This sample contains the subscription agreement of a Private Placement Memorandum for Film Production.
Instructions for completion and links to other required subscription documents can be found here: PPM for Film - Instructions for Subscription Documents
Your Company LLC
City, State Zip
To Your Company LLC:
1. Subscription. The undersigned (the “Investor”) hereby subscribes for and agrees to purchase the number of units of Class A limited liability company membership interest (the “Class A Units”) in Your Company LLC, a Delaware limited liability company (the “Company”), set forth on the signature page hereto at a purchase price of $100 per Class A Unit.
2. Purchase of Class A Units. On or before the closing date of the purchase of Class A Units by the Investor, the Investor shall deliver payment (in the form of a wire transfer, cashier’s check or cancellation/conversion of indebtedness) to the Company for the number of Class A Units set forth on the signature page hereto.
3. Acceptance or Rejection of Subscription.
(a) The Investor understands and agrees that the Investor’s subscription for Class A Units evidenced hereby is irrevocable and is conditioned upon acceptance by the Company, and that, at any time prior to the closing of the Investor’s purchase of a Class A Unit, may be accepted or rejected in whole or in part by the Company, in its sole discretion notwithstanding prior receipt by the Investor of notice of acceptance of the Investor’s subscription, if in the judgment of the Company’s manager such action is not in the best interests of the Company.
(b) In the event of a rejection of the Investor’s subscription, the Investor’s cash or check will be returned to the Investor without interest or deduction and this Subscription Agreement shall have no force or effect. In the event of a partial rejection of the Investor’s subscription, that portion of the Investor’s payment relating to the rejected portion will be returned, and this Subscription Agreement will be deemed amended to reflect the reduction by the Company, as the Investor’s attorney-in-fact.
4. Closing Date; Operating Agreement.
(a) The Investor’s minimum subscription for Class A Units shall be $10,000, provided that the Company may accept less than such amount in its sole discretion. The Company may accept subscriptions for Class A Units in the aggregate amount of up to $325,000. The initial closing shall occur on or before July 31, 2007, or such later date as determined by the Company’s manager (the “Initial Closing”). Following the Initial Closing, the Company may conduct one or more subsequent closings until the date on which the Company has accepted subscriptions for Class A Units in the aggregate amount of $80,000 (the “Initial Offering Amount”). Subscriptions received after the sale of the Initial Offering Amount will be held in a segregated account and released to the Company on the date the Company has received subscriptions in the aggregate amount of $245,000 (the “Final Closing”). The Final Closing shall occur by March 31, 2008, subject to the right of the Company’s manager to extend the offering. If the Investor’s subscription is not accepted by the Company, the Investor’s funds shall be returned, without interest or deduction, to the Investor.
(b) The Investor agrees to be bound by all the terms and provisions of the Amended and Restated Limited Liability Company Operating Agreement of the Company (as amended from time to time, the “Operating Agreement”), in the form attached hereto as Exhibit A, and, upon acceptance of the Investor’s subscription and admission of the Investor to the Company as a member, the Company may execute and deliver the Operating Agreement on behalf of the Investor as the Investor’s attorney-in-fact.
5. Representations and Warranties of the Investor. To induce the Company to accept the Investor’s subscription for Class A Units, the Investor represents and warrants to the Company as follows:
(a) The Investor is acquiring the Class A Units for the Investor’s own account, for investment purposes only and not with a view to or for the resale, distribution or fractionalization thereof, in whole or in part, and no other person has or will have a direct or indirect beneficial interest in the Class A Units. If an entity, the Investor was not formed for the purpose of investing in the Company.
(b) The Investor acknowledges its/his/her understanding that the offering and sale of the Class A Units is exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of sections 3(b) and 4(2) of the Securities Act and Rule 504 of Regulation D promulgated thereunder, and is exempt from the qualification requirements under the California Corporate Securities Law of 1968 pursuant to section 25102(f) thereof. In furtherance thereof, the Investor represents and warrants to and agrees with the Company and the manager of the Company (the “Manager”) that:
(i) The Investor has the financial ability to bear the economic risk of the Investor’s investment in the Company (including its possible loss), has adequate means for providing for the Investor’s current needs and personal contingencies and has no need for liquidity with respect to the Investor’s investment in the Company.
