1. Shareholder Agreements Paul A. Tonella

2.  Value Balancing  existing owners  departing owner (or their estate) Enhancing Value  Joint Investments  companies  partnerships  trusts  jointly owned assets

3. Planning Continuum Today Voluntary Exit Involuntary Exit Business Succession PlanningEstate Planning

4.  I didn’t mean to…  death  disability Choices  Okay, maybe I did…  retirement  termination  dispute

5.  Realizing Value Objectives

6.  Selecting Your Partners Objectives

7.  Achieving “Clean Exit” Objectives

8. Conflict between surviving owners & family Concerns of employees & creditors Lack of Market Lack of income for family Valuation difficulties Surviving owners may be forced to buy via installment sale unless funded with insurance Pitfalls

9.  A contract executed between members of a company and the company What  Supplements statutory protections

10.  Entry and Exit of Owner Group Critical Provisions

11.  Defines Commitment to Business Critical Provisions

12.  Address Decision Making Critical Provisions

13.  Restrains trade and protects intellectual property Critical Provisions

14.  Resolves Disputes Critical Provisions

15.  Ability to ‘veto’ decisions  Right to act as director  Dividend policies  Reporting obligations  Salary policies Bonus Round!

16.  Book Value Value

17.  Fair Market Value Value

18.  Formula Valuation Value

19.  Arbitration  “Forced Sale” Clause Dispute Resolution

20. “Forced Sale” Clause

22.  Three equal shareholders, equal contributions  Each shareholder actively involved in business  Personal guarantees  No shareholders agreement  Dispute over internal business processes It’s Fightin’ Time!

23.  A and B Unhappy with C and Sacked him as Director  A and B Increased their Wages  No Dividends Paid  Problems for C  Personal guarantee  No director’s salary  No information  Reliant on litigation (oppression)  Unable to sell Outcome

24. Contact Details Presenter - Paul A. Tonella ptonella@kellerrohrback.com