0001214659-20-006877.txt : 20210426 0001214659-20-006877.hdr.sgml : 20210426 20200807211352 ACCESSION NUMBER: 0001214659-20-006877 CONFORMED SUBMISSION TYPE: 1-A POS PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 20200807 DATE AS OF CHANGE: 20210329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Opening Night Enterprises, LLC CENTRAL INDEX KEY: 0001707175 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 814737793 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 1-A POS SEC ACT: 1933 Act SEC FILE NUMBER: 024-10712 FILM NUMBER: 201086739 BUSINESS ADDRESS: STREET 1: 80 WEST SIERRA MADRE BOULEVARD STREET 2: SUITE 141 CITY: SIERRA MADRE STATE: CA ZIP: 91204 BUSINESS PHONE: 2122301300 MAIL ADDRESS: STREET 1: 80 WEST SIERRA MADRE BOULEVARD STREET 2: SUITE 141 CITY: SIERRA MADRE STATE: CA ZIP: 91204 1-A POS 1 primary_doc.xml 1-A POS LIVE 0001707175 XXXXXXXX 024-10712 Opening Night Enterprises, LLC CA 2016 0001707175 7812 81-4737793 0 0 80 WEST SIERRA BOULEVARD #141 SIERRA MADRE CA 91024 626-355-1049 Charles Jones II Other 276.00 0.00 0.00 0.00 276.00 1750.00 0.00 1750.00 -1474.00 276.00 0.00 14071.00 0.00 -14871.00 0.00 0.00 Cashuk, Wiseman, Goldberg, Birnbaum & Salem, LLP NONE 0 00000NONE NONE NONE 0 00000NONE NONE NONE 0 00000NONE NONE true true Tier2 Audited Equity (common or preferred stock) Y Y N Y N N 100000 0 500.0000 50000000.00 0.00 0.00 0.00 50000000.00 Jumpstart Securities, LLC 975000.00 Cashuk, Wiseman, Goldberg, Birnbaum & Salem, LLP 2250.00 Ryan J. Lewis, Esq. 9420.00 156214 49013330.00 true AL AK AZ AR CA CO CT DE FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY DC PR AL AK AZ AR CA CO CT DE FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY DC PR true PART II AND III 3 partiiandiii.htm POST QUALIFICATION AMENDMENT NO. 3
 
OFFERING CIRCULAR
 
Form 1-A: Tier 2
_____________________
 
OPENING NIGHT ENTERPRISES, LLC

80 W SIERRA MADRE BLVD, SUITE 141
SIERRA MADRE, CA 91024
P: (626) 355-1049
_____________________

Up to 100,000 Units Available for Purchase
Date of Offering Circular: June 10, 2019

 
   

Offering Price

To Public

    

Commissions, Service Fees

And Expenses (1)(3)

    

Proceeds to

Others(2)

    

Proceeds to

Issuer (3)

 
Unit Price   $ 500     $ 0.00     $ 0     $ 500  
Minimum   $ 500     $ 0.00     $ 0     $ 500  
Maximum   $ 50,000,000     $ 0.00     $ 0     $ 50,000,000  
 

(1)        We do not intend to use commissioned sales agents or underwriters.

 

(2)        No finder’s fees are being paid to any third parties from the Offering proceeds.

 

(3)        Does not include expenses of the Offering, including costs of blue sky compliance, fees to be paid to JumpStart Securities, LLC and other offering related expenses which may include, among other things, legal fees, state and other administrative filing fees, accounting, printing, advertising, travel, marketing, blue sky or other state-level compliance and other expenses associated with establishing and maintaining escrow accounts, technological offering platforms and actual out-of-pocket expenses incurred by the Company selling the Units membership interest. The Company estimates these expenses to be approximately $160,000 in the aggregate, assuming a sale of all 100,000 Units of membership interest for an aggregate purchase price of $50,000,000. If the company engages the services of additional broker-dealers in connection with the offering, their commissions will be an additional expense of the offering. The company expects to enter into service agreements with JumpStart Securities, a member of FINRA, to provide subscription and administrative services for the offering. JumpStart Securities, LLC is not an underwriter and will not be paid underwriting fees, but will be paid service fees. Currently, there are no finder’s fees or other fees being paid to third parties from the proceeds, other than those disclosed below. See the “Plan of Distribution” for details regarding the compensation payable in connection with this offering.

 

Generally no sale may be made to you in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth.  Different rules apply to accredited investors and non-natural persons.  Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A.  For general information on investing, we encourage you to refer to www.investor.gov.
 

This offering of membership interests (the “Units”) in Opening Night Enterprises, LLC (the “Company”) is being made on a “best efforts” basis, which means there is no guarantee that any minimum amount will be sold.  The Units are being offered and sold by the Company and through JumpStart Securities, LLC (“JumpStart” or “JS”), a broker/dealer registered with the Securities and Exchange Commission (the “SEC”) and a member of the Financial Industry Regulatory Authority (“FINRA”). The Company may undertake one or more closings on a rolling basis, where, after each such closing, funds tendered by investors are disbursed to the Company and the corresponding Units are delegated to the investors whose subscriptions were accepted.  This offering will commence upon its qualification by the Securities and Exchange Commission and shall terminate upon the earlier of: (1) Sale of the Offering maximum (100,000) Units; (2) one year from the date that the Offering is qualified by the Commission, unless extended unless extended by the Company in its sole discretion in accordance with applicable Commission regulations for such additional period as may be sought to sell the 100,000 Units; or (3) any earlier date upon which the Offering is terminated by the Company in its sole discretion.  The funds received in exchange for Units, shall be held in an escrow account maintained by Prime Trust, LLC. All funds received by the escrow agent shall be held only in an interest bearing bank account, but no interest will be paid to the Company or investors, but will be kept by Prime Trust, LLC as part of its compensation for services provided. Upon closing under the terms as set out in this Offering Circular, funds will be immediately transferred to the Company where they will be available for use in the operations of the Company’s business in a manner consistent with the “USE OF PROCEEDS TO ISSUER” in this Offering Circular.

 

Although not signed at this time, the escrow agreement with Prime Trust, LLC is attached as an Exhibit hereto and will be executed between the parties thereto upon the SEC’s qualification of this offering. The execution of the escrow agreement in advance of qualification will subject the issuer to expenses which it shall be able to incur once the offering is certain to launch.

 

Investment in the Units is risky and should only be made by those able to bear the total loss of their investment.  Prospective Investors must read and carefully consider the RISK FACTORS beginning on page 4 below.

Opening Night Enterprises – Offering Circular1 
 
 
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SELLING LITERATURE.  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 ARE EXEMPT FROM REGISTRATION.

 
JURISDICTIONAL (NASAA) LEGENDS
 
 
FOR RESIDENTS OF ALL STATES: THE PRESENCE OF A LEGEND FOR ANY GIVEN STATE REFLECTS ONLY THAT A LEGEND MAY BE REQUIRED BY THAT STATE AND SHOULD NOT BE CONSTRUED TO MEAN AN OFFER OR SALE MAY BE MADE IN A PARTICULAR STATE. IF YOU ARE UNCERTAIN AS TO WHETHER OR NOT OFFERS OR SALES MAY BE LAWFULLY MADE IN ANY GIVEN STATE, YOU ARE HEREBY ADVISED TO CONTACT THE COMPANY. THE SECURITIES DESCRIBED IN THIS OFFERING CIRCULAR HAVE NOT BEEN REGISTERED UNDER ANY STATE SECURITIES LAWS (COMMONLY CALLED "BLUE SKY" LAWS).
 
THIS OFFERING CIRCULAR DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS CONCERNING THE COMPANY OTHER THAN THOSE CONTAINED IN THIS OFFERING CIRCULAR, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON.
 
PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS OFFERING CIRCULAR, OR OF ANY PRIOR OR SUBSEQUENT COMMUNICATIONS FROM THE COMPANY OR ANY OF ITS EMPLOYEES, AGENTS OR AFFILIATES, AS INVESTMENT, LEGAL, FINANCIAL OR TAX ADVICE.
 
BEFORE INVESTING IN THIS OFFERING, PLEASE REVIEW ALL DOCUMENTS CAREFULLY, ASK ANY QUESTIONS OF THE COMPANY'S MANAGEMENT THAT YOU WOULD LIKE ANSWERED AND CONSULT YOUR OWN COUNSEL, ACCOUNTANT AND OTHER PROFESSIONAL ADVISORS AS TO LEGAL, TAX AND OTHER RELATED MATTERS CONCERNING THIS INVESTMENT.
 
Opening Night Enterprises – Offering Circular2 
 
 
Table of Contents
 

SUMMARY OF THE OFFERING
6
1. Company:
 6
2. Nature of the Units:
 6
3. The Offering:
 6
4. Company Managers:
6
5. Management Rights and Duties:
6
6. Business of the Company:
6
7. Estimated Use of Proceeds:
7
8. Limited Liability of Members:
8
9. Rights of First Refusal and First Notice:
8
10. Special Note Regarding Forward-Looking Statements:
8
11. Prior Performance:
8
12. Tax Ruling:
8
   
RISK FACTORS
9
North American Securities Administrators Association Uniform Legend
9
Non-Transferability of Units
9
No Assurance of Adequate Capitalization
10
No Assurance of Recovery of Capital or Payment of Profits
10
Uncertainty of Critical or Public Acceptance Minimized
10
The Company Has No Operating History
10
New Business Model
10
Limited Business Purpose of Company
10
Single Purpose Entities
11
No resale Market of Disposition of Units
11
No Assurance
11
Subsidiary Rights Income Is Uncertain
11
No Distribution Currently In Place
11
Potential Conflict Of Interest
11
Contributions to the Capital of the Limited Liability Company
12
Managers Control
12
Abandonment or Close of Production
12
Managers' Right to Obtain and Make Loans
12
Production of Musical at Minimum Capitalization Reduces Chance of Success
12
Risk of Non-Contingent Best Efforts Nature of Offering and Potential for Use of Commitment Prior to Minimum Capitalization of the Company
12
No Contracts Have Been Entered Into
13
No Withdrawal From Company
15
Offering Price of the Units Arbitrarily Determined
15
Long Term Project
15
Commercial Success Not Certain
15
The Company Faces Significant Competition
15
Potential Legal Challenges
15
Federal Income Tax Consequences
15
Risks Relating to Arbitration and Exclusive Forum Provisions in Subscription Agreement and Operating Agreement 16
Investment in Initial Season Only
 17
Contingencies Related to Inability to Finance All Six Musical Productions
 17
 
Opening Night Enterprises – Offering Circular3 
 
 
DILUTION
18
Initial Immediate Dilution
18
Potential for Future Dilution
18
Nature of Units and Interests Held by Non-Investor Members
18
Anti-Dilution Provisions of the Units
18
   
PLAN OF DISTRIBUTION AND SELLING TO SECURITYHOLDERS
19
Distribution of Securities
19
Suitability 19
Disposition of Units and the Offering
19
Issuer Manager Subscription Cancellation Rights
23
Arbitration and Exclusive Forum Provisions 23
   
USE OF PROCEEDS TO ISSUER
24
TV Production Budget Worksheet
24
Opening Night - Musical Production Budget Worksheet
26
Potential Payments to Managers from Offering Proceeds
27
Best Efforts Offering Adjustments
27
Potential Use of Proceeds to Discharge Company Debts
27
   
DESCRIPTION OF BUSINESS
28
Purpose
28
Subsequent Productions
29
Additional Companies
29
Subsidiary Participation
30
Co-Productions
30
Television Series and Theatrical Industry
30
Additional Information About the Company and its Business
33
   
DESCRIPTION OF PROPERTY
33
   
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
34
Plan of Operations
34
Post-Season 1 Outlook
35
General Industry Trends
36
   
MANAGERS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
38
   
COMPENSATION OF MANAGERS AND EXECUTIVE OFFICERS
40
Company Management and Series-Related Compensation
40
Necessary Definitions
40
Musical-Related Compensation of Managers
41
Company Owner Revenues Available to Managers
43
   
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS
44
   
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
45
No Musical-Related Manager Compensation Likely to Eventuate in Fiscal Year 1
45
Investor Roadshow Performance Compensation
45
Series-Related Manager Compensation
45
Manager Reimbursements
 45
No Company Net Profits Participations For Managers Likely to Eventuate in Fiscal Year 1
46
No Intended Third Party Beneficiaries
46
   
SECURITIES BEING OFFERED
46
 
Opening Night Enterprises – Offering Circular4 
 
 
Voting Rights
46
Rights of First Refusal/Anti-Dilution Rights
46
Distributions
48
Restriction on Transferability of Units
 49
No Guaranty
49
Audit and Statement
49
Unit Rights and Preferences
50
Unregistered and Illiquid Nature of Units
50
Limited Liability of Investors
50
   
FEDERAL TAX DISCUSSION
51
   
ERISA CONSIDERATIONS
56
General Fiduciary Obligations
56
   
PART F/S
58
   
PART III - EXHIBITS INDEX
67
   
SIGNATURE PAGE
 68
 
Opening Night Enterprises – Offering Circular5 
 
 
SUMMARY OF THE OFFERING


The following summary is qualified in its entirety by the more detailed information appearing elsewhere or incorporated by reference in this Offering Circular and its attached Exhibits.  Any capitalized terms used herein which are not defined herein shall have the meanings ascribed to them in the Operating Agreement attached hereto as Exhibit1A-2B. Each recipient hereof is urged to carefully read this Offering Circular in its entirety including but not limited to the Risk Factors section.

1.          Company: Opening Night Enterprises, LLC (the “Company”) is a manager-managed California limited liability company which was recently formed for the purpose of exploiting the rights in and to as many as six original Musicals (as defined below) in certain multi-media settings and otherwise in accordance with the Company’s business plans as described herein.  The Company is, as of yet, unfunded and is engaging in this offering (the “Offering”) of membership interests (the “Units”) in the Company for the purpose of raising the necessary operational funds to carry out its business plans as described herein.

2.          Nature of the Units: The Managers (as defined below) shall have full authority to accept or reject the subscriptions of any potential investors subscribing hereunder in their sole and absolute discretion.  However, those who successfully subscribe under this Offering (the “Investors” or “Investor Members”) shall receive Units representing their ownership interests (their “Interests”) in the Company.  All those holding ownership Interests in the Company shall be deemed “Members” hereunder.  The Units and their accompanying Interests sold in this Offering shall not entitle the Investors to voting, management or other decision-making rights on behalf of the Company except as may be otherwise set-forth in the Company’s operating agreement (the “Operating Agreement”), which is attached hereto as “Exhibit1A-2B” or as otherwise required by the laws of any governing jurisdiction.
 

3.          The Offering: The Units are being sold for Five Hundred Dollars U.S. ($500.00) per Unit, minimum purchase per Investor is One (1) Unit.  Up to One Hundred Thousand (100,000) Units are available for sale under this Offering, for an aggregate potential raise of Fifty Million Dollars U.S. ($50,000,000.00).  This Offering is being made on a “best efforts” basis, meaning that there is no guarantee that any minimum amount will be sold and the Units are being sold by the Managers, who will not receive any form of success-based, transaction-based or sales-based compensation in exchange for their selling efforts.  The Company may undertake one or more closings on a rolling basis, where, after each such closing, funds tendered by potential Investors are disbursed to the Company and the corresponding Units are delegated to the Investors whose subscriptions were accepted.  This Offering will commence upon qualification of the Offering by the Securities and Exchange Commission (the “SEC”) and shall terminate upon the earlier of: (1) Sale of the Offering maximum (100,000) Units; (2) one year from the date that the Offering is qualified by the SEC, unless extended by the Managers in their sole collective discretion in accordance with applicable SEC regulations for such additional period as may be sought to sell the 100,000 Units; or (3) any earlier date upon which the Offering is terminated by the Company in its sole discretion.  The funds received in exchange for Units (the “Commitments”), shall be held in an escrow account maintained by Prime Trust, LLC (the “Escrow Agent”) until such time as the Commitments are accepted or the Offering is terminated. Neither the Company nor the Investors will receive interest on the funds maintained by the Escrow Agent. Instead the interest will be kept by Prime Trust, LLC as part of its compensation for services provided.

 
4.          Company Managers: The Company will be managed initially by three managing Members (the “Managers”) consisting of: (1) Charles Jones II Enterprises, LLC on behalf of Charles Jones II; (2) Kristin Chenoweth; and (3) Regina Dowling. (See below at, MANAGERS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES, generally).
 
5.          Management Rights and Duties: The Managers will be responsible for the management of the Company (see “OPERATING AGREEMENT” at Exhibit1A-2B).  The Managers will be supported in its management activities by appropriate staff, consultants and co-producers.  Managers may bring on one or more additional highly experienced producers or production companies in order to further facilitate the Company’s business plans as described herein and the Managers shall generally surround themselves with other highly experienced personnel throughout each phase of the business if and as necessary.

6.          Business of the Company: The purpose of the Company is to produce a certain hour-long unscripted competition television series prospectively entitled “OPENING NIGHT” (the “Series”) in which, throughout the 13-week/13-episode initial season of the Series, the Company presents and markets to millions of viewers select portions of the up to six new musical theater shows (the “Musicals”) (see below at, DESCRIPTION OF BUSINESS, generally).   Through the presentation of the Musicals to Series viewers, the Company believes it will generate great interest to see the completed Musicals outside of the television Series in a live theatrical medium at various stages in the United States and throughout the world, including on the Broadway stage.  The Company will derive earnings both from the Series, as well as from various exploitations of the Musicals and their underlying rights, which will include, but are not necessarily limited to, ticket sales from each Musical and additional revenue streams ancillary to the production including musical recordings, merchandising and a variety of consumer products.
 
 
Opening Night Enterprises – Offering Circular6 
 
 

7.          Estimated Use of Proceeds: The proceeds of this Offering will go to fund the business of the Company generally, and specifically, the vast majority of the funds raised under this Offering will be used to finance production of both (a) the Series and (b) the initial 12-week (96 show) run of the U.S. exhibition of as many of the Musicals as possible and as the Managers in their collective professional discretion deem economically and commercially feasible.  By financing the production of the Series, the Company will all but eliminate the risk of loss to networks and other television programming distributors who might otherwise pass on distributing the Series if they had to finance the Series’ production.  The Managers believe that this will give the Series the best possible opportunity to be distributed by the best possible range of television distributors on the best terms possible.  (See below at, USE OF PROCEEDS TO ISSUER, generally and also at, MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS at ‘Plan of Operations’).  In addition to the foregoing, a facilitation fee of One and 95/100 Percent (1.95%) of each Unit sold will be paid to JumpStart, the Offering’s sole licensed broker-dealer.

 
Opening Night Enterprises – Offering Circular7 
 
 
8.          Limited Liability of Members: The Members shall not have any personal liability for liabilities or obligations of the Company except to the extent of their respective capital Commitments, and the Members shall not be required to make any further or additional Commitments to the Company or to lend funds to the Company for any purpose.  Notwithstanding anything to the contrary in the foregoing, a Member shall indemnify and hold harmless the Company and each Member from any liability or loss incurred by virtue of the assessment of any tax with respect to such Member’s allocable share of the profits or gain of the Company.

9.          Rights of First Refusal and First Notice: Although the Units shall not impose a requirement upon the Investor Members to make any future investment in the Company or otherwise, in the event that any future offerings of equity in the Company are made to private investors in exchange for cash investments, the then-extant Investor Members shall have a right of first refusal to invest in the new Units at least up to an amount that enables them to maintain their then-current level of equity in the Company.  The Investor Members shall also maintain certain rights of first refusal to invest in any future entities created to own and exploit the rights in and to any future seasons of U.S. versions of the Series, if any.  All of the foregoing rights of first refusal and anti-dilution of Units shall be subject to certain terms and conditions and may not be applicable in every instance (see below, SECURITIES BEING OFFERED at ‘Rights of First Refusal/Anti-Dilution Rights’, for further discussion of particulars). 

10.         Special Note Regarding Forward-Looking Statements: This Offering Circular includes forward-looking statements.  All statements other than statements of historical fact contained in this Offering Circular, including statements regarding the Company’s future financial condition, business strategy, financing and distribution plans and objectives of management and the Series’ or Musicals’ future successes and opportunities are forward-looking statements.  A number of presentations and disclosures in this Offering Circular, including any statements preceded by, followed by or which include the words, “may”, “should”, “would”, “believe”, “expect”, “estimate”, “intend”, “anticipate”, “plan”, “assume” or similar expressions, are intended to identify forward-looking statements.  These forward-looking statements are based on information available to the Managers at the time the statements are made and on assumptions, expectations, beliefs current thereto which concern future developments and their potential effect on the Company.  These forward-looking statements involve risks, uncertainties and other factors, many of which are outside the Company’s control, which may cause actual results and performances to be materially different from the future results or performances anticipated or implied by these forward-looking statements.

To the extent that this Offering Circular contains forward-looking statements regarding the financial condition, operating results, business strategy or any other aspect of the Company, please be advised that the Company’s actual financial condition, operating results and business performance may differ materially from those projected or estimated by the Company in its forward-looking statements.  The differences may be caused by a variety of factors, including, but not limited to, lack of experience of the Company and of the Managers, cost overruns in producing and marketing the Series or one or more of the Musicals, fluctuations of banking rates or market conditions, intense competition for television series distribution and/or premium stages and theater space in the major U.S. markets, unavailability of qualified talent for the Musicals, loss of talent previously committed or interested in the Series or Musicals, lack of viewer appeal of the Series or Musicals, insufficient working capital, unexpected operating deficits, lower sales prices and revenues than forecast, inability to carry out marketing and sales plans, and other specific risks that may be alluded to in this Offering Circular including those described in the RISK FACTORS section below.

11.         Prior Performance: The Managers have no prior operating history with respect to management of a business that seeks to produce an unscripted television competition series for the purpose of launching and subsequently producing several live stage musicals featured in said television series.  Nor are the Managers aware of anyone having attempted this specific business model marrying a television series to one or more live stage musical productions.  Accordingly, the Managers cannot say whether such a business model will meet with success or what levels of success or failure can be realistically expected.

12.         Tax Ruling: The Managers do not intend to apply for a ruling from the IRS regarding the Company’s tax status as a limited liability company.  PROSPECTIVE INVESTORS ARE URGED TO OBTAIN INDEPENDENT TAX ADVICE SPECIFIC TO THEIR OWN INDIVIDUAL CIRCUMSTANCES FROM A TAX ADVISOR OF THEIR OWN CHOOSING.
 
Opening Night Enterprises – Offering Circular8 
 
 
RISK FACTORS


An investment in the Company involves a high degree of risk. Prospective Investors should read these risk factors carefully before deciding whether to invest. This Offering Circular is not intended to describe all of the potential risks of the Company or its business, rather, the following is a description of what are considered to be some of the Company’s key challenges and risks. The risks and uncertainties described below are not the only risks and uncertainties faced by the Company or its intended business venture(s). Additional risks and uncertainties not presently known to the Company or known to be material may ultimately impair the Company’s success.

This Offering Circular contains certain forward-looking statements that involve many risks and uncertainties. These statements relate to future events or the Company’s future financial performance. In some cases, one can identify forward-looking statements by terminology including “could,” “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially from those projected as a result of certain of the risk factors set forth below and elsewhere in the Offering Circular. The Company cannot and does not guarantee any future results, performance or achievements, whether described or alluded to herein or otherwise.

In considering the contents of this Offering Circular and the nature, likelihood of success and prospects of the Company and the business venture(s) described herein, recipients of this Offering Circular must rely on their own independent examination of the Company and its proposed business.  Recipients should not construe the contents of this offering circular to be tantamount to legal, tax, investment or accounting advice, and each recipient hereof is urged to consult with its own independent advisors with respect to legal, tax, regulatory, financial and accounting consequences of any potential involvement with the Company or investment in the Units.

North American Securities Administrators Association Uniform Legend:
 
YOU SHOULD MAKE YOUR OWN DECISION WHETHER THIS OFFERING MEETS YOUR INVESTMENT OBJECTIVES AND RISK TOLERANCE LEVEL. NO FEDERAL OR STATE SECURITIES COMMISSION HAS APPROVED, DISAPPROVED, ENDORSED, OR RECOMMENDED THIS OFFERING. NO INDEPENDENT PERSON HAS CONFIRMED THE ACCURACY OR TRUTHFULNESS OF THIS DISCLOSURE, NOR WHETHER IT IS COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS ILLEGAL.
 
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. YOU SHOULD BE AWARE THAT YOU WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
 
Non-Transferability of Units:

For the reasons discussed below (see, SECURITIES BEING OFFERED at Restriction on Transferability of Units, below) and in accordance with the terms and provisions set forth in the accompanying Operating Agreement (see, OPERATING AGREEMENT – Article 8.1), no Member shall be authorized to transfer, sell or assign all or any portion of its Units or any interests or rights therein.  These restrictions mean that the Investors may never be able to sell or transfer their Units and that those Units may therefore have no resale value.  Accordingly, the prospective Investors should be prepared to hold onto their Units indefinitely.
 
Opening Night Enterprises – Offering Circular9 
 

No Assurance of Adequate Capitalization:

This Offering is not being undertaken on either a so-called “all or nothing” or “mini-maxi” basis as is typical for start-up ventures.  All or nothing and mini-maxi offering structures ensure that either: (1) all of the projected requisite funds (in the case of an all or nothing offering); or (2) at least the minimum amount of funds required to operate the business (in the case of a mini-maxi offering) – will be secured so as to enable the issuing entity to ensure it can undertake its proposed business operations.  In an all or nothing or mini-maxi offering structure, if those requisite levels of funds are not obtained, then all of the investors’ investments must be returned and cannot be used by the issuing entity.   Again, this ensures that the investors’ money cannot be used unless the issuing entity has secured enough money to ensure that it can undertake the business purposes pursuant to its stated plans.  HOWEVER, THIS OFFERING IS NOT STRUCTURED AS EITHER AN ‘ALL OR NOTHING’ OR ‘MINI-MAXI’ OFFERING AND THEREFORE, AN INVESTOR’S INVESTMENT COULD POTENTIALLY BE ACCEPTED AND USED BY THE COMPANY EVEN IF THE COMPANY NEVER ACTUALLY SECURES THE NECESSARY FUNDS TO ENABLE IT TO PERFORM ITS MINIMAL BUSINESS OPERATIONS AS CONTEMPLATED HEREIN.  IF SUCH AN EVENT OCCURS, THE INVESTOR WILL HAVE LOST ALL OF THEIR COMMITMENT AND THE COMPANY’S BUSINESS WILL NEVER EVEN HAVE BEEN CAPITALIZED TO THE EXTENT NECESSARY TO ALLOW IT TO PROPERLY UNDERTAKE ITS BUSINESS OPERATIONS AS CONTEMPLATED HEREIN.

No Assurance of Recovery of Capital or Payment of Profits:

The Company wishes to emphasize that no one should consider the purchase of the Units being offered without recognizing the highly speculative nature of and the risks of loss involved in the purchase of an Interest in an enterprise devoted to one or more particular television and/or theatrical production(s). Prospective Investors should only invest in the Company if they do not require liquidity in their investment and are prepared to lose their entire investment.

Uncertainty of Critical or Public Acceptance Minimized:

Considerable competition exists among producers in the acquisition of theatrical properties. To some extent, the success or failure of the theatrical venture is dependent upon the ability of the producer to select talent and plays that will appeal to the theater-going public and to produce such work in a desirable manner and in a desirable theater. Further, the Managers hope that the voting process at the end of the Series will allow them to gain insight into the commercial benefits and challenges of each musical which can subsequently be put to use during the development of the given Musical(s) on stage; an insight that competing producers will not have the ability to harness, however, if the Managers are unsuccessful in achieving such accurate insights, then the projected returns from the exhibition and other exploitations of one or more of the Musicals could prove far less than anticipated and may not ultimately even cover the costs of putting on the productions themselves.

 The Company has No Operating History:

The Company has recently been formed (on January 15, 2017). As such there is no operating history or financial statements on which an investment decision can be based. The likelihood of the success or failure of the Company must be considered in light of the risks, costs, difficulties and delays frequently encountered in establishing a new enterprise, many of which are beyond the Company’s control. The Company is subject to all of the risks inherent in the creation of a new enterprise and the competitive environment in which it will operate. There can be no assurance that the Company will prove to be commercially successful or profitable, however, the Managers believe that the prior television exposure via the Series will afford the Musicals a unique following and will allow the Managers and their partners to utilize marketing, advertising and publicity channels not available to other stage properties.  Furthermore, as a newly organized entity with minimal assets, the Company is subject not only to the risks inherent in the entertainment industry, but also those inherent in the establishment and operation of a new business venture, including the absence of an operating history.

New Business Model:

The Company’s proposed business model, while premised on existing business models that have long thrived in various segments of the entertainment industry, such as unscripted or reality television programming, unscripted competition series’ and live stage performance musical productions, however, have never been combined into a single business model such as that proposed by the Company.  This proposed new business model may fail for any of the reasons that either television programs fail or for any of the reasons that musical productions fail, or it may fail for any number of other reasons unique to the yet-untested nature of the Company’s proposed combined business venture.

Limited Business Purpose of Company:

The sole business of the Company will be the production of the Series and the production and presentation of each Musical and the exploitation of the rights therein. In any venture the risk of loss is especially high in contrast with the prospects of any profit, however, television series development and production and musical production development each exhibit abnormally high levels of failure due to the limited number of potential distribution outlets available to each medium, and the even fewer number of profitable distribution outlets available as each project’s costs increase and each of these individual productions is likely to be expensive in its own right.
 
Opening Night Enterprises – Offering Circular10 
 

Single Purpose Entities:

The customary method of financing legitimate theater business ventures is through the organization of a single purpose vehicle (e.g. a limited liability company).  When one of the Musicals is produced on stage, a specific limited liability company will be organized as a single purpose vehicle for that Musical for the purpose of managing and exploiting that Musical’s underlying rights and separating its liabilities from those of the Company and the other Musicals. The Company will be the sole managing member and owner of each such single purpose vehicle as to ensure that the Members of the Company shall have the sole and exclusive entitlement to the net revenues (that is, revenues subject to deduction for actual running and other costs) of each single purpose entity.  The capitalization hereunder is expected to cover the capitalization costs of each Musical’s production budget.

No Resale Market or Disposition of Units:

While securities, such as the Units, that are sold under Regulation A are not “restricted” securities, various resale issues are inherent with such securities and presently there is no market for the resale of the Units, nor do the Managers anticipate undertaking any of the necessary steps required to enable resale of the Units, therefore, no such resale market is expected to develop. Although an Investor has the right to assign his/her interest in the profits of the Company with the consent of the Managers, no assignee of an Investor has the right to become a substituted Investor in place of his/her assignor, unless the Managers consent thereto in writing, which they are not obligated to do.  For the foregoing reasons it is unlikely that the Investors will ever be able to sell the Units they purchase.

No Assurance:

There is no assurance that the investment Commitments made in under this Offering will be recouped or that the Members will realize a profit as a result of their investment in the Company under this Offering.

Subsidiary Rights Income is Uncertain:

If one or more Musicals are presented on Broadway for a certain number of performances within a specified period, it is expected that the contracts with the authors of the Musicals will allow for the prospective Investors hereunder to be entitled to a share in the proceeds from the exploitation of subsidiary rights in the Musicals, namely exploitations of the Musical following the expiration of the Company’s rights therein. If the Company is entitled to share in said subsidiary rights income, it is impossible to determine the extent to which such income will amount.

No Distribution Currently in Place:

There is no distribution currently in place for either the Series or for any of the Musicals.  In order for the Series to come to fruition and act as either a revenue stream or a marketing tool to promote awareness and build a fan-base for the Musicals, each as contemplated herein, the Series must first find a distributor willing to purchase its rights and distribute it.  Nor is there any way of assuring or determining in advance the size of the distributor’s reach, nature of the network or per episode or other production fee or license price that the Company will be able to achieve, if any, with respect to the Series.  There is also no exhibition or other agreement currently in place with any theater company or actor(s) for the Musicals, nor is there any guarantee that those performances will ever actually be able to find such exhibitors on Broadway or elsewhere as anticipated herein.

Potential Conflict of Interest:

The interests of the Managers may be in conflict with the interests of the Investors because one or more Managers hereunder may serve or be engaged as a producer of the Series or the live exploitation of one or more Musicals hereunder, and, as such, may be entitled to a customary, arms-length, standard producer payment.  It may be in the interest of such producers to continue to present a Musical on stage, whereas it may be in the interest of the Members to cease operations so that any unused capital may be returned.

The obligations of the Managers to the Company are not exclusive. The Managers and their principals are involved in other theatrical and entertainment-related projects as well as in other business activities. Liabilities incurred and commitments undertaken by the Managers with respect to projects other than the Company’s business could adversely affect their ability to manage the Company. Moreover, the Managers are expected to engage in the production of other theatrical productions for their own account, and for others, during the term of the Company. Such activities could be seen as competing with the Company and resulting in potential conflicts of interest.

In addition, the Managers may now or hereafter engage in businesses which provide goods and/or services to the Company which otherwise would be provided by unrelated third parties. By becoming an investor in the Company, Investors consent to such transactions as long as they are on terms substantially as favorable to the Company as would have been provided by unrelated third parties.
 
Opening Night Enterprises – Offering Circular11 
 

Contributions to the Capital of the Limited Liability Company:

Any monies expended by the Managers prior to the completion of the Offering of the Company for items which, if incurred by the Company would have constituted production expenses, weekly operating expenses or other expenses relating to any production of each Musical will be considered equivalent to a cash contribution to the capital of the Company if the Managers elect not to have such monies reimbursed to them. The Managers have not made any such election and, consequently, it cannot be known whether such expenditures will, in fact, be cash contributions to the capital of the Company. In any event, none of such monies will be repaid to the Managers prior to the receipt by the Company of the minimum capitalization unless authorized to be used prior to the minimum capitalization of the Company. 

Managers Control:

The Managers have complete control over the management of the Company which includes the production of the Series and each Musical and the exploitation of all of the Company’s rights. Therefore, Investors will not participate in the decision making process as far as management of the Company is concerned and may not hold the Managers liable for any action taken upon the advice of professionals or which do not constitute gross negligence or intentional misconduct.  No assurances can be provided that the Company’s management will perform adequately or that the Company’s operations will prove successful under the guidance of the Managers.

Abandonment or Close of Production:
 

The Managers have the right to abandon production of the Series and/or one or more Musicals at any time, for any reason whatsoever. In the case of such abandonment, the Investors must be prepared for a loss.  The Investors may also recoup and/or make a profit for one or more production(s) even if one or more other production(s) are cancelled.  Losses may be decreased if abandonment of a given production occurs following the vesting of the Company’s rights to participate in subsidiary revenue, or if prior merchandising or album income previously had been earned.

 
Managers’ Right to Obtain and Make Loans:

The Managers may obtain from third parties (or any Manager may make) loans to be repaid before return of the Investors’ capital Commitments without affecting the respective interests of the Investors hereunder. If the Managers elect to borrow additional sums or advance funds in the Company’s name, such loans or advances may result in considerable delay in the repayment of Investors’ capital Commitments to the Company or in a complete loss to Investors if the gross receipts are not sufficient to meet operating expenses, repay loans and/or advances and the capital Commitments of the Investors.

Production of Musical at Minimum Capitalization Reduces Chance of Success:

The Company may decide to discontinue the Offering upon raising approximately $20,000,000. This amount represents the Managers’ estimate of the minimum amount required to produce the Series and each Musical for the Series.  Capitalizing the Company at such a figure may result in either (a) less funds with which to meet contingencies or on which to draw for increased advertising or other expenditures that might be required to increase the likelihood of each Musical’s success beyond the Series, and/or (b) a higher likelihood that there may be fewer productions, e.g., that there may be one or two live Musical stage exploitations, rather than three or six.
 

Risk of Non-Contingent Best Efforts Nature of Offering and Potential for Use of Commitment Prior to Minimum Capitalization of the Company:

 

This Offering of the Company’s Units is being made on a “non-contingent” “best efforts” basis, which means there is no guarantee that any minimum amount will be sold.  Accordingly, there is no guarantee that the Company will ultimately secure sums necessary to enable it to carry out its anticipated business plan(s) as described herein.  By investing in this Offering, the Investors agree to the use of their capital Commitments by the Company at any time upon Closing, which may include a Closing that occurs prior to securing any minimum capitalization of the Company, if this happens, Investors may lose all of their Commitment despite the fact that the Company failed to raise enough financing to properly undertake or complete either the Series or any live stage productions. 

 
Opening Night Enterprises – Offering Circular12 
 
 
No Contracts Have Been Entered Into:

No written contracts have been entered into by the Company, and the Company expects to use the funds raised hereunder so as to transact with the necessary parties, obtain rights, and enter into the agreements necessary to effectuate the Company’s purposes hereunder.  Accordingly, all of the Company’s plans and projections as set forth herein remain entirely speculative, based on the Managers’ own working knowledge of the industries in which they have or have not operated and based on third party projections that the Managers may have solicited from others in the relevant fields.  There is no guarantee that the tasks anticipated by the Managers for the operation of the Company’s proposed business will, in fact, cover the actual costs of operation, nor is there any guarantee that the money the Company hereby seeks to raise will not be more than what the Company’s proposed business actually needs in order to operate.  In the event that the Company ends up with more liquid capital than it requires to operate its proposed businesses, then it is likely it will use said capital reserves to increase its bargaining position with potential network and other distributors of the Series and/or put some or all of the excess funds towards promotion and marketing of the Series and/or Musicals or such other tasks as are reasonably calculated to improve the performance or chances of revenues from the exploitation of those properties.
 
 
Opening Night Enterprises – Offering Circular13 
 
 

Although not signed at this time, the escrow agreement with Prime Trust, LLC is attached as an Exhibit hereto and will be executed between the parties thereto upon the SEC’s qualification of this offering. The execution of the escrow agreement in advance of qualification will subject the issuer to expenses which it shall be able to incur once the offering is certain to launch.

 
Opening Night Enterprises – Offering Circular14 
 
 
No Withdrawal from Company:

Prospective Investors should note that once their investment has been approved by the Managers and they become a Member of the Company, they cannot withdraw from the Company and demand the return of their Commitment.  There will be no interest accrued, paid or available for withdrawal on Commitments.  The Commitments hereunder may not be used as security for any loan, debt or other obligation.

Offering Price of the Units Arbitrarily Determined:

The Offering price of $500 per Unit has been arbitrarily determined by the Company based upon such factors as the proceeds to be raised by this Offering, the lack of a public market for the Company interests and the capital requirements of the Company. There is no relationship whatsoever between such offering price and the assets or book value of the Company, or any other recognized criteria of value.

Long Term Project:

The development and production of even a single new unscripted television series typically involves the passage of significant amount of time, as does the development and production of even a single live stage musical performance.  As the Company’s business contemplates the production of at least one television program, along with the production of three to six different live stage performances, it goes without saying that it may necessitate the passage of an even more significant amount of time than it otherwise would for even one such production.  One or more rounds of Investor financing may continue for one or several years, attempts to sell the Series to a network may last for months or years or more, if they are ultimately even successful at all, production of the Series may extend for three months to more than a year, and it may be even longer still before the show even makes it to air, after which, the Musicals, the players originally involved therewith or other elements thereof, may no longer even be available or in existence to perform the Musicals live.

Commercial Success Not Certain:

Either the Series, one or more of the Musicals or all of them may ultimately be deemed commercially unacceptable to networks and other major television distributors or to Broadway and other major commercial exhibitors of live theater productions, respectively.   As a result, the Series and/or the Musicals may never find homes, or they may only find homes with distributors or exhibitors of low bandwidth or in unfavorable markets, which greatly mitigate the Series’ or the Musicals’ abilities to recoup their costs, let alone generate any profits. The ultimate profitability of any television series or live musical production depends upon its audience appeal in relation to the cost of its respective production and distribution/exhibition.  The audience appeal of a given television series or live stage production depends, among other things, on unpredictable critical reviews and changing public tastes and such appeal cannot be anticipated with certainty.

The Company Faces Significant Competition:

Competition in both the television and the live stage production industries is notoriously fierce and it can be driven as much by names of those involved and by the personal or societal tastes of audiences at any given time, as it can by the actual quality of the programs or productions themselves.  There is no guarantee that the Series will find a distributor, or if it does, that the Series will find its audience and be able to remain on air long enough to leverage the Series as a marketing tool for the Musicals as anticipated herein.  Nor is it certain whether the Musicals will be able to find audiences or critical acclaim necessary to continue long enough to break even, let alone become profitable.  The Series and/or the Musicals may each fall victim to stronger or more well received competing television and live stage productions.

Potential Legal Challenges:

The entertainment industry is a notoriously litigious one, in which ownership and attribution claims are raised all the time with respect to original ideas.  It would not be unheard of for one or more third parties to claim that they inspired or helped come up with the concepts or stories or characters for one or more of the Musicals or for the Series itself and thereafter threaten to or actually bring suit against the Company or one or more of the Managers on the alleged basis that those persons or entities are due some measure of contribution or redress from the profits of the Company.  In such an instance, even when the claims amount to nothing, they must still be litigated and/or settled before a distributor will allow the Series to be aired, or before the producers or theater will allow the live production to take the stage.

Federal Income Tax Consequences:

The Company has not obtained and will not seek to obtain a ruling from the Internal Revenue Service or an opinion of counsel as to its status as a partnership for federal income tax purposes or as to any other issue.  Prospective Investors should consult their own tax advisers as to the tax consequences of investment in the Company.  The IRS may, as to certain matters discussed in this offering circular, interpret income tax statutes and regulations in a manner that is detrimental to the Company and/or one or more of its Members.  Should this happen, the Member may have to litigate the matter at considerable expense or may have to submit to an audit of such Member’s individual income tax return that might cause other tax consequences not associated with the Company.
  
Opening Night Enterprises – Offering Circular15 
 
  

Risks Relating to Arbitration and Exclusive Forum Provisions in Subscription Agreement and Operating Agreement:

 

Investors in this Offering will be bound by both the Offering’s Subscription Agreement (see, Exhibit 1A-4 to this Offering Circular) and the Company’s Operating Agreement (see, Exhibit 1A-2B to this Offering Circular). Under both Section 10 of the Subscription Agreement and Article 11.5 of the Operating Agreement, Investors agree that disputes arising under or relating to the respective agreements will be resolved by binding arbitration pursuant to the rules and under the jurisdiction of the American Arbitration Association (“AAA”) and its commercial rules, the rules of the Federal Arbitration Act and the laws of the State of California and that all such arbitrations shall take place in the State of California in Los Angeles County. However, neither of the analogous arbitration provisions set forth in the Subscription Agreement and the Operating Agreement, nor the corresponding exclusive forum provisions, apply to claims made under the federal securities laws of the United States, and said arbitration and exclusive forum provisions do not impact the rights of the Investors to bring claims under said federal securities laws or the rules and regulations promulgated thereunder. Additionally, despite Investors agreeing to the provisions in the Subscription Agreement and in the Operating Agreement, Investors will not be deemed to have waived Company’s compliance with federal securities laws and the rules and regulations promulgated thereunder. For the reasons stated below, either of the Operating Agreement’s or the Subscription Agreement’s exclusive forum or arbitration provisions could have the effect of limiting and discouraging legal actions and proceedings being brought against the Company.

 

As a result of the foregoing, if an adversarial proceeding not involving the federal securities laws is brought against the Company under either the Subscription Agreement or the Operating Agreement, it may be heard only by an arbitrator or arbitrators, which would be conducted according to different procedures than a normal jury or non-jury trial and may result in different outcomes than a jury trial or a trial by judge would have had, including results that could be less favorable to the plaintiff(s) in such an action. Additionally, while arbitrations are generally believed to result in faster and less expensive outcomes than jury and judge trials held on the same matters, that is not necessarily always the case, and it is possible for any action submitted to arbitration to take longer and/or cost the participants more than a jury or judge trial on the same matters.

 

In addition to the potential drawbacks for plaintiffs of mandatory arbitration under the Subscription Agreement and/or Operating Agreement, both such Agreements also contain analogous forum selection provisions, which stipulate that any arbitrations proceeding thereunder must be held in Los Angeles County in the State of California. Such forum selection provisions may have the effect of limiting an Investor’s ability to bring legal action against the Company and could limit an Investor’s ability to obtain a favorable forum for disputes. These geographic provisions may have the effect of making the prospect of legal action against the Company by an Investor too expensive or burdensome in the event that the Investor has to travel out to Los Angeles, California in order to give or obtain testimony, present or gather evidence, select and pay a local lawyer or other advocate to represent the Investor’s interests in the arbitration, or otherwise. There is also the possibility that either the exclusive forum provisions or the arbitration provisions may discourage Unitholder lawsuits, or limit Unitholders’ abilities to bring an action in a forum that it finds favorable for disputes against the Company and its officers and directors. Alternatively, if either the forum selection or arbitration provisions were challenged and found to be inapplicable to, or unenforceable with respect to, one or more of the specified types of actions or proceedings, the Company could ultimately incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect the Company’s business and financial condition.

  
Opening Night Enterprises – Offering Circular16 
 
 
Investment in Initial Season Only:

The Company is only being set up to manage the business operations of the first season of the Series and its accompanying Musicals and is not intended to have any economic or other interest in the subsequent seasons of the Series, should they eventuate, other than those limited rights of first refusal to invest in similar offerings of equity in future entities formed to finance future seasons of the Series, if any.  Furthermore, the rights of first refusal to invest in any future seasons and companies are subject to various qualifications as discussed in greater detail herein below (see, SECURITIES BEING OFFERED at Rights of First Refusal/Anti-Dilution Rights).  Therefore, regardless of the performance of season 1 of the Series, in the event that subsequent seasons of the Series go on to be hits, there is no guarantee that the Investors will participate in any such financial or other success unless they invest separately into those subsequent seasons as well.

  
Contingencies Related to Inability to Finance All Six Live Musical Productions:

While this Offering contemplates raising money to finance the subsequent (following airing of the Series) production of live versions of each of the six Musicals, in the event that insufficient funds are raised to enable the Company to self-finance each of the six Musicals, then the Company’s Managers will assess the potential value of each live production and determine which it feels stand the greatest chance of being successful and it will attempt to finance those that it feels will be the most valuable.  However, the Company will only directly profit from and own the single purpose entities (i.e. subsidiary companies) for those live productions that it finances directly and will receive either no or partial receipts from any such Musical that is subsequently produced without Company financing.  The exact details of any such partial or non-investment into subsequent live Musical productions will be subject to available funds, the good faith decisions of the Managers and terms available from subsequent primary financiers of such live Musical productions, if any.  In short, depending on the amount of money actually raised by this Offering, the Company may only ultimately participate in one or a few of the six Musicals or it may participate in none of them, in which case, the Company’s goal of using the Series as a platform to publicize and build value for the individual Musicals would fail and the Company would be forced to look to sales and/or licenses of the Series itself and accompanying merchandise and other ancillary revenue streams for recoupment of the Investors’ investments.
 
Opening Night Enterprises – Offering Circular17 
 
 
DILUTION


“Dilution” as used herein refers to a reduction in value, control or earnings of the Units and here specifically refers to a reduction in value, control or earnings of the Units that are and/or would-be held by the Investor Members.

Initial Immediate Dilution:

Early stage companies, such as the Company, typically grant shares or Units to their founding owners and early-stage employees at very low cost or for no monetary value in exchange for those persons’ sweat equity and other contributions to the Company.  When these new companies (such as this Company) seek outside investment from investors, such as you, those initial capital investors typically pay more in monetary Commitments for their shares/Units than the initial sweat equity founders and employees, which means that the cash value of the shares/Units is automatically diluted.

Potential for Future Dilution:

This offering’s Investor Member return structure is based on a scheme that is common in both the theater and film industries, and which divides the distributable returns of the Company into two separate post-Recoupment (see, SECURITIES BEING OFFERED at Distributions, below) pools of Company Net Profits (see, SECURITIES BEING OFFERED at Distributions, below), namely the Investor Member pool and the Manager pool.  These Net Profit pools are split 50/50 between the Manager (and anyone paid out of the Manager’s pool) on the one hand, and the Investor Members on the other hand.  Accordingly, if more Investor Members are ultimately added or more Investor Member Units are subsequently issued and sold, then the initial Investor Members’ shares of the Company’s Net Profits will become diluted.  This type of dilution may inherit in a situation where the Company ultimately ended up needing to raise additional outside capital in order to continue the Company’s operations insomuch as it meets those needs by selling additional, newly minted, Units.

Nature of Units and Interests Held by Non-Investor Members:

All non-Investor Members shall receive their Units or other income participation interests in the Company’s profits from the Manager’s pool of Units/participation interests.  While some of these founding Members and/or initial employees, officers, directors or affiliates of the Company have and may subsequently contribute cash in the form of loans and/or via paying for certain necessary start-up costs of the Company and/or this Offering, these non-Investor Members are receiving their Units or other profit participation interests in the Company in exchange for their sweat equity contributions to the Company and its business as opposed to receiving them in exchange for monetary Commitments to the Company as the Investor Members are.

Because the Company is a brand new business, which has absorbed its founding Members’ out-of-pocket capital contributions, but which has yet to start its business operations, create any original intellectual property or other assets or earn any profits, the Company’s current valuation may only be construed from arbitrarily-assigned valuations of its current potential, and barring any such professional valuation, the Company’s current per-Unit value (i.e. share value) can be said to be $0.  As a result of the foregoing circumstances, the non-Investor Members and profit participants of the Company should be considered to have received their respective Units or other income participation interests in exchange for a zero-Dollar contribution.  The current offering is selling Investor Member Units for a price of $500 per Unit.
 
Despite the foregoing difference in monetary values paid by Investor and non-Investor Members for their respective Units/profit participations, the structure of the profit participation waterfall for the Company (see, SECURITIES BEING OFFERED at Distributions, below) effectively obviates any actual resulting dilution to the Investor Members’ Units.  This is because: (a) the pool of Company profits set-aside for distributions to Investor and Non-Investor Members alike is split into two equal pools; (b) the Company will not be paying the non-Investor Member Unit and profit-interest holders prior to or during Recoupment (i.e. at the same time or prior to initial payments from the Company to the Investor Members); and (c) all non-Investor Members’ Units and/or other Company profit participations come solely out of the Manager’s pool of Company profits, which always remains at 50% of the total Net Profits.  Accordingly, the non-Investor Members’ Units/Interests in the Company’s profits will not be diluted or otherwise affected by an increase in the number of non-Investor Members who hold Units or other income interests in the Company, because the non-Investor Members were always to take their collective profits from the same 50% pool of Net Profits, regardless of how many of them there were to be.

Anti-Dilution Provisions of the Units:

For a full discussion on this, see below, SECURITIES BEING OFFERED at ‘Rights of First Refusal/Anti-Dilution Rights’.
 
Opening Night Enterprises – Offering Circular18 
 
 

PLAN OF DISTRIBUTION AND SELLING TO SECURITY HOLDERS

The Company is not making use of any underwriter or finders. We have engaged JumpStart Securities, LLC (“JS” or “JumpStart”), a FINRA registered broker-dealer firm, for administrative and technology services, but not for underwriting or placement agent services. Specifically, JS relies in part on certain offering administrative and technological infrastructures and services provided by FundAmerica, including but not limited to secured transactional programs and platforms (i.e. technology), escrow account set-up and management services and disbursement services and platforms integrated into/with their technology and platforms, Bad Actor checks and the like associated with management and administration of the Offering.  These administrative fees and overhead associated with these services are reimbursable on an ongoing basis from the Offering proceeds and otherwise by the Managers who may then draw down reimbursements from the Offering proceeds themselves. See ‘Proposed JumpStart Selling Agreement’ below for further details.

