Last week concluded the annual Tulane Corporate Law Institute in New Orleans. Corporate lawyers and litigators from all over the country attended, although the largest contingency always seem to be from Delaware. Members of the Delaware judiciary, including two members of the Supreme Court and the incoming Chancellor of the Court of Chancery appear to be the only members of the judiciary present–or speaking on panels. Much of the materials focus on recent Delaware cases. Some wags refer to it as an unofficial meeting of the Delaware corporate bar, as well as those from around the country that follow and rely on the latest developments in Delaware corporate law.

The event is widely covered by the mainstream press and legal trade journals. See, e.g., the New York Times DealBook piece.

This is the 25th year that the Tulane Corporate Law Institute has presented a seminar in New Orleans that attracts corporate litigators and M & A lawyers from around the country to discuss the latest developments in corporate law. Members of Delaware’s Supreme Court and Court of Chancery by far represent the largest number of jurists from one state on the panel presentations. Delaware Supreme Court Chief Justice Myron Steele is providing the keynote address today entitled “Delaware and M&A: Looking Forward”. Vice Chancellor Donald Parsons is on a panel discussing recent corporate decisions from Delaware.  Other panels include Justice Ridgely and Justice Jacobs, as well as Chancellor Strine and Vice Chancellor Glasscock. I plan to update this post throughout the afternoon on March 21 and during the morning of March 22.

UPDATE: A few highlights of the keynote address by Chief Justice Steele:

– The duty of good faith should not stand alone as a concept but acknowledge that one cannot act loyally without at the same time acting in good faith.

– His Honor’s comments are, he emphasized, made on his own behalf and not on behalf of the court.

– It is a presumption in Delaware that the first-filed plaintiff receives some deference as to choice of forum; not to be confused with the doctrine of forum non conveniens. He also mentioned comity as a concept to address multi-jurisdiction litigation.

– Task Force of state and federal judges and practitioners around the country who are expected to prepare a handbook to guide judges and lawyers regarding multi-jurisdiction litigation.

– Equity v. Predictability; and Implied Covenant of Good Faith and Fair Dealing:  This implied covenant as a gap-filler should be used sparingly. Note that 75% of companies now chartered in Delaware are alternative entities. – Vice Chancellor Laster’s decision in ASB, 50 A.3d 434, 440 (highlighted on these pages here), is in the Chief Justice’s view, the best explanation of distinction between good faith as a common law duty and as part of the contractual implied duty of good faith and fair dealing.

– His Honor says more focus should be placed on the doctrine of stare decisis.  He notes that 90% of all appeals from Chancery are affirmed and that the common law system may not be perfect, but as Churchill said, it’s the best we have.

UPDATE II: Rick Alexander of the Morris Nichols firm in Wilmington discussed proposed new legislation predicted to pass the Delaware legislature by the summer. First is a “medium-form merger” amendment to the DGCL to provide a simpler way to address “top up options”. Also, a new “benefit corporation” statute is expected to become law in Delaware this summer. This allows a for-profit corporation to balance the interest of maximizing shareholder value with other considerations, but it must be a specified public beneficiary. Only shareholders can sue.  Business judgment rule protection is available for compliance with statute. There is also a reporting requirement, but no requirement for optional third-party standards to apply. Twelve states already have a version of this. Of course, this type of private ordering is already available in the alternative entity context. In order to convert an existing corporation, it requires a 90% shareholder approval.

Another new proposed change to the Delaware corporate statute is a new DGCL Section 204, designed to be a safe harbor for defective corporate acts such as over-issuance of shares. Also, a new Section 205 will give Chancery jurisdiction to address defective corporate acts. Vice Chancellor Parsons commented on cases that have addressed current limitations on its ability to fix defective corporate acts in light of potential barriers such as laches. There also was a discussion of In Re Complete Genomics, Inc. Shareholder Litig., C.A. No. 7888-VCL (Del. Ch. Nov. 9, 2012),(Transcript), that addressed ability of board to enter into an agreement without a “fiduciary out”.

Highlights of prior years at the Tulane seminars can be found on these pages here.

 

We are at the 24th Annual Tulane Corporate Law Institute in New Orleans. Of the several hundred corporate lawyers from around the country, perhaps close to half are from Delaware. The attendees include four of the five members of the Delaware Court of Chancery and three of the five members of the Delaware Supreme Court.

