5) Investment Agreement for Limited Liability Company (LLC) 6) Memorandum of Understanding 7) Operating Agreement for a MemberManaged Limited Liability Company 8) Letter of Intent to Purchase a Business 9) Mutual Non-Disclosure Agreement
Chapter One
TEMPLATE ONE: ASSIGNMENT AND TRANSFER OF LLC MEMBERSHIP INTERESTS
This Agreement (hereinafter the Agreement) is entered into and effective as of [insert date] by and between by and between the following parties: [Insert Name of Transferor/Assignor] (hereinafter Assignor) with a principal business address of _________________________; and [Insert Name of Transferee/Assignee] (hereinafter Assignee) with a principal business address of _______________________ _______ ____,collectively referred to as the Parties.
Whereas, the Assignor is the holder of a _________ (___%) percent membership interest (the Membership Interest) in __________________ (the Company), a company incorporated pursuant to the laws of the State of _______________ and having its principal place of business at _____________________________; And whereas the Assignor has agreed to assign, transfer and set over onto the Assignee the Membership Interest and all of the Assignors right, title and interest therein and thereto; and And whereas, the Assignee has agreed to assume all of the disclosed obligations of the Assignor under the Membership Agreement with the Assignor (hereinafter Membership Agreement) annexed hereto as Exhibit A, as if the Assignor were the original party there under in place and stead of the Assignor.
Now therefore, in consideration of the premises and the exchange of mutual covenants set out herein and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties agree as follows: 1. Assignment by Assignor
The Assignor hereby assigns, transfers and sets over unto the Assignee, free of all encumbrances, for its/his/her own use and benefit, effective from and including the Effective Date, all of its/his/her right, title and interest in and to the Membership Interest, together with any and all benefits, advantages, privileges and rights relating thereto or arising and flowing therefrom. 2. Assumption by Assignee
In consideration of the foregoing assignment of the Membership Agreement by the Assignor to the Assignee, the Assignee hereby assumes and covenants to the bound by all of the Assignors disclosed
obligations, covenants, representations and warranties and liabilities arising or flowing from and under or in any way connected with the Membership Agreement effective from and including the Effective Date and covenants and agrees with the Assignor and the Company to duly keep, observe, perform and comply with or cause to be kept, observed, performed and complied with all such obligations and all stipulations, restrictions, provisions and conditions set for in and in accordance with the provisions of the Membership Agreement as fully as if the Assignee was an original signatory thereto in the place and stead of the Assignor. 3. Assignors Representations and Warranties The Assignor represents and warrants that as of the Effective Date: A. The Assignor has the power and authority to execute and deliver this Agreement and to perform its obligations hereunder, all of which have been duly
authorized by all requisite action. This Agreement has been duly authorized, executed and delivered by it and constitutes its valid and binding obligation, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. B. The Assignor represents and warrants to the Assignee that the Membership Agreement is in good standing and without default by the Assignor as of the Effective Date. The Assignor further represents that all dues, membership fees, contract payments, penalties, fines, assessments, and the like, and any other payments which may be required to be paid by the Assignor to the Assignor are current as of the Effective Date. C. No authorization, registration, consent or approval of any governmental authority
or other individual, partnership, corporation, joint stock company, unincorporated organization or association, trust or joint venture, or a governmental agency or political subdivision thereof is necessary for the execution, delivery or performance of this Agreement or the consummation of the transactions contemplated hereby by it. D. The Assignor owns the Membership Interest beneficially and of record, free and clear of any liens, claims or encumbrances (except for any encumbrances created on behalf of the Assignee hereunder) (collectively, "Encumbrances"). The Assignor has not entered into any agreement, arrangement or other understanding (i) granting any option, warrant or right of first refusal with respect to the Membership Interest to any third party, (ii) restricting its right to sell the Membership Interest to any third party, or (iii) restricting any other of its rights with respect to the Membership Interest. It has the absolute and unrestricted right, power and capacity to assign and transfer the
Membership Interest to the Assignee free and clear of any Encumbrances (except for any encumbrances created on behalf of the Assignee hereunder). Upon execution of this Agreement, the Assignee shall acquire good, valid and marketable title to the Membership Interest, free and clear of any Encumbrances (except for any encumbrances created on behalf of the Assignor hereunder. E. Except as otherwise set forth herein, no material suits, actions, or proceedings arepending, or to the knowledge of the Assignor are threatened against or affecting the Assignor or its property. 4. Assignor Released The Assignor is hereby released from its/his/her obligations and covenants in the Membership Agreement with the Company. 5. Further Assurances
Each of the parties hereto shall execute and deliver all such further documents and do such other things as the other party may
reasonably request to give full effect to this Agreement. 6. Successors and Assigns
The Parties agree that this Agreement shall be binding upon each of its successors and assigns and that this Agreement may not be assigned to any other third party, without the written consent of Assignor, which shall not be unreasonably withheld. 7. Amendments
No modification, supplement, termination, extension, waiver or amendment to or of this Agreement (or any attachments or exhibits) or any of its provisions may be made, and any attempts, shall not be binding unless agreed to by the Parties in writing, by pen on paper, by duly authorized representatives of the Parties. There shall be no oral agreements. Electronic writings, including E-mail messages, text messages, tweets, instant messages, etc., their contents, and any attachments, and any prior or subsequent communications including oral
discussions or negotiations concerning some or all of the Agreement, or anything at all, are not intended to represent and do not reflect an offer or acceptance to enter into (or amend, modify, revise, terminate, abrogate, extend, waive a breach or damages of, etc.) a binding contract, transaction or agreement, and are not intended to and do not bind any party to this Agreement. The parties may determine that they wish to attempt to negotiate a written agreement that is binding that amends, modifies, revises, terminates, abrogates, extends, waives a breach or damages of, this Agreement , however, the parties intend and will continue to intend that there shall be no contract formations, waivers, modifications, abrogations, extensions, amendments, etc., without one or more formal written documents executed non electronically but with holographic signatures by hand with ink pen on paper signed by a duly authorized representative of each of the parties (aka wet signatures or pen on paper signatures). Any communication to the contrary in the past, now or future, is not binding on any party to this Agreement.
Absent the written express statement to the contrary as set out below, it is the intention of the Parties, and the Parties agree not to conduct any contract formation, modifying transaction, amend any agreement, abrogate any agreement, grant any extension, or waive any right by electronic writing. Any alleged communication to the contrary is not binding on any party. The written express statement mentioned above ("electronic express statement") shall be the following, or that which expresses the same intent as the following: I expressly intend that this shall constitute an electronic signature to a writing thereby [forming, modifying, amending, abrogating, granting an extension in relations to, or waiving a breach to] a binding [contract or agreement]. For purposes of any agreement, a formal written document on paper with wet signatures (pen on paper signatures) and otherwise consistent with the requirements herein, which is transmitted by facsimile, the internet, or any cell/wireless/mobile telephone system, or the like, as an image or .pdf document is valid when signed by pen on paper by all parties to
be charged. The Parties expressly state and intend that Emails / texts / tweets / instant messages, etc., sent or received - even when there are multiples or combinations of these do not include all of the essential or material terms required in order for there to be a legally binding agreement or contract between the Parties, and are ineffective for purposes of contract formation, modification, amendment, waiver, etc., without the electronic express statement mentioned above. No addition to or modification or consensual cancellation of this agreement, notice or statement shall be binding unless made in one or more formal written documents consistent with the pen on paper or "electronic express statement" requirements herein. Any purported communication to the contrary is not binding. 8. Waiver
No waiver of any breach of any provision of this agreement, notice or statement shall constitute a waiver of any prior, concurrent or subsequent breach of the same or any other
provisions hereof, and no waiver shall be effective unless made in writing and wet signed by pen on paper or electronic express statement as set out herein. [Authors note: If you wish to allow emails that reflect some formality, and that you have given adequate and due consideration to the matter, to be used for amendments, for example, to add to a schedule of deliverables, this version of the document does allow formal emails with special language in them to be used. Therefore if you do not wish to allow that, and only wish for there to be signatures by pen on paper you may wish to edit this document by removing the portions in this section that are highlighted in gray. If you allow this you will want to remove the gray highlight from the final version of the Agreement before you print it. And then you will want to delete this note.] 9. Notices
Any notice required, permitted to be given, or otherwise given hereunder may be effectively given by letter delivered either by personal delivery, registered mail certified return receipt requested, postage prepaid, or delivered by overnight delivery service, or by facsimile machine upon receipt from the sender of a confirmation of receipt, or by other electronic means so long as the recipient has acknowledged receipt (for purposes of this section an automatically generated receipt confirmation does *not* qualify as acknowledgement of receipt), addressed to the recipient as follows: In the case of Assignor: Assignor Attn: _____________ Tel: __________________ Fax: __________________ Email: _______________________ In the case of Assignor: Assignee Attn: _____________ Tel: __________________
Fax: __________________ Email: _______________________ 10. Governing Law This Agreement shall be governed by and construed in all respects in accordance with the laws of the State of ___________________ as they apply to agreements entered into and to be performed by the Parties herein. 11. Venue
The Parties further agree that venue of any legal action or claim hereunder shall be exclusively in and with a court having jurisdiction over __________ County, __________ , if disputes are to be resolved in Court, if at all, as set out below, or where arbitration or mediation is to occur, if at all, as set out below. The Parties further agree and hereby consent to, and waive all defences of lack of personal jurisdiction and forum non conveniens with respect to, venue and jurisdiction in the State of ________ and
_________County. Notwithstanding the foregoing either party may seek equitable, preliminary, or permanent injunctive relief from any court of competent jurisdiction, which rights and remedies shall be cumulative and in addition to any other rights or remedies at law or in equity to which either party may be entitled. 12. Entire Agreement This Agreement shall constitute the entire agreement between the Parties and will supersede all prior agreements, representations, warranties, statements, promises, information, arrangements and understandings, whether oral or written, express or implied, with respect to the subject matter hereof. The Parties shall not be bound or charged with any oral or written agreements, representations, warranties, statements, promises, information, arrangements or understandings not specifically set forth in this Agreement. This Agreement has been carefully drafted and the Parties are convinced that this document
completely and clearly expresses their intentions. Further, the Parties place great value on the quick and inexpensive resolution of any dispute that may arise between them concerning this contract or the subject hereof. Therefore, the Parties agree that: (i) all disputes concerning this Agreement or the subject matter hereof shall be resolved as provided herein; (ii) this Agreement constitutes the sole agreement among the Parties, and supersedes any and all prior or contemporaneous oral or written agreements, promises, or understandings among them, pertaining to the matters contemplated in this Agreement; (iii) no express or implied representations, warranties, or inducements have been made by any party to any other party except as set forth in this Agreement; (iv) this Agreementmay not be amended, added to, or altered except by a writing duly executed by each of the Parties hereto, as set forth herein; and (v) no parole or extrinsic evidence whatsoever may be introduce or considered in any judicial or arbitration proceeding involving this agreement, for any purpose, including to interpret, explain,
clarify, or add to this Agreement, except in any instance in which a provision is found in whole or in part to be invalid, illegal or unenforceable and subject to severability and the arbitrator or court undertakes to re-write or construe the severed provision as closely as possible to conform to the intent of the Parties. 13. Severability Each of the provisions of this Agreement (and each part of each such provision) is severable from every other provision hereof (and every other part thereof). In the event that any provision (or part thereof) contained in this Agreement or the application thereof to any circumstance shall be invalid, illegal or unenforceable, in whole or in part, and to any extent: (i) the validity, legality or enforceability of such provision (or such part thereof) in any other jurisdiction and of the remaining provisions contained in this Agreement (or the remaining parts of such provision, as the case may be) shall not in any way be affected or impaired thereby; (ii)
the application of such provision (or such part thereof) to circumstances other than those as to which it is held invalid, illegal or unenforceable shall not in any way be affected or impaired thereby; (iii) if possible, such provision (or such part thereof) shall be construed or re-written as closely as possible to conform to the intent of the parties, in which instance parole or extrinsic evidence may be considered to do so; (iv) if not susceptible to such construction, such provision (or such part thereof) shall be severed from this Agreement and ineffective to the extent of such invalidity, illegality or unenforceability in such jurisdiction and in such circumstances; and (v) the remaining provisions of this Agreement (or the remaining parts of such provision, as the case may be) shall nevertheless remain in full force and effect.
