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.
Delaware is known for its business-friendly legal environment and is a popular jurisdiction for companies considering mergers and acquisitions. When drafting a merger agreement under Delaware law, there are several important considerations that should be taken into account. These considerations can be categorized into different types of Delaware Checklist of Matters that Should be Considered in Drafting a Merger Agreement: 1. Corporate Governance Matters: — Compliance with Delaware General Corporation Law (DCL) provisions. — Approval requirements related to shareholders, directors, and board committees. — Procedures for calling and conducting board and shareholder meetings. — Duties and responsibilities of officers and directors. 2. Merger Structure and Terms: — Description of the type of merger being undertaken (e.g., merger, consolidation, stock purchase, asset purchase). — Merger consideration and valuation, including the exchange ratio or purchase price. — Treatment of outstanding stock options, warrants, or convertible securities. — Conditions precedent to the merger, such as obtaining necessary regulatory approvals. 3. Representations and Warranties: — Statements made by each party regarding the accuracy of certain facts and legal matters. — Disclosure of any material contracts, pending lawsuits, or other liabilities. — Indemnification provisions to protect parties from losses arising from breaches of representations or warranties. 4. Covenants and Agreements: — Pre-closing covenants, such as non-competition, non-solicitation, and confidentiality clauses. — Post-closing covenants, including integration planning and compliance with any required regulatory approvals. — Conditions relating to conducting business between signing the merger agreement and closing the transaction. 5. Termination and Remedies: — Circumstances under which the merger agreement can be terminated by either party. — Provisions for payment of termination fees or expenses in case of certain events. — Specific performance and injunctive relief remedies available in the event of a breach. It is important to note that this is not an exhaustive list, and depending on the specific circumstances of the merger, other considerations may arise. Engaging legal counsel experienced in Delaware corporate law is highly recommended ensuring compliance with relevant laws and to tailor the merger agreement to the specific needs and requirements of the parties involved.
