SUBSCRIPTION AGREEMENT
FOR
PROSPECT STREET CAPITAL PARTNERS, L.P.
Subscription Agreement for Prospect Street Capital Partners, L.P.
To the undersigned Subscriber:
Prospect Street Capital Partners, L.P. a Delaware limited partnership
(the
"Partnership"), and Prospect Street Ventures II, LLC, a Delaware
limited
liability company (the "General Partner"), hereby agree with you (the
"Subscriber") as follows:
1. Defined Terms. Capitalized terms used herein without definition
have the
meanings set forth in the Limited Partnership Agreement (the
"Partnership
Agreement") of the Partnership.
2. Sale and Purchase of Limited Partner Interest. Subject to the
terms and
conditions hereof, and in reliance upon the representations and
warranties of
the respective parties contained herein, upon counter-signature hereof
by the
General Partner, (a) the Partnership agrees to sell to you and you
irrevocably
subscribe for and agree to purchase from the Partnership an interest as
a
Limited Partner in the Partnership (an "Interest"), (b) you agree to
become a
Limited Partner of the Partnership (a "Limited Partner") and (c) the
Partnership
and the General Partner agree that you shall be admitted as a Limited
Partner,
in each case on the Closing Date (as defined below) and upon the terms
and
conditions, and in consideration for your agreement to be bound by the
terms and
provisions, of the Partnership Agreement and this Agreement, with a
capital
commitment to the Partnership in the amount equal to the amount set
forth in the
Schedule of Partners, but in no event greater than the amount set forth
opposite
your signature at the end of this Agreement (your "Capital
Commitment").
3. Other Subscription Agreements. The Partnership and the General
Partner
have entered into or expect to enter into separate subscription
agreements (the
"Other Subscription Agreements" and, together with this Agreement, the
"Subscription Agreements") with other subscribers (the "Other
Subscribers"),
providing for the sale to the Other Subscribers of Interests and the
admission
of the Other Subscribers as Limited Partners at the Closing. This
Agreement and
the Other Subscription Agreements are separate agreements, and the
sales of
Interests to you and the Other Subscribers are to be separate sales.
4. Closing. The closing (the "Closing") of the sale to you, and the
subscription for and purchase by you, of an Interest, and your
admission as a
Limited Partner, shall take place on such date and at such time as the
General
Partner and the Partnership shall accept this Subscription Agreement
(the date
of the Closing being hereinafter referred to as the "Closing Date").
5. Representations and Warranties of the Subscriber. In addition to
the
representations and warranties made by you in the Partnership
Agreement, you
represent and warrant to the Partnership and the General Partner that:
(a) Access to Information. You have made your own decision to make an
investment in the Partnership and you have not relied on any advice
regarding
your decision to make such investment in the Partnership by the General
Partner
or any affiliate thereof.
(b) No other Respresentations. The subscriber has not relied on any
representations of any representative of the Partnership, the General
Partner,
any placement agent, or any Affiliate thereof with respect to this
investment
other than those representations set forth in the Partnership Agreement
or the
Confidential Private Placement Memorandum (as supplemented, amended or
amended
and restated from time to time, the "Memorandum").
(c) Evaluation of and Ability to Bear Risks. You have such knowledge
and
experience in financial affairs that you are capable of evaluating the
merits
and risks of purchasing an Interest, and you have not relied in
connection with
this investment upon any representations, warranties or agreements
other than
those set forth in this Agreement and the Partnership Agreement. Your
financial
situation is such that you can afford to bear the economic risk of
holding the
Interest for an indefinite period of time, and you can afford to suffer
the
complete loss of your investment in the Interest.
(d) Evaluation of and Ability to Bear Risks. You have such knowledge
and
experience in financial affairs that you are capable of evaluating the
merits
and risks of purchasing an Interest, and you have not relied in
connection with
this investment upon any representations, warranties or agreements
other than
those set forth in this Agreement and the Partnership Agreement. Your
financial
situation is such that you can afford to bear the economic risk of
holding the
Interest for an indefinite period of time, and you can afford to suffer
the
complete loss of your investment in the Interest.
