SAMPLE OPERATING AGREEMENT - dot.state.oh.us€¦ · SAMPLE OPERATING AGREEMENT This Operating...

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1 SAMPLE OPERATING AGREEMENT This Operating Agreement (the “Agreement”) of Company (hereinafter the “Company”) is entered into as of today between Pat, Luis and Joe. RECITALS A. The Members hereto shall cause to be formed a limited liability company pursuant to and in accordance with the Ohio Limited Liability Company Act, as amended from time to time (“OLLCA”); B. The Members wish to comply with the requirements of the OLLCA and to promote their mutual interests by defining their respective rights, obligations and restrictions with respect to management of the Company and transferability of their interests therein; NOW, THEREFORE, IT IS AGREED AS FOLLOWS: ARTICLE I ORGANIZATION AND PURPOSE 1.1 Organization. The Members have agreed to the organization of a limited liability company pursuant to the OLLCA and the provisions of this Agreement and, for that purpose, will cause a Certificate of Formation to be executed and filed for record with the Ohio Secretary of State and agree to the provisions set forth herein. 1.2 Name of the Company. The name of the limited liability company formed shall be Company. The Company may do business under that name and under any other name or names which the Members select. If the Company does business under a name other than that set forth in its Certificate of Formation, then the Company shall file an application for an assumed business name as required by law. 1.3. Term. The term of the Company shall begin on its formation date and continue until dissolved in accordance with the OLLCA and the provisions of this Agreement. 1.4 Purpose. The Company will be formed as a to engage in any lawful act or activity for which limited liability companies may be formed under the OLLCA and to engage in any and all activities necessary or incidental to the foregoing. 1.5 Office. The registered office of the Company shall be at address and name of agent. . 1.6 Members. The membership interests of the Members are set forth below, and the Members shall own an interest in the Company, in accordance with the following Sample For ODOT Seminar Use Only

Transcript of SAMPLE OPERATING AGREEMENT - dot.state.oh.us€¦ · SAMPLE OPERATING AGREEMENT This Operating...

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SAMPLE OPERATING AGREEMENT

This Operating Agreement (the “Agreement”) of Company (hereinafter the

“Company”) is entered into as of today between Pat, Luis and Joe.

RECITALS

A. The Members hereto shall cause to be formed a limited liability company

pursuant to and in accordance with the Ohio Limited Liability Company Act, as amended

from time to time (“OLLCA”);

B. The Members wish to comply with the requirements of the OLLCA and to

promote their mutual interests by defining their respective rights, obligations and

restrictions with respect to management of the Company and transferability of their

interests therein;

NOW, THEREFORE, IT IS AGREED AS FOLLOWS:

ARTICLE I

ORGANIZATION AND PURPOSE

1.1 Organization. The Members have agreed to the organization of a limited liability

company pursuant to the OLLCA and the provisions of this Agreement and, for that

purpose, will cause a Certificate of Formation to be executed and filed for record with the

Ohio Secretary of State and agree to the provisions set forth herein.

1.2 Name of the Company. The name of the limited liability company formed shall

be Company. The Company may do business under that name and under any other name

or names which the Members select. If the Company does business under a name other

than that set forth in its Certificate of Formation, then the Company shall file an

application for an assumed business name as required by law.

1.3. Term. The term of the Company shall begin on its formation date and continue

until dissolved in accordance with the OLLCA and the provisions of this Agreement.

1.4 Purpose. The Company will be formed as a to engage in any lawful act or activity

for which limited liability companies may be formed under the OLLCA and to engage in

any and all activities necessary or incidental to the foregoing.

1.5 Office. The registered office of the Company shall be at address and name of

agent. .

1.6 Members. The membership interests of the Members are set forth below, and the

Members shall own an interest in the Company, in accordance with the following

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percentages (the “Membership Interest(s)”), subject to adjustment, by the prior written

consent of all Members, including but not limited to, the event additional members are

admitted:

Name Membership Interest = 100%

Patrick 33.3%

Joe 33.3%

Luis 33.3%

ARTICLE II

CAPITAL

2.1 Capital. The Members shall contribute the amounts following their names on

Exhibit “A” attached hereto and incorporated by reference herein (herein after referred to

as “Initial Contribution(s)”). The Initial Contributions to be allocated shall be determined

not later than 90 days after the execution date of this Agreement. Except as shall be

expressly set forth herein, no member shall be required to (a) make any additional Capital

Contributions (hereinafter Initial Contributions plus additional Capital Contributions shall

be collectively referred to as “Capital Contribution(s)”), (b) make any loan, or (c) caused

to be loaned any money or other assets to the Company (collectively (b) and (c) shall

hereinafter be referred to as “Member Loan(s)”).

2.2 An individual capital account shall be maintained for each Member (hereinafter

referred to as “Capital Account(s)”). Each Member’s Capital Account shall consist of its

Capital Contributions, and subject to the prior written approval of all other Members,

increased by (i) such Member’s additional contributions to the capital of the Company, if

any, and (ii) such Member’s share of the Net Profits of the Company and decreased by

(a) distributions to such Member by the Company, (b) such Member’s distributive share

of Net Losses of the Company, and (c) such Member’s distributive share of expenditures

of the Company not deductible in computing net profits or losses and not properly treated

as capital expenditures. No Member shall have the right to withdraw, or receive any

return of, its Capital Contributions, if any, and no Capital Contributions may be returned,

except as specifically provided herein.

2.3 No interest shall be paid by the Company on Capital Contributions of Members.

Unless approved by the vote or prior written consent of all Members, in accordance with

Article IV of this Agreement, no Member shall have the right to withdraw from the

Company, or to demand a refund or return of all or any part of its Capital Contributions,

and no Member shall be entitled to any compensation for use of the Capital

Contributions.

