ADVISING OREGON BUSINESSES
VOLUME 1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Sole Proprietorships . . . . . . . . . . . . . . . . . . . . . . . Stuart E. Foster
Timothy L. Jackle
General Partnerships . . . . . . . . . . . . . . . . . . . . Michael D. Walker
Merritt S. Yoelin
Limited Liability Partnerships . . . . . . . . . . . . Jennifer J. Johnson
James M. Kennedy
Limited Partnerships . . . . . . . . . . . . . . . . . . . James M. Kennedy
Partnership Taxation . . . . . . . . . . . . . . . . . . Charles S. Lewis, III
Orlando Medina
Tenancy in Common—
An Alternative to Partnerships . . . . . . . . . . . Rhonda W. Kennedy
Limited Liability Companies . . . . . . . . . . . . David C. Culpepper
Promoters and Preincorporation
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . Laurence E. Thorp
Procedural Steps of Incorporation . . . . . . Andrew J. Morrow, Jr.
Business Records . . . . . . . . . . . . . . . . . . . . . . . . . Elisa L. Wilson
James A. Kuzmich
Milton R. Stewart
Amendment of Articles and Bylaws . . . . . . Erich W. Merrill, Jr.
Income Tax Consequences
of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . Diane C. Kerns
Subchapter S Taxation . . . . . . . . . . . . . . . . Christopher K. Heuer
Financing in General . . . . . . . . . . . . . . . . . . . . . . Jeffrey S. Cronn
Carol Dey Hibbs
Definition of a Security . . . . . . . . . . . . . . . . . . . Henry H. Hewitt
Robert J. Moorman
Jeffery B. Erb
Public Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . John H. Halle
Todd E. Barker
Contents
17
18
19
Private Placement of Securities . . . . . . . . . . . . . . Henry H. Hewitt
John M. Schweitzer
Jason M. Brauser
Kyle D. Wuepper
Oregon Securities Law . . . . . . . . . . . . . . . . Robert J. McGaughey
James G. Harlan
Debt Financing . . . . . . . . . . . . . . . . . . . . . . Richard R. Rasmussen
VOLUME 2
20
21
22
23
24
25
26
27
28
29
30
31
32
33
Venture Capital Financing . . . . . . . . . . . . . . William C. Campbell
Government Financing of
the Small Business . . . . . . . . . . . . . . . . . . . Suzanne C. Pickgrobe
David J. Elott
Shareholders’ Meetings; Voting; Proxies;
and Voting Arrangements . . . . . . . . . . . . . . . . Douglas D. Morris
Corporate Buy-Sell Agreements . . . . . . . . . . . . . Nikki C. Hatton
Gregory W. Mallory
Redemption or Purchase of
Corporate Shares . . . . . . . . . . . . . . . . . . . . . Erich W. Merrill, Jr.
Derivative Suits . . . . . . . . . . . . . . . . . . . . . . . . Whitney L. Grubbs
Kerry J. Shepherd
Inspection of Corporate Records . . . . . . . . . . . . . . . Ruth A. Beyer
Powers, Duties, and Liabilities of
Corporate Directors and Officers . . . . . . . . . . Mark A. von Bergen
Ethical Guidelines for the
Business Lawyer . . . . . . . . . . . . . . . . . . . . . . . . . . Peter R. Jarvis
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lisa Carey Alan
Foreign Corporations in Oregon . . . . . . . . . . . . Orlando Medina
Beverly C. Pearman
Assisting an Extranational
Corporation in Oregon . . . . . . . . . . . . . E. Walter Van Valkenburg
Jaime M. W. Sanders
Todd E. Barker
Cooperatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . David R. Simon
Professional Corporations . . . . . . . . . . . . . . . . . . Donald R. Laird
Contents
34
35
36
37
38
39
40
41
42
43
44
Special Problems of Closely
Held Businesses . . . . . . . . . . . . . . . . . . . . . . . . . Eva M. Kripalani
Andrew S. Glikbarg
Stock Redemptions and
Nonliquidating Distributions . . . . . . . . . . . . . . . Peter L. Osborne
Corporate Liquidations . . . . . . . . . . . . . . . . . Joseph J. Hanna, Jr.
