Final Exam Flashcards

Question

Martin Marietta v. Vulcan

Answer 1

A party must not be able to breach a confidentiality agreement and reap the benefit of the misconduct in a takeover attempt. Confidentiality agreements matter, and will be enforced. Note: a standstill provision would have made this case a non-starter. So include them, and be unambiguous in all language as much as possible.

Answer 2

* NDA — remember term, definition of representatives, etc... * LoI — make sure it's non-binding. But some parts are binding, like provisions that relate to the process of conducting the negotiations and proceeding towards a more definitive agreement.

Answer 3

Make sure it's non-binding. But some parts are binding, like provisions that relate to the process of conducting the negotiations and proceeding towards a more definitive agreement. See picture for pros and cons.

Answer 4

There is a ceiling and floor, stock will fluctuate between them. This is meant to limit the risk. There is risk within the collar, but the ultimate price they must pay can't go above or below those lines. "For equity securities, a collar agreement establishes a range of prices within which a stock will be valued or a range of share quantities that will be offered to assure the buyer and seller of getting the deals they expect. The primary types of collars are fixed-value collars and fixed share collars. A collar may also include an arrangement in a merger and acquisition deal that protects the buyer from significant fluctuations in the stock's price, between the time the merger begins and the time the merger is complete. Collar agreements are utilized when mergers are financed with stock rather than cash, which can be subject to significant changes in the stock's price and affect the value of the deal to the buyer and seller."

Answer 5

he answer isn't when they're disclosing. They're exceptions to the R&Ws! They provide additional information pursuant to R&Ws.

Answer 6

* **Conduct of Business**: run company in ordinary course of business (must get consent) * **Antitrust**: hell or high water provisions: buyer has to close, even if crazy unforseen things happen in between * **Stockholder meetings and related documentation** * Deal Protection Devices: No shops, window shops, no talks * **Best Efforts, Reasonable Best Efforts, and Reasonable Efforts Clauses**: reasonable person with these three effort standards (full force to middle to meh) to obtain regulatory clearances, etc... (like divesting certain company assets/divisions) * **Fiduciary Out Provisions**: allow the board of directors of the target company to consider alternative offers or proposals from third parties, even after signing an agreement with a particular buyer. These provisions are designed to protect the interests of the target company's shareholders and to ensure that the board fulfills its fiduciary duty to act in the best interests of the shareholders.

Answer 7

Use these for public transactions, or some super big private companies! They protect the transaction between signing and obtaining shareholder approval

Answer 8

They allow the board of directors of the target company to consider alternative offers or proposals from third parties, even after signing an agreement with a particular buyer. These provisions are designed to protect the interests of the target company's shareholders and to ensure that the board fulfills its fiduciary duty to act in the best interests of the shareholders.

Answer 9

They allow a party (often the buyer) to terminate the agreement or renegotiate the terms if a material adverse change occurs that significantly impacts the target company's business, financial condition, or prospects between the signing of the agreement and the closing date. They exclude systematic risk and merger-specific risk, but cover idiosyncratic risks: * **Idiosyncratic**: specific to a particular company or asset and are not directly related to broader market or systematic factors. They are unique risks that are inherent to the operations, industry, or circumstances of the company. * **Systematic**: broad economic or market risks that affect the entire industry or market, rather than specific companies or assets. They are external factors that can impact the overall business environment. * **Merger-specific**: Merger-specific risks are directly related to the process of merging or acquiring another company. They arise from the transaction itself and the subsequent integration of the two companies.

Answer 10

Akorn: Target. Fresenius: Acquirer. A started to do terribly — whistleblower said theyir products didn't comply with regulatory requirements. Court: For F to have the right not to close, F must show that the effect was material **AND** would continue for a durationally significant period of time. Durationally significant: Can't be a hiccup, must be longer (years). And must impact the company specifically. Note: Walking away from an M&A transaction based on a MAC, is nowhere near as easy as it is to walk away from another type of K with a force-majeure provision! MAC and MAE provisions are souped-up FM provisions. Harder to trigger. There are highly-negotiated carve-outs, lots of stuff that CAN'T trigger an MAE.