 
 
Distribution of Securities:

This Offering is being undertaken in connection with the licensed broker-dealer JS and JS is, in turn supported by FundAmerica, so the distribution of securities under this Offering shall be handled by JS operating through FundAmerica’s technological platforms and model as follows:

 

Investors will review the Offering’s terms of investment via a portal on a page on the Company’s website which will have some aspect dedicated to this Offering.  There, the Investors will be able to access (either directly or via URL links to the SEC or other such public websites) information about the Company and the Offering.  At that portal, potential Investors will also be able to subscribe for Units, execute the accompanying Subscription Agreement online and make the corresponding Commitments of capital.  Once the subscriptions and corresponding Commitments have been submitted via the website, they cannot be retracted or withdrawn by the potential Investor.  At that point, JS shall begin the necessary subscriber due diligence required to qualify an individual or entity investor under Regulation A, Tier II offerings.  If the subscriber fails to meet the necessary standards, then their Commitments shall be returned and their subscriptions voided.  If, however, the subscriber is qualified to invest, then their subscriptions (including their Commitments) shall sit in the escrow account administered by Prime Trust until such time as the Company directs JS to close on the individual subscriber’s funds (either alone or, more likely, as part of a larger group of accepted subscriptions) and it is at that point of closing that the individual subscriber’s Subscription Agreement will be accepted, their corresponding Units issued in the form of their executed Subscription Agreements being returned to them, and at that point, the service fees and any FundAmerica offering costs will be deducted off-the-top of the Commitments before the balance of said Commitments are remitted to the Company’s account(s).

 

Suitability:

 

The Investor agrees to provide any additional documentation the Company may reasonably request, including documentation as may be required by Company to form a reasonable basis that the Investor qualifies as an “accredited investor” as that term is defined in Rule 501 under Regulation D promulgated under the Act, or otherwise as a “qualified purchaser” as that term is defined in Regulation A promulgated under the Act, or as may be required by the securities administrators or regulators of any state, to confirm that the Investor meets any applicable minimum financial suitability standards and has satisfied any applicable maximum investment limits.

 

Disposition of the Units and the Offering:
 

The Company is a new entity and the only owners of its Units had been the founding Members, who therefore owned 100% of the Company.  All of the Units offered hereunder are newly issued, in the sense that they have never been offered for sale to any other non-founding Member of the Company.  This is the Company’s first issuance of Units or potential ownership Interests of any sort to any outside third parties.  To the extent that the Managers of the Company are the ones that are effectively selling their Interests in the Company, as they are presently the owners of 100% of the Company’s Interests, all Units for sale in this Offering are being sold solely by the Managers, which will receive no additional consideration in exchange for their selling efforts. One of the Managers consists of an entity, Charles Jones II Enterprises, LLC, which is wholly owned and operated by Charles Jones II and which maintains its Company Interests on his individual behalf.


The Company plans on using one or more self-managed websites and/or social media outlets to aid in the sale of the Units.  The Company presently anticipates making use of yet-to-be-created pages on its Facebook site to drive awareness of the Offering and on which it will provide access to this Offering Circular and any other necessary disclosure materials associated with the Offering.  The Company will establish a site that allows qualified investors to subscribe through a dedicated website or page.

 
Opening Night Enterprises – Offering Circular19 
 
 

All subscribers will be instructed by the Company or its agents to transfer funds by wire or ACH transfer directly to the escrow account established for this Offering or deliver checks made payable to “Prime Trust, as Escrow Agent to Investors in the Opening Night Enterprises Securities Offering” which the escrow agent shall deposit into such escrow account and release to the Company at each closing. The Company may terminate the Offering at any time for any reason at its sole discretion. (Although not signed at this time, the escrow agreement with Prime Trust, LLC is attached as an Exhibit hereto and will be executed between the parties thereto upon the SEC’s qualification of this offering. The execution of the escrow agreement in advance of qualification will subject the issuer to expenses which it shall be able to incur once the offering is certain to launch.)

 

We intend to engage JumpStart Securities, LLC, a broker-dealer registered with the SEC and a member of FINRA, to perform the following administrative and technology related functions in connection with this offering, but not for underwriting or placement agent services. Please see the “JumpStart Selling Agreement” for more information.

 

Opening Night Enterprises – Offering Circular20 
 

 

Proposed JumpStart Selling Agreement

 

  1. Accept investor data from the company, generally via the FundAmerica software system, but also via other means as may be established by mutual agreement;

 

  2. Review and process information from potential investors, including but not limited to running reasonable background checks for anti-money laundering ("AML"), IRS tax fraud identification and USA PATRIOT Act purposes, and gather and review responses to customer identification information;

 

  3. Review subscription agreements received from prospective investors to confirm they are complete;

 

  4. Advise the company as to permitted investment limits for investors pursuant to Regulation A, Tier 2;

 

  5. Contact the company and/or the company's agents, if needed, to gather additional information or clarification from prospective investors;

 

  6. Provide the company with prompt notice about inconsistent, incorrect or otherwise flagged (e.g. for underage or AML reasons) subscriptions;

 

  7. Serve as registered agent where required for state blue sky requirements, provided that in no circumstance will JumpStart solicit a securities transaction, recommend the company’s securities or provide investment advice to any prospective investor;

 

  8. Transmit data to the company’s transfer agent in the form of book-entry data for maintaining the company’s responsibilities for managing investors (investor relationship management, aka “IRM”) and record keeping;

 

  9. Keep investor details and data confidential and not disclose to any third party except as required by regulators, by law or in our performance under this Agreement (e.g. as needed for AML); and

 

  10. Comply with any required FINRA filings including filings required under Rule 5110 for the offering.

 

The Company shall pay Jumpstart a facilitation fee equivalent to 1.95% of capital raised. JumpStart Securities, LLC is not participating as an underwriter and under no circumstance will it solicit any investment in the company, recommend the Company’s securities or provide investment advice to any prospective investor, or make any securities recommendations to investors. JumpStart Securities, LLC is not distributing any securities offering prospectuses or making any oral representations concerning the securities offering prospectus or the securities offering. Based upon JumpStart Securities, LLC’s anticipated limited role in this Offering, it has not and will not conduct extensive due diligence of this Offering and no Investor should rely on JumpStart’s involvement in this Offering as any basis for a belief that it has done extensive due diligence. JumpStart does not expressly or impliedly affirm the completeness or accuracy of the Offering Circular presented to investors by the Company. All inquiries regarding this Offering should be made directly to the Company.

 

Any subscription checks should be sent to Prime Trust, LLC, 10890 S. Eastern Avenue, Suite 114, Henderson, NV 89052, and be made payable to “Prime Trust, LLC as Escrow Agent for Investors in Opening Night Enterprises Securities Offering.” If a subscription is rejected, funds will be returned to subscribers within ten days of such rejection without deduction or interest. Upon acceptance by us of a subscription, a confirmation of such acceptance will be sent to the subscriber by the company. Prime Trust, LLC has not investigated the desirability or advisability of investment in the Units nor approved, endorsed or passed upon the merits of purchasing the Units.

 

This Offering of the Company’s Units is being made on a “non-contingent” “best efforts” basis, which means there is no guarantee that any minimum amount will be sold.  Accordingly, there is no guarantee that the Company will ultimately secure sums necessary to enable it to carry out its anticipated business plan(s) as described herein.  The Company may undertake one or more closings on a rolling basis, where, after each such closing, funds tendered by potential investors are disbursed to the Company and the corresponding Units are delegated to the Investors whose subscriptions were accepted.  However, because the Company anticipates needing to immediately deploy certain funds secured through closings of the Offering in order to pay for up-front expenses such as ongoing offering expenses, the Company will likely utilize certain funds to pay for those initial and ongoing expenses and will not be able to guarantee reimbursement of said finances to the Investors.  Among the initial expenses that the Company anticipates incurring and needing to pay for out of the Commitments are Offering expenses, including associated legal, advertising, printing, website construction and maintenance, marketing, as well as other non-offering related initial expenses such as the costs associated with musical production development for one or more of the three prospective musicals and sizzle reel production, travel and other expenses associated with distributor solicitation for the Program as well as anticipated investor roadshow expenses associated with traveling two of the Company’s Managers to various major U.S. cities along with numerous members of the Musicals’ troupes and their writers and/or directors in order to stage partial performances and/or set-pieces and songs from the Musicals for audiences of potential Investors.

 
Opening Night Enterprises – Offering Circular21 
 
 

As a result of the aforementioned conditions of the Offering and the Company’s business, the Company is not offering Investors any arrangement, as part of the Offering terms, to return part or all of the Investors’ funds in the event that the Company fails to secure any given Offering minimum amount.  The Company has no plans to offer preferred or other classes of Units for sale at any point in the future.

 

This Offering is not being made on either an “all-or-none basis” as described in Rule 10b-9(a)(1) (17 CFR 240.10b-9(a)(1)) or on a so-called “part-or-none basis” as contemplated under Rule 10b-9(a)(2) (17 CFR 240.10b-9(a)(2)), nor does the Company make any representations that this Offering is being made on the condition that all or part of the consideration paid by a potential Investor in the Units will be refunded to said potential Investor in the event that some or all of the Units currently offered for sale are not, in fact, sold, as described in Rule 10b-9(a)(2) (17 CFR 240.10b-9(a)(2)).

 
 
Opening Night Enterprises – Offering Circular22 
 

 

Issuer Manager Subscription Cancellation Rights:

 

 

Prior to the termination of the offering the Company retains the right and authority to void subscriptions and return the corresponding Commitments under any circumstance. It is entirely within the discretion of the Managers to do so. This decision may be made, for example, if new information becomes available concerning the Investor and the Commitment, which concerns the Managers and/or JumpStart in relation to Investor identity verification, sources of funds used by Investors, or new information concerning suitability of the investment for the Investor.   Without limitation to the foregoing and strictly for the avoidance of doubt, neither JumpStart, nor FundAmerica, will retain any right to cancel a potential Investor’s subscriptions under the Offering unless the potential Investor fails to meet the necessary Regulation A, Tier II investment requirements (e.g. they qualified as so-called “bad actors”), suitability requirements, or where the Investor fails to meet required verifications and search results pursuant to anti-money laundering requirements. In such cancellations an investors Commitment, in its entirety, will be returned to them promptly upon the decision to reject or otherwise cancel a Commitment. If there are pending Commitments upon the termination of the Offering, those pending Commitments will be rejected and returned in their entirety to the Investors.

 

Arbitration and Exclusive Forum Provisions:

 

Investors in this Offering will be bound by both the Offering’s Subscription Agreement (see, Exhibit 1A-4 to this Offering Circular) and the Company’s Operating Agreement (see, Exhibit 1A-2B to this Offering Circular). Under both Section 10 of the Subscription Agreement and Article 11.5 of the Operating Agreement, Investors agree that disputes arising under or relating to the respective agreements will be resolved by binding arbitration pursuant to the rules and under the jurisdiction of the AAA and its commercial rules, the rules of the Federal Arbitration Act and the laws of the State of California and that all such arbitrations shall take place in the State of California in Los Angeles County. However, neither of the analogous arbitration provisions set forth in the Subscription Agreement and the Operating Agreement, nor the corresponding exclusive forum provisions, apply to claims made under the federal securities laws of the United States, and said arbitration and exclusive forum provisions do not impact the rights of the Investors to bring claims under said federal securities laws or the rules and regulations promulgated thereunder. Additionally, despite Investors agreeing to the provisions in the Subscription Agreement and in the Operating Agreement, Investors will not be deemed to have waived Company’s compliance with federal securities laws and the rules and regulations promulgated thereunder.

 

Opening Night Enterprises – Offering Circular23 
 


USE OF PROCEEDS TO ISSUER *



As set forth in the two tables immediately below, the Company’s current plan anticipates utilizing effectively all of the Offering proceeds to operate its proposed business, namely the production of the Series’ 13 hour-long episodes and the production and presentation of up to as many as six Musicals on various stages throughout the United States, each for a duration of 12 weeks (96 runs each).  However, as discussed elsewhere herein, depending on the actual funds raised via the Offering, the Company is prepared to produce less than the total six Musicals for live exhibition if need be.  Additionally, as indicated in the second table below in this section, the Company’s initial projections have anticipated a uniform price for production of each of the six Musicals, which the Company realizes is highly unlikely and will depend largely on the specific nature of the stage that each Musical is initially produced for.  By way of example, if one or more of the Musicals ultimately plays on a Broadway stage, that production will likely be far more expensive than that of a Musical that plays on a regional stage, the same is true of Musicals exhibiting on regional and other like stages of vastly different size and standing.

TV Production Budget Worksheet
Name of Program
OPENING NIGHT – TELEVISION SERIES
Number of TV Episodes & duration
PILOT AND THEN 12 EPISODES – 1 HOUR IN LENGTH
Previous Funding
Development
$ 2,500
$ 2,500
Production
$ 2,500
$ 2,500
 
TV DEVELOPMENT / SCRIPT
Concept & Rights (All rights owned by Production Company)
$ 0.00
  
Research – Musical Selection Committee
$ 20,000.00
  
Story / Script / Writers Fees
$ 5,000.00
  
Other (specify) REALITY PROGRAM DEVELOPMENT
$0.00
  
Development Subtotal
  
$25,000.00
 
TV PRODUCTION (PER EPISODE)
Producer Fees (total incl. EP)
$
100,000.00
Director Fees (total)
$
40,000.00
Presenters / Actors / Talent (UNION)
$
145,000.00
Production Staff & Crew (UNION)
$
100,000.00
Studio / Locations
$
100,000.00
Lighting and Sound design and operation
$
75,000.00
Wardrobe / Make-Up / Art Department
$
25,000.00
Travel/Accommodations/Living
$
75,000.00
Production Office / Admin
$
25,000.00
Scenery and Costume Design and Creation
$
75,000.00
Production Subtotal
  
$ 760,000.00
 

*       We have entered into service agreements with JumpStart Securities, LLC, a member of FINRA, to provide subscription and administrative services for the offering. JumpStart Securities, LLC is not an underwriter and will not be paid selling commissions or underwriting fees, but will be paid service fees equal to One and 95/100 Percent (1.95%) of the Units sold in connection with this Offering.

 
Opening Night Enterprises – Offering Circular24 
 
 
TV POST PRODUCTION (PER EPISODE)
Music & Copyright
$
50,000.00
Library Footage & Copyright
$
10,000.00
Film / Tape Stock
$
10,000.00
Picture Post Production
$
20,000.00
Audio Post Production
$
20,000.00
Titles/Graphics
$
10,000.00
Post Production Labor
$
50,000.00
TV Post Production Cont.
Other (specify)
$
  
Post Production Subtotal
  
$ 170,000.00
 
TV MARKETING & ADMINISTRATION
Marketing / Delivery
$
20,000.00
Administration / Overheads
$
50,000.00
Legal
$
10,000.00
Insurance
$
10,000.00
Sundry (e.g. finance, ACC etc.)
$
10,000.00
TV PILOT – 5 City Promotional Concerts w/ Kristin Chenoweth and the
Musicals
$
715,000.00
Marketing/Admin AND Promotional Tour Subtotal Costs
  
$ 815,000.00
 
Total Above The Line (Per Episode)
$ 320,000.00
 
 
Total Below The Line  (Per Episode)
$ 725,000.00
Contingency (Per Episode)
$  100,000.00
Production Company Overhead (Per Episode)
$  100,000.00
 
SUBTOTAL COST PER EPISODE =  $1,245,000.00                                TOTAL FOR 13 EPISODES
$ 16,185,000.00
 
TOTAL TELEVISION PRODUCTION BUDGET (INCLUDING 13 EPISODES, 5 CITY PROMOTIONAL CONCERT TOUR
AND MARKETING AND ADMINISTRATION)
$17,000.000.00
 
Opening Night Enterprises – Offering Circular25 
 
 
OPENING NIGHT - MUSICAL Production Budget Worksheet  (Off Broadway)
These are the cost’s anticipated to ensure ALL six musical’s long term sustainability and to maximize profits.
Name of MUSICAL
ONE OF SIX MUSICALS (EACH MUSICAL ESTIMATED AT SAME COST)
Number of Shows – 12 Weeks, 96 Shows
This Budget Reflects 32 SHOWS – 4 Week Time Period Budget
PRODUCTION DEVELOPMENT
Production Development: (Includes rehearsal expenses, director,
choreographer, costume designer salaries and costs for making costumes,
lighting, sound, scenery & props, musical arrangements and production
development staff.)
ONE TIME
BUDGETARY COST
$650,000.00
MUSICAL’S OPERATIONAL COST FOR 32 SHOWS (4 week)
Producer Fees (total incl. EP)
$
100,000.00
Author, Composer, Lyricist Royalty at 2% gross revenue for each
$
70,000.00
Actors / Talent (UNION)
$
125,000.00
Production Staff & Crew (UNION)
$
150,000.00
Theater Rental
$
150,000.00
Costume Cleaning, Prop Maintenance
$
20,000.00
Wardrobe / Make-Up / Art Department (UNION)
$
60,000.00
Air Travel/Accommodations/Living
$
75,000.00
Orchestra Conductor and Musicians
$
160,000.00
Travel/Load-in of Equipment by Stagehands
$
60,000.00
PRODUCTION SUBTOTAL
  
$ 970,000.00
MUSICAL MARKETING & ADMINISTRATION - 32 SHOWS (4 Week Period)
Marketing/Delivery/Publicist
$
25,000.00
Administration/Overheads
$
90,000.00
Legal & Insurance
$
35,000.00
Box Office & Programs
$
5,000.00
Payroll Taxes
$
50,000.00
Equity Pension, Health Insurance
$
25,000.00
Contingency
$
250,000.00
MARKETING & ADMINISTRATION SUBTOTAL
  
$ 480,000.00
PRE-OPENING AND RUNNING OPERATIONAL
BUDGET TOTAL FOR 4 WEEKS, 32 SHOWS: (NON-
BROADWAY STAGE)
  
$1,450,000.000
MUSICAL PRODUCTION OPERATIONAL COSTS FOR 12 WEEKS, 96 SHOWS =                             
 $4,350,000.000
ONE TIME PRODUCTION DEVELOPMENTAL COSTS (SEE ABOVE)
  
$650,000.000
TOTAL ESTIMATED COSTS FOR ONE OF THE SIX
MUSICAL’S TO ENSURE SUSTAINABILITY AND TO
MAXIMIZE PROFITS.                                          TOTAL
FOR ALL SIX SHOWS = $30,000,000.00
  
$5,000,000.00
 
Opening Night Enterprises – Offering Circular26 
 
 
Potential Payments to Managers from Offering Proceeds:

Although discussed in greater detail in the sections below entitled “COMPENSATION OF MANAGERS AND EXECUTIVE OFFICERS” and in “INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS”, it is noted here that if and when adequate Offering proceed funds become available (estimated at $2 Million) to both operate the business as planned and also pay the Managers for their operation of the Company’s day-to-day business, then Manager Charles Jones II Enterprises, LLC shall become entitled (on behalf of Charles Jones II) to receive a reasonable salary, commensurate with the time actually spent working for the Company and with industry standards and contingent on the total amount of Offering proceeds ultimately received by the Company, in exchange for its services running the day-to-day operations of the Company.

In exchange for their time and services in coordinating and leading the proposed investor roadshow/initial live partial exhibitions of the Musicals to potential investors in various U.S. cities following the success of the initial raise of funds hereunder, Managers Kristen Chenoweth and Regina Dowling will each be entitled to receive sums equal to approximately $100,000 each.

As compensation for their respective services on both the Series and the Musicals, each of the Managers shall be entitled to reasonable compensation in their respective roles as producers and/or talent on each of the Series and one or more of the Musicals.  The specific sums allocable for such services would be in-line with or below industry standards and would be paid from the line-items set-asides listed in the foregoing tables immediately above.

Best Efforts Offering Adjustments:

In the event that less than the full 100,000 Units are sold under this Offering, various aspects of the planned business operations may need to change.  For instance, the initial financing needs are tied to the proposed investor roadshow and the production of the Series, however, if the initial Offering proceeds fall far short of the necessary sums needed to carry out these operations, then adjustments will be made to one or more of those operations.  For instance, if the roadshow is undertaken and does not seem to be providing the anticipated results in terms of new Unit purchases, then it can be cut short and much of the associated expense outlay can be recouped.  Similarly, if the initial financing needs fall short, then the Company can produce a single pilot episode for the Series and use that pilot to shop for co-financing or traditional network-financed TV Series production deals for the Series.  The Managers are also prepared to cut some of the proposed Musical productions from the Series and/or from eventual future live stage production in the event that the desired sum is not raised under the Offering (the Managers have a plan to use 3 rather than the full 6 Musicals if need be).

Potential Use of Proceeds to Discharge Company Debts:

 

To date, one or more of the Managers has personally provided the necessary start-up financing out-of-pocket, including the funds used to set-up the Company and finance the legal and other services provided in association with this Offering.  In the event that at least $2 Million in Offering proceeds is raised, then Managers shall have the right to recoup actual start-up expense outlays without interest up to a ceiling of One Hundred Thousand Dollars U.S. ($100,000.00) upon reasonable proof of payment of such sums to third parties.  Without limiting the foregoing, to date the Managers estimate that they have incurred less than $40,000 in personal expenses associated with this initial Offering and establishment and proposed operations of the Company, however, those costs are not necessarily final yet and they include or may ultimately end up including, among other things, legal fees, state and other administrative filing fees, accounting, printing, advertising, travel, marketing, blue sky or other state-level compliance and other expenses.  Additional such personal expenses of the Managers have been and/or would be used to cover such other start-up expenses as: Legal expenses associated with drafting and negotiating of necessary performer agreements and rights option agreements, Company set-up fees and expenses, broker dealer retainers and the like.  Furthermore, all such expenses to date have been incurred solely by Charles Jones II Enterprises LLC and all such future start-up expenses would also likely be borne by Manager Charles Jones II Enterprises, LLC.  However, the Managers also realize that this Offering may need to be supplemented by further outlays of personal Manager funds in the event that subsequent offerings or rounds need to be undertaken and/or in order to undertake the creation of certain supplemental Offering devices, such as creation and maintenance of one or more websites, social media accounts and the like, which may need to eventuate prior to securing of the Offering’s initial capital raise or closing.

 

The Company reserves the right to alter the use of Offering proceeds as stated herein based on the ongoing needs of the business of the Company, the amount of capital raised and based on any unforeseen circumstances arising subsequent to the closing of this Offering. Any reallocation of the estimated use of proceeds shall be undertaken at the Managers’ sole reasonable discretion in accordance with the perceived best interests of the Company.

 
Opening Night Enterprises – Offering Circular27 
 
 
DESCRIPTION OF BUSINESS
Purpose:

 

The Company is a new business venture that seeks to combine two entertainment industry business formats, namely unscripted/reality television and live musical theater (together, the “entertainment program”), for the purpose of enhancing the market awareness, audience and revenue potential of the latter, while retaining for the Company the greatest possible direct and ancillary revenue stream upsides from each medium.  In effect, the Company seeks to exploit a version of the X-Factor model of artist/brand building and awareness that has been so successful for Sony and Simon Cowell’s Syco Entertainment label.  The Company’s proposed business venture(s) would create a nationally broadcasted competition reality television series, which would pit up to six musical productions against one another in a competition to determine which of the six the professional industry judges felt had the greatest potential to be a future Broadway sensation.  All of the Musicals would be owned and controlled by the Company and the production of each would be paid for by the Company.  Depending on the availability of Company funds, interest of third party theaters, and the Managers’ determinations of potential for immediate commercial success, the Musicals would then (following conclusion of the Series) be produced for a regional or other U.S. theater, with the goal being to get one or more of the Musicals presented on Broadway and others Off-Broadway or otherwise in order to maximize potential revenues from the exhibitions.

 

The Series would derive its own episodic licensing and other fees, which would flow to the Company, but one of the primary objectives of the Series will be to invest the Series’ audience in one or more of the productions and producing teams.  One of the most expensive and valuable elements associated with any entertainment property is marketing and promotion of the property.  A single studio film may spend upwards of U.S. $200 million+ in advertising to promote a potential tentpole film to worldwide audiences.  While live stage musicals do not spend nearly as much in marketing due to the locally restricted nature of the productions and the much more finite potential box office grosses, the methods and costs of marketing are effectively the same across media (e.g. printing, billboard prices and TV ad spots cost the same amount irrespective of the type of media that’s being advertised).  Having a national television program that introduces audiences to various forthcoming live theatrical productions would serve as possibly the most valuable marketing tool ever created for a live stage production.

The Company will seek to derive revenues from both exploitation of the Series as well as from exploitation of the Musicals themselves and all ancillary rights associated therewith and deriving therefrom.  The Company further believes that the typical live stage box offices grosses will have the opportunity to far exceed typical Broadway box office grosses as the masses of tourists who regularly visit New York City and attend Broadway shows each year is excessive and is growing annually alongside ticket prices for those shows.  International market awareness is anticipated to lead to foreign licenses of the Musicals, which will further enhance the Company’s expected returns.

The Series will highlight for millions of viewers the competitive, challenging and dramatic creative process of the teams composing, writing, and mounting the Musicals.  The 13-week, reality competition Series is designed to portray in an entertaining and dramatic manner the struggle of creating an artistically and financially successful musical.
 
To protect the value and allure of each Musical, and to protect the value of said Musicals’ exploitation, no Musical will be seen in its entirety during the Series.  Guided by highly experienced stage production mentors, only those Musicals deemed most entertaining will be performed.  The stories of the writers, composers, designers, actors and other creators of the Musicals and their relationships and the conflicts they have and will continue to encounter as they face the challenges of competition and musical development will offer a plethora of additional storylines for audiences to latch onto and the Company believes they will also strengthen the bonds between the audiences and the Musicals.
 

No Prior Performance by Management Operating an Entertainment Program:

 

The Managers have not operated an entertainment program in the past and have no historical operating results. Accordingly, there is no basis of another entertainment program for investors to compare this entertainment program to, nor is there historical liquidity information to rely upon.

 
Opening Night Enterprises – Offering Circular28 
 
 
SUBSEQUENT PRODUCTIONS
 
Additional Companies:

After a Musical has been presented on a regional, Off-Broadway, Broadway or other U.S. stage, once the initial run for that Musical ends, if the Managers believe that a given Musical has sufficient potential to be produced again, one or more times, either as a tour or a sit down production (each, a “Subsequent Production”), the Managers may, in their sole discretion, form one or more additional limited liability company(s) or similar entity(s) (each, a “Subsequent Company”) to act as single purpose vehicles for the purpose of producing any Subsequent Production(s).  To effectuate this, the Managers, on behalf of the Company, shall license to such Subsequent Company(s) those rights necessary to allow the Subsequent Company to present and otherwise exploit the Musical.  The Managers also may, on behalf of the Company, license rights held by the Company to third party companies the principals of which may not include any Manager of the Company (each a “Licensee Company”) – this scenario would likely inherit where the Company failed to raise, or secure from that Musical’s initial run, the necessary funds to finance production of the Musical.  In addition and in no way meant to limit the above, any Subsequent Company or Licensee Company shall pay to the Company customary and reasonable royalties, license fees and/or other compensation as consideration of the Subsequent Company’s or Licensee Company’s exploitation of rights in and to the Musical licensed to such Subsequent Company or Licensee Company by the Company.

 

If a Subsequent Company is created for one or more of the Musicals, then the Company shall receive the majority or all of the gross proceeds flowing thereto to the extent that the Company’s funds were used to finance the production of any Musicals therefrom.  If such a Subsequent Company is formed, it shall likely be for purposes of insulating the Company from any potential liability flowing from the production or exploitation of those Musicals.
 
Opening Night Enterprises – Offering Circular29 
 

It should be noted that a prerequisite of the foregoing plan of operations is that the Company maintain controlling ownership of each of the Musicals and their underlying rights and that the Series’ primary distributor(s) not restrict the Musicals’ underlying rights-holders from fully exploiting the Musicals and their underlying rights immediately following the Series’ initial broadcast.  The Managers believe that they will not encounter any issues in having the Company retain a controlling interest in each of the Musicals and their underlying rights so long as the Company fully finances production of the Series, as contemplated herein.  By financing the Series’ production, the Company will greatly mitigate the potential risk of loss to the Series’ distributor which would otherwise need to be offset by the potential upside from exploitation of the Musicals’ underlying rights.
 
Subsidiary Participation:
 
It is anticipated that the Company, as the presenter of each Musical production, shall be entitled to a participation, expressed as a percentage of gross receipts of each of the Musicals’ authors’ (the “Authors”) future gross income from each Musical (with deductions for payments off the top to agents) derived from exploitations of the Musical licensed by the Authors to third parties (such third parties not to include the Company, the Managers or any Subsequent or Licensee Company).  The participation of the Company shall depend on the number of performances of a given Musical that were presented by the Company. Any amounts inuring to the Company as a result of such subsidiary participation shall constitute part of Company Gross Receipts (as defined below in SECURITIES BEING OFFERED at Distributions), and shall be distributed according to the terms described herein (see, SECURITIES BEING OFFERED at Distributions, below).
 
Co-Productions:
 
The Managers shall also have the right to fix the terms of any co-production or licensing agreement with third parties, and amounts inuring to the Company therefrom shall be distributed according to the terms set forth herein (see, SECURITIES BEING OFFERED at Distributions, below).

Television Series and Theatrical Industry:

The entertainment industry in general and the television and live stage performance industries in particular, are extremely competitive in nature.  Depending largely on the point in time that a Series distributor comes aboard the project, the Company may need to be paired with a television production company partner with an output deal and experience in making similar types of unscripted competition television shows for one or more of the networks, SVOD or other distributors that the Company intends to pitch the Series to, or else, the Company may be forced by the network to take-on a showrunner partner who will spearhead production of the Series.  For every television series that sells, there are tens of thousands of pitches that get turned down each season.  Of the shows that are initially picked up by one network or another each season (i.e. that “sell” to a network), less than half of them ever make it to the screen and of those, unless a non-linear format distributor such as Netflix picks it up, the network often still decides to cancel the show after producing and airing only the pilot or a handful of episodes.  While production is different for theater, productions are still routinely off of Broadway before they have had a chance to find their audience or turn a profit, because of the contractual nature of their deals with the theaters and the fact that they cannot afford to burn through capital if no one is showing up to the performances.  There are a very limited number of theaters available at any given time on Broadway and competition for them is almost as fierce as it is for the limited number of desirable television network timeslots available at any given time on TV.  If either the Company’s proposed television Series or the Musical(s) fail to secure desirable distribution/exhibition space, respectively, then the projected success and profits of the Company may be in jeopardy.

The Company seeks to greatly mitigate the risks of the Series not making it on air and/or one or more of the Musical(s) not making it to the stage, by financing production of each component in-house.  By removing this massive cost (i.e. risk) from the Series’ distributor, the Company ensures that any presentation of the Series by a distributor is guaranteed pure profit for that distributor, the only question remaining for the distributor is the level of upside, which will be determined by the success of the Series and the size of its audience.

The Managers shall attempt to negotiate with the Series’ distributor(s) to pay the Company certain Series licensing fees and/or creator fees.  The former fees are atypical for unscripted series’ that premier on U.S. television networks, however, they may be possible in this instance because of the fact that Company will be paying for the production of the Series itself, which is also atypical for most network and other large television series’, and such fees would be justifiable as helping Company offset some of the risk it will inherently assume as the sole financier of the Series’ production.
 
Opening Night Enterprises – Offering Circular30 
 

The commercial theater business in the United States is generally separated into two categories, New York and outside New York. New York is the central and principal venue for commercial theater in the United States with a significant resident population of theatergoers and a tourist population that attends the commercial theater regularly.  The Company anticipates, due to the notoriety of each of the three Musicals deriving from the Series, that a Broadway production will occur for at least one, if not eventually a majority of the Musicals.  But it is important to note that for the Company’s business model, the litmus test for financial success of the endeavor will not be not predicated on a production occurring on a Broadway stage.  In fact, the overhead and, especially, the marketing, advertising and publicity costs are significantly less in theaters outside New York, making for the potential of a greater financial return, assuming that the number of people attending and ticket prices are the same, which may or may not be the case depending on where each Musical plays outside of Broadway.  Broadway, or the commercial theatrical industry in New York City, however, does provide for the greater likelihood of (a) open-ended runs and (b) premium (higher) ticket pricing.

As part of the Company’s business model, the Managers shall obtain the right to present the play live on any stage from the author or authors of the Musicals.  Such options shall be exclusive with respect to professional productions (with a stock and amateur holdback) in the United States, the British Isles, Australia, New Zealand and Canada, as well as certain other international territories. It is typical for the producer to pay the writer or writers a non-recoupable advance against a royalty to be paid to the writer or writers from the gross weekly box office receipts derived from the producer’s presentation or presentations of the play or musical. The royalty paid to the author or authors of a play is typically 4.5% of the gross weekly box office receipts. Occasionally, a play or musical is based on another work or on the life of a person. On these occasions, the producer would be required to obtain such rights to the other work or from the person who is the subject matter of the work. Typically, the holders of such rights would also be entitled to a royalty based on the gross weekly box office receipts; such amount is usually between 1% and 2%.  Gross weekly box office receipts are usually defined as the receipts received from the sale of tickets for the show minus credit card costs, applicable amusement or sales tickets and certain pension and welfare union payments (for Broadway only) that do not usually amount to over 10%.  On many occasions, the producers are able to negotiate the option to pay authors a share of weekly operating profits (if any) as opposed to a gross participation and the Managers will employ every best effort to do so and expect to do so.

When a producer is presenting a new play or musical or is presenting a play or musical that has not been previously presented in the United States, the producer will usually be entitled to vest a percentage of revenues earned by the author or authors in the future from the exploitation of the play or musical, including revenues from a film or television adaptation of the play or musical and future stage presentations of the work. This revenue participation is called subsidiary rights participation and the percentage is vested by the producer based upon the number of performances of the play or musical that is presented by him or her. The top subsidiary rights participation that can be earned by the producer is typically from 40% to 50%.

The theatrical producer with an option on a play or musical will usually form a legal entity in which to raise funds to produce the play or musical and to produce the play or musical. The producer will also begin the process of preparing the necessary offering papers to legally raise money from the public, usually as an exempt offering under federal and state securities laws. The customary entity employed in the theatrical industry is a limited liability company. The producer will assign to such entity the rights he or she obtained by virtue of the option agreement with the writer or writers of the play or musical.  Very often the producer will team with other producers to partner with him or her in presenting the play or musical and/or in raising the necessary financing.   Because with this offering the funding is being raised up-front for the television production and the production of all three Musicals that are featured in the Series, the Managers expect to save money, to the benefit of the Members, as a result of not having to engage professionals to effectuate offerings to capitalize three disparate live stage companies, or to give away substantial portions of the profits to (a) partners, (b) fund raisers and (c) other parties assisting in the capitalization.  Moreover, since three musicals are expected to be produced, the gains from one or two may offset losses from another.

The producers of the Musical will assemble the business and creative elements and personnel for the presentation of thereof. On the business side, the producers will retain a theatrical attorney, a general manager, a company manager, a theatrical press agent, a marketing specialist, an advertising firm, a production supervisor and other related personnel. On the creative side, the producers will retain a director, a cast and chorus, a choreographer, designers for the set, costumes, lighting, sound, a stage manager, a musical director, a conductor, a casting director and other related personnel. The compensation paid to the above-mentioned personnel is often paid in accordance with applicable collective bargaining organization rules. Many are entitled to royalties or otherwise increase weekly expenses, including the producers. In addition to the above, the producers must license a theater or, if producing a tour, must license a number of theaters in each city that it is planning to tour the show. Theater licenses often provide that the production pay a fixed rent, plus the expenses associated with the running of the theater facility (such as ushers, climate control, utilities and equipment) and a royalty based on a percentage of gross weekly box office receipts.

Developmental theaters that provided development towards the production of one or more musicals may be entitled to a royalty from subsequent productions on Broadway and/or in other commercial settings.
 
Opening Night Enterprises – Offering Circular31 
 
 
The show will usually require significant rehearsals prior to public performances of the Musical. Rehearsals can typically be from four to fourteen weeks. Prior to a show opening on Broadway or Off-Broadway, it will run a number of preview performances before paying audience members. These preview performances will allow the producers and the creative personnel the chance to see how certain material is received by the audience and to make changes, if necessary, prior to the opening of the show. Just prior or after a play or musical opens, the critics for newspapers, television, magazines and other media will see the play or musical and write their reviews. Usually, the first reviews for the play or musical appear in public on opening night or the morning after.

Typically, a medium to large theater can gross between $250,000 and $2,000,000 per week. The point at which a given show breaks even depends upon a great many factors. On average, producers of a play or musical will attempt to keep the break-even point for a production at no more than 60% of the theater’s potential gross.  As noted above, many of a show’s personnel (including the producers) are paid a percentage of a show’s gross weekly box office receipts, weekly fee or share of weekly operating profits. As such, the amount of such compensation will vary from week to week depending upon the number of tickets sold.
 
Opening Night Enterprises – Offering Circular32 
 

Typically, as a live stage show makes operating profits, 100% of such profits are paid to investors of the show until the investors are paid back in full. Thereafter, the investors and producers each are entitled to 50% of the adjusted net profits from the show.   In this case, however, the three to six Musicals may ultimately be cross-collateralized for the benefit of the Company’s Investor Members.  Namely, even after the recoupment of a given production, all net cash flow shall inure to the Investor Members on a pro-rata basis until their respective investments (which are being used for a package consisting of one television show and three to six stage productions) are recouped in their entirety (as defined in SECURITIES BEING OFFERED at ‘Distributions’, below).  In such a manner the gains from one Musical will offset the losses of another; only following the recoupment by the Investors of all monies invested hereunder will the Managers participate in Company Net Profits (as defined in SECURITIES BEING OFFERED at ‘Distributions’, below).

Additional Information About the Company and its Business:

The Company does not currently employ anyone, nor has it employed anyone to date.  The Company has never filed for bankruptcy, is not in receivership nor embroiled in any similar or other types of legal proceedings, nor are any such proceedings reasonably foreseeable at this time.  At present, the Company has little to no realized assets, debts or obligations.
 
 
DESCRIPTION OF PROPERTY

As of the date of this Offering, the Company is a new business and has no assets other than the intellectual property and rights it has in and to the original musicals that it plans to develop.  The Company is not presently entered into any contracts and maintains no physical or other tangible assets to speak of, including real estate and leases.
 
Opening Night Enterprises – Offering Circular33 
 
 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS


TO THE EXTENT THAT THIS SECTION CONTAINS ANY REFERENCES AND/OR COMPARISONS TO ANY PREVIOUSLY RELEASED TELEVISION PROGRAMS. MUSICALS OR OTHER STAGE PRODUCTIONS AND/OR THEIR PERFORMANCES, SAID COMPARISONS HAVE BEEN PROVIDED STRICTLY FOR PURPOSES OF ILLUSTRATION AND COMPARISON AND SHOULD NOT BE RELIED ON BY THE READERS AS GUARANTEES OF RESULTS FOR EITHER THE SERIES OR ANY OF THE MUSICALS.  ANY PREDICTIONS OR ASSUMPTIONS MADE OR IMPLIED BELOW AND ANY COMPARISONS DRAWN BETWEEN THE SERIES AND/OR ANY MUSICAL AND ANY OTHER TELEVISION PROGRAM, MUSICAL, THEATRICAL PRODUCTION OR SCENARIO SURROUNDING EITHER OF THEM, ARE MERELY PREDICTIONS AND MAY ENGENDER BIASES IN FAVOR OF THE SERIES OR MUSICALS’ PERFORMANCES WHICH ULTIMATELY PROVE TO BE UNDULY OPTIMISTIC AND/OR INCAPABLE OF SUCCESS AS PREDICTED OR DESCRIBED.  NEITHER THE COMPANY OR THE MANAGERS ARE AFFILIATED IN ANY WAY WITH THE PUBLISHERS OF ANY OF THE INFORMATION REGARDING THE TELEVISION OR THEATER INDUSTRIES AS MAY BE REPORTED HEREIN.

As of the date of this Offering, the Company is a new business that has been in operation for less than one year, has no physical or other assets or debts other than those mentioned hereinabove at DESCRIPTION OF PROPERTY, if any, and any debts incurred as described in above in USE OF PROCEEDS TO ISSUER at ‘Potential Use of Proceeds to Discharge Company Debts’.  Whether or not the Company will have any business or whether the Company will be able to make any profits as anticipated herein, will depend initially on the ability of the Company to either self-finance production of the Series and then place the Series with a viable U.S. distributor, or alternatively, the ability of the Company to sell the Series to a viable U.S. distributor or co-finance the Series with said distributor.  Thereafter, once the Series is placed with a viable U.S. distributor, the success of the Company’s proposed business operations will hinge on the willingness of that distributor to give the Series a prime time or other desirable time slot (unless the distributor is an SVOD service) such that the Series will be easily accessible to its core potential demographics, which will include families among others who tend to watch television during prime time hours.  Regardless of the Series’ time slot, the success of the Company’s proposed business operations will depend largely on the willingness of the Series’ U.S. distributor to expend money and use its reserved bumpers and ad slots to promote the Series to the public.

Following exhibition of the Series, the Company’s success or failure will be contingent upon the locations, sizes and natures of the theaters that the Musicals ultimately begin exhibiting in and the strength of the Musicals’ casts and directors and the reception of the Musicals by major critics and audiences who will be needed to spread word of mouth.  If the Musicals ultimately play in Broadway theaters, which are able to draw on a massive revolving door of tourists to New York City and local theater enthusiasts all capable of paying premium prices for top shows, then the Company will benefit from the premium prices for tickets and the constant turnover of new audiences, which should allow the shows to continue playing to new audiences for an extended period of time.  If, however, one or more of the Musicals fails to draw audiences in their initial regional theater locations and therefore never progress to Broadway, Off-Broadway or the like and therefore are unable to avail themselves of the benefits of high turnover of potential theatergoers, then it could have a detrimental impact on the duration of a given Musical’s life, as well as on the value of the tickets sold.  Without limiting the foregoing, it should be noted that the Company believes that the Musicals can still enjoy great financial and critical success if they ultimately only play in top-flight regional theaters.  Various regional theaters throughout the U.S. are located in major metropolitan cities, such as Chicago, Boston, San Francisco, Washington D.C., etc. and therefore experience high levels of tourist traffic and fervent communities of arts supporters interested in new theater shows and capable of paying premium ticket prices.

Additional factors that may ultimately impact the long-term returns of the Company include initial box office success of the Musicals, and the impact of that success on foreign market licenses for one or more of the Musicals.  One way that well regarded live stage productions enhance their lifetime earnings is through licenses of the show to foreign territorial productions.  The Company believes that the existence of such opportunities will be greatly enhanced by the promotional benefits to the Musicals provided inherent in their being a part of the Series.  If this popularity translates into big initial box office draws for one or more of the Musicals, then the likelihood of those shows licensing their rights to foreign territories will be greatly improved.

Plan of Operations:
 

This Management's Discussion and Analysis should be read in conjunction with the Company's financial condition in conjunction with the Company's unaudited Condensed Consolidated Financial Statements and notes thereto found in F/S section of this Circular.

 

As we have yet to begin the fundraising portion of our project, the liquidity and capital resources are limited to monies submitted, as needed for legal and financial obligations, to the Company account by its Managers. We anticipate sources of funding to begin in 2020, once investors are made aware of this investment opportunity.

 

Following the initial raise of funds, the Company plans on using approximately One Million Two Hundred and Forty Five Thousand Dollars U.S. ($1,245,000) of the Offering proceeds to create the Series’ pilot episode, which it will then use to start soliciting interest from U.S. television networks and other potential distributors and sponsorship partners of the Series.  It should be noted that the $1,245,000 figure cited in the foregoing sentence reflects the Company’s estimated average cost per-episode of producing the Series (see, USE OF PROCEEDS TO ISSUER at ‘TV Production Budget Worksheet’) and therefore may in-fact be lower than the actual cost of producing the pilot.  This is because the production of pilot episodes typically entails creation of certain sets, stages, costumes and other series production overhead items that are then used throughout the life of the television series.
 
Opening Night Enterprises – Offering Circular34 
 

While the Series’ pilot episode is being completed (i.e. in post production), the Company will draw on an additional sum, estimated at Eight Hundred and Fifteen Thousand Dollars U.S. ($815,000), for the purpose of putting on a private roadshow to raise the necessary balance of the Series’ production funds from private investors in various cities throughout the U.S.  Two of the Company’s Managers, Kristen Chenoweth and Regina Dowling, will take several troupes of performers and the writers of the Musicals on the road to eight major U.S. cities to perform portions of the Musicals in front of live audiences of prospective Investors for the purpose of enticing them to purchase equity Interests in the Company under this Offering.  Additionally, during this same period, the Company will also begin looking into establishing an online and social media presence for the purpose of soliciting potential Investors from beyond the bounds of the more narrowly focused roadshow.  The Company will invest in the creation and maintenance of one or more websites and/or social media accounts and may also look to engage a social media-fundraising consultant to aid in planning its online and social media awareness and fundraising campaigns.
 
After production of the Series’ pilot is complete, production of the remaining 12 episodes of the Series will occur subject to the influx of additional Offering proceeds deriving from the roadshow and from the Company’s other investor solicitation efforts.  Investors should note that while the Company presently anticipates financing the entirety of the Series itself, in the event that a U.S. network or other major television series distributor wishes to co-finance part of the Series, then Company will consider entering into a co-production arrangement with that party.
 
The Company anticipates that the initial fundraising, production of the Series’ pilot and subsequent investor roadshow will take approximately three months to complete, though actual timing is contingent on various factors, including the timing of the eventual receipt of initial Offering proceeds by the Company and the ability to use those funds immediately as per the terms of any given Investor’s subscription agreement.  Thereafter, the timetable for producing the remaining 12 episodes of the Series will be entirely contingent upon the availability of production funds.  If all of the necessary production funds were immediately available, then the Company estimates that the production of the entire first season of the Series would take approximately nine months to complete from pre-production, troupe rehearsals through principal photography and post production.  Throughout this period of time during which the Company will be raising funds, producing its pilot and season 1 episodes and soliciting investments, the Company will also be simultaneously soliciting distribution and potentially also sponsorship opportunities for the Series.
 
Following production of season 1 of the Series, the Company will know which of the proposed six Musicals ultimately won the Series’ competition and the Managers will have had a chance to see each of the six Musicals develop and know which of the six appear to have the best chance of playing to wide audiences in different regional theaters throughout the U.S.  The Company will use the information and the insights gained from and during the Series’ production to determine which regional theaters it will approach to place each of the six Musicals.  The number of Musicals that the Company will ultimately be able to produce will depend on the amount of investments raised hereunder.  The Company estimates that it will need U.S. $30 Million to produce all six Musicals for 12 weeks each (96 runs).  How much the Company ultimately raises, will determine how many of the Musicals it in fact produces.

In the opinion of the Company, the target ($50 Million) raise of this offering will satisfy the stated purposes and needs of the Company, which is, as stated above and elsewhere herein, to finance development and production of one, thirteen episode, season of the Series, a promotional U.S. roadshow for the Series, Musicals and offering, and to further finance development and production of all six Musicals for initial twelve week (96 show) runs.
 

We are in the midst of securing at least three stage musicals for our projects which require legal contracts and obligations to ensure a viable investment. Our plans are to secure those musicals prior to May 1, 2020, so that marketing through social media and other markets, including our website can begin and funds can then be raised so that our initial pilot can be taped and a television distribution contract can be secured.

 

The proceedings from the offering will satisfy our cash requirements and we anticipate to begin raising funds within the next six months to implement the plan of operations.


Post-Season 1 Outlook:

Subsequent seasons of the Series and their accompanying musicals would be financed separately, through an analogous subsequently formed company, which would own and manage the rights and assets in and to the series for that season and for that season’s musicals in perpetuity.  The Company and its Investors would still continue to receive incomes from exploitation of the Musicals and their rights in perpetuity, those would simply be separate from any such future musicals spawned by future seasons of the Series.  The Company believes that its ongoing business (i.e. the ownership and continued exploitation of the Musicals) would ultimately become self-sustaining, and therefore would not require any future investments to finance operations.  However, to the extent that one or more of the Musicals ultimately proved unprofitable, performances of that/those Musical(s) could simply be halted and the profitable Musicals could go on exploiting their rights.

In addition to incomes received from the Company (i.e. from season 1 of the Series and from exploitation of the season 1 Musicals), the Investor Members would also retain contingent investment opportunities and interests in future seasons of the Series and in the exploitation of their accompanying Musicals (see discussion in, SECURITIES BEING OFFERED at ‘Rights of First Refusal/Anti-Dilution Rights’, below)
 
Opening Night Enterprises – Offering Circular35 
 
 
General Industry Trends:
 

The Broadway box office has been trending up for decades, in terms of not only grosses, but also in terms of attendance, with the past 3 seasons in particular breaking and remaining above the 13 Million people per year mark for the first time (see, statistics from The Broadway League, at https://www.broadwayleague.com/research/statistics-broadway-nyc/, last visited Sept. 15, 2017).  The shows on Broadway have been getting bigger, driving even larger box office grosses from quarter to quarter.  If this trend were somehow reversed during the period that the Company planned on exhibiting its Musicals, then that could potentially affect the projected revenues of those shows.  However, this is unlikely as the popularity of Broadway shows are largely now driven by tourism and it would likely take an event, such as another major terrorist attack on New York City, to temporarily stem the tide of tourists flooding into the City from all corners of the globe.

 

With the emergence of live television musical specials and a foray of theatrical releases of classic movie musicals, interest in musicals has never been higher. As a result of these trends the financial benefits have unlimited potential for a positive material effect on the operation.

 

We are creating a new paradigm of how musicals are promoted, funding is raised and popularity is increased. Where creative individuals with an idea and a musical, can share that on the world stage. All while marketing their show to millions through television and other mediums. Additionally, the musical world plays a larger part in the mainstream culture; creating hundreds of new jobs for talented artists, directors, set designers, costume designers, choreographers, lighting and audio directors, technical staff, ticket sellers, etc., all working in tandem for the benefit of these six shows on stage and off; generating interest upon creatives to write musicals for others to enjoy and participate in.

 
Opening Night Enterprises – Offering Circular36 
 

Value of ticket prices and sponsorship of live events throughout the U.S. has also been increasing in recent years, perhaps as a backlash to the proliferation of streaming and increasingly ever-accessible filmed content that people cannot escape from.  The novelty of filmed entertainment, such as television and film is now long gone as the U.S. finds itself entrenched in the digital age, where endless libraries of video content can be consumed at any time, any place and on any device.  Live events have once again regained their past luster in terms of their uniqueness and audience draw (see, e.g., Concert Tours and U.S. Festivals Smash Records in 2016 and Worldwide Growth Booms, Cronen, Jason M., at https://www.linkedin.com/pulse/concert-tours-us-festivals-smash-records-again-2016-worldwide-cronen/, last visited Sept. 15, 2017) and musical theater has been and will continue to be among the beneficiaries of this trend.

The somewhat depressed nature of the film industry (in terms of actor salaries) as compared with past decades, has meant that big name actors have been finding increasingly less diversity of roles and smaller actor’s fees in the once glamorous film industry and those actors have been branching out to different realms of the entertainment industry, most notably to TV and Broadway.  With bigger and bigger names from Hollywood and the music industry opting to do stints in shows on Broadway, Broadway productions have been able to use those names not only to attract broader audiences, but also to increase ticket prices.  If film were to suddenly start paying 1980’s actor wages again and studios abandoned their newfound penchant for franchise films that easily transcended national, linguistic and social barriers (such as superhero movies), then it could result in fewer big name actors plying their trades on Broadway, which could potentially affect projected revenues for the Company, however, this is an even less likely scenario in the near term than that of a major terrorist attack sapping tourism.


Yet another unlikely scenario which could impact the planned business operations of the Company would be an immediate decaying of the public’s interest in watching competition-style reality television programming.  However, that does not seem likely given the ongoing success and proliferation of such series’ over the past decade (see, e.g., Comcast Spotlight Report, Trend Insights, ‘Is There Too Much TV, II: Unscripted Series’ Growing Popularity’ (2017), at http://www.comcastspotlight.com/sites/default/files/pdf/documents/Too_much_TV_vol2.pdf, last visited Sept. 15, 2017).

