SUPPLEMENT

TO

REPORT OF THE LEGAL OPINION COMMITTEE OF THE BUSINESSLAW SECTION OF TIIE NORTII CAROLINA BAR ASSOCIATION

TIIIRD.PARTY LEGAL OPINIONS IN BUSTNESSTRANSACTIONS, SECOND EDITION

Co-Chair ChristopherB. Capel Raleigh,North Carolina

Co-Choir KerurethM. Greene Greensboro,North Carolina

Co-Chair RichardK. Schell Charlotte,North Carolina

CommitteeMembers

A. Mark Adcock SeanM, Jones Charlotte,North Carolina Charlotte,North Carolina

DianaS. Allen ChristopherE. Leon Durham,North Carolina Winston-Salem,North Carolina

David L. Batty JohnR. Miller Charlotte,North Carolina Charlotte,North Carolina

Mark T. Cain Alfred L. Purrington,III Greensboro,North Carolina Greensboro,North Carolina

JamesL. S. Cobb Manley W. Roberts Raleigh,North Carolina C-harlotte"North Carolina

William B. Gwyn,Jr. Raleigh,North Carolina SUPPLEMENT

TO

RIIPORT OF THE LEGAL OPINION COMMIT'I'EE OF TIIE BUSINESSLAW SECTION OF THE NOR'TII CAROI,INA BAR ASSOCIATION

TFIIRD-PARTY LEGAL OPINIONS IN BUSINESSTRANSACTIONS, SECOND EDITION

INTRODUCTION

'l'his Supplementto theReporl on Tbird-PartyLegal Opinions in Business'I'ransactions,Second Edition(this "Supplcmcnt")was preparedby the LegalOpinion Committee (the "Comrnittee") of theBusiness Law Sectionof theNorth Caroiina Bar Association.

The BusinessLaw Sectionformed the Committeein late 1994, and in January1999 the Committeeissued its jnitial Reporl on Third-PartyLegal Opinionsin BusinessTransactions (the "1999 Report").Tn 2002, the BusinessLaw Sectionreconstituted the Committeeto reexarnjne 'I'he the 1999Reporl and up

After examiningthe 2004 Repofi, the Commineedetermined that the most useful form of an uptlatewas a supplementto the 2004 Repoft rather than a new, third edition. The Committee submittedthis Supplementto tlre BusinessLaw SectionCouncil, and the Council approvedand endorsedit in February2009. As was the casewith the 2004 Report,this Supplcmentdoes not necessarilyreflect the views of any law firm, institutionor individualpractitioner, including individualmembers of thc Committee.

' All capitahzed temu and abbreviatiorrs used in this Supplenrcntwitlrout delinition shall have lhe nreattitrgs ascribed thereto in the Glossary of 1'errns set forth in $ | 0 of tlie 2004 Report,

I Specifically,tlre Comrrritteeidentified three sections of the 2004 Reportin needof upda{.ing. Thosetlu'ec sections and the reasonsfur therevisions ure as follows:

Sectiorr2.2: Adch-essee.Given the fi'equencyof requestsby opinion recipientsthat successors and assignsbe permittedto rely on legal opinions in syndicatedloan transactions(as well as other transactionsin which an assignmentmay be contemplated),the Comrnitteedecided to amendSection 2.2 to addressthe issueof when and under what circurnstancessuch expanded relianceis warranted. The standardformulation in the Illustrative Form of Opinion remains nzurow. The revised Section 2.2 discussesthe reasonsfor the nalrow formulation and the circumstancesthat eouldjustify broadeningthe scopeof permittedreliance on the opinion. The revisedSection 2.2 also suggestslanguage when the opinion giver has agreedto permi[ sucir expandedreliance.

Section6.0.g: Delawarc eq!0p_4nies. Since the 2004Report, there has been significant discussion among lawyers,as well as commentary,as to the meaningof a statementin art opinion letter being deliveredwith respectto a Delawarecorporation or lin'ritedliability companythal thc opinion is linrited to rnattersgovenred by eitherthe DelawareGeneral Corporation Law or the DelawareLimited Liability ColnpanyAct. Also, the numberof linritedliability companieshas continrredto increasc,including Delaware limited liability companies.Therefore, the Cornmiltee conch-rdcdthat an updatcon opinionson mattersof Delawarecorporation and limjted liability companylarv would be helpfui. 'l'he Section14: Staternentof No Litigation. opinion in the Massachusettscase of Dean Foodsv. Puppathanasi,No. Civ. A.01-2595 BLS,2004 WL 3019442(Mass. Super. Dec.3,2004), which held a law firm liable for more than $9 million in damagesand costsin connectionwith a no- litigation confirmationin a third-parly legal opinion, generatedconcerns among attorreys with an activethird-party legal opinion practicebeyond the stateof Massachusetts.2Perhaps the most far-reachingeffect of the DeanFoods case is increasingreluctance by iirms to provirlebroad no- iitigation confinnations. In Nortb Carolina,this evolution of opinion practicehas led to a movementaway from lhe 2004 Report toward the narro'werfotmulation set forth in revised Section14 asreflected in this Supplement.l

Despitethe widespreadattention that the DeanFoods case has received,the court's holding did not break any new ground. Rathcr, Ihe court confirmed the applicablestandard of cale for providing no-litigationopinions as previouslyarticulated by the TriBar Reportand followed by various state bar assocjationreports regardingthird-party legal opinions. Nevertheless,in responseto lhe DeanFoods decision, the BostonBar Association'sLegal OpinionComrnittee took the approach,in its StrearnlinedForm of Closing Opinion, of specificallylinriting the no- litigation confrrmationto litigation affectinglhe transactionat issueor to litigationwith respect to which the law firm giving the legal opinion representsthe client addressedby the legal

2 See,Douald W Glazer and Arthur N. Field, "No-Litigation Opinions Can Be Risky Busincss-Lootcitrgat the Facts and Beyond," Bus. L Todtry, JulyiAugrrst 2005.

3 .5'eeA Mark Adcock and David L. Ilatty, "Recent f)evelopments in Opiruon Letter Practice," Noles Bearing Inlercst, Vol 28, No. 2 (t)ccenrbcr 2006) for a more detailed discussion- opinion,o The Committce supportsthis approachas the trend away from broad no litigation cor:firnationseliminates many of thedifiiculties associated with providinga broadno litigation confirmation.s

PartIII: Il.lustr4!y,9Fonn of Opinion.

In addition,because of the updatedsections in this Supplement,the Committeedetermined that the Fomr of the IllustrativeForm of Opinion includedin Par-tIII of the 2004 Reporl shouldbe updated.

