Divestiture clause: Copy, customize, and use instantly
Introduction
A divestiture clause outlines the terms under which a party may be required or allowed to sell, transfer, or dispose of certain assets or interests. This clause ensures that the divestiture process is clear, including the conditions for sale or transfer, timelines, and responsibilities. It is commonly used in mergers, acquisitions, and joint ventures to govern the divestiture of assets, subsidiaries, or equity interests.
Below are templates for divestiture clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Standard divestiture clause
This version provides the general framework for divestiture.
In the event that either Party is required or elects to divest any assets, equity interests, or subsidiaries during the term of this Agreement, such divestiture shall be completed in accordance with the terms and conditions outlined in this Agreement, and the divesting Party shall notify the other Party in writing of the divestiture and provide relevant details regarding the transfer of assets.
Divestiture clause with right of first refusal
This version gives the other party the right of first refusal.
If either Party intends to divest any assets, equity interests, or subsidiaries, the other Party shall have a right of first refusal to purchase such assets at the price and terms offered by a third party, subject to the procedures set forth in Section [X].
Divestiture clause with mandatory divestiture condition
This clause requires a mandatory divestiture under certain conditions.
In the event that [specific condition, e.g., antitrust concerns, regulatory approval] arises, the Parties agree that a mandatory divestiture of assets, equity interests, or subsidiaries shall occur within [X] days, and the affected Party shall take all necessary actions to comply with such divestiture requirement.
Divestiture clause with post-divestiture obligations
This version includes obligations after divestiture.
Upon the completion of any divestiture under this Agreement, the divesting Party agrees to fulfill all obligations arising from the divested assets or subsidiaries, including but not limited to [specific obligations, e.g., transition services, non-compete provisions] as outlined in Exhibit A.
Divestiture clause with timelines for completion
This version includes specific timelines for divestiture.
The Parties agree that any divestiture of assets, equity interests, or subsidiaries shall be completed within [X] months from the date the divestiture obligation is triggered, and the divesting Party shall take all necessary steps to ensure a smooth and timely transaction.
Divestiture clause with restrictions on future competition
This clause includes non-compete provisions following divestiture.
After the divestiture of assets, equity interests, or subsidiaries, the divesting Party agrees not to engage in any business activities that directly compete with the divested business for a period of [X] years in [specified geographic region].
Divestiture clause with indemnification provisions
This version includes indemnification for the divesting Party.
The Party divesting assets or equity interests agrees to indemnify and hold harmless the other Party against any claims, losses, or liabilities arising from the divestiture, including but not limited to the transfer of ownership, employees, or contracts related to the divested entity.
Divestiture clause with approval rights from the other Party
This version requires approval from the other Party before divestiture.
The divesting Party shall not proceed with the divestiture of any assets, equity interests, or subsidiaries without obtaining prior written consent from the other Party, which consent shall not be unreasonably withheld.
Divestiture clause with disclosure obligations
This clause includes disclosure requirements for the divesting Party.
The divesting Party agrees to disclose to the other Party all material information related to the assets, equity interests, or subsidiaries to be divested, including financial statements, liabilities, and potential risks, at least [X] days prior to completing the divestiture.
Divestiture clause with a right to acquire divested assets
This version grants a right to acquire the divested assets.
If the divesting Party elects to divest any assets, equity interests, or subsidiaries, the other Party shall have a right to acquire those assets on the same terms and conditions offered to a third party, subject to the procedures outlined in Section [X].
Divestiture clause with provision for divestiture of non-core assets
This clause requires divestiture of non-core assets.
The Parties agree that either Party may be required to divest non-core assets, including but not limited to [specific asset categories], within [X] months of the closing of this Agreement in order to focus on core business operations.
Divestiture clause with third-party approval requirement
This version requires third-party approval for divestiture.
Any divestiture of assets, equity interests, or subsidiaries by either Party is subject to the approval of [specific third party, e.g., regulatory authority, lender], and the divesting Party agrees to obtain such approval within [X] days of initiating the divestiture process.
Divestiture clause with fair market value assessment
This clause includes an assessment of the fair market value of the divested assets.
In the event of a divestiture, the Parties agree to obtain an independent fair market value assessment of the divested assets, and the divesting Party shall offer the assets for sale at the determined fair market value, subject to the approval of the other Party.
