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Oct 31, 2010

Why do the Chinese Blow Car Horns So Much an Explanation by an American Lawyer in China

China must have the loudest horns in the world.  Now, I don’t know much about noise levels and decibals and other technical things like that, but, I do know what I hear – when I can hear.  I’ve been thinking about a topic for my next blawg post for quite awhile and while I have had a couple of great ideas, I just couldn’t figure it out.  You know that me  like to write about the law in China and other interesting stuff like that, but, if you read my blawg you also know that I like to write about China and the customs and habits which can help us all understand or tolerate the way things work over here.

So, I was thinking about horns in China and for those of you who have been here, you know that horns are not used in the same way as they are in the West.  In fact, if someone beeped their horn in the same angry, prolonged, and aggressive way as they do here in China, in Los Angles, they may be shot.

They don’t just give you a friendly toot to remind you that the light is now green, they lay on the mother like their life depended upon it which then starts a chain reaction of angry beepers all laying on the loudest horns on the planet.

I’m sure that when they design and build cars in China for sale on the Domestic Chinese market, whether it’s Ford, or Mercedes, or BMW, or Geely, they have a meeting to discuss horns and there is a typical Chinese automotive engineer type with the short sleeve white shirt, black pants with white socks and overly shiny black shoes that says:  ”we gotta make these horns extra loud so that they Chinese will hear them.”

The response inevitably is “how much louder” and the engineer says “what about 100% louder, because we are China and the Middle Kingdom and the biggest and best country in the world and we should have the loudest horns.”  The decision makers obviously not wanting to lose their jobs by allowing wimpy horns or lose face to the rest of the automotive industry all agree and the horn blowing torture begins.

So I was thinking, as they create their own traffic jams by all trying to jump ahead of each other on the roads, why the Chinese don’t just wait for the light to change, or the person rudely stopped in the middle of the road talking on their cell phone to move on, or the taxi letting off it’s passengers to complete their transaction (which usually only takes about 10 seconds), or any of the million other reasons why they beep their horns, “why do they really lay on the horn”.

It doesn’t seem that it works or the person whom is the brunt of the horn blowing cares, it only annoys the hell out of me.  I am sitting in my office on the 12th floor of a premium office building in the Shenzhen CBD and I hear a cacophony of the loudest horns ever invented and the same goes for my apartment on the 32nd floor.

Mosquitoes don’t even make it up to the 32nd floor, how the hell can the horns sound so loud and reach my ears while I am trying to sleep.  I guess the simple answer is they just don’t give a hoot about anything else other than what is impacting their little world at that time and I wholeheartedly believe that this mentality is prevalent in everything the Chinese do.  Now I am not talking about everyone, of course there are considerate and inconsiderate people all over the world, it just seems like with one and a half billion people that there are plenty here that just don’t give a hoot.

So just remember, when you are dealing with a factory owner in China or looking to invest in or acquire an existing business or conducting any other transaction and you believe that the person(s) you are dealing with “likes you” and “I can trust them” (we heard it all) see the the way they lay on that horn.

Frank Caruso is the head of the China Law Practice at IPG.  He has lived and worked in China for over a decade.

Oct 30, 2010

Doing Business in Korea (by Tom Coyner: IPG Legal's Senior Adviser)

IPG Legal's Senior Business Adviser - Tom L. Coyner has published the second edition of his book on Korean business. The book is entitled "Doing Business in Korea" and may be purchased through Amazon or at most books stores in Korea.

The book is highly recommended reading for anyone with business interests in Korea.  Sean Hayes has been noted as a contributor to the legal chapter of the book and considers the book a must-have for all doing business with Koreans.

For those not in Korea having difficulty obtaining the book (Amazon only carries a few copies), please contact IPG Legal and we will obtain you a copy.
“Underscored with a deep and nuanced understanding of modern Korean culture, this is a ‘must read’ for any foreigner in Korea.   
    — Robert Fallon, Former Chairman of the Board of  Korea  Exchange Bank

“Examples and practical advice—it’s all here! This book will save you years on the learning curve.”      
    — Jack Lewis, Associate Dean of the Marshall School of Business at USC

Oct 26, 2010

The Green-Tea Party (Korea Times by Sean Hayes)

My grandfather was proud to be a Democrat and my father a Republican and I am proud not to vote.

