3. Qualified Purchaser Representation (Part I). The Investor makes one of the following
representations regarding the Investor’s status as a “qualified purchaser” (within the meaning of
Section 2(a)(51) under the Companies Act) [Please check the applicable representation.]10
(a) The Investor is a trust that owns Investments that are Valued at not less than
$5,000,000 and is owned directly or indirectly by two (2) or more natural
persons related as siblings, spouses (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.
(b) The Investor is a trust not covered by clause (a) above and not formed for
the specific purpose of acquiring the Interest, as to which the trustee or other
person authorized to make decisions with respect to the trust and each settler or
other person who has contributed assets to the trust is a person described in
clause (a) in paragraph 3 of Part II (i.e., a qualified purchaser individual); OR
under clause (a) in this paragraph 3 of Part III (i.e., a qualified purchaser
trust); OR under clause (i) in paragraph 3 of Part IV (i.e., a qualified purchaser
IRA); OR under clause (a), (b), (c) (d) or (e) in paragraph 3 of Part V (i.e., a
qualified purchaser entity).
(c) The Investor cannot make any of the representations set forth in clauses (a) or
(b) above.
4. Qualified Purchaser Representation (Part II). If the Investor has made one of the
representations set forth in clauses (a) or (b) of paragraph 3 above, the Investor then makes one or
more of the following representations regarding its status as a “qualified purchaser” (within the
meaning of Section 2(a)(51) under the Companies Act) [Please check the applicable
representation.]:
(a) The Investor would be treated as an “investment company” under the Companies Act but
for the fact that the Investor qualifies for one of the exemptions from the definition of
“investment company” provided for in Sections 3(c)(1) or 3(c)(7) of the Companies Act.11
(i) True [Please answer clause (b) below.]
(ii) False [Please skip to paragraph 5 below.]
10 For purposes of this paragraph 3, “Investments” and “Valued” shall have the meanings provided in EXHIBIT B
hereto.
11 Relevant excerpts of Section 3(c)(1) and 3(c)(7) of the Companies Act are provided in EXHIBIT B attached hereto.
16
(b) If the Investor has checked “true” in clause (a) above, the Investor certifies that the
Investor has read and understands the provisions of Section 2(a)(51)(C) of the Companies
Act and Rule 2a51-2 promulgated under the Companies Act excerpted on EXHIBIT B
hereto and makes one of the following representations [Please check the applicable
representation.]:
(i) No consent of the Investor’s direct or indirect beneficial owners is
required for the Investor’s treatment as a “qualified purchaser” (within
the meaning of Section 2(a)(51) under the Companies Act) with respect
to the Fund;
(ii) Both: (A) all of the beneficial owners of the Investor’s outstanding
securities (other than short-term paper), determined in accordance with
Section 3(c)(1)(A) of the Companies Act, that acquired such securities
on or before April 30, 1996 (the “Pre-Amendment Beneficial Owners”);
and (B) all of the Pre-Amendment Beneficial Owners of any company
that, but for the exclusions from the definition of “investment company”
provided for in Sections 3(c)(1) or 3(c)(7) of the Companies Act, would
be an “investment company” and that directly or indirectly owns any
outstanding securities of the Investor have consented to its treatment as a
“qualified purchaser” under the Companies Act with respect to the
Fund;
(iii) The Investor made either of the representations set forth in clause
(a) of paragraph 3 above, and all of the trustees of the Investor have
consented to the Investor’s treatment as a “qualified purchaser” (within
the meaning of Section 2(a)(51) under the Companies Act) with respect
to the Fund; or
(iv) The Investor cannot make any of the representations set forth in clauses
(i), (ii), or (iii) above.
17
5. Qualified Client Representation (Part I). The Investor makes one or more of the following
representations regarding the Investor’s status as a “qualified client” (within the meaning of Rule
205-3 under the Advisers Act), and has checked the applicable representation:
(a) The Investor is a company12 that has made a Capital Commitment to the Fund of
at least $1,000,000.
(b) The Investor is a company that has a net worth of more than $2,000,000.
(c) The Investor is a qualified purchaser (i.e., has checked one of the representations
set forth in clause (a) or (b) of paragraph 3 above).
(d) The Investor cannot make any of the representations set forth in clauses (a), (b)
or (c) above.
6. Qualified Client Representation (Part II). Please check the appropriate response to the
following statement:
___ True/___ False The Investor is a company that (i) would be an “investment company”
under the Investment Company Act but for the exception provided from
that definition by section 3(c)(1) of the Investment Company Act, (ii) is
an investment company registered under the Investment Company Act,
or (iii) is a “business development company,” as defined in section
202(a)(22) of the Advisers Act (each, an “Excluded Company”).
[If your response to the above statement is “False,” please skip to paragraph (7) below.]
___ True/___ False All of the Investor’s trustees and grantors are qualified clients (as
described in paragraph 5 above) and none of the Investor’s trustees or
grantors is an Excluded Company.
[If your response to the above statement is “True,” please skip to paragraph (7) below.]
___ True/___ False The Investor and any direct or indirect beneficial owner of the Investor
that would be identified as a “client” under Rule 205-3 of the Advisers
Act, is a qualified client within the meaning of the Advisers Act and the
rules and regulations promulgated thereunder.
7. Beneficial Owners. Investor either [check the applicable subparagraph]:
(a) Is not an “investment company” under the Companies Act nor does the Investor
rely upon the exclusions from the definition of “investment company” provided
for in Section 3(c)(1) or 3(c)(7) of the Companies Act; or
(b) Will collectively, as of the Closing, have ____ beneficial owners of its
outstanding securities (other than short-term paper), and is not structured or
12 For purposes of this paragraph 5 and paragraph 6 below, “company” means a corporation, a partnership, an
association, a joint-stock company, a trust, or any organized group of persons, whether incorporated or not; or any
receiver, trustee in a case under title 11 of the United States Code [11 USCS §§ 101 et seq.], or similar official, or
any liquidating agent for any of the foregoing, in his capacity as such, but does not include a company that is
required to be registered under the Investment Company Act but is not registered.
18
operated for the purpose of circumventing the registration requirements of the
Companies Act. [Please fill in the blank specifying the number of beneficial
owners.]
8. Investment Representation. Please check the appropriate true or false response to each of the
following statements.
True False The Investor was not organized for the purpose of
acquiring the Interest.
True False To the best of the Investor’s knowledge, the Investor does not
control, nor is it controlled by, or under common control with,
any other Limited Partner of the Fund. [If this box is checked
False, please identify the entity]:
True False The Investor has made investments prior to the date hereof
or intends to make investments in the near future and each
beneficial owner of interests in the Investor has and will share in
the same proportion of each such investment.
True False The Investor’s investment in the Fund will not constitute
more than forty percent (40%) of the Investor’s assets
(including for this purpose any committed capital for an
Investor that is an investment fund).
True False The governing documents of the Investor require that each
beneficial owner of the Investor, including, but not limited
to, shareholders, partners and beneficiaries, participate through
such beneficial owner’s interest in the Investor in all of the
Investor’s investments and that the profits and losses from each
such investment are shared among such beneficial owners in the
same proportions as all other investments of the Investor. No
such beneficial owner may vary such beneficial owner’s share of
the profits and losses or the amount of such beneficial owner’s
contribution for any investment made by the Investor.
If the “False” box is checked for any of the above statements, please provide a brief
explanation and contact Fund Counsel.
9. Benefit Plan Representation. Please check the appropriate true or false response to the
following statement. The Investor understands that the Fund, Fund Counsel and the General
Partner are relying upon the Investor’s response within this paragraph 7 in determining fiduciary
responsibilities under ERISA and related rules and regulations.
True False The Investor is an “employee benefit plan” as defined in Section
3(3) of ERISA, that is subject to the provisions of Part 4 of Title
I of ERISA.
True False The Investor is a “plan” (as defined in Section 4975(e)(1) of the
Code), whether or not subject to Section 4975 of the Code,
19
True False including, without limitation, individual retirement accounts and
Keogh plans.
→
The Investor is an entity that is deemed to be a “benefit plan
investor” under the U.S. Department of Labor final plan assets
regulation, 29 C.F.R. §2510.3-101, as it may be amended from
time to time (the “Regulation”), as modified by Section 3(42) of
ERISA, because its underlying assets include “plan assets” by
reason of a plan’s investment in the entity (including, by way of
example only, a partnership not qualifying as an operating
company within the meaning of the Regulation in which twenty-
five percent (25%) or more of each class of equity interests is
owned by entities described above in this paragraph 7.
If the Investor is deemed a “benefit plan investor,” the Investor
hereby certifies that __________% of the total value of equity
interests in the Investor is held by “benefit plan investors.”
If any of the above responses becomes inaccurate at any time, including any time following the
closing, the Investor or the Investor’s counsel should notify the General Partner or contact
Fund Counsel.
10. Tax and Grantor Trust Representations. The Investor makes the following representations
regarding the Investor’s status:
(a) Is the Investor a “United States person”13 for U.S. federal income tax purposes?
Yes:
No:
(b) Is the Investor a trust and a grantor or other person is treated as the owner of any
portion of such trust under subpart E of subchapter J of the Code (any such trust,
a “grantor trust”)?
Yes:
No: [Please skip to paragraph 9 below.]
If the Investor is a grantor trust, the following persons own the following
percentage of such trust:
13 “United States person” means an individual who is a citizen of the United States or a resident alien for U.S.
federal income tax purposes; a corporation, an entity taxable as a corporation, or a partnership created or organized
in or under the laws of the United States or any state or political subdivision thereof or therein (including the District
of Columbia); an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or a
trust if (y) a court within the United States is able to exercise primary supervision over its administration and one or
more United States persons have the authority to control all of its substantial decisions or (z) such trust was in
existence on August 20, 1996 and was treated as a domestic trust on August 19, 1996 and such trust has a valid
election in effect under applicable U.S. Treasury regulations to be treated as a United States person.
20
Owner: _____________________ Percentage Ownership: __________
Owner: _____________________ Percentage Ownership: __________
Owner: _____________________ Percentage Ownership: __________
Owner: _____________________ Percentage Ownership: __________
Owner: _____________________ Percentage Ownership: __________
(i) If the Investor is a grantor trust and is not a “United States person” for U.S.
federal income tax purposes, the Subscriber is submitting Form W-8IMY, and
such documentation (e.g., Form W-8BEN, W-8IMY, W-8ECI, W-8EXP or W-9)
and information pertaining to each grantor or other owner that permits the
Fund to reliably associate each such grantor’s or other owner’s indirect share of
the Fund’s income with such grantor or other person.
Yes:
No:
N/A: [The Investor is a “United States person”]
(ii) If the Investor is a grantor trust and is a “United States person” for U.S. federal
income tax purposes, the Investor is submitting such documentation (e.g., Form
W-8BEN, W-8IMY, W-8ECI, W-8EXP or W-9) and information pertaining to
each grantor or other owner that permits the Fund to reliably associate each
such grantor’s or other owner’s indirect share of the Fund’s income with such
grantor or other person.
Yes:
No:
N/A: [The Investor is not a “United States person”]
11. Public Disclosure Obligations. Please check the appropriate true or false response to each of the
following statements and, if applicable, provide the appropriate information in each such
statement.
True False (a) The Investor is subject to Section 552(a) of Title 5,
United States Code (commonly known as the “Freedom of
Information Act”) or state freedom of information statutes or
other similar federal, state, county or municipal public disclosure
statutes or regulations, whether foreign or domestic, in each of
the following jurisdictions. [If a similar statute is applicable,
please specify the applicable statute along with the applicable
jurisdiction, to the extent
known]:_____________________________________________
____________________________________________________
True False (b) The Investor is required, by statute, regulation, contract
or otherwise, to disclose any of the Partnership’s Confidential
Information to a government agency or other regulatory body,
trading exchange, or other market where interests in such
21
Investor are sold or traded (or to the regulating body thereof),
whether foreign or domestic, including but not limited to by
virtue of Investor’s registration under the Securities Act or the
Companies Act, or a state, local or foreign equivalent thereof. [If
applicable, please specify the applicable statute or regulation
along with the applicable
jurisdiction]:_________________________________________
____________________________________________________
True False (c) The Investor or its Affiliate is required, or will likely be
True False
required, to disclose Confidential Information to a government
True False
body, agency or committee, whether foreign or domestic, by
virtue of such Investor’s (or its Affiliate’s) current or proposed
involvement in government office.