(e) Investor Suitability. In furtherance of your representations set
forth in
the Partnership Agreement, the information set forth in Annex A hereto
is true
and correct.
(f) Investment Company Act Matters. Your Commitment is less than or
equal to
40% of your total assets. Your stockholders, partners, Limited Partners
or other
beneficial owners do not have individual discretion as to their
participation in
particular investments made by the Partnership.
6. Effectiveness. Notwithstanding any provisions in this
Subscription
Agreement to the contrary, this Subscription Agreement shall not be
effective
until such date as the General Partner notifies each Limited Partner of
its
acceptance hereof.
7. Amendments and Waivers. This Agreement may be amended and the
observance
of any provision hereof may be waived (either generally or in a
particular
instance and either retroactively or prospectively) only with the
written
consent of you, the Partnership and the General Partner.
8. Notice of Change; Additional Information. The Subscriber will
give the
Partnership prompt notice of any change that causes any representation
contained
herein or in the Partnership Agreement to be incorrect. The Subscriber
will
also provide the General Partner with any additional information that
the
General Partner shall require in order to determine that the
Partnership shall
be in compliance with applicable laws.
9. Successors and Assigns. This Agreement shall be binding upon and
inure to
the benefit of and be enforceable by the respective successors and
assigns of
the parties hereto and it is understood that you may not assign this
Agreement
without the consent of the General Partner.
10. Power of Attorney. You hereby designate, constitute and appoint
the
General Partner as your true and lawful representative and attorney-in-
fact, in
your name, place and xxxxx with full power and authority to act in your
name and
on your behalf with respect to the execution and delivery of the
Partnership
Agreement substantially in the form of such Agreement provided to you,
with full
power and authority to do and perform each and every act and thing
whatsoever
required and necessary to be done in and about the foregoing as you
might or
could do if personally present, and you hereby ratify and confirm all
that each
said attorney shall lawfully do or cause to be done by virtue of this
power of
attorney.
11. Tax Certification. You hereby certify that (a) the taxpayer
identification provided under your signature is correct and (b) the
Limited
Partner is not subject to backup withholding because (i) you have not
been
notified that you are subject to backup withholding as a result of
failure to
report interest and dividends or (ii) the Internal Revenue Service has
not
notified you that you are subject to backup withholding.
12. Applicable Law. This agreement and the rights and obligations
of the
parties hereto shall be interpreted and enforced in accordance with and
governed
by the laws of Delaware applicable to agreements made and to be
performed wholly
within that jurisdiction.
13. Entire Agreement. This Agreement, the Partnership Agreement, the
Memorandum and any other written agreements between the General Partner
or the
Partnership and a Limited Partner (including the Subscriber) contain
the entire
agreement of the parties with respect to the subject matter hereof and
thereof,
and there are no representations, covenants or other agreements except
as stated
or referred to herein or therein.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of
which taken
together shall constitute a single instrument.
If you are in agreement with the foregoing, please so indicate by
signing in the
counterpart signature page attached hereto, whereupon this Agreement
shall
become a binding agreement between you, the General Partner and the
Partnership
and you shall become a Limited Partner, effective as of the Closing
Date set
forth below.
PROSPECT STREET CAPITAL PARTNERS, L.P.
By: PROSPECT STREET VENTURES II, LLC,
its general partner
By: ______________________________________
Name:
Title:
PROSPECT STREET VENTURES II, LLC
By:_______________________________________
Name:
Title:
Closing Date: ________________
The foregoing Subscription Agreement for Prospect Street Capital
Partners, L.P.
is hereby agreed to by the undersigned as of the Closing Date:
___________________________________
Print Name of Subscriber
By: _______________________________
(Signature of Subscriber)
If Subscriber is not an individual, please print below the name and
title of
person signing on behalf of the Subscriber:
Name: ______________________________
Title: ______________________________
U.S.$_______________________________
Amount of Capital Commitment
____________________________________
U.S. Taxpayer Identification Number
For Purposes of the Partnership Agreement, the above Subscriber
hereby
certifies to the General Partner that the categories checked below
apply to the
Subscriber.
