Risk Shifting Covenant
(No Obligation to Make Divestitures)

Summary

This Risk Shifting Covenant (No Obligation to Make Divestitures) clause expressly provides that the buyer will not have to take various actions requested by antitrust authorities or other regulators in order to obtain any required antitrust or other regulatory approvals. This template includes practical guidance and drafting notes. This clause is considered the most buyer friendly of all the possible risk shifting covenants.For the most seller-friendly clause, requiring the buyer to take any all actions to obtain such approvals, see the clause Risk Shifting Covenant (Hell or High Water). For a clause that obligates the buyer to take any and all actions up to a given cap, see the clause Risk Shifting Covenant (Capped Divestiture Obligation). 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. The template provision 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.