Introduction to Corporate
Reorganizations . . . . . . . . . . . . . . . . . . . . . . David C. Culpepper
Acquisitive Corporate Reorganizations:
Type A, B, and C Reorganizations . . . . . . . . David C. Culpepper
Rebecka L. Eggers
Corporate Separations—
The D Reorganization . . . . . . . . . . . . . . . . . . . . Paul A. Stamnes
Peter L. Osborne
Type E and Type F Reorganizations . . . . . . . . . Harry M. Hanna
Type G Reorganization . . . . . . . . . . . . . . . Steven L. Christensen
Cross-Entity Conversions and Mergers . . . . . . . . . . Robert C. Art
[RESERVED FOR EXPANSION]
[RESERVED FOR EXPANSION]
Table of Statutes and Rules
Table of Cases
Subject Index
CONTENTS
Volume 3
ONGOING BUSINESS CONCERNS
45
46
47
48
49
50
51
52
53
54
55
56
57
Executive Compensation Matters . . . . . . . . . . David C. Culpepper
Qualified Retirement Plans . . . . . . . . . . . . . . . . . . Ray R. Benner
Estate Planning for Owners of
Closely Held Businesses . . . . . . . . . . . . . . . . . . . . . Emily V. Karr
Pendleton H. Serrurier
Business Risk and Insurance Coverage . . . . . . . . Beth R. Skillern
Sheila H. Potter
Company Policies . . . . . . . . . . . . . . . . . . . . Kathleen Barsocchini
Robert Barsocchini
James C. Bradshaw
Alice Cuprill-Comas
Stacey E. Mark
Edward J. Reeves
Doing Business with the Government . . . . . . . Terence J. Meehan
David C. Reese
MardiLyn Saathoff
Doing Business with Indian Tribes . . . . . . . . . . Townsend Hyatt
Robert James Miller
Melissa Masat Robertson
Evaluating and Structuring Acquisitions;
Decision Factors; Nontax Considerations . . . . . Todd A. Bauman
Ellen Theodorson
Structuring the Transaction:
Tax Considerations . . . . . . . . . . . . . . . . . . . . . Lewis M. Horowitz
Nicholas P. Nguyen
Valuing the Business . . . . . . . . . . . . . . . . . . . . Gregory A. Gilbert
Financing the Purchase . . . . . . . . . . . . . . Andrew J. Morrow, Jr.
Legal Opinions in Business Transactions—
Customary Practice . . . . . . . . . . . . . . . . . . . . Alan L. Pasternack
Mark A. Long
Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Robert L. Carlton
vii
Contents
Volume 4
INTELLECTUAL PROPERTY AND
COMPETITIVE RESTRICTIONS
58
59
60
61
62
63
64
65
66
67
68
Overview of the Antitrust Laws . . . . . E. Walter Van Valkenburg
John C. Motley
Niamh M. Lewis
Business Names . . . . . . . . . . . . . . . . . . . . . . William A. Birdwell
Garth E. Janke
Deborah Blyveis
Domain Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jere M. Webb
Gary H. Lau
Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . David P. Cooper
Copyrights . . . . . . . . . . . . . . . . . . . . . . . . . . . . Paula Holm Jensen
Patent Law Essentials . . . . . . . . . . . . . . . . . . . . Richard J. Polley
Trade Secrets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jere M. Webb
E. Walter Van Valkenburg
Confidentiality Agreements . . . . . . . . . . . . . . . . . . . Jere M. Webb
The Departing Employee—
Competitive Restrictions . . . . . . . . . . . . . . . . . . . . . Jere M. Webb
Randolph C. Foster
Corbett Gordon
MardiLyn Saathoff
Government Regulation of Franchises . . . . . . . Michael J. Morris
Douglas D. Smith
Business Aspects of Franchising . . . . . . . . . . . . Douglas D. Smith
Table of Statutes and Rules
Table of Cases
Subject Index
viii
Advising Oregon Businesses
Volume 5
Forms
PARTNERSHIPS
1 Partnership Agreement Checklist
(1998 rev) . . . . . . . . . . . . . . . . . . . . . . . . . . Jeffrey C. Wolfstone
2 General Partnership Agreement
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . Jeffrey C. Wolfstone
3 Certificate of Limited Partnership
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . . James M. Kennedy
4 Agreement of Limited Partnership
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . . James M. Kennedy
LIMITED LIABILITY COMPANIES
4A Limited Liability Company
Articles of Organization
(1998 rev) . . . . . . . . . . . . . . . . . . . . . . . . . . . Donald W. Douglas
4B Limited Liability Company
Operating Agreement—
Member-Managed LLC
(1998 rev) . . . . . . . . . . . . . . . . . . . . . . . . . . . Donald W. Douglas
4C Limited Liability Company Articles
of Incorporation—Single-Member LLC
(1998 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Donald W. Douglas
4D Limited Liability Company Operating
Agreement—Single-Member LLC
(1998 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Donald W. Douglas
CORPORATIONS: ORGANIZATIONS
5 Preincorporation Checklist
(1998 rev) . . . . . . . . . . . . . . . . . . . . . . . . . . Stanley E. Martinson
6 Application for Reservation of
Corporate Name
(1998 rev)
7 Letter to Client Regarding
Incorporation
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . Stanley E. Martinson
8 Letter to Client Disclosing
Potential Conflicts
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . . . . . . Peter R. Jarvis
9 Articles of Incorporation—
Business Corporation
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . Jeffrey C. Wolfstone
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . Samuel R. DeSimone, Jr.
