Legal Opinion Letter (California)

CALIFORNIA THIRD-PARTY LEGAL OPINION LETTER

Form opinion letter for a California transaction, drafted consistent with the "California Remedies Opinion Report" and the "2007 Report on Third-Party Closing Opinions" of the Business Law Section of the State Bar of California, the TriBar Opinion Committee's Third-Party "Closing" Opinions (1998), and subsequent TriBar supplements. Counsel giving this opinion should confirm compliance with current customary practice and with the State Bar of California Opinions Committee reports.

[LAW FIRM LETTERHEAD]

[__/__/____]

To: [ADDRESSEE NAME]
[STREET ADDRESS]
[CITY, STATE, ZIP]

Re: [TRANSACTION DESCRIPTION] — [CLIENT NAME]

Ladies and Gentlemen:

We have acted as California counsel to [CLIENT LEGAL NAME], a California [corporation / limited liability company / limited partnership] (the "Company"), in connection with the transactions contemplated by [DESCRIBE PRIMARY AGREEMENT] dated as of [__/__/____] (the "Transaction Agreement") among the Company, [____________________], and [____________________]. This opinion is being delivered to you pursuant to Section [____] of the Transaction Agreement.

1. Documents Examined

In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of:

(a) the Transaction Agreement and each of the Transaction Documents listed on Schedule A hereto;
(b) the Articles of Incorporation of the Company certified by the Secretary of State of the State of California on [__/__/____] [or Articles of Organization / Certificate of Limited Partnership, as applicable];
(c) the Bylaws of the Company [or Operating Agreement / Limited Partnership Agreement], certified as true, correct, and complete by the Secretary of the Company;
(d) a Certificate of Status (Good Standing) issued by the California Secretary of State dated [__/__/____];
(e) Resolutions of the Board of Directors [and, if applicable, shareholders / members / partners] of the Company authorizing the Transaction;
(f) a UCC-1 search report from the California Secretary of State dated [__/__/____];
(g) a Certificate of Officer of the Company dated [__/__/____] (the "Officer's Certificate"); and
(h) such other records, documents, certificates, and instruments as we have deemed necessary or appropriate.

2. Assumptions

In rendering the opinions below, we have assumed, without independent investigation:

(a) the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted as originals, and the conformity to originals of all copies;
(b) that each party to the Transaction Documents other than the Company (i) is duly organized, validly existing, and in good standing under the laws of its jurisdiction of organization; (ii) has full power and authority to execute, deliver, and perform the Transaction Documents; and (iii) has duly authorized, executed, and delivered each Transaction Document to which it is a party;
(c) that each Transaction Document constitutes the legal, valid, and binding obligation of each party other than the Company, enforceable against such party in accordance with its terms;
(d) the accuracy of the factual matters set forth in the Officer's Certificate;
(e) that there has been no mutual mistake of fact or misunderstanding, fraud, duress, or undue influence in connection with the Transaction; and
(f) that the choice of California law set forth in the Transaction Agreement will be respected under Cal. Civ. Code § 1646.5 (for transactions of $250,000 or more) and Nedlloyd Lines B.V. v. Superior Court, 3 Cal. 4th 459 (1992).

3. Opinions

Based upon the foregoing and subject to the qualifications, exceptions, and limitations set forth below, we are of the opinion that:

3.1 Existence and Power. The Company is a [corporation / limited liability company / limited partnership] duly incorporated [or organized], validly existing, and in good standing under the General Corporation Law of California [or the California Revised Uniform Limited Liability Company Act, Cal. Corp. Code §§ 17701.01 et seq., or the California Uniform Limited Partnership Act of 2008, Cal. Corp. Code §§ 15900 et seq., as applicable]. The Company has the corporate [limited liability company / partnership] power and authority to own its properties and to conduct its business as presently conducted and to execute, deliver, and perform its obligations under the Transaction Documents to which it is a party.

3.2 Authorization. The execution, delivery, and performance of each Transaction Document to which the Company is a party have been duly authorized by all necessary corporate [limited liability company / partnership] action on the part of the Company under the General Corporation Law of California [or RULLCA, as applicable] and under the Company's organizational documents.

3.3 Execution and Delivery. Each Transaction Document has been duly executed and delivered by the Company.

3.4 Enforceability (California Remedies Opinion). Each Transaction Document to which the Company is a party constitutes the legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with its terms under California law, subject to the Customary Qualifications set forth in Section 4 below, including the Bankruptcy Exception, the Equitable Principles Limitation, and the generic California Remedies Opinion qualifications identified in the State Bar of California Business Law Section's Remedies Opinion Report.

3.5 No Violation of Law. The execution and delivery by the Company of the Transaction Documents and the performance by the Company of its obligations thereunder do not violate (i) any provision of the Company's organizational documents; or (ii) any California statute or regulation that, in our experience, is typically applicable to transactions of the type contemplated by the Transaction Documents and to parties such as the Company.

3.6 No Governmental Consents. No consent, approval, authorization, or order of, or filing with, any California governmental authority is required on the part of the Company for the valid execution, delivery, and performance by the Company of its obligations under the Transaction Documents, except for such consents, approvals, authorizations, orders, or filings as have been obtained or made or which under California law are permitted to be obtained or made after the closing.

3.7 UCC Security Interest Perfection (if applicable). The financing statement attached as Schedule B is in an appropriate form for filing with the California Secretary of State under Cal. Com. Code Division 9. Upon filing of such financing statement with the California Secretary of State, the security interest granted under the [Security Agreement] will be perfected under Cal. Com. Code § 9310 to the extent a security interest in such collateral can be perfected by the filing of a UCC-1 financing statement under Cal. Com. Code §§ 9501–9502.

