Exhibit 99.1
[LOGO]
USDATA [LOGO]
AUTHORITY
PRE-ACQUISITION AGREEMENT
This Agreement made as of January 31, 2003, by and between USDA AUTHORITY, INC.,
a Florida Corporation located at Gables International Plaza, 0000 XxXxxxx Xxxx,
Xxxxx 000, Xxxxx Xxxxxx, Xxxxxxx 00000 ("USDA"), and ZONA TECNOLOGICA y
TELECOMUNICACIONES, S.A., a company incorporated under the Laws of the Country
of Panama, located at Edificio 220 ("Building 220"), Ciudad Del Saber ("City of
Knowledge"), Xxxxxxx, PANAMA, with United States offices at 00000 Xxxxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxx Xxxxx, Xxxxxxx 00000 ("ZTT").
WITNESSETH:
WHEREAS, USDA is a publicly traded United States corporation in the field
of online data storage, data management and the telecommunications services
necessary to support such an offering of data storage and data management
services; and
WHEREAS, USDA is seeking an association which would enhance and accelerate
the development of its data storage and revenue production offering; and
WHEREAS, USDA, will assume from West of America Financial Group Corp.,
S.A., a Panamanian corporation (the "West Group") an agreement (the "West
Agreement") pursuant to which West Group is obligated, subject to certain
conditions, to fund up to Six million dollars into ZTT in consideration for
receiving up to seventy percent (70%) of the outstanding common shares of ZTT;
and
WHEREAS, USDA provided funding for ZTT through an agreement between USDA
and US Data Technology, Inc., a company unaffiliated with USDA, acting as an
agent to USDA, with payments to date totaling Four hundred thousand dollar
($400,000.00 USD). Said payments to ZTT through U.S. Date Technology, Inc. were
in consideration for an agreement to provide to [USDA] exclusively priced,
pre-paid data storage development, management and maintenance services by ZTT.
In consideration for such payments, USDA will receive a number of common shares
of ZTT equal to a three and one-third percent (3.334%) ownership of ZTT; and
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WHEREAS, USDA invested the cash sum of Three hundred thousand dollars
($300,000.00 USD), in common shares of ZTT, representing a two and one-half
percent (2.5%) ownership interest in ZTT; and
WHEREAS, ZTT can offer all the technical services needed by USDA to
operate an international telecommunications company whose specialty is
collocation, high-speed telecommunications connectivity and data storage and
management, and is in need of supportive funding; and
WHEREAS, ZTT owns the license to operate in an economic free zone in
Panama, whereby such facility shall not be liable to taxes, fees or other
government intervention ("Free Zone") under governmental provisions issued by
the Panamanian government in accordance with the Law Decree Number 6 of February
10, 1998 (the "License"); and
WHEREAS, ZTT was seeking a financial partner to help develop an
operational Data Center facility, and ZTT did accept USDA as such a partner.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and for other good and valuable consideration, the parties
hereto agree as follows:
1. THE EXCHANGE
A. ZTT shall cause to happen, the assignment and transfer to USDA a
number of shares of common stock of ZTT, constituting at least 80%
of the total issued and outstanding shares of the only class of
stock of ZTT (the "ZTT Stock"), owned by various shareholders of
ZTT. In consideration, USDA shall transfer to ZTT three million
(3,000,000) Series A Preferred shares of USDA Stock, par value $1.00
USD (the "USDA Stock"), subject to the conditions set forth in
Section 1B below. Existing ZTT shareholders shall receive their
proportionate allotment of these shares in relationship to their ZTT
stock ownership.
B. Upon Closing of the transactions contemplated herein, USDA shall
assume liability for the Senior debt instruments tendered by various
creditors in the amounts specified in Appendix A, utilized by ZTT to
initially fund itself. Prior to the assumption by USDA of such
liabilities, said creditors will renegotiate this debt with ZTT,
extending the term of each respective debt obligation for one year,
from the date of this Agreement. As an incentive toward the
acceptance of said extension, and as consideration of said extension
of term and deferral of payment, USDA will issue to the negotiating
agent of ZTT a number of shares of common stock in USDA. USDA would
tender no more than 24 million restricted common shares within
thirty days of the authorization of additional shares at a USDA
shareholders meeting, subject to the fulfillment of this conditions
set forth in this Agreement. The disbursement of the total amount of
Common stock (Par value $0.02 USD) to be tendered to the creditors
shall be accomplished through the
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existing Management of ZTT or their assigned agent(s). It is hereby
acknowledged and agreed that the issuance of the USDA Common stock
to such creditors, is subject to approval by its shareholders at the
USDA shareholders meeting at which time upon approval USDA will be
authorized the issuance of additional shares of Common Stock of
USDA, in order to fulfill its obligations described herein.
