Behold the following:
The Sponsor hereby represents and warrants to BNY Mellon, which representations and warranties shall be deemed to be continuing, that: …
I’ve seen this provision in different kinds of contracts, notably lending agreements. But I haven’t found any commentary about it. And I don’t believe it’s mainstream in M&A. Here’s how a related concept is usually expressed in M&A termination provisions:
by the Buyer, if any representation of the Seller stated in this agreement was inaccurate when made or becomes inaccurate such that the condition stated in section ____ [the bringdown condition] would not be satisfied; …
Here’s my version of that, stated in The Structure of M&A Contracts (as further revised to use the term statement of fact instead of representation):
by the Buyer, if any statement of fact made by the Seller in article 2 as of the date of this agreement could not be made again on any date after the date of this agreement and before the Termination Date so as to satisfy the condition stated in section ___ [the bringdown condition]; …
But to go back to deemed to be continuing, I suggest that it’s not clear what it means. I’d prefer to spell out the implications, in the manner of my M&A language.
Anyone have any views on this? Do you know of any commentary on it?
I am very skeptical of representations and warranties that are deemed to continue, or that have to be true and correct at closing. That effectively converts them into covenants or, where they are beyond the representer/warrantor’s control, closing conditions. So they should be stated as such.
Yes.
Hi Ken, what are your insights on “considered necessary” vs “deemed necessary”. Can these be used interchangeably ?
Thanks in advance for sharing your expertise.