This document outlines the terms of a shareholder agreement between Theresa Mulhern, the majority owner of Pure Imagination Early Learning Center II, and several individuals purchasing ownership shares in the childcare center. The key points are: 1. The individuals purchasing shares will have equal interest and rights of survivorship. 2. Shares representing 1% ownership are priced at $5,000 each and must be paid in full within 180 days. 3. No individual can purchase more than 15% of shares, and no more than 25% of shares will be sold in total. 4. The shares entitle holders to 6 months of free childcare that then transitions to a 25% discount

1. Shareholder Agreement – PIELC II
This document is to serve as the written agreement between Theresa Mulhern, who is the Majority
Owner of Pure Imagination Early Learning Center, Location II, and the following individuals, who wish to
purchase shares in the Childcare Center located @ 720 S 68th Street
Individual 1:_______________________________________________________
Individual 2:________________________________________________________
The above listed individuals share an equal interest in the shares purchased and have right of
survivorship. Should any one individual pass away, the ownership will revert to the others unless
specified otherwise in a legal will or trust.
The shareholders (individuals listed above) agree to the following terms of purchase:
1. Each 1% of the company is priced @ $5000 US. The share will not be distributed until funds are
collected, and the final incorporation paperwork is complete, which will be finished prior to the
opening of the center, which is scheduled for November 2 1stth 2010. Until the incorporation
paperwork is complete this document will serve as the legal and binding agreement between
parties.
2. The payment for each 1% purchased must be made in one payment. If purchasing more than
1%, the payments may be spaced out up to 60 days between payments, but each payment must
be for a full 1%. No more than 180 days may be taken for the full purchase to be completed. No
shares may be purchased after January 29th, by which time all shareholder agreements must be
signed for the sale to be considered final. Should payment not be delivered according to the
payment terms, ownership of shares will revert back to the corporation.
3. No-more than 15% may be purchased by one individual. No more than 25% will be sold in total.
4. Each 1% share sold will be applied to the first 6 months of care for one child. After 6 months, the
shareholder will resume childcare payments @ 75% of their current childcare rate. Shareholders
will be subject to the annual rate increases which are applied to every family in care equally. If
everyone’s rate increases by $5 per week per child, the shareholders will have the same
increase. Parents with more than one child can split the care between their children, making it 3
months for 2 children or 2 months for 3 children etc..
5. Any shareholder who wishes to sell their shares must offer them back to the company @ 200%
of fair market value based on the value of the business before placing them on offer publicly. In
order to maintain the integrity of the childcare, shares may not ever be sold to any individual
with certain criminal offenses in their history which include violent felonies, convictions for child
abuse, sexual abuse or anyone on the sex offender registry, as these individuals could not
participate in shareholder meetings which are held in a childcare center. Although the State of
Iowa does allow sex offenders to own childcares, we do not them to sit on our parent advisory
board.

