1. JB&J SESSION THREE WORKBOOK Decisions and Notes for Modules 1 – 6 BSMARTer Business Simulation Management and Relationship Training

2. Fundamentals of Equity MODULE ONE

3. Changes in Equity 2 John Jacob has taken a leadership role to transition the firm from a silo organization to an ensemble practice. This effort solidifies the mission, increases the valuation, and enables a smooth succession to the next team of partners. As a result, there will be significant changes in equity in the next ten years. JJ’s succession plan according to his personal plans and according to the Partnership Agreement (2 parts: transitioning all roles/responsibilities by the age of 67 AND selling all equity by the age of 70?) Segmenting equity from responsibilities Responsibilities CEO responsibilities transitioning to Beth contingent on her continuing her trend of impressing the Partners. If not, Alice would be considered or Beth’s PE contacts would be leveraged to find the next CEO. Leadership roles transitioning to Alice focused on continued efforts to finalize shift from a Silo practice to an Ensemble practice (Opportunity to evaluate his CEO leadership capabilities) Equity JJ will sell Beth 2%, but she will have the opportunity to buy 5% She earned this Equity opportunity because she ‘hit her metrics’; significant contributor to success of Firm. 2% - JJ 1% from each other Owner Going forward, she will not be measured on revenue; rather operating margin, rev/client, rev/staff, rev/professional Systematic process of selling equity to Alice contingent on him meeting established revenue growth AND successful leadership in finalizing transition to an Ensemble practice.

4. Changes in Equity 2 Jr Partner’s will be offered ownership after 7 years and in accordance to our subjective Criteria for Partnership. In this criteria, Jr Partners will have to consistently demonstrate their ability to win new clients, to retain existing clients, and to exemplify the characteristics highlighted by our Mission. Above all, the legacy JB&J Partners want to assure our clients that the culture of our Firm will be sustained by the next generation of Partners. JB&J will secure a 10 year loan arrangement with a Bank to help Jr Partners finance the purchase of the equity. Depending on the valuation, JB&J may need to provide details explaining ‘how’ a Jr Partner will finance the purchase of equity. The valuation may require that Jr Partners give up some of their compensation and borrow (may also need to extend the note beyond 10 years) JB&J will secure a third party valuation from David DeVoe &Co. on an annual basis because of the market for the stock due to the aggressive succession plan being put in place. This will ensure that a fair and consistent valuation will be established for the buying and selling of the equity.

5. Valuation Principles and Experience MODULE TWO

6. Firm Value 4 As a result of JB&J’s aggressive succession planning efforts, we will hire David DeVoe&Co. to perform an annual valuation for the buying and selling of firm equity. This will ensure consistency and fairness. Before we engage David DeVoe&Co., we will perform an internal audit of our financials to help us establish and prepare for our engagement. We will analyze our cash flow for the current year and do our best to forecast the next few years. As a result of our financial analysis, we will be in a position to begin to assemble potential strategies that will enable Jr Partners to purchase equity. Note: JB&J prefers an internal succession therefore, a 20% discount will be given to Jr Partners If time permits, JB&J will adjust our 5 year spreadsheet by doing the following – Use financials provided in current Briefing Book Modify assumptions according to the financials provided AND incorporating new ASSUMPTIONS as a result of this WORKBOOK Submit in Appendix our Worksheet + DCF valuation?

7. New Partnership Admission MODULE THREE

8. Criteria for New Partners 6 Consistent with our vision and mission for the firm, we believe in building a sustainable firm for the future. We seek to grow the business and develop our next generation of leaders. It is important that we share the profits and equity of the firm with our best talent especially as we look to promote succession and motivate our top performers. Partnership is not an entitlement, rather a privilege. It is based upon economic and non-economic criteria. In this document, we will outline our process and criteria for new partners and how we communicate to our organization (see attached “ Becoming a Partner”). Question for Phillip– do we need to address when we add a partner or how they buy in? Criteria for Partnership Revenue contribution – Note that direct revenue production is not a requirement. Individuals with a significant contribution can be considered ( i.e. COO) Managerial contribution - (key functioning role). Building strong teams and next generation is key for our firm. We wish to reward those that are able to lead effectively. Ethics and character. Someone that has integrity, sound judgment, high ethical standards. Skill or Intellectual Contribution- Someone that possesses a skill or expertise that our firm deems mission critical to the success of the firm. Visibility & Community- Eligible candidates for partner will ideally add to the value of how our firm is perceived in the community. Involvement externally will increase our ability to develop new business from COI’s (critical to our firm’s vision related to growth). Process of identifying a Partner to be considered Management Team identifies the candidate, and nominates to the Board of Directors for review and consideration. Board votes and presents to existing owners Existing owners vote Note: Beth has been identified by the management team and will be nominated for consideration as partners. The current owners feel that the business, with its new growth, can support the addition of Beth as a partner/equity owner. While Beth does not have a direct contribution to revenue, she does manage our Client Service team which is responsible for client satisfaction and referrals, thus leading to new business. Beth has demonstrated her ability to manage the team successfully and has been instrumental in helping develop the next generation of leaders within JB&J.

