N.Y. Arts and Cultural Affairs Law § 23.03: Definitions

§ 23.03. Definitions. 1. The following terms, whenever used or

referred to in this article, shall have the following meanings, unless

the context clearly requires otherwise:

(a) A "theatrical production" shall mean those live-staged dramatic

productions, dramatic-musical productions and concerts, as defined in

this subdivision, which hereafter are shown to the public for profit and

which are financed wholly or in part by the offering or sale in or from

this state, directly, or through agents or distributors, of investment

agreements, evidences of interest, limited partnerships, producer

shares, equity or debt securities, pre-organization subscriptions or any

other syndication participation, when any persons are offered, solicited

to purchase or sell, directly or indirectly, such syndication interests

for moneys or services within or from the state of New York; provided,

however, that for purposes of paragraphs (h) and (i) of this subdivision

a "theatrical production" shall mean any live-staged dramatic

production, dramatic-musical production or concert which is presented to

the public in a place of entertainment as defined in this subdivision.

(b) "Fraud", "deceit", and "defraud", as such terms are used in this

article, are not limited to common-law deceit.

(c) "Syndication" shall mean all forms, methods and devices for

pooling of investment funds for the chief purpose of participating in a

theatrical production company, as defined herein.

(d) A "principal" shall mean and include every person or firm directly

or indirectly controlling the business affairs or operations of a

theatrical production company or of a ticket distributor, as defined

herein.

(e) A "person" shall mean an individual, firm, company, partnership,

corporation, trust or association.

(f) A "concert" shall mean any live performance whether musical or

spoken, dramatic or nondramatic, by one or more performers, which is

presented to the public in a place of entertainment, as defined in this

subdivision.

(g) A "sporting event" shall have the same meaning as set forth in

subdivision three of section 23.23 of this article.

(h) The term "event" shall mean a theatrical production or sporting

event, as those terms are defined in this subdivision, or any other

public exhibition, game, show, contest or performance which is presented

to the public in a place of entertainment as defined in this

subdivision.

(i) A "place of entertainment" shall mean a theatre, dinner theatre,

hall, coliseum, convention center, arena, auditorium, stadium, concert

hall, garden, outdoor space or other place of amusement operated as a

for profit entity and located in this state in which theatrical

productions, sporting events or other events are presented.

(j) A "theatrical production company" shall mean any entity formed to

(i) develop, produce, invest in or otherwise exploit, or any combination

thereof, one or more specified or nonspecified theatrical productions,

and (ii) conduct all activities related thereto.

(k) The term "advance ticket" shall mean a ticket of admission sold

more than twelve hours in advance of the time of performance of the

event for which the ticket is purchased.

(l) The term "ticket distributor" shall have the same meaning as set

forth in subdivision one of section 23.23 of this article.

(m) The term "accredited investor" shall mean (i) a natural person

whose individual net worth (or joint net worth with his or her spouse)

will exceed one million dollars at the time of purchase, or (ii) a

natural person who has an individual income (exclusive of any income

attributable to a spouse) of more than two hundred thousand dollars for

the past two years or joint income with a spouse of more than three

hundred thousand dollars in each of those years and has a reasonable

expectation of reaching the same income level in the current year, or

(iii) an entity in which each equity owner is an accredited investor

under subparagraph (i) or (ii) of this paragraph, or (iv) either an

organization described in section 501 (C)(3) of the Internal Revenue

Code of 1986, as amended, a corporation, a Massachusetts or similar

business trust, or a partnership, in each case not formed for the

specific purpose of acquiring the securities being offered, and with

total assets in excess of five million dollars, or (v) a trust, with

total assets in excess of five million dollars, not formed for the

specific purpose of acquiring the securities, whose purchase of the

securities is directed by a person who has such knowledge and experience

in business and financial matters that he or she is capable, as defined

by the Securities Act of 1933, as amended, of evaluating the merits and

risks of the prospective investment, or a bank, as defined in section

3(a)(2) of the Securities Act of 1933, as amended, (A) acting in its

fiduciary capacity as trustee, or (B) subscribing for the purchase of

securities being offered on its own behalf.

2. Accurate books and records of account shall be maintained by each

theatrical production company. Every producer of a theatrical production

shall at least once for each twelve month fiscal period beginning with

the initial expenditure of investors' funds (other than those of any

principal), within four months after the end of such period or the last

public performance of the original production in New York state,

whichever is sooner, furnish to all investors and to the department of

law a written balance sheet and statement of profit and loss which shall

be prepared by an independent public accountant and contain an express

opinion by such accountant that such statements fairly present the

financial position and results of operations of the theatrical

production company, hereinafter referred to as "certified statement".

