THE LIMITED PARTNERSHIP INTERESTS (THE "INTERESTS") OFFERED HEREBY ARE SECURITIES AND ARE BEING OFFERED PURSUANT TO EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE SECURITIES LAWS OF THE STATE OF __________. THIS MEMORANDUM IS AN OFFER ONLY TO PERSONS WHOSE NAMES APPEAR ON THE COVER PAGE AND WHO ARE RESIDENTS OF THE STATE. THE OFFEREE AGREES NOT TO COPY THIS MEMORANDUM, AND TO RETURN IT TO THE PARTNERSHIP IF THE OFFEREE DOES NOT PURCHASE ANY INTERESTS.
NO STATE OR FEDERAL SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR HAS PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ADEQUACY OR ACCURACY OF THESE MATERIALS. ANY REPRESENTATION TO THE CONTRARY IS ILLEGAL.
INVESTMENT IN THE INTEREST OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK, AND CERTAIN CONFLICTS OF INTEREST. INVESTORS WILL BE REQUIRED TO REPRESENT THAT THEY ARE PURCHASING THE INTERESTS FOR INVESTMENT ONLY AND NOT WITH A VIEW TO RESALE OR SUBSEQUENT DISTRIBUTION, AND HAVE THE KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS TO EVALUATE THE MERITS AND RISKS OF INVESTMENT. THERE EXIST SUBSTANTIAL LIMITATIONS ON THE RESALE OR OTHER TRANSFER OF THE INTERESTS.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS OFFERING CIRCULAR, ATTACHMENTS HERETO OR MATERIALS AVAILABLE ON REQUEST. IF ANY SUCH INFORMATION OR REPRESENTATIONS ARE GIVEN OR MADE, THEY MUST NOT BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE GENERAL PARTNER. THE DELIVERY OF THIS OFFERING CIRCULAR, OR MATERIALS AVAILABLE UPON REQUEST AT ANY TIME, DOES NOT IMPLY THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION THE DATE HEREOF.
ALL OFFERS ARE SUBJECT TO PRIOR SALES OF THE INTERESTS, OR WITHDRAWALS OR CANCELLATION OF SUCH OFFERS WITHOUT NOTICE. THE GENERAL PARTNER RESERVES THE RIGHT TO REJECT, IN WHOLE OR IN PART, ANY SUBSCRIPTION FOR INTERESTS; PROVIDED, HOWEVER, THAT ANY SUBSCRIPTION SHALL REMAIN IN FULL FORCE AND EFFECT AS TO ANY ACCEPTED PORTION.
__(Full name of Film Company)__, a ___(State)____ Corporation, (hereinafter referred to as the "Company") intends to produce a feature-length motion picture, presently entitled "_____(title)_______", and three short non-theatrical promotional films, based on and edited from the feature length motion picture (all of which collectively shall be referred to as the "Motion Picture"), and offer limited partnership interests in a partnership to be formed for that purpose under the laws of the State of __(state)__ (hereinafter referred to as the "Partnership"). The general partner(s) of the partnership (hereinafter referred to as the "General Partner") shall be the _____(Full name of Company)___ and any other parties selected by it who sign the Limited Partnership Agreement for the Partnership as general partners prior to the formation of the Partnership. The addition of general partners shall not affect or impair the obligations of any Limited Partner nor give rise to any right of rescission.
The Motion Picture, set in the present, is the story of a contemporary American family having to deal with the fixation of the youngest son to enter into the film and music business. A synopsis of the feature-length motion picture, as currently proposed, is included attached hereto. _______(Name of screenplay writer)_____ authored the screenplay. The author and ___(name of Company)___, a __(state)__ corporation, are the sole owners of the Company, which was established for the purpose of producing the Motion Picture.
The Partnership will acquire the Motion Picture production rights to the screenplay, and produce and oversee distribution of the Motion Picture. The Company will contribute all of its interests in the screenplay production rights to the Partnership in exchange for its General Partnership interests.
The General Partner will make no other financial contributions as such, but will receive FORTY PERCENT (40%) of any profits. If there are no profits, Limited Partners will bear the entire risk of loss to the extent of their respective contributions. Any losses in excess of that amount will be borne by the General Partner. For contributing the entire capital of the Partnership, the Limited Partners will receive SIXTY PERCENT (60%) of the profits of the Partnership.
An investor's share of the net profits will bear the same proportion to the Limited Partners' aggregate 60% share of the net profits of the Partnership as his/her contribution bears to the total amount raised. The amount to be raised hereunder is a minimum of $2,000,000 and a maximum of $2,500,000. (See section entitled "Use of Proceeds.") There is no overcall. The General Partner may form the Partnership at any time after such minimum capitalization has been raised, but may continue to accept contributions until the maximum of $2,500,000 has been raised. A $25,000 contribution will entitle a Limited Partner to a 1% share of the profits if $2,500,000 is raised and to a 1.333% share thereof if $2,000,000 is raised; if more than $2,000,000 and less than $2,500,000, is raised, that Limited Partner's share of the profits will vary proportionately. In all events, the Limited Partners, in the aggregate, will always be entitled to receive 60% of the profits of the Partnership.
If the General Partner believes additional funds are necessary for carrying on the affairs of the Partnership, the General Partner has the right to advance, or to borrow in the Partnership's name, the amounts deemed necessary; any amounts so advanced or borrowed are to be repaid prior to the repayment to the Limited Partner(s) of their contribution(s).
If, and to the extent, the General Partner (or any of them) invests in the Partnership, it (or they) will become a Limited Partner as well and will receive a proportionate share of the Limited Partner's interest in the profits in addition to a share thereof as General Partner.