The Company’s business model is focused on two distinct segments of the entertainment industry, namely television and live theater.  However, even more specifically, the Company’s business focuses on unscripted competition programing and musical theater.  Both of these market niches have been experiencing continued growth in terms of value and viewership over the past several years and the Company’s Managers believe that now is a good time to be entering these marketplaces with a strong and unique product such as that of the Series and its accompanying Musicals.
 
Opening Night Enterprises – Offering Circular37 
 
 
MANAGERS, EXECUTIVE OFFICERS
AND SIGNIFICANT EMPLOYEES


Name
Position(s)
Age
Term of
Office*
Approximate Hours
per Week for Part-
Time Employees***
Kristin Chenoweth
Manager, Talent (TV),
Executive Producer (TV and Musicals)
 
49
  
Full-Time during the initial investor roadshow and during production of any TV Series and Musical in which she is participating as a producer or talent
Charles Jones II
Manager, CEO, Executive Producer (TV and Musicals)
64
  
Full-Time
Regina Dowling
Manager, Talent (TV),
Executive Producer (TV and Musicals)
 
49
  
Full-Time during the initial investor roadshow and during production of any TV Series and Musical in which she is participating as a producer or talent
Senge Creates, Inc.
(on behalf of Charles
Senge)
Producer (TV), Director (TV)
 
64
**
Full-Time during any TV Series or Musical that he is directing, otherwise any employment would be sporadic in nature only, as an outside consultant.
* The Managers of the Company have been appointed by the founding Members and shall be confirmed by incoming Members by proxy votes to the extent necessary under the law.  The Managers’ terms are indefinite and subject to termination by a vote of the Managers or otherwise as permitted under the applicable law(s).  The other key employee positions held by the above-named personnel are held at the discretion of the Managers and are only effective with respect to the specific TV Series and/or Musical(s) to which they apply and therefore do not necessarily constitute fill-time employment or control over the Company.
** Charles Senge shall not be a managing member of the Company and his role in connection with the business of the Company shall be limited to his involvement with the first season of the TV Series and possibly the initial run of one of the Musicals and therefore does not necessarily constitute full time employment.  The CEO and/or Managers shall determine the employment parameters of Senge in accordance with industry standards.
*** Managers listed here should be regarded as directors of corporations for purposes of determining frequency of work schedules/duties associated with the position.
 
Opening Night Enterprises – Offering Circular38 
 


Kristin Chenoweth: Kristin Chenoweth won a Tony Award in 1999 for her Broadway performance as Sally Brown in You're a Good Man, Charlie Brown.  In 2003, she received wide notice for originating the role of Glinda in the musical Wicked, including a nomination for another Tony. Her television roles have included Annabeth Schott in NBC's The West Wing and Olive Snook on the ABC comedy-drama Pushing Daisies, for which she won a 2009 Emmy Award for Outstanding Supporting Actress in a Comedy Series. Kristin also starred in the ABC TV series GCB in 2012. Kristin's stage work includes five City Center Encores! productions, Broadway's The Apple Tree in 2006, Promises, Promises in 2010 and On the Twentieth Century in 2015, as well as Off-Broadway and regional theatre.  Chenoweth had her own sitcom Kristin in 2001, and has guest starred on many other television shows, including Sesame Street and Glee, for which she was nominated for Emmy Awards in 2010 and 2011. In films, she played significant roles in Bewitched (2005), The Pink Panther (2006) and RV (2006). She has also played roles in made-for-TV movies, such as Descendants (2015); done voice work in animated films such as Rio 2 (2014) and The Peanuts Movie (2015) along with the animated TV series Sit Down, Shut Up; hosted several award shows; and released several albums of songs, including A Lovely Way to Spend Christmas (2008), Some Lessons Learned (2011), Coming Home (2014) and The Art of Elegance (2016). Chenoweth also penned a 2009 memoir, A Little Bit Wicked.


Charles Jones II: Charles is a television producer producing live shows and other productions via his wholly owned and controlled company, Charles Jones II Enterprises LLC, since 1997.  Charles’ main client throughout the period has been the Walt Disney Company in its live entertainment division.  In 2007 he was the managing producer of the Opening Ceremonies for the Tournament of the Roses Parade seen by millions internationally.  Formerly an entertainment reporter for PBS television, Charles served as a college music professor at Oklahoma City University, where he met the Company’s other Managers on the Opening Night team, namely, Kristen Chenoweth and Regina Dowling.  Charles was a television producer at the NBC station in Oklahoma City during the 1995 Oklahoma City bombing.  During that time, Charles created innovative new television programming, including the only live television program for kids in America, TV Made From Scratch with a 16 year old as the show’s host.  Charles is the creator and will act as the executive producer for the Opening Night Series and he developed the business model for the Opening Night multi-media project.  In addition to being one of the Company’s Managers, Charles also serves as the Company’s CEO.

Regina Dowling:  Regina earned a Bachelor’s degree in musical theater performance from Oklahoma City University and has performed in over 40 Musicals including leading roles in Elton John and Tim Rice’s Aida, She Loves Me, Will Rogers Follies, Carousel, Brownstone, South Pacific, Funny Thing Happened on the Way to the Forum, Into the Woods and Trouble in Tahiti. She has been seen on daytime soaps All My Children and Port Charles. Regina created and hosted two TV pilots Real Glamour with Regina Dowling and Adventures of the Pampered Pooch. A Lifestyle expert and beauty blogger, Regina created and hosted the popular site Glamour24-7.com where her expertise in living a glamorous life through giving back, appealed to a worldwide audience resulting in many loyal followers. Currently, Regina is the Vice President at the world renowned ArtCenter College of Design in Pasadena, CA where she has worked for over 10 years, previously as the Director of Educational Partnerships overseeing collaborations with major corporations and individuals who work on design projects with talented and creative students who attend ArtCenter from many different countries.


Charles Senge: Charles “Chase” Senge is currently the principal of the eponymously named SengeCreates, Inc.  Prior to starting his own company, Chase worked for 20 years as Senior Show Director for the Walt Disney Co., developing new shows and entertainment formats for their properties around the globe. His creative concepts and stage productions have been seen by millions of audience members throughout the United Sates, Asia, Europe and Latin America. In addition to directorial experience, Chase also has an extensive background in staging, choreography, lighting, scenery, costuming, and special effects.  Chase currently operates through SengeCreates, Inc. providing consulting services to help third party companies create original productions for theatrical, touring and televised special events.  Chase’s stage productions have been nominated for Broadway’s TONY Award and the NY Drama Desk Award, plus received the “Diamond Award of Excellence” for the Best Cruise Line Show, and the “Big E” award for Best Show from the international theme park industry (IAAPA). As a consultant, Chase’s theatrical and creative development expertise has been called upon to collaborate on new projects of numerous organizations, as well as to “ show doctor” existing productions. Chase has brought his unique creative approach to such clients as Broadway’s Nederlander Worldwide Entertainment, Universal Studios, Bally’s Casino Las Vegas, Macy’s Thanksgiving Day Parade, the Pasadena Tournament of Roses Parade, as well as Busch Entertainment Corp., Virgin Atlantic, IBM, the Rockefeller Group, and the noted creative think-tank Eureka Ranch.  Chase is the only creative consultant noted in the Guinness Book of World Records.

 
Opening Night Enterprises – Offering Circular39 
 
 
COMPENSATION OF MANAGERS
AND EXECUTIVE OFFICERS


The Company is a new business and has not been in operation prior to this year in any format or under any alternative name.  Accordingly, there is no history of payments received by any of the Company’s Managers or executive officers in any capacity in association with the Company.

Company Management and Series-Related Compensation:

As explained in greater detail in USE OF PROCEEDS TO ISSUER at ‘Potential Payments to Managers from Offering Proceeds’, the only executive officer or Manager that is to receive any compensation in connection with his or her role as an executive officer is Charles Jones II, whose salary as the Company’s CEO shall be contingent upon the Company’s securing a minimum of at least $2 Million in Offering proceeds.  Furthermore, the value of any such salary shall thereafter be determined in accordance with the total available operating capital, the ultimate number of hours worked by Mr. Jones in that capacity and the prevailing industry rates and standards of reasonableness for someone operating a similar company in Mr. Jones’ capacity.

Certain compensation streams available to one or more of the Managers, specifically those which would be deriving from the initial Investor Commitments, are described in INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS at ‘Investor Roadshow Performance Compensation’ and ‘Series-Related Manager Compensation’.  Those consideration streams apply to the tasks that the Managers will be undertaking with respect to the initial operations of the Company, including compensation paid to Managers Kristin Chenoweth and Regina Dowling for their respective preparation or and participation in the Investor roadshow and also each of the Managers’ respective contributions as producers and talent for the Series.

Necessary Definitions:

For purposes of interpreting the schedule of Musical distributions set forth in the subsection immediately below, the following terms shall have the following meanings:

GROSS RECEIPTS
“Gross Receipts” shall be deemed to mean all sums derived by and belonging to the Company from any and all sources (but not including Membership Commitments or Loans) including, without limitation, (i) from its stage presentations of each Musical, including the Series, and inclusive of ancillary income such as merchandise and commercial use products, (ii) from the disposition or exploitation of any of its rights in each Musical, including subsidiary rights, tours, films and other derivatives or (iii) from the disposition of its physical assets acquired with funds of the Company, and the return of any bonds or other recoverable items, and (iv) interest, if any, on the aforesaid sums.

LOANS
“Loans” shall mean any loan, promissory note, sponsorship, or other secured financing received by the Company or any subsidiary thereof for the purpose of providing part or all of the necessary capital necessary to undertake one or more Musicals or the Series or otherwise carry out Company’s business operations.

ORIGINAL CAPITAL
“Original Capital” shall mean the actual capital raised by the Company and or any of its subsidiaries, if any are formed, to produce and/or exploit one or more of the Musicals.   Original Capital may include, without limitation, Loans, Commitments and other Company revenue, income and proceeds.
 
Opening Night Enterprises – Offering Circular40 
 
 
OTHER EXPENSES
“Other Expenses” shall be deemed to mean all expenses of whatsoever kind or nature, other than those referred to as Running Expenses (as defined below) or Production Expenses (as defined below), incurred in or in connection with or by reason of the operation of the business of the Company, including, without limitation, commissions paid to agents, monies paid or payable in connection with claims for plagiarism, libel, negligence, and other claims or settlements of a similar or dissimilar nature, and taxes of whatsoever kind or nature (other than income taxes of the individual Members or Managers). There shall be no “Other Expenses” incurred which are not reasonable and directly related to and necessary for the formation of the Company or the operation of the business of the Company.

PRODUCTION EXPENSES
“Production Expenses” shall be deemed to mean the total expenses, charges and disbursements of whatever kind incurred by the Company directly in connection with any production of the television series and musicals selected from the series, to continue beyond the television series, including without limitation, fees, advances and/or other compensation of the writers of the Musicals or their directors, choreographers, designers, orchestrators, casts, general managers, company managers, business managers, theater party representatives, production assistants and production secretaries (none of which parties before referred to need render its services exclusively in connection with each Musical); cost of the sets, costumes, curtains, drapes, properties, furnishings, electrical and sound equipment, rentals, bonds and guarantees, insurance premiums, rehearsal salaries, charges and expenses, transportation charges, office facilities furnished by the Managers, legal and auditing expenses, advance publicity, theater costs and expenses, preliminary advertising, post-opening advertising, taxes of whatsoever kind or nature other than income taxes of any of the individual Members or Managers; expenses for replacement or substitution of any of the foregoing personnel and items; and any and all other expenses usually included in the term “Production Expenses.” There shall be no “Production Expenses” incurred which are not reasonable or which do not appear as a budgetary item of the final budget for the applicable production of each Musical presented by the Company.

RUNNING EXPENSES
“Running Expenses” shall be deemed to mean all expenses, charges and disbursements of whatsoever kind actually incurred as running expenses of any production of the Musicals presented by the Company or their subsidiaries, including, without limitation, percentage royalties payable to the owners, authors, directors, choreographers and/or to the Managers as a royalty; salaries and other compensation of cast, designers, stage managers, general managers, company managers, business managers, theater party representatives, production associates, production assistants, production secretaries (none of which parties before referred to need render its services exclusively in connection with each Musical), production supervisors and stage hands; theater costs and expenses, theater rentals, transportation charges, office facilities, insurance, legal and auditing expenses, advertising, publicity and promotion expenses (including the right to engage an advertising agency at the usual commission and to contract for additional payments for merchandising, exploitation, sales promotion and publicity), commissions paid to theater party agents, brokers, telephone sales and credit card  companies, Ticketmaster and similar types of organizations, rentals of equipment, lighting, props and other articles from parties (including the Managers or Members of each Company subsidiary or the Company), miscellaneous supplies, taxes of whatsoever kind or nature, other than income taxes of the individual Members or Managers, and any and all other expenses usually included in the term “Running Expenses.” The term “Running Expenses” shall also include any portion of the gross weekly box office receipts or Gross Receipts generated by each Musical payable to any person or firm rendering or furnishing services or materials or granting rights to be used by the Company in or in connection with the production or presentation of each Musical or the exploitation of any of the rights therein.
 
Musical-Related Compensation of Managers:

The Managers, likely in conjunction with other third parties, are going to be the producers of each Musical. For the Production and for services rendered in the development of each Musical, the Managers, in the aggregate, will be entitled to receive, for their own account and not shared with the Members, the following producer compensation for their producing services on each Musical: An executive producer fee of $50,000 (per Musical production, to be shared by all such producers of a given Musical), a producer’s management royalty of up to three (3%) percent of GWBOR (or weekly operating profits equivalent), collectively, and a weekly producer’s office fee of not more than $1,500, collectively, for any given week (regardless of how many shows are currently playing) but they may be prorated down if less than 8 shows are performed in a given week, to be shared among all of a Musical’s producers including any Managers who are producers.  For the avoidance of doubt, the 3% GWBOR producer’s management royalty shall be shared by all producers of a given Musical and 1 of those 3 points are typically reserved for large investors and/or fundraisers of the Musical (i.e. only 2 of the 3 total producer GWBOR points will be paid to/shared by each of a given Musical’s producers including any Managers who are producers).  As is industry custom in the live stage performance industry, the producers of the Musicals (which may include one or more Managers) may receive a producer royalty (which may be a share of gross weekly box office receipts, or per gross weekly box office percentage point royalty pool equivalent) and other customary payments in connection with Subsequent Productions, in accordance with theater industry custom.

As discussed in DESCRIPTION OF BUSINESS at ‘Purpose’ above generally, the primary income stream that the Managers anticipate initially is the combined box office and ancillary income streams flowing from exploitation of each of the Musicals.  However, that does not mean that the Series will necessarily be a loss leader for the Musicals or for the Company.  The Series may well end up generating revenues from ad-sharing deals with its distributors, from licensing deals with foreign distributors and domestic syndicators, from merchandising deals arising from the Series itself and ultimately from the Series’ library value.  However, because the Managers’ primary focus will be on using the Series as a publicity generator for the Musicals, it is appropriate to provide an explanation of the distributions emanating from the exploitation of each Musical and how those will be divided once they flow back to the Company.
 
Opening Night Enterprises – Offering Circular41 
 

If and so long as any amounts are payable to the Investor Members pursuant to the schedule and terms set forth immediately below, the Company shall seek to pay such amounts within sixty (60) days after the end of each calendar quarter with respect to any amounts payable for such quarter; provided, that the Company shall seek to make the first such payment on the date twelve (12) weeks following the first paid public performance of each Musical hereunder, if any such amounts are payable at such time; and provided further, that commencing with the first calendar year following the year in which the last performance of each Musical has been presented, the Company shall seek to make such payments within sixty (60) days after the end of such calendar year.  In general, distributions from Gross Receipts actually received by the Company (from all sources) shall be made in accordance with the following order of priority:
 

1.          First, to the payment of the Running Expenses and Other Expenses.  Running Expenses, as described herein shall include a Musical’s standard gross corridor participations1, which are typically payable to a limited range of key personnel, including the writer(s) of the Musical’s book, the Musical’s director, et. al.  In a gross corridor format, the total weekly gross from a musical that end up being allocable to such participants is in the range of 11.5% - % to 18%.  The producer’s management royalty (as described above) is 3% of the total 11.5% - 18% total gross corridor and, as also explained above, the producer’s share is usually 2 of the 3 percentage points and those 2% are shared among all of the Musical’s producers including any Managers who are producers.

                                                                        
1 The production company ultimately responsible for producing each version of each Musical will ultimately determine what type of standard prevailing live theater revenue participation formulae it will apply on a production-by-production basis.  The gross participation formula assumed here is one such format, the total gross receipts allocable to gross profit participants, of which is typically in the range of 12% to 18% of weekly gross receipts.  An alternative common formula for allocating a live stage production’s receipts is a “pool” format.  The Company will not know which formulae shall be used with respect to a given Musical production until such time as the Musicals and their actual final producers are determined.
 
Opening Night Enterprises – Offering Circular42 
 
 
2.          Second, to satisfy any liens and to repay any loans, if any, including interest charges and fees thereon, assumed by the Company in connection with the operation of its business, including, without limitation any preferred returns thereon.

3.          Third, to the establishment of a cash reserve (distributable cash held back, or accumulated) in an amount determined by the Managers in their sole reasonable discretion from time to time, for anticipated debts, liabilities, expenses and working capital.
           
4.          Gross Receipts remaining after the deductions set forth in subsections 1, 2 and 3 immediately above shall be characterized as “Net Cash Flow”.  Net Cash Flow shall be distributed to each Investor Member in the same proportion as his Commitment bears to the aggregate amounts raised from all Investor Members, until such time as each Investor Member has recouped 100% of his Commitment (“Recoupment”).

5.          Next, following Recoupment by all Investor Members, remaining and all subsequent Net Cash Flow, if any, shall be deemed “Net Profits” and shall be distributed as follows:
           
a.
The Managers may allocate Net Profits “off the top” to third parties in reasonable and customary arms-length transactions in consideration of services provided or rights contributed to the Musicals or any other production(s) as contemplated herein (these shall generally be in the form of Deferrals [as defined in the OPERATING AGREEMENT – EXHIBIT1A-2B – Article I (GLOSSARY) at “Deferments or Deferrals” and “Producer and Professional Deferrals or PPDs”]).  There shall be no other distribution of Net Profits prior to their characterization as Adjusted Net Profits as defined immediately below.

b.
The remainder of such Net Profits, if any, shall be deemed “Adjusted Net Profits” of the Company, and shall be applied as follows:

i.
INVESTOR MEMBER’S NET PROFITS: An amount equal to 50% of Adjusted Net Profits shall be divided among the Investor Members of the Company, with each such Investor Member receiving that portion thereof as its Commitment bears to the amounts raised in the aggregate from all Investor Members; and

ii.
MANAGERS’ NET PROFITS: An amount equal to 50% of the Adjusted Net Profits shall be paid to the Managers of the Company. The Managers shall have the right to allocate Manager’s Net Profits to themselves or any third parties in their sole discretion.
 
Company Owner Revenues Available to Managers:

In addition to those incomes potentially available to one or more of the Managers, as described in this section above, the Managers shall also be entitled to receive a share of Company Net Profits (as defined in SECURITIES BEING OFFERED at ‘Distributions’, below), if any, remaining after all expenses and any Investor Recoupments have been paid and future operating costs and contingency reserves have been set-aside.  Distributions of Company Gross Receipts including distributions of Company Net Profits paid to Managers, shall be made in accordance with the descriptions provided in SECURITIES BEING OFFERED at ‘Distributions’ below.

In addition to consideration for each of the foregoing services of the Managers, the Managers and/or any person, partnership, corporation or other entity in which the Managers are in any way interested may provide other services to the Company with all monies received to belong solely to the Manager furnishing such equipment for its sole benefit and account.
 
Opening Night Enterprises – Offering Circular43 
 
 
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN SECURITYHOLDERS


This Offering is being made available to outside private investors.  Under this Offering, up to Fifty Percent (50%) of the Company’s total non-voting interests are being sold (i.e. income interests) are being sold.  None of the securities being offered for sale in this Offering shall be voting interests and the Company shall remain controlled 100% by its Managers following the completion of this Offering.

Name of
Unitholder
Title of
Class
Amount and Nature of
Beneficial Ownership
Amount and Nature of
Beneficial Ownership
Acquirable
Percent of Class
Kristin
Chenoweth
Manager
33.334%
Voting Interest
 
N/A
 
33.334%
Charles Jones
II
Manager
33.333%
Voting Interest
 
N/A
 
33.333%
Regina
Dowling
Manager
33.333%
Voting Interest
 
N/A
 
33.333%

* The Mailing address for each such beneficial owner named above shall be as follows: c/o Ryan J. Lewis, Esq., 207 W. 25th Street, 6th Floor, New York, NY 10001

 
 


Name of
Unitholder
Title of
Class
Amount and Nature of
Beneficial Ownership
Amount and Nature of
Beneficial Ownership
Acquirable
Percent of Class
Kristin
Chenoweth
Member
33%
Non-Voting Units
 
N/A
 
33%
Charles Jones
II
Member
33%
Non-Voting Units
 
N/A
 
33%
Regina
Dowling
Member
33%
Non-Voting Units
 
N/A
 
33%
Senge Creates,
Inc. (on behalf
of Charles
Senge)
 
Member
 
1%
 
N/A
 
1%
 
Opening Night Enterprises – Offering Circular44 
 
 
INTEREST OF MANAGEMENT AND OTHERS
IN CERTAIN TRANSACTIONS


No Musical-Related Manager Compensation Likely to Eventuate in Fiscal Year 1:

As of the date of this Offering, the Company is a new business that has been in operation for less than one year, has no physical or other assets or debts other than those mentioned in DESCRIPTION OF PROPERTY, above.  It is highly unlikely that in the current fiscal year, the Company will earn returns from any of the Musicals, because the Musicals would have to be created and their development and production would need to be filmed for television prior to the production of said Musicals for the live stage.  This is significant because the Company’s three Managers will be entitled to certain salaries associated with their work as producers of the Musicals as well as to certain receipts from exploitation of those Musicals (see COMPENSATION OF MANAGERS AND EXECUTIVE OFFICERS, at ‘Musical-Related Compensation of Managers’).

Investor Roadshow Performance Compensation:

Upon securing of certain initial financing, one of the first objectives of the Company is to expand the reach of this Offering and awareness of the project by putting on an investor U.S. roadshow which would bring portions of several Musical live performances to a handful of select U.S. cities.  Two of the Company’s Managers, namely Kristin Chenoweth and Regina Dowling, would be presenting and accompanying the roadshow and helping to work with the performers and troupes in preparation and presentation of those performances.  It is contemplated that for their services and time, the Managers Regina Dowling and Kristin Chenoweth would be compensated at a rate of $100,000 each for their investor roadshow-related services.

Series-Related Manager Compensation:

The Company’s Managers also stand to be paid for their roles as executive producers and/or talent on the Series when it goes into production (see, COMPENSATION OF MANAGERS AND EXECUTIVE OFFICERS at ‘Company Management and Series-Related Compensation’).  The Series’ intended executive producer, series creator, talent and other standard television series line item fees applicable to the Managers are in-line with analogous line items on similarly situated unscripted competition television series’ of the size of the Series.  While the specific amounts due to each of the individual Managers who will be acting as executive producer, producers, talent, etc. in relation to the Series have not been determined, the specific line items for all Series talent and producers have been determined (see, USE OF PROCEEDS TO ISSUER at ‘TV Production Budget Worksheet’ above).

The producer fees total $100,000 per episode (for each of the 13 season 1 episodes) and it is anticipated that Manager Charles Jones II will be acting as the Series’ executive producer and that both Managers Kristin Chenoweth and Regina Dowling will be acting as producers on the Series.  What is not known is how many or what other producers the Series will ultimately add, which would further divide the pot attributable to that line item.  Similarly, Kristin Chenoweth and Regina Dowling will be receiving fees as talent participating in the Series and there is currently a presenter/actor/talent line item scaled to union rates and equal to $145,000 per episode for each of the 13 season 1 episodes of the Series, however, what and how many other individuals will be compensated from that pool of funds is not currently known.  Despite the gaps in knowledge, it is anticipated that each of the Managers will receive Series-related compensation in excess of $50,000 per person for their contributions to the Series as producers and on-camera talent during season 1 of the Series.  Similarly, were the necessary production financing to eventuate in time to film the entire series during the Company’s first fiscal year, then the Series’ director and 1% equity-interest holder, Charles Senge, would receive compensation for his services as the Series’ director, which such compensation would be in the amount of $40,000 per episode for each of the 13 episodes of season 1 of the Series.
 
Manager Reimbursements:

As described in greater detail elsewhere herein, including in USE OF PROCEEDS TO ISSUER at Potential Use of Proceeds to Discharge Company Debts above, certain Managers, particularly Charles Jones II Enterprises, LLC, have and will continue to incur personal debt in furtherance of starting the Company, undertaking this Offering and generally beginning the Company’s operations.  At some point in the future, if and when Company raises at least $2 Million in Offering proceeds, then Managers shall have the right to recoup actual start-up expense outlays without interest up to a ceiling of One Hundred Thousand Dollars U.S. ($100,000.00) upon reasonable proof of payment of such sums to third parties.  No agreements or more specific set of terms with Charles Jones II Enterprises, LLC or any other Manager have yet been entered into with the Company with respect to specific terms of repayment of such start-up expenses, nor are any such agreements anticipated to eventuate.
 
Opening Night Enterprises – Offering Circular45 
 
 
No Company Net Profit Participations for Managers Likely to Eventuate in Fiscal Year 1:

In addition to the foregoing, the Company’s Managers are also entitled to receive fifty percent (50%) of the Company Net Profits (see COMPENSATION OF MANAGERS AND EXECUTIVE OFFICERS at ‘Company Owner Revenues Available to Managers’ above and SECURITIES BEING OFFERED at ‘Distributions’, below).  However, the only potential current fiscal year incomes that the Company might possibly experience would come from a sale or license of the proposed Series rights to a network or other distributor.  It is highly unlikely that the sale or license of the proposed television show rights would result in any Company Net Profits for the Company’s Managers.  This is because, among other things, all of the Company Gross Profits would likely be needed to finance the remaining operations of the Company, namely the production and presentation of the Musicals.  Furthermore, the structure of the recoupment waterfall for the Company’s Investors is such that the Investors are entitled to recoup their capital Commitments out of 100% of the Company Net Cash Flow prior to determination or distribution of any Company Net Profits (see, SECURITIES BEING OFFERED at ‘Distributions’, below), and if the Company achieves its target minimum of $20 Million in initial, pre-Musical production operating costs and the majority of those initial operating costs are comprised of Commitments raised under this Offering, then there is essentially no chance that the potential television earnings of the Company for year 1 would ever eclipse both the full $50 Million projected operating costs of the Company’s business, accordingly, there would be no Company Net Profits available to pay to the Company’s Managers.

No Third Party Intended Beneficiaries:

No expert named in this offering statement as having prepared or certified any part of this offering statement, was employed for such a purpose on a contingent basis.  Nor was any such person or entity, either at the time of such preparation or certification or at any time thereafter, a holder of any material interest in either the Company or any of its parents or subsidiaries, nor was any such person or entity ever connected with the Company or any of its parents or subsidiaries as a promoter, underwriter, voting trustee, director, officer or employee.
 
 
 
SECURITIES BEING OFFERED


The Company is offering to the public up to One Hundred Thousand (100,000) Units.

Voting Rights:

The Investors’ Units shall not be managing-member Units and therefore shall not have any voting or Company management rights attached to them except as may be otherwise required by the applicable laws of any governing jurisdiction(s).  Instead, the Company shall be managed solely by its Manager, which, for the indefinite future shall mean: (1) the California limited liability company, Charles Jones II Enterprises, LLC; (2) Kristin Chenoweth; and (3) Regina Dowling.  However, without the consent of a majority of the Investor Members, as measured by capital accounts, the Managers may not take any action on behalf of the Company which would be reasonably expected to have an adverse effect on the membership Interests of the Investor Members but not on the membership Interests of the Managers, if any.
 
There is no present intention on the part of the Managers to create any additional class(es) of membership Interests in the Company other than managing and non-managing Interests.

Rights of First Refusal/Anti-Dilution Rights:

Following the close of this Offering, the Units successfully subscribed for by Investor Members hereunder shall bear a right of first refusal to invest in any future offering of Company Units up to an amount which allows each such Unit to maintain its former value in terms of its Interest (i.e. its percentage of Company ownership).  Without limitation to the foregoing and strictly for the avoidance of doubt, the effect of the foregoing right of first refusal shall be such that an Investor Member who secured Units hereunder shall be able to maintain the ownership interest in the Company that it had following the close of this Offering in the event that any future such offering(s) create new Units that would otherwise dilute the existing Investor Members’ Interests.  In addition to the foregoing right of first refusal, Investor Members who successfully invest under this Offering will also have an analogous right of first refusal to purchase similar ownership interests in any future companies or other legal entities created for future seasons of the U.S. version of the Series.
 
Opening Night Enterprises – Offering Circular46 
 
 
There are, however, limitations on each of the foregoing rights of first refusal, as follows: (1) The rights of first refusal will not apply to Units that are given in exchange for in-kind or other non-monetary Commitments to Managers or other parties; (2) the purchase of such future Units or other ownership interests shall be subject to availability based on residency of the Investor and any changes in the securities or other relevant laws which would make sale to the former Investor Member impossible or not economically or otherwise feasible; (3) the right of first refusal shall also be subject to the Subscriber’s qualification for investment under the terms of the subsequent offering – by way of example but not limitation, if the subsequent offering is made under Regulation D, Rule 506(b), then it may be limited to accredited investors and some or many of those investors qualifying under the terms of this Regulation A, Tier 2 Offering would not be allowed to invest in the subsequent offering and therefore, their rights of first refusal hereunder would have no effect; (4) All such offerings of equity investment in the Company will be subject to availability; and (5) the rights of first refusal shall not apply to sales of future Units or other ownership interests that are being made to potential business partners and/or the following, whether or not those Units are being given in exchange for monetary or non-monetary Commitments: Banks, venture capital companies, or other institutional or licensed lenders or financiers; television networks or other potential Series distributors; stage companies, theaters or other potential theatrical exhibitors or exhibition companies; television, film or other development or production companies; hosts, producers, executive producers, directors, writers, composers, designers or other potential talent involved with the Series or one or more of the Musicals; brands that might sponsor, be or become affiliated with the Series or one or more Musicals; existing or potential Managers or managing-Members; or other such existing or potential Series or Musical affiliates, whether they are receiving such Units in exchange for monetary or non-monetary commitments.
 
Opening Night Enterprises – Offering Circular47 
 
 
Distributions:

As discussed in COMPENSATION OF MANAGERS AND EXECUTIVE OFFICERS at ‘Musical-Related Compensation of Managers’ above, because the Managers are focusing primarily on the Series as being a loss-leader for the Musicals and the Musicals generating the bulk, if not all of the Company’s eventual profits, the Managers have created a schedule of Recoupment and distribution of Company profits based solely on the profits deriving from exploitation of the Musicals themselves (see, COMPENSATION OF MANAGERS AND EXECUTIVE OFFICERS at ‘Musical-Related Compensation of Managers’ above).  However, as also acknowledged in that section above, it is essentially certain that the Company will also generate various separate revenue streams from the exploitation of the Series, which, when combined with the revenues from exploitation of the Musicals and their underlying rights as well as any and all other yet unrecognized sources, could result in a larger aggregate pool of revenues (the “Company Gross Receipts”) for the Company to disburse among its Interest-holders.
 
If and so long as any amounts are payable to the Investor Members pursuant to the schedule and terms set forth immediately below, the Company shall seek to pay such amounts within sixty (60) days after the end of each calendar quarter with respect to any amounts payable for such quarter; In general, distributions from Company Gross Receipts actually received by the Company (from all sources) shall be made in accordance with the following order of priority:
 
1.          First, to the payment of any Company operating expenses to the extent not covered by the Commitments received.  With respect to those portions of the Company Gross Receipts deriving from exploitation of individual Musical productions, part of such incomes will first be used to pay the applicable Musical production’s Running Expenses and Other Expenses (see, COMPENSATION OF MANAGERS AND EXECUTIVE OFFICERS at ‘Musical-Related Compensation of Managers’ above and the waterfall at part 1 thereof2);
 
2.          Second, to satisfy any liens and to repay any loans, if any, including interest charges and fees thereon, assumed by the Company in connection with the operation of its business, including, without limitation any preferred returns thereon;
 
3.          Third, to the establishment of a cash reserve (distributable cash held back, or accumulated) in an amount determined by the Managers in their sole reasonable discretion from time to time, for anticipated debts, liabilities, expenses and working capital;
 
4.          Gross receipts remaining after the deductions set forth in subsections 1, 2, and 3 immediately above shall be characterized as “Company Net Cash Flow”.  Company Net Cash Flow shall be distributed to each Investor Member in the same proportion as his Commitment bears to the aggregate amounts raised from all Investor Members, until such time as each Investor Member has recouped 100% of his Commitment (“Recoupment”).
 
5.          Next, following Recoupment by all Investor Members, remaining and all subsequent Net Cash Flow, if any, shall be deemed “Company Net Profits” and shall be distributed as follows:
 
c.
The Managers may allocate Company Net Profits “off the top” to third parties in reasonable and customary arms-length transactions in consideration of services provided or rights contributed to the Series, or one or more Musicals, or other production(s) presented hereunder.  There shall be no other distribution of Company Net Profits prior to their characterization as Company Adjusted Net Profits as defined immediately below.
 
d.
The remainder of such Company Net Profits, if any, shall be deemed “Company Adjusted Net Profits”, and shall be applied as follows:
 
                                                                         
2 Describing specifics of gross corridor participations (11.5% - 18% of GWBOR) included in the standard deductions from a Musical’s aggregate GWBOR prior to repayment of investors and others.
 
Opening Night Enterprises – Offering Circular48 
 
 
i.
INVESTOR MEMBER’S COMPANY NET PROFITS: An amount equal to 50% of Company Adjusted Net Profits shall be divided among the Investor Members, with each such Investor Member receiving that portion thereof as its Commitment bears to the amounts raised in the aggregate from all Investor Members; and

ii.
MANAGERS’ COMPANY NET PROFITS: An amount equal to 50% of the Company Adjusted Net Profits shall be paid to the Managers. The Managers shall have the right to allocate Manager’s Company Net Profits to themselves and/or any third parties in their sole discretion.
 
Restrictions on Transferability of Units:

In accordance with the terms set forth in the accompanying Operating Agreement (see, OPERATING AGREEMENT – Article 8.1), despite the fact that the Units are being offered under a Regulation A offering and are therefore technically unrestricted, the Managers have imposed artificial restrictions on the transferability of the Units such that no Member shall be authorized to transfer, sell or assign all or any portion of its Units or any interests or rights therein.  These restrictions have been imposed for various reasons, including to keep the Company from becoming liable for Investor Member violations of Rule 144 resale holding period restrictions and affiliate transfer restrictions as well as protecting the Company from liability emanating from various state securities law (i.e. Blue Sky) registration requirements that would be applicable to resales of otherwise exempted Regulation A, Tier 2-issued Units.  In the event that the SEC one day amends Regulation A and/or other securities laws to preempt application of Blue Sky laws to resales of Regulation A, Tier 2 securities and/or in the event that the Company one day wishes to become a so-called “Reporting Company” under the 1934 Securities Exchange Act and therefore wishes to make the Units freely transferable, it may vote to do so in accordance with the relevant voting and decision making provisions set forth in the Operating Agreement.  However, there is no present indication that the SEC will soon amend the relevant laws, nor does the Company have any present intention to become a “Reporting Company” now or in the future, therefore there is presently no prospect of the Company ever making the Units freely transferrable.

(All capitalized terms used in this paragraph which are not defined in this Offering Circular shall have the meanings given to them in the Operating Agreement).  As described in the Operating Agreement (see, OPERATING AGREEMENT – Article 8.1), the voluntary transfer of any Membership Interests, including Economic Interests, in violation of the prohibition contained in Article 8.1 of the Operating Agreement, shall be deemed invalid, null and void ab initio, and of no force or effect.  Any person or entity to whom Membership Interests are attempted to be transferred in violation of Article 8.1 of the Operating Agreement shall not be entitled to vote on matters coming before the Members, participate in the management of the Company, act as an agent of the Company, receive Distributions from the Company, or have any other rights in or with respect to the Membership Interests.  Notwithstanding the foregoing, a Member may assign its Economic Interests (i.e., rights to receive monies from the Company) if the Assignor provided all Managers with advance Notice and all of the Managers have consented to the same in Writing.  All assignments and/or transfers of Interests of any Member hereunder shall be subject not only to the provisions of Article VIII of the Operating Agreement, but also to all other restrictions which may be placed on such transfers as a result of any other provision contained in the accompanying Subscription Agreement(s) and in any other Article or provision contained in the Operating Agreement, including, but not by way of limitation, any restrictions on resale, transfer, or assignment which are imposed therein or in any of the other Offering Materials.  All assignments or transfers made in accordance with the restrictions set forth in the Offering Materials shall also be subject to any restrictive measures imposed by the Regulation A Tier II, Regulation S, Rule 144, Blue Sky laws, or other Securities Act exemptions, qualifications or filing requirements and all applicable federal, state, or foreign governmental securities regulatory restrictions.
 
No Guaranty:

There is no guaranty that the Company will have enough money at any point in time and in consideration of the priority of distributions set forth above, to ensure that distributions will be made to the Investor Members.

Audit and Statement:

The Company’s financial statements showing the origin thereof shall accompany all distributions paid to the Members by the Company.  For a period of eighteen (18) months after the delivery of a given financial statement, a Member may, during reasonable business hours and upon fourteen (14) days written notice to the Company and at the Member’s expense, audit the books and records of the Company in order to verify the accuracy of any such financial statements they receive with their distributions.  The applicable Member shall deem any statement in respect of which such an audit does not occur within such 18-month period accepted and approved in its entirety. Notwithstanding the above, the cost of such audit shall be at the Company’s expense if, and only if, such audit uncovers that the distribution in respect of the (or any) statement(s) to which such audit relates was in an amount which was 10% or more lower than the amount due to the Member.  If such audit reveals that there was a discrepancy in Company’s favor between the amount actually paid to the Member and the amount owed to the Member, the Member shall immediately remit payment to the Company in the amount of such discrepancy.
 
Opening Night Enterprises – Offering Circular49 
 

Unit Rights and Preferences:

The Investor Member Units being offered under this Offering, shall bear no preemptive, conversion, or other rights, and there no redemptive or sinking fund provisions applicable to such Units.
 
Unregistered and Illiquid Nature of Units:

Although the Units sold under this Offering are not hampered by a resale restriction, they may need to be held by the Investor Member purchasing them for an indefinite period of time.  The Managers have no intention of listing the Units on any exchange and no public market may ever develop for said Units, nor will the Company or the Managers bear any obligation to repurchase the Units at any particular price or at all from any Investor.

Limited Liability of Investors:

The Members shall not have any personal liability for liabilities or obligations of the Company except to the extent of their respective capital Commitments, and shall be indemnified against any further such obligations.  The Members shall not be required to make any further or additional Commitments to the Company or to lend or advance funds to the Company for any purpose. Notwithstanding anything to the contrary in the foregoing, (i) if any court of competent jurisdiction holds that distributions (or any part thereof) received by a Member pursuant to the provisions hereof constitute a return of capital and directs and requires that a Member pay such amount (with or without interest thereon) to or for the account of the Company or any creditor thereof, such obligation shall be the obligation of said Member and not of any other Member or the Company, and (ii) a Member shall indemnify and hold harmless the Company and each Member from any liability or loss incurred by virtue of the assessment of any tax with respect to such Member’s allocable share of the profits or gain of the Company.
 
Opening Night Enterprises – Offering Circular50 
 
 
FEDERAL TAX DISCUSSION

CAUTION: NOTHING STATED IN THE BRIEF DISCUSSION THAT FOLLOWS IS OR SHOULD BE CONSTRUED AS TAX ADVICE TO ANY PROSPECTIVE INVESTOR, INDIVIDUALLY. THE FOLLOWING DISCUSSION REPRESENTS THE BROAD VIEWS AND INTERPRETATIONS OF THE MANAGERS’ TAX COUNSEL ON COMPLEX TAX MATTERS WITH WHICH THE IRS MAY NOT AGREE.  PROSPECTIVE INVESTORS SHOULD SEEK INDIVIDUAL TAX ADVICE FOR SUCH INDIVIDUAL'S UNIQUE TAX SITUATION APART FROM THE TAX CONSEQUENCES OF AN INVESTMENT IN COMPANY INTERESTS.

Introduction: The following discussion summarizes the material federal income tax consequences associated with the acquisition and ownership of the Company Units.  The discussion is not intended, however, as a comprehensive analysis of every federal income tax consideration that may be relevant to purchasers of Units of the Company and the federal income tax consequences to each Investor may vary.  Further, the discussion does not address the state, local or foreign tax laws that could affect the Company or the Investors.  Accordingly, each prospective Investor should consult with his or her own tax advisor before acquiring any such Units.
 
This summary is based upon the Internal Revenue Code of 1986, as amended (the “Code”), existing and proposed Treasury Regulations and judicial decisions and administrative interpretations thereunder, as of the date hereof, all of which are subject to change or to differing interpretation, possibly with retroactive effect.  Prospective Investors should note that any such change or interpretation with retroactive effect could result in federal income tax consequences different from those discussed below.  This summary does not purport to address all tax considerations that may be important to a particular Investor in light of the Investor’s circumstances or to certain categories of investors (such as certain financial institutions, insurance companies, tax-exempt organizations, dealers in securities or foreign currency, controlled foreign corporations, passive foreign investment companies, foreign personal holding companies or others) that may be subject to special rules.  Nor does this summary necessarily or always address discrepant tax consequences and/or circumstances which may affect different classes of Investors.

Classification as a Partnership for Federal Income Tax Purposes: The federal income tax consequences anticipated as a result of investment in the Company will be applicable to the Company and the Members only if the Company is classified as a partnership and not as an association taxable as a corporation for federal income tax purposes.  The IRS has promulgated the so-called “Check-the-Box” regulations that provide that if an eligible entity is domestic and has two or more members, the entity is a partnership by default, unless it elects to be treated as a corporation.  If the Company does not choose to be treated for tax purposes as a corporation, it may be presumed that the Company will be treated as a partnership.  No assurances can be given, however, that the IRS will not challenge the Company’s classification as a partnership for federal income tax purposes.  FOREIGN INVESTORS SHOULD BE AWARE THAT CERTAIN FOREIGN JURISDICTION TAX AUTHORITIES HAVE RULED THAT U.S. COMPANY’S WERE NOT ALLOWED TO BE TAXED AS PARTNERSHIPS FOR PURPOSES OF AVOIDING DOUBLE-TAXATION AND OTHER TAX-CONSEQUENCES IN FOREIGN JURISDICTIONS.
 
Publicly Traded Partnerships

The Omnibus Budget Reconciliation Act of 1987 (the “1987 Act”) contains provisions that will produce adverse tax consequences for publicly traded partnerships.  Under the 1987 Act, publicly traded partnerships that were not in existence on December 17, 1987 will be taxed as corporations (see Code §7704).  The Company was not (will not have been) in existence on December 17, 1987 but the term “publicly traded partnership” is defined for purposes of these provisions as any partnership whose interests are traded on an established securities market or are readily tradeable on a secondary market or the substantial equivalent thereof.

The Company may avoid being classified as a publicly traded partnership under this definition if (1) the Units will not be traded on an established securities market; (2) restrictions placed on transfers of Units are exercised to prevent public trading; and (3) the Company Manager prevents the Units from being considered as readily tradable on a secondary market or the substantial equivalent thereof.

The adoption of the provisions affecting publicly traded partnerships address some of the same issues as the earlier legislative proposals directed at “large” partnerships.  Since the PPM does not limit the number of Members to 35, the Company could very likely be characterized as a “large partnership” under the prior legislative proposals.  It is not anticipated, however, that Congress will adopt a proposal directed at “large partnerships” in the immediate future, since the “publicly traded partnership” provisions of the ‘87 Act address much the same concerns.
 
Limitations on Deductibility of Losses by Investors

A. In General: The deduction of Company losses by an Investor is subject to three limitations.  Initially, under Section 704(d) the Investor’s deduction for his or her distributive share of Company loss is limited to and may not exceed his or her basis for his or her Company interest (see discussion below).  Further, even though the loss may be allowable to an Investor to the extent of that Investor’s basis, it is also subject to the “at risk” rules of Section 465 (see discussion below).  Then, after the “at risk” rules are met, the loss is also subject to the passive loss rules of Section 469 (see discussion below).  Each of the three limitations provides for a carryover of any disallowed loss.  Thus, the limitations may be viewed as timing concepts more than true disallowance provisions. The limitations are applied in the following order: First the basis limitation of Section 704(d), then the “at risk” limitation, and finally the passive loss limitation of Section 469.
 
Opening Night Enterprises – Offering Circular51 
 

B. Basis of Company Units: The basis of Company interests is relevant in determining an Investor’s gain or loss on the sale or other disposition of an interest in the Company, and may limit the ability of an Investor to deduct losses attributable to the operations of the Company.  An Investor will be entitled to deduct his or her distributive share of any Company tax losses (if any) only to the extent of the adjusted basis in his or her Company interest at the close of the Company taxable year in which the loss occurs.  The basis of an Investor’s interest in the Company initially will equal his or her cash contribution or adjusted basis of other property contributed to the Company in exchange for such interest.  Such basis will be increased by the Investor’s share of certain Company nonrecourse liabilities [determined in accordance with applicable Treasury Regulations (see discussion below) and his or her share of Company profits] and by his or her share of the Company’s taxable income.  An Investor’s basis for his or her Company interest will be reduced by; (i) any decrease in such Investor’s share of Company nonrecourse liabilities; (ii) the amount of cash distributions received by the Investor; and (iii) such Investor’s share of Company tax losses, if any.

C. “At Risk” Limitations: The so-called “at risk” rules contained in Code Section 465 generally provide that a limited partner (and by analogy a member of a manager-managed Company) cannot claim his or her distributive share of the losses incurred by the investment vehicle (entity) to the extent such losses exceed his or her amount “at risk” in the business activity undertaken, as determined at the close of the taxable year of the entity.  Only deductions in excess of income received from the activity in the taxable year are “losses” for these purposes, and thus a limited partner (or Company Member) generally is entitled to claim his or her share of the entity’s deductions to the extent of his or her share of entity income for a taxable year, even if the investor has no amount “at risk”. The “at risk” rules of Code Section 465 are applicable only to individuals (including individual partners in a partnership), estates, trusts, shareholders of an S-corporation, and certain closely-held C-corporations in which five (5) or fewer individuals own more than fifty-percent (50%) of the stock.
 
An investor generally will be treated as “at risk” under Code Section 465 to the extent of; (i) the unborrowed cash and the adjusted basis of other property he or she contributes to the entity’s business activity; and (ii) the investor’s share of amounts borrowed for use in the entity’s business activity if the investor is personally liable therefor or has pledged his or her property (other than property used in the entity’s business activity) as security for the borrowed amount.  An investor will not be considered “at risk” with respect to amounts borrowed from a person who has an interest in the activity or from a person related to a person (other than the taxpayer) with an interest in the activity.  For this purpose, a person whose interest in the activity is solely that of a creditor generally will not be considered to have an interest in the activity.  Further, an investor will not be considered “at risk” with respect to any amounts as to which he or she is protected against loss through nonrecourse financing, guarantees, stop loss or reimbursement agreements, insurance or other similar arrangements.
 

An Investor should be able to include in his or her amount “at risk” his or her cash contribution to the Company made from unborrowed funds or from proceeds of a borrowing that he or she is personally liable to repay, provided such borrowing is from a person who; (i) does not have an interest other than as creditor in the Company; and (ii) is not related, within the meaning of Code Section 168(e)(4)(D), to a person with a non-creditor-only interest in the Company (other than the Investor). If the above-discussed rules are followed, each Investor could reasonably expect to have sufficient amounts “at risk” in the Company to deduct his or her distributive share of any tax loss that may be experienced by the Company, to the extent of his or her cash capital contribution or the adjusted basis of property contributed to the Company.  On the other hand, there is a risk that the “at risk” limitations would operate to defer the deduction for advertising costs paid with borrowed funds, if funds were borrowed to pay advertising costs.


Company losses deducted by an Investor will reduce his or her amount “at risk”, and this reduced “at risk” amount would then be carried forward to the succeeding taxable year.  The “at risk” amount will also be reduced by any cash distributions by the Company to the Investor.  If deductions are suspended due to an insufficient amount “at risk”, the suspended amount will be available to the Investor as a deduction in subsequent taxable years subject to the “at risk” limitations. Suspended amounts will be deductible no later than the taxable year in which an Investor disposes of his or her interest in the Company.  If the amount “at risk” of an Investor is reduced below zero, the Investor must include as income the amount of previously allowed losses to the extent of the negative amount “at risk”.  This recaptured amount would be taxable to the Investor as ordinary income in the subject taxable year.

D. Passive Loss Limitation: Possibly the most significant change made by the Tax Reform Act of 1986 was the passive loss limitation enacted by Congress in Internal Revenue Code Section 469.  Congress expressly sought to eliminate the so-called “abusive tax shelter”.  Section 469 accomplished Congress’ intent by denying a taxpayer the use of deductions and credits generated by “passive” activities against income from other activities until the taxpayer disposes of the interest in the passive activities.  The determination of whether or not an activity is “passive” is defined by the statute based on whether or not a taxpayer “materially participates” in the activity and the activity involves the conduct of a trade or business.  The material participation test divides taxpayers into “active” participants and “passive” participants.  The active/passive determination must be made separately for each taxpayer and for each activity in which a taxpayer participates.
 
To “materially participate” in an activity, a taxpayer must be involved in its operations on a sufficiently regular, continuous, and substantial basis.  Definitions of the terms “regular”, “continuous” and “substantial” are deferred to the regulations, which are lengthy, and far from clear.  Nonetheless, it is clear that generally member/investors in manager-managed limited liability companies are presumed to be not materially participating in the relevant activity, subject to certain exceptions [see Internal Revenue Code Section 469(h)(2)].

The passive activity loss rules apply to individuals, estates, and trusts.  They also apply to personal service corporations (provided that more than ten-percent (10%) of the stock by value is held by the employee-owner(s)) and closely-held C-corporations that have five (5) or fewer individuals holding more than fifty-percent (50%) of the stock.
 
Opening Night Enterprises – Offering Circular52 
 

After each activity in which a taxpayer is involved is classified as either a passive or an active activity as to that taxpayer, income or loss is determined on an activity-by-activity basis.  Deductions from all passive activities that exceed income from all passive activities (excluding portfolio income) may not be deducted from other income.

“Portfolio income” is a third classification of income, that was created by Congress (along with “active” income and “passive” income), which includes items such as interest, dividends, royalties and gains from the sale of property held for investment.  Portfolio income, expenses, gains, and losses are excluded from the determination of net income or loss from a passive activity.  For example, interest income earned by Company funds held in a bank account, or other interest-bearing instrument pending use in Company operations will be considered portfolio income, and when allocated, pro rata, among the Investors, it will not be offset by “passive” deductions, even though the passive deductions are generated by the Company.

 
The income and losses from “active” activities are netted.  If a net loss results from an “active” activity, the loss can be deducted against any other income.  Similarly, the income and losses from “passive” activities are also netted.  If net income results, the passive activity limitations do not apply.  However, if a net passive loss results, the loss cannot be deducted against income from any other source.  Instead, such losses become suspended until a later tax year when the taxpayer has net passive income from other passive activities, or until the taxpayer disposes of his or her entire interest in the passive investment that generated the loss.  A disposition that will trigger the usability of carried forward passive losses must be in the form of a fully taxable transaction, and the person acquiring the interest cannot be related to the taxpayer.  Upon such a disposition, the suspended losses, which can be carried forward indefinitely, are applied first against the income resulting from the disposition, if any, and thereafter, may be applied to offset any income.  A disposition of less than the entire interest in the passive activity will not be sufficient to trigger the allowance of suspended losses.

