Legal agreement governing profit participation rights and distributions.
Before execution, this document should be reviewed by qualified securities counsel. This is not an offer or solicitation.
THIS AGREEMENT made and entered into as of _________________ (the "Closing Date"), by and between:
EVERYONE LLC, a Delaware limited liability company ("Company")
AND
_____________________________ ("Participant")
WHEREAS, the Company is developing, producing, and distributing EVERYONE, a cultural property consisting of immersive experiences, touring productions, streaming content, merchandise, and related intellectual property (the "Project"); and
WHEREAS, Participant desires to make a capital contribution to the Company to support the Project and to participate in specified Net Distributable Profits as defined herein; and
WHEREAS, the parties desire to document Participant's profit participation rights and the terms and conditions governing distributions.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein, and for other good and valuable consideration, the parties agree as follows:
The following terms shall have the meanings set forth below:
Capital Contribution: The amount paid by Participant to Company as set forth in Section 2, being $_________________.
Capital Contribution Date: The date on which Participant's capital contribution is received by the Company (typically the Closing Date).
Distributable Profits Percentage: The participant's pro-rata allocation of distributions, calculated as:
Pro-Rata Share = Participant's Capital Contribution ÷ Total Capital Contributions from All Participants
This pro-rata share is applied differently depending on the distribution phase (see Section 4.1 for phase-based mechanics).
Fiscal Quarter: Each three-month period ending March 31, June 30, September 30, and December 31.
Gross Revenue: All revenue received or collected by the Company (or any subsidiary or joint venture in which Company has ownership interest) from all sources including but not limited to:
Maximum Return: Two times (2.0x) the Participant's Capital Contribution.
Net Distributable Profits (NDP): Calculated quarterly and defined as:
NDP = Gross Revenue − Specified Deductions
Where Specified Deductions are itemized in Section 3.2 below.
Participation Period: The period commencing on the Capital Contribution Date and ending upon the earliest to occur of: (a) the date the Participant has received cumulative distributions equal to the Maximum Return; (b) dissolution or liquidation of the Company; or (c) written termination notice from the Company.
Quarter-End Date: The last day of each Fiscal Quarter (March 31, June 30, September 30, December 31).
Revenue Surfaces: Collectively, all sources of Gross Revenue as defined above, treated as a single waterfall with equal priority and no internal preferences among sources.
In this Agreement:
Participant agrees to contribute $_________________ (the "Capital Contribution") to the Company.
Participant's Capital Contribution shall be paid via wire transfer of immediately available funds to the account designated by Company at closing. Funds must be received by the Company on or before [INSERT CLOSING DATE].
Participant acknowledges that the Company will use capital contributions (including Participant's) for the general purposes set forth in the Term Sheet, including production costs, marketing, venue partnerships, working capital, and professional fees. The Company has discretion to allocate proceeds among these uses as it deems appropriate.
Participant's Capital Contribution is not a loan and shall not be repaid except through distributions of Net Distributable Profits as provided in Section 6. If the Project generates no profit or insufficient profit, Participant may not recover their capital contribution.
The Company shall calculate Net Distributable Profits for each Fiscal Quarter in accordance with the waterfall methodology set forth in Exhibit A.
Net Distributable Profits shall be calculated by deducting the following items from Gross Revenue in the following order:
| Tier | Deduction | Description |
|---|---|---|
| 1 | Venue/Platform Splits | Amounts owed to physical venues, streaming platforms, ticketing platforms, and distribution partners |
| 2 | Cost of Goods Sold (COGS) | Direct costs of physical merchandise, goods, materials (not including labor) |
| 3 | Direct Marketing & Promotion | Customer acquisition, advertising, social media, promotional events, and marketing payroll |
| 4 | Operating Expenses | Payroll (excluding production), insurance, facilities, professional services, administrative overhead |
| 5 | Production Budget Recoupment | Annual allocation for creative development, new production, content creation, and capital equipment |
Typical ranges for each deduction category and any applicable annual caps are detailed in the EVERYONE Business Plan (Investment Invitation) and may be updated from time to time.
NDP = Gross Revenue − Venue Splits − COGS − Marketing − Operating Expenses − Production Budget
Venue/Platform Splits include:
Cost of Goods Sold includes:
Direct Marketing & Promotion includes:
Operating Expenses includes:
Production Budget Recoupment includes:
The Company shall not be required to invest or manage the Net Distributable Profits; amounts not distributed in any period shall be retained at the Company's discretion for operations, growth, or reserves.
