"Due Diligence" Investigation Check List

1. CORPORATE MATTERS
a. Articles of Incorporation and by-laws of the Company and Seller.
b. Corporate minute books and stock transfer records of the Company.
c. Federal and state tax returns and related reports of the Company including:
i. income tax returns
ii. audit reports of taxing authorities including descriptions of any open
issues
iii. real estate tax bills and payment records
i!. personal property tax bills and payment records
!. franchise license capital stock doing business and similar tax reports
and
!i. any other material documents.
d. Agreements and arrangements between the Company and Seller or any affiliate
of the Company or Seller including:
i. stock subscription agreements
ii. loan line of credit or other financing arrangements
iii. tax sharing agreements or arrangements
i!. o!erhead allocation agreements or arrangements
!. management ser!ices or personnel loan agreements or arrangements
!i. guarantees or keep-well arrangements for the benefit of creditors or other
third parties and
!ii. any others.
e. Shareholder agreements relating to stock of the Company or stock owned by the
Company.
f. "ocuments imposing restrictions or conditions on stock transfer or merger
including any arrangements granting rights of first refusal or other preferential
purchase rights.
g. #hird-party or go!ernmental consent or authori$ations re%uired for merger or
ac%uisition.
2. I!A!CIAL MATTERS
a. Financial statements including:
i. audited financial statements for all periods beginning on or after & '(&
consisting in each case of at least a balance sheet and income
statement
ii. interim monthly unaudited financial statements for periods after the latest
audited statements and
iii. working papers relating to the foregoing.
b. )ank accounts and depositary arrangements.
c. Credit agreements and credit instruments including loan agreements notes
debentures and bonds and files relating thereto.
d. *erformance and financial bonds.
e. +etters of credit.
f. Instruments or arrangements creating liens encumbrances mortgages or other
charges ,including mechanics and materialmens- liens. on any real or personal
property of the Company including property held indirectly through /oint !entures
partnerships subsidiaries or otherwise.
g. 0ecei!ables analysis including aging turno!er and bad debt experience.
". MA!A#EME!T A!D OPERATIO!S
a. Internal management reports and memoranda.
b. *olicy and procedures manuals including those concerning personnel policy
internal controls and legal and regulatory compliance.
c. )udgets financial pro/ections business plans and capital expenditure plans.
d. Contracts and arrangements for supplies or ser!ices including the following
which were entered into or under which work was done during the past & years:
i. contracts for the sale or purchase of real estate
ii. contracts for the purchase or sale of materials e%uipment or other
personal property or fixtures
iii. contracts or other arrangements for legal accounting consulting
brokerage banking or other ser!ices and
i!. construction and engineering contracts or subcontracts.
e. *roprietary information and documents including:
i. patents and patent applications
ii. copyrights
iii. trademarks ser!ice marks logos and trade or assumed names
i!. nonpatentable proprietary know-how
!. federal and state filings relating to any of the foregoing
!i. licensing agreements relating to any of the foregoing ,whether the
Company is a licensor or licensee. and
!ii. confidentiality agreements relating to any of the foregoing.
f. *artnership or /oint !enture agreements to which the Company is a party and any
other arrangements with third parties concerning the management or operation of
properties facilities or in!estments of the Company.
g. 0eports to management board of directors or shareholders prepared by outside
consultants engineers or analysts.
h. Closing documentation and related files for each prior sale of Company stock
and each material asset purchase or sale by the Company during the past &
years.
i. +eases deeds and related instruments including without limitation office
premises leases e%uipment or !ehicle leases and any such instruments held
indirectly through /oint !entures partnerships subsidiaries or otherwise.
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/. Agreements or arrangements granting rights of first refusal or other preferential
purchase rights to any property of the Company.
k. 2ther material agreements or arrangements.
$. EMPLO%EE MATTERS
a. Corporate policies concerning hiring compensation ad!ancement and
termination.
b. +abor contracts together with a list of all labor unions that ha!e represented or
attempted to represent employees of the Company during the past & years.
c. Agreements with indi!idual employees including:
i. executi!e employment agreements
ii. bonus profit-sharing and similar arrangements
iii. postemployment agreements including 3salary continuation3 and 3golden
parachute3 arrangements and
i!. co!enants not to compete by present or former employees.
d. 4ames of any officers or key employees who ha!e left the Company during the
past years.
e. 5ach of the following which the Company maintains or contributes to together
with filings with the Internal 0e!enue Ser!ice *ension )enefit 6uaranty
Corporation ,*)6C. Securities and 5xchange Commission and "epartment of
+abor including without limitation Forms 7788 and 79'8 summary plan
descriptions summary annual reports I0S determination letters ,for %ualified
plans. and *)6C reportable e!ents:
i. :nion-sponsored multiemployer plans
ii. "efined benefit plans
iii. "efined contribution plans including:
'. money purchase pension plans
1. profit-sharing plans
9. stock bonus plans
;. employee stock ownership plans and
7. sa!ings or thrift plans
i!. <ealth and welfare plans including:
'. medical surgical hospital or other health care plans or insurance
programs including <=2s
1. dental plans
9. short-term disability or sick pay plans or arrangements
;. long-term disability insurance or uninsured arrangements
7. group term or other life or accident insurance
>. unemployment or !acation benefit plans and
?. other welfare plans
!. 4on%ualified deferred compensation arrangements including:
'. director or officer deferred fee plans
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1. excess benefit plans ,pro!iding benefits in excess of internal
re!enue code limitations for %ualified plans. and
9. se!erance pay plans
!i. Incenti!e or bonus plans including:
'. stock option plans
1. stock bonus plans
9. stock purchase plans and
;. cash bonus or incenti!e plans.
&. I!S'RA!CE
a. Insurance policies including those co!ering:
i. fire
ii. liability
iii. casualty
i!. life
!. title
!i. workers- compensation
!ii. directors- and officers- liability and
!iii. any other insured e!ents or matters.
b. Claim and loss histories correspondence with insurance carriers and names of
all insurance representati!es relating to the foregoing.
(. REAL ESTATE A!D E)'IPME!T A!D OT*ER PERSO!AL PROPERT%
a. +ist of real estate ,with legal descriptions. e%uipment and other personal
property owned leased or in the process of being ac%uired or sold by the
Company with the cost and book !alue of each item.
b. 0eal estate e%uipment and other personal property leases and conditional sale
agreements.
c. Information relating to title on all property listed in the items abo!e including
motor !ehicle title documents.
d. Appraisals of real estate personal property and e%uipment.
+. #O,ER!ME!TAL RE#'LATIO!
a. +icenses permits filings or authori$ations obtained from made with or re%uired
by any go!ernmental entity.
b. Correspondence with any go!ernmental regulatory authority.
c. Accident or in/ury reports to federal state local and foreign go!ernmental
entities.
-. LITI#ATIO! A!D CLAIMS
a. *ending or threatened litigation regulatory in!estigations go!ernmental actions
arbitrations or notices of !iolation or possible !iolation including proceedings in
;
which the Company is a plaintiff or claimant and the names and addresses of
legal counsel ad!ising or representing the Company in each matter.
b. Files and records relating to the foregoing including opinions and e!aluations.
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