Existence of Trade or Business: Although the Company should be entitled to treat deductions claimed in connection with the Series and Musicals as expenses incurred in the Company’s overall trade or business of financing, producing, and exploiting the Series and Musicals, the IRS may assert that otherwise deductible items (other than depreciation) incurred in connection with the Series and Musicals, if any, should not be treated as ordinary and necessary business expenses under Code Section 162(a), because the Company itself is not actively engaged in television program or musical theater production or distribution.

The IRS may take the position that expenses incurred prior to commencement of principal photography constitute “start-up” expenses that would be capitalized and amortized over a sixty (60) month period pursuant to Code Section 195, on the theory that such expenses are incurred to create a trade or business, prior to becoming an active trade or business.  Such a position would not appear to be well founded, since the business of the Company includes financing and production of the Series and Musicals.
 
Profit Motive and Code Section 183: In order for certain expenses to be deductible by the Investors, such expenses must be incurred in a trade or business or other activity engaged in for profit.  If for any reason such expenses were determined not to have been incurred in a trade or business or other activity for profit, the deductions attributable to the activity would be allowed to Investors who are individuals or S-corporations only to the extent permitted by Code Section 183.  Pursuant to Code Section 183, all deductions that are not dependent on a profit motive (such as interest or taxes) generally would be allowable, and the balance of the deductions that would otherwise be permitted only if the activity were engaged in for profit would be allowed only to the extent of the amount that gross income from the activity exceeded the deductions that were not dependent on a profit motive.

The determination as to whether an activity constitutes an activity engaged in for profit for tax purposes is based on all the facts and circumstances and is determined at the Investor, not entity level, so the requisite intent of the Investor controls this determination.

Since the test of whether an activity is deemed to be “engaged in for profit” is based on facts and circumstances that exist from time to time, no assurance can be given that the IRS will not attempt to apply Section 183 of the Code in order to disallow deductions by the Investors for Company operations.  However, if it is the intention of the Manager to at all times operate the Company in a business-like manner and to create its product with the intention of generating an overall profit, the “engaged in for profit” test should be met.
 
Allocation of COMPANY Tax Items: The allocation among the Investors of the Company’s income, gains, losses, deductions and credits (“Tax Items”) will be determined under the Operating Agreement except to the extent an allocation stated in the Operating Agreement both (i) lacks “substantial economic effect”, and (ii) is not in accordance with the Investors’ interests in the Company, as determined under all the facts and circumstances [see Code Section 704(b)].
 
Opening Night Enterprises – Offering Circular53 
 

Treasury Regulations define the term “substantial economic effect” and describe an investor’s interest in the entity for purposes of Code Section 704(b) [see Treas. Reg. Section 1.704-1(b)(2)&(3)]. Under these Treasury Regulations, an allocation of a flow-through entity’s Tax Items to an investor generally has “economic effect” only if (i) the allocation is reflected in the investor’s capital account balance and capital accounts are otherwise maintained in accordance with the tax accounting principles set forth in the regulations; (ii) liquidation proceeds are, throughout the term of the entity, distributable in accordance with the investor’s capital account balances; and (iii) any investor with a deficit capital account balance following the distribution of liquidation proceeds must restore such deficit to the entity [see Treas. Reg. Section 1.704-1(b)(2)(ii)].  However, as discussed below, an alternative test is available concerning point
(iii). The Treasury Regulations contain detailed rules relating to the maintenance of capital accounts for this purpose.

The economic effect of an allocation is deemed to be “substantial” if there is a reasonable possibility that the allocation will affect substantially the dollar amounts to be received by the investors, independent of tax consequences.  The economic effect of an allocation generally will not be substantial if (i) the overall tax liability of the investors for the taxable year is reduced by reason of the allocation and the overall capital account adjustments for all investors in the taxable year would be substantially the same in the absence of the allocation; or (ii) there is a strong likelihood that the initial economic effect of the allocation will be offset by one or more allocations in subsequent years and the investors’ tax liability is reduced thereby [see Treas. Reg. Section 1.704-1(b)(2)(iii)(b)&(c)].
 
If the allocation of the investment vehicle’s Tax Item does not have “substantial economic effect”, the proper allocation of such item will be determined in accordance with the investor’s interest in the entity with respect to such item [IRC Section 704(b)].  Under the Treasury Regulations, the investor’s interests in the entity with respect to an entity Tax Item are generally determined by examining the manner in which the investors have agreed to “share the economic benefit or burden” attributable to such item.  The economic arrangement of the investors with respect to an entity Tax Item is to be determined on the basis of all the facts and circumstances, including (i) the investors’ relative capital contributions to the entity; (ii) the interests of the investors in economic profits and losses; (iii) the interests of the investors in operating distributions; and (iv) the rights of the investors with respect to liquidating distributions [see Treas. Reg. Section 1.704-1(b)(3)].

COMPANY Tax Deductions and Credits: The Company is not designed to generate tax deductions for the Investors, and prospective Investors should not acquire Units for the purpose of sheltering income from other sources.  Nevertheless, the Company will incur expenses in connection with its business activities, many of which will result in tax deductions.  The discussion below describes certain Tax Items that may or may not be deductible for federal income tax purposes.

Taxable Income May Exceed Distributions: Prospective Investors should be aware that there is a substantial possibility that taxable income that is allocated to Investors will exceed the cash distributed to such Investors in a given taxable year.

Taxable Year of COMPANY: Section 706(b) of the Code requires the Company to adopt the taxable year of the Investors owning a majority interest in the Company capital and profits.  It is anticipated that the Company will adopt a calendar taxable year under this provision.  If Investors who are calendar year taxpayers do not hold a majority interest in Company capital and profits, the Company would be required to adopt the taxable year of its “principal partners” if all such partners have the same taxable year.  If there were principal partners with different taxable years, adoption of a calendar year would be required.
 
Liquidation of the Company: The dissolution and liquidation of the Company will generally not result in any gain or loss being recognized by the Company.  Each Investor will recognize gain to the extent that the sum of money received (which includes any decrease in an Investor’s share of Company liabilities) exceeds such Investor’s adjusted tax basis in the Company [see IRC Sections 731(a) and 752(b)].  Subject to the rules concerning “unrealized receivables” and “substantially appreciated inventory items” (“Section 751 property”), such gain will be capital gain.

Capital loss will be recognized only if “money” (which includes a reduction in an Investor’s share of Company liabilities) and Section 751 property are distributed, and only to the extent an Investor’s adjusted basis for such Unit exceeds the sum of such money (as defined above) and the basis to the Investor of his or her share of Section 751 property.  If the liquidating distribution includes property other than money (as defined above) and “Section 751 property”, no loss will be recognized.

Where property other than money is distributed in liquidation, each Investor’s basis for such property received will be such Investor’s adjusted basis for his or her Unit in the Company reduced by any money (as defined above) distributed to such Investor.  To the extent “Section 751 property” is distributed, a special allocation of an Investor’s basis for his or her interest in the Company must first be made to such property, with any remaining basis allocated to other property in proportion to his or her adjusted basis to the Company (see IRC Section 732).

The dissolution and liquidation of the Company will generally result in each Investor recognizing income only to the extent cash received in the distribution exceeds the Investor’s basis of his or her Company interest.  So long as the Company’s Operating Agreement requires the liquidation of all Company property prior to winding up the Company and that liquidating distributions be made only in cash, the rules for distributing money, described above, should govern the tax consequences upon dissolution and liquidation of the Company.
 
Tax Exempt Investors: Tax-exempt organizations, such as pension and profit sharing plans, Keogh Plans, which are qualified under Section 402 of the Code, and Individual Retirement Accounts, usually are not subject to federal income taxation.  However, a tax is imposed by Section 511 of the Code on an exempt organization’s “unrelated business taxable income” (“UBTI”).  This tax is computed at the rates provided in Section 11 of the Code.
 
Opening Night Enterprises – Offering Circular54 
 

UBTI is generally defined in Section 512 of the Code as gross income derived by any organization from any unrelated trade or business (i.e., not related to the exempt purpose of the Investor).  UBTI received by an otherwise tax-exempt organization in excess of $1,000 during any taxable year is subject to tax.  For computing UBTI, an Investor that is a tax-exempt organization would be required to take into account its share of income from the Company to the extent such income was UBTI.  Certain items are excluded from UBTI, including dividends, interest, royalties, most rents from real property and gains from the sale of property other than “inventory” or “property held primarily for sale to customers in the ordinary course of business”.  (Such exclusions do not apply to income generated by a “publicly-traded partnership”, although the Company should not be considered a “publicly-traded partnership” under the parameters of IRS Notice 88-75, I.R.B. 1988-27).

Future Legislation: In recent years, there have been a number of proposals made in Congress by individual representatives, government agencies and the executive branch of the federal government for changes in the federal income tax laws.  In addition, the IRS has proposed and may still be considering changes in regulations and procedures, and numerous private interest groups have lobbied for regulatory and legislative changes in the federal income tax laws.
 
It is impossible to predict with any degree of certainty the likelihood of adoption of any of such proposals or the probable effect of any such proposals upon the income tax treatment presently associated with investment in the Company, or the effective date of any legislation that may derive from any such proposals.

PROSPECTIVE INVESTORS ARE STRONGLY URGED TO CONSIDER ONGOING DEVELOPMENTS IN THIS UNCERTAIN AREA OF THE LAW AND TO CONSULT THEIR OWN TAX ADVISORS IN ASSESSING THE RISKS OF THE PURCHASE OF AN INTEREST IN THE COMPANY.

State and Local Taxes: In addition to the federal income tax consequences described above, prospective Investors should consider potential state and local tax consequences of an investment in the Company.  An Investor’s income or loss from the Company may be required to be included in determining such Investor’s reportable income for purposes of state and local taxation.

THIS DISCUSSION MERELY ADVISES THAT POTENTIAL STATE AND LOCAL TAX RISKS MAY BE ASSOCIATED WITH INVESTMENT IN THE COMPANY.  EACH INVESTOR IS ADVISED TO CONSULT HIS OR HER OWN TAX ADVISOR FOR ADVICE AS TO STATE AND LOCAL TAXES WHICH MAY BE PAYABLE IN CONNECTION WITH INVESTMENT IN THE COMPANY.

Foreign Taxes: In addition to the federal income tax consequences described above, prospective Investors (particularly those who are non-U.S. or dual citizenship residents) should consider applicable foreign tax consequences of an investment in the Company.  An Investor’s income or loss from the Company may be required to be included in determining such Investor’s reportable income for purposes of foreign jurisdictional taxation.
 
THIS DISCUSSION MERELY ADVISES THAT POTENTIAL FOREIGN (NON-U.S.) TAX RISKS MAY BE ASSOCIATED WITH INVESTMENT IN THE COMPANY.  EACH INVESTOR IS ADVISED TO CONSULT HIS OR HER OWN TAX ADVISOR FOR ADVICE AS TO FOREIGN TAXES WHICH MAY BE PAYABLE IN CONNECTION WITH INVESTMENT IN THE COMPANY.

General Tax Considerations: The foregoing summary is not intended as a substitute for careful tax planning, particularly since the income tax consequences of an investment in the Company are complex and certain of these consequences will not be the same for all taxpayers.  Accordingly, prospective purchasers of Units are strongly urged to consult their tax advisors.

Importance of Obtaining Professional Advice: THE FOREGOING ANALYSIS IS NOT INTENDED AS A SUBSTITUTE FOR CAREFUL INDIVIDUAL TAX PLANNING.  THE TAX MATTERS RELATING TO THE COMPANY AND THE TRANSACTIONS DESCRIBED HEREIN ARE COMPLEX AND ARE SUBJECT TO VARYING INTERPRETATIONS. MOREOVER, THE EFFECT OF EXISTING INCOME TAX LAWS AND POSSIBLE CHANGES IN SUCH LAWS WILL VARY WITH THE PARTICULAR CIRCUMSTANCES OF EACH INVESTOR. EACH PROSPECTIVE INVESTOR SHOULD CONSULT WITH AND RELY ON HIS OR HER OWN ADVISORS WITH RESPECT TO THE POSSIBLE TAX CONSEQUENCES (FEDERAL AS WELL AS STATE, LOCAL AND FOREIGN) OF AN INVESTMENT IN THE COMPANY.  Such individual tax advice is suggested for an individual’s unique tax situation apart from the tax consequences of an investment in the Company interests.
 
Opening Night Enterprises – Offering Circular55 
 
 
ERISA CONSIDERATIONS


General Fiduciary Obligations:

Trustees and other fiduciaries of qualified retirement plans or IRAs that are set up as part of a plan sponsored and maintained by an employer, as well as trustees and fiduciaries of Keogh Plans under which employees, in addition to self-employed individuals, are participants (together, “ERISA Plans”), are governed by the fiduciary responsibility provisions of Title 1 of the Employee Retirement Income Security Act of 1974 (“ERISA”). An investment in the Units by an ERISA Plan must be made in accordance with the general obligation of fiduciaries under ERISA to discharge their duties (i) for the exclusive purpose of providing benefits to participants and their beneficiaries; (ii) with the same standard of care that would be exercised by a prudent man familiar with such matters acting under similar circumstances; (iii) in such a manner as to diversify the investments of the plan, unless it is clearly prudent not do so; and (iv) in accordance with the documents establishing the plan. Fiduciaries considering an investment in the Units should accordingly consult their own legal advisors if they have any concern as to whether the investment would be inconsistent with any of these criteria.

Fiduciaries of certain ERISA Plans which provide for individual accounts (for example, those which qualify under Section 401(k) of the Code, Keogh Plans and IRAs) and which permit a beneficiary to exercise independent control over the assets in his individual account, will not be liable for any investment loss or for any breach of the prudence or diversification obligations which results from the exercise of such control by the beneficiary, nor will the beneficiary be deemed to be a fiduciary subject to the general fiduciary obligations merely by virtue of his exercise of such control. On October 13, 1992, the Department of Labor issued regulations establishing criteria for determining whether the extent of a beneficiary’s independent control over the assets in his account is adequate to relieve the ERISA Plan’s fiduciaries of their obligations with respect to an investment directed by the beneficiary. Under the regulations, the beneficiary must not only exercise actual, independent control in directing the particular investment transaction, but also the ERISA Plan must give the participant or beneficiary a reasonable opportunity to exercise such control, and must permit him to choose among a broad range of investment alternatives. 
 
Trustees and other fiduciaries making the investment decision for any qualified retirement plan, IRA or Keogh Plan (or beneficiaries exercising control over their individual accounts) should also consider the application of the prohibited transactions provisions of ERISA and the Code in making their investment decision. Sales and certain other transactions between a qualified retirement plan, IRA or Keogh Plan and certain persons related to it (e.g., a plan sponsor, fiduciary, or service provider) are prohibited transactions. The particular facts concerning the sponsorship, operations and other investments of a qualified retirement plan, IRA or Keogh Plan may cause a wide range of persons to be treated as parties in interest or disqualified persons with respect to it. Any fiduciary, participant or beneficiary considering an investment in Units by a qualified retirement plan IRA or Keogh Plan should examine the individual circumstances of that plan to determine that the investment will not be a prohibited transaction. Fiduciaries, participants or beneficiaries considering an investment in the Units should consult their own legal advisors if they have any concern as to whether the investment would be a prohibited transaction.

Regulations issued on November 13, 1986, by the Department of Labor (the “Final Plan Assets Regulations”) provide that when an ERISA Plan or any other plan covered by Code Section 4975 (e.g., an IRA or a Keogh Plan which covers only self-employed persons) makes an investment in an equity interest of an entity that is neither a “publicly offered security” nor a security issued by an investment company registered under the Investment Company Act of 1940, the underlying assets of the entity in which the investment is made could be treated as assets of the investing plan (referred to in ERISA as “plan assets”). Programs which are deemed to be operating companies or which do not issue more than 25% of their equity interests to ERISA Plans are exempt from being designated as holding “plan assets.”  The Managers anticipate that the Company would clearly be characterized as an “operating company” for the purposes of the regulations, and that it would therefore not be deemed to be holding “plan assets.”
 
Classification of the Company’s assets of as “plan assets” could adversely affect both the plan fiduciary and management. The term “fiduciary” is defined generally to include any person who exercises any authority or control over the management or disposition of plan assets. Thus, classification of our assets as plan assets could make the Managers a “fiduciary” of an investing plan. If the Company’s assets are deemed to be plan assets of investor plans, transactions which may occur in the course of its operations may constitute violations by the management of fiduciary duties under ERISA. Violation of fiduciary duties by management could result in liability not only for management but also for the trustee or other fiduciary of an investing ERISA Plan. In addition, if the Company’s assets are classified as “plan assets,” certain transactions that we might enter into in the ordinary course of our business might constitute “prohibited transactions” under ERISA and the Code. 
 
Opening Night Enterprises – Offering Circular56 
 
 
Under Code Section 408(i), as amended by the Tax Reform Act of 1986, IRA trustees must report the fair market value of investments to IRA holders by January 31 of each year. The Company has not yet promulgated regulations defining appropriate methods for the determination of fair market value for this purpose. In addition, the assets of an ERISA Plan or Keogh Plan must be valued at their “current value” as of the close of the plan’s fiscal year in order to comply with certain reporting obligations under ERISA and the Code. For purposes of such requirements, “current value” means fair market value where available. Otherwise, current value means the fair value as determined in good faith under the terms of the plan by a trustee or other named fiduciary, assuming an orderly liquidation at the time of the determination. The Company does not have an obligation under ERISA or the Code with respect to such reports or valuation although the Managers will use good faith efforts to assist fiduciaries with their valuation reports. There can be no assurance, however, that any value so established (i) could or will actually be realized by the IRA, ERISA Plan or Keogh Plan upon sale of the Units or upon liquidation of the Company, or (ii) will comply with the ERISA or Code requirements.

The income earned by a qualified pension, profit sharing or stock bonus plan (collectively, “Qualified Plan”) and by an individual retirement account (“IRA”) is generally exempt from taxation. However, if a Qualified Plan or IRA earns “unrelated business taxable income” (“UBTI”), this income will be subject to tax to the extent it exceeds $1,000 during any fiscal year. The amount of unrelated business taxable income in excess of $1,000 in any fiscal year will be taxed at rates up to 36%. In addition, such unrelated business taxable income may result in a tax preference, which may be subject to the alternative minimum tax. It is anticipated that income and gain from an investment in the Units will not be taxed as UBTI to tax exempt shareholders, because they are participating only as passive financing sources.
 
Opening Night Enterprises – Offering Circular57 
 
 

 

 
PART F/S
 

  

OPENING NIGHT ENTERPRISES, LLC

 

 

FINANCIAL STATEMENTS

 

DECEMBER 31, 2018

 

(AUDITED)

 

 

 

 

 

 

 

Cashuk, Wiseman, Goldberg, Birnbaum, & Salem, LLP

Certified Public Accountants

 

 

3333 Camino Del Rio South • Suite 230 • San Diego, CA 92108-3808 • P (619) 563-0145 • F (619) 563-9584 • www.cwgcpa.com

Opening Night Enterprises – Offering Circular58 
 

 

OPENING NIGHT ENTERPRISES, LLC

TABLE OF CONTENTS

December 31, 2018 and 2017

 

 

  PAGE
   
Independent Auditors’ Report 60-61
   
Balance Sheets 62
   
Statements of Income 63
   
Statements of Members’ Equity 64
   
Statements of Cash Flows 65
   
Notes to the Financial Statements 66-68

 

   

Certified Public Accountants

Telephone (619) 563-0145

Fax (619) 563-9584 • www.cwgcpa.com

 

Opening Night Enterprises – Offering Circular59 
 

 

Certified Public Accountants

PARTNERS

Richard A. Goldberg, CPA
Wes L. Salem, CPA

Ma. Lolita Cremat, CPA
Michael Selamet Kwee, CPA 

Office manager

Tanya Davis

 

 

 

 

 

 

INDEPENDENT AUDITORS’ REPORT

 

 

 

To the Board of Directors and Members of

Opening Night Enterprises, LLC

 

We have audited the accompanying financial statements of Opening Night Enterprises, LLC (a California limited liability company), which comprise the balance sheets as of December 31, 2018 and 2017, and the related statements of income, member’s equity and cash flows for the years then ended, and the related notes to the financial statements.

 

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

 

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

3333 Camino Del Rio South | Suite 230 | San Diego, CA 92108-3808 | P (619) 563-0145 | F (619) 563-9584 | www.cwgcpa.com

Opening Night Enterprises – Offering Circular60 
 

 

 

 

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Opening Night Enterprises, LLC as of December 31, 2018 and 2017, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

 

 

 

CASHUK, WISEMAN, GOLDBERG, BIRNBAUM AND SALEM, LLP

 

San Diego, California

April 23, 2019

 

Opening Night Enterprises – Offering Circular61 
 

 

OPENING NIGHT ENTERPRISES, LLC

BALANCE SHEETS

December 31, 2018 and 2017

 

 

ASSETS

 

 

   2018   2017 
         
CURRENT ASSETS          
Cash and Cash Equivalents (Note A)  $276   $1,172 
           
TOTAL ASSETS  $276   $1,172 
           
           
           
           
           
LIABILITIES AND MEMBERS' EQUITY
           
           
           
CURRENT LIABILITIES          
Accrued Expenses  $950   $750 
Income Tax Payable (Note B)   800    800 
           
TOTAL LIABILITIES   1,750    1,550 
           
MEMBERS' EQUITY (DEFICIT)   (1,474)   (378)
           
TOTAL LIABILITIES AND MEMBERS' EQUITY  $276   $1,172 

 

The accompanying notes are an integral part or these financial statements.

 

   

Certified Public Accountants

Telephone (619) 563-0145

Fax (619) 563-9584 • www.cwgcpa.com

 

Opening Night Enterprises – Offering Circular62 
 

 

OPENING NIGHT ENTERPRISES, LLC

STATEMENTS OF INCOME

For The Years Ended December 31, 2018 and 2017 

 

 

   2018   2017 
         
REVENUES  $-   $- 
           
EXPENSES          
General & Administrative   1,170    218 
Professional Fees-Legal   3,456    7,442 
Professional Fees-Other   9,445    1,500 
           
TOTAL EXPENSES   14,071    9,160 
           
INCOME (LOSS) BEFORE TAXES   (14,071)   (9,160)
           
Income Tax Expense (Note B)   800    800 
           
NET LOSS  $(14,871)  $(9,960)

 

The accompanying notes are an integral part or these financial statements. 

 

   

Certified Public Accountants

Telephone (619) 563-0145

Fax (619) 563-9584 • www.cwgcpa.com

 

Opening Night Enterprises – Offering Circular63 
 

 

OPENING NIGHT ENTERPRISES, LLC

STATEMENTS OF MEMBERS EQUITY

For The Years Ended December 31, 2018 and 2017 

 

 

Beginning Balance, January 1, 2017  $- 
      
Contributions   9,582 
      
Distributions   - 
      
Net Income (Loss)   (9,960)
      
Ending Balance, December 31, 2017  $(378)
      
Contributions   13,775 
      
Distributions   - 
      
Net Income (Loss)   (14,871)
      
Ending Balance, December 31, 2018  $(1,474)

 

The accompanying notes are an integral part or these financial statements. 

 

   

Certified Public Accountants

Telephone (619) 563-0145

Fax (619) 563-9584 • www.cwgcpa.com

 

Opening Night Enterprises – Offering Circular64 
 

 

OPENING NIGHT ENTERPRISES, LLC
STATEMENT OF CASH FLOWS

For The Years Ended December 31, 2018 and 2017  

 

 

  2018   2017 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net Loss  $(14,871)  $(9,960)
Adjustments to Reconcile Net Income to Net Cash          
Cash Provided(Used) by Changes in          
Operating Assets and Liabilities:          
Accrued Expenses   200    750 
Income Tax Payable   -    800 
           
CASH USED FOR OPERATING ACTIVITIES   (14,671)   (8,410)
           
FINANCING ACTIVITIES          
Member's Contribution   13,775    9,582 
           
CASH PROVIDED BY FINANCING ACTIVITIES   13,775    9,582 
           
INCREASE IN CASH AND CASH EQUIVALENTS   (896)   1,172 
           
Cash and Cash Equivalents at Beginning of Period   1,172    - 
           
CASH AND CASH EQUIVALENTS AT END OF PERIOD  $276   $1.172 
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:          
           
Income Taxes Paid  $800   $- 
Interest Expense   -    - 

 

The accompanying notes are an integral part or these financial statements.

 

   

Certified Public Accountants

Telephone (619) 563-0145

Fax (619) 563-9584 • www.cwgcpa.com

 

Opening Night Enterprises – Offering Circular65 
 

 

OPENING NIGHT ENTERPRISES, LLC

NOTES TO THE FINANCIAL STATEMENTS

December 31, 2018

 

NOTE A-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

 

1.Opening Night Enterprises, LLC (the Company) was formed under the laws of the State of California on December 12, 2016 and started operations on January 1, 2017. The Company has adopted a December 31 calendar year end for reporting requirements.

 

2.The Company was formed to create television programs that promote musical theater entertainment. The Company aims to blend television and certain mobile platforms with the musical theater industry, develop undiscovered creative teams and generate revenue in both television and live on stage realms.

 

3.In general, revenue is recognized by the Company based on the public performance data for musical theater presentation and as services are performed for production costs. There was no revenue for the years ended December 31, 2018 and 2017.

 

4.Cash & Cash Equivalents for purposes of the statement of cash flows, include cash on hand, cash in checking and savings accounts with banks. All short-term debt securities with a maturity of three months or less are considered cash equivalents.

 

5.Use of Estimates-The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates.

 

6.Leases that meet the criteria for capitalization are classified as capital leases. Leases that do not meet such criteria are classified as operating leases and related rentals are charged to expense as incurred. As of December 31, 2018, there is no such leases.

 

7.Concentration of Cash and Credit Risk-The Company maintains corporate cash balances which, at times, may exceed federally insured limits. Management believes it is not exposed to any significant risk on its cash balances. At December 31, 2018, the Company has no uninsured cash balances.

 

8.Advertising Costs are expensed in the year incurred. The Company incurred no advertising expense in the years ended December 31, 2018 and 2017.

 

9.Fair Value of Financial Instruments-Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 820,  “Fair Value Measurements and Disclosures”, defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity.

 

   

Certified Public Accountants

Telephone (619) 563-0145

Fax (619) 563-9584 • www.cwgcpa.com

 

Opening Night Enterprises – Offering Circular66 
 

 

OPENING NIGHT ENTERPRISES, LLC

NOTES TO THE FINANCIAL STATEMENTS

December 31, 2018

 

NOTE A-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CON’T:

 

Cash and Cash Equivalents, Accrued Liabilities and Other Payables-The carrying amounts reported in the balance sheets for these items are a reasonable estimate of fair value.

 

NOTE B-INCOME TAXES:

 

Opening Night Enterprises, LLC is treated as a partnership for federal and state income tax purposes, with income taxes payable personally by the members. Accordingly, no provision has been made in these financial statements for federal income taxes for the Company. The State of California imposes a $800 minimum tax.

 

As a limited liability company, each member’s liability is limited to amounts reflected in their respective member equity accounts in accordance with the Operating Agreement. The income allocable to each member is subject to examination by federal and state taxing authorities. In the event of an examination of the income tax returns, the tax liability of the members could be changed if an adjustment in the income is ultimately determined by the taxing authorities.

 

Certain transactions of the Company may be subject to accounting methods for income tax purposes that differ significantly from the accounting methods used in preparing the financial statements in accordance with generally accepted accounting principles. Accordingly, the taxable income of the Company reported for income tax purposes may differ from net income in these financial statements.

 

The Company has adopted FASB ASC 740-10 regarding accounting for uncertain income tax positions. Management is not aware of any tax positions that are more likely than not to change in the next 12 months, or that would sustain an examination by applicable taxing authorities.

 

The Company recognizes penalties and interest arising from uncertain tax positions as incurred in the statement of income and comprehensive income, which are none for the period ended December 31, 2018. The federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years after they are filed.

 

NOTE C-RETIREMENT PLAN:

 

The Company currently does not sponsor a retirement plan for its employees.

 

NOTE D-COMMITMENTS AND CONTINGENCIES:

 

As of the date of the financial statements, the Company has not signed office facility leases.

 

   

Certified Public Accountants

Telephone (619) 563-0145

Fax (619) 563-9584 • www.cwgcpa.com

 

Opening Night Enterprises – Offering Circular67 
 

 

OPENING NIGHT ENTERPRISES, LLC

NOTES TO THE FINANCIAL STATEMENTS
December 31, 2018

 

NOTE E-SUBSEQUENT EVENT:

 

In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through April 23, 2019, the date the financial statements were available to be issued. There were no subsequent events requiring adjustments to and disclosures in the financial statements as of and for the year ended December 31, 2018.

 

NOTE F-FAIR VALUE MEASUREMENTS:

 

FASB ASC Topic 820 specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs). In accordance with FASB ASC Topic 820, the following summarizes the fair value hierarchy:

 

Level 1 Inputs—Unadjusted quoted market prices for identical assets and liabilities in an active market that the Company has the ability to access.

 

Level 2 Inputs—Inputs other than the quoted prices in active markets that are observable either directly or indirectly.

 

Level 3 Inputs—Inputs based on prices or valuation techniques that are both unobservable and significant to the overall fair value measurements.

 

FASB ASC Topic 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurements. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

 

As of December 31, 2018, there were no assets and liabilities measured at fair value.

 

   

Certified Public Accountants

Telephone (619) 563-0145

Fax (619) 563-9584 • www.cwgcpa.com

 

Opening Night Enterprises – Offering Circular68 
 

 

 

OPENING NIGHT ENTERPRISES, LLC

 

  

INTERIM FINANCIALS

 

SEPTEMBER 30, 2019

 

 

 

 

 

 

Opening Night Enterprises – Offering Circular69 
 

  

OPENING NIGHT ENTERPRISES, LLC

TABLE OF CONTENTS

September 30, 2019

 

 

  PAGE
   
Balance Sheets 71
   
Statements of Income 72
   
Statements of Members’ Equity 73
   
Statements of Cash Flows 74
   
Notes to the Financial Statements 75-77

  

Opening Night Enterprises – Offering Circular70 
 

 

OPENING NIGHT ENTERPRISES, LLC BALANCE SHEET

September 30, 2019

  

 

 

 

ASSETS

 

 

 

 

CURRENT ASSETS     
Cash and Cash Equivalents  $326 
      
TOTAL ASSETS  $326 
      
      
      
      
      
      
LIABILITIES AND MEMBERS' EQUITY
      
      
      
CURRENT LIABILITIES     
Accrued Expenses  $10,423 
Income Tax Payable   900 
      
TOTAL LIABILITIES   11,323 
      
MEMBERS' EQUITY   (11,649)
      
TOTAL LIABILITIES AND MEMBERS' EQUITY  $326 

 

The accompanying notes are an integral part of these financial statements.

No assurance is provided as this is an unaudited financial statement.

 

Opening Night Enterprises – Offering Circular71 
 

 

OPENING NIGHT ENTERPRISES, LLC
STATEMENT OF INCOME

Beginning January 1, 2019 and ending September 30, 2019

 

 

 

 

REVENUES  $ - 
       
EXPENSES     
General & Administrative   1,368 
Professional Fees-Legal   6,852 
Professional Fees-Other   2,203 
      
TOTAL EXPENSES   10,423 
      
INCOME (LOSS) BEFORE TAXES   (10,423)
      
Income Tax Expense   900 
      
NET LOSS  $(11,323)

 

The accompanying notes are an integral part of these financial statements.

No assurance is provided as this is an unaudited financial statement.

 

Opening Night Enterprises – Offering Circular72 
 

 

OPENING NIGHT ENTERPRISES, LLC
STATEMENT OF MEMBERS EQUITY

Beginning January 1, 2019 and ending September 30, 2019

 

 

 

 

Beginning Balance, January 1, 2019  $(276)
      
Contributions   11,925 
      
Distributions   - 
      
Net Income (Loss)   (11.323)
      
Ending Balance, September 30, 2019  $326 

 

The accompanying notes are an integral part of these financial statements.

No assurance is provided as this is an unaudited financial statement.

 

Opening Night Enterprises – Offering Circular73 
 

  

OPENING NIGHT ENTERPRISES

LLC STATEMENT OF CASH FLOWS

Beginning January 1, 2019 and ending September 30, 2019

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES   
Net Loss  $(11,323)
Adjustments to Reconcile Net Income to Net Cash     
Cash Provided (Used) by Changes in     
Operating Assets and Liabilities:     
Accrued Expenses   10,423 
Income Tax Payable   900 
      
CASH USED FOR OPERATING ACTIVITIES   (11,323)
      
FINANCING ACTIVITIES     
Member's Contribution   11.925 
INCREASE IN CASH AND CASH EQUIVALENTS   602 
      
Cash and Cash Equivalents at Beginning of Period   (276)
      
CASH AND CASH EQUIVALENTS AT END OF PERIOD  $326 
      
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:     
Income Taxes Paid  $- 
Interest Expense   - 

  

The accompanying notes are an integral part of these financial statements.

No assurance is provided as this is an unaudited financial statement.

 

Opening Night Enterprises – Offering Circular74 
 

 

OPENING NIGHT ENTERPRISES

LLC NOTES TO THE FINANCIAL
STATEMENTS

September 30, 2019

 

NOTE A-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

 

1.Opening Night Enterprises, LLC (the Company) was formed under the laws of the State of California on December 12, 2016 and started operations on January 1, 2017. The Company has adopted a December 31 calendar year end for reporting requirements.

 

2.The Company was formed to create television programs that promote musical theater entertainment. The Company aims to blend television and certain mobile platforms with the musical theater industry, develop undiscovered creative teams and generate revenue in both television and live on stage realms.

 

3.In general, revenue is recognized by the Company based on the public performance data for musical theater presentation and as services are performed for production costs.

 

4.Cash & Cash Equivalents for purposes of the statement of cash flows, include cash on hand, cash in checking and savings accounts with banks. All short-term debt securities with a maturity of three months or less are considered cash equivalents.

 

5.Use of Estimates-The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates.

 

6.Leases that meet the criteria for capitalization are classified as capital leases. Leases that do not meet such criteria are classified as operating leases and related rentals are charged to expense as incurred. As of September 30, 2019, there are no such leases.

 

7.Concentration of Cash and Credit Risk-The Company maintains corporate cash balances which, at times, may exceed federally insured limits. Management believes it is not exposed to any significant risk on its cash balances. At September 30, 2019, the Company has no uninsured cash balances.

 

8.Advertising Costs are expensed in the year incurred. The Company incurred no advertising expense as of September 30, 2019.

  

Opening Night Enterprises – Offering Circular75 
 

 

OPENING NIGHT ENTERPRISES,
LLC NOTES TO THE FINANCIAL
STATEMENTS

September 30, 2019

 

9.Fair Value of Financial Instruments-Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 820, "Fair Value Measurements and Disclosures", defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity.

  

10.Cash and Cash Equivalents, Accrued Liabilities and Other Payables-The carrying amounts reported in the balance sheets for these items are a reasonable estimate of fair value.

 

NOTE B-INCOME TAXES:

 

Opening Night Enterprises, LLC is treated as a partnership for federal and state income tax purposes, with income taxes payable personally by the members. Accordingly, no provision has been made in these financial statements for federal income taxes for the Company. The State of California imposes a $800 minimum tax.

 

As a limited liability company, each member's liability is limited to amounts reflected in their respective member equity accounts in accordance with the Operating Agreement. The income allocable to each member is subject to examination by federal and state taxing authorities. In the event of an examination of the income tax returns, the tax liability of the members could be changed if an adjustment in the income is ultimately determined by the taxing authorities.

 

Certain transactions of the Company may be subject to accounting methods for income tax purposes that differ significantly from the accounting methods used in preparing the financial statements in accordance with generally accepted accounting principles. Accordingly, the taxable income of the Company reported for income tax purposes may differ from net income in these financial statements.

 

The Company has adopted FASB ASC 740-10 regarding accounting for uncertain income tax positions. Management is not aware of any tax positions that are more likely than not to change in the next 12 months, or that would sustain an examination by applicable taxing authorities.

 

The Company recognizes penalties and interest arising from uncertain tax positions as incurred in the statement of income and comprehensive income, which are none as of September 30, 2019.

 

The federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for three years after they are filed.

 

Opening Night Enterprises – Offering Circular76 
 

 

OPENING NIGHT ENTERPRISES,
LLC NOTES TO THE FINANCIAL
STATEMENTS

September 30, 2019

  

NOTE C-RETIREMENT PLAN:

 

The Company currently does not sponsor a retirement plan for its employees 

 

NOTE D-COMMITMENTS AND CONTINGENCIES:

 

As of the date of the financial statements, the Company has not signed office facility leases.

 

NOTE E-FAIR VALUE MEASUREMENTS:

 

FASB ASC Topic 820 specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs). In accordance with FASB ASC Topic 820, the following Summarizes the fair value hierarchy:

 

Level 1 Inputs-Unadjusted quoted market prices for identical assets and liabilities in an active market that the Company has the ability to access.

 

Level 2 Inputs-Inputs other than the quoted prices in active markets that are observable either directly or indirectly.

 

Level 3 Inputs-Inputs based on prices or valuation techniques that are both unobservable and significant to the overall fair value measurements.

 

FASB ASC Topic 820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurements. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs

 

As of September 30, 2019, there were no assets and liabilities measured at fair value.

 

IN THE OPINION OF MANAGEMENT ALL ADJUSTMENTS NECESSARY IN ORDER TO MAKE THE INTERIM FINANCIAL STATEMENTS NOT MISLEADING, HAVE BEEN INCLUDED.

 

Opening Night Enterprises – Offering Circular77 
 

 

PART III – EXHIBITS

 

INDEX  TO  EXHIBITS
Exhibit 1A-2A * Articles of Organization – Opening Night Enterprises, LLC (California)
Exhibit 1A-2B ^ Revised Operating Agreement – Opening Night Enterprises, LLC
Exhibit 1A-4 ^ Revised Subscription Agreement with Attached Investor Questionnaire
Exhibit 1A-6 *** JumpStart Selling Agreement
Exhibit 1A-8 ^ Revised Escrow Agreement with PrimeTrust
Exhibit 1A-11 ^^ Auditor Consent Letter for Use of Incorporated Audit Report
Exhibit 1A-12 * Legal Opinion Letter of Feldman, Golinski, Reedy + Ben-Zvi, PLLC

 

^Provided herewith.

 

*Previously filed as Exhibits to the Form 1-A filed on December 29, 2017 (File No. 024-10712).

 

**Previously filed as Exhibit to the Form 1-A/A Amendment No. 3 filed on April 19, 2018 (File No. 024-10712).

 

***Previously filed as Exhibit to the Form 1-A/A Amendment No. 5 filed on January 23, 2019 (File No. 024-10712).

 

^^ Previously filed as Exhibit to the Form 1-A Amendment No. 6 and Post-Qualification Amendment No. 1 on March 11, 2019 and June 19, 2019, respectively (File No. 024-10712).

 

Opening Night Enterprises – Offering Circular78 
 

 

SIGNATURES

 

Pursuant to the requirements of the Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this offering statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Sierra Madre, State of California, on August 6, 2020.

 

    Opening Night Enterprises, LLC
     
     
    By:  

/s/ CHARLES JONES II

 

        Name:   Charles Jones II
        Title:   Managing Member and Chief Executive Officer

 

This offering statement has been signed by the following persons in the capacities and on the dates as indicated.

 

 

Name   Title   Date
         
         
/s/ CHARLES JONES II  

Managing Member, Chief Executive Officer

(Principal Executive Officer) and Chairman of

   August 6, 2020
Charles Jones II   the Board    
         
/s/ CHARLES JONES II   

Chief Financial Officer, Secretary and Treasurer

(Principal Financial Officer and Principal

   August 6, 2020
Charles Jones II   Accounting Officer)    
         
/s/ REGINA DOWLING  

Managing Member, establishing Majority of

Governing Body of Opening Night Enterprises LLC

   August 6, 2020
Regina Dowling        

 

 

Opening Night Enterprises – Offering Circular7 79  

 

 

 

 

 EX1A-2B BYLAWS 4 ex1a_2b.htm EXHIBIT 1-A.2B

 

EXHIBIT 1A-2B

TO THE OFFERING CIRCULAR

 

LLC OPERATING AGREEMENT FOR

OPENING NIGHT ENTERPRISES, LLC

 

 

 

THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY OF THE MEMBERSHIP INTERESTS (i.e. SECURITIES) REPRESENTED BY THIS COMPANY OPERATING AGREEMENT NOR DOES THE SECURITIES EXCHANGE COMMISSION PASS UPON THE MERITS OR GIVE ITS APPROVAL TO THE TERMS OF THIS OFFERING, THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OF THIS OPERATING AGREEMENT OR OTHER SELLING LITERATURE.  THE SECURITIES BEING OFFERED HAVE NOT BEEN REGISTERED WITH THE SECURITIES EXCHANGE COMMISSION, NOR HAVE THEY BEEN REGISTERED WITH ANY FOREIGN EQUIVALENT AGENCY OR BRANCH.  THESE SECURITIES ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES BEING OFFERED ARE EXEMPT FROM REGISTRATION. THE SECURITIES BEING OFFERED ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK AND SHOULD NOT BE PURCHASED BY ANYONE WHO CANNOT AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT.

 

THE INFORMATION IN THIS DOCUMENT OR ANY OTHER DOCUMENT SUBMITTED TO INVESTORS IN CONNECTION WITH THIS OFFERING, AND WHETHER SUCH DISCLOSURE IS ADEQUATE AND WHETHER THESE SECURITIES ARE EXEMPT FROM REGISTRATION, HAS NOT BEEN REVIEWED OR PASSED UPON BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER REGULATORY AGENCY, NOR HAS ANY SUCH AGENCY PASSED UPON THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY OR ANY REPRESENTATION THAT ANY REGULATORY AGENCY HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS OPERATING AGREEMENT IS A CRIMINAL OFFENSE. THE MEMBERSHIP INTERESTS BEING OFFERED ARE SPECULATIVE SECURITIES THAT INCLUDE A HIGH DEGREE OF RISK. ACCORDINGLY, THE OFFERING IS SUITABLE ONLY FOR PERSONS WHO CAN AFFORD A TOTAL LOSS OF THEIR INVESTMENT.

 

THE INTERESTS EVIDENCED BY THIS OPERATING AGREEMENT (THE "INTERESTS") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER ANY STATE SECURITIES LAWS. THESE INTERESTS MAY ONLY BE ACQUIRED FOR THE PURCHASER'S OWN ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE.

 

THIS AGREEMENT, TOGETHER WITH ITS ATTACHED EXHIBIT AND RELATED PAPERS SHALL NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY.

 

   
 

 

THE INTERESTS ARE CONSIDERED 'SECURITIES' FOR PURPOSES OF FEDERAL AND CERTAIN STATE SECURITIES LAWS. THE OFFER AND SALE OF THE INTERESTS WILL BE MADE TO INVESTORS ONLY IN SUCH A MANNER THAT THEY WILL BE DEEMED TRANSACTIONS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT PURSUANT TO SECTION 3(b)(2) OF THE 1933 ACT AND REGULATION A PROMULGATED THEREUNDER.

 

THE MANAGERS RESERVE THE RIGHT TO WITHDRAW OR MODIFY THIS OFFERING AND TO REJECT ANY PURCHASE OFFER IN WHOLE OR IN PART.

 

NO OFFERING LITERATURE SHALL BE EMPLOYED IN THE OFFERING OF THESE INTERESTS EXCEPT FOR THIS OPERATING AGREEMENT AND ACCOMPANYING OFFERING CIRCULAR, AND NO PERSON HAS BEEN AUTHORIZED TO MAKE OR TO GIVE ANY SUCH REPRESENTATIONS. ANY INFORMATION OR REPRESENTATIONS NOT CONTAINED IN OR OBTAINED PURSUANT TO THE TERMS OF THIS OPERATING AGREEMENT MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE MANAGERS.

 

ALL RELEVANT DOCUMENTS IN THE POSSESSION OF OR REASONABLY AVAILABLE TO THE MANAGERS NECESSARY TO VERIFY THE ACCURACY OF THE INFORMATION FURNISHED IN THIS OPERATING AGREEMENT WILL BE MADE AVAILABLE TO THE OFFEREE AND/OR HIS/HER OR ITS ADVISORS UPON REQUEST.

 

PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS AGREEMENT OR ANY PRIOR OR SUBSEQUENT COMMUNICATION FROM THE COMPANY, THE MANAGERS, THEIR AFFILIATES OR ANY PROFESSIONAL ASSOCIATED WITH THIS OFFERING, AS LEGAL, TAX OR INVESTMENT ADVICE. EACH INVESTOR SHOULD CONSULT WITH AND RELY ON HIS/HER OR ITS OWN PERSONAL COUNSEL, ACCOUNTANT AND/OR OTHER ADVISORS AS TO LEGAL, TAX AND/OR ECONOMIC IMPLICATIONS OF THE INVESTMENT DESCRIBED IN THE OPERATING AGREEMENT AND ITS SUITABILITY FOR HIM/HER OR IT. NO REPRESENTATION OR WARRANTY IS OR CAN BE MADE AS TO THE ECONOMIC RETURN THAT MAY ACCRUE TO A MEMBER. THERE MAY BE NO TAX BENEFITS FROM AN INVESTMENT IN THE COMPANY (INCLUDING LEVERAGING AND/OR DEPRECIATION) AND ANY INVESTMENT SHOULD BE MADE SOLELY FOR ECONOMIC REASONS. CERTAIN INVESTORS MAY BE ABLE TO OFFSET LOSSES AGAINST CERTAIN INVESTMENT GAINS AT CERTAIN TIMES, HOWEVER NO MEMBER SHOULD DEEM NOR RELY ON ANY STATEMENT HEREIN AS TAX ADVICE. MEMBERS ARE ADVISED TO CONSULT A TAX ACCOUNTANT REGARDING THE TAX REPERCUSSIONS OF THIS INVESTMENT.

 

   
 

 

Table of Contents

 

Article I 1
   
GLOSSARY 1
   
Article II 16
   
FORMATION MATTERS 16
2.1 Formation of Limited Liability Company 16
2.2 Filings 16
2.3 Limited Liability Company Name 16
2.4 Principal Office 16
2.5 Term of Company 17
2.6 Name, Address and Designation of Managers and Members 17
2.7 Agent for Service of Process 17
2.8 Agreement, Effect of Inconsistencies with the Law 17
2.9 Entity Declaration 17
   
Article III 18
   
PURPOSES AND POWERS 18
3.1 Purposes of the Limited Liability Company 18
3.2 Powers of the Company 18
   
Article IV 18
   
CONTRIBUTIONS AND CAPITAL ACCOUNTS 18
4.1 Capital Contributions by Members 18
4.2 Cash and Property Contributions by Unit Holders 18
4.3 Non-Capital Contribution 19
4.4 Withdrawal of Capital 19
4.5 Interest 19
4.6 Liabilities of Managers for Contributions 19
4.7 Maintenance of Capital Accounts 19
4.8 Additional Contributions 20
4.9 Revaluation of Company Property 21
   
Article V 22
   
TAX ALLOCATIONS 22
5.1 Allocations of Net Gains 22
5.2 Allocation of Net Losses 22
5.3. Syndication Expenses 22
5.4 Special Allocations 22
5.5 Other Allocation Rules 23
5.6 Accounting Policy; Fiscal Year 24
5.7 Books and Records 24
5.8 Banking 24
5.9 Compensation of Managers and Affiliates 24

 

EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreementi 
 

 

5.10 Unit Holder Compensation 25
5.11 Taxes of Taxing Jurisdictions 25
5.12 Cash Method of Accounting 25
   
Article VI 25
   
DISTRIBUTIONS           25
6.1. Distributions 25
6.2 Distributions in Liquidation 27
6.3 Governmental Withholding 27
6.4 Liability upon Wrongful Distribution 27
   
Article VII 27
   
MANAGEMENT OF THE LIMITED LIABILITY COMPANY 27
7.1 Election of Managers 27
7.2 Management Powers of the Managers (Generally) 28
7.3 Specific Power and Authority of Managers 28
7.4 Authority to Execute Agreements on Behalf of Company 29
7.5 Time Devoted to Company 29
7.6 Other Business 30
7.7 Agreements with Members and Others 30
7.8 Manager as Tax Matters Partner/Member 30
7.9 Withdrawal of Manager 31
7.10 Indemnification 31
7.11 Rights and Obligations of the Unit Holders 31
7.12 Reports to Members and Others 31
7.13 Meetings 32
7.14 Fiduciary Duties of Managers 32
7.15 Actions by Members 32
7.16 Credits 32
   
Article VIII 32
   
ASSIGNMENT OF INTERESTS IN THE LIMITED LIABILITY COMPANY 32
8.1 Restrictions On Transfers 32
8.2 Assignment of the Interest in the Company of a Manager 33
8.3 Rights of Assignee 33
8.4 Substitution of Assignee 33
8.5 Allocations and Distributions 33
8.6 Incapacity, Death, Bankruptcy of a Unit Holder 34
8.7 Further Assignments 34
8.8 Removal of a Manager 34
8.9 Incapacity or Death of a Manager 34
8.10 Transfer of Security Interests 34
8.11 Voluntary Withdrawal 34
8.12 Involuntary Withdrawal 34
   
Article IX 35
   
AMENDMENTS 35
9.1 Amendments 35

 

EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreementii 
 

 

Article X DISSOLUTION, WINDING UP AND LIQUIDATION 35
10.1 Events of Dissolution 35
10.2 Company Continuation 35
10.3 Winding Up 35
10.4 Liquidation 36
10.5 Effect of Dissolution Event 36
10.6 Transfer of Member’s Interests 36
   
Article XI 36
   
MISCELLANEOUS PROVISIONS 36
11.1 Notices 36
11.2 Power of Attorney 37
11.3 Severability 37
11.4 Applicability of California Law 37
11.5 Arbitration 37
11.6 Headings 38
11.7 Entire Agreement 38
11.8 Successors 38
11.9 Consents and Agreements 38
11.10 Waiver of Claims 38
11.11 No Injunction 39
11.12 Cure 39
11.13 Counterparts 39
   
Article XII 39
   
PURCHASER REPRESENTATIONS AND INDEMNIFICATION 39
12.1 Representations of the Unit Holder 39
12.2 Indemnification 40

 

(This Operating Agreement exists as Exhibit 2 to the Offering Circular for the initial Offering of Non-Managing Membership Units in Opening Night Enterprises, LLC, a California limited liability company).

 

EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreementiii 
 

 

OPERATING AGREEMENT

 

OPENING NIGHT ENTERPRISES, LLC

A CALIFORNIA LIMITED LIABILITY COMPANY

 

 

THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT (herein called the “Operating Agreement” or “Agreement”), is entered into as of the date set forth below, by and between the managing members of the Company (as hereinafter defined), consisting of: (1) Charles Jones II Enterprises, LLC on behalf of Charles Jones II; (2) Kristin Chenoweth; and (3) Regina Dowling (collectively, the “Managers”) on the one hand and the Non-Managing Members of the Company pursuant to the Offering’s Subscription Agreement executed by such Members.

 

W I T N E S S E T H:

 

NOW THEREFORE, it is agreed as follows:

 

Article I

GLOSSARY

 

The following terms, when used in this Agreement, (initial letter capitalized herein and in the accompanying Offering Circular and Subscription Agreement) shall have the respective meanings assigned to them in this Article unless the context otherwise requires:

 

 “Act” or The “Securities Act”: The federal Securities Act of 1933, as the same may be amended from time to time.