2.4 For purposes of this Agreement, the Net Profits and Net Losses of the Company

for any fiscal year shall be determined under the cash basis method of accounting in

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accordance with generally accepted accounting principles in the US, consistently applied

(hereinafter “GAAP”).

2.4.1 Any Net Profits of the Company shall be allocated among the Members

pro rata in accordance with their respective Membership Interests in effect for such year

(with appropriate adjustments if Membership Interests change during the year). The sum

of the Membership Interests of all Members shall be equal to 100 percent at all times.

The Membership Interests of the Members are set forth in Section 1.6 hereof. Any

subsequent changes to these Membership Interests will be reflected from time to time on

the Company’s books and records.

2.4.2 Any Net Losses of the Company shall be allocated among the Members

pro rata in accordance with their respective Capital Account balances as of the first day

of such year, with a proportionate adjustment made if there are Capital Contributions or

withdrawals during the year, except that Net Losses may be allocated to Members who

are “at risk” as determined under the OLLCA, with the prior written consent of all other

Members.

2.4.3 As used herein, the terms “Profits” and “Losses” shall mean, for each

fiscal year, the economic Net Profits and Net Losses of the Company as determined for

each fiscal year, or portion thereof, in accordance with GAAP in the United States of

America, consistently applied. The foregoing provisions and the other provisions of this

Agreement relating to the maintenance of Capital Accounts are intended to comply with

all applicable provisions of the Internal Revenue Code of 1986, as amended from time to

time (“Code”), or any corresponding Federal tax statute enacted after the date of this

Agreement. A reference to a specified 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 execution 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. If in

the opinion of the Company’s accountants the manner in which Capital Accounts are to

be maintained pursuant to the preceding provisions of this Article should be modified to

comply with the Code thereunder, then notwithstanding anything to the contrary

contained in the preceding provisions of this section, subject to the prior written consent

of a supermajority of the Members, the method in which Capital Accounts are maintained

shall be so modified; provided, however, that any change in the manner of maintaining

Capital Accounts shall not materially alter the economic agreement among the Members

as set forth in this Agreement. It is intended that all of the allocations of income, gain,

loss, deduction and credit pursuant to this Agreement will comply with the Code, and this

Agreement shall be interpreted consistently therewith. For federal, state and local income

tax purposes, each item of income, gain, loss, deduction or credit of the Company shall

be allocated among the Members pursuant to the other applicable provisions of this

Article II.

ARTICLE III

FISCAL YEAR, PROFITS AND LOSSES DISTRIBUTIONS

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3.1 Fiscal Year. The fiscal year of the Company shall commence as of May 1st and

terminate on April 30th the following year, for each calendar year during the Term of this

Agreement (“Fiscal Year”).

3.2 Net Cash Flow. Subject to Section 3.3 below, distributions of net cash flow of the

Company, if any, less such reasonable reserves as the Members shall determine to be

necessary for present operations and/ or future contingencies, shall be made at such time

and in such amounts as the Members shall determine by prior written approval of a

supermajority of the Members. For purposes hereof, net cash flow shall be the net profits

or losses of the Company for the Fiscal Year, plus any amounts deducted during such

period for depreciation, unpaid accrued interests and other non-cash charges. In addition,

the amount paid during such period for Member reimbursements, Capital Contributions

and previously unpaid accrued interest shall be subtracted, unless otherwise advised by

the Company’s accountants. Net cash flow shall be distributed to the Members in

proportion to each Members’ Interests.

3.3 Capital Contributions Delinquency. No distributions of net cash flow shall be

made to any Member who is in default of its Capital Contribution, until such time as the

delinquency plus interest thereon computed at the rate charged to the Company by its

institutional lender on the last date of the month prior to the date that distributions are

made (the “Delinquency”) is recouped. All such Member’s distributions, up to the

amount of the Delinquency, shall instead be paid to the Company (or any respective

Members who loaned more than their proportionate share, up to the amount of such

excess loans, distributed pro rata among those Members, including interest computed in

the manner set forth above) in reduction of the Delinquency.

3.4 Intentionally deleted.

3.5 Distribution Proceeds. The net cash proceeds resulting from the sale, exchange,

lease, refinance or other transfer of all or substantially all of the assets of the Company or

from the liquidation of the assets of the Company following the dissolution thereof,

subject to the applicable provisions of this Agreement, which are not reinvested or

retained by the Company for the continuation of its business, and after deducting all

related expenses, (hereinafter referred to as “Distribution Proceeds”) shall be distributed

and applied in the following order of priority:

3.5.1 to pay any debts or liabilities of the Company, including, but not limited

to, all outstanding Member Loans (together with interest thereon as calculated pursuant to

other applicable provisions contained herein) made to the Company by any Member and

all necessary expenses of liquidation, if applicable;

3.5.2 to establish any reserves which the Members deem reasonably necessary

to provide for any contingent or unforeseen liabilities or obligations of the Company,

provided, however that at the expiration of such period of time as the Members deem

advisable, the balance of such reserves remaining after the payment of such contingencies

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shall be distributed to the Members in accordance with Sections 3.5.3, 3.5.4, and 3.5.5

below:

3.5.3 to the Initial Members, in proportion to their respective Capital

Contributions;

3.5.4 to the Members, in accordance with, and proportionate to their respective

positive Capital Account balances remaining after the payments described in this Section,

3.5, (until the positive Capital Account of each Member, on a pro rata basis, is reduced to

zero); and

3.5.5 to the Members in proportion to each Member’s Membership Interest.

3.6 Members’ Reimbursements. The Company shall reimburse the Members for any

expenses paid by them that properly are to be borne by the Company, as approved by the

Members from time to time. Notwithstanding the foregoing, with respect to any

expenses related to client development, relations, retention, or investment incurred by any

Member shall be reimbursable up to $300. Any amounts in excess of $300 shall be

reimbursable, but only upon the approval of a supermajority of the Members, unless

otherwise unanimously agreed upon by the other Members.

