GOING PRIVATE: TIMELINES & CHECKLISTS



From PLI’s Course Handbook

Going Private: Doing It Right 2007

#12546

Get 40% off this title right now by clicking here.

1

going private:

timelines & Checklists

Francis J. Aquila

Sullivan & Cromwell LLP

Copyright © 2007

All Right Reserved

Going Private: TIMELINES & CHECKLISTS

Francis J. Aquila

Copyright © 2007

All Rights Reserved

Table of Contents

Transaction: Cash Merger Without A First Step Tender Offer………………..….4

Transaction: Merger With A First Step Tender Offer……………………………15

Transaction: Reverse Stock Split……………………………………….…………..26

ACQUISITION TIMETABLE CHECKLIST[1]

(Transaction: Cash Merger Without A First Step Tender Offer)

CERTAIN ABBREVIATIONS

Affiliate Bidding to Take Corporation Private Bidder

Board of Directors of Company Board

Corporation Being Taken Private Company

Financials Advisors to Special Committee SC’s Bankers

Financial Advisors to Bidder B’s Bankers

Legal Counsel to Bidder B’s Counsel

Legal Counsel to Special Committee SC’s Counsel

Plaintiff’s Attorneys PA’s

|Date[2] |Event/Action Item |Parties |

| | | |

|Weeks before Date X |Determination by Bidder to devote resources and time to potential going private|Bidder |

| |transaction. Evaluation of reasons for going private, including but not | |

| |limited to: (i) public market not ascribing appropriate value to Company, (ii) | |

| |ability to make long-term strategic decisions at expense of short-term | |

| |profitability, (iii) eliminate duty owed to Company’s minority stockholders, | |

| |(iv) ability to be reposition Company when outside of publicly traded domain, | |

| |(v) elimination of securities disclosure requirements and many Sarbanes-Oxley | |

| |concerns. | |

| | | |

| | | |

|Weeks before Date X |Bidder engages B’s Bankers and B’s Counsel. |Bidder |

| | | |

| | | |

|Weeks before Date X |Various analyses (economic, strategic repositioning following acquisition, |Bidder; B’s Bankers; B’s |

| |etc.) of Company by Bidder and B’s Bankers. |Counsel |

| | | |

|Weeks before Date X |Planning for approach to Board; determine if any members of management of |Bidder; B’s Bankers; B’s |

| |Company will be part of Bidder group. |Counsel |

| | | |

|Weeks before Date X |Analysis of Delaware Section 203 concerns. Is Bidder a 15% or more stockholder|Bidder; B’s Counsel |

| |on its own? What about other members of Bidder group? | |

| | | |

|Shortly before Date X |Analysis of potential regulatory concerns including anti-trust review. (Note: |Bidder; B’s Counsel |

| |due to Bidder’s percentage of beneficial ownership of Company, Bidder and | |

| |Company may be the same “person” for purposes of the HSR Act and no filing or | |

| |waiting period may be required in connection with the proposed transaction) | |

| | | |

|Shortly before Date X |Preparation of initial draft of Merger Agreement and letter to Board. |Bidder; B’s Counsel |

| | | |

|Date X |Bidder sends letter to Board informing Board of Bidder’s intentions with |Bidder |

| |respect to the “going private” transaction (typically Bidder includes | |

| |indication of price it would pay for the equity interests of the Company that | |

| |Bidder does not already own). | |

| | | |

|Shortly after Date X |As applicable, Bidder (group) files an amendment to Schedule13D (depends on |Bidder; B’s Counsel |

| |ownership of Bidder (group) and what existing Schedule 13D on file discloses). | |

| | | |

|Shortly after Date X |Board/Company publicly announce the receipt of the letter from Bidder and the |Board; Company |

| |basic facts contained therein. | |

| | | |

|Shortly after Date X |PA’s begin to file lawsuits (breach of fiduciary duty and lack of business |PA’s |

| |purpose – usually seeking injunctive relief; complaints filed after the | |

| |dissemination of disclosure materials, on the other hand, will tend to focus on| |

| |material misstatements and omissions in those materials, usually claiming a | |

| |violation of federal securities laws). The discovery process is very likely to| |

| |lead to a turning over of all of Bidder’s internal documents and plans for the | |

| |going private transaction. | |

| | | |

|Shortly after Date X |Board forms a SC of disinterested and independent directors who are not |Board |

| |representatives/members of the Bidder (group) or employees of the Company. It | |

| |is important for SC to be given appropriate scope of authority so that its | |

| |members may satisfy their fiduciary duties, but, depending on the | |

| |circumstances, the Board may limit the scope of authority of the SC to a | |

| |majority or controlling stockholder’s proposed transaction; the SC need not be | |

| |authorized to solicit or consider other offers. | |

| | | |

|Shortly after Date X |SC selects its own chairperson. |SC |

| | | |

|Shortly after Date X |SC interviews and then selects SC’s Counsel and SC’s Bankers (important for |SC; SC’s Counsel; SC’s |

| |record to show that neither Bidder nor anyone at the Company (whether |Bankers |

| |management or other members of Board not on the SC) directed or influenced the | |

| |SC in its selection of advisors). | |

| | | |

|Shortly after Date X |Both SC and Bidder engage separate Delaware legal counsel in connection with |SC; Bidder |

| |the PA’s lawsuits. | |

| | | |

|Shortly after Date X |Respond to lawsuits - stockholder class action litigation is almost a certainty|SC; Bidder |

| |(The discovery process in this litigation will, subject to any available | |

| |privileges, lead to a turning over of all internal documents of Bidder | |

| |concerning Company, the Bidder’s plans for the Company and the Bidder’s | |

| |planning for the going private transaction. This may also lead to discovery of| |

