============================================================ Ithaca Community Annuities (ICA) Agreement (Version 1, Fall 2004) ============================================================ NAME: I*CAN, Ithaca Community is a specific Note, e.g. a specific Note for $250 etc WE*CAN = WISE Equity Community Annuity Notes -- the name of the retirement system PROGRAM/project (linked right into your WISE) being proposed here. FIRST DOCUMENT: The agreement that investors get (this is the main one!) SECOND DOCUMENT will be an elaboration on how the funds are invested, how the Ithaca Community Annuities (ICA) are kept safe and how the guarantees to investors assured. This document will be based on the original WISE proposal by Paul Glover, modified to apply directly to the ICA agreements that people receive. Numbers in brackets are parameters for discussion, possible modification now, and certainly could be modified, as well, in future versions. THIRD: What the investor signed and mails in ###################################################################### ###################################################################### FIRST (and by far the MAIN and longest) DOCUMENT: Investment form for Ithaca Community Annuity Notes. - - - - - - - - - - - - - - - - - - - - - - - - - I. Overview A.Motivation and Rationale. These Notes allow you to help build a strong local economy, strengthen person to person ties, foster economic democracy in the workplace and community, and build a more peaceful, just, and sustainable future. On top of this, these Notes allow you to build equity outside of Wall Street. Why do so? 1. Your values: you don't support Wall Street. 2. Safety*: Wall Street and the U.S. dollar may be in for turbulent times; thus you are hedging your bets. 3. To reduce or eventually dismantle Corporate Power over our lives, we withdraw support. 4. A positive vision. Because just as people deserve a democratic to banks (e.g. credit unions) we deserve a democratic alternative to Corporate America's pension scheme of putting our entire nest eggs into Wall Street. [*: Calculations showing mathematically that Wall Street is provably unsustainable over the long term are at http://economicdemocracy.org/wall-st.html and http://economicdemocracy.org/wall-st-ii.html ] [Note: Ultimately we seek a World in which no one, retired or not, has to "earn" the right to food, housing, and other human needs. Working within the existing world we have today, however, the WE*CAN program allows us to meet these four objectives and others, promoting our values, and our economic security, while helping create the democratic and communitarian physical, economics and social infrastructure to help make such a World possible] B. Fundamentals The basic idea behind Ithaca Community Annuity Notes (I*CANs) is a way of letting you save and prepare for retirement security outside Wall Street and in alignment with the goals just outlined. The fundamental "big picture" was authored by Paul Glover, in his Whole Ithaca Stock Exchange (WISE) proposal, and will serve as a general guide for the I*CAN program now initiated. [See http://www.ithacanews.org/wise.html] Unaware of WISE, Harel wrote "A Workable Transition to Democratic Retirement Systems" [see http://economicdemocracy.org/democraticretire.html] focusing on the user-end (retirement). He later became aware of WISE into which his proposal could perfectly plug in. You are encouraged to review these two documents, as well as carefully reading the rest of this document, and contacting Paul or Harel (please CC the other person) with any questions, comments, suggestions, or concerns. C. Disclaimer and Caution This is an ambitious project and naturally carries risk of losing one's equity. Please review this document carefully, understanding that the program may not succeed, or may succeed but in a significantly longer time-frame than envisioned. Read also the sections with protections to the investor which the management of I*CANs will be guided by, though again there is no guarantee of capital. YOU SHOULD ONLY INVEST MONEY YOU CAN AFFORD TO LOSE; AND ONLY MONEY WHICH YOU DO NOT NEED BACK IN THE SHORT TERM. At the same time, don't be scared off and please consider: 1. I*CANs concept co-designer Harel noted: "At the same time, it must be noted that Paul Glover has a long and distinguished record as a community activist (see http://www.ithacanews.org/glover.resume.html) Particularly noteworthy are his being the founder of Ithaca Hours, among the most successful community currency systems, and of the Ithaca Health Fund, a nonprofit, democratically run, member-owned health (co-)insurance fund" 2. Paul, Harel, and those working with them have invested their own money into this project (without receiving higher financial returns) and beyond this, are dedicated by our values to do everything they can to make WE*CANs a reality. 3. The open, transparent, and democratic nature of the WE*CAN program is expected to make our investments much safer from abuse and mismanagement, all other things being equal, as compared with closed-door Wall Street management styles. 