MAVA Due Diligence

DOCUMENT/ACTION for CORP B

COMPLETION DATE

CURRENT STATUS

NOTES

CORPORATE & ORGANIZATIONAL

Certified copy of Articles of Incorporation with all amendments thereto

Certified copy of Bylaws and all amendments thereto

Access to Minute Books

Access to stock books, if any, or membership lists

List of all states qualified to do business in including list of registered agents

Certificate of good standing from state of incorporation and other states in which qualified to do business

Organizational Chart including all subsidiaries and hierarchy of all officers, and employees

All names under which business has been done in past five years

SECURITIES

Statement of all outstanding stock, if any with stockholders list

BUSINESS DESCRIPTION

Copy of all annual reports prepared in last five years

Copy of all marketing or description brochures

DEBT

Copy of all currently effective loan agreements, indentures, debt instruments and other financing statements, and all related material and documentation

Negative covenants or actions prohibited including mergers/acquisitions/assets or sales/leases, or dissolution

Affirmative covenants and actions required of Corp B

Financial covenants and required financial ratio maintenance (debt to equity, etc.)

Requirement of or consent of lenders to proposed transaction

Copies of letters of credit

Copies of lease purchase agreements

CASH FLOW & BALANCE SHEET ITEMS

Copies of financial statements, tax returns, credit reports

Monthly cash flow actuals and projections

Monthly accounts receivable

Monthly accounts payable

Detail of property and equipment, if any, and projections for present year end.  Age and condition of each  major asset category, as well as book value and replacement cost

Summary of financing  (borrowing, interest accretion, etc.) and debt service (including capital leases) detail and projections for present year-end

Brief description of portfolio investments of Corp B including cost basis and current value

OFFICERS & DIRECTORS, EMPLOYEES AND LABOR DISPUTES

All liability insurance policies for officers and directors of Corp B  and subsidiaries

Number of persons employed with description of function

Names and addresses of each person who has a power of attorney to act on behalf of Corp B and copies of such powers of attorney

If applicable, list of all labor union contracts

List any pending or threatened requests for arbitration, grievance proceedings, labor disputes, strikes

Copy of all performance bonus plans adopted by the Board of Directors during the past five years (with copies of all relevant documents)

A description of all written or oral employment, management agreements or consulting agreements with copies of same

Information on all employees and retired employees, if applicable, who are receiving or will be entitled to receive any payment not already produced

Copies of all confidentiality, non-competition, or similar agreements, including those with any subsidiary and any present or former officers, directors, employees, agents, or consultants

Resumes of key employees

Description of any severance problems relative to present or former employees

Copy of employee handbook

Description of all deferred compensation programs affecting officers, directors, or employees.  Schedule of amount accrued and/or paid during most recent fiscal year under such programs, and amounts of accruals

PERSONNEL -SALARY INFORMATION

With respect to each officer and director, name address and telephone number and aggregate compensation detail for current and previous fiscal years.  With respect to all other non-union employees, a listing of names, job titles and annual base salary or straight time hourly rate

A description of the pay program for non-union employees including salary ranges salary administration policies and job evaluation

Description of all bonuses, deferred/incentive compensation programs and schedule of amounts accrued and/or paid during the most recent fiscal year under such programs and amounts of accruals thereunder.

Description of additional benefits provided to selected executives

Details of most recent changes to wages and salaries, and date on which next review is due, and any indications or commitments given as to the amount of any increase or other benefits to be provided to staff

BENEFIT PLANS

Copies of any and all benefit plan documents and IRS determination letters with respect to such plans

CONTRACTS AND ARRANGEMENTS

Copy of all standard forms of agreement used by Corp B

A list and description of all significant oral contracts and commitments

Copy of all effective guarantees by Corp B concerning payment or performance of third parties

A list of all contracts and commitments under which a default has occurred or is claimed to have occurred