Brendan R. McDonnell
10 Articles of Incorporation—
Professional Corporation
(1998 rev) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Donald R. Laird
11 Articles of Amendment
Before Shares Issued
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . Jeffrey C. Wolfstone
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . Samuel R. DeSimone, Jr.
Brendan R. McDonnell
12 Bylaws
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . . . . . John W. Whitty
13 Minutes of Organizational Meeting
of Directors
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . Kenneth A. Williams
14 Consent in Lieu of Organizational
Meeting of Directors
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . Kenneth A. Williams
CORPORATIONS: STOCK
15 Subscription Agreement
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . . James M. Kennedy
16 Stock Certificate for Common Stock
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . . James M. Kennedy
17 Stock Certificate for Preferred Stock
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . . James M. Kennedy
18 Legends for Stock Certificates
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . . James M. Kennedy
19 Affidavit of Loss of Stock Certificate
and Indemnity Agreement
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . Kenneth A. Williams
20 Key Employees’ Stock Option Plan
(1998 rev) . . . . . . . . . . . . . . . . . . . . . . . . . . . David C. Culpepper
21 Incentive Stock Option Agreement
(1998 rev) . . . . . . . . . . . . . . . . . . . . . . . . . . . David C. Culpepper
CORPORATIONS: AGREEMENTS
22 Employment Agreement
(1998 rev) . . . . . . . . . . . . . . . . . . . . . . . . . . . James M. Kennedy
23 Buy-Sell Agreement
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C. Paul Dagle
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . . . . . Nikki C. Hatton
24 Voting Trust Agreement
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . Michael W. Shackelford
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . Brenda L. Meltebeke
25 Voting Trust Certificate
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . Michael W. Shackelford
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . Brenda L. Meltebeke
26 Voting Agreement
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . Michael W. Shackelford
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . Brenda L. Meltebeke
27 Irrevocable Proxy
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . Michael W. Shackelford
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . Brenda L. Meltebeke
ONGOING CORPORATE MATTERS
28 Notice of Special Meeting of
Board of Directors
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . . . . Steven C. Alberty
29 Waiver of Notice of Meeting of
Board of Directors
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . . . . Steven C. Alberty
30 Minutes of Annual Meeting of
Board of Directors
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . . . . Steven C. Alberty
31 Resolutions for Annual Meeting of
Board of Directors
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . . . . Steven C. Alberty
32 Notice of Annual or Special Meeting
of Shareholders
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Richard E. Roy
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . . Sanjiv N. Kripalani
Mary P. Pounds
33 Minutes of Meeting of Shareholders
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Richard E. Roy
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . . Sanjiv N. Kripalani
Mary P. Pounds
34 Resolutions to Consider for Meeting
of Shareholders
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Richard E. Roy
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . . Sanjiv N. Kripalani
Mary P. Pounds
35 Certificate of Mailing
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Richard E. Roy
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . . Sanjiv N. Kripalani
Mary P. Pounds
36 Articles of Amendment After
Shares Issued
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . Jeffrey C. Wolfstone
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . Samuel R. DeSimone, Jr.
Brendan R. McDonnell
36A Designation of Series A Voting
Preferred Stock
(1998 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . Jeffrey C. Wolfstone
37 Restated Articles of Incorporation
and Accompanying Certificate
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . Jeffrey C. Wolfstone
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . Samuel R. DeSimone, Jr.