The rights and obligations of the General and Limited Partners are set forth in the Partnership Agreement. This must be signed by all subscribers to the Limited Partnership interest and copies thereof may be obtained from the General Partner.
B. NUMBER AND TYPE OF SECURITIES OFFERED
A maximum of 100 Limited Partnership interests (hereinafter referred to as the "Interests") are being offered at a per Interest price of $25,000, payable by $15,000 cash and $10,000 secured by an irrevocable letter of credit. A limited number of fractional Interests may be available at the sole discretion of the General Partner.
Subsequent to the formation of the Partnership, additional Limited Partners will be admitted as subscriptions for Interests are made and payments received, until the date when the General Partner shall determine to discontinue the offering of Interests.
Such date will occur upon the earlier of the following events:
C. USE OF PROCEEDS
The cash proceeds of this offering, assuming the sale of all Interests offered will aggregate $1,500,000. When combined with borrowings based on Limited Partner's letters of credit aggregating $1,000,000, the Partnership will have a total of $2,500,000 in cash and liquid assets with which to begin operations. Such amounts will be utilized approximately as follows:
The General Partner believes, however, that it may be able to reduce the need for production funds by securing deferrals, from persons or organizations who will be furnishing services and/or materials to the production. To the extent that the General Partner is able to do so, and to the extent the General Partner believes that the reserve can be reduced, it may elect to form the Partnership and go forward with the production with less than, $2,500,000. any arrangements providing for deferred compensation to persons or organizations so furnishing services or materials to the production will be payable only out of the General Partner's share of profits and will, therefore, not affect the Limited Partner's share of profits or delay the return of their contribution.
All cash proceeds of this offering obtained prior to the formation of the Partnership shall be placed by the General Partner in an escrow account at ____(Name and address of Bank)______. Such escrow funds will be maintained by the General Partner and shall not be used (unless a contributor shall otherwise agree) for any purpose until at least the Minimum
Aggregate Contribution of $2,000,000 has been received and the Partnership shall commence.
To the extent the General Partner advances funds for production requirements, it will be reimbursed upon formation of the Partnership. The General Partner has advanced approximately $25,000 to date for expenses such as travel and development expenses.
In the event that less than $2,500,000 is raised from the sale of interests, and in the event that supplemental funds are not raised from other sources, such as pre-sales of certain rights, the shortfall will be absorbed by reducing or eliminating the reserves for prints, publicity and other expenses related to distribution and production contingencies, and by seeking deferments and lower salaries from all salaried personnel.
As the budget included as D is an estimate, actual expenditures may vary from those shown, depending upon production and distribution requirements. The Company will have the authority to vary such expenditures without seeking the approval of the Limited Partners.
D. THE RISK TO INVESTORS
A prospective investor should be aware that this is a highly speculative investment. The sole business of the Partnership will be the production and arrangement for the exploitation of the Motion Picture. While no accurate industry statistics are available, it is a fact that there is a high ratio of loss to investors in limited partnerships formed to produce motion pictures. The risk of loss is especially high in contrast with the prospects for any profit. These securities should not be purchased unless the investor is prepared for the possibility of total loss.
E. PARTNERSHIP INTEREST IN MOTION PICTURE
All of the rights, interests and obligations of the General Partner in the Motion Picture, including the screenplay, except for novelization rights, which the General Partner is retaining, will be assigned, without any royalty or other payment obligation on the Partnership's part, to the Partnership upon its formation.
These rights, which extend for the entire duration of the copyright in the Motion Picture, any renewals or extensions, include: The right to copyright the Motion Picture, the right to produce and exploit it, and all subsidiary rights including the right to produce one or more sequels or remakes, or to produce video programs or series based upon the Motion Picture or any character therein.
F. PROFITS, LOSSES AND DISTRIBUTION
Based upon present estimates, the film rentals (monies received by the Motion Picture's distribution from theaters exhibiting the Motion Picture) derived from the Picture would have to equal approximately four to six times the production cost of the Motion Picture in order for the Limited Partners to receive the return of their contributions. See "Estimate of Profits." The Partnership's receipts derived from any source in connection with the exploitation of the Motion Picture (with the exception of novelization rights) will be allocated in the following order of priority:
Any receipts in excess of the foregoing will be deemed profits of the Partnership and are allocatable 60% to the Limited Partners (and, among the Limited Partners, in direct proportion of their investments) and 40% to the General Partner.
Losses arising after profits have been realized will be allocated against profits; losses in excess of profits will be allocated entirely to the Limited Partners, in direct proportion of their investments (and ratably among them).
The investment tax credit, if any, for Federal income tax purposes, has been allocated to the Limited Partners.
As the Partnership receives funds, the General Partner, after paying or providing for any Partnership debts and liabilities, including taxes, contingent liabilities and projected operating needs, will pay such receipts in accordance with the foregoing order of priority. Distributions will be made at least semi-annually.
Profits already distributed to Partners and Limited Partners' investments previously returned to them may be subject, in that order, to be repaid by the recipients to the Partnership should obligations of the Partnership thereafter require.
A portion of the producer's and author's fees payable to the General Partner are to be deferred and paid only out of the General Partner's share of the profits; such fees accordingly, will not affect the Limited Partner's participation in profits, if any.