List of any contracts currently under negotiation

Copy of all agreements for which performance is due

Copy of all contracts with advertising or public relations agencies

Copy of all joint venture or partnership agreements to which Corp B or any subsidiary is a party

Description of any agreement restricting the ability of Corp B to undertake any business venture

Copy of agreements granting any right of first refusal to acquire any business or assets or pursuant to which Corp B has granted such right

Copies of any licenses to which Corp B is a party

INTELLECTUAL PROPERTY

Schedule of any patent registrations and applications identifying each patent by title, registration (application number), date of registration (application), and country

List of all trademarks

Schedule of all copyright registrations and applications identifying each copyright by title, registration number and date of registration

Copy of all licensing agreements, assignments relating to patents, technology, trade secrets, trademarks (service marks), trade dress and copyrights

Copy of agreements pursuant to which patent, trademark, service mark or trade name has been sold or transferred by or to Corp B and evidence of recording thereof

LIABILITIES

Description of all guarantees given by Corp B

Schedule of accrued liabilities attributable to payroll, vacation pay, incentives, distributor programs, and other payroll taxes.

Schedule of accounts payable

Schedule of any other current liabilities or defaults disclosing notes payable and current portion of capitalized lease obligations, intercompany obligations, other short-term financing, accrued interest and penalties, and guarantees

Description of all long term indebtedness including capitalized lease obligations and guarantees, schedule and analysis of deferred income taxes, and other deferred credits

TRANSACTIONS WITH OFFICERS

List and state amounts and other essential terms of any indebtedness or other obligations of or to Corp B to or from any officer, director, shareholder or employee

List and describe any assets or properties used by Corp B in which any officer, director, shareholder or employee has an interest

List all material transactions between Corp B and its officers, directors, shareholders or employees not disclosed above

FILINGS AND REPORTS

Copies of any recent filings with governmental agencies

Copy of all correspondence with, reports of or to, filings with or other material information about any other regulatory bodies that regulate a material portion of Corp B's business

LICENSES

Copy of all correspondence, reports and notices relating to laws and regulations administered by any Federal, state or local government for the past five years

List of all Federal, state, local and foreign (if applicable) governmental permits, licenses, and approvals (excluding those already produced herein) either held or required to be held by Corp B for the conduct of its business

CONSENTS

A list of all entities who will need to be notified of the proposed transaction including all entities for which consent is required in connection with the proposed transaction

ENVIRONMENTAL AND RELATED MATTERS

Copies of all environmental reports prepared in connection with any property owned by Corp B

Copies of any notices, complaints, suits or similar documents sent to received by or served upon Corp B or any of its subsidiaries by the FEPA, any state department or environmental regulator, or similar state or local regulatory body, authority, or agency

ACQUISITIONS OR SALES OF SECURITIES

Copy of all agreements pursuant to which Corp B has acquired securities or has issued (or may be obligated to issue) securities

Copy of all private placement memoranda, prospectuses, or other documentation relating to the offering or acquisition by Corp B of securities

Copy of all reports to, documents filed with, and correspondence with any state securities commission

Copy of all agreements and other documentation concerning any sale of material assets (including any agreements in principle) to which Corp B is a party.

Copy of all agreements and plans entered into by Corp B or any of its subsidiaries relating to the acquisition of, or merger with a business, or an interest in any business, whether by acquisition of share, acquisition of assets, or otherwise

LITIGATION

A description of each threatened or pending claim, lawsuit or arbitration or investigation involving a claim for relief of $500 or more against Corp B, any subsidiary, or any of their respective officers or directors

List and describe any pending or threatened litigation against Corp B and/or directors and officers that involves (a) claims involving alleged violations of laws or regulations for the health or safety of employees or others, (b) governmental or administrative proceeding, (c) equal employment opportunity, (d) antitrust claim or litigation, (e) claim or litigation seeking injunctive relief, or (f) other material claims to which Corp B is a party

A copy of all complaints, answers, and other material pleadings concerning any litigation