(d) One or more of the Investor’s beneficial owners is
subject (or is an agent, nominee, fiduciary, custodian or trustee
of an entity which is subject) to the statutes, regulations, or
obligations described in paragraphs 9(a), (b) or (c) above
(collectively “Disclosure Obligations”) [If applicable, please
specify the applicable statute or regulation along with the
applicable jurisdiction]:_________________________
____________________________________________________
____________________________________________________
(e) To the best of the Investor’s knowledge, neither the
Investor nor any of the Investor’s beneficial owners are subject
to Disclosure Obligations, nor are any of them agents, nominees,
fiduciaries, custodians or trustees of an entity which is itself
subject to Disclosure Obligations.
Trust Investors who have agreed to Part I and completed Part III of this Agreement may skip
Parts II, IV and V. Please (i) complete and execute the signature page to this Agreement; (ii)
complete and sign IRS Form W-9 or the applicable Form W-8; and (iii) execute two (2) copies
of the signature page to the Partnership Agreement attached as EXHIBIT A.
22
PART IV – TO BE COMPLETED BY INVESTORS WHO QUALIFY AS
INVESTMENT RETIREMENT ACCOUNT HOLDERS ONLY
1. Investor’s Representations. In connection with the Investor’s purchase of the Interest, the
Investor represents that the Interest will be held by an IRA / Keogh / SEP (collectively, “IRA”)
(IRA Investors must have the IRA custodian/trustee sign this subscription agreement on behalf of
the IRA). The Interest will be held under the following type of ownership:
IRA
Keogh
SEP
2. Accredited Investor Representation. The Investor makes one of the following representations
regarding the Investor’s status as an “accredited investor” (within the meaning of Rule 501
promulgated under the Securities Act), and has checked the applicable box:
(i) The Investor is an IRA account in which all of the beneficiaries are
individuals, who have a net worth14 either individually or upon a joint
basis with the Investor’s spouse, of at least $1,000,000 (within the
meaning of such terms as used in the definition of “accredited investor”
contained in Rule 501 promulgated under the Securities Act), or has had
an individual income in excess of $200,000 for each of the two most
recent years, or a joint income with the Investor’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. List the
beneficiaries of the Investor:
IRA Beneficiaries
(ii) The Investor cannot make the representation set forth in clause (i) above.
3. Qualified Purchaser Representation. The Investor makes one of the following
representations regarding the Investor’s status as a “qualified purchaser” (within the
meaning of Section 2(a)(51) under the Companies Act), and has checked the applicable
representation:15
(i) The Investor is an IRA in which all of the beneficiaries (listed above)
either individually or together with their spouse own Investments that are
Valued at not less than $5,000,000.
(ii) The Investor cannot make the representation set forth in clause (i)
above.
14 For purposes of this paragraph, the meaning of “net worth” as used in the definition of “accredited investor”
contained in Rule 501 under the Securities Act has been revised as of July 21, 2010 to mean the excess of total
assets, excluding Investor’s primary residence, at fair market value over total liabilities, including Investor’s
mortgage or any other liabilities secured by Investor’s primary residence only if and to the extent that it exceeds the
value of Investor’s primary residence.
15 For purposes of this paragraph 3, “Investments” and “Valued” shall have the meanings provided in EXHIBIT B
hereto.
23
4. Qualified Client Representation. The Investor makes one or more of the following
representations regarding the Investor’s status as a “qualified client” (within the meaning of Rule
205-3 under the Advisers Act), and has checked the applicable representation:
(a) The Investor is a company16 or IRA that has made a Capital Commitment to the
Fund of at least $1,000,000.
(b) The Investor is an IRA in which all of the beneficiaries are individuals who have
a net worth (either individually or on a joint basis with their spouse) of more than
$2,000,000.
(c) The Investor is a qualified purchaser (i.e., has checked the representation in
paragraph 3(i) above).
(d) The Investor cannot make any of the representations set forth in clauses (a), (b),
or (c) above.
5. Public Disclosure Obligations. The Investor or its Affiliate is required, or will likely be
required, to disclose Confidential Information to a government body, agency or committee,
whether foreign or domestic, by virtue of such Investor’s (or its Affiliate’s) current or proposed
involvement in government or agency office.
True False
6. Custodian Information. Set forth below is the name, address and account title of the Investor on
the books and records of the custodian/trustee of the IRA.
The Investor does not have a custodian/trustee.
The Investor has a custodian/trustee.
The name of the custodian/trustee is: __________________________________________
The address of the custodian/trustee is: ________________________________________
The title of the Investor’s account on the books and records of the custodian/trustee is:
_________________________________________________________________
IRA Investors who have agreed to Part I and completed Part IV of this Agreement may skip Parts II,
III and V. Please (i) have the IRA custodian/trustee complete and execute the signature page to this
Agreement on behalf of the IRA; (ii) complete and sign IRS Form W-9 or the applicable Form W-8;
and (iii) execute two (2) copies of the signature page to the Partnership Agreement attached as
EXHIBIT A.
16 For purposes of this paragraph 4, “company” means a corporation, a partnership, an association, a joint-
stock company, a trust, or any organized group of persons, whether incorporated or not; or any receiver, trustee in a
case under title 11 of the United States Code [11 USCS §§ 101 et seq.], or similar official, or any liquidating agent
for any of the foregoing, in his capacity as such, but does not include a company that is required to be registered
under the Investment Company Act but is not registered.
24
PART V – TO BE COMPLETED BY ENTITY INVESTORS ONLY
1. Investor’s Representations. In connection with the Investor’s purchase of the Interest, the
Investor makes the following representation on which the General Partner, the Fund and Fund
Counsel are entitled to rely:
(a) The Interest will be held under the following type of ownership [Please check the
applicable box.]:
Private Tax-Exempt Foundation )
Tax-Exempt Endowment
Limited Partnership
General Partnership
C Corporation
S Corporation
Limited Liability Company
Other (Please describe:
2. Accredited Investor Representation. The Investor makes one of the following representations
regarding the Investor’s status as an “accredited investor” (within the meaning of Rule 501 under
the Securities Act), and has checked the applicable representation [Please check the applicable
representation.]:
(a) The Investor is a corporation, partnership, limited liability company or business
trust, not formed for the purpose of acquiring the Interest, or an organization
described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended
(the “Code”), in each case with total assets in excess of $5,000,000.
(b) The Investor is a bank, insurance company, investment company registered under
the Companies Act, a broker or dealer registered pursuant to Section 15 of the
United States Securities Exchange Act of 1934, as amended, a business
development company, a Small Business Investment Company licensed by the
United States Small Business Administration, a plan with total assets in excess of
$5,000,000 established and maintained by a state for the benefit of its employees,
or a private business development company as defined in Section 202(a)(22) of
the United States Investment Advisers Act of 1940, as amended.
(c) The Investor is an employee benefit plan and either all investment decisions are
made by a bank, savings and loan association, insurance company, or registered
investment advisor, or the Investor has total assets in excess of $5,000,000 or, if
such plan is a self-directed plan, investment decisions are made solely by persons
who are accredited investors.
(d) The Investor is an entity in which all of the equity owners qualify under clause
(a) in paragraph 2 of Part II (i.e., an accredited individual); OR under clause (a)(i)
of paragraph 2 of Part III (i.e., an accredited irrevocable trust); OR under
paragraph 2(i) of Part IV (i.e., an accredited IRA); OR under clause (a), (b), (c)
of this paragraph 2 of Part V (i.e., an accredited entity); OR under this clause (d)
of this paragraph 2 of Part V. [If the Investor belongs to this investor category
only, please provide the name of the equity owners of the Investor and the
25
investor category (e.g., 2(a) of Part V) which each such equity owner
satisfies.]
Name of Equity Owners Investor Category
(e) The Investor cannot make any of the representations set forth in clauses (a), (b),
(c) or (d) above.
3. Qualified Purchaser Representation (Part I). The Investor makes one of the following
representations regarding the Investor’s status as a “qualified purchaser” (within the meaning of
Section 2(a)(51) under the Companies Act) [Please check the applicable representation.]:17
(a) The Investor is an entity, acting for its own account or the accounts of others
described in clause (a) in paragraph 3 of Part II (i.e., a qualified purchaser
individual); OR in clause (a) or (b) of paragraph 3 of Part III (i.e., a qualified
purchaser trust); OR in paragraph 3(i) of Part IV (i.e., a qualified purchaser IRA);
OR in clause (b), (c), (d) or (e) of this paragraph 3 of Part V below; OR in
this clause (a) of paragraph 3 of Part V, that in the aggregate owns and invests on
a discretionary basis Investments that are Valued at not less than $25,000,000.
(b) The Investor is an entity that owns Investments that are Valued at not less than
$5,000,000 and is owned directly or indirectly by two (2) or more natural persons
related as siblings, spouses (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.
(c) The Investor is an entity not covered by clause (a) or (b) above and not formed
for the specific purpose of acquiring the Interest, as to which each beneficial
owner is a person described in clause (a) in paragraph 3 of Part II (i.e., a qualified
purchaser individual); OR in clause (a) in paragraph 3 of Part III (i.e., a qualified
purchaser trust); OR under paragraph 3(i) of Part IV above (i.e., a
qualified purchaser IRA); OR under clause (a) or (b) in this paragraph 3 of this
Part V.
17 For purposes of this paragraph 3, “Investments” and “Valued” shall have the meanings provided in EXHIBIT B
hereto.
26
(d) The Investor is an entity, all of the outstanding securities of which are owned by
persons or entities described in clause (a) in paragraph 3 of Part II (i.e., a
qualified purchaser individual); OR in clause (a) or (b) of paragraph 3 of Part III
(i.e., a qualified purchaser trust); OR in paragraph 3(i) of Part IV (i.e., a
qualified purchaser IRA); OR under clause (a), (b) or (c) of this paragraph 3 of
Part V; OR under this clause (d) of paragraph 3 of Part V. [If the Investor
belongs to this investor category only, please provide the name of the equity
owners of the Investor and the investor category which each such equity owner
satisfies.]
Name of Investor Investor Category
(e) The Investor is a “qualified institutional buyer” as defined in paragraph (a) of
Rule 144A under the Securities Act, acting for its own account, the account of
another qualified institutional buyer, or the account of a qualified purchaser;
provided that (i) a dealer described in paragraph (a)(1)(ii) of Rule 144A must
own and invest on a discretionary basis at least $25,000,000 in securities of
issuers that are not affiliated persons of the dealer and (ii) a plan referred to in
paragraph (a)(1)(i)(D) or (a)(1)(i)(E) of Rule 144A, or a trust fund referred to in
paragraph (a)(1)(i)(F) of Rule 144A that holds the assets of such a plan, will not
be deemed to be acting for its own account if investment decisions with respect
to the plan are made by the beneficiaries of the plan, except with respect to
investment decisions made solely by the fiduciary, trustee or sponsor of such
plan.
(f) The Investor cannot make any of the representations set forth in clauses (a), (b),
(c), (d) or (e) above.
4. Qualified Purchaser Representation (Part II). If the Investor has made one of the
representations set forth in clauses (a) through (e) of paragraph 3 of Part V of this subscription
agreement above, the Investor then makes one or more of the following representations regarding
its status as a “qualified purchaser” (within the meaning of Section 2(a)(51) under the Companies
Act) [Please check the applicable representation.]:
(a) The Investor would be treated as an “investment company” under the Companies Act but
for the fact that the Investor qualifies for one of the exemptions from the definition of
“investment company” provided for in Sections 3(c)(1) or 3(c)(7) of the Companies Act.18
(i) True [Please answer clause (b) below.]
(ii) False [Please skip to paragraph 5 below.]
