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.
Pennsylvania Checklist of Matters that Should be Considered in Drafting a Merger Agreement: 1. Entity Formation and Legal Authority: — Determine the legal entity form and ensure the merger complies with Pennsylvania law. — Verify the authority of each entity to enter into the merger agreement. 2. Merger Structure: — Define the specific structure of the merger, such as a stock or asset purchase, merger of equals, or triangular merger. — Consider tax implications and potential benefits for each party involved. 3. Purchase Price and Consideration: — Specify the purchase price or consideration to be paid, including any adjustments or contingencies. — Address the allocation of consideration between cash, stock, or other forms. 4. Representations and Warranties: — Detail the representations and warranties made by each party regarding their respective businesses, assets, and liabilities. — Include provisions regarding the accuracy of financial statements, ownership of intellectual property, compliance with laws, and disclosure of material facts. 5. Due Diligence and Disclosure: — Outline the extent of due diligence to be conducted by each party and the sharing of information. — Determine the timelines and obligations for disclosing material information discovered during due diligence. 6. Closing Conditions and Termination: — Enumerate the conditions that must be met for the merger to close successfully. — Address the termination rights of both parties, including circumstances that would allow a party to terminate the agreement. 7. Employee Matters: — Consider the treatment of employees in terms of benefits, wages, and retention plans post-merger. — Determine any potential reorganization or redundancies that may occur and their implications. 8. Indemnification and Liability: — Define the indemnification obligations of each party in case of breach of representations, warranties, or covenants. — Specify the limitations on liability for both parties, including caps, baskets, and survival periods. 9. Governing Law and Dispute Resolution: — Choose the governing law of the merger agreement, which should be Pennsylvania. — Determine the forum and method of dispute resolution, such as arbitration or litigation in Pennsylvania courts. 10. Ancillary Agreements and Consents: — Identify any additional agreements required for the completion of the merger, such as non-compete agreements or intellectual property transfers. — Address the need for third-party consents, such as landlord approvals or customer notifications. Types of Pennsylvania Checklists for Merger Agreements: 1. Pennsylvania Merger Agreement Checklist for Small Businesses: — Tailored to small businesses, this checklist emphasizes simplicity, cost-efficiency, and basic legal compliance. 2. Pennsylvania Merger Agreement Checklist for Complex Mergers: — For larger or more complex mergers involving multiple entities, industries, or jurisdictions, this checklist covers a broader set of legal, regulatory, and financial considerations. 3. Pennsylvania Merger Agreement Checklist for Specific Industries: — Industry-specific checklists may exist for sectors such as healthcare, finance, technology, or energy, addressing specific regulatory requirements and industry practices. 4. Pennsylvania Merger Agreement Checklist for Non-Profit Organizations: — Designed for mergers involving non-profit entities, this checklist focuses on compliance with tax-exempt laws, charitable trust obligations, and governance principles. Note: The above examples showcase hypothetical types of Pennsylvania merger agreement checklists; the actual availability and categorization may vary.
