Spring 2016 B TRANSACTIONS AND DOCUMENT DRAFTING Transactions... · Legal Drafting course and...

BUSINESS TRANSACTIONS AND DOCUMENT DRAFTING (A Skills-Based Seminar & Workshop)

University of Florida Levin College of Law

Law 6802

Spring Term – 2016

COURSE SYLLABUS _______________________

ADJUNCT FACULTY / INSTRUCTORS / COACHES:

Daniel H. Aronson (Leader, Organizer & Coordinator) – Partner | Berger Singerman LLP

Louis T. M. Conti – Partner | Holland & Knight LLP

Gardner F. Davis – Partner | Foley & Lardner LLP

Gregory C. Yadley – Partner | Shumaker, Loop & Kendrick LLP

CLASS DAY, TIME AND ROOM:

Wednesdays – 1:00 pm to 2:50 pm (commencing January 6, 2016)

Classroom – 355D (Holland Hall)

BOOKS AND MATERIALS: The principal books and resource materials for this course are:

Course Materials Book (Volumes I and II) (compiled and edited by Daniel H. Aronson)

Charles M. Fox, Working with Contracts: What Law School Doesn't Teach You (2nd

Ed. 2008)

Documents & Forms Supplement (accessible solely via the Course TWEN site)

Practical Law (Thomson Reuters) Documents, Forms, Practice Pointers, Checklists & Resources

Additional articles, outlines, materials, exercises, databases and other resources will be introduced and

provided from time to time throughout the term (via in-class handouts, TWEN site posting and data base

logins). Students are urged and expected to read regularly (daily) The Wall Street Journal (a form for

discounted student and online subscriptions will be provided during our first class).

PREREQUISITES: The Course – a two credit skills-based seminar and workshop – is limited to 20 law

students, with registration preference (based on submitted applications) given to 3Ls who have

completed certain courses (Securities Regulation, Mergers & Acquisitions and Unincorporated

Business Enterprises). In addition, the Course is only available to students who have completed the

Legal Drafting course and either the Corporations or Business Associations Survey course.

CLASS PREPARATION AND ATTENDANCE; ASSIGNMENTS; GRADING: Because the class

meets only once each week, and given the skills-based, drafting-focused and “hands-on” interactive

nature of the Course and planned exercises, both advance preparation for and attendance at ALL classes

are essential to the incremental learning experience. Students are expected to read all assigned

materials (per the detailed Course Schedule & Reading Assignments outline to be distributed during our

first class and as posted on the TWEN site and as otherwise assigned by faculty) in advance of each

class. Drafting exercises and certain other assignments will be distributed (and then submitted by

students, and reviewed and “scored” by faculty) – both in class and via TWEN site (“Assignments &

Quizzes”) submission/posting – throughout the term. There is no Final Exam for this Course. Each

student’s final grade will be based on a composite of all "scored"/graded drafting assignments, as well

as thoughtful and meaningful participation and performance in class (including in our five planned in-

class drafting exercises). Please see the Course “Ground Rules & Administrative Matters”

accompanying this Syllabus and posted on the TWEN site.

Business Transactions and Document Drafting Spring 2016

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GROUND RULES & ADMINISTRATIVE MATTERS

Attendance, Participation, Professionalism & Respect. Students are required to attend every class

(barring emergency or illness excused in advance) and to be prepared for and participate in all class

discussions, exchanges and exercises. Please be and stay engaged, informed and committed. Advance

preparation includes reading and thoughtfully considering all assigned material and thinking about and

preparing responses (including drafts) to assigned questions and exercises. In class, you are expected (i) to

volunteer, willingly respond and to participate when called upon, and (ii) to conduct yourself

professionally, and to respect and be courteous to your fellow classmates (and course faculty).

Reading Assignments. The detailed Course Schedule & Reading Assignments outline (distributed during

our first class and posted on TWEN) lists the reading (and skimming) material assigned, on an advance,

class-by-class basis, over the course of the spring term. This list (and your advance review and reading

assignments) will be updated, revised and supplemented from time to time, either in class by the assigning

faculty member or via periodic posting on TWEN. Importantly, your faculty relies heavily on the

assumption that each student will timely complete all assigned reading in advance of the relevant class.

