Merger refers to the situation where one of the constituent corporations remains in being and absorbs into itself the other constituent corporation. It refers to the case where no new corporation is created, but where one of the constituent corporations ceases to exist, being absorbed by the remaining corporation.
Generally, statutes authorizing the combination of corporations prescribe the steps by which consolidation or merger may be effected. The general procedure is that the constituent corporations make a contract setting forth the terms of the merger or consolidation, which is subsequently ratified by the requisite number of stockholders of each corporation.
Alabama Checklist of Matters that Should be Considered in Drafting a Merger Agreement: A Comprehensive Guide In Alabama, when drafting a merger agreement, there are several critical matters that should be considered to ensure a smooth and legally sound merger process. This detailed checklist outlines these key areas to assist businesses and legal professionals in the state: 1. Parties involved: Clearly identify the companies participating in the merger, including their legal names, addresses, and details of their corporate structure. 2. Purpose and structure of the merger: Define the objectives and reasons for the merger and specify the proposed structure, whether it is a statutory merger, consolidation, or a stock purchase/acquisition. 3. Purchase price and consideration: Determine the purchase price and the form of consideration to be exchanged between the merging companies, such as cash, stock, or a combination thereof. 4. Representations and warranties: Enumerate the representations and warranties made by both parties concerning their respective businesses, financials, properties, and legal compliance, ensuring accurate disclosure of material information. 5. Due diligence investigations: Specify the scope and extent of due diligence reviews to be conducted before the merger, including examinations of financial statements, contracts, intellectual property, employment matters, tax liabilities, pending litigation, and regulatory compliance. 6. Conditions precedent: Outline the conditions that must be fulfilled or waived before the merger can proceed, such as obtaining necessary approvals from shareholders, regulatory agencies, or third parties. 7. Treatment of consent rights: Consider any consent rights that shareholders or other stakeholders may hold, such as change of control provisions, and determine whether they will be waived, terminated, or honored. 8. Covenants and obligations: Describe the pre-closing and post-closing covenants and obligations of both parties, covering matters such as non-competition, preserving confidentiality, employee retention, and the sharing of financial information. 9. Employee matters: Address the treatment of employees during and after the merger, including any potential redundancies, severance packages, the continuation of employee benefits, and the handling of vested interests. 10. Indemnification and liability: Determine the extent to which the parties will indemnify each other for breaches of representations, warranties, and covenants, and establish the process for making claims and resolving disputes. 11. Governing law and dispute resolution: Identify the applicable laws that will govern the merger agreement and establish the agreed-upon method of resolving disputes, such as arbitration or litigation. 12. Termination and survival clauses: Incorporate provisions outlining the circumstances and procedures for termination of the agreement, as well as the survival of certain provisions beyond the completion of the merger. It's worth noting that while the above checklist covers the general matters often considered in Alabama, specific circumstances and complexities may require additional or customized provisions in the merger agreement. Consulting with experienced legal professionals is crucial to ensure compliance with Alabama state laws and regulations in every unique merger scenario. Types of Alabama Checklists of Matters: 1. Alabama Checklist of Matters for Statutory Mergers: Specifically tailored to address the legal requirements and considerations involved in statutory mergers under Alabama law. 2. Alabama Checklist of Matters for Consolidations: Focusing on the distinct considerations related to the consolidation of multiple companies into a single entity. 3. Alabama Checklist of Matters for Stock Purchase/Acquisition Mergers: Targeting the unique matters to be addressed when a merger occurs through the acquisition of a company's stock. By utilizing these Alabama Checklist of Matters that Should be Considered in Drafting a Merger Agreement, businesses undertaking mergers in Alabama can ensure that all essential aspects are addressed, minimizing potential risks and maximizing the chances of a successful merger.
