That is good in the case of our own lawyers and usually, but not always, good in the case of opposing counsel


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NameThat is good in the case of our own lawyers and usually, but not always, good in the case of opposing counsel
A typeDocumentation
Merger

The opinion section of the letter has 8 paragraphs:
(a)Organizational Status

(b)Power and Authority

(c)Execution, Validity and Enforceability

(d)Noncontravention

(e)Governmental Approvals

(f)Proceedings

(g)Ownership of Shares

(h)Merger


Sale of Stock
The opinion section of the letter has 7 paragraphs:
(a) Organizational Status

(b)Power and Authority

(c)Execution, Validity and Enforceability

(d)Noncontravention

(e)Governmental Approvals

(f)Proceedings

(g)Ownership of Shares

Sale of Assets

The opinion section of the letter has 6 paragraphs:

(a)Organizational Status

(b)Power and Authority

(c)Execution, Validity and Enforceability

(d)Noncontravention

(e)Governmental Approvals

(f)Proceedings


HEADINGS IN OPINION LETTER

1. Documents Reviewed

2. Assumptions Underlying Our Opinions

3. Our Opinions

4. Exclusions

5. Qualifications and Limitations

6. Reliance on Opinions

Why do we have these headings?

To make the opinions easier to understand.

That is good in the case of our own lawyers and usually, but not always, good in the case of opposing counsel.

1. Documents Reviewed

In connection with this opinion letter, we have examined the following documents:

(a) the Agreement;

(b) the [Employment Agreement(s)];

(c) the [Non-competition Agreement(s)1;

(d) the [Escrow Agreement];

(e) the [Tax Agreement];
These are the “Transaction Documents.”

Be careful about what you include on this list.

The opinion is mostly about these documents

(f) the certificate of incorporation, bylaws and board of directors resolutions, certificate of organization, operating agreement and members’ consent, or certificate of limited partnership, limited partnership agreement and consent of general partner, as the case may be, of the Seller and each Acquired Company (the “Organizational Documents”);

• This is the definition of “Organizational Documents”.

• The language picks up corporations, limited liability companies and limited partnerships. it can be simplified or made more complex as needed.

• The Organizational Documents are the foundation for the opinions on

— Power and Authority

— Execution, Validity and Enforceability

— Non-Contravention (in part)
(g) with respect to the Seller and each Acquired Company, a certificate issued by the [Secretary of State] or other appropriate official of the state of organization of such party attesting to the continued existence and good standing of such party in such state (the “Good Standing Certificates”);

“Good Standing Certificates” are for the Organizational Status opinion and are discussed below.
(h) the agreements and instruments identified in Section ____ of the

Agreement (the “Reviewed Agreements”)

“Reviewed Agreements” are often the Company’s material contracts with third parties.
Be careful to limit the list as much as possible.
List the Reviewed Agreements if a cross- reference to the Agreement is not feasible.
The non-contravention opinion normally says that none of the Reviewed Agreements are breached by the deal.
That may be the hardest opinion to give of any in the letter.

(i) such other records, documents and other instruments as we have deemed necessary for the purposes of this opinion letter.


• This catchall lets you avoid listing everything that you review.
• It also lets you avoid reviewing documents that are inconsequential to the opinion without explicitly declaring that the documents are not being reviewed.



  1. Assumptions Underlying Our Opinions


For all purposes of the opinions expressed herein, we have assumed, without independent investigation, that:
(a) Factual Matters. With regard to factual matters, to the extent that we have reviewed and relied upon (i) certificates of the Seller and each Acquired Company or their authorized representatives, (ii) representations of the Seller and each Acquired Company set forth in the Transaction Documents and (iii) certificates and assurances from public officials, all of such certificates, representations and assurances are accurate;
This is a very important assumption.
It allows us to rely on the certificates, reps and warranties of our clients as being true.
It also allows us to rely on the certificates and assurances of public officials as being true.

(b) Contrary Knowledge of Addressee. No addressee of this opinion letter has any actual knowledge that any of our factual assumptions or opinions is inaccurate;


This is another important assumption.
It protects us from being sandbagged by problems the Buyer may know about and doesn’t reveal.