My Italian grandfather lived through the Great Flu Epidemic of 1918 that took his father; the Great Depression that took his pride; World War II which took his thumb; the mass production of the automobile that took his pre-teen brother in a fatal accident; and heart disease that took his wife in the prime of her life.

My grandfather lived the life of the typical immigrant and accordingly was a Democrat. Republicans of this generation were rightly perceived to be a party that represented the rich and the democrats were the alternative, thus, representing the working-class.

My off-the-boat Irish father came to the U.S. and worked at odd jobs until my grandfather introduced him to the stability presented by the local utility company.

My father experienced similar hardships in Ireland as my grandfather, but was richly rewarded by the “golden opportunities” that presented themselves even to the off-the-boat Irishmen with the thick Kilkenny-Irish brogue and no high school education. Hey the guy didn’t even know the difference between a hurling stick and a baseball bat.

He rightly is unable to understand how so many people don’t have jobs and often proclaims how this has to do something with an unwillingness to get off one’s derrier ― in much less diplomatic terms and still in the thick Kilkenny brogue.

Of course my father is a proud Republican and now loves even coaching baseball. An Irishmen coaching baseball ― only in America.

My mother a lifetime social worker, and the first person in our direct family to graduate from college was brought up in generation fighting for equality of the sexes and opportunities for the socially disadvantaged.

She became part of this revolution and even made the revolution part of her working life. She, of course, is a proud member of the Democratic Party.

I, being brought up in a middle-class family came to admire, campaign for and even work for Republicans and the party.

After working in D.C. for a conservative senator, I became disgruntled with politics after realizing that Harold Lasswell’s “Who Gets What, When, How?” is not just a book, but the basics of this political game.

The game is well played in America and Korea by politicians that are more interested in political survival than ideology and the well-being of the nation.

I loved politics because of the ideological battles between conservatives and liberals. I came to respect the classical liberal (modern conservatives/libertarian) ideologies for their focus on the individual.

However, it becomes apparent that most liberal and conservative politicians care little for ideology and care more about self-preservation. If ideology is useful it is employed, if not it is maligned. The Hamilton and Jefferson ideological clashes are dead and simply political survival rules the day.

Today liberals in the U.S. and even more so in Korea are hell bent on preserving the status quo. A status quo that keeps certain provinces and occupations loyal to this liberal political elite ― a liberal political elite that lives off the backs of the loyalty given by these regions and occupations.

The conservatives are not much different. A hopeful seemingly ideology-based Korean president fell to “pragmatism” because of a realization that his reform of the service sector, healthcare system, education, politics and bureaucracy was impossible because of vested political elites in all camps that were entirely unwilling to risk political irrelevancy.

If politics is a mere “Who Gets What, When and How?” game and only the few are getting anything, then why do we even care.

The mid-term election in America and the state of political discord in Korea lends itself to a feeling of total political hopelessness for voters and a need for a new political movement.

The Tea Party is available in America with an ideology-based contract from America agenda that calls for: identifying the constitutionality of every new law; rejecting emissions trading; demanding a balanced federal budget; simplifying the tax system; auditing all federal government agencies; limiting annual growth in federal spending; repealing the health care legislation passed on March 23; passing an “all-of-the-above” energy policy; reducing earmarks; and reducing taxes.

Sure some of the “members” are nut-jobs, but at least they are standing up for more than their jobs.

Hopefully, something can brew in Korea other than the ubiquitous Starbucks coffee.

Appeared in the Korea Times on October 23, 2010.


Oct 21, 2010

American Law Firms in Korea

Things may be changing soon. Presently there are no U.S. law firms in Korea, but things will change if the Korea-U.S. FTA is passed. Presently numerous American law firms are interested in access to the market. I have been contacted by a few firms interested in building alliances. The doors will also open to British firms with the Korea-EU FTA.

The Korea Herald had an interesting interview with Gregory Nitzkowski the managing partner of Paul Hastings.

Gregory Nitzkowski noted in the article that:
"It is not the dominance in the Korean legal market that we seek, but rather a firmer connection to our global clients, many of whom are Korean-based international companies such as the Samsung or SK Group.   A market is usually in favor of the staus quo and changes for the unknown many come as a threat.  It is natural for Korean law firms to feel a certain degree of alarm and change themselves accordingly, but the global precedents show that they need not be intimidated by the upcoming challenges."
I have wrote numerous articles on how the introduction of competition will likely create better services for clients.  I assume, for business clients, fees may also be reduced and more transparent billing practices will be implemented by these firms.  Here are a few articles that appeared in the Korea Times and on this blog that may be of interest.