Divestiture clause with non-disclosure of sale terms
This version prevents disclosure of sale terms to third parties.
The Parties agree that the terms of any divestiture, including the sale price and specific conditions, shall remain confidential and not be disclosed to any third parties without prior written consent from both Parties, except as required by law.
Divestiture clause with continuing obligations post-divestiture
This clause includes obligations that continue after divestiture.
Following the divestiture, the divesting Party agrees to continue fulfilling certain obligations related to the divested assets, including [specific obligations, e.g., service agreements, warranty obligations] for a period of [X] months after the divestiture date.
Divestiture clause with provision for a structured sale process
This version outlines a structured process for sale.
The Parties agree that the divestiture of assets, equity interests, or subsidiaries shall follow a structured process, which includes [e.g., a competitive bidding process, appointment of a third-party broker], and all sale terms shall be negotiated in good faith between the Parties.
Divestiture clause with right to purchase back divested assets
This version includes the right to repurchase divested assets.
If the divesting Party wishes to repurchase any assets, equity interests, or subsidiaries within [X] years after the divestiture, the other Party agrees to sell such assets back at the original sale price or a mutually agreed-upon price.
Divestiture clause with compliance with regulatory requirements
This clause ensures compliance with regulatory requirements.
The Parties agree that any divestiture of assets, equity interests, or subsidiaries shall comply with all applicable local, state, or federal laws, including antitrust regulations, and any necessary filings or approvals must be completed before the divestiture is finalized.
Divestiture clause with restriction on divestiture of key assets
This version restricts the divestiture of key assets.
The divesting Party shall not divest any key assets, including but not limited to [list of key assets, e.g., intellectual property, patents], without the express prior written consent of the other Party, which shall not be unreasonably withheld.
Divestiture clause with option for the other Party to assume liabilities
This clause allows the other Party to assume liabilities during the divestiture.
In connection with any divestiture, the receiving Party may choose to assume certain liabilities associated with the divested assets, including but not limited to [specific liabilities], provided such assumption is agreed upon in writing by both Parties.
Divestiture clause with right to terminate in case of failed divestiture
This version includes the right to terminate the agreement if divestiture fails.
If the divestiture is not completed within [X] months from the initiation of the divestiture process, either Party may terminate this Agreement without penalty, and any unfulfilled obligations will be deemed void.
Divestiture clause with confidentiality of post-sale plans
This version includes confidentiality regarding post-sale plans.
The Parties agree that any post-sale business plans or strategies related to the divested assets, including future plans for the divested entity, shall remain confidential and shall not be disclosed to third parties without prior written consent.
Divestiture clause with requirement for divestiture in the event of an acquisition
This clause requires divestiture if an acquisition occurs.
In the event of an acquisition of [Party A] or [Party B], the acquiring Party shall be required to divest certain assets or subsidiaries, as determined by [Party A/Party B], to maintain compliance with regulatory requirements or business strategy.
Divestiture clause with a non-compete obligation for divested assets
This version includes a non-compete obligation for divested assets.
The Party divesting assets agrees not to engage in any competing business using the divested assets for a period of [X] years following the completion of the divestiture, within the market where the divested assets operated.
Divestiture clause with provision for sale to a third party
This clause allows for the divestiture to a third party.
In the event that either Party elects to divest any assets, equity interests, or subsidiaries, the other Party shall have the option to purchase such assets at a fair market value or as agreed upon before the sale to any third party.
Divestiture clause with requirement for prior consultation
This version includes a requirement for consultation before divestiture.
The Party intending to divest any assets, equity interests, or subsidiaries agrees to consult with the other Party and provide reasonable notice and relevant information before proceeding with the divestiture.
Divestiture clause with provision for cash sale or asset swap
This clause outlines options for the divestiture structure.
The divestiture of assets, equity interests, or subsidiaries may occur through a cash sale or an asset swap, as mutually agreed upon by the Parties. The structure of the divestiture shall be determined based on market conditions and the Parties’ respective interests.
Divestiture clause with provisions for operational transition
This version includes operational transition terms.
In connection with the divestiture of assets or subsidiaries, the divesting Party agrees to assist with the operational transition, including the transfer of employees, customer relationships, and ongoing contracts, for a period of [X] months post-divestiture.
Divestiture clause with a right of refusal for intellectual property
This clause includes intellectual property rights of refusal.