C. USDA shall make available the funds necessary to make ZTT fully
operational in the shortest time possible, based upon a budget of
Six million dollars ($6,000,000.00 USD) provided by ZTT to USDA,
with a deposit of Three hundred thousand dollars ($300,000.00 USD)
upon the full execution of this Agreement, and an additional Seven
hundred thousand dollars ($700,000.00 USD) within one (1) week of
the execution of this Agreement, and upon the delivery to USDA all
of the due diligence materials listed in Appendix B of this
Agreement. In the event that based upon USDA's review of due
diligence materials that it would not be in the best interest of
USDA to pursue the acquisition, USDA shall have the option to
rescind this Agreement and would retain its ownership interests,
estimated to be 14.17% in ZTT as consideration for all cash tendered
to date, estimated at $1.7 million. USDA will deliver simultaneously
the due diligence materials listed in Appendix C to ZTT. Evidence of
the availability of this additional amount shall be given to ZTT at
the time of execution; and
D. USDA will not have the right to announce and inform the public of
any pending or executed contracts, letters of intent or any formal
agreements in place from ZTT as a subsidiary of USDA, until all
shares of ZTT have been transferred, but will announce only the
details of this Agreement until USDA acquires the 80% interest in
ZTT.
E. Upon receipt of the $700,000 payment, ZTT will assist USDA in
finalizing the establishment of a collocated technical facility in
Miami, Florida, for which USDA is currently negotiating. Said
assistance shall include set-up and delivery of the hardware and
software necessary to facilitate such a center and technical
assistance to maintain it, acknowledging that all these and other
budget items will be the responsibility of USDA.
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2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS
ZTT hereby represents and warrants that:
a. The License, as of this date is, and until October 23, 2010, will be,
in full force and effect and not subject to any claims, disputes or caveats
whether from the Government of Panama or any other person, and that said License
will remain in full force in effect after the consummation of all of the
transactions contemplated by this Agreement, including but not limited to the
acquisition of 80% of the common shares of ZTT together with all other equity
interests held by USDA;
b. The ZTT Stock is part of the only class of stock or other securities
convertible or otherwise, issued and outstanding and represents at least 80% of
the total number of the shares of such class;
c. Except as shown on Appendix A and Appendix B attached hereto, ZTT has
no outstanding obligations and liabilities to any person, corporation or
government entity of any kind, whether stated or contemplated; and
d. ZTT is authorized to consummate the transactions contemplated herein
subject to the approval of the shareholders holding the eighty percent (80%) of
Common stock of ZTT shares being tendered; and
e. ZTT is not in violation of any statute, rule, regulation or contract
and the transfer of the ZTT Stock by the ZTT shareholders contemplated herein is
not and will not be in violation of any statute, rule, regulation or contract.
3. CONDITIONS PRECEDENT TO CLOSING
Closing of the acquisition contemplated herein will occur the day after
the satisfaction of the following conditions precedent:
a. Receipt by USDA of a letter from the Government of Panama specifically
acknowledging the effectiveness and good standing of the License and its
approval of the transactions contemplated herein;
b. Receipt by USDA of evidence satisfactory to its accountants and counsel
that the representations and warranties set forth in Appendix A and Appendix B
as well as any representations or warranties contained herein, hereof are true
and correct;
c. Receipt by USDA of an Investor Questionnaire and Subscription Agreement
duly executed by ZTT showing that ZTT and/or its assignee is an "accredited
investor" for purposes of Regulation D under the Securities Act of 1933, as
amended; and
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d. Approval of the transactions as contemplated herein by the Boards of
Directors of USDA and ZTT.