Indicative of the national interest in this gathering of lawyers and others who make their living by keeping up with the latest developments in corporate law, are the reports today about the seminar from The Wall Street Journal and The New York Times.

Delaware Supreme Court Chief Justice Myron Steele was on a panel entitled: “Public Company Directors: A View from Inside the Board Room”. The Chief Justice observed that as a general approach to the review of disinterested and independent directors:

Generally, when a Delaware court reviews the conduct of a director, if the director is disinterested and independent and satisfies other attributes that demonstrate that the director was acting objectively and reasonably, deference will often be given.

His Honor also expressed his skepticism about federal legislation that is often enacted quickly in response to a crisis and without careful consideration of the consequences, much like a Napoleonic Code, one-size-fits-all approach.

Highlights from another panel today come from Ted Mirvis of New York’s Wachtell Lipton firm, who is frequently involved in major corporate litigation cases decided by the Delaware courts. He addressed the issue of an increasing number of suits involving Delaware law being filed in courts outside of Delaware. A few bullet points from his presentation include the following:

  • Background: over 90% of deals involving at least $100 million are challenged by an average of 6.1 lawsuits each. Now, M & A class actions in state court outnumber federal class actions.
  • The Problem: About two-thirds of cases involving a challenge to a merger involving a Delaware company were filed outside a Delaware state court.   The risk is that non-Delaware courts will be deciding issues of Delaware law.
  • Why is there a problem: Some plaintiffs think they may suffer less scrutiny and receive more fees outside Delaware.  There are more plaintiffs attorneys than ever. Many other states now have “business courts”.
  • Solution: Forum selection clauses in charters or bylaws. Almost 200 public companies now have these provisions. Of this group of Delaware companies, 31% are based in California.

There is much more to report about this two-day long conference, but this is just a small sample. Two years ago we provided a fuller overview here.

This is the second day that our blog posts will be presented from the annual Tulane Corporate Law Institute. The panel presentation this morning that would be of the most interest to readers is entitled: "M & A of Financially Distressed Companies". Among the issues addressed at this intersection of corporate law and bankruptcy law is the scope of fiduciary duties of the board of directors, and to whom are those duties owed?

There was discussion of J.P. Morgan’s purchase of Bear Stearns as a means for Bear Stearns to avoid bankruptcy and the need to make decisions in a matter of hours–not days or weeks.

One panel member, who is part of the Delaware judiciary, suggested that in most cases the very short, expedited timetable involved in the historic events relating to Bear Stearns and Lehman Bros. is not  typical or common, and that the boards of distressed companies should be more forward-looking in terms of trying to plan for dealing with these issues.

He also indicated that recent  Delaware cases emphasize that the duties of directors do not change simply because the company is failing. The BJR protection is still available even when the company is on the verge of bankruptcy. If the directors think the best way to fulfill their obligations is to liquidate, that may be the fulfillment of their duties depending on the situation. Alternatively, the best decision may be to seek additional capital. If the prerequisites to the presumption of the BJR apply, the Court will defer to the business judgment of the directors. Reference to what has been called "the zone of insolvency" can be a distraction because it has no precise boundaries.

A simple rule for directors still applies: Maximize value of the entity and don’t steal from the entity. As for preferred shareholders, they are limited to contract rights and the board is entitled to prefer the well-being of common shares over preferred shares–to the extent that the contract rights of preferred do not require any benefits superior to common shareholders. See, e.g.,Trados case,  where the fiduciary decided to terminate the entity, without benefit to the common shareholders,  but the preferred shareholders benefit. In those situations, the Court will carefully examine whether the preferred holders are receiving more than what their contract rights entitled them to receive.

In essence, the focus of directors should be to preserve the value of common shareholders. Others like creditors have contractual rights on which they can rely.

SUPPLEMENT:

An afternoon panel grappled with ethics issues and one of the panel members was Vice Chancellor Travis Laster of the Delaware Court of Chancery who provided important "practice pointers" of great interest to anyone appearing in his Court. A few highlights follow:

Avoid Intemperate Language in Briefs:

  • Do not accuse a lawyer of misleading the Court unless you are prepared to prove it.
  • The word "false" is not a synonym for "incorrect" because the word "false" involves the concept of "scienter" and is His Honor believes it is unprofessional to use that accusation in a brief unless one truly believes that a Rule 11 violation or ethical violation is involved.

