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Trust

Trust

A trust is a legal construct in which one person (the trustee) holds legal title to property previously owned (by the settlor) for the benefit of another (the beneficiary).

A non-profit can exist as a trust, when the trustee is under the obligation to use or hold the property for a charitable purpose.

A non-profit can also be named as the beneficiary to a trust, when the settlor makes a Planned Gift.

Unrelated Business Income

Unrelated Business Income

A non-profit can lose its 501(c)(3) Tax-Exempt Organization status if it generates too much unrelated business income from the exempt function of the organization. If your business idea addresses a social need but you plan on retaining a profit from your business, you can consider structuring your business as a Social Enterprise rather than a non-profit. California recently introduced two “hybrid” corporate forms for social enterprises: the Flexible-Purpose Corporation and the Benefit Corporation.

Sample Term Sheet

Sample Term Sheet

The information contained in this sample is provided for informational purposes only, and should not be construed as legal advice on any subject matter. You should not act or refrain from acting on the basis of any content included in this site without seeking legal or other professional advice. The contents of this post contain general information and may not reflect current legal developments or address your situation. We disclaim all liability for actions you take or fail to take based on any content on this site.

This sample has been provided in conjunction with Meyerdirk Consulting. MeyerdirkConsulting.com
elow you can find a Sample Term Sheet

Contents

TERM SHEET FOR THE PURCHASE AND SALE OF SECURED CONVERTIBLE PROMISSORY NOTE OF XYZ CORPORATION

<DATE>

THIS TERM SHEET (the “Term Sheet”) sets forth the principal terms proposed by _________________________ (the “Investor”) for the purchase of a Convertible Promissory Note from XYZ Corporation, an <State> corporation (the “Company”). These terms when finalized will be memorialized in a binding Convertible Note Purchase Agreement executed between the Company and the Investor along with other documents as described herein.

GENERAL:

Type of Security:
Convertible Note, bearing interest at a simple interest rate of _____ (__%) percent calculated on the basis of a 360-day year consisting of twelve, 30-day months (the “Notes”).

Investors:
The Investor named at the beginning of this Term Sheet, as well as other investors designated by and reasonably acceptable to the Company (collectively, the “Investors”).

Total Amount Invested:
U.S. $____________________.

Closing:
As soon as practicable following the Company¡¦s acceptance of this Term Sheet and execution of all other required documentation designated by the Company but no later than <Date> (the ¡§Initial Closing¡¨). Additional closings may occur at any time following the Initial Closing in the Company¡¦s discretion.

TERMS OF THE NOTES:

Term of Payment:
The day that is one year following the date of the Initial Closing shall be the end of the term of the Note (the “Maturity Date”). All principal and accrued interest under the Note is due and payable on the Maturity Date. The Note may be prepaid at any time by the Company without penalty upon five days prior written notice to the Holder.

Terms of Conversion:
The Note would be convertible on the following terms. In the event the Company consummates, prior to the Maturity Date (as defined below) an equity financing pursuant to which it sells shares of its Series A Preferred Stock (the “Series A Preferred Stock”) with an aggregate sales price of not less than $_____________, including any and all convertible notes which are converted into preferred stock (including the Notes issued under this Note Purchase Agreement), and with the principal purpose of raising capital (a “Qualified Financing”), then the Note shall automatically convert all principal and accrued interest under the Note into the Series A Preferred Stock at __% of the price paid by investors in the Qualified Financing. The Note shall convert into shares of Series A Preferred Stock on the same other terms as the other investors purchasing Series A Preferred Stock in the Qualified Financing.

Liquidity Event:
If a Liquidity Event occurs before repayment or conversion of the Note into equity, the Company will pay the holder of the Note an amount equal to ___% of the outstanding principal amount of the Note plus any accrued interest due under the Note upon the closing of such Liquidity Event. (For example the Holder of a $_________ note earning __% interest, upon a Liquidity Event would be paid $_________ plus accrued interest of __% on $_______.) For purposes of this provision, a “Liquidity Event” shall mean (a) a merger of the Company with or into another entity (if after such merger the holders of a majority of the Company’s voting securities immediately prior to the transaction do not hold a majority of the voting securities of the successor entity), (b) a sale by the Company of all or substantially all of its assets or (c) the closing of the Company’s first firm commitment underwritten public offering of the Company’s common stock registered under the Securities Act of 1933, as amended.

Security and Subordination:
Repayment of the Note would be secured by a first priority security interest in collateral consisting of all of the assets of the Company. The Note shall be subordinated to all indebtedness of the Company to banks, commercial finance lenders, insurance companies, leasing or equipment financing institutions or other lending institutions regularly engaged in the business of lending money (excluding venture capital, investment banking or similar institutions which sometimes engage in lending activities but which are primarily engaged in investments in equity securities), which is for money borrowed, or for the purchase or leasing of equipment in the case of lease or other equipment financing, whether or not secured.

OTHER:

Documentation:
The transaction would be documented by counsel of the

Company with the documents containing the provisions described above and consisting of the following:

  • Note Purchase Agreement;
  • Risk Factor Statement;
  • Convertible Promissory Note; and
  • Security Agreement.

Representations & Warranties:
The Convertible Note Purchase Agreement would contain customary representations from the Company including, without limitation: organization and qualification, execution and delivery, validity and enforceability of agreements, issuance of the Note, no litigation and compliance with laws. Customary representations from the Investor would include without limitation: suitability to invest, restrictions on the securities that will be issued in the event of conversion, “lock-up” provisions related to a potential public offering.

