EFTA01118864.pdf

SAMPLE VALUATION PROVISIONS/DESCRIPTIONS 1. Tudor Futures Fund - Private Placement Memorandum, p. 21. 11. Viking Global Equities, L.P. - Limited Partnership Agreement, pp. 11-12. III. Colden Capital Partners LP - Limited Partnership Agreement, pp. 5-6. IV. SAB Capital Partners, L.P. - Private Placement Memorandum, p. 25. V. Hlghrbidge Statistically Enhanced Equity Portfolio - Private Placement Memorandum, pp.47-48. VI. Highview Global Macro, I.P. - Private Placement Memorandum, pp. 27, 34-35. VII. Highbridge Long Short Equity Fund, L.P. - Limited Partnership Agreement, pp. 23-24. VIII. Highbridge Capital Corporation - Private Placement Memorandum, p. 27. IX. King Street Capital , L.P. - Notes to Finanal Statements, pp.10, 17-19. IN ADDITION: NOTE THE ENCLOSED SWAP AGREEMENT BETWEEN CITIGROUP AND FTC AS TRUSTEE FOR WCTII RELATING TO A NOTIONAL BASKET OF CITIBANK FUNDS. EFTA01118864  660\j- 'hy4c-L.NreS \--LA/ fOlAk VALUATION Futures and option contracts traded on exchanges are valued at their settlement prices on the day as of which Net Assets am determined; provided, however, that, if a futures or option contract could not be liquidated on such day due to the operation of daily price fluctuation limits or other rules of the exchange on which such contract is traded or otherwise, the settlement price on the first subsequent day on which such contract could be liquidated will be the value of such contract for such day. Foreign exchange spot and forward contracts and options, off-exchange option contracts, interest rate and credit default swaps, and swaptions are valued in good faith by the General Partner based on pricing models developed by the General Partner or broker quotations. Commodity forward contracts and commodity and equity swaps are valued based on the settlement prices of the underlying instruments (in accordance with the policies described above). In the absence of a settlement price, valuations are determined using broker quotations. Equity securities traded on exchanges or included in the NASDAQ Stock Market are valued at their last sale prices reported on the day as of which Net Assets are determined, or, if a security did not trade on such day, the last sale price on the next preceding day on which a sale price was reported. Over-the-counter securities for which last sale prices are not reported through the NASDAQ Stock Market generally arc valued at their last sale prices reported on the day as of which Net Assets are determined unless such securities, in the opinion of the General Partner, are illiquid, in which case such securities are valued at their last reported bid prices if held long and their last reported asked prices if sold short. Options on equity securities traded on exchanges are valued at their last reported mid-price on the day as of which Net Assets are determined. Over-the-counter options that are not traded on an exchange are valued in good faith by the General Partner and the Service Provider based on pricing models developed by the General Partner that consider the time value of money, volatility, and the current market and contractual prices of the underlying financial instruments. Fixed income securities are valued using prices published by independent vendors, which in turn utilize prices supplied by brokers. HighlYiekt ind distressed debt is valued using broker quotations and independent pricing services, if available. Investments in other investment companies are valued at the net asset values reported by such investment companies. In the absence of quoted values or when quoted values am deemed by the General Partner not to be representative of market values for positions, such positions are recorded at fair value in accordance with guidelines approved by the General Partner in consultation with the Partnership's independent public accountants, and any unrealized appreciation or depreciation generally is included in such values. Securities that have transfer restrictions generally are valued at a discount, as determined by the General Partner• to reflect restricted marketability. Securities and other investments for which quoted values are not available generally are valued at cost unless circumstances indicate that a different valuation is warranted, as determined by the General Partner. Values generally are adjusted if, for example, the General Partner determines that a substantial arm's length transaction has occurred, the investee company is experiencing significant operating difficulties or the operating environment for such companies, individually or as a whole, has deteriorated. In addition to special valuation determinations relating to illiquid positions, other special situations affecting the valuation of portfolio positions may arise from time to time. Prospective investors should understand that any uncertainties as to the valuation of portfolio positions could have an impact on the calculation of Net Assets if judgments regarding appropriate valuations should prove to be incorrect. The General Partner, in consultation with the Service Provider and the Partnership's auditor, will update these policies as they deem reasonably necessary, taking into account, among other factors, the availability and accuracy of third party pricing sources, the development of additional pricing models, and the timing of material announcements or events concerning markets or instruments. 