9. Partnership Agreements MODULE FOUR

10. Partnership Agreements 8 PARTNERSHIP AGREEMENT The partnership agreement delineates the rights and responsibilities of the partners who form the business enterprise and establishes protocol for future partner additions to the firm. Formation of the Partnership Powers & responsibilities of the Partners to make, enter into, deliver and perform the duties of the partnership Delineation of powers CEO will manage the day to day operations of the Firm The CEO will consult with the Partners prior to making or taking any steps that may result in a substantial change in the operation or policies of the Firm. Board of Directors Establishment of Board-of-Directors CEO and three partners who will be elected for a period of 3 years Election of the Board of Directors Powers of the Board-of-Directors Requirements of Unanimous or Majority Consent of the Partners Dissolution Termination of an individual partner Partner additions Restrictions on Partners Commit any act that would be in violation of the Partnership Agreement Sell his/her individual shares without prior notification and consent of the majority of the partners. Capital Contribution & Shares of Profits and Losses Each Partners ownership percentage shall be determined by dividing the Partner’s capital account by the total of all of the capital accounts of all the Partners combined. Each Partner’s capital contribution shall be acknowledged and verified. s for distribution

11. Partnership Agreements,cont’d 8 Distributions Each partner will have an annual salary that is reviewed on a yearly basis. Profits and losses for any fiscal year will be allocated among the Partners based on percentage interests specified to each partner as defined. Bonuses will be allocated to Partners and associates and will be based on individual contributions to the Firm. Contributions include but are not limited to revenue generation, profitability, client retention, etc. Transfer of Partnership Interests Partner additions Disability of a Partner Death of a Partner Prohibited transfers Dissolution of the Partnership as a Whole Finalizing and Termination of Partnership Partners Liability Rule

12. Founder Succession MODULE FIVE

13. Succession Plan 10 JB&J is designing a succession plan consistent with our mission and vision that will evolve our governance structure and compensation structure and will help grow the business and build our next generation of firm leaders. We will strengthen our team because we know that it is critical to our success and that of our clients. Our plan will drive retention of key employees, increase their compensation and help motivate employees with a clear career development path. Ages of the partners: John and Rachel mid 60’s. Tico and David late 50’s. Alice 48-50 Phase 1- focus on John Jocob’s succession plan to Alice Job roles/responsibilities/function – transition responsibilities to Beth over next 3 years Leadership responsibilities – transition leadership to Beth in 3-5 years Then ownership – initial 5% to Beth Transition client responsibilities to junior partner Phase 2 - focus on Rachel’s succession and a plan to allow transition of ownership to new partners. Plan will allow owners to sell shares once a year after the firm valuation to: New partners Existing owners prioritized from smallest owners to largest Communicate plan to employees Use Internal succession guide – gap 2 page worksheet

14. Other Initiatives MODULE SIX

15. Other Initiatives 12 Describe any other initiatives your firm will undertake. Notes InitiativeExplanation 1. Execute Nonsolicitation and noncompete agreements with key employees 2. Defining succession plan of Alice and Tico 3. Get key person insurance policies Currently there is immense risk if something happens to one of founders 4. Do a vendor evaluation to determine who will value firm and how often. Consider hiring a succession plan consultant to help review and further build out your goals 5. Each partner will complete the internal transition guide individually This will help determine goals and timeframes for ownership changes InitiativeExplanation 1. Execute Nonsolicitation and noncompete agreements with key employees 2. Defining succession plan of Alice and Tico 3. Get key person insurance policies Currently there is immense risk if something happens to one of founders 4. Do a vendor evaluation to determine who will value firm and how often. Consider hiring a succession plan consultant to help review and further build out your goals 5. Each partner will complete the internal transition guide individually This will help determine goals and timeframes for ownership changes 6. Secure a 10 year loan arrangement with Bank for Jr Partners