Private Company Merger Agreement — Buyer-Protective Extended Form

For Informational Purposes Only

Buyer-side reverse triangular merger agreement with statutory mechanics, holder treatment schedules, purchase-price adjustment provisions, and comprehensive startup diligence framework for negotiated private-company acquisitions. Form ID FMA-006 · Version 1.0.0

Download Template (.docx)

Matter Completion Sheet — Not Part of the Agreement

Complete every row before releasing an execution copy. Enter the selected term, document name, date, amount, or responsible person in the final column. Do not leave a row blank. If an item does not apply, enter “N/A” and the reason. A checked drafting box means only that the drafting input is complete; it is not legal approval.

A. Structure, parties, approvals, and timing

Status	Required completion	Matter-specific input, owner, or approval
☐	Confirm Parent, Merger Sub, Company, and Securityholder Representative legal names, entity types, jurisdictions, good standing, authority, and signatory capacity.	[COMPLETE]
☐	Confirm reverse triangular merger structure; governing merger statute; constituent corporations; Surviving Corporation charter, bylaws, directors, and officers; Certificate of Merger; filing time; and intended Tax treatment.	[COMPLETE]
☐	Reconcile charter, bylaws, investor rights, voting, drag-along, ROFR/co-sale, stockholder, note, SAFE, warrant, option, award, and side-letter provisions; identify every approval, notice, waiver, and appraisal-right holder.	[COMPLETE]
☐	Select simultaneous or deferred Closing; complete stockholder-consent process, information statement, appraisal notice, regulatory filings, interim covenants, no-shop, Outside Date, financing risk, and termination consequences.	[COMPLETE]

B. Consideration and founder outcomes

Status	Required completion	Matter-specific input, owner, or approval
☐	Approve enterprise value, Cash, Debt, Transaction Expenses, Target Working Capital, escrows, holdbacks, representative fund, unpaid transaction bonuses, and the no-double-count bridge to equity value.	[COMPLETE]
☐	Attach the fully diluted capitalization and holder waterfall covering preferred conversion, liquidation preferences, common stock, options, restricted stock, RSUs, warrants, SAFEs, notes, promised grants, fractional interests, and unclaimed proceeds.	[COMPLETE]
☐	Complete earnout, rollover, buyer equity, seller note, employment, consulting, retention, restrictive covenant, release, D&O, and founder liquidity or governance arrangements in identified agreements.	[COMPLETE]
☐	Approve Tax structure and withholding, including Sections 280G, 409A, 1202, 338, 336(e), 382, 453A, payroll, state conformity, and treatment of transaction expenses, escrows, earnouts, and rollover.	[TAX COUNSEL / DATE]

C. Diligence, disclosures, and closing record

Status	Required completion	Matter-specific input, owner, or approval
☐	Complete Disclosure Schedules and reconcile them to the final data-room index, cap table, minute books, financial statements, diligence reports, and each representation; select whether supplements cure any breach.	[COMPLETE]
☐	Complete IP chain-of-title, PIIA, open-source, AI model/data, privacy, cybersecurity, employment, benefits, Tax, trade controls, permits, real property, environmental, product, customer, supplier, insurance, and regulatory diligence.	[COMPLETE]
☐	Confirm stockholder support, written consents, notices, equity cancellations, payoff and lien releases, founder and officer releases, letters of transmittal, Tax forms, lost-certificate procedures, and dissenting-share reserves.	[COMPLETE]
☐	Finalize the signing and Closing checklists, Certificate of Merger, funds flow, verified wires, payment-agent setup, final data-room archive, consideration schedule, certificates, resignations, and post-Closing calendar.	[COMPLETE]

D. Risk allocation, deal certainty, and remedies

Status	Required completion	Matter-specific input, owner, or approval
☐	Select Knowledge Persons and inquiry standard; Material Adverse Effect; bring-down standard; materiality scrape; sandbagging; survival; basket; cap; special indemnities; Fraud; and several or joint liability.	[COMPLETE]
☐	Select traditional indemnity, RWI, or hybrid recovery; state retention, exclusions, subrogation, underwriting cooperation, recovery order, escrow source, setoff rights, and claims administration.	[COMPLETE]
☐	Complete regulatory-efforts standard, divestiture limits, clean-team protocol, financing cooperation, reverse fee or limited guaranty, specific-performance conditions, and allocation of delay risk.	[COMPLETE]
☐	Confirm Securityholder Representative authority, expense fund, reliance, replacement, conflicts, standard of care, holder reporting, allocation, transaction privilege, D&O tail, release, and records-access provisions.	[COMPLETE]

E. Review and release control

Status	Required completion	Matter-specific input, owner, or approval
☐	Corporate lead completed the bracket, election, defined-term, cross-reference, merger-mechanics, capitalization, waterfall, schedule, exhibit, signature, and funds-flow checks.	[LAWYER / DATE]
☐	Required specialists approved their sections: Tax; benefits; employment; antitrust; CFIUS; securities; IP; privacy; cyber; environmental; real estate; industry regulation.	[LAWYER(S) / DATE OR N/A—REASON]
☐	Counterparty-position review completed; each nonstandard protection is necessary, obtainable, specific, and tied to a remedy, condition, price term, or process control.	[LAWYER / DATE]
☐	Execution copy released only after all open items are resolved or listed in a written release memorandum approved by the responsible lawyer.	[RELEASED BY / DATE / VERSION]

AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger (this “Agreement”) is entered into as of [DATE] by and among [PARENT], a [JURISDICTION] [ENTITY TYPE] (“Parent”), [MERGER SUB], a [JURISDICTION] corporation and wholly owned subsidiary of Parent (“Merger Sub”), [TARGET COMPANY], a [JURISDICTION] corporation (the “Company”), and [SECURITYHOLDER REPRESENTATIVE], solely in the capacity stated here (the “Securityholder Representative”).

