LDFA 1-27-09 Board Meeting Packet

LDFA Board Meeting
- ANN Arbor/YPSILANTI
January 27, 2009
SMARTZONE 8:15am to 10:15 am
SPARK Central Incubator
330 E. Liberty Street, Arm Arbor, MI 48104
Agend a
I .Call to Order
0 .Approval of the Agenda
IIA
. pproval of the Minutes of the
November 14, 2008 Special Board
Meeting
0.LDFA Chair's Report
V. Reports from Service Providers
a. Acceptance of
SPARK Report — FY
2009 2nd Quarter
Ended December
31, 2009
b. Acceptance
of the
SPARK FY
2009
Entreprene
urial Plan c.
Acceptance
of the SPARK
FY 2009
Cantillon
Maintenance
Plan (to be
distributed
at the
meeting)
VI. LDFA Treasurer's Report
a. LDFA Financial Report — 2 nd
Quarter Ended December 31, 2008

VII. Reports from Committees
a. Update of Audit
Committee
Review/Acceptance
of SPARK Corrective
Actions Plan, Dated
November 7, 2008
Abraham & Gaffney
Engagement Letter:
FY 2009 SPARK Audit,
Six (6) Months Ended
December 31, 2008
b. Ad-hoc Committee for Re-design
of SPARK Reporting Elements
c.Ad-hoc Committee for
Strategic Planning and
Audit
d.By-Laws Committee
e. Contract/Budget
Committee
Phase I
Screenings to
Determine
Geographic
Location
Eligibility
VIII. Report from the MEDC
IX. Other Business
a.Ann Arbor Angels
Proposal
b.Committee
appointments —
Nominating
Recommendation c.
FY 2008 LDFA
Annual Report
X. Motion to Adjourn
Ann Arbor/Ypsilanti SmartZone LDFA
Board of Directors
FY 2009
Municipality Member LDFA Title Term Starts Term Ends Company Phone Email
Ann Arbor Mike Korybalski Vice Chair 10/4/2004 6/30/2011 369-2774 michael@korybalski.com
Ann Arbor Rob Risser 6/30/2002 6/30/2009Picometrix, Inc. 864-5605 rrisser@picometrix.com
Ann Arbor Steve Rapundalo 10/15/2007 6/30/2011City of Ann Arbor 476-0648 srapundaloaa2cov.orq
Ann Arbor Richard Beedon 11/17/2008 6/30/2009MacBeedon Group 323-0114
Ann Arbor Theresa Carroll 6/30/2008 6/30/2012Dykema Gossett PLLf 214-7698
Ann Arbor Lisa Kurek 6/30/2008 6/30/2012Biotechnology Busine 930-9741 lisaebioconsultants.com
Ypsilanti Darryl Daniels Treasurer 6/30/2007 6/30/2011Jacobsen Daniels 734-961-3200 darrvleiacobsendaniels.com

Ypsilanti Mark Maynard 6/30/2008 6/30/2012U-M Tech Transfer 734-516-1432 mmaynardnumich.edu
Ypsilanti Richard King Chair 6/30/2005 6/30/2009SDTDC 487-0490 rking@emich.edu
Ex-officio Roselyn Zator MEDC (517)241-0771 zatorramichigan.orq

Ex-officio Tom Crawford Recording Secretary City of Ann Arbor 994-2909 tcrawforde.a2clov.orq
DRAFT
A R T Z O N E -
MINUTES — SPECIAL BOARD MEETING
November 14, 2008 H: 734-623-8402
C: 734-330-7374
Ann Arbor-Ypsilanti SmartZone Local Development Finance Authority
City of Ann Arbor, Guy C. Larcom, Jr. Municipal Building, 5 Floor Conference Room
th
100 N. Fifth Ave., Ann Arbor, MI
Members Present: Richard King, Michael Korybalski, Rob Risser, Stephen Rapundalo,
Theresa Carroll, Mark Maynard, Darryl Daniels, Lisa Kurek, Roselyn Zator-Ex-officio, Tom
Crawford-Ex-officio
Members Excused:
Others Present: Michael Finney-SPARK, Scott Olson-SPARK, Greg Fronizer-SPARK,

Elizabeth Parkinson-SPARK, Skip Simms-SPARK, Kurt Riegger-SPARK, Timothy Marshall-
SPARK, Sandi Bird-City of Ann Arbor-Finance, Tina Reed-Ann Arbor News, Nathan Bomey-Ann
Arbor Business Review, Mickey Katz-Pek
CALL TO ORDER:
King called the meeting to order at 8:14am. A quorum was present.
APPROVAL OF THE AGENDA:

Korybalski moved, seconded by Rapundalo, to approve the Agenda for this meeting in the form
presented at this meeting, as amended per discussion. Motion approved unanimously.
MOTIONS & RESOLUTIONS:
1. Minutes of the October 28, 2008 Board Meeting:
Risser moved, seconded by Korybalski, to approve the Minutes of the October 28, 2008 board
meeting in the form presented at this meeting, as amended per discussion. Motion approved
unanimously.
REPORT FROM COMMITTEES:
1. Audit Committee:
The question was called at the October 28, 2008 meeting to confirm the number of votes
required to approve a motion when a 6 member quorum is present, and the answer is 5, at all
times.
DRAFT
Risser moved, seconded by Rapundalo, in reference to the FY 2008 Agreement between the
LDFA and Ann Arbor SPARK, whereby Ann Arbor SPARK owes the LDFA $23,612.50 for net
overbillings relative to the audit findings, subject to the potential adjustment for the $2,312.50
inadequate documentation for Phase II and Phase Ill if provided within 30 days. Payment due
December 1, 2008. Motion approved unanimously.
Risser moved, seconded by Korybalski to provide for SPARK employees to incur up to 1 hour
of Phase I screenings, per new Phase I company, to determine geographic location eligibility for
reimbursed services under the FY09 LDFA contract with SPARK. Further, the LDFA should
investigate if a modification to the existing SPARK FY09 contract is necessary in order to
clarify this geographic eligibility screening of one (1) hour during Phase I. Motion approved
unanimously.
OTHER BUSINESS:
1.Nomination of Officer Position — Treasurer
Korybalski moved, seconded by Risser, to nominate Darryl Daniels as Treasurer. Motion

approved unanimously.
2.Committee Appointments — Contract/Budget, Nominating Recommendation,

By-laws, Ad-hoc Committee for Re-design of SPARK Reporting Elements, Ad-
hoc Committee for Strategic Planning and Audit:
The Chair made the following committee appointments:
Contract/Budget Committee:
Daniels (Chair), Carroll, Risser
By-laws Committee:
Carroll (Chair), Daniels, Rapundalo
Ad-hoc Committee for Re-design of SPARK Reporting Elements:

Kurek, Maynard, King
Ad-hoc Committee for Strategic Planning and Audit:

Risser, Korybalski, Kurek, King
3.Update of Ann Arbor Angels:
Korybalski reported SPARK is working with the Ann Arbor Angels and a proposal would be
forthcoming to the LDFA.
4.Proposed Meetings/Location:
King requested a conference call meeting, prior to the January meeting, between the LDFA
board members and the City of Ann Arbor Attorney's office to discuss the Open Meetings Act.
Public meeting notice to be forthcoming.
DRAFT
Carroll moved, seconded by Daniels to move the location of the January LDFA board meeting to
the SPARK Central Incubator due to the current City Hall construction with limited parking
space. Motion approved (Rapundalo — No).
5.FY 2009 Budget Reallocation:
Risser moved, seconded by Maynard to amend the agenda to add item for budget reallocation.
Motion approved unanimously.
Risser moved, seconded by Korybalski, to provide funding of $10,000 for Cantillon Maintenance
and to authorize the budget reallocation by reducing the unexpended Cantillon Entrepreneurial
Education Series-Maintenance, Enhancement and Operation, budget line item-Development.
0.FY 2009 Administrative Agreement between the LDFA and the City of Ann
Arbor:
Korybalski moved, seconded by Maynard to authorize the Chair to review and execute the FY
2009 Administrative Agreement between the LDFA and the City of Ann Arbor, not to exceed
$4,000. Motion approved unanimously.
1.Executed Copy of Attachment C to the FY 2008 Agreement between the

LDFA and Ann Arbor SPARK:
King noted Attachment C to the Agreement between LDFA and Ann Arbor SPARK, dated July
15, 2008, in the form presented at this meeting, and attached hereto and made a part hereof,
reflects the budget increases approved at the June 13, 2008 board meeting.
2.FY 2008 LDFA Annual
Report: Postponed until the next
meeting.
REPORT FROM SERVICE PROVIDERS:
Korybalski moved, seconded by Risser, to accept The Ann Arbor SPARK Business Accelerator
Report, Attachment A: Business Accelerator Clients, for the quarter ended September 30,
2008, in the form presented at this meeting and attached hereto and made a part thereof.
The Chair requested the Budget/Contract Committee to review the Corrective Action Plan report
submitted by Ann Arbor SPARK.
DRAFT
MOTION TO ADJOURN:
Risser moved, seconded by King, to adjourn the meeting at 9:23am. Motion approved
unanimously.
Respectfully Submitted,
Tom Crawford, Recording Secretary

Ann Arbor-Ypsilanti SmartZone
Local Development Finance Authority
Ann Arbor SPARK
Quarterly Report
October 1, 2008 through December 31, 2008
Work Accomplished
Number and identity of companies in each phase, plus relevant aspects of
commercialization
59 companies in Ann Arbor were served this quarter. Counting

companies outside the area a total of about 80 companies were
served with Phase I, II and III services.
The following companies only received Phase I reviews
Absolute 3D Imaging Mana Livonia

AviCenna Medical geme
Systems, Inc. nt Ann Arbor
Bio Logic Cons
Engineering, Inc. ultant Dexter Troy
Brooks Newco s, LLC Ann Arbor
Brugeman Newco Grand Blanc
Carew Energy, Inc. Ann Arbor Ann Arbor Ann Arbor

Ann Arbor Chelsea
Cutting Image
Histology, LLC Ann Arbor
DiMarzo Newco
DVM Newco
ePack
fiftySense LLC
Global
Business planning im rting waste to neutriceutical.
pli
Business planning
cat Business plan development
assistance
ion
Assistance with s Business planning
business planning, for Organizing next steps, possible
financial modeling, pla
funding MLSIC tenant
nni MEMS packaging source
Concept validation ng
and referral Newco
Business model Conve
Quality management consulting
decisions and
Ann Arbor SPARK Q2, 2008/09 LDFA Report Page 1

Grease Monkeys, LLC
rce Business Academy
ntermz
Nanosystems
Ann Arbor Business planning and network

connections
Ypsilanti Eligibility requirement
Ann Arbor Newco
Ann Arbor New product commercialization help
Patient Toolp Ann Arbor Ann Arbor

Provid ax
er Brighton Howell
Comm Valent
unicatio a
ns Newc
Photoni o Flint
c Ann Arbor Franklin Ann
Crystal Wedli
Biosys nk Arbor Novi
tems
Work Ann Arbor Ann Arbor
Pillar net
Technology Syste
ms
Real3D Places Dexter
Rate My
Student Rental Ann Arbor
Smoothie
Llama
Sofirek
Stephanie
Freeth Newco
stopyourforecl
osure.org
thePatientConn
ection
Threefold
Sensors/IA, Inc.
Referral to BBC Smoot Looking for funding
for SBIR hie Market entry strategy,
Franc
Market hise introductions Business
validation
and Newc planning for
business o
planning investment
Busin
Outside the area ess Web 2.0 for linking
Idea photographers and
Can't help Form weddings
Referr Growth strategy
Online student
housing site ed to
others
Mobile
The following companies were in Phase II

Due Diligence this quarter but have not
reached Phase Ill
Boomdash Ann Arbor Market entry strategy for second

market channel
ExpressByte
Ann Arbor Marketing assistance
Ann Arbor 1800018000
Inc.
AnnAkervall Technologies Daixo
Arbor 4000
Ann Arbor Mobatech,

25002500 Inc. Ann Education, Financial,
Phios
Analytical Arbor Business Plan Review
Laboratories Ann plans for moving forward
UrTurn
Arbor Fundraising assistance
AdGuru
Ann Due diligence, develop
engagement proposal
TheGISH Arbor Business planning and
Audiallo technical assistance
Ann Next steps
Better Rehab,
Arbor Branding, web
LLC architecture and IP
Huckestein Ann assistance
Evaluate technology
Newco Kiyo Arbor hurdles Business Idea
Networks Form
Ann
MarketMonitor Newco
Arbor Initial Meeting
HQ Nudge
Them Inc. Ann
Arbor
Ann
Arbor
Ann
Arbor
Ann
Arbor
Ann
Arbor
The following companies received Phase III level support
Account BA BA
City Request Contract Statement of Work or
Name Amt Milestones Amt
Market assessment and product mapping

Market assessment and entry strategy
nn Arbor
11000
Ann Arbor 15000
OcuSciences,
Arbor Ann ArborInc
arning, LLC
Ann
16800Arbor
4000
Motivation Ann Arbor
Online
otechnologies Hygieia, Inc.
recommendations
Development of financial assumptions and
reports
Value chain analysis, market segmentation and
meeting w/DTE
Corporate identity
Market assessment and partnering opportunities
Business planning
Business plan review for funding
Combination of remaining amounts from earlier
Proposals
Product development and market research
9000
6400 6400
5105
Sentry Medical Technologies

Ann Arbor 14700
11725
11000
Ann Arbor
Switchback LLC15000 Ann Arbor
Ann Arbor 14700 Ann Arbor
2400
2400 Development of sales and
marketing structure
Velesco Pharmaceutical Services LLC
11725 Website marketing tactics and
Wizrad Ann Arbor strategy
Market research
Number and identity of companies that completed phase III engagements
EiPon Learning, LLC

Ann Arbor Ann Arbor 16800 Corporate identity
Hygieia, Inc. 6400 6400 Business plan review for funding
Sentry Product development and market research
Medical Development of sales and marketing structure
Technologies
Website marketing tactics and strategy
Switchback LLC
Velesco Pharmaceutical
Services LLC
Founding location, current location

Ann ArborWe
SPARK Q2,
have 2008/09
just startedLDFA Report
tracking where the companies were located at the time the initial Page 4
contact occurred. We do not yet have enough data to provide a meaningful report with
this information.
Work to be Accomplished:
We anticipate the volume of companies served next quarter will be slightly higher than
this quarter.
Next Boot Camp will be held in
April. Problems
SPARK would like clarity on:

1.Phase III use of funds for companies that need services not easily or practically billable at
an hourly rate
2.Event Sponsorship qualifications or limitations,
if any 3. Hosted Event location limitations within
SmartZone Significant Deviation from Scope of
Work
Number of companies reaching Phase II due diligence is under our projections. This is
due in part to the number of companies actually located in the city of Ann Arbor at a
stage of development or preparedness for acceleration services. Despite this anomaly we
are using more
Ann Arbor
Phase III services with companies to accelerate their progress. This will continue to be the case.
n Arbor Ann Arbor Saginaw
The forecast Ann
for the nextArbor Ann Arbor
two quarters for Phase II and Phase In expenditures are significantly
higher than the first half of the year but we believe we could reach them. The hours spent in Due
Diligence is averaging much less than originally estimated and may be too high still, but Phase
III support will be ramped up the next half of the year.
Business Incubator expense this quarter was higher than forecast because paid rents were
significantly in arrears. We experienced significant IT challenges also which drove up
maintenance costs. Our concern going forward is the number of paying tenants meeting our
estimates.
Business Services
The following companies attended the 14th Entrepreneur Boot Camp in
November:
Anita GoodBee 511 Fairview Ypsilanti

Audiallo 819 Brown #3 Ann Arbor
Transcutaneous Raman
Biomatrix Photonics Spectroscopy (TRS) is an optical 930 N. University
Ann Arbor
(BMP) diagnostic tool for non-invasive Ave., Lab 4638
measurement of bone quality.
26677 West Twelve
Southfield
Mile Road
C'est Moi!
motivation (FM) is an AI- based recommendation system that draws on personality and population da
1645 Morehead
Drive Ann Arbor
FitFire
2284 Hardyke Ct. Ann Arbor
University of Michigan
Fontis Biotechnologies GIDEON
University
i2 Imagination of Michigan
International
7600 Madeline Street
In the Groove
1601 Pond Shore Drive
Magic Bio1777 Highland Dr., Suite B

2500 Packard Street, Ann Arbor
Suite 105
Michigan Aerospace
2900 Huron Parkway Suite 8
MKP Structural Design Associates, Inc.

Next Generation Therapeutics

Phoenix Technologies 3424 EECS
Building, 1301 Beal Ann Arbor Ave
Wireless sensor motes that offer the sensing and
computational capabilities of traditional sensor motes
with costs and form factor similar to those of passive
sensors (RFID tags).
A traditional website mimics print
marketing. A CMS lets a client536 South First
make the most of the internet by Street
managing their own website.
1684 Parkside Ct.Ann AnnArbor
Arbor
Switchback LLC WindStar Energy

Hosted Events
SPARK hosted 19 entrepreneurial events this

quarter, all at SPARK Central. Attendance ranged
from 9 to 64 entrepreneurs with a total of 566
attending.
Sponsorships/Partnered Events
We sponsored only one event this quarter.
ArbCamp was an ad-hoc 'unconference' of ideas
shared in an open environment for technology
entrepreneurs and could-be entrepreneurs. 163
people attended.
See
invoic
e for
detail
s of
each
event
.
SPAR
K
Central
Incubat
or
Five companies were tenants at SPARK

Central this quarter, four tenants at the end of
the quarter. They are:
Openworld Institute - Entrepreneur looking for
opportunities - December, 2008
Vision Interface Technologies - Non-contact
spatial input/pointing system - December, 2007
Ruby Skills - Computer code around Ruby
technology - August
Hygieia - Glucose monitor that recommends dosage
adjustments for improved glycemic control -
September
Outreach
Cantillon Entrepreneurial Education

The following entrepreneurs took advantage
of the Cantillon program. These are mostly
attendees of the November Boot Camp and
focused on Unit 2 "The Executive Summary".
Alice Brown - In Groove Last Login: October 21,
111111.111111M,.. 2:06 AM Total Login Time
hours, 36 minutes
.
Good activity - 1 Plan review taken Vladimir Marakov — auditor this cycle
k W
Mark Birac - GIDEON Last Login: July 28, 2008, 5:27 PM

Total Login Time: 16 hours, 5 minutes
Last Login: December 22, 2007, 2:32 PM Exceptional activity- 21 visits to the course over
Total Login Time: 14 hours, 0 minutes the period of 2 months; 17 plans downloaded
Excellent activity — 24 plan reviews taken
Stephen Colson - Switchback
Scott Hanson
Last Login: October 21, 2008, 12:31 PM
Last Login: October 14, 2008, 9:44 PM Total Login Time: 1 hours, 0 minutes
Total Login Time: 6 hours, 6 minutes Limited activity
Excellent activity — 17 plans downloaded and 3
reviews taken Cliff Williams —MI Areo
Greg Hulbert — MKP Total Login Time: 19 minutes
.6‘
Limited activity
Total Login Time: 2 hours, 1 minutes Katie Miller —i2 Imagination
Very good activity Last Login: October 18, 2008, 12:29 PM
Total Login Time: 29 minutes
Zd Ma — MKP
Last Login: October 16, 2008, 2:25 PM Esmonde Whites
Ravi Birla — Not camper this cycle Total Login Time: 4 minutes
Last Login: October 6, 2008, 11:07 PM Limited activity — downloads
Interest in using Cantillon as a tool for entrepreneurs continues to grow with SmartZones at TechTown,
Battle Creek Unlimited incubator, and the OUlNCubator looking to contract for licenses. Jackson
Community College, Kettering University, Saginaw Valley State, and Northern Lakes Regional ED are
evaluating the product. Professors at U of M and EMU are piloting the use of the product as part of their
class syllabus.
Other
In a separate proposal is a plan for the maintenance, enhancement and ongoing operation of Cantillon.
Lastly, there is a separate proposal from Ann Arbor Angels which we support. The revival of this
Angel network is vital for the long term success of our efforts to accelerate companies. With
limited capital investment available to young companies it is more important than ever in today's
economic climate to have a robust source of capital.