18 Relevant excerpts of Section 3(c)(1) and 3(c)(7) of the Companies Act are provided in EXHIBIT A attached hereto.
27
(b) If the Investor has checked “true” in clause (a) above, the Investor certifies that the
Investor has read and understands the provisions of Section 2(a)(51)(C) of the Companies
Act and Rule 2a51-2 promulgated under the Companies Act excerpted on EXHIBIT B
hereto and makes one of the following representations [Please check the applicable
representation.]:
(i) No consent of the Investor’s direct or indirect beneficial owners is
required for the Investor’s treatment as a “qualified purchaser” (within
the meaning of Section 2(a)(51) under the Companies Act) with respect
to the Fund;
(ii) Both: (A) all of the beneficial owners of the Investor’s outstanding
securities (other than short-term paper), determined in accordance with
Section 3(c)(1)(A) of the Companies Act, that acquired such securities
on or before April 30, 1996 (the “Pre-Amendment Beneficial Owners”);
and (B) all of the Pre-Amendment Beneficial Owners of any company
that, but for the exclusions from the definition of “investment company”
provided for in Sections 3(c)(1) or 3(c)(7) of the Companies Act, would
be an “investment company” and that directly or indirectly owns any
outstanding securities of the Investor have consented to its treatment as a
“qualified purchaser” under the Companies Act with respect to the
Fund;
(iii) The Investor made either of the representations set forth in clause (b) of
paragraph 3 above, and all of the trustees, directors or general partners
of the Investor have consented to the Investor’s treatment as a
“qualified purchaser” (within the meaning of Section 2(a)(51) under the
Companies Act) with respect to the Fund; or
(iv) The Investor cannot make any of the representations set forth in clauses
(i), (ii), or (iii) above.
28
5. Qualified Client Representation (Part I). The Investor makes one or more of the following
representations regarding the Investor’s status as a “qualified client” (within the meaning of Rule
205-3 under the Advisers Act), and has checked the applicable representation:
(a) The Investor is a company19 that has made a Capital Commitment to the Fund of
at least $1,000,000.
(b) The Investor is a company that has a net worth of more than $2,000,000.
(c) The Investor is a qualified purchaser (i.e., has checked one of the representations
set forth in clause (a) through (e) of paragraph 3 above).
(d) The Investor cannot make any of the representations set forth in clauses (i), (ii) or
(iii) above.
6. Qualified Client Representation (Part II). Please check the appropriate response to the
following statement:
___ True/___ False The Investor is a company that (i) would be an “investment company”
under the Investment Company Act but for the exception provided from
that definition by section 3(c)(1) of the Investment Company Act, (ii) is
an investment company registered under the Investment Company Act,
or (iii) is a “business development company,” as defined in section
202(a)(22) of the Advisers Act (each, an “Excluded Company”).
[If your response to the above statement is “False,” please skip to paragraph (7) below.]
___ True/___ False All of the Investor’s equity owners are qualified clients (as described in
paragraph 5 above) and none of the Investor’s equity owners is an
Excluded Company.
[If your response to the above statement is “True,” please skip to paragraph (7) below.]
___ True/___ False The Investor and any direct or indirect beneficial owner of the Investor
that would be identified as a “client” under Rule 205-3 of the Advisers
Act, is a qualified client within the meaning of the Advisers Act and the
rules and regulations promulgated thereunder.
7. Beneficial Owners. Investor either [check the applicable subparagraph]:
(a) Is not an “investment company” under the Companies Act nor does the Investor
rely upon the exclusions from the definition of “investment company” provided
for in Section 3(c)(1) or 3(c)(7) of the Companies Act; or
(b) Will collectively, as of the Closing, have ____ beneficial owners of its
outstanding securities (other than short-term paper), and is not structured or
19 For purposes of this paragraph 5 and paragraph 6 below, “company” means a corporation, a partnership, an
association, a joint-stock company, a trust, or any organized group of persons, whether incorporated or not; or any
receiver, trustee in a case under title 11 of the United States Code [11 USCS §§ 101 et seq.], or similar official, or
any liquidating agent for any of the foregoing, in his capacity as such, but does not include a company that is
required to be registered under the Investment Company Act but is not registered.
29
operated for the purpose of circumventing the registration requirements of the
Companies Act. [Please fill in the blank specifying the number of beneficial
owners.]
8. Investment Representation. Please check the appropriate true or false response to each of the
following statements.
True False The Investor was not organized for the purpose of acquiring the
Interest.
True False To the best of the Investor’s knowledge, the Investor does not
True False
True False control, nor is it controlled by, or under common control with,
any other Limited Partner of the Fund. [If this box is checked
False, please identify the entity]:
The Investor has made investments prior to the date hereof or
intends to make investments in the near future and each
beneficial owner of interests in the Investor has and will share in
the same proportion of each such investment.
The Investor’s investment in the Fund will not constitute more
than forty percent (40%) of the Investor’s assets (including for
this purpose any committed capital for an Investor that is an
investment fund).
True False The governing documents of the Investor require that each
beneficial owner of the Investor, including, but not limited to,
shareholders, partners and beneficiaries, participate through such
beneficial owner’s interest in the Investor in all of the Investor’s
investments and that the profits and losses from each such
investment are shared among such beneficial owners in the same
proportions as all other investments of the Investor. No such
beneficial owner may vary such beneficial owner’s share of the
profits and losses or the amount of such beneficial owner’s
contribution for any investment made by the Investor.
If the “False” box is checked for any of the above statements, please provide a brief
explanation and contact Fund Counsel.
9. Benefit Plan Representation. Please check the appropriate true or false response to the
following statement. The Investor understands that the Fund, Fund Counsel and the General
Partner are relying upon the Investor’s response within this paragraph 7 in determining fiduciary
responsibilities under ERISA and related rules and regulations.
True False The Investor is an “employee benefit plan” as defined in Section
3(3) of ERISA, that is subject to the provisions of Part 4 of Title
I of ERISA.
True False The Investor is a “plan” (as defined in Section 4975(e)(1) of the
Code), whether or not subject to Section 4975 of the Code,
30
True False including, without limitation, individual retirement accounts and
Keogh plans.
→
The Investor is an entity that is deemed to be a “benefit plan
investor” under the U.S. Department of Labor final plan assets
regulation, 29 C.F.R. §2510.3-101, as it may be amended from
time to time (the “Regulation”), as modified by Section 3(42) of
ERISA, because its underlying assets include “plan assets” by
reason of a plan’s investment in the entity (including, by way of
example only, a partnership not qualifying as an operating
company within the meaning of the Regulation in which twenty-
five percent (25%) or more of each class of equity interests is
owned by entities described above in this paragraph 7.
If the Investor is deemed a “benefit plan investor,” the Investor
hereby certifies that __________% of the total value of equity
interests in the Investor is held by “benefit plan investors.”
If any of the above responses becomes inaccurate at any time, including any time following the
closing, the Investor or the Investor’s counsel should notify the General Partner or contact
Fund Counsel.
10. Tax and Grantor Trust Representations. The Investor makes the following representations
regarding the Investor’s status:
(a) Is the Investor treated as a partnership or a disregarded entity for U.S. federal income tax
purposes?
Yes:
No:
(b) Is the Investor a “United States person”20 for U.S. federal income tax purposes?
Yes:
No:
(c) Is the Investor a trust and a grantor or other person is treated as the owner of any
portion of such trust under subpart E of subchapter J of the Code (any such trust,
a “grantor trust”)?
20 “United States person” means an individual who is a citizen of the United States or a resident alien for U.S.
federal income tax purposes; a corporation, an entity taxable as a corporation, or a partnership created or organized
in or under the laws of the United States or any state or political subdivision thereof or therein (including the District
of Columbia); an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or a
trust if (y) a court within the United States is able to exercise primary supervision over its administration and one or
more United States persons have the authority to control all of its substantial decisions or (z) such trust was in
existence on August 20, 1996 and was treated as a domestic trust on August 19, 1996 and such trust has a valid
election in effect under applicable U.S. Treasury regulations to be treated as a United States person.
31
Yes:
No: [Please skip to paragraph 9 below.]
If the Investor is a grantor trust, the following persons own the following
percentage of such trust:
Owner: _____________________ Percentage Ownership: __________
Owner: _____________________ Percentage Ownership: __________
Owner: _____________________ Percentage Ownership: __________
Owner: _____________________ Percentage Ownership: __________
Owner: _____________________ Percentage Ownership: __________
(i) If the Investor is a grantor trust and is not a “United States person” for U.S.
federal income tax purposes, the Subscriber is submitting Form W-8IMY, and
such documentation (e.g., Form W-8BEN, W-8IMY, W-8ECI, W-8EXP or W-9)
and information pertaining to each grantor or other owner that permits the
Fund to reliably associate each such grantor’s or other owner’s indirect share of
the Fund’s income with such grantor or other person.
Yes:
No:
N/A: [The Investor is a “United States person”]
(ii) If the Investor is a grantor trust and is a “United States person” for U.S. federal
income tax purposes, the Investor is submitting such documentation (e.g., Form
W-8BEN, W-8IMY, W-8ECI, W-8EXP or W-9) and information pertaining to
each grantor or other owner that permits the Fund to reliably associate each
such grantor’s or other owner’s indirect share of the Fund’s income with such
grantor or other person.
Yes:
No: [The Investor is not a “United States person”]
N/A:
11. Public Disclosure Obligations. Please check the appropriate true or false response to each of the
following statements and, if applicable, provide the appropriate information in each such
statement.
True False (a) The Investor is subject to Section 552(a) of Title 5,
United States Code (commonly known as the “Freedom of
Information Act”) or state freedom of information statutes or
other similar federal, state, county or municipal public disclosure
statutes or regulations, whether foreign or domestic, in each of
the following jurisdictions. [If a similar statute is applicable,
please specify the applicable statute along with the applicable
jurisdiction, to the extent
32
known]:_____________________________________________
____________________________________________________
True False (b) The Investor is required, by statute, regulation, contract
or otherwise, to disclose any of the Partnership’s Confidential
True False Information to a government agency or other regulatory body,
True False trading exchange, or other market where interests in such
True False
Investor are sold or traded (or to the regulating body thereof),
whether foreign or domestic, including but not limited to by
virtue of Investor’s registration under the Securities Act or the
Companies Act, or a state, local or foreign equivalent thereof. [If
applicable, please specify the applicable statute or regulation
along with the applicable
jurisdiction]:_________________________________________
____________________________________________________
(c) The Investor or its Affiliate is required, or will likely be
required, to disclose Confidential Information to a government
body, agency or committee, whether foreign or domestic, by
virtue of such Investor’s (or its Affiliate’s) current or proposed
involvement in government office.
(d) One or more of the Investor’s beneficial owners is
subject (or is an agent, nominee, fiduciary, custodian or trustee
of an entity which is subject) to the statutes, regulations, or
obligations described in paragraphs 9(a), (b) or (c) above
(collectively “Disclosure Obligations”) [If applicable, please
specify the applicable statute or regulation along with the
applicable jurisdiction]:_________________________
____________________________________________________
____________________________________________________
(e) To the best of the Investor’s knowledge, neither the
Investor nor any of the Investor’s beneficial owners are subject
to Disclosure Obligations, nor are any of them agents, nominees,
fiduciaries, custodians or trustees of an entity which is itself
subject to Disclosure Obligations.
Entity Investors who have agreed to Part I and completed Part V of this Agreement may skip
Parts II, III and IV. Please (i) complete and execute the signature page to this Agreement, (ii)
complete and sign IRS Form W-9 or the applicable Form W-8, and (iii) execute two (2) copies
of the signature page to the Partnership Agreement attached as EXHIBIT A.
[SIGNATURE PAGE FOLLOWS]
33
IN WITNESS WHEREOF, the parties hereto have executed this SUBSCRIPTION AGREEMENT AND
INVESTOR QUESTIONNAIRE as of the dates written below.
