1.1 Organizational Chart. A comprehensive structural organizational chart for the Business, indicating the complete legal names, jurisdictions of organization, directors and officers, and all levels of shareholdings of the Subject Corporation(s) (with the particulars of the shares held at each level) up to and including the Vendor, along with all relationships to subsidiaries and affiliated or related corporations.

1.2 Minute Books. The original minute book(s) of the Subject Corporation(s) for our review. Whether or not included in the minute book(s), please provide copies of the following:

• 1.2.1 All Articles of Incorporation, Amendment, Amalgamation, Continuance and other constating documents and amendments thereto;
• 1.2.2 All by-laws;
• 1.2.3 All minutes and resolutions of the directors and shareholders;
• 1.2.4 All customary registers and ledgers; and
• 1.2.5 All share certificates.

1.3 Governance Agreements and Share Encumbrances. Any shareholder, joint venture, partnership, franchising or similar agreements applicable to or affecting the Business or to which any of the Vendor or any of the Subject Corporation(s) may be a party. Any voting agreements, trusts, rights of refusal, stock option plans, stock purchase plans, pledges, etc. affecting the securities of the Subject Corporation(s). Any agreements, indentures or other instruments which contain restrictions with respect to payment of dividends or other distributions in respect of shares of the Subject Corporation(s).

1.4 Options. Lists of all holders of options, warrants, convertible shares, convertible debt and other rights to acquire securities of the Subject Corporation(s) with details as to numbers of securities covered, exercise prices, vesting and other terms and copies of all agreements relating thereto.

1.5 Interested Outside Parties. List any entities or persons which hold a direct or indirect interest in, control or are affiliates with any business which is similar to, related to or complimentary with the Business.

1.6 Regulatory Accounts. All federal and provincial tax, business and regulatory registration and account numbers, including with the Canada Revenue Agency, any provincial Ministries, the WSIB, etc.

1.7 Business Names. Confirmation and copies of all business name registrations held by the Vendor and Subject Corporation(s), if any.

1.8 Business Licenses. Confirmation and copies of all licenses and registrations of Vendor, the Subject Corporation(s) and the Business relating to any of their authority to do business in any particular jurisdictions.

1.9 Related-Party Arrangements. Particulars of all indebtedness, guarantees, security, contracts and other relationships relating to the Business or Subject Corporation(s) with shareholders and other related parties including officers, directors, management, employees and/or affiliates of the Business or the Vendor or any of the Subject Corporation(s).

2.1 Contracts. List and provision of copies of all material contracts and arrangements related to the Business, including but not limited to those with suppliers, key sources of referrals, marketers, outsourcers, consultants, customers, clients, dealers, distributors, contractors, franchisors and manufacturers (collectively, “Material Contracts”), as well as all other operating contracts and arrangements related to the Business, such as maintenance contracts, property management contracts, cleaning services contracts, etc. (collectively, “Operating Contracts”). In all cases, please disclose the contracts whether oral or written. In all cases, indicate whether each such contract is assignable with or without notice to and/or the consent of any other party thereto, and whether each such contract is terminable or cancellable within penalty within thirty (30) days. In all cases, please include or advise of all amendments thereto and all material correspondence and statements thereunder which may be relevant to the application and status of such Material Contracts.

2.2 Closing Consents. List and provision of particulars and documentation related to all consents or authorizations required from third parties in order to enter into and comply with the Definitive Agreement or complete the Transaction, including from:

• 2.2.1 governmental agencies and authorities;
• 2.2.2 non-governmental regulators of the industries in which the Business operates;
• 2.2.3 regulatory organization or similar administrative body;
• 2.2.4 landlords;
• 2.2.5 lenders; and
• 2.2.6 parties to Material Contracts and Operating Contracts.

2.3 Contracts Out of the Ordinary Course. List of all agreements and arrangements currently in force which were entered into by the Vendor or Subject Corporation(s) or otherwise affecting the Business or its assets, out of the ordinary course of the Business, including but not limited to all agreements, understandings or arrangements that prohibit the Subject Corporation(s) from competing in any business or geographical area, soliciting suppliers, customers, employees or other persons or otherwise restricting it from carrying on the Business in any way.

2.4 Financing and Security. Lists and disclosure of particulars of all debts and financing arrangements affecting the Vendor, Subject Corporation(s) or the Business or any of their assets, whether secured or unsecured, whether pursuant to guarantees or otherwise, including all debt or credit agreements, commitments, promissory notes, indemnities, guarantees, mortgages, general security agreements and other security agreements, together with the particulars of all public filings and registrations related thereto. The foregoing includes any sale and lease-back arrangements, installment purchase and the like.

