THE INTERESTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAW AND ARE OFFERED IN RELIANCE ON RULE 506(c) OF REGULATION D. THEY ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND MAY NOT BE RESOLD EXCEPT AS PERMITTED BY THE COMPANY AGREEMENT AND APPLICABLE LAW.
To: First Meter Partners GP, LLC, as manager (the "Manager") of First Meter Site __________, LLC (the "Company")
The undersigned (the "Subscriber") agrees with the Company and the Manager as follows. Capitalized terms not defined here have the meanings given in the Company Agreement of the Company, as amended (the "Company Agreement").
1. SUBSCRIPTION
1.1Commitment. The Subscriber irrevocably subscribes for a membership interest in the Company and agrees to make Capital Contributions up to the Capital Commitment stated on the signature page, when called under the Company Agreement. The Company holds a single Site, described in the Site Offering Notice dated __________ (the "Site Offering Notice"), which the Subscriber has received. The subscription relates to that Site only and gives the Subscriber no right or obligation as to any other site.
1.2Initial Contribution. The Subscriber shall fund its Percentage Interest of the Initial Contribution, which in aggregate for all Members is one hundred thousand dollars ($100,000) or the larger amount stated in the Site Offering Notice, by wire on or before the Closing Date stated in the Manager's closing notice. The Subscriber's share is stated on the signature page. Later Capital Calls for the Site will be made on not less than ten (10) business days' notice.
1.3Acceptance. This subscription is effective only when the Manager accepts it by countersigning below. The Manager may reject it in whole or in part for any reason. If the closing does not occur by the date stated in the Site Offering Notice, any amount the Subscriber has paid will be returned without interest. On acceptance, the Subscriber is admitted as an Investor Member and is bound by the Company Agreement as if it had signed it, and this signature page is a counterpart signature page to the Company Agreement.
1.4Fees. The Subscriber acknowledges that: (a) the Company pays the Manager a Management Fee for each quarter equal to the greater of one-quarter of two percent (2%) of the Total Commitments and three thousand dollars ($3,000), from the Closing Date until the Disposition or abandonment of the Site, borne by all Members pro rata; (b) the Company pays the Affiliated Developer, an Affiliate of the Manager controlled by the Key Person, a Development Fee of five thousand dollars ($5,000) per megawatt of Confirmed Capacity, one half at the earlier of the acquisition of the Site and the assignment of the purchase contract, and one half on the Disposition of the Site, under the Development Agreement; (c) the Company bears its organizational and offering expenses up to fifteen thousand dollars ($15,000); and (d) the Manager receives a Promote under Section 5.3 of the Company Agreement after the Investor Members receive their Capital Contributions and an eight percent (8%) Preferred Return.
2. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER
The Subscriber represents and warrants to the Company and the Manager, as of the date it signs and as of each date it makes a Capital Contribution, that:
2.1Accredited investor. The Subscriber is an "accredited investor" as defined in Rule 501(a) of Regulation D, on the basis indicated in the Investor Questionnaire attached as Exhibit A.
2.2Verification. The Subscriber will provide, before acceptance, the evidence the Manager reasonably requires to verify its accredited investor status under Rule 506(c)(2)(ii), which may be (a) a written confirmation from a registered broker-dealer, SEC-registered investment adviser, licensed attorney or certified public accountant dated within the prior ninety (90) days, in the form of Exhibit B, or (b) tax returns, bank or brokerage statements, credit reports or other documents the Manager accepts. A verification delivered for another company managed by the Manager may be relied on if it is dated within the prior ninety (90) days. The Subscriber consents to the Manager relying on and retaining that evidence.
2.3Authority. The Subscriber has full power and authority to sign and perform this Subscription Agreement and the Company Agreement, and each is its valid and binding obligation. If the Subscriber is an entity, it was not formed for the purpose of investing in the Company, unless each of its equity owners is an accredited investor.
2.4Investment intent. The Subscriber is acquiring the interest for its own account, for investment, and not with a view to distribution. It understands that there is no market for the interest, that transfers require the Manager's consent, and that it must bear the economic risk of the investment for an indefinite period.
2.5Sophistication and access. The Subscriber has such knowledge and experience in financial and business matters that it can evaluate the merits and risks of the investment. It has received and read the Company Agreement and the Site Offering Notice, has had the opportunity to ask questions of and receive answers from the Manager and to review the Site data room, and has obtained all information it considers necessary. It has relied on its own advisors for legal, tax and investment advice and not on the Manager.
