Charles Wyble 0144012332 moved over from previous repo, generalized some

2020-10-16 23:40:28 -05:00

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Introduction

In order to form a limited liability company pursuant to and in accordance with the Texas Business Organization Code (BOC), as amended from time to time, the Members hereby agree as follows:

Outside Capital Raising

insert any terms and conditions here....

perhaps mention sources of revenue, markets being pursued etc...

Non Equity and Non Debt based

Capital will be primarily sought through the pursuit of abc from xyz (but not limited to):

Restrictions on Capital Sources

Equity Based Raises

General Conditions and Requirements

Any grant of equity in exchange for outside capital investment in the Company shall be on the following (or substantially similiar) terms and conditions , and require unamious written consent of the Members and the Board Of Directors.

Terms and Conditions

[PUBLIC] Earnest Shared Earnings Agreement v1.3 SHARED EARNINGS AGREEMENT BETWEEN EARNEST CAPITAL AND Company.

Date

The following is a summary of the principal terms with respect to the proposed financing of _______________ (the “Company”). Except for the section entitled “Confidentiality,” this summary of terms does not constitute a legally binding obligation. The parties intend to enter into a legally binding obligation only pursuant to definitive agreements to be negotiated and executed by the parties. Amount of Investment

$___________

Shared Earnings By the 10th day of each quarter, the Company will pay the Investor the Percentage (as defined below) of: the Company's Founder Earnings (as defined below) less the proportional Founder Earnings Threshold (as defined below),
in the preceding quarter.

Shared Earnings shall continue until the Investor has received the Shared Earnings Cap.

The Percentage The Percentage shall be ___%.

Net Income Net Income means net income determined in accordance with GAAP.

Founder Earnings Founder Earnings means Net Income, adding back any founders' salaries.

Founder Earnings Threshold $________ per founder per year.

Shared Earnings Cap The Shared Earnings Cap will be __X the investment amount.

Equity Basis The Equity Basis will be the greater of (i) any unpaid portion of the Shared Earnings Cap, or (ii) the Amount of Investment.

Equity Conversion The Investor has the right, at its option, to convert the Equity Basis into the shares sold by the Company in its next fixed-price round of financing, at a price per share equal to the lesser of (i) the price of the securities sold in the next financing, or (ii) at a price per share calculated by dividing the Valuation Cap (defined below) by all issued and outstanding shares plus all shares reserved for issuance under any equity incentive plan at the time of the closing of the next financing.

Valuation Cap $_____________

Sale On a sale of the Company, the Investor is entitled to receive the greater of (i) any unpaid amount of the Shared Earnings Cap or (ii) the amount the Investor would be entitled to receive if it converted the Equity Basis at the Valuation Cap.

Information Rights The Investor is entitled to standard information and inspection rights including any records of accounting necessary to verify Shared Earnings calculations.

Board Observer The Investor will be entitled to attend Board Meetings as an observer upon its request, subject to executing a standard form observer confidentiality agreement.

Participation Rights The Investor will have the right to participate on a pro rata basis in subsequent issuances of Membership Interests, subject to customary exclusions.

Confidentiality Without the consent of the Investor, the Company shall not disclose these terms to anyone other than the Company's officers, directors, and key service providers.

COMPANY:

Name:
Title:
Date:
INVESTOR:

Name:
Title:
Date:

Creation of Additional Membership Interests

Additional Membership Interests may be created and issued to existing or new Members or Persons, and such other Persons may be admitted to the Company as Members in one or more classes, with the unanimous written conset of the Board Of Directors, and all Company Members on such terms and conditions as the Board Of Directors and Company Members may approve at the time of admission.

The creation of new Membership Interests, the admission of any new Members, or the creation of any new class or group of Members in accordance with this Agreement may

(i) result in the dilution of the Sharing Ratios of existing Members
(ii) be reflected as an amendment to this Agreement or a Supplement which shall be valid if executed by the entirety of the Board Of Directors, all existing Company Members and the new Member.

Rights to Company Information

In addition to the other rights specifically set forth in this Agreement, each Member is entitled to the following information under the circumstances and conditions set forth in the BOC:

true and full information regarding the status of the business and financial condition of the Company
promptly after becoming available, a copy of the Company's federal, state and local income tax returns for each year
a current list of the name and last known business, or mailing address of each Member and Director
a copy of this Agreement ,the Company's Certificate of Formation, and all amendments to such documents
true and full information regarding the amount of cash and a description and statement of the agreed value of any other property or services contributed by each Member and which each Member has agreed to contribute in the future, and the date on which each became a Member
other information regarding the affairs of the Company to which that Member is entitled pursuant to the BOC (including all the Company books and records)

Liability to Third Parties

No Member or Director, solely by reason of being a member or Director, shall be liable for the debts, obligations, or liabilities of the Company.