 

“Adjusted Capital Account Deficit”: With respect to any Member, the deficit balance, if any, in such Member’s Capital Account as of the end of the relevant Fiscal Year, after giving effect to the following adjustments: (i) credit to such Capital Account any amounts that such Member is deemed obligated to restore pursuant to the penultimate sentences of Regulations sections 1.704-2(g)(1) and 1.704-2(i)(5); and (ii) debit to such Capital Account the items described in Regulations sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).  The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Regulations section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

 

“Adjusted Cash Flow” or “Distributable Cash” or “Net Receipts” or “Adjusted Gross Profits” or “Net Profits” or “Net Revenues” (A) the Gross Receipts (which shall include all gross receipts of the Company from all sources throughout the world in any media now known or hereafter created including without limitation from exploitation of all the Company’s merchandising, soundtrack album, music publishing, and other ancillary or subsidiary rights, and otherwise derived from the Company’s operations) including, without limitation (i) net proceeds from a Capital Transaction; and (ii) reductions, if any, in reserves established by the Managers from time to time, reduced by (B) all cash expenses of the Company incurred or required to be incurred by or on the account of the Company in connection with its media and other products, the rights therein and thereto, and the operations of the Company that are unpaid from the Capital Contributions (and/or Non-Capital Contributions as discussed in Articles 4.1 - 4.3 herein below) at the time Company receives gross receipts, which expenses may include, without limitation: (i) the aggregate expenses, charges and disbursements incurred in connection with the preparation, production, completion and delivery of the Series, fully cut, edited and scored, and with the development, production and presentation of the Musicals, each including without limitation the following: payments for acquisition of underlying rights, payments for the services of developmental and production personnel, on-camera talent, judges, performers, choreographers, writers’ and actors’ fees, studio facilities, overhead, laboratory and sound services, location expenses, advertising and marketing costs, set production, theater rentals, routine promotional expenses, all outstanding developmental and production costs, all costs associated with financing and interest payments, and all legal and accounting charges, (ii) all other expenses of whatever kind or nature incurred in or in connection with the organization or operation of the business of the Company including, but not limited to, the promotion, sale and distribution of the Series and ancillary and subsidiary rights therein, (iii) all transaction costs and expenses, (iv) debt service on any Company loans and other financing charges, (v) taxes and other fees incurred in connection with the operation of the Company, and (vi) increases, if any, in reserves established by the Managers from time to time for working capital and other purposes.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement1
 

 

“Additional Capital Contributions”: Means those Contributions of Money (i.e., not including Non-Capital Contributions) made above and beyond those Contributions raised as part of the Initial Contributions by the Initial Members (i.e., Contributions made in exchange for Membership Interests other than the initial Membership Interests sold as part of this Offering);

 

“Additional Contribution(s)”: Contributions made above and beyond those Contributions raised as part of the Initial Offering by Initial Members.

 

“Additional Member(s)”: A Member other than an Initial Member or a Substitute Member who has acquired a Membership Interest from Company; they are generally those additional Investors identified by Managers to provide funding of the Series or Musical and become Member(s) hereof; the term is further defined in Article 4.8 below.

 

 “Affiliate”: Any Person directly or indirectly controlling, controlled by or under common control with this Company or its Managers.

 

“Agreement” or “Operating Agreement”: This written agreement as between all of the Members and Managers and relating to and regulating the affairs of the Company and the conduct of its business in any manner not inconsistent with Law or the Articles of Organization, including all amendments thereto.  Such term shall refer to this Agreement as a whole, unless the context otherwise requires.  This Agreement is incorporated into the accompanying Offering Circular as Exhibit 2.

 

“Allocations”: Designations of Member and Manager shares of Company income, losses, credits, deductions and/or other financial or tax items in the manner described in this Agreement.

 

“Articles” or “Articles of Organization”: The Articles of Organization for the Company originally filed with the California Secretary of State, including all amendments thereto or restatements thereof and such term shall mean the Articles as a whole unless the context otherwise requires.

 

“Amortization”: The method of allocating the cost of an intangible asset over time for purposes of offsetting (deducting) such cost from revenues the asset helps to produce.

 

“Assignee” or “Transferee”: A Person to whom a Membership Interest has been transferred and who has not been admitted as a Substituted Member.

 

“Bankrupt Member”: A Member who: (1) has become the subject of an Order for Relief under the United States Bankruptcy Code or any successor statute or other statute in any foreign jurisdiction having like import or effect, or (2) has initiated, either in an original Proceeding or by way of answer in any state insolvency or receivership Proceedings, an action for liquidation, arrangement, composition, readjustment, dissolution, or similar relief.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement2
 

 

 “Blue Sky”: Relating to U.S. state securities law compliance matters as opposed to federal securities law.

 

“Book Adjustment”: Adjustments with respect to the Book Value of Company Property for depreciation, depletion, Amortization, and gain or loss, as computed in accordance with section 1.704-1(b)(2)(iv)(g) of the Regulations;

 

“Book Value”: With respect to Property Contributed to the Company, the fair market value of the Property at the time of Contribution as adjusted by Book Adjustments; with respect to Company Property which has been Revalued, the fair market value of such Company Property as adjusted by Book Adjustments.

 

“Business Day”: Any day other than Saturday, Sunday, or any legal holiday observed in the State of California.

 

“Business Purpose” or “Purpose”: The purposes for which the Company was established, as further defined in Articles 3.1 and 3.2 below.

 

“Capital Account”: The account maintained for a Member or Assignee determined in accordance with Article IV.  Without limitation to the foregoing, generally, with respect to any Member, the Capital Account maintained for such Member in accordance with the following: (i) to each Member’s Capital Account there shall be credited (A) the amount of Money and the fair market value of any Property Contributed to the Company by the Member (“Invested Capital”), and (B) such Member’s Distributional Share of Net Gains and any items in the nature of income or gain that are specially Allocated pursuant to Article 5.1 of this Agreement; (ii) to each Member’s Capital Account there shall be debited (A) the amount of Money and the fair market value of any Property Distributed to the Member, and (B) the Member’s Distributional Share of Net Losses and any items in the nature of expenses or losses that are specially Allocated pursuant to Article V of this Agreement.  (Capital Accounts are discussed in greater detail in Article 4.7 infra).

 

“Capital Contribution”: Contributions (as defined below) other than Contributions of services or Property other than Money, including any Additional Capital Contribution, if any, of each Member of the Company.  The aggregate amount of Capital Contributions of the Unit Holders in the Offering shall be a minimum Contribution of $5,000.00 and a maximum of $50,000,000.00 unless and until the Managers determine that additional funding is necessary for the purposes of this Company.

 

“Capital Interest”: Means with respect to each Member, the proportion that such Member’s aggregate Unrecovered Capital Contribution bears to the total Unrecovered Capital Contributions of all Members.

 

“Capital Transaction”: Means (i) any transaction by the Company (other than receipt of Capital Contributions and/or Non-Capital Contributions) not in the ordinary course of the Company’s business, and (ii) any financing or refinancing of the Series and/or one or more of the Musicals.

 

“Closing Date” or “Closing”: The (point at)/(date on) which a given Round of the Offering may conclude (i.e., at least the Offering Minimum has been subscribed for in the event that there is an Offering Minimum for the Offering – THERE IS NO SUCH OFFERING MINIMUM CONTEMPLATED WITH THIS OFFERING THEREFORE THE ONLY “Closing” FOR THE OFFERING SHALL BE THE “Final Closing” [as defined below]) and does in fact conclude.  At this point, the secured (i.e., subscribed-for) funds are closed upon by the Company and the accompanying Units are officially granted to the Subscribers in exchange therefor.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement3
 

 

“Code”: The Internal Revenue Code of 1986, as amended.  All references herein to sections of the Code shall include any corresponding provision or provisions of succeeding law.

 

“Commitments”:  The obligation to Contribute and the amount to be Contributed by any Investor who becomes or seeks to become a Member of the Company.  The term may also be used interchangeably with the term “Contribution.”

 

“Contribution” or “Contributed Property”: Any Money, Property or services rendered, or a promissory note or other binding obligation to Contribute Money or Property or to render services as permitted under the Act and by Law, which an Initial Member or Additional Member or Assignee, as consideration for a Membership Interest, Contributes to the Company in that Member’s capacity as a Member pursuant to an agreement (i.e. the Subscription Agreement) between and among the Members and Managers, including an agreement as to value.

 

“Company”: The California limited liability company (Opening Night Enterprises, LLC formed pursuant to the Law.

 

“Company Gross Revenues” or “Company Gross Receipts”: (Same as “Gross Company Revenues” or “Gross Revenues to the Company”).

 

“Company Liability”: Any enforceable debt or obligation for which the Company is liable or which is secured by any Company Property.

 

“Company Minimum Gain”: An amount determined by first computing for each Company Non-Recourse Liability any gain the Company would realize if it disposed of the Company Property subject to that liability for no consideration other than full satisfaction of the liability, and then aggregating the separately computed gains.  The amount of Company Minimum Gain includes such minimum gain arising from a conversion, refinancing, or other change to a debt instrument, only to the extent a Member is Allocated a share of that minimum gain.  For any Taxable Year, the net increase or decrease in Company Minimum Gain is determined by comparing the Company Minimum Gain on the last day of the immediately preceding Taxable Year with the Minimum Gain on the last day of the current Taxable Year.  Notwithstanding any provision to the contrary contained herein, Company Minimum Gain and increases and decreases in Company Minimum Gain are intended to be computed in accordance with section 704 of the Code and the Regulations issued thereunder, as the same may be issued and interpreted from time to time.  A Member’s share of Company Minimum Gain at the end of any Taxable Year equals: the sum of Non-Recourse Deductions Allocated to that Member (and to that Member’s predecessors in interest) up to that time, and the Distributions made to that Member (and to that Member’s predecessors in interest), up to that time, of proceeds of a Non-Recourse Liability allocable to an increase in Company Minimum Gain, minus the sum of that Member’s (and of that Member’s predecessors in interest) aggregate share of the net decreases in Company Minimum Gain plus their aggregate share of decreases resulting from Revaluations of Company Property subject to one or more Company Non-Recourse Liabilities.

 

“Company Non-Recourse Liability”: Any Company Liability to the extent that no Member or Related Person bears the economic risk of loss (as defined in section 1.752-2 of the Regulations) with respect to the Liability.

 

“Company Property”: Any Property owned by the Company.

 

“Counsel to the Managers” or “Counsel”: Ryan J. Lewis, Esq. whose offices are located at 207 W. 25th Street, 6th Floor, New York, NY 10001.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement4
 

 

“Creative Talent”: Bookwriters, producers, directors, actors and others who participate in the creative process relating to development and/or production of either the Series or one or more of the Musicals.

 

“Default Interest Rate”: The higher of the legal rate or the then-current prime rate quoted by the largest commercial bank in the jurisdiction of the Principal Office, plus three percent (3%).

 

“Deferments” or “Deferrals”: Payments for goods or services provided to the Company for/during the development, production and/or distribution of the Series and/or one or more of the Musicals for which either reduced or no compensation will be initially given (so that the payments are paid out of specified portions of the Series’ or one or more of the Musicals’ (as applicable) production budgets or Company receipts before Recoupment), it being understood that the provider of such goods or services will be compensated by the Company for the value of such goods or services solely from the Net Profits (as that term is defined solely in Section 6.1.6. below) in accordance with the provisions of Article VI of this Agreement.  (See also, “Producer and Professional Deferrals” below).

 

“Delinquent Member”: A Member or Assignee who has failed to meet the Commitment of that Member or Assignee.

 

“Depreciation”: For each Fiscal Year, an amount equal to the depreciation, Amortization, or other cost recovery deduction allowable with respect to an asset for such Fiscal Year for federal income tax purposes, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such Fiscal Year, Depreciation shall be an amount that bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, Amortization, or other cost recovery deduction for such Fiscal Year bears to such beginning adjusted tax basis; provided, however, that if the adjusted basis for federal income tax purposes of an asset at the beginning of such Fiscal Year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Managers.

 

“Dissociated Member”: A Person who has ceased to be a Member as a result of Dissociation.

 

“Dissociation”: Any action which causes a Person to cease to be a Member.

 

“Dissociation Event”: With respect to any Member, one or more of the following: the death, retirement, Withdrawal, resignation, expulsion, bankruptcy or dissolution of a Member, or occurrence of any other event which terminates his or her continued Membership Interest in the Company, or as otherwise provided under the Law.

 

“Dissolution Event”: (See Article 10.1 below).

 

“Distributable Cash”: The same thing as “Adjusted Net Profits” as that term is defined in Article 6.1.7. herein below.

 

“Distribution”: A transfer of Money, Property or other benefit from the Company to a Member on account of a Membership Interest, or to a Transferee of the Member’s Distributional Interest.

 

“Distributional Interest” or “Distributional Share” or “Distributive Share”: All of a Member’s interest in Distributions by the Company.

 

 “Economic Interest”: A person’s or entity’s right to share in the income, gains, losses, deductions, credit, or similar items of, and to receive Distributions from, the Company, but does not include any other rights of a Member or Manager, including without limitation, the right to Vote or to participate in management, or except as provided at Law, any right to information concerning the business and affairs of the Company.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement5
 

 

The “Exchange Act” or The “Securities Exchange Act” or The “1934 Act”: Refers to The Securities Exchange Act of 1934, as the same may be amended from time to time.

 

 “Final Closing” or “Final Closing Date”: The (point at)/(date on) which the Offering actually Closes.  At this point, any subsequent offering of securities by the Company will not be considered a part of the prior Offering under the SEC’s “integration doctrine”, but rather, will be considered a (part of a) new and independent securities offering.

 

 “Fiscal Year”: Means the Company’s fiscal year, which shall commence on January 1st and end on December 31st of each year, provided that the first Fiscal Year of the Company shall be deemed to have commenced upon the filing of the Articles of Organization and shall end on December 31 of such year.

 

“Gross Asset Value”: With respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows: (i) the initial Gross Asset Value of any Property Contributed by a Member to the Company shall be the gross fair market value of such asset; (ii) the Gross Asset Values of all items of Company Property shall be adjusted to equal their respective gross fair market values (taking Code section 7701(g) into account) as of the following times: (A) the acquisition of an additional Interest in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution; (B) the Distribution by the Company to a Member of more than a de minimis amount of Company Property as consideration for an Interest in the Company, and (C) the liquidation of the Company within the meaning of Regulations section 1.704-1(b)(2)(ii)(g), provided that an adjustment described in clauses (A) and (B) of this paragraph shall be made only if the Managers reasonably determine that such adjustment is necessary to reflect the relative Economic Interests of the Members; (iii) the Gross Asset Value of any item of Company Property Distributed to any Member shall be adjusted to equal the gross fair market value (taking Code section 7701(g) into account) of such item on the date of Distribution; and (iv) without duplication, the Gross Asset Values of each item of Company Property shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code section 734(b) or section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations section 1.704-1(b)(2)(iv)(m) and subparagraph (vi) of the definition of “Net (Gains) Profits” and “Net Losses” or Article 5.4.3 hereof.

 

“Gross Proceeds of the Offering” or “Gross Offering Proceeds”: The aggregate total of the Original Invested Capital (i.e. Commitments) of the Members and Managers.

 

“Gross Company Revenues” or “Gross Revenues to the Company” or “Gross Receipts” or “Gross Proceeds”: The total amount of all sums received by and belonging to the Company from any and all sources for Company activities, including, but not limited to: (i) all the revenues derived from distribution, exhibition and other exploitations of the Series and each Musical, along with all forms of contingent compensation paid to the Company as a result of the exploitation of the Series and each Musical in all markets and media; (ii) any and all ancillary incomes derived from exploitations of rights in the Series and Musicals, such as merchandising and commercial use products, (iii) from the exploitation of any rights in each Musical, including subsidiary rights, tours, films and other derivatives; or (iv) from the disposition of the physical assets of the Series and each Musical  to the extent that such physical assets were acquired with Company funds and the return of any bonds or other recoverable items, and (v) interest if any, on the aforesaid sums.  Notwithstanding the foregoing, “Gross Receipts”, etc. described in this paragraph, shall specifically exclude any and all revenues that might flow from subsequent seasons of the Series, from any spinoffs or sequels thereof and from any musicals or other productions emanating from or otherwise featured or displayed on, said subsequent seasons or versions of the Series; nor shall they include any monies due to be paid to any co-financing entity. (same as “Company Gross Revenues” and “Company Gross Receipts”).

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement6
 

 

“Immediate Family”: A Member’s Immediate Family includes the Member’s spouse, children (including natural, legally adopted and stepchildren), grandchildren, parents (including natural or legally adopted) and siblings (including natural, legally adopted, or half, but not step).

 

“Information Rights”: The right to inspect, copy or obtain information and documents concerning the affairs of the Company as provided in the Law.

 

“Initial Contribution”: The Contribution agreed to be made by the Initial Members (i.e.,  Members receiving Units under this Offering) as described in Article IV of this Agreement.

 

“Initial Members”: Those non-managing Investor Members who have executed this Agreement and whose Contributions were raised and accepted under this Offering prior to the Final Closing of this Offering.

 

“Initial Offering” or “Offering”: This Offering of equity Units in the Company which are being offered for the purpose of raising developmental and production financing for the Series and Musicals as described in the Offering Circular and which are represented by the non-managing Member Units described herein and in the Offering Circular and Subscription Agreement associated with this Agreement.

 

 “Interest” or “Membership Interests” or “Units”: The entire ownership interest of a fully admitted or Substituted Member or Manager in the Company, which may be modified from time to time by the Managers with Notices to the Members to reflect changes in membership of the Company consistent with the terms of Article IV herein, at any particular time, including the rights of such Member or Manager to any and all benefits to which a Member or Manager may be entitled as provided in this Agreement including (i) the economic rights to share in Distributions (Liquidating or otherwise) and allocations of profits, income, gains, losses, deductions, and/or credits, and to receive Distributions as provided in this Agreement; (ii) the right to any information concerning the business and affairs of the Company provided by the Law; and (iii) to the extent the Agreement permits, and in conformance with the Law, the rights to participation in the management and affairs of the Company, together with the obligations of such Member(s) and Manager(s) to comply with all terms and provisions of this Agreement and the Law.

 

“Investor” or “Investor Member” or “Subscriber”: Those Members who have made Capital Contributions to the Company.

 

 “IRS”: The Internal Revenue Service.

 

“Issuer”: The entity which is issuing the securities (the Company Interests or Units) for sale in this offering, (i.e.,  the California limited liability company Opening Night Enterprises, LLC).

 

“Law”: Means California’s Revised Uniform Limited Liability Company Act, codified in Sections 17701.01 – 17713.13 et seq., of Title 2.6 of the California Corporations Code, as the same may be amended from time to time.

 

“Liquidating Distribution”: A Distribution made as consideration for a Membership Interest (see “Distributions in Liquidation” at Article 6.2 herein below).

 

“Liquidation” (of the Company): (See Article 4.7.3 herein below).

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement7
 

 

   “Mail”: Unless otherwise explicitly provided for in the relevant Offering Material document, first-class mail, postage prepaid, unless registered mail is specified.  Registered mail includes certified mail.

 

“Majority In Interest”: That group of Members and Managers whose Interests in the Company amount to more than fifty percent (50%) of the Company’s: (1) Voting power, (2) capital, and (3) shares of Distributions and Allocations.

 

“Majority of the Managers”: shall be required for all decisions of the Company consistent with the terms and procedures of Article VII below, except those decisions that require a unanimous decision as explicitly provided for herein.  Notwithstanding the foregoing, Charles Jones II Enterprises, LLC shall retain a veto right over all Manager decisions.

 

“Management and Voting Rights”: Those rights of a Member and Manager described in Article VII of this Agreement as they may be limited in this Agreement, the Articles and the Law.

 

“Manager”: Any individual or entity elected by the Members of the Company to manage the Company.  The initial Managers shall be Charles Jones II Enterprises, LLC, Kristin Chenoweth and Regina Dowling.  The Manager’s role is further defined in Article VII below.

 

“Member” or “Unit Holder”: A Person who (1) has been admitted to the Company as a Member in accordance with the Articles or Operating Agreement, or (2) a Substituted Member or Additional Member, including, unless the context expressly indicates to the contrary, the Manager, or Assignee who has become a Member pursuant to the terms hereof or pursuant to any inalienable terms of the Law which may be contrary hereto; and (3) who has not resigned, Withdrawn, or been expelled or Disassociated as a Member or, if other than an individual, been dissolved.

 

“Member Minimum Gain”: An amount determined by first computing for each Member Non-Recourse Liability any gain the Company would realize if it disposed of the Company Property subject to that liability for no consideration other than full satisfaction of the liability, and then aggregating the separately computed gains.  The amount of Member Minimum Gain includes such minimum gain arising from a conversion, refinancing, or other change to a debt instrument only to the extent a Member is Allocated a share of that minimum gain.  For any Taxable Year, the net increase or decrease in Member Minimum Gain is determined by comparing the Member Minimum Gain on the last day of the immediately preceding Taxable Year with the Minimum Gain on the last day of the current Taxable Year.  Notwithstanding any provision to the contrary contained herein, Member Minimum Gain and increases and decreases in Member Minimum Gain are intended to be computed in accordance with section 704 of the Code and the Regulations issued thereunder, as the same may be issued and interpreted from time to time.

 

“Member Non-Recourse Liability”: Any Company Liability to the extent the liability is non-recourse under state law, and on which a Member or Related Person bears the economic risk of loss under section 1.752-2 of the Regulations because, for example, the Member or Related Person is the creditor or a guarantor.

 

“Member of Record”: A Member named as a Member on the list maintained in accordance with provisions of the Law.

 

 “Membership Interest”: (Same as “Interest” above)

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement8
 

 

“Money”: Cash or other legal tender of the United States, or any obligation that is immediately reducible to legal tender without delay or discount.  Money shall be considered to have a fair market value equal to its face amount.

 

“Musical(s)”: Up to six new musical theater shows developed on and in competition with one another on the Series.  The Musicals will be financed and produced by the Company and the winning Musicals and any otherwise deemed the most commercially viable by the Managers, shall, following the conclusion of the Series’ initial commercial U.S. broadcast, be produced by the Company, and/or its subsidiaries and/or licensees, as regional or other commercial musicals at one or more professional theaters in markets throughout the U.S. with the goal being to get one or more of the Musicals presented on Broadway and others Off-Broadway or otherwise in order to maximize potential revenues from the exhibitions.

 

“Net Losses” and “Net Gains”: For purpose of computing Net Losses and Net Gains, the Book Value of an asset shall be substituted for its adjusted tax basis, if the two differ (in accordance with the principles of section 1.704-1(b)(2)(iv) of the Regulations).  For each Fiscal Year, an amount equal to the Company’s taxable income or loss for such year, determined in accordance with Code section 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Code section 703(a)(1) shall be included in taxable income or loss), with the following adjustments (without duplication): (i) any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Net Gains or Net Losses pursuant to this definition shall be added to such taxable income or loss; (ii) any expenditures of the Company described in Code section 705(a)(2)(B) or treated as Code section 705(a)(2)(B) pursuant to Regulations section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Gains and Net Losses shall be subtracted from such taxable income; (iii) in the event the Gross Asset Value of any items of Company Property is adjusted pursuant to subparagraphs (ii) or (iii) of the definition of Gross Asset Value, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the Gross Asset Value of the item of Property) or an item of loss (if the adjustment decreases the Gross Asset Value of the item of Property) from the disposition of such item of Property and shall be taken into account for purposes of computing Net Gains or Net Losses; (iv) gain or loss resulting from any disposition of Property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the Property disposed of, notwithstanding that the adjusted tax basis of such Property differs from its Gross Asset Value; (v) in lieu of the Depreciation, Amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year, computed in accordance with the definition of Depreciation; (vi) to the extent an adjustment to the adjusted tax basis of any item of Company Property pursuant to Code section 734(b) or Regulations section 1.704-1(b)(2)(iv)(m)(4) is required to be taken into account in determining Capital Accounts as a result of a Distribution other than in liquidation of a Member’s Interest, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the item of Property) or loss (if the adjustment decreases such basis) from the disposition of such item of Property and shall be taken into account for purposes of computing Net Gains or Net Losses; and (vii) notwithstanding any other provision of this definition, any items that are specially Allocated pursuant to Article 5.4 hereof, shall not be taken into account in computing Net Gains or Net Losses.  The amounts of the items of Company income, gain, loss, or deduction available to be specially Allocated pursuant to Article 5.4 hereof shall be determined by applying rules analogous to those set forth in (i) through (vi) above.

 

“Net Proceeds of the Offering”: Gross Proceeds of the Offering less expenses incurred and to be paid by the Company in connection with organizing the Company and in offering Units to Prospective Purchasers – this includes deductions from Gross Proceeds of the Offering of any such proceeds used for putting-on any Prospective Investor roadshows, as well as deduction of any such proceeds that were paid to any finders or licensed broker dealers engaged to sell Units as part of this Offering.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement9
 

 

“Net Profits” or “Net Receipts”: (Same as “Adjusted Cash Flow” and “Distributable Cash”, etc.).

 

“Non-Capital Contributions”: The Company, in its sole discretion, may accept Contributions in the form of loans, advances, finishing funds, financed future tax credits and other soft money options, the value of in-kind services, etc. (“Non-Capital Contributions”) which may be counted as part of the Capital Contributions, and which may be counted in calculation of whether any minimum capital requirements hereunder have been met, and otherwise which may be paid prior to return of Capital Contributions. THIS Offering DOES NOT HAVE ANY MINIMUM CAPITALIZATION Closing REQUIREMENT AS A SO-CALLED “MINI-MAXI OFFERING” WOULD.

 

“Non-Recourse Deductions”: Refers to section 705(a)(2)(B) (of the Code) expenditures attributable to partnership nonrecourse liabilities.

 

“Non-Recourse Liabilities”: Include both Company Non-Recourse Liabilities and Member Non-Recourse Liabilities.

 

“Notice(s)”: All Notices shall be in Writing and shall be delivered by personal delivery against receipt or by any nationally recognized overnight courier or when mailed by first class mail postage prepaid addressed.  Notice to the Company shall be considered given to the Managers in care of the Company at the addresses listed at Article 11.1.  Notice to a Member shall be considered given when mailed by first class mail postage prepaid addressed to the Member at the address reflected in that Member’s Subscription Agreement, unless the Member has given the Company Written Notice of a different address.  Any other party to whom Notice is deemed necessary or required hereunder, shall receive Notice at such Person’s principal office or home address (as applicable).

 

“Offering”: This current offer and sale of Units in the Company made in reliance on the SEC’s Regulation A, Tier II.  As used in conjunction with this initial offering, “Offering” shall refer to all combined Rounds (if any such multiple Rounds should eventuate) of the offer and sale of these non-managing Membership Units as further described in the Offering Circular and Subscription Agreement accompanying this Operating Agreement.

 

 “Offering Circular”: The accompanying securities disclosure document which is required to be made public and otherwise furnished to Prospective Purchasers of Units (prior to purchase) pursuant to the federal and state securities laws.   Company’s Offering Circular is dated November 30, 2017.

 

“Offering Expenses”: Expenses paid or incurred in connection with the issuing and marketing of Company Units, including brokerage fees, finder’s fees, selling commissions, state (“Blue Sky”) filing fees, legal fees of the Issuer and/or the Managers for consultations relating to the requirements of the applicable federal, state and foreign securities laws and for tax advice pertaining to the adequacy of tax disclosures in the Offering Materials, accounting fees, if any, for preparation of financial projections to be included in the Offering Materials and printing/binding costs of such Offering Materials.  Unlike other expenses, Offering Expenses may not typically be deducted currently or Amortized over a period of time (in contrast to Organizational Expenses).

 

“Offering Materials”: Refers generally to the set of documents and other materials given to Potential Investors for purposes of informing them about the nature, attributes, benefits and risks of the Offering and of the Units they are considering purchasing and of the Company and its planned current and future projects and investments.  Some or all of the Offering Materials may be given for purposes of complying with federal, local and foreign securities disclosure and registration exemption requirements and they will typically include, but may not be limited to, the Offering Circular, the Operating Agreement, the Subscription Agreement, any Investor questionnaire or other securities screening document, etc.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement10
 

 

“Offering Maximum”: The maximum amount of Capital Contributions and Non-Capital Contributions which may be raised by the Company in a given Offering period or term and which, if raised during said period or term, will result in an automatic Closing of that Offering.

 

“Offering Minimum” or “Minimum Offering Proceeds”: The minimum amount of Capital Contributions and Non-Capital Contributions which must be raised by the Company in a given mini-maxi securities offering before any of the Contributions for that offering may be Closed-on and thereby made the property of the Company, as would be specifically set forth in the Offering Circular and the Subscription Agreement.  THIS IS NOT A MINI-MAXI OFFERING AND THERE IS NO SUCH Offering Minimum OTHER THAN THE VALUE OF THE ONE (1) UNIT MINIMUM PURCHASE REQUIREMENT PER Investor.

 

“Offering Proceeds”: Those sums raised by the Company through the Offering in exchange for Membership Interests (Units) in the Company.

 

“Operating Agreement”: (Same as “Agreement”).

 

“Organization”: A Person other than a natural person.  Organization includes, without limitation, domestic or foreign corporations (non-profit, not-for-profit and other corporations), partnerships (both limited and general), joint ventures, domestic or foreign corporations, limited liability companies, real estate investment trusts, and unincorporated associations or any other commercial or legal entity, but the term does not include joint tenancies or tenancies by the entirety.

 

“Organizational Expenses”: Expenses paid or incurred in connection with the organization of the Company.  Such expenses must be Amortized and therefore deducted over a 60-month period.  Included are legal fees for services incident to the organization of the Company, such as negotiation and preparation of this Operating Agreement and preparation and filing of the Articles, the Subscription Agreement, the Offering Circular and any business plan, accounting fees for establishing the Company’s accounting system and necessary Company filing fees.

 

“Original Invested Capital”: The amount in cash Contributed to the capital of the Company by the Unit Holders and the Managers, if any such Manager Contributions are made.

 

“Other Expenses”: All expenses of whatsoever kind or nature, other than those referred to as Running Expenses (as defined herein) or Production Expenses (as defined herein), incurred in or in connection with or by reason of the operation of the business of the Company, including, without limitation, commissions paid to agents, monies paid or payable in connection with claims for plagiarism, libel, negligence, and other claims or settlements of a similar or dissimilar nature, and taxes of whatsoever kind or nature (other than income taxes of the individual Members or Managers).  There shall be no “Other Expenses” incurred which are not reasonable and directly related to and necessary for the formation of the Company or the operation of the business of the Company.

 

 “Percentage Interest”: (a) For Member Voting purposes, that portion of the non-Managing Member’s Interest relative to all other non-Managing Members’ Interests, multiplied by fifty percent (50%) (the Managing Members retain an aggregate of 50% of the total Member Votes); and (b) for Allocations of Net Gains and Net Losses, the percentage of a Member or Manager’s Interest relative to the Interests of all Members (including Manager-Members).  Percentage Interests may be adjusted from time to time pursuant to the terms of this Agreement.  Percentage Interests shall be determined, unless otherwise provided herein, in accordance with the relative proportions of the Capital Accounts of Members and Manager, effective as of the first day of the Company’s Fiscal Year but with all Distributions under Article VI hereof to be deemed to have occurred on such day immediately prior to determination of Percentage Interest of a Member or Manager.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement11
 

 

“Permitted Transferee”: Any member of the Member’s Immediate Family, or an Organization controlled by such Member or by members of the Member’s Immediate Family.

 

“Person”: As used herein, the word “person” means an individual person, firm, partnership, association, corporation, individual, corporation, business trust, estate, trust, limited liability company, limited liability partnership, joint venture, government, governmental subdivision, agency or instrumentality, or any other legal or commercial entity, real estate investment trusts.

 

“Potential Purchasers” or “Potential Investors” or “Potential Unit Purchasers” or “Potential Unit Holders” or “Potential Subscribers”: Persons or entities who or which receive copies of the Offering Circular and any Offering Materials intended to or which do induce any consideration of investing in any immediate Offering.  This group includes those who invest successfully as well as those whose Subscriptions are either not accepted by the Managers or whose Subscriptions are accepted by the Managers, but who fail to ultimately be admitted as Members because the Offering or the specific Round of the Offering to which they were subscribed fails to Close. (See also “Prospective Purchasers” below).

 

 “Presale Financing”: Funds obtained in addition the Offering Proceeds in the form of cash advances or guarantees paid by domestic or foreign distributors, pay or cable television systems, SVOD, NVOD, video cassette producers, television syndicators, and/or bank loans obtained by using such cash advances or guarantees as collateral.  Presale financing also refers to the financing of commercial paper consisting of future contracts to purchase the aforementioned distribution rights upon delivery of the completed Series or other media/entertainment product.

 

“Principal Office”: The Principal Office of the Company shall be 80 W Sierra Madre Blvd., Suite 141, Sierra Madre, CA 91024.

 

“Proceeding”: Any judicial or administrative trial, hearing or other activity, civil, criminal or investigative, the result of which may be that a court, arbitrator, or governmental agency may enter a judgment, order, decree, or other determination which, if not appealed and reversed, would be binding upon the Company, a Member or other Person subject to the jurisdiction of such court, arbitrator, or governmental agency.

 

 “Producer and Professional Deferrals” or “PPDs”: Payment for services limited to anyone with a producer title who received no compensation out of budget, for the limited purposes of reimbursement of certain expenses in connection with development of the Series and/or one or more of the Musicals, any person or company providing professional services such as an attorney, an accountant or a collector, for which reduced or no compensation is initially provided or required, it being understood that the provider of such services will be compensated by the Company for the value of such services from the Adjusted Gross Profits.  Nothing herein shall require the Company to grant a PPD to any producer, and such PPD shall be set out in writing with an agreement between the Company and the party claiming such PPD.  (See also, “Deferments” above).

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement12
 

 

“Production Expenses”:  The total expenses, charges and disbursements of whatever kind incurred by the Company directly in connection with any production of the Series and Musicals, to continue beyond the Series, including without limitation, fees, advances and/or other compensation of the author, director, choreographer, designers, orchestrator, cast, general manager, company manager, business manager, television and theater party representatives, production assistants and production secretaries (none of which parties before referred to need render its services exclusively in connection with the Series and each Musical); cost of the sets, costumes, curtains, drapes, properties, furnishings, electrical and sound equipment, rentals, bonds and guarantees, insurance premiums, rehearsal salaries, charges and expenses, transportation charges, office facilities furnished by the Managers, legal and auditing expenses, advance publicity, theater costs and expenses, preliminary advertising, post-opening advertising, taxes of whatsoever kind or nature other than income taxes of any of the individual Members or Managers; expenses for replacement or substitution of any of the foregoing personnel and items; and any and all other expenses usually included in the term “Production Expenses.” There shall be no “Production Expenses” incurred which are not reasonable or which do not appear as a budgetary item of the final budget for the applicable production of the Series and each Musical presented by the Company.

 

“Property”: Any property(ies), assets and rights of any type, real or personal, tangible or intangible (including goodwill), including Money and any legal or equitable interest in such property, but excluding services and promises to perform services in the future, owned by the Company.

 

“Prospective Purchasers” or “Prospective Investors” or “Prospective Unit Purchasers” or “Prospective Unit Holders” or “Prospective Subscribers”: Persons or entities who or which receive copies of the Offering Circular and any Offering Materials intended to or which do induce any consideration of investing in any immediate Offering.  This group includes those who invest successfully as well as those whose Subscriptions are either not accepted by the Managers or whose Subscriptions are accepted by the Managers, but who fail to ultimately be admitted as Members because the Offering or the specific Round of the Offering to which they were subscribed fails to Close.  (See also, “Potential Purchasers” above)

 

“Proxy”: A Written authorization signed or an electronic transmission authorized by a Member or the Member’s attorney-in-fact giving another Person the power to exercise the Voting rights of that Member.  “Signed”, for this purpose, means the placing of the Member’s name on the Proxy (whether by manual signature, typewriting, telegraphic or electronic transmission, or otherwise) by the Member or Member’s attorney-in-fact.  A Proxy may be transmitted by an oral telephonic transmission if it is submitted with information from which it may be determined that the Proxy was authorized by the Member, or by the Member’s attorney-in-fact.

 

“Recoupment”: For purposes of any type of investment which may be referenced in any of the Offering Materials, the term shall refer generally to the recovery by and of all Investor Members of 100% of each such Investor’s investment in Units.

 

“Registered Office”: 80 W. Sierra Madre Blvd., Suite 141, Sierra Madre, CA 91024.

 

“Regulations”: Unless the context clearly indicates otherwise, the regulations currently in force as final or temporary that have been issued by the U.S. Department of Treasury pursuant to its authority under the

Internal Revenue Code of 1986, as amended.

 

“Related Person”: A person having a relationship to a Member that is described in section 1.752-4(b) of the Regulations.

 

 “Resignation”: The act of a Manager-Member by which such Manager-Member ceases to be a Manager but continues to be a Member.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement13
 

 

“Return of Capital”: Any Distribution to a Member to the extent that the Member’s Capital Account, immediately after the Distribution, is less than the amount of that Member’s Contributions to the Company as reduced by prior Distributions that were a Return of Capital.

 

“Revaluation”: The adjustment to the Book Value of Company Property as provided in Article 4.9 of this Agreement.

 

“Revaluation Date”: The date on which a Revaluation Event occurs.

 

“Revaluation Event”: (1) a Contribution (other than a de minimis amount), (2) a Liquidating Distribution (other than a de minimis amount), or (3) a Liquidation of the Company.

 

“Round” or “Round of the Offering”: This refers to an individual mini-maxi or other offering of securities which, as a result of the SEC’s integration doctrine and/or by the Company’s design of the offering itself, is considered for all intents and purposes to be a part of a larger securities offering.  Each Round of an offering may Close independently of the larger offering, however, thereby enabling the Company to close upon and begin using the Proceeds from that Round of the offering prior to the Final Closing.  NOTWITHSTANDING THE FOREGOING, THE MANAGERS DO NOT ANTICIPATE CONDUCTING THIS Offering AS A MINI-MAXI OFFERING OF SECURITIES AND NO SUBSEQUENT Rounds ARE CONTEMPLATED TO EVENTUATE WITH REGARD TO THIS Offering.

 

“Running Expenses”: All expenses, charges and disbursements of whatsoever kind actually incurred as running expenses of any production of the Series and the Musicals presented by the Company or any Affiliates thereof, including, without limitation, percentage royalties payable to the owners, authors, directors, choreographers and/or to the Managers as royalties; salaries and other compensation of cast, designers, stage managers, general manager, company managers, business manager, theater party representatives, production associates, production assistants, production secretaries (none of which parties before referred to need render its services exclusively in connection with the Series and/or a Musical), production supervisor and stage hands; theater costs and expenses, theater rentals, transportation charges, office facilities, insurance, legal and auditing expenses, advertising, publicity and promotion expenses (including the right to engage an advertising agency at the usual commission and to contract for additional payments for merchandising, exploitation, sales promotion and publicity), commissions paid to theater party agents, brokers, telephone sales and credit card  companies, Ticketmaster and similar types of organizations, rentals of equipment, lighting, props and other articles from parties (including the Managers or Members of each Company or the Company), miscellaneous supplies, taxes of whatsoever kind or nature, other than income taxes of the individual Members or Managers, and any and all other expenses usually included in the term “Running Expenses.”  The term “Running Expenses” shall also include any portion of the gross weekly box office receipts or Gross Receipts generated by the Series and each Musical payable to any person or firm rendering or furnishing services or materials or granting rights to be used by the Company in or in connection with the production or presentation of the Series and one or more Musicals or the exploitation of any of the rights therein.

 

 “Securities and Exchange Commission” or “SEC”: The federal agency responsible for regulating the sales of securities including passive-investor (i.e., manager-managed) limited liability company interests.  Such agency may also be referred to herein as the SEC.

 

“Series”: A certain nationally broadcast competition reality television series, which would pit up to six musical productions (i.e. the Musicals) against one another in a competition to determine which of the six the professional industry judges felt had the greatest potential to be a future Broadway sensation.  The Series would be financed and produced by the Company and would be distributed by one or more major television and/or SVOD broadcasters throughout the U.S.  In general, the Series would introduce audiences to the rigors of developing and producing a new major commercial musical theater production and more specifically, the Series would introduce audiences to the six or so Musicals and their creators and players.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement14
 

 

“Sharing Ratio”: With respect to any Member, a fraction (expressed as a percentage), the numerator of which is the total of the Member’s Capital Account and the denominator of which is the total of all Capital Accounts of all Members (including Substituted Members) and Assignees.

 

“Subscriber”: Those Persons and entities who subscribe for Units of the Company and whose subscription applications are accepted by the Managers in accordance with the terms provided herein (same as “Investor” or “Investor Member”);

 

“Subscription Agreement”: A document included as Exhibit 3 to the Offering Circular which each Person desiring to become a Unit Holder must complete, execute, acknowledge and deliver to the Managers before being accepted by the Managers as a Unit Holder.

 

“Substituted Member”: Any Assignee or Transferee of a Member’s Interests who is admitted as a Member in the Company pursuant to Article VIII hereof.

 

“Syndication Expenses” or “Offering Expenses”: Expenses paid or incurred in connection with the issuing and marketing of Interests in the Company, including brokerage fees, finder fees, selling commissions, state (“Blue Sky”) filing fees, legal fees of the Issuer for consultations relating to the requirements of the applicable federal, state and foreign securities laws and for tax advice pertaining to the adequacy of tax disclosures in the Offering Circular, accounting fees, if any, for preparation of financial projections to be included in the Offering materials and printing/binding costs of such Offering materials.  Unlike other expenses, Syndication Expenses may not be deducted currently or Amortized over a period of time (in contrast to Organizational Expenses).

 

“Tax Matters Member” or “Tax Matters Partner)”: The designated Manager or Member who, as required by the Tax Equity and Fiscal Responsibility Act of 1983, is to serve as the primary liaison between the Company and the IRS with regard to Company tax matters and Proceedings before the IRS.  For the Company, the Tax Matters Partner is the Manager Charles Jones II Enterprises, LLC’s sole owner Charles Jones II or his designated representative.

 

“Taxing Jurisdiction”: Any state, local, or foreign government that collects tax, interest or penalties, however designated, on any Member’s share of the income or gain attributable to the Company.

 

“Taxable Year”: The taxable year of the Company as determined pursuant to section 706 of the Code.

 

“Third Party Expenses”: Any actual reimbursable expenses of any third party directly related to the Series or one or more of the Musicals and documented with receipts and provided by such third party in an invoice, limited to contractual obligations of the Company therefore agreed to in advance of such expenses accruing.

 

“Transferee”: (See “Assignee” above).

 

“Third Party Profit Participation”: Means Company’s Gross Proceeds to certain third parties (the “Third Party Profit Participants”) by the Managers as compensation for goods or services provided by such Third Party Profit Participants.  Any such Third Party Profit Participations shall be paid from the Adjusted Cash Flow of the LLC pursuant to Article VI.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement15
 

  

“Unit”: A ratable interest in the Company held by a Unit Holder.

 

“Unit Holder” or “Unit Purchaser”: An Investor in the Company who thereby becomes a Member.  One who purchases one or more Units and has thereby obtained a pro rata share in the Company.

 

“Unrecovered Capital Contribution”: For any Member, the aggregate amount of capital Contributed by such Member pursuant to Articles 4.1, 4.2 and 4.3 reduced by the aggregate amount of Distributions theretofore made to such Member pursuant to Articles 6.1 and 6.2.

 

“Vote”: Those rights of a Member and Manager described in Article VII of this Agreement as they may be limited by this Agreement, the Articles and the Law. A Vote hereunder shall include authorization by Written consent.

 

“Withdrawal”: Includes the resignation or retirement of a Member as a Member.

 

“Written” or “In Writing”: Any form of communication that can be reduced to a hard copy form including, facsimile, e-mail and telegraphic communication which are signed.

 

 

 

Article II

FORMATION MATTERS

 

2.1 Formation of Limited Liability Company: The Members do hereby agree to join the Company, which is a manager-managed limited liability company operating pursuant to the Law (the “Company”).  The rights and liabilities of the Members and Managers shall, except as may be hereinafter expressly stated to the contrary, be as provided for in said Law.  In the event of a conflict between the terms of this Operating Agreement and the terms of the Articles of Organization, the terms of the Articles shall prevail.

 

2.2 Filings: The Managers shall execute, file, record and publish all certificates (including, at the option of the Managers, this Operating Agreement), notices, statements and other instruments required by law for the maintenance and operation of the Company as a limited liability company in all jurisdictions in which the Company conducts business.  Each Unit Holder hereby agrees to execute and deliver to the Company within five (5) days after receipt of a written request therefor, such other and further documents and instruments, statements of interest and holdings, designations, powers of attorney and other instruments and to take such other action as the Company deems necessary, useful or appropriate to comply with any acts, rules or regulations as may be necessary to enable the Company to fulfill its responsibilities under this Operating Agreement, to preserve the Company as a limited liability company under the Law and to enable the Company to be taxed as a partnership for federal and state income tax purposes.

 

2.3 Limited Liability Company Name: The name of the Company is: Opening Night Enterprises, LLC.  The Company is a California limited liability company to be formed upon Closing of the Offering using a portion of the funds thereof.  The business of the Company shall be conducted under said name, or such modification or variations thereof as the Managers may determine from time to time.

 

2.4 Principal Office: The Company’s address to which all mail should be directed is 80 W. Sierra Madre Blvd., Suite 141, Sierra Madre, CA 91204; all Notices delivered hereunder or in accordance herewith should be copied to Ryan J. Lewis, Esq. 207 W. 25th Street, 6th Floor, New York, NY 10001; however substitute or additional places of business may be established at such other locations as may, from time to time, be determined by the Managers.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement16
 

 

2.5 Term of Company: The Company was made effective upon the filing of the Articles of Organization with the California Secretary of State and shall continue in full force as set forth in the Articles.

 

2.6 Name, Address and Designation of Managers: The names of the Managers are as follows: Charles Jones II Enterprises, LLC, a California limited liability company wholly-owned by the individual Charles Jones II; Kristin Chenoweth; and Regina Dowling.  The business address for the Company and the Company’s Manager Charles Jones II Enterprises, LLC is 80 W. Sierra Madre Blvd., Suite 141, Sierra Madre, CA 91204.  The names and business addresses of the Members and other Managers shall be shall be kept on file at the Company’s principal office and the names and addresses of the Company’s Members shall also be set forth on each Members’ respective Subscription Agreement.

 

2.7 Agent for Service of Process: The agent for service of process on the Company shall be Ryan J. Lewis, Esq. 207 W. 25th Street, 6th Floor, New York, NY 10001, or any other such person or entity which may be so designated in the Articles to be filed with the Secretary of State for California.  The Managers by a unanimous decision, may, from time to time, change the Registered Agent or office through appropriate filings with the Secretary of State.  In the event the Registered Agent ceases to act as such for any reason or the registered office shall change, the Managers shall promptly designate a replacement registered agent or file a notice of change of address as the case may be.

 

2.8 Agreement, Effect of Inconsistencies with the Law: For and in consideration of the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Managers executing this Operating Agreement and all Members hereby agree to the terms and conditions of this Operating Agreement, as it may from time to time be amended, according to its terms.  It is the express intention of the Managers and Members that this Operating Agreement shall govern, even when inconsistent with, or different from, the provisions of the Law or any other law or rule.  To the extent any provision of this Operating Agreement is prohibited or ineffective under the Law, this Operating Agreement shall be considered amended to the smallest degree possible in order to make the Operating Agreement effective under the Law.  In the event the Law is subsequently amended or interpreted in such way as to make any provision of this Operating Agreement that was formerly invalid valid, such provision shall be considered valid from the effective date of such interpretation or amendment.  The Managers and Members hereby agree that each Manager and Member shall be entitled to rely on the provisions of this Operating Agreement, and no Manager or Member shall be liable to the Company or to any Member for any action or refusal to act taken in good faith reliance on the terms of this Operating Agreement.  The Members and the Company hereby agree that the duties and obligations imposed on the Managers and Members of the Company as such shall be those set forth in this Operating Agreement, which is intended to govern the relationship among the Company and the Managers and Members, notwithstanding any provision of the Law or common law to the contrary.

 

2.9 Entity Declaration: Notwithstanding any provisions herein to the contrary, each of the Unit Holders and Managers hereby recognizes that the Company will be taxable as a partnership for federal, state and local income tax purposes and that the Company will be subject to the provisions of Subchapter K of the Code.  Other than for tax purposes, the Company shall not be treated as a general partnership, limited partnership or a joint venture, and no Member shall be considered a partner or joint venturer of or with any other Member, and this Operating Agreement shall not be construed otherwise.  No Member shall have any liability or obligation to the Company or to any other Member other than as specifically provided for herein.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement17
 

 

Article III

PURPOSES AND POWERS

 

3.1 Purposes of the Limited Liability Company: The purpose and character of the business of the Company (the “Purpose” or the “Business Purpose”) is to engage in the financing, development, production, ownership, distribution and other exploitation of the Series and the Musicals and the exploitation of the ancillary and subsidiary rights to the Series and the Musicals either directly or in conjunction with others through corporations, joint ventures, partnerships, trusts, limited liability companies or otherwise, which may be necessary, incidental or convenient to the financing, development, production and exploitation of the Series and the Musicals.

 

3.2 Powers of the Company: Such Business Purposes as set forth in 3.1 shall include the doing of any and all things incidental thereto or in furtherance thereof.  Without in any way limiting the generality of the foregoing statement, the Company may own, operate, sell, transfer, convey, license, mortgage, exchange, exploit or otherwise dispose of or deal with Property of every nature whatsoever and engage in any activities in furtherance of said purpose as are not prohibited by law.

 

The Company purposes set forth in 3.1 hereof may be accomplished by taking any action which is permitted under the Law, and which is customary or directly related to the acquisition, ownership, development, improvement, operation, management, financing, selling, leasing, exchanging, exploiting, or other disposing of Property of any nature whatsoever; provided, however, that nothing contained in this Article 3.2 or elsewhere in this Operating Agreement shall obligate the Managers to take any action on behalf of the Company if the Managers deem such action inappropriate or not reasonably necessary to accomplish Company’s Business Purpose.

 

 

 

Article IV

CONTRIBUTIONS AND CAPITAL ACCOUNTS

 

4.1 Capital Contributions by Members: Each Member shall contribute to the Company the amount of such Member’s Capital Contribution.  The Company intends to offer for subscription limited liability company interests (“Units”), priced at $500 per Unit (payable as provided in Article 4.2), and each Investor who subscribes for at least One (1) Unit will acquire an Interest in the Company subject to the provisions of Article 4.2 of this Agreement.  The Capital Contributions described herein shall constitute the full obligation of the Members to furnish funds to the Company.  No additional funds or other Property shall be required of any Member.  The Capital Contributions may be used by the Managers for any Business Purpose.

 

4.2 Cash and Property Contributions by Unit Holders: The Managers, in their sole collective discretion, may accept Contributions from Persons who, upon simultaneous execution of a counterpart of this Operating Agreement and the Subscription Agreement, together with payment of their Capital Contributions, shall become Members.  Each Prospective Unit Purchaser shall Contribute to the Company cash in an amount equal to the number of Units said Person is purchasing multiplied by the value of a Unit under this Offering.  The Contributions of the Unit Holders shall be an amount equal to the value of funds and Property actually received from the private sale of Units in this Offering.  The total Contributions of all Unit Purchasers will represent a Fifty percent (50%) Interest in the Company. Members acquiring their Units under this initial Offering shall be entitled to that portion of fifty percent (50%) of the Company’s Distributable Cash equal to said Unit Purchaser’s respective Interests relative to the Interests of all other Unit Purchaser Member Interests.