Non-Binding Terms:
Except for the provisions set forth in the captions below entitled ¡§Exclusivity¡¨ and “Expenses,” this Term Sheet is not an offer subject to acceptance or a legally binding commitment by Investor, and no obligation will be created by execution of this Term Sheet unless and until definitive documents have been executed and delivered.

Confidentiality:
The Company shall not disclose the terms of this Term Sheet to any person or entity except for the Company’s accountants and attorneys and other potential Investors acceptable to Investor, without the written consent of Investor.

Expiration:
This Term Sheet expires on _____________, 20__ if not accepted by the Company by that date.

Amendment:
Holders of a majority in interest of the principal amount of the Notes may amend or waive any provision of the Notes and such amendment or waiver shall be binding on all holders of the Notes.

Expenses:
The Company and the Investors will each bear their own legal and other expenses with respect to the transactions contemplated herein.

The undersigned hereby agree to the foregoing terms. This instrument may be executed in one or more counterparts and by facsimile, each of which will constitute an original, and all of which will constitute one and the same instrument.

INVESTOR: ______________________

By:_________________________

ACCEPTED AND AGREED TO AS OF THE DATE SET FORTH BELOW:

THE COMPANY: XYZ CORPORATION, an <State> corporation
By: _____
Name:______
Title:_______

This sample has been provided in conjunction with Meyerdirk Consulting. MeyerdirkConsulting.com

Sample Subscription Agreement

Sample Subscription Agreement

The information contained in this sample is provided for informational purposes only, and should not be construed as legal advice on any subject matter. You should not act or refrain from acting on the basis of any content included in this site without seeking legal or other professional advice. The contents of this post contain general information and may not reflect current legal developments or address your situation. We disclaim all liability for actions you take or fail to take based on any content on this site.

This sample has been provided in conjunction with Meyerdirk Consulting. MeyerdirkConsulting.com

Subscription Agreement

[Issuer Name], LP
STATEMENT REGARDING SECURITIES

THIS AGREEMENT DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT AUTHORIZED OR MAY NOT LAWFULLY BE MADE.

THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED HEREBY OR THE TERMS OF THE OFFERING. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED HEREUNDER ARE EXEMPT FROM REPRESENTATION. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE, AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, PURSUANT TO REGISTRATION OR EXEMPTION THEREUNDER. ANY REPRESENTATION TO THE CONTRARY OF THE FOREGOING IS A CRIMINAL OFFENSE.

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER ANY STATE SECURITIES LAWS AND ARE OFFERED PURSUANT TO CERTAIN EXEMPTIONS THEREUNDER. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY ANY STATE SECURITIES AGENCY AND NO REGULATORY BODY HAS PASSED UPON OR ENDORSED THESE SECURITIES. THESE SECURITIES MAY NOT BE TRANSFERRED EXCEPT IN TRANSACTIONS WHICH ARE EXEMPT UNDER APPLICABLE SECURITIES LAWS OR PURSUANT TO EFFECTIVE REGISTRATIONS THEREUNDER. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. INVESTMENT IN THE [CLASS ??] LIMTED PARTNER UNITS INVOLVES A SIGNIFICANT DEGREE OF RISK AND SHOULD BE UNDERTAKEN ONLY BY PERSONS WHOSE FINANCIAL RESOURCES ARE SUFFICIENT TO ENABLE THEM TO ASSUME SUCH RISK.

INVESTMENT IN SMALL BUSINESS INVOLVES A HIGH DEGREE OF RISK, AND INVESTORS SHOULD NOT INVEST ANY FUNDS IN THIS OFFERING UNLESS THEY CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT.

THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVESTMENT IN THE SECURITIES INVOLVES A HIGH DEGREE OF RISK. INVESTORS MUST BE PREPARED TO BEAR THE ECONOMIC RISK OF THE INVESTMENT FOR AN INDEFINITE PERIOD AND BE ABLE TO WITHSTAND A TOTAL LOSS OF THEIR INVESTMENT.

THIS DISCLOSURE DOCUMENT CONTAINS ALL OF THE REPRESENTATIONS BY THE COMPANY CONCERNING THIS OFFERING. NO PERSON SHALL MAKE DIFFERENT OR BROADER STATEMENTS THAN THOSE STATEMENTS CONTAINED HEREIN. INVESTORS ARE CAUTIONED NOT TO RELY UPON ANY INFORMATION NOT EXPRESSLY SET FORTH IN THIS DOCUMENT.

THE SECURITIES ARE BEING OFFERED ONLY TO PERSONS WHO HAVE SUCH KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS TO BE ABLE TO MAKE AN INFORMED DECISION REGARDING AN INVESTMENT IN THE SECURITIES. POTENTIAL INVESTORS MUST REPRESENT THAT THEY ARE CAPABLE OF EVALUATING THE MERITS AND RISKS OF THIS INVESTMENT. INVESTORS MUST BE ACQUIRING THE SECURITIES FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO ANY RESALE OR DISTRIBUTION. THE SECURITIES ARE SUITABLE ONLY FOR PERSONS WHO HAVE NO NEED FOR LIQUIDITY IN THIS INVESTMENT.

