Anchorage
Beijing
Coeur D’Alene
Hong Kong
Orange County
Portland
San Francisco
Pacific Coast Opportunities
A guide to foreign acquisitions of businesses and real property
Seattle
Spokane
Taipei
in California, Oregon, Washington and Alaska
Washington DC
www.prestongates.com
Anchorage
Beijing
Coeur D’Alene
Hong Kong
Orange County
Portland
San Francisco
Pacific Coast Opportunities
A guide to foreign acquisitions of businesses and real property
Seattle
Spokane
Taipei
in California, Oregon, Washington and Alaska
Washington DC
www.prestongates.com
Pacific Coast Opportunities
A guide to foreign
acquisitions of
businesses and real
property in California,
Oregon, Washington
and Alaska
This guide is intended to provide general
information only and is not intended as
legal advice. Prospective investors should
seek the assistance of experienced legal
and tax advisors at the outset of any
transaction.
© 1992-2004 by Preston Gates & Ellis LLP
Reproduction of this manual in whole or
in part without written permission is
prohibited.
Contents
Introduction .........................................................................................1
Due Diligence ........................................................................................3
Structuring the Acquisition .................................................................10
Entity Used in Making and Holding the Acquisition ............................16
Negotiating and Executing Agreements .............................................20
Financing ............................................................................................24
Closing ................................................................................................27
Acquisition of a Public Company ........................................................30
Conclusion ..........................................................................................35
About Preston Gates & Ellis LLP...........................................................36
Introduction
The global economy increasingly favors foreign investment into North
America and, in particular, the four-state Pacific Coast region of the
United States, consisting of California, Oregon, Washington and Alaska.
Preston Gates & Ellis LLP, a premier corporate law firm with active commercial practices in each of these states, offers foreign purchasers this
guide to some of the principal legal issues surrounding such acquisitions.
After identifying the business or real property to be purchased, there are
five basic phases of an acquisition:
•
•
•
•
•
Due diligence
Structuring the acquisition
Negotiating and executing agreements
Financing
Closing
This guide briefly considers matters such as federal and state tax issues,
government approvals and reporting procedures, environmental concerns
and questions of real property title.
Note that this guide confines its discussion to acquisitions of entire
businesses and outright purchases of real property. Alternative forms of
investment, such as purchases of portions of the stock of existing companies and joint venture partnerships, are not considered. A section at
the end of this guide addresses the securities and corporate law issues
that surround the acquisition of publicly held corporations.
[1]
Pacific Coast Opportunities
In order to enhance readability and serve a broad spectrum of foreign
investors in the four-state region, this guide limits its coverage to a summary of key legal issues. Serious foreign purchasers should seek legal
and tax advice at the beginning of any transaction.
[2]
Due Diligence
The due diligence (or investigation) phase of an acquisition is designed
to determine whether the business or real property meets the foreign
purchaser’s needs and expectations. A particular focus of due diligence
is to identify hidden problems, liabilities and costs.
Generally, due diligence will involve a four-step process of investigation:
• Review of financial statements, tax returns, key leases and contracts,
and other documents related to the business. Often, documents are
provided by sellers in response to a due diligence document request list
provided by the potential purchaser. Alternatively, particularly where
an organized auction or other sale process is undertaken with multiple potential purchasers, the seller will organize either a physical
or “virtual” due diligence room in which due diligence documents are
organized and stored for inspection by potential purchasers.
• Inspection of facilities, equipment and other properties. In the case
of real property, these should include environmental, structural and
other engineering inspections. Appraisals and surveys may also be
conducted.
• Interviews with management, other employees, and key customers
and suppliers.
• Review of publicly available records, particularly as they relate to
court proceedings, records of mortgages and security interests, and
the zoning and land-use status of real property.
[3]
Pacific Coast Opportunities
Ordinarily, before allowing access to sensitive documents, sellers require
prospective purchasers to sign confidentiality agreements. Sometimes,
such confidentiality agreements will prohibit the potential purchaser
from soliciting or even hiring the target’s employees. In some cases,
sellers insist that prospective purchasers show their seriousness by
signing letters of intent or by paying earnest money (either refundable or
non-refundable) before undertaking some phases of due diligence. In
many other cases, purchase and sale agreements must be signed prior
to giving any access to key customers and employees for due diligence
purposes.
In investigating businesses, be especially cognizant of some frequently
hidden liabilities or costs. These areas deserve special attention in due
diligence:
• PENSION PLANS. Businesses often maintain their own pension plans or
contribute to multi-employer plans. Often, these plans are underfunded or involve large liabilities in the event of termination, becoming a costly burden to a new purchaser.
• ENVIRONMENTAL MATTERS. Both past and present environmental practices of businesses need to be carefully reviewed. Businesses are
often held liable for significant cleanup costs as a result of their past
disposal practices even though, at the time, the practices were lawful. To assess environmental concerns, special environmental consultants are often hired (see discussion below on environmental audits).
• LABOR AND EMPLOYMENT ISSUES. Key issues in many business acquisitions include whether union contracts exist and the extent to which
the purchaser will be bound by them. Other labor and employment
issues often include the existence of unfair labor practices; wrongful
termination claims; sex, race, national origin, age, disability or other
discrimination claims; health and safety violations; and wage and
hour claims.
• LEASES AND CONTRACTS. Important leases and contracts must be carefully reviewed to determine the remaining length of the agreement,
[4]
Due Diligence
whether any changes in rent or prices are contemplated, and the
extent to which a lease or contract survives a change in ownership.
Often, assurances as to the validity and good standing of contracts
are sought from the other parties to the contracts. In real property acquisitions, the commonly used tools for such assurances are estoppel
certificates.
• INDUSTRIAL AND INTELLECTUAL PROPERTY RIGHTS. Ownership of key industrial and intellectual property rights is often a major issue in acquisitions of high technology companies. The issues become particularly
complicated with respect to software. Generally, under the U.S.
copyright laws, the consultant who writes the software owns it, not
the employer. Risks of patent infringement must also be assessed.
During the past 10 years, U.S. courts have become far more protective of patents and patent owners. Successfully defending patent
infringement actions can cost millions of dollars in attorneys’ fees
and other costs and expenses. An additional issue involves software
and other intellectual property licenses; often, such licenses cannot
be transferred without the consent of the licensor and are subject to
termination on change in control.
• UCC SEARCH. Most financing liens on the personal property of California, Oregon, Washington and Alaska businesses (such liens are commonly referred to as security interests) are evidenced by filings with
a unit of state government located in the capital of each state. To
determine the status of such lien filings, what is commonly referred
to as a UCC search is performed. In the past five years, the search
process under the UCC has become much easier, since a new rule
now requires most filings to be done in the state where the entity is
formed, rather than where the collateral is located.