2. 6. Should a shareholder be convicted of a violent felony or Sex offense, they will have the following
options:
a. Sell their share back to the childcare for 200% of FMV
b. Sell their share to another daycare parent currently enrolled
c. Sign over their share to someone eligible with no offenses, such as their spouse or child
7. All shareholders will agree to a child abuse check done by the State of Iowa upon purchase, and
a check of their criminal record. Misdemeanors, traffic and civil/credit will be completely
disregarded, as they are not safety issues. Every 2 years another check will be done. The results
will be confidential and not disclosed at meetings or otherwise.
8. Bi-Annual Parent advisory council meetings will be held in order to keep everyone apprised of
how the center is functioning. The first Thursday of July and the first Thursday of December will
be the meeting dates. The time of the meeting will be posted at the center for 2 weeks prior to
allow for other individuals to attend. The shareholders will receive notice through email or
postal mail. The PAC will be comprised of Theresa Mulhern, Amanda Lechtenberg and all parent
shareholders.
9. The parent advisory meeting will have the following schedule:
a. 30 minutes at the beginning will be for all parents from both centers to have a chance to
address the PAC about concerns with their child’s care or other issues. This might
include parents who are being terminated, parents who feel they are not satisfied or
parents who have ideas for how the centers could be improved. If unable to attend,
parents may send written correspondence which will be read and responded to within
24 hours of the meeting.
b. The next item addressed will be the financial report. The information given will include
the income of the center for 6 months, the money paid for all bills and the money owed
in Accounts receivable. Names of parents owing will not be disclosed.
c. The next item addressed will be problems which need resolved. This may include voting
on termination notices for families, voting on purchases of items over $1000.00 and
setting up groups to research information necessary for the center’s growth.
d. The next item addressed will be inspections and licensing. The shareholders will receive
copies of all inspections held in the last 6 months, and an explanation of any violations
or issues. Written confirmation that any violations were corrected will be provided and
if necessary a center inspection of the problem area can be conducted during the
meeting.
e. Last but not least we will enlist help with projects which need done in an effort to save
money. This may include painting, repairs, cutting out projects etc…
f. After these items have been addressed, all visitors will be dismissed for closed session.
Items we will cover here will be staff disciplinary actions, health and safety issues which
fall under HIPPA and other issues which have confidentiality regulations.
10. Parent Advisory meetings will include dinner and childcare for the shareholders and Invited
Accessory personnel. Visitors may pay for childcare and dinner if they wish, as long as they
register ahead of time.

3. 11. Accessory Personnel are other individuals vital to the health and growth of the center. These
individuals will be invited to attend all of the PAC meetings, and may be asked to stay for the
closed session if necessary. These individuals include, but are not limited to:
a. Steve Peterson, who is a 25% owner in PIELC I, which is the location on Vine Street.
b. Scott Jarvis, VP of West Bank, our banker.
c. Ryan Flynn or Kevin Yeager, both CPA’s who will be working with us.
d. Amy Kariados, our Visiting Nurse Consultant
e. The staff Nurse at the center
f. Kristy Vasey, our Childcare Resource and Referral Center Consultant
g. Cheryl Hickle, our licensing worker for DHS
h. Ty Noard, a child protective worker for DHS
i. Our USDA food program inspector
j. Amanda Lechtenberg, Director for the Center on Vine Street
k. Other experts as we need them for topics which come up.
12. Each Shareholder will have 4 voting points for each 1% ownership, so that if a family owns a
share they each have a say. Theresa Mulhern will have 40 voting points. Amanda Lechtenberg
will have 20. This ensures that shareholders have a large say in the way things are run.
13. Accessory personnel will be given voting points based on their involvement. Their voting points
will be disclosed at the first meeting and voted on by the shareholders. Their voting points will
only be used for items under their prevue. For example, the nurse consultant may vote on issues
dealing with health and safety, but not issues dealing with bills and purchases. Every meeting
agenda will place items into categories, and every AP will have a list of their categories. This will
allow us input from the experts that we cannot then ignore. AP will be allowed to send a proxy
in their place to meetings, as will shareholders.
14. At the July meeting, each shareholder will receive an accounting of their personal childcare
charges and personal estimated profit for the six month period. At the December meeting a full
year’s report and profit checks will be provided for each family. If there is balance due of less
than $500 for childcare after profits, the debt may be rolled into the next 6 month cycle. If there
is a balance of more than $500, the shareholder will have 300 days to pay their account down to
a $500 balance. Once there are no children in care for that shareholder, all funds will be
dispensed by check to the person or persons designated on the shareholder paperwork.
15. Should Theresa Mulhern wish to sell the childcare, shareholders will be given an opportunity to
vote and the price and sale will be made open to all shareholders for review. At the closing of
sale, checks will be cut to each shareholder for their portion of the sale price, after all of the
closing costs and realtor fees.
16. Shareholders agree that confidential information which is disclosed during meetings will not be
shared with anyone else ever. This could include medical information, bad checks, abuse
allegations etc…
Theresa Mulhern agrees to the following terms:
1. Mrs. Mulhern will serve as acting director for the facility without compensation until the center
reaches 40% enrollment or 6 months, whichever comes first. As soon as the center reaches 40%