G. DISTRIBUTION OF THE MOTION PICTURE
The producers of the Motion Picture will write a distribution and marketing plan that will be implemented during the production stages. The plan will represent the best case scenario for the film and is designed to maximize exposure and profits for the production, and if possible, provide pre-sales agreements and co-production financing for future Partnership projects. A distribution and marketing plan is essential in order to better define audience appeal and film distributor interest. The plan will not only be aimed at the North American market, but also the world market, including Europe, South America, the Scandinavian countries, etc. The distribution and marketing plan will include a time schedule outlining (1) when to approach a major film distributor, (2) what rights to negotiate, (3) what film festivals and film markets to attend, (4) foreign theatrical sales strategies, and (5) television, cable sales, home video rights, etc. By having access to a well developed film distribution plan, the producers can effectively evaluate the best possible distribution deal, and better negotiate contract terms with a major film distributor both in the United States and abroad. What follows is a capsule description of the categories which the final distribution and marketing plan will address in greater detail.
THEATRICAL DISTRIBUTION (Domestic)
HOME VIDEO CASSETTE MARKET
FOREIGN THEATRICAL SALES
FOREIGN TELEVISION AND HOME
FILM FESTIVALS AND FILM MARKETS
H. FEDERAL INCOME TAX MATTERS
The Partnership will not seek a ruling from the Internal Revenue Service as to whether the Partnership will be treated for Federal income tax purposes as a partnership rather than an association taxable as a corporation. Even if applied for, there is no assurance that such a ruling would issue. Under current Federal income tax laws, a partnership, as such, is not subject to Federal income taxes, so that a partner will take into account on his personal tax return his distributive share of partnership income, gains, losses, deductions or credits (including the investment credit, if any) for the taxable year of the partnership ending within or with the partner's taxable year.
If, for any reasons, the Partnership is determined to be an association taxable as a corporation for Federal income tax purposes, the following consequences, among others, would result: income earned by the Partnership would be taxable at corporate rates; distribution of funds to Partners would be taxable as dividends; losses and credits, if any, realized by the Partnership would not pass through to Limited Partners to be used as deductions or credits.
Assuming the Partnership is treated as a partnership for Federal income tax purposes, an investor should note that partners are taxed based on distributive shares of profits, not on actual cash distributed. A Limited Partner may thus be taxed on funds not received by him.
It is impractical to comment on all aspects of Federal, state and local tax laws which may affect the tax consequences of participation by the Limited Partner in this venture. Moreover, the various statutory provisions, regulations and decisions upon which any tax discussion must be based are subject to change by interpretation in the courts and by legislative or administrative action, any of which could adversely affect the tax consequences of participation in this venture. Therefore, each prospective Limited Partner should satisfy himself as to the income and other tax consequences of his participation in the partnership by first obtaining advise from his own tax counsel.
Furthermore, while the General Partner will furnish each Limited Partner with the necessary information to enable him to file the Federal, state and local tax returns for which he may be liable, the preparation and filing of such returns will be the personal responsibility of each Limited Partner. If the Internal Revenue Service proposes any adjustment with respect to any item of Partnership income, gain, loss, deduction or credit, such adjustment will also be reflected in the individual return of each Limited Partner who will be liable for the payment of any resulting deficiency and, should he/she choose to do so, the cost of contesting deficiency.
I. OTHER FINANCING
The General Partner reserves the right for any reason whatsoever to pay to individual investors, persons rendering services to the Motion Picture and others an additional participation in profits solely from the General Partner's share of profits, for any reason.
J. FINANCIAL STATEMENTS
The ultimate issuer of these securities will be the Partnership to be formed. Accordingly, no financial statements are presently available. After the formation of the Partnership, and so long as the Partnership is exploiting any interest(s) in the Motion Picture, the General Partner will furnish to the Limited Partners annually a balance sheet and a statement of operations prepared by an independent public accountant, which need not be certified, and with such other financial statements as may be from time to time required by law. In addition, the Limited Partners will have the right to examine Partnership books if they so desire, during regular business hours and subject to reasonable prior written notice.
ESTIMATE OF PROFITS
Admission price x Number of People = $ Per Theater x Total Houses x Days = Gross
1st Run: $4x300 = $1,200 x300 (= $360,000) x10 days = $3,600,000
2nd Run: $2x300 = $600 x 100 (= $60,000) x 10 days = $ 600,000
Less 50% for companion feature = $ -300,000
1st Run Gross $3,600,000
2nd Run Gross + 300,000
Less 50% to theaters -1,950,000
Less 35% to distribution fees - 682,500
Motion Picture profit U.S. & Canada $1,267,500
Odd Foreign Market expectancy +1,267,500
Total World theatrical profit $ 2,535,000
Add TV sales expectancy over 7 years $ 1,000,000
Add Miscellaneous revenue + 100,000
Total Motion Picture Gross $ 3,535,000
Less Production costs -2,577,000
Net after Investor recoupment $ 957,885
60% Profits to Limited Partners $ 574,731
NOTE: This tabulation is an estimate of potential profits. The actual profits, if any, may be substantially different from the figures above.
SUMMARY OF PROPOSED BUDGET FOR MOTION PICTURE
PRODUCTION COMPANY EXPENSES
TOTAL: Above and Below Line $ 1,822,860
CERTIFICATE AND ARTICLES OF LIMITED PARTNERSHIP
THIS CERTIFICATE AND ARTICLES OF LIMITED PARTNERSHIP (hereinafter referred to as this "Certificate") is made this __th day of _________, 199_, by and between the __(General Partner)___(hereinafter referred to as the "General Partner"), and the individuals named and designated as Limited Partners on Schedule I and who have executed and acknowledged this Certificate on Schedule II, both of which schedules are attached hereto and hereby made a part hereof (jointly and severally hereafter referred to as the "Limited Partners").
ARTICLE I. FORMATION
(1) FORMATION OF PARTNERSHIP. The Partners hereby form a limited partnership (hereinafter referred to as the "Partnership") pursuant to the provisions of the Uniform Limited Partnership Act of the State of _________, as amended from time to time, and the rights and liabilities of the Partners shall be as provided under such law, except as herein otherwise expressly provided.