INDIVIDUAL INVESTOR: ENTITY INVESTOR:
(Signature) (Legal Name of Entity)
(Print Name)
Date: By:
Name:
Title:
Date:
CAPITAL COMMITMENT: $___________________________________
SUBSCRIPTION ACCEPTED:
Accepted this ____ day of _____________, 2013
Accepted Amount:______________________
GENERAL PARTNER: FUND:
COLORADO HIGH YIELD FUND, LLC COLORADO HIGH YIELD FUND, LP
By: COLORADO HIGH YIELD FUND, LLC
By: Its: General Partner
By:
COLORADO HIGH YIELD FUND, LP
SUBSCRIPTION AGREEMENT AND INVESTOR QUESTIONNAIRE
SIGNATURE PAGE
Schedule A
Investor Information
Name
Company Name
Title
Mailing Address
City State ZIP Country
Street Address (if different)
City State ZIP Country
Phone
Fax
Email
Taxpayer Identification Number
Place of Formation or Incorporation
Primary Delivery Method: (email/mail/both/none)
Type of Investor Trust / Estate IRA / Keogh / SEP Community Property
Individual C Corporation
S Corporation General Partnership LLC Exempt Organization
Limited Partnership
Other ______________________
Wire Instructions for Distributions
Please provide wire instructions for the transfer of any payments due from the Fund. These instructions must
be provided at account inception. The Investor may change these wire instructions but may be required to
provide an appropriate signature guarantee by a qualified financial institution (note that a signature guarantee
is different than a notarized signature).
Bank
Location
9-Digit ABA
SWIFT
Attention
Account Number
Account Name
Further Credit
Instructions for Physical Check Delivery
Payee Name
Payee Address
Special Instructions
SCHEDULE A
Primary Contact
The following individual will receive all correspondence listed below, and is fully authorized to update and
change ownership information, provide instructions, and address procedural questions regarding the Interest.
Key Contact Name
Company Name
Title
Mailing Address
City State ZIP
Street Address (if different)
City State ZIP
Phone
Fax
Email
Primary Delivery Method: (email/mail/both)
Relationship to Investor
Other Interested Parties Phone
Alt. Phone
Name Fax
Title Email
Mailing Address Primary Delivery Method: (email / mail)
City State ZIP Circle as appropriate:
Street Address (if different) 1 2 3 456
City State ZIP
Relationship Phone
Alt. Phone
Name Fax
Title Email
Mailing Address Primary Delivery Method: (email / mail)
City State ZIP Circle as appropriate
Street Address (if different) 1 2 3 456
City State ZIP
Relationship Phone
Alt. Phone
Name Fax
Title Email
Mailing Address Primary Delivery Method: (email / mail)
City State ZIP Circle as appropriate
Street Address (if different) 1 2 3 456
City State ZIP
Relationship
Key
1 = All Information * 2 = Reports (Quarterly and Annual) 3 = Tax Reporting **
4 = Authorization to update contact info. 5 = Authorized to add/remove parties 6 = Fully Authorized ***
* All Information = All Reports, Tax Reporting, General Correspondence, and Transaction Confirmations
** Tax Reporting
*** Fully Authorized = Distribution Notices, Audited Financials, K-1's
= Authorized to update contact info, add/remove parties to the account, and change ownership
information, such as wiring instructions, etc.
SCHEDULE A
EXHIBIT A
SIGNATURE PAGES TO THE PARTNERSHIP AGREEMENT (2 COPIES)
EXHIBIT A
IN WITNESS WHEREOF, the Partners have executed this Limited Partnership Agreement
of COLORADO HIGH YIELD FUND, LP as of the date first written above.
GENERAL PARTNER: LIMITED PARTNER:
COLORADO HIGH YIELD FUND, LLC
____________________________________
By:
By: ________________________________
(signature)
Name: ______________________________
(print name)
Title: _______________________________
The Managing Principals hereby acknowledges his respective obligations pursuant to paragraph
10.5(a).
Chris Boyd
“THE SECURITIES EVIDENCED BY THIS PARTNERSHIP AGREEMENT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT COVERING SUCH
SECURITIES OR THE GENERAL PARTNER RECEIVES AN OPINION OF COUNSEL FOR
THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE
GENERAL PARTNER, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF THE 1933 ACT.”
SIGNATURE PAGE TO LIMITED PARTNERSHIP AGREEMENT OF
COLORADO HIGH YIELD FUND, LP
IN WITNESS WHEREOF, the Partners have executed this Limited Partnership Agreement
of COLORADO HIGH YIELD FUND, LP as of the date first written above.
GENERAL PARTNER: LIMITED PARTNER:
COLORADO HIGH YIELD FUND, LLC
____________________________________
By:
By: ________________________________
(signature)
Name: ______________________________
(print name)
Title: _______________________________
The Managing Principals hereby acknowledges his respective obligations pursuant to paragraph
10.5(a).
Chris Boyd
“THE SECURITIES EVIDENCED BY THIS PARTNERSHIP AGREEMENT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT COVERING SUCH
SECURITIES OR THE GENERAL PARTNER RECEIVES AN OPINION OF COUNSEL FOR
THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE
GENERAL PARTNER, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF THE 1933 ACT.”
SIGNATURE PAGE TO LIMITED PARTNERSHIP AGREEMENT OF
COLORADO HIGH YIELD FUND, LP
EXHIBIT B
CERTAIN DEFINITIONS & STATUTORY EXCERPTS
“Investments” means any of the following:
(1) “Securities” as such term is defined by Section 2(a)(1) of the Securities Act.
Notwithstanding the foregoing, securities of an issuer that controls, is controlled by, or is
under common control with the Investor shall not be deemed Investments unless the
issuer is:
(i) An investment company or a company that would be an investment company but
for the exclusions provided by Sections 3(c)(1) through 3(c)(9) of the Companies
Act, a foreign bank or insurance company, an issuer of asset-backed securities that
meets certain requirements or a commodity pool;
(ii) A company whose equity securities are listed on a national securities exchange,
traded on Nasdaq or listed on a “designated offshore securities market” (as defined
by Regulation S promulgated pursuant to the Securities Act); or
(iii) A company with shareholders’ 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 such financial statements
present information as of a date not more than sixteen (16) months preceding the
Investor’s investment in the Company).
(2) Real estate held for investment purposes (i.e., not used by the undersigned for personal
purposes or as a place of business or in connection with the trade or business of the
undersigned).
(3) “Commodity Interest” (i.e., commodities futures contracts, options on such contracts or
options on commodities that are traded on or subject to the rules of (i) any contract
market designated for trading under the Commodity Exchange Act and rules thereunder
or (ii) any board of trade or exchange outside the United States, as contemplated in Part
30 of the rules under the Commodity Exchange Act) held for investment purposes.
(4) Physical commodities (with respect to which a Commodity Interest is traded on a market
specified in paragraph 3 above) held for investment purposes.
(5) Financial contracts within the meaning of Section 3(c)(2)(B)(ii) of the Companies Act
held for investment purposes.
(6) If the Investor is a company that would be an investment company but for the exclusion
provided by Section 3(c)(1) or 3(c)(7) of the Companies Act, or a commodity pool, any
amounts payable to the Investor pursuant to a binding commitment pursuant to which a
person has agreed to acquire an interest in, or make capital contributions to, the Investor
upon demand by the Investor.
(7) Cash and cash equivalents (including bank deposits, certificates of deposit, bankers
acceptances and similar bank instruments held for investment purposes and the net cash
surrender value of insurance policies).
“Valued” means either the fair market value or cost of Investments net of the following deductions:
(1) the amount of any outstanding indebtedness incurred to acquire such Investments; and
EXHIBIT B
(2) if the holder of the Investment is a company described in paragraph 3(a) of Part III or
paragraph 3(b) of Part V, any outstanding indebtedness incurred by any owner of such
company to acquire such Investments.
SECTION 2(A)(51)(C) OF THE COMPANIES ACT:
“The term “qualified purchaser” does not include a company that, but for the exceptions provided for in
paragraph (1) or (7) of Section 3(c), would be an investment company (hereafter in this paragraph referred
to as an “excepted investment Company”), unless all beneficial owners of its outstanding securities (other
than short-term paper), determined in accordance with Section 3(c)(1)(A), that acquired such securities on
or before April 30, 1996 (hereafter in this paragraph referred to as “pre-amendment beneficial owners”),
and all pre-amendment beneficial owners of the outstanding securities (other than short-term paper) or any
excepted investment company that, directly or indirectly, owns any outstanding securities of such excepted
investment company, have consented to its treatment as a qualified purchaser. Unanimous consent of all
trustees, directors, or general partners of a company or trust referred to in clause (ii) or (iii) of
subparagraph (A) shall constitute consent for purposes of this subparagraph.”
RULE 2A51-2 AS PROMULGATED UNDER THE COMPANIES ACT:
“(a) Beneficial Ownership: General. Except as set forth in this section, for purposes of Sections
2(a)(51)(C) and 3(c)(7)(B)(ii) of the Act, the beneficial owners of securities of an excepted investment
company…shall be determined in accordance with Section 3(c)(1) of the Act.
(b) Beneficial Ownership: Grandfather Provision. For purposes of Section 3(c)(7)(B)(ii) of the
Act, securities of an issuer beneficially owned by a company (without giving effect to Section 3(c)(1)(A)
of the Act (“owning company”) shall be deemed to be beneficially owned by one person unless: (1) The
owning company is an investment company or an excepted investment company; (2) The owning
company, directly or indirectly, controls, is controlled by, or is under common control with, the issuer;
and (3) On October 11, 1996, under Section 3(c)(1)(A) of the Act as then in effect, the voting securities of
the issuer were deemed to be beneficially owned by the holders of the owning company’s outstanding
securities (other than short-term paper), in which case, such holders shall be deemed to be beneficial
owners of the issuer’s outstanding voting securities.
(c) Beneficial Ownership: Consent Provision. For purposes of Section 2(a)(51)(C) of the Act,
securities of an excepted investment company beneficially owned by a company (without giving effect to
Section 3(c)(1)(A) of the Act (“owning company”) shall be deemed to be beneficially owned by one
person unless: (1) The owning company is an excepted investment company; (2) The owning company
directly or indirectly controls, is controlled by, or is under common control with, the excepted investment
company or the company with respect to which the excepted investment company is, or will be, a
qualified purchaser; and (3) On April 30, 1996, under Section 3(c)(1)(A) of the Act as then in effect, the
voting securities of the excepted investment company were deemed to be beneficially owned by the
holders of the owning company’s outstanding securities (other than short-term paper), in which case the
holders of such excepted company’s securities shall be deemed to be beneficial owners of the excepted
investment company’s outstanding voting securities.
(d) Indirect Ownership: Consent Provision. For purposes of Section 2(a)(51)(C) of the Act, an
excepted investment company shall not be deemed to indirectly own the securities of an excepted
investment company seeking a consent to be treated as a qualified purchaser (“qualified purchaser
company”) unless such excepted investment company, directly or indirectly, controls, is controlled by, or
is under common control with, the qualified purchaser company or a company with respect to which the
qualified purchaser company is or will be a qualified purchaser.
EXHIBIT B
(e) Required Consent: Consent Provision. For purposes of Section 2(a)(51)(C) of the Act, the
consent of the beneficial owners of an excepted investment company (“owning company”) that
beneficially owns securities of an excepted investment company that is seeking the consents required by
Section 2(a)(51)(C) (“consent company”) shall not be required unless the owning company directly or
indirectly controls, is controlled by, or is under common control with, the consent company or the
company with respect to which the consent company is, or will be, a qualified purchaser.”
SECTION 3(C)(1)(A) OF THE COMPANIES ACT:
“[N]one of the following persons is an investment company …
(1) Any issuer whose outstanding securities (other than short-term paper) are beneficially
owned by not more than one hundred persons and which is not making and does not
presently propose to make a public offering of its securities … For purposes of this
paragraph:
(A) Beneficial ownership by a company shall be deemed to be beneficial ownership
by one person, except that, if the company owns 10 per centum or more of the
outstanding voting securities of the issuer and is or, but for the exception
provided for in this paragraph or paragraph (7), would be an investment
company, the beneficial ownership shall be deemed to be that of the holders of
such company’s outstanding securities (other than short-term paper).”
SECTION 3(C)(7) OF THE COMPANIES ACT:
“[N]one of the following persons is an investment company …
(7) (A) Any issuer, the outstanding securities of which are owned exclusively by persons
who, at the time of acquisition of such securities, are qualified purchasers, and
which is not making and does not at the time propose to make a public offering
of such securities. Securities that are owned by persons who received the
securities from a qualified purchaser as a gift or bequest, or in a case in which the
transfer was caused by legal separation, divorce, death, or other involuntary
event, shall be deemed to be owned by a qualified purchaser, subject to such
roles, regulations, and orders as the Commission may prescribe as necessary or
appropriate in the public interest or for the protection of investors.”