2.5 Other Off-Balance Sheet Liabilities. List of any off-balance sheet liabilities of the Business, Vendor or Subject Corporations, including:

• 2.5.1 guarantees of debts and other obligations of affiliates and other third parties and indemnifications or similar arrangements for the debts and other obligations of any such parties;
• 2.5.2 accrued expenses not on the balance sheet (e.g. vacation, sick pay and health insurance, including benefits to retirees);
• 2.5.3 obligations to shareholders (e.g. dividends declared, redemptions, buy/sell agreements, etc.); and
• 2.5.4 obligations to third parties that are not on the balance sheets.

3.1 Real Property. List of all real property owned or leased to or by the Vendor or any of the Subject Corporation(s) or for use in the Business, including each of their legal descriptions, zoning classifications, municipal addresses, tax notices, MPAC assessments, surveys, whether owned or leased, original cost, present market value and mortgages, easements, liens and other encumbrances, together with copies of any documents of title in respect of any such real property.

3.2 Leases. A current rent roll for all real property owned any of the Subject Corporation(s) which is leased, together with copies of all leases and related agreements (including amendments) with all tenants, including and any notices of termination and a list of prepaid rents.

3.3 Fixed Assets. List of all equipment, vehicles, furniture and other fixed assets owned or leased by the Vendor or any of the Subject Corporation(s) or for use in the Business, including each of their make, model, serial number, whether owned or leased, original cost and book value, together with, in the case of any such assets with an original cost of Twenty Thousand Dollars ($20,000.00) or greater, copies of any documents of title and leases (and amendments thereto) in respect of such assets.

3.4 Financial Accounts. If not set out in detail on the financial statements, a list of all bank accounts, safe deposit boxes, securities and other investments and liquid assets held by the Vendor and any of the Subject Corporation(s), including their cost, present market value, account and branch particulars and a list of persons with signing authority thereon or who have access thereto or who hold powers of attorney related thereto.

3.5 Rental Items. Disclosure of all assets used in the Business which are rented, leased or otherwise not owned by the Vendor or Subject Corporation(s), together with copies of all rental agreements, lease agreements and other contracts and arrangements related thereto (together with all amendments) and a summary of terms, termination rights, renewal rights, minimum annual payments and total payment commitment for the remainder of term for each.

3.6 Inventories. An itemized list of all current inventories of the Business including quantity, cost, age, location where stored and any details regarding any inventories which are damages or otherwise less saleable.

3.7 Environmental Issues. Particulars of any potential environmental concerns in respect of the Business or property of the Vendor or any of the Subject Corporation(s), including any applicable or necessary governmental or regulatory permits, licenses or authorizations, documented environmental problems, governmental investigations, inquiries or proceedings, spills, and internal policies, practices and procedures.

4.1 Regulatory Permits and Licenses. List of all permits, licenses and similar governmental or regulatory authorizations obtained by the Vendor or any of the Subject Corporation(s) or in respect of the Business or which are necessary for the conduct of the Business, together with all filings with, correspondence or notices from, and pending investigations, inquiries or proceedings by any governmental regulatory agencies in the current fiscal year and any of the past three (3) fiscal years, and disclosure of any such permits, licenses and authorizations which are not currently up to date and in good standing.

4.2 Litigation. List and particulars of all threatened or pending litigation, claims, assessments, and criminal or regulatory proceedings, investigations or inquiries at any point brought, pending, settled, adjudged or appealed in respect of the Vendor or any of the Subject Corporation(s) or the Business in the current fiscal year or any of the past three (3) fiscal years, together with copies of any decrees, judgments, convictions, orders, injunctions and settlement agreements with respect thereto.

4.3 Active Orders. Copies of all orders, rulings, judgments, consent decrees or other decrees of all courts, agencies or tribunals and all settlement agreements or other agreements requiring or prohibiting any present or future activities or imposing any continuing obligations or restrictions on the Vendor or any of the Subject Corporation(s).

4.4 Audit Legal Responses. Copies of any letters of counsel of the Vendor or any of the Subject Corporation(s) in reply to auditors’ inquiry letters for each of the last three (3) audit periods.

4.5 Legal Expenses. Summary of all legal costs (inclusive of fees and disbursements) incurred by the Business, the Vendor or the Subject Corporation(s) n the current and previous fiscal years, including the dates of payment and particulars of each such legal matter.

