EX-10 4 subscription-agr.txt SUBSCRIPTION AGREEMENT 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 stead 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 mark 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 mark 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 April 30, 1996, (B) 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 mark 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. B-5 [EXECUTION COPY] B-1 B-6 B-11 B-15