assignment of shares in a company

Transferring Shares in a Corporation

Here’s everything you need to know about transferring shares in a corporation.

The capital in a company or corporation is divided into small equal units, finite in number as defined in the total authorized shares . Each of these units are known as shares in a corporation . In layman’s terms, a share is the percentage of ownership that a shareholder in a corporation holds.

Here’s everything you need to know about transferring shares in a corporation .

What Is A Corporation?

A corporation is a separate legal entity that’s distinct from the owners. However, it has most of the rights and responsibilities that an individual possesses: it can enter into agreements , borrow and loan money , own assets, sue others, pay taxes, and file or face a legal lawsuit.

The development of a corporation entails a legal procedure called incorporation where the drafting of legal documents comprising the major purpose of the business, location, name, stock types, and the number of shares taking place.

The procedure of incorporation gives the business entity a unique feature that protects the owners from being personally responsible in case of a legal claim or lawsuit .

How a Corporation Works

A corporation is supposed to name its board of directors before it can begin operations. Shareholders in corporations elect the members of the board during the AGM or annual general meeting . All shareholders are entitled to a vote as they cannot participate in the daily operation of the corporation.

The directors stand for elections as executive officers or members of the board of directors of the corporation. The elected board of directors owe a duty of care to the shareholders in a corporation and should act in their best interest as well as that of the corporation.

Types of Corporations

A corporation is created by single or numerous shareholders who collaborate to seek a common goal. A corporation can be formed either as a ‘not-for-profit’ or ‘for-profit’ entity. Not-for-profit entities work as charitable organizations, which are committed to a specific social cause, for instance religious, research, or educational purposes.

Instead of distributing revenue to shareholders, they use their revenues to advance their objectives. Most corporations are for-profit entities formed to generate revenues and offer a return to the shareholders in a corporation, according to their ownership.

C Corporation

This incorporation is the most common among businesses and comprises nearly all of a corporation’s attributes. Owners obtain profits and are taxed individually while the corporation pays taxes as a business entity.

A Non-profit corporation

Educational, charitable, and religious organizations work as non-profit corporations , Since they are run without generating profits, they are exempt from paying taxes. Any donations or revenue obtained are retained in the entity to spend on expansion, operations, or future plans.

S Corporation

An S Corporation bears resemblance to a C Corporation but differs in tax purposes and owner limitation. The corporation comprises up to 100 shareholders and the taxation isn’t separate . Instead, the shareholders bear the profits and losses on their revenue tax returns.

How Shares are Recorded in a Corporation

The recording of issued shares occurs on a balance sheet as owner’s equity or capital stock . You’ll find outstanding shares listed on every corporation’s quarterly filings with the SEC . The outstanding shares are also available in the capital segment of a corporation’s annual report.

If it’s a publicly-traded company, then the transfer of shares in the corporation is recorded on an electronic ledger , and changes when their shares are traded in the open market.

Shareholders in a Corporation

The shareholders in a corporation are what makes up the ownership , and how the company manages these shareholders is important . This not only involves how many shares each shareholder owns, but the different types of corporate shareholders.

Definition of Shareholder

A shareholder can be a company, person, or organization that holds shares in a corporation. A shareholder in a corporation should own at least one share in a company’s mutual fund or stock to give them partial ownership. Shareholders usually obtain declared dividends if the company performs well in a financial year.

Also known as stockholders , they can vote on particular issues regarding the company and can also be elected to the board of directors. If the company is undergoing liquidation and its assets are sold , the shareholder in the corporation might obtain a share of the proceeds after all creditors of the company are paid off.

In the case of liquidation , a stockholder is not under any obligation to shoulder the financial obligations and debts the company incurs. This implies that creditors cannot force stockholders to overwrite their debts.

Types of Shareholders

Two kinds of shareholders exist common and preferred shareholders . Common shareholders own common shares in a corporation. They’re the more prevalent type with voting rights on matters regarding the company. Since they have control over the company’s management, they can file a class-action lawsuit against the organization for any wrongdoing.

On the other hand, preferred shareholders are less common. They own shares of the company’s preferred stock but lack voting rights and have no say in a company’s management. Rather, they have the right to a fixed annual dividend, which they receive before common shareholders.