 

 

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement18
 

 

4.3 Non-Capital Contribution: The Managers, in their sole collective discretion, may accept Contributions in the form of loans, advances, finishing funds, the value of in-kind services, etc. (“Non-Capital Contributions”) which may be counted as part of the Capital Contributions, and which may be counted in calculation of whether the minimum capital requirements hereunder have been met, and otherwise which may be paid prior to return of Capital Contributions subject to the profits waterfall set forth in Article 6.1 et. seq. below.

 

4.4 Withdrawal of Capital: Other than as provided in this Agreement, no Unit Holder shall have the right to withdraw or be repaid any Contribution to the Company or to receive any return of a portion of such Contribution.

 

4.5 Interest: No Member or Manager shall be paid interest on any Capital Contribution to the Company.  However, interest shall be paid to Members or to Company on amounts placed in the segregated account up to and until such funds are either rejected or transferred to the Company’s account(s), (i.e., until those funds are Closed-on or the accompanying Subscriptions are rejected or fail to Close for any reason).  If a Member’s Capital Contribution is accepted, then interest (if any shall be accruing in the Managers’ sole collective discretion) deriving from that Capital Contribution shall be paid to Company.  However, if the Capital Contribution is rejected or the accompanying Subscription is not Closed-on for any reason, then interest deriving from that Capital Contribution (if any shall be accruing in the Managers’ sole collective discretion) shall be paid to the corresponding Prospective Purchaser.  No Member shall have any priority over any other Member with respect to the return of Capital Contributions other than as set forth in Articles VI and X.

 

4.6 Liabilities of Managers for Contributions: The Managers shall not be personally liable for the return of any portion of the Contributions of the Unit Holders; the return of those Contributions shall be made solely from Company assets.  The Managers shall be required to restore any deficit in their Capital Accounts on dissolution of the Company.  However, except as specifically provided in the preceding sentences, the Managers shall not be required to pay to the Company or any Unit Holder any deficit in any Unit Holder’s Capital Account on dissolution or otherwise.  Under the circumstances requiring a return of any Capital Contribution, no Member or Manager shall have the right to demand or receive Property other than cash except as may be specifically provided for in this Operating Agreement and the Offering Circular.

 

4.7 Maintenance of Capital Accounts: The Company shall establish and maintain a Capital Account for each Member and Assignee.  Each Capital Account shall be increased by (a) the amount of any Money actually Contributed by the Member to the Company, (b) the fair market value of any Property (other than Money) Contributed by the Member, as determined by the Company and the Contributing Member at arm’s length at the time of Contribution (net of liabilities assumed by the Company or subject to which the Company takes such Property, within the meaning of section 752 of the Code), and (c) the Member’s share of Net Gains and of any separately allocated items of income or gain except adjustments of the Code (including income and gain exempt from tax and adjustments to income and gain as a result of a Revaluation or in connection with Property Contributed in the manner described in section 1.704- 1(b)(2)(iv)(g) of the Regulations to reflect the difference between the Book Value and the adjusted basis of Company Property, but excluding allocations of income and gain described in section 1.704-1(b)(4)(i) of the Regulations under which such difference is reflected for tax purposes).

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement19
 

 

4.7.1          Each Capital Account shall be decreased by: (a) the amount of any Money Distributed to the Member by the Company, (b) the fair market value of any Property Distributed to the Member, as determined by the Company and the Member receiving the Distribution at arm’s length at the time of Distribution (net of liabilities of the LLC assumed by the Member or subject to which the Member takes such Property within the meaning of Section 752 of the Code), and (c) the Member’s share of Net Losses and of any separately Allocated items of Net Loss (including adjustments for depreciation, depletion, Amortization, and loss as a result of a Revaluation or in connection with Property Contributed in the manner described in section 1.704-1(b)(2)(iv)(g) of the Regulations to reflect the difference between the Book Value and the adjusted basis of Company Property, but excluding Allocations of depreciation, depletion, Amortization, and loss described in section 1.704-1(b)(4)(i) of the Regulations under which such difference is reflected for tax purposes).

 

4.7.2          Upon the transfer of an Interest in the Company after the date of this Operating Agreement, if such transfer does not cause a termination of the Company within the meaning of section 708(b)(1)(B) of the Code, the Capital Account of the transferor Member that is attributable to the transferred Interest will be carried over to the Transferee Member but, if the Company has a Section 754 election in effect, the Capital Account will not be adjusted to reflect any adjustment under section 743 of the Code except as provided in Treasury Regulation section 1.704-1(b)(2)(iv)(m), or (b) if such transfer causes a termination of the Company within the meaning of section 708(b)(1)(B) of the Code, the income tax consequences of the deemed Distribution of the Property and of the deemed immediate Contribution of the Property to a new company (which for all other purposes continues to be the Company) shall be governed by the relevant provisions of Subchapter K of Chapter 1 of the Code and the regulations promulgated thereunder, and the initial Capital Accounts in the new company shall be determined in accordance with Treasury Regulation section 1.704-1(b)(2)(iv) and thereafter in accordance with section 4.6(a).

 

4.7.3          Upon (i) the “Liquidation of the Company” (as hereinafter defined), (ii) the Distribution of Money or Property to a Member as consideration for an Interest in the Company, or (iii) the Contribution of Money or Property to the Company by a new or existing Member as Consideration for an Interest in the Company, then adjustments shall be made to the Capital Accounts in the following manner: All Property of the Company which is not sold in connection with such event shall be valued at its then “Agreed Value.”  Such “Agreed Value” shall be used to determine both the amount of gain or loss which would have been recognized by the Company if the Property had been sold for its Agreed Value (subject to any debt secured by the Property) at such time, and the amount of Adjusted Cash Flow or Net Gains, as the case may be, which would have been Distributable by the Company pursuant to Article 6.2 if the Property had been sold at such time for said value, less the amount of any debt secured by the Property.  The Capital Accounts shall be adjusted to reflect the deemed Allocation of such hypothetical gain or loss in accordance with Article 6.2.  The Capital Accounts of the Members (or of a Transferee of a Member), and Net Gains and Net Losses of the Company, including depreciation with respect to, and gain or loss arising from, the sale or disposition of any Revalued Property or Property described in Treasury Regulation section 1.704-1(b)(2)(iv), shall be adjusted to reflect “book items” and not “tax items” in accordance with Treasury Regulation sections 1.704-l(b)(2)(iv)(g) and l.704-l(b)(4)(i).

 

4.7.4          For purposes of this Article 4.7(.1)-(.4), the term “Liquidation of the Company” shall mean (a) a termination of the Company effected in accordance with this Agreement at Article X below, which shall be deemed to occur, for purposes of this Article IV, on the date upon which the Company ceases to be a going concern and is continued in existence solely to wind-up its affairs, or (b) a termination of the Company pursuant to section 708(b)(1) of the Code.

 

4.8 Additional Contributions: In the event the Company determines that it shall need additional Capital Contributions from equity Investors to further its business, including without limitation the development, production and/or distribution of the Series or Musicals, or to satisfy its obligations after receipt of the Offering Maximum, the Managers may take such actions to secure additional funds, including the creation and sale of additional classes of Units on such terms most favorable to the Company as can be negotiated by the Managers, provided that if any such sale shall dilute the Interests of the Initial Members in their then-existing respective classes, then Company agrees that it must first offer those new Units to the existing Unit Holders in proportions which will allow them to maintain their respective Percentage Interest in the Company and on the same terms as they would be offered to non-Members.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement20
 

 

If the Company creates and offers new classes of Units for sale to individuals for the primary purpose of raising additional equity funding (e.g., of the production phase of the Musicals), it will offer said Units to the existing Unit Holders generally.  Any preferential terms attached to the Units taken under this Offering, such as rights of preemption and first offer, would not be applicable to issuances of new classes of Units which were offered to co-producers, distributors or others in furtherance of necessary business relationships for production or distribution of the Series or the Musicals provided that such issuances are for other than primarily equity financing purposes, or to financial institutions or lessors in connection with commercial credit arrangements, presale financing, completion bond or other loan guarantors, or project financing generally, provided that such issuances are for other than primarily equity financing purposes.  In addition to the Initial Contributions and Commitments, the Managers may continue to seek Contributions from Additional non-Manager Prospective Unit Holders until the Offering Maximum has been obtained.  Units may also be offered for sale to non-Members such as product placement and distributors in order to fully finance the Series’ or one or more of the Musicals’ combined production budgets and marketing budgets as may be necessary.  However, if such outside business partnership or leveraged financing opportunities involve sales of Units those Interests will be in classes of Units other than the developmental equity Investor Units which are for sale in this Offering.

 

Upon determining that additional sales of non-Manager Units are needed (subsequent to the Final Closing of this Offering) or that new classes of Units should be established and sold primarily for equity fundraising purposes, the Managers shall give Notice to all existing Unit Holders of that class or of any new class of Units that is being established primarily for purpose of raising investment through equity sales, Notice shall be given in writing at least ten (10) Business Days prior to the date on which such Units are made available for purchase.  No existing Unit Holder shall be obligated to make any such Additional Contributions.  In the event that Units are being offered in the same class, if any one or more Unit Holder of that same class does not make the necessary Additional Contribution which would allow it to maintain its Percentage Interest, others, both Unit Holders of that same class and Unit Holders of other classes shall be given the opportunity to make the Contributions.  In the event that the Additional Contributions of the existing Member(s) are insufficient to enable the Company to effectuate its purposes, the Managers may seek Additional Contributions from private parties who are not already Members (“Additional Members”), provided however, that such Additional Contributions from Additional Members shall only be accepted and agreed to in accordance with the terms and conditions imposed by the SEC’s Regulation A, Tier II exemptions for exempted offerings of securities.  Each Additional Member shall make the Contribution to which such Member has agreed, at the time or times and upon the terms to which the Managers and the Additional Member agree as set forth in the offering materials (offering circular, subscription agreement, etc.) tied to that offering.

 

4.9 Revaluation of Company Property: The Capital Accounts of the Members shall be increased or decreased to reflect a Revaluation of Company Property (including intangible assets such as goodwill) on the Company’s books in connection with a Revaluation Event.  Upon such Revaluation: (1) the Book Value of Company Property shall be adjusted based on the fair market value of Company Property (taking section 7701(g) of the Code into account) on the Revaluation Date; (2) the unrealized income, gain, loss, or deduction inherent in such Company Property (that has not been reflected in the Capital Accounts previously) would be allocated among the Members as if there were a taxable disposition of such Company Property for such fair market value on the Revaluation Date.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement21
 

 

Article V

TAX ALLOCATIONS

 

5.1 Allocations of Net Gains: The Net Gains of the Company for each Fiscal Year after taking into account the Special Allocations of Gross Receipts and Syndication Costs provided for in Article 5.3 hereof shall be allocated among the Members solely for tax purposes as follows:

 

5.1.1 First to the Members in an amount equal to, and in proportion to, the aggregate amount of Net Losses theretofore allocated to each Unit Holder;

 

5.1.2 There shall next be allocated to those Members, if any, who have deficit balances in their Capital Accounts immediately prior to such transaction, an amount of Net Gains equal to the aggregate amount of such deficit balances, which amount shall be allocated in the same proportion as such deficit balances;

 

5.1.3 There shall next be allocated to each of the Members Net Gains equal to and in proportion to the amount of the aggregate Distributable Cash theretofore Distributed to each Member in accordance with the provisions of Article 6.1;

 

5.1.4 Thereafter, in proportion to their respective Percentage Interests in the Company and in accordance with the provisions of Article 6.1.

 

Any credit available for income tax purposes shall be allocated among the Members in proportion to their respective Capital Interests in the Company.  If the Company shall realize gain which is treated as ordinary income under section 1245 or 1250 of the Code, such ordinary income shall be allocated to the Members who receive the allocation of the depreciation or cost recovery deduction that generated the ordinary income, which amount shall be allocated in the same proportions as such deductions.

 

5.2 Allocation of Net Losses: All Net Losses shall be allocated in the following order of priority:

 

5.2.1 First, 100% to the Members, pro rata in accordance with their Percentage Interests until each Member’s Capital Account is reduced to zero.

 

5.2.2 The balance, if any, to the Managers in proportion with each Manager’s respective ownership Interest in the Company.

 

5.3. Syndication Expenses:

 

5.3.1 Syndication Expenses, if any, shall be Allocated to the Members pro rata in accordance with their Percentage Interests.

 

5.4 Special Allocations: Notwithstanding the foregoing provisions of this Article V, the following special Allocations shall be made in the following order:

 

5.4.1 Qualified Income Offset: In the event that any Member unexpectedly receives any adjustments, allocations, or distributions described in Regulations section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Company income and gain shall be allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the Adjusted Capital Account Deficit of such Member as quickly as possible; provided that an Allocation pursuant to this Article 5.4.1 shall be made only if and to the extent that such Member would have an Adjusted Capital Account Deficit after all other Allocations provided for in this (including any later amended version hereof) Article V have been tentatively made as if this Article 5.4.1 were not in this Operating Agreement.

 

5.4.2 Gross Income Allocation: In the event that any Member has an Adjusted Capital Account Deficit at the end of any Fiscal Year, each such Member shall be Allocated items of Company income and gain in the amount of such deficit as quickly as possible; provided that an Allocation pursuant to this Article 5.4.2 shall be made only if and to the extent that such Member would have an Adjusted Capital Account Deficit in excess of such sum after all other Allocations provided for in this Article V have been tentatively made as if Article 5.4.1 and this Article 5.4.2 were not in this Operating Agreement.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement22
 

 

5.4.3 Section 754 Adjustments: To the extent an adjustment to the adjusted tax basis of any Company asset, pursuant to Code section 734(b) or section 743(b) or Regulations § 1.704-1(b)(2)(iv)(m)(2) or § 1.704-1(b)(2)(iv)(m)(4), is required to be taken into account in determining Capital Accounts as the result of a Distribution to a Member in complete liquidation of such Member’s Interest in the Company, the amount of such adjustment to Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially Allocated to the Members in accordance with their Interests in the Company in the event Regulations § 1.704- 1(b)(2)(iv)(m)(2) applies, or to the Member to whom such Distribution was made in the event Regulations § 1.704-1(b)(2)(iv)(m)(4) applies.

 

5.4.4 Curative Allocations: The Allocations set forth in Articles 5.4.1, 5.4.2 and 5.4.3 (the “Regulatory Allocations”) are intended to comply with certain requirements of the Regulations.  It is the intent of the Members that, to the extent possible, all Regulatory Allocations shall be offset either with other Regulatory Allocations or with special Allocations of other items of Company income, gain, loss, or deduction pursuant to this Article 5.4.4.  Therefore, notwithstanding any other provision of this Article V (other than the Regulatory Allocations), the Managers shall make such offsetting special Allocations of Company income, gain, loss, or deduction in whatever manner they collectively determine appropriate so that, after such offsetting Allocations are made, each Member’s Capital Account balance is, to the extent possible, equal to the Capital Account Balance such Member would have had if the Regulatory Allocations were not part of the Agreement and all Company items were Allocated pursuant to Articles 5.1 and 5.2.

 

5.5 Other Allocation Rules:

 

5.5.1 Section 706: For purposes of determining the Net Profits, Net Losses, or any other items allocable to any period, Net Profits, Net Losses and any such other items shall be determined on a daily, monthly, or other basis, as determined by the Managers using any permissible method under Code section 706 and the Regulations thereunder.

 

5.5.2 Section 704(c): In accordance with Code section 704(c) and the Regulations thereunder, income, gain, loss, and deduction with respect to any Property Contributed to the capital of the Company shall, solely for tax purposes, be Allocated among the Members so as to take account of any variation between the adjusted basis of such Property to the Company for federal income tax purposes and its initial Gross Asset Value.  In the event the Gross Asset Value of any Company asset is adjusted pursuant to subparagraph (ii) of the definition of Gross Asset Value, subsequent Allocations of income, gain, loss, and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its Gross Asset Value in the same manner as under Code section 704(c) and the Regulations thereunder.  Any elections or other decisions relating to such Allocations shall be made by the Managers in any manner that reasonably reflects the purpose and intention of this Operating Agreement, provided that the Company shall elect to apply the section 704(c) allocation method permitted by the Regulations under Code section 704(c).  Allocations pursuant to this Article 5.5.2 are solely for purposes of federal, state and local taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of Net Profits, Net Losses, or other items, or Distributions pursuant to any provision of this Operating Agreement.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement23
 

 

5.6 Accounting Policy; Fiscal Year: For tax purposes, the Fiscal Year of the Company shall be the calendar year.  Statements showing the Gross Company Revenues and Distributable Cash, if any, shall be furnished, and all Distributions by the Company shall be made, to Members, Managers, Creative Talent and others entitled thereto no less frequently than annually during the term of the Company, with each such statement being furnished not later than seventy-five (75) days after the end of each such annual period, and payments made not later than seventy-five (75) days after the end of each such annual period.

 

5.7 Books and Records: The Managers shall cause to be kept at the office of the Company the following records:

 

(a) A current list of the full name and last known business or residence address of each Member and of each holder of an Economic Interest in the Company set forth in alphabetical order, together with the Contribution and the share in profits and losses of each Member and holder of an Economic Interest.

 

(b) A current list of the full names and business or residential addresses of each of the Managers.

 

(c) A copy of the Articles of Organization and all amendments thereto, together with any powers of attorney pursuant to which the Articles or any amendments thereto were executed.

 

(d) Copies of the Company’s federal, state and local income tax or information returns and reports, if any, for the six most recent Taxable Years.

 

(e) A copy of the Company’s Operating Agreement and any amendments thereto, together with any powers of attorney pursuant to which any written Operating Agreement or any amendments thereto were executed.

 

(f) Copies of the financial statements of the Company, if any, for the six most recent Fiscal Years.

 

(g) The books and records of the Company as they relate to the internal affairs of the Company for at least the current and past four Fiscal Years.  The Company’s books of account shall be kept on an accrual basis in accordance with generally accepted accounting practices and principles which show accurately the transactions of the Company.  Each Member and such Member’s agents and representatives shall have access to the Company’s books and records at all reasonable times.  The Managers shall arrange for annual tax returns for the Company to be prepared and filed with the IRS, along with the appropriate K1s to be transmitted to each Member within a reasonable period after the close of each Fiscal Year of the Company.

 

5.8 Banking: All funds of the Company shall be deposited in the name of the Company in such bank account or accounts as shall be determined by the Managers.  No other funds shall be deposited in such accounts.  The funds in such accounts shall be used solely for the business of the Company.  All withdrawals therefrom shall be made on checks or drafts signed on behalf of the Company by such person or persons as the Managers shall designate.

 

5.9 Compensation of Managers and Affiliates: The following summarizes the form and estimated amounts of compensation, fees and Percentage Participations to be paid to the Company’s Managers and Affiliates.  Such items have not been determined by arm’s-length negotiations.  Other than as set forth herein and in the Offering Circular at “COMPENSATION OF MANAGERS AND EXEXUTIVE OFFICERS”, generally, no other compensation or remuneration in any form is to be paid to the Managers or Affiliates.

 

The Managers have, and will during the course of this Offering, advance necessary funds to cover certain necessary developmental expenses.  The Managers may request to be reimbursed for such expenses out of the Gross Offering Proceeds.  Such reimbursement shall not exceed a ceiling equal to 0.1% of the Offering Maximum Proceeds.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement24
 

 

The Managers will be paid that percentage participation in the Company’s Distributable Cash in accordance with their respective Distributional Interests.  The Managers’ Distributional Interest shall consist of that portion of the Manager’s Net Profits (as defined in Article 6.1.7.[b] below) which the Managers do not otherwise dispose of.  In general, it is presumed that the Company will need to dispose of the majority of the Manager’s Net Profits to various classes of distributors, exhibitors, theaters, co-producers, writers, directors, actors and other talent and various others whom the Company will rely on to help produce, perform-in, bring audiences to, distribute and otherwise exploit the various rights in and to the Series and the Musicals.

 

The Managers shall have no interests in Company Losses and tax deductions for federal income tax purposes until after the Members’ Capital Accounts have been reduced to zero.

 

At the conclusion of the Company, all property rights and ancillary rights in the Series and the Musicals shall revert to and be distributed to the Managers.

 

5.10 Unit Holder Compensation: No Unit Holder shall be paid any salary or fee for services in connection with the activities of the Company in his or her capacity as a Unit Holder and no such services shall be rendered.

 

5.11 Taxes of Taxing Jurisdictions: To the extent that the laws of any Taxing Jurisdiction requires, each Member and Economic Interest holder (or such Members as may be required by the Taxing Jurisdiction) will submit an agreement indicating that the Member will make timely income tax payments to the Taxing Jurisdiction and that the Member accepts personal jurisdiction of the Taxing Jurisdiction with regard to the collection of income taxes attributable to the Member’s income, and interest, and penalties assessed on such income.  If the Member fails to provide such agreement, the Company may withhold and pay over to such Taxing Jurisdiction the amount of tax, penalty and interest determined under the laws of the Taxing Jurisdiction with respect to such income.  Any such payments with respect to the income of a Member shall be treated as a Distribution for purposes of Article IV above.  The Managers may, where permitted by the rules of any Taxing Jurisdiction, file a composite, combined or aggregate tax return reflecting the income of the Company and pay the tax, interest and penalties of some or all of the Members on such income to the Taxing Jurisdiction, in which case the Company shall inform the Members of the amount of such tax interest and penalties so paid.

 

5.12 Cash Method of Accounting: The records of the Company shall be maintained on a cash receipts and disbursements method of accounting.

 

 

 

Article VI

DISTRIBUTIONS

 

6.1. Distributions: Distributions of Distributable Cash for any Fiscal Year shall be made in the following order of priority:

 

6.1.1.          First, to pay all Production Expenses (to the extent not paid for/covered by the Capital Contributions), Running Expenses and Other Expenses;

 

6.1.2.          Second, to satisfy any liens and to repay any loans, including interest charges and fees thereon, assumed by the Company in connection with the Series and/or the Musicals, including, without limitation, any “Last In, First Out” loans (as defined below) plus any preferred return thereon;

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement25
 

 

6.1.3.          Third, to establish a cash reserve (distributable cash held back, or accumulated) in amounts determined by the Managers in their sole reasonable discretion from time to time, for anticipated debts, liabilities, expenses and future operating costs/working capital;

 

6.1.4.          Fourth, with respect to revenues deriving from the Musicals alone, certain standard gross corridor participations1 are typically payable to a limited range of key personnel, including the writer(s) of the Musical’s book, the Musical’s director, et. al.  In a gross corridor format, the total weekly gross profits from a musical that end up being allocable to such participants is in the range of 12% to 18%.

 

6.1.5.          Without limitation to any definitions of “Adjusted Cash Flow”, “Net Profits” or “Net Receipts”, etc. set forth in Article I above, Gross Receipts remaining after the deductions set forth in subsections 6.1.1, 6.1.2, 6.1.3 and 6.1.4 immediately above shall be characterized as “Net Cash Flow.”  Net Cash Flow shall be distributed to each Investor Member in the same proportion as his Capital Contribution bears to the aggregate amounts raised from all Investor Members, until such time as each Investor Member has Recouped;

 

6.1.6.          Next, after Recoupment, and further without limitation to any definitions of “Adjusted Cash Flow”, “Net Profits” or “Net Receipts”, etc. set forth in Article I above, for purposes of this Article VI waterfall alone, following Recoupment, Net Cash Flow, if any, shall be deemed “Net Profits” and shall be distributed as follows:

 

6.1.6.(a)          The Managers may allocate Net Profits “off the top” to third parties in reasonable and customary arms-length transactions in consideration of services provided or rights contributed to the Series and/or the Musicals, or any other production(s) as contemplated herein, including but not limited to distributions made as PPDs and other types of Deferrals, which shall be paid pro rata and pari passu until all such PPDs and other Deferrals are paid in full;

 

6.1.7.          Next, without limitation to any definitions of “Adjusted Cash Flow”, “Net Profits” or “Net Receipts”, etc. set forth in Article I above, for purposes of this Article VI waterfall alone, the remainder of such Net Profits, if any, shall be deemed “Adjusted Net Profits”, and shall be distributed as follows: ;

 

6.1.7.(a)          MEMBERS’ NET PROFITS: An amount equal to fifty percent (50%) of the Adjusted Net Profits shall be divided among the Investor Members of the Company, with each such Investor Member receiving that portion thereof as its Capital Contribution bears to the amounts raised in the aggregate from all Investor Members; and

 

6.1.7.(b)          MANAGER’S NET PROFITS: An amount equal to fifty percent (50%) of the Adjusted Net Profits shall be paid to the Managers of the Company (all non Investor Members receiving portions of such Adjusted Net Profits shall also be paid out of this 50% pool of Manager’s Net Profits).  The Managers shall have the right to allocate Manager’s Net Profits to themselves or any third parties in their sole discretion.

 

 

1 The production company ultimately responsible for producing each version of each Musical will ultimately determine what type of standard prevailing live theater revenue participation formulae it will apply on a production-by-production basis.  The gross participation formula assumed here is one such format, the total gross receipts allocable to gross profit participants, of which is typically in the range of 12% to 18% of weekly gross receipts.  An alternative common formula for allocating a live stage production’s receipts is a “pool” format.  The Company will not know which formulae shall be used with respect to a given Musical production until such time as the Musicals and their actual final producers are determined.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement26
 

 

All amounts Distributed pursuant to this Article 6.1 shall be Allocated among the Members in accordance with their respective Percentage Interests and in accordance with the terms of each respective class of Units that they have subscribed to.

 

6.2 Distributions in Liquidation: Notwithstanding Article 6.1 above, Adjusted Cash Flow attributable to a Capital Transaction which constitutes a Liquidation of the Company, together with other funds remaining to be Distributed, shall be Distributed to the Members no later than the later of (i) the end of the Taxable Year of the Company in which such Liquidation occurs or (ii) within ninety (90) days after the date of such Liquidation, after payment of all Company liabilities and expenses (or adequate provision therefor); provided, however, that in no event shall (a) a Liquidating Distribution be made to any Member if, after giving effect to such Distribution, all liabilities of the Company, other than liabilities to Members on account of their Interests and liabilities for which the recourse of creditors of the Company is limited to specified Property of the Company, exceed the fair market value of the assets of the Company (except that the fair market value of assets that are subject to a liability for which the recourse of creditors is limited shall be included in the assets of the Company only to the extent that the fair market value of those assets exceeds that liability) and (b) the Distribution to a Member exceeds the positive balance in such Member’s Capital Account after giving effect to all Allocations to such Member under Article V of this Agreement so that Liquidation proceeds shall be Distributed in accordance with each Member’s positive Capital Account balance (within the meaning of Treasury Regulation Section 1.704-1 (b)(2)(ii)(k) as in effect on the date first written above).

 

6.3 Governmental Withholding: In the event the Company is required to deduct and withhold, pursuant to the Code or any other federal, state or local law, foreign governmental, or other rule or regulation which is currently in effect or which may be promulgated hereafter (“Applicable Law”), any amount from an actual Distribution to a Member or Transferee, the amount so deducted and withheld from such Distribution shall, for all purposes of this Agreement, be treated as a Distribution to such Member or Transferee of the same type as the Distribution giving rise to the obligation.  In the event applicable law requires the Company to pay or withhold any amount on behalf of a Member (including any federal, state, local or foreign taxes) measured by a Member’s Distributive Share of the Company’s Net Profits, gain or any other Company item, other than any amount required to be deducted and withheld from actual Distributions to a Member, then the payment or withholding of any such amount shall be considered a loan (“Tax Loan”) by the Company to such Member (the “Borrowing Member”).  The Borrowing Member shall repay any such Tax Loan within thirty (30) days after the Managers (or if the Managers fail to do so, any Member) delivers a written demand therefor, together with interest at an annual rate equal to one percent (1%) per annum in excess of the rate announced from time to time in the Wall Street Journal as the “prime rate” from the date such loan was made until the date of the repayment thereof.  In addition to any other rights of the Company to enforce its entitlement to receive payment of the Tax Loan, plus any accrued interest thereon, the Company may deduct from any Distribution to be made to a Borrowing Member an amount not greater than the outstanding balance of any Tax Loan, plus any accrued interest thereon, as a payment in total or partial satisfaction thereof.

 

6.4 Liability upon Wrongful Distribution: A Member or Manager who Votes for or assents to a Distribution in violation of this Agreement or the Law is personally liable to the Company, but not to another Person, for the amount of the Distribution that exceeds what could have been Distributed without violating the Law or this Agreement, if it is established that the Member or Manager did not perform that Member or Manager’s duties.

 

Article VII

MANAGEMENT OF THE LIMITED LIABILITY COMPANY

 

7.1 Election of Managers: The election of the Manager to fill the initial Company Manager positions shall be by declaration set forth herein, and shall be confirmed by the affirmative Vote of a Majority In Interest of the Members.  The accompanying Subscription Agreement provides that by completing such application and by signing it, the Prospective Purchaser is authorizing his or her Vote to be cast by proxy held by the individual Charles Jones II for the election of the Managers: Charles Jones II Enterprises, LLC; Regina Dowling and Kristin Chenoweth to fill the initial Manager positions of the Company pursuant to the Law.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement27
 

 

7.2 Management Powers of the Managers (Generally):  The Company shall exist as a manager-managed limited liability company.  The Managers shall collectively have full and exclusive control of the management and operation of the business of the Company and shall be responsible for making all creative and business judgments, determinations, and decisions affecting Company affairs except as otherwise specifically provided herein.  The Managers may each render services or provide goods to the Company in a capacity other than as a manager for consideration in accordance with the customs and practices of the television and/or live stage theater industry (as applicable), each such Manager’s experience in the applicable industries and the Series and each Musical’s working budget(s) (as applicable).

 

7.3 Specific Power and Authority of Managers: The Managers shall have, subject to any limitations imposed elsewhere in this Operating Agreement, the power and authority on behalf of the Company to do or cause to be done any and all acts deemed by the Managers to be necessary or appropriate in connection with the management and operation of the business of the Company and the development, production, distribution and other exploitation of the Series and each Musical.  Without limiting the generality of the foregoing, the Managers may at any time, in their sole collective discretion and without further notice to, or consent from, any non-Manager Unit Holder:

 

(i)Open and maintain bank checking accounts on behalf of the Company and to designate signatories on such accounts, provided that the funds of the Company may not be commingled with funds owned by or held on behalf of any Manager or any limited liability company, partnership or other entity in which either has an interest or to which any producer, executive producer, co-producer, associate producer or line producer of the Series or any Musical has an interest;

 

(ii)Enter into agreements on behalf of the Company with television studios, production companies, SVOD and other filmed entertainment distributors, theaters or other third parties pursuant to which the Company may commit to pay a percentage of the Company’s Gross Revenues in exchange for such network’s, distributor’s, theater’s or other third parties’ assistance in financing, producing, distributing, staging and/or otherwise exploiting either the Series or one or more of the Musicals;

 

(iii)Apply a portion of Capital Contributions to further fundraising for, and/or marketing and distribution of the Series and/or one or more of the Musicals whether or not the Offering Maximum funding of this or any subsequent Offering is achieved;

 

(iv)Modify the budget(s) of the  Series and/or one or more of the Musicals to adapt to changing contingencies, so long as in the judgment of the Managers such budget changes improve the Company’s ability to produce a better Series or Musical(s);

 

(v)Enter into co-financing, co-production or pre-sale agreements with joint venture partners or other production entities, theaters, networks or other distributors;

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement28
 

 

(vi)Enter into agreements on behalf of the Company which provide that persons providing financing, rendering services or furnishing literary material or other materials or facilities in connection with the development, production, distribution or other exploitation of the Series or one or more of the Musicals shall receive as salary or other compensation, deferred amounts or a percentage participation in Company revenue either before or after Investor Recoupment.

 

(vii)Transfer any Property of the Company on such terms as the Managers shall determine;

 

(viii)Borrow money for Company purposes or on behalf of the Company on such terms as the Managers shall determine, pledge any assets or rights of the Company as security for such borrowing and pay back the principal and interest on such loans out of Gross Offering Proceeds;

 

(ix)Expend Capital Contributions for Company purposes immediately upon receipt and acceptance;

 

(x)Extend the termination date of this or any subsequent Offering in accordance with applicable federal and state securities regulations and subject to any explicitly stated Offering term set forth in the Offering Circular or other Offering Materials;

 

(xi)Make agreements with lead actors or actresses to pay Deferrals or gross participations prior to Investor Recoupment, if necessary;

 

(xii)Otherwise deal in any reasonable manner with the assets of the Company in connection with the management and operation of the business of the Company;

 

(xiii)Borrow money from individuals to be paid out of and to be secured by the first revenues generated by the exploitation of the Series or a given Musical (“Last In/First Out Loan”) and to pay a premium thereon in its discretion and with applicable industry customs and practices;

 

(xiv)Employ accountants, legal counsel or other experts or consultants to perform services for the Company (including producers and to compensate them from Company funds or through the granting of Producer and Professional Deferments;

 

(xv)To establish reasonable reserve accounts for Company operations;

 

(xvi)Institute, prosecute and defend any Proceeding in the Company’s name;

 

(xvii)To establish one or more subsidiary entities to the Company, to which the Managers shall be permitted to transfer some or all of the Company’s assets;

 

Notwithstanding the foregoing, Charles Jones II Enterprises, LLC shall retain a veto right over all Manager decisions and authority hereunder.

 

7.4 Authority to Execute Agreements on Behalf of Company: In connection with the foregoing, it is agreed that any instrument, agreement or other document executed by one or more of the Managers, while acting in the name and on behalf of the Company shall be deemed to be an action of the Company as to any third parties (including the Unit Holders as third parties for such purposes).

 

7.5 Time Devoted to Company: The Managers shall devote to the Company’s affairs such time, on a non-exclusive basis, as each of the Managers, in their individual reasonable discretion, shall deem appropriate.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement29
 

 

7.6 Other Business: Any Member or Manager shall have the right to engage in or possess any interest in other business ventures of any kind, nature or description (including without limitation, motion pictures, television and theater projects which may compete with the Series or one or more of the Musicals) whether or not in competition with the Company. Neither the Company nor any other Member or Manager shall have any right by virtue of this Agreement in or to such independent ventures or to the income or profits derived therefrom.

 

7.7 Agreements with Members and Others: The Managers shall not enter into (on behalf of the Company) any agreements with Members or any person related to any of the Managers unless such agreements are on terms and conditions which the Managers might reasonably conclude are not less favorable to the Company than the terms and conditions likely to result from “arms-length” negotiations with unaffiliated third parties.  For the purposes of this subsection, the term “unaffiliated third parties” shall mean third parties in which the applicable Manager(s) has no material direct or indirect financial interest.

 

7.8 Manager as Tax Matters Partner/Member: Charles Jones II Enterprises, LLC or its representative is designated as the Tax Matters Partner of the Company as that term is used in section 6231(a) of the Code and regulations thereunder and for purposes of these Offering Materials, any reference to the “Tax Matters Member” shall be deemed to have the same meaning as “Tax Matters Partner” under the Code.  Such Manager, acting as Tax Matters Partner, may enter into one or more agreements with the IRS with respect to the tax treatment of any Company income, loss, deductions or credits and, to the extent permitted under the Code, may expressly agree that such agreement shall bind any other Managers and Members of the Company.

 

7.8.1. Each Member shall furnish the Tax Matters Member with such information as the Tax Matters Member may reasonably request to permit it to provide the Internal Revenue Service with sufficient information to allow proper notice to the parties in accordance with section 6223 of the Code.

 

7.8.2. No Member shall file, pursuant to section 6227 of the Code, a request for an administrative adjustment of the Company items for any Company Taxable Year without first notifying the other Members.  If the other Members agree with the requested adjustment, the Tax Matters Member shall file the request for administrative adjustment on behalf of the Company.  If the Members do not reach agreement within thirty (30) days or within the period required to timely file the request for administrative adjustment, if such period is shorter, any Member may file a request for administrative adjustment on its own behalf.  If, under section 6227 of the Code, a request for administrative adjustment which is to be made by the Tax Matters Member must be filed on behalf of the Company, the Tax Matters Member shall also file such a request on behalf of the Company under the circumstances set forth in the preceding sentence.

 

7.8.3. If any Member intends to file a petition under section 6226 or 6228 of the Code with respect to any Company item or other tax matter involving the Company, the Member so intending shall provide Notice to the other Members of such intention and the nature of the contemplated Proceeding.  Such Notice shall be given in a reasonable time to allow the other Members to participate in the choosing of the forum in which such petition will be filed.  If the Members do not agree on the appropriate forum, the petition shall be filed with the United States Tax Court.  If any Member intends to seek review of any court decision rendered as a result of the Proceeding instituted under the preceding part of this subsection, such party shall provide Notice to the others of such intended action.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement30
 

 

7.8.4. If any Member enters into a settlement agreement with the Secretary of the Treasury with respect to any Company items, as defined by section 623 1(a)(3) of the Code, it shall provide Notice to the other Members of such settlement agreement and its terms within thirty (30) days from the date of settlement.

 

7.9 Withdrawal of Manager: Without the Written consent of a Majority-In-Interest, a Manager shall not have any right to Withdraw or retire from the Company, and shall be considered as a “key man” to this Agreement.

 

7.10 Indemnification: The Managers, the Manager’s Affiliates, Counsel, consultants and their representatives or agents shall be held harmless and be indemnified by the Company for any liability, loss (including amounts paid in settlement), damages or expenses (including reasonable attorney’s fees) suffered by virtue of any acts or omissions or alleged acts or omissions arising out of such person’s activities either on behalf of the Company or in furtherance of the interests of the Company and in a manner believed in good faith by such person to be within the scope of the authority conferred by this Agreement or law, so long as such person is not determined to be guilty in a final adjudication of criminal conduct, gross negligence or gross misconduct with respect to such acts or omissions.  Such indemnification or agreement to hold harmless shall only be recoverable out of the assets of the Company, including insurance proceeds, if any.  Notwithstanding the foregoing, indemnification of the Managers or their representatives or agents by the Company for liability imposed by a judgment arising from or out of violation of state or federal securities laws shall not be made.

 

7.11 Rights and Obligations of the Unit Holders:

 

(i)No Participation in Management: The Unit Holders shall not participate in the management of the business of, or transact any business for, the Company and shall have only such rights and powers as a Unit Holder as are expressly provided herein or provided by applicable law.

 

(ii)Liability: No Unit Holder shall be personally liable for any of the debts, contracts or other obligations of the Company or any of the losses thereof, except to the extent of such Unit Holder’s Capital Contribution, plus such Unit Holder’s share of undistributed Company income if any.  When a Unit Holder has rightfully recovered the return in whole or in part of such Unit Holder’s Capital Contribution, such Unit Holder shall nevertheless be liable to the Company for a period of one year thereafter for any sum, not in excess of such return with interest, necessary to discharge such Unit Holder’s liability to all creditors who extended credit or whose claim arose during the period the contribution was held by the Company.  No Unit Holder shall be required to contribute any amounts to the Company except as provided for in this Agreement.

 

(iii)Unit Holders May Not Bind Company: No Unit Holder shall have any power to represent, sign for or bind any Manager or the Company.

 

7.12 Reports to Members and Others: The Managers shall, upon Written request of any Member, prepare and distribute to the Members and Counsel to the Managers a quarterly report regarding the status of the Offering and the Company during the Offering period, and thereafter, no less than annually, including a breakdown on Company expenditures.  Not later than 75 days after the close of each Fiscal Year of the Company, the Managers shall deliver to each Member the following items: (1) an annual report, (2) a balance sheet of the Company, (3) an income statement for that year and (4) a statement setting forth that Member’s Allocable share of all items of Company income, gain, loss, deduction, credit and tax preference for that Fiscal Year which are to be included by that Member on such Member’s federal income tax return for that year.  Each of the financial statements and documents referred to above will be conclusive and binding upon the Members unless written objection thereto is received by the Managers within 60 days after the statement has been delivered to the Members.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement31
 

 

7.13 Meetings: It is not expected that there will be regular meetings of the Members.  However, the Managers may call a meeting at any time and must call a meeting if requested In Writing to do so by the Members of record (at that time) of at least fifty percent (50%) of the issued and outstanding Interests.  Any action which may be taken at a properly constituted meeting of the Members (as set forth in this Article 7.13) may be taken without a meeting, without Notice and without a Vote, if a Written request for consent, setting forth the action so taken, is provided to all Members and signed by Members holding not less than the minimum Interests that would be necessary to authorize or take such action at a properly constituted meeting on said issue were present and Voted.  Prompt Notice of the taking of such action without a meeting shall be given to those Members who did not consented In Writing to such action.  The scheduling of such meetings may not interfere with the duties of the Managers in the production of the Series or any Musical.

 

7.14 Fiduciary Duties of Managers: The fiduciary duties a Manager owes to the Company and to its Members are those of a partner to a partnership and to the partners of the partnership.

 

7.15 Actions by Members: The Members shall act by Vote of the holders of the Majority-In-Interest. The Members shall have no right to control, and shall take no part in the management or control of, the Company’s business or activities, except if the Law requires that a particular right of a Member related thereto may not be waived.

 

7.16 Credits: Managers shall, in the Managers’ sole collective discretion, make all decisions with regard to granting of credits in the Series and Musicals, subject to any restrictions contained in any applicable and binding collective bargaining agreements.  In the event Managers agree to grant credit to any Member, no casual or inadvertent failure by the Company to comply with the provisions of the agreed upon credit provisions shall be deemed a breach by the Company of this Agreement.  Company agrees that provided the Member entitled to a credit informs the Company of a failure to comply with the credit provisions, the Company shall use reasonable commercial efforts to cure said failure on a prospective basis, and no failure by the Company, Managers, or any third party to accord any credit to such party hereunder shall be deemed a breach of this Agreement.  In the event of a breach of these credit provisions, the aggrieved Member’s remedies shall be limited to an action at law for money damages actually suffered, if any, and in no event shall such aggrieved Member be entitled to seek to terminate or rescind this Agreement in whole or in part or any rights granted or agreed to be granted herein or to obtain injunctive or other equitable relief in connection herewith or in connection with the Series or any Musical or any rights granted or agreed to be granted or to impair or otherwise interfere with the development, production, exhibition, promotion, distribution, advertising or other exploitation of either the Series or any Musical, any rights therein or thereto or any rights granted or agreed to be granted herein.

 

 

 

Article VIII

ASSIGNMENT OF INTERESTS IN THE LIMITED LIABILITY COMPANY

 

8.1 Restrictions On Transfers: No Member may transfer all, or any portion of, or any Interest or rights in, the Membership Interest owned by the Member.  Each Member hereby acknowledges the reasonableness of this prohibition in view of the Business Purposes of the Company and the relationship of the Members.  The voluntary transfer of any Membership Interests, including Economic Interests, in violation of the prohibition contained in this Article 8.1 shall be deemed invalid, null and void ab initio, and of no force or effect.  Any Person to whom Membership Interests are attempted to be transferred in violation of this Article 8.1 shall not be entitled to Vote on matters coming before the Members, participate in the management of the Company, act as an agent of the Company, receive Distributions from the Company, or have any other rights in or with respect to the Membership Interests.  Notwithstanding the foregoing, a Member may assign its Economic Interests (i.e., rights to receive monies from the Company) if the Assignor provided all Managers with advance Notice and all of the Managers have consented to the same in Writing.  All assignments and/or transfers of Interests of any Member hereunder shall be subject not only to the provisions of this Article VIII, but also to all other restrictions which may be placed on such transfers as a result of any other provision contained in the accompanying Subscription Agreement(s) and in any Article or provision contained herein, including, but not by way of limitation, any restrictions on resale, transfer, or assignment which are imposed herein or in any of the other Offering Materials.  All assignments or transfers hereunder shall also be subject to any restrictive measures imposed by the Regulation A Tier II, Regulation S, or other Securities Act exemptions, qualifications or filing requirements and all applicable federal, state, or foreign governmental securities regulatory restrictions.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement32
 

 

8.2 Assignment of the Interest in the Company of a Manager: The Managers shall have the free and unrestricted right to assign all of its Interests in the proceeds of and Distributions from the Company, or any part thereof.  Said assignee, however, shall not become a Manager without the consent of a Majority of the Managers and a Majority-In-Interest.  Such assignment shall not relieve the assigning Manager of its obligations hereunder.

 

8.3 Rights of Assignee: An Assignee, legal representative or successor in interest of a Unit Holder shall be subject to all of the restrictions on a Unit Holder provided in this Agreement.  An Assignee of a Unit Holder’s Interest, or a portion thereof, who does not become a Substituted Member in accordance with the provisions below shall have no right to an accounting of Company transactions, to inspect the Company’s books, or Vote on any of the matters on which a Member would be entitled to Vote.  Upon the giving of Notice of the assignment to the other Members and the Manager, such an Assignee shall be entitled to receive only the share of Company profits or other compensation by way of income, or the return of the assignor’s Contribution, to which the assignor would have been entitled.

 

8.4 Substitution of Assignee: An assignee of all or any part of a Unit Holder’s Interest will become a Substituted Member only if (a) a Majority in Interest of the Managers consent thereto in Writing (and any Manager may withhold such consent in its discretion) and (b) each of the following conditions is met:

 

(i)The Assignee shall consent in writing, in a form prepared by or satisfactory to the Managers, to be bound by the terms and conditions of this Operating Agreement;

 

(ii)The Assignee shall pay any expenses of the Company in effecting the substitution;

 

(iii)The assignment shall be effected in compliance with all applicable federal and state securities laws and regulations; and

 

(iv)All requirements of the Law including amendment of this Operating Agreement, shall have been completed by the Assignee, the assignor and the Company, as the case may be.

 

8.5 Allocations and Distributions: All assignments shall become effective for Distribution and Allocation purposes at the close of the calendar month in which the Managers are notified of such Assignment.  All cash Distributions required to be made or made after the date the Assignment is effective shall be made to the Transferee.  Income or loss for the year shall be Allocated to the transferor and Transferee based on the ratio of months each was considered to be the Member of Record in the Company.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement33
 

 

8.6 Incapacity, Death, Bankruptcy of a Unit Holder: In the event of the incapacity (i.e., judicially determined incompetence or insanity), death or bankruptcy of a Unit Holder, the executor, trustee, guardian or conservator, administrator, receiver or other successor in interest of such Unit Holder shall have all the rights of such Unit Holder for the purpose of settling or managing such Unit Holder’s affairs and such power as such Unit Holder possessed to assign all or a part of such Unit Holder’s Interest (subject to the approval of a Majority in Interest of the Managers) and to join with the Assignee in satisfying the conditions precedent to such Assignee’s becoming a Substituted Member.

 

The incapacity, death, or bankruptcy of a Unit Holder shall not dissolve the Company.  Each Unit Holder’s estate or other successor in interest shall be liable for all obligations of such Unit Holder.  In no event, however, shall such estate, legal representative or other successor in interest become a Substituted Member as such term is used herein, except in accordance with the above.

 

8.7 Further Assignments: An assignee of all or any portion of the Interest of a Unit Holder in the Company pursuant to the terms hereof, who desires to make a further assignment of such Interest, shall be subject to all the provisions of this Article VIII to the same extent and in the same manner as such Unit Holder making an initial assignment of such Unit Holder’s Interest in the Company.

 

8.8 Removal of a Manager: Due to the unique nature of the project being undertaken by the Company, and the relationship of the Managers to such project(s), the Managers, once elected, enjoy a protected status.  A Manager may be removed, but only for good and sufficient cause, and only by Vote of 75% in Interest of the Members and unaffected Managers, if any, considered together at a meeting called expressly for that purpose.  Any removal shall be without prejudice to the rights, if any, of such Manager under any contract of employment.  Upon the effectiveness of such removal, the Members may by the consent of a Majority-In-Interest and any remaining Manager(s), if any, elect a successor Manager to continue the business of the Company, or continue the business of the Company with the remaining Manager(s) acting in that capacity.

 

8.9 Incapacity or Death of a Manager: In the event of the Withdrawal, incapacity, or death of a Manager, the remaining Managers, if any, may continue the business of the Company alone, or, at his or her option may appoint a successor Manager.  If no remaining Manager exists, a new Manager may be named by a Majority In Interest of the remaining Members.

 

8.10 Transfer of Security Interests: Upon request of any lender, a Member (via Manager’s proxy or otherwise) shall grant a security interest in a Member’s Membership Interest in the Company to a bank or lender for the purpose of securing or guaranteeing such bank or lender’s loan to the Company.

 

8.11 Voluntary Withdrawal: No Member shall have the right or power to voluntarily Withdraw (“Voluntarily Withdraw”) from the Company.  Any Withdrawal in violation of this Agreement shall entitle the Company to damages for breach, which may be offset against the amounts otherwise Distributable to such Member.

 

8.12 Involuntary Withdrawal: Immediately upon the occurrence of an involuntary Withdrawal (“Involuntary Withdrawal”), the successor of the Withdrawn Member shall thereupon become an Economic Interest holder, but shall not become a Member.  If the Company is continued as provided in this Agreement, the successor Economic Interest holder shall have all the rights of an Economic Interest holder, provided however such Economic Interest holder shall not be entitled to require a liquidation of the Economic Interest.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement34
 

 

Article IX

AMENDMENTS

 

9.1 Amendments: This Operating Agreement may be amended only with the written consent of the Majority in Interest of the Managers and such Unit Holders as own 66 2/3% of the outstanding Units.  No amendment which is not approved in Writing by such Members and Managers, however, shall change the purpose of the Company, modify the term of the Company, change the Company to a general partnership, reduce the liabilities, obligations or responsibilities of the Managers, increase the liabilities or commitments of the Unit Holders or change the provisions of this Agreement requiring the unanimous consent of the Unit Holders to continue the business of the Company.  The Managers may (collectively) unilaterally decide to engage in subsequent private equity offerings which may impact the priority of Recoupment by the Unit Holders.  However, any such subsequent Offering which is made primarily for equity fundraising purposes shall not negatively affect the order or priority of Recoupment of any Unit Holder’s Original Invested Capital.

 

 

 

Article X
DISSOLUTION, WINDING UP AND LIQUIDATION

 

10.1 Events of Dissolution: The Company shall be dissolved at the time specified at Article 2.5 above or upon the earlier occurrence of any of the following (“Dissolution Events”): (a) at the time specified in the Articles of Organization; (b) upon the happening of events specified in the Articles of Organization; (c) by the Vote of a Majority-In-Interest of the Members, (d) upon the occurrence of a Dissociation Event, unless the business of the Company is continued by a Vote of a Majority-In-Interest of the Remaining Members within 90 days of the happening of the event, or (e) by decree of judicial dissolution pursuant to section 17707.03 of the Law.  Upon the death, retirement, resignation, expulsion, bankruptcy, insanity, disability or dissolution of all Managers or occurrence of any other event that terminates the continued Membership of all Managers in the Company (a “Management Dissociation Event”) unless the business of the Company is continued by a Vote of a majority of the Members remaining who also elect at least one Manager, within ninety (90) days thereafter.  Any other event that terminates the Company under this Operating Agreement or the Law.

 

10.2 Company Continuation: The Company shall not be dissolved by the death, Withdrawal, retirement or incapacity of a Manager, provided the business of the Company is continued by a remaining or successor Manager pursuant to a right to do so stated in the Operating Agreement, which right is hereby granted.

 

10.3 Winding Up: In the event of dissolution as provided above (including in the event that Members do not elect a successor Manager and continue the business of the Company as provided above), the business of the Company shall be wound up, and the assets distributed as provided herein.  The winding up of the affairs of the Company and the distribution of its assets shall be conducted by the Managers who are hereby authorized to do any and all acts and things authorized by law for these purposes.

