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Subscription Agreement

Prepared for:
[Subscriber Name]

Prepared by:
[Company Name]

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Subscription Agreement

This Subscription Agreement (hereinafter referred to as the "Agreement") is made on [Effective Date] (hereinafter referred to as the "Effective Date") 

By and between 

[Company Name] (hereinafter referred to as the "Company"), a corporation organized under the laws of the state of [State],  located at [Company Address] and 

[Subscriber Name] (hereinafter referred to as the "Subscriber"). 

The Company and the Subscriber shall be collectively referred to as "Parties" and individually as "Party."

WHEREAS the Subscriber desires to become a shareholder of the Company on the terms and conditions hereinafter set forth.

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Terms and Conditions

1. Subscription

The Subscriber hereby subscribes for and agrees to acquire  [number of shares] shares (hereinafter referred to as the "Shares") at $[0.00] per share aggregating to $[total amount of shares] (hereinafter referred to as 
the "Subscription Amount"). 

2. Terms of Subscription

The Subscriber acknowledges that this purchase of the Shares is subject to acceptance by the Company. The Company reserves the right, in whole or in part, in its sole and absolute discretion, to accept or reject this subscription and the subscription will not be binding until accepted by the Company in writing
The Subscriber acknowledges that, in order to subscribe for Shares, the Subscriber must hereby deliver to the Company: 
[number of signed copies] duly signed copies of this Subscription Agreement, and 
A cheque made payable to the Company LLC in the amount of $[Subscription Amount].
The closing of the Subscription of Shares hereunder (hereinafter referred to as the “Closing”) shall occur immediately upon:
The acceptance by the Company of a properly executed Signature Page to this Agreement; 
Receipt of all funds for the subscription of shares hereunder.
This subscription shall be irrevocable until and unless:
The subscription is rejected for any reason
This Agreement is terminated

3. Representation and Warranty

The Subscriber hereby warrants and represents the following enlisted to the Company:

The Subscriber has received and read documents that may include all exhibits and attachments of the "Memorandum" dated [Date], "Operating Agreement" dated [Date], other attachments, and such other documents, and has fully understood the terms and conditions set thereby in their entirety.
The Subscriber has received the opportunity to obtain additional information as they may wish so as to validate the information contained in the Memorandum and all attachments and exhibits thereto, and thus, is unbounded in case they have any inquiry concerning the terms and conditions of the Company's offering.
The Subscriber shall understand that data contained in the Memorandum, including financial data and projections are near estimates and projections put forth by the Company's Management Team, and thus, shall provide no assurance that any such results will be achieved.
The Subscriber warrants that it is a legal citizen of the state of [State], and resides at its principal address being [Address].
The Subscriber understands that there are risks involved in any investment in the Company, including those mentioned in the Memorandum, and involves substantial risk of loss of Subscriber’s entire investment. The Subscriber shall consult with a Tax Advisor regarding the tax aspects of the investment and its suitability for the Subscriber. The Subscriber shall be financially stable and must be able to bear the risks involved in the investment in the Company.
Subscriber is a “Sophisticated Investor” as defined in “Investor Suitability Standards” in the Memorandum.
The Subscriber acknowledges that the Company has not represented, guaranteed, or warranted the achievement of any particular financial result by the Company.
The Subscriber must understand that the Operating Agreement shall impose certain restrictions on the transferability of the Subscriber's Shares.
The Subscriber declares that the representations and warranties made by the Subscriber herein are true and accurate as of the date hereof and it shall be true of the date of Subscriber’s delivery of payment to the Company subject to the acceptance of the Subscriber's subscription by the Company. Should the Subscription's representations and warranties are found to be not true by the Subscriber prior to the acceptance of this Agreement by the Company, the Subscriber shall immediately notify the Company in writing.

4. Power of Attorney

The Subscriber thereby nominates, appoints, and constitutes [Attorney Name], [Attorney Designation], as their lawful and true attorney to exercise on their behalf over the Subscriber's best interests or otherwise, shall execute, under seal, acknowledge, deliver, and file or record whenever as required in accord with their full power and authority. 
The nominated Power of Attorney shall be responsible to send a private offering Memorandum to the parties.
The aforementioned power of attorney nominated shall be an irrevocable power and shall survive the decease, disability, mental infirmity, or bankruptcy of the Subscriber. 

5. Indemnification

The Subscriber acknowledges and understands the legal consequences of the representations and warranties contained in this Agreement, and agrees to indemnify and hold harmless the Company and its managers, agents, and employees from and against any losses, expenses, and damages and liabilities due to or arising out of any misrepresentations or misstatements with respect to any of the representations or warranties contained in this Agreement by the Subscriber.