Management of the Company

Member authority

Company Members shall be fully empowered and authorized to implement the terms and provisions of the Board Of Directors approved Business Plan and Annual Budget on behalf of the Company, subject to the limitations set forth in Section "Major Decisions".

The Company may rely upon any action taken or document executed by the any Officer without duty of further inquiry and may assume that such Officer has the requisite power and authority to take the action or execute the document in question.

Annual requirements of members

Not later than February 1 of each year, the Members shall deliver to the Board Of Directors a detailed proposed business plan (the "Business Plan") for the Company's next succeeding fiscal year, which shall include the proposed budget for such year (the "Annual Budget").

Business Plan and Annual Budget

The Business Plan and Annual Budget shall contain such other information as the Members wishes to include and shall contain such information as the Board Of Directors may request.

The Board Of Directors will review the proposed Annual Budget and Business Plan, and subject to required revisions, approve the same for the next succeeding fiscal year no later than February 15 of each year.

The Business Plan and Annual Budget shall include projected revenues, expenses for the year in question, projected investment activities and such other matters as the Members and Board Of Directos may deem appropriate. If the Annual Budget provides for a contingency or similar line item, then unless otherwise specifically provided to the contrary therein, the Members shall be empowered to expend the amount set forth in such line item for the Company obligations. If the Business Plan is not approved by the date set forth above, then:

any items or portions thereof that have been approved will become operative immediately
with respect to the Annual Budget, the Members may expend, in respect of noncapital or recurring expenses in any quarter of the then current calendar year, an amount equal to the budget amount for the corresponding quarter of the immediately preceding calendar year, as set forth on the last approved Annual Budget after giving effect to any material changes to the Company or its properties during the prior year; however, if any contract approved as a part of any prior approved Annual Budget or Business Plan provides for automatic increases in costs thereunder after the beginning of the then current calendar year, then the Members may expend the amount of that increase.

Following submission and recording of the final version of the Business Plan and Annual Budget, the Members shall be authorized to take the actions, incur obligations and make the expenditures therein expressly set forth. The Members shall not have any authority or power to take any action on behalf of the Company that would constitute a Major Decision, unless it has been expressly approved in writing by the Board Of Directors.

Compensation of Members

Except as otherwise specifically provided herein, no compensatory payment shall be made by the Company to any Member for the services to the Company.

Officers

The Board Of Directors may from time to time, designate one or more Persons to be officers or agents of the Company (an "Officer"). Any Officer so designated shall have such title and authority and perform such duties as the Board Of Directors may, from time to time, designate. Unless the Board Of Directors decides otherwise, if the title is one commonly used for officers of a business corporation, the assignment of such title shall constitute the delegation to such Officer of the authority and duties that are normally associated with that office, subject to any specific delegation of authority and duties made to such Officer by the Board Of Directors. Each Officer shall hold office until his successor shall be duly designated and shall qualify or until his death or until he shall resign or shall have been removed. The salaries or other compensation, if any, of the Officers and agents of the Company shall be fixed from time to time by the Board Of Directors. Any Officer may resign as such at any time. Any Officer may be removed as such, with or without Cause, by the Board Of Directors. Designation of an Officer shall not, in and of itself, create contract rights.

Duty of care

Each Member shall discharge their duties in a good and proper manner as provided for in this Agreement. Each Member, on behalf of the Company shall enforce agreements entered into by the Company and conduct or cause to be conducted the ordinary business and affairs of the Company in accordance with good industry practice and the provisions of this Agreement.

Time and Capital Requirements of members

No Member shall be required to devote a particular amount of time or capital to the Company's business, but shall devote sufficient time to perform their duties hereunder.

