This document contains an outline of the Equity and Profit Sharing Scheme of Dwel.Online, a software development corporation henceforth referred to as the Company.
The definition of profits, as pertains to this document, is: any funds remaining after all expenses and debts are paid.
The Company’s flagship product is an Online Operating System named ‘Dwel’ (Dwel OOS).
The mission of the Company, and it’s suite of products and services, is to provide ordinary people with means to independently gather, store, manage and utilize their personal digital data, and the ability to engage in communications, and social and business interactions, with due privacy and control.
We envision the future in which individuals, groups and all other social or commercial entities are using the Dwel OOS to manage their day-to-day activities, collect, store, manage and utilize their digital data, autonomously and independently from any third parties.
The Company is governed by a Board Of Directors (BOD), headed by the Chairman of the Board.
The BOD’s prime objective is to make the Company as profitable as possible, while upholding the following Fundamental Values, as pertains to the end users of the Company’s products and services:
1. Independence from any specific suppliers of digital products and services.
2. Total and real ownership of personal digital data.
3. Safety, security and privacy of personal digital data.
4. Focus on benefiting individuals by streamlining and automating the use of personal digital data
The Company is owned by its Equity Shareholders.
The Equity Shareholders are split into two main groups, each owning 50% of the company’s equity: the Contributors Of Capital Funds (COCF) and the Contributors Of Intellectual Property (COIP)
COCFs are individuals and/or commercial entities who provide the capital necessary for the Company’s operations, until such time when the Company is able to sustain itself. Any such capital is considered a loan to the Company and is to be paid back, according to the rules outlined in Appendix A.
After the Company achieves self-sufficiency, the COCFs continue to own the 50% of the Company’s equity, indefinitely.
COIPs are individuals who contribute their ideas and energy (momentum and drive) necessary for the Company’s on-going operations.
COIPs, are entitled to a share of the Company’s equity, according to the rules outlined in Appendix B.
Each group (COCFs and COIPs) annually elects four representatives to serve on the BOD.
In addition, the Company may appoint up to 4 High-Profile Outside Experts (HPOE) as non-executive directors, to bring the necessary industry experience and expertise to the board.
Individual members of the BOD may not represent more than one group (i.e. be elected as a representative of both COCFs and COIPs at the same time)
COCF Equity
Individuals and/or commercial entities wishing to invest capital in the project will do so with the following provisions:
The money invested will be considered a loan, (COCF Loan) attracting 20% annual interest, but payable only when the Company has any funds left after the expenses.
Each COCF owns a share of the company’s Equity, in proportion to the percentage of their individual investment to the total amount of capital contributed by all investors.
Appendix A outlines the method and formula by which the COCF Loan is repaid and COCF Equity is distributed
COIP Equity
The COIP’s half of the Company’s equity is split between the Contributors of IP (anyone employed by the Company in any capacity, including HPOEs), in proportion to the total amount of salary/wages/contract income paid to each individual or entity.
Appendix B outlines the method and formula by which the COIP equity is distributed.
Equity Calculation
Both COCF and COIP equity shares are recalculated and adjusted on monthly basis.
Time-In-Lieu Provision
For the duration of the startup phase, while the company is in the process of acquiring the capital necessary for day-to-day operations, selected individuals or commercial entities may provide products/services to the company, in lieu of financial investment.
Any such products/services will be provided at an agreed upon price/rate, which will be considered as capital investment, and the person/entity so investing will be considered a COCF.
Time-in-lieu investors must accept that if the Company fails to produce any commercial benefits, they relinquish all rights to any claims of any benefits from or reimbursement of or reward against the products or services rendered to the Company.
Appendix A – COCF Loan repayment and Equity distribution
The COCF Loan repayments will be made in proportion to the percentage of individual investment to the total amount of capital contributed by all investors.
Let’s assume that in year1 the Company requires $100K (the Company’s overall debt) and there are three investors that provided that capital. Investor1 contributed $45K (45%), investor2 – $20K (20%) and investor3 – $35K (35)%
If at the end of the year the Company has 10K remaining after expenses, investor1 will be paid back $4.5K, investor2 – $2K and investor3 – $3.5K
Let’ further assume that in the year2 the Company decides to raise $200K more capital and gets investor4 to provide $100K and investor5 to also provide $100K.
The overall debt is now increased to $290K (10K is already paid back to the first group of investors).
If at the end of the year the Company has $10K left after expenses, this amount will be split into 2 parts, one for each group, proportionate to the percentage of overall debt owned by each group.
Group1 now owns 31% of the overall debt, so 31% of the $10K ($3.1K) is reserved for their repayments. Group 2 owns 69% of the overall debt and 69% of the $10K ($6.9K) is reserved for their repayments.
Within the first group, investor1 gets 45% of the $3.1K ($1395), investor2 gets 20% of the $3.1K ($620) and investor3 gets 35% of the $3.1K ($1085)
Within the second group investor4 gets 50% of the $6.9K ($3450) and investor5 gets the other 50% of the $6.9K ($3450)
Each COCF owns a share of the COCF Equity in proportion to the percentage of their individual investment to the total amount of capital contributed by all investors.
In the above example, the overall investment was $300K. Of that, investor1 contributed $45K – 15%. Investor2 contributed $20K – 6.6%. Investor3 contributed $35K – 11.6%. Investor4 and 5 each contributed $100K (33.3%). Therefore, the COCF Equity distribution is as follows: investor1 – 15%, investor2 – 6.6%, investor3 – 11.6%, investor4 – 33.3%, investor5 – 33.3%.
These percentages are recalculated and adjusted on monthly basis.
The COCFs remain entitled to their share of Equity indefinitely, while the Company is solvent and trading.
The COCF Equity may be traded or transferred, however each transaction must be approved by the BOD.
Appendix B: COIP Equity distribution
The definition of Contributor, as pertains to this document, is: any individual hired by the Company on permanent, part-time or contract basis, for any period of time.
All Company Contributors are subject to approval by the BOD, before they are confirmed as COIP Equity shareholders. The approval is subject to the Contributor providing genuine value to the Company.
After confirmation, the Contributors are awarded a share of the COIP Equity, in proportion to the total amount of salary/wages/contract income paid to them to date.
For example: Contributor1 is hired as a programmer on $40K annual salary. After an appropriate probationary period, they are confirmed as a COIP Shareholder. To date, they are paid $20K.
Let’s assume that the total amount of money paid to all Contributors by the company at that time is $100K. Therefore, as the Contributor1 is paid 20% of the total salary pool, they are, at that time, entitled to 20% of the Company’s COIP Equity.
These percentages are recalculated and adjusted on monthly basis.
Contributors’ entitlement to their COIP Equity share continues indefinitely, even if they quit or are dismissed by the Company. However, before any dividends are paid out, the Contributor has to ‘pay back’ the salary/wages/contract income that has been paid to them by the Company, plus 20% interest. As an example, if a Contributor is paid $50K during their involvement with the Company, the company will pay them their portion of the profit indefinitely, however the first $60K will be retained as pay back of the $50K.
The COIPs remain entitled to their share of the Equity indefinitely, while the Company is solvent and trading.
The COIP Equity may be traded or transferred, barring any potential conflict of interests, such as being acquired by COCFs. Any such transactions must be approved by the BOD.
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