assignment of rights stock

Stock Assignment: Transferring Ownership Rights with Stock Power

1. introduction to stock assignment and stock power, 2. understanding ownership rights in stock, 3. the role of stock power in transferring ownership, 4. ways to obtain stock power, 5. filling out a stock power form, 6. executing a stock assignment, 7. legal considerations in stock assignment, 8. common mistakes to avoid in stock assignment, 9. conclusion and final thoughts on stock power and stock assignment.

Stock Assignment and Stock Power are two terms that are commonly used in the world of stocks and investments. They are often used interchangeably, but they refer to two different things. Stock assignment is the process of transferring ownership rights of a stock from one party to another, while Stock Power is a legal document that authorizes the transfer of ownership rights from one party to another. In this section, we will discuss in detail what Stock Assignment and Stock Power are, how they work, and why they are important.

1. What is Stock Assignment?

Stock Assignment refers to the transfer of ownership rights of a stock from one party to another. This process is typically used when an investor wants to sell their shares to someone else. The seller must sign an Assignment of Stock Certificate form, which is a legal document that transfers ownership rights to the buyer . The buyer must then present the form to the company's transfer agent, who will update the company's records to reflect the change in ownership.

2. What is Stock Power?

Stock Power is a legal document that authorizes the transfer of ownership rights from one party to another. It is typically used when an investor wants to transfer their shares to a family member or a trust. The seller must sign a stock Power form , which is a legal document that authorizes the transfer of ownership rights to the buyer. The buyer must then present the form to the company's transfer agent, who will update the company's records to reflect the change in ownership.

3. What are the differences between Stock Assignment and Stock Power?

The main difference between Stock Assignment and Stock Power is the purpose for which they are used. Stock Assignment is used when an investor wants to sell their shares to someone else, while Stock Power is used when an investor wants to transfer their shares to a family member or a trust. Another difference is the legal document that is used. Stock Assignment uses an Assignment of Stock Certificate form, while Stock Power uses a Stock Power form.

4. What are the benefits of Stock Assignment and Stock Power?

The main benefit of Stock Assignment and Stock Power is that they provide a legal framework for transferring ownership rights of a stock from one party to another. This ensures that the transfer is done legally and that the new owner has full ownership rights to the stock. It also ensures that the company's records are updated to reflect the change in ownership, which is important for tax purposes.

5. What are the risks of Stock Assignment and Stock Power?

The main risk of Stock Assignment and Stock Power is that they can be used for fraudulent purposes. For example, someone could forge an Assignment of Stock Certificate or a Stock Power form to transfer ownership rights of a stock to themselves. To mitigate this risk, it is important to use a reputable transfer agent and to verify the authenticity of the legal documents.

6. Which option is better: Stock Assignment or Stock Power?

The choice between Stock Assignment and Stock Power depends on the purpose for which they are being used. If an investor wants to sell their shares to someone else, then Stock Assignment is the better option. If an investor wants to transfer their shares to a family member or a trust, then Stock Power is the better option. It is important to use the correct legal document and to ensure that the transfer is done legally to avoid any potential risks .

Introduction to Stock Assignment and Stock Power - Stock Assignment: Transferring Ownership Rights with Stock Power

When it comes to owning stock, it's important to understand the concept of ownership rights. Ownership rights refer to the various privileges that come with owning stock, such as voting rights and the ability to receive dividends. Understanding these rights is crucial for investors who want to make informed decisions about their investments. In this section, we'll take a closer look at ownership rights in stock and what they mean for investors.

1. Voting Rights

One of the most important ownership rights in stock is the right to vote. When you own stock in a company, you are entitled to vote on certain matters that affect the company. These matters can include electing members to the board of directors, approving mergers or acquisitions, and making changes to the company's bylaws. The number of votes you have is typically based on the number of shares you own. For example, if a company has 1,000 shares outstanding and you own 100 shares, you would have 10% of the voting power.

2. Dividend Rights

Another ownership right in stock is the right to receive dividends. Dividends are payments made by a company to its shareholders, usually on a quarterly basis. The amount of the dividend is typically based on the company's profits and can vary from year to year. If you own stock in a company that pays dividends, you are entitled to a portion of those payments based on the number of shares you own.

3. Liquidation Rights

If a company goes bankrupt or is liquidated, shareholders have the right to a portion of the company's assets. This is known as liquidation rights. However, in most cases, shareholders are the last in line to receive payment after creditors and other stakeholders have been paid.

4. Preemptive Rights

Preemptive rights refer to the right of existing shareholders to purchase additional shares in a company before they are offered to the public. This allows shareholders to maintain their ownership percentage in the company and prevent dilution of their shares.

5. Transferability of Ownership Rights

Ownership rights in stock are transferable, meaning you can sell your shares to another investor. When you sell your shares, you transfer your ownership rights to the buyer. However, it's important to note that some ownership rights, such as voting rights, may be restricted for a period of time after the sale.

Understanding ownership rights in stock is crucial for investors who want to make informed decisions about their investments. Voting rights, dividend rights, liquidation rights, preemptive rights, and transferability of ownership rights are all important concepts to understand. When considering investing in a company, it's important to evaluate these ownership rights and consider the potential risks and rewards .

Understanding Ownership Rights in Stock - Stock Assignment: Transferring Ownership Rights with Stock Power

Stock power plays a crucial role in transferring ownership of stocks from one person to another. Without it, the process would be more complicated and time-consuming. In this section, we will explore the different aspects of stock power and its importance in transferring ownership.

1. Definition of Stock Power: A stock power is a legal document that authorizes the transfer of ownership of a stock from the owner (the "grantor") to another person or entity (the "grantee"). It is also known as a stock assignment or a stock power form. The stock power form contains the details of the stock being transferred, the name of the grantee, and the signature of the grantor.

2. importance of Stock power : Stock power is important because it provides proof of ownership transfer and protects both the grantor and the grantee. With a stock power, the grantor can transfer ownership of the stock without physically delivering the stock certificate. This avoids the risk of loss or theft of the stock certificate. On the other hand, the grantee can prove ownership of the stock through the stock power, which is crucial for selling the stock or receiving dividends.

3. Types of stock Power forms : There are two types of stock power forms: "blank" and "special." A blank stock power form is unsigned and does not specify the name of the grantee. It is commonly used for transferring ownership of stocks to a brokerage firm or for depositing the stocks into a trust account. A special stock power form is signed and specifies the name of the grantee. It is used for transferring ownership of stocks to a specific person or entity.

4. How to Fill Out a Stock Power Form: Filling out a stock power form is a simple process. The grantor needs to sign the form and specify the name of the grantee. The grantee also needs to sign the form to acknowledge receipt of the stock. The completed form should be sent to the transfer agent or the brokerage firm that handles the stock.

5. Alternatives to Stock Power: While stock power is the most common way to transfer ownership of stocks, there are alternatives. One option is to use a trust. The grantor can transfer the stock to a trust and name the grantee as the beneficiary. The grantee will receive the stock upon the grantor's death. Another option is to use a will. The grantor can specify in the will that the stock should be transferred to the grantee upon the grantor's death.

Stock power plays an important role in transferring ownership of stocks. It provides proof of ownership transfer and protects both the grantor and the grantee. There are different types of stock power forms, and filling them out is a simple process. While there are alternatives to stock power, it is the most common way to transfer ownership of stocks.

The Role of Stock Power in Transferring Ownership - Stock Assignment: Transferring Ownership Rights with Stock Power

When it comes to transferring ownership rights with stock power , there are various ways to obtain this crucial document. Whether you are a shareholder looking to transfer your ownership or a company seeking to issue new shares, understanding the different methods available can help streamline the process and ensure a smooth transition of ownership. In this section, we will explore some common ways to obtain stock power, providing insights from different perspectives and comparing several options to determine the best approach.

1. Directly from the Transfer Agent:

One of the most straightforward ways to obtain stock power is by contacting the transfer agent directly. The transfer agent is responsible for maintaining the shareholder records and managing the transfer of ownership. They can provide you with the necessary stock power forms, which typically need to be completed, signed, and notarized before submitting them back to the transfer agent. This method ensures that the required documentation is obtained directly from the authorized party, reducing the risk of errors or fraudulent activity.

2. Online Stock Power Forms:

In today's digital era, many companies offer the convenience of online stock power forms. Shareholders can access these forms through the company's website or a designated platform. Online forms often include step-by-step instructions and may even provide a notary service. This option can save time and effort, as there is no need for physical paperwork or mailing documents. However, it is essential to ensure the online platform is secure and trustworthy, protecting sensitive information from potential cyber threats.

3. Brokerage Firms:

If you hold your shares through a brokerage account, you can obtain stock power through your broker. Brokerage firms typically have their own procedures for transferring ownership and may require specific forms or documentation. Contact your broker to inquire about the process and any associated fees. While this option may be convenient for shareholders who already have a brokerage account, it may not be the best choice for those who prefer a direct relationship with the transfer agent or have shares held outside of a brokerage account.

4. In-person at a Financial Institution:

Some shareholders may prefer to obtain stock power in person, either at their bank or another financial institution . This option allows for face-to-face interaction and immediate access to the necessary forms. However, not all financial institutions offer this service, so it is important to check beforehand. Additionally, consider any associated fees and potential time constraints when opting for this method.

Comparing the different ways to obtain stock power, the best option ultimately depends on your specific circumstances and preferences. If you have a direct relationship with the transfer agent, obtaining stock power directly from them ensures accuracy and eliminates potential intermediaries. On the other hand, online stock power forms can offer convenience and ease of use, particularly for tech-savvy individuals. Brokerage firms provide a viable option for those already utilizing their services, while in-person visits to financial institutions may be preferred by individuals seeking a personal touch.

Understanding the various ways to obtain stock power is crucial for shareholders and companies alike. By exploring the options available and considering the specific requirements and preferences, individuals can choose the most suitable method to transfer ownership rights efficiently and securely.

Ways to Obtain Stock Power - Stock Assignment: Transferring Ownership Rights with Stock Power

When transferring ownership rights with a stock power, there are several important steps to follow. Filling out the stock power form is one of the most crucial steps in this process, as it legally transfers ownership of the stock from one party to another. In this section, we will explore the process of filling out a stock power form, including what information is required, how to properly fill it out, and what to do after it is completed.

1. Understanding the Stock Power Form

A stock power form is a legal document that is used to transfer ownership of stock from one party to another. It is typically used in situations where the actual stock certificate is not available, such as when the stock is held in a brokerage account. The stock power form contains important information about the stock, such as the name of the company, the number of shares being transferred, and the name of the current owner.