While both preferred and common stocks experience a value increase with a company’s positive performance , the former experience higher capital losses or gains.

The Functions of a Shareholder in Corporation

A shareholder doesn’t merely receive profits. They perform other responsibilities, including:

• Determining the amount of salary that directors obtain. This decision is usually tricky since stockholders should ensure that the amount they’ll give will compensate for the living costs and expenses incurred by the director without compromising the corporation’s coffers.
• Proposing and determining the powers they’ll transfer to the company’s directors, including their appointment and removal from office
• Examining and approving the company’s statements
• Decision-making on occasions where the directors lack power, including making amendments to a company’s constitution

How Do You Transfer Shares in a Corporation

Understanding the transfer of shares in a corporation is significant for both the business owners and the shareholders. It’s also equally important to properly record this transfer of shares in the company’s cap table .

Here’s how the process of transfer of shares in a corporation works:

Stock Transfer

Transfer of shares occurs in all kinds of business entities, whether partnerships, corporations, or limited liability corporations. However, the share structure , maximum shareholder number , and share transfer process in every entity is different.

For the share transfer process to happen, a stock transfer form is necessary. The document comprises details of the buyer and seller of the shares, the number and type of shares being transferred, and the amount paid by the purchaser.

Most corporations have stock transfer agreements and procedures stipulating how to calculate the share value and who might or might not be a shareowner in that respective organization. While all corporations should have a stock transfer agreement, not all do. If such an agreement is unavailable, you must value the stock realistically before the transfer of shares takes place in order to comply with state corporation decrees and the IRS rules .

The creation of a purchase agreement is a mandatory step in order to transfer shares in a corporation. The document delineates all the details concerning the share transfer process. Once the signing of the document takes place, the share certificates must specify the name of the new owner.

Transfer of Shares in an S Corporation

When it comes to transferring shares in an S Corp . there are mandatory procedures that need to be followed so that the company continues to enjoy its advantageous tax benefits. These include:

1. Ensuring That the Purchaser Is Eligible

Tax code rules in an S corporation strictly limit the number and types of shareholders in a corporation. In order to maintain its S Corp. status, the company cannot have more than 100 shareholders who can be individuals and specified trusts and estates. Partnerships, other corporations and non-residents are not allowed to own S Corporation stock. If the company violates these statues, it stands to lose its preferential tax status. So, ensure that a proposed transfer complies with these restrictions.

2. Review the Shareholder Agreement

All restrictions pertaining to stock transfers can be found in the shareholders’ agreement or bylaws . Any proposed transfer may first need to be approved by the board or the management. The corporation may also have the first right of refusal which allows it to buy its stock back before you offer it to another purchaser.

3. Determine the Value of the Stock

Since S Corp. shares are not publicly traded, they do not have a current market value . It is therefore important to determine the right price of your stock. A selling price or the process to arrive at one might be specified in the shareholders’ agreement. In the absence of such information, the price can be determined by comparing the corporation to similar businesses that have an established market value on their shares. The best way to determine the fair market value of the corporation is to have a 409a valuation conducted by an independent appraisal firm. Checkout our 409a valuation prices at Eqvista .

4. Prepare the Stock Transfer Agreement

Once the value of the shares has been determined, a written stock transfer agreement needs to be prepared , setting out the terms and conditions of sale. Alternatively, the stock transfer form can also be filled. It will also include the quantity of stock purchased, the selling price and a commitment by the purchaser to abide by the bylaws of the corporation.

The stock transfer agreement needs to be signed by the seller and the purchaser who must also execute a declaration consenting the terms of the company. This declaration needs to be notarized by the purchaser and filed with the company.

5. Update the Stock Transfer Ledger

The new ownership needs to be entered into the corporation’s stock transfer ledger after which new stock certificates need to be prepared. The seller can also request the corporation to issue a final statement showing Share of Income, Deductions and Credits that reflects their share in the profits and losses during their time as a shareholder.

