eden rock complaint

8/7/2019 Eden Rock Complaint

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ILED: NEW YORK COUNTY CLERK 03/08/2011 INDEX NO. 650613/

YSCEF DOC. NO. 1 RECEIVED NYSCEF: 03/08/


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EXHIBIT A

ILED: NEW YORK COUNTY CLERK 03/08/2011 INDEX NO. 650613/

YSCEF DOC. NO. 1-1 RECEIVED NYSCEF: 03/08/


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EXHIBIT A

THE STILLWATER ASSET BACKED FUND II, LP

A Delaware Limited Partnership

Limited Partnership Agreement

June 3, 2004

Neither The Stillwater Asset Backed Fund II, LP nor the limited partnershipinterests therein have been or will be registered under the Securities Act of 1933, asamended (the Securities Act), the Investment Company Act of 1940, as amended, or thesecurities laws of any of the States of the United States. The offering of such limitedpartnership interests is being made in reliance upon an exemption from the registrationrequirements of the Securities Act for offers and sales of securities which do not involveany public offering, and analogous exemptions under state securities laws.

These securities are subject to restrictions on transferability and resale, may not betransferred or resold except (i) as permitted under the Securities Act and applicable statesecurities laws pursuant to registration or exemption therefrom, and (ii) in accordance withthe requirements and conditions set forth in this Limited Partnership Agreement.


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LIMITED PARTNERSHIP AGREEMENT

of

THE STILLWATER ASSET BACKED FUND II, LP

This Limited Partnership Agreement of The Stillwater Asset Backed Fund II, LP, aDelaware limited partnership (the Partnership), is entered into as of the 3rd day of June, 2004(this Agreement) by and between Stillwater Capital Partners, LLC, a Delaware limited liabilitycompany (the General Partner), with an address at 41 Madison Avenue, 29th Floor, New York,New York 10010, Jack Doueck, as the Initial Limited Partner, and other certain persons andentities who become limited partners in accordance with the terms hereof (the Limited Partnerswhich together with the General Partner shall collectively be referred to as the Partners).

ARTICLE IGeneral Provisions

Section 1.01 Formation of Partnership. The Partnership was formed as a limitedpartnership under the Delaware Revised Uniform Limited Partnership Act (as in effect on thedate hereof and as amended from time to time, the Act) by the filing of its Certificate ofLimited Partnership (the Certificate) with the Secretary of State of Delaware on June 3, 2004.The General Partner, for itself and as agent for the Limited Partners, shall accomplish all filing,recording, publishing and other acts necessary or appropriate for compliance with all therequirements for the formation and operation of the Partnership as a limited partnership underthis Agreement and the Act and under all other laws of the State of Delaw are and such otherjurisdictions in which the General Partner determines that the Partnership may conduct business.Each Limited Partner admitted to the Partnership by the General Partner shall promptly executeall relevant certificates and other documents, as the General Partner shall request.

Section 1.02 Partnership Name. The name of the Partnership is and shall be TheStillwater Asset Backed Fund II, LP.

Section 1.03 Purpose. As described in the Partnerships Confidential Private PlacementMemorandum (as amended from time to time, the Memorandum), the Partnership is organizedto serve as a fund through which the assets of its Partners may, in the discretion of the GeneralPartner, be invested primarily in a portfolio of mostly illiquid and privately offered short andmedium-term loans and other asset backed obligations collateralized by real estate and otherassets (Loans) for various types of borrowers, including but not limited to, (i) loans secured byresidential and commercial properties, (ii) legal claims, (iii) medical receivables, (iv) commercial

accounts receivable, (v) general commercial and corporate loans, (vi) mezzanine corporate orreal estate loans, (vii) ownership of participations in loans and loan portfolios, (viii) non-performing debt and (iv) other miscellaneous assets. The Partnership intends to sell participationrights in the Loans to other entities, including offshore investment funds managed or advised bythe Investment Manager (as defined below) and other affiliated entities. The Partnership intends


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to retain at least a 20% interest in all Loans it originates (i.e., the Partnership intends to limit itssales of participation rights to no more than 80% of its interest in such Loans). Moreover, thePartnership may charge a fee to purchasers of Loan participations for the participations.Nevertheless, in addition to Loans, the Partnership is authorized to invest and trade in a widevariety of securities, real estate interests and financial instruments, domestic or foreign, of all

kinds and descriptions, whether publicly traded or privately placed, including but not limited tocommon and preferred stocks, bonds and other debt securities, direct ownership interests in realestate, interests in other real estate investment funds and vehicles, loans, notes, convertiblesecurities, limited partnership interests, limited liability company interests, mutual fund shares,options, warrants, derivatives, currencies, monetary instruments and cash and cash equivalents.In furtherance of the foregoing, the Partnership may engage in any lawful act or activity forwhich limited partnerships may be formed under the Act, and any and all activities necessary orincidental thereto, including any other business activities described in the Memorandum.

