Merger Agreement - Arizona

MERGER AGREEMENT

(State of Arizona)

TABLE OF CONTENTS

1. Definitions
2. The Merger
3. Merger Consideration
4. Representations and Warranties of the Company
5. Representations and Warranties of Parent and Merger Sub
6. Covenants
7. Conditions to Closing
8. Indemnification and Survival
9. Termination
10. Dispute Resolution
11. General Provisions
12. Execution

RECITALS

This MERGER AGREEMENT (this "Agreement") is entered into as of [__/__/____] (the "Effective Date") by and among:

(a) [________________________________], an Arizona corporation (the "Company");

(b) [________________________________], a [________________________________] corporation ("Parent"); and

(c) [________________________________], an Arizona corporation and a wholly-owned subsidiary of Parent ("Merger Sub").

Company, Parent, and Merger Sub are each a "Party" and collectively the "Parties."

WHEREAS, the respective Boards of Directors of the Company, Parent, and Merger Sub have approved the merger of Merger Sub with and into the Company (the "Merger") in accordance with the Arizona Business Corporation Act (A.R.S. Title 10);

WHEREAS, upon the Merger, Merger Sub shall cease to exist and the Company shall continue as the surviving corporation (the "Surviving Corporation") and a wholly-owned subsidiary of Parent;

WHEREAS, the Parties intend the Merger to qualify as a statutory merger under A.R.S. § 10-1101;

NOW, THEREFORE, in consideration of the mutual covenants herein, the Parties agree as follows:

ARTICLE 1 — DEFINITIONS

1.1 As used in this Agreement:

(a) "ABCA" means the Arizona Business Corporation Act, A.R.S. Title 10, Chapters 1 through 17, as amended.

(b) "ACC" means the Arizona Corporation Commission.

(c) "Articles of Merger" means the articles of merger to be filed with the ACC in accordance with A.R.S. § 10-1105.

(d) "Business Day" means any day other than a Saturday, Sunday, or any day on which banking institutions in Phoenix, Arizona are authorized or required to close.

(e) "Closing" means the consummation of the Merger.

(f) "Closing Date" means the date on which the Closing occurs.

(g) "Company Shareholders" means the holders of record of the Company Shares as of the Record Date.

(h) "Company Shares" means all issued and outstanding shares of capital stock of the Company.

(i) "Dissenting Shares" means Company Shares held by a shareholder who has properly exercised dissenters' rights under A.R.S. §§ 10-1302 through 10-1331.

(j) "Effective Time" means the date and time at which the Merger becomes effective, as determined by the filing of the Articles of Merger with the ACC pursuant to A.R.S. § 10-123, or such later time as specified in the Articles of Merger.

(k) "Encumbrance" means any lien, pledge, mortgage, charge, security interest, restriction, claim, option, or other encumbrance.

(l) "GAAP" means generally accepted accounting principles in the United States.

(m) "Governmental Authority" means any federal, state, local, or foreign government or agency, including the ACC.

(n) "Knowledge" means actual knowledge after reasonable inquiry.

(o) "Law" means any statute, law, ordinance, regulation, rule, code, or order.

(p) "Material Adverse Effect" means any event or change materially adverse to the business, financial condition, or assets of the applicable entity.

(q) "Merger Consideration" has the meaning in Section 3.1.

(r) "Person" means an individual, corporation, partnership, LLC, trust, or other entity.

(s) "Publication Requirement" means the requirement under A.R.S. § 10-1105 to publish a copy of the articles of merger within sixty (60) days after the ACC approves the filing.

(t) "Record Date" means the record date for determining shareholders entitled to vote on the Merger.

(u) "Required Shareholder Approval" means the affirmative vote required under A.R.S. § 10-1103 and the Company's articles of incorporation.

ARTICLE 2 — THE MERGER

2.1 The Merger. Upon the terms and conditions set forth herein, at the Effective Time, Merger Sub shall be merged with and into the Company in accordance with A.R.S. § 10-1101. As a result:

(a) The separate corporate existence of Merger Sub shall cease; and

(b) The Company shall continue as the Surviving Corporation and a wholly-owned subsidiary of Parent.