Let’s cover a simple example to understand how to transfer shares in a corporation better:

Say there’s a corporation, ABC Corp , which has a total of 4 founders each holding 25% of the company. With a total of 1,000,000 authorized shares , each founder would have 250,000 shares each with a share price of $0.10 . Now let’s say that a founder, James Moore, has decided to resign from his position in the corporation, and the company finds another person, Amy Scott, to join the company and purchase James Moore’s shares. Therefore James Moore would sell his 250,000 shares to Amy Scott. James Moore and Amy Scott will now have to determine the consideration that James Moore will receive for the stock transfer agreement. Since James Moore and Amy Scott go back a long way, James Moore agrees to transfer his shares at 10% less than the current market value . This means he will be transferring each share to Amy Scott at a value of $0.09 per share . (0.10-15%). Amy Scott will therefore need to pay James Moore USD 22,500 ($0.09 x 250,000 shares) for the transfer of shares. James Moore then needs to write a share transfer contract . The template would be available in the shareholders agreement. A written contract will prevent ambiguities and any future legal problems that may arise out of the transfer. The contract needs to mention the amount of stock given and the consideration for the stock , the names of both – the buyer and the seller and any other information that may be relevant to the transfer. James Moore and Amy Scott also need to ensure that all relevant updates have been made in the stock transfer ledger and that updated stock certificates are prepared.

Transfer shares on Eqvista

You can transfer shares in a corporation seamlessly on the Eqvista platform. The whole share transfer process can be completed all online through the equity software management through your account. Let’s take a look at how the transferring shares in a corporation would look on Eqvista.

Here is the pre-transfer cap table of ABC Corporation.

Once you are ready to transfer the shares, you can click in to the share grant and go the transfer shares page , which will show up on the platform as below:

After you have entered in all the information for the share transfer, the company’s cap table would be updated with the new shareholder .

Now this is a simple example to illustrate how transferring shares in a corporation works , but no matter how complex your cap table may be, transferring your shares on the Eqvista platform can be easy and straightforward.

Transfer shares in your Corporation on Eqvista

Managing over a large corporation can be tricky, especially when it comes to the company shares. Corporations with as few as 20 shareholders to hundreds of owners often find it hard to manage their cap table and all the information needed to be recorded when they transfer their shares.

Eqvista is a sophisticated cap table software that can handle this. Authorize , issue , transfer , redeem , and perform all your share transactions on the Eqvista app.

If you have questions on the share transfer process or wondering how to initiate the transfer of shares in a corporation, you can reach out to us Eqvista and explore how our software can help you manage your shares!

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Assignment of shares in case of a limited company: required documents

In case of limited liability companies, shareholders may assign their shares. This assignment procedure may be performed by a Romanian lawyer .

A consequence of such a share assignment is that the assignor – the person assigning his shares, leaves the company and therefore loses his capacity of shareholder, while the assignee – the person who receives the shares – continues the activity of the company by acquiring the capacity of shareholder.

The share assignment procedure must be carried out at the Trade Registry. Lawyers appointed in this regard shall submit on behalf of the limited liability company (Ltd) all required documents.

Assigning shares is a procedure that may require two steps (if shares are assigned to persons outside the Ltd) or one single step (if shares are assigned to one or more of the Ltd’s existing shareholders). Shares may be assigned to individuals or companies (Romanian or foreign).

Two-step assignment of shares

Documents that need to be prepared as a first step:

• request for the assignment of shares;
• Decision of the General Assembly of Shareholders or, as the case may be, Decision of the sole shareholder (the assignment of shares must be expressly stipulated and all necessary information regarding the assignment);
• Assignment Agreement between the assignor and the assignee;

It is possible to be represented by a Romanian lawyer based on a special power of attorney.

Documents that need to be prepared during the second phase of the procedure:

• Registration request;
• Proof that the Decision of the General Assembly of Shareholders or the Decision of the sole shareholder was published in the Official Gazette;
• Decision of the General Assembly of Shareholders or, as the case may be, the Decision of the sole shareholder, which must include information about the assignment of shares;
• Copies of the individuals’ Identity Cards and, as the case may be, of the incorporation certificates in the case of companies, of those who shall acquire the capacity of shareholder;
• Statement given by the shareholder – company – that it complies with all required conditions for acting in the capacity of shareholder;
• Incorporation certificate, original or a copy bearing an Apostil, from the Trade Registry where the foreign company is registered, certifying its existence;
• Restated Articles of Incorporation – original copy.