2.6Risks. The Subscriber understands that an investment in the Company is speculative and may result in the loss of all of its Capital Contributions, and specifically that:
(a)the Company holds a single Site, so its results depend entirely on that Site and are not diversified;
(b)the value of the Site depends on the utility confirming, building and delivering electric capacity, which is outside the Company's control and may be delayed, reduced, repriced or denied, including by changes in ERCOT, PUCT or utility rules for large loads;
(c)the Company may pay option fees, deposits and study costs and then abandon the Site, and those amounts may be lost;
(d)target prices per megawatt, timelines and returns in the Site Offering Notice and any presentation are illustrative estimates, not projections or promises;
(e)the Management Fee has a minimum of $3,000 per quarter, which is a higher percentage of a smaller Company, and is payable whether or not the Company makes a profit;
(f)the Manager, the Key Person and the Affiliated Developer have conflicts of interest, including that the Affiliated Developer is paid a Development Fee, that they manage other single-site companies and develop sites for their own account and for others, that the Promote is calculated site by site and is not reduced by losses on other sites, and that the Affiliated Developer has existing co-investors with rights to participate in some sites it develops;
(g)a Member that fails to fund a Capital Call is subject to severe remedies, including loss of fifty percent (50%) of its capital account;
(h)the Company has no operating history, and the Subscriber may be allocated taxable income without receiving a cash distribution; and
(i)the interest is illiquid and the life of the Company may be extended.
2.7General solicitation. The Subscriber acknowledges that interests in the Company may be offered by general solicitation, including on a public website, and that no statement on any website or in any presentation modifies the Company Agreement or the Site Offering Notice.
2.8Bad actor. Neither the Subscriber nor, if it is an entity, any of its beneficial owners of twenty percent (20%) or more is subject to any disqualifying event described in Rule 506(d)(1).
2.9Anti-money laundering and sanctions. The Subscriber's Capital Contributions are not derived from unlawful activity. Neither the Subscriber nor any of its beneficial owners is named on any list maintained by the Office of Foreign Assets Control or is otherwise a person with whom United States persons are prohibited from dealing. The Subscriber will provide any information the Manager reasonably requests to comply with anti-money laundering and know-your-customer laws.
2.10ERISA. Unless the Subscriber indicates otherwise in Exhibit A, the Subscriber is not a "benefit plan investor" as defined in Section 3(42) of ERISA and is not using the assets of any such plan.
2.11Investment Company Act. If the Subscriber is an entity that would be excluded from the definition of an investment company only by Section 3(c)(1) or 3(c)(7) of the Investment Company Act of 1940, it has disclosed that fact in Exhibit A, and its investment in the Company does not exceed ten percent (10%) of its total assets.
2.12Tax status. The Subscriber has provided, or will provide before its first Capital Contribution, a properly completed IRS Form W-9 (or the applicable Form W-8), and the information in it is correct.
2.13Confidentiality and non-circumvention. The Subscriber has signed the Manager's site confidentiality and non-circumvention agreement, or signs it with this Subscription Agreement, and acknowledges that Section 10.3 of the Company Agreement applies to it.
2.14Updates. The Subscriber will promptly notify the Manager if any representation in this Subscription Agreement ceases to be true.
3. GENERAL
3.1Indemnity. The Subscriber shall indemnify the Company, the Manager and their Affiliates against any loss arising from any inaccuracy in its representations or breach of this Subscription Agreement.
3.2Reliance; survival. The Company and the Manager will rely on the representations in this Subscription Agreement in determining that the offering is exempt from registration. The representations survive the Subscriber's admission.
3.3Governing law; venue; jury waiver. This Subscription Agreement is governed by the laws of the State of Texas. The state and federal courts in Harris County, Texas have exclusive jurisdiction over any dispute under it. THE SUBSCRIBER WAIVES TRIAL BY JURY.
3.4Electronic delivery and signature. The Subscriber consents to receiving Capital Calls, reports, tax information and notices by electronic mail or investor portal at the address below. This Subscription Agreement may be signed electronically.
3.5Not assignable. The Subscriber may not assign this Subscription Agreement.
The signature page, Exhibit A (investor questionnaire) and Exhibit B (accredited investor verification letter) are in the PDF and Word versions.