| |documents relating to the Bidder’s broader strategic deliberations. Important | |

| |for Bidder to be sensitive to this reality in preparing all written materials).| |

| | | |

|Shortly after Date X |Bidder and Company negotiate and enter into confidentiality agreement. |Bidder; B’s Counsel; SC; SC’s|

| | |counsel; Company |

| | | |

|Week two to week four |Bidder due diligence on Company; Company management presentations (length of |Bidder; B’s Counsel; B’s |

|after Date X |time; degree of diligence depends in part on relationship of Bidder and |Bankers (other advisors – |

| |Company). |e.g., accountants) |

| | | |

|Week two to week four |SC’s Bankers to analyze value of Company; perhaps analyze other options |SC; SC’s Bankers |

|after Date X |(depends in part on whether Bidder has indicated that it is unwilling to | |

| |consider any other transaction, sell to any third party and how much of Company| |

| |the Bidder owns). | |

| | | |

|For an ongoing period of|Bidder and its advisors negotiate with SC and its advisors re Merger Agreement |Bidder: SC; respective |

|at least two months |and price (and negotiation separately with plaintiffs counsel as well). This |advisors |

|after Date X |is a process which Bidder deliberately starts off with a price that does not | |

| |represent what Bidder is prepared to pay. It is in interests of Bidder that SC| |

| |says “no” at least twice to Bidder in process where record shows movement from | |

| |Bidder on Merger Agreement and price as SC extracts more money and more | |

| |favorable deal protection terms from Bidder. Multiple meetings of SC and its | |

| |advisors occur as SC diligently considers Bidder proposal and negotiates hard | |

| |with Bidder. | |

| | | |

|Two to three months |Bidder and SC reach general agreement on price and other terms. |Bidder; SC; respective |

|(could be more) after | |advisors |

|Date X | | |

| | | |

|Two to three months |SC/Board obtains fairness opinion from SC’s Bankers that consideration offered |SC’s Bankers |

|(could be more) after |by Bidder is fair from a financial point of view to the stockholders of the | |

|Date X |Company other than the Bidder (in certain circumstances Bidder may also obtain | |

| |a fairness opinion). | |

| | | |

|Two to three months |Bidder, SC and PA’s reach general agreement on price and other terms (Bidder |Bidder; SC; PA’s |

|(could be more) after |will usually want to try to finalize settlement with PA’s at same time as | |

|Date X |reaching agreement with SC so as to have no further rounds of price | |

| |negotiations and tie it all up at same time). | |

| | | |

|Two to three months |Depending on circumstances of transaction (e.g., Bidder to increase leverage in|Board |

|(could be more) after |Company) Board might engage (early after Date X) independent valuation firm to | |

|Date X |render (around this time or possible just before closing) a solvency opinion in| |

| |connection with the transaction. | |

| | | |

|Two to three months |SC recommends transaction to the Board and Board approves transaction and |SC; Board |

|(could be more) after |approves Bidder for purposes of Delaware Section 203 (if not seek vote of 66 | |

|Date X |2/3% of stock not owned by Bidder) (Depending on representation of Bidder | |

| |individuals/non-independent individuals on Board, Board recommendation may be | |

| |made by less than all members). | |

| | | |

|Just prior to Date Y |Organize Merger Sub – file Certificate of Incorporation, finalize Bylaws, |Bidder; B’s Counsel |

| |prepare organizational board resolutions. | |

| | | |

|In connection with |As applicable, Company amends its Stockholder Protection Rights Agreement so |Company |

|action on Date Y |that Bidder does not become an “Acquiring Person”/rights separate as a result | |

| |of execution of Merger Agreement or consummation of transactions thereunder | |

| |(depending on amount of Company that Bidder owns, existing Rights Agreement may| |

| |already have carve-out for certain circumstances). | |

| | | |

|Date Y |Execute Merger Agreement and publicly announce transaction and price. |Bidder; Company |

| | | |

|Shortly after Date Y |Company files Form 8-K with executed Merger Agreement attached as exhibit. |Company |

| | | |

|Shortly after Date Y |Bidder (group) files an amendment to Schedule13D with executed Merger Agreement|Bidder; B’s Counsel |

| |attached as an exhibit (depends on ownership of Bidder (group) and what | |

| |existing Schedule 13D on file discloses). | |

| | | |

|Begin prior to Date Y, |Determine consents, waivers, amendments, if any required under contracts or |Bidder; Company |

|but preparation |other material documents and commence preparation of same. | |

|typically after Date Y | | |

| | | |

|Shortly after Date Y |Execute Memorandum of Understanding re Settlement with PA’s and commence |Bidder; SC; Company; PA’s |

| |procedures to have a Delaware court hearing with respect to fairness (after | |

| |execution of the Merger Agreement). | |

| | | |

|In days/weeks after Date|File regulatory filings as necessary/appropriate (notification under HSR Act |Bidder; Company |

|Y |may or may not be necessary – see discussion above). | |

| | | |

|In days/weeks after Date|Preparation of Schedule 13E-3 transaction statement and Proxy Statement of the |Bidder; B’s Counsel; SC’s |

|Y |Company. Going private transactions are conducted under a microscope of |Counsel; Company |

| |securities disclosure requirements far more rigorous than in any other kind of | |

| |transaction. The SEC has adopted rules making it illegal for an issuer or any | |

| |affiliate of any issuer to effect a transaction that results in the delisting | |

