3 private placement memorandum, oracle of investing fund lp

Private Placement MemorandumOracle of Investing Fund LP

ORACLE of Investing

Oracle of Investing TM

Copyright © 2013 www.oracleofi nvesting.com

Th is information is provided by Oracle of Investing (OI) and is issued solely for informational

purposes and does not constitute an off er to sell or a solicitation of

an off er to buy securities.

Reproduction without written permission is strictly prohibited

and will be prosecuted to the full extent of the law.

iv – Private Placement Memorandumiv – Private PPlalacecement Memorandum

Name of Recepient __________________________________

ORACLE OF INVESTING FUND LP

AMENDED AND RESTATED

CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM

September 15, 2013

THE LIMITED PARTNERSHIP INTERESTS OFFERED PURSUANT TO THE TERMS OF THIS MEMORANDUM ARE HIGHLY SPECULATIVE AND INVOLVE CERTAIN RISKS. SEE THE DISCUSSION HEREIN CAPTIONED “CERTAIN RISK FACTORS.”

Oracle of Investing Fund LP (the “Partnership”) is a Delaware limited partnership which seeks to achieve long-term capital ap-preciation while minimizing the risk of permanent capital loss. Th e Partnership’s investment objective and strategy are discussed further herein. See “INVESTMENT POLICY.”

Th is Amended and Restated Confi dential Private Placement Memorandum (the “Memorandum”) relates to an off ering (the “Off ering”) of limited partnership interests (the “Interests”) in the Partnership. Prospective investors who seek to be limited partners (the “Limited Partners”) in the Partnership should read carefully and retain this Memorandum. Th e Partnership’s day-to-day operations are managed by its general partner, Wharton Global Capital, LLC, a Delaware limited liability company (the “General Partner”). Th e Gener-al Partner and the Limited Partners are collectively referred to herein as the “Partners.”

In making an investment decision, investors must rely upon their own examination of the Partnership and the terms of the Off er-ing, including the merits and risks involved.

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) NOR QUALIFIED, APPROVED OR DISAPPROVED UNDER ANY OTHER FEDERAL OR STATE SECURITIES LAWS. NEITHER THE SECURITIES AND EXCHANGE COMMISSION (“SEC”) NOR ANY OTHER FEDERAL OR STATE REGULATORY AUTHORITY HAS PASSED ON OR ENDORSED THE MERITS OF THIS OFFER-ING OR THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. THE SECURITIES OFFERED HEREBY MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF BY AN INVESTOR UNLESS THEY ARE REGISTERED UNDER THE SECURITIES ACT AND, WHERE REQUIRED, UNDER THE LAWS OF OTHER JURISDICTIONS, UNLESS SUCH PROPOSED SALE, TRANSFER OR DISPOSITION IS EXEMPT FROM SUCH REGISTRATION.

THE GENERAL PARTNER IS EXEMPT FROM REGISTRATION WITH THE COMMODITY FUTURES TRADING COMMISSION AS A COMMODITY POOL OPERATOR PURSUANT TO RULE 4.13(A)(3) AND THEREFORE, UNLIKE A REGISTERED COMMODITY POOL OPERATOR, IT IS NOT REQUIRED TO DELIVER A DISCLOSURE DOCUMENT AND A CERTIFIED ANNUAL REPORT TO PARTICIPANTS IN THE POOL.

GENERAL NOTICES

No. _____

iv – Private Placement Memorandum

THIS IS A PRIVATE OFFERING MADE PURSUANT TO APPLICABLE FEDERAL AND STATE “PRIVATE PLACE-MENT” EXEMPTIONS. THE INTERESTS MUST BE ACQUIRED FOR INVESTMENT PURPOSES ONLY AND, ONCE ACQUIRED, WILL NOT BE FREELY TRANSFERABLE.

THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY STATE OR JURISDIC-TION IN WHICH SUCH AN OFFER OR SOLICITATION IS UNLAWFUL. THIS MEMORANDUM CONSTITUTES AN OFFER ONLY IF DELIVERY OF THIS MEMORANDUM IS PROPERLY AUTHORIZED BY THE GENERAL PARTNER. THIS MEMORANDUM HAS BEEN PREPARED BY THE GENERAL PARTNER SOLELY FOR THE BENEFIT OF PERSONS IN-TERESTED IN THE PROPOSED SALE OF THE INTERESTS, AND ANY DISTRIBUTION OR REPRODUCTION OF THIS MEMORANDUM, AS A WHOLE OR IN PART, WITHOUT THE PRIOR WRITTEN CONSENT OF THE GENERAL PART-NER, IS PROHIBITED.

NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY REPRESENTATIONS OR PROVIDE ANY INFORMATION WITH RESPECT TO THE INTERESTS EXCEPT SUCH INFORMATION AS IS CONTAINED IN THIS MEMORANDUM.

THE CONTENTS OF THIS MEMORANDUM SHOULD NOT BE CONSTRUED AS INVESTMENT, LEGAL, ERISA OR TAX ADVICE. A NUMBER OF FACTORS MATERIAL TO A DECISION WHETHER TO INVEST IN THE INTERESTS HAVE BEEN PRESENTED IN THIS MEMORANDUM IN SUMMARY OR OUTLINE FORM ONLY IN RELIANCE ON THE FINANCIAL SOPHISTICATION OF THE OFFEREES. EACH PROSPECTIVE INVESTOR IS URGED TO SEEK INDEPEN-DENT INVESTMENT, LEGAL, ERISA AND TAX ADVICE CONCERNING THE CONSEQUENCES OF INVESTING IN THIS PARTNERSHIP.

INTERESTS ARE AVAILABLE ONLY TO PERSONS WILLING AND ABLE TO BEAR THE ECONOMIC RISKS OF THIS INVESTMENT. THE INVESTMENTS IN THE PARTNERSHIP ARE SPECULATIVE, ILLIQUID AND INVOLVE A HIGH DEGREE OF RISK. SEE “CERTAIN RISK FACTORS.” THE INVESTMENTS ARE SUITABLE AS AN INVESTMENT ONLY FOR A LIMITED PORTION OF THE RISK SEGMENT OF AN INVESTOR’S PORTFOLIO.

TO THE EXTENT THAT THESE MATERIALS CONTAIN STATEMENTS ABOUT THE FUTURE, SUCH STATE-MENTS ARE FORWARD LOOKING AND SUBJECT TO A NUMBER OF RISKS AND UNCERTAINTIES, INCLUDING, BUT NOT LIMITED TO, THE IMPACT OF COMPETITIVE PRODUCTS, PRODUCT DEMAND AND MARKET ACCEP-TANCE RISKS, RELIANCE ON KEY STRATEGIC ALLIANCES, FLUCTUATIONS IN OPERATING RESULTS AND OTHER RISKS. THESE RISKS COULD AFFECT THE VALUE OF THE INTERESTS DESCRIBED HEREIN AND COULD CAUSE THE RESULTS FOR THE CURRENT FISCAL YEAR AND BEYOND TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD LOOKING STATEMENTS MADE HEREIN.

THIS MEMORANDUM IS BEING GIVEN TO THE RECIPIENT SOLELY FOR THE PURPOSE OF EVALUATING AN INVESTMENT IN THE PARTNERSHIP INTERESTS DESCRIBED HEREIN. IT MAY NOT BE REPRODUCED OR DISTRIBUTED TO ANYONE ELSE (OTHER THAN THE IDENTIFIED RECIPIENT’S PROFESSIONAL ADVISERS.) THE RECIPIENT, BY ACCEPTING DELIVERY OF THIS MEMORANDUM, AGREES TO RETURN IT AND ALL RELATED DOC-UMENTS TO THE PARTNERSHIP IF THE RECIPIENT DETERMINES NOT TO SUBSCRIBE FOR PARTNERSHIP INTER-ESTS.

INVESTORS (AND EACH EMPLOYEE, REPRESENTATIVE OR OTHER AGENT OF INVESTORS) MAY DISCLOSE TO ANY AND ALL PERSONS, WITHOUT LIMITATIONS OF ANY KIND, THE TAX TREATMENT AND TAX STRUCTURE OF THE TRANSACTION AND ALL MATERIALS OF ANY KIND (INCLUDING OPINIONS OR OTHER TAX ANALYSIS) THAT ARE PROVIDED TO INVESTORS RELATING TO SUCH TAX TREATMENT AND TAX STRUCTURE. THIS AU-THORIZATION OF TAX DISCLOSURE IS RETROACTIVELY EFFECTIVE TO THE COMMENCEMENT OF THE FIRST DISCUSSIONS BETWEEN SUCH INVESTOR AND THE PARTNERSHIP REGARDING THE TRANSACTIONS CONTEM-PLATED HEREIN.

DISCUSSIONS IN THIS MEMORANDUM BELOW AS THEY RELATE TO CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES ARE NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING UNITED STATES FEDERAL TAX PENALTIES. SUCH DISCUSSIONS WERE WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED IN THIS MEMORANDUM, AND ANY TAXPAYER TO WHOM THE TRANSACTIONS OR MATTERS ARE BEING PROMOTED, MARKETED OR RECOMMENDED SHOULD SEEK ADVICE BASED ON ITS PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

Table of Contents – 1

Contents

Chapter 1. Th e Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Chapter 2. Investment Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Chapter 3. Professionals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Chapter 4. Subscriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Chapter 5. Withdrawals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Chapter 6. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Chapter 7. Suitability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Chapter 8. Certain Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Chapter 9. Potential Confl icts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Chapter 10. Fund Structure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Chapter 11. Tax Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Chapter 12. ERISA Considerations. . . . . . . . . . . . . . . . . . . . . . . . . 49

Chapter 13. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Chapter 14. Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Chapter 15. Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Chapter 16. Exhibit I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

10 – Private Placement Memorandum10 – Private PPlalacec ment Memorandum

Glossary

Th e following is a summary of the terms and conditions of an investment in Oracle of Investing Fund, LP (the “Partnership”). Th is summary is qualifi ed in its entirety by the information appearing elsewhere in this amended and restated confi dential private placement memorandum (the “Memorandum”) and in the Partnership’s amended and restated limited partnership agreement dated as of September 15, 2013 (the “Partnership Agree-ment”) as each may be amended, restated or supplemented from time to time. Th e description of any document herein is qualifi ed by reference to such document.

Th e Partnership

Th e Partnership is a Delaware limited partnership that was formed on August 27, 2013. Th e Partnership is currently off ering Class A limited partnership interests (the “Class A Interests”) and Class B limited partner-ship interests (the “Class B Interests” and together with the Class A Interests, the “Interests”) in the Partnership through private placement. Investors in the Partnership become limited partners (the “Limited Partners” or “Part-ners”) of the Partnership. Th e Limited Partners holding the Class A Interests are sometimes referred to herein as “Class A Limited Partners” and the Limited Partners holding the Class B Interests are sometimes referred to herein as the “Class B Limited Partners.”

Share Class Diff erences

Subject to certain withdrawal fees, Class A Limited Partners may make withdrawals from their Capital Accounts (as defi ned herein) on a quarterly basis, whereas Class B Limited Partners may make withdrawals from their Capital Accounts on an annual basis. In addition, the Class B Limited Partners are not subject to the Man-agement Fee (as defi ned herein) whereas the Class A Limited Partners are. Lastly, the Capital Accounts of Class A Limited Partners are subject to a twenty percent (20%) quarterly Incentive Allocation allocable at the Master Fund level in excess of a one-percent (1%) cumulative (on a quarterly basis, but not cumulative on an annual basis) hurdle return, whereas the Class B Limited Partners are subject to a twenty-fi ve percent (25%) annual Incentive Allocation allocable at the Master Fund level in excess of a six percent (6%) non-cumulative hurdle return.

Investment Objective and Strategy

Th e Partnership’s investment objective is to compound wealth for Limited Partners over the medium term. Th e General Partner (as defi ned herein) targets outperforming most equity indices by 5-15% annually.

Th e basis of the General Partner’s investment philosophy is the existence of a two-tier price structure for the securities of any publicly traded corporation. First, there is the stock market value, which is the most recent price at which the securities have traded on a stock exchange or in an over the counter market.

Second, there is the intrinsic value of the securities which is determined in several ways, including, book value, net current asset value, earning value and private market value. Once an estimate of intrinsic value has

10 – Private Placement Memorandum

been determined, the decision to buy or sell a security is made by a comparison of its current market price to its intrinsic value. Th e discount from intrinsic value at which investments can be made is defi ned as the “margin of safety.” For example, a security purchased at less than 50-60% of intrinsic value is backed by corporate net worth (i.e., “collateral,” which is nearly twice the cost of the investment). Th e General Partner believes that this collateral provides protection (a margin of safety) against permanent capital loss, although temporary stock market declines can occur. In contrast to the “effi cient market theory” of investment, which generally holds that at any given time stock prices refl ect all relevant information and are therefore true values, the General Partner believes that the stock market, in its excesses, has, and will continue to, undervalue and overvalue securities in relation to their intrinsic value.

Th ere can be no assurance that the General Partner will be successful in achieving the Partnership’s invest-ment objective or that the strategies pursued by the Partnership will be successful. See “INVESTMENT STRAT-EGY.”

Master Fund

Th e General Partner will seek to pursue the Partnership’s investment objective by investing all, some, or none of the Partnership’s assets in the Class A and Class B limited partnership interests in Oracle of Investing Master Fund, L.P., a British Virgin Islands limited partnership (the “Master Fund”). Th e general partner of the Master Fund is Oracle of Investing GP Ltd., a company organized under the laws of the British Virgin Islands (the “Master Fund GP”). Th e Master Fund will retain the General Partner (or an affi liate thereof ) to serve as the Master Fund’s investment manager and will utilize the General Partner’s (or its affi liate’s) services (in its capacity as investment manager), to invest and reinvest capital of the Partnership, together with assets of other similar entities following the same investment strategy described herein, including without limitation, Oracle Fund Inc., a British Virgin Islands business company (the “Off shore Fund”). To the extent that the Partnership’s capital is invested in the Master Fund, any or all of the fees and expenses payable by the Partnership will be paid by the Partnership or the Master Fund, but will not be duplicated (other than fees and expenses incurred by both the Partnership and the Master Fund such as, without limitation, administration fees). References herein to the “Partnership” shall be read to include the “Master Fund” unless the context otherwise requires. See “MASTER-FEEDER FUND STRUCTURE.”

New Issue Allocation

Th ough not currently anticipated, the Partnership may in the future invest in “new issues” (generally defi ned in NASD Conduct Rule 2790, as the same may be amended, supplemented or replaced from time to time (the “NASD Rule”) of the U.S. National Association of Securities Dealers, Inc. (the “NASD”), as any initial public off ering of an equity security). Th e NASD has taken the position in the NASD Rule that such “new issues” may not be sold, except in limited circumstances, to an account in which a member or person affi liated with or related to a member of the NASD (or to certain other securities industry professionals/companies) has an interest. In the event the Partnership invests (directly or indirectly) in “new issues,” Partners who are “restricted persons” within the meaning of the NASD Rule may be prohibited from participating in such “new issues” in whole or in part. Th e General Partner may, in its sole discretion, make special allocations to prevent all or part of a Partner’s Capital Account from participating in “new issues” so as to comply with the NASD Rule.

General Partner

Wharton Global Capital, LLC, a Delaware limited liability company, serves as general partner of the Partner-ship (the “General Partner”). Th e General Partner exercises ultimate authority over the Partnership and is respon-sible for the day-to-day operations and management of the Partnership. Th e General Partner is the “Tax Matters Partner” for Internal Revenue Service (“IRS”) purposes. Th e General Partner is an unregistered commodity pool operator that has fi led for an exemption from registration with the National Futures Association (the “NFA”)

Glossary – 10

pursuant to Rule 4.13(a)(3) of the Commodity Exchange Act, as amended (the “CEA”). In addition, the General Partner is an unregistered commodity trading advisor pursuant to Rule 4.14(a)(10) of the CEA. See “PARTNER-SHIP’S PROFESSIONALS – Th e General Partner.”

Administrator

Wharton Global Capital LLC, located in New York, serves as the administrator of the Partnership (the “Administrator”). In such capacity, it is responsible for administering the day to day activities of the Partnership’s operations, receiving contributions, maintaining partnership interest records, processing withdrawal and transfer requests, calculating the Net Asset Value, responding to investor inquiries and similar matters. See “PROFES-SIONALS - Administrator.”

Custodian

Interactive Brokers LLC (the “Custodian”) shall keep custody of securities and cash held in the Master Fund. A limited number of portfolio assets may not be held by the Custodian, and may be held in the custody of one or more fi nancial institutions, including any brokers or dealers or other institutions through which the Master Fund eff ects transactions.

Th e Custodian will not provide any other services or perform any other functions except safekeeping and the usual administrative matters relating to the Safe Custody Assets of the Master Fund, and will have no other duties or responsibilities relating to the Master Fund.

Brokerage and Execution. Th e Master Fund will establish a brokerage account with a licensed broker selected by the General Partner (as investment manager of the Master Fund). Th e General Partner (as investment manager of the Master Fund) reserves the right, in its sole discretion, to change or add brokers, custodians or banks without the consent of the limited partners of the Master Fund, including the Partnership.

Portfolio transactions are executed by brokers and dealers generally selected by the General Partner (as investment manager of the Master Fund) on behalf of the Master Fund on the basis of such factors as price, the ability of the brokers to eff ect the transactions, the brokers’ facilities, reliability and fi nancial responsibility and the provision or payment of the costs of brokerage and research services (i.e., soft dollar items). Accordingly, if the General Partner (as investment manager of the Master Fund) determines in good faith that the amount of com-missions charged by a broker is reasonable in relation to the value of the brokerage or research services provided by such broker, the Master Fund may pay commissions to such broker in an amount greater than the amount anoth-er broker might charge. See “PROFESSIONALS - Th e Custodian.”

Placement Agents

Th e Partnership may retain the services of one or more placement agents (“Placement Agents”) to assist in selling interests in the Partnership at no additional cost to the Limited Partners.

Minimum Investment

Th e minimum initial contribution to the Partnership by each Class A Limited Partner is U.S.$50,000 and by each Class B Limited Partner is U.S.$50,000, and the minimum additional contribution is U.S$50,000, or such other amounts as determined by the General Partner, in its sole discretion, from time to time. Th e General Partner, may, in its discretion, waive all or part of the minimum initial contribution amount and/or the minimum additional contribution amount with respect to any Partner. Th e General Partner may permit contributions in kind in its sole discretion.

Valuation


Th e net assets of the Partnership will be valued the last Business Day (as defi ned herein) of each calendar month or such other times as determined by the General Partner in its sole discretion (the “Valuation Date”). Th e term “Business Day” refers to any day the banks are open for business in New York (other than Saturday or Sunday). For a description of the valuation procedures applicable to certain investments of the Partnership, see “SUBSCRIP-TIONS - Net Asset Valuation.”

Management Fee and Expenses

Th e Partnership, as a limited partner in the Master Fund, will pay to the General Partner (as the investment manager of the Master Fund) a monthly management fee in arrears (the “Management Fee”) equal to approximately 0.0833% of the ending net asset value of the Partnership’s capital account in the Master Fund which is attributable to the Class A Limited Partners for such month with respect to the Master Fund (one percent (1.0%) per annum) as of the last Business Day of each calendar month. Payment of the Management Fee is due as of the last Business Day of each calendar month or as of the last day of any partial period (if applicable) and is payable by the Partnership within a reasonable time thereafter. Th e General Partner reserves the right to waive or reduce the Management Fee attributable to any Class A Limited Partner (by rebate or otherwise), including, without limitation, its affi liates and/or employees. Th e Management Fee will be prorated for partial periods. Th e Class B Limited Partners are not subject to the Management Fee.