Recitals

A. The parties intend Merger Sub to merge with and into the Company, with the Company surviving as a wholly owned subsidiary of Parent.

B. The governing bodies of Parent, Merger Sub, and the Company have approved this Agreement and the transactions it contemplates, subject to the approvals and conditions stated below.

C. The parties intend the Merger to be treated for U.S. federal income Tax purposes as [a taxable acquisition of Company stock / a reorganization under Section [368(a)(___)] of the Code / OTHER TREATMENT], subject to Tax counsel’s approval.

The parties agree as follows.

1. Definitions and Interpretation

1.1 Selected definitions

“Acquisition Proposal” means a proposal or inquiry concerning a direct or indirect acquisition of [15%] or more of the Company’s equity, voting power, consolidated assets, revenue, or earnings; a merger, recapitalization, liquidation, or similar business combination involving the Company; or an issuance that would impede the Merger, other than the transactions contemplated by this Agreement.

“Aggregate Merger Consideration” means $[BASE EQUITY VALUE], plus Closing Cash, minus Closing Debt, minus Transaction Expenses, plus or minus the Working Capital Adjustment, and plus or minus any other item expressly listed in the Consideration Schedule, without duplication.

“Business Day” means a day other than Saturday, Sunday, or a day on which commercial banks in [NEW YORK, NEW YORK] are authorized or required to close.

“Closing Cash” means unrestricted cash and cash equivalents of the Company as of the Measurement Time, calculated under Exhibit A and excluding trapped, restricted, customer, fiduciary, and similar cash except as expressly included there.

“Closing Debt” means the Company’s indebtedness and debt-like obligations as of the Measurement Time listed by category in Exhibit A, including accrued interest, prepayment premiums, capital leases, deferred purchase price, declared but unpaid distributions, and employer payroll Taxes on transaction payments, but excluding items already counted in Transaction Expenses or Net Working Capital.

“Company Securities” means all Company capital stock and every option, warrant, restricted stock unit, restricted share, convertible security, SAFE, note, phantom right, promised grant, or other right measured by, convertible into, or exercisable for Company equity or transaction value.

“Disclosure Schedules” means the schedules delivered by the Company with this Agreement and identified by the section they qualify. A disclosure qualifies another section only when its relevance is reasonably apparent on its face.

“Fully Diluted Share Number” means the share-equivalent denominator in the Consideration Schedule, calculated after applying the Company’s charter, liquidation preferences, conversion terms, exercise prices, award documents, and the treatment elected under Section 2.8.

“Fraud” means actual common-law fraud under the governing law committed by the Person against whom relief is sought in making an express representation in this Agreement; it excludes constructive fraud, equitable fraud, negligent misrepresentation, and fraud imputed solely through another Person, except to the extent nonwaivable law requires otherwise.

“Knowledge” means the actual knowledge of the individuals listed on Schedule 1.1 after reasonable inquiry of the employees responsible for the relevant subject and reasonable review of the records those individuals ordinarily use. The parties must replace this sentence if a different inquiry standard is selected.

“Losses” means losses, liabilities, damages, judgments, settlements, penalties, fines, interest, and reasonable external costs, subject to Section 9.6. Losses exclude punitive, exemplary, remote, speculative, or multiple-of-earnings damages except to the extent paid to a third party or expressly included in a special indemnity.

“Material Adverse Effect” means a fact, change, event, or effect that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the Company’s business, assets, liabilities, results of operations, or financial condition, taken as a whole. It excludes general economic, financial-market, industry, legal, geopolitical, epidemic, cyber, natural-disaster, and announcement or performance effects, except to the extent the Company is disproportionately affected relative to comparable businesses; the exclusions do not disregard the underlying cause. The parties must conform this definition to the negotiated durational, disproportionate-effect, customer-loss, cybersecurity, and prospects standards.

“Measurement Time” means [11:59 p.m. local time on the day before Closing / immediately before the Effective Time], consistently applied to every purchase-price component.

“Net Working Capital” means current assets minus current liabilities included in Exhibit A, calculated under its hierarchy and excluding Cash, Debt, Transaction Expenses, deferred Taxes, and any item counted elsewhere in the price bridge.

“Per Share Merger Consideration” means the amount payable for each class or series under the Consideration Schedule after applying the charter waterfall, exercise-price deductions, and applicable withholding.

“RWI Policy” means the buyer-side representation-and-warranty insurance policy described on Schedule 1.1, including its binder, exclusions, retention, subrogation limits, and no-recourse provisions.

“Transaction Expenses” means unpaid fees, costs, bonuses, change-in-control payments, employer payroll Taxes, and other obligations triggered by negotiating or consummating the transactions, in each case to the extent assigned to the Company or securityholders in Exhibit A and not counted in Debt or Net Working Capital.

1.2 Interpretation and document hierarchy

“Including” means including without limitation; “or” is inclusive; references to a Person include permitted successors; and a law includes amendments and implementing rules in effect at the relevant time. Days are calendar days unless stated as Business Days. A time is [EASTERN TIME]. Currency is U.S. dollars. The parties jointly negotiated this Agreement, and no presumption applies against its drafter.

