Would you like to be alerted of new articles on Preferred Stock? Check out LawKT Premium. Law Firm Publications on Preferred Stock [See Also: News Articles] Last update: Mar 20, 2007 Cooley Godward: IRS Announces Limited Compliance Program for ???Rank-an...  Feb 15, 2007 Cooley Godward Kronish LLP | News cations | Cooley Alerts | IRS Announces Limited Compliance Program for “Rank-and-Fileâ€? Discounted Stock Option Exercises in 2006 Advanced Search Search Help Cooley Alerts Recent HeadlinesAnnual ReviewsCooley AlertsAlerts Sign UpIn The NewsPress ReleasesCooley Publications Emily Foley-- Ashley Kanigher 02/15/07IRS Announces Limited Compliance Program for “Rank-and-Fileâ€? Discounted Stock Option Exercises in 2006Trick or Treat. Application of Section 409A Greenberg Traurig: Use of Finders in Securities Transactions  May 01, 2006 Nor would it be suitable to sell a highly speculative stock to an octogenarian on a fixed income with preservation of capital as his primary investment objective. Generally the following would be deemed to a "security:" · Common stock, preferred stock, as well as warrants or options to purchase stock, and · Most limited liability company membership interests, as well as limited partnership interests (general partnership interests usually are not securities Greenberg Traurig: The Law of Unintended Consequences: New Generation of T...  Mar 01, 2006 The Law of Unintended Consequences: New Generation of Trust Preferreds Squeezes Market for DRD Preferred Stocks. Following the issuance of a proprietary $300 million E-CAPS1 transaction by Lehman Brothers, Inc. in mid-2005 and a change in the view of Moody's Investor Services as to the amount of equity credit provided to these securities,2 bankers have been busy selling the latest generation of trust preferred securities as a tax-efficient replacement to the issuance of traditional preferred McDermott: Entire Fairness and Fairness Opinions Applied to Multip...  Feb 02, 2006 Prior to the acquisition, TCI was organized as three divisions (the TCI Group, the TCI Liberty Media Group and the TCI Ventures Group) and had two separate classes of stock (high- and low-vote) for each division intended to track their respective performances. John Malone, the Chairman and Chief Executive Officer of TCI, and other directors owned the majority of the shares comprising the high-vote stock of the TCI Group Goodwin Procter: Financial Services Alert  Jan 31, 2006 OCC Authorizes National Bank to Sponsor and Invest in Derivative-Based Closed End Fund In interpretive letter 1047 ("Letter 1047") the OCC permitted a national bank to sponsor and invest in a closed end fund that in turn invests in preferred shares of companies formed by an affiliate and engaged principally in credit default swap index activities. The preferred stock invested in by the fund would be rated at least investment grade and within the highest four categories by a nationally recognized Goodwin Procter: Bank Regulatory Issues in Securitization and Credit Der...  Jan 15, 2006 3 of the General Regulations of the Banking Board of the State of New York provides prior notice procedures for certain subsidiary investments exceeding the lesser of 1 % of a bank's or trust company's capital stock, surplus fund and undivided profits, or $5 million dollars. 167 A state chartered member bank of the Federal Reserve is not required to obtain prior approval from the Federal Reserve to establish an operating subsidiary in the United States Goodwin Procter: Sweet Basel II: The Regulatory Capital Treatment of Sec...  Jan 15, 2006 Goodwin Procter: Synthetic Securitizations and Derivatives Transactions ...  Jan 15, 2006 Blank Rome: Fourth Quarter Deal Diary  Jan 01, 2006 Public and Private Securities Transactions Liberty Partners, L.P. in their investment in preferred securities and warrants of SeaWave, LLC. This transaction closed on October 14, 2005 and the terms were not disclosed. Ionatron, Inc. (NASDAQ: IOTN) in a PIPE transaction involving the issuance of Series A Convertible Preferred Stock Greenberg Traurig: Application of Section 409A to Private Company Stock Op...  Jan 01, 2006 Application of Section 409A to Private Company Stock Options and Other Equity Awards PUBLICATIONS ALERTS 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 GT Alert Application of Section 409A to Private Company Stock Options and Other Equity Awards January 2006 View or download the PDF version of this Alert. The proposed regulations are intended to further explain how Section 409A applies to various compensatory arrangements, including stock options granted by private companies Pepper Hamilton: Delaware Corporate Law Update Commercial Litigation Rep...  Sep 08, 2005 Examen sought a declaratory judgment that Delaware law was controlling on the certificate of designation of its Series A preferred stock. VantagePoint, which held 83 percent of Examen s outstanding Class A preferred stock, sought a declaration from California that Examen was a quasi-California corporation under section 2115 of the California Corporations Code Gibbons: The Business Advisor  Jun 03, 2005 Existing holders of various series of preferred stock of the company were given the opportunity to purchase shares of the newly created Series C Preferred Stock. The transaction was structured so that the shares of any holder of Series B Preferred Stock who did not purchase shares of Series C Preferred Stock, would automatically be converted into shares of a special class of preferred stock of the company, which class is not entitled to preemptive rights and anti-dilution adjustments in Gibbons: Prime Due Diligence for Second Lien Lending  May 26, 2005 Also, exhibits to these filings (such as certificate of incorporation, by-laws, preferred stock instruments, material contracts, loan agreements, etc. should be carefully read by legal counsel Goodwin Procter: Synthetic Securitizations and Derivatives Transactions ...  Apr 08, 2005 Goodwin Procter: Sweet Basel II: The Regulatory Capital Treatment of Sec...  Apr 08, 2005 Goodwin Procter: Financial Services Alert  Mar 08, 2005 FRB Issues Final Rule on Inclusion of Trust Preferred Securities in Tier 1 Capital The FRB issued a final rule amending its risk-based capital standards for bank holding companies. ("BHCs") that allows the continued inclusion of outstanding and prospective issuances of trust preferred securities in BHCs' tier 1 capital, subject to stricter quantitative limits and qualitative standards (the "Final Rule") Jones Walker: SEC Approves Amendments to NYSE Corporate Governance Ru...  Nov 17, 2004 By Douglas N. Currault II and Izabela M. Chabinska On November 3, 2004, the Securities and Exchange Commission approved the New York Stock Exchange's proposed amendments and clarifications of certain of its corporate governance standards set forth in Section 303A of the NYSE Listed Company Manual that were initially approved by the SEC on November 4, 2003. (Click here to link to our November 2003 E*Zine summarizing the SEC's approval of the NYSE corporate governance rules Kramer Levin: Tax Alert: American Jobs Creation Act of 2004  Nov 01, 2004 Presumably, the last item would include use of the repatriated funds to repay indebtedness; it is less clear whether the funds can be used to redeem stock. For example, in a stock inversion, USCo could merge with a ForCo domestic subsidiary, with its shareholders exchanging their USCo shares for ForCo shares Blank Rome: SEC Proposes Amendments To Insider Trading Rules  Oct 01, 2004 Within six months after the reclassification, insiders sold common stock. The court also held that Rule 16b-3(d), which exempts from Section 16 liability grants, awards and other acquisitions from the issuer, did not exempt the reclassification of preferred stock because the transaction lacked compensatory nature Blank Rome: Business Tax Alert  Oct 01, 2004 Expatriate Corporations – Excise Tax on Stock Based Compensation The Act imposes an excise tax on stock-based compensation of certain top executives of expatriate corporations. The excise tax is 15% of the value of the stock-based compensation, but does not apply to (a) the exercise of an option exercised on the expatriation date or during the six-months period before that date if the executive recognizes compensation income on such exercise, or (b) to any other stock-based compensation with Kramer Levin: Corporate Department Advisory: Venture Capital/Private ...  Oct 01, 2004 ...g., anti-takeover provisions, stockholder voting requirements, statutory preemptive rights, etc. What rights should an investor have as a stockholder Lowenstein Sandler: "Angel Financing: What Entrepreneurs Need to Know&...  Sep 20, 2004 In fact, angels sometimes structure their investment to avoid valuing the venture, often using debt that converts into preferred stock at a discount to the next round. What characterizes a great angel Goodwin Procter: Financial Services Alert  May 11, 2004 FRB Proposes Continued Inclusion of Trust Preferred Securities in Tier 1 and Tier 2 Capital The FRB issued a much anticipated proposed rule (the "Proposed Rule") on May 6, 2004 concerning. the inclusion of outstanding and prospective issuances of trust preferred securities in the tier 1 and tier 2 capital of bank holding companies ("BHCs") Debevoise: The "Inspire Art" Judgment of the European Cour...  Jan 20, 2004 The German rules also make it close to impossible to issue redeemable or convertible preferred stock on terms comparable to US or UK standards. If, on the other hand, a British limited company is used as the vehicle for a German investment, a far greater variety of convertible or redeemable equity or debt instruments becomes possible O'Melveny & Myers: Finance Briefing - January 2004 (PDF)  Jan 01, 2004 With limited exceptions, Section 16(b) requires directors, officers, and persons beneficially owning more than 10% of the outstanding stock of a public company to disgorge to the company the full amount of any "short-swing profits" (as defined) from purchase and sale transactions involving the company's equity securities within any six-month period. In this case, the court upheld a plaintiff-stockholder's lawsuit against the defendants' motion for summary judgment Fried Frank: Fried Frank PEP Talk™ Winter 2003  Dec 23, 2003 At least as important, the New York Stock Exchange and the Nasdaq National Market have adopted significant changes to their corporate governance listing requirements, and major institutions such as the Conference Board and the Business Roundtable have been issuing new sets of best practices for the corporate boardroom. Preferred Stock Investment Debevoise: New SEC Rules Governing Issuer Repurchases of Common St...  Dec 12, 2003 ...pubid=14353512162003=4yes','link','width=617,height=550,menubar=yes,location=yes,scrollbars,left=0,top=0'); } New SEC Rules Governing Issuer Repurchases of Common Stock and Related DisclosureDecember 12, 2003The SEC’s final rules amending Rule 10b-18 under the Securities Exchange Act of 1934 go into effect on December 17, 2003. Rule 10b-18 provides issuers with a safe harbor under which they may repurchase their common stock without violating price manipulation rules under the Exchange Act as Faegre & Benson: PIPE Dreams: Public Equity Offerings Without the Public...  Oct 01, 2003 A PIPE involves two phases: First, a public company sells its unregistered securities (common stock, preferred stock or convertible securities) in a private placement at a discount to a select group of sophisticated individuals or institutions. There are two types of PIPEs – a traditional PIPE and a structured PIPE. A traditional PIPE involves the sale of common or preferred stock at a fixed price. A structured PIPE involves the sale of convertible debt or convertible preferred stock at a McDermott: Ninth Circuit Case Creates Deduction Opportunity for Co...  Jun 24, 2003 Boise Cascade Corporation maintained an ESOP that owned Boise Cascade convertible preferred stock. When participants in the ESOP terminated employment, Boise Cascade redeemed convertible preferred stock equal in value to the participants vested account balances for cash McDermott: Ninth Circuit Case Creates Deduction Opportunity for Co...  Jun 24, 2003 Boise Cascade Corporation maintained an ESOP that owned Boise Cascade convertible preferred stock. When participants in the ESOP terminated employment, Boise Cascade redeemed convertible preferred stock equal in value to the participants vested account balances for cash Morrison & Foerster: Jobs and Growth Tax Relief Reconciliation Act of 2003  Jun 10, 2003 Note: The Tax Act does not change Section 1202, so that the partial exclusion of gain from qualified small business stock remains at 50 percent. Notes: These changes can be expected to make holding of stock more attractive relative to debt, since dividends will be subject to a much lower tax rate than interest Thelen Reid & Priest: Third Circuit Rejects Petition for Rehearing: Section 1...  Jun 06, 2003 This decision has thrown into question the ability of executive officers and directors to rely on these exemptions when they sell stock pursuant to a business combination. The SEC argued in its motion that the Third Circuit panel erred in holding that Rule 16b-3 exempts only transactions that have a compensatory element and in holding that Rule 16b-7 did not exempt the insiders' acquisition of stock in connection with a reclassification Latham & Watkins: Jobs and Growth Tax Relief Reconciliation Act of 2003: ...  Jun 06, 2003 Prior to the 2003 Tax Act, an amount realized on a disposition of Code Section 306 stock (primarily, preferred stock received as a tax-free stock dividend or certain preferred stock received in a tax-free reorganization or spin-off) was treated as ordinary income in an amount equal to the value of the tainted stock on the day it was received, to the extent such value would have been a dividend if cash had instead been distributed to the shareholder. Under the 2003 Tax Act, to the extent a Ropes & Gray: Job and Growth Tax Relief Reconciliation Act of 2003  May 23, 2003 Ropes & Gray: Job and Growth Tax Relief Reconciliation Act of 2003  May 23, 2003 A foreign corporation is a qualified foreign corporation if it is (i) incorporated in a possession of the U.S., or (ii) eligible for the benefits of a comprehensive income tax treaty with the U.S. Dividends on stock of a foreign corporation "readily tradable on an established securities market in the U.S." will be treated as qualified dividend income. o Qualified dividend income does not include any dividend received on a share of stock (i) held for less than 61 days during the 120 day period Pillsbury Winthrop: Legislature Considers New Exemption for Venture Capital...  Apr 15, 2003 Morgan Lewis: Nuts & Bolts - Critical Steps to Building a Successful ...  Apr 10, 2003 Advantages Limited liability Simple structure Tax-free reorganization permitted Incentive stock options permitted Preferred by most venture funds. Corporation pays taxes on income Stockholders pay tax on dividends received Dorsey & Whitney: House Passes Dividend Allocation Rule Legislation  Mar 19, 2003 This provision will repeal the dividend allocation rule (DAR) ­ a rule that imposes an additional tax on cooperatives if they pay a dividend on capital stock or other proprietary capital interest (a "Dividend on Capital Stock"). No similar exclusion exists for dividends paid to stockholders from nonpatronage earnings Dewey Ballantine: Federal Courts Split Over How to Apply the All-Holders ...  Mar 03, 2003 Faegre & Benson: Fairness to Whom: When Multiple Classes of Equity Requi...  Mar 01, 2003 The Delaware Supreme Court addressed the obligations of a Special Committee of the Board of Directors of The Reader s Digest Association, Inc. ( RDA ) to the holders of RDA s non-voting Class A common stock in a proposed recapitalization. The recapitalization involved the repurchase of a significant amount of RDA s voting Class B common stock by RDA and the conversion of the remaining Class B shares and all Class A shares into a new single class of Common Stock Thelen Reid & Priest: Preferred Musings on the 'Active Business Requirem...  Feb 20, 2003 Preferred Musings on the 'Active Business Requirement' Preferred Musings on the 'Active Business Requirement' February 20, 2003 Click icon for printer-friendly version of this article. These requirements generally include: The transaction must consist of the distribution by one corporation (Distributing) solely of stock (to its shareholders with respect to its stock) or securities (to its security holders in exchange for its securities) of a corporation (Controlled) that Distributing controls Choate: Benchmark Alert from Business & Technology  Feb 01, 2003 Bell: SEC Adopts Proxy Voting Disclosure Rules  Feb 01, 2003 Gray Cary: Venture Financings 2002:? Investors Keep the Upper Hand  Jan 30, 2003 Management carve out plans were frequently used to moderate the effect of "drag along" rights and to provide a continuing incentive to management and key employees when, as a result of preferred stock liquidation preferences, there was substantial uncertainty as to whether the common stock continued to have any real value. A couple of lessons learned in 2002 follow: Having seen their investments wiped out in a wash out financing in which all the preferred stock was forced to convert into common Thelen Reid & Priest: Third Circuit Limits the Availability of the Short-Swin...  Jan 27, 2003 The case arose out of a reclassification of preferred stock of Fairchild Semiconductor owned by Sterling Holding and National Semiconductor. In the shareholder-approved reclassification, non-convertible preferred stock was converted into common stock simultaneously with an initial public offering of Fairchild common stock, with Sterling increasing its common stock ownership from 48 Pillsbury Winthrop: Bush Administration Proposes Eliminating Double Tax on ...  Jan 24, 2003 A corporation that did not distribute its entire EDA as an excludable dividend could allocate retained EDA (up to its Eits shareholders, permitting them to increase their stock bases. This "retained earnings basis adjustment," or REBA, would reduce the amount of any gain (or increase any loss) on a later sale of the stock Debevoise: Opportunities Created by President Bush's Proposal ...  Jan 07, 2003 Applying this rule in combination with the Administration’s 100% exemption proposal should make it possible to eliminate a substantial portion of an individual’s tax upon the sale of corporate stock. To illustrate, a corporation could distribute a dividend of its own common stock in a manner that is taxable under current law Hodgson Russ: US Basis-Shifting Regs  Dec 27, 2002 Canadian Tax HighlightsNovember, 2002 by Marla Waiss On October 18, 2002, the IRS issued proposed regs dealing with "unutilized basis" in redemptions treated as dividends for US tax purposes, modifying existing rules that taxpayers have relied on to take tax losses in stock attributable to redemptions that shift basis from one taxpayer to another. Some transactions involve shifting basis from stock of a non-US person to a US person, allowing the US person to use the shifted basis to reduce the Goodwin Procter: Freeing the Captives: Trends in Divesting Of Business U...  Nov 12, 2002 Strategic acquirors enjoyed similarly high stock prices and used their stock to acquire smaller companies in acquisition after acquisition. Corporate acquirors have watched their earnings vanish and their stock prices plummet Goodwin Procter: The Benchmark Case and the Limits of Preferred Stock Pr...  Nov 01, 2002 The Benchmark Case and the Limits of Preferred Stock Protections. But as valuations have plummeted and companies seeking capital have fought to survive, provisions for protecting preferred stock investors have taken on new significance McDermott: Down-Round Perils For Early Stage Preferred Stock Inves...  Nov 01, 2002 McDermott - Newsletters - Down-Round Perils For Early Stage Preferred Stock Investors if (document. selectedIndex=0; } Please select a language: English Italian German PUBLICATIONS NEWSLETTERS DOWN-ROUND PERILS FOR EARLY STAGE PREFERRED STOCK INVESTORS November 2002 A recent Delaware case illustrates the necessity for investors to have preferred stock terms that are clearly and unambiguously drafted McDermott: Down-Round Perils For Early Stage Preferred Stock Inves...  Nov 01, 2002 McDermott - Newsletters - Down-Round Perils For Early Stage Preferred Stock Investors if (document. selectedIndex=0; } Please select a language: English Italian German PUBLICATIONS NEWSLETTERS DOWN-ROUND PERILS FOR EARLY STAGE PREFERRED STOCK INVESTORS November 2002 A recent Delaware case illustrates the necessity for investors to have preferred stock terms that are clearly and unambiguously drafted Haynes and Boone: 10/29/2002 - Investor Equity Expectations  Oct 29, 2002 Greenberg Traurig: How Can You Save Estate Taxes Using an Estate Freeze?  Oct 01, 2002 Historically, estate freezes were accomplished using a preferred stock recapitalization. Congress has for the most part legislated away the utility of a preferred stock freeze; however, creative estate planners have devised a substitute in the form of an installment sale Bell: SEC Proposes Proxy Voting Rules  Oct 01, 2002 Lowenstein Sandler: "Will You Still Love Me Tomorrow? Five Things I Sh...  Sep 30, 2002 In addition, VCs tend to end up with board seats and other approval rights as holders of preferred stock. Each VC round restructures the financial ownership of the company so that the management team (holders of common stock) will not start to see cash in the event of a sale of the business until increasingly significant preference payments have been made Goodwin Procter: Financial Services Alert  Sep 03, 2002 IRS Proposes Additional Regulations for Mark-to-Market Election for PFIC Stock The Internal Revenue Service ("IRS") proposed additional regulations (REG-112306-00) for U.S. persons and controlled. foreign corporations that own marketable stock in a passive foreign investment company ("PFIC") and desire to mark-to-market their stock pursuant to Section 1296 of the Internal Revenue Code Vinson Elkins: First Half of 2002  Sep 01, 2002 Vinson & Elkins: "First Half of 2002"  Sep 01, 2002 Gray Cary: The Down Round - What Does It Mean To You?  