A subscription is a purchase made by a signed order. A subscription offer should state with certainty the name of the payee, the amount and date of the subscription, any limitations placed on the use of the property contributed, and a clear description of the consideration. To ensure enforceability a subscription should also include a clear recitation of consideration.
Rhode Island Subscription Agreement with Nonprofit Corporation is a legally binding document that outlines the terms and conditions agreed upon by a subscriber and a nonprofit organization for the purchase of subscription shares. This agreement enables individuals or entities to invest in the nonprofit corporation and become a subscriber or member. In Rhode Island, there are two main types of Subscription Agreements with Nonprofit Corporations: 1. General Subscription Agreement: A general subscription agreement is the most common type and is used when a subscriber intends to purchase shares in the nonprofit corporation without any specific conditions or obligations. It includes essential provisions such as the number of shares to be subscribed, the purchase price, any payment installments, and the subscriber's representations and warranties. 2. Conditional Subscription Agreement: A conditional subscription agreement is used when a subscriber wants to impose specific conditions or requirements on their investment. Such conditions may include obtaining certain permits, achieving certain milestones, or meeting particular funding targets. This agreement outlines the conditions and obligations that need to be fulfilled for the subscriber's investment to proceed. Additionally, both types of subscription agreements typically cover important provisions such as: a. Representations and Warranties: The subscriber makes specific statements to affirm their eligibility and capacity to enter into the agreement, providing true and accurate information. b. Purchase Price and Payment Terms: The agreement specifies the total purchase price for the subscribed shares and the agreed-upon payment terms, including any down payment, installments, or lump sums. c. Subscription Term: It outlines the duration of the subscription agreement, including the start and end dates, or details any provisions for automatic renewal. d. Transferability of Shares: The agreement may address whether the subscribed shares can be freely transferred or if there are any restrictions on their transfer, such as requiring board approval or a right of first refusal for existing members. e. Termination and Remedies: This section outlines the circumstances under which the agreement can be terminated, the consequences of early termination, and the available remedies for breach or non-performance. f. Governing Law and Jurisdiction: The agreement identifies Rhode Island as the governing law, ensuring compliance with the state's rules and regulations, and specifies the jurisdiction for any legal disputes arising from the agreement. It is crucial for both the nonprofit corporation and the subscriber to thoroughly review and understand the terms and conditions outlined in the Subscription Agreement before entering into the investment. Consulting with legal professionals specializing in nonprofit law is highly recommended ensuring compliance and protect the interests of both parties.