2. Gathering the Required Information

Before filling out the stock power form, it is important to gather all of the necessary information. This may include the name of the company that issued the stock, the number of shares being transferred, and the name and contact information of the current owner. It is also important to have the recipient's information on hand, including their name and contact information.

3. Filling Out the Form

When filling out the stock power form, it is important to be accurate and thorough. The form will typically ask for the name and address of the current owner, as well as the name and address of the recipient. It may also ask for the number of shares being transferred, the date of the transfer, and other relevant information. It is important to double-check all of the information before submitting the form.

4. Submitting the Form

Once the stock power form has been filled out, it should be signed and dated by the current owner. Depending on the situation, the form may need to be notarized or witnessed by a third party. The completed form should be submitted to the appropriate parties, such as the brokerage firm or transfer agent.

5. Considerations When Filling Out a Stock Power Form

When filling out a stock power form, it is important to consider several factors. For example, if the stock is being transferred as a gift, it may be subject to gift taxes. It is also important to consider any restrictions or limitations on the transfer of the stock, such as those imposed by the company or by applicable laws and regulations.

6. Best Practices for Filling Out a Stock Power Form

To ensure that the stock power form is filled out correctly and completely, it is important to follow best practices. This may include reviewing the form carefully before submitting it, double-checking all of the information, and seeking professional advice if necessary. It is also important to keep copies of all relevant documents, such as the stock power form and any supporting documentation.

Filling out a stock power form is an important step in transferring ownership rights with a stock power. By following the steps outlined above and considering the relevant factors, it is possible to ensure that the transfer is completed correctly and legally.

Filling out a Stock Power Form - Stock Assignment: Transferring Ownership Rights with Stock Power

Executing a stock assignment is a process that involves transferring ownership rights from one party to another. It is a crucial step in the stock transfer process, and it requires both the assignor and the assignee to follow specific procedures to ensure a smooth transfer of ownership . In this section, we will explore the steps involved in executing a stock assignment and some insights from different points of view.

1. Review the Stock Power Form

Before executing a stock assignment, it is essential to review the stock power form carefully. This document is a legal instrument that transfers ownership rights from the assignor to the assignee. It contains important information, such as the name of the assignor, the name of the assignee, the number of shares being transferred, and the date of the transfer. Both the assignor and the assignee must sign the stock power form in the presence of a notary public.

2. Choose the Right Type of Stock Assignment

There are two types of stock assignments: a full assignment and a limited assignment. A full assignment transfers all ownership rights from the assignor to the assignee, while a limited assignment transfers only specific ownership rights, such as the right to vote or receive dividends. The type of stock assignment you choose depends on your specific needs and circumstances.

3. Consider the Tax Implications

Executing a stock assignment may have tax implications for both the assignor and the assignee. The assignor may be subject to capital gains tax if the stock has appreciated in value since it was acquired. The assignee may be subject to income tax if they receive dividends or sell the stock at a profit. It is important to consult with a tax professional to understand the tax implications of executing a stock assignment.

4. Choose the Right Method of Transfer

There are several methods of transferring ownership rights, including physical delivery, book-entry transfer, and electronic transfer. Physical delivery involves the physical delivery of stock certificates from the assignor to the assignee. Book-entry transfer involves the transfer of ownership rights through an intermediary, such as a stock transfer agent . Electronic transfer involves the transfer of ownership rights through an electronic network, such as the Depository Trust Company (DTC). The method of transfer you choose depends on your specific needs and circumstances.

5. seek Professional assistance

Executing a stock assignment can be a complex process, and it is advisable to seek professional assistance. A stock transfer agent can help you navigate the transfer process and ensure that all necessary procedures are followed. A tax professional can help you understand the tax implications of executing a stock assignment. Seeking professional assistance can help ensure a smooth transfer of ownership rights.

Executing a stock assignment is an essential step in transferring ownership rights from one party to another. It requires careful consideration of the stock power form, the type of stock assignment, the tax implications, the method of transfer, and professional assistance. By following these steps, you can ensure a smooth transfer of ownership rights.

Executing a Stock Assignment - Stock Assignment: Transferring Ownership Rights with Stock Power

When transferring ownership rights with a stock power, legal considerations must be taken into account to ensure a smooth and legally valid transaction. These considerations can vary depending on the type of stock being transferred and the parties involved. Here are some of the key legal considerations to keep in mind:

1. Type of Stock: The type of stock being transferred will impact the legal requirements for the transfer . For example, transferring common stock may require different legal documentation than transferring preferred stock. It's important to understand the specific requirements for the type of stock being transferred.

2. Parties Involved: The parties involved in the transfer will also impact the legal considerations . For example, transferring stock between family members may require different documentation than transferring stock between unrelated parties. It's important to understand the legal requirements based on the parties involved.

3. Tax Implications: The transfer of stock ownership can have tax implications for both the transferor and transferee. It's important to understand the tax consequences of the transfer and to consult with a tax professional if necessary.

4. Securities Laws: The transfer of stock ownership is subject to certain securities laws, including the securities act of 1933 and the Securities Exchange Act of 1934. These laws regulate the sale and transfer of securities and may require certain disclosures or filings.

5. State Laws: State laws may also impact the transfer of stock ownership. For example, some states require specific documentation or filings for stock transfers. It's important to understand the state laws that apply to the transfer.

When considering the legal considerations for stock assignment, it's important to consult with a legal professional to ensure compliance with all applicable laws and regulations. A legal professional can also help determine the best option for transferring ownership rights with a stock power.

Options for transferring ownership rights with a stock power include:

1. Direct Transfer: A direct transfer involves transferring the stock from one party to another without the involvement of a broker or intermediary. This option may be simpler and less expensive, but may require more legal documentation and may not be available for all types of stock.

2. Broker-Assisted Transfer: A broker-assisted transfer involves using a broker to facilitate the transfer of stock ownership. This option may be more expensive, but may be easier and more efficient, particularly for larger transfers or transfers involving multiple parties.

3. Gift Transfer: A gift transfer involves transferring ownership of the stock as a gift. This option may have tax implications for the transferor and transferee and may require additional legal documentation.

Ultimately, the best option for transferring ownership rights with a stock power will depend on the specific circumstances of the transfer. Consulting with a legal professional can help determine the most appropriate option and ensure compliance with all applicable legal requirements.

Legal Considerations in Stock Assignment - Stock Assignment: Transferring Ownership Rights with Stock Power

When it comes to stock assignment, there are several mistakes that people make which can lead to legal and financial complications. It is important to understand the process of transferring ownership rights with stock power and avoid these common mistakes.

1. Failing to Complete the Stock Assignment Form Correctly

One of the most common mistakes made in stock assignment is failing to complete the stock assignment form correctly. This can lead to delays in the transfer of ownership rights and can result in legal complications. It is important to ensure that all the required fields are filled out correctly and that the form is signed and dated by the appropriate parties.

2. Not Having a Properly Endorsed Stock Certificate

Another mistake that people make is not having a properly endorsed stock certificate. This is important because the stock certificate is the physical representation of the ownership rights of the stock. It is important to ensure that the certificate is properly endorsed by the seller and that the buyer has the certificate in their possession.

3. Not understanding the Tax implications of Stock Assignment

Another mistake that people make is not understanding the tax implications of stock assignment. Depending on the circumstances, there may be tax implications for both the buyer and the seller. It is important to consult with a tax professional to understand the tax implications before completing the stock assignment.

4. Not Using a Broker or Transfer Agent

Some people try to complete the stock assignment themselves without using a broker or transfer agent. This can lead to complications and delays in the transfer of ownership rights. It is recommended to use a broker or transfer agent to ensure that the process is completed correctly and efficiently.

5. Not Verifying the Identity of the Buyer or Seller

Finally, it is important to verify the identity of the buyer or seller before completing the stock assignment. This can help to prevent fraud and ensure that the transfer of ownership rights is legitimate. It is recommended to use a reputable broker or transfer agent who can help with this process.

Stock assignment can be a complicated process, but by avoiding these common mistakes, it can be completed successfully. It is important to ensure that the stock assignment form is completed correctly, that the stock certificate is properly endorsed, that the tax implications are understood, and that a reputable broker or transfer agent is used. By following these guidelines, the transfer of ownership rights can be completed efficiently and without complications.

Common Mistakes to Avoid in Stock Assignment - Stock Assignment: Transferring Ownership Rights with Stock Power

Stock Power and Stock Assignment are important concepts in the world of finance and investment. These concepts help investors transfer ownership rights of their stocks to another party. In this blog post, we have discussed the details of these concepts and their implications. We have also analyzed the different perspectives and provided insights on how to use these concepts effectively.

1. Importance of Stock Power and Stock Assignment

Stock Power and Stock Assignment are essential tools for investors who want to transfer ownership rights of their stocks to another party. These concepts enable investors to transfer their stocks without having to go through the hassle of selling them. This is particularly useful in cases where the investor wants to gift the stocks to someone or transfer them to another account.

2. Understanding Stock Power

Stock Power is a legal document that enables the transfer of ownership rights of a stock from one party to another. It is an endorsement that is required by the brokerage firm to transfer the ownership of the stock. The stock power must be signed by the owner of the stock and must be submitted along with the certificate of the stock to the brokerage firm.

3. Understanding Stock Assignment

Stock Assignment is a process where the ownership rights of a stock are transferred from one party to another. The process involves filling out a transfer form and submitting it to the brokerage firm. The transfer form must be signed by the owner of the stock and must be submitted along with the certificate of the stock.

4. pros and Cons of stock Power and Stock Assignment

Stock Power and Stock Assignment have their own advantages and disadvantages. Stock Power is a simpler process that requires the submission of a single document, whereas Stock Assignment involves filling out a transfer form. However, Stock Power can only be used if the certificate of the stock is in the possession of the owner, whereas Stock Assignment can be used even if the certificate is lost or misplaced.

5. Best Option

The best option depends on the situation. If the certificate of the stock is in the possession of the owner, Stock Power is the best option. However, if the certificate is lost or misplaced, Stock Assignment is the better option. In any case, it is important to consult with the brokerage firm to determine the best option.

Stock Power and Stock Assignment are important concepts that enable investors to transfer ownership rights of their stocks. These concepts have their own advantages and disadvantages, and the best option depends on the situation. It is important to consult with the brokerage firm to determine the best option.

Conclusion and Final Thoughts on Stock Power and Stock Assignment - Stock Assignment: Transferring Ownership Rights with Stock Power

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Stock Power: What it is, How it Works, Requirements

What Is Stock Power?

Stock power is a legal power of attorney form that transfers the ownership of certain shares of a stock to a new owner. A stock power transfer form usually is only required when an owner opts to take physical possession of securities certificates, rather than holding securities with a broker. A stock power form includes the previous owner's name, a description of the shares to be transferred, the stock certificates, and the cost basis of the shares. 

