1. Basic Organization Documents Corporations Pre-incorporation agreement Articles of Incorporation Bylaws Organization Resolutions: Officers, Directors, stock issuance, employment agreements, bylaws, bank account, transactions, etc. Shareholder Agreement (Buy-Sell) Employment Agreements Stock certificates and record Asset and liability transfer documents Required government and tax filings LLCs and Partnerships LLC Operating Agreement or Partnership Agreement Asset and liability transfer documents Required government and tax filings Copyright 2005 Dwight Drake. All Rights Reserved. Business Planning: Closely Held Enterprises www. drake-business-planning.com 4-1

2. Client Non Buy-Sell Planning Process Step One: Layout Potential Issues Step Two: Identify Client’s Hot Issues Step Three: Determine Key Facts that Impact Hot Issues Step Four: Identify Potential Solution Techniques Step Five: Select Best Solution Technique(s) Step Six: Develop Rationale for Convincing Co-Owners Step Seven: Present to Co-Owners (Lawyer’s role may range from passive advising, to strategic negotiation, to hardcore sales) Copyright 2005 Dwight Drake. All Rights Reserved. Business Planning: Closely Held Enterprises www. drake-business-planning.com 4-2

3. Important Non Buy-Sell Owner Issues Scope of Enterprise - liability exposure, “Tag along” issues Business Plan Changes - diversion, expansion, speed-ups Debt - Changing, expanding, personal guarantees Additional Capital - dilution risks, mandatory New Equity Owners - disruption, dilution, synergies Owner Roles - service commitments, inner circle Owner Employment Rights - tie to equity, expulsion Business Location - headquarters, changes Outside Owner Activities - competitors, supplies, customers Related Party Transactions - conflicts, disclosures, prohibitions Copyright 2005 Dwight Drake. All Rights Reserved. Business Planning: Closely Held Enterprises www. drake-business-planning.com 4-3

4. Important Non Buy-Sell Owner Issues Tax Elections - cost recovery, inventories, fiscal yr, etc. Confidentiality Covenants - extent to owners? AP Management - discount fast or normal slow? Cash Distributions - priority or no or low expectations? Loss Allocations - deficit restoration obligation, three hurdles Professionals - selection process and criteria Indemnification - words vs. reality, insurance Dispute Resolution Procedures - fast, cheap vs. slow, costly Life After Rights - fast, easy restarts Sell-Out Options - who and how many must bless Copyright 2005 Dwight Drake. All Rights Reserved. Business Planning: Closely Held Enterprises www. drake-business-planning.com 4-4

5. Solution Techniques Definitive Contract Supermajority Vote Designated Board or Management Committee Specified Conditions Individual Veto Right Opt-Out Rights Buy-Out Trigger Cumulative Voting Preemptive Rights Different Equity Interests Copyright 2005 Dwight Drake. All Rights Reserved. Business Planning: Closely Held Enterprises www. drake-business-planning.com 4-5 Debt Levels

6. Solution Techniques Definitive Contract Supermajority Vote Designated Board or Management Committee Specified Conditions Individual Veto Right Opt-Out Rights Buy-Out Trigger Cumulative Voting Preemptive Rights Different Equity Interests Copyright 2005 Dwight Drake. All Rights Reserved. Business Planning: Closely Held Enterprises www. drake-business-planning.com 4-6 New Owner

7. Solution Techniques Definitive Contract Supermajority Vote Designated Board or Management Committee Specified Conditions Individual Veto Right Opt-Out Rights Buy-Out Trigger Cumulative Voting Preemptive Rights Different Equity Interests Copyright 2005 Dwight Drake. All Rights Reserved. Business Planning: Closely Held Enterprises www. drake-business-planning.com 4-7 Cash Distributions