Due Diligence Checklist

Information Requested Status

A. Organization and Good Standing.
1. The Company's Articles of Incorporation, and
all amendments thereto.
2. The Company's Bylaws, and all amendments
thereto.
3. The Company's minute book, including all
minutes and resolutions of shareholders and
directors, executive committees, and other
governing groups.
4. The Company's organizational chart.
5. The Company's list of shareholders and
number of shares held by each.
6. Copies of agreements relating to options,
voting trusts, warrants, puts, calls,
subscriptions, and convertible securities.
7. A Certificate of Good Standing from the
Secretary of State of the state where the
Company is incorporated.
8. Copies of active status reports in the state of
incorporation for the last three years.
9. A list of all states where the Company is
authorized to do business and annual reports
for the last three years.
10. A list of all states, provinces, or countries
where the Company owns or leases property,
maintains employees, or conducts business.
11. A list of all of the Company's assumed
names and copies of registrations thereof.
12. A list of all subsidiaries or affiliates of the
Company
B. Financial Information.
1. Audited financial statements for three years,
together with Auditor's Reports.
2. The most recent unaudited statements, with
comparable statements to the prior year.
3. Auditor's letters and replies for the past five
years.
4. The Company's credit report, if available.
5. Any projections, capital budgets and strategic
plans.
6. Analyst reports, if available.
7. A schedule of all indebtedness and
contingent liabilities. All agreements relating
to current or future debt (including
reimbursement) obligations for borrowed
money, including security agreements and
agreements to acquire any such debt
obligation of others, or for a leasing
transaction of a type required to be
capitalized in accordance with FASB No. 13.
8. A schedule of inventory.
9. A schedule of accounts receivable.
10. A schedule of accounts payable.
11. A description of depreciation and
amortization methods and changes in
accounting methods over the past five years.
12. Any analysis of fixed and variable expenses.
13. Any analysis of gross margins.
14. The Company's general ledger.
15. A description of the Company's internal
control procedures.
C. Physical Assets.
1. A schedule of fixed assets and the
locations thereof.
2. All U.C.C. filings.

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3. All leases of equipment.
4. A schedule of sales and purchases of
major capital equipment during last
three years.
5. Capitalization table
6. All shareholder agreements and equity-
related documents, including private
placement memos, if any
7. All secured loan documentation,
including promissory notes, security
agreements, and UCC financing
statements.
8.
9. Description of and reason for any
change in accountants or accounting
methods or principles.
10. List of the Company’s top [20] suppliers
with respect to the Business, and, if
available, a breakdown by purchases
per supplier and indicating any sole-
source supplier.
11. Copies of all agreements with sales
representatives, distributors and
resellers, with respect to the Business,
including addresses and sales data for
the last two fiscal years. If such
agreements are in the Company’s
standard form without revisions, the
Company may provide a copy of the
standard form and a list of third parties
who have entered into such forms
(including the names and addresses of
such parties, and the date of each such
form agreement).
D. Real Estate.
1. A schedule of the Company's business
locations.
2. Copies of all real estate leases, deeds,
mortgages, title policies, surveys, zoning
approvals, variances or use permits.
E. Intellectual Property.
1. A schedule of domestic and foreign patents
and patent applications.
2. A schedule of trademark and trade names.
all trademarks, trade names and service
marks, registered or unregistered, used in
connection with the Business, whether or not
such trademarks, trade names and service
marks are owned by or licensed to the
Company, with a description of products or
services associated therewith, numbers,
jurisdiction and status of any registration
applications pending, if any; and copies of all
state, federal and other registration and
recordation documents and certifications
pertaining to each.
3. A schedule of copyrights. List and copies of
all copyright registrations and applications
pending relating to the Business, held or
being prosecuted by the Company in the
United States or elsewhere, in connection
with the Business, with descriptive titles,
numbers and jurisdiction.
4. A description of important technical know-
how.
5. A description of methods used to protect
trade secrets and know-how.

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6. Any "work for hire" agreements.
7. A schedule and copies of all consulting
agreements, agreements regarding
inventions, and licenses or assignments of
intellectual property to or from the Company.
8. Any patent clearance documents.
9. A schedule and summary of any claims,
litigation or threatened claims by or against
the Company regarding intellectual property.
10. All license agreements and sublicense
agreements pursuant to which the Company licenses
any technology or intellectual property rights to or
from third parties in connection with the Business.

11. All documents, correspondence, pleadings,

memos, notes and other papers or
information relating to any actual, pending,
potential or threatened intellectual property
litigation or claim against the Company, or
any other actual, pending, potential or
threatened assertion, suggestion or inquiry
by a third party that the Company is infringing
its intellectual property rights.
12. List of law firms handling intellectual
property matters for the Company and name and
telephone numbers of the contact person or persons
at each such firm.