21 EFTA01118865  \►L.7ac\ Credit" is the product of (x) the debit balance in the Loss Recovery Account multiplied by (y) a fraction, the numerator of which is the Incentive Allocation rate for the I ass Class, and the denominator of which is the Incentive Allocation rate for the Gain Class. The Loss Recovery Account of the Loss Class shall be credited by the debit balance in the Loss Recovery Account used to reduce the Net Capital Appreciation of the Gain Class. (e) If, upon the expiration of a Lock-Up Period, a Limited Partner elects to convert its interests (or portion thereof) with respect to the applicable Capital Account into a different Class of Interests and such conversion occurs on a date which does not correspond with the fiscal year-end of the Partnership, the Incentive Allocation rate for such interests for the fiscal year in which the conversion was made shall be the time-weighted average of the Incentive Allocation rate applicable to the Class of Interests converted and the Incentive Allocation rate applied to the new Class of Interests. Thereafter, the Incentive Allocation rate will be the Incentive Allocation rate applicable to the new Class of Interests. (1) In the event that the Partnership is dissolved on a date which is not the end of a fiscal year, or the effective date of a Limited Partner's withdrawal upon the expiration of a Lock-Up Period is a date which is not the end of a fiscal year, then, for purposes of determining the Incentive Allocation, Net Capital Appreciation shall be determined through the dissolution date (for all Limited Partners) or the withdrawal date (for the withdrawing Partner only) as if such date were the end of the fiscal year. (g) In the event the General Penner determines that, for tax or regulatory reasons, or any other reasons as to which the General Partner and any Limited Partner agree, such Partner should not participate in the gains or losses, if any, attributable to trading in any Security or type of Security or to any other transaction, the General Partner may allocate such Net Capital Appreciation or Net Capital Depreciation only to the Capital Accounts of Partners to whom such reasons do not apply. In addition, if for any of the reasons described above, the General Partner determines that a Partner should have no interest whatsoever in a particular Security, type of Security or transaction, the interests in such Security, type of Security or transaction may be set forth in a separate memorandum account in which only the Partners having an interest in such security, type of security or transaction shall have an interest and the gains and losses for each such memorandum account shall be separately calculated. Sec. 3.06 Amendment of Incentive Allocation. The General Partner shall have the right to amend, without the consent of the Limited Partners, Sec. 3.05 of this Agreement so that the Incentive Allocation therein provided conforms to any applicable requirements of the Securities and Exchange Commission and other regulatory authorities; provided, however, that no such amendment shall increase the Incentive Allocation as so amended to more than the amount that would be allocable prior to_giving_effect to such amendment. Sec. 3.07 Valuation of Assets. (a) Securities (including options) will generally be valued at their last sales price on the date the valuation is made on the primary securities exchange on which they are traded or on the consolidated tape in the case of Securities traded on the Nasdaq National Market System. If there were no reported sales on the date the valuation is made, the Securities will be 545463.13 EFTA01118866 valued at their last "bid" prices if held "long" and their last "asked" prices if held "short." Securities which are not listed on a national securities exchange nor included in the Nasdaq National Market System will be valued at their last closing "bid" prices if held "long" and their last closing "asked" prices if held "short." In the event the Partnership acquires Securities or other financial instruments for which market quotations are not available, such Securities will be valued at their fair market value as determined by the General Partner. Securities not denominated in U.S. dollars will be translated into U.S. dollars at prevailing exchange rates as determined by the General Partner. (b) All other assets of the Partnership (except goodwill, which shall not be taken into account) shall be assigned such value as the General Partner may reasonably determine. (c) If the General Partner determines that the valuation of any Securities or other property pursuant to Sec. 3.07(a) does not fairly represent market value, the General Partner shall value such Securities or other property as it reasonably determines and shall set forth the basis of such valuation in writing in the Partnership's records. (d) All values assigned to Securities and other assets by the General Partner pursuant to this Sec. 3.07 shall be final and conclusive as to all of the Partners. Sec. 3.0g Assets and Liabilities. Assets and liabilities shall generally be determined using generally accepted accounting principles applied on a consistent basis; provided, however that (i) the Partnership's organizational expenses will be amortized by the Partnership over a 60-month period; and (ii) the General Partner in its discretion may provide reserves for estimated accrued expenses, liabilities or contingencies, including general reserves for unspecified contingencies (even if such reserves are not in accordance with generally accepted accounting principles). Sec. 3.09 