ANNA,
A RK
IGNITING. INNOVATION
Entrepreneur Education: Emerging Growth

Proposed Emerging Growth Sem inar Series
Two-Unit Series: Leadership and Sales
G ettin g th e R ig h t R esu lts, T h e R igh t W ay, R ig h t N o w
Based on the book "How Great Leaders Get Great Results"
John Baldoni (author), Bill Wood (consultant, advisor)
S a le s M a ster U n ivers ity c u rricu lu m
D en ise R o b erts o f S ales P artn ers T roy
Four month, bi-weekly program
Two-part format
Platform training, delivered by experienced entrepreneurial

mentors
O ne-on-one coaching follow ing sem inar for enrolled
entrepreneurs only, to apply !earnings to specific situations
Budget amount $20,700
September 17, 2008
To: LDFA Board
From: Scott Olson, Ann Arbor SPARK

Subject: Entrepreneurial Education Plan 2008-2009
NOTE: This memo replaces the memo dated July 15, 2008 of the same Subject.
Ann Arbor SPARK stimulates Washtenaw County's dynamic entrepreneurial community by

focusing on the three areas vital to economic growth: ideas, people and funding. Through
its entrepreneurial education initiatives, SPARK helps entrepreneurs increase their chances
of launching and growing successful businesses.
Background
Entrepreneurial education tends to organize by Stage of company maturation, with the bulk of
activity in the Washtenaw County region at the formation Stage. For purposes of analyzing
entrepreneurial education programs, the following "Stage" definitions are used:
Stage Definition
Concept Ideation Formation of the business idea through
brainstorming
Development of the business idea into a
Innovation product or service that a marketplace could
receive
Formalizing the implications of the business idea and
Planning the resources that are required to bring it to the
marketplace
Based on the earlier stages, creating and refining with
Commercializatio
Product Development the intended customer and the supplier partners
n
the intended product or service offering
Launch Entering the target market with a product or service
Developing the systemic processes that allow a
Growth Systematization
company to expand its products or services
Breaking in to new markets or new products that
Expansion
take advantage of the company's existing base
Realizing the growth through sales of the
Rapid Growth company's products and services, with the
attendant resource requirements to enable the
product and service delivery
There are numerous educational programs in the Washtenaw County area, through SPARK
1 support organizations. Existing programs are summarized
and several other entrepreneurial
below, with their status for the 2008-2009 year. Also included in the table are other
resources available to entrepreneurs in Washtenaw County.
Educational Program DescPtion and Status
Cantillon eCourse for Cantillon is a 10-module, self-paced course
Technology Entrepreneurs designed for the technology entrepreneur, with the
Cost: Free to Washtenaw remote assistance of an experienced mentor. As of
County entrepreneurs July 1, 2008, eight of the modules were available; the
Format: Self-paced course with up to final two are scheduled to go live by August 31,
10 hours of individual mentoring 2008. The course is being marketed within
available Stage: Commercialization Washtenaw County, including through university
channels, and across the state through the
SmartZone network.
Entrepreneurial Boot Camp For the past 10 years, the Entrepreneurial Boot
Camp has been serving technology entrepreneurs
Cost: $995
from around the region. Delivered by well-respected
Format: Two-day intensive training
including three individual breakout entrepreneurs and educators, the Boot Camp also
sessions with experienced mentors draws from a pool of over 100 experienced mentors
who volunteer their wisdom in guiding the
Stage: Commercialization
entrepreneurial teams through
Marketing Roundtable The Marketing Roundtable is a ten-session monthly
Cost: Free series featuring regional talent who discuss practical
Format: Monthly panel discussion and cost- effective innovation marketing. Program
with Q&A, moderated by marketing topics range from brand strategy to social media,
and from financial accountability to guerrilla
professionals
Stage: Commercialization, Growth marketing. There is a strong networking emphasis as
Starting Your Own Business well.
Attendees learn about personality traits that impact
Seminar Cost: $25 entrepreneurialism; how to create a marketing
Format: One day with hands-on plan for their businesses; and details of legal,
exercises plus access to support service accounting, franchises, business plans and
organizations Stage: Concept financing options. They also receive one on one
counseling with a business expert and have an
opportunity to get advice from a variety of business
experts and organizations that are available to
support new ventures.
FastTrac TechnoVenture Developed by the Kauffman Foundation specifically
(GLEQ) Cost: $395 for knowledge-based businesses, the program was
Format: Six-session evening modified. by SPARK and the MI-SBTDC in 2007 from
program facilitated by a trained a 10-session format to the current 6-session.
mentor and including guest Materials must be purchased from the Kauffman
entrepreneurs Foundation, and only trained mentors can deliver
Stage: Concept the course. It is unknown if GLEQ or MI-SBTDC will
sponsor it in 2009.
Intro to Commercialization This half-day session for early stage life science
(Biotechnology Business Consultants) companies and entrepreneurs explores issues
Cost: Free pertaining to commercialization and identifies
Format: Half-day session for life BBC resources available to support the
science companies commercialization process. It is targeted toward
Stage: Concept, Commercialization Michigan-based scientists and entrepreneurs
2 interested in commercialization of life science
technology.
SBIR/STTR 101 Intro and This half-day workshop covers the SBIR/STTR
Overview (Biotechnology Business program basics, including: program purpose;
Consultants) Cost: $50 eligibility; and sources of funding. The course is
Format: Half-day workshop covering targeted to a broad audience that is still exploring
basics the SBIR/STTR program. It
of federal funding through the SBIR is designed to provide enough information for
and STIR programs attendees to determine if they would like to
Stage: Concept, Commercialization seriously pursue proposal development.
SBIR/STTR Proposal Presentation Periodic courses, including some that emphasize NIH
Workshop (Biotechnology Business funding and cover electronic submission. Includes
Consultants) detailed instruction on proposal preparation,
Cost: $125 including
both technical and commercialization plans and
Format: 1 to 2 day intensive course, proposal procedures. Differences between
submission
depending on the content and agencies are addressed. Core principals of
agencies
covered preparing
SBIR/STTRfundable
proposals are stressed.
Stage: Commercialization
Vision to Reality (Small Business and Basic seminar on how to start a business, for all types
Technology Development Center) of
businesses.
Cost: $30
Format: Monthly 2.5 hour seminars
taught by SBTDC counselors and
business professionals
Stage: Concept
Assessment
While there are numerous educational opportunities at the earliest Concept and
Commercialization Stages of a new venture, the needs of entrepreneurial businesses at the
operational Commercialization and Growth Stages are thinly met. (Later Growth Stages are
similarly poorly met, but are not the focus of this assessment as the companies in those
Stages have many more resources available.)
To address the needs of the operational Stage entrepreneurs in Sales and Leadership,
SPARK has outlined two courses in conjunction with its consultants. The courses have share
several characteristics:
1. Targeted to entrepreneurs in early Growth (Systematization and Expansion Stages)

technology ventures
2. Courses have practical focus, suitable to immediate implementation, with discussion
format to engage specific actions
3. Enrollment benefits include individual coaching between education modules by topic
presenters
4. Small fee to support commitment to attend
5. Delivered by entrepreneurs experienced in operational areas (including coaching)
SPARK proposes to progress with a two-part emerging Emerging Growth series as follows:
3
1. Emerging Company Leadership, delivered by John Baldoni and Bill Wood (based on
Baldoni's book "How Great Leaders Get Great Results") (one day session followed
by three one-hour coaching sessions spaced monthly).
2. Sales Master University, delivered by Denise Roberts, Sales Partners Troy (4 month
program with biweekly half-day sessions and intervening coaching).
Budget
A maximum budget has been authorized under the LDFA-SPARK contract dated as of June 30,
2008. The following breakdown is projected, within 20% of the indicated amounts but not to
exceed the total amount without prior authorization by the LDFA.
$ 8,000Emerging Company Leadership Development (program design, materials, recruitment
of
entrepreneurs in cooperation with SPARK) and delivery of monthly content,
including coaching
$ 12,000Sales Partners Delivery of content and monthly one-on-one coaching
$ 700 Miscellaneous (facility charges in excess of collected fees)
$ 20,700 Total
Next Steps
Pursuant to the LDFA-SPARK contract dated June 30, 2008 (sections 1.4.2, 3.2.1, and 3.7) this
plan must be approved by the LDFA, and such approval is hereby requested.
4
AN N! AR ti WE ,. e ... ILAN 11
SMARTZONE ''''''
FINANCIAL SUMMARY
as of December 31, 2008
Smart Zone LDFA
DELIVERABLES Q1 Q2
as of December 31, 2008 ACTUAL ACTUAL FORECAST FORECAST
Q3 Q4 Full Year
Phase II (Due Diligence) $100/hr

Number of Clients
Actual/Forecast 23 17 30 30 100
Budget/Proposed 11 11 11 11 44
Actual Over/(Under) Target 12 6 19 19 56
Hours per Client (Avq)

Actual/Forecast 2.9
Budget/Proposed 10.0 2.5 10.0 (7.5)2.5 10.0 (7.5)2.5 10.0 (7.5)2.6 10.0 (7.4)
Actual Over/(Under) Target (7.1)
Memo: Total Phase II Hours 67 42 74 74 257
Phase Ill (Intensive Service) $100/hr Number of New Clients

Actual/Forecast 13
Budget/Proposed 21 22 21 1 23 21 2
13 21 (8) 71 84 (13)
Actual Over/(Under) Target (8)
Hours per Client (Avg)
Actual/Forecast 30.2 47.6 47.6 47.6 43.2

Budget/Proposed 40.0 40.0 40.0 40.0 40.0
Actual Over/(Under) Target (9.8) 7.6 7.6 7.6 3.2
Memo: Total Phase Ill Hours 392 618 1,046 1,094 3,151
Smartzone Financial Report 12-31-08 (2).xlsx

B U D G E T VARIANCE Explanation
ACTUALS ACTUAL FORECAST FORECAST Forecast
Q2 03 Q4 (Over)/Under
01 Full Year Amount Budget
Smart Zone LDFA
FY 2008 FINANCIAL SUMMARY
as of December 31, 2008
INCOME STATEMENT
Revenues:
Tax Revenue $ 580,396 $ 213,861 $ 142,574 $ 13,662 $ 950,492 $ 950,492 $ -
Miscellaneous 5,000 23,763 28,763 28,763

Investment Income 4,655 5,000 2,000 $ 1,000 12,655 12,655
Total Revenues $ 590,051 $ 242,623 $ 144,574 $ 14,662 $ 991,910 $ 950,492 $ 41,418
Expenditures:
Contracted Services
SPARK BA Direct Staffing (39,252) (39,252) (39,252) (39,244) (157,000) (157,000)
Phase II (Due Diligence) (2,800) (1,350) (7,410) (7,410) (18,970) (44,000) 25,030
Phase III (Intensive Service) (39,040) (61,825) (104,627) (109,383) (314,875) (334,000) 19,125
Bus. Network Events-Hosted (2,312) (3,679) (4,800) (4,800) (15,591) (19,200) 3,609
Bus. Network Events-Sponsorships (831) (1,250) (10,000) (6,000) (18,081) (24,000) 5,919
Entreprenuer Educ.-Bootcamp & Grants (10,000) (20,350) (10,175) (40,525) (40,700) 175
Tuition Matching (9,453) (5,000) (5,000) (19,453) (20,000) 548
Cantillon Web Based Education (4,600) (11,800) (23,600) (13,600) (53,600) (54,400) 800
Total Contracted Services $ (98,834) $ (128,609) $ (215,039) $ (195,612) $ (638,095) $ (693,300) $ 55,206
Other Proiected Services
Marketing - P/R, Print, Websites (7,069) (14,324) (14,600) (14,407) (50,400) (50,400)
Business Incubator (26,487) (43,443) (35,000) (35,000) (139,930) (139,930) 0
SPARK Accounting (10,750) (10,750) (10,750) (10,750) (43,000) (43,000)
Legal & Admin. Support (17,293) (4,000) (6,208) (27,500) (27,500)
Other Contingency
Total Other Projected Services $ (61,598) $ (68,517) $ (64,350) $ (66,365) $ (260,830) $ (260,830) $ 0
Total Expenditures $ (160,432) $ (197,126) $ (279,389) $ (261,976) $ (898,924) $ (954,130) $ 55,207
Net Increase/Decrease $ 429,619 $ 45,497 $ (134,815) $ (247,315) $ 92,985 $ (3,638) 96,624)

(1
Memo:
Fund Balance (6/30/2008) $ 178,240

Fund Balance - Operations (Qtr End) $ 607,859 $ 653,356 $ 518,541 $ 271,226
Smartzone Financial Report 12-31-08 (2).xlsx

Legal & Admin. Support July 08 1 2009 1 Audit 1.00 $ (12,360.00)
SPARK BA Direct Staffing July 08 1 2009 1 Direct Staff 1.00 $ (13,084.00)
Phase II (Due Diligence) July 08 1 2009 1 Hours 20.00 $ (2,000.00)
Phase III (Intensive Service) July 09 1 2009 1 Hours 140.55 $ (14,055.00)
Business Incubator July 08 1 2009 1 Facility Exp 1.00 $ (8,679.52)
SPARK Accounting July 08 1 2009 1 Accting Svc 1.00 $ (3,583.33)
SPARK BA Direct Staffing Aug. 08 1 2009 1 Direct Staff 1.00 $ (13,084.00)
Phase II (Due Diligence) Aug. 08 1 2009 1 Hours 4.00 $ (400.00)
Phase III (Intensive Service) Aug. 08 1 2009 1 Hours 174.15 $ (17,415.00)
Business Incubator Aug. 08 1 2009 1 Facility Exp 1.00 $ (10,466.98)
SPARK Accounting Aug. 08 1 2009 1 Accting Svc 1.00 $ (3,583.33)
Bus. Network Events-Sponsor: Aug. 08 1 2009 1 Events 1.00 $ (268.00)
Bus. Network Events-Hosted Aug. 08 1 2009 1 Events 1.00 $ (1,009.77)
Cantillon Web Based Educatio Aug. 08 4 2008 1 Dev Unit 10 1.00 $ (12,000.00)
Cantillon Web Based Educatio Aug. 08 4 2008 1 Accr. 6/08 1.00 $ 12,000.00
Legal & Admin. Support Sept. 08 1 2009 1 Audit 1.00 $ (4,932.50)
SPARK BA Direct Staffing Sept. 08 1 2009 1 Direct Staff 1.00 $ (13,084.00)
Phase II (Due Diligence) Sept. 08 1 2009 1 Hours 4.00 $ (400.00)
Phase III (Intensive Service) Sept. 08 1 2009 1 Hours 75.70 $ (7,570.00)
Business Incubator Sept. 08 1 2009 1 Facility Exp 1.00 $ (7,340.25)
SPARK Accounting Sept. 08 1 2009 1 Accting Svc 1.00 $ (3,583.33)
Bus. Network Events-Sponsdr: Sept. 08 1 2009 1 Events 1.00 $ (562.86)
Bus. Network Events-Hosted Sept. 08 1 2009 1 Events 1.00 $ (1,301.81)
Marketing - P/R, Print, WebsitE Sept. 08 1 2009 1 Marketing 1.00 $ (7,068.76)
Cantillon Web Based Educatio Sept. 08 1 2009 1 Cantillon 1.00 $ (4,600.00)
Entreprenuer Educ.-Bootcamp Sept. 08 1 2009 1 Bootcamp 1.00 $ (10,000.00)
SPARK BA Direct Staffing Oct. 08 2 2009 2 Direct Staff 1.00 $ (13,084.00)
Phase II (Due Diligence) Oct. 08 2 2009 2 Hours 2.00 $ (200.00)
Phase III (Intensive Service) Oct. 08 2 2009 2 Hours 136.00 $ (13,600.00)
Business Incubator Oct. 08 2 2009 2 Facility Exp 1.00 $ (15,091.95)
SPARK Accounting Oct. 08 2 2009 2 Accting Svc 1.00 $ (3,583.33)
Bus. Network Events-Hosted Oct. 08 2 2009 2 Events 1.00 $ (1,733.95)
Marketing - P/R, Print, WebsitE Oct. 08 2 2009 2 Marketing 1.00 $ (4,212.57)
Tuition Matching Oct. 08 2 2009 2 Bootcamp Match 1.00 $ (9,452.50)
Cantillon Web Based Educatio Oct. 08 2 2009 2 Dev Unit 6 1.00 $ (12,000.00)
Cantillon Web Based Educatio Oct. 08 2 2009 2 Accr. 6/08 1.00 $ 4,800.00
Cantillon Web Based Educatio Oct. 08 2 2009 2 Mentor List & Train 1.00 $ (1,200.00)
SPARK BA Direct Staffing Nov. 08 2 2009 2 Direct Staff 1.00 $ (13,084.00)
Phase II (Due Diligence) Nov. 08 2 2009 2 Hours 11.50 $ (1,150.00)
Phase III (Intensive Service) Nov. 08 2 2009 2 Hours 201.50 $ (20,150.00)
Business Incubator Nov. 08 2 2009 2 Facility Exp 1.00 $ (12,512.14)
Smartzone FM511124291044-2618 (2).xlsx Nov. 08 2 20094 2 Accting Svc 1.00 $ (3,583.33)
Bus. Network Events-Hosted Nov. 08 2 2009 2 Events 1.00 $ (845.75)
Marketing - P/R, Print, WebsitE Nov. 08 2 2009 2 Marketing 1.00 $ (6,002.81)
Cantillon Web Based Educatio Nov. 08 2 2009 2 Consult & Mentors 1.00 $ (1,200.00)
SPARK BA Direct Staffing Dec. 08 2 2009 2 Direct Staff 1.00 $ (13,084.00)
Phase III (Intensive Service) Dec. 08 2 2009 2 Hours 280.75 $ (28,075.00)
Business Incubator Dec. 08 2 2009 2 Facility Exp 1.00 $ (15,838.83)
SPARK Accounting Dec. 08 2 2009 2 Accting Svc 1.00 $ (3,583.00)
Bus. Network Events-Sponsor; Dec. 08 2 2009 2 Events 1.00 $ (1,250.00)
Bus. Network Events-Hosted Dec. 08 2 2009 2 Events 1.00 $ (1,099.55)
Marketing - P/R, Print, WebsitE Dec. 08 2 2009 2 Marketing 1.00 $ (4,109.00)
Cantillon Web Based Educatio Dec. 08 2 2009 2 Promo - Q Pymt 1.00 $ (1,000.00)
Cantillon Web Based Educatio Dec. 08 2 2009 2 Consult & Mentors 1.00 $ (1,200.00)
47fit . -'4C;*;TisEal'YearT
Ftscal Year, P!
,
,enti,41
Incurred
Incurred easureable
Qtr
Qtr ' Year
Year Unit Descrip. Nurnbe
Unit Descrip. Nur AM01.1
SPARK
ANN ARBOR
IGNITING INNOVATION
November 7,
2008 LDFA
Board
Enclosed please find the following documents, in response to motions

taken at the September 23, 2008 LDFA Regular Board Meeting:
1. Corrective Actions Draft 11-07-2008, an update of the draft

1/22/2009
provided to the LDFA by SPARK on 10-22-2008
2. Business Accelerator and Accounting Procedures
a.3.4.4. LDFA Third Party Consultant Payments
b.3.5.7. LDFA Monthly Billing Procedure
c.5.1. Business Accelerator Procedure Flowchart
d.5.1.1. Phase I Screening
0.5.1.2. Phase II Due Diligence
a.5.1.3. Phase III Intensive Advising
3. SPARK's Conflict of Interest Policy, with recommended changes
marked that; this has not yet been approved by SPARK's Board
4. SPARK's Consulting Agreement, with recommended changes
marked
Respectfully submitted,
Greg Fronizer
Director of Finance and Administration
Smartzone Financial Report 12-31-08 (2).xlsx 5
ty Street, Ann Arbor, Michigan 48104 T:734-761-9317 F 734-761-9062 W:AnnArborSPARK.org

Ann Arbor SPARK
LDFA Contract Compliance Audit
Corrective Action Plan
Draft #3 November 7, 2008
General Contract Controls
Issue/Corrective Action Staff Responsible

Co araci Requirement for ( rection
SPARK Staff
dependent program audit not funded by LDFA, and not conducted by SPARK. SPARK did include LDFA activities within the sco
The program progress report was provided to LDFA Chair on time, but determined to be inadequate. Modifications made as reque
t required program auditReporting

End of Year by end of contract year and program progress report 60 days following year end.
Status:
Corrective Action: SPARK will work with the LDFA Board to develop Pending
reporting requirements.
Status: Complete
Corrective Action: SPARK has instituted a deadline for internal review of LDFA End of Year reports. All LD
reports are due to the President & CEO of Ann Arbor SPARK one week prior to the LDFA due date.
SPARK
A primary cause for the delay in billing in FY07/08 was receiving all third party BA consultant Staff prior to the 10th
invoices
ling due to LDFA by 10th calendar day FY08/09 - billing timeframe lengthened - billing due between 5th and
Timely Billing
day of month
Corrective Action: Consultant invoices are due to SPARK by 5 th

of the month, as documented
Status: Complete in the co
agreements effective for engagements during
ous record of services provided, identification of service recipient or business
and Billing Records the 2008-09 fiscal year, and communicated
vidual performing
to all consultants in August and September
2008.
Insurance In past and current Corrective Action: Each year upon renewal
SPARK Staff
Certificates contract, SPARK has of the insurance contract, the Insurance
Status: Complete
carrier will directly provide the LDFA with
a copy of the certificate of insurance naming
the LDFA as an additional insured party.
This copy was sent to the LDFA in
Business Accelerator Services
Audit Finding Contract 12equirententIssneiCorrectil e Action Staff Resinmsible C o rr e c tio n
Consultants were previously unclear regarding requirements for each invoice submitted for LDFA
billable work.
Corrective Actions — SPARK revised its consultant agreement on June 24, 2008 to include a provision that invoices
must be submitted within 5 business days of the end of the month. On September 26, 2008, SPARK distributed a memo
to all consultants and held a training at the monthly BA consultant meeting. Training included core elements required
for each time and billing invoice for LDFA billable services. Going forward, the Director of Finance & Administration
will confirm that all elements are included on invoices prior to payment or billing. This action will be a Staff
SPARK regular agenda
item for the monthly consultant meetings.
Corrective Action: Consultants will now be required to notify their Client of the
Status: Complete
Status:
Complete; see Procedure 5.1.3. Phase III
anies approved to receive phase III services must sign an engagement contract prior to commencement of services.
amount of hours being billed to Intensiv

d Phase III documentation SPARK on each monthly invoice. e
"cc" the Client
Consultants can during e-mail Advisin
submission of their invoice.
Clients will then have the
opportunity to identify any issues
related to the billing. Consultants
Client signature on invoices
before submitting to SPARK
for payment.
Corrective Action: Company
principal
office location information will be
Phase III business by Managing Director of SPARK Staff
accelerator Entrepreneurial Business
services are Development prior to Phase III Status:
Geographic limited
have a to companies
principal place services being rendered, and 'Complete; see
City of Ann Arbor records.
Eligibility of
business located within clients will certify in writing that Procedure
the
Ann Arbor portion of they
eligibility requirements during the 5.1.3.
meet Phase III
LDFA Service area. diligence process, with a new form Intensive

effective Advising
10-13-08.
Business Accelerator Services (continued)
audit F i Issue/Corrective Action