The body of this Agreement controls over an Exhibit or Schedule unless the body expressly states otherwise. Exhibit A controls calculations, the Consideration Schedule controls holder-level allocation, and the Escrow Agreement controls the escrow agent’s duties. A Disclosure Schedule identifies exceptions but does not expand a representation or create a covenant. Headings do not affect meaning.

2. The Merger and Treatment of Securities

2.1 Merger and surviving corporation

At the Effective Time and under [SECTION 251 OF THE DGCL / APPLICABLE STATUTE], Merger Sub will merge with and into the Company. Merger Sub’s separate existence will cease, and the Company will continue as the “Surviving Corporation.” The Merger will have the statutory effects prescribed by applicable law, including vesting of property and continuation of liabilities in the Surviving Corporation.

2.2 Closing and Effective Time

The Closing will occur remotely on the [second] Business Day after satisfaction or waiver of the conditions in Section 7, other than conditions to be satisfied at Closing, or at another agreed time. At Closing, the parties will file the Certificate of Merger in the approved form. The Merger becomes effective when the filing is accepted or at the later time stated in the Certificate of Merger (the “Effective Time”). No party may release signatures or authorize filing until the Closing coordinator confirms the funds flow, conditions, and release instruction in writing.

2.3 Charter, bylaws, directors, and officers

At the Effective Time, the Surviving Corporation’s certificate of incorporation will be [the form attached as Exhibit B / Merger Sub’s charter, revised to state the Surviving Corporation’s name], and its bylaws will be [the form attached as Exhibit C / Merger Sub’s bylaws], subject to Section 6.8. The directors and officers listed on Schedule 2.3 will serve until successors are duly selected. The parties will preserve exculpation, indemnification, and advancement rights as Section 6.8 requires.

2.4 Company capital stock

Each share of Company capital stock outstanding immediately before the Effective Time, other than cancelled and Dissenting Shares, will automatically convert into the right to receive the applicable Per Share Merger Consideration shown in the Consideration Schedule, without interest and subject to escrow, representative-fund, holdback, withholding, and other expressly stated deductions. Shares held by Parent, Merger Sub, the Company, or their wholly owned subsidiaries will be cancelled without payment. Each Merger Sub share will convert into one Surviving Corporation share.

2.5 Preferred stock and liquidation preferences

The Consideration Schedule must state whether each preferred series converts, receives its liquidation preference, participates, or receives another amount under the charter and approved transaction documents. No summary overrides the charter. Company counsel will certify the final waterfall, assumptions, conversion elections, accrued dividends, seniority, participation caps, and treatment of any class entitled to a separate vote.

2.6 Dissenting Shares

A share held by a Person who validly perfects and does not withdraw or lose appraisal rights is a “Dissenting Share” and will receive only the rights provided by applicable law. The Company will promptly give Parent copies of demands and material communications. Parent will control appraisal proceedings after Closing, but before Closing the Company will not settle, waive, or make a payment without Parent’s consent, not unreasonably withheld where the settlement is fully reflected in the funds flow. If appraisal rights are lost, the share converts under Section 2.4.

2.7 Exchange and payment procedure

Parent will fund [PAYMENT AGENT] under Exhibit D. A holder receives payment only after delivering an executed letter of transmittal, applicable Tax form, certificate or lost-certificate affidavit, and any joinder or release expressly required by this Agreement. The payment agent will follow the Consideration Schedule and may rely on the Company’s capitalization certificate absent manifest error. Unclaimed funds transfer to Parent after [12] months, subject to abandoned-property law. Neither Parent nor the Surviving Corporation is liable for amounts delivered to a public official under escheat law.

2.8 Options, warrants, restricted equity, and convertible instruments

Before the Effective Time, the Company will take approved corporate action to [cash out / cancel without payment / assume / substitute / accelerate / preserve] each Company Security as shown on Schedule 2.8. For an in-the-money option or warrant cashed out, the payment equals the share consideration otherwise payable minus the aggregate exercise price and withholding. Out-of-the-money instruments receive [no payment / the consideration required by their terms]. The schedule must address vesting, acceleration, Section 409A, payroll, securities law, releases, promised awards, early-exercise shares, repurchase rights, and fractional amounts.

2.9 No further ownership rights

After the Effective Time, former Company Securities represent only the payment rights stated here. The transfer books close, and no transfer is recorded. A transfer presented later is treated as presented immediately before the Effective Time and paid only to the Person entitled under applicable law and the Consideration Schedule.

2.10 Withholding

Parent, the payment agent, and the Surviving Corporation may deduct Taxes required by law. Except for compensatory payments or a failure to provide requested Tax forms, Parent will give the affected holder reasonable advance notice and cooperate in good faith to reduce or eliminate withholding legally. Amounts withheld and timely remitted are treated as paid to the holder.

3. Consideration, Closing Statement, and Adjustments

3.1 Estimated Closing Statement

At least [five] Business Days before Closing, the Company will deliver a good-faith Estimated Closing Statement calculating each component of Aggregate Merger Consideration under Exhibit A, with supporting ledgers, bank evidence, payoff letters, invoices, payroll calculations, and a draft Consideration Schedule. Parent may comment, and the Company will consider comments in good faith, but disagreement does not delay Closing unless the statement fails an express condition.

3.2 Closing payments and funds flow

At Closing, Parent will pay the estimated Aggregate Merger Consideration according to the verified funds flow: direct payoff of Closing Debt and Transaction Expenses; deposits to adjustment, indemnity, special escrow, and the representative fund; payment-agent funding; and any rollover or seller-note consideration. Each item must appear once. The Closing coordinator will reconcile total sources and uses and obtain callback verification for changed wires.