Allocation for Tax Purposes. For each fiscal year, items of income, deduction, gain, loss or credit shall be allocated for income tax purposes among the Partners in such manner as to reflect equitably amounts credited or debited to each Partner's Capital Account(s) for the current and prior fiscal year (or relevant portions thereof). Allocations under this Sec. 3.09 shall be made pursuant to the principles of Section 704(b) and 704(c) of the Internal Revenue Code of 1986, as amended (the "Code"), and Regulations Sections 1.704- 1(b)(2)(ivXf) and (g), I.704-1(b)(4)(i) and 1.704-3(c) promulgated thereunder, as applicable, or the successor provisions to such Section and Regulations. Notwithstanding anything to the contrary in this Agreement, there shall be allocated to the Partners such gains or income as shall be necessary to satisfy the "qualified income offset" requirement of Regulations Sections 1.704- 1(b)(2)(ii)(d). If the Partnership realizes ordinary income and/or capital gains (including short- term capital gains) for Federal income tax purposes (collectively, "income") for any fiscal year during or as of the end of which one or more Positive Basis Partners (as hereinafter defined) withdraw from the Partnership pursuant to Articles IV or VI, the General Partner may elect to allocate such income as follows: (i) to allocate such income among such Positive Basis Partners, pm rata in proportion to the respective Positive Basis (as hereinafter defined) of each such 545465.1) -12- EFTA01118867  fLausi, ceLz.„sY ARTICLE VI Allocation of Net Profits and Net Losses; Determination of Net Profits and Net Losses; Hot Issues; Prior Fiscal Period Items Section 6.01 Allocation of Net Profits and Net Losses. (a) Except as otherwise provided in Section 6.03 regarding the treatment of 'Hot Issues" (as hereinafter defined), any Net Profits or Net Losses (as defined in Section 6.02) during any Fiscal Period shall be allocated as of the end of such Fiscal Period to the Capital Accounts of all the Partners in the proportions which each Partner's Capital Account as of the beginning of such Fiscal Period bore to the sum of the Capital Accounts of all the Partners as of the beginning of such Fiscal Period. (b) If in any fiscal year ('Current Year) the Net Profits allocated to a particular Limited Partner's Capital Account pursuant to Section 6.01(a) and Section 6.03 exceed the Net Losses so allocated to such Limited Partner's Capital Account for such Limited Partner for the Current Year, there shall be reallocated to the General Partner as of the end of the Current Year an amount equal to 20% of the Net Profits so allocated to such Limited Partner for such year, provided, however, that no amount will be reallocated from such Limited Partner's Capital Account to the General Partner for that year until the Net Profits for the year exceed such Limited Partner's loss carryforward amount. The loss carryforward amount for a particular Limited Partner applicable to the Current Year shall be the sum of all prior year Net Losses allocated to the Limited Partner and not subsequently offset by prior year Net Profits; provided, that the loss carryforward amount shall be reduced proportionately to reflect any withdrawals made by such Limited Partner. The total amount so reallocated pursuant to this Section 6.01(b) shall be credited as of the end of the year to the Capital Account of the General Partner. The General Partner, in its sole discretion, may waive or reduce this reallocation with regard to any Limited Partner. (c) In the event that a Limited Partner withdraws capital or is required to retire at any time other than the end of a fiscal year, the reallocation provided for in Section 6.01(b) shall be made with respect to such Partner as though the date of such Partner's withdrawal or retirement last day of a fiscal year. Section 6.02 Determination of Net Profits and Net Losses. 'Net Profits" or "Net Losses" of the Partnership for a Fiscal Period shall be determined by the General Partner on the accrual basis of accounting using generally accepted accounting principles as a guideline, unless otherwise deemed appropriate by the General Partner in its sole discretion, and further in accordance with the following: (a) Net Profits and Net Losses shall include realized and unrealized profits and losses with respect to all securities positions. In computing such realized and unrealized profits and losses. profit and loss shall mean for each position held in a security during any Fiscal Period, the realized or unrealized appreciation or realized or unrealized depreciation, as the case may be, with respect to such position, determined by comparing the net proceeds from the closing of such position or the market value of such position at the end of such Fiscal Period with (I) the cost of such position, if established during such Fiscal Period, or (ii), If such position were established during a prior Fiscal Period, the market value of such position al the end of the last preceding Fiscal Period. (b) The market value of positions in securities shall be as follows: securities that are listed on a stock exchange and are freely transferable shall be valued at their last sales price on the date of determination on the stock exchange which is the principal exchange for such securities, or, if no sales occurred on such day, at the 'bid' price on such exchange at the close of business on such day if held long and at the "asked" price at the close of business on such day 5 