Section 1.04 Place of Business. The Partnership shall have offices located at 41Madison Avenue, 29th Floor, New York, New York 10010, or elsewhere as the General Partnermay from time to time determine. The Partnership may have more than one (1) office as mayfrom time to time be determined by the General Partner.

Section 1.05 Fiscal Year and Fiscal Quarter. The fiscal year of the Partnership shallend on December 31 of each year (the Fiscal Year). The Fiscal Year may be changed by theGeneral Partner. In the event that the General Partner changes the Partnerships Fiscal Year, thedates and time periods referred to in this Agreement shall be appropriately adjusted. The termFiscal Quarter shall mean any one or more of the following (a) January 1 to March 31 of eachFiscal Year, (b) April 1 to June 30 of each Fiscal Year, (c) July 1 to September 30 of each FiscalYear, (d) October 1 to December 31 of each Fiscal Year, and (e) such other periods as may bedesignated from time to time as a Fiscal Quarter by the General Partner.

Section 1.06 Term of Partnership. The term of the Partnership commenced upon filingof the Partnerships Certificate with the Delaware Secretary of State and shall continueindefinitely, provided however that the Partnership shall be dissolved forthwith upon theoccurrence of any one of the events set forth in Section 13.01 below.

ARTICLE IIComposition; Admissions

Section 2.01 Names of the Partners. Stillwater Capital Partners, LLC, a Delawarelimited liability company, is the sole General Partner. The names and addresses of the GeneralPartner and of each of the Limited Partners shall be set forth in a schedule of the Partnership to

be kept on file at all times at the principal place of business of the Partnership.

Section 2.02 Admission of Partners. Additional Limited Partners may be admitted tothe Partnership at other times as provided in Article VIII below. In connection with theadmission of a Limited Partner to the Partnership, such Limited Partner shall, in advance of such


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admission and as a condition thereto, sign a copy of this Agreement or an agreement to becomebound by the provisions of this Agreement and such other subscription materials as shall bedetermined by the General Partner. A substitute General Partner, and affiliated or additionalgeneral partners, may be admitted to the Partnership as provided in Article IV below. Upon theadmission of a Limited Partner, the Initial Limited Partner listed on the signature page hereof

shall automatically be deemed to have withdrawn from the Partnership.

Section 2.03 Partnership Interests. For purposes of this Agreement, the termPartnership Interest shall mean the quotient resulting from dividing the amount in a PartnersCapital Account (as defined in Section 9.01 below) by the aggregate amount in the CapitalAccounts of all Partners. Partnership Interests shall mean the sum of all amounts in theCapital Accounts of all Partners.

ARTICLE IIIManagement

Section 3.01 Management of Partnership.

(a) The business and affairs of the Partnership shall be managed exclusivelyby the General Partner and the Investment Manager. The Limited Partners shall take no part inthe management or control of the Partnerships business and shall have no authority to act for orbind the Partnership. The Partnership shall enter into an investment management agreement withan investment manager (Investment Manager) selected by the General Partner pursuant towhich the Investment Manager shall have sole discretion and authority to select investments,shall invest the funds of the Partnership from time to time as the Investment Manager deemsappropriate in accordance with the purposes set forth in Section 1.03, as limited by Section 3.05below, and shall have the powers set forth in Section 3.02 below. The initial InvestmentManager shall be Stillwater Capital Partners, Inc., a New York corporation and registered

investment adviser. Except for the authority delegated to the Investment Manager, the GeneralPartner shall be responsible for all management and decision-making matters with respect to thePartnership, including overseeing the Partnerships day-to-day operations and affairs. Inaddition to the Investment Manager, the General Partner may delegate investment managementresponsibility with respect to all or any portion of the Partnerships assets to one or more thirdparties as it may select from time to time in the exercise of its reasonable discretion.

(b) Neither the General Partner nor the Investment Manager shall be requiredto devote their full time to the business of the Partnership, but shall devote so much of their timeand efforts to the affairs of the Partnership as may in their judgment be necessary to accomplishthe purposes of the Partnership. The General Partner, the Investment Manager and their affiliates

may engage and hold interests in other business ventures of every kind and description for theirown account, whether such business ventures are in direct or indirect competition with thePartnership and whether the Partnership or any of the Partners also has an interest therein,without having to account to the Partnership or any Partner for any profits or other benefitsderived therefrom and without incurring any obligation to offer any interest in any such activity


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to the Partnership or any Partner. In particular, in addition to managing the Partnershipsinvestments, the General Partner, the Investment Manager and their principals and affiliates mayprovide investment advice to other parties and may manage other accounts and privateinvestment vehicles similar to the Partnership, as described in the Memorandum. The Partnersare not prohibited from buying or selling securities for their own accounts or for the accounts of

affiliates, including the same securities as are purchased, sold or held by the Partnership, butneither the General Partner, the Investment Manager nor any of their affiliates shall buysecurities from or sell securities to the Partnership without the written consent of all LimitedPartners.