Real Property and Due Diligence
For acquisitions involving real property, several additional due diligence
steps are often taken, including the following:
• ENVIRONMENTAL AUDIT. If hazardous wastes or other contaminants exist
on a piece of real property, the owner can be required to abate or oth[5]
Pacific Coast Opportunities
erwise clean them up even though the contamination occurred before
the owner’s purchase of the property. Contamination problems have
been found to exist on many nonindustrial properties. For example,
former gasoline stations have been a major source of problems. As
a result, today, few investors purchase real property in California,
Oregon, Washington and Alaska without having an environmental audit
performed by specialized environmental consultants.
Typically, an environmental audit is done in two phases. In Phase 1,
the property is visually inspected for tell-tale signs, its past use is
investigated, and public records are reviewed. A Phase 2 audit is
undertaken only if the results of Phase 1 suggest the presence of possible contaminants. In that phase, soil and groundwater samples may
be taken and more sophisticated tests performed.
Asbestos has been and remains a concern for any purchaser of either
real property or a business that in the past handled asbestos. Asbestos on real property may have to be removed through costly procedures if it is friable or if the property in the future is to be remodeled,
rebuilt or changed. Businesses that either directly or through predecessors manufactured products that contained asbestos, manufactured products that required asbestos insulation for efficient operation of that product, or handled asbestos, even if many years ago,
are increasingly the targets of multiple personal injury lawsuits from
workers who claim injury or illness from their contact with asbestos.
• TITLE INSURANCE. Title to real property in California, Oregon, Washington and Alaska is not guaranteed by a government registry. Thus,
in almost all real estate acquisitions, the purchaser insists on being
provided with title insurance in an amount equal to the purchase
price. Title insurance, which is issued by private insurance companies, insures that the purchaser has title to the real property, free of
all mortgages and other title defects except as specifically identified.
Typically, at the outset of a real property acquisition, the purchaser
will obtain a preliminary commitment for title insurance. The preliminary commitment will identify all mortgages, easements and other
matters that are recorded and that affect the real property. As part of
[6]
Due Diligence
the negotiation and acquisition process, a purchaser might agree to
accept the real property with all of the items identified in the preliminary commitment or may insist that the seller remove certain items.
In California, Oregon, Washington and Alaska, title insurance for
purchasers comes in two alternatives: standard coverage and extended
coverage. Extended coverage title insurance insures against items
such as encroachments and construction liens. (Construction contractors can enjoy lien rights ahead of a new purchaser, provided they
give notice within a specified period of time.) Extended coverage is
about 30 to 65 percent more expensive.
Although negotiable, it is common for sellers of real property to pay
the premium for standard title insurance, with purchasers paying for
the additional extended coverage premium. Real property lenders will
often require extended coverage title insurance, which is paid for by
the purchaser as borrower.
• LAND SURVEYS. Land surveys are designed to show the exact legal
boundaries of the real estate, then to identify whether buildings and
other improvements extend beyond the boundaries of the property;
whether they rest on easements that could require their removal; and
whether any neighboring buildings or improvements encroach onto
the property being purchased. Additionally, land surveys show drainage, access and topography of the property. An adequate and current
land survey almost always must be supplied in order to get extended
coverage title insurance. Lenders also require surveys.
• ZONING AND OTHER LAND-USE REGULATIONS; WATER RIGHTS. Zoning and
land-use restrictions must be carefully considered, particularly if
new construction is anticipated. Restrictions are particularly sensitive in Washington and Oregon along shorelines and around wetlands.
Oregon has a comprehensive statewide system of land-use regulation. Many parcels of land in Oregon are currently in non-conforming
uses under conditional use permits, which may restrict even minor
changes in use.
[7]
Pacific Coast Opportunities
In California, planning and zoning bodies at all levels of state and local government exercise considerable control over the use of privately
held land. In addition, since the early 1970s, the application of
the California Environmental Quality Act (CEQA) and the California
Coast Act to land-use planning, development and permit processes
has made land development and use in California increasingly more
complex, expensive and risky.
In Alaska, with its high incidence of wetlands, wetland development
generally requires a permit from the United States Army Corp of Engineers. Larger communities in Alaska have permitting processes for
development, but many smaller communities do not.
Assuring access to adequate water rights for the contemplated operations is an essential part of due diligence for uses as varied as silicon
wafer production plants to agricultural operations, salmon processing
and golf courses. Access to water rights can be an issue even in the
rainiest parts of the Pacific Northwest and Alaska.
Other Special Due Diligence Considerations
Care should be taken by a foreign investor in the United States to ensure
review of these special due diligence considerations:
• FOREIGN STATUS. Foreign purchasers of real property must consider
whether their foreign status will complicate or prohibit, in whole or
in part, the proposed acquisition. There are no general prohibitions
in California, Oregon, Washington and Alaska on foreign purchases
of real property, although certain federally owned lands may not be
sold to foreign purchasers. Alaska has certain restrictions on foreign
ownership of exploration and mining rights in state-owned lands, and
Oregon limits foreign purchases of state-owned lands. Federal laws
also limit or prohibit foreign participation in different business areas,
including the following:
• Fishing boats and other vessels and fishing permits
• Radio and television stations, paging companies and other
communications activities
[8]
Due Diligence
• Airlines
• Certain natural resources and energy facilities
• BUSINESSES WITH AN EFFECT ON NATIONAL SECURITY
(see discussion below on Exon-Florio)
Additionally, foreign purchasers of businesses should consider the
effects of the Export Administration Act, the International Traffic
in Arms Regulations (ITAR) and other export controls of the United
States. Under these laws, giving access to technology or data to
foreign nationals is deemed to be an export transaction and may, in
some cases, require prior U.S. government approval. While these export control laws do not prohibit or restrict foreign purchases of U.S.
businesses, they can complicate later foreign management if foreign
personnel cannot be given access to certain technology or data.
• SARBANES-OXLEY. A foreign purchaser who presently has stock listed
on a U.S. exchange or has stock presently traded on pink sheets or
OTB, or expects to list or trade stock in such manner in the future,
will want to assure itself that the target has systems and processes in
place to meet the certification, financial and disclosure control procedures, as well as other requirements that arise from the requirements
of the Sarbanes-Oxley Act and the initial or continued listing requirements of the applicable U.S. securities exchange.
[9]
Structuring the Acquisition
Acquisitions can typically be carried out in a number of different ways,
depending on how they are structured. As a general matter, structuring
an acquisition will involve two separate questions:
• By what method will the purchaser acquire the seller’s business or
real property?
• Through what type of entity will the purchaser make the acquisition
and hold the business or real property?
Significant tax and other savings are available to both purchasers and
sellers if these questions are properly answered.
Method of Acquiring the Business or Real Property
Businesses, and to a lesser extent real estate, are usually held by foreign
buyers through a corporation. The basic acquisition method issue is usually one of stock versus asset sale: Will the purchaser buy the stock of
the corporation or will it buy the assets?