Administrator’s Fees. Th e Administrator receives an administration fee that accords with reasonable and custom-ary administration fees. Th e administration fee and the Administrator’s responsibilities may change from time to time as circumstances dictate.

Ongoing Costs. Th e Partnership will be responsible for all ongoing costs and expenses associated with its op-erations including without limitation costs and expenses relating to transactions in securities and positions for the Partnership’s account including, but not limited to, brokerage commissions, interest and commitment expenses on loans and debt balances, borrowing charges on securities sold short, dividends on securities sold short, but not yet purchased, transfer taxes, custodial fees and expenses, administrative fees and expenses, research fees and expenses, reporting expenses, legal, accounting and consulting fees and expenses, interest expense, litigation expenses, taxes, the Management Fee, its pro rata share of Master Fund expenses and all extraordinary expenses. Th e General Part-ner and/or the Investment Manager reserve the right, at any time and from time to time, to assume all or a portion ofthe Partnership’s ongoing costs and expenses and/or to waive its right to reimbursement from the Partnership with respect thereto.

Th e General Partner and any affi liates retained by it will be reimbursed for reasonable out-of-pocket expenses incurred on behalf of the Partnership. Such reimbursable expenses will not include any expense attributable to their provision of management and offi ce personnel and space required for the performance of their services, as well as any travel related expenses. See “FEES AND EXPENSES.”

Organizational Costs. Th e General Partner has advanced organizational costs of the Partnership without re-imbursement from the Partnership. All expenses of the Partnership shall be deducted fi rst from income, then from capital gains and, to the extent income and capital gains are insuffi cient to pay such expenses, from assets.

Capital Accounts

A capital account (the “Capital Account”) will be established with respect to each Partner in the Partnership (including the General Partner), the opening value of which will be the Partner’s initial capital contribution to the Partnership. Adjustments are then made to the Capital Accounts to account for gains, losses, withdrawals, alloca-tions, additional contributions and other such items.

Allocation of Gains and Losses, Debiting of Management Fee

At the end of each Accounting Period (as defi ned herein) of the Partnership, (i) the aggregate amount of any

Glossary – 10

and all Management Fees payable by the Partnership during such Accounting Period which are attributable to each Class A Limited Partner shall be charged to such Class A Limited Partner’s Capital Account, and (ii) any Net Capital Appreciation or Net Capital Depreciation (as each term is defi ned herein) will be allocated to all Partners (including the General Partner) in proportion to their respective Ownership Percentages (as defi ned in the Part-nership Agreement) for such Accounting Period.

Incentive Allocation

Generally, subject to the Loss Recovery Account provisions discussed herein, the following amounts will be reallocated (in the aggregate) from the Partnership’s capital account in the Master Fund to the Master Fund GP’s capital account in the Master Fund:

(i) at the end of each calendar quarter, twenty percent (20%) of the Class A Aggregate Net Increase (as de-fi ned herein) in excess of the Class A Hurdle Return (as defi ned herein) (the “Class A Incentive Allocation”); and

(ii) at the end of each calendar year, twenty-fi ve (25%) of the Class B Aggregate Net Increase (as defi ned herein) in excess of the Class B Hurdle Return (as defi ned herein) (the “Class B Incentive Allocation” and together with the Class A Incentive Allocation, the “Incentive Allocation”).

In the event that a Limited Partner withdraws from the Partnership and the Partnership, accordingly, with-draws a portion of its capital account in the Master Fund other than at the end of a calendar quarter, or calendar year (as applicable) net capital appreciation or net capital depreciation, as the case may be, allocable to the Partner-ship shall be determined through the date of withdrawal and the Incentive Allocation, if any, will be reallocated to the Master Fund GP as of the withdrawal date. Th e Master Fund has adopted the “high water mark” method of incentive allocation by utilizing the Loss Recovery Account method described below.

“Class A Hurdle Return” means an amount equal to one percent (1%) of the portion of the Partnership’s capital account balance in the Master Fund which is attributable to Class A Limited Partners, calculated as of the beginning of each calendar quarter. Th e Class A Hurdle Return will be adjusted throughout the applicable peri-od to refl ect additional capital contributions and withdrawals by the Partnership in the Master Fund (which are attributable to Class A Limited Partners). Th e Class A Hurdle Return is cumulative with respect to each quarter during a calendar year, but not from year to year. Th us, if the Class A Hurdle Return is not earned during a quar-ter in a calendar year, the shortfall will need to be made up during the following quarter in such year. Th e Class A Hurdle Return will be prorated for partial periods.

“Class B Hurdle Return” means an amount equal to six percent (6%) of the portion of the Partnership’s capital account balance in the Master Fund which is attributable to Class B Limited Partners, calculated as of the beginning of each calendar year. Th e Class B Hurdle Return will be adjusted throughout the applicable pe-riod to refl ect additional capital contributions and withdrawals by the Partnership in the Master Fund (which are attributable to Class B Limited Partners). Th e Class B Hurdle Return is non-cumulative with respect to each calendar year. Th us, if the Class B Hurdle Return is not earned during a calendar year, the shortfall will not need to be made up during the following year. Th e Class B Hurdle Return will be prorated for partial periods. “Hurdle Return” means the Class A Hurdle Return and/or the Class B Hurdle Return, as the context requires. Th e Master Fund GP may, in its discretion, waive all or part of the Incentive Allocation with respect to any Partner, including, without limitation, its affi liates, members and/or employees.

For purposes of calculating the Management Fee and Incentive Allocation attributable to each Limited Part-ner, the Master Fund shall maintain, for bookkeeping purposes only, a separate capital account and separate loss recovery account for each Limited Partner. Th e Management Fee shall be calculated separately with respect to each Limited Partner’s capital account. Prior to the end of each period in which the Incentive Allocation is allocated at the Master Fund level, the Partnership shall provide the Master Fund with an estimate of its on-going expenses for such period (“Partnership Expenses”). Appreciation, depreciation, Partnership Expenses and Management Fees


(if applicable) with respect to each Limited Partner shall be credited or debited, as the case may be, to such Part-ner’s capital account, and each Limited Partner’s loss recovery account shall be adjusted accordingly. Th e applicable Hurdle Return shall be calculated separately with respect to each Limited Partner’s capital account. Th e Incentive Allocation shall be calculated separately with respect to each Limited Partner’s capital account, after taking into ac-count such Limited Partner’s loss recovery account and applicable Hurdle Return. Th e Incentive Allocation allocable with respect to the Partnership’s capital account in the Master Fund with respect to any period shall be the aggregate Incentive Allocations allocable with respect to the capital account of each Limited Partner during such period.

Loss Recovery Account

Th e Master Fund will maintain a memorandum account on behalf of the Partnership, the opening balance of which is zero. Th e Master Fund GP’s Incentive Allocation shall be subject to the amount of the Partnership’s loss re-covery account from the preceding calendar quarter for Class A Interests, and calendar year for Class B Interests. At the end of each calendar quarter or calendar year, as applicable, the Partnership’s loss recovery account will be credit-ed with the aggregate net capital depreciation, if any, allocated to the Partnership’s capital account for such calendar quarter or calendar year, as applicable, and debited, but not below zero, with the aggregate net capital appreciation, if any, allocated to the Partnership’s capital account for such calendar quarter or calendar year, as applicable. Further-more, for the purposes of adjusting the Partnership’s loss recovery account, any Management Fees paid or accrued with respect to any calendar quarter or calendar year, as applicable, shall increase the amount of net capital deprecia-tion credited to the Partnership’s loss recovery account or decrease the amount of net capital appreciation debited to the Partnership’s loss recovery account, as the case may be, for such calendar quarter or calendar year, as applicable. Th e Master Fund GP will not be allocated any Incentive Allocation with respect to the Partnership’s capital account until the Partnership has recovered any negative balance in its loss recovery account. Th e amount which must be recovered will be reduced pro rata for withdrawals of capital.

Admissions, Additional Capital Contributions

Th e General Partner may admit new Limited Partners and permit Limited Partners to make additional cap-ital contributions on a monthly basis as of the fi rst Business Day of each calendar month, or at any other time in the General Partner’s sole discretion. Th e General Partner may modify the frequency of permitted admissions and/or additional contributions. Additionally, the General Partner may, in its sole discretion, “close” the Partnership at any time by refusing to (i) allow the admission of new Limited Partners and/or (ii) accept additional capital con-tributions by existing Limited Partners without notice to the Limited Partners. Notwithstanding the foregoing, the General Partner may, at its sole discretion, reopen the Partnership as of any date in its sole discretion.

Eligibility

Investors in the Partnership must be “accredited investors” within the meaning of Regulation D under the Securities Act of 1933, as amended and will be required to meet other suitability requirements as set forth in the subscription documents. Th e foregoing suitability standards represent the minimum suitability requirements for pro-spective investors in the Partnership and satisfaction of these standards does not necessarily mean that an investment in the Partnership is a suitable investment for a prospective investor. See “SUITABILITY.”

Withdrawals

Class A Limited Partners. Subject to any Class A Withdrawal Fees (as defi ned herein), a Class A Limited Partner has the right, upon sixty (60) days’ prior written notice to the Administrator, to make a partial or total withdrawal from its Capital Account as of the last day of each calendar quarter or such other date as determined by the General Partner (each a “Class A Withdrawal Date”).

A withdrawal fee of fi ve percent (5%) of the withdrawal amount will be charged for withdrawals made by Class A Limited Partners within the fi rst six (6) months after each capital contribution (the “Initial Class A Withdrawal

Glossary – 10

Fee”). A withdrawal fee of two percent (2%) of the withdrawal amount will be charged for withdrawals by Class A Limited Partners occurring any time following the fi rst six (6) months and preceding the twelve (12) month anniversary of each capital contribution (the “Subsequent Class A Withdrawal Fee”).

In addition to the foregoing, the General Partner, in its sole discretion, may permit any Class A Limited Partner to withdraw all or any portion of its Capital Account on a day other than the last day of a calendar quar-ter and/or on less than sixty (60) days prior written notice subject to a withdrawal fee of two percent (2%) of the withdrawal proceeds (the “Notice Withdrawal Fee” and together with the Initial Class A Withdrawal Fee and Subsequent Class A Withdrawal Fee, the “Class A Withdrawal Fees”); provided, however, that in no event will any Class A Limited Partner be charged withdrawal fees in excess of fi ve percent (5%) for a withdrawal.

Th e Class A Withdrawal Fees will be deducted from the amount otherwise payable to a withdrawing Class A Limited Partner and will be payable to the Partnership. Th e General Partner may, in its sole discretion, waive or reduce the Withdrawal Fees otherwise due with respect to any Class A Limited Partner’s investment, by rebate or otherwise.

Class B Limited Partners. A Class B Limited Partner has the right upon sixty (60) days’ prior written notice to the Administrator to make a partial or total withdrawal of any capital contribution from its Capital Account as of the last Business Day of the calendar month in which the Class B Lock-Up Period (as defi ned below) expires, and thereafter, on the last Business Day of the calendar month in which each twelve (12) month anniversary of the expiration of such Class B Lock-Up Period falls, or such other date as determined by the General Partner (each a “Class B Withdrawal Date” and together with the Class A Withdrawal Date, the “Withdrawal Date”). Th e General Partner, in its sole discretion, may waive or reduce the Class B Lock-Up Period and/or the notice period required for withdrawals by Class B Limited Partners. In addition, withdrawals by Class B Limited Partners will not be subject to any withdrawal fees.

Class B Lock-Up Period. Notwithstanding anything to the contrary, a Class B Limited Partner may not with-draw any capital contribution (and any appreciation thereon) until after the expiration of the twelve (12) month period (the “Class B Lock-Up Period”) following the contribution of such capital, without the prior written con-sent of the General Partner, which may be granted or denied in the General Partner’s sole discretion.

Payment of Withdrawal Proceeds. Each withdrawing Limited Partner will receive, at the General Partner’s sole discretion, at least ninety percent (90%) of its estimated withdrawal amount within thirty (30) days after its With-drawal Date, with the balance payable within thirty (30) days after the completion of the Partnership’s annual audit.

Inability to Liquidate, Suspension. In circumstances where the Partnership is unable to liquidate securities positions in an orderly manner in order to fund withdrawals, or where the value of the net assets and liabilities of the Partnership cannot reasonably be determined, the Partnership may take longer than the aforementioned time periods to eff ect settlements of withdrawals and/or the Partnership may establish a liquidating trust. In addition, the Partnership may extend the duration of the withdrawal notice period if the General Partner deems such an extension as being in the best interest of the Partnership and the non-withdrawing Limited Partners.

Th e General Partner reserves the right to suspend or limit the rights of Limited Partners to withdraw from the Partnership and/or to receive withdrawal payments, upon the occurrence of an event that may result in disso-lution of the Partnership or at any other time in the General Partner’s sole discretion. Th e Partnership may with-hold a portion of any proceeds of withdrawals if necessary to comply with applicable regulatory requirements. In addition, the Partnership, in the General Partner’s sole discretion, may settle any given withdrawal, as a whole or in part, in kind.

Compulsory Withdrawals. Th e General Partner has the right to require a compulsory withdrawal of all or part of a Limited Partner’s Interest in the Partnership, in its sole and absolute discretion, for any or no reason. A notice


of compulsory redemption shall have the same eff ect for all purposes as a notice of withdrawal.

General Partner Withdrawals. Th e General Partner and its affi liates may make withdrawals, including current earnings and allocations, from their Capital Accounts at any time without notice to the Limited Partners. In addi-tion, the General Partner may withdraw as the Partnership’s general partner at any time upon notice to the Limited Partners. For additional rights, terms, conditions and requirements regarding withdrawals, see “WITHDRAWALS” and the Partnership Agreement.

Transfers of Interests

No transfers of Interests may be made other than with the express prior written consent of the General Partner, which consent may be withheld by the General Partner in its sole and absolute discretion.

Distributions and Reinvestment

Th e Partnership does not anticipate that any distributions will be paid to Limited Partners out of the Partner-ship’s current earnings and profi ts, but, rather, that such income will be reinvested. Th e General Partner reserves the right to change such policy in its sole discretion.

Risk Factors, Confl icts of Interest

Investment in the Partnership is speculative and involves a high degree of risk. Th ere is no assurance that the Partnership will be profi table. Th e risks of an investment in the Partnership include, but are not limited to, the speculative nature of the Partnership’s strategies and the charges that the Partnership will incur regardless of wheth-er any profi ts are earned. See “CERTAIN RISK FACTORS.” Th e General Partner and its respective offi cers and employees may directly or indirectly manage the assets of other funds and have other clients and business activities that in some respects compete with the Partnership for certain investments. As further described herein, in seeking to comply with applicable securities laws and reduce risk exposure related to the violation of such laws, the General Partner and its affi liates may cause the Partnership to forego certain potentially profi table investment opportunities that may involve such risks. Th e Partnership is also subject to certain potential confl icts of interest. See “POTEN-TIAL CONFLICTS”

Regulatory Matters, Amendments

Th e Partnership Agreement may be amended by the General Partner without further notice to the Limited Partners without limitation to satisfy any requirements in an opinion, directive, order, ruling or regulation. See the Partnership Agreement for additional amendment provisions.

Fiscal Year

Th e Partnership’s fi scal year will end on December 31st of each year.


Directory

Offi ces of Partnership Oracle of Investing Fund LP Ph: (212) 729-4318 228 Park Ave S 62523 Fax: (212) 729-4583

New York, NY 10003-1052

Investment Manager & Wharton Global Capital LLC Ph: (212) 729-4318 Administrator 228 Park Ave S 62523 Fax: (212) 729-4583 New York, NY 10003-1052

Auditors Deloitte & Touche Ph: (284) 494-2868 Omar Hodge Buildingg, Wickhams Cay P.O. Box 3083, Road Town Tortola, British Virgin Islands

Custodian Interactive Brokers, LLC Ph: (312) 542-6901 209 South LaSalle Street Fax: (312) 984-1017 10th Floor Chicago, IL 60604 USA

Legal Advisor Tannenbaum Helpern Ph: (212) 508-6700 Syracuse & Hirschtritt LLP 900 Th ird Avenue New York, New York 10022


2Th e Partnership

GenerallyOracle of Investing Fund LP (the “Partnership”) is a limited partnership which was formed under the laws

of Delaware on August 27, 2013. Th e Partnership is currently off ering to a select group of sophisticated qualifi ed investors by private placement through this amended and restated confi dential private placement memorandum, as amended or restated from time to time (the “Memorandum”), Class A limited partnership interests (the “Class A Interests”) and Class B limited partnership interests (the “Class B Interests” and together with the Class A In-terests, the “Interests”) in the Partnership. Upon admission to the Partnership, investors become limited partners (the “Limited Partners” or “Partners”) of the Partnership. Th e Limited Partners holding the Class A Interests are sometimes referred to herein as “Class A Limited Partners” and the Limited Partners holding the Class B Interests are sometimes referred to herein as the “Class B Limited Partners.”

Class Diff erencesSubject to certain withdrawal fees, Class A Limited Partners may make withdrawals from their Capital

Accounts (as defi ned herein) on a quarterly basis, whereas Class B Limited Partners may make withdrawals from their Capital Accounts on an annual basis. In addition, the Class B Limited Partners are not subject to the Man-agement Fee (as defi ned herein) whereas the Class A Limited Partners are. Lastly, the Capital Accounts of Class A Limited Partners are subject to a twenty percent (20%) quarterly Incentive Allocation allocable at the Master Fund level in excess of a one-percent (1%) cumulative (on a quarterly basis, but not cumulative on an annual basis) hurdle return, whereas the Class B Limited Partners are subject to a twenty-fi ve percent (25%) annual Incentive Allocation allocable at the Master Fund level in excess of a six percent (6%) non-cumulative hurdle return.

Th e Partnership is authorized to issue additional classes of interests from time to time pursuant to other off er-ing materials containing fi nancial terms and conditions that may diff er from those set forth herein.

Th e Partnership’s investment objective and strategy with regard to the Interests are set forth below, and investors are directed to such materials. Th e General Partner (as defi ned herein) from time to time, may refi ne or change the Partnership’s trading method or strategy without prior notice to, or approval by, the Limited Partners. Th e information in this Memorandum is qualifi ed in its entirety by the Partnership’s amended and restated limited partnership agreement, as it may be amended and/or supplemented from time to time (the “Partnership Agree-ment”), annexed hereto as Exhibit II and deemed a part of this Memorandum, which should be reviewed carefully before a prospective investor invests in the Partnership.