Brendan R. McDonnell
38 Proxy Statement for Shareholders’
Annual Meeting
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . . Robert J. Moorman
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . . . Richelle M. Tustin
39 Proxy for Annual Meeting of
Shareholders
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . . Robert J. Moorman
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . . . Richelle M. Tustin
SUBCHAPTER S; DISSOLUTION/LIQUIDATION
40 IRS Form 2553: S Corporation Election
(1998 rev)
41 Revocation of S Corporation Election
(1998 rev) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wesley W. Kirtley
42 Agreement to Preserve
S Corporation Status
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . . . Wesley W. Kirtley
43 Articles of Dissolution
(1998 rev)
44 IRS Form 966: Corporate Dissolution
or Liquidation
(1998 rev)
CORPORATE REORGANIZATIONS
45 Type A Reorganizations: Agreement
and Plan of Merger
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . John J. DeMott
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . Steven L. Christensen
46 Articles of Merger
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . John J. DeMott
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . Steven L. Christensen
47 Type D Reorganizations: Agreement
and Plan of Corporate Separation
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . John J. DeMott
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . Steven L. Christensen
48 Type E Reorganizations: Agreement
and Plan of Recapitalization
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . John J. DeMott
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . Steven L. Christensen
49 Notice to Shareholders, Including Right
to Exercise Appraisal Remedies
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . John J. DeMott
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . Steven L. Christensen
VENTURE CAPITAL
50 Common Stock Purchase Agreement
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . James F. Hensel
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Carolyn M. Vogt
BUSINESS ACQUISITIONS
51 Acquisition Due Diligence Checklist
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Robert S. Wiggins
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Todd A. Bauman
52 Letter of Intent for Sale
of Business Assets
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Robert S. Wiggins
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Todd A. Bauman
53 Letter of Intent for Sale
of Common Stock
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Robert S. Wiggins
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Todd A. Bauman
54 Agreement for Sale and Purchase
of Business Assets
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G. Todd Norvell
Richard E. Roy
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Carolyn M. Vogt
55 Stock Purchase Agreement
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . . . . Todd A. Bauman
56 Security Agreement
(1998 rev) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . George K. Fogg
57 Pledge Agreement
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Richard E. Roy
Laura J. Mazel
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . . . Mark H. Peterman
58 Escrow Agreement for Pledge of Stock
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Richard E. Roy
Emily V. Karr
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . . . Mark H. Peterman
59 Blank Stock Power
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G. Todd Norvell
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . Margaret B. Kushner
60 Consulting Agreement
(1998 rev) . . . . . . . . . . . . . . . . . . . . . . . . . . . Sanjiv N. Kripalani
Mary P. Pounds
61 Noncompetition Agreement
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G. Todd Norvell
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jere M. Webb
62 Personal Guaranty
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G. Todd Norvell
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . George K. Fogg
63 Promissory Note
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
64 Nonnegotiable Promissory Note
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
G. Todd Norvell
George K. Fogg
G. Todd Norvell
George K. Fogg
65 Closing Memorandum (Asset Purchase)
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Richard E. Roy
Kaylene Lewis
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . . Sanjiv N. Kripalani
Mary P. Pounds
66 Opinion Letter—Sale of Assets
(1998 rev) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mark A. Long
67 Opinion Letter—Sale of Stock
(1998 rev) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mark A. Long
67A ABA Illustrative Opinion Letter
(1998 rev) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mark A. Long
68 Certified Resolutions Authorizing Sale
of Business Assets
(1991 ed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G. Todd Norvell
(1998 supp) . . . . . . . . . . . . . . . . . . . . . . . . . Margaret B. Kushner
69 Bill of Sale for Personal Property
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . Stanley E. Martinson
INTELLECTUAL PROPERTY
70 Submitted Idea Agreement
(Reverse Confidentiality Agreement)
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . . . . . . . Jere M. Webb
71 Agreement Between Submitter of Ideas or
Inventions and Prospective Developer
or Marketer
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . . . . . . . Jere M. Webb
72 Employee or Consultant
Confidentiality Agreement
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . . . . . . . Jere M. Webb
73 Short Form Confidentiality Agreement
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . . . . . . . Jere M. Webb
74 Franchise Agreement
(1991 ed & 1998 supp) . . . . . . . . . . . . . . . . . . . Douglas D. Smith
75 Miscellaneous Provisions
(1998 rev) . . . . . . . . . . . . . . . . . . . . . . . . . . . James M. Kennedy
52
TODD A. BAUMAN*
ELLEN THEODORSON
EVALUATING AND STRUCTURING
ACQUISITIONS; DECISION FACTORS;
NONTAX CONSIDERATIONS
I.
