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ALL ABOARD: THE DIRECTORS PLAYBOOK KEIRETSU ACADEMY PRESENTATION NOVEMBER 6, 2008 John Kellogg

ALL ABOARD: THE DIRECTORS PLAYBOOK KEIRETSU ACADEMY PRESENTATION NOVEMBER 6, 2008 John Kellogg Moye White LLP 303-292-7935 john.kellogg@moyewhite.com. The Team. Board Composition Inside/outside directors Investors/non-investors Experience/non-experienced Counsel Advisors Management.

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ALL ABOARD: THE DIRECTORS PLAYBOOK KEIRETSU ACADEMY PRESENTATION NOVEMBER 6, 2008 John Kellogg

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  1. ALL ABOARD: THE DIRECTORS PLAYBOOK KEIRETSU ACADEMY PRESENTATION NOVEMBER 6, 2008 John Kellogg Moye White LLP 303-292-7935 john.kellogg@moyewhite.com

  2. The Team • Board Composition • Inside/outside directors • Investors/non-investors • Experience/non-experienced • Counsel • Advisors • Management

  3. The Rules • State Law • Common Law (case law) Duties • Constituent Documents of the Company • Articles/Bylaws/Operating Agreements • Committee Charters • Contractual Provisions (i.e., Investor Rights Agreement) • Public Companies • SEC rules, stock exchange rules, etc.

  4. Defensive Play – Business Judgment Rule • Presumption that directors acted on an informed basis, in good faith, and with the honest belief that the action was in the best interest of the corporation • May be rebutted • Good offense is best defense

  5. Offensive Play – Duty of Loyalty • The interests of the corporation and its shareholders take precedence over the interest of the director • Conflicts of Interest • Personal Interest • Disclosure and Abstention • Corporate Opportunities

  6. Offensive Play – Duty of Care • In good faith in a manner that the director reasonably believes is in the best interests of the corporation • Care that a person in a like position would exercise • “Ordinary careful and prudent person” • Informed decision • Reasonable reliance and deliberation

  7. Special Teams • Indemnification • D&O Insurance

  8. Pre-Season • Information Flow • When, How, Content • Meeting/Communication • How scheduled/agendas • Approval • Is majority or supermajority approval required? • Are certain issues reserved for approval of shareholders? • Election and Removal of Directors • Is the entire board elected annually or are terms staggered? • Are board members elected by cumulative vote or plurality vote? • Who has the authority to remove Directors?

  9. Pre-Season • Board Meetings • In person meetings or teleconferences are generally permitted • How formal are meetings? • Approval can be documented in minutes or by written consent, but documentation is crucial • Minutes and Notes • Indemnification/Insurance • Conflict of Interest/Interested Party Transactions

  10. Discipline – Gut Check • Process vs. Content • If you were the CEO, would you make the decision based on the information presented? If not, ask for more information.

  11. yes Do you have any interest in the transaction? Consider whether you have fulfilled your Duty of Loyalty no AUDIBLES Have you received and reviewed all material information reasonably available? no Consider whether you have fulfilled Duty of Care yes Is your decision made on an informed basis, in good faith and in the honest believe that the action is in the best interests of the company? no Business Judgment Rule does not apply. No defense. yes Business Judgment Rule applies.

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