Risk Shifting Covenant
(Hell or High Water)

Summary

This Risk Shifting Covenant (Hell or High Water) clause obligates the buyer to propose or accept any settlement with the government in order to obtain required antitrust or other regulatory approvals. This clause includes practical guidance, drafting notes, and optional clauses. The hell-or-high-water clause typically requires the buyer to take all necessary actions as soon as practicable, and in any event prior to the drop dead date (or within a specified number of days before the drop dead date to give the parties time to arrange all of the closing logistics in advance of such date). In some cases, the parties may agree to extend the drop dead date to accommodate a longer regulatory process if all other conditions have been satisfied; this can be structured as an automatic extension or an extension made at the election of one or both parties. The overall scope of the "hell or high water" provision is typically heavily negotiated, and will ultimately depend on the relative negotiating power of the parties, factors specific to the parties and the transaction, and the likelihood of any such conditions or other requirements being imposed by the applicable antitrust or other regulatory authorities. The hell-or-high-water clause is quite seller-friendly and requires buyers to take any and all remedial actions that will resolve any antitrust issues. Risk shifting covenants that place limitations on the remedial actions to which buyers must agree are typically called capped divestiture obligations. For a clause addressing capped divestiture obligations, please see Risk Shifting Covenant (Capped Divestiture Obligation). For a more buyer friendly risk shifting covenant, please see the clause Risk Shifting Covenant (No Obligation to Make Divestitures). For more information on these clauses, see Antitrust Hell-or-High-Water Provisions. For a practice note with background on negotiating the antitrust provisions in a transaction agreement, including the risk shifting provisions, please see Transaction Agreements: Antitrust Issues. References to "the Company" refer to the target company, to "Seller" refer to the selling party, to "Parent" or "Buyer" refer to the acquiring party (depending on whether the transaction is structured as a reverse triangular merger or a straight acquisition), and to "the Agreement" refer to the principal agreement setting forth the details of the transaction; such terms should be conformed as appropriate to the terms otherwise being used to refer to such persons. This provision template uses the phrase "the transactions contemplated by this Agreement"– this can be replaced with the appropriate defined term (e.g., "the Transaction" or "the Merger") used to refer to the M&A transaction to which the principal agreement relates.