The following should serve
as a checklist for Some Software Corporation’s due diligence investigation with
respect to the proposed acquisition of the assets of SomeCo, Inc. (the
"Company") from SomeCorp. Please respond to all items in writing and
indicate "none" or "not applicable" where appropriate. Where the information requested is contained
in written documents, please provide a copy of each such document to Some
Company at or prior to our meetings on SomeDate ___, 2009. Where
agreements requested are oral, please describe.
A.
Certificate
of Incorporation, as amended.
B.
By-Laws,
as amended.
C.
List
of stockholders (including with respect to each stockholder, class of shares,
number of shares owned, purchase price for shares and date of purchase) for the
past five years.
D.
Minutes
of meetings and consents of the stockholders, directors, and any committees for
the past five years.
E.
Materials
distributed to stockholders, directors and committees thereof in connection
with meetings or consents for the past five years.
F.
Reports
to stockholders for the past five years.
G.
List
of directors and officers.
H.
List
of jurisdictions in which the Company is qualified to do business or is
otherwise operating or pays sales, excise or intangible property taxes on its
software programs or revenues generated.
I.
List
of investments in other corporations, partnerships and other business
enterprises.
J.
Documents
relating to acquisitions and divestitures of companies, significant assets or
operations.
K.
Copy
of the most recent business plan for the Company.
A.
Minutes
of meetings and consents of the stockholders, directors, and any committees,
which relate to the Some Company-related assets of the Company.
B.
Materials
distributed to stockholders, directors and committees thereof, which relate to
the Some Company-related assets of the Company.
C.
Documents
relating to the Some Company-centric operations of the Company for the past
five years.
A.
Financial
statements of the Company (internal by division and parent company format) for
1998, 1999, 2000, 2001 and for each month of the current year.
B.
Accountants'
letters, opinions, and any Company management letter comments reported by Y
Company’s independent accountants for the past three years.
C.
The
Company’s budgets and financial projections for 1999, 2000, 2001, 2002 and
monthly actual to budget comparisons for 2002.
D.
Copies
of the Company’s tax filings and those of the consolidated group that include
the Company’s federal and state returns for the last 5 years including income,
sales, use, property and franchise taxes.
E.
Correspondence
and work papers received from or submitted to any taxing authority in
connection with the examination of any tax return.
F.
Information
relating to any changes in accounting methods or principles during the past
three years.
G.
Information
relating to any loss contingencies or related provisions or reserves identified
for or discussed with the accountants during the past three years.
H.
The
reports/results of internal audits of the Company performed by Y Company from
1996 to present.
I.
The
Accounts Receivable Aging reports of the Company for December 2000 and 2001 and
for each month during 2002 with accounts identified as Some Company related or
X Company related.
J.
Invoices
related to the Some Company-related balances in the Accounts Receivable aging
as of the current date.
K.
Fixed
Asset ledgers of the Company for December 2000 and 2001 and each month of the
current year with assets identified as x related or y related.
A.
Credit
agreements, loan agreements, notes, indentures, capital leases, security
agreements and pledges relating to financing transactions, agreements regarding
sales of accounts receivable and other agreements.
B.
Agreements
relating to the purchase, issuance or sale of securities and related documents
(including disclosure memoranda), whether oral or written.
C.
Agreements
relating to voting of securities including voting trusts, stockholder
agreements, voting agreements and irrevocable proxies, preemptive rights,
rights of first refusal or first offer regarding securities sales, and other
restrictions on stock transfers.
D.
Guarantees
of third-party obligations.
E.
Schedule
of issuances, sale and repurchases of stock or other securities since
inception.
F.
Information
relating to all transactions in derivatives.
G.
Agreements
relating to the redemption or repurchase of stock of the Company.
H.
Agreements
granting the right to cause the Company to register securities of the Company
under the Securities Act of 1933, as amended.
I.
Agreements
with brokers, investment bankers or finders relating to any transaction or
proposed transaction since inception.
J.
Copies
of all documentation related to stock options and grant agreements for all
grantees, and employee stock purchase plans.
K.
Description
of any oral or written commitments made to any person related to stock options
or any other security in the Company.
L.
Copies
of any recent filings with respect to security interests relating to the
Company or any of its subsidiaries.
A.
List
of all Some Company related customers of the Company and copies of their
services and license agreements.
B.
List
of all Some Company related customer contracts that may require further action
and the supporting documents related to the status of the project.
C.
All
software license, support and similar agreements, including any agreements
affording third parties rights to distribute software not owned by them.
D.
Standard
forms of software license, quotations, support and similar agreements.
E.
Standard
forms of warranties, quotations, purchase orders and invoices.
F.
Secrecy,
confidentiality and nondisclosure agreements with employees, developers or
other third parties (please indicate any employee not covered by such
agreements).
G.
List
of software developers and/or contractors who may have contributed to the work.
H.
Source
code listings in both hard copy and electronic format; and a list of persons having
copies of, or access to source codes.
I.
Schedule
of patents, trademarks, service marks, trade secrets, copyrights, domain names
and other intangible assets, and all related applications, registrations,
licenses, assignments, security agreements and ownership documents.
