Merger Plan Type C
This is an agreement of merger and plan for and
tax-free reorganization pursuant to Internal
Revenue Code of 1986 § 368(c). The Agreement of
merger and Plan for reorganization calls for the
seller to transfer all of its assets and liabilities to the
buyer, in exchange for voting common stock in
buyer. The seller then dissolves and distributes the
stock to the shareholders of seller. This agreement
template has schedules to indicate the various assets
transferred and to allow for due diligence to be
performed and for closing of the merger and
acquisition.
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EXPRESS, IMPLIED, OR OTHERWISE, INCLUDING AS TO THEIR LEGAL EFFECT AND
COMPLETENESS. They are for guidance and should be modified to meet your needs and the
laws of your state. Use at your own risk. Docstoc and anyone who participated in providing or
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does not provide legal advice. The information and forms are not a substitute for the advice of
your own attorney.
AGREEMENT OF MERGER AND PLAN FOR REORGANIZATION
THIS AGREEMENT OF MERGER AND PLAN FOR REORGANIZATION (the “Agreement”)
made as of ___________ [Instruction: Insert Date], by and between ___________
[Instruction: Insert Buying Corporation Name], a ___________ [Instruction: Insert State]
corporation, with its principal office located at ___________ [Instruction: Insert Address] (the
“Buyer”), and ___________ [Instruction: Insert Selling Corporation Name], a ___________
[Instruction: Insert State] corporation, with its principal office located at ___________
[Instruction: Insert Address] (the “Seller”).
WHEREAS, Buyer wishes to merge with Seller and acquire all of Seller’s assets and certain of
Seller’s liability, in exchange for the transfer of certain shares of Buyer’s stock, and Seller is
agreeable, subject to the following the terms and conditions;
NOW, THEREFORE, in consideration of the promises and other good and valuable
consideration set forth, the parties agree as follows:
1. Transfer of Assets and Liabilities. Subject to the conditions set forth in this Agreement, the
Seller shall transfer and convey to Buyer all of Seller’s Assets, as defined in paragraph 1(A),
along with the Seller’s Liabilities, as defined in paragraph 1(A).
A. Assets. Buyer shall acquire from Seller all assets, properties and rights of Seller, as set
forth in Exhibit “A”, attached hereto and incorporated herein, including but not limited to, the
good will of the business of the Seller, its corporate name and all variants of such name, its
patents, trademarks, and tradenames, and all other assets of the business owned and operated by
the Prospective Seller (the “Assets”).
B. Liabilities. Buyer shall assume, discharge, and indemnify the Seller against, all debts,
contracts, obligations, and liabilities of Seller as reflected or referred to in Exhibit “B”, attached
hereto and incorporated herein. In addition, Buyer shall assume, discharge and indemnify Seller
against, all debts, obligations, and liabilities of Seller that have arisen or will arise in the ordinary
course of its business prior to the Closing Date, as such term is defined in paragraph 0 below (the
“Liabilities”). Buyer shall not, however, be liable for: (A) any income tax or other tax arising
out of this merger and reorganization or the distribution of the proceeds to the shareholders of
Prospective Seller or the winding up and dissolution of Prospective Seller; or (B) Any liabilities
incurred by Prospective Seller as a result of agreements that it may enter into in violation of the
terms of this Agreement; and (C) all other obligations and liabilities incurred by Prospective
Seller after the Closing Date.
2. Issuance of Stock. In consideration for the transfer and conveyance set forth in paragraph 1,
Buyer shall issue and deliver to the Seller, ___________ (______) [Instruction: Insert Amount]
fully paid and non-assessable voting shares of Prospective Buyer’s common stock (the
“Shares”). Promptly following the complete execution of this Agreement, Buyer shall take any
and all necessary action for the issuance of the Shares to be delivered to Seller for registration of
such Shares under applicable state and federal securities regulations. Buyer’s failure to complete
such action in a satisfactory manner shall render this Agreement voidable at Seller’s option.
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3. Closing Date. The closing of the transaction contemplated by this Agreement shall take
place on ___________ [Instruction: Insert Date], at ___________ [Instruction: Insert Time]
(the “Merger Date”), at ___________ [Instruction: Insert Address].
4. Dissolution of Seller
A. Promptly following the Closing Date, Seller shall proceed to wind up its affairs, liquidate,
and distribute its assets, including the Shares received by Buyer pursuant to this Agreement, and
voluntarily dissolve.