____ The Subscriber is an ERISA Partner.
____ The Subscriber is a Tax Exempt Partner.
____ The Subscriber is a "bank holding company" within the meaning of
the Bank
Holding Company Act.
____ The Subscriber is a United States person for U.S. federal income
tax
purposes.
____ The Subscriber is not a United States person for U.S. federal
income tax
purposes.
Please complete Annex A and Annex B to the Subscription Agreement
attached
hereto.
Annex A to Subscription Agreement
CERTIFICATION AS TO CERTAIN REGULATORY MATTERS
The Subscriber hereby certifies pursuant to the Subscription Agreement
attached
hereto as follows:
1. Accredited Investor Status. The Subscriber is an "Accredited
Investor" as
such term is defined in Rule 501(a) of Regulation D promulgated under
the
Securities Act of 1933, as amended (the "Securities Act") and meets
each of the
following Accredited Investor categories marked below (please xxxx each
category
that applies):
______
(i) a bank as defined in Section 3(a)(2) of the Securities Act, or a
savings
and loan association or other institution as defined in Section
3(a)(5)(A) of
the Securities Act, whether acting in its individual or fiduciary
capacity;
______
(ii) a broker or dealer registered pursuant to Section 15 of the
Securities
Exchange Act of 1934, as amended (the "Exchange Act");
______
(iii) an insurance company as defined in Section 2(13) of the
Securities Act;
______
(iv) an investment company registered under the Investment Company
Act;
______
(v) a business development company as defined in Section 2(a)(48) of
the
Investment Company Act;
______
(vi) a Small Business Investment Company licensed by the U.S. Small
Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act
of 1958, as amended;
______
(vii) a plan established and maintained by a state, its political
subdivisions,
or any agency or instrumentality of a state or its political
subdivisions, for
the benefit of its employees, if such plan has total assets in excess
of
$5,000,000;
______
(viii) an employee benefit plan within the meaning of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), if either
(a) the investment decision is made by a plan fiduciary, as defined
in Section
3(21) of ERISA, which is either a bank, savings and loan association,
insurance
company or registered investment adviser,
(b) the employee benefit plan has total assets in excess of
$5,000,000, or
(c) the plan is a self-directed plan with investment decisions made
solely by
persons that are Accredited Investors;
______
(ix) a private business development company as defined in Section
202(a)(22) of
the Investment Advisers Act of 1940, as amended;
______
(x) an organization described in Section 501(c)(3) of the Internal
Revenue
Code of 1986, as amended (the "Code"), corporation, Massachusetts or
similar
business trust, or partnership not formed for the specific purpose of
making an
investment in the Company, with total assets in excess of $5,000,000;
______
(xi) a director, executive officer, or administrative member of the
issuer of
the membership interests being offered or sold, or a director,
executive
officer, or general partner of an administrative member of that issuer;
______
(xii) a natural person whose individual net worth, or joint net worth
with his
or her spouse, at the time of his or her purchase exceeds $1,000,000;
______
(xiii) a natural person who has an individual income in excess of
$200,000
in each of the two most recent years or joint income with that person's
spouse
in excess of $300,000 in each of those years and has a reasonable
expectation of
reaching the same income level in the current year;
______
(xiv) a trust, with total assets in excess of $5,000,000, not formed
for the
specific purpose of making an investment in the Company whose purchase
of the
membership interests offered is directed by a sophisticated person as
described
in Rule 506(b)(2)(ii) of Regulation D; or
______
(xv) an entity in which all of the equity owners are Accredited
Investors.