Contract Requirement Staff Responsible
for Correction
Corrective Action: All companies will sign documentation SPARK Staff

prior to phase II due diligence and/or phase III services. The
original signed version of all of these documents will be Status: Complete; see
centralized in the accounting office at SPARK headquarters. All Procedure 5.1.2. Due
engagement documents will contain the elements required by the Diligence and 5.1.3.
current LDFA contract. Salesforce.com has been modified to Intensive Advising
require Phase II documentation and eligibility as part of setting
up a BA opportunity. Status: Complete; see
Procedure 3.5.7.
Corrective Action: All phase II and/
or phase III documents will be
verified by the Director of Finance
on a monthly basis prior to billing
the LDFA, effective with the July
2008 billing. All documents will
also be uploaded into the
Salesforce data management
SPARK for
system staff.
access by key
SPARK Staff
SPARK's current conflict of
interest policy does not
restrict use of related parties
for consulting services, nor
Nevertheless,
do SPARK
the 2007-08 and will
2008-09
modify its conflict of interest
policy to preclude the use of
family members on
consulting engagements.
SPARK's practice has been to
hire consultants interested in
working on client
engagements on a full-time
executive basis should the
SPARK knowingly hired a
Use of related Contract was mute on issue who held equity in a client, or
party of using related parties as who was already receiving
consultant consultants. compensation from the client
for the same work being
performed.
Corrective Action: SPARK will Status:
modify its Conflict of Interest policy

to include restrictions on (1)
contracting with immediate family Complete;

members of client executives for modifications
consulting engagements, (2) proposed to both
contracting for services with current Conflict of
executives of client companies; (3) Interest policy
contracting for services from and Consulting
individuals who own equity in the Agreement
client; (4) contracting with
consultants who have contingent
compensation or equity
arrangements with the Client.
Tracking of Corrective Action: SPARK will track

Contract in place for 07/08 SPARK Staff
$50,000
lifetime indicated that the total amount of Status: Complete
total funds allocated by company,
and monitor quarterly.
Quarterly
Quarterly reporting was instituted
Network Quarterly reporting of networking
during the contract period and will be SPARK Staff
Collaboration activities and staff involved
continued.
Reporting
Issue/Cori eclive Action
Bootcamp eligibility and
unding
Entrepreneur's Bootcamp
Finding Ypsilanti SmartZone. SPARK is to maintain copies of tuition checks as eligibility for match.
ased in Ann Arbor/
Staff Revonsibl for Correction
Co itract Roquirern
Billing for the tuition match was done based on collections and billing of receivables, not only on the amount actually collected.
Corrective Action: Billing for the Bootcamp matching funds will only occur upon receipt of
checks (or other payment method).
Corrective Action: The Boot Camp participant agreement has been modified to include a
certification of geographic eligibility, and is being implemented for the October 2008 Boot
Camp. SPARK Staff
Status:Complete; see Procedure 3.5.7. LDFA Monthly Bi
Status: Complete
Contract Requirement Issue/Corrective Action
end reasonable
nable copyrightcopyright and trademark
and trademark protections
protections
mission to the LDFA of any revenues, royalties, user fees
Status:Not yet implemented. Recommend establishing

direct contractual and payment Cantillon Entrepreneurial
relationship between Education Series
contracting party and LDFA. SPARK would continue to facilitate
marketing and promotion.
SPARK Staff
One fee received from GLEQ was not paid to the LDFA in a timely manner.
Current process requires that SPARK President & CEO must sign any license or other revenue-
producing agreement involving Cantillon.
Corrective Action: Upon execution of a license or other agreement that would generate fees,
SPARK accounting will create corresponding A/R and A/P entries to ensure that amounts taken
in are
Revenue, paid out
royalties tofees
and the received
LDFA in by
timely fashion.
SPARK must be paid to the LDFA
Reasonable protections are not specified in the contract. SPARK Staff LDFA Board
Corrective Action: Theresa Carroll will review the Status: Under review
documentation and process surrounding Cantillon, and
advise the LDFA as to appropriate steps to determine what
is reasonable. Status: Changes to website
to implement click license
Corrective Action: SPARK will implement the "click" license are underway, with a target
on its website immediately, and require all prospective date for
participants to accept it to use Cantillon. Additionally, SPARK
implementation
of 11-14-08. Cost
will determine the cost of
figures have not
implementation on the U-M system
yet been received
and provide the cost information to the
from U-M CPD,
LDFA Board, to be considered as part
but will be
of the overall.
forwarded to
LDFA when
available.
There have been no new inventions

SPARK Staff
arising from Cantillon to date.
Corrective Action: Include a statement
Status:
with each quarterly report to the
Implemented
LDFA as to new inventions, or the
with first quarter
absence thereof. SPARK will require
Provide SPARK must communicate to report.
sufficient the LDFA:
from subcontractor Business Engines
(Kurt Riegger) a statement of any
reports to LDFA - any new inventions arising
on new from Cantillon known new inventions arising from
invention and - listing of consultants trained Cantillon.
trained and qualified to work with Status:
Corrective Action: Include details of
consultants client firms training and current qualified mentors Implemented
with first quarter
at each quarterly report to the LDFA. report.
SPARK will require from
subcontractor Business Engines (Kurt
Riegger) quarterly reporting in timing
and detail to support the LDFA
report.
Business Incubator
Contract Requirement
Staff, Responsible
Audit Finding Issue/Corrective Action
for Correction
The audit found

that internal
None
controls were
adequate
Procedure Number Procedure Name Procedure Section
3.4.4. LDFA Third Party Consultant Accounts Payable

Payments
Department Approved by Signature & Date
Accounting & Finance Michael A. Finney, President & CEO
LDFA Third Party Consultant Invoices
1. Upon receipt of an approved invoice, accounting staff will review it for the following:
a.Accounting will verify the signature approval on the invoice.

A
b.Accounting staff will also verify that the invoice contains the following:
IIdentification of the service recipient or business purpose
Date of services provided
Duration of services provided
N
Name of individual performing services on behalf of SPARK
Amount of the total invoice
2. The invoice is posted and stamped
a. The invoice is posted into the accounts payable portion of the accounting
system with the proper coding of class and general ledger account number
0. The copy of the invoice is stamped as "posted"
c. The invoice is then processed for payment
November 7, 2008 Page 1

Procedure. Number Procedure Name Procedure Section
3.5.7. LDFA Monthly Billing Procedure Accounts Receivable
Department Approved by: Signature & Date
Accounting & Finance Michael A. Finney, President & CEO
SPARK Accounts Receivable Process
LDFA Monthly Billing Procedure
1. Timely Submission of the LDFA Invoice

a. A monthly invoice with supporting documentation is sent to the LDFA
between the 5 and 15 business days of the month following service.
th th
0. The process consists of accounting staff preparing the data and the Director of
Finance and Administration reviewing and completing the invoice.
2. Preparation of the detail for the LDFA invoice

a. Accounting will receive internal staff time sheets and external consultant
invoices which have been approved.
b. Accounting will compile the monthly data spreadsheet to include detail of
phase I, phase II and phase Ill billable hours from the information on the internal
timesheets and approved invoices.
c. Accounting staff will also put together the event reconciliation backup
spreadsheet and Business Incubator expense detail spreadsheet.
3. Director of Finance and Administration Review and Completion of the LDFA Invoice
a. The Director of Finance and Administration will verify the billing information
for the proper engagement documentation and review the address of all
companies for geographic eligibility.
0. Bootcamp — The Director of Finance and Administration will review records for
each attendee at bootcamp prior to billing for any matching funds. The review
will include geographic eligibility for matching funds billed to the LDFA for
each attendee. SPARK will bill the LDFA monthly for payments received for
bootcamp attendees on a progress billing basis up to the last day allowable
under the contract.
c. The LDFA Invoice is then generated, approved and submitted
PHASE I SCREENING
E')
5.1. BUSINESS ACCELERATION SERVICES
usiness Idea SdhrnIs io.
,
1.1,r1)-
tt :q
,
Proceed to
Yes '-
Obtain BA Engagement
Determine
F-..I'd,r1g)pr Phase II
Review Business Idea Submission; call prospect to
Salesforce updated with eligibility data: date of Engagement Letter;

signed Incubator license if appropriate; business address; taxing
jurisdiction
No I
PHASE II DUE DILIGENCE
. .
iptOin5igned
Phase II
Interview and Assessment may be conducted by Project Manager only or with Consultant included
No
ulting Agreement in place (including conflict of interest language); selection may be made
Salesforce
subsequent
updated
to Client
with date
Intake
ofInterview
signed proposal agreement; consultant name added to account as Contact Role; dollar value of engagement
PHASE III INTENSIVE ADVISING
if4egin Phase ITN , ",,,,, ::re,..,--) t-,: 1 ,
f Intensive \tab c:',i,)fJ:',K1". tf, --fIrr,e, e " .f

p- - .
k,. Advising Bec 1 .ki.-I,I,4&x.1.:-..:-..-:, ,

'N's.f.i..!3.':n,....5::;:,...%...t.;:,
Salesforce updated with completion date if appropriate
Invoice sent to Incubator Coordinator with copy to Project Manager, Director of Finance and Administration
5.1.1. Phase I Screening BA
Entrepreneurial Business Michael A. Finney, President & CEO

Development
SPARK Business Accelerator Procedure
PHASE I SCREENING
1. Prospective client submits a Business Idea, either by web form, email or in person.
The web for
automatically populates Salesforce.com , creating a Lead. If client submits outside of
the web
form, the Incubator Coordinator creates a lead to enter the system and begin the
process.
2. Incubator Coordinator receives notice of Lead from Salesforce.
a. If Lead has complete information and appears to be in Southeast MI region,
Coordinator converts Lead to Account and creates and Opportunity, with an
assignment to a Project Manager (the Managing Director or his designee).
b. Coordinator enters all Leads into A2Newco entrepreneurial group to receive
information of general entrepreneurial interest.
3. Project Manager contacts prospective client by phone or in meeting to determine if
prospective client is appropriate for SPARK services.
a. Appropriate prospect is:
i. located in Washtenaw County, or interested in locating its
business to Washtenaw County
ii. one that is doing business (or intends to do business) in technology
innovation field, but will require further diligence to determine
coachability and appropriateness of needs
b. Inappropriate prospect is one that seeks assistance for a business outside of
SPARK's geographic (Washtenaw County) or technology service areas
i. Project Manager refers prospect to non-SPARK resources
ii. At option of Project Manager, Coordinator sends letter to prospect with
contact information for other Entrepreneurial Support Organizations
(ESO's)
4. Incubator Coordinator obtains signature on BA Engagement Letter from client
5. Incubator Coordinator checks geographic eligibility to receive LDFA funded direct services
a. Coordinator obtains business address from Engagement Letter
b. Coordinator checks if address is in Ann Arbor City, using website
http://www2.a2gov.org/Mypropertyinformation/address.asp. If property in is City,
Coordinator captures screen print to file for upload into Salesforce.
c. If not in City, Coordinator determines taxing jurisdiction using website
http://gisweb.ewashtenaw.org/website/mapwashtenaw/, or paper map if website
search does not provide taxing jurisdiction.
d. If address provided is home address outside of Ann Arbor City, Coordinator
offers to prospect that the company may join the Incubator. If prospect
accepts, Coordinator obtains client signature on License Agreement to join,
and uses SPARK Central for business address.
0. If Client is a U-M faculty/staff/student entrepreneur without another principal
place of business, business address is U-M.
e. Coordinator updates Salesforce with address and taxing
jurisdiction data. 6. Project Manager determines eligibility
for funding of direct services, using Salesforce data.
a. If business address is in Ann Arbor City, client is eligible for LDFA-funded direct
services. Under Opportunity in Salesforce, modify to show Funding Source
listed as LDFA - W/in AA City Limits.
b. In business address is NOT in Ann Arbor City, client is NOT eligible for LDFA-
funded direct services. (no other funding available at 11-05-2008)
c. Prospect not eligible for any funding source
i. Project Manager refers prospect to non-SPARK resources
ii. At option of Project Manager, Coordinator sends letter to prospect with
contact information for other Entrepreneurial Support Organizations
(ESO's)

5.1.2. Phase II Due Diligence BA

Development
PHASE II DUE DILIGENCE
1. Project Manager confirms Phase II starting Criteria

a.Signed Engagement Letter is in Salesforce
b.Funding Status in Salesforce of "LDFA — W/in AA City Limits"
2. Project Manager selects a consultant, based on things including skills, experience,
industry knowledge, style and expected fit with client
3. Incubator Coordinator
a.Checks to see if a current Consulting Agreement is on file with Consultant
b . C h e c k s a v a il a b il i t y w i t h C o n s u l t- aProposal
nt Proceed to
c. Schedules a Client Intake Interview

4. Consultant and Project Manager conduct Client Intake interview (this discussion will form the
basis for further due diligence prior to creating a BA Engagement Statement of Work)
a. The published guidelines for "full" engagement with SPARK BA are as follows
i.Management interested in growth and amenable to coaching
ii.Within 1-3 years of sustainable commercial revenues
0.Fundamental technical development completed
i.P ot en ti al ann ual r ev en ue s of $ 10 MM w i thi n 5 ye ar s
ii.Technology-driven products/services, especially with defensible
intellectual property
iii.Target milestone(s) that SPARK can realistically help achieve given
SPARK's time
and resource limitations
0.Located within Ann Arbor Region
i. I n t e r e s t f r om p r o f e s s i o n a l i n v e s t o r s a n d/ o r m a n a g e m e n t
b. Baseline information
i.Complete address and contact information
ii.Status of business formation
iii. Amount of investment to date
c. Technology or scientific review
.,.. ' e -s c r- i p t i o n o f t e c h n o l o g y
i.D
0 . S t a t u s of i n t e l l e c t u a l pr o p e r t y
iii. Identification of proof of concept milestones
d. Management team review
i.Founder's background
ii. Ma na ge me nt t ea m b ac kg rou nd , le ve l of c ommi tm en t
0.Targeted executive talent with timeframes
i . A d v i s o r y b o a r d m e m b e r s , s t a g e o f c o m mi t m e n t
v. Board of directors, if any
e. Market understanding
i. Competitor assessment
i i. N e e d f o r p r o p o s e d pr o d u c t o r s e r v i c e
iii. Amount of investigation into market dynamics (channel, pricing,
influencers, key enabling patents)
iv. Market forces identified (economic cycle, trends)
f. Financing
i.Founder investment to date (cash, not in kind or deferred salary)
ii.Funding needs
iii. Openness to outside funding if business model indicates it
g. Coachability
i . F o un d i n g t e a m
ii.Advisors, if any
5. Consultant or Project Manager summarizes results of Intake interview
a. Brief written assessment of each area interviewed
i.Baseline information
i i. T e c h n o l og y o r s ci e n t i f i c r e v i e w
iii.Management team
iv.Market understanding
v.Financing
vi.Coachability
b. Judgment of areas for further due diligence
i.Intellectual property must be addressed
ii.Technology or scientific areas must be addressed, especially as endpoints
for
project milestones
6. Design of Statement of Work (See 5.1.3.)
a. Based on milestones that are both valuable to the client and that can be
accomplished
in approximately 20-40 hours of consulting time, Consultant drafts an initial
Statement
of Work.
i. This may be based on sample language from other SOW's, at the
discretion of
the Consultant or the Project Manager.
ii. Consultant also estimates the amount of hours of consulting time it will
take to achieve the milestones, along with a calendar time estimate.
b. Project Manager reviews and provides feedback until a mutually agreeable SOW is
complete.
c. The review and feedback may involve the Client as well.
7. Obtain Signed Proposal Agreement
a. Project Manager, with support of Incubator Coordinator, integrates SOW into
Proposal Form for client signature
0. Project Manager and Incubator Coordinator secure signature of client
b. Incubator Coordinator uploads electronic copy of signed agreement into
Salesforce
a. Incubator Coordinator updates Opportunity fields within
Salesforce with relevant information
i.Contract Start Date
ii.Close Date
iii.Status (change to "Closed-Won")
iv.Engagement Amount

5.1.3. Phase III Intensive Advising BA
Department Approved by: Signature & Date

Development
PHASE III INTENSIVE ADVISING
1. Project Manager confirms Phase III starting criteria

a . C o n t r a c t s t a r t d a t e i n S al e s f o r c e
b.Signed Proposal Agreement is in Salesforce
c. Funding Status in Salesforce of "LDFA — W/in AA City Limits"
2. Project Manager notifies Consultant of contract initiation by email or phone, and sends
copy of signed Proposal Agreement
3. Consultant creates detailed timeline, if appropriate
4. Consultant executes against SOW
5. Consultant and Project Manager review progress no less frequently than
monthly
6. On a monthly basis, and at the close of the project, Consultant submits to SPARK an
invoice containing:
a.Name of Client
b.Dates and duration of service
c .D es cr ip ti on o f act iv it y b y e ac h da te
d . N a m e o f c o n s ul t a n t p r o v i di n g s e r v i c e
7. Consultant submits the invoice by email to the Incubator Coordinator, and a copy to the
Project Manager and the Director of Finance and Administration.
0.Incubator Coordinator sends copy of invoice to client for review and
information. 9. At the conclusion of the project, Consultant submits copies of work
product to the Client, Incubator Coordinator and the Project Manager.

SPARK Conflict of Interest Policy
Article I
Purpose
The duty of loyalty owed by members of the Board of Directors

of Ann Arbor Spark, a Michigan nonprofit corporation (the
"Corporation") requires that Directors exercise their power in the
interest of the Corporation. As a tax exempt organization the
Corporation also is obligated to promote publicly supported
organizations that it benefits, rather than private interests.
It is the policy of the Corporation that all Directors and
Officers shall scrupulously avoid any conflict, or the appearance of
any conflict, between their own interests and the interests of the
Corporation. The purpose of this Conflict of Interest Policy is to
protect the Corporation's interest when contemplating a
transaction or arrangement that might benefit the private interest
of an Officer or Director of the Corporation.
This policy is intended to supplement but not replace the
Bylaws of the Corporation. If any conflict exists between this
Policy and the Bylaws of the Corporation, the Bylaws shall
control.
This Policy is further intended to supplement and not replace

(a) any applicable state law governing conflicts of interest
concerning nonprofit corporations, and (b) any conflicts of interest
policy that governs the conduct of any member of the Corporation.
In the event of any conflict between this Policy and either of the
foregoing, the foregoing shall control.
Article H
Definitions
1.Interested Person
A director, principal officer, OP, member of a committee with

board delegated powers, or consultant hired by the Corporation to
provide services benefitting a client of the Corporation,_and who has a
direct or indirect Financial Interest, as defined below, is an
Interested Person.
2.Financial Interest
A person has a Financial Interest if the person has, directly or

indirectly, through business, investment or family, 1 or more of the
following:
a.An ownership or investment interest in any entity with which

the
Corporation has a transaction or arrangement;
b.A compensation arrangement with the Corporation or with
any entity or
individual with which the Corporation has a transaction or
arrangement, or
c.A potential ownership or investment interest in, or

compensation
arrangement with, any entity or individual with which the
Corporation is negotiating a transaction or arrangement.
Compensation includes direct and indirect remuneration as

well as gifts or favors that are substantial in nature.
A Financial Interest is not necessarily a conflict of interest.