J.
All
systems integrator (“SI”), value-added reseller ("VAR"), original
equipment manufacturer ("OEM"), independent software vendors (“ISV”),
private label, joint venture, partnership, distributorship, teaming, agency,
commission, brokerage, conditional sale, consulting, franchise or
representative agreements to which the Company is a party.
K.
Copies
of all issued patents and patent applications.
L.
Proprietary
rights policies and usage guidelines, including intellectual property audits,
trademark and service mark proper use rules, copyright notice and proprietary
rights notice templates and usage guidelines, employee invention disclosure
policies and procedures for protection, marking and use of confidential
information.
M.
Schedules
of royalty payment obligations and of royalties paid and accrued by license and
product.
N.
Any
reports or analyses of backlog.
O.
Methods
used for accounting for software development expenditures and software
maintenance revenues.
P.
List,
by product, of all third party and public domain intellectual property rights
and technologies used in or required for developing, using, selling or copying
the Company's products.
Q.
List
and description, and copies of all documents for all significant domain names,
trade secrets, copyrights, patents, patents pending, proprietary designs or
proprietary schematics.
R.
List
of all restrictions/required consents relating to transfer of any assets
including intellectual property rights and licenses.
S.
Agreements
with third parties under which the Company has the right to make, use or sell
products or technology, use third party trademarks, trade names, copyrighted or
proprietary information or other intellectual property or which obligate the
Company to pay royalties with respect to intellectual property.
T.
A
list of each of the software programs of the Company, a description of the
functions and features of each, and a chronology of their respective
development.
U.
All
records and documentation maintained by the Company documenting the
development, authorship or ownership of the software programs and related
technology. A list of all public domain materials incorporated in the software
programs. A list of all third-party materials (including work under U.S.
government ownership) incorporated in the software programs.
V.
A
description of the instances in which source code relating to the software
programs of the Company has been disclosed to the persons outside the
organization of the Company and any agreements involving disclosure of source
code related to the software programs including source code escrow agreements.
W.
Agreements,
options, or other commitments giving anyone any rights to acquire any right,
title, or interest in the software programs or related technology of the
Company.
X.
A
description of the how services and software are currently marketed.
Y.
A
copy of all promotional material.
A.
Pleadings,
motions, orders, rulings and correspondence in connection with any litigation
or administrative proceedings.
B.
Schedule
of legal counsel for the past five years.
C.
Description
of pending, threatened or concluded litigation, claims and proceedings since
incorporation.
D.
Litigation
letters submitted by counsel for the Company or Y Company to independent
accountants since incorporation.
E.
Consent
decrees, settlement agreements, judgments and the like imposing continuing or
contingent obligations.
F.
Correspondence
dealing with actual or alleged infringement of trademarks, copyrights or
patents, domain names or complaints of misappropriations of trade secrets or
proprietary rights.
A.
Notices,
citations, reports, letters and other communications to or from federal, state
or foreign governmental agencies.
B.
List
of pending investigations and governmental proceedings.
C.
Export
licenses and other documents relating to the export of the Company's products.
D.
Other
governmental permits, licenses, approvals and consents, together with related
documents and correspondence, including authorization to do business in
jurisdictions outside the United States, conversion of foreign currency and
repatriation of earnings, royalties or other payments.
E.
Material
reports filed, delivered or otherwise presented to federal, state or foreign
governmental agencies or regulatory bodies since inception.
F.
Environmental
audit and inspection reports and monitoring and test reports (such as
underground storage tank, groundwater, surface water, soil, sewer discharges
and air emissions), whether performed internally or by third parties, and any
related memoranda and correspondence.
A.
List
of all employees of the Company setting forth their names, age, sex, functions,
compensation (including perquisites) and any other relationships to the Company
or any of its officers and directors; copies of employment agreements with such
employees.
B.
List
of all consultants to the Company setting forth their names, functions,
compensation (including perquisites) and any other relationships to the Company
or any of its officers and directors; copies of consulting agreements with such
consultants.
C.
All
agreements with, or compensatory plans or arrangements with respect to,
directors, officers and other key employees (collectively, "key
personnel") which involve payments or other compensation to key personnel
by the Company or any other person in connection with (a) the resignation,
retirement or other termination of the employment of key personnel, (b) a
change in control of the Company or (c) a change in the responsibilities of key
personnel following a change in control.
D.
Collective
bargaining or other labor agreements.
E.
Contracts
or plans related to, or descriptions of, union, pension, retirement, employee
benefit, health, deferred compensation and profit-sharing plans or programs,
and any audit reports covering pension plans, together with a schedule of
accrued vacation and severance liabilities.
F.
Deferred
compensation or bonus plans, and similar arrangements, together with offering
documents and Blue Sky or other securities law filings, if any, related to the
foregoing.
G.
Copies
of any contracts with, or loans to or from, management personnel, directors or
stockholders or any entities affiliated with management personnel, directors or
stockholders.
H.
Personnel
policies, personnel manuals and employee handbooks including copies and
descriptions of all health and benefit plans.