Grading (and Assignment “Scoring”). Your final grade in this Course will be based on:

90% - Performance (Composite Scores) on Homework Assignments

10% - Class Participation (including timeliness, preparation, respect, thoughtfulness, meaningful

engagement and performance, in the Course Coordinator’s discretion)

Preparing and Submitting Homework Assignments. All homework exercises and assignments (seven

are planned) will be assigned and submitted solely via the Assignments & Quizzes link on the Course

TWEN site. Please review and follow carefully the “Guidelines for Preparing and Submitting Homework

Assignments” posted on the Course TWEN site (under the Assignments & Quizzes link).

Note on Deadlines: Your faculty reserves the right not to accept any assignment which is submitted

late (i.e., after the posted “due” date and time). If a faculty member determines to accept a tardy

submission, the “score” for that submission may automatically be lowered by 10%.

Collaboration; Use of Forms/Precedents/External Resources; Doing your Own Work (Honor Code).

In general, all scored/graded work, exercises and assignments in this Course will be individual in nature

(with each student expected to do his or her own work). When you are expected to work in pairs or teams,

the assigning faculty member will make that clear. There will be much class discussion about the proper

role and use of forms, precedents and other resources in document preparation, drafting and negotiation.

At best, a form is only a starting point. Using a form, precedent or drafting resource is not the same thing

as using (or basing one’s work on) another student’s work, drafting effort or responses (the latter is

impermissible plagiarism), whether from this or a previous version of this course. If you have any

questions about this, please ask. The honor code applies to this Course and all its exercises and

assignments.

Office Hours; Meetings with Faculty. The four members of your course faculty are full-time practicing

attorneys who work (and live) outside the Gainesville area. Generally, an “on duty” adjunct will be at the

law school each Wednesday during the term approximately two hours before and one to two hours after

each class. Occasionally, the faculty will be on campus other days and times as well. We will maintain an

“open door” policy while at the law school (in our assigned faculty office – Room 362, Holland Hall),

seeing students on a “first come, first (re)served” basis. If you desire to schedule an appointment, please

contact the instructor teaching the class the week in question to arrange a mutually convenient time to

meet. In addition, as part of the Course, we encourage each student to meet with each of the adjunct

faculty members (at least once outside of class).


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BUSINESS TRANSACTIONS AND DOCUMENT DRAFTING

(A Skills-Based Seminar & Workshop)

University of Florida Levin College of Law

Spring Term - 2016

COURSE SCHEDULE &

READING ASSIGNMENTS

_______________________

Class Session(s)

(Date(s))

1 - 2 Introduction; Business Lawyer’s Role, Skills-Base, Approach, Functions &

(Jan. 6 & 13) Value-Adds; Contract Building Blocks and Drafting Resources; Framework

and Model for Developing Skills and Proficiency in Contract Drafting and

Transaction Negotiation

(Mr. Aronson)

Course Overview & Full Syllabus with Assigned Reading List; Ground Rules &

Administrative Matters; Respect & Professionalism; Class Participation & Exercises;

Grades (and “Scoring” of Assignments) & Assignment Feedback; Course TWEN Site

and Other Resources; Adjunct Faculty, Office/Office Hours & Appointments

A. Introduction: Business/Transactional Lawyer's Role, Skills-Base, Mindset,

Rigor, Tool Kits and Value Adds (Business Lawyer’s Role as Trusted Counselor,

Strategist, Translator, Issues Identifier/Narrower/Resolver, Drafter, Advocate,

Negotiator, Risk/Compliance Advisor, Choreographer & Execution Specialist)

B. Framework for Developing Proficiency in Contract Drafting and Transaction

Negotiation; Client-Centered Approach – Building Trust; Assessing, Creating

and Adding Value Early, Often and Throughout Relationship

C. Building Blocks and Critical Provisions of Contracts and Business Documents

D. Negotiating Contracts & Transactions – The Art & Craft of Negotiation through

Listening, Analyzing, Drafting, Leveraging Information and Utilizing

Qualification, Limitation and Exception Tools & Resources

E. A Primer on (and the Importance of) Letters of Intent (LOIs) and Term Sheets

F. A Model for Developing and Improving Contract Drafting Skills; Related In-

Class Drafting Exercise (A) – Class 2

G. Introduction to and Context for First Homework (H/W) Assignment (#1)

ASSIGNED READING (Prior to Class 1):

Fox – Table of Contents; Chapters 1 and 2

Course Materials Book (Vol. I, Forepart) – Table of Contents; Syllabus; Ground Rules

& Administrative Matters; Course Overview & Schedule (Pages i-viii)

