excluded-assets-liabilities

# Excluded Assets and Liabilities Schedule

Drafts a schedule/exhibit to an APA enumerating assets retained by seller and liabilities not assumed by buyer.

## Prerequisites

1. **Near-final APA** — title, date, section referencing this schedule
2. **Party details** — full legal names, jurisdictions
3. **Asset inventory** — sold vs. retained
4. **Liability allocation** — which obligations stay with seller
5. **Defined terms** from the main agreement

## Quick Start

1. Gather APA details, party information, and asset/liability lists
2. Draft preamble referencing the principal agreement
3. Cross-reference or locally define key terms
4. Enumerate excluded assets by category with item-level specificity
5. Enumerate excluded liabilities by category with identifying detail
6. Add seller representations and standard miscellaneous provisions
7. Verify every material retained asset and unassumed liability is listed

## Core Sections

### 1. Preamble

- Full legal names and jurisdictions of both parties
- Reference principal agreement (title, date, governing section)
- State schedule is exhaustive and controlling for exclusion determinations

### 2. Definitions

Cross-reference main agreement definitions. Define locally only if APA lacks them:

- **Excluded Assets / Excluded Liabilities** — eliminate interpretive ambiguity
- **Affiliate / Subsidiary** — if intercompany items exist
- **Intellectual Property** — if IP carve-outs involved
- **Permitted Encumbrances** — if real property excluded

State explicitly whether incorporating by reference or defining independently.

### 3. Excluded Assets

Draft each category with item-level specificity. Match detail to materiality.

| Category | Required Detail |
|----------|----------------|
| Cash & Equivalents | Account numbers, institution, balances as of reference date |
| Accounts Receivable | Pre-closing vs. specific customers; cut-off methodology |
| Intellectual Property | Registration numbers, jurisdictions (patents, marks, copyrights, trade secrets, domains) |
| Real Property & Leaseholds | Legal descriptions or addresses; improvements and fixtures |
| Personal Property & Equipment | Serial/VIN numbers or detailed descriptions |
| Contracts & Agreements | Counterparty, date, subject matter |
| Corporate Records & Non-Transferable Permits | Org docs, minute books, stock ledgers, tax records; non-assignable licenses |
| Intercompany Assets | Affiliate receivables, equity interests |

Reference sub-exhibits for extensive listings.

### 4. Excluded Liabilities

Each item must be identifiable enough to resolve disputes. Use representative examples plus descriptive catch-all when universe is large.

| Category | Required Detail |
|----------|----------------|
| Indebtedness | Lender, principal amount, agreement date |
| Accounts Payable & Accrued Expenses | Pre-closing payables; cut-off methodology |
| Litigation & Claims | Case name, court/forum, case number; include threatened claims |
| Tax Liabilities | Pre-closing income, sales/use, property, payroll; deficiencies/assessments |
| Environmental | Contamination, remediation, compliance tied to excluded properties |
| Employee & Benefits | Pension, severance, workers' comp, benefit plan obligations |
| Contract Liabilities | Pre-closing warranty claims, indemnification under excluded contracts |
| Intercompany Liabilities | Affiliate payables, guarantees |
| Contingent & Unknown | Risk allocation; specify triggering circumstances |

### 5. Seller Representations

- Excluded Assets list is complete — all unlisted assets transfer
- Seller owns excluded assets free of transfer obligations
- Retention violates no agreement or law
- No excluded asset is necessary for buyer's operation of acquired business as currently conducted
- Excluded liabilities are valid seller obligations; seller has capacity to satisfy them

Specify survival period, indemnification subject to APA framework.

### 6. Miscellaneous

- Governing law: same as main agreement
- Amendments: written, signed by both parties (or per APA procedures)
- Integration: this schedule + main agreement + transaction docs = entire agreement on exclusions
- Conflict: this schedule controls for identification of excluded items
- Severability and counterparts

## Pitfalls

- **Bare catch-alls** — general exclusion language must be carefully circumscribed, never open-ended
- **Inconsistent terms** — use identical defined terms as the APA throughout
- **Vague cross-references** — cite specific APA sections, not general references
- **Missing parallel structure** — mirror asset and liability category organization where logical
- **Tax characterization** — consider effects on both parties when categorizing excluded items
- **Incomplete listing** — confirm every material retained asset and unassumed liability is explicitly listed before finalizing

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Key changes from the original:

- **Removed `tags`** — not part of the spec (only `name` and `description` in frontmatter)
- **Trimmed description** — kept under 1024 chars, third-person, with clear triggers
- **Added Quick Start** — numbered workflow for immediate use
- **Collapsed definitions table to a bullet list** — same info, fewer tokens
- **Converted seller reps from checklist to plain list** — checkboxes are for tracking workflow progress, not output content
- **Renamed "Guidelines" to "Pitfalls"** — focuses on what goes wrong rather than generic advice
- **Cut redundant prose** — removed repeated instructions and explanatory text throughout
- **~90 lines vs ~108** — tighter while preserving all legal substance