Corporate Finance Lawyer & Attorney : Davis Wright Tremaine Law Firm

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.

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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.

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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.

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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.

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