ARTICLE IV

MANAGEMENT

4.1 Management by the Members. The business and affairs of the Company shall be

managed by and all Company decisions shall be made by the supermajority vote of the

Members, except as otherwise provided herein. The Members may designate or elect

officers to assist in the management of the day to day operations of the business and

affairs of the Company, and such officers may take any actions as are necessary or

appropriate, within the scope of their respective duties and responsibilities, to carry out

the approved decisions of a supermajority of the Members. All Members shall have the

title, rights, duties, obligations and compensation as set forth in the Employment

Agreement, attached hereto as Exhibit “B”, and incorporated by reference herein, which

shall be determined, for each Initial Member, not later than 90 days after the execution

date of this Agreement. The Chief Executive Officer (“CEO”), to be determined at a

future date, shall have the discretion and authority to make all Company decisions

relating to financing and strategy, on behalf of the Company and the other Members, if

necessary, subject to the applicable state or local law.

4.2 Intentionally deleted.

4.3 Execution of Non-Disclosure/Non-Circumvention Agreements: All Members

agree to simultaneously execute Exhibit “C”, attached hereto and incorporated by

reference herein.

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4.4 It is the intention of the Members that the Company shall be treated as a LLC for

all tax purposes and each Member shall refrain from taking any actions inconsistent with

such characterization. The Chief Financial Officer (“CFO”), to be determined at a future

date, shall have the discretion and authority to make all tax elections, on behalf of the

Company and the other Members, if necessary, subject to the applicable provisions of the

Code and any applicable state or local tax law. All reasonable expenses incurred by the

CFO, approved by supermajority of the Members, while acting in such capacity shall be

paid or reimbursed by the Company.

4.5 Voting by and Meetings of Members:

4.5.1 Majority Vote. The Initial Members to this Agreement shall maintain

exclusive voting rights throughout the term of this Agreement, unless otherwise agreed

upon at a later date by unanimous consent. Any Supermajority vote shall be defined as

consisting of four (2) out of five (3) Initial Members. Notwithstanding the foregoing, the

following actions shall require the unanimous consent of all Initial Members:

(a) to admit new Members or to transfer all or any portion of a Member’s

Membership Interest;

(b) to approve the repayment of Capital Contributions, subject to other

applicable provisions of this Agreement;

(c) to approve the annual budget and/or the incurrence of any extraordinary

indebtedness, other than indebtedness in the ordinary course of business of the Company;

(d) to approve the Company making an investment in or a loan to any person

or entity, subject to other applicable provisions of this Agreement;

(e) to amend the Company’s Articles of Organization or this Operating

Agreement.

Notwithstanding the foregoing, the following actions shall require Supermajority

consent of all Initial Members:

(f) to approve an increase in the compensation of any Member, or other

employee of the Company;

(g) to approve a sale, exchange, lease, mortgage, pledge or other transfer of all

or substantially all of the assets of the Company;

(h) to approve a merger, acquisition or consolidation with another entity;

(i) to approve prepayment of a Member Loan;

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4.5.2 Meetings. A meeting of the Members may be called at any time by a

Member on not less than ten (10) nor more than ninety (90) days prior written notice to

all Members before each meeting. No annual or regular meetings of Members are

required. The notice shall state the time, place, and purpose of the meeting.

4.5.3 Consent In Lieu of Meeting. In lieu of holding a meeting, the Members

may vote or otherwise take action by a written instrument indicating the Supermajority

approval of the Members.

4.5.4 Attendance At Meetings By Teleconference. Meetings of the Members

may be undertaken by means of a conference telephone or similar communications

equipment by which all individuals participating in the meeting can hear each other

during the meeting. Participation by such means shall constitute presence in person at

such meeting.

4.5.5 Proxies. At all meetings of Members, a Member may vote in person or

by proxy. Such proxy shall be filed by any Member prior to the commencement of the

meeting and may be filed by regular postal service, facsimile, or email transmission at the

principal office of the Company.

4.5.6 Limited Liability. No Member shall be personally liable under any

judgment of a court, or in any other manner, for any debt, obligation, or liability of the

Company, whether that liability or obligation arises in contract, tort, or otherwise, solely

by reason of being a Member of the Company.

ARTICLE V

BOOKS AND RECORDS

5.1 Bank Accounts. All funds of the Company shall be deposited in a bank account

or accounts opened in the Company’s name. A Supermajority of the Members may

determine the institution or institutions at which the accounts will be opened and

maintained, the types of accounts, and the persons who will have authority with respect to

the management of the assets of the accounts and the funds therein.

5.2 Books and Records.

5.2.1 Maintenance of Books and Records. The books and records of the

Company shall be kept at the principal place of business of the Company, or in such other

place as designated by a supermajority of the Members.

5.2.2 Examination of Books and Records. The books and records shall be

maintained in accordance with GAAP, consistently applied and shall be available at the

Company’s principal office for examination by any Member or the Member’s duly

authorized representative at any and all reasonable times during normal business hours

upon twenty four hours prior written notice to be delivered to the Company’s principal

office.

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5.2.3 Payment of Costs of Inspection. Each Member shall reimburse the

Company for all costs and expenses incurred by the Company in connection with the

Member’s inspection and/or copying of the Company’s books and records, within 30

days after the date on which the expenses were incurred.

5.3 Furnishing of Income Tax Information. Within 90 days after the end of each

fiscal year, such appropriate information as may be required by each Member for the

purpose of preparing their income tax returns for that year shall be furnished to each

Member.

5.4 Adjustment of Basis of Assets. In case of a transfer of all or part of the interest of

any Member, the Company may elect, pursuant to the applicable Sections of the Code to

adjust the basis of the assets of the Company provided that such election shall be

allowable at the time and provided further there is no detriment to the other Members.

5.5 Title to Company Property. All real and personal property acquired by the

Company shall be acquired and held by the Company in its name.