Aug 01, 2002 66% split between the founders and the shares reserved in the employee stock option pool. The stake owned by the founders and stock option pool has now been diluted from 66 Testa: PIPE Transactions  Jul 01, 2002 In a PIPE transaction, investors purchase securities directly from a publicly traded company in a private placement, typically at a discount to the market price of the company’s common stock. Although various types of debt and equity securities, as well as more exotic securities such as derivatives, can be sold and registered with the SEC in a PIPE transaction, most PIPEs involve the issuance by the company of common stock, convertible preferred stock or convertible debt Sullivan & Worcester: Court Simplifies Conversion to S Corporation Status  Jul 01, 2002 Testa: PIPE Transactions  Jul 01, 2002 The excess parachute payment tax applies only to those individuals who are perceived to have the ability to exert control over the corporation by reason of their ownership of large blocks of stock, or due to their status as officers or highly compensated individuals. Under the prior guidance, an individual was subject to the excise tax by reason of ownership of stock (directly or indirectly) worth more than the lesser of 1% of the outstanding stock of the corporation or $1 million Foley Lardner: How To For Early Stage Restructuring  Jul 01, 2002 1 THE FOUNDER'S STOCK, ISO'S AND NON-STATUTORIES.. The principal "Founder" wishes to maintain control of the company, to provide handsome incentive stock options for the management team and to avoid high taxes to the fullest extent possible Lowenstein Sandler: "Venture Capital: "Hello Old Friend" - C...  Jun 01, 2002 Understanding this critical issue entails understanding what makes preferred stock "preferred." When institutional investors buy equity they almost always receive preferred stock. "Preferred Stock" gets its name from, among other things, the liquidation preference (the right to receive an amount of money in a liquidation or a sale of the business after payments to creditors but before --or in "preference" to--common stock holders) Goodwin Procter: Financial Services Alert Quarterly Review  May 21, 2002 SEC Issues Statement on Compliance Date for the Bank Exceptions to Broker-Dealer Registration in the Gramm-Leach-Bliley Act FRB Issues Merchant Banking Opinion FRB Permits Bank Stock Acquisition to Hedge Equity Derivatives; OCC Expands This Authority Through Edge Act Corporations FDIC Discusses the Spousal Signature Provisions of Reg. European Parliament Amends UCITS Directive OCC Concludes that National Banks Can Hostand Build Customer Web-Sites with Electronic Payment Services U.S. District Foley Lardner: Presentation - Legal Perspectives for the Nanotech Star...  May 21, 2002 C Corporation ­ Legal existence separate and distinct from shareholders ­ Centralized management ­ Sell stock to raise capital or use it to make acquisitions ­ Full range of capital structure. Common stock Preferred stock and variations, including hybrids ­ Convertible preferred stock ­ Debt Hybrid ­ some states allow debt with voting rights Convertible debt Nonconvertible or "straight" debt Goodwin Procter: Financial Services Alert  May 14, 2002 Money Market Funds May Purchase Closed-End Fund Auction Market or Remarketed Preferred Stock The SEC's Division of Investment Management issued no action relief that permits money market funds to purchase. auction market or remarketed preferred stock issued by certain closed-end funds Goodwin Procter: Financial Services Alert  May 07, 2002 OCC Issues Letters Concerning National Banks' Authority to Invest in Convertible Bonds and Perpetual Preferred Stock of Fannie Mae and Freddie Mac The OCC issued interpretative letters concerning a national bank's authority to: (1) purchase bonds. convertible into equity ("Letter 930"); and (2) hold issues of perpetual preferred stock of the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") as investment securities ("Letter 931") Akin Gump: Private Equity Investing Under Russia's Amended La...  May 01, 2002 Private Equity Investing Under Russia's Amended Law On Joint Stock Companies. Strategic investors often seek to purchase 100 percent of a Russian company's stock Faegre & Benson: Recapitalization: Bringing Valuations Back to Earth  May 01, 2002 Debevoise: The Private Equity Report  Apr 01, 2002 Structure of Transaction In order to effect a tax-free spin-off in anticipation of an investment by a private equity fund, parent typically would first distribute all of the stock of an existing or newly created subsidiary to its shareholders on a pro rata basis in the form of a special dividend. Investors typically purchase convertible preferred stock which returns to investors, in preference to any junior securities, their original cost (or, as discussed below, a multiple thereof) in the event Foley Lardner: Primer on Early Stage Financing (PDF)  Mar 15, 2002 1 THE FOUNDER'S STOCK, ISOs AND NON-STATUTORY STOCK OPTIONS. The Founder wishes to maintain control of the company, provide handsome incentive stock options for the management team and avoid high taxes to the fullest extent possible Goodwin Procter: Freeing the Captives: Current Trends in Private Equity ...  Mar 01, 2002 Strategic acquirors enjoyed similarly high stock prices and used their stock to snap up smaller companies in acquisition after acquisition. Corporate acquirors have seen their stock prices plummet Bracewell & Patterson: Trust Preferred  Feb 25, 2002 It is cumulative preferred stock issued by a business trust that is wholly owned by a bank holding company. In exchange for the proceeds from the sale of the TPS to investors, the company issues a subordinated debenture to the trust in the same amount and with the same terms as the preferred stock Lathrop & Gage: Lawyers Help Firms Shift Focus  Feb 14, 2002 He often suggests existing investors have to take losses on their stock to attract new investors willing to put up more money. "Cram-down" financing, as Roberts calls such stock liquidation, is painful to investors and often a last-ditch effort to save a company just steps away from filing for Chapter 11 bankruptcy, he said Hale Dorr: 2001 Hale and Dorr Public Offerings  Feb 01, 2002 Morrison & Foerster: Ceridian and Expense Allocation  Jan 23, 2002 The facts in Zenith were as follows: Zenith owned all the stock of Zenith Insurance Company (“ZIC”). Zenith used the debenture proceeds to develop a diverse portfolio of preferred stock Morrison & Foerster: Ceridian and Expense Allocation  Jan 23, 2002 The facts in Zenith were as follows: Zenith owned all the stock of Zenith Insurance Company (“ZIC”). Zenith used the debenture proceeds to develop a diverse portfolio of preferred stock Faegre & Benson: Nasdaq relaxes its listing compliance requirements  Jan 01, 2002 Goodwin Procter: Performance Deals: A Crystal Ball in the Capital Struct...  Dec 01, 2001 ...generally occurs through a modification of the rate at which the preferred stock held by the investor converts into common stock, an adjustment to the amount of the preferential payment the investor receives in addition to its common stock interest, or both. To bridge the valuation gap, the investor may agree to acquire convertible preferred stock representing a 16 Paul Weiss: Recent Changes to Japanese Exchange Rules  Sep 05, 2001 Until recently, Japanese securities exchange rules prohibited a company from issuing shares (including shares issued upon conversion of preferred stock, convertible bonds or warrants) in the fiscal year in which a listing application is filed (the "Prohibited Period"). On September 4, 2001, revisions to the Tokyo Stock Exchange's rules came into effect that will abolish the Prohibited Period (with respect to stock to be listed and convertible securities issued after September 4, 2001) and make Lowenstein Sandler: "Venture Capital in Focus: Down-Round Financing&qu...  Sep 01, 2001 ...and founders hold common stock and that the investors hold convertible preferred stock). Down-round anti-dilution protection is incorporated into the terms of preferred stock to provide investors with additional stock if the company issues new shares at a price below the price paid by the preferred shareholders (typically the conversion price) King & Spalding: Equity Derivatives  Sep 01, 2001 A warrant entitles its holder to purchase from the issuer shares of underlying equity (most often common stock) at a pre-determined price. Most often, warrants are attached to preferred stock or debt securities of the issuer as a unit for sale to investors Debevoise: The Private Equity Report  Jul 01, 2001 The development of the financial markets and emergence of a stock culture in Germany have created exit opportunities that simply did not exist a decade ago. page 8 Avoiding "Phantom Income" When Buying Preferred Stock page 10 What's the Buzz About Privacy Weil: Preferred Dividends: Accrual Versus Payment  Jul 01, 2001 Oct. 25, 2000 and Jan. 12, 2001), held on a motion for summary judgment that a certificate of incorporation clearly and unambiguously provided for daily accrual of preferred dividends payable at the time of redemption. Three concepts are important when discussing dividends for preferred stock Gray Cary: Business Combinations and Goodwill  Jul 01, 2001 These include: Part-cash, part-stock deals, e.g.: Cash election mergers Cash-stock two-step deals Use of non-voting common stock, e.g.: Contingent value rights Warrants Preferred Stock Earnouts, installment sales and other deferred consideration transactions Potential Impact on Deal Strategy Elimination of pooling will likely affect a variety of deal strategies, e.g.: Indemnity provisions will be negotiated heavily without pooling constraints (escrow percentage, survival period) More flexibility Kirkland & Ellis: Corporate Investing: Strategic Alliance Issues and Cons...  May 01, 2001 Lowenstein Sandler: "Bridge Financing Can Be a Salvation or an Albatro...  Mar 05, 2001 Bridge loans typically have an equity component; the lender receives either a note that converts into shares of the company's stock or a nonconvertible note accompanied by warrants to purchase shares. Lenders typically look for conversion into shares of preferred stock rather than common stock, especially if preferred is already outstanding McGuire Woods: ESTATE FREEZE TECHNIQUES AND FREEZE RELATED ISSUES  Feb 01, 2001 Lowenstein Sandler: "When "Exit" is Not Spelled "IPO�...  Nov 01, 2000 ...e., the holders of common stock) with sufficient incentive, management will not be inclined to push for the types of exits that you so fervently desire. " Depending on the leverage of the preferred investors and the extent to which they are persuaded by this incentive issue, management may or may not be successful in negotiating caps on the preferred investors' consideration protection. These provisions operate in a relatively straight forward manner when the merger consideration consists solely Wyatt: Technology and Venture Capital  Jul 01, 2000 We help initiate and complete initial public offerings, private placements of stock and other securities offerings by start-ups, entrepreneurs and established companies. We draft preferred stock purchase agreements, employee stock option plans, research and development partnership agreements and joint venture agreements, and can assist clients in developing financing and strategic investment instruments tailored to meet their specific needs Sidley Austin: Corporate Newsletter - Biotech Finance Report - July 20...  Jul 01, 2000 A $150 million stock purchase will be made at closing and two $50 million stock purchases will be made in 2001. 5 million of Isis common stock and is obligated to purchase an additional $7 Debevoise: Checklist: Preparing for Possible Takeover Attempts  Jul 26, 1999 There also continue to be a number of hostile tender offers, often accompanied by proxy solicitations in which bidders seek to take their case directly to the stockholders to dismantle takeover defenses. Increase in authorized common stock Troutman Sanders: Summer 1999  Jul 01, 1999 Preferred stock is the most common vehicle used to provide these investors with this preferential treatment. As a general rule, the special privileges associated with preferred stock are almost always augmented and expanded by a shareholders' agreement that addresses issues such as stock transfer restrictions, board composition, operationalrestrictionsonmanagementandregistration rights Goodwin Procter: Financial Services Alert  Mar 02, 1999 ...(BELOW IS YOUR REQUESTED ARTICLE FROM THE ALERT) -- FDIC Issues Guidance on Investments in Trust Preferred Securities The FDIC issued guidance on the treatment of insured state nonmember bank investments in trust preferred securities under the FDIC's recently revised activities regulations, which are discussed in detail in the February 9 Alert. The guidance confirmed that, because the OCC has permitted national banks to invest in trust preferred instruments as "Type III" securities, the Pillsbury Winthrop: Searching For Deep Pocket  Feb 01, 1999 Without question, the high-octane fuel powering the engine of startup company capital formation has been the preferred stock private placement. However, if the startup company is successful, private placement equity financing will inevitably be more expensive to the company's founders and other common shareholders than debt financing, due to the special fights and privileges that permit the preferred shareholders to reap substantial value Preliminaries: Waiting for the Dough In the event you are Paul Weiss: U.S. Private Equity Investment in Europe: French Legal ...  Feb 01, 1999 U.S. private equity practice and conventional structures and terms of U.S. private equity investment have of course developedwithin the U.S. legal context, which, under Delaware, New York and other state corporate laws, provides substantial flexibilityin the design of preferred stock terms and shareholder agreements that are both transaction-specific and enforceable. ThebackboneoftheU.S.modelisthevotingconvertible preferredstockinvestmentvehicletowhichis added a bundle of private equity features Weil: New Director Entitled To Inspect Most Corporate Books A...  Jan 01, 1999 June 12, 1998), held that Vincent Intrieri, a new director of Avatex Corporation elected by preferred shareholders, was entitled to review the corporation s books and records pertaining to a proposed merger pursuant to which preferred stock would be converted into common stock. These two documents discussed the corporation s contractual rights and obligations to its preferred stockholders Goodwin Procter: Financial Services Alert  Dec 17, 1998 As to the direct activities of insured state banks, the revised rule expands the existing exception allowing an insured state bank to invest up to 15% of its Tier 1 capital in adjustable rate preferred stock or money market preferred stock to now include other instruments determined by the FDIC to have debt characteristics and not present a significant risk to the insurance funds. Although not expressly stated in the regulation, the preamble to the regulation declares that trust preferred Weil: Additional Recent Decisions of Note  Oct 01, 1998 ...its last annual meeting, the Court of Chancery may summarily order a meeting to be held upon the application of any stockholder or director, does not require that the court under these circumstances must order that a meeting be within 30 days. The court also dismissed claims against COM and Fraser for primary liability under Section 12(a)(1) of the Securities Act of 1933 because Maher did not allege that COM or Fraser sold him stock or solicited his purchase of stock Weil: Additional Recent Decisions Of Note  Aug 01, 1998 " Prices for the preferred stock were quoted on the OTC Bulletin Board, a trading service maintained under the auspices of the NASD, but Axsys' board determined that the OTC Bulletin Board did not qualify as a market system that triggered the board's obligation to calculate fair value based upon closing price data. The court reasoned as follows with respect to whether the duty owed by the corporation's directors to the preferred shareholders under these circumstances was a contractual or a Testa: The Receipt of the Redeemable Preferred May Be a Taxabl...  Jul 01, 1998 ...xsp; Private Equity Viewpoint The Receipt of the Redeemable Preferred May Be a Taxable Transaction William J. Corcoran Summer 1998 Certain preferred stock investments in portfolio companies may create a tax problem under a new law. Some private equity funds have structured investments in portfolio companies using preferred stock that is convertible into both common and redeemable preferred stock Weil: "Floorless Convertibles": A New Form Of Finan...  Jun 01, 1998 Convertible preferred equities and debentures are hybrids, making fixed payments like bonds, but with a feature making the security convertible, commonly after a specified number of days, for shares of the issuer's common stock. A conversion ratio determines how many shares of common stock the security holder is entitled to receive in a conversion Jones Day: WTO Market Access Report: Venture Capital (originally p...  Feb 28, 1998 Capital Structure - While it is a standard international practice that VC investments be made through the purchase of a target company's preferred stock or. enterprises (FIE) laws do not generally allow complex capital structures beyond simple one tier common stock ownership Isaacson: Manufacturers Can Escape Income Taxes on Exported Goods  Jan 01, 1998 They may have no more than 25 shareholders and may not have any preferred stock. They must maintain at all times during the year a foreign office at which business activities of the FSC are carried on (by the FSC or an agent of the FSC), and such office must be owned or operated by the FSC or its agent Weil: Corporate Planning and Taxation  Oct 01, 1997 Under prior law, the definition of an investment company included a regulated investment company (a RIC), a real estate investment trust (a REIT) and any corporation more than 80 percent of the value of whose assets are held for investment (namely, readily marketable stocks and securities and interests in RICs and REITs). In determining whether the 80 percent threshold is met, investment assets now include stocks and securities that are not readily marketable, as well as, among others, equity Testa: New SEC Position on Participating Preferred Stock  Jul 01, 1997 The SEC is now taking the position that pooling accounting cannot apply to any business combination in which the acquisition consideration is allocated in accordance with the terms of a participating preferred security. In recognition of the importance of the issue, as well as the significance of the SEC’s change of view in this area, the SEC is currently “grandfathering” deals where the participating preferred security was put into place before January 1997 Foley Lardner: Captives And Rent-A-Captive Insurance Alternatives  Dec 01, 1996 Foley Lardner: Rent?A?Captives: Traversing The Securities Lair  Jun 01, 1996 Morgan Lewis: Latin American Standards of Corporate Governance: Brazi...  Dec 31, 1969 ...reserve additional decisions to the shareholders of listed reporting companies such as the issuance of common stock to directors, officers, significant shareholders or their affiliates, and any issuance of common stock that represents voting power equal to or greater than 20 percent of the then outstanding voting power. Under Mexican companies law, shareholders must approve significant actions of the company such as: premature dissolutionofacompany,increaseorreductionofthecorporate capital of a March 1   Supreme Court Declines Review of Eighth Circuit Opinion that Convertible Preferred Stock Should Be Considered in Determining Common Equity Owned for Purposes of the 10 Percent Beneficial Owner Threshold of 1934 Act Section 16(b). It has been reported that Medtox Scientific Inc. sued Morgan Capital LLC to recover profits resulting from Morgan Capital’s sale of some of the Medtox Scientific common shares it had received upon conversion of Medtox Scientific convertible preferred stock February 27   Supreme Court Declines Review of Eighth Circuit Opinion that Convertible Preferred Stock Should Be Considered in Determining Common Equity Owned for Purposes of the 10 Percent Beneficial Owner Threshold of 1934 Act Section 16(b). It has been reported that Medtox Scientific Inc. sued Morgan Capital LLC to recover profits resulting from Morgan Capital’s sale of some of the Medtox Scientific common shares it had received upon conversion of Medtox Scientific convertible preferred stock February 6   Moreover, proposed amendments to rule 10b-10 under the 1934 Act would require a broker-dealer effecting transactions in shares of preferred stock to inform customers in writing—at or before the completion of the transaction—if the issuer of the stock has reserved the right to repurchase the shares, while proposed amendments to Form N-1A—the registration form for mutual funds—would require mutual funds to provide enhanced prospectus disclosure regarding sales loads and revenue sharing payments. February 4   Moreover, proposed amendments to rule 10b-10 under the 1934 Act would require a broker-dealer effecting transactions in shares of preferred stock to inform customers in writing—at or before the completion of the transaction—if the issuer of the stock has reserved the right to repurchase the shares, while proposed amendments to Form N-1A—the registration form for mutual funds—would require mutual funds to provide enhanced prospectus disclosure regarding sales loads and revenue sharing payments. February 1   7 million shares of Nasdaq stock to the Nasdaq Stock Market Inc. Nasdaq will buy the shares for approximately US$440 million with a combination of cash and the issuance to NASD of two new series of Nasdaq preferred stock. The initial two phases of this restructuring took place in June 2000 and January 2001 June 22   It has been reported that, due to the recent failure of certain technical systems and the scheduled rebalancing of the Russel 2000 small capitalization stock index, the NYSE has decided to delay the introduction of three new ETFs. RECENT SEC REGISTRATIONS Embraer-Brazilian Aviation Company Inc., a Brazilian company, on June 13, 2001, filed a Form F-1 to register 8,120,822 preferred shares Merrill Lynch & Co. v. Comm'r - Cross-Chain   Background the 1986 Sale of ML Leasing During the taxable years in question, Merrill Lynch & Co. ("Merrill Lynch") owned 100 percent of the stock of Merrill Lynch Capital Resources, Inc. ("MLCR"), which in turn, owned 100 percent of the stock of Merrill Lynch Leasing, Inc. ("MLL"). For purposes of Code Section 304(a)(1): The "issuing corporation" is the corporation that is being sold and it is the stock of the issuing corporation that is the relevant stock for purposes of determining if the January 30   7 million shares of Nasdaq stock to the Nasdaq Stock Market Inc. Nasdaq will buy the shares for approximately US$440 million with a combination of cash and the issuance to NASD of two new series of Nasdaq preferred stock. REGIONAL DEVELOPMENTS Hong Kong Stock Exchange Publishes Proposed Amendments to its Listing Rules Volume 3   Since 1974, Congress has provided enticing tax incentives designed to encourage corporations to adopt employee stock ownership plans ("ESOPs") for the benefit of their employees. abuses that can arise where an ESOP's ownership is subject to substantial dilution through the use of stock options and other forms of equity interests (so-called "synthetic equity") for management and venture capitalists Permanent Estate Tax Repeal? Not Yet (If Ever). So   FLPs can also be structured to provide cash flow to the senior generation by use of a preferred interest similar to preferred stock. Younger generations (or trusts for their benefit) could own the "common" interest, which would enjoy all appreciation in excess of the preferred return Permanent Estate Tax Repeal? Not Yet (If Ever). So   FLPs can also be structured to provide cash flow to the senior generation by use of a preferred interest similar to preferred stock. Younger generations (or trusts for their benefit) could own the "common" interest, which would enjoy all appreciation in excess of the preferred return Akin Gump: Articles   He also was integrally involved in other completed and ongoing regulatory projects, including projects relating to the subpart F consequences of hybrid entity structures, the sourcing of losses on sales of personal property, the treatment of step-down preferred stock transactions, the taxation of FASITs, corporate tax shelter registration requirements and interest expense allocations. Mr. Leblang also participated in a number of negotiations with current and prospective U.S. tax treaty partners Akin Gump: SEC Proposes Amendments to Clarify Rules 16B-3 and 16B-...   