Operating Agreement

BUILD then MARKET LLC

1. Formation & Name

• LLC formed under state law as "BUILD then MARKET LLC."
• Purpose: Establishes the LLC's name, formation date, state of registration, and principal office.
• Clauses:
  • Company name and purpose
  • Effective date

2. Classes of Membership

Entity	Allocation Type	Allocation Percentage
Founder (Abhi Ray)	Capital Interest (CI)	52%
VC Investor Reserve	Equity Pool	20%
14 Employees	Equity	28% total (2% each)
Total		100%

• Class A Members: Founders, majority owners. Abhi Ray holds 52%. Full voting rights.
• Class B Members: Up to 14 contributors, each capped at 2% profit interest, vesting via milestones. Limited voting rights (economic only, unless specified).
• Class C Members: Investor class, capped at 20% total. Economic rights + protective provisions.
• Admission of new members
• Withdrawal or removal of members

2.1 Capital Contributions

• Class A contributes initial capital.
• Class B contributes services (sweat equity).
• Class C contributes cash investment.

2.2 Equity Interests and Service Contributions

1. Equity Stakeholder Status
   • Class B Members are admitted solely as equity stakeholders. They are not employees and are not entitled to wages, salaries, or benefits.
2. Profit Interests
   • Profit interest units entitle Class B Members to share in profits and appreciation, subject to vesting and milestones. No guaranteed payments; no obligation to share in losses.

2.3 Creation of Profit Interest Class

• The Company hereby creates a separate class of equity titled: Profit Interest Units (PIUs).
• Characteristics:
  • No Member or voting rights
  • Participate only in future profits and appreciation
  • Subject to vesting
  • Non‑transferable without consent of the Managing Member

2.4 Profit & Loss Allocation

• Allocated according to ownership percentages once vested.
• Unvested interests revert to the pool.
• Distributions:
  • Based on ownership % or profit interest units
  • Schedule: quarterly, annually, or at manager discretion
  • Treatment of unvested profit interests: revert to pool
  • Tax allocations: K‑1s issued to members
    2.5 Independent-Contractor Safe-Harbor. (a) No Employment Presumption. Unless and until a Class B Member executes a separate written Employment Agreement that has been (i) approved by the Managing Member and (ii) countersigned after the date on which the Company first exceeds [US $1 million] in cumulative GAAP revenue ("Revenue Threshold"), the Class B Member is an independent contractor and not an employee, partner, or agent of the Company for any purpose. (b) IC Covenants. Without limiting the generality of the foregoing, each Class B Member: (i) controls the manner, means, and timing of performing Services; (ii) supplies his or her own equipment, software, and workspace; (iii) is paid only in the form of PIUs or distributions expressly provided herein; (iv) receives no health, retirement, PTO, or other employee-type benefits; (v) is responsible for all self-employment taxes; and (vi) may perform services for third parties. (c) Re-Characterization Backstop. If any governmental agency re-classifies a Class B Member as an employee, the Company may, in its sole discretion, (A) convert such Member to employee status on the date required by the agency, (B) accelerate vesting of all PIUs that would have vested within the next 12 months, and (C) withhold or gross-up any payroll taxes the Company is required to pay. The Member consents to such conversion and waives any claim for additional equity or severance except as expressly provided herein. 3.4 Tax Distributions. To the extent the Company has sufficient Available Cash, the Managing Member shall use commercially reasonable efforts to distribute cash to each Member in an amount sufficient to pay the estimated federal and state income tax liabilities arising from the allocation of taxable income to such Member (a "Tax Distribution"). Tax Distributions shall be treated as an advance against, and shall reduce, future distributions of profit due to such Member. 2.6 Securities Compliance & Elections. (a) Within five (5) Business Days after issuance of any PIU, the Company shall deliver to the Member: (i) a copy of the Profits Interest Grant Notice; (ii) IRS Form 83(b) in duplicate; and (iii) written instructions requiring the Member to file the 83(b) election within thirty (30) days and to provide proof of filing to the Company. (b) The Company shall concurrently file a Section 83(b) Election Cover Sheet with the IRS and make a Safe-Harbor Election under Rev. Proc. 93-27 for each PIU grant. (c) Forfeiture for Failure. If a Member fails to furnish proof of timely 83(b) filing, all unvested PIUs shall automatically forfeit without further action.

