Opinion ID: 2279777
Heading Depth: 1
Heading Rank: 3

Heading: Court of Chancery Public Offering Prospectus

Text: Attached to the complaint in this case were copies of the Partnership Agreement and Assignment Agreement. Those copies had been exhibits to the Public Offering prospectus. At the oral argument on the defendants' motion to dismiss, defense counsel offered to provide the Court of Chancery with a complete copy of the prospectus that accompanied the Public Offering. The following exchange is reflected in the record: Defense Counsel: [S]ince they have provided [the court] with the complaint Exhibit A to the prospectus, which was the partnership agreement, and they provided by letter amendment Exhibit B to the prospectus, I thought it would be useful ... to provide Your Honor with a couple copies of the full prospectus. The Court: Is that all right? Plaintiffs' Counsel: Your honor, without going into the question of the relevancy of the prospectus itself, I have no objection to their being handed up for whatever use. In its October 18, 1996 bench ruling on the motion to dismiss, the Court of Chancery, considered the prospectus: The controlling documents  and I refer to the partnership agreement and the assignment agreement  are, unfortunately, not as clear as the understanding stated in the prospectus that went to persons who were invited to become assignee holders in the public offering, which says at page 61 that the rights of a transferee who does not become a substituted limited partner will be limited to sharing in profits and/or losses and cash distributions, and voting rights of a transferor who transfers an interest will terminate whether or not the transferee is admitted as a substituted limited partner. I do believe that that was the intent behind this. The Court of Chancery's reliance on the prospectus in deciding the motion to dismiss is further illustrated by the following excerpt from its Memorandum Opinion dated November 4, 1996: Although the agreements themselves do not directly say so, the prospectus explains... that the rights of any transferee who does not become a Substituted Limited Partner will be limited to his share of partnership profits or losses and cash distributions.... Since the explanation provided to purchasers in the public offering is consistent with the agreements, the prospectus confirms the defendants' interpretation and contradicts the interpretation argued by the plaintiffs.