EFTA01118868  if sold short. Securities traded over the counter which are freely transferable shall be valued al the last sales price on the date of determination, or, if no sales occurred on such day, at the 'bid' price at the close of business on such day if held long and at the "asked" price at the close of business on such day if sold shod. Notwithstanding the foregoing, if in the reasonable judgment of the General Partner, at Its sole discretion, the listed price for any security held by the Partnership does not accurately reflect the value of such security, the General Partner may value such security at a price which is greater or less than the quoted market price for such security. All other assets and liabilities of the Partnership shall be valued in the manner determined by the General Partner. (c) The market value of a commodity future, forward or similar contract or any option on any such instrument traded on an exchange shall be the most recent available dosing quotation on such exchange; provided, that if the General Partner determines that such closing price does not accurately reflect market value due to price limit constraints, such contract or option shall be valued at fair market value as determined by the General Partner. (d) There shall be deducted in computing Net Profits and Net Losses, estimated expenses for legal and audit services and all other expenses, if any, in respect of the particular Fiscal Period (whether performed therein or to be performed thereafter), and such reserves for contingent liabiities of the Partnership, Including estimated expenses, If any, In connection therewith, as the General Partner shall determine. The fee payable pursuant to Section 4.03 shall be deducted in computing Net Profits and Net Losses; however, overhead expenses borne by the General Partner or its affiliate pursuant to Section 4.01 shall not be deducted in computing Net Profits and Net Losses. (e) The organizational expenses of the Partnership shall be amortized over a period of 60 months from the commencement of operations of the Partnership and the amortizable portion of the organizational expenses shall be deducted In computing Net Profits and Net Losses. (I) In valuing the Partnership's Investments In other investment entitles, If any, the General Partner shall be entitled to rely on the last unaudited or audited financial statement or performance report of any such investment entity, unless the General Partner reasonably determines in its sole discretion that some other valuation Is appropriate. (g) The determination of net asset value may be suspended whenever Partnership C_____ withdrawals are suspended pursuant to Secti — Section 6.03 Hot Issues. In the event the General Partner decides to invest in securities which are the subject of a public distribution and which the General Partner, in Its sole discretion, believes may become a "hot issue" as that term Is defined In the Conduct Rules of the National Association of Securities Dealers, Inc., such investment shall be made in accordance with the following provisions: (a) any such Investment made in a particular Fiscal Period shall be made in a special account (the "Hot Issues Account"); (b) only those Partners who do not fall within the proscription of the Conduct Rules ("Unrestricted Partners") shall have any beneficial interest in the Hot Issues Account; (c) each Unrestricted Partner shall have a beneficial interest in the Hot Issues Account for any Fiscal Period in the proportion which (i) such Unrestricted Partner's regular Capital Account as of the beginning of the Fiscal Period bore to (ii) the sum of the regular Capital Accounts of all Unrestricted Partners as of the beginning of such Fiscal Period: (d) funds required to make a particular investment shall be transferred to the Hot Issues Account from the regular account of the Partnership; securities involved in the public distribution shall be purchased in the Hot Issues Account, held in the Hot Issues Account and eventually sold 6 EFTA01118869  S1\-B CezirtL prA l Partner and its affiliates that may not be fully utilized by the _ Partnership or a Parallel Fund. VALUATION OF PARTNERSHIP ASSETS AND LIABILITIES The Partnership's assets and liabilities will be valued by the General Partner in accordance with the terms of the Partnership Agreement. Securities (including options) will generally be valued at their last sales price on the largest national securities exchange on which they are traded, or if trading in such securities on such exchange was reported on the consolidated tape, the last sales price on the consolidated tape. If there were no reported sales at certain dates specified in the Agreement, the securities will generally be valued at the last "bid" price for long positions and "asked" price for short positions. Securities that are not listed on a national securities exchange or included in the NASDAQ National Market System will be valued based upon their sales prices (if such prices are available). The ( Partnership Agreement specifies certain exceptions to these procedures. In the event the Partnership acquires securities for which market quotations are not available, such securities will be valued at such value as the General Partner may reasonably determine. Assets held in a Side- Pocket Account will be valued at their carrying value (generally, at cost subject to any Write-Down). If the General Partner determines that the valuation of an asset pursuant to the Partnership Agreement does not fairly