Background
Richard Saccone founded Trux, Inc., a Delaware technology company serving the construction trucking industry, in 2015 and held approximately 18.55% of its outstanding stock. In April 2018, Viking Venture Partners, LLC — a wholly owned subsidiary of Vulcan Materials Company, one of Trux’s largest customers — made a significant investment in Trux, acquiring roughly 20% of its stock. Concurrent with that investment, all stockholders, including Richard, entered into a Right of First Refusal and Co-Sale Agreement (the “ROFR Agreement”) that imposed notice requirements, a waterfall of refusal rights, and co-sale rights whenever stockholders proposed to transfer shares.
In early 2020, Viking made a series of proposals to acquire all outstanding Trux shares it did not already own. The Board and a majority of stockholders accepted Viking’s March 27, 2020 proposal, which offered $1.18 or $0.92 per share depending on payment terms. The Selling Stockholders and Richard each executed stock purchase agreements — Richard’s netting him over $5.8 million — which included mutual releases of claims relating to share ownership. The Transaction increased Viking’s ownership from roughly 28.7% to over 80% of Trux’s outstanding stock, and the Company’s own written consents described it as a Deemed Liquidation Event under its Amended and Restated Certificate of Incorporation.
Richard subsequently intervened in an existing stockholder action and filed Cross-Claims seeking a declaration that the entire Transaction was void ab initio under Section 2.4(a) of the ROFR Agreement, on the ground that Viking and Trux had failed to comply with the 60-day advance notice requirement of Section 2.1(b) and the protective notice-and-negotiation procedures of Section 2.5. He argued that because the transfers were void, his release of claims in the Stock Purchase Agreement was likewise unenforceable, and that all post-Transaction stock dealings should be rescinded.
The Court’s Holding
Vice Chancellor Fioravanti granted summary judgment in favor of Viking and Trux on three independent grounds. First and most dispositive, the court held that Section 3.2 of the ROFR Agreement exempts from the entirety of Section 2 — including the notice, refusal, co-sale, and void-transfer provisions — any sale of stock “pursuant to a Deemed Liquidation Event.” The Transaction plainly qualified: Viking’s March 27 proposal sought to purchase all outstanding Trux shares, and after the Selling Stockholders and Richard sold their shares in a series of related transactions, Viking’s ownership rose from approximately 28% to over 80%, satisfying the Amended Certificate’s definition of a Deemed Liquidation Event. Richard himself had consistently alleged throughout his pleadings, opening brief, and oral argument that the Transaction was a Deemed Liquidation Event — reversing position only after defendants cited Section 3.2. The court found that late reversal directly contradicted the undisputed record and Richard’s own verified allegations.
Second, even setting aside Section 3.2, the court found no breach of Sections 2.5 or 2.1(b). Section 2.5’s notice and exclusive negotiation rights are triggered when the Company desires to explore a Deemed Liquidation Event or receives an unsolicited offer for one — not when Viking, as the Investor with those protective rights, itself initiates an acquisition. Construing those provisions as requiring Viking to notify itself of its own proposal would be commercially unreasonable and inconsistent with the agreement’s overall structure. Similarly, Section 2.1(b)’s 60-day Proposed Transfer Notice requirement governs transfers initiated by Stockholders selling to third-party prospective transferees; it was not designed to require Viking to give notice to itself when purchasing rather than selling shares. Third, Richard independently released any remaining claims by executing the Stock Purchase Agreement’s Seller’s Release, which broadly covered claims relating to his share ownership arising before closing.
Key Takeaways
- A Deemed Liquidation Event exemption clause (here Section 3.2) that carves out all of “Section 2” from applying to such transactions is broad enough to foreclose void-transfer claims that depend on Section 2 notice and refusal requirements.
- A party who repeatedly and unequivocally characterizes a transaction as a Deemed Liquidation Event in verified pleadings and briefing cannot reverse that position at the reply stage simply because the characterization has become strategically inconvenient.
- ROFR Agreement notice requirements designed to protect an Investor’s purchase rights do not, as a matter of contract construction, require that same Investor to give itself notice when it is the buyer initiating the acquisition.
- A broad release of claims “relating to ownership of shares” in a stock purchase agreement can bar a selling stockholder from later seeking to void that same sale, particularly when no successful void-ab-initio theory survives to undermine the release.
Why It Matters
This decision reinforces that standard Deemed Liquidation Event exemptions in ROFR agreements — common in venture-backed company charters — operate as a comprehensive carve-out from transfer restrictions, not merely from liquidation-preference mechanics. Practitioners drafting or advising on such agreements should recognize that an acquirer who structures a majority stock purchase as a Deemed Liquidation Event may effectively sidestep the notice, co-sale, and void-transfer enforcement machinery that would otherwise govern stockholder-initiated transfers.
The opinion also carries a cautionary procedural lesson: courts will hold sophisticated parties to the positions they stake out in verified pleadings and repeated oral argument. A litigant who builds an entire theory around the premise that a transaction was a Deemed Liquidation Event cannot abandon that premise in a reply brief when a contractual exemption tied to that very event proves fatal to the theory.