Notwithstanding the aforesaid, in no event shall a producer be required

by this subdivision to submit certified statements to investors for any

period less than twelve months following the period covered by a prior

certified statement. Irrespective of the aforesaid, and in addition

thereto, every such producer shall also furnish each investor and the

department of law with an accurate and truthful itemized statement of

income and expenditure for every six month period not covered by a

previously issued certified statement or a certified statement required

to be issued hereunder for a period ending at such time, which

additional statement shall be subscribed to by the producer as accurate,

and may be submitted within three months after the close of such six

month period. Following the last public performance in New York state of

the original production, the producer shall accurately report to the

investors and the department of law, at least once within four months

after the end of each year thereafter, with respect to any subsequent

earnings or expenditures by the theatrical production, which shall be

truthful and accurate and which shall be subscribed to by the producer

as accurate. The attorney general may adopt, promulgate, amend and

rescind rules and regulations setting forth other accounting

requirements than set forth above, which may be selected by a producer

in lieu of the accounting requirements set forth above. Upon conditions

set forth by the attorney general, such rules and regulations may

further provide for the issuance of an exemption from the requirements

herein (i) for offerings of less than two hundred fifty thousand

dollars, (ii) for offerings made to less than thirty-six persons in or

from this state, or (iii) for such other offerings and upon such other

grounds as may be determined by the attorney general.

This subdivision shall not apply to any production whose first

performance in New York state preceded June first, nineteen hundred

sixty-four.

3. (a) Except as otherwise provided herein, no offering of syndication

interests in a theatrical production company, as defined herein, shall

be made within or from this state without the use of a prospectus or

offering circular making full and fair disclosure of material facts

pertaining to the particular venture. The attorney general may also

issue rules and regulations requiring the submission to prospective

investors in such offerings an offering circular and amendments thereto

containing a concise and accurate description of the nature of the

offering, profits to promoters and others, the background of the

producers, a description of subsidiary rights and other pertinent

information as will afford potential investors or purchasers and

participants an adequate basis upon which to found their judgment, but

the attorney general shall accept offering literature filed with the

Securities and Exchange Commission and authorized for use by such agency

as complying therewith as of the date of receipt of a true copy by the

department of law of such literature and proof of authorization by the

Securities and Exchange Commission by affidavit or otherwise. The

attorney general may also provide for the method of filing of offering

literature other than that filed with the Securities and Exchange

Commission, as well as underlying documents, with the department of law

at its office in the city of New York, prior to the offering of the

syndication interest involved; however, any such regulation also shall

provide that all funds derived from the sale of such theatrical

syndication interests shall be held in trust in a special bank account

until the attorney general has issued to the issuer or other offeror a

letter stating that the offering has been permitted to be filed; but in

that event such regulation promulgated by the attorney general shall

also provide that the attorney general, not later than fifteen days

after such submission, shall issue such a letter or, in the alternative,

a notification in writing indicating deficiencies therein.

(b) Where not more than one million dollars is the total amount of the

theatrical offering, including the right to an involuntary overcall, the

provisions of this subdivision shall be deemed to be satisfied by the

use of an investment agreement clearly setting forth in easily readable

print all of the terms of the offering. A copy of such document may be

filed with the department of law in lieu of a prospectus or offering

circular in the manner set forth in this article and shall be deemed to

be offering literature.

(c) The provisions of this subdivision shall not apply to offerings to

fewer than thirty-six persons (plus an unlimited number of accredited

investors) where express waivers in writing to the filing and offering

circular requirements of this subdivision are filed with the department

of law by or on behalf of all investors.

4. A limited partnership that is a theatrical production company is

exempt from the requirement for publishing its certificate or notice

under sections ninety-one, 121-201 and 121-902 of the partnership law so

long as the words "limited partnership" appear in its name. A limited

liability company that is a theatrical production company is exempt from

the requirement for publishing its articles of organization, application

for authority or a notice containing the substance thereof under

sections two hundred six and eight hundred two of the limited liability

company law so long as the words "limited liability company" appear in

its name.

5. It shall be unlawful for any person, in connection with the offer,

sale, or purchase of any syndication interest in any theatrical

production company, as defined herein, directly or indirectly:

(a) To employ any device, scheme, or artifice to defraud;

(b) To willfully make any untrue statement of a material fact or to

omit to state a material fact necessary in order to make such statement

made, not misleading; or

(c) To engage in any act, practice, or course of business which he

knows or reasonably should have known operates or would operate as a

fraud or deceit upon any person.

6. Any person, partnership, corporation, company, trust or association

or any agent or employee thereof, who (or which), having engaged in any

act or practice constituting a violation of subdivision five of this

section, commits additional acts under such circumstances as to

constitute a felony, the crime of conspiracy, petit larceny, or more

than one of the aforesaid, shall be punishable therefor, as well as for

the violation of subdivision five of this section, and may be prosecuted

for each crime, separately or in the same information or indictment,

notwithstanding any other provision of law.