the restrictive covenant is subject to change with the employment duties. A annual review of such contracts may also be helpful with the addition of an amendment, as necessary, to include territories that may not have been considered when the contract was signed.

Tuesday, May 17, 2011

How Will the Georgia New Non-Compete Statutes Affect You?

The New Face of
Non-Compete Agreements
in Georgia

Generally, non-compete provisions are very difficult to enforce in Georgia. However, on November 2, 2010, Georgia voters made it a little easier to enforce restrictive covenants such as non-compete provisions and non-solicitation provisions.

At the last election, Amendment One to the Georgia Constitution was passed. Amendment One grants the State legislature greater authority to regulate the reasonableness of contracts containing restrictive covenants, such as non-competes. The hope behind the new law is to make it easier for Georgia employers to enforce non-competes and other restrictive covenants against former employees.

The passage of Amendment One means that the recently enacted law on non-competes, previously passed by Georgia's General Assembly, will finally go into effect. In an effort to provide predictability and enforceability of restrictive covenants, the Georgia General Assembly previously passed (and Governor Perdue signed) HB 173. HB 173 is codified in O.C.G.A. § 13-8-50 though O.C.G.A. § 13-8-59. However, due to a ruling of the Georgia Supreme Court, the law could not go into effect unless there was an amendment to the Georgia Constitution.

Now that recently enacted law concerning restrictive covenants is now in effect, what does it mean? The new law sets forth rules governing restrictive covenants, such as non-compete and non-solicitation provision, in contracts during and after an employee’s employment. Restrictive provisions in contracts are permitted during the course of employment. However, the employer must ensure that the provisions are reasonable as to:
(1) Time;
(2) Geographic Area; and
(3) Scope of Activities Barred.
The rules are slightly different once an employee leaves a company. After employment ends, the statute sets forth rules for the types of activities that can be restricted and the categories of employees who can be bound by such prohibitions.

Non-Compete Agreements

Whether or not a non-compete provision in a contract will be enforced against an employee after employment ends, depends largely on the employee’s activities and responsibilities during his or her employment. Specifically, during the course of employment, the employee must have:
(1) Customarily and regularly solicited customers or prospective customers for the employer;
(2) Customarily and regularly engaged in making sales or obtaining orders or contracts for products or services to be performed by others;
(3) Performed the following:
a. Primary duty of management;
b. Customarily and regularly directed the work of two or more
other employees; and
c. Had the authority to hire, fire or change the status of
other employees or had a significant voice in making such
decision; or
(4) Been a key employee.

Non-Solicitation Agreements

Non-solicitation provisions in a contract are treated in an entirely different manner. For a non-solicitation provision in a contract to be enforced against an employee after employment ends, the non-solicitation provision must cover a stated period of time following termination and must only apply to the employer’s customers and prospective customers with whom the employee had material contact during his or her employment.

The non-solicitation provision can prohibit such an employee from not only soliciting competing business from the former employer’s customers and prospective customers, but also from attempting to solicit such customers and prospective customers. Further, the non-solicitation provision can prohibit the former employee from directly engaging in such solicitation efforts and can also prohibit the former employee from helping others engage in such solicitation efforts.

Importantly, and for a nice change, the language required for the non-solicitation provision is minimal. For example, the contract does not need to have an express reference to a geographic area or even to the types of products or services that are considered to be competitive. Mere reference to a prohibition against soliciting or trying to solicit business from customers is sufficient and will apply to:
(1) The employer’s customers, and actively sought prospective customers, with whom the former employee had material contact; and
(2) Products and services that are competitive with those of the employer’s business.

The New Law is Not Retroactive

As described herein, the Georgia statutes finally provide guidance for employers desiring to include enforceable restrictive covenants, such as non-compete and non-solicitation provisions, in employment agreements. However, the statute passed by the Georgia legislature governing restrictive covenants did not become effective until November 2nd, the day Amendment One to the Georgia Constitution was passed by the voters. Therefore, the new restrictive covenant rules will apply only to agreements executed after November 2nd, 2010 The maze of current legal rules will remain relevant for employers for years to come.

Wednesday, May 4, 2011

Do You Have What it Takes to be the Next Tycoon?

The question is: Are you a gambler at heart?

