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Catalyst Fund Private Placement Memorandum

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This offering is effective on the date the SEC Rules regarding CrowdFunding under the JOBS Act, and is meant for non-accredited investors with a $10k minimum investment.
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  • 1. PreConstruction Catalysts, Inc. THE CATALYST FUND, LP PRIVATE OFFERING MEMORANDUM LIMITED PARTNERSHIP AGREEMENT SUBSCRIPTION AGREEMENT PREPARED FOR: _____________________________ DOCUMENT#__________________________
  • 2. C O N F I D E N T I A L O F F E R I N G M E M O • T H E C A T A L Y S T F U N D , L L C L P Page 1 PRIVATE OFFERING MEMORANDUM THE CATALYST FUND, LLC, LP (A MARYLAND LIMITED PARTNERSHIP) THIS MEMORANDUM HAS BEEN PREPARED SOLELY FOR, AND IS BEING DELIVERED ON A CONFIDENTIAL BASIS TO, PROSPECTIVE ACCREDITED INVESTORS WHO ARE CONSIDERING THE PURCHASE OF PARTNERSHIP INTERESTS (THE “UNITS” OR “UNIT”) IN THE CATALYST FUND, LP (THE “FUND”). DISTRIBUTION OF THIS MEMORANDUM TO ANY PERSON OTHER THAN THE PROSPECTIVE INVESTOR TO WHOM THIS MEMORANDUM IS DELIVERED, EITHER BY THE PROSPECTIVE INVESTOR RECIPIENT AND/OR THOSE PERSONS RETAINED TO ADVISE THEM WITH RESPECT THERETO IS UNAUTHORIZED. ANY REPRODUCTION OF THIS MEMORANDUM, IN WHOLE OR IN PART, OR THE DIVULGENCE OF ANY OF THE CONTENTS HEREIN, WITHOUT THE PRIOR WRITTEN CONSENT OF THE FUND IS STRICTLY PROHIBITED. EACH PROSPECTIVE INVESTOR, BY ACCEPTING DELIVERY OF THIS MEMORANDUM, AGREES TO RETURN IT AND ALL OTHER DOCUMENTS RECEIVED BY THEM, TO THE FUND, IF THE PROSPECTIVE INVESTOR’S SUBSCRIPTION IS NOT ACCEPTED, OR IF THE OFFERING IS TERMINATED. THESE ARE SPECULATIVE SECURITIES WHICH INVOLVE A HIGH DEGREE OF RISK. ONLY THOSE INVESTORS WHO CAN BEAR THE LOSS OF THEIR ENTIRE INVESTMENT SHOULD INVEST IN THESE UNITS. THE EFFECTIVE DATE OF THIS OFFERING IS MARCH 15, 2016 THIS OFFERING HAS NOT BEEN DULY FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION. THIS IS A REGULATION “A”, RULE 506(c) OFFERING
  • 3. C O N F I D E N T I A L O F F E R I N G M E M O • T H E C A T A L Y S T F U N D , L L C L P Page 2 THE CATALYST FUND, LP $80,000,000 (MAXIMUM OFFERING AMOUNT) THE CATALYST FUND, LP (THE “FUND”), A MARYLAND LIMITED PARTNERSHIP (UNDER ORGANIZATION), IS OFFERING A MINIMUM OF 5,000,000 AND A MAXIMUM OF 80,000,000 PARTNERSHIP UNITS FOR $1.00 PER UNIT. THE OFFERING PRICE PER UNIT HAS BEEN ARBITRARILY DETERMINED BY US. BY ACCEPTANCE OF THIS MEMORANDUM, PROSPECTIVE INVESTORS RECOGNIZE AND ACCEPT THE NEED TO CONDUCT THEIR OWN THOROUGH INVESTIGATION AND DUE DILIGENCE BEFORE CONSIDERING A PURCHASE OF THE UNITS. THE CONTENTS OF THIS MEMORANDUM SHALL NOT BE CONSIDERED TO BE INVESTMENT, TAX, OR LEGAL ADVICE AND EACH PROSPECTIVE INVESTOR SHOULD CONSULT WITH THEIR OWN COUNSEL AND ADVISORS AS TO ALL MATTERS CONCERNING INVESTMENT IN THIS OFFERING. MAXIMUM OFFERING: $80,000,000 MINIMUM OFFERING: $ 5,000,000 PRICE PER UNIT: $1 MINIMUM INVESTMENT: $10,000 (10,000 Units) THE FUND RESERVES THE RIGHT TO WAIVE THE 1 UNIT MINIMUM SUBSCRIPTION FOR ANY INVESTOR. THE OFFERING IS NOT UNDERWRITTEN. THE UNITS ARE OFFERED ON A “BEST EFFORTS” BASIS BY THE FUND. THE FUND HAS SET A MINIMUM OFFERING AMOUNT OF $5,000,000.