Under Article III, Section 2, a person who has a Financial Interest
may have a conflict of interest only if a determination is made that a
conflict of interest exists.
Article III
Procedur
es
I. Duty to Disclose
In connection with any actual or possible conflicts of

interest, an Interested Person shall disclose the existence and
nature of his or her Financial Interest and must be given the
opportunity to disclose all material facts to the directors and
members of committees with board delegated powers considering
the proposed transaction or arrangement.
2.Determining Whether a Conflict of Interest Exists
After disclosure of the Financial Interest and all material

facts, and after any discussion with the Interested Person, the
Interested Person shall leave the board or committee meeting while
the determination of a conflict of interest is discussed and voted
upon. The remaining board or committee members shall decide if a
conflict of interest exists.
3.Procedures for Addressing the Conflict of Interest
a.An Interested Person may make a presentation at the board

or committee
meeting, but after such presentation, he/she shall leave the meeting
during the discussion of, and the vote on, the transaction or
arrangement that results in the conflict of interest.
b.The chairperson of the board or committee shall, if
appropriate, appoint a
disinterested person or committee to investigate alternatives to the
proposed transaction or arrangement.
c.After exercising due diligence, the board or committee
shall determine
whether the Corporation can obtain a more advantageous transaction
or arrangement with reasonable efforts from a person or entity that
would not give rise to a conflict of interest.
d.If a more advantageous transaction or arrangement is not

reasonably
attainable under circumstances that would not give rise to a conflict
of interest, the board or committee shall determine by a majority vote
of the disinterested directors whether the transaction or arrangement
is in the Corporation's best interest and for its own benefit and
whether the transaction is fair and reasonable to the Corporation
and shall make its
decision as to whether to enter into the transaction or
arrangement in conformity with such determination.
4. Violations of the Conflicts of Interest Policy
a.If the board or committee has reasonable cause to believe

that a member
has failed to disclose actual or possible conflicts of interest, it shall
inform the member of the basis for such belief and afford the
member an opportunity to explain the alleged failure to disclose.
b.If after hearing the response of the member and making

such further
investigation as may be warranted in the circumstances, the
board or committee determines that the member has in fact failed
to disclose an actual or possible conflict of interest, it shall take
appropriate disciplinary and corrective action.
Article IV
Records of Proceedings
The minutes of the board and all committees with board-

delegated powers shall contain:
a.The names of the persons who disclosed or otherwise were

found to have
a Financial Interest in connection with an actual or possible conflict
of interest, the nature of the Financial Interest, any action taken to
determine whether a conflict of interest was present, and the
board's or committee's decision as to whether a conflict of
interest in fact existed.
b.The names of the persons who were present for
discussions and votes
relating to the transaction or arrangement, the content of the
discussion, including any alternatives to the proposed transaction
or arrangement, and a record of any votes taken in connection
therewith.
Article V
Annual Statements
Each director, principal officer-arid, member of a committee
with board delegated powers and consultant hired by the
Corporation to provide services benefitting..a client of
I the Corporation, shall annually sign a statement which affirms
that such person in the form attached hereto as Exhibit A:
a.has received a copy of the conflict of interest policy;
b.has read and understands the policy;
c.has agreed to comply with the policy; and
d.understands that the Corporation is an organization exempt

from taxation
and that in order to maintain its federal tax exemption it must
engage primarily in activities which accomplish one or more of
its tax-exempt purposes.
Article VI
Periodic Reviews
To ensure that the Corporation operates in a manner

consistent with its exempt purposes and that it does not engage in
activities that could jeopardize its status as an organization exempt
from federal income tax, periodic reviews shall be conducted. The
periodic reviews shall, at a minimum, include the following
subjects:
a.Whether compensation arrangements and benefits are

reasonable and are
the result of arm's-length bargaining.
b.Whether any of its activities result in inurement or
impermissible private
benefit.
c. Whether partnership and joint venture arrangements and

arrangements
with publicly supported and private organizations conform to
written policies, are properly recorded, reflect reasonable
payments for goods and services, further the Corporation's exempt
purposes and do not result in inurement or impermissible private
benefit.
Article VII
Use of Outside Experts
In conducting the periodic reviews provided for in Article VI,
the Corporation may, but need not, use outside advisors. If outside
experts are used their use shall not relieve the board of its
responsibility for ensuring that periodic reviews are conducted.
Formatted: Font: (Default) Times New Roman, 12 pt
Exhibit A
ANN ARBOR SPARK
CONFLICT OF INTEREST POLICY
ANNUAL STATEMENT
As a member of the Board of Directors of Ann Arbor Spark (the

"Corporation"), a Corporation officer, employee, or a member of a
committee with powers delegated by such Board, in each case in
the capacity indicated below, I do hereby affirm as of the date set
forth below that:
1.I
am affiliated with the Corporation in the following described
way(s)
((check and complete all that are applicable):
M
Member of the Corporation's Board of Directors
Officer of the Corporation: (complete with office)
O
Member of the following committee (s):
M
Consultant hired by the Corporation to provide se vices benefitting a

client of the Corporation
Formatted: Numbered + Level: 1 + Numbering
F Style: 1, 2, 3, ... + Start at: 1 + Alignment: Left + Aligned at: 36 pt + T
o
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:
N
o
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e
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s
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b
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g
B2. I have received a copy of the Conflict of Interest
Policy of the. Corporation (the "Policy");
the .I have read and I understand
1 4 .Policy;
Policy; andI agree to comply with the
4.5. Except as indicated as follows, I have no real or potential
conflict of
interest with the Corporation, determined as provided in
the Policy:
Describe any perceived real or potential conflict of interest (use
and attached additional sheets, if necessary):
Signature:_______________________
Print Name:______________________
Date:
CONSULTING AGREEMENT
This Consulting Agreement, including all Addenda referred to herein, is made effectiveand-entered__into as
of July 1,_______________________ , 2008 (the "Effective Date) by and between the Ann Arbor SPARK
Business Accelerator (hereinafter "SPARK"), a Michigan non-profit corporation which has a place of
business at 201 S. Division, Suite 430, Ann Arbor MI 48104, and _____________________(hereinafter
"Consultant") with principal place of business at_____________________. The parties, intending to be
legally bound, hereby agree as follows:
ARTICLE I TERM-
The term of this Agreement shall be one year commencing on the Effective Date. Unless notice is
provided by one party to the other in writing no less than 30 days prior to the end of the term, this
Agreement shall automatically renew for subsequent one year terms. Notwithstanding the foregoing, this
Agreement may be terminated earlier or canceled as provided in Article XI.
ARTICLE II STATEMENT OF WORK

-
During the term of this Agreement, Consultant shall perform the specific responsibilities identified for
each client engagement, as set forth between Consultant and SPARK in a Project Engagement in
substantially the form included as Addendum A ("Work"). Each Project Engagement shall become an
amendment to this Agreement, and the Work for each Project Engagement shall include preparing and
presenting a report of findings, providing all work products electronically, and recording activities and
providing them electronically to Project Manager.
ARTICLE III FEES/PAYMENT/TAXES

-
FEES: The Consultant will be paid at an hourly rate of $100.00 per hour, and with a maximum fee as set
forth the Project Engagement for each client engagement, unless work above the limit is approved by
the Project Manager. In addition, SPARK shall pay all pre-approved or reasonable travel and out of
pocket expenses. Fees paid to Consultant for Work under this Agreement constitute the entire payment to
Consultant for the Work performed, unless otherwise specified in the Project Engagement. In no case may
Consultant accept equity, the promise of equity, or other contingent compensation from a SPARK client
during the term of the Proiect Engagement, for Work paid for by SPARK.
PAYMENT: Consultant shall submit monthly invoices to SPARK status rcports no laterinefe-f-r-equently
than the 5th day of the month for work performed during the prior month.
Invoices should indicate the hours worked by date during the month, to the nearest quarter hour, and the
specific activities pursuant to the outlined Work week to the SPARK Project Manager
TAXES: Amounts payable by SPARK for Consultant's performance of the Work do not include related
federal, state, local or any other taxes. Consultant will be responsible for his/her own payment of
appropriate taxes. Subject to the federal, state and local laws, SPARK will issue a 1099 form at the end of
the year for the amounts paid to the Consultant for the Work performed under this Agreement.
ARTICLE IV RELATIONSHIP OF PARTIES

-
In performing the Work, Consultant is acting as an independent contractor and not as an employee, agent,
or representative of SPARK. Consultant has no authority to transact any business in the name of or on
account of SPARK or otherwise obligate SPARK in any manner.
ARTICLE V INTELLECTUAL PROPERTY RIGHTS

-
A. Consultant agrees to and does hereby assign and grant to SPARK the entire right, title and interest
of Consultant in and to the Deliverables and any other work product Consultant produces
SPARK Confidential Consulting Agreement (Rev. November 06,Feb 11, 2008) Page 1
pursuant to this Agreement, including, but not limited to, programs, documentation and reports
produced in the course of or pursuant to performance of the Work done under this Agreement.
Consultant agrees and does hereby assign to SPARK the entire right, title and interest of
Consultant in and all inventions, improvements and discoveries (including, but not limited to,
those that are or may be patentable or subject to copyright, trademark or patent protection) made,
originated, conceived or first actually reduced to practice in the course of or pursuant to the
performance of Work done under this Agreement (including, without limitation, website/web
portal design, development and content) and to all United States and Foreign Letters Patents
granted thereon. Consultant agrees and does hereby assign and grant to SPARK the entire right,
title and interest of Consultant in training, presentation, educational and/or informational
materials, programs, methodologies, formulas, techniques, forms, templates and similar
information developed or used for general or broad-based training, education or consulting
produced in the course of or pursuant to performance of the Work done under this Agreement.
B. Consultant agrees to deliver to SPARK such duly executed instruments of assignment,
application papers, and rightful oaths as are necessary to vest in SPARK or its designee, the sole
and exclusive ownership of, and the right to apply for and prosecute patent applications covering
each such invention, improvement or discovery. Consultant further agrees that it will at all times
at SPARK expense, aid SPARK or its designee in preparing for and in giving information or
testimony, or in doing any other reasonable acts deemed necessary by SPARK in any and all
proceedings involved in the securing of any patent or patents for any such invention,
improvement or discovery, or in enforcing and defending any rights there under.
0. Consultant agrees to and does hereby assign and grant to and vest in SPARK the entire right, title
and interest of Consultant to all copyrights, both U.S. and foreign, and all copyrightable material
first produced or composed in the course of or pursuant to the performance of Work under this
Agreement.
D. Consultant agrees to and does hereby grant to SPARK an unlimited, paid-up, royalty-free, non-
exclusive, irrevocable license to reproduce, translate, publish, use and dispose of, and to authorize
others so to do, any and all of Consultant's copyrighted or copyrightable material furnished as a
result of Work performed under this Agreement but not first produced or composed by
Consultant in the performance of such Work.
ARTICLE VI PROPRIETARY INFORMATION

-
A.Proprietary Information shall include all business and technical information relating to the Work
which is furnished or made available to Consultant by SPARK and all other information which is
furnished by SPARK at any time prior or during the Tenn of the Agreement to the Consultant in
tangible form marked as "restricted", "confidential", "proprietary", or other appropriate legend, or
disclosed by SPARK or Client of SPARK to the Consultant in non-tangible form with indication of
I SPARK Confidential Consulting Agreement (Rev. November 06,Feb 11, 2008) Page 2
its proprietary nature.
B.The Work and deliverables representing Work are deemed to be Proprietary Information of
SPARK as though it was Proprietary Information furnished by SPARK to Consultant, and shall
be so treated by Consultant.
C. Title, or the right to possess Proprietary Information, as between the parties shall, except as
otherwise provided herein, remain in the party which furnishes or otherwise makes it available to
the other party. No rights are granted by either party to the other with respect to Proprietary
Infonnation except as expressly stated herein. Neither party shall use or copy any Proprietary
Information of the other party except for the purposes of and to the extent necessary for this
Agreement. Each party shall exercise reasonable care with respect to Proprietary Information of
the other party to preclude disclosure thereof to any third party and permit disclosure only to its
personnel who are involved in the Work and have agreed in writing to be bound consistent with
the provisions of this Agreement. Each party shall have the obligations stated in this Article VI
regarding Proprietary Information both during and after the expiration, tennination or
cancellation of this Agreement and shall be released from such obligations only as to Proprietary
Information:
1) which is at any time in the public domain other than by a breach of this Agreement on the
part of the receiving party; or
2) which is at any time rightfully received from a third party which has the right and
transmits it to the receiving party without any obligation of confidentiality; or
(3) whichisindependentlydevelopedbypersonnelofthereceivingpartywhohavenothad
access to Proprietary Information of the other party.
D.Neither party is restricted from disclosing Proprietary Information of the other party pursuant to a
judicial or governmental order, but any such disclosure shall be made only to the extent so
ordered and provided only that the party receiving an order: (a) timely notifies the other party so
that it may intervene in response to such order, or (b) if timely notice cannot be given then seeks to
obtain a protective order from the court or government for such information.
E.Each party shall promptly cease using and shall return or destroy (and certify destruction of) all
Proprietary Information furnished by the other party along with all copies thereof in its
possession including copies stored in any computer memory or storage medium upon the
expiration, termination, or cancellation of this Agreement, whichever first occurs; provided,
however, that SPARK may retain copies of Consultant's materials for the purpose of the license
rights as set forth in Article V hereof.
ARTICLE VII - CONSULTANT'S WARRANTIES

Consultant makes the following warranties to SPARK:
1) Consultant has expertise in the field covered by this Agreement and shall commit time
and resources to attain the stated goal and complete the Work.
2) In performing the Work, Consultant shall not infringe any trade secrets, copyright or
patent of a third party.
3) Consultant shall not divulge or furnish to SPARK any trade secret or other proprietary
information of any third party which Consultant does not have the right to divulge or
furnish.
0) Consultant has the power and right to grant SPARK the title and license rights set forth in
Article V hereof.
(5) This Agreement is not in conflict with any other agreement or obligation which
Consultant has with any third party.
ARTICLE VIII - SERVICES FOR OTHERS

Consultant shall not engage directly or indirectly in any undertaking which creates any legal impediment
to or conflicts with rights granted to SPARK by Consultant under this Agreement. Consultant shall not
undertake, during the term of this Agreement, to perfonn similar services for any third party which would
compromise the value of the Work or deliverables representing Work to SPARK.
ARTICLE IX - NOTICES
A.All notices and requests given by either party to the other shall be in writing and sent by
facsimile, first class mail or in person.
Formatted:
Highlight Formatted:
Formatted: Highlight
I SPARK Confidential Consulting Agreement (Rev. November 06,Fcb 11, 2008) Page 3
se
C.Notices and requests sent by Consultant regarding any aspect of the Agreement shall be addressed
to the SPARK Project Manager as follows:
Scott Olson
Ann Arbor SPARK Business Accelerator
201 S. Division, Ste. 430
Ann Arbor, MI 48104
Scott@AnnArborUSA.org
D.Consultant and SPARK shall each have the right to change at any time the respective individuals
to whom notices and requests shall be sent by giving written notice of such change to the other
party.
ARTICLE X - ASSIGNMENT
Consultant shall not assign this Agreement or any rights hereunder or delegate the Work or any of
Consultant's other obligations hereunder to any third party without prior written consent of SPARK and
any assignment without such consent shall be void.
ARTICLE XI - TERMINATION/CANCELLATION
A. TERMINATION FOR NONPERFORMANCE
SPARK shall have the right to terminate this Agreement or the Work to be performed hereunder in
whole or in part for unsatisfactory performance at SPARK's sole discretion, or for breach of
Consultant's obligations under this Agreement at any time, effective immediately. Consultant
shall terminate the Work as quickly as possible upon being notified of the Termination. SPARK
shall have no liability to Consultant based on any such termination except to pay all amounts due
Consultant up to the time of tennination in accordance with the compensation provisions of
Article III. Consultant shall promptly deliver to SPARK all work product(s), whether or not
completed, which is in Consultant's possession on the termination date containing information
related to the Work, including a final report to be prepared by Consultant describing results of the
Work to the date of termination.
B Consultant shall have the right to cancel this Agreement only if SPARK fails to cure any
deficiency in making any payment due Consultant, which is not in good faith dispute between the
parties, within seven (7) days after receiving written notice of such deficiency.
C. ADDITIONAL RIGHTS AND REMEDIES
SPARK and Consultant shall retain all rights and remedies available at law or equity, to the
extent they are not inconsistent with this Agreement, in the event of any termination or
cancellation of this Agreement.
ARTICLE XII - PUBLICITY

Consultant shall not disclose the terms and conditions of or publish any information concerning this
Agreement without the prior written consent of SPARK.
ARTICLE XIII - WAIVERS

The failure of either party to assert any claim or right against the other party regarding its obligations
hereunder, in any one or more instances, shall not constitute a waiver of such claim or right with respect
to future performance of such obligations and other obligations under the Agreement.
ARTICLE XIV - SEVERABILITY

The invalidity or unenforceability of any particular provision of this Agreement shall not affect other
provisions and the Agreement shall be construed in all respects as if such invalid or unenforceable
provisions were omitted.
I SPARK Confidential Consulting Agreement (Rev. November 06.,Fcb 11, 2008) Page 4
ARTICLE XV - HEADINGS
All Article and paragraph headings are for reference only and shall not be used in construing this
Agreement.
ARTICLE XVI GOVERNING LAW

-
This Agreement shall be construed, governed and interpreted in accordance with the laws, but not the
rules relating to the choice of law, of the State of Michigan.
ARTICLE XVII SURVIVAL OF PROVISIONS

-
The rights and duties of the parties as set forth in Articles V, VI, XIII, XIV, XV, XVI, XVII, XIX, XX
and XXI shall survive the expiration, termination or cancellation of this Agreement and shall inure to the
benefit of and be binding on their authorized assigns, successors and legal representatives.
ARTICLE XVIII ENTIRE AGREEMENT

-
This Agreement sets forth the entire agreement between the parties and supersedes all prior oral and
written agreements and understanding between the parties with respect to the subject matter hereof. This
Agreement may not be modified or the parties released from their obligations hereunder except by an
instrument in writing signed by an authorized representative of the parties.
ARTICLE XIX COMPLIANCE WITH LAW

-
Consultant shall comply with all federal, state and local laws and regulations pertaining to the
perfonnance of this Agreement and shall indemnify SPARK for any liability and related costs, expenses
and fees incurred by SPARK as a result of Consultant's breach of such obligation.
ARTICLE XX BUSINESS PRACTICE GUIDELINES

-
Consultant acknowledges that it has received a copy of Business Practice Guidelines and Code of Ethical
Conduct (Addendum B) and has read and will act in accordance with them.
ARTICLE XXI HOLD HARMLESS

-
Notwithstanding any of the insurance requirements set forth in this Agreement or limits of liability set
forth therein, Consultant shall indemnify and hold hannless SPARK, any third party and their agents,
servants, and employees from any liability against all claims, damages, losses and expenses with respect
to the death, injury or disability of any persons and damage to or destruction of any property (including
loss of use), arising out of, resulting from or connected in any way with the performance of this
Agreement by Consultant or Consultant's employees. At Consultant's expense, Consultant shall defend
all suits or claims (whether or not false, fraudulent or groundless) alleging such injury or damage and
shall pay all charges or attorneys, court costs, awards and all other costs and expenses in connection
therewith. This provision shall survive after the expiration or tennination of this Agreement.
"Consultant" Ann Arbor SPARK Business Accelerator
By: _____________________________________By: Scott Olson
Managing Director, Entrepreneurial Business

.17
Development
I SPARK Confidential Consulting Agreement (Rev. November 06,Feb 11, 2008) Page 5
ADDENDUM A
FORM OF PROJECT ENGAGEMENT
Project Engagement
[SPARK CLIENT NAME]
[DATE]
STATEMENT OF WORK
During the term of this Engagement, Consultant shall perfonn the following work ("Work"):
<Specific tasks, documents, and other items identified by client company>
Specific Responsibilities:
Prepare and present report of findings <DATE> and provide all work products electronically
Record activities and provide electronically to Project Manager
Project Milestones with target dates:
<As outlined in the project plan and amended weekly on the action items list>
ENGAGEMENT FEES
The total Fees for this Engagement shall not exceed $_______ without the prior written approval of the
SPARK Project Manager.
K Confidential Consulting Agreement (Rev. November 06,Feb 11, 2008) Page 6

ADDENDUM B
BUSINESS PRACTICE GUIDELINES AND CODE OF ETHICAL CONDUCT
A. BUSINESS ETHICS
Consultant shall perform the Work under this Agreement in accordance with applicable law and
high ethical standards. Consultant, in performing the Work, shall not attempt to influence present
or prospective customers of SPARK in the public or private sector through making or receiving
any payments not otherwise specified in this Agreement or in any other contractual arrangement
between the Consultant or SPARK and a third party and shall not maintain slush funds or make
political contributions in any manner which would imply that such illegal payments are made by
or on behalf of SPARK, including its subsidiaries, affiliates, officers, directors and employees, or
in relation to the Work. In the event Consultant breaches any of these provisions, SPARK shall
have the right to cancel this Agreement and obtain a full refund of all payments made to
Consultant hereunder.
Consultants are considered Interested Persons under SPARK's Conflict of Interest Policy. Prior to
accepting any Project Engagement, you must disclose any potential conflict of interest, as
described in the Conflict of Interest Policy. And on an annual basis, you must sign a statement
which affirms that you:
a. have received a copy of the conflict of interest policy;

b . h a ve r ea d an d u n d e r sta n d the p o lic y ;
c. have agreed to comply with the policy• and
d.understand that the Corporation is an organization exempt from taxation and that
in order to maintain its federal tax exemption it must engage primarily in
activities which accomplish one or more of its tax-exempt purposes.
SPARK's Conflict of Interest Policy is attached as Addendum B-1.
B. COMPLY WITH ALL LAWS AND REGULATIONS

