asset acquisitions - Jackson Walker LLP

was some variation from agreement to agreement, the exceptions weresimilar to the exceptions that merger parties have been relying on for years–Tyson Foods does not seem to have resulted in an effort to narrow the list ofexceptions. In fact, the post-Tyson Foods agreements contained more ratherthan fewer carve-outs. The exceptions included the following:• Adverse effects resulting from compliance with the mergeragreement.• Adverse effects resulting from the announcement of the merger–subject to further exceptions for effects that would interfere withthe completion of the transaction or impact the enforceability of themerger agreement.• Declines in a company’s stock price or trading volume.• Adverse changes in the global economy, the U.S. economy or othereconomies in which a company operates.• Adverse changes in the industry in which the company operates–unless the change has a disproportionate impact on the company.• Changes attributable to GAAP.• Changes attributable to the impact of the merger agreement oncustomers, suppliers or employees.• Changes attributable to changes in legal, regulatory or businessconditions–unless they affect the company disproportionately.• Changes attributable to actions taken by the other party to fulfill itsobligations under the merger agreement.The agreements reviewed did not include other special outs thatmight be viewed as a response to Tyson Foods. Instead, they included thestandard list of conditions–for example, conditions requiring thatrepresentations and warranties remain true, that covenants be satisfied andthat regulatory hurdles be crossed.For a discussion of the advisability of including a separate “no material adversechange” condition in the acquisition agreement, see the Comment to Section 7.1 under thecaption “Desirability of Separate ‘No Material Adverse Change’ Condition.” For adiscussion of the implications of various methods of drafting a phrase such as “that mayresult in such a material adverse change” (which appears at the end of Section 3.15), see theintroductory Comment to Section 3 under the caption “Considerations When Drafting‘Adverse Effect’ Language in Representations.”The tragic events of September 11, 2001 have led to a focus on whether terrorism orwar are among the class risks encompassed by a no material adverse change provision. InWarren S. de Weid, The Impact of September 11 on M&A Transactions, 5 The M&A LawyerNo. 5 (Oct. 2001), the author concluded that in the few deals surveyed the general practice3148166v1- 90 -