HANDOUT 1 EXAMPLE OF A DUE DILIGENCE REQUEST LIST

Transcription

1 HANDOUT 1 EXAMPLE OF A DUE DILIGENCE REQUEST LIST 1

2 PROJECT [ ] LEGAL DUE DILIGENCE REQUEST LIST We refer to the attached Due Diligence Request List. This memorandum sets forth a proposed list of legal due diligence documents that should be collected as part of the due diligence process related to the [ ] (the "Project") and [ ] AS, company registration no. [ ] (the "Company") and its subsidiaries listed below (the "Significant Subsidiaries"). Documents should be collected with respect to the Company and each of the Significant Subsidiaries to be held, directly or indirectly, by the Company (together, the "Group"). The following documents and items should be obtained for each of the relevant companies in the Group and reviewed or discussed, as the case may be. Additional documents may need to be requested as the due diligence review proceeds. Some items referred to below may not exist or may not be applicable to each company. Hence, as documents are collected, we are available to discuss the inapplicability of any requests and relevance of any information requested which may not be relevant to the business, operations, financial condition or prospects of a particular company. In addition, this list is extensive and relies heavily on the meaning of the term "material" in various contexts. As a general matter, unless this term is specifically defined below, something is material if: (i) if it is asset related; a) it has a replacement value exceeding NOK [10] million ; or b) it generates revenues of more than NOK [10] million per annum; (ii) if it is liability related; a) the actual, future or contingent liability exceeds NOK [1] million; (ii) if it is a contract, agreement, license or other document; a) it relates to a material asset or liability; or b) it generates revenues or results in costs of more than NOK [1] million per annum; or (iv) if it is otherwise of particular significance to the business of the relevant company or if relevant, to the business of the Group as a whole, such as matters relating to significant intellectual property rights, change in control or non-competition issues. It is helpful if the documents are compiled in the same order as in the due diligence request list and that all documents are marked with the relevant letter and number indicated in the due diligence request list. For instance, the Articles of Association of the Company shall be marked "A1" and the schedule of the Company's shareholders shall be marked "A2" and so on. If most of the documents already are in place in the data room, please mark them in a similar way. Please also prepare the schedules we are asking for in the due diligence request list. Please fill in the second column in the due diligence list with a short reference to all documents compiled under each sub-section. Some of the documents we ask for in the due diligence request list will not be relevant or available. In these cases, please indicate in column 3 why such documents are not included. For instance, if the Company does not have any Significant Subsidiaries, you will not be able to provide any organisational documents under section "A3". Instead, simply state in column 3 that: "The Company 2

3 does not have any Significant Subsidiaries". Furthermore, if the requested information is fully described in the submitted Information Memorandum, please insert "IM + page number" in which the requested information can be found. The list of documents in column 2 and the comments in column 3 will give us an overview of the documents you have compiled and help us assess whether any further documents should be included. The Significant Subsidiaries Name Company Registration Nos. Jurisdictions [ ] [ ] [ ] [ ] [ ] [ ] 3

