The recent decision by Vice Chancellor Sam Glasscock in Manti Holdings v. Authentix Acquisition, C.A. No. 2017-0887-SG (Del. Ch. Aug. 14, 2019), is noteworthy for two reasons: first, the vice chancellor’s comments regarding the utility of motions for reargument, and second, his holding in a case of first impression that the Delaware General Corporation Law does not prohibit sophisticated owners of a corporation from agreeing to bind themselves to a future sale and waive in advance their statutory appraisal rights.
The case involved the sale by merger of Authentix Acquisition Co. to a third party. The petitioners had been the sole owners of the company’s predecessor. In 2008, the predecessor was merged into Authentix, and the petitioners became minority stockholders in the new entity. As a condition of the merger, the petitioners entered into a stockholders agreement with the new majority owners that provided for certain contractual rights and duties in the event of a “company sale,” as defined therein. In the agreement, the petitioners consented in advance to a contractually compliant sale and agreed that they would “refrain from the exercise of appraisal rights with respect to such transaction.” See Manti Holdings v. Authentix Acquisition, C.A. No. 2017-0887-SG (Del. Ch. Oct. 1, 2018). After Authentix was sold, the cash consideration was distributed to the various categories of stock in accordance with the waterfall provisions of the company’s certificate, and the petitioners and other common stockholders received little or nothing for their equity interest in the company.
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