October 2018

Sections

OCTOBER 2018

	IN THIS ISSUE
Akorn, Inc. v. Fresnius Kabi AG: Delaware Court of Chancery Finds Material Adverse Effect		>
California’s New Sexual Harassment Laws		>
Register Now: Enforcement of Stock Pledges Luncheon Seminar		>
Save the Date: Webinar on New Ethical Rules of Professional Conduct of Interest to Transactional Lawyers		>
Enhance Your Practice: Join the Executive Committee of the Business and Corporations Section		>
Law Firm Memos		>

The Business & Corporations Section eNews is published by the Business & Corporations Law Section Editors: Andrew Clark Latham & Watkins LLP Andrew.Clark@lw.com Alex Voxman Latham & Watkin LLP Alex.Voxman@lw.com Business and Corporations Executive Committee Officers: Katherine Blair, Chair Harumi Hata, Vice Chair, Membership Roger Loomis, Vice Chair, Membership Barry Burten, Vice Chair, Programs Peter Menard, Vice Chair, Programs James Coupe, Vice Chair, Treasurer and Council of Sections Liaison Mark Hiraide, Vice Chair, Events Scott Lochner, Vice Chair, Events and Secretary Members: Candice S. Choh Arash Khalili Theresa Leets Corporate Law Departments Section Representative Lois M. Jacobs Barristers Liaison Sarah Kelly-Kilgore

	Akorn, Inc. v. Fresnius Kabi AG

Delaware Court of Chancery Finds Material Adverse Effect On October 1, 2018, the Delaware Court of Chancery issued what is believed to be the first decision of a Delaware court finding the existence of a “material adverse effect” which justified the termination of a merger agreement. Against the backdrop of a precipitous adverse change in the target business’s performance (including a 55% drop in annual EBITDA after consistent EBITDA growth in prior years), significant breaches of regulatory requirements and inadequate remediation of such breaches, the Court found the existence of a general “material adverse effect” and breach of regulatory compliance representations which would reasonably be expected to result in a “material adverse effect”. For further insight and analysis of the case, please see the dedicated sub-section of the “Law Firm Memos” section of this newsletter by clicking here. In addition to the excellent law firm insight and analysis, the 246 page opinion itself provides an excellent guide for transactional practitioners of the issues to be mindful of when drafting and negotiating key provisions of acquisition and merger agreements under Delaware law. The full judgement of the Delaware Court of Chancery is available here.

	California’s New Sexual Harassment Laws

In its most recently concluded session, prompted by the #MeToo movement, the California legislature passed a number of bills to Governor Brown’s desk for signature on the issue of sexual harassment, spawning the hashtag #TakeTheLead to describe California’s approach to the issue. In the final hours before the September 30 deadline, Governor Brown vetoed AB 3080 (the most controversial of the various bills which would have prohibited (a) mandatory arbitration agreements for almost all types of employment law claims in California, and (b) employers from insisting on confidentiality or non-disclosure agreements in the context of workplace sexual harassment) but he did sign into law a number of other sexual harassment related bills, including: AB 3109 which renders void and unenforceable any provision in a contract or settlement agreement which seeks to limit a party’s right to testify in proceedings concerning alleged criminal or sexual harassment. For the full text of AB 3109, please click here. SB 820 which, for agreements entered into after January 1, 2019, prohibits (and renders void and unenforceable) any provision that prevents disclosure of information relating to sexual assault, sexual harassment or discrimination based on sex (unless such provision is included at the request of the claimant). For the full text of SB 820, please click here. SB 1343 which expands California’s requirement for sexual harassment training of employees to any employer with 5 or more employees (down from the current 50 or more employees). For the full text of SB 1343, please click here.

	*Register Now*

Pledges of Equity Interests Luncheon Seminar Join the LACBA Business and Corporations Law Section and Commercial Law and Bankruptcy Section for a luncheon seminar on Pledges of Equity Interests on November 15, 2018 at 12:15 PM at the Offices of the Los Angeles County Bar Association (1055 W. 7th Street, 27th Floor, Los Angeles, CA 90047). Speakers include Barry L. Burten and John A. Graham of Jeffer Mangels Butler & Mitchell LLP and Susan Goldfarb of Proskauer. For further information and to register, please click here.

	Save the Date

Webinar on New Ethical Rules of Professional Conduct of Interest to Transactional Lawyers Save the date for a webinar on New Ethical Rules of Professional Conduct of Interest to Transactional Lawyers to be delivered by Neil Wertlieb to be held on January 15, 2019. Further information to follow.

	Enhance Your Practice

Join the Executive Committee of the Business and Corporations Law Section The Executive Committee of the Business and Corporations Law Section is seeking new members. Membership on the Executive Committee is a terrific forum to network with your fellow corporate law practitioners across the city. Membership on the committee affords unique opportunities to participate in the creation of law in your practice area, to get to know and be known by other practitioners, to work with the recognized leaders in your field, and to stay on the cutting edge of developments and practice techniques. For further information on the Section, click here. If you are interested, please contact hhata@buchalter.com.

	Law Firm Memos

M&A: Akorn Case The MAC is Back Harvard Law School Forum on Corporate Governance and Financial Regulation Delaware Court of Chancery Finds a Material Adverse Effect and Permits Termination of Merger Agreement Wilson Sonsini Goodrich & Rosati PC Delaware Chancery Court Upholds Termination of Merger on MAE Grounds in Akorn v. Fresenius Sullivan & Cromwell LLP Akorn, Inc. v. Fresenius Kabi AG: Delaware Court of Chancery Finds Material Adverse Effect Allowing Buyer to Terminate Merger Agreement Richards, Layton & Finger, PA Yes, Virginia, there is an MAE Debevoise & Plimpton LLP Developments in California Law New Wave of Employment Bills Signed into Law Sheppard, Mullin, Richter & Hampton LLP California Will Soon Require Novel Disclosure Requirements Providers Of Commercial Financings Allen Matkins Leck Gamble Mallory & Natsis LLP California Governor Signs Numerous #MeToo Laws Cooley LLP California Pioneers IoT Security Legislation Sheppard, Mullin, Richter & Hampton LLP California Enacts New Laws Expanding Lactation Accommodation Requirements, Other Paid Family Leave Benefits Lewis Brisbois Bisgaard & Smith LLP M&A Court Of Appeal Finds No Property Transfer In Reverse Triangular Merger Allen Matkins Leck Gamble Mallory & Natsis LLP CFIUS Pilot Program to Require Mandatory Notification of Certain Transactions Cooley LLP The Twilight of Enhanced Scrutiny in Delaware M&A Jurisprudence Harvard Law School Forum on Corporate Governance and Financial Regulation Securities Laws Semi-Public Offerings? Pushing the Boundaries of Securities Law Harvard Law School Forum on Corporate Governance and Financial Regulation Ninth Circuit Holds General Partnership Interests To Be Investment Contracts Allen Matkins Leck Gamble Mallory & Natsis LLP The Principles Guiding FINRA Enforcement Latham & Watkins LLP The Tesla/Musk Settlements Harvard Law School Forum on Corporate Governance and Financial Regulation General Departing Is Such Sweet Sorrow: Some Things To Consider When You Leave California Allen Matkins Leck Gamble Mallory & Natsis LLP

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