SMRC.EQUITY.PARTNER.TERMS-FINANCING.AGREEMENT

Social Market Research for Charity (SMRC)
1009 Tantra Park Circle, Boulder, CO 80305 | (720) 204-3569

EQUITY PARTNER TERMS / FINANCING AGREEMENT

This Agreement is made as of this the____________ , by and between___________________________,
an individual resident of ________________ (hereinafter referred to as "Investor") and Phil Nakata &
Assoc. (a Colorado Consultancy) , (hereinafter referred to as the "PNA") regarding an investment of
____________________________ , as an Equity Partner in an entity (TBD), dba Social Market Research
for Charity (hereinafter referred to as “SMRC)

1. The location of SMRC will be at: Online – TBD / Hosting – Boulder CO
 Operations HQ: 1009 Tantra Park Circle, Boulder CO 98052
 Development/Networking/Consulting: 1009 Tantra Park Circle, Boulder CO 98052
 Satellite offices: Los Angeles, Houston, San Diego, Scottsdale, Seattle, Australia
 Online at: www.socialmarketresearchforcharity.org (INTERMEDIATE - TEMPORARY)
2. Availability: These terms are only offered to a SMRC working partner – e.g. your qualified need
based on being an active registered SMRC sponsor or Spokesperson sponsor.
3. Period of agreement: Duration of the agreement is 1 Year and Yearly renewal basis. This
duration is applicable unless it’s stated in any part of this agreement. Any change towards the
duration of the agreement should be done with a new agreement and automatically this
agreement is invalid

3. Equity: ___ (Y/N)

# of Shares or % of Share Type Exec. Notes Reference
shares per class Board (a – f below)
Votes
SMRC Common 1 (a)
(Executive – Performer)
SMRC Common 0 (b) Non-Exec voting
SMRC Preferred n/a Non-voting

a. Executive founders shares as 30% of total shares. 18.5% of this class is pre-allocated, along
with 6% as a finder’s fee equity reserve. The current offer is $3 Million for 40% of the shares
in this class, leaving a residual of 36% of SMRC’s Executive Common shares plus all of the
un-allocated Common and Preferred shares to be issued in a 2nd round investment or up to a
second round of investments, bring th total invested to date of $100,000,000 – based on a
first year revenue before taxes of $200+ million.
b. Un-allocated; reserved for 2nd round investments, General board voting rights by shares
c. Un-allocated; reserved for 2nd round investments _______________________________
d. ____________________________________________________________________
e. ____________________________________________________________________
f. ____________________________________________________________________

4. Use of Funds: The funds will be used to provide working capital to fund the last stages of
development (in a production system), operational and infrastructure/service overhead, and the
market introduction of SMRC to Charities, Celebrities and Key Social Leaders (non-political
companies with active ties to charities that accept donations).

Based on an initial launch with 10 million members (from some of the largest charities &
educational institutions), and 500+ small social/web sponsor, the major emphasis is building
membership from thousands of mid to large sized sponsors (million+ followers and cause
marketers (former invasive advertisers)):

Use of Funds by Partner-Sponsor Investment class:
 At $3MM primary funding, 2/3 for marketing, 1/3 for development => base plan at 10
million startup users worst case (generating a minimum of $2+ BB for charity +rewards
 At $25MM funding, 2/3 for marketing , 1/12 for infrastructure mgmt, ¼ for development
=> to achieve 3 year plan in 2 years
 At $100MM funding, 1/3 for marketing, ¼ for development, 5/12 for infrastructure
mgmt. => to achieve 3 year plan in 2 years and own most of the SMRC off-shore bank

Base Budget Template: Factored proportion to the targeted budget and returns
(achievements), the tactical components are defined in the SMRC Executive Summary, page 28
of of SMRC’s Business Profile, adjusted by an additional $1 MM to include marketing and
development services for the first 30-45 days after market launch, as a $3MM net start-up
investment. The profile from page 28 of the above document is displayed below:
Architecture:‎ ‎ $416,000‎
Subscriptions processing systems ‎ (20,000)‎
Rewards tracking systems ‎ (20,000)‎
Activity & gaming point systems ‎ (30,000)‎
SMRC profile development / content tracking ‎ 35,000)‎
(
Hosting/member donation entry/logging ‎ 38,000)‎
(
System multi-server XML synchronization ‎ 35,000)‎
(
VirtuALLY ‎ 40,000)‎
(
User Interfaces/Mobile Apps ‎ (40,000)‎

Labor (4 Mo. X 25 people, 2/3:mktg) $804,000‎
Phillip Nakata - information systems architect ‎ 45,000)‎
(
Aaron Nakata - gaming/coding liaison ‎ (45,000)‎
TBD - human systems architect ‎ (45,000)‎
Joel Doerfel - charity/celebrity liaison ‎ 45,000)‎
(
TBD - presentation guru/ head maverick ‎ 45,000)‎
(