 

In the event of the removal, death, incapacity, Withdrawal or bankruptcy of a Manager, the winding up of the affairs of the Company and the distribution of its assets shall be conducted by such person or entity as may be selected by such Unit Holders as own at least a majority of the outstanding Units, which person or entity is hereby authorized to do any and all acts and things authorized by law for these purposes.  In winding up the affairs of the Company, Property may be sold and a Member may, if such Member desires, purchase such Property for the fair market value thereof.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement35
 

 

10.4 Liquidation: (a) Upon Liquidation of the Company, all assets of the Company shall be Liquidated and Distributions shall be made to Members and the Managers in accordance with their positive Capital Account balances.  Net Gains and Net Losses resulting from transactions in connection with Liquidation shall be Allocated to each Member’s and Manager’s Capital Account as set forth in Article IV hereof.  If upon Liquidation, a Manager has a deficit Capital Account, such Manager must restore the amounts of such deficits to the Company.

 

(b) After dissolution and Liquidation, all remaining assets of the Company shall be paid in the following order: (i) to third party creditors (including any lending bank), in the order of priority provided for by law; (ii) to the Managers for reimbursement of any unreimbursed expenses advanced by such Managers or other amounts owed to such Managers by the Company; (iii) to the Members in accordance with their ending Capital Account balances.

 

(c) If all of the Members and Managers shall so determine, payments on dissolution, or any other Company Distributions, may be made in whole or in part in-kind.

 

10.5 Effect of Dissolution Event: Upon the occurrence of a Dissolution Event, the Company shall cease carrying on as distinguished from the winding up of the Company business, but the Company shall not be terminated, but shall continue until the winding up of the affairs of the Company has been completed and the certificate of dissolution has been issued by the Secretary of State.

 

10.6 Transfer of Member’s Interests: If the Company is dissolved due to a transfer of all, or nearly all, of its assets to an analogous subsidiary entity or entities as described in Article 7.3(xvii)above, then the Managers shall transfer all of the Member’s Interests to the subsidiary entity (or entities) in the same measure and proportion as they had existed with respect to the Company.  The nature of any such subsidiary entity and the management, voting, distributions, dissolution and other events described herein shall be treated in the same or as nearly the same manner as permissible and reasonably practicable under applicable U.S. state or any applicable foreign law as they are treated hereunder and under the Law.  Managers will provide each Member with Notice of the establishment of the subsidiary entity (or entities) and of the transfer of the Member’s Interests and any conditions appurtenant thereto as and when the same are made reasonably known by Managers.

 

 

Article XI

MISCELLANEOUS PROVISIONS



11.1 Notices: Any notice, payment, demand or communication required or permitted to be given by any provision of this Agreement shall be deemed to have been sufficiently given or served for all purposes if delivered personally to the party to whom the same is directed or three (3) business days after deposit in the United States mail, registered or certified, postage and charges prepaid, addressed to each Member or Manager, as applicable, at the applicable address specified by such Member in the Subscription Agreement.  A Member may change such Member’s address for purposes of Notice by a writing sent in accordance with this Article to the Manager.  In the case of a Manager and/or the Company, Notices should be sent to:

 

Opening Night Enterprises, LLC

80 W. Sierra Madre Blvd, Ste. 141

Sierra Madre, CA 91024

Attention: Charles Jones II

 

with a simultaneous copy to:

Ryan J. Lewis, Esq.

207 W. 25th Street, 6th Floor

New York, NY 10001

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement36
 

 

Notice may also be sent to such other addresses or substitute addresses of which a Member advises the Company by notice given in the manner set forth herein.  Notices given in compliance with the provisions of this Article shall be deemed given on the day received or the day of attempted delivery.

 

11.2 Power of Attorney: Each Unit Holder, upon execution of an Offering Subscription Agreement and approval of the Managers, hereby makes, constitutes and appoints Charles Jones II Enterprises, LLC as such Unit Holder’s true and lawful attorney, with full power of substitution, for such Unit Holder and in such Unit Holder’s name, place, stead and benefit, to sign this Agreement, to file and record the Articles of Organization, and, subject to any applicable consent requirements contained in this Agreement, to sign, execute, certify, swear, acknowledge, file and record any other documents, instruments and conveyances as may be necessary or appropriate to carry out the provisions or purposes of this Operating Agreement or which may be required of the Company by law in California, or any other applicable jurisdiction, or by federal or state securities laws or other applicable laws, including, without limitation, amendments to or cancellations of such Articles.

 

The foregoing grant of authority is hereby declared to be irrevocable and a power coupled with an interest and shall survive the death, incapacity or bankruptcy of any person hereby giving such power and the transfer or assignment for the whole or any portion of the Company Interest of such person; provided, however, that in the event of a transfer by a Unit Holder of all of such Unit Holder’s Units, the foregoing power of attorney of a transferor Unit Holder shall survive such transfer until such time, if any, as the transferee shall have been duly admitted to the Company as a Substitute Member.

 

11.3 Severability: If any provision of this Agreement shall be invalid, illegal or unenforceable in any applicable jurisdiction, the validity, legality, and enforceability of the remaining provisions, or of such provision in any other jurisdiction, shall not in any way be affected or impaired thereby.

 

11.4 Applicability of California Law: Wherever possible, this Agreement and its various accompanying parts and exhibits, and the application or interpretation hereof and thereof, shall be governed, construed and enforced exclusively by its terms and in accordance with the laws of the State of California and contracts that had been wholly made, entered into and performed therein.

 

11.5 Arbitration: Except with respect to claims arising under the Securities Act, the Exchange Act or otherwise under the federal securities laws of the United States, if any dispute or controversy occurs between the Subscriber and the Company relating to the interpretation, implementation, application, or validity of this Agreement, each party to the dispute or controversy agrees to proceed to an arbitration hearing to be administered by the American Arbitration Association (“AAA”) in accordance with its commercial rules and the Federal Arbitration Act.  Nothing herein shall preclude any party from seeking injunctive relief in a court of competent jurisdiction if the party perceives that without such injunctive relief, serious harm may be done to the party.  The arbitrator(s) may award attorneys’ fees and costs, as well as AAA arbitrator and administrative expenses, relating to the entire matter or any particular issue, in favor of any prevailing party. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction.  Evidence and testimony provided in any arbitration hearing, as well as any decisions of the arbitrator(s) shall be treated as confidential information.  The Company and the Subscriber: (i) agree that except with respect to claims arising under the Securities Act, the Exchange Act or otherwise under the federal securities laws, any legal proceeding or cause of action arising out of or relating to this Operating Agreement shall be instituted exclusively in accordance with the arbitration provision set forth herein, which shall be arbitrated in Los Angeles County, California, (ii) waive any objection to venue, and (iii) irrevocably consent to the jurisdiction of the AAA, the Federal Arbitration Act and the laws of the State of California, in any such action or proceeding.  Without limitation to the foregoing, and strictly for the avoidance of doubt, the parties hereto acknowledge and agree that the arbitration provisions set forth in this Section 11.5 of the Agreement shall not be applicable with respect to actions arising under the Securities Act, the Exchange Act or otherwise under the federal securities laws of the United States of America and nothing contained herein shall be construed as a waiver by Unit Holder or otherwise of Company’s compliance with federal securities laws and the rules and regulations promulgated thereunder.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement37
 

 

11.6 Headings: Headings at the beginning of each Article of this Agreement are solely for the convenience of the readers and are not intended to control or influence in any manner the meaning of the specific language provided thereunder.

 

11.7 Entire Agreement: This Agreement, the accompanying Offering Circular and the Subscription Agreement executed contemporaneously herewith contain the entire agreement between the Members and Managers relating to the subject matter hereof and all other agreements relative hereto which are not contained therein are terminated.  Amendments, variations, modifications or changes herein may be effective and binding on the Members and Managers by, and only by, setting the same forth in a document duly executed and consented to by the holders of sixty-six and two-thirds percent (66 2/3%) of the Percentage Interests owned by Unit Holders and Managers and any alleged amendment, variation, modification or change herein which is not so documented shall not be effective as to any Member or Manager.

 

11.8 Successors: This Agreement shall be binding on and inure to the benefit of the respective successors, assigns and personal representatives of the parties hereto, except to the extent of any contrary provision in this Agreement.

 

11.9 Consents and Agreements: Any and all consents and agreements provided for or permitted by this Agreement shall be in writing and a signed copy thereof shall be filed and kept with the books of the Company.

 

11.10 Waiver of Claims: Each Member is hereby urged to obtain the advice of independent counsel regarding all matters relating to this investment.  To the extent that a Member chooses not to obtain separate legal representation on matters relating to the affairs of the Company, such Member or Members hereby knowingly and willingly agree to waive any claims against the Manager’s Counsel based on such Counsel’s advice to his Manager client(s) as it relates to the Company.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement38
 

 

11.11 No Injunction: The parties hereto agree and acknowledge that in the event of a breach of any party hereto of any obligation hereunder, the damage caused any other party shall not be irreparable or otherwise so sufficient as to give rise to a right of injunctive or other equitable relief, and the parties hereto acknowledge that their rights and remedies in the event of any such breach shall be limited to the right, if any, to recover damages in an action at law or arbitration hereunder and shall not include the right to enjoin the development, financing, production, distribution or other exploitation of the Picture hereunder.

 

11.12 Cure: No party shall be liable to any other party for damages of any kind arising out of or in connection with any breach of this Agreement occurring or accruing before the breaching party has had reasonable notice of and opportunity to cure such breach.

 

11.13 Counterparts: This Agreement may be executed in counterparts by each of the Members and

Managers, all of which taken together shall be deemed one original.

 

 

 

Article XII

PURCHASER REPRESENTATIONS AND INDEMNIFICATION

 

12.1 Representations of the Unit Holder: Each Unit Holder hereby represents and warrants to the Company and all Members and the Managers that the following statements are true: (a) Such Unit Holder is a bona fide resident of the state or country set opposite such Unit Holder’s name on the signature page of the Subscription Agreement in that: (i) if a corporation, partnership, trust or other form of business organization, it has its principal office within such state; (ii) if an individual, such individual’s principal residence is in such state; and (iii) if a corporation, partnership, trust or other form of business organization which has organized for the specific purpose of acquiring Units in the Company, all of its beneficial owners are residents of such state.

 

(b) Such Unit Holder acknowledges the receipt of the Opening Night Enterprises, LLC Offering Circular dated November 30, 2017.  Such Unit Holder has been advised that the Managers are available to answer questions about the purchase of Units in the Company and such Unit Holder has asked any questions of the Managers which such Unit Holder desires to ask and has received answers from the Managers with respect to all such questions.

 

(c) Such Unit Holder recognizes that the Company is newly organized and has no history of operations or earnings and is of a speculative nature.

 

(d) Such Unit Holder understands that no state or federal governmental authority has made any finding or determination relating to the fairness for public investment of the Units offered by the Company and that no state or federal government authority has or will recommend or endorse these Company interests.

 

(e) Such Unit Holder recognizes that prior to this Offering there has been no public market for the Units offered by the Company and it is likely that after the Offering there will be no such market for the Units.

 

(f) Such Unit Holder is financially able to comply with such Unit Holder’s obligations hereunder; and such Unit Holder has adequate means of providing for such Unit Holder’s current financial needs and possible contingencies exclusive of such Prospective Purchaser’s investment in the Company.

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement39
 

 

(g) Such Unit Holder understands that the IRS may disallow some or all of the deductions or losses to be claimed by the Company and that the IRS may attempt to treat the Company as an association taxable as a corporation which could have an adverse economic effect on the Members by (i) taxation of the Company as a corporation resulting in double taxation of income to the Members and no flow-through of losses and (ii) substantial reduction in yield, if any, of the Members’ investment in the Company.

 

(h) Such Unit Holder is aware that the Managers and their Affiliates may engage in businesses which are competitive with that of the Company, and such Unit Holder agrees to such activities even though there may be conflicts of interests inherent therein.

 

12.2 Indemnification: Each Unit Holder shall and does hereby agree to indemnify and save harmless the Company, the Managers, the Manager’s Affiliates, Counsel and consultants and each other Unit Holder from any damages, claims, expenses, losses or actions resulting from (i) a breach by such Unit Holder of any of the warranties and representations contained in this Article or (ii) the untruth of any of the warranties and representations contained herein.  If such warranties and representations are either breached or are not true, the Unit Holder who breached such warranties and/or representations, shall, at the election of a Majority in Interest of the Managers, be subject to a rescission of such Unit Holder’s rights or interests in the Company.

 

 

THE MEMBERSHIP INTERESTS REPRESENTED BY THIS COMPANY OPERATING AGREEMENT HAVE NOT BEEN REGISTERED WITH THE SECURITIES EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SALE OR OTHER DISPOSITION OF THE MEMBERSHIP INTERESTS IS RESTRICTED, AS STATED IN THE COMPANY OPERATING AGREEMENT, AND IN ANY EVENT IS PROHIBITED UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL, AT THE REQUEST OF A MANAGING MEMBER, SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH SALE OR OTHER DISPOSITION CAN BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933. BY ACQUIRING THE COMPANY MEMBERSHIP INTEREST(S) REPRESENTED BY THIS COMPANY OPERATING AGREEMENT, EACH MEMBER REPRESENTS THAT IT HAS ACQUIRED SUCH MEMBERSHIP INTEREST(S) FOR INVESTMENT AND THAT IT WILL NOT SELL OR OTHERWISE DISPOSE OF THIS COMPANY MEMBERSHIP INTEREST(S) WITHOUT REGISTRATION OR OTHER COMPLIANCE WITH THE AFORESAID ACT AND THE RULES AND REGULATIONS THEREUNDER.

 

 

 

//REMAINDER  OF  PAGE  INTENTIONALLY  LEFT  BLANK//

 

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement40
 

  

IN WITNESS WHEREOF, the undersigned have executed the Agreement as of the date set forth below.

 

 

ON BEHALF OF OPENING NIGHT ENTERPRISES, LLC

 

   
By: Charles Jones II, Authorized Signatory  

 

 

ADDITIONAL MANAGER ESTABLISHING MAJORITY OF GOVERNING BODY OF OPENING NIGHT ENTERPRISES, LLC

 

 

By: Regina Dowling, Managing Member

 

 

 

MEMBER ATTORNEY-IN-FACT ACKNOWLEDGMENT

 

THE STATE OF CALIFORNIA )  
  )  
COUNTY OF                                                    )  

 

This instrument was acknowledged before me on the ______ day of _______________________, __________, by Charles Jones II, an individual, as the ATTORNEY-IN-FACT FOR THE MEMBERS of Opening Night Enterprises, LLC and he is known by me or has demonstrated by sufficient evidence to be the person represented.

   

  _________________________________
  Notary Public in and for the
  State of California
(Notary Seal)  
   
  __________________________
  Printed Name of Notary
My Commission Expires:  
   
_______________________  
   

 

MANAGER ACKNOWLEDGMENT

 

THE STATE OF CALIFORNIA )  
  )  
COUNTY OF                                                    )  

 

This instrument was acknowledged before me on the ______ day of _______________________, __________, by Charles Jones II, the Owner of the Manager Charles Jones II Enterprises, LLC for Opening Night Enterprises, LLC and he is known by me or has been demonstrated by sufficient evidence to be the person represented.

 

 

  _________________________________
  Notary Public in and for the
  State of California
(Notary Seal)  
   
  __________________________
  Printed Name of Notary
My Commission Expires:  
   
_______________________  

 

IN WITNESS WHEREOF, the undersigned have executed the Agreement as of the date set forth below. ON BEHALF OF OPENING NIGHT ENTERPRISES, LLC By: Charles Jones II, Authorized Signatory ADDITIONAL MANAGER ESTABLISHING MAJORITY OF GOVERNING BODY OF OPENING NIGHT ENTERPRISES, LLC By: Regina Dowling, Managing Member MEMBER ATTORNEY-IN-FACT ACKNOWLEDGMENT THE STATE OF CALIFORNIA ) ) COUNTY OF Los Angeles ) This instrument was acknowledged before me on the 22nd day of November, 2019, by Charles Jones II, an individual, as the ATTORNEY-IN-FACT FOR THE MEMBERS of Opening Night Enterprises, LLC and he is known by me or has demonstrated by sufficient evidence to be the person represented. Notary Public in and for the State of California (Notary Seal) Printed Name of Notary My Commission Expires: 12/13/2022 MANAGER ACKNOWLEDGMENT THE STATE OF CALIFORNIA ) ) COUNTY OF Los Angeles) This instrument was acknowledged before me on the 22nd day of November, 2019, by Charles Jones II, the Owner of the Manager Charles Jones II Enterprises, LLC for Opening Night Enterprises, LLC and he is known by me or has been demonstrated by sufficient evidence to be the person represented. Notary Public in and for the State of California (Notary Seal) Printed Name of Notary My Commission Expires: 12/13/2022

 EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement41
 

 

 MANAGER ACKNOWLEDGMENT

 

THE STATE OF CALIFORNIA )  
  )  
COUNTY OF                                                    )  

 

This instrument was acknowledged before me on the ______ day of _______________________, __________, by Regina Dowling, Managing Member for Opening Night Enterprises, LLC and she is known by me or has been demonstrated by sufficient evidence to be the person represented.

 

 

  _________________________________
  Notary Public in and for the
  State of California
(Notary Seal)  
   
  __________________________
  Printed Name of Notary
My Commission Expires:  
   
_______________________  

 

MANAGER ACKNOWLEDGMENT THE STATE OF CALIFORNIA ) ) COUNTY OF Los Angeles ) This instrument was acknowledged before me on the 25th day of November, 2019, by Regina Dowling, Managing Member for Opening Night Enterprises, LLC and she is known by me or has been demonstrated by sufficient evidence to be the person represented. Notary Public in and for the State of California (Notary Seal) Printed Name of Notary My Commission Expires: 12/13/2022

EXHIBIT 2 to Offering Circular/Opening Night Enterprises, LLC/Operating Agreement

42

 

 

 

 EX1A-4 SUBS AGMT 5 ex1a_4.htm EXHIBIT 1-A.4

 

EXHIBIT 1A-4

TO THE OFFERING CIRCULAR

 

SUBSCRIPTION AGREEMENT

 

FOR THE DIRECT TRANSFER OF UNITS 

 

 

By signing this Subscription Agreement (the “Agreement”), you, the purchaser (the “Subscriber”) identified on the signature page of this Agreement, are acknowledging that you have read the offering circular dated November 30, 2017 and filed with the SEC (the “Offering Circular”) to which this Agreement is attached as an exhibit, and you have reviewed the materials pertaining to the California limited liability company, Opening Night Enterprises, LLC (the “Company”), including the Company’s “Operating Agreement” which exists as Exhibit 2 to the Offering Circular. By executing this Agreement, the Subscriber is attesting that he/she/it understands the nature of the Company and the terms of this proposed sale of Units (the “Offering”) and that the Subscriber is willing to invest in the Company the sum (the “Commitment”) that the Subscriber indicates on page 15 of this Agreement below. The Company is hereby offering up to One Hundred Thousand (100,000) non-managing membership interests (the “Units”) in the Company for sale at a price of Five Hundred Dollars U.S. ($500.00) per Unit. The Company offers the Units on the terms and in the manner described hereunder. The Subscriber understands and agrees that upon completing this Agreement and paying the Commitment, it shall thereafter be within the sole discretion of the Company as to whether or not the Company ultimately accepts or denies the subscription and the Commitment and if and when the Company accepts the subscription and accompanying Commitment, the Subscriber will receive a copy of this executed Agreement as evidence that it has become a member of the Company and said Subscriber will have become a “Member” or “Investor Member”.

 

This Offering is being conducted pursuant to the rules for Tier 2 offerings under Regulation A.  Regulation A was enacted by the Securities and Exchange Commission (the “SEC”) to exempt certain limited-size public offerings from the registration requirements of Section 5 of the Securities Act of 1933, as amended (the “Securities Act”).  Subscribers must either be “Accredited Investors” (as described more fully below) or be able to represent herein that the amount to be invested does not exceed 10% of the greater of their annual income or net worth (for natural persons); or annual revenue or net assets (for non-natural persons). 

 

 

IMPORTANT INVESTOR NOTICES 
PLEASE READ CAREFULLY BEFORE SIGNING

 

BY ENTERING INTO THIS AGREEMENT, SUBSCRIBERS ARE REPRESENTING THAT THEY UNDERSTAND THE FOLLOWING RISKS: THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. 

 

THIS INVESTMENT IS SUITABLE ONLY FOR PERSONS WHO CAN BEAR THE ECONOMIC RISK FOR AN INDEFINITE PERIOD OF TIME AND WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. FURTHERMORE, THE SUBSCRIBERS MUST UNDERSTAND THAT SUCH INVESTMENT IS ILLIQUID SINCE THERE IS CURRENTLY NO PUBLIC MARKET FOR THE SALE OF THE SECURITIES IN THIS OFFERING, AND NO PUBLIC MARKET IS EXPECTED TO DEVELOP IN THE NEAR FUTURE IF EVER. 

 

  
  

 

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE FEDERAL SECURITIES ACT OR ANY STATE SECURITIES OR SO-CALLED “BLUE SKY LAWS”.  ALTHOUGH AN OFFERING STATEMENT HAS BEEN FILED WITH THE SEC, THAT OFFERING STATEMENT DOES NOT INCLUDE ALL OF THE SAME INFORMATION THAT WOULD BE INCLUDED IN A REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT.  THE SECURITIES BEING SOLD HEREUNDER HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE MERITS OF THIS OFFERING OR THE ADEQUACY OR ACCURACY OF THIS SUBSCRIPTION AGREEMENT OR ANY OTHER MATERIALS OR INFORMATION MADE AVAILABLE TO THE SUBSCRIBERS IN CONNECTION WITH THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. 

 

THE SECURITIES CANNOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS.  IN ADDITION, THE SECURITIES ARE SUBJECT TO CERTAIN RIGHTS OF FIRST REFUSAL PROVISIONS (SET FORTH BELOW AND IN THE COMPANY’S OPERATING AGREEMENT) AND ANY UNAPPROVED TRANSFERS MAY BE STOPPED BY THE COMPANY OR ITS TRANSFER AGENT. 

 

THE SUBSCRIBERS WHO DO NOT QUALIFY AS “ACCREDITED INVESTORS” (AS THAT TERM IS DEFINED IN SECTION 501 OF REGULATION D PROMULGATED UNDER THE SECURITIES ACT) ARE SUBJECT TO LIMITATIONS ON THE AMOUNT THEY MAY INVEST, AS SET OUT IN SECTION 4(g) OF THE SECURITIES ACT.  THE COMPANY IS RELYING ON THE REPRESENTATIONS AND WARRANTIES MADE BY EACH SUBSCRIBER IN THIS SUBSCRIPTION AGREEMENT AND THE OTHER INFORMATION PROVIDED BY THE SUBSCRIBERS IN CONNECTION WITH THIS OFFERING. 

 

THE SUBSCRIBERS MAY NOT TREAT THE CONTENTS OF THIS SUBSCRIPTION AGREEMENT, THE OFFERING STATEMENT, INCLUDING THE OFFERING CIRCULAR OR ANY OF THE OTHER MATERIALS AVAILIBLE ONLINE OR PROVIDED BY THE COMPANY (COLLECTIVELY, THE “OFFERING MATERIALS”), OR ANY PRIOR OR SUBSEQUENT COMMUNICATIONS FROM THE COMPANY OR ANY OF ITS OFFICERS, EMPLOYEES OR AGENTS (INCLUDING “TESTING THE WATERS” MATERIALS, IF ANY) AS INVESTMENT, LEGAL OR TAX ADVICE.  IN MAKING AN INVESTMENT DECISION, THE SUBSCRIBERS MUST RELY ON THEIR OWN PROFESSIONAL ADVISORS, AND THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND THE RISKS INVOLVED.  EACH SUBSCRIBER SHOULD CONSULT ITS OWN COUNSEL, ACCOUNTANTS AND OTHER PROFESSIONAL ADVISORS AS TO INVESTMENT, LEGAL, TAX AND OTHER IMPLICATIONS AND RELATED MATTERS CONCERNING THE SUBSCRIBER’S PROPOSED INVESTMENT. 

 

THE OFFERING MATERIALS MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT.  WHEN USED IN THE OFFERING MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS.  THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS.  THE SUBSCRIBERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE.  THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS. 

 

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THE INFORMATION PRESENTED IN THE OFFERING MATERIALS WAS PREPARED BY THE COMPANY SOLELY FOR THE USE BY PROSPECTIVE SUBSCRIBERS IN CONNECTION WITH THIS OFFERING.  NO REPRESENTATIONS OR WARRANTIES ARE MADE AS TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED IN ANY OFFERING MATERIALS, AND NOTHING CONTAINED IN THE OFFERING MATERIALS IS OR SHOULD BE RELIED UPON AS A PROMISE OR REPRESENTATION AS TO THE FUTURE PERFORMANCE OF THECOMPANY.

 

THE COMPANY RESERVES THE RIGHT IN ITS SOLE DISCRETION AND FOR ANY REASON WHATSOEVER TO MODIFY, AMEND AND/OR WITHDRAW ALL OR A PORTION OF THE OFFERING, AND/OR ACCEPT OR REJECT, IN WHOLE OR IN PART, ANY PROSPECTIVE INVESTMENT BY A SUBSCRIBER IN THE SECURITIES, OR TO ALLOT TO ANY SUBSCRIBER LESS THAN THE AMOUNT OF SECURITIES SUCH SUBSCRIBER DESIRES TO PURCHASE. 

 

EXCEPT AS OTHERWISE INDICATED, THE OFFERING MATERIALS SPEAK AS OF THEIR RESPECTIVE DATES.  NEITHER THE DELIVERY NOR THE PURCHASE OF THE SECURITIES SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THAT DATE.  ALL INFORMATION PROVIDED HEREIN BY SUBSCRIBERS FOR DETERMINING PURCHASER QUALIFICATIONS WILL BE KEPT STRICTLY CONFIDENTIAL.  THE COMPANY IS RELYING UPON THE ACCURACY AND COMPLETENESS OF THE SUBSCRIBER’S REPRESENTATIONS, WARRANTIES, AND OTHER INFORMATION PROVIDED IN THIS AGREEMENT.

 

1.     Subscription:

 

(a)     The Subscriber hereby commits to purchase _____________ Units of the Company (must subscribe to a minimum of 1 Unit), at a purchase price of $500.00 per Unit, for a total purchase price of $_____________________, upon the terms and conditions set forth herein (the or this “Subscription”).  The total purchase price for the Subscription is payable in the manner provided in Section 3 below.  The Units being subscribed for under this Agreement are sometimes referred to herein as the “Securities.” 

 

(b)     The Subscriber understands that the Securities are being offered pursuant to the Form 1-A, Regulation A Offering Statement, including an Offering Circular and attached Operating Agreement.  A full description of the Securities and the Offering is set forth in the Offering Circular and accompanying Operating Agreement.  By subscribing to the Offering, the Subscriber acknowledges that he/she/it has received and reviewed a copy of the Offering Circular, Operating Agreement and any other information requested by the Subscriber in writing to make an investment decision with respect to the Securities. 

 

(c)     This Subscription may be accepted or rejected, in whole or in part, by the Company in its sole discretion.  In addition, the Company, in its sole discretion, may allocate to the Subscriber only a portion of the number of Units subscribed for.  The Escrow Agent (as defined in Section 3 below) will notify the Subscriber via e-mail in each of the following instances: (i) when the Subscriber’s Closing Documents (as defined in Section 3 below) are received; (ii) when the Subscriber’s Commitment sums are received; and (iii) if and when the Subscriber’s Subscription is accepted (whether in whole or in part) or rejected.  In the event that the Subscription is accepted, the Escrow Agent shall also e-mail the Subscriber a copy of the duly executed Agreement.  If the Subscription is rejected, the Subscriber’s payment (or portion thereof if partially rejected) will be returned to him/her/it without interest and all of the Subscriber’s obligations hereunder shall terminate except with respect to any portion of the Commitment and accompanying Units successfully subscribed for. 

 

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(d)     The maximum number of shares of the Company’s Units that may be sold in this Offering shall not exceed 100,000 (the “Maximum Units”).  The Company may accept subscriptions until the earlier of: (1) Sale of the Maximum Units; (2) twelve months from the date that the Offering is qualified by the SEC, unless extended by the Company in its sole discretion in accordance with applicable SEC regulations for such additional period as may be sought to sell the Maximum Units (the “Termination Date”).  Once accepted, the Company may immediately use the proceeds from this Subscription for its business needs, in its sole discretion.  The Company may elect to set an earlier Termination Date and end the Offering.  No minimum number of Units is required to be sold. 

 

(e)     In the event of a rejection of this Subscription in its entirety, or in the event the sale of the Units (or any portion thereof) to the Subscriber is not consummated for any reason, this Agreement shall have no force or effect, except for Sections 7, 8 and 9 hereof, which shall remain in force and effect. 

 

(f)     The terms of this Agreement shall be binding upon the Subscriber and its permitted transferees, heirs, successors and assigns (collectively, “Transferees”); provided that for any such transfer to be deemed effective, the Subscriber shall have complied with the Transfers of Interests provisions set forth under Section 2 below and Transferee shall have executed and delivered to the Company, in advance, an agreement acceptable to the Company, in its sole discretion, pursuant to which the proposed Transferee shall acknowledge, agree, and be bound by the representations and warranties of the Subscriber and the terms of this Agreement. 

 

2.     Transfers of Interests in the Company: The Subscriber agrees not to transfer or assign this Agreement, or any of its interest herein, and further agrees that the assignment and transfer of the Units acquired pursuant hereto shall be made only in accordance with the Operating Agreement (if permitted thereby) and all applicable laws.  By subscribing to the Offering and executing this Agreement, the Subscriber (and, if the Subscriber is purchasing the Units subscribed for hereby in a fiduciary capacity, the person or persons for whom the Subscriber is so purchasing) hereby agrees to comply with the provisions set forth in Article VIII (ASSIGNMENT OF INTERESTS IN THE LIMITED LIABILITY COMPANY) of the Company’s Operating Agreement, a copy of which is attached to the Offering Circular as Exhibit 2 and incorporated herein by reference, for any nonexempt transfer described therein, for as long as such provisions therein remain in effect.

 

3.  Subscription and Withdrawal: Subject to the terms and conditions hereof, the Subscriber hereby irrevocably subscribes for and agrees to invest in Units and agrees to become a non-managing Member (as defined in the Operating Agreement at Article I [GLOSSARY]) of the Company with the membership interest described at section 5 herein, and in the Operating Agreement, to which such Units entitle it.  The Investor hereby tenders to the Company the Commitment in the form of a wire made payable to “Prime Trust, LLC” and electronically executed copies of the Investor Questionnaire, the Operating Agreement, this Agreement and any additional Purchaser Representative Questionnaire and/or Certificate of Corporate Resolution as may be necessary (hereinafter collectively referred to as the “Closing Documents”).  The Subscription funds will be held in a segregated escrow account managed by the third party escrow agent, Fund America (the “Escrow Agent”).  In the event that the Subscriber’s Subscription is not accepted all documents and funds delivered by the Subscriber will be returned promptly to it without deduction.  In the sole discretion of the Company, less than the full number of Units subscribed for by the Subscriber may be accepted, whereupon the excess funds tendered by the Subscriber will be returned promptly.

 

(a)          It is understood that this Subscription is not binding unless and until it is accepted by the Company who may withdraw this offer of membership interest (“Withdrawal”) by providing the Escrow Agent with notice of its intent in accordance with the notice provisions hereof.  Additionally, Subscriber may fail to qualify as an investor in accordance with the terms and conditions of Regulation A, Tier 2 as described elsewhere herein.  In the event that the Subscriber fails to qualify as an investor under Regulation A, Tier 2 protocols, then the Subscriber’s Commitments (or the non-qualifying portions thereof, at the discretion of the Company and in accordance with SEC protocols and regulations) shall be returned to Subscriber without interest.  The Subscriber also understands and agrees that its subscription for Units shall not be deemed binding upon the Company unless and until the Commitments are disbursed (following Company approval of the Subscription) to the Company’s bank account(s).

 

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(b)          In the event that the Subscription is accepted by the Company, the Subscriber shall receive notice and evidence of the digital entry of the number of the Securities owned by the Subscriber.  Unit certificates will not be used or provided to the Subscriber, however, the Subscriber shall receive, via e-mail, a digital copy of the duly executed Agreement memorializing the value and number of Units subscribed-for.  If the Subscriber’s Subscription is rejected, the Subscriber will be notified via e-mail and funds will be returned to the Subscriber within 30 days of such rejection subject to Subscriber’s provision of timely and accurate banking information to the Escrow Agent.

 

(c)          In order to complete a Subscription hereunder, Subscriber must submit completed, executed copies of the Closing Documents, along with the full balance of the Commitment.  Furthermore, one of the Closing Documents is the Operating Agreement, which will only be issued in the name of, and delivered to, the Subscriber, and the Subscriber agrees to comply with the terms of the Operating Agreement and this Agreement, and to execute any and all further documents necessary in connection with its becoming a non-managing Member of the Company.

 

(d)          The Subscriber agrees that he/she/it may not cancel, terminate or revoke this Agreement, the Operating Agreement or any agreement of the Subscriber makes hereunder and that this Agreement and the Operating Agreement shall survive the death or disability of the Subscriber and shall be binding upon the Subscriber’s heirs, executors, administrators, successors and assigns.

 

4. Objectives of This Offering; Immediate Use of Funds Disclaimer: The purpose of this Offering is to raise enough operating capital for the Company to allow it to produce and sell the television series (the “Series”) and the third party musicals (the “Musicals”) (each described in greater detail in the Offering Circular at DESCRIPTION OF BUSINESS, generally), which the Company will be promoting in the Series.  However, as described in greater detail in the Offering Circular (see the Offering Circular at DESCRIPTION OF BUSINESS, “Television Series and Theatrical Industry” and at MANAGEMENT’S DISCUSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS “Plan of Operations”), the success of Company’s business is predicated on producing and securing major third party distribution for the Series and thereafter on producing and successfully staging the Musical productions.  Therefore, the most immediate need of the Company is the instant securing of production financing for the Series, which the Company will then be able to entice network, major SVOD providers and others to distribute (without those distributors having to risk their own resources on production).  To this end, the Company has identified several musical properties which it wishes to start producing the Series’ competition around upon receipt of first accessible funds.  As time is of the essence and Company will need to access the Commitments immediately, this Offering is not making use of a minimum closing amount structure (i.e. it is neither a so-called “mini-maxi” nor “all or nothing” offering) as is often invoked for the protection of investor interests, particularly with respect to investments in start-up ventures. All or nothing and mini-maxi offering structures ensure that either: (1) all of the projected requisite funds (in the case of an all or nothing offering); or (2) at least the minimum amount of funds required to operate the business (in the case of a mini-maxi offering) – will be secured so as to enable the issuing entity to ensure it can undertake its proposed business operations.  In an all or nothing or mini-maxi offering structure, if those requisite levels of funds are not obtained, then all of the investors’ investments must be returned and cannot be used by the issuing entity.   Again, this ensures that the investors’ money cannot be used unless the issuing entity has secured enough money to ensure that it can undertake the business purposes pursuant to its stated plans.

 

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THIS OFFERING IS NOT STRUCTURED AS EITHER AN ‘ALL OR NOTHING’ OR ‘MINI-MAXI’ OFFERING AND THEREFORE, AN INVESTOR’S INVESTMENT COULD POTENTIALLY BE ACCEPTED AND USED BY THE COMPANY EVEN IF THE COMPANY NEVER ACTUALLY SECURES THE NECESSARY FUNDS TO ENABLE IT TO PERFORM ITS MINIMAL BUSINESS OPERATIONS AS CONTEMPLATED HEREIN.  IF SUCH AN EVENT OCCURS, THE INVESTOR WILL HAVE LOST ALL OF THEIR COMMITMENT AND THE COMPANY’S BUSINESS WILL NEVER EVEN HAVE BEEN CAPITALIZED TO THE EXTENT NECESSARY TO ALLOW IT TO PROPERLY UNDERTAKE ITS BUSINESS OPERATIONS AS CONTEMPLATED HEREIN.

 

Because this Offering has no minimum closing amount, the Company, in its sole discretion, will determine, subject to the terms and conditions of this Agreement, when each Subscriber’s Commitment will be disbursed to the Company and the Commitment will then be invested by the Company in the manner that it deems most effective in furtherance of its business purposes as discussed in the Offering Circular.  The disbursed Commitments shall be non-recoupable if the Company fails to fully capitalize or in the event that this Offering fails or terminates for any reason at any time. 

 

5. Description of Units: Units are granted at the discretion of the Company and they shall not be offered for less than Five Hundred Dollars U.S.($500.00) per Unit under this Offering.  The Units will confer upon the Investor Members the rights of a Member but not those of a Manager (each as defined in the Operating Agreement at Article I [GLOSSARY]).  These Units are being offered for the purposes of financing the development and initial business operations of the Company, including but not limited to helping the Company produce, license and/or sell the Series, as further described in the Offering Circular.  The Units will only be offered to a limited number of potential equity Subscribers.  The Company does not presently anticipate needing to engage in subsequent rounds of equity offerings in order to raise additional funds for the business’ operations.  If the Company were to engage in any such subsequent offerings of equity to private investors, it is anticipated that such offerings would utilize similar classes (or likely the same class) of Units bearing analogous and/or less favorable anti-dilution protocols, though such future classes of Units may also bear more favorable voting, dilution and/or other terms, however, all such determinations will remain at all times at the full discretion of the Company pursuant to the needs of the Company.  In addition to whatever ownership and income interests they represent, the Units being offered hereunder, have the following attributes:

 

(a)          Although there is no future investment requirement as a result of investing in the Units, in the event that any future issuances of new Units in the Company are made to accredited investors or other qualifying investors in exchange for cash investments, the then-extant Subscriber members shall have a right of first refusal to invest in the new Units at the then-prevailing offering price in an amount which allows each such Unit to maintain its former value in terms of its “Interest” (as defined in the Operating Agreement at Article I [GLOSSARY]) (i.e. its percentage of Company ownership).  Without limitation to the foregoing and strictly for the avoidance of doubt, the effect of the foregoing right of first refusal shall be such that an Investor Member who secured Units hereunder shall be able to maintain the ownership interest in the Company that it had following the close of this Offering in the event that any future such offering(s) create new Units that would otherwise dilute the existing Investor Members’ Interests.

 

(b)          In addition to the foregoing right of first refusal, Investor Members who successfully invest under this Offering will also have an analogous right of first refusal to purchase similar ownership interests in any future companies or other legal entities created for future seasons of the U.S. version of the Series.

 

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(c)          Notwithstanding anything to the contrary contained herein, the aforementioned rights of first refusal will only inherit with respect to offerings made to other individual private investors investing cash for equity and not to third parties in furtherance of necessary business relationships or perceived business advantages.  Additionally, the aforementioned rights of first refusal shall also be subject to the following limitations: (1) The rights of first refusal will not apply to Units that are given in exchange for in-kind or other non-monetary Commitments to Managers (as defined in the Operating Agreement at Article I [GLOSSARY]) or other parties; (2) the purchase of such future Units or other ownership interests shall be subject to availability based on residency of the Subscriber and any changes in the securities or other relevant laws which would make sale to the existing Investor Member impossible or not economically or otherwise feasible; (3) the right of first refusal shall also be subject to the Subscriber’s qualification for investment under the terms of the subsequent offering – by way of example but not limitation, if the subsequent offering is made under Regulation D, Rule 506(b), then it may be limited to accredited investors and some or many of those investors qualifying under the terms of this Regulation A, Tier 2 Offering would not be allowed to invest in the subsequent offering and therefore, their rights of first refusal hereunder would have no effect; and (4) the rights of first refusal shall not apply to sales of future Units or other ownership interests that are being made to potential business partners and/or the following, whether or not those Units are being given in exchange for monetary or non-monetary Commitments: Banks, venture capital companies, or other institutional or licensed lenders or financiers; television networks or other potential Series distributors; stage companies, theaters or other potential theatrical exhibitors or exhibition companies; television, film or other development or production companies; hosts, producers, executive producers, directors, writers, composers, designers or other potential talent involved with the Series or one or more of the Musicals; brands that might sponsor, be or become affiliated with the Series or one or more Musicals; existing or potential Managers or managing-Members; or other such existing or potential Series or Musical affiliates, whether they are receiving such Units in exchange for monetary or non-monetary commitments. 

 

(d)          This right of first refusal will entitle the Investor Members taking Units under this Offering to receive a notice of the terms and conditions of any future offering of equity by the Company subject to the limitations set forth immediately above.  These notices will be sent to the Investor Members at least Ten (10) Business Days prior to the sale of such new Units to any new potential investors.  At the expiration of that period, or in the event that the Investor Members indicate that they do not wish to make any such further investments in the Company, the opportunity will be opened up to new potential investors on the same terms as were offered to the Investor Members. All such offerings of equity investment in the Company will be subject to availability.  Each Investor Member’s rights of first refusal will be held proportionately with their respective existing percentage of ownership of the Company.

 

(e)          The various rights of preemption, first offer, etc. described in this Section 5(a)-(e) may not be effective with respect to issuances of new classes of Units which are offered to persons and/or entities with which Company has certain business or strategic relationships provided such issuances are for other than primarily equity financing purposes.  Similarly, the various rights of preemption, first offer, etc. described in this Section 5(a)-(e) may not be effective with respect to issuances of new classes of Units which are offered to financial institutions, underwriters or lenders in connection with commercial credit arrangements, presale financing, completion bond or other loan guarantors, or project financing generally, provided that such issuances are for other than primarily equity financing purposes.

 

(f)          Subject to the terms of the distribution waterfall set forth in the Offering Circular (see Offering Circular at SECURITIES BEING OFFERED “Distributions”) and further subject to any future offerings of equity investor Units, the Investor Members shall collectively maintain a Fifty Percent (50%) interest in the profits of the Company. This interest shall remain at 50% regardless of the actual number of equity investor Units allocated.

 

(g)          The Units shall be non-managing Membership Interests, with all of the rights and powers described as inheriting to non-Manager Members in the Operating Agreement.

 

6.     Representations and Warranties of the Company: The Company represents and warrants to the Subscriber that the following representations and warranties are true and complete in all material respects as of the date of the Offering Circular. 

 

(a)     Organization and Standing: The Company is a limited liability company duly formed, validly existing and in good standing under the laws of the State of California.  The Company has all requisite power and authority to own and operate its properties and assets and to execute and deliver this Agreement, the Operating Agreement and any other agreements or instruments required hereunder to the Subscriber.  The Company is duly qualified and is authorized to do business and is in good standing as a foreign company in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business. 

 

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(b)     Issuance of the Securities: The issuance, sale and digital delivery of the Securities in accordance with this Agreement have been duly authorized by all necessary actions on the part of the Company.  The Securities, when issued, sold and delivered against payment therefor in accordance with the provisions of this Agreement, will be duly and validly issued, fully paid and non-assessable. 

 

(c)     Authority for Agreement: The acceptance by the Company of this Agreement, and the consummation of the transactions contemplated hereby, are within the Company’s powers and have been duly authorized by all necessary actions on the part of the Company.  Upon the Company’s acceptance of this Agreement, it shall constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except: (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, and (iii) with respect to provisions relating to indemnification and contribution, as limited by considerations of public policy and by federal or state securities laws. 

 

(d)     No Filings: Assuming the accuracy of the Subscriber’s representations and warranties set forth in Section 7 hereof, no order, license, consent, authorization or approval of, or exemption by, or action by or in respect of, or notice to, or filing or registration with, any governmental body, agency or official is required by or with respect to the Company in connection with the acceptance, delivery and performance by the Company of this Agreement except: (i) for such filings as may be required under Regulation A of the Securities Act, or under any applicable state securities laws, (ii) for such other filings and approvals as have been made or obtained, or (iii) where the failure to obtain any such order, license, consent, authorization, approval or exemption, or the failure to give any such notice or make any filing or registration, would not have a material adverse effect on the ability of the Company to perform its obligations hereunder. 

 

(e)     Financial Statements: Complete copies of the Company’s audited financial statements, describing the financial position of the Company since its formation in 2017, and the related audited Balance Sheet, Statement of Income, Statement of Cash Flows for the aforementioned period, as well as Statement of Members’ Equity for the Company (collectively, the “Financial Statements”) are attached to the Offering Circular (see, Offering Circular, at PART F/S).  The Financial Statements are based on the books and records of the Company and fairly present the financial condition of the Company as of the respective dates they were prepared and the results of the operations and cash flows of the Company for the respective periods indicated.  Cashuk, Wiseman, Goldberg, Birnbaum & Salem, LLP, which has audited the Financial Statements as of June 30, 2017, is a licensed certified public accounting firm and an independent accounting firm as defined by the rules and regulations adopted by the SEC. 

 

(f)     Proceeds: The Company shall use the proceeds from the issuance and sale of the Securities sold in the Offering as set forth in the “Use of Proceeds to Issuer” section of the Offering Circular.

 

(g)    Litigation: There is no threatened or pending action, suit, proceeding, arbitration, mediation, complaint, claim, charge or investigation before any court, arbitrator, mediator or governmental body, or to the Company’s knowledge, currently threatened in writing: (i) against the Company, or (ii) to the Company’s knowledge, against any consultant, officer, manager, director or key employee of the Company arising out of his or her consulting, employment or board relationship with the Company or that could otherwise materially impact the Company. 

 

7.     Representations and Warranties of the Subscriber: By subscribing to the Offering, the Subscriber (and, if the Subscriber is purchasing the Units subscribed-for hereby in a fiduciary capacity, the person or persons for whom the Subscriber is so purchasing) represents and warrants as follows, which representations and warranties are true and complete in all material respects as of the date of this Agreement:

 

(a)     Requisite Power and Authority: The Subscriber has all necessary power and authority under all applicable provisions of law to subscribe to the Offering, to execute and deliver this Agreement and the Operating Agreement, to grant all rights granted by Subscriber herein and to perform all of its duties and obligations as set forth herein. All actions on the Subscriber’s part required for the lawful subscription to the Offering have been or will be effectively taken on or prior to the date of this Agreement.  Upon subscribing to the Offering, this Agreement and the Operating Agreement will constitute valid and binding obligations of the Subscriber, enforceable in accordance with their terms, except: (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights and (ii) as limited by general principles of equity that restrict the availability of equitable remedies.  

 

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 (b)     Company Information: The Subscriber has had an opportunity to review this Agreement, the Operating Agreement, the Offering Circular, and their respective exhibits, including but not limited to the Company’s Financial Statements, and the Subscriber has had an opportunity to discuss the Company’s business and financial affairs with managers, officers and others in charge of the Company and has had the opportunity to review the Company’s operations and facilities, to the extent the Subscriber has desired or requested in writing.  The Subscriber has also had the opportunity to ask questions of and receive answers from the Company and its management team regarding the terms and conditions of this Subscription.  The Subscriber acknowledges that except as set forth herein, no representations or warranties have been made to the Subscriber, or to the Subscriber’s advisors or representatives, by the Company or others with respect to the business or prospects of the Company or its financial condition, nor have any such additional or alternative representations or warranties been made by the Company or its agents with respect to the proposed business of the Company, the deductibility of any item for tax purposes, and/or the economic, tax, or any other aspects or consequences of a purchase of Units, and that Subscriber has not relied upon any information concerning the Offering, written or oral, other than that contained in this Agreement, the Operating Agreement, the Offering Circular, and their respective exhibits.  The Subscriber shall only rely upon its own judgment and/or its professional advisors in making its investment decision. 

 

(c)     Investment Experience: The Subscriber has sufficient experience in financial and business matters to be capable of utilizing such information to evaluate the merits and risks of the Subscriber’s investment in the Securities, and to make an informed decision relating thereto, or alternatively, the Subscriber has utilized the services of a purchaser representative and together they have sufficient experience in financial and business matters that they are capable of utilizing such information to evaluate the merits and risks of the Subscriber’s investment in the Securities, and to make an informed decision relating thereto. 

 

(d)     The Subscriber’s Determination of Suitability: The Subscriber has been advised to seek independent advice from its professional advisors relating to the suitability of an investment in the Company in view of Subscriber’s overall financial needs and with respect to the legal and tax implications of such investment and it has done so or Subscriber has knowingly foregone his/her/its right to do so.  The Subscriber has evaluated the risks of an investment in the Securities, including those described in the section of the Offering Circular captioned “Risk Factors”, and has determined that the Offering is a suitable investment for the Subscriber based upon its investment objectives and financial needs.  The Subscriber has adequate financial resources for an investment of this character, and the Subscriber understands that the Subscriber could bear a complete loss of the Subscriber’s investment in the Company.  Specifically, as required by Regulation A, the Subscriber hereby represents and warrants that either: (i) it is an “accredited investor” as that term is defined in Section 501 of Regulation D promulgated under the Securities Act, or (ii) the amount of its investment in the Company does not exceed 10% of the greater of its annual income or net worth (for natural persons); or annual revenue or net assets (for non-natural persons). 

 

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(e)     No Registration: The Subscriber understands that the Securities are being offered pursuant to an exemption from registration under Regulation A of Section 3(b) of the Securities Act, and that reliance on such exemption is predicated in part on the truth and accuracy of the Subscriber’s representations and warranties, and those of the other purchasers of the Units in this Offering.  The Subscriber further understands that the Securities are not being registered under the securities laws of any states because a Tier 2 offering under Regulation A preempts such laws.  Any future sales or transfers of the Securities are subject to the terms and conditions set forth in Article VIII (ASSIGNMENT OF INTERESTS IN THE LIMITED LIABILITY COMPANY) of the Company’s Operating Agreement, as well as applicable federal and state securities laws applicable at the time of any future offer or sale. 

 

(f)     Illiquidity and Continued Economic Risk: The Subscriber acknowledges and agrees that there is no ready public market for the Securities and that there is no guarantee or expectation that a market for their resale will ever develop and exist.  The Company has no obligation to list any of the Securities on any market or take any steps (including registration under the Securities Act or the Securities Exchange Act of 1934, as amended [the “Exchange Act”]) with respect to facilitating the trading or resale of the Securities.  The Subscriber may have to bear the economic risk of this investment indefinitely, and the Subscriber acknowledges that he/she/it is able to bear the economic risk of losing his/ her/its entire investment in the Securities. 

 

 (g)     Accredited Investor Status or Investment Limits: The Subscriber represents that his/her/its representations and information set forth in the Investor Questionnaire and the signature pages that follow (which are hereby incorporated herein by reference) are true and complete.  The Subscriber represents that to the extent he/she/it has any questions with respect to its status as an accredited investor, or the application of the investment limits, he/she/it has sought independent professional advice. 

 

(h)     Subscriber Information: Within five days after receipt of a request from the Company, the Subscriber hereby agrees to provide any further information needed in connection with this Subscription. 

 

(i)     Valuation: Because of the number of intangible factors impacting the value of small, privately held companies as well as the highly unique nature of the Company’s proposed operations/ventures and the extremely new nature of the Company itself, the Company has decided not to undergo a formal valuation process at this time.  The Subscriber understands that the price of the Units to be sold in this Offering was arbitrarily set by the Company on the basis of the Company’s projected operational needs and is therefore highly speculative, accordingly no warranties are made by the Company as to its fair market value.  The Subscriber further acknowledges that while no future offerings of Company securities are presently contemplated, were such future offerings of securities to eventuate at lower valuations than the current Unit valuations, then the Subscriber’s investment would bear a lower valuation, and the Subscriber’s ownership interests may thereby be diluted. 

 

(j)     Domicile: The Subscriber maintains its domicile (and is not a transient or temporary resident) at the address provided at the end of this Agreement, which shall promptly be updated by the Subscriber in the future upon any change thereof. 

 

(k)    Foreign Subscribers: If the Subscriber is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), the Subscriber hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Units or any use of this Agreement, including: (i) the legal requirements within its jurisdiction for the purchase of the Units, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Securities.  The Subscriber’s Subscription and payment for and continued beneficial ownership of the Securities will not violate any applicable securities or other laws of the Subscriber’s jurisdiction.