2.2 Effective Time. On the Closing Date, the Parties shall cause the Articles of Merger to be filed with the ACC in accordance with A.R.S. § 10-1105. The Merger shall become effective at the time and date of the Articles of Merger, as determined pursuant to A.R.S. § 10-123.

2.3 Publication Requirement. Under A.R.S. § 10-1105, within sixty (60) days after the ACC approves the filing of the Articles of Merger, a copy of the Articles of Merger shall be published. The Surviving Corporation shall be responsible for satisfying this publication requirement.

2.4 Effects of the Merger. The Merger shall have the effects set forth in A.R.S. § 10-1106, including:

(a) The Surviving Corporation shall possess all rights, privileges, immunities, and powers of the merging corporations;

(b) All property, real and personal, and all debts due on whatever account shall vest in the Surviving Corporation;

(c) The Surviving Corporation shall be responsible for all liabilities and obligations of each merging corporation;

(d) The articles of incorporation of the Company, as in effect immediately prior to the Effective Time, shall be the articles of the Surviving Corporation (as amended, if specified); and

(e) The bylaws of the Company shall be the bylaws of the Surviving Corporation.

2.5 Articles of Incorporation. At the Effective Time, the articles of incorporation of the Surviving Corporation shall be as set forth in Exhibit A.

2.6 Bylaws. At the Effective Time, the bylaws of the Surviving Corporation shall be as set forth in Exhibit B.

2.7 Directors and Officers. At the Effective Time:

(a) Directors of the Surviving Corporation: [________________________________]; and

(b) Officers of the Surviving Corporation: [________________________________].

2.8 Closing. The Closing shall take place at [________________________________], or remotely, on [__/__/____], or such other date as the Parties agree.

ARTICLE 3 — MERGER CONSIDERATION

3.1 Conversion of Company Shares. At the Effective Time, by virtue of the Merger:

(a) Each Company Share issued and outstanding immediately prior to the Effective Time (other than Dissenting Shares and treasury shares or shares held by Parent or Merger Sub) shall be converted into the right to receive $[________________________________] per share in cash (the "Per Share Merger Consideration"), without interest;

☐ Alternative: Stock Consideration. Each Company Share shall be converted into [____] shares of Parent's [________________________________] stock;

☐ Alternative: Mixed Consideration. Each Company Share shall be converted into (i) $[________________________________] cash and (ii) [____] shares of Parent stock;

(b) Each share of Merger Sub common stock shall be converted into one (1) share of common stock of the Surviving Corporation; and

(c) Treasury shares and shares held by Parent or Merger Sub shall be cancelled without payment.

3.2 Payment. At or promptly after the Effective Time, Parent shall deposit with [________________________________] (the "Paying Agent") cash sufficient to pay the aggregate Merger Consideration. Upon surrender of stock certificates, the Paying Agent shall pay the Per Share Merger Consideration.

3.3 Letter of Transmittal. Promptly after the Effective Time, the Paying Agent shall mail to each Company Shareholder a letter of transmittal and instructions for surrendering stock certificates.

3.4 Dissenting Shareholders — Arizona Dissenters' Rights Procedures. Company Shares held by shareholders who have properly exercised dissenters' rights under A.R.S. §§ 10-1302 through 10-1331 (Chapter 13, Dissenters' Rights) shall not be converted into the right to receive the Merger Consideration. The following procedures shall apply:

(a) Right to Dissent (A.R.S. § 10-1302). A shareholder of the Company is entitled to dissent from and obtain payment of the fair value of the shareholder's shares in the event of the consummation of the Merger, if shareholder approval is required.

(b) Notice of Dissenters' Rights (A.R.S. § 10-1320). The Company shall, if the proposed Merger is submitted to a vote at a shareholders' meeting, send to each shareholder a written notice stating that dissenters' rights are available, together with a copy of A.R.S. §§ 10-1301 through 10-1331 and a brief description of the procedure.

(c) Notice of Intent to Demand Payment (A.R.S. § 10-1321). A shareholder who wishes to assert dissenters' rights must deliver to the Company, before the vote is taken, written notice of the shareholder's intent to demand payment for the shares if the proposed action is effectuated.

