Last week, the Delaware Court of Chancery issued an interesting opinion where it enjoined a party from prosecuting a proxy contest and proceeding with a hostile bid for its industry competitor as a remedy for breach of the parties’ NDA. This pretty extreme remedy was issued even though the parties did not enter into a standstill agreement. Courtesy of John Reed, a partner in DLA Piper’s Delaware office, below is a brief summary of the case and a few questions raised by this recent decision. The full text of the case is available here: Martin Marietta Materials, Inc. v. Vulcan Materials Co., C.A. 7102-CS (Del. Ch. May 4, 2012).Continue Reading Turning an NDA into a standstill?
Selecting Delaware as the Exclusive Forum for Stockholder Litigation
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
Survival of Reps and Warranties: Drafting Lessons from the Delaware Court of Chancery
Last week, the Delaware courts (Chancellor Strine) provided some interesting guidance for those concerned about time-limiting reps and warranties in purchase/merger agreements. The issue raised is whether a time-limited rep/warranty combine
d with express termination language (i.e., a rep/warranty that survives for one year from closing then terminates along with any remedy for breach) effectively operates to shorten the statute of limitations on claims. Courtesy of John Reed, a partner in DLA Piper’s Delaware office, below is a brief summary of the case and a few key takeaways. The full text of the case is available here: GRT, Inc. v. Marathon GTF Technology, Ltd., No. 5571-CS (Del. Ch. July 11, 2011).
The provision at issue stated that certain “representations and warranties … will survive for twelve (12) months after the Closing Date, and will thereafter terminate, together with any associated right of indemnification … or the remedies provided …” The plaintiff-investor argued that the Survival Clause should not be read as shortening the time period in which a claim for breach must be brought, but instead only as shortening the period of time in which a breach may occur subject to the ordinarily applicable three-year statute of limitations. The Chancellor rejected the argument and held that “the contract plainly shortened the three-year statute of limitations applicable to breach of contract claims to one year.”Continue Reading Survival of Reps and Warranties: Drafting Lessons from the Delaware Court of Chancery