Answer 11

These are the R&Ws which were made as of the signing date, but are being "brought down" to closing! True and correct as of both dates. This BD condition will put different standards of truthfulness on the different R&Ws! For the deal not to close bc the condition hasn't been satisfied, it must be something egregious! We've gotten this far, there must be something super bad to have your performance be excused. Double materiality: "R&W will be true — except where failure (disregarding…) would not, indiv or in the aggregate reasonably be expected to have a company MAE." The BD R&Ws have materiality qualifieres in them, which is a double MAC! ® It's hard to prove a MAC, and now we add on ANOTHER MAC! This is double materiality * THAT IS WHY we have "disregarding all qualifications as to materiality or MAEs" * Strike out any terms regarding MACs when you look at the R&Ws then, in context of this 8.2! * No double MAC, just one MAC. Instead of 2 high standards, just 1! But now it's 1 standard all across the board.

Answer 12

This will provide all the termination events for each or both parties to get out of doing the agreement. * Read termination provisions along with termination fee triggers — not every termination results in breakup fee being paid. * Remember closing conditions — if one of them is not satisfied, that's a way of getting out of the agreement without triggering the termination fees. Termination events will sometimes trigger termination fees. For example: no stockholder approval, or if they get a superior proposal, no deal. But they may still need to pay the termination fee.

Answer 13

* Normally only in the context of private company transactions. * These result from the survival of Reps and Warranties — R&Ws **typically** survive the closing between **one and two years**; **but** R&Ws going to the title of assets, to the authorization to enter into the agreement, and to the capitalization of the company, will likely survive **indefinitely**.

Answer 14

* Stock sales: Shareholders * Asset sales: Selling corporation * Merger of CHCs (closely held): Shareholder of acquired corporation * Note: $$ needed to pay indemnification claims (normally only those that would be paid 1-2 years out) will be placed in escrow at closing.

Answer 15

Clarity! Draft everything without ambiguity, that's what leads to litigation leter. Prof says: that's great, but you have limited time. Can't make everything perfectly clear or anticipate every possible problem in the future.

Answer 16

This is a defensive tactic used by target of hostile takeover to prevent the takeover: Flip-In Poison Pill vs. Flip-Over Poison Pill — flip-in poison pills aim to dilute the value of a target company's shares to deter takeovers, while flip-over poison pills offer shareholders of the target company the opportunity to benefit from the acquiring company's success, thereby making a hostile takeover less appealing.

Answer 17

These are in relation to the threat posed!

Answer 18

Unitrin came out after Unocal. This applies to Deal Protection Devices! Two part test: Coercive or preclusive, and range of reasonableness. Note: Every deal protection device is preclusive!! That's the nature of a DPD! This makes it harder for people to make offers, and shareholders from hearing offers. No shop provision with limited fiduciary out (example). So this is where the range of reasonableness comes into play.

Answer 19

1. Public auction 2. Pre-signing market check (market canvass) 3. Single bidder 4. Singel bidder & bargains for a post-agreement market check — window shop (or go shop) Note: this period is when we have confidnetiality agreement and LoI

Answer 20

1. No shops 2. Matching rights 3. Information rights 4. Standstills (continuing from pre-signing) 5. Crown Jewel Asset Lock-up Options 6. Stock Lock-Ups (voting agreements) 7. Force the Vote Provisions 8. Change of Board REccomendation Provisions 9. Termination Fees

Answer 21

Here, we're concerned with Revlon and Lyondale, etc... — how knowlegeable was the board about the value of the company? How good was the process? Factors for Special Knowledge / Sufficiently Reliable Evidence about company's value: 1. # of bidders contacted/involved 2. General awareness of company and industry 3. Solicitation fo financial/legal advice 4. How active was the board in overseeing the process? Number of meetings, length of meetings, what happened in these meetings, who's presenting, etc... 5. Attempts to negotiate higher prices and/or less deal protection or other terms 6. Past ngotiations with same or other bidders This is application of Revlon, not about Unocal (for Unocal, we'd talk about DPDs separately. This is if they've satisfied Revlon duties). Note: Maximizing sale price isn't necessarily dollar figure itself. We can consider other factors: certainty of closing, antitrust/regulatory issues (maybe take lower dollar figure but have more certainty of closing, maybe due to HSR hart Scott issues).

Answer 22

Mostly used in financial deals as opposed to strategic deals Target is allowed to actively shop itself Duration — go shop period starts when deal is signed, and extends for some preiod after signing (25-50 days after signing, you can go out and actively solicit other offers and enter into transaction with someone who makes a superior offer during that time. This is opposite of a no shop). That’s the problem — have already set up the agreement, and other provisions in agreement coul prevent or inhibit others from coming to make an offer. Some sort of termination fee will still be applicable! Vested rights clauses: allow target to continue discussions with competing bidders identified during the go shop period Two-tiered termination fees Often lower fee of the accept a superior proposal during the go-shop period Issue: does the whole deal need to get done (agreement signed) in the GS period? Or does lower fee also apply if proposal is submitted during the GS period but accepted afterward? This will be negotiated. Timeline: Once signing of agreement, go shop starts. Once it's done, you enter into the no shop period (can't even continue conversations started in GS period). This lasts until shareholder approval of original deal.

