[COMPANY, INC.] Due Diligence Request List
In connection with the proposed sale by [Company, Inc.], a Delaware corporation (the “Company”), of its Series [__] Preferred Stock, below please find a list of the items that we would like to review as part of our due diligence investigation of the Company. Unless otherwise noted, requested information should be provided for all times since the inception of the Company and should include current forms of agreements, and all amendments thereto, reports or other requested information. If any of these requested documents do not exist, have already been provided or are not applicable, please so indicate.
1. CORPORATE RECORDS AND CHARTER DOCUMENTS
a. All minutes of directors’ and stockholders’ meetings, and all written consents of directors and stockholders.
b. Certificate of Incorporation, including all amendments and amendments and restatements thereto, Certificates of Designation, etc., and Bylaws.
c. A list indicating each state or jurisdiction in which the Company is qualified to do business.
d. A list of subsidiaries and other entities in which the Company has an equity investment.
2. BUSINESS PLAN AND FINANCIAL STATEMENTS
a. All written strategic, marketing or business plans of the Company.
b. Financial statements and footnotes of the Company for each fiscal year since inception, including balance sheet, income statement, statement of cash flows whether audited or unaudited.
c. Quarterly financial statements for the last three fiscal years and for the period since the latest fiscal year-end.
d. Management’s operating budget for each of the last three years and year to date, including variances.
e. All financial projections for the Company.
3. SECURITIES ISSUANCES AND AGREEMENTS CONCERNING SECURITIES
a. A list of the Company’s stockholders and option holders.
b. Copies of agreements relating to outstanding options, warrants, rights (including conversion or preemptive rights) or agreements for the purchase or acquisition of any of the Company’s securities, and agreements relating to the Company’s past stock issuances and a summary of the related vesting schedules.
c. Evidence of qualification or exemption under applicable state and federal securities laws for issuance of the Company’s securities.
d. Any documents evidencing registration rights or preemptive rights for the Company’s securities, or evidencing any agreements among the Company’s stockholders or between the Company and its stockholders, including voting agreements.
4. MATERIAL AGREEMENTS AND OPERATING INFORMATION
a. Any agreements, instruments or proposed transactions to which the Company is a party or by which it is bound which involve obligations of, or payments to, the Company in excess of $5,000.
b. Contracts with suppliers, distributors, customers or manufacturers upon which the Company’s business is or is expected to be dependent.
c. Any personal property leases.
d. Any agreements concerning the purchase, lease, or sublease of real property.
e. Any documents evidencing indebtedness for money borrowed, guaranties, equipment leases or any similar liabilities incurred by the Company.
f. Any documents evidencing any mortgages, liens, loans and encumbrances with respect to the Company’s property or assets.
g. Any documents evidencing any loans or advances made by the Company.
h. Any agreements, understandings or proposed transactions between the Company and any of its officers, directors, employees or affiliates, including, without limitation, employment agreements and loans.
i. A copy of the Company’s form proprietary information and inventions agreement signed by each of the Company’s employees and independent contractors, and a list of any employees who either did not sign such agreement or who made exceptions to such agreement.
j. Copies of offer letters to employees.
k. Any consulting or independent contractor agreements.
l. A summary of insurance policies, or certificates of insurance, with respect to insurance held by the Company or of which the Company is a beneficiary.
m. Any employee benefit plans, including, without limitation, stock option plans, pension plans and insurance plans.
n. Any judgment, order, writ, settlement agreement or decree by which the Company is bound or to which it or any of its officers or directors is a party.
o. Any agreements requiring consents in connection with the financing.
p. All documents relating to any acquisitions and divestitures.
q. Import and export licenses.
r. Any confidentiality and/or nondisclosure agreements.
s. Marketing and sales literature from the past two years through the present, including brochures, advertisements and industry reports in which the Company’s promotional materials appear or in which the Company is discussed.
t. Press clippings and releases for the last two years.
u. Any agreements with competitors, including, without limitation, non-competition agreements.
v. Partnership, joint venture, association, research and development, and technical cooperation agreements.
w. Any other agreement material to the Company.
5. INFORMATION REGARDING INTELLECTUAL PROPERTY
a. List of principal products (including products being developed) in each line of business, with short descriptions of the products, their respective prices and their stage of development.
b. All documents relating to Company procedures for identifying, harvesting and protecting inventions, including procedures for determining whether an invention should be patented or remain a trade secret, for identifying patentable inventions made by employees and consultants of the Company, for creating and preserving evidence of conception and diligence, for maintaining inventions confidential and avoiding public uses and sales prior to filing, for making foreign filing decisions, and ensuring the timeliness of patent filings.
c. Any licenses or agreements of any kind with respect to the Company’s or others’ patent, copyright, trade secret or other proprietary rights, proprietary information or technology.
d. Issued patents and patent applications, and information regarding any foreign patent filings.
e. All prior art searches, conclusions, reports and opinions, whether internal or external, that the Company possesses concerning the infringement of third party patents by its products and the validity of such third party patents.
f. All documents relating to all federal, state and foreign trademark registrations and pending applications used in or associated with the business.
g. All documents relating to all agreements dealing with trademarks, e.g., consent letters, mutual agreements, licenses or opposition settlement agreements, whether the Company is licensee or licensor.
h. All copyright registration records, including title documents and payment of renewal fees (for older copyrights).
i. All documents relating to any restrictions or limitations on the use of the copyright portfolio or third party ownership rights.
j. All agreements dealing with trade secrets, e.g., license, secrecy, or non-analysis, whether the Company is licensor or licensee.
k. All claims and legal or administrative actions involving any of the Company’s trade secrets.
l. All agreements with any of the Company’s employees and former employers relating to the use of the Company’s proprietary information.
m. All value added reseller (VAR), original equipment manufacturer (OEM), and other reseller agreements.
6. INFORMATION REGARDING DISPUTES AND POTENTIAL LITIGATION
a. Any correspondence or documents relating to any pending or threatened action, suit or proceeding or investigation, including, without limitation, those involving the Company’s employees in connection with their prior or present employment or use of technology.
b. Any correspondence or documents relating to allegations of the Company’s infringement of the proprietary rights of others.
c. Any correspondence or documents relating to any labor agreements or actions, union representation, or strike or other labor dispute.
d. Correspondence, memoranda or notes concerning inquiries from federal, state or other government tax, environmental, occupational safety and hazard or other officials.
7. AUDIT INFORMATION
a. Management letters from auditors concerning internal accounting controls in connection with all audits in the last five years (including predecessor companies).
b. All letters which have been sent to the Company in connection with all audits in the last five years (including predecessor companies).
8. OTHER AGREEMENTS OR MATTERS
a. Merger, consolidation, asset purchase or other acquisition or disposition agreements pursuant to which the Company has acquired or sold assets or entities.
b. Agreements with finders or brokers.
c. List of all agreements or transactions between the Company, and any director, officer, management employee or substantial shareholder (or as to which any such person or a relative thereof has a direct or indirect interest), and copies of all such agreements or other documentation relating to any such transactions.
d. Any other agreement or arrangement which could be material to the Company.