EXHIBIT B
EXHIBIT C
FORM W-9
(WITH INSTRUCTIONS)
EXHIBIT C
187144 v1/DC
EXHIBIT D
FORM W-8BEN, FORM W-8ECI,
FORM W-8EXP AND FORM W-8IMY
(WITH INSTRUCTIONS)
EXHIBIT D
EXHIBIT E
PRIVACY NOTICE
We are sending this Privacy Notice in compliance with the Federal Trade Commission’s rules
regarding the privacy of nonpublic personal information (the “Privacy Rules”). This Privacy
Notice explains the manner in which the Partnership collects and uses nonpublic personal
information about our limited partners. This Privacy Notice applies only to limited partners who
are individuals.
We collect nonpublic personal information about you from the following sources:
Investor Questionnaires, the Limited Partnership Agreement or other forms (for
example, name, address, Social Security number, assets and income); and
Ownership records of the fund in which you are a limited partner (such as the
amount of your percentage ownership interest and any capital commitment).
The Partnership is committed to protecting your privacy and maintaining the confidentiality and
security of your personal information. We do not disclose any personal information we receive
from you unless required by law or to discharge our management duties to the fund. We expect
to disclose limited information about your interest in the Partnership only as necessary to (i)
effect in kind distributions of our portfolio securities through brokers and (ii) fulfill our financial
reporting obligations to our limited partners. We may also disclose certain of your information to
our outside service providers, such as lawyers and auditors, but only as permitted by law and as
necessary in performing our fund management duties.
We have always considered the protection of sensitive personal information to be a sound
business practice and we intend to continue to scrupulously guard the privacy of our limited
partners.
EXHIBIT E
Limi
Partne
Agree
ited
ership
ement
COLORADO HIGH YIELD FUND, LP
LIMITED PARTNERSHIP AGREEMENT
_____________, 2016
COLORADO HIGH YIELD FUND, LP
LIMITED PARTNERSHIP AGREEMENT
THIS LIMITED PARTNERSHIP AGREEMENT (this “Agreement”) is made and entered into
as of this ___ day of _________, 2016 by and among COLORADO HIGH YIELD FUND, LLC, a
Delaware limited liability company (the “General Partner”), and each of the persons and entities
identified as a limited partner on the Schedule of Partners maintained in the books of the
Partnership (each a “Limited Partner” and collectively, the “Limited Partners”), who hereby
form COLORADO HIGH YIELD FUND, LP (the “Partnership”), pursuant to the provisions of the
Delaware Revised Uniform Limited Partnership Act (the “Act”) as follows:
ARTICLE 1
NAME, PURPOSE AND OFFICES OF PARTNERSHIP
1.1 Name. The name of the Partnership is Colorado High Yield Fund, LP. The
affairs of the Partnership shall be conducted under the Partnership name, or such other name as
the General Partner may, in its discretion, determine.
1.2 Purpose. The primary purpose of the Partnership is to make investments in
funds, ventures and financial instruments related to the cannabis and hemp industry. The general
purposes of the Partnership are to buy, sell, hold, and otherwise invest in Securities of every kind
and nature and rights and options with respect thereto, including, without limitation, stock, notes,
bonds, debentures and evidence of indebtedness; to exercise all rights, powers, privileges, and
other incidents of ownership or possession with respect to Securities held or owned by the
Partnership; to enter into, make, and perform all contracts and other undertakings; and to engage
in all activities and transactions as may be necessary, advisable, or desirable to carry out the
foregoing.
1.3 Partnership Offices. The Partnership shall have offices 331 1/2 Main Street
Longmont, CO 80501 or such other place or places as the General Partner may from time to time
designate.
1.4 Registered Agent and Office. The name of the registered agent for service of
process of the Partnership and the address of the Partnership’s registered office in the State of
Delaware shall be as the General Partner may from time to time designate.
ARTICLE 2
TERM OF PARTNERSHIP
2.1 Term. The term of the Partnership shall commence upon the date of the filing of
the Certificate of Limited Partnership of the Partnership with the office of the Secretary of State
of the State of Delaware and shall continue until the fifth (5th) anniversary date of the Initial
Closing Date (the “Termination Date”), unless extended or sooner dissolved, as provided in
paragraphs 10.1 or 10.2 below.
2.2 Events Affecting a Member of the General Partner. Except as specifically
provided in paragraph 10.2, the death, bankruptcy, withdrawal, insanity, incompetency,
temporary or permanent incapacity, expulsion or removal of any member of the General Partner
shall not dissolve the Partnership.
2.3 Events Affecting a Limited Partner of the Partnership. The death, temporary
or permanent incapacity, insanity, incompetency, bankruptcy, liquidation, dissolution,
reorganization, merger, sale of all or substantially all the stock or assets of, or other change in the
ownership or nature of a Limited Partner shall not dissolve the Partnership.
2.4 Events Affecting the General Partner. Except as specifically provided in
paragraph 10.2, the bankruptcy, expulsion, resignation, removal or withdrawal, liquidation,
dissolution, reorganization, merger, sale of all or substantially all the stock or assets of, or other
change in the ownership or nature of the General Partner shall not dissolve the Partnership, and
upon the happening of any such event, the affairs of the Partnership shall be continued by the
General Partner or any successor entity thereto.
ARTICLE 3
NAME AND ADMISSION OF PARTNERS
3.1 Name and Address. The name and address of the General Partner and each
Limited Partner (hereinafter the General Partner and Limited Partners shall be referred to
collectively as the “Partners” and individually as a “Partner”), the amount of such Partner’s
Capital Commitment to the Partnership, and such Partner’s Partnership Percentage are set forth
on the Schedule of Partners maintained in the books of the Partnership. The General Partner
shall cause the Schedule of Partners to be amended from time to time to reflect the admission of
any new Partner, the withdrawal or substitution of any Partner, the transfer of interests among
Partners, receipt by the Partnership of notice of any change of address of a Partner, or the change
in any Partner’s Capital Commitment or Partnership Percentage.
3.2 Admission of Additional Partners.
(a) Additional persons or entities may be admitted as a Limited Partner and
any Limited Partner may increase its Capital Commitment with the consent of (i) only the
General Partner on or before the date that is twelve (12) months after the Initial Closing Date, or
(ii) the General Partner and a Majority in Interest of the Limited Partners at any time thereafter.
(b) Any Limited Partner admitted, or whose Capital Commitment is
increased, in accordance with this paragraph 3.2 shall be required to contribute to the
Partnership, at the time of such admission or increase, (i) a percentage of its Capital
Commitment (or, in the case of a Limited Partner whose Capital Commitment is increased, a
percentage of its incremental Capital Commitment) equal to the percentage of Capital
Commitments theretofore contributed to the Partnership by other Limited Partners in accordance
with paragraph 4.2 and (ii) unless waived or reduced by the General Partner in its sole discretion,
an additional amount calculated as interest on such capital contribution, at a rate equal to the
Prime Rate (as defined in paragraph 4.5(b)(i)) plus two percent (2%). Such interest (an “Interest
2.
Charge”) shall accrue from the date each such capital contribution would have been due through
the date of admission of such additional person or such Capital Commitment increase. Limited
Partners admitted to the Partnership after the Initial Closing Date will not be entitled to share in
any Idle Funds Income accruing prior to or contemporaneously with their admission date. An
Interest Charge shall not be included in determining an additional or increasing Limited Partner’s
Capital Commitment or Partnership Percentage and shall not be treated as a capital contribution
by such additional Limited Partner but rather shall be allocable as Profit to the previously
admitted Partners in proportion to their respective Partnership Percentages.
(c) Upon the admission of any additional Limited Partner or the increase of
any Limited Partner’s Capital Commitment pursuant to this paragraph 3.2, the General Partner
may, in its sole discretion, make a special distribution of all or a portion of the initial
contribution of capital made by such Limited Partner in the event that the General Partner
determines that such initial contribution is not needed by the Partnership to make currently
proposed Partnership investments or to fund current organizational, start-up, operational or other
Partnership expenses. Such distribution shall be made to all existing Partners in accordance with
Partnership Percentages (as adjusted to reflect the admission of such additional Limited Partner)
and shall be deemed to be a return of capital to such Partners; provided, however, that (i) such
Partners shall be deemed, for the purposes of paragraph 4.2, not to have contributed the amount
of such distribution and the amounts of their respective unfunded Capital Commitments shall be
increased accordingly, and (ii) the portion of such distribution attributable to the management fee
payable pursuant to paragraph 6.1 shall be paid to the General Partner or its designee. In
addition, the General Partner may in its discretion make a special distribution of the amount
received by the Partnership (if any) in respect of the Interest Charge paid by any additional
Limited Partner, which distribution shall be made to the previously admitted Partners in
proportion to their respective Partnership Percentages (without adjustment to reflect the
admission of such additional Limited Partner) in the event that the General Partner determines
that such initial contribution is not needed by the Partnership to make currently proposed
Partnership investments nor to fund current organizational, start-up, operational, or other
Partnership expenses.
(d) Each additional person admitted as a Partner shall execute and deliver to
the Partnership a counterpart of this Agreement or otherwise take such actions as the General
Partner shall deem appropriate for such Limited Partner to become bound by the terms of this
Agreement.
ARTICLE 4
CAPITAL ACCOUNTS, CAPITAL CONTRIBUTIONS,
AND NONCONTRIBUTING PARTNERS
4.1 Capital Accounts. An individual Capital Account shall be maintained on the
Partnership’s books for each Partner.
4.2 Capital Contributions of the Limited Partners.
3.
(a) Each Limited Partner shall contribute capital to the Partnership in respect
of its Capital Commitment at such time as its subscription to the Partnership is accepted by the
General Partner, or as otherwise requested by the General Partner upon ten (10) calendar days’
prior written notice. Each capital contribution shall be made in cash and in accordance with
Partnership Percentages. No Limited Partner shall be required to contribute any capital
following the Second anniversary of the Initial Closing Date (the “Commitment Period”), except
as may be necessary for (i) Partnership expenses, including, but not limited to, payment of any
management fee due to the General Partner (or its designee); (ii) completion of transactions in
process (including those for which the Partnership has issued a term sheet (whether or not legally
binding) and those for which the Partnership has entered into a binding commitment to close (if
any)); (iii) follow-on investments in the Securities of issuers in which the Partnership holds a
pre-existing interest as of the date of such proposed follow-on investment; (iv) making new
guarantees of indebtedness for existing portfolio companies; (v) making payment on previous
guarantees of indebtedness for existing portfolio companies; and (vi) fulfillment of such Limited
Partner’s obligations pursuant to paragraph 4.2(c)(i). Subject to paragraphs 4.2(b), 4.2(c)(ii) and
except as otherwise provided herein, in no event shall any Limited Partner be required to
contribute capital in an aggregate amount in excess of its Capital Commitment.
(b) The General Partner may, in its sole discretion, return to the Partners all or
a portion of any capital contribution intended for a proposed investment which is not
consummated as anticipated pro rata in accordance with their respective capital contributions;
provided that such returned capital shall be added back to unfunded Capital Commitments and
be subject to recall by the General Partner pursuant to this Article 4.
(c) If, in the discretion of the General Partner, Partnership assets are
insufficient to fulfill any indemnification obligation of the Partnership pursuant to paragraph
15.4, or any obligation of the Partnership to return some or all of the proceeds or other amounts
received by the Partnership with respect to a Partnership investment (whether in connection with
a breach of representations or warranties or otherwise), then prior to the termination of the
Partnership the General Partner may require each Partner to contribute capital to the Partnership
in an amount up to such Partner’s unfunded Capital Commitment, if any.