INCOME TAX ISSUES The primary motivation for an asset acquisition is
the potential U.S. federal, and Oregon and California state, income
tax savings to the purchaser. (There is no income tax in Washington.
Alaska has a corporate income tax but no individual income tax; thus,
in Alaska, the tax analysis is somewhat different.) If stock is purchased,
the assets of the acquired corporation will retain the same basis for tax
depreciation and other purposes even though a purchase price equal to
the fair market value of the assets is paid. On the other hand, if assets
[ 10 ]
Structuring the Acquisition
are purchased, the basis of the asset for tax depreciation and other
purposes will be their fair market value. For example, if a purchaser
buys, for $1 million, the stock of a corporation whose only assets
have been fully depreciated, there would be no further tax deductions
available. Conversely, if assets were bought and their fair market value
were $1 million or more, the purchaser would be entitled to depreciate
the full purchase price over the useful life of the assets.
In many cases, however, corporate sellers will resist an asset sale because of the extra tax costs to the seller. Except in the case of certain
corporations discussed below, corporate sellers of assets will have two
levels of income tax: one at the corporate level on the difference between the corporation’s basis in the assets and the purchase price; and
a second at the level of the shareholders on the amount distributed out
to them (subject to a partial dividend received deduction in the case of
corporate shareholders). The maximum federal corporate income tax rate
is 35 percent, and the maximum federal individual income tax rate is
also 35 percent (reduced to 15 percent for most dividends and for most
capital gains on assets held more than one year); the maximum Oregon
corporate and individual income tax rates are 6.6 percent and 9 percent, respectively; and the maximum California corporate franchise and
personal income tax rates are 9.3 percent and 11 percent, respectively.
Absent some countervailing factors, such as large carried-forward losses
or an already high basis in assets, the effect of two levels of income tax
on a transaction can be quite costly to the seller.
The double level of income tax problem will generally not apply to subsidiaries when owned 80 percent or more by the parent corporation. The
problem also will often not apply to corporations which have elected to
be treated as an “S-corporation.” To be an S-corporation, a corporation
must have 75 or fewer shareholders, each of whom must be an individual (or a qualifying trust) and must meet certain other requirements.
Generally, for S-corporations, all items of income and loss flow through
to the shareholders, and there is no corporate level of tax. Finally, the
problem will not apply in the case of general partnerships, limited partnerships, and limited liability companies, which are often the types of entities
used to own real property. Both types of partnerships, for income tax
[ 11 ]
Pacific Coast Opportunities
purposes, are generally ignored, and all items of income and loss flow
through to the partners. Similarly, a limited liability company with more
than one member is generally taxed as a partnership. Such entities are
generally ignored for income tax purposes, and all items of income or
loss flow through to members.
If parties to a transaction decide to proceed with a stock sale, there
are still a number of methods to improve the purchaser’s income tax
position. These include payment to selling shareholders for their agreement not to compete with the purchaser in the business being sold. As
discussed below, non-compete agreements are very common in business
acquisitions. Unlike payments for stock, income tax deductions are
available for reasonable non-compete amounts, albeit over a period of
15 years. On the other hand, selling shareholders tend to resist large allocations to non-compete agreements because such amounts are taxed at
ordinary income rates (35 percent federally) rather than the lower capital
gains rate applicable to payments for stock (generally 15 percent at the
federal level).
OTHER ISSUES In addition to income tax issues, there is a whole series
of other issues involved in choosing between a stock versus asset sale,
including the following:
• Liabilities. When buying stock, all of the corporation’s liabilities
(contractual, tort, product liability, taxes, warranties, environmental
and others) follow with the assets. On the other hand, when buying
assets, the purchaser has, depending on the agreement reached with
the seller, the ability to assume no liabilities or to assume only certain
known liabilities.
The ability to avoid the seller’s liabilities in an asset sale is subject
to a number of exceptions. Mortgages and other liens attach to real
property and are thus not avoided through a purchase. A similar principle applies in the case of personal property. As discussed earlier,
many environmental liabilities also attach to the land. In Washington,
purchasers of a business’s assets can be held responsible for the prior
owner’s sales tax, business and occupation tax (B&O), and other state
[ 12 ]
Structuring the Acquisition
tax obligations. Under California, Oregon, Washington and Alaska
law, in certain relatively narrow circumstances, purchasers of a business can be responsible for their predecessor’s product liabilities.
Under Oregon law, a purchaser of assets may be liable for the unpaid
wages of the seller’s employees. California also has a bulk sales act.
Under this act, unless trade suppliers for certain types of businesses
are given notice of the sale and monies are set aside for them, a
purchaser of the business’s assets remains liable to the unpaid trade
suppliers.
• Transfer taxes. When buying assets in Washington, the purchaser is
required to pay a sales tax (at an 8.8 percent rate in the Seattle area)
on the equipment (other than exempt manufacturing equipment),
vehicles and other tangible personal property not held for resale, and
the seller is required to pay a real estate excise tax (at a 1.78 percent
rate in the Seattle area) on the real property being sold. These taxes
are avoided through a stock sale. However, Washington imposes a real
estate excise tax (at 1.78 percent, in the Seattle area, of the value of
the real estate) on the sale of 50 percent or more of the stock of a
corporation that owns real property located in Washington.
There are sales taxes in some of Alaska’s local jurisdictions, but not,
for example, in Anchorage. Most of Alaska’s local taxes exempt from
their application an isolated transaction or limit taxes to a lower
amount on a single large sale.
In Oregon, only one county (Washington County) has a tax on the
transfer of real property ($1.00 per $1,000 in value). There is no
sales tax in Oregon.
In California, the application of a sales tax to the transfer of a
business’s tangible personal property will depend on whether the
seller’s business holds, or is required to hold, a seller’s permit. In
the case of the former, sales taxes of up to 8.25 percent will apply.
Where the seller’s business is not required to hold a seller’s permit,
where the transfer is deemed to be an “occasional sale” or where the
transfer of tangible personal property is made by a sale of stock of the
[ 13 ]
Pacific Coast Opportunities
acquired business, sales taxes will not be applied. In addition, California county taxes on the transfer of real property (of varying rates,
depending on the county) may also apply to the sale of a business.
Finally, a transfer of ownership of the real property may trigger a reassessment of the realty on the basis of its “full cash value,” resulting
in increases in annual property taxes.
• Union contracts and other employment issues. Where a union contract
exists, the union contract will generally continue in force if a stock
sale takes place. If an asset sale is used, the purchaser normally will
not be bound by the union contract. However, successorship or severance provisions in the union contract might impose substantial obligations on the seller. For example, it is not unusual to find a union
contract which mandates that the seller require an asset purchaser,
who plans to operate the business, to adopt the contract.
While an asset sale may avoid a union contract, the purchaser may
not escape the obligation of having to deal with the union. If, after
the purchase of assets, more than one-half of all employees doing
work done before the closing by union members remain, the purchaser would normally be required to bargain with the union over a new
contract.
