This SUBSCRIPTION AGREEMENT (this “Agreement”) is entered into by and among REMAGINE GP PARTNERS II, LLC, a Delaware limited liability company (the “General Partner”), acting on its own behalf and in its capacity as general partner of REMAGINE VENTURES II, L.P., a Delaware limited partnership (the “Partnership”), and the investor identified on SCHEDULE A hereto (the “Investor”) in connection with the Investor’s purchase of a limited partner interest in the Partnership (the “Interest”), and admission as a Limited Partner therein pursuant to the Amended and Restated Limited Partnership Agreement of the Partnership (as amended and/or restated from time to time, the “Partnership Agreement”). Capitalized terms used but not defined herein shall have the meanings set forth in EXHIBIT E, or, if not defined in EXHIBIT E, the meanings given to them in the Partnership Agreement.
The Investor hereby irrevocably subscribes for an Interest, and the General Partner, the Partnership and the Investor hereby agree as follows:
1. Subscription for a Limited Partner Interest. Subject to the terms and conditions set forth in this Agreement, the Investor agrees to purchase from the Partnership the Interest in exchange for a commitment to contribute capital to the Partnership in the amount set forth on the Investor’s signature page hereto on the line captioned “Capital Commitment,” or such lesser amount as the General Partner may accept pursuant to paragraph 3(b) of this Agreement (the Investor’s “Capital Commitment”), payable in the manner and at the times provided in the Partnership Agreement. The General Partner, acting on behalf of itself and as agent or attorney-in-fact on behalf of each of the other Partners in the Partnership, and the Investor each agree that, with effect from the General Partner’s acceptance of the Investor’s subscription pursuant to this Agreement, the Investor will be admitted to the Partnership as a Limited Partner and will be bound by and receive the benefit of the terms of the Partnership Agreement as a Limited Partner, and such terms are hereby incorporated by reference as if set out herein in full. If the General Partner elects to form one or more Parallel Funds pursuant to the Partnership Agreement, then this Agreement shall be, at the election of the General Partner, a subscription for an interest in (including by way of transfer from the Partnership, if necessary) such other of those entities as the General Partner designates and the agreement of the undersigned to become a party to the Partnership Agreement and become a limited partner of the Partnership shall apply to such other of those entities as the General Partner designates. If the General Partner so designates that the undersigned become a limited partner or member of such other entity, then the term “Partnership” as used herein shall refer to such other entity, the term “Partnership Agreement” shall refer to the corresponding document of such other entity and the term “Limited Partner” shall mean a limited partner or member of such other entity. The limited partnership agreement and/or other organizational agreement and any other documents reflecting the admission of the Investor to a Parallel Fund as a limited partner or member thereof (including by way of transfer) may be executed on behalf of the Investor by the General Partner pursuant to the power of attorney granted by the Investor in paragraph 22 or such other power of attorney as is executed by the Investor.
2. Contribution. The Investor agrees to contribute, in installments, an aggregate amount equal to the Investor’s Capital Commitment pursuant to the terms of, and at the times required by, the Partnership Agreement. (All references herein are to United States Dollars.) All payments of the Investor’s Capital Commitment shall be made by check made payable to “Remagine Ventures II, L.P.” or by wire transfer pursuant to instructions provided by the General Partner prior to the due date of such payments. The Investor understands that, except as otherwise provided in the Partnership Agreement, the Investor may not make less than the full amount of any required capital contribution or return less than the total amount of distributions required to be returned, and that default provisions with respect thereto, pursuant to which the Investor may suffer substantial adverse consequences (including, without limitation, the loss of its entire investment in the Partnership), are contained in the Partnership Agreement.
3. Acceptance of Capital Commitment. Delivery of Partnership Agreement. The Investor understands and agrees that this subscription is made subject to the following terms and conditions:
(a) The General Partner shall have the right to review the suitability of any Person desiring to purchase an Interest and, in connection with such review, to waive such suitability standards as to such Person as the General Partner deems appropriate under applicable law;
(b) The General Partner shall have the right, in its sole and absolute discretion, to reject this subscription, in whole or in part, and the subscription shall be deemed to be accepted bythe General Partner only when the Investor has been admitted to the Partnership as a Limited Partner;
(c) The General Partner shall have no obligation to accept subscriptions in the order received;
(d) The Investor hereby requests and authorizes the General Partner to enter the Investor’s name in the books and records of the Partnership as holder of the Interest;
(e) The Interest to be created on account of this subscription shall be created only in the name of the Investor, and the Investor agrees to comply with the terms of the Partnership Agreement and to execute any and all further documents necessary in connection with becoming a Limited Partner of the Partnership; and
(f) The Investor hereby undertakes in respect of the Interest that the Investor shall comply with the restrictions on Transfer of the Interest contained in the Partnership Agreement.
