This is a template for an Opinion Letter of Counsel regarding a Merger. The letter,
prepared by the attorney for the company that is going to be acquired, and for the
purchasing company, opines that the company to be acquired is in good standing,
qualified to do business, has no serious pending litigation, can and will execute the
merger agreement, which will be binding upon the company, and explains the
company's current capitalization. This document contains language that is common for
any industry. Use of this letter is important because it determines whether or not a
merger will be viable by auditing the company to be acquired.
___________ [Instruction: Insert Law Office Name]
___________ [Instruction: Insert Company Address 1]
___________ [Instruction: Insert Company Address 2]
___________ [Instruction: Insert Date]
___________ [Instruction: Insert Names]
___________ [Instruction: Insert Address 1]
___________ [Instruction: Insert Address 2]
Re: Merger of ___________ [Instruction: Insert Corporation Name] and
___________ [Instruction: Insert Corporation Name]
We have acted as counsel for ___________ [Instruction: Insert Corporation Name], a
___________ [Instruction: Insert State] corporation (the “Company”), in connection with the
negotiation, execution, and delivery of that certain Agreement and Plan of Merger (the “Merger
Agreement”) dated as of ___________ [Instruction: Insert Date], by and between the
Company, the Company’s shareholders (the “Shareholders”), and ___________ [Instruction:
Insert Acquiring Corporation] (the “Buyer”). This opinion letter is delivered pursuant to
section __ [Instruction: Insert Section Number] of the Merger Agreement. Unless otherwise
defined herein or the context otherwise requires, all capitalized terms used in this opinion letter
shall have the respective meanings assigned to them in the Merger Agreement.
1. Examinations. In rendering the opinions hereinafter expressed, we have examined and relied
upon such documents and instruments as we have deemed appropriate, including the following
documents and instruments: ___________ [Instruction: Insert documents and instruments
that were reviewed. Examples of documents that may have been reviewed are: the Merger
Agreement; the “Certificate of Merger”; Certificates from officers and employees of the
Company; Certificate of Status indicating that the Company is in good standing; Letter
from the Franchise Tax Board of the State of California relating to the tax status of the
Company; Resolutions of the board of directors and shareholders of the Company
regarding to the acquisition documents; the Articles of Incorporation of the Company; The
Company’s Certificate of Listing; and the bylaws of the Company.]
2. Assumptions. In conducting our examination, we have assumed, without investigation, the
genuineness of all signatures, the correctness of all certificates, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all copies submitted to us
and the authenticity of the originals of such copies, and the accuracy and completeness of all
records made available to us by the Company and the Shareholders. In addition, we have
assumed, without investigation, the accuracy of the representations, warranties, and covenants as
to factual matters made in the Merger Agreement and the Certificate of Merger (collectively, the
“Acquisition Documents”) and the accuracy of representations and statements as to factual
matters made by officers and employees of the Company, the Shareholders, and public officials.
Whenever a statement herein is qualified by “known to us,” “we are not aware,” “to our
knowledge,” or similar phrase, it is intended to indicate that, during the course of our
representation of the Company and the Shareholders, no information that would give us current
actual knowledge of the inaccuracy of such statement has come to the attention of those
attorneys in this firm who have rendered legal services in connection with the representation
described in the introductory paragraph of this opinion letter. However, except as otherwise
expressly indicated, we have not undertaken any independent investigation to determine the
accuracy of such statement, and any limited inquiry undertaken by us during the preparation of
this opinion letter should not be regarded as such an investigation; no inference as to our
knowledge of any matters bearing on the accuracy of any such statement should be drawn from
the fact of our representation of the Company or the Shareholders. The opinions hereinafter
expressed are subject, without investigation, to the following assumptions:
A. Upon execution and delivery, the Merger Agreement will be a valid, binding, and
enforceable obligation of the respective parties thereto. The Acquisition Documents will be
enforced in circumstances and in a manner in which it is commercially reasonable to do so.
B. Other than the Company or the Shareholders, no party to the transaction contemplated by
the Acquisition Documents, or any document or oral agreement relating thereto, is subject to any
statute, rule, or regulation, or to any impediment to which contracting parties are generally not
subject, that requires the Company, the Shareholders, or such party to obtain the consent of, or to
make a declaration or filing with, any governmental authority.
C. All terms, provisions, and conditions of, or relating to, the merger transaction are
correctly and completely reflected in the Acquisition Documents.
