Sample Due Diligence Request Checklist

Set forth below is a preliminary list of documents and information regarding [Company Name]

(together with all subsidiaries and any predecessors, collectively, the “Company”) which must

be reviewed by Buyer, Inc. (“Buyer”) and its counsel and advisors in connection with a possible

transaction with the Company. This is not a definitive list, and as the review proceeds,

Unless otherwise indicated, the word “material” means an item involving payments (to or from

the Company) or liabilities in excess of $[XX,000].

To the extent that you have already provided Buyer information or documents that are

responsive to any of the requests, please note this next to the applicable item in the attached

list. Please provide all other requested information or documents. If any of the items requested

does not exist or is not relevant to the Company, please note this be placing the words “NONE”

or “NOT APPLICABLE” below the listed item. Additionally, it will expedite our review if you

would mark each document that you furnish to us in response to this list with the item number

to which that document corresponds.

If there is any change in circumstances arising after you respond to any of the requests below,

or Bud Baker at [email protected] ((919) 743-7318).

A. ORGANIZATION OF THE COMPANY

1. Describe the corporate or other structure of the legal entities that comprise the

Company. Include any helpful diagrams or charts. Provide a list of the officers and

directors of the Company and a brief description of their duties.

2. Long-form certificate of good standing and articles or certificate of incorporation from

Secretary of State or other appropriate official in the Company's jurisdiction of

incorporation, listing all documents on file with respect to the Company, and a copy of all

documents listed therein.

which the Company is qualified to do business.

5. All minutes for meetings of the Company's board of directors, board committees and

stockholders for the last [five] years, and all written actions or consents in lieu of

meetings thereof.

6. List of all subsidiaries and other entities (including partnerships) in which the Company

has an equity interest; organizational chart showing ownership of such entities; and any

agreements relating to the Company's interest in any such entity.

B. OWNERSHIP AND CONTROL OF THE COMPANY

1. Capitalization of the Company, including all outstanding capital stock, convertible

securities, options, warrants and similar instruments.

C. ASSETS AND OPERATIONS

1. Annual financial statements with notes thereto for the past three fiscal years of the

Company, and the latest interim financial statements since the end of the last fiscal year

and product sales and cost of sales (including royalties) analysis for each product which

is part of assets to be sold.

2. All current budgets and projections including projections for product sales and cost of

sales.

3. Any auditors (internal and external) letters and reports to management for the past [five]

years (and management's responses thereto).

4. Provide a detailed breakdown of the basis for the allowance for doubtful accounts.

certificates of occupancy, easements, zoning variances, condemnation or eminent

domain orders or proceedings, deeds of trust, mortgages and fixture lien filings.

8. Schedule of significant fixed assets, owned or used by the Company, including the

identification of the person holding title to such assets and any material liens or

restrictions on such assets.

9. Without duplication from Section D below, or separate intellectual property due diligence

checklist, schedule of all intangible assets (including customer lists and goodwill) and

proprietary or intellectual properties owned or used in the Company, including a

statement as to the entity holding title or right to such assets and any material liens or

restrictions on such assets. Include on and off balance sheet items.

E. REPORTS

1. Copies of any studies, appraisals, reports, analyses or memoranda within the last [three]

years relating to the Company (i.e., competition, products, pricing, technological

developments, software developments, etc.).

2. Current descriptions of the Company that may have been prepared for any purpose,

including any brochures used in soliciting or advertising.

3. Descriptions of any customer quality awards, plant qualification/certification distinctions,

ISO certifications or other awards or certificates viewed by the Company as significant

or reflective of superior performance.

4. Copies of any analyst or other market reports concerning the Company known to have

been issued within the last [three] years.

claim and loss experience thereunder.

6. Any of the following documents filed by the Company or affiliates of the Company and

which contain information concerning the Company: annual reports on SEC Form 10-K;

quarterly reports on SEC Form 10-Q; current reports on SEC Form 8-K.

F. COMPLIANCE WITH LAWS

1. Copies of all licenses, permits, certificates, authorizations, registrations, concessions,

approvals, exemptions and other operating authorities from all governmental authorities

and any applications therefor, and a description of any pending contemplated or

threatened changes in the foregoing.

