ESOP Structural Analytics

1. ESOP Structural Analytics

2. Overview- Objectives for Company • For Via Trading Corporation (“VTC”), we see the following objectives: • Shareholders’ Liquidity • Provide liquidity and diversification for the shareholders • Maximize after-tax cash for shareholders • Tax Savings for Company • Use enhanced cash flow to pay shareholders and fund company growth • Reduce taxes at both corporate and personal levels • Shareholders Retain Upside and Control • Shareholders retain operational control over the Company • Retain upside in Company’s future growth • Incentivize Management and Employees • Create a valuable incentive for the management team 2

3. Options for VTC • Sell to an ESOP? 3

4. Sell to an ESOP? 4

5. Basic ESOP Example • Via Trading Corporation borrows money to finance part of the purchase (“Outside Loan”) • VTC lends the money to the ESOP (“Inside Loan”) • ESOP uses the money to purchase the stock. Sellers receive seller notes for balance of purchase price* • *Seller notes issued by ESOP at closing and then assumed by company- making it a direct obligation of the company Lender/ Shareholders 1 CASH NOTE CASH 2 NOTE CASH Shareholders ESOP 3 SHARES 5

6. Basic ESOP Example • HAI borrows some money to finance purchase (“Outside Loan”) • HAI lends the money to the ESOP (“Inside Loan”) • ESOP uses the money to purchase the stock from the shareholders • Shareholders get notes (“Seller Notes”) back for the balance of the purchase. Issued by ESOP at closing, but then HAI assumes the obligation. Paid from tax enhanced cash flow of HAI Lender 1 CASH NOTE 2 CASH 4 SELLER NOTES CASH Shareholders ESOP 3 SHARES 6

7. Agenda • Overview • Valuation • ESOP Structuring • Comparative Cash Flows • Additional Planning • Appendix • Valuation 7

8. Negotiated valuation An institutional trust company will serve as ESOP Trustee ESOP sale is a negotiated M&A transaction with ESOP Trustee, which hires an independent valuation firm to advise it on value Trustee and valuation firm do not represent the sellers– they represent the ESOP (buyer) Transactions subject to IRS and DOL regulations and compliance ESOP Trustee cannot pay more than “fair market value” of stock Valuation methods: Discounted cash flow (“DCF”) analysis Public market comparable companies analysis Comparable M&A transactions (not sufficient information) Valuation Primer 8

9. Agenda • Overview • Valuation • ESOP Structuring • Comparative Cash Flows • Additional Planning • Appendix • ESOP Structuring 9

10. ESOP Structure – Partial Sale: 49% C Corp • Overview: • Sale occurs in 2014 – VTC becomes C Corporation • Shareholders sell 49% of preferred stock– estimated value of $7.8MM • All selling shareholders elect 1042 rollover – defer/eliminate capital gains taxes • Shareholders retain 51% ownership • Preferred stock is dividend yielding (9%) • Financing: • Initial sale is 100% seller financed • Second sale partially financed by a $10MM bank debt and the remainder is seller financed • Second sale assumptions are as follows: • Shareholders sell additional 31% of the equity in 2017 and exchange the rest for a package of warrants • Company borrows $10MM in 2017 to accelerate amortization of seller notes 10

11. ESOP Structure – Partial Sale: 30% C Corp • Overview: • Sale occurs in 2014 – VTC becomes C Corporation • Shareholders sell 30% of preferred stock– estimated value of $4.88MM • All selling shareholders elect 1042 rollover – defer/eliminate capital gains taxes • Shareholders retain 70% ownership • Preferred stock is dividend yielding (7%) • Financing: • Option 1 – Bank financing for second sale • 100% seller financed for the first sale; $10MM Term Loan in 2017 to finance second sale • Option 2 –100% seller financed • 100% seller financed for the first sale and for the second sale in • Second sale assumptions are as follows: • Shareholders sell additional 50% of the equity in 2017 and exchange the rest for a package of warrants 11

12. Maintaining Operational Control • Overview • Shareholders can retain full control over business operations • In all circumstances– including 100% ESOPs– the company is run by Board of Directors • Transaction documents will give shareholders control over Board of Directors • ESOP Trustee is a “directed Trustee”– votes on most corporate matters as directed by Board • Selling shareholders also have control over VTC as the largest creditors – through seller notes 12

13. Long Term Strategy • Multiple options: No further sale – retain status quo Sell Company. Pay off seller notes and value of warrants Make acquisitions from cash accumulated by a tax free entity in perpetuity Sale to ESOP Sell more stock to ESOP 13

14. 1042 Rollover • Selling shareholder can defer, and possibly eliminate, capital gain tax on sale • “1042 Rollover”: • 12 months to reinvest proceeds into “qualified replacement property” (QRP) • QRP= stocks and bonds of US operating companies • No capital gains tax due on reinvestment • QRP investments get carryover cost basis of stock sold to ESOP • Taxes triggered if later sell the QRP; but investment strategies to allow active management • If hold QRP until death, family gets stepped up basis and can sell without taxes • Company must be C corp. at time of sale, and ESOP must own at least 30% of stock (sellers aggregated) 14

15. 1042 Rollover - Options Floating Rate Notes Static Investments • Long-term, investment-grade bonds (AAA to A) designed for 1042 rollovers • Put ~10% down, borrow 90% to purchase FRNs • Allows you to actively manage remaining sale proceeds without triggering 1042 taxes • Bonds puttable– hold until death, step up in basis, estate sells without capital gains • Investors portfolios typically contains some long-term bonds • Can combine with 1042 • Allocate portion of 1042 rollover proceeds to long-term bonds • Hold until maturity 1042 Investor Real Estate Private Company Investments • Direct real estate investments not permitted • But can make equity investment in NewCo or existing company, to invest in and manage real estate • Can buy and sell real estate without triggering 1042 taxes • Can make equity and/or debt investments into private companies • New companies or existing companies 15