4.6 Privacy Policies. Copies of all past and present privacy policies (published or unpublished) related to the collection, use and disclosure of personal information however collected, including on internet websites.

4.7 Contracts in Breach. Particulars of any omissions or actions taken under any contract, arrangement, permit, license or authorization to which the Vendor or any of the Subject Corporation(s) is a party or its business is affected, relating to the waiver, extension, breach or termination (if termination process is still ongoing) of or default under such contract, arrangement, permit, license or authorization or any part thereof.

4.8 Laws in Breach. List and describe any federal, provincial, local or foreign laws, regulations, and policies with which the Vendor or any of the Subject Corporation(s) is not currently or at any time in the past has not been in compliance and whether or not any notice of non-compliance was received.

4.9 Customer Complaints. Provide all letters and correspondence relating to any material complaints about the Vendor or any of the Subject Corporation(s) or the Business made by clients or customers.

4.10 Extensions of Limitation Periods. List any actions taken by the any of the Business, Vendor or Subject Corporation(s) that have resulted in a waiver or extension of the statute of limitations that is currently applicable to any of their liabilities.

5.1 Major Customers. List of all material clients and customers of the Business in order of volume for the current and previous fiscal years, together with disclosure of the sales/revenue volume associated with each such client/customer in each such year and disclosure of whether any significant customers or clients (whether significant individually or in the aggregate) have been lost or threatened to cease business dealings with the Business during such time.

5.2 Major Suppliers. List of all material suppliers of the Business in order of volume for the current and previous fiscal years, together with itemized lists of purchases from each such supplier during such time periods and disclosure of whether any significant suppliers (whether significant individually or in the aggregate) have been lost or threatened to cease business dealings with the Business during such time.

5.3 Information Technology. Description of all computer and technical hardware and software used in the operation of the Business, together with operating policies and procedures, together with operating policies and procedures, applicable licensing agreements, purchasing or leasing commitments, system plans and flowcharts, etc.

5.4 Web Site and Other Media Pages. Name and addresses of all websites, online marketing accounts, social media accounts and other arrangements whereby the Business has any online presence, including description of the location and identities of all hosting server(s) and copies of all internet hosting agreements, and any agreement related to the purchase of any domain names.

6.1 Employee List. List of employees, agents and independent contractors of the Vendor and Subject Corporation(s), including job function/description, location, salary and other remuneration, date/details of last pay increase/decrease, age and length of employment, status regarding disability or leave, status regarding whether an employee, agent or independent contractor, status regarding whether a written employment agreement is in place, status regarding entitlement to any benefit or pension plans maintained by the Vendor or any of the Subject Corporation(s), vacation time and vacation pay entitlements and accrued and unused/unpaid vacation time and vacation pay in the current fiscal year.

6.2 Employees on Leave or Disability. List of all employees of the Business who are currently receiving long-term or short-term disability benefits, workers’ compensation or workplace health and safety insurance benefits, leaves of absence including sick leave or parental leave, or receiving other benefits, and account or policy numbers with respect to any of the foregoing insurance or benefits plans or accounts maintained by the Vendor or any of the Subject Corporation(s).

6.3 Payroll, Government Slips and Summaries. A payroll summary for all employees of the Business for the current fiscal year to date, inclusive of all amounts paid and remittances made, together with copies of all T4 slips and summaries pertaining to all employees of the Subject Corporation(s) for the past two (2) calendar years.

6.4 Terminated Employees. List of any employees of the Business which have been terminated or resigned or brought any claims or complaints against the Vendor, the Subject Corporation(s), the Business or any of its other personnel in the current fiscal year or any of the past three (3) fiscal years.

6.5 Non-Unionized. Confirmation that there are no collective bargaining agreements, completed or pending union certifications,

6.6 Employment Contracts. Copies of any written employment agreements (and any outstanding offer letters) of any of the foregoing individuals, copies of consulting, management or similar arrangements with any person or entity relating to the Business, and other contracts, arrangements and obligations applicable to the employees, independent contractors, directors, officers, agents and other representatives of the Vendor and any of the Subject Corporation(s), including confidentiality agreements, non-competition agreements and non-solicitation agreements.

6.7 Benefit Plans. Disclosure of any benefit plans, pension plans, other retirement and benefit compensation plans, multi-employer plans, pay equity plans, insurance maintained (including life, disability, medical, travel, accident, and products liability, workers’ compensation, etc.), and other benefits and perquisites applicable to the employees of the Vendor and any of the Subject Corporation(s).