Answer 23

Part 1: Process — Does BJR or Revlon apply? Here, we ask: how many times did the board meet? What were instructions to counsel? Bankers? What were instructions of the board? What was the premium? What did the board know and investigate? Part 2: Deal Protection Devices — Unocal Will also examine K language.

Answer 24

The more extensive the sales process, more knowledge you build as a board of directors, the stronger DPDs you can have! There's a correlation between if you've gone out and canvassed the market big time, full auction process, what are people willing to pay for this company, you know your stuff. You can have much stronger DPDs then. Can be closer to outer edges of what courts would allow/find reasonable. VS if you're solely negotiating with a single bidder. No canvassing the market, etc… then your argument for having strong DPDs is much weaker. See Omnicare, they really just had a single bidder.

Answer 25

Deal Protection Devices

Answer 26

Under the business judgment rule, a business determination made by a corporation’s board of directors is presumed to be fully informed and made in good faith and in the best interests of the corporation. However, this presumption is rebuttable if the plaintiffs can show that the directors were grossly negligent in that they did not inform themselves of “all material information reasonably available to them.” The court determines that in this case, the Trans Union board of directors did not make an informed business judgment in voting to approve the merger. The directors did not adequately inquire into Van Gorkom’s role and motives behind bringing about the transaction, including where the price of $55 per share came from; the directors were uninformed of the intrinsic value of Trans Union; and, lacking this knowledge, the directors only considered the merger at a two-hour meeting, without taking the time to fully consider the reasons, alternatives, and consequences. The evidence presented is sufficient to rebut the presumption of an informed decision under the business judgment rule. The directors’ decision to approve the merger was not fully informed.

Answer 27

**Rule**: When the break-up of a corporation is inevitable, the duty of the corporation’s board of directors changes from maintaining the company as a viable corporate entity (**reasonable responses to the threat**) to maximizing the shareholders’ benefit when the company is eventually and inevitably sold (**reasonable value maximization**) **Court**: In cases where a board implements “anti-takeover measures,” the burden is on the directors to prove that their actions were reasonable. However, the business judgment rule kicks in if they prove a good faith and reasonable investigation resulted in their decision. In the present case, the Revlon board’s initial defensive measures—its exchange offer for Notes—was reasonable under the holding in Unocal Corporation v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985), given the board’s determination that Pantry Pride’s offer was less than adequate. However, when Pantry Pride continually increased its offer, the court determines that it became obvious that “the break-up of [Revlon] was inevitable.” **At that point, the Revlon board’s duty was changed from maintaining Revlon as a viable corporate entity to maximizing the shareholders’ benefit when the company was eventually and inevitably sold.** By granting the lock-up option to Forstmann that in turn guaranteed par value for the Note holders who were threatening litigation against Revlon, it is apparent that **the Revlon board of directors had their own legal interests in mind, rather than the maximization of Revlon shareholders’ benefits.** There was essentially an auction ongoing between Forstmann and Pantry Pride for Revlon’s shares and the granting of the lock-up option effectively ended the auction rather than letting the auction play out to obtain the highest bid for the Revlon stockholders. The Revlon board put its own legal interests first to the detriment of the stockholders. This constitutes a breach of the board’s duty of loyalty and therefore the board is not entitled to the deference of the business judgment rule. The lock-up option should be enjoined. "**Revlon Mode**" or "Revlon Land" — this means you can consider other constituencies (like employees, community, debtors, etc…) BUT those MUST be related to the maximization of shareholder value. **Other Flashcard**: When the company puts itself up for sale and a break-up becomes inevitable, the directors’ role changes from defenders of the corporate bastion to auctioneers charged with getting the best price for the stockholders at a sale of the company. Burden shifts to the board of directors to prove that their actions were reasonable. If the board can satisfy this burden, they are given business judgement rule deference.

