YOU ARE CONSIDERING A BUY SELL YOU HAVE A BUY SELL DIRECT TO CALCULATOR Buy Sell Story Board and Calculator Mock Up. This is the first screen and the entry point to the story board and calculator. In screen show mode, select one of the 3 boxes – which will take you to different points in the presentation. If you select “you are considering a buy sell” will allow you to go through the entire presentation. (Select one) No bank or credit union guarantee | Not a deposit | Not FDIC/NCUA insured | May lose value | Not insured by any federal or state government agency Guarantees are dependent upon the claims-paying ability of the issuing company. This information is not intended as tax or legal advice. For advice concerning your own situation, please consult with our appropriate professional advisor.

WHY WOULD YOU WANT A BUY SELL? THREE TWO CERTAINTIES IN LIFE DEATH TAXES BUSINESS SUCCESSION This is the screen they go to if they select “you are considering a buy sell.” Script There is an old saying – there are two certainties in life…death and taxes. But if you’re a business owner, two is not the right number…there is a third certainty and that’s business succession.

A BUSINESS SUCCESSION EVENT WILL HAPPEN DISABILITY? RETIREMENT? DEATH? YOUR BUSINESS TIMELINE A business has a life cycle and we measure that life cycle on the business time line. One event that is predictable and we know will occur is a business succession event. The situations that may trigger a business succession include disability, retirement, death, termination of employment, and the divorce or bankruptcy of an owner. And while it is predictable that a business succession event will happen sometime in the life of your business - when it will occur on your business time line is unpredictable. Because we know that it is likely for a business succession event to happen - that knowledge gives you the opportunity to provide for a smooth transition – no matter what the trigger event is or when it happens. A smooth transition may be established by setting out the terms of the business succession, planning for funding, and maintaining and monitoring the plan through the years. Before we move on is there anything here that concerns you the most? TERMINATION? DIVORCE? BANKRUPTCY?

WITHOUT A BUY SELL UNCERTAINTY INSTABILITY INSECURITY More info With out a buy sell agreement in place – all that you can be sure of is that there is an uncertain future for you, your family and your business. Even when everyone has the best of intentions you have to imagine what the situation is actually like when something triggers a business succession crisis – such as the death of you or one of your co-owners. I know it’s hard to put yourself in that moment – but consider all the question marks that exist. How will the surviving family get the funds they need to live on and that they feel they’re entitled to? They have an uncertain future as to how to replace the income that’s lost. What happens to the benefits the business has been providing. How will the family convert the business interest to cash? What about the business? There’s great instability at this moment. A key person is gone. What will do that to ongoing business, to new business, to existing loan arrangements? Can the business afford to pay the surviving family the fair value of the business? What is the fair value and how do you get mourning parties to come to the table to agree? For your family, your business, you and your co-owners what there is is insecurity and is often the leading matter that keeps business owners up at night. More info

WITHOUT A BUY SELL UNCERTAINTY Family income Family benefits Family receiving fair value for the business INSECURITY Does this keep you up at night? INSTABILITY Impact on business Impact with lenders Business cash flow Family interference With out a buy sell agreement in place – all that you can be sure of is that there is an uncertain future for you, your family and your business. Even when everyone has the best of intentions you have to imagine what the situation is actually like when something triggers a business succession crisis – such as the death of you or one of your co-owners. I know it’s hard to put yourself in that moment – but consider all the question marks that exist. How will the surviving family get the funds they need to live on and that they feel they’re entitled to? They have an uncertain future as to how to replace the income that’s lost, the benefits that are endanger. How do they convert the business interest to cash? What about the business? There’s great instability at this moment. A key person is gone. What will do that to ongoing business, to new business, to existing loan arrangements? Can the business afford to pay the surviving family the fair value of the business? What is the fair value and how do you get mourning parties to come to the table to agree? For your family, your business, you and your co-owners – question marks lead to insecurity and is often the leading matter that keeps business owners up at night.

WITH A BUY SELL CERTAINTY UNCERTAINTY INSTABILITY STABILITY SECURITY INSECURITY With a buy sell agreement in place you can help turn the uncertainty to certainty, the instability to stability and the insecurity to security. More info

WITH A BUY SELL CERTAINTY STABILITY SECURITY Family income Family benefits Family receiving fair value for the business STABILITY Impact on business Impact with lenders Business cash flow Family interference SECURITY Does this keep you up at night? With a buy sell agreement in place you can help turn the uncertainty to certainty, the instability to stability and the insecurity to security.

