Dori R. Merriam, Transferee - Page 5

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          C.   James Merriam’s Business Activities                                    
               1.   James Merriam’s Early Businesses                                  
               In the late 1960s and 1970s, James Merriam started the Sir             
          Speedy Printing Centers franchise business and other franchise              
          businesses.  In the early 1980s, he started Texas State Video               
          Co., which he envisioned would become a nationwide video rental             
          franchise business.  James Merriam raised about $2 million in a             
          stock offering relating to the video franchise company.                     
               2.   James Merriam’s Offices, Office Staff, and Procedures             
               James Merriam had offices at the Tiburon residence and at              
          other locations.  He had numerous corporations and bank accounts.           
               James Merriam and members of his office staff received and             
          sorted mail delivered to the Tiburon residence.  James Merriam              
          gave petitioner mail not related to his businesses or taxes.                
          James Merriam told his staff not to give petitioner any                     
          information about his businesses.                                           
               3.   Napa                                                              
               Ted Merriam incorporated Merriam Investment Corp. (MIC) in             
          Colorado in 1983 and was its registered agent.  MIC was Napa’s              
          predecessor.  Initially, the members of the MIC board of                    
          directors were James Merriam, Ted Merriam, and petitioner.  James           
          and Ted Merriam resigned as directors shortly after MIC was                 
          incorporated and before MIC changed its name to Napa.                       
          Thereafter, petitioner was the president, sole shareholder, and             

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Last modified: May 25, 2011