(i) If, in the discretion of the General Partner, Partnership assets
remain insufficient to fulfill any indemnification obligation of the Partnership pursuant to
paragraph 15.4 or any obligation of the Partnership to return some or all of the proceeds or other
amounts received by the Partnership with respect to a Partnership investment (whether in
connection with a breach of representations or warranties or otherwise) following the
contribution to the Partnership of the maximum amount permitted by paragraph 4.2(a), the
General Partner may recall distributions previously made to the Partners solely for the purpose of
fulfilling or satisfying such an obligation or liability. The obligation to re-contribute
distributions under this paragraph 4.2(c) shall be applied pro rata in proportion to aggregate
distributions from the Partnership (in each case, with any in kind distributions valued as of the
date of distribution). In no event shall any Partner be required to recontribute distributions
pursuant to this paragraph 4.2(c)(ii) in an amount in excess of the lesser of (i) the aggregate
amount of distributions received by such Partner from the Partnership, and (ii) twenty five
percent (25%) of such Partner’s Capital Commitment. Additionally, in no event will the General
Partner be permitted to call capital after the date three (3) years from the Partnership’s
4.
Termination Date (as extended or sooner dissolved, as provided in paragraphs 10.1 or 10.2
below).
(ii) Notwithstanding anything contained in this paragraph 4.2 to the
contrary, with the consent of the General Partner, a Limited Partner may elect to contribute one
hundred percent (100%) of such Limited Partner’s Capital Commitment to the Partnership on the
date of such Limited Partner’s admission (a “Full Contribution Limited Partner”). The excess
of the amount of capital that a Full Contribution Limited Partner has contributed to the
Partnership at any point in time over the amount that such Limited Partner would have been
required to contribute to the Partnership at such point in time had such Limited Partner’s Capital
Commitment been drawn down pursuant to paragraph 4.2(a) above is hereinafter referred to as
such Partner’s “Excess Contribution.” The General Partner will deposit the Excess
Contributions of the Full Contribution Limited Partners in a segregated account.
Notwithstanding any provision of this Agreement to the contrary (i) items of income, gain, loss
and deduction attributable to such account shall not be taken into account in determining Profit
or Loss and such items shall be allocated to the Full Contribution Limited Partners pro-rata based
on the amount of their respective Excess Contributions from time to time and (ii) any earnings on
such account (less all expenses associated with such account) shall be distributed to the Full
Contribution Limited Partners pro-rata based on the amount of their respective Excess
Contributions from time to time. The General Partner shall transfer amounts from the segregated
account to the Partnership’s general accounts from time to time to the extent necessary to reflect
any decrease in the Excess Contributions of the Full Contribution Limited Partners (e.g., due to
an additional draw-down of Capital Commitments pursuant to paragraph 4.2(a) above).
4.3 Capital Contributions of the General Partner. The General Partner shall
contribute cash to the capital of the Partnership in an amount equal to at least one million dollars
($1,000,000) on the same schedule and terms as the Limited Partners.
4.4 Acquisition of an Additional Interest by the General Partner. In the event
that the General Partner acquires a Limited Partner’s interest pursuant to the terms of this
Agreement, the General Partner shall have two Partnership Percentages and two Capital Account
balances for purposes of making Partnership allocations, as if such subsequently acquired
interest were held by a separate entity which is a Limited Partner, although for all other purposes
the General Partner shall have only one Capital Account.
4.5 Noncontributing Partners.
(a) Should any Limited Partner fail to make any of the capital contributions
required of it under this Agreement and such failure shall have continued uncured for ten (10) or
more days after delivery of written notice by the General Partner to such Limited Partner, such
Limited Partner shall be in default (a “Defaulting Limited Partner”) and the Partnership shall be
entitled to enforce the obligations of each Limited Partner to make the contributions to capital set
forth in paragraph 4.2, and the Partnership shall have all remedies available at law or in equity in
the event any such contribution is not so made. If any legal proceedings relating to the failure of
a Limited Partner to make such a contribution are commenced, such Limited Partner shall pay all
costs and expenses incurred by the Partnership, including attorneys’ fees, in connection with
such proceedings.
5.
(b) Additionally, without in any way limiting any remedy which the
Partnership may pursue pursuant to paragraph 4.5(a), in the event of a default by a Defaulting
Limited Partner (which, for avoidance of doubt, shall be deemed to occur only after such
Defaulting Limited Partner fails to make any of the capital contributions required of it under this
Agreement and such failure continues uncured for ten (10) or more days after delivery of written
notice by the General Partner to such Defaulting Limited Partner), the General Partner may, in
carrying out what it determines to be in the best interests of the nondefaulting Limited Partners,
elect to enforce one or more of the provisions of this paragraph 4.5(b) in connection with such a
default, to which each Limited Partner hereby expressly consents. The General Partner shall
deliver a second written notice to such Defaulting Limited Partner in the event that it determines
to utilize one or more of the powers set forth in paragraph 4.5(a) or this paragraph 4.5(b) (a
“Default Notice”). Upon delivery of the Default Notice, the Defaulting Limited Partner may not
make any additional contributions of capital against such Defaulting Limited Partner’s Capital
Commitment (other than to fund management fees and other expenses of the Partnership)
without the written consent of the General Partner, which consent may be granted or denied in
the sole discretion of the General Partner.
(i) Should the General Partner, in its sole discretion, elect to exercise
the provisions of this paragraph 4.5(b)(i), such Defaulting Limited Partner shall pay all expenses
incurred or anticipated to be incurred by the Partnership in connection with the default and the
interest on the amount of the contribution to the Partnership then due at an interest rate equal to
the prime rate reported on such date in The Wall Street Journal (currently reflecting the base rate
on corporate loans by the thirty (30) largest banks in the United States) (the “Prime Rate”) plus
six percent (6%) per annum, such interest to accrue from the date the contribution to the
Partnership was required to be made pursuant to paragraph 4.2 hereof until the earlier of (a) the
date the contribution is made by such Defaulting Limited Partner or (b) the termination of the
Partnership. The accrued interest shall be paid by such Defaulting Limited Partner to the
Partnership upon payment of such contribution unless such payment is waived by the General
Partner. The accrued interest so paid shall not be treated as an additional contribution to the
capital of the Partnership, but shall be deemed to be income to the Partnership; provided that
such income shall not be allocated to the Capital Account of the Defaulting Limited Partner.
Until such time as the unpaid contribution and accrued interest thereon shall have been paid by
such Defaulting Limited Partner, the General Partner may elect to withhold any or all
distributions to be made to such Defaulting Limited Partner pursuant to Article 7 or Article 10
hereof and recover any such unpaid contribution and accrued interest thereon by set off against
any such distribution withheld.
(ii) Should the General Partner, in its sole discretion, elect to exercise
the provisions of this paragraph 4.5(b)(ii), such Defaulting Limited Partner, for so long as the
default continues, shall have no right to participate with the Limited Partners in any votes taken
or consents granted or withheld by the Limited Partners hereunder, and such Defaulting Limited
Partner’s Capital Commitment shall be disregarded for purposes of calculating the threshold
percentage required to approve or disapprove the matter being voted upon.
(iii) Should the General Partner, in its sole discretion, elect to exercise
the provisions of this paragraph 4.5(b)(iii), the General Partner may declare the entire amount of
6.
a Defaulting Limited Partner’s then unfunded Capital Commitment to be immediately due and
payable.
(iv) Should the General Partner, in its sole discretion, elect to exercise
the provisions of this paragraph 4.5(b)(iv), the General Partner may enforce, by appropriate legal
proceedings on behalf of the Partnership, the Defaulting Limited Partner’s obligation to make
payment on the amount of any due and unpaid capital contributions by such Defaulting Limited
Partner pursuant to this Agreement or to pay the entire amount of such Defaulting Limited
Partner’s then unfunded Capital Commitment.
(v) Should the General Partner, in its sole discretion, elect to exercise
the provisions of this paragraph 4.5(b)(v), the General Partner may, in its sole discretion, elect to
remove such Defaulting Limited Partner from the Partnership, in which such event (1) one
hundred percent (100%) of the Defaulting Limited Partner’s Capital Account balance shall be
forfeited and reallocated to the Capital Accounts of the nondefaulting Partners proportionally,
based on, with respect to each such Partner, the ratio that its Partnership Percentage immediately
prior to such calculation bears to the aggregate Partnership Percentages of all Partners (other than
the Defaulting Limited Partner), and (2) the Defaulting Limited Partner’s Partnership Percentage
shall be reduced to zero.
(vi) Notwithstanding anything to the contrary in this paragraph 4.5, a
Defaulting Limited Partner may sell or transfer its interest in the Partnership to a third party or
another Partner, subject to the terms and conditions set forth in Article 9, including but not
limited to the requirement of prior written consent of the General Partner, which consent may be
granted or denied in the sole discretion of the General Partner.
(vii) Notwithstanding anything to the contrary in this Agreement, each
Limited Partner (A) agrees that it will execute any instruments or perform any other acts that are
or may be necessary to effectuate and carry out the transactions contemplated by this paragraph
4.5, and (B) designates and appoints the General Partner its true and lawful attorney, in its name,
place and stead to make, execute and sign any and all instruments, documents or certificates on
behalf of any Defaulting Limited partner in order to give effect to any remedy against such
Defaulting Limited Partner (including, but not limited to, the remedies set forth in this paragraph
4.5(b)).
(viii) The Partners agree that the General Partner’s authority and
discretion to enforce any remedy against a Defaulting Limited Partner (including but not limited
to the remedies set forth in this paragraph 4.5(b)) supersede any fiduciary duties of the General
Partner to such Defaulting Limited Partner. The Partners further agree that the remedies set forth
in this paragraph 4.5(b) are fair and reasonable in light of the difficulty in ascertaining the actual
damages that would be incurred by the Partnership and the nondefaulting Partners as a result of
the Defaulting Limited Partner’s failure to contribute capital when due pursuant to the terms of
this Agreement.
7.
4.6 Suspension Period.
(a) Notwithstanding any other provision of this Agreement to the contrary, no
Limited Partner shall be required to contribute capital to the Partnership in respect of its Capital
Commitment during any Suspension Period pursuant to paragraph 4.6(b) except for:
(i) Partnership expenses, including, but not limited to, payment of any
management fee due to the General Partner (or its designee);
(ii) follow-on investments in the Securities of issuers in which the
Partnership holds a pre-existing interest prior to commencement of the Suspension Period;
(iii) completion of transactions in process (including those for which
the Partnership has issued a term sheet (whether or not legally binding) and those for which the
Partnership has entered into a binding commitment to close (if any)) as of the commencement of
the Suspension Period; provided that the General Partner shall provide written notice to the
Limited Partners within thirty (30) days following the commencement of the Suspension Period
providing the date that the Suspension Period commenced, listing any transactions described in
this clause (iii) and listing the anticipated capital contributions required to complete such
transactions;
(iv) making new guarantees of indebtedness for existing portfolio
companies;
(v) making payment on previous guarantees of indebtedness for
existing portfolio companies; and
(vi) fulfillment of such Limited Partner’s obligations pursuant to
paragraph 4.2(c)(i).
(b) In the event that prior to the second anniversary of the Initial Closing Date
all of the Managing Principals as of the date hereof are no longer actively managing the affairs of
the General Partner (a “Suspension Event”), the General Partner shall promptly notify each
Limited Partner of such event (the “Suspension Event Notice”), whereupon the Limited
Partners, by vote of a Majority in Interest of the Limited Partners occurring not more than sixty
(60) days following receipt of the Suspension Event Notice, shall have the right to suspend the
Commitment Period, in which event a Limited Partner shall not be required to contribute capital
to the Partnership except as set forth in paragraph 4.6(a) during the period beginning on the date
of such Suspension Event and continuing until the termination of such period pursuant to
paragraph 4.6(c) (such period a “Suspension Period”).
(c) A Suspension Period pursuant to paragraph 4.6(b) may be terminated at
any time upon the affirmative vote of Two-Thirds in Interest of the Limited Partners.
8.