represent its market value, the General Partner will value such investment as it reasonably determines. The Partnership's liabilities will be valued by the General Partner in accordance with the terms of the Partnership Agreement. All matters concerning valuation of securities shall be final and conclusive as to all Partners. ELIGIBLE INVESTORS Interests may only bt purchased by investors who are "accredited investors" and "qualified purchasers" as defined under Federal securities laws and meet other suitability requirements described herein and in the Partnership's subscription documents. Non-U.S. investors may purchase Interests in the discretion of the General Partner. The General Partner reserves the right to reject subscriptions in its absolute discretion. The Partnership does not intend to register under the Company Act, in reliance on the exclusion provided by Section 3(c)(7) under the Company Act for entities whose securities are owned exclusively by -25- EFTA01118870  ZS c-- cis SAL\ ro-r-redect Witt Limited Partnerships of the Cayman Islands following distribution of all of the Portfolio's assets. Expenses Expenses of the Portfolio include, but are not limited to, (i) organizational and offering expenses, (ii) the cost of investments, (iii) administrative, legal, internal and external accounting fees and operating expenses and (iv) extraordinary or non-recurring expenses. These expenses will be allocated to the Portfolio Capital Accounts of the Investment Vehicles. Voting, Amendments to Portfolio Agreement The terms and provisions of the Portfolio Agreement may be modified or amended at any time and from time to time by the Portfolio General Partner (a) with the consent of a majority in interest of the Investment Vehicles or (b) without the consent of the Investment Vehicles; provided, however, that no amendment shall be adopted without the consent of the Investment Vehicles unless the adoption thereof (i) is consistent with the authority granted to the Portfolio General Partner pursuant to the Portfolio Agreement, (ii) does not alter the allocations set forth in the Portfolio Agreement, (iii) is for the benefit of, or not adverse to, the interests of the Investment Vehicles and any other partner and (iv) does not modify the limited liability of the Investment Vehicles or the status of the Portfolio as a partnership for Federal income tax purposes. VALUATION OF THE PORTFOLIO'S ASSETS The Administrator will value the assets held by the Portfolio in accordance with the Portfolio Agreement. The Portfolio Agreement provides that investments shall be valued as follows: (i) securities (other than options) that are listed on a national securities exchange and are freely transferable shall be valued at their official listed closing price on the principal exchange on which such securities are listed, and options that are listed on a national securities exchange shall be valued at their official listed closing price on the principal exchange on which such options are traded; provided however that if the trading of any such securities is suspended at the date of determination, then the securities shall be valued at the last available price on the principal exchange on which such securities are listed prior to suspension; (ii) securities traded over-the-counter that are freely transferable shall be valued at the mean of the closing "bid' price and closing "ask" price as reported by NASDAQ or, if not quoted on such system, by one of the principal market makers in such security; (iii) futures, options on futures and other commodity interests traded on a commodity exchange shall be valued at the settlement price on the commodity exchange on which the particular commodity interest is traded by the Portfolio; and (iv) forward, spot and swap contracts, other off-exchange instruments, derivative instruments or commodity interests traded on a foreign exchange or any other investment not set forth above shall be valued by the Administrator on a basis consistently applied. Notwithstanding the foregoing, if the security to be valued constitutes a block that, in the judgment of the Administrator, could not be liquidated in a reasonable 47 EFTA01118871 time without depressing the market, such block shall then be valued by the Administrator but not at a unit value in excess of the quoted market price for the security. In special circumstances in which the Administrator determines that market prices or quotations do not fairly represent the value of particular securities or if no quotation exists, the Administrator is authorized to assign a value to such securities which differs from the market prices or quotations in its good faith discretion. Except as provided above, all other assets (including options not listed on any national exchanges or traded over-the-counter) of the Portfolio shall be valued in the manner determined by the Administrator. All valuations are made in consultation with HCM. TAX ASPECTS This is only a summary of certain aspects of the income taxation of the Fund and its Limited Partners that should be considered by a prospective Limited Partner. The Fund has not sought a ruling from the Internal Revenue Service (the "Service") or any other taxing authority with respect to any of the tax issues affecting the Fund. United States Federal Income Taxation Disclaimer. The Treasury Department has promulgated regulations which require the following statements. First, prospective investors should consult their own tax advisors with