Preview
FILED: NEW YORK COUNTY CLERK 09/07/2023 05:42 PM INDEX NO. 653999/2023
NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 09/07/2023
THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED
L3 CAPITAL INCOME FUND, LLC
MEMBERSHIP INTERESTS
AMENDED AND RESTATED
CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM
October 2020
FILED: NEW YORK COUNTY CLERK 09/07/2023 05:42 PM INDEX NO. 653999/2023
NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 09/07/2023
THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED
AMENDED AND RESTATED
CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM
L3 CAPITAL INCOME FUND, LLC
(A Delaware Limited Liability Company)
MEMBERSHIP INTERESTS
MANAGER:
L3 CAPITAL MANAGEMENT, LLC
This Amended and Restated Confidential Private Placement Memorandum (this
“Memorandum”) is submitted to the person named below in connection with a private
placement of membership interests in L3 Capital Income Fund, LLC (the “Fund”), a Delaware
limited liability company. This Memorandum includes new and updated information from,
and supersedes and replaces in its entirety, the Confidential Private Placement
Memorandum, dated November 2019 (the “Old Memorandum”). This Memorandum is
submitted to the recipient (the “Recipient”) by L3 Capital Management, LLC (the “Manager”)
and is not intended to be used by any other person. In accepting this Memorandum, the
Recipient agrees:
Not to reproduce this Memorandum for distribution to any person, nor to discuss its
contents with any person, other than the Recipient’s professional advisers;
To return this Memorandum upon receipt of a written request from the Fund, or any of its
authorized agents or representatives;
Not to consider receipt of this Memorandum as an offer to sell or the solicitation of an
offer to buy in any jurisdiction where such offer or solicitation is unlawful; and
Not to rely on any information concerning the Fund or its business other than information
contained in this Memorandum, its supplements, and other information provided in
writing by the Fund (which may be provided to you through its agents).
Memorandum Number
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THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED
NOTICE TO INVESTORS
THIS MEMORANDUM IS FURNISHED TO SELECTED QUALIFIED INVESTORS FOR THE PURPOSE OF PROVIDING
CERTAIN INFORMATION ABOUT AN INVESTMENT IN MEMBERSHIP INTERESTS (THE “INTERESTS”) IN L3
CAPITAL INCOME FUND, LLC (THE “FUND”).
THE INTERESTS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION (THE “SEC”) OR BY THE SECURITIES REGULATORY AUTHORITY OF ANY STATE OR
JURISDICTION, NOR HAS THE SEC OR ANY SUCH SECURITIES REGULATORY AUTHORITY PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS MEMORANDUM.
THE INTERESTS HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR JURISDICTION NOR IS
SUCH REGISTRATION CONTEMPLATED. THE INTERESTS MAY NOT BE TRANSFERRED EXCEPT AS PERMITTED
BY THE FUND’S OPERATING AGREEMENT, THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS. THERE IS NO PUBLIC MARKET FOR THE INTERESTS, AND NO SUCH MARKET IS EXPECTED TO
DEVELOP IN THE FUTURE. ALTHOUGH L3 CAPITAL MANAGEMENT, LLC (THE “MANAGER”) INTENDS THAT
THE FUND WILL BE EXEMPT FROM REGULATION UNDER THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED (THE “INVESTMENT COMPANY ACT”), NO ASSURANCE CAN BE GIVEN THAT THE FUND WILL
NOT BE DEEMED TO BE AN “INVESTMENT COMPANY” SUBJECT TO REGULATION UNDER THE INVESTMENT
COMPANY ACT.
EACH PURCHASER OF INTERESTS MUST BE AN “ACCREDITED INVESTOR,” AS DEFINED IN REGULATION D
UNDER THE SECURITIES ACT. POTENTIAL INVESTORS SHOULD PAY PARTICULAR ATTENTION TO THE
INFORMATION UNDER THE CAPTION “RISK FACTORS” OF THIS MEMORANDUM. INVESTMENT IN THE FUND
IS SUITABLE ONLY FOR SOPHISTICATED INVESTORS AND REQUIRES THE FINANCIAL ABILITY AND
WILLINGNESS TO ACCEPT THE HIGH RISKS AND LACK OF LIQUIDITY INHERENT IN AN INVESTMENT IN THE
FUND. INVESTORS IN THE FUND MUST BE PREPARED TO BEAR SUCH RISKS FOR AN EXTENDED PERIOD OF
TIME. NO ASSURANCE CAN BE GIVEN THAT THE FUND’S INVESTMENT OBJECTIVES WILL BE ACHIEVED OR
THAT INVESTORS WILL RECEIVE A RETURN OF THEIR CAPITAL.
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE
FUND AND THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. PROSPECTIVE
INVESTORS SHOULD NOT CONSTRUE THE CONTENTS OF THIS MEMORANDUM AS LEGAL, TAX, INVESTMENT
OR ACCOUNTING ADVICE, AND EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT WITH HIS, HER OR ITS
OWN ADVISORS WITH RESPECT TO LEGAL, TAX, REGULATORY, FINANCIAL AND ACCOUNTING
CONSEQUENCES OF ITS INVESTMENT IN THE FUND.
IN CONSIDERING ANY PERFORMANCE INFORMATION CONTAINED HEREIN, PROSPECTIVE INVESTORS
SHOULD BEAR IN MIND THAT PAST PERFORMANCE OR TARGETED PERFORMANCE IS NO GUARANTEE OF
FUTURE RESULTS, AND THERE CAN BE NO ASSURANCE THAT THE FUND WILL ACHIEVE COMPARABLE
RESULTS OR THAT THE FUND WILL BE ABLE TO IMPLEMENT ITS INVESTMENT STRATEGY AND INVESTMENT
APPROACH OR ACHIEVE ITS INVESTMENT OBJECTIVE OR TARGET RETURNS.
THE DESCRIPTIONS OR TERMS IN THIS MEMORANDUM ARE NOT INTENDED TO DESCRIBE ALL MATERIAL
TERMS OF THE FUND AND ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE FUND’S OPERATING
AGREEMENT AND SUBSCRIPTION AGREEMENT. IN THE EVENT THAT THE DESCRIPTIONS OR TERMS
DESCRIBED HEREIN ARE INCONSISTENT WITH OR CONTRARY TO THE DESCRIPTIONS IN OR TERMS OF THE
FUND’S OPERATING AGREEMENT OR SUBSCRIPTION AGREEMENT, THE OPERATING AGREEMENT OR
SUBSCRIPTION AGREEMENT, AS APPLICABLE, SHALL CONTROL.
EACH PROSPECTIVE INVESTOR IS INVITED TO MEET WITH REPRESENTATIVES OF THE FUND TO DISCUSS
WITH, ASK QUESTIONS OF AND RECEIVE ANSWERS FROM SUCH REPRESENTATIVES CONCERNING THE FUND
AND THE TERMS AND CONDITIONS OF THIS OFFERING AND TO OBTAIN ANY ADDITIONAL INFORMATION, TO
THE EXTENT THAT SUCH REPRESENTATIVES POSSESS SUCH INFORMATION OR CAN ACQUIRE IT WITHOUT
UNREASONABLE EFFORT OR EXPENSE NECESSARY TO VERIFY THE INFORMATION CONTAINED HEREIN.
THIS MEMORANDUM IS TO BE USED BY THE POTENTIAL INVESTOR RECEIVING IT SOLELY IN CONNECTION
WITH THE CONSIDERATION OF THE PURCHASE OF THE OFFERED INTERESTS.
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THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED
THE INFORMATION CONTAINED HEREIN SHOULD BE TREATED IN A CONFIDENTIAL MANNER AND MAY
NOT BE REPRODUCED OR USED IN WHOLE OR IN PART FOR ANY OTHER PURPOSE, NOR MAY IT BE
DISCLOSED WITHOUT THE PRIOR WRITTEN CONSENT OF THE FUND. EACH POTENTIAL INVESTOR
ACCEPTING THIS MEMORANDUM HEREBY AGREES TO TREAT IT CONFIDENTIALLY AND TO RETURN IT
PROMPTLY UPON REQUEST.