4. Partnership’s Conditions to Closing. The Partnership’s obligations hereunder are subject to acceptance by the General Partner of the Investor’s subscription and to the fulfillment, prior to or at the time of closing, of each of the following conditions:
(a) The representations and warranties of the Investor contained in this Agreement shall be true and correct at the time of closing; and
(b) All proceedings in connection with the transactions contemplated hereby and all documents and instruments incident to such transactions shall be satisfactory in substance and form to the General Partner, the Partnership and Choate, Hall & Stewart LLP, legal counsel to the Partnership (“Partnership Counsel”), and the General Partner, the Partnership or Partnership Counsel shall have received all such counterpart originals or certified or other copies of such documents as the General Partner may request.
5. Investor’s Representations. In connection with the Investor’s purchase of the Interest, the Investor makes the following representations and warranties on which the General Partner, the Partnership and Partnership Counsel are entitled to rely:
(a) The Investor has a pre-existing personal or business relationship with the General Partner and/or any of its principals, agents or Affiliates. The Investor has received, read and understands the Partnership Agreement and this Agreement, including, without limitation, the Legal and Regulatory Considerations contained in EXHIBIT C hereto. No representations or warranties have been made to the Investor by the Partnership, the General Partner or any agent of said Persons, other than as set forth in the Partnership Agreement and this Agreement, including, without limitation, the Legal and Regulatory Considerations contained in EXHIBIT C hereto.
(b) The Investor is acquiring the Interest solely for the Investor’s own account and not directly or indirectly for the account of any other Person whatsoever (or, if the Investor is acquiring the Interest as a trustee, solely for the account of the trust or trust account named herein) for investment and not with a view to, or for sale in connection with, any distribution of the Interest. The Investor does not have any contract, undertaking or arrangement with any Person to Transfer or grant a participation to any Person with respect to the Interest.
(c) If the undersigned is acting as a nominee or a custodian for another Person in connection with the purchase and holding of the Interest, the undersigned has so indicated on SCHEDULE A hereto. The representations and warranties contained in this Agreement and any other documents provided to the General Partner or the Partnership in connection with the Investor’s investment in the Partnership regarding the “Investor” are true and correct with regard to the Person for which the undersigned is acting as a nominee or custodian. Without limiting the generality of the foregoing, the representations and warranties regarding the status of the Investor in the Exhibits hereto are true with respect to, and accurately describe, the Person for which the undersigned is acting as nominee or custodian and the undersigned nominee or custodian has the full power and authority to make such representations on behalf of and execute the binding agreements enforceable against such Person. The Person for which the undersigned is acting as nominee or custodian will not Transfer or otherwise dispose of or distribute any part of its economic or beneficial interest in (or any other rights with respect to) the Interest without complying with Applicable Securities Laws (as defined below) and all of the applicable provisions of the Partnership Agreement as if such Person were a direct limited partner of the Partnership and were transferring a direct limited partner interest in the Partnership. If the undersigned is acting as nominee or custodian for another Person, the undersigned agrees to provide such other information as the General Partner may reasonably request regarding the undersigned and the Person for which the undersigned is acting as nominee or custodian in order to determine the eligibility of the Investor to purchase the Interest. If the undersigned is a trustee of a trust, all of the representations and warranties contained in this Subscription Agreement (and the Exhibits hereto) and any other documents provided to the General Partner or the Partnership in connection with the Investor’s investment in the Partnership are true and correct with respect to such trust, such trustee has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Partnership, the representations and warranties in paragraphs 5(p) and 5(r) with respect to power and authority of the Investor, and lack of conflicts with the governing documents and other applicable agreements and laws binding upon the Investor, respectively, are made both by the Investor and such trustee, and this Agreement has been duly executed on behalf of the Investor by such trustee, is binding against such trustee in such capacity and such trustee has obtained all necessary consents described in paragraph 5(o). If the Investor is a non-U.S. entity without separate legal personality under the laws of the jurisdiction of its formation (such as a Cayman Islands exempted limited partnership or a partnership formed under the laws of Guernsey, Jersey, England or Wales), the representations and warranties regarding the “Investor” in this paragraph 5 and any other documents provided to the General Partner or the Partnership in connection with the Investor’s investment in the Partnership are made on behalf of and regarding such non-U.S. entity by the Person (such as its general partner) that has the power and authority to act on behalf of or in trust of such non-U.S. entity, and the representations and warranties in paragraphs 5(p) and 5(r) with respect to power and authority of the Investor, and lack of conflicts with the governing documents and other applicable agreements and laws binding upon the Investor, respectively, are made by such applicable Person that has the power and authority to act on behalf of and regarding such non-U.S. entity, this Agreement has been duly executed on behalf of such non-U.S. entity by such Person, is binding against such Person in such Person’s capacity and such Person has obtained all necessary consents described in paragraph 5(o).