| |of any class of equity securities of the issuer unless certain specified | |

| |disclosure requirements are satisfied. | |

| | | |

|In days/weeks after Date|Engage proxy solicitation firm. |Company; Bidder |

|Y | | |

| | | |

|In days/weeks after Date|Engage payment agent. |Bidder |

|Y | | |

| | | |

|Three to four weeks |File Schedule 13E-3 and Proxy Statement with the Securities and Exchange |Bidder |

|after Date Y |Commission (which will include the Proxy Statement of the Company as an exhibit| |

| |thereto). | |

| | | |

|Seven to Eight weeks |SEC will very likely review and comment on the Schedule 13E-3 and Proxy |- - - - - |

|after Date Y |Statement. | |

| | | |

|Nine to Twelve weeks |Resolution of SEC comments on Schedule 13E-3 and Proxy Statement. |B’s Counsel and SC’s Counsel |

|after Date Y | | |

| | | |

|Two to three months |Mail Proxy Statement to stockholders of Company and solicit proxies (period |Company |

|after Date Y |between mailing and meeting date of typically at least 20 business days). | |

| | | |

|Three to Four months |Company Stockholders adopt Merger Agreement at special meeting (approve Bidder |Company |

|after Date Y |if needed for Delaware Section 203 – see discussion above). | |

| | | |

|Three to Four months |File certificate of merger; merger then becomes effective; close transaction. |Bidder; B’s Counsel; Company |

|after Date Y | | |

| | | |

|Shortly after closing |Final amendment to Schedule 13E-3 reporting the results of the Rule 13E-3 |Bidder |

| |transaction (as per Rule 13e-3(d)(3)). | |

| | | |

|Shortly after closing |Letter of transmittal and instructions sent out to stockholders of Company re |Bidder; Company |

| |surrender of Company share certificates. | |

| | | |

|Shortly after closing |De-list Company shares from NYSE if Company is traded on NYSE. Coordinate with|Bidder; Company |

| |NYSE so it files Form 25 at appropriate time (see note below). | |

| | | |

|Shortly after closing |Deregister (file Form 15) Company shares. For a former NASDAQ quoted company, |Bidder; B’s Counsel; Company |

| |the Form 15 can be filed directly after the merger. However, for a NYSE-listed| |

| |company a Form 15 may not be filed prior to the effective date of the Form 25 | |

| |(delisting on NYSE) since Section 12(g) and 15(d) are suspended during the | |

| |period in which Section 12(b) applies. Therefore, Bidder/Company need to work | |

| |timing with NYSE so NYSE files the Form 25 soon after closing so that 10 days | |

| |later a Form 15 can be filed to deregister the Company shares. | |

| | | |

|Shortly after closing |Delaware Chancery Court approval of the settlement of lawsuits (can be done |- - - - - |

| |pre-merger, but likelihood is that this will occur post-merger). | |

| | | |

|Shortly after closing |As applicable, Bidder files Forms S-8 for assumed stock option plans of |Bidder |

| |Company, if any. | |

| | | |

|Shortly after closing |Statutory process re appraisal rights under Delaware law (only relevant to the |Bidder; Company |

| |extent any stockholders of Company perfect their dissenters’ rights with | |

| |respect to the merger - likelihood of a significant number of dissenters is | |

| |typically very small). Notice of appraisal rights will be sent out to | |

| |stockholders along with the Proxy Statement. | |

ACQUISITION TIMETABLE CHECKLIST[3]

(Transaction: Merger With A First Step Tender Offer)

CERTAIN ABBREVIATIONS

Affiliate Bidding to Take Corporation Private Bidder

Board of Directors of Company Board

Corporation Being Taken Private Company

Financials Advisors to Special Committee SC’s Bankers

Financial Advisors to Bidder B’s Bankers

Legal Counsel to Bidder B’s Counsel

Legal Counsel to Special Committee SC’s Counsel

Plaintiff’s Attorneys PA’s

Special Committee SC

|Date[4] |Event/Action Item |Parties |

| | | |

|Weeks before Date X |Determination by Bidder to devote resources and time to potential going private|Bidder |

| |transaction. Evaluation of reasons for going private, including but not | |

| |limited to: (i) public market not ascribing appropriate value to Company, (ii) | |

| |ability to make long-term strategic decisions at expense of short-term | |

| |profitability, (iii) eliminate duty owed to Company’s minority stockholders, | |

| |(iv) ability to be reposition Company when outside of publicly traded domain, | |

| |(v) elimination of securities disclosure requirements and many Sarbanes-Oxley | |

| |concerns. | |

| | | |

| | | |

|Weeks before Date X |Bidder engages B’s Bankers and B’s Counsel. |Bidder |

| | | |

| | | |

|Weeks before Date X |Various analyses (economic, strategic repositioning following acquisition, |Bidder; B’s Bankers; B’s |

| |etc.) of Company by Bidder and B’s Bankers. |Counsel |

| | | |

|Weeks before Date X |Planning for approach to Board; determine if any members of management of |Bidder; B’s Bankers; B’s |

| |Company will be part of Bidder group. |Counsel |

| | | |

|Weeks before Date X |Analysis of Delaware Section 203 concerns. Is Bidder a 15% or more stockholder|Bidder; B’s Counsel |

| |on its own? What about other members of Bidder group? | |

| | | |

|Shortly before Date X |Analysis of potential regulatory concerns including anti-trust review. (Note: |Bidder; B’s Counsel |

| |due to Bidder’s percentage of beneficial ownership of Company, Bidder and | |

| |Company may be the same “person” for purposes of the HSR Act and no filing or | |

| |waiting period may be required in connection with the proposed transaction) | |