CERTAIN STATEMENTS CONTAINED IN THIS MEMORANDUM CONSTITUTE FORWARD-LOOKING
STATEMENTS WHICH CAN GENERALLY BE IDENTIFIED BY THE USE OF SUCH TERMS AS “MAY,” “WILL,”
“SHOULD,” “EXPECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “ESTIMATE,” “TARGETED” OR OTHER
VARIATIONS OF COMPARABLE TERMINOLOGY WHICH ARE USED TO IDENTIFY FORWARD-LOOKING
STATEMENTS THAT ARE SUBJECT TO RISK AND UNCERTAINTIES. THERE CAN BE NO ASSURANCE THAT ANY
EXPECTATIONS, EXPRESS OR IMPLIED, IN A FORWARD-LOOKING STATEMENT WILL PROVE CORRECT OR
THAT THE CONTEMPLATED EVENT OR RESULT WILL OCCUR AS ANTICIPATED. VARIOUS FACTORS,
INCLUDING THOSE OUTLINED UNDER THE CAPTION “RISK FACTORS” OF THIS MEMORANDUM, COULD
CAUSE ACTUAL RESULTS, PERFORMANCE AND THE GENERAL CONDITION OF THE FUND TO DIFFER
MATERIALLY FROM THOSE REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS. AN INVESTMENT IN
THE FUND IS SPECULATIVE AND INVOLVES A SUBSTANTIAL RISK OF LOSS, INCLUDING LOSS OF PRINCIPAL.
EACH RECIPIENT OF THIS MEMORANDUM SHOULD CONDUCT HIS, HER OR ITS OWN ANALYSIS AS TO THE
EXPECTED RATE OF RETURN, RISK, INVESTMENT PERIOD, AND OTHER PERTINENT FACTORS.
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THIS OFFERING TO GIVE ANY INFORMATION OR
MAKE ANY REPRESENTATIONS OTHER THAN AS CONTAINED IN THIS MEMORANDUM, AND ANY
REPRESENTATION OR INFORMATION NOT CONTAINED HEREIN OR IN THE OPERATING AGREEMENT MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THE DELIVERY OF THIS
MEMORANDUM DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATES REFLECTED HEREIN. THE FUND UNDERTAKES NO RESPONSIBILITY TO UPDATE
ANY INFORMATION IN THIS MEMORANDUM TO REFLECT EVENTS SUBSEQUENT TO THE DATE REFLECTED
HEREIN.
THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY INTERESTS IN ANY STATE OR OTHER JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION IN SUCH STATE OR JURISDICTION. NEITHER THE FUND NOR THE
MANAGER MAKES ANY REPRESENTATION TO ANY OFFEREE OR PURCHASER OF THE INTERESTS REGARDING
THE LEGALITY OF AN INVESTMENT THEREIN BY SUCH OFFEREE OR PURCHASER UNDER APPROPRIATE
LEGAL INVESTMENT OR SIMILAR LAWS OR REGULATIONS. EACH PROSPECTIVE PURCHASER OF THE
INTERESTS MUST COMPLY WITH ALL APPLICABLE LAWS AND REGULATIONS IN FORCE IN ANY
JURISDICTION IN WHICH IT PURCHASES, OFFERS OR SELLS THE INTERESTS OR POSSESSES THIS
MEMORANDUM AND MUST OBTAIN ANY CONSENT, APPROVAL OR PERMISSION REQUIRED BY IT FOR THE
PURCHASE, OFFER OR SALE BY IT OF THE INTERESTS UNDER THE LAWS AND REGULATIONS IN FORCE IN
ANY JURISDICTION TO WHICH IT IS SUBJECT OR IN WHICH IT MAKES SUCH PURCHASES, OFFERS OR SALES,
AND NONE OF THE FUND, THE MANAGER OR ANY AFFILIATE OF THE FUND SHALL HAVE ANY
RESPONSIBILITY THEREFORE.
Prospective Investors wishing to inquire about L3 Capital Income Fund, LLC should contact:
L3 Capital Income Fund, LLC
c/o L3 Capital Management, LLC
75 Wall Street, Suite 23R
New York, NY 10005
Richard Cardinale, Managing Member
Tel: (347) 223-7671
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THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED
TABLE OF CONTENTS
Page
I. EXECUTIVE SUMMARY .................................................................................................................. 5
II. SUMMARY OF TERMS ................................................................................................................... 9
III. INVESTMENT OPPORTUNITY ................................................................................................ 21
IV. FUND MANAGEMENT ................................................................................................................ 26
V. RISK FACTORS .............................................................................................................................. 27
VI. POTENTIAL CONFLICTS OF INTEREST................................................................................ 35
VII. U.S. FEDERAL TAX CONSIDERATIONS ............................................................................... 38
VIII. REGULATORY CONSIDERATIONS/MANNER OF SUBSCRIBING................................ 39
IX. ANTI-MONEY LAUNDERING POLICY .................................................................................... 40
X. PRIVACY NOTICE ......................................................................................................................... 41
XI. OFFERING LEGENDS .................................................................................................................. 42
Exhibit A – Form of Amended and Restated Operating Agreement
Exhibit B – Subscription Booklet
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THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED
I. EXECUTIVE SUMMARY
The Offering
L3 Capital Management, LLC (the “Manager”) has organized L3 Capital Income Fund, LLC
(the “Fund”). The Manager is seeking capital contributions (“Capital Contributions”) from
Investors (as described below) for the purchase of membership interests (“Interests”) in the
Fund. Investors who provide Capital Contributions for the purchase of Interests will become
members (the “Members”) in the Fund. The Manager is not registered with the Securities and
Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940, as amended
(“Advisers Act”). The Manager will not be charging any management fee at the Fund level.
The Fund has been designed to provide qualified investors (“Investors”) with access to
investments in the alternative financial services industry by investing in the debt and/or equity of
firms involved in factoring, bridge financing, merchant cash advance, unsecured consumer
installment lending, payday loans, debt settlement services, and such other income producing
opportunities that arise from the alternative financial services industry or such other industries
where the Manager believes the Fund will achieve its investment objectives as determined in the
Manager’s sole discretion (each referred to as an “Investment”). The Manager is targeting for
the Fund to make an annual return of between twelve (12%) to fifteen (15%) percent with
payments to be made to Investors quarterly 1. It is anticipated that a potential return of 15% will
be able to be sustained for Investors who either (a) are able to be part of the first $10 million
invested in the Fund or (b) invest at least $1 million into the Fund. All other Investors are
anticipated to receive a 12% annual return. The Manager believes that such return is achievable
due to the structure of the Investments intended to be made and the returns that the principal of
the Manager has experienced previously in the non-traditional finance industry. Any entity
which the Company makes an Investment in may achieve returns greater than the annual returns
which are paid to Investors as set forth above and any amount(s) in excess of such annual returns
will not be shared with the Fund or the Investors.
The principal of the Manager and his affiliates have invested their own capital in a number of
different non-bank providers of alternative financial services for approximately the past ten years
and have experienced returns on their investments that are consistent with the returns that the
Fund is seeking to target for prospective investors in the Fund.
The principal of the Manager began investing in the alternative finance industry in conjunction
with the financial crisis of 2008 as a number of businesses that had traditionally turned to banks
and finance companies for a source of capital, through loans and lines of credit, found
themselves unable to secure such funding. Banks and finance companies, also known as the
traditional finance sector, no longer desired to take credit risk as a result of significant losses
incurred during the financial crisis. As a result, many businesses such as restaurants, auto shops,
1
No assurance can be provided that these or comparable returns will be achieved by the Fund or that the Fund’s
investment objectives will be achieved. Changes in applicable laws or regulatory requirements could inhibit the
Company’s ability to achieve prospective returns. The Fund’s target return referenced above is net of projected
expenses and the standard fees that will apply to an investment in the Fund as described in this Memorandum.
EXECUTIVE SUMMARY L3 CAPITAL INCOME FUND LLC 5
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healthcare practices, service-oriented businesses and companies with annual revenues of less
than $5,000,000 per year experienced significant difficulty in receiving working capital to pay
normal recurring bills or for expansion. Furthermore, individuals began experiencing job loss,
pay reduction and similar negative economic consequences which caused them to have difficulty
paying their bills. As a result of the negative economy, opportunity arose to service businesses
and consumers that were having difficulty either obtaining capital or credit or who were having
difficulty servicing their debt.