Indemnification; Reimbursement of Expenses; Insurance

To the fullest extent permitted by law, and subject to the limitations set forth in this Section, and with, in each case, the Board Of Directors prior approval:

the Company may (at the Members sole discretion) indemnify each Director or Member for any Adverse Consequences that a Director or Member may suffer including, but not limited to, any Director, or Member who, is to be made a party to any pending or completed action, suit or proceeding ("Proceeding"), any appeal therein, or any inquiry or investigation preliminary thereto, solely by reason of the fact that he or she is or was a Director, Member and was acting within scope of duties or under the authority of the Company and was not in breach of agreements or violating fiduciary responsibility as determned by the Members;
the Company may (at the Members sole discretion) pay a Director or Member for expenses incurred by him or her:

(1) in advance of any deposition of a Proceeding to which such Director or Member is a party, and

(2) in connection with his or her appearance as a witness or other participation in any Proceeding.

Such indemnification may also include counsel fees.

The Company may indemnify and advance expenses to an employee or agent of the Company to the same extent and subject to the same conditions under which it may indemnify and advance expenses to the Director or Members under the preceding sentence.

The provisions of this Section shall not be exclusive of any other right under any law, provision of the Certificate or this Agreement, or otherwise.

Notwithstanding the foregoing, this indemnity shall not apply to actions constituting :

gross negligence
simple negligence
willful misconduct
bad faith
involving a material or fiduciary breach of this Agreement or the duties set forth herein,
any other reason in the Members and/or Board Of Directors discretion which reason, in the Board Of Directors or Members reasonable opinion, causes a substantial loss to the Company.

Option to Purchase Insurance

The Company may purchase and maintain insurance to protect itself and any Director, Member, employee or agent of the Company, whether or not the Company would have the power to indemnify such Person under this Section.

Limits of Coverage

This indemnification obligation shall be limited to $1,000.00 and no Member shall be required to make a Capital Contribution in respect thereof.

Accounts and Records

Records and Accounting; Reports; Fiscal Affairs

Proper and complete records and books of accounting of the business of the Company, including a list of names, addresses and interests of all Members, shall be maintained under the direction of the Board Of Directors at the Company's principal place of business. Each Member or his or her duly authorized representative may examine the books of account of the Company records, reports and other papers regarding the business and financial condition of the Company, make copies and extracts therefrom at such Member's expense, and discuss the affairs, finances and accounts of the Company with independent public accountants of the Company, all at such reasonable times and as often as may be reasonably requested.

The books and records of the Company shall be kept on a cash basis in accordance with generally accepted accounting principles applied on a consistent basis, and in all events shall conform with Generally Accepted Accounting Policies and Procedures.

Fiscal Year End

The fiscal year end of the Company shall be December 31.

Keeper of the Books

At all times during the term of existence of the Company, and beyond that term if deemed by Board Of Directors to be necessary, the CFO shall keep or cause to be kept the books of accounts referred to in this section and the following:

A current list of the full name and last known business or residence address of each Member and Director, together with the Capital Contribution and the share in Profits and Losses of each Member;
A copy of the Certificate of Formation, as amended;
Executed counterparts of this Agreement, as amended;
Executed Supplements and Consents, if any;
Any powers of attorney under which the Company takes action;
Copies of the Company's federal, state, and local income tax or information returns and reports, if any, for the six (6) most recent taxable years;
Financial statements of the Company for the six (6) most recent fiscal years; and
All Company records as they relate to the Company's internal affairs for the current and past four (4) fiscal years.

Member Examination of Records

Each Member, at its expense and under the circumstance and conditions set forth in the BOC, may at all reasonable times during usual business hours, audit, examine and make copies of account records, files and bank statements of the Company. Such right may be exercised by any Member or by its designated agents or employees.

Bank Accounts

All funds of the Company shall be deposited in one or more accounts with one or more recognized financial institutions in the name of the Company, at such locations as shall be determined by the Board Of Directors and CFO. Withdrawal from such accounts shall require the signature of such Person or Persons as the Board Of Directors and Members jointly designate.

Members' Tax Requirements

Within fifteen (15) days after the end of each taxable year, the Company shall forward to each Member all information necessary for the Members to complete their federal and state income tax or information returns, and a copy of the Company's federal, state, and local income tax or information returns for such year.

Capital Contributions and Finance

Membership Records

The

name
e-mail address
Capital Contributions
Percentage Interest

of each of the Members is set forth in Supplement 4.

Capital Contribution

The Board Of Directors and Members shall determine if Capital Contributions are required to enable the Company to invest in any Investment Entity or to operate its business. No Member shall have any obligation to make any Capital Contribution. Notwithstanding the foregoing, Company members, in their sole and absolute discretion, may at any time elect to fund or not fund further Capital Contributions with respect to the Company or any Investment, Investment Entity, without any liability whatsoever to the Company or any Member, even if such failure to contribute results in the loss of any opportunity or the forfeiture of any Investment or interest in any Investment Entity, or results in any other penalty or liability.

