Merger Plan - Type B Reorganization

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Merger Plan - Type B Reorganization Powered By Docstoc
					This document sets forth a sample plan of merger between two corporations. As
drafted, this agreement is a Type B reorganization, referring to Section 368 of the
Internal Revenue Code. Shares of the seller’s stock are exchanged for the purchaser’s
stock. This short-form merger agreement contains standard clauses commonly used in
these types of agreements but it can be customized to ensure the specific terms of the
parties’ agreement are addressed.
                              "B" Type Re-Organization Plan
   Agreement and plan of reorganization made as of the _________ day of _________[year], by and between
_________, a _________ corporation (called "purchaser") and _________, _________, and _________(called
"shareholders") all of the shareholders of _________, a _________ corporation (called "company").

                                               Plan of Reorganization

   This plan of reorganization shall be a reorganization within the meaning of Code Section 368(a)(1)(B) as
amended. Purchaser shall acquire all of the outstanding stock of the company in exchange solely for a part of
purchaser's voting common stock.

                                                     Agreement

   In order to consummate the above plan of reorganization and in consideration of the mutual benefits to be
derived and the mutual agreements contained, purchaser and shareholders approve and adopt this agreement and
plan of reorganization and mutually covenant and agree with each other as follows:

      1. Shares To Be Transferred and Shares To Be Issued.

          1.1. On the closing date the shareholders shall transfer to purchaser certificates for the number of shares
      of the company's common stock described in schedule 1 which in the aggregate shall represent all of the
      issued and outstanding shares of the company's common stock. These certificates shall be duly endorsed in
      blank by shareholders or accompanied by duly executed stock powers in blank with signatures guaranteed by
      a bank or trust company or member firm of the New York Stock Exchange.

         1.2. In exchange for the company's stock being transferred pursuant to subparagraph 1.1, purchaser shall
      on the closing date and contemporaneously with the transfer of company's common stock to it by
      shareholders issue and deliver to shareholders the number of shares of purchaser's common stock specified
      on schedule 1.

      2. Representations and Warranties of Shareholders.

          2.1. Ownership of Stock.

          Shareholders are the record owners and holders of the number of fully paid and nonassessable shares of
      the company's common stock listed in schedule 1 as of this date and will continue to own these shares of the
      company's common stock until delivery to the purchaser on the closing date and all shares of common stock
      are or will be on the closing date owned free and clear of all liens, encumbrances, charges and assessments of
      every nature and subject to no restrictions with respect to transferability. The shareholders will have full
      power and authority to assign and transfer their shares of the company in accordance with these terms.

         [Subparagraphs 2.2 through 2.5 shall be the same as subparagraphs 2.1 through 2.4 of the form in
      §3.2423 except that the references to "seller" shall be changed to "company" and, in addition, the following
      changes shall be made:]

          [In subparagraph 2.1(a), the following sentences shall be added:] The authorized capital stock of
      company is _________ shares of common stock, $_____ par value, of which _________ shares of stock are
      issued and outstanding.

          [In subparagraph 2.1(e) the clause reading "subject to the approval and adoption by the shareholders of
      seller contemplated hereby" shall be omitted]
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          [Subparagraph 2.1(f) shall be added as follows:]

          (f). Except for this agreement, there are no outstanding options, contracts, calls, commitments or demands
      of any character relating to authorized or issued stock of the company.

          [Subparagraph 2.4(k) shall be amended to read as follows:]

          (k). All negotiations relative to this agreement and the transactions contemplated have been carried on
      directly by shareholder with purchaser without the intervention of any broker or third party. Neither company
      nor shareholder has engaged, consented to or authorized any broker, investment banker or third party to act
      on its behalf directly as broker or finder in connection with the transactions contemplated by this agreement.

          [Subparagraph 2.6 shall be the same as subparagraph 2.5 of the form in §3.2423 except that the
      references to "seller" shall be changed to "shareholder"]

         [Subparagraph 2.7 shall be the same as subparagraph 3.4 of the form in §3.2423 except that the
      beginning reference to "he" shall be changed to "shareholder" and the references to "seller" shall be
      changed to "company"]

          [Subparagraph 2.8 shall be the same as subparagraph 3.5 of the form in §3.2423 except that the
      references to "seller" shall be changed to "company"]

      3. Representations and Warranties of Purchaser.

          [This paragraph shall be the same as paragraph 4 of the form in §3.2423]

      4. Covenants of Shareholders.

           [This paragraph shall be the same as paragraph 5 of the form in §3.2423 except that references to
      "seller" shall be changed to "company" and subparagraph 5.2(g) shall be modified to apply to "company and
      its subsidiaries," and subparagraph 5.3 shall be omitted]

      5. Conditions Precedent to Purchaser's Obligations.

          [This paragraph shall be the same as paragraph 6 of the form in §3.2423 except that in subparagraph 6.1
      the reference to "seller" shall be omitted; in subparagraph 6.2 the reference to "seller" shall be changed to
      "shareholder," the reference to "subparagraph 5.1" shall be changed to "subparagraph 4.1" and the
      reference to "subparagraph 13.2" shall be "subparagraph 12.2"; the references in the remaining
      subparagraphs to "seller" shall be changed to "company"; subparagraph 6.4 shall be omitted; in
      subparagraph 6.8 the reference to "subparagraph 13.4(a)" shall be changed to "subparagraph 12.4(a)";
      subparagraph 6.10 shall be omitted; and in subparagraph 6.12 the reference to "subparagraph 13.2(d)"
      shall be changed to "subparagraph 12.2(f)"]

      6. Conditions Precedent to Shareholders' Obligations.

          [This paragraph shall be the same as paragraph 7 of the form in §3.2423 except that the references to
      "seller" shall be 
				
DOCUMENT INFO
Description: This document sets forth a sample plan of merger between two corporations. As drafted, this agreement is a Type B reorganization, referring to Section 368 of the Internal Revenue Code. Shares of the seller’s stock are exchanged for the purchaser’s stock. This short-form merger agreement contains standard clauses commonly used in these types of agreements but it can be customized to ensure the specific terms of the parties’ agreement are addressed.
This document is also part of a package M&A Forms for your Business 6 Documents Included