The alternative finance sector is based on the philosophy that although
companies/counterparties/borrowers that are not A+ rated credit may pose a credit risk, the
interest rates and/or the fees charged in transactions with such persons or companies should be
able to compensate for the credit risk. This situation permits the opportunity for above market
rates of return which should permit the Fund to target annualized returns through Investments as
described above. As a result, the alternative financial services industry, which is comprised of
non-traditional lenders and service providers, typically a non-bank or unlicensed finance
company (each an “AFSP”), were developed to provide capital and services to a small business
enterprise using the operating history of such borrower as a gauge for how much money can be
advanced or what kinds of services can be provided and how much can be charged. Many
alternative finance companies have developed a unique approach and have attracted some well-
known names to the industry like Kevin O’Leary (IOU Financial) and Barbara Corcoran
(OnDeck) 2.
AFSPs are in constant need of capital and the Manager believes an AFSP can be a creditworthy
borrower as they receive returns on their invested capital at above average rates but are also less
of a credit risk than being a lender directly to a small business. As such, AFSP and related
entities generally have large portfolios of transactions with either businesses or consumers to
back their business operations and payment obligations and the risk of default by any AFSP is
mitigated. In short, one of the Manager’s strategies will be to providing funding to the AFSPs
and the AFSPs will use said funding to finance their business transactions with consumers and
businesses which have non A+ rated credit but who pose a likelihood of repayment.
As stated before, the Manager will not charge any management fee at the Fund level. Rather, the
Manager shall receive a one time acquisition fee from each Investment, which will not be shared
with the Fund or the Members. The principal of the Manager has extensive relationships in the
alternative finance sector and the Manager intends to utilize such relationships to identify
desirable Investments. An, officer, director, manager or member of a potential Investment may
receive fees for services and/or it may be a paid advisor of or receive compensation through its
relationships with such Investment which will not be shared with the Fund or the Members. The
principal of the Manager, or his affiliates may, directly or indirectly, be an investor in and/or an
officer, director, manager or member of any Investment which the Fund may invest in and may
be entitled to share in any fees and/or compensation which such officer, director, manager or
2
Neither Mr. O’Leary nor Ms. Corcoran are involved with the Fund nor should any reference to their name be an
assumption that they have endorsed the Fund or any of the Investments being contemplated by the Fund. They are
being shown solely as an example of well recognized people in the business community that have received notoriety
for their perceived business acumen that have also participated within the alternative finance industry.
EXECUTIVE SUMMARY L3 CAPITAL INCOME FUND LLC 6
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member of such Investment may be entitled to receive, which will not be shared with the Fund
and the Members. Since the determination of the nature or amount of any such fees cannot be
made as of the date of this Memorandum, any additional fees to be received by the principal of
the Manager of his affiliates will be disclosed quarterly in updates to be provided to Investors.
The Manager plans to build a portfolio of debt and potentially some equity investments with a
sufficient number of such Investments to achieve diversification of investments and reduce
overall volatility inherent in a fund with a concentration of investments, however, there can be
no guarantee that any diversification of investments will be achieved by the Fund.
For certain risks involved in the purchase of the Interests, see "Risk Factors" on page 27 hereof.
The Manager, the Fund and certain of their respective affiliates have certain conflicts of interest
with each other and with Members. See "Conflicts of Interest" on page 35 hereof
EXECUTIVE SUMMARY L3 CAPITAL INCOME FUND LLC 7
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Investment Highlights
The following table highlights key aspects of the Fund.
Key Highlights
Characteristics The Fund’s structure has been designed to provide Investors the
ability to receive potential returns from Investments that are
determined by the Manager in its sole discretion. It is
anticipated that prospective Investments will be made in AFSPs
and such other income producing opportunities that may arise
from the non-bank/non-traditional finance industry. The
Manager also reserves the right, in its sole discretion, to invest
in any industry or business that it determines to be consistent
with the Fund’s general investment objective.
Experienced Leadership The Manager’s leadership team has expertise and relationships
Team with a number of AFSPs and the Manager believes such broad
experience will benefit the Fund.
Member Network The Manager believes it possesses a strong partner network of
entrepreneurs, operators, and advisors who are expected to
provide access to deal flow.
Manner of Offering
The Interests are being offered without registration pursuant to an exemption from registration
under Rule 506(b) under the Securities Act of 1933, as amended (the “Securities Act”) and
applicable state securities laws. The Fund is offering Interests to Investors who meet the
definition of an “Accredited Investor” under the Securities Act and meet certain other eligibility
requirements. Investors will be asked to complete a subscription agreement and other documents
prior to being accepted as a Member. The minimum capital commitment for Investors to the
Fund is $250,000, although the Manager may, in its sole discretion, waive or change the
minimum amount. The Manager, in its sole discretion, may reject any subscription, in whole or,
with the Investor’s consent, may reject a portion of the amount subscribed by such Investor.
EXECUTIVE SUMMARY L3 CAPITAL INCOME FUND LLC 8
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II. SUMMARY OF TERMS
THIS SUMMARY OF TERMS PROVIDES KEY INFORMATION RELATED TO L3 CAPITAL INCOME FUND,
LLC, A DELAWARE LIMITED LIABILITY COMPANY AND IS QUALIFIED BY THE TERMS OF THE FUND’S
AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING AGREEMENT (THE
“OPERATING AGREEMENT”). THE FOLLOWING SUMMARY OF TERMS SHOULD BE READ IN
CONJUNCTION WITH, AND IS QUALIFIED IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION
CONTAINED IN THE OPERATING AGREEMENT OF THE FUND, THE DETAILS PROVIDED IN THIS
MEMORANDUM, PARTICULARLY THE RISK FACTORS, AND THE SUBSCRIPTION AGREEMENT
RELATED TO THE PURCHASE OF INTERESTS IN THE FUND.
The Fund: L3 Capital Income Fund, LLC a Delaware limited liability
company (the “Fund” or the “Company”), is a newly formed fund
that has been designed to provide qualified investors (“Investors”)
with access to investments in the alternative financial services
industry by investing in the debt and/or equity of firms involved in
factoring, bridge financing, merchant cash advance, unsecured
consumer installment lending, payday loans, debt settlement
services, and such other income producing opportunities that arise
from the alternative financial services industry or such other
industries where the Manager believes the Fund will achieve its
investment objectives, as determined in the Manager’s sole
discretion (each referred to as an “Investment”). The Manager
will select the Investment and determine the portion of the Fund’s
assets to be invested in a particular Investment in its sole
discretion.
The Fund will not be registered under the Investment Company Act
of 1940, as amended (the “Investment Company Act”).
Manager: The manager of the Fund is L3 Capital Management, LLC (the
“Manager”), a Delaware limited liability company. The Manager
operates and manages the Fund. The Manager is not a registered
investment advisor with the Securities and Exchange Commission.
Investment Objective: The Fund seeks to achieve its investment objective by investing
substantially all of its assets in Investments selected by the
Manager based on the investment experience of the principal of the
Manager in the alternative financial services industry, which is
comprised of non-traditional lenders and service providers,
typically a non-bank or unlicensed finance company (each an
“AFSP”). AFSPs are in constant need of capital and the Manager
believes an AFSP can be a creditworthy borrower as they receive
returns on their invested capital at above average rates but are also
less of a credit risk than being a lender directly to a small business
as such AFSP and related entities generally have large portfolios of
SUMMARY OF TERMS L3 CAPITAL INCOME FUND LLC 9
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transactions with either businesses or consumers to back their
business operations and payment obligations and the risk of default
by any AFSP is mitigated. In short, one of the Manager’s
strategies will be to providing funding to the AFSPs and the AFSPs
will use said funding to finance their business transactions with
consumers and businesses which have non A+ rated credit but who
pose a likelihood of repayment.
Investments by the Fund are initially expected to primarily consist
of short-term loan obligations and/or venture agreements that will
be for a term of 12 months or less, provide for the ability to be
rolled over on an annual basis, and depending on the terms of said
loan or financial transaction, may not be secured or guaranteed.
Interest rates on these short-term obligations will vary based on a
prospective investment and are expected to be at rates which would
permit the Fund to pay Investors the targeted annualized net returns
as described above. In instances where the Fund makes an equity
investment that becomes a controlling interest in any Investment,
the Fund will seek to obtain control rights over issues fundamental
to the Fund such as major capital expenditures, major debt/equity
financings, change in product offerings or lines of business, sale or
merger of the Investment, and/or dissolution of the Investment,
however, there can be no guarantee that these control rights will be
granted to the Fund.
