Sample Front Money Agreement
For A Broadway Production of
(Sample Only - Subject To Amendment)
Jeremiah Ginsberg & Wendy Ginsberg
PO Box 770835
Coral Springs, FL 33077-0835
Date: ________ , 2016
1. We plan to organize a limited liability company (the "Company") under the laws of the State of New York to present and produce on Broadway in New York City and elsewhere a musical stage play currently entitled, "Mendel's Messiah" (formerly "Rabboni"). We are writing the book, music and lyrics and are the anticipated managing members of the Company, although others may be admitted as such. The investor members of the Company will share pro rata in fifty percent (50%) of the net profits of the Company, and the managing members will receive fifty percent (50%) of such net profits, all to be defined in the limited liability company operating agreement. The amount of capital to be raised by and for the Company is yet undetermined, but will tentatively not exceed $10 million (subject to change).
2. You have agreed to advance to us the sum of _________________, which shall constitute front money. We shall have the right to use these funds immediately, but only in connection with the Play, for the following pre-production expenses of the proposed production: fees; advances; deposits, or bonds made for the purpose of purchasing options on a book, play, or other underlying materials; engaging creative personnel; securing a theater; retaining legal, accounting, and other professional advisers, preparing offering documents; the costs of a workshop or off-Broadway production to be presented by the issuer or other purposes reasonably related to the production for which the front money was raised.
3. (a) In consideration of the foregoing, if and when the Company is formed, and the offering of Company interests is allowed to commence, you may be designated as an investor member thereof, at your option, to the extent of the amount of front money so advanced by you, and you shall be entitled to such portion of the investor members' share of the net profits of the Company as your investment bears to the total capital raised for the production of the Play. For example, if you advance front money in the sum of $200,000, you will receive one percent (1%) of the net profits of the Company, if any, if an offering of $10,000,000 of Company interests were to be made.
(b) You shall also be entitled to an additional interest in the Company's net profits equal to one half (.5%) your portion of the investor members' share of the net profits of the Company payable from the managing members' share of such net profits as, when and if received by the managing members (and subject to all rights of refund, rebate and return as are applicable to the managing members' share under the operating agreement).
(c) If you elect not to be designated as an investor member of the Company, prior to exercising your option to be so designated, you will (a) receive a full refund of your front money contribution, without interest, in the event and at such time as the Company is fully capitalized; and (b) in lieu of the consideration referred to in subclauses "a" and "b" of this Clause "3," you will be entitled to receive such portion of fifty percent (50%) of the net profits of the Company as your front money contribution bears to the total capital raised for the production of the Play, but payable only from the managing members' share of such net profits as, when and if received by the managing members (and subject to all rights of refund, rebate and return as are applicable to the managing members' share under the operating agreement).
4. You understand that the front money advanced hereunder is high-risk capital and that if the Play is abandoned, at any stage, for any reason whatsoever, our only obligation will be to account to you for the funds spent, and to return to you, and the other parties advancing money, any unused balance of such funds on deposit, pro rata and pari-passu. We agree to furnish you with an accounting for all front money advanced to us hereunder, but not more than once every six months and then only until such money has been fully expended, or the Play abandoned, and the provisions of the Clause "4" fully satisfied.
5. At such time, if any, as the Company is to be formed and you elect to be designated as an investor member thereof, you hereby irrevocably authorize, nominate, and appoint each of us as your attorney-in-fact to execute the operating agreement on your behalf, to the extent of the amount of front money advanced by you under Clause "2" above, and to take any and all further steps which we may deem necessary or appropriate to effectuate your investment in the Company in accordance with the foregoing provisions. You will be furnished with a copy of the definitive offering documents, if required by law, the operating agreement and any other offering material at that time.
6. You are aware that while offering literature may be filed with the Securities and Exchange Commission and the Department of Law of the State of New York, the Company's offering has not yet been declared effective or allowed to commence by these securities agencies.
7. Your liability in respect to the Play shall be limited to the amount of front money advanced by you under paragraph "2" hereof. We agree to indemnify you against any and all claims, liabilities or expenses, including reasonable attorneys' fees, arising out of any claim by third parties asserting that you are liable for any sum beyond such amount.
8. Except as herein specifically set forth, you shall not have any rights by reason of your making this advance of front money.
9. This letter, when countersigned by you, shall constitute a binding agreement between us which shall be construed in accordance with the laws of the State of New York. Our agreement hereunder may not be modified orally.
If this letter correctly sets forth your understanding, please sign and return a copy of same.
Very truly yours,
Jeremiah Ginsberg & Wendy Ginsberg
AGREED TO AND ACCEPTED:
Social Security or Federal I.D. Number: __________________________________
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