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Sample Template of Disclosure Schedules
The following is a sample template of disclosure schedules that will often be required for an M&A transaction. Note that the exact scope and language of the schedules can be subject to extensive negotiation, and thus the final form of the disclosure schedules will often vary significantly from what is contained below. But this is a good starting point for the seller’s employees to prepare the first draft of the disclosure schedules. The disclaimers at the beginning of the disclosure schedules are important.
DISCLOSURE SCHEDULE
Capitalized terms used but not defined in this Disclosure Schedule shall have the respective meanings ascribed to such terms in the Agreement and Plan of Merger (the “Agreement”), dated as of [•],____, by and among [Parent], a Delaware corporation (“Parent”), [Merger Sub], a Delaware corporation and a direct or indirect wholly owned subsidiary of Parent (“Merger Sub”), [Company], a Delaware corporation (the “Company”), and, with respect to Section __, Article ___, Article ___ and Article ___ only, [Stockholder Representative] as Stockholder Representative (the “Stockholder Representative).
This Disclosure Schedule is qualified in its entirety by reference to the Agreement. The Company may, at its option, include in this Disclosure Schedule any items that are not material in order to avoid any misunderstanding, and any such inclusion, or any references to dollar amounts, shall not be deemed to be an acknowledgment or representation that such items are material, to establish any standard of materiality or to define further the meaning of such terms for purposes of the Agreement.
This Disclosure Schedule has been arranged, for purposes of convenience only, as separately titled Schedules corresponding to certain sections of the Agreement. Information disclosed in any Schedule shall constitute a disclosure for purposes of all other Schedules of this Disclosure Schedule notwithstanding the lack of specific cross-reference thereto, but only to the extent the applicability of such disclosure to such other Schedule is reasonably apparent. In no event shall the inclusion of any matter in this Disclosure Schedule be deemed or interpreted to broaden the representations, warranties, covenants or agreements of the Company contained in the Agreement. The mere inclusion of an item in this Disclosure Schedule shall not be deemed an admission by the Company that such item represents a material exception or fact, event, or circumstance or that such item would be reasonably likely to result in a Material Adverse Effect. The information contained in this Disclosure Schedule is disclosed solely for the purposes of the Agreement, and no information contained herein shall be deemed to be an admission by the Company to any third party of any matter whatsoever, including of any violation of law or breach of any agreement. No reference in this Disclosure Schedule relating to any possible breach, non-compliance with or violation of any agreement, law or regulation shall be construed as an admission or indication that any such breach or violation exists or has actually occurred. Nothing in this Disclosure Schedule shall constitute an admission of any liability or obligation of the Company or any other party to any third party or shall confer or give to any third party any remedy, claim, liability, reimbursement, cause of action or other right. Any item of information disclosed in this Disclosure Schedule shall be subject to the terms of the Non-Disclosure Agreement, dated as of ____, ___, between the Company and Parent.
Headings (other than numerical references to sections and subsections of the Agreement) have been inserted in some of the Schedules of this Disclosure Schedule for convenience of reference only, and such headings shall not have the effect of amending or changing the express description of such Schedule as set forth in the Agreement.
Reference herein to any contract or agreement shall, unless otherwise specified herein or unless the context otherwise requires, refer to such contract or agreement and any attachments, schedules, exhibits, statements of work, orders, or work orders thereto, provided that such attachments, schedules, exhibits, statements of work, orders, or work orders thereto, have been provided or made available to Parent and Merger Sub on or prior to the date of this Disclosure Schedule.
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TABLE OF CONTENTS TO DISCLOSURE SCHEDULES
1. Subsidiaries
2. Capitalization Table
3. Outstanding Options
4. Accounts Receivable
5. Material Contracts
6. Breaches of Material Contracts
7. Leases
8. Intellectual Property
9. Employees
10. Largest Customers
11. Largest Suppliers
12. Contracts Requiring Consents on Change of Control
13. Employee Benefit Plans
14. Insurance Policies
15. Litigation
16. Interested Party Transactions
17. Liens
18. Tax Information
19. Bank Accounts and Power of Attorney
20. Financial Statements
21. Liabilities and Obligations Incurred Since Date of Most Current Balance Sheet
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DISCLOSURE SCHEDULE FOR SUBSIDIARIES
Name of Subsidiary Jurisdiction of IncorporationPercentage
Owned
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DISCLOSURE SCHEDULE FOR CAPITALIZATION TABLE *
HOLDER Common Series A Preferred
Series B Preferred
Series C Preferred
Warrants Options
Total
* Amend as appropriate (to reflect actual securities outstanding). List names of all holders and number of shares, warrants and options held. If warrants are held in different series of stock, so indicate.