Key Takeaways

• Stock power is a power of attorney form that transfers share ownership to a new owner. 
• Stock power is sometimes referred to as a security power form and generally requires a signature guarantee to protect against fraudulent transfers.
• This form is usually only needed when physical possession of security certificates is taken.
•  A stock power form includes the previous owner's name, a description of the shares to be transferred, the stock certificates, and the cost basis of the shares.

How Stock Power Works

A stock power usually requires a signature guarantee to protect against fraudulent transfers. A stock power form is sometimes referred to as a security power form. As mentioned, it’s generally only needed for the transfer of physically held shares, but it may also be needed to change the name on the account or add a transfer of death beneficiary. 

Stock powers can be used in secured lending transactions, where securities are used as collateral for a loan. When this happens, the stock power is signed by the borrower and delivered to the lender, but is not dated or completed. A stock power, in this instance, protects the lender’s interest, allowing them to foreclose on the shares if the loan is not repaid. 

Special Considerations

Most often, when buying or selling shares of stock, a retail investor uses a brokerage firm that will take care of any legal documentation required for the transfer of shares to the new owner. Thus, in the vast majority of cases, the owner of the shares of a stock does not take possession of the share certificates and does not have to complete legal paperwork to buy and sell shares. 

The shares are held in an electronic record with the broker's custodian eliminating the need for physical possession of the shares. However, before technology allowed records to be kept entirely electronically, physical stock certificates were the norm, and it was ubiquitous to use stock powers when transferring ownership of shares from one party to another.

Requirements for a Stock Power 

Stock powers are needed for each account and each security being transferred. All owners must sign the form and generally have their signatures guaranteed with a medallion signature guarantee . In some cases, if a stock power is too old, it might be rejected. 

If the owner of a stock is unable to complete a needed stock power form, the legal representative of that person must sign the form. This can include the Power of Attorney or custodian for someone that is incapacitated or a minor.

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Contract Rights and Spin-off Transactions

Daniel E. Wolf  and David B. Feirstein  are partners at Kirkland & Ellis LLP. This post is based on a Kirkland & Ellis publication by Mr. Wolf and Mr. Feirstein, and is part of the  Delaware law series ; links to other posts in the series are available  here .

Most commercial and corporate contracts provide that the agreement is binding on a party’s “successor and assigns”. This boilerplate clause, coupled with the legal consequences of a stock purchase or merger, covers most corporate transaction scenarios and ensures that the agreement remains with, and binding on, the business that signed the contract.

But the current popularity of corporate “separation” transactions highlights that this simple clause may be insufficient to properly address the consequences of spin-offs and other separation transactions. When a company separates itself into two or more pieces via a spin-off, split-off, carve-out or similar deal structure, it is not clear whether contractual rights and obligation replicate themselves at the separated entity.

To take a simple example, shareholders often negotiate a set of governance rights in a stockholders’ agreement to which the company is a party. What happens to those rights if the company spins-off a portion of the business into a separate independent company? While a party may expect contractual rights to replicate themselves at the new spin-off company, often there is nothing explicit in the agreement that dictates the outcome—the boilerplate “successors and assigns” provision typically is not implicated. In this scenario a party can lose important rights (e.g., vetoes, preemptive rights, board designation rights) as to a significant portion of the business in which it invested if the company does not agree to port the governance rights to the newly independent spin-off company. This very result was highlighted by a Delaware court in a 2015  decision holding that a litigation settlement agreement by News Corporation prohibiting the enactment of a poison pill did not bind its publishing business, which was spun-off as an independent public company.

Parties to contracts may want to consider expanding the standard “successors” clause to cover these scenarios. Here is a sample clause:

S p i n – O ff s or S p l i t – O ff s . In the event that a Party effects the separation of a [material/ substantial] portion of its business into one or more entities (each, a “NewCo”), whether existing or newly formed, including without limitation by way of spin-off, split-off, carve-out, demerger, recapitalization, reorganization or similar transaction, prior to such separation the Party shall cause any such NewCo to enter into an agreement with the other Party that contains rights and obligations of the Parties that are substantially identical to those set forth in this Agreement.

While this language may not be necessary or appropriate for all agreements, parties should consider its inclusion where they are at risk of losing significant benefits of a contract in the event of a separation transaction.

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Stock Assignment Separate from Certificate Transferring Stock to Revocable Trust | Practical Law

Stock Assignment Separate from Certificate Transferring Stock to Revocable Trust

Practical law standard document w-036-2266  (approx. 9 pages).

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• Stock Assignments

Legal “assignment” is the transfer of an individual’s rights or property to another person or business. Essentially, assignment is the transfer of ownership. An example of an assignment agreement is when a person sells his or her car, thereby “assigning” the title to another. If you are moving stocks to a living trust or assigning them to an organization or to an individual, you’ll need to do it with the legal assistance of an experienced Orange County stock assignment attorney at the Citadel Law Corporation. An experienced stock assignment attorney will be familiar with stock assignment contracts and with stock assignment contract law, so you may be certain that your assignment of stock is a legal contract in full compliance with federal and state law.

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A stock assignment contract can operate in several ways, depending upon whether the securities are held by you or by your securities broker, or if you’ve invested in a mutual fund. A stock certificate must be assigned through a contract of assignment, which must be sent to the transfer agent – a person or company responsible for keeping track of the securities issued by a corporation or government – along with the stock certificate. If the stock is publicly traded – that is, bought and sold to the public through a stock exchange – the stockholder’s signature must be guaranteed on the assignment document by a commercial bank or by a stock brokerage firm. Such a guarantee is comparable to having the signature notarized.

EXPERIENCED LEGAL HELP IS HERE

The assignment of brokerage accounts is handled by sending a request to your brokerage firm. The firm will need documentation of the trustee’s powers to deal with securities. Similarly, most mutual funds firms require your guaranteed signature on a letter requesting assignment. The stock assignment attorneys at the Citadel Law Corporation offer experienced legal guidance. Contact an experienced Orange County stock assignment attorney at the Citadel Law Corporation to discuss your legal needs. Call 949-852-8181 to schedule an appointment with an attorney today.

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• assignments basic law

Assignments: The Basic Law

The assignment of a right or obligation is a common contractual event under the law and the right to assign (or prohibition against assignments) is found in the majority of agreements, leases and business structural documents created in the United States.

As with many terms commonly used, people are familiar with the term but often are not aware or fully aware of what the terms entail. The concept of assignment of rights and obligations is one of those simple concepts with wide ranging ramifications in the contractual and business context and the law imposes severe restrictions on the validity and effect of assignment in many instances. Clear contractual provisions concerning assignments and rights should be in every document and structure created and this article will outline why such drafting is essential for the creation of appropriate and effective contracts and structures.

The reader should first read the article on Limited Liability Entities in the United States and Contracts since the information in those articles will be assumed in this article.

Basic Definitions and Concepts:

An assignment is the transfer of rights held by one party called the “assignor” to another party called the “assignee.” The legal nature of the assignment and the contractual terms of the agreement between the parties determines some additional rights and liabilities that accompany the assignment. The assignment of rights under a contract usually completely transfers the rights to the assignee to receive the benefits accruing under the contract. Ordinarily, the term assignment is limited to the transfer of rights that are intangible, like contractual rights and rights connected with property. Merchants Service Co. v. Small Claims Court , 35 Cal. 2d 109, 113-114 (Cal. 1950).

An assignment will generally be permitted under the law unless there is an express prohibition against assignment in the underlying contract or lease. Where assignments are permitted, the assignor need not consult the other party to the contract but may merely assign the rights at that time. However, an assignment cannot have any adverse effect on the duties of the other party to the contract, nor can it diminish the chance of the other party receiving complete performance. The assignor normally remains liable unless there is an agreement to the contrary by the other party to the contract.

The effect of a valid assignment is to remove privity between the assignor and the obligor and create privity between the obligor and the assignee. Privity is usually defined as a direct and immediate contractual relationship. See Merchants case above.

Further, for the assignment to be effective in most jurisdictions, it must occur in the present. One does not normally assign a future right; the assignment vests immediate rights and obligations.

No specific language is required to create an assignment so long as the assignor makes clear his/her intent to assign identified contractual rights to the assignee. Since expensive litigation can erupt from ambiguous or vague language, obtaining the correct verbiage is vital. An agreement must manifest the intent to transfer rights and can either be oral or in writing and the rights assigned must be certain.

Note that an assignment of an interest is the transfer of some identifiable property, claim, or right from the assignor to the assignee. The assignment operates to transfer to the assignee all of the rights, title, or interest of the assignor in the thing assigned. A transfer of all rights, title, and interests conveys everything that the assignor owned in the thing assigned and the assignee stands in the shoes of the assignor. Knott v. McDonald’s Corp ., 985 F. Supp. 1222 (N.D. Cal. 1997)

The parties must intend to effectuate an assignment at the time of the transfer, although no particular language or procedure is necessary. As long ago as the case of National Reserve Co. v. Metropolitan Trust Co ., 17 Cal. 2d 827 (Cal. 1941), the court held that in determining what rights or interests pass under an assignment, the intention of the parties as manifested in the instrument is controlling.

The intent of the parties to an assignment is a question of fact to be derived not only from the instrument executed by the parties but also from the surrounding circumstances. When there is no writing to evidence the intention to transfer some identifiable property, claim, or right, it is necessary to scrutinize the surrounding circumstances and parties’ acts to ascertain their intentions. Strosberg v. Brauvin Realty Servs., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998)

The general rule applicable to assignments of choses in action is that an assignment, unless there is a contract to the contrary, carries with it all securities held by the assignor as collateral to the claim and all rights incidental thereto and vests in the assignee the equitable title to such collateral securities and incidental rights. An unqualified assignment of a contract or chose in action, however, with no indication of the intent of the parties, vests in the assignee the assigned contract or chose and all rights and remedies incidental thereto.

More examples: In Strosberg v. Brauvin Realty Servs ., 295 Ill. App. 3d 17 (Ill. App. Ct. 1st Dist. 1998), the court held that the assignee of a party to a subordination agreement is entitled to the benefits and is subject to the burdens of the agreement. In Florida E. C. R. Co. v. Eno , 99 Fla. 887 (Fla. 1930), the court held that the mere assignment of all sums due in and of itself creates no different or other liability of the owner to the assignee than that which existed from the owner to the assignor.

And note that even though an assignment vests in the assignee all rights, remedies, and contingent benefits which are incidental to the thing assigned, those which are personal to the assignor and for his sole benefit are not assigned. Rasp v. Hidden Valley Lake, Inc ., 519 N.E.2d 153, 158 (Ind. Ct. App. 1988). Thus, if the underlying agreement provides that a service can only be provided to X, X cannot assign that right to Y.

