Ownership

This was written a year or so ago and may or may not still be appropriate.

Definition of Terms

• Until a better name is chosen, the business venture will be called "ProCash" (the most likely surviving product name). DevPlan, Inc. is not a very good name. The venture will act as a partnership until another business form is needed.
• "Founders" are Carl & ......

Principles of Ownership

• All ownership rests with Carl until this or another agreement is reached.
• The intent is that, if the venture is successful, the founders will share equally in net realization.
• A specific "formula" will be created to show shifting ownership.
  • Threshholds of value is one key to the ownership formula.
    • Threshhold A: "minimal cash flow sufficiency".
    • Threshhold B: "provenness" -- when value of $1.5 million (adjusted for CPI from 1/1/01) certain events will be triggered. Value will be determined by:
      • Whatever price new capital commitments to the venture are getting, or, if there are no new commitments,
      • A multiple of earnings in the prior twelve months, say 15 times earnings.
      The purpose of Threshhold B is to allow either of the "Founders" to withdraw partially or entirely from the venture. If either "Founder" elects to withdraw, the other has the right of first refusal on his shares. If the right of first refusal is not exercized, the "Founder" wishing to withdraw is free to sell his share to anyone except anyone who is determined to be a hostile buyer (more criteria are needed).
    • Threshhold C: ?
    • Threshhold D: ?
  • The venture will be said to have a certain value at its beginning and each founder will be said to own a certain number of shares when the venture begins.
  • A certain appropriate salary level for each founder will be agreed upon. When less than that salary level is drawn, additional shares will be issued to make up for salary not drawn.
  • Expenses will be reimbursed from the venture, and when there is insufficient revenue to reimburse expenses, they will treated as unpaid salary. It is expected that while there is no revenue to cover expenses, all reasonable effort will be used to keep expenses to a minium. Relocation, if and when needed, will be considered an expense of the venture.
• As new financing is negotiated, all equity owners will be protected from disproportionate dillution.
• An economic model will be created to allow testing this financial plan. When the venture begins, the model will be updated monthly to prod us along.
• Florida will be the first market area because of its size and because we have some knowledge of the development community in Florida. Expansion will be guided by geographic/transportation proximity to Florida and/or where paying clients emerge.