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Assignment: Definition in Finance, How It Works, and Examples

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

What Is an Assignment?

Assignment most often refers to one of two definitions in the financial world:

• The transfer of an individual's rights or property to another person or business. This concept exists in a variety of business transactions and is often spelled out contractually.
• In trading, assignment occurs when an option contract is exercised. The owner of the contract exercises the contract and assigns the option writer to an obligation to complete the requirements of the contract.

Key Takeaways

• Assignment is a transfer of rights or property from one party to another.
• Options assignments occur when option buyers exercise their rights to a position in a security.
• Other examples of assignments can be found in wages, mortgages, and leases.

Uses For Assignments

Assignment refers to the transfer of some or all property rights and obligations associated with an asset, property, contract, or other asset of value. to another entity through a written agreement.

Assignment rights happen every day in many different situations. A payee, like a utility or a merchant, assigns the right to collect payment from a written check to a bank. A merchant can assign the funds from a line of credit to a manufacturing third party that makes a product that the merchant will eventually sell. A trademark owner can transfer, sell, or give another person interest in the trademark or logo. A homeowner who sells their house assigns the deed to the new buyer.

To be effective, an assignment must involve parties with legal capacity, consideration, consent, and legality of the object.

A wage assignment is a forced payment of an obligation by automatic withholding from an employee’s pay. Courts issue wage assignments for people late with child or spousal support, taxes, loans, or other obligations. Money is automatically subtracted from a worker's paycheck without consent if they have a history of nonpayment. For example, a person delinquent on $100 monthly loan payments has a wage assignment deducting the money from their paycheck and sent to the lender. Wage assignments are helpful in paying back long-term debts.

Another instance can be found in a mortgage assignment. This is where a mortgage deed gives a lender interest in a mortgaged property in return for payments received. Lenders often sell mortgages to third parties, such as other lenders. A mortgage assignment document clarifies the assignment of contract and instructs the borrower in making future mortgage payments, and potentially modifies the mortgage terms.

A final example involves a lease assignment. This benefits a relocating tenant wanting to end a lease early or a landlord looking for rent payments to pay creditors. Once the new tenant signs the lease, taking over responsibility for rent payments and other obligations, the previous tenant is released from those responsibilities. In a separate lease assignment, a landlord agrees to pay a creditor through an assignment of rent due under rental property leases. The agreement is used to pay a mortgage lender if the landlord defaults on the loan or files for bankruptcy . Any rental income would then be paid directly to the lender.

Options Assignment

Options can be assigned when a buyer decides to exercise their right to buy (or sell) stock at a particular strike price . The corresponding seller of the option is not determined when a buyer opens an option trade, but only at the time that an option holder decides to exercise their right to buy stock. So an option seller with open positions is matched with the exercising buyer via automated lottery. The randomly selected seller is then assigned to fulfill the buyer's rights. This is known as an option assignment.

Once assigned, the writer (seller) of the option will have the obligation to sell (if a call option ) or buy (if a put option ) the designated number of shares of stock at the agreed-upon price (the strike price). For instance, if the writer sold calls they would be obligated to sell the stock, and the process is often referred to as having the stock called away . For puts, the buyer of the option sells stock (puts stock shares) to the writer in the form of a short-sold position.

Suppose a trader owns 100 call options on company ABC's stock with a strike price of $10 per share. The stock is now trading at $30 and ABC is due to pay a dividend shortly. As a result, the trader exercises the options early and receives 10,000 shares of ABC paid at $10. At the same time, the other side of the long call (the short call) is assigned the contract and must deliver the shares to the long.

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Assignment of Shares Template

Document description.

This assignment of shares template has 1 pages and is a MS Word file type listed under our finance & accounting documents.