4. enrollment, a letter will be sent to all shareholders and Theresa will begin drawing 25% of her
full capacity salary. At full capacity Mrs. Mulhern will draw $45,000 per year in salary for a 50
hour work week. At 60% enrollment Mrs. Mulhern will go up to 50%. At 80% enrollment she will
draw 75% and at 100% enrollment (185 kids) she will draw 100% salary. After one year, Mrs.
Mulhern will be allowed 2 week’s vacation per year which will be taken no more than one week
at a time and 5 sick days paid.
2. Mrs. Mulhern will not require health, dental or vision insurance. As a benefit of employment she
will not accrue a childcare bill for her 2 youngest children when in attendance. They are not built
into the 185 full enrollments and will not be counted as enrolled children for purpose of her
salary.
3. Shareholders who work for the center will be paid wages separate from their shareholder profit
based on their job and experience. They may select to have their childcare deducted from either
their shareholder profits or paycheck.
4. Mrs. Mulhern agrees to have all reports and agendas ready one week prior to the bi-annual
meetings and available for shareholders to review before the meeting.
5. Mrs. Mulhern agrees to provide a copy of the childcare center’s taxes for the shareholders no
later than March 30th of each year. Shareholders can use their December statement for their
tax returns.
6. Mrs. Mulhern agrees to notify the shareholders by email or phone within 24 hours of any
emergency to include facility issues, serious injury or death to a child or other critical issues, so
that a meeting can be called to discuss the problem.
7. Mrs. Mulhern agrees that each shareholder has the same rights and privileges as any other
parents and that shareholder’s children may attend either location of Pure Imagination ELC.
Parents wishing to switch to another location must give 1 week’s notice, and there must be an
opening at the other location.
8. Mrs. Mulhern agrees that should the center @ 86th street fail within one year, childcare will be
provided at the Vine street location for each shareholder until their 6 months of paid time has
been used up and 6 month of free time has been given as well. After one year shareholders will
be considered fully vested and no compensation will be given. As the center will be incorporated
before opening, shareholders will not be personally liable financially for the childcare center.
9. Mrs. Mulhern agrees that liability insurance will be carried on the center at all times which
covers the center for a minimum of 1 million per occurrence and 3 million aggregate.
10. Mrs. Mulhern agrees to be a zealous advocate for the shareholders, to include aggressively
marketing the center, working to ensure the center maintains integrity and is portrayed in a
favorable light by the community and the clients, and to pursue additional avenues of income
and profit for the center which are consistent with the childcare image. She agrees to behave in
a manner which is professional and pursue education and information to further her expertise.
11. Mrs. Mulhern agrees to keep all shareholder personal information confidential.
These terms are outlined as a clear expression of both parties’ intentions and commitment. This
agreement is legal and binding. Both parties agree that should there be a disagreement or breach of
contract, arbitration will be used and the bill paid by the prevailing party.

5. Having read and understood the terms and conditions above, we the above listed individuals wish to
purchase the following:
_______% of ownership in Pure Imagination ELC II. The payment for these shares will be as follows:
Payment 1: $________________ within 5 business days of this agreement
Payment 2: $________________ on or before April 1st, 2010
Payment 3: $________________ on or before June 5th, 2010
Payment 4: $________________ on or before August 10th, 2010
Payment 5: $________________ on or before September 15th, 2010
Payments cannot be made for a fraction of a percent. Therefore payments must be made in $3500
increments. Payments for less than $5000 will be held and returned if the rest of the funds are not
delivered.
A receipt will be issued within 48 hours of receipt of payment.
Signed:_____________________________________________ Date:___________
Signed:_____________________________________________ Date:___________
Signed:____________________________________________ Date:__________
Signed:____________________________________________ Date:___________
Signed:____________________________________________ Date:___________
Notary: ________________________________________ Signed before me this __________ day of
_________, 2010 at __________ AM/PM in _______________, Iowa . My commission expires:
______________________ .
Notary Signature and seal :_________________________________________________