Course Materials Book – Pages 2 - 24 (Part I), 29 - 60, 636 - 639, 640 - 646

Case: Find and Read United Rentals, Inc. v. Ram Holdings, Inc., 937 A.2d 810

(Del. Ch. 2007)

Documents & Forms Supplement (link on Course TWEN site) – Selected Consumer

Contracts folder (Skim all six contracts)


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Additional Course Materials (link on Course TWEN site) – Read (posted articles)

Wordsmithing – Why contract language shouldn’t be an afterthought (K. Adams);

and What They Don’t Teach Law Students: Lawyering (D. Segal)

MANDATORY ONLINE WEBINAR (After Class 1, on Thursday, January 7, at 6:00

pm) re: Practical Law (Thomson Reuters Legal Solution) Database and Resource

Platform – Introduction, Overview and Useful Resources for Business Lawyers & Law

Students (log-in and access details to be provided by email) [Note: Regarding

references to “Practical Law” materials below, each student must be able to login,

access and review documents, tools and resources on the Practical Law Database.]

ASSIGNMENT (Prior to Class 2): Review and Be Prepared to Discuss Email Request to

Spring 2016 Law Associate (re: New Client – Need Your Help) (to be posted on

Course TWEN site by Mr. Aronson)


Fox – Chapter 3, Chapter 4, Chapter 5 (Sections 5:1 - 5:5) and Chapter 8

(Sections 8:3 and 8:4)

Course Materials Book – Read Pages 24 - 28 (Part II), 61 - 73 (re: Primer on Letters

of Intent and Term Sheets); and pages 285 - 297, 390 - 409, 596; Skim pages

603 - 624 (Selected Pages and Excerpts from ABA Model Asset and Stock

Purchase Agreements with Commentary)

Practical Law – Read Aligning Associate Training with Client Needs; and Drafting or

Reviewing a Commercial Contract

Case: Find and Read Espresso Disposition Corp. 1 et al. v. Santana Sales & Marketing

Group, Inc., No. 3D12-1147 (Fla. 3d DCA, November 14, 2012)

Documents & Forms Supplement (link on Course TWEN site) – Sample Contracts –

Drafting Progression Series folder – Skim Residential Real Estate - Purchase and

Sale Agreement (3 versions); and Selected Private Company Documents &

Agreements folder – Skim Contract of Sale (Commercial Real Estate)

OPTIONAL SUGGESTED READING (Articles of Interest) (Prior to Class 2):

Additional Course Materials (link on Course TWEN site) – Read (posted article)

Teaching Contract Drafting to First-Year Law Students in Three Hours or Less (S.

Payne)

HOMEWORK (H/W) ASSIGNMENT (Class 2):

First H/W Assignment (#1) – Assigned @ End of Class 2 by Mr. Aronson

3 Organizing and Working with Business Entities and their Constituent

(Jan. 20) Documents – An Introduction

(Mr. Conti)

A. Primer on Business Entity Differences & Entity Selection Considerations

B. Keys to Effective Org Doc Drafting: Importance of State Statute(s), “Default”

and Procedural Provisions, and Terms that may not be Altered or Modified

C. Preparing & Drafting LLC Organizational Documents – Articles of

Organization/Certificate of Formation and LLC Operating Agreement

D. In-Class Drafting Exercise (B) – Drafting Key Provisions of a Multi-Member

LLC Operating Agreement


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Fox – Glossary (Pages 265 - 297); Chapter 5 (Section 5:6), Chapter 6 (Sections

6:1 - 6:3) and Chapter 9 (Sections 9:1 - 9:2)

Course Materials Book – Skim Pages 119 - 146 (Exhibits A - C); Read Pages 75 -

77 (Early Planning Considerations: Entity Selection & Structural

Considerations in Organizing a Business Venture) and Pages 147 - 185

(Exhibit D – Form of FL LLC Operating Agreement)

Additional Course Materials (link on Course TWEN site) – Read (posted articles):

Eleven Fundamental Errors in Drafting LLC Operating Agreements (J.