(2) NAME. The Partnership shall operate under the name____(Partnership Name)________.
(3) CERTIFICATES. The General Partner(s) shall promptly cause this Certificate of Limited Partnership to be filed of record in the office of the Secretary of State of __________. The General Partner(s) shall also cause to be filed and published the Certificate of Assumed Name. Such certificate filings shall be amended at appropriate times in the manner prescribed by law, and specifically in the case of this Certificate, each time there is a change in the identities of the Partners or any amendment to this Certificate or to schedules attached hereto. All Partners waive their right to receive a copy of the certificate marked "filed" by the ____(State)_____ Secretary of State.
(4) PRINCIPAL PLACE OF BUSINESS. The principal place of business of the Partnership shall be at ___(Full Address)___, where the Partnership books shall be kept, unless changed from time to time by the General Partner(s) upon written notice to all Limited Partners.
(5) TERM OF PARTNERSHIP. The Partnership shall be deemed to exist from and after the date on which this Certificate is recorded as required by law and as provided in Section 1(3) herein, and shall continue for an indefinite term, and thereafter shall be wound up and terminated.
(6) BUSINESS OF PARTNERSHIP. The character of the business of the Partnership shall be the acquisition, purchase and perfection of Production Rights for, and the production, promotion and distribution of, a dramatic feature-length motion picture, and three short promotional films, and any other related business activities appropriate in connection therewith.
(7) PARTNERS. The names, places of residence, and designation of the Partners are:
General Partner: __(General Partner)__
Limited Partners: As set forth in Schedule I hereto
ARTICLE 2. CAPITAL CONTRIBUTIONS AND ACCOUNTS
(1) INITIAL CAPITAL. The initial capital contributions of the original Partners shall consist of the cash and property (including letters of credit) which have been contributed by the respective Partners in the amount or with the agreed values as set forth in Schedule I hereto. Additional Limited Partners may be admitted upon their contribution of cash and letters of credit to the Partnership, execution of an amended Schedule I, and the filing for record of an appropriate amendment to this Certificate.
The original Partners' percentage interests in the capital of the Partnership as a result of their respective contributions shall be determined by the General Partner and set forth on Schedule I. Such original percentage interests shall be determined by reference to each Limited Partner's proportionate share of total contributions by all Limited Partners (taking into account the percentage interest allocated to the General Partner(s). In the event of the original Limited Partners shall be appropriately reduced. Limited Partners shall not be required to make any additional contributions to th Partnership beyond those specified on Schedule I.
Each Limited Partner shall deposit with the General Partner(s) an irrevocable assignable letter of credit, in form and substance acceptable to the General Partner(s), issued by a bank acceptable to the General Partner(s), in an amount with respect to each Limited Partner as indicated opposite such Partner's name on Schedule I hereto. This letter of credit, and any replacement letter of credit, shall be herein referred to as the "Letter of Credit". Each Limited Partner shall deliver his or her Letter of Credit to the General Partner on or before the date specified on Schedule I. Failure of a Limited Partner to deposit his or her Letter of Credit or make his or her cash capital contributions as agreed shall, in the sole discretion of th General Partner, result in forfeiture of his or her entire interest and all funds previously contributed and, in addition, shall subject the Limited Partner to any remedies available, in law or equity, to the General Partner or Partnership.
The Letter of Credit delivered by each Limited Partner shall be effective and irrevocable from the date delivered through April 30, 199_. Each Limited Partner agrees to deliver to the General Partner(s) on or before April 1, 199_ and on or before each succeeding April 1, so long as the Partnership is in existence, a replacement Letter of Credit effective, assignable and irrevocable during the twelve-month period from May 1 through the following April 30 immediately following the April 1 by which deposit of such replacement Letter of Credit is required. If any Limited Partner fails so to deposit a replacement Letter of Credit, the General Partner shall, prior to the expiration of the then-effective Letter of Credit, issue a draft upon, or other demand for payment under, such Limited Partner's Letter of Credit in an amount equal to the face value of such Letter of Credit. Any proceeds received from any Letter of Credit which is drawn upon shall be used in the Partnership business as the General Partner(s) determines. A Limited Partner whose Letter of Credit is drawn upon because of a failure to deposit a replacement Letter of Credit shall not be entitled to any increase in his or her share of distributions from the Partnership or any other compensation because of such event.
(2) CAPITAL ACCOUNTS. A separate Capital Account shall be maintained for each Partner. The Capital Account of each Partner shall consist of each Partner's initial capital contribution as set forth on Schedule I, increased by (i) each Partner's share of Partnership income, and (ii) each Partner's additional capital contributions to the Partnership, if any, of Partnership losses or expenditures properly chargeable to capital. If there is any change in the amount or character of the capital contributions of any Limited Partner, an appropriate amendment shall be made to this Certificate filed of record. No Capital Account balance shall bear interest. A debit balance in any Partner's Capital Account shall not constitute a personal liability of that Partner to the Partnership.
(3) NO RIGHT TO RETURN OF CONTRIBUTION. The Limited Partners shall have no right to withdraw from the Partnership or to the return of their capital contributions, as reflected in their respective Capital Accounts from time to time, except for distributions of cash as provided in Article 3, and except upon the dissolution and liquidation of the Partnership pursuant to this Certificate. Any such withdrawals or returns of capital shall be solely from Partnership assets and may, in the discretion of the General Partner, be solely in cash. Partnership capital shall be at risk and the General Partner shall not be personally liable for the return or distribution thereof.