(ii) The Investor has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Class A Units and protecting the Investor’s own interests in connection with the investment and has obtained, in the Investor’s judgment, sufficient information from the Company and the Manager to evaluate the merits and risks of an investment in the Class A Units. The undersigned has not utilized any person as the Investor’s purchaser representative in connection with evaluating such merits and risks.
(iii) The Investor is either (A) an “accredited investor” within the meaning of Regulation D as set forth in the Investor Questionnaire attached hereto as Exhibit C and completed and submitted to the Company by Investor herewith or (B) has (1) a preexisting personal or business relationship with the Company or one or more of its managers, officers or control persons or (2) by reason of the Investor’s business or financial experience the Investor is capable of evaluating the risks and merits of this investment and of protecting the Investor’s own interests in connection with this investment.
(iv) The offer and sale of the Class A Units to the Investor has not been accomplished by any form of general solicitation or general advertising, including, but not limited to, any advertisement, article, notice or other communication published in any newspaper, magazine or similar media, or broadcast over television or radio and any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.
(c) The Investor:
(i) has been furnished with any documents which may have been requested by the Investor, has carefully read such documents and acknowledges that (A) the assumptions, estimates, projections and budgets contained in such documents have been included for illustration purposes only, are estimates only and actual results may not correspond with results contemplated by the assumptions set forth therein, and (B) that the information in such documents and any other information provided to the Investor by the Company reflects the Company’s current intentions and estimates at the current time, and, as with any developing company, the precise elements of the Company’s plans can be expected to change from time to time;
(ii) has evaluated and understands the risks associated with an investment in the Company and has carefully read and understands the Investment Considerations and Risk Factors attached hereto as Exhibit B and made a part hereof;
(iii) understands that the information contained in the documents provided to the Investor and herein is confidential and non-public and agrees that all such information shall be kept in confidence by the Investor and neither used by the Investor for the Investor’s personal benefit (other than in connection with the evaluation and purchase of Class A Units) nor disclosed to any third party for any reason (other than in connection with the evaluation and purchase of Class A Units);
(iv) has been furnished, to the full satisfaction of the Investor, with any materials the Investor has requested relating to the Company, the offering of Class A Units or any statement made in the documents provided to the Investor, and the Investor has been afforded the opportunity to ask questions of and receive answers from the Company concerning the terms and conditions of the offering of Class A Units and the Operating Agreement and other matters pertaining to an investment in Class A Units, and has been given the opportunity to obtain such additional information in order for the Investor to evaluate the merits and risks of an investment in the Company to the extent the Manager or the Company possess such information or can acquire it without unreasonable effort or expense;
(v) has consulted to the extent deemed appropriate by the Investor with the Investor’s own advisers as to the tax, legal and related matters concerning an investment in the Class A Units and on that basis has determined that an investment in the Class A Units is suitable and appropriate for the Investor and that at this time the Investor could bear a complete loss of Investor’s investment; and
(vi) acknowledges that the tax consequences of investing in the Company will depend on the Investor’s particular circumstances, and neither the Company, the Manager nor any of their respective agents, employees, managers, affiliates, consultants or representatives will be responsible or liable for the tax consequences to the Investor of an investment in the Company and that the Investor will look solely to, and rely upon, the Investor’s own advisers with respect to the tax consequences of an investment in the Company.
(d) In making the decision to purchase the Class A Units herein subscribed for, the Investor has relied solely upon independent investigations made by the Investor and materials furnished by the Company or the Manager as described in Section 2(c) hereof, and no representations or warranties have been made to the Investor by the Company, any Manager or any of their respective employees, managers, owners, affiliates or representatives, nor has any person at any time expressly or implicitly represented guaranteed or warranted to the Investor that (i) Investor may freely transfer the Class A Units, (ii) a percentage of profit and/or amount or type of consideration will be realized as a result of an investment in the Class A Units, (iii) the past performance of the Manager or such Manager’s affiliates indicates the predictable results of the ownership of the Class A Units or the operations of the Company, (iv) any cash distributions from the operations of the Company will be made to the Investor by any specific date or will be made at all (except as expressly set forth in the Operating Agreement), or (v) any specific benefits will accrue to the Investor as a result of an investment in the Company. The Investor is not relying on the Company or its Manager with respect to the Investor’s tax consequences involved in an investment in the Class A Units.