Cunningham); Model Organizational Checklist for a Limited Liability

Company (ABA Business Law Section LLC Subcommittee)

Practical Law – Read LLC Agreement Commentary; and Setting Up a New

Business Checklist; Skim LLC Agreement Checklist

Case: Find and Read In re Kinder Morgan, Inc. Corporate Reorganization

Litigation, C.A. No. 10093-VCL (Del. Ch., Aug. 20, 2015)

4 Organizing and Working with (the Principal Documents and Agreements

(Jan. 27) Essential to) Corporations and Other Business Entities

(Mr. Davis)

A. Review of Class 3 Discussion & In-Class Drafting Exercise

B. Working and Contracting with Different Forms of Business Entities

C. Keys to Preparing/Drafting Principal Corporate Organizational Documents

1. Articles/Certificate of Incorporation and Bylaws

2. Organizational Actions (Election of Board, Appointment of Officers, etc.)

3. Minutes, Authorizing Resolutions and Actions by Written Consent

D. Fundamentals of and Key Considerations in Drafting and Negotiating Corporate

Shareholders’ Agreements – Up Close

E. In-Class Drafting Exercise (C) – Drafting Key Provisions of a Corporate

Shareholders’ Agreement

F. Introduction to and Context for H/W Assignment (#2)


Fox – Chapter 7 and Chapter 8 (Sections 8:1 and 8:2)

Course Materials Book – Pages 186 - 244 (Exhibit E – Supp. Lecture Outline)

Documents & Forms Supplement (link on Course TWEN site) – Selected Private

Company Documents & Agreements folder – Skim Sample Form of Shareholders

Agreement (Exhibit “A” - DAVIS), and Sample Form of Shareholders

Agreement with P/E Owners (Exhibit “B” - DAVIS); Read Example of “Mark-

up” of Shareholders Agreement (Exhibit “G” - DAVIS)

Practical Law – Read Forming and Organizing a Corporation; Preparing Minutes:

Checklist; and Stockholders Agreement Checklist; Skim Corporate Formation

and Housekeeping Toolkit; Certificate of Incorporation (Short-form DE); By-

laws: DE Corporation; Organizational Action by Sole Incorporator; and

Unanimous Written Consent of the Board in Lieu of Organizational Meeting

HOMEWORK ASSIGNMENT (Class 4)

H/W Assignment (#2) – Assigned @ End of Class 4 by Mr. Davis


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5 Agreements with Management and Key Employees; Executive and Employee

(Feb. 3) Agreements and Incentive Compensation Plans

(Mr. Davis)

A. Review of Class 4 Discussion & In-Class Drafting Exercise

B. Critical Importance of Retaining, Incenting and Motivating Key Employees

(including through employee agreements and plans)

C. Primer on Employee Contracts and Plans, Compensation, Severance &

Termination Provisions, Restrictive Covenants & Tax Considerations

D. Keys to Preparing and Drafting Employee Agreements/Documents

1. Employment Agreements (including “At Will” agreements) and Incentive

Compensation (including Stock Option) Plans and Agreements

2. Non-compete, Non-solicitation, Invention Assignment and Confidentiality

Agreements

3. Termination & Severance Considerations


Course Materials Book – Pages 245 - 249 (Exhibit “F”), Pages 368 - 380 (Selected

Excerpt from ABA Model Asset Purchase Agreement with Commentary –

Noncompetition, Nondisclosure and Nonsolicitation Agreement, exhibit) and

Pages 625 - 635 (Selected Excerpt from ABA Model Stock Purchase Agreement

with Commentary – Considerations Regarding Employment Agreements in

Connection with Sale of Stock, appendix)

Practical Law – Read Negotiating and Drafting an Executive Employment

Agreement; Drafting an Employee Non-compete Agreement: Best Practices

Checklist; and Restrictive Covenants Toolkit; Skim Non-compete Agreements

with Employees; and Employee Non-compete Agreement (FL)

Documents & Forms Supplement (link on Course TWEN site) – Skim Sample

Contracts – Drafting Progression Series folder – Employment Agreement (3

versions); and Selected Public Company Documents & Agreements folder –

Twitter CEO Employment Agreement (2013)

6 Subscription, Purchase & Sale of Stock and Equity Interests - Part I;

(Feb. 10) Establishing the Client Relationship and Funding a Start-Up Business

(Mr. Yadley)

A. Offer, Issuance & Sale of Equity Interests in a New Business – Legal &

Practical Considerations

1. Role of the Business Lawyer (including junior associates)

2. Importance of Understanding Business, Financial Statements & Key

Accounting and Tax Matters

B. Establishing and Maintaining a Lawyer-Client Relationship

1. Understanding, Minding and Meeting Client Expectations

2. Professional Obligations

3. Keys to Effective Client Interviews, Meetings and Counseling in

Business, Finance and Transactional Engagements

C. Funding a Start-Up Business – Sale and Issuance of Equity Interests –

The Entrepreneur and the Investor: How to Align Their Interests

D. Introduction to & Context for H/W Assignment (#3)


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Fox – Chapter 2 (Section 2:2)