F. Employees and Employee Benefits.

1. A list of employees including positions,
current salaries, salaries and bonuses paid
during last three years, and years of service.
2. All employment, consulting, nondisclosure,
nonsolicitation or noncompetition agreements
between the Company and any of its
employees.
3. Resumés of key employees.
4. The Company's personnel handbook and a
schedule of all employee benefits and
holiday, vacation, and sick leave policies.
5. Summary plan descriptions of qualified and
non-qualified retirement plans.
6. Copies of collective bargaining agreements,
if any.
7. A description of all employee problems within
the last three years, including alleged
wrongful termination, harassment, and
discrimination.
8. A description of any labor disputes, HR
litigation, requests for arbitration, or
grievance procedures currently pending or
settled within the last three years.
9. A list and description of benefits of all
employee health and welfare insurance
policies or self-funded arrangements.
10. A description of worker's compensation claim
history.
11. A description of unemployment insurance
claims history.
12. Copies of all stock option and stock purchase
plans and a schedule of grants thereunder.

13. Any non at-will employee agreements?

14. Any severance provisions?

15. Any deferred compensation? Any accrued

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Information Requested Status

but unpaid salary? Any accrued but unpaid
vacation?

G. Licenses and Permits.

1. Copies of any governmental licenses,
permits or consents.
2. Any correspondence or documents relating
to any proceedings of any regulatory agency.
H. Environmental Issues.
1. Environmental audits, if any, for each
property leased by the Company.
2. A listing of hazardous substances used
in the Company's operations.
3. A description of the Company's disposal
methods.
4. A list of environmental permits and
licenses.
5. Copies of all correspondence, notices
and files related to EPA, state, or local
regulatory agencies.
6. A list identifying and describing any
environmental litigation or
investigations.
I. Taxes
1. Federal, state, local and foreign tax
returns for the last three years
2. States sales tax returns for the last
three years.
3. Any audit and revenue agency reports.
4. Any tax settlement documents for the
last three years.
5. Employment tax filings for three years.
6. Excise tax filings for three years.
7. Any tax liens.
J. Material Contracts.
1. A schedule of all subsidiary, partnership, or
joint venture relationships and obligations,
with copies of all related agreements.
2. Copies of all contracts between the Company
and any officers, directors, 5-percent
shareholders or affiliates.
3. All loan agreements, bank financing
arrangements, line of credit, or promissory
notes to which the Company is a party.
4. All security agreements, mortgages,
indentures, collateral pledges, and similar
agreements.
5. All guaranties to which the Company is a
party.
6. Any installment sale agreements.
7. Any distribution agreements, sales
representative agreements, marketing
agreements, and supply agreements.
8. Any letters of intent, contracts, and closing
transcripts from any mergers, acquisitions, or
divestitures within last five years.
9. Any options and stock purchase agreements
involving interests in other companies.
10. The Company's standard quote, purchase
order, invoice and warranty forms.
11. All nondisclosure or noncompetition
agreements to which the Company is a party.
12. All other material contracts and contract
litigation. Any other contracts with respect to
the Business pursuant to which the Company
will receive or pay over [$25,000] or which in
the Company’s view are material to the

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Business
13. All contracts with provisions purporting to
limit the Company’s Business activities or
ability to compete in any market with respect
to the Business or providing for exclusive
rights.
K. Product or Service Lines.
1. A list of all existing products or services and
products or services under development.
2. Copies of all correspondence and reports
related to any regulatory approvals or
disapprovals of any Company's products or
services.
3. A summary of all complaints or warranty
claims or product/service litigation.
4. A summary of results of all tests, evaluations,
studies, surveys, and other data regarding
existing products or services and products or
services under development.
L. Customer Information.
1. A schedule of the Company's twelve largest
customers in terms of sales thereto and a
description of sales thereto over a period of
two years. A breakdown by revenue per
customer for the last two fiscal years,
including any form contract used with
customers (i.e., form license agreement or
support maintenance agreement).
2. Any supply or service agreements.
3. A description or copy of the Company's
purchasing policies.
4. A description or copy of the Company's credit
policy
5. A schedule of unfilled orders - backlog
6. A list and explanation for any major
customers lost over the last two years
7. All surveys and market research reports
relevant to the Company or its products or
services
8. The Company's current advertising
programs, marketing plans and budgets, and
printed marketing materials.
M. Litigation
1. A schedule of all pending litigation

2. A description of any threatened litigation.

3. Copies of insurance policies possibly
providing coverage as to pending or
threatened litigation.

4. Documents relating to any injunctions,

consent decrees, or settlements to which the
Company is a party.

5. A list of unsatisfied judgments

N. Insurance Coverage
1. A schedule and copies of the Company's
general liability, personal and real property,
product liability, errors and omissions, key-
man, directors and officers, worker's
compensation, and other insurance.

2. A schedule of the Company's insurance

claims history for past three years
O. Professionals.
1. A schedule of all law firms, accounting firms,

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Information Requested Status

consulting firms, and similar professionals
engaged by the Company during past five
years

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