Bad Actor Disqualification Representations and Covenants Clause Samples
The Bad Actor Disqualification Representations and Covenants clause serves to ensure that none of the parties involved, particularly key individuals or entities, have been subject to certain disqualifying events such as securities law violations, criminal convictions, or regulatory sanctions. In practice, this clause requires parties to affirmatively state that they and their affiliates have not engaged in conduct that would bar them from participating in securities offerings, and to promise to notify the other party if such a status changes. Its core function is to protect the integrity of the transaction and ensure compliance with securities regulations, thereby reducing legal and reputational risks for all parties involved.
Bad Actor Disqualification Representations and Covenants. No Disqualification Events. Neither the Company, nor any of its predecessors, affiliates, any manager, executive officer, other officer of the Company participating in the offering, any beneficial owner (as that term is defined in Rule 13d-3 under the Exchange Act) of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity as of the date of this Agreement and on the Closing Dates (each, a “Company Covered Person” and, together, “Company Covered Persons”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine (A) the identity of each person that is a Company Covered Person; and (B) whether any Company Covered Person is subject to a Disqualification Event. The Company will comply with its disclosure obligations under Rule 506(e).