Sample Due Diligence Checklist

Please provide copies of the indicated documents or the information requested, as

appropriate.
1. Basic Corporate Documents:
a. Articles of Incorporation, including all amendments.

b. B!la"s, including all amendments.

c. #inutes of all meetings of directors, committees of directors and shareholders,
including copies of an "ritten notices $if given% or "aivers thereof and an "ritten!
consent to action "ithout a meeting.

d. &ist of all states "here propert o"ned or leased or "here emploees are located,
indicating in "hich states the Compan is qualified to do business.

e. &ist of all countries "here Compan is doing business, indicating in "hich
countries the Compan is qualified to do business.

f. 'amples of common and preferred stoc( certificates $if an%, "arrants, options,
debentures and an other outstanding securities.

g. Copies of an voting trust, shareholder or other similar agreement covering an
portion of the Compan)s shares.

h. Copies of all agreements relating to repurchases, redemptions, e*changes,
conversions or similar transactions.

i. Copies of all agreements containing registration rights or assigning such rights.

+. Copies of all agreements containing preemptive rights or assigning such rights.

(. 'toc( boo(s of the Compan.

l. All quarterl and annual reports and an other communications to the Compan)s
shareholders "ithin the past five ears.

m. All press releases issued b the Compan "ithin the past five ears.

n. &ist of all subsidiaries.

,. Documents for an 'ubsidiar: 'ame as those listed under -o. 1 above.

.. 'ecurities Issuances:
a. /quit 0inancings: copies of an stoc( purchase agreements.

b. Debt 0inancings: copies of convertible debt agreements.

c. 'toc( option or purchase plans and forms of option or purchase agreements
"hich have been or ma be used thereunder.

d. An other agreements relating to sales of securities b the Compan including
an private placement memoranda or other offering circulars.

e. Blue '( permits, notices of e*emption and consents for issuance or transfer of
Compan)s securities and evidence of qualification or e*emption under other
applicable state blue s( la"s.

f. 0orms D or an other forms filed to establish an e*emption under the 'ecurities
Act of 11...

2. 'hareholder Information:
a. 3ecords setting forth all issuances or grants of stoc(, options and "arrants b the
Compan, listing the names of the issuees or grantees, the amounts issued or
granted, the dates of the issuances or grants, the number of shares presentl
e*ercisable $if applicable% and the consideration received $or to be received% b the
Compan in each case.

b. &ists of all current shareholders, including addresses and numbers of shares
o"ned.

c. -umerical listing of stoc( certificates sho"ing certificate number and date, name
of shareholder, number of shares, date of Board approval and permit and tracing
transfers.

d. &ists of all options proposed to be granted, if an, including names and addresses
of proposed optionholders and number of options to be held b each.

4. #aterial Contracts:
a. Ban(line of credit agreements, including an amendments, rene"al letters,
notices, "aivers, correspondences, etc.

b. 5ther agreements evidencing outstanding loans to or guarantees b the
Compan, including correspondences.

c. All outstanding leases for real and personal propert.

d. #aterial contracts "ith suppliers or customers. Please indicate "hich suppliers are
sole source.

e. #odel sales or manufacturing contracts.

f. Agreements for loans to and an other agreements $including consulting and
emploment contracts% "ith officers, directors or emploees, "hether or not no"
outstanding.

g. 'chedule of all insurance policies in force covering propert of the Compan and
an other insurance policies such as ))(e person)) policies, director indemnification
policies or product liabilit policies.

h. Partnership or +oint venture agreements.

i. Bonus plans, retirement plans, pension plans, deferred compensation plans, profit
sharing and management incentive agreements.

+. 0orm of emploee confidentialit invention assignment agreement.

(. An other material contracts outstanding.

6. Patent and 7rademar( #atters:
a. &ist of all foreign and domestic patents and patent licenses held b the Compan.

b. &ist of an trademar(s, trade names or service mar(s.

c. &ist of an coprights.

d. Copies of all material agreements for licensing of Compan technolog to third
parties.

e. Copies of all material agreements for licensing of technolog from third parties.

f. Describe importance of e*isting patents and "hether additional patents are
necessar.

g. An correspondence from third parties regarding potential infringement of
intellectual propert right of others.

h. &ist of proprietar processes controlled b the Compan.

i. Please provide the name of the la" firm "hich handles patent and trademar(
matters for the Compan and the contact there.

8. #anufacturing:
a. A brea(do"n b manufacturing site of the products manufactured, personnel
emploed, number of shifts and capacit, if an.

b. &ist of ma+or suppliers sho"ing total and tpe of purchases from each supplier
during the last and current fiscal ears, and indicate which are sole sources.

c. &ist of contract manufacturers or assemblers, if an, sho"ing total and tpe of
purchases from each contract manufacturer or assembler during the last and current
fiscal ears.

d. #aterial or outside of ordinar course of business contracts "ith suppliers,
manufacturers, etc., if an.

e. Description of all to*ic chemicals used in production and manner of storage and
disposition. Description of an /PA or other investigation or claim.

9. 5perations:
a. &ist of third part developers sho"ing total and tpe of pro+ect for each developer
during the last and current fiscal ears, contact names and phone numbers, together
"ith forms of agreements entered into "ith third part developers.

b. &ist of third part soft"are duplicators and manual publishers sho"ing total and
tpe of services from each duplicator and publisher during the last and current fiscal
ears.

c. 0orm of agreements relating to the sale or lease of material capital equipment.

d. &ist of top ,: accounts paable "ith contact names and phone numbers.