Novation Compared to Assignment:

Although the difference between a novation and an assignment may appear narrow, it is an essential one. “Novation is a act whereby one party transfers all its obligations and benefits under a contract to a third party.” In a novation, a third party successfully substitutes the original party as a party to the contract. “When a contract is novated, the other contracting party must be left in the same position he was in prior to the novation being made.”

A sublease is the transfer when a tenant retains some right of reentry onto the leased premises. However, if the tenant transfers the entire leasehold estate, retaining no right of reentry or other reversionary interest, then the transfer is an assignment. The assignor is normally also removed from liability to the landlord only if the landlord consents or allowed that right in the lease. In a sublease, the original tenant is not released from the obligations of the original lease.

Equitable Assignments:

An equitable assignment is one in which one has a future interest and is not valid at law but valid in a court of equity. In National Bank of Republic v. United Sec. Life Ins. & Trust Co. , 17 App. D.C. 112 (D.C. Cir. 1900), the court held that to constitute an equitable assignment of a chose in action, the following has to occur generally: anything said written or done, in pursuance of an agreement and for valuable consideration, or in consideration of an antecedent debt, to place a chose in action or fund out of the control of the owner, and appropriate it to or in favor of another person, amounts to an equitable assignment. Thus, an agreement, between a debtor and a creditor, that the debt shall be paid out of a specific fund going to the debtor may operate as an equitable assignment.

In Egyptian Navigation Co. v. Baker Invs. Corp. , 2008 U.S. Dist. LEXIS 30804 (S.D.N.Y. Apr. 14, 2008), the court stated that an equitable assignment occurs under English law when an assignor, with an intent to transfer his/her right to a chose in action, informs the assignee about the right so transferred.

An executory agreement or a declaration of trust are also equitable assignments if unenforceable as assignments by a court of law but enforceable by a court of equity exercising sound discretion according to the circumstances of the case. Since California combines courts of equity and courts of law, the same court would hear arguments as to whether an equitable assignment had occurred. Quite often, such relief is granted to avoid fraud or unjust enrichment.

Note that obtaining an assignment through fraudulent means invalidates the assignment. Fraud destroys the validity of everything into which it enters. It vitiates the most solemn contracts, documents, and even judgments. Walker v. Rich , 79 Cal. App. 139 (Cal. App. 1926). If an assignment is made with the fraudulent intent to delay, hinder, and defraud creditors, then it is void as fraudulent in fact. See our article on Transfers to Defraud Creditors .

But note that the motives that prompted an assignor to make the transfer will be considered as immaterial and will constitute no defense to an action by the assignee, if an assignment is considered as valid in all other respects.

Enforceability of Assignments:

Whether a right under a contract is capable of being transferred is determined by the law of the place where the contract was entered into. The validity and effect of an assignment is determined by the law of the place of assignment. The validity of an assignment of a contractual right is governed by the law of the state with the most significant relationship to the assignment and the parties.

In some jurisdictions, the traditional conflict of laws rules governing assignments has been rejected and the law of the place having the most significant contacts with the assignment applies. In Downs v. American Mut. Liability Ins. Co ., 14 N.Y.2d 266 (N.Y. 1964), a wife and her husband separated and the wife obtained a judgment of separation from the husband in New York. The judgment required the husband to pay a certain yearly sum to the wife. The husband assigned 50 percent of his future salary, wages, and earnings to the wife. The agreement authorized the employer to make such payments to the wife.

After the husband moved from New York, the wife learned that he was employed by an employer in Massachusetts. She sent the proper notice and demanded payment under the agreement. The employer refused and the wife brought an action for enforcement. The court observed that Massachusetts did not prohibit assignment of the husband’s wages. Moreover, Massachusetts law was not controlling because New York had the most significant relationship with the assignment. Therefore, the court ruled in favor of the wife.

Therefore, the validity of an assignment is determined by looking to the law of the forum with the most significant relationship to the assignment itself. To determine the applicable law of assignments, the court must look to the law of the state which is most significantly related to the principal issue before it.

Assignment of Contractual Rights:

Generally, the law allows the assignment of a contractual right unless the substitution of rights would materially change the duty of the obligor, materially increase the burden or risk imposed on the obligor by the contract, materially impair the chance of obtaining return performance, or materially reduce the value of the performance to the obligor. Restat 2d of Contracts, § 317(2)(a). This presumes that the underlying agreement is silent on the right to assign.

If the contract specifically precludes assignment, the contractual right is not assignable. Whether a contract is assignable is a matter of contractual intent and one must look to the language used by the parties to discern that intent.

In the absence of an express provision to the contrary, the rights and duties under a bilateral executory contract that does not involve personal skill, trust, or confidence may be assigned without the consent of the other party. But note that an assignment is invalid if it would materially alter the other party’s duties and responsibilities. Once an assignment is effective, the assignee stands in the shoes of the assignor and assumes all of assignor’s rights. Hence, after a valid assignment, the assignor’s right to performance is extinguished, transferred to assignee, and the assignee possesses the same rights, benefits, and remedies assignor once possessed. Robert Lamb Hart Planners & Architects v. Evergreen, Ltd. , 787 F. Supp. 753 (S.D. Ohio 1992).

On the other hand, an assignee’s right against the obligor is subject to “all of the limitations of the assignor’s right, all defenses thereto, and all set-offs and counterclaims which would have been available against the assignor had there been no assignment, provided that these defenses and set-offs are based on facts existing at the time of the assignment.” See Robert Lamb , case, above.

The power of the contract to restrict assignment is broad. Usually, contractual provisions that restrict assignment of the contract without the consent of the obligor are valid and enforceable, even when there is statutory authorization for the assignment. The restriction of the power to assign is often ineffective unless the restriction is expressly and precisely stated. Anti-assignment clauses are effective only if they contain clear, unambiguous language of prohibition. Anti-assignment clauses protect only the obligor and do not affect the transaction between the assignee and assignor.

Usually, a prohibition against the assignment of a contract does not prevent an assignment of the right to receive payments due, unless circumstances indicate the contrary. Moreover, the contracting parties cannot, by a mere non-assignment provision, prevent the effectual alienation of the right to money which becomes due under the contract.

A contract provision prohibiting or restricting an assignment may be waived, or a party may so act as to be estopped from objecting to the assignment, such as by effectively ratifying the assignment. The power to void an assignment made in violation of an anti-assignment clause may be waived either before or after the assignment. See our article on Contracts.

Noncompete Clauses and Assignments:

Of critical import to most buyers of businesses is the ability to ensure that key employees of the business being purchased cannot start a competing company. Some states strictly limit such clauses, some do allow them. California does restrict noncompete clauses, only allowing them under certain circumstances. A common question in those states that do allow them is whether such rights can be assigned to a new party, such as the buyer of the buyer.

A covenant not to compete, also called a non-competitive clause, is a formal agreement prohibiting one party from performing similar work or business within a designated area for a specified amount of time. This type of clause is generally included in contracts between employer and employee and contracts between buyer and seller of a business.

Many workers sign a covenant not to compete as part of the paperwork required for employment. It may be a separate document similar to a non-disclosure agreement, or buried within a number of other clauses in a contract. A covenant not to compete is generally legal and enforceable, although there are some exceptions and restrictions.

Whenever a company recruits skilled employees, it invests a significant amount of time and training. For example, it often takes years before a research chemist or a design engineer develops a workable knowledge of a company’s product line, including trade secrets and highly sensitive information. Once an employee gains this knowledge and experience, however, all sorts of things can happen. The employee could work for the company until retirement, accept a better offer from a competing company or start up his or her own business.

A covenant not to compete may cover a number of potential issues between employers and former employees. Many companies spend years developing a local base of customers or clients. It is important that this customer base not fall into the hands of local competitors. When an employee signs a covenant not to compete, he or she usually agrees not to use insider knowledge of the company’s customer base to disadvantage the company. The covenant not to compete often defines a broad geographical area considered off-limits to former employees, possibly tens or hundreds of miles.

Another area of concern covered by a covenant not to compete is a potential ‘brain drain’. Some high-level former employees may seek to recruit others from the same company to create new competition. Retention of employees, especially those with unique skills or proprietary knowledge, is vital for most companies, so a covenant not to compete may spell out definite restrictions on the hiring or recruiting of employees.

A covenant not to compete may also define a specific amount of time before a former employee can seek employment in a similar field. Many companies offer a substantial severance package to make sure former employees are financially solvent until the terms of the covenant not to compete have been met.

Because the use of a covenant not to compete can be controversial, a handful of states, including California, have largely banned this type of contractual language. The legal enforcement of these agreements falls on individual states, and many have sided with the employee during arbitration or litigation. A covenant not to compete must be reasonable and specific, with defined time periods and coverage areas. If the agreement gives the company too much power over former employees or is ambiguous, state courts may declare it to be overbroad and therefore unenforceable. In such case, the employee would be free to pursue any employment opportunity, including working for a direct competitor or starting up a new company of his or her own.

It has been held that an employee’s covenant not to compete is assignable where one business is transferred to another, that a merger does not constitute an assignment of a covenant not to compete, and that a covenant not to compete is enforceable by a successor to the employer where the assignment does not create an added burden of employment or other disadvantage to the employee. However, in some states such as Hawaii, it has also been held that a covenant not to compete is not assignable and under various statutes for various reasons that such covenants are not enforceable against an employee by a successor to the employer. Hawaii v. Gannett Pac. Corp. , 99 F. Supp. 2d 1241 (D. Haw. 1999)

It is vital to obtain the relevant law of the applicable state before drafting or attempting to enforce assignment rights in this particular area.

Conclusion:

In the current business world of fast changing structures, agreements, employees and projects, the ability to assign rights and obligations is essential to allow flexibility and adjustment to new situations. Conversely, the ability to hold a contracting party into the deal may be essential for the future of a party. Thus, the law of assignments and the restriction on same is a critical aspect of every agreement and every structure. This basic provision is often glanced at by the contracting parties, or scribbled into the deal at the last minute but can easily become the most vital part of the transaction.

As an example, one client of ours came into the office outraged that his co venturer on a sizable exporting agreement, who had excellent connections in Brazil, had elected to pursue another venture instead and assigned the agreement to a party unknown to our client and without the business contacts our client considered vital. When we examined the handwritten agreement our client had drafted in a restaurant in Sao Paolo, we discovered there was no restriction on assignment whatsoever…our client had not even considered that right when drafting the agreement after a full day of work.

One choses who one does business with carefully…to ensure that one’s choice remains the party on the other side of the contract, one must master the ability to negotiate proper assignment provisions.

