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CALIFORNIA CORPORATE & SECURITIES LAW

New California Law Threatens To Destroy Plan Uniformity

Companies often include a choice of law provision in their equity and other compensation plans.  Some companies include a choice of law  in the award agreement, either in lieu of, or in addition to, the plan document.  Specifying applicable law helps to ensure that plans are consistently interpreted and applied.  Uniformity may be particularly important…

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Can An Employment Agreement Be A Wee Bit Too Integrated?

The Bylaws of many public companies provide for mandatory indemnification of directors and officers (and sometimes other agents as well).  Often, Bylaws describe these indemnity obligations as contract rights.  For example the Bylaws of one well-known public company state: The right to indemnification conferred in this Article shall be a contract right. If Bylaws are…

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Will Issuers Add Rule 506(d) Bad Acts To The Definition Of “Cause”?

The SEC’s new bad actor rule, Rule 506(d), may cause some issuers to consider expanding the definition of “cause” in their employment agreements with executive officers. Because executive employment agreements typically reduce severance payments significantly in the case of “for cause” terminations, the definition of “cause” is often hotly negotiated. While “cause” definitions often include…

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