New York Codes, Rules and Regulations
Title 13 - DEPARTMENT OF LAW
Chapter III - THEATRICAL SYNDICATION FINANCING
Part 50 - THEATRICAL FINANCING
Section 50.4 - Additional contents of offering literature filed pursuant to section 50.1(k)(1) of this Part in connection with an offering for a theatrical production company which will use the proceeds for more than one production or for one or more nonspecified productions

(1) The name of the theatrical production company and a brief statement of its purpose (i.e., production, development of properties, investment) and whether or not specific properties for the venture have been identified. If the company intends to engage in more than one type of activity, the approximate amount and percentages which will be allocated for each activity. Such statement will thereafter, for the purpose of the offering literature, be referred to as the "business of the theatrical production company".

(2) a statement in capital letters printed in boldface roman type at least as large as 10-point modern type and at least two points leaded (or if typed, with underlining);

SPECIAL RISKS:

THE PROCEEDS OF THIS OFFERING WILL BE USED FOR MORE THAN ONE VENTURE. THEREFORE, WHILE THE LOSSES FROM AN UNSUCCESSFUL PRODUCTION MAY BE OFFSET IN WHOLE OR IN PART BY THE PROFITS OF A SUCCESSFUL PRODUCTION, INVESTORS SHOULD NOTE THAT PROFITS FROM A SUCCESSFUL PRODUCTION MIGHT BE DIVERTED TO AN UNSUCCESSFUL ONE.

if at least 75 percent of the proceeds of the offering are not allocated to specific named productions to which the issuer or other offeror hold the production right or rights to invest at the time of the offering, the above statement should continue, in the same type, as follows:

BECAUSE LESS THAN 75 PERCENT OF THE PROCEEDS OF THIS OFFERING ARE NOW ALLOCATED TO SPECIFIED PRODUCTIONS TO WHICH THE ISSUER OR OTHER OFFEROR HOLD THE PRODUCTION RIGHT OR RIGHTS TO INVEST, THIS OFFERING IS DEEMED TO BE A "BLIND POOL". A "BLIND POOL" IS A THEATRICAL OFFERING WHICH DOES NOT SET FORTH EACH SPECIFIC PROPERTY WHICH WILL BE PRESENTED AND WHICH WILL ULTIMATELY BE A SOURCE OF THE THEATRICAL PRODUCTION COMPANY's PROFITS, IF ANY.

(3) The minimum amount necessary to initiate the business of the theatrical production company and a statement that the proceeds of the offering will not be expended if such minimum is not obtained, but will be returned to the investors therein except, that if any of the investors have so authorized such proceeds may be used for the limited purpose of acquiring production rights, costs reasonably related to such acquisition and organizational and offering expenses. (The minimum must be demonstrably sufficient to bring the theatrical production company to the point where it is possible to attain profits, e.g., the presentation of a production to a paying audience, the sale of a property developed by the theatrical production company or an investment in a theatrical production will be fully capitalized upon the receipt of such investment.)

(1) The investment objectives and policies of the theatrical production company and a statement as to whether such objectives and policies may be changed and under what circumstances. Address the issue of whether and to what extent profits of a successful venture may be diverted to an unsuccessful one.

(2) The plan of operation of the theatrical production company, including but not limited to, to the extent known:

(3) A statement regarding the extent to which the plan of operation set forth in paragraph (2) of this subdivision has been effectuated (i.e.,have options been acquired, have development or investment agreements been entered into) and a timetable for effectuating such plan as of the commencement of business of the theatrical production company.

(4) Referring to the plan of operation set forth in paragraph (2) of this subdivision, state what has to occur for profits to be generated to the theatrical production company and the time required for such occurrence. Notwithstanding the aforesaid, projections may be included only if there is set forth a reasonable basis for such projections; the person or persons who prepared the information on which such projections are based, and their qualifications; the limitations on the trustworthiness of the information used; the assumptions used; and other material factors concerning the process by which such information was compiled.

(5) The specific terms and conditions upon which profits may be reinvested or used to offset losses from any theatrical production which is not profitable.

(6) The period of time for which the venture will operate. If the issuer has the right to extend the period of the venture beyond the initial term, the conditions which have to be met for its continuation, and the terms and conditions upon which it will be terminated.

(7) A statement that none of the proceeds of the offering will be invested in a theatrical production company which is not exclusiveley formed for the purpose of developing or producing, or both, theatrical productions.

