Docket Entries Since Last Update
NOTE: This court's RSS feed does not list MOTION entries, so Bloomberg Law cannot detect them and thus they will not be listed here. However, motions will be included if you update the docket.
Editor's Note: This is largely a typical pre-closing covenant regarding confidentiality and the ability of the buyer (here, “the Parent”) to access information and records of the target or seller (here, “the Company”) during the period between signing and closing. The covenant provides an exception for limitations caused by Covid-19 pandemic-related concerns, part of an emerging trend in this provision type. The text of this exception is bolded below. This sample language requires the target or seller to mitigate any delays or obstacles stemming from Covid-19, including by providing virtual access when possible.
Section [X] Access to Information; Confidentiality
Subject to applicable Laws [(including any Covid-19 Measures)] from the date hereof until the earlier of the Closing Date or the date on which this Agreement is terminated in accordance with its terms, the Company shall cause its Subsidiaries to afford to the Parent and its Representatives reasonable access during normal business hours and upon reasonable notice to its (and its Subsidiaries’) properties, books, Contracts and records, and the Company shall, and shall cause its Subsidiaries to, furnish promptly to the Parent such information concerning its business and properties as Parent may reasonably request; provided that the Parent and its Representatives shall conduct any such activities in such a manner as not to interfere unreasonably with the business or operations of the Company; provided, further, that (i) the Company (and its Subsidiaries) shall not be obligated to provide such access or information if the Company determines, in its reasonable judgment, that doing so would violate applicable Law or a Contract with a third party or obligation of confidentiality owing to a third-party, jeopardize the protection of the attorney-client privilege, or expose the Company to risk of liability for disclosure of sensitive or personal information (provided that the Company shall use its reasonable best efforts to allow for providing such access or information (or as much of it as possible) in a manner that does not violate applicable Law or a Contract or obligation of confidentiality, jeopardize the protection of the attorney-client privilege, or expose the Company to risk of liability for disclosure of sensitive or personal information, including by (x) using its reasonable best efforts to obtain the required consent of any third party to provide such access or information or (y) entering into a customary joint defense or common interest agreement). The information exchanged pursuant to this Section [X] will be subject to the terms of the Confidentiality Agreement, dated as of [Date], between Parent and the Company.
Each of the Parties acknowledges that access to and provision of information pursuant to this Section [X] may be delayed or limited in the circumstances, having regard to the impact of Covid-19 [or Covid-19 Measures]; provided that any such delays and limitations shall be mitigated by the Company so far as reasonably possible, and virtual access (including to employees) shall be provided to the Parent or its Representatives as soon as reasonably practicable to the extent reasonably possible if physical access is not available.
Comment: Targets typically agree to a pre-closing covenant that allows the buyer to access information, including the books and records of the target company, during the period of time between signing and closing. The sample above provides access subject to standard exclusions and acknowledges that, due to the impacts of the pandemic, access to such information may be limited or delayed.
Value/Risk Analysis: The value of including an exception for pandemic-related issues, as in this sample, is important for a transaction taking place during the course of the pandemic because it provides a mechanism for the parties to avoid breaching the access to information pre-closing covenant if they are required to take measures to protect their employees as a result of the COVID-19 pandemic. Another advantage of this exception is it provides for virtual access as an option for the parties to mitigate limitations and delays. The risk of not including such an exception is that either party may breach the covenant because of pandemic-related issues beyond their control.
⇒ Pro Purchaser. This is a pro-purchaser clause and exception in the sense that it places the onus on the Company to mitigate limitations and delays to the Purchaser's access to information and provide virtual access in instances where Covid-19 makes physical access. In addition, it is written as an acknowledgement of the possible circumstances for a delay, and not a right on the part of the Company or target.
⇒ Pro Seller/Pro Target. This provision gives the target some flexibility to request a to limit or delay access due to Covid-19. To make this sample language even more advantageous to the target/seller, the language could be written as a right of the Company or target. Alternatively, the duty to mitigate could be changed such that it falls on both parties and not just the target/seller, or the duty to mitigate could be removed altogether so that the exception acknowledges that limitations and delays may occur and give the option to the target/seller to provide virtual access.
Affected Clauses: Certain defined terms, such as Law, Covid-19, and Covid-19 Measures (as indicated in bracketed language above), may need to be adjusted or added to the Definitions section of the agreement as a result of the inclusion of this type of covenant.