(d) The Investor and its purchaser representative (if any) currently have, and (unless the Investor has a purchaser representative) the Investor had immediately prior to receipt of any offer regarding the Partnership, such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Partnership. With respect to the profit sharing and compensation arrangements between the Partnership and the General Partner and its Affiliates set forth in the Partnership Agreement, the Investor understands and acknowledges that (i) the profit sharing arrangements may create an incentive for the General Partner to make investment decisions that are riskier or more speculative than would be the case in the absence of such arrangements (ii) the Partnership Agreement and such profit sharing and compensation arrangements represent arms’-length arrangements between the Investor and the Partnership, on the one hand, and the General Partner and its Affiliates, on the other hand, and, (iii) other arrangements more favorable to the Investor may be available in the market. The Investor understands the proposed methods of profit sharing and compensation of the General Partner and its Affiliates and their risks. The Investor is able to bear the economic risk of such investment, including the risk of complete loss.
(e) If the Investor has used a purchaser representative, the Investor has previously given the Partnership notice in writing of such fact, specifying that such representative would be acting as the Investor’s “purchaser representative” as defined in Rule 501(h) of Regulation D under the Securities Act.
(f) The Investor has had access to such information concerning the Partnership as the Investor deems necessary to enable the Investor to make an informed decision concerning thepurchase of the Interest. The Investor has had access to representatives of the General Partner and the opportunity to ask questions of, and receive answers satisfactory to the Investor from, such representatives concerning the offering of Interests and the Partnership generally. The Investor has obtained all additional information requested by the Investor to verify the accuracy of all information furnished in connection with the offering of Interests, evaluate the merits and risks of an investment in the Interest or otherwise relative to the proposed activities of the Partnership.
(g) The Investor understands that the Interest has not been, and will not be, registered under the Securities Act, or any securities law of any state of the United States or any other jurisdiction, in each case in reliance on an exemption for private offerings.
(h) The Investor is aware that (i) the Investor must bear the economic risk of investment in the Interest for an indefinite period of time, possibly until final winding up and dissolution of the Partnership, (ii) because the Interest has not been registered under the Securities Act, there is currently no public market therefor and it is not anticipated that such a market will ever develop, (iii) the Investor may not be able to avail itself of the provisions of Rule 144 of the Securities Act with respect to the Interest, and (iv) the Interest cannot be sold or otherwise disposed of unless subsequently registered under the Securities Act or an exemption from such registration is available. The Investor understands that the Partnership is under no obligation, and does not intend, to effect any such registration at any time. The Investor also understands that Transfers of the Interest are further restricted by the provisions of the Partnership Agreement and, as applicable, securities laws of other jurisdictions and the states of the United States. The Investor has no need for liquidity in connection with its purchase of the Interest, and is able to bear the risk of loss of its entire investment in the Interest.
(i) The Investor agrees not to resell or otherwise Transfer all or any part of the Interest, except as permitted by law, including, without limitation, any regulations under the Securities Act and the applicable securities acts or similar statutes of the jurisdiction in which the Investor resides, including all regulations and rules of such laws, together with applicable published policy statements, instruments, notices and blanket orders or rulings of general applications (collectively, “Applicable Securities Laws”), and the terms of this Agreement and the Partnership Agreement. The Transfer of the Interest and the substitution of another Limited Partner for the Investor is restricted by and subject to the terms of the Partnership Agreement and the consent of the General Partner.
(j) The Partnership is relying on (and the offering is conditional upon) an exemption from the requirement to provide the Investor with a prospectus under the Applicable Securities Laws and, as a consequence of acquiring the Interest pursuant to such exemption, certain protections, rights and remedies provided by the Applicable Securities Laws, including statutory rights of rescission or damages, may not be or may only be partially available to the Investor, or others for whom it is contracting hereunder. Such Persons may not receive information that would otherwise be required to be provided under the Applicable Securities Laws and the Partnership is relieved from certain obligations that would otherwise apply under the Applicable Securities Laws. The Investor acknowledges that the Investor is purchasing the Interest without being furnished any offering literature or prospectus other than the Partnership Agreement and this Agreement, including, without limitation, the Legal and Regulatory Considerations contained in EXHIBIT C hereto. The Investor did not rely on any information whatsoever, except for this Agreement and the Partnership Agreement, including, without limitation, the Legal and Regulatory Considerations contained in EXHIBIT C hereto, to make such decision and such materials were not accompanied by any advertisement, including, without limitation, in printed public media, radio, television or telecommunications, including electronic display and the internet, or part of a general solicitation.
(k) The Investor acknowledges that it is not purchasing the Interest as a result of or subsequent to (i) any advertisement, article, notice or other communications published in any newspaper, magazine or other similar media (including any internet site that is not password protected) or broadcast over television or radio, or (ii) any seminar or meeting whose attendees, including the Investor, had been invited as a result of, subsequent to or pursuant to the foregoing.
(l) The Partnership is not being registered, and the General Partner does not have any intention of registering the Partnership, as an “investment company” as the term “investment company” is defined in Section 3(a) of the U.S. Investment Company Act of 1940, as amended (the “Investment Company Act”). None of the General Partner, Remagine Media Ltd. (the “Management Company”) or their respective members, or any other person selected by the General Partner to act as agent or adviser of the Partnership with respect to managing the affairs of the Partnership, is currently registered as an investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the “Advisers Act”).