14. Headings
The headings for sections herein are for convenience only and shall not affect the meaning of the provisions of this Agreement. Such headings shall not be deemed to govern, limit, modify or in any other manner affect the scope, meaning or intent of the provisions of this Agreementor any part thereof, nor shall they otherwise be given any legal effect. 15. No Unannounced Modifications to Signature Documents The Parties have reviewed (and, if applicable, negotiated) this Agreement, in its electronic form. They desire to sign the hard-copy version without having to re-read it to confirm that no unauthorized changes were made before the final printout. Accordingly, by signing and delivering this Agreement, and/or any exhibit, amendment, or addendum to it, now or in the future, each Party represents that it has not made any changes to any other draft provided to (or by) the other party, unless the signing Party has redlined the changes or otherwise
expressly called them to the other partys attention in writing. (Non-substantive format clean-up and correction of immaterial spelling errors need not be redlined.) 16. Waiver A waiver by either party of any provision of this agreement in any instance shall not be deemed to waive it for the future. A Partys failure to insist on strict compliance with any of the terms of this agreement on one or more occasions is not a waiver of any rights or obligations under this Agreement. 17. Survival Those sections of this Agreement, that should logically survive termination or expiration of this Agreement, shall survive termination or expiration of this Agreement.
18. Construction
If there is any controversy regarding this agreement or the terms of this Agreement, this Agreement, will be deemed to have been drafted by all parties herein and will not be strictly construed as against any party. The parties have been made aware of their right and opportunity to consult with independent legal counsel and have either done so, or knowingly waive the right to do so. Further, the parties acknowledge that they have engaged in negotiations to reach this Agreement. 19. Counterparts This Agreement, may be executed in several counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one and the same agreement, including the judicial proof of any of the terms hereof. A photocopy, fax copy, or electronic image copy, which depicts the inclusion of one or more signatures by pen on paper, shall be deemed an original.
20. Attorneys Fees In the event of litigation or arbitration relating to the subject matter of this Agreement, the prevailing party shall have the right to collect from the other party its reasonable costs and necessary disbursements and attorneys' fees incurred in enforcing this Agreement. 21. Authority Each person signing warrants and represents that he or she has full authority to enter into this Agreement, and that all representations and warranties in this Agreement, are true and correct. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, as of the day and year first written above. Assignor Assignee
Name: __________________
Name: __________________
sufficiency of which is hereby acknowledged, the parties agree as follows: 1. Sale of Assets Subject to the terms, conditions and agreements provided elsewhere in this Agreement, Buyer agrees to purchase and Seller agrees to sell, as of the Closing Date (as that term is defined herein), all of the assets held by Seller together with the Business of Seller as a going concern, including, but not limited to, its goodwill, franchises, contract rights, trademarks and trade names, and cash, except any funds withheld from employees of Seller for taxes as of the Closing Date. 2. Purchase Price The purchase price shall be _______ Dollars, together with the assumption by Buyer of certain obligations and liabilities of Seller as provided in Section 4 of this Agreement and subject to the adjustments set forth in Section 5 of this Agreement. 3. Audit; Financial Statements
CPA FIRM NAME, certified public accountants, shall, at the expense of Buyer, make an audit of the books and records of Seller as of the close of business on DATE (the Closing Date) and shall furnish the parties with a certified balance sheet of Seller as of the close of business on that date (the Balance Sheet) and a statement of income and earnings retained in the business of Seller for the period ending on that date (the Income Statement). 4. Assumption of Debts and Obligations Buyer shall assume (a) all of the liabilities shown as liabilities on the balance sheet to be prepared as provided in this Agreement, except liabilities for taxes (other than taxes the value of which have been included in inventory and are shown as accounts payable or accrued taxes on the balance sheet), and withheld funds of employees; (b) liabilities asserted by customers relating to goods shipped on or after DATE; and (c) all contracts, commitments, and obligations incurred in the ordinary course of business that are
specifically referred to or are described in and meet the requirements and conditions as set forth in Section 8 of this Agreement. Sellers Warranties Seller represents and warrants that: (a) Seller has delivered to Buyer an accurate list and summary description of all patents, patent applications, trademarks, trade names, and copyrights presently owned or held by Seller as set forth in Exhibit A, which is attached and incorporated by this reference; and (b) Seller has no presently existing contracts or commitments, including leases of real or personal property extending beyond the Closing Date, except as set forth in Exhibit B, which is attached to and incorporated in this Agreement. 5. 6. Operation of Business for Account of Buyer Beginning on DATE and until the Closing Date, Seller shall use the assets to be purchased to continue to operate the Business for the account of Buyer. In that connection Seller shall establish and
maintain separate books of account as soon as practicable and convenient, which shall be transferred to Buyer at the Closing Date. All profits and losses during this period shall be for the account of Buyer. All assets received or acquired by Seller during that period shall be transferred to Buyer and/or accounted for at the time of closing. All liabilities incurred by Seller during that period shall be assumed by Buyer at the Closing Date, provided that the Business of Seller during the period has been conducted in the regular and ordinary course and not in violation of any provision of this Agreement. 8. Ordinary Course of Business A. Until the Closing Date, the Business of Seller shall be conducted only in the ordinary course. Except with the consent of Buyer, no contract or commitment, including leases of real or personal property, shall be entered into by or on behalf of Seller involving an amount in excess of five thousand dollars ($5,000). No assets, the cost of
which is in excess of one thousand dollars ($5,000), shall be purchased by Seller. B. Seller will use its best efforts to preserve its business organization intact, keep available to the company the services of its present officers and employees, and preserve for the company the goodwill of Seller's suppliers, customers, and others having business relations with it. C. Except with the consent of Buyer, Seller shall not extend credit to any one customer in excess of one thousand dollars ($1000). Seller will use its best efforts to maintain existing licenses and franchises in full force and effect. All reasonable steps shall be taken to renew or extend any such licenses and franchises expiring in accordance with its or their terms. 9. Severability The invalidity of any portion of this Agreement will not and shall not be deemed
to affect the validity of any other provision. If any provision of this Agreement is held to be invalid, the parties agree that the remaining provisions shall be deemed to be in full force and effect as if they had been executed by both parties subsequent to the expungement of the invalid provision. 10. No Waiver The failure of either party to this Agreement to insist upon the performance of any of the terms and conditions of this Agreement, or the waiver of any breach of any of the terms and conditions of this Agreement, shall not be construed as subsequently waiving any such terms and conditions, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred. 11. Governing Law This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of NAME OF STATE. 12. Notices
Unless provided herein to the contrary, any notice provided for or concerning this Agreement shall be in writing and shall be deemed sufficiently given when sent by certified or registered mail if sent to the respective address of each party as set forth at the beginning of this Agreement. 13. Mandatory Arbitration Any dispute under this Agreement shall be required to be resolved by binding arbitration of the parties hereto. If the parties cannot agree on an arbitrator, each party shall select one arbitrator and both arbitrators shall then select a third. The third arbitrator so selected shall arbitrate said dispute. The arbitration shall be governed by the rules of the American Arbitration Association then in force and effect. 14. Entire Agreement This Agreement shall constitute the entire agreement between the parties and any prior understanding or representation of any kind preceding the date of this
Agreement shall not be binding upon either party except to the extent incorporated in this Agreement. 15. Modification of Agreement Any modification of this Agreement or additional obligation assumed by either party in connection with this Agreement shall be binding only if placed in writing and signed by each party or an authorized representative of each party. 16. Assignment of Rights The rights of each party under this Agreement are personal to that party and may not be assigned or transferred to any other person, firm, corporation, or other entity without the prior, express, and written consent of the other party. 17. Counterparts This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument.
18. Compliance with Laws In performing under this Agreement, all applicable governmental laws, regulations, orders, and other rules of duly-constituted authority will be followed and complied with in all respects by both parties. WITNESS our signatures as of the day and date first above stated. ______________________________ NAME OF BUYER ______________________________ NAME OF SELER
collectively referred to as the Parties). II. WHEREAS, the Hiring Party and Contractor hereby enter into a agreement whereby Contractor will render services to and for the benefit of the Hiring Party in exchange for valuable consideration. III. NOW, THEREFORE, for and in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Hiring Party and Contractor do hereby contract, covenant and agree as follows: A. Agreement. Contractor does hereby agree to render and provide services in accordance with the terms of this agreement and as specified in Paragraph E herein.
B. RATE. The Hiring Party does hereby agree to pay Contractor the rate of _________________. C. Independent Contractor. Contractor is, and will continue to be for the duration of this Agreement, an independent contractor and is not to be considered in any way subject to control by the Hiring Party. Contractor is not, and is not to be considered, an agent or employee of the Hiring Party. D.Indemnity. Contractor does hereby for himself/herself, and his/her heirs, executors, administrators, officers, employees, subcontractors, successors and assigns, agree and covenant to indemnify, save and hold harmless the Hiring Party and his or her heirs, executors, administrators, agents, employees, attorneys, successors and assigns
E. from any and all claims, demands, actions, causes of action, suits at law or in equity, damages, costs, expenses, and losses of any kind or nature whatsoever, whether now known or unknown, which may not exist or which may hereafter arise out of or from the work, services, labor and/or materials to be rendered and provided by Contractor or its subcontractors to or for the benefit of the Hiring Party. F. Description of Service to Be Performed. Contractor agrees to perform and/or provide the following services to the Hiring Party: DESCRIPTION OF SERVICES TO BE PERFORMED. G. Agreement Term. This Agreement shall commence on DATE and shall continue 120
DAYS. This Agreement may be terminated by the Parties as follows: by either party upon giving 30 days written notice. In the event that either party breaches any term of this Agreement, such breach shall operate to terminate this Agreement between the Parties, And the non-breaching party shall have no further obligations thereunder. However, all unperformed obligations of the breaching party will remain due and owing. H.Confidentiality. In the course of performing the services as described herein, the Parties acknowledge that the Contractor may come in contact or become familiar with information which the Hiring Party may consider private, proprietary and confidential. Contractor to keep all such information confidential
and not to discuss or divulge it to anyone other than appropriate Hiring Party family members, personnel or their designees. I. Contractor's Taxpayer I.D. Number. The taxpayer I.D. number of the Contractor is CONTRACTOR'S ID NUMBER. If applicable, necessary or required, the Contractor is licensed to perform the agreed upon services enumerated herein and covenants that he or she maintains all valid licenses, permits and registrations to perform the same. J. Competent Performance of Services. Contractor agrees that all services will be done in a competent fashion in accordance with applicable standards of the Contractors profession or trade and all services are subject to final
approval by a representative of the Hiring Party prior to payment. K.Representations and Warranties. The Contractor will make no representations, warranties, or commitments binding the Hiring Party without the Hiring Partys prior written consent. L. Legal Right. Contractor covenants and warrants that he/she has the unlimited legal right to enter into this Agreement and to perform in accordance with its terms without violating the rights of others or any applicable law and that he/she has not and shall not become a party to any other agreement of any kind which conflicts with this Agreement. Contractor shall indemnify and hold harmless the Hiring Party from any and all damages, claims
and expenses arising out of or resulting from any claim alleging that this Agreement violates any such other agreements. Breach of this warranty shall operate to terminate this Agreement automatically without notice and to terminate all obligations of the Hiring Party to pay any amounts which remain unpaid under this Agreement. M. Waiver. Failure to invoke any right, condition, or covenant in this Agreement by either party shall not be deemed to imply or constitute a waiver of any other rights, conditions, or covenants, and neither party may rely on such failure. N. Additional Terms. a. Entire Agreement and Amendments. This Agreement constitutes the entire agreement of the parties with regard to the
subject matter hereof, and replaces and supersedes all other agreements or understandings, whether written or oral. No amendment or extension of this Agreement shall be binding unless in writing and signed by both parties. b. Binding Effect, Assignment. This Agreement shall be binding upon and shall inure to the benefit of Contractor and the Hiring Party and to the Hiring Partys successors and assigns. Nothing in this Agreement shall be construed to permit the assignment by Contractor of any of its rights or obligations hereunder, and such assignment is expressly prohibited without the prior written consent of the Hiring Party.
c. Governing Law, Severability, Attorneys Fees. This Agreement shall be governed by the laws of the State of ______________. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision. In the event that a dispute arises involving the subject matter of this Agreement, the prevailing party in such dispute shall be entitled to their reasonable attorneys fees and costs. WHEREFORE, the parties have executed this Agreement as of the date stated above. By: _________________________
This website that you are visiting, NAME OF WEBSITE (the Website), is owned by NAME OF COMPANY (the Company).