4 DUE DILIGENCE REQUEST LIST Documents A. Corporate Records 1. The Articles of Associations, as originally in effect, and all amendments hereto, and registration certificates or similar documents for the Company and each of the Company's Significant Subsidiaries 1 2. A schedule of the Company's shareholders; indicate for each shareholder (i) its shareholding, (ii) whether it is an individual, corporation, partnership, etc., and (iii) its home jurisdiction. 3. Organisational documents (articles of association or equivalent documents) of each of the Company's Significant Subsidiaries, each as originally in effect, and all amendments thereto. 4. Incorporation or organisation proceedings of each of the Company and its Significant Subsidiaries and proceedings (minutes or written consents of the board of directors and shareholder) relating to each amendment to the certificate of incorporation or by-laws of each of the Company and its Significant Subsidiaries since 1 January Minutes of meetings (or written consents in lieu thereof) of the board of directors (and any committees thereof) and the shareholders of the Company, together with any materials submitted to the board of directors (or committee thereof) for the past three years. 6. Minutes of meetings (or written consents in lieu thereof) of the board of directors (and any committees thereof) and the shareholders of each of the Company's Significant Subsidiaries, together with any materials submitted to the board of directors (or committee thereof) for the past three years. 7. The Company's share books, share ledgers and transfer records (including board of directors and shareholders minutes or consents) reflecting issuance, cancellations and transfers of share capital of the Company since incorporation (including a schedule showing authorisation for, date of issue of, dates of payment for, outstanding shares of the Company. 8. A list of ownership in other companies, including shareholders' list and shareholders' register. 9. A corporate organisation chart showing all of the Company's Affiliates 2 and Subsidiaries including non-significant Subsidiaries (specifying percentage ownership for any subsidiaries or affiliated operations that are not wholly owned), a summary description of their businesses and their respective jurisdictions of organisation. 1 A "Significant Subsidiary" is any subsidiary of the Company (including its subsidiaries) whose assets account for more than 10% of the total assets of the total asset of the Company and its consolidated subsidiaries (after inter-company eliminations). 2 For purpose of this list, an "Affiliate" is a person or entity that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Company. 4

5 10. Current management organisation charts and proposed management organisation charts (if different). B. Governmental Regulation and Filings (see also M Environmental) 1. A schedule of all orders, permits, licenses, concessions and authorisations of any government or foreign governments or agencies thereof to carry out the operations of the Company or any of its Significant Subsidiaries. 2. Copies of all such permits, licenses, concessions and authorisations and any conditions or commitments relating thereto. 3. All reports filed by the Company, any of its Significant Subsidiaries or any of their auditors and correspondence with any governmental agencies during the past three years. 4. Copies of any legal opinions with respect to material governmental or regulatory matters by the Company or a Significant Subsidiary. 5. All prospectuses and offering memoranda prepared and used by the Company in the last three years in connection with issuances or placements of its securities or bank loan applications. 6. Copies of all correspondence and other documents relating to any filed or threatened administrative proceeding or investigation by any regulatory authority. 7. Any agreement between the Company or any of its Affiliates on the one hand, and any regulatory authority or any governmental controlled corporation on the other including any such document constituting a pledge or a grant of security interest on such shares or creating any restrictions. C. Capitalisation of the Company 1. Schedule of any outstanding consolidated short-term (maturity one year or less) and long-term indebtedness of the Company or any of its Significant Subsidiaries (whether secured or unsecured, including credit agreements, letters of credit and securitisations), including any related significant financial or hedging instruments (i.e., swaps, forwards, options, etc.) as of a recent date, indicating co-obligor or guarantor, if any, and obligee thereof and indicating any obligations of the Company in connection therewith. 2. Schedule of any unfunded credit lines and other unfunded sources of liquidity of the Company or any of its Significant Subsidiaries currently in effect. 3. Schedule of any agreements or instruments evidencing other "material" financing arrangements of the Company and its Significant Subsidiaries currently in effect. 4. All documents and agreements evidencing material borrowings and securisations, whether secured or unsecured, by the Company or its Significant Subsidiaries, including trust indentures, term or revolving 5