 

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(l)          No Offering Minimum: The Subscriber t has been informed by the Company, and understands the significance, of the fact that this Offering is being undertaken on a no minimum basis, and that this means that the Company can accept the Subscriber’s Subscription (i.e. the Subscriber’s investment) and begin using all or part of the Commitment without any guarantee that the Company will ultimately raise the remainder of the funds necessary to allow it to undertake its operations or conduct its business as planned and described in the Offering Circular generally and that the Company may therefore fail and the Subscriber may lose their entire investment.

 

(m)          Further Considerations:  The Subscriber has fully considered the fact that: (i) the Company has no financial and operating history, (ii) the Units are speculative investments with a high degree of risk of loss, and (iii) there are substantial restrictions on the transferability of, and there will be no public market for, the Units, and the Subscriber may not be possible to liquidate an investment in the Units in case of emergency.

 

(n)          Subscriber’s Capabilities: The Subscriber is able: (i) to bear the economic risk of this investment, (ii) to hold the Units indefinitely, and (iii) presently to afford a complete loss of this investment; the Subscriber has adequate means of providing for current needs and personal contingencies, has no need for liquidity in this investment.

 

 

(o)          Consent to Allocations: By signing this Agreement, Subscriber hereby specifically consents to the methods set forth in the Operating Agreement and Offering Circular by which allocations of net income, net loss, tax credits and other items are made as an express condition to becoming an Investor Member.

 

(p)          No Assurances: The Subscriber acknowledges and is aware that there is no assurance as to the future performance of the Company.  Subscriber also acknowledges that there may be certain adverse tax consequences to it in connection with its purchase of the Units, and that the Company has advised Subscriber to seek the advice of experts in such areas prior to making this investment.

 

(q)          Accuracy of Subscriber’s Financial Information: The information which Subscriber has furnished to the Company with respect to its financial position and business experience, is correct and complete as of the date of signing of this Agreement and, if there should be any material change in such information prior to Company’s acceptance of Subscriber’s Subscription, Investor will furnish such revised or corrected information to the Company.

 

(r)          No Revocation: The Subscriber is aware that except for any rescission rights that may be provided under applicable laws, it is not entitled to cancel, terminate, or revoke this Subscription, and all agreements made in connection herewith shall survive Subscriber’s death or disability.

 

The foregoing representations and warranties and undertakings, along with any representations made by the Subscriber in any Investor Questionnaire submitted herewith, or prior hereto (which representations would be incorporated herein by this reference), are made by the Subscriber with the intent that they be relied upon in determining his/her/its suitability as a non-managing member in the Company and the Subscriber hereby agrees that such representations and warranties shall survive its admission to the Company.

 

The Subscriber hereby warrants and represents that it understand the meaning and legal consequences of the foregoing representations and warranties, which are true and correct as of the date hereof and will be true and correct as of the date of its purchase of the Units subscribed for herein.  Each such representation and warranty shall survive said purchase.

 

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If more than one person is signing this Agreement, each representation and warranty and undertaking made herein shall be a joint and several representation, warranty or undertaking of each such person.

 

8.     Indemnity: The representations, warranties and covenants made by the Subscriber herein shall survive the acceptance by the Company of his/her/its Subscription.  The Subscriber acknowledges that he/she/it understands the meaning and legal consequences of the representations and warranties contained in Section 7, and Subscriber hereby agrees to indemnify and hold harmless the Company and its respective officers, directors, managing and non-managing members, employees and agents and affiliates, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act (the “Indemnitee”), from and against any and all losses, claims, demands, damages, judgments, liabilities and expenses (including costs and including, but not limited to, any and all reasonable attorneys’ fees, including attorneys’ fees on appeal and expenses reasonably incurred in investigating, preparing or defending against any false representation or warranty, or breach, or failure by the Subscriber to comply with any covenant or agreement made by the Subscriber herein or in any other document furnished by the Subscriber to any of the Indemnitees in connection with this Offering) incurred by each such person and/or entity in connection with defending or investigating any such claims or liabilities, whether or not resulting in any liability to such person, to which any such Indemnitee may become subject under the Securities Act, under any statutes, at common law, foreign law or otherwise, insofar as such losses, claims, demands, liabilities and/or expenses: (a) arise out of or are based upon any untrue statement of a fact made by the Subscriber and contained in this Agreement, or (b) arise out of or are based upon any breach by Subscriber of any representation, warranty, or agreement made by Subscriber contained herein or in the Investor Questionnaire, or (c) arise out of the sale/transfer of Units, of the Securities Act, or any other applicable state, federal, or foreign securities law. 

 

9. Continuing Effect of Representations, Warranties and Acknowledgments: The representations and warranties of Section 7 of this Agreement are true and accurate as of the date of execution of this Agreement and shall be true and accurate as of the date of acceptance of the Subscriber’s subscription, and shall survive the termination of this Offering.  If in any respect such representations, warranties and acknowledgments shall not be true and accurate prior to the date of acceptance or rejection of this subscription, the Subscriber shall give immediate written notice of such fact to the Company, specifying which representations, warranties and acknowledgments are not true and accurate and the reasons therefor.

 

10. Governing Law; Dispute Resolution; Jurisdiction: This Agreement shall be deemed to have been made and delivered and performed entirely in the State of California and it shall be governed by and construed in accordance with the laws of the State of California.  Except with respect to claims arising under the Securities Act, the Exchange Act or otherwise under the federal securities laws of the United States, if any dispute or controversy occurs between the Subscriber and the Company relating to the interpretation, implementation, application, or validity of this Agreement, each party to the dispute or controversy agrees to proceed to an arbitration hearing to be administered by the American Arbitration Association (“AAA”) in accordance with its commercial rules and the Federal Arbitration Act.  Nothing herein shall preclude any party from seeking injunctive relief in a court of competent jurisdiction if the party perceives that without such injunctive relief, serious harm may be done to the party.  The arbitrator(s) may award attorneys’ fees and costs, as well as AAA arbitrator and administrative expenses, relating to the entire matter or any particular issue, in favor of any prevailing party. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction.  Evidence and testimony provided in any arbitration hearing, as well as any decisions of the arbitrator(s) shall be treated as confidential information.  The Company and the Subscriber: (i) agree that except with respect to claims arising under the Securities Act, the Exchange Act or otherwise under the federal securities laws, any legal proceeding or cause of action arising out of or relating to this Subscription Agreement shall be instituted exclusively in accordance with the arbitration provision set forth herein, which shall be arbitrated in Los Angeles County, California, (ii) waive any objection to venue, and (iii) irrevocably consent to the jurisdiction of the AAA, the Federal Arbitration Act and the laws of the State of California, in any such action or proceeding.  Without limitation to the foregoing, and strictly for the avoidance of doubt, the Parties acknowledge and agree that the arbitration provisions set forth in this Section 10 of the Agreement shall not be applicable with respect to actions arising under the Securities Act, the Exchange Act or otherwise under the federal securities laws of the United States of America and nothing contained herein shall be construed as a waiver by Subscriber or otherwise of Company’s compliance with federal securities laws and the rules and regulations promulgated thereunder.

 

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11.     Notices: Notice, requests, demands and other communications relating to this Agreement and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given if and when: (a) delivered personally, on the date of such delivery; or (b) mailed by registered or certified mail, postage prepaid, return receipt requested, in the third day after the posting thereof; or (c) upon receipt, if delivered by Federal Express, or (d) e-mailed on the date of such delivery pursuant to the contact information set forth in this Agreement, or provided in writing in the future upon any changes.  If to the Company: 

 

Opening Night Enterprises, LLC 
80 W Sierra Madre Blvd., Suite 141

Sierra Madre, CA 91024
e-mail: openingnight@icloud.com 
Phone: 626.355.1049 

 

If to the Subscriber, at the Subscriber’s address provided at the end of this Agreement, or to such other address as may be specified hereafter by written notice from time to time by the party entitled to receive such notice. 

 

12. No Waiver; Modifications in Writing: This Agreement, together with the Offering Circular, Operating Agreement and the other Closing Documents referred to herein sets forth the entire understanding of the parties hereto, and supersedes all prior agreements, arrangements, term sheets, presentations and communications, whether oral or written, with respect to the specific subject matter hereof.  No waiver of or consent to any departure from any provision of this Agreement shall be effective unless signed in writing by the party entitled to the benefit thereof and no waiver of any right, remedy or benefit hereof, hereunder or arising herefrom shall constitute a future or subsequent such waiver of that or any other right, remedy or benefit hereof, hereunder or arising herefrom.  Except as otherwise provided herein, no amendment, modification or termination of any provision of this Agreement shall be effective unless signed in writing by or on behalf of the Company and each Subscriber to this Offering.  Any amendment, supplement or modification of or to any provision of this Agreement, any waiver of any provision of this Agreement, and any consent to any departure by the Company from the terms of any provision of this Agreement, shall be effective only in the specific instance and for the specific purpose for which made or given.

 

13. Acceptance of Subscription: The Company may accept this Subscription at any time for all or any portion of the Units subscribed-for by notifying the Subscriber within a reasonable time thereafter.

 

14. Proxy Vote Power of Attorney: The Subscriber understands that by completing this Agreement and by signing below, the Subscriber is specifically authorizing: (i) The Managing Member Charles Jones II Enterprises, LLC to execute (to whatever extent legally necessary) the Operating Agreement on behalf of the Subscriber; and (ii) Subscriber’s vote to be cast by proxy for the election of Charles Jones II Enterprises, LLC as Manager of Opening Night Enterprises, LLC to whatever extent required (if at all) to the California’s Revised Uniform Limited Liability Company Act.

 

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15. Miscellaneous:

 

(a)          This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.  The execution of this Subscription Agreement may be by actual, digital, electronic or facsimile signature.

 

(b)          All exhibits, schedules and addenda to this Agreement shall be deemed to be a part hereof by this reference.

 

(c)          Section headings herein have been inserted for reference only and shall not be deemed to limit or otherwise affect, in any matter, or be deemed to interpret in whole or in part, any of the terms or provisions of this Subscription Agreement.

 

(d)          All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person or persons or entity or entities may require.

 

(e)          This Agreement is not transferable or assignable by the Subscriber, except as provided for herein. 

 

(f)          The representations, warranties and agreements contained herein shall be deemed to be made by and be binding upon the Subscriber and its heirs, executors, administrators and successors and shall inure to the benefit of the Company and its successors and assigns.

 

(g)          None of the provisions of this Agreement may be waived, changed or terminated orally or otherwise, except as specifically set forth herein or except by a writing signed by the Company and the Subscriber. 

 

(h)          In the event any part of this Agreement is found to be void or unenforceable, the remaining provisions shall be binding with the same effect as if the void or unenforceable part were never part of this Agreement.

 

(i)           The invalidity, illegality or unenforceability of one or more of the provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of this Agreement, including any such provision, in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law. 

 

(j)          The terms and provisions of this Agreement are intended solely for the benefit of each party hereto and their respective successors and assigns, and it is not the intention of the parties to confer, and no provision hereof shall confer, third-party beneficiary rights upon any other person.

 

(k)           The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.

 

(l)          If any recapitalization or other transaction affecting the Units of the Company is effected, then any new, substituted or additional securities or other property which is distributed with respect to the Securities shall be immediately subject to this Agreement, to the same extent that the Securities, immediately prior thereto, shall have been covered by this Agreement. 

 

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ALL SUBSCRIBERS MUST COMPLETE THE APPLICABLE PARTS OF THE FORMS BELOW

 

IN WITNESS WHEREOF, the Subscriber has executed this Agreement on the ______ day of_______________________, 201___. 

 

x  $500.00 for each Unit     $

 

  Units =  
Subscription Amount   Aggregate
Purchase Price
     

 

 

Manner in which Title is to be held (Please Check One):

 

1.  ___  Individual  7.  ___  Trust/Estate/Pension or Profit sharing Plan
          Date Opened:______________ 
2.  ___  Joint Tenants with Right of Survivorship  8.  ___  As a Custodian for 
          _________________________________________ 
          Under the Uniform Gift to Minors Act of the State of 
          _________________________________________ 
3.  ___  Community Property  9.  ___  Married with Separate Property 
4.  ___  Tenants in Common  10.  ___  Keogh 
5.  ___ Corporation/Partnership/ Limited Liability Company  11.  ___ Tenants by the Entirety 
6.  ___  IRA       

 



 

YOU MUST COMPLETE THIS SECTION ONLY IF THIS IS AN IRA INVESTMENT OR THE SUBSCRIBER IS NOT GOING TO BE THE REGISTERED OWNER.

 

Name of Firm (Bank, Brokerage, Custodian): 
 
Account Name: 
 
Account Number: 
 
Representative Name: 
 
Representative Phone Number: 
 
Address: 
 
City, State, Zip: 

 

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EXECUTION BY NATURAL PERSONS

 

IF MORE THAN ONE SUBSCRIBER, EACH SUBSCRIBER MUST SIGN. 
INDIVIDUAL SUBSCRIBERS MUST COMPLETE THIS PAGE 
SUBSCRIBERS WHICH ARE ENTITIES MUST COMPLETE THE NEXT PAGE 

 

     
  Exact Name in Which Title is to be Held   

 

     
Name (Please Print)    Name of Additional Subscriber 
     
Residence: Number and Street    Address of Additional Subscriber 
     
City, State and Zip Code    City, State and Zip Code 
     
Social Security Number    Social Security Number 
     
Telephone Number    Telephone Number 
     
Fax Number (if available)    Fax Number (if available) 
     
E-Mail (if available)    E-Mail (if available) 
     
(Signature)    (Signature of Additional Subscriber)

 

ACCEPTED this ___ day of _________201___, on behalf of the Company. 

 

  By:    
    Name: Charles Jones II Enterprises, LLC
    Title: Managing Member

 

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EXECUTION BY ANY SUBSCRIBER WHICH IS AN ENTITY 
(Corporation, Partnership, LLC, Trust, Etc.) 

 

     
  Name of Entity (Please Print)   

 

Date of Incorporation or Organization: 

 

State of Principal Office: 

 

Federal Taxpayer Identification Number: 

 

   
Office Address   

 

   
City, State and Zip Code   
   
Telephone Number   
   
Fax Number (if available)   
   
E-Mail (if available)   

 

      By:    
        Name: 
        Title: 
[seal]          
         
Attest:          
  (If Entity is a Corporation)          
         
        Address 

 

ACCEPTED this ____ day of __________ 201___, on behalf of the Company. 

 

  By:    
    Name: Charles Jones II Enterprises, LLC
    Title: Managing Member

 

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SUBSCRIBER QUESTIONNAIRE - ALL SUBSCRIBERS MUST COMPLETE APPLICABLE PORTIONS

 

 

INSTRUCTIONS: IF YOU ARE AN ACCREDITED INVESTOR, please check all boxes below which correctly describe you. If you cannot check any of these boxes, complete the representations below regarding your qualification to invest in this Offering, as well as all other information required. 

 

☐ You are (i) a bank, as defined in Section 3(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), (ii) a savings and loan association or other institution, as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in an individual or fiduciary capacity, (iii) a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (iv) an insurance company as defined in Section 2(13) of the Securities Act, (v) an investment company registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”), (vi) a business development company as defined in Section 2(a)(48) of the Investment Company Act, (vii) a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301 (c) or (d) of the Small Business Investment Act of 1958, as amended, (viii) a plan established and maintained by a state, its political subdivisions, or an agency or instrumentality of a state or its political subdivisions, for the benefit of its employees and you have total assets in excess of $5,000,000, or (ix) an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and (1) the decision that you shall subscribe for and purchase membership interest units in the Company (the “Units”), is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or (2) you have total assets in excess of $5,000,000 and the decision that you shall subscribe for and purchase the Units is made solely by persons or entities that are accredited investors, as defined in Rule 501 of Regulation D promulgated under the Securities Act (“Regulation D”) or (3) you are a self-directed plan and the decision that you shall subscribe for and purchase the Units is made solely by persons or entities that are accredited investors. 
   
☐ You are a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended.
   
☐ You are an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), a corporation, Massachusetts or similar business trust or a partnership, in each case not formed for the specific purpose of making an investment in the Units and its underlying securities in excess of $5,000,000.
   
☐ You are a director or executive officer of the Company.

 

☐ You are a natural person whose individual net worth, or joint net worth with your spouse, exceeds $1,000,000 (excluding your principal residence) at the time of your subscription for and purchase of the Units. 
   
☐ You are a natural person who had an individual income1 in excess of $200,000 in each of the two most recent years or joint income with your spouse in excess of $300,000 in each of the two most recent years, and who has a reasonable expectation of reaching at least the same income level in the current year. 
   
☐ You are a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Units and whose subscription for and purchase of the Units is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D.
   
☐ You are an entity in which all of the equity owners are persons or entities described in one of the preceding paragraphs.

 

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IF YOU HAVE NOT CHECKED ONE OF THE BOXES ABOVE, YOUR INITIALS ARE REQUIRED BELOW:

 

_____     _____   I/We represent that the purchase price, together with any other amounts previously used to purchase Units in this Offering, does not exceed 10% of the greater of the Subscriber’s annual income or net worth (or in the case of a Subscriber that is a non-natural person, its revenue or net assets for such Subscriber’s most recently completed fiscal year end). 

 

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ALL SUBSCRIBERS: CHECK ALL BOXES BELOW WHICH CORRECTLY DESCRIBE YOU:

 

With respect to this investment in the Units, your: 

 

  Investment Objectives:  ☐ Aggressive Growth  ☐ Speculation   
         
  Risk Tolerance:  ☐ Low Risk  ☐ Moderate Risk  ☐ High Risk 

 

Are you associated with a FINRA Member Firm?    ☐ Yes    ☐ No 

 

Your initials (Subscriber and co-Subscriber, if applicable) are required for each item below:

 

___  ___  I/We understand that this investment is not guaranteed. 
     
___  ___  I/We are aware that this investment is not liquid. 
     
___  ___  I/We are sophisticated in financial and business affairs and are able to evaluate the risks and merits of an investment in this offering. 

 

___  ___  I/We confirm that this investment is considered “high risk.” (This type of investment is considered high risk due to the inherent risks including lack of liquidity and lack of diversification.  Success or failure of offerings such as this Offering is dependent on the corporate issuer of these securities and is outside the control of the investors.  While potential loss is limited to the amount invested, such loss of the entirety of the investment is possible.) 

 

The Subscriber hereby represents and warrants that all of its answers to this Subscriber Questionnaire are true as of the date of its execution of the subscription agreement pursuant to which it purchased the Units. 

 

     
Name of Subscriber [please print]    Name of Co- Subscriber [please print] 

 

 

    
Signature of Subscriber (Entities please
provide signature of Subscriber’s duly
authorized signatory.) 		   Signature of Co- Subscriber 

 

 

    
Name of Signatory (Entities only)     

 

 

    
Title of Signatory (Entities only)     

 

 

 

 

1 For individuals, “income” shall mean your adjusted gross income as reported on your federal tax returns increased by (i) any deduction for long term capital gain, (ii) any deduction for depletion, (iii) any exclusion for interest, and (iv) any losses allocated to you as an individual Unit-holder.

 

Opening Night Enterprises/Subscription Agreement & Investor Questionnaire/(2017/18)

 

 

 

Opening Night Enterprises/Subscription Agreement & Investor Questionnaire/(2017/18) 20
 

 

 

 EX1A-8 ESCW AGMT 6 ex1a_8.htm EXHIBIT 1-A.8

 

Exhibit 1A-8

 

ESCROW SERVICES AGREEMENT

 

This Escrow Services Agreement (this “Agreement”) is made and entered into as of MONTH, DATE, 2019 by and between Prime Trust, LLC (“Prime Trust” or “Escrow Agent”) and Opening Night Enterprises, LLC (“Issuer”).

 

RECITALS

 

WHEREAS, the Issuer proposes to offer for sale and sell securities to prospective investors (“Subscribers”), as disclosed in its offering materials, in a registered offering pursuant to the Securities Act of 1933, as amended, or exemption from registration (i.e. Regulation A+, D or S) (the “Offering”), the equity, debt or other securities of the Issuer (the “Securities”) up to the maximum amount of $50,000,000.00 (the “Maximum Amount of the Offering”).

 

WHEREAS, Issuer desires to establish an Escrow Account in which funds received from Subscribers will be held during the Offering, subject to the terms and conditions of the offering circular and this Agreement.

 

WHEREAS, Prime Trust agrees to serve as third-party escrow agent for the Subscribers with respect to such Escrow Account (as defined below) in accordance with the terms and conditions set forth herein.

 

AGREEMENT

 

NOW THEREFORE, in consideration for the mutual covenants, promises, agreements, representations, and warranties contained in this Agreement and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties herby agree as follows:

 

1.Establishment of Escrow Account. Prior to the Issuer initiating the Offering, and prior to the receipt of the first Subscriber funds, Escrow Agent shall establish an account for the Issuer (the “Escrow Account”). All parties agree to maintain the Escrow Account and Escrow Amount (as defined below) in a manner that is compliant with banking and securities regulations. For purposes of communications and directives, Escrow Agent shall be the sole administrator of the Escrow Account.

 

2.Escrow Period. The escrow period (“Escrow Period”) shall begin with the commencement of the Offering and shall terminate upon the earlier to occur of the following:

 

a. The date upon which Issuer and/or their authorized representatives provide Escrow Agent or its designated agent with written notice of termination of the Offering, unless said notice provides for a specific date on which said termination should occur, in which case termination shall occur on the stated date; or

 

b. Escrow Agent’s exercise of the termination rights specified in Section 8.

 

During the Escrow Period, the parties agree that (i) the Escrow Account and escrowed funds will be held for the benefit of the Subscribers, and that (ii) Issuer is not entitled to any funds received into the Escrow Account, and that no amounts deposited into the Escrow Account shall become the property of Issuer or any other entity, or be subject to any debts, liens or encumbrances of any kind of Issuer or any other entity, until the Issuer closes on said escrowed funds in accordance with the terms and conditions set forth in the subscription agreements, offering circular and/or other offering documents, as applicable.

 

3. Deposits into the Escrow Account. All Subscribers will be directed by the Issuer and its agents to transmit their data and subscription amounts, via Escrow Agent’s technology systems (“Issuer Dashboard”), directly to the Escrow Account to be held for the benefit of Subscribers in accordance with the terms of this Agreement and applicable regulations. All Subscribers will transfer funds directly to the Escrow Agent (with checks, if any, made payable to “Prime Trust, LLC as Escrow Agent for Investors in Opening Night Enterprises LLC”) for deposit into the Escrow Account. Escrow Agent shall process all Escrow Amounts for collection through the banking system, shall hold such funds, and shall maintain an accounting of each deposit posted to its ledger, which also sets forth, among other things, each Subscriber’s name and address, the quantity of Securities purchased, and the amount paid. All monies so deposited in the Escrow Account and which have cleared the banking system are hereinafter referred to as the “Escrow Amount”. No interest shall be paid to Issuer or Subscribers on balances in the Escrow Account. Issuer shall promptly, concurrent with any new or modified Subscription Agreement and/or Offering documents, provide Escrow Agent with a copy of the Subscriber’s subscription and other information as may be reasonably requested by Escrow Agent in the performance of their duties under this Agreement. Escrow Agent is under no duty or responsibility to enforce collection of any funds delivered to it hereunder. Issuer shall assist Escrow Agent with clearing any and all AML and ACH exceptions. 

  

   
 

 

Funds Hold — clearing, settlement and risk management policy: All parties agree that funds are considered “cleared” as follows:

 

Wires — 24 hours after receipt of funds

 

Checks — 10 days after deposit

 

ACH — As transaction must clear in a manner similar to checks, and as Federal regulations provide investors with 60 days to recall funds. For risk reduction and protection, in making an effort to provide flexibility to Issuer, the Escrow Agent shall at its discretion post funds as cleared starting 10 calendar days after receipt. Of course, regardless of this operating policy, Issuer remains liable to immediately and without protestation or delay return to Prime Trust any funds recalled for whatever reason pursuant to Federal regulations.

 

Not withstanding the foregoing, cleared funds remain subject to internal compliance review in accordance with internal procedures and applicable rules and regulations. Escrow Agent reserves the right to deny, suspend or terminate participation in the Escrow Account of any Subscriber to the extent Escrow Agent, in its sole and absolute discretion, deems it advisable or necessary to comply with applicable laws or to eliminate practices that are not consistent with laws, rules, regulations or best practices.

 

4. Disbursements from the Escrow Account. Upon termination of the Escrow Period, Escrow Agent shall terminate the Escrow Account and make a full and prompt return of cleared funds to each Subscriber to the Offering.

 

In the event Escrow Agent receives a written instruction from Issuer (generally via notification on the Issuer Dashboard), Escrow Agent shall, pursuant to those instructions, make a disbursement to the Issuer from the Escrow Account. Issuer acknowledges that there is a 24-hour (one business day) processing time once a request has been received to disburse funds from the Escrow Account. Furthermore, Issuer directs Escrow Agent to accept instructions regarding fees from registered securities brokers in the syndicate, if any, or from the API integrated platform or portal through which this Offering is being conducted, if any.

 

5.Collection Procedure. Escrow Agent is hereby authorized, upon receipt of Subscriber funds, to promptly deposit them in the Escrow Account. Any Subscriber funds which fail to clear or are subsequently reversed, including but not limited to ACH chargebacks and wire recalls, shall be debited to the Escrow Account, with such debits reflected on the Escrow Account ledger accessible via Escrow Agent’s API or dashboard technology. Any and all escrow fees paid by Issuer, including those for funds receipt and processing are non-refundable, regardless of whether ultimately cleared, failed, rescinded, returned or recalled. In the event of any Subscriber refunds, returns or recalls after funds have already been remitted to Issuer, then Issuer hereby irrevocably agrees to immediately and without delay or dispute send equivalent funds to Escrow Agent to cover such refunds, returns or recalls. If Issuer has any dispute or disagreement with its Subscriber then that is separate and apart from this Agreement and Issuer will address such situation directly with said Subscriber, including taking whatever actions Issuer determines appropriate, but Issuer shall regardless remit funds to Escrow Agent and not involve Escrow Agent in any such disputes.

 

6.Escrow Administration Fees, Compensation of Prime Trust. Escrow Agent is entitled to escrow administration fees from Issuer as set forth in Schedule A attached hereto. All fees are charged immediately upon receipt of this Agreement and then immediately as they are incurred in Escrow Agent’s performance hereunder and are not contingent in any way on the success or failure of the Offering or transactions contemplated by this Agreement. No fees, charges or expense reimbursements of Escrow Agent are reimbursable, and are not subject to pro-rata analysis. All fees and charges, if not paid by a representative of Issuer (e.g. funding platform, lead syndicate broker, etc.), may be made via either Issuers credit card or ACH information on file with Escrow Agent. Escrow Agent may also collect its fee(s), at its option, from any other account held by the Issuer at Prime Trust. It is acknowledged and agreed that no fees, reimbursement for costs and expenses, indemnification for any damages incurred by Issuer or Escrow Agent shall be paid out of or chargeable to the investor funds on deposit in the Escrow Account.

 

   
 

 

7.Representations and Warranties. The Issuer covenants and makes the following representations and warranties to Escrow Agent:

 

a.It is duly organized, validly existing, and in good standing under the laws of the state of its incorporation or organization and has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder.

 

b.This Agreement and the transactions contemplated thereby have been duly approved by all necessary actions, including any necessary shareholder or membership approval, has been executed by its duly authorized officers, and constitutes a valid and binding agreement enforceable in accordance with its terms.

 

c.The execution, delivery, and performance of this Agreement is in accordance with the agreements related to the Offering and will not violate, conflict with, or cause a default under its articles of incorporation, bylaws, management agreement or other organizational document, as applicable, any applicable law, rule or regulation, any court order or administrative ruling or decree to which it is a party or any of its property is subject, or any agreement, contract, indenture, or other binding arrangement, including the agreements related to the Offering, to which it is a party or any of its property is subject.

 

d.The Offering shall contain a statement that Escrow Agent has not investigated the desirability or advisability of investment in the Securities nor approved, endorsed or passed upon the merits of purchasing the Securities; and the name of Escrow Agent has not and shall not be used in any manner in connection with the Offering of the Securities other than to state that Escrow Agent has agreed to serve as escrow agent for the limited purposes set forth in this Agreement.

 

e.No party other than the parties hereto has, or shall have, any lien, claim or security interest in the Escrow Funds or any part thereof. No financing statement under the Uniform Commercial Code is on file in any jurisdiction claiming a security interest in or describing (whether specifically or generally) the Escrow Funds or any part thereof.

 

f.It possesses such valid and current licenses, certificates, authorizations or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct its respective businesses, and it has not received any notice of proceedings relating to the revocation or modification of, or non-compliance with, any such license, certificate, authorization or permit.

 

g.Its business activities are in no way related to cannabis, gambling, adult entertainment, or firearms.

 

h. The Offering complies in all material respects with the Act and all applicable laws, rules and regulations.

 

8. Risk of Authorizing Immediate Use of Commitment Prior to Minimum Capitalization of the Company. The Investors agree to the use of his or her capital Commitment by the Company prior to any minimum capitalization of the Company, and Investors may thereby lose part or all of their Commitment if at least $20 Million is not raised and, as a result, there is no Series completed. 

 

All of its representations and warranties contained herein are true and complete as of the date hereof and will be true and complete at the time of any disbursement of Escrow Funds.

 

   
 

 

9.Term and Termination. This Agreement will remain in full force during the Escrow Period and shall terminate upon the following:

 

a.As set forth in Section 2.

 

b. Termination for Convenience. Any party may terminate this Agreement at any time for any reason by giving at least thirty (30) days’ written notice.

 

c. Escrow Agent’s Resignation. Escrow Agent may unilaterally resign by giving written notice to Issuer, whereupon Issuer will immediately appoint a successor escrow agent. Without limiting the generality of the foregoing, Escrow Agent may terminate this Agreement and thereby unilaterally resign under the circumstances specified in Section 2b. Until a successor escrow agent accepts appointment or until another disposition of the subject matter has been agreed upon by the parties, following such resignation notice, Escrow Agent shall be discharged of all of its duties hereunder save to keep the subject matter whole.

 

10.Binding Arbitration, Applicable Law, Venue, and Attorney’s Fees. This Agreement is governed by, and will be interpreted and enforced in accordance with the laws of the State of Nevada, as applicable, without regard to principles of conflict of laws. Any claim or dispute arising under this Agreement may only be brought in arbitration, pursuant to the rules of the American Arbitration Association, with venue in Clark County, Nevada. The parties consent to this method of dispute resolution, as well as jurisdiction, and consent to this being a convenient forum for any such claim or dispute and waives any right it may have to object to either the method or jurisdiction for such claim or dispute. Furthermore, the prevailing party shall be entitled to recover damages plus reasonable attorney’s fees and costs and the decision of the arbitrator shall be final, binding and enforceable in any court.

 

11. Limited Capacity of Escrow Agent. This Agreement expressly and exclusively sets forth the duties of Escrow Agent with respect to any and all matters pertinent hereto, and no implied duties or obligations shall be read into this Agreement against Escrow Agent. Escrow Agent acts hereunder as an escrow agent only and is not associated, affiliated, or involved in the business decisions or business activities of Issuer, portal, or Subscriber. Escrow Agent is not responsible or liable in any manner whatsoever for the sufficiency, correctness, genuineness, or validity of the subject matter of this Agreement or any part thereof, or for the form of execution thereof, or for the identity or authority of any person executing or depositing such subject matter. Escrow Agent shall be under no duty to investigate or inquire as to the validity or accuracy of any document, agreement, instruction, or request furnished to it hereunder, including, without limitation, the authority or the identity of any signer thereof, believed by it to be genuine, and Escrow Agent may rely and act upon, and shall not be liable for acting or not acting upon, any such document, agreement, instruction, or request. Escrow Agent shall in no way be responsible for notifying, nor shall it be responsible to notify, any party thereto or any other party interested in this Agreement of any payment required or maturity occurring under this Agreement or under the terms of any instrument deposited herewith. Escrow Agent’s entire liability, and Issuer’s exclusive remedy, in any cause of action based on contract, tort, or otherwise in connection with any services furnished pursuant to this Agreement shall be limited to the total fees paid to Escrow Agent by Issuer. The Escrow Agent shall not be called upon to advise any party as to the wisdom in selling or retaining or taking or refraining from any action with respect to any securities or other property deposited hereunder. Escrow Agent may consult legal counsel selected by it in the event of any dispute or question as to the construction of any of the provisions hereof or of any other agreement or of its duties hereunder, or relating to any dispute involving any party hereto, and shall incur no liability and shall be fully indemnified from any reasonable liability whatsoever in acting in accordance with the reasonable opinion or instruction of such counsel. Issuer shall promptly pay, upon demand, the reasonable fees and expenses of any such counsel.

  

12.Indemnity. Issuer agrees to defend, indemnify and hold Escrow Agent and its related entities, directors, employees, service providers, advertisers, affiliates, officers, agents, and partners and third-party service providers (collectively “Escrow Agent Indemnified Parties”) harmless from and against any loss, liability, claim, or demand, including attorney’s fees (collectively “Expenses”), made by any third party due to or arising out of (i) this Agreement or a breach of any provision in this Agreement, or (ii) any change in regulation or law, state or federal, and the enforcement or prosecution of such as such authorities may apply to or against Issuer. This indemnity shall include, but is not limited to, all Expenses incurred in conjunction with any interpleader that Escrow Agent may enter into regarding this Agreement and/or third-party subpoena or discovery process that may be directed to Escrow Agent Indemnified Parties. It shall also include any action(s) by a governmental or trade association authority seeking to impose criminal or civil sanctions on any Escrow Agent Indemnified Parties based on a connection or alleged connection between this Agreement and Issuers business and/or associated persons. These defense, indemnification and hold harmless obligations will survive termination of this Agreement. Escrow Agent reserves the right to control the defense of any such claim or action and all negotiations for settlement or compromise, and to select or approve defense counsel, and Issuer agrees to fully cooperate with Escrow Agent in the defense of any such claim, action, settlement, or compromise negotiations.

 

13.Entire Agreement, Severability and Force Majeure. This Agreement contains the entire agreement between Issuer and Escrow Agent regarding the Escrow Account. If any provision of this Agreement is held invalid, the remainder of this Agreement shall continue in full force and effect. Furthermore, no party shall be responsible for any failure to perform due to acts beyond its reasonable control, including acts of God, terrorism, shortage of supply, labor difficulties (including strikes), war, civil unrest, fire, floods, electrical outages, equipment or transmission failures, internet interruptions, vendor failures (including information technology providers), or other similar causes.

 

   
 

 

14. Escrow Agent Compliance. Escrow Agent may, at its sole discretion, comply with any new, changed, or reinterpreted regulatory or legal rules, laws or regulations, law enforcement or prosecution policies, and any interpretations of any of the foregoing, and provided Escrow Agent provides Issuer with written notice thereof, Escrow Agent may (i) modify either this Agreement or the Escrow Account, or both, to comply with or conform to such changes or interpretations or (ii) terminate this Agreement or the Escrow Account or both if, in the sole and absolute discretion of Escrow Agent, changes in law enforcement or prosecution policies (or enactment or issuance of new laws or regulations) applicable to the Issuer might expose Escrow Agent to a risk of criminal or civil prosecution, and/or of governmental or regulatory sanctions or forfeitures if Escrow Agent were to continue its performance under this Agreement. Furthermore, all parties agree that this Agreement shall continue in full force and be valid, unchanged and binding upon any successors of Escrow Agent. Changes to this Agreement will be sent to Issuer via email. Escrow Agent may act or refrain from acting in respect of any matter referred to in this Escrow Agreement in full reliance upon and by and with the advice of its legal counsel and shall be fully protected in so acting or in refraining from acting upon advice of counsel. In the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder, the Escrow Agent shall be entitled to (i) refrain from taking any action other than to keep safe the Escrow Amounts until directed otherwise by a court of competent jurisdiction or, (ii) interplead the Escrow Amount to a court of competent jurisdiction.

 

15.Waivers. No waiver by any party to this Agreement of any condition or breach of any provision of this Agreement will be effective unless in writing. No waiver by any party of any such condition or breach, in any one instance, will be deemed to be a further or continuing waiver of any such condition or breach or a waiver of any other condition or breach of any other provision contained in this Agreement.

 

16.Notices. Any notice to Escrow Agent is to be sent to escrow@primetrust.com. Any notices to Issuer will be to charlesjonesii@mac.com.

 

Any party may change their notice or email address giving notice thereof in accordance with this Paragraph. All notices hereunder shall be deemed given: (1) if served in person, when served; (2) if sent by facsimile or email, on the date of transmission if before 6:00 p.m. Eastern time, provided that a hard copy of such notice is also sent by either a nationally recognized overnight courier or by U.S. Mail, first class; (3) if by overnight courier, by a nationally recognized courier which has a system of providing evidence of delivery, on the first business day after delivery to the courier; or (4) if by U.S. Mail, on the third day after deposit in the mail, postage prepaid, certified mail, return receipt requested. Furthermore, all parties hereby agree that all current and future notices, confirmations and other communications regarding this Agreement specifically, and future communications in general between the parties, may be made by email, sent to the email address of record as set forth above or as otherwise from time to time changed or updated in Issuer Dashboard, directly by the party changing such information, without necessity of confirmation of receipt, delivery or reading, and such form of electronic communication is sufficient for all matters regarding the relationship between the parties. If any such electronically-sent communication fails to be received for any reason, including but not limited to such communications being diverted to the recipients’ spam filters by the recipients email service provider or technology, or due to a recipients’ change of address, or due to technology issues by the recipients’ service provider, the parties agree that the burden of such failure to receive is on the recipient and not the sender, and that the sender is under no obligation to resend communications via any other means, including but not limited to postal service or overnight courier, and that such communications shall for all purposes, including legal and regulatory, be deemed to have been delivered and received. No physical, paper documents will be sent to Issuer, including statements, and if such documents are desired then that party agrees to directly and personally print, at their own expense, the electronically-sent communication(s) or dashboard reports and maintaining such physical records in any manner or form that they desire. Your Consent is Hereby Given: By signing this Agreement electronically, you explicitly agree to this Agreement and to receive documents electronically, including your copy of this signed Agreement as well as ongoing disclosures, communications and notices.

 

17.Counterparts; Facsimile; Email; Signatures; Electronic Signatures. This Agreement may be executed in counterparts, each of which will be deemed an original and all of which, taken together, will constitute one and the same instrument, binding on each signatory thereto. This Agreement may be executed by signatures, electronically or otherwise, and delivered by email in .pdf format, which shall be binding upon each signing party to the same extent as an original executed version hereof.

 

18.Substitute Form W–9: Taxpayer Identification Number certification and backup withholding statement. PRIVACY ACT STATEMENT: Section 6109 of the Internal Revenue Code requires you (Issuer) to provide us with your correct Taxpayer Identification Number (TIN). Under penalties of Perjury, Issuer certifies that: (1) the tax identification number provided to Escrow Agent is the correct taxpayer identification number and (2) Issuer is not subject to backup withholding because: (a) Issuer is exempt from backup withholding, or, (b) Issuer has not been notified by the Internal Revenue Service (IRS) that it is subject to backup withholding. Notification Obligation: Issuer agrees to immediately inform Prime Trust in writing if it has been, or at any time in the future is notified by the IRS that Issuer is subject to backup withholding.

 

Under penalty of perjury, by signing this Agreement below I certify that: 1) the number shown above is our correct business taxpayer identification number; 2) our business is not subject to backup withholding unless we have informed Prime Trust in writing to the contrary; and 3) our Company is a U.S. domiciled business.

 

   
 

 

19.Survival. Even after this Agreement is terminated, certain provisions will remain in effect, including but not limited to Sections 3, 4, 5, 10, 11, 12 and 14 of this Agreement. Upon any termination, Escrow Agent shall be compensated for the services as of the date of the termination or removal.

 

[Signature Page Follows]

 

   
 

 

Consent is Hereby Given: By signing this Agreement electronically, Issuer and Escrow Agent explicitly agree to receive documents electronically including its copy of this signed Agreement as well as ongoing disclosures, communications, and notices.

 

Agreed as of the date set forth above by and between:

 

Opening Night Enterprises LLC, as Issuer

 

 

 

Name: Charles Jones, II
Email: charlesjonesii@mac.com
Title: Manager, CEO
Date:  

 

 

 

 

Prime Trust

 

 

By:    
     
Name:    
     
Title:    

 

 

 

 

 

 

 

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August 6, 2020

 

Securities and Exchange Commission

Division of Corporation Finance

Washington D.C. 20549

Mail Stop 3561

Attn: Mr. John Dana Brown

brownj@sec.gov

 

Re:Opening Night Enterprises LLC
Post-Qualification Amendment No. 2 to
Offering Statement on Form 1-A
Filed November 27, 2019
File No. 024-10712

 

DELIVERED VIA E-MAIL

 

 

Dear Mr. Brown:

 

Thank you for your letter, dated December 13, 2019 with regard to the above-referenced offering statement. We are now filing the third amended post-qualification offering statement in compliance with your letter’s instructions and direction and we are also providing this letter in response to certain comments, questions and points raised in your letter, as follows:

 

 

General – (1) – Rule 257 Reporting Obligations:

 

Comment number 1 in your letter dated December 13, 2019 held in part that the issuer was “still not current in (its) reporting obligations pursuant to Rule 257” in that the issuer had “not filed a special financial report on Form 1-K containing audited financial statements for the fiscal year ended December 31, 2018 pursuant to Rule 257(b)(2)(i)(A)…” Please note that in Part F/S of its Form 1-A post-qualification Amendment No. 1 filing, which was filed with and accepted by your office on June 19, 2019, contained audited financial statements for the two years ending December 31, 2017 and December 31, 2018. In response to that filing, your office issued Post-Qualification Amendment No. 1 Comment Letter, dated October 10, 2019, whose only comments with respect to financial statements were at Comment 2 requesting “inclu(sion of) updated financial statements and Management’s Discussion and Analysis of Financial Condition” and at Comment 7 inquiring as to why the issuer had “not filed any periodic reports under Rule 257 of Regulation A.” In response to that Comment Letter, the issuer subsequently filed an amended Form 1-A with, and accepted by, your office on November 27, 2019, which was accepted the same day, and which contained a Part F/S consisting solely of unaudited “Interim Financials” for the period beginning January 1, 2019 and ending September 30, 2019.

 

 

 

  
 

 

In response to your office’s Comment 7 from its Post-Qualification Amendment No. 1 Comment Letter, dated October 10, 2019, issuer now responds that the information that would have been set forth in the Form 1-K Special Report, consisting of audited financial statements covering the issuer’s business for the period beginning January 1, 2018 and ending December 31, 2018, had already been previously provided in Part F/S of issuer’s previous Amended Form 1-A previously filed on June 19, 2019. Additionally, the identifying information requested of issuer in Part I of Form 1-K had all previously been provided to your office in Part I, Item 1 of Form 1-A. Accordingly, there was no new information that the SEC or the general public could have had from a filing of the Form 1-K Special Report. The foregoing response should also be read as a partial reply to Comment 1 from your office’s Post-Qualification Amendment No. 2 Comment Letter, dated December 13, 2019.

 

By way of further response to Comment 1 from your office’s Post-Qualification Amendment No. 2 Comment Letter, dated December 13, 2019, issuer hereby submits that it is concurrently filing a separate Form 1-K Annual Report in satisfaction of both its yet unfiled Form 1-K Special Report as well as its year 2019 Form 1-K Annual Report and that said Form 1-K Annual Report contains audited financial statements from issuer’s new accountant and new independent auditor covering both the year ending December 31, 2018 and the year ending December 31, 2019. Issuer believes that this concurrent filing should satisfy both of its outstanding Form 1-K Reports, namely the Special Report that was due by July 27, 2019 and the 2019 Annual Report due as of April 29, 2020.

 

Comment 1 from your office’s Post-Qualification Amendment No. 2 Comment Letter, dated December 13, 2019 also cited issuer’s failure to file a Form 1-SA Semiannual Report covering the period ending June 30, 2019 in accordance with the requirements of Rule 257(b)(3). That same letter also recognizes that the issuer mistakenly filed a Form 1-SA report containing financial reports covering the period beginning January 1, 2019 and ending September 30, 2019, instead of June 30, 2019. Issuer now submits that it will hereafter be filing an amended form 1-SA covering the appropriate period.

 

 

Risk of Authorizing Immediate Use of Commitment Prior to Minimum Capitalization of the Company, page 12 – (2)-(5):

 

Comments 2 through 5 of your letter note that there are various deficiencies and inconsistencies with respect to the Offering Circular’s statements (and omissions) pertaining to Exchange Act Rule 10b-9 disclosure requirements and also with respect to corresponding Exchange Act Rule 15c2-4 and with further conflicts in the same regard present in the Offering Circular’s corresponding Operating Agreement, Subscription Agreement and Escrow Agreement. An explanation for the confusion can be summarized as follows, this Offering had always been structured as a non-contingent, best efforts offering, and the Offering Circular and corresponding offering documents clearly reflected that. However, in the period of time since I, personally, stopped handling this offering on behalf of issuer’s now-former legal counsel and the time that issuer re-engaged me directly to take over handling of this offering, a third party escrow agent was attached to the offering and in connection with the filing of the pre-qualification Amendment No. 5 Form 1-A on January 23, 2019 that escrow agent, on its own or in conjunction with the former law firm managing the offering, generated and filed with EDGAR an escrow agreement appended to Form 1-A as Exhibit A1-8, the terms of which such escrow agreement were completely inconsistent with the non-contingent nature of the underlying Offering. The Escrow Agreement contained provisions and statutory references that seemed to contemplate a so-called “part-or-none” contingent best efforts offering and when that Escrow Agreement was uploaded to EDGAR, it seemingly precipitated a cascade of comments from your office pertaining to various newly identified inconsistencies and related questions with respect to the perceived contingent nature of the Offering and corresponding application of Rules 10b-9 and 15c2-4 of the Exchange Act.

 

  
 

 

However, the error was due to the negligent drafting of the blatantly conflicting Escrow Agreement and perhaps also misunderstanding and subsequent miscommunications on the part of the issuer and/or its former counsel about the contingent nature of the Offering in discussions said issuer and/or former counsel had with your office and/or the escrow agent. In response to the inconsistencies cited by your office in prior comment letters, particularly Post-Qualification Amendment No. 1 Comment Letter, dated October 10, 2019, the issuer and/or its former counsel added various language to the Offering Circular and other Offering documents, which cited Rule 10b-9 and the like. However, they somehow also failed to remove the various directly conflicting provisions and language scattered throughout the Offering Circular and corresponding Offering documents, despite the fact that the actual contingent nature of the Offering was clearly described throughout all prior-filed iterations of the Offering Circular. As a result, the Amended Offering materials submitted as post-qualification Amendment No. 2 created even more instances of directly conflicting provisions and terms than had previously existed under the Post-Qualification Amendment No. 1 filing.

 

In order to remedy the matter and in response to the applicable comments provided in your office’s Post-Qualification Amendment No. 2 Comment Letter, dated December 13, 2019 at Comments 2 – 5, various changes have been made to the Offering Circular and its corresponding Offering documents, which now all uniformly reflect the non-contingent best efforts nature of this Offering. Primarily these changes consisted of removing conflicting language added under Post-Qualification Amendment No. 1, however additional harmonizing changes were made to the original documents as well. Most importantly, we have overhauled the Escrow Agreement, such that it now properly contemplates a non-contingent, best efforts offering structure.

 

I believe that the current Offering documents submitted herewith will address and resolve all of your office’s concerns as set forth in your December 13, 2019 Comment Letter at comments 2 – 5.

 

 

Risk of Authorizing Immediate Use of Commitment Prior to Minimum Capitalization of the Company, page 12 – (4):

 

In addition to the immediately foregoing response, Comment 4 of your office’s December 13, 2019 Letter specifically asks, “whether any broker-dealer will accept funds in this offering.” No broker-dealer has been, nor does the issuer presently contemplate that any broker-dealer or other party acting as a broker-dealer will hereafter be, engaged by or on behalf of the issuer to act in the capacity of a broker-dealer (i.e., soliciting sales of issuer’s securities in exchange for contingent compensation) with respect to this Offering. Moreover, the language cited in your office’s letter at Comment 4, which precipitated the foregoing question, has since been removed from the Offering Circular as I found it to be ambiguous and potentially conflicting with the structure and nature of this Offering as set forth elsewhere in the Offering documents.

 

 

Risk Factors – Arbitration Provision, page 16 – (6)-(8):

 

Comments 6 through 8 of your office’s December 13, 2019 Letter pertain to various questions about the interaction among and operation of certain arbitration and choice of forum provisions present in the Subscription Agreement and Operating Agreement for this Offering. In particular, these Comments are concerned with the applicability of these provisions to claims brought under the federal securities laws. We have made revisions to harmonize the two different arbitration provisions present in the Subscription Agreement and Operating Agreement and we have included various discussions therein and in the Offering Circular addressing the Comment Letter’s remaining questions about the breadth of application of these clauses and the potential detrimental effects of their operation on the options and remedies of the investors and also of the issuer in different circumstances.

 

  
 

 

Part F/S, page 59 – (9):

 

Comment 9 of your office’s letter pertains to a perceived deficiency of the Offering Circular’s attached audited financial statements pursuant to Sections (b) and (c)(1) of Part F/S. Specifically, comment 9 of your office’s letter states in relevant part, “(r)evise to also include audited financial statements reflecting the two most recently completed fiscal years. Your interim financial statements should also cover the corresponding period of the preceding fiscal year.”

 

The Offering is undertaken under Regulation A, Tier 2. Accordingly, as per Part F/S(c)(1) which governs Tier 2 offerings, the issuer was obligated to “provide the financial statements required by paragraph (b) of this Part F/S…” and specifically, Part F/S(b)(3)(A), which applies to offerings such as that of the issuer, where the “offering statement is qualified, more than three months but no more than nine months after the most recently completed fiscal year end,” and for which issuer must then include in the Offering Circular, “a balance sheet as of the two most recently completed fiscal year ends.” Your office issued Notice of Qualification for the Offering on March 29, 2019. Accordingly, the Part F/S(b)(3)(A) standards apply as the Offering was qualified more than 3, but not more than 9, months after the most recently completed fiscal year end. Included in Part F/S of this current revised Circular 1-A filing, the issuer has included such audited financial statements for the fiscal years ending December 31, 2017 and December 31, 2018. Additionally, along with the filing of this revised Form 1-A Offering Circular, issuer is simultaneously filing a Form 1-K, as discussed in response to Comment 1 from your office’s letter, as discussed above. As discussed above, the Form 1-K filed herewith contains audited financial statements of issuer, generated by issuer’s new accountant and independent auditor.

 

We believe that the included audited financial statements incorporated in the revised Form 1-A Offering Circular, which covered the periods of 2017 and 2018, along with the separately audited financial statements covering the fiscal years ending December 31, 2018 and December 31, 2019, as are included in the Form 1-K being filed herewith, should satisfy the applicable audit and financial statement requirements and your office’s Comment 9.

 

 

In conclusion, our firm believes that the Opening Night Enterprises, LLC Offering Circular, Subscription Agreement, Offering Agreement and Escrow Agreement should all now be harmonized with one another and in compliance with your office’s requirements and as we are concurrently filing a Form 1-K Annual Report which contains both the newly independently audited 2018 and 2019 issuer financial statements, satisfying your office’s compliance requirements, we ask that you please re-qualify the Offering accordingly, with the understanding that we will be promptly re-filing issuer’s Form 1-SA for the period of January 1, 2019 through June 30, 2019 to replace the previously erroneously filed Form 1-SA for the period of January 1, 2019 through September 30, 2019.

 

 

Very truly yours,

 

 

 

By:  /s/Ryan J. Lewis.  

 

Ryan J. Lewis, Esq.

207 W. 25th Street, 6th Floor

New York, NY 10001

t. (212) 966-6700

f. (212) 966-6051

ryan@rlalaw.net