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DISCLOSURE SCHEDULE FOR OUTSTANDING OPTIONS
As of: ________________
Last Name First Name Grant Date
Options Grante
d
Options Outstandin
gGrant Price
ExercisePrice
Option Term
Accelerated 1 Vesting
Vest 2
Schedule
Vested 3 as of _____,_____
Vested 4
Upon Change
of Control
1 – List if optionee has any rights to accelerated vesting and what those rights are.2 – E.g., 25% after 1 year, monthly vesting over 36 months thereafter.3 – This will be the amount of options that will be bested as of an assumed closing date.4 – This is disclosure for any optionees who vest on a change of control, and the amounts or percentages so accelerated.
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DISCLOSURE SCHEDULE OF MATERIAL CONTRACTS
i. Customer, sales, advertising or agency contracts involving payments in excess of $50,000 during the 12-month period ending on the date of the Acquisition Agreement. [List titles, dates of contracts, dollar amounts per 12 months, and parties to contracts.]
1. 2. 3. 4. 5. 6. 7. 8. 9.
ii. Supplier Contracts involving payments by any in excess of $50,000 during the 12-month period ending on the date of the Acquisition Agreement. [List titles, dates of contracts, dollar amounts per 12 months, and parties to contracts.]
1. 2. 3. 4. 5.
The Company has/had verbal Contracts and purchase orders with the following Suppliers for services with payments in excess of $50,000 during the 12-month period ending on the date of the Acquisition Agreement:
[for Legal Services] [for Legal Services] [for Audit Services] [for Company’s MasterCard – Credit Card] American Express [for Company’s AMEX – Credit Card] Expedia [for Travel Agency] [for Purchase of _____ License]
Amend as appropriate.
iii. Contracts that expire or may be renewed at the option of any Person other than the Company so as to expire more than one (1) year after the date of this Agreement
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involving payments to the Company in excess of $50,000 during the 12-month period ending on the date of the Agreement. [List titles, dates of contracts, and parties to contracts.]
1. 2. 3. 4. 5. 6. 7.
iv. Contracts for the Borrowing of Money, etc. [List titles, dates of contracts, and parties to contracts.]
1. 2. 3. 4. 5. 6.
v. Contracts for Capital Expenditures over $100,000 in aggregate. [List titles, dates of contracts, and parties to contracts.]
1. 2. 3.
vi. Contracts limiting the freedom of the Company or its affiliates. [List titles, dates of contracts, and parties to contracts.]
1. 2. 3. 4. 5. 6.
vii. Contracts containing “Most Favored Nation” Type of Pricing. [List titles, dates of contracts, and parties to contracts.]
1. 2. 3.
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viii. Equipment Lease Agreements. [List titles, dates of contracts, and parties to contracts.]
1. 2. 3.
ix. Contracts with any Related Party (such as shareholders, officers, directors, affiliated companies, parents and subsidiaries). [List titles, dates of contracts, and parties to contracts – include stock purchase agreements, shareholder agreements, etc.]
1. 2. 3. 4. 5. 6. 7.
See also the list of Employment Agreements set forth in Section ____ of this Disclosure Schedule.
See also the list of Indemnification Agreements set forth in Section ____ of this Disclosure Schedule.
x. Agreements of Guarantee, Financial Assistance, etc.
Support Agreement
1. 2.
Contracts of Guarantee
1. 2. 3. 4. 5.
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DISCLOSURE SCHEDULE FOR BREACHES OF MATERIAL CONTRACTS
Describe any breaches of material contracts with specific reference to title, date of contract, parties to contract, and nature of breach.
1. 2. 3. 4. 5. 6. 7.
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DISCLOSURE SCHEDULE FOR LEASES
1. Name of Lease: Location: Date of Lease: Amendments to Lease: Term: Parties: Location: Monthly Rent: Sq. Ft.: Security Deposit:
2. Name of Lease: Location: Date of Lease: Amendments to Lease: Term: Parties: Location: Monthly Rent: Sq. Ft.: Security Deposit:
3. Name of Lease: Location: Date of Lease: Amendments to Lease: Term: Parties: Location: Monthly Rent: Sq. Ft.: Security Deposit:
4. Name of Lease: Location: Date of Lease: Amendments to Lease: Term: Parties: Location: Monthly Rent: Sq. Ft.: Security Deposit:
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DISCLOSURE SCHEDULE FOR INTELLECTUAL PROPERTY
Section ___ – Intellectual Property
For the purposes of the definition of Company Products in the Agreement, Company Products shall mean [List company products by name]:
i. Trademarks:
Used or intended to be used in the Ordinary Course of Business
Trademark Country ApplicationNo.
FilingDate
RegistrationNo.
Registration
Date
Owner Status
The following trademarks are common law trademarks used in the Ordinary Course of Business but for which Company has not filed applications for registration with Governmental Entities.