(e) The Investor understands and agrees that the Investor may not sell or otherwise transfer the Class A Units without registration under the Securities Act or an exemption therefrom. The Investor fully understands and agrees that the Investor must bear the economic risk of the Investor’s investment for an indefinite period of time because, among other reasons, the Class A Units have not been registered under the Securities Act or under the securities laws of any state and, therefore, cannot be resold, pledged, assigned or otherwise disposed of unless subsequently registered under the Securities Act and under applicable state securities laws of any state or an exemption from such registration is available. The Investor understands that the Company is under no obligation to register the Class A Units on the Investor’s behalf or to assist the Investor in complying with any exemption from registration under the Securities Act or any applicable state securities laws. The Investor also understands that sales or transfers of the Class A Units are further restricted by the provisions of the Operating Agreement.
(f) The Investor is authorized and qualified to become a member in, and authorized to make the Investor’s capital contribution to, the Company, and, if the Investor is an entity, the person signing this Subscription Agreement on behalf of the Investor has been duly authorized by the Investor to do so.
(g) The execution and performance of the terms and obligations of the Operating Agreement will not cause the Investor to violate any judgment, order, law, ordinance, rule, agreement, charter, organizational document or indenture to which the Investor or the Investor’s property is subject.
(h) This Subscription Agreement has been duly authorized, executed and delivered by the Investor and constitutes the valid and legally binding obligation of the Investor, subject to bankruptcy, insolvency, reorganization and other similar laws affecting the enforcement of creditors’ rights generally and to general equity principles.
(i) If the Investor is a corporation, partnership, limited liability company, trust, IRA, Keogh or other employee benefit plan, or other entity, the Investor is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized.
(j) The information which the Investor has furnished herewith to the Company or the Manager with respect to the Investor’s financial position and business experience, including without limitation the information set forth in the Investor Questionnaire, is correct and complete as of the date hereof and if there should be any material change in such information prior to the Investor’s admission to the Company as a member, the Investor will immediately furnish such revised or corrected information to the Company.
6. Tax Information. The Investor represents and warrants to the Company that (i) the Investor’s name, taxpayer identification or social security number and address provided in the Investor Questionnaire is correct, (ii) the Investor will complete and return with this Subscription Agreement IRS Form W-9, Payer’s Request for Taxpayer Identification Number and Certification, attached hereto as Exhibit D, (iii) the Investor is not a non-resident alien individual, foreign corporation, foreign partnership, foreign trust or foreign estate (as defined in the Internal Revenue Code (the “Code”)) and (iv) the Investor will notify the Company within thirty (30) days of a change to foreign status. The Investor agrees to execute properly and provide to the Company in a timely manner any tax documentation that may be reasonably required by the Manager in connection with the Company.
7. Further Advice and Assurances. All information which the Investor has provided to the Company, including the information in the Investor Questionnaire, is correct and complete as of the date hereof, and the Investor agrees to notify the Company and the Manager promptly if any representation or warranty contained in this Subscription Agreement, including the Investor Questionnaire, becomes untrue prior to the Investor’s admission to the Company. The Investor agrees to provide such information and execute and deliver such documents as the Company may reasonably request to verify the accuracy of the Investor’s representations and warranties herein or to comply with any law or regulation to which the Company may be subject.
8. Power of Attorney. The Investor hereby constitutes and appoints the Company, with full power of substitution and resubstitution, as the Investor’s true and lawful attorney-in-fact, with full power and authority for the Investor, and in the Investor’s name, place and stead and either personally or by attorney-in-fact, to make, execute, sign, acknowledge, publish, file and record, and to swear to in the execution, delivery, acknowledgment, filing and recording of the following, after receipt of any necessary approval or consents of the Manager and/or members of the Company:
(a) The Operating Agreement (unless such agreement has been personally executed by Investor), any Certificate of Formation and any certificate of amendment, certificate of dissolution, certificate of cancellation of certificate of formation, certificate of continuation, certificate of merger, restated certificate of formation and such other instruments, documents or certificates which may from time to time be required by the laws of the United States of America, the State of Delaware, or any political subdivision thereof or any other state or political subdivision in which the Company shall do business;
(b) Any certificates, counterparts, instruments and documents, and any amendments thereto, including without limitation, fictitious name certificates, as may be required by, or may be appropriate under, the laws of the State of Delaware or of any jurisdiction in which the Company is doing or intends to do business;
(c) Any other instrument which may be required to be filed by the Company under the laws of any jurisdiction or by any governmental agency, or which such attorney-in-fact deems advisable to file;
(d) Any documents which may be required to effect the admission of an additional manager, an additional or substituted member, or the dissolution and termination of the Company, in accordance with the terms of the Operating Agreement; and
(e) Any agreement or instrument which the Manager deems appropriate to (i) admit the Investor as a member of the Company in accordance with the terms of the Operating Agreement, or (ii) effect an amendment or modification to the Operating Agreement adopted in accordance with the terms of the Operating Agreement.