6. Arbitration

In the event of any dispute arising in and out of this Agreement between the Parties, it shall be resolved by Arbitration. There shall be [Number of Arbitrators] Arbitrators which shall be appointed by [Party Name]. The venue of Arbitration shall be [Venue/Location of Arbitration] and Seat shall be [State of Seat]. The Arbitrators' decision shall be final and will be binding on both the Parties.

7. Termination

This Agreement may be terminated: 
By the Company at any time, if in its sole discretion, it determines to cancel the offering of Shares prior to the Closing. 
By the Company, if representations or warranties are found to be not true or accurate prior to the acceptance of this Agreement by the Company.

8. Miscellaneous

Fixing Period: In case of errors or bugs, the Subscriber shall notify the Company, who thereby shall make the necessary changes strictly within the deadline of [Deadline Days] as set by the Subscriber. Failure of the same shall result in termination of the Agreement upon mutual consensus.
Assignability: Neither party may assign this Agreement or the rights and obligations thereunder to any third party without the prior express written approval of the other Party which shall not be unreasonably withheld.
Notices: Any notice required to be given under this Agreement shall be in writing and shall be deemed to be sufficiently given when delivered by certified mail, personal delivery, or overnight delivery.
Force Majeure: Neither party shall be liable for any failure in performance of the obligation under this Agreement due to cause beyond that party's reasonable control (including and not limited to any pandemic, fire, strike, act or order of public authority, and other acts of God) during the pendency of such event.
Modification: No modification of this Agreement shall be made unless in writing, signed by both parties.
Severability: If any term, clause, or provision hereof is held invalid or unenforceable by a court of competent jurisdiction, all other terms will remain in full force and effect until the Agreement termination.
Governing Law and Jurisdiction: This Agreement shall be governed following the laws of the [State]. If the disputes under this Agreement cannot be resolved by Arbitration, they shall be resolved by litigation in the courts of the [State] including the federal courts therein, and the Parties all consent to the jurisdiction of such courts, agree to accept service of process by mail and hereby waive any jurisdictional or venue defenses otherwise available to it.
Legal and Binding Agreement: This Agreement is legal and binding between the Parties as stated above. This Agreement may be entered into and is legal and binding in the [State/Court/Region]. The Parties each represent that they have the authority to enter into this Agreement.
Entire Agreement: This Agreement constitutes the entire understanding of the Parties, and revokes and supersedes all prior agreements between the Parties, and is intended as a final expression of their Agreement. It shall not be modified or amended except in writing signed by the Parties hereto and specifically referring to this Agreement. This Agreement shall take precedence over any other documents which may conflict with this Agreement.

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Acceptance and Signature

IN WITNESS WHEREOF, the undersigned Parties have duly executed the terms herein the Agreement as of the aforementioned date.

[Subscriber Name]

[Company Name]

Signature

Assign signer 1

Name

Assign signer 1

Date

Assign signer 1

Signature

Assign signer 2

Name

Assign signer 2

Date

Assign signer 2

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THANK YOU

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DISCLAIMER: Revvsales, Inc is not a law firm. The content provided herein is for general information purposes only, and does not constitute legal advice. Revvsales, Inc and its partners make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability, or completeness of any information mentioned hereunder. The use or reliance of any information contained herein is for your personal use and solely at your own risk. You agree to fully release and indemnify Revvsales, Inc from any liability associated with the use of this content. You are advised to obtain independent legal advice before taking or refraining from any action on the basis of the content provided here.

Free Subscription Agreement Template

Q: Is a subscription agreement a contract?

No, a subscription agreement is a official agreement between a company and an investor to purchase a certain number of privately held shares of the company.

Searching for a competent investor to support your business? A subscription agreement can be the key to finding your perfect investment partner. With our customizable Subscription Agreement Template, you can now create impressive agreements within minutes.

Get started with this template

SaaS

Software

Technology

What is a Subscription Agreement?

An official agreement between a company and an investor to purchase a certain number of privately held shares of the company is known as a Subscription Agreement.

An investor can buy or subscribe to shares of a company with limited partnerships (LP). An LP is formed when two or more partners collaborate on a commercial business, and the limited partners are held responsible only for their respective investments in the company.

The capital sum invested by the investor or subscriber is utilized to carry out a range of commercial activities by the company and in return, the company agrees to share the profits with each subscriber.