In this Supplemcnt, each of thcsc Sections has been restatedin its entirety and eac'lrsuch restated Section replaces and supersedesthe corresponding Section lrom the 2004 Report. In addition, the Illustrative Form of Opinion contained in this Supplement replaces and supersedesthe Ilh.rstrativcForm of Opinion containedin Part lll of the 2004 Report. Conesponding changes are also applicableto the IllustrativeForm of UCC Opinion.6

Special note should be made that tlre restated Illustrative Form of Opinion elimiuates, in the suggestedopinions, any refbrences to the "knowledge" of the opinion givcr. This change was made becausea "knowledge" qualification is unavoidably ernimprecise limitation on an opinion ard could be subject to a dispute. Although a knowledge qualification may be warranted in the context of a specific transaction, the Committee concluded that the general use of a knowledge qualification in the Illustrative Form of Opinion was not warranted. Moreover, as the scope of the specific opinions which previously ir-rcludeda knowledge qualification has been narrowed in the updated lllustrative Form of Opinion, a knowledge qualification was no longer neccssary.

In connection with its work, tlre Committee considered the Statementon the Role of Customary Pructice in the Preparation and Understanding of Third-Party Legal Opinions.63 BUS. LAW. 1277 (2008) (the "statement of Customary Practice" or the "Statement"). The Comrnittee recommended the Statement of Custornary Practice to the Business Law Section of the North Carolina Bar Association and the Section has approved it. The Statement of Customary Practice rs attached to this Supplement as an appendix and is reprinted with the permission of the Anrerican Bar Association.

a See6l BUS t-AW. 393, at 396 (2005).

5 See TriBar Repoft g 6.8 (noting that although a no-litigation opinion that "rclatcs to litigation affecting the hansaction. . . does not ordinarily raise difficult questions," a no-litigation opinion "that covers litigation generally affccting the Company can be qrrite challeuging.")

6 It should also be noted that since the publication ol'the 2004 Report, the second edition of Glazcr and l:itzgibborr on l,egal Opinions (2d. ed. 2001 & Supp. 2003), referred to as "GLAZEI{" in the 2004 Report, bas been updatcd by a thild editioq Clazer and Fitzgibbon on lrgal Opinions (3d. ed 2008) and all tcfcreuces in this Sttpplement to GLAZER are to the thild edition- SEC'IION 2.2. TH.f. ADDR.ESSEE OF THE OPINION

$ 2.2 Addressee. ln geneml,a lawyer owes a duty of carc nol only to the addresseeof an opinion ietter but to other nonclientswhom "the lawyer or (with the lawyer's acquiescence)the lawyer's client invitcs...to rcly''on the opinion so long as the nonclient does in fact rely and "is not, under applicable tofi law, too rernote from the lawver to be entitled to protection."T Consequently, it is important from the standpoint of the opinion giver that the addresseesbe specifically named - if not individually, at leasl by a dcscription of a group whose membcrs can be ascertained (such as "the Underwriters named in Schedule I to the Underwriting Agrecmcnt").

To make it clear who may rely on an opinion letter, and for what purposes, the opinion giver often expressly prohibits reliance by anyone other than the addresseefor any purpose, and prohibits rcliance by the addresseefor any purpose other than the transaction with respect to which the opinion is rcndcred.t Given the extensive body of case law concerning who may rely uporropinions and reportsof professionalsin other fielcJs,especially accounlants, the Comrnitlee recommends, that opinion letters include an express statement limiting reliance and use of the opinion letter, such as the following:

This opinion letter is delivered solely for your benefit in connection with the Transaction and may not be used or relied upon by any other person or for any other purpose without our prior written consent in each instance.

The principal exception to this limitationo on reliance has been in syndicated loan transactions (as well as other transactions in which assignment is contemplated, such as securitizations)where the opinion recipient often requeststhat successorsand assigns(i.a., fuhrre membcrs of the syndicate)be permitted to rely on the opinion letter as well, to the same extent as the addressee. Although historically many opinion givers have been willing to allow successors and assignsof the addresseeto rely on an opinion letter renderedin connection with a syndicated loan transaction, over thc last several years some firms have resisted requests to allow such reliance, The principal leasonsfor suclrresistance include:

' GLAZER $ 2.3.2,quotins RESTA'TEMENT OF LAW GOVERNINGLAWYERS $ 51,

t Id.

n Oth"t corrunonsitrrations in whjch the opinion givcr may expresslypcr-mit persons othcr than the addresseeto rely on the opinion are when (i) counselfor the opinion recipient needsto rely on the opinion in comection with such corrnscl'sown opinion that is beirg renderedas part of the samekansaction, and (ii) a lenderproviding acquisition financingto a companythat is acquiringarrolher company requests that the lenderbe pernrinedto lcly, ftrr the pr.rposes of thc loanbansuction, on the opiniondclivered by sellcr'scounsel to thebuyer in corurectionwith theacquisition. In those instances,the statemeutlimiting reliance will typically be nrodified to add thc pluase "exccpt that [r'rameof law frrnrl may rely on dris opinion letter in connectionwith ils opimon letter of even datebcrng dclivcred to in connectionwith thc Transaction"or "exccptthat lhe Lcndcl rnayrely on this opiniorrlefter in connectionwith thelransaction.s contemplated by theAgreenrcnt ". A perception that problem loans arc likely to be assigned to so-called "vtrlture funds" that are rnore likely than traditionallcnders to view the opinion giver as a deeppocket and to make a claim on the opinion giver in an attempt to recover a portion of the defaulted loan amount.

The possibility of multiple claims being made by syndicatemembers, requiring the opinion giver to negotiate with a number of different claimants and making it difficult to resolve claims expeditiouslyor with finality, since settling with one claimant wollld not prevent another syndicate member from bringing a later claim.

. A concem that successol'sand assigns rnay not appreciatethe limitations on tire opinion letter (to which the addresseeis also subject), that the opinion may be deemed to be re-issueclas of the date the new syndicate member acquires its interest in the loan, or tlr.atportions of the opinion could differ depending on the status of the new syndicate nrember (such as whether there is an applicable exemption from usury larvs).'o

. The possibility of claims in unexpectedand distantjurisdictions and unccrtainty as to the governing law.

Syndicated lenders have nonetheless generally insisted that the opinion letter permit successorsand assigns to rely on the opinion, arguing that failure to authorizc such reliance hinders the loan syndication, and that ftlture syndicate members must be allowed to rely on the opinion to the same extent as the original lenders. The Loan Syrdications and Trading Association, a not-for-profit organizatjon that promotes the development of an efficient trading market for corporate loans and other similar private debt, rcquires administrativc agents in syndicated loan transactionsto "request, on behalf of the lenders,that the borrower's counsel's legal opinion permit relianceby assignees.""

Section 1.7 of the ABA Guidelines acldresses,in part, the concerns of opinion givers with respectto reliance by successorsturd assigns- Section 1.7 provides as follows:

1.7 Reliance

An opinion giver is entitled to assume,withoirt so stating, that in relying on a closing opinion the opinion recipient (alone or with its courrsel)is familiar wilh customary practice conccming the preparation and interpretation of closing opinions. On occasion, a closing opinion cxpressly authorizespersons to whom it 'l'hose is not addressed(for example, assigneesof notes) to rely on it. persons are

r0 "special J<-rintConrnrittee of the Maryland State Bar Association and the Bar Association of Baltimore City," ,f5 B[JS. LAW. 720 ( r 990).