2. Qualified Purchaser Status. The Subscriber is a "Qualified
Purchaser" as
such term is defined in Section 2(a)(51) of the Investment Company Act
and meets
each of the following Qualified Purchaser categories marked below
(please xxxx
each category that applies or, if no such categories apply, please so
indicate
in Section 4 below):
______
(i) a natural person (including any person who holds a joint,
community
property, or other similar shared ownership interest in an issuer that
is
excepted under Section 3(c)(7) of the Investment Company Act with that
person's
Qualified Purchaser spouse) who owns not less than $5,000,000 in
investments1;
______
(ii) a company that was not formed or recapitalized for the specific
purpose of
making an investment in the Partnership that owns not less than
$5,000,000 in
investments and that is owned directly or indirectly by or for two or
more
natural persons who are related as siblings or spouse (including former
spouses), or direct lineal descendants by birth or adoption, spouses of
such
persons, the estates of such persons, or foundations, charitable
organizations,
or trusts established by or for the benefit of such persons;
______
(iii) a trust that is not covered by clause (ii) of this Section 2 and
that was
not formed or recapitalized for the specific purpose of making an
investment in
the Partnership, as to which the trustee or other person authorized to
make
decisions with respect to the trust, and each settlor or other person
who has
contributed assets to the trust, is a person described in clause (i) or
(ii) of
this Section 2; or
______
(iv) a person acting for its own account or the accounts of other
persons
described in clauses (i), (ii) or (iii), who in the aggregate owns and
invests
on a discretionary basis, not less than $25,000,000 in investments; or
______
(v) any entity in which each of the beneficial owners of its
securities is a
person described in clause (i), (ii), (iii) or (iv) of this Section 2.
If the Subscriber is a Qualified Purchaser based on one or more of the
categories set forth in clauses (ii), (iii), or (iv) of this Section 2,
such
Subscriber must answer Question 3 below.
3. Additional Information to be Provided by Entities under the
Qualified
Purchaser Rules. If the Subscriber is an entity, please indicate
which of the
following apply:
______
(i) The Subscriber is not an "investment company" as defined in
Section 3 of
the Investment Company Act because it is relying on the exception from
the
definition of an "investment company" in Section 3(c)(1) or 3(c) (7) of
the
Investment Company Act.
If the Subscriber has checked this item, the Subscriber further
represents
that it was either (a) organized after April 30, 1996 or (b) organized
on or
before April 30, 1996 and the consent to the treatment of the
Subscriber as a
"Qualified Purchaser" has been obtained from the following parties: (A)
each
beneficial owner of an interest in the Subscriber who acquired such
interest on
or before Xxxxx 00, 0000, (X) each beneficial owner of any holder of an
interest
in the Subscriber that is a Section 3(c)(1) or 3(c)(7) company that
acquired
such interest on or before April 30, 1996 (a "Pre-May Indirect Holder")
and (C)
the holder of any interest in a Pre-May Indirect Holder that is a
Section
3(c)(1) or 3(c)(7) company and that is controlled by or is under common
control
with the Subscriber or the Partnership, if such holder acquired its
interest in
the Pre-May Indirect Holder on or prior to April 30, 1996.
______
(ii) The Subscriber is not an "investment company" as defined in
Section 3 of
the Investment Company Act for reasons other than the exceptions from
the
definition of an "investment company" in Section 3(c)(1) and Section
3(c)(7) of
the Investment Company Act.
4. Failure to Meet Qualified Purchaser Status. If the Subscriber is
NOT a
"Qualified Purchaser" as such term is defined in Section 2(a)(51) of
the
Investment Company Act, please so indicate by placing a xxxx in the
following
space. __________
* * * * * *
For purposes of this Annex A, the term "investments" means:
(1) Securities (as defined in Section 2 (a)(1) of the Securities
Act), other
than securities of an issuer that controls, is controlled by, or is
under common
control with, the Subscriber, unless the issuer of such securities is:
(a) an
investment company, a company that would be an investment company but
for the
exclusion provided by Sections 3(c)(1) through 3(c)(9) of the
Investment Company
Act or Rule 3a-6 or 3a-7 under the Investment Company Act, or a
commodity pool;
(b) a company that files periodic reports under Section 13 or 15(d) of
the
Exchange Act, or has a class of securities listed on a "designated
offshore
securities market" as defined in Regulation S under the Securities Act;
or (c) a
company with shareholder's equity of not less than $50,000,000
(determined in
accordance with generally accepted accounting principles) as reflected
on the
company's most recent financial statements, provided that such
financial
statements present the information as of a date within 16 months
preceding the
date on which the Subscriber acquires an interest in the Partnership.
