A choice of forum clause is a provision in a contract that designates the specific court or jurisdiction that will handle any legal disputes arising under the contract. This clause provides certainty and convenience for both parties by pre-determining where litigation will be conducted, potentially reducing legal costs and avoiding jurisdictional conflicts.
The Company confirms that the choice of forum provision does not apply to any actions arising under the Securities Exchange Act of 1934. In response to the Staff´s comment, if the proposed reincorporation is approved by its stockholders, the Company will initially include in its Quarterly Report on Form 10-Q for the quarterly period ending June 30, 2020, and will include or incorporate by reference in subsequent Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K, a risk factor to the following effect (emphasis added):
“Our certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders and that the federal district courts of the United States of America are the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933. These choice of forum provisions could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
The Company will also reference the inapplicability of the choice of forum provision on actions arising under the Securities Exchange Act of 1934 in any other future disclosures relating to the choice of forum provision.
Neither of these choice of forum provisions would affect suits brought to enforce any liability or duty created by the Securities Exchange Act of 1934 or the rules and regulations thereunder, jurisdiction over which is exclusively vested by statute in the U.S. federal courts. Because these provisions will be located in the Delaware Charter rather than the Delaware Bylaws, any future amendment of these provisions will be more difficult to achieve due to the need to obtain approval of not only the board but also holders of at least two-thirds in voting power of the outstanding shares of capital stock entitled to vote thereon.”
The Company’s choice of forum provision is intended to apply to the fullest extent permitted by law to the above-specified types of actions and proceedings, including, to the extent permitted by the federal securities laws, to lawsuits asserting both the above-specified claims and claims under the federal securities laws. Application of the choice of forum provision may be limited in some instances by applicable law. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the choice of forum provision will not apply to actions arising under the Exchange Act or the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder, subject to a limited exception for certain “covered class actions.” There is uncertainty, particularly in light of current litigation, as to whether a court would enforce the choice of forum provision with respect to claims under the Securities Act. Our stockholders will not be deemed, by operation of the Company’s choice of forum provision, to have waived claims arising under the federal securities laws and the rules and regulations thereunder.”
These choice of forum provisions do not preclude or contract the scope of exclusive federal or concurrent jurisdiction for any actions brought under the Securities Act or the Exchange Act. Accordingly, our choice of forum provisions will not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder, and our stockholders will not be deemed to have waived our compliance with these laws, rules and regulations. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any action, a court could find the choice of forum provisions contained in our restated certificate of incorporation to be inapplicable or unenforceable in such action. Nonetheless, any person or entity purchasing or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to these provisions. These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or our directors, officers or other employees or agents, which may discourage lawsuits against us and our directors, officers and other employees or agents.
The foregoing provisions, including the choice of forum provisions, will make it more difficult for our existing stockholders to replace our board of directors as well as for another party to obtain control of our company by replacing our board of directors.
Choice of Forum, page 14 1. We note that your amended and restated certificate of incorporation identifies the Court of Chancery of the State of Delaware as the exclusive form for certain litigation, including any “derivative action.” Please disclose whether this provision applies to actions arising under the Securities Act or Exchange Act. In that regard, we note that Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder and Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.
“Choice of Forum Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the exclusive forum for: • any derivative action or proceeding brought on our behalf; • any action asserting a claim of breach of a fiduciary duty; • any action asserting a claim against us arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws; or • any action asserting a claim against us that is governed by the internal affairs doctrine. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any action, a court could find the choice of forum provisions contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in such action.
The enforceability of similar federal court choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that a court could find our federal court choice of forum provision to be inapplicable or unenforceable. If a court were to find either of the choice of forum provisions contained in our amended and restated certificate of incorporation or amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions.
The Company undertakes to include substantially similar disclosure with regard to its choice of forum provisions, to the extent the provisions remain applicable, in its future Securities Act and Exchange Act filings in which these provisions are addressed.
The Company revised the disclosure in the risk factor at page 26 entitled, “Our bylaws designate the state and federal courts located in Denver, Colorado as the exclusive forum for certain types of actions and proceedings, which could limit a shareholder's ability to choose the judicial forum for disputes arising with Assure Holdings Corp.” to disclose that the Company interprets the choice of forum provision contained in its bylaws to apply to certain expressed actions and not to apply to actions arising under the Exchange Act or the Securities Act.
Based on our interpretation, the choice of forum provision contained in its bylaws does not apply to actions arising under the Exchange Act or the Securities Act. Accordingly, no additional disclosure is required. The Company added a general statement at page 26 that provides, “ there is uncertainty as to whether a Court will enforce these forum selection clauses.”