" LS?7 Pntnary Market ond Agtznr h'ansfer Prouices (May 2005), Ren'ieved February 9, 2009, Ii'om http ;//www. lsla.orgl . pemitted to rely on the closing opinion to the same cxtent as - but to no greater extentthan - the addressee.

Opiniongivers who permit their opinionsto bc reliedupon by third parlies,consistent with cr.rstomarypractice as articulatedin Section1.7 of the ABA Guidelines,often do so by includinglanguage to thefollowing effect:

This opinion letter is delivered solely for your benefit, and that of your successorsand permitted assigns,in connectionwith the Transaction and may not be usedor relied upon by any other person or for any other purposewithout our prior written consentin eacbinstance.

On the other hand, some opinion givers prefer to state with more specificity the lirnitationson relianceimplicit undersuch customary practice. A formulationthat hasgained wide-spreadacceptance'? reads as follows:

At your request,we berebyconsent to reliancehereon by any future assignee of your interest in the loans under the Credit Agreement pursuant to an assignmentthat is made and consentedto in accordancewith the express provisionsof SectionI I of the Credit Agreement,on the condition and understandingthat (i) this letter speaksonly as of the date hereof, (ii) we have no responsibilityor obligation to update this letter, to consider its applicabilityor correctnessto any personother than its addressee(s),or to take into accountchauges in law, facts or any other developmentsof which we may later becomeaware, and (iii) any suchreliance by a future rusignce must be actual and reasonableunder the circumstancesexisting at the time of assignrncnt,including any changesin law, factsor nny other developments known to or reasonablyknowable by the assigneeat such timc.

Occasionallyan opinion recipient in a loan transactionwill requestthat purchasersof loan participationinterests also be permittedto rcly on the opinion letter. The purchaserof a loan participationinterest is not in privity of contractwith the borrower,and hasno rightsexcept thosethat are derivativeof, and that must be assefledby, the holder of the loan. Moreover, sellcrs of loan participationinterests generally make no warrantiesabout the loan documents evidencingor securingthe loans or any other aspectof the loan transaction,and the loan participationpurchasers acknowledge in the underlyingparticipation agreement that they are relying solcly upontheir own due diligenceand invesligationin closingthe purchaseand sale of the loan participationinterest. Given these limitationson the holders of loan particination interests,and the potentialrisks to opinion givers of allowing such reliance(which risks are exacerbatedby the potentialnumber of loan participants),the Committeebelieves that it is generallyinappropriate for an opinion recipientto requestthat loan participantsbe permittedto rcly on the opinionletter.

t2 SeeGLAZF.I{ $ 2.3.1,n.3. SECTION 6.0.9: TIIE STATUS OPINION FOR A DELAWARE COMPANY g. DelawalgCo-mpanies. It hasbecome commonplace for lawyersnot admittedto practice in Delawaleto be askedto opineon routinematters of Delarvarecorporalion and liniited liability companylaw, such as the statusof a Delawarecorporation or lirnited tiability company. I'he Commilteeapproves of this practice,so long as the opiniongivcr has sufficientknowledge of' 'fhe Delawarccorporation law and lirnited liability compary law, as applicable. opinion giver has the responsibilityto determinewhether he or she is competentto render a particular Delaware law opinion, o1r a case-by-casebasis.ll The due diligence involved in giving a Delawarecompany stahls opinion and other mattersof Delawarelaw are beyondthe scopeof thisreport.'u

Opinion lettersby non-Delawarelawyers on Delawarecorporations or DelawareLLCs often statethat the opinionis limited to mattersgovenred by the DelawareGeneral Corporation Law or the DelawareLimited Liability CompanyAct, as the casemay be, or containa sirnilarstatement as to coveredlaw. Thjs raisesthe questionwhether the opinion being renderedcovers any nrattersbeyond thc lcxt of these statutes. The Committeebelieves that an opinion lctter lirnitatiorr tliat rcfcrs to the Delaware General Corporationl.aw or the Dclaware Linrited Liability CompanyAct shouldbe interpretedto cover not only the text of the statutesbut also reponedjndicial dccisionsconstruing these statutes, unless the opinion letter statesthat it does not covcrsuch matters. This view is widelyheld.'t

In the caseof an opinion on a DelawareLLC, anotherquestion is raised:whethcr the opinion being renderedcovers Delaware contract law issues. The terms of a Delawarelimited liability companyagreement (also known as an operatingagreement) may have a significantbearing on tl'reopinion being rendered- such as whetherthe LLC has the requisitepower to enterinto a transaction,whether a transactionhas beenduly authorized,or whethera transactionagreement hasbeen duly executed.The Committcebelieves tlrat an opinion letter limitation that refersto the Delaware Lirnited Liability CompanyAct should also be interpretedto cover l)elaware contractlaw issuesthat may apply to the mattersaddressed by the opinion beingrendered,'o snch as "power," "authority' and "due execution"opinions, unless the opinion letter indicatesthat il does not cover contractlaw.r' The Committee observesthat such contract law issuesand

'' J:eeTriBar Report $4.t n.85; Thild-Party Closing Opinions: Limited Liability Corrrparries,6l BUS. LAW. 679 (2006)(the "TriBar LLC Report') $ 1.0,at 681; GLAZER $2.7.3. 't Tlre Committee notes that non-Delaware lawyers who advise Delawarc conrpanies nray be srrbject to berng suecJin Delaware coutls. See Sample v. Morgan,g3s A. 2d 1046 (Del. Ch. 2007).

t5 Se", Special Report of the TriBal Conunjnee: The Remedies Opiuion - f)ecirling Whcn to lnclude ".g., Exceptionsand Assumplions,59 BUS. LAW. 1483 (2004), at 1487 n.25; TnBar LLC Report $ | 0, at 681. 16 SeeTriBar LLC Report, $1.0 n.19 arrdacconrparrying text. rr If contract Iaw ts excluded, the Committee notes that the opinion recipient will need to evalrrate the consequelces of such a limitation on the uscftilncss of the opinion in light of "the central role the operating agreement,a contract, plays in cstabl-ishing the lighs and obligations of participants in an LLC and in setting the nrles by which it is governed."GLAZER $l 9.6. interpretationmay be relatively straight-forwardin some casesand nrore complex in others, dependingon theapplicable provisions of the operatingagreement.rg

If the opinion giver wishes to limit the coverageof the opinion to the text of the relevant Delawarestatute and excludejudicial decisionsand otherareas of Delawarelaw, the Committee recommendsthat the opinion lettercontain language substantially similar to the following:

The opinion set forth in paragraph _ is limited to matters governedby the Delaware General Corporation Law [Delaware Limited Liability Company A,ctl, and we do not expressany opinion as to any judicial decisions construing the Delawffre General Corporation Law [Delaware Limited Liability Company Act] or on any others matters of Delaware law other than the text of the Delaware General Corporation Law fDelaware Limited Liability CompanyActl.

