Tip for Tip: Profit sharing agreement (1)

Strobeck Startup Incentive Model — Profit sharing agreement

I’d rather have one tenth of a success, than nine times that of a failure.

Part 1

  • Tip for Tip, LLC: Hereby referred to as "the company," is a single member limited liability company registered in the State of Oregon.
  • Kirk Strobeck: Hereby referred to as "the member," is the sole member and the sole owner of 100% of the company. The member has the sole signing authority for the company in all matters.
  • Operating capital: The capital used for day-to-day operations and other business expenses, including but not limited to equipment, staff, and company savings.
  • Profit(s): The amount of capital above and beyond operating capital, including but not limited to the proceeds from a financial event, such as an acquisition. Profit is not owned by the company.
  • Contributor(s): Anyone who has engaged in a signed contributor agreement with the company.
  • Team: The member(s) and contributor(s).
  • Distribution percent: 50% of the profits are for team distribution.
  • Incentive percent: 50% of the profits are set aside for deferred team distribution as incentive to retain as much of the company as possible. The payout amount for the distribution percent is identical to the amount set aside as the incentive percent.
  • Contributor distribution percent: 80% of the distribution percent.
  • Member distribution percent: 20% of the distribution percent.
  • Work: Any effort to help build the company that would otherwise be compensated.
  • Compensation: The value of a contributor’s work derived from currency of United States Dollars at the time of work.
  • Relative compensation: A portion of contributor distribution percent commensurate with compensation relative to the sum of all compensation.
  • (In/On) Lockdown: The moment when relative compensation is permanently fixed to prohibit relative dilution. Contributions will no longer affect the contributor distribution percent.
  • Contribution period: The time period from the start of the company to the lockdown.

The company will make every effort to retain full ownership, but a portion(s) of any size may be sold to help build the company. If more than 50% of the company is sold, there will be dilution for the team. If less than 50% of the company is sold, then the remaining incentive percent will be converted to distribution percent with an instant payout.

Part 2

This will be meaningful and substantial because of the talent of those involved and their willingness to hope in our success.

In the spirit of keeping our efforts to build the company fair and equitable, the company is offering profit sharing.

A contributor will be compensated by one or more of the following:

  • Hourly: An example may be a developer logging hours of work at their market rate.
  • Project: An example may be work similar to hourly, but to the advantage of the company to get a discount.
  • Other: An example may be an acquisition, value-adding relationship, or asset.

All compensation records must be kept on a rolling weekly basis. The company reserves the right to discard records outside of that timeframe. Time tracking reports will be posted for team checks-and-balances on a weekly basis. Hourly rates may be disclosed at the member’s discretion.

In the event that the company becomes profitable, a payment strategy will be put in place to payout profits on a monthly basis. The company reserves the right to payout more frequently. The team receives payout simultaneously. The company reserves the right to payout an amount less than $1,000 on different schedule, but no less than annually.

The member distribution percent is fixed to ensure that others are compensated fairly. Member protection: In fairness to the member and the intent of this unique profit sharing model, the member distribution percent will grow to that of the largest single contributor in the event that their relative compensation is above the member distribution percent.

In all events, with the exception of member protection, the team distribution percent will grow or shrink without dilution.

The company will make every effort to end the contribution period and operate as a cash-based company. The team will receive payout at their respective hourly rate(s) from operating capital.

In the event that the company is on lockdown and it can not or should not continue operations, the company will dissolve. Equipment and otherwise will be liquidated as profit. Profits will payout immediately.

Survivorship of the profit share will pass down per the applicable will and testament.

The company will make reasonable efforts to be fair in all matters.