respect to the Federal, state and local tax aspects of an investment in the Fund based on their particular circumstances. Second, the statements of tax consequences set forth below (i) were written to support the marketing of the Interests; and (ii) were not intended or written to be used, and they cannot be used, by the Fund or any taxpayer for the purpose of avoiding certain penalties that may be imposed with respect to tax deficiencies. The discussion of United States Federal income tax aspects is based upon the Code, judicial decisions, Treasury Regulations (the "Regulations') and published revenue rulings and procedures in existence on the date hereof, all of which are subject to change, possibly with retroactive effect. This summary does not discuss all of the tax consequences that may be relevant to a particular investor or to certain investors subject to special treatment under the Federal income tax laws, such as insurance companies, tax-exempt persons and foreign persons (i.e., persons not subject to United States taxation on their world-wide incomes). Tax Treatment of Fund Operations Classification of the Fund. The Fund and the Portfolio intend to operate as partnerships for Federal income tax purposes and will not be taxable as corporations. As partnerships, the Fund and the Portfolio will not themselves be subject to Federal income tax. The Fund will file annual information returns with the Service that report the results of its share of the Portfolio's operations. Each Limited Partner is 48 EFTA01118872  Lcui2t.,) C4&! tics rr Valuation of Fund Assets The Fund's assets are valued by the General Partner, in consultation with the Trading Manager, in accordance with the terms of the Partnership Agreement. Since the Fund's principal asset is its investment in the Portfolio, the valuation of the Fund's assets are substantially dependent upon the manner in which the Portfolio is valued. See 'Valuation of the Portfolio's Assets' for a description of the methodology employed in the valuation of the Portfolio's assets. All matters concerning valuation of securities and other instruments as well as allocations among the Partners and accounting procedures, not expressly provided for in the Partnership Agreement, may be determined by the General Partner, whose determination is to be final and conclusive as to all Partners. The General Partner may, from time to time, also establish or abolish reserves for estimated or accrued expenses and for unknown or contingent liabilities. The General Partner has delegated to the Administrator the responsibility for valuing the Fund's assets. of Limited Partners The Limited Partners and former Limited Partners shall be liable for the repayment and discharge of all debts and obligations of the Fund attributable to any fiscal year (or relevant portion thereof) during which they are or were Limited Partners of the Fund to the extent of their respective interests in the Fund in the fiscal year (or relevant portion thereof) to which any such debts and obligations are attributable. In order to meet a particular debt or obligation, a Limited Partner or former Limited Partner shall, in the discretion of the General Partner, be required to make additional contributions or payments up to, but in no event in excess of, the aggregate amount of returns of capital and other amounts actually received by him from the Fund during or after the fiscal year to which such debt or obligation is attributable. Liability of the General Partner The Partnership Agreement provides that the General Partner and its affiliates, employees, members, directors, officers and agents will not be liable to any Limited Partner or the Fund for mistakes of judgment or for action or inaction which the General Partner or its affiliates, employees, members, directors, officers or agents reasonably believed to be in the best interests of the Fund or for (i) any act or omission performed or failed to be performed by it, or for any losses, claims, costs, damages, or liabilities arising therefrom, in the absence of willful misfeasance, bad faith or gross negligence on its part, (ii) any tax liability imposed on the Fund or any Limited Partner or (iii) any losses due to the gross negligence of any employees, brokers, or other agents of the Fund (whether or not such persons are directly employed by any Indemnified Person, as defined below) as long as such persons are selected with reasonable care. The General Partner and its affiliates, employees, members, directors, officers and agents may consult with counsel, accountants and other experts in respect of Fund affairs and are to be fully protected and justified in any action or inaction which is taken 27 EFTA01118873  C-Ci6J real Upon the liquidation of the Portfolio, its assets are to be distributed: (i) first to creditors, including Investment Vehicles who are creditors, to the extent otherwise permitted by law, in satisfaction of liabilities of the Portfolio (whether by payment or by establishment of reserves); and (ii) then to the Investment Vehicles proportionately in accordance with the balances in their respective Portfolio Capital Accounts. Expenses Expenses of the Portfolio include, but are not limited to, (i) organizational and offering expenses, (ii) the cost of investments, (iii) administrative, legal, internal and external accounting fees and operating expenses and (iv) extraordinary or non-recurring expenses. These expenses are allocated gm rata according to the Portfolio Capital