February 22, 2022
M&A Agreements: Crypto References Creep In
Bloomberg Law’s Grace Maral Burnett has a new article that looks at references to cryptocurrencies & crypto assets in publicly filed acquisition agreements. References to crypto appeared in 24 public deal docs last year. That may not sound like a lot, but it’s an all-time record & enough to see some drafting trends begin to emerge – including where in acquisition agreements crypto references are likely to appear.
In addition to cataloging that information, the article excerpts some specific crypto language in MAE clauses, reps & warranties, and even in a post-closing covenant addressing employee compensation. The article also flags an interesting termination provision allowing a buyer to walk in the event of a decline in the price of bitcoin. Here’s that provision:
Termination. This Agreement may be terminated at any time prior to the Effective Time (with respect to Sections 8.01(b) through 8.01(k), by written notice by the terminating party to the other party), whether before or, subject to the terms hereof, after approval of the Merger Partner Voting Proposal by the Shareholders of Merger Partner or approval of the Public Company Voting Proposals by the Shareholders of Public Company:
[…]
by Public Company, at any time prior to the Effective Time, if the seven day moving average price of Bitcoin, as reported on Binance as “MA(7)”, falls below $15,000. (Gryphon Digital Mining Inc.–Sphere 3D Corp. Agreement and Plan of Merger dated June 3, 2021 (governing law: Delaware))
It’s interesting to note that the agreement was subsequently amended to eliminate that termination right as part of an overhaul of the deal’s termination provisions. If you’re interested, you can check out the discussion of that amendment & related changes to the deal that appears on p. 138 of Sphere 3D’s proxy statement/prospectus for the transaction.
– John Jenkins