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Assignability and Transferability of Stock Rights Contract Clauses (92)

Grouped into 1 collection of similar clauses from business contracts.

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Assignment of Stock - Free Legal Form

Check our free sample assignment of stock legal form. 1 min read updated on February 01, 2023

Assignment of Stock Form

For good and valuable consideration, receipt of which is hereby acknowledged, I, [Name] the undersigned, residing at [Address] hereby sell, assign and transfer to [Name], residing at [Address], [Number] shares of the stock of [Name of Corporation] (the "Corporation") standing in my name on the books of the Corporation, represented by Certificate No. [Certificate Number], and hereby irrevocably constitute and appoint [Name], attorney-in-fact to transfer the stock on the books of the within named Corporation, with full power of substitution in the premises.

Dated: [Month, Day, Year] In the presence of: ________________________ Signature of Witness ________________________ Signature

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Assignment clause defined.

Assignment clauses are legally binding provisions in contracts that give a party the chance to engage in a transfer of ownership or assign their contractual obligations and rights to a different contracting party.

In other words, an assignment clause can reassign contracts to another party. They can commonly be seen in contracts related to business purchases.

Here’s an article about assignment clauses.

Assignment Clause Explained

Assignment contracts are helpful when you need to maintain an ongoing obligation regardless of ownership. Some agreements have limitations or prohibitions on assignments, while other parties can freely enter into them.

Here’s another article about assignment clauses.

Purpose of Assignment Clause

The purpose of assignment clauses is to establish the terms around transferring contractual obligations. The Uniform Commercial Code (UCC) permits the enforceability of assignment clauses.

Assignment Clause Examples

Examples of assignment clauses include:

• Example 1 . A business closing or a change of control occurs
• Example 2 . New services providers taking over existing customer contracts
• Example 3 . Unique real estate obligations transferring to a new property owner as a condition of sale
• Example 4 . Many mergers and acquisitions transactions, such as insurance companies taking over customer policies during a merger

Here’s an article about the different types of assignment clauses.

Assignment Clause Samples

Sample 1 – sales contract.

Assignment; Survival .  Neither party shall assign all or any portion of the Contract without the other party’s prior written consent, which consent shall not be unreasonably withheld; provided, however, that either party may, without such consent, assign this Agreement, in whole or in part, in connection with the transfer or sale of all or substantially all of the assets or business of such Party relating to the product(s) to which this Agreement relates. The Contract shall bind and inure to the benefit of the successors and permitted assigns of the respective parties. Any assignment or transfer not in accordance with this Contract shall be void. In order that the parties may fully exercise their rights and perform their obligations arising under the Contract, any provisions of the Contract that are required to ensure such exercise or performance (including any obligation accrued as of the termination date) shall survive the termination of the Contract.

Reference :

Security Exchange Commission - Edgar Database,  EX-10.29 3 dex1029.htm SALES CONTRACT , Viewed May 10, 2021, <  https://www.sec.gov/Archives/edgar/data/1492426/000119312510226984/dex1029.htm >.

Sample 2 – Purchase and Sale Agreement

Assignment . Purchaser shall not assign this Agreement or any interest therein to any Person, without the prior written consent of Seller, which consent may be withheld in Seller’s sole discretion. Notwithstanding the foregoing, upon prior written notice to Seller, Purchaser may designate any Affiliate as its nominee to receive title to the Property, or assign all of its right, title and interest in this Agreement to any Affiliate of Purchaser by providing written notice to Seller no later than five (5) Business Days prior to the Closing; provided, however, that (a) such Affiliate remains an Affiliate of Purchaser, (b) Purchaser shall not be released from any of its liabilities and obligations under this Agreement by reason of such designation or assignment, (c) such designation or assignment shall not be effective until Purchaser has provided Seller with a fully executed copy of such designation or assignment and assumption instrument, which shall (i) provide that Purchaser and such designee or assignee shall be jointly and severally liable for all liabilities and obligations of Purchaser under this Agreement, (ii) provide that Purchaser and its designee or assignee agree to pay any additional transfer tax as a result of such designation or assignment, (iii) include a representation and warranty in favor of Seller that all representations and warranties made by Purchaser in this Agreement are true and correct with respect to such designee or assignee as of the date of such designation or assignment, and will be true and correct as of the Closing, and (iv) otherwise be in form and substance satisfactory to Seller and (d) such Assignee is approved by Manager as an assignee of the Management Agreement under Article X of the Management Agreement. For purposes of this Section 16.4, “Affiliate” shall include any direct or indirect member or shareholder of the Person in question, in addition to any Person that would be deemed an Affiliate pursuant to the definition of “Affiliate” under Section 1.1 hereof and not by way of limitation of such definition.

Security Exchange Commission - Edgar Database,  EX-10.8 3 dex108.htm PURCHASE AND SALE AGREEMENT , Viewed May 10, 2021, < https://www.sec.gov/Archives/edgar/data/1490985/000119312510160407/dex108.htm >.

Sample 3 – Share Purchase Agreement

Assignment . Neither this Agreement nor any right or obligation hereunder may be assigned by any Party without the prior written consent of the other Parties, and any attempted assignment without the required consents shall be void.

Security Exchange Commission - Edgar Database,  EX-4.12 3 dex412.htm SHARE PURCHASE AGREEMENT , Viewed May 10, 2021, < https://www.sec.gov/Archives/edgar/data/1329394/000119312507148404/dex412.htm >.

Sample 4 – Asset Purchase Agreement

Assignment . This Agreement and any of the rights, interests, or obligations incurred hereunder, in part or as a whole, at any time after the Closing, are freely assignable by Buyer. This Agreement and any of the rights, interests, or obligations incurred hereunder, in part or as a whole, are assignable by Seller only upon the prior written consent of Buyer, which consent shall not be unreasonably withheld. This Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns.

Security Exchange Commission - Edgar Database,  EX-2.1 2 dex21.htm ASSET PURCHASE AGREEMENT , Viewed May 10, 2021, < https://www.sec.gov/Archives/edgar/data/1428669/000119312510013625/dex21.htm >.

Sample 5 – Asset Purchase Agreement

Assignment; Binding Effect; Severability

This Agreement may not be assigned by any party hereto without the other party’s written consent; provided, that Buyer may transfer or assign in whole or in part to one or more Buyer Designee its right to purchase all or a portion of the Purchased Assets, but no such transfer or assignment will relieve Buyer of its obligations hereunder. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the successors, legal representatives and permitted assigns of each party hereto. The provisions of this Agreement are severable, and in the event that any one or more provisions are deemed illegal or unenforceable the remaining provisions shall remain in full force and effect unless the deletion of such provision shall cause this Agreement to become materially adverse to either party, in which event the parties shall use reasonable commercial efforts to arrive at an accommodation that best preserves for the parties the benefits and obligations of the offending provision.

Security Exchange Commission - Edgar Database,  EX-2.4 2 dex24.htm ASSET PURCHASE AGREEMENT , Viewed May 10, 2021, < https://www.sec.gov/Archives/edgar/data/1002047/000119312511171858/dex24.htm >.

Common Contracts with Assignment Clauses

Common contracts with assignment clauses include:

• Real estate contracts
• Sales contract
• Asset purchase agreement
• Purchase and sale agreement
• Bill of sale
• Assignment and transaction financing agreement

Assignment Clause FAQs

Assignment clauses are powerful when used correctly. Check out the assignment clause FAQs below to learn more:

What is an assignment clause in real estate?

Assignment clauses in real estate transfer legal obligations from one owner to another party. They also allow house flippers to engage in a contract negotiation with a seller and then assign the real estate to the buyer while collecting a fee for their services. Real estate lawyers assist in the drafting of assignment clauses in real estate transactions.

What does no assignment clause mean?

No assignment clauses prohibit the transfer or assignment of contract obligations from one part to another.

What’s the purpose of the transfer and assignment clause in the purchase agreement?

The purpose of the transfer and assignment clause in the purchase agreement is to protect all involved parties’ rights and ensure that assignments are not to be unreasonably withheld. Contract lawyers can help you avoid legal mistakes when drafting your business contracts’ transfer and assignment clauses.

Benjamin W.

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Tayane M. Oliveira is a founding partner at Vannucci Oliveira. With a concentration in family law, Tayane is renowned for her commitment to providing compassionate yet powerful representation to her clients. Her experience as an associate attorney at Brodzki Jacobs & Brook, coupled with her unwavering dedication to her clients' welfare, prepared her for her current role at Vannucci Oliveira. Tayane's academic achievements are a testament to her rigorous intellectual curiosity and dedication to her profession. She graduated with a Bachelor of Arts degree in Criminal Justice, supplemented by a minor in Psychology, from Florida Atlantic University in 2013. The culmination of her academic pursuit came in 2017, when she earned her Juris Doctor degree, cum laude, from the esteemed Nova Southeastern University's Shepard Broad College of Law. Before co-founding Vannucci Oliveira, Tayane honed her skills in the heat of the courtroom, representing clients in an array of general civil litigation matters. This diversified exposure instilled in her an ability to tackle complex legal challenges, a skill she employs to benefit her clients in family law. Originally from Brazil, Tayane brings an international perspective to her practice. When not delving into legal briefs or advocating for her clients, she indulges in travelling, reading, spoiling her puppies, and exercising, activities that not only rejuvenate her but also provide her with a broader perspective on the world and her practice. *Supreme Court Certified Portuguese Speaking Mediator

P. McCoy Smith is the Founding Attorney at Lex Pan Law LLC, a full-service technology and intellectual property law firm based in Portland, Oregon, U.S.A and Opsequio LLC, an open source compliance consultancy. Prior to his current position, he spent 20 years in the legal department of a Fortune 50 multinational technology company as a business unit intellectual property specialist; among his duties was setting up the free & open source legal function and policies for that company. He preceded his in-house experience with 8 years in private practice in a large New York City-based boutique intellectual property law firm, working simultaneously as a U.S. patent litigator and U.S. patent prosecutor. He was also a patent examiner at the U.S. Patent & Trademark Office prior to attending law school. He is licensed to practice law in Oregon, California & New York and to prosecute patent applications in the U.S. Patent & Trademark Office; he is also a registered Trademark and Patent Agent with the Canadian Intellectual Property Office. He has degrees from Colorado State University (Bachelor of Science, Mechanical Engineering, with honors), Johns Hopkins University (Masters of Liberal Arts) and the University of Virginia (Juris Doctor). While in private practice, and continuing into his in-house career, he taught portions of the U.S. patent bar exam for a long-standing and well-known patent bar exam preparation course, and from 2014-2020 was on the editorial board of the Journal of Open Law, Technology & Society (JOLTS), and starting in 2023 will be on the editorial board of the American Intellectual Property Law Quarterly Journal (AIPLAQJ). He is the author or co-author of chapters on open source and copyright and patents in “Open Source Law, Policy & Practice” (2022, Oxford University Press). He lectures frequently around the world on free and open source issues as well as other intellectual property topics.

