Go to Antitrust Unpacked Revised August 28, 2012 Sample Antitrust-Related Provisions in M&A Transactions This note collects a small sample of antitrust-related provisions, including risk-shifting provisions, that have been used in actual deals. Of course, every deal stands on its own, and the language that has been used in one deal may not be appropriate for another deal. Inclusion of a provision in this sample does not constitute an endorsement of the language. Rather, the sample is designed to give you a good idea of the types of provisions that parties in fact have used in dealing with antitrust process and risk in negotiated transactions. Dale Collins Index I. Definitions ........................................................................................................................................................ 3 a. Antitrust laws ............................................................................................................................................. 3 b. HSR Act ..................................................................................................................................................... 4 c. Governmental authority ............................................................................................................................. 4 d. Antitrust approvals ..................................................................................................................................... 4 II. Representations and Warranties ................................................................................................................... 5 a. Antitrust-related consents and approvals ................................................................................................... 5 III. Conditions Precedent ...................................................................................................................................... 6 a. HSR Act waiting period ............................................................................................................................. 6 b. HSR Act waiting period plus any voluntary commitment not to close ...................................................... 6 c. HSR “approval” ......................................................................................................................................... 6 d. All “antitrust approvals” ............................................................................................................................ 6 e. HSR Act and multinational regulatory approvals (with materiality proviso)............................................. 6 f. Condition precedent with agreed list of jurisdictions in exhibit to Agreement .......................................... 9 g. Condition precedent with list of jurisdictions to be negotiated ................................................................ 10 h. Detailed condition precedent—US/EU/Canada/other .............................................................................. 11 i. No law, order or injunction ...................................................................................................................... 11 j. No pending actions or litigation ............................................................................................................... 12 IV. General Efforts Covenants ........................................................................................................................... 15 V. Merger Control Filing Covenants ................................................................................................................ 16 a. Covenant to make HSR filings and comply with any second request ...................................................... 16 b. Covenant to make multinational filings ................................................................................................... 17 c. Pulling/refiling and timing agreements .................................................................................................... 19 d. Covenant on timing of second request compliance .................................................................................. 19 VI. Cooperation Covenants................................................................................................................................. 20 a. Detailed cooperation covenant ................................................................................................................. 20 b. Provision for the exchange of filings and submissions ............................................................................ 22 c. Seller cooperation in Purchaser filings .................................................................................................... 22 www.shearmanantitrust.com 1 Go to Antitrust Unpacked d. Buyer control of strategy and tactics........................................................................................................ 23 (i) Simple provision (Example 1) ...................................................................................................... 23 (ii) Simple provision (Example 2) ...................................................................................................... 23 (iii) Simple provision (Example 3) ...................................................................................................... 23 (iv) Expanded provision (with buyer control proviso) ........................................................................ 23 (v) Best efforts to cooperate but with buyer control ........................................................................... 24 (vi) Buyer control of appeals, consent decree negotiations, and general strategy ............................... 25 (vii) Buyer control (but with special consultation provisions for certain jurisdictions) ....................... 25 (viii) Buyer control (with litigation exception) ...................................................................................... 26 (ix) Mutual notice ................................................................................................................................ 