Opinion ID: 2294957
Heading Depth: 2
Heading Rank: 3

Heading: Only the Series A-2.2 Was Entitled to Opt Out of the Conversion

Text: The provided, however provision confirms the validity of the foregoing analysis, by giving effect to all terms of the Omneon charter, as our rules of contract construction require. [35] The provided, however provision expressly gave the Series A-2.2 preferred the exclusive right to opt out of a conversion that is either (i) conditioned upon, or (ii) that follows the consummation of a Liquidation Event. [36] No other Series of preferred was given that right. It is undisputed that the merger, standing alone, was a Liquidation Event under the charter definition. [37] It is also undisputed that the conversion was a (waivable) condition of the merger, having been so described in the Harmonic-Omneon merger agreement. [38] Moreover, Omneon has represented, and the Series C-1 preferred shareholders have not disputed, that the merger was also a condition of the conversion. Therefore, the conversion was conditioned upon a Liquidation Event (the merger)a circumstance that triggered the Series A-2.2 preferred's right to opt out of the conversion. The Superior Court determined, and we agree, that the provided, however provision would be superfluous if the Series C-1 preferred shareholders were entitled to the same opt out right as the Series A-2.2 under the Liquidation Event clause. [39] The drafters of these provisions plainly considered the possibility that a conversion might be integral to, and precede, a Liquidation Eventbut that those two transactions would nonetheless constitute legally separate events (transactions). Here, all but two of the relevant Series of preferred had the requisite economic motivation (the merger premium) to approve the conversion. That is, the Harmonic merger gave all but two of the nine Series of preferred an incentive to convertan incentive made possible only because of the preexisting automatic conversion charter mechanism. [40] Only the Series A-2.2 preferred bargained for the right to avoid that automatic conversion possibility and thereby protect its entitlement to receive a liquidation preference payout, even if the other Series decided (by majority vote) to forego it. The Series C-1 preferred did not bargain for or obtain that contractual opt out right. They cannot now obtain from the courts a right that they failed to achieve at the bargaining table.