If, in connection with an asset sale involving a business with 100
or more employees, 50 or more full-time employees at a single site
can be expected to lose their jobs, the provisions of WARN (a federal
plant closure law) may have to be considered. Under WARN, 60 days
advance written notice must be given of “plant closings” and “mass
layoffs.” States such as California have their own versions of WARN,
which may impose more stringent requirements than the federal law.
• Key leases and contracts. While key leases and contracts will continue
after a stock sale (absent special clauses to the contrary), they may
not be assignable to the purchaser in the event of an asset sale. The
generally accepted view is that “forward” mergers might be treated as
an assignment of contracts by operation of law, triggering the need to
get consents from the other party to the contract under anti-assign-
[ 14 ]
Structuring the Acquisition
ment clauses, but that a “reverse” merger, where the target is the
survivor, should not have such an effect on contracts.
• Government licenses and permits. Many government licenses and
permits remain following a stock sale, but are not transferable in
connection with an asset sale. On the other hand, for some licenses,
reapplication must be made, regardless of the method used in purchasing a business. Such is the case, for example, with respect to
California, Oregon, Washington and Alaska liquor and lottery/gaming
licenses.
In addition to the above issues, foreign purchasers must also consider
the effect of a stock versus asset sale on their domestic tax, legal and
financial situation. Finally, while the stock versus asset sale issue is
usually one of the most important structuring issues, it is by no means
the only one. For example, some acquisitions can be tax-free to sellers
— and thus cheaper to the purchaser — when the consideration to the
seller is purchaser’s stock rather than cash. It is important, therefore,
that legal and tax advisors be consulted at the outset of a transaction.
[ 15 ]
Entity Used in Making
and Holding the Acquisition
Foreign purchasers can acquire and hold businesses and real property in
California, Oregon, Washington and Alaska through a number of different
corporate and other entities, either U.S. or foreign-based, depending on
tax and other factors.
In most cases, foreign purchasers will want to hold their acquisitions
through an entity that limits liability from the newly acquired business
or real property. Thus, for an asset sale, a new corporation or limited liability company will typically be used. If a stock sale takes place, usually
no new corporation will need to be formed.
When two or more owners are involved, foreign purchasers should consider the use of a partnership (either a general partnership or a limited
partnership) or a limited liability company to carry out asset purchases.
As noted above, with partnerships and limited liability companies, the
double level of federal, California and Oregon income taxes is generally
avoided; all items of income and loss flow through to the partners, and
there is no entity-level tax. There are, however, some tax disadvantages
to a partnership or limited liability company when foreigners are involved
(e.g., special tax withholding obligations apply), and liabilities of the
partnership flow through to the general partners. (That problem can,
however, generally be solved through the use of a newly created corporation to act as general partner.)
When a foreign purchaser decides to use a corporation to make its
acquisition, the choice then often becomes whether to use a U.S.-based
corporation or a foreign-based corporation operating in the United States.
[ 16 ]
Entity Used in Making and Holding the Acquisition
This choice will be dictated largely by United States and foreign tax
considerations, the foreign purchaser’s investment objectives, and the
contemplated financing for the acquisition.
Some of the U.S. tax consequences affecting this choice include:
U.S. Corporations
• A foreign-owned U.S.-based corporation will generally be subject to
U.S. corporate income taxes on its net income on the same basis as
any other U.S. corporation.
• If a U.S. corporation is part of a consolidated group (if it is owned
80 percent or more by another U.S. corporation), generally the U.S.
corporation’s gains and losses can offset the losses and gains of other
U.S. corporations in the consolidated group.
• Dividends from U.S. corporations to their foreign shareholders are
subject to U.S. tax at a rate of 30 percent, collected by withholding
on the dividend distribution. The 30 percent rate, however, has been
lowered by tax treaties the United States has in place with member
states of the Organization for Economic Cooperation and Development (OECD) and many other countries.
• Distributions to foreign shareholders on liquidation of U.S. corporations are generally not subject to tax. Gain on sales of assets before
any liquidation would, however, be subject to normal U.S. taxes.
• A foreigner’s gain on the sale of stock of a U.S. corporation is
generally not subject to U.S. tax. However, a law commonly known
as FIRPTA imposes a tax on the sale of stock of U.S. corporations,
the assets of which are primarily real property. The tax is collected
through a 10 percent withholding on the gross sales price. In California, there is also a 3 percent withholding on the gross sales price on
the same basis as FIRPTA.
[ 17 ]
Pacific Coast Opportunities
Foreign Corporations
• When a foreign-based corporation is involved in a U.S. trade or business, the net income from that trade or business will be subject to
U.S. corporate income tax rates on generally the same basis as U.S.
corporations. Many real estate investments in the U.S. by foreign
corporations can qualify as a U.S. trade or business, and even if they
do not, an election can be made to treat them as such. If a real estate
investment does not or is not qualified as a U.S. trade or business,
gross rental income from real estate is subject to a U.S. withholding
tax at a 30 percent rate.
• The gains or losses of a foreign corporation cannot, for U.S. tax purposes, be consolidated with the gains or losses of other corporations.
• In addition to the corporate income tax, a foreign corporation with
U.S. operations is subject to a branch tax at a rate of 30 percent of
the gross amount of the after-tax retained earnings not reinvested in a
U.S. trade or business. Under tax treaties with nations such as Japan,
however, the branch tax does not apply. In such cases, use of a foreign corporation can offer advantages over a U.S. corporation, since
dividends from the U.S. corporation would be subject to a withholding
tax, but comparable remittances from the U.S. branch would not be
subject to tax.
• Net gain realized on the sales of real property is, pursuant to FIRPTA,
subject to U.S. income tax on the same basis as applied to U.S.
corporations. In addition, FIRPTA imposes a 10 percent withholding on the gross sales amount of any real property sale, although the
withheld amount is a credit against the taxes payable on the net gain.
In California, there is also a 3 percent withholding on the gross sales
price on the same basis as FIRPTA.
The above U.S. tax consequences must be considered in tandem with
domestic tax consequences to the foreign purchaser. For example,
adequate domestic tax credits for U.S. withholdings on dividends might
eliminate the advantages discussed above with the use of a foreign
corporation rather than a U.S. corporation. In making a choice of entity,
[ 18 ]
Entity Used in Making and Holding the Acquisition
foreign purchasers should also consider U.S. tax issues related to financing (discussed below) and state tax issues.
If a foreign purchaser decides to make an acquisition through a U.S.
corporation, corporations formed under the laws of California, Oregon,
Washington and Alaska would generally be adequate. Corporations in
all four states can be formed in a matter of days and without great cost.
Foreign purchasers should, however, note that under the Alaska Business
Corporation Act, the publicly filed articles of incorporation must disclose
the identity of any alien affiliate (foreign person) with an interest in the
corporation.