1. 'ales and #ar(eting:
a. Copies of all mar(et research or mar(eting studies conducted in the last three
ears.

b. &ist of the Compan)s products and services.

c. &ist of the Compan)s competitors.

d. &ist of the Compan)s ,: largest customers or groups in each of the last t"o fiscal
ears, indicating the tpes of products and the amounts of each purchased, and
contact name and phone number for each customer.

e. All material licensing agreements, franchises, and conditional sales contracts to
"hich the Compan is a part.

f. Agreements "ith distributors, ;A3)s, 5/#)s, dealers and sales representatives.

g. Copies of long!term sales contracts.

h. Compan!financed customer purchase agreements, if an.

i. 'ervice and support contracts and mar(eting agreements, if an.

+. All material agenc and advertising contracts to "hich the Compan is a part.

(. 0orms of "arranties and guarantees provided to customers.

l. Copies of all mar(et research or mar(eting studies.

m. Copies of sales literature and forms, including price lists, catalogs, purchase
orders, etc.

n. &ist of top ,: accounts receivable "ith contact names and phone numbers.

o. Bac(log at end of the most recent fiscal ear and most recent fiscal quarter.

1:. 7angible Propert:
a. &ist of real and material personal propert o"ned b the Compan.

b. Documents of title, mortgages, deeds of trust and securit agreements pertaining
to the properties listed in $a% above.

c. All outstanding leases for real and personal propert to "hich the Compan is
either a lessor or lessee.

d. &ist of an securit interests in personal propert, including an <CC filing.

e. Documentation of significant acquisitions or dispositions of assets.

11. &itigation and Audits:
a. All letters "hich have been sent to auditors in connection "ith ear!end and
current interim audits, including ))litigation letters.))

b. Copies of an auditors) letters to management regarding internal accounting
controls.

c. Descriptions of $and reasons for% an change in accounting methods in the past
three ears.

d. Active litigation files, including letters asserting claims, complaints, ans"ers, etc.

e. An litigation settlement documents.

f. An decrees, orders or +udgments of courts or governmental agencies.

g. Description of an "arrant claims "hich have been made against the Compan,
an subsidiar, or an partnership or +oint venture and the resolution of such claim.

h. Information regarding an material litigation to "hich the Compan is a part or
in "hich it ma become involved.

1,. /nvironmental:
a. 'chedule of =a>ardous #aterials stored, manufactured or located at an facilit of
the Compan either no" or in the past, or that the Compan ships or transports
$=a>ardous #aterials means an substance or an material containing a substance
that could be considered to*ic or ha>ardous under 0ederal or state la", including
solvents, petroleum, pesticides, paints, asbestos containing materials, lead based
batteries, radioactive materials and PCB containing transformers.%

b. 'chedule of chemicals, to*ic substances or air contaminants "hich are regulated
b 5'=A present in an facilit of the Compan.

c. 'chedule of an incidents involving the release of a potentiall ha>ardous amount
of an carcinogen into, or presence of asbestos in, the "or(place.

d. 'chedule of all instances in the past in "hich the Compan has corrected unsafe
"or(ing conditions.

e. 'chedule of all the facilities of the Compan that discharge "aste into an bod of
"ater, stream or an sanitation sstems.

f. 'chedule of all permits or approvals obtained from an governmental bod
responsible for environmental or health regulation.

g. 'chedule of all occasions in "hich a liquid or solid "aste material or an fuel or
other =a>ardous #aterial "as accidentall or intentionall spilled or released.

h. An notices of violation or requests for information that have been received or
threatened at an time for alleged failure of an facilit to compl "ith applicable air
pollution la"s or "ith an air qualit permit.

1.. /mploees:
a. Description of an significant labor problems or union activities the Compan has
e*perienced including an collective bargaining agreements.

b. -umber of emploees bro(en do"n b ma+or tpes of emploees and a
management organi>ation chart.

12. #anagement:
a. Completed copies of Directors) and 5fficers) ?uestionnaires.

b. Detailed resume of directors and top management personnel.

c. 0ounders agreements, management emploment agreements, indemnification
agreements, and ))golden parachute)) agreements, if an.

d. 'chedule of all compensation paid in the most recent fiscal ear to officers,
directors and (e emploees sho"ing separatel salar, bonuses and non!cash
compensation $e.g., use of cars, propert, etc.%

e. Bonus plans, retirement plans, pension plans, deferred compensation plans, profit
sharing and management incentive agreements.

f. Agreements for loans to and an other agreements $including consulting and
emploment contracts% "ith officers or directors, "hether or not no" outstanding.

g. Description of an transactions bet"een the Compan and an insider $i.e.,
officer, director, or o"ners of substantial amount of the Compan)s securities%.

14. 5ther 3evie":
a. Cop of an internal or outside studies of the Compan or the mar(et for its
products $e.g., management consultants%.

b. 'ummar of all 5'=A inquiries $if an%.

c. 'ummar of all /PA, //5 $etc.% inquiries $if an%.

d. 'ummar of all Department of &abor inquiries.

e. 'tatus of contracts sub+ect to 3enegotiation Act.

f. 'ummar of 0ederal, 'tate, local and foreign income ta* status, i.e., have all
returns been filed@ all ta*es been paid@ an audits b ta*ing authorities@

g. Permits for conduct of business, including licenses, franchises, concessions and
distributorship agreements.