As SPARK Consultant, you must scrupulously comply with all laws and government regulations
applicable in your governing jurisdiction. For any interpretation or clarification of legal or
regulatory requirements, consult legal representatives.
C. DEAL HONESTLY WITH CUSTOMERS, SUPPLIERS AND CONSULTANTS

Contract Negotiation
I SPARK Confidential Consulting Agreement (Rev. November
In negotiating contracts,06,Feb 11, 2008)
be accurate and completePage 7 representations. The submission to a
in all
United States government customer of a proposal, quotation or other document or statement that
is false, incomplete or misleading can result in civil and/or criminal liability for the SPARK and
consultant. In negotiating contracts with the federal government, we have an affirmative duty to
disclose current, accurate and complete cost and pricing data where such data are required under
appropriate law or regulation.
Competitive Analysis
In conducting market analysis, do not accept or use information proprietary to our competitors.
Supervisors must ensure that competitor proprietary information is not obtained or used in any
fashion.
Project Reporting
Timecards must be filed in a complete, accurate and timely manner. Hours worked and costs
must be applied to the project and period in which they were incurred.
ADDENDUM B-1
SPARK Conflict of Interest Policy

- Article I
Purpose
The duty of loyalty owed by members of the Board of Directors of Ann Arbor Spark, a Michigan nonprofit
corporation (the "Corporation") requires that Directors exercise their power in the interest of the Corporation. As a
tax exempt organization the Corporation also is obligated to promote publicly supported organizations that it
benefits, rather than private interests.
It is the policy of the Corporation that all Directors and Officers shall scrupulously avoid any conflict, or
the appearance of any conflict, between their own interests and the interests of the Corporation. The purpose of this
Conflict of Interest Policy is to protect the Corporation's interest when contemplating a transaction or arrangement
that might benefit the private interest of an Officer or Director of the Corporation.
This policy is intended to supplement but not replace the Bylaws of the Corporation. If any conflict exists
between this Policy and the Bylaws of the Corporation, the Bylaws shall control.
This Policy is further intended to supplement and not replace (a) any applicable state law governing
conflicts of interest concerning nonprofit corporations, and (b) any conflicts of interest policy that governs the
conduct of any member of the Corporation. In the event of any conflict between this Policy and either of the
foregoing, the foregoing shall control.
Article II
Definitions
1.Interested Person
A director, principal officer, , member of a committee with board delegated powers, or consultant hired by
the Corporation to provide services benefitting a client of the Corporation, and who has a direct or indirect Financial
Interest, as defined below, is an Interested Person.
2.Financial Interest
A person has a Financial Interest if the person has, directly or indirectly, through business, investment or
family, 1 or more of the following:
a.An ownership or investment interest in any entity with which the Corporation has a transaction or
arrangement;
b.A compensation arrangement with the Corporation or with any entity or individual with which the
Corporation has a transaction or arrangement, or
c. A potential ownership or investment interest in, or compensation arrangement with, any entity or
individual with which the Corporation is negotiating a transaction or arrangement.
Compensation includes direct and indirect remuneration as well as gifts or favors that are substantial in
nature.
A Financial Interest is not necessarily a conflict of interest. Under Article III, Section 2, a person who has a
Financial Interest may have a conflict of interest only if a determination is made that a conflict of interest exists.
I SPARK Confidential Consulting Agreement (Rev. November 06,Fcb 11, 2008) Page 8
Article III
Procedur
es
1.Duty to Disclose
In connection with any actual or possible conflicts of interest, an Interested Person shall disclose the
existence and nature of his or her Financial Interest and must be given the opportunity to disclose all material facts
to the directors and members of committees with board delegated powers considering the proposed transaction or
arrangement.
2. Determining Whether a Conflict of Interest Exists
After disclosure of the Financial Interest and all material facts and after any discussion with the Interested
Person, the Interested Person shall leave the board or committee meeting while the determination of a conflict of
interest is discussed and voted upon. The remaining board or committee members shall decide if a conflict of
interest exists.
3. Procedures for Addressing the Conflict of Interest

a. An Interested Person may make a presentation at the board or committee meeting, but after such
presentation, he/she shall leave the meeting during the discussion of, and the vote on, the transaction or arrangement
that results in the conflict of interest.
b.The chairperson of the board or committee shall, if appropriate, appoint a disinterested person or
committee to investigate alternatives to the proposed transaction or arrangement.
c.After exercising due diligence, the board or committee shall detennine whether the Corporation
can obtain a more advantageous transaction or arrangement with reasonable efforts from a person or entity that
would not give rise to a conflict of interest.
d. If a more advantageous transaction or arrangement is not reasonably attainable under

circumstances that would not give rise to a conflict of interest, the board or committee shall determine by a majority
vote of the disinterested directors whether the transaction or arrangement is in the Corporation's best interest and for
its own benefit and whether the transaction is fair and reasonable to the Corporation and shall make its decision as
to whether to enter into the transaction or arrangement in conformity with such determination.
4. Violations of the Conflicts of Interest Policy

SPARK Confidential Consulting Agreement (Rev. November 06,Fcb 11, 2008) Page 9
a.If the board or committee has reasonable cause to believe that a member has failed to disclose
actual or possible conflicts of interest, it shall inform the member of the basis for such belief and afford the member
an opportunity to explain the alleged failure to disclose.
b. If, after hearing the response of the member and making such further investigation as may be
warranted in the circumstances, the board or committee determines that the member has in fact failed to disclose an
actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action.
Article IV
Records of Proceedings
The minutes of the board and all committees with board-delegated powers shall contain:
a. The names of the persons who disclosed or otherwise were found to have a Financial Interest in
connection with an actual or possible conflict of interest, the nature of the Financial Interest, any action taken to
determine whether a conflict of interest was present, and the board's or committee's decision as to whether a
conflict of interest in fact existed.
b. The names of the persons who were present for discussions and votes relating to the transaction or
arrangement, the content of the discussion, including any alternatives to the proposed transaction or arrangement,
and a record of any votes taken in connection therewith.
Article V
Annual Statements
Each director, principal officer member of a committee with board delegated powers and consultant hired
by the Corporation to provide services benefitting a client of the Corporation shall annually sign a statement which
affirms that such person in the form attached hereto as Exhibit A:
a. has received a copy of the conflict of interest policy;
b. ha s r ea d and under st and s the poli cy;
c. has agreed to comply with the policy: and
d. understands that the Corporation is an organization exempt from taxation and that in order to
maintain its federal tax exemption it must engage primarily in activities which accomplish one or more of its tax-
exempt purposes.
Article VI
Periodic Reviews
To ensure that the Corporation operates in a manner consistent with its exempt purposes and that it does
not engage in activities that could jeopardize its status as an organization exempt from federal income tax periodic
reviews shall be conducted. The periodic reviews shall, at a minimum, include the following subjects:
a.Whether compensation arrangements and benefits are reasonable and are the result of arm's-
length bargaining.
b. Whether any of its activities result in inurement or impermissible private benefit.

c. Whether partnership and joint venture arrangements and arrangements with publicly supported
and private organizations conform to written policies, are properly recorded, reflect reasonable payments for goods
and services, further the Corporation's exempt purposes and do not result in inurement or impermissible private
benefit.
K Confidential Consulting Agreement (Rev. November 06,Fcb 11, 2008) Page 10
Article VII
Use of Outside Experts
In conducting the periodic reviews provided for in Article VI, the Corporation may, but need not, use
outside advisors. If outside experts are used their use shall not relieve the board of its responsibility for ensuring
that periodic reviews are conducted.
ANN ARBOR SPARK
CONFLICT OF INTEREST POLICY
ANNUAL STATEMENT
poration"), a Corporation officer, employee, or a member of a committee with powers delegated by such Board, in each case in the capacity indicated below, I do here
way(s) (check and complete all that
f Directors
es benefitting a client of the Corporation.
ct of Interest Policy of the Corporation (the "Policy");
of interest with the Corporation,
ched additional sheets if necessary):
( Formatted: Font: Bold
I SPARK Confidential Consulting Agreement (Rev. November 06,Fcb I I, 2008) Page II

Principals n 111111111 n TM. 3511 Coolidge Road
Dale J. Abraham, CPA MM.YMI MN
Suite 100
Michael T. Gaffney, IINWANIM UMW I= East Lansing, MI
CPA Steven R. www nn n • VMS= WWI 48823
Kirinovic, CPA Aaron MINIIMO n WORM, . nn (5 I 7)351-6836
M. Stevens, CPA FAX: (517) 351-6837
EricJ. Glashouwer, ABRAHAM&GAFFNEY,
CPA Alan D. Ranter,
CPA
P.C.
Certified Public Accountants
December 19, 2008
Mr. Tom Crawford

Ann Arbor/Ypsilanti SmartZone Local Development Finance Authority
100 North Fifth Avenue
Ann Arbor, MI 48104
Dear Mr. Crawford:

Enclosed are two (2) copies of the proposed engagement letter which will serve as the agreement between
Abraham & Gaffney, P.C. and the Ann Arbor/Ypsilanti SmartZone Local Development Finance Authority (LDFA) to
provide agreed-upon procedures. If the terms are acceptable, the letters can be signed with one (1) copy being
returned to us.
Please feel free to call if you should have any questions.
Sincerely,
ALAN D. PANTER, CPA

Principal
Enclosure
East Lansing Rochester Hills - St. Johns

Principal il==.11111
=IIINIA1111.11 3511 Coolidge Road
s 1 Suite 100
Dale J. Abraham, CPA
Michael T. Gaffney,
CPA Steven R.
ABRAHAM & GAFFNEY, P.C.
December 18, 2008
Ann Arbor/Ypsilanti SmartZone Local Development Finance Authority

100 North Fifth Avenue
Ann Arbor, 11,41 48104
This letter is to confirm our understanding of the services we are to provide to the Ann Arbor/Ypsilanti SmartZone
Local Development Finance Authority (LDFA) related to evaluation of the internal controls and monitoring
activities being carried out by Ann Arbor SPARK (SPARK) as part of their contract with the LDFA for the period
July 1, 2008 through December 31, 2008.
We will perform the following procedures:
1. Meet with the LDFA and SPARK to obtain an understanding of the process and to obtain the input of all
parties.
2. Provide an independent evaluation of SPARK's:
Adequacy of internal control procedures that cover all key elements of the contract;
Ability to keep adequate records and produce accurate, complete, and useful reports as they relate to
fulfilling SPARK's contractual obligations to the LDFA;
Monitoring processes to ensure internal control procedures are effective;
Procedures to check for defects in billing/reporting requirements or instances of contract non-
compliance, with documentation of appropriate and corrective action where necessary;
Regular review protocols for individual processes and the internal control system itself for effectiveness.
3. Report to the LDFA on the results of our procedures, the internal controls currently in place, and our
recommendations for improvements.
All functions that are performed such as these will be billed as professional services. Abraham & Gaffney, P.C.
will not be making any management decisions on behalf of the LDFA or SPARK during this engagement nor
perform any other functions that may hinder our independence in the future. The LDFA or SPARK will be
responsible for providing all information related to the various records maintained related to all accounting
functions.
Also, as part of this engagement the LDFA will:
1. Designate a management-level individual to be responsible and accountable for overseeing the proposed
services.
2. Establish and monitor the performance of the proposed services to ensure that it meets management's
objectives.
3. Make any decisions that involve management functions related to the proposed services and accept full
responsibility for such decisions.
4. Evaluate the adequacy of the proposed services
performed and any findings that result. East Lansing n
Rochester Hills n St. Johns

Our fees for these services will be based on the actual time spent at our standard hourly rates, plus out-of-
pocket costs such as mileage, report production, typing, postage, etc. Our standard hourly rates vary according
to the degree of responsibility involved and the experience level of the personnel assigned to your engagement.
Our invoices for these fees will be rendered as work progresses and are payable on presentation.
Our fees to perform these services will not exceed $20,000 without prior approval of the LDFA.
Any additional services desired by the LDFA in connection with this engagement would be billed at the following
hourly rates:
Team Member Level Hourly Rate
150
Principal
Senior Accountant 115
Accountant 90
Administrative 70
If any dispute arises in connection with the performance of our services under this agreement, or any other
services we may perform, any party may, upon written notice to the other party, request facilitated mediation.
Such mediation shall be assisted by a neutral facilitator acceptable to all parties and shall require the best efforts
of the parties to discuss with each other in good faith their respective positions and, respecting their different
interests, to finally resolve such dispute.
Facilitated mediation shall conclude within 60 days from receipt of the written notice unless extended by mutual
agreement. In the event the aforementioned difference cannot be resolved by facilitated mediation (or the
parties agree to waive that process) then such dispute shall be settled by arbitration. Arbitration shall be
administered by and follow the rules of the American Arbitration Association (AAA) unless otherwise agreed
upon by the parties.
Each party may disclose any facts to other parties, the facilitator, or the arbitrator, which it, in good faith,
considers necessary to resolve the difference. However, all such disclosures will be deemed in furtherance of
settlement efforts and will not be admissible in any subsequent litigation against the disclosing party. The
facilitator or the arbitrator shall not act as a witness for any party in any subsequent proceedings between the
parties. Neither the facilitator nor arbitrator shall have authority to award non-monetary or equitable relief, and
any monetary award shall not include punitive damages. An award issued by arbitration may be confirmed by
any federal or state court of competent jurisdiction. All costs of any facilitated proceedings shall be shared
equally by all parties. If arbitration is required, all reasonable costs, of all parties, as determined by the arbitrator,
shall be borne entirely by the non-prevailing party.
If you should have any questions or need additional information please let us know. If you agree with the terms
of our engagement as described in this letter please sign the enclosed copy and return it to us.
ABRAHAM & GAFFNEY, P.C.

RESPONSE:
This letter correctly sets forth the understanding of the Ann Arbor/Ypsilanti SmartZone Local Development Finance
Authority.
By:
Title: ______________________________________________________________
Date: _______________________________________________________________
ANN
ARBORANGELS
LDFA Proposal
January 2009
TABLE OF CONTENTS
I.Overview
A. History
II.The Need
A. The Funding Gap
Ill. Investment Criteria
A.Investment Process Overview

B.Investment Application Process
IV.Member Profile
A. Membership Criteria
V.Management
A.Orga niza tion Structure

B.Governance
VI.Reigniting the Ann Arbor Angels
A.Three Phases of Development

0.Phase I Funding Request
C. Phase I Funding
Milestones
Exhibits
A2A 2005 Annual Report Press Release
Inc. Magazine, Jan/Feb 2009, Special Financial Guide
— Angel Investors 2009
inc. Magazine, September 2008, 500 Fastest-
Growing Private Companies, National Map
LDFA Proposal January 2009
I. OVERVIEW
The Ann Arbor Angels (A2A) is a collaborative non-profit organization dedicated to

bridging the gap between angel investors and early stage technology-based companies
in the Ann Arbor region. The focus of the organization is to facilitate private equity
financing for high-potential growth companies. A2A is not a fund and does not invest,
nor participate in any funding decisions, nor receive any share of profits or gains from
its member's investment.
A2A's primary activities include:

Building Angel Investor Relationships
Identifying Great Growth Companies
Initiating Investor Connections
Orchestrating Investor Meetings
Facilitating Member Investments
Collaborating organizations include Ann Arbor SPARK, Bank of Ann Arbor, University of
Michigan Zell-Lurie Center for Entrepreneurship, University of Michigan Office of
Technology Transfer, Michigan Venture Capital Association, Michigan Small Business
Technology Development Corporation (SBTDC), and the New Enterprise Forum.
This LDFA Funding Proposal is for $12,500 of operational funding support to assist with
the restart of the organization over the next five months. The goal of the LDFA funding
will be to (a) complement the business services and seed stage funding provided by
Ann Arbor Spark and (b) help early stage companies access the angel funding needed
to successfully develop into growth stage companies.
gcOnRARK GNITING INNOVATION

Growth
ANN ARBOR ANG ELS Company
I.A. History
Founded in 2004, the Ann Arbor Angels has been substantially supported by the Bank
of Ann Arbor Technology Industry Group. Additionally, the support of A2A's founding
organizations and the MEDC has been instrumental to the success of the A2A to date.
Page 2 of 20
4-3
ANNAR8ORANGELS
The following is a summary of the organization's stages of development:

2002/03 — Concept Development
2004/05 — Beta Stage
2006/08 — Transition Stage
2009/10 — Reigniting A2A
2011/12 — Sustainability
During 2004 and 2005, the BOAA and the MEDC provided operational support for a
part-time Managing Director. This operational support and the collaborative support of
the founding organizations, board of directors, and advisory council enabled the
organization to achieve many significant milestones during its first full year of operation.
A summary of the organizations achievements was included in the A2A 2005 Annual
Report. The report substantiated the A2A operational model and its significant value
contribution potential for the Ann Arbor region's early stage growth companies. The
A2A 2005 Report included information about 26 transactions totaling $82 million that
were lead by A2A members, four investor presentation meetings, two angel investing
seminars, publication of an A2A DealWire e-newsletter, website launch, establishment
of a deal screening team, regional angel investment collaboration, and testimony before
the State of Michigan Senate sub-committee investigating angel funding legislation.
Due to the confidential nature of this report, only the associated press release has been
attached.
Operational support from the MEDC was abruptly pulled in 2006, despite a verbal
commitment, due to circumstances beyond the control of A2A. With the loss of MEDC
operational support, the A2A was forced to significantly downsize its activity levels. The
founding organizations, the A2A board of directors, and the organization's Managing
Director remained committed to the mission and goals over the 2006-08 time period.
However, due to insufficient operational funding the group's company screening and
investment facilitation activity levels were significantly curtailed and the organizations
limited resources were focused towards the development and funding of a long-term
operating plan.
During 2006-07, A2A utilized the resources provided through the Angel Capital
Association, North America's leading angel group association with 165 angel group
members, to engage in a full strategic analysis. The ACA's Angel Organization
Decision Matrix, national and regional angel group best practices, and the unique needs
and resources of the Ann Arbor region were taken into consideration. The ACA
Decision Matrix focuses on five angel group structural components as identified in the
following diagram.
Page 3 of 20
Angel Organization Decision Matrix

Manager-Managed
Vs.
Member-Managed
ANGEL CAPI:AL ASSOCIATION
Based upon the organization's strategic work in this area, the A2A Board of Directors
approved an operating plan based upon the following components on July 10, 2007.
Investment Process Manager-Managed. A2A would continue to focus on

leveraging Ann Arbor's unique existing technology business
infrastructure to maximize the depth of the organization's
expertise and minimize operational funding requirements. It
was agreed that the optimal structure would include an
angel member in the organization's leadership position.
However, absent the availability of such an individual, the A2A
would be lead by a part-time Managing Director.
Non-Profit Corporation. A non-profit legal structure was
approved to best align the organization with its economic
development objectives and to provide maximum operational
funding flexibility.
Membership Commitment. An additional level of commitment from the
organizations members was considered to be an important element of future
success. A continued focus on high integrity 'accredited investors' as members
remains a key element of the organizations membership policies.
Page 4 of 20
Financial Resources. An operational funding strategy which

was not dependent upon one source of funding or the founding
organizations as the sole source was recommended. The
following sources of funding were to be evaluated and
pursued: state and local grants, foundation grants, membership
fees, company application and presentation fees, and corporate
sponsorships. Given the part- time management structure and
the additional legal requirements, management fees based
upon percentages of committed capital or pooled funds and
fund raising success based fees were not approved.
Member-Lead Collaborative Investment Process. Continuing to leverage the
unique strengths and resources of the founding organizations and the Ann Arbor
region technology business community remains a core strategic component.
Additionally, the evolution of a member lead screening and review process which
would follow pre-screening and first stage screening was seen as an integral
component in the investor relationship building process. The TechCoast Angels,
the nation's largest and most successful angel network, based in Southern
California, remains A2A's primary investment process model.
Achievements during 2008, generously supported by our founding organizations, the

A2A Board, Managing Director, several supporting corporations, and the involvement of
our members, included:
one highly successful Investor Presentation meeting
one company breakfast meeting
complete redesign and relaunch of the A2A website
adoption of Angelsoft as the company application and member
communication and management software application
establishment of Ann Arbor SPARK in the lead role for: (i) qualifying
company's for online application and (ii) pre-screening completed online
applications.
recruiting of an experienced lead for second stage screening
development of a pipeline of online company funding applicants
Founding Organizations
SP
PA
AR
RK
K
A
Techno.o
gy n M ICHIGAN
IGNITHUG MINI:WA 110N
-
ROSS SCHOOL OF BUSINESS
Industry 13 ink
Samuel Zell &
Robert H. Lurie
Institute
T E C H tr a n s fe r FOR ENTREPRENEURIAL
STUDIES
MICHIGAN VCA. Center for Venture Capital &