Master FundTh e General Partner will seek to pursue the Partnership’s investment objective by investing all or substantially


all of the Partnership’s assets in the Class A and Class B limited partnership interests of the Oracle of Investing Master Fund, LP, a British Virgin Islands limited partnership (the “Master Fund”). Th e general partner of the Master Fund is Oracle of Investing GP Ltd., a company organized under the laws of the British Virgin Islands (the “Master Fund GP”). Th e Master Fund will retain the General Partner (or an affi liate thereof ) to serve as the Master Fund’s investment manager and will utilize the General Partner’s (or its affi liate’s) services (in its capacity as investment manager), to invest and reinvest capital of the Partnership, together with assets of other similar entities following the same investment strategy described herein, including without limitation, Oracle of Investing Fund Inc., a British Virgin Islands business company (the “Off shore Fund”). To the extent that the Partnership’s capital is invested in the Master Fund, any or all of the fees and expenses payable by the Partnership will be paid by the Partnership or the Master Fund, but will not be duplicated (other than fees and expenses incurred by both the Partnership and the Master Fund such as, without limitation, administration fees). References herein to the “Part-nership” shall be read to include the “Master Fund” unless the context otherwise requires. See “FUND STRUC-TURE.”

15– Private Placement Memorandum15– Private PlPlacacement Memorandum

3Investment Strategy

Investment Objective and StrategyTh e Partnership’s investment objective is to compound wealth for Limited Partners over the long term. Th e

General Partner targets outperforming most equity indices by 5-15% annually.

Th e basis of the General Partner’s investment philosophy is the existence of a two-tier price structure for the securities of any publicly traded corporation. First, there is the stock market value, which is the most recent price at which the securities have traded on a stock exchange or in an over the counter market. Second, there is the intrinsic value of the securities which is determined in several ways, including, book value, net current asset value, earning value and private market value. Once an estimate of intrinsic value has been determined, the decision to buy or sell a security is made by a comparison of its current market price to its intrinsic value. Th e discount from intrinsic value at which investments can be made is defi ned as the “margin of safety.” For example, a security purchased at less than 50-60% of intrinsic value is backed by corporate net worth (i.e., “collateral,” which is nearly twice the cost of the investment). Th e General Partner believes that this collateral provides protection (a margin of safety) against permanent capital loss, although temporary stock market declines can occur. In contrast to the “ef-fi cient market theory” of investment, which generally holds that at any given time stock prices refl ect all relevant information and are therefore true values, the General Partner believes that the stock market, in its excesses, has, and will continue to, undervalue and overvalue securities in relation to their intrinsic value.

Medium-Term HorizonTh e General Partner believes that weekly, monthly, quarterly or even annual performance yardsticks focus

an investor’s attention in the wrong place; instead, focus should be on signifi cant increases in value per share over longer periods (e.g., 5 years).

Th e General Partner focuses on the following:

1. Situations where the risk of a loss to capital is just about as close to zero as one can make it; and

2. Investments that have a very high likelihood that they help the portfolio progress to a double (a “double” would double the share value).

Once these two criteria are met, the General Partner believes that it can focus on how long this progression is expected to take.

Th e General Partner seeks to invest 70 to 80% of the Partnership’s portfolio in 6 to 10 securities that have this risk-reward profi le. Th e General Partner expects 20-30% of the Partnership’s capital to be invested in 10 to 15 “seed” positions.

16– Private Placement Memorandum

Investment ResearchTh e general philosophical approach to the investment process is that there will only be a very small percent-

age of securities that meet the fundamental, technical, and global macro criteria at any particular time. Diff erent weightings may be given to the three general areas under consideration.

Th e General Partner devotes signifi cant time and energy backtesting and reviewing historical precedent of opportunities as they give one of the best estimates for handicapping probabilities of an investing opportunity. Moreover, the General Partner reviews written fundamental information and global macro information in a peri-odic basis. Th e General Partner (GP) requests annual reports and other fundamental information as it is relevant to the investment decision.

We calculate that about 1% of available securities would meet the criteria at any given time. Given that there are several thousand stocks in the U.S. alone, the high selectiveness of our approach does not limit the amount of diversifi cation implemented in the portfolio as around 70 stocks would fulfi ll the criteria. From there we pick the opportunities with the highest probabilities of success and the highest payoff s. In sum, the opportunities with the highest expected value, taking into account the variability of the outcomes as well, (i.e. Sharpe ratio). Th us, we can really focus resources in the highest-quality opportunities.

Among the fundamental factors considered are: the return on capital, the return on equity, the profi t margin, the operating margin, price/revenue, price/earnings, earnings growth, earnings acceleration, revenue growth, and revenue acceleration.

Among the technical factors considered are: price and volume in the recent past, price level with respect to several moving averages, momentum, acceleration, volume growth, volume acceleration, and inclusion into an equity index.

Among the global macro factors considered are: elections in the US and other G-20 countries, decisions by the Federal Reserve, Bank of Japan, European Central Bank, and other G-20 central banks. Decisions by the De-partment of the Treasury and its equivalent in other countries, decisions by the White House and Congress, and their equivalents in other countries. Other geopolitical factors such as armed confl ict, civil war, war, among others.

Idea GenerationIdea Generation emanates always and everywhere from observation of events such as from current events and

the media, price action, or analysis of historical data. From there, the General Partner backtest the idea to see if similar situations have yielded a large positive expected return with minimum risk. Th is approach prevents sub-jectivity and emotional factors to enter into the equation. Th e ideas that pass a threshold of return/risk are imple-mented; otherwise, the General Partner will allocate resources to cash.

Initial Screening

Screening is done automatically by the systems the General Partner uses daily. Th ey help monitor more than 7,000 stocks. Without them it would only be possible to monitor a few dozens. So, the initial screening is im-portant in being able to select high-probability, high-payoff opportunities. Companies with strong fundamentals and strong technicals at a time of favorable general market action, greatly enhance to odds of success. In terms of fundamentals we can use the following questions, “Does the company have a good “moat” or sustainable com-petitive advantage?”, “Can the company redeploy capital successfully?”, “What are the long term dynamics of the business?”, “Are managements’ interests aligned with shareholders?”, “Do they operate the business effi ciently?”,

Investment Strategy – 17

“Do they allocate capital well?”, Do they think like owners?”, and “What is the company worth?”.

Investment SelectionTh e idea is to select the best return/risk ratio opportunities, in which the defi nition of risk could be the vari-

ability, but most importantly would be the possibility of permanent loss.

Limitation on Trading of Commodity Interest Positions

At all times, the Partnership will limit its trading of commodity interest positions to one of the following limits: the aggregate initial margin and premiums required to establish commodity interest positions, determined at the time the most recent position was established, will not exceed fi ve percent (5%) of the liquidation value of the Partnership’s portfolio, after taking into account unrealized profi ts and unrealized losses on any such positions it has entered into (the“Five Percent Test”)1; or the aggregate net notional value of the Partnership’s commodity interest positions, determined at the time the most recent position was established, will not exceed one hundred-percent (100%) of the liquidation value of the Partnership’s portfolio, after taking into account unrealized profi ts and unrealized losses on any such positions it has entered.2

Given the limitations imposed on the Partnership’s trading of commodity interest positions, the Partnership should not be viewed as a vehicle for trading in the commodity futures or commodity options markets. Th e Part-nership will not engage in futures and/or commodities trading in accordance with the foregoing limitations until the General Partner has fi led for exemption from registration with the National Futures Association.

Borrowing of Cash and Securities and Loans

Borrowings

Th ere are no limits on the Partnership’s borrowing ability and the Partnership may borrow funds for invest-ment purposes or to fund withdrawals. See “WITHDRAWALS” Loans with respect to the Partnership generally may be obtained from securities brokers and dealers or from other fi nancial institutions; such loans will be secured by securities or other capital of the Partnership, as the case may be, pledged to such brokers or fi nancial institu-tions. See “PROFESSIONALS – Custodian.”

In the event the Partnership obtains a credit facility, the General Partner’s investment discretion may be sub-ject to certain limitations prior to and/or following an event of default. For example, pursuant to the terms of the credit facility, the Partnership’s trading may have to abide by certain formulas, or the General Partner may have to obtain the lender’s consent to engage in some or all transactions while the credit facility is outstanding. After the occurrence of an event of default (whether because of nonpayment or otherwise), it is likely that, among other consequences, the lender would assume total control of the Partnership’s assets and/or trading activities and no distributions could be made or withdrawals eff ected without the lender’s consent.

1 Rule 4.13(a)(3)(ii)(A) of the CEA. In the case of an option that is in-the-money at the time of purchase, the in-the-money amount as defi ned in Rule 190.01(x) may be excluded in computing the fi ve percent.2 Rule 4.13(a)(3)(ii)(B) of the CEA. Th e term “notional value” is calculated for each futures position by multiplying the number of contracts by the size of the contract, in contract units (taking into account any mul-tiplier specifi ed in the contract), by the current market price per unit and for each such option position by mul-tiplying the number of contracts by the size of the contract, in contract units (taking into account any multiplier specifi ed in the contract), by the strike price per unit. Th e General Partner, in calculating notional value, is permit-ted to net contracts with the same underlying commodity across designated contract markets, registered deriva-tives transaction execution facilities and foreign boards of trade.

18– Private Placement Memorandum

Short Sales

Th e Partnership expects to engage in “short sales” as part of its investment strategy. Short selling is the practice of selling securities that are borrowed from a third party. Th e Partnership will be required to return securities equiv-alent to those borrowed for the short sale at the lender’s demand. Pending the return of such securities, the Partner-ship will be required to deposit with the lender as collateral the proceeds of the short sale plus additional cash or securities. Th e amount of the required deposit will be adjusted periodically to refl ect any change in the market price of the securities that the Partnership is required to return to the lender.

Th e Partnership will be required to pay brokerage commissions to execute short sales and may be required to pay a premium and/or interest to the lender of the securities, which would increase the cost of the securities sold. Until the borrowed securities are replaced, the Partnership, as the case may be, generally will be required to pay to the lender amounts equal to any dividends or interest that accrue on the securities borrowed during the period of the loan.

Distributions and ReinvestmentTh e Partnership does not expect to make any distributions to Limited Partners out of the Partnership’s current

earnings and profi ts. Rather, the Partnership will reinvest such income and allocate the same in accordance with the Partnership Agreement. Potential investors should keep this limitation in mind when determining whether or not an investment in the Partnership is suitable for their particular purposes. Th e General Partner reserves the right to change such policy.

Plan of Distribution and Use of Proceeds, Cash EquivalentsInterests will be off ered through private placement to sophisticated, qualifi ed investors. See “SUITABILITY.”

Th e net proceeds of the private off ering contemplated herein will be invested in accordance with the policies set forth above or may be invested in whole or in part in a Master Fund (as defi ned herein) that will adhere to such policies. Th e Partnership may hold cash or invest in cash equivalents for short-term investments including, without limitation: obligations of the U.S. Government, its agencies or instrumentalities (U.S. Government Securities; U.S. Treasury Bills); commercial paper; and repurchase agreements, money market mutual funds, certifi cates of deposit and bankers’ acceptances issued by domestic branches of U.S. banks that are members of the Federal Deposit Insur-ance Corporation. In the event the General Partner so determines, all or a portion of the Partnership’s capital may be held in cash and cash equivalents.

In making investment decisions, the Partnership will rely on the advice of the General Partner (or its affi liates, as the case may be) rather than any specifi c objective criteria.

New Issue AllocationTh ough not currently anticipated, the Partnership may in the future invest in “new issues” (generally defi ned in

NASD Conduct Rule 2790, as the same may be amended, supplemented or replaced from time to time (the “NASD Rule”) of the U.S. National Association of Securities Dealers, Inc. (the “NASD”), as any initial public off ering of an equity security). Th e NASD has taken the position in the NASD Rule that such “new issues” may not be sold, except in limited circumstances, to an account in which a member, or person affi liated with or related to a member, of the NASD (or to certain other securities industry professionals/companies) has an interest. In the event the Part-nership invests (directly or indirectly) in “new issues,” Partners who are “restricted persons” within the meaning of the NASD Rule may be prohibited from participating in such “new issues” in whole or in part. Th e General Partner may, in its sole discretion, make special allocations to prevent all or part of a Partner’s Capital Account from partici-pating in “new issues” so as to comply with the NASD Rule.


4Professionals

Th e General PartnerWharton Global Capital LLC (the “General Partner”), a Delaware limited liability company, which was

organized on December 28, 2010, serves as general partner of the Partnership. Th e General Partner exercises ultimate authority over the Partnership and is responsible for the day-to-day operations and management of the Partnership. Th e General Partner is the “Tax Matters Partner” for Internal Revenue Service (“IRS”) purposes. Th e General Partner is an unregistered commodity pool operator that has fi led for an exemption from registration with the National Futures Association (the “NFA”) pursuant to Rule 4.13(a)(3) of the Commodity Exchange Act, as amended (the “CEA”). In addition, the General Partner is an unregistered commodity trading advisor that will rely on an exemption from registration with the NFA pursuant to Rule 4.14(a)(10) of the CEA.

Th e General Partner has the right to delegate its responsibilities here under, including the responsibility of providing certain investment advisory, management, administrative and auditing services, to suitable parties who may be reasonably compensated by the Partnership. Th e General Partner may also retain such other suitable parties to provide services to the Partnership, including, without limitation, legal, consulting and auditing services. Furthermore, the General Partner may enter into agreements with such parties on behalf of the Partnership, which agreements may include provisions for the indemnifi cation and exculpation of such parties by the Partnership. Th e Partnership Agreement provides for the indemnifi cation of the General Partner with respect to certain expenses incurred by the General Partner in connection with the performance of its duties on behalf of the Partnership.

Th e General Partner will devote as much time to the investment activities of the Partnership as it shall deter-mine to be necessary for the effi cient and eff ective operation of the Partnership.

Th e General Partner, its respective affi liates, principals and employees may engage or participate in other activities or ventures, whether or not of the same nature as the Partnership. No Partner shall be entitled to any profi ts that the General Partner, any of its affi liates, principal or employees shall derive from any activities or ventures other than those derived from the Partnership, whether or not such businesses or ventures are of the same nature as, and/or compete with the Partnership. Th e General Partner, its affi liates, principals and employees shall not be prohibited from buying or selling securities for their own account, including securities that are the same as those held by the Partnership. As a result of its other activities, the General Partner may have confl icts of interest in allocating time, services and functions among the Partnership and other business ventures. See “CERTAIN RISK FACTORS.”

Principal Decision MakersTh e principal decision maker of the General Partner with regard to the Partnership is Javier Gonzalez, PhD.

Dr. Javier Gonzalez


Javier Gonzalez, the principal of the General Partner, has been managing the investments of the Partnership since its inception. Dr. Gonzalez created Wharton Global Capital, LLC in 2010 and has managed the Oracle of Investing Fund since its inception. Prior to Oracle of Investing, Dr. Gonzalez worked at Morgan Stanley as Equity Strategist and Equity Analyst and the Bank of Canada as a Macroeconomic Research Economist.

Javier has also taught at the Wharton School of Business and the University of Pennsylvania. He earned a PhD in economics from the University of Pennsylvania in 2008. He previously obtained a BA and an MA in Eco-nomics from the University of British Columbia in 2001 and 2002, respectively.

Javier has obtained #1 in national mathematics competitions and has ranked #3 in physics national compe-titions. He combines several approaches to his investing including quantitative tools, fundamental analysis, and geopolitical and macroeconomic factors.

Administrator

Th e Partnership has entered into an agreement (the “Administration Agreement”) with Wharton Global Capital LLC (the “Administrator”), to perform all general administrative tasks for the Partnership, including (i) communicating with the Partnership’s Limited Partners, (ii) maintaining the register of partnership interests of the Partnership, (iii) processing the Partnership’s Limited Partners contributions, transfers of interest, and with-drawals, (iv) maintaining all appropriate Limited Partner registers and ledgers,(v) preparing and maintaining all fi nancial and accounting books and records, (vi) overseeing and reviewing payment of all fees and expenses of the Partnership, including legal fees and accounting fees, (vii) calculating the Net Asset Value of the Partnership. Th e fee payable to the Administrator is based on its standard schedule of fees charged by the Administrator for similar services.

Under the Administration Agreement, the Partnership will indemnify the Administrator from and against any and all expenses, losses, liabilities or damages (other than those resulting from the gross negligence, bad faith, willful malfeasance or criminal conduct on the part of the Administrator in performing its obligations or duties under the Administration Agreement) which may be imposed on, incurred by or asserted by third parties against the Administrator in properly performing its obligations or duties under the Administration Agreement.

Th e Administration Agreement provides that it shall continue until terminated by any party giving to the other party not less than sixty (60) days’ written notice (or such shorter notice as the parties may agree to accept).

Custodian

Interactive Brokers LLC (the “Custodian”) shall keep custody of securities and cash held in the Master Fund. A limited number of portfolio assets may not be held by the Custodian, and may be held in the custody of one or more fi nancial institutions, including any brokers or dealers or other institutions through which the Master Fund eff ects transactions.

Th e Custodian will not provide any other services or perform any other functions except safekeeping and the usual administrative matters relating to the Safe Custody Assets of the Master Fund, and will have no other duties or responsibilities relating to the Master Fund. For example the Custodian will not provide advisory services or asset management services nor will it monitor investment management activities or investment strategies of the Master Fund. Th e Custodian shall not supervise or control the activities of the General Partner (as investment manager of the Master Fund), the Master Fund GP or the administrator of the Master Fund. Th e Custodian does not warrant the contents of the relevant fund-documentation nor will it be involved in the management, admin-istration or net asset value calculation of the Master Fund. Th e Custodian does not act as sponsor or promoter of the Master Fund.

Th e Custodian does not therefore assume any liability for negligent or willful misconduct of the General Partner (as investment manager of the Master Fund), the Master Fund GP or administrator of the Master Fund

Professionals – 22

and potential investors should not rely upon the Custodian in deciding whether or not to invest in the Partner-ship.

Brokerage and Execution

Th e Master Fund will establish a brokerage account with a licensed broker selected by the General Partner. Th e General Partner reserves the right, in its sole discretion, to change or add brokers, custodians or banks without the consent of the limited partners of the Master Fund, including the Partnership.

Portfolio transactions are executed by brokers and dealers generally selected by the General Partner on behalf of the Master Fund on the basis of such factors as price, the ability of the brokers to eff ect the transactions, the brokers’ facilities, reliability and fi nancial responsibility and the provision or payment of the costs of brokerage and research services (i.e., soft dollar items). Accordingly, if the General Partner determines in good faith that the amount of commissions charged by a broker is reasonable in relation to the value of the brokerage or research ser-vices provided by such broker, the Master Fund may pay commissions to such broker in an amount greater than the amount another broker might charge. Notwithstanding the foregoing, certain brokers utilized by the General Partner or its affi liates may refer investors to the Master Fund and/or the Partnership or other investment vehicles managed by the General Partner or its affi liates. Th e Custodian can be replaced and/or additional brokers can be retained at any time without the consent of the limited partners of the Master Fund including the Partnership.

Section 28(e) of the United States Securities Exchange Act of 1934, as amended, establishes a safe harbor (the “Section 28(e) safe harbor” or “safe harbor”) allowing investment managers to use client funds, by way of commis-sion dollars, to purchase certain “brokerage and research services.” Pursuant to such safe harbor, the brokerage and research services must provide lawful and appropriate assistance to the investment manager in the performance of its investment decision-making responsibilities. Further, the amount of commissions paid by the Master Fund must be reasonable in light of the value of the brokerage or research services off ered, taking into account various factors, including commission rates, fi nancial responsibility and strength and ability of the broker to effi ciently execute transactions.