Oct 20, 2010

KORUS FTA is Dead without a Push from Manufacturers and an Understanding of the Unions.

The National Association of Manufacturers Blog has a brief mention of the reasons why the U.S.-Korean Free Trade Agreement (KOR-US FTA) is a benefit to American manufacturers and will not lead to the outsouricng of more jobs as President Obama is now alleging.

The blog post notes that:
Not to belabor a point that has been raised by international economists and trade policy analysts across the political spectrum: Cutting tariffs and non-tariff barriers in foreign markets through preferential trade agreements does not reduce or outsource American factory jobs, it creates more of them. How? Our market is open, with tariffs averaging 2.5 percent. Most other markets (developing as well as some developed) in the world have tariff and non-tariff barriers that are far higher. When we sign a FTA with a country, its barriers come down, and as a result, our exports go up, both in volume and value, and more than our imports from that country.

Voilà, increased exports. Since manufactured goods are two-thirds of our exports, when we increase those exports, we boost manufacturing output, employment, and growth here at home. While we have a trade deficit overall in manufactured goods, we have a trade SURPLUS in manufacturing with our free trade agreement partners – more than $50 billion worth over the last two years.


Doing Business in Asia: Due Diligence, Agreements, Attorneys and Street Smarts

International attorneys mention in blogs, speeches, journal articles and in the press, frequently, that doing business in Asia is different and much more risky than in the West. Maybe we are not getting the word out clear enough.
Understand, we are not trying to sell you anything you don’t need ----LISTEN UP - Get someone who works locally to execute these deals, get a carefully drafted agreement and engage in a little due diligence. If not, we love litigation, winding-up joint ventures and filing criminal complaints. These are the things that require a good deal more time than drafting and negotiating agreements.

For example, a client involved in a USD 600,000 breach of contract/fraud case (option to purchase industrial machinery) with a Korean manufacturer recently contacted use with another issue in Korea.

The client (I know you are reading this and we love you guys) concluded a deal with a bare-bones PO and invoice. As I mentioned in a previous post, “[i]f you plan on just dealing through a purchase order (PO) in Korea, you are heading down a path that will invariably lead to a kick in the tail.” Korean Outsourcing: Legal Basics and other articles such as Korean Joint Ventures: Bare Essential of a JV in Korea

The client sent a substantial amount of money as a deposit on a piece of used industrial machinery and some spare parts. After sending the money, the Korean seller unilaterally changed the terms by making more demands. This is a common tactic. The seller now has your money and has the upper-hand in now renegotiating better terms for himself.

The Korean seller noted that some of the parts would cost more money, he required an additional 20% deposit, he can’t deliver the machinery FOB and a slew of other bull that all related to trying to obtain a better deal. The client already quoted the final sale price and terms to his final customer and thus was stuck between a customer and a jerk.

We settled the matter for the client after a good deal of time and long heated conversations with the Korean seller. The client gained a couple of more grey hairs, a sizeable legal bill, a smaller margin in his deal and another lesson in doing business with Koreans (the same risk applies to most Asian nations)

Please. Please. Listen.

First, Due Diligence. Due Diligence. Due Diligence. Due Diligence means at least doing an asset check before sending someone money. The Korean company proclaimed on its website that it was a medium-size corporation. However, the company was a sole-proprietorship without any assets. Don’t forward money to strangers.

Second, L/Cs add a degree of safety to a deal for buyers and sellers. A seller that doesn’t want to utilize a L/C is a seller that we must scrutinize. A solvent seller will normally be able to easily obtain credit on the L/C. In this case, the seller was unwilling to utilize an L/C for a variety of non-sense reasons relating to his total lack of commercial sense. Therefore, we established (will establish) a joint bank account with the power to release the funds in the hands of our law firm.

Thirdly, an agreement shouldn’t be only one page long. Numerous risks come-up in these types of deals. Get someone to assist that has partaken in litigation and has worked with international transactions in Korea. In Asia, a lawyer is recommended, since often the attorney awakens the fear in the belly of the beasts (my partner is a former Korean judge and he loves this part of his role) and the attorney will often understand better than anyone else the risks of doing business in Asia (my group has dozens of pending breach of contract cases based on agreements that left much to be desired- some were drafted by less-than qualified “international” and Korean attorneys).