YI NI VI tt CRIM UL W OC INI fi ri .
Private Equity Finance
Ann Arbor Spark/Ann Arbor IT Zone, Bank of Ann Arbor, University of Michigan Zell
Lurie Institute for Entrepreneurial Studies and Center for Venture Capital & Private
Page
Equity Finance, University of 5Michigan
of 20 Office of Technology Transfer and the Michigan
Venture Capital Association are the Founding Organizations of the Ann Arbor Angels. It
has been the support of these organizations that has enabled A2A's success to date.
Angel Groups Corporate VCs
6 % 2 % %

Influencers
24% Angel
Investors
42%
Leveraging the unique resources of these organizations remains a primary component
of A2A's strategic plan.
Page 6 of 20
Venture
The A2A membership base totaled 236 individuals including angel investors, key angel
Capitalists
26%
investment influencers, venture capitalists, other regional angel group
representatives, and corporate venture investors. The pie-chart provides a breakout
by category.
The organization's five member board of directors was supported by an 18 member

Advisory Council w h i c h p ro v i d e d a n g e l fu n d i n g e xp e rt i se , organizational
guidance, screening, due diligence, deal flow, cross sector domain experience, and
represented the organization in the areas of public relations and membership
recruitment. The Advisory Council consisted of the following individuals.
David Brophy, Director, UM Center for Tim Petersen, Partner, Arboretum

Venture Capital & Private Equity Ventures
Finance Tom Porter, Principal, Trillium
Ian Bund, Partner, Plymouth Venture Ventures
Partners Mahendra Ramsinghani, Partner,
Mary Campbell, Senior Partner, EDF Plymouth Venture Partners
Ventures Chris Rizik, Senior Partner, Ardesta
Theresa Carroll, Partner, Dykema Ventures
Gossett LLP Chuck Salley, Principal, CAS Ventures
Tim Damschroder, Partner, Bodman Skip Simms, Director, Ann Arbor Spark
LLP Mina Sooch, Senior Partner, Apjohn
Raj Kothari, Partner, Seneca Partners Ventures
Tim Mayleben, Partner, Esperance Matt Turner, Principal, Amherst Fund
Bioventures Sreeram Veeragandham, Principal,
Yan Ness, CEO, Online Technology Gitega Capital
Inc.
David Parsigian, Partner, Honigman
Miller LLP
II. THE NEED
During the mid-1980's, Ann Arbor gained national recognition as the Midwest Center of
Research. Today, one the most important challenges facing Ann Arbor and the state of
Michigan is the evolution of the Ann Arbor Region from the Midwest Center of Research
to the Midwest Center of Technology and Life Science Business. One of the biggest
hurdles to success for emerging growth companies is the angel funding gap.
The Ann Arbor region has the unique foundational components necessary to develop
into the Midwest Center of Technology and Life Science Business over the next
decade, including university research, brilliant scientists, government support, highly
skilled workforce, and a professional technology business infrastructure. All of these
areas have made significant advances over the past several years which has further
elevated Ann Arbor's position as the nucleus for Michigan's emerging 21 century st
economy. The emerging commercialization infrastructure includes — lawyers,

accountants, bankers, market research firms, consultants, public relations companies,
non-profits, venture capitalists, and angel investors with experience in the technology
industry.
The emergence of Ann Arbor SPARK as a connector of cross-disciple resources, a

champion of collaboration, an organizer of efforts, a conduit for improved information
flow, entrepreneurial training, talent attraction, and seed capital has significantly
enhanced Ann Arbor's technology business infrastructure.
Although Ann Arbor is the state's center of commercialization infrastructure there is still
much that can be improved upon to help move the Ann Arbor region forward. Towards
this end, the Ann Arbor Angels is dedicated to bridging the Ann Arbor region's Capital
and Informational Funding Gap to improve the chances of success of local companies
with high growth potential.
ILA. Funding Gap: Capital and Information
The following diagram from the Center for Venture Research summarizes the current
and near term future of the private equity market.
At the inception, or pre-seed stage, the venture is owner/inventor financed through a

variety of bootstrapping methods. Capital requirements are small at this stage and as
such bootstrapping presents a viable growth strategy for the short term (Freear, Sohl
and Wetzel 1995).2 r eAs
s t .g.
the venture
.a.e4
begins to develop, but is still in the pre-seed stage of
Seed/ ar
growth, friends and families tend to be the source of small pools of capital. If this
C2 SK $1 USK $2,01110KSS.00111K
ad I
Supply
Funding Gap Secondary F u n d i n g Gap
Page 7 of 20
ANN ARBOR ANG EL S LDFA Proposal January 2009
financing is not overburdened with terms and conditions that may impinge on
professional equity capital at a later stage, these sources are useful to begin product
development, but are not considered to be classic investment capital (Sohl 1999).
As the entrepreneurial venture grows, so does the appetite for cash. At this point, the
seed and start-up phase, private investors are the major source of external equity
capital. This relatively invisible source is the oldest and largest segment of the venture
capital industry and is made up of individuals that are self-made millionaires, typically
with substantial business and entrepreneurial experience. While estimates of the scale
of this informal venture capital market are difficult to ascertain with any degree of
certainty, a conservative estimate suggests that between 300,000 and 350,000 angels
are investing approximately $30 billion every year in close to fifty thousand ventures.
The typical angel deal is an early-stage round (seed or start-up) in the $100 thousand to
$2 million range, raised from six or eight investors (Van Osnabrugge and Robinson
2000).
As a complement to the angel investor, institutional venture capital funds, the visible
segment of the private equity market, invest primarily in later-stage and larger deals.
This move to later stage represents a systemic, rather than a reactionary trend, and is
evident over the last decade.
Page 8Aoftypical
20 round of financing from a venture capital fund is
a later-stage deal in the $10 to $15 million range, with average size of rounds steadily
increasing.
Financial market theory is predicated on the assumption of efficient capital markets

where there exists fully informed buyers and sellers and low transaction costs. However,
for the high growth entrepreneurial firm efficient markets theory does not apply.
Market imperfections, prevalent in the informal seed/early stage capital market,
lead to two types of market inefficiencies, collectively referred to as the funding gap.
The first market inefficiency is a capital gap between the needs of early stage ventures
and the suppliers of early stage capital. High growth ventures need patient, value added
equity capital to fuel growth. Under efficient market conditions capital flows from the
suppliers of this capital, angels and venture capital funds, unimpeded to the demand
side, the high tech entrepreneurs. In the United States, the private equity market
does not meet this standard of efficiency, not by a long shot.
The second, and equally important, type of market inefficiency contributing to the
funding gap is the information clap. An efficient market implies an open and timely
flow of reliable information concerning financing sources and investment opportunities. In
the informal venture capital market, with the suppliers of capital seeking a degree of
anonymity, often in conflict with the need to maintain quality deal flow, information flows
very inefficiently. An entrepreneur's search for equity capital is often a time consuming
process, resulting in missed market opportunities and unsuccessful avenues. Likewise,
as investors seek a balance between quality deal flow and the desire to maintain a
reasonable degree of anonymity, promising technologies are often overlooked or
prematurely discarded.
This capital and information inefficiency results in two substantial funding gaps in the
private equity market. The first gap occurs primarily in the seed and start-up financing
stage (see diagram), and is the result of both capital and information inefficiencies. In
1998 a new funding gap emerged in the United States' equity markets (Sohl, 1999) and
persists today. This secondary market gap occurs in the early stage of equity financing
and is reflective of the venture capital industry's progression to larger and later stage
financing. This funding gap is more of a capital gap than the capital/information gap in
the seed and start-up stage, and it has been steadily increasing. These larger capital
requirements, still considered early stage deals, have spawned a new hybrid of angel
financing - the angel alliance/group.
Research indicates that angel investors provide close to 80% of the seed and start-up
capital for high tech entrepreneurial ventures (Sohl, Van Osnabrugge and Robinson
2001). Over the past decade, this sector of the private capital market has been
formalizing in response to both growing demands and complexity. There were
approximately 50 formal business angel groups in the United States ten years ago.
Today estimates provided by the ACA indicate that there are 330 angel organizations.
Of this number, there are approximately 4-8 Michigan based groups, representing 1-2%
of the total. These groups have several characteristics: loosely to well-defined legal
structures; part-time or full-time management; standardized investment processes; a
public face usually with a website and public relations activities; and, occasionally a
traditionally structured venture capital/angel investing fund.
In Michigan and specifically Ann Arbor, the angel capital and informational funding gap
is particularly pronounced. On one side of the chasm we have world class research and
the diligent efforts of Ann Arbor SPARK and many others to push new businesses to
market. On the other side of the chasm we have one of the nation's deepest pools of
potential angel financing. However, despite the Ann Arbor regions foundational
advantages, a large corporate culture has dominated in Michigan for generations which
has de-emphasized entrepreneurship, adversely impacted access to angel capital and
stifled the emergence of new growth businesses. The following bullet points provide
some evidence supporting the theory of an enlarged funding cap in Michigan and the
importance and immediate need for the Ann Arbor Angels.
• Business angels
Pageare the oldest, largest, and most often used source of
9 of 20
outside funds for entrepreneurial firms.
The United States has close to three million angels, investing more than
$30Bn in entrepreneurial firms each year.
Angels fund thirty to forty times as many entrepreneurial firms as the
formal venture industry, investing three to five times more money.
Many of America's most influential firms, such as Ford Motor Company,
Apple Computer and Amazon.com, were initially angel-funded.
Apple Computer, founded in 1977, was initially funded with a $91,000
angel investment and a $250,000 angel guaranteed bank loan.
75% of net new jobs created between 1979-1999 were created by
approximately 8% of the nation's fastest growing entrepreneurial
companies, not Fortune 500 companies
Michigan is in the top-ten states in the US in the number of millionaires,
however in the most recent Inc. Magazine 500 Growth Company rankings
only seven Michigan companies are present, representing 1.4% of the
total. None of the growth companies are located in Ann Arbor. See
attached.
Although Ann Arbor has been recognized as the Midwest Center of
Research since the mid-1980's and has emerged as Michigan's center of
entrepreneurship over the past decade there remains little recognition of
Ann Arbor's growing technology business community. The Special
Financial Guide in the Jan/Feb 2009 issue of Inc. Magazine highlights the
nations leading angel investor networks. The guide mentions only one
group in Michigan, the Grand Angels in Grand Rapids. Ironically, while
there is no recognition of Ann Arbor's prominent role in the Midwest
technology business community in the article, the facing page to the
article is an MEDC "Upper Hand" advertisement; featuring Ann Arbor
based Adaptive Materials.
The University of Michigan consistently ranks in the top five universities
nationally with annual research dollar spending in excess of $800 million.
Conversely, the state consistently ranks in the bottom twenty-five percent
of states in venture capital dollars invested in growth stage companies.
The following flow diagram provides an overview of the stages of development for a
typical growth stage business. The Ann Arbor community and our region's
entrepreneurs are significantly challenged by the funding gap, represented by the wall in
this diagram.
7
Page 10 of 20
4 1 1 1 0
SPARK LDFA Proposal January 2009
AMIN ARBOR
Growth 14, [=,

INNOVATiON
Capital
Research Business Resources
Growth
0 Job
0 0Economic
Company Creation Prosperity
1 ICHIGAN VCA
S PAThe
Rfollowing
KE diagram depicts a more focused view of the Growth Capital
segment in the previous diagram. This diagram divides the Growth
I G L U N OVg f li i
st a s
Seed Fundingsegment into three stages: (i) seed funding supported by the efforts
Capital g IN M I M M U NI NO M M I IM II I O M M I . I NM O N1 1 1 - - -
MEM
MIIIIMMEMeMIIIINSIMMINMS..MIN.0 -
-- --- -- -- --- -- MM IN IM MM -
of Ann Arbor SPARK, (ii) angel funding represented as the primary capital
.................................
barrier for potential high growth companies in the Ann Arbor region and
(iii) two potential paths which a company that has moved through the
angel funding stage of development might choose (a) the venture capital
route which is uniquely supported in the Ann Arbor region by the members
of the Michigan Venture Capital Association and (b) the more traditional
growth path which is uniquely supported in the Ann Arbor region by one
of the nation's only Technology Banking Groups at Bank of Ann Arbor.
Page 11 of 20
7;i
The primary goal of the A2A is to help bridge the angel funding capital gap for emerging
growth companies. This effort is achieved in collaboration with supporting organizations
and as depicted in the following diagram a compliment to the programs and seed
funding administered by Ann Arbor SPARK.
III. INVESTMENT CRITERIA
A2A members look for companies that can achieve rapid growth in large markets. Some
of the investment criteria include:
Scale: annual revenue potential of at least $50 million

Market: a compelling, well articulated strategy for capturing and defending a
significant market share M CHIGAN VCA
vtorultLI A.- Ass, )L1. STILYN.
Barriers to Entry: patents or proprietary technology

Team: a strong, not necessarily complete, team
Exit Strategy: some idea of probable investor liquidity opportunitiesBan k
Fit: a desire for advice and Acoaching
ANN ARROR NG EL S INIEM
Valuation: appropriate fit within our risk/reward expectations 1
Location: business in or willing to relocate to the Ann Arbor OF region
ANN ARBOR
Stage: early-stage technology focused company that is seeking funding in
the range of $100,000 to $3,000,000
Industry: industry sectors of particular interest include
Software/IT/Telecommunication
Life Sciences (Device/Therapeutics/Diagnostics/Tools)
Small Tech (Materials/Semiconductors/MEMS/Nanotech)
Alternative Energy/Green Tech
Industrial Tech (Advanced Manufacturing/Transportation)
Our members do not invest in Retail or Non-Technology companies
Page 12 of 20
73
III.A. Investment Process Overview Presntp-pan
In cofiaberation with Ann Arbor SPARK significant improvements

DuCigi6,0
and refinements were made to the A2A investment e
process in62008.
Once an application is submitted it is pre-screened by Ann Arbor SPARK to

It-ietment
make sure it meets the investment criteria of our members. It is then
evaluated by a small committee of members. During this process members
may ask to meet with the management of the company. If the company
makes it through the screening, the company may present before a group of
the members at a board room meeting or larger investor presentation
meeting. Interested members will perform due diligence and finally investment.
There is no set timeline, however, this process can take anywhere from 8
weeks to 8 months. Note: due to the emergence of an economic recession
during the second half of 2008 a reevaluation of the timeline guidelines is needed.
III.B. Investment Application Process
Applications are submitted online through the Ann Arbor Angels website at
vvww.annarborangels.orq. The application link on the website connects to our back-
end Angelsoft software application. This is the same software application utilized
by the Ann Arbor SPARK seed fund and the industry's leading angel group
screening and member management tool. There is a $250 company application
fee.
IV. Member Profile
From a purely legal standpoint, an "angel investor" (or "business angel investor")
is a "high net worth individual," usually an accredited investor (as the term is
defined in Regulation D under the Securities Act of 1933 or SEC Rule 501) who
invests his or her own funds in private companies, typically at the seed and early
stages.
Members of the Ann Arbor Angels are accredited investors who invest in
companies in the greater Ann Arbor area. A2A members while focused on
investment returns often bring expertise or affinity for a company's product,
market or management team, in addition to taking additional financial risks. Many
serve as active advisors or mentors for entrepreneurs, provide additional
relationships to aid the business' growth, supply industry and entrepreneurial
experience, and are further motivated by a desire to give back to the community,
a drive to help build successful companies, and the satisfaction derived from this
involvement.
. Broadly defined our members fall into four categories:
Page 13 of 20
74
Guardian Angels, who bring both entrepreneurial and industry

expertise.
Entrepreneur Angels, who have experience starting
companies but come from different sectors.
Operational Angels, who bring industry experience and
expertise, but from large, established companies, and lack
first-hand experience with the travails of a startup.
Financial Angels, who typically invest purely for the financial return.
IV.A. Membership Criteria
Membership in the A2A is by invitation only and is extended to individuals who share
our vision and will actively contribute to our process.
Each member of the Ann Arbor Angels is:
an accredited investor
Proven and has a track record managing and building successful companies
either as an entrepreneur or operating executive
Experienced in angel investing, leading due diligence, structuring
investments, and coaching entrepreneurs
Knowledgeable and brings an extensive peer network of domain expertise
Connected with contacts for subsequent funding, talent and technology
Involved and dedicating significant time and effort to A2A activities, including
attendance at presentation meetings and screening sessions and serving on
A2A working teams
Committed to investing in at least one new A2A opportunity each year
Members pay an annual fee of $1000 and have confidential online access to deal flow
information. All meetings are held in the Ann Arbor area. Members are expected to
participate.
Our members collaborate on due diligence, but make individual investment decisions
and understand that investments in early-stage, privately-held ventures are risky and
can be highly illiquid so it can be several years before capital is returned, if ever.
Members are assigned to a working team upon acceptance to membership. Some of

the working teams include:
Membership Annual Reception
Page 14 of 20
V. MANAGEMENT
A2A is a manager-managed organization, lead by a part-time Managing Director. An

important component of the Managing Director's responsibilities is building and
managing collaborative relationships with supporting organizations and key individuals.
Many of these organizations and individuals volunteer and/or contribute resources
essential to the organizations ongoing operations.
V.A. Organizational Structure
Draft Articles of Incorporation to establish A2A as a Domestic Nonprofit in the State of

Michigan have, been prepared and are pending final review and filing with the state.
V.B. Governance
A2A is governed by a five member Board of Directors. The current members of the A2A
Board of Directors are:
Dwight Carlson, CEO, Coherix

Michael Cole, Technology Banking Group President, Bank of Ann Arbor
Richard Eidswick, Senior Partner, Arbor Partners
Tom Kinnear, Executive Director, UM Zell Lurie Institute for Entrepreneurial
Studies and the Center for Growth Capital and Private Equity
Tim Marshall, CEO, Bank of Ann Arbor
VI. THREE PHASES OF DEVELOPMENT
As part of this LDFA Funding Proposal, A2A is recommending a three phase operating
plan.
Phase I — restart the organization after three years of curtailed activity.
Phase II - focus on rebuilding the membership base and
reestablishing the organization as the state's premier source of
early stage growth capital funding, providing the foundation for the
Phase III operating model decision.
Phase III — execute either a large network or small group operating
model dependent upon the collective decision of A2A, Ann Arbor
SPARK and the LDFA.
The following diagram provides a flow chart overview of A2A's three phase
development plan.
7
Page 15 of 20
- LDFA Proposal January 2009
Phase I -Restart Phase II - Phase lila -

Traction Group
Focus: I* Focus: Rebuild Model
Phase
Illb -
Network
Model
Focus:
Investments
Time: 12
Months
Current FY'08/09 Future FY'09/10 Future FY'10/11

LDFA Funding LDFA Funding LDFA Funding
Proposal Proposal Proposal
The A2A three phase plan is designed to assist Ann Arbor SPARK in significantly
narrowing the funding gap within the Ann Arbor region over the next several years. The
following diagram provides an overview of how the efforts of Ann Arbor SPARK and the
Ann Arbor Angels are complementary, yet focused at opposite ends of the funding gap
challenge.
7/
Page 16 of 20
111
Early Stage
InnovationNarrowing the Ann Arbor Region Funding Gap
Companies
1 f i r
AA SPARK Ann Arbor Angels
1. .Bootcamp
Incubator
Customers
Seed Fund Bank Financing
I. .Phase I
Phase II Phase III b
III. Phase Illa
2. .Investor Meetings
The Funding
Gap
Ann Arbor SPARK programs such as Bootcamp, the Business Incubator and the Seed
Fund have worked to narrow the funding gap by better preparing Ann Arbor region
entrepreneurs and their businesses for potential angel investment funding. However,
without dedicated angel capital raising assistance these businesses are left with the
enormous challenge of initiating and building relationships with angel investors in a
state which has substantially ignored this segment of the capital markets for
generations.
The Ann Arbor Angels in collaboration with its founding organizations is uniquely
positioned to assist aspiring growth companies in search of angel capital financing. The
three phase plan detailed herein will help to further narrow the funding gap by
complimenting the work and achievements of Ann Arbor SPARK.
Page 17 of 20 7'7
VI.A. Phase I LDFA Funding Request
A2A is requesting LDFA funding in the amount of $12,500 over the next five months
(Feb — June 2009) to partially support the Phase I restart of A2A. The use of LDFA
operational funding will be used to fund 50% of the cost associated with the contracting
of a part-time Managing Director as summarized below. The remaining 50% of the
contract cost will be supported by a Corporate Sponsor.
Contract Hourly
Managing Director Rate Rate
Period (months) 5 5
Hours 125 125
Hourly Rate $200 $250
Total $25,000 $31,250
Contract Rate Discount 20%
Funding Sources
LDFA $12,500
Corporate Sponsor $12,500
Total $25,000
The required experience level of the part-time Managing Director is commensurate with
an individual with an hourly billing rate of $250/hour. A 20% discount off this hourly rate
would be expected based upon the signing of a term contract.
79)
Page 18 of 20
The following is an hourly estimate by month of the part-time Managing Director's

activities.
Hours/Month Feb Mar Apr May Jun Total
VC Communications 0 4 0 4 0 8
Corp Communications 2 3 6 3 0 14
Org Filing 1 0 0 0 0 1
Bank Accts 1 0 0 0 0 1
AngelSoft 1 0 0 0 0 1
Website 1 0 0 0 0 1
Board Meeting 5 5 0 0 0 10
OnLine Payments 1 0 0 0 1 2
LDFA Mid-Term 0 8 4 0 0 12
Meeting
LDFA End-Term Meeting
. 0 0 0 8 6 14
Presenting Company 0 0 4 6 0 10
Investor Meeting 0 0 2 7 0 9
Member Communications 0 4 6 10 2 22
Member Agreements 0 0 0 2 2 4
Screening Team 2 2 2 2 0 8
Company Analysis 2 2 2 2 0 8
Total Hours 16 28 26 44 11 125
Solidifying board member support, completing key management tasks, rebuilding

investor relationships, providing angel investment services, and reporting to the LDFA
will be the focus of the Managing Directors activities over the five month term of the
Phase I contract.
VI.B. Phase I LDFA Funding Milestones
The recommended payment schedule for LDFA funding includes a front-end payment
and two milestone based payments as detailed below.
Feb 1, 2009 April 7, 2009 June 15, 2009 Total