The Manager plans to build a portfolio of debt and potentially
some equity investments with a sufficient number of such
Investments to achieve diversification of investments and reduce
overall volatility inherent in a fund with a concentration of
investments, however, there can be no guarantee that any
diversification of investments will be achieved by the Fund.
The Manager intends to periodically determine an appropriate
range of asset allocation by the Fund among its Investments. The
Fund may vary its investment focus and asset allocation as
opportunities arise to invest in various Investments and as
expectations concerning the performance and risk of different
Investments change over time. As a result, the Manager may
decide to reallocate Fund assets that are made into a particular
Investment and may increase, reduce or end altogether a particular
Investment in its sole discretion.
SUMMARY OF TERMS L3 CAPITAL INCOME FUND LLC 10
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Interests Being Offered: The Fund is seeking Capital Contributions from suitable investors
for Interests aggregating up to $75 million. The Manager may
accept aggregate subscriptions greater or less than $75 million. No
minimum amount of Interests are required to be sold. As of the
date of this Memorandum, the Fund has received aggregate Capital
Contributions from investors equal to approximately $45,000,000.
The minimum Capital Contribution accepted from a Member will
be $250,000, although the Manager has the discretion to accept
Capital Contributions of lesser amounts in its sole discretion. The
Manager or an affiliate(s) of the Manager may make Capital
Contributions to the Fund at such time(s) and in such amount(s) as
they may be determined in their sole discretion.
“affiliate” of any person or entity means any entity or person
controlling, controlled by or under common control with, such
person or entity, and any members, partners, directors or officers of
any of the foregoing.
The Fund may reserve an amount of the Capital Contributions to
cover the expenses of the Fund. Accordingly, only the net amount
of Capital Contributions of the Members will be deployed for
Investments to be made by the Fund.
Eligible Investors: Only investors that qualify as an “accredited investor,” as such
term is defined in Rule 501 of Regulation D under the Securities
Act, will be admitted as Members in the Fund. More detailed
information concerning the applicable suitability requirements will
be set forth in the Fund’s subscription documents.
Closings: The initial date (the “Initial Closing Date”) on which Capital
Contributions are made and subscriptions for Interests in the Fund
are accepted (the “Initial Closing”) will occur as soon as
practicable at the sole discretion of the Manager. The Initial
Closing occurred in November 2019. The Fund may hold its Initial
Closing even though the Fund has received Capital Contributions
of less than $75 million. The Fund did not have a minimum
closing amount which was required for an Initial Closing to take
place.
Subsequent closings with respect to the Fund (each, a “Subsequent
Closing”) may occur at least once a month, on such date to be
determined in the discretion of the Manager. An Investor shall not
be a Member and not entitled to rights and privileges as a Member
of the Fund, including any distributions made by the Fund, unless
their subscription is accepted by the Manager and they are included
SUMMARY OF TERMS L3 CAPITAL INCOME FUND LLC 11
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NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 09/07/2023
THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED
in the Initial Closing or any Subsequent Closing.
On the Initial Closing and any Subsequent Closing, each Member
shall be required to fund 100% of his, her or its Capital
Contribution.
As of the date of this Memorandum, the Fund has received
aggregate Capital Contributions from investors equal to
approximately $45,000,000.
Distributions: The Manager is permitted to make distributions at any time of cash
generated from the ownership and operation of the Fund’s
investments, net of the Fund’s operating expenses or in-kind, as
determined by the Manager. The timing of any distribution made
by the Fund will be determined by the Manager, in its sole
discretion.
Capital Accounts; The Fund will maintain a capital account (“Capital Account”) for
Allocations of Net Profit each Member, to reflect contributions, distributions and allocations
and Loss: of net profits and net losses. The Capital Account of each Member
shall be determined by reference to such Member's Capital
Contribution(s) and the Member's pro rata share of Fund expenses,
profits and losses and any distributions made in respect of such
Member's Interests.
Management Fees and Members shall not pay any management fee or incentive based
Incentive Fees: compensation associated with an investment in the Fund at the
Fund level. A Member will be responsible for the expenses of the
Fund as described below. The Manager shall be entitled to receive
compensation from an Investment as described under “Fees to be
Paid by an Investment to the Manager” as described below.
Organizational Expenses: The Company will bear all expenses associated with the
organization of the Company and offering of the Interests in the
Company (or reimburse the Manager for any such costs incurred on
behalf of the Fund), including, but not limited to, reimbursement of
out-of-pocket costs incurred by or on behalf of the Manager or its
affiliates, in connection with the marketing, formation and
organization of the Company and the Manager, including legal,
accounting, travel, meeting, printing and other fees and expenses
incident thereto.
SUMMARY OF TERMS L3 CAPITAL INCOME FUND LLC 12
FILED: NEW YORK COUNTY CLERK 09/07/2023 05:42 PM INDEX NO. 653999/2023
NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 09/07/2023
THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED
Operating Expenses: The Fund will be responsible for out of pocket expenses incurred in
connection with locating, evaluating and consummating
investments and potential investments (whether or not the
acquisition is consummated), including legal, accounting and other
professional or third party costs, litigation expenses, and other
transaction costs, custody fees, compensation of advisors,
consultants and finders, travel costs, and appraisal costs. The Fund
will also bear all commitment fees and any transfer taxes,
registration fees and other expenses in connection with acquisitions
and dispositions of investments, and all expenses relating to the
ownership and operation of investments, including taxes, interest,
and expenses. Any such expense incurred for the benefit of one or
more accounts in addition to the Fund will be allocated pro rata in
proportion to the relative amounts invested or in such other manner
as the Manager determines to be fair and equitable. The Fund will
also pay the fees and expenses of its legal counsel, the costs of
meetings with Members, and the costs of liability insurance for the
Fund, the Manager and its affiliates and any extraordinary expenses
arising in connection with the operations of the Fund. The
aggregate amount of expenses, including Organizational Expenses,
shall not exceed $375,000.
Transfer of Interests: Subject to limited exceptions, Interests may not be sold, transferred
or assigned without the prior written consent of the Manager,
which consent may be withheld in its sole discretion.
Fees to be Paid by an The Manager will provide certain services to each Investment
Investment to the made by the Fund. In consideration for the services to be rendered
Manager: by the Manager, the Manager shall be entitled to receive a one-time
acquisition fee equal to two percent (2%) of the aggregate proceeds
made into an Investment payable upon an Investment being made.
The Manager shall have the right to waive or reduce, from time to
time, all or part of the fees payable by an Investment without
waiving or reducing the fees with respect to other Investment(s).
If the Fund does not make quarterly distributions to Members, any
fees payable to the Manager will be deferred until such quarterly
distributions are made.
SUMMARY OF TERMS L3 CAPITAL INCOME FUND LLC 13
FILED: NEW YORK COUNTY CLERK 09/07/2023 05:42 PM INDEX NO. 653999/2023
NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 09/07/2023
THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED
Voluntary Withdrawals: The Fund will offer withdrawal (i.e., “redemption”) rights to the
Members for their outstanding Interests at a redemption price equal
to a Member’s aggregate Capital Contribution(s) less any portion
of such Capital Contribution(s) previously returned to the Member
and its pro rata portion of Company Expenses.
A Member that wishes to withdraw some or all of his, her or its
Capital Account from the Fund must provide a written notice to the
Manager (the “Withdrawal Request”). Each Withdrawal Request
will state a dollar amount requested to be withdrawn and shall be
given at least 90 days prior to the requested date of withdrawal.
The Manager intends that the withdrawal rights set forth above will
be available on each January 1st and July 1st, of any year (or if such
day is not a business day, the next following business day, each
such date, a “Withdrawal Date”), however, any withdrawal
payments will be subject to the Fund’s capacity to provide liquidity
based upon its cash position and provided further the Manager may
determine, in its sole discretion, to not allow any Withdrawal
Requests that exceed 20% of all Capital Contributions of the Fund
within a 12 month period.