Illegal or Abusive Usage is Prohibited: You may not abuse, harass, threaten, or intimidate users of the Website. You may not use the Website for any illegal or unauthorized purpose. Users agree to comply with all laws regarding online conduct and acceptable content. If you are found to have engaged in illegal or abusive usage of the Website, the Company will suspend your account. Electronic Communication: When you visit the Website or send e-mails to the Company, you are communicating with us electronically. You consent to receive communications from us electronically. You agree that all agreements, notices, disclosures and other communications we provide you electronically in fact satisfy all legal requirement that such communications be in writing. Copyright: All content included on this site (including text, graphics, logos, button icons, images, audio clips, digital downloads, data compilations, and software)
is the property of Company and is protected by U.S. and international copyright laws. All content on this site is the exclusive property of the Company and is protected by U.S. and international copyright laws. All software used on this site is the property of the Company or its software suppliers and is protected by U. S. and international copyright laws. Trademarks: The Website and the Company and any Company graphics, logos, page headers, button icons, scripts, and service names are all registered trademarks or trade dress of the Company in the U.S. and other countries. The Companys trademarks and trade dress may not be used in connection with any product or service that is not the Companys in any manner that is likely to cause confusion among customers or that disparages or discredits the Company. All trademarks not owned by the Company appearing on the Website are the property of the respective owners, who may or may not be affiliated with, connected to, or sponsored by the Company.
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written consent. Any unauthorized use terminates the permission or license granted. Users are granted a limited, revocable, and nonexclusive right to create a hyperlink to the home page of the Company so long as the link does not portray the Company, or its products or services, in a false, misleading, derogatory or offensive matter. Users may not use the Company logo or other proprietary graphic or trademark as part of a link without written permission. Risk of Loss: All items purchased from the Company are made pursuant to a shipment contract. This means that the risk of loss and title for such items passes to the user upon delivery to the carrier. Disclaimer of Warranties and Limitation of Liability THIS SITE AND ALL INFORMATION, CONTENT, MATERIALS, PRODUCTS (INCLUDING SOFTWARE) AND SERVICES INCLUDED ON OR OTHERWISE MADE AVAILABLE TO YOU THROUGH THIS SITE ARE
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INFORMATION, CONTENT, MATERIALS, PRODUCTS (INCLUDING SOFTWARE) OR SERVICES OTHERWISE MADE AVAILABLE TO USERS THROUGH THIS SITE; THEIR SERVERS; OR E-MAIL SENT FROM THE COMPANY ARE FREE OF VIRUSES OR OTHER HARMFUL COMPONENTS. THE COMPANY WILL NOT BE LIABLE FOR ANY DAMAGES OF ANY KIND ARISING FROM THE USE OF THIS SITE OR FROM ANY INFORMATION, CONTENT, MATERIALS, PRODUCTS (INCLUDING SOFTWARE) OR SERVICES INCLUDED ON OR OTHERWISE MADE AVAILABLE TO USERS THROUGH THIS SITE, INCLUDING DIRECT, INDIRECT, INCIDENTAL, PUNITIVE, AND CONSEQUENTIAL DAMAGES. CERTAIN STATE LAWS DO NOT ALLOW LIMITATIONS ON IMPLIED WARRANTIES OR THE EXCLUSION OR LIMITATION OF CERTAIN DAMAGES. IF THESE LAWS APPLY TO YOU,
SOME OR ALL OF THE ABOVE DISCLAIMERS, EXCLUSIONS, OR LIMITATIONS MAY NOT APPLY TO YOU, AND YOU MIGHT HAVE ADDITIONAL RIGHTS. Applicable Law: By visiting the Website, you agree that the laws of the State of ____________ without regard to principles of conflict of laws will govern these Conditions of Use and any dispute of any sort that might arise between you and the Company. Disputes: Any dispute relating in any way to your visit to the Website or to products or services sold or distributed by the Company in which the aggregate total claim for relief sought on behalf of one or more parties exceeds $7,500 shall be adjudicated in any state or federal court in the County of ________ in the State of ___________, and any user hereby consents to exclusive jurisdiction and venue in such courts.
ONLINE PRIVACY POLICY The Company and any subsidiary companies respect the privacy rights of all users and recognize the importance of protecting the information collected from them. The Company adheres to a corporate wide Online Privacy Policy that guides how we collect, store and use the information users provide. This policy applies only to the Website and any other websites maintained by the Company and its subsidiaries, and not to websites maintained by other companies or organizations to which we link. INFORMATION COLLECTION AND USE Our primary goal in collecting personally identifiable information is to provide users with the product and services made available through the Website. Information Collected Upon Registration: If users desire access to certain restricted sections of the Website, they will be
required to become registered users and to submit certain personally identifiable information to the Company. This occurs when users sign up for the Companys services or if they ask to receive marketing materials. Personally identifiable information that the Company gathers may include users IP addresses, passwords, email addresses, city, time zone, telephone numbers, and other similar information. Use of Contact Information: The Company may use users contact information to market to them and provide them with information about the Companys products and services. Log Data: When you visit the Site, our servers automatically record information that your browser sends whenever you visit a website as Log Data. This Log Data may include information such as your IP address, browser type or the domain from which you are visiting, the websites you visit, the search terms you use, and any advertisements on which you click. For most
users accessing the Internet from an Internet service provider the IP address will be different every time you log on. We use Log Data to monitor the use of the Site and of our Service, and for the Sites technical administration. We do not associate your IP address with any other personally identifiable information to identify you personally, except in case of violation of the Terms of Service Cookies and Other Technologies Cookies: We use cookies and other technologies to passively collect demographic information, personalize your experience on our site and monitor advertisements and other activities. Cookies are small files downloaded to your computer to track movements within web sites. The Company may link cookie information to personal information. Cookies link to information regarding what items users have selected for purchase at the Company store or pages users have viewed. This information is used to keep track of users
shopping carts and make sure users do not see the same ads repeatedly. The Company also mat use cookies to deliver content specific to users interest and to monitor website usage. Most browsers are automatically set to accept cookies whenever a user visits a website. Users can disable cookies or set their browsers to alert them when cookies are being sent. This privacy policy covers the use of cookies by the Company only and does not cover the use of cookies by any advertisers. Other Technologies: Other technologies the Company may use include clear GIFs and IP address logging. Clear GIFs, also known as web bugs, beacons or tags, are small graphic images placed on a web page, web-based document, or in an e-mail message. Clear GIFs are invisible to the user because they are typically very small (only 1-by-1 pixel) and the same color as the background of the web page, document or e-mail message. The Company does not use clear GIFs to collect personal information about users. However, the Company may use clear GIFs to capture
statistical usage information for its web pages, features or other elements on a web page. The Company may correlate this information to a user to personalize user experience and for statistical analysis of user experiences on our web pages. Third Parties Third Party Services: Users may register for other services from the Website. Certain products and/or services available on the Website are provided to users in partnership with third party(s) and may require users to disclose personally identifiable information in order to register for and access such products and/or services. Such products and/or services shall identify the third party partners at the point of registration. If users elect to register for such products and/or services, their personally identifiable information will be transferred to such third party(s) and will be subject to the privacy policy and practices of such third party(s). The Company is not responsible for the privacy practices and policies of such third
party(s) and, therefore, users should review the privacy practices and policies of such third party(s) prior to providing their personally identifiable information in connection with such products and/or services. Service Providers: The Company engages third parties to perform functions and provide services, including hosting and maintenance, customer relationship, database storage and management, and direct marketing campaigns. The Company will share users personally identifiable information with these third parties, but only to the extent necessary to perform these functions and provide such services, and only pursuant to binding contractual obligations requiring such third parties to maintain the privacy and security of users data. Law Enforcement: The Company cooperates with government and law enforcement officials or private parties to enforce and comply with the law. It may
disclose any information about users to government or law enforcement officials or private parties when it believes it is necessary or appropriate to respond to claims, legal processes (including subpoenas), to protect the property and rights of the Company or a third party, the safety of the public or any person, to prevent or stop any illegal, unethical, or legally actionable activity, or to comply with the law. Business Transfers: The Company may sell, transfer or otherwise share some or all of its assets, including users personally identifiable information, in connection with a merger, acquisition, reorganization or sale of assets or in the event of bankruptcy. Users will have the opportunity to opt out of any such transfer if the new entity's planned processing of their information differs materially from that set forth in this Privacy Policy.
1. Investment. A. Investor hereby agrees to make an investment in the amount of DOLLAR AMOUNT (the Investment Amount). The Investment Amount shall be contributed in one lump sum payment within 10 days. Upon the LLCs receipt of the Investment Amount, the LLC shall admit Investor as a member of the LLC with a PERCENTAGE OF EQUITY (Membership Interest). B. Distributions made to all the members of the LLC (including the Investor upon admission to the LLC as a member as detailed herein) shall be paid in proportion to their respective Membership Interests. 2. Management. The management and governance of the LLC shall be determined as provided in the Operating Agreement. Investor shall not have any rights to manage or appoint a
manager of the LLC solely by virtue of this investment. 3. Representations, Indemnity. Warranties and
following
i. Investor understands that the LLCs Membership Interests have not been registered either with the Securities and Exchange Commission (the SEC) or with the securities commission of any state and are being offered and sold pursuant to private offering exemptions provided in Section 4(2) of the Securities Act of 1933, as amended (the Act), Regulation D as promulgated by the SEC, and all applicable state securities laws, and that no governmental agency has recommended or endorsed the LLCs Membership Interests or made any finding or determination relating to the adequacy or accuracy for public investment of the LLCs Membership Interests.
ii. Investor recognizes that the LLCs Membership Interests are a form of speculative investment which involves substantial risk of loss of his/her entire investment, and that there can be no assurances that any tax benefits will result from an investment in the LLC. Investor has consulted with a tax advisor regarding the tax aspects of this investment and its suitability for the Investor. The amount and nature of Investors investment in the LLC is suitable and consistent with his/her financial situation and Investor is able to bear the risk of losing all of this investment. Investor represents that his/her knowledge and experience in financial and business matters in general and in speculative investments such as the LLC in particular are such that the he/she is capable of evaluating the merits and risks of investment in the LLC. Investor acknowledges and agrees that neither the LLC nor any other person has represented, guaranteed or warranted that any particular financial result will be achieved by the LLC
Investor is investing in the LLC solely for his/her own account, for investment purposes only, and is intending to make a profit therefrom, and not with a view to distribute or sell to any other individual, corporation, firm or person. iii. Investor recognizes that there is not and will not be a public market for his/her Membership Interest in the LLC and that the transferability of his/her Membership Interest in the LLC is restricted under the terms of the Operating Agreement and is subject to the consent of the members of the LLC. The Investor understands that he/she may not be readily able to liquidate his/her investment in the Company, even in case of an emergency, and that he/she will not be eligible to make any transfers of his/her Membership Interests in the LLC pursuant to SEC Rule 144. B. Investor hereby acknowledges that he/she understands the meaning and legal consequences of the representations and
warranties contained in this Agreement, and agrees to indemnify and hold harmless the LLC and its managers agents and employees from and against any and all loss, damage or liabilities due to or arising out of a breach of any of the representations or warranties contained in this Agreement. 4. Miscellaneous. A. This Agreement constitutes the entire agreement between the parties hereto with respect to the specific subject matter hereof and supersedes all prior agreements or understandings of any kind with respect to the specific subject matter hereof. B. In the event that any provision or part of this Agreement shall be deemed void or invalid by a court of competent jurisdiction, the remaining provisions or parts shall be and remain in full force and effect. C. Any modification to this Agreement must be in writing and signed by the parties or it shall have no effect and shall be void.