| | | |

|Shortly before Date X |Preparation of initial draft of Merger Agreement contemplating a first step |Bidder; B’s Counsel |

| |tender offer. | |

| | | |

| |Preparation of letter to Board. | |

| | | |

| |Begin preparation of Schedule TO (including distribution of directors and | |

| |officers questionnaire), Offer to Purchase, Letter of Transmittal, Notice of | |

| |Guaranteed Delivery, letter to brokers and dealers, letter to customers, etc. | |

| |(Schedule 13E-3 transaction statement requirements will be a part of the | |

| |Schedule TO and going private transactions are conducted under a microscope of | |

| |securities disclosure requirements far more rigorous than in any other kind of | |

| |transaction). | |

| | | |

| | | |

|Date X |Bidder sends letter to Board informing Board of Bidder’s intentions with |Bidder |

| |respect to the “going private” transaction (typically Bidder includes | |

| |indication of price it would pay for the equity interests of the Company that | |

| |Bidder does not already own). | |

| | | |

|Date X |If Bidder makes any public statement re acquisition, Bidder files a |Bidder; B’s Counsel |

| |pre-commencement Schedule TO | |

| | | |

|Shortly after Date X |As applicable, Bidder (group) files an amendment to Schedule13D (depends on |Bidder; B’s Counsel |

| |ownership of Bidder (group) and what existing Schedule 13D on file discloses). | |

| | | |

|Shortly after Date X |Board/Company publicly announce the receipt of the letter from Bidder and the |Board; Company |

| |basic facts contained therein. | |

| | | |

|Shortly after Date X |PA’s begin to file lawsuits (breach of fiduciary duty and lack of business |PA’s |

| |purpose – usually seeking injunctive relief; complaints filed after the | |

| |dissemination of disclosure materials, on the other hand, will tend to focus on| |

| |material misstatements and omissions in those materials, usually claiming a | |

| |violation of federal securities laws). The discovery process is very likely to| |

| |lead to a turning over of all of Bidder’s internal documents and plans for the | |

| |going private transaction. | |

| | | |

|Shortly after Date X |Board forms a SC of disinterested and independent directors who are not |Board |

| |representatives/members of the Bidder (group) or employees of the Company. It | |

| |is important for SC to be given appropriate scope of authority so that its | |

| |members may satisfy their fiduciary duties, but, depending on the | |

| |circumstances, the Board may limit the scope of authority of the SC to a | |

| |majority or controlling stockholder’s proposed transaction; the SC need not be | |

| |authorized to solicit or consider other offers. | |

| | | |

|Shortly after Date X |SC selects its own chairperson. |SC |

| | | |

|Shortly after Date X |SC interviews and then selects SC’s Counsel and SC’s Bankers (important for |SC; SC’s Counsel; SC’s |

| |record to show that neither Bidder nor anyone at the Company (whether |Bankers |

| |management or other members of Board not on the SC) directed or influenced the | |

| |SC in its selection of advisors). | |

| | | |

|Shortly after Date X |Both SC and Bidder engage separate Delaware legal counsel in connection with |SC; Bidder |

| |the PA’s lawsuits. | |

| | | |

|Shortly after Date X |Respond to lawsuits - stockholder class action litigation is almost a certainty|SC; Bidder |

| |(The discovery process in this litigation will, subject to any available | |

| |privileges, lead to a turning over of all internal documents of Bidder | |

| |concerning Company, the Bidder’s plans for the Company and the Bidder’s | |

| |planning for the going private transaction. This may also lead to discovery of| |

| |documents relating to the Bidder’s broader strategic deliberations. Important | |

| |for Bidder to be sensitive to this reality in preparing all written materials).| |

| | | |

|Shortly after Date X |Bidder and Company negotiate and enter into confidentiality agreement. |Bidder; B’s Counsel; SC; SC’s|

| | |counsel; Company |

| | | |

|Week two to week four |Bidder due diligence on Company; Company management presentations (length of |Bidder; B’s Counsel; B’s |

|after Date X |time; degree of diligence depends in part on relationship of Bidder and |Bankers (other advisors – |

| |Company). |e.g., accountants) |

| | | |

|Week two to week four |SC’s Bankers to analyze value of Company; perhaps analyze other options |SC; SC’s Bankers |

|after Date X |(depends in part on whether Bidder has indicated that it is unwilling to | |

| |consider any other transaction, sell to any third party and how much of Company| |

| |the Bidder owns). | |

| | | |

|For an ongoing period of|Bidder and its advisors negotiate with SC and its advisors re Merger Agreement |Bidder: SC; respective |

|at least two months |and price (and negotiation separately with plaintiffs counsel as well). This |advisors |

|after Date X |is a process which Bidder deliberately starts off with a price that does not | |

| |represent what Bidder is prepared to pay. It is in interests of Bidder that SC| |

| |says “no” at least twice to Bidder in process where record shows movement from | |

| |Bidder on Merger Agreement and price as SC extracts more money and more | |

| |favorable deal protection terms from Bidder. Multiple meetings of SC and its | |

| |advisors occur as SC diligently considers Bidder proposal and negotiates hard | |

| |with Bidder. | |

| | | |

|Two to three months |Continue preparation of Schedule TO and ancillary documents. |Bidder; B’s Counsel |

|after Date X | | |

| |Prepare summary “tombstone” publication | |

| | | |

|Two to three months |Bidder and SC reach general agreement on price and other terms. |Bidder; SC; respective |

|(could be more) after | |advisors |

|Date X | | |

| | | |

|Two to three months |SC/Board obtains fairness opinion from SC’s Bankers that consideration offered |SC’s Bankers |