Preview
FILED: NEW YORK COUNTY CLERK 09/07/2023 05:42 PM INDEX NO. 653999/2023 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 09/07/2023 THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED L3 CAPITAL INCOME FUND, LLC MEMBERSHIP INTERESTS AMENDED AND RESTATED CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM October 2020 FILED: NEW YORK COUNTY CLERK 09/07/2023 05:42 PM INDEX NO. 653999/2023 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 09/07/2023 THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED AMENDED AND RESTATED CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM L3 CAPITAL INCOME FUND, LLC (A Delaware Limited Liability Company) MEMBERSHIP INTERESTS MANAGER: L3 CAPITAL MANAGEMENT, LLC This Amended and Restated Confidential Private Placement Memorandum (this “Memorandum”) is submitted to the person named below in connection with a private placement of membership interests in L3 Capital Income Fund, LLC (the “Fund”), a Delaware limited liability company. This Memorandum includes new and updated information from, and supersedes and replaces in its entirety, the Confidential Private Placement Memorandum, dated November 2019 (the “Old Memorandum”). This Memorandum is submitted to the recipient (the “Recipient”) by L3 Capital Management, LLC (the “Manager”) and is not intended to be used by any other person. In accepting this Memorandum, the Recipient agrees: Not to reproduce this Memorandum for distribution to any person, nor to discuss its contents with any person, other than the Recipient’s professional advisers; To return this Memorandum upon receipt of a written request from the Fund, or any of its authorized agents or representatives; Not to consider receipt of this Memorandum as an offer to sell or the solicitation of an offer to buy in any jurisdiction where such offer or solicitation is unlawful; and Not to rely on any information concerning the Fund or its business other than information contained in this Memorandum, its supplements, and other information provided in writing by the Fund (which may be provided to you through its agents). Memorandum Number -i- FILED: NEW YORK COUNTY CLERK 09/07/2023 05:42 PM INDEX NO. 653999/2023 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 09/07/2023 THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED NOTICE TO INVESTORS THIS MEMORANDUM IS FURNISHED TO SELECTED QUALIFIED INVESTORS FOR THE PURPOSE OF PROVIDING CERTAIN INFORMATION ABOUT AN INVESTMENT IN MEMBERSHIP INTERESTS (THE “INTERESTS”) IN L3 CAPITAL INCOME FUND, LLC (THE “FUND”). THE INTERESTS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) OR BY THE SECURITIES REGULATORY AUTHORITY OF ANY STATE OR JURISDICTION, NOR HAS THE SEC OR ANY SUCH SECURITIES REGULATORY AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM. THE INTERESTS HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR JURISDICTION NOR IS SUCH REGISTRATION CONTEMPLATED. THE INTERESTS MAY NOT BE TRANSFERRED EXCEPT AS PERMITTED BY THE FUND’S OPERATING AGREEMENT, THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THERE IS NO PUBLIC MARKET FOR THE INTERESTS, AND NO SUCH MARKET IS EXPECTED TO DEVELOP IN THE FUTURE. ALTHOUGH L3 CAPITAL MANAGEMENT, LLC (THE “MANAGER”) INTENDS THAT THE FUND WILL BE EXEMPT FROM REGULATION UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY ACT”), NO ASSURANCE CAN BE GIVEN THAT THE FUND WILL NOT BE DEEMED TO BE AN “INVESTMENT COMPANY” SUBJECT TO REGULATION UNDER THE INVESTMENT COMPANY ACT. EACH PURCHASER OF INTERESTS MUST BE AN “ACCREDITED INVESTOR,” AS DEFINED IN REGULATION D UNDER THE SECURITIES ACT. POTENTIAL INVESTORS SHOULD PAY PARTICULAR ATTENTION TO THE INFORMATION UNDER THE CAPTION “RISK FACTORS” OF THIS MEMORANDUM. INVESTMENT IN THE FUND IS SUITABLE ONLY FOR SOPHISTICATED INVESTORS AND REQUIRES THE FINANCIAL ABILITY AND WILLINGNESS TO ACCEPT THE HIGH RISKS AND LACK OF LIQUIDITY INHERENT IN AN INVESTMENT IN THE FUND. INVESTORS IN THE FUND MUST BE PREPARED TO BEAR SUCH RISKS FOR AN EXTENDED PERIOD OF TIME. NO ASSURANCE CAN BE GIVEN THAT THE FUND’S INVESTMENT OBJECTIVES WILL BE ACHIEVED OR THAT INVESTORS WILL RECEIVE A RETURN OF THEIR CAPITAL. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE FUND AND THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. PROSPECTIVE INVESTORS SHOULD NOT CONSTRUE THE CONTENTS OF THIS MEMORANDUM AS LEGAL, TAX, INVESTMENT OR ACCOUNTING ADVICE, AND EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT WITH HIS, HER OR ITS OWN ADVISORS WITH RESPECT TO LEGAL, TAX, REGULATORY, FINANCIAL AND ACCOUNTING CONSEQUENCES OF ITS INVESTMENT IN THE FUND. IN CONSIDERING ANY PERFORMANCE INFORMATION CONTAINED HEREIN, PROSPECTIVE INVESTORS SHOULD BEAR IN MIND THAT PAST PERFORMANCE OR TARGETED PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS, AND THERE CAN BE NO ASSURANCE THAT THE FUND WILL ACHIEVE COMPARABLE RESULTS OR THAT THE FUND WILL BE ABLE TO IMPLEMENT ITS INVESTMENT STRATEGY AND INVESTMENT APPROACH OR ACHIEVE ITS INVESTMENT OBJECTIVE OR TARGET RETURNS. THE DESCRIPTIONS OR TERMS IN THIS MEMORANDUM ARE NOT INTENDED TO DESCRIBE ALL MATERIAL TERMS OF THE FUND AND ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE FUND’S OPERATING AGREEMENT AND SUBSCRIPTION AGREEMENT. IN THE EVENT THAT THE DESCRIPTIONS OR TERMS DESCRIBED HEREIN ARE INCONSISTENT WITH OR CONTRARY TO THE DESCRIPTIONS IN OR TERMS OF THE FUND’S OPERATING AGREEMENT OR SUBSCRIPTION AGREEMENT, THE OPERATING AGREEMENT OR SUBSCRIPTION AGREEMENT, AS APPLICABLE, SHALL CONTROL. EACH PROSPECTIVE INVESTOR IS INVITED TO MEET WITH REPRESENTATIVES OF THE FUND TO DISCUSS WITH, ASK QUESTIONS OF AND RECEIVE ANSWERS FROM SUCH REPRESENTATIVES CONCERNING THE FUND AND THE TERMS AND CONDITIONS OF THIS OFFERING AND TO OBTAIN ANY ADDITIONAL INFORMATION, TO THE EXTENT THAT SUCH REPRESENTATIVES POSSESS SUCH INFORMATION OR CAN ACQUIRE IT WITHOUT UNREASONABLE EFFORT OR EXPENSE NECESSARY TO VERIFY THE INFORMATION CONTAINED HEREIN. THIS MEMORANDUM IS TO BE USED BY THE POTENTIAL INVESTOR RECEIVING IT SOLELY IN CONNECTION WITH THE CONSIDERATION OF THE PURCHASE OF THE OFFERED INTERESTS. -ii- FILED: NEW YORK COUNTY CLERK 09/07/2023 05:42 PM INDEX NO. 653999/2023 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 09/07/2023 THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED THE INFORMATION CONTAINED HEREIN SHOULD BE TREATED IN A CONFIDENTIAL MANNER AND MAY NOT BE REPRODUCED OR USED IN WHOLE OR IN PART FOR ANY OTHER PURPOSE, NOR MAY IT BE DISCLOSED WITHOUT THE PRIOR WRITTEN CONSENT OF THE FUND. EACH POTENTIAL INVESTOR ACCEPTING THIS MEMORANDUM HEREBY AGREES TO TREAT IT CONFIDENTIALLY AND TO RETURN IT PROMPTLY UPON REQUEST. CERTAIN STATEMENTS CONTAINED IN THIS MEMORANDUM CONSTITUTE FORWARD-LOOKING STATEMENTS WHICH CAN GENERALLY BE IDENTIFIED BY THE USE OF SUCH TERMS AS “MAY,” “WILL,” “SHOULD,” “EXPECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,” “ESTIMATE,” “TARGETED” OR OTHER VARIATIONS OF COMPARABLE TERMINOLOGY WHICH ARE USED TO IDENTIFY FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT TO RISK AND UNCERTAINTIES. THERE CAN BE NO ASSURANCE THAT ANY EXPECTATIONS, EXPRESS OR IMPLIED, IN A FORWARD-LOOKING STATEMENT WILL PROVE CORRECT OR THAT THE CONTEMPLATED EVENT OR RESULT WILL OCCUR AS ANTICIPATED. VARIOUS FACTORS, INCLUDING THOSE OUTLINED UNDER THE CAPTION “RISK FACTORS” OF THIS MEMORANDUM, COULD CAUSE ACTUAL RESULTS, PERFORMANCE AND THE GENERAL CONDITION OF THE FUND TO DIFFER MATERIALLY FROM THOSE REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS. AN INVESTMENT IN THE FUND IS SPECULATIVE AND INVOLVES A SUBSTANTIAL RISK OF LOSS, INCLUDING LOSS OF PRINCIPAL. EACH RECIPIENT OF THIS MEMORANDUM SHOULD CONDUCT HIS, HER OR ITS OWN ANALYSIS AS TO THE EXPECTED RATE OF RETURN, RISK, INVESTMENT PERIOD, AND OTHER PERTINENT FACTORS. NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THIS OFFERING TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN AS CONTAINED IN THIS MEMORANDUM, AND ANY REPRESENTATION OR INFORMATION NOT CONTAINED HEREIN OR IN THE OPERATING AGREEMENT MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THE DELIVERY OF THIS MEMORANDUM DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATES REFLECTED HEREIN. THE FUND UNDERTAKES NO RESPONSIBILITY TO UPDATE ANY INFORMATION IN THIS MEMORANDUM TO REFLECT EVENTS SUBSEQUENT TO THE DATE REFLECTED HEREIN. THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY INTERESTS IN ANY STATE OR OTHER JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH STATE OR JURISDICTION. NEITHER THE FUND NOR THE MANAGER MAKES ANY REPRESENTATION TO ANY OFFEREE OR PURCHASER OF THE INTERESTS REGARDING THE LEGALITY OF AN INVESTMENT THEREIN BY SUCH OFFEREE OR PURCHASER UNDER APPROPRIATE LEGAL INVESTMENT OR SIMILAR LAWS OR REGULATIONS. EACH PROSPECTIVE PURCHASER OF THE INTERESTS MUST COMPLY WITH ALL APPLICABLE LAWS AND REGULATIONS IN FORCE IN ANY JURISDICTION IN WHICH IT PURCHASES, OFFERS OR SELLS THE INTERESTS OR POSSESSES THIS MEMORANDUM AND MUST OBTAIN ANY CONSENT, APPROVAL OR PERMISSION REQUIRED BY IT FOR THE PURCHASE, OFFER OR SALE BY IT OF THE INTERESTS UNDER THE LAWS AND REGULATIONS IN FORCE IN ANY JURISDICTION TO WHICH IT IS SUBJECT OR IN WHICH IT MAKES SUCH PURCHASES, OFFERS OR SALES, AND NONE OF THE FUND, THE MANAGER OR ANY AFFILIATE OF THE FUND SHALL HAVE ANY RESPONSIBILITY THEREFORE. Prospective Investors wishing to inquire about L3 Capital Income Fund, LLC should contact: L3 Capital Income Fund, LLC c/o L3 Capital Management, LLC 75 Wall Street, Suite 23R New York, NY 10005 Richard Cardinale, Managing Member Tel: (347) 223-7671 -iii- FILED: NEW YORK COUNTY CLERK 09/07/2023 05:42 PM INDEX NO. 653999/2023 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 09/07/2023 THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED TABLE OF CONTENTS Page I. EXECUTIVE SUMMARY .................................................................................................................. 