Section 28(e) safe harbor research services provided by brokers generally include advice, analyses and reports, and may specifi cally include traditional research reports analyzing the performance of a particular company or stock, certain fi nancial newsletters and trade journals, quantitative analytical software and software that provides analyses of securities portfolios, seminars, conferences and other services that refl ect substantive content (i.e., the expression of reasoning or knowledge relating to the subject matter of Section 28(e)) and provide lawful and appropriate assistance to the General Partner in the performance of its investment decision-making responsibilities on behalf of the Master Fund. According to an interpretive release (the “Release”) recently issued by the Securities and Exchange Commission (the “SEC”), products with inherently tangible or physical attributes, such as comput-er hardware (including computer terminals), telephone lines and offi ce furniture are ineligible as “research services” under the Section 28(e) safe harbor, as such products do not refl ect the expression of reasoning or knowledge. Other products and services that are not eligible under the Section 28(e) safe harbor are rent, legal expenses, offi ce equipment and mass marketed publications.

Certain equipment and services that are ineligible as research services, such as connectivity services between the General Partner and the broker and other relevant parties, trading software operated by a broker to route orders to market centers and algorithmic trading software, may, however, be eligible as “brokerage services” under the Section 28(e) safe harbor to the extent such equipment is suffi ciently related to the execution, clearing and set-tlement of securities transactions and other incidental functions. However, “overhead expenses” such as telephone or computer terminals and other products that are not suffi ciently related to order execution or fall outside the temporal standard for “brokerage” under the Section 28(e) safe harbor are not eligible.

Th e SEC’s position on the eligibility of custody also falls within the temporal standard for “brokerage ser-vices.” Th e SEC states that short-term custody that relates to eff ecting, clearing and trading particular transactions


falls within the safe harbor. However, long-term custody that takes place post-settlement and relates to long-term maintenance of securities positions, is not incidental to eff ecting the securities transaction and therefore does not fall within the safe harbor. Furthermore, long-term custody is generally a service provided directly to an investment manager’s client for the benefi t of the client and not provided to an investment manager for the benefi t of the client.

Th e Section 28(e) safe harbor is available only when the General Partner conducts business with a broker that is involved with “eff ecting” the trades and “provides” the research. “Eff ecting” trades generally involves executing, clearing or settling the trade. A broker “provides” the product or service if the broker that is eff ecting transactions for the advised accounts is either legally obligated to pay for the research or, is not legally obligated to pay, but pays the research preparer directly and takes steps to ensure that the services being paid with client commissions are eligible under the safe harbor.

Th e General Partner may from time to time use soft dollars for items which are within the Section 28(e) “safe harbor.” Soft dollar items, whether provided directly or indirectly, may be utilized for the benefi t of the General Partner’s and its affi liates’ other accounts. Th e General Partner may from time to time use soft dollars to acquire soft dollar items that the General Partner or its affi liates would otherwise be obligated to provide to, or acquire at their own expense for, the Master Fund. Nonetheless, the General Partner believes that such soft dollar items may provide the Master Fund with benefi ts by supplementing the research and services otherwise available to the Master Fund.

Th e General Partner may enter into directed brokerage arrangements in its discretion. References throughout this section to the General Partner shall refer to the General Partner in its capacity as investment manager to the Master Fund. Th e Partnership may retain the services of one or more placement agents (“Placement Agents”) to assist in selling interests in the Partnership at no additional cost to the Limited Partners.

Independent Client RepresentativeTh e Partnership has the authority to appoint a person (the “Independent Client Representative”) unaffi liated

with the General Partner or any of its affi liates to act as the agent of the Partnership to give or withhold any consent of the Partnership required under applicable law to a transaction in which the General Partner causes the Partnership to purchase securities or other instruments from, or sell securities or other instruments to, the General Partner or its affi liates or to engage in brokerage transactions in which any of the General Partner’s affi liates acts as broker for another person on the side of the transaction opposite that of the Partnership. If appointed, the Independent Client Representative may be paid by the Partnership and will receive an indemnity from the Partnership for claims arising out of activity in such capacity. Th is paragraph is included for compliance with applicable law, including, but not limited to, Section 206 of the Investment Advisers Act of 1940, as amended (the “Advisers Act”)

27 – Private Placement Memorandum27 – Private PPlalacecement Memorandum

5Subscriptions

Th e minimum initial contribution to the Partnership by each Class A Limited Partner is U.S.$50,000 and by each Class B Limited Partner is U.S.$50,000, and the minimum additional contribution is U.S$50,000, or such other amounts as determined by the General Partner, in its sole discretion, from time to time. Th e General Partner, in its sole discretion, may accept lesser sums as initial and subsequent subscriptions. Furthermore, the General Partner may permit contributions in kind in its sole discretion. Th e General Partner reserves the right to reject subscriptions, in whole or in part, in its sole discretion. Th e General Partner may admit new Limited Partners and permit Limited Partners to make additional capital contributions as of the fi rst Business Day of each calendar month, or at any other time in the General Partner’s sole discretion. Th e General Partner may modify the frequency of permitted admissions and/or additional contributions. Additionally, the General Partner may, in its sole discretion, “close” the Partnership by refusing to at any time (i) allow admission of new Limited Partners and/or (ii) accept additional capital contributions by existing Limited Partners without notice to the Limited Partners. Notwithstanding the foregoing, the General Partner may, at its sole discretion, reopen the Partnership as of any date. Th e term “Business Day” refers to any day the banks are open for business in New York (other than Saturday or Sunday).

Unless otherwise agreed by the General Partner, capital contributions must be in the Partnership’s account on or before the fi rst Business Day of the month the investment is to be made and will be accepted, in cleared funds or, at the General Partner’s sole discretion, in kind, in accordance with the Partnership’s Net Asset Value as of the beginning of such month. Th ereafter, capital contributions will be accepted in accordance with the Partnership’s Net Asset Value as of the beginning of the following month and, pending investment, will be held in a separate account.

Unless otherwise agreed by the General Partner, completed subscription materials must be received by the Administrator at least two (2) Business Days prior to the Subscription Date on which prospective limited partners wish to invest in the Partnership, and cleared funds must be in the Partnership’s account on or before the Sub-scription Date.

Capital Account EstablishmentA capital account (the “Capital Account”) will be established for each Partner (including the General Partner)

and refl ects each Partner’s interest in the Partnership. Th e opening balance of a Partner’s Capital Account is the Partner’s initial contribution. Capital Accounts are further adjusted as provided herein and in accordance with the principles set forth in the Partnership Agreement.

Subject to the foregoing, at the end of each accounting period (“Accounting Period”)1 of the Partnership, (i) 1 Th e term “Accounting Period” shall mean the following periods: Th e initial Accounting Period will begin upon the initial opening of the Partnership and each subsequent Accounting Period will begin immediately aft er the close of the immediately preceding Accounting Period. Each Accounting Period will close at the close


the aggregate amount of any and all Management Fees (as defi ned herein) payable by the Partnership during such Accounting Period which are attributable to each Class A Limited Partner will be charged to such Class A Limited Partner’s Capital Account and (ii) any Net Capital Appreciation2 or Net Capital Depreciation3 will be allocated to all Partners (including the General Partner) in proportion to each Partner’s Ownership Percentage (as defi ned in the Partnership Agreement).

Incentive AllocationGenerally, subject to the Loss Recovery Account provisions discussed herein, the following amounts will be

reallocated (in the aggregate) from the Partnership’s capital account in the Master Fund to the Master Fund GP’s capital account in the Master Fund:

(i) at the end of each calendar quarter of the Master Fund, twenty percent (20%) of the Class A Aggregate Net Increase4 in excess of the Class A Hurdle Return (the “Class A Incentive Allocation.

(ii) at the end of each calendar year of the Master Fund, twenty-fi ve (25%) of the Class B Aggregate Net Increase5 in excess of the Class B Hurdle Return (the “Class B Incentive Allocation” and together with the Class A Incentive Allocation, the “Incentive Allocation”).

In the event that a Limited Partner withdraws from the Partnership and the Partnership, accordingly, with-draws a portion of its capital account in the Master Fund other than at the end of a calendar quarter, or calendar year (as applicable) net capital appreciation or net capital depreciation, as the case may be, allocable to the Partner-ship shall be determined through the date of withdrawal and the Incentive Allocation, if any, will be reallocated to the Master Fund GP as of the withdrawal date. Th e Master Fund has adopted the “high water mark” method of incentive allocation by utilizing the Loss Recovery Account method described below.

“Class A Hurdle Return” means an amount equal to one percent (1%) of the portion of the Partnership’s capital account balance in the Master Fund which is attributable to Class A Limited Partners, calculated as of the beginning of each calendar quarter. Th e Class A Hurdle Return will be adjusted throughout the applicable peri-od to refl ect additional capital contributions and withdrawals by the Partnership in the Master Fund (which are attributable to Class A Limited Partners). Th e Class A Hurdle Return is cumulative with respect to each quarter

of business on the fi rst to occur of (i) the date immediately prior to the eff ective date of the admission of a new Partner and/or an increase in a Partner’s capital contribution; (ii) the eff ective date of any withdrawal by a Partner, (iii) the date when the Partnership dissolves and/or terminates, (iv) the last Business Day of each cal-endar month, (v) at such other time as may be required by governmental rules and regulations imposed upon the General Partner or the Partnership, or (vi) at such other time as the General Partner, in its sole discretion, may determine.2 “Net Capital Appreciation” shall mean, with respect to any Accounting Period, the excess, if any, of the Ending Value over the Beginning Value (as such terms are defi ned in the Partnership Agreement). 3 “Net Capital Depreciation” shall mean, with respect to any Accounting Period, the excess, if any, of the Begin-ning Value over the Ending Value (as such terms are defi ned in the Partnership Agreement).4 Th e term “Class A Aggregate Net Increase” shall mean, with respect to any period in which the Incentive Allocation is allocable at the Master Fund level, the excess (if any) of the aggregate appreciation over the aggre-gate depreciation credited or debited to the Partnership’s capital account in the Master Fund less any Manage-ment Fees charged to the Partnership’s capital account in the Master Fund (which is attributable to the Class A Limited Partners) with respect to such period.5 Th e term “Class B Aggregate Net Increase” shall mean with respect to any period in which the Incentive Al-location is allocable at the Master Fund level the excess (if any) of the aggregate appreciation over the aggregate depreciation credited or debited to the Partnership’s capital account in the Master Fund (which is attributable to the Class B Limited Partners) with respect to such period.

Subscriptions – 27

during a calendar year, but not from year to year. Th us, if the Class A Hurdle Return is not earned during a quar-ter in a calendar year, the shortfall will need to be made up during the following quarter in such year. Th e Class A Hurdle Return will be prorated for partial periods.

“Class B Hurdle Return” means an amount equal to six percent (6%) of the portion of the Partnership’s capital account balance in the Master Fund which is attributable to Class B Limited Partners, calculated as of the beginning of each calendar year. Th e Class B Hurdle Return will be adjusted throughout the applicable pe-riod to refl ect additional capital contributions and withdrawals by the Partnership in the Master Fund (which are attributable to Class B Limited Partners). Th e Class B Hurdle Return is non-cumulative with respect to each calendar year. Th us, if the Class B Hurdle Return is not earned during a calendar year, the shortfall will not need to be made up during the following year. Th e Class B Hurdle Return will be prorated for partial periods. “Hurdle Return” means the Class A Hurdle Return and/or the Class B Hurdle Return, as the context requires. Th e Master Fund GP may, in its discretion, waive all or part of the Incentive Allocation with respect to any Partner, including, without limitation, its affi liates, members and/or employees.

For purposes of calculating the Management Fee and Incentive Allocation attributable to each Limited Part-ner, the Master Fund shall maintain, for bookkeeping purposes only, a separate capital account and separate loss recovery account for each Limited Partner. Th e Management Fee shall be calculated separately with respect to each Limited Partner’s capital account. Prior to the end of each period in which the Incentive Allocation is allocated at the Master Fund level, the Partnership shall provide the Master Fund with an estimate of its on-going expenses for such period (“Partnership Expenses”). Appreciation, depreciation, Partnership Expenses and Management Fees (if applicable) with respect to each Limited Partner shall be credited or debited, as the case may be, to such Partner’s capital account, and each Limited Partner’s loss recovery account shall be adjusted accordingly. Th e applicable Hurdle Return shall be calculated separately with respect to each Limited Partner’s capital account. Th e Incentive Allocation shall be calculated separately with respect to each Limited Partner’s capital account, after taking into account such Limited Partner’s loss recovery account and applicable Hurdle Return. Th e Incentive Allocation al-locable with respect to the Partnership’s capital account in the Master Fund with respect to any period shall be the aggregate Incentive Allocations allocable with respect to the capital account of each Limited Partner during such period.

Loss Recovery AccountTh e Master Fund will maintain a memorandum account on behalf of the Partnership, the opening balance of

which is zero. Th e Master Fund GP’s Incentive Allocation shall be subject to the amount of the Partnership’s loss recovery account from the preceding calendar quarter for Class A Interests, and calendar year for Class B Interests. At the end of each calendar quarter or calendar year, as applicable, the Partnership’s loss recovery account will be credited with the aggregate net capital depreciation, if any, allocated to the Partnership’s capital account for such calendar quarter or calendar year, as applicable, and debited, but not below zero, with the aggregate net capital appreciation, if any, allocated to the Partnership’s capital account for such calendar quarter or calendar year, as applicable. Furthermore, for the purposes of adjusting the Partnership’s loss recovery account, any Management Fees paid or accrued with respect to any calendar quarter or calendar year, as applicable, shall increase the amount of net capital depreciation credited to the Partnership’s loss recovery account or decrease the amount of net capital appreciation debited to the Partnership’s loss recovery account, as the case may be, for such calendar quarter or calendar year, as applicable. Th e Master Fund GP will not be allocated any Incentive Allocation with respect to the Partnership’s capital account until the Partnership has recovered any negative balance in its loss recovery account. Th e amount which must be recovered will be reduced pro rata for withdrawals of capital.

Net Asset Valuation


Th e Partnership’s net asset value (the “Net Asset Value”) is equal to the Partnership’s assets, at fair value, less its liabilities, at fair value, as calculated pursuant to the Partnership Agreement. Th e General Partner, or any party designated by the General Partner (including the Administrator), shall determine the Partnership’s Net Asset Value the last Business Day of each calendar month or such other times as determined by the General Partner in its sole discretion (the “Valuation Date”), as follows:

1. Securities, other than options, that are listed or admitted to trading on one or more securities exchanges will be valued at the last sales price on the exchange selected by the General Partner (or an affi liate), acting in good faith, on the relevant Valuation Date or, if no sales took place on such Valuation Date, at the mean between the “bid” and “asked” prices at the close of trading on the exchange selected by the General Partner (or an affi liate), acting in good faith, on the relevant Valuation Date. Securities that are not listed or admitted to trading on an exchange, including, without limitation, “Brady Bonds,” or that are listed on an exchange which the General Partner (or an affi liate), in good faith believes does not accurately represent such securities’ true value, will be valued at the mean between the bid and asked prices provided by a dealer whom the General Partner (or an affi liate), acting in good faith, deter-mines to be a reputable dealer.

2. Options and warrants that are listed or admitted to trading on one or more exchanges will be valued at the last sales price, if such price is equal to or is between, the “bid” and the “asked” prices (otherwise, the mean between the “bid” and “asked” prices will be used), on the exchange selected by the General Partner, acting in good faith, on the relevant Valuation Date. Options and warrants that are not listed or admitted to trading on an exchange or that are listed on an exchange which the General Partner (or an affi liate), in good faith believes does not accurately rep-resent such securities’ true value, will be valued at the mean between the bid and asked prices provided by a dealer whom the General Partner (or an affi liate), acting in good faith, determines to be a reputable dealer. Th e General Partner (or an affi liate), acting in good faith, may also value options and warrants according to a valuation model or volatility formula based on volatility levels provided by dealers deemed to be reputable by the General Partner (or an affi liate).

3. In the event the General Partner deems any of the foregoing valuation methods to be inadequately represen-tative of an asset’s value, the General Partner, acting in good faith and a commercially reasonable manner, may assign to such asset an alternate value. Furthermore, all assets of the Partnership other than those described in the preceding two (2) paragraphs will be assigned such value as the General Partner (or an affi liate), may reasonably determine in good faith. Independent appraisals may be conducted but are not required.

4. Liabilities will be determined using U.S. Generally Accepted Accounting Principles (“GAAP”). Th e Part-nership may suspend the valuation of its assets and liabilities during any period in which (i) any securities exchange on which the Partnership’s securities or other assets are regularly traded or quoted is closed (other than for legal holidays) or trading thereon has been suspended or restricted or (ii) it is otherwise not reasonably practicable, in the judgment of the General Partner, to make an accurate and timely determination of the value of the Partnership’s assets. Th e suspension of the valuation of the Partnership’s assets and liabilities shall terminate on the day following the fi rst Business Day on which the condition giving rise to the suspension shall have ceased to exist. Th e General Partner shall promptly notify Limited Partners of any such suspension, and the termination of any such suspension, by means of a written notice. Th e Partnership may suspend any distributions or withdrawals of any amounts from Capital Accounts for any period during which the Partnership has suspended the valuation of its assets and liabilities as provided above.

All accrued debts and liabilities are deducted from the value of the Partnership’s assets in determining the Partnership’s Net Asset Value. Th ese debts and liabilities may include (a) fees of the General Partner (if any) that are earned but not yet paid, (b) any allowance for the Partnership’s estimated annual audit and legal fees and other op-erating expenses, (c) any contingencies for which reserves are determined to be required, (d) the value of options or commitments to purchase or sell securities or other assets pursuant to agreements entered into prior to the Valuation Date), and (e) liabilities (fi xed or contingent). Net Asset Valuations are expressed in United States Dollars and any items denominated in other currencies are translated at prevailing exchange rates as determined by the Administra-

Subscriptions – 27

tor in consultation with the General Partner. All values assigned to securities and other assets and liabilities by the General Partner (or an affi liate) will be fi nal and conclusive as to all Partners.


6Withdrawals

Class A Limited PartnersSubject to any Class A Withdrawal Fees (as defi ned herein), a Class A Limited Partner has the right, upon

sixty (60) days’ prior written notice to the Administrator, to make a partial or total withdrawal from its Capital Account as of the last day of each calendar quarter or such other date as determined by the General Partner (each a “Class A Withdrawal Date”).

A withdrawal fee of fi ve percent (5%) of the withdrawal amount will be charged for withdrawals made by Class A Limited Partners within the fi rst six (6) months after each capital contribution (the “Initial Class A With-drawal Fee”). A withdrawal fee of two percent (2%) of the withdrawal amount will be charged for withdrawals by Class A Limited Partners occurring any time following the fi rst six (6) months and preceding the twelve (12) month anniversary of each capital contribution (the “Subsequent Class A Withdrawal Fee”).

In addition to the foregoing, the General Partner, in its sole discretion, may permit any Class A Limited Partner to withdraw all or any portion of its Capital Account on a day other than the last day of a calendar quar-ter and/or on less than sixty (60) days prior written notice subject to a withdrawal fee of two percent (2%) (the “Notice Withdrawal Fee” and together with the Initial Class A Withdrawal Fee and Subsequent Class A With-drawal Fee, the “Class A Withdrawal Fees”); provided, however, that in no event will any Class A Limited Partner be charged withdrawal fees in excess of fi ve percent (5%) for a withdrawal. Th e Class A Withdrawal Fees will be deducted from the amount otherwise payable to a withdrawing Class A Limited Partner and will be payable to the Partnership. Th e General Partner may, in its sole discretion, waive or reduce the Withdrawal Fees otherwise due with respect to any Class A Limited Partner’s investment, by rebate or otherwise.