4. Additionally, there are safety mechanisms to protect the investors as much as is possible within this "no guarantees" framework, see section IV. below - - - - - - - - - - - - - - - - - - - - - - - - - II. Governance of WE*CAN. A. Initially [starting approximately January, 2005] Paul Glover will oversee the WE*CAN as the deposits increase, towards building to an initial level of capital. The initial goal is $20,000. B. Management: Paul Glover will be the initial overseer and Manager. As soon as is practicable [and no later than January 2007] a Board of Directors [the "Board" henceforth] will be set up with members running for that office and elected by the membership. A democratic one-member-one-vote system like that of the Ithaca Health Fund will be used. If, heaven forbid, Paul Glover dies (or for some reason is unable to oversee the WE*CAN project) before a Board is set up, [Suggestion? I sure hope we don't ever have to use this clause but we need it! Maybe no money leaves the Escrow until there's a board?] - - - - - - - - - - - - - - - - - - - - - - - - - III. The Mechanics of Investing A. Minimum Investment: [$250] [NOTE: Socially Responsible mutual fund Pax World Fund has the low $250 min. We can do even lower, when the ICA is stronger, could then change to "$250 or 1% of your annual income, whichever is lower" for example] B. Heirs: All WE*CAN investors [henceforth, "investors"] may include a person, a nonprofit, a donation back to WE*CAN, or some combination of these (with percent breakdown) who/which would receive any funds which that investor had not redeemed prior to that investor passing away. WE*CAN investors who do not provide such information with their initial sign-up form, may do so at a later time by sending that information (including SSN or TIN) signed and dated, to the WE*CAN address. C. How the Funds are invested: Future versions of this agreement will provide additional details; these details will be based on the general principles and overall framework of WISE (http://www.ithacanews.org/wise.html) which itself already has considerable detail. IMPORTANT: Any parts of the WISE (http://www.ithacanews.org/wise.html) document that are not in agreement with this document (the WE*CAN Agreement), such as percentage rates, etc, will not apply: the terms of what WE*CAN investors are entitled to are as laid out in this WE*CAN Agreement. D. What is due to Investors [THIS IS PERHAPS THE MOST IMPORTANT SECTION] 1. [During the first four years, January 2005-January 2009] there is no redemption of WE*CANs. If things progress faster and better than anticipated, this could be revised in a positive direction in future versions of this agreement, but at this time this clause represents out expectation of an initial period necessary to build solid equity. 2. We expect that eventually WE*CANs will be redeemable a for i. Ithaca Hours ii. Goods and services, e.g. goods at GreenStar coop supermarket; housing credits [which will be defined more specifically in future versions], Ithaca Health Fund membership annual renewals, and so forth; iii. U.S. Dollars; iv. Local currencies of cooperating affiliates elsewhere. Investors are encouraged to opt for i. and ii., later also iv. in support of their values; while the Board will work, as much as it can, to make such decisions be financially rewarding as well. During the next [two years, Jan 2009-Jan 2011] WE*CANs will be redeemable only for a combination of i. and ii. The Board will earnestly endeavor to make a non-zero portion of the CANs held by investors redeemable for iii. U.S. dollar, given that some human needs may not be easily met through the community enterprises WE*CAN and WISE invest in. The Board will also work over time to make ii. possible through cooperative agreements (see also below) 3. In January 2009, the Board in its Report (see section IV below) will declare what each $100 of CANs has earned for each year, years, or fraction thereof, for the 2005-2009 period, in terms of a basket of redeemables. Example: "Each $100 invested by January 2005 earns, for the Jan 05 to Jan 06 period, $X in Ithaca Hours, The following GreenStar: [...]" Similar declarations will be made for every other 12 month period (e.g. CANs purchased Jan 06-Jan 07 may earn lower or higher or different baskets) and CANS purchased mid-year earn a PRORATED fraction of the basket in question In January 2010 the Board will also declare (somewhat similar to e.g. TIAA-CREF with its Traditional Annuity) what basket CANs purchased during Jan 2009-Jan 2010 had earned. The Board will do likewise in subsequent years. Future versions of this Agreement may require more frequent reports from the Board but such as described here shall be the minimum. - - - - - - - - - - - - - - - - - - - - - - - - - IV. Responsibilities of WE*CAN towards investors A. A note with is sent to WE*CAN depositors. It will contain a copy of this Agreement; the amount of their investment; the date that amount was received by the WE*CAN representative ; and a signature and date. It will be signed by Paul Glover initially; and later by a representative of the WE*CAN Board. B. Guarantees: If this present endeavor fails, collapses, or gets frozen in its tracks, then if some years later a similar project is initiated, then all investors in the present WE*CANs are guaranteed "first in line" rights. Meaning: if the new system has the resources to pay anyone, and as soon as it is able to do so without endangering itself, then these investors, the current investors in WE*CANs, have that right to be paid first. In other words, present investors are guaranteed not to lose their money based on the present system failing (which organizers, will work hard to avoid) *provided* that the new