5 II. SUMMARY OF TERMS ................................................................................................................... 9 III. INVESTMENT OPPORTUNITY ................................................................................................ 21 IV. FUND MANAGEMENT ................................................................................................................ 26 V. RISK FACTORS .............................................................................................................................. 27 VI. POTENTIAL CONFLICTS OF INTEREST................................................................................ 35 VII. U.S. FEDERAL TAX CONSIDERATIONS ............................................................................... 38 VIII. REGULATORY CONSIDERATIONS/MANNER OF SUBSCRIBING................................ 39 IX. ANTI-MONEY LAUNDERING POLICY .................................................................................... 40 X. PRIVACY NOTICE ......................................................................................................................... 41 XI. OFFERING LEGENDS .................................................................................................................. 42 Exhibit A – Form of Amended and Restated Operating Agreement Exhibit B – Subscription Booklet -iv- FILED: NEW YORK COUNTY CLERK 09/07/2023 05:42 PM INDEX NO. 653999/2023 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 09/07/2023 THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED I. EXECUTIVE SUMMARY The Offering L3 Capital Management, LLC (the “Manager”) has organized L3 Capital Income Fund, LLC (the “Fund”). The Manager is seeking capital contributions (“Capital Contributions”) from Investors (as described below) for the purchase of membership interests (“Interests”) in the Fund. Investors who provide Capital Contributions for the purchase of Interests will become members (the “Members”) in the Fund. The Manager is not registered with the Securities and Exchange Commission (the “SEC”) under the Investment Advisers Act of 1940, as amended (“Advisers Act”). The Manager will not be charging any management fee at the Fund level. The Fund has been designed to provide qualified investors (“Investors”) with access to investments in the alternative financial services industry by investing in the debt and/or equity of firms involved in factoring, bridge financing, merchant cash advance, unsecured consumer installment lending, payday loans, debt settlement services, and such other income producing opportunities that arise from the alternative financial services industry or such other industries where the Manager believes the Fund will achieve its investment objectives as determined in the Manager’s sole discretion (each referred to as an “Investment”). The Manager is targeting for the Fund to make an annual return of between twelve (12%) to fifteen (15%) percent with payments to be made to Investors quarterly 1. It is anticipated that a potential return of 15% will be able to be sustained for Investors who either (a) are able to be part of the first $10 million invested in the Fund or (b) invest at least $1 million into the Fund. All other Investors are anticipated to receive a 12% annual return. The Manager believes that such return is achievable due to the structure of the Investments intended to be made and the returns that the principal of the Manager has experienced previously in the non-traditional finance industry. Any entity which the Company makes an Investment in may achieve returns greater than the annual returns which are paid to Investors as set forth above and any amount(s) in excess of such annual returns will not be shared with the Fund or the Investors. The principal of the Manager and his affiliates have invested their own capital in a number of different non-bank providers of alternative financial services for approximately the past ten years and have experienced returns on their investments that are consistent with the returns that the Fund is seeking to target for prospective investors in the Fund. The principal of the Manager began investing in the alternative finance industry in conjunction with the financial crisis of 2008 as a number of businesses that had traditionally turned to banks and finance companies for a source of capital, through loans and lines of credit, found themselves unable to secure such funding. Banks and finance companies, also known as the traditional finance sector, no longer desired to take credit risk as a result of significant losses incurred during the financial crisis. As a result, many businesses such as restaurants, auto shops, 1 No assurance can be provided that these or comparable returns will be achieved by the Fund or that the Fund’s investment objectives will be achieved. Changes in applicable laws or regulatory requirements could inhibit the Company’s ability to achieve prospective returns. The Fund’s target return referenced above is net of projected expenses and the standard fees that will apply to an investment in the Fund as described in this Memorandum. EXECUTIVE SUMMARY L3 CAPITAL INCOME FUND LLC 5 FILED: NEW YORK COUNTY CLERK 09/07/2023 05:42 PM INDEX NO. 653999/2023 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 09/07/2023 THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED healthcare practices, service-oriented businesses and companies with annual revenues of less than $5,000,000 per year experienced significant difficulty in receiving working capital to pay normal recurring bills or for expansion. Furthermore, individuals began experiencing job loss, pay reduction and similar negative economic consequences which caused them to have difficulty paying their bills. As a result of the negative economy, opportunity arose to service businesses and consumers that were having difficulty either obtaining capital or credit or who were having difficulty servicing their debt. The alternative finance sector is based on the philosophy that although companies/counterparties/borrowers that are not A+ rated credit may pose a credit risk, the interest rates and/or the fees charged in transactions with such persons or companies should be able to compensate for the credit risk. This situation permits the opportunity for above market rates of return which should permit the Fund to target annualized returns through Investments as described above. As a result, the alternative financial services industry, which is comprised of non-traditional lenders and service providers, typically a non-bank or unlicensed finance company (each an “AFSP”), were developed to provide capital and services to a small business enterprise using the operating history of such borrower as a gauge for how much money can be advanced or what kinds of services can be provided and how much can be charged. Many alternative finance companies have developed a unique approach and have attracted some well- known names to the industry like Kevin O’Leary (IOU Financial) and Barbara Corcoran (OnDeck) 2. AFSPs are in constant need of capital and the Manager believes an AFSP can be a creditworthy borrower as they receive returns on their invested capital at above average rates but are also less of a credit risk than being a lender directly to a small business. As such, AFSP and related entities generally have large portfolios of transactions with either businesses or consumers to back their business operations and payment obligations and the risk of default by any AFSP is mitigated. In short, one of the Manager’s strategies will be to providing funding to the AFSPs and the AFSPs will use said funding to finance their business transactions with consumers and businesses which have non A+ rated credit but who pose a likelihood of repayment. As stated before, the Manager will not charge any management fee at the Fund level. Rather, the Manager shall receive a one time acquisition fee from each Investment, which will not be shared with the Fund or the Members. The principal of the Manager has extensive relationships in the alternative finance sector and the Manager intends to utilize such relationships to identify desirable Investments. An, officer, director, manager or member of a potential Investment may receive fees for services and/or it may be a paid advisor of or receive compensation through its relationships with such Investment which will not be shared with the Fund or the Members. The principal