Anthony Kappus

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Kevin Criddle
kevin.criddle@dlapiper.com 
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Anthony Kappus
anthony.kappus@dlapiper.com

One of the key considerations in structuring merger and acquisition (M&A) transactions is determining which contracts of the target company, if any, will remain in effect for the acquiror following closing.  This post will briefly outline: (1) the general rules of contract assignment; (2) the effect of anti-assignment clauses and other exceptions to the general rule of assignability; and (3) the effect of four common M&A structures on contract assignment.

General Rule: Contracts are Freely Assignable

The general rule is that contracts are freely assignable unless the contract itself, a statute, or public policy dictates otherwise.  This is true in Washington State, where courts have found that contractual rights are generally transferable unless the contract expressly prohibits assignment in “very specific” and “unmistakable terms.”

Exceptions to the General Assignability Rule

The exceptions to the general rule of free assignability fall into two broad categories: (1) contractual prohibitions on free assignability (“anti-assignment clauses”) and (2) case law prohibitions on free assignability of certain types of contracts that arise out of public policy concerns.Continue Reading Assigning Contracts in the Context of M&A Transactions

CONTRIBUTED BY: John Reed and Anthony Kappus

Many existing and startup corporations are considering adding forum-selection provisions to their governing documents requiring shareholder derivative and other intra-corporate lawsuits to be filed with courts in a specified location, or “venue,” often naming the Delaware Court of Chancery as the sole court in which such actions may be filed.  The issue has been the subject of much discussion since the March 2010 Delaware Court of Chancery opinion in In re Revlon, Inc. Shareholders Litigation, suggesting in dicta that corporations are free to adopt charter amendments that designate the jurisdiction for litigation of intra-corporate disputes.[1]

Post-Revlon, there has been a meaningful trend among both public and private companies towards adopting charter or bylaw provisions that designate Delaware as the exclusive jurisdiction for stockholder litigation.Continue Reading Selecting Delaware as the Exclusive Forum for Stockholder Litigation

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CONTRIBUTED BY
Anthony Kappus
anthony.kappus@dlapiper.com

This installment of our series Understanding VC Financing examines liquidation preferences.  Along with dividend rights, conversion rights, and anti‑dilution provisions, liquidation preferences are an essential economic term of the preferred stock typically sold in a VC financing.

Liquidation preferences govern how a company allocates and distributes the proceeds from a sale, merger, dissolution, or other liquidation event.  The liquidation preference entitles holders of preferred stock to receive distributions of proceeds from an exit transaction before holders of common stock and other series of preferred stock with a lower preference priority and, in certain cases, entitles preferred stock to participate with holders of common stock after payment of the initial preference amount.Continue Reading Understanding VC Financings – Liquidation Preferences