1. A PLANNING GUIDE FOR A SUCCESSFUL EXIT STRATEGY PERPETUATING YOUR BUSINESS Gerald McMichael Jeff Shupe

2. PERPETUATING YOUR BUSINESS A Shareholder Agreement is ESSENTIAL Addresses the transfers of shares Typically accomplished through stock redemption Covers what happens in an involuntary departure of shareholder such as: Condition of shareholders: 1.Death of shareholder 2.Disability of shareholder Financing Method: 1.Life Insurance 2.Disability Insurance Insurance for key employees Key-Man Life Insurance Business Overhead Insurance

3. FIVE BASIC METHODS OF PERPETUATION: Method: Transfer/Sell to family member……………….36% Sell to a 3 rd party……………………………..…42% Transfer to existing partner……………………17% Merge, then retire………………………………..2% Retain business until death…………………….6% Other…………………………………………..…...3%

4. CLAIMS-MADE POLICY EXAMPLE 3/1/2008 Retro Date 6/1/2011 “Wrongful Act Occurs” 8/1/2011-8/1/2012 Current Policy Term 10/08/2012 Claim Made (Reported) (12 Months) If Purchased Extended Reporting Period

5. DIRECTORS’ AND OFFICERS’ LIABILITY POLICY BENEFITS Covers “Wrongful Acts” Covers business interference and market misrepresentation Coverage for breach of contract and fiduciary duty No discrimination exclusion applies in standard policy Provides defense for wrongful enrichment claims Provides defense coverage for claims related to fraud, criminal, or willful conduct until proven No built in exclusion for professional services Definition of insured includes directors and officers, spouses and domestic partners, and employees No retention applies if no finding of liability