(m) The purchase of the Interest by the Investor is consistent with the general investment objectives of the Investor. The Investor hereby acknowledges that it has not relied on the General Partner, the Management Company or any of their respective officers, directors, employees, shareholders, partners, members, managers, managing directors or Affiliates for investment advice with respect to an investment in the Partnership.
(n) The Investor’s full legal name, true and correct address of residence (for individuals) or principal place of business (for entities), phone number, fax number, electronic mail address, United States taxpayer identification number (each, if applicable) and other contact information are provided on SCHEDULE A hereto.
(o) The Investor received this Agreement (including, without limitation, the Legal and Regulatory Considerations contained in EXHIBIT C hereto) and the Partnership Agreement and first learned of the Partnership in the jurisdiction listed as the address of the Investor set forth on SCHEDULE A hereto, and intends that the Applicable Securities Laws of that jurisdiction alone shall govern this transaction. If the Investor is not a resident of the United States, the Investor understands that it is the responsibility of the Investor to satisfy himself, herself or itself as to full observance of the laws of any relevant territory outside of the United States in connection with the offer and sale of the Interest, including obtaining any required governmental or other consent or observing any other applicable formalities.
(p) The execution and delivery of the Partnership Agreement and this Agreement, the consummation of the transactions contemplated thereby and the performance of the obligations thereunder will not conflict with or result in any violation of or default under any provision of any other agreement or instrument to which the Investor is a party or any license, permit, franchise, judgment, order, writ or decree, or any statute, rule or regulation, applicable to the Investor.
(q) No suit, action, claim, investigation or other proceeding is pending or, to the best of the Investor’s knowledge, is threatened against the Investor that questions the validity of the Partnership Agreement or this Agreement or any action taken or to be taken pursuant to the Partnership Agreement or this Agreement.
(r) The Investor has full power and authority to make the representations referred to in this Agreement, to purchase the Interest pursuant to this Agreement and the Partnership Agreement and to deliver and perform its obligations under the Partnership Agreement and this Agreement. The Partnership Agreement and this Agreement create valid and binding obligations of the Investor and are enforceable against the Investor in accordance with their terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws affecting creditors’ rights, and subject to general equity principles and to limitations on availability of equitable relief, including specific performance.
(s) The Investor acknowledges that it understands the meaning and legal consequences of the representations and warranties made by the Investor herein. Such representations and warranties are complete and accurate, shall be complete and accurate at the time of closing, may be relied upon by the Partnership, the General Partner and Partnership Counsel and shall survive delivery of this Agreement and the Partnership Agreement. If in any respect such information shall not be complete and accurate prior to the time of closing, the Investor shall give immediate written notice of such incomplete or inaccurate information to the General Partner, specifying which representations or warranties are not complete and accurate and the reasons therefor. If, after the time of closing, the Investor becomes aware that any of the representations and warranties made by the Investor herein become incomplete or inaccurate as of such time (including, without limitation, as a result of any transfer of any direct or indirect interest in the Investor by a direct or indirect participant in the Investor, any admission of a new participant (directly or indirectly) to the Investor, or otherwise), the Investor shall give immediate written notice of such incomplete or inaccurate information to the General Partner, specifying which representations or warranties are not complete and accurate and the reasons therefor. The Investor hereby agrees to provide the Partnership and the General Partner with all information that may otherwise be reasonably requested by the General Partner in connection with compliance with applicable law by the General Partner, the Partnership, the Portfolio Companies, the Management Company and their respective Affiliates, including all applicable anti-money laundering, economic sanctions, anti-bribery and anti-boycott laws and regulations.
(t) The Investor hereby agrees to indemnify and hold harmless the Partnership, Partnership Counsel, the General Partner, the Management Company and each shareholder, partner, member, managing director, manager, director, officer, employee, consultant, agent or Affiliate thereof (each, an “Indemnified Party”) from and against any and all loss, damage or liability due to or arising out of any inaccuracy or breach of any representation or warranty of the Investor or failure of the Investor to comply with any covenant or agreement set forth herein or in any other document furnished by the Investor to any Indemnified Party specifically supplementing the information in this Agreement. The Investor shall reimburse each Indemnified Party for its legal and other fees and expenses (including the cost of any investigation and preparation) as they are incurred in connection with any such claim, action, proceeding or investigation. The reimbursement and indemnification obligations of the Investor under this paragraph shall survive any closing applicable to the Investor (or, if this Agreement is terminated pursuant to paragraph 3(b) above, such termination) and shall be in addition to any liability that the Investor may otherwise have (including, without limitation, liabilities under the Partnership Agreement), and shall be binding on, and inure to the benefit of, any successors, assigns, heirs, estates, executors, administrators and personal representatives of the Indemnified Parties. The General Partner may make, execute, record and file, on its own behalf and on behalf of the Partnership, all instruments and other documents (including one or more deed polls in favor of categories of Indemnified Parties and/or one or more separate indemnification agreements between the General Partner on behalf of itself or the Partnership and individual Indemnified Parties) that the General Partner deems necessary or appropriate in order to extend the benefit of the provisions of this paragraph 5(t) to the Indemnified Parties; provided that such other instruments and documents authorized hereunder shall be on the same terms as provided for in this paragraph 5(t) except as otherwise may be required by applicable law.