(C) Signatures The signature of individuals signing the Transaction Documents are genuine and (other than of individuals signing on behalf of the seller or any of the Acquired Companies) authorized:


  • This assumption mat be controversial




  • Buyer may object to our assuming that our clients’ signature are genuine. We do not typically make this assumption in our financing opinions.




  • We are not handwriting specialists. If we do not know the person doing the signing, you will need, at a minimum, a certificate signed by someone you do know with a specimen signature of the other signers.



Id) Authentic and Conforming Documents. All documents submitted to us as originals are authentic, complete and accurate, and all documents submitted to us as copies conform to authentic original documents;
(e) Capacity of Certain Parties. All parties to the Transaction Documents (other than the Seller and the Acquired Companies) have the capacity and full power and authority to execute, deliver and perform the Transaction Documents and the documents required or permitted to he delivered and performed thereunder;

(f) Transaction Documents Binding on Certain Parties. Except with respect to the Seller and the Acquired Companies, all of the Transaction Documents and the documents required or permitted to be delivered thereunder have been duly authorized by all necessary corporate or other action on the part of the parties thereto, have been duly executed and delivered by such parties and are valid and binding obligations enforceable against such parties in accordance with their terms;

(g) Consents for Certain Parties. All necessary consents, authorizations, approvals, permits or certificates (governmental and otherwise) which are required as a condition to the execution and delivery of the Transaction Documents by the parties thereto (other than the Seller and the Acquired Companies) and to the consummation by such parties of the transactions contempbted thereby have been obtained; and

(h) Accurate Description of Parties’ Understanding. The Transaction Documents accurately describe and contain the mutual understanding of the parties, and there are no oral or written statements or agreements that modify, amend or vary, or purport to modify, amend or vary, any of the terms thereof.
• These assumptions are important too, but they should not be Controversial.


  1. Our Opinions


Based on and subject to the foregoing and the other imitations, assumptions, qualifications and exclusions set forth in this opinion letter, we are of the opinion that:


  1. Organizational Status. Based solely upon the Good Standing Certificates, the Seller and each of the Acquired Companies is validly existing land in good standing under the laws of its jurisdiction of organization as of the date set forth in the applicable Good Standing Certificate.




• Notice how narrow this opinion is. New York banks accept it, so it should be good enough for everybody.
• You will often be asked to say that the selling parties:

— Are “duty incorporated” or “duly organized

--- Are “qualified to do business’ everywhere that they need to be
• Don’t do it. Stick to what you can tie to a certificate.
• Modify the wording of the opinion if the certificates you rely on are not Igood standing” certificates — some states certify only ‘existence’.
Ib) Power and Authority. The Seller and each of the Acquired Companies has the organizational power and authority to execute, deliver and perform the terms and provisions of each Transaction Document to which it is party and has taken all necessary organizational action to authorize the execution, delivery and performance thereof.
You must review the Organizational Documents carefully to give this opinion.
• You must have proper resolutions from directors, managers, shareholders, members or partners as the case may be. They should refer to the transaction specifically and in sufficient detail.
• If our client is a “special purpose” entity, be sure the proposed transaction is within the scope of its purpose.
• Be sure there are no special restrictions in the charter, bylaws or other Organizational Documents.
• Be sure that special statutory requirements have been met; e.g., in Virginia a merger normally needs approval of more than 2/3 of shares eligible to vote.
• If asked to insert “full” as a modifier of “power and authority” say no; the meaning of “full’ is unclear.


(c) Execution, Validity and Enforceability. The Seller and each of the Acquired Companies has duly executed and delivered each Transaction Document to which it is party, and each such Transaction Document constitutes the valid, binding and enforceable obligation of such party.

• This opinion is aided greatly by the assumptions and qualifications elsewhere in the letter.
• You should have a resolution that authorizes the signing persons.
• You should have a certificate that authenticates the signatures of such persons if genuineness has not been assumed.
• The Transactions Documents must have been delivered. If they are in escrow, the opinion should be in escrow.
• “Valid, binding and enforceable” are the terms of art in contemporary practice. These terms are qualified elsewhere in the opinion. Do not try to qualify them here.
• Do not add “legal” to the list. Legality is covered by the non­contravention opinion that follows.