[ 19 ]
Negotiating and
Executing Agreements
Typically, most business acquisitions and many real property purchases
involve two separate documents:
•
•
an initial letter of intent and
a later definitive purchase and sale agreement.
Letters of Intent
Letters of intent are usually signed after some preliminary due diligence has been completed and an agreement has been reached on the
purchase price and other key business terms. Generally, letters of intent
are designed to memorialize the agreement on these basic matters and
to set forth a schedule for completing the transaction. They are, however,
generally not intended to create a legally binding obligation on either
of the parties. Often, letters of intent include a statement expressly
stating that they do not create legally binding obligations. Letters of
intent usually condition the obligations of both parties on completion of
a definitive purchase and sale agreement. They also usually condition
the purchaser’s obligations on its satisfaction with the results of its due
diligence and on securing financing.
While generally nonbinding, letters of intent are often used to create the
following legally binding obligations:
• An agreement by the seller not to sell the business or real property to
a third party during an agreed-upon period (often 30, 60 or 90 days).
• An agreement by the seller to provide documents and facility access
for due diligence purposes.
[ 20 ]
Negotiating and Executing Agreements
• An agreement by the purchaser to keep the results of its due diligence confidential and an agreement by both parties not to issue
press releases.
A number of other documents and instruments are used as alternatives
to letters of intent, including:
• TERM SHEETS. Generally, term sheets are simply outlines of key business terms and rarely contain any provisions intended to be binding.
• MEMORANDUM OF UNDERSTANDING. While the format is different, a memoranda of understanding generally has the same effect as letters of
intent.
• OPTION AGREEMENTS. Option agreements are most commonly used in
real estate purchases. The purchaser is given a binding option to
buy the real property within an agreed period of time — usually in
exchange for a payment that is often nonrefundable, but that in some
cases can be applied against the purchase price.
While letters of intent generally are not intended to be binding, if poorly
prepared they can impose unintended legal obligations. Even letters of
intent clearly purporting to be nonbinding can, when combined with
post-signing behavior suggesting that a deal has been agreed to, result
in a finding that a commitment to buy and sell was made. In addition,
many of the basic terms of a letter of intent should not be agreed upon
until a foreign purchaser has fully considered all of the structuring alternatives. Thus, letters of intent should not be signed before consulting
with legal and tax advisors.
Purchase and Sale Agreements
Both business and real property acquisitions, regardless of whether
carried out by a stock or asset sale, are documented through fairly
comprehensive purchase and sale agreements. In business acquisitions,
such agreements are typically completed after most, if not all, of the due
diligence has been completed. A purchase and sale agreement is usually
signed before closing. During the period between execution and closing,
[ 21 ]
Pacific Coast Opportunities
specified events and conditions, such as a meeting of shareholders to
approve the transaction, obtaining the landlord’s consent, completing of
financing, and obtaining government approvals, are provided for.
A large portion of purchase and sale agreements for both business and
real property acquisitions is taken up by representations and warranties
of the seller. These are often heavily negotiated statements made by the
seller about the business or real property. If they prove to be incorrect,
the purchaser is usually allowed to cancel the acquisition, if not yet
closed; if closed, the purchaser is often entitled to seek damages from
the seller.
To make sure the purchaser has some recourse for false representations
and warranties after closing, it is common for purchasers in business
acquisitions to insist on a holdback of cash being paid at closing. A portion of the purchase price is typically deposited into an escrow account
with a bank or other neutral institution for a period ranging up to three
years and is released to the seller only if there have been no breaches
of representations and warranties. Holdbacks are less common in cases
where a portion of the purchase price is to be paid in installments after
closing or in cases where the seller is fully creditworthy.
Other Provisions of Purchase and Sale Agreements
In addition, other typical provisions of purchase and sale agreements
include the following:
• NONCOMPETE AGREEMENTS. In business acquisitions, it is common to
require individual sellers, particularly if they had been involved in
the business, to agree that they will not directly or indirectly compete
with the purchaser in the business being sold. Noncompetes for as
long as three to five years are not unusual. In some cases, payment
is made specifically for the noncompetes, in part to provide the
purchaser with advantages under income tax laws. If reasonable in
scope, length and territory, noncompete agreements given in connection with a sale of a business are generally enforceable in California,
Oregon, Washington and Alaska.
[ 22 ]
Negotiating and Executing Agreements
• MANAGEMENT OF BUSINESS OR REAL PROPERTY PRIOR TO CLOSING. It is common to require sellers to forego capital expenditures, making changes
in leases and contracts, and other major actions during the period
between execution and closing, as well as to keep the business and
real property in good condition.
• STOCK SALE PROVISIONS. In stock sales, it is common to stipulate that
selling shareholders shall bear their own accounting and attorney
fees, along with other transactional expenses. Absent such provisions, these expenses remain as liabilities of the corporation being
purchased and are thus, in effect, paid by the purchaser. It is also
common to require that all directors and officers provide their written
resignations at closing.
[ 23 ]
Financing
Financing for business and real property acquisitions by foreign purchasers typically will come from three different sources:
•
•
•
the seller itself,
bank and other third-party financing, and
the purchaser’s own resources.
Seller financing is not uncommon in California, Oregon, Washington and
Alaska, particularly in the case of real property acquisitions. When the
seller finances the acquisition by deferring the purchase price, the seller
will typically insist on a mortgage (usually in the form of a deed of trust
in California, Oregon, Washington and Alaska) in the real property being
sold and a security interest in the other assets. Obviously, the effects of
such seller-retained mortgages and security interests on future financings
need to be taken into account.
When considering bank financings for business acquisitions, a logical
place to start is with the U.S. banks currently providing credit to the
business. Often, such banks are familiar and comfortable with the business and its operations and desire to retain a valuable customer. These
banks are often the readiest possible source of asset-based acquisition
financing (financing which relies solely, in whole or in part, on the assets
of the business being acquired rather than on the guarantees of the purchaser). But, when the risk profile of the purchaser differs from that of
the seller, many times it is more advantageous to obtain financing from a
capital source with an appropriate risk perspective.
If foreign sources of financing are used, the purchaser and its lender
should consider the effect of the U.S. tax on interest payments, collected
[ 24 ]
Financing
by withholding on the interest payments. The tax rate is 30 percent, but
that rate is reduced in most tax treaties and is eliminated in the case of
portfolio debt.
When the foreign purchaser uses its own resources to finance the acquisition, either through direct cash transfers or through guarantees of loans
made by lenders in the United States, a number of U.S. tax issues need
to be taken into account, including:
• INTEREST WITHHOLDINGS. As noted earlier, interest payments to a foreign lender are subject to U.S. tax withholdings, although there are a
number of exceptions.