In the case of an opinion on a DelawareLLC, the Committeebelieves that the foregoing languageis sullicientalso to excludeDelaware conhact law matters.

It '!ower," Thc Commitieenotes that opinions as to "atrthoriV' and "due executjon" for a DelawareLLC do not adckessthe enforceabitityof the operatingagrcement of thc cornpany,and that an enforceabilityopinion gencrally is significantlymore dilficult to render. SECTION14. STATEMENT OF NO LITI(;A]'ION

$ 14.0 StandardFormulation. The followingis a standardfonnulation of the statcment of no litigation:

In addition,we adviseyou that, we do not representtbe Companyin any action,suit or proceedingnow pendingat law or in equity,or by or beforeany governmentalinstrumentality or agencyor arbitral body,or overtly threatenedin writing againstthe Companyby a potentialclairnant, that challengesthe validity or enforceabilityof, or seeksto enjoin the performanceof, the TransactionDocuments [except. . ,1.

ao*tr*t*"

a. Nature of Stateme4l!.The statementof no litigation is a statement of fact. "fhe language uscd is intended to reflect that the statement is a confirmation of fact and not a legal opinion which requireslegal analysesand conclusions. For that reason,the statementis set forth in a separate,runumbered paragraph and may be offset frorn the rest of the opinion by asterisks.

b. Purpose antl Scone af Statemenl. Typically, an opinion recipient requeststhe statement of no titigation primarily as additional assuranceof the nonexistenceof pcnding or threatenedlitigation. Such a statement is requestedof the opinion giver becauseof the belief that the opinion giver would be involved jn the representationof tire Company in corurectionwith any legalproceedings to which the Compzrnyis a party. C)f course, this premise is questionable in cases where the opinion giver is not the primary outside counsel which regularly handles legal matters (including matters other than the lransaction contemplatedby the Transaction Documents) for the Company. In instances where the opinion giver is merely acting as local counsel or is otherwise only engagcd with respect to a limited aspect of the transaction, a no Iitigation confirmation is not appropnate.

The scope of the standard fiormulation of the statementof no litigation is limited in fwo ways. First, the staternentof no litigation applies only to litigation matters where the law firm renderilg the closing opinion represents the Company. Second, only litigation affecting the transaction or the validity of the Transaction Documents is covered by the standardformulation of the statementof no litigation A broader form of the statementof no litigation, i.e., a statementas to the absenceof any pending or thrcatencdlitigation gerrerallyagainst the Conrpany,is sometrmesrequested. This request is significantly more expansivcthan tlre standardformulation in two ways. First, it covcrs any litigation involving the Company where the law firm rendering the closing opinion is not representingthe Company. Second,it covers all litigation involving the Cornpany - not just litigation affectingthe transactionor the validity of the TransactionDocuments. As discrusedbelow, this broadcrform of the statementof no litigationmay requirernore extensivedue diligence,and nray involve greaterrisk for the law firm rendet'ingthe closing opinion,than the nan'ower,standal'd fonnulation. Becausethe staternentof no litigation is entirely a factual confirmationand does not involve any legal analysisor professionaljudgment, it doesnot add anythingto tlre Company'srepresentations and warranties in the TransactionDocuments other than additional assurancefrom the Company'scounsel. Accordingly, a law finn renderinga closingopinion and its client should weigh thc costsand benefitsof including the statementof' no litigation in the closingopinion. ln the eventthal thc law firm renderingthe closingopinion andits client conclude that the broadcr form of the statenrentof no litigation is wananted,the following formulationof tlrestatement of no litigationtnay beused:

In tddition, we advise you that, to our knowledge without Rny independentinvestigation (including without limitation any searchof court records,the files of tltis firm or the filesof theCompany), there is no action,suit or proceeding now pending at law or in equity, or by or before any governmentalinstrumentality or agencyor arbitral body, or overtly threatened in writing against tbe Company by a potentialclaimant [, exceptas llistedon the disclosureschedule to thc AgreemcntlfiistedoD an officer'scertificate rendered to us in connection with this opinionlIfollows: 11.

The broader scope of this formulatiol of the staternenl of no litigation jr,rstifies the inclusion of a knowledge qualification. Although the TriBar Report states tbat "[tJhe presenceor absenceof the phrase'to our knowledge'does not change the rneaning of the [no litigation confirmation]" (see TriBar Report $ 6.8), tlie Committee believes that the "to our knowledge" qualilication emphasizes that the statement i.s fact-based and establishesthe scopeof the incluiry necessaryto meet lhe due diligence obligations of the opinion giver. ,See$ 5 of this Report ("Knowledge Qualification").'t As discussedthere, the guiding principle underlying the statementand its knowledge qualification is that the benefits associatedrvith the statement should outweigh the costs associatedwith the scopeof the requireddue diligence.

c. No Action. Suit or Proceedi;s, et Law or in Erluit-v. The phrase "no action, suit or proceedingat law or in equity" encompassesall legal proceedingsregardless of whether the requestedrelief is of an equitableor legal nature. 1'he larrguageof the statementis

'n Not. that "[a]s a mattcr of customary diligence lhc [no litigatiorr conlurntion] does not requile that the opiniorr giver check coufl or othel public records or revjew the frm's files (axl an exprcss disclainrer to that effect is not ncccssary)." The purpose of the statement is to elicit factr.ral information already knolryri by corrnsel, not factual infomulion that nught be urrovcred by outside research- J'ee TnBar Itepon $ 6.8 Neverthclc.*s, an exprcss statemcnt of the scope of duc diligcncc review is not inappropriate,

l0 limited to legai proceedingsbefore bodies that can rcnder injunctive relicf or binding 'fherefore, resultson the partiesto such legal proceedirrgs. a dispute that is the subjectof non-bindingarbitration or rncdiationwould nol be requir-edto be disclosed.

d. Now Pendinq or Overtl-v Threatened Litigatiort The use of tlre phrase "overtly threatened"may be misinterpleted to inciude both oral and written tlu'eats. Although the Committee believes that the phrase "overtly threatened"does not include oral threats,use of the phrase"overlly threatenedin rvriting" is advisableto avoid any confrisionon this point. This phrasedoes not include unassertedclaims, even if in writing, that might arise from an existing state of facts that are better left to the audit process.2o

e. Disclosure Schedule. The broader formulation of the statenrenlof no litigation set forth in paragraph(b) above referencesa disclosule schedule or officer's certificate to identify the relevant litigation matters. By referencing all such legal proceedings in this manner, the law firm renderingthe closing opinion avoids the needto determinethe materiality of any pafticularlegal proceeding. The disadvantageof the disclosureschedule or oIilcer's certificatc is that it rnay become so extensive as to make the statement cumbersorre. If this occurs,then the opinion recipient and the opinion giver may reduce the list of legal proceedingsto tnaterial legal proceedings, provided they can establish objective criteria for legal proceedingsthat are required to be disclosed. See $ 1 L2.a of this Report ("No Breach or Default Under Other Agreernents-AgreementsCovered"). Of course, equitable proceedingsdo not present readily identifiable, obje,c.tivebenchmarks. Therefore, if the approach of full disclosure becomes too cumbersome, there may be compelling reasons not to includethe statementof no litisation in the ooinion letter.