of the Manager, or his affiliates may, directly or indirectly, be an investor in and/or an officer, director, manager or member of any Investment which the Fund may invest in and may be entitled to share in any fees and/or compensation which such officer, director, manager or 2 Neither Mr. O’Leary nor Ms. Corcoran are involved with the Fund nor should any reference to their name be an assumption that they have endorsed the Fund or any of the Investments being contemplated by the Fund. They are being shown solely as an example of well recognized people in the business community that have received notoriety for their perceived business acumen that have also participated within the alternative finance industry. EXECUTIVE SUMMARY L3 CAPITAL INCOME FUND LLC 6 FILED: NEW YORK COUNTY CLERK 09/07/2023 05:42 PM INDEX NO. 653999/2023 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 09/07/2023 THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED member of such Investment may be entitled to receive, which will not be shared with the Fund and the Members. Since the determination of the nature or amount of any such fees cannot be made as of the date of this Memorandum, any additional fees to be received by the principal of the Manager of his affiliates will be disclosed quarterly in updates to be provided to Investors. The Manager plans to build a portfolio of debt and potentially some equity investments with a sufficient number of such Investments to achieve diversification of investments and reduce overall volatility inherent in a fund with a concentration of investments, however, there can be no guarantee that any diversification of investments will be achieved by the Fund. For certain risks involved in the purchase of the Interests, see "Risk Factors" on page 27 hereof. The Manager, the Fund and certain of their respective affiliates have certain conflicts of interest with each other and with Members. See "Conflicts of Interest" on page 35 hereof EXECUTIVE SUMMARY L3 CAPITAL INCOME FUND LLC 7 FILED: NEW YORK COUNTY CLERK 09/07/2023 05:42 PM INDEX NO. 653999/2023 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 09/07/2023 THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED Investment Highlights The following table highlights key aspects of the Fund. Key Highlights Characteristics The Fund’s structure has been designed to provide Investors the ability to receive potential returns from Investments that are determined by the Manager in its sole discretion. It is anticipated that prospective Investments will be made in AFSPs and such other income producing opportunities that may arise from the non-bank/non-traditional finance industry. The Manager also reserves the right, in its sole discretion, to invest in any industry or business that it determines to be consistent with the Fund’s general investment objective. Experienced Leadership The Manager’s leadership team has expertise and relationships Team with a number of AFSPs and the Manager believes such broad experience will benefit the Fund. Member Network The Manager believes it possesses a strong partner network of entrepreneurs, operators, and advisors who are expected to provide access to deal flow. Manner of Offering The Interests are being offered without registration pursuant to an exemption from registration under Rule 506(b) under the Securities Act of 1933, as amended (the “Securities Act”) and applicable state securities laws. The Fund is offering Interests to Investors who meet the definition of an “Accredited Investor” under the Securities Act and meet certain other eligibility requirements. Investors will be asked to complete a subscription agreement and other documents prior to being accepted as a Member. The minimum capital commitment for Investors to the Fund is $250,000, although the Manager may, in its sole discretion, waive or change the minimum amount. The Manager, in its sole discretion, may reject any subscription, in whole or, with the Investor’s consent, may reject a portion of the amount subscribed by such Investor. EXECUTIVE SUMMARY L3 CAPITAL INCOME FUND LLC 8 FILED: NEW YORK COUNTY CLERK 09/07/2023 05:42 PM INDEX NO. 653999/2023 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 09/07/2023 THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED II. SUMMARY OF TERMS THIS SUMMARY OF TERMS PROVIDES KEY INFORMATION RELATED TO L3 CAPITAL INCOME FUND, LLC, A DELAWARE LIMITED LIABILITY COMPANY AND IS QUALIFIED BY THE TERMS OF THE FUND’S AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING AGREEMENT (THE “OPERATING AGREEMENT”). THE FOLLOWING SUMMARY OF TERMS SHOULD BE READ IN CONJUNCTION WITH, AND IS QUALIFIED IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION CONTAINED IN THE OPERATING AGREEMENT OF THE FUND, THE DETAILS PROVIDED IN THIS MEMORANDUM, PARTICULARLY THE RISK FACTORS, AND THE SUBSCRIPTION AGREEMENT RELATED TO THE PURCHASE OF INTERESTS IN THE FUND. The Fund: L3 Capital Income Fund, LLC a Delaware limited liability company (the “Fund” or the “Company”), is a newly formed fund that has been designed to provide qualified investors (“Investors”) with access to investments in the alternative financial services industry by investing in the debt and/or equity of firms involved in factoring, bridge financing, merchant cash advance, unsecured consumer installment lending, payday loans, debt settlement services, and such other income producing opportunities that arise from the alternative financial services industry or such other industries where the Manager believes the Fund will achieve its investment objectives, as determined in the Manager’s sole discretion (each referred to as an “Investment”). The Manager will select the Investment and determine the portion of the Fund’s assets to be invested in a particular Investment in its sole discretion. The Fund will not be registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”). Manager: The manager of the Fund is L3 Capital Management, LLC (the “Manager”), a Delaware limited liability company. The Manager operates and manages the Fund. The Manager is not a registered investment advisor with the Securities and Exchange Commission. Investment Objective: The Fund seeks to achieve its investment objective by investing substantially all of its assets in Investments selected by the Manager based on the investment experience of the principal of the Manager in the alternative financial services industry, which is comprised of non-traditional lenders and service providers, typically a non-bank or unlicensed finance company (each an “AFSP”). AFSPs are in constant need of capital and the Manager believes an AFSP can be a creditworthy borrower as they receive returns on their invested capital at above average rates but are also less of a credit risk than being a lender directly to a small business as such AFSP and related entities generally have large portfolios of SUMMARY OF TERMS L3 CAPITAL INCOME FUND LLC 9 FILED: NEW YORK COUNTY CLERK 09/07/2023 05:42 PM INDEX NO. 653999/2023 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 09/07/2023 THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED transactions with either businesses or consumers to back their business operations and payment obligations and the risk of default by any AFSP is mitigated. In short, one of the Manager’s strategies will be to providing funding to the AFSPs and the AFSPs will use said funding to finance their business transactions with consumers and businesses which have non A+ rated credit but who pose a likelihood of repayment. Investments by the Fund are initially expected to primarily consist of short-term loan obligations and/or venture agreements that will be for a term of 12 months or less, provide for the ability to be rolled over on an annual basis, and depending on the terms of said loan or financial transaction, may not be secured or guaranteed. Interest rates on these short-term obligations will vary based on a prospective investment and are expected to be at rates which would permit the Fund to pay Investors the targeted annualized net returns as described above. In instances where the Fund makes an equity investment that becomes a controlling interest in any Investment, the Fund will seek to obtain control rights over issues fundamental to the Fund such as major capital expenditures, major debt/equity financings, change in product offerings or lines of business, sale or merger of the Investment, and/or dissolution of the Investment, however, there can be no guarantee that these control rights will be granted to the Fund. The Manager plans to build a portfolio of debt and potentially some equity investments with a sufficient number of such Investments to achieve diversification of investments and reduce overall volatility inherent in a fund with a concentration of investments, however, there can be no guarantee that any diversification of investments will be achieved by the Fund. The Manager intends to periodically determine an appropriate range of asset allocation by the Fund among its Investments. The Fund may vary its investment focus and asset allocation as opportunities arise to invest in various Investments and as expectations concerning