• DEBT-TO-EQUITY RATIO RULES. When excessive debt is used to finance
a foreign person’s U.S. subsidiary, U.S. tax authorities have the
ability to recharacterize the debt as equity. If debt is recharacterized
as equity, interest deductions on the excess debt can be denied. In
addition, interest and principal payments from the U.S. subsidiary
on debt guaranteed by its foreign parent can be characterized as
dividend payments to the foreign parent, in respect of which tax withholdings should have been made. Unfortunately, there are no clear
rules on the appropriate debt-to-equity ratio, and numerous factors
have to be taken into account in determining safe ratios. However, it
can be generally assumed that in cases of debt from a related party,
or guaranteed by a related party, ratios of debt-to-equity in excess of
4 to 1 (at the time the debt is created) run serious risks of recharacterization. (In calculating this debt-to-equity ratio, a corporation may
use the current fair market value of its assets.)
• RECHARACTERIZATION OF NONCOMMERCIAL LOANS GUARANTEED BY A FOREIGN
PARENT. When loans guaranteed by a foreign parent are made to
its U.S. subsidiary in circumstances which suggest that the loan
has no commercial sense independent of the guarantee, U.S. tax
authorities have the ability to recharacterize the guaranteed loan to
the subsidiary as a loan to the parent, the proceeds of which are in
turn used to make a loan to the U.S. subsidiary. As a result of such
recharacterization, a withholding tax on all deemed interest payments
[ 25 ]
Pacific Coast Opportunities
made by the subsidiary to its parents would have to be paid. The risks
of recharacterization are particularly great when the foreign parent’s
guaranty is backed up by a certificate deposit or monetary deposits.
• “EARNING-STRIPPING” RULES. Under the U.S. income tax “earning-stripping” rules, certain interest paid or accrued by a corporation to a
related, tax-exempt person (including those persons who are partially
or wholly tax exempt by virtue of a reduced or eliminated tax treaty
rate) is not deductible. These limitations, however, only apply if, at
the close of the tax year, the ratio of debt-to-equity of the U.S. corporation exceeds 1.5 to 1. (In calculating this debt-to-equity ratio, the
corporation must use its tax basis book value.) Also, the subsidiary’s
interest deductions for a taxable year will not be denied if its net
interest expenses are no greater than 50 percent of its taxable income
(with certain adjustments). Debt guaranteed by a foreign parent or
related person is subject to these rules.
[ 26 ]
Closing
Closing is the consummation of an acquisition. At that time, ownership
transfers, funds are paid, and the purchaser is placed in control of the
business or real property.
Typically, closing is conditioned on the occurrence of a number of
events set forth in the purchase and sale agreement, ranging from shareholder approval, to financing, to consents from parties to key leases and
contracts.
For certain types of acquisitions, these conditions should include U.S.
governmental screening procedures under Hart-Scott-Rodino and under
Exon-Florio.
Hart-Scott-Rodino
Hart-Scott-Rodino is a pre-acquisition notification process that allows
U.S. antitrust authorities to determine whether certain acquisitions create antitrust problems. Generally, Hart-Scott-Rodino will apply to many
acquisitions of $50 million or more, where the parties are each of a certain size, although some stock sales with a lower price may be covered
if the acquiring person already holds stock of the issuer. Purchases of
residential real estate, office buildings and undeveloped land are usually
exempt, but other real estate acquisitions may be covered.
Under Hart-Scott-Rodino, both the seller and the purchaser must file a
notification with the antitrust authorities. Depending on the size of the
transaction, the purchaser must pay a filing fee ranging from $45,000
to $280,000; depending on how the transaction is structured, the
seller may have to pay a fee as well. After filing, the parties must wait a
certain time, usually 30 days, before closing the transaction. This wait[ 27 ]
Pacific Coast Opportunities
ing period is often shortened by the antitrust authorities, but it can also
be extended. If they are concerned about the antitrust implications of
the acquisition, the antitrust authorities can try to stop the acquisition
through court proceedings.
Exon-Florio
Exon-Florio permits the president of the United States to prohibit foreign
acquisitions which threaten national security. If the acquisition is already
closed, the president can order a divestiture. To date, however, although
hundreds of transactions have been reviewed, that divestiture power
has only been exercised once, when the first President Bush ordered a
Chinese purchaser of a Seattle-based manufacturer of airplane parts to
divest.
“National security” can be interpreted quite broadly, and regulatory
authorities responsible for enforcing Exon-Florio have made more vigorous use of the provision since September 11, 2001. Those regulatory
authorities have resisted any definition of national security that would
exclude any industries from scrutiny by type.
Filings notifying the government of the transaction are voluntary; however, notification of transactions involving products, services and technologies important to U.S. defense are considered “appropriate.” Further,
since September 11, 2001, the government is more likely than previously to focus on transactions involving telecommunications and technology
companies. Potential purchasers should carefully consider whether to
make the voluntary filing. If a filing is not made, the acquisition remains
perpetually open to government scrutiny and potential divestiture. On the
other hand, if a materially complete and correct filing is made, and no
government action is taken within 90 days, the acquisition can proceed
without any further threat of injunction or divestiture under Exon-Florio.
Other Regulations and Procedures
For acquisitions of businesses in defense-related industries, foreigners
may also have to deal with the U.S. Department of Defense to ensure
compliance with the Department’s regulations on foreign control and in-
[ 28 ]
Closing
fluence. In addition, 60-day notice prior to closing may have to be given
under the Department of State’s ITAR regulations.
Foreign purchasers should also be aware of two post-closing government
notification procedures. The International Investment and Trade in Services
Survey Act requires that reports be filed with the U.S. Department of
Commerce within 45 days of closing whenever a foreign person acquires
a 10 percent or greater interest in a U.S. business or real property
(subject to certain exceptions for real estate). The Agricultural Foreign
Investment Disclosure Act requires that a separate report be filed within
90 days of closing whenever a foreign person acquires or transfers any
interest, other than a security interest, in agricultural lands.
At closing, a variety of documents and instruments are delivered. Legal
opinions from both the seller’s and purchaser’s counsel are commonly
delivered in business acquisitions and in larger real property transactions. The legal opinion for the seller will provide assurance to the
purchaser that all corporate procedures were properly completed. In a
stock sale, delivery of stock certificates, properly endorsed over to the
purchaser, is typically the primary closing deliverable from the seller.
When assets or real property are purchased, a whole series of transfer instruments are delivered, including deeds for real property, bills of sale for
other tangible assets, assignments and assumptions of leases and other
contracts, and title documents for vehicles and aircraft.
In the case of real property acquisitions, it is common in California,
Oregon, Washington and Alaska to close through escrow with a title
insurance company. Funds from the purchaser and the deed and other
documents from the seller are delivered to the title insurance company
with instructions to deliver funds to the seller only when the title insurance company has recorded the deed and is satisfied that it can deliver
title insurance showing no mortgages and other title defects, except as
otherwise agreed to by the parties.