LDFA Payments $ 6,250 $3,125 $3,125 $12,500
It is proposed that A2A will provide LDFA with mid-contract (April LDFA meeting) and
end-contract (June LDFA meeting) updates including details of performance against
approved milestones. Recommended milestones for consideration by the LDFA include
the following.
Page 19 of 20
April 2009 Milestones
1. Filing of Article of Incorporation

2. Establishment of Commercial Operating Account
3. A2A Board Approval of Revised Plan
4. 100% Corporate Sponsor ($12,500) LDFA funding match for
Managing Director contract costs
5. Additional 50% Corporate Sponsor ($6,250) match support for
other operational costs
June 2009 Milestones
1. 20 registered Angel Investor Members

2. Development of Angel, Corporate and Venture Capital
Membership Agreements, incorporating annual membership fee
schedules
3. Investor Presentation Meeting
4. Verbal commitment for 100% LDFA funding match ($30,000) for
Managing Director contract costs in FY'09/10 A2A Phase II.
5. Additional 50% Corporate Sponsor ($15,000) verbal commitment
match to support other operating costs.
In summary, achievement of the above milestones would provide a minimum A2A

operating budget as follows.
Phase Phase Phase III
I II FY10/11
Minimum Operating Budget FY08/09 FY09/10 12 months
$ 5 months
12,500 12 months
$ 30,000 TBD
Managing Director - LDFA
Managing Director - Corporate Sponsor(s) $ 12,500 $ 30,000 TBD
Other Operating - Corporate Sponsor(s) $ 6,250 $ 15,000 TBD
Total Minimum Operating Budget $ 31,250 $ 75,000 TBD
Page 20 of 20
ff/
Contact: Michael Cole Contact: Larry T. Eiler
Bank of Ann Arbor Eiler Communications
734.662.1600 734.761.3399
ANN ARBOR ANGE S
ANN ARBOR ANGELS DRIVE $82M IN NEW

INVESTMENTS FOR AREA FIRMS
FOR IMMEDIATE RELEASE — ANN ARBOR, MICH. — April 27, 2006 — The Ann
Arbor Angels (A2A) investment group reported involvement in 26
transactions with total value of $82 million in 2005. Investment activity
included $46.2 million in information technology sector related
companies and $7.5 million in the life science sector. Companies
representing the advanced automotive, consumer products, financial
services, homeland security/defense, manufacturing technology, and
nanotechnology sectors also received funding.
"Angel investment is critical to the development of new exciting

companies in our state," said Michael Cole, vice president of the
Technology Industry Group at Bank of Ann Arbor and managing director
of A2A. "Southeastern Michigan's angel investment community is world-
class and through the success of A2A we are pleased to now have an
opportunity to provide this vitally important information to the public."
"The state of Michigan's angel investment community continues to

demonstrate its strength and vision, evidenced by the companies and
investments highlighted in the 2005 A2A investment report," said Jim
Epolito, president and chief executive officer of the Michigan Economic
Development Corporation (MEDC). The $32 million investment in ePrize
was one of the largest angel deals in the Midwestern United States in
2005. Over the past century Michigan's angel investors have helped to
launch automobile companies, chemical companies and cereal companies,
providing the foundation for our great state's economic prosperity. The
21st Century Jobs Fund initiative will further boost angel investments in
Michigan, at this critical junction, with the creation of capital gains roll-
over incentives, pre-seed funds and commercialization investments.
These programs will help Michigan's angel investors launch the companies
that will drive our economy for the next 100 years."
Angel investment transactions of note in the region during 2005 included a
$32 million third round recapitalization for interactive promotions agency
ePrize. The transaction was lead by angel investors Gary Shiffinan of Sun
Communities; Brian Hermelin of Active Aero; and Dan Gilbert and David
Katzman of Quicken Loans/Rock Financial/Cleveland Cavaliers, Camelot
Ventures, with Bank of Aim Arbor providing $500,000 of pre-
recapitalization debt financing.
"ePrize has been fortunate to work with the Technology Industry Group at
Bank of Ann Arbor for more than two years. Michael Cole and the Bank of
Ann Arbor stepped up to provide financing to ePrize when no one else
would," noted Robb Lippitt, chief operating officer and general counsel for
ePrize LLC. "They also introduced us to A2A and have been an integral
part of our growth. Our region and new economy companies have a need
for these kinds of services which The Bank of Ann Arbor and the A2A are
doing a great job filling."
Machine vision company Coherix raised more than $6 million in 2005
utilizing the new Michigan Innovation Certificate of Deposit (MICD) angel-
funding vehicle with Bank of Ann Arbor acting as the lead bank. A2A lead
the angel funding with participation from Toledo, Ohio-based Core
Network. Coherix has raised in excess of $8 million of a targeted $11
million to date.
"The A2A present a huge opportunity for the entrepreneurial community in
Ann Arbor to lead at a time when leadership is going to be extremely
important as we face the upcoming economic crises in Michigan," said
Dwight D. Carlson, chief executive officer of Coherix. "A2A has started to
take shape to provide leadership which will assist the administration of
the University, the local community and State government deal with
significant global economic development issues unique to the 21st
Century."
Nano-particles company Nanocerox closed an over-subscribed $2.4
million Series B round. A2A lead the funding with participation from
members of the Great Lakes Angels. Bank of Ann Arbor provided $240,000
of equipment financing and a $100,000 working capital line of credit.
"The A2A with Michael Cole taking the lead were most helpful to me and
Nanocerox in our efforts to raise a round 2 funding," said Steve Swanson,
chief executive officer of Nanocerox. "A2A provided a platform to
organize an investor presentation and helped identify prospective angel
investors. A2A is a vital link for early stage companies in their effort to
find funding."
Flow cytometer device company Accuri Instruments closed an $800,000

Series A preferred equity transaction and a $1.5 million convertible debt
round in 2005. Members of A2A lead the funding with participation from
the Great Lakes Angels and Core Network. The company is currently
closing an additional round of funding.
Among the other angel rounds participated in by A2A in 2005 were
$1.5 million for laser navigation company Self Guided Systems, $1.5
million for drug discovery analytics company Genetics Squared,
$420,000 for Pier 3 Technologies and $150,000 for Myrmidon
Biomaterials.
Other key A2A funding and acceleration service partners during 2005
included Ann Arbor SPARK Business Accelerator, Amherst Fund LLC,
Arboretum Ventures, Bodman LLP, CrystalPoint Partners, Dykema Gossett
PLLC, Inovo Technologies, Plymouth Venture Partners, Menlo Innovations,
Miller Canfield PLC, Online Technologies, Schox PLC and Seneca Partners.
About the Ann Arbor Angels (A2A):
The Ann Arbor Angels is dedicated to bridging the gap between angel
investors and the region's premier growth companies. The not-for-profit
network founded by the Bank of Ann Arbor is supported by the Michigan
Economic Development Corporation (MEDC) and Ann Arbor SPARK. Key
collaborators include The University of Michigan Zell-Lurie Institute for
Entrepreneurial Studies, Center for Venture Capital & Private Equity, and
Office of Technology Transfer; the Ann Arbor IT Zone, MichBio and the
Michigan Venture Capital Association.
JANUARY 2009
ANN ARBOR ANGELS LDFA PROPOSAL
Inc. Magazine, September 2008

The Inc. 500 is a annual ranking of the fastest
w regrowing companies
In the Mid& of Somewhere
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Revenue growth from 2004 — 2007 #165 Secure-24, Southfield
Founded and generating revenue by #205 VisionIT, Detroit
the first week of 2004 #319 MacUpdate, Traverse City
U.S. based, privately held and #354 Allied PhotChemical, Kimball 17662
independent #376 Environmental Services of North 3,54594
Minimum 2004 revenue $200,000 America, Dearborn ,",
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#436 Piston Automotive, Redford

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In this year's Inc. 500 special issue a June 2008 report from the Small Business Administration Office of
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410
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Zappos, Jenny Craig, Kinkes
and more, page 70
PAGE62
Special Financial
"Me and five girls—
Guide
rough life,"
says the founder Angel
ofPlentyofFish,theNoldating Investors
The Handbook of the American Entrepreneur
A n d th e site in the U.S. 2009
Money
PAGE 83
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• .4' Ai
It's simple. It's brilliant. And in a world intent on developing
alternative energy sources, Adaptive Materials, the pioneer of
solid oxide fuel cell systems, is revolutionizing the portable
power:game. Formerly research-based, Adaptive Materials
recently made the transition to manufacturing thanks to a $6.27
million award from the Michigan Economic Development
Corporation?' This grant helped the company acquire a
47,000 sq. ft. facility in.Ann. Arbor, Michigan, where they have
the in-house capability to manufacture solid oxide.fuel cell
systems that provide portable;power for military and
commercial applications.
,
If you dream big and are ready to

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fast, Michigan is the place for your
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you will love to live year round.
Visit our;new website at
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ECONOts11 C.DEVELOPME'NT CORPORATION-,

.
SPECIAL FINANCIAL REPORT
In a toug
are more cautious
possible to find funding. Here's how
BY KASEY WEHRUM
120 companies, making these wealthy individuals the single largest source of start-up capital, according to the University of New Hampshire
ent portfolios, and theirs, just like yours, have been hammered. That's sparking big changes in the way angels invest. Even in a tough ec
3RAPHY BY JASON LEE JANUARY/ FEBRUARY 2009 I INC. 183
6(7
in a hurry. Angels are pretty spooked these means of ensuring that good companies
days. "EVen highly diversified investors may are properly funded.
be seeing a 20 to 40 percent decrease in the If you are looking for funds, be prepared
value of their stock portfolios:' says Michael for a buyer's market. That means requests
Gruber, founder and managing director of for more control as well as lower valua-
Cornerstone Angels, a Chicago-based angel tions. "I'm not saying we are going to be
group. Further complicating matters is the angels from hell, but we are not going to be
fact that many angels are entrepreneurs stupid about how to pricer says John May,
themselves and may be more concerned, managing partner of New Vantage Group
with shoring up their companies than with in Vienna, Virginia.
.
or- On
,
the other hand,ftsays
PallIkeDigt="E0
1.14
t me
helping you build yours. Bill Warner, chairman of the Triangle

t=0
As a result, they are being a kit more Accredited Capital Forum in North Caro-
cautious than they have been in years past. lina, "no angel wants to put an entrepre-
The Center for Venture Research says neur in the position of not being able to
investments through the second quarter of reap benefits from a successful exit."
2008 totaled $12.4 billion, up 4.2 percent In the pages that follow, Inc provides
from the same period in 2007. But just a map to the new landsca'pe of angel
23,000 ventures received those funds, a investing, induding a directory of the
3.8 percent drop. Why? "There's safety in nation's leading investors. The challenge
• numbers," says Marianne Hudson, execu- is getting those reluctant angels on your
team—whether you have never landed
tive director of the Angel Capital Associa-
an investment or you are going back for
tion. Angels, she says, see syndication not a second round.
only as a way of reducing risk but also as a
GET YOUR WINGS
Never dealt with an

angel? Here's what .
you need to know
Even in hard times, a smart angel will not pass up
the chance to back a promising business. That said,
don't expect much tolerance for
missteps. All the old rules for pitching angels still
apply—be succinct, avoid jargon, have an exit
strategy—but they are even more true now. "Times
like this separate the wheat from the chaff," says
Andy Sack, an entrepreneur and member of
Founder's Co-op, an angel fund in Seattle. Sack
urges start-ups to be realistic about their prospects.
"It's a hell of a tough time to raise money," he says.
Below, some tips for ingratiating yourself with
potential investors.
Add Some Experience
Seeing some gray hair on your prior ups and downs and knows how to
management team will help ease investors' manage cash in the downside says
fears about your company's ability to deal John May. Even if this individual is an
with a tough economy. "Now more than unpaid adviser, he or she will add to your
ever, we want to see someone on board company's credibility "Someone who is 26
who's been through and says
84 I IN C. I JANUARY/FEBRUARY 2009
s' is blowing smoke; May says. "They have never been through a recession."
g impression
ours. by presenting
He and his twofirst-time
partner, both businessentrepreneurs,
plans: one from before the
launched thebusiness
market crash
in the and the
spring ofnew
2007one.
and"They showedthe
have funded meventure
the '08so
pla
h-quick schemes. "People who really believe in what they are doing should continue to do it," says May. "But those who are swept
"A lot of investors are saying
they are only funding proven
entrepreneurs," says the
founder of one start-up."This
is our first time, and there's
nothing I can do to change that."
les plans will be the losers in the race to money," saysWarner. Young companies should be able to demonstrate an expert knowled
s he has met over the past year. "We try to stay engaged with our network, so
e taken a much more active interest in his success; indeed, now they call him with business advice. "Every conversation with investors
JANUARY/ FEBRUARY 200? I INC.I 85

ti
SPECIALFINANCIALREPORT
BACK FOR MORE
ng new cash plunged 28 percent in the third quarter of 2008, according to the National Venture Capital Associatio
are going to have to show real, demonstrable progress on sales and reaching a point where they are profitable and cash-flow posi
Conway wrote in an e-mail to his portfolio companies in October. His reasoning is pretty obvious: Busi?nesses with healthy war chests will b
ve of which he founded and ran as the first CEO. His latest venture, Earth Class Mail, recently raised $5.1 million in follow-up funding from
s been going on-good and bad. "I think a lot of our money came in at the end because investors didn't have any better place to go, and we
Warner. Among the measures angels are advocating: reducing head count, cutting capital expenses, and focusing the business aro
here is always some excuse that an angel or VC has to try to hammer you down on valuations," he says. "At the end of the day, they
nt to keep dose tabs on how their money is being spent "Entrepreneurs may even be asked to resubmit their operating plans in light of
86 I INC. I JANUARY/ FEBRUARY 2009

WINGMEN (AND -WOMEN)
Inc's g u id e to th e n a tio n 's

le a d in g a n g e l- in v e s t o r n e t w o r k s
NATIONAL NORTHEAST
LaunchpadVentureGroup Boston
WHAT ITS LOOKINGSilicon

FOR: Garden Angel investor Network Somerset, New Jersey njangelsnet@aotcom
Beacon Angels Boston
Technology-driven companies, FOR:
wararrsumiarto in a East*Coast
wide varietycompanies
of industries.
in most industries.
TYPICAL INVESTMENT RANGE:
WHAT rrs LOOKING FOR, TYPICAL INVESTMENT RANGE:
$20,0004260,1300 INVESTORS RI NETWORK: 'KW
$100,000-$500,000
New England-based technology start-ups with a valuation of less than $5 million.
TYPICAL ['VESTMENT RANGE: INVESTORS IN NETWORK. 604
000 50 000
ude community$100. 43 .
development, education, the environment, energy, health, and media, and businesses that are woman- or minority-led.
INVESTORSIN NETWORK: 22
Maine Angels Portland, Maine Tri-State Private InvestorsNetwork

WHAT trs LOOKING FOR: New York City
IT companies, especially those working on business applications.
WHAT IT'S WORMS FOR:
CommonAngels Boston TYPICAL INVESTMENT RANGE:
commonangels.corn Start-ups in any industry except biotech.
$50,000-$250,000 INVESTORS IN NETWORK:42 TYPICALINVESTMENT RANEE:
WHATIT'SLOOKI NG OoR, $300,000-$600,000
Early-stage companies in IT, telecom, semiconductors, and medical devices.
Keiretsu Forum Lafayette. California -
TYPICAL INVESTMENT RANGE: $500,00041 million
INVESTORS IN NETWORK:75 INVESTORS IN NETWORK 30
FOR.
umer-products, health care/life-sciences, and real estate companies. VermontInvestorsForum Burlington, Vermont it
T RANGE: New York Angels New York City WHAT ITS LOOKING FOR:
on WHAT ITS LOOKING FOR: Vermont-based companies.
ORKMO HubAngelsInvestment Group Boston
Start-ups valued at less than $4 million and based in the Boston-New York- Washington, D.C., corridor.
Not disclosed
WHAM'S LOOKING FOR:$250,000-$750,000 INVESTORS IN NETWORK. 75
New England-based INVESTORS IN NETWORK
start-ups in health65+
care, IT, life sciences, and financial services.
$250,0D0-$750,000
INVESTORS IN NETWORK:75+
WalnutVentureAssociates Boston
in medical devices, IT, pharmaceuticals. energy and defense. The group consists of Jewish investors.
WHAT IT'S LOOKING FOR.
RochesterAngelNetwork Rochester, NewYork
New England-based businesses involved in IT, software, and Internet applications.
WHAT ITSIDOKING FOR:
TYPICAL INVESTMENT RANGE
Companies based in western New York State. in all industries.
JumpstartNewJersey Angel NetworkTYPICAL INVESTMENT RANGE, $260,000-$1 million
Mount Laurel, New Jersey $250,000 $Z million
-
INVESTORS IN NETWORK:14
maims LOOKING FOR: INVESTORS IN NETWORK 30
Technology companies on the Eastern Seaboard, from Connecticut to Virginia.
TYPICALINVESTMENTRANGE: $200,000-$1 million
INVESTORS IN NETWORK:40+
"Now more than ever, we want to see someone on .
board who's been through prior ups and downs and knows
how to manage cash in the downside. -John May, New Vantage Group "
JANUARY/ FEBRUARY 2009 t INC, 187
/
9
SPECIALFINANCIALREPORT
"Companies that
have already
received funding
from
angels are going
to be asked to
tighten their
belts."
—Bill Warner, Triangle Accredited
Capital Forum
PACIFI TYPICALIN nolo prog