I.
Non-competition,
confidentiality, non-solicitation or similar agreements between the Company and
any officer, director, employee, consultant, representative, supplier or
customer, including standard forms of such agreements currently used by the
Company and a list of persons covered by such agreements.
J.
A
copy of every employee’s employee agreement.
K.
A
list of all employees of the Company who are no longer employed by the Company,
but continue to receive compensation and/or benefits, with copies of any
severance agreements into which the Company has entered.
L.
A
copy of the employee manual (if any) and of any bonus, profit-sharing, pension,
health benefit, group insurance, and similar plans and agreements relating to
employee benefits (with all amendments) and related documentation, including
bills, invoices, tax filings, discrimination test results, and records of
consulting or brokerage fees.
M.
Documentation
of any commitments or understandings with employees (written or verbal).
N.
Current
salary information by job function showing minimum, maximum and average salary
and number of incumbents.
O.
Copies
of any bonus plans, deferred compensation plans, commission plans, etc.; and
complete list of employees who are covered by each plan with target
compensation.
A.
Schedule
of all real property owned, leased or otherwise occupied.
B.
Deeds
and mortgages.
C.
Leases
or subleases of real property used by the Company.
D.
Communications
relating to any defaults or waivers under any leases or subleases of the
Company.
E.
Documentation
concerning the payment status of lease obligations, and related taxes.
A.
Financing
leases and sale and leaseback agreements.
B.
Conditional
sale agreements.
C.
Equipment
or other personal property leases.
D.
Documentation
concerning the payment status of equipment or other personal property leases
and related taxes.
A.
Strategic,
marketing and business plans and studies describing current or expected
business.
B.
External
and internal analysis and research regarding competing products or
technologies.
C.
Articles,
market research and studies, consulting reports, Company research, industry
newsletters and studies, competitive analyses and similar documents, prepared
by third parties.
D.
Other
consultants', engineers' or management reports and studies related to material
aspects of the Company's business operations.
E.
A
description of any pending research and development activity.
F.
Backup,
archive and disaster recovery procedures.
G.
Resumes
or professional backgrounders of all technical employees together with a list
of their accomplishments and a description of their current involvement with
particular projects. Question – is this
for the services department’s evaluation?
H.
Systems,
procedures, schedules and backup materials for the development and maintenance
of the software.
I.
Current
“bug” lists, customer support logs, and problem reports.
J.
Future
product design specifications or descriptions for any and all projects underway
or anticipated, including projected dates of delivery, schedules and resource
requirements.
A.
Any
agreement with affiliates or related parties of management or key personnel.
B.
Indemnification
contracts and similar arrangements for officers, directors or others.
C.
Insurance
policies, including casualty, property, liability, key man, directors and
officers, and errors and omissions.
D.
Other
contracts involving in excess of $5,000 whether or not entered into in the
ordinary course of business, including:
1.
Domestic
and foreign marketing agreements, including sales agent, sales representative,
dealer and distributor agreements, consignment and pricing agreements
2.
Government
contracts and subcontracts
3.
Supply
agreements
4.
Purchase,
output and requirements contracts
5.
Joint
venture and partnership agreements
6.
Agreements
regarding research and development
7.
Management
and service agreements
8.
Performance
guarantees and bonds
9.
Advertising
agreements.
E.
Other
contracts entered into outside the ordinary course of business.
F.
All
agreements, agreements in principle or letters of intent concerning
confidentiality, non-competition, acquisition or disposition of the Company's
product lines, assets or operations, mergers and the like, which might restrict
the activities of the Company or its successors or assigns.
A.
Copies
of all press releases issued by the Company for the last three years.
B.
Press
clips and other articles concerning the Company or its competitors collected
from trade, financial and other publications for the last three years.
C.
Current
product literature and other marketing materials regarding the Some
Company-related operations of the Company.
D.
Other
published Company literature.
A.
List
of outstanding purchase orders as of the current date.
B.
List
of Some Company related customers and distributors since inception of the
Company, together with contact names and telephone numbers.
C.
Contracts
and subcontracts relating to the provision of Some Company related services by
the Company to its customers.
D.
Some
Company related training course materials, documentation, product literature
and manuals provided or to be provided to the Company's customers or
prospective customers.
E.
Detailed
list of accounts payable by customer and vendor, with aging.
F.
Identify
and describe any transaction occurring within the last five (5) years between
Company or any of its subsidiaries, on the one hand, and any Related Party (as
defined below), on the other hand, pursuant to which services or products have
been purchased, sold or leased. “Related Party” will mean any officer,
director, shareholder or employee of Company or any of its subsidiaries, or any
corporation, firm, partnership, association or entity in which any such
officer, director, shareholder or employee has a direct or indirect beneficial
interest.
A.
Identify
and provide full information concerning the occurrence of any event for the
last 5 years having or expected to have a material adverse effect on the
business, properties, financial condition or assets of Company or any of its
subsidiaries, including, without limitation, any strike, default, governmental
injunction, lawsuit, fire, disaster, accident or other event or casualty.