Proposal - Sports Support Syndicate's Investor's Interaction for New Product Development
I. Investor's Formula
- A. Mark Rauterkus and the Syndicate desire a standard and simple formula to guide product development.
- B. The following document is a policy guide to assist those involved with the Syndicate's product development.
II. Introductory Interaction with Investor
- A. Investors can review the suggested projects on a case by case basis
- B. No potential investor has an exclusive privilege to review the project proposals.
- C. Once the investment process begins, the investor has exclusive privilege to the profits of that product.
- D. All Syndicate plans, proposals and internal materials are confidential and should be treated as guarded trade-secrets.
III. Benefits
- A. The investor takes all the financial risks and claims all the financial profits until product maturation.
- B. Mark Rauterkus will get paid for his services for product development at the time of the development.
- C. Since the investor has the rights to the profits on the first and second production cycles, this allows for a conservative first-time manufacturing order.
- D. Then based upon the measurements and reviews of the early sales success of the product, a more significant reinvestment in the second production cycle can yield dramatic profits for the investor.
- E The Syndicate's existing sales operation will be a slave for all of the Syndicate's own products. Utilizing the Syndicate's sales force will eliminate sales commissions and provides for a high profitability for the investor.
- F. Since the Syndicate retains the long-term rights, the investor's involvement with the product is NOT entangled for years and years to come.
IV. Generic Product Development Stages
A. First Production Cycle
- 1. Research and Development
- 2. Author and Edit
- 3. Manufacture Goods
- 4. Promote and Advertise
- 5. Sell and Deliver Products
B. Second Production Cycle
- 1. Make Decision to Reinvest
- 2. Manufacture More Products
- 3. Promote and Advertise - (optional)
- 4. Sell and Deliver Products
V. Overall Process of Product Development with the Syndicate
A. First Production Cycle
- 1. The investor reviews the SSS proposal.
- 2. After the investor agrees to support the plan, an agreement statement is signed.
- 3. The investor pays all the costs of the first production cycle.
- 4. The initial production levels will be designed to insure the projects' maturation in a two year period.
- 5. The Syndicate sells the product collecting profits for the investor while retaining only the shipping and handling charges.
- 6. After a one year period, the Syndicate pays the investor all the collected revenues from that product.
- 7. Quarterly payments continue to the investor for the duration of the first and second production cycles.
- 8. The Syndicate recommends a proposal to the original investor for the second production cycle.
B. Second Production Cycle
- 1. The investor has the option to reinvest in the product in the second production cycle.
- 2. If the original investor decides not to reinvest at the start of the second production cycle, then the Syndicate assumes all rights of the product.
C. Third Production Cycle
- 1. The Syndicate assumes the rights to full ownership (expenses, revenues and profits) of the product at the start of the third production cycle.
VI. Syndicate Responsibilities
- A. After initial approval, Mark Rauterkus will create and maintain a project plan for the entire life of the product. The investor has the right to review these records.
- B. Mark Rauterkus will make a monthly memo to investors and authors concerning the status and activities of the projects.
- C. Mark Rauterkus will work to the best of his ability to minimize the developmental and fixed costs associated with these projects.
- D. At the conclusion of the first production cycle, the SSS will recommend a proposal to the investor regarding the second production cycle.
VII. Investor's Responsibilities
A. Investor pays 100% of the budgeted costs for the initial production cycle as projected by Mark Rauterkus (plus or minus 10%). Budgeted costs generally included:
- 1. printing charges
- 2. package charges
- 3. author's royalties
- 4. Syndicate's developmental charges
- 5. payment to the Mark Rauterkus as the editor and coordinator
B. The investor must make a decision and negotiate the specifics of the second production cycle within 60 days following the delivery of the Syndicate's recommended proposal outlining the second production cycle. This insures a product will not die at the end of the first production cycle due to investor's inactivity.
C. Investor has the right to chooses to terminate involvement with the specific project after the initial production cycle.
D. If the investor decides to continue an involvement with the product, the investor pays 100% of the budgeted costs on the second production cycle.
VIII. Expense Account Management
A. The Syndicate will manage the project's expense account.
B. The Syndicate will either accept a one-time payment from the investor. With:
- 1. Exact expenses will be reported to the investor as part of the
monthly report. - 2. A one-time investment payment reduces the amount of checks and transactions between the Syndicate, the investor and the suppliers.
C. Or, the investor can elect to make investment payments directly to the suppliers. With:
- 1. The Syndicate will forward billing statements directly to the investor for prompt payment.
- 2. The investor is responsible for 100% of the payment of these development and production expenses as agreed upon in the initial agreement. The investor can not refuse payments if the charges are within ten percent of the original budget.
IX. Revenue Management
A. The Syndicate receives all revenues from the sales of the products. All customers and dealers pay the Syndicate for products. The investor is not a sales center.
B. The Syndicate sales operation will not make any profits on the sale of the investor's products except for shipping and handling chargeş.
C. The first payment from the Syndicate to the investor will be one year after the "Starting Cash" investment. In the first year, the Syndicate will retain the generated revenues of the products and credit the investor's account according to all sold products and the resulting revenue.
D. At the conclusion of the first year, payments from the Syndicate to the investor will continue on a quarterly basis.
X. Long-term Ownership
A. The author or the Syndicate will retain the copyrights of these products, not an investor.
B. After the investor terminates involvement with a product, the Syndicate and/or author can continue to develop the project and resume product production at without investor's approval.
C. The third and all future production cycles are the complete responsibility of the Syndicate and/or author. The investor's involvement with the product and rights to any profits will end at the conclusion of the second production cycle.
