1. Tips from the Trenches: M&A Trends for 2011 John F. Grossbauer Michael K. Reilly Potter Anderson & Corroon LLP Dallas Bar M&A Section Meeting February 8, 2011

2. 2  The Latest On Delaware M&A: The Friendly Two Step Tender Offer  M&A and the “Unified Theory”: A New Roadmap  Revlon Revisited: When, Why and Who Really Cares Anyway?  Post-Closing Adjustments: Some Comfort and a Caution  Poison Pills: The Latest Developments  Arbitration in the Court of Chancery: A New Option For Contracting Parties M&A Trends for 2011

3. 3 The Latest On Delaware M&A: The Friendly Two Step Tender Offer  Trend favoring the friendly two step –Modification of Best Price Rule –Timing Advantages –Result = 30% in 2007, 49% in 2008, 61% in 2009  Top-up option –Need Significant Authorized Shares –Terms of the note Cash for aggregate par value? –Appraisal Issues Olson v. ev3, Inc. In re Cogent, Inc. S’holder Litig.  Indenture or other issues?

4. 4 M&A and the “Unified Theory”: A New Roadmap  Majority Stockholders: Have the rules changed?  One Step Mergers –In re John Q. Hammons Hotels  Two Step Mergers –CNX – Supreme Court declined interlocutory appeal –Cox Radio – Supreme Court does not address  Structure for business judgment?  Effect on deal value?  Burden shifting is still available  Another example of Court preference for proactive directors

5. 5 Revlon Revisited: When, Why and Who Really Cares Anyway?  Revlon triggers –Initiate active bidding process –Abandon long term strategy in favor of break-up –Change of control  End stage transactions –Reverse-split freeze-outs Reis v. Hazelett Strip-Casting Corp. –Mix of stock and cash mergers Steinhardt v. Howard-Anderson (Occam) –Stock for stock mergers (the whale and minnow)  Effect of triggering Revlon –Reasonableness standard of review –Contextually specific obligations of the board –No blueprint

6. 6 Revlon Revisited: When, Why and Who Really Cares Anyway?  What’s the Remedy? –Lyondell and 102(b)(7) (but what about officers?) –Forgo v. Health Grades, Inc. (Transcript) “[T]he number of times that this Court has ever enjoined stockholders from considering a premium-generating transaction in the absence of fear of a disclosure violation or coercion and the absence of a higher competing offer…- it’s basically a null-set.” –In re Cogent, Inc. S’holder Litig. (absence of favoring one bidder over another). –Possibility of an injunction remedy nevertheless?  Disclosure violations –Maric Capital; Art Technology; Zenith; Occam  Omnipresent duty to maximize value  Deal protections and process – intertwined

7. 7 Post-Closing Adjustments: Some Comfort and a Caution  Drafting the escrow properly –Imposing obligations vs. Adjusting merger consideration  Aveta v. Bengoa –Post-closing adjustment enforced –Court relied on statutory authority (facts ascertainable) –Implies limits on ability to bind non-signers  Implications for deals with escrows –Properly drafted escrows work –Enforceability issues for “stockholder reps” –Doubt about whether non-signers can be bound to true indemnification provisions –Court may be skeptical about deductions for appraisal claims

8. 8 Poison Pills: The Delaware Handbook  Keeping the Pill “on the shelf” –“Window Closing Pill” inconsistent with this strategy  Using the Pill to protect NOLs –Selectica –Impact on Proxy Contests?  Using the Pill to defend against activists –Barnes & Noble –Impact on Proxy Contests?  Using the Pill to protect the corporate culture –Craigslist v. eBay  When must Pill be redeemed? –Airgas  Should targets adopt a Pill in a friendly deal?

9. 9 Arbitration in the Court of Chancery: A New Option  Permits business entities to consent to voluntary binding arbitration  Chancellor, Vice Chancellor or Master  Three distinct advantages: –Confidential proceedings –Swift resolution –Opportunity to resolve monetary disputes  Mechanics –Agreement to arbitrate (which can predate dispute) –All parties must have consented –At least one party a Delaware business entity –No party may be a consumer –For monetary relief, amount must exceed $1 million

10. 10 John F. Grossbauer Direct Dial: (302) 984-6131 Email: jgrossbauer@potteranderson.comjgrossbauer@potteranderson.com Michael K. Reilly Direct Dial: (302) 984-6181 Email: mreilly@potteranderson.commreilly@potteranderson.com Potter Anderson & Corroon LLP Hercules Plaza, 6th Floor 1313 North Market Street Wilmington, DE 19801 www.potteranderson.com