Copy of all letters from counsel to Corp B to accountants relating to litigation or contingent liabilities involving Corp B

Copy of all correspondence relating to actual or alleged infringement by Corp B of intellectual property rights of others

Copy of judgements, orders and decrees to which Corp B is subject with a brief description of each

Copy of most recent response to auditor's request for information about litigation and/or contingent liabilities of Corp B

Describe any litigation involving an officer of director of Corp B concerning bankruptcy, crimes, securities laws violations, or business practice breaches for the past five year

Description of any investigation of Corp B, pending or threatened, by any federal, state, local or foreign authorities

If applicable, current listing of any unfair labor practice complaints filed, grievances which are pending and pending/threatened arbitration requests

TAX RETURNS

Copy of last three (3) years of income tax and other returns for

·        Federal

·        State

·        Localities

Copy of any audit reports by and for any tax jurisdictions over the past five (5) years including:

·        Federal

·        State/Localities

        Income tax

        Sales/Use tax

        Property tax

Noting any deficiencies and a description of steps taken to address same

Fair market valuation of fixed assets, including detailed listing of fixed assets, tax depreciation and amortization schedules, and tax basis of assets

Evidence of three (3) years property tax returns and payments

Proof of payment of corporate income, sales, and use taxes since inception for

·        Federal

·        State

·        Localities

Federal Employer Identification Number

Copies of any and all auditor's letters

PROPERTIES, LEASES AND INSURANCE

Copy of all plans of property owned

List of all liens, security interests, or mortgages on the property of Corp B or any of its subsidiaries

Copy of all leases and location for offices or facilities, property, equipment, including, but not limited to, all motor vehicles owned, leased, hired, purchased or used by Corp B and including fair market value for all leases

Provide confirmation that each landlord is willing to accept assignment of respective current lease

List all leases for Corp B property leased to third parties

Provide details of any restrictive covenants relating to the use of any land or buildings

With respect to real estate owned, provide a copy of the title insurance policy

List of fixed assets, machinery, equipment used by Corp B stating whether each item is owned or leased and indicating costs, depreciation, method of depreciation, insured value, estimated remaining useful life, condition suitability for use and appraised value, if known, for each

List of all registered equipment such as automobiles and other equipment leased or used by Corp B, including a description of lease provisions, year made, state of registration, registration number, cost estimated, useful life and insured value

List of all premises at which any Corp B assets are located

All professional appraisals on the property

Copy of all security agreements on personal property

List of all insurance policies relating to the business of Corp B which would include insurance company name, policy number, term of coverage, property or risk covered, appraisal value of covered property, extent of coverage, annual premium, amount of premiums that are prepaid or are unpaid from prior years.

Copy of loss runs for all insurance policies, specifically worker's compensation and general liability for the past three (3) years

Copy of details for all open claims with an incurred value greater than $5000

Copy of all insurance claims pending over $500

List of all bank accounts and safe deposit boxes indicating who the signatories are

Most recent schedule and description of prepaid expenses including insurance and deposits for utilities and leasehold interests

TAX EXEMPTION

Copies of all grant agreements and schedule of all grants and restricted donations

List of members and dues schedules

Copy of IRS determination letter

Copy of any correspondence received form IRS in connection with revocation or qualification of determination letter

Copy of application for tax exempt status

Fiscal year‑end

Statement of any reported unrelated business income

Description of any income other than grants or donations

Description of annual fundraising activity

Description of any lobbying or influencing of legislation activity

Description of any investigation by any attorney general of any state regarding Corp B's nonprofit status

MAVA:

MAVA's COUNSEL ("HLNSJ"):

Ronald B. Peterson, Esq.

Halleland Lewis Nilan Sipkins & Johnson

600 Pillsbury Center South

220 South Sixth Street

Minneapolis, Minnesota 55402

Ph:      612-204-4122

Fax:     612-338-7858

CORP B:

CORP B'S COUNSEL:

Time of Closing

Location of Closing