Course Materials Book – Pages 250 - 258 (Memo re: Proposed Private Sale of

Common Stock); 259 - 261 (Memo re: Offering Procedures for Proposed

Private Sale of Common Stock); and Pages 459 - 463, 596, 597 - 602 (Selected

Excerpts from ABA Model Stock Purchase Agreement with Commentary –

Representations and Warranties (of Buyer); Introduction to Exhibits; Legal

Opinions)

Case: Find and Read ENI Holdings, LLC v. KBR Group Holdings, LLC (Del. Ch.

Sept. 13, 2013)

Practical Law – Read Subscription Agreement: Private Placement of Equity Securities

(Regulation D); and Confidentiality Agreement: Early-stage Business (Pro-

discloser)

Additional Course Materials (link on Course TWEN site) – Read Reading &

Understanding Financial Statements – A Guide to Financial Reporting (F. Jaumot,

M. Borkowski); and Interviewing: The Beginning of the Attorney-Client

Relationship (Excerpt) (A. Alvarez and P. Tremblay)

HOMEWORK ASSIGNMENT

H/W Assignment (#3) – Assigned @ End of Class 6 by Mr. Yadley

7 Subscription, Purchase & Sale of Stock and Equity Interests - Part II;

(Feb. 17) Conducting Due Diligence and Drafting Contract Reps & Warranties

and Disclosure Schedules

(Mr. Yadley)

A. Key Steps in Private Securities Offering/Private Placement Transactions

1. Establishing 1933 Act Exemptions (including under new SEC rules)

2. Who are the Prospective Investors?

3. Drafting Securities Offering Disclosure Documents (Drafting Style,

Technique and Approach Contrasted)

B. Key Legal, Regulatory and Drafting Considerations

1. Offers; Authorization & Issuance; Purchase & Sale; Purchase Price;

Equity Securities Provisions; LLCs and “Uncertificated” LLC Interests

(Caution)

2. Offeree and Purchaser Representative Questionnaires

3. How will Potential Investors be Reached and/or Contacted? “General

Solicitation” Issues & Considerations (Reasonable Verification Measures

re: Accredited Investor status)

4. Felon and “Bad Actor” Disqualification

C. “Due Diligence” – Requests & Responses; Data Rooms; Relationship with/to

Transaction Documents

1. Critical Role of Counsel – Early, Often & Throughout the Deal

2. Allocation of Risk in Contract Drafting and Negotiation

3. Due Diligence Requests, Responses and Handling Information

4. (Virtual) Data Rooms

5. From Due Diligence to Disclosure Schedules

6. Effect on, and Need to Update and Fine-Tune, Reps & Warranties

D. In-Class Drafting Exercise (D) – Drafting and Correlating Due Diligence,

Disclosure Schedules, Reps & Warranties and Indemnification Provisions


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Fox – Chapter 6 (Sections 6:4.1 and 6:4.7) and Chapter 9 (Sections 9:1 - 9:2 – review)

Course Materials Book – Pages 279 - 284 (Corp. Associate Experience Checklist)

Practical Law – Read Due Diligence Checklist: Securities Offerings; Skim Due

Diligence Request List: Securities Offerings; Investor Questionnaire; Bad Actor

Questionnaire: Rule 506 Offering; and Private Placement Memorandum

Additional Course Materials (link on Course TWEN site) – Read Top 12 Most FAQs by

Junior Associates Conducting Due Diligence (V. Tsaganos)

8 Commercial Loans, Notes & Debt Financing Transactions –

(Feb. 24) Promissory Notes, Credit/Loan Agreements and Security Agreements

(Mr. Davis)

A. Primer on Documenting Commercial Loans and Debt Financing Transactions,

including Credit/Loan Agreements (Term and Revolver), Notes/Debentures,

and Intercreditor/Subordination and Security Agreements

B. Understanding and Drafting Key Provisions of Loan Agreements (including

Covenants, Default and Remedial Provisions, Subordination and Guarantees)

