Schedules, annexes, appendices – reasons to include 1

The reasons for including a schedule (or annex, appendix, attachment or exhibit, as you like) may vary. I will address three aspects here, and the two remaining aspects I identified in the next post.

The reasons for including a schedule vary, from complexity, to addressing other ‘subtransactions’ to the disciplines that are involved:

  • Complexity. The transaction is complex, in which case the structuring into schedules enhances the overseeability of all the transaction documents.
  • Various sub-transactions. The transaction in the main agreement entails various smaller transactions each of which is of a different nature:
  • a product sales agreement may include a licence of technology;
  • a secured loan agreement will have the (agreed form) agreements by which such security (e.g. a mortgage, a deed of pledge, a parent guarantee or suretyship arrangement) is established or vested attached as a schedule;
  • a share purchase agreement is often accompanied by a transitional services agreement and ongoing business agreements between the seller and the acquired companies;
  • a joint venture agreement will typically include one or more business arrangements, as well as a (business) contribution agreement;
  • a joint development agreement may require that one party provides certain tools or equipment on loan, in which case the goods on loan will be dealt with by a separate schedule;
  • the lease of a car may include an insurance policy and a financing arrangement;
  • an employment agreement may include the applicability of a collective labour agreement or pension scheme.

Different disciplines involved. The transaction requires the involvement of different disciplines and different types of contributions:

  • a joint development agreement typically contains a statement of work (i.e. a technical document specifying various aspects of the work to be developed, such as for example the product specifications, testing criteria and acceptance procedures, deliverables and milestones, go/no-go decision making points, budget allocations, persons involved in the various stages);
  • a service agreement may contain a description of the work to be created as part of the services or the agreed service level (e.g. response times, allowed failure rate, technical criteria);
  • a shareholders agreement may refer matters related to decision making (i.e. matters reserved for approval by the shareholders; or arrangements in cases of conflicts of interest) to a separate schedule; this is probably not immediately recognised as such, but certainly related to the question who may or must see what;
  • in a share purchase agreement, in respect of the period before completion of the share transfer, various important business decisions will require the prior approval of the purchaser (who might not start to manage the business but will certainly want to prevent that the acquired business acting in a way which is inconsistent with its prospective business plans); the subject matters requiring approval are sometimes listed in a schedule;
  • the list of assets, intellectual property rights, material contracts sold under a share or asset purchase agreement often serve as the list of security required to be given in the financing (loan) agreements related to the same share or asset transaction – the financing bank requires that those lists are extracted from the data room and the purchaser will in turn require that the seller produces the lists and warrants that the lists are complete.

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