The foregoing grant of authority:
(i) is a Special Power of Attorney coupled with an interest, and is irrevocable;
(ii) may be exercised by such attorney-in-fact by executing an instrument as attorney-in-fact for the Investor, and Investor’s name shall be listed in the instrument as a member;
(iii) shall survive the Investor’s delivery of an assignment of the Class A Units, except that where the assignee thereof has been approved by the Manager for admission to the Company as a substituted member as provided for in the Operating Agreement, the Power of Attorney in this Section 8 shall survive the delivery of such assignment for the sole purpose of enabling such attorney-in-fact to execute, acknowledge and file any instrument necessary to effect such substitution; and
(iv) shall terminate upon the complete withdrawal of the Investor from participation as a member of the Company.
The Investor hereby agrees to be bound by all of the representations of the Investor’s attorney-in-fact and waives any and all defenses which may be available to the Investor to contest, negate or disaffirm the actions of such attorney-in-fact under the Power of Attorney in this Section 8, and hereby ratifies and confirms all acts which said attorney-in-fact may take on behalf of the Investor in compliance herewith and the Operating Agreement.
In the event of any conflict between a provision of the Operating Agreement and any document executed or filed by the attorney-in-fact pursuant to the Power of Attorney in this Section 8, the Operating Agreement shall govern.
9. Indemnity. The Investor understands that the information provided herein will be relied upon by the Company for the purpose of determining the eligibility of the Investor to purchase Class A Units. The Investor agrees to provide, if requested, any additional information that may reasonably be required to determine the eligibility of the Investor to purchase Class A Units. The Investor agrees to indemnify and hold harmless the Company, any Manager, the officers of the Company and each member of the Company from and against any loss, damage or liability due to or arising out of a breach of any representation, warranty or agreement of the Investor contained in this Subscription Agreement or in any other document provided by the Investor to the Company or in any agreement executed by the Investor with the Company or the Manager in connection with the Investor’s investment in Class A Units.
(a) This Subscription Agreement shall be governed in all respects by the laws of the State of California without application of principles of conflicts of laws.
(b) The representations, warranties, covenants and agreements made herein shall survive the closing of the transactions contemplated hereby.
(c) This Subscription Agreement is not assignable by the Investor without the consent of the Company. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.
(d) This Subscription Agreement and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof. Neither this Subscription Agreement nor any provisions hereof shall be waived, modified, discharged or terminated except by an instrument in writing signed by the party against whom any waiver, change, discharge or termination is sought.
(e) Unless otherwise expressly provided herein, the rights of the Investor hereunder are several rights, not rights jointly held with any of the other investors in Class A Units. Any invalidity, illegality or limitation on the enforceability of any part of this Agreement, whether arising by reason of the law of the Investor’s domicile or otherwise, shall in no way affect or impair the validity, legality or enforceability of this Subscription Agreement with respect to any other investor in Class A Units. In case any provision of this Subscription Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
(f) The titles of the paragraphs and subparagraphs of this Subscription Agreement are for convenience of reference only and are not to be considered in construing this Agreement.
(g) The representations and warranties made by the Investor in this Subscription Agreement and the Investor Questionnaire, shall survive the closing of the transactions contemplated hereby and any investigation made by the Company or the Manager. The Investor Questionnaire, including without limitation the representations and warranties contained therein, is an integral part of this Subscription Agreement and shall be deemed incorporated by reference herein.
(h) This Subscription Agreement may be executed in one or more counterparts, all of which together shall constitute one instrument.
(i) THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTIONS 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement on the date set forth below.
Number of Class A Units Subscribed For:
Total Amount of Investment:
(print spouse’s name)
(signature of spouse)
PARTNERSHIP, CORPORATION, TRUST, LIMITED LIABILITY COMPANY, CUSTODIAL ACCOUNT, OR OTHER INVESTOR:
(print name of entity)
(signature of person signing on behalf of entity)
YOUR COMPANY LLC
Your Name, Manager
(print name and title of person signing on behalf of entity)