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Be Precise or Pay the Price: Tips for Deal Language Geoffrey Bracken, Mark Wege, Norman Comstock, Saul Solomon, and Ron Vollmar Moderator: Scott Van Meter.

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Presentation on theme: "Be Precise or Pay the Price: Tips for Deal Language Geoffrey Bracken, Mark Wege, Norman Comstock, Saul Solomon, and Ron Vollmar Moderator: Scott Van Meter."— Presentation transcript:

1 Be Precise or Pay the Price: Tips for Deal Language Geoffrey Bracken, Mark Wege, Norman Comstock, Saul Solomon, and Ron Vollmar Moderator: Scott Van Meter November 2014

2 Agenda 1.APA-ABC Co. Acquisition 2.Website Transfer 3.XYZ Indemnity

3 APA-ABC Co. Acquisition 1.Purchase of stock of ABC, Co. 2.Net Asset Value (NAV) determined in accordance with GAAP consistently applied 3.Closing Statement prepared by Seller with reasonable detail and basis for NAV calculation 4.90 days after closing Buyer to prepare Post Closing Statement with reasonable detail of basis for calculation of NAV, including back up or supporting data as Seller may reasonably request, with cooperation of Buyer, reasonable access to books, records, accountants work papers and personnel

4 APA-ABC Co. Acquisition (cont.) 5.30 days for Seller to provide Buyer with written dispute notice indicating any disagreement with calculation of NAV and reasons, including Sellers determination of NAV with reasonable detail 6.15-day negotiation period 7.Final determination of remaining disputes by Neutral firm within 30 days

5 Website Transfer Contract Type Sale of brick and mortar business “Shoelaces, Etc.” with an associated e-commerce website Key Provision “Seller shall transfer to Buyer the website located at ‘http://www.shoelaces.com’ with all text, HTML code, graphics and other multimedia assets contained therein.”

6 Website Transfer Outcome Seller delivers all of the contents of the website to Buyer exactly as specified in the agreement. Seller refuses to transfer domain name, contending that the agreement only called for transfer of the contents of the site and did not specify transfer of the name, or control of the domain.

7 Website Transfer Outcome (cont.) Seller sets up new e-commerce site at Additionally, all addresses for etc. that were previously associated with the Business remain with the Seller and not the Buyer. Buyer sues for breach of contract and for injunction barring Seller from using domain name.

8 XYZ Indemnity 9.1 XYZ Expenses From and after the Closing, the Sellers, jointly and severally, agree to indemnify and hold harmless the Parent Indemnified Parties from and against any XYZ Expenses. Any Parent Indemnified Party seeking indemnification with respect to XYZ Expenses shall deliver to the Seller Representative a notice (a "XYZ Claim") signed by an officer of Parent or its Affiliates, which XYZ Claim shall (i) state that the party claiming indemnification has paid or incurred XYZ Expenses, and (ii) specify in reasonable detail, to the extent practicable, the individual items of XYZ Expenses included in the amount so stated, the date each such item was paid or incurred, or the basis for such anticipated liability. Any Third Party Claim with respect to XYZ Expenses shall be controlled by the Parent or its Affiliates.

9 XYZ Indemnity 9.1 XYZ Expenses 9.1.4Notwithstanding anything to the contrary herein, the Parent Indemnified Parties can obtain indemnification with respect to the XYZ Accord only if and only to the extent that Losses arising directly from performing the XYZ Accord (for the avoidance of doubt, not including Losses under the XYZ Contract) are greater than the revenues to the Company and/or ASC from the XYZ Accord.

10 Biographies Mark Wege is a partner in King & Spalding’s Houston office and is a member of the firm’s Financial Restructuring Group. He represents entities in corporate reorganizations, including out-of-court restructurings, and formal bankruptcy proceedings in a wide variety of industries. In Chapter 11 cases, he has represented debtors, DIP lenders, creditor committees, purchasers and secured and unsecured creditors in bankruptcy courts across the United States, as well as having participated in international proceedings. Geoffrey H. Bracken is a trial attorney whose practice emphasizes commercial, construction, copyright infringement and personal injury litigation. He has represented individuals and businesses in both personal injury and commercial litigation matters at trial and appellate levels, and in arbitration. Mr. Bracken is co-chair of the Firm's litigation department and heads up Gardere's Austin and Houston trial groups.

11 Biographies (cont.) Saul Solomon’s experience includes damages calculations, forensic and investigative accounting, fraud investigations, valuation, intellectual property, trade secrets, bankruptcy, securities fraud, class certifications financial analysis, purchase price and earnout disputes, ERISA, accounting and financial reporting fraud, oil and gas royalty disputes, class-action claims administration, alter ego and piercing the corporate veil investigations, and evaluation of accounting and auditing issues, financial reporting, application of GAAPs, and auditing standards. He has provided testimony in state district, family law, and federal courts and has testified in over 125 cases. He has served as a third-party neutral arbitrator and has participated in mediations and arbitration proceedings as both an expert and consultant. Mr. Solomon’s certifications include CPA, CFE, CFF, ABV, and CVA. Norman L. Comstock, Jr. is a director at BRG. He advises clients on enterprise risk management, information technology governance, technology assurance, program management, and cybersecurity. He has experience leading complex, high-profile projects and initiatives for investment due diligence, integration, divestitures, and program management for high-risk, multiyear, multi-vendor projects. He has advised clients across diverse industries and geographies including construction, energy, financial services, healthcare, higher education, high technology, and manufacturing, as well as state, local, and federal governments.

12 Biographies (cont.) Ronald Vollmar is a director at BRG. He specializes in serving the oil and gas, retail financial services, and manufacturing sectors of the economy, with experience including the management of a wide variety of litigation, bankruptcy, valuation, audit, and internal control review engagements. His experience includes evaluating whether an auto manufacturer was the alter ego of an auto dealer; evaluating unjust enrichment arising from an alleged trademark infringement; evaluating lost profits arising from an alleged misappropriation of trade secrets relating to certain customer information; and evaluating lost profits arising from an alleged breach of contract relating to accounting software. Scott Van Meter is a director at BRG. He has 25 years of professional experience in bankruptcy/restructuring, accounting, law, management, forensic and investigative accounting, and litigation consulting. Before joining BRG, he was a managing director at other international consulting firms. Prior to his career in consulting, he was president of a national temporary staffing company. He also practiced law at Bracewell & Patterson (now Bracewell & Giuliani) in Houston and Stearns Weaver Miller Weissler Alhadeff & Sitterson in Tampa and Miami. His legal experience includes corporate restructuring and commercial litigation.

13 Disclaimer The opinions expressed herein are those of the individual authors and do not represent the opinions of Berkeley Research Group, LLC; King & Spalding; and Gardere or their other employees and affiliates. The information provided is not intended to and does not render legal, accounting, tax, or other professional advice or services, and no client relationship is established with these firms by making any information available in this presentation. None of the information contained herein should be used as a substitute for consultation with competent advisors.


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