D.This Agreement is binding upon and shall inure to the benefit of the respective successors, licensees and/or assigns of the parties hereto. Notwithstanding the foregoing, neither party may assign their respective rights and/or obligations hereunder without the other partys prior written consent. E. The waiver by either party of a breach or violation of any provision of this Agreement shall not constitute a waiver of any subsequent or other breach or violation. F. This Agreement shall be governed in accordance with the laws of the State of California, applicable to agreements to be wholly performed therein, with jurisdiction exclusive to the Federal and State courts located in the State of California. G.Investor hereby acknowledges that: (i) prior to signing below, Investor had the opportunity to review this Agreement and consult with legal and other advisors of
Investors choice; (ii) LLC has advised Investor to secure an attorney to advise Investor as to the legal effect of this Agreement and Investor has either done so or has chosen not to do so; (iii) Investor has read and fully understands all of the terms of this agreement; and (iv) Investor voluntarily accepts and agrees to be bound by all of the terms and conditions of this Agreement. IN WITNESS WHEREOF the parties have duly executed this Agreement as of the date first written above.
LLC:
________________________________
1.01
The purpose of this Memorandum is to provide the framework for a written definitive agreement that may govern the proposed business relationship between YOUR NAME and OTHER PARTYS NAME. It is not intended to set forth all of the essential or material terms of an agreement and is, therefore, not legally binding. The anticipated Project is described as follows: SUMMARIZE PROJECT OR UNDERTAKING Cooperation
2.0 2.01
The activities and services for the proposed Project are anticipated to include the following responsibilities or obligations to be performed
by the respective parties as identified below: 2.01.1 YOUR NAME: YOUR RESPONSIBILITIES OTHER PARTYS NAME: RESPONSIBILITIES OF OTHER PARTY
2.01.2
3.0 3.01
Resources It is anticipated that YOUR NAME will provide the following resources in respect to the proposed Project: RESOURCES TO BE PROVIDED BY YOU 3.02 It is anticipated that OTHER PARTY may provide the following resources in
respect to the proposed Project: RESOURCES TO BE PROVIDED BY OTHER PARTY 4.0 4.01 Funding It is anticipated that YOUR NAME and OTHER PARTY may agree that each of them shall not be liable for more than the amount of funds each contributes to the Project. It is anticipated that YOUR NAME and OTHER PARTY may agree that any funds identified herein as to be contributed by one or more of them shall be advanced or provided by the designated party according to a schedule that will be agreed upon and included within the definitive
4.02
agreement if and when such agreement is executed by the Parties. 4.03 It is anticipated that such funds may be managed by YOUR NAME OR OTHER PARTYS NAME. Limitations 5.01 Except for Sections 6.0 and 8.0, this Memorandum is not intended to be legally binding and is not intended to impose legal or equitable rights or obligations, and will have no legal or equitable effect. Neither Party shall be responsible for the actions of any third parties or associates who may be involved in any activities outlined in this Memorandum.
5.0
5.02
6.0 6.01
Confidentiality The Parties will enter into a binding confidentiality or mutual non-disclosure agreement concurrently with this Memorandum. Duration 7.01 As this is a non-legally binding Memorandum, except as stated in Section 5.0, and only the written final definitive agreement will be binding on the Parties, the Parties are free to discontinue discussions and negotiations regarding the proposed Project at any time as well as re-continue discussions and negotiations, and may enter into the same or similar proposed Project with any other Party, with fewer than
7.0
all of the Parties, or with any third-party, as long as such discussions or negotiations do not interfere with or breach the provisions set forth in Section 6.0 regarding the confidentiality of the contents of this Memorandum. The Parties may exercise common courtesy and inform each other if and when they wish to discontinue discussions. 8.0 8.01 Additional Conditions Any amendments to this Memorandum are strictly prohibited, unless such amendments are agreed to by both Parties. There shall be no oral agreements. Waiver
9.0
9.01
No waiver of any breach of any provision of this Memorandum shall constitute a waiver of any prior, concurrent or subsequent breach of the same or any other provisions hereof, and no waiver shall be effective unless made in writing and signed by waiving party.
I. Definitions. Unless the context otherwise requires, the terms defined in this Article I shall, for the purposes of this Agreement, have the following meanings: A. California [OR YOUR STATE] Act means the California [OR YOUR STATE] limited liability company statute, as amended from time to time.
B. Additional Members has the meaning set forth in Section XIII. C. Agreement means this Operating Agreement of the Company, as amended, modified, supplemented or restated from time to time. Capital Account means, with respect to any Member, the account maintained for such Member in accordance with the provisions of Section IV-C.
D.
E.
Capital Contribution means, with respect to any Member, the aggregate amount of money and the fair market value of any property (other than money) contributed to the Company pursuant to Section IV-A with respect to such Member's Interest. Certificate means the Certificate of Formation of the Company and any and all amendments to the Certificate of Formation and restatements of the same filed on behalf of the Company with the office of the Secretary of State of California [OR YOUR STATE] pursuant to its limited liability company statute.
F.
G. Code means the Internal Revenue Code of 1986, as amended from time to time, or any corresponding federal tax statute enacted after the date of this Agreement. A reference to a
specific section of the Code refers not only to such specific section but also to any corresponding provision of any federal tax statute enacted after the date of this Agreement, as such specific section or corresponding provision is in effect on the date of application of the provisions of this Agreement containing such reference. H. Company means YOUR COMPANY, the limited liability company formed and continued under and pursuant to the California [OR YOUR STATE] Act and this Agreement. I. Covered Person means a Member, any officers, directors, shareholders, partners, employees, representatives or agents of a Member, or any employee or agent of the Company.
J.
Fiscal Year means: 1. The period commencing upon the formation of the Company and ending on December 31, 2013 (the Fiscal Year End Date); Any subsequent 12-month period that commences on the day of the year immediately after the day of the year that is identified as the Fiscal Year End Date; or Any portion of the period described in Clause 2 of this subsection for which the Company is required to allocate Profits, Losses and other items of Company income, gain, loss or deduction pursuant to Section VIII.
2.
3.
K. Interest means a Member's limited liability company interest in the Company which represents such Member's share of the profits and losses of the Company and a Member's right to receive distributions of the Company's assets in accordance with the provisions of this Agreement and the California [OR YOUR STATE]Act. L. Member means each of the Members, and includes any Person admitted as an Additional Member pursuant to the provisions of this Agreement, in such Person's capacity as a member of the Company; Members means two (2) or more of such Persons when acting in their capacities as Members of the Company. For purposes of the California [OR YOUR STATE] Act, the Members shall constitute one class or group of members.
M. Net Cash Flow means, for each Fiscal Year or other period of the Company, the gross cash receipts of the Company from all sources, but excluding any amounts, such as gross receipts taxes, that are held by the Company as a collection agent or in trust for others or that are otherwise not unconditionally available to the Company, less all amounts paid by or for the account of the Company during the same Fiscal Year or other period (including, but not limited to, payments of principal and interest on any Company indebtedness and expenses reimbursed to the Members under Section V-B, and less any amounts determined by the Members to be necessary to provide a reasonable reserve for working-capital needs or any other contingencies of the Company. Net Cash Flow shall be
determined in accordance with the cash receipts and disbursements method of accounting and otherwise in accordance with generally accepted accounting principles, consistently applied. Net Cash Flow shall not be reduced by depreciation, amortization, cost recovery deductions, depletion, similar allowances or other noncash items, but shall be increased by any reduction of reserves previously established. N. Percentage Interest means the Interest of a Member, expressed as a portion of one hundred percent.
O. Person includes any individual, corporation, association, partnership (general or limited), joint venture, trust, estate, limited liability company or other legal entity or organization.
P.
Profits and Losses means, for each Fiscal Year, an amount equal to the Company's taxable income or loss for such Fiscal Year, determined in accordance with Section 703(a) of the Code.
Q. Tax Matters Partner has the meaning set forth in Section XI-A. R. Treasury Regulations means the income tax regulations, including temporary regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).