[ 29 ]
Acquisition
of a Public Company
Acquiring a U.S. public company involves a number of highly technical
corporate and securities law issues that are largely beyond the scope
of this guide. However, here is a summary of some of the key issues
encountered in such transactions:
Fiduciary Duties
In general, directors and management of a U.S. seller have fiduciary
obligations to act in good faith, with due care and loyalty, in what they
believe to be the best interests of the corporation and its shareholders.
In a change of control acquisition, the board is required to maximize
share value through the pursuit of the best transaction reasonably available for the corporation’s shareholders. A board of directors, as a general
rule, has no fiduciary obligation to negotiate with a hostile bidder or to
sell the corporation merely because it received a premium offer for all
of the corporation’s shares. Under Delaware law, the seller’s board has a
duty to seek the best available transaction, by seeking out the best price
and other terms reasonably available under the circumstances, which
may not be the ideal transaction. Revlon, Inc. v. MacAndrews & Forbes
Holdings, Inc., 506 A.2d 173 (Del. 1996). This duty is imposed if the
corporation is sold for cash, for a non-voting security, or to a company
controlled by one or more persons (but generally not in a combination for
voting securities, except to a controlled company).
Deal Protection
Deal protection is typically driven by the buyer’s desire for certainty of
consummation when negotiating a transaction. The seller may want to
[ 30 ]
Acquisition of a Public Company
preserve the maximum amount of flexibility to consider alternative transactions in order to satisfy the board’s fiduciary duties or to preserve its
ability to obtain a more favorable deal. The need for deal protection has
resulted in the development of a number of features intended to deter
third parties from disrupting a transaction and, in the event of disruption, to compensate the initial buyer. Such measures include:
• a no-shop clause, which limits the ability of the seller to solicit competing bids;
• a no-talk provision, which restricts the seller’s ability to discuss a bid
with, or provide information to, a third party;
• break-up fees, which provide that, if a transaction is terminated and
the seller enters into an acquisition agreement with a third party, the
seller will pay a fee to the initial buyer. The fee is usually in the range
of 1 to 4 percent of the equity value of the transaction, depending on
the size of the transaction, the circumstances under which the agreement is executed, the nature of the consideration and the terms and
conditions of the agreement, including how committed the buyer is;
• a requirement that the transaction be presented for seller shareholder
approval, regardless of whether the board of the target has changed
its recommendation; and
• provisions which lock out competitive bidders for a specified period of
time.
Careful review should be given as to whether the deal protection measures are permissible under applicable state law.
Proxy/Registration Statement
In a statutory merger, the buyer, if issuing its securities as consideration
in the transaction, would file a registration statement on Form F-4 (for
foreign private issuers, comparable to the Form S-4) covering the shares
to be issued in the merger. In a structured disclosure situation, such as
a registration statement, the required disclosure is dependent upon the
[ 31 ]
Pacific Coast Opportunities
requirements of the specific registration form utilized. In most instances
disclosure of material facts will be required. The disclosure process under U.S. federal securities laws provides for making prospective purchasers of securities aware of the risks of the enterprise and insisting on the
use of factual information.
The shareholders of the seller will have to approve a merger by the vote
required by the applicable state statute and the seller’s charter. The
merger is likely to be structured so that under the applicable statute,
shareholder approval of the buyer would not be required. If, however,
stock of the buyer is listed on a United States securities exchange, the
rules of the exchange may require approval of its shareholders as well.
For example, Nasdaq rules require shareholder approval for the issuance of shares equal to 20 percent or more of a company’s outstanding
shares. A meeting of shareholders will be required. Solicitation of proxies
will be subject to the proxy rules of U.S. federal securities laws.
The typical statutory merger involves both the sale of securities registered under the Securities Act of 1933 and a solicitation of proxies subject to the Exchange Act of 1934 proxy rules. The process is facilitated
by allowing one document to serve both as the proxy statement of the
seller (and the buyer if approval of its shareholders is required) and the
prospectus of the buyer. Preparation of the F-4 could take up to 20 days
or longer. An additional 30-60 days may be required to complete the
Securities and Exchange Commission (SEC) review process and to mail
the proxy to the shareholders of the seller. For certain types of transactions (for example, going private acquisitions or acquisitions involving
complicated accounting issues), the SEC review could be lengthened by
months. Once SEC clearance is received, the seller can set a record date
and have proxies printed and sent out to its shareholders. Typically, the
seller will require 10-15 days for printing and mailing the proxies. The
seller’s shareholder meeting is typically 20-30 days from the date the
proxies are mailed, depending on the state law requirements.
Anti-takeover Provisions
Shareholder rights plans, more commonly known as “poison pills,” have
traditionally been adopted by public company boards to prevent certain
[ 32 ]
Acquisition of a Public Company
types of hostile takeovers and to encourage potential buyers to negotiate with a corporation’s board prior to acquiring any sizable amount of
its stock. Poison pills are also relevant in friendly transactions. If either
the buyer or the seller has a shareholder rights plan, the treatment of
the proposed transaction under the plan or plans must be analyzed,
and the plans may have to be amended so that a proposed transaction
does not trigger the consequences originally intended to apply to hostile
takeovers. Such amendments may require early board action. Rights
plans provide for the distribution to a company’s common shareholders
of “rights,” which are essentially warrants. The distribution is effected as
a stock dividend declared by the company’s board and does not require
shareholder approval. Upon the occurrence of a triggering event, the
rights become exercisable for a number of shares of common stock with
a below market exercise price. By purchasing more shares cheaply, the
shareholders, other than the potential buyer, are able to dilute the shares
held by the potential buyer, which results in making the target unattractive to the potential buyer.
A number of states have enacted statutes that protect corporations incorporated (or doing business) in those states from unsolicited takeover
bids. State anti-takeover statutes are generally based on a “business
combination,” a “fair price” or a “control share” model. Business combination statutes generally prevent acquirors who do not reach agreement
with a target corporation’s board from consummating certain transactions, primarily involving some type of self-dealing that may arise in the
course of hostile acquisitions. Fair price statutes generally preclude an
acquirer who crosses a specified ownership threshold from significant
business transactions with the target corporation unless certain “fair
price” criteria are met. Control share statutes prohibit an acquirer from
voting its shares or electing the board of directors.
Another anti-takeover device used by public companies is the staggered
board. The staggered board provides anti-takeover protection both by:
(i) forcing any hostile bidder, no matter when it emerges, to wait at least
one year to gain control of the board; and
[ 33 ]
Pacific Coast Opportunities
(ii) requiring such a bidder to win two elections far apart in time rather
than a one-time referendum on its offer.
Tender Offers
The tender offer is a means of buying a substantial portion of the outstanding stock of a company by making an offer to:
(i)
(ii)
(iii)
(iv)
purchase all outstanding shares;
up to a specified number;
tendered by shareholders within a specified period; and
at a fixed price (usually at a premium above the market price).