Deposition Practice Styles:

  • Civility during a deposition is important. For example, when defending a deposition, if one makes continuous critical comments of the opposing attorney beyond simple objections, or otherwise interferes inappropriately with the deposition, at some point  it will invite a "do over" that will be at the cost of the offender.

Class Action Settlement Issues

  • His Honor did not want to discuss his recent Revlon decision as it is still a pending case, but made a few passing comments. The record in that case was limited but it is noteworthy that it did not announce new law.  The decision cited to Newberg’s Class Actions treatise. Class counsel, it must be remembered, is a fiduciary and all the applicable fiduciary duties apply. As a matter of ethics and professionalism, it is dangerous for class counsel to address the merits of the case mixed in with a discussion of fees to be awarded. That "failure to separate the merits and fee award" will raise fiduciary duty issues with the counsel involved.
  • Factual recitations in an MOU and the proxy statements will be closely examined. The "presumption of causation of the lawsuit and a later benefit" cannot be used to create fictitious chronologies about how the settlement occurred and who contributed to it.

 

Blog posts today and tomorrow will be from the Tulane Corporate Law Institute in New Orleans. This event gathers practitioners and academics from around the country who want to keep updated on the latest developments in the law impacting corporate litigation and corporate transactions. Among the few hundred attendees, lawyers and judges from Delaware represent a disproportionately large percentage of participants. Members of the Delaware Supreme Court and Delaware Court of Chancery dominate several panels including the following:

"Delaware Developments"; "Public Company M & A: 2010"; "M & A of Financially Distressed Companies"; and "Enhanced Ethics and Professionalism".

The plan is to provide posts with selected highlights from the panel presentations that refer to Delaware corporate law developments.

The highpoint of this afternoon’s schedule is a presentation called "Delaware Developments". The handout materials include almost 100 pages of case summaries on topics such as "220 Demands"; Disclosure; "Claims Against Dissolved Corporations"; and "Rights of Preferred Shareholders".

How, one might ask, can a 90-minute presentation and 100-pages of case summaries be converted into a manageable blog post? Let’s find out. All of the cases discussed by the panel are Delaware decisions issued within the last year or so that have been highlighted in the past on these pages and can be found via the "search box" in the right margin.  Bullet points will be used as the format that lends itself most readily to this situation.

  • San Antonio Fire and Police Pension Fund v. Amylin Pharm. In connection with a "continuing director provision" that would trigger a put of debt instruments if violated, the Court of Chancery allowed directors to "approve" (as provided in the continuing director provision), an insurgent board if they determined in good faith that the election of the insurgents would not be materially adverse to the corporation.
  • Selectica, Inc. v. Versata, Inc. The Chancery Court upheld the use of a pill by a board and deferred to the board’s business judgment based on a Unocal standard, for the following reasons: it was not preclusive (i.e., the proxy contest was not impossible); the protection of the NOLs was a valid corporate objective; to exchange rights for newly issued shares and to issue a new rights dividend (i.e., reloading), was proportionate and entitled to deference under the business judgment rule. Also, importantly, one panel member said it was the first Delaware decision to distinguish between "independent directors" and "outside directors". Even though not  regarded on these facts as "outside directors", the Court found that two directors were still independent.
  • In re Revlon, Inc. S’hlders Litig. (Del. Ch. Mar.16, 2010). This is not the same as the 1985 Delaware Supreme Court decision relating to the duties of directors in connection with the sale of a company. This recent decision discusses the standards that the Court will impose on attorneys in class actions. The Court removed lead counsel and Delaware counsel. Extensive discussion and analysis was provided by the Court for the factual, legal and policy reasons behind the ruling, and the Court addressed these concepts in the context of representative litigation in general. One panel member suggested that an inevitable consequence of this opinion is that cases of this type will be prosecuted with more vigor, and more discovery is likely before Memoranda of Understanding are entered into involving litigation that challenges corporate mergers or similar transactions. It was also suggested that the practice of "high volume" complaints filed by some plaintiffs’ firms will be more carefully handled. Another member of the panel (who is a New York lawyer that often practices in Chancery Court), indicated that if there is a risk that plaintiff’s lawyers will now be inclined to avoid Delaware, one solution for companies who want their shareholder suits to be filed in Delaware, is to include a "Delaware exclusive forum" provision in their charters–much like a forum selection clause in a merger agreement. To the extent that plaintiffs’ lawyers already choose other fora, one risk is that the results in those fora is not as predictable as decisions from Delaware.