Sample of our assignment of shares template:

ASSIGNMENT OF SHARES This Assignment of Shares (the �Assignment�) is made and effective [DATE], BETWEEN: [YOUR COMPANY NAME] (the "Assignor"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] AND: [ASSIGNEE NAME] (the "Assignee"), an individual with his main address located at OR a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] TERMS 1. For value received, which is acknowledged, the Assignor hereby assigns all int

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LLC Membership Interests as Collateral

It is not uncommon for lenders to take a security interest in a business owner’s ownership interest in the corporation, LLC, limited partnership or other entity as collateral for a loan to the business. For the most part, the transactions are documented through a standard pledge or assignment (the “assignment agreement”) of the stock or other evidence of ownership. While such an approach may be acceptable when the interests of a corporation are pledged, when the collateral is an interest in an LLC, savvy lenders will make sure that they use an enhanced form of assignment agreement and perhaps obtain the consents (and necessary waivers) from the other LLC members.

An enhanced form of assignment agreement is called for because an LLC has one distinct advantage over other entity forms. Under Maryland law, a judgment against an LLC member can only be enforced by imposing a charging order against the member’s interest. This is a court order requiring the LLC to pay the creditor the debtor member’s share of LLC distributions. In this respect, a charging order is akin to a wage garnishment, except it is against the member’s distributions rather than against wages.  The lender who simply obtains an assignment of a membership interest in an LLC gets no right to attach the member’s LLC interest or be admitted as a voting member . The lender cannot, therefore, participate in company management, force a sale of company assets or distribution of profits, or inspect company books.

In contrast, shares of a corporation’s stock are freely transferable absent contrary provisions in a shareholder agreement. Consequently, a lender with a security interest can typically exercise all of the associated rights of a stockholder. Upon obtaining the shares, the lender acquires the right to inspect corporate books and records and to vote on the election and removal of directors. If the shares represent a controlling interest, the lender could actually replace all the directors and officers and take over control of the corporation. Depending on the circumstances, the lender may also have the right to seek involuntary dissolution or place the corporation in receivership.

To optimize the collateral value of an LLC membership interest, lenders will want to be sure that they, as assignees, can be admitted, automatically, as full voting members of the company once they obtain ownership of the membership interest (a complex process in and of itself). Lenders will also want to scrutinize the LLC operating agreement to see if it contains provisions that either permit the company to acquire a member’s interest for a discounted value in the event of the member’s personal bankruptcy or that limit profit distributions either by making them discretionary rather than mandatory, or by restricting distributions to insolvent members. Finally, the operating agreement should be reviewed so that the lender understands any restrictions that may be placed upon the rights of an assignee who assumes a member’s interest. If such provisions are included in the operating agreement, they should be addressed in the assignment agreement as part of the negotiations over the assignment of the LLC membership interest so as to preserve the creditor’s rights and the value of charging orders.

Savvy lenders know that the LLC is the optimal form of entity for insulating company assets from owners’ personal creditors. Hence, they are the lenders that will carefully review the LLC organizational documents and only take LLC interests as collateral using an enhanced form of assignment agreement.

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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.

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U.S. Sues Apple, Accusing It of Maintaining an iPhone Monopoly

The lawsuit caps years of regulatory scrutiny of Apple’s wildly popular suite of devices and services, which have fueled its growth into a nearly $3 trillion public company.

Garland Accuses Apple of Violating Federal Antitrust Law

Attorney general merrick b. garland said that apple has employed a strategy that relies on exclusionary anti-competitive conduct that hurts both consumers and developers..

Over the last two decades, Apple has become one of the most valuable public companies in the world. Today, its net income exceeds the individual gross domestic product of more than 100 countries. That is in large part due to the success of the iPhone, Apple’s signature smartphone product. But as our complaint alleges, Apple has maintained monopoly power in the smartphone market, not simply by staying ahead of the competition on the merits, but by violating federal antitrust law. Consumers should not have to pay higher prices because companies break the law. We allege that Apple has employed a strategy that relies on exclusionary, anticompetitive conduct that hurts both consumers and developers. For consumers, that has meant fewer choices, higher prices and fees, lower quality smartphones, apps and accessories, and less innovation from Apple and its competitors. For developers, that has meant being forced to play by rules that insulate Apple from competition. And as outlined in our complaint, we allege that Apple has consolidated its monopoly power, not by making its own products better, but by making other products worse.

