NEITHER THE NOTES OFFERED HEREBY NOR ANY UNITS CONSTITUTING A MEMBERSHIP INTEREST IN THE COMPANY HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT, UNDER SECTION 4(2) THEREOF AND RULE 506 OF REGULATION D PROMULGATED THEREUNDER, AND OF SUCH LAWS.
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN RECOMMENDED, APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER FEDERAL OR STATE COMMISSION OR REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS MEMORANDUM OR ANY PRIOR OR SUBSEQUENT COMMUNICATIONS FROM THE COMPANY OR ANY OF ITS MEMBERS, DIRECTORS, AGENTS, OFFICERS OR EMPLOYEES, AS LEGAL OR TAX ADVICE. EACH INVESTOR SHOULD CONSULT HIS OR HER OWN LEGAL COUNSEL AND ACCOUNTANT AS TO TAX MATTERS AND RELATED MATTERS CONCERNING HIS OR HER INVESTMENT. THE INFORMATION CONTAINED HEREIN HAS BEEN OBTAINED FROM SOURCES DEEMED RELIABLE, BUT NO REPRESENTATION OR WARRANTY IS MADE AS TO ITS ACCURACY OR COMPLETENESS.
IN MAKING AN INVESTMENT DECISION EACH INVESTOR MUST RELY ON HIS/HER/ITS OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. NEITHER THE NOTES NOR UNITS OF MEMBERSHIP INTEREST IN THE COMPANY MAY BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED ‘UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
NO BROKER, DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS MEMORANDUM OR IN THE EXHIBITS HERETO OR DOCUMENTS REFERRED TO HEREIN WITH RESPECT TO THE TRANSACTION AND MATTERS DESCRIBED HEREIN, AND ANY INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON. NEITHER THE DELIVERY OF THIS MEMORANDUM NOR ANY SALES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN MATTERS DISCUSSED HEREIN SINCE THE DATE HEREOF. HOWEVER, IN THE EVENT OF ANY MATERIAL CHANGE, THIS MEMORANDUM WILL BE AMENDED OR SUPPLEMENTED ACCORDINGLY. PROSPECTIVE INVESTORS AND THEIR PROFESSIONAL ADVISORS ARE INVITED TO REQUEST ANY FURTHER INFORMATION THEY MAY DESIRE FROM THE COMPANY.
The Notes offered hereby (and the Units of membership interest in the Company subject to the related option (“Units”)) are suitable only for those Investors whose business and investment experience, either alone or together with their advisors, makes them capable of evaluating the merits and risks of their prospective investment, and who can afford to bear the economic risks thereof for an indefinite period and have no need for liquidity in this investment. Notes are being offered hereby without registration under the 1933 Act by reason of the exemptions from the registration requirements of the 1933 Act set forth in Section 4(2) thereof and in Rule 506 ( Regulation D promulgated thereunder (“Rule 506”)). Rule 506 sets forth certain restrictions as to the number and nature of purchasers of securities offered pursuant thereto. In order for the offering to qualify as an exempt Rule 506 offering, the Company will sell Notes only to Investors who are accredited investors as that term is defined in Rule 501(a) of Regulation D (“Accredited Investors”).
An “Accredited Investor” is defined in Regulation D is an investor who meets at least one of the following standards:
a. The investor is a natural person and had individual income in excess of $200,000 in each of the two preceding years, or joint income with that person’s spouse in excess of $300,000 in each of those years, and reasonably expects to have the same income level in the current year; or
b. The investor is a natural person whose individual net worth, or joint net worth that natural person’s spouse, at the time of purchase, exceeds $1,000,000, excluding the value of the primary residence of such natural person, calculated by subtracting from the estimated fair market value of the property the amount of debt secured by the property, up to the fair market value of the property; or
c. The investor is a bank as defined in Section 3(a)(2) of the 1933 Act or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act, whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; any insurance company as defined in Section 2(13) of the 1933 Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act; a small business investment company licensed by the U.S. Small Business Administration under Section 301(c) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, if the employee benefit plan has total assets in excess of $5,000,000 or, if a self directed plan, with investment decisions made solely by persons that are Accredited Investors; or
d. The investor is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940; or
e. The investor is any organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), Massachusetts or similar business trust, limited liability company or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000; or
f. The investor is any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer; or
g. The investor is 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 directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D; or
h. The investor is a corporation, partnership, trust, limited liability company, or other entity in which all of the equity owners would qualify as Accredited Investors.
An Investor that is an employee benefit plan or retirement plan that is an Accredited Investor by virtue of (c) above will be required to provide the Company with information regarding each of its participants, including information regarding the qualification of each participant as an Accredited Investor.
Each Investor will be required to represent, among other things, that:
1. He or she is an Accredited Investor;
2. His or her overall commitment to investments which are not readily marketable is not disproportionate to his or her net worth, and his or her investment in the Shares will not cause his or her overall commitment to become excessive;
3. He or she has no need for liquidity in his or her investment in the Notes or Units;
4. He or she has, or he or she and his or her purchaser representative together have, such knowledge and experience in financial and business matters that he or she is, or they are, capable of evaluating the merits and risks of an investment in the Company;
5. He or she has read the Articles of Organization, Operating Agreement of the Company and this Memorandum for purposes of evaluating the risks of investing in the Company; and
6. He or she is purchasing Notes (and, if he exercises the related option, the applicable Units) for his or her own account, for investment and not with a view to resale.
The suitability standards described above are minimum requirements; the Notes and Units are not necessarily a suitable investment for every prospective Investor who meets such standards.
In order to assure adherence to the suitability requirements described above, the Company will require prospective Investors to complete an Offeree Questionnaire and Subscription Agreement incorporated into this Memorandum and reserves the right to conduct such further inquiries as it may deem necessary or appropriate to confirm the information provided therein.
The Offeree Questionnaire and Subscription Agreement is designed to allow each Investor to substantiate his/her/its status as an Accredited Investor. The Company has the right to refuse a subscription for Notes in whole or in part if in its sole discretion it believes that the Investor does not meet the suitability requirements set forth above or that the Notes are otherwise an unsuitable investment for the Investor, or for any other reason. However, the Company has no duty or obligation to make any inquiry or investigation into such suitability beyond information set forth in the Offeree Questionnaire. The Company may accept subscriptions on other than a first submitted, first accepted basis.
Investors may not be able to liquidate their investment in the event of emergency or other reason because there is not now any public market for the Notes or Units and it is not anticipated that one will develop. As a consequence, purchasers of the Notes or Units will not be able to resell or otherwise transfer the Notes or Units unless an exemption from registration under the 1933 Act for such resale or transfer is available. Any applicable state law requiring registration or qualification also must be satisfied before any resale or transfer.
The Company will have no obligation to assist any Investor in registering or qualifying his/her/its Notes or Units for sale or in obtaining or establishing an exemption from registration or qualification requirements. As a consequence of these restrictions an Investor must be prepared to bear the economic risk of the investment for an indefinite period of time. These restrictions also may prevent the use of a Note or Units as collateral.