(4) FAILURE TO MAKE REQUIRED CONTRIBUTIONS. In the event a Partner fails to make any contribution to capital for which he or she is obligated, such Partner shall be in default with respect to his or her contribution. Upon failure to cure such default within ten days of mailing of written notice of default from the General Partner(s), such defaulting Partner shall be deemed expelled from the Partnership and shall thereafter have none of the rights of a Partner in this Partnership. The amount of such expelled Partner's initial contribution to Partnership capital (as reflected in Schedule I) shall be reallocated pro rata amount the Capital Accounts of all remaining Partners for their benefit. An expelled Partner shall have no right of any portion of capital previously contributed and shall have no rights to share in income, profits or earnings of the Partnership, nor have any other rights whatsoever with respect to his or her investment in this Partnership.
ARTICLE 3. ALLOCATION AND DISTRIBUTION OF CASH AVAILABLE, PROFITS, INCOME AND LOSSES
(1) DEFINITIONS. The following terms shall have the following meanings:
(2) ALLOCATION AND DISTRIBUTION. The Gross Receipts of the Partnership, as received shall be allocated (and paid, as hereinafter provided) in the following order of priority:
(3) PROFITS. Net Profits of the Partnership shall be allocated as follows:
60% to the Limited Partners in the direct proportion among them as the capital contribution of each Limited Partner bears to the aggregate capital contributions of the Limited Partners; and 40% to the General Partner(s).
(4) LOSSES. Losses, if any, of the Partnership shall be allocated to the Limited Partners in the direct proportion among them as the capital contribution of each bears to the aggregate capital contributions; losses in excess thereof shall be borne by the General Partner(s); provided, however, that if there shall be Net Profits of the Partnership, losses shall first be allocated, and borne by the Partners, to the extent of such Net Profits. Any investment shall be allocated entirely among the Limited Partners in the direct proportion among them as the capital contribution of each bears to the aggregate capital contributions of the Limited Partners.
(5) DISTRIBUTIONS TO PARTNERS. After payment or provisions for Loans and Expenses, and after reserving such funds as the General Partner may deem appropriate to cover its reasonable business fees, including contingent liabilities, if any, the General Partner shall make distributions, if available, first to the Limited Partners in repayment of their aggregate capital contributions and, then, to the Partners of any available Net Profits. Distributions shall be made at such times and in such amounts as the General Partner, in its discretion, shall determine, but not less frequently than annually. No Partner shall be entitled to interest on undistributed capital contributions or Net Profit.
ARTICLE 4. FINANCIAL STATEMENTS, BOOKS AND BANK ACCOUNTS
(1) BOOKS AND RECORDS. The General Partner shall maintain accurate and complete books and records of the Partnership at its principal business office unless moved in accordance with Section 1(4) herein. All Limited Partners shall have full access to and the right to inspect, examine and copy such books at all reasonable times upon written notice to the Partnership a least five (5) business days in advance of the proposed inspection date.
(2) FINANCIAL STATEMENTS. The General Partner shall deliver to the Limited Partners within 75 days after each fiscal year accurate and complete financial statements, including a balance sheet and profit and loss statement, a statement showing the Capital Accounts of each Partner and the amounts of net income and net loss reportable for federal income tax purposes, a statement showing the computations for determining Cash Available and its distribution, and, if relevant, a statement showing the computations of Partnership Net Film Receipts and payment of Participations.
(3) BANKING. The General Partner shall open and maintain in the name of the Partnership one or more separate bank accounts in which shall be deposited all the monies of the Partnership and no other monies. The Partnership funds shall be used solely for Partnership purposes, and all disbursements shall be made by the General Partner or such person as the General Partner may from time to time authorize.
(4) RATIFICATION OF FINANCIAL STATEMENTS. Unless written notice is made by a Partner within 60 days after receipt of Partnership annual financial statement, each such statement shall be deemed to have been ratified and accepted by all Partners, except for such matters as may not be reflected in such annual financial statements as a result of fraud or misrepresentation.
ARTICLE 5. PARTNERSHIP MANAGEMENT AND RESTRICTIONS ON PARTNERS
(1) RIGHTS AND OBLIGATIONS OF THE GENERAL PARTNER. The General Partner shall have the full power, right and authority to manage the Partnership business in all matters and shall have the sole and exclusive power on behalf of the Partnership to control the conduct of the Partnership business. The General Partner shall have all the necessary and appropriate powers and authority to carry out the purposes and conduct of the business of the Partnership, including, without limitation, the following:
(2) SERVICES AND MANAGEMENT FEE OF GENERAL PARTNER. The General Partner is required to devote to the business of the Partnership only the time and attention that it believes in good faith is required for the efficient operation of the Partnership. The General Partner shall not be required to devote full time to the Partnership business and shall not be restricted from engaging in other business or related activities. In addition to its respective shares of Partnership income and cash distributions under Article 3 herein, the Partnership shall pay to the General Partner, or its duly appointed agent, the following items of compensation, which shall be deemed expenses:
All such fees to the General Partner shall be guaranteed payments under Internal Revenue Code Section 707(c), determined without regard to Partnership income, and shall not be treated as a share of Partnership profits. The General Partner's compensation by way of such fees shall be deducted as an expense Of the Partnership in calculating net income or loss of the Partnership as well as in calculating Cash Available under Section 3 of this Certificate, except to the extent such amounts are required to be capitalized and amortized under the provisions of Internal Revenue Code Section 280.
(3) RESTRICTIONS ON LIMITED PARTNERS. The Limited Partners shall take no part in, nor interfere in any manner with the management, conduct or control of the Partnership business or the production, distribution, promotion or sale of its assets. The Limited Partners shall have no right or authority to act for or bind the Partnership, nor have any authority to enter into any transaction on behalf of the Partnership, nor make any conveyance or alienation of Partnership assets.
