M&A Conditions Precedent Checklist - Arizona

M&A CONDITIONS PRECEDENT CHECKLIST

State of Arizona

Transaction Name: [________________________________]
Transaction Type: ☐ Stock Purchase ☐ Asset Purchase ☐ Statutory Merger ☐ Interest Exchange ☐ Other: [________________________________]
Seller/Target: [________________________________]
Buyer/Acquirer: [________________________________]
Anticipated Closing Date: [__/__/____]
Definitive Agreement Date: [__/__/____]
Outside Date (Drop-Dead Date): [__/__/____]
Deal Counsel (Seller): [________________________________]
Deal Counsel (Buyer): [________________________________]

STATUS KEY:

• NS = Not Started
• IP = In Progress
• PC = Pending Counterparty
• PR = Pending Regulatory
• C = Complete
• W = Waived
• NA = Not Applicable

PART I: PRE-CLOSING CONDITIONS

A. Regulatory Approvals

B. Third-Party Consents

C. Stockholder/Member Approvals

PART II: SELLER'S CONDITIONS TO CLOSING (Conditions for Seller's Benefit)

A. Representations and Warranties Bring-Down

B. Buyer's Covenants Performed

C. Other Seller Conditions

PART III: BUYER'S CONDITIONS TO CLOSING (Conditions for Buyer's Benefit)

A. Representations and Warranties Bring-Down

B. Seller's Covenants Performed

C. No Material Adverse Change (MAC/MAE)

D. Legal Opinions

E. Financial and Diligence Conditions

F. Employee and Benefits Conditions

G. Insurance / RWI Conditions (if Applicable)

PART IV: MUTUAL CONDITIONS TO CLOSING

PART V: ARIZONA-SPECIFIC REQUIREMENTS

A. State Merger Filings (Statutory Merger / Interest Exchange Transactions)

B. Arizona Good Standing and Entity Status

C. Arizona Tax Matters

D. Arizona-Specific Licensing and Permits

E. Bulk Sales Considerations

PART VI: CLOSING DELIVERABLES CHECKLIST

A. Seller's Closing Deliverables

B. Buyer's Closing Deliverables

C. Funds Flow and Payment

PART VII: POST-CLOSING CONDITIONS AND OBLIGATIONS

PART VIII: PRACTICE NOTES -- ARIZONA-SPECIFIC

Key Arizona Considerations

1. Filing Office: Arizona merger filings go to the Arizona Corporation Commission (ACC), not the Secretary of State. The ACC handles all corporate filings. UCC filings, however, go to the Arizona Secretary of State.

2. Publication Requirement: Arizona is one of the few states that requires publication or posting of a Statement of Merger. Under A.R.S. 10-1105, within 60 days after the ACC approves the filing, a copy of the Statement of Merger must be published in a newspaper of general circulation in the county of the corporation's known place of business or posted on the ACC website. Failure to publish does not invalidate the merger but can result in administrative issues.

3. Filing Fee: The ACC filing fee for a Statement of Merger is $100. Expedited processing is available: $35 additional for expedited, $100 for next-day, $200 for same-day, and $400 for two-hour service.

4. Entity Restructuring Transactions: Arizona uses the term "entity restructuring transactions" (A.R.S. 10-1102) rather than just "merger." This section covers mergers, interest exchanges, conversions, and domestications.

5. Shareholder Approval: Under A.R.S. 10-1103, approval requires a majority of votes cast by each voting group entitled to vote (assuming a quorum). Review the articles for supermajority requirements.

6. Short-Form Merger: Under A.R.S. 10-1104, a parent owning at least 90% of each class of a subsidiary may complete a merger without subsidiary shareholder approval.

7. Appraisal Rights: Arizona provides appraisal rights under A.R.S. 10-1301 through 10-1320. Dissenting shareholders can demand fair value for their shares. Note the specific procedural requirements including written demand before the shareholder vote.

8. No Bulk Sales Act: Arizona has repealed UCC Article 6 (Bulk Transfers). However, for asset purchases, it is prudent to request a TPT (transaction privilege tax) clearance letter from the Arizona Department of Revenue to protect the buyer from successor liability for unpaid transaction privilege taxes.

9. No Real Property Transfer Tax: Arizona does not impose a state-level real property transfer tax, but an Affidavit of Property Value (A.R.S. 11-1133) is required for most real property transfers and must be filed with the county recorder.

10. Transaction Privilege Tax (TPT): Arizona's TPT is the equivalent of a sales tax but is imposed on the seller/vendor rather than the buyer. Ensure TPT obligations are current.

11. Water Rights: In Arizona, water rights are a critical concern. If the target holds any water rights, surface water rights, or groundwater permits, separate analysis and possible Arizona Department of Water Resources filings may be required.

Common Pitfalls

• Filing merger documents with the Secretary of State instead of the Arizona Corporation Commission
• Missing the 60-day publication/posting requirement after ACC approval
• Not requesting a TPT clearance letter in asset purchases (successor liability risk)
• Overlooking water rights as a key asset requiring separate transfer analysis
• Failing to file the Affidavit of Property Value for real property transfers
• Not accounting for both state and local TPT in tax clearance analysis
• Overlooking that the ACC (not the Secretary of State) is the filing office for corporate documents
• Forgetting to withdraw foreign entity qualification after merger (if disappearing entity was foreign-qualified)

RWI and Insurance Considerations

• D&O tail policies should be bound at or before closing. Typical tail period is 6 years.
• Confirm RWI policy covers Arizona-specific representations, particularly those related to water rights and environmental matters common in Arizona transactions.
• For transactions involving real property in Arizona, confirm environmental liability coverage (particularly Superfund exposure in areas with historical mining activity).
• Arizona workers' compensation insurance must be confirmed for post-closing operations.

Timing and Scheduling Notes

• Arizona Corporation Commission standard processing: approximately 10-15 business days
• Expedited processing available: $35 (expedited), $100 (next-day), $200 (same-day), $400 (2-hour)
• Publication or posting must occur within 60 days of ACC approval of the Statement of Merger
• HSR filing (if applicable): 30-day waiting period from date of filing
• Dissenter's rights procedures must be initiated before the shareholder vote and completed per A.R.S. 10-1301-10-1320

SOURCES AND REFERENCES

• Arizona Business Corporation Act, Entity Restructuring: A.R.S. 10-1101 through 10-1108
• Arizona Corporation Commission Forms: azcc.gov
• ACC Statement of Merger Form M075: azcc.gov
• ACC Fee Schedule: azcc.gov
• Arizona Appraisal Rights: A.R.S. 10-1301 through 10-1320
• Hart-Scott-Rodino Act, 15 U.S.C. 18a; 2025 thresholds: ftc.gov