Shareholders of the issuer, Fairchild Semiconductor International, Inc. (Fairchild), had approved a plan of recapitalization involving an automatic conversion upon completion of Fairchild's IPO of all shares of the issuer's preferred stock into shares of class A common stock. Upon completion of the IPO, the two corporate defendants that had officers who sat on Fairchild's board of directors acquired shares of common stock upon conversion of their preferred stock Akin Gump: Articles   6 billion public merger for cash and stock. Mr. Older's recent venture capital transactions include the representation of a private equity investment firm in connection with its $126 million investment in a telecommunications services company, a provider of colocation services in connection with Series A and B preferred stock investments aggregating more than $200 million, and a French telecommunications company in connection with a $250 million equity investment by DLJ Merchant Banking Cooley Godward: Counsellors to Rising Start-Ups   While the Web may enable easier sales of stock to individuals, I have not seen evidence that it will change the buying behavior of institutions (i. Since institutions buy most of the stock in an IPO, I believe most companies with a good story will continue to go public in the traditional way Cooley Godward: The Entrepreneur's Quick Guide to Business Law   The principal advantages are the limited liability it provides to its owners and the familiarity investors have with investments in stock. Despite its flexibility and similarity to a corporation, however, many venture capitalists prefer to invest in stock of a corporation over investing in LLC interests Days: Bridge Loans Over Troubled Waters   Downs Rachlin Martin: Model Term Sheet   RE: SERIES A PREFERRED STOCK. At the Closing, VC will purchase from the Company $___ million of Series A Convertible Preferred Stock having the terms summarized in the attached term sheet (the "Series A") Epstein Becker & Green: TEXT   However, in your rush to close the deal, you pay little attention to the fact that the venture capitalists are receiving preferred stock, while you retain common stock. Sooner or later, you'll learn why it's called preferred Epstein Becker & Green: TEXT   A hypothetical deal could go like this: The company is accorded a "post-money" valuation of $10 million, and all preferred stock is wiped out and turned into common stock. The new investment group will generally insist on receiving "super-preferred stock." Instead of being guaranteed the customary minimum annual rate of return of 6% to 8%, this super-preferred carries a "liquidation preference" of two to three times (an amount negotiated ahead of time) the original investment Epstein Becker & Green: TEXT   Since the $5 million investment would be equal to one-third of the postinvestment value, the VCs would feel entitled to a third of the stock. However, if the VCs decide your company is worth only $5 million, then their $5 million investment would make the company worth $10 million, and entitle the investors to half the stock bsp;a sizable difference Goodwin Procter: FASB Statement 149 and Redeemable Preferred Stock   One of these categories is particularly applicable to private equity and venture-backed companies, namely financial instruments, such as preferred stock, that are manditorily redeemable on a fixed or determinable date or upon an event that is certain to occur. Frequently, preferred stock issued to venture capital and private equity investors by emerging growth companies is redeemable at the option of the investor after a specified date, usually at par and sometimes at fair market value Goodwin Procter: Nasdaq Reinstates Maintenance Requirements and Extends ...   The Nasdaq Stock Market announced today that it intends to reinstate both minimum bid price and public float market value requirements for companies listed on the Nasdaq National Market and the Nasdaq SmallCap Market on January 2, 2002. Nasdaq Reinstates Maintenance Requirements and Extends Grace Period for SmallCap Issuers Following the terrorist attacks on September 11, 2001, the Nasdaq Stock Market suspended both its minimum bid price and public float market Gray Cary: Venture Capital Exit Strategy in Today?s Economic Envir...   Liquidation preferences and participation rights are provisions typically negotiated in a venture financing to augment the rights of the preferred shares that venture capitalists purchase. These terms dictate how the purchase price in an acquisition will be divided between the shareholders, and they are typically a primary cause of tension between the preferred and common shareholders, both during financing rounds and in any subsequent sale of the company Gray Cary: Venture Financings 2003:? First Quarter Remains Unchang...   Recapitalizations continue to occur, with companies trying to reduce the liquidation and other preferences on existing preferred stock to attract new, outside investors. With recapitalizations, pay-to-play and forced conversion to junior preferred or common stock were almost mandatory terms Gray Cary: Venture Financings 2003:? Second Quarter Looking Up ? S...   Very common in later stage rounds, with existing preferred more often converting to a class of junior preferred stock rather than common stock, but the more severe option of converting to common is becoming increasingly popular. Initially, these plans provided for equal sharing of the proceeds among the preferred stockholders and employees, but we now are seeing more tiered sharing, where employees do not receive anything until a specified dollar threshold of acquisition consideration is met, Gray Cary: Getting Corporate VC Right   They know that VC is a highly specialized area of private equity, with its own legal rules and surprisingly rigid expectations; that venture capitalists expect to invest in a series of preferred stock, with founders owning common stock and later employees owning options for common stock; and that they have to be sensitive to these expectations of future investors. Experienced corporate VCs make sure that their disclosure needs are recognized in the stock purchase agreement and that these rights Howard Rice: The Distressed E-Commerce Company California State Bar ...   B. "Hitting the Wall" The downslope of the troubled E-Commerce enterprise saw several turns starting in early 2000, when the stock markets began to recede. This is true not only for the later venture rounds, e.g., Series C or D convertible preferred, but even for IPOs Kilpatrick Stockton: The Life Sciences Industry - Surviving the Toughest of ...   14:4 § 14:5 § 14:6 § 14:7 § 14:8 § 14:9 § 14:10 § 14:11 § 14:12 § 14:13 § 14:14 § 14:15 Federal funding sources Venture capital investments --Valuation --Preferred stock -- --Dividend rights -- --Liquidation preference -- --Anti-dilution rights -- --Exit strategies -- --Registration rights -- --Voting rights -- --Employment agreements -- --Future nancing rights. As compared to seed and venture capital investment, government grants do not result in dilutive stock issuances or repayment Lowenstein Sandler: "Angel Financing: What Entrepreneurs Need to Know&...   In fact, angels sometimes structure their investment to avoid valuing the venture, often using debt that converts into preferred stock at a discount to the next round. When should I proceed with caution Palmer & Dodge: Managing Risk Through the Use of Milestone-based Conver...   Palmer & Dodge: What Can We Do Now That Our Public Offering Has Aborted...   Perkins Coie: Public Offerings and Institutional Placements   Piper Rudnick: Retirement Plan "Blackouts" Under Sarbanes-Oxle...   Poyner and Spruill: Selecting the Business Entity for Succession Planning   An LLC will be the preferred entity only if it can be classified as a partnership. For example, an S corporation may not have a corporate shareholder; there is no such limitation in the case of an LLC. An S corporation may have only one class of stock, whereas an LLC can be structured so that members have varying rights such as to distributions and allocations Sidley Austin: Basle Committee and US Regulatory Capital Guidelines Tr...   Innovative Tier 1 capital instruments, including trust and REIT preferred securities, have become a particularly attractive alternative for US financial institutions in meeting legal capital requirements. This is primarily because of their hybrid nature ­ trust preferred securities are considered equity for regulatory capital purposes while considered debt for tax purposes and REIT preferred securities provide the parent with the ability to pay preferred dividends in pre-tax dollars Sidley Austin: Tax Alert - Illinois Adopts Favorable Legislation for I...   Qualifying investment securities include the following: common stock (including preferred or debt securities convertible into common stock) and preferred stock; bonds, debentures, and other debt securities; foreign and domestic currency deposits secured by federal, state, or local government agencies; mortgage or asset-backed securities secured by federal, state, or local governmental agencies; repurchase agreements and loan participations; foreign currency exchange contracts and forward and Stroock: Issue No. 9 (2002)   Entergy Mississippi, Inc. (9/4/02) (35-27565, 709757) Entergy Mississippi, Inc requests authorization to increase fees, commissions and expenses of underwriters in connection with its plan to issue and sell bonds, debentures and preferred stock. The increase would not exceed the lesser of 3 Stroock: Issue No. 2   ...(35-27664, 70-10102) Authorizes GPU Diversified Holdings LLC ("GPUDH"), a subsidiary of FirstEnergy, to exchange all of its shares of Ballard Generation Systems Inc. ("BGS") for restricted shares of common stock of Ballard Power System Inc. ("BPS") having a value equal to the value of the BGS shares. Allegheny Energy, Inc. (03/06/03) (35-27657, 70-8553) Requests authority to issue through December 31, 2008, up to 20,000,000 authorized shares of its common stock through its Employee Stock Stroock: Issue No. 11 (2002)   8 billion under its previous financing order, (3) issue unsecured long-term debt securities that may be convertible into or exchanged for Keyspan common stock and may have maturities ranging from 1 to 50 years, (4) include within Keyspan's existing guarantee authority an additional guarantee obligation of $60 million it has to Hawkeye Construction LLC, a non-affiliate, under a June 2000 agreement, (5) issue up to $500 million in unsecured long-term debt to its financing subsidiaries that may be Stroock: Issue No. 1 (2003)   Allegheny Energy, Inc. (01/21/03) (35-27640, 70-10109) Authorizes Allegheny Energy, Inc. to solicit proxies from shareholders in connection with a proposed amendment to its charter to eliminate any preemptive right of stockholders to subscribe for newly issued securities of Allegheny. The modifications are authorized in connection with the acquisition by Energy East of RGS Energy Group, Inc. and its subsidiaries,and include:(1) extending the authorization period through September 30, 2005; (2) Stroock: Issue No. 8 (2001)   Maine Yankee Atomic Power Company (9/10/01) (35-27438, 70-9715) Authorizes the redemption, from its stockholders, of 99% of the presently outstanding common stock on a pro rata basis. Progress Energy Inc., et al. (8/10/01) (35-27431, 70-9909) Proposes to increase the amount of common stock, preferred stock, other preferred securities and debentures that may be issued and outstanding from $3 Stroock: Issue No. 3   The total aggregate amount of Class A shares, Class B shares and preferred securities will not exceed $500 million. Reserves jurisdiction over the issuance by ATC of any convertible preferred securities, pending completion of the record Stroock: Issue No. 10 (2002)   No SPE will publicly issue preferred securities unless it has maintained at least an investment grade corporate or senior unsecured debt rating by at least one nationally recognized rating agency. Proceeds will be used for ongoing construction, debt retirement and general corporate purposes Stroock: Issue No. 6 (2001)   Cinergy Corp. (5/8/01) (35-27396) Authorizes amendment of certificate of incorporation to permit issuance of up to 10 million shares of preferred stock. Alabama Power Company et al. (5/4/01) (3527395, 70-8461) Alabama Power, Georgia Power Company, Gulf Power Company, and Mississippi Power Company, all electric public utility subsidiaries of The Southern Company, request authorization and extension of time to issue various amounts in preferred securities Stroock: Issue No. 5 (2001)   Authorizes issuance of common stock, debt securities and guarantees. Reserves jurisdiction over Entergy's proposed solicitation of proxies from common shareholders to amend articles of incorporation; charter amendment; and issuance and sale of preferred stock Ulmer & Berne: Business and Investment   The Act restricts certain otherwise tax-free "spin-off" transactions in which a corporation distributes stock of a controlled corporation to shareholders. Under these new "anti-Morris Trust" rules, corporate-level gain is recognized on a spin-off which is part of a plan or series of related transactions in which there is an acquisition of 50-percent or more of the vote or value of stock of either the distributing corporation or the controlled corporation Weil: Need For Discovery In Securities Litigation Trumps Pres...   The court also underscored that S&P rated practically all public debt financings and preferred stock issues with or without a request or fee from the issuer. 9 The Court of Appeals noted that the Pan Am court had found that S&P could invoke a journalistic privilege in part because S&P rated virtually all public debt and preferred stock regardless of whether the issuer was an S&P client Weil: How VCs Can Limit Their Liabilities In A Down Round   Unhappy with the results of a down-round financing, Benchmark Capital recently filed suit against the directors and controlling stockholders of Juniper Financial Corp. claiming, among other things, breaches of fiduciary duties. Common stockholders and even preferred stock investors that refuse to continue to invest are often washed-out so severely diluted that they retain merely a nominal stake in the company Weil: Recent Decisions Under Section 16(b) Of The Securities ...   Actions under Section 16(b) and in particular, cases that reach the Circuit Courts of Appeals, typically involve borderline or unorthodox transactions: i.e., ones that do not involve open market purchases and sales of stock, but rather acquisitions that arise from the conversion of, or adjustments to, an entire class of securities by the issuer, which constitute a Section 16(b) purchase that is matchable against sales by an insider; or acquisitions and exchanges of (or even readjustment of Wiley Rein & Fielding: Third-Party Claimant Lacks Standing To Sue D&O Insurer   A third party sued the policyholder company and three of its directors for securities fraud based on allegations that the company’s directors had made false statements regarding the company’s preferred stock. After voluntarily dismissing the directors, the third party received a $10 million default judgment against the company and then filed a direct action against the insurer under California Insurance Code Section 11580 to collect on the judgment, or in the alternative, as an intended Merrill Lynch & Co. v. Comm'r - Cross-Chain   Background the 1986 Sale of ML Leasing During the taxable years in question, Merrill Lynch & Co. ("Merrill Lynch") owned 100 percent of the stock of Merrill Lynch Capital Resources, Inc. ("MLCR"), which in turn, owned 100 percent of the stock of Merrill Lynch Leasing, Inc. ("MLL"). For purposes of Code Section 304(a)(1): The "issuing corporation" is the corporation that is being sold and it is the stock of the issuing corporation that is the relevant stock for purposes of determining if the Volume 3   Since 1974, Congress has provided enticing tax incentives designed to encourage corporations to adopt employee stock ownership plans ("ESOPs") for the benefit of their employees. abuses that can arise where an ESOP's ownership is subject to substantial dilution through the use of stock options and other forms of equity interests (so-called "synthetic equity") for management and venture capitalists Permanent Estate Tax Repeal? Not Yet (If Ever). So   FLPs can also be structured to provide cash flow to the senior generation by use of a preferred interest similar to preferred stock. Younger generations (or trusts for their benefit) could own the "common" interest, which would enjoy all appreciation in excess of the preferred return Permanent Estate Tax Repeal? Not Yet (If Ever). So   FLPs can also be structured to provide cash flow to the senior generation by use of a preferred interest similar to preferred stock. Younger generations (or trusts for their benefit) could own the "common" interest, which would enjoy all appreciation in excess of the preferred return Project Finance Update   Keith Martin April 5, 1999 IRS Addresses Tax Effect of Contract Buyout top The Internal Revenue Service told a US utility that the utility could deduct the fair market value of common stock the utility issued to buy out power contracts with "qualifying facility" projects. The debt is called MIPS, or monthly income preferred securities Oral Statements   On December 15, 1992, IBM announced that it was "unsure of its ability to maintain the dividend at current levels." In response to this announcement, the price of IBM's stock decreased 6 3/4 points, from 62 7/8 to 56 1/8. However, the court found that Project Pacers was a proposal formulated by IBM's Treasurer Robert Ripp in 1992 to enhance stockholder value and achieve flexibility with the dividend commitment by dividing the common stock into a combination of preferred and common stock that Community Bankers Update Volume 12   ...by Carolyn V. Kelly page 6 Wholesale Borrowings Raise Regulatory Concerns by Peter G. Weinstock page 7 Don't Ignore. Sub-Debt also does not count as a second class of stock for S corporation purposes; i.e., an S corporation is able to issue Sub-Debt without defeating its S corporation status Volume 13   For purposes of the new rule, "equity investment" includes the purchase, acquisition or retention of any equity instrument (including common stock, preferred stock, partnership interests, interests in limited liability companies, trust certificates and warrants and call options that give the holder the right to purchase an equity instrument), any equity feature of a debt instrument (such as a warrant or call option to acquire an equity instrument), and any debt instrument that is convertible ESOPtions Volume 3   Several of these bills focus on the need for diversification among retirement plans and avoid the situation where the bulk of participants' retirement savings are tied into company stock. Enron's matching contributions were made exclusively in company stock Volume 14   The primary advantages of public rather than private ownership are the generally higher stock valuations and superior acquisition flexibility of public institutions. Unfortunately, for many public community financial institutions, both the stock valuation premium and the ability to effect a favorable acquisition are minimal in today's environment Volume 3   Page 1 ENRON Lawsuits Draw "BattleLines" For ESOP Fiduciaries Page 5 Sixth Circuit Court Holds Decrease in Company Stock Held is a StateLaw Claim Not Pre-empted by ERISA Page 7 Current Developments on FAS-150 Page 9 District Court Upholds ESOP Fiduciary's Decision to Hold Onto Company Stock During Declining Market Page 10 IRS May Not Agree With Recent DOL's Plan Expense Guidance Page 10 Legislative Update for S Corporation ESOPs Page 11 What We're Doing, Where We're Going. The DOL is seeking to Akin Gump: SEC Proposes Amendments to Clarify Rules 16B-3 and 16B-...   