(u) The Investor acknowledges that this Agreement does not contain any disclosure concerning the tax aspects of the Partnership’s activities under the laws of any state, local, non-U.S., or other jurisdiction (other than certain United States federal income tax matters) and that the United States federal income tax matters summarized in this Agreement are general in nature, are not intended to apply, and likely will not apply, to any specific investor in light of its particular circumstances and in many cases are uncertain and subject to change. The Investor confirms that the Investor has been advised to consult with the Investor’s attorney regarding legal matters concerning the Partnership and to consult with independent tax advisors regarding the tax consequences of investing in the Partnership. The Investor acknowledges that he, she or it understands that any anticipated United States federal or state income tax benefits may not be available and, further, may be adversely affected through adoption of new laws or regulations or amendments to existing laws or regulations. The Investor acknowledges and agrees that the Partnership is providing no warranty or assurance regarding the ultimate availability of any tax benefits to the Investor by reason of the Investor’s investment in the Partnership. The Investor has consulted with, and relied solely upon, its own accountant or tax advisors in connection with its decision to acquire the Interest.
(v) The Investor understands that information relating to the Investor shall appear on the financial statements and other records of the Partnership. The Investor acknowledges and agrees that other Partners may receive such information as permitted by the Partnership Agreement or as required by applicable laws and may share such information with their advisors and other parties.
(w) The Investor represents, warrants and agrees (for the benefit of the Partnership and of any person who participated in the offer or sale of its Interest) that it has provided or will provide in a timely manner a properly completed United States Internal Revenue Service Tax Form W-8BEN, W-8BEN-E, W-8IMY, W-8EXP or W-8ECI (each, a foreign person certificate) or W-9 (a US person certificate), as appropriate. To the extent the Investor has provided or will provide a W-8IMY, and the Investor is not acting as a withholding foreign partnership or a withholding foreign trust pursuant to an agreement with the IRS, the Investor represents, warrants and agrees that it has provided or will provide properly completed and executed withholding forms for its beneficial owners as well as a withholding statement prepared in accordance with the instructions to the W-8IMY. If the Investor is providing a Form W-8IMY and the Investor is not acting as a withholding foreign partnership or a withholding foreign trust pursuant to an agreement with the IRS, the Investor agrees that the Partnership may charge the Investor for any incremental tax accounting expenses incurred as a consequence of the Investor’s structure. The Investor shall (i) promptly inform the General Partner of any change in any such information and (ii) furnish to the Partnership a new properly completed and executed W-9, or appropriate W-8 (and any accompanying required documentation), as applicable, as may be requested from time to time by the General Partner or as may be required under the Internal Revenue Service instructions to such forms, the Code or any applicable Treasury Regulations. The Investor shall cooperate with the General Partner to provide in a timely manner any other information, form, disclosure, certification or documentation that the General Partner may reasonably request (including, without limitation, any information requested with respect to Code Sections 1471-1474 and the Treasury Regulations promulgated thereunder (“FATCA”) and similar or related non-U.S. laws, including the OECD Standard for Automatic Exchange of Financial Account Information – the Common Reporting Standard, including, in each case, any amendments thereto and any guidance issued with respect thereto (together with FATCA, the “AEOI”)) in order to maintain appropriate records and provide for withholding amounts, if any, relating to the Investor’s Interest, or otherwise as the General Partner deems reasonably necessary for the conduct of the Partnership’s affairs and/or in order for the Partnership to comply with any AEOI (including if applicable, information regarding the Investor’s beneficial owners). The Investor expressly acknowledges that such tax forms and withholding information may be provided to any withholding agent that has control, receipt or custody of the income of which the Investor is the beneficial owner or any withholding agent that can disburse or make payments of the income of which the Investor is the beneficial owner. In addition, the Investors acknowledges that the information and documentation provided to the Partnership pursuant to this paragraph may be disclosed to the IRS, any other applicable governmental authority and any third parties as may be necessary or advisable in the General Partner’s sole judgement to comply with, or minimize taxes under, any AEOI. Without limiting the generality of the foregoing, the Investor agrees to waive any provisions of non-U.S. law that, absent such waiver, would prevent any reporting of information required by any AEOI, or would otherwise prevent compliance by the Partnership with its obligation under any AEOI.