FURTHER, THE COMPANY IS EXTENDING THE OFFERING ONLY TO THOSE PERSONS WHO MEET THE DEFINITION OF ¡§ACCREDITED INVESTOR¡¨ UNDER THE SECURITIES ACT OF 1933, REGULATION D. THE MOST COMMON WAYS TO MEET THE DEFINITION OF AN ACCREDITED INVESTOR ARE AS FOLLOWS:

1. ANY NATURAL PERSON WHOSE INDIVIDUAL NET WORTH, OR JOINT NET WORTH WITH THAT PERSON¡¦S SPOUSE, AT THE TIME OF HIS OR HER PURCHASE EXCEEDS $1,000,000;
2. ANY NATURAL PERSON WHO HAD AN INDIVIDUAL INCOME IN EXCESS OF $200,000 IN EACH OF THE TWO MOST RECENT YEARS OR JOINT INCOME WITH THAT PERSON¡¦S SPOUSE IN EXCESS OF $300,000 IN EACH OF THOSE YEARS AND HAS A REASONABLE EXPECTATION OF REACHING THE SAME INCOME LEVEL IN THE CURRENT YEAR; OR
3. ANY TRUST, WITH TOTAL ASSETS IN EXCESS OF $5,000,000, NOT FORMED FOR THE SPECIFIC PURPOSE OF ACQUIRING THE SECURITIES OFFERED, WHOSE PURCHASE IS DIRECTLY BY A SOPHISTICATED PERSON WHO HAS SUCH KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT HE OR SHE IS CAPABLE OF EVALUATING THE MERITS AND RISKS OF THE PROSPECTIVE INVESTMENT.

THE COMPANY IS OFFERING THE SECURITIES PURSUANT TO AVAILABLE EXEMPTIONS FROM REGISTRATION UNDER FEDERAL AND STATE SECURITIES LAWS. THE SECURITIES WILL BE RESTRICTED SECURITIES AND MUST BE HELD INDEFINITELY ACCORDING TO THEIR TERMS. THEY MAY NOT BE TRANSFERRED UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN AVAILABLE EXEMPTION FROM REGISTRATION WITH AN OPINION FROM LEGAL COUNSEL TO THAT EFFECT SATISFACTORY TO THE COMPANY. THE COMPANY IS UNDER NO OBLIGATION, AND HAS NO INTENTION, TO REGISTER THE SECURITIES AND IS UNDER NO OBLIGATION TO ATTEMPT TO SECURE AN EXEMPTION FOR ANY SUBSEQUENT SALE.

AN INVESTMENT IN THE SECURITIES IS HIGHLY ILLIQUID. ANY PERSON ACQUIRING THE SECURITIES SHOULD BE ABLE TO WITHSTAND A HIGHLY RISKY INVESTMENT OVER THE TERM OF THE SECURITIES. THERE WILL BE NO MARKET FOR THE SECURITIES.

THE OFFERED SECURITIES ARE BEING OFFERED SUBJECT TO ACCEPTANCE, PRIOR TO SALE AND WITHDRAWAL, CANCELLATION OR MODIFICATION OF THE OFFER BY THE COMPANY AT ANY TIME WITHOUT NOTICE.

[ISSUER NAME], LP

SUBSCRIPTION AGREEMENT
FOR OWNERSHIP OF [CLASS ??] LIMITED PARTNER UNITS OF A LIMITED PARTNERSHIP

Name of Subscriber ___________________________________________________________ .

Total U.S. Dollar Amount of Subscription US $ _______________ (the “Subscription Amount”).

WHEREAS, the undersigned party (the “Subscriber”) desires to subscribe for ___ [Class ??] Limited Partner Percentage Units, (the “[Class ??] Units”), of [Issuer Name], LP (the “Company”), a limited partnership organized under the laws of the State of [Domicile State] for the Subscription Amount stated above; and

WHEREAS, the Company is willing to offer the [Class ??] Units to Subscriber in the manner and subject to the terms set forth in this Subscription Agreement, the Certificate of Formation, the Private Placement Memorandum and the Limited Partnership Agreement of the Company (the “Enabling Documents”);

NOW, THEREFORE, the Company and Subscriber do hereby agree as follows:

1. Delivery of Subscription Amount. In order to subscribe for the [Class ??] Units, Subscriber must: (a) complete and execute this Subscription Agreement as well as the signature page to the Limited Partnership Agreement and deliver both documents to the Company, at: ________________________________; and (b) transmit the Subscription Amount by wiring funds to the _______________________ (the ¡§Escrow Agent¡¨), pursuant to the following wire transfer instructions:

Bank: __________________
Address: ___________________________
City, [Domicile State] _______________
Phone: _________________________
ABA Routing No. __________________
Credit account name: __________________________
Escrow Agent for: [Issuer Name], LP
Address:
Phone:
Credit account number: _____________________

If Subscriber does not execute and deliver to the Company a signature page to the Operating Agreement, upon written request to the Company, Subscriber may have its Subscription cancelled and its Subscription Amount returned in full. However, the Company reserves the right to cancel the Subscription and return the associated Subscription Amount in full if the Subscriber has not executed and returned the Operating Agreement in a timely manner.

Please notify the Company of your wire by fax to the Company at: _____________________. Please ensure the following information is included in your notification:

  • Name and Account Number
  • Amount of Wire
  • Date of Wire
  • Name of Remitting Bank
2. Acceptance. Subject to the acceptance hereof by the Company, Subscriber does hereby subscribe for the [Class ??] Units having a total U.S. dollar amount described on the first page of this Subscription Agreement above.
3. Subscription.
a. The Subscriber hereby subscribes for and agrees to purchase [Class ??] Units of the Company in the aggregate total of the U.S. dollar amount described on the first page of this document, all subject to the terms and conditions of this Subscription Agreement (the ¡§Subscription¡¨).
b. The Subscriber understands that the Company is offering a minimum of ___________ and a maximum of ___________________ Units for _______________ for each [Class ??] Limited Partnership Unit. Upon full subscription, the [Class ??] Limited Partners will own _________ of the equity of the Company. The minimum subscription amount is ____________, although the Company reserves the right to accept a lesser amount.
c. The Subscriber understands that the [Class ??] Limited Partner Units and the General Partner Unit have been issued to management and its affiliates in exchange for services or nominal consideration.
d. The Subscriber understands that the [Class ??] Units are offered with preference described as follows: The investor subscribing for a [Class ??] Unit will be provided a quarterly preferred return (non-cumulative and non-guaranteed) in an amount up to but not exceeding _____________ per annum calculated on the amount of their capital account as of the date of the quarterly payment. The return shall be calculated as of the date the original investment, based on the beginning balance of the Limited Partner¡¦s capital account and shall be adjusted in the event that the Limited Partner¡¦s capital account is reduced as a result of a return of equity. Additionally, in the event of the sale of all of the assets of the partnership, (the residential real estate portfolio, collectively the ¡§Property¡¨), the [Class ??] Limited Partners will be paid on a prorated basis between them______________ percent of the gain on the sale (the ¡§Bonus Payment¡¨) if any gain is realized, at the time of the closing of the sale of all of the Property. The General Partner and the [Class ??] Limited Partner will be allocated the balance of the earnings in proportion their respective ownership interests. Additionally, in the event of a sale of all of the Property, __________________ percent preferred annual return will be prorated on a calendar year basis calculated on the balance of the Limited Partner¡¦s capital account as of the date of the closing of the sale. A [Class ??] Limited Partnership Interest owner shall also have a priority as to other Partners for repayment of the balance due of his, her or its Capital Account in the event of liquidation.
e. The Subscriber understands that the [Class ??] Units are being issued pursuant to exemption afforded under Regulation D of the Securities Act of 1933, and that therefore the [Class ??] Units can only be sold to the Company and cannot be sold to a third party without a separate exemption from registration.
f. The Subscriber understands that this Subscription Agreement, the consideration delivered and all other subscription documents will be held by the Company prior to the closing of the Offering. The Subscriber understands that if the Offering is terminated without closing, any amount delivered to the Company will be returned to the Subscriber with 1% annualized interest.
g. The Subscriber acknowledges that the Company reserves the right, in its sole and absolute discretion, to accept or reject this Subscription, in whole or in part, and that this Subscription shall not be binding unless and until accepted by the Company.
h. The Subscriber and its/his/her purchaser representative, if any, may only rely on the information furnished or made available or to be made available to the Subscriber and its/his/her purchaser representative, if any, by the Company, as described above.
i. Subscriber acknowledges and agrees that the Subscription Price will be disbursed from the Company¡¦s escrow account at the time the General Partner concludes that the offering is complete.
4. Subscriber Representations, Warranties and Covenants. The Subscriber understands that the information provided by the Subscriber in this Subscription Agreement is being furnished in order for the Company to verify the Subscriber¡¦s qualification to acquire the [Class ??] Units. The Subscriber understands that such information is needed by the Company so that it can determine the validity and applicability of certain exemptions from the registration requirements of the Securities Act of 1933, as amended (the ¡§Act¡¨) and applicable state securities laws (the ¡§State Acts¡¨) in respect to the sale of the [Class ??] Units. Accordingly, the Subscriber represents and warrants to the Company as follows:
a. The Subscriber understands that if it/he/she uses the service of a Purchaser Representative as such term is defined in Regulation D under the Act (¡§Purchaser Representative¡¨), that: (1) it/he/she must acknowledge in writing prior to its/his/her purchase of the [Class ??] Units that such Purchaser Representative is its/his/her Purchaser Representative in connection with evaluating the merits and risks of its/his/her prospective investment in the Company, (2) such Purchaser Representative must disclose, in writing, prior to the acknowledgment referred to above, any material relationship between such Purchaser Representative or its affiliates and the Company or its affiliates which now exists or is mutually understood to be contemplated or which has existed at any time during the previous two years, and any compensation received or to be received as a result of such relationship, including any compensation received or to be received in connection with the offering of the [Class ??] Interests, and (3) the Subscriber must furnish true and complete copies of the foregoing acknowledgments promptly upon their execution.