(d) Noncontravention. Neither the execution, delivery and performance by the Seller or any of the Acquired Companies of any Transaction Document to which it is a party, nor the compliance by the Seller or any of the Acquired Companies with the terms and provisions thereof: U) violates any present law, statute or regulation that, in each case, is applicable to such party; (ii) violates any provision of the Organizational Documents of such party; or (iii) results in any breach of any of the terms of, or constitutes a default under, any Reviewed Agreement.
• This opinion says that the merger will not violate:

—---o-- the law
— our clients’ Organizational Documents
— any Reviewed Agreement
• You cannot give this opinion without the limitations and assumptions elsewhere in the letter.
• Try not to give (iii) and never expand it to cover more than a specific list of agreements and instruments.
• Do not opine that the selling parties are in compliance with laws generally.
• Take special note of the “Applicable Law”, “Noncontravention” and “Reviewed Agreements” qualifications below.
(e) Governmental Approvals. [Except for the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (to the extent applicable) and except as disclosed on Schedule (______] of the Agreement], no consent, approval or authorization of, or filing with, any governmental authority that, in each case is applicable to the Seller or any of the Acquired Companies is required for (i) the due execution, delivery and performance by the Seller or any of the Acquired Companies of any Transaction Document to which it is a party or (ii) the validity, binding effect or enforceability of any Transaction Document to which the Seller or any of the Acquired companies is a party, except (A) in each case as have previously been made or obtained and (B) consents, approvals, authorizations or filings as may be required to be obtained or made by the Buyer or the Merger Subsidiary as a result ol its involvement in the transactions contemplated by the Transaction Documents.
This opinion is not always given. It is arguably covered by the noncontravention and enforceability opinions.
Never give it for all governmental approvals needed for the selling parties to conduct business.
Take special note of the “Applicable Law” and “Government Approvals” qualifications below.
(f) Proceedings. To our knowledge, there is no outstanding judgment, action, suit or proceeding pending against the Seller or any Acquired Company before any court, governmental agency or arbitrator which challenges the legality, validity, binding effect or enforceability of any Transaction Document to which the Seller or such Acquired Company is a party.
This opinion is limited by knowledge.
It refers only to proceedings directed against the Transaction Documents.
Do not give an opinion about proceedings generally.
Avoid giving an opinion about “threatened” proceedings, although the knowledge limitation helps.
Do not give up the knowledge limitation.
(g) Ownership of Shares. Based upon our review of the share ledger of the

Company, the Seller is the record owner of all of the outstanding shares of the Company, free of any adverse claim.
• A much more expansive opinion will often be requested concerning capitalization of the Company, whether the shares are validly issued, fully paid and nonassessable and whether the Seller has good title to the shares free of liens and encumbrances. Resist.
These are fundamentally factual matters that the Buyer can investigate as well as we can. On that basis, try to avoid the opinion altogether.
• Do not take on the burden of researching years of Company records to determine proper issuance of the shares.

• In a stock sale, you may be asked to give this additional sentence:
• Upon consummation of the transactions contemplated by the Agreement, Buyer will acquire all right, title and interest of the Seller to such shares.
• It asked to take out “of the Seller”, resist.
(h) Merger. Based upon the certificate of merger issued by the [State] [Commonwealth] of [Organizational Jurisdiction, the Merger

has become effective under the laws of such jurisdiction.
This is commonly requested in a merger transaction.
Make sure that Buyer’s counsel gives the same opinion.


  1. Exclusion


We call your attention to the following matters as to which we express no opinion:

(a) Indemnification.

(b) Fraudulent Transfer.

(c) Jurisdiction, Venue, etc.

(d) Certain Laws.

(e) Local Ordinances.

(f) Certain Agreements of the Seller and Acquired Companies.

(g) Remedies.

(h) Waivers.

(i) Security Interests. The creation, validity, perfection, priority or enforceability of any security interest or Iieri;J
(j) Employment Agreements. The enforceability of any agreement of employment; and

(k) Noncompetition Agreements. The enforceability of any agreement not to compete.
• All of these are important.
• If you think of others, let the Opinion Committee know.
• If you have to opine about a security interest, it requires pages. See the Model Opinions for secured loan transactions.
• If you have an employment agreement or a noncompete agreement in the transaction, avoid opining that they are enforceable.