4. INDEMNITY
ZTT shall indemnify and hold harmless USDA, its officers, directors,
employees, customers or agents for damages or expenses resulting from any claim,
suit or proceeding brought against USDA, arising from the marketing, sale or
distribution of the data storage or collocation services or any other
exploitation of the License or any breach of any of the representations and
warranties contained herein (including representations and warranties set forth
in the Appendices attached hereto and made a part hereof), or for damages to
USDA resulting from ZTT's failure to perform all of its obligations under this
Agreement, including but not limited to ZTT's continuing obligations pursuant to
Setion14 hereof. The same applies for indemnity from USDA to ZTT its officers,
agents, directors, employees, customers and representatives.
5. NOTICES Any notice required or permitted by this Agreement shall be in
writing and shall be delivered by U.S. Certified Mail, return receipt requested,
or by special messenger service with receipt (such as Federal Express), or by
hand, to the parties at the addresses set forth above or such substitute address
of which notice is given in like manner.
6. GOVERNING LAW AND VENUE This Agreement shall be deemed to be executed in the
State of Florida and governed by the laws of the State of Florida. Any
controversy or claim arising out of or relating to this Agreement or to the
interpretation, breach or enforcement thereof shall be adjudicated in the courts
of Miami-Dade County, Florida.
7. SEVERABILITY In the event any parts of this Agreement are found to be void,
the remaining provisions of this Agreement shall nevertheless be binding with
the same effect as though the void parts were deleted.
8. SUCCESSORS Subject to the provisions of this Agreement, this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
9. WAIVER AND AMENDMENT The waiver by any party to this Agreement of a breach of
any provision hereof by any other party shall not be construed as a waiver of
any subsequent breach by any party. No provision of this Agreement may be
terminated, amended, supplemented, waived or modified other than by an
instrument in writing signed by the party against whom the enforcement of the
termination, amendment, supplement, waiver or modification is sought.
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10. COUNTERPARTS This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument. The execution of this Agreement may be
by actual or facsimile signature, provided however those original signatures
must be provided within three (3) days from the date of signing.
11. ATTORNEY FEES AND COSTS In the event any action is commenced, the prevailing
party shall be entitled to reasonable attorney's fees, costs and expenses.
12. ENTIRE AGREEMENT This Agreement constitutes the entire agreement between the
parties and supersedes all prior oral or written agreements regarding the same
subject matter.
13. EXCLUSIVITY OF MARKETING Upon full acceptance and execution of this
Agreement, the operational, technical and marketing center of USDA will be
serviced by ZTT, subject to the control of USDA..
14. RESCISSION Notwithstanding anything herein to the contrary, in the event
USDA accepts as accurate all due diligence materials and does not terminate this
Agreement in accordance with Section 1C hereof, receives the approval of its
Counsel and Board of Directors; then does not fund, or assist in the funding
necessary, to make ZTT operational as a Panama-based facility, within six (6)
months from the date hereof, designed to exploit the License, and such inability
was not due to factors beyond USDA's control, this Agreement shall terminate and
the transactions described herein with respect to the issuance of the shares of
USDA to ZTT shareholders and the receipt of 80% of the common shares of ZTT held
by USDA shall be rescinded. Upon providing such notice of termination by USDA to
ZTT, ZTT shall cause its shareholders to sell, assign and transfer to USDA all
their USDA stock (and any shares of USDA stock acquired through the exercise of
options), for no consideration, and USDA shall sell, assign and transfer to ZTT,
the ZTT stock, for no consideration. Upon such termination, as consideration for
the cash consideration that was provided to ZTT by USDA, ZTT shall continue to
offer USDA exclusively-priced data storage development, management and
maintenance services, as an alliance partner to USDA at terms and wholesale
costs recognized as "available-to-USDA-only" as set forth in the stated ZTT
pro-forma, part of its due diligence offering dated ________. USDA would also
retain that percentage of ownership represented by its cash consideration and
investment including all cash disbursements given to ZTT up to that date. The
length contemplated for delivery of such services shall correspond with the
length of the License held by ZTT. It is expressly understood that USDA will
exercise its "best efforts" to secure or assist in securing the funding
necessary to make ZTT functional, and in the event that ZTT secures funding from
any source, aided by USDA's assistance or cash consideration, this Agreement
will not be rescinded and ZTT will acknowledge that USDA has fulfilled its
responsibility. Notice of any decision to rescind must be sent thirty (30) days
prior to any Rescission.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
AGREED & ACCEPTED
FOR:
ZTT
By: /s/ Xxxxxxxx von Luxburg
------------------------
Xxxxxxxx von Luxburg
President/CEO
ZONA TECNOLOGICA y
TELECOMUNICACIONES, S.A.