26 e. Buyer ability to exclude seller from agency meetings ............................................................................. 26 f. Covenant to avoid actions that would increase antitrust risk ................................................................... 27 VII. Litigation Covenants..................................................................................................................................... 28 a. Simple covenants ..................................................................................................................................... 28 b. Detailed obligation (with reasonable best efforts defined) ...................................................................... 29 c. Obligation (with buyer control of strategy) ............................................................................................. 29 d. Buyer option to litigate ............................................................................................................................ 32 VIII.Risk-Shifting Covenants .............................................................................................................................. 32 a. No obligation to make divestitures proviso ............................................................................................. 32 b. Unconditional obligation to propose and accept settlements (“Hell or high water” obligation) .............. 33 c. Limitation of obligation to make divestitures .......................................................................................... 37 (i) Divestiture obligation capped by revenues (Example 1) .............................................................. 37 (ii) Divestiture obligation capped by revenues (Example 2) .............................................................. 37 (iii) Divestiture obligation limited to acquiring company’s assets and capped by revenues ............... 38 (iv) Divestiture obligation proviso capped by multiple criteria ........................................................... 39 (v) Divestiture obligation capped by revenues and material adverse impact) .................................... 39 (vi) Divestiture obligation capped by definition of “reasonable best efforts” ..................................... 41 (vii) Divestiture obligation capped by a named business plus other assets capped by revenue ............ 41 (viii) Divestiture obligation capped by materiality (Example 1) ........................................................... 42 (ix) Divestiture obligation capped by materiality (Example 2) ........................................................... 42 (x) Divestiture obligation capped by materiality (Example 3) ........................................................... 42 (xi) Divestiture obligation capped by materiality (Example 4) ........................................................... 43 (xii) Divestiture obligation capped by materiality (Example 5) ........................................................... 43 (xiii) Divestiture obligation capped by materiality (with carve-out for specified business) .................. 44 (xiv) Divestiture obligation capped by definition of MAC defined in a disclosure letter ..................... 45 (xv) Divestiture obligation capped by a “Substantial Detriment” ........................................................ 45 (xvi) No obligation to divest with carveouts (Example 1)..................................................................... 46 (xvii) No obligation to divest with carveouts (Example 2)..................................................................... 47 (xviii) Proviso excluding buyer’s assets from divestiture obligation ....................................................... 47 (xix) Divestiture obligation with protected business ............................................................................. 47 (xx) Divestiture obligation as provided in a draft consent decree ........................................................ 48 d. Buyer responsible for making settlement offers ...................................................................................... 48 e. Seller responsible for settlement negotiations .......................................................................................... 49 f. Timing for entering into consent settlement ............................................................................................ 49 (i) Delay to minimize scope of relief ................................................................................................. 49 IX. Antitrust Reverse Termination Fees ............................................................................................................ 50 a. Reverse termination fee for failure to obtain clearance ........................................................................... 50 b. Antitrust reverse termination fee with recoupment .................................................................................. 51 c. Antitrust reverse termination fee equal to transaction costs (with cap) ................................................... 52 www.shearmanantitrust.com 2 Go to Antitrust Unpacked X. “Take Or Pay” Provisions ............................................................................................................................ 52 a. “Take or pay” covenant ........................................................................................................................... 52 b. Business to be put in trust if clearance not obtained ................................................................................ 53 X. Termination Provisions................................................................................................................................. 54 a. Failure to close by End Date or due to final prohibition order ................................................................. 54 b. Termination if FTC has not acted ............................................................................................................ 55 c. Termination following prohibition of the transaction .............................................................................. 