2. A description of any pending or threatened proceedings or investigations before any

court or any regulatory authority.

3. Describe any circumstance where the Company has been or may be accused of

violating any law or failing to possess any material license, permit or other authorization.

List all citations and notices from governmental or regulatory authorities.

4. Schedule of the latest dates of inspection of the Company's facilities by each regulatory

authority that has inspected such facilities.

regulatory changes of which the Company is aware.

6. Copies of any information requests from, correspondence with, reports of or to, filings

with or other material information with respect to any regulatory bodies which regulate a

material portion of the Company's business. Limit response to the last [five] years unless

upon or consummate the proposed transaction.

9. Schedule of any significant U.S. import or export restrictions that relate to the

Company's operations.

10. List of any export, import or customs permits or authorizations, certificates, registrations,

concessions, exemptions, etc., that are required in order for the Company to conduct its

business and copies of all approvals, etc. granted to the Company that are currently in

effect or pending renewal.

11. Any correspondence with or complaints from third parties relating to the marketing,

sales or promotion practices of the Company.

G. ENVIRONMENTAL MATTERS

1. A list of facilities or other properties currently or formerly owned, leased, or operated by

the Company and its predecessors, if any.

2. Reports of environmental audits or site assessments in the possession of the Company,

including any Phase I or Phase II assessments or asbestos surveys, relating to any

such facilities or properties.

3. Copies of any inspection reports prepared by any governmental agency or insurance

carrier in connection with environmental or workplace safety and health regulations

relating to any such facilities or properties.

4. Copies of all environmental and workplace safety and health notices of violations,

complaints, consent decrees, and other documents indicating noncompliance with

environmental or workplace safety and health laws or regulations, received by the

Company from local, state, or federal governmental authorities. If available, include

6. Listing of underground storage tanks currently or previously present at the properties

to Items 1-6 above.

8. Copies of any information requests, PRP notices, "106 orders," or other notices received

by the Company pursuant to CERCLA or similar state or foreign laws relating to liability

for hazardous substance releases at off-site facilities.

9. Copies of any notices or requests described in Item 8 above, relating to potential liability

for hazardous substance releases at any properties or facilities described in response to

Item 1.

10. Copies of material correspondence or other documents (including any relating to the

Company's share of liability) with respect to any matters identified in response to Items 8

and 9.

12. Description of the workplace safety and health programs currently in place for the

Company's business, with particular emphasis on chemical handling practices.

H. LITIGATION

1. List of all litigation, arbitration and governmental proceedings relating to the Company to

which the Company or any of its directors, officers or employees is or has been a party,

or which is threatened against any of them, indicating the name of the court, agency or

other body before whom pending, date instituted, amount involved, insurance coverage

and current status. Also describe any similar matters which were material to the

Company and which were adjudicated or settled in the last [ten] years.

2. Information as to any past or present governmental investigation of or proceeding

I. SIGNIFICANT CONTRACTS AND COMMITMENTS

1. Contracts relating to any completed (during the past 10 years) or proposed

reorganization, acquisition, merger, or purchase or sale of substantial assets (including

all agreements relating to the sale, proposed acquisition or disposition of any and all

divisions, subsidiaries or businesses) of or with respect to the Company.

2. All joint venture and partnership agreements to which the Company is a party.

3. All material agreements encumbering real or personal property owned by the Company

including mortgages, pledges, security agreements or financing statements.

lessor or lessee), and all leasehold title insurance policies (if any).

endorsements for collection in the ordinary course and consistent with past practice.

employee or agent against any liability incurred in such capacity.

arrangements, lines of credit, lease financing arrangements, installment purchases, etc.

relating to the Company or its assets and copies of any security interests or other liens

securing such obligations.

9. No-default certificates and similar documents delivered to lenders for the last [five] (or

shorter period, if applicable) years evidencing compliance with financing agreements.

12. Contracts involving cooperation with other companies or restricting competition.

including contracts relating to any patent, trademark, service mark and copyright

registrations or other proprietary rights used by the Company and any other agreement