Florence V. Zabarsky Zabarsky & Associates, LLC (440) 572-4950 zabarsky@ameritech

1. The Ohio Employee Ownership Center April 20, 2007Basic Relationship Between the Company and the TPA Florence V. Zabarsky Zabarsky & Associates, LLC (440) 572-4950 zabarsky@ameritech.net

2. A good relationship between the Company and the TPA is crucial to the effective and smooth operation of an ESOP, or any Retirement Plan • The TPA should be knowledgeable, but also personable and able to provide efficient service • The Company, or Plan Sponsor should be available to work with the TPA as needed to respond to any issues that arise

3. Basic Relationship Between the Company and the TPA • Service Agreement contents • Annual Data Request • Partnership between the TPA, Client and Trust Company • Preliminary Report • Communication of testing results and issues • Other TPA Functions

4. Service Agreement Contents • A service agreement should be in place for each Client/TPA relationship • It should include a Schedule of Services, along with responsible party • Avoid functions that no one realizes they are responsible for

5. Service Agreement Contents Routine TPA Duties: • Eligibility determination • Participant recordkeeping • Calculation/allocation of employer contribution • Calculation/allocation of forfeitures • Distribution processing • Compliance testing

6. Service Agreement Contents Duties Rarely Handled By TPA: • Making any decisions related to the Plan • To avoid being considered a fiduciary, the TPA cannot make any decisions in regard to the Plan. This would include method of handling any process that a Plan would have a choice in • Could include areas of the Plan Documents, testing, etc. • TPAs normally do not issue Plan disbursements

7. Annual Data Request • Employee (Census) Information • Company Information • ESOP Information

8. Annual Data Request Employee (Census) Information • SSN, Name • Dates • Birth • Hire • Termination • Rehire history • Hours • Compensation

9. Annual Data Request Employee (Census) Information • Any “other” contributions – 401(k), match, employer to another plan • Officers • Shareholders • Family Members • Pending QDROs

10. Company Information • Type of Company – C Corp, S Corp, etc. • Any mergers, acquisitions, etc.

11. Annual Data Request ESOP Information • Plan Assets – including Checking/Trust accounts, any mutual funds, any other investments • Detail of ESOP loan payments made • Amendments to Plan Document or Loan Document • Plan Year-end Stock Valuation • Fidelity bond information

12. Working with Client and Trust Company During the year-end allocation process it is important to have a representative available at both the client and the Trust Company, for any issues or questions that arise

13. Preliminary Report • Contents • Discussion in regard to

14. Communicating testing results and issues • Options and timing • Section 404 – Deductibility • Section 410b - Coverage • Section 415 – Annual Additions • Section 416 – Top Heavy

15. Final Report and Participant Statements

16. Other TPA Functions • Notification to Client of distributions • R.M.D.s • Diversification • Participants Eligible for Notification • Calculation of available amount • Annual Plan Sponsor Meeting • Employee Meetings

17. Sample Timeline • December 1  TPA sends a year-end data request to the Company • This should include an employee census request, as well as detail of all items needed • February 15  Company should remit all requested items to the TPA • March 15  TPA Delivers preliminary report to the client • March 31  Appraiser completes year-end stock valuation • March 31  Company reviews/gives approval of preliminary report • April 15 -30  TPA delivers completed final report, participant statements, final testing and Form 5500 (if unaudited Plan) to client