DUE DILIGENCE

The opinion giver generally should:

o Requestcertificates of officersor managersof the Companylisting actions,suits or proceedingspending or overtly threatenedagainst the Company;rl

to The statenrentof no litigationirr an opinionlcttel shorrlci rrot be conftl-setlwith a lesponseto auditor'srequest that a law firm may renderto a certifiedpublic accouutinglunr irr corucctionwith that accouutingfirm's audit of the finattcral staternen$of a company- Seegenerally, ABA Staternentof Policy Regarding Lawyers Responsesto Auditor'sReguests for Information,3l IlLlS. LAW. 1709(1976). The statementof no litigationis not inteudedto serue lhe samePu{pose as a responseto an auditor'srequest. Accordingly, the due cliligencethat will be undertakenin providingtbe staternenlof no litigatioumay be less cxtensivethan the procedureslhal a law film may follow in respondingto auditor'sr€quesls. ?lExcept with respectto tlre olficer's certificate,thc opuriongiver shouldnot be rrguired to inquirc with the Company about pendingor overtly tlueatenedlegal proceedings. The opiruon g.iver is not au audilor. Absent the requirernentof an audit, thc opiniorr giver should not be requirrd to speculateas to whom in an olganization has 'l'hercfore, personalknowlcdge abottt legal proceedingsto which thc Cornpanyi^s a party, the opinion givcr shouldbc entitledto rely on the infomrationprovided to tlre opinion rccipicrrtin thc Agreement(nornrally the Conrpany's representationsand warranties)absent infornration known to the opinion giver that would prevent the opinion giver fromjustifiably relying upon ntchinforntation, Tlre opinionrecipient and tlreopinion giver nrayaglee, however, that inquiry shouldbe conductedof Companyofficers ln that case,an expressstatement of strchreliancc should be iucludedin the opiniou letter-

l1 Examinerepresentations and.u,arranties of the Companyin thc Agreement;and

Make an inquiry of the lawyersin its finn who constitutethe "Primary Lawyer Gloup." See$ 5 ("KnowledgeQualification") of this Report. If the opiuiongiver doesnot incorporatethe conceptof "Prinrary Lawyer Group" into the opinion, thentlie opiniongiver's inquiry shouldinclude those people in its firm rvhomthe opinion giver reasonablybelieves would have knowledgeof any pendingor ovefily threatenedlegal proceedingsagainst tlre Company, However,this inquiry doesnot involvereviewing the litigationdocket of the firm or suchother listing of currentlegal proceedings that the finn keepson a regularbasis, nor is the opinion giver obligatedto inquire of all of the attorneysin the finn or to review all of the filcs of the firm.

It should be noted tlrat the diligence underlying a statcmcntof no litigation will be basedupon customary practice. The diligcnce required u.ill depend in part upon the scope of the stalement of no litigation that is to be delivered. The opinion giver may also limit the factual inquiry that customary practice would otlrcr-wiserequire by describing in the opinion letter the inquiry the opinion giver has conducted.22It is important to rernemberthat even though the statementof no litigation is a statementof fact, it is subject to the general prohibition against rendering opinions that "the opinion giver recognizeswill misleadthe recipientwith regardto the mattels addressed by the opinions given."'] Therefore, the opinion giver should cornplete the diligence revicw that is reasonably necessary based on the specific facts and circumstances of the particular hansaction.?'

27 SeeGIAZER, $ 17.3;ARA GuidelinesSection 3 4.

2rSee ABA Guidelinesg 1.5. tn C1.Dcan Foods v. Pnppathanasi,No, Civ. A.0l-2595 BLS, 2004WL3019442 (Mass. Super. Dec. 3, 2004)

l2 ilI. ILLUSTRATIVEFORM OI,'OPINION

IDate]25

IAddressee]2u

Ladies and Gentlemen:

We have actedas counsel?tto (the "Company'')in connectionwith the transaction(the "Tt'ansaction') contemplatedby the Agreementdated (the "Agreement") between the Company and (the "[Other Party]").2' This opinion letteris deliveredprusuant to Section of the Agreement.DAll capitalizedtcrms usedherein and not otherwisedefined hcrein shall have the samemeanings as are ascribedto themin theAgreement.ro

ln renderingthe opinions set forth herein,we have reviewed linsert as applicablef:

(i) the Agreement;

(i') ; and (iii)

The Agreementand the other documentsdescribed and identifiedin clauses(i) through (iii) arereferred to hereinfor convenienceas the "TransactionDocuments".

We havereviewed such documcnts and considered such matters of law and fact aswe, in our professionaljudgment, have deemedappropriate to renderthe opinionscontained herein.rr With respectto certain facts, we have consideredit appropriateto rely upon certificatesor other comparabledocuments of public ofTicialsand officers or other appropriaterepresentatives of the Company,without investigation or analysisof any undedyingdata contained therein.tt

r SeeE 2.1 of 2004Report. 26.9ee $ 2.2 of 2004Report as modified by the Supplcrnent. 27 See$ 2.4 of 2@4 Report. 2t See5 2.3 of2004 Report. 2t See5 2.3 of 2OD4Report. ro See5 2.5 of 20O4Report. r' ,See5 3.0 of 2004Report. 3? .!ee5 Lt of 2004 Report.

l3 [n addition,we havc relied, without investigation,on the following assumptions;]rr

[insert specific assumptions,if upplicubleJ

[rf any opinion is renderecl that includes "lo our knotvledge" or "known to us", insert expI anut ory paragraphf'^