C. Issues, Approaches & Tactics in Drafting Complex Loan Agreements and

Documents – The Good, Bad & Ugly

D. Resources for Loan-Related Documents and Drafting/Negotiation Pointers

E. Introduction to and Context for H/W Assignment (#4)


Fox – Chapter 2 (Section 2:3.2), Chapter 6 (Sections 6:4.8 and 6:4.9) and Chapter 9

(Section 9:3 in total)

Practical Law – Read Loan Agreement: Overview; Closing a Loan Transaction

Checklist; Loan Agreement: Representations and Warranties; Loan

Agreement: Events of Default; Skim Loan Agreement: Standard Definitions;

and Loan Agreement: Financial Covenants

Additional Course Materials (link on Course TWEN site) – Read Precision’s

Counterfeit: The Failures of Complex Documents, and Some Suggested

Remedies (H. Darmstadter)

HOMEWORK ASSIGNMENT

H/W Assignment (#4) – Assigned @ End of Class 8 by Mr. Davis

< March 2nd – No Class – Spring Break >

9 Drafting Public Securities Registration, Offering and Disclosure Documents;

(March 9) Drafting “Risk Factor” and Investment Considerations Disclosures

(Mr. Yadley)

A. Review of H/W and Drafting Exercises (including H/W Assignment #3)

B. Key Considerations in Drafting the Principal Offering/Subscription Documents

1. Compiling and Preparing a First Draft; Business Description

2. Management Discussion/Analysis of Financial Statements (MD&A)

3. Risk Factor Provisions & Disclosures

4. Forward-Looking Information (and Other Notices/Warnings)

5. SEC Forms and Filings


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C. The Initial Public Offering (IPO) Process – Role of Counsel

1. “All Hands” Organizational Meeting

2. “Pacing Issues”, Timetables and Checklists

3. Pricing, Listing, Closing and Closing Binders

D. Confidentiality and Nondisclosure Agreements (Up Close) – Key Drafting and

Negotiation Considerations (and importance of these agreements as a precursor

to significant transaction due diligence and negotiations)

E. Risk Factors: Critical Disclosures Regarding Legal and Other Considerations

that May Adversely Impact an Investment (and How to Address Them)

F. Introduction to & Context for H/W Assignment (#5)


Fox – Chapter 10

Course Materials Book – Pages 52 - 59 (Example of “Miscellaneous” Contract

Provisions) and Pages 262 - 278 (Memo re: Initial Public Offering (“IPO”))

Practical Law – Read Risk Factors: What Keeps You Up at Night?; and Risk

Factors Toolkit; Skim Initial Public Offerings Toolkit; and Confidentiality

and Nondisclosure Agreements

Documents & Forms Supplement (link on Course TWEN site) – Sample Contracts

– Drafting Progression Series folder – Skim Underwriting Agreement (for

IPO) (3 versions) and Investment Banking/Financial Advisory Engagement

Agreement (3 versions); Selected Public Company Documents & Agreements

folder – Skim Ferrari Final IPO Prospectus

Check for additional TWEN postings prior to Class (including a recent IPO

prospectus and selected excerpts from the SEC Plain English Handbook)

HOMEWORK ASSIGNMENT

H/W Assignment (#5) – Assigned @ End of Class 9 by Mr. Yadley

10 Buying & Selling Companies and Businesses | M&A Agreements – Part I

(March 16) (Mr. Conti)

A. Transition to M&A-Related Classes, Skills, Documents, Assigned

Reading and Upcoming H/W Assignment

Various differences and distinctions between investment (and joint

venture/strategic alliance) transactions and M&A (purchase and

sale) transactions and the agreements providing for same

B. Understanding M&A Transaction Structures & Agreements (following review

of Confidentiality and Nondisclosure Agreements discussion)

1. Stock (Equity Securities) Purchase Agreements

2. Asset Purchase Agreements

3. Merger Agreements (and related plans) and State Merger Statutes

C. Key “Building Blocks” in M&A Agreements – Drafting & Negotiation

Touchstones

1. Reps & Warranties of Buyers and Sellers

2. Covenants (various, including pre- and post-closing) of Buyers and

Sellers; No-Shop/Exclusivity Provisions

3. Conditions Precedent to Closing – Pre-Closing Rigor & Closing Checklists


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4. Material Adverse Effect and Material Adverse Change ("MAE" and

“MAC”) Clauses & Definitions (and relationship to bring-down closing

conditions)