Promotion:‎ ‎ $227,500‎
Communications ‎ 7,250)‎
(
Travel & Lodging ‎ (41,500)‎
Presentation ‎ (3,950)‎
Materials (hardware)‎ ‎ (15,800)‎
Events Co-Sponsorship ‎ (22,500)‎

Penny Program (base rate of content) $209,625‎
g₁ = i₀ * 18.28%‎ ‎ (8,850)‎
g₂ = g₁ * 1.618‎ ‎ (14,325)‎
g₃ = g₂ * 1.618‎ ‎ (23,175)‎
g₄ = g₃ * 1.618‎ ‎ 37,500)‎
(


Graphic Design : $95,000‎
www.christianknopf.de/index.php ‎ 14,000)‎ - NOTE : sample
(
http://www.schematic.com/#‎ ‎ 24,000)‎- NOTE: sample
(
Branding ‎ ‎ 95,875‎
$
Registrations & Trademarking ‎ 3,900)‎
(
Celebrity Affiliations/Associations ‎ 12,000)‎
(
Philanthropic Affiliations/Associations ‎ 13,000)‎
(
Viral Content (4,950)‎

Legal & Miscellany: ‎ $152,000‎
Insurance ‎ (2,400)‎
Legal ‎ 50,000)‎
(
Miscellany ‎ (12,900)‎

Sub-Totals: ‎ $2,000,000‎

Infrastructure, Business Overhead: $1,000,000
For 1.5 – 2 mo.; to be applied against
$3MM min. research return (1/3 of target)

Total: Launch + 2mo. Adjustment $3,000,000

5. Repayment of Investment: In consideration of the Investor making that financial contribution
called for in paragraph 4 hereof, SMRC shall pay or cause to be paid to the Investor the
following:

(a) Repayment of Investment: Shall in any case the investor want to reimburse the
investment amount or terminate the contract, SMRC will pay back the invested amount
only.

(b) Net Profit Participation: Paid as Dividends on SMRC Common and Preferred Stock it
is based on the percentage of a partner/investor’s shares to the total SMRC outstanding
(common) shares PLUS the total number of Issued Preferred Shares. Net profits
participation of the Investor as described in this sub-paragraph 3(b) shall continue so
long as SMRC is generating net profits and duration of the agreement except that the
Investor shall have no interest in the SMRC anymore.

EXCLUSIVE / AND / OR (USING EQUITY AS COLLATERAL – one only at most – strikeout
others):

[ ] _______ (SMRC initials) Dividends:
Beginning in the third year following investment, the enterprise will pay
to the investor a dividend. Dividends will be shared among investors on
a pro rata basis. The amount of the dividend will be determined by the
board of directors, but in no event will total dividends issued reduce the
fiscal year end cash ratio to less than .75.

[ ] _______ (SMRC initials) - Investor redemption based on a pre-defined
schedule - Beginning in the third year after investment the investor will
have the right to redeem their equity to the extent that the enterprise's
cash ratio can be maintained at or above .6. If more than one investor
wishes to redeem their equity it will be done so on a pro rata basis.
Redemption will be based on the following schedule.

Year three - 125% of original investment, this is equivalent to 10%
internal rate of return.
Year four - 190% of original investment, this is equivalent to 18%
Year five - 250% of original investment, this is equivalent to 21% internal
rate of return.

[ ] _______ (SMRC initials) - Enterprise buyout of investors based on a
pre-defined schedule - Beginning in the third year after investment the
enterprise will have the right to buy back the investor's equity at a pre-
determined price. Buy back will be based on the following schedule.

Year three - 400% of original investment, this is equivalent to 60%
Year four - 600% of original investment, this is equivalent to 57%
Year five - 800% of original investment, this is equivalent to 52%

[ ] _______ (SMRC initials) – Merger, Acquisition, IPO
In any of these circumstances it is not possible to predict what the
return will be for the investor. It is assumed that any such action
would be done in the best interest of the stockholders.

6. Investor's Monetary Contribution: The Investor shall deliver a ______________
(Check/Cash/Other) in the amount of ________________to the SMRC payable to the
Company's designated <SMRC Inc.> Account.

OR

A Total Equity Investment of $ __________________, in ______ Phases:

$_________________ at the start of this Agreement;

$_________________ after ____________________;

$_________________ at _______________________

6. Investor Approval Rights: The Investor shall be ______ actively involved on a regular basis
and in a material manner in significant decisions relating to the expansion, selling of the
SMRC, production, post-production, and other exploitation of the SMRC.