  1. Qualifications and Limitations


The opinions set forth above are subject to the following qualifications and limitations:

(a) Applicable Law. Our opinions are limited to the laws of the State) (Commonwealth) of [Governing Law Jurisdiction] the general (corporate] (Iimited liability company) [partnership] laws of the respective jurisdictions in which the Seller and the Acquired companies are organized], the fedora I aw of I he United Slates and the governmental authorities of Governing Law Jurisdiction] and the United States. and we not express any opinion concerning any other law or governmental authority.
• This is one of the most important provisions in the letter.
• Do not opine about the law of a jurisdiction where you are not admitted to practice, with the possible exception of Delaware entity law if you are well experienced with it.
• Notice how this limits both the law and the governmental consents you have to worry about.
• If you have to opine about laws or consents in jurisdictions where you are not qualified, find a partner who is or hire a local lawyer.
• Consult with a member of the Opinion Committee if you need to solve the problem by making assumptions about the law of a foreign jurisdiction, such as:

We have assumed that the law governing such Transaction Document would have the same effect as the law of the Commonwealth of Virginia.
(b) Bankruptcy.
(c) Equitable Principles.
(d) Knowledge. Whenever our opinions are stated to be “to our knowledge or known to us” (or words of similar import), it means the actual knowledge of the attorneys who have represented the Seller and the Acquired Companies in connection with the Transaction Documents and who have given substantive attention to the preparation and negotiation thereof. Except as expressly set forth herein, we have not undertaken any independent investigation (including, without limitation, conducting any review, search or investigation of any public files or records or dockets or any review of our files) to determine the existence or absence of any facts, and no inference as to our knowledge concerning such facts should be drawn from our reliance on the same in connection with the preparation and delivery of this opinion letter.
• Notice how narrowly knowledge is defined.
• Only the knowledge of lawyers giving substantive attention to the preparation and negotiation of the Transaction Documents applies.
• Independent investigation is disclaimed.
• Do not give this up.

(e) Noncontravention and Governmental Approvals. With respect to the opinions expressed in clauses 3(d)(i) and (iii) and paragraph 3(e), our opinions are limited (i) to our knowledge, if any, of the Seller’s and the Acquired Companies specially regulated business activities and properties based solely upon Section I______I of the Agreement in respect of such matters and (ii) to our review of only those laws and regulations that, in our experience, are normally applicable to transactions of the type contemplated by the Transaction Documents.
• This limits our responsibility to laws and regulations that in our experience are normally applicable to transactions like the one in question.
• This also limits our responsibility for considering specially regulated business activities or properties to those that have been specifically identified.
• If it does not work to cross-reference a Section of the Agreement to identify specially regulated business activities or properties, attach a schedule or a certificate that lists them.
• If there are none to list, strike (i).

(f)Reviewed Agreements. With respect to our opinion in clause 3(d)(iii), we have assumed that the law governing each Reviewed Agreement would have the same effect as the law of the State (Commonwealth) of (Governing Law Jurisdiction), and we express no opinion as to any violation not readily ascertainable from the face of any Reviewed Agreement or arising from any cross-default provision insofar as it relates to a default under an agreement that is not a Reviewed Agreement or arising under a covenant of a financial or numerical nature or requiring computation.
(g) Incorporated Documents.
(h) Headings.
• Reviewed Agreements may be governed by law different from the Transaction Documents. The language above solves that problem with an assumption.
• The other limitations on the scope of our review are also helpful.



  1. Reliance on Opinions


The foregoing opinions are being furnished to the Buyer for the purpose referred to in the first paragraph of this opinion letter, and this opinion letter is not to be furnished to any other person or entity or used or relied upon for any other purpose without our prior written consent. The opinions set forth herein are made as of the date hereof, and we assume no obligation to supplement this opinion letter if any applicable laws change after the date hereof or if we become aware after the date hereof of any facts that might change the opinions expressed herein.

very truly yours,

Manual Signature

• If you are asked to expand who can rely on the opinion, limit the expansion to specific parties who need the opinion to participate in the closing, such as a lender.

• Sign the firm name, not your own name, to the opinion.

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