(x) The following representations are included with the intention of enabling the Partnership to qualify for the benefit of a “safe harbor” under Treasury Regulations from treatment of the Partnership as an entity subject to corporate income tax. If the Investor is (or will be at any time during the period in which the Investor holds any Interest in such Partnership) an entity disregarded as separate from its owner for United States federal income tax purposes (a “Disregarded Entity”), the Investor makes the representations in this paragraph on behalf of itself and its first direct or indirect beneficial owner that is not a Disregarded Entity (the “Investor’s Owner”), as if all references to “the Investor” were replaced with “the Investor’s Owner.” Either:
(i) The Investor is not a partnership (including a limited liability company or other entity treated as a partnership for United States federal income tax purposes), grantor trust, or Subchapter S corporation for United States federal income tax purposes (a “Flow-Through Entity”), or
(ii) The Investor is a Flow-Through Entity for United States federal income tax purposes, but (1) at no time during the term of the Partnership will 65% or more of the value of any beneficial owner’s direct or indirect interest in the Investor be attributable to the Investor’s interests in the Partnership, (2) less than 65% of the value of the Investor is attributable to the Investor’s interests in the Partnership, and (3) permitting the Partnership to satisfy the 100-partner limitation set forth in Section 1.7704-1(h)(1)(ii) of the Treasury Regulations is not a principal purpose of any beneficial owner of the Investor in investing in the Partnership through the Investor.
If the Investor is unable to make either of such representations, the Investor hereby agrees to provide the General Partner, prior to the effective date of the purchase of the Interest, with evidence (including opinions of counsel, if requested) satisfactory in form and substance to the General Partner relating to the status of the Partnership under Section 7704 of the Code. Further, if at any time after the effective date of the purchase of the Interest the Investor can no longer make either of such representations, the Investor shall promptly notify in writing the General Partner. The Investor acknowledges and agrees that (i) if the Investor is a Flow-Through Entity or Disregarded Entity for United States federal income tax purposes, any change that would cause such entity to cease to be treated as a Flow-Through Entity or Disregarded Entity for United States federal income tax purposes, respectively, will be treated as a Transfer of such Investor's interests for purposes of the Partnership Agreement, (ii) if the Investor is not a Flow-Through Entity, or Disregarded Entity, any change that would cause such entity to be treated as a Flow-Through Entity or Disregarded Entity for United States federal income tax purposes, respectively, will be treated as a Transfer of such Investor's interests for purposes of the Partnership Agreement and (iii) if as a result of a Transfer, directly or indirectly, of all or any part of the ownership interests in the Investor, any part of the interests of such Partnership would be treated as being Transferred within the meaning of Treasury Regulation Section 1.7704-1(a)(3), such Transfer will be treated as a Transfer of such Investor's interests for purposes of the Partnership Agreement.
(y) The Investor understands and agrees that the General Partner may, in its sole and absolute discretion, cause the Partnership to make an election under Section 754 of the Code or an election to be treated as an “electing investment partnership” for purposes of Section 743 of the Code. If the Partnership elects to be treated as an electing investment partnership, the Investor shall cooperate with the Partnership and the General Partner to maintain that status and shall not take any action that would be inconsistent with such election. Upon request, the Investor shall provide the General Partner with any information necessary to allow the Partnership to comply with (i) its obligations to make tax basis adjustments under Sections 734 or 743 of the Code and (ii) its obligations as an electing investment partnership. The Investor understands and agrees that it shall not make an election under Section 732(d) of the Code with respect to property distributed to it by the Partnership without the prior written consent of the General Partner.
(z) The Investor acknowledges that an investment in the Partnership involves a high degree of risk and that there can be no assurance that the Partnership’s investment objectives will be achieved, or that a limited partner will receive a return of its capital. The Investor understands the various risks of an investment in the Partnership, as well as the fees and conflicts of interest to which the Partnership is subject, as set forth in the Partnership Agreement and this Agreement, including, without limitation, the Legal and Regulatory Considerations contained in EXHIBIT C hereto. The Investor hereby consents and agrees to the payment of the fees so described to the parties identified as the recipients thereof, and to such conflicts of interest.