8. Representations and Warranties: SMRC hereby represents and warrants to the Investor
that:

(a) Powers and Authority: It is duly incorporated, validly existing and in good standing. It
has the corporate power and all necessary rights and title to enter into and perform this
Agreement and the transactions contemplated hereby or referred to herein and have
taken all necessary action to authorize the entry into and performance of this
Agreement and such transactions.

(b) Legal Validity: This Agreement constitutes a legal, valid and binding obligation of
SMRC and is in proper form for enforcement against it.

(c) Non-Conflict With Laws: The entry into and performance of this Agreement and the
transactions contemplated hereby do not and will not conflict with: (i) any existing law
or regulation or any official or judicial order, or (ii) its articles of incorporation, or (iii)
any agreement or document to which it is a party or which is binding upon it or any of
its assets.

Without limiting the generality of the foregoing, SMRC represents and warrants that
there are not now any liens, claims, encumbrances, legal proceedings, restrictions,
agreements or understandings which might conflict or interfere with, limit, derogate
from, or be inconsistent with or otherwise affect any of the provisions of this Agreement
or any of the representations or warranties of SMRC.

(d) Consents: All authorizations, approvals, consents, licenses, exemptions, filings,
registrations, notarizations and other matters, official or otherwise, required by SMRC
or advisable in connection with the entry into, performance, validity and enforceability
of this Agreement and the transactions contemplated hereby SMRC have been obtained
or effected and are in full force and effect (other than the registration of security
interests to be created pursuant hereto).

(e) Litigation: No litigation, arbitration or administrative proceedings are threatened or,
to its knowledge, pending which call into questions the validity or performance of its
obligations hereunder.

(f) Copy Documents: Each copy document delivered to the Investor by or on behalf of
SMRC under or in connection with this Agreement and/or any prior negotiation
between SMRC and the Investor constitutes a true and complete copy of the document
of which it purports to be a copy and all facts, circumstances and other documents
which might materially affect their interpretation have been disclosed in writing to the
Investor.

(g) Material Information: All information which might be material to a person assuming
the obligations and acquiring the rights assumed and acquired by the Investor pursuant
to this Agreement has been disclosed in writing to the Investor and there are no facts or
circumstances which might make such information misleading or inaccurate.

(h) Survival: SMRC's warranties, representations and agreements are of the essence of
this Agreement and shall survive the early termination hereof. None of SMRC's
warranties, representations or agreements shall in any way be limited by reason of any
investigation made by the Investor or on behalf of the Investor regarding said
warranties, representations or agreements.

9. Indemnification by SMRC: SMRC shall, at its own expense, indemnify, save and hold
harmless the Investor and its successors, licensees, assigns, agents, representatives and
affiliates from and against any and all claims, demands, causes of action, obligations,
liability, loss, damage, cost and expenses (including reasonable attorneys' fees), incurred or
sustained by reason of or arising out of any breach or alleged breach of any of the
warranties, representations or agreements herein made by SMRC, or from any reliance
upon any such warranties, representations or agreements. If any person or entity shall make
any claim or institute any suit or proceeding alleging any facts, which, if true, would
constitute a breach by SMRC, of any warranty, representation or agreement herein made,
SMRC shall give prompt written notice of same to the Investor and SMRC shall undertake at
its own cost and expense the defense thereof and shall supply competent and experienced
counsel to defend any such suit or proceeding. The Investor may also engage his own
counsel in connection with any such suit or proceeding.

10. Accounting and Reports by SMRC:

(a) SMRC shall maintain complete books and records with respect to the operation of
SMRC. SMRC shall render to the Investor, on a semi-annual basis for the first two years
after initial operation of SMRC, a written statement of monies due the Investor
hereunder, if any ("Investor Statement"), and such Investor Statement shall be
accompanied by remittance of any amount shown to be due to the Investor thereon.
Thereafter, Investor Statements and payments shall be provided annually for as long as
SMRC generates net profits or based on duration of the agreement which ever first. If
any error is made by SMRC in any Investor Statement, it may be corrected by SMRC
within two (2) years thereafter by making any necessary deductions or additions on
subsequent Investor Statements, or at SMRC 's option by rendering an Amended
Investor Statement. Each Investor Statement shall be rendered within forty-five (45)
days following the end of each accounting period. Any Investor Statement rendered by
SMRC hereunder shall be deemed conclusively true and correct and binding upon the
Investor, shall constitute an account stated and be incontestable unless the Investor
delivers to SMRC in writing specific objections, setting forth specific transactions or
items objected to and the basis of such objections, within one (1) year from the date of
such Investor Statement. Any recovery by the Investor shall be limited to those items
specifically objected to in writing by the Investor within said one (1) year period.