II.
(§52.1)
INTRODUCTION
(§52.2)
FINDING THE BUYER OR SELLER
A. (§52.3)
Accounting Firms
B. (§52.4)
Business Opportunity Brokers and Finders
C. (§52.5)
Investment Bankers, Securities Brokerage
Firms, and Venture Capital Sources
D. (§52.6)
Trust or Business Advisory Departments of
Commercial Banks
E. (§52.7)
Professional Business and
Management Consultants
F. (§52.8)
Traditional Financial and Credit References;
Rating Services
G. (§52.9)
Trade Associations, Customers,
and Competitors
TODD A. BAUMAN, A.B., Stanford University (1978), J.D., University of Chicago
(1984); member of the State Bar of California since 1984 and the Oregon State
Bar since 1987; partner, Stoel Rives LLP, Portland.
ELLEN THEODORSON, B.A., J.D., University of Oregon (1989, 1999); member of
the Oregon State Bar since 1999; associate, Stoel Rives LLP, Portland.
*The authors gratefully acknowledge the contributions of John Detjens III and
Ruth A. Beyer, who wrote the prior version of this chapter.
The case citations in this chapter were checked for overrulings and reversals through November
2002. The ORS citations were checked through 2001.
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III.
THE DECISION TO BUY OR SELL
A. Nonfinancial Considerations
1. (§52.10) Purpose of Purchase or Sale
2. (§52.11) Buyer’s Considerations
a.
(§52.12) Management
b.
(§52.13) Products and Marketing
c.
(§52.14) Manufacturing Conditions
d.
(§52.15) Sales and Distribution
B. Financial Considerations
1. (§52.16) Buyer’s Considerations
a.
(§52.17) Comparative Financial Statements
b.
(§52.18) Accountant’s Opinion
c.
(§52.19) Audited vs. Unaudited
Financial Statements
d.
(§52.20) Analysis of Financial Statements
e.
(§52.21) Cash, Earnings, and
Balance Sheet Forecasts
2. (§52.22) Seller’s Considerations
IV.
INVESTIGATION BY BUYER AND SELLER
A. Buyer’s Investigation
1. (§52.23) Documents and Other Information
2. (§52.24) Retirement and Deferred Compensation
3. (§52.25) Contingent Liabilities
4. (§52.26) Encumbrances
a.
(§52.27) UCC Search
b.
(§52.28) Statutory Liens
c.
(§52.29) Unpaid Wages
d.
(§52.30) Mortgages or Liens on
Real Property
e.
(§52.31) Judgments and Pending Litigation
5. (§52.32) Labor Considerations
6. (§52.33) Antitrust Law
7. (§52.34) Pending Regulations or Zoning Changes
8. (§52.35) Environmental Compliance
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B.
V.
(§52.40)
A.
B.
C.
D.
E.
F.
VI.
Seller’s Investigation
1. (§52.36) Buyer’s History
2. (§52.37) Retirement and Deferred Compensation
Arrangements and Obligations
3. (§52.38) Secrecy Problems
4. (§52.39) Conduct During Negotiations
BASIC STRUCTURES AVAILABLE FOR SALE
OR ACQUISITION OF A BUSINESS
(§52.41) Purchase of Assets
(§52.42) Purchase of Stock
(§52.43) Purchase of Stock in Conjunction with
Partial Redemption
Statutory Merger or Exchange
1. (§52.44) Statutory Merger
2. (§52.45) Exchange
(§52.46) Identity of Seller
(§52.47) Entity to Acquire Business
TERMS OF SALE OR ACQUISITION
A. Purchase Price
1. (§52.48) Negotiating Price and Terms of Payment
2. (§52.49) Contingent Payments and Earnout
3. (§52.50) Alternative Financing
B. (§52.51) Security
C. (§52.52) Responsibility for Liabilities of
Acquired Business
D. Warranties
1. (§52.53) Seller’s Warranties
2. (§52.54) Buyer’s Warranties
3. (§52.55) Buyer’s Protection, Indemnification,
and Release
4. (§52.56) Release from Creditor or
Indemnification Agreement
E. (§52.57) Covenants Not to Compete
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VII.
