Social Market Research for Charity (SMRC)1009 Tantra Park Circle, Boulder, CO 80305 | (720) 204-3569 EQUITY PARTNER TERMS / FINANCING AGREEMENTThis Agreement is made as of this the____________ , by and between___________________________,an individual resident of ________________ (hereinafter referred to as "Investor") and Phil Nakata &Assoc. (a Colorado Consultancy) , (hereinafter referred to as the "PNA") regarding an investment of____________________________ , as an Equity Partner in an entity (TBD), dba Social Market Researchfor Charity (hereinafter referred to as “SMRC) 1. The location of SMRC will be at: Online – TBD / Hosting – Boulder CO Operations HQ: 1009 Tantra Park Circle, Boulder CO 98052 Development/Networking/Consulting: 1009 Tantra Park Circle, Boulder CO 98052 Satellite offices: Los Angeles, Houston, San Diego, Scottsdale, Seattle, Australia Online at: www.socialmarketresearchforcharity.org (INTERMEDIATE - TEMPORARY) 2. Availability: These terms are only offered to a SMRC working partner – e.g. your qualified need based on being an active registered SMRC sponsor or Spokesperson sponsor. 3. Period of agreement: Duration of the agreement is 1 Year and Yearly renewal basis. This duration is applicable unless it’s stated in any part of this agreement. Any change towards the duration of the agreement should be done with a new agreement and automatically this agreement is invalid 3. Equity: ___ (Y/N) # of Shares or % of Share Type Exec. Notes Reference shares per class Board (a – f below) Votes SMRC Common 1 (a) (Executive – Performer) SMRC Common 0 (b) Non-Exec voting SMRC Preferred n/a Non-voting a. Executive founders shares as 30% of total shares. 18.5% of this class is pre-allocated, along with 6% as a finder’s fee equity reserve. The current offer is $3 Million for 40% of the shares in this class, leaving a residual of 36% of SMRC’s Executive Common shares plus all of the un-allocated Common and Preferred shares to be issued in a 2nd round investment or up to a second round of investments, bring th total invested to date of $100,000,000 – based on a first year revenue before taxes of $200+ million. b. Un-allocated; reserved for 2nd round investments, General board voting rights by shares c. Un-allocated; reserved for 2nd round investments _______________________________ d. ____________________________________________________________________ e. ____________________________________________________________________ f. ____________________________________________________________________ 4. Use of Funds: The funds will be used to provide working capital to fund the last stages of development (in a production system), operational and infrastructure/service overhead, and the market introduction of SMRC to Charities, Celebrities and Key Social Leaders (non-political companies with active ties to charities that accept donations).
Social Market Research for Charity (SMRC)1009 Tantra Park Circle, Boulder, CO 80305 | (720) 204-3569 Based on an initial launch with 10 million members (from some of the largest charities & educational institutions), and 500+ small social/web sponsor, the major emphasis is building membership from thousands of mid to large sized sponsors (million+ followers and cause marketers (former invasive advertisers)): Use of Funds by Partner-Sponsor Investment class: At $3MM primary funding, 2/3 for marketing, 1/3 for development => base plan at 10 million startup users worst case (generating a minimum of $2+ BB for charity +rewards At $25MM funding, 2/3 for marketing , 1/12 for infrastructure mgmt, ¼ for development => to achieve 3 year plan in 2 years At $100MM funding, 1/3 for marketing, ¼ for development, 5/12 for infrastructure mgmt. => to achieve 3 year plan in 2 years and own most of the SMRC off-shore bank Base Budget Template: Factored proportion to the targeted budget and returns (achievements), the tactical components are defined in the SMRC Executive Summary, page 28 of of SMRC’s Business Profile, adjusted by an additional $1 MM to include marketing and development services for the first 30-45 days after market launch, as a $3MM net start-up investment. The profile from page 28 of the above document is displayed below: Architecture: $416,000 Subscriptions processing systems (20,000) Rewards tracking systems (20,000) Activity & gaming point systems (30,000) SMRC profile development / content tracking 35,000) ( Hosting/member donation entry/logging 38,000) ( System multi-server XML synchronization 35,000) ( VirtuALLY 40,000) ( User Interfaces/Mobile Apps (40,000) Labor (4 Mo. X 25 people, 2/3:mktg) $804,000 Phillip Nakata - information systems architect 45,000) ( Aaron Nakata - gaming/coding liaison (45,000) TBD - human systems architect (45,000) Joel Doerfel - charity/celebrity liaison 45,000) ( TBD - presentation guru/ head maverick 45,000) ( Promotion: $227,500 Communications 7,250) ( Travel & Lodging (41,500) Presentation (3,950) Materials (hardware) (15,800) Events Co-Sponsorship (22,500) Penny Program (base rate of content) $209,625 g₁ = i₀ * 18.28% (8,850) g₂ = g₁ * 1.618 (14,325) g₃ = g₂ * 1.618 (23,175) g₄ = g₃ * 1.618 37,500) (