II. Formation and Term A. Formation. 1. The Members have formed the Company as a limited liability company under and pursuant to
the California [OR YOUR STATE] Act and agree that the rights, duties and liabilities of the Members shall be as provided in the California [OR YOUR STATE]Act, except as otherwise provided in this Agreement. 2. Upon the execution of this Agreement or a counterpart of this Agreement, all executing Members, as identified above, shall be admitted as Members of the Company. 3. The name and mailing address of each Member and the amount contributed to the capital of the Company shall be listed on the attached Schedule A. The Members shall be required to update Schedule A from time to time as necessary to accurately reflect the information in the schedule. Any amendment or revision to Schedule A made in
accordance with this Agreement shall not be deemed an amendment to this Agreement. Any reference in this Agreement to Schedule A shall be deemed to be a reference to Schedule A as amended and in effect from time to time. 4. YOUR NAME, as an authorized person within the meaning of the California [OR YOUR STATE]Act, shall execute, deliver and file the Certificate. B. Name. The name of the Company is YOUR COMPANY. The business of the Company may be conducted upon compliance with all applicable laws under any other name designated by the Members. C. Term. The term of the Company shall commence on the date the Certificate is filed in the office of the Secretary of State of California [OR
YOUR STATE]and shall continue until December 31, 2015, unless the Company is dissolved before such date in accordance with the provisions of this Agreement. The existence of the Company as a separate legal entity shall continue until cancellation of the Certificate in the manner required by the California [OR YOUR STATE] Act. D. Registered Agent and Office. The Company's registered agent and office in California shall be YOUR NAME at YOUR STREET ADDRESS, YOUR HOME TOWN, YOUR STATE, YOUR ZIP. At any time, the Members may designate another registered agent or registered office. E. Principal Place of Business. The principal place of business of the Company shall be at YOUR COMPANY ADDRESS. At any time, the Members may change the location
of the Company's principal place of business. F. Qualification in Other Jurisdictions. The Members shall, if required by law or if deemed advisable by the Members, cause the Company to be qualified, formed or registered under assumed or fictitious name statutes or similar laws in any jurisdiction in which the Company transacts business. YOUR NAME, as an authorized person within the meaning of the California [OR YOUR STATE] Act, shall execute, deliver and file any certificates (and any amendments or restatements of such certificates) necessary for the Company to qualify to do business in a jurisdiction in which the Company may wish to conduct business. III. Purpose and Powers of the Company A. Purpose. The Company is formed for the object and purpose of, and the nature of the business to be conducted and promoted by the Company is,
engaging in any lawful act or activity for which limited liability companies may be formed under the California Act and engaging in any and all activities necessary, convenient, desirable or incidental to the foregoing, including, but not limited to, acquiring, holding, managing, operating and disposing of securities of corporations, partnerships, limited liability companies and trusts. B. Powers of the Company. 1. The Company shall have the power and authority to take any and all actions necessary, appropriate, proper, advisable, incidental or convenient to or for the furtherance of the purpose set forth in Section III-A, including, but not limited to, the power: a. To conduct its business, carry on its operations and have and exercise the powers
granted to a limited liability company by the California [OR YOUR STATE]Act in any state, territory, district or possession of the United States, or in any foreign country that may be necessary, convenient or incidental to the accomplishment of the purpose of the Company; b. To acquire by purchase, contribution of property or otherwise, own, hold, operate, maintain, finance, sell, convey, transfer, or dispose of any securities or other personal property that may be necessary, convenient or incidental to the accomplishment of the purpose of the Company; c. To enter into, perform and carry out contracts of any
kind, including, but not limited to, contracts with any Member, or any agent of the Company necessary to, in connection with, convenient to, or incidental to the accomplishment of the purpose of the Company; d. To purchase, take, receive, subscribe for or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend, pledge, or otherwise dispose of, and otherwise use and deal in and with, shares or other interests in or obligations of domestic or foreign corporations, associations, general or limited partnerships (including, but not limited to, the power to be admitted as a partner and to exercise the rights and perform the duties created by such partnerships),
trusts, limited liability companies (including, but not limited to, the power to be admitted as a member or appointed as a manager and to exercise the rights and perform the duties created by such admission or appointment), or individuals or direct or indirect obligations of the United States or of any government, state, territory, governmental district or municipality or of any instrumentality of any of them; e. To lend money for its proper purpose, to invest and reinvest its funds, to take and hold real and personal property for the payment of funds so loaned or invested; f. To sue and be sued, complain and defend, and
participate in administrative or other proceedings, in its name; g. To appoint employees and agents of the Company, and define their duties and fix their compensation; h. To indemnify any Person in accordance with the California Act and to obtain any and all types of insurance; i. To cease its activities and cancel its Certificate; j. To negotiate, enter into, renegotiate, extend, renew, terminate, modify, amend, waive, execute, acknowledge or take any other action with respect to any lease, contract or security agreement in
respect of any assets of the Company; k. To borrow money and issue evidences of indebtedness, and to secure the same by a mortgage, pledge or other lien on the assets of the Company; l. To pay, collect, compromise, litigate, arbitrate or otherwise adjust or settle any and all other claims or demands of or against the Company or to hold such proceeds against the payment of contingent liabilities; m. To make, execute, acknowledge and file any and all documents or instruments necessary, convenient or incidental to the
accomplishment of the purpose of the Company; and n. The Company may merge with, or consolidate into, another California limited liability company or other business entity upon the approval of all of the Members. IV. Capital Contributions; Interests; Capital Accounts; Advances A. Capital Contributions. 1. Each Member has contributed or is deemed to have contributed to the capital of the Company the amount set forth opposite the Member's name on the attached Schedule A. The agreed value of the Capital Contributions made or deemed to have been made by each Member shall be set forth on Schedule A.
2. No Member shall be required to make any additional capital contribution to the Company. However, a Member may make additional capital contributions to the Company with the written consent of all of the Members. 3. Member's Interest. A Member's Interest shall for all purposes be personal property. A Member has no interest in specific Company property. B. Status of Capital Contributions. 1. Except as otherwise provided in this Agreement, the amount of a Member's Capital Contributions may be returned to it, in whole or in part, at any time, but only with the consent of all of the Members. Any such returns of Capital Contributions shall be made to all Members in proportion to the
Percentage Interests. Notwithstanding the foregoing, no return of a Member's Capital Contributions shall be made if such distribution would violate applicable state law. Under circumstances requiring a return of any Capital Contribution, no Member shall have the right to demand or receive property other than cash, except as may be specifically provided in this Agreement. 2. No Member shall receive any interest, salary or drawing with respect to its Capital Contributions or its Capital Account or for services rendered on behalf of the Company or otherwise in its capacity as a Member, except as otherwise specifically provided in this Agreement. 3. Except as otherwise provided in this Agreement and by
applicable state law, the Members shall be liable only to make their capital contributions pursuant to Section IV-A, and no Member shall be required to lend any funds to the Company or, after a Member's Capital Contributions have been fully paid pursuant to Section IV, to make any additional capital contributions to the Company. No Member shall have any personal liability for the repayment of any Capital Contribution of any other Member. C. Capital Accounts. 1. An individual Capital Account shall be established and maintained for each Member. 2. The Capital Account of each Member shall be maintained in accordance with the following provisions:
a. To such Member's Capital Account there shall be credited such Member's Capital Contributions (consisting of cash or the fair market value of any property net of any liabilities secured by such contributed property that the Company is considered to assume or take subject to under 26 U.S.C.A. 752 of the Code); such Member's distributive share of Profits; and such Member's distributive share of other items of income, gain or credits; and b. To such Member's Capital Account there shall be debited the amount of cash and the fair market value of property distributed by the Company to such Member (net of liabilities secured by
such distributed property which the Member is considered to assume or take subject to under 26 U.S.C.A. 752 of the Code); such Member's distributive share of Losses; and such Member's distributive share of other items of loss or deduction. D. Advances. If any Member shall advance any funds to the Company in excess of its Capital Contributions, the amount of such advance shall neither increase its Capital Account nor entitle it to any increase in its share of the distributions of the Company. The amount of any such advance shall be a debt obligation of the Company to such Member and shall be subject to such terms and conditions acceptable to the Company and each Member. Any such advance shall be payable and collectible only out of Company assets, and the other Members shall not be
personally obligated to repay any part of such advance. No Person who makes any nonrecourse loan to the Company shall have or acquire, as a result of making such loan, any direct or indirect interest in the profits, capital or property of the Company, other than as a creditor. V. Members A. Powers of Members. The Members shall have the power to exercise any and all rights or powers granted to the Members pursuant to the express terms of this Agreement and the CaliforniaAct. B. Reimbursements. The Company shall reimburse the Members, for all ordinary and necessary out-of-pocket expenses incurred by the Members on behalf of the Company. Such reimbursement shall be treated as an expense of the Company that shall be deducted in computing the Net Cash
Flow and shall not be deemed to constitute a distributive share of Profits or a distribution or return of capital to any Member. C. Partition. Each Member waives any and all rights that it may have to maintain an action for partition of the Company's property. D. Resignation. A Member may not resign from the Company without the written consent of all of the other Members. VI. Management A. Management of the Company. 1. In accordance with the California [OR YOUR STATE]Act, management of the Company shall be vested in the Members. Except as otherwise expressly provided in this Agreement, whenever this
Agreement requires or permits actions to be taken by the Members, the majority decision by Members owning more than Fifty Percent(50%)% of the Percentage Interests shall control. 2. Subject to Section VI-A, the Members shall have full, exclusive and complete discretion to manage the business and affairs of the Company, to make all decisions affecting the business and affairs of the Company and to take such actions as they deem necessary or appropriate to accomplish the purpose of the Company as set forth in this Agreement. 3. Subject to Section VI-A, with respect to third parties, each Member is an agent of the Company's business, and each Member may bind the Company. If a Member binds the Company, but did not have the authority to so
act under this Agreement (including by failing to obtain necessary consents from other Members), in addition to any other remedy (at law or in equity) that may be available against such Member, such Member shall be liable for all damages caused by breaching this Agreement. B. Reliance by Third Parties. Any Person dealing with the Company or any Member may rely upon a certificate signed by any Member as to: 1. The identity of a Member;
2. The existence or nonexistence of any fact or facts which constitute a condition precedent to acts by the Members or in any other manner germane to the affairs of the Company; 3. The Persons who are authorized to execute and deliver
any instrument or document of, or on behalf of, the Company; or 4. Any act or failure to act by the Company or as to any other matter whatsoever involving the Company or any Member. VII. Amendments and Meetings A. Amendments. Any amendment to this Agreement shall be adopted and be effective as an amendment to the Agreement if it receives the affirmative vote of all of the Members, provided that such amendment be in writing and executed by all of the Members. B. Meetings of the Members. 1. Meetings of the Members may be called at any time by any Member. Notice of any meeting shall be given to all Members not less than 5 days nor more than 90 days prior to the date of such
meeting. Each Member may authorize any Person to act for it by proxy on all matters in which a Member is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Every proxy must be signed by the Member or its attorney-in-fact. 2. The Members shall establish all other provisions relating to meetings of Members, including notice of the time, place or purpose of any meeting at which any matter is to be voted on by any Members, waiver of any such notice, action by consent without a meeting, the establishment of a record date, quorum requirements, voting in person or by proxy or any other matter with respect to the exercise of any such right to vote.
3. The Company may take any action contemplated by this Agreement as approved by the unanimous written consent of the Members. VIII. A. Allocations Profits and Losses. 1. Subject to the allocation rules of Section VIII-B, Profits for any Fiscal Year shall be allocated among the Members in proportion to the Percentage Interests. 2. Subject to the allocation rules of Section VIII-B, Losses for any Fiscal Year shall be allocated among the Members in proportion to the Percentage Interests. B. Allocation Rules. 1. For purposes of determining the Profits, Losses or any other
items allocable to any period, Profits, Losses and any such other items shall be determined on a daily, monthly or other basis, as determined by the Members using any method that is permissible under 26 U.S.C.A. 706 of the Code and the Treasury Regulations under that Section. 2. Except as otherwise provided in this Agreement, all items of Company income, gain, loss, deduction and any other allocations not otherwise provided for shall be divided among the Members in the same proportions as they share Profits and Losses for the Fiscal Year in question. 3. The Members are aware of the income tax consequences of the allocations made by this Section VIII and agree to be bound by the provisions of this Section VIII in reporting their
shares of Company income and loss for income tax purposes. 4. The Members intend that the allocation provisions set forth in this Agreement are intended to comply with 26 U.S.C.A. 704(b) of the Code and the Treasury Regulations issued under that Section and the provisions are to be interpreted in a manner consistent with those Treasury Regulations. C. Tax Allocations; 26 U.S.C.A. 704(c) of the Code. In accordance with Section 704(c) of the Code and the Treasury Regulations under that Section, income, gain, loss and deduction with respect to any property contributed to the capital of the Company shall, solely for income tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for
federal income tax purposes and its initial fair market value. IX. Distributions A. Net Cash Flow. Except as otherwise provided in Section XV (relating to the dissolution of the Company), any distribution of the Net Cash Flow during any Fiscal Year shall be made to the Members in proportion to the Percentage Interests. B. Distribution Rules. All distributions pursuant to this Section IX shall be at such times and in such amounts as shall be determined by the Members. C. Limitations on Distribution. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make a distribution to any Member on account of its interest in the Company if such
distribution would violate California Act or other applicable law. X. Books and Records
A. Books, Records and Financial Statements. 1. At all times during the continuance of the Company, the Company shall maintain, at its principal place of business, separate books of account for the Company that shall show a true and accurate record of all costs and expenses incurred, all charges made, all credits made and received and all income derived in connection with the operation of the Company business in accordance with generally accepted accounting principles consistently applied, and, to the extent inconsistent with such principles, in accordance with this Agreement. Such books of
account, together with a copy of this Agreement and of the Certificate, shall at all times be maintained at the principal place of business of the Company and shall be open to inspection and examination at reasonable times by each Member and its duly authorized representative for any purpose reasonably related to such Member's interest in the Company. 2. The Members shall prepare and maintain, or cause to be prepared and maintained, the books of account of the Company. The Members shall prepare and file, or cause to be prepared and filed, all applicable federal and state tax returns. C. Accounting Method. For both financial and tax reporting purposes and for purposes of determining Profits and Losses, the books and records of
the Company shall be kept on the accrual method of accounting applied in a consistent manner and shall reflect all Company transactions and be appropriate and adequate for the Company's business. D. Annual Audit. At any time at a Member's sole discretion, the financial statements of the Company may be audited by an independent certified public accountant, selected by such Member, with such audit to be accompanied by a report of such accountant containing its opinion. The cost of such audits will be an expense of the Company. A copy of any such audited financial statements and accountant's report will be made available for inspection by the Members. XI. Tax Matters A. Tax Matters Partner.