Return of Contributions

Except as expressly provided herein, no Member shall be entitled to the return of any part of its Capital Contributions, to be paid interest in respect of either its Capital Account or any Capital Contribution made by it or paid for the fair market value of its Membership Interest upon withdrawal or otherwise.

Unrepaid Capital Contributions shall not be a liability of the Company, or of any Member.

No Member shall be required to contribute or lend any cash or property to the Company to enable the Company to return any Member's Capital Contributions.

Member Guaranties

No Member shall undertake to guarantee or otherwise become liable for any obligation of the Company, or any Investment Entity.

Investments

Investments. All Investments by the Company shall be made on such terms and conditions as the Board Of Directors and Members may determine.

Distributions to Members

Distributions in General

From time to time, but not less often than monthly, the CEO and CFO shall determine (i) the amount, if any, by which the Company's funds then on hand exceed the Reserve Amount (such excess being referred to herein as "Excess Funds").

If the CEO and CFO determines that there are Excess Funds subject to distribution but that additional Capital Contributions will be required for future Company needs within the next two (2) calendar month period, then the CEO and CFO may elect to not make a distribution of such Excess Funds.

Not later than the 15th day of each calendar month, the Excess Funds derived from the business shall be distributed to the Company Members in accordance with their Sharing Ratios.

Withholding

The Company may withhold distributions or portions thereof if it is required to do so by any applicable rule, regulation, or law, and each Member hereby authorizes the Company to withhold from or pay on behalf of or with respect to such Member any amount of federal, state, local or foreign taxes that the Board Of Directors, CEO and CFO reasonably determines that the Company is required to withhold or pay with respect to any amount distributable or allocatable to such Member pursuant to this Agreement. Any amounts so paid or withheld with respect to a Member pursuant to this Section shall be treated as having been distributed to such Member and shall reduce any amounts otherwise distributable to such Member (either currently or in the future) pursuant to Section "Distributions to Members" or Section "Withdrawl, Dissolution, Liquidation and Termination".

The Company desires to issue Units in respect of Series I of the Company designated as “Profits Interest Units” to Participant in connection with Participant’s performance of services to or for the benefit of the Company.

Withdrawal, Dissolution, Liquidation and Termination

Dissolution, Liquidation, and Termination Generally

The Company shall be dissolved upon the first to occur of any of the following:

The sale or disposition of all assets of the Company and the receipt, in cash, of all consideration therefor, and the determination of the Board Of Directors and all Members not to continue the business of the Company directly or through an Investment Entity
The occurrence of any event which, as a matter of law, requires that the Company be dissolved.

Liquidation and Termination

Upon dissolution of the Company such Person as the Board Of Directors may designate shall act as liquidator. The liquidator shall proceed diligently to wind up the affairs of the applicable Company and make final distributions as provided herein. The costs of liquidation shall be a Company expense, as applicable. Until final distribution, the liquidator shall continue to operate the Company with all of the power and authority of the Board Of Directors, as applicable hereunder. The steps to be accomplished by the liquidator are as follows:

as promptly as possible after dissolution and again after final liquidation, the liquidator shall cause a proper accounting to be made by a firm of certified public liquidator, which shall cause a proper accounting to be made by a firm of certified public accountants acceptable to the Board Of Directors of the Company's assets, liabilities, and operations through the last day of the calendar month in which the dissolution shall occur or the final liquidation shall be completed, as applicable
the liquidator shall cause the Company to satisfy all of the debts and liabilities of the Company and (whether by payment or the making of reasonable provision for payment thereof)
all remaining assets of the Company shall be distributed to the Members as follows:
(a) the liquidator may sell any or all applicable Company property and the sum of:
(b) any resulting gain or loss from each sale plus
(c) the fair market value of such property that has not been sold shall be determined and (notwithstanding the provisions of Section Capital Accounts income, gain, loss, and deduction inherent in such property (that has not been reflected in the Capital Accounts previously) shall be allocated among the Members to the extent possible to cause the Capital Account balance of each Member to equal the amount distributable to such Member under this Section.
Company property as applicable shall be distributed to the Members as provided in Section "Distributions to Members".

Deficit Capital Accounts.