3.3 Final Closing Statement

Within [90] days after Closing, Parent will deliver its calculation of the final purchase-price components with reasonable supporting detail. Securityholder Representative has [30] days to object in writing, identifying each disputed line, amount, basis, and proposed correction. Unobjected items become final. During review, Parent will provide reasonable access to relevant work papers and personnel, subject to privilege, cybersecurity, and ordinary confidentiality controls.

3.4 Resolution of disputes

The parties will try in good faith for [20] days to resolve disputed items, then submit only remaining accounting disputes to [INDEPENDENT ACCOUNTING FIRM]. The expert acts as an expert, not arbitrator; may not select an amount outside the parties’ positions; must apply Exhibit A; and may not decide legal liability, contractual interpretation unrelated to accounting, or indemnity. Costs are allocated in proportion to the amounts unsuccessfully disputed. The final adjustment is paid within [five] Business Days from the Adjustment Escrow first and then [the responsible party], subject to the negotiated cap.

3.5 Accounting hierarchy and no double count

Calculations follow, in order: (a) the express definitions and inclusions or exclusions in this Agreement; (b) the specific policies and sample calculation in Exhibit A; and (c) [GAAP, consistently applied] only where the first two are silent. The calculation must use the same Measurement Time, avoid purchase-accounting effects and post-Closing changes in reserves or policy, disregard Parent’s financing and transaction costs, and prevent any item from affecting more than one of Cash, Debt, Transaction Expenses, Net Working Capital, indemnity, or another price component.

3.6 Earnout, rollover, and founder arrangements

Any earnout must be in Exhibit E and state the metric, accounting rules, attribution, reporting, inspection, dispute, operating covenant, permitted integration, anti-avoidance rule, setoff, acceleration, change-of-control treatment, Tax treatment, and worked examples. Rollover equity must be documented in a separate agreement stating value, class, governance, transfer, liquidity, dilution, securities, and Tax terms. Employment, consulting, retention, restrictive covenant, release, and transaction-bonus consideration must be separately documented and classified for Tax and waterfall purposes.

4. Company Representations and Warranties

The Company represents and warrants to Parent as of signing and Closing, except as the applicable representation states another date and except as fairly disclosed in the Disclosure Schedules.

4.1 Organization, subsidiaries, and authority

The Company and each subsidiary is duly organized, validly existing, in good standing where applicable, and qualified where failure would be material. Schedule 4.1 lists each subsidiary, jurisdiction, equity owner, and branch. The Company has power and authority to execute, deliver, and perform this Agreement. The board approval and stockholder vote identified on Schedule 4.1 are the only Company approvals required, subject to filing the Certificate of Merger.

4.2 Capitalization

Schedule 4.2 completely and accurately states authorized, issued, outstanding, reserved, and treasury shares; record and beneficial owners; Company Securities; grant and exercise prices; vesting and acceleration; repurchase rights; conversion terms; liquidation preferences; accrued dividends; and fully diluted ownership. All issuances and repurchases were duly authorized, validly effected, and compliant in all material respects with governing documents, contracts, and securities law. No undisclosed voting, transfer, preemptive, registration, anti-dilution, redemption, or similar right exists.

4.3 No conflict, consents, and enforceability

This Agreement is enforceable against the Company, subject to bankruptcy and equitable-remedy limitations. Execution and performance do not violate organizational documents, law, judgment, or Material Contract; accelerate an obligation; create a lien; or require a consent, notice, or filing, except as Schedule 4.3 states. Schedule 4.3 identifies each change-of-control, anti-assignment, termination, pricing, data-transfer, source-code, or similar transaction right.

4.4 Financial statements, records, and liabilities

Schedule 4.4 attaches the audited or reviewed annual and interim financial statements and states their accounting basis. They fairly present, in all material respects, the Company’s financial condition and results for the periods covered, subject for interim statements to normal year-end adjustments described there. Books and records are maintained in reasonable detail. The Company has no liability required to be recorded under the stated accounting basis except those reflected or reserved, incurred in the ordinary course since the balance-sheet date, or disclosed on Schedule 4.4.

4.5 Absence of changes

Since [BALANCE-SHEET DATE], no Material Adverse Effect has occurred, and the Company has operated in the ordinary course except as Schedule 4.5 states. Schedule 4.5 lists dividends, equity issuances, Debt, liens, acquisitions, dispositions, material contract actions, unusual compensation, layoffs, related-party transactions, accounting changes, data incidents, and other actions that would have required Parent’s consent under Section 6.2.

4.6 Assets, real property, and sufficiency

The Company has good title to or valid rights in its material assets, free of liens other than Permitted Liens. Schedule 4.6 lists owned and leased real property, material equipment, shared assets, deferred maintenance, casualty, condemnation, and facilities dependencies. The assets and rights available to the Surviving Corporation at Closing, together with services expressly provided under ancillary agreements, are sufficient in all material respects to conduct the business as conducted immediately before Closing.

4.7 Contracts, customers, suppliers, and revenue

Schedule 4.7 lists Material Contracts by category, including customer, supplier, channel, cloud, license, Debt, lease, government, exclusivity, most-favored pricing, change-of-control, and related-party contracts. Each is valid and in force, and neither the Company nor, to Knowledge, the counterparty is in material breach. Schedule 4.7 identifies top customers and suppliers, material notices, churn or concentration changes, rebates, credits, deferred revenue, service obligations, and nonstandard commitments affecting revenue quality.