Shareholders of the issuer, Fairchild Semiconductor International, Inc. (Fairchild), had approved a plan of recapitalization involving an automatic conversion upon completion of Fairchild's IPO of all shares of the issuer's preferred stock into shares of class A common stock. Upon completion of the IPO, the two corporate defendants that had officers who sat on Fairchild's board of directors acquired shares of common stock upon conversion of their preferred stock Akin Gump: Listed Company Audit Committee Standards ??? SEC Issues...   Some SROs (such as The New York Stock Exchange and Nasdaq) have already proposed separate, and in some cases more rigorous, listing standards for independent directors and audit committee members that listed companies will need to understand and comply with, in addition to the SEC's new rule. Therefore, compliance with the new rule is required but may not be totally sufficient - depending upon the listing standards adopted by the marketplace on which the listed company's securities are traded Blank Rome: SEC PROPOSES ADDITIONAL DISCLOSURE REGARDING TRANSACTIO...   1 As proposed, transactions in instruments such as preferred stock convertible into common stock at a floating. exercise price and performance-based units would be reportable under Item 10 Chapman and Cutler: 2003 Annual Review   Public Equity Offerings Improving equity markets and the return of public equity offerings in 2003 enabled the firm to act as underwriters' counsel in two public common stock offerings of NYSE listed issuers. The fund invests in a diversified portfolio of common stocks highly ranked by Value Line, Inc., an independent equity research firm Clifford Chance:  Tax-Free Acquisitions by Foreign Entities - Satis...   Debevoise: Article Index   Title Covering Your Assets: The Upside and Downside of Products Liability Due Diligence Don't Forget Your MAC A Case for European Private Equity Investment (Guest Column) What the End of Goodwill Amortization Means for Finance Agreement Covenants Tax Benefits for "Qualified Small Business Stock" Are Shareholder Agreements Enforceable. Avoiding "Phantom Income" When Buying Preferred Stock What's the Buzz About Privacy Debevoise: Article Index   Title Securitization of Private Equity Fund Interests: What Every Fund Sponsor Should Know Could This Be the Year to Start Expensing Stock Options. Making Sense of the New Tax Rules Applicable to Confidential Transactions China's Revised Venture Capital Rules: The Rule-Making Process in China Indemnification by Stockholders of Public Targets Going, Going, Gone Debevoise: Article Index   Title Securitization of Private Equity Fund Interests: What Every Fund Sponsor Should Know Could This Be the Year to Start Expensing Stock Options. Making Sense of the New Tax Rules Applicable to Confidential Transactions China's Revised Venture Capital Rules: The Rule-Making Process in China Indemnification by Stockholders of Public Targets Going, Going, Gone Debevoise: Article Index   Title Securitization of Private Equity Fund Interests: What Every Fund Sponsor Should Know Could This Be the Year to Start Expensing Stock Options. Making Sense of the New Tax Rules Applicable to Confidential Transactions China's Revised Venture Capital Rules: The Rule-Making Process in China Indemnification by Stockholders of Public Targets Going, Going, Gone Downs Rachlin Martin: Model Term Sheet   RE: SERIES A PREFERRED STOCK. At the Closing, VC will purchase from the Company $___ million of Series A Convertible Preferred Stock having the terms summarized in the attached term sheet (the "Series A") Downs Rachlin Martin: Ten Questions Regarding Choice of Business Entity   Since LLCs can have multiple classes of equity interests and it is possible to fashion an LLC membership interest comparable to convertible preferred stock, one might think that the LLC form would be attractive to investors. There are two significant differences, however, between option plans to purchase corporate stock versus options to purchase an interest in an LLC or a partnership Epstein Becker & Green: TEXT   However, in your rush to close the deal, you pay little attention to the fact that the venture capitalists are receiving preferred stock, while you retain common stock. Sooner or later, you'll learn why it's called preferred Epstein Becker & Green: TEXT   A hypothetical deal could go like this: The company is accorded a "post-money" valuation of $10 million, and all preferred stock is wiped out and turned into common stock. The new investment group will generally insist on receiving "super-preferred stock." Instead of being guaranteed the customary minimum annual rate of return of 6% to 8%, this super-preferred carries a "liquidation preference" of two to three times (an amount negotiated ahead of time) the original investment Epstein Becker & Green: TEXT   Since the $5 million investment would be equal to one-third of the postinvestment value, the VCs would feel entitled to a third of the stock. However, if the VCs decide your company is worth only $5 million, then their $5 million investment would make the company worth $10 million, and entitle the investors to half the stock bsp;a sizable difference Fox Rothschild: 2003 Tax Act: New Law Will Benefit Individuals and Busi...   To qualify for the reduced tax rate on dividend income, stock must be held for 60 days during the 120 day period beginning 60 days before the ex-dividend date (i. e., the date on which buyers of the stock are no longer entitled to receive the last declared dividend) Fried Frank: 2004 Supplement to Responses to Takeover Bids: Corporat...   There were also increasing numbers of stock deals, strategic acquisitions, and continued globalization of the acquisition market. Following the burst of the stock market bubble in 2000­2001, merger and acquisition activity declined in intensity, but became more robust again in late 2003 and early 2004, including an increase in hostile takeover proposals Goodwin Procter: Over $16 Billion in Real Estate Securities Public Offer...   Type of Security MTNs MTNs Senior Notes Common Stock MTNs MTN MTNs Senior Notes Common Stock Convertible Preferred Stock Preferred Stock. MTNs Common Stock MTNs Common Stock Preferred Units Preferred Stock $150 million $149 million $125 million $100 million $50 million $30 million Goodwin Procter: Nasdaq Reinstates Maintenance Requirements and Extends ...   The Nasdaq Stock Market announced today that it intends to reinstate both minimum bid price and public float market value requirements for companies listed on the Nasdaq National Market and the Nasdaq SmallCap Market on January 2, 2002. Nasdaq Reinstates Maintenance Requirements and Extends Grace Period for SmallCap Issuers Following the terrorist attacks on September 11, 2001, the Nasdaq Stock Market suspended both its minimum bid price and public float market Gray Cary: 100% Dividend Exclusion Proposal:? Consequences for Cor...   The basis increase, which will not be taxable, will reduce a shareholder s capital gains when the shareholder sells his or her stock, to the extent that the sales price reflects the corporation s retained, previously taxed earnings. e., if the corporation does not declare a cash dividend to shareholders), such retained earnings should generally be reflected in the value of the corporation s stock Honigman Miller: The Representative Director Problem   In one of the few discussions of the problem of the representative director, the author reviewed Weinberger and the cases of Johnson v. Trueblood8 and Sinclair Corp. v. Levien9 and concluded that The cases that deal with self-dealing transactions between a controlling stockholder and the controlled corporation cannot be reconciled with the existence of any general prohibition against action by a director who represents a particular stockholder to further that interest. Even where disinterested Honigman Miller: Natural Gas Pipeline Regulation and its Impact on Value   Long Term Debt Preferred Stock Common Equity TOTAL. The FERC's preferred method is the discounted cash flow or DCF method Howard Rice: The Distressed E-Commerce Company California State Bar ...   B. "Hitting the Wall" The downslope of the troubled E-Commerce enterprise saw several turns starting in early 2000, when the stock markets began to recede. This is true not only for the later venture rounds, e.g., Series C or D convertible preferred, but even for IPOs Kilpatrick Stockton: The Life Sciences Industry - Surviving the Toughest of ...   14:4 § 14:5 § 14:6 § 14:7 § 14:8 § 14:9 § 14:10 § 14:11 § 14:12 § 14:13 § 14:14 § 14:15 Federal funding sources Venture capital investments --Valuation --Preferred stock -- --Dividend rights -- --Liquidation preference -- --Anti-dilution rights -- --Exit strategies -- --Registration rights -- --Voting rights -- --Employment agreements -- --Future nancing rights. As compared to seed and venture capital investment, government grants do not result in dilutive stock issuances or repayment Morris: Working with Limited Liability Companies and Limited Li...   LLCs can have preferred interests and participating debt. g., those with foreign investors, corporate or trust investors, or holders of preferred stock) Morris: Working with Limited Liability Companies and Limited Li...   LLCs can have preferred interests and participating debt. g., those with foreign investors, corporate or trust investors, or holders of preferred stock) Sidley Austin: Tax Alert - The American Jobs Creation Act of 2004 - Pr...   In the first transaction, before the enactment of §163(l), Enron issued debt payable by reference to the stock of a more-than-50 percent owned subsidiary. In the second transaction,after enactment of §163(l),Enron reduced its ownership interest below 50 percent and again issued debt payable by reference to the subsidiary's stock Sidley Austin: Tax Alert - American Job Creation Act of 2004   ...reduces the foreign tax credit limitation categories from nine to two (passive category income and general category income); extends the 15 day holding period required to claim foreign tax credits on stock dividends to include certain gross based withholding taxes, including foreign withholding taxes on interest income; modifies the foreign tax credit interest allocation rules; extends the foreign tax credit limitation carry forward period to ten years. In general, §956 treats a controlled Sidley Austin: Best Practices Calendar for Corporate Boards and Commit...   A $150 million stock purchase will be made at closing and two $50 million stock purchases will be made in 2001. 5 million of Isis common stock and is obligated to purchase an additional $7 Sidley Austin: Investment Companies & Investment Managers Newsletter   Preferred Stock Deemed 2a-7 Eligible Security. n answer to a request submitted on behalf of Merrill Lynch Investment Managers by Sidley Austin Brown LLP (May 10, 2002), the SEC staff stated that it would not recommend enforcement action if money market funds purchase auction market preferred stock and remarketed preferred stock, through an auction or remarketing occurring once every seven days Sidley Austin: International Bulletin: Summer 2002 Issue   ...n American Stock Exchange LLC (August 17, 2001), the SEC staff responded to the Amex's request that the SEC allow series of exchange traded funds, subject to certain conditions, to begin secondary market trading without submitting a 1934 Act exemptive/no-action request. The relief was granted to ETFs satisfying the following conditions: · ETF shares must be issued by a registered open-end management investment company or a UIT; · the ETF must consist of a "basket" of 20 or more component stocks, Stroock: Issue No. 9 (2002)   Entergy Mississippi, Inc. (9/4/02) (35-27565, 709757) Entergy Mississippi, Inc requests authorization to increase fees, commissions and expenses of underwriters in connection with its plan to issue and sell bonds, debentures and preferred stock. The increase would not exceed the lesser of 3 Stroock: Issue No. 2   ...(35-27664, 70-10102) Authorizes GPU Diversified Holdings LLC ("GPUDH"), a subsidiary of FirstEnergy, to exchange all of its shares of Ballard Generation Systems Inc. ("BGS") for restricted shares of common stock of Ballard Power System Inc. ("BPS") having a value equal to the value of the BGS shares. Allegheny Energy, Inc. (03/06/03) (35-27657, 70-8553) Requests authority to issue through December 31, 2008, up to 20,000,000 authorized shares of its common stock through its Employee Stock Stroock: Issue No. 11 (2002)   8 billion under its previous financing order, (3) issue unsecured long-term debt securities that may be convertible into or exchanged for Keyspan common stock and may have maturities ranging from 1 to 50 years, (4) include within Keyspan's existing guarantee authority an additional guarantee obligation of $60 million it has to Hawkeye Construction LLC, a non-affiliate, under a June 2000 agreement, (5) issue up to $500 million in unsecured long-term debt to its financing subsidiaries that may be Stroock: Issue No. 1 (2003)   Allegheny Energy, Inc. (01/21/03) (35-27640, 70-10109) Authorizes Allegheny Energy, Inc. to solicit proxies from shareholders in connection with a proposed amendment to its charter to eliminate any preemptive right of stockholders to subscribe for newly issued securities of Allegheny. The modifications are authorized in connection with the acquisition by Energy East of RGS Energy Group, Inc. and its subsidiaries,and include:(1) extending the authorization period through September 30, 2005; (2) Stroock: Issue No. 8 (2001)   Maine Yankee Atomic Power Company (9/10/01) (35-27438, 70-9715) Authorizes the redemption, from its stockholders, of 99% of the presently outstanding common stock on a pro rata basis. Progress Energy Inc., et al. (8/10/01) (35-27431, 70-9909) Proposes to increase the amount of common stock, preferred stock, other preferred securities and debentures that may be issued and outstanding from $3 Stroock: Issue No. 3   The total aggregate amount of Class A shares, Class B shares and preferred securities will not exceed $500 million. Reserves jurisdiction over the issuance by ATC of any convertible preferred securities, pending completion of the record Stroock: Issue No. 10 (2002)   No SPE will publicly issue preferred securities unless it has maintained at least an investment grade corporate or senior unsecured debt rating by at least one nationally recognized rating agency. Proceeds will be used for ongoing construction, debt retirement and general corporate purposes Stroock: Issue No. 6 (2001)   Cinergy Corp. (5/8/01) (35-27396) Authorizes amendment of certificate of incorporation to permit issuance of up to 10 million shares of preferred stock. Alabama Power Company et al. (5/4/01) (3527395, 70-8461) Alabama Power, Georgia Power Company, Gulf Power Company, and Mississippi Power Company, all electric public utility subsidiaries of The Southern Company, request authorization and extension of time to issue various amounts in preferred securities Stroock: Issue No. 5 (2001)   Authorizes issuance of common stock, debt securities and guarantees. Reserves jurisdiction over Entergy's proposed solicitation of proxies from common shareholders to amend articles of incorporation; charter amendment; and issuance and sale of preferred stock Stroock: Issue No. 7 (2002)   The order authorizes an electric restructuring whereby REI will become a wholly owned subsidiary of CenterPoint Energy, Inc. ("New RRI") and REI's stockholders will become stockholders of New REI, and REI's regulated generation assets used to generate electric power and energy for sale in Texas will be contributed to Texas Genco Holdings, Inc. ("Texas Genco"), a wholly owned subsidiary of New REI; a spin-off of Reliant Resources, Inc. ("RRI") through the distribution by New REI of its RRI shares Stroock: Frequently Asked Questions About PIPEs   ...the sale of convertible preferred stock or convert. for investors to hedge their commitment by shorting the issuer's stock Stroock: Proxy Voting-Related Requirements for Registered Manage...   ...stock option plans and other management compensation issues; and social and corporate responsibility issues. Stroock: Issue No. 9 (2001)   ...al. (10/01/01) (35-27445, 70-9787) Authorizes Emera, a Nova Scotia company, to acquire the outstanding common stock of Bangor Hydro-Electric Company and its public utility subsidiaries; authorizes financings and related transactions; authorizes an exemption from registration under section 3(a)(1) of the Public Utility Holding Company Act of 1935; reserves jurisdiction over the formation of an Emera service company, the tax allocation agreement, and other matters. 5 billion outstanding at any one Stroock: NASDAQ Proposed Rule: Change and Amendment No. 1 Relati...   Because Nasdaq does not believe that ownership of company stock by itself would preclude a board finding of independence, it is not included in the aforementioned objective factors. (C) Notwithstanding paragraph (4)(A)(ii) above, if the nominations committee is comprised of at least three members, and if the exception described in paragraph (4)(B) is not relied upon, one director who owns 20% or more of the company's common stock or voting power outstanding, and is not independent as defined in Stroock: "Don't Pay Twice for Your Equity!" by Mi...   For these reasons, as well as the accepted protections found in statutory mergers, a merger's certainty might be preferred. FAIR VALUE' APPRAISAL "Fair value" appraisal is the remedy for dissenting stockholders squeezed out of Delaware companies Stroock: The New Form 4   ...(b) The title of the security should clearly identify the class, even if the issuer has only one class of securities outstanding; for example, Common Stock, Class A Common Stock, Class B Convertible Preferred Stock, etc. g., convertible preferred securities) only in Table II. (ii) The title of a derivative security and the title of the equity security underlying the derivative security should be shown separately in the appropriate columns in Table II. The puts and calls reported in Table II Stroock: Regulation S   ...(b) SUSMI of an issuer's debt security (which term includes nonparticipatory preferred. stock and certain asset-backed securities) means that: i. at least 300 United States persons hold the debt security; or ii Weil: Need For Discovery In Securities Litigation Trumps Pres...   The court also underscored that S&P rated practically all public debt financings and preferred stock issues with or without a request or fee from the issuer. 9 The Court of Appeals noted that the Pan Am court had found that S&P could invoke a journalistic privilege in part because S&P rated virtually all public debt and preferred stock regardless of whether the issuer was an S&P client Weil: How VCs Can Limit Their Liabilities In A Down Round   Unhappy with the results of a down-round financing, Benchmark Capital recently filed suit against the directors and controlling stockholders of Juniper Financial Corp. claiming, among other things, breaches of fiduciary duties. Common stockholders and even preferred stock investors that refuse to continue to invest are often washed-out so severely diluted that they retain merely a nominal stake in the company Weil: Recent Decisions Under Section 16(b) Of The Securities ...   Actions under Section 16(b) and in particular, cases that reach the Circuit Courts of Appeals, typically involve borderline or unorthodox transactions: i.e., ones that do not involve open market purchases and sales of stock, but rather acquisitions that arise from the conversion of, or adjustments to, an entire class of securities by the issuer, which constitute a Section 16(b) purchase that is matchable against sales by an insider; or acquisitions and exchanges of (or even readjustment of Weil: Post-Merger Employment Agreements With Target Managemen...   Sept. 4, 2002), the Second Circuit held that the acquiror s payment to the target s chief executive officer under a post-merger non-compete agreement, when the CEO also owned a block of the target s stock, violated Rule 14d-10, although the payment was made after the tender offer closed. Computer Associates offered to purchase On-Line stock for $15 Weil: SPOTLIGHT: IRWIN WARREN - Winning Four Different Trials...   Protecting Intellectual Property Rights: McGraw-Hill v. Vanguard Index Trust The Standard & Poor s division (S&P) of McGraw-Hill has been publishing its "S&P 500 Index" the premier benchmark for U.S. stock market performance for over forty years. ETF shares could be bought and sold at market prices on a national exchange throughout the trading day, much like a common stock, and unlike conventional mutual fund shares, which may be purchased and redeemed only at the end of each trading day at the Weil: Additional Recent Decisions of Note   May 5, 2003) United States District Court for the District of Delaware holds that a Delaware non-resident s merely owning stock or being a director of a Delaware corporation does not confer long-arm jurisdiction over him or her. In June 2002, Venoco, Inc. s board of directors voted to pay a cash dividend to two holders of its preferred stock Weil: SEC Adopts Integration Safe Harbor For Abandoning and C...   ...g., more of the same series of preferred stock) to be offered within a specified period after closing without triggering the original purchasers exercise of preemptive rights. In either situation, assuming the additional tranche or tranches is offered but never sold, the question becomes whether the initial placement may be treated as completed for 152 purposes and the subsequent, failed placement can be deemed abandoned within the meaning of Rule 155(b) February 6   Moreover, proposed amendments to rule 10b-10 under the 1934 Act would require a broker-dealer effecting transactions in shares of preferred stock to inform customers in writing—at or before the completion of the transaction—if the issuer of the stock has reserved the right to repurchase the shares, while proposed amendments to Form N-1A—the registration form for mutual funds—would require mutual funds to provide enhanced prospectus disclosure regarding sales loads and revenue sharing payments. February 4   Moreover, proposed amendments to rule 10b-10 under the 1934 Act would require a broker-dealer effecting transactions in shares of preferred stock to inform customers in writing—at or before the completion of the transaction—if the issuer of the stock has reserved the right to repurchase the shares, while proposed amendments to Form N-1A—the registration form for mutual funds—would require mutual funds to provide enhanced prospectus disclosure regarding sales loads and revenue sharing payments. Merrill Lynch & Co. v. Comm'r - Cross-Chain   Volume 3   Since 1974, Congress has provided enticing tax incentives designed to encourage corporations to adopt employee stock ownership plans ("ESOPs") for the benefit of their employees. abuses that can arise where an ESOP's ownership is subject to substantial dilution through the use of stock options and other forms of equity interests (so-called "synthetic equity") for management and venture capitalists Permanent Estate Tax Repeal? Not Yet (If Ever). So   FLPs can also be structured to provide cash flow to the senior generation by use of a preferred interest similar to preferred stock. Younger generations (or trusts for their benefit) could own the "common" interest, which would enjoy all appreciation in excess of the preferred return Permanent Estate Tax Repeal? Not Yet (If Ever). So   FLPs can also be structured to provide cash flow to the senior generation by use of a preferred interest similar to preferred stock. Younger generations (or trusts for their benefit) could own the "common" interest, which would enjoy all appreciation in excess of the preferred return Project Finance Update   Keith Martin April 5, 1999 IRS Addresses Tax Effect of Contract Buyout top The Internal Revenue Service told a US utility that the utility could deduct the fair market value of common stock the utility issued to buy out power contracts with "qualifying facility" projects. The debt is called MIPS, or monthly income preferred securities Oral Statements   On December 15, 1992, IBM announced that it was "unsure of its ability to maintain the dividend at current levels." In response to this announcement, the price of IBM's stock decreased 6 3/4 points, from 62 7/8 to 56 1/8. However, the court found that Project Pacers was a proposal formulated by IBM's Treasurer Robert Ripp in 1992 to enhance stockholder value and achieve flexibility with the dividend commitment by dividing the common stock into a combination of preferred and common stock that Akin Gump: SEC Proposes Amendments to Clarify Rules 16B-3 and 16B-...   Shareholders of the issuer, Fairchild Semiconductor International, Inc. (Fairchild), had approved a plan of recapitalization involving an automatic conversion upon completion of Fairchild's IPO of all shares of the issuer's preferred stock into shares of class A common stock. Upon completion of the IPO, the two corporate defendants that had officers who sat on Fairchild's board of directors acquired shares of common stock upon conversion of their preferred stock Akin Gump: Listed Company Audit Committee Standards ??? SEC Issues...   Some SROs (such as The New York Stock Exchange and Nasdaq) have already proposed separate, and in some cases more rigorous, listing standards for independent directors and audit committee members that listed companies will need to understand and comply with, in addition to the SEC's new rule. Therefore, compliance with the new rule is required but may not be totally sufficient - depending upon the listing standards adopted by the marketplace on which the listed company's securities are traded Blank Rome: SEC PROPOSES ADDITIONAL DISCLOSURE REGARDING TRANSACTIO...   1 As proposed, transactions in instruments such as preferred stock convertible into common stock at a floating. exercise price and performance-based units would be reportable under Item 10 Clifford Chance:  Tax-Free Acquisitions by Foreign Entities - Satis...   Debevoise: Article Index   Title Covering Your Assets: The Upside and Downside of Products Liability Due Diligence Don't Forget Your MAC A Case for European Private Equity Investment (Guest Column) What the End of Goodwill Amortization Means for Finance Agreement Covenants Tax Benefits for "Qualified Small Business Stock" Are Shareholder Agreements Enforceable. Avoiding "Phantom Income" When Buying Preferred Stock What's the Buzz About Privacy Debevoise: Article Index   Title Securitization of Private Equity Fund Interests: What Every Fund Sponsor Should Know Could This Be the Year to Start Expensing Stock Options. Making Sense of the New Tax Rules Applicable to Confidential Transactions China's Revised Venture Capital Rules: The Rule-Making Process in China Indemnification by Stockholders of Public Targets Going, Going, Gone Debevoise: Article Index   Title Securitization of Private Equity Fund Interests: What Every Fund Sponsor Should Know Could This Be the Year to Start Expensing Stock Options. Making Sense of the New Tax Rules Applicable to Confidential Transactions China's Revised Venture Capital Rules: The Rule-Making Process in China Indemnification by Stockholders of Public Targets Going, Going, Gone Debevoise: Article Index   Title Securitization of Private Equity Fund Interests: What Every Fund Sponsor Should Know Could This Be the Year to Start Expensing Stock Options. Making Sense of the New Tax Rules Applicable to Confidential Transactions China's Revised Venture Capital Rules: The Rule-Making Process in China Indemnification by Stockholders of Public Targets Going, Going, Gone Debevoise: Article Index   Title Securitization of Private Equity Fund Interests: What Every Fund Sponsor Should Know Could This Be the Year to Start Expensing Stock Options. Making Sense of the New Tax Rules Applicable to Confidential Transactions China's Revised Venture Capital Rules: The Rule-Making Process in China Indemnification by Stockholders of Public Targets Going, Going, Gone Downs Rachlin Martin: Model Term Sheet   RE: SERIES A PREFERRED STOCK. At the Closing, VC will purchase from the Company $___ million of Series A Convertible Preferred Stock having the terms summarized in the attached term sheet (the "Series A") Downs Rachlin Martin: Ten Questions Regarding Choice of Business Entity   Since LLCs can have multiple classes of equity interests and it is possible to fashion an LLC membership interest comparable to convertible preferred stock, one might think that the LLC form would be attractive to investors. There are two significant differences, however, between option plans to purchase corporate stock versus options to purchase an interest in an LLC or a partnership Fox Rothschild: 2003 Tax Act: New Law Will Benefit Individuals and Busi...   To qualify for the reduced tax rate on dividend income, stock must be held for 60 days during the 120 day period beginning 60 days before the ex-dividend date (i. e., the date on which buyers of the stock are no longer entitled to receive the last declared dividend) Fried Frank: 2004 Supplement to Responses to Takeover Bids: Corporat...   There were also increasing numbers of stock deals, strategic acquisitions, and continued globalization of the acquisition market. Following the burst of the stock market bubble in 2000­2001, merger and acquisition activity declined in intensity, but became more robust again in late 2003 and early 2004, including an increase in hostile takeover proposals Goodwin Procter: Over $16 Billion in Real Estate Securities Public Offer...   Type of Security MTNs MTNs Senior Notes Common Stock MTNs MTN MTNs Senior Notes Common Stock Convertible Preferred Stock Preferred Stock. MTNs Common Stock MTNs Common Stock Preferred Units Preferred Stock $150 million $149 million $125 million $100 million $50 million $30 million Goodwin Procter: Nasdaq Reinstates Maintenance Requirements and Extends ...   The Nasdaq Stock Market announced today that it intends to reinstate both minimum bid price and public float market value requirements for companies listed on the Nasdaq National Market and the Nasdaq SmallCap Market on January 2, 2002. Nasdaq Reinstates Maintenance Requirements and Extends Grace Period for SmallCap Issuers Following the terrorist attacks on September 11, 2001, the Nasdaq Stock Market suspended both its minimum bid price and public float market Goodwin Procter: SEC Expected to Approve Final NYSE Corporate Governance...   Summary Completing a process that began in June 2002, the SEC is expected to approve the New York Stock Exchange's new corporate governance listing standards. There are exceptions for controlled companies, companies with only listed preferred stock or debt securities, and foreign private issuers Goodwin Procter: SEC Approves AMEX Corporate Governance Reforms   Summary On December 1, 2003, the SEC approved the American Stock Exchange's proposed corporate governance reforms. There are exceptions to certain of these requirements for controlled companies, limited partnerships, asset-backed issuers and Effective Dates other passive business organizations, registered investment management companies, business development companies, companies with only listed preferred stock or debt securities, foreign private issuers and small business filers Gray Cary: 100% Dividend Exclusion Proposal:? Consequences for Cor...   Honigman Miller: The Representative Director Problem   In one of the few discussions of the problem of the representative director, the author reviewed Weinberger and the cases of Johnson v. Trueblood8 and Sinclair Corp. v. Levien9 and concluded that The cases that deal with self-dealing transactions between a controlling stockholder and the controlled corporation cannot be reconciled with the existence of any general prohibition against action by a director who represents a particular stockholder to further that interest. Even where disinterested Howard Rice: The Distressed E-Commerce Company California State Bar ...   B. "Hitting the Wall" The downslope of the troubled E-Commerce enterprise saw several turns starting in early 2000, when the stock markets began to recede. This is true not only for the later venture rounds, e.g., Series C or D convertible preferred, but even for IPOs Kilpatrick Stockton: The Life Sciences Industry - Surviving the Toughest of ...   14:4 § 14:5 § 14:6 § 14:7 § 14:8 § 14:9 § 14:10 § 14:11 § 14:12 § 14:13 § 14:14 § 14:15 Federal funding sources Venture capital investments --Valuation --Preferred stock -- --Dividend rights -- --Liquidation preference -- --Anti-dilution rights -- --Exit strategies -- --Registration rights -- --Voting rights -- --Employment agreements -- --Future nancing rights. As compared to seed and venture capital investment, government grants do not result in dilutive stock issuances or repayment Morris: Working with Limited Liability Companies and Limited Li...   LLCs can have preferred interests and participating debt. g., those with foreign investors, corporate or trust investors, or holders of preferred stock) Morris: Working with Limited Liability Companies and Limited Li...   LLCs can have preferred interests and participating debt. g., those with foreign investors, corporate or trust investors, or holders of preferred stock) Sidley Austin: Basle Committee and US Regulatory Capital Guidelines Tr...   Innovative Tier 1 capital instruments, including trust and REIT preferred securities, have become a particularly attractive alternative for US financial institutions in meeting legal capital requirements. This is primarily because of their hybrid nature ­ trust preferred securities are considered equity for regulatory capital purposes while considered debt for tax purposes and REIT preferred securities provide the parent with the ability to pay preferred dividends in pre-tax dollars Sidley Austin: Tax Alert - The American Jobs Creation Act of 2004 - Pr...   In the first transaction, before the enactment of §163(l), Enron issued debt payable by reference to the stock of a more-than-50 percent owned subsidiary. In the second transaction,after enactment of §163(l),Enron reduced its ownership interest below 50 percent and again issued debt payable by reference to the subsidiary's stock Sidley Austin: Tax Alert - American Job Creation Act of 2004   ...reduces the foreign tax credit limitation categories from nine to two (passive category income and general category income); extends the 15 day holding period required to claim foreign tax credits on stock dividends to include certain gross based withholding taxes, including foreign withholding taxes on interest income; modifies the foreign tax credit interest allocation rules; extends the foreign tax credit limitation carry forward period to ten years. In general, §956 treats a controlled Sidley Austin: Best Practices Calendar for Corporate Boards and Commit...   A $150 million stock purchase will be made at closing and two $50 million stock purchases will be made in 2001. 5 million of Isis common stock and is obligated to purchase an additional $7 Sidley Austin: Selected 2002 and 2001 Developments in US Corporate and...   Many RCIs and PROs include a stock settlement feature whereby deferred cash coupons may be satisfied by the issuing bank by issuing shares. meet its coupon obligations because of shareholder dilution, it is unlikely that the stock settlement feature would be used, and, therefore, such instruments would likely be treated as liabilities rather than as shareholders' funds Sidley Austin: Investment Companies & Investment Managers Newsletter   Preferred Stock Deemed 2a-7 Eligible Security. n answer to a request submitted on behalf of Merrill Lynch Investment Managers by Sidley Austin Brown LLP (May 10, 2002), the SEC staff stated that it would not recommend enforcement action if money market funds purchase auction market preferred stock and remarketed preferred stock, through an auction or remarketing occurring once every seven days Sidley Austin: Tax Practice Memorandum   ...g., "trust preferreds") have historically been treated as debt for federal income tax purposes. Tier 1 capital product development to date has focused primarily on non-dilutive, fixed income, nonvoting securities that raise capital at a lower cost than traditional common and, to the extent available to the bank, preferred shares Stroock: Issue No. 9 (2002)   Entergy Mississippi, Inc. (9/4/02) (35-27565, 709757) Entergy Mississippi, Inc requests authorization to increase fees, commissions and expenses of underwriters in connection with its plan to issue and sell bonds, debentures and preferred stock. The increase would not exceed the lesser of 3 Stroock: Issue No. 2   ...(35-27664, 70-10102) Authorizes GPU Diversified Holdings LLC ("GPUDH"), a subsidiary of FirstEnergy, to exchange all of its shares of Ballard Generation Systems Inc. ("BGS") for restricted shares of common stock of Ballard Power System Inc. ("BPS") having a value equal to the value of the BGS shares. Allegheny Energy, Inc. (03/06/03) (35-27657, 70-8553) Requests authority to issue through December 31, 2008, up to 20,000,000 authorized shares of its common stock through its Employee Stock Stroock: Issue No. 11 (2002)   8 billion under its previous financing order, (3) issue unsecured long-term debt securities that may be convertible into or exchanged for Keyspan common stock and may have maturities ranging from 1 to 50 years, (4) include within Keyspan's existing guarantee authority an additional guarantee obligation of $60 million it has to Hawkeye Construction LLC, a non-affiliate, under a June 2000 agreement, (5) issue up to $500 million in unsecured long-term debt to its financing subsidiaries that may be Stroock: Issue No. 1 (2003)   Allegheny Energy, Inc. (01/21/03) (35-27640, 70-10109) Authorizes Allegheny Energy, Inc. to solicit proxies from shareholders in connection with a proposed amendment to its charter to eliminate any preemptive right of stockholders to subscribe for newly issued securities of Allegheny. The modifications are authorized in connection with the acquisition by Energy East of RGS Energy Group, Inc. and its subsidiaries,and include:(1) extending the authorization period through September 30, 2005; (2) Stroock: Issue No. 8 (2001)   Maine Yankee Atomic Power Company (9/10/01) (35-27438, 70-9715) Authorizes the redemption, from its stockholders, of 99% of the presently outstanding common stock on a pro rata basis. Progress Energy Inc., et al. (8/10/01) (35-27431, 70-9909) Proposes to increase the amount of common stock, preferred stock, other preferred securities and debentures that may be issued and outstanding from $3 Stroock: Issue No. 3   The total aggregate amount of Class A shares, Class B shares and preferred securities will not exceed $500 million. Reserves jurisdiction over the issuance by ATC of any convertible preferred securities, pending completion of the record Stroock: Issue No. 10 (2002)   No SPE will publicly issue preferred securities unless it has maintained at least an investment grade corporate or senior unsecured debt rating by at least one nationally recognized rating agency. Proceeds will be used for ongoing construction, debt retirement and general corporate purposes Stroock: Issue No. 6 (2001)   Cinergy Corp. (5/8/01) (35-27396) Authorizes amendment of certificate of incorporation to permit issuance of up to 10 million shares of preferred stock. Alabama Power Company et al. (5/4/01) (3527395, 70-8461) Alabama Power, Georgia Power Company, Gulf Power Company, and Mississippi Power Company, all electric public utility subsidiaries of The Southern Company, request authorization and extension of time to issue various amounts in preferred securities Stroock: Issue No. 5 (2001)   Authorizes issuance of common stock, debt securities and guarantees. Reserves jurisdiction over Entergy's proposed solicitation of proxies from common shareholders to amend articles of incorporation; charter amendment; and issuance and sale of preferred stock Stroock: Issue No. 7 (2002)   The order authorizes an electric restructuring whereby REI will become a wholly owned subsidiary of CenterPoint Energy, Inc. ("New RRI") and REI's stockholders will become stockholders of New REI, and REI's regulated generation assets used to generate electric power and energy for sale in Texas will be contributed to Texas Genco Holdings, Inc. ("Texas Genco"), a wholly owned subsidiary of New REI; a spin-off of Reliant Resources, Inc. ("RRI") through the distribution by New REI of its RRI shares Stroock: Frequently Asked Questions About PIPEs   ...the sale of convertible preferred stock or convert. for investors to hedge their commitment by shorting the issuer's stock Stroock: Proxy Voting-Related Requirements for Registered Manage...   ...stock option plans and other management compensation issues; and social and corporate responsibility issues. Stroock: Issue No. 9 (2001)   ...al. (10/01/01) (35-27445, 70-9787) Authorizes Emera, a Nova Scotia company, to acquire the outstanding common stock of Bangor Hydro-Electric Company and its public utility subsidiaries; authorizes financings and related transactions; authorizes an exemption from registration under section 3(a)(1) of the Public Utility Holding Company Act of 1935; reserves jurisdiction over the formation of an Emera service company, the tax allocation agreement, and other matters. 5 billion outstanding at any one Stroock: NASDAQ Proposed Rule: Change and Amendment No. 1 Relati...   Because Nasdaq does not believe that ownership of company stock by itself would preclude a board finding of independence, it is not included in the aforementioned objective factors. (C) Notwithstanding paragraph (4)(A)(ii) above, if the nominations committee is comprised of at least three members, and if the exception described in paragraph (4)(B) is not relied upon, one director who owns 20% or more of the company's common stock or voting power outstanding, and is not independent as defined in Stroock: "Don't Pay Twice for Your Equity!" by Mi...   For these reasons, as well as the accepted protections found in statutory mergers, a merger's certainty might be preferred. FAIR VALUE' APPRAISAL "Fair value" appraisal is the remedy for dissenting stockholders squeezed out of Delaware companies Stroock: The New Form 4   ...(b) The title of the security should clearly identify the class, even if the issuer has only one class of securities outstanding; for example, Common Stock, Class A Common Stock, Class B Convertible Preferred Stock, etc. g., convertible preferred securities) only in Table II. (ii) The title of a derivative security and the title of the equity security underlying the derivative security should be shown separately in the appropriate columns in Table II. The puts and calls reported in Table II Weil: Need For Discovery In Securities Litigation Trumps Pres...   The court also underscored that S&P rated practically all public debt financings and preferred stock issues with or without a request or fee from the issuer. 9 The Court of Appeals noted that the Pan Am court had found that S&P could invoke a journalistic privilege in part because S&P rated virtually all public debt and preferred stock regardless of whether the issuer was an S&P client Weil: How VCs Can Limit Their Liabilities In A Down Round   Unhappy with the results of a down-round financing, Benchmark Capital recently filed suit against the directors and controlling stockholders of Juniper Financial Corp. claiming, among other things, breaches of fiduciary duties. Common stockholders and even preferred stock investors that refuse to continue to invest are often washed-out so severely diluted that they retain merely a nominal stake in the company Weil: Recent Decisions Under Section 16(b) Of The Securities ...   Actions under Section 16(b) and in particular, cases that reach the Circuit Courts of Appeals, typically involve borderline or unorthodox transactions: i.e., ones that do not involve open market purchases and sales of stock, but rather acquisitions that arise from the conversion of, or adjustments to, an entire class of securities by the issuer, which constitute a Section 16(b) purchase that is matchable against sales by an insider; or acquisitions and exchanges of (or even readjustment of Weil: Post-Merger Employment Agreements With Target Managemen...   