Page 18 - Representation & Warranties Insurance

Description of Typical Representations and Warranties

Internal Controls entities. The representation will also typically include
Transaction agreements may also include certain representations regarding the contracts, such as
representations regarding the internal controls of the that each contract is valid, legal, binding and enforceable;
target entity, including its information technology that neither party to a contract is in breach of or default
infrastructure. A representation regarding internal under (or is alleged to be in breach of or default under) the
controls might be stated as follows: contract; and that neither party has provided or received
any notice of any intention to terminate the contract.
The Company maintains a system of internal
accounting controls sufficient to provide reasonable Forecasts and Forward-Looking Statements
assurance that (i) transactions are executed in Often, the seller may present forecasts or other forward-
accordance with management’s general or specific looking information as a component of the financial
authorizations; (ii) transactions are recorded package shared with potential buyers for the transaction.
as necessary to permit preparation of financial Such forward-looking information may include items
statements in conformity with generally accepted such as projected financial performance of the company;
accounting principles and to maintain asset the expected development of the company’s business,
accountability; (iii) access to assets is permitted only projects, and joint ventures; execution of the company’s
in accordance with management’s general or specific vision and growth strategy, including with respect to
authorization; and (iv) the recorded accountability future M&A activity and global growth; sources and
for assets is compared with the existing assets at availability of third-party financing, future liquidity,
reasonable intervals and appropriate action is taken working capital, and capital requirements; completion
with respect to any differences. The Company’s of the company’s projects that are currently underway,
internal control over financial reporting is believed in development, or otherwise under consideration;
to be effective, and the Company is not aware of and renewal of the company’s current customer,
any material weakness in its internal control over supplier, and other material agreements. Transaction
financial reporting. agreements often contain language to clarify that such

forward-looking information is not a guarantee of future
Material Contracts performance and that undue reliance should not be
Most transaction agreements include representations placed on them because forward-looking statements
related to material contracts, such as those relating to necessarily involve estimates, known and unknown
customers, vendors, or insurance. This representation risks, and uncertainties. Further, transaction agreements
will specifically identify material contracts. The definition often include that the company has no obligation to
of a “material contract” will typically be set forth within update forward-looking statements if circumstances
each transaction agreement and could include those or management’s estimates or opinions should change
with income or expenditures over a certain dollar value; except as required by applicable securities laws.
those with the target entity’s largest customers, key Accordingly, forecasts and forward-looking information
employees, partnerships, or joint ventures; or those are typically not covered by RWI.
related to insurance and contracts with government

14 Representations and Warranties Insurance