You are Vice President of Acquisitions for Greensill Capital, LLC.Your chief executive officer asks you to evaluate a possible acquisition of a company known as Mayor Oscar's Meat Sellers, Inc.("MOMS").In performing due diligence on MOMS you learn the following:

A.MOMS' financial projections for the upcoming year are heavily based on a two hundred percent increase in the sale of pork sausage.MOMS has a contract with Healthy Hogs, L.P. under which MOMS agrees to purchase, and Healthy Hogs agrees to sell, "MOMS' annual requirements for pork products."Over the first five years of the contract term, MOMS has purchased an annual average of 25,000 pounds of pork products from Healthy Hogs. MOMS' manufacturing plan for the upcoming year calls for purchasing at least 100,000 pounds of pork products from Healthy Hogs.When you ask MOMS' CFO about the projected increase, she tells you "Don't worry about it; that's why we negotiated that contract with Healthy Hogs. They have to sell us whatever amount we need."

B.You learn that thirty percent of MOMS' annual revenue derives from its manufacture and sale of microwave ovens to Amana, Inc., which operates retail stores in all 50 states and sells the microwave ovens to consumers.You review correspondence from Amana advising MOMS of more than three dozen claims Amana has received asserting that consumers have been seriously injured as a result of electrical fires erupting in the microwave ovens manufactured by MOMS.MOMS' General counsel tells you not to worry about these claims because MOMS: (i) has recently changed the design of the electrical components of the microwave ovens at no additional cost in favor of a design which MOMS' engineers originally recommended but did not adopt at the urging of MOMS' marketing department; (ii) MOMS is not in privity with the consumers who purchased the microwave ovens; and (iii) Amana's sales order form with consumers disclaims all warranties and excludes any and all damages for personal injury.

C.You also learn that MOMS' manufacturing plant has been operating at fifty percent capacity because one of the pork processing machines has failed and needs to be replaced.This manufacturing machine was purchased over five years ago; the cost of repairing the machine is estimated to be $3,000,000.MOMS' General Counsel tells you "the good news is that when the machine broke down it didn't damage any other machinery or harm anyone."She expects that MOMS will be able to recoup most or all of the replacement costs and lost profits by bringing a claim for negligence and strict product liability against the manufacturer of the pork processing machine.

What is a brief memo to your CEO addressing the issues set forth above?