Reps and Warranties
(HSR Size-of-Person Test Not Met)

Summary

These Reps and Warranties (HSR Size-of-Person Test Not Met) clauses provide representations that buyer or seller (or both) does not meet the HSR Act's size-of-person test, and therefore no HSR filing is required. These clauses include practical guidance, drafting notes, and an alternate clause. Note that the HSR thresholds are adjusted annually (early in the year) based on changes to the gross national product. The thresholds used in this clause reference the unadjusted statutory amounts. For the current HSR thresholds, see the Current HSR Thresholds Chart. The size-of-person test is relevant only for transactions valued at between $50 million and $200 million, as adjusted annually. Transactions valued at less than $50 million, as adjusted annually, are not HSR reportable regardless of the parties' sizes and transactions valued at more than $200 million, as adjusted annually, are HSR reportable (assuming no exemption applies) regardless of the parties' sizes. The size-of-person test is met if the ultimate parent entity of one party (including all entities it controls) had total assets or annual net sales of $100 million or more, as adjusted annually, and the ultimate parent entity of other party (including all entities it controls) had total assets or annual net sales of $10 million or more, as adjusted annually. If one party is below the lower threshold ($10 million, as adjusted annually), the size-of-person test will not be met. If neither party is below the lower threshold, but both parties are below the higher threshold, the size-of-person test will not be met. Therefore, either one party will have to give a representation that they are below the lower threshold, or both will have to give a representation that they are below the higher threshold. References to "the Company" refer to the target company, to "Seller" refer to the selling party, to "Parent" or "Buyer" refer to the acquiring party. For a practice note with background on the negotiation of antitrust provisions in transaction agreements, please see Transaction Agreements: Antitrust Issues. For a practice note on whether a transaction will be subject to the reporting and waiting period obligations of the HSR Act, please see Reportability of a Merger or Acquisition under the Hart-Scott-Rodino (HSR) Act.