B. . Within ___________ (___) [Instruction: Insert Number] days following the Closing
Date, Seller will prepare and file all income tax returns and reports required under applicable
state and federal law covering all periods prior to the closing date for which tax returns and
reports have not previously been filed.
5. Approval of the Shareholders. Buyer and Seller shall, within ___________ (___)
[Instruction: Insert Number] days following the execution of this Agreement, call special
meetings of their respective shareholders for the purpose of considering and approving this
Agreement and for the purpose of authorizing all other matters necessary or incident to the
consummation of this Agreement.
6. Representations and Warranties.
A. Seller’s Representations and Warranties. Seller represents and warrants that:
i. Corporate Status. Seller is a corporation duly organized, validly existing, and in good
standing under the laws of ___________ [Instruction: Insert State], with an authorized capital
structure consisting of ___________ (___) [Instruction: Insert Number] shares of common
stock, each with a par value of ___________ Dollars ($_____) [Instruction: Insert Amount], of
which ___________ (___) [Instruction: Insert Number] shares have been duly issued and are
outstanding, fully paid, and non-assessable. Seller has no subsidiaries or affiliates.
ii. Corporate Authority. Seller has the corporate power and authority to carry on its
business as it is now being conducted and to own and operate its assets and business.
iii. Financial Statements. The balance sheet of Seller as of ___________ [Instruction:
Insert Date], and related statements of income and retained earnings of Seller for the past three
fiscal years, copies of which are reproduced as Exhibit “C”, attached hereto and incorporated
herein, which are true and complete and have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with that of prior periods. Each
statement fairly presents the financial condition and the results of the operations of Seller as of
the dates and for the periods indicated.
iv. Distribution of Assets. Since ___________ [Instruction: Insert Date], there has been
no change in the financial condition of Seller except changes that have taken place in the
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ordinary course of business; and there has been no damage, destruction, or loss materially and
adversely affecting the assets or business of Seller.
v. Title to Property. Seller has good and marketable title to all of its Assets, free of all
restrictions on transfer or assignment and of all encumbrances and liens other than those
disclosed in Exhibit “A”. Seller has delivered to Buyer an additional schedule, a copy of which
is reproduced as Exhibit “D”, attached hereto and incorporated herein, describing briefly all land,
buildings, and structures owned by Seller. All such buildings, structures, and all machinery,
equipment, and other properties owned or used by Seller are in good operating condition and
repair, are adequate and sufficient for all current operations of Seller, and conform with all
applicable ordinances, regulations, and other laws pertaining to the same.
vi. Intellectual Property. Exhibit “E”, attached hereto and incorporated herein, is a true
and complete schedule setting forth all patents, trademarks, copyrights, and all pending
applications for the same owned or licensed by Seller, none of which is the subject of litigation.
vii. Leases and Contracts. Seller has delivered to Buyer true and complete schedule of all
the contracts, leases, licenses, or commitments to which Seller is a party. Said schedule are
reproduced as Exhibit “F”, attached hereto and incorporated herein. All such agreements are
valid, binding, and in full force and effect, and there is no existing default under them. Seller has
obtained the written consent of all third parties to such contracts, leases, or commitments as
necessary for the assignment of such rights to Buyer.
viii. Proceedings and Claims. There are no judgments, liens, actions, or proceedings
pending against Seller anywhere which might result in any substantial and adverse change in the
business or properties of Seller, and there are no citations of violations pending against Seller’s
business.
ix. Taxes. Seller has filed all tax returns required to be filed by it, and all taxes due and
payable by Seller on or before the date of this Agreement have been paid.
x. Insurance. Seller now has in force fire, liability, and other insurance with respect to
its properties and, except in accordance with the written approval of Buyer, will not change,
increase, or decrease any such insurance prior to the Closing Date.
B. Buyer’s Representations and Warranties. Buyer represents and warrants to Seller that:
i. Corporate Status. Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of ___________ [Instruction: Insert State], with an authorized capital
structure consisting of ___________ (___) [Instruction: Insert Number] shares of common
stock, each with a par value of ___________ Dollars ($_____) [Instruction: Insert Amount], of
which ___________ (___) [Instruction: Insert Number] shares have been duly issued and are
outstanding, fully paid, and non-assessable. Buyer has no subsidiaries or affiliates.
ii. Corporate Authority. Buyer has the corporate right and authority to acquire and
operate the properties and business now owned and operated by Seller.