3. Mandatory Service Contributions

3.1 Objective Milestones. PIUs vest only upon the objective achievement of the following milestones (no Board discretion): (a) [] cumulative GAAP revenue recognized by the Company; (b) delivery and acceptance of [] product features listed on Schedule 3.1(b); and (c) Member's continuous Service Relationship (as defined below) through each vesting date. 3.2 Measurement & Certification. Within thirty (30) days after the end of each fiscal quarter, the Managing Member shall deliver to all Members a written revenue certificate signed by the Company's external CPA or CFO certifying whether the revenue milestone for that period has been satisfied. The certificate is final and binding absent manifest error. 3.3 Service Relationship. "Service Relationship" means the continuous performance of bona-fide services (as an independent contractor or, after conversion, as an employee) without a Service Cessation. "Service Cessation" occurs on the earlier of: (i) the Member's written resignation, (ii) the Managing Member's determination that the Member has failed to perform material services for sixty (60) consecutive days without written excuse, or (iii) the Member's breach of the Confidentiality & IP Agreement. 3.4 Consequences of Service Cessation. (a) Good-Leaver (death, disability, or termination without Cause): unvested PIUs immediately forfeit; vested PIUs retained. (b) Bad-Leaver (voluntary quit or termination for Cause): all PIUs (whether vested or not) automatically revert to the Pool for par value (US $0.0001 per unit) if the Member is offered and refuses conversion to employee within thirty (30) days after the Revenue Threshold is met. 3.5 Cause Definition. "Cause" means: (i) material breach of this Agreement or the Confidentiality & IP Agreement, (ii) conviction or plea of nolo contendere to any felony or crime involving moral turpitude, (iii) fraud, embezzlement, or dishonesty, or (iv) gross misconduct that causes material harm to the Company.

4. No Employment Relationship by Default

4.1 Revenue-Threshold Conversion Trigger. Promptly---and in no event later than forty-five (45) days---after the Company first satisfies the Revenue Threshold, the Managing Member shall: (a) offer each Active Class B Member a written Employment Agreement containing market salary, at-will status, and customary employee benefits; and (b) provide at least thirty (30) days for the Member to accept. 4.2 Deemed Acceptance & Payroll. If the Member fails to respond within thirty (30) days, the offer is deemed rejected, the Member becomes a Bad-Leaver, and Section 3.4(b) applies. If accepted, employment commences on the date set forth in the Employment Agreement and the Company shall immediately place the Member on payroll and withhold all required taxes. 4.3 No Retroactive Benefits. Nothing in this Section creates an employment relationship for any period before the effective date of the Employment Agreement.

5. Future Conversion to Employment

• The Company and any Class B Member may, by mutual agreement, enter into a separate Employment Agreement later.
• Equity interests remain governed by this Agreement unless expressly amended.

5.1 No Dilution on Conversion. Conversion to employee status shall not, by itself, reduce the number or percentage of PIUs already vested. Any subsequent dilution must occur only under a separate, board-approved equity incentive plan in which the Member participates pro-rata. 5.2 Most-Favored-Member. If the Company grants any future service provider more favorable vesting acceleration, the same terms automatically apply to any Class B Member who has already converted to employee status, unless the Member affirmatively waives such terms in writing. 5.4 Specific Power of Attorney. Each Class B Member hereby irrevocably appoints the Managing Member as their true and lawful attorney-in-fact, with full power of substitution, to execute, acknowledge, swear to, and file any documents necessary to: (a) Reflect the admission, substitution, or withdrawal of Members in accordance with this Agreement; (b) Effectuate a conversion to a Corporation (C-Corp) or a merger approved by the Managing Member; (c) Execute any Section 83(b) elections or other tax filings required by this Agreement; and (d) Comply with the statutes of any state in which the Company conducts business. This power is coupled with an interest and is irrevocable.

