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2.05 Due Diligence List If a joint venture partner will convey assets or license technology to the venture, the other partner is likely to want to conduct diligence to confirm that the assets are in good condition, and that they constitute everything that the venture will need to operate the venture. In general, a standard due diligence with relatively modest redrafting will suffice. The following is a form of general due diligence checklist. It is designed to capture information about the company as a whole. This form would be most useful in a deal in which all of a company's businesses would be contributed to a new venture. When the company only plans to contribute assets related to one of several businesses, a due diligence checklist with a narrower scope would be appropriate. [COMPANY NAME] DUE DILIGENCE CHECKLIST Please provide the following documents and information for [Company Name] (the "Company") and all of its subsidiaries (collectively, the "Subsidiaries") in connection with the Company's proposed transaction. Dated: _______________ OUTLINE OF CHECKLIST A. BASIC INFORMATION AND BACKGROUND B. FINANCIAL INFORMATION AND ADVISORS C. ASSETS AND INTELLECTUAL PROPERTY D. MATERIAL CONTRACTS E. MATERIAL LITIGATION F. EMPLOYEE MATTERS G. REGULATORY MATTERS, GOVERNMENT APPROVALS AND PERMITS H. TAX MATTERS I. INSURANCE J. OTHER INFORMATIONNot Notes Have not No. Item Description Provided Applicable been provided and documents A. BASIC INFORMATION for the LLC. AND BACKGROUND A1 Charter and bylaws, and all amendments thereto. A2 Minutes of all meetings of the board of directors (including all committees) and shareholders, including copies of notices of all such meetings where written notices were given and all written consents, since inception. A3 Description of acquisitions, restructurings, conversions, reorganizations, dispositions, divestitures, repurchases or any other significant transactions of businesses or material assets, together with copies of documents (including indemnity and non-competition agreements) related thereto. A4 Jurisdictions in which qualified to do business or otherwise doing business (broken out separately for the Company and each Subsidiary). A5 All assumed fictitious and other business or trade names under which the Company or any Subsidiary is conducting or has conducted business. A6 List of authorized capital stock and amounts outstanding (by class and series). A7 Copies of stock certificates for all currently outstanding stock. A8 Description and copies of relevant plans and agreements relating to other equity securities (e.g., options, SARs, warrants, convertible debt) of the Company or any Subsidiary. A9 Schedules/ledgers of issuances or grants of stock, options or warrants, listing the names of the issues or grantees, the amounts issued or granted, the dates of the issuances or grants, the consideration received and the vesting schedule in each case. A10 Lists of all current record and beneficial owners of any class of shares, options, warrants, or any other outstanding security or equity interest, including percentage of each such security owned. A11 Shareholders' agreements, voting agreements, proxies, registration rights agreements, preemptive rights, rights of first refusal and drag-along or tag-along rights or agreements relating to restrictive share transfers. A12 Stock purchase agreements that have been used for sales of common stock and any other agreements, offering memoranda or prospectuses relating to sales of any debt or equity securities. A13 All communications with shareholders since inception to the extent not already provided pursuant to another Item hereof. A14 All Blue Sky qualifications, notices or other filings related to the issuance or transfer of the Company's securities. A15 Organizational charts showing the corporate structure of the Company and Subsidiaries, including divisions, business units and affiliates. A16 List of current officers and directors of the Company and of each Subsidiary. A17 Information with respect to dividends paid by the Company, if any, since inception. A18 All business plans developed by the Company or any Subsidiary during the last three years. B. FINANCIAL INFORMATION AND ADVISORS B1 Audited financial statements for all fiscal years since formation and interim unaudited financial statements for the most recent interim period. B2 Management letters from auditors concerning internal accounting controls in connection with all audits of the Company and each Subsidiary since inception. B3 All correspondence with auditors (including management representation letters) in connection with all audits of the Company or any Subsidiary since inception. B4 Detailed balance sheet and income statement for the Company and each Subsidiary for the most recent month and last fiscal quarter. B5 Historical and current summary listing of loans showing balances, interest rates and maturity dates. B6 Brief description of contingent liabilities. B7 All agreements relating to advisors retained, fees payable to them and claims for payment by them. C. ASSETS AND INTELLECTUAL PROPERTY C1 List of real property currently owned and previously owned, together with (a) location and brief description, (b) description of all encumbrances on currently owned property, (c) copies of all appraisal reports, if any, in respect to all currently owned property and (d) copies of all deeds and title insurance and reports relating thereto. C2 List of real property leased, together with (a) location and brief description, (b) lease agreements (and proposed modifications) and (c) a summary of date, term and termination rights, renewal rights and rent. C3 Any licenses or permits affecting any property (e.g., certificate of occupancy). C4 List of material personal property leased, together with (a) copies of lease agreements and (b) a summary of date, term and termination rights, renewal rights and rent. C5 Any appraisals or valuation reports covering the Company's or any Subsidiary's assets for the last 3 years. C6 Any material agreements affecting any property owned or leased (i.e., management agreements or maintenance contracts). C7 List of all patents, trademarks, copyrights, service marks, and applications therefor, and trade secrets used in the business. Indicate those owned, those subject to adverse claims and the jurisdictions in which each is registered. If not owned, identify the owner and provide copies of the license or other royalty arrangements. D. MATERIAL CONTRACTS D1 List of the top ten manufacturers, suppliers, sellers or service providers during the last year. Copies of material supply/service agreements with major suppliers or service providers. D2 Any arrangements with manufacturers, suppliers, providers or customers, including exclusivity agreements. D3 Cost sharing agreements, commitments, loans or other arrangements (e.g., "common cost agreements") among the Company and Subsidiaries or any affiliate of the Company or any Subsidiary. D4 Capital leases, contracts for the deferred purchase price of property and sale-leaseback arrangements. D5 Material contracts providing for the purchase of supplies, products, services or equipment, including outsourcing arrangements. D6 All agreements or arrangements (and drafts of arrangements under consideration) with directors, officers, employees, shareholders, debtholders or members of their families, or with entities in which any of the foregoing have an interest, including loans or guarantees of indebtedness. D7 All documents relating to any current, proposed or contemplated partnership, joint venture or marketing or other similar contract or arrangement. D8 Any license or royalty agreements or similar arrangements to which the Company or any Subsidiary is a party. D9 All agreements, including indemnity agreements and noncompete agreements, related to acquisitions, restructurings, reorganizations and dispositions of businesses and material assets. D10 All financial advisor retention and indemnification agreements. D11 All loan agreements, including any floor plan financing agreements, any debt, credit, security or similar agreements and all letters of credit, indentures, debentures, preferred stock agreements, commercial paper, warrants and notes to which the Company or any Subsidiary is a debtor party. D12 List and summary of any interest rate or other hedging transactions or agreements to which the Company or any Subsidiary is a party. D13 List and summary of terms of outstanding indebtedness over $10,000, identifying parties, overall amount, repayment schedules and scheduled maturities, covenants and restrictions, interest rate and security interests. D14 All loan agreement compliance certificates of the Company or any Subsidiary, if any. Description of all events of default by the Company or any Subsidiary under any indenture or loan agreement to which it is a party. D15 Identify each agreement under which consents or approvals will be required in order to consummate the proposed transaction or which will be subject to modification or acceleration as a result of the proposed transaction. E. MATERIAL LITIGATION E1 List of pending, threatened or potential litigation or administrative actions involving the Company or any Subsidiary, identifying the parties to each such litigation, the nature of the claim, the amount at issue; provide copies of all documentation relating thereto. E6 Correspondence, memoranda or notes concerning any disputes with manufacturers, contractors, suppliers, customers, competitors or landlords regarding any claim against the Company or any Subsidiary for an amount in excess of $10,000 or which may otherwise have a material impact on the Company or any such Subsidiary. For this purpose, a dispute with a manufacturer shall be presumed material. F. EMPLOYEE MATTERS F1 Organizational chart of personnel indicating functions and reporting responsibilities. F2 List of key management (including directors, officers and key employees) showing name, age, starting date, responsibilities, compensation (including salary and cash, stock or other bonuses), education and prior service. F3 Employment, consulting, severance, change of control, termination and confidentiality agreements (whether formal or informal, oral or written). F4 List of labor disputes, grievances, arbitrations, unfair labor practices, litigation, EEOC actions, WARN and ADA disputes or claims since inception. F5 Summary of all employee benefits of the Company and each Subsidiary. F6 Description of existing or contemplated employee benefit plans and arrangements (including health, pension, retirement, 401(k), profit sharing, incentive, stock ownership, stock option, management incentive or bonus plans), together with all trust agreements, amendments and written interpretations thereof, and copies of all personnel policies and manuals. G. REGULATORY MATTERS, GOVERNMENT APPROVALS AND PERMITS G1 Any federal, state or other permits, licenses, authorizations or approvals held by the Company or any Subsidiary or required for current or planned business operations. Indicate the compliance, expiration, renewal or termination provisions thereof. G2 Any federal or state regulatory filings required in connection with the provision of services by the Company or any Subsidiary. H. TAX MATTERS H1 All federal, territorial, state and local tax returns (including all attachments, schedules, etc.) filed with respect to the last five fiscal years or relating to any open years. H2 Description of all tax audits and copies of all materials relating thereto (including any notices or proposed adjustments from taxing authorities with respect to audits). Closing agreements and ruling requests for all open years. I. INSURANCE I1 Copies and descriptions of existing insurance policies (including property, casualty, third party, liability, D&O, key employee, business interruption and workers compensation), including company, agent, coverage, premiums, liability retention limits, self-insurance and inter-group premium reimbursement agreements. I2 Summary of claims experience during the past five years under policies. J. OTHER INFORMATION J1 List of all current and proposed offices and facilities. J2 List of major competitors.