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iii. Financial Statements. Buyer has delivered to Seller copies of its balance sheet as of
___________ [Instruction: Insert Date], and related statements of income and retained earnings
of Buyer for the past three fiscal years, copies of which are reproduced as Exhibit “G”, attached
hereto and incorporated herein, which are true and complete and have been prepared in
accordance with generally accepted accounting principles applied on a basis consistent with that
of prior periods. Each statement fairly presents the financial condition and the results of the
operations of Buyer as of the dates and for the periods indicated.
iv. Status of Shares. The shares of Buyer’s common stock to be delivered pursuant to
this Agreement, when issued and delivered as provided in this Agreement, will be duly and
validly issued and will be fully paid and non-assessable.
7. Covenants Pending Closing Date
A. Seller’s Covenants. Until the Closing Date, Seller covenants that:
i. Seller will carry out only such activities as are necessary in the ordinary course of
business;
ii. Seller will use its best efforts to preserve for Buyer the goodwill of suppliers,
customers, and others having business relationships with Seller;
iii. Seller will keep and maintain Seller’s property and equipment in good operating
condition, repair, and working order;
iv. Seller will use Seller’s best efforts to perform all of its obligations under contracts
relating to or affecting the properties;
v. Seller will not declare or pay any dividend or other distribution of payment with
respect to its outstanding shares, and it will not redeem, retire, purchase, or otherwise acquire
any such stock;
vi. Seller will permit Buyer and Buyer’s representatives to examine, during normal
business hours, all books and records of Seller and will allow Buyer to make copies of books and
records as are reasonably requested by Buyer;
vii. Seller will not enter into any new contracts or make new commitments except
contracts in the ordinary course of business and will not enter into or assume any mortgage,
pledge, lien, encumbrance, or charge of any kind upon any of its properties or assets to be sold to
Buyer and will not borrow any money or incur any liability other than in the ordinary and usual
course of business;
viii. Seller will submit this Agreement to its shareholders for their approval, and shall use
its best efforts to obtain such approval; and
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ix. Seller will furnish to Buyer all information that Buyer may reasonably request or
require for use in preparation of any listing application or proxy statement to be submitted to its
shareholders in soliciting their proxies for the special meeting of shareholders to approve this
Agreement.
B. Buyer’s Covenants. Buyer covenants that pending the Closing Date:
i. Buyer will carry out only such activities, including the disposition of any property, as
are necessary in the regular and ordinary course of business;
ii. Buyer will not declare or pay any dividends, make any other distributions to its
shareholders, or issue or purchase any stock;
iii. Buyer will submit this Agreement to its shareholders for their approval, and shall use
its best efforts to obtain such approval.
iv. Buyer will furnish to Seller all information that Seller may reasonably request or
require for use in the preparation of a proxy statement to be submitted to shareholders in
soliciting their proxies for the special meeting of shareholders to approve this Agreement.
8. Conditions Precedent.
A. Buyer’s obligations hereunder are subject, at Buyer’s option, to the fulfillment, prior to
the Closing Date, of each of the following conditions:
i. The representations and warranties of Seller contained herein or any statement or
other document attached hereto or delivered hereunder shall be true and substantially correct as
of the date of this Agreement and as of Closing Date;
ii. All of Seller’s representation, warranties, covenants, promises and agreements
contained herein have been complied with;
iii. Seller shall have delivered to Buyer an opinion of counsel, dated the closing date, in
form and substance satisfactory to Buyer, that provides that: (1) the corporate existence, good
standing, and corporate power and authority of Seller are as represented and warranted in this
Agreement; (2) the common stock of Seller is validly issued and outstanding, fully paid and non-
assessable; and (3) all corporate acts and other proceedings required to be taken by Seller to
authorize it to carry out this Agreement and to sell and transfer its property as provided in this
Agreement, and to liquidate and dissolve, have been duly and properly taken;
iv. All corporate proceedings requisite to the acquisition of the assets of Seller by Buyer
in exchange for the common stock of Buyer, pursuant to this Agreement, shall have been
approved and consented to by the shareholders of Buyer; and
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v. The instruments executed and delivered to Buyer by Seller pursuant hereto are valid
in accordance with their terms, and effectively vest in Buyer good and marketable title to the
assets and business as contemplated by this Agreement, free and clear of any liabilities,
obligations, and encumbrances, except those liabilities and obligations expressly assumed by
Buyer as provided in this Agreement.