Class B Limited Partners A Class B Limited Partner has the right upon sixty (60) days’ prior written notice to the Administrator to

make a partial or total withdrawal of any capital contribution from its Capital Account as of the last Business Day of the calendar month in which the Class B Lock-Up Period (as defi ned below) expires, and thereafter, on the last Business Day of the calendar month in which each twelve (12) month anniversary of the expiration of such Class B Lock-Up Period falls, or such other date as determined by the General Partner (each a “Class B Withdrawal Date” and together with the Class A Withdrawal Date, the “Withdrawal Date”). Th e General Partner, in its sole discretion, may waive or reduce the Class B Lock-Up Period and/or the notice period required for withdrawals by Class B Limited Partners. In addition, withdrawals by Class B Limited Partners will not be subject to any with-drawal fees.

Class B Lock-Up Period

Notwithstanding anything to the contrary, a Class B Limited Partner may not withdraw any capital contribu-


tion (and any appreciation thereon) until after the expiration of the twelve (12) month period (the “Class B Lock-Up Period”) following the contribution of such capital, without the prior written consent of the General Partner, which may be granted or denied in the General Partner’s sole discretion.

Payment of Withdrawal Proceeds

Each withdrawing Limited Partner will receive, at the General Partner’s sole discretion, at least ninety percent (90%) of its estimated withdrawal amount within thirty (30) days after its Withdrawal Date, with the balance payable within thirty (30) days after the completion of the Partnership’s annual audit.

Inability to Liquidate, Suspension

In circumstances where the Partnership is unable to liquidate securities positions in an orderly manner in order to fund withdrawals, or where the value of the net assets and liabilities of the Partnership cannot reason-ably be determined, the Partnership may take longer than the aforementioned time periods to eff ect settlements of withdrawals and/or the Partnership may establish a liquidating trust. In addition, the Partnership may extend the duration of the withdrawal notice period if the General Partner deems such an extension as being in the best interest of the Partnership and the non-withdrawing Limited Partners.

Th e General Partner reserves the right to suspend or limit the rights of Limited Partners to withdraw from the Partnership and/or to receive withdrawal payments, upon the occurrence of an event that may result in disso-lution of the Partnership or at any other time in the General Partner’s sole discretion.

Th e Partnership may withhold a portion of any proceeds of withdrawals if necessary to comply with applica-ble regulatory requirements. In addition, the Partnership, in the General Partner’s sole discretion, may settle any given withdrawal, as a whole or in part, in kind.

Compulsory Withdrawals

Th e General Partner has the right to require a compulsory withdrawal of all or part of a Limited Partner’s In-terest in the Partnership, in its sole and absolute discretion, for any or no reason. A notice of compulsory redemp-tion shall have the same eff ect for all purposes as a notice of withdrawal.

General Partner Withdrawals

Th e General Partner and its affi liates may make withdrawals, including current earnings and allocations, from their Capital Accounts at any time without notice to the Limited Partners. In addition, the General Partner may withdraw as the Partnership’s general partner at any time upon notice to the Limited Partners. When withdrawals are made, Incentive Allocations that have been accrued as of the date of withdrawal may be calculated and deduct-ed from the withdrawal proceeds as described in “SUBSCRIPTIONS” For additional rights, terms, conditions and requirements regarding withdrawals, see the Partnership Agreement.


7Fees and Expenses

Fees of the General PartnerTh e Partnership, as a limited partner in the Master Fund, will pay to the General Partner (as the investment

manager of the Master Fund) a monthly management fee in arrears (the “Management Fee”) equal to approx-imately 0.0833% of the ending net asset value of the Partnership’s capital account attributable to the Class A Limited Partners for such month with respect to the Master Fund (one percent (1.0%) per annum) as of the last Business Day of each calendar month. Payment of the Management Fee is due as of the last Business Day of each calendar month or as of the last day of any partial period (if applicable) and is payable by the Class A Limited Partners within a reasonable time thereafter. Th e General Partner reserves the right to waive or reduce the Manage-ment Fee attributable to any Limited Partner (by rebate or otherwise), including, without limitation, its affi liates and/or employees. Th e Management Fee will be prorated for partial periods. Th e Class B Limited Partners are not subject to the Management Fee.

Administrator’s FeesTh e Administrator receives an administration fee that accords with reasonable and customary administration

fees. Th e administration fee and the Administrator’s responsibilities may change from time to time as circumstanc-es dictate.

Ongoing ExpensesTh e Partnership will be responsible for all ongoing costs and expenses associated with its operations including

without limitation costs and expenses relating to transactions in securities and positions for the Partnership’s ac-count including, but not limited to, brokerage commissions, interest and commitment expenses on loans and debt balances, borrowing charges on securities sold short, dividends on securities sold short, but not yet purchased, transfer taxes, custodial fees and expenses, administrative fees and expenses, research fees and expenses, report-ing expenses, legal, accounting and consulting fees and expenses, interest expense, litigation expenses, taxes, the Management Fee, its pro rata share of Master Fund expenses and all extraordinary expenses. Th e General Partner and/or the Investment Manager reserve the right, at any time and from time to time, to assume all or a portion of the Partnership’s ongoing costs and expenses and/or to waive its right to reimbursement from the Partnership with respect thereto.

Th e General Partner and any affi liates retained by it will be reimbursed for reasonable out-of-pocket expens-es incurred on behalf of the Partnership. Such reimbursable expenses will not include any expense attributable to their provision of management and offi ce personnel and space required for the performance of their services, as well as any travel related expenses.


Organizational CostsTh e General Partner has advanced organizational costs of the Partnership without reimbursement from the

Partnership. All expenses of the Partnership shall be deducted fi rst from income, then from capital gains and, to the extent income and capital gains are insuffi cient to pay such expenses, from assets.

Master FundTo the extent the Partnership’s net assets are invested in the Master Fund, any or all of the fees and expenses

payable or allocable by the Partnership, including, without limitation, the Management Fee and the Incentive Allocation, will be paid or allocated (as the case may be) by the Partnership or the Master Fund, but will not be duplicated (other than fees and expenses incurred by both the Partnership and the Master Fund, such as, without limitation, administration fees).


8Suitability

Investor Suitability StandardsEach purchaser of an Interest must bear the economic risk of its investment for an indefi nite period of time

(subject to its limited right to withdraw capital from the Partnership as more specifi cally described in the Partner-ship Agreement) because the Interests have not been registered under the Securities Act of 1933 (the “Securities Act”), as amended, and, therefore, cannot be sold unless they are subsequently registered under the Securities Act or an exemption from such registration is available. It is not contemplated that any such registration will ever be eff ected, or that certain exemptions provided by rules promulgated under the Securities Act (such as Rule 144) will be available. Th ere is no public market for the Interests now, nor is one expected to develop in the future. Th e Interests are being off ered in reliance upon the exemption provided in Section 4(2) of the Securities Act and Regu-lation D thereunder. Th e Interests have not been registered under the securities laws of any state or other jurisdic-tion and will not be off ered in any state of the United States except pursuant to an exemption from registration. In addition, the Partnership is not registered under the Investment Company Act of 1940 (the “Company Act”). Th e Partnership Agreement provides that a Limited Partner may not assign its Interest (except by operation of law), nor substitute another person as a Limited Partner, without the prior consent of the General Partner, which may be withheld for any reason. Th e foregoing restrictions on transferability must be regarded as substantial, and will be clearly refl ected in the Partnership records.

Each purchaser of an Interest is required to represent that the Interest is being acquired for its own account, for investment, and not with a view to resale or distribution. Th e Interests are suitable investments only for sophis-ticated investors for whom an investment in the Partnership does not constitute a complete investment program and who fully understand, are willing to assume, and who have the fi nancial resources necessary to withstand the risks involved in the Partnership’s specialized investment program and to bear the potential loss of their entire investment in the Interests. Each potential investor must qualify as an “accredited investor” within the meaning of Regulation D under the Securities Act.

An accredited investor is:

1. Any U.S. bank or any banking institution organized under the laws of any State, territory or the District of Columbia, the business of which is substantially confi ned to banking and is supervised by the State or Territori-al banking commission or similar offi cial agency, any U.S. savings and loan association or other similar institution, whether acting in its individual or fi duciary capacity; any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; any U.S. insurance company; any investment company registered under the Partnership Act or a business development company as defi ned in the Partnership Act; any Small Business Invest-ment Partnership licensed by the U.S. Small Business Administration under the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumental-ity of a state or its political subdivisions, for the benefi t of its employees, if such plan has total assets in excess of $5,000,000; any employee benefi t plan within the meaning of the Employee Retirement Income Security Act of


1974, as amended (“ERISA”), if the investment decision is made by a plan fi duciary, as defi ned in ERISA, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the em-ployee benefi t plan has total assets in excess of $5,000,000; or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;

2. Any “private business development company” as defi ned in the Advisers Act;

3. Any organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), corporation, Massachusetts or similar business trust, or partnership, not formed for the specifi c purpose of acquiring the securities off ered, with total capital in excess of $5,000,000;

4. Th e General Partner and certain affi liates of the General Partner;

5. Any natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of his purchase, exceeds $1,000,000;

6. Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;

7. Any trust with total assets in excess of $5,000,000, not formed for the specifi c purpose of acquiring the securities off ered, whose purchase is directed by a sophisticated person as described in Regulation D; or

8. Any entity all of whose equity owners satisfy one or more of such requirements (1) through(7) above.

In addition, prospective investors resident in certain states of the United States may be required to meet more demanding suitability standards imposed by the securities laws of those states. Each prospective investor will repre-sent in its Subscription Agreement that it satisfi es the above standards.

Th e foregoing suitability standards represent the minimum suitability requirement for prospective investors in the Partnership and satisfaction of these standards does not necessarily mean that an investment in the Partner-ship is a suitable investment for a prospective investor. In all cases, the General Partner shall have the right, in its sole discretion, to refuse a subscription for Interests for any reason, including, but not limited to, its belief that the prospective investor does not meet the applicable suitability requirements or that such an investment is otherwise unsuitable for that investor.

Each prospective purchaser is urged to consult with its own advisers to determine the suitability of an invest-ment in the Interests, and the relationship of such an investment to the purchaser’s overall investment program and fi nancial and tax position. Each purchaser of an Interest is required to further represent that, after all necessary advice and analysis, its investment in an Interest is suitable and appropriate, in light of the foregoing consider-ations. Th e method of subscription is described in the Subscription Document.


9Certain Risk Factors

Prospective investors should give careful consideration to the following risk factors in evaluating the merits and suitability of an investment in the Partnership as they relate specifi cally to Interests or to the Partnership in general, as the context requires. Th e following does not purport to be a comprehensive summary of all of the risks associated with an investment in the Partnership. Rather, the following are only certain risks to which the Partner-ship is subject and that the General Partner wishes to encourage prospective investors to discuss in detail with their professional advisors. All risk factors should be read to apply to the Partnership and the Master Fund.

Potential of Loss

An investment in the Partnership entails a high degree of risk. Th ere can be no assurance that the Partnership will achieve its investment objective or that the strategies described herein will be successful. Given the factors that are described below, there exists a possibility that an investor could suff er a substantial loss as a result of an invest-ment in the Partnership.

Reliance on Key Personnel

All decisions with respect to the investment of the Partnership’sassets will be made by the General Partner, which relies on the services of Dr. Javier Gonzalez. Limited Partners will have no right or power to take part in the management of the Partnership. As a result, the success of the Partnership for the foreseeable future will depend largely upon the ability of Dr. Gonzalez. Should he terminate his relationship with the General Partner, die or become otherwise incapacitated for any period of time, profi tability of the Partnership’s investments may suff er. In addition, should the General Partner terminate its relationship with the Partnership, the profi tability of the Part-nership’s investments may suff er. Th ere can be no assurance that the General Partner will be successful.

No Current Income

Th e Partnership’s investment policies should be considered speculative, as there can be no assurance that the General Partner’s assessments of the short-term or long-term prospects of investments will generate a profi t. In view of the fact that the Partnership does not intend to pay dividends or make distributions, other than the proceeds of withdrawals, an investment in the Partnership is not suitable for investors seeking current income for fi nancial or tax planning purposes.

Competition

Th e securities industry is extremely competitive. Th e Partnership competes with fi rms, including many of the larger investment banking fi rms, and other funds, which have substantially greater fi nancial resources than does the General Partner and substantially greater research staff s and more securities traders than does the General Partner.


Incentive Allocation

Th e Incentive Allocation may create an incentive for the Master Fund GP to make investments that are riski-er or more speculative than would be the case in the absence of a performance fee.

Risks of Special Techniques Used by the General Partner

Th e Partnership may invest using special investment techniques that may subject the Partnership’s invest-ments to certain risks. Certain, but not all, of these techniques and the risks that they entail are summarized here-in. Th e Partnership, in any event, is not designed to correlate to the broad equity market, and should be viewed as an alternative to, instead of a substitute for, equity investments.

Risks of Derivatives

Th e Partnership may trade derivatives. Th e risks posed by derivatives include (1) credit risks (the exposure to the possibility of loss resulting from a counterparty’s failure to meet its fi nancial obligations); (2) market risks (adverse movements in the price of a fi nancial asset or commodity); (3) legal risks (an action by a court or by a regulatory or legislative body that could invalidate a fi nancial contract); (4) operations risks (inadequate controls, defi cient procedures, human error, system failure or fraud); (5) documentation risks (exposure to losses resulting from inadequate documentation); (6) liquidity risks (exposure to losses created by the inability to prematurely terminate a derivative); (7) systemic risks (the risk that fi nancial diffi culties in one institution or a major market disruption will cause uncontrollable fi nancial harm to the fi nancial system); (8) concentration risks (exposure to losses from concentration of closely-related risks such as exposure to a particular industry or exposure linked to a particular entity); and (9) settlement risks (the risk that the Partnership faces when it has performed its obligations under a contract but has not yet received value from its counterparty).

Futures

Th e Partnership may use futures for investment and for hedging purposes, including anticipatory hedging of planned purchases of underlying securities. Futures are standardized exchange-traded contracts which obligate a purchaser to take delivery and a seller to make delivery of a specifi c amount of an asset at a specifi ed future date at a specifi ed price. No price is paid upon initiation of a futures contract. Rather, the Partnership is required to deposit margin equal to a percentage of the contract value. Th e Partnership will then receive or pay maintenance margin based on the gains or losses experienced on an on-going basis. Futures therefore involve substantial lever-age. As a result, the Partnership can suff er losses that signifi cantly exceed the amount deposited with the prime brokers. Futures positions may be illiquid because, for example, most US commodity exchanges limit fl uctuations in certain futures contract prices during a single day by regulations referred to as a “daily price fl uctuation limits” or “daily limits”. Once the price of a contract for a particular future has increased or decreased by an amount equal to the daily limit, positions in the futures can neither be taken nor liquidated unless traders are willing to eff ect trades at or within the limit. Futures contract prices in various commodities occasionally have moved the daily limit for several days with little or no trading. Similar occurrences could prevent the Partnership from promptly liquidating unfavorable positions and subject the Partnership to substantial losses. In addition, the Partnership may not be able to execute futures contract trades at favorable prices if trading volume is low. It is also possible that an exchange or the CFTC (as defi ned herein) may suspend trading in a particular contract, order immediate liquidation and settlement of a particular contract or order trading in a particular contract be conducted for liqui-dation only.

Option Trading

In seeking to enhance performance or hedge capital, the Partnership may purchase and sell call and put options on both securities and stock indexes. A stock index measures the movement of a certain group of stocks by assigning relative values to the common stocks included in the index. Examples of well-known stock indexes

Certain Risk Factors – 41

are the S&P 500 and the S&P 100 Index. Both the purchasing and the selling of call and put options contain risks. Although an option buyer’s risk is limited to the amount of the purchase price of the option, an investment in an option may be subject to greater fl uctuation than an investment in the underlying securities. In theory, the exposure to loss is potentially unlimited in the case of an uncovered call writer (i.e. a call writer who does not have and maintain during the term of the call an equivalent long position in the stock or other security underlying the call), but in practice the loss is limited by the term of existence of the call. Th e risk for a writer of an uncovered put option (i.e., a put option written by a writer that does not have and maintain an off setting short position in the underlying stock or other security) is that the price of the underlying security may fall below the exercise price. Th e eff ectiveness of purchasing or selling stock index options as a hedging technique may depend upon the extent to which price movements in investments that are hedged to correlate with price movements of the stock index selected. Because the value of an index option depends upon movement in the level of the index rather than the price of a particular stock, whether a gain or loss will be realized from the purchase or writing of options on an index depends upon movements in the level of stock prices in the stock market generally, rather than movements in the price of a particular stock.

Institutional Risk and Custodial Risks

Th e institutions, including brokerage fi rms and banks, with which the Partnership (directly or indirectly) does business, or to which securities have been entrusted for custodial and brokerage purposes, may encounter fi nancial diffi culties that impair the operational capabilities or the capital position of the Partnership. Custodi-ans may trade with an exchange as a principal on behalf of the Partnership, in a “debtor-creditor” relationship, unlike other clearing broker relationships where the broker is merely a facilitator of the transaction. Such broker could, therefore, have title to all of the assets of the Partnership (for example, the transactions which the broker has entered into on behalf of the Partnership as principal as well as the margin payments which the Partnership provides). In the event of such broker’s insolvency, the transactions which the broker has entered into as principal could default and the Partnership’s assets could become part of the insolvent broker’s estate, to the detriment of the Partnership. In this regard, Partnership assets may be held in “street name” such that a default by the broker may cause Partnership’s rights to be limited to that of an unsecured creditor.

Reliance on Certain Information

Th e General Partner may elect to invest in securities on the basis of information and data fi led by the issuers of such securities with the SEC or made directly available to the General Partner by the issuers of the securities and other instruments or through sources other than the issuers. Although the General Partner evaluates all such information and data and seeks independent corroboration when it considers it appropriate and when it is reason-ably available, the General Partner is not in a position to confi rm the completeness, genuineness, or accuracy of such information and data.

Hedging Transactions

Th e Partnership may utilize a variety of fi nancial instruments such as individual equities as well as ETFs, futures, options and other forms of derivatives, including without limitations, swaps, both for investment pur-poses and for risk management purposes. Hedging also involves special risks including the possible default by the other party to the transaction, illiquidity and, to the extent the General Partner’s assessment of certain market movements is incorrect, the risk that the use of hedging could result in losses greater than if hedging had not been used. Th e Partnership is subject to the risk of the failure or default of any counterparty to the Partnership’s transac-tions. If there is a failure or default by the counterparty to such a transaction, the Partnership will have contractual remedies pursuant to the agreements related to the transaction (which may or may not be meaningful depending on the fi nancial position of the defaulting counterparty). Th e Partnership seeks to minimize the Partnership’s counterparty risk through the selection of fi nancial institutions and types of transactions employed. However, the Partnership’s operational mechanisms may involve counterparty and other risk elements that may create unfore-


seen exposures.