  • 4. C O N F I D E N T I A L O F F E R I N G M E M O • T H E C A T A L Y S T F U N D , L L C L P Page 3 TABLE OF CONTENTS I. SUMMARY OF THE OFFERING ...................................................................................................11 A. INVESTMENT PLAN.......................................................................................................................... 11 B. THE OFFERING.................................................................................................................................. 11 C. RISK FACTORS .................................................................................................................................. 11 D. USE OF PROCEEDS............................................................................................................................ 12 E. MINIMUM OFFERING PROCEEDS - ESCROW OF PROCEEDS...................................................... 12 F. PARTNERSHIP UNITS ....................................................................................................................... 12 G. REGISTRAR........................................................................................................................................ 12 H. SUBSCRIPTION PERIOD ................................................................................................................... 12 II. THE FUND ...................................................................................................................................13 A. FUND STRUCTURE............................................................................................................................ 13 B. INVESTMENT OBJECTIVES ............................................................................................................. 13 C. INVESTMENT PHILOSOPHY & STRATEGY.................................................................................... 13 D. FUND BENCHMARKS THE FUND SEEKS TO RAISE $1,250,000 PER QUARTER......................... 15 E. OPERATIONS ..................................................................................................................................... 15 F. OPPORTUNITY / STRUCTURE.......................................................................................................... 15 G. MANAGEMENT.................................................................................................................................. 16 H. EXIT STRATEGY................................................................................................................................ 17 I. RISK CONTROLS ............................................................................................................................... 17 III. SUMMARY OF TERMS ................................................................................................................19 IV. REQUIREMENTS FOR PURCHASERS ..........................................................................................20 A. GENERAL SUITABILITY STANDARDS ........................................................................................... 20 B. ACCREDITED INVESTORS ............................................................................................................... 21 C. OTHER REQUIREMENTS.................................................................................................................. 22 V. FORWARD LOOKING INFORMATION.........................................................................................23 VI. RISK FACTORS............................................................................................................................23 A. INVESTMENTS FAIL TO MEET EXPECTATIONS........................................................................... 24 B. UNANTICIPATED OBSTACLES........................................................................................................ 24 C. MANAGEMENT DISCRETION AS TO USE OF PROCEEDS ............................................................ 