Section 14(d)(1) of the Securities Exchange Act of 1934 requires that a
tender offer for a class of registered equity securities be made pursuant
to filing with the SEC information regarding the bidder’s ownership interest in the target company and material terms of the proposed transaction, as well as specified information regarding the target company, the
prior acquisition of the target company’s securities by the bidder, and
past dealings between the bidder and the target company. The tender
offer can be withdrawn any time during the period an offer request or
invitation remains open.
Pursuant to Section 14(d)(7) of the Exchange Act and Rule 14d-10,
a bidder must pay the same consideration to all shareholders of the
target who tender their securities during a tender offer. The remedy for
a violation under Section 14(d)(7) is that whenever the bidder increases
consideration offered to shareholders at any time, the bidder must pay
that increased consideration to all tendering shareholders. Some recent
cases have found that Rule 14d-10 applies to employment agreements
between the bidder and the target company executives (e.g., non-compete, severance, compensation packages, options and retention bonuses)
on the theory that the agreements represent disguised compensation for
the executives’ tender and thereby constitute additional consideration paid
to those insiders in violation of the “all holders, best price” rule. Absent
SEC clarification on the scope of the “all holders, best price” rule,
tender offers should be avoided in favor of other acquisition structures,
unless the bidder is willing to accept litigation risk.
[ 34 ]
Conclusion
California, Oregon, Washington and Alaska afford exciting opportunities
to foreign purchasers of businesses and real property. Those opportunities can be even more gratifying if the acquisitions are properly structured and documented, and if due diligence is fully completed. This
booklet has provided a brief guide to foreign investment in the four-state
region; it cannot, however, substitute for the active involvement of
experienced legal and tax accounting advisors in a transaction. Foreign
purchasers are advised to seek the assistance of experienced advisors at
the outset of their transaction.
[ 35 ]
About Preston Gates & Ellis LLP
Preston Gates & Ellis LLP has been providing private and public sector
clients with counsel, litigation, legislative advocacy and transactional
services for more than 120 years. As a full-service law firm, we offer
more than 425 attorneys and 630 professional staff members in eleven
cities throughout the West Coast, in Washington, DC and in Asia.
Our firm is a service organization. Our goal is to offer clients reliable,
timely and cost-effective counsel while maintaining the highest standards of legal excellence and personal integrity. We aim to develop with
each of our clients a long-term, mutually satisfying relationship. We
know these kinds of relationships do not happen overnight. They are
based on the trust that develops over time when a law firm understands
its clients and their businesses, anticipates their needs, and provides
prompt, high-quality and consistently valuable service.
Preston Gates lawyers and professionals believe in working as a team
with our clients and each other. We make extensive use of sophisticated
communications, document production and research technology, and
stand ready to meet all of our clients’ legal needs, from drafting simple
documents to managing major multi-party transactions throughout the
United States and the world.
[ 36 ]
For more information please contact these Preston Gates offices
ANCHORAGE
SAN FRANCISCO
420 L Street, Suite 400
Anchorage, AK 99501-1937
Tel: (907) 276-1969
Fax: (907) 276-1365
55 Second Street, Suite 1700
San Francisco, CA 94105-3493
Tel: (415) 882-8200
Fax: (415) 882-8220
BEIJING
SEATTLE
Suite 1003, Tower E3
Oriental Plaza
No 1 East Chang An Avenue
Beijing 100738 China
Tel: 86 (10) 8518-8528
Fax: 86 (10) 8518-9299
925 Fourth Avenue, Suite 2900
Seattle, WA 98104-1158
Tel: (206) 623-7580
Fax: (206) 623-7022
COEUR D’ALENE
1200 Ironwood Drive, Suite 315
Coeur D’Alene, ID 83814
Tel: (208) 667-1839
Fax: (208) 765-2494
HONG KONG
35th Floor
Two International Finance Centre
8 Finance Street
Central, Hong Kong SAR
Tel: 011 (852) 2511-5100
Fax: 011 (852) 2511-9515
ORANGE COUNTY
1900 Main Street, Suite 600
Irvine, CA 92614-7319
Tel: (949) 253-0900
Fax: (949) 253-0902
SPOKANE
601 West Riverside Avenue, Suite 1400
Spokane, WA 99201-0628
Tel: (509) 624-2100
Fax: (509) 456-0146
TAIPEI
12/F-1 No., 99 Tun Hwa South Road
Sec. 2
Taipei 106 Taiwan
Tel: 886 (2) 6638-9887
Fax: 886 (2) 6638-9879
WASHINGTON DC
Preston Gates Ellis & Rouvelas Meeds LLP
1735 New York Avenue NW, Suite 500
Washington, DC 20006-5209
Tel: (202) 628-1700
Fax: (202) 331-1024
PORTLAND
222 SW Columbia Street, Suite 1400
Portland, OR 97201-6632
Tel: (503) 228-3200
Fax: (503) 248-9085
ONLINE
www.prestongates.com
www.prestongates.com
For more information please contact these Preston Gates offices
ANCHORAGE
SAN FRANCISCO
420 L Street, Suite 400
Anchorage, AK 99501-1937
Tel: (907) 276-1969
Fax: (907) 276-1365
55 Second Street, Suite 1700
San Francisco, CA 94105-3493
Tel: (415) 882-8200
Fax: (415) 882-8220
BEIJING
SEATTLE
Suite 1003, Tower E3
Oriental Plaza
No 1 East Chang An Avenue
Beijing 100738 China
Tel: 86 (10) 8518-8528
Fax: 86 (10) 8518-9299
925 Fourth Avenue, Suite 2900
Seattle, WA 98104-1158
Tel: (206) 623-7580
Fax: (206) 623-7022
COEUR D’ALENE
1200 Ironwood Drive, Suite 315
Coeur D’Alene, ID 83814
Tel: (208) 667-1839
Fax: (208) 765-2494
HONG KONG
35th Floor
Two International Finance Centre
8 Finance Street
Central, Hong Kong SAR
Tel: 011 (852) 2511-5100
Fax: 011 (852) 2511-9515
ORANGE COUNTY
1900 Main Street, Suite 600
Irvine, CA 92614-7319
Tel: (949) 253-0900
Fax: (949) 253-0902
SPOKANE
601 West Riverside Avenue, Suite 1400
Spokane, WA 99201-0628
Tel: (509) 624-2100
Fax: (509) 456-0146
TAIPEI
12/F-1 No., 99 Tun Hwa South Road
Sec. 2
Taipei 106 Taiwan
Tel: 886 (2) 6638-9887
Fax: 886 (2) 6638-9879
WASHINGTON DC
Preston Gates Ellis & Rouvelas Meeds LLP
1735 New York Avenue NW, Suite 500
Washington, DC 20006-5209
Tel: (202) 628-1700
Fax: (202) 331-1024
PORTLAND
222 SW Columbia Street, Suite 1400
Portland, OR 97201-6632
Tel: (503) 228-3200
Fax: (503) 248-9085
ONLINE
www.prestongates.com
www.prestongates.com