Sept. 4, 2002), the Second Circuit held that the acquiror s payment to the target s chief executive officer under a post-merger non-compete agreement, when the CEO also owned a block of the target s stock, violated Rule 14d-10, although the payment was made after the tender offer closed. Computer Associates offered to purchase On-Line stock for $15 Weil: SPOTLIGHT: IRWIN WARREN - Winning Four Different Trials...   Protecting Intellectual Property Rights: McGraw-Hill v. Vanguard Index Trust The Standard & Poor s division (S&P) of McGraw-Hill has been publishing its "S&P 500 Index" the premier benchmark for U.S. stock market performance for over forty years. ETF shares could be bought and sold at market prices on a national exchange throughout the trading day, much like a common stock, and unlike conventional mutual fund shares, which may be purchased and redeemed only at the end of each trading day at the Weil: Additional Recent Decisions of Note   May 5, 2003) United States District Court for the District of Delaware holds that a Delaware non-resident s merely owning stock or being a director of a Delaware corporation does not confer long-arm jurisdiction over him or her. In June 2002, Venoco, Inc. s board of directors voted to pay a cash dividend to two holders of its preferred stock Weil: SEC Adopts Integration Safe Harbor For Abandoning and C...   ...g., more of the same series of preferred stock) to be offered within a specified period after closing without triggering the original purchasers exercise of preemptive rights. In either situation, assuming the additional tranche or tranches is offered but never sold, the question becomes whether the initial placement may be treated as completed for 152 purposes and the subsequent, failed placement can be deemed abandoned within the meaning of Rule 155(b) SEC Update - August 10   First, the reclassification resulted in the insiders owning equity securities (common stock) with different risk characteristics from the securities (non-convertible preferred stock) extinguished in the transaction. Second, the reclassification involved an increase in the percentage of insiders' common stock ownership, based on the fact that the insiders owned some common stock before the reclassification extinguished their preferred stock in exchange for common stock February 6   Moreover, proposed amendments to rule 10b-10 under the 1934 Act would require a broker-dealer effecting transactions in shares of preferred stock to inform customers in writing—at or before the completion of the transaction—if the issuer of the stock has reserved the right to repurchase the shares, while proposed amendments to Form N-1A—the registration form for mutual funds—would require mutual funds to provide enhanced prospectus disclosure regarding sales loads and revenue sharing payments. February 4   Moreover, proposed amendments to rule 10b-10 under the 1934 Act would require a broker-dealer effecting transactions in shares of preferred stock to inform customers in writing—at or before the completion of the transaction—if the issuer of the stock has reserved the right to repurchase the shares, while proposed amendments to Form N-1A—the registration form for mutual funds—would require mutual funds to provide enhanced prospectus disclosure regarding sales loads and revenue sharing payments. Volume 3   Since 1974, Congress has provided enticing tax incentives designed to encourage corporations to adopt employee stock ownership plans ("ESOPs") for the benefit of their employees. abuses that can arise where an ESOP's ownership is subject to substantial dilution through the use of stock options and other forms of equity interests (so-called "synthetic equity") for management and venture capitalists Permanent Estate Tax Repeal? Not Yet (If Ever). So   FLPs can also be structured to provide cash flow to the senior generation by use of a preferred interest similar to preferred stock. Younger generations (or trusts for their benefit) could own the "common" interest, which would enjoy all appreciation in excess of the preferred return Permanent Estate Tax Repeal? Not Yet (If Ever). So   FLPs can also be structured to provide cash flow to the senior generation by use of a preferred interest similar to preferred stock. Younger generations (or trusts for their benefit) could own the "common" interest, which would enjoy all appreciation in excess of the preferred return Project Finance Update   Keith Martin April 5, 1999 IRS Addresses Tax Effect of Contract Buyout top The Internal Revenue Service told a US utility that the utility could deduct the fair market value of common stock the utility issued to buy out power contracts with "qualifying facility" projects. The debt is called MIPS, or monthly income preferred securities SEC Update - August 2   ...it has issued in registered primary offerings at least $1 billion in non-convertible debt or preferred securities in the preceding three years; and. is current in its Exchange Act reports and has filed timely in the twelve months preceding the filing of a registration statement; since the end of its most recent fiscal year, has not failed to make payments on preferred stock or defaulted on material capital obligations; and either Akin Gump: SEC Proposes Amendments to Clarify Rules 16B-3 and 16B-...   Shareholders of the issuer, Fairchild Semiconductor International, Inc. (Fairchild), had approved a plan of recapitalization involving an automatic conversion upon completion of Fairchild's IPO of all shares of the issuer's preferred stock into shares of class A common stock. Upon completion of the IPO, the two corporate defendants that had officers who sat on Fairchild's board of directors acquired shares of common stock upon conversion of their preferred stock Akin Gump: Alerts   While the Levy v. Sterling opinion acknowledged that Rule 16b-7 could exempt a reclassification, it narrowly construed Rule 16b-7 not to exempt an acquisition pursuant to a reclassification that (i) resulted in the insiders owning equity securities (common stock) with different risk characteristics from the extinguished securities (preferred stock) and (ii) involved an increase in the percentage of insiders' common stock ownership. The SEC noted that the conditions imposed by the Levy v. Akin Gump: Listed Company Audit Committee Standards ??? SEC Issues...   Some SROs (such as The New York Stock Exchange and Nasdaq) have already proposed separate, and in some cases more rigorous, listing standards for independent directors and audit committee members that listed companies will need to understand and comply with, in addition to the SEC's new rule. Therefore, compliance with the new rule is required but may not be totally sufficient - depending upon the listing standards adopted by the marketplace on which the listed company's securities are traded Blank Rome: Sec Proposes Additional Disclosure Regarding Transactio...   1 As proposed, transactions in instruments such as preferred stock convertible into common stock at a floating. exercise price and performance-based units would be reportable under Item 10 Clifford Chance:  Tax-Free Acquisitions by Foreign Entities - Satis...   Cooley Godward: Counsellors to Rising Start-Ups   While the Web may enable easier sales of stock to individuals, I have not seen evidence that it will change the buying behavior of institutions (i. Since institutions buy most of the stock in an IPO, I believe most companies with a good story will continue to go public in the traditional way Cooley Godward: The Entrepreneur's Quick Guide to Business Law   The principal advantages are the limited liability it provides to its owners and the familiarity investors have with investments in stock. Despite its flexibility and similarity to a corporation, however, many venture capitalists prefer to invest in stock of a corporation over investing in LLC interests Debevoise: Article Index   Debevoise: Article Index   Debevoise: Article Index   Debevoise: Article Index   Downs Rachlin Martin: Model Term Sheet   RE: SERIES A PREFERRED STOCK. At the Closing, VC will purchase from the Company $___ million of Series A Convertible Preferred Stock having the terms summarized in the attached term sheet (the "Series A") Downs Rachlin Martin: Ten Questions Regarding Choice of Business Entity   Since LLCs can have multiple classes of equity interests and it is possible to fashion an LLC membership interest comparable to convertible preferred stock, one might think that the LLC form would be attractive to investors. There are two significant differences, however, between option plans to purchase corporate stock versus options to purchase an interest in an LLC or a partnership Fox Rothschild: 2003 Tax Act: New Law Will Benefit Individuals and Busi...   To qualify for the reduced tax rate on dividend income, stock must be held for 60 days during the 120 day period beginning 60 days before the ex-dividend date (i. e., the date on which buyers of the stock are no longer entitled to receive the last declared dividend) Fried Frank: 2004 Supplement to Responses to Takeover Bids: Corporat...   There were also increasing numbers of stock deals, strategic acquisitions, and continued globalization of the acquisition market. Following the burst of the stock market bubble in 2000­2001, merger and acquisition activity declined in intensity, but became more robust again in late 2003 and early 2004, including an increase in hostile takeover proposals Goodwin Procter: Delaware Case Validates Pay-to-Play Strategy   ...al., the court decided that Watchmark's directors, five out of six of whom were representatives of the preferred stock investors, did not breach their fiduciary duties in approving a financing that converted preferred stock of nonparticipating investors into common stock. While the Metrica merger was being negotiated, Watchmark's board also began negotiations for the sale of a new series of preferred stock to finance the acquisition Goodwin Procter: Over $16 Billion in Real Estate Securities Public Offer...   Type of Security MTNs MTNs Senior Notes Common Stock MTNs MTN MTNs Senior Notes Common Stock Convertible Preferred Stock Preferred Stock. MTNs Common Stock MTNs Common Stock Preferred Units Preferred Stock $150 million $149 million $125 million $100 million $50 million $30 million Goodwin Procter: WatchMark Ruling Clarifies Pay-To-Play   In a typical scenario, existing investors that fail to participate in a current financing lose certain preferred stock rights, such as their liquidation preference or anti-dilution protection, or even forfeit all preferred stock rights through forcible conversion of their preferred stock into common stock. In 2003, about a third of all preferred stock financings are reported to have included some pay-to-play consequences for non-participating investors Goodwin Procter: John R. LeClaire   Goodwin Procter: Nasdaq Reinstates Maintenance Requirements and Extends ...   The Nasdaq Stock Market announced today that it intends to reinstate both minimum bid price and public float market value requirements for companies listed on the Nasdaq National Market and the Nasdaq SmallCap Market on January 2, 2002. Nasdaq Reinstates Maintenance Requirements and Extends Grace Period for SmallCap Issuers Following the terrorist attacks on September 11, 2001, the Nasdaq Stock Market suspended both its minimum bid price and public float market Goodwin Procter: SEC Expected to Approve Final NYSE Corporate Governance...   Summary Completing a process that began in June 2002, the SEC is expected to approve the New York Stock Exchange's new corporate governance listing standards. There are exceptions for controlled companies, companies with only listed preferred stock or debt securities, and foreign private issuers Goodwin Procter: SEC Approves AMEX Corporate Governance Reforms   Summary On December 1, 2003, the SEC approved the American Stock Exchange's proposed corporate governance reforms. There are exceptions to certain of these requirements for controlled companies, limited partnerships, asset-backed issuers and Effective Dates other passive business organizations, registered investment management companies, business development companies, companies with only listed preferred stock or debt securities, foreign private issuers and small business filers Goodwin Procter: Bank Regulatory Issues in Securitization and Credit Der...   Gray Cary: 100% Dividend Exclusion Proposal:? Consequences for Cor...   Honigman Miller: The Representative Director Problem   In one of the few discussions of the problem of the representative director, the author reviewed Weinberger and the cases of Johnson v. Trueblood8 and Sinclair Corp. v. Levien9 and concluded that The cases that deal with self-dealing transactions between a controlling stockholder and the controlled corporation cannot be reconciled with the existence of any general prohibition against action by a director who represents a particular stockholder to further that interest. Even where disinterested Kilpatrick Stockton: The Life Sciences Industry - Surviving the Toughest of ...   14:4 § 14:5 § 14:6 § 14:7 § 14:8 § 14:9 § 14:10 § 14:11 § 14:12 § 14:13 § 14:14 § 14:15 Federal funding sources Venture capital investments --Valuation --Preferred stock -- --Dividend rights -- --Liquidation preference -- --Anti-dilution rights -- --Exit strategies -- --Registration rights -- --Voting rights -- --Employment agreements -- --Future nancing rights. As compared to seed and venture capital investment, government grants do not result in dilutive stock issuances or repayment Lowenstein Sandler: "Angel Financing: What Entrepreneurs Need to Know&...   In fact, angels sometimes structure their investment to avoid valuing the venture, often using debt that converts into preferred stock at a discount to the next round. When should I proceed with caution Morris: Working with Limited Liability Companies and Limited Li...   LLCs can have preferred interests and participating debt. g., those with foreign investors, corporate or trust investors, or holders of preferred stock) Morris: Working with Limited Liability Companies and Limited Li...   LLCs can have preferred interests and participating debt. g., those with foreign investors, corporate or trust investors, or holders of preferred stock) Palmer & Dodge: Warning: Your Preferred Stock Protective Provisions May...   Palmer & Dodge: Warning: Your Preferred Stock Protective Provisions May Provide No Protection "); document.write(""); } //dummy functions to prevent errors until real functions are loaded and in effect. //-- if(document.images){ publicationsoff.src="images/sp/publications_over. gif" //we're in this department, turn on the image } Warning: Your Preferred Stock Protective Provisions May Provide No Protection by Stephen M. Muniz Warning: Your Preferred Stock Protective Provisions May Provide No Sidley Austin: Basle Committee and US Regulatory Capital Guidelines Tr...   Innovative Tier 1 capital instruments, including trust and REIT preferred securities, have become a particularly attractive alternative for US financial institutions in meeting legal capital requirements. This is primarily because of their hybrid nature ­ trust preferred securities are considered equity for regulatory capital purposes while considered debt for tax purposes and REIT preferred securities provide the parent with the ability to pay preferred dividends in pre-tax dollars Sidley Austin: Tax Alert - The American Jobs Creation Act of 2004 - Pr...   In the first transaction, before the enactment of §163(l), Enron issued debt payable by reference to the stock of a more-than-50 percent owned subsidiary. In the second transaction,after enactment of §163(l),Enron reduced its ownership interest below 50 percent and again issued debt payable by reference to the subsidiary's stock Sidley Austin: Tax Alert - American Job Creation Act of 2004   ...reduces the foreign tax credit limitation categories from nine to two (passive category income and general category income); extends the 15 day holding period required to claim foreign tax credits on stock dividends to include certain gross based withholding taxes, including foreign withholding taxes on interest income; modifies the foreign tax credit interest allocation rules; extends the foreign tax credit limitation carry forward period to ten years. In general, §956 treats a controlled Sidley Austin: Selected 2002 and 2001 Developments in US Corporate and...   Many RCIs and PROs include a stock settlement feature whereby deferred cash coupons may be satisfied by the issuing bank by issuing shares. meet its coupon obligations because of shareholder dilution, it is unlikely that the stock settlement feature would be used, and, therefore, such instruments would likely be treated as liabilities rather than as shareholders' funds Sidley Austin: Investment Companies & Investment Managers Newsletter   Preferred Stock Deemed 2a-7 Eligible Security. n answer to a request submitted on behalf of Merrill Lynch Investment Managers by Sidley Austin Brown LLP (May 10, 2002), the SEC staff stated that it would not recommend enforcement action if money market funds purchase auction market preferred stock and remarketed preferred stock, through an auction or remarketing occurring once every seven days Stroock: Issue No. 9 (2002)   Entergy Mississippi, Inc. (9/4/02) (35-27565, 709757) Entergy Mississippi, Inc requests authorization to increase fees, commissions and expenses of underwriters in connection with its plan to issue and sell bonds, debentures and preferred stock. The increase would not exceed the lesser of 3 Stroock: Issue No. 2   ...(35-27664, 70-10102) Authorizes GPU Diversified Holdings LLC ("GPUDH"), a subsidiary of FirstEnergy, to exchange all of its shares of Ballard Generation Systems Inc. ("BGS") for restricted shares of common stock of Ballard Power System Inc. ("BPS") having a value equal to the value of the BGS shares. Allegheny Energy, Inc. (03/06/03) (35-27657, 70-8553) Requests authority to issue through December 31, 2008, up to 20,000,000 authorized shares of its common stock through its Employee Stock Stroock: Issue No. 11 (2002)   8 billion under its previous financing order, (3) issue unsecured long-term debt securities that may be convertible into or exchanged for Keyspan common stock and may have maturities ranging from 1 to 50 years, (4) include within Keyspan's existing guarantee authority an additional guarantee obligation of $60 million it has to Hawkeye Construction LLC, a non-affiliate, under a June 2000 agreement, (5) issue up to $500 million in unsecured long-term debt to its financing subsidiaries that may be Stroock: Issue No. 1 (2003)   Allegheny Energy, Inc. (01/21/03) (35-27640, 70-10109) Authorizes Allegheny Energy, Inc. to solicit proxies from shareholders in connection with a proposed amendment to its charter to eliminate any preemptive right of stockholders to subscribe for newly issued securities of Allegheny. The modifications are authorized in connection with the acquisition by Energy East of RGS Energy Group, Inc. and its subsidiaries,and include:(1) extending the authorization period through September 30, 2005; (2) Stroock: Issue No. 8 (2001)   Maine Yankee Atomic Power Company (9/10/01) (35-27438, 70-9715) Authorizes the redemption, from its stockholders, of 99% of the presently outstanding common stock on a pro rata basis. Progress Energy Inc., et al. (8/10/01) (35-27431, 70-9909) Proposes to increase the amount of common stock, preferred stock, other preferred securities and debentures that may be issued and outstanding from $3 Stroock: Issue No. 3   The total aggregate amount of Class A shares, Class B shares and preferred securities will not exceed $500 million. Reserves jurisdiction over the issuance by ATC of any convertible preferred securities, pending completion of the record Stroock: Issue No. 10 (2002)   No SPE will publicly issue preferred securities unless it has maintained at least an investment grade corporate or senior unsecured debt rating by at least one nationally recognized rating agency. Proceeds will be used for ongoing construction, debt retirement and general corporate purposes Stroock: Issue No. 6 (2001)   Cinergy Corp. (5/8/01) (35-27396) Authorizes amendment of certificate of incorporation to permit issuance of up to 10 million shares of preferred stock. Alabama Power Company et al. (5/4/01) (3527395, 70-8461) Alabama Power, Georgia Power Company, Gulf Power Company, and Mississippi Power Company, all electric public utility subsidiaries of The Southern Company, request authorization and extension of time to issue various amounts in preferred securities Stroock: Issue No. 5 (2001)   Authorizes issuance of common stock, debt securities and guarantees. Reserves jurisdiction over Entergy's proposed solicitation of proxies from common shareholders to amend articles of incorporation; charter amendment; and issuance and sale of preferred stock Stroock: Issue No. 7 (2002)   The order authorizes an electric restructuring whereby REI will become a wholly owned subsidiary of CenterPoint Energy, Inc. ("New RRI") and REI's stockholders will become stockholders of New REI, and REI's regulated generation assets used to generate electric power and energy for sale in Texas will be contributed to Texas Genco Holdings, Inc. ("Texas Genco"), a wholly owned subsidiary of New REI; a spin-off of Reliant Resources, Inc. ("RRI") through the distribution by New REI of its RRI shares Stroock: Frequently Asked Questions About PIPEs   ...the sale of convertible preferred stock or convert. for investors to hedge their commitment by shorting the issuer's stock Stroock: Proxy Voting-Related Requirements for Registered Manage...   ...stock option plans and other management compensation issues; and social and corporate responsibility issues. Stroock: Issue No. 9 (2001)   ...al. (10/01/01) (35-27445, 70-9787) Authorizes Emera, a Nova Scotia company, to acquire the outstanding common stock of Bangor Hydro-Electric Company and its public utility subsidiaries; authorizes financings and related transactions; authorizes an exemption from registration under section 3(a)(1) of the Public Utility Holding Company Act of 1935; reserves jurisdiction over the formation of an Emera service company, the tax allocation agreement, and other matters. 