The opinions set forth lrerein are limited to matters governed by llie laws of the State of North Carolina [and the federal laws of the lJnited States], and no opinion is expressedherein as to the laws of any other jurisdiction.rt [For purposes of our opinions, we have disregarded thc choice of law provisions in the Transaction Documents and, instead, have assumed that the Transaction Documents are governed exclusively by the interrral, substantive laws and judiciai interpretationsof the State of North Carolina.16]We express no opinion concerning any matter respecting or affected by any laws other than laws that a lawyer in North Carolina exercising customaryprofessional diligence would reasonablyrecognize as being directly applicableto the Company,the Transactionor both.3'

rt ^See5 4 of 2004Rcport, which setsforth a list of standardassumptions- As notedin that sectior\ the Cornmiflee believesthat theseassumptious ale implicit and it is not nec€ssaryto statethem in the opinion. Shouldthe opinion giverprefcr to setforth suchassumptions in the opinionletler or in an attachmentthereto, 4 of the Reportprovrdes 'fhe $ samplelanguage. opinion giver shouldalso set forth hcre any specificassumptions not coveredby tlle list of standardassumptious. 'o 'Ihe Seu $ 5.0 of 2004 Report. opinioru set forth in this illustrativc lorm of oprniorrpruposelirlly omit arty referenceto "lo our knowlcdge"or' "k-nown to trs". If, however,the opiniongiver does rendcr an opinionthat contains leferencesto any of thosephrases, the following explanatoryparagraph may be included:

The pbrases"to oru klrowledge" and "known to us" mean the consciotuawarencss by lawyersin the primary lawyer group of fachrai rnatt€rssuch lawycrs recognizeas being relcvant to the opinion or corrfirmationso qualified. Where any opinion or confrrmation is qulified by thc ptuase "to or.rr knowledge"or "known to us," the lawyersin the prinrary lawyer group are without knowledge,or consciou.sawaret'less, that the opilion or confirmationis rrntrue. "Prinrary lawyer group" nreansany lawycr in this firm (i) who signsthrs opinionlctter, (ii) who is activelyinvolved in negotiatingor documcntingthe transaction,or (iii) solely as to informatiorr relevant to a particular opinion or lacrualconfirmation issue, who is primarily responsiblefor providing the responseconceming the poflicularopinion or issue.

35See g 2.6of 7004Report.

16 Seeg 10.3.aof 20O4Reporl This senterrceis usedonly where the TransactionDocuments provide that lhe law of a jwisdiction olher than Norlh Carolina will govern the TransactjouDocuments. Where thc opinion covers the enforccabilityof suchchoice-ofJaw provision, lhe opinion language set forth in $ 10.3b of theReport may be usetl. I I rsed as an operaliveopinion, rather than an a-ssunrptiou,such opinion clausenray properly be placedalor:g with the otlrcr operativeopinion clausesin the marnbody of the letter.

17See g 2.-tof 2OO4Report.

t4 Basedupon and subjectto the foregoingand the frrrthcr assurnptions,limitations and qualificationshereinafler expressed, it is onropinion lhat:r8

l. The Companyis a corporationflimited liability company]in existenceunder the lawsof theState of North Carolina.re

2- CompanySubsidizry is authorizedto transactbusiness in the Stateof Norlh Carolina.to

3. The authorizcdcapital stock of the Cornpanyconsists of colnmon shares.of which sharesare outstanding.[Describe other classesif applicable.] The Sharcshave been duly authorizedand validly issued,and are fully paid andnonassessable"al

4. The Cornpanyhas the corporateflimited liability company] powef to execute, dcliverand perform its obligationsunder the Transaction Documents [and to operatei{s business as currcntly conducled, For purposesof this opinion, we have assumedthat the business presentlyconducted by the Companyconsists of and

it .!ee$ 2.8of 2004Report. to 5", g 6 0 of 2004Reporl no See$ 7,0 of 2004 Reporl. Sinceparagraph I of ttus form of opuuonreflects that the Companyis a North Carolina entiry, this forcign authorizationclause is un-ittento cover a subsidiaryfor illusrative pulposes. In acttraltrsage, the subsidiarywould need to be identihedproperly. '' See5 9.0 of 2004 Reporl. "Shares"should be defuredrn the opuuon to mcan thc sharesto be isstredor transferred in theTransaction or to nreanall outstandingshares, as the casenray be. The sampleopiruon applies only to Sharesof a corpontion; il doesnot apply to limited liability conrpanics.Because of Orewide variatiorrsafforded to orga-uizersof linited liabilily companiesin plannilg LLC ownership anangenrents,it is not practicableto lormnlate a standard opinion regardingthe authorizationand issuanceof LLC nrembershipinterests ,See$ 9.0 of 2004 Report at footnote 87" The following fornrulationis a slartrngpoint if a capitalizatiorropimon is given for an LLC:

The authorizedmembership interests of the Company couist of [rnsert appropriatedescriprionl, of which nrmbershrpinterests are oulstandirg. All of the Company'snrcnrbership interests have been duly arrthorizedand validly issrred.

Currently, lhere appearsto be no cousensusas to whether opinions on the authorizationand issuanceof LLC membenhip interestsshould be reqr.restedor rendered.Depending on the natureof the LLC membershipinterests, such opinionsn:ay be expensrveto prepare,aud the relativecosts and benefitsshould be weiglredprior to requestingor renderingthe opinion, SeeGI-AZER $ 19.5. Unlike corporatcstock that is createdpursuant to statuleand corporate charler,menrbership interests in an LLC arsconh'actual obligations of theLLC crealedin the limitedliability company opemtingagreement or by the defaultrules of the applicableLLC stanrte-ld at n.4. An opinionon tlre validity of membershipintcrcsts in an LLC coversboth statecontract law and the applicableLLC stanrE. Il an opinion is lenderedregardiug membership intercsts in an LLC, the opiruongiver shouldconsider pelforming drre diligence that confirnrs(i) complctionof the procedrualrequirements puusuanl to both the LLC stahrteand the conh'achral provrsions of thc lirnitedliability companyoperating agrecment, (ii) that the righls,powels, alrd drrticsprovidcd in tlrc limitcd liability companyoperating agreernjnt are permincdby the LLC statuteand thc lirnited liabiliry conlpany opcrating agreement,and (iii) that any considemtionrequired to bc paid for the LLC membcrshipinterest to be issuedwas either receivedby tbe LLC, or thal suchreceipt was covercd hy an expressassrrmphon in the opinion. SeeGLAZER $ 19.5. Widr respectto LI-Cs formeclirr Delawarc,sce {i 6.0.9srrprn.

l5 activities directly related thereto, as set fbrth in an officer's certificale rendereclto us in connectionwith thisopinionl.o?