(aa) The Investor is not, and has not been, subject to any disqualifying event set forth in Rule 506(d) of Regulation D promulgated under the Securities Act and as defined below and is not subject to any proceeding or event that could result in any such disqualifying event (each, a “Disqualifying Event”). The following representations apply to the Investor as well as each direct or indirect owner of the Investor that would own 20% or more of the Partnership’s Interests if such owner were a direct limited partner in the Partnership (each, a “Significant Owner”). By way of example only, if the Investor owns 40% of the Partnership’s Interests, the Investor would have a Significant Owner if one of the Investor’s beneficial owners owns 50% or more of the outstanding equity of the Investor. Each of the enumerated instances below is a “Disqualifying Event.” The Investor or any Significant Owner has been subject to a Disqualifying Event if the Investor or such Significant Owner:
(1) Has been convicted within ten years of the date hereof of any felony or misdemeanor (i) in connection with the purchase or sale of any security, (ii) involving the making of any false filing with the U.S. Securities and Exchange Commission (the “SEC”) or (iii) arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment adviser or paid solicitor of purchasers of securities;
(2) Is subject to any order, judgment or decree of any court of competent jurisdiction entered within five years of the date hereof that presently restrains or enjoins the Investor from engaging or continuing to engage in any conduct or practice (i) in connection with the purchase or sale of any security, (ii) involving the making of any false filing with the SEC or (iii) arising out of the conduct of the business of an underwriter, broker, dealer, municipal securities dealer, investment adviser or paid solicitor of purchasers of securities;
(3) Is subject to a final order of a state securities commission (or an agency or officer of a state performing like functions); a state authority that supervises or examines banks, savings associations or credit unions; a state insurance commission (or an agency or officer of a state performing like functions); an appropriate federal banking agency; the United States Commodity Futures Trading Commission; or the National Credit Union Administration that (i) as of the date hereof, bars the Subscriber from (A) association with an entity regulated by such commission, authority, Confidential, Proprietary and Trade Secret agency or officer, (B) engaging in the business of securities, insurance or banking or (C) engaging in savings association or credit union activities or (ii) constitutes a final order based on a violation of any law or regulation that prohibits fraudulent, manipulative or deceptive conduct entered within ten years of the date hereof;
(4) Is subject to any order of the SEC pursuant to Section 15(b) or 15B(c) of the Securities Exchange Act of 1934 (the “Exchange Act”) or Section 203(e) or (f) of the Advisers Act that, as of the date hereof: (i) suspends or revokes the Investor’s registration as a broker, dealer, municipal securities dealer or investment adviser, (ii) places limitations on the activities, functions or operations of the Investor or (iii) bars the Investor from being associated with any entity or from participating in the offering of any penny stock;
(5) Is subject to any order of the SEC entered within five years of the date hereof that presently orders the Investor to cease and desist from committing or causing a violation or future violation of (i) any scienter-based anti-fraud provision of the federal securities laws or (ii) Section 5 of the Securities Act;
(6) Is, as of the date hereof, suspended or expelled from membership in, or suspended or barred from association with a member of, a registered national securities exchange or a registered national or affiliated securities association for any act or omission to act constituting conduct inconsistent with just and equitable principles of trade;
(7) Has filed (as a registrant or issuer), or was named as an underwriter in, any registration statement or Regulation A offering statement filed with the SEC that, within five years of the date hereof, was the subject of a refusal order, stop order or order suspending the Regulation A exemption, or is presently the subject of an investigation or proceeding to determine whether a stop order or suspension order should be issued; or
(8) Is subject to a United States Postal Service false representation order entered within five years of the date hereof or is presently subject to a temporary restraining order or preliminary injunction with respect to conduct alleged by the United States Postal Service to constitute a scheme or device for obtaining money or property through the mail by means of false representations.
(9) To the best of the Investor’s knowledge, neither the Investor nor any Significant Owner is currently the subject of any threatened or pending investigation, proceeding, action or other event that, if adversely determined, would give rise to any of the events described in clauses (1)-(8) above.
(bb) The Investor will immediately notify the General Partner in writing if the Investor becomes subject to a Disqualifying Event, or becomes aware that a Significant Owner has become subject to a Disqualifying Event, at any date after the date hereof. If the Investor becomes subject to a Disqualifying Event, or becomes aware that a Significant Owner has become subject to a Disqualifying Event, at any date after the date hereof, the Investor agrees and covenants to use its best efforts to coordinate with the General Partner (i) to provide documentation as reasonably requested by the General Partner related to any such Disqualifying Event and (ii) to implement a remedy to address the Investor’s or such Significant Owner’s changed circumstances such that the changed circumstances will not affect in any way the Partnership’s or its Affiliates’ ongoing and/or future reliance on the exemption from registration set forth in Rule 506 of Regulation D promulgated under the Securities Act. The Investor acknowledges that, at the discretion of the General Partner, such remedies may include, without limitation, the waiver of all or a portion of the Investor’s voting power in the Partnership, the Investor’s removal from the Partnership, and/or the Investor’s withdrawal from the Partnership through the transfer or sale of its Interest in the Partnership. The Investor also acknowledges that the General Partner may periodically request assurance that the Investor has not become subject to a Disqualifying Event at any date after the date hereof, and the Investor further acknowledges and agrees that the General Partner shall understand and deem the failure by the Investor to respond in writing to such requests to be an affirmation and restatement of the representations, warranties and covenants in this paragraph and paragraph 5(aa).
(cc) Except as otherwise disclosed in writing in this Agreement, the Investor and any Beneficial Owner of the Investor do not and will not “beneficially own” (within the meaning of Rule 13d-3 of the Exchange Act) any other limited partner interest in the Partnership except for the interest subscribed to by the Investor in this Agreement, and none of the Investor and any Beneficial Owner of the Investor have agreed with one or more other Limited Partners (or the “beneficial owners” of such Limited Partner(s)) to act together for the purpose of acquiring, holding, voting or disposing of limited partner interests in the Partnership (within the meaning of Rule 13d-5 of the Exchange Act).
(dd) The Investor acknowledges that none of the General Partner, the Management Company nor their respective Affiliates provides, or intend to provide, advice to the Partnership with respect to investment strategies that are “plans or programs for the investment of the proceeds of municipal securities or the recommendation of and brokerage of municipal escrow investments” (within the meaning of Rule 15Ba1-1 promulgated under the Exchange Act). The Investor represents and agrees that none of its contributions to the Partnership will consist of “proceeds of municipal securities” (within the meaning of Rule 15Ba1-1).