5.6 Obligations of Members to Report Allocations. The Members are aware of the

income tax consequences of the allocations made by this Agreement, and hereby agree to

be bound by the provisions of this Agreement in reporting their shares of the Company

income and loss for income tax purposes.

ARTICLE VI

TRANSFER OF MEMBER’S INTEREST

6.1 Transfer. Except as permitted in this Article 6, no Member may transfer, assign,

sell, give, pledge, hypothecate, bequeath or otherwise encumber (collectively “Transfer”)

all or any part of its Membership Interest in the Company unless approved by the

unanimous written consent of the Members in accordance with Section 4.5.1(a) and any

attempt to do so without such prior written approval or consent shall be null and void and

of no force or effect. Notwithstanding anything to the contrary contained in this

Agreement, it is understood and agreed that any Transfer of a Membership Interest

pursuant to this Article 6 shall specifically exclude any transfer of voting rights which

have been previously vested solely in the Initial Members.

6.1.1 Conditions of Transfer. No transferring Member (individually, a

“Transferor”) may Transfer all or any portion of or any interest or rights in the Member’s

Membership Interest (“Transfer of the Membership Interest”) unless the following

conditions (“Conditions of Transfer”) are satisfied:

(a) The Transfer of the Membership Interest will not require

registration of the Membership Interest under any federal or state securities laws;

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(b) The party to whom the Membership Interest is proposed to be

transferred (“Transferee”) delivers to the Company a written agreement, in a form

acceptable to the Company, to be bound by all the terms and conditions of this

Agreement;

(c) The Transfer of the Membership Interest will not result in the

termination of the Company pursuant to the applicable Section(s) of the Code;

(d) The Transfer of the Membership Interest will not result in the

Company being subject to the Investment Company Act of 1940, as amended;

(e) The Transferee delivers the Transferee’s taxpayer identification

number and the Transferee’s initial tax basis in the Transfer of the Membership Interest;

(f) The conditions of Section 4.5.1(a) are satisfied regarding, in part,

the approval of the Transfer by the Initial Members; and

(g) The Transferee obtains, at the expense of the Transferee, and

delivers to the Company, an opinion of legal counsel acceptable and approved by the

Members of the Company, confirming that the Conditions of Transfer have been

satisfied.

6.2 Family Transfers. A Member may Transfer all or any portion of their

Membership Interest in the Company as part of an estate planning technique to

member(s) of the immediate family of the Member (individually referred to as “Family

Transferee”), if Family Transferee signs a counterpart of this Agreement, as it may be

amended, agrees to be bound by its terms and conditions, and only upon the prior

Supermajority written consent of the Initial Members.

ARTICLE VII

DISSOLUTION AND TERMINATION

7.1 Upon the occurrence of any of the following events, the Company shall be

dissolved if:

7.1.1 the Company ceases its business operations on a permanent basis; or

7.1.2 the Members, in accordance with Articles III and IV herein, vote or

approve the dissolution and termination of the Company or to sell or Transfer all or

substantially all of the assets of the Company; or

7.1.3 Intentionally deleted; or

7.1.4 the entry of decree of judicial dissolution; or

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7.1.5 as otherwise provided in this Agreement or in the Articles of Organization

of the Company, as applicable.

7.2 The bankruptcy, death, dissolution, expulsion, incapacity, resignation, retirement

or withdrawal of any Member shall not cause the dissolution of the Company. Such

affected Member’s personal representative, executor, administrator or successor in

interest shall have all of the rights of a Member for the purpose of managing and settling

such affected Member’s estate, but any sale or other transfer of such affected Member’s

Interests shall continue to be subject to the provisions of this Agreement.

7.3 In the event of the dissolution of the Company, the business and affairs of the

Company shall continue to be governed by this Agreement during the winding up of the

Company’s business and affairs. In the event of such dissolution, distribution of all

proceeds, assets and any other capital account balances of the Company shall be

distributed subject to section 3.5 of this Agreement, as applicable.

ARTICLE VIII

GENERAL PROVISIONS

8.1 Members may engage in other business ventures and investments of any nature

whatsoever, so long as such activities are not competitive with the business of the

Company. Neither the Company nor any of its Members shall, as a result of this

Company, have any right or interest, in any such other business that is substantially

similar to the Company. Neither the Company nor any of its Members shall have

ventures or investments or share in any income profit or receive any other benefit derived

from a business that is substantially similar to the business of the Company. The

Company may enter into contracts with its Members provided that the financial terms and

conditions are fair and reasonable to the Company at prices that are competitive for

comparable products or services. Members may engage in business activity that is

substantially similar to the business of the Company where prior business relationships

exist as evidenced in Exhibit “D”, as shall be amended from time to time.

8.2. Any notice required or given with respect to this Agreement shall be valid and

effective when delivered by registered or certified mail or by hand or by Express Mail,

Federal Express or similar overnight courier to the address hereinabove set forth. Any

Member hereto may change such address by notice given to Company and other

Members hereto in accordance with this Section 8.2.

8.3 This Agreement shall be binding upon and inure to the benefit of the Members

hereto and their respective heirs, legal representatives, successor and assigns. Any party

that receives an assignment of a Membership Interest in accordance with the terms hereof

shall be required to execute and deliver to each other Member, a legally enforceable

agreement expressly assuming all of the terms, conditions and covenants of this

Agreement and such other documents as the Members shall reasonably require prior to

such assignment becoming effective. Each Member shall provide prior written consent

evidenced by Exhibit “E”, the Spousal Consent Form, attached hereto and incorporated

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by reference herein, upon the event of their marriage, or if the Member is married at the

time of the execution of this Agreement.