As children, most people don’t day dream about rising to the level of middle management in a corporate conglomerate. No one really thinks, "I can’t wait to work 9-5 in a cubicle for someone who can't remember my name." Most people want to run their own show, be their own bosses, and become the next millionaire.
You can do it, but make sure you are prepared. Preparation is the key to success in the early stages of entrepreneurship. Now, let’s talk about three keys to preparing for the jump:

1) Family Buy-In

You and your family need to be ready to commit all resources to your dream. All of your time, energy, and, most importantly, money will disappear. Your spouse better be onboard and fully bought in to your dream because he or she is not going to see you or any money for a while. Set the expectations early and save your business and your marriage.

2) Be Realistic and Study the Terrain

There is no better way for you to discover new ideas or pitfalls for your business, than to write a plan. We’re not talking about a formal, $20,000 business plan, but a preliminary written analysis of your ideas. Perform intensive market research to determine if there is an unmet need for what you will offer. Is that unmet need a cheaper price or an untapped geographical market? Perhaps there’s an unmet need for products and services that are complimentary to those already on the market. Part of your research should also include analyzing the competition and determining where your company will have the edge. As you research and analyze the data, you can then determine if anyone will actually buy what you plan to offer.

3) The Money - How, When and Where

Once you have determined that you can offer something that people will want to buy, determine your funding strategy for the first five years. Try to avoid unnecessary overhead expenditures. Work out of your house, which is quickly becoming today’s trend even for large corporate employees. Also, hire only those who are critical to the success of your company and seek out creative compensation strategies. Your goal is to keep the cash in the business as much as possible.

As for funding your venture, contrary to popular folklore, friends and family don’t want to give you their savings. There will be lots of promises to help in the beginning, but getting people to actually sign that check will be a struggle; I guarantee it.

If at all possible, plan to self-fund your venture for the first couple of years through your own savings and through loans. Loans are tough to get right now, but they are still out there. Next, get firm commitments from your friends and family as to the amount they will give you and when. By firm, I mean in writing. As for their ROI, don’t give away your equity if you can help it. Be creative - consider performance based returns to offset equity. Be stingy with your equity and try to structure the investments as loans or, at worst, a loan/equity combination.

If you build it, they will not necessarily come. It makes for a great movie, but not always a great life. Most start-ups fail, not for the lack of passion but for the lack of preparation.

Wednesday, April 27, 2011

Georgia's Investment Trend

What's the Hot Trend for Investment in Georgia?

Real estate? Still no...not even close. So where's the money? It's in the movies. Ever thought about how much you spend on film, TV and video games? We've all paid far too much over the last year, or even the last week for some of us, to go to the movie theater with our family and friends. How about TV? Secretly, most people have some favorite reality show that they just can't miss. Or, how about Halo, Call of Duty, and similar games that are taking a large chunk of change out of your bank account every month; if not yours, you surly know someone who spends far too much on those games. Wouldn't it be nice to get something back?

Over the past couple of years, Hollywood has been migrating to Georgia. In 2009 alone, Georgia slid into the nation's top five for film and TV production. And, in just the first half of 2010, movies filmed in Georgia have grossed more than $400 million at the box office.

"Film, music and digital entertainment projects...'these industries are thriving, growing and employing thousands of Georgians." Gov. Sonny Perdue

What's going on? Why has Georgia become the hottest place to film a movie? Easy, tax credits.... big ones. While real estate is burdened by higher and higher taxes, entertainment is getting all the breaks. And, it's all thanks to the Georgia Entertainment Industry Investment Act.

In May 2008, the Georgia Entertainment Industry Investment Act was signed. It improved the state tax credit for qualified production and post- production expenditures by as much as 30%. As a result, productions in such areas have increased 400% since the program went into effect.

The Georgia Entertainment Industry Investment Act is an aggressive tax credit program that provides an income tax credit of 20% to qualified productions. In addition, there is a 10% tax credit for productions that embed a Georgia promotional logo in the title, credits or as product placement in the content. Furthermore, there is an additional incentive provided for a Sales and Use Tax Exemption of up to 8% on all qualified expenses. And, what's really fantastic about this tax credit program is that it encompasses much more than just traditional feature films; the Act also includes video game development and animation.

Movies, television series, commercials, music videos, game development and animation are the hot spots for investment in Georgia.

The Georgia Entertainment Industry Investment Act has been a tremendous benefit for Georgia. The State has benefited from an overall economic impact of over $1.5 billion. In addition, the tax credit package has generated upwards of $950 million in direct investment! Someone's making money off of these productions. So far, I've just been spending money on these productions. I sure would like to get some back!