California Ban on Texting while Driving to become Law

Effective January 1, 2009, it will be illegal to use a wireless phone device to write, send or read text messages while operating a motor vehicle.  Violators caught text messaging while driving will be fined $20 for a first offense and $50 for any violations after that, although court imposed fees would increase the cost of a first offense to nearly $100.

This is an important back-fill law to the previously imposed ban effective July 1, 2008 to prohibit the hand-held use of cell phones while driving.  In discussing the pending law, its author, Sen. Joe Simitian, indicated that while it would have been logical to include the ban on texting in the earlier ban on the use of hand-held phone devices while driving, the concern was that this would have provided another excuse to put off passage of the original cell phone ban.

My view?  While my heart would like to agree with Republicans that existing laws against negligent driving should cover this obviously dangerous activity, you could apply the same logic to not running stop signs, and I see drivers every day (still!) yammering on the phone with both hands or sending text messages while driving.  Perhaps the publicity around the new law will remind people that it’s far too easy to get lost in a text conversation, or catching up on my blog posts, as the car in front of you suddenly comes to a stop…!!

Warren Buffett invests in Goldman Sachs

I have to admit that I’ve never had an investment pay off several hundred million dollars on the first day (how many of us have?), but I can help break down the elements of the Warren Buffett led Berkshire Hathaway investment in Goldman Sachs, one of the last two remaining major investment banks alongside Morgan Stanley in the US.  (I guess whether they are still investment banks is debatable, as the Fed allowed them to change their regulatory status to bank holding companies to provide them with access to greater lending resources, but we’ll save that discussion for another time.)

In any event, as the press release from Goldman Sachs indicated, the Berkshire Hathaway investment consisted of the following:

• A $5 billion private placement preferred stock purchase agreement, with a 10% dividend and a call option at a 10% premium
• $5 billion in warrants to purchase common stock at $115/share for five years
• Separately, Goldman Sachs indicated that they would do a secondary public offering in the amount of $2.5 billion in common stock.

These agreements haven’t been made publicly available as of the time of this writing, so I’ve posted some links to sample stock purchase agreements and warrant agreements for those of you needing to use these types of legal agreements in your own work, but once they are available you can immediately find them at www.RealDealDocs.com, which provides thousands of lawyers and business professionals with easily searchable access to millions of legal agreements and contracts from top law firms, including searchable agreement clauses, profiled and searchable the way professionals thinking about them.

Transition Services Agreement in the Lehman Brothers – Barclays Capital deal

As part of the Lehman Bros Barclays Capital Asset Purchase Agreement between Lehman Brothers and Barclays Capital, through which Barclays agreed to acquire virtually all of Lehman’s North American assets along with its headquarters building and two data centers, Lehman Brothers and Barclays Capital entered into a Transition Services Agreement.  What is a transition services agreement, and what is it used for?

 

Transition services agreements are legal agreements most often associated with asset purchase agreements involving the divestiture of a significant portion of a business.  In a transition services agreement, the seller agrees to provide certain services to support the acquired business for a period of time in return for compensation.  I’ve linked to a helpful article from Deloitte Consulting, in which the authors mention that “TSAs (transition services agreements) are most often used in carve-outs where the buyer lacks the necessary information technology (IT) capabilities or capacity to support the business on its own. For instance, many Private Equity (PE) firms rely on TSAs until they can identify and engage an IT outsourcing vendor.  TSAs are also often necessary when the deal closes faster than the buyer’s IT organization can respond.”

 

There are a number of advantages in entering into transition services agreements alongside asset purchase agreements, including reducing transition costs and providing for a faster close, allowing for a cleaner break for the divested business, and potentially giving the acquirer an opportunity to more effectively assimilate the acquired business.

 

Disadvantages of poorly conceived and executed transition services agreements include a drawn out transition process, distractions for the seller as it has to continue to provide support to an outside entity in potentially unfamiliar ways, and the possibility that the TSA is used to put off difficult decisions by the buyer.  Sellers will work to avoid lengthy obligations under a transition services agreement, and will generally only do the minimum required to get the deal done.

I’ve linked to several helpful resources above, including several hundred sample transition services agreements available at www.RealDealDocs.com.