|(could be more) after |by Bidder is fair from a financial point of view to the stockholders of the | |

|Date X |Company other than the Bidder (in certain circumstances Bidder may also obtain | |

| |a fairness opinion). | |

| | | |

|Two to three months |Bidder, SC and PA’s reach general agreement on price and other terms (Bidder |Bidder; SC; PA’s |

|(could be more) after |will usually want to try to finalize settlement with PA’s at same time as | |

|Date X |reaching agreement with SC so as to have no further rounds of price | |

| |negotiations and tie it all up at same time). | |

| | | |

|Two to three months |Depending on circumstances of transaction (e.g., Bidder to increase leverage in|Board |

|(could be more) after |Company) Board might engage (early after Date X) independent valuation firm to | |

|Date X |render (around this time or possible just before closing) a solvency opinion in| |

| |connection with the transaction. | |

| | | |

|Two to three months |SC recommends transaction to the Board and Board approves transaction and |SC; Board |

|(could be more) after |approves Bidder for purposes of Delaware Section 203 (if not seek vote of 66 | |

|Date X |2/3% of stock not owned by Bidder) (Depending on representation of Bidder | |

| |individuals/non-independent individuals on Board, Board recommendation may be | |

| |made by less than all members). | |

| | | |

|Just prior to Date Y |Organize Merger Sub – file Certificate of Incorporation, finalize Bylaws, |Bidder; B’s Counsel |

| |prepare organizational board resolutions. | |

| | | |

|Just prior to/after Date|In connection with first step tender offer, appoint the Dealer Manager, |Bidder; B’s Counsel |

|Y |Information Agent and Depositary, and prepare relevant agreements. | |

| | | |

|In connection with |As applicable, Company amends its Stockholder Protection Rights Agreement so |Company |

|action on Date Y |that Bidder does not become an “Acquiring Person”/rights separate as a result | |

| |of execution of Merger Agreement or consummation of transactions thereunder | |

| |(depending on amount of Company that Bidder owns, existing Rights Agreement may| |

| |already have carve-out for certain circumstances). | |

| | | |

|Date Y |Execute Merger Agreement that contemplates a first step tender offer by Bidder |Bidder; Company |

| |and publicly announce transaction and price. | |

| | | |

|Shortly after Date Y |Company files Form 8-K with executed Merger Agreement attached as exhibit. |Company |

| | | |

|Shortly after Date Y |Bidder (group) files an amendment to Schedule13D with executed Merger Agreement|Bidder; B’s Counsel |

| |attached as an exhibit (depends on ownership of Bidder (group) and what | |

| |existing Schedule 13D on file discloses) – can be done as a part of the filing | |

| |of the Schedule TO. | |

| | | |

|During period after Date|File Schedule TO, publish tombstone and launch tender offer by mailing offer to|Bidder; B’s Counsel |

|Y that parties set forth|purchase and ancillary documents. | |

|in Merger Agreement | | |

| |Execute Dealer Manager agreement and related documents for tender offer. | |

| | | |

|Typically on same date |File Schedule 14D-9 and mail to stockholders of the Company. |Company; SC’s Counsel |

|as immediately preceding| | |

|action | | |

| | | |

|Begin prior to Date Y, |Determine consents, waivers, amendments, if any required under contracts or |Bidder; Company |

|but preparation |other material documents and commence preparation of same. | |

|typically after Date Y | | |

| | | |

|Shortly after Date Y |Execute Memorandum of Understanding re Settlement with PA’s and commence |Bidder; SC; Company; PA’s |

| |procedures to have a Delaware court hearing with respect to fairness (after | |

| |execution of the Merger Agreement). | |

| | | |

|Shortly after Date Y |File regulatory filings as necessary/appropriate (notification under HSR Act |Bidder; Company |

| |may or may not be necessary – see discussion above). | |

| | | |

|Two to Four weeks after |SEC may review and comment on the tender offer documents – assuming no need to |Bidder; Company |

|Date Y |re-circulate, Bidder/Company make any necessary amendments. | |

| | | |

|At least 20 business |Close tender offer may expire subject to any extension. (Tender offer must |Bidder; B’s Counsel |

|days after commencing |remain open for at least 20 business days from commencement). | |

|tender offer | | |

| | | |

|Immediately after |If, upon the consummation of the tender offer, Bidder has acquired at least 90%|Bidder |

|consummation of tender |of the outstanding shares of each class of the Company entitled to vote on the | |

|offer |merger, Bidder can acquire Company by means of a short form merger. | |

| | | |

|Two to three months |If, upon the consummation of the tender offer, Bidder has not acquired enough |Bidder, Company |

|after Date Y |shares of Company to complete a short-form merger, Bidder, Company prepare an | |

| |information statement to be mailed to remaining Company stockholders. | |

| | | |

|One to Three months |File certificate of merger; merger then becomes effective; close transaction. |Bidder; B’s Counsel; Company |

|after Date Y (depending | | |

|on short or long form | | |

|merger) | | |

| | | |

|Shortly after closing |Final amendment to Schedule 13E-3 reporting the results of the Rule 13E-3 |Bidder |

| |transaction (as per Rule 13e-3(d)(3)). | |

| | | |

|Shortly after closing |Letter of transmittal and instructions sent out to remaining stockholders of |Bidder; Company |

| |Company re surrender of Company share certificates. | |

| | | |

|Shortly after closing |De-list Company shares from NYSE if Company is traded on NYSE. Coordinate with|Bidder; Company |

| |NYSE so it files Form 25 at appropriate time (see note below). | |

| | | |

|Shortly after closing |Deregister (file Form 15) Company shares. For a former NASDAQ quoted company, |Bidder; B’s Counsel; Company |

