asset acquisitions - Jackson Walker LLP

7.6 NO CONFLICTNeither the consummation nor the performance of any of the Contemplated Transactionswill, directly or indirectly (with or without notice or lapse of time), contravene, or conflict with, orresult in a violation of, or cause Buyer or any Related Person of Buyer to suffer any adverseconsequence under, (a) any applicable Legal Requirement or Order, or (b) any Legal Requirement orOrder that has been published, introduced, or otherwise proposed by or before any GovernmentalBody, excluding Bulk Sales Laws.COMMENTSection 7.6 allows the Buyer to terminate the acquisition if the Buyer or any relatedperson would violate any law, regulation, or other legal requirement as a result of theacquisition. This Section supplements the Seller’s “no conflict” representation in Section3.2(b)(ii) and the Seller’s “compliance with legal requirements” representation in Section3.18(a), both of which operate as closing conditions pursuant to Section 7.1(a). However,unlike the representations in Sections 3.2(b)(ii) and 3.18(a) (which focus exclusively on legalrequirements applicable to the Seller), Section 7.6 focuses on legal requirements applicableto the Buyer and its Related Persons. For example, environmental agencies in some states,e.g., New Jersey, have the ability to void a sale if no clean-up plan or “negative declaration”has been filed, and because there are significant fines for failure to comply with theseregulations, a buyer should identify such regulations, or if any are applicable in the state inwhich the agreement is to be performed, require that their compliance (including the Seller’scooperation with such compliance) be a condition to the Closing, and the requirement for theSeller’s cooperation should be inserted as a covenant (Article 5) or a representation andwarranty of the Seller (Article 3).Section 7.6 refers to proposed legal requirements as well as to those already ineffect. Thus, if legislation is proposed that would prohibit or impose material restrictions onthe Buyer’s control or ownership of the Assets, the Buyer will be able to terminate theacquisition, even though the proposed legislation might never become law. A seller mayseek to limit the scope of Section 7.6 to legal requirements that are in effect on the scheduledclosing date, and to material violations and material adverse consequences.The Buyer may exercise its “walk right” under Section 7.6 if the acquisition wouldcause it to “suffer any adverse consequence” under any applicable law, even though theremight be no actual “violation” of the law in question. Thus, for example, the Buyer wouldbe permitted to terminate the acquisition under Section 7.6 because of the enactment of astatute prohibiting the Buyer from using or operating the Assets in substantially the samemanner as they had been used and operated prior to the closing by the Seller, even though thestatute in question might not actually impose an outright prohibition on using or operatingthe Assets or any of them.Section 7.6 does not allow the Buyer to terminate the acquisition merely because ofan adverse change in the general regulatory climate in which the Seller operates. The Buyercannot terminate the acquisition under Section 7.6 unless the acquisition itself (or one of theother Contemplated Transactions) would trigger a violation or an adverse consequenceunder an applicable or proposed legal requirement.3148166v1- 135 -