asset acquisitions - Jackson Walker LLP

parties should always pay close attention to the definition of Excluded Assets, themechanism by which the assets that are excluded from the transaction are described assumeseven greater significance when the acquired assets are described in only a general way.The interplay between the section listing purchased assets and the section listing theexcluded assets also needs close attention. The Model Agreement specifically provides thatthe listing of Excluded Assets set forth in Section 2.2 takes priority over the listing of Assetsset forth in Section 2.1. This priority is established both by the parenthetical at the end of theintroductory paragraph of Section 2.1 and the language at the beginning of Section 2.2. As aresult, particular care needs to be given to the listing of Excluded Assets as that list willcontrol if a particular asset could be both an Asset and an Excluded Asset.The categories of Assets in Section 2.1 are described using a combination of definedterms and specific description of the Assets. This represents a blend of two extremes, whichare defining all terms elsewhere and using only the defined terms in Section 2.1 and placingthe complete description of all assets in Section 2.1 with the definitions at the end of eachcategory. In the Model Agreement, defined terms are used to cover categories of Assetswhere that defined term is used elsewhere in the Model Agreement (for example, in therepresentations section). Reference is made to the definitions of the various defined termsused in Section 2.1 and the Comments to those definitions for further description of thescope of those terms. If no defined term is needed elsewhere in the Model Agreement, aspecific description of the category of Assets is used. Where defined terms are used, thedefinitions need to be carefully drafted to transfer only the Assets intended and to ensure thatthe defined terms need to be addressed consistently throughout the Agreement.For example, the term “Tangible Personal Property” includes personal propertyowned or leased by the seller (see Section 2.1(b)). Therefore, since the buyer is purchasingall leased personal property, the associated lease contracts should be listed on the Part of theDisclosure Letter referred to in Section 2.1(e), should not be listed on Exhibit 2.2(f) pursuantto Section 2.2(f), which identifies excluded assets, and should be listed on the Part of theDisclosure Letter referred to in Section 2.4(a)(v).Whether a defined term or a specific description is utilized, the Buyer can reduce therisk that an unlisted item will be excluded from the acquired assets by using language such as“including.” Although the last sentence of Section 1.2(a)(vii) expressly recognizes that theword “including” does not limit the preceding words or terms, the rule of ejusdem generishas been applied to construe the meaning of a broad phrase to include only matters that are ofa nature similar to those specifically described. See the Comment to Section 1.2.If there are specific assets which are of significant importance to the buyer, the buyermay want to specifically list those assets instead of relying on the introductory “catch-all”phrase or any “including” clause listing assets of a similar type. For example, if the sellerhad subsidiaries, the buyer would want to include specifically stock of the subsidiaries asassets in Section 2.1. Similarly, if the seller owns or has access to certain businessdevelopment assets, such as luxury boxes, event tickets or the like, the buyer would want tospecifically identify those assets.Under Section 2.1(i), all insurance benefits are transferred to the buyer unlessexpended in accordance with the terms of the Model Agreement. In most asset acquisitions,insurance policies are not transferred, primarily because such policies typically may not betransferred without the consent of the insurance company. Transferable policies may be3148166v1- 42 -