4.8 Intellectual property, open source, and AI

Schedule 4.8 lists registered and material unregistered Intellectual Property, domains, social accounts, inbound and outbound licenses, source-code escrows, and material claims. The Company owns or has valid rights to Intellectual Property necessary for the business. Current and former personnel who created material owned Intellectual Property executed enforceable present assignments, subject to applicable law. Schedule 4.8 discloses open-source software and obligations, provenance gaps, copyleft risk, AI models and systems, training and evaluation data rights, model weights, third-party model terms, output claims, biometric or synthetic data, and material restrictions on transfer or commercial use.

4.9 Privacy, data protection, and cybersecurity

The Company materially complies with applicable privacy and cybersecurity laws, contractual commitments, and published notices. Schedule 4.9 identifies material personal-data categories and uses, processors, cross-border transfers, retention rules, security assessments, insurance notices, incidents, ransomware, regulator or customer inquiries, and unresolved remediation. The Merger and contemplated data transfers will not violate a material restriction identified there. No representation substitutes for a jurisdiction-specific privacy and cyber review.

4.10 Personnel, benefits, and founder matters

Schedule 4.10 lists employees, contractors, compensation, location, classification, leave, immigration status, accrued bonuses, severance, change-in-control rights, equity awards, and Benefit Plans. The Company has materially complied with wage, hour, classification, leave, labor, immigration, and benefits requirements. Schedule 4.10 identifies union activity, WARN exposure, PIIA gaps, founder arrangements, retention promises, transaction bonuses, Section 280G payments, Section 409A arrangements, and commitments to create post-Closing employment or equity rights.

4.11 Taxes and qualified small business stock

The Company timely filed material Tax returns and paid material Taxes due, subject to disclosed contests. Schedule 4.11 identifies audits, liens, elections, nexus, payroll and sales Tax issues, deferred revenue, Tax-sharing agreements, consolidated-group history, net operating losses, ownership changes, Section 409A issues, and any intended Section 338 or 336(e) election. Any statement concerning Section 1202 or qualified small business stock is limited to facts specifically listed on Schedule 4.11 and is not a guarantee of holder-level treatment.

4.12 Compliance, permits, sanctions, and regulation

The Company materially complies with applicable law and holds material permits listed on Schedule 4.12. That schedule identifies governmental inquiries, consent decrees, export classifications, sanctions screening, anti-bribery controls, political or government payments, government contracts, regulated products, professional licenses, foreign investment, and any permit or filing affected by the Merger.

4.13 Litigation, insurance, product, and environmental matters

Schedule 4.13 lists pending or threatened material claims, judgments, investigations, product defects or recalls, warranties, environmental matters, and insurance policies and claims. No undisclosed order prevents the Company from operating its business or consummating the Merger. The Company has given required notices to insurers and has not received an uncured cancellation notice for a material policy.

4.14 Related parties, workplace misconduct, and brokers

Schedule 4.14 lists material contracts, receivables, payables, benefits, assets, and opportunities involving founders, directors, officers, significant holders, family members, or Affiliates. It also identifies substantiated or unresolved allegations since [DATE] of sexual harassment, discrimination, retaliation, or comparable misconduct involving a founder, director, officer, executive, or senior manager, together with material settlements or corrective action, subject to lawful privacy limits. No broker or adviser is entitled to a fee from Parent or the Company except as listed.

4.15 Exclusivity and full disclosure

Except for the express representations in this Agreement and certificates delivered under it, neither the Company nor another Person makes a representation concerning projections, data-room materials, or other information. This limitation does not restrict claims for Fraud. No express representation omits a fact necessary to make that representation, in its stated context and subject to its qualifiers, materially misleading.

5. Parent and Merger Sub Representations

Parent and Merger Sub each represents that it is duly organized, has authority to execute and perform this Agreement, and has obtained required internal approvals. Execution and performance do not violate its governing documents or material law or contract, except as disclosed. Merger Sub was formed solely for the Merger and has no material business or liabilities.

Parent has, and at Closing will have, sufficient immediately available funds to pay all amounts due. If financing is used, Schedule 5 contains complete commitment documents, conditions, equity commitments, limited guaranty, and permitted replacement terms. Financing is not a condition unless this Agreement expressly says so. Parent will enforce the commitments, satisfy conditions within its control, notify the Company of material developments, and seek replacement financing when required.

Parent conducted an independent investigation and is relying only on express representations in this Agreement and closing certificates, subject to Fraud and nonwaivable law. Parent has reviewed the RWI Policy and disclosed its exclusions, retention, and subrogation terms relevant to securityholder exposure.

6. Covenants

6.1 Access, diligence, and final data-room record

Before Closing, the Company will provide reasonable access to records, personnel, facilities, and advisers without unreasonably disrupting operations. Access is subject to law, privilege, clean-team limits, security, and customer restrictions. At [SIGNING / CLOSING], the Company will deliver a read-only index and archive of the electronic data room, with access logs and a written list of items supplied outside it. Delivery does not expand representations or waive privilege.

6.2 Conduct before Closing and no premature control

The Company will operate in the ordinary course, preserve material relationships, maintain insurance and systems, and take the actions listed on Schedule 6.2 only with Parent’s prior consent, not unreasonably withheld for items specifically identified as reasonableness-qualified. Parent may not direct day-to-day operations, competitively sensitive decisions, hiring, pricing, customers, or vendors before Closing. No consent right authorizes unlawful gun jumping or shifts operational control before the Effective Time.