Eliza brings a distinguished track record of delivering outstanding results for her clients, showcasing expertise across a spectrum of legal areas. Eliza is not just an attorney; she's your dedicated advocate with a proven record of achieving excellent results for her clients. Her representation spans numerous family law cases, including dissolutions, custody, support, probate, and civil litigation matters. Eliza's unique background as a Registered Nurse and licensed Attorney sets her apart. Before establishing her law practice, she served as a Registered Nurse in various hospitals across Los Angeles and the Bay Area. Notably, she contributed to prominent institutions such as Los Angeles County Public Health and the City of Anaheim. Additionally, Eliza ventured into entrepreneurship, managing her own Professional Fiduciary and Consulting business. Her legal acumen extends to civil litigation, personal injury, medical malpractice, nursing home abuse, worker's compensation, and family law matters. Eliza earned her Bachelor's Degree in Nursing and Public Health from CSU Dominguez Hills. In 2008, she furthered her education, obtaining a Master's Degree in Nursing, Administration, and Healthcare Management, along with a Quality Improvement Certificate. Eliza culminated her academic journey by earning her law degree from the JFK University of Law in 2016. Eliza's multidisciplinary background uniquely positions her to navigate the intricacies of legal matters, offering a comprehensive and compassionate approach to her client's diverse needs. Eliza's diverse background uniquely positions her to understand and address your legal needs comprehensively. Trust her to navigate your case with care and dedication, ensuring you receive the support you deserve.

Committed to a career in advocacy as an attorney, educator, and consultant, I specialize in education, family, personal injury, and criminal law. While at John Rue & Associates LLC, I led litigation and alternative dispute resolution, handling complex class-action lawsuits involving discrimination, privacy, administrative, and education law. I also directed conflict resolution through mediation, reducing costs and securing favorable client outcomes. While in law school, I served as a law clerk at Wilson Elser, excelling in crafting answers, overseeing discovery, attending depositions, and conducting exhaustive legal research. My responsibilities extended to preparing deposition summaries, assisting in motion practice, drafting persuasive briefs, evaluating cases, and contributing to trial preparations. I thrived in managing client affairs, supporting colleagues, and ensuring compliance with relevant laws. I am eager to explore opportunities to contribute my skills and passion to impactful projects aligned with client needs. I look forward to discussing opportunities and demonstrating how my qualifications will meet client needs.

Legal professional with 10+ years of Fortune 500 in-house and AmLaw 50 law firm experience in crafting multi-pronged litigation, regulatory, and public policy strategies and negotiating pioneering, high-stakes global cloud services and digital content distribution deals.

Ido Alexander is dedicated to helping his clients identify risks and understand how to navigate the unknowns. He has a keen ability to sort through the noise to develop strategies for growth and advance clients' interests. An experienced counsel, he focuses on finding solutions for businesses, estate planning needs, helping resolve complex and strategic disputes, and at times restructuring through bankruptcy or out of court, while keeping his clients' financial health as the top priority.

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Spotting issues with assignment clauses in M&A Due Diligence

Written by: Kira Systems

January 19, 2016

6 minute read

Although not nearly as complex as change of control provisions , assignment provisions may still present a challenge in due diligence projects. We hope this blog post will help you navigate the ambiguities of assignment clauses with greater ease by explaining some of the common variations. (And, if you like it, please check out our full guide on Reviewing Change of Control and Assignment Provisions in Due Diligence. )

What is an Assignment Clause?

First, the basics:

Anti-assignment clauses are common because without them, generally, contracts are freely assignable. (The exceptions are (i) contracts that are subject to statutes or public policies prohibiting their assignment, such as intellectual property contracts, or (ii) contracts where an assignment without consent would cause material and adverse consequences to non-assigning counterparties, such as employment agreements and consulting agreements.) For all other contracts, parties may want an anti-assignment clause that allows them the opportunity to review and understand the impact of an assignment (or change of control) before deciding whether to continue or terminate the relationship.

In the mergers and acquisitions context, an assignment of a contract from a target company entity to the relevant acquirer entity is needed whenever a contract has to be placed in the name of an entity other than the existing target company entity after consummation of a transaction. This is why reviewing contracts for assignment clauses is so critical.

A simple anti-assignment provision provides that a party may not assign the agreement without the consent of the other party. Assignment provisions may also provide specific exclusions or inclusions to a counterparty’s right to consent to the assignment of a contract. Below are five common occurrences in which assignment provisions may provide exclusions or inclusions.

Common Exclusions and Inclusions

Exclusion for change of control transactions.

In negotiating an anti-assignment clause, a company would typically seek the exclusion of assignments undertaken in connection with change of control transactions, including mergers and sales of all or substantially all of the assets of the company. This allows a company to undertake a strategic transaction without worry. If an anti-assignment clause doesn’t exclude change of control transactions, a counterparty might materially affect a strategic transaction through delay and/or refusal of consent. Because there are many types of change of control transactions, there is no standard language for these. An example might be:

In the event of the sale or transfer by [Party B] of all or substantially all of its assets related to this Agreement to an Affiliate or to a third party, whether by sale, merger, or change of control, [Party B] would have the right to assign any or all rights and obligations contained herein and the Agreement to such Affiliate or third party without the consent of [Party A] and the Agreement shall be binding upon such acquirer and would remain in full force and effect, at least until the expiration of the then current Term.

Exclusion for Affiliate Transactions

A typical exclusion is one that allows a target company to assign a contract to an affiliate without needing the consent of the contract counterparty. This is much like an exclusion with respect to change of control, since in affiliate transfers or assignments, the ultimate actors and responsible parties under the contract remain essentially the same even though the nominal parties may change. For example:

Either party may assign its rights under this Agreement, including its right to receive payments hereunder, to a subsidiary, affiliate or any financial institution, but in such case the assigning party shall remain liable to the other party for the assigning party’s obligations hereunder. All or any portion of the rights and obligations of [Party A] under this Agreement may be transferred by [Party A] to any of its Affiliates without the consent of [Party B].

Assignment by Operation of Law

Assignments by operation of law typically occur in the context of transfers of rights and obligations in accordance with merger statutes and can be specifically included in or excluded from assignment provisions. An inclusion could be negotiated by the parties to broaden the anti-assignment clause and to ensure that an assignment occurring by operation of law requires counterparty approval:

[Party A] agrees that it will not assign, sublet or otherwise transfer its rights hereunder, either voluntarily or by operations of law, without the prior written consent of [Party B].

while an exclusion could be negotiated by a target company to make it clear that it has the right to assign the contract even though it might otherwise have that right as a matter of law:

This Guaranty shall be binding upon the successors and assigns of [Party A]; provided, that no transfer, assignment or delegation by [Party A], other than a transfer, assignment or delegation by operation of law, without the consent of [Party B], shall release [Party A] from its liabilities hereunder.

This helps settle any ambiguity regarding assignments and their effects under mergers statutes (particularly in forward triangular mergers and forward mergers since the target company ceases to exist upon consummation of the merger).

Direct or Indirect Assignment

More ambiguity can arise regarding which actions or transactions require a counterparty’s consent when assignment clauses prohibit both direct and indirect assignments without the consent of a counterparty. Transaction parties will typically choose to err on the side of over-inclusiveness in determining which contracts will require consent when dealing with material contracts. An example clause prohibiting direct or indirect assignment might be:

Except as provided hereunder or under the Merger Agreement, such Shareholder shall not, directly or indirectly, (i) transfer (which term shall include any sale, assignment, gift, pledge, hypothecation or other disposition), or consent to or permit any such transfer of, any or all of its Subject Shares, or any interest therein.

“Transfer” of Agreement vs. “Assignment” of Agreement

In some instances, assignment provisions prohibit “transfers” of agreements in addition to, or instead of, explicitly prohibiting “assignments”. Often, the word “transfer” is not defined in the agreement, in which case the governing law of the contract will determine the meaning of the term and whether prohibition on transfers are meant to prohibit a broader or narrower range of transactions than prohibitions on assignments. Note that the current jurisprudence on the meaning of an assignment is broader and deeper than it is on the meaning of a transfer. In the rarer case where “transfer” is defined, it might look like this:

As used in this Agreement, the term “transfer” includes the Franchisee’s voluntary, involuntary, direct or indirect assignment, sale, gift or other disposition of any interest in…

The examples listed above are only of five common occurrences in which an assignment provision may provide exclusions or inclusions. As you continue with due diligence review, you may find that assignment provisions offer greater variety beyond the factors discussed in this blog post. However, you now have a basic understand of the possible variations of assignment clauses. For a more in-depth discussion of reviewing change of control and assignment provisions in due diligence, please download our full guide on Reviewing Change of Control and Assignment Provisions in Due Diligence.

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Ways to Structure Company Sales and Purchases (M&A Deal Structures) – Part 2

Another reason asset deals are a little more work from a documentation standpoint compared to stock deals and statutory mergers is due to the question of whether or not the buyer and seller need approval of third parties. These third parties may include parties to the selling company’s customer contracts, vendor agreements, leases, etc. The general common law rule is that contracts are assignable. If you and I have a contract that says I’ll buy your 1962 Ford Mustang, the law allows me to assign the contract, and consequently, my obligation to buy the car, to another person (although the assignment may not actually get me off the hook for buying the car if the person I assign it to does not). As with just about every area in the law, there are some exceptions, such as contracts involving professional or artistic skills (if our contract instead says I’ll pay you $100 to sing at my daughter’s wedding, your services are considered unique and personal and you can’t just assign away your obligation in that case). Nevertheless, the general rule is contracts are freely assignable.

In practice, however, contracts often generally freely assignable. This is because it is very common, particularly with commercial contracts, for a contract to contain language to the following effect – “Company XYZ shall not assign this agreement without the prior written approval of Company ABC.” Lawyers call this is an anti-assignment clause (creative name, don’t you think?). The clause we just referenced is a basic, fairly typical anti-assignment clause. A basic, fairly typical anti-assignment clause is triggered by the type of assignment that is done in an asset purchase agreement. In other words, in an asset purchase deal, the buyer and seller often need the approval of third parties to the seller’s commercial contracts. Getting these approvals can be a lot of work and, depending on the terms of the particular contract (i.e., in cases where the seller has a below market deal and the third party wants to get out of the deal), may be near impossible without some renegotiation. And, anything that gives parties to the seller’s contracts, particularly the key customer and vendor contracts, major leases, etc., the opportunity to say no or renegotiate the contract, has the potential to impact the deal. Buyers are generally not interested in paying huge money for your company if they expect that customers and vendors will have a right to rethink their contracts and are likely to do so. That being said, I have seen plenty of deals where buyers were so hot on closing the deal that they were willing to move forward without required contractual approvals to key agreements. Sometimes this is a risk a buyer is willing to take.