3. Qualifications. The opinions hereinafter expressed are subject to the following
A. Our opinions in paragraphs 4.I) and 4.J), are subject to:
i. The effect of bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent conveyance, and other similar laws now or hereafter in effect relating to or affecting
the rights of creditors generally;
ii. The limitations imposed by state or federal law, and/or equitable principles upon the
validity, binding effect, or enforceability of any of the remedies, covenants, or other provisions
of the Acquisition Documents and upon the availability of injunctive relief or other equitable
remedies, including, without limitation, the effect of state and federal court decisions, invoking
statutes or principles of equity, that have held that certain covenants and provisions of
agreements are unenforceable where: (1) the breach of such covenants or provisions imposes
restrictions or burdens upon one party, including the acceleration of indebtedness due under debt
instruments, and it cannot be demonstrated that the enforcement of such restrictions or burdens is
reasonably necessary for the protection of the other party, or (2) a party’s enforcement of such
covenants or provisions under the circumstances would violate such party’s implied covenant of
good faith and fair dealing; and
iii. The power of state or federal courts to refuse to enforce, or to stay the enforcement
of, any provision of the Acquisition Documents that purports to waive the rights of the Company
or the Shareholders to assert the claims or defenses available to the Company or the Shareholders
by statute, common law, or equity.
B. Our opinion in paragraph 4.B) is based solely upon certificates from public officials, as to
the qualification and good standing of the Company in the states specified.
C. Our opinion in paragraph 4.F) is subject to the following:
i. We express no opinion relating to the effect of the Acquisition Documents under any
financial test or ratio contained in any of the instruments or agreements referred to in paragraph
ii. When reviewing instruments and Merger Agreements that are governed by the laws
of any jurisdiction other than ___________ [Instruction: Insert State], we have not undertaken
any independent investigation of the laws of such other jurisdiction, and we refer you to our
qualification in paragraph 3(F).
D. Our opinions below are limited to the matters expressly set forth in this opinion letter,
and no opinion is to be implied or may be inferred beyond the matters expressly so stated.
E. We disclaim any obligation to update this opinion letter for events occurring after the
date of this opinion letter.
F. Except as otherwise provided herein, our opinions below are limited to the effect of the
state laws of the State of ___________ [Instruction: Insert State]; accordingly, we express no
opinion with respect to the laws of any other jurisdiction, or the effect thereof, on the
transactions contemplated by the Acquisition Documents.
4. Opinions. Based upon and subject to the foregoing, we are of the opinion that:
A. The Company is a corporation validly existing and in good legal standing under the laws
of the State of ___________ [Instruction: Insert State].
B. The Company is qualified to do business as a foreign corporation and in good standing in
the states of ___________ [Instruction: Insert States].
C. The Company has corporate power to execute, deliver, and perform the Merger
Agreement and to consummate the transactions evidenced thereby. The Merger Agreement has
been duly authorized by all necessary corporate action on the part of the Company and has been
duly executed, acknowledged, and delivered by the Company.
D. The Shareholders have full power and authority to enter into and perform the Merger
Agreement and ___________ [Instruction: Insert Any Other Documents]. The Merger
Agreement and ___________ [Instruction: Insert Any Other Documents] have been duly
executed, acknowledged, and delivered by the Shareholders.
E. The Company’s authorized capitalization consists of ___________ (_____) [Instruction:
Insert Amount] shares of ___________ [Instruction: Insert Type] stock, each with a par value
of ___________ Dollars ($_____) [Instruction: Insert Amount], of which ___________
(_____) [Instruction: Insert Amount] shares are issued and outstanding. We are not aware of
any outstanding subscriptions, warrants, calls, options, rights, commitments, or agreements by
which the Company is bound calling for the issuance of shares of any class of its capital stock, or
for the issuance of any securities convertible or exchangeable, actually or contingently, into
shares of its capital stock.
F. The execution and delivery of the Acquisition Documents and the merger provided for
therein do not:
i. Conflict with or result in a violation of the Company’s Articles of Incorporation or
Bylaws or any judgment, order, or decree known to us of any court, arbitrator, or governmental
agency, rendered in a matter to which the Company was subject, and in which it was a named
ii. Result in a material breach of any of the terms or conditions of, result in the
imposition of any lien or encumbrance upon any properties of the Company pursuant to, or
constitute a default or result in an occurrence of an event as to which any holder or holders of
indebtedness may declare the same due and payable under any credit agreement or other similar
instrument known to us under which the Company is a party or by which the Company or any of
its properties is bound.
G. Except as otherwise disclosed, there is no litigation, proceeding, or investigation known
to us before or by any court, arbitrator, or governmental authority, whether state, local, or
federal, pending or threatened against the Company, wherein an unfavorable decision, ruling, or
finding would materially and adversely: (i) affect the Merger Agreement or the merger provide