FOR:
USDA
By: /s/ Xxxxxxxx X. Xxxxxx
------------------------
Xxxxxxxx X. Xxxxxx
President/CEO
US DATA AUTHORITY, INC.
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APPENDIX A
The list of creditors holding Senior Debt from Zona de Tecnologia y
Telecomunicaciones, S.A. is:
Xxxxxxx Xxxxxx 40,625.0
Merlano Xxxxx S. en C. 65,000.0
Taibei Company N. B. 81,250.0
Xxxxxx Xxxxxxxx 183,625.0
Lynbrook Holdings Limited 125,000.0
Xxxxx Xxxxxx 123,750.0
Orma Enterprises 250,000.0
Xxxxx Xxxxxxxxx 362,500.0
Juliao Revocable Trust 231,250.0
Envest, LIC 387,500.0
1,850,500.0
0
XXXXXXXX X
DUE DILIGENCE LIST
OPERATIONS:
We anticipate an operations review that is a mix of documentation and data,
discussion, and site visits covering the following topics:
Marketing Sales and Revenues
o Revenue Recap
o Sales
- Selection criteria (generally)
- High-risk business evaluation criteria
- Pricing policy (new business)
- Internal authorizations for contracts
- Incentive system
o Business Mix (current)
- % Co-Location
- % Data Storage
- % by business type (other) ________________________________
Banking
Government
Hospital
Other Commercial
- Contract lengths (range, average)
Employees
o Organization chart and manager responsibilities
o Employment practices
- Pre-employment processes overview
- Sources and availability of applicants
- EEO logs
- Background check procedures, records
o Work rules and employee handbooks
o Performance reviews
o Recognition and incentive programs
o Safety program and activity
o Training records
Services, Systems and Procedures
o Formal documentation of ZTT as a Corp Entity
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o Formal Performa of future operations
o Design and layout of NOC (formal documents)
o List of real estate and location of business
o List of all Licenses and permits to operate
o Background check on shareholders and officers
o Copies of all government contracts to operate business in Panama Free Zone
o List of all vendors and current services/products
o List of all insurance policies
o Schedule of all Insurance Policies
o List of claims over $1000
o Motor vehicle polices and procedures
- Driver-employee motor vehicles records
- Ownership of vehicles (including any personal vehicles used for
business)
o Scheduling, payroll and invoicing system(s): overview, manuals
demonstration, reports (combine with Financial review of systems)
o Internal audit
- Staffing
- Procedures
- Frequency
- Copy of audit plan and report formats
FINANCIAL
Financial Overview
o Flow chart and/or narrative of the revenue, payroll and disbursement
transaction cycles (combine with Operations review of system)
o Description of accounting principles and documentation of any deviations
from GAAP or unusual interpretation of GAAP
o All financial audit reports for the last 3 years
o Independent accountants' management letters on internal controls and
contingent liabilities (if any) for the last 3 years
o Pending or scheduled audits
Financial Statements Required
o Accrual basis income statements for the 2002, 2001, 2000 years and YTD
2003 (copies)
o Balance sheets at the same fiscal year-end and YTD (copies)
o General Ledger and Sub-Ledgers for 2002, 2001 and 2000
Revenue
o List of all contracted services
o Invoice Registers for Current Year (CY)
o Invoices for CY (on an "as requested" basis)
o Invoice supporting documentation (on an "as requested" basis)
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Costs/Payroll
o Employment records
o Payroll Registers for CY
o Supporting documentation for salaries/hourly rates (on an "as requested"
basis)
o Supporting documentation for hours worked (on an "as requested" basis)
o State and local payroll tax filings and payments
o Federal payroll tax filings and payments
o SUI filings and payments
o W-2 filings and reconciliations
