Governing Law Clause
(Xerox Provisions, Acquisition Agreement)

Summary

This governing law clause for an acquisition agreement is among the lender-protective Xerox Provisions in a typical acquisition financing. This clause includes practical guidance and drafting notes. Since the aftermath of the 2008 financial crisis, commitment parties generally require lender-protective provisions to be expressly included in acquisition agreements for which they provide a debt financing commitment. These provisions are customarily referred to as "Xerox Provisions," which were introduced in a 2009 merger agreement involving Xerox Corporation and Affiliated Computer Services, Inc. Xerox Provisions often require: 1) exclusive New York or Delaware forum for disputes under the acquisition agreement, 2) New York forum for disputes relating to the debt financing commitment, and 3) provisions giving the commitment parties (and their affiliates and representatives) the benefit, usually as third party beneficiaries, of the waiver of jury trial, limitation on damages (if any) and waiver of claims not based in contract against the commitment parties. Some acquisition agreements may further expressly provide that commitment parties will have no liability to the parties to the merger agreement and that such parties will not bring any claim or cause of action against the commitment parties (other than claims brought by the counterparty to the applicable commitment letter and solely to the extent of claims arising under the commitment letter). The capitalized terms used in this sample provision should be conformed to the defined terms in the relevant agreement. Note that Xerox Provisions can take several different forms. This example is provided to give a better understanding of one facet of typical Xerox Provisions. For the other clauses that constitute the Xerox Provisions, see Amendment Prohibition Clause (Xerox Provisions, Acquisition Agreement), Forum Selection Clause (Xerox Provisions, Acquisition Agreement), Jury Trial Waiver Clause (Xerox Provisions, Acquisition Agreement), Liability Limitation Clause (Xerox Provisions, Acquisition Agreement), and Third-Party Beneficiaries Clause (Xerox Provisions, Acquisition Agreement). For more guidance on Xerox Provisions, see Acquisition Financing Fundamentals, Conditions Precedent (Commitment Letters), Financing Conditions, and Acquisition Financing Resource Kit. For a full listing of key content covering finance fundamentals, see Finance Fundamentals Resource Kit.