5. Termination, Survival, Indemnification & Remedies

D. Representation & Warranty Insurance in M&A Transactions

E. In-Class Drafting Exercise (E) – Drafting Key Provisions of M&A Agreements



Fox – Chapter 2 (Section 2:3 - 2:5 in total), Chapter 6 (Sections 6:4.1, 6:4.4 - 6:4.6)

and Chapter 9 (Section 9:4 in total)

Course Materials Book – Skim Pages 402 - 513, 514 - 566, 567 - 595 (Selected

Excerpts from ABA Model Stock Purchase Agreement with Commentary)

Practical Law – Read Avoiding Key Risk Allocation Pitfalls under Commercial

Contracts; Acquiring a Business Checklist (Private Company Target);

Indemnification Clauses in Private M&A Agreements; and Key Negotiating Points

in Private Acquisition Agreements Comparison Chart; Skim Stock Purchase

Agreement (Pro-Buyer Short Form); Disclosure Schedules: Mergers and

Acquisitions; and Representation and Warranty Insurance for M&A Transactions

Additional Course Materials (link on Course TWEN site) – The Special Challenges of

Training Deal Lawyers (C. Fox)

Documents & Forms Supplement (link on Course TWEN site) – Skim Sample Contracts

– Drafting Progression Series folder – Stock Purchase Agreement (3 versions);

and Selected Public Company Documents & Agreements folder – Verizon / MCI

Merger Agreement

OPTIONAL SUGGESTED READING (Articles of Interest):

Additional Course Materials (link on Course TWEN site) – Common Mistakes of M&A

Practitioners (ABA Business Law Section M&A Committee); and Merger Pacts:

Contract Drafting, Cerberus Litigation (K. Adams)

Practical Law – Confidentiality Agreements: Mergers and Acquisitions; and Material

Adverse Change Provisions: Mergers & Acquisitions

HOMEWORK ASSIGNMENT

H/W Assignment (#6) – Assigned @ End of Class 10 by Mr. Conti

11 Buying & Selling Companies and Businesses | M&A Agreements – Part II

(March 23) (Mr. Conti)

A. Review of H/W Assignment (#6) with “Best Drafting” Model

B. Asset Purchase Agreements (Up Close) – Critical Provisions; Key Inflexion

Points; Role of Due Diligence and Disclosure Schedules (Revisited); Drafting

& Negotiation Tools, Tips and Considerations

1. Purchased Assets; Assumed vs. Excluded Liabilities

2. Working Capital and Purchase Price Adjustments

3. Earn-out, Deferred Consideration & Escrows

4. Special Representations, Warranties & Covenants

5. "No Shop" & Exclusivity Provisions

6. Indemnification Provisions (and “Survival” Limitations, Escrows, Baskets,

Caps, Carve-Outs, “Sole Remedy” and Other Provisions/Limitations)


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7. Termination, “Fiduciary Outs”, "Break-Up" and Termination fees

8. Signing vs. Closing Considerations, Preparations and Deliverables

C. Timetables, Checklists, Closing(s) and Closing Binders

D. Practical Law and Other Resources for M&A Deals and Agreements


Fox – Chapter 5 (Section 5:2.1) and Chapter 6 (Sections 6:4.2 and 6:4.3)

Course Materials Book – Pages 43 - 52 (Examples of Other Contractual Provisions

of Interest); 285 – 297 (revisited), 298 - 306, 307 - 333, 334 - 349, 350 - 364,

381 - 387, 388 - 389 (Read all Notes, Comments & Discussion, Skim

Contractual Provisions) (Selected Excerpts from ABA Model Asset Purchase

Agreement with Commentary and Exhibits)

Practical Law – Read Asset Acquisitions: Overview; Asset Acquisition Checklist; and

Asset Purchase Agreement Commentary; and Due Diligence for Private Mergers

and Acquisitions; Skim Asset Purchase Agreement (Pro-Buyer Short Form); and

Due Diligence Request List: Private Mergers & Acquisitions

OPTIONAL SUGGESTED READING (Articles of Interest):

Additional Course Materials (link on Course TWEN site) – Scraping By (J. LcClaire et

al.); How to Structure Contingent Purchase Price/Earnout Provisions (F.