Oct 10, 2010

A monkey on my back (Korea Times by Sean Hayes)

Korea ranks behind many of its developed and less developed Asian neighbors in many major economic freedoms and indices.

The major monkeys on the back of the Korean economy, according to some surveys, include restrictive trade policies, a bloated bureaucracy, high tax rates, and over regulation of credit, business, labor and whatever else the bureaucracy thinks it can get its hands on.

These indices are a useful guide for businesses considering entering the Korean market, however, they must never be viewed in isolation from other realities.

The indices never consider the inherent difficulties in doing business in the developing world. Many of these difficulties are not present or even considered in Korea. One of these difficulties was evident during my recent trip to one of the world’s favorite vacation destinations.

I awoke at about 8 a.m. to a fully developed adult monkey sitting on top of the TV feasting on a bowl of fruits. Awakening to a monkey in your hotel room is entertaining; trying to get a “five-star” hotel in a developing economy to remove a monkey from a hotel room is simply hysterical.

I sensed in my recent trip to one of Asia’s favorite banana republics that if my hotel is any reflection of the nation’s work force, Korea has little to fear from this emerging economy. The developing economy is often labeled as more economically freer than Korea in many major categories of these economic freedom indices and equal or only a little lower than Korea in many others.

Awakening to the monkey on your TV eating fruit from the hotel supplied fruit bowl, I thought it would be best to call the reception desk. I suspected that they wouldn’t check him into a different room, but would check him out of my room.

Calling to the reception desk, I proclaimed in what must have sounded like an excited voice “a monkey is on the TV.” Reception: “TV needed fixed. Transferred call to repair.” “No. No. A monkey is on top of the TV” I proclaimed. Reception: “Ok. Ok.” After a few choice words influenced by an Irish temper and Italian wit, I was transferred to a repair guy.

The repair guy, after having a good laugh and asking if the monkey was of any relation, advised that this is a matter that room service will take care of so. He quickly transferred me to room service.

I explained the situation to room service and explained how the monkey has now taken my swim shorts into the shower room. I suspect the shorts were a little too big for the monkey. I was a little concerned that I may have to choose between swimming in the buff or in Asian-sized swimwear.

The buff, I was sensing, may be a little more comfortable than the Asia-sized swimwear alternative. The room service man said sorry since they don’t handle these issues and he quickly transferred me back to the reception desk.

Of course, a who’s on first conversation ensued leading me to request a gun and two bullets. One of the bullets was intended for the monkey and none were intended for me. I learned quickly that monkeys seem to understand that loud profanity is a sign to leave and leave without my shorts.

I have had the pleasure of assisting clients in doing business in China, Korea, Cambodia, Vietnam, Thailand and a few other Asian nations. Yes Korea has many structural problems caused by its bloated bureaucracy and overregulation of everything; however, in Korea you are far more likely to find employees to handle your monkey problems.

Korea does need to get the figurative monkeys off of its back; however, investors should never consider, alone, these indicators as tools in choosing investment options.

For most companies establishing an office in a foreign nation, the most important consideration should be access to a quality labor pool. Korea may not have the world’s greatest labor pool, but you are sure to find employees to handle all of your monkey business.

Appeared in the Korea Times on October 9, 2010.
by Sean Hayes (Host of Blog)


Oct 6, 2010

Korea-EU FTA: Country of Origin under the Kor-EU FTA

In order for an importer/exporter to benefit from the lowered tariff rates under the Korean-European Union FTA, the product must be recognized as a product either from Korea or an EU member nation.

Article 2 of the Protocol to the Korea-EU (the “Protocol”) provides that in order for a product to be recognized as a product under the Protocol , the product must either:

  • “Wholly Obtained” within the territory of the Party; OR
  • Has undergone “substantial transformation” within the territory of the Party.

Protocol Article 4 notes that “wholly obtained” means, in summary,:

  1. Minerals extracted and vegetables grown and harvested in the territory of the Party;
  2. Seafood taken from the territorial waters of the Party;
  3. Products made from (2) seafood on “factory ships;”
  4. Scrape and Waste derived from the manufacturing or processing in the territory of the Party.
A "factory ship" "vessel" must be registered in the territory of the Party, sail under their flag and 50% of the shares must be owned by a national within the territory of the Party.

Protocol Article 6 notes that “insufficient” to classify as a “substantial transformation” includes, in summary, mere:

  1. Preservation techniques for transport;
  2. Painting and polishing;
  3. Husking of cereals and rice, peeling of fruits, removal of seeds;
  4. Sifting, screening, sorting, classifying, grading or matching of products;
  5. Slaughter of animals;
  6. Assemble and disassemble of products.