4. Customary Qualifications

Our opinions are subject to the following qualifications, exceptions, and limitations, which are customary in California opinion practice and which follow the guidance of the California Remedies Opinion Report:

4.1 Bankruptcy Exception. Enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, receivership, assignment for the benefit of creditors, fraudulent transfer, and similar laws affecting creditors' rights generally.

4.2 Equitable Principles Limitation. Enforcement is subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law, including (without limitation) concepts of materiality, reasonableness, good faith, fair dealing, and the availability and discretion of courts in granting specific performance, injunctive relief, and other equitable remedies.

4.3 California-Specific Enforceability Exceptions. We express no opinion as to the enforceability of:

(a) any provision that purports to be a non-competition, customer-non-solicit, or employee-non-solicit covenant against any natural person, which is void under Cal. Bus. & Prof. Code § 16600 and Edwards v. Arthur Andersen LLP, 44 Cal. 4th 937 (2008);
(b) any liquidated damages provision to the extent it fails to comply with Cal. Civ. Code §§ 1671(b)–(d);
(c) any provision imposing a penalty or forfeiture to the extent subject to Cal. Civ. Code § 3275 (relief from forfeiture) or Cal. Civ. Code § 1670.5 (unconscionability);
(d) any provision that purports to waive the obligation of good faith and fair dealing, diligence, reasonableness, or care;
(e) any waiver of rights that Cal. Civ. Code § 3513 states may not be waived, or any waiver of the protections of Cal. Civ. Code § 1542 unless expressly and properly made with the statutory language;
(f) any indemnification provision to the extent prohibited by Cal. Civ. Code § 2782 (construction contracts) or Cal. Civ. Code § 1668 (exculpation for fraud, willful injury, or violation of law);
(g) any attorney-fee provision to the extent Cal. Civ. Code § 1717 operates to make a one-sided fee clause mutual, or to the extent limited by Reynolds Metals Co. v. Alperson, 25 Cal. 3d 124 (1979);
(h) any forum selection or choice of law clause that designates a non-California forum or non-California law as to an employee primarily residing or working in California, which is voidable by the employee under Cal. Lab. Code § 925;
(i) any jury waiver, which is unenforceable in California state court with respect to the right to a jury trial under Grafton Partners v. Superior Court, 36 Cal. 4th 944 (2005), unless the parties have agreed to arbitration or judicial reference under Cal. Code Civ. Proc. § 638;
(j) any provision purporting to bind third parties or successors in a manner contrary to California law;
(k) any cumulative remedies provision to the extent inconsistent with California's election-of-remedies doctrine or Cal. Code Civ. Proc. § 726 (one-action rule) for secured transactions involving real property;
(l) any prejudgment interest provision inconsistent with Cal. Civ. Code §§ 3287, 3288, and 3289; or
(m) any provision for self-help remedies, including self-help repossession, to the extent restricted by Cal. Com. Code §§ 9609 and 9610 or by the California Constitution.

4.4 Scope of Law. We express no opinion concerning: (i) federal or state securities laws; (ii) federal, state, or local tax laws; (iii) antitrust, environmental, ERISA, pension, patent, trademark, copyright, or other intellectual property laws; (iv) federal bankruptcy or state insolvency laws; (v) the law of any jurisdiction other than the State of California and the federal law of the United States of America; or (vi) municipal ordinances or county regulations.

4.5 No Factual Investigation. As to matters of fact, we have relied upon the Officer's Certificate and certificates of public officials without independent verification.

4.6 Currency of Opinion. This opinion speaks only as of its date. We assume no obligation to update or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur.

5. Reliance

This opinion letter is furnished solely to you in connection with the closing of the Transaction and is solely for your benefit. It may not be relied upon by, disclosed to, quoted to, or filed with any other person or for any other purpose, except that (a) you may furnish a copy to your independent auditors, legal counsel, and regulators having jurisdiction over you; (b) you may disclose it in response to an order of a court of competent jurisdiction; and (c) [permitted assignees and participants, if the transaction is a financing] may rely on this opinion on the same terms as you.

Very truly yours,

[LAW FIRM NAME]

By: [________________________________]
[ATTORNEY NAME]
CA Bar No. [____________________]
[PARTNER / SHAREHOLDER / MEMBER]

Schedule A — Transaction Documents

☐ [DOCUMENT 1]
☐ [DOCUMENT 2]
☐ [DOCUMENT 3]

Schedule B — UCC-1 Financing Statement

[Attach if applicable]

Sources and References

• Business Law Section of the State Bar of California, Sample California Third-Party Legal Opinion for Business Transactions (as updated)
• State Bar of California, Report on Third-Party Remedies Opinions (Business Law Section Opinions Committee)
• TriBar Opinion Committee, Third-Party "Closing" Opinions, 53 Bus. Law. 591 (1998) and subsequent supplements
• Cal. Civ. Code §§ 1646.5, 1668, 1670.5, 1671, 1717, 3275, 3287, 3288, 3289, 3513
• Cal. Corp. Code §§ 100 et seq., 15900 et seq., 17701.01 et seq.
• Cal. Com. Code §§ 9310, 9501, 9502, 9609, 9610
• Cal. Lab. Code § 925
• Nedlloyd Lines B.V. v. Superior Court, 3 Cal. 4th 459 (1992)
• Grafton Partners v. Superior Court, 36 Cal. 4th 944 (2005)
• Edwards v. Arthur Andersen LLP, 44 Cal. 4th 937 (2008)
• Reynolds Metals Co. v. Alperson, 25 Cal. 3d 124 (1979)