Social Market Research for Charity (SMRC)1009 Tantra Park Circle, Boulder, CO 80305 | (720) 204-3569 Graphic Design : $95,000 www.christianknopf.de/index.php 14,000) - NOTE : sample ( http://www.schematic.com/# 24,000)- NOTE: sample ( Branding 95,875 $ Registrations & Trademarking 3,900) ( Celebrity Affiliations/Associations 12,000) ( Philanthropic Affiliations/Associations 13,000) ( Viral Content (4,950) Legal & Miscellany: $152,000 Insurance (2,400) Legal 50,000) ( Miscellany (12,900) Sub-Totals: $2,000,000 Infrastructure, Business Overhead: $1,000,000 For 1.5 – 2 mo.; to be applied against $3MM min. research return (1/3 of target) Total: Launch + 2mo. Adjustment $3,000,000 5. Repayment of Investment: In consideration of the Investor making that financial contribution called for in paragraph 4 hereof, SMRC shall pay or cause to be paid to the Investor the following: (a) Repayment of Investment: Shall in any case the investor want to reimburse the investment amount or terminate the contract, SMRC will pay back the invested amount only. (b) Net Profit Participation: Paid as Dividends on SMRC Common and Preferred Stock it is based on the percentage of a partner/investor’s shares to the total SMRC outstanding (common) shares PLUS the total number of Issued Preferred Shares. Net profits participation of the Investor as described in this sub-paragraph 3(b) shall continue so long as SMRC is generating net profits and duration of the agreement except that the Investor shall have no interest in the SMRC anymore. EXCLUSIVE / AND / OR (USING EQUITY AS COLLATERAL – one only at most – strikeout others): [ ] _______ (SMRC initials) Dividends: Beginning in the third year following investment, the enterprise will pay to the investor a dividend. Dividends will be shared among investors on a pro rata basis. The amount of the dividend will be determined by the board of directors, but in no event will total dividends issued reduce the fiscal year end cash ratio to less than .75.
Social Market Research for Charity (SMRC)1009 Tantra Park Circle, Boulder, CO 80305 | (720) 204-3569 [ ] _______ (SMRC initials) - Investor redemption based on a pre-defined schedule - Beginning in the third year after investment the investor will have the right to redeem their equity to the extent that the enterprises cash ratio can be maintained at or above .6. If more than one investor wishes to redeem their equity it will be done so on a pro rata basis. Redemption will be based on the following schedule. Year three - 125% of original investment, this is equivalent to 10% internal rate of return. Year four - 190% of original investment, this is equivalent to 18% internal rate of return. Year five - 250% of original investment, this is equivalent to 21% internal rate of return. [ ] _______ (SMRC initials) - Enterprise buyout of investors based on a pre-defined schedule - Beginning in the third year after investment the enterprise will have the right to buy back the investors equity at a pre- determined price. Buy back will be based on the following schedule. Year three - 400% of original investment, this is equivalent to 60% internal rate of return. Year four - 600% of original investment, this is equivalent to 57% internal rate of return. Year five - 800% of original investment, this is equivalent to 52% internal rate of return. [ ] _______ (SMRC initials) – Merger, Acquisition, IPO In any of these circumstances it is not possible to predict what the return will be for the investor. It is assumed that any such action would be done in the best interest of the stockholders. 6. Investors Monetary Contribution: The Investor shall deliver a ______________ (Check/Cash/Other) in the amount of ________________to the SMRC payable to the Companys designated <SMRC Inc.> Account. OR A Total Equity Investment of $ __________________, in ______ Phases: $_________________ at the start of this Agreement; $_________________ after ____________________; $_________________ at _______________________
Social Market Research for Charity (SMRC)1009 Tantra Park Circle, Boulder, CO 80305 | (720) 204-3569 6. Investor Approval Rights: The Investor shall be ______ actively involved on a regular basis and in a material manner in significant decisions relating to the expansion, selling of the SMRC, production, post-production, and other exploitation of the SMRC. 8. Representations and Warranties: SMRC hereby represents and warrants to the Investor that: (a) Powers and Authority: It is duly incorporated, validly existing and in good standing. It has the corporate power and all necessary rights and title to enter into and perform this Agreement and the transactions contemplated hereby or referred to herein and have taken all necessary action to authorize the entry into and performance of this Agreement and such transactions. (b) Legal Validity: This Agreement constitutes a legal, valid and binding obligation of SMRC and is in proper form for enforcement against it. (c) Non-Conflict With Laws: The entry into and performance of this Agreement and the transactions contemplated hereby do not and will not conflict with: (i) any existing law or regulation or any official or judicial order, or (ii) its articles of incorporation, or (iii) any agreement or document to which it is a party or which is binding upon it or any of its assets. Without limiting the generality of the foregoing, SMRC represents and warrants that there are not now any liens, claims, encumbrances, legal proceedings, restrictions, agreements or understandings which might conflict or interfere with, limit, derogate from, or be inconsistent with or otherwise affect any of the