B. Seller’s obligations hereunder are subject, at Seller’s option, to the fulfillment, prior to or
at the closing, of each of the following conditions:
i. The representations and warranties of Buyer contained herein and in any statement or
other document attached hereto or delivered hereunder shall be true and substantially correct as
of the date of this Agreement and as of the Closing Date;
ii. All of Buyer’s representation, warranties, covenants, promises and agreements
contained herein have been complied with;
iii. All actions, proceedings, instruments, and documents required to carry out this
Agreement, or incidental to it, shall have been approved by counsel for Seller;
iv. Buyer shall have delivered an opinion of counsel, dated as of the Closing Date, in
form and substance satisfactory to Seller that provides that: (1) the corporate existence and good
standing of Buyer are as represented and warranted herein; (2) the common stock of Buyer when
delivered pursuant to this Agreement will constitute validly issued and outstanding shares of
Buyer, fully paid and non-assessable; and (3) all corporate acts and other proceedings required to
be taken by Buyer to authorize and carry out this Agreement and to deliver the shares of
common stock of Buyer have been duly and properly taken;
v. All corporate proceedings requisite to the sale and transfer by Seller of its properties,
and its liquidation and dissolution, shall have been approved and consented to by the
shareholders of Seller;
vi. On or before the Closing Date, the Buyer shall have obtained a written ruling or
rulings from the Internal Revenue Service to the effect that the plan of reorganization provided
for in this Agreement will be a “reorganization” as that term is defined in the Internal Revenue
Code of 1986, as amended, and that the sale of the assets and business of Seller and the
distribution to the shareholders of Seller of the shares of common stock of Buyer in connection
with the liquidation and dissolution of Seller, all as contemplated in this Agreement, will not
result in the recognition of any taxable income or deductible loss by Seller or by its shareholders.
Unless such a ruling has been obtained prior to the closing, Seller shall have the right to cancel
this Agreement.
9. Miscellaneous.
A. Each party shall pay its own expenses, taxes, and other costs incident to or resulting from
this Agreement, whether or not the transactions contemplated by this Agreement are
consummated.
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B. Any notice to be given hereunder shall be given in writing and delivered personally or by
registered or certified mail, postage prepaid to the parties at the addresses first indicated above,
or at such other address as may be updated by valid notice.
C. This Agreement constitutes the entire agreement between the parties hereto with respect
to the specific subject matter hereof and supersedes all prior agreements or understandings of any
kind with respect to the specific subject matter hereof.
D. In the event that any provision or part of this Agreement shall be deemed void or invalid
by a court of competent jurisdiction, the remaining provisions or parts shall be and remain in full
force and effect.
E. Any modification to this Agreement must be in writing and signed by the parties or it
shall have no effect and shall be void.
F. This Agreement is binding upon and shall inure to the benefit of the respective
successors, licensees and/or assigns of the parties hereto.
G. The waiver by either party of a breach or violation of any provision of this Agreement
shall not constitute a waiver of any subsequent or other breach or violation.
H. This Agreement shall be governed in accordance with the laws of the State of
_____________ [Instruction: Insert State], applicable to agreements to be wholly performed
therein, with jurisdiction exclusive to the Federal and State courts located in the County of
_____________ [Instruction: Insert County], State of ______________ [Instruction: Insert
State].
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
respective officers, at ______________ [Instruction: Insert Location], as of the date first
written above.
BUYER:
________________________________ [Instruction: sign]
By: ___________________________ [Instruction: Insert Name of Signatory]
Title: ___________________________ [Instruction: Insert Title of Signatory]
SELLER:
________________________________ [Instruction: sign]
By: ___________________________ [Instruction: Insert Name of Signatory]
Title: ___________________________ [Instruction: Insert Title of Signatory]
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Exhibit “A”
Seller’s Assets
Asset Encumbrances and/or Liens on Asset
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Exhibit “B”
Seller’s Liabilities
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Exhibit “C”
Seller’s Financial Statements
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Exhibit “D”
Seller’s Land, Buildings, and Structures
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Exhibit “E”
Seller’s Intellectual Property
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Exhibit “F”
Seller’s Leases and Contracts
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Exhibit “G”
Buyer’s Financial Statements
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