(2) Real estate held for investment purposes. Real estate shall not
be
considered to be held for investment purposes if it is used by the
Subscriber or
a sibling, spouse or former spouse, or a direct lineal descendant or
ancestor by
birth or adoption of the Subscriber, or a spouse of the descendent or
ancestor
(a "Related Person"), or by any owner of the Subscriber if the
Subscriber is a
company or any Related Person of such owner, for personal purposes or
as a place
of business, or in connection with the conduct of the trade or business
of the
Subscriber or a Related Person (including an owner of the Subscriber or
any
Related Person of such owner), provided that real estate owned by the
Subscriber
may be deemed to be held for investment purposes if the Subscriber is
engaged
primarily in the business of investing, trading or developing real
estate.
Residential real estate shall not be deemed to be used for personal
purposes if
deductions with respect to such real estate are not disallowed by
Section 280A
of the Code;
(3) Commodity futures contracts, options on commodity futures
contracts, and
options on physical commodities that are traded on or subject to the
rules of
any contract market designated for trading such transactions under the
Commodity
Exchange Act and the rules thereunder or of any board of trade or
exchange
outside the United States contemplated in Part 30 of the rules under
the
Commodity Exchange Act ("Commodity Interests") that are held for
investment
purposes. A Commodity Interest owned, or a financial contract entered
into, by
the Subscriber may be deemed to be held for investment purposes if the
Subscriber is engaged primarily in the business of investing,
reinvesting or
trading in Commodity Interests, Physical Commodities or financial
contracts in
connection with such business.
(4) Physical commodities with respect to which a Commodity Interest
is traded
on a contract market designated as specified in the preceding paragraph
(3)
("Physical Commodities") and that are held for investment purposes.
Physical
Commodities owned, or a financial contract entered into, by the
Subscriber may
be deemed to be held for investment purposes if the Subscriber is
engaged
primarily in the business of investing, reinvesting or trading in
Commodity
Interests, Physical Commodities or financial contracts in connection
with such
business.
(5) To the extent not securities, financial contracts (as defined in
Section
3(c)(2)(B)(i) of the Investment Company Act) entered into for
investment
purposes.
(6) Cash and cash equivalents (including non-U.S. currencies) held
for
investment purposes. Cash and cash equivalent include bank deposits,
certificates of deposit, bankers acceptances and similar bank
instruments held
for investment purposes and the net cash surrender value of an
insurance policy.
Valuation of Investments: The value of an investment is its fair market
value on
the most recent practicable date or its cost; provided, that the value
of
Commodity Interests shall be the value of the initial margin or option
premium
deposited in connection with the Commodity Interest.
Deductions from Valuation: The mount of any outstanding indebtedness
incurred to
acquire or for the purpose of acquiring the investments of the
Subscriber shall
be deducted from the amounts of the Subscriber's investments. In
addition, the
amount of any outstanding indebtedness incurred to acquire the
investments
shall be deducted.
Special Rules:
Joint Investments: If the Subscriber is a natural person, the
Subscriber
may include in the amount of his or her investments any investments
held jointly
with the Subscriber's spouse, or investments in which the Subscriber
shares with
his or her spouse a community property or similar shared ownership
interest. In
determining whether spouses who are making a joint investment in the
Partnership
are Qualified Purchasers, there may be included in the amount of each
spouse's
investments any investments owned by the other spouse (whether or not
such
investments are held jointly). In each case, there shall be deducted
from the
amount of any such investments the amounts specified in the first
sentence of
"Deductions from Valuation" incurred by each spouse.