b. The Subscriber and its/his/her Purchaser Representative, if any, have received and read a copy of the Private Placement Memorandum of the Company dated _____________, the Limited Partnership Agreement of the Company, the Certificate of Formation and this Subscription Agreement, in order that they are able to: (1) ask questions and receive satisfactory answers concerning the Company and its Officers, the business and the financial condition of the Company, and the terms and conditions of the offering, and (2) obtain any additional information which the Company possesses or can acquire without unreasonable effort or expense that is necessary to verify the accuracy or completeness of such information. The Subscriber also has been furnished access to any and all other information that is material to the Subscriber or would be as requested by a reasonable investor making a decision to purchase the [Class ??] Interests.
c. Neither the Subscriber nor its/his/her Purchaser Representative, if any, has been furnished any offering literature other than the Enabling Documents.
d. The [Class ??] Units are being acquired solely for investment for the Subscriber¡¦s own account and not as nominee or agent or otherwise on behalf of any other entity or person, and are not being acquired with a view to or with a present intention to reoffer, resell, fractionalize, assign, grant any participating interest in, or otherwise distribute the [Class ??] Interests.
e. The Subscriber certifies that: (1) no other entity or person has any direct or indirect beneficial interest in the [Class ??] Interests, (2) the Subscriber is not acting as an underwriter or directly or indirectly participating in any underwriting of the [Class ??] Interests, (3) the Subscriber has not formed any entity for the purpose of making the investment in the [Class ??] Units or if so, has previously reported such fact to the Company, (4) the Subscriber will not take, or cause to be taken, any action that would cause the Subscriber to be an underwriter (as defined in Section 2(11) of the Act) of the [Class ??] Interests, and (5) the Subscriber does not have any contract, undertaking, agreement, arrangement or understanding with any entity or person which is contrary to the representations, warranties and agreements contained in this Subscription Agreement.
f. The Subscriber further agrees that the [Class ??] Units shall only be sold, pledged, assigned, hypothecated, or otherwise transferred (with or without consideration) in compliance with the conditions specified in the Limited Partnership Agreement, to which the Company is a party.
g. The Subscriber agrees that the Company is under no obligation to register the [Class ??] Units under the Act or any State Acts on its/his/her behalf or to assist it/him in complying with any exemption from registration.
h. The Subscriber understands that no federal or state agency has passed upon the [Class ??] Interests, or made any finding or determination as to the fairness of the investment or any recommendation or endorsement of the [Class ??] Interests.
i. The Subscriber is a citizen of either Canada or the United States of America, is at least 21 years of age, and has the legal capacity and authority to execute, deliver and perform this Subscription Agreement, and its/his/her principal residence is located within the state designated under its/his/her name below.
j. All information which the Subscriber has provided to the Company concerning the Subscriber is true and complete as of the date set forth at the end hereof, and if there should be any change in such information prior to this Subscription being accepted, the Subscriber will immediately provide the Company with accurate and complete information concerning any such change.
k. The Subscriber understands that the [Class ??] Units are not a liquid investment.
l. The Subscriber understands that the Company will be subject to all of the risks inherent in the operation of a business in general, including, without limitation, those related to local and national economic conditions, changes in market conditions and costs, changes in management, changes in consumer preferences and demographics, competition, ability to obtain and retain qualified employees, and government laws and regulations.
m. The Subscriber certifies reaffirms that statements set forth on the previously delivered Investor Suitability Questionnaire are applicable to the Subscriber as indicated.
n. The Subscriber represents that the Subscriber: (i) has adequate means of providing for the Subscriber¡¦s current needs and possible contingencies, (ii) has no need for liquidity in this investment, (iii) believes that the nature and amount of this investment is suitable for the Subscriber and consistent with the Subscriber¡¦s overall investment program and financial position, (iv) believes that the Subscriber¡¦s overall commitment to investments which are not readily marketable is not disproportionate to the Subscriber¡¦s net worth and the investment in the [Class ??] Units will not cause such overall investment commitment to become excessive, (v) is under no present or contemplated future need to dispose of the [Class ??] Units to satisfy any existing or contemplated undertaking, need or indebtedness, (vi) is able to bear the economic risks of the investment in the [Class ??] Units, (vii) at the present time is able to afford a complete loss of such investment, and (viii) has such knowledge and experience in business and financial matters that he is capable of evaluating the merits and risks of the investment.
o. The Subscriber is aware that no market may exist for the resale of the [Class ??] Units.
p. The Subscriber is aware of any and all restrictions imposed by the Company on the further distribution of the [Class ??] Units.
5. Indemnification. The Subscriber agrees to indemnify and hold harmless the Company, the General Partner and any entity or person, attorney or other acting on behalf of the Company, from and against any and all damage, loss, liability, cost and expense (including attorneys¡¦ fees) which any of them may incur by reason of the failure by the Subscriber to fulfill any of the terms or conditions of this Subscription Agreement, or by reason of any breach of the representations and warranties made by the Subscriber herein, or in any other document provided by the Subscriber to the Company. All representations, warranties and covenants contained in this Subscription Agreement, and the indemnification contained in this Section 5, shall survive the acceptance of this Subscription.
6. Special Securities Laws Notices. The Subscriber understands and acknowledges that:

THE [CLASS ??] LIMTED PARTNERSHIP UNITS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES ACTS, WILL BE ACQUIRED FOR INVESTMENT ONLY, AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR TRANSFERRED FOR VALUE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OF THEM UNDER THE ACT OR THE STATE ACTS OR AN EXEMPTION THEREFROM, AND THEN ONLY SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN THE OPERATING AGREEMENT.

7. Miscellaneous.
a. No Waiver. Notwithstanding any of the representations, warranties, acknowledgments or agreements made herein by the Subscriber, the Subscriber does not thereby or in any other manner waive any of the rights granted to it/him/her under federal or state securities laws.
b. Entire Agreement; Modification. This Subscription Agreement, the Enabling Documents and the Risk Factor Statement attached hereto constitutes the entire agreement among the parties hereto with respect to the subject matter hereof, and neither this Subscription Agreement nor any provisions hereof shall be waived, changed, discharged or terminated except by an instrument in writing signed by the party against whom any waiver, change, discharge or termination is sought.
c. Notices. Any notice, demand or other communication which any party hereto may be required, or may elect, to give to anyone interested hereunder shall be sufficiently given if: (i) deposited, postage prepaid, in the United States mail, certified or registered mail, a nationally recognized overnight delivery service, addressed, in the case of the Company, to the Company, attention President at the above address, and in the case of the Subscriber, to the address set forth on the signature page hereof or at such other address as the Subscriber shall so notify the Company in writing, or (ii) delivered personally at such address.
d. Binding Effect. Except as otherwise provided herein, this Subscription Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, legal representatives and permitted assigns, as applicable. If the Subscriber is more than one entity or person, the obligations of the Subscriber shall be joint and several and the agreements, representations, warranties and acknowledgments herein contained shall be deemed to be made by and be binding upon each such person and its/his/her respective heirs, executors, administrators, successors, legal representative and assigns.
e. Assignability. The Subscriber agrees not to transfer or assign this Subscription Agreement, or any of the Subscriber¡¦s interest herein, and further agrees that the transfer or assignment of the [Class ??] Units shall be made only in accordance with applicable laws and the terms of the Limited Partnership Agreement.
f. Applicable Law. This Subscription Agreement shall be governed by and construed in accordance with the laws of the State of [Domicile State], without regard to conflict of law principles.
g. ARBITRATION OF DISPUTES. THE UNDERSIGNED ACKNOWLEDGES, BY HIS, HER OR ITS EXECUTION OF THIS SUBSCRIPTION AGREEMENT, THAT IT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE. BY SIGNING THIS AGREEMENT, THE PARTIES AGREE AS FOLLOWS:
1). ALL PARTIES TO THIS AGREEMENT ARE GIVING UP THE RIGHT TO SUE EACH OTHER IN COURT, INCLUDING THE RIGHT TO A TRIAL BY JURY, EXCEPT AS PROVIDED BY THE RULES OF THE ARBITRATION FORUM IN WHICH A CLAIM IS FILED.
2). ARBITRATION AWARDS ARE GENERALLY FINAL AND BINDING: A PARTY’S ABILITY TO HAVE A COURT REVERSE OR MODIFY AN ARBITRATION AWARD IS VERY LIMITED.
3). THE ABILITY OF THE PARTIES TO OBTAIN DOCUMENTS, WITNESS STATEMENTS AND OTHER DISCOVERY IS GENERALLY MORE LIMITED IN ARBITRATION THAN IN COURT PROCEEDINGS.
4). THE ARBITRATORS DO NOT HAVE TO EXPLAIN THE REASON(S) FOR THEIR AWARD.
5). THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY.
6). THE RULES OF SOME ARBITRATION FORUMS MAY IMPOSE TIME LIMITS FOR BRINGING A CLAIM IN ARBITRATION. IN SOME CASES, A CLAIM THAT IS INELIGIBLE FOR ARBITRATION MAY BE BROUGHT IN COURT.
7). THE RULES OF THE ARBITRATION FORUM IN WHICH THE CLAIM IS FILED, AND ANY AMENDMENTS THERETO, SHALL BE INCORPORATED INTO THIS AGREEMENT.

NO PERSON SHALL BRING A PUTATIVE OR CERTIFIED [CLASS ??]CTION TO ARBITRATION, NOR SEEK TO ENFORCE ANY PRE-DISPUTE ARBITRATION AGREEMENT AGAINST ANY PERSON WHO HAS INITIATED IN COURT A PUTATIVE [CLASS ??]CTION; OR WHO IS A MEMBER OF A PUTATIVE CLASS WHO HAS NOT OPTED OUT OF THE CLASS WITH RESPECT TO ANY CLAIMS ENCOMPASSED BY THE PUTATIVE [CLASS ??]CTION UNTIL: (a) THE CLASS CERTIFICATION IS DENIED; OR (b) THE CLASS IS DECERTIFIED; OR (c) THE SUBSCRIBER IS EXCLUDED FROM THE [CLASS ??]Y THE COURT. SUCH FORBEARANCE TO ENFORCE AN AGREEMENT TO ARBITRATE SHALL NOT CONSTITUTE A WAIVER OF ANY RIGHTS UNDER THIS AGREEMENT EXCEPT TO THE EXTENT STATED HEREIN.

IN THE EVENT THAT A DISPUTE ARISES BETWEEN THE UNDERSIGNED SUBSCRIBER AND THE COMPANY, OR ANY OF THEIR LEGAL REPRESENTATIVES, ATTORNEYS, ACCOUNTANTS, AGENTS, EMPLOYEES OR ANY OTHER PARTY EMPLOYED BY THE COMPANY, SAID DISPUTE ARISING OUT OF, IN CONNECTION WITH OR AS A RESULT OF THE SUBSCRIPTION HEREBY MADE, THE UNDERSIGNED HEREBY EXPRESSLY AGREES THAT SAID DISPUTE SHALL BE RESOLVED THROUGH ARBITRATION RATHER THAN LITIGATION. THE UNDERSIGNED HEREBY AGREES TO SUBMIT THE DISPUTE FOR RESOLUTION TO EITHER THE AMERICAN ARBITRATION ASSOCIATION, IN PHOENIX, [DOMICILE STATE] OR THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC., IN [DOMICILE STATE], WHICHEVER ASSOCIATION MAY ASSERT JURISDICTION OVER THE DISPUTE, WITHIN FIVE (5) DAYS AFTER RECEIVING A WRITTEN REQUEST TO DO SO FROM ANY OF THE AFORESAID PARTIES. IF THE UNDERSIGNED FAILS TO SUBMIT THE DISPUTE TO ARBITRATION AS REQUESTED, THEN THE REQUESTING PARTY MAY COMMENCE AN ARBITRATION PROCEEDING. THE FEDERAL ARBITRATION ACT SHALL GOVERN THE PROCEEDING AND ALL ISSUES RAISED BY THIS AGREEMENT TO ARBITRATE.

IN WITNESS WHEREOF, the Subscriber has executed this Subscription Agreement on the date above.

THIS AGREEMENT CONTAINS A BINDING ARBIRTATION PROVISION ON _________.

INVESTOR:
By: _________________________________
[Print Name] _________________________
Social Security or EIN Number:
____________________________________
Address:

SUBSCRIPTION ACCEPTED:
[Issuer Name], LP,
By: _______________________________

STATEMENT OF RISK FACTORS

Investing in the Securities involves a high degree of risk. The risk factors and all other information disclosed in this Subscription Agreement must be carefully considered before making an investment decision regarding the Securities. One or more of these risk factors could cause a loss of part or all funds invested in the Securities.
[Copy]

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Sample Stock Certificate

Sample Stock Certificate

The information contained in this sample is provided for informational purposes only, and should not be construed as legal advice on any subject matter. You should not act or refrain from acting on the basis of any content included in this site without seeking legal or other professional advice. The contents of this post contain general information and may not reflect current legal developments or address your situation. We disclaim all liability for actions you take or fail to take based on any content on this site.