6.3 Exclusivity and Acquisition Proposals

From signing until termination, the Company and its controlled representatives will not solicit, encourage, negotiate, or enter into an Acquisition Proposal or furnish nonpublic information for one. The Company will notify Parent within [24] hours of an unsolicited proposal and provide material terms and updates. The board may take action required by nonwaivable fiduciary duty only under the agreed superior-proposal process, information parity, matching right, approval standard, and termination-fee provisions on Schedule 6.3. The parties must delete this sentence if no fiduciary out is negotiated.

6.4 Stockholder approval, information statement, and appraisal notice

The Company will solicit the Requisite Stockholder Approval by [written consent under Section 228 of the DGCL / meeting] promptly after signing using materials approved under Schedule 6.4. The materials will describe the Merger, consideration, conflicts, founder and management interests, rollover, escrows, representative authority, releases, appraisal rights, and material Tax consequences. The Company will deliver all notices required by governing law and maintain evidence of delivery. Parent may review and comment, but the Company remains responsible for accuracy and legal compliance.

6.5 Regulatory filings and efforts

Each party will make required antitrust, foreign-investment, sectoral, securities, and other filings and cooperate in responses. Schedule 6.5 selects the efforts standard, control of strategy, clean-team rules, allocation of filing fees, litigation obligations, and any divestiture or behavioral-remedy ceiling. Neither party will agree to a remedy outside that ceiling without written consent. The parties will not exchange competitively sensitive information except through approved safeguards.

6.6 Employees, benefits, and equity

Schedule 6.6 states treatment of continuing employees, offers, compensation, service credit, benefits, paid time off, severance, bonuses, payroll migration, and equity. Nothing guarantees employment or creates a third-party beneficiary unless expressly stated. The Company will complete required equity, payroll, Section 280G, and Section 409A actions before Closing with counsel-approved notices and evidence.

6.7 Confidentiality, publicity, and communications

The existing confidentiality agreement remains in effect until Closing or termination as specified. Public announcements require joint approval except legally required disclosure after advance consultation where practicable. Schedule 6.7 allocates employee, customer, vendor, investor, regulator, media, and leak-response communications. No party may use another party’s name or marks except as approved or legally required.

6.8 Director, officer, and founder protections

For [six] years after Closing, Parent will cause the Surviving Corporation to honor existing indemnification and advancement rights to the maximum extent stated in governing documents and law as of signing and will not amend them adversely for pre-Closing acts. Before Closing, the Company will obtain a [six]-year D&O tail with coverage and carriers no less favorable than the current policy, at a premium not exceeding [___%] of the current annual premium. Schedule 6.8 states any founder release, insurance exclusions, advancement procedure, and records access. These protections do not release Fraud or obligations expressly assumed by an individual.

6.9 Tax cooperation

The parties will cooperate on pre-Closing returns, transaction Tax deductions, transfer Taxes, amended returns, audits, Tax elections, and records under Section 10. No election or filing may prejudice a holder or Parent beyond the allocation expressly negotiated. Tax counsel must approve any intended reorganization, Section 338, Section 336(e), or rollover treatment.

6.10 Disclosure Schedule updates

The Company will promptly notify Parent of a fact that makes an express representation inaccurate or a covenant breached. A supplement does not cure, waive, or alter Parent’s rights unless Parent expressly accepts the identified matter in a signed writing stating its effect on Closing, indemnity, price, and the Disclosure Schedules. Failure to notify does not create a separate recovery for the same Loss.

6.11 Transaction communications and privilege

Schedule 6.11 identifies counsel representing the Company, founders, or securityholders in the transaction; allocates ownership and control of transaction-related attorney-client communications after Closing; addresses joint-client conflicts, privilege assertions, files, and inadvertent production; and preserves the Surviving Corporation’s rights in ordinary-course legal advice. No provision requires counsel to violate professional duties or prevents disclosure required by law.

6.12 RWI cooperation

If Parent obtains RWI, it will use commercially reasonable efforts to bind and maintain the policy, satisfy conditions within its control, and prevent amendment that increases securityholder recourse without Securityholder Representative consent. The Company and representative will reasonably support underwriting without creating representations beyond this Agreement. Parent will not seek subrogation against a securityholder except for that Person’s Fraud to the extent the policy permits.

7. Conditions and Closing Deliverables

Each party’s obligation to close is conditioned on no final legal prohibition and completion of required regulatory waiting periods. Parent’s conditions include: accuracy of Company fundamental representations in all respects except de minimis inaccuracies; accuracy of other representations under the selected bring-down standard; material covenant performance; no Material Adverse Effect; receipt of the Requisite Stockholder Approval; appraisal demands below [___%]; and delivery of the items on Schedule 7. Company’s conditions include accuracy of Parent’s fundamental representations, material covenant performance, payment of the Closing funds, and delivery of Parent items on Schedule 7.

Schedule 7 must list responsible party, form, due date, waiver authority, and evidence for each deliverable, including the Certificate of Merger, officer and secretary certificates, payoff and lien releases, D&O tail, resignations, equity cancellation documents, escrow agreement, payment-agent agreement, consideration schedule, funds flow, verified wires, Tax forms, legal opinions if any, consents, releases, ancillary agreements, and final data-room archive.

No certificate enlarges a representation or creates personal officer liability. Waiver of a Closing condition does not waive a post-Closing remedy unless the waiver expressly identifies that consequence.