Tannenbaum); and 2013 Private Target Mergers & Acquisitions Deal Points Study

(ABA Business Law Section M&A Committee)

Documents & Forms Supplement (link on Course TWEN site) – Skim Sample Contracts

– Drafting Progression Series folder – Indemnification & Remedies Provisions

(from APA) (2 versions)

12 Advanced (Institutional) Private Equity / Venture Capital Investment

(March 30) Agreements, Documents and Transactions – Part I

(Mr. Aronson)

A. Course Review (to date); Review of Certain Previous H/W Assignments,

Performance and Faculty Comments

B. The Market and Need for Private Equity Investments; Dynamics of

Venture Capital (VC) and Institutional Equity Funding Transactions;

Participants, Deals and Terms that Impact Party Objectives, Leverage

and Document Drafting and Negotiation

C. Anatomy of a VC Transaction | Role, Requirements and Value-Adds of Counsel

D. VC Term Sheets & LOIs (Up Close) – Key Provisions & Considerations

E. Review of Assigned Illustration and Proposed Draft Letter of Intent



Venture Capital Guidebook* – Pages 1 - 2, 15 - 32, 35 (bottom) - 60, 61 - 72

Fox – Chapters 3, 4 and 5 (Sections 5:1 and 5:2), Chapter 6 (Section 6:2) and

Chapter 9 (Section 9:4.4) (review and reinforce)

* Mr. Aronson will provide a complimentary copy of his book, Venture Capital: A Practical Guidebook for Business

Owners, Managers and Advisors (R. R. Donnelley, Fifth Ed. 2011), during the first class on January 6th

.


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Course Materials Book – Pages 61 - 73 (review), 78 - 118 (excerpt from Mr.

Aronson’s Venture Capital Guidebook – Annex B – Glossary of Venture

Capital Terms and Jargon)

Practical Law – Read Preferred Stock: Overview; Skim Startup Venture

Finance: Overview; and Preferred Stock in Private Equity Transactions:

Key Characteristics Chart

ASSIGNMENT: Review (and be prepared to discuss and advise and assist with) the

Venture Capital Transaction Illustration and Proposed Draft Letter of Intent (to be

posted and assigned on the Course TWEN site)

HOMEWORK ASSIGNMENT

H/W Assignment (#7) – Assigned @ End of Class 12 by Mr. Aronson

13 Advanced (Institutional) Private Equity / Venture Capital Investment

(April 6) Agreements, Documents and Transactions – Part II

(Mr. Aronson)

A. From Term Sheets/LOIs to Definitive Investment Agreements & Documents

B. Key Considerations in Drafting VC Agreements & Documents

1. Stock/Securities Purchase Agreement

2. Amended & Restated Charter / Certificate of Designation (authorizing

Convertible Preferred Stock)

3. Investor Rights Agreement

4. Voting Agreement; Right of First Refusal and Co-Sale Agreement

C. Practical Illustration – Continued Review of Assigned Illustration and

Proposed Draft Letter of Intent (and the Drafting & Negotiation process)

D. Resources for Counsel in Sophisticated Private Equity Capital Transactions

E. Discussion regarding Final Class (next week)


Venture Capital Guidebook – Pages A-1 - A-29 (Illustrative Series A Investment

Transaction Term Sheet - Annex A)

Fox – Chapter 6 (Sections 6:4.1 and 6:4.7)

Course Materials Book – Read Pages 2 - 28 (review); Skim Pages 29 - 60 (review)

Check for additional TWEN postings prior to Class (including selected portions of the

NVCA.org website and its Model VC Legal Documents)

14 Class Catch-Up, Wrap-Up, Review & "Take-Aways"

(April 13) (Mr. Aronson)

A. Open Class Questions & Discussion

B. Review of Previous H/W Assignments and Faculty Feedback

C. Course Review – Keys to Proficient, Skillful and Effective Document Drafting

and Transaction Negotiation, Client Advocacy, Value-Add Counseling and

“Getting the Deal Done”


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D. Case Study – Working and Making Sense of the Pieces of the Puzzle and

Document Drafting, Negotiation and Execution Challenges over a Corporate

Lifespan; Applying Systems Thinking & Functional Integration to Contract

Drafting and Negotiation

E. Building on the Base: The Road to Continued Learning, Improvement and

Fulfillment

F. Course Wrap-up; Submission of Course Evaluation Form


Check for TWEN postings prior to Class (including the special student Course

Evaluation Form)

[ A portion of our Class 14 will be devoted to a review and discussion session,

and related illustrations, designed following Class input. ]


Aronson

Spring 2016 B TRANSACTIONS AND DOCUMENT DRAFTING Transactions... · Legal Drafting course and...

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