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~ CERTIFICATE OF STOCK ~

NUMBER: ___ COMMON SHARES:____

ORGANIZED UNDER THE LAWS OF THE STATE OF xxxxxxxxxxxx

XYZ, INC. A XYZ CORPORATION

The Corporation is authorized to issue ________________ Shares of Common Stock without Par Value.

THIS CERTIFIES THAT XXXXXXXX is the owner of XXXXXXXX (xxxxx) fully paid and non-assessable share(s) of Common Stock without Par Value, transferable only on the books of the Corporation by the holder hereof in person or by a duly authorized Attorney upon surrender of this Certificate property endorsed.

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE MADE WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

Transfer of these Shares is subject to restrictions in the By Laws for this Corporation.

The Corporation will furnish without charge to each Shareholder who so requests, the powers, designations, preferences and relative participation rights of Shareholders and the qualifications, limitations or restrictions of such rights.

In Witness Whereof, the said Corporation has caused this Certificate to be signed by its duly authorized Officers.
Dated_____________________

__________________________
xxxxxxxxx, President

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Sample Security Agreement

Sample Security Agreement

The information contained in this sample is provided for informational purposes only, and should not be construed as legal advice on any subject matter. You should not act or refrain from acting on the basis of any content included in this site without seeking legal or other professional advice. The contents of this post contain general information and may not reflect current legal developments or address your situation. We disclaim all liability for actions you take or fail to take based on any content on this site.

This sample has been provided in conjunction with Meyerdirk Consulting. MeyerdirkConsulting.com

SECURITY AGREEMENT FOR XYZ CORPORATION

CONVERTIBLE PROMISSORY NOTE

THIS SECURITY AGREEMENT (the “Security Agreement”) is entered into as of ___________, 20__, by and between XYZ Corporation, an <State> corporation (the “Company”), and _______________________ (the “Secured Party”).

RECITALS:

Company has borrowed funds and may borrow through subsequent advances additional funds, from Secured Party pursuant to a Convertible Promissory Note of even date herewith (the “Note”) the terms of which are incorporated herein by reference.

As security for its repayment obligations under the Note, Company has agreed to grant Secured Party a security interest in all of its assets on the terms set forth in this Security Agreement.

NOW, THEREFORE, to that end and in consideration of the premises, covenants and agreements set forth below, and the mutual benefits to be derived from this Security Agreement, and other good and valuable consideration, the parties hereto agree as follows:

1. Security Interest. To secure the “Obligation” (as defined below), Company hereby transfers, conveys, assigns, and grants to Secured Party a security interest in all of Company’s assets, which may include one or more of the following items (hereinafter, collectively, the “Collateral”):
a. General Intangibles. All of Company’s General Intangibles, now existing or hereafter arising or acquired, together with the proceeds therefrom. As used herein, the term “General Intangibles” means all personal property (including things in action) other than goods, accounts, chattel paper, documents, instruments, and money, and includes, but is not limited to, business records, deposit accounts, inventions, intellectual property, designs, patents, patent applications, trademarks, trademark applications, trademark registrations, service marks, service mark applications, service mark registrations, trade names, goodwill, technology, knowhow, confidential information, trade secrets, customer lists, supplier lists, copyrights, copyright applications, copyright registrations, licenses, permits, franchises, tax refund claims, and any letters of credit, guarantee claims, security interests, or other security held by the Company to secure any “Accounts” (as hereinafter defined).
b. Accounts (Including Accounts Receivable). All of Company’s Accounts, whether now existing or hereafter arising or acquired, together with the proceeds therefrom. As used herein, the term “Accounts” means any right of Company to receive payment from another person or entity, including payment for goods sold or leased, or for services rendered, no matter how evidenced or arising, and regardless of whether yet earned by performance. It includes, but is not limited to, accounts, accounts receivable, contract rights, contracts receivable, purchase orders, notes, drafts, acceptances, all rights to payment earned or unearned, and other forms of obligations and receivables.
c. Inventory. All of Company’s Inventory, whether now owned or hereafter acquired, together with the products and proceeds therefrom and all packaging, manuals, and instructions related thereto. As used herein, the term “Inventory” means all goods, merchandise, and personal property held for sale or leased or furnished or to be furnished under contracts of service, and all raw materials, work in process, or materials used or consumed in Company’s business, wherever located and whether in the possession of Company, a warehouseman, a bailee, or any other person.
d. Equipment. All of Company’s Equipment, now owned or hereafter acquired, together with the products and proceeds therefrom, and all substitutes and replacements therefor. As used herein, the term “Equipment” includes all equipment, machinery, tools, office equipment, supplies, furnishings, furniture, or other items used or useful, directly or indirectly, in Company’s business, all accessions, attachments, and other additions thereto, all parts used in connection therewith, all packaging, manuals, and instructions related thereto, and all leasehold or equitable interests therein.
e. Fixtures. All of Company’s interest in and to all fixtures and furnishings, now owned or hereafter acquired, together with the products and proceeds therefrom, all substitutes and replacements therefor, all accessories, attachments, and other additions thereto, all tools, parts, and supplies used in connection therewith, and all packaging, manuals, and instructions related thereto, located on or attached to Company’s business premises located at: XYZ Corporation, ______________________________.
f. Chattel Paper, Documents and Instruments. All of Company’s right, title, and interest in any chattel paper, documents, or instruments, now owned or hereafter acquired or arising, or now or hereafter coming into the possession, control, or custody of either Company or Secured Party, together with all proceeds therefrom. The terms “chattel paper,” “documents,” and “instruments” shall have those meanings ascribed to them in the <State> Uniform Commercial Code.
2. Obligation. This security interest is given as security for all indebtedness and obligations owed by Company to Secured Party, whether now existing or hereafter incurred, under this Security Agreement or the Note, together with all extensions, modifications, or renewals thereof (hereinafter referred to, collectively, as the “Obligation”).
3. Proceeds. As used in this Security Agreement, the term “proceeds” means all products of the Collateral and all additions and accessions to, replacements of, insurance or condemnation proceeds of, and documents covering any of the Collateral, all property received wholly or partly in trade or exchange for any of the Collateral, all leases of any of the Collateral, and all rents, revenues, issues, profits, and proceeds arising from the sale, lease, license, encumbrance, collection, or any other temporary or permanent disposition, of any of the Collateral or any interest therein.
4. Title; Filing. Company warrants that, except as previously disclosed in writing to Secured Party, it is the owner of the Collateral free and clear of all liens, claims, and encumbrances of whatever kind or nature. Company covenants that so long as any portion of the Obligation remains unpaid, Company will not execute or file a financing statement or security agreement covering the Collateral to anyone other than Secured Party, except in the ordinary course of business or as otherwise allowed. Company agrees to sign and deliver one or more financing statements or supplements thereto or other instruments as Secured Party may from time to time require in order to comply with the Uniform Commercial Code or other applicable law to preserve, protect and enforce the security interest of Secured Party and to pay all costs of filing such statements or instruments. In addition, the Secured Party shall have the right to promptly file a financing statement to perfect Secured Party’s interest in the Collateral.
5. Care of Collateral. Company will keep in effect all licenses, permits and franchises required by law or contract relating to Company’s business (if applicable), property, or the Collateral; maintain insurance on the Collateral; keep the Collateral in good repair and be responsible for any loss or damage to it; at all times warrant and defend Company’s ownership and possession of the Collateral keep the Collateral free from all liens, claims, encumbrances and security interests; pay when due all taxes, license fees, and other charges upon the Collateral or upon Company’s business, property or the income therefrom; and not misuse, conceal or in any way use or dispose of the Collateral unlawfully or contrary to the provisions of this Security Agreement or of any insurance coverage. Loss of, damage to, or un-collectability of the Collateral or any part thereof will not release Company from any of its obligations hereunder.
6. Default. A default hereunder will occur if any of the following events occur: (1) Company fails to pay any portion of the Obligation when due; (2) Company fails to perform any undertaking or materially breaches any warranty or covenant in this Security Agreement or the Note; (3) any statement, representation or warranty of Company under this Security Agreement or the Note is untrue in any material respect when made; (4) Company becomes insolvent or unable to pay debts as they mature or makes an assignment for the benefit of creditors or any proceeding is instituted by or against it alleging that it is insolvent or unable to pay its debts as they mature; (5) dissolution of Company; (6) an attachment, garnishment, execution or other process is issued or a lien filed against any property of Company, which is not removed within a reasonable period of time; and (7) Company transfers an interest in any of the Collateral contrary to the provisions of this Security Agreement without the prior written consent of Secured Party other than in the ordinary course of business. Waiver of any default will not constitute a waiver of any other or subsequent default.
7. Remedies. Upon the occurrence of any default hereunder at any time thereafter, all of the Obligation will, at the election of Secured Party and without notice of such election, or demand for payment, become immediately due and payable and Secured Party will have the remedies of a secured party under the <State> Uniform Commercial Code or other applicable law.
8. General. The wavier by Secured Party of any breach of any provision of this Security Agreement or warranty or representation herein set forth will not be construed as a waiver of any subsequent breach. The failure to exercise any right hereunder by Secured Party will not operate as a waiver of such night. All rights and remedies herein provided are cumulative. Company may not assign its nights or delegate its duties hereunder without Secured Party’s written consent. This Security Agreement may not be altered or amended except by a writing signed by all the parties hereto. This Security Agreement will be governed by and construed and interpreted in accordance with the laws of the State of <State>. Any provision hereof found to be invalid will not invalidate the remainder. All words used herein will be construed to be of such gender and number as the circumstances require. This Security Agreement binds Company, its successors and assigns, and inures to the benefit of Secured Party, its successors and assigns.
9. Notices. Any notice or other communication hereunder must be given in writing and either (i) delivered in person, (ii) transmitted by telefacsimile, provided that any notice so given is also mailed as provided in clause (iii), or (iii) mailed, postage prepaid, or by an overnight delivery service, as follows:

If to Company, addressed to:

XYZ Corporation
Address:
Phone:
Attention:
Email:

If to Holder, addressed to:

_________________________
Attention: _________________
Address: __________________
_________________________
_________________________
Email: ___________________
Phone No.: __________________
Fax No.: ________________
SSN or EIN #: _________________________

or to such other address or to such other person as any party shall have last designated such notice to the other parties. Each such notice or other communication shall be effective (i) if given by mail, three days after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, (ii) if given by tele-facsimile, when transmitted to the applicable number so specified in (or pursuant to) this Section 9 provided that appropriate confirmation of receipt is generated by the tele-facsimile and a duplicate copy is mailed, postage prepaid, or (iii) if given by any other means, when actually delivered at such address.

IN WITNESS WHEREOF, the Parties to this Agreement have executed the same on the date first written above.

SECURED PARTY: ______________________________.

By: _________________________________

THE COMPANY: XYZ CORPORATION, an <State> corporation

By:
Name:
Title:

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