ARTICLE 5
PARTNERSHIP ALLOCATIONS
5.1 Allocation of Profit and Loss. Except as hereinafter provided in this Article 5,
Profit and Loss of the Partnership for each Accounting Period shall be allocated to the Partners’
Capital Accounts as follows:
(a) Allocation of Profit. Any Profit of the Partnership for such Accounting
Period shall be allocated as follows:
(i) First, to the Capital Accounts of all Partners (including the General
Partner) to the extent that such accounts were previously allocated an amount of Loss,
management fee or other Partnership expense that has not been restored by previous allocations
pursuant to this paragraph 5.1(a)(i). Such Profit shall be allocated to the Partners’ Capital
Accounts (A) first, to reverse prior allocations of Contingent Loss (as defined in paragraph
5.2(a)) that have not been restored by previous allocations pursuant to this paragraph 5.1(a)(i)
and paragraph 5.1(c) (in reverse order of such reallocations comprising the Contingent Loss), in
proportion to the amount of Contingent Loss in each Partner’s Capital Account, and (B) then, to
reverse the remaining unrestored Loss, management fee and other Partnership expense, in
proportion to the amount of unrestored Loss, management fee and other Partnership expense
contained in such Partner’s Capital Account bears to the aggregate amount of unrestored Losses,
management fees and other Partnership expenses contained in all of the Partners’ Capital
Accounts; and
(ii) Second, (1) twenty percent (20%) to the Capital Account of the
General Partner and (2) eighty percent (80%) to Capital Accounts of all of the Partners
(including the General Partner) in proportion to their respective Partnership Percentages.
(b) Allocation of Loss. Any Loss of the Partnership for such Accounting
Period shall be allocated as follows:
(i) First, twenty percent (20%) to the Capital Account of the General
Partner and eighty percent (80%) to the Capital Accounts of all of the Partners (including the
General Partner) in proportion to their respective Partnership Percentages until the aggregate
Loss allocated pursuant to this paragraph 5.1(b)(i) for the current Accounting Period and all prior
Accounting Periods equals the aggregate Profit allocated pursuant to paragraph 5.1(a)(ii) for the
current Accounting Period and all prior Accounting Periods; and
(ii) Second, one hundred percent (100%) to the Capital Accounts of all
Partners (including the General Partner) in proportion to their respective Partnership Percentages.
(c) All Idle Funds Income and management fees and other expenses of the
Partnership for each Accounting Period shall be allocated to the Capital Accounts of the Partners
in proportion to respective Partnership Percentages, provided that (i) Idle Funds Income shall
first be allocated to reverse prior reallocations of management fees and expense comprising a
Contingent Loss that have not been restored by previous allocations pursuant to this paragraph
9.
5.1(c) or paragraph 5.1(a)(i) (in reverse order of such reallocations of expense comprising the
Contingent Loss), and (ii) if both paragraph 5.1(a)(i)(A) and paragraph 5.1(c)(i) apply (for
purposes of restoring prior reallocations of fees and expenses) in any Accounting Period, then
paragraph 5.1(c)(i) shall apply first.
5.2 Reallocation of Losses.
(a) Except as provided in paragraph 5.2(b), in the event that, after application
of the allocations set forth in paragraph 5.1 in any Accounting Period, the balance of the
Adjusted Capital Account of the General Partner has been reduced to less than the General
Partner’s Partnership Percentage multiplied by the Capital Accounts of all Partners, then, (x) an
amount of expense (including fee expense) shall be reallocated from the General Partner’s
Capital Account to all of the Partners’ Capital Accounts (in proportion to each Partner’s
respective Partnership Percentage) so that the General Partner’s Adjusted Capital Account
balance is returned to the General Partner’s Partnership Percentage multiplied by the Capital
Accounts of all Partners; and (y) if such reallocation of expense does not restore the General
Partner’s Adjusted Capital Account to the General Partner’s Partnership Percentage multiplied
by the Capital Accounts of all Partners, then an amount of Loss shall next be reallocated from the
General Partner’s Capital Account to all of the Partner’s Capital Accounts (in proportion to each
Partner’s respective Partnership Percentage) so that the General Partner’s Adjusted Capital
Account balance is returned to the General Partner’s Partnership Percentage multiplied by the
Capital Accounts of all Partners (such reallocated items of expense and Loss collectively, the
“Contingent Loss”). For purposes of this paragraph 5.2, the General Partner’s Capital Account
shall not be deemed to include any amounts attributable to a Limited Partner’s interest held by
the General Partner.
(b) The amount of Contingent Loss that would otherwise be reallocated from
the General Partner’s Capital Account under paragraph 5.2(a) shall instead be allocated to the
General Partner’s Capital Account until the deficit in the General Partner’s Capital Account
equals the amount the General Partner would have an obligation to contribute capital to the
Partnership pursuant to paragraph 10.5 assuming all the assets of the Partnership were sold for
their Adjusted Asset Values and the Partnership were in liquidation.
5.3 Special Allocations.
(a) To the extent the Partnership has taxable interest income or expense with
respect to any promissory note between any Partner and the Partnership as holder and maker or
maker and holder pursuant to Section 483, Sections 1271 through 1288, or Section 7872 of the
Code, such interest income or expense shall be specially allocated to the Partner to whom such
promissory note relates, and such Partner’s Capital Account adjusted if appropriate.
(b) If additional persons are admitted to the Partnership as Limited Partners
subsequent to the date of its formation, then organizational costs, fees (including the
management fee set forth in paragraph 6.1), and expenses of the Partnership that are allocated to
the Partners on or after the effective date of such admission shall be allocated first to such new
Partners to the extent necessary to cause such persons to be treated with respect to such items as
10.
if they had been Partners from the Initial Closing Date, all as the General Partner may in its
discretion determine to be equitable.
5.4 Regulatory Allocations.
(a) This Agreement is intended to comply with the safe harbor provisions set
forth in Treasury Regulation 1.704-1(b) and the allocations set forth in paragraph 5.4(b) (the
“Regulatory Allocations”) are intended to comply with certain requirements of Treasury
Regulation Section 1.704-1(b). In the event the Regulatory Allocations result in allocations
being made that are inconsistent with the manner in which the Partners intend to divide
Partnership Profit and Loss as reflected in paragraphs 5.1, 5.2 and 5.3, the General Partner shall
use its best efforts to adjust subsequent allocations of any items of profit, gain, loss, income or
expense such that the net amount of the Regulatory Allocations and such subsequent special
adjustments to each Partner is zero.
(b) The allocations provided in this Article 5 shall be subject to the following
exceptions:
(i) Any Loss or expense otherwise allocable to a Limited Partner
which exceeds the positive balance in such Limited Partner’s Adjusted Capital Account shall
instead be allocated first to all Limited Partners who have positive balances in their Adjusted
Capital Accounts in proportion to their respective Partnership Percentages, and when all Limited
Partners’ Adjusted Capital Accounts have been reduced to zero, then to the General Partner;
income shall first be allocated to reverse any loss or expense allocated under this
paragraph 5.4(b)(i), in reverse order of such loss and expense allocations, until all such prior loss
and expense allocations have been reversed.
(ii) In the event any Limited Partner unexpectedly receives any
adjustments, allocations, or distributions described in Treasury Regulation Section 1.704-
1(b)(2)(ii)(d)(4) through (d)(6), which causes or increases a deficit balance in such Limited
Partner’s Adjusted Capital Account, items of Partnership income and gain shall be specially
allocated to such Limited Partner in an amount and manner sufficient to eliminate the deficit
balance in its Adjusted Capital Account created by such adjustments, allocations, or distributions
as quickly as possible. This paragraph is intended to provide for a “qualified income offset”
within the meaning of Treasury Regulation Section 1.704-1(b)(2).
(iii) Any partnership nonrecourse deductions (as defined in the
regulations under Section 704(b) of the Code) will be allocated to the Partners in proportion to
their Partnership Percentages.
(iv) The minimum gain chargeback provisions of Treasury Regulations
Section 1.704-2(f)(6) shall also apply in the manner determined appropriate by the General
Partner.
11.
5.5 Income Tax Allocations.
(a) Except as otherwise provided in this paragraph or as otherwise required by
the Code and the rules and Treasury Regulations promulgated thereunder, a Partner’s distributive
share of Partnership income, gain, loss, deduction, or credit for income tax purposes shall be the
same as is entered in the Partner’s Capital Account pursuant to this Agreement.
(b) In accordance with Code Section 704(c) and the Treasury Regulations
thereunder, income, gain, loss and deduction with respect to any asset contributed to the capital
of the Partnership shall, solely for tax purposes, be allocated among the Partners so as to take
account of any variation between the adjusted basis of such property to the Partnership for
federal income tax purposes and its initial Adjusted Asset Value.
(c) In the event the Adjusted Asset Value of any Partnership asset is adjusted
pursuant to the terms of this Agreement, subsequent allocations of income, gain, loss and
deduction with respect to such asset shall take account of any variation between the adjusted
basis of such asset for federal income tax purposes and its Adjusted Asset Value in the same
manner as under Code Section 704(c) and the Treasury Regulations thereunder.
ARTICLE 6
MANAGEMENT FEE; PARTNERSHIP EXPENSES; ACQUISITION AND DISPOSITION FEES
6.1 Management Fee.
(a) The General Partner (or its designee) shall be compensated on a quarterly
basis for services rendered during the term of the Partnership by the payment in advance by the
Partnership in cash to the General Partner (or its designee) on the first day of each fiscal quarter
(or portion thereof) (each a “Management Fee Payment Date”), of a management fee.
Notwithstanding the foregoing, the first payment shall be due upon the date on which the
Limited Partners’ initial capital contributions are due and shall be for the amount accrued since
the Initial Closing Date plus the amount due from the period from such initial drawdown date to
the beginning of the subsequent Management Fee Payment Date of the Partnership.
(b) The management fee for each fiscal quarter shall be an amount equal to
1.75% (the percentage applicable for any fiscal quarter referred to herein as the “Management
Fee Percentage”) of the aggregate Capital Commitments of all Partners, as of the first day of
each such quarter; provided, however, (i) that the management fee for each of the Partnership’s
first and last fiscal quarter shall be proportionately reduced based upon the ratio that the number
of days in each such period bears to ninety (90), and (ii) that an additional management fee shall
be payable upon the date of admission of any additional Partner to the Partnership to reflect the
increased Capital Commitments calculated as if such Partner were admitted upon the Initial
Closing Date of the Partnership.
(c) The management fee otherwise payable by the Partnership to the General
Partner (or its designee) pursuant to paragraph 6.1(a) for a quarterly period shall be offset by an
amount equal to one hundred percent (100%) of the amount of any cash or other compensation
12.
paid as directors, transaction (excluding Acquisition and Disposition Fees pursuant to paragraph
6.3), commitment, breakup or broken deal fees to the General Partner, the Managing Principals
or its employees or Affiliates, during the immediately preceding quarterly period by or in
connection with any company in which the Partnership holds an investment or any company in
which the Partnership expected to invest but issuance of Securities was not consummated. For
the purposes of this paragraph 6.1(c), all non-cash compensation in the form of options, warrants
or other similar rights received by any parties set forth in this paragraph 6.1(c) shall offset
management fees only at such time as they are valued by the Partnership pursuant to this
paragraph. All non-cash compensation shall be valued upon the earliest to occur of (a) the
disposition of the underlying Securities acquired on the exercise of such options, warrants or
other similar rights or (b) the date of dissolution of the Partnership. The value of options and
warrants shall be, on a per share basis, the difference, as of the valuation date, between the
exercise price and the fair market value of the Securities on such date. No value shall be
attributable to an option or warrant if the Securities are of a portfolio company that has been
written off or written down to a nominal amount as of the valuation date. In the event the offsets
required by this paragraph 6.1(c) for a quarterly period exceed the management fee payable for
such quarterly period, the amount of such excess shall be offset against the management fee
otherwise payable in subsequent quarterly periods until there has been a full reduction of
management fees with respect to amounts described in the foregoing sentence; provided that any
balance of fees not offset by the reduction of management fees prior to the dissolution of the
Partnership shall be paid over to the Partnership by the General Partner and allocated among all
Partners in accordance with their respective Partnership Percentages (unless a Partner provides
written notice to the General Partner that it elects not to receive an allocation of any such excess
fees).
All valuations of stock and options received by the General Partner, the Managing Principals or
any of their respective Affiliates as compensation shall be determined by the General Partner
pursuant to paragraph 12.1. The provisions of this paragraph 6.1(c) shall not apply to any
director’s fees received by any of the members of the General Partner who serve as a director of
an entity in which the Partnership has invested if (i) such fees are related to a member’s service
as a director after the initial public offering of the entity or after such entity’s acquisition by
merger or consolidation with, or sale of all or substantially all of its assets to, another entity; (ii)
such fees were also received by each of the other directors of the entity or surviving entity, in the
case of an acquisition, merger or consolidation and (iii) such fees are applicable to the time
period after such interest has been distributed to the Partners.