5 billion outstanding at any one Stroock: NASDAQ Proposed Rule: Change and Amendment No. 1 Relati...   Because Nasdaq does not believe that ownership of company stock by itself would preclude a board finding of independence, it is not included in the aforementioned objective factors. (C) Notwithstanding paragraph (4)(A)(ii) above, if the nominations committee is comprised of at least three members, and if the exception described in paragraph (4)(B) is not relied upon, one director who owns 20% or more of the company's common stock or voting power outstanding, and is not independent as defined in Weil: Need For Discovery In Securities Litigation Trumps Pres...   The court also underscored that S&P rated practically all public debt financings and preferred stock issues with or without a request or fee from the issuer. 9 The Court of Appeals noted that the Pan Am court had found that S&P could invoke a journalistic privilege in part because S&P rated virtually all public debt and preferred stock regardless of whether the issuer was an S&P client Weil: How VCs Can Limit Their Liabilities In A Down Round   Unhappy with the results of a down-round financing, Benchmark Capital recently filed suit against the directors and controlling stockholders of Juniper Financial Corp. claiming, among other things, breaches of fiduciary duties. Common stockholders and even preferred stock investors that refuse to continue to invest are often washed-out so severely diluted that they retain merely a nominal stake in the company Weil: Recent Decisions Under Section 16(b) Of The Securities ...   Actions under Section 16(b) and in particular, cases that reach the Circuit Courts of Appeals, typically involve borderline or unorthodox transactions: i.e., ones that do not involve open market purchases and sales of stock, but rather acquisitions that arise from the conversion of, or adjustments to, an entire class of securities by the issuer, which constitute a Section 16(b) purchase that is matchable against sales by an insider; or acquisitions and exchanges of (or even readjustment of Weil: Post-Merger Employment Agreements With Target Managemen...   Sept. 4, 2002), the Second Circuit held that the acquiror s payment to the target s chief executive officer under a post-merger non-compete agreement, when the CEO also owned a block of the target s stock, violated Rule 14d-10, although the payment was made after the tender offer closed. Computer Associates offered to purchase On-Line stock for $15 Weil: SPOTLIGHT: IRWIN WARREN - Winning Four Different Trials...   Protecting Intellectual Property Rights: McGraw-Hill v. Vanguard Index Trust The Standard & Poor s division (S&P) of McGraw-Hill has been publishing its "S&P 500 Index" the premier benchmark for U.S. stock market performance for over forty years. ETF shares could be bought and sold at market prices on a national exchange throughout the trading day, much like a common stock, and unlike conventional mutual fund shares, which may be purchased and redeemed only at the end of each trading day at the Weil: Additional Recent Decisions of Note   May 5, 2003) United States District Court for the District of Delaware holds that a Delaware non-resident s merely owning stock or being a director of a Delaware corporation does not confer long-arm jurisdiction over him or her. In June 2002, Venoco, Inc. s board of directors voted to pay a cash dividend to two holders of its preferred stock November 18   It has been reported that in a case decided on October 31, 2005, the Delaware Supreme Court ruled that Section 151 of the Delaware General Corporation Law does not require preferred stock to carry dividend rights. Delaware law merely requires that preferred stock have "some bona fide preference over other stock," according to the court SEC Update - August 10   First, the reclassification resulted in the insiders owning equity securities (common stock) with different risk characteristics from the securities (non-convertible preferred stock) extinguished in the transaction. Second, the reclassification involved an increase in the percentage of insiders' common stock ownership, based on the fact that the insiders owned some common stock before the reclassification extinguished their preferred stock in exchange for common stock February 15   RECENT SEC REGISTRATIONS · Linkwell Corporation, a Florida corporation with its principal executive offices in Shanghai, PRC, filed a Form SB-2 on February 8, 2006 to register the resale by selling security holders from time to time of up to 57,353,565 shares of its common stock, of which 18,763,450 shares are issuable upon the conversion of shares of its Series A Convertible Preferred Stock and Series B 6% Cumulative Convertible Preferred Stock and 36,745,115 shares are issuable upon exercise February 6   Moreover, proposed amendments to rule 10b-10 under the 1934 Act would require a broker-dealer effecting transactions in shares of preferred stock to inform customers in writing—at or before the completion of the transaction—if the issuer of the stock has reserved the right to repurchase the shares, while proposed amendments to Form N-1A—the registration form for mutual funds—would require mutual funds to provide enhanced prospectus disclosure regarding sales loads and revenue sharing payments. February 4   Moreover, proposed amendments to rule 10b-10 under the 1934 Act would require a broker-dealer effecting transactions in shares of preferred stock to inform customers in writing—at or before the completion of the transaction—if the issuer of the stock has reserved the right to repurchase the shares, while proposed amendments to Form N-1A—the registration form for mutual funds—would require mutual funds to provide enhanced prospectus disclosure regarding sales loads and revenue sharing payments. November 16   It was reported that, in a case decided on October 31, 2005, the Delaware Supreme Court ruled that Section 151 of the Delaware General Corporation Law does not require preferred shares to provide dividend rights to their holders. Delaware law merely requires that preferred shares have "some bona fide preference over other stock," according to the court Volume 3   Since 1974, Congress has provided enticing tax incentives designed to encourage corporations to adopt employee stock ownership plans ("ESOPs") for the benefit of their employees. abuses that can arise where an ESOP's ownership is subject to substantial dilution through the use of stock options and other forms of equity interests (so-called "synthetic equity") for management and venture capitalists Project Finance Update   Keith Martin April 5, 1999 IRS Addresses Tax Effect of Contract Buyout top The Internal Revenue Service told a US utility that the utility could deduct the fair market value of common stock the utility issued to buy out power contracts with "qualifying facility" projects. The debt is called MIPS, or monthly income preferred securities Akin Gump: SEC Proposes Amendments to Clarify Rules 16B-3 and 16B-...   Shareholders of the issuer, Fairchild Semiconductor International, Inc. (Fairchild), had approved a plan of recapitalization involving an automatic conversion upon completion of Fairchild's IPO of all shares of the issuer's preferred stock into shares of class A common stock. Upon completion of the IPO, the two corporate defendants that had officers who sat on Fairchild's board of directors acquired shares of common stock upon conversion of their preferred stock Akin Gump: Alerts   While the Levy v. Sterling opinion acknowledged that Rule 16b-7 could exempt a reclassification, it narrowly construed Rule 16b-7 not to exempt an acquisition pursuant to a reclassification that (i) resulted in the insiders owning equity securities (common stock) with different risk characteristics from the extinguished securities (preferred stock) and (ii) involved an increase in the percentage of insiders' common stock ownership. The SEC noted that the conditions imposed by the Levy v. Blank Rome: Sec Proposes Additional Disclosure Regarding Transactio...   1 As proposed, transactions in instruments such as preferred stock convertible into common stock at a floating. exercise price and performance-based units would be reportable under Item 10 Clifford Chance:  Tax-Free Acquisitions by Foreign Entities - Satis...   Cooley Godward: Counsellors to Rising Start-Ups   While the Web may enable easier sales of stock to individuals, I have not seen evidence that it will change the buying behavior of institutions (i. Since institutions buy most of the stock in an IPO, I believe most companies with a good story will continue to go public in the traditional way Cooley Godward: The Entrepreneur's Quick Guide to Business Law   The principal advantages are the limited liability it provides to its owners and the familiarity investors have with investments in stock. Despite its flexibility and similarity to a corporation, however, many venture capitalists prefer to invest in stock of a corporation over investing in LLC interests Debevoise: Article Index   Debevoise: Article Index   Debevoise: Article Index   Downs Rachlin Martin: Model Term Sheet   RE: SERIES A PREFERRED STOCK. At the Closing, VC will purchase from the Company $___ million of Series A Convertible Preferred Stock having the terms summarized in the attached term sheet (the "Series A") Downs Rachlin Martin: Ten Questions Regarding Choice of Business Entity   Since LLCs can have multiple classes of equity interests and it is possible to fashion an LLC membership interest comparable to convertible preferred stock, one might think that the LLC form would be attractive to investors. There are two significant differences, however, between option plans to purchase corporate stock versus options to purchase an interest in an LLC or a partnership Epstein Becker & Green: TEXT   However, in your rush to close the deal, you pay little attention to the fact that the venture capitalists are receiving preferred stock, while you retain common stock. Sooner or later, you'll learn why it's called preferred Epstein Becker & Green: TEXT   A hypothetical deal could go like this: The company is accorded a "post-money" valuation of $10 million, and all preferred stock is wiped out and turned into common stock. The new investment group will generally insist on receiving "super-preferred stock." Instead of being guaranteed the customary minimum annual rate of return of 6% to 8%, this super-preferred carries a "liquidation preference" of two to three times (an amount negotiated ahead of time) the original investment Epstein Becker & Green: PDF   Epstein Becker & Green: TEXT   Since the $5 million investment would be equal to one-third of the postinvestment value, the VCs would feel entitled to a third of the stock. However, if the VCs decide your company is worth only $5 million, then their $5 million investment would make the company worth $10 million, and entitle the investors to half the stock bsp;a sizable difference Epstein Becker & Green: PDF   Stock Options/SARs Code Section 409A generally does not cover nonqualified stock options and stock appreciation rights ("stock rights") granted at fair market value with respect to service recipient stock. To meet this exemption, the exercise price can never be less than the fair market value of the underlying service recipient stock on the date of grant and the stock Fox Rothschild: 2003 Tax Act: New Law Will Benefit Individuals and Busi...   To qualify for the reduced tax rate on dividend income, stock must be held for 60 days during the 120 day period beginning 60 days before the ex-dividend date (i. e., the date on which buyers of the stock are no longer entitled to receive the last declared dividend) Fried Frank: 2004 Supplement to Responses to Takeover Bids: Corporat...   There were also increasing numbers of stock deals, strategic acquisitions, and continued globalization of the acquisition market. Following the burst of the stock market bubble in 2000­2001, merger and acquisition activity declined in intensity, but became more robust again in late 2003 and early 2004, including an increase in hostile takeover proposals Goodwin Procter: Delaware Case Validates Pay-to-Play Strategy   ...al., the court decided that Watchmark's directors, five out of six of whom were representatives of the preferred stock investors, did not breach their fiduciary duties in approving a financing that converted preferred stock of nonparticipating investors into common stock. While the Metrica merger was being negotiated, Watchmark's board also began negotiations for the sale of a new series of preferred stock to finance the acquisition Goodwin Procter: Over $16 Billion in Real Estate Securities Public Offer...   Type of Security MTNs MTNs Senior Notes Common Stock MTNs MTN MTNs Senior Notes Common Stock Convertible Preferred Stock Preferred Stock. MTNs Common Stock MTNs Common Stock Preferred Units Preferred Stock $150 million $149 million $125 million $100 million $50 million $30 million Goodwin Procter: WatchMark Ruling Clarifies Pay-To-Play   In a typical scenario, existing investors that fail to participate in a current financing lose certain preferred stock rights, such as their liquidation preference or anti-dilution protection, or even forfeit all preferred stock rights through forcible conversion of their preferred stock into common stock. In 2003, about a third of all preferred stock financings are reported to have included some pay-to-play consequences for non-participating investors Goodwin Procter: John R. LeClaire   Goodwin Procter: Nasdaq Reinstates Maintenance Requirements and Extends ...   The Nasdaq Stock Market announced today that it intends to reinstate both minimum bid price and public float market value requirements for companies listed on the Nasdaq National Market and the Nasdaq SmallCap Market on January 2, 2002. Nasdaq Reinstates Maintenance Requirements and Extends Grace Period for SmallCap Issuers Following the terrorist attacks on September 11, 2001, the Nasdaq Stock Market suspended both its minimum bid price and public float market Goodwin Procter: SEC Expected to Approve Final NYSE Corporate Governance...   Summary Completing a process that began in June 2002, the SEC is expected to approve the New York Stock Exchange's new corporate governance listing standards. There are exceptions for controlled companies, companies with only listed preferred stock or debt securities, and foreign private issuers Goodwin Procter: SEC Approves AMEX Corporate Governance Reforms   Summary On December 1, 2003, the SEC approved the American Stock Exchange's proposed corporate governance reforms. There are exceptions to certain of these requirements for controlled companies, limited partnerships, asset-backed issuers and Effective Dates other passive business organizations, registered investment management companies, business development companies, companies with only listed preferred stock or debt securities, foreign private issuers and small business filers Gray Cary: 100% Dividend Exclusion Proposal:? Consequences for Cor...   Honigman Miller: The Representative Director Problem   In one of the few discussions of the problem of the representative director, the author reviewed Weinberger and the cases of Johnson v. Trueblood8 and Sinclair Corp. v. Levien9 and concluded that The cases that deal with self-dealing transactions between a controlling stockholder and the controlled corporation cannot be reconciled with the existence of any general prohibition against action by a director who represents a particular stockholder to further that interest. Even where disinterested Kilpatrick Stockton: The Life Sciences Industry - Surviving the Toughest of ...   14:4 § 14:5 § 14:6 § 14:7 § 14:8 § 14:9 § 14:10 § 14:11 § 14:12 § 14:13 § 14:14 § 14:15 Federal funding sources Venture capital investments --Valuation --Preferred stock -- --Dividend rights -- --Liquidation preference -- --Anti-dilution rights -- --Exit strategies -- --Registration rights -- --Voting rights -- --Employment agreements -- --Future nancing rights. As compared to seed and venture capital investment, government grants do not result in dilutive stock issuances or repayment Lowenstein Sandler: "Angel Financing: What Entrepreneurs Need to Know&...   In fact, angels sometimes structure their investment to avoid valuing the venture, often using debt that converts into preferred stock at a discount to the next round. When should I proceed with caution Palmer & Dodge: Warning: Your Preferred Stock Protective Provisions May...   Sidley Austin: Basle Committee and US Regulatory Capital Guidelines Tr...   Innovative Tier 1 capital instruments, including trust and REIT preferred securities, have become a particularly attractive alternative for US financial institutions in meeting legal capital requirements. This is primarily because of their hybrid nature ­ trust preferred securities are considered equity for regulatory capital purposes while considered debt for tax purposes and REIT preferred securities provide the parent with the ability to pay preferred dividends in pre-tax dollars Sidley Austin: Tax Alert - The American Jobs Creation Act of 2004 - Pr...   In the first transaction, before the enactment of §163(l), Enron issued debt payable by reference to the stock of a more-than-50 percent owned subsidiary. In the second transaction,after enactment of §163(l),Enron reduced its ownership interest below 50 percent and again issued debt payable by reference to the subsidiary's stock Sidley Austin: Tax Alert - American Job Creation Act of 2004   ...reduces the foreign tax credit limitation categories from nine to two (passive category income and general category income); extends the 15 day holding period required to claim foreign tax credits on stock dividends to include certain gross based withholding taxes, including foreign withholding taxes on interest income; modifies the foreign tax credit interest allocation rules; extends the foreign tax credit limitation carry forward period to ten years. In general, §956 treats a controlled Sidley Austin: Selected 2002 and 2001 Developments in US Corporate and...   Many RCIs and PROs include a stock settlement feature whereby deferred cash coupons may be satisfied by the issuing bank by issuing shares. meet its coupon obligations because of shareholder dilution, it is unlikely that the stock settlement feature would be used, and, therefore, such instruments would likely be treated as liabilities rather than as shareholders' funds Sidley Austin: Investment Companies & Investment Managers Newsletter   Preferred Stock Deemed 2a-7 Eligible Security. n answer to a request submitted on behalf of Merrill Lynch Investment Managers by Sidley Austin Brown LLP (May 10, 2002), the SEC staff stated that it would not recommend enforcement action if money market funds purchase auction market preferred stock and remarketed preferred stock, through an auction or remarketing occurring once every seven days Stroock: Issue No. 9 (2002)   Entergy Mississippi, Inc. (9/4/02) (35-27565, 709757) Entergy Mississippi, Inc requests authorization to increase fees, commissions and expenses of underwriters in connection with its plan to issue and sell bonds, debentures and preferred stock. The increase would not exceed the lesser of 3 Stroock: Issue No. 2   ...(35-27664, 70-10102) Authorizes GPU Diversified Holdings LLC ("GPUDH"), a subsidiary of FirstEnergy, to exchange all of its shares of Ballard Generation Systems Inc. ("BGS") for restricted shares of common stock of Ballard Power System Inc. ("BPS") having a value equal to the value of the BGS shares. Allegheny Energy, Inc. (03/06/03) (35-27657, 70-8553) Requests authority to issue through December 31, 2008, up to 20,000,000 authorized shares of its common stock through its Employee Stock Stroock: Issue No. 11 (2002)   8 billion under its previous financing order, (3) issue unsecured long-term debt securities that may be convertible into or exchanged for Keyspan common stock and may have maturities ranging from 1 to 50 years, (4) include within Keyspan's existing guarantee authority an additional guarantee obligation of $60 million it has to Hawkeye Construction LLC, a non-affiliate, under a June 2000 agreement, (5) issue up to $500 million in unsecured long-term debt to its financing subsidiaries that may be Stroock: Issue No. 1 (2003)   Allegheny Energy, Inc. (01/21/03) (35-27640, 70-10109) Authorizes Allegheny Energy, Inc. to solicit proxies from shareholders in connection with a proposed amendment to its charter to eliminate any preemptive right of stockholders to subscribe for newly issued securities of Allegheny. The modifications are authorized in connection with the acquisition by Energy East of RGS Energy Group, Inc. and its subsidiaries,and include:(1) extending the authorization period through September 30, 2005; (2) Stroock: Issue No. 8 (2001)   Maine Yankee Atomic Power Company (9/10/01) (35-27438, 70-9715) Authorizes the redemption, from its stockholders, of 99% of the presently outstanding common stock on a pro rata basis. Progress Energy Inc., et al. (8/10/01) (35-27431, 70-9909) Proposes to increase the amount of common stock, preferred stock, other preferred securities and debentures that may be issued and outstanding from $3 Stroock: Issue No. 3   The total aggregate amount of Class A shares, Class B shares and preferred securities will not exceed $500 million. Reserves jurisdiction over the issuance by ATC of any convertible preferred securities, pending completion of the record Stroock: Issue No. 10 (2002)   No SPE will publicly issue preferred securities unless it has maintained at least an investment grade corporate or senior unsecured debt rating by at least one nationally recognized rating agency. Proceeds will be used for ongoing construction, debt retirement and general corporate purposes Stroock: Issue No. 6 (2001)   Cinergy Corp. (5/8/01) (35-27396) Authorizes amendment of certificate of incorporation to permit issuance of up to 10 million shares of preferred stock. Alabama Power Company et al. (5/4/01) (3527395, 70-8461) Alabama Power, Georgia Power Company, Gulf Power Company, and Mississippi Power Company, all electric public utility subsidiaries of The Southern Company, request authorization and extension of time to issue various amounts in preferred securities Stroock: Issue No. 5 (2001)   Authorizes issuance of common stock, debt securities and guarantees. Reserves jurisdiction over Entergy's proposed solicitation of proxies from common shareholders to amend articles of incorporation; charter amendment; and issuance and sale of preferred stock Stroock: Issue No. 7 (2002)   The order authorizes an electric restructuring whereby REI will become a wholly owned subsidiary of CenterPoint Energy, Inc. ("New RRI") and REI's stockholders will become stockholders of New REI, and REI's regulated generation assets used to generate electric power and energy for sale in Texas will be contributed to Texas Genco Holdings, Inc. ("Texas Genco"), a wholly owned subsidiary of New REI; a spin-off of Reliant Resources, Inc. ("RRI") through the distribution by New REI of its RRI shares Stroock: Frequently Asked Questions About PIPEs   ...the sale of convertible preferred stock or convert. for investors to hedge their commitment by shorting the issuer's stock Stroock: Proxy Voting-Related Requirements for Registered Manage...   ...stock option plans and other management compensation issues; and social and corporate responsibility issues. Stroock: Issue No. 9 (2001)   ...al. (10/01/01) (35-27445, 70-9787) Authorizes Emera, a Nova Scotia company, to acquire the outstanding common stock of Bangor Hydro-Electric Company and its public utility subsidiaries; authorizes financings and related transactions; authorizes an exemption from registration under section 3(a)(1) of the Public Utility Holding Company Act of 1935; reserves jurisdiction over the formation of an Emera service company, the tax allocation agreement, and other matters. 5 billion outstanding at any one Stroock: NASDAQ Proposed Rule: Change and Amendment No. 1 Relati...   Because Nasdaq does not believe that ownership of company stock by itself would preclude a board finding of independence, it is not included in the aforementioned objective factors. (C) Notwithstanding paragraph (4)(A)(ii) above, if the nominations committee is comprised of at least three members, and if the exception described in paragraph (4)(B) is not relied upon, one director who owns 20% or more of the company's common stock or voting power outstanding, and is not independent as defined in November 18   It has been reported that in a case decided on October 31, 2005, the Delaware Supreme Court ruled that Section 151 of the Delaware General Corporation Law does not require preferred stock to carry dividend rights. Delaware law merely requires that preferred stock have "some bona fide preference over other stock," according to the court SEC Update - August 10   First, the reclassification resulted in the insiders owning equity securities (common stock) with different risk characteristics from the securities (non-convertible preferred stock) extinguished in the transaction. Second, the reclassification involved an increase in the percentage of insiders' common stock ownership, based on the fact that the insiders owned some common stock before the reclassification extinguished their preferred stock in exchange for common stock February 15   RECENT SEC REGISTRATIONS · Linkwell Corporation, a Florida corporation with its principal executive offices in Shanghai, PRC, filed a Form SB-2 on February 8, 2006 to register the resale by selling security holders from time to time of up to 57,353,565 shares of its common stock, of which 18,763,450 shares are issuable upon the conversion of shares of its Series A Convertible Preferred Stock and Series B 6% Cumulative Convertible Preferred Stock and 36,745,115 shares are issuable upon exercise February 6   Moreover, proposed amendments to rule 10b-10 under the 1934 Act would require a broker-dealer effecting transactions in shares of preferred stock to inform customers in writing—at or before the completion of the transaction—if the issuer of the stock has reserved the right to repurchase the shares, while proposed amendments to Form N-1A—the registration form for mutual funds—would require mutual funds to provide enhanced prospectus disclosure regarding sales loads and revenue sharing payments. February 4   Moreover, proposed amendments to rule 10b-10 under the 1934 Act would require a broker-dealer effecting transactions in shares of preferred stock to inform customers in writing—at or before the completion of the transaction—if the issuer of the stock has reserved the right to repurchase the shares, while proposed amendments to Form N-1A—the registration form for mutual funds—would require mutual funds to provide enhanced prospectus disclosure regarding sales loads and revenue sharing payments. November 16   It was reported that, in a case decided on October 31, 2005, the Delaware Supreme Court ruled that Section 151 of the Delaware General Corporation Law does not require preferred shares to provide dividend rights to their holders. Delaware law merely requires that preferred shares have "some bona fide preference over other stock," according to the court Volume 3   Since 1974, Congress has provided enticing tax incentives designed to encourage corporations to adopt employee stock ownership plans ("ESOPs") for the benefit of their employees. abuses that can arise where an ESOP's ownership is subject to substantial dilution through the use of stock options and other forms of equity interests (so-called "synthetic equity") for management and venture capitalists Project Finance Update   Keith Martin April 5, 1999 IRS Addresses Tax Effect of Contract Buyout top The Internal Revenue Service told a US utility that the utility could deduct the fair market value of common stock the utility issued to buy out power contracts with "qualifying facility" projects. The debt is called MIPS, or monthly income preferred securities Akin Gump: SEC Proposes Amendments to Clarify Rules 16B-3 and 16B-...   Shareholders of the issuer, Fairchild Semiconductor International, Inc. (Fairchild), had approved a plan of recapitalization involving an automatic conversion upon completion of Fairchild's IPO of all shares of the issuer's preferred stock into shares of class A common stock. Upon completion of the IPO, the two corporate defendants that had officers who sat on Fairchild's board of directors acquired shares of common stock upon conversion of their preferred stock Akin Gump: Alerts   While the Levy v. Sterling opinion acknowledged that Rule 16b-7 could exempt a reclassification, it narrowly construed Rule 16b-7 not to exempt an acquisition pursuant to a reclassification that (i) resulted in the insiders owning equity securities (common stock) with different risk characteristics from the extinguished securities (preferred stock) and (ii) involved an increase in the percentage of insiders' common stock ownership. The SEC noted that the conditions imposed by the Levy v. Blank Rome: Sec Proposes Additional Disclosure Regarding Transactio...   Clifford Chance:  Tax-Free Acquisitions by Foreign Entities - Satis...   Downs Rachlin Martin: Model Term Sheet   RE: SERIES A PREFERRED STOCK. At the Closing, VC will purchase from the Company $___ million of Series A Convertible Preferred Stock having the terms summarized in the attached term sheet (the "Series A") Downs Rachlin Martin: Ten Questions Regarding Choice of Business Entity   Since LLCs can have multiple classes of equity interests and it is possible to fashion an LLC membership interest comparable to convertible preferred stock, one might think that the LLC form would be attractive to investors. There are two significant differences, however, between option plans to purchase corporate stock versus options to purchase an interest in an LLC or a partnership Epstein Becker & Green: TEXT   However, in your rush to close the deal, you pay little attention to the fact that the venture capitalists are receiving preferred stock, while you retain common stock. Sooner or later, you'll learn why it's called preferred Epstein Becker & Green: TEXT   A hypothetical deal could go like this: The company is accorded a "post-money" valuation of $10 million, and all preferred stock is wiped out and turned into common stock. The new investment group will generally insist on receiving "super-preferred stock." Instead of being guaranteed the customary minimum annual rate of return of 6% to 8%, this super-preferred carries a "liquidation preference" of two to three times (an amount negotiated ahead of time) the original investment Epstein Becker & Green: PDF   Epstein Becker & Green: TEXT   Since the $5 million investment would be equal to one-third of the postinvestment value, the VCs would feel entitled to a third of the stock. However, if the VCs decide your company is worth only $5 million, then their $5 million investment would make the company worth $10 million, and entitle the investors to half the stock bsp;a sizable difference Epstein Becker & Green: PDF   Stock Options/SARs Code Section 409A generally does not cover nonqualified stock options and stock appreciation rights ("stock rights") granted at fair market value with respect to service recipient stock. To meet this exemption, the exercise price can never be less than the fair market value of the underlying service recipient stock on the date of grant and the stock Fried Frank: 2004 Supplement to Responses to Takeover Bids: Corporat...   There were also increasing numbers of stock deals, strategic acquisitions, and continued globalization of the acquisition market. Following the burst of the stock market bubble in 2000­2001, merger and acquisition activity declined in intensity, but became more robust again in late 2003 and early 2004, including an increase in hostile takeover proposals Gray Cary: 100% Dividend Exclusion Proposal:? Consequences for Cor...   Honigman Miller: The Representative Director Problem   In one of the few discussions of the problem of the representative director, the author reviewed Weinberger and the cases of Johnson v. Trueblood8 and Sinclair Corp. v. Levien9 and concluded that The cases that deal with self-dealing transactions between a controlling stockholder and the controlled corporation cannot be reconciled with the existence of any general prohibition against action by a director who represents a particular stockholder to further that interest. Even where disinterested Kilpatrick Stockton: The Life Sciences Industry - Surviving the Toughest of ...   14:4 § 14:5 § 14:6 § 14:7 § 14:8 § 14:9 § 14:10 § 14:11 § 14:12 § 14:13 § 14:14 § 14:15 Federal funding sources Venture capital investments --Valuation --Preferred stock -- --Dividend rights -- --Liquidation preference -- --Anti-dilution rights -- --Exit strategies -- --Registration rights -- --Voting rights -- --Employment agreements -- --Future nancing rights. As compared to seed and venture capital investment, government grants do not result in dilutive stock issuances or repayment Sidley Austin: Basle Committee and US Regulatory Capital Guidelines Tr...   Innovative Tier 1 capital instruments, including trust and REIT preferred securities, have become a particularly attractive alternative for US financial institutions in meeting legal capital requirements. This is primarily because of their hybrid nature ­ trust preferred securities are considered equity for regulatory capital purposes while considered debt for tax purposes and REIT preferred securities provide the parent with the ability to pay preferred dividends in pre-tax dollars Sidley Austin: Tax Alert - The American Jobs Creation Act of 2004 - Pr...   In the first transaction, before the enactment of §163(l), Enron issued debt payable by reference to the stock of a more-than-50 percent owned subsidiary. In the second transaction,after enactment of §163(l),Enron reduced its ownership interest below 50 percent and again issued debt payable by reference to the subsidiary's stock Sidley Austin: Tax Alert - American Job Creation Act of 2004   ...reduces the foreign tax credit limitation categories from nine to two (passive category income and general category income); extends the 15 day holding period required to claim foreign tax credits on stock dividends to include certain gross based withholding taxes, including foreign withholding taxes on interest income; modifies the foreign tax credit interest allocation rules; extends the foreign tax credit limitation carry forward period to ten years. In general, §956 treats a controlled Sidley Austin: Best Practices Calendar for Corporate Boards and Commit...   A $150 million stock purchase will be made at closing and two $50 million stock purchases will be made in 2001. 5 million of Isis common stock and is obligated to purchase an additional $7 Sidley Austin: Selected 2002 and 2001 Developments in US Corporate and...   Many RCIs and PROs include a stock settlement feature whereby deferred cash coupons may be satisfied by the issuing bank by issuing shares. meet its coupon obligations because of shareholder dilution, it is unlikely that the stock settlement feature would be used, and, therefore, such instruments would likely be treated as liabilities rather than as shareholders' funds Sidley Austin: Investment Companies & Investment Managers Newsletter   Preferred Stock Deemed 2a-7 Eligible Security. n answer to a request submitted on behalf of Merrill Lynch Investment Managers by Sidley Austin Brown LLP (May 10, 2002), the SEC staff stated that it would not recommend enforcement action if money market funds purchase auction market preferred stock and remarketed preferred stock, through an auction or remarketing occurring once every seven days Stroock: Issue No. 1 (2003)   Allegheny Energy, Inc. (01/21/03) (35-27640, 70-10109) Authorizes Allegheny Energy, Inc. to solicit proxies from shareholders in connection with a proposed amendment to its charter to eliminate any preemptive right of stockholders to subscribe for newly issued securities of Allegheny. The modifications are authorized in connection with the acquisition by Energy East of RGS Energy Group, Inc. and its subsidiaries,and include:(1) extending the authorization period through September 30, 2005; (2) Stroock: Issue No. 2   ...(35-27664, 70-10102) Authorizes GPU Diversified Holdings LLC ("GPUDH"), a subsidiary of FirstEnergy, to exchange all of its shares of Ballard Generation Systems Inc. ("BGS") for restricted shares of common stock of Ballard Power System Inc. ("BPS") having a value equal to the value of the BGS shares. Allegheny Energy, Inc. (03/06/03) (35-27657, 70-8553) Requests authority to issue through December 31, 2008, up to 20,000,000 authorized shares of its common stock through its Employee Stock Stroock: Issue No. 9 (2002)   Entergy Mississippi, Inc. (9/4/02) (35-27565, 709757) Entergy Mississippi, Inc requests authorization to increase fees, commissions and expenses of underwriters in connection with its plan to issue and sell bonds, debentures and preferred stock. The increase would not exceed the lesser of 3 Stroock: Issue No. 11 (2002)   8 billion under its previous financing order, (3) issue unsecured long-term debt securities that may be convertible into or exchanged for Keyspan common stock and may have maturities ranging from 1 to 50 years, (4) include within Keyspan's existing guarantee authority an additional guarantee obligation of $60 million it has to Hawkeye Construction LLC, a non-affiliate, under a June 2000 agreement, (5) issue up to $500 million in unsecured long-term debt to its financing subsidiaries that may be Stroock: Issue No. 3   The total aggregate amount of Class A shares, Class B shares and preferred securities will not exceed $500 million. Reserves jurisdiction over the issuance by ATC of any convertible preferred securities, pending completion of the record Stroock: Issue No. 8 (2001)   Maine Yankee Atomic Power Company (9/10/01) (35-27438, 70-9715) Authorizes the redemption, from its stockholders, of 99% of the presently outstanding common stock on a pro rata basis. Progress Energy Inc., et al. (8/10/01) (35-27431, 70-9909) Proposes to increase the amount of common stock, preferred stock, other preferred securities and debentures that may be issued and outstanding from $3 Stroock: Issue No. 10 (2002)   No SPE will publicly issue preferred securities unless it has maintained at least an investment grade corporate or senior unsecured debt rating by at least one nationally recognized rating agency. Proceeds will be used for ongoing construction, debt retirement and general corporate purposes Stroock: Issue No. 6 (2001)   Cinergy Corp. (5/8/01) (35-27396) Authorizes amendment of certificate of incorporation to permit issuance of up to 10 million shares of preferred stock. Alabama Power Company et al. (5/4/01) (3527395, 70-8461) Alabama Power, Georgia Power Company, Gulf Power Company, and Mississippi Power Company, all electric public utility subsidiaries of The Southern Company, request authorization and extension of time to issue various amounts in preferred securities Stroock: Issue No. 5 (2001)   Authorizes issuance of common stock, debt securities and guarantees. Reserves jurisdiction over Entergy's proposed solicitation of proxies from common shareholders to amend articles of incorporation; charter amendment; and issuance and sale of preferred stock Stroock: Issue No. 7 (2002)   The order authorizes an electric restructuring whereby REI will become a wholly owned subsidiary of CenterPoint Energy, Inc. ("New RRI") and REI's stockholders will become stockholders of New REI, and REI's regulated generation assets used to generate electric power and energy for sale in Texas will be contributed to Texas Genco Holdings, Inc. ("Texas Genco"), a wholly owned subsidiary of New REI; a spin-off of Reliant Resources, Inc. ("RRI") through the distribution by New REI of its RRI shares Stroock: Frequently Asked Questions About PIPEs   ...the sale of convertible preferred stock or convert. for investors to hedge their commitment by shorting the issuer's stock Stroock: Proxy Voting-Related Requirements for Registered Manage...   ...stock option plans and other management compensation issues; and social and corporate responsibility issues. Stroock: Issue No. 9 (2001)   ...al. (10/01/01) (35-27445, 70-9787) Authorizes Emera, a Nova Scotia company, to acquire the outstanding common stock of Bangor Hydro-Electric Company and its public utility subsidiaries; authorizes financings and related transactions; authorizes an exemption from registration under section 3(a)(1) of the Public Utility Holding Company Act of 1935; reserves jurisdiction over the formation of an Emera service company, the tax allocation agreement, and other matters. 5 billion outstanding at any one Stroock: NASDAQ Proposed Rule: Change and Amendment No. 1 Relati...   Because Nasdaq does not believe that ownership of company stock by itself would preclude a board finding of independence, it is not included in the aforementioned objective factors. (C) Notwithstanding paragraph (4)(A)(ii) above, if the nominations committee is comprised of at least three members, and if the exception described in paragraph (4)(B) is not relied upon, one director who owns 20% or more of the company's common stock or voting power outstanding, and is not independent as defined in Weil: Need For Discovery In Securities Litigation Trumps Pres...   The court also underscored that S&P rated practically all public debt financings and preferred stock issues with or without a request or fee from the issuer. 9 The Court of Appeals noted that the Pan Am court had found that S&P could invoke a journalistic privilege in part because S&P rated virtually all public debt and preferred stock regardless of whether the issuer was an S&P client Weil: How VCs Can Limit Their Liabilities In A Down Round   Unhappy with the results of a down-round financing, Benchmark Capital recently filed suit against the directors and controlling stockholders of Juniper Financial Corp. claiming, among other things, breaches of fiduciary duties. Common stockholders and even preferred stock investors that refuse to continue to invest are often washed-out so severely diluted that they retain merely a nominal stake in the company Weil: Recent Decisions Under Section 16(b) Of The Securities ...   Actions under Section 16(b) and in particular, cases that reach the Circuit Courts of Appeals, typically involve borderline or unorthodox transactions: i.e., ones that do not involve open market purchases and sales of stock, but rather acquisitions that arise from the conversion of, or adjustments to, an entire class of securities by the issuer, which constitute a Section 16(b) purchase that is matchable against sales by an insider; or acquisitions and exchanges of (or even readjustment of Weil: Post-Merger Employment Agreements With Target Managemen...   Sept. 4, 2002), the Second Circuit held that the acquiror s payment to the target s chief executive officer under a post-merger non-compete agreement, when the CEO also owned a block of the target s stock, violated Rule 14d-10, although the payment was made after the tender offer closed. Computer Associates offered to purchase On-Line stock for $15 Weil: SPOTLIGHT: IRWIN WARREN - Winning Four Different Trials...   Protecting Intellectual Property Rights: McGraw-Hill v. Vanguard Index Trust The Standard & Poor s division (S&P) of McGraw-Hill has been publishing its "S&P 500 Index" the premier benchmark for U.S. stock market performance for over forty years. ETF shares could be bought and sold at market prices on a national exchange throughout the trading day, much like a common stock, and unlike conventional mutual fund shares, which may be purchased and redeemed only at the end of each trading day at the Weil: Additional Recent Decisions of Note   May 5, 2003) United States District Court for the District of Delaware holds that a Delaware non-resident s merely owning stock or being a director of a Delaware corporation does not confer long-arm jurisdiction over him or her. In June 2002, Venoco, Inc. s board of directors voted to pay a cash dividend to two holders of its preferred stock Want Alerts, Online Saving Options, Publishing Capabilities, and More? Check out LawKT Premium. [ Terms Of Use | Privacy | Disclaimer ] © 1998-2004 SurfWax, Inc. All rights reserved. Patents pending.

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