6. Preservation of Equity Rights

• Conversion to employee or contractor status shall not reduce or eliminate vested equity.
• Any modification of equity rights must be documented in writing and approved under this Agreement.

7. Voting & Management

• Summary:
  • Class A controls day‑to‑day management.
  • Class B votes only on admission of new members or amendments affecting their rights.
  • Class C has veto rights on major events (merger, sale, dissolution).

7.1 Voting Rights

• Voting proportional to ownership unless otherwise stated.
• Class A holds majority voting power.
• Class B votes limited to matters affecting their class rights.

7.2 Quorum Requirements

• Voting Quorum: The Founder plus 50% of the remaining members must be physically present to open the floor for a vote (7 passive members + Founder).
• Automatically satisfied when Class A participates.

7.3 Supermajority Votes

• 75% ownership required for:
  • Amending the Operating Agreement
  • Admitting new members
  • Dissolving the company
  • Selling substantially all assets
• Class A alone can meet this threshold, but votes are recorded for transparency.

7.4 Advisory Voting

• Class B may cast advisory votes on operational matters.
• Advisory votes recorded in minutes for transparency.

7.5 Decision‑Making Process

• Class A has final authority on day‑to‑day decisions.
• Class A agrees to consider Class B views in good faith and provide written reasoning if acting against a unanimous advisory vote.

7.5.1 Decision Voting

• Simple Majority Support of the Entire Membership. For cultural buy-in, the Founder needs at least $8 out of 14$ votes.

8. Transfer & Buy‑Back

• Members may be required to sell back interests if they leave.
• Buy‑back price determined by fair market value or agreed formula.
• Right of first refusal applies before transfer to outsiders.

ARTICLE 8: RESTRICTIVE COVENANTS

8.1 Non-Solicitation. During the term of their membership and for a period of twenty-four (24) months after Ceasing to be a Member, no Class B Member shall, directly or indirectly, solicit, induce, or attempt to hire any employee or independent contractor of the Company to terminate their relationship with the Company.

8.2 Non-Interference. During the same period, no Class B Member shall solicit or encourage any client, customer, or vendor of the Company to terminate or reduce their business relationship with the Company.

9. Exit & Conversion

• If the LLC converts to a corporation, profit interests convert into stock (common or preferred).
• Members may negotiate to become employees or board members.
• Dissolution procedures follow state law and this Agreement.

9.2 Conversion to Corporation. In the event the Managing Member determines it is in the best interest of the Company to convert into a corporation (e.g., for a Qualified Financing), each Member agrees to exchange their Units for shares of Common Stock (or options) in the successor corporation.

• Economic Parity: The exchange shall be calculated to preserve the relative economic value of each Member's interest immediately prior to the conversion.

• Cooperation: Members agree to execute all necessary shareholder agreements, lock-up agreements, and other documents required by the underwriters or investors in connection with such conversion.

10. Miscellaneous Provisions

• Amendments: Require supermajority approval.
• Severability: If one clause is invalid, the rest remain enforceable.
• Entire Agreement: Supersedes prior understandings.
• Governing Law: State of registration governs.
• Execution: Agreement effective upon signature of all Members.
  10.6 Indemnification. The Company shall indemnify any Member who becomes subject to tax, interest, or penalty as a result of the Company's failure to timely file any election required under Section 2.6, provided the Member cooperated in good faith. 10.7 Conflict Control. In the event of any inconsistency between this Agreement and any side letter, Employment Agreement, or PIU Grant Notice, the provisions most favorable to the Member with respect to vesting, acceleration, or equity retention shall control.

10.8 Spousal Consent. Within ten (10) days of becoming a Member (or marrying thereafter), each Member must cause their spouse to execute a Spousal Consent form in a format approved by the Managing Member. This consent acknowledges that the spouse has read this Agreement and agrees to be bound by its restrictions, including the restrictions on transfer and the Buy-Back provisions. Failure to provide this consent constitutes a material breach ("Cause").