(4) GENERAL PARTNER'S LIABILITY. The General Partner shall not be liable to the Limited Partners for any act or omission performed or omitted except only in the event of fraud, intentional wrongdoing, or gross negligence by the General Partner. The Partnership shall indemnify the General Partner against any expense (including reasonable attorney's fees), claim or liability incurred by the General Partner in performing its duties as General Partner (or in connection with the business of the Partnership); provided, however, that such indemnification shall not apply in the event of fraud, intentional wrongdoing, or gross negligence by the General Partner.
(5) OTHER ACTIVITIES. Any Partner, General or Limited, and any entity in which the Partner has an interest, may engage in or possess any interest in any other ventures or businesses of any nature or description, independently or with others, without limitation, regardless of whether or not such other ventures or businesses compete with the business of the Partnership or any other Partner. No Partner shall have any duty to tender any business opportunity to the Partnership. Neither the Partnership nor any other Partner shall have any right by virtue of the existence of this Partnership to participate in any way in such other venture, or the income or profits derived therefrom.
(6) EXECUTION OF DOCUMENTS. Any deed, mortgage, security interest, pledge, bill of sale, lease, contract or other instrument purporting to convey or encumber the assets of the Partnership in whole or part, or any other instrument of behalf of the Partnership, may be signed by the General Partner on behalf of the Partnership, and no other signatures shall be required, whether during the continuation or winding up of the Partnership.
ARTICLE 6. PROVISIONS APPLICABLE TO LIMITED PARTNERS
(1) EXCESS LOSSES. Notwithstanding anything to the contrary contained herein, the liability of any Limited Partner for losses and obligations of the Partnership or otherwise with respect to the Partnership shall in no event exceed in the aggregate the amount of such Limited Partner's respective Capital Account with the Partnership (representing such Partner's interest in the assets of the Partnership), plus unpaid obligations to make additional capital contributions, except as may be otherwise provided by applicable statute. Any excess losses and obligations shall be borne solely by the General Partner.
(2) NO WITHDRAWAL. No Limited Partner shall at any time withdraw from the Partnership except as provided in this Certificate. No Limited Partner shall have the right to have his or her capital of the Partnership returned except as provided herein. The death or adjudication of bankruptcy or insolvency of any of the Limited Partner(s) shall not dissolve or terminate the Partnership.
(3) CONVERSION TO GENERAL PARTNERSHIP INTEREST. Any General Partner who is also a Limited Partner at any time during the term of this Partnership may, upon causing an amendment hereto to be filed for record, convert such Limited Partnership interest to that of a General Partnership interest.
(4) CONSENT. To the fullest extent permitted by law, the Limited Partners hereby consent to the exercise by the General Partner of all of the rights and powers conferred on the General Partner by this Certificate or applicable law.
(5) POWER OF ATTORNEY. Each of the Limited Partners irrevocably constitutes and appoints the General Partner, each of such Limited Partner's true and lawful attorney-in-fact, with full power of substitution, in the name, place and stead of each of such Limited Partners, to make, swear to, execute, acknowledge and file:
It is expressly intended that the foregoing power of attorney is coupled with an interest.If a Limited Partner assigns his or her interest in the Partnership, as provided in Section 7(3) herein, the foregoing power of attorney shall survive the delivery of the instruments effecting such assignment for the purpose of enabling the General Partner to sign, swear to, execute and acknowledge and file any and all amendments to this Certificate of the Partnership and other instruments and documents necessary to effectuate the substitution of the assignee as a Limited Partner.
ARTICLE 7. ASSIGNMENT OF PARTNERSHIP INTERESTS
(1) PROHIBITION OF ASSIGNMENT OF PARTNERSHIP INTERESTS. Except as otherwise expressly provided in this Article 7, the interest of any Partner in the Partnership shall not be assignable during his or her lifetime by gift, sale, or other assignment, in whole or in part, for the purpose of transferring or assigning an interest in the Partnership.
(2) ASSIGNMENT OF INTEREST OF GENERAL PARTNER. Without the prior written consent of all Partners, a General Partner may not assign, pledge, encumber, sell or otherwise dispose of its General Partnership interest, nor without such consent may any person be admitted or substituted as a General Partner in this Partnership. The failure of the Partners to consent to an action by a General Partner which is within the provisions of this Section 7(2) shall not affect the validity of any instrument of assignment of the right to receive Partnership distributions provided that a duly executed and acknowledged counterpart of the assignment is filed with the Partnership, the appropriate provisions of the Securities Act of 1933 and any applicable state securities law are complied with, and the assignee is not a minor or legally incompetent. Unless the conditions of this paragraph are met, an attempted assignments of the rights of a General Partner to receive Partnership distributions shall be void and ineffective as between the Partnership and the parties thereto, and shall not bind the Partnership.
(3) LIMITED PARTNERS. The interests of a Limited Partner may not be assigned, pledged, mortgaged, sold or otherwise disposed of and no Limited Partner shall have the right to substitute an assignee in such Limited Partner's place except as follows:
ARTICLE 8. DISSOLUTION AND WINDING UP OF THE PARTNERSHIP
(1) EVENTS NOT CAUSING DISSOLUTION. The occurrence of any of the following events shall not effect the continuation of the Partnership:
(2) NO VOLUNTARY WITHDRAWAL BY THE GENERAL PARTNER; VOLUNTARY DISSOLUTION. A General Partner may not voluntarily withdraw or retire from the Partnership except by giving written notice of dissolution of the Partnership to all other Partners which shall be effective to dissolve the Partnership 90 days after the receipt of such notice by all Partners (the "effective date").