In the event of a divestiture, the divesting Party shall offer the other Party the right of first refusal to purchase any intellectual property, including patents, trademarks, and copyrights, related to the divested assets.
Divestiture clause with compliance with antitrust laws
This version ensures compliance with antitrust regulations.
Any divestiture of assets, equity interests, or subsidiaries must comply with applicable antitrust laws, and the Parties agree to take all necessary steps, including obtaining regulatory approval, to ensure that the divestiture does not result in anti-competitive effects.
Divestiture clause with provision for retention of key employees
This clause includes the retention of key employees post-divestiture.
The Parties agree that, as part of the divestiture, the divesting Party will retain certain key employees who are crucial for the ongoing operations of the divested business, and these employees shall be offered continued employment in accordance with the terms of the Agreement.
Divestiture clause with protections for ongoing contracts
This version ensures ongoing contracts are protected.
The divesting Party agrees to honor and assign any ongoing contracts associated with the divested assets or subsidiaries, ensuring that the divested entity maintains the rights and obligations under such contracts post-divestiture.
Divestiture clause with provision for dispute resolution
This clause includes dispute resolution for divestiture issues.
In the event of any dispute arising from the divestiture of assets or subsidiaries, the Parties agree to resolve such dispute through mediation or arbitration, as outlined in Section [X] of this Agreement.
Divestiture clause with conditions for post-divestiture support
This version includes post-divestiture support conditions.
Following the divestiture of any assets or subsidiaries, the divesting Party agrees to provide ongoing support to the purchasing Party for a period of [X] months, including assistance with integration, training, and operational setup.
Divestiture clause with provision for share buyback
This clause allows for the purchase of shares after divestiture.
The divesting Party agrees to provide the other Party with the right to repurchase any equity interests divested, at a price mutually agreed upon by the Parties, within [X] years of the divestiture.
Divestiture clause with requirement for divestiture of specific assets
This version specifies the assets to be divested.
The Parties agree that, in the event of a divestiture, certain assets, including but not limited to [list of specific assets], shall be divested in order to meet regulatory requirements or to streamline business operations.
Divestiture clause with restrictions on post-sale use of data
This version includes restrictions on the use of data after divestiture.
Following the divestiture of assets or subsidiaries, the receiving Party agrees not to use any customer data, trade secrets, or proprietary information obtained from the divested business for competitive purposes.
Divestiture clause with requirement to settle outstanding debts
This clause addresses settlement of debts related to the divestiture.
The divesting Party agrees to settle all outstanding debts, liabilities, or financial obligations related to the divested assets or subsidiaries prior to or as part of the divestiture process, ensuring that no encumbrances remain on the assets post-sale.
Divestiture clause with option to delay divestiture
This version allows for a delay in the divestiture process.
Either Party may delay the divestiture of assets, equity interests, or subsidiaries for up to [X] months if circumstances arise that prevent or impede the timely completion of the divestiture, with prior written notice to the other Party.
Divestiture clause with provision for financing assistance
This clause includes financing assistance for the divestiture.
In the event that the divesting Party is unable to finance the divestiture, the other Party agrees to provide reasonable financial assistance to facilitate the sale of assets, including but not limited to [specific forms of assistance].
Divestiture clause with exclusivity period for negotiations
This version includes an exclusivity period for negotiations.
Upon initiating the divestiture process, the Parties agree to an exclusivity period of [X] months during which neither Party will negotiate with third parties regarding the sale or transfer of the assets, equity interests, or subsidiaries.
Divestiture clause with termination of exclusivity upon sale
This clause terminates exclusivity once the sale occurs.
The exclusivity period outlined in Section [X] shall terminate automatically upon the completion of the divestiture, at which point both Parties may freely engage in discussions or negotiations with other potential buyers or partners.
Divestiture clause with agreement to indemnify against future claims
This version includes indemnification for future claims.
The divesting Party agrees to indemnify and hold the other Party harmless against any future claims, liabilities, or damages arising from the divested assets, including claims related to any actions taken by the divested entity after the sale.
Divestiture clause with provision for contingent sale terms
This version includes contingent terms for the sale.
The terms of the divestiture, including the sale price, shall be contingent upon [specific conditions, e.g., financial performance, regulatory approval], and the final sale agreement shall reflect any adjustments based on these conditions.
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