24 D. CONTROL BY MANAGEMENT......................................................................................................... 24 E. LIMITED TRANSFERABILITY AND LIQUIDITY ............................................................................ 25 F. BROKER - DEALER SALES OF UNITS............................................................................................. 25 G. LONG TERM NATURE OF INVESTMENT........................................................................................ 26 H. COMPLIANCE WITH SECURITIES LAWS ....................................................................................... 26 I. OFFERING PRICE............................................................................................................................... 26 J. LACK OF FIRM UNDERWRITER ...................................................................................................... 27 K. PROJECTIONS: FORWARD LOOKING INFORMATION................................................................. 27 L. GENERAL ECONOMIC CONDITIONS.............................................................................................. 28
  • 5. C O N F I D E N T I A L O F F E R I N G M E M O • T H E C A T A L Y S T F U N D , L L C L P Page 4 VII. USE OF PROCEEDS .....................................................................................................................28 A. SALE OF EQUITY............................................................................................................................... 28 B. OFFERING EXPENSES & COMMISSIONS........................................................................................ 28 C. GENERAL EXPENSES - APPLICATION OF PROCEEDS ................................................................. 29 D. TOTAL USE OF PROCEEDS .............................................................................................................. 29 VIII. CURRENT PARTNERS .................................................................................................................30 IX. LITIGATION ................................................................................................................................30 X. DESCRIPTION OF UNITS .............................................................................................................30 XI. TRANSFER AGENT AND REGISTRAR .........................................................................................31 XII. PLAN OF PLACEMENT................................................................................................................31 A. ESCROW OF SUBSCRIPTION FUNDS .............................................................................................. 31 B. HOW TO SUBSCRIBE FOR UNITS.................................................................................................... 32 XIII. ADDITIONAL INFORMATION .....................................................................................................32 A. LOANS TO COMPANY....................................................................................................................... 44 B. ADDITIONAL CAPITAL CONTRIBUTIONS..................................................................................... 44 C. FAILURE TO PAY CAPITAL.............................................................................................................. 44 D. CAPITAL ACCOUNTS........................................................................................................................ 45 E. GROSS ASSET VALUE ...................................................................................................................... 46 F. PERMITTED TRANSFERS.. ............................................................................................................... 48 Exhibits Exhibit A - Limited Partnership Agreement Exhibit B - Investor Suitability Questionnaire Exhibit C - Subscription Agreement