(3) AUTOMATIC DISSOLUTION. Subject to the provisions of Section 8 herein, the Partnership shall automatically be dissolved upon the occurrence of:
Upon dissolution, the Partnership shall be wound up and shall conduct only activities necessary to its liquidation or to the completion of transactions previously commenced.
ARTICLE 9. WINDING UP AND SETTLEMENT
(1) SHARING INCOME DURING LIQUIDATION. Upon the dissolution of the Partnership, the Partnership shall expeditiously wind up its affairs. The Partners shall continue to share in income and losses during dissolution, including any gain or loss on disposition of Partnership properties in the process of liquidation, as provided in Article 3 herein. For allocation purposes only, any property distributed in kind in liquidation shall be valued and treated as though the property were sold and the cash proceeds distributed; the difference between such value of property distributed in kind and its book value shall be treated as gain or loss on the sale of property and shall be credited or charged to the Partner's in the proportions specified in Article 3 herein.
(2) DISTRIBUTION OF PROCEEDS. Partnership assets, including proceeds from liquidation, shall be applied in the following order of priority:
The Partners acknowledge that such order of priority differs materially from the priorities set out in the applicable provisions of the State of __(STATE,where valid)__ Uniform Limited Partnership Act and that the amount each Partner will receive upon distribution of proceeds may vary considerably from the settlement he or she would receive should the statutory order of priority be followed. Each Partner waives any right to demand a settlement in accordance with the priorities set out in the __(State, where valid)__ Statutes. If any Partners receive a settlement other than as provided herein, they agree to pay the difference to the other Partners so that the terms of this certificate are fulfilled.
(3) RETENTION OF BOOKS. Unless otherwise agreed upon, in the event of any winding up of the Partnership, the books and records of the Partnership shall be deposited with the accountants regularly employed by the Partnership and such books and records shall be retained for inspection and use by the Partners for a period of not less than 76 months following the effective date of termination of the Partnership. Each Partner shall be furnished with a statement of the assets and liabilities of the Partnership as of the date of dissolution and the manner in which the assets have been applied and distributed.
ARTICLE 10. ADMINISTRATIVE AND LEGAL MATTERS
(1) BINDING. Except as many be specifically provided herein to the contrary, this Certificate, shall be binding upon all parties hereto, their heirs, legal representatives, successors and assigns.
(2) NOTICES. All notices provided for in this Certificate shall be directed to the parties at the addresses set forth in Schedule I, or as such other addresses as the Partnership shall be notified in writing by the respective Partners. All notices shall be deemed properly given in reduced to writing and personally delivered or forwarded by U.S. mail, postage prepaid, and addressed as set forth on Schedule I. Such notices shall be deemed delivered and received five days after the same have been so mailed.
(3) INVESTMENT INTENT. Each of the Limited Partners named on Schedule I hereof represents that he or she is a bona fide resident of the state indicated on such Partner's Subscription Agreement and has no immediate intention of changing his or her residence, and is acquiring his or her interests in the Partnership for investment purposes only and has no present intent to sell the same or divide his or her participation with others. Each of such Limited Partners is aware that he or she may not freely transfer his or her respective nterest as, among other factors,
(4) NO INDUCEMENTS. Each Limited Partner acknowledges and agrees that he or she has not been induced to enter into this Agreement by any warranties, guarantees, promises, statements, or representations, expressed or implied, except those specifically set forth herein and in the Offering Circular relating hereto (of which Offering Circular the Limited Partners hereby acknowledge receipt), and that the General Partner shall not be bound nor liable in any manner by express or implied warranties, guaranties, promises, statements or representations pertaining hereto except as are specifically set forth herein and therein.
(5) ARBITRATION. Any dispute or controversy between the parties relating to or arising out of this Certificate or any amendment or modification thereof shall be determined by arbitration by one arbitrator selected and acting pursuant to the rules of the American Arbitration Association. The arbitrator's award shall be final and binding upon the parties and judgement may be entered thereon in any court of competent jurisdiction. The arbitrator shall have the power to award a decree of specific performance of this Agreement or any part thereof, and the decree of specific performance shall be binding upon the parties as though decreed by a court of competent jurisdiction.
(6) AMENDMENT. This Certificate contains the entire understanding among the Partners governing their business relationship and the conduct of the affairs of the Partnership and may be amended only upon the written agreement of the General Partner and at least 75% by interest of the Limited Partners.
(7) WAIVER OF COURT DECREED DISSOLUTION. The Partners agree that irreparable damage would be done to the business and reputation of the Partnership should any Partner bring an action in court to dissolve this Partnership. Each Partner accepts the provisions of this Certificate as the sole entitlement on termination of the Partnership relationship. Each Partner hereby waives and renounces his or her right to seek a court order of dissolution or to seek the appointment by a court of a liquidator for the Partnership.
(8) APPLICABLE LAW. This Agreement shall be governed, guided and interpreted in accordance with the laws of the State of __(STATE)__ pertaining to agreements to be entered into and fully performed therein.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year first above written.
__NAME OF PARTNERSHIP__
NAME OF PARTNERSHIP
LIMITED PARTNER SIGNATURE PAGE
This Limited Partner Signature Page is a part or shall be attached to the Certificate and Articles of Limited Partnership of __(NAME OF PARTNERSHIP)__. Each of the undersigned, being first duly sworn on oath, certifies and acknowledges that the facts stated in the Certificate and Articles are true and correct to the best of his or her knowledge and that he or she hereby executes this instrument as his or her free act and deed.
