Please, draft a risk-shifting clausea representation given by the Seller of business assets about pending or threatened litigation--from two different perspectives: First, taking on the role of the Buyer's negotiator, you will write the Seller's representation the way the Buyer would want it to be stated in the contract. Then your role will change to that of the Seller's negotiator, and you will draft the same representation in a way that is most favorable to the Seller; from the following scenario:

The Facts: ABC Company (the "Buyer") is in negotiations with XYZ Company (the "Seller") over a possible deal in which the Buyer would purchase substantially all the assets of the Seller. Both the Buyer and the Seller are publicly traded companies. The Buyer has net assets of about $800 million USD, and the Seller has net assets of approximately $450 million USD. Each company does business in more than a dozen U.S. states. The Seller is aware of only two lawsuits that have been filed against it.

• The first lawsuit, Smith v. XYZ Co., is pending in the District Court of Montgomery County, Maryland, which cannot award the plaintiff more than $25,000 USD in damages.
• The second lawsuit, Superior Steel, Inc. v. XYZ Co., is an antitrust lawsuit pending in a federal court in Chicago, Illinois. In that case, Superior Steel has sued XYZ Co. for total damages of $500 million for alleged attempted monopolization of the market for iron ore shipping services on the Great Lakes.

The first draft of the Asset Purchase Agreement contains a representation that XYZ Company (the Seller) is making to ABC Company (the Buyer). The representation states that, "To the Seller's knowledge, there are no lawsuits or other proceedings pending or threatened against it." The agreement also provides that the owners of XYZ Co. will indemnify ABC Corp. against any losses resulting from a representation given by XYZ that is untrue.

1. Part 1:
   • If you were the Buyer, would you want to revise the first draft of the representation the Seller is making to you? If so, how?
   • If you were the Seller, would you want to revise the first draft of the representation that the Seller is making to the Buyer? If so, how? Give reasons for your changes.
2. Part 2:
   • Assume that the Seller's representation about pending or threatened litigation remains based upon the "Seller's knowledge," as stated in the initial draft above. Draft two definitions of the Seller's knowledge:
     • One from the perspective of the Buyer in this scenario, reflecting what the Buyer would want the Seller's knowledge to include; and
     • One from the perspective of the Seller being asked to make the representation, reflecting the Seller's desire to limit the scope of the representation the Seller is giving.
   • Note that Part 2 does not ask you to restate the representation that will be given by the Seller. Instead, it asks you to define what the term "knowledge" will mean when it is used in the Seller's representation.