A subscription agreement helps to:

Track the sale of number of shares
Keep details of who owns what shares and how much
Establish terms and conditions regarding the transaction
Outline capital contribution requirements and more

Why does a company require a subscription agreement?

When a company wants financial backing but doesn’t want to list itself as a public enterprise, it can seek the help of private investors with the help of a subscription agreement. Both the subscriber and the company reap benefits from a subscription agreement. Some of the advantages are:

For the company:

Raising funds for your company is easier
The subscribers act as silent partners and have limited involvement in running the company on a daily basis

For the subscriber:

The subscriber who has an investment in the company is not held responsible if the company runs into a loss or gets bankrupt
It asserts that the ‘subscriber hereby agrees’ to make a one-time investment in the company by purchasing shares at a predetermined price. This is a fantastic investment opportunity for the subscriber wherein he/she can invest a flat sum and get huge profit returns as the company grows.

Why should you use templates to create Subscription Agreements?

A subscription agreement is an important legal document as it is key to getting financial support from an investor. It gives a fair idea about the sale of a company’s share, the price involved, the terms and conditions of owning the private share, etc. Whether an investor is eager to start an investment in your business/company depends on how well your agreement is written. And, to draft stunning agreements from scratch means extensive research and effort, which can be daunting. You can overcome such challenges, if you have a professional agreement sample.

It simplifies the agreement creation process as there are pre-established themes and guidelines for arranging your information exactly where it is needed
Ensures uniformity and consistency in your messaging
Prevents legal complications as the templates are thoroughly vetted by lawyers. If needed, you can also seek legal advice on the clauses or assign a law firm to create all templates that have legal processes involved
Saves time to create single and bulk agreements since templates can be easily edited to suit your business needs
No more information gaps as templates remind you to include all the key details in your agreements

What information must be included in a Subscription Agreement Template?

To avoid any future legal disputes, it is necessary to have an all-inclusive agreement document by your side. How will you know whether the agreements created from a master sample have all the elements required in the subscription agreement? In the following section, we will tell you the key aspects that you should include in your subscription agreements.

Introduction

Start with a brief introduction. Hereof, include details such as:

Company name and address whose shares are on sale
Subscriber name and address who is willing to purchase the shares
The agreed upon date or effective date from which the agreement shall be active or valid

Terms and conditions

1. Subscription

Herein you need to provide details about how many shares a subscriber has bought, and at what price he/she has availed those.

2. Terms of subscription

It outlines all the terms and conditions to be followed by the subscriber and the involved company/business. Either party should acknowledge the purchase of shares, and mention the mode of payment and all other general obligations each party should diligently follow.

3. Representations and warranties

Representation refers to the assertion of a past or existing fact while warranty refers to a present or future promise of a fact. These statements are mandatory as you enter a contract. Hence, use this section to ensure that both parties are on the same page about the exhibits and attachments of the ‘Memorandum,’ ‘Operating Agreement,’ etc.

4. Power of attorney

An individual/agent is given the authority by a subscriber to act on the subscriber’s behalf through the use of a power of attorney (POA). In this part, the subscriber should mention whom they are nominating as their power of attorney.

Hereof, the subscriber should also explain whether the appointed attorney will have limited or unrestricted authority on the agreement. Power of attorney could be revoked at any time by the subscriber or if the subscriber dies, the attorney shall automatically lose his/her rights to it.

5. Indemnification

In general, indemnification is a party's promise to hold another party legally blameless—or not accountable—for a possible breach in an agreement. So in this section, you shall mention in detail exactly what kind of breach or losses are not liable in the contract.

Hereunder, the subscriber acknowledges and understands the legal consequences of the representations and warranties. The subscriber hereby agrees that the involved company/business is not accountable for any losses, expenses, damages, and liabilities caused.

6. Arbitration

Arbitration is like an out-of-court dispute resolution where an impartial third party, known as an arbitrator, hears evidence and provides a binding ruling. Any disputes between the parties resulting from or connected to the subscription policy are resolved in accordance with this provision. You need to give the details of the arbitrators involved. If both parties agree, even a law firm can act as an arbitrator.

7. Termination

This section explains on what conditions a company or a subscriber can terminate the agreement. A company can terminate the agreement anytime in writing and shall proceed with it when:

Representations or warranties are found to be not true or accurate prior to the acceptance of the agreement by the company
When a subscriber makes payment defaults, i.e when a subscriber fails to pay on the agreed-upon time or doesn’t pay even after the due date
Confidential data breaches, and more

Termination made by the subscriber hereunder should be in writing when:

The company displays wrong profit projections
Provides tampered business success stories etc., and more

8. Miscellaneous

This part includes the conditions to follow during any modification in the agreement, details of the governing laws, and other liability clauses.

