100% Ownership & equal financial partnership

Okay, here's the story if some folks can shed some light for me. In '03, a friend of mine had an idea to start a company, based on what I was helping him out in sales earlier. He ran down to the capital, registered to be a business, and said we'd split the profit 50/50. He's in sales, and I do computer programming. Basically, to make a web application handling sales for clients, and hiring telemarketing help for them. He says he wants to be 100% owner, because he doesn't want to have it taken away from him, and he wants to be able to have a final say on things if need be. He claims riches are going to flow in, etc.

Well, as I'm building our website and our application in the back-end, we're scheming, going over things, since day 0. Going over to potential clients, all while I'm forming the active core of the whole she-bang. NEVER signed ANYTHING! I built it with him and was there growing the company from scratch with him (and doing all the software building). No money investment on either side.

Well, after a couple years, we FINALLY started getting some money in. Our agreement was we each take out the same amount of money, even steven. And we get weekly equal "paychecks" based on the current & projected profits. And that's what we've done the past 3-4 years... but the total profits aren't split up at the end of the year -- we agree based on projected revenues & expenses and future investments, we take OUR owed money and re-invest it in the company. We always agreed I'm not his employee, and I don't work FOR him... I work WITH him.

Now, we're making decent money and are going to sign a contract. He wants me to be an Employee and upon termination, I would get my equal share of the "snapshot" profit sitting in the bank at the time. If I didn't do anything significantly wrong (ie cause for a firing), he would pay me -twice- the equal profit... ("buying me out"), but under both scenarios, it would be paid out over a weekly timeframe of current weekly pay (so the company wouldn't lose money on the spot).

He claims he's 100% owner, and I have no stake in the value of the company, and just a profit share. But I'm re-investing owed money back in, just like he is! Are phantom stocks a good way to resolve this? What do I deserve? What if he sells the company? He claims he gets 100% of the sale, but he'd be forced to "buy me out", and is willing to give me an extra "equal" percentage, too if that's done. But the point is -- why am I not an equal financial partner?

You get 50% of profits whenever you want them and you are not an employee if that is what you agreed as you said.

But you all need to sit down now and figure out your agreement in detail. You can own 50% of shares but give him a veto right or even all voting rights--a shareholders agreement can provide that.

There are many ways to structure or document it...