The new "expedited, voluntary" arbitration rules now applicable in the Court of Chancery were discussed by the panel (as previously explained on this blog). Among the prerequisites and features of these new rules are that:

  • The parties must consent to the procedure
  • A member of the Court will be the arbitrator (and will be able to issue injunctive relief)
  • The dispute must involve a Delaware entity and an amount in dispute of at least $1million
  • The parties can agree that the decision will be binding, otherwise appeals are directly to the Delaware Supreme Court
  • Hearings are expected to be held within 90 days of filing the complaint (i.e., very fast).
  • The procedure will be confidential (as will the decision)  unless and until an appeal is made to the Delaware Supreme Court

 

This is my sixth and final update from the corporate law seminar in New Orleans. The final panel today is titled: "The Role of Counsel in Transactions: Enhanced Ethics and Professionalism".

Members of the panel include Vice Chancellor Donald Parsons of the Delaware Chancery Court as well as several leading corporate practitioners.

[As an aside, this two-day seminar which featured panel members from all over the country, benefited from a majority of the members of the Delaware Supreme Court and a majority of the members of the Delaware Chancery Court participating on various panels, in addition to a very large contingent of Delaware lawyers who practice in the area of corporate litigation.]

This last panel presentation of the day was based on a fact pattern involved in a real Delaware Chancery Court decision called Postorivo, that was summarized on this blog here. There were also several other Chancery Court decisions involving this case, all highlighted here.

The factual background that forms the context for the ethical issues addressed  was the asset purchase of a business. In that situation, the general rule is that when one purchases a business, one also acquires any "attorney/client privileges" that attach to the business assets, as well as related files (and computers)  of the parties. An exception may apply to issues related to the purchase transaction itself.

VC Parsons provided the following overview:  Under Delaware law, one can speak to the former employee of an adversary, but  with precautions. For example, it must first be determined if that person in represented by counsel. Also, one must first say that one does not want any privileged data, and one must also notify the ex-employee of the nature of the dispute. A description of the matter involved must be explained. The care that must be taken was also addressed in the Delaware decisions of both Monsanto and LaPoint.  His Honor also mentioned that if one finds oneself with privileged data that may belong to another party, one must be careful to preserve all applicable rights before proceeding.

Of course, there are also applicable Rules of Professional Conduct that may apply to this situation.

New Federal Rule of Evidence 502 was discussed in the context of a case where there a millions of emails and hundreds of boxes of documents and only two months to do discovery (e.g., in an expedited case). Thus, one might employ a clawback agreement.

This new rule changes the prior rule by providing that if the waiver is inadvertent then there is NO "subject-matter" waiver.

VC Parsons commented on the applicability of this rule to Delaware Chancery Court. While acknowledging the excellent litigation skills of attorneys who practice in that court, His Honor suggested that those same competent lawyers may not be the "most familiar" (my words) with electronic discovery matters.

Part D of new Rule 502 refers to whether an order from a federal court determining that there is no waiver (e.g., in a protective order) may also apply to prevent a waiver of that same matter in any STATE court proceeding.

Three-part test. Waiver will only apply if:

(1) the waiver  was intentional; (2) the disclosed and undisclosed communication or information concern the same subject matter; and (3) they ought in fairness be considered together.

Inadvertent disclosure. A disclosure will not operate as a waiver if:

(i) the disclosure is inadvertent;

(ii) the holder of the privilege took reasonable efforts to avoid disclosure; and

(iii) the holder took reasonable steps to rectify the error, including (if applicable) following Fed. R. Civ. Proc. 26(b)(5)(B).

NEW PROPOSED MODEL RULE 1.10

Addresses potential conflicts that arise with lawyers going from one firm to another. Also note that not all states will uniformly recognize or enforce "advance waivers".

This is my fifth update from this corporate law seminar in New Orleans. On this second day, the third panel presentation this morning is titled: "Delaware Developments". The panel members include a member of the Delaware Chancery Court and a few leading Delaware corporate practitioners.

Vice Chancellor Lamb discussed the very recent Delaware Supreme Court decision in Lyondell Chemical Co. v. Ryan,  which was recently summarized on this blog.

