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.
Rhode Island Checklist of Matters that Should be Considered in Drafting a Merger Agreement A merger agreement is a critical document that governs the entirety of a merger or acquisition transaction. The state of Rhode Island has specific requirements and considerations that must be accounted for in the drafting of a merger agreement. The following checklist outlines the essential matters that should be considered when drafting a merger agreement in Rhode Island: 1. Parties involved: Clearly identify and provide detailed information about the merging companies, including their legal names, principal places of business, and jurisdiction of incorporation. 2. Recitals: Include the purpose and background of the merger, outlining the strategic objectives and benefits to be achieved. 3. Consideration: Specify the type and amount of consideration to be exchanged, such as cash, stock, or a combination of both, along with any adjustments or contingencies related to the calculation of the consideration. 4. Representations and warranties: Provide a comprehensive list of representations and warranties made by each party, covering areas such as corporate authority, financial statements, tax matters, intellectual property, contracts, and compliance with laws. 5. Covenants: Identify the obligations and responsibilities of each party, including pre-closing covenants like limiting certain actions, non-solicitation, and confidentiality provisions, as well as post-closing covenants regarding integration, employee matters, or dispute resolution mechanisms. 6. Conditions precedent: Specify the conditions that must be satisfied before the merger can be completed, such as obtaining required regulatory approvals, shareholder consent, third-party consents, and the absence of material adverse changes. 7. Termination provisions: Address the circumstances under which either party can terminate the merger agreement, including the payment of a termination fee, if applicable. 8. Indemnification: Define the scope and limitations of indemnification obligations, including survival periods for representations and warranties and any specific indemnification procedures unique to Rhode Island. 9. Governing law and jurisdiction: State that the merger agreement will be governed by and interpreted under Rhode Island law, and designate a specific jurisdiction for any disputes arising under the agreement. 10. Miscellaneous provisions: Include additional provisions related to dispute resolution mechanisms, assignment of the agreement, notice provisions, entire agreement clauses, and non-waiver clauses. Different Types of Rhode Island Checklist of Matters that Should be Considered in Drafting a Merger Agreement: 1. Checklist for Public Company Mergers: This checklist provides additional considerations specific to mergers involving publicly traded companies, including disclosure requirements, regulatory filings, and stockholder approvals. 2. Checklist for Merger of Equals: When two companies of similar size and market presence merge, this checklist focuses on issues such as management structure, governance, and the integration of management teams. 3. Checklist for Cross-Border Mergers: Cross-border mergers introduce additional complexities, such as compliance with foreign laws, foreign exchange regulations, and securing approvals from multiple jurisdictions. This checklist delves into those unique considerations. In summary, drafting a merger agreement in Rhode Island requires a careful examination of the specific legal requirements and relevant considerations. Adhering to a comprehensive checklist can help ensure that all crucial matters are addressed, ultimately enabling a smooth and successful merger process.