(b) The Investor shall have the right to examine the books and records of SMRC to the
extent they pertain to the operation of SMRC. Such examination shall be made during

reasonable business hours, upon reasonable advance written notice, at the regular
place of business of SMRC where such books and records are maintained, and shall be
conducted on the Investor's behalf and at the Investor's expense by the Investor's
designee. Such examination shall not be made more frequently than annually and no
more than once with respect to any accounting period or Investor Statement rendered
hereunder. With respect to any accounting period for which an Investor Statement has
been rendered by SMRC, such examination shall be permitted only for a period of one
year from the date such Investor Statement was received by the Investor. Investor's
examination shall be limited to those records relating to the SMRC and under no
circumstances shall the Investor have the right to examine records relating to SMRC
business generally or relating to other motion pictures for purposes of comparison or
otherwise.

(c) No action, suit or proceeding arising out of this Agreement or concerning the
Investor Statement or other accounting rendered by SMRC hereunder or to the period
of time to which such Investor Statement or accounting relates may be maintained
against SMRC unless commenced within one (1) year after the date such Investor
Statement or accounting is received by the Investor.

(d) SMRC shall, upon the Investor's request, avail itself of any audit right SMRC might
have under any distribution agreement SMRC might enter into relating to the SMRC.
The expenses of such an audit, if not reimbursable by such distributor shall be a
deductible expense under paragraph 2 hereof.

11. Funds Held in Trust: All monies received by SMRC which are payable to the Investor in
accordance with the provisions of this Agreement shall be held by SMRC, in trust, for the
sole use and benefit of the Investor and shall be immediately deposited upon receipt in a
separate interest-bearing bank account naming the Investor as the beneficiary thereof.
SMRC shall not commingle the monies payable to the Investor hereunder with other monies
of SMRC.

12. Relationship of Parties: The Investor and SMRC each acknowledge that they are
independent contractors and that no partnership, joint venture, agency or employment
relationship has or will be created by this Agreement. However, nothing herein shall prevent
SMRC from subsequently initiating arm's length negotiations with and engaging the Investor
and/or the Investor's company, in which case the Investor and/or his company shall be paid
budgeted costs out of the SMRC's budget.

13. Business Opportunities: Each of the parties acknowledges that this Agreement relates only
to the SMRC and than none of the parties will in any way be restricted from any other
business activity, whether or not competitive to the SMRC, it being agreed that so-called
"corporate and/or joint venture opportunities" or fiduciary opportunities in relation to any
such other activities are hereby waived by each of the parties.

14. Additional Documents: Each of the parties agree to execute any additional documents
which may be required or be desirable to fully effectuate the purposes and intent of this
Agreement or to carry out the obligations of the parties hereunder, provided that they are
not inconsistent with the provisions of this Agreement.

15. Notices: All notices hereunder shall be in writing and shall be served by personal delivery to
the Investor or SMRC, as the case may be, or by registered or certified mail, return receipt
requested, or by telegram or FAX, addressed as follows:

Investor:

_________________________________________

_________________________________________

_________________________________________

Any party may change its address at any time by written notice to the other parties.
Notices served by mail shall be deemed to be served three (3) business days next.

16. Assignment: No party hereto shall have the right to assign all or any part of its right or
obligations hereunder without the prior consent of the other party, except that nothing
contained in this sentence shall prevent any party from assigning its right to receive monies
hereunder.

17. Miscellaneous:

(a) This Agreement may not be modified except by written agreement signed by each of
the parties hereto.

(b) This Agreement shall in no event be construed as a third party beneficiary contract
and is not intended for the benefit of any person or company whomsoever except the
parties hereto.

(c) No waiver by one party of a breach or default by the other party shall be deemed to
be a waiver of any preceding, continuing or succeeding breach of the same or any other
provision of this Agreement.

(d) Each party acknowledges that no representation or warranty not expressly set forth
in this Agreement has been made or relied upon by the other party, it being agreed that
this Agreement constitutes the entire Agreement of the parties regarding the subject
matter hereof and supersedes all prior Agreements with respect thereto.

(e) This Agreement has been entered into in the United States and shall be construed
and enforced under and subject to the laws of said country.

18. Attorneys' Fees: In any action or proceeding between or among the parties hereto to
interpret or enforce any of the provisions hereof, the prevailing party shall, in addition to
any other award of damages or other remedy, be entitled to reasonable attorneys' fees and
costs.

WHEREFORE, the parties have executed this Agreement on the date first above written.

Funding SMRC Sponsor or Sponsor Spokesperson as an Equity Partner

By:

___________________________________________________

___________________________________________________

SMRC:

By:

___________________________________________________

SMRC.EQUITY.PARTNER.TERMS-FINANCING.AGREEMENT

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