(ee) The Investor is not a “banking entity” as such term is defined under Section 619 of Dodd Frank Wall Street Reform and Consumer Protection Act (the “Volcker Rule”) or qualified for an exemption or other relief under the Volcker Rule with respect to ownership of a limited partner interest in the Partnership, based on currently available published regulatory guidance, including the joint notice of final rulemaking issued on December 10, 2013 with respect to the Volcker Rule. The Investor covenants that it shall immediately provide the General Partner with written notice if, at any time after the Investor’s admission to the Partnership, the holding of a limited partner interest in the Partnership would cause the undersigned to violate the Volcker Rule.
6. Anti-Money Laundering Regulations. The Investor hereby acknowledges that the intent of the General Partner and the Partnership is to comply with all applicable federal, state, local and non-United States laws designed to combat money laundering and similar illegal activities, including the provisions of the PATRIOT Act. In furtherance of such efforts, the Investor hereby represents, covenants and agrees that, to the best of the Investor’s knowledge based on reasonable investigation:
(a) None of the Investor’s capital contributions to the Partnership (whether payable in cash or otherwise) shall be derived from, or related to, money laundering or similar activities deemed illegal under United States federal, state or other laws and regulations.
(b) No contribution or payment by the Investor to the Partnership, to the extent that such contribution or payment is within the Investor’s control, and no distribution to the Investor (assuming it is made with instructions provided to the General Partner by the Investor) shall cause the Partnership, the General Partner, the Management Company, the Principals or any of their respective Affiliates to be in violation of United States federal anti- money laundering laws, including, without limitation, the United States Bank Secrecy Act, the United States Money Laundering Control Act of 1986, the United States International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001, or the PATRIOT Act or any other anti-money laundering laws or regulations, in each case, such statute as amended to date and any successor statute thereto and including all regulations promulgated thereunder.
(c) When requested by the General Partner, the Investor will provide any and all additional information reasonably requested by the General Partner, and the Investor understands and agrees that the General Partner may release confidential information about the Investor and, if applicable, any underlying beneficial owner or Related Person to any Person, deemed reasonably necessary to comply with the request of an external regulatory agency related to compliance with all applicable laws and regulations concerning money laundering and similar activities. The General Partner reserves the right to request any information as is necessary to verify the identity of the Investor and the source of any payment to the Partnership. If the Investor delays or fails to produce any information required for verification purposes, the Investor’s subscription may be refused.
(d) Except as otherwise disclosed in writing to the General Partner, the Investor represents and warrants that neither the Investor nor any Person controlled by, controlling or under common control with the Investor, any of the Investor’s beneficial owners, any Person for whom the Investor is acting as agent or nominee in connection with this investment, nor in the case of an Investor which is an entity, any Related Person is:
(i) a Prohibited Investor;
(ii) a Senior Foreign Political Figure, any member of a Senior Foreign Political Figure’s “immediate family,” which includes such Senior Foreign Political Figure’s parents, siblings, spouse, children and in-laws, or any Close Associate of a Senior Foreign Political Figure, or a Person resident in, or organized or chartered under, the laws of a Non-Cooperative Jurisdiction;
(iii) a Person resident in, or organized or chartered under, the laws of a jurisdiction that has been designated by the United States Secretary of the Treasury under the PATRIOT Act as warranting special measures due to money laundering concerns; or
(iv) a Person who gives the Investor reason to believe that its funds originate from, or will be or have been routed through, an account maintained at a Foreign Shell Bank, an “offshore bank,” or a bank organized or chartered under the laws of a Non-Cooperative Jurisdiction.
(e) If the Investor is purchasing the Interest as agent, representative, intermediary/nominee or in any particular capacity for any other Person, or is otherwise requested to do so by the General Partner, it shall provide a copy of its anti-money laundering policies (“AML Policies”) to the General Partner. The Investor represents that it is in compliance with its AML Policies, its AML Policies have been approved by counsel or internal compliance personnel reasonably informed of anti-money laundering policies and their implementation and it has not received a deficiency letter, negative report or any similar determination regarding its AML Policies from independent accountants, internal auditors or some other Person responsible for reviewing compliance with its AML Policies.
(f) The Investor hereby agrees to (i) immediately notify the General Partner if it knows, or has reason to suspect, that any of the representations in this paragraph 6 have become incorrect or if there is any change in the information affecting these representations and covenants, and (ii) provide the General Partner with a reasonably detailed description of any such inaccuracy or change.
(g) The Investor agrees that if at any time it is discovered that any of the foregoing anti-money laundering representations are incorrect, or if otherwise required by applicable laws or regulations related to money laundering and similar activities, the General Partner may undertake appropriate actions, and the Investor agrees to cooperate with such actions, to ensure compliance with such laws or regulations, including, without limitation, segregation and/or redemption of the Investor’s Interest in the Partnership or freezing the Investor’s account.