Among the comments His Honor made about the case,  he referred to page 18 of of Supreme Court opinion in Lyondell which describes what must be show in order to establish a violation the duty of care as compared with the duty of loyalty. 

He also referred to the part of the Supreme Court’s opinion that explained that  simply putting a company "in play", does not trigger Revlon duties. Rather, Revlon duties are only triggered when the board decides to sell the company.  Revlon applies heightened scrutiny and uses a "range of reasonableness". The Supreme Court also cited approvingly the Chancery Court decision in the Lear case (which was handed down shortly prior to the Chancery Court’s decision in Lyondell v. Ryan.  The Lear case includes the distinction between a review of the board’s activities in connection with a sale, both before as opposed to after the transaction closes.

Contractual Limitations on a Board’s Fiduciary Duties

The panel cited to the Chancery Court decision in Grimes v. Donald (1995) that stands for the view that a board should not restrict its duties to manage the corporation. (Compare with the option that the board might want to change its mind on whether to recommend a merger). See also Carmody v. Toll Bros. (1998)  prohibiting the "dead hand pill"; and Abercrombie v. Davies (1956) preventing a voting agreement that required board designees to vote as a block.

By contrast, DGCL Section 141 allows certain restrictions to be in the certificate of incorporation–as opposed to having such restrictions in the bylaws which do not allow for as much leeway. See CA, Inc. (recent Delaware Supreme Court case) See also Grimes (upheld an agreement that allowed the CEO to unilaterally decide that his employment was terminated if his powers were restricted); and Cullman (agreement  upheld that was in director’s role as shareholder and also had fiduciary out). Another case discussed was:

Hokanson v. Petty, 2008 WL 5169633 (Del Ch. 2008). Claim that board breached duty of care and loyalty rejected because court said the agreement involved allowed the board to seek a higher price. Though the claims were time-barred, even so, the board had fulfilled its fiduciary duties by getting the best deal possible in a very distressed situtation.

BUSTED DEALS

The Delaware cases discussed included: IBP  v. Tyson (2001) (applying NY law to grant specific performance and finding no trigger of MAE clause); Frontier v. Holly (2005)(staterment of CEO was not a repudiation, so the party that claimed a repudiation of the other was found to be in breach and no MAE established); United Rentals v. Ram Holdings (2007)(summarized on this blog, finding that contract limited remedy to termination fee); Hexion v. Huntsman (2008)(no MAE found, when one party orchestrated an insolvency opinion for merged entity, and specific performance ordered.)

PROPOSED REVISIONS TO THE DELAWARE GENERAL CORPORATION (DGCL)

Dave McBride discussed the changes expected to be made in the next few months to the DGCL by the Delaware Legislature and presumably to be signed by the Governor by this summer.

  • Section 112.  In light of the recent decision by the Delaware Supreme Court in the CA, Inc. case, this change would allow the bylaws to include provisions that would allow individuals to the board to be nominated by stockholders.
  • Section 113. Also in light of the recent CA, Inc. case, this allows bylaws to provide for reimbursement for expenses incurred by stockholders in soliciting proxies. But there is a mandatory provision that relates to the setting of the record date and effectiveness of bylaw change.
  • It is still an open question (in some circles) in Delaware as to what power a board has to amend a "shareholder-adopted" bylaw.
  • Section 145. Changes the default rule on advancement due to recent decision in Schoon v. Troy so that an existing right to advancement cannot be withdrawn or eliminated once an act occurs that may provide for advancement, unless a bylaw or contract provision expressly provides otherwise.
  • Section 225(c). Allows a corporation to seek, in the discretion of the Chancery Court, to remove a director if he is convicted of a felony in connection with his duties, and under certain other circumstances.
  • Section 213(a).  This addresses "dual record dates".

Gantler v. Stephens, (Del. Supr., Jan. 27, 2009)(previously summarized on this blog). A member of the panel also discussed this recent Delaware Supreme Court case that addressed issues of shareholder ratification and refused to apply the Unocal  test, and instead applied the "entire fairness standard" to a board decision to retain control over their bank.

This is my fourth installment of live blogging from the above seminar in New Orleans. The second panel on this second day of this corporate law gathering is titled: "Roles Played and Issued Faced by Financial Advisors in Today’s Deals". Among the panel members are Delaware Supreme Court Justice Henry duPont Ridgely as well as leading corporate practitioners and a representative of the SEC.