8. Termination and Deal Certainty

This Agreement may be terminated before the Effective Time by mutual written consent; by either party after the Outside Date if that party’s material breach did not cause the failure; by a nonbreaching party for an uncured material breach that makes a Closing condition incapable of satisfaction; or under the superior-proposal, regulatory, approval, financing, or other specific triggers in Schedule 8. A cure period does not extend beyond the Outside Date unless expressly stated.

On termination, this Agreement ends except confidentiality, expenses, dispute, privilege, publicity, and other stated surviving provisions. Termination does not release liability for a willful and material pretermination breach or Fraud. If negotiated, Schedule 8 states the Company termination fee, reverse termination fee, expense reimbursement, sole-remedy effect, limited guaranty, financing-source protections, and whether Parent may be compelled to close. Any conditional specific-performance right must state that financing is funded or will fund if Closing occurs and all other conditions are satisfied or waived.

9. Indemnification and Remedies

9.1 Survival and indemnifying parties

Representations survive for [12–18] months; fundamental and Tax representations survive until [the applicable statute plus 60 days / SPECIFIED DATE]; covenants survive under their terms; and Fraud claims survive as law permits. Company securityholders indemnify Parent and the Surviving Corporation [severally in proportion to their proceeds / through escrow and representative mechanisms only] for breaches, specified pre-Closing Taxes, unpaid Debt or Transaction Expenses, waterfall errors, and special matters on Schedule 9.1. Parent indemnifies former holders for Parent breaches and post-Closing obligations expressly assumed.

9.2 Basket, cap, escrow, and several liability

General representation claims are subject to a [deductible / tipping] basket of $[AMOUNT] and aggregate cap of $[AMOUNT OR %]. Fundamental, Tax, covenant, Fraud, and special claims have the separate limits on Schedule 9.2. No holder is liable beyond the consideration actually received by that holder, except for that holder’s Fraud or several breach of an individual representation. No holder bears another holder’s individual breach. Escrow is [the sole / first] source for identified claims.

9.3 RWI and recovery order

For a covered claim, Parent will seek recovery in the order stated on Schedule 9.3: retention, escrow, RWI, special escrow, or direct recourse. Parent need not pursue futile coverage, but must comply with policy notice and cooperation duties. Policy denial does not expand securityholder liability. Recoveries are reduced by actual insurance proceeds, Tax benefits actually realized from the Loss, and third-party recoveries, net of collection costs and premium effects.

9.4 Direct and third-party claims

A claim notice must state the provision, known facts, good-faith Loss estimate, and recovery source. Delay prejudices rights only to the extent of material prejudice. For third-party claims, the indemnifying side may control the defense with qualified counsel if it acknowledges coverage, the claim seeks primarily monetary relief within available limits, and no conflict or regulatory, injunctive, criminal, reputational, or customer risk makes control inappropriate. No settlement may impose nonmonetary obligations, admit wrongdoing, or fail to release the indemnified parties without consent.

9.5 Securityholder Representative

By approving the Merger or accepting consideration, each holder appoints the Securityholder Representative as agent and attorney-in-fact for adjustments, escrow, claims, disputes, settlements, notices, and the representative fund, subject to the appointment instrument. Parent may rely on representative instructions without liability absent manifest bad faith. Schedule 9.5 states replacement, resignation, conflicts, holder reporting, confidentiality, standard of care, indemnification, fund use, and return. The representative may not increase a holder’s several liability beyond this Agreement or settle that holder’s Fraud without consent.

9.6 Loss limitations and no double recovery

Losses are determined without duplicating purchase-price adjustments, reserves, insurance, or other recovery. The injured party must use commercially reasonable efforts to mitigate. No party recovers for a hypothetical diminution or multiple unless necessary to measure an actual direct Loss and permitted by governing law. Payments are treated as purchase-price adjustments to the extent lawful. The parties must select whether materiality qualifiers are disregarded for determining breach, Losses, both, or neither.

9.7 Exclusive remedy, sandbagging, and equitable relief

After Closing, Article 9 is the exclusive monetary remedy for matters addressed by representations, covenants, and specified indemnities, except Fraud, equitable relief, purchase-price adjustment, express ancillary-document remedies, and claims that cannot lawfully be limited. Parent’s right to recover is not affected by pre-Closing knowledge except an express written waiver identifying the breach and remedy surrendered. Nothing authorizes double recovery or circumvents the negotiated RWI and escrow waterfall.

10. Tax Matters

Schedule 10 allocates preparation, review, filing, payment, amendment, and control of pre-Closing and straddle-period Tax returns and contests; transaction deductions; refunds; transfer Taxes; payroll withholding; cooperation; records retention; and permitted elections. Parent will not make a retroactive election or amend a pre-Closing return that materially increases former-holder liability without Securityholder Representative consent, not unreasonably withheld when Parent bears the resulting cost. The parties will report consistently with the agreed Tax treatment unless a final determination requires otherwise.

Any Section 280G cleansing vote requires valid waivers, complete disclosure of all contingent payments and reasonable-value analysis, exclusion of ineligible votes, and evidence of approval before Closing. Any Section 409A, Section 1202, Section 338, Section 336(e), Section 382, or reorganization provision is a specialist-review gate and not a representation of holder-level outcome.

11. Miscellaneous

Notices must be written and sent to Schedule 11 by personal delivery, recognized overnight courier, or confirmed email, with legal-process notices delivered as law requires. Each party bears its expenses except as expressly allocated. No assignment is permitted without consent, except Parent may assign to an Affiliate or financing source if Parent remains liable and the assignment does not delay or impair Closing. D&O indemnitees and financing sources are beneficiaries only of provisions expressly protecting them.