6.8 Employee Policies. Copies of all employment manuals, employee handbooks, brochures, policies or other literature regarding terms and conditions of employment furnished to employees of the Business generally.

6.9 Planned Increases in Employee Compensation. Description of any increases in compensation or benefit programs granted or proposed in the current or any future fiscal year and description of any traditional, standard or expected increases in compensation or benefits.

6.10 Workers’ Compensation. Copies of all Workplace Safety and Insurance Board workers’ compensation premium and claims statements for the past three (3) fiscal years as well as any other workers compensation documentation, including: (i) a list of all workers compensation registrations with account numbers and name of account holder; (ii) documentation confirming the workers compensation classification and rate of the Companies; (iii) documentation showing amount of current annual premiums paid to workers compensation boards; (iv) a list of all current workers compensation claims and reason for claim (lost time or otherwise); (v) a list of any details of any outstanding workers compensation appeals; (vi) any documentation showing any benefits awarded because of industrial disease or exposure to designated and hazardous substances and (vii) details of any occupational disease or exposure claims that have been filed in the past three (3) years.

6.11 Occupational Health and Safety. Copies of all orders and charges laid by the Ontario Ministry of Labour (and ministries of labour in other provinces) under occupational health and safety legislation. WHMIS (Workplace Hazardous Materials Information System) policy and evidence that it is carefully and strictly enforced.

6.12 Employer Health Tax. Confirmation that none of the Subject Corporation(s) is subject to Employer Health Tax (EHT) or, alternatively, copies of all EHT statements and correspondence for the past two (2) calendar years.

7.1 Insurance Maintained. List and copies of all policies of insurance relating to the Business or its assets taken out by the Vendor or any of the Subject Corporation(s), including fire and casualty, general liability, business interruption, professional liability, disability, product liability, workers’ compensation, director’s and officer’s liability and life, health and dental insurance.

7.2 Non-Insured Risks. List all risks relating to the Business that are “self-insured” and not covered by insurance. Identify any respective reserves and whether such reserves are deemed adequate by management.

7.3 Claims History. Describe the claims history for all of the above policies for the previous three (3) complete fiscal years and the current year to date, including whether the Vendor or any of the Subject Corporation(s) have ever received any notice of intent to cancel any insurance policy.

7.4 Premiums. Copies of the most recent premium statements for employee benefit plans relating to the Business (for example, life, medical and dental insurance).

8.1 Bank Statements. Copies of all account or bank statements and other reports pursuant to any of the accounts described in paragraph 1.18 above.

8.2 Financial Statements. Copies of all financial statements for the Vendor and the Subject Corporation(s) for the past three (3) completed fiscal years, including any accountants’ letters, notices to reader, auditor reports and similar documents in connection with such financial statements.

8.3 Internal and Interim Financial Statements. Copies of up-to-date internally prepared financial statements for the current fiscal year of the Business, together with an up-to-date trial balance as well as the trial balance for the most recent preceding fiscal year.

8.4 Adjusting Journal Entries and Summary of Unadjusted Differences. Copies of any adjusting entries prepared by the Subject Corporation(s)’ external accountants or auditors for the last three (3) fiscal year-ends for the Subject Corporation(s) and Copies of the Summary of Unadjusted Differences, if any, prepared by the external accountant for the last three (3) fiscal year-ends.

8.5 Receivables and Payables. An itemized aged list of all accounts payable, accounts receivable, deposits, prepaid expenses and accruals of the Business as at the most recent month-end, indicating each amount and the name of the third party to whom such amounts relate. To the extent there are any reconciling items between foregoing lists/sub-ledgers and the amounts reported on the month-end internal financial statements provided pursuant to paragraph 1.54, please explain such reconciling items.

8.6 Business Plans and Projections. Copies of any business plans, budgets, proposals, projections, forecasts, consultant analyses, market studies or similar reports regarding the Business created during the current or any of the past three (3) fiscal years.

8.7 Notices of Assessment and Notices of Reassessment. The Vendor’s and Subject Corporations’ Notices of Assessment (and Reassessment) for the last three (3) taxation years.

8.8 Income Tax Returns. All federal and provincial income tax returns of the Vendor and the Subject Corporations for the last three (3) taxation years.

8.9 Tax Elections. Copies of any and all tax election forms filed with the Canada Revenue Agency during the last three (3) tax years and up to the current date, pertaining to the Business (including any tax election forms such as Form T2057 ‘Election on disposition of property by a taxpayer to a taxable Canadian Corporation’) between the Vendor (or any related person to the Vendor) and the Subject Corporation(s).