By David McCabe and Tripp Mickle

David McCabe reported from Washington, and Tripp Mickle from San Francisco.

The federal government’s aggressive crackdown on Big Tech expanded on Thursday to include an antitrust lawsuit by the Justice Department against Apple, one of the world’s best-known and most valuable companies.

The department joined 16 states and the District of Columbia to file a significant challenge to the reach and influence of Apple, arguing in an 88-page lawsuit that the company had violated antitrust laws with practices that were intended to keep customers reliant on their iPhones and less likely to switch to a competing device. The tech giant prevented other companies from offering applications that compete with Apple products like its digital wallet, which could diminish the value of the iPhone, and hurts consumers and smaller companies that compete with it, the government said.

The Justice Department’s lawsuit is seeking to put an end to those practices. The government even has the right to ask for a breakup of the Silicon Valley icon.

Read the Lawsuit Against Apple

The antitrust suit is the federal government’s most significant challenge to the reach and influence of the company.

The lawsuit caps years of regulatory scrutiny of Apple’s wildly popular suite of devices and services, which have fueled its growth into a nearly $2.75 trillion public company that was for years the most valuable on the planet. It takes direct aim at the iPhone, Apple’s most popular device and most powerful business, and attacks the way the company has turned the billions of smartphones it has sold since 2007 into the centerpiece of its empire.

By tightly controlling the user experience on iPhones and other devices, Apple has created what critics call an uneven playing field, where it grants its own products and services access to core features that it denies rivals. Over the years, it has limited finance companies’ access to the phone’s payment chip and Bluetooth trackers from tapping into its location-service feature. It’s also easier for users to connect Apple products, like smartwatches and laptops, to the iPhone than to those made by other manufacturers.

“Each step in Apple’s course of conduct built and reinforced the moat around its smartphone monopoly,” the government said in the lawsuit, which was filed in the U.S. District Court for the District of New Jersey. It added that the company’s practices resulted in “higher prices and less innovation.”

Apple says these practices make its iPhones more secure than other smartphones. But app developers and rival device makers say Apple uses its power to crush competition.

“This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets,” an Apple spokeswoman said. “If successful, it would hinder our ability to create the kind of technology people expect from Apple — where hardware, software, and services intersect. It would also set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology.”

Apple is the latest company the federal government has tried to rein in under a wave of antitrust pressure in recent years from both the Justice Department and the Federal Trade Commission, to which the Biden administration has appointed heads sharply focused on changing the laws to fit the modern era. Google, Meta and Amazon are all facing similar suits, and companies from Kroger to JetBlue Airways have faced greater scrutiny of potential acquisitions and expansion.

The lawsuit asks the court to stop Apple from engaging in current practices, including blocking cloud-streaming apps, undermining messaging across smartphone operating systems and preventing the creation of digital wallet alternatives.

The Justice Department has the right under the law to ask for structural changes to Apple’s business — including a breakup, said an agency official, who spoke on condition of anonymity. The official declined to identify what additional action the agency could request in this case but any demands would be tied to how a court rules on the question of whether — and how — Apple broke the law.

It’s unclear what implications the suit — which is likely to drag out years before any type of resolution — would have for consumers. Apple plans to file a motion to dismiss the case in the next 60 days. In its filing, the company plans to emphasize that competition laws permit it to adopt policies or designs that its competitors oppose, particularly when those designs would make using an iPhone a better experience.

Apple has effectively fought off other antitrust challenges. In a lawsuit over its App Store policies that Epic Games, the maker of Fortnite, brought in 2020, Apple persuaded the judge that customers could easily switch between its iPhone operating system and Google’s Android system. It has presented data showing that the reason few customers change phones is their loyalty to the iPhone.

It also has defended its business practices in the past by highlighting how the App Store, which it opened in 2008, created millions of new businesses. Over the past decade, the number of paid app makers has increased by 374 percent to 5.2 million, which Apple has said is a testament to a flourishing marketplace.