o All payroll audits within the last 12 months with their status or outcome
o Payroll/vacation accrual procedures
o Supporting documentation for all CY SG&A expenses (on an "as requested"
basis)
Cash
o Cash receipts Sub-Ledger for CY
o Deposit slips and bank statements supporting XX xxxx receipts (on an "as
requested" basis)
o Bank statements (copies) and reconciliation's for 2002, 2001 and 2000
o All cash flow schedules, cash requirements schedule or proforma cash flow
schedules for future operations and 2002
Accounts Receivable
o Accounts Receivable Sub-Ledger
o Aged Accounts Receivable collection and write-off procedures
o Historical bad debt experience
o Allowance for Doubtful Accounts calculation
o Credit Terms
Fixed Assets
o Detailed fixed assets ledger, including purchase date, original cost,
accumulated depreciation and book value
o Capital Appropriation Request procedures
o Capitalization thresholds
o Capital spending commitments
o Detailed list of all software/hardware either purchased/leased or
otherwise acquired
Accounts Payable
o Accounts Payable Sub-Ledger
o Accounts Payable accrual procedures
o Credit Terms
o Contingencies
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Related Party Transactions
o Summary and explanation of all transactions and balances within last two
fiscal years involving officers or other employees (other than advances in
the ordinary course of business for expenses less than $5000)
o Summary and explanation of any transactions between ZTT or its affiliates
and any related parties (directors, shareholders, entities controlled by
them or their relatives)
TAX ISSUES
For all legal entities, for all open tax years:
o Copies of:
- Federal, State and Local income tax returns (including
intangibles/excise returns)
- State apportion information: sale, payroll, assets
- Asset records supporting depreciation and amortization taken in
returns
- Calculations of tax basis in assets and stock; E&P calculations
o Copies of all IRS or State and local tax audits/RAR reports, any audits in
progress?
o Copies of all sales/use/service tax filings
- Reconciliation of taxable amounts reported per those returns to the
legal entity financial statements
- If any receipts are being treated as exempt from sales/service tax,
provide legal basis for position
o Any tax sharing or indemnification agreements
o All unemployment tax returns, rate notices and taxable payrolls
o Personal Property and Real Estate tax returning for last 3 years
- Assessment notices, exemptions claimed, rationale for such, and
audit reports
o Scheduling calculating Deferred Tax balances
o All tax attribute carry forward schedules (NOL's, Tax credits, etc.)
- Any 3115 (change in method) filings? Any partnerships or LLC's
o Listing of officer compensation and officer expense reports for all open
years
o List of all form 1099's filed for all open years
- Is any individual treated as an independent contractor for payroll
purposes?
o Analysis for all open years of tax accruals, payments, etc; by type of tax
and legal entity
o Listing of all business acquisitions (if any), and nature of same i.e.
asset or stock
RISK MANAGEMENT
o General summary of all current policies, including type, limits,
retentions, premiums and insurers
o Primary Casualty:
- Three years of P&L expense by line of coverage: w/c, a/l, g/l
- Three year exposure summary to include net compensation payroll by
state, revenue, number of and type of vehicles
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o Five years of detailed loss run by line of coverage: w/c, a/1, g/l
- Provided detailed information on any claims over $10,000
(settlements including legal expense or claims expected or reserved
in excess of $10,000
- Number of customers given additional insured status under liability
policies? By Separate endorsement? Blanket endorsement?