SPECIAL CONSIDERATIONS IN DRAFTING
THE AGREEMENT
A. (§52.58) Broker’s or Finder’s Fee
B. (§52.59) Selecting Assets; Name Change
C. (§52.60) Rights to Acquire Capital Stock
VIII. CORPORATE MATTERS
A. Purchase of Stock
1. (§52.61) Buyer’s Shareholders
2. (§52.62) Seller’s Shareholders
3. (§52.63) Sale of Control by Majority Shareholder
4. (§52.64) Oregon Control Share Act and
Oregon Business Combination Act
B. Purchase of Assets
1. (§52.65) Buyer’s Shareholders
2. (§52.66) Seller’s Shareholders
C. (§52.67) Other Elements of Shareholder Approval
D. Other Approvals
1. (§52.68) Approval or Consent of Third Parties
2. (§52.69) Avoiding Impact of After-Acquired
Property Clauses
3. (§52.70) Regulatory Agencies and Permits
IX.
X.
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SECURITIES LAWS
A. (§52.71) Applicability of Securities Laws
B. (§52.72) Federal Laws
C. (§52.73) Oregon Securities Law
TAXES, LICENSES, AND FEES
A. (§52.74) Impact of Transfer Taxes
B. (§52.75) Sales and Use Taxes
C. (§52.76) Business Licenses and Occupation Taxes
D. (§52.77) Franchise Fees
E. (§52.78) Miscellaneous Fees
XI.
XII.
CLOSING
A. (§52.79) Timing
B. (§52.80) Conditions to Closing
1. (§52.81) Buyer’s Conditions
2. (§52.82) Seller’s Conditions
3. (§52.83) Postclosing Actions
MISCELLANEOUS MATTERS
A. (§52.84) Continuing Liability of Buyer
1. (§52.85) Fraud on Creditors; Tax Liabilities
2. (§52.86) De Facto Merger
3. (§52.87) Buyer Is a Continuation of Seller
4. (§52.88) Payment Directly to Shareholders
B. (§52.89) Purchase of Assets from a Proprietorship,
General Partnership, or Limited Partnership
1. (§52.90) Sole Proprietorship
2. (§52.91) General Partnership
3. (§52.92) Limited Partnership
I. (§52.1) INTRODUCTION
The decision to buy or sell a business is not solely a business
decision. In today’s business world, the lawyer may be called on to assist
in evaluating a proposed purchase or sale and to render legal advice on
matters of securities regulation and corporate, antitrust, taxation, and
labor laws. But see Professional Liability Fund Claims Made Plan §I.3.i
(exempting from coverage investment advice).
This chapter discusses certain business factors and nontax legal
considerations involved in the purchase or sale of a business, including
structuring the transaction. The discussion is limited to the sale or
acquisition of a business that is not publicly owned.
II. (§52.2) FINDING THE BUYER OR SELLER
Often, the first item on the agenda of a prospective buyer or seller
of a business is the task of finding an appropriate transaction
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§52.3 / Acquisitions—Nontax Considerations
counterparty. Many sources are available to prospective parties to help
them identify buyers or sellers. In most instances, a fee is required.
A.
(§52.3)
Accounting Firms
Most major accounting firms have contacts and experience that may
be helpful in matching prospective buyers and sellers. These firms also
prepare a wide variety of business and economic studies on related
topics.
B.
(§52.4)
Business Opportunity Brokers and Finders
Business brokers and finders identify and match prospective buyers
and sellers. Although a finder usually limits its services to introducing
a buyer to a seller and has no allegiance to either side, a broker may be
engaged to market the business or to identify an attractive business for
acquisition and may become involved in negotiating the transaction.
C.
(§52.5)
Investment Bankers, Securities Brokerage Firms,
and Venture Capital Sources
Investment bankers are experts in locating and evaluating
candidates for sale or acquisition and in providing advice to ongoing
businesses and potential takeover targets. Most large securities brokerage
firms maintain a business brokerage or acquisition department that
provides investment banking services. Independent venture capital
businesses and small business investment companies are also available
for evaluation and financing.
D.
(§52.6)
E.
(§52.7)
Trust or Business Advisory Departments of
Commercial Banks
Bank trustees holding stock in private companies may consider
selling the interest they hold, particularly for liquidity or performance
reasons. Many banks now have small business advisory departments that
may be aware of acquisition opportunities.
Professional Business and
Management Consultants
By the nature of their business, consultants know of persons who
want to buy or sell. In addition to rendering consulting services, these
enterprises may also perform evaluation work.
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