  • 6. C O N F I D E N T I A L O F F E R I N G M E M O • T H E C A T A L Y S T F U N D , L L C L P Page 5 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 FUND. THE SECURITIES DESCRIBED IN THIS MEMORANDUM HAVE NOT BEEN REGISTERED UNDER ANY STATE SECURITIES LAWS (COMMONLY CALLED "BLUE SKY" LAWS). THESE SECURITIES MUST BE ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OF SUCH SECURITIES UNDER SUCH LAWS, OR AN OPINION OF COUNSEL ACCEPTABLE TO THE FUND THAT SUCH REGISTRATION IS NOT REQUIRED. THE PRESENCE OF A LEGEND FOR ANY GIVEN STATE REFLECTS ONLY THAT A LEGEND MAY BE REQUIRED BY THE STATE AND SHOULD NOT BE CONSTRUED TO MEAN AN OFFER OF SALE MAY BE MADE IN ANY PARTICULAR STATE. 1. FOR CALIFORNIA RESIDENTS ONLY: THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS OFFERING HAS NOT BEEN QUALIFIED WITH COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFORE PRIOR TO SUCH QUALIFICATIONS IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPTED FROM QUALIFICATION BY SECTION 25100, 25102, OR 25104 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS OFFERING ARE EXPRESSLY CONDITION UPON SUCH QUALIFICATIONS BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT. 2. NOTICE TO MARYLAND RESIDENTS ONLY: IF YOU ARE A MARYLAND RESIDENT, YOU ARE HEREBY ADVISED THAT THESE SECURITIES ARE BEING OFFERED IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE MARYLAND SECURITIES ACT. THE SECURITIES CANNOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE ACT
  • 7. C O N F I D E N T I A L O F F E R I N G M E M O • T H E C A T A L Y S T F U N D , L L C L P Page 6 OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR IN A TRANSACTION WHICH IS OTHERWISE IN COMPLIANCE WITH THE ACT. 3. NOTICE TO FLORIDA RESIDENTS ONLY: THE SHARES DESCRIBED HEREIN HAVE NOT BEEN REGISTERED WITH THE FLORIDA DIVISION OF SECURITIES AND INVESTOR PROTECTION UNDER THE FLORIDA SECURITIES ACT. THE SHARES REFERRED TO HEREIN WILL BE SOLD TO, AND ACQUIRED BY THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061 OF SAID ACT. THE SHARES HAVE NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE OF FLORIDA. IN ADDITION, ALL OFFEREES WHO ARE FLORIDA RESIDENTS SHOULD BE AWARE THAT SECTION 517.061(11)(a)(5) OF THE ACT PROVIDES, IN RELEVANT PART, AS FOLLOWS: "WHEN SALES ARE MADE TO FIVE OR MORE PERSONS IN [FLORIDA], ANY SALE IN [FLORIDA] MADE PURSUANT TO [THIS SECTION] IS VOIDABLE BY THE PURCHASER IN SUCH SALE EITHER WITHIN 3 DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY THE PURCHASER TO THE ISSUER, AN AGENT OF THE ISSUER OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER." THE AVAILABILITY OF THE PRIVILEGE TO VOID SALES PURSUANT TO SECTION 517.061(11) IS HEREBY COMMUNICATED TO EACH FLORIDA OFFEREE. EACH PERSON ENTITLED TO EXERCISE THE PRIVILEGE TO AVOID SALES GRANTED BY SECTION 517.061 (11) (A)(5) AND WHO WISHES TO EXERCISE SUCH RIGHT, MUST, WITHIN 3 DAYS AFTER THE TENDER OF ANY AMOUNT TO THE COMPANY OR TO ANY AGENT OF THE COMPANY (INCLUDING THE SELLING AGENT OR ANY OTHER DEALER ACTING ON BEHALF OF THE PARTNERSHIP OR ANY SALESMAN OF SUCH DEALER) OR AN ESCROW AGENT CAUSE A WRITTEN NOTICE OR TELEGRAM TO BE SENT TO THE COMPANY AT THE ADDRESS PROVIDED IN THIS CONFIDENTIAL EXECUTIVE SUMMARY. SUCH LETTER OR TELEGRAM MUST BE SENT AND, IF POSTMARKED, POSTMARKED ON OR PRIOR TO THE END OF THE AFOREMENTIONED THIRD DAY. IF A PERSON IS SENDING A LETTER, IT IS PRUDENT TO SEND SUCH LETTER BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ASSURE THAT IT IS RECEIVED AND ALSO TO EVIDENCE THE TIME IT WAS MAILED. SHOULD A PERSON MAKE THIS REQUEST ORALLY, HE MUST ASK FOR WRITTEN CONFIRMATION THAT HIS REQUEST HAS BEEN RECEIVED.
