Big Boy letters Confidentiality Covenants Jury trial waivers Letters of intent Material adverse change Merger agreements Cash Cash election Cash / Stock Stock Mergers of Equals Representations and warranties Standstill agreements Termination
Summary Typically used when a company or an insider sells stock to a non-insider buyer Buyer waives any subsequent claims based on seller's failure to disclose non-public information Buyer is often a sophisticated investor with an unfettered ability to investigate May be unenforceable per Exchange Act § 29(a) Exchange Act [more...]
Notable Cases Rockwell Automation v Kall (Del Ch 2005) Further developments in this action Rockwell Automation v Kall (Del Ch 2004) Employment agreement provided for the return of confidential documents upon termination of employment Defendant employee was not entitled to retain these documents Must instead use discovery to obtain these documents [more...]
Precedent Affirmative Covenants Financial statements Certificates; Other information Payment of obligations Maintenance of existence; Compliance Maintenance of property; Insurance Inspection of books and records: Discussions Notices Environmental laws Interest rate protection Additional collateral, etc Precedent Negative Covenants Financial [more...]
Developments Debt buyers are increasingly requiring event protection Requiring change of control and ratings downgrade covenants Even from investment grade issuers To address risk of current market developments Increased risk that an issuer will become more highly leveraged after a private equity sponsored buyout or activist shareholder inspired [more...]
Summary Contracting parties will often agree to waive a trial by jury in event of a dispute California's Supreme Court held that contractual waivers are invalid under California law (2005) Contractual Waivers Invalid Under California Law Grafton Partners v Superior Court (CA Sup 2005) Opinion (California Supreme Court) California Code of Civil [more...]
Preliminary agreements; Memos of understanding; MOUs Summary Infrequently used in M&A context - Especially in public company transactions - because disadvantages to their use will usually outweigh any advantage Advantages Can start required waiting periods for HSR Act clearance Can satisfy conditions to obtaining financing commitments [more...]
M&A Closing Conditions MAC clause asserted to prevent liability for exit financing in Solutia bankruptcy proceeding Richards Kibbe & Orbe LLP USA - February 11 2008 Recently, a number of high-profile cases have emerged involving the application of material adverse change ("MAC") provisions, primarily in the context of leveraged buyouts. richards_kibbe_021108 2 See, e.g., United [more...]
Summary Addresses standard M&A contractual condition Variously referred to as: Material adverse change MAC clause Material adverse effect MAE clause When invoked by buyer, rarely litigated to finality Either clearly a MAC , and deal terminates, or Buyer threatens to terminate and renegotiates price See Troubled Deals Recent cases Holly [more...]
Summary Covers various issues over contractual representations and warranties ABRY Partners v F&W Acquisition Del Ch 2006 Significant Delaware decision About contractual non-reliance provisions See ABRY Partners v F&W Acquisition Securities Law Liability - SEC'S Titan Investigation SEC's Titan [more...]
Precedent Sovereign Bancorp - Santander 2005 Investment agreement Article 8 includes standstill provisions See Regional Banks for more detail UnitedGlobalCom - Liberty Media 2004 Standstill agreement Form 8-K Both Delaware companies Often included in M&A confidentiality agreements See M&A confidentiality agreements for additional precedent [more...]
Notable Cases Frontier Oil v Holly Corp (Del Ch 4 29 05) V C Noble Frontier agreed to buy rival Holly for cash and stock A toxic tort sued was filed against Frontier Holly said it would recommend shareholders vote against the deal if it weren't renegotiated After weeks of negotiation, Frontier sued claiming repudiation In response, Holly [more...]
Developments New forms are being used for automatic shelf registration Response to Securities Offering Reform changes See Automatic Shelf Registration Some underwriters have changed their forms of underwriting agreements In response to New York Court of Appeals decision in EBC I v Goldman Sachs 6.07.05 Which ruled that underwriters can have fiduciary [more...]
Banc of America Securities 2006 Mueller Water Products Banc of America / Morgan Stanley / Lehman Brothers Underwriting agreement Final prospectus 5.25.06 MWA news - stock chart RAM Holdings Banc of America / Merrill Lynch Underwriting agreement Final prospectus 4.27.06 RAMR news - stock chart Bear Stearns 2006 Novacea Bear [more...]