The Dojo4 Playbook

A work in progress...

dojo4 on GitHub

Also see all Dojo4 Co-op legal documents here: and in the Dojo4 Concord account at

Summary of Final Terms for the Conversion of dojo4, LLC to a Cooperative under the Colorado Uniform Limited Cooperative Association Statute

March 3, 2017

The following is a summary of the material terms and conditions of the proposed conversion of dojo4, LLC, a Colorado limited liability company, (the “LLC”) to dojo4, LCA, a Colorado limited cooperative association (the “Cooperative”). This term sheet is for discussion purposes only and is not binding on the LLC or the potential members, nor is the LLC or any of the Members obligated to consummate the cooperative conversion until the appropriate legal documents (listed below) have been executed. Further detail will be provided in these transaction documents and many other details will be left to be determined through the customary practice of the Cooperative once operations commence.


For Initial Members:

<FOUNDERS> will be de facto (automatic) initial members of the Cooperative. <FOUNDERS> will select three to five (3-5) additional Council Members, as defined in the Bylaws from among the current potential stakeholders. The eligible current stakeholders include all current subcontractors, employees and substantial general contributors to the business, as of <DATE>.

For Future Members:

Following consummation of the conversion, new Council Member candidates will go through a six (6) month trial before they are eligible to become members of the Cooperative. After the trial period, a unanimous (100%) vote of the Council Members will be needed to approve the new member.

Council Member’s may enroll in the Co-op either individually (e.g. in case of employees, managers) or via their LLC (e.g. subcontractor). Membership rights, however, will be exercised by natural person behind each LLC, and always on a one-member, one-vote basis. Membership will be a democracy of people, not businesses, even if the legal documentation refers to members as LLC’s. The intention is to preserve the independent contractor status of the Member and to safeguard limited liability protection.

Critical Mass:

Five (5) Council Members

Buy-in Amount:

$<AMOUNT>. Newly admitted Council Member may also make a partial up-front contribution and pro-rate the balance over 12-months.

Periodic Dues:

$0, subject to change.

Initial Board of Directors:

Until there are more than 7 Council Members, all Council Members will comprise the Board.

Subsequent Board of Directors:

Once there are more than 7-Council Members, the Board will have between 3-5 seats, with a majority comprised of Council Members, and no more than a minority comprised of external directors. All directors are elected by Council Members.

The subsequent Directors will be elected by a super-majority (2/3) of Council Members during annual meeting.

General Management:

<FOUNDERS> will initially remain in their current management roles. The management roles will be appointed by and will report to the Board of Directors. Additionally, as a retention incentive for ongoing management, the managers will be entitled to “Guaranteed Payment Distributions” akin to a salary or performance based-compensation.


TBD (revisited later). The intention will be to outline in a discrete and enumerable list of task-based roles: e.g. specific project-related QC responsibilities, moving locations, onboarding new members, etc.

Council-Member Terms:


A simple majority of the Council Members present and voting in person or in any other authorized manner will constitute a quorum.

Council Members will be required to attend (either in person or virtually) at least 30% of Council Member activities per year.


One-member – one-vote. Operationalized using fist to five (i.e.

Passing vote requirements:

A super-majority (2/3) vote of the Council Members

Terms requiring mandatory voting and council consent:

§ Admission of new Council Members.

§ Voting in the members of Board of Directors.

§ Accepting new clients.

§ Annual review of existing clients.

§ Amending the Bylaws and Articles of Incorporation.

§ Change of control event: merger, acquisition, liquidation, demutualization.

§ Successful petition by the members to implement: new work standards (e.g. brick house vs wood frame house technique), new policies, or new business opportunities. The petition is initially drawn to a vote and approved by at least 25% of the Council Members.


Total Patronage Dividend Allocations:

The patronage allocations will be allocated from the annual net profit/loss. All Council Members receiving patronage allocations will receive a K-1. Coop may decide not to distribute all or any of a profit/loss allocation in cash, in which case it will be allocated to Internal Capital Accounts.

Council Member Patronage Calculations:

An individual Council Member’s patronage dividend will be calculated based on units allocated (“Patronage Units”). One (1) Patronage Unit will be allocated for each ten (10) hours of work/service/value contributed by a Council Member either to the Co-op pursuant to a written arrangement or through the Co-op on behalf of Co-op clients (pursuant to a sub-contractor or services agreement).

Both client billable work time as well as general value-add contribution time will be credited with Patronage Units. All time will be subject to review or approval by management.

By signing below, I acknowledge acceptance and agreement of the foregoing.



Dated: _________________________