5. l'he Companyhas authoriz.edthe execution,delivery and performanceof the TransactionDocuments by all necessarycorporate flimited liability company] action and has dulyexecuted and delivered the Transaction Documents.ul

6, The TransactionDocuments constitutc the legal,valid and bincJingobligation of the Company,enforceable against the Companyin accordarcewith their respectiveterrns.e 'fhe 7. executionand deliveryby the Cornpanyof the TransactionDocuments and the perfonnanceby the Companyof its obligationstherein (a) do not violate the articlcs of incorporation[articles of organization]or bylaws [opcratingagreementl of the Company,(b) do nol breachor result in a defaultunder any Other Agreement,and (c) do not violate the terms of any Coun Order. For purposeshereof, (I) the term "Olher Agreement"means any of those agreementslisted on [the disclosureschedule to the Agreement][anofficer's certificaterendcrcd to us in connectionwith this opinion] and (II) the term "Court Order" nleansany judieial or administrativejudgment, order, decreeor arbitral decision that names the Cornpanyand is specificallydirected to it or its propertiesand that is listedon [the disclosureschedule to the Agreernent][an officer's certificaterendered to us in connectionwith this opinion].oj

L Thc executionand deliveryby the Companyof thc TransactionDocuments, and performanceby the Companyof its obligationstherein, do not violate applicableprovisions of statutorylaw.s or regulations.o6

9. No consent,approval, authorizationor other action by, or filing with, any governmentalauthority of the United State.sor the Stateof North Carolinais requiredfor the Company'sexecution and deliveryof the TransactionDocuments and consummationof the Transaction[except . .,].ot

The opinions expressedabove are subjectto the following assumptions,qualifications and limitations:nE

nt 5'"" 5 E 0 of 20M Report. t' 5'", g 8.1of 2004Repon- * Seeg 10.0of 2004Rcport. a5 Seegll of2004Report. oo See$ 12 of Z}O|Report. o' S"e $ 13.0of 200aReport. u8 See$$ 10,1,10.2, 10.3 and 10.4 of 2004 Reporl

16 (a) This opinion is subject to the effcct of applicablcbankluptcy, insolvency, reorganization, fraudulent conveyance, nroratorium and sirnilar laws affecting the enforccmerrtof creditors'rights generally.

(b) This opinion is subjectto the effect of gcneralprinciples of equity (regardlessof whetherconsidered in a proceedingin equityor at law), which may, amongother things, denyrights of specilicperformance.

[Include thefollowing ns appropriate:Jae

In renderingour opinion that the Company "is a corporation'"["is a lirnited liability company"]and "is in existence,"we haverelied solely Lrpona Cerlificate of Existenceregarding the Companyfrom the North CarolinaSecretary of State dated

We do not expressany opinion as to the enforceabilityof any provisions containedin the TransactionDoctunents that (i) pruport to excusea party for liability for its own acts,(ii) purport to makevoid any act done in contravention thcreof,(iii) purportto authorizeapafty to actin its solediscretion orprovide that detcrminationby a partyis conclusive,(iv) requirewaivers or arnendmentsto be madeonly in writing, (v) purport to effect waiversof constitutional,statutory or equitable rights or the effect of applicable laws, or (vi) impose liquidated damages,penalties or forfeitureor that limit or alter laws requiringmitigation of damages.

We do not expressany opinion as to the enforceabilityof provisionsof the TransactionDocuments concerning choice of forum or consentto thejurisdiction of courts,venue of actionsor nleansof serviceof process.

We do not expressany opinion as to the enforceabilityof provisions of the TransactionDocurnents purporting to waivethe right ofjury trial.

We do not expressany opinion as to the enforceabilityof provisions of the TransactionDocuments purporting to reconstitutethe tcmrs thereofas necessary to avoida claim or defenseof usury.

We do not cxprcss any opinion as to the enforceabilityof provisionsof the TransactionDocurnents puqporting to requirea party theretoto pay or reimburse attorneys'fees incurred by anotherparty, or to indemnify anotherparty therefor, which provisionsmay be lirnited by applicablestatutes and dccisionsrclating to thecollection and award of attomeys'fees.

o" 5"" $ 10.2 of 2004 Report, Thc tlrst paragraphshows how severalexccptions may be conrbincdinto a single sentercein the opinion. 50 .SeeE 6.0 of 2004Repolt (Due Diligencetl b).

l7 We do rlot expressany opinion as to the enforceabilityof provisionsof tlre TransactionDocuments providing for arbttrahon.

We do rrotexpress any opinionas to thc cnforceabilityof provisionsrelating to evidentiarystandards or otherstandards by which the TransactionDocrrments are to be construed.

Enforcementof the Guaratty may be limited by the provisionsof Chapler26 of the North Carolina Gcneral Statutes,and we expressno opinion as to the effectivenessof any waiver by any Guarantorof his or her rights under that Chapter.

We do not expressany opinion as to the enforceabilityof provisionsprohibiting (i) cornpetition,(ii) the solicitationor acccptanceof customers,of business relationshipsor of employees,(iii) the use or disclosureof infomration,or (iv) activitiesin restraintof trade.

We do not express any opinion as to the enforceability of provisions that enumeratedremedies are not exclusiveor that a parly has the right to pursuc nrultipleremedies without regard to otherrenredies elected or thatall remediesare cumulative.

We do not expressany opinion asto the enforceabilityof severabilityprovisions.

We do not expressany opinion as to the enforceabilityof provisionspermitting lhe excrcisc,under certaincircumstances, of rights without notice or without providingopportunity to cure failuresto perfonn.

We do not expressary opiniorras to theenforceability of provisionsthat purport to createrights of setoff otherwisethan in accordancewith applicablelaw.

Certainof the remediesprovided under the terms of the TransactiorrDocuments rnay be lrrrtherlimited or renderedunenforceable by applicablelaw, but in our opinion such law does not, subject to the other qualificationsand exceptions statedcisewhere in this opinion, makethe remediesafforded by the Transaction Documentsrnadequate for the practical realization of the principal benefits purportedto be providedthereby.5'

In additjon,we adviseyou thatwe do not representthc Companyin auy action,suit or proceedingnow pendingat law or in equity,or by or beforeany goverrrmentalinstnrmentality or agencyor arbitral body, or overtly threatenedin writing agarnstthc Companyby a potential

5r Seeg 10,4of2004 Reporl.

l8 claimant,that clrallengesthe validity or enforceabilityof, or seeksto cnjoin the performanceof, theTransaction Documents [except . , .].t'

This opinionietter is deliveredsolely for yourbenefit in connectionwith theTransaction and may not be usedor relied upon by any other personor for any other purposewithottt our prior written consentin eachinstance.5r Our opinionsexpressed herein are as of the datehereof, anclwe undertakeno obligation to adviseyou of any changesin applicablelaw or any other mattersthat may come to our attention after the date hereof that may affect our opinions cxprcssedherein.'o

Very tmly yotrs,

Signature of Opining Lawyer or Firm5s

5? See $ 140 of 2004 Report as rnodificd by the Supplement. In the event that the opiniorrgivel and its client conclrrdethat thc broadcrform of thc stalcmcntof no litigationis warranted,the following may be trsedl

In addition, we advise you that, to eur knowledge without any independentinvestigation (includingwithout limitation any searchof coult records,the frles of this firm or thc ltles of the Conrpany),there is no action,suit or procccdingnow pendingat Iaw or in eqtrity,or by or before any govet'luncntatinstrumentality or agency or arbitral body, or overtly threatenedin writing againstthe Companyby a potentialclaimant [,except as Ilisted on the

