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

Summary

These Reps and Warranties (HSR Size-of-transaction Test Not Met) clauses provide representations that the transaction does not meet the HSR size-of-transaction test, and therefore no HSR filing is required. These clauses contain practical guidance and drafting notes. 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-transaction test is met if the acquiring person will hold any combination of voting securities and assets of the acquired person with an aggregate value greater than $50 million, as adjusted annually. For certain transactions, the transaction value is not subjective and therefore no representation regarding the size-of-transaction is necessary (e.g., the value of publicly-traded voting securities is the higher of the actual price paid or the market price). Typical situations in which a buyer or seller would provide a representation regarding the size-of-transaction are: (1) in a transaction requiring the buyer to make a fair market valuation (e.g., the sale of assets), the seller may want the buyer to provide a representation that the buyer's fair market valuation is less than the threshold; and (2) in a transaction involving both U.S. and non-U.S. assets, the buyer may want the seller to represent that the value of the assets in the U.S. and sales in or into the U.S. were below the relevant thresholds. 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.