(d) Dissenters' Notice (A.R.S. § 10-1322). If the Merger is approved, the Company shall deliver a dissenters' notice to all shareholders who have satisfied A.R.S. § 10-1321. The dissenters' notice shall (i) state where the demand for payment must be sent and where stock certificates must be deposited, (ii) supply a form for demanding payment, (iii) set a date by which the Company must receive the demand (not fewer than 30 and not more than 60 days after the date the notice is delivered), and (iv) be accompanied by a copy of A.R.S. §§ 10-1301 through 10-1331.

(e) Duty to Demand Payment (A.R.S. § 10-1323). A dissenting shareholder must demand payment, certify whether the shareholder acquired beneficial ownership before the date set for demanding payment, and deposit the shareholder's certificates in accordance with the terms of the dissenters' notice.

(f) Share Restrictions (A.R.S. § 10-1324). After demand for payment, the shareholder's shares shall not be transferred and new certificates shall not be issued.

(g) Payment (A.R.S. § 10-1325). As soon as the proposed action is taken, the Company shall pay each dissenting shareholder the amount the Company estimates to be the fair value of the shareholder's shares, plus accrued interest.

(h) Withdrawal of Dissent. A shareholder who fails to comply with the procedures or withdraws the dissent shall have shares converted into the right to receive the Merger Consideration.

(i) Judicial Appraisal (A.R.S. § 10-1328). A shareholder who is dissatisfied with the payment or offer may, within thirty (30) days after the Company makes or offers payment, notify the Company of the shareholder's own estimate of the fair value and demand payment. If the Company and shareholder cannot agree, either party may file a petition in the superior court requesting the court to determine the fair value.

3.5 Adjustments. The Merger Consideration shall be equitably adjusted to reflect any stock split, reverse stock split, stock dividend, or reclassification occurring between the Effective Date and the Effective Time.

ARTICLE 4 — REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to Parent and Merger Sub that:

4.1 Organization. The Company is duly organized, validly existing, and in good standing under the ABCA. The Company is in good standing with the ACC.

4.2 Capitalization. The authorized capital stock consists of [________________________________] shares. [________________________________] shares are issued and outstanding. All outstanding shares are duly authorized, validly issued, fully paid, and nonassessable under A.R.S. § 10-601 and A.R.S. § 10-621. Schedule 4.2 provides a complete capitalization table.

4.3 Authority. The Company has all necessary corporate power to execute and perform this Agreement and to consummate the Merger, subject to the Required Shareholder Approval. The Board has approved this Agreement and recommended shareholder approval.

4.4 No Conflicts. The execution and performance of this Agreement does not conflict with the Company's articles, bylaws, or any agreement or Law.

4.5 Financial Statements. Schedule 4.5 lists Financial Statements, prepared in accordance with GAAP, fairly presenting the Company's financial condition.

4.6 Absence of Undisclosed Liabilities. No liabilities except those in the Financial Statements or incurred in the ordinary course.

4.7 Absence of Changes. No Material Adverse Effect since the most recent Financial Statements.

4.8 Compliance with Laws. The Company is in material compliance with all applicable Laws, including the ABCA and all ACC filing requirements.

4.9 Material Contracts. Schedule 4.9 lists all material contracts, each in full force and effect.

4.10 Litigation. Except as set forth on Schedule 4.10, no pending or threatened litigation.

4.11 Tax Matters. All tax returns timely filed; all taxes paid.

4.12 Employees and Benefits. Schedule 4.12 lists all employees and benefit plans.

4.13 Environmental Matters. Material compliance with all environmental Laws.

4.14 Intellectual Property. Schedule 4.14 lists material intellectual property.

4.15 Real Property. Schedule 4.15 describes all owned and leased real property.

4.16 Insurance. Schedule 4.16 lists all insurance policies.

4.17 Brokers. Except as on Schedule 4.17, no broker or finder engaged.

4.18 Required Approvals. No consent, approval, or authorization required except the Required Shareholder Approval, the ACC filing, and the publication requirement under A.R.S. § 10-1105.

