Allocation of Antitrust Risk in Mergers & Acquisitions

1 AllocationofAntitrustRiskinAllocation of Antitrust Risk in Mergers & AcquisitionsScottPPerlmanScott P. PerlmanPartnerMayer Brown LLP1 202263 3201+ 11, 2007 Mayer Brown LLPO verviewOverview Allocation of Antitrust risk is an issue that frequently arises between parties to Mergers or Acquisitions that raise potential Antitrust concerns This presentation: Describesthetypesofcontractualprovisions adoptedtoallocateDescribes the types of contractual provisions adopted to allocate Antitrust risk Identifies factors that determine the type of provision adopted in a particulartransactionparticular transaction Analyzes the implications of different types of Antitrust risk Allocation provisions for the parties dealings with the Antitrust enforcement agenciesagencies Addresses legal issues with respect to interpretation of these provisions and whether the parties can withhold these provisions from

2 Enforcement authoritiesbecausetheyarecoveredbythejoi ntdefenseor commonMayer Brown LLPauthorities because they are covered by the joint defense or common interest privilegeAntitrustRiskAllocationProvisio ns:PurposeAntitrust Risk Allocation Provisions: Purpose In the , Mergers and Acquisitions are reviewed at the federal level by either the Antitrust Division of the Department of Justice or the Federal TradeCommission(mergersmeetingcertaindol larthresholdsmustbeTrade Commission ( Mergers meeting certain dollar thresholds must be notified to these agencies under the Hart Scott Rodino Act))

3 Purpose of this review to determine whether the combination of two businessesthatcompetewithrespecttocertai nproductsorserviceswillbusinesses that compete with respect to certain products or services will enable the merged entity to exercise market power, , the power to raise prices above competitive levels or exclude competition Ifthereviewingagencydeterminesthetransac tionislikelytoresultinsuch If the reviewing agency determines the transaction is likely to result in such anticompetitive effects, it may oppose the transaction altogether, or condition approval on the parties agreeing to remedies such as divestitures of certain assets or businesses, or other restrictions on the merged business ( , require licensing of certain IP)(g,qg) Parties to a merger or acquisition for which there is a significant possibility that such divestitures or other remedies will be required typically include a provision in the merger agreement to allocate the risk of such remedies Mayer Brown LLPpggbetween themAntitrustRiskAllocationProvisions:Ty pesAntitrust Risk Allocation Provisions.

4 Types GenerallythePurchaserwantstominimizeitsc ontractualGenerally, the Purchaser wants to minimize its contractual obligations to make divestitures, hold businesses or assets separate pending divestiture, or agree to any other restrictions on the post merger business The Seller usually wants the Purchaser to do whatever is necessary to obtain Antitrust approval as quickly as possible so it can get its money, including agreeing to any divestitures or other restrictions y,gggyrequested by the reviewing agencyMayer Brown LLPA ntitrustRiskAllocationProvisions:TypesAn titrust Risk Allocation Provisions.

5 Types hell or high water Except to the extent otherwise provided in Section X, upon the terms and subject to the conditions of this Agreement, each of the parties hereto shall(i)makepromptlyitsrespectivefilings andthereaftermakeanyshall(i) make promptly its respective filings and thereafter make any other required submissions, under the HSR Act and any other Law with respect to this Agreement and the Mergers , if required, and (ii) use its reasonable efforts to take, or cause to be taken, all appropriate action, and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws to consummate and make effective the Mergers , and the other transactions contemplated by this Agreement, including using its reasonable efforts to obtain allPermits, consents, approvals, authorizations.

6 Qualifications and orders of Governmental AuthoritieswiththeCompanyandtheSubsidiar iesasarenecessaryforthewith the Company and the Subsidiaries as are necessary for the consummation of the transactions contemplated by this Agreementand to fulfill the conditions to the Mergers and the other transactions contemplated by this Agreement. Mayer Brown LLPA ntitrustRiskAllocationProvisions:TypesAn titrust Risk Allocation Provisions: Types Divestiture Obligation Limited by Material AdEff MAE Adverse Effect or MAE The Company and Parent shallcooperate with each other and.

7 Use .. pyp. their respective reasonable best efforts.. (ii) to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisableto be obtained from any .. Governmental Entityin order to satisfy the conditions in Article X and to consummatetheMerger;providedhoweverthatn otwithstandingconsummate the Merger .. ; provided, however,that, notwithstanding anything to the contrary in this Agreement, neither Parent nor any of its Subsidiaries shall be required to agree (with respect to (x) Parent or its Subsidiaries or (y) the Company or its Subsidiaries) to any divestitures, licenses, hold separate arrangements or similar matters in order to ,pgobtain approval of the transactions contemplated by this Agreement.

8 Under applicable Competition Laws if such divestitures, licenses, arrangements or matters would reasonably be expected to have amaterial adverse effect on the financial condition, assets and liabilities (takentogether)orbusinessofParentanditsS ubsidiariesandtheMayer Brown LLP(taken together) orbusiness of Parent and its Subsidiaries and the Company and its Subsidiaries on a combined basis. AntitrustRiskAllocationProvisions:TypesA ntitrust Risk Allocation Provisions: Types Divestiture up to certain dollar amount Parent and Seller shall, if required by one or more Governmental Entities acting pursuant to any applicable Antitrust , competition or similarlawstoobtainanoftheconsentscleara ncesappro alssimilar lawsto obtain any of the.

9 Consents, clearances, approvals .. or if required by a federal, state or foreign court, agree to the divestitureby Parent, Seller or any of their respective Subsidiaries of shares of capital stock or of any business, assets or property of Parent or its SubsidiariesorSelleroritsSubsidiariesand theimpositionofanySubsidiaries or Seller or its Subsidiaries and the imposition of any limitation on the ability of Parent or its Subsidiaries or Seller or its Subsidiaries to conduct their respective businesses or to own or exercise control of their respective assets.

10 Properties and stock(including licenses, hold separate agreements, covenants affecting bititiiiltt )ifhdi titdbusiness operating practices or similar matters) if such divestitures and limitations, individually or in the aggregate, would not be reasonably expected to result in the loss of annualized revenue of Parent and Seller on a combined consolidated basis of more than $225,000,000. Mayer Brown LLPA ntitrustRiskAllocationProvisions:TypesAn titrust Risk Allocation Provisions: Types Disclaimer of any obligation to agree to di iiidivestitures or restrictions Notwithstanding anything in this Agreement to the contrary, in no event willParentorSubbeobligatedtoproposeoragr eetoacceptanywill Parent or Sub be obligated to propose or agree to accept any undertaking or condition, to enter into any consent decree, to make any divestiture, to accept any operational restriction, or take any other action that, in the reasonable judgment of Parent.