PRELIMINARY DUE DILIGENCE DOCUMENT AND INFORMATION REQUEST LIST

 

(A) Gather as much of the documents and information requested hereby before forwarding such documents and information. Piecemeal delivery of documents and information will increase the time and expense associated with reviewing such materials.

(B) All materials delivered in connection with this request list should be clearly identified as being responsive to one or more of the following numbered paragraphs.

(C) To the extent any requested information or document is not readily available or is not available at all, please prepare a mark-up of this letter and indicate when such information or document will be available or, if applicable, why the Company cannot deliver such information or document.

1. Legal Matters

1.1 Description of corporate structure, including full legal names, jurisdiction of incorporation and ownership of the Company and each of its subsidiaries.

1.2 Copy of the Company’s organizational documents, including all amendments thereto, and Bylaws, as currently in effect.

1.3 Copy of minute books of the Company, including minutes of shareholders’ meetings, directors meetings, executive committee meetings and other committee meetings, in each case for the last five years.

1.4 Copy of stock transfer books and records of the Company, including all filings with “blue sky” authorities.

 

1.5 List of the jurisdictions in which the Company presently is (a) qualified to conduct business as a foreign corporation, (b) conducting business, and (c) has any other significant licenses, qualifications or business permits.

1.6 List of any consents that may or will be required in connection with the consummation of the proposed transaction

1.7 List of directors and officers of the Company by position.

 

2. Capitalization

2.1 List of each class of capital stock of the Company, setting forth the number of authorized shares, outstanding shares and treasury shares.

2.2 List of all covenants regarding preferred stock, including a schedule of all dividend declarations, record dates and dividend payments made by the Company.

2.3 List of stockholders, giving name and address of each stockholder of the Company and the number of shares owned by each such stockholder.

2.4 List of holders of any options or rights to purchase any interest in the Company (including warrants and convertible securities), giving name, number of options or rights held, exercise or conversion prices, date(s) of grant or issue and relationship of holder to the Company.

2.5 Copy of any agreements or instruments containing restrictions on transfer of or encumbrances upon, or options or other agreements to purchase, securities of the Company.

2.6 Copy of all voting trusts, voting rights agreements, stockholders’ agreements, and all other agreements with respect to securities of the Company.

2.7 Copy of all agreements relating to pre-emptive or ant dilution rights.

3. Financial and Tax Matters

3.1 Copy of the Company’s most recent fiscal year end audited financials.

3.2 List of returns and the years thereof that have been audited by tax authorities and copies of determination letters related thereto.

 

3.3 List of returns and the years thereof that are open or under audit by tax authorities and copies of any statements or documents connected therewith.

3.4 Copy of all agreements, consents, elections, and waivers filed or made by the Company with any taxing authorities.

3.5 List and describe all pending or threatened disputes with regard to tax matters involving the Company.

3.6 Copy of all tax sharing and tax benefit agreements involving the Company.

3.7 All reports, advisory letters or the like communications from the Company’s independent public accounting firm to the Company regarding its financial condition, accounting practices or operations.

3.8 Reports by internal or outside auditors or consultants to the Board of Directors of the Company relating to internal corporate controls of the Company.

3.9 List of accountants, length of relationship, description of any Company interests or positions held by any accountants.

4. Governmental and Regulatory Matters

4.1 List of all material governmental licenses, permits, orders, registrations, approvals and certificates of authority from governmental or regulatory authorities held or required to be held by the Company.

4.2 List of all material notices, material information requests, material warnings, material consents of, material filings with, or material correspondence or agreements or consent decrees to or from any government entity, agency or regulatory body having authority over the Company (or any of its assets) which currently affect the operations of the Company.

4.3 Description of any allegation or claim (including copies of any claims made in writing) made since its organization, that the Company is acting in violation of any law, regulation, ordinance or other requirement of any governmental authority.

4.4 List of all investigations and material inquiries and status thereof undertaken by federal and state regulatory bodies.

 

4.5 List of any present or prospective regulations that may adversely affect the Company’s operations.

5. Real, Personal and Intellectual Property; Bank Accounts; Liens

5.1 List of all locations, stores, distribution centers and other real property. For each leased locations, include a schedule of monthly rent, terms of lease, and market rent by location.

5.2 List of all patents, trademarks, trade names, trade secrets and other intellectual property rights owned or used, giving brief description of use, registration number and date of issuance of registration, trademark or trade name is licensed and brief description of any arrangement or agreements relating thereto.

5.3 Copy of all patents, trademarks or trade names and other proprietary right licenses to which the Company is a party as licensor, licensee or otherwise.

5.4 List of all software used by the Company, indicating whether it is owned or licensed, and name of the developer/licensor, together with purchase price or payment terms. Copies of all license, development, service and maintenance agreements involving software that is not of the “off the shelf’ kind.

5.5 To the extent the Company is in possession of such information, certified results of all liens, litigation and judgment searches for the jurisdictions where collateral is located and the jurisdiction under which the Company is formed.

6. Business Matters

6.1 Copy of all standard forms of sales, service and supply contracts and invoices of the Company and a list of all sales, service and supply contracts and invoices which deviate from the standard form (indicating contract value).

6.2 Copy of all long-term agreements (not to be performed within six months or involving over $10,000), whether or not entered into in the ordinary course of business.

6.3 Copy of all advertising agreements.

 

6.4 Copy of all agreements and plans relating to the disposition of, acquisition of or merger with a business or an interest in any business, whether by acquisition of shares, acquisition of assets or otherwise.

6.5 Copy of all franchising, licensing, joint venture, distribution and partnership agreements entered into by the Company (if oral, description of key terms).