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Domain Names
Domain name Registered Since Next Renewal Owner
ii. Patents:
Patents Granted
Title, as filedFilingDate
FiledIn
Application Numbers Owner Status
Patent Applications
Title, as filedFilingDate
FiledIn
Application Numbers Owner Status
iii. Copyrights
[List any registered copyrights]
_________________________________ _________________________________ _________________________________ _________________________________
iv. Trade Secrets
_________________________________
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_________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________
v. Licenses In. [List all licenses in of Intellectual Property.]
_________________________________ _________________________________ _________________________________
vi. Licenses Out. [List all licenses out of Intellectual Property.]
_________________________________ _________________________________ _________________________________
vii. Defaults/Non-compliance Under Intellectual Property Contracts
1. 2. 3. 4.
viii. Open Source Software Usage. [List all open source software used.]
Name of Open Source Software Used
How the Software is Used
ix. Source Code Escrows. [List any escrows involving the Company’s source code.]
_________________________________ _________________________________ _________________________________
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DISCLOSURE SCHEDULE FOR EMPLOYEES
EmployeeName
Dept. Supervisor Address
OfficeLocation
Hire Date Job Title
Current AnnualSalary
Bonus/Comm
ContractSeveranc
eVacation
Rights
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The Company has Employment Agreements as follows [include date and exact title of agreement]:
_________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________
The Company has Indemnification Agreements with directors and officers as follows [include date and exact title of agreement]:
_________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________
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DISCLOSURE SCHEDULE OF 10 LARGEST CUSTOMERS
Rank Customer NameLast Calendar
Year Spend Description12345678910
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DISCLOSURE SCHEDULE OF 10 LARGEST SUPPLIERS
Rank Suppliers NameLast Calendar
Year Spend Description12345678910
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DISCLOSURE SCHEDULE OF CONTRACTS REQUIRING CONSENTS ON CHANGES OF CONTROL
[List all contracts with titles, dates of contracts and parties to the contracts.]
1. 2. 3. 4. 5.
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DISCLOSURE SCHEDULE FOR EMPLOYEE BENEFIT PLANS
[List all employee benefit plans and name the providers, e.g. Aetna.]
Medical
_________________________________ _________________________________ _________________________________
Dental
_________________________________ _________________________________ _________________________________
Vision
_________________________________ _________________________________ _________________________________
Life Insurance
_________________________________ _________________________________ _________________________________
Disability Plans
_________________________________ _________________________________ _________________________________
Stock & Stock Option Plans
_________________________________ _________________________________ _________________________________
Bonus Plans
_________________________________ _________________________________
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_________________________________
Incentive Compensation Plans
_________________________________ _________________________________ _________________________________
401 (k) Plans
_________________________________ _________________________________ _________________________________
ERISA Plans
_________________________________ _________________________________ _________________________________
Union Plans
_________________________________ _________________________________ _________________________________
Retirement or Pension Plans
_________________________________ _________________________________ _________________________________
Sales Incentive Plans
_________________________________ _________________________________ _________________________________
Employee Referral Programs
_________________________________ _________________________________
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_________________________________
Pregnancy Leave
_________________________________ _________________________________ _________________________________
Tuition Reimbursement Program
_________________________________ _________________________________ _________________________________
Childcare
_________________________________ _________________________________ _________________________________
Vacation/Paid Time Off
_________________________________ _________________________________ _________________________________
Employee Reimbursement Policies
_________________________________ _________________________________ _________________________________
Other Employee Benefit Plans
_________________________________ _________________________________ _________________________________
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DISCLOSURE SCHEDULE FOR INSURANCE POLICIES
Type Carrier Policy Number Term Limit Deductible PremiumGeneral Liability
D&OE&O
UmbrellaKey ManPackage
Employee LiabilityWorkers Comp.
Etc.
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DISCLOSURE SCHEDULE FOR LITIGATION
[Disclose any litigation, arbitration, investigation, or governmental proceeding.]
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DISCLOSURE SCHEDULE FOR LIENS
Asset Covered Secured Party
Pursuant to What Agreement?
(Title, Date, Parties)Filing Date of Security
Interests
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DISCLOSURE SCHEDULE FOR TAX INFORMATION
1. List of income tax jurisdictions:
Name of Company or Subsidiary Jurisdiction
2. Any Tax Audits of the Company or its Subsidiaries Pending:
_________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________
3. Any Deficiency or Assessments Levied Against the Company and its Subsidiaries for Unpaid Taxes:
_________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________
4. Any Tax Returns Delinquent?:
_________________________________ _________________________________ _________________________________ _________________________________ _________________________________ _________________________________
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DISCLOSURE SCHEDULE FOR BANK ACCOUNTS AND POWERS OF ATTORNEY
Name of CompanyType of Account
AccountNumber
Bank Nameand Address
Authorized Persons
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DISCLOSURE SCHEDULE FOR FINANCIAL STATEMENTS
Attach full financial statements for the last two complete years and the year to date interim financial statements.