Operating agreement undertaking

Why this exists before the operating agreement does

At the moment you sign this there is usually no operating agreement yet. The entity may not be formed, counsel may not be engaged, and the final documents are weeks away. Everything agreed between us until then lives in the partnership terms — which describe the deal but are not the document that governs it.

That gap is the whole reason for this page. This is the undertaking that holds the agreed terms in place across it, so that what we agreed before the papers existed is what appears in the papers when they do.

What you are undertaking

You undertake that the terms agreed with us will be written into the final operating agreement and the definitive documents for this deal, in substance and without dilution, and that you will not execute those documents in a form that omits or reduces them.

What has to carry over

The partnership terms control the detail. These are the points that have to survive into the final documents intact, because they are the ones that tend to get quietly rewritten between a handshake and a signature page:

• Our participation, at the percentage agreed for this deal, taken from your side and not from the investors’.
• The fee split agreed on acquisition, on asset management and at exit.
• No capital calls on us, and no earnest money from us — at any point, including after closing.
• Management and voting rights, and the right to information on the asset, at the level agreed.
• No liability for the loan. We are not a guarantor and do not sign as one.
• Confidentiality, as the partnership terms describe it.

If a term needs to change because counsel says the structure requires it, that is a conversation, not a decision you take alone. Bring it to us before the document is executed, not after.

What you are acknowledging about our role

Signing this is your statement, in your own voice, that you understand all of the following. None of it is new — it is the partnership terms said plainly, in the place where it matters.

Those last two belong together and are not negotiable apart. We are active in the decisions and absent from the liability, and a structure that gives us one without the other is not the structure we agreed.

Our share comes out of yours, not out of the investors’

You choose one of two, on the partnership terms, and you choose it before the deal is shown to anyone:

Say which one you are choosing when you file the request. If the deal grows past ten million between the request and the closing, the waterfall option falls away and the flat ten applies — that is not us changing terms, it is the term as written.

We sign the operating agreement ourselves

We are a member of the entity and we execute the operating agreement in our own name, or in the name of an affiliate under common control with Nikolay Shulgin. You do not sign it on our behalf and no power of attorney is given here or anywhere else.

The operating agreement is executed at or before closing. If closing arrives and it has not been executed, closing waits.

If the final documents leave it out

If the deal closes and the executed operating agreement does not carry the agreed terms, you are responsible for that, and you owe us what we would have received had it carried them. You also put it right in the documents, on request, at your cost.

It binds only if the deal closes

Nothing here obliges either of us to do this deal. You may walk away, and so may we, for any reason or none, at any point before the definitive documents are signed. This undertaking bites on one condition only: the deal closes. If it does not, it falls away and neither of us owes the other anything under it.

It survives, though, in one direction: it binds your successors and any entity you substitute into the deal. You cannot step out of it by changing the name on the door.

What this form is not

It is not legal advice and it does not replace your counsel, who drafts the operating agreement and reviews this. It is not an offer of a security. It does not make us your partner in any deal other than the one named in the request you filed.

Governed by the laws of the state in which the property that is the subject of your request is located, and any dispute goes to the state or federal courts sitting in that state. That is where the asset is, where the closing happens and where you are; both of us agree to that forum and give up any objection to it.