When does termination of an agreement result in a reporting obligation?
New Item 1.02 requires disclosure upon termination of a material definitive agreement not made in the ordinary course of business, other than by reason of expiration of the agreement on a stated termination date or as a result of all parties completing their obligations under the agreement, where such termination is material to the company. In such an event, the company must disclose information including: (i) the identity of the parties to the agreement; (ii) any material relationship between the company and such parties; (iii) a brief description of the material terms and conditions of the agreement; (iv) a brief description of the material circumstances surrounding the termination; and (v) any material early termination penalties incurred by the company.5 In response to comments, the final rules do not require a company to disclose management’s analysis of the effect of the termination on the company, or provide a “mini-MD&A,” as was originally proposed. The SEC cautioned (here and
Related Questions
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