o Surety Bonds:
- Number of performance bonds issued, face amount outstanding, issuing
company
- Number and amount of outstanding bid bonds
o Employment Practice Liability:
- Five year claim history: number of claims, estimated liability
- Five year P&L expense
- Provide copy or summary of policy, if any, covering: terms,
conditions, limits, retention, insurer
- Provide summary of programs in place to reduce exposure
o Worker's compensation records and practices
- Meet with coordinator (or whoever has such responsibilities)
- List of employees collecting WC
o Other Litigation (provide detail):
- Environmental
- Miscellaneous
LEGAL ISSUES
o Customer contracts overview
- Standard service agreement (form)
- Assign ability
- % of executed contracts
- % of standard agreements
- Government entity contracts
o Customer contracts files
o Vendor agreements
o Software licenses
o Equal employment, age, discrimination, sexual harassment and occupational
safety and health matters: description of all policies and descriptive
list of all material disputes, complaints, investigations and other
proceedings
o List of labor and other employee-related disputes, grievances,
arbitrations, unfair labor prices and litigation
o Pending Administrative Agency actions:
- OHSA
- Department of Labor (including audits and wage claims)
- OFCCP (for Federal contracting)
o Certificates of Incorporation and by-laws of each company
o Lists of all officers, directors and shareholders
o List of jurisdictions in which each company conducts business and/or is
qualified as a foreign corporation to conduct business
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o Minutes of all meetings for the last 2 years of each company's board of
directors, board committees and shareholders
o A listing of and access to all other material agreements, litigation and
formation. The following is a relatively exhaustive of such required
information (some of which may be requested elsewhere in this Due
Diligence list):
- Any employment, consulting, severance, non-compete, non-disclosure
or similar contracts, arrangements or policies
- Agreements (if any) relating to the ownership or control of any of
the companies, including all shareholder agreements, voting trusts
and agreements, irrevocable proxies, transfer restriction
agreements, stock purchase rights and warrants
- Agreements to which any company is a party relating to any completed
or proposed business acquisitions, mergers, sales or purchases of
substantial assets, equity financings, reorganizations and other
material transactions outside the ordinary course of business within
the last 3 years
- Files concerning (i) any pending or threatened litigation (including
attorneys' responses to audit inquires for the past 3 years, (ii)
material claims settled or adjudicated within the past 3 years,
(iii) any past or current investigations or proceedings of any
governmental agencies (including environmental and employee safety
matters), (iv) any outstanding orders, decrees or judgments, (v) any
pending or threatened labor disputes (including strikes, grievances,
and arbitration proceedings)
- Any collective bargaining agreements with any labor union
- Information regarding (i) any material contingent liabilities and
any material unasserted claims, (ii) any asserted or unasserted
violation of any employee safety and environmental laws and (iii)
any asserted or unasserted pollution clean-up liability
- Agreements and files relating to proprietary rights (patents,
trademarks, service marks, trade names, corporate names, copyrights,
etc.), including registrations and royalty agreements and licenses
held or granted with respect thereto and any pending or threatened
infringement actions by or against any of the companies
- Documents relating to any transactions with any director, officer or
shareholder (including their affiliates and relatives) of any
company
- Description of any real estate owned by each company and copies of
related deeds, surveys, title insurance policies, certificates of
occupancy, easements, condemnation orders and zoning variances
- Appraisals, if any, of each company's properties or significant
fixed assets
- List of any governmental approvals, permits, certificates,
registrations, concessions, exemption, etc., required for each
company to conduct its business in every applicable jurisdiction
- Non-disclosure and non-compete agreements
- Agreements and indentures relating to the borrowing of money or
placing of a lien on any of the company's assets
- Any letter of credit agreement
- Any agreement under which the company is lessee or holds or operates
any real property or any personal property
- Any agreement under which any company is lessor of or permits any
third. party to hold or operate any property, real or personal
- Any powers of attorney granted or other agency agreements
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- Any agreement which prohibits any company from freely engaging in
business anywhere in the world
- Any sales distribution, franchise or advertising agreements
- Tax sharing or tax indemnification agreements
- If any, a description of all SEC registrations and filings,
including those filed by predecessor corporations
- Any barter agreement
- Any intellectual property rights
- Any intellectual property violations with any government agency
HUMAN RESOURCES AND BENEFITS
o Confirm executive officer and manager responsibilities, compensation and
employment data
o Explanation of the determination of management fees paid to senior
management and any other employees in 1996 and 1997
o Labor relation:
- NLRB matters
- Any union representation, pending elections and number of affected
employees
- Threatened union organizing efforts
o Summary listing of employees, title/position, compensation and any recent
increase
o Description of policies regarding vacation, sick pay, holiday, severance,