1. YOUR NAME is designated as Tax Matters Partner of the Company for purposes of 26 U.S.C.A. 6231(a)(7) of the Code. The Tax Matters Partner may not choose a forum for the resolution of tax matters or extend any statute of limitation without the written consent of all of the Members. 2. The Tax Matters Partner shall, within ten (10) business days of the receipt (or within any such shorter time as required) of any notice from the Internal Revenue Service in any administrative proceeding at the Company level relating to the determination of any Company item of income, gain, loss, deduction or credit, mail or otherwise deliver a copy of such notice to each Member.
B. Taxation as Partnership. The Company shall be treated as a partnership for U.S. federal income tax purposes. XII. Liability; Exculpation; Indemnification A. Liability. Except as otherwise provided by the California [OR YOUR STATE] Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Covered Person shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Covered Person. B. Exculpation. 1. No Covered Person shall be liable to the Company or any other Covered Person for any loss, damage or claim incurred by
reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of authority conferred on such Covered Person by this Agreement, except that a Covered Person shall be liable for any such loss, damage or claim incurred by reason of such Covered Person's gross negligence or willful misconduct. 2. A Covered Person shall be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any Person as to matters the Covered Person reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care
by or on behalf of the Company, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, Profits, Losses or Net Cash Flow or any other facts pertinent to the existence and amount of assets from which distributions to Members might properly be paid. C. Fiduciary Duty. To the extent that, at law or in equity, a Covered Person has duties (including fiduciary duties) and related liabilities to the Company or to any other Covered Person, a Covered Person acting under this Agreement shall not be liable to the Company or to any Member for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they restrict the duties and liabilities of a Covered Person otherwise existing at law or in equity, are agreed by the
parties to replace such other duties and liabilities of such Covered Person. D. Indemnification. To the fullest extent permitted by applicable law, a Covered Person shall be entitled to indemnification from the Company for any loss, damage or claim incurred by such Covered Person by reason of any act or omission performed or omitted by such Covered Person in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of authority conferred on such Covered Person by this Agreement, except that no Covered Person shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Covered Person by reason of gross negligence or willful misconduct with respect to such acts or omissions; provided, however, that any indemnity under this Section XII-D shall be provided out of and to the extent of Company assets only, and no Covered
Person shall have any personal liability on account of the same. E. Expenses. To the fullest extent permitted by applicable law, expenses (including legal fees) incurred by a Covered Person in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Company prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Company of an undertaking by or on behalf of the Covered Person to repay such amount if it shall be determined that the Covered Person is not entitled to be indemnified as authorized in Section XII-D. F. Insurance. The Company may purchase and maintain insurance, to the extent and in such amounts as the Members shall, in its sole discretion, deem reasonable, on behalf of Covered Persons and such other Persons as the
Members shall determine, against any liability that may be asserted against or expenses that may be incurred by any such Person in connection with the activities of the Company or such indemnities, regardless of whether the Company would have the power to indemnify such Person against such liability under the provisions of this Agreement. The Members and the Company may enter into indemnity contracts with Covered Persons and such other Persons as the Members shall determine and adopt written procedures pursuant to which arrangements are made for the advancement of expenses and the funding of obligations under Section XII-E and containing such other procedures regarding indemnification as are appropriate. G. Outside Businesses. Any Member may engage in or possess an interest in other business ventures of any nature or description, independently or with
others, similar or dissimilar to the business of the Company, and the Company and the Members shall have no rights by virtue of this Agreement in and to such independent ventures or the income or profits derived from such ventures, and the pursuit of any such venture, even if competitive with the business of the Company, shall not be deemed wrongful or improper. No Member shall be obligated to present any particular investment opportunity to the Company even if such opportunity is of a character that, if presented to the Company, could be taken by the Company, and any Member shall have the right to take for its own account (individually or as a partner or fiduciary) or to recommend to others any such particular investment opportunity. XIII. Additional Members
authorized to admit any Person as an additional member of the Company (each, an Additional Member and collectively, the Additional Members). Each such Person shall be admitted as an Additional Member at the time such Person: 1. Executes this Agreement or a counterpart of this Agreement; and 2. Is named as a Member on the attached Schedule A. The legal fees and expenses associated with such admission shall be borne by the Company. C. Allocations. Additional Members shall not be entitled to any retroactive allocation of the Company's income, gains, losses, deductions, credits or other items; provided that, subject to the restrictions of 26 U.S.C.A. 706(d) of the Code, Additional Members shall be entitled to their respective share of the Company's income, gains, losses,
deductions, credits and other items arising under contracts entered into before the effective date of the admission of any Additional Members to the extent that such income, gains, losses, deductions, credits and other items arise after such effective date. To the extent consistent with 26 U.S.C.A. 706(d) of the Code and Treasury Regulations promulgated under that Section, the Company's books may be closed at the time Additional Members are admitted (as though the Company's tax year had ended) or the Company may credit to the Additional Members pro rata allocations of the Company's income, gains, losses, deductions, credits and items for that portion of the Company's Fiscal Year after the effective date of the admission of the Additional Members. XIV. Assignability and Substitute Members
A. Assignability of Interests. No Member may assign the whole or any part of its Interests without the unanimous approval of all Members. B. Recognition of Assignment by Company. No assignment or pledge of any Interest, or any part of an Interest, that is in violation of this Section XIV shall be valid or effective, and neither the Company nor the Members shall recognize the same for the purpose of making distributions pursuant to this Agreement. Neither the Company nor the Members shall incur any liability as a result of refusing to make any such distributions to the assignee of any such invalid assignment. C. Pledge. No Member may pledge or otherwise encumber the whole or any part of its Interests. XV. Dissolution, Liquidation and Termination
A. No Dissolution. The Company shall not be dissolved by the admission of Additional Members in accordance with the terms of this Agreement. B. Events Causing Dissolution. The Company shall be dissolved and its affairs shall be wound up upon the occurrence of any of the following events: 1. The expiration of the term of the Company, as provided in Section II-C; 2. The written consent of all Members; 3. The death, retirement, resignation, expulsion, bankruptcy or dissolution of a Member or the occurrence of any other event under the (name of state) Act that terminates the continued membership of a Member in the Company unless, within thirty
(30) days after the occurrence of such an event, all of the remaining Members agree in writing to continue the business of the Company; or 4. The entry of a decree of judicial dissolution. C. Liquidation. Upon dissolution of the Company, the Members shall carry out the winding up of the Company and shall immediately commence to wind up the Company's affairs; provided, however, that a reasonable time shall be allowed for the orderly liquidation of the assets of the Company and the satisfaction of liabilities to creditors so as to enable the Members to minimize the normal losses attendant upon a liquidation. The Members shall continue to share Profits and Losses during liquidation in the same proportions, as specified in Section VIII, as before liquidation. The proceeds of liquidation shall be
distributed in the following order and priority: 1. To creditors of the Company, including Members who are creditors, to the extent otherwise permitted by law, in satisfaction of the liabilities of the Company (whether by payment or the making of reasonable provision for payment); and 2. To the Members in accordance with their Capital Account balances, after giving effect to all contributions, distributions and allocations for all periods. C. Termination. The Company shall terminate when all of the assets of the Company, after payment of or due provision for all debts, liabilities and obligations of the Company, shall have been distributed to the Members in the manner provided for in this Section XV
and the Certificate shall have been canceled in the manner required by the CaliforniaAct. D. Claims of the Members. The Members and former Members shall look solely to the Company's assets for the return of their Capital Contributions, and if the assets of the Company remaining after payment of or due provision for all debts, liabilities and obligations of the Company are insufficient to return such Capital Contributions, the Members and former Members shall have no recourse against the Company or any other Member. XVI. Miscellaneous A. Notices. All notices provided for in this Agreement shall be in writing, duly signed by the party giving such notice, and shall be delivered, mailed via an overnight courier service, telecopied or mailed by registered or certified mail, as follows:
1. If given to the Company, at the address specified in Section II-E of this Agreement; or 2. If given to any Member, at the address set forth opposite its name on the attached Schedule A, or at such other address as such Member may designate in the future by written notice to the Company. 3. All such notices shall be deemed to have been given when received. B. Failure to Pursue Remedies. The failure of any party to seek redress for violation of, or to insist upon the strict performance of, any provision of this Agreement shall not prevent a subsequent act, which would have originally constituted a violation, from having the effect of an original violation.
C. Cumulative Remedies. The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive its right to use any or all other remedies. The rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance or otherwise. D. Binding Effect. This Agreement shall be binding upon and inure to the benefit of all of the parties and, to the extent permitted by this Agreement, their successors, legal representatives and assigns. E. Interpretation. Throughout this Agreement, nouns, pronouns and verbs shall be construed as masculine, feminine, neuter, singular or plural, whichever shall be applicable. All references in this Agreement to Articles, Sections and
Paragraphs shall refer to corresponding provisions of this Agreement. F. Severability. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions of this Agreement, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision was omitted. G. Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all parties had signed the same document. All counterparts shall be construed together and shall constitute one instrument. H. Integration. This Agreement constitutes the entire agreement among the parties pertaining to the subject matter of this Agreement and supersedes all prior agreements and
understandings pertaining to such subject matter. I. Governing Law. This Agreement and the rights of the parties under this Agreement shall be interpreted in accordance with the laws of (name of state), and all rights and remedies shall be governed by such laws without regard to principles of conflict of laws. WITNESS our signature(s) as of the day and date first above stated. By:_____________________ ________________________ (Printed name) Member of YOUR COMPANY Schedule A
Members Names, Capital Contribution and Ownership Interest: YOUR NAME _____________ ($_________) One Hundred Percent (100%) IN WITNESS WHEREOF, the Members have executed, or caused this Schedule A to be executed, as of the date set forth hereinabove. MEMBERS _________________ _________________ Member Signature Member Signature _________________ __________________ Printed Name Printed Name
This confirms that we intend to acquire all business assets, good will, and properties of [Name of Seller] (Seller). This Letter establishes the terms and conditions of this proposed transaction. This Letter is nonbinding. This letter is not an offer nor does it impose any obligation on either party.
The proposed terms and conditions are as follows: : (a) Business to be acquired and liabilities to be assumed. We will acquire all of the assets, tangible and intangible, owned by Seller that are used in, or necessary for the conduct of, its development business, including (i) software, subject to any obligations contained in disclosed
license agreements and all related intellectual property; (ii) the fixed assets of Seller; (iii) any and all customer lists; and (iv) the goodwill associated therewith, all free and clear of any security interests, mortgages or other encumbrances. (b) Consideration. The aggregate consideration for the assets and business to be purchased shall be $____________ , provided the working capital (current assets less current liabilities) of the business to be purchased equals or exceeds $________, as shown on a closing date
balance sheet prepared in accordance with generally accepted accounting principles. (c) Due Diligence Review. Following the execution of this letter of intent, you will allow us to complete our examination of your financial, accounting and business records and the contracts and other legal documents necessary to complete due diligence. Any information obtained by us as a result thereof will be maintained by us in confidence subject to the terms of the Confidentiality Agreement executed by the parties and dated ______________ (the Confidentiality Agreement). The parties will cooperate to complete due diligence expeditiously.