Answer 28

When there's a **change of control** (**QVC**) WHen a transaction will cause a **break-up of the corporate entity**: When the board started to negotiate the sale of the company —** when they decided that they wanted to sell** the company (**Lyondell**) A**ctive bidding process to sell itself, in response to a bidders offer**, etc... (see picture). When you have a **cash** transaction! When is Revlon applicable? It's not clear cut. Courts have focused on change of control and the acquisition consideration. If all stock transaction, Revlon is inapplicable. BjR. BUT Companies should still try to maximize shareholder value? Examples: * 100% Cash, Revlon applicable — yes. * 62% cash — likely yes * 50% cash — yes, but "not free from doubt." * 42% cash — no * 33% cash — no * 100% stock — no, unless controlling stockholder (like in QVC). Leveraged buy out, etc… that's a Revlon transaction. Stock for Stock, normally BjR. Will have friendly transaction on test! Revlon or BjR? Not Unocal, bc that's only applicable in context of hostile takeovers. DPDs are a different thing. Process = BjR or Revlon!

Answer 29

**Prof Big takeaway**: Revlon applies in CoC transactions. **Don't need CoC AND inevitable breakup of company. CoC is enough**. **If a corporation undertakes a transaction that will cause a change in corporate control or a break-up of the corporate entity, the directors’ obligation is to seek the best value reasonably available to the stockholders.** Defensive measures such as a no-shop provision making it difficult or unfeasible for a corporation to accept another offer may not legally prevent directors from carrying out their fiduciary duties to the corporation and its stockholders. In the case at bar, there were no protections in the merger agreement for the Paramount stockholders who were about to become minority stockholders in the corporation. Those stockholders are entitled to receive a control premium and because there were no protections built into the agreement, it was up to the Paramount board of directors to obtain for them the best possible value. Because of the no-shop and other draconian defensive measures in the agreement—that the Paramount directors agreed to and did not modify even in the amended merger agreement—the Paramount directors were not able to do this and thus did not fulfill their fiduciary duties. In addition, QVC repeatedly demonstrated a willingness to meet and exceed Viacom’s offers. Paramount’s failure to acknowledge this and amend the merger agreement with Viacom to make it more favorable constitutes a breach of fiduciary duty.

Answer 30

Rule: a fiduciary satisfies its good-faith requirement if it cannot be demonstrated that the fiduciary **intentionally** failed to act in the face of a known duty to act. Prof: to breach Revlon, board MUST breach duty of loyalty. Certain steps, like an acution or market check may help a board maxmimize shoareolder calue, but there is no requirement that these steps be taken. Prof: **No single blueprint to satisfy Revlon duties! Lot's of ways to do it. Throw this into your final when talking about Revlon**! Since they had an exculpation provision, the board members can only be liable for bad faith (hard to prove). Inadequate attempt to perform revlon duties may be a breach of care but not bad faith or breach of the duty of loyalty. If directors strive to fulfil thier duty, they have protection**. It would take an exremem set of facts to sustain a disloyalty claim** based on the idea that directors were intentionaly disregarding thier duties. Revlon triggered: when the board started to negotiate the sale of the company. When they decided that they wanted to sell the company, that's when Revlon is triggered.

Answer 31

What Standard of Review is applicable to DPDs in a Revlon deal? * Chancery court has applied Unocal to DPDs in Revlon reals "or at least mention, the preclusion or coercion elements of Unocal review." * We've been looking at DPDs in context of Revlon — enhanced scrutiny applies to DPDs in Revlon context. BUT: in Revlon transaction, is it Revlon or Unocal enhanced scrutiny? Do we have to do coercive, preclusive, fall within a range of reasonableness? * Their either formally applying Unocal to Revlon cases DPDs, or their mentioning the requirements (preclusion, coercion, range of reasonableness). Maybe they'll say these DPDs are individually and together not coercive, and they fall within a range of reasonableness. * For DPDs, even if you have a Revlon transaction, you have to consider DPDs using the Unocal enhanced scrutiny standard! The threat is that someone else will come along and make an offer. Talk about preclusive-ness, talk about coercion, and talk about range of reasonableness. **Summary** Process: BjR or Revlon DPDs: Concerned with Unocal standard

Answer 32

A termination fee in a merger agreement is a valid liquidated-damages provision if the actual damages that would result from a breach are uncertain and the fee the parties fixed is reasonable and neither coercive nor unconscionable. * Stock for stock deal so the deal process **should** be governed by BjR! See P562; and Deal Protection by Unocal (see Omnicare) * BUT court applies liquidated damages test (looking to see whether the fee is punitive and not compensatory): Are damages uncertain/incapable of accurate valuation? Is the amount a reasonable forecast of actual damages? Or is it a penalty? * Compensatory: termination fees should compensate you for time/money that has been spent to make the deal happen up until that point.