Justice Ridgely discussed the definition of "independence" of directors according to the Delaware case law, and  mentioned that DGCL Section 141 specifically allows directors to rely on reports of experts such as financial advisors. Another panel member suggested however, that there is no requirement that experts be used per se. One panel member emphasized that "at the end of the day" the board needs to make the "business decision" on a particular deal.

Disclosure requirements were discussed and in particular the Delaware Chancery Court’s Pure Resources  opinion which said that the shareholders are entitled to a "fair summary"  (in the proxy statement) of the basis of the fairness opinion on which the board relied. For example, a "fair summary" includes a description of exercises employed by the bankers and their assumptions used, and fair values resulting. However, other Chancery cases, such as Globis, said that one does not need to include so much that it would allow the shareholders to duplicate the same analysis made by the bankers. In addition, if the data was merely "helpful" that does not make it material. However, if there is "partial reference" to a topic, then it needs to be a complete disclosure on that topic. (i.e., not a misleadingly incomplete disclosure).

One panel member noted that the Chancery decision in JCC Holdings stands for a "no quibble" rule. That is, quibbling with the results  of the valuation is not a disclosure claim as long as there is a disclosure about what "the banker did" as opposed to what analysis the banker did "not do".

Bottom line: Disclose the "meat" of the banker’s analysis so that it is meaningful for the shareholders in making a decision based on the banker’s valuation.

Fees paid to bankers: If it is contingent, the entire details of fee must be disclosed, otherwise all the details of the fee are not needed.

Netsmart was a Chancery Court decision that  discussed what  projections need to be provided to shareholders in a valuation. For example, a shareholder being cashed-out in an LBO would want to see and would need management’s projections on which the valuation was based. One key is to determine whether the projections are "reliable". If they are reliable, then they need to be provided (even if determining "reliability" of projections is not always subject to certainty.) Plaintiff must prove reliability if the goal is to enjoin a transaction due to lack of disclosure of projections.

This is the second day of the annual gathering of corporate law types in New Orleans and this is my third update on the seminar. The panel this morning is entitled: " M & A and the Media". Among those on the panel includes reporters from The Wall Street Journal and The New York Times. The panel discussed the need to be aware of what is being said in the blogosphere, as the latest news in often reported there first. The question was asked about why the media (particularly the mainstream press) did not "identify" or "report about" the underlying problems that led to the current economic crisis–before the crash. In my view, the answers to that question from the panel did not satisfactorily address that burning issue.

This is the second live installment from the above 2009 corporate law seminar in New Orleans. Among the other bloggers posting live, see, e.g., here.

As a follow-up to my last post, the panel presentation of this afternoon is entitled:

Public Company M & A in 2009: What to Expect?  The moderators are Victor Lewkow and James Morphy, Jr. The panel members include a Vice Chancellor of the Delaware Chancery Court.

MAC clauses were discussed. The member of the Chancery Court on the panel provided his perspective on MAC clauses by suggesting that recently there seem to be less "outs" in contracts, and Delaware strongly supports contract rights.  There is a tension between a MAC clause and a "break-up fee" if the deal is not consummated. The "downside" of the position that strongly honors contracts,  is that it puts pressure on financing parties when there is no "financing out". A problem develops if the agreement does not allow specific performance and one does not have a deal, then one is only left with the unpalatable option of "chasing" the termination fee.

Ted Mirvis of  Wachtell Lipton discussed remedies in the context of merger agreements. Among the many issues he addressed, include the discussion of the different treatment of third party beneficary rights addressed in the Delaware decision in Amirsaleh compared with the New York decision in Con Ed

The Omnicare case was discussed and juxtaposed with the need for "deal certainty".  The point was made that the analysis may be different when viewed from an "equitable as opposed to law" lens. In that context, a transcript of a decision by the Delaware Chancery Court in the case of

Optima International of Miami, Inc. v. WCI Steel, Inc., (Lamb, V.C., transcript, June 27, 2008),

was cited for the position that Omnicare  is not violated when there is shareholder consent and the controlling shareholder owns less than 50% (and such consent is not prohibited by charter). However, the SEC recently made an interpretation that such consent cannot  be used if there is any non-cash consideration requiring an S-4.