Korean Anti-trust Law: Defining the Relevant Market in Korea

The Seoul High Court (2009 NU 1930, May 19, 2010) has overruled the decision of the Korean Fair Trade Commission (KFTC) in a case concerning price-fixing by luxury car importers. The KFTC has appealed the decision.

The High Court ruled that a price-fixing arrangement (restriction on discounts from MSRP) between Lexus car dealers was not an “unfair collective act” under Monopoly Regulation and Fair Trade Act Art. 19 (1) thus overruling the decision of the KFTC that imposed a fine and ordered the dealers not to engage in the price-fixing arrangement. The KFTC has also imposed a fine on other luxury car importers.

The KFTC opined that the relevant market was the market for the particular car and not the entire car or luxury car market. Thus, the Commission ruled that the act restrained trade absolutely within the relevant particular car luxury market (Lexus market) and thus restrained 100% of trade within the market.

The Seoul High Court, in contrast, defined the relevant market as the entire market for imported automobiles and luxury domestic cars. Thus, the BMW car market accounted for “much less than 15%” of the relevant market and thus was not a significant restraint on trade and thus didn’t reduce competition in the relevant market.

I would be curious to hear what others feel about this case.

It seems like the Seoul High Court will now not rule per se that a price-fixing relationship is an unfair collect act (unfair restraint on trade) and will require a finding by the KFTC that the arrangement has a substantial effect on competition. The Seoul High Court will also likely define the markets very broadly.

As we all know in Korea, the courts are far less predictable than in Europe and the states this holding may be not followed in preceding cases, even by the same court.

Also, it is curious that the decision by the Supreme Court (2003 Du 9252, Aug. 19, 2005) seems to have been ignored by the Seoul High Court. The Supreme Court in the case opined that price-fixing is per se and unfair collective act “absent special circumstances.” What is the special circumstance in this case?

I am very interested to see what the Supreme Court does and if the Court will pick the obvious market middle-ground (why define all imported cars in the same category as luxury cars), uphold the decision or stand by its previous holding etc. I will update the reader HERE on the outcome of the Supreme Court case.

The Supreme Court case is 2010 DU 11757 and no hearing date, as of October 6, 2010, is scheduled. This would be great one for oral arguments. Expect no update soon.

Also of interest may be:


Oct 5, 2010

Korean Joint Ventures: Bare Essential of a JV in Korea

A client, a minority shareholder in a foreign-capital invested company in Korea is involved in litigation with other company shareholders over issues the client had with the majority and other shareholders.

The majority shareholder (controls the representative director) has been helping himself to the company profits through liberal expensing and interested transactions with the company and his personal company. The majority shareholder is also threatening to block distributions and is possibly increasing the stickiness of his fingers.

Like situations WILL occur in many cases where a JV is not completed through a carefully drafted shareholder agreement and articles of association.  A majority shareholding will not prevent this situation from occuring, because of the nature and power of representative directors.

I have said this numerous times, if you don’t want to support my extravagant lifestyle (actually I don’t have an extravagant lifestyle), get an experienced attorney to draft your Korean shareholder agreement and articles of association.  Make sure the attorney knows what the heck he is doing- many of the foreign and Korean attorneys - don’t.

Make sure the attorney is not merely going to give you form agreements. Every joint venture agreement in Korea is different and form agreements are a sign of a lack of care and trouble in the future.  Don’t skimp at this stage and thus don’t use form articles, form shareholder agreements, and form by-laws drafted by hacks, attorneys that quote the lowest price and only accountants and bubmusa (judicial scriveners).

Joint Venture Basics

  1. Due Diligence, Due Diligence, Due Diligence;
  2. Limit the Powers of the Representative Director;
  3. Retain the Power to Appoint and Remove the Representative Director;
  4. Maintain Control over the Company Seal;
  5. Retain Majority Control or include other Minority Protection Clauses;
  6. Hire an Independent Accountant and Utilize a Neutral REAL Statutory Auditor;
A few other articles I wrote may be also of interest:


Korea Licensing Agreements: The Slim Basics

We always advise our clients for every license agreement that there is a very high probability that at the end of the agreement license payment obligations will not be honored by the Korean licensee. The same holds true for our Chinese and Southeast Asian practices.