Exchange Rules

Each securities exchange typically has the right to suspend or limit trading in all securities that it lists. Such a suspension would render it impossible for the Partnership to liquidate positions and, accordingly, could expose the Partnership to losses. Similarly, the General Partner has the right to suspend or limit withdrawals when, in its opin-ion, the Partnership’s net assets are not suffi ciently liquid to fund withdrawals.

Short Selling

Th e Partnership’s investment program includes short selling and leverage which practices can, in certain cir-cumstances, maximize the adverse impact to which the Partnership’s investments may be subject. As discussed here-in, the Partnership may implement a portion of its investment strategy by selling short securities of an issuer in the expectation of covering the short sale with securities purchased in the open market at a price lower than that received in the short sale. If the price of the issuer’s securities declines, the Partnership may then cover the short position with securities purchased in the market. Th e profi t realized on a short sale will be the diff erence between the price re-ceived in the sale and the cost of the securities purchased to cover the sale. Th e possible losses from selling short a se-curity diff er from losses that could be incurred from a cash investment in the security; the former may be unlimited, whereas the latter can only equal the total amount of the cash investment. Short selling activities are also subject to restrictions imposed by the federal securities laws and the various national and regional securities exchanges, which restrictions could limit the Partnership’s investment activities. Th ere can be no assurance that securities necessary to cover a short position will be available for purchase.

Leverage

Th e Partnership intends to employ leverage in its investment program when deemed appropriate by the Gen-eral Partner and subject to applicable regulations. Th ere are no limits on Partnership’s borrowing ability. Leverage creates an opportunity for greater yield and total return, but at the same time increases exposure to capital risk and higher current expenses. If the Partnership purchases securities on margin and the value of those securities falls, the Partnership may be obligated to pay down the margin loans to avoid liquidation of the securities. If loans to the Partnership are collateralized with portfolio securities that decrease in value, the Partnership may be obligated to provide additional collateral to the lender in the form of cash or securities to avoid liquidation of the pledged securi-ties. Any such liquidation could result in substantial losses. Moreover, counterparties of the Partnership, in their sole discretion, may change the leverage limits that they extend to the Partnership.

Illiquidity of Interests

Transfers of Interests are restricted and are subject to the General Partner’s express written consent. Further-more, except with the General Partner’s consent which may be withheld in its sole discretion, a Class B Limited Partner may not withdraw any capital contribution until expiration of the twelve (12) month period following the date of such contribution, and a Class A Limited Partner may be subject to Early Withdrawal Fees with respect to a partial or total withdrawal from its Capital Account until the expiration of the twelve (12) month period following its initial or subsequent investment in the Partnership. In addition, there is no market for Interests and, accord-ingly, Interests may be disposed of only through the withdrawal procedures described above and elsewhere in this Memorandum. Under certain circumstances, such withdrawal procedures may entail a signifi cant delay in a Limited Partner’s withdrawal of capital from the Partnership.

Distributions in Cash or Kind, Deferred Distributions

Th e Partnership is not required to distribute cash or other property to the Limited Partners, and the General Partner does not intend to make any such distributions. Notwithstanding the foregoing, the Partnership may, in the


General Partner’s discretion, settle a given withdrawal, as a whole or in part, in kind. Moreover, with regard to de-ferred distributions, the amount deferred remains an asset of the Partnership (even though the same may be placed in a separate account) and as such remains subject to claims of creditors of the Partnership, as well as the terms of this Memorandum and the Partnership Agreement.

Notice Required

A Limited Partner must give prior written notice as provided herein to the General Partner (subject to the General Partner’s right to waive or extend such notice period) to make a partial or total withdrawal from the Part-nership. During such notice period, the Limited Partner’s Interest remains at the full risk of the Partnership and subject to the claims of the Partnership’s creditors.

Compliance

Th e Partnership must comply with various legal requirements, including requirements imposed by the secu-rities laws, tax laws and pension laws in various jurisdictions. Should any of those laws change over the scheduled term of the Partnership, the legal requirements to which the Partnership and the Limited Partners may be subject could diff er materially from current requirements.

Reserves

Under certain circumstances, the Partnership may fi nd it necessary to establish a reserve for contingent lia-bilities or withhold a portion of the Limited Partner’s settlement proceeds at the time of withdrawal, in which case the reserved portion would be isolated from fl uctuations in the profi ts and losses of the Partnership but remain subject to the claims of the Partnership’s creditors.

Forced Liquidation

Substantial withdrawals by Limited Partners within a short period of time could require the General Partner to liquidate positions more rapidly than would otherwise be desirable, which could adversely aff ect the value of the Partnership’s capital. Th e resulting reduction in the Partnership’s capital could make it more diffi cult to generate a positive rate of return or to recoup losses due to a reduced equity base.

Litigation and Claims

Th e Partnership and the General Partner, as independent legal entities, may be subject to lawsuits or proceed-ings by government entities or private parties. Except in certain limited circumstances, expenses or liabilities of the Partnership arising from any suit will be borne by the Partnership.

Lack of Diversifi cation

Th e Partnership’s assets will not be diversifi ed across a particular industry, market or country as the General Partner will not attempt to diversify the Partnership’s assets. As such, the Partnership’s assets shall not be aff orded the protection otherwise available through greater diversifi cation of its investments.

Certain Non-U.S. Securities

Th e Partnership may invest in securities and other instruments of certain non-U.S. corporations and coun-tries. Investing in the securities of companies (and, from time to time, governments) in certain countries (such as emerging nations or countries with less well regulated securities markets than the U.S. or the UK) involves certain considerations not usually associated with investing in securities of United States companies or the United States Government, including among other things, political and economic considerations, such as greater risks of ex-propriation, nationalization and general social, political and economic instability; the small size of the securities


markets in such countries and the low volume of trading, resulting in potential lack of liquidity and in price vola-tility; fl uctuations in the rate of exchange between currencies and costs associated with currency conversion; certain government policies that may restrict the Partnership’s investment opportunities; exposure to currency fl uctuations; and in some cases less eff ective government regulation than is the case with securities markets in the Unites States.

Confl icts of Interest

Th e Partnership and the General Partner are subject to various confl icts of interest as set forth in the section of this Memorandum entitled “POTENTIAL CONFLICTS”

Need for Independent Advice

Th e General Partner has consulted with counsel, accountants and other experts regarding the formation of the Partnership. Each prospective investor should consult its own legal, tax and fi nancial advisors regarding the desirabil-ity of an investment in the Partnership.

Limited Partner Loss

With respect to any given fi scal year, Limited Partners and former Limited Partners will share all losses, liabili-ties and expenses of the Partnership up to the limit of their respective interests in the Partnership during such fi scal year. As such, each Limited Partner and former Limited Partner may be required, for purposes of meeting these obligations, to make additional contributions or payments, respectively, up to, but not in excess of, the aggregate amount of returns of capital and other amounts actually received from the Partnership during or after the fi scal year to which any such obligation is attributable.

Economic and Business Conditions

General economic and business conditions may aff ect the Partnership’s activities. Interest rates, the prices of securities and participation by other investors in the fi nancial markets may aff ect the value of securities purchased by the Partnership. Unexpected volatility or liquidity in the markets in which the Partnership directly or indirectly holds positions could impair the Partnership’s ability to carry out its business and could cause it to incur losses.

Master Fund

As discussed herein, the Partnership will implement its strategy by investing all or substantially all of its assets in a Master Fund. To the extent it does so, an investment by the Partnership in a Master Fund may be aff ected by an investment by other funds in the Master Fund. In view of the fact that all expenses of the Master Fund are shared pro rata among its investors, if other investors in the Master Fund redeem their interests, the possibility exists that the Partnership will bear the burden of an increased share of the Master Fund’s expenses. As the Master Fund will be domiciled outside of the U.S., changes in governmental regulation, political structure, local economies and tax laws (U.S. or non-U.S.) may adversely impact the Partnership’s investment in such Master Fund. As discussed herein, the Master Fund’s assets (including the Partnership’s assets invested in the Master Fund) are ultimately controlled by the Master Fund’s general partner. See “FUND STRUCTURE.”

Federal Income Tax Risks

Th e Partnership has not requested a ruling from the Internal Revenue Service as to any tax matters, including whether the Partnership will be treated as a Partnership (and not as an association taxable as a corporation) for feder-al income tax purposes. If the Partnership were to be treated, as a corporation rather than as a partnership for federal income tax purposes, the Partnership itself would be taxed on its taxable income at corporate tax rates, there would be no fl ow-through of items of partnership income, gain, loss or deductions to the Limited Partners, and Partnership distributions generally would be taxable as dividends. Under present laws and regulations and judicial interpretations thereof, the General Partner believes that the Partnership would be classifi ed and treated as a partnership for federal


income tax purposes, and not as an association taxable as a corporation.

Assuming that the Partnership is treated as a partnership, each Limited Partner must include in its own income, its allocable share of Partnership taxable income, whether or not any cash is distributed and, as a result of various limitations imposed by the tax laws regarding passive losses and otherwise, may be unable to currently deduct its allocable share of Partnership expenses and capital losses, if any. Because the General Partner currently does not expect the Partnership to make cash distributions to Limited Partners, a Limited Partner’s tax liability with respect to its share of the Partnership’s taxable income may exceed the cash distributions, if any, to such Part-ner in a particular year.

Absence of Certain Statutory Registrations

Th e General Partner does not currently intend to register under the Advisers Act as investment advisers, and the Partnership will not be registered under the Company Act, in reliance upon certain exemptions from such registration requirements. Accordingly, the General Partner and the Partnership will not be subject to many of the various statutory and SEC regulatory requirements applicable to registered investment advisers and investment companies. Moreover, the General Partner is exempt from registration with the National Futures Association (“NFA”) pursuant to Rules 4.13(a)(3) and 4.14(a)(10) of the Commodity Exchange Act (“CEA”).

Anti-Money Laundering

If the General Partner, the Partnership or any governmental agency believes that the Partnership has accepted contributions, or is otherwise holding assets of, any person or entity that is acting directly or indirectly, in viola-tion of a U.S., international or other anti-money laundering laws, rules, regulations, treaties or other restrictions, or on behalf of any suspected terrorist or terrorist organization, suspected drug traffi cker, or senior foreign political fi gure(s) suspected in engaging in foreign corruption, the General Partner, the Partnership or such governmen-tal agency may freeze the assets of such person or entity invested in the Partnership or suspend their withdrawal rights. Th e General Partner or the Partnership may also be required to remit or transfer those assets to a govern-mental agency.

Compliance with ERISA Transfer Restrictions

Th e General Partner intends to use commercially reasonable eff orts to cause employee benefi t plans subject to ERISA and/or Section 4975 of the Code and other “benefi t plan investors,” as defi ned in the Plan Asset Regula-tion, to hold, in the aggregate, less than 25% of any class of Interests in the Partnership. Th e General Partner shall use commercially reasonable eff orts to restrict transfers of any interest in the Partnership so that ownership of each class of partnership interests in the Partnership by benefi t plan investors will remain below this 25% threshold. In this event, although there can be no assurance that such will be the case, the assets of the Partnership should not constitute “plan assets” for purposes of ERISA and Section 4975 of the Code.

If the assets of the Partnership were to become “plan assets” subject to ERISA and Section 4975 of the Code, certain investments made or to be made by the Partnership in the normal course of its operations might result in non-exempt prohibited transactions and might have to be rescinded (see “ERISA CONSIDERATIONS”). If at any time the General Partner determines that assets of the Partnership may be deemed to be “plan assets” subject to ERISA and Section 4975 of the Code, the General Partner may take certain actions it determines necessary or appropriate, including requiring one or more investors to redeem or otherwise dispose of all or part of their Inter-ests in the Partnership or terminating and liquidating the Partnership.


10Potential Confl icts

Potential Confl icts of InterestProspective investors should give careful consideration to the following potential confl icts of interest in evalu-

ating the merits and suitability of an investment in the Partnership. Th e following does not purport to be a com-prehensive summary of all the potential confl icts of interests associated with the Partnership. Rather, the following are only certain confl icts of interest to which the Partnership is subject and that prospective investors should discuss in detail with their professional advisors.

Th e General Partner and its respective affi liates, which will be deemed to include, in each case, their respec-tive members, offi cers, directors, employees and entities owned by any of the aforementioned parties (the “Related Parties”) may face certain confl icts of interests in relation to the Partnership. Th ese confl icts include, but are not limited to, the following:

General PartnerTh e General Partner and its respective principal decision makers, offi cers and employees presently and will

in the future, directly or indirectly, direct, sponsor or manage other managed pools or accounts in addition to the Partnership. Th e General Partner and each of its principal decision makers may have fi nancial or other incentives to favor over the Partnership such pools or accounts. Th e General Partner will make its own decisions for the Partnership, which decisions may diff er from time to time from those recommended by analysts of the General Partner for their other advisory clients.

Th e Partnership depends on the General Partner for the operation of the Partnership and for the investment of the Partnership’s assets. Th e General Partner believes that it will continue to have suffi cient staff personnel and resources to perform all of their duties with respect to the Partnership. However, because some of the offi cers of the General Partner may have duties in connection with other investment funds and other matters, such offi cers may have confl icts of interest in the allocation of responsibilities, services and functions among the Partnership and other entities similar to the Partnership.

Th e Related Parties may engage for their own accounts, or for the accounts of others, in other business ven-tures of any nature, and the Partnership has no right to participate in or benefi t from the other management activ-ities of the General Partner and the Related Parties shall not be obliged to account to the Partnership for any prof-its or benefi ts made or derived therefrom, nor shall they have any obligation to disclose or refer to the Partnership any of the investment or service opportunities obtained through such activities. Related Parties may own Interests in the Partnership, deal as principals with the Partnership in the sale or purchase of investments of the Partnership or act as brokers, whether to the Partnership or third parties, in the purchase or sale of the Partnership’s invest-ments and will be entitled to retain any profi ts or customary commissions resulting from such dealings.


Th e General Partner and/or its affi liates and/or their employees may from time to time have an interest, direct or indirect, in a security, the purchase or sale of which by the Partnership is recommended, or which in fact is purchased or sold by or otherwise traded for the Partnership. Moreover, such recommendation, purchase, sale or trading may occur in connection with a transaction involving another fund or account managed by the General Partner. Accordingly, the General Partner may sell or recommend the sale of a particular security for certain accounts, including accounts in which they have an interest, and they or others may buy or recommend the purchase of such security for other accounts, including accounts in which they have an interest, and, thus, transactions in particular accounts may not be consistent with transactions in other accounts or with the General Partner’s investment recommendations. For example, the General Partner may recommend that the Partnership sell a security, while not recommending such sale for other accounts in order to enable the Partnership to have suffi cient liquidity to honor Limited Partners’ withdrawal requests. When there is a limited supply of investments, the General Partner will use its reasonable eff orts to allocate or rotate investment opportunities, but the General Partner cannot assure absolute equality among all of its accounts and clients.

Other ActivitiesTh e General Partner and each of its affi liates may engage in other business activities and manage the accounts

of clients other than the Partnership including those of other collective investment vehicles. Certain strategies im-plemented by the General Partner with respect to the Partnership may vary or be substantially similar to those of such other clients. Th e General Partner and each of its affi liates are not required to refrain from any other activity, nor must they disgorge any profi ts from any such activity, including acting as general partner, investment manager or managing agent for investment vehicles with objectives similar to those of the Partnership.

CounselTh e law fi rm of Tannenbaum Helpern Syracuse & Hirschtritt LLP serves as counsel to the Partnership and

the General Partner and their affi liates. Tannenbaum Helpern Syracuse & Hirschtritt LLP does not represent the Limited Partners of the Partnership. Should a future dispute arise between the Partnership and the General Part-ner, separate counsel may be retained as circumstances then dictate.


11Fund Structure

Master-Feeder Fund StructureAs discussed herein, the Partnership intends to achieve its investment objective by investing all or part of its

net assets in an interest in a centralized company, Oracle of Investing Master Fund, L.P., a British Virgin Islands exempted limited partnership (the “Master Fund”). Th e Master Fund is an investment vehicle separate from the Partnership but with an investment objective that is identical to that of the Partnership. Accordingly, the Partner-ship’s interest in the securities owned by a Master Fund is indirect. In such an arrangement, an entity such as the Partnership is often referred to as a “Feeder Fund.” In addition to selling an interest to the Partnership, the Master Fund may sell interests to other affi liated and non-affi liated investment companies or institutional investors (i.e., other Feeder Funds), including without limitation, Oracle of Investing Fund Inc. Such investors will invest in the Master Fund on the same terms and conditions and will pay a proportionate share of the Master Fund’s expenses. However, the other investors investing in the Master Fund are not required to sell their shares at the same off ering price as the Partnership due to variations in sales commissions and other operating expenses. Th erefore, investors in the Partnership should be aware that these diff erences may result in diff erences in returns experienced by inves-tors in the diff erent funds that invest in the Master Fund.

Smaller Feeder Funds investing in the Master Fund may be subject to certain tax consequences or be oth-erwise adversely aff ected by the actions of larger Feeder Funds investing in the Master Fund. For example, if a large Feeder Fund redeems a signifi cant amount of assets from the Master Fund, the remaining Feeder Funds may experience higher pro rata operating expenses, thereby producing lower returns. Additionally, under such circum-stances, the Master Fund may be required to liquidate positions more rapidly than would otherwise be desirable, which could adversely aff ect the value of the Master Fund’s capital.

Other investors in the Master Fund may alone or collectively acquire suffi cient voting interests in the Mas-ter Fund to control matters relating to the operation of the Master Fund, which may require the Partnership to redeem its investment in the Master Fund or take other appropriate action. Any such withdrawal could result in a distribution of Master Fund assets in kind (as opposed to a cash distribution from the Master Fund). A distribu-tion in kind may result in a less diversifi ed portfolio of investments and could adversely aff ect the liquidity of the Partnership.

Th e Master Fund will be treated as a partnership for U.S. federal tax purposes. Other investors generally in-vest in a Master Fund by way of one or more Feeder Funds with investment objectives similar to the Partnership.

Th e Master Fund is governed by a general partner which has complete authority over the management and operations of the Master Fund. As such, although the Partnership’s General Partner provides advisory services to the Master Fund, the Master Fund GP (an affi liate of the General Partner) has ultimate authority with respect to the Master Fund’s assets, including the Partnership’s assets invested in the Master Fund. Furthermore, should the Master Fund enter into liquidation, a liquidator may be appointed and such liquidator would have ultimate


authority with respect to the Master Fund’s assets. In the event that the Master Fund GP or liquidator suspends withdrawals at the Master Fund level and/or terminates the Master Fund’s investment management agreement with the Partnership’s General Partner, the Partnership will be unable to unilaterally eff ectuate withdrawals or control the assets of the Partnership invested in the Master Fund.

Th e board of directors of the Master Fund GP consists of one (1) director, Javier Gonzalez, (the “Director”). Th e Director also serves in such capacity for the Off shore Fund. Th e Director has the right to remove the Master Fund GP as general partner of the Master Fund, at any time in its sole discretion, with written notice to the Mas-ter Fund’s limited partners.