COMMON TYPES OF BUY SELL ENTITY PURCHASE OWNER BUSINESS CROSS PURCHASE OWNER HYBRID BUSINESS OWNER OPTION 1 OPTION 2 [This screen is the screen the presentation goes to if the agent selects you have a buy sell.] Let’s think for a moment about how a buy sell works. I’ve illustrated 3 of the more common types of business succession plans. In an entity buy out the business will purchase the business interest from the selling owner. An entity purchase, in a corporate setting, may be called a stock redemption arrangement. In a cross purchase buy out, the co-owners will purchase the business interest from the selling owner. Finally, there is a hybrid plan – which sometimes goes under other names such as Wait and See. This arrangement is actually a series of options – at least two. The first option is for the business to purchase the business interest. However, if the business does not or cannot make the purchase, the co-owners will then have the purchase option. Sometimes the second purchase option is a required purchase. If not, there will be another purchase option – either the entity purchase or a liquidation. As I gather additional information from you, it will become clearer which type of business succession arrangement may be most appropriate for you and your business. Ultimately, the decision should be made by you, your accountant, attorney and others on your planning team. Depending on what type of buy sell arrangement is entered into will help us determine how the funding option should be established.

DOES YOUR BUY SELL GIVE YOU A FALSE SENSE OF SECURITY? HOW ARE YOU FUNDING YOUR BUY OUT? It’s great that you have a buy sell agreement – but does simply have the agreement give you a false sense of security. Is that security only an illusion? It depends on how you answer the question – how are you funding your buy out?

YOUR FUNDING OPTIONS SURPLUS SAVINGS 3RD PARTY LOAN INSTALLMENTS There’s, generally, 5 ways to fund a buy sell. It’s not unusual to see more than one option being deployed. INSTALLMENTS LIFE INSURANCE

THE MOST COMMON FUNDING CHOICES Of these 5, the installment and life insurance are the two most popular alternatives. INSTALLMENTS LIFE INSURANCE

COST AND CASH FLOW OF AN INSTALLMENT Buy Out Amount: Installment Term: (1-10 years) Installment Interest Rate: % % Include your business' profit margin to calculate the gross sales required to support the annual payment. Business Gross Income: (not used in calculations) Year 1 2 3 4 5 6 7 8 9 10 Annual Payment The Installment Note Year Principal Remaining Annual Payment Let’s take a look at what a hypothetical might look like. We’ll enter an assumed buy out amount. The installment term is the number of years that the installment payments will be made. The installment interest rate represents the interest that will be paid each year. That rate is normally set in the buy sell agreement. Skip over the business profit margin entry to start. Enter the business gross income. This is not used in the calculation but helps in understanding how much of the gross income may need to be allocated to the installment. Hit calculate and you will see the bar chart and the numbers chart showing the annual payment.. Next, select the business profit margin button and enter the business profit margin. Select calculate. The gross sales needed to accumulate the funds to make the payment are now added to the chart.

Insurance Premium on All Lives through Year 10 COST AND CASH FLOW OF LIFE INSURANCE Insurance Premium: % Insurance Death Benefit: (not used in calculations) Business Gross Income: (not used in calculations) Year 1 2 3 4 5 6 7 8 9 10 Life Insurance Premium Insurance Premium on All Lives through Year 10 Year Annual Premium Cumulative Premium Here you see the chart showing the cost and cash flow of life insurance. Enter the assumed insurance premium. The business profit marginand business gross income will flow automatically from the previous page. Enter the insurance death benefit – which does not enter into the calculation but is helpful for review. The charts will always show 10 years of payments. It’s important to note that the premium will continue to be due on the policy – but we are demonstrating the first 10 years of payments. Note that you must provide the client the full life illustration used to arrive at these values if using permanent insurance.

Installment arrangements and life insurance may work together, but they solve the funding problem in different ways. INSTALLMENTS May require significant cash flow to cover the new debt. Year 1 2 3 4 5 6 7 8 9 10 Annual Payment LIFE INSURANCE This page reminds the viewer of the two results. May be a more cost efficient tool. Predictable outlays and cash flow may be more affordable to the purchaser. Year 1 2 3 4 5 6 7 8 9 10 Annual Premium

THE ROAD TO PAYMENTS – THE CASH FLOW REQUIRED – SAMPLE OF ALL INSUREDS LIFE INSURANCE PREMIUM ON ALL LIVES THROUGH YEAR 10 THE INSTALLMENT NOTE Annual Premium Cumulative Premium Cash Flow Principal Remaining Annual Payment Gross Sales Year Year This page continues the review. This chart shows payments through the first 10 years of the policy life on all of the insured owners. It is designed to help give you an understanding of the gross sales that may be needed to have the funds to pay the premium. Life insurance premiums will be due through the entire term of the policy according to the terms of the life insurance policy. This chart is simply designed to demonstrate payment cash flows. In addition, there may be cash values in the policy illustration for a full understanding of the life insurance policy premiums, death benefit and cash values. This chart shows a hypothetical cash flow – demonstrating the potential payments, gross and net sales that might be required in the event an installment buy out is triggered. These figures are hypothetical and will change depending upon the business’ gross margin, actual interest rate and principal due. These rates are subject to change without notice. New insurance is subject to underwriting.

WITH THE AGREEMENT AND FUNDING IN PLACE… YOU, YOUR FAMILY, YOUR BUSINESS ARE MORE SECURE.