| |the Form 15 can be filed directly after the merger. However, for a NYSE-listed| |

| |company a Form 15 may not be filed prior to the effective date of the Form 25 | |

| |(delisting on NYSE) since Section 12(g) and 15(d) are suspended during the | |

| |period in which Section 12(b) applies. Therefore, Bidder/Company need to work | |

| |timing with NYSE so NYSE files the Form 25 soon after closing so that 10 days | |

| |later a Form 15 can be filed to deregister the Company shares. | |

| | | |

|Shortly after closing |Delaware Chancery Court approval of the settlement of lawsuits (can be done |- - - - - |

| |pre-merger, but likelihood is that this will occur post-merger). | |

| | | |

|Shortly after closing |As applicable, Bidder files Forms S-8 for assumed stock option plans of |Bidder |

| |Company, if any. | |

| | | |

|Shortly after closing |Statutory process re appraisal rights under Delaware law (only relevant to the |Bidder; Company |

| |extent any stockholders of Company perfect their dissenters’ rights with | |

| |respect to the merger - likelihood of a significant number of dissenters is | |

| |typically very small). Notice of appraisal rights will be sent out to | |

| |stockholders along with the Schedule TO. | |

ACQUISITION TIMETABLE CHECKLIST[5]

(Transaction: Reverse Stock Split)

CERTAIN ABBREVIATIONS

Affiliate Bidding to Take Corporation Private Bidder

Board of Directors of Company Board

Corporation Being Taken Private Company

Financials Advisors to Special Committee SC’s Bankers

Financial Advisors to Bidder B’s Bankers

Legal Counsel to Bidder B’s Counsel

Legal Counsel to Special Committee SC’s Counsel

Plaintiff’s Attorneys PA’s

Special Committee SC

|Date[6] |Event/Action Item |Parties |

| | | |

|Weeks before Date X |Determination by Bidder to devote resources and time to potential going private|Bidder |

| |transaction. Evaluation of reasons for going private, including but not | |

| |limited to: (i) public market not ascribing appropriate value to Company, (ii) | |

| |ability to make long-term strategic decisions at expense of short-term | |

| |profitability, (iii) eliminate duty owed to Company’s minority stockholders, | |

| |(iv) ability to be reposition Company when outside of publicly traded domain, | |

| |(v) elimination of securities disclosure requirements and many Sarbanes-Oxley | |

| |concerns. | |

| | | |

| | | |

|Weeks before Date X |Bidder engages B’s Bankers and B’s Counsel. |Bidder |

| | | |

| | | |

|Weeks before Date X |Various analyses (economic, strategic repositioning following acquisition, |Bidder; B’s Bankers; B’s |

| |etc.) of Company by Bidder and B’s Bankers. |Counsel |

| | | |

|Weeks before Date X |Planning for approach to Board; determine if any members of management of |Bidder; B’s Bankers; B’s |

| |Company will be part of Bidder group. |Counsel |

| | | |

|Weeks before Date X |Analysis of Delaware Section 203 concerns. Is Bidder a 15% or more stockholder|Bidder; B’s Counsel |

| |on its own? What about other members of Bidder group? | |

| | | |

|Shortly before Date X |Analysis of potential regulatory concerns including anti-trust review. (Note: |Bidder; B’s Counsel |

| |due to Bidder’s percentage of beneficial ownership of Company, Bidder and | |

| |Company may be the same “person” for purposes of the HSR Act and no filing or | |

| |waiting period may be required in connection with the proposed transaction) | |

| | | |

|Shortly before Date X |Preparation of letter to Board. Bidder may want to begin preparation of an |Bidder; B’s Counsel |

| |acquisition agreement in case reverse stock split proposal is rejected by Board| |

| |(and may want to prepare an agreement that envisions a reverse stock split, if | |

| |Bidder and the Company agree than an agreement of some kind is merited). | |

| | | |

|Date X |Bidder sends letter to Board informing Board of Bidder’s intentions with |Bidder |

| |respect to the “going private” transaction (typically Bidder includes | |

| |indication of price it would pay for the equity interests of the Company that | |

| |Bidder does not already own – Bidder may want to include indication of price it| |

| |would pay even if it has proposed a going private transaction by virtue of a | |

| |reverse stock split). | |

| | | |

|Shortly after Date X |As applicable, Bidder (group) files an amendment to Schedule13D (depends on |Bidder; B’s Counsel |

| |ownership of Bidder (group) and what existing Schedule 13D on file discloses). | |

| | | |

|Shortly after Date X |Board/Company publicly announce the receipt of the letter from Bidder and the |Board; Company |

| |basic facts contained therein. | |

| | | |

|Shortly after Date X |PA’s begin to file lawsuits (breach of fiduciary duty and lack of business |PA’s |

| |purpose – usually seeking injunctive relief; complaints filed after the | |

| |dissemination of disclosure materials, on the other hand, will tend to focus on| |

| |material misstatements and omissions in those materials, usually claiming a | |

| |violation of federal securities laws). The discovery process is very likely to| |

| |lead to a turning over of all of Bidder’s internal documents and plans for the | |

| |going private transaction. | |

| | | |

|Shortly after Date X |Board forms a SC of disinterested and independent directors who are not |Board |

| |representatives/members of the Bidder (group) or employees of the Company. It | |

| |is important for SC to be given appropriate scope of authority so that its | |

| |members may satisfy their fiduciary duties, but, depending on the | |

| |circumstances, the Board may limit the scope of authority of the SC to a | |

| |majority or controlling stockholder’s proposed transaction; the SC need not be | |