In a stock deal, however, the basic, typical anti-assignment clause is not triggered. When a buyer purchases all of the stock of the selling company, the buyer steps into the shoes of the seller and the seller’s assets, contracts, etc. are not technically transferred at all. Although that may be a little confusing, think about a situation where you own all 100 shares of XYZ, Inc. All of the contracts and assets of XYZ are in the name of XYZ. If you sell the 100 shares to me, you transfer the shares to me and now I own 100 shares of XYZ. At the level of XYZ, nothing changed. The assets and contracts of XYZ are still all in the name of XYZ.

Now, let’s take a look at a comprehensive anti-assignment clause – “Company XYZ shall not assign or transfer this agreement, in whole or in part, without the prior written approval of Company ABC. For purposes of this agreement, any change in control of Company XYZ resulting from a merger, consolidation, stock purchase or asset sale shall be deemed an assignment or transfer.”  This comprehensive anti-assignment provision specifically captures a stock sale. Therefore, even if buyer and seller structure the deal as a stock sale, they’ll need the approval of the other party to the seller’s contract where those contracts contain a comprehensive anti-assignment clause like this one. In my experience, basic anti-assignment clauses are more common that comprehensive ones.

But, hold on, there are other, perhaps even more important, considerations that go into the decision of how to structure the sale. When I was a baby (young) associate at the law firm, I would often question why we were structuring the transaction one way versus another. When I asked a partner or senior associate, invariably, the answer given was that it was “tax driven.” At times I thought that was the pat answer so the partner could avoid saying “I don’t know.” Turns out, though, that’s actually the driving force of a lot of the reasoning behind transaction structures. And, so it goes with the decision as to whether to do a stock or an asset deal. Sure, the considerations we raised earlier regarding documentation and liabilities are real ones and play into the decision as to how to structure the deal. But, taxes seem to typically carry the day.

At the risk of oversimplifying the complex area of M&A law and accounting, buyers generally like asset purchases. When they purchase assets, the IRS allows buyers to increase (or “step-up”) the book value of those assets. With a higher book value, the buyer will be able to deduct a greater amount of asset depreciation in the coming years. For example, if a buyer pays $100 for all of seller’s assets but the book value of those assets on the seller’s books is only $50, the buyer gets to allocate the extra $50 (the $100 purchase price minus the $50 current book value yields an excess of $50) to the book value of the assets on its books. So, if the buyer depreciates the assets over five years (this is a gross simplification as assets will be depreciated over different lengths of time, that means that the buyer can deduct $20 of depreciation for each of the next five years ($100 book value of the assets divided by five years = $20 per year). If the buyer would otherwise have $100 of earnings before taxes at the end of the first year, after deducting the $20 of depreciation, the buyer effective only pays taxes on $80. If the buyer has a 40% effective tax rate, it will pay taxes of $32 instead of $40. This savings of $8 is a real, tangible cash savings. After paying taxes, the buyer who was able to step-up the tax basis in the purchased assets will have net profit of $68 ($100 earnings before taxes minus $32 in taxes = $68).

In Part 3 , we’ll look at stock deals and mergers.

Author: Brett Cenkus

Brett Cenkus is a business attorney with 18+ years experience based in Austin, Texas. He has worked with a variety of businesses and has clients throughout Texas as well as many technology clients throughout the United States. Brett is a Harvard Law graduate with a sharply seasoned mind and an entrepreneurial heart. As a founder of 6 companies himself, he is especially passionate about helping startups succeed. In 2016 Brett was named the winner in the Individual category for RecognizeGood’s Ethics in Business & Community Award. He offers businesses solutions that are in sync with their culture, goals and values. You can learn more about Brett by visiting the About page on this website.

STOCK ASSIGNMENT AGREEMENT

            This STOCK ASSIGNMENT AGREEMENT is entered into as of September 30, 2002 by and between POINT WEST CAPITAL CORPORATION , a Delaware corporation ( "Assignor" ), BROAD STREET CONTRACT SERVICES, INC. , a Delaware corporation with an office at 48 Wall Street, New York, NY 10005 ( "Assignee" ) and the holders of the Senior Notes (as defined herein).

            A.             Assignor has previously purchased 1000 shares of common stock (collectively, the "Shares" ) constituting 100% of the outstanding stock of Dignity Partners Funding Corp. I, a Delaware corporation ( "DPFC" ). Assignor is also the servicer under an Amended and Restated Contribution, Sale and Servicing Agreement (as amended through the date hereof, the "Servicing Agreement" ) dated as of March 31, 2000 among Assignor, DPFC and Bankers Trust Company as indenture trustee for the DPFC Senior Viatical Settlement Notes, Series 1995-A (the "Senior Notes" ). The holders of the Senior Notes are GE Capital Corporation as successor in interest to Heller Financial, Inc., The Lincoln National Life Insurance Company and First Penn-Pacific Life Insurance Company (the "Noteholders" ).

            B.             Pursuant to Section 3.01 of the Master Agreement dated as of March 31, 2000 among Assignor, DPFC, and the Noteholders, Assignor agreed to assign the Shares to the Noteholders or their designee upon the termination of its position as servicer under the Servicing Agreement. Assignee’s term as servicer will end on September 30, 2002, and servicing will thereafter be performed by Mills, Potoczak & Company, 27600 Chagrin Boulevard, Suite 200, Cleveland, Ohio, 44122 ( "MPC" ). The Noteholders desire that Assignor convey the Shares to Assignee and that DPFC move its headquarters to MPC’s address.

            C.             Assignee desires to purchase and hold the Shares.

            NOW, THEREFORE, in consideration of the premises and the promises, covenants and undertakings contained herein, and for valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:

            1.             Assignment . Effective as of the close of business on September 30, 2002 (as hereinafter defined), Assignor hereby sells, assigns and transfers to Assignee all of its right, title and interest to the Shares in exchange for payment on such date by the Noteholders of $1,000. Assignor shall promptly deliver the Shares and shall cause DPFC to promptly deliver the DPFC corporate

record book (including the stock register) to Reid Mandel at Katten Muchin Zavis Rosenman, 525 West Monroe, Suite 1600, Chicago, Illinois 60661, for reregistration of the Shares.

            2.              Acceptance and Assumption by Assignee . Assignee hereby accepts such assignment and agrees to pay to Assignor $1,000 in consideration for the Shares.

            3.              Indemnification . The Assignor agrees to indemnify, defend and hold the Assignee harmless with respect to any claim(s) arising from or relating to a breach of a representation or warranty made by Assignor in this Agreement. The Assignee agrees to indemnify, defend and hold the Assignor harmless with respect to any claim(s) arising from or relating to a breach of a representation or warranty made by Assignee in this Agreement.

            4.              Representations and Warranties Assignor . Assignor hereby represents and warrants to Assignee:

       (a) Assignor is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware.        (b) Assignor has the power and authority to enter into this Agreement and the person executing this Agreement on behalf of Assignor has the power and authority to do so.         (c) Assignor is the sole legal and beneficial owner of the Shares and the Shares are free and clear of all liens, encumbrances and other interests. The sale, assignment and transfer of the Shares to Assignee pursuant to this Agreement validly assigns ownership interest of the Shares to Assignee free and clear of any pledge, lien, encumbrance or security interest.         (d) Other than the Shares, Assignor does not own or hold any stock, debt instruments or other securities issued by DPFC, and DPFC has no other classes of equity or debt instruments outstanding as of the date hereof other than the Shares and the Senior Notes.         (e) Assignor has filed a consolidated federal income tax return that includes DPFC for the period through December 31, 2000. Assignor will file, on or before December 31, 2002 a consolidated federal income tax return that includes DPFC for the period through December 31, 2001 and will file, on or before June 15, 2003, a consolidated federal income tax return that includes DPFC for the period through September 30, 2002. All federal and state income and franchise taxes have been paid in a due and timely manner with respect to DPFC and the consolidated group for all open fiscal years. Assignor has paid or provided for all federal and state income and franchise taxes due for DPFC and the consolidated group tax year ending with the termination of DPFC’s inclusion in the consolidated group. DPFC has no obligations, and will have no obligations, to any affiliates under any tax sharing 2 agreement or similar arrangement.             (f) DPFC has no, and will have no, liabilities to the PBGC, or for any payroll or unemployment taxes or premiums relating to any periods prior to October 1, 2002.

5.              Covenants of Assignor .

Assignor hereby covenants to perform the following obligations:

            (a) Assignor will promptly deliver all DPFC’s corporate records, including copies of all federal and state tax returns filed on behalf of or including DPFC, to DPFC’s new headquarters, c/o MPC. Assignor will continue to maintain a mailing address and/or forwarding address through March 31, 2003, and will promptly forward all correspondence it receives on behalf of DPFC to DPFC at its new headquarters.             (b) Assignor will continue to maintain its corporate franchise and existence, until at least the earlier of (i) the transition of servicing for DPFC from Assignor to MPC is complete or (ii) December 31, 2002. In the event of its subsequent dissolution or liquidation, Assignor shall designate at least one with continuing signing authority to act on behalf of Assignor during and after its dissolution to assist Assignee and DPFC with the transition in servicing, the assumption of control over DPFC’s wind-down and DPFC’s compliance with state and federal tax and corporate filings at least until December 31, 2003, and shall require such individual to reasonably cooperate with DPFC to participate in phone calls and/or sign documents on behalf of Assignor, if otherwise essential to DPFC collection efforts, at no cost to such individual on a fully indemnified basis. Assignor shall promptly notify DPFC of its decision to dissolve or liquidate and of the names and contact information of the individual that has been provided such authority.  

