Merger Agreement (Private Company, Pro-Seller)

by Practical Law Corporate & Securities, with environmental provisions by Andrew N. Davis, Ph.D. and Aaron D. Levy, Shipman & Goodwin LLP.

A Standard Document that serves as a long-form agreement for the acquisition of a US private corporation by merger, drafted to be favorable to the target company and its stockholders. This agreement is well-suited for transactions conducted as an auction, where a target company may solicit competing bids from multiple potential acquirers. It assumes the transaction is structured as a reverse triangular merger between Delaware corporations, governed by the Delaware General Corporation Law (DGCL), with a gap between signing and closing. This Standard Document addresses critical aspects of the deal, including the treatment of common stock and options, the appointment of a stockholder representative, and post-closing obligations. It establishes a framework for purchase price adjustments, including provisions for a working capital true-up mechanism, and utilizes escrow funds to secure the stockholders' indemnification obligations. The provisions are structured to limit the target's post-closing liabilities, covering key areas such as representations and warranties, survival periods, and limitations on liability.