No Member shall be required to pay to the Company, to any other Member or to any third party any deficit balance which may exist from time to time in the Member's Capital Account.

Cancellation of Certificate.

In the case of the dissolution, liquidation and termination of the Company, on completion of the distribution of Company assets, the Board Of Directors (or such other Person as the BOC may require or permit) shall file a Certificate of Cancellation with the Secretary of State of Texas, cancel any other filings made pursuant to Section "Qualification in Other Jurisdictions". and take such other actions as may be necessary to terminate the existence of the Company. In the case of the dissolution, liquidation and termination of the Company, the CEO shall file such certificates as may be required by the BOC or other law in respect thereof.

Board Oversight of the Company

The Company itself and it's Members shall be overseen by Indepdent Directors, to be known as the “For Profit Committee”. The committee shall be governed by the For Profit Committee Charter. Changing the Committee Charter requires a unamious vote of written consent by the LLC members.

Profits, Losses and Distributive Shares of Tax Items

Members Bound

Members shall be bound by the provisions of this Section in reporting their shares of Company income for income tax purposes.

Tax Returns

The Board Of Directors shall cause to be prepared and filed all necessary federal and state income tax returns for the Company, including making the elections described in Section "Tax Elections".

Each Member shall furnish to the Board Of Directors all pertinent information in its possession relating to Company operations that is necessary to enable such income tax returns to be prepared and filed.

Tax Elections.

The following elections shall be made on the appropriate returns of the Company:

to adopt the calendar year as the Company's fiscal year;
to keep the Company's books and records on the income-tax method;
if there is a distribution of Company property as described in section 734 of the Code or if there is a transfer of a Company interest as described in section 743 of the Code, upon written request of any Member, to elect, pursuant to section 754 of the Code, to adjust the basis of Company properties; and
to elect to amortize the organizational expenses of the Company ratably over a period of twelve (12) or sixty (60) months as permitted by section 709(b) of the Code.

No election shall be made by the Company or any Member to be excluded from the application of the provisions of subchapter K of chapter 1 of subtitle A of the Code or any similar provisions of applicable state laws.

Tax Matters Partner.

The Board Of Directors and CFO collectivley shall be the "tax matters partner" of the Company pursuant to section 6231(a)(7) of the Code. As tax matters partner, they shall take such action as may be necessary to cause each other Member to become a "notice partner" within the meaning of section 6223 of the Code. Such Member shall inform each other Member of all significant matters that may come to its attention in its capacity as tax matters partner by giving notice thereof within ten days after becoming aware thereof and, within such time, shall forward to each other Member copies of all significant written communications it may receive in such capacity. Such Member shall not take any action contemplated by sections 6222 through 6232 of the Code without the consent of the Board Of Directors. This provision is not intended to authorize such Member to take any action left to the determination of an individual Member under sections 6222 through 6232 of the Code.

Allocations on Transfer of Interests.

The Company income, gain, loss or deduction allocable to any Member in respect of any interest in the Company which may have been transferred shall be allocated during such year based upon an interim closing of the Company's books as described in the first sentence of Treasury Regulations § 1.706-1(c)(2)(ii), taking into account the actual results of Company operations during the portion of the year in which such Member was the owner thereof, and the date, amount and recipient of any distribution which may have been made with respect to such interest.

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The Profits Interest Units below are issued to Party on the terms and conditions set forth in this Agreement.

Party shall make no Capital Contribution to the Company in connection with the Profits Interest Units issued hereunder and, as a result, Parties Capital Account balance in the Company immediately after their receipt of the Profits Interest Units shall be equal to zero.

Notwithstanding anything to the contrary contained in the LLC Agreement or set forth herein, with respect to the rights of Party related to, in respect of and in connection with the Company, Board Of Directors and other Members, Party and the Profits Interest Units owned thereby shall have only a right to share in or be allocated Net Profits and Net Losses and receive or share in distributions of the Company as set forth in the Agreement.

Party agrees to execute a counterpart signature page to the Agreement, in the form attached hereto and shall thereupon become a Member as of the Effective Date.

The Profits Interest Units acquired pursuant to this Agreement shall be fully subject to the terms and conditions contained in this Agreement, and Party hereby acknowledges that Participant has read and understands the terms and conditions contained therein.

Closing

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, has duly executed this

Company NDA
Company IP Assignment
Company Operating Agreement

Signature Page

The parties sign this Agreement on the date below by their electronic signatures.

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