disability benefits, supplemental unemployment benefits, pre- and
post-retirement health and medical benefits, transfer and other material
personnel matters (including ability to carry-over unused days of vacation
or sick pay)
o Copies of any and all deferred compensation agreements between ZTT and/or
its affiliates and any current or former employee who has not taken full
payment of such compensation
o Generally, for any welfare plans, defined benefit plans or defined
contribution plans:
- Overview of benefits
- All relevant primary documents and filings
- Financial data (trust reports, valuations, audits, reconciliation's,
contribution schedule, expenses, reserves)
o Specifically, for any such plans: copies of (i) written plans and
arrangements, together with all trust agreements and any amendments and
written interpretations thereof, (ii) IRS determination letters and Annual
Form 5500 reports (including, if applicable, Schedule B thereto) and, if
applicable, Pension Benefit Guaranty Corporation filings, for the last two
years, (iii) the most recent and prior year's actuarial valuation report
prepared in connection with any such plan and (iv) statements on Form S-8
relating to any such plan. Confirm that none of the plans are
"multi-employer" plans
o Copies, if available, or description of all other employee compensation,
bonus, incentive, commissions, retirement, benefit or similar plans or
arrangements, including without limitation any stock option or other
equity-based compensation plans or arrangements. Include a description of
funding arrangements, participants and costs for the past two years
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APPENDIX B
INTEGRATION PLANNING
These items are provides for discussion. Although ZTT is to be primarily
responsible for the successful integration of its business with US Data
Authority's business, significant communication and cooperation will be
required. Progress should begin as soon as possible, and many issues will come
up during due diligence.
Potential Synergies
o Administrative center
o Advertising
o Alarm response, inspection
o Background screening
o Field supervision
o Investigations
o Legal services
o Licensing
o Management information systems, potential for phase-in combination
o Office locations, consolidation
o Sales and marketing
o Software integration for billing and management
Key Integration Steps and Issues
o Customers
- Communicate plans and benefits to customers
- Plan brand interactions and transitions (pricing, quality,
advertising, uniforms)
o Employees
- Plan convergence of ZTT and US Data Authority's benefits and
policies
- Communicate plans and effects to ZTT and US Data Authority's
employees
o Operations and Administrative
- Plan transitions of scheduling, dispatching, payroll and invoicing
processes
- Determine approval authorities and procedures, establish lines of
communication
- Update employee files and documentation, as required
o Cash and Treasury
- Define disbursement procedures (including transfers, manual checks,
xxxxx cash)
- Arrange lockbox, disbursement, payroll transition
- Establish reporting requirements
- Set up bank reconciliation procedures
o Accounting
- Integrate systems with US Data Authority
- Define record keeping requirements of purchase agreement
- Define general ledger accounts and procedures
- Establish reporting and forecasting requirements
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o Insurance Transitions
o Legal
o Tax
- Update tax reporting procedures and define responsibilities (sales,
use, payroll)
- Determine and implement any changes to unemployment insurance
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APPENDIX C
1. Articles of Incorporation / Amendments / Restatements
2. Bylaws / Amendments
3. Current Domestic Stock Statement or Equivalent
4. Stock Transfers Ledger
5. Buy-Sell agreements / Shareholder agreements
6. Stock restriction agreements
7. Voting Trusts
8. Oral understandings regarding any of the foregoing
9. Real property deeds
10. List / description of real properties owned
11. Real property leases
12. List / description of real properties occupied
13. List / description of general assets (by type)
14. Bills of sale / or invoices re: equipment and/or inventory / stock in
trade
15. Automobile and truck registrations
16. List / description of automobiles and trucks owned
17. Automobile and truck leases
18. List / description of automobile and trucks leased
19. Other vehicle / vessel / rolling equipment or machinery leases
20. List / description of other vehicle / vessels / rolling equipment or
machinery
21. Office equipment leases (telephone, photocopy, etc.)
22. List / description of office equipment leased
23. Industrial equipment leases
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24. List / description of industrial equipment leased
25. Furniture leases
26. List / description of furniture
27. Patent / trademark / service xxxx registrations
28. List / description of patents, trademarks and service marks
29. Xxxx of Landing re: inventory / stock in trade
30. List / description of inventory / stock in trade (type, item and location)
31. List / description of raw materials on hand
32. List / description of raw materials on order
33. Other leases or use agreements not mentioned above
34. List / description of all other assets not mentioned above
35. Trust deeds
36. Security agreements
37. UCC-1 financing statements
38. Stock pledge agreements
39. Loan documents (including applications)
40. Notes made or held by the Company
41. Line of credit agreements
42. Guarantees (company and personal)
43. Notices of default
44. Oral understandings regarding any of the foregoing
45. City business licenses / permits
46. City industrial / occupational permits
47. State industrial / occupational permits
48. State licenses / permits (AGMD, etc.)
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49. Federal licenses / permits (FCC, etc.)