This Agreement, its Disclosure Schedules, and identified ancillary agreements are the entire agreement. An amendment before the Effective Time requires the approvals required by law and the signatures specified on Schedule 11; an amendment after stockholder approval may not adversely change holder consideration or rights without required approval. Waiver must be signed and specific. Invalid terms are narrowed only to the minimum lawful extent.

This Agreement is governed by [DELAWARE] law without conflicts principles. The parties submit to exclusive jurisdiction in [THE DELAWARE COURT OF CHANCERY OR, IF IT LACKS JURISDICTION, ANOTHER SPECIFIED COURT] and waive jury trial to the maximum extent lawful. Equitable relief is available subject to Section 8. Counterparts and authenticated electronic signatures are effective. The Securityholder Representative signs only in that capacity and has no personal liability except under provisions expressly applicable to it.

Signature Page

PARENT [LEGAL NAME] By: ______________________________ Name: [NAME] Title: [TITLE]	MERGER SUB [LEGAL NAME] By: ______________________________ Name: [NAME] Title: [TITLE]
COMPANY [LEGAL NAME] By: ______________________________ Name: [NAME] Title: [TITLE]	SECURITYHOLDER REPRESENTATIVE, solely in that capacity [LEGAL NAME OR INDIVIDUAL] By: ______________________________ Name: [NAME] Title: [TITLE, IF ANY]

Schedules and Exhibits

Disclosure and transaction schedules

• Schedule 1.1 — Knowledge Persons, RWI Policy, and Additional Definitions

• Schedule 2.3 — Surviving Corporation Directors and Officers

• Schedule 2.5 — Capitalization, Preferences, and Conversion Elections

• Schedule 2.8 — Equity and Convertible Instrument Treatment

• Schedule 4 — Company Disclosure Schedules

• Schedule 5 — Financing Commitments, Equity Commitment, and Limited Guaranty

• Schedule 6.2 — Interim Operating Covenant and Consent Matrix

• Schedule 6.3 — Exclusivity, Superior Proposal, Matching Right, and Termination Fee

• Schedule 6.4 — Approval, Information Statement, Notice, and Appraisal Process

• Schedule 6.5 — Regulatory Efforts and Remedy Ceiling

• Schedule 6.6 — Employees, Benefits, Equity, 280G, and 409A Actions

• Schedule 6.8 — D&O Tail, Founder Releases, and Records Access

• Schedule 6.11 — Transaction Privilege and Counsel Allocation

• Schedule 7 — Conditions and Closing Deliverables

• Schedule 8 — Termination, Reverse Fee, Guaranty, and Specific Performance

• Schedule 9 — Indemnity Limits, Special Matters, Recovery Waterfall, and Representative Terms

• Schedule 10 — Tax Matters

• Schedule 11 — Notices and Amendment Authority

Exhibits

• Exhibit A — Purchase Price Definitions, Accounting Principles, Line Items, and Sample Calculation

• Exhibit B — Form of Certificate of Incorporation of the Surviving Corporation

• Exhibit C — Form of Bylaws of the Surviving Corporation

• Exhibit D — Payment Agent, Letter of Transmittal, and Consideration Schedule Procedures

• Exhibit E — Earnout Terms and Worked Examples, if applicable

• Exhibit F — Form of Certificate of Merger and Filing Checklist

• Exhibit G — Form of Officer Closing Certificate

• Exhibit H — Form of Secretary and Incumbency Certificate

• Exhibit I — Form of Escrow Agreement

• Exhibit J — Form of Stockholder Joinder, Release, and Appraisal Acknowledgment

• Exhibit K — Form of Option or Award Cancellation Agreement

• Exhibit L — Form of Founder Employment, Restrictive Covenant, or Release Agreement, if applicable

• Exhibit M — Final Data-Room Index and Archive Certificate

Website Posting README — Not Part of the Agreement

Purpose. This agreement structures a private-company reverse triangular merger from a buyer-protective perspective, including statutory mechanics, holder treatment, purchase-price adjustment, startup diligence, Closing certainty, and post-Closing remedies.

Use when. Use when a buyer is acquiring a founder-led corporation with enough holders or equity instruments that individual stock transfers would create execution, holdout, or administration risk.

Do not use when. Do not use for a public-company merger, forward merger, tender offer, cross-border combination, regulated entity, or Tax-free reorganization without rebuilding the statutory, securities, disclosure, approval, and Tax provisions. Do not assume a merger avoids contractual consent requirements.

Founder-critical decisions. Confirm the charter waterfall; founder, employee, and investor proceeds; rollover and employment separation; option and warrant treatment; appraisal process; representative authority; escrow and RWI recourse; D&O protection; privilege; Tax elections; and whether financing or regulatory risk can prevent payment.

Customization checklist. Complete every schedule and exhibit; test the capitalization and funds-flow model; conform the Certificate of Merger and approvals to current law; select the bring-down, MAE, no-shop, remedies, RWI, Tax, and specific-performance alternatives; complete specialist reviews; remove the Matter Completion Sheet, banner, unused alternatives, brackets, and this README before execution.

Public-use disclaimer. This practitioner master is for educational and drafting-reference purposes. It is not legal or Tax advice, does not create an attorney-client relationship, and requires review by transaction counsel and applicable specialists.

Need help customizing this template for your business? Contact Montague Law to schedule a consultation and get this document reviewed by our team.

This template is provided by Montague Law for informational and educational purposes only and does not constitute legal advice. Consult a qualified attorney licensed in your jurisdiction before using any legal document.