(d) Conduct in Ordinary Course. In addition to the conditions discussed herein and any others to be contained in a definitive written purchase agreement (the Purchase Agreement), consummation of the acquisition would be subject to having conducted your business in the ordinary course during the period between the date hereof and the date of closing and there having been no material adverse change in your business, financial condition or prospects. (e) Definitive Purchase Agreement. All of the terms and conditions of the proposed transaction would be stated in the Purchase Agreement,
to be negotiated, agreed and executed by you and us. Neither party intends to be bound by any oral or written statements or correspondence concerning the Purchase Agreement arising during the course of negotiations, notwithstanding that the same may be expressed in terms signifying a partial, preliminary or interim agreement between the parties. Cordially, By__________________ [Name of Offering Party]
The Terms and Conditions set forth in the above-signed letter are acceptable and reflect the intentions of [Name of Seller]. By_________________ [Name of Seller] NAME OF RECIPIENT
that which relates to research, products, services, customers, markets, software, developments, inventions, processes, designs, drawings, engineering, marketing or finances which is marked or identified by the disclosing party as proprietary or confidential. Confidential Information does not include information, technical data or know-how which a. is in the possession of the receiving Party at the time of disclosure as shown by the receiving Party's files and records immediately prior to the time of disclosure; or b. prior or after the time of disclosure becomes part of the public knowledge or literature, not as a result of any inaction or action of the receiving Party; or c. is approved for release by the disclosing Party; or d. is independently developed by the receiving Party without the use of
any Confidential Information of the other Party. In addition, Confidential Information shall also include other information which is (a) disclosed by a Party in writing and marked as confidential at the time of disclosure; and/or (b) disclosed by Party in any other manner and identified as confidential at the time of disclosure and is also summarized and designated as confidential in a written memorandum delivered to the non-disclosing Party within (30) days of the disclosure. 2. A Party who receives any Confidential Information under this Agreement shall use the Confidential Information only for the purpose of evaluating potential business and investment relationships with the disclosing Party. Such potential business and investment relationships are further described as follows: unknown for now (Hereinafter the Business Relationship).
3. YOU and OTHER PARTY each warrant that he/she has the right to disclosure the Confidential Information as described in this Agreement. 4. YOU and OTHER PARTY each agree that he/she/it shall use the Confidential Information solely for the purpose of evaluating opportunities and transactions related to the Business Relationship. YOU and OTHER PARTY each agree that he/she shall limit the disclosure of the Confidential Information within its own organization to its directors, officers, partners and/or employees having a need to know and shall not disclose Confidential Information to any third party without the prior written consent of the disclosing Party. The Parties also agree to inform and educate his/her employees, agents, consultants and others who are permitted access to or use of the Confidential Information as to the restrictions of the use of the
Confidential Information and shall be responsible and expressly liable for the use of the Confidential Information by his/her/its employees, agents, consultants and others who are permitted access to or use of the Confidential Information. A rebuttable presumption that a Party has satisfied his/her obligations under this paragraph shall exist if he/she/it can show evidence that he/she took affirmative measures to ensure compliance with these confidentiality obligations by his/her employees, agents, consultants and others who permitted access to or use of the Confidential Information. 5. A Party will not have violated this Agreement if a Party discloses information that (a) is or becomes a matter of public knowledge through no fault of the disclosing Party; (b) is rightfully received by a Party from a third party not owing a duty of confidentiality to the non-disclosing Party; (c) is disclosed without a duty of
confidentiality to a third party by, or with the authorization of, the Party who owns the confidential information; or (d) is independently developed by the disclosing Party. 6. Neither Party shall be liable to the other in any manner whatsoever for any decisions, obligations, costs or expenses incurred, changes in business practices, plans, organization, products, services, or otherwise, based on either Partys decision to use or rely on any information exchanged under this Agreement. 7. Nothing in this Agreement prohibits a Party from offering products and/or services of the type that are the subject of the Business Relationship for sale to third parties or to modify them or discontinue sale of the same at any time. 8. If there is a breach or threatened breach of any provision of this Agreement, it is
agreed and understood that the nonbreaching Party shall have no adequate remedy in money or other damages and shall be entitled to injunctive relief; provided however, no specification in this Agreement of any particular remedy shall be construed as a waiver or prohibition of any other remedies in the event of a breach or threatened breach of this Agreement. 9. The obligations of the Parties hereunder survive any termination of this Agreement and shall continue indefinitely or until such time that the Confidential Information becomes publically known. 10. Breach: In the event that this Agreement is breached by either Party, any and all disputes must be settled in a court of competent jurisdiction in the State of NAME OF STATE. 11. Severability: If any provisions of this Agreement are found to be
unenforceable, the remainder shall be enforced as fully as possible and the unenforceable provision(s) shall be deemed modified to the limited extent required to permit enforcement of the Agreement as a whole. 12. Governing Law and Consent to Jurisdiction: This Agreement is made under and shall be construed according to the laws of the State of California, without regard to conflict of law principles. Both Parties voluntarily consent to the jurisdiction of a court of competent jurisdiction in the State of California to govern, interpret and enforce this Agreement. 13. Entire Agreement: This Agreement states the entire agreement between the Parties concerning the disclosure of Confidential Information and supersedes any prior agreements, understandings, or representations with respect thereto. Any addition or modifications to this Agreement must
Chapter Two What is the Difference between a General and Limited Partnership?
There are two types of partnerships: general partnerships and limited partnerships. General Partnerships:
A partnership is a business relationship between at least two or more persons to carry on a business or a project. Each partner contributes money, property or skills to the enterprise and in exchange receives a share of the partnerships profits and losses. Partnership agreements can be oral; written is better.
The partnership agreement specifies the terms of how the partnership will operate, the purpose of the partnership, how decisions will be made, and when distributions will be made. By default, each partner has an equal right to participate in the management and control of the business. The partnership files an informational only annual income tax return; all profits and losses of the business pass to the personal income tax returns of the partners. Partners are not considered employees of the partnership. Partnerships are easy to form and do not require formal document filings as a corporation or a limited liability company. Partners are held personally, jointly and severally liable for all the
business debts of the partnership, regardless of the percentage of ownership in the business.
Upon the death, withdrawal, disability or resignation of any partner, the partnership by default will terminate. All money or property contributed to the partnership becomes an asset of the partnership. All profits are shared with the partners.
Limited Partnership:
The general partners deal with the day-to-day management of the business, and do not need to consult with or involve the limited partners for most business decisions. The profits and losses flow through the business to the partners, and
A limited partner's liability for the debts of the partnership is limited to the amount of money or property the limited partner contributed to the partnership. Limited partners can leave or be replaced without the partnership being dissolve Partners are held personally, jointly and severally liable for the business debts of the partnership. One partner is not responsible or liable for another partner's misconduct or negligence. Although it varies from state to state, the partners have a form of limited liability protection from debts of the business similar to that of shareholders in a corporation.
Each partner is responsible only for the amount of money he/she has contributed to the partnership. All partners may be involved in the management of the business. Like an LLC, a partnership files an informational only annual income tax return, and all profits and losses of the business will pass to the personal income tax returns of the partners. Some states restrict the types of professions that may form a limited liability partnership
Chapter Three
What is a Private Placement Memorandum?
A private placement is the issuance and sale of a stock of a company to investors to secure funding. A private placement memorandum (PPM) is an offering disclosure document that outlines the terms and conditions of the investment. The document is similar to a business plan except the emphasis is on disclosure of facts rather than projected results. This is the one document that must be professionally prepared.
If you are trying to raise capital by offering debt or equity to angel investors or private investors you need a private placement memorandum (PPM) that allows you the advantages of SEC Regulation D exemption rules 504, 505 or 506. Your PPM must include the terms of the offering, the allocation of proceeds, and all risk factors. The document must contain all relevant information about your company and its business as well as any other information that might possibly be considered "material" by a potential investor. Your PPM must be accompanied by a subscription agreement and investor questionnaire. The subscription agreement is a contract to purchase a specified number of securities at an agreed price. It must contain a statement that the investor has received and reviewed the PPM and
that she/he is aware of the risk factors and is a suitable investor. The investor questionnaire also solicits information about the investor's background, employment and investment experience. It is used to confirm the investor's investment sophistication. There are two common types of securities that companies offer via a regulation: equity and debt securities. Equity Offerings Equity securities consist of common stock for a corporation or membership units for an LLC and represent a portion of the ownership interest in the company. Stockholders are entitled to vote on corporate matters and receive all key information about the company, including financial statements.
Debt Offering Debt securities usually consist of bonds representing a debt obligation of the company with a specified interest rate, maturity date, and repayment amount. A company should only offer debt securities if it can demonstrate that it has the ability to repay the debt.
SEC Regulation D Filing Exemptions Regulation D provides three exemptions from registration: a) Rule 504 Rule 504 provides an exemption for the offer and sale of up to $1,000,000 of securities in a 12-month period. The company may use this exemption so long as it is not a blank check company and is not subject to Exchange Act reporting requirements.
As with other Regulation D exemptions, you may not use public solicitation or advertising to market securities, and purchasers receive "restricted" securities--meaning they may not sell the securities without registration or an applicable exemption. This exemption may be used for a public offering for which investors will receive freely tradable securities under these circumstances: * The offering is registered exclusively in one or more states that require a publicly filed registration statement and delivery of a substantive disclosure document to investors; * The registration and sale takes place in a state that requires registration and disclosure delivery and the buyer is in a state without those requirements as long as the disclosure documents mandated
by the state in which he/she is registered to all purchasers are delivered; or * The securities are sold according to state law exemptions that permit general solicitation and advertising and you are selling only to accredited investors. (However, accredited investors are only needed when sold exclusively with state law exemptions on solicitation.)
Rule 505 Rule 505 provides an exemption for offers and sales of securities totaling up to $5 million in any 12-month period. Under this exemption, securities may be sold to an unlimited number of "accredited investors" and up to 35 "unaccredited investors" who do not need to satisfy the sophistication or wealth standards associated with the
other exemptions. Purchasers must buy for investment only, not for resale. The securities are restricted in sense that investors may not sell them for at least two years. General solicitation or advertising to sell the securities is not allowed. Financial statement requirements applicable to this type of offering are as follows:: * Financial statements need to be certified by an independent public accountant; * If a company other than a limited partnership cannot obtain audited financial statements without unreasonable effort or expense, only the company's balance sheet, to be dated within 120 days of the start of the offering, must be audited; and
* Limited partnerships unable to obtain required financial statements without unreasonable effort or expense may furnish audited financial statements prepared under federal income tax laws.
Rule 506 (Highly Recommended in Almost all Cases!) A company that qualifies for an exemption under this rule: * Can raise an unlimited amount of capital; * Does not use general solicitation or advertising to market the securities * Sale of securities can be to an unlimited number of accredited investors and up to 35 other purchasers. Unlike Rule 505, all non-accredited investors, either alone or with a purchaser representative, must be sophisticated meaning they must have sufficient
knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment; * Seller must be available to answer questions by prospective purchasers; * Financial statement requirements as for Rule 505; and * They receive restricted securities which may not be traded in the secondary market after the offering. Sample checklist for contents of Private Placement Memorandums Cover Page Securities Legends Suitability Standards for Investors Summary of the Securities Offering Risk Factors Capitalization of the Company Use of Proceeds from the Securities
Offering Dilution Plan of Distribution of the Securities Selected Financial Data PARTNERSHIP LEARNING
CHAPTER FOUR
S - Corporation or C - Corporation or Limited Liability Corporation?
Two of the most common legal business structures are the limited liability corporation (LLC) and the S corporation. There is also the C corporation. Your business may find that the LLC offers advantages over both, at least at the outset.