8.10 GST/HST. Copies of the Vendor’s and Subject Corporation(s)’ GST/HST returns and assessments (and reassessments) for the last three (3) taxation years.

8.11 Property Taxes. The most recent property tax assessments for all real property owned by the Vendor or any of the Subject Corporations or leased by any of the same under an arrangement where such tenant is responsible for property taxes.

8.12 Employee Remittances. Confirmation that all employer obligations of the Vendor and the Subject Corporation(s), including Canada Pension Plan, Employment Insurance and workers’ compensation contributions that are due, have been paid.

8.13 Disputes. Description of any ongoing tax disputes involving the Subject Corporation(s), including copies of any documentation, reports, audits, correspondence, etc. relating to any pending federal, provincial or foreign tax proceedings, prosecutions, assessments or investigations.

9.1 Intellectual Property List. List all patents (including the expiration dates thereof), patent licenses, software licenses, know-how licenses, trade names, brand names, trademarks, service marks, designs, symbols and logos, copyrights and all other intangible property rights owned by the Vendor and the Subject Corporation(s) or used in connection with the Business, whether registered or unregistered and any application or registrations therefor in any jurisdiction including Canada, the United States, and/or any other jurisdiction (collectively, “Intellectual Property”).

9.2 Licensing Agreements. Provide copies of all license, royalty, franchise or other agreements granting the Vendor or Subject Corporation(s) any rights to use any of the Intellectual Property or information technology (including software) which is not exclusively owned by the Vendor and Subject Corporation(s).

9.3 Active Applications and Registrations. List and provide copies of all active applications and registrations (including renewals and extensions) for the Intellectual Property.

9.4 Infringements by the Business. Particulars of whether the Vendor or the Subject Corporation(s) is in default under any Intellectual Property licenses and copies of all correspondence to and from any third party who has alleged infringement of said third party’s rights under patents, trademarks, copyrights, trade secrets and/or unfair competition in connection with the Vendor’s or the Subject Corporation(s)’ operation of the Business.

9.5 Infringements against the Business. Copies of all correspondence to and from any third party who the Vendor or any of the Subject Corporation(s) have alleged has infringed upon any Intellectual Property rights of the Business or has committed unfair competition.

9.6 IP Protection Policies. Describe any unwritten, and provide copies of written, policies and procedures regarding the protection of any Intellectual Property.

10.1 Authorization with the Canada Revenue Agency. Please complete, have executed by all required parties and deliver to us for submission to the Canada Revenue Agency a Form RC59 ‘Business Consent Form’ which will authorize the Purchaser’s accountants to obtain access to view (but not change) the Subject Corporation(s) information on the Canada Revenue Agency’s website using ‘My Representative’. To the extent a Definitive Agreement (as defined in the LOI) is not entered into, it is the responsibility of the Vendor and/or Subject Corporation(s) to remove/cancel such access.

10.2 Authorization with the WSIB. Please complete, have executed by all required parties and deliver to us for submission to the WSIB an ‘Employer’s Direction of Authorization – Firm File Access’ form in respect of the Vendor and Subject Corporation(s).

10.3 Authorization with the Ministry of Finance (RST). Please complete, have executed by all required parties and deliver to us for submission to the Ministry of Finance a ‘Third Party Authorization – Release of Information’ form in respect of the Vendor and Subject Corporation(s).

10.4 Authorization with the Ministry of Finance (EHT). Please complete, have executed by all required parties and deliver to us for submission to the Ministry of Finance a letter authorizing the Ministry to disclose to us all information related to Employer Health Tax accounts and compliance in respect of the Vendor and Subject Corporation(s).

10.5 Real Property Inquiries. Please prepare, have executed by all required parties and deliver to us for submission to the relevant third parties letter(s) authorizing us to make all necessary inquiries and obtain all requested information pertaining to any real properties owned or leased by the Vendor or Subject Corporation(s) or in connection with the Business, including, without limitation, inquiries with all utilities and service providers, municipal planning and zoning departments, municipal or regional health departments, fire departments, conservation authorities and similar regulatory authorities.

10.6 Human Rights Commissions. Please complete, have executed by all required parties and deliver to us for submission to the Ministry of Finance a letter authorizing the Ontario Human Rights Commission and Canadian Human Rights Commission to disclose to us all information related to complaints or proceedings against the Vendor and Subject Corporation(s) pertaining to the Ontario Human Rights Code and Canadian Human Rights Act.