the performance and risk of different Investments change over time. As a result, the Manager may decide to reallocate Fund assets that are made into a particular Investment and may increase, reduce or end altogether a particular Investment in its sole discretion. SUMMARY OF TERMS L3 CAPITAL INCOME FUND LLC 10 FILED: NEW YORK COUNTY CLERK 09/07/2023 05:42 PM INDEX NO. 653999/2023 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 09/07/2023 THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED Interests Being Offered: The Fund is seeking Capital Contributions from suitable investors for Interests aggregating up to $75 million. The Manager may accept aggregate subscriptions greater or less than $75 million. No minimum amount of Interests are required to be sold. As of the date of this Memorandum, the Fund has received aggregate Capital Contributions from investors equal to approximately $45,000,000. The minimum Capital Contribution accepted from a Member will be $250,000, although the Manager has the discretion to accept Capital Contributions of lesser amounts in its sole discretion. The Manager or an affiliate(s) of the Manager may make Capital Contributions to the Fund at such time(s) and in such amount(s) as they may be determined in their sole discretion. “affiliate” of any person or entity means any entity or person controlling, controlled by or under common control with, such person or entity, and any members, partners, directors or officers of any of the foregoing. The Fund may reserve an amount of the Capital Contributions to cover the expenses of the Fund. Accordingly, only the net amount of Capital Contributions of the Members will be deployed for Investments to be made by the Fund. Eligible Investors: Only investors that qualify as an “accredited investor,” as such term is defined in Rule 501 of Regulation D under the Securities Act, will be admitted as Members in the Fund. More detailed information concerning the applicable suitability requirements will be set forth in the Fund’s subscription documents. Closings: The initial date (the “Initial Closing Date”) on which Capital Contributions are made and subscriptions for Interests in the Fund are accepted (the “Initial Closing”) will occur as soon as practicable at the sole discretion of the Manager. The Initial Closing occurred in November 2019. The Fund may hold its Initial Closing even though the Fund has received Capital Contributions of less than $75 million. The Fund did not have a minimum closing amount which was required for an Initial Closing to take place. Subsequent closings with respect to the Fund (each, a “Subsequent Closing”) may occur at least once a month, on such date to be determined in the discretion of the Manager. An Investor shall not be a Member and not entitled to rights and privileges as a Member of the Fund, including any distributions made by the Fund, unless their subscription is accepted by the Manager and they are included SUMMARY OF TERMS L3 CAPITAL INCOME FUND LLC 11 FILED: NEW YORK COUNTY CLERK 09/07/2023 05:42 PM INDEX NO. 653999/2023 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 09/07/2023 THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED in the Initial Closing or any Subsequent Closing. On the Initial Closing and any Subsequent Closing, each Member shall be required to fund 100% of his, her or its Capital Contribution. As of the date of this Memorandum, the Fund has received aggregate Capital Contributions from investors equal to approximately $45,000,000. Distributions: The Manager is permitted to make distributions at any time of cash generated from the ownership and operation of the Fund’s investments, net of the Fund’s operating expenses or in-kind, as determined by the Manager. The timing of any distribution made by the Fund will be determined by the Manager, in its sole discretion. Capital Accounts; The Fund will maintain a capital account (“Capital Account”) for Allocations of Net Profit each Member, to reflect contributions, distributions and allocations and Loss: of net profits and net losses. The Capital Account of each Member shall be determined by reference to such Member's Capital Contribution(s) and the Member's pro rata share of Fund expenses, profits and losses and any distributions made in respect of such Member's Interests. Management Fees and Members shall not pay any management fee or incentive based Incentive Fees: compensation associated with an investment in the Fund at the Fund level. A Member will be responsible for the expenses of the Fund as described below. The Manager shall be entitled to receive compensation from an Investment as described under “Fees to be Paid by an Investment to the Manager” as described below. Organizational Expenses: The Company will bear all expenses associated with the organization of the Company and offering of the Interests in the Company (or reimburse the Manager for any such costs incurred on behalf of the Fund), including, but not limited to, reimbursement of out-of-pocket costs incurred by or on behalf of the Manager or its affiliates, in connection with the marketing, formation and organization of the Company and the Manager, including legal, accounting, travel, meeting, printing and other fees and expenses incident thereto. SUMMARY OF TERMS L3 CAPITAL INCOME FUND LLC 12 FILED: NEW YORK COUNTY CLERK 09/07/2023 05:42 PM INDEX NO. 653999/2023 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 09/07/2023 THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED Operating Expenses: The Fund will be responsible for out of pocket expenses incurred in connection with locating, evaluating and consummating investments and potential investments (whether or not the acquisition is consummated), including legal, accounting and other professional or third party costs, litigation expenses, and other transaction costs, custody fees, compensation of advisors, consultants and finders, travel costs, and appraisal costs. The Fund will also bear all commitment fees and any transfer taxes, registration fees and other expenses in connection with acquisitions and dispositions of investments, and all expenses relating to the ownership and operation of investments, including taxes, interest, and expenses. Any such expense incurred for the benefit of one or more accounts in addition to the Fund will be allocated pro rata in proportion to the relative amounts invested or in such other manner as the Manager determines to be fair and equitable. The Fund will also pay the fees and expenses of its legal counsel, the costs of meetings with Members, and the costs of liability insurance for the Fund, the Manager and its affiliates and any extraordinary expenses arising in connection with the operations of the Fund. The aggregate amount of expenses, including Organizational Expenses, shall not exceed $375,000. Transfer of Interests: Subject to limited exceptions, Interests may not be sold, transferred or assigned without the prior written consent of the Manager, which consent may be withheld in its sole discretion. Fees to be Paid by an The Manager will provide certain services to each Investment Investment to the made by the Fund. In consideration for the services to be rendered Manager: by the Manager, the Manager shall be entitled to receive a one-time acquisition fee equal to two percent (2%) of the aggregate proceeds made into an Investment payable upon an Investment being made. The Manager shall have the right to waive or reduce, from time to time, all or part of the fees payable by an Investment without waiving or reducing the fees with respect to other Investment(s). If the Fund does not make quarterly distributions to Members, any fees payable to the Manager will be deferred until such quarterly distributions are made. SUMMARY OF TERMS L3 CAPITAL INCOME FUND LLC 13 FILED: NEW YORK COUNTY CLERK 09/07/2023 05:42 PM INDEX NO. 653999/2023 NYSCEF DOC. NO. 29 RECEIVED NYSCEF: 09/07/2023 THIS MEMORANDUM MAY NOT BE REPRODUCED OR DISTRIBUTED Voluntary Withdrawals: The Fund will offer withdrawal (i.e., “redemption”) rights to the Members for their outstanding Interests at a redemption price equal to a Member’s aggregate Capital Contribution(s) less any portion of such Capital Contribution(s) previously returned to the Member and its pro rata portion of Company Expenses. A Member that wishes to withdraw some or all of his, her or its Capital Account from the Fund must provide a written notice to the Manager (the “Withdrawal Request”). Each Withdrawal Request will state a dollar amount requested to be withdrawn and shall be given at least 90 days prior to the requested date of withdrawal. The Manager intends that the withdrawal rights set forth above will be available on each January 1st and July 1st, of any year (or if such day is not a business day, the next following business day, each such date, a “Withdrawal Date”), however, any withdrawal payments will be subject to the Fund’s capacity to provide liquidity based upon its cash position and provided further the Manager may determine, in its sole discretion, to not allow any Withdrawal Requests that exceed 20% of all Capital Contributions of the Fund within a 12 month period.