In considering numerous ownership transition alternatives, the leveraged ESOP is a viable alternative when the selling shareholder, the sponsoring company and the employees of the sponsoring company possess some or all of the following characteristics:

Selling Shareholder Characteristics

• Owns (either individually, along with other selling shareholders or through a trust) at least 30% of all outstanding stock of the company

• Has low basis in stock

• Desires to sell because his or her net worth is concentrated in the company

• Looking to reduce involvement in the company presently with a longer term outlook (5 to 10 years) of phasing out entirely

• Would like to take some value out of the company on a tax-deferred basis

• Willing to transfer the beneficial ownership of some company stock to the company's employees

Sponsoring Company and Employee Characteristics

• Mature company with modest capital expenditure requirements over the next few years

• Sufficient balance sheet strength to absorb ESOP acquisition debt

• Sufficient cash flow from operations to cover all ESOP acquisition debt and other long term debt service requirements by at least 1.25 times

• Historical and projected profitable operating performance (i.e., revenue generation and profit margins)

• Payroll of approximately $500,000 or more

• 15 to 20 employees or more

• Tax paying position

• Necessary existing and future corporate leadership to be a perpetual corporation -- i.e., as one retires, others are available to lead

• Participatory management environment

• Effective communications exist between employees and management