12Tax Considerations

Federal Income TaxTh e following is a general summary of some of the federal income tax consequences to Limited Partners of

an investment in the Partnership. It is not intended as a complete analysis of all possible tax considerations in acquiring, holding and disposing of a Limited Partnership Interest and, therefore, is not a substitute for careful tax planning by each investor, particularly since the federal, state and local income tax consequences of an investment in partnerships such as the Partnership may not be the same for all taxpayers. Except where otherwise indicated, this discussion has been prepared on the assumption that a Limited Partner is a U.S. resident individual or a U.S. domestic corporation that is not tax exempt. Prospective investors should consult their own tax advisors with respect to the tax consequences (including state and local and foreign tax consequences) of an investment in the Partnership.

Th e following statements are based upon the provisions of the United States Internal Revenue Code of 1986, as amended (the “Code”), the applicable existing and proposed regulations promulgated there under (the “Reg-ulations”), existing judicial decisions and current administrative rulings and practice. It is emphasized, however, that no assurance can be given that legislative, judicial or administrative changes may not be forthcoming which would modify such statements. Accordingly, certain of the Code provisions discussed hereinafter may be further amended, modifi ed or clarifi ed by the U.S. Internal Revenue Service (the “IRS”) or the courts, which may have an eff ect on the Partnership and the Limited Partners. Moreover, the availability and amount of deductions, credits and income attributable to the activities of the Partnership will depend not only on the legal principles described herein, but also upon the resolution of various factual issues. Th ere can be no assurance, therefore, that some of the positions taken by the Partnership will not be successfully challenged by the IRS.

Th is discussion of the federal income tax consequences of an investment in the Partnership is based upon existing law. Th e existing law, as currently interpreted, is subject to change by new legislation, or by diff ering inter-pretations of existing law, either of which could, by retroactive application or otherwise, adversely aff ect a Limited Partner’s investment in the Partnership.

THIS SUMMARY IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING UNITED STATES FEDERAL TAX PENALTIES. THIS SUMMARY WAS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN, AND ANY TAXPAYER TO WHOM THE TRANSACTIONS OR MAT-TERS ARE BEING PROMOTED, MARKETED OR RECOMMENDED SHOULD SEEK ADVICE BASED ON ITS PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

Classifi cation as a PartnershipSince, under the Regulations, and subject to the discussion of “publicly traded partnerships” herein, the


Partnership is classifi ed as a “partnership” for federal income tax purposes, no Federal income tax is payable by it as an entity. Instead, each Partner is required to take into account such Partner’s distributive share of the items of income, gain, loss, deduction and credit of the Partnership.

If the Partnership were classifi ed as an association taxable as a corporation, the Partnership would be subject to federal income tax on any taxable income at regular corporate tax rates, reducing the amount of cash available for distribution to the Partners. In that event, the Partners would not be entitled to take into account their dis-tributive shares of the Partnership’s deductions in computing their taxable income, nor would they be subject to tax on the Partnership’s income. Distributions to a Partner would be treated as (i) dividends to the extent of the Partnership’s current or accumulated earnings and profi ts, (ii) a return of basis to the extent of each Partner’s basis in its Partnership Interest and (iii) gain to the extent any remaining distributions exceeded the Partner’s basis in its Partnership Interest. Overall, treatment of the Partnership as an association taxable as a corporation would sub-stantially reduce the anticipated benefi ts of an investment in the Partnership.

A “publicly traded partnership” (as defi ned in Section 7704 of the Code) is one in which the interests are (i) traded on an established securities market or (ii) readily tradable on a secondary market or the substantial equiva-lent thereof. A “publicly traded partnership” is treated as a corporation unless a certain percentage of its gross in-come during certain prescribed periods is “qualifying income” (generally, interest, dividends, real estate rents, and gain from the sale of capital assets and certain other items). It is likely, but not certain, that the Partnership will meet the qualifying income test. Even if it does not, however, the Partnership should not be considered a “publicly traded partnership.” Interests in the Partnership will not be traded on an established securities market. Further-more, the Interests should not be readily tradable on a secondary market or the substantial equivalent thereof, since the Partnership should qualify for the safe harbors established under the Regulations for partnerships that are not registered under the Securities Act, because the Partnership will have fewer than one hundred (100) Limited Partners.

Taxation of Partners on Income or Losses of the PartnershipSince Limited Partners are required to include Partnership income in their respective income tax returns

without regard to whether there have been distributions from the Partnership attributable to that income, Limited Partners may be liable for Federal and state income taxes on that income even though they have received no cash or other property from the Partnership. While the Partnership Agreement may allow the Partners to withdraw amounts from their Capital Accounts actual withdrawals may not in fact be suffi cient to pay all federal, state and local taxes arising out of a Limited Partner’s investment in the Partnership.

It is possible that the Partnership might have a net loss for Federal income tax purposes during a taxable peri-od. Certain Limited Partners (generally, all limited partners subject to tax which are not widely held corporations) may be subject to limitations on the deduction of their shares of Partnership losses and deductions, including the at-risk rules, passive loss rules, rules restricting the deduction of investment interest, potential capital loss limita-tions and the rules governing the deduction of miscellaneous itemized deductions. See “Limitations on Deduct-ibility of Certain Expenses.” Th e deductions of any Limited Partner will not be deductible to the extent in excess of that Limited Partner’s basis in its interest in the Partnership. See “Basis of Limited Partnership Interest and Distributions.”

Allocations of Income and LossA partner’s distributive share of partnership income, gain, loss, deduction or credit for federal income tax

purposes is usually determined in accordance with the allocation provisions of a partnership agreement. Howev-er, under Section 704(b) of the Code, an allocation is respected only if it either has “substantial economic eff ect” or is in accordance with the partner’s “interest in the partnership.” If the allocation contained in the Partnership

Tax Considerations – 54

Agreement does not meet either test, the IRS will make the allocation in accordance with its determination of the Partner’s interest in the Partnership.

Th e Regulations under Section 704(b) of the Code are extremely complex and in many respects subject to varying interpretations. Th e allocations contained in the Partnership Agreement may not comply in all respects with the Regulations’ requirements for having substantial economic eff ect or for being deemed to be in accordance with the Partners’ interests in the Partnership. However, although the matter is not free from doubt, the General Partner believes that the allocations to the Partners contained in the Partnership Agreement are in accordance with the Partners’ interests in the Partnership and is sustained in all material respects. It should be noted, however, that there can be no assurance that the IRS will not claim that these allocations are not in accordance with the Partners’ interests in the Partnership and, therefore, attempt to change the allocations to the Partners. In such an event, some Partners’ distributive shares of the Partnership’s taxable income may increase, while others’ may decrease.

Under the Partnership Agreement, the General Partner has the sole and absolute discretion to allocate spe-cially items of Partnership capital gain (including short-term capital gain) and capital loss for federal income tax purposes to a withdrawing Partner to the extent that its Capital Account exceeds or is less than, as the case may be, its adjusted tax basis in its Interest. Th ere can be no assurance that, if the General Partner makes such a special allocation, the IRS will accept such allocation. If such allocation is successfully challenged by the IRS, the Partner-ship’s gains allocable to the remaining Partners would be increased.

Diff erences Between Book Income and Tax IncomeProfi ts and losses allocated to the Partners will include their respective shares of unrealized gain or loss. How-

ever, such items may not be taken into account for federal income tax purposes until realized or, in some cases, even later. If the relative interests of the Limited Partners change in the interim (e.g., because of the admission of a new partner or a withdrawal of a Partner), the gain or loss recognized for tax purposes on the disposition of an asset will be allocated, to the extent possible, to refl ect the prior allocation of the unrealized gain or loss, which is not necessarily in the same nature as the interests of the Partners at the time of disposition. For these and similar reasons, it is possible for a Limited Partner to be allocated taxable income even though the Partnership (or that Limited Partner) suff ers an economic loss, or be allocated tax losses at a time that the Partnership (or that Limit-ed Partner) enjoys substantial economic profi ts. Usually, such discrepancies even out over a period of time, but, because of certain technical rules under subchapter K of the Code, it may be impossible to do so in all cases. Th e General Partner will make such corrective allocations as, consistent with the tax law and after consulting with the Partnership’s tax advisors, may in its judgment be most appropriate to eliminate or minimize these diff erences between book and tax income.

Basis of Limited Partnership Interest and DistributionsA Limited Partner’s tax basis in its Partnership Interest will include the amount of money and/or its tax basis

in securities or other property that the Limited Partner contributes to the Partnership, increased principally by (i) any additional contributions made by the Limited Partner to the Partnership, (ii) the Limited Partner’s distributive share of any Partnership income, and (iii) the amount, if any, of the Limited Partner’s share of Partnership non-recourse indebtedness; and decreased, but not below zero, principally by (x) distributions from the Partnership to the Limited Partner, (y) the amount of the Limited Partner’s distributive share of Partnership losses, and (z) any reduction in the Limited Partner’s share of Partnership nonrecourse indebtedness. In the case of non-liquidating distributions other than cash (and other than certain ordinary income type assets, like accounts receivable) basis is reduced (but not below zero) by the basis of the property distributed.

It is possible that investors in the Partnership will contribute property to the Partnership in exchange for Interests in the Partnership. Generally, if the property contributed constitutes a diversifi ed portfolio of stocks and


securities for purposes of the Regulations under Section 351 of the Code as applicable to transfers under Section 721 of the Code, any gain realized on such contribution should not be recognized by an investor making such in-kind contribution. However, in view of the complexity of the rules governing the tax treatment of such transfer, a prospective investor contemplating a contribution other than cash to the Partnership (or such a contribution to the Partnership, if consented to by the Partnership) is urged to consult with its tax advisor with respect to the tax conse-quences thereof.

Special rules apply in determining the basis of an interest in a partnership which has been transferred in a tax-able transaction or by reason of death. Each prospective investor should consult with his own tax advisor with regard to such transfers. Generally, a cash distribution to a Partner will be taxable only to the extent it exceeds the Partner’s basis in its Partnership interest. Th e amount of that excess generally would be taxable as capital gain. Distributions of property other than cash (or certain ordinary income type assets) are generally not taxable although any unrealized gain with respect to such property may be taxable upon the subsequent disposition of such property.

Sale of an Interest or WithdrawalA Limited Partner generally will recognize capital gain or loss on the sale of an Interest or upon a complete

withdrawal from the Partnership. Th e amount of gain or loss recognized is determined by the diff erence between the amount realized and the Limited Partner’s adjusted tax basis in its Interest. See “Basis of Limited Partnership Interest and Distributions” above. For this purpose, the amount realized includes the Limited Partner’s share of outstand-ing Partnership nonrecourse liabilities, if any. Under certain circumstances, a portion of the gain may be taxable as ordinary income.

As discussed above, the Partnership Agreement provides that the General Partner may specially allocate items of Partnership capital gain (including short-term capital gain) and capital loss to a withdrawing Partner to the extent its Capital Account exceeds or is less than, as the case may be, its adjusted tax basis in its Interest. Such a special alloca-tion may result in the withdrawing Partner recognizing capital gain, which may include short-term capital gain, in the Partner’s last taxable year in the Partnership, thereby reducing the amount of long-term capital gain recognized during the tax year in which it receives its liquidating distribution upon withdrawal.

Elections as to Basis AdjustmentsTh e Partnership may be required to, or, at the request of a Limited Partner, the General Partner may, in its

discretion, cause the Partnership, to make an election as to basis adjustments under Section 754 of the Code. In general, a Section 754 election, if made, would permit the Partnership to adjust the tax basis of its capital to refl ect a transferee partner’s basis in an interest in the Partnership sold or exchanged, or transferred upon the death of a Part-ner. Certain adjustments might also arise if assets are distributed in kind. Th ese elections are usually benefi cial if the Partnership’s properties have appreciated in value. However, if there are many transfers or distributions to which the election applies, the calculation of the adjustments and the necessary record keeping become extremely complicated and costly. Consequently, unless such election is mandatory under the Code, the General Partner, in its discretion, may choose not to make the election. Other elections may be available as well in accordance with applicable rules. Th e General Partner may exercise its discretion in making such elections.

Treatment of FeesTh e Partnership intends to deduct the Management Fee either as an ordinary and necessary business expense

or as an expense incurred to produce income. Th e General Partner believes that the Management Fee is reasonable and approximates the amount which would be paid to an unrelated third party. However, the IRS may disallow all or part of the deduction for such fee. Th e determination of whether the fee is reasonable in amount and deductible in full involves factual questions and thus there can be no assurance that the IRS will not contest the amount of


the deduction by asserting that it is excessive and the expenditure is in whole or in part a capital expense or other non-deductible expenditure.

Limitations on Deductibility of Certain ExpensesUnder Section 163(d) of the Code, the deduction of investment interest by an individual on indebtedness

incurred to purchase or carry investment property is limited to the amount of the taxpayer’s net investment in-come. Investment interest generally includes interest paid by the Partnership on its debt and would usually include interest paid by a Limited Partner on indebtedness incurred to purchase or carry such Limited Partner’s interest in the Partnership to the extent the Partner’s interest in the Partnership is investment property. Property held for investment includes (1) any interest in an activity involving the conduct of a trade or business which is not passive and in which the taxpayer does not materially participate in the activity and (2) generally, partnership property that produces “portfolio” income. Th us, it is anticipated that the Limited Partners that are individuals are subject to the investment interest limitations.

It is anticipated that income earned by the Partnership (other than certain dividend income and long-term capital gain, except as described below) and passed through to the Limited Partners should be included in net investment income. If the income were not included in net investment income, a non-corporate Limited Partner might be denied a deduction for all or part of that portion of its distributive share of the Partnership’s ordinary losses that is attributable to interest expense, unless such Limited Partner has suffi cient investment income from other sources.

A Limited Partner who could not deduct losses currently as a result of the application of Section 163(d) would be entitled to carry those losses forward to future years, when the same limitation would again apply. Th us, subject to certain limitations, investment interest expense which is not deductible in a taxable year can be carried forward until all disallowed amounts have been deducted.

Original Issue Discount and Market DiscountInvestments by the Partnership in securities with original issue discount generally will result in income to

the Partnership equal to a portion of the excess of the stated redemption price at maturity of the securities over their issue price (the “Original Issue Discount”) each year that the securities are held, even though the Partner-ship receives no cash interest payments. In addition, if the Partnership invests in certain high-yield Original Issue Discount obligations issued by domestic corporations, a portion of the Original Issue Discount accruing on such an obligation that is allocable to a corporate Partner may be eligible for the deduction for dividends received by corporations.

Gain derived by the Partnership from the disposition of any market discount obligations (i.e., obligations purchased other than at original issue, where the face value of the obligations exceeds their purchase price by more than a de minimis amount) held by the Partnership generally will be taxed as ordinary income to the extent of the accrued market discount on the obligations, unless the Partnership elects to include the market discount in in-come as it accrues.

For each taxable year, interest expense incurred by the Partnership to purchase or carry a market discount obligation cannot be deducted to the extent that the amount thereof exceeds the interest (including Original Issue Discount) that is includible in the Partnership’s income for such taxable year with respect to such obligation; disallowed interest will be deductible in the year of the obligation’s disposition. Alternatively, at the Partnership’s election, such interest expense can be carried forward and deducted in a year prior to the disposition of the obliga-tion, if any, in which the taxpayer has net interest income from the obligations.


Partnership Tax Returns, AuditTh e Partnership tax returns are subject to review by the IRS and other taxing authorities, which may dispute

the Partnership’s tax positions. Th ere can be no assurance that these authorities will not adjust the tax fi gures report-ed in the Partnership returns. Any recharacterizations or adjustments resulting from an audit may require each Lim-ited Partner to pay additional income taxes and interest and possibly result in an audit of other items on the Limited Partner’s own return, and any audit of a Limited Partner’s return could result in adjustments of non-Partnership, as well as Partnership, income and deductions. Any adjustment would give rise to interest and could give rise to penal-ties.

Generally, upon an IRS audit, the tax treatment of Partnership items are determined at the Partnership level pursuant to administrative or judicial proceedings conducted at the Partnership level. Each Limited Partner generally is required to fi le his tax returns in a manner consistent with the information returns fi led by the Partnership or be subject to possible penalties, unless the Limited Partner fi les a statement with its return on IRS Form 8082 describ-ing any inconsistency. Pursuant to the Limited Partnership Agreement, the General Partner is the Partnership’s “tax matters partner” and will have considerable authority with respect to the tax treatment of Partnership items and pro-cedural rights of the Partners. Th e General Partner is able to extend the statute of limitations on behalf of all Limited Partners with respect to Partnership items. A Limited Partner may fi le with the IRS a statement that the General Partner does not have the authority to enter into a settlement agreement on behalf of that Limited Partner.

IRS Reporting RequirementsUnder the Regulations, funds and, in certain circumstances, investors in funds are generally required to disclose

to the IRS their participation in certain transactions, including certain “loss transactions” which result in a loss of at least $2 million in any taxable year (or an aggregate of $4 million over a period of six taxable years) for certain partnerships and for individuals. However, an individual or a trust will be treated as engaged in a “loss transaction” if it claims a loss from a foreign currency transaction, either directly or through a pass-through entity such as the Partnership, of at least $50,000 in any taxable year. While the IRS has exempted many transactions from the report-ing requirements, certain transactions, including certain straddle transactions and certain foreign currency transac-tions, are not so exempt. Th e Partnership will notify any Partner who may have an IRS reporting requirement under the Regulations with respect to any non-exempt “loss transaction” entered into by the Partnership. Each prospective investor should consult with his own tax advisor with regard to the possible application of the IRS reporting require-ments under the Regulations to his investment in the Partnership.

Unrelated Business Taxable IncomeGenerally, an exempt organization (such as, without limitation, a qualifi ed pension or profi t sharing plan ex-

empt under Section 501(a) of the Code) is exempt from federal income tax on its passive investment income, such as dividends, interest and capital gains, whether realized by the organization directly or indirectly through a partner-ship in which it is a partner.

Th is general exemption from tax does not apply to the “unrelated business taxable income” (“UBTI”) of an exempt organization. UBTI also includes “unrelated debt-fi nanced income,” which generally consists of (i) income derived by an exempt organization (directly or through a partnership) from income-producing property with respect to which there is “acquisition indebtedness” at any time during the taxable year, and (ii) gains derived by an exempt organization (directly or through a partnership) from the disposition of property with respect to which there is “ac-quisition indebtedness” at any time during the twelve-month period ending with the date of such disposition.

Th e Partnership intends to incur “acquisition indebtedness” with respect to certain of its transactions, such as the purchase of securities on margin or the use of funds borrowed from others for the purpose of pursuing its invest-


ment objectives. To the extent the Partnership recognizes income (i.e., dividends and interest) from securities with respect to which there is “acquisition indebtedness” during a taxable year, the percentage of such income which will be treated as UBTI generally will be based on the percentage which the “average acquisition indebtedness” incurred with respect to such securities is of the “average amount of the adjusted basis” of such securities during the taxable year.

To the extent the Partnership recognizes capital gains from securities with respect to which there is “acqui-sition indebtedness” at any time during the twelve-month period ending with the date of their disposition, the percentage of such gain which will be treated as UBTI will be based on the percentage which the highest amount of such “acquisition indebtedness” is of the “average amount of the adjusted basis” of such securities during the taxable year. In determining the unrelated debt-fi nanced income of the Partnership, an allocable portion of deduc-tions directly connected with the Partnership’s debt-fi nanced property is taken into account. Th us, for instance, a percentage of capital losses from debt-fi nanced securities (based on the debt/basis percentage calculation described above) would off set gains treated as UBTI.

