F

our business associates create a business that will develop and sell information technology software. The business will be incorporated. The four will provide 90 percent of the initial capital needs of the business, but none of them has the IT skills to develop marketable software. In addition, none of the four wants to be involved in the day-to-day management of the business. The four associates have found, however, an IT engineer to develop software and another person who is willing to manage the business. The engineer and the general manager each want a 5 percent equity interest in the corporation, which the four associates are willing to grant to them. Although the engineer and the GM would each like to elect a representative to the corporation's board of directors, the four associates want to control the business absolutely, with each associate owning an equal share of the corporation and sitting on the board.

Question 1-Using classes of shares, create an equity structure for the corporation that meets the wants of the four associates, the engineer, and the GM.