50. Correspondences to/from any state or federal body governing the business
or operations of the company
51. License agreements
52. Royalty agreements
53. Patent / trademark / service xxxx assignments
54. Dealership agreements
55. Distributorship agreements
56. Vendor agreements
57. Supplier agreements
58. Consulting agreements
59. Employment agreements
60. Independent contractor agreements
61. Asset sale / purchase agreements
62. Employee stock sale/ purchase agreements
63. Employee stock subscription agreements
64. Employee stock option plans
65. Employee stock option agreements
66. Pension / profit sharing trust or agreements
67. Medical / reimbursement plans / agreements
68. Trust indentures
69. Oral understandings regarding any of the foregoing
70. Plaintiff suits - pleadings, discovery, etc.
71. Defendant suits - pleadings, discovery, etc.
72. Attorney audit response letters
73. Demand letters received / sent
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74. Labor board proceeding documents
75. Administrative court proceeding documents
76. Notices of default received
77. Foreclosure / private sale documents
78. Collection letters / xxxxxxx letters utilized (form or otherwise)
79. Collection letters / xxxxxxx letters received
80. Bankruptcy filing documents
81. Three (3) years prior state tax returns
82. Three (3) years prior Federal tax returns
83. Franchise tax board notices / correspondence
84. Franchise tax board suspension / review documents
85. Real property tax assessment notices / documents
86. Personal property / business equipment tax assessment notices / documents
87. Three (3) years prior financial statements
88. Interim financial statements
89. Tax delinquency notices
90. Audit inquiry response letters
91. Summary of all deposit accounts, savings accounts and other accounts
92. Six (6) month prior bank statements (all accounts)
93. Daily check registers / account books (including computer stored
information)
94. General ledger books (including computer stored information)
95. Special account ledger books
96. Chart of accounts
97. Daily / weekly chronological financial records
98. Copy of credit reference materials provided by vendors, etc.
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99. List of company credit cards and holders
100. List of vendors supplying company on account (with balances and A/R aging)
101. Ledgers showing company A/R w/aging
102. Ledgers showing company A/P w/aging
103. State securities permits / notices / filings
104. State securities registrations / qualifications
105. Federal securities registration / offering circulars / disclosure
documents
106. Federal securities compliance documents (10K, 10Q, etc.)
107. Correspondence to/from the New York department of corporations
108. Correspondence to/from the SEC
109. Correspondence to/from any foreign body governing securities matters
110. Attorney retainer letters / correspondence
111. Attorney opinion letter prepared with regard to the Company
112. Accountant retainer letter / correspondence
113. Accountant "working papers" pertaining to previous three (3) years
financial statements
114. Insurance policies including business liabilities, disability, medical and
workers compensation policies
115. Detail of key management employees: names, addresses, ages, work
experience, positions held and job description in company, salary and
benefits
116. General information regarding employees: number of employees (full-time
and part-time) by each location and department, percentage of employees
who have left company and reasons of departure, working hours and wage
levels by position and department
117. Past history of labor problems
118. Details of employees benefits (pensions, bonuses, retirement plans, etc.)
119. Policy manuals or materials
120. Company operational or procedure manuals or materials
121. Employee manuals or materials
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122. Employment application and hiring forms, documents or materials
123. Employment disclosure documents
124. Past and present business plans of company
125. Full organizational chart of company
126. Details of internal operational structures with regard to following,
including identity of who plans, checks and carries out functions, who
reviews their results, and how the foregoing is accomplished:
a) Management structure
b) Marketing structure
c) Purchasing structure
d) Merchandising structure
127. Particular details of marketing / sales structures, methods and programs,
including identity and functions of sales personnel, special or unusual
promotional activities, occasional programs and other special sales
efforts
128. Materials or substantial contracts of agreements (written or oral) not
listed above or otherwise disclosed thereunder
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