provisions of this Agreement or any of the representations or warranties of SMRC. (d) Consents: All authorizations, approvals, consents, licenses, exemptions, filings, registrations, notarizations and other matters, official or otherwise, required by SMRC or advisable in connection with the entry into, performance, validity and enforceability of this Agreement and the transactions contemplated hereby SMRC have been obtained or effected and are in full force and effect (other than the registration of security interests to be created pursuant hereto). (e) Litigation: No litigation, arbitration or administrative proceedings are threatened or, to its knowledge, pending which call into questions the validity or performance of its obligations hereunder. (f) Copy Documents: Each copy document delivered to the Investor by or on behalf of SMRC under or in connection with this Agreement and/or any prior negotiation between SMRC and the Investor constitutes a true and complete copy of the document of which it purports to be a copy and all facts, circumstances and other documents which might materially affect their interpretation have been disclosed in writing to the Investor.
Social Market Research for Charity (SMRC)1009 Tantra Park Circle, Boulder, CO 80305 | (720) 204-3569 (g) Material Information: All information which might be material to a person assuming the obligations and acquiring the rights assumed and acquired by the Investor pursuant to this Agreement has been disclosed in writing to the Investor and there are no facts or circumstances which might make such information misleading or inaccurate. (h) Survival: SMRCs warranties, representations and agreements are of the essence of this Agreement and shall survive the early termination hereof. None of SMRCs warranties, representations or agreements shall in any way be limited by reason of any investigation made by the Investor or on behalf of the Investor regarding said warranties, representations or agreements. 9. Indemnification by SMRC: SMRC shall, at its own expense, indemnify, save and hold harmless the Investor and its successors, licensees, assigns, agents, representatives and affiliates from and against any and all claims, demands, causes of action, obligations, liability, loss, damage, cost and expenses (including reasonable attorneys fees), incurred or sustained by reason of or arising out of any breach or alleged breach of any of the warranties, representations or agreements herein made by SMRC, or from any reliance upon any such warranties, representations or agreements. If any person or entity shall make any claim or institute any suit or proceeding alleging any facts, which, if true, would constitute a breach by SMRC, of any warranty, representation or agreement herein made, SMRC shall give prompt written notice of same to the Investor and SMRC shall undertake at its own cost and expense the defense thereof and shall supply competent and experienced counsel to defend any such suit or proceeding. The Investor may also engage his own counsel in connection with any such suit or proceeding. 10. Accounting and Reports by SMRC: (a) SMRC shall maintain complete books and records with respect to the operation of SMRC. SMRC shall render to the Investor, on a semi-annual basis for the first two years after initial operation of SMRC, a written statement of monies due the Investor hereunder, if any ("Investor Statement"), and such Investor Statement shall be accompanied by remittance of any amount shown to be due to the Investor thereon. Thereafter, Investor Statements and payments shall be provided annually for as long as SMRC generates net profits or based on duration of the agreement which ever first. If any error is made by SMRC in any Investor Statement, it may be corrected by SMRC within two (2) years thereafter by making any necessary deductions or additions on subsequent Investor Statements, or at SMRC s option by rendering an Amended Investor Statement. Each Investor Statement shall be rendered within forty-five (45) days following the end of each accounting period. Any Investor Statement rendered by SMRC hereunder shall be deemed conclusively true and correct and binding upon the Investor, shall constitute an account stated and be incontestable unless the Investor delivers to SMRC in writing specific objections, setting forth specific transactions or items objected to and the basis of such objections, within one (1) year from the date of such Investor Statement. Any recovery by the Investor shall be limited to those items specifically objected to in writing by the Investor within said one (1) year period. (b) The Investor shall have the right to examine the books and records of SMRC to the extent they pertain to the operation of SMRC. Such examination shall be made during