Participant's share of Net Distributable Profits follows a three-phase distribution waterfall based on cumulative distributions received:
PHASE 1: RECOUPMENT (0X to 1X Capital Contribution)
During Phase 1, 100% of Net Distributable Profits in each quarter shall be distributed to Participants pro rata (based on each Participant's Capital Contribution), until each Participant has received cumulative distributions equal to their Capital Contribution (1X recoupment).
Phase 1 Distribution = Pro-Rata Share × Net Distributable Profits
PHASE 2: PROFIT SHARING (1X to 2X Maximum Return)
Once a Participant has achieved 1X recoupment, that Participant enters Phase 2. In Phase 2, Net Distributable Profits are split:
This continues until the Participant reaches the Maximum Return (2X Capital Contribution).
Phase 2 Distribution (per Participant) = Pro-Rata Share of Investor Pool × 50% × Net Distributable Profits
PHASE 3: POST-2X DISTRIBUTION (After 2X Maximum Return)
Once a Participant's cumulative distributions equal or exceed the Maximum Return (2X Capital Contribution), that Participant's Participation Period terminates immediately. All subsequent Net Distributable Profits are distributed per the post-2X allocation set forth in the EVERYONE Business Plan (Investment Invitation) (the "Post-2X Allocation").
The Participant's pro-rata share is retired and permanently reallocated per the Post-2X Allocation.
Illustrative examples using hypothetical amounts. Actual aggregate raise, deduction ranges, and post-2X allocation percentages are set forth in the EVERYONE Business Plan (Investment Invitation).
Assume:
Scenario 1: Both Participants in Phase 1 (no prior distributions)
Scenario 2: Participant A in Phase 2 (cumulative = $50,000+), Participant B still in Phase 1
Assume Q2 NDP = $60,000, and Participant A has already received $50,000 (at 1X recoupment):
Scenario 3: Participant A hits 2X cap during distribution
If Participant A's cumulative distributions are $95,000 and Phase 2 allocation would be $10,000, bringing total to $105,000 (exceeding 2X cap of $100,000):
Participant's total distributions shall not exceed the Maximum Return, which is 2.0 times (2X) the Capital Contribution.
Example: A $50,000 investment has a Maximum Return cap of $100,000. Once Participant has received $100,000 in total distributions, all further distributions are suspended.
Upon Participant's receipt of distributions equal to or exceeding the Maximum Return:
The Company shall track cumulative distributions to each Participant. When cumulative distributions reach the Maximum Return, the Company shall notify Participant in writing that the Participation Period has ended.
If a quarterly distribution would cause Participant's cumulative distribution to exceed the Maximum Return, the Company shall distribute only the amount necessary to reach the cap, and all remaining net distributable profits in that period shall be retained by the Company.
Participant shall:
Notwithstanding anything herein, the Company has no obligation to distribute any portion of Net Distributable Profits except as calculated and determined by the Company in accordance with Section 3. In no event shall the Company be obligated to make distributions if:
With each distribution, the Company shall provide:
Participant represents and warrants that:
The Company represents and warrants that:
Participant covenants that Participant shall:
The Company covenants that the Company shall:
The Company shall deliver to each Participant, within 45 days of each Quarter-End Date:
If the Company raises an amount in aggregate from all participants that equals or exceeds the audit threshold (as set forth in the EVERYONE Business Plan (Investment Invitation)), the Company shall provide:
If the aggregate raise is below the audit threshold, unaudited financial statements shall be provided.
Participants holding at least 25% of aggregate capital contributions may:
The Company may hold optional annual investor meetings (non-voting, informational only) to discuss operations, financials, and business updates. Attendance is voluntary.
Participant acknowledges that in connection with this investment, Participant may receive non-public information regarding the Company, including financial data, business plans, creative concepts, and operational details (collectively, "Confidential Information").
Participant agrees to:
Confidentiality obligations shall not apply to information that:
Participant's participation rights may not be transferred, assigned, pledged, or otherwise disposed of without the prior written consent of EVERYONE LLC. Any attempted transfer without consent is void.
If Participant proposes to transfer participation rights, the Company shall have the first right to purchase the rights at the price offered by the third party (or the proposed price, if no third party is involved). Company must elect within 15 days of notice.
Participant may not propose any transfer during the first 12 months following the Capital Contribution Date.
Participation rights are highly illiquid. There is no secondary market, and transfers may be impossible or impractical to arrange. Participant should assume the rights cannot be liquidated.