resurrected system has enough resources to pay that many investors. NOTE: It is our sincere intention to avoid such an outcome if at all possible This clause is a "just in case" clause aimed at providing backup protection to current investors. C. To help safeguard the health of the WE*CAN system of Community Annuity Notes, Paul Glover, and once created, the WE*CAN Board, shall consult with key financial professionals including but not necessarily limited to: community economics experts, people with mainstream business knowledge and experience, actuaries on the issue of risk and how much the system can afford to promise in returns; and experts in specific domains whenever investing in a project that touches upon it. For example, permaculture experts, solar power installation experts, etc, with credentials where possible, will be consulted with when WISE, acting with money obtained through WE*CANs, invests in a community gardening or alternative energy enterprise. NOTE: This will include legal experts as well so that enterprises take precautions to minimize the risk of being sued, etc. D. Reports. At least annually Paul Glover and later the Board will 1. Describe state of things in overview, progress report, and snapshot of the WE*CAN/WISE project (compare with reports by New Alternatives (NALFX) mutual fund on the alternative energy/conversation businesses in which they invest); 2. And will give the "basket" earned (possibly prorated) for investments during the past year as described in section III.D.3. above. E. Moving to expand beyond the Ithaca, NY region. The board and membership will endeavor over the years to make investors' equity as usable as possible outside Ithaca, with the long-term goal of being fully usable for retirement and meeting life's needs outside the Ithaca regions. Outside Ithaca, WE*CAN becomes "Wholesome Equity Community Annuity Notes" - - - - - - - - - - - - - - - - - - - - - - - - - V. Future Modifications A. 1. Clause: These initial bylaws may be modified by the Board. The advantage of anyone signing this present Agreement is they will have the right to either keep to its terms or adopt the next version, when that happen. This will in effect, make sure that the next version, which is expected to be more detailed, will be at least as favorable to the investor. 2. Future Agreements however, may not have a clause like V.A.1. meaning from some point on, investors who remain invested in WE*CANs will have to agree to the new agreement as it is updated from year to this. The present V.A.1. is an added special protection for the earliest investors. B. Future versions of this WE*CAN agreement, based on the general principles in http://www.ithacanews.org/wise.html, will specify in more detail how one can invest in WE*CANs through labor rather than through U.S. dollars (or through a combination of the two) This will be done as soon as it is practicable, i.e. when participating institutions accepting such labor will have established a working relationship with WE*CAN. Paul Glover/The Board will endeavor to create such options as soon as practicable. C. One aspect of the present agreement is similar to Wall Street and is in this regard unsustainable, and that is that exponential growth (e.g. a percent return) cannot continue indefinitely. Even a 1% return (after inflation) when passed on to heirs will become after e.g. 1,000 years an impossibly astronomical number. While keeping the option of percent returns in the short term, the Board will think hard and carefully and consult with sustainability experts as well as financial and economic experts and with the input and votes of the membership -- and will by 2020 implement modifications needed for sustainability of the WE*CAN retirement program into the indefinite future. ###################################################################### ###################################################################### [We don't need to iron out the Second Document at this point, just some thoughts] [How invested. Different types: (i) Cash in community/worker owned institutions (CWOIs) e.g. Alternatives Federal Credit Union (AFCU). (ii) Bonds from (i.e. loans made to) established community CWOIs like GreenStar Coop Supermarket (iii) Bonds from emerging/establishing CWOIs (iv) Equity stake in emerging CWOIs. Explanation below] Explanation: We don't want to become "one dollar equals one vote investors" and also, want to keep CWOIs as community/worker owned. However if large amount of startup capital is given to an emerging CWOI, anywhere between 1/10% to say 3% of the goods produced by that CWOI could be owned by the board/institution (need a NAME for it) running the ICA, e.g. a new worker-owned bakery could have 1% of all bread made be the share owned forever by (NAME), limited however to what NAME and her/his immediate family can eat. That is, if they have earned 10 loaves this week but can only eat 3, the other 7 go back to the bakery. ###################################################################### ###################################################################### Third Document: What Investors Get and Sign and Send In: Name: Address: Phone: Email: Heir: [Name/SNN (percent they get) ; Organization/TIN/(percent) [copy of agreement] Signature: Date [What else?] ###################################################################### ######################################################################