Accounts of the Investment Vehicles. Voting, Amendments to Portfolio Agreement The terms and provisions of the Portfolio Agreement may be modified or amended at any time and from time to time by the Portfolio General Partner (a) with the consent of a majority in interest of the Investment Vehicles or (b) without the consent of the Investment Vehicles• provided, however that no amendment shall be adopted without the consent of the Investment Vehicles unless the adoption thereof (i) is consistent with the authority granted to the Portfolio General Partner pursuant to the Portfolio Agreement; (II) does not alter the allocations set forth in the Portfolio Agreement; (iii) is for the benefit of, or not adverse to, the interests of the Investment Vehicles and any other partner; and (iv) does not modify the limited liability of the Investment Vehicles or the status of the Portfolio as a partnership for Federal income lax purposes. VALUATION OF THE PORTFOLIO'S ASSETS The Portfolio General Partner is authorized to value the assets held by the Portfolio in accordance with the Portfolio Agreement. The Portfolio Agreement provides that investments shall be valued as follows: (i) futures, options on futures and other commodity interests traded on a commodity exchange shall be valued at the settlement price on the commodity exchange on which the particular commodity interest is traded by the Portfolio on the close of the day with respect to which Net Assets are being determined; provided that if a commodity interest could not be liquidated on such day due to the operation of daily limits or other rules of the commodity exchange upon which that interest is traded or otherwise, the settlement price on the first subsequent day on which the contract could be liquidated shall be the market value of such contract for such day; (ii) forward, spot and swap contracts, other off-exchange instruments, derivative instruments or commodity interests traded on a foreign exchange or any other investment not set forth above shall be valued by the Portfolio General Partner, in consultation with the Trading Manager, on a basis consistently applied; (iii) securities (other than options) that are listed on a national securities exchange and are freely transferable shall be valued 34 EFTA01118874 at their last sales price on the principal exchange on which such securities are listed, and options that are listed on a national securities exchange shall be valued at their last sales price on the principal exchange on which such options are traded; provided however that if the trading of any such securities is suspended at the date of determination, then the securities shall be valued at their last sales price on the first subsequent day on which trading is resumed on the principal exchange on which such securities are listed; (iv) securities (including options) traded over-the-counter that are freely transferable shall be valued, in the case of long' positions, at their last "bid' price and, in the case of "short" positions, at their last "asked" price as reported by the NASD, Inc. Automatic Quotation System or if not quoted on such system, by one of the principal market makers in such security selected by the Portfolio General Partner, in consultation with the Trading Manager. In special circumstances in which the Portfolio General Partner, in consultation with the Trading Manager, determines that market prices or quotations do not fairly represent the value of particular securities or if no quotation exists, the Portfolio General Partner, in consultation with the Trading Manager, is authorized to assign a value to such securities which differs from the market prices or quotations in its good faith discretion. Except as provided above, all other assets (including options not listed on any national securities exchange or traded over-the-counter) of the Portfolio shall be valued in the manner determined by the Portfolio General Partner or the Trading Manager. The Portfolio General Partner has delegated all of its authority for valuation of the Portfolio's assets and liabilities to the Administrator. TAX ASPECTS This is only a summary of certain aspects of the income taxation of the Fund and its Limited Partners that should be considered by a prospective Limited Partner. The Fund has not sought a ruling from the Internal Revenue Service (the "Service") or any other Federal, state or local agency with respect to any of the tax issues affecting the Fund. This summary is based upon the Code, judicial decisions, Treasury Regulations (the Regulations") and published rulings in existence on the date hereof, all of which are subject to change, possibly with retroactive effect. This summary does not discuss all of the tax consequences that may be relevant to a particular investor or to certain investors subject to special treatment under the Federal income tax laws, such as insurance companies. Each prospective Limited Partner should consult with his own tax adviser about the Federal, state, local and foreign income tax consequences of an investment in the Fund. 35 EFTA01118875  4Q G" ayr A. - e- eti-vgAL-(4 Article XII. TERMINATION OF PARTNERSHIP; LIQUIDATION AND DISTRIBUTION OF ASSETS 12.1 Dissolution and Termination. The Partnership shall be dissolved upon the happening of any of the following events: (a) On December 31, 2050; (b) when a sole General Partner ceases to be a General Partner, if, within 30 days following such event, a successor General Partner has not then been appointed as and become the General Partner as provided in Section 3.5; (c) where the General Partner elects, by written Notice to the Partnership, to dissolve the Partnership; or (d) the happening of any other event that, under the laws of the State of Delaware, mandatorily requires the dissolution of a limited partnership. 