6 loan and credit agreements, mortgages, promissory notes and other evidences of indebtedness and all material guarantees entered into by the Company or any of its Significant Subsidiaries. 5. Bank letters or agreements confirming material lines of credit entered into by the Company or any of its Significant Subsidiaries. 6. All documents and agreements evidencing other material financing arrangements entered into by the Company or any of its Significant Subsidiaries. 7. Copies of all correspondence with lenders including all compliance reports submitted by the Company or its Significant Subsidiaries or their independent public accountants; any communications regarding defaults, potential defaults, consents or waivers thereunder; and any opinions of counsel related thereto. 8. A schedule of all issued and outstanding warrants, options (including under share option plans or agreements) or other agreements relating to rights to acquire or dispose, or the issuance of additional shares, of the Company's share or the share of any Significant Subsidiary, including any agreements relating to pre-emptive rights or registration rights. 9. All documentation authorising and governing outstanding share of the Company, and all security holder agreements or voting trust agreements, including without limitation, (i) any shareholder agreements restricting the transfer of shares of the Company and any agreements relating to the issuance of additional share capital of the Company or any of its Significant Subsidiaries, and (ii) any other agreements or documents (including trust agreements for shares held in a fiduciary capacity, voting trusts or outstanding proxies) that define or limit the rights of shareholders (including with respect to voting rights or the declaration or payment of dividends) of the Company. D. The Power Generation 1. A list identifying and briefly describing all production plants fully or partly owned. 2. A list of and copies of all relevant agreements in connection with generation and regulation of water reservoirs. 3. List of and copies of all relevant regulations and concessions for the power generation. 4. Copies of all correspondence with public authorities of relevance for the Company's concessions and operation of business. 5. A list of and documentation of any obligations to deliver power in accordance with concessional requirements. 6. A list of and copies of all long-term power agreements. 7. Documentation of anticipated amount (volume) of water in reservoirs as per 31 December [ ], 1 July [ ] and 1 October [ ] with relevant 6

7 information regarding the production and inflow in the interim periods 8. Documentation of actual amount (volume) of water in reservoirs as per 31 December the last 10 years. E. The Network 1. Copy of letter confirming the income/efficiency requirements for [ ] and [ ] 2. Specification of actual and anticipated costs and payments for [ ] and [ ] 3. Documentation substantiating a total volume of supplied energy in the regional and distribution network of 2 GWh/Documentation verifying number of customers within the Company's concession area as per 31 December [ ]/List of tariffs for various customer groups 4. Specification (with matching against the total accounts) of annual operational costs related to the network, excluding depreciation and purchase of transfer services ([ ] and [ ]) 5. Specification of the accounting and tax related value of the net operations as per 31 December 2000, with matching against the accounts/submitted taxation documents 6. Documentation of any calculation of tax depreciation (in percentage) on the net operations in 2000 and Documentation of any calculation of loss (in percentage) in connection with the net operations, with relevant sub-documentation 8. Documentation showing the replacement value of the network 9. Documentation showing the age distribution of the network 10. Documentation showing any disruption in connection with the network 11. NVE accounts, including overview of NVE profit in [ ] and [ ] 12. List of additional/reduced income which can be retrieved 13. List of investments (and investment budget) for the network for the last 5 years as well as next 5 five years 14. List of networks/age distribution of networks; indication of average age 15. Information regarding the system control centre, showing age, investment requirements and staff requirements 16. Copies of any reports regarding technical conditions, age and reinvestment requirements related to the network 17. Copies of any power system plans 18. Copies of any reports regarding out-phasing 7

8 requirements/simplification of the network 19. Documentation of any irregular operating conditions on the network causing disruptions 20. Copies of any significant impositions from the Production and Electricity Authority 21. Documentation of any extraordinary security arrangements, such as night shift etc. 22. Documentation regarding road lighting arrangements, and ownership in relation thereto 23. Documentation regarding any purchase and handling of any network losses F. Energy sale 1. Copy of the Company's analyse of the market value of the power agreements 2. List of prices and volume of agreed purchase and sale classified as follows The agreements to be classified per season Information to be divided into financial and physical agreements List of all fixed-price agreements Documentation verifying number of customers within and outside own concession area 3. List of customers (categorised in households, cabins, small industries etc.) indicating number and volume 4. Documentation verifying that the volume of the annual sale of power within own concession area constitutes at least [1] GWh to end customer. G. Material Agreements (to the extent not covered by D, E and F above) 1. Copies of any agreements between the Company or any Significant Subsidiary, on the one hand, and executive offices or directors of a Group Company or any shareholder on the other hand. 2. Copies of all material sale, supply, agency, distribution, franchising, advertising, licensing, royalty or similar agreements to which the Company or any of its Significant Subsidiary is a party, including hereunder any telecommunication agreements and fibre-optic cable agreements 3. A list of all agreements or arrangements that contain "change of control" clauses. 4. A list of a description of, as well as copies of, all material sale- /leaseback arrangements. 8

