Disclosure Schedule Updates Clause
(Acquisition Agreement)

Summary

This clause, intended for inclusion in an acquisition agreement, permits a target company to update its disclosure schedules and specifies the impact that such updates will have on closing conditions and indemnification obligations included in other parts of the agreement. This clause includes practical guidance and drafting notes. In acquisition transactions where signing and closing are not simultaneous, the parties will often provide a mechanism by which the seller (and, where applicable, the buyer) is obligated to update its disclosure schedules during the period between signing the acquisition agreement and the closing. Updates to the disclosure schedules may be necessary for the seller to comply with the condition to the buyer's obligation to close the transaction that the representations and warranties contained in the acquisition agreement be true and correct (or true and correct in all material respects) as of the closing date. From the buyer's perspective, however, unlimited updates to disclosure schedules can result in the buyer being required to assume liabilities at the closing that it did not anticipate at the time of the signing of the agreement. It is important that the language in this provision dovetail with the language in the seller's pre-closing covenant regarding the accuracy of its representations and warranties and the corresponding bring-down certificate to be delivered on the closing date. In addition, this provision, including the definitions and cross-references, should be adapted to conform with the balance of the agreement. Click here to see recent examples of provisions requiring disclosure schedule updates in publicly filed acquisition agreements in Market Standards, the Practical Guidance database of publicly filed M&A deals that enables users to search, compare, and analyze transactions using 150+ deal points to filter search results. For a full listing of M&A transaction content, see Asset Acquisition Resource Kit, Stock Acquisition Resource Kit, Private Merger Transaction Resource Kit, Public Merger Transaction Resource Kit, and M&A Provisions Resource Kit. For further discussion of disclosure schedules in acquisition agreements, see Disclosure Schedules: Preparation and Review, Key Drafting Considerations for Disclosure Schedules (Chart), and Disclosure Schedules for Private M&A Deals Video. For disclosure schedule templates, see Disclosure Schedule to Asset Purchase Agreement and Disclosure Schedules for M&A Transactions.