| |authorized to solicit or consider other offers. | |

| | | |

|Shortly after Date X |SC selects its own chairperson. |SC |

| | | |

|Shortly after Date X |SC interviews and then selects SC’s Counsel and SC’s Bankers (important for |SC; SC’s Counsel; SC’s |

| |record to show that neither Bidder nor anyone at the Company (whether |Bankers |

| |management or other members of Board not on the SC) directed or influenced the | |

| |SC in its selection of advisors). | |

| | | |

|Shortly after Date X |Both SC and Bidder engage separate Delaware legal counsel in connection with |SC; Bidder |

| |the PA’s lawsuits. | |

| | | |

|Shortly after Date X |Respond to lawsuits - stockholder class action litigation is almost a certainty|SC; Bidder |

| |(The discovery process in this litigation will, subject to any available | |

| |privileges, lead to a turning over of all internal documents of Bidder | |

| |concerning Company, the Bidder’s plans for the Company and the Bidder’s | |

| |planning for the going private transaction. This may also lead to discovery of| |

| |documents relating to the Bidder’s broader strategic deliberations. Important | |

| |for Bidder to be sensitive to this reality in preparing all written materials).| |

| | | |

|Shortly after Date X |Bidder and Company negotiate and enter into confidentiality agreement. |Bidder; B’s Counsel; SC; SC’s|

| | |counsel; Company |

| | | |

|Week two to week four |Bidder due diligence on Company; Company management presentations (length of |Bidder; B’s Counsel; B’s |

|after Date X |time; degree of diligence depends in part on relationship of Bidder and |Bankers (other advisors – |

| |Company). |e.g., accountants) |

| | | |

|Week two to week four |SC’s Bankers to analyze value of Company; perhaps analyze other options |SC; SC’s Bankers |

|after Date X |(depends in part on whether Bidder has indicated that it is unwilling to | |

| |consider any other transaction, sell to any third party and how much of Company| |

| |the Bidder owns). | |

| | | |

|For an ongoing period of|Bidder and its advisors negotiate with SC and its advisors re large reverse |Bidder: SC; respective |

|at least two months |stock split (i.e., one in which only Bidder has enough shares of the Company in|advisors |

|after Date X |order to receive shares of the Company in the reverse stock split while all | |

| |other stockholders of the Company will be effectively cashed out). Bidder and | |

| |its advisors negotiate with SC and its advisors re price that will be paid to | |

| |stockholders in the reverse stock split (and negotiation separately with | |

| |plaintiffs counsel as well). This is a process which Bidder deliberately | |

| |starts off with a price that does not represent what Bidder is prepared to | |

| |pay/have Company pay in the reverse stock split. It is in interests of Bidder | |

| |that SC says “no” at least twice to Bidder in process where record shows | |

| |movement from Bidder re price as SC extracts more money and more favorable deal| |

| |protection terms, if any, from Bidder. Multiple meetings of SC and its | |

| |advisors occur as SC diligently considers Bidder proposal and negotiates hard | |

| |with Bidder. | |

| | | |

|Two to three months |Bidder and SC reach general agreement on size of reverse split and amount of |Bidder; SC; respective |

|(could be more) after |cash stockholders of the Company are to receive as none of the stockholdings of|advisors |

|Date X |the stockholders (other than Bidder) will be large enough to receive any shares| |

| |and will instead be cashed-out. | |

| | | |

|Two to three months |SC/Board obtains fairness opinion from SC’s Bankers that amount stockholders |SC’s Bankers |

|(could be more) after |(other than Bidder) are to receive in the reverse stock split is fair from a | |

|Date X |financial point of view to the stockholders of the Company other than the | |

| |Bidder (in certain circumstances Bidder may also obtain a fairness opinion). | |

| | | |

|Two to three months |Bidder, SC and PA’s reach general agreement on price and other terms (Bidder |Bidder; SC; PA’s |

|(could be more) after |will usually want to try to finalize settlement with PA’s at same time as | |

|Date X |reaching agreement with SC so as to have no further rounds of price | |

| |negotiations and tie it all up at same time). | |

| | | |

|Two to three months |Depending on circumstances of transaction (e.g., Bidder to increase leverage in|Board |

|(could be more) after |Company) Board might engage (early after Date X) independent valuation firm to | |

|Date X |render (around this time or possible just before closing) a solvency opinion in| |

| |connection with the transaction. | |

| | | |

|In connection with |As applicable, Company amends its Stockholder Protection Rights Agreement so |Company |

|action on Date Y |that Bidder does not become an “Acquiring Person”/rights separate as a result | |

| |of reverse stock split (depending on amount of Company that Bidder owns, | |

| |existing Rights Agreement may already have carve-out for certain | |

| |circumstances). | |

| | | |

|Date Y |SC recommends reverse stock split to the Board and Board approves the |SC; Board |

| |transaction and approves Bidder for purposes of Delaware Section 203 (if not | |

| |seek vote of 66 2/3% of stock not owned by Bidder) (Depending on representation| |

| |of Bidder individuals/non-independent individuals on Board, Board | |

| |recommendation may be made by less than all members). Depending on | |

| |circumstances, Company and Bidder may enter into agreement re reverse stock | |

| |split. | |

| | | |

|Shortly after Date Y |Company files Form 8-K with press release re transaction attached as an |Company |

| |exhibit, together with any agreement between the Company and Bidder regarding | |

| |the same. | |

| | | |

|Shortly after Date Y |Bidder (group) files an amendment to Schedule13D (depends on ownership of |Bidder; B’s Counsel |