6.6 Copy and brief description of all non-compete agreements relating to the Company and contracts restricting the ability of any Company to compete in any line of business or with any person or committing the Company to continue in any line of business.

6.7 List of outstanding powers of attorney.

7. Environmental Matters

7.1 Copy of all internal Company reports concerning environmental matters relating to current properties or properties formerly owned or operated by the Company.

7.2 Description of all notices, complaints, suits or similar documents sent to, received by or served upon the Company by the Federal Environmental Protection Agency or any state department of environmental regulation or any similar state or local regulatory body, authority or agency.

7.3 Description of all claims under environmental protection laws and any notices of violation with respect thereto, including any claims under, and notices of violation with respect to, CERCLA and RCRA; information with respect to OSHA citations and outstanding enforcement actions.

8. Bank and Credit Arrangements

8.1 Copy of all documents and agreements evidencing outstanding borrowings of the Company, whether secured or unsecured, including loans and credit agreements, indentures, promissory notes, bank lines of credit and other evidences of indebtedness and all guarantees related thereto.

8.2 Copy of all documents and agreements, not previously disclosed, evidencing other financing arrangements of the Company, including sale and leaseback arrangements, capitalized leases, real estate and other installment purchases, equipment leases, etc.

 

8.3 Copy and description of amounts and other terms of any indebtedness or other obligations of or to the Company to or from any of its officers, directors, employees, consultants or other insiders.

8.4 List of all contingent obligations (including, without limitation, guarantees and keep well agreements) or indemnity undertakings given by
the Company and copies of all documentation evidencing same.

8.5 List of each account maintained by or for the benefit of the Company at any bank or financial institution. Include the name of the bank or financial institution, the account number and the authorized signatories.

8.6 Recent compliance certificates concerning satisfaction of covenants contained in the obligations of the Company for money borrowed or other debt and any other debt covenant compliance calculations if applicable.

8.7 Schedule of all loans or advances to any supplier, customer, dealer, distributor or other third party contractor with whom the Company conducts or conducted business.

9. Officers and Directors; Employees and Compensation

9.1 Description of all transactions with directors, officers, or owners of more than 5% of the stock of the Company. Copies of contracts or agreements with, or pertaining or relating to, the Company to such directors, officers, or owners or their affiliates are parties.

9.2 Brief description and copy of all employee benefit plans. For each pension or profit sharing plan, if any, furnish copy of plan document, including amendments (and a description of any changes in these plans proposed, agreed upon or under consideration), actuarial reports, if applicable, trust instruments and trust balance sheet, if any, and summary plan descriptions.

9.3 List of any non-qualified or executive medical reimbursement or other benefit programs specifically designed for an individual employee or senior employees showing the individuals covered and a description of benefits offered.

9.4 Copy of all compensation plans, including bonus, deferred compensation, stock option, stock purchase and annuity plans, of or covering employees of the Company.

 

9.5 Description and copy of all “golden parachutes,” “tin parachutes” or other termination agreements, plans or arrangements which provide for payments upon a change in control of the Company.

9.6 Description and copy of all written and oral employment agreements (other than union contracts) by which the Company is bound or affected.

9.7 Copy of all consulting and management agreements and arrangements of the Company.

9.8 Copy of standard forms of employee trade secret, non-disclosure and invention assignment agreements of the Company.

9.9 List of all labor union contracts and collective bargaining arrangements to which the Company is a party.

9.10 Copy and consent status of any pending or threatened arbitration, written grievance proceeding or labor dispute affecting the Company.

9.11 Description of all other benefits, not included above, involving any employee of the Company (e.g., automobiles, use of facilities by employees, matching contribution plans, etc.).

10. Insurance

10.1 Description of insurance claims history of the Company since its organization, including date of claim, nature of loss, payment and/or reserve, and description of experience under workers’ compensation, including cost.

10.2 Description of major claims and lawsuits pending with respect to insurance coverage of the Company.

10.3 Copy of all insurance claims or notices made or sent by the Company or any of its predecessors to any insurance carrier relating to environmental liabilities since the date of the Company’s organization (or predecessor, if earlier), and copies of all responses from the Company’s insurance carriers regarding any acknowledgement or denial, in whole or in part, of coverage under any applicable policy.

11. Litigation

11.1 A schedule of all suits, actions, litigation, patent, trademark or trade name infringement proceedings, arbitrations administrative proceedings or other

governmental investigations or inquiries, pending or threatened, which seek an injunction, seek a declaratory judgment or involve a claim for relief in excess of $10,000, providing a brief description of (a) parties; (b) nature of the proceeding; (c) date commenced; (d) damages or other relief sought; (e) status of the proceedings; and (f) attorneys handling the matter.

11.2 All consent decrees, judgments, other decrees or orders, settlement agreements and other agreements to which the Company is a party or by which the Company is bound, or was bound since its organization.

11.3 All letters from or to independent public accountants regarding pending or threatened litigation in which the Company is or may be involved and copy of correspondence between the Company’s independent public accountants and its outside counsel regarding such litigation.

11.4 Schedule of any known violations of any law, code, rule, regulation or ordinance by the Company not otherwise covered by any paragraph hereof.

12. Miscellaneous

12.1 Unless otherwise covered by a request above, copies of all agreements or description of any arrangement pursuant to which the Company has agreed (or is contractually obligated) to indemnify any person or entity.

12.2 Any other documents or information that, in your judgment, are significant with respect to the business of the Company that should be considered and reviewed in order to evaluate accurately the financial condition, operations or prospects of the Company.