8.4 This Agreement shall be governed by and construed in accordance with the laws

of the State of Ohio. Any dispute of any kind, nature or description between or among

the Members hereto arising out of or in relation to this Agreement shall be resolved by

binding arbitration in Cleveland, Ohio subject to the American Arbitration Association,

which tribunal shall have exclusive jurisdiction thereof. Judgment upon any award may

be entered in any court of competent jurisdiction. The arbitrator is authorized to award

the prevailing party reasonable counsel fees and expenses in connection with any

arbitration proceeding.

8.5 The Members recognize that irreparable injury will result from a breach of any

provision of this Agreement and that money damages will be inadequate to remedy the

injury fully. Accordingly, in the event of a material breach or threatened material breach

of one or more of the provisions of this Agreement, any Member who may be injured (in

addition to any other remedies which may be available to that Member) and only upon a

Supermajority approval of the Members, the Members shall be entitled to one or more

preliminary or permanent orders (i) restraining and enjoining any act that would

constitute a material breach or (ii) compelling the performance of the non-performing

Member of any obligation that, if not performed, would constitute a material breach of

this Agreement.

8.6 This Agreement sets forth the entire agreement and understanding of the

Members in respect of the subject matter hereof and supersedes all prior and

contemporaneous agreements, arrangements and understandings, express or implied, oral

or written, relating to the subject matter hereof.

8.7 This Agreement may be amended or modified only by a Supermajority approval

of all Members evidenced by a fully executed written instrument. The failure of a

Member at any time(s) to require performance of any provisions hereof shall in no

manner affect the Member’s right at a later time to enforce the same. No waiver by any

Member of the breach of any term contained in this Agreement, whether by conduct or

otherwise, in any one or more instances, shall be deemed to be construed as a further or

continuing waiver of any such breach or of the breach of any other term of this

Agreement.

8.8 Reference to this Agreement herein shall include any amendments or renewal

hereof.

8.9 If any non-material provision of this Agreement shall be held to be invalid or

unenforceable, such invalidity or unenforceability shall attach only to such provision and

only to the extent such provision shall be held to be invalid or unenforceable and shall not

in any way affect the validity or enforceability of the other provisions hereof, all of which

are hereby declared severable, and this Agreement shall be carried out as if such invalid

or unenforceable provision or portion thereof was not embodied herein.

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8.10 This Agreement may be executed in several counterparts, each of which shall be

an original, but all of which together shall constitute one and the same agreement. The

headings in this Agreement are solely for the convenience of the Members, and are not

intended to and do not limit, construe or modify any of the terms and conditions hereof.

8.11 None of the provisions of this Agreement shall be for the benefit of or be

enforceable by any creditors of the Company.

8.12 Words and phrases used herein in the singular shall be deemed to include plural

and vice versa, and nouns and pronouns used in any particular gender shall be deemed to

include any other gender, unless the context requires otherwise.

8.13 Notwithstanding anything to the contrary stated herein, no Member, nor any

permitted Transferee or successor or assign of any Member, shall be liable, responsible or

accountable in damages or otherwise for any errors in judgment, for any act, including

any act of active negligence, performed by any such person or entity, or for any omission

or failure to act, if the performance of such act or such omission or failure is done in good

faith, is within the scope of the authority conferred upon such person or entity by this

Agreement or by law and does not constitute breach of fiduciary duty, willful

misconduct, gross negligence or reckless disregard of duties.

8.14 The Company shall indemnify and hold harmless all of the Members as well as

the Members’ permitted Transferees, successors and assigns and its employees

(collectively the “Indemnified Person(s)”) from and against any and all liabilities

reasonably incurred by any such Indemnified Person in connection with the defense or

disposition of any proceedings in which any such Indemnified Person may be involved or

with which any such Indemnified Person may be threatened, with respect to or arising out

of any act, including any act of active negligence, performed by the Indemnified Person

or any omission or failure to act if (i) the performance of the act or the omission or failure

was done in good faith and within the scope of the authority conferred upon the

Indemnified Person by the Agreement or by law, except for acts which constitute breach

of fiduciary duty, willful misconduct, gross negligence or reckless disregard of duties or

(ii) a court of competent jurisdiction determines upon application, in view of all the

circumstances, the Indemnified Person is fairly and reasonably entitled to indemnification

for such liabilities as such court may deem proper.

8.15 Each Member shall execute all certificates and other documents and shall do all

such filing, recording, publishing, and other acts as may be appropriate to comply with

the requirements of law for the formation and operation of the Company and to comply

with any laws, rules, and regulations relating to the acquisition, operation, or holding of

the property of the Company.

8.16 By signing this Agreement, each Member acknowledges that they shall have had

a reasonable opportunity, prior to the date of execution of this Agreement, to consult with

outside legal counsel and receive their legal opinion, as to the sufficiency of the terms

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and conditions contained herein, prior to the execution of this Agreement, and by doing

so, each Member acknowledges complete acceptance of all the terms and conditions of

this Agreement.

IN WITNESS HEREOF, the parties have executed this Agreement as of the day

and year first above written. .

FOUNDING MEMBERS OF COMPANY

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EXHIBIT “A”

INITIAL CONTRIBUTIONS

Patrick $1

Joe $1

Luis $1

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EXHIBIT “B”

Company

EMPLOYMENT AGREEMENT

This employment agreement is effective as of November 11th, 2011, between

“Future CEO” (“Executive”) and Company (“Employer”), with a principal place of

business located in Cleveland, OH.

1. Employer desires the services of Executive in order to retain his experience,

abilities and knowledge and is therefore willing to engage his services on the

terms and conditions set forth below.

2. Executive desires to continue in the employ of Employer and is willing to do

so on the terms and conditions set forth below.

THEREFORE, in consideration of the above recitals and of the mutual

promises and conditions in this agreement, it is agreed as follows:

Unless the parties agree otherwise in writing during Executive’s employment,

Executive shall perform the services he/she is required to perform under this

agreement at any office opened by Employer; provided, however, that

Employer may from time to time require Executive to travel temporarily to

other locations on Employer’s business.

