Opinion ID: 2402127
Heading Depth: 1
Heading Rank: 11

Heading: Warrant Rights Contractual

Text: Warrants are contractual entitlements. The exclusive rights and remedies of warrantholders must appear in the contractual provisions of the Warrants. Had the drafters intended for the Warrantholders to have an independent claim for fair value of the common stock following a merger, the Warrant could have said, for example, that: upon a merger, the Warrantholders are entitled to receive the greater of the consideration received by stockholders in the merger or the fair value of the common stock. Had Section 2(c) been written with the intent of providing the Warrantholders with the right to a fair value determination in connection with a merger, it would have undoubtedly included specific procedures by which the Warrantholders could elect to forego the $14 per share Merger consideration and pursue a contractually agreed upon fair value quasi -appraisal right designed as the functional equivalent of a proceeding under Section 262. These Warrantholders did not expressly contract for a quasi-appraisal right that would operate as the functional equivalent of a statutory Section 262 proceeding. The plaintiffs' request that we find such a right within the penumbra or interstices of the Warrant provisions was properly rejected by the Court of Chancery, which held: To hold otherwise would inject great uncertainty on the part of issuers of Warrants, who commonly rely upon anti-destruction clauses identical in substance to § 2(c), by disrupting their settled expectations that these clauses would be interpreted in accordance with their plain terms .... [28] The Court of Chancery followed this Court's precedents in recognizing that the only reason a common stockholder of United Artists had the right to seek fair value was through a statutory appraisal remedy by legislative mandate. [29]