(8) A statement that none of the proceeds of the offering will be used prior to the time the stated maximum capitalization is raised unless, pursuant to paragraph (17) of this subdivision, a lesser or minimum amount of capitalization is established and such minimum is demonstrably sufficient to bring the theatrical production company to the point where it is possible to attain profits (e.g., the presentation of a production to a paying audience, the sale of a property developed by the theatrical company or an investment in a theatrical production which will be fully capitalized upon receipt of such investment), provided, however, that such minimum shall in no event be less than 10 percent of the maximum capitalization, in which case, if a specific use of proceeds section is included, such investor funds may be used, with prior investor authorization, for the preproduction or production purposes of the first of any specified theatrical production.

(9) If any of the proceeds will be invested in another theatrical production company, information regarding the principals of such companies required by section 50.3(d)(7), of this Part; whether the issuer or other offeror is affiliated with the issuer or promoter or principals of such other company; the exact nature of the affiliation; and the potential conflict of interest connected therewith. Include, to the extent known, the material terms of any such agreement.

(10) A complete chronological history of the principal occupations and business affiliations of the issuer or other offeror, including their principal occupations and employment during the past five years, and a brief explanation of the nature of the responsibilities associated with such employment where that is not evident from the name of the position. If the issuer or other offeror has previously controlled or managed a syndication of whatever kind, a complete statement of the results of such syndications and the returns, if any, to investors; and if the investors did not realize returns equal to or greater than their investments, state also the fees and remuneration direct and indirect, received by the issuer or other offeror in connection therewith. If the issuer or other offeror has an intention to originate or otherwise promote other theatrical production companies, a complete statement of the conflict of interest which would or might ensue and the principles which will be applied in resolving any such conflicts. If the theatrical production company will, to any extent, invest in other theatrical production companies, information regarding the results of prior theatrical investments and/or a statement that the issuer or other offeror has no experience managing a theatrical production company which has invested in other theatrical productions.

(11) The fees or other remuneration, direct or indirect, which will be received by the issuer or other offeror or to which they may become entitled from the theatrical production company or any affiliated company or entity.

(12) The persons who will be responsible for carrying out the objectives and plan of operation of the theatrical production company as set forth in paragraphs (1) and (2) of this subdivision, if other than the issuer or other offeror, including a detailed description of the duties of such persons stating the fee and/or fees which will be paid in connection therewith, all other remuneration direct and indirect, which such persons will receive or to which they may become entitled, and their occupational background as it is relevant to the functions they will perform.

(13) A description of any underwriting or selling agreement between the issuer or other offeror and any underwriter, broker, dealer, finder, advisor, or any other financing organization, including the services to be rendered by such person; their compensation; their specific "nonexclusive"; whether there are provisions for indemnification with respect to claims based upon violations of applicable securities laws; and whether the issuer or other offeror has or had any other dealings or affiliation with such persons. Any such compensation is subject to the definition of organizational and offering expenses, set forth in section 50.1(h) of this Part.

(14) All other persons who will be or may be retained on a permanent basis by the theatrical production company, the capacity in which they will be retained and the anticipated manner of compensation, (e.g., royalties, salary etc.). Such information may be grouped by categories of employees, if necessary. If such individuals are known at the time of the offering, include their occupational background and employment history during the past five years.

(15) If the issuer or other offeror will furnish office facilities to the theatrical production company, describe the facilities and the amount of the charge therefore; the period or periods during which such office will be maintained and the reasons for maintaining an office during such periods; the functions which will be performed in such facility; the number of staff and their duties. If office facilities will be furnished by a person other than the issuer or other offeror, provide the above required information for such other person and describe their relationship to the issuer or other offeror.

(16) A representation that the issuer or other offeror will provide all the financial reports required pursuant to the Arts and Cultural Affairs Law of New York and of Part 51 of this Title; and where the funds of the theatrical production company are invested in or otherwise applied to a production or other venture not under the direct control of the issuer or other offeror, that they will require, through contract, that such reports be provided.

(17) If the theatrical production company intends to commence business at less than the stated maximum capitalization, a statement describing how the business of the theatrical production company and the plan of operation set forth in paragraph (a)(1) of this section and paragraph (2) of this subdivision, will change; how the reduced capitalization is sufficient to go forward with the curtailed business operations; and how such change will affect the other elements of the proposed plan which are disclosed in this section. With respect to determining a minimum, reference should be made to paragraph (9) of this subdivision.