55 d. Extension if antitrust conditions have not been satisfied ......................................................................... 56 e. Accelerated termination .......................................................................................................................... 58 I. Definitions a. Antitrust laws (i) Includes non-U.S. competition laws (Example 1) the HSR Act, the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade Commission Act, as amended, and any other federal, state or foreign law, regulation or decree designed to prohibit, restrict or regulate actions for the purpose or effect of monopolization or restraint of trade (collectively “Antitrust Laws”), (ii) Includes non-U.S. competition laws (Example 2) For purposes of this Agreement, “Regulatory Law” means the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, and all other federal, state or foreign statutes, rules, regulations, orders, decrees, administrative and judicial doctrines and other Laws, including without limitation any antitrust, competition or trade regulation Laws, that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening competition through merger or acquisition. (iii) Separate definition for non-U.S. antitrust laws For purposes of this Agreement, (A) “Antitrust Law” means the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, Foreign Antitrust Laws and all other federal, state and foreign, if any, statutes, rules, regulations, Orders, decrees, administrative and judicial doctrines and other Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or lessening of competition through merger or acquisition and (B) “Foreign Antitrust Laws” means the applicable requirements of www.shearmanantitrust.com 3 Go to Antitrust Unpacked antitrust, competition or other similar Laws, rules, regulations and judicial doctrines of jurisdictions other than the United States. b. HSR Act (i) Example 1 “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. (ii) Example 2 “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder, and any successor to such statute, rules or regulations. c. Governmental authority (i) Example 1 “Governmental Authority” means any federal, national, foreign, supranational, state, provincial, county, local or other government, governmental, regulatory or administrative authority, agency, instrumentality or commission or any court, tribunal, or judicial or arbitral body of competent jurisdiction. (ii) Example 2 “Governmental Entity” means any state, nation or international body or governmental organization, whether federal, state, county, local or foreign, or multinational, including but not limited to any agency, authority, official or instrumentality of any such government or political subdivision or any court, tribunal or arbitrator(s) of competent jurisdiction[, self- regulatory organization] or any statutory authority. d. Antitrust approvals “Antitrust Approvals” shall mean the expiration or termination of any waiting period under the HSR Act and the applicable merger control Laws of Austria, Germany, Ukraine, and such other jurisdictions as Buyer Parent reasonably determines are required in connection with the consummation of the Transactions. www.shearmanantitrust.com 4 Go to Antitrust Unpacked II. Representations and Warranties a. Antitrust-related consents and approvals (i) U.S. and non-U.S. merger control requirements (with materiality out) (Example 1) (b) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company and the consummation of the Merger will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except (i) for applicable requirements, if any, of Blue Sky Laws, any filings required to be made with the SIX, the premerger notification requirements of the HSR Act, the requirements of the EU Merger Regulation or other applicable foreign, federal, state or supranational antitrust, competition, fair trade or similar Laws and the filing and recordation of the Certificate of Merger as required by the DGCL, and (ii) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not have a Company Material Adverse Effect. (ii) U.S. and non-U.S. merger control requirements (with materiality out) (Example 2) Other than in connection with or in compliance with (i) the provisions of the DGCL, (ii) the Exchange Act, (iii) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the “HSR Act”), (iv) any applicable requirements under Council Regulation (EC) No. 139/2004 of 20 January 2004 on the control of concentrations between undertakings (published in the Official Journal of the European Union on January 29, 2004 at L 24/1) (the “EC Merger Regulation”), (v) any applicable requirements of Laws in other foreign jurisdictions governing antitrust or merger control matters, and (vi) the approvals set forth on Section 3.3(b) of the Disclosure Schedule (collectively, the “Company Approvals”), no authorization, consent or approval of, or filing with, any United States or foreign governmental or regulatory agency, national securities exchange, commission, court, body, entity or authority (each, a “Governmental Entity”) is necessary, under applicable Law, for the consummation by the Company of the transactions contemplated by this Agreement, except for such authorizations, consents, approvals or filings (x) that, if not obtained or made, would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect or (y) as may arise in connection with the Financing or as a result of facts, circumstances relating to Parent or its affiliates (as defined in Section 8.13(a)) or Laws or contracts binding on Parent or its affiliates. www.shearmanantitrust.com 5 Go to Antitrust Unpacked III. Conditions Precedent a. HSR Act waiting period Governmental Approvals. Any waiting period (and any extensions thereof) under the HSR Act shall have expired or have been terminated; b. HSR Act waiting period plus any voluntary commitment not to close The waiting period applicable to the consummation of the Merger under the HSR Act shall have expired or been terminated, and there shall not be in effect any voluntary agreement between Parent or the Company and the Federal Trade Commission or the Department of Justice pursuant to which Parent or the Company has agreed not to consummate the Merger for any period of time. c. HSR “approval” HSR Approval Condition. The HSR Approval shall have been obtained and shall remain in full force and effect (the “HSR Approval Condition”). “HSR Approval” means the expiration or early termination of the applicable waiting periods required pursuant to the HSR Act;[1] d. All “antitrust approvals” (b) Antitrust Approvals. All Antitrust Approvals shall have been made or obtained, as the case may be. “Antitrust Approvals” shall mean the expiration or termination of any waiting period under the HSR Act and the applicable merger control Laws of Austria, Germany, Ukraine, and such other jurisdictions as Buyer Parent reasonably determines are required in connection with the consummation of the Transactions. e. HSR Act and multinational regulatory approvals (with materiality proviso) (i) Example 1 HSR Act. All applicable waiting periods (and any extensions thereof) under the HSR Act and under any similar foreign statutes and regulations applicable to the Merger shall have [1] This definition can easily be modified to compass more than the expiration or termination of the applicable waiting period under the HSR Act. www.shearmanantitrust.com 6 Go to Antitrust Unpacked expired, terminated or where applicable, approvals have been obtained (except where the failure of which to expire, terminate or be obtained would not reasonably be expected to, individually or in the aggregate, materially and adversely affect the Company and Parent, taken as a whole, or would not reasonably be expected to result in criminal liability); (ii) Example 2 Antitrust Waiting Periods. (i) Any waiting period (and any extensions thereof) applicable to consummation of the Merger under the HSR Act and, to the extent material, under any foreign antitrust, competition or pre-merger notification law shall have expired or been terminated, and (ii) all other material foreign antitrust, competition, trade, pre-merger notification or other regulatory approvals as may be required to consummate the Merger shall have been made or obtained, as applicable. (iii) Example 3 (i) Any applicable waiting period under the HSR Act shall have expired or been earlier terminated, (ii) the European Commission shall have issued a decision under the EC Merger Regulation declaring the Merger compatible with the common market, and (iii) all applicable waiting and other time periods under other applicable foreign, federal antitrust, competition or fair trade Laws or applicable Laws, other than the HSR Act and the EC Merger Regulation, shall have expired, lapsed or been terminated (as appropriate) and all regulatory clearances in any relevant jurisdiction shall have been obtained, in each case, in respect of the Merger unless otherwise waived by Parent (the “Foreign Antitrust Condition”); provided, however, that with respect to the Foreign Antitrust Condition, the failure of such condition shall not relieve either Parent or Merger Sub of its obligation to consummate the Merger unless consummation of the Merger without obtaining any of the regulatory clearances referred to in this subclause (iii) would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. (iv) Example 4 (d) Regulatory Approvals. (i) any applicable waiting period under the HSR Act shall have expired or been terminated; (ii) the European Commission shall have taken a decision (or been deemed to have taken a decision) under Article 6(1)(b) or, if the European Commission has initiated proceedings pursuant to Article 6(1)(c), under Article 8 of the EC Merger Regulation, declaring the Merger compatible with the common market or any national competition authority of any European Union member state with jurisdiction shall have taken a decisions clearing or approving the transaction under any applicable antitrust, competition or fair trade Laws of any European Union member state or any applicable waiting period under such Laws shall have expired, lapsed or been terminated; and (iii) all www.shearmanantitrust.com 7 Go to Antitrust Unpacked applicable waiting and other time periods under other applicable foreign, federal or state antitrust, competition or fair trade Laws or applicable Laws having expired, lapsed or been terminated (as appropriate) and all regulatory clearances in any relevant jurisdiction having been obtained, in each case, in respect of the Merger unless otherwise waived by Purchaser (the “Foreign Antitrust Condition”); provided, however, that with respect to the Foreign Antitrust Condition, the failure of such condition shall not relieve either Parent or Purchaser of its obligation to consummate the Merger if the failure of a waiting period to expire or be terminated or the failure to obtain any required approval would not reasonably be expected to result in material limitations on the operation by Parent of the assets of Parent, its subsidiaries or the Company or its subsidiaries or the failure of a waiting period to expire or be terminated or the failure to obtain any required approval would not subject Parent or Purchaser to the payment of a material fine or penalty. (v) Example 5 (with provision for timing agreement with DOJ) (i) Any applicable waiting period under the HSR Act, Mexico’s Federal Law on Economic Competition, or imposed by any agreement with the Antitrust Division of the U.S. Department of Justice shall have expired or been earlier terminated, and (ii) all applicable waiting and other time periods under other applicable state or foreign antitrust, competition or fair trade Laws or applicable Laws, other than those referred to in the foregoing clause (i), shall have expired, lapsed or been terminated (as appropriate) and all regulatory clearances in any relevant jurisdiction shall have been obtained, in each case, in respect of the Merger unless otherwise waived by Parent; provided that with respect to the condition set forth in this clause (ii), the failure of such condition shall not relieve either Parent or Purchaser of its obligation to consummate the Merger unless consummation of the Merger without obtaining any of the regulatory clearances referred to in this clause (ii) would reasonably be expected to have, individually or in the aggregate, a Regulatory Material Adverse Effect or result in