Answer 33

Now, mergers must have a fiduciary-out provision! Deal-protection devices that are designed to force the consummation of a merger and foreclose consideration of any superior transaction are preclusive and coercive, and they are thus unenforceable. The court held that the deal protection devices here were unenforceable as they were unreasonable and disproportionate to the threat of potentially losing the deal. This robbed stockholder vote of any effectiveness! The court also held that given the **voting agreements**, the r**equirement that the board submit the deal to stockholders for a vote**, and the **omission of a fiduciary out clause** prevented the board from exercising its fiduciary duties to minority stockholders. **Note**: maybe one of the above would have been ok, but taken together they totally and impermissibly locked up the transaction. **Dissent**: board was on brink of bankruptcy, and tried for a long time to get a buyer. If they couldn't negotiate those terms, they wouldn't have found this buyer! **Prof**: this was a stock for stock transaction, so ordinarily subject to BJR. Prof thinks this case was not decided correctly. But has gone back and forth. **Courts will give more leeway when you're in a situation like this company where you're about to declare bankruptcy, backed into a corner**. Now though, companies cite Omnicare and say they can't agree to excessive lockup provisions.

Answer 34

* Gauge potential interest/seriousness. Intent to do deal * Clarify terms of transaction — price and structure * Can help to obtain financing * Can use it to start regulatory process Make sure it's not binding! Don't let people use that to get a deal done. Say this "LoI" is not binding, only portions are bidnign (like confidentiality, negotiate in good faith, etc...). Say that no agreement unitl a definiteive agreement is reached, one that's contemplated.

Answer 35

* Can't start DD until NDA is in place. * This will prevent buyers from disclosing/using conf. info. (CI) for thier own benefit or for benefit of someone else. * If deal falls apart, info returned or destroyed.

Answer 36

* Information that already is public * Information that buyer already had * Without breach by buyer, a third party made it available * Information put together using publically available information — thier own work-product

Answer 37

Buyer can't go out and purchase more stock during period. Typically will last for a year — depends on nature of information Can waive standstill provisions — board can do this.

Answer 38

MAC (Material Adverse Change) or MAE (Material Adverse Effect) clauses **typically cover idiosyncratic risks**, such as company-specific events or changes that materially impact the target company's financial condition or operations. However, **they often exclude systematic risks**, which are broader market or industry factors affecting many companies, **and merger-specific risks**, which are risks directly related to the M&A transaction itself. Let's break down these types of risks with examples in the context of a company acquiring another in the oil and gas industry: Another merger-specifc risk: The acquiring company intends to merge the operations of the target company with its existing assets to achieve synergies and cost savings. However, during the integration process, unexpected challenges arise in aligning the two companies' systems, processes, and corporate cultures. This could lead to delays in realizing the anticipated benefits of the merger, increased integration costs, and disruptions in operations.

Answer 39

It must be a covered risk (idiosyncratic). It must be durationally significant. Other requirements below:

Answer 40

Stock for stock: Everyone must approve. parent is a constituent, and using all stock. Cash out: Parent's SHs may have to approve, but not if the 251(f) exception is met (CS2): Under DGCL § 251(f), the shareholders of the surviving corporation are not required to vote on the merger if **each** of the following conditions is satisfied: The company’s certificate of incorporation is not amended; There is no change in the characteristics of the outstanding stock of the surviving corporation; and the surviving corporation does not issue more than twenty percent of its outstanding stock in connection with the transaction."

Answer 41

* To not trigger certain changes like anti-assignment provisions (though will trigger CoC provisions) * Maintaining goodwill (brand) * Company remains in existence, just changes ownership

Answer 42

Hostile: Unocal is used for process. Friendly: BjR or Revlon for process, and Unocal for DPDs.

Answer 43

Check out page 12 of Omnicare and the section that starts with this: “A board's decision to protect its decision to enter a merger agreement with defensive devices against uninvited competing transactions that may emerge is analogous to a board's decision to protect against dangers to corporate policy and effectiveness when it adopts defensive measures in a hostile takeover contest.” The threat for DPDs is simply that the target may lose the incumbent buyer and/or that another bidder may come along and disrupt the first transaction. You have to analyze the deal protection individually and together as a package using the Unocal/Unitrin analysis. The DPDs must be reasonable in relation to threat posted (remember this second part is a two-part analysis and entails an analysis of first whether the DPDs are coercive or preclusive and if they are neither, then you look at the range of reasonableness). The range of reasonableness analysis is typically where you are talking about whether the deal protection devices are “standard” or “market.” This is like we discussed during the review session. It might be helpful to review how the Omnicare court dealt with the DPDs in that case to see the court’s analysis.

