Corporate Finance Law Blog : Corporate Finance Lawyer & Attorney : Davis Wright Tremaine Law Firm

Zhi-Ying James (Jim) Fang Partner - Los Angeles 213.633.6847 jimfang@dwt.com Download VCard   The law firm of Davis Wright Tremaine LLP is pleased to inform you that our partner, Zhi-Ying James Fang, will speak at the American Conference Institute’s 4th National Symposium on Mergers & Acquisitions in China. The event takes place Feb. 25 and 26, 2010, at the Carlton on Madison in New York City. Mr. Fang will present on “Best Practices in Corporate Structuring and Consolidation” on Feb. 26 from 3:45 to 4:30 p.m. EST. Mr. Fang has arranged for Davis Wright Tremaine clients, contacts and colleagues to receive $200 off the cost of registration. Just mention this special discount when you register (a free brochure is available from the registration page). If you have any questions, please contact the American Conference Institute at (888) 224-2480 or via their Web site. Thank you.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

"Company requests permission to allocate the transaction costs incurred based on the entity to whom the services were rendered and/or on whose behalf the services were provided. Company’s position is that this treatment is appropriate because these entities directly and proximately benefited from the services and incurred the economic burden of these services. Company essentially argues that the proper party to be charged with costs incurred in the Transaction may not be readily identifiable because of the structure of the transaction and the many parties involved."

"It is well established that where a taxpayer undertakes to pay the obligations of another taxpayer, such payments are not deductible as ordinary or necessary business expenses incurred in the taxpayer’s trade or business. See Interstate Transit Lines v. Commissioner, 319 U.S. 590 (1943); Deputy v. du Pont, 308 U.S. 488 (1940). This is true even where the cost would have been deductible had the taxpayer incurred it. The determination of the appropriate taxpayer is often a question of fact. See Crosby v. United States, 496 F.2d 1384 (5th Cir. 1974)."

"We conclude Company may allocate transaction costs to either Company or Acquisition Co. based upon the entity to which the services were rendered and/or on whose behalf the services were provided."

Full guidance here.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

On August 27, 2008, the Securities and Exchange Commission ("SEC") adopted significant changes to the rules regulating cross border tender offers.  The final rules largely follow the changes proposed in May of this year, including:

• changing the measurement date, from 30 days prior to commencement of the tender offer to 60 days before announcement or 30 days after announcement, of U.S. ownership for purposes of  determining eligibility for Tier 1 or Tier 2 cross-border rules exemptions;
• providing relief to bidders that are unable to use the 60/30 day measurement dates;
• amending the Tier 1 and Tier 2 exemptions in connection with going private transactions and multiple foreign tender offers done contemporaneously with US offers;
• relaxing rules regarding withdrawal of tender offers; and

making other changes that the SEC hopes have the effect of better ensuring that tender offers and similar transactions by foreign companies will be made available to U.S. shareholders.  When combined with earlier rule changes and amendments with respect to such things as the use of international accounting standards and amendments to the Rule 12g3-2(b) registration exemption, the SEC continues on its quest to make the US capital markets friendlier and easier for foreign companies.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

"We are asked to decide an issue of first impression under California law, whether a provision within a Stock Purchase Agreement (“SPA”) permitting the representations and warranties of the parties to survive closing, also serves as a contractual statute of limitation that reduces a longer period otherwise provided by California law. Because the provision at issue does not unambiguously state the parties’ intent to contractually reduce the applicable California statute of limitation to one year, we reverse and remand."

http://www.ca9.uscourts.gov/ca9/newopinions.nsf/A5B54EBBA680B571882574B0004F2EFA/$file/0755535.pdf?openelement

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In Ryan v. Lyondell Chemical Company (Del. Ch. Ct., 7/29/08), the Delaware Chancery Court refused to dismiss on summary judgment claims that a board failed to meet its Revlon duties and that deal protection measures agreed to were not reasonable and appropriate.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

At yesterday’s open meeting, the SEC adopted significant changes to Rule 144 and Rule 145. The amendments were adopted largely as proposed and will be effective 60 days after publication in the Federal Register (www.sec.gov/news/press/2007/2007-233.htm).

Among other changes, the amendments to Rule 144 will:

• shorten the holding period for restricted securities of reporting companies to six months; and 
• allow non-affiliates of reporting companies to freely resell restricted securities after satisfying a six-month holding period and allow non-affiliates of non-reporting companies to freely resell restricted securities after satisfying a 12-month holding period.

• eliminate the presumptive underwriter provision, except with respect to transactions involving blank check or shell companies; and
• revise the resale provisions of Rule 145(d).

All of these changes should make capital raising and acquisition transactions easier and less costly.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

This summer, the Oregon legislature again showed its anti-business bias by enacting several changes in Oregon’s employment law that will adversely Oregon employers and out of state employers with employees in Oregon. The changes are effective January 1, 2008 and include the following:

• voids an arbitration agreement between an employer and an employee unless the employer notifies the employee in writing at least two weeks prior to the beginning of employment that the employee will be required to enter into an arbitration agreement (ORS. 36.620); and
  
• makes non-competition agreements voidable unless the employer informs the employee, in writing and at least two weeks before employment begins, that a non-competition agreement is required. Additionally, only “white collar” exempt employees may be required to enter into non-compete agreements, and the employee must have access to trade secrets or other confidential business information. A non-competition agreement is only available for an employee who earns more than the median income for a family of four, which is now approximately $60,000, and the agreement may not exceed two (2) years from the date of the employee’s termination (ORS 653.295). 
  

These changes are effective for agreements entered into on or after January 1, 2008.
Employers located in Oregon, employers with employees working in Oregon and those contemplating acquiring, starting or re-locating an Oregon business should take heed. These changes will make it more difficult for employers to protect their legitimate business interests and reinforce Oregon’s label as a difficult place to do business.

• Email This
• Print
• Comments (2)
• Trackbacks
• Share Link

Broc Romanek blogs about this opinion ("Delaware Chancery Court Addresses Cancellation Value of Stock Options in Mergers").  The opinion is also available online.   In a cash merger, out-of-the-money options were rendered worthless.  The question was whether the terms of the stock option plan governing the options prohibited this treatment and instead required that the former officers and directors be compensated for the full value of their options.  The court found for the plaintiffs and awarded them a sum of money equal to the full economic value of their options.

• Email This
• Print
• Comments
• Trackbacks
• Share Link