ARTICLE 5 — REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Parent and Merger Sub jointly and severally represent and warrant:

5.1 Organization. Parent is duly organized under the laws of [________________________________]. Merger Sub is an Arizona corporation duly organized and in good standing with the ACC.

5.2 Authority. Parent and Merger Sub have all necessary corporate power. Their boards have approved this Agreement. Parent, as sole shareholder of Merger Sub, has approved the Merger.

5.3 No Conflicts. No conflict with organizational documents, agreements, or Law.

5.4 Financing. Parent has or will have at Closing sufficient funds for the aggregate Merger Consideration.

5.5 Litigation. No pending or threatened litigation that would prevent the Merger.

5.6 Brokers. No broker or finder entitled to a fee from the Company.

5.7 Solvency. After the Merger, the Surviving Corporation will be solvent.

5.8 Merger Sub. Merger Sub was formed solely for the Merger and has no prior operations.

ARTICLE 6 — COVENANTS

6.1 Conduct of Business. From the Effective Date through the Effective Time, the Company shall:

(a) Conduct business in the ordinary course;
(b) Preserve business organization and relationships;
(c) Not issue shares or securities;
(d) Not declare dividends or distributions;
(e) Not enter into, amend, or terminate material contracts;
(f) Not incur indebtedness exceeding $[________________________________];
(g) Not sell or dispose of material assets;
(h) Not amend articles or bylaws;
(i) Not effect any merger or recapitalization; and
(j) Promptly notify Parent of any Material Adverse Effect.

6.2 Access. The Company shall provide Parent reasonable access to books, records, properties, and personnel.

6.3 Shareholder Approval.

(a) The Company shall promptly call and hold a shareholders' meeting to vote on the Merger in accordance with A.R.S. § 10-1103.

(b) Under A.R.S. § 10-1103, the board of directors must submit the plan to its shareholders for their approval. The board must also transmit to the shareholders a recommendation that the shareholders approve the plan, unless the board makes a determination that because of conflicts of interest or other special circumstances it should not make such a recommendation.

(c) The Company shall provide notice of the shareholders' meeting in accordance with A.R.S. § 10-705, including the statement that dissenters' rights are available under Chapter 13 of the ABCA.

(d) The Required Shareholder Approval is a majority of votes entitled to be cast on the plan, unless the articles of incorporation require a greater percentage.

6.4 Dissenters' Rights Compliance. The Company shall comply fully with A.R.S. §§ 10-1302 through 10-1331, including:

(a) Providing notice of dissenters' rights (A.R.S. § 10-1320);
(b) Delivering dissenters' notices (A.R.S. § 10-1322);
(c) Making timely payments (A.R.S. § 10-1325); and
(d) If applicable, participating in judicial appraisal proceedings (A.R.S. § 10-1328).

6.5 Board Recommendation. Subject to fiduciary duties, the Board shall recommend shareholder approval.

6.6 No Solicitation.

(a) The Company shall not solicit, initiate, or encourage any competing acquisition proposal.

(b) Fiduciary Out. The Board may respond to an unsolicited Superior Proposal if the Board determines in good faith, after consultation with counsel, that failure to do so would violate fiduciary duties.

6.7 Regulatory Filings. The Parties shall cooperate in making all required filings with the ACC and other Governmental Authorities.

6.8 Publication. Promptly following the Effective Time, the Surviving Corporation shall satisfy the publication requirement under A.R.S. § 10-1105 by publishing a copy of the Articles of Merger in a newspaper of general circulation in Maricopa County, Arizona (or the county of the Company's known place of business) within sixty (60) days after ACC approval.

6.9 Employee Matters. Parent shall use reasonable efforts to provide comparable compensation and benefits for [____] months post-Effective Time.

6.10 Indemnification of Directors and Officers. For [____] years after the Effective Time, Parent shall cause the Surviving Corporation to honor all indemnification obligations to former directors and officers, consistent with A.R.S. § 10-851 (authority to indemnify) and A.R.S. § 10-852 (mandatory indemnification) and the Company's existing articles and bylaws.