6.2 Expenses.
(a) From the management fee, the General Partner shall bear all normal
operating expenses incurred in connection with the management of the Partnership, the General
Partner, except for those expenses borne directly by the Partnership as set forth in
paragraphs 6.2(b), (c) and (d) below and elsewhere herein. Such normal operating expenses to
be borne by the General Partner (or its designee) shall include, without limitation, expenditures
on account of salaries, wages, benefits, entertainment, and other expenses of employees, and
agents of General Partner, overhead and rentals payable for space used by the General Partner (or
its designee) or the Partnership, office expenses and expenses for equipment.
13.
(b) The Partnership shall bear all costs and expenses incurred in the
investigation, holding, purchase, sale or exchange of Securities (whether or not ultimately
consummated), including, but not by way of limitation, private placement fees, finder’s fees,
interest on borrowed money, real property or personal property taxes on investments, including
documentary, recording, stamp and transfer taxes, brokerage fees or commissions, legal fees,
expenses incurred in connection with the investigation, prosecution or defense of any claims by
or against the Partnership, including claims by or against a governmental authority, audit and
accounting fees, legal, accounting and consulting fees relating to investments or proposed
investments, taxes applicable to the Partnership on account of its operations, fees incurred in
connection with the maintenance of bank or custodian accounts, and all expenses incurred in
connection with the registration of the Partnership’s Securities under applicable securities laws
or regulations. The Partnership shall also bear expenses incurred by the General Partner in
investigating and evaluating investment opportunities whether or not consummated (including
but not limited to legal, accounting and consulting fees incurred in connection therewith),
managing investments of the Partnership, serving as the tax matters partner (as described in
paragraph 11.7), the reasonable cost of liability and other premiums for insurance protecting the
Partnership, the General Partner, the Managing Principals, and its employees from liability to
third parties, all out-of-pocket expenses of preparing and distributing reports to Partners, out-of-
pocket expenses associated with Partnership communications with Partners, including
preparation of annual or other reports to the Limited Partners, out-of-pocket costs associated with
Partnership meetings, all legal and accounting fees relating to the Partnership and its activities,
all costs and expenses arising out of the Partnership’s indemnification obligation pursuant to this
Agreement, and all expenses that are not normal operating expenses.
(c) The Partnership shall bear all of the organizational costs, fees, and other
expenses incurred in connection with the formation and organization of the Partnership and the
General Partner, including, without limitation, legal and accounting fees, travel and expenses
incident thereto with such formation and organization, up to a maximum aggregate amount of
Three Hundred Thousand Dollars ($300,000).
(d) The Partnership shall bear all liquidation costs, fees, and expenses in
connection with the liquidation of the Partnership at the end of the Partnership’s term, including,
without limitation, legal and accounting fees and expenses.
(e) The Partnership agrees to reimburse the General Partner as appropriate to
give effect to the provisions of this paragraph 6.2 in the event that the General Partner pays an
obligation that is properly the responsibility of the Partnership.
6.3 Acquisition and Disposition Fees. The General Partner (or its designee) shall be
compensated upon the acquisition of each investment by payment by the Partnership in cash to
the General Partner (or its designee) of one percent (1%) based upon the gross asset cost of
investment made by the Partnership. The General Partner (or its designee) shall be compensated
upon the disposition of each investment by payment by the Partnership in cash to the General
Partner (or its designee) of one percent (1%) based upon the gross asset sale of dispositions made
by the Partnership.
14.
ARTICLE 7
WITHDRAWALS BY AND DISTRIBUTIONS TO THE PARTNERS
7.1 Interest. Except as otherwise provided in this Agreement, no interest shall be
paid to any Partner on account of its interest in the capital of or on account of its investment in
the Partnership.
7.2 Withdrawal by the Partners. A Partner may withdraw any amount from its
Capital Account with one hundred twenty (120) days advance written notice to the General
Partner, provided that the Partnership has been in existence for one (1) complete fiscal year. In
the event of withdrawal under the foregoing terms, such Partner shall forfeit any distributions
provided in this Article 7 for the applicable taxable year. Withdrawal of a Partner may only be
made pursuant to this Article 7 or Article 10.
7.3 Partners’ Obligation to Repay or Restore. Except as required by law or this
Agreement, no Limited Partner shall be obligated at any time to repay or restore to the
Partnership all or any part of any distribution made to it from the Partnership in accordance with
the terms of this Article 7 or Article 10.
7.4 Mandatory Distributions. The General Partner may cause the Partnership to
distribute to each Partner in cash, within ninety (90) days after the end of each fiscal year during
the term of the Partnership, an amount equal to the excess, if any, of (i) the Applicable Tax Rate
(as defined below) multiplied by the net taxable income allocated to such Partner as a result of
such Partner’s ownership of an interest in the Partnership for such immediately preceding fiscal
year, over (ii) all prior cash and in-kind distributions (valued at the time of distribution in
accordance with paragraph 12.1) made pursuant to this paragraph 7.4 or paragraph 7.5 during
such immediately preceding fiscal year (other than amounts distributed pursuant to this
paragraph 7.4 during such fiscal year in respect of net taxable income allocated to a Partner
during the preceding fiscal year) provided, that the General Partner will have no obligation to
make the foregoing distributions if the total amount to be distributed to all Partners would be less
than one hundred thousand dollars ($100,000). In addition, the General Partner may cause the
Partnership to distribute such aggregate amount in a lump sum or in installments, at such time or
times as the General Partner deems appropriate in its discretion, including, without limitation, in
quarterly installments during any fiscal year, or after the end of a fiscal year. The General
Partner may estimate the appropriate amount of any such distribution. All such quarterly tax
distributions shall be made to the Partners in proportion to the taxable income allocated (or
expected to be allocated) to them for the applicable fiscal year. In the event any Partner receives
aggregate tax distributions for a particular fiscal year that exceed such Partner’s proportionate
entitlement to tax distributions for such fiscal year (based on such Partner’s allocable share of
taxable income for such fiscal year), the General Partner shall correct such overage in the manner
it deems most appropriate, including, without limitation, by deducting such excess from future
tax distributions to which such Partner may be entitled, or by requiring repayment of such excess
by such Partner. The provisions of this paragraph 7.4 shall apply equally to all Partners, without
regard to their tax-exempt status under the Code. For purposes of this paragraph 7.4, the
“Applicable Tax Rate” shall refer to the highest state and federal rates (including, to the extent
applicable, self-employment and Medicare taxes) then applicable to any Managing Principal who
15.
is then actively involved in the affairs of the Partnership, applied by taking into account the
character of the taxable income in question (i.e., long-term capital gains, ordinary income, etc.)
7.5 Discretionary Distributions.
(a) Prior to Payback, as defined below, all such distributions shall be made to
all Partners (including the General Partner) pro rata in proportion to their respective Partnership
Percentages.
(b) Subsequent to Payback, all such distributions shall be made eighty percent
(80%) to all Partners in proportion to their respective Partnership Percentages and twenty percent
(20%) to the General Partner; provided, however, in no event shall the General Partner receive
any distribution pursuant to this paragraph 7.5(b) so long as and to the extent that (i) there are
Contingent Losses in the Capital Accounts of the Partners that have not been previously restored
or are not restored by adjustments to such distribution, and (ii) such distribution would cause the
General Partner’s Capital Account to be less than the General Partner’s Partnership Percentage
multiplied by the Capital Accounts of all Partners or further reduce the General Partner’s existing
Capital Account balance to less than the General Partner’s Partnership Percentage multiplied by
the Capital Accounts of all Partners (calculating Capital Account balances for such purposes by
adjusting the Capital Account balances as of the beginning of the Accounting Period in which
the distribution is made for all distributions made and for all income and gains or losses realized
subsequent to the beginning of such Accounting Period through the date of the proposed
distribution). The portion of the General Partner’s distribution described in the proviso in the
first sentence of this paragraph 7.5(b) which is not permitted shall be, at the General Partner’s
discretion, retained by the Partnership and distributed to the General Partner (x) upon the
satisfaction of the conditions set forth in clauses (i) and (ii) of this paragraph 7.5(b) or (y),
subject to paragraph 10.5, upon liquidation of the Partnership.
“Payback” is defined to be the time that (i) the aggregate distributions received by the Limited
Partners pursuant to all provisions of this Agreement (with any in-kind distributions valued at the
time of distribution in accordance with paragraph 12.1) equal (ii) the aggregate amount of the
capital contributed by the Limited Partners to the Partnership through the date of determination.
(c) Notwithstanding paragraph 7.5(b) above, the General Partner may in its
discretion, at any time subsequent to distributions made pursuant to paragraph 7.5(a), make
distributions either (i) to all Partners in proportion to their respective Partnership Percentages, or
(ii) to the Limited Partners in proportion to their respective Partnership Percentages. In the event
that a distribution representing amounts otherwise distributable to the General Partner pursuant
to paragraph 7.5(b) in respect of its carried interest is made at the General Partner’s election to
all Partners or to the Limited Partners in proportion to their respective Partnership Percentages
pursuant to this paragraph 7.5(c), then the General Partner may subsequently cause the
Partnership to distribute cash to the General Partner in an amount equal to the amount of such
foregone distribution.
(d) Any distribution made pursuant to paragraph 7.4 shall be deemed an
advance of, and shall offset, the Partnership’s obligation to make distributions to Partners
16.
pursuant to paragraph 7.5, but only to the extent such amounts have not previously been taken
into account to calculate or reduce distributions.
(e) Securities distributed in kind shall be subject to such conditions and
restrictions as the General Partner determines are legally required or appropriate. Whenever
types or classes of Securities are distributed in kind, each Partner shall receive its ratable portion
of each type or class of Securities distributed in kind (except to the extent that a disproportionate
distribution is necessary to avoid distributing fractional shares).
(f) Except as set forth in paragraph 7.5(i) below, and subject to its intention to
make portfolio company investments in an aggregate amount of up to one hundred percent
(100%) of Committed Capital and to establish reasonable reserves for anticipated Partnership
obligations, expenses (including the management fee payable to the General Partner pursuant to
paragraph 6.1 hereof) and actual or contingent liabilities, the General Partner shall distribute
proceeds from the sale or other disposition of Securities of portfolio companies and other cash
income received from portfolio company investments as soon as practicable after such sale,
disposition or receipt. For the avoidance of doubt, the General Partner shall be permitted to use
the proceeds in respect of disposed portfolio company Securities to make investments in the
Securities of new portfolio companies, subject to the foregoing limitation.
(g) Notwithstanding any other provision of this paragraph 7.5, prior to the
dissolution of the Partnership, the Partnership shall not make a distribution of Nonmarketable
Securities.
(h) Immediately prior to any distribution in kind, the Deemed Gain or
Deemed Loss of any Securities distributed shall be allocated to the Capital Accounts of all
Partners as Profit or Loss pursuant to Article 5.
(i) In connection with any distribution of cash made available as a result of
the disposition of that portion of an investment disposed of to an unaffiliated third party within
twelve (12) months of the original investment date (each, a “Designated Distribution”), the
General Partner may elect, by written notice to the Partners, to make all or a portion of the
amount of such Designated Distribution subject to recontribution to the Partnership to the full
extent of the cost basis portion of such distribution (a “Designated Amount”). In the event of
any such election, solely for purposes of determining the remaining amount of capital that each
Partner is obligated to contribute pursuant to paragraph 4.2(a) in respect of such Partner’s Capital
Commitment, such Partner’s Capital Commitment shall be deemed to be increased by such
Partner’s share of the Designated Amount. In addition, in lieu of the General Partner distributing
the Designated Amount to the Partners and each Partner re-contributing such Partner’s share of
the Designated Amount pursuant to a capital call made by the General Partner, the General
Partner may retain each Partner’s share of the Designated Amount for reinvestment in new
portfolio company investments or any other purpose for which the General Partner is entitled to
call capital pursuant to the terms of this Agreement.
(j) Notwithstanding any other provision of this paragraph 7.5, and subject to
the maintenance of reasonable cash reserves (as determined and established at the discretion of
the General Partner), within ninety (90) days of the end of each fiscal year, the General Partner
17.
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