asset acquisitions - Jackson Walker LLP

may want the definition to encompass “comfort letters” confirming the Seller’s intention toprovide financial support to a subsidiary or other related person and assurances to employeesregarding compensation, benefits, and tenure, whether or not such letters or assurances arelegally binding.“Damages” -- as defined in Section 11.2.“Disclosing Party” -- as defined in Section 12.1.“Disclosure Letter” -- the disclosure letter delivered by Seller and Shareholders to Buyerconcurrently with the execution and delivery of this Agreement.COMMENTThe form and content of the Disclosure Letter (sometimes called a disclosureschedule) should be negotiated and drafted concurrently with the negotiation and drafting ofthe acquisition agreement. The Disclosure Letter is an integral component of the acquisitiondocumentation and should be prepared and reviewed as carefully as the acquisitionagreement itself. The Buyer may prefer to attach multiple schedules or exhibits to theacquisition agreement instead of using a disclosure letter.“Effective Time” -- [The time at which the Closing is consummated.] [__________ on theClosing Date.]COMMENTUnder the Model Agreement, if the Closing occurs, the Effective Time fixes the timeat which the transfer to the Buyer of the assets and the risks of the business and theassumption by the Buyer of liabilities are deemed to have taken place, regardless of theactual time of consummation of the transaction.Normally the Effective Time will be the time when payment for the assets is made,at the consummation of the Closing. Sometimes acquisition agreements specify an effectivetime at the opening or closing of business on the closing date, or even (in the case of abusiness, such as a hospital, that operates and bills on a twenty-four hour basis) 12:01 a.m.on the Closing Date. This must be done with care, however, to avoid unintendedconsequences, such as the buyer having responsibility for an event that occurs after theEffective Time but before the Closing or the seller having responsibility for an event thatoccurs after the Closing but before the Effective Time.Many drafters do not use a general definition of effective time and simply treat theclosing as if it occurred at a point in time on the closing date. If the parties agree on aneffective time for financial and accounting purposes that is different from the time of theclosing, this can be accomplished by a sentence such as the following: “For financial andaccounting purposes (including any adjustments pursuant to Section 2.8), the Closing shallbe deemed to have occurred as of __________ on the Closing Date.”“Encumbrance” -- any charge, claim, community property interest, condition, equitableinterest, lien, option, pledge, security interest, mortgage, right of way, easement, encroachment,servitude, right of first option, right of first refusal or similar restriction, including any restriction on3148166v1- 29 -