6.11 Confidentiality. All non-public information exchanged in connection with this Agreement shall be kept confidential.

ARTICLE 7 — CONDITIONS TO CLOSING

7.1 Conditions to All Parties. The obligations of all Parties are subject to:

(a) The Required Shareholder Approval shall have been obtained;
(b) No Law or order shall prohibit the Merger;
(c) All required regulatory approvals shall have been obtained; and
(d) The Articles of Merger shall be in proper form for filing with the ACC.

7.2 Conditions to Parent and Merger Sub. Additionally subject to:

(a) The Company's representations and warranties shall be true and correct in all material respects;
(b) The Company shall have performed all covenants;
(c) No Material Adverse Effect since the Effective Date;
(d) Dissenting Shares shall not exceed [____]% of outstanding Company Shares;
(e) Parent shall have received a closing certificate from the Company; and
(f) All material third-party consents shall have been obtained.

7.3 Conditions to the Company. Additionally subject to:

(a) Parent's and Merger Sub's representations and warranties shall be true and correct;
(b) Parent and Merger Sub shall have performed all covenants;
(c) Parent shall have deposited the Merger Consideration with the Paying Agent; and
(d) The Company shall have received a closing certificate from Parent.

ARTICLE 8 — INDEMNIFICATION AND SURVIVAL

8.1 Indemnification by Parent. Parent shall indemnify the Company Shareholders from Losses arising from breach of Parent's or Merger Sub's representations, warranties, or covenants.

8.2 Indemnification by Company Shareholders. The Company Shareholders (pro rata) shall indemnify Parent and the Surviving Corporation from Losses arising from breach of the Company's representations, warranties, or covenants.

8.3 Escrow.

☐ $[________________________________] (the "Indemnification Escrow Amount"), representing [____]% of the aggregate Merger Consideration, shall be deposited into an escrow account at Closing.

8.4 Basket. No indemnification unless aggregate Losses exceed $[________________________________] (the "Basket").

8.5 Cap. Maximum liability shall not exceed $[________________________________] (the "Cap"); does not apply to fraud or willful misconduct.

8.6 Survival. Representations and warranties survive the Closing for [____] months; fundamental representations survive for the applicable statute of limitations period.

ARTICLE 9 — TERMINATION

9.1 Termination Events. This Agreement may be terminated prior to the Effective Time:

(a) By mutual written agreement;
(b) By either the Company or Parent if the Closing has not occurred by [__/__/____];
(c) By either Party if a Governmental Authority issues a final order prohibiting the Merger;
(d) By Parent if the Company Shareholders do not approve the Merger;
(e) By Parent for material uncured breach by the Company (with [____] days' notice);
(f) By the Company for material uncured breach by Parent or Merger Sub (with [____] days' notice); or
(g) By the Company to accept a Superior Proposal, subject to payment of the Termination Fee.

9.2 Termination Fee. If the Company terminates under Section 9.1(g), the Company shall pay Parent $[________________________________] (the "Termination Fee"), representing [____]% of the aggregate Merger Consideration, within [____] Business Days.

9.3 Effect of Termination. Upon termination, this Agreement becomes void except (a) Sections 6.11, 9.3, and Article 11 survive, and (b) termination does not release liability for willful breach.

ARTICLE 10 — DISPUTE RESOLUTION

10.1 Governing Law. This Agreement shall be governed by Arizona law, including the ABCA, without giving effect to conflict-of-laws principles.

10.2 Forum Selection. Each Party irrevocably submits to the exclusive jurisdiction of state and federal courts in Maricopa County, Arizona.

10.3 Injunctive Relief. Any Party may seek specific performance or injunctive relief without posting bond.

10.4 Jury Trial Waiver. EACH PARTY HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING OUT OF THIS AGREEMENT.

10.5 Attorneys' Fees. The prevailing Party shall recover reasonable attorneys' fees pursuant to A.R.S. § 12-341.01.

ARTICLE 11 — GENERAL PROVISIONS

11.1 Notices. All notices shall be in writing, deemed given when delivered personally, sent by certified mail, overnight courier, or email (with confirmation):

If to the Company:
[________________________________]
[________________________________]
Email: [________________________________]

If to Parent:
[________________________________]
[________________________________]
Email: [________________________________]

