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 or Database Route: Under A.R.S. 10-1105, within 60 days after approval either a copy of the statement is published or the Commission inputs the approval information into the A.R.S. 10-130 database. The filer does not itself “post” the statement to satisfy the database branch.

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, each voting group entitled to vote separately must approve by a majority of all votes entitled to be cast on the plan unless law, articles, or a board condition requires more. The surviving-corporation exception applies only if every condition in subsection G is met.

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's A.R.S. 10-1301 through 10-1331 procedure requires transaction-specific eligibility analysis. For a meeting vote, an eligible holder must give pre-vote notice of intent and not vote in favor; the payment demand follows the corporation's post-action dissenters' notice.

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 processing time must be checked on the live Commission site before scheduling
• Expedited processing available: $35 (expedited), $100 (next-day), $200 (same-day), $400 (2-hour)
• The A.R.S. 10-1105 publication-or-Commission-database route must be documented within 60 days after approval
• HSR filing (if applicable): ordinarily 30 days after FTC/DOJ receipt of both required notifications; 15 days for a cash tender offer after receipt of the acquiring person's notification, subject to statutory extensions
• Dissenters' procedures begin before the shareholder vote and continue through A.R.S. 10-1301-10-1331

SOURCES AND REFERENCES

• Arizona Business Corporation Act, Entity Restructuring: A.R.S. 10-1101 through 10-1105
• Arizona Entity Restructuring Act, Merger: A.R.S. 29-2201 through 29-2206
• 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 10-1331
• Hart-Scott-Rodino Act, 15 U.S.C. 18a; 2026 thresholds: ftc.gov