Since the calculation of the Partnership’s “unrelated debt-fi nanced income” is complex and will depend in large part on the amount of leverage used by the Partnership from time to time, it is impossible to predict what percentage of the Partnership’s income and gains will be treated as UBTI for a Limited Partner which is an exempt organization. An exempt organization’s share of the income or gains of the Partnership which is treated as UBTI may not be off set by losses of the exempt organization either from the Partnership or otherwise, unless such losses are treated as attributable to an unrelated trade or business (e.g., losses from securities for which there is acquisi-tion indebtedness).

To the extent that the Partnership generates UBTI, the applicable federal tax rate for such a Limited Partner generally would be either the corporate or trust tax rate depending upon the nature of the particular exempt orga-nization. An exempt organization may be required to support, to the satisfaction of the IRS, the method used to calculate its UBTI. Th e Partnership will be required to report to a Partner which is an exempt organization infor-mation as to the portion of its income and gains from the Partnership for each year which will be treated as UBTI. Th e calculation of such amount with respect to transactions entered into by the Partnership is highly complex, and there is no assurance that the Partnership’s calculation of UBTI will be accepted by the IRS.

In general, if UBTI is allocated to an exempt organization such as a qualifi ed retirement plan or a private foundation, the portion of the Partnership’s income and gains which is not treated as UBTI will continue to be ex-empt from tax, as will the organization’s income and gains from other investments which are not treated as UBTI. Th erefore, the possibility of realizing UBTI from its investment in the Partnership generally should not aff ect the tax-exempt status of such an exempt organization. However, a charitable remainder trust will not be exempt from federal income tax under Section 664(c) of the Code for any year in which it has UBTI. Moreover, the charita-ble contribution deduction for a trust under Section 642(c) of the Code may be limited for any year in which the trust has UBTI. A prospective investor should consult its tax advisor with respect to the tax consequences of receiving UBTI from the Partnership.

State and Local TaxesEach Partner may be liable for state and local income taxes payable in the state or locality in which it is a

resident or doing business or in a state or locality in which the Partnership conducts or is deemed to conduct business. In addition, the Partnership may operate in states and localities which impose taxes on the Partnership’s assets or income. Th e income tax laws of each state and locality may diff er from the above discussion of federal income tax laws so each prospective Partner should consult its own tax counsel with respect to potential state and local income taxes payable as a result of an investment in the Partnership.


Foreign PartnersA foreign (i.e., non-U.S.) person or entity considering acquiring an Interest in the Partnership should consult

its own tax advisors as to the federal, state and local tax consequences of an investment in the Partnership, as well as with respect to the treatment of income or gain received from the Partnership under the laws of its country of citi-zenship, residence or incorporation. As a general principle, an investment in the Partnership may not be suitable for non-U.S. persons because of certain potentially adverse withholding or other tax consequences.

Other JurisdictionsIn jurisdictions other than the U.S., foreign taxes may be withheld at the source on dividend and interest

income derived by the Partnership at rates varying from jurisdiction to jurisdiction. Capital gains derived by the Partnership in such jurisdictions may often be exempt from foreign income or withholding taxes at source, although the treatment of capital gains varies among jurisdictions.

THE FOREGOING IS A BRIEF SUMMARY OF CERTAIN MATERIAL INCOME TAX MATTERS WHICH ARE PERTINENT TO PROSPECTIVE INVESTORS. THE SUMMARY IS NOT, AND IS NOT INTENDED TO BE, A COMPLETE ANALYSIS OF ALL PROVISIONS OF THE FEDERAL INCOME TAX LAW WHICH MAY HAVE AN EFFECT ON SUCH INVESTMENTS. THIS ANALYSIS IS NOT INTEND-ED AS A SUBSTITUTE FOR CAREFUL TAX PLANNING. ACCORDINGLY, PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN RESPECTIVE TAX ADVISORS WITH RESPECT TO THEIR OWN RESPECTIVE TAX SITUATIONS AND THE EFFECTS OF THIS INVESTMENT THEREON.


13ERISA Considerations

Th e United States Employee Retirement Income Security Act of 1974, as amended (“ERISA”) imposes certain requirements on “employee benefi t plans” (as defi ned in Section 3(3) of ERISA) subject to ERISA, includ-ing entities such as collective investment funds and separate accounts whose underlying assets include the assets of such plans (collectively, “ERISA Plans”) and on those persons who are fi duciaries with respect to ERISA Plans. Investments by ERISA Plans are subject to ERISA’s general fi duciary requirements, including the requirement of investment prudence and diversifi cation and the requirement that an ERISA Plan’s investments be made in ac-cordance with the documents governing the plan. Th e prudence of a particular investment must be determined by the responsible fi duciary of an ERISA Plan by taking into account the ERISA Plan’s particular circumstances, including the ERISA Plan’s existing investment portfolio, and all of the facts and circumstances of the investment including, but not limited to, the matters discussed above under “Investment Considerations and Risk Factors.”

Section 406 of ERISA and Section 4975 of the Code prohibit certain transactions involving the assets of an ERISA Plan (as well as those plans that are not subject to ERISA but which are subject to Section 4975 of the Code, such as individual retirement accounts (together with ERISA Plans, “Plans”)) and certain persons (referred to as “parties in interest” for purposes of ERISA and “disqualifi ed persons” for purposes of the Code) having certain relationships to such Plans, unless a statutory or administrative exemption is applicable to the transaction. A party in interest or disqualifi ed person who engages in a nonexempt prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Code, and the transaction might have to be rescinded.

Th e U.S. Department of Labor has promulgated a regulation, 29 C.F.R. Section 2510.3-101 (as modifi ed by Section 3(42) of ERISA) (the “Plan Asset Regulation”), describing what constitutes the assets of a Plan with respect to the Plan’s investment in an entity for purposes of certain provisions of ERISA, including the fi duciary responsibility and prohibited transaction provisions of Title I of ERISA and the related prohibited transaction pro-visions under Section 4975 of the Code. Under the Plan Asset Regulation, if a Plan invests in an “equity interest” of an entity that is neither a “publicly off ered security” nor a security issued by an investment company registered under the Investment Company Act, the Plan’s assets include both the equity interest and an undivided interest in each of the entity’s underlying assets, unless it is established that the entity is an “operating company”, which includes for purposes of the Plan Asset Regulation a “venture capital operating company”, or that equity participa-tion in the entity by “Benefi t Plan Investors” (as defi ned below) is not “signifi cant.”

Under the Plan Asset Regulation, equity participation in an entity by Benefi t Plan Investors (as defi ned below) is “signifi cant” on any date if, immediately after the most recent acquisition of any equity interest in the entity, 25% or more of the value of any class of equity interests in the entity is held by Benefi t Plan Investors. Th e term “Benefi t Plan Investor” is defi ned in the Plan Asset Regulation as: (a) any employee benefi t plan (as defi ned in Section 3(3) of ERISA), subject to part 4 of subtitle B of Title I of ERISA; (b) any plan subject to Section 4975 of the Code; and (c) any entity whose underlying assets include plan assets by reason of the investment in the en-tity by such employee benefi t plan and/or plan. For purposes of this determination, (i) the value of equity interests


held by a person (other than a Benefi t Plan Investor) that has discretionary authority or control with respect to the assets of the entity or that provides investment advice for a fee (direct or indirect) with respect to such assets (or any affi liate of any such person) is disregarded, (ii) only that portion of the equity interests of an entity described in clause (c) of the preceding sentence, investing in another entity that is held by employee benefi t plans or other plans described in clauses (a) or (b) of the preceding sentence are included in the testing of such other entity.

An Interest in the Partnership should be considered to be an “equity interest” in the Partnership for purposes of the Plan Asset Regulation, and the Interests will not constitute “publicly off ered securities” for purposes of the Plan Asset Regulation. In addition, the Partnership will not be registered under the Company Act and it is not expected to qualify as a “venture capital operating company.”

Th e General Partner intends to use commercially reasonable eff orts to restrict transfers of any equity interest in the Partnership so that ownership of each class of equity interests in the Partnership by Benefi t Plan Investors will remain below the 25% threshold contained in the Plan Asset Regulation. Although there can be no assurance that such will be the case, the assets of the Partnership should not constitute “plan assets” for purposes of ERISA and Section 4975 of the Code.

If the assets of the Partnership were deemed to constitute the assets of a Plan, the fi duciary making an invest-ment in the Partnership on behalf of an ERISA Plan could be deemed to have improperly delegated its asset man-agement responsibility, the assets of the Partnership could be subject to ERISA’s reporting and disclosure require-ments, and transactions involving the assets of the Partnership would be subject to the fi duciary responsibility and prohibited transaction provisions of ERISA and the prohibited transaction rules of Section 4975 of the Code. Accordingly, certain transactions that the Partnership might enter into, or may have entered into, in the normal course of its operations might result in non-exempt prohibited transactions and might have to be rescinded. A par-ty in interest or disqualifi ed person that engaged in a non-exempt prohibited transaction may be subject to nonde-ductible excise taxes and other penalties and liabilities under ERISA and the Code. In addition, such “plan asset” treatment would subject the calculation and payment of the General Partner’s fees to applicable prohibited trans-action and certain confl ict of interest provisions of ERISA and the Code. Consequently, if at any time the General Partner determines that assets of the Partnership may be deemed to be “plan assets” subject to ERISA and Section 4975 of the Code, the General Partner may take certain actions it may determine to be necessary or appropriate, including requiring one or more investors to redeem or otherwise dispose of all or part of their Interests in the Partnership or terminating and liquidating the Partnership.

Each Plan fi duciary who is responsible for making the investment decisions whether to invest in the Partner-ship should determine whether, under the general fi duciary standards of investment prudence and diversifi cation and under the documents and instruments governing the Plan, an investment in the Interests is appropriate for the Plan, taking into account the overall investment policy of the Plan and the composition of the Plan’s invest-ment portfolio. Any Plan proposing to invest in Interests should consult with its counsel to confi rm that such investment will not result in a prohibited transaction and will satisfy the other requirements of ERISA and the Code.

Th e sale of any Interests to a Benefi t Plan Investor is in no respect a representation by the General Partner or any of its affi liates that such an investment meets all relevant legal requirements with respect to investments by Plans generally or any particular Plan, or that such an investment is appropriate for Plans generally or any particu-lar Plan.

Regardless of whether the assets of the Partnership are deemed to be “plan assets,” the acquisition of an Inter-est by a Plan could, depending upon the facts and circumstances of such acquisition, be a prohibited transaction, for example, if any of the General Partner or any of its affi liates were a party in interest or disqualifi ed person with respect to the Plan. However, such a prohibited transaction may be treated as exempt under ERISA and the Code if the Interests were acquired pursuant to and in accordance with one or more “class exemptions” issued by the

ERISA Considerations – 57

U.S. Department of Labor, such as Prohibited

Transaction Class Exemption (“PTCE”) 84-14 (a class exemption for certain transactions determined by an independent, qualifi ed professional asset manager), PTCE 90-1 (a class exemption for certain transactions in-volving an insurance company pooled separate account), PTCE 91-38 (a class exemption for certain transactions involving a bank collective investment fund), PTCE 95-60 (a class exemption for certain transactions involving an insurance company general account), and PTCE 96-23 (a class exemption for certain transactions determined by an in-house asset manager).

Any insurance company proposing to invest assets of its general account in the Interests should also consider the extent to which such investment would be subject to the requirements of ERISA in light of the U.S. Supreme Court’s decision in John Hancock Mutual Life Insurance Co. v. Harris Trust and Savings Bank and under any sub-sequent legislation or other guidance that has or may become available relating to that decision, including Section 401(c) of ERISA and the regulations thereunder published by the U.S. Department of Labor in January, 2000.

Th e General Partner will require a fi duciary of an ERISA Plan that proposes to acquire an Interest to rep-resent that it has been informed of and understands the Partnership’s investment objectives, policies, strategies and limitations, that the decision to acquire an Interest was made in accordance with its fi duciary responsibilities under ERISA and that neither the General Partner nor any of its affi liates has provided investment advice with respect to such decision. Th e General Partner will also require any investor that is, or is acting on behalf of, a Plan to represent and warrant that its acquisition and holding of an Interest will not result in a nonexempt prohibited transaction under ERISA and/or Section 4975 of the Code.

Governmental plans and certain church plans, while not subject to the fi duciary responsibility provisions of ERISA or the provisions of Section 4975 of the Code, may nevertheless be subject to state or other federal laws that are substantially similar to the foregoing provisions of ERISA and the Code. Th e General Partner will require similar representations and warranties with respect to the purchase of an Interest by any such plan. Fiduciaries of such plans should consult with their counsel before purchasing any Interests.

Th e discussion of ERISA and Section 4975 of the Code contained in this Memorandum is, of necessity, general and does not purport to be complete. Moreover, the provisions of ERISA and Section 4975 of the Code are subject to extensive and continuing administrative and judicial interpretation and review. Th erefore, the mat-ters discussed above may be aff ected by future regulations, rulings, and court decisions, some of which may have retroactive application and eff ect.

ANY POTENTIAL INVESTOR CONSIDERING AN INVESTMENT IN INTERESTS THAT IS, OR IS ACTING ON BEHALF OF, A PLAN (OR A GOVERNMENTAL PLAN SUBJECT TO LAWS SIMILAR TO ERISA AND/OR SECTION 4975 OF THE CODE) IS STRONGLY URGED TO CONSULT ITS OWN LEGAL, TAX AND ERISA ADVISORS REGARDING THE CONSEQUENCES OF SUCH AN INVEST-MENT AND THE ABILITY TO MAKE THE REPRESENTATIONS DESCRIBED ABOVE.


14Miscellaneous

Amendments to Partnership AgreementTh e Partnership Agreement may be amended by the General Partner without further notice to the Limited

Partners without limitation to satisfy any requirements in an opinion, directive, order, ruling, or regulation. See the Partnership Agreement for additional amendment provisions.

Limited Partner ConsentAll actions, votes or consents required or permitted to be taken by the Limited Partners will be taken by the

written consent of Limited Partners holding in aggregate not less than the minimum Ownership Percentages (as defi ned in the Partnership Agreement) as to the particular action, vote or consent. Notwithstanding the foregoing, for purposes of obtaining any such consent as to any matter proposed by the General Partner, the General Partner may, in the notice seeking consent of Limited Partners, require a response within a specifi ed period (which will not be less than fi fteen days) and failure to give the General Partner written notice of opposition to the proposed action within that period will constitute a vote and consent to approve the proposed action. Except as otherwise expressly provided in the proposal for an action, that action will be eff ective immediately after the required sig-natures have been obtained or, if applicable, the expiration of the period within which responses were required, if that requirement was imposed and there were not votes cast against such action in the amount necessary to pre-vent the action from becoming eff ective.

Legal and Accounting MattersTannenbaum Helpern Syracuse & Hirschtritt LLP, located at 900 Th ird Avenue, New York, New York

10022, has acted as counsel to the Partnership and the General Partner in connection with the preparation of this Memorandum and may serve as counsel to other investment funds sponsored or managed by the General Partner or its affi liates. Should a future dispute arise between the Partnership and the General Partner, separate counsel may be retained as circumstances and professional responsibilities then dictate. Counsel to the Partnership does not represent the investors. Th e Partnership has retained Deloitte & Touche as independent auditor for the Partnership. Th e General Partner may at its discretion appoint another independent auditor for the Partnership without notice to the Limited Partners.

Access to Information

Reports

Th e General Partner intends to furnish all Limited Partners with annual reports setting forth: (i) a balance


sheet of the Partnership as of the close of such Fiscal Year; (ii) a statement showing the Net Profi t or Net Loss of the Partnership for such Fiscal Year in reasonable detail; (iii) a statement indicating the balance of such Partner’s Capital Account as of the beginning and end of such Fiscal Year; and (iv) such other information set forth in the Partnership Agreement.

Th e annual reports will contain audited (and, all other reports, unaudited) fi nancial information. Th e audited fi nancial statements will be examined and reported upon by independent certifi ed public accountants. In addition, the General Partner will distribute additional information, including, without limitation, a Form K-1 or other appropriate information to enable the Limited Partners to prepare their respective income tax returns, although the preparation of such returns will be the sole responsibility of each Limited Partner and the Partnership makes no guarantee that any of the foregoing reports will be received by Limited Partners by any particular time. Costs incurred with respect to such reporting are treated as an expense of the Partnership.

Additional Information

Th e offi ces of the Partnership and the General Partner are located at 228 Park Ave S # 62523, New York, NY 10003-1052. Prospective investors are invited to review any materials available to the General Partner which can be acquired without unreasonable eff ort or expense that is necessary to verify the accuracy of any information relating to the Partnership, the operations of the Partnership, the General Partner and its affi liates, and any other matters relating to this Off ering. Notwithstanding the foregoing, the General Partner reserves the right to restrict access to any information concerning the Partnership or its Partners that may be considered confi dential and/or proprietary.

61– Private Placement Memorandum61– Private PlPlacacement Memorandum

Exhibit I

Privacy NoticeAll employees and affi liates of Wharton Global Capital LLC (the “General Partner”) recognize the impor-

tance of protecting the Limited Partners’ privacy and Oracle of Investing Fund LP, (the “Partnership”) and the General Partner have policies in place to maintain the confi dentiality and security of the Limited Partners’ infor-mation. Th e following is designed to help you understand what information we collect from you and how we use that information to serve your account.

Categories Of Information We May Collect

In the normal course of business, we may collect the following types of information: information you provide in the subscription documents and other forms (including name, address,income and other fi nancial-related infor-mation); and data about your transactions with us (such as the types of investments you have made and yourac-count status).

How We Use Your Information Th at We Collect

Any and all nonpublic personal information received by the Partnership and/or the General Partner with respect to the Limited Partners who are natural persons, including the information provided to the Partnership by a Limited Partner in the subscription documents, is not shared with nonaffi liated third parties which are not service providers to the Partnership and/or the General Partner without prior notice to such Limited Partners, un-less otherwise required by law. In the normal course of business, we may disclose the kinds of nonpublic personal information listed above to nonaffi liated third party service providers involved in servicing and administering products and services on our behalf. Th e Partnership’s service providers include, but are not limited to, the Admin-istrator, the auditors, any prime broker and the legal advisors of the Partnership. Additionally, the Partnership and/or the General Partner may disclose such nonpublic personal information as required by law (such as to respond to a subpoena or a request from a regulator and/or to prevent fraud). Without limiting the foregoing, the Partner-ship and/or the General Partner may disclose nonpublic personal information about you to governmental entities and others in connection with meeting its obligations to prevent money laundering. In addition, if the Partnership chooses to dispose of any Limited Partner’s nonpublic personal information that the Partnership is not legally bound to maintain, then the Partnership will do so in a manner that reasonably protects such information from unauthorized access. Th e same privacy policy will also apply to former Limited Partners who are natural persons. For questions about this privacy policy, please contact the General Partner.

oracleofi nvesting.com

MAKE IT HAPPENAfter reading the Private Placement Memorandum and signing the Subscription

Agreement you are ready to join Oracle of Investing Fund LP. Welcome to the family.

www.oracleofi nvesting.comORACLE of Investing

Oracle of Investing

228 Park Ave SNew York, NY 10003

Phone (212) 729-4318

Email info@oracleofi nvesting.com

3 private placement memorandum, oracle of investing fund lp

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