9 5. Copies of all joint venture and partnership agreements to which the Company or any of its Significant Subsidiaries is a party. 6. A schedule of all material insurance policies of the Company and its Significant Subsidiaries. 7. A schedule of all material patents, patent application, trademarks, service marks, trade names, brands and copyrights of the Company and its Significant Subsidiaries and any license agreement relating to any of the foregoing and any pending applications relating to such assets. 8. A description of any material research and development of technical co-operation or collaboration agreement. 9. Copies of all significant documents relating to any material acquisitions or dispositions by the Company or any of its Significant Subsidiaries during the past three years or any such currently proposed material acquisitions or dispositions. 10. Copies of all contracts or agreements with or pertaining to the Company or any of its Significant Subsidiaries and to which directors of officers of the Company or owners of more than 5% of the share of the Company are parties. 11. Copies of all documents pertaining to any receivables from or payables to directors, officers or owners of more than 5% of the share of the Company. 12. Copies of any documents relating to any other transactions between the Company or any of its Significant Subsidiaries on the one hand, and any director or officer of the Company or owner of more than 5% of the share of the Company, on the other. 13. Copies of any confidentiality, secrecy or "non-compete" agreements or other agreements relating to restrictions upon competition of the Company or any of its Significant Subsidiaries with employees, customers, suppliers or others. 14. Copies of all material agreements or commitments made by the Company or any of its Significant Subsidiaries to invest in, provide funds for or make any investment in any entity or business. 15. Copies of all material inter-company agreements to which the Company or any of its Affiliates is a party and any related documents, including but not limited to, share subscription agreements; loan, line of credit or other financing arrangements; tax-sharing agreements or arrangements; overhead allocation agreements; management services or personnel loan agreements; and guarantees or keep-well arrangements. 16. Copies of any shareholder agreements, material guaranties, sureties and support letters issued for the benefit of third parties to which the Company or any of its Significant Subsidiaries is party. 17. Copies of any standard form agreements and all other material agreements to which the Company or any of its Significant 9

10 Subsidiaries is a party, including any material government agreements. 18. Copies of any material contracts or agreements to which the Company or any of its Affiliates is a party and not entered in the ordinary course of business. H. Properties (to the extent not covered by D, E and F above) 1. A schedule of material real property owned or leased by the Company and Significant Subsidiaries including land number, title number, municipality, the expiration date and material terms and any liens or encumbrances or any instruments granting a security interest assumed or suffered to exist in or on any real property. 2. Copies of all material leases for real or any substantial amount of personal property to which the Company or any of its Significant Subsidiaries is a party, either as lessor or lessee, including but not limited to leases for property for a period in excess of ten years or which require payments in excess of five percent of the Company's revenues in any fiscal year. 3. Copies of all agreements for the purchase of material real estate held by the Company or any of its Significant Subsidiaries within the past three years. 4. Information regarding any material plans or commitments for construction of new facilities or systems or expansion of existing facilities or systems and data on incurred and projected construction or expansion costs for such facilities or systems. 5. Schedule of equipment owned or leased by the Company and/or Significant Subsidiaries and the expiration date and material terms of any such lease, having a fair market value of NOK [1] million. 6. Copies of all material agreements concerning the management and/or operation of properties or facilities of the Company or any of its Significant Subsidiaries to the extent such agreement is material to the Company, including joint venture or partnership agreements. 7. Documentation and correspondence relating to the purchase or sale or similar transaction or any asset material to the Company and its Significant Subsidiaries. 8. Copies of any agreements or arrangements granting right of first refusal or other preferential purchase rights with respect to any material properties. 9. Copies of all material instruments or arrangements creating liens, encumbrances, mortgages, or other charges on any real estate or personal property of the Company (or any of its Significant Subsidiaries to the extent material to the Company), including property held indirectly through joint ventures, partnerships, subsidiaries or otherwise (also include any financing statements). 10. Copies of all documents showing any certification or compliance with, or any deficiency with respect to, relevant regulatory standards (e.g., 10