            6.              Representations and Warranties of Assignee . Assignee hereby represents and warrants to Assignor:

        (a) Assignee is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware.         (b) Assignee has the power and authority to enter into this Agreement and the person executing this Agreement on behalf of Assignee has the power and authority to do so.         (c) Assignee is an "accredited investor" within the meaning of Rule 501 of Regulation D promulgated under the Securities Act; 3           (d) Assignee: (i) has such knowledge and experience in financial and business matters that Assignee or its representatives are capable of evaluating the merits and risks of owning the Shares; (ii) is able to bear the complete loss of its investment in the Shares; and (iii) has had the opportunity to review all of the documents and agreements relating to the Shares and has had the opportunity to ask questions of, and receive answers from, the Noteholders concerning the terms and conditions of the Shares and the Senior Notes, and all such questions have been answered to Assignee's full satisfaction;         (e) Assignee confirms that it is acquiring the Shares solely for its own account, for investment purposes, and not with a view to the distribution or resale of the Shares;         (f) Assignee confirms that the right to purchase the Shares was not offered by any means of general solicitation or general advertising, that Assignee has received no representations, warranties or written communications with respect to its purchase of the Shares, and in entering into this Agreement, Assignee is not relying upon any information other than that obtained from the results of Assignee's own independent investigation;         (g) Assignee understands that there are substantial restrictions on the transferability of the Shares and it may not be possible for Assignee to liquidate an investment in the Shares, and accordingly, such Assignee may have to hold the Shares, and bear the economic risk of such investment, indefinitely;         (h) Assignee understands that the investment in the Shares involves substantial risks inherent in such an investment, including, without limitation, the fact that the Shares shall be subordinate to the Senior Notes;         (i) Assignee will arrange for DPFC to file tax returns covering DPFC for all tax periods commencing on or after October 1, 2002; and         (j) Assignee understands and agrees that (i) Assignor, as servicer under the Servicing Agreement, collected and maintained files containing sensitive medical data and other confidential information ("Confidential Materials"); (ii) various state and federal laws govern or may govern the confidentiality and restrict the use, dissemination and disclosure of the Confidential Materials (e.g. California Insurance Information and Privacy Act ( see generally Cal. Ins. Code  791 et . seq .); California Right to Financial Privacy Act ( see generally Cal. Gov. Code  7460 et . seq .); and Gramm Leach Bliley Act ( see generally 15 USC  6801 et . seq .)); (iii) there is pending legislation in California that, if passed, may govern the disclosure and confidentiality standards by which Assignee is bound (e.g. California Assembly Bill 1775 and California Senate Bill 1386); and (iv) Assignee is bound by applicable law governing confidentiality and disclosure of the Confidential Materials and will be held to the same standards as Assignor, will direct DPFC to hold and treat the Confidential Materials 4 confidentially and will not, unless required by law, or in accordance with applicable law, disclose the Confidential Materials to any person or entity.

            7.          Miscellaneous .

            (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.             (b) This Agreement may be executed in counterparts, each of which when executed by the parties hereto shall be deemed an original and all of which together shall be deemed an original and all of which together shall be deemed the same Agreement.             (c) This Agreement is binding upon each party’s successors and assigns.             (d) The representations, warranties and covenants of Assignor and Assignee herein shall survive the sale of the Shares to Assignee.

            IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date first above written.

ASSIGNEE: BROAD STREET CONTRACT SERVICES, INC., a Delaware corporation /s/    Orlando Figueroa          Orlando Figueroa           Vice President

  ASSIGNOR: POINT WEST CAPITAL CORPORATION, a Delaware corporation /s/    John Ward Rotter         John Ward Rotter         CEO

The undersigned execute this Agreement for the sole purpose of consenting to the assignment and terms set forth herein.

Watch CBS News

Trump Media launching Truth Social streaming service, where it says creators "won't be cancelled"

By Aimee Picchi

Edited By Alain Sherter

Updated on: April 16, 2024 / 2:30 PM EDT / CBS News

Trump Media & Technology Group on Tuesday announced plans to start a streaming TV platform to air news, film and other content the company claims other media outlets refuse to show.

The announcement comes three weeks after Trump Media began trading on the Nasdaq stock market, briefly valuing the company at $10.8 billion. After reaching peaking at $79.38 per share on March 26, the stock — which trades under the ticker DJT, the initials of former President Donald Trump — has plunged by almost 70%.

The slide continued on Tuesday, with Trump Media shares slipping $3.29, or 12.4%, to $23.32 in early afternoon trading. Its market value now stands at about $3.1 billion.

Trump Media's primary asset is Truth Social, the social media service that Trump created in 2022 after he was booted from major platforms following the January 6 assault on the U.S. Capitol. From its founding, the company aimed to create what it called a " media powerhouse " with multiple platforms, including social media and digital streaming. Until now, however, the company had only introduced Truth Social.

Going public has helped bolster the money-losing company's coffers, with Trump Media CEO Devin Nunes telling Fox Business earlier this month that it has "$200 million in the bank" to fund its plans. 

Key to building a major media company will be building an audience, which in turn could convince advertisers to open their wallets. Although Trump Media doesn't disclose its user numbers, the service had an estimated 494,000 monthly active users in February, compared with 142 million for Facebook and 75 million for X (formerly known as Twitter), according to web data company Similarweb. 

That may explain why Trump Media's revenue last year was $4.1 million, or about half the annual sales booked by an average single  Chick-fil-A location , while it lost $58 million. Recent advertisers on Truth Social include groups like Patriots for America, a group hawking Trump hats, and USA Gear, selling American flag hoodies. 

Trump Media didn't immediately respond to a request for comment.

Trump's streaming plans

Trump Media said its streaming TV platform will first unveil on the Truth Social app before eventually making its way to home TV streaming. The company didn't provide a timeline for the rollout. 

"There is a lot of great content that simply can't find an audience for unjust reasons, and we want to let these creators know they'll soon have a guaranteed platform where they won't be cancelled [sic]," Nunes, a former Republican congressman from California, said.

The company added that its TV content will include "news networks, religious channels, family-friendly content including films and documentaries; and other content that has been cancelled, is at risk of cancellation, or is being suppressed on other platforms and services."

To be sure, conservative-leaning TV networks already exist, including One America News Network (OANN) and Christian Broadcast Network, which produces the 700 Club. And conservative commentator Tucker Carlson debuted his Tucker Carlson Network after parting ways with Fox News last year.

Sliding stock price

Meanwhile, one of Trump Media's main assets — its publicly traded stock — is continuing to lose value. That's noteworthy because one route for a publicly traded company to raise additional capital is through secondary stock sales. If its shares become less valuable, that can hinder its ability to raise money from the public market. 

Trump Media's stock plunged 18.4% on Monday after the company filed a regulatory document that opens the door for the potential sale of millions more shares. The document, called an S-1, relates to warrants held by investors that can be transformed into shares of stock, as well as shares held by company insiders.

The former president's 57% stake in his media business was valued at $1.8 billion on Tuesday afternoon, a sharp decline from its $6.3 billion valuation at the stock's peak.

Trump Media's stock are at risk of falling further, Ben Emons, senior portfolio manager at NewEdge Wealth, said in an April 15 research note. The price of the warrants, which give their holders the right to buy the stock at a certain price, has plunged 43% from their March 26 peak and now indicate the share price could decline to $17.50, he said.

"There is plenty of opportunity for the DJT stock price to recover, but it likely goes down first," Emons added.

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Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.

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FIFA Said to Be Close to TV Deal With Apple for New Tournament

The agreement would give the tech company worldwide rights for a monthlong World Cup-style competition between top teams set to take place next year.

By Tariq Panja

Reporting from London

FIFA, soccer’s global governing body, is close to an agreement with Apple that would give the tech company worldwide television rights for a major new tournament, a monthlong, World Cup-style competition for top teams that will be played for the first time in the United States next summer.

The agreement could be announced as soon as this month, according to three people familiar with the matter, who were not authorized to discuss the deal publicly because it has yet to be officially confirmed. It comes after several false starts for a competition championed by FIFA’s president, Gianni Infantino. Plans to hold it in China in 2021 were scuttled because of the pandemic.

The value of the deal might be as little as a quarter of the $4 billion FIFA had first estimated, the people said. It is unclear if the deal with Apple will include any free-to-air rights, meaning the entire event could be available only to subscribers of Apple TV+, a factor over which senior executives at FIFA have raised concerns.

Should the deal go through, it would be the first time that FIFA, which will stage the first expanded 48-team men’s World Cup in the United States in 2026, has agreed to a single worldwide contract. It would also represent the latest foray into soccer for Apple, which in 2022 signed a 10-year, $2.5 billion agreement for the global streaming rights to Major League Soccer.

Streaming services have become increasingly interested in live sports, as they seek to woo more subscribers. Peacock streamed a National Football League playoff game last season and Amazon Prime has been streaming Thursday night N.F.L. games since 2022. Apple also has a deal to stream Major League Baseball games. Netflix focuses more on sports documentaries, though it recently pushed into live “sports-adjacent programming,” including a multibillion deal to stream World Wrestling Entertainment’s flagship weekly wrestling show, “Raw.” It also announced that it would stream a boxing match between the former heavyweight champion Mike Tyson and the social media influencer Jake Paul in July.

FIFA was hoping that the tournament, which will feature a mix of successful teams from across the globe, including 12 from Europe, where most of the world’s top talent plays, would create huge demand from broadcasters and commercial partners. But a combination of poor planning and delays prompted broadcasters to balk at the figures FIFA had sought. Sponsors have so far also been reluctant to commit the $150 million that the organization is seeking for sponsorship packages, according to the people.

A global deal with a major company like Apple may give the tournament, which will be played every four years, the veneer of high quality that Infantino has been trying to secure. Tom Neumayr, a spokesman for Apple, declined to comment. “As a general practice, FIFA does not confirm or deny commercial discussions,” FIFA said in a statement.

FIFA has set aside June 15 to July 13 in 2025 for the tournament to be played. That comes after the long European season, and has traditionally been a time when no major events take place in order to allow players to rest in the off-season a year before the World Cup. Players unions have criticized FIFA for not consulting them before announcing the event.

FIFA also faces significant costs by playing the event in the United States, where it will act as a tuneup for the World Cup. Some games will be in large arenas, including N.F.L. stadiums that must be leased. FIFA had hoped to secure major sponsorship partners willing to pay as much as the $100 million that World Cup sponsors pay per cycle, but with little more than a year to go, no title partners have been announced for the event.

The deal must be concluded soon in order to be announced ahead of the upfronts later next month, during which entertainment companies try to woo advertisers by talking about future programming.

European clubs have been pressing FIFA for months for concrete details of the event, including the cities where it will be staged, and even its name. FIFA had said the event would be called the Mundial de Clubes FIFA, but teams have now been told that is under review.

Tariq Panja is a global sports correspondent, focusing on stories where money, geopolitics and crime intersect with the sports world. More about Tariq Panja

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While the political world fixates on Donald Trump’s Manhattan criminal trial, the Supreme Court is weighing two decisions that could re-define the November election and invalidate charges for hundreds of January 6th defendants. CNN’s Senior Supreme Court Analyst Joan Biskupic is here to explain what’s at stake and read the tea leaves as to which way the justices are leaning. Joan’s book, Nine Black Robes , is now out in paperback.