Answer 44

So, we only discussed this in the context of there not being a controlling shareholder of the target shares before the transaction but there being one after (this is the case of QVC). I think it’s helpful to review the QVC case for this. In short, the argument is that what the shareholders are holding is different pre and post-merger because of the domination of the controlling shareholder (essentially their voting rights don’t mean anything because the controlling shareholder will win every time). Revlon is triggered in such a case (review the PowerPoint and class notes from the second to last class and last class for this). With respect to whether there is a controlling shareholder before the transaction and then no controller on the buy-side, we did not discuss this in class so it’s not fair game for the final exam. But for your own knowledge Revlon is not triggered then.

Answer 45

To confirm my understanding of “double-materiality,” there are certain MAE/MAC provisions within the R&Ws (e.g., a litigation or capitalization representation). Next, there are the closing conditions, that typically have a “bring-down” clause essentially requiring all R&Ws to be true as of closing as if made at the time of closing. These bring-down clauses is where the “double-materiality” normally comes in by applying an additional MAE/MAC standard. But in practical effect, it strips the R&W’s prior MAC/MAE’s provisions, and applies an overarching MAC/MAE standard necessary for closing. So it adds “materiality” for the specified (or unspecified) provisions, without regard to whether or not any prior MAE/MAC provisions existed. And the primary purpose for adding a provision like this would be to essentially CYA. Is this the gist of it? Answer: Yes, this is the gist. Remember you have to read the actual bringdown condition to see what level of truthfulness must be satisfied. For most of the reps and warranties, the original materiality qualifiers will be stripped out and the rep and warranty will be subject to an overall MAE/MAC.

Answer 46

As for standstill agreements. Standstills are provisions typically within the NDA lasting 6 months that essentially bind the bidder’s actions (e.g., approaching shareholders directly, publicly disclosing the potential deal, liquidating any existing shares they might have). Ancillary to Standstills can also be “don’t ask, don’t waive” provisions (“DADW”) meaning if the target is in any current standstills with other bidders, they will not waive them, despite engaging in similar negotiations with another bidder. DADW provisions raise questions of fiduciary duty whenever a company has an obligation to seek the highest value for the company in the event of the sale because DADWs encourage “best and final,” instead of engaging in a negotiation dialogue. In essence, Standstills and DADW provisions are deal protection devices for the target, giving them more of a chance to control the bidding process and preventing a bidder from potentially going rogue. Is that correct? Answer: Pretty much. They can be longer than 6 months. Also, to be clear the DW part of a DADW will typically be in a merger agreement signed up with a "winning bidder." Because of caselaw questioning DADW standstills, most standstills are not DADW these days.

Answer 47

Closing conditions are conditions precedent to closing, which means that before the deal can close every condition listed must be either satisfied or waived by parties (sometimes waiver is not possible – for example, in the context of regulatory clearances, those must be obtained or cleared. There’s no possibility for parties to say we waive the regulatory clearances because the law requires these clearances). If conditions are not satisfied, performance under the contract is excused (meaning the deal is not going to close and the agreement will terminate). Generally, if there is a failure of a closing condition, the parties will mutually agree to terminate the agreement. If they can’t agree, then they will litigate. So, failure of a closing condition leads to termination. The termination section includes events that lead to termination and often these events will lead to the payment of a termination fee (you must read the termination fee section with the termination section to determine if the event leads to payment of a fee). The big difference between termination events and closing conditions is when termination fees must be paid. Generally, the failure to satisfy closing conditions isn’t going to trigger the payment of termination fees. So, if a closing condition fails, the party who has failed the condition will not be liable for fees unless there is a breach of the agreement.

Answer 48

251(C) says all SHs of the two constitutent corporations must vote. 251(F) has an exception! "No vote of stockholders of a **constituent corporation surviving a merger** shall be necessary to authorize a merger if: 1. No amendemnt to certificate of incorporation (changing the name counts as a disqualifying change); 2. No change to the characteristics of the outstanding stock owned by these shareholders (shares remain identical before and after merger); AND 3. The authorized but unissued shares that the surviving company will use to finance the transaction is no more than 20% of the total outstanding shares immediaetly before the merger.