11 governmental environmental protection standards) by the Company or any of its Significant Subsidiaries. 11. Schedule, including expiration dates, of all material patents, patent applications, trademarks, service marks, trade names, brands, copyrights and other intellectual property belonging to or used by the Company or any of the Significant Subsidiaries. 12. Schedule identifying any material non-patented know-how belonging to or used by the Company or a Significant Subsidiary. I. Management and Employment 1. Copies of all employment agreements (other agreements with all members of the management team of the Company and Significant Subsidiaries) and all other material employment agreements, all standard employment agreements, collective bargaining agreements (if applicable), and consulting agreements to which the Company or any of its Significant Subsidiaries is a party. 2. Copies of any bonus or incentive compensation plans, profit sharing plans, employee share option plans, or medical reimbursement, death benefit, deferred compensation or pension plans or similar arrangements of the Company and each of its Significant Subsidiaries; and any such plans or arrangements of the Company's Affiliates (other than Significant Subsidiaries) in which the Company's employees participate or are eligible to participate. Please include all filings for the last three years with relevant governmental agencies, and a copy of any summery plan descriptions and summery annual reports. 3. Schedule of material claims under employee benefit plans. 4. To the extent not covered by G above, a summery of (i) any loans to or for the benefit of officers, directors, or employees of the Company or Significant Subsidiaries, (ii) ownership of Company's share by each officer and director of the Company including date and price of share when acquired and (iii) guaranties or similar undertakings for the benefit of directors or employees. 5. Copies of all indemnification agreements with officers, directors or any other employees. 6. Summary of any planned work force reductions or lay-offs. 7. Copies of any staff or employee manuals. J. Tax Matters 1. Copies of any income tax deficiency notices, audit and settlement proposals within the past five years. 2. Copies of any deficiency notices, audit or settlement proposals relating to any payment of foreign or domestic tax by the Company or any of its Significant Subsidiaries within the past five years. 11

12 K. Litigation 1. A schedule (and summary) of all significant (civil or criminal) litigation, arbitration, administrative proceedings or governmental investigations or inquiries, pending or threatened, affecting (i) the Company or any of its Significant Subsidiaries or (ii) their respective officers, directors or agents in such capacity as officers, directors or agents. 2. All letters form the attorneys of the Company or any of its Significant Subsidiaries to the independent public accountants of the Company regarding litigation in which the Company or any of its Affiliates is or may be involved. 3. Information with respect to any consent decrees, judgements, other decrees or orders, settlement agreements and other agreements to which the Company or any of its Significant Subsidiaries is a party or is bound, requiring or prohibiting any future activities. 4. Any internal reports on or summaries of litigation involving the Company or any of its Significant Subsidiaries, prepared during the past three years. 5. A schedule of fines and penalties incurred by the Company or any of its Significant Subsidiaries arising out of the operation of its facilities or equipment or the sale of its products or services. 6. A schedule discussing material complains, claims and actions for breach of agreement filed by customers involving or relating to alleged defects in connection with services, products or any warranties and guarantees relating thereto. 7. Details of any infringement or alleged infringement by third parties of patents, trademarks, registered designs, know-how or trade secrets, copyrights or other intellectual property rights owned by or licensed to the Company or a Significant Subsidiary and any infringement or alleged infringement of any such intellectual property by the Company or a Significant Subsidiary. L. Financial and Other Information 1. Annual reports since 1 January [ ] 2. Any other documents or information that, in your judgement, are significant with respect to the business of the Company or which should be considered and reviewed in making disclosures regarding the business and financial condition of the Company to prospective investors. M. Environmental 1. Any information concerning environmental matters and compliance with environmental laws and government regulations, including descriptions of any contaminated properties, liabilities to third parties and current or prospective environmental remediation efforts, including copies of any internal or external environmental audits or 12

13 similar reports.. 2. Copies of official communications, reports filed or agreements entered into by the Company or a Significant Subsidiary with any environmental regulatory agency since 1 January [ ] relating to any environmental restrictions to which the Group is subject. 13