Employer shall employ Executive as CEO with full power and authority to

manage and conduct all the business of Employer, subject to the directions

and policies of Employer and Members as they may be, from time to time,

stated either orally or in writing. Executive shall not, however, take any of the

following actions on behalf of Employer without the express written approval

of all Members of the Company:

(1) Borrowing or obtaining credit in any amount or executing any guaranty;

(2) Expending funds for capital equipment in excess of budgeted expenditures

for any calendar month;

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(3) Selling or transferring capital assets exceeding $1.00 in market value in

any single transaction or exceeding $1.00 in market value in any one fiscal

year.

During his employment, Executive shall devote his full business time, energy

and ability exclusively to the business and interests of Employer, and shall

not, without Employer’s prior written consent, render to others services of any

kind for compensation or engage in any other business activity that would

materially interfere with the performance of his duties under this agreement.

Executive represents to Employer that he has no other outstanding

commitments inconsistent with any of the terms of this agreement or the

services to be rendered hereunder. During his employment, Executive shall

devote such time, interest and effort to the performance of this agreement as

may be fairly and reasonably necessary.

During the employment term, Executive shall not, directly or indirectly,

whether as partner, employee, creditor, shareholder, or otherwise, promise,

participate or engage in any activity or other business competitive with

employer’s business.

During the term of this agreement, Employer agrees to pay executive a salary

of $TBD per year, to be determined within 30 days of initial funding of the

Company. The salary shall be payable as current salary, in no less frequent

than monthly installments subject to all applicable withholdings and

deductions.

The Members shall review Executive’s salary and additional benefits then

being paid to Executive not less frequently than every twelve months.

Following such review, the Supermajority vote of the Members may, at their

discretion, increase (but shall not be required to increase) Executive’s salary

or any other benefits.

If Executive’s employment with the Company terminates by virtue of an

“Involuntary Termination” (as defined herein) and is other than for “cause”

(as defined herein), or if Executive’s employment with the Company

terminates as a result of an Involuntary Termination at any time within twelve

months after a “Change of Control” (as defined herein), then Executive shall

be entitled to receive a buyout of his Membership Interest in the Company in

the manner and in accordance with the terms stated on Exhibit “A” hereto.

For this purpose, “Cause” is defined as: (i) an act of dishonesty made by

Executive in connection with Executive’s responsibilities as an employee, (ii)

Executive’s conviction of, or plea of nolo contendere to, a felony, (iii)

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Executive’s gross misconduct, or (iv) Executive’s failure to perform his

employment duties.

For this purpose, “Change of Control” of the Company is defined as (i) any

“person” (as such term is used in Sections 13(d) and 14(d) of the Securities

Exchange Act of 1934, as amended) other than the heirs of an “Initial

Member”, as that term is defined in the Operating Agreement, is or becomes

the “beneficial owner” as defined in Rule 13d-3 under said Act), directly or

indirectly, of securities of the Company representing fifty percent (50%) or

more of the total voting power represented by the Company’s then

outstanding voting securities; or (ii) the date of the consummation of a merger

or consolidation of the Company with any other entity that has been approved

by the Members of the Company, other than a merger or consolidation which

would result in the voting securities of the Company outstanding immediately

prior thereto continuing to represent (either by remaining outstanding or by

being converted into voting securities of the surviving entity) more than fifty

percent (50%) of the total voting power represented by the voting securities of

the Company or such surviving entity outstanding immediately after such

merger or consolidation, or the Members of the Company approve a plan of

complete liquidation of the Company; or (iii) the date of the consummation of

the sale or disposition by the Company of all or substantially all the

Company’s assets.

For this purpose, “Involuntary Termination” shall mean (i) without

Executive’s consent, the significant reduction of Executive’s duties or

responsibilities relative to his duties or responsibilities in effect immediately

prior to such reduction; (ii) without Executive’s consent, a significant

reduction (twenty percent 20% or more) by the Company in Executive’s

salary as in effect immediately prior to such reduction; (iii) a significant

reduction by the Company in the kind or level of employee benefits to which

Executive is entitled immediately prior to such reduction with the result that

Executive’s overall benefits package is significantly reduced; (iv) any

purported termination of Executive by the Company which is not effected by

virtue of Executive’s death or permanent and total disability; (v) without

Executive’s consent, a significant relocation of the primary location of

Executive’s place of employment beyond a twenty (20) mile radius of the

current principal office of the Company.

During the employment term, Executive shall be entitled to receive all other

benefits of employment generally available to Employer’s other executive and

managerial employees when and as he becomes eligible for them, including

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e.g. medical, dental, life and disability insurance benefits, and participation in

Employer’s pension plan and profit sharing plan, if any.

Employer reserves the right to modify, suspend or discontinue any and all of

the above benefit plans, policies and practices at any time without notice to or

recourse by Executive, so long as such action is taken generally with respect

to other similarly situated persons and does not single out Executive.

Executive shall be entitled to paid vacation in accordance with Employer’s

policies and practices in effect with respect to employer’s other executive and

managerial employees.

During the employment term, Employer shall reimburse Executive promptly

for reasonable business expenses, including travel, entertainment, parking,

business meetings, professional dues incurred and substantiated in accordance

with the policies and procedures established from time to time by Employer

with respect to Employer’s other executive and managerial employees.

All processes, inventions, patents, copyrights, trademarks and other intangible

rights that may be conceived or developed by Executive, either alone or with

others, during the term of Executive’s employment, whether or not conceived

or developed during Executive’s working hours, and with respect to which the

equipment, supplies, facilities, or trade secret information of Employer was

used, or that relate at the time of conception or reduction to practice of the

invention to the business of the Employer or to Employer’s actual or

demonstrably anticipated research and development, or that result from any

work performed by executive for employer, shall be the sole property of

Employer. Executive shall disclose to Employer all inventions conceived

during the term of employment, whether or not the property of Employer

under the terms of the preceding sentence, provided that such disclosure shall

be received by Employer in confidence. Executive shall execute all

documents, including patent applications and assignments, required by

Employer to establish Employers rights under this Section.