| |Bidder (group) and what existing Schedule 13D on file discloses). | |

| | | |

|Begin prior to Date Y, |Determine consents, waivers, amendments, if any required under contracts or |Bidder; Company |

|but preparation |other material documents and commence preparation of same. Likelihood of need | |

|typically after Date Y |for these should be reduced with reverse stock split structure | |

| | | |

|Shortly after Date Y |Execute Memorandum of Understanding re Settlement with PA’s and commence |Bidder; SC; Company; PA’s |

| |procedures to have a Delaware court hearing with respect to fairness. | |

| | | |

|In days/weeks after Date|File regulatory filings as necessary/appropriate (notification under HSR Act |Bidder; Company |

|Y |may or may not be necessary – see discussion above). | |

| | | |

|In days/weeks after Date|Preparation of Schedule 13E-3 transaction statement and Proxy Statement of the |Bidder; B’s Counsel; SC’s |

|Y |Company. |Counsel; Company |

| | | |

|In days/weeks after Date|Engage proxy solicitation firm. |Company; Bidder |

|Y | | |

| | | |

|In days/weeks after Date|Engage payment agent. |Bidder |

|Y | | |

| | | |

|Three to four weeks |File Schedule 13E-3 and Proxy Statement with the Securities and Exchange |Bidder |

|after Date Y |Commission (which will include the Proxy Statement of the Company as an exhibit| |

| |thereto). | |

| | | |

|Seven to Eight weeks |SEC will very likely review and comment on the Schedule 13E-3 and Proxy |- - - - - |

|after Date Y |Statement. | |

| | | |

|Nine to Twelve weeks |Resolution of SEC comments on Schedule 13E-3 and Proxy Statement. |B’s Counsel and SC’s Counsel |

|after Date Y | | |

| | | |

|Two to three months |Mail Proxy Statement to stockholders of Company and solicit proxies (period |Company |

|after Date Y |between mailing and meeting date of typically at least 20 business days). | |

| | | |

|Three to Four months |Company stockholders approve reverse stock split at special meeting (approve |Company |

|after Date Y |Bidder if needed for Delaware Section 203 – see discussion above). | |

| | | |

|Three to Four months |Declare reverse stock split (or Board could have declared reverse stock split |Board, Company |

|after Date Y |previously and simply conditioned it on obtaining a favorable stockholder vote | |

| |– timing of record date/notification to relevant stock exchange depends on | |

| |which course taken). | |

| | | |

|Shortly after closing |Final amendment to Schedule 13E-3 reporting the results of the Rule 13E-3 |Bidder |

| |transaction (as per Rule 13e-3(d)(3)). | |

| | | |

|Shortly after closing |Letter of transmittal and instructions sent out to stockholders of Company re |Bidder; Company |

| |surrender of Company share certificates for cash in reverse stock split. | |

| | | |

|Shortly after closing |De-list Company shares from NYSE if Company is traded on NYSE. Coordinate with|Bidder; Company |

| |NYSE so it files Form 25 at appropriate time (see note below). | |

| | | |

|Shortly after closing |Deregister (file Form 15) Company shares. For a former NASDAQ quoted company, |Bidder; B’s Counsel; Company |

| |the Form 15 can be filed directly after the reverse stock split is consummated.| |

| |However, for a NYSE-listed company a Form 15 may not be filed prior to the | |

| |effective date of the Form 25 (delisting on NYSE) since Section 12(g) and 15(d)| |

| |are suspended during the period in which Section 12(b) applies. Therefore, | |

| |Bidder/Company need to work timing with NYSE so NYSE files the Form 25 soon | |

| |after closing so that 10 days later a Form 15 can be filed to deregister the | |

| |Company shares. | |

| | | |

|Shortly after closing |Delaware Chancery Court approval of the settlement of lawsuits (can be done |- - - - - |

| |pre-stock split, but likelihood is that this will occur post-stock split). | |

| | | |

|Shortly after closing |As applicable, Bidder files Forms S-8 for assumed stock option plans of |Bidder |

| |Company, if any. | |

-----------------------

[1] This timetable/checklist assumes an all cash acquisition of a Delaware corporation by means of a merger by a bidder that does not need to obtain financing from lenders or through any private equity investors.

[2] This timetable/checklist keys off of two dates uncertain: Date X (the date of delivery by Bidder of the acquisition proposal to the Board) and Date Y (the date of the execution of the Merger Agreement). Unless otherwise indicated, dates are in terms of “week of” and are estimates.

[3] This timetable/checklist assumes an all cash acquisition of a Delaware corporation by means of a merger with a first step tender offer by a bidder that does not need to obtain financing from lenders or through any private equity investors.

[4] This timetable/checklist keys off of two dates uncertain: Date X (the date of delivery by Bidder of the acquisition proposal to the Board) and Date Y (the date of the execution of the Merger Agreement). Unless otherwise indicated, dates are in terms of “week of” and are estimates.

[5] This timetable/checklist assumes a large reverse stock split by the Company (a Delaware corporation) the result of which will be that only Bidder will remain a stockholder and all the other stockholders of the Company will be cashed out. It should be noted that such transactions are more commonly effected so that a company can, as a result of the reverse stock split, have fewer than 300 stockholders of record (allowing the company to terminate the registration of its stock), as opposed to using the transaction as a vehicle for one acquiror to acquire 100% of the company.

[6] This timetable/checklist keys off of two dates uncertain: Date X (the date of delivery by Bidder of the acquisition/reverse stock split proposal to the Board) and Date Y (the date of approval of the reverse stock split). Unless otherwise indicated, dates are in terms of “week of” and are estimates.

................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download