Alta Berkeley VI C v. v. Omneon, Inc.
41 A.3d 381
Del.2012Background
- Omneon merged with Harmonic via Orinda in May 2010; conversion of remaining preferred to common was conditioned on Merger approval and occurred Sept. 15, 2010, just before merger; merger consideration totaled ~$190 million cash plus Harmonic stock; Series C-1 liquidation preference exceeded estimated merger value; Series A-2.2 could opt out of conversion under charter; Superior Court granted summary judgment for Omneon holding only Series A-2.2 had liquidation payout rights because conversion was not a Liquidation Event and occurred prior to the merger.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether automatic conversion is part of a Liquidation Event | C-1 argues conversion is part of Liquidation Event | Omneon argues conversion is separate from Liquidation Event | Not part of Liquidation Event |
| Whether 'series of related transactions' includes antecedent conversion | Conversion was part of a related-series culminating in merger | Series must transfer voting power; Harmonic did not partake in conversion | Conversion not within the series; only merger constitutes the Liquidation Event |
| Effect of the 'provided, however' right for opt-out | C-1 should share opt-out rights along with A-2.2 | Only Series A-2.2 has exclusive opt-out right | A-2.2 alone has opt-out right; C-1 cannot rely on it |
| Timing of conversion relative to Liquidation Event | Conversion occurred before merger, thus stockholders were common at Liquidation Event | Conversion and merger are a connected sequence | Conversion occurred before Liquidation Event; no liquidation payout for C-1 |
Key Cases Cited
- Bank of New York Mellon Trust Co. v. Liberty Media Corp., 29 A.3d 225 (Del.2011) (anti-circumvention purpose of 'series of related transactions' language; aggregation to prevent piecemeal transfers)
- Elliott Assoc., L.P. v. Avatex Corp., 715 A.2d 843 (Del.1998) (contract interpretation requires reading instrument as a whole; plain meaning controls)
- Rhone-Poulenc Basic Chem. Co. v. Am. Motorists Ins. Co., 616 A.2d 1192 (Del.1992) (contract ambiguity standard; clear terms given effect)
- Airgas, Inc. v. Air Prod. and Chem., Inc., 8 A.3d 1182 (Del.2010) (contract interpretation and reading plain terms; unambiguous language)
- City Investing Co. Liq. Trust v. Cont'l Cas. Co., 624 A.2d 1191 (Del.1993) (principle that plain meaning governs if no ambiguity)