Participation rights may be transferred to Participant's beneficiaries or estate upon death. The transferee must qualify as an accredited investor and execute an Accredited Investor Questionnaire.
Participant is not a member of EVERYONE LLC and shall have:
Participant's only rights are the contractual rights to receive distributions as specified in this Agreement. Participation is a contractual claim, not an ownership stake.
This Agreement does not create a partnership, joint venture, or agency relationship. Participant is not an agent of the Company and has no authority to bind the Company.
Participant shall not have any right to:
Participant acknowledges that:
The Company provides no tax advice. Participant is solely responsible for understanding and fulfilling all tax obligations. Participant should consult with a CPA or tax attorney before investing.
If and when the Company makes distributions, Participant may have tax liability even if distributions are not received in cash or are deferred.
Participant shall indemnify and hold harmless the Company and its members from any claims arising from:
The Company shall indemnify and hold harmless Participant from third-party claims that the Company's operations infringe intellectual property rights or violate law, except to the extent caused by Participant's breach.
The indemnified party shall provide prompt written notice of any claim. The indemnifying party shall have the right to defend the claim at its expense, and the indemnified party shall cooperate in the defense.
This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflicts of law principles.
Any dispute arising from or relating to this Agreement shall be resolved by binding arbitration administered by JAMS (Judicial Arbitration and Mediation Services) in Wilmington, Delaware, under the JAMS Comprehensive Arbitration Rules & Procedures.
The prevailing party in any arbitration or litigation shall be entitled to recover reasonable attorneys' fees and costs.
Notwithstanding the arbitration provision, either party may seek injunctive relief in court to prevent irreparable harm (e.g., breach of confidentiality or unauthorized transfer).
The Company shall not amend any material term of this Agreement without the written consent of holders of at least 50% of outstanding capital contributions.
The Company may amend Exhibit A (waterfall methodology) to clarify calculations or adjust for new revenue sources, provided such amendments do not materially increase deductions or reduce participant distributions beyond the threshold set forth in the Participation Agreement. Participants shall be notified of any material amendments.
Amendment of the following terms requires unanimous consent of all participants:
This Agreement commences on the Capital Contribution Date and continues until the Participation Period terminates (as defined in Section 1.2 or as provided below).
The Participation Period shall terminate upon the earliest to occur of:
Upon termination of the Participation Period:
The Company is under no obligation to redeem or repurchase Participant's interest upon termination. Participant's sole right is to receive distributions as provided in this Agreement.
This Agreement, together with the Term Sheet, Operating Agreement, and attached Exhibits, constitutes the entire agreement between the parties regarding the subject matter and supersedes all prior agreements and understandings, whether written or oral.
If any provision of this Agreement is held to be invalid or unenforceable, the remaining provisions shall continue in full force and effect to the maximum extent permitted by law.
The Company may not assign this Agreement without Participant's consent. Participant may not assign except as provided in Section 10.
All notices shall be in writing and delivered by email, hand delivery, or overnight courier to the addresses set forth below. Notices shall be effective upon receipt.
To Company: EVERYONE LLC 8 The Green #24830, Dover, DE 19901 Attention: Zak Zaidman (zak@everyone.team)
To Participant: As set forth on the signature page below.
This Agreement may be signed in counterparts, each of which shall be deemed an original and together shall constitute one instrument.
No waiver of any provision shall be effective unless in writing. Waiver of one breach shall not constitute waiver of any other breach.
Each party agrees to execute such additional documents and take such further actions as may be reasonably necessary to carry out the purposes of this Agreement.
Exhibit A: Waterfall Calculation Methodology The waterfall calculation methodology, including deduction categories, typical ranges, and worked examples, is set forth in Section IV (Investment Structure & Returns) of the EVERYONE Business Plan (Investment Invitation) and in Section 3 of this Agreement.
Exhibit B: Accredited Investor Questionnaire See the EVERYONE LLC Accredited Investor Questionnaire, provided separately to each Participant prior to closing.
Exhibit C: Company Information Schedule
IN WITNESS WHEREOF, the parties have executed this Profit Participation Agreement as of the date first written above.
By: _____________________________________ Name: ___________________________________ Title: ____________________________________ Date: ____________________________________
_________________________________________ Participant Signature
_________________________________________ Participant Printed Name
_________________________________________ Address
_________________________________________ Email
_________________________________________ Telephone
_________________________________________ Date
This document should not be executed without review by qualified securities counsel.