Employer shall, to the maximum extent permitted by law and its Operating

Agreement, indemnify and hold Executive harmless for any acts or decisions

made in good faith while performing services for Employer. To the same

extent, Employer will pay, and subject to any legal limitations, advance all

expenses, including reasonable attorney fees and costs of court-approved

settlements, actually and necessarily incurred by Executive in connection with

the defense of any action, suit or proceeding and in connection with any

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appeal, which has been brought against Executive by reason of his service as

an office or agent of Employer.

Employer shall use its best efforts to obtain coverage for Executive (provided

it may be obtained at a reasonable cost) under any liability insurance policy or

policies now in force or hereafter obtained during the term of this agreement

that cover other officers of Employer having comparable or lesser status and

responsibility.

Because of his employment by Employer, Executive will have access to trade

secrets and confidential information about Employer, its products, its

customers and its methods of doing business. In consideration of his access to

this information, Executive agrees that for a period of three years after

termination of his employment, he will not directly or indirectly compete with

Employer in the field of publication, solicitation and sale of information in

printed form and as software of government required workplace materials,

such as plans to avoid and prevent workplace injury and illness, schemes,

regulation of worker’s compensation, employee hours and overtime and

OSHA requirements, all of which are mandated by laws, rules and regulations

of particular states and by the United States. Notwithstanding the above, in

the event that Executive’s employment is terminated as a result of Executive’s

involuntary termination without cause Executive’s non-competition term shall

be one year.

Executive understands and agrees that direct competition means services

competitive with those of Employer. Indirect competition means employment

by any competitor or third party providing services competing with

Employer’s services for which Executive will perform the same or similar

function as he performs for Employer.

In the course of his employment, Executive will have access to confidential

records and data pertaining to Employer’s customers and to the relationship

between these customers and Employer. Such information is considered

secret and is disclosed to Executive in confidence. During his employment by

Employer and for three years after termination of that employment, Executive

shall not directly or indirectly disclose or use any such information except as

required in the course of his employment by Employer. In addition, two years

after termination of his employment, Executive shall not induce or attempt to

induce any employee of Employer to discontinue employment with Employer

for the purpose of employment with a competitor of Employer.

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Any controversy or claim arising out of or relation to this Agreement, or

breach of this Agreement, shall be settled by arbitration and Mediation

Services (American Arbitration Association), and judgment on the award

rendered by the arbitrator may be entered in any court having jurisdiction.

There shall be one arbitrator and the fees of the arbitrator shall be borne

equally by the parties. Each party shall pay his own attorneys and the

expenses of his or her witnesses and all other fees and costs associated with

such arbitration.

Executive is obligated under this agreement to render services of a special,

unique, unusual, extraordinary and intellectual character, which give this

agreement peculiar value. The loss of these services cannot be reasonably or

adequately compensated in damages in an action at law. Accordingly, in

addition to other remedies provided by law or this agreement, Employer shall

have the right to obtain injunctive relief against the breach of this contract by

Executive or the performance or the performance of services elsewhere by

Executive, or both.

This agreement contains the entire agreement between the parties and

supersedes all prior oral and written agreements, understandings,

commitments and practices between them, including all prior employment

agreements, whether or not fully performed by Executive before the date of

this agreement. No oral modifications, express or implied, may alter or vary

the terms of this agreement. No amendments to this agreement may be made

except by a writing signed by both parties. No employee or supervisor of the

employee is authorized to alter or vary the terms of this agreement except by

written agreement of the Chief Executive Officer. Any representations

contrary to this agreement, express or implied, written or oral, are hereby

disclaimed.

The formation, construction and performance of this agreement shall be

construed in accordance with the laws of Ohio.

Any notice to Employer required or permitted under this agreement shall be

given in writing to Employer, either by personal service or by registered or

certified mail, postage prepaid, addressed to Employer at its then principal

place of business. Any such notice to Executive shall be given in a like

manner and, if mailed, shall be addressed to Executive at his home address

then shown in Employer’s files. For the purpose of determining compliance

with any time limit in this agreement, a notice shall be deemed to have been

duly given (a) on the date of services, if served personally on the party to

whom notice is to be given, or (b) on the second business day after mailing, if

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mailed to the party to whom the notice is to be given in the manner provided

in this section.

If any provision of this agreement is held invalid or unenforceable, the

remainder of this agreement shall nevertheless remain in full force and effect.

If any provision is held invalid or unenforceable with respect to particular

circumstances, it shall nevertheless remain in full force and effect in all other

circumstances.

Executed by the parties as of the day and year first above written.

By: ________________________________________

Title: _______________________________________

Executive: __________________________________

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EXHIBIT “C”

MUTUAL NON-DISCLOSURE – NON-CIRCUMVENTION AGREEMENT

COMPANY.

This Mutual Non-Disclosure – Non-Circumvention Agreement (“Agreement”) is made as

of this date and parties and is interested in discussing the possibility of establishing a

business relationship between the Parties.

Non-Disclosure Clause

In the course of the association between the parties hereto reasonably believe that it shall

be necessary to disclose to each other certain proprietary information and non-public

written information, collectively “Confidential Information” as described herein, relating

to Company, the strict confidential nature of which the Parties desire to maintain.

In consideration of the terms and conditions hereinafter set forth, the Parties mutually

agree as follows:

1. Parties. As used hereafter the term “Disclosing Party” shall mean the Party which

is disclosing Confidential Information, and the term “Receiving Party” shall mean

the Party to which the Confidential Information is disclosed. Company may be

the Disclosing Party or the Receiving Party dependent on which Party is the

originator and which Party is the recipient of Confidential Information. The terms

“Parties” shall refer to all parties to this Agreement and their respective affiliates

and “Party” shall refer to one of the Parties and its affiliates.