Name and Address of Limited Partner
The foregoing instrument was acknowledged before me this __ day of __________, 199_.
LIMITED PARTNERS AUTHORIZING IMMEDIATE
USE OF FUNDS BUT NOT WAIVING REFUND
The following sign the foregoing Agreement of Limited Partners and agree that their contributions may be used forthwith by the General Partner for the business of the Partnership.
Persons so signing DO NOT WAIVE REFUND in the event of insufficiency of funds or abandonment prior to formation of the Partnership.
LIMITED PARTNERS AUTHORIZING IMMEDIATE
USE OF FUNDS AND WAIVING REFUND
The following sign the foregoing Agreement as Limited Partners and agree that their contributions may be used forthwith by the General Partner for the business of the Partnership.
Persons so signing AGREE TO WAIVE ANY REFUND FROM THE PARTNERSHIP OR THE GENERAL PARTNER IN CASE ON INSUFFICIENCY OF FUNDS OR ABANDONMENT PRIOR TO FORMATION OF THE PARTNERSHIP.
NAME OF PARTNERSHIP
CONFIDENTIAL FINANCIAL INFORMATION FORM
1. Name: ____________________________________________ Age: _____
2. Residence Address: _________________________________________
3. Business Address: ___________________________________________
4. Married: ______ Single: ______
5. Occupation: _________________________________________________
6. Employer: __________________________ Position: ______________
7. Other Business: _____________________________________________
8. Educational Background: _____________________________________
9. Approximate Income 19__: $ ____________ Taxable $___________
10. Is current level of income expected to either stay the same or increase during future years? __________ if not, explain _____________________________________________
11. Approximate Net Worth: Excluding home and personal property $___________ Including home and personal property $__________
12. Approximate Liquid Net Worth: $_________________
13. Have you been informed of the risks involved in an investment in the Limited Partnership Interests and their limited liquidity? _______________
14. Name of Financial Advisor: __________________________________
Telephone Number:____________________ FAX: _________________
15. Are you consulting the named advisor in connection with your decision to purchase one or more Interests in the Partnership? _______
16. Please provide up to five significant, passive investments which you have made during the past five years in entertainment, natural resources, real estate or other related or similar business ventures:
17. Please indicate any other facts which you feel qualify you as an appropriate purchaser of one or more Partnership Interests in __(NAME OF PARTNERSHIP)__:
The undersigned certifies the information contained herein is accurate and complete as of the date hereof.
ATTACHMENT G. SUBSCRIPTION AGREEMENT
INCLUDING INVESTMENT REPRESENTATIONS
TOTAL OFFERING OF 100 LIMITED PARTNERSHIP INTERESTS:
$ 1,500,000 Cash, $ 15,000 Per Interest
$ 1,000,000 Letters of Credit, $ 10,000 Per Interest
The undersigned hereby subscribes for the purchase of ______ limited partnership interests (the "Interests") in --(partnership name)--, a limited partnership organized under --(state)-- law (the "Partnership") for purchase price of $25,000 per Interest, $15,000 cash per Interest and a commitment to contribute an additional $10,000 per Interest which commitment is secured by a letter of credit in the amount of $10,000 per Interest. The undersigned herewith submits the undersigned's check payable to --(partnership name)-- for $____________, the aggregate cash payment for the _____ Interests herein subscribed for, and the undersigned herewith submits an assignable letter of credit in favor of the Partnership in the amount of $___________, the aggregate amount due in connection with the purchase of the subscribed for
In lieu of such aggregate cash payment the undersigned herewith submits a check payable to the Partnership in the amount of $__________ and the undersigned's irrevocable letter of credit in the amount of $_________, and agrees to pay the balance of the cash due as follows:
In connection with the undersigned's subscription for the Interests, the undersigned has read, has had the opportunity to ask questions relating to, and understands the provisions of Section 2(4) of the Certificate and Articles of Limited Partnership which are Attachment F to the Offering Circular. This Section provides for the forfeiture by an investor of the investor's payment submitted herewith in the event the investor fails to pay (under the terms of Section 2(4) the balance of the purchase price and provide the required letter of credit on the established due dates and after notice of default to any defaulting subscribers. Default in the payment of any balance of the purchase price when due will cause the investor to be expelled from the Partnership with no right to the return of any portion of the previously paid, and without any rights of a Limited Partner of the Partnership.
In connection with the undersigned's subscription for the Interests, the undersigned is advised that the Interest's are not registered under the Securities Act of 1933 (the "Act") or any other law (the "Laws"), and that such Interests will be issued to the undersigned in reliance on the non-public offering exemption under Section 4(2) of the Act and the appropriate provisions of the Laws, and the undersigned's representations and agreements contained herein.
In connection with, and in consideration of, the sale of the Interests to the undersigned, the undersigned hereby represents and warrants to the --(partnership name)--, the General Partner, the Partnership, and the Partnership's present and future Limited Partners that the undersigned:
IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement Including Investment Representations of ____ day of ________________, 19__.
Name ______________________ Social Security No. ______________
Name ______________________ Social Security No. ______________
Street Address __________________________________________________
City _______________________ State ____________________________
Telephone Number ___________ Occupation _______________________
( ) Individual Ownership
( ) Joint Tenants with Right of Survivorship
( ) Tenants in Common
Mailing address, if different from above:
Name(s) ______________________ _______________________________
Street Address __________________________________________________
City _________________________ State _________________________
NUMBER OF INTERESTS: __________ AMOUNT OF LETTER OF CREDIT: $___________
PRICES OF INTERESTS: $_________
AMOUNT PAID: $_________
AMOUNT DUE: $_________
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