PRE-FORMATION CHECKLIST CONTACT NAME ____________________________________________________ ADDRESS __________________________________________________ __________________________________________________ __________________________________________________ TELEPHONE _________________________________ FAX _________________________________ BUSINESS PURPOSE _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ PROPOSED NAME -3 CHOICES IN ORDER OF PREFERENCE 1. __________________________________________________________________ 2. __________________________________________________________________ 3. __________________________________________________________________ In forming a business entity, you may elect features that provide the maximum protection for owners who are not active in management, or features that provide the maximum protection and flexibility for management, or some alternative in between. Failure to address and provide for these considerations will result in a lack of traditional protection or structure for the benefit of the passive investor. On a scale of 1 (least important) to 5 (most important) please indicate the significance of the following considerations with respect to your new business entity. 1 2 3 4 5 _____________________ 1) This company will be part of an: _ _ _ _ _ Asset protection plan _ _ _ _ _ Estate plan _ _ _ _ _ _____________________ 2) Hostile takeover is a concern. _ _ _ _ _ _____________________ 3) We want the greatest member-owner _ _ _ _ _ flexibility for the business. _ _ _ _ _ _____________________ 4) We want the most protection for _ _ _ _ _ the owners. _____________________ _ _ _ _ _ 5) We want the greatest flexibility _ _ _ _ _ for management. _____________________ _ _ _ _ _ 6) We want the most protection for _ _ _ _ _ management. _ _ _ _ _ __________________________________________ 7) Formality and structure to assure _ _ _ _ _ communication to all owners is _ _ _ _ _ important. _ _ _ _ _ _____________________ 8) Protection for the investors who _ _ _ _ _ are not active in management is _ _ _ _ _ important. _ _ _ _ _ _____________________ 9) Owners should have unlimited _ _ _ _ _ rights to inspect and copy _ _ _ _ _ business records during regular _ _ _ _ _ business hours. _____________________ _ _ _ _ _ 10) We desire the most protection for _ _ _ _ _ the investors who are active in _ _ _ _ _ management. _____________________ _ _ _ _ _ 11) Secrecy is a concern. _ _ _ _ _ _____________________ 12) Ownership will probably always _ _ _ _ _ be closely held (less than 10 _ _ _ _ _ owners) _ _ _ _ _ _____________________ 13) Transfer or pledge of ownership _ _ _ _ _ ought to be restricted. _ _ _ _ _ _____________________ 14) We will be transacting business _ _ _ _ _ in other states. _ _ _ _ _ _____________________ 15) We will be transacting business _ _ _ _ _ in other countries. _ _ _ _ _ _____________________ 16) Owners are to be active in the _ _ _ _ _ management of the business _ _ _ _ _ _____________________ 17) Owners are not to be active _ _ _ _ _ in management of the business. _ _ _ _ _ _ _ _ _ _ 18) Limited Liability is important. _ _ _ _ _ _____________________ 19) Pass-through tax treatment _ _ _ _ _ is important. _ _ _ _ _ _____________________ 20) Removing assets from the entity _ _ _ _ _ minimizing tax consequences or _ _ _ _ _ terminating is an important _ _ _ _ _ consideration. _____________________ _ _ _ _ _ 21) It should be easy for members to _ _ _ _ _ leave the entity and receive back _ _ _ _ _ their capital contribution. _ _ _ _ _ __________________________________________ 22) Profit and loss allocations _ _ _ _ _ should be different than the _ _ _ _ _ capital contributions. _ _ _ _ _ _____________________ 23) Owners (do) or (do not) desire a _ _ _ _ _ preemptive right to retain their _ _ _ _ _ initial percentage of ownership. _ _ _ _ _ _____________________ 24) Owners (do) or (do not) desire _ _ _ _ _ cumulative voting. _ _ _ _ _ _____________________ 25) In five to ten years, we want _ _ _ _ _ to do the following: _ _ _ _ _ _ _ _ _ _ Sell the company _ _ _ _ _ Merge with another company _ _ _ _ _ Bring other family members into _ _ _ _ _ the company _ _ _ _ _ Retire _ _ _ _ _ _____________________ 26) As a result of the business of the _ _ _ _ _ company, we will have involvement with: _ _ _ _ _ _ _ _ _ _ Securities issues _ _ _ _ _ Environmental issues _ _ _ _ _ Other governmental regulatory _ _ _ _ _ issues _ _ _ _ _ _____________________ 27) We desire a criminal avoidance plan be designed for the LLC? Yes ____ No _____ 28) The agency power of the members needs to be restricted to specific grants of authority? Yes ____ No _____ 29) The LLC is going to sell ownership interests in the company to others? Yes ___ No ______ 30) Initial managers of the business will be: (name, address & telephone number) ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ 31) Initial owners of the business will be: (name, address, telephone, and % of ownership): ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ 32) Your attorney con serve as your agent for service, if you want another, specify: (names and address): ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ 33) Other Comments ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ CERTIFICATION I am the designated contact with the attorney in the above-proposed business formation and have authority from all participants to act in this capacity. In this capacity, I have completed the foregoing checklist for the attorney to rely upon in recommending a business entity and in tailoring the formation documents to fit our needs and desires. In this process, we have considered and discussed, among other items, voting rights, powers and quorum percentages desired for the owners and management, the role of committees, share restrictions and rights, management power, the role of the owners in management and the structure we want the business entity to follow. Date:_________________________________ Agent:________________________________