Flexibility
An LLC allows a business to set up an ownership structure that makes sense for both business and tax purposes. Unlike an S corp in which the share structure follows the amount invested by each shareholder, an LLC has more flexibility. This is important as profits flow through an LLC and are taxed in the hands of the
wners. Profit distribution does not have to mirror vestment in the company.
ransfer of Ownership
n an S corp, shares can be sold, gifted or willed to thers, creating changes in ownership structure that an alter the direction of operations over time. An LLC is issolved upon the bankruptcy or death of an owner; he other owners can then set up a new LLC.
ess Paperwork
orporations, including S corps, are required to hold egular shareholder meetings and take minutes. A mandated board of directors makes decisions via formal ocumented resolutions. An LLC operates under no equirement for minutes, resolutions or even board meetings. This gives the owner/ managers of the usiness more flexibility to make swift or timely
decisions. It also significantly reduces the time spent on administration chores as opposed to strategic planning and just doing business.
Although LLCs pay no federal income tax, state filing taxes are due. In almost all states, the annual state filing tax is less for LLCs than it is for S corps. In some states, LLCs with only two members do not pay any state filing tax. The minimum filing tax is lower than it is for S corps.
Simple to Set Up
Forming an LLC is easy. The fees for setting it up are generally low. You gain the limited liability that you need and you get pass through accounting for profits and losses without the "double taxation" you have with
C -Corp.
ounds great, yes? Well in most cases it is and this is is hy you see so many businesses setup as LCs. However, as they grow, they usually change to Corporations; we will see why below.
Corporation
he S Corporation is a popular structure for small usinesses because the company is taxed like a sole roprietor or partnership. The company itself does not le its own taxes; instead, all company profits and osses are "passed through" and reported on the ersonal income tax return of the shareholders (or in he case of an LLC, the members).
While circumstances vary for each individual and his or er business, the following are general guidelines to
help you;
1. Business Formality
With its roots as a C Corporation, the S Corporation involves structure, formalities and compliance obligations, which can be too burdensome for the solo entrepreneur, in other words, a payroll of one. If you incorporate as an S Corporation, you need to set up a board of directors, file annual reports and other business filings, hold shareholders meetings, keep records of your meeting minutes, and generally operate at a higher level of regulatory compliance than your business might need. LLCs use an informal operating agreement. If you want less red tape and formality, the LLC is for you.
an be a shareholder and S Corps cannot have more han 100 shareholders. (Obviously, this is not relevant o most small businesses). In addition, all individual hareholders of an S Corp must be either U.S. citizens or ermanent residents. If you have foreign owners (or ould like an LLC to be a shareholder), you cannot form n S Corporation and should opt for the LLC.
. Income Allocation
n an LLC, income and loss can be allocated isproportionately among the owners whereas, in an S orp, income and loss are assigned to each shareholder ased on their pro-rata shares of ownership.
his can be important. Say Joe and Jane open a oftware business as 50-50 owners. Time flies and Joe eeds to focus on other things while Jane ends up doing l the work. Their business becomes profitable and it is me to divide up the profits. Because Jane has done most all of the work, the two decide she should keep
75% of the profits. With an LLC, everything is good, and Joe and Jane will be taxed pursuant to the terms of their LLC Operating Agreement.
But this will not work with an S Corporation! Since Joe and Jane are 50% owners, each will be allocated 50% of the corporations income when it comes to computing income tax. So, if you need flexibility when it comes to divvying up profits among owners, the LLC is the structure for you.
4. Pass-Through Losses
With LLCs and S Corporations, members and shareholders pass company losses to their personal income. Note that an LLC lets you pass more loss than does an S Corporation, most notably when it comes to real estate. In an LLC used for real estate investments, members are allowed to add the amount of the mortgage to their basis for the purpose of computing a
oss.
your business structure is for real estate investments, he LLC permits writing off more losses on the personal ax returns.
. Class of Stock
n an S Corporation, all shareholders own one class of ock. An S Corporation can have voting and non-voting hares but cannot have distinctions like common stock nd preferred stock. In an LLC, however, these priorities nd preferences are allowed, and you can have ifferent membership classes. You cannot offer ommon and preferred stock classes in an S orporation. Thus, if you want flexibility in ownership assification, you need an LLC.
. Reinvesting Profits
As pass-through entities, individual owners of an S Corporation or LLC are liable for any taxes owed on profits whether that money is retained in the company or put in their wallets. For example, if you own 50% of an S Corporation or LLC and that company makes $100,000 in profit, you need to report $50,000 in income on your personal tax return. It does not matter whether that $50,000 actually ended up in your bank account. This is known as phantom income and can obviously cause a problem for some shareholders.
If you plan on retaining money in the company and would prefer not to have be personally taxed on this money as a shareholder, you should consider the C Corporation over both the LLC and S Corp.
7. VC Funding
If your company is considering raising venture capital down the road, VC firms will most likely choose the C Corporation as the type of legal entity for their
vestments. This doesnt necessarily mean your usiness needs to start as a C Corp, but be advised: If ou are considering raising venture capital and start out ith an LLC or an S Corp, you will need to convert the usiness to a C Corp (if your state allows conversions) at ome point.
his conversion will require additional filings and fees ithin your state. If you choose this route, you may ant to consider the S Corp as your option, since onverting an S Corp to a C Corp can be done in a day ith a single tax form.
hoosing the right business structure is a multi-faceted ecision, and will ultimately depend on all the unique spects of your particular business needs, vision and rcumstances. And remember that tax treatment varies etween states. Consulting with an accountant or tax dvisor can go a long way in helping you determine hich business structure offers the biggest advantage or your situation.
Take note that the deadline to elect S Corp treatment is March 15 for existing companies (or 75 days from the day your company is formed). Get your legal structure squared away early on, and your company will be set for years to come.
The most obvious problem with C Corporations is that they do not offer the pass through accounting that LLCs and S Corporations do, so the corporation will pay tax on any profits and you as owner will pay taxes on your salary and if there are any profit distributions by means of dividends) the owner/shareholder will be taxed again!
The tax code is not friendly to a C-Corporation that wants to provide profits to the shareholders. And if those shareholders work there, then are three different
LCs look like they have only one point of taxation but reality there is a second point of taxation because here is self-employment tax in addition to income tax. Of course paying self employment tax is still better han paying a C-Corp tax because the C-Corp will need o make an employment tax on salaries which is ssentially the same as the self employment tax).
ne difference is that with the C-Corp you can hold rofits in the corporation rather than pay them out; herefore if you are highly profitable, you will want to old profits in the corporation and also pay yourself a minimal salary. If you expect to experience losses as hings ramp up, as it usually the case, the LLC has dvantages. LLCs pass those losses along, and those oses can offset other income you might have. In a Corp, the corporation will carry those losses (for credit gainst future profits) but the owner, as an employee, oes not get to make use of those losses. He or she will ave W-2 income and will be taxed accordingly, just as
Still, the biggest limitation of LLCs is the systemic problem of how you deal with the ownership structure. LLCs do not have shareholders and shares of stock (instead they have "members" and "units"). It may seem that these are just different names for the same thing, but that is not so. In an LLC, one member is the same as another member. Everyone is working under the same operating agreement. An investor, the owner, other employees who have been given ownership -- all hold exactly the same share of equity or unit; there is no difference between them.
C - Corporations can issue different classes of stock, so an investor might have preferred stock and employees and owners have common stock. Those classes can be subdivided further so a investor today might get "Series A Preferred Stock" with certain rights and privileges, and a later investors get "Series B Preferred Stock" with different rights. You might setup a stock option plan for employees to give them ownership in exchange for
heir work and loyalty to the company while the owners ave a founders stock. Vendors might get stock arrants in exchange for providing discounted services. n short, there is a lot more flexibility.
hen there are tax implications. If you have asked an vestor to put in money at $10 per unit and later you ve 100 units to an employee because you want to give hem ownership, then you have subjected that mployee to a tax hit. The IRS will say that you "gave" he employee $1000 worth of equity ($10 x 100 units) nd he owes income tax--at ordinary income rates. So our employee is out, say, $300 + in taxes.
With the C-Corp, however, you can create a stock ption plan to give ownership to employees. As long as he option price is equal to the fair market value of the nderlying class of stock (at the time the option was ranted) there is no taxable event. The expectation is hat the company will grow, and by the time the stock ests it will be worth a lot more than when it was ranted. The employee will have to pay tax on the gain
if and when he/she exercises those options, but she/he does not need to exercise the options until they intend to cash in (and then there is cash to pay the tax!).
And it is taxed as capital gain (albeit short term), not as ordinary income. Note that in a C-Corporation all classes of stock are usually not created equal and, therefore, are not priced the same. If an investor buys preferred shares at $10/share that does not mean your common shares are also worth $10/share or that your base option price is $10/share. The preferred shares can have may benefits that make them much more valuable. Nobody would pay $10 for common when the same $10 can get them so much more with preferred.
Your board of directors will have set the price of common, as noted in the minutes, with an explanation of why they are worth so much less than the preferred shares. It is not unusual for this discount to be 90% (or more) in a start up, so a $10 preferred price might mean $1 (or less) for common shares and their option exercise price!
o what to do?
When Private Placement Advisors helps form a new ompany we always start with an LLC. After success ave been achieved and the entrepreneur wants to grant ock options to new (or old) employees or outside nvestors, we convert to a C-Corporation. When you are alking major investors and employee option pools, Corporations are often the way to go. When it is only ou and one or two partners at the outset, an LLC is hat you want.
ut be careful with that LLC. You do not want to end up ith a large number of investors who have invested at ifferent times -- with no flexibility in how those hares/units are priced or structured.
About the author Web sites and blogs that Douglas Slain has managed for the last several years
include PrivatePlacementAdvisors.com, RegDConsumersReport.com, RegDLaw.com, and Startup-SeedCapital.com. Books he has authored include Real Estate Blind Pools, Delivery Services, and EB-5 and U.S. Securities Law. Doug is the manager of a LinkedIn discussion group focusing on state securities enforcement and private placement law with over 950 members, styled Securities Enforcement Group/Securities Enforcement Law. He is available as an expert witness in litigation involving compliance with Regulation D and private placement law. Doug was the founding editor and long term publisher of Insurance Litigation Reporter (with Bills Gates Sr. on the original editorial advisory board), Professional Liability Reporter, Medical Liability Reporter, Pleadings and Briefs
and Construction Litigation Reporter, titles initially purchased by McGraw-Hill, Inc., and now published by ThomsonReuters. More recently, he was the founding editor and publisher of Securities Enforcement Reporter and Blue Sky Chronicle. Doug practiced real estate and finance law at Pillsbury, Madison & Sutro (now Pillsbury Winthrop) after graduating from Stanford Law School. He was honored to serve as an A BA rule of law consultant to the Ministry of Economy for the Republic of Latvia as its secured transactions adviser. He has taught at Stanford Law School as an adjunct clinical law professor. He has served as chairman of the American Bar Associations Professional Responsibility Committee (for two terms). His first job out of college was as a reporter for The Wall Street Journal.
Doug initiated (and then associated with Lieff Cabraser Heimann & Bernstein to pursue) a class action against the infamous Fund America, where $37 million was recovered 10 months after the class was certified. He was also the lead plaintiffs lawyer in the largest consumer class action filed against the even more infamous WorldCom, Inc. Doug received a JD from Stanford Law School, a MA from the University of Chicago (working with Hannah Arendt and Saul Bellow in the Social Thought Committee), and a BA from DePauw University (Phi Beta Kappa), a diploma from University College London, and a certificate from the Goethe Institute.
He can be reached at doug.slain@privateplacementadvisors,om or via Skype at dslain2134.