(c) In the discretion of the General Partner, the Partnership may obtain acredit facility from a bank or other financial institution in order to finance investments, forliquidity purposes to meet withdrawal requests, or to pay expenses of the Partnership. In thediscretion of the General Partner, the Partnership may secure such credit facility by anassignment of the Partners capital contributions, and Partners may be required to confirm thattheir capital contribution obligations are unconditional (except as otherwise provided herein), toprovide financial information and to execute other documents required to obtain such facility.

(d) The General Partner and/or its principals or affiliates may, in theirdiscretion, make certain short-term loans to the Partnership as an interim facility or for liquiditypurposes. Any such loan shall be unsecured and shall bear interest at the prime rate plus 1% perannum. The Partnership shall pay all costs and expenses in connection with any such short-termloan from the General Partner or its principals or affiliates.

Section 3.02 Powers of the General Partner. Without in any way intending to limit thepowers of the General Partner, the General Partner and/or the Investment Manager (inconnection with the performance of its investment management responsibilities under Section3.01) shall have the right, power and authority on behalf of the Partnership:

(a) As provided in Section 3.01 above, to allocate all of the assets of thePartnership among securities and investments to be selected by the Investment Manager in itssole and absolute discretion, including, but not limited to the right to:

(i) purchase, hold and sell investments and securities and rightstherein of any kind or nature;

(ii) purchase, hold, sell and otherwise deal in put and call options,monetary instruments and any combinations thereof and any otherfinancial instruments, contracts or investments of any nature or

kind;

(iii) maintain margin accounts with brokers, pledge securities for loansand, in connection with any such pledge, effect borrowings frombrokers or banks in such amounts as may be determined from timeto time; and


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(iv) transact business through brokers and dealers and other personsselected by the General Partner in its sole discretion;

(b) To acquire and enter into any contract of insurance that the GeneralPartner deems necessary or appropriate for the protection of the Partnership and the GeneralPartner or for any purpose convenient or beneficial to the Partnership;

(c) To engage in any transaction with affiliates of the General Partner;

(d) To employ persons, whether full-time or part-time, in the operation andmanagement of the business of the Partnership, on such terms and for such compensation as theGeneral Partner shall determine, regardless of whether such persons also may be employed bythe General Partner or its affiliates;

(e) To file, conduct and defend legal proceedings of any form, includingproceedings against Partners, and to compromise and settle any such proceedings, or any claimsagainst any person, including claims against Partners, on whatever terms deemed appropriate by

the General Partner;

(f) To open brokerage, bank and other accounts and, to the extent that fundsare not invested, to deposit and maintain such funds in the name of the Partnership in suchaccounts and to temporarily invest such funds in short term United States and/or foreigngovernment securities, money market accounts and/or other short term interest bearinginstruments, provided, however, that the Partnership funds shall not be commingled with thefunds of any other person or entity;

(g) To cause the Partnership to make or revoke any of the elections referred toin Section 754 of the Internal Revenue Code of 1986, as amended (the Code), or any similar

provision enacted in lieu thereof;

(h) To select as its accounting year the period ending December 31 or otherFiscal Year as is permitted by the Internal Revenue Service;

(i) To engage the Investment Manager, independent accountants, attorneys,investment managers, sub-advisers, broker-dealers, administrators, custodians and such otherpersons as the General Partner may deem necessary or advisable;

(j) To establish and maintain for the conduct of Partnership affairs one ormore offices and in connection therewith rent or acquire office space, engage personnel, whetherpart time or full time, and do such other acts and incur such expenses as the General Partner may

deem necessary or advisable in connection with maintenance or administration of such office;

(k) To require a provision in all Partnership contracts that the General Partnershall not have any personal liability therefore, but that the person or entity contracting with thePartnership is to look solely to the Partnership and its assets for satisfaction;


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(l) To purchase and sell Partnership assets at such price or amount for cash,securities or other property and upon such terms as are deemed in the General Partners absolutediscretion to be in the best interests of the Partnership;

(m) To prepare, or cause to be prepared, to execute, acknowledge and deliverany and all instruments to effectuate the business of the Partnership, including, but not limited to,annual and/or interim reports, a copy of which shall be delivered to each Partner, as provided inSections 3.06 and 13.05 hereof;

(n) To effect on behalf of the Partnership any agency cross transaction (ascontemplated in Rule 206(3)-2 under the U.S. Investment Advisers Act of 1940 (the AdvisersAct)) through the General Partner or any of its affiliates that is registered as a broker or dealer;providedthat the authority granted in this subsection may be revoked at any time by the GeneralPartner or by vote or consent of Limited Partners owning more than fifty percent (50%) of thePartnership Interests held by Limited Partners;

(o) To cross any transaction for the purchase or sale of securities between

two or more advisory clients or managed funds, including the Partnership (as contemplated inRule 206(3) under the Advisers Act and interpretations thereunder) (Cross Trading); providedthat the General Partner receives no additional compensation in connection with such CrossTrading activities;

(p) To waive or reduce, in whole or in part, any notice period, minimumamount requirement, or other limitation or