2. Confidential Information.

a) “Confidential Information” means any type of information or material (i)

disclosed by either Party and/or (ii) known by the Receiving Party as a

consequence of or through participation in the Purpose (“Purpose” shall refer

to any and all business matters related to Company), and which information or

material is not generally known to the public. “Confidential Information”

includes, without limitation, any business technical or financial information

regarding such Party, marketing information, information which related to

contracts, business operations, trademarks, trade secrets, designs, customer

lists, business plans or strategies, information entrusted to the Disclosing Party

or its principal officers and employees by third parties, and any other

confidential or proprietary information All Confidential Information

exchanged between the Parties is considered loaned for use solely in

connection with the Purpose.

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b.) Confidential Information shall not include any information that: a) becomes

generally available to the public through no wrongful act of the Receiving

Party; or b) which is already lawfully in the possession of the Receiving Party

and not subject to an existing agreement of confidentiality between the

Parties; or c) which is received from a third party without restriction and

without breach of any confidentiality or non-disclosure agreement; d) which is

independently developed by the Receiving Party without reference to

Confidential Information; or e) which is disclosed pursuant to the binding

order of a government agency or a court so long as the Disclosing Party

provides the other party with notice of such requirement prior to any such

disclosure.

3. Confidentiality. All Parties hereto agree to hold all Confidential Information in

trust and confidence and agree that it shall be used only for the contemplated

Purpose set forth above, and shall not be used for any other purpose and/or

disclosed to any third party unless such use or dissemination is specifically

approved in writing by a duly authorized representative of the other non-

disclosing Party. Unless written consent is otherwise granted by the Disclosing

Party, the Parties agree that release, access to or use of disclosed Confidential

Information shall be restricted to the Receiving Party and those employees,

officers and agents of the Receiving Party’s organization who have a need to

know the Confidential Information in order to fulfill the Purpose for which the

Confidential Information was disclosed. The Receiving Party shall direct any

person to whom it releases or provides access to or use of the disclosed

Confidential Information to treat the same in the same manner and with the same

care as required of the Receiving Party. The Receiving Party shall use the same

degree of care to protect the secrecy or confidentiality of the Confidential

Information as it uses to protect its own Confidential Information, but in all events

use at least a reasonable degree of care. The confidentiality obligations imposed

herein shall extend for a period of two (2) years from the date of disclosure and

shall survive termination of this Agreement.

4. Return of Confidential Information. The original and all copies of all

Confidential Information or any part thereof shall be returned promptly by the

Receiving Party to the Disclosing Party within 30 days receipt of a written request

by the Disclosing Party except that the Receiving Party may upon written notice

to the Disclosing Party retain a single complete copy of the Confidential

Information in the exclusive possession of its attorney or general counsel’s office

solely for use in connection with the defense of any dispute arising from this

Agreement. This Agreement shall not be construed as granting or conferring any

rights, by license or otherwise, in any Confidential Information disclosed

hereunder.

5. Obligations. The release of Confidential Information discussed herein shall not

obligate either of the Parties to provide any additional Confidential Information.

In addition, neither the release of Confidential Information nor any other fact or

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circumstance in connection with this Agreement will in any way obligate either

Party to proceed further with the Purpose or enter into any other or further

agreement with the other Party.

Non-disclosure Clause. Under this Agreement, all Parties hereto have or shall

introduce to all other Parties, the companies or parties who may be considered

financing sources, strategic partners or other proprietary business relationships

(”Parties Introduced”). All Parties agree not to circumvent one another as

follows: The Parties agree not to make contact with, deal with, or otherwise be

involved in any transaction with any Parties Introduced without written

permission of the introducing Party for a period of two (2) years from the date of

this Agreement.

6. Remedies. In the event of a breach of any of the foregoing provisions, the Parties

agree that the harm suffered by the injured Party would not be compensable by

monetary damages alone and, accordingly, that the injured Party shall, in addition

to other available legal or equitable remedies, be entitled to an injunction against

such breach. No public announcement or disclosure may be made by either Party

concerning this Agreement or the related discussions without the prior written

approval of the other Party.

7. Attorneys’ Fees and Costs. If any Party brings an action upon this Agreement, the

prevailing Party shall be entitled to recover its actual expenses, including, but not

limited to, sums expended for its engagement of expert witnesses and their costs

and expenses, whether or not called to testify, and actual costs and attorney fees

incurred in connection therewith, whether at trial, arbitration, or any appeal there-

from, including, without limitation, those incurred in connection with any

bankruptcy, insolvency or reorganization proceeding or receivership in which

either Party is involved, including, without limitation, those incurred in making

any appearances in any such proceeding or in seeking relief from any stay or

injunction issued in or arising out of any such proceeding.

8. Governing Law. This Agreement is to be governed by the laws of the State of

Ohio; and the Parties hereby consent to the jurisdiction of the courts sitting in the

State of Ohio to adjudicate all disputes arising hereunder.

9. Entire Agreement. This Agreement sets forth the entire agreement and

understanding between the Parties as to the subject matter hereto and supersedes

all previous agreements between the Parties whether express, implied, written or

oral. The Agreement can only modified by a written agreement duly signed by all

Parties hereto or a person duly authorized to sign agreements on behalf of each

such Party.

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10. No Assignment. None of the Parties hereto may assign this Agreement or

delegate their respective rights and duties hereunder, without the prior written

consent of all other Parties hereto.

11. Termination. This Agreement is set for a term of 24 months from the date of

execution of this Agreement after which any applicable Party hereto may

terminate this Agreement upon 90 days written notice to the other Parties hereto.

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be

duly executed as of the date and year first written above.

______________________________

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