1. Mergers & Acquisitions – An Effective Strategy for Growth and Sustainability…and Issues Related to Implementation November 17, 2010 Legal Aspects Paul A. Krulisky (pkrulisk@fclaw.com) (602) 916-5330pkrulisk@fclaw.com

2. 2 Legal Considerations  After the target company is identified the work continues  Letter of Intent  Further Due Diligence  Transaction Documents

3. 3 Transaction Structures  Mergers  Stock Sale  Asset Sale  Isolate Assets / Liabilities  Assignment Issues / Change of Control  Due Diligence Continues

4. 4 Purchase Price Adjustments  Working Capital Adjustment  Net Asset Adjustment  Debt Adjustment  Holdbacks  Earn-outs

5. 5 Representations and Warranties  Tailor to Deal  Required Consents ○Contract Requirements ○Governmental  Intellectual Property ○Owned / Licensed ○Exclusivity ○Infringement

6. 6  Personal / Real Property  Material Contracts  Insurance  Taxes  Litigation  Conduct of Business Prior to Closing Representations and Warranties

7. 7  Knowledge / Materiality Qualifiers  Survival Period ○General – one to two years ○Tax, environmental, etc. – Applicable Statute of Limitations ○Due organization, authority to enter into agreement – no limit  Disclosure Schedules

8. 8 Indemnification  Seller ○Representations, warranties, covenants ○Possible Exclusions in Disclosure Schedules ○Baskets / thresholds ○Caps / limitations  Buyer ○Representations, warranties, covenants ○Conduct of the business after closing  Holdback  Third Party Claims

9. 9 Conditions to Buyer’s Obligations  Representations and warranties  Disclosure Schedules acceptable  No Adverse Proceeding  No MAC / MAE  Due Diligence review  Consents / Approvals

10. 10 Other Matters  Nondisclosure of Confidential Information  Noncompetition / Nonsolicitation Agreement  Key Employees of Target  Integration with Existing Operations / Capturing Synergies