12.2 Winding Uo and Distribution. Upon the dissolution of the Partnership, each of the following shall be accomplished in an orderly and businesslike manner so as not to involve undue sacrifice: (a) the General Partner, or if no General Partner is remaining, the represenialive(s) appointed by a Majority in Interest of the Limited Partners, shall cause to be prepared a statement setting forth the assets and liabilities of the Partnership as of the date of dissolution, and such statement shall be furnished to all of the Partners; (b) Net Profit, including the Incentive Allocation, or Net Loss for the Fiscal Year in which dissolution occurs shall be allocated, and the Partners' Capital Accounts shall be credited or charged, in accordance with the provisions of this Agreement; and (c) the proceeds from sales and all other assets of the Partnership shall be distributed first to pay and discharge all the Partnership's debts and liabilities to persons other than Partners; second to pay and discharge all of the Partnership's debts and liabilities, including appropriate reserves for unallocated expenses upon liquidation, to Partners (other than in respect of their Capital Accounts in the Partnership); and then to the Partners in proportion to their respective Capital Accounts, as adjusted pursuant to paragraph (b) of this Section 12.2. 12.3 Valuation of Partnership Assets. The value of any assets or liabilities of the Partnership shall be determined by the General Partner, in consultation with the Administrator, in good faith and such determination shall be conclusive and binding on all of the Partners and all parties claiming through or under them. The Partnership's name and goodwill shall, as among the Limited Partners, be deemed to have no value and shall belong to the General Partner or any successor thereof, and no - 23 - EFTA01118876 Limited Partner shall have any right or claim individually to the use thereof. The assets shall be valued as follows: (i) securities (other than options) that are listed on a national securities exchange and are freely transferable shall be valued at their last sales price on the principal exchange on which such securities are listed, and options that are listed on a national securities exchange shall be valued at their last sales price on the principal exchange on which such options are traded; provided, however, that if the trading of any such securities is suspended at the date of determination, then the securities shall be valued at their last sales price on the first subsequent day on which trading is resumed on the principal exchange on which such securities are listed; (ii) securities (including options) traded over-the-counter that are freely transferable shall be valued, in the case of 'long' positions, at their last 'bid' price and, in the case of 'short" positions, at their last 'asked' price as reported by the NASD, Inc. Automatic Quotation System or if not quoted on such system, by one of the principal market makers in such security selected by the General Partner, in consultation with the Administrator; (iii) futures, options on futures and other commodity interests traded on a commodity exchange shall be valued at the settlement price on the commodity exchange on which the particular commodity interest is traded by the Partnership on the dose of the day with respect to which Net Assets are being determined; provided that if a commodity interest could not be liquidated on such day due to the operation of daily limits or other rules of the commodity exchange upon which that interest is traded or otherwise, the settlement price on the first subsequent day on which the contract could be liquidated shall be the market value of such contract for such day; (iv) forward, spot and swap contracts, other off-exchange instruments, derivative instruments or commodity interests traded on a foreign exchange or any other investment not set forth above shall be valued by the General Partner, in consultation with the Administrator, on a basis consistently applied. Notwithstanding the foregoing, if the security to be valued constitutes a block which, in the judgment of the General Partner, in consultation with the Administrator, could not be liquidated in a reasonable time without depressing the market, such block shall then be valued by the General Partner, in consultation with the Administrator, but not at a unit value in excess of the quoted market price for the security. In special circumstances in which the General Partner, in consultation with the Administrator, determines that market prices or quotations do not fairly represent the value of particular securities or if no quotation exists, the General Partner, in consultation with the Administrator, is authorized to assign a value to such securities which differs from the market prices or quotations in its good faith discretion. Except as provided above, all other assets (including options not listed on any national securities exchange or traded over-the-counter) of the Partnership shall be valued in the manner determined by the General Partner. The General Partner intends to delegate its duties under this Section 12.3 to the Adm