Hmmm, reading the original deal filings, here's some relevant info....
If the Merger Agreement is validly terminated, written notice thereof shall be given to the other party or
parties, specifying the provisions of the Merger Agreement pursuant to which such termination is made and the
basis thereof described in reasonable detail, and the obligations of the parties will terminate and there will be no
liability on the part of any party with respect thereto, except for certain designated provisions in the Merger
Agreement, including, among other provisions, those regarding termination fees, which will survive termination;
provided, however, subject to the termination fee provisions of the Merger Agreement, nothing contained in the
Merger Agreement will relieve any party from liability for damages incurred or suffered as a result of its fraud or
willful and material breach of any of its representations, warranties, covenants or other agreements set forth in the
Merger Agreement occurring prior to such termination, in which case the aggrieved party will be entitled to all
rights and remedies available at law or equity.
So I think first SIMO will sue MXL for breach of contracts/covenants. MXL is probably going to need to prove at least one of the four reasons in their press release today. All of them lacked detail, so hard to say what exactly is MXL's argument.
If SIMO wins the lawsuit, MXL perhaps has liability for the damages, which is likely the $93.32 cash + 0.388 shares of MXL per SIMO share.
And this bit a few paragraphs down.
Exclusive Remedy
The parties have agreed that, except in cases of fraud or willful and material breach, (I think MXL has done a willful and material breach) the receipt of a termination fee will be the receiving party’s sole and exclusive remedy against the other party or parties, as applicable, to the Merger Agreement and certain related persons of such party or parties for all damages suffered as a result of the failure of the Merger or the other Transactions to be consummated and for any breach or failure to perform under the Merger Agreement. While the parties may pursue both a grant of specific performance (as is described below under the caption “The Merger Agreement — Specific Performance”) and the payment of a termination fee simultaneously, no party will be entitled to receive both remedies.
The above seems to say that in case of a dispute, the winner gets either the cancellation fee or the judged penalty, but not both.
So I would imagine SIMO's position will be that MXL's announcement today is a willful and material breach of the contract. In this case.......the following paragraph sounds like SIMO can compel the contract/buyout to move forward if they win the lawsuit.
Specific Performance
The parties have agreed that if any of the provisions of the Merger Agreement are not performed in
accordance with their specific terms or were otherwise breached, irreparable damage would occur, no adequate
remedy at law would exist and damages would be difficult to determine, and accordingly, the parties:
shall be entitled to an injunction or injunctions to prevent breaches of the Merger Agreement and to specific
performance of the terms thereof, (that sounds like SIMO could request an injunction to halt the MXL termination of the deal??) in addition to any other remedy to which they are entitled at law or in equity;
----
Hmmm, it sounds to me like they're going to go to court, and SIMO will hopefully try to force MXL to complete the deal. MXL will have to prove something claimed in their press release, but their claims against SIMO are too vague to evaluate.
Lets stay tuned......
waive any requirement for the securing or posting of any bond in connection with the obtaining of any
specific performance or injunctive relief;
and will waive, in any action for specific performance, the defense of adequacy of a remedy at law.
The Company’s or Parent’s pursuit of specific performance at any time will not be deemed an election of
remedies or waiver of the right to pursue any other right or remedy to which such party may be entitled, including
the right to pursue remedies for liabilities or damages incurred or suffered by the other party in the case of a breach
of the Merger Agreement involving fraud or a willful and material breach. |