Certain Retirement Plans and Trusts: If the Subscriber is a
natural
person, he or she may include in the amounts of his or her investments
any
investments held in an individual retirement account or similar
account, the
investments of which are directed by and held for the benefit of the
Subscriber.
Annex B to Subscription Agreement
PROSPECT STREET CAPITAL PARTNERS, L.P.
CORRESPONDENCE AND PAYMENT INSTRUCTIONS
SUBSCRIBER: _______________________________________________________
1. All correspondence addressed to the Subscriber should be sent to the
following:
Contact Name:__________________________
Title:___________________________________
Company:_______________________________________________________________
_______
Address:_______________________________________________________________
________
Number and Street (No P.O. Box Please)
_______________________________________________________________________
_______
City State Country Zip or Postal Code
Telephone:___________________________ Fax:
___________________________________
Area Code Number Area Code Number
Email:_______________________________
2. Name and address of any other person to whom correspondence should
be sent.
Name:__________________________________________________________________
_______
Title:_________________________________________________________________
_________
Company:_______________________________________________________________
_______
Address:_______________________________________________________________
________
Number and Street (No P.O. Box Please)
_______________________________________________________________________
_______
City State Country Zip or Postal Code
Telephone:___________________________ Fax:
___________________________________
Area Code Number Area Code Number
Email:_______________________________
3. Instructions for capital contributions should be sent to:
___ The person specified in Section l
___ The person specified in Section 2
___ The following:
Name:__________________________________________________________________
_______
Title:_________________________________________________________________
_________
Company:_______________________________________________________________
_______
Address:_______________________________________________________________
________
Number and Street (No P.O. Box Please)
_______________________________________________________________________
_______
City State Country Zip or Postal Code
Telephone:___________________________ Fax:
___________________________________
Area Code Number Area Code Number
Email:______________________________
4. Cash distributions should be sent by wire transfer to the following
account:
Bank
Name:__________________________________________________________________
__
Bank Address:
__________________________________________________________________
_______________________________________________________________________
_______
ABA Number:
__________________________________________________________________
Name of Account:
_______________________________________________________________
Account Number:
_______________________________________________________________
Reference1:
____________________________________________________________________
Reference2:
____________________________________________________________________
Reference3:
____________________________________________________________________
5. Prior to each distribution, the following should be notified of the
amount
and date of the distribution:
___ The person specified in Section l
___ The person specified in Section 2
___ The person specified in Section 3
___ The following:
Name:__________________________________________________________________
_______
Title:_________________________________________________________________
_________
Company:_______________________________________________________________
_______
Address:_______________________________________________________________
________
Number and Street (No P.O. Box Please)
_______________________________________________________________________
_______
City State Country Zip or Postal Code
Telephone:___________________________ Fax:
___________________________________
Area Code Number Area Code Number
Email:_______________________________
6. Type of Investor (check one):
___ Individual ___ Corporation ___ Limited Liability Company ___
Partnership
___ Trust ___ Other
___ Joint Investor (check one of the following):
___ Rights of Survivorship
___ Tenants in Common
___ Community Property
State or other jurisdiction in which incorporated or
formed:_______________________________
Date of incorporation or
formation:__________________________________________________
7. Is the Investor a United States taxpayer? (check one) ___
Yes ___
No
If yes, the Investor's social security or taxpayer identification
number
is:____________________
Tax forms (IRS Form K-1) should be sent to:
___ The person specified in Section l
___ The person specified in Section 2
___ The person specified in Section 3
___ The person specified in Section 5
___ The following: (e.g., accountant):
Name:__________________________________________________________________
_______
Title:_________________________________________________________________
_________
Company:_______________________________________________________________
_______
Address:_______________________________________________________________
________
Number and Street (No P.O. Box Please)
_______________________________________________________________________
_______
City State Country Zip or Postal Code
Telephone:___________________________ Fax:
___________________________________
Area Code Number Area Code Number
Email:_______________________________
1 Please see the definition of "investments" below.
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[EXECUTION COPY]
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