Every modern-day tech giant has faced a major federal antitrust challenge. The Justice Department is also pursuing a case against Google’s search business and another focused on Google’s hold over advertising technology. The Federal Trade Commission filed a lawsuit accusing Meta, which owns Facebook, of thwarting competition when it bought Instagram and WhatsApp and another accusing Amazon of abusing its power over online retail. The F.T.C. also tried unsuccessfully to block Microsoft from acquiring Activision Blizzard, the video game publisher.

The lawsuits reflect a push by the regulators to apply greater scrutiny to the companies’ roles as gatekeepers to commerce and communications. In 2019, under President Donald J. Trump, the agencies opened antitrust inquiries into Google, Meta, Amazon and Apple. The Biden administration has put even more energy behind the effort, appointing critics of the tech giants to lead both the F.T.C. and the antitrust division of the Department of Justice.

In Europe, regulators recently punished Apple for preventing music streaming competitors from communicating with users about promotions and options to upgrade their subscriptions, levying a 1.8 billion-euro fine. App makers have also appealed to the European Commission , the European Union’s executive arm, to investigate claims that Apple is violating a new law requiring it to open iPhones to third-party app stores.

In South Korea and the Netherlands , the company is facing potential fines over the fees it charges app developers to use alternative payment processors. Other countries, including Britain, Australia and Japan, are considering rules that would undercut Apple’s grip on the app economy.

The Justice Department, which began its investigation into Apple in 2019, chose to build a broader and more ambitious case than any other regulator has brought against the company. Rather than narrowly focus on the App Store, as European regulators have, it focused on Apple’s entire ecosystem of products and services.

The lawsuit filed Thursday focuses on a group of practices that the government said Apple had used to shore up its dominance.

The company “undermines” the ability of iPhone users to message with owners of other types of smartphones, like those running the Android operating system, the government said. That divide — epitomized by the green bubbles that show an Android owner’s messages — sent a signal that other smartphones were lower quality than the iPhone, according to the lawsuit.

Apple has similarly made it difficult for the iPhone to work with smartwatches other than its own Apple Watch, the government argued. Once an iPhone user owns an Apple Watch, it becomes far more costly for them to ditch the phone.

The government also said Apple had tried to maintain its monopoly by not allowing other companies to build their own digital wallets. Apple Wallet is the only app on the iPhone that can use the chip, known as the NFC, that allows a phone to tap-to-pay at checkout. Though Apple encourages banks and credit card companies to allow their products to work inside Apple Wallet, it blocks them from getting access to the chip and creating their own wallets as alternatives for customers.

The government said that Apple refuses to allow game streaming apps that could make the iPhone a less valuable piece of hardware or offer “super apps” that let users perform a variety of activities from one application.

The government’s complaint uses similar arguments to the claims it made against Microsoft decades ago, in a seminal lawsuit that argued the company was tying its web browser to the Windows operating system, said Colin Kass, an antitrust lawyer at Proskauer Rose. He added that the most compelling allegation — and the one that brings it closest to the Microsoft case — is that Apple could be contractually preventing rivals from developing apps that work with other app providers, as “super apps” could.

Other legal experts noted that companies are legally allowed to favor their own products and services, so the government will have to explain why that is a problem with Apple.

“This case is about technology,” Mr. Kass said. “Can the antitrust laws force a company to redesign its product to make it more compatible with competitors’ products?”

Apple has defended itself against other antitrust challenges by arguing that its policies are critical to make its devices private and secure. In its defense against Epic Games, it argued that restraining the distribution of apps allowed it to protect the iPhone from malware and fraud. The practice benefited customers and made the iPhone more attractive than competing devices with Android’s operating system.

The government will try to show that the effect of Apple’s policies was to hurt consumers, not help them.

“Competition makes devices more private and more secure,” said Jonathan Kanter, assistant attorney general of the Justice Department’s antitrust division. “In many instances, Apple’s conduct has made its ecosystem less private and less secure.”

David McCabe covers tech policy. He joined The Times from Axios in 2019. More about David McCabe

Tripp Mickle reports on Apple and Silicon Valley for The Times and is based in San Francisco. His focus on Apple includes product launches, manufacturing issues and political challenges. He also writes about trends across the tech industry, including layoffs, generative A.I. and robot taxis. More about Tripp Mickle

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