Social Market Research for Charity (SMRC)1009 Tantra Park Circle, Boulder, CO 80305 | (720) 204-3569 reasonable business hours, upon reasonable advance written notice, at the regular place of business of SMRC where such books and records are maintained, and shall be conducted on the Investors behalf and at the Investors expense by the Investors designee. Such examination shall not be made more frequently than annually and no more than once with respect to any accounting period or Investor Statement rendered hereunder. With respect to any accounting period for which an Investor Statement has been rendered by SMRC, such examination shall be permitted only for a period of one year from the date such Investor Statement was received by the Investor. Investors examination shall be limited to those records relating to the SMRC and under no circumstances shall the Investor have the right to examine records relating to SMRC business generally or relating to other motion pictures for purposes of comparison or otherwise. (c) No action, suit or proceeding arising out of this Agreement or concerning the Investor Statement or other accounting rendered by SMRC hereunder or to the period of time to which such Investor Statement or accounting relates may be maintained against SMRC unless commenced within one (1) year after the date such Investor Statement or accounting is received by the Investor. (d) SMRC shall, upon the Investors request, avail itself of any audit right SMRC might have under any distribution agreement SMRC might enter into relating to the SMRC. The expenses of such an audit, if not reimbursable by such distributor shall be a deductible expense under paragraph 2 hereof. 11. Funds Held in Trust: All monies received by SMRC which are payable to the Investor in accordance with the provisions of this Agreement shall be held by SMRC, in trust, for the sole use and benefit of the Investor and shall be immediately deposited upon receipt in a separate interest-bearing bank account naming the Investor as the beneficiary thereof. SMRC shall not commingle the monies payable to the Investor hereunder with other monies of SMRC. 12. Relationship of Parties: The Investor and SMRC each acknowledge that they are independent contractors and that no partnership, joint venture, agency or employment relationship has or will be created by this Agreement. However, nothing herein shall prevent SMRC from subsequently initiating arms length negotiations with and engaging the Investor and/or the Investors company, in which case the Investor and/or his company shall be paid budgeted costs out of the SMRCs budget. 13. Business Opportunities: Each of the parties acknowledges that this Agreement relates only to the SMRC and than none of the parties will in any way be restricted from any other business activity, whether or not competitive to the SMRC, it being agreed that so-called "corporate and/or joint venture opportunities" or fiduciary opportunities in relation to any such other activities are hereby waived by each of the parties. 14. Additional Documents: Each of the parties agree to execute any additional documents which may be required or be desirable to fully effectuate the purposes and intent of this Agreement or to carry out the obligations of the parties hereunder, provided that they are not inconsistent with the provisions of this Agreement.
Social Market Research for Charity (SMRC)1009 Tantra Park Circle, Boulder, CO 80305 | (720) 204-3569 15. Notices: All notices hereunder shall be in writing and shall be served by personal delivery to the Investor or SMRC, as the case may be, or by registered or certified mail, return receipt requested, or by telegram or FAX, addressed as follows: Investor: _________________________________________ _________________________________________ _________________________________________ Any party may change its address at any time by written notice to the other parties. Notices served by mail shall be deemed to be served three (3) business days next. 16. Assignment: No party hereto shall have the right to assign all or any part of its right or obligations hereunder without the prior consent of the other party, except that nothing contained in this sentence shall prevent any party from assigning its right to receive monies hereunder. 17. Miscellaneous: (a) This Agreement may not be modified except by written agreement signed by each of the parties hereto. (b) This Agreement shall in no event be construed as a third party beneficiary contract and is not intended for the benefit of any person or company whomsoever except the parties hereto. (c) No waiver by one party of a breach or default by the other party shall be deemed to be a waiver of any preceding, continuing or succeeding breach of the same or any other provision of this Agreement. (d) Each party acknowledges that no representation or warranty not expressly set forth in this Agreement has been made or relied upon by the other party, it being agreed that this Agreement constitutes the entire Agreement of the parties regarding the subject matter hereof and supersedes all prior Agreements with respect thereto. (e) This Agreement has been entered into in the United States and shall be construed and enforced under and subject to the laws of said country. 18. Attorneys Fees: In any action or proceeding between or among the parties hereto to interpret or enforce any of the provisions hereof, the prevailing party shall, in addition to any other award of damages or other remedy, be entitled to reasonable attorneys fees and costs.
Social Market Research for Charity (SMRC)1009 Tantra Park Circle, Boulder, CO 80305 | (720) 204-3569 WHEREFORE, the parties have executed this Agreement on the date first above written. Funding SMRC Sponsor or Sponsor Spokesperson as an Equity Partner By: ___________________________________________________ ___________________________________________________ SMRC: By: ___________________________________________________