Cover design by ABA Publishing. The materials contained herein represent the opinions and views of the authors and/or the editors, and should not be construed to be the views or opinions of the law firms or companies with whom such persons are in partnership with, associated with, or employed by, nor of the American Bar Association or the General Practice, Solo and Small Firm Section, unless adopted pursuant to the bylaws of the Association. Nothing contained in this book is to be considered as the rendering of legal advice, either generally or in connection with any specific issue or case; nor do these materials purport to explain or interpret any specific bond or policy, or any provisions thereof, issued by any particular franchise company, or to render franchise or other professional advice. Readers are responsible for obtaining advice from their own lawyers or other professionals. This book and any forms and agreements herein are intended for educational and informational purposes only. 2007 American Bar Association. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. For permission, contact the ABA Copyrights & Contracts Department at copyright@abanet.org or via fax at 312-988-6030. Printed in the United States of America 10 09 08 07 5 4 3 2 1 Library of Congress Cataloging-in-Publication Data Swartz, Matt. The corporate, securities, and M&A lawyer s job: a survival guide / by Matt Swartz and Daniel Lee. 1st ed. p. cm. Includes index. ISBN 978-1-59031-824-9 1. Consolidation and merger of corporations Law and legislation United States. 2. Tender offers (Securities) Law and legislation United States. 3. Venture capital Law and legislation United States. 4. Private equity United States. 5. Investments Law and legislation United States. 6. Business enterprises Law and legislation United States. I. Lee, Daniel. II. Title. KF1477.S925 2007 346.73'06626 dc22 2007024794 Discounts are available for books ordered in bulk. Special consideration is given to state bars, CLE programs, and other bar-related organizations. Inquire at Book Publishing, ABA Publishing, American Bar Association, 321 North Clark Street, Chicago, Illinois 60610-4714. www.ababooks.org
Contents Foreword About the Authors v ix Section 1: Surviving as a New Associate 1 When to Accept a New Assignment 1 Important Concepts for Corporate Lawyers 2 Section 2: Transactions 5 Chapter 1: Mergers and Acquisitions: The Basics 7 Chapter 2: Private Equity and Venture Capital Investments: The Basics 19 Chapter 3: Public Securities Offerings: The Basics 29 Chapter 4: Simple Debt Transactions 35 Chapter 5: Organizing and Conducting Due Diligence 47 Chapter 6: Drafting Disclosure Schedules 51 Chapter 7: Organizing Transaction Closings 55 Section 3: Ongoing Responsibilities 61 Chapter 8: General Corporate Counsel and Maintenance 63 Chapter 9: Entity Formation: The Basics 67 Chapter 10: Taking Board Minutes and Drafting Board Resolutions 79 Chapter 11: Drafting Agreements 83 Chapter 12: Public Company Compliance Work: The Basics 87 Chapter 13: Issuing Securities: The Basics 93 Chapter 14: Prepare the Working Group List 97 Chapter 15: Handle Document Production at the Financial Printer 99 Chapter 16: Administering a Company s Stock Ledger 103 Section 4: Organizational Responsibilities 107 Chapter 17: Organizational Advice 109 iii
iv CONTENTS Section 5: U.S. Securities Law 113 Section 6: Glossary 119 Section 7: Using EDGAR 135 Section 8: Exhibits 137 Exhibit A: Sample Capitilization Table 138 Exhibit B: Form S-1 139 Exhibit C: Sample SEC Comment Letter 147 Exhibit D: UCC Financing Statement and Instructions 160 Exhibit E: Sample Open Due Diligence Issues List 164 Exhibit F: Sample Format for Recording Findings of Review of Corporate Minutes 165 Exhibit G: Disclosure Schedules to the Stock Purchase Agreement 166 Exhibit H: Sample Closing Checklist 168 Exhibit I: Sample Closing Binder Index 169 Exhibit J: Sample Proxy Card 172 Exhibit K: Blue Sky Laws 173 Exhibit L: Sample Working Group List Page Format 175 Exhibit M: Sample Tracking Sheet 176 Exhibit N: Sample Stock Ledger 177 Exhibit O: Shares Eligible for Future Sales 178 Index 181
Foreword Law schools do not prepare students to be associates in the corporate documents of modern law firms. Though law school courses on tax, securities, and mergers and acquisitions are helpful, these courses focus, appropriately, on the laws covering these areas, not the tasks that new associates will actually be assigned. Traditionally, new lawyers learn these tasks by apprenticeship, not in the classroom. Tradition aside, apprenticeship may be the best way to learn some things. However, law firm partners and senior associates are busier today than ever. Although no one expects new corporate lawyers to know how to perform specific tasks, law firms do expect new lawyers to learn quickly and to be independent, proactive, and resourceful. We intend this book as a head start for new corporate lawyers. It provides basic instruction on some of the assignments they are likely to receive in the corporate, securities, and mergers and acquisitions departments of most law firms. Ideally, new lawyers find mentors within their firms who have the time and inclination to teach the basics described in this book. Not everyone is fortunate enough to find such a mentor. For those who find one, this book provides somewhere to turn if the mentor is not available and helps elevate the level of discussion when he or she is. We organized this book to make it as accessible and helpful to new corporate lawyers as possible. First, we explain the basics of the transactions which new corporate associates are likely to support. As part of the explanation, we describe the tasks often assigned to junior associates working on these transactions. We also illustrate ongoing responsibilities and tasks usually assigned to new corporate lawyers. Finally, we offer our advice about how to organize workload, structure a workday, and similar items. Use of the Term Corporate From this point forward, this book will refer to lawyers who practice corporate, securities, private equity/venture capital, and mergers and acquisitions law as corporate lawyers. Law firms sometimes separate their mergers and acquisitions lawyers, securities lawyers, and/or private equity lawyers into different groups within the business law department. Many firms do not separate them, and the term corporate in this book is intended to encompass all of these areas. v
To my cherished family: Sarah, Henry, and Tommy. You bring me so much joy. MBS To my wife, Behnaz. DL vii
About the Authors Matt Swartz is a partner in the corporate and securities group of Pillsbury Winthrop Shaw Pittman, LLP. He advises buyers and sellers in mergers and acquisitions, issuers and investors in private financings, and issuers and underwriters in public offerings. He also provides private and public companies with general corporate counsel. Matt is based in the Washington, D.C. metropolitan area, where he lives with his wife and two children. He has also practiced in Silicon Valley and Southern California. Prior to becoming an attorney, he worked at a large private biotechnology company. Matt received his B.A. from the University of California, Berkeley in 1990 and his J.D. from the University of California, Hastings College of Law in 1995. Daniel Lee is a senior associate in the corporate group of Dow Lohnes PLLC in their Washington, D.C. office. Prior to this, he was an attorney-advisor at the U.S. Securities and Exchange Commission in the Division of Corporation Finance and an associate at two national law firms where he represented clients in private financings, public offerings, and mergers and acquisitions transactions. Daniel received his B.A. in Economics: Business from the University of California, Los Angeles in 1996 and his J.D. from the George Washington University Law School in 1999. ix