If to Merger Sub:
[________________________________]
[________________________________]
Email: [________________________________]

11.2 Entire Agreement. This Agreement constitutes the entire agreement of the Parties.

11.3 Amendment. May be amended only by written instrument executed by all Parties.

11.4 Waiver. No waiver effective unless in writing.

11.5 Severability. Invalid provisions shall not affect remaining provisions.

11.6 Assignment. No assignment without prior written consent.

11.7 Successors. Binding upon successors and permitted assigns.

11.8 Third-Party Beneficiaries. Except for D&O indemnification, no third-party beneficiaries.

11.9 Counterparts. May be executed in counterparts. Electronic signatures deemed originals.

11.10 Expenses. Each Party bears its own expenses except as otherwise provided.

11.11 Schedules and Exhibits.

ARTICLE 12 — EXECUTION

IN WITNESS WHEREOF, the Parties have executed this Merger Agreement as of the Effective Date.

COMPANY:

[________________________________]

By: [________________________________]
Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

PARENT:

[________________________________]

By: [________________________________]
Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

MERGER SUB:

[________________________________]

By: [________________________________]
Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

ARIZONA-SPECIFIC PRACTICE NOTES

Merger Procedures Under the ABCA. The Arizona Business Corporation Act governs the merger process:

• A.R.S. § 10-1101 — One or more domestic corporations may merge with one or more domestic or foreign entities
• A.R.S. § 10-1103 — After adopting a plan, the board must submit it to shareholders for approval; a majority of votes entitled to be cast is required unless the articles require a greater vote
• A.R.S. § 10-1104 — A parent owning at least 90% of a subsidiary's outstanding shares may merge the subsidiary without subsidiary shareholder approval (short-form merger)
• A.R.S. § 10-1105 — After approval, articles of merger are filed with the ACC; within 60 days after ACC approval, the articles must be published in a newspaper of general circulation in the county of the corporation's known place of business
• A.R.S. § 10-1106 — The merger takes effect at the effective date of the articles; the surviving entity succeeds to all rights, property, and obligations

Dissenters' Rights Under Arizona Law. Arizona provides comprehensive dissenters' rights:

• A.R.S. § 10-1302 — A shareholder is entitled to dissent from and obtain fair value for shares in a merger (if shareholder approval is required), a share exchange, and other specified transactions
• A.R.S. § 10-1320 — Notice of dissenters' rights must be sent with the meeting notice
• A.R.S. § 10-1321 — Before the vote, the shareholder must deliver written notice of intent to demand payment
• A.R.S. § 10-1322 — After the action is taken, the corporation must send a dissenters' notice (not fewer than 30, not more than 60 days for response)
• A.R.S. § 10-1323 — The dissenting shareholder must demand payment and deposit certificates
• A.R.S. § 10-1325 — The corporation must pay its estimate of fair value plus accrued interest
• A.R.S. § 10-1328 — A dissatisfied shareholder may notify the corporation and, if unresolved, either party may petition the superior court to determine fair value
• A.R.S. § 10-1331 — Court costs and attorneys' fees may be assessed

Filing Fees and Procedures.

• Articles of merger filing fee with the ACC: check the current fee schedule at https://azcc.gov/corporations/fee-and-payment-info
• Publication costs vary by newspaper and county
• Articles of incorporation filing fee for Arizona corporations: $60

SOURCES AND REFERENCES

• Arizona Business Corporation Act — Mergers (A.R.S. §§ 10-1101 through 10-1106): https://www.azleg.gov/arsDetail/?title=10
• Arizona Dissenters' Rights (A.R.S. §§ 10-1302 through 10-1331): https://www.azleg.gov/ars/10/01302.htm
• Arizona Corporation Commission: https://azcc.gov/corporations/fee-and-payment-info
• A.R.S. § 10-1103 — Action on plan: https://www.azleg.gov/ars/10/01103.htm
• A.R.S. § 10-1105 — Articles of merger; publication: https://law.justia.com/codes/arizona/2012/title10/section10-1105/

This template is provided by ezel.ai for informational purposes only. It does not constitute legal advice. Merger transactions require experienced legal counsel licensed in Arizona.