C VESTMEN gy,
NORTH ram
WEST TRANGE:
Web s
$501400 ,
0- oata
A $750,000 and
INVESTOR spx
l mob WHATITS
l SIN
NETWOR ile LOOKING
i K:100* tech FOR:
a nolo Biotec
n gy h,
F
c com bioscie
o
e pani nce,
u
es softwa
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with re,
f d consu
at
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t
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g s engi altern
e nee ative-
l C r on energ
s o boa y
- rd. comp
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e p INVESTME locat
a NT. ed in
t S $200,00 Oreg
t 0
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l a S IN south
e t NETWOR west
allianceof t K: 17 Wash
angets.co l ingto
m n.
WHATITS
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founder Angel rrPicA
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FOR: scoop.c LINIV
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busines rg/ Angel
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s n WEST l
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nizati e l
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k often t r r
make h t q
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$2 r WHATITS
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e LOOKING
00 h l FOR:
0 w s IT and
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$5 s T sciences
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0 s based in
TYPICAL New
in o
INVESTME
O NT n Mexico.
AF RANGE: edesert TYPICAL
- $150,00
angels. INVESTMEN
0- com TRANGE:
ba $200,00 WHATITS
ck 0 $250,000-
LOOKING $000,000
ed INVESTOR
FOR. I
SIN
co NETWOR Busine N
m K: 32 sses in V
pa the E
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INVESTORS States, R
IN
NETWORK: prefer S
62
ably I
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et uartere N
d in E
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Arizon T
nd
a. W
Vent O
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INVESTME R
Club NT. K:
Sea 7
ttle $300,00
0 5
pugetsou INVESTOR +
SIN
ndvc.com NETWOR
-
WHAT rrs K:70 -
LOOKING -
FOR: Utah
E N Angels
a e U
rl w t
y a
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s e
t x V
a i a
g c l
e o l
c e
o A y
m n ,
p g
a e U
t i . Band of
a l c Angels
l M
h o
i e
m n
o
WHAT l
u n
ITS
t INVESTOR LOOKING
o
a SIN FOR:
NETWOR
h High- P
K:25
a tech, a
n medic r
g al- k
e CALIF techn
ORNI .
l A ology,
s clean-
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WHATIT'S A comp o
LOOKING n anies r
FOR, g based n
Loc e
all in i
l the a
y Silicon
s
ba Valley.
se
'
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d Y a
co F PI n
mp o C d
ani r A a
es u L
n
in m I
g
just N
ab V e
out P E l
an a S s
y l T .
ind o M c
E o
ust
N m
ry.
A T
T WHAT Irs
l R LOOKING
Y A FOR:
t
PI N High-
C
o
, G tech
A E,' compa
LI $ nies in
N C 1 Norther
V
a 0 n
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l 0 Californ
S ,
i ia.
T 0
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f Investo
o 0 rs
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n 4
T e
1
R i former
m
A a execut
ill
N i
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G o from
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n n
$ INVESTOR t-
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0 e NETWOR d,
, l K: 25 Intuit,
0 s Logitec
0 f h, Sun
0 o Micros
-
r ystems
$
u , and
2
m m Syman
tec. t a RSIN
TYPICAL h , NETWOR
INVESTMEN K110
e
T:
r m
$500,000 n e Sand Hill
INVESTORS d Angels
IN R
NETWORK: C i e
131 a c d
l a w
P i l o
a f device o
s o s, Web d
a r 2.0. IT, C
n softwa it
d
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a semic ,
n onduc
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c tors, a
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A m mer
n f
p electr o
g a onics, r
e n and n
l i teleco i
s e m. a
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n I n
t
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d a A h
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g V e
C e E t
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f E o
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r n T
WHATITS
n d LOOKING
i u R FOR:
a s A Life-
t N scienc
p r G es,
a i E infrast
s e , ructur
a s e.
d , $ consu
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i 0 produ
n
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compan
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t n $ T
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WHATITS o l I
LOOKING p l N
FOR/ h i V
S a o E
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u m INVESTO
T
M c Tech annual
E o Coast revenue
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m Netw of $50
T
R WHATIT'S orks million.
LOOKING T
A are in
N FOR, Y
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$ les,
energy, A
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$ M
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5 l- ara, T
m device and R
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n region. a 5
INVESTORS TYPICAL 3
INVESTM
n
IN 0
NETWORK: ENT d
RANGE: 0
70
$250,00 ,
0- E 0
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I 0. It p 0
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with m
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V deals c INVESTORS
i IN
rangin h NETWORK:
l g from c 2SO
l $1 o
a million a
g to $4 s SOUTH
e million.
,
t
INVESTOR
a Atlanta
SIN
NETWOR n Technolo
8 8 I INC. I JANUARY
N / FEBRUARY
K,SO 2009 g gy
e e Angels
v t Atlanta
a s angelatta
d . nta,corn
a c WHATIT'S
LOOKING
o FOR,
s m Tec
i WHATITS hnol
LOOKING
e ogy
FOR:
r Southe com
r rn pani
a Califor es
a nia in
n compa the
g nies Atla
with nta
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the area
l
potenti .
s
al for TYPIC
.
AL
INVES t M k
TMEN - E Hous
T u N ton
RANG p T houstona
E: s R ngelnetw
$250 i A orfc.net
.000- n N WHAT irs
$1 G LOOKING
c FOR:
millio E
e Texas-
n :
n based
INVESTORS $
t technol
IN 2
r ogy
NETWORK; 5
45 a compani
,
l 0 es that
Central T 0 are past
e the
Texas 0
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a $ e phase
Network s
Austin 1 and
. , have
centexan
gets.org T 5 revenue
Y INVESTOR or pilot
WHATIT'S
PI SIN progra
LOOKING
C NETWOR
FOR:
K; 55
ms.
Se A
L TYPICAL
ed INVESTMEN
- I Hou
T:
st N ston
$250,000-
ag V Ang $300,000
E el INVESTORS
e
S Net IN
st NETWORK,
T wor
ar 100
Greensboro, North Carolina piedmontangelnetworkcom
rd Capital
edia, Jacksonville.
and energy Florida
start-ups.
NG FOR
ervices, information-technology.
ences companies.
MENT RANGE:
000
TWORK:50+
IMAF-Triad Triangle Accredited Mid-America Angels RAIN Source Capital St.

Winston-Salem, North Carolina Capital Forum Lenexa, Kansas Paul
imaftriad.com Wake Forest, North Carolina midarnericaangels.com rainsourcecaPital.corn
WHAT ITS LOOKING FOR: capital-forum.com WHAT ITS LOOKING FOR: WHAT ITS LOOKING FOR:
Medical-devices, -diagnostics, and WHAT ITS LOOKING FOR: High-growth companies within Manufacturing and technology
-technology companies Life-sciences and 200 miles of Kansas City; portfolio businesses at any stage of
in Georgia. North Carolina. South technology companies. companies are in medical devices, development in Idaho, Iowa,
Carolina, Virginia, TYPICAL INVESTMENT RANGE advanced materials, software, Web Minnesota, Montana, North
and Tennessee. $200,0113-$300,000 2.0, and consumer products. Dakota, and South Dakota.
TYPICAL INVESTMENT RANGE: TYPICAL INVESTMENT RANGE:
TYPICAL INVESTMENT: INVESTORS IN NETWORK. About 100
$250.000-$500,000 $500,000-$2
$250,000
INVESTORS IN NETWORK:75 INVESTORS IN NETWORK; 100 + INVESTORS IN NETWORK: RAIN
manages 23 angel investing
MIDWEST funds across the Midwest.
Network of Business Ohio TechAngels
Angels and Investors BlueTree Allied Angels Columbus, Ohio
Atlanta Pittsburgh ohiotechangefs.com *lams Wisconsin Investment
nbaknet bluetreealliedangels.com Partners
LOOKING FOR: Early-stage
WHAT ITS LOOKING FOR: Madison, Wisconsin
WHAT ITS LOOKING FOR: start-ups based in Ohio..
Consumer-products, wireless, Medical, life-sciences, and IT TYPICAL INVESTMENT: wisinvpartners.corn
media, green-energy technology, companies in and around $425,000 WHAT IT'S LOOKING FOR:
and biomedical companies. Pittsburgh. INVESTORSIN NETWORK: 218 Wisconsin-based biotech and
TYPICAL INVESTMENT: life-sciences companies.
TYPICAL INVESTMENT.
TYPICAL INVESTMENT:
$500,000 $350,000 Queen City Angels
INVESTORS IN NETWORK: 50 Cincinnati $250,000
INVESTORS IN NETWORK: 20
C1C3.COM
New Vantage Group Grand Angels WHAT ITS LOOKING FOR:
Vienna, Virginia Holland, Michigan Companies within 150 miles of
newvantagegroup.com grandangels.com Cincinnati with the potential to
WHAT ITS LOOKING FOR:
00114 For an expanded list of
WHAT IT'S LOOKING FOE have revenue of more than $10
Early-stage companies in angel-investor groups, visit
Telecom. Internet, medical- million in five years.
western Michigan. www.inc.com/keyword/jan09.
devices, and homeland- TYPICAL INVESTMENT RANGE:
security companies in the Mid- TYPICALINVESTMENTRANGE: $200,000-$50,000
Atlantic region. $250,000-$1 million INVESTORS IN NETWORK:26
INVESTORS IN NETWORK: 30+
TYPICAL INVESTMENT RANGE;
$250,00-$500.000
Want to learn more?

Our list is just the tip of the iceberg. Check out these organizations for even more leads—and advice on how to close deals.
Angel Capital Association angelcapitalassociation.org
This alliance of 165 professional angel groups in the U.S. and Canada is a great starting point for entrepreneurs looking to tap this capital
market. You will find a list of accredited investors organized by region.
Angel Capital Education Foundation angelcapitaleducation. org

This nonprofit, established by the Kauffman Foundation, has robust resources for entrepreneurs looking for advice on all aspects of angel
investing—including term sheets, valuations, due diligence, and NDAs.
Angelsoft angeisoft.net
This Web-based service standardizes the submission process for early-stage investments. The site boasts more than 14,000 investors.
including 450 angel groups. Register with the site and you can submit a business plan to three groups simultaneously. For $250 a month,
your proposal will be included in a news feed that investors can access on their Angelsoft dashboards. The site was the vehicle for more
than 16,000 deals in the first half of 2008.
JANUARY/ FEBRUARY 2009 INC. 8 9

ARBORPIPMANTI
SMARTZONE' .
ANN
ARBO
R/YPS
ILANT
I
SM
AR
TZ
ON
E
LD
FA
2008
ANNUA
L
REPOR
T
For the
period July
1, 2007 June
30, 2008
ANN ARBOIMPSILANTI
SMARTZONE -
2011 Term Expires: June 30, 2009 Term Expires: June 30, 2009 Term Expires: June 30, 2011 Term Expires: June 30, 2011 Term Expires:
2008 Board of Directors
Ann Arbor/Ypsilanti SmartZone LFDA 2008 Annual Report

(A) Mickey Katz-Pek, Chair
(A) Mike Korybalski, Vice Chair
(A) Robin Risser, Treasurer
(A) Michael Reid

(Y) Darryl Daniels
(A) Stephen Rapundalo
(Y) Richard King
(A) Tom Kinnear

(Y) Jonnie Bryant
Ex-Officio Board Members
Tom Crawford, Secretary Affiliation: City of Ann Arbor
Roselyn Zator Affiliation: MEDC
(A) Denotes City of Ann Arbor Appointee (Y) denotes City of Ypsilanti Appointee
ANN ARBORIYPSILANTI
SMARTZONE'
Introduction
In 2001, the Michigan Economic Development Corporation (MEDC) created eleven

separate SmartZones throughout the state, including Ann Arbor/Ypsilanti, for the
purpose of highlighting Michigan's unique technology business opportunities and
promoting job creation. The foundational documents for the Ann Arbor/Ypsilanti
SmartZone included 1.) An initial SmartZone application to the MEDC, 2.) A Tax
Increment Financing plan, and 3.) A Municipal Cooperation Agreement between the
cities of Ann Arbor and Ypsilanti, and maintain a primary focus on developing and
sustaining local "Business Accelerators" and "Business Incubators" as the vehicles
through which services to emerging technology driven businesses are delivered.
The governing body, known as the Ann Arbor/Ypsilanti SmartZone Local Development
Finance Authority (LDFA) consists of a nine-member board of directors of which six
members are appointed by the Ann Arbor City Council and the Ypsilanti City Council
appoints three members. The LDFA operates under a set of bylaws that were initially
approved by the Ann Arbor and Ypsilanti City Councils. Proposed changes or
amendments to the bylaws are adopted by the LDFA's Board of Directors and
submitted to the Ann Arbor City and Ypsilanti City Councils for approval.
The LDFA provides local financing for the Ann Arbor/Ypsilanti SmartZone through a tax
capture mechanism within a specific district. The geographic boundaries for the Ann
Arbor/Ypsilanti SmartZone LDFA was defined as the combined DDAs of the two
respective cities, and under the tax capture formula, tax levies eligible for capture
include only those for which a prior claim had not been established by either DDA. The
SmartZone captures up to one-half of the school operating and state education taxes
within the Ann Arbor portion of the district, and is based on the increase in taxable value
due to new development and appreciation above the base year of 2002. Presently, TIF
revenue is generated only within the geographic boundaries of the Ann Arbor DDA.
Summary of Fiscal Year Operations
Through contracts with qualified service providers, the Ann Arbor/Ypsilanti SmartZone
LDFA funded Business Accelerator activities to work with emerging technology based
businesses, identifying those that have the greatest potential for commercialization,
rapid growth, and ultimately the ability to promote job development within the
SmartZone district. The Business Accelerator provides entrepreneurs and their
emerging technology businesses with educational and networking services, assistance
in market definition, business plan development, and exploring financing alternatives.
During the July 1, 2007 — June 30, 2008 period, the Ann Arbor/Ypsilanti SmartZone
LDFA Board met twelve times. Among the issues deliberated by the Board of Directors
were development of the annual budget, scope of work and performance metrics for
contracted services, strategic and long range planning, and amendments to the LDFA
By-laws.

ANN EE8ClitlYPMANTI
SMARTZOINIE
The Ann Arbor/Ypsilanti SmartZone LDFA has no employees and conducted all
operations through negotiated service contracts. To this end, The Ann Arbor/Ypsilanti
SmartZone LDFA entered into Agreements with Ann Arbor SPARK for the July 1, 2007
— June 30, 2008 fiscal year with five measurable goals. Table 1 summarizes the actual
results delivered versus the goals and objectives established in the scope of work:
Table 1
Service Goals & Targets FY 2008 Results

Entrepreneurs Boot Camp
Conduct 2 Boot Camp sessions with
Contracted with Ann Arbor SPARK to November 1 & 2, 2007
minimum of 8 qualified companies 15 companies participated
develop curriculum and organize a
per session.
professional panel of qualified experts
sufficient to conduct two intensive multi-day April 24 & 25, 2008
workshops for early stage entrepreneurs. 15 companies participated
LDFA to provide $10,000 base support per ,
session and up to $10,000 per session to Cost of Service provided: $40,000
match participant tuition payments.
Cantillon Education Series
Contracted with Ann Arbor SPARK to Create 4 new modules: 4 of 5 planned new modules were
Develop three modules of a planned ten created and launched; one was
module web-based, interactive, high-tech Unit 1: Technology delayed due to speaker scheduling
entrepreneurship curriculum. Each module Commercialization and is currently 85% complete.
will integrate Michigan-specific training and Usage report on the first 2 modules:
case studies and utilize an open source Unit 5: Management Team
model. The complete curriculum shall take In total, there have been almost
an entrepreneur through critical elements of Unit 7: Growing Sales: Systematic 1,000 registrations, with about
defining and refining his/her business Selling one-third of those being
vision, testing its feasibility, incorporating completed.
micro deliverables for the entrepreneur to Unit 10: Entrepreneurial Firm 68 mentors have received training;
complete, and be reviewed and critiqued by Lifecycle 12 of those are fully trained in the
an assigned mentor. use of the tool
Cost of Service provided: $70,875
Business Networking Events

Contracted with Ann Arbor SPARK to host Sponsorship reimbursement for 50
50 events with majority of attendees
or sponsor events for entrepreneurs to defined as 'Entrepreneurs' events was provided. Many events
learn about building a technology business, were in held collaboration with
recruiting and retaining people, raising partnering organizations like GLEQ,
capital, writing a business plan, protecting SBTDC and U of M.
IP, and finding partners/customers.
SPARK reports 2,675 people attended
these events with 1,512 identifying
themselves as 'entrepreneurs' (57%).
Cost of Service provided: $25,000

ANN MOROI:N.0-1]
SMARTZONE'
Business Accelerator Services
120 new engagements in fiscal year
164 companies/business ideas received Phase I services in the fiscal year.
Cost of Service Provided: $30,188
95 companies received Phase II services in the fiscal year. Some of the companies served were existing BA clients from prior
Cost
ogrammatic fit, (b) solicit reviews of Service
from Provided: $37,994
advisors/consultants for high level reaction, (c) referral to Phase II or other programs or outside resources. Phase I n
, and (e) identification of criteria required for reconsideration. Phase II normally averages 10 hours per company.
for achievement of high value milestone(s), (b) addressing a strategic issue, (c) implementation of a milestone plan, (d) advancing the client on 1-3 strategi
97 companies received Phase III services in the fiscal year. Some of the companies served were existing BA clients from prior
Cost of Service Provided: $342,498
Of the 79 Business Accelerator companies Ann Arbor SPARK identified as providing

new opportunities for success this fiscal year, the following metrics are noteworthy5.
266 Full Time Equivalent jobs exist today

At least 35 new jobs were added this year
$4,991,500 of grants were awarded to 9 companies
$28,906,500 in private equity was raised by 14 companies (the largest recipient
accounted for $18 million of this amount)
University of Michigan technology is driving 6 companies
5
Source: Ann Arbor SPARK

ANN ANSORr(PSNLANTI
SMARTZONE"
Statement of Operations
INCOME STATEMENT
Revenues: FY 2008 FY 2008 FY 2008 FY 2009
Actual Adopte Variance Adopte

d (Over)/Under d
($) Budget Budget
($)
Tax Revenue $ 728,730 $ 770,000 $ (41,270) 950,492

Use of Prior Year Fund Balance 121,231 297,000 $ (175,769)
Investment Income 22,875 22,875 -
Total Revenues $ 872,836 $ 1,067,000 $ (194,164) $ 950,492
Expenditures:
Contracted Services $ 535,679 $ 410,000 $ (125,679) $ 681,900

Other Services $ 331,352 416,080 84,728 * 225,220
Undesignated Contingency - 221,920 221,920 -
Administrative Expense 5,805 19,000 13,195 27,500
Total Expenditures $ 872,836 $ 1,067,000 $ 194,164 $ 934,620

Net Increase/(Decrease) $ $ $ $ 15,872
Memo:
° *The positive divergence in "Other Services" resulted from the Business Incubator budgeted amount of $250,580
and actual expenditure of $190,373 due to the delayed opening and lower than projected expense.
° **Actual Fund Balance at Fiscal Year End $178,240.

ANN ARBORMS1LAN71
SMARTZONE "
Statement of Operations (continued)

Detail of Expenditures
Smart Zone LDFA
INCOME STATEMENT AND STATEMENT OF CHANGES IN FUND BALANCE
FY 2008 FY 2009
Actual Projected
Expenditures
($) ($)
Expenditures:
Business Accelerator 410,680 578,000
Business Incubator 190,373 120,420
Boot Camp 40,000 60,700
Marketing 70,104 50,400
Collaboration Networking 60,000
Networking Events 25,000 43,200
Cantillon Web Site Development 70,875 54,400
Legal & Administrative Support 5,804 27,500
Total Expenditures 872,836 $ 934,620
Ann Arbor/Ypsilanti SmartZone LFDA 2008 Annual Report / o

LDFA 1-27-09 Board Meeting Packet

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LDFA 1-27-09 Board Meeting Packet

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LDFA Board Meeting

Quarter Ended December 31, 2008

Ypsilanti Darryl Daniels Treasurer 6/30/2007 6/30/2011Jacobsen Daniels 734-961-3200 darrvleiacobsendaniels.com

Ex-officio Roselyn Zator MEDC (517)241-0771 zatorramichigan.orq

100 N. Fifth Ave., Ann Arbor, MI

Others Present: Michael Finney-SPARK, Scott Olson-SPARK, Greg Fronizer-SPARK,

APPROVAL OF THE AGENDA:

MOTIONS & RESOLUTIONS:

1. Minutes of the October 28, 2008 Board Meeting:

REPORT FROM COMMITTEES:

1.Nomination of Officer Position — Treasurer

Korybalski moved, seconded by Risser, to nominate Darryl Daniels as Treasurer. Motion

2.Committee Appointments — Contract/Budget, Nominating Recommendation,

The Chair made the following committee appointments:

Ad-hoc Committee for Re-design of SPARK Reporting Elements:

Ad-hoc Committee for Strategic Planning and Audit:

3.Update of Ann Arbor Angels:

5.FY 2009 Budget Reallocation:

1.Executed Copy of Attachment C to the FY 2008 Agreement between the

2.FY 2008 LDFA Annual

Report: Postponed until the next

REPORT FROM SERVICE PROVIDERS:

Tom Crawford, Recording Secretary

59 companies in Ann Arbor were served this quarter. Counting

Absolute 3D Imaging Mana Livonia

Carew Energy, Inc. Ann Arbor Ann Arbor Ann Arbor

Ann Arbor SPARK Q2, 2008/09 LDFA Report Page 1

Ann Arbor Business planning and network

Ypsilanti Eligibility requirement

Ann Arbor Newco

Ann Arbor New product commercialization help

Patient Toolp Ann Arbor Ann Arbor

The following companies were in Phase II

Boomdash Ann Arbor Market entry strategy for second

Ann Arbor Mobatech,

The following companies received Phase III level support

Market assessment and product mapping

Sentry Medical Technologies

Ann Arbor SPARK Q2, 2008/09 LDFA Report Page 3

Number and identity of companies that completed phase III engagements

EiPon Learning, LLC

Founding location, current location

SPARK would like clarity on:

if any 3. Hosted Event location limitations within

SmartZone Significant Deviation from Scope of

Anita GoodBee 511 Fairview Ypsilanti

Magic Bio1777 Highland Dr., Suite B

MKP Structural Design Associates, Inc.

Ann Arbor SPARK Q2, 2008/09 LDFA Report Page 5

Switchback LLC WindStar Energy

SPARK hosted 19 entrepreneurial events this

Five companies were tenants at SPARK

Cantillon Entrepreneurial Education

Mark Birac - GIDEON Last Login: July 28, 2008, 5:27 PM

Ann Arbor SPARK Q2, 2008/09 LDFA Report Page 7

Entrepreneur Education: Emerging Growth

Platform training, delivered by experienced entrepreneurial

To: LDFA Board

From: Scott Olson, Ann Arbor SPARK

Ann Arbor SPARK stimulates Washtenaw County's dynamic entrepreneurial community by

1. Targeted to entrepreneurs in early Growth (Systematization and Expansion Stages)

Phase II (Due Diligence) $100/hr

Hours per Client (Avq)

Memo: Total Phase II Hours 67 42 74 74 257

Phase Ill (Intensive Service) $100/hr Number of New Clients

Actual/Forecast 30.2 47.6 47.6 47.6 43.2