  • 8. C O N F I D E N T I A L O F F E R I N G M E M O • T H E C A T A L Y S T F U N D , L L C L P Page 7 4. NOTICE TO ILLINOIS RESIDENTS: THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECRETARY OF THE STATE OF ILLINOIS NOR HAS THE STATE OF ILLINOIS PASSED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. 5. NOTICE TO NEVADA RESIDENTS ONLY: IF ANY INVESTOR ACCEPTS ANY OFFER TO PURCHASE THE SECURITIES, THE INVESTOR IS HEREBY ADVISED THE SECURITIES WILL BE SOLD TO AND ACQUIRED BY IT/HIM/HER IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 49:3-60(b) OF THE NEVADA SECURITIES LAW. THE INVESTOR IS HEREBY ADVISED THAT THE ATTORNEY GENERAL OF THE STATE OF NEVADA HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING AND THE FILING OF THE OFFERING WITH THE BUREAU OF SECURITIES DOES NOT CONSTITUTE APPROVAL OF THE ISSUE, OR SALE THEREOF, BY THE BUREAU OF SECURITIES OR THE DEPARTMENT OF LAW AND PUBLIC SAFETY OF THE STATE OF NEVADA. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. NEVADA ALLOWS THE SALE OF SECURITIES TO 25 OR FEWER PURCHASERS IN THE STATE WITHOUT REGISTRATION. HOWEVER, CERTAIN CONDITIONS APPLY, I.E., THERE CAN BE NO GENERAL ADVERTISING OR SOLICITATION AND COMMISSIONS ARE LIMITED TO LICENSED BROKER-DEALERS. THIS EXEMPTION IS GENERALLY USED WHERE THE PROSPECTIVE INVESTOR IS ALREADY KNOWN AND HAS A PRE-EXISTING RELATIONSHIP WITH THE COMPANY. (SEE NRS 90.530.11.) 6. NOTICE TO NEW JERSEY RESIDENTS ONLY: IF YOU ARE A NEW JERSEY RESIDENT AND YOU ACCEPT AN OFFER TO PURCHASE THESE SECURITIES PURSUANT TO THIS MEMORANDUM, YOU ARE HEREBY ADVISED THAT THIS MEMORANDUM HAS NOT BEEN FILED WITH OR REVIEWED BY THE ATTORNEY GENERAL OF THE STATE OF NEW JERSEY PRIOR TO ITS ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE STATE OF NEW JERSEY HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. 7. NOTICE TO NEW YORK RESIDENTS ONLY: THIS DOCUMENT HAS NOT BEEN REVIEWED BY THE ATTORNEY GENERAL OF THE STATE OF NEW YORK PRIOR TO
  • 9. C O N F I D E N T I A L O F F E R I N G M E M O • T H E C A T A L Y S T F U N D , L L C L P Page 8 ITS ISSUANCE AND USE. THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. THE COMPANY HAS TAKEN NO STEPS TO CREATE AN AFTER MARKET FOR THE SHARES OFFERED HEREIN AND HAS MADE NO ARRANGEMENTS WITH BROKERS OF OTHERS TO TRADE OR MAKE A MARKET IN THE SHARES. AT SOME TIME IN THE FUTURE, THE COMPANY MAY ATTEMPT TO ARRANGE FOR INTERESTED BROKERS TO TRADE OR MAKE A MARKET IN THE SECURITIES AND TO QUOTE THE SAME IN A PUBLISHED QUOTATION MEDIUM, HOWEVER, NO SUCH ARRANGEMENTS HAVE BEEN MADE AND THERE IS NO ASSURANCE THAT ANY BROKERS WILL EVER HAVE SUCH AN INTEREST IN THE SECURITIES OF THE COMPANY OR THAT THERE WILL EVER BE A MARKET THEREFORE. 8. NOTICE TO PENNSYLVANIA RESIDENTS ONLY: EACH PERSON WHO ACCEPTS AN OFFER TO PURCHASE SECURITIES EXEMPTED FROM REGISTRATION BY SECTION 203(d), DIRECTLY FROM THE ISSUER OR AFFILIATE OF THIS ISSUER, SHALL HAVE THE RIGHT TO WITHDRAW HIS ACCEPTANCE WITHOUT INCURRING ANY LIABILITY TO THE SELLER, UNDERWRITER (IF ANY) OR ANY OTHER PERSON WITHIN TWO (2) BUSINESS DAYS FROM THE DATE OF RECEIPT BY THE ISSUER OF HIS WRITTEN BINDING CONTRACT OF PURCHASE OR, IN THE CASE OF A TRANSACTION IN WHICH THERE IS NO BINDING CONTRACT OF PURCHASE, WITHIN TWO (2) BUSINESS DAYS AFTER HE MAKES THE INITIAL PAYMENT FOR THE SECURITIES BEING OFFERED. IF YOU HAVE ACCEPTED AN OFFER TO PURCHASE THESE SECURITIES MADE PURSUANT TO A PROSPECTUS WHICH CONTAINS A NOTICE EXPLAINING YOUR RIGHT TO WITHDRAW YOUR ACCEPTANCE PURSUANT TO SECTION 207(m) OF THE PENNSYLVANIA SECURITIES ACT OF 1972 (70 PS § 1-207(m), YOU MAY ELECT, WITHIN TWO (2) BUSINESS DAYS AFTER THE FIRST TIME YOU HAVE RECEIVED THIS NOTICE AND A PROSPECTUS TO WITHDRAW FROM YOUR PURCHASE AGREEMENT AND RECEIVE A FULL REFUND OF ALL MONEYS PAID BY YOU. YOUR WITHDRAWAL WILL BE WITHOUT ANY FURTHER LIABILITY TO ANY PERSON. TO ACCOMPLISH THIS WITHDRAWAL, YOU NEED ONLY SEND A LETTER OR TELEGRAM TO THE ISSUER (OR UNDERWRITER IF ONE IS LISTED ON THE FRONT PAGE OF THE PROSPECTUS)
  • 10. C O N F I D E N T I A L O F F E R I N G M E M O • T H E C A T A L Y S T F U N D , L L C L P Page 9 INDICATING YOUR INTENTION TO WITHDRAW. SUCH LETTER OR TELEGRAM SHOULD BE SENT AND POSTMARKED PRIOR TO THE END OF THE AFOREMENTIONED SECOND BUSINESS DAY. IF YOU ARE SENDING A LETTER, IT IS PRUDENT TO SEND IT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ENSGTI THAT IT IS RECEIVED AND ALSO EVIDENCE THE TIME WHEN IT WAS MAILED. SHOULD YOU MAKE THIS REQUEST ORALLY, YOU
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