The choice of forum provision contained in its bylaws does not apply to actions arising under the Securities Act. Accordingly, no additional disclosure is required.
While the Company believes that the provisions in its bylaws related to choice of forum are clear, the Company agrees to propose amendments to its bylaws at its next annual meeting to expressly provide that the choice of forum provisions in the bylaws do not apply to actions arising under the Securities Act or Exchange Act. the Company also proposes to include similar language in future filings, where appropriate.
Choice of Forum Provisions in Our Bylaws Our amended and restated bylaws provide that the Court of Chancery of the State of Delaware (or if the Court of Chancery does not have jurisdiction, another court of the State of Delaware, or if no court of the State of Delaware has jurisdiction, the federal district court for the District of Delaware) shall be the exclusive forum for the following types of actions or proceedings: •any derivative action or proceeding brought on our behalf; •any action asserting a breach of fiduciary duty; •any action asserting a claim against us arising under the Delaware General Corporation Law, our certificate of incorporation, or our bylaws; •any action asserting a claim governed by the internal-affairs doctrine; and •any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or our bylaws. The choice of forum provision in our bylaws does not apply to claims brought to enforce any duty or liability created by the Exchange Act or the Securities Act or any claim with respect to which the federal courts have exclusive jurisdiction.
Choice of Forum Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative form, the Court of Chancery of the State of Delaware is the sole and exclusive forum for: (1) any derivative action or proceeding brought on our behalf; (2) any action asserting a claim of breach of a fiduciary duty by any of our directors, officers, employees or stockholders owed to us or our stockholders; (3) any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws, or as to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware; or (4) any action asserting a claim governed by the internal affairs doctrine. Our certificate of incorporation also provides that any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of and to have consented to this choice of forum provision. It is possible that a court of law could rule that the choice of forum provision contained in our certificate of incorporation is inapplicable or unenforceable if it is challenged in a proceeding or otherwise. This choice of forum provision has important consequences for our stockholders. Our certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to choose other forums for disputes with us or our directors, officers or employees.
Choice of Forum Unless Misonix consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the exclusive forum for: any derivative action or proceeding brought on Misonix’s behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against Misonix arising pursuant to the Delaware General Corporation Law; or any action asserting a claim against Misonix that is governed by the internal affairs doctrine. Notwithstanding the foregoing, this provision will not apply to any claims arising under the Securities Act or the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction. The enforceability of similar choice of forum provisions has been challenged in legal proceedings, and it is possible that, in connection with such actions or any future actions, a court could find the choice of forum provision to be inapplicable or unenforceable. It is possible that a court could find that such a choice of forum provision is inapplicable for a particular claim or action or that such provisions are unenforceable.
“Notably, however, while our amended and restated bylaws provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for, inter alia, any derivative action or proceeding brought on our behalf, such choice of forum provision does not apply to suits brought to enforce a duty or liability created by the Securities Act, the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction.”
Furthermore, the Company intends to inform its stockholders in its annual reports on Form 10-K that its currently effective choice of forum provision does not apply to suits brought to enforce a duty or liability created by the Securities Act, the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction.
Choice of Forum is a legal term that refers to the agreement between parties in a contract to have any disputes resolved in a specific court or jurisdiction. This clause can be crucial in determining where a lawsuit can be filed should a conflict arise between the contracting parties. It is also known as “forum selection” and ensures predictability and convenience regarding legal proceedings.
You should consider using a choice of forum clause in your contract if:
When drafting a choice of forum clause, consider including the following elements:
Example:
Choice of Forum Clause: “The parties agree that any legal suit, action, or proceeding arising out of or relating to this Agreement shall be instituted exclusively in the federal or state courts located in [Specified Location], and each party irrevocably submits to the exclusive jurisdiction of such courts.”
Choice of forum clauses are commonly found in the following types of contracts:
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Dive deeper into the world of clauses and learn more about these other clauses that are used in real contracts.
A Choice of Law clause specifies which jurisdiction's laws will govern the interpretation and enforcement of the contract. This clause provides clarity and predictability by pre-determining the legal framework that will apply in case of disputes.
The choice of venue clause specifies the predetermined location or jurisdiction where any legal proceedings related to the contract will be conducted. This ensures that any disputes arising from the contract are resolved in a designated court, providing clarity and convenience for the parties involved.
A class action waiver is a contract clause that prevents parties from joining together to file a lawsuit or arbitration as a group or class, requiring them to pursue individual claims instead. This clause is commonly found in consumer and employment agreements and is often used to limit legal exposure and streamline dispute resolution processes.
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