If a Korean licensee is not going to continue the relationship with the foreign licensor, many Korean companies simply choose to forego the obliged payments in favor of not responding to emails, phone calls and mail.

We represent many foreign companies that retain us to collect on overdue payments from the Korean licensees. We are often disappointed at seeing license agreements that are simply form agreements from U.S./European Law firms or agreements drafted by Korean law firms with Korean and foreign attorney hacks. Sorry to call fellow attorneys hacks, but after reading one of the license agreements from one of the "ubiquitous big firms," the term is even too kind, since the fee paid for a simple regergetated form was outrageous.

For you foreign attorneys in Korea reading this, don't just use an agreement given to you by a Korean attorney or borrowed from a license agreement from an inhouse form book (we all know that book), but use a little creativity and your legal education.

If the company is a large respected company with numerous executed license agreements, often the problem is resolved with a letter and a call, however, the less cash flush will often skip town and will require you to hire an attorney to attach assets.

Save you money and spend some time and resources on drafting a Korean-tailored license agreement.

Here are a few tips for those that wish to forego the use of an attorney (not advisable, but I do love giving free advice.)

  1. Front-load the payments and expect not to get the last few payments;
  2. Have clauses requiring the payment of expenses for collection etc.;
  3. Have fire prevention etc. clauses;
  4. Make the agreement compelling enough for the Korean company to continue with the agreement. Think up some unique teasers, while still maintaining your option not to renew;
  5. Use a Korean-tailored agreement and not just a form American or European license agreement;
  6. Translate the agreement into Korean in order to avoid misunderstandings;
  7. Do a background check on the company;
  8. If you smell a stinky fish, you found a stinky fish. Don’t be desperate; someone else will want what you have, unless you also have your own stinky fish to sell.
Other articles that may be of interest for those reading this article include:


Oct 1, 2010

Stock Purchase/M & A Due Diligence Check List for Korean Companies

A client called and asked if I would draft a due diligence check list in order to advise on due diligence necessaries.  The client intends to purchase the stocks of a distressed 700+ employee Korean company.

He noted that his staff would do the actual due diligence and all we should do is prepare the check list. I sent him this list for free and advised him to get someone to do the due diligence that knows what to look for. Hopefully, he will take my advice, since we see too many issues with clients looking to save a few bucks by using staff with no Korean experience.

Korean companies often are very poor at keeping accurate records, thus, knowing what and where to find the usual red flags is critically necessary. The paper trail that is produced by Korean companies is often poor and without a knowing eye and ear you are bound to be taken to the cleaners. Additionally, the issues that come up in U.S. due diligence are vastly different than those that arise in Korea.

Be forewarned, this list was meant for experienced attorneys with knowledge of numerous Korean peculiarities. The list is only our initial check list and intended to jar the memory only.

Initial Checklist
Stock Purchase/M & A
J & S Law Firm
(Seoul Office)

I. History
     A. Company History
     B. Founder & Family
     C. Historical Profitability
     D. Reason for Sale
     E. Primary Customer
     F. Stinky Fish

II. Financials
     A. Audit Documents
     B. Tax Returns, VAT filings etc.
     C. Government Filings, Notices and Communications
     D. Local Taxes
     E. Cash Flow, Current Financials, YE
     F. Distribution to shareholders

III. Company Docs
     A. Business Licenses
     B. Articles, By-laws, Amendments etc.
     C. Shareholder Agreements
     D. Government Approvals etc.
     E. Directors, Officers, Share Holdings
     F. Representative Director, Seal Authority
     G. Formation Docs
     H. Insurance

IV. Assets
     A. Receivables
     B. Real Property
     C. Moveable
     D. IP (trademark, patents, copyrights, licenses etc.)

V. Other Liabilities
     A. Lawsuits
     B. Government
     C. Loans
     D. Guarantees
     E. Licenses
     F. Contingents
     G. Liabilities to Shareholders, Directors, employees

VI. Employees
     A. Employee List
     B. Employment Contracts
     C. Government Obligations
     D. Severance Obligations
     E. Employment Related Tax Obligations
     F. Labor Union Representatives/Union

VII. Real Estate
     A. Title, Lease, Property Records
     B. Adjoining Landowners
     C. Mortgages, Liens etc.

VIII. Customers
     A. Major Customers
     B. Agreements
     C. Customer Relationship Issues
     D. Customer Relationship with Key Employees Leaving