Mergers & Acquisitions – An Effective Strategyfor Growth and Sustainability…and Issues

Related to ImplementationNovember 17, 2010

Legal AspectsPaul A. Krulisky

(pkrulisk@fclaw.com) (602) 916-5330

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Legal Considerations

After the target company is identified the work continues

Letter of Intent Further Due Diligence Transaction Documents

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Transaction Structures

Mergers Stock Sale Asset Sale Isolate Assets / Liabilities Assignment Issues / Change of Control Due Diligence Continues

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Purchase Price Adjustments

Working Capital Adjustment Net Asset Adjustment Debt Adjustment Holdbacks Earn-outs

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Representations and Warranties

Tailor to Deal Required Consents

○ Contract Requirements○ Governmental

Intellectual Property○ Owned / Licensed○ Exclusivity○ Infringement

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Personal / Real Property Material Contracts Insurance Taxes Litigation Conduct of Business Prior to Closing

Representations and Warranties

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Representations and Warranties

Knowledge / Materiality Qualifiers Survival Period

○ General – one to two years○ Tax, environmental, etc. – Applicable Statute of

Limitations○ Due organization, authority to enter into

agreement – no limit

Disclosure Schedules

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Indemnification

Seller○ Representations, warranties, covenants○ Possible Exclusions in Disclosure Schedules○ Baskets / thresholds○ Caps / limitations

Buyer○ Representations, warranties, covenants○ Conduct of the business after closing

Holdback Third Party Claims

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Conditions to Buyer’s Obligations

Representations and warranties Disclosure Schedules acceptable No Adverse Proceeding No MAC / MAE Due Diligence review Consents / Approvals

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Other Matters

Nondisclosure of Confidential Information Noncompetition / Nonsolicitation Agreement Key Employees of Target Integration with Existing Operations /

Capturing Synergies