criminal liability for any officer or director of Parent, the Company or any of their respective Subsidiaries. (vi) Example 6 (with provision for referral to EU Member States) (a) Regulatory Consents. (i) The waiting period (and any extensions thereof) applicable to the consummation of the Transaction under the HSR Act shall have expired or been earlier terminated; (ii) all Governmental Consents required to be obtained from the FCC for the consummation of the Transaction shall have been obtained; and (iii) the European Commission shall have adopted a decision pursuant to the EC Merger Regulation declaring that the Transaction is compatible with the common market (or such compatibility shall have been deemed to exist under Article 10(6) of the EC Merger Regulation), or, in the event that that the European Commission adopts a decision pursuant to Article 9(3)(b) of the EC Merger Regulation (or is deemed to have done so pursuant to Article 9(5) of the EC www.shearmanantitrust.com 8 Go to Antitrust Unpacked Merger Regulation) referring the review of all or part of the Transaction to a Governmental Entity of a member state of the European Union, such Governmental Entity (or any other Governmental Entity of such member state) shall have granted approval of the transactions or part thereof that were so referred. f. Condition precedent with agreed list of jurisdictions in exhibit to Agreement (i) Specified list (Example 1) Antitrust Consents. (i) Any applicable waiting period under the HSR Act shall have expired or been earlier terminated and (ii) any affirmative approval of a Governmental Authority required under any other Antitrust Law set forth in Section 8.01(b) of the Company Disclosure Schedule shall have been obtained or deemed to have been obtained under such applicable Antitrust Law. (ii) Specified list (Example 2) (d) Regulatory Approvals/HSR Act. (i) All waiting periods (and extensions thereof) applicable to the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements under the HSR Act and any other applicable Antitrust Laws, as set forth on Schedule 9.1(d), shall have expired or been terminated, and (ii) the clearances, approvals and consents required to be obtained under applicable Antitrust Laws to permit the Parties to consummate the transactions contemplated by this Agreement and the Ancillary Agreements, as set forth on Schedule 9.1(d), shall have been obtained ((i) and (ii) together, the “Antitrust Approvals”). (iii) Specified list (Example 3) (c) No Order. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law or Order, whether temporary, preliminary or permanent, which is then in effect and has the effect of enjoining, restraining, prohibiting or otherwise preventing the consummation of the Transactions (collectively, a “Restraint”); provided, however, that any antitrust, competition, fair trade or similar Law or Order (whether temporary, preliminary or permanent) which has such an effect shall constitute a “Restraint” only if it arises in the United States, the European Union or a jurisdiction specified in Section 8.01(d) of the Company Disclosure Schedule. (d) Regulatory Approvals. (i) Any waiting period (and any extension thereof) applicable to the consummation of the Merger under the HSR Act shall have expired or been terminated; (ii) the approval of the European Commission of the Transactions shall have been obtained pursuant to the EU Merger Regulation (or the approval by those national competition authorities in the European Union that have jurisdiction as a result of a referral www.shearmanantitrust.com 9 Go to Antitrust Unpacked of the Transactions under the EU Merger Regulation); and (iii) any approval or waiting period with respect to those jurisdictions set forth in Section 8.01(d) of the Company Disclosure Schedule shall have been obtained or terminated or shall have expired. (iv) Specified list (Example 4) (c) Antitrust Laws. (i) All applicable waiting periods under (A) the HSR Act, and (B) the German Act Against Restraints of Competition (Gesetz gegen Wettbewerbsbeschrankungen),with respect to the transactions contemplated by this Agreement shall have expired or been terminated. (ii) All applicable approvals and authorizations under the Spanish Defense of Competition Law (Ley 15/2007, de 3 de julio, de Defensa de la Competencia) with respect to the transactions contemplated by this Agreement shall have been obtained (whether implicitly through the expiration of any waiting periods or explicitly by resolution). (v) Specified list with additional material jurisdictions (c) Antitrust Laws; Consents and Approvals. Unless the Offer Closing shall have occurred, (i) all applicable waiting periods under the HSR Act with respect to the Merger shall have expired or been terminated, (ii) all consents required under any other Antitrust Law of the jurisdictions set forth on Section 6.01(c) of the Company Disclosure Letter shall have been obtained or any applicable waiting period thereunder shall have expired or been terminated, (iii) all other consents, approvals and authorizations of any Governmental Entity required of Parent, the Company or any of their Subsidiaries to consummate the Merger, the failure of which to be obtained, individually or in the aggregate, would have a Parent Material Adverse Effect or a Material Adverse Effect, shall have been obtained and shall be in full force and effect and (iv) the conditions of any agreement entered into by any Party with any Governmental Entity the effect of which is to prohibit the Merger pending the completion of the Governmental Entity’s review or investigation of the Merger shall have been satisfied or waived in accordance with the terms thereof. g. Condition precedent with list of jurisdictions to be negotiated (c) Antitrust Laws. Any applicable waiting period (or extension thereof) under the HSR Act and any other applicable Antitrust Law that, within fifteen (15) days following the date of this Agreement, the parties identify and agree is applicable to the Merger shall have expired or been terminated and the European Commission shall have issued a decision under the EC Merger Regulation declaring the Merger compatible with the common www.shearmanantitrust.com 10