This opinion lettel is delivcredsolcly fol yorn benetit,and that of yortr successolsand permitted assigns,in connection with the Transaction and may not be used or relied r.rponby any othcr personor for any other purposewithout ou prior written consentin each instance

On the other hand"some opinion givers prefer to statewith more specificity the limitationson reliatrceinrplicrt 'lransaction under suc[ custorraryplactice in the context of a involving a syndicatedcredit facility by using tlte following statemerl:

At your request,we herebyconsent io rcliancchereon by any future assignecof yotu iltelesl in the loans under thc Agrcemcnt pursrunt to an assignmeutthat is made and consentedto in accordancewith tbe expressprovisions of Section[ ] of the Agreenrent,on tlre conditionand undcrstandingthat (i) this letter speaksonly as of the datehereof, (ii) we haveno responsibilityor obligationto updatethis lefter,to considerits applicabilityor corroctnessto any personother than its addressee(s),or to take into accountchanges in law, factsor any otherdevelopnreDts of which we may laler beconreaware, and (iii) any suchreliance by a futule assigncernust be actualand reasonableunder the circumstanccscxisting al the timc of assignnrent,including alry changesIn law, facts or any other developnrentsknown to or reasonablyknowable by the assigneeal such tlnte.

ir S-ec$ 2.1of 2004Rcport. tt .iee 5 2.9 af 2004Report.

t9 APPENDIX _ STAI'ENIENT OF CUSTOMARY PRACTTCE

Angustl, 2008

Statementon the Role of CustomaryPractice in the Preparationand Understandingof Third-PartyLegal Opinions At tlre closingof many businesstransactions, the lawyersfor one party deliver to the other party a legal opinion letter eoveringmatters the recipienthas askedthose lawyers to address, These opinion letters, also comnronly known as closing or third-party legal opinions, are preparedand understootlin accordancewith the customarypractice of lawyerswho regularly givethem and review them for clients. Customarypractice permits an opinion giver and an opinion recipient(directly or throughits counsel)to havecommon understandingsabout an opinion without spellingthcm out, The use of customarypractice does this in two principalways: l. It identifiesthe worlc (factualand legal) opinion givers are expectedto perfbrm to give opinions. Cnstomarypracticc rcflccts a realisticassessment of the natureand scope of the opinionsbeing given andthe difficrrlty and extentof the work requiredto sr-rpportthem. 2. It providesgtridance on how certainwords and phrasescommonJy used in opinions shouldbe understood.Customary practice may expandor limit the plain meaningof tlrose wordsand phrases, Dy providing content to abbreviatedopinion language,customary practice permits tlre omission ftom an opinion lctter of descriptionsof the proceduresthat the opinion giver has performedand of many definitions,assumptions, limitations, and exceptions.Thus, it reduces the nurnberof words neededto communicatecomplex thoughts. As a matter of customary practice,the explicit inclusionin an opinion letter of somebut not all of thesematters does not exclude otherscustomarily understood to apply. A departurefrom customarypractice is not implied andshould not be inferredunless the departureis clearin the opinionletter, The role of customarypractice in third-partylegal opinion practiceis well established.The AmericanLaw Institute'sRestatement (Third) of theLaw GoverningLawyerss6 statcs: In giving "closing"opiniorrs, lawycrs typically usc custornand practice to provide abbreviateclopinions that facilitate the closing. Such opinions rnay not recite certain assumptions,limitations, and standardsof diligeuce becausethey are understoodbetwccn counsel. The Restatementalso refers to customarypractice as an elementin detenniningthe "meaningof the opinionletter."

56 Tlre referencesto the Resratementin this statenrenl are to Sectious 51,52, and 95 of rhe Restatentent. The referencesalso include the following Coulncnts, Illustrations, and Notes to those sections: Sectiorr 51, Comment e; Section 52, Conrment b, Comrnent e, ilh,rstration 2; and Section 95, Reporler's Note lo Comnrent b, Reponer's Note ta Cornment c. The Restalemen! sometimes refers to "custom and practice." The Reslolement uses the phrascs "cuslonr and practice" and "custornry practice" to mean the same thrng.

20 The Restatementidentifies customary practicc as a sourceof the criteriafor deterrnining whetherthe opinion giver has satisfied its obligationsof conrpetenceand diligence. Under the Restatemenlthe "professionalcommunity whose practices and standards are relevant" in making that determinationis that of "lawyersundertaking simiiar matters." That professional communitymay vary basedon, amongother things, the subjectof the opinion andthe relevant jurisdiction. Tlre Rastntementtreats bar associationreports on opinionpractice as valuable sourscs of guidanceon custonlarypractice. Customary practice evolves to reflectchanges in law and practlce. Someclosing opinions refer to the applicationof cuslomarypractice. Othersdo not. Either way, cutstomarypractice applies.

**:k*:*

This Statement is upproved by thefollowing bar and lawyer groups: . Legal Opinions Conrnritteeof tlre Sectionof BusincssLaw of the American Bar Association

. Legal Opinions in Rcai EstateTransactions Committee of the Real Property, TrLrstald Estate Law Section of the American Bar Association . American College of CommercialFinanceLawyers . American College of Mortgage Attorneys o Attorneys Opinions Committee of the American Coliege of Real EstateLawyers . Businessand Finance Section of the Atlanta Bar Association . BusinessLaw Sectionof the Boston Bar Association o BusinessLaw Section of the California StateBar . Commercial Law Sectionof'the DelawareState Bar Association r Real & PersonalProperty Section of the Delaware State Bar Association r Corporate Law Committee of I.he Bar Association of the District of Columbia r BusinessLaw Section of T'heFlonda Bar o Reai Property, Probate and Trust Law Section of The Florida Bar r Real Properly and Financial Services Section of the Hawaii State Bar Association r BusinessLaw Section of the Maryland State Bar Association . Real Property Scction of the Maryland Statc Bar Association . StateBar of Michigan BusinessLaw Sect:on . TriBar Opinion Committee (consisting of mcmbers of (i) the Special Conrmittee on Legal Opinions in Commercial Transactions,New York County Lawycrs' Association; (ii) the Corporation Law Committee, The Association of the Bar of the City of New York, (iii)

21 the SpecialCommittee on LegalOpinions of the BusinessLaw Section,New York State Bar Association,and (iv) otherstate and local bar associations) . BusinessLaw Sectionof the North CarolinaBar Association . CorporationLaw Committeeof the Ohio StateBar Association o BusinessLaw Sectionof the OregonState Bar r BusinessLaw Sectionof the PenasylvaniaBar Association r BusinessLaw Sectionof the PhiladelphiaBar Association . Corporate,Banking and Securities Law Sectionof the SouthCarolina Bar r BusinessLaw Sectionof the StateBar of Texas r RealEstate, Probate and Trust Law Sectionof the StateBar of Texas r BusinessLaw Sectionof the WashingtonState Bar Association o BusinessLaw Sectionof theState Bar of Wisconsiu

22