Acceptance and signatures

This is the last section. Herein the subscriber acknowledges the terms of the contract by providing his/her signature on the agreement document. But legal weightage comes only when all parties involved in the contract have accepted and signed it.

Use Revv’s customizable subscription agreement template and design agreement documents faster

Your subscription agreement should be remarkable and should highlight you as a successful and profit-generating company if you want to get the attention of investors. The potential investors should be excited to start an investment in the company without having second thoughts. A well-written agreement can be your game-changer.

With Revv's editable subscription agreement template, you can design engaging subscription agreements more quickly and efficiently.

Fully editable templates

Creating single or bulk documents from scratch is tedious since you need to change the information contained in the agreement from time to time. Some instances where you have to constantly edit your agreement documents are:

Change in investor/subscriber name, company name, address, etc.
Edits in the effective date, number of shares, subscriber’s warranties, etc.
Addition of parties involved and respective signature tags
Legal clauses and other law-related policies that are subject to change

The above-mentioned are some of the customizations you will be required to do in your agreements. Be it any changes you want to make, Revv makes it possible. Revv templates are fully editable. With a simple drag-and-drop feature, you will be able to add images, text, tables, integrate payment systems, and more. You can also connect Google Sheets to your agreement document and import data seamlessly.

Parties involved in the subscription agreement can access their document at any time

The involved company and any party who has an investment in the company can access the respective subscription agreement document on any occasion, and from any device. Revv uses a cloud-based document storage system that allows any user with the link to the document to access the file from anywhere. He/she need not necessarily be a registered user of Revv.

Simple and fast approval and review process

A subscription agreement document contains a lot of legally binding terms and conditions such as:

Information subject to the price of shares (including cost per share detail)
The number of shares available for private buying
Company-assured representations, and warranties
Laws of the state involved etc.

To ensure all law-related and other stated data in the agreement document is correct and error-free, oftentimes these documents need to be thoroughly vetted. A company’s internal team head or manager can review the agreements before sending them out to a potential investor or subscriber.

With Revv, you can send any subscription agreement for acceptance to the approval manager or other team members for their review and approval using the Check and send for internal approval feature. With a simple click, the respective manager acknowledges and approves the document.

Collaborate with teammates in real time

If you want your agreement document to be reviewed by your colleagues prior to sending it to an investor or want some additional input from other internal department members, you can do it with Revv’s Notes feature. Collaborate in real-time with your teammates by tagging them using @mentions. You can even add public or private comments, or ask them to attach documents or images to your existing subscription proposal document. The tagged person will receive an email notification for the same.

Safe and secure eSignature

Revv makes your subscription agreement legally binding with its bank-grade eSignatures. It follows all laws of the state such as the ESIGN Act, UETA, and eIDAS, among others. You can also add any number of signers to the signature page of your document.

Easy to track any activity on the agreement document

From the Activity tracking feature, you can easily track real-time happenings in your agreement documents.

Get instant notifications

Revv sends auto-generated email notifications to both the sender and recipients, notifying them of the actions to be taken on the agreement.

Generates Evidence Summary certificate for all signed proposals

Revv generates an electronic copy of audit trails in the form of an Evidence Summary for all eSigned documents. Evidence Summary is a digital certificate that records each action taken during the signing process. It acts as legal proof in the event of a dispute in the future. A user can download the certificate for free.

Revv helps you to create clear and compelling subscription agreements in no time. To know more, Sign up today!

Frequently asked questions

What is a company subscription agreement?

It is an official agreement between a company and an investor to purchase shares of the company at a certain price. It includes all of the agreement's specifics, such as the number of outstanding shares, the ownership of the shares, and the payouts.

Is a subscription agreement a contract?

No, a subscription agreement is an official agreement between a company and an investor to purchase a certain number of privately held shares of the company.

Do you need a subscription agreement for an LLC?

An investor's request to join a limited liability company (LLC) is made through an LLC agreement. This contract is signed between an investor and an LLC in which the investor is subscribing/investing.

What information must be included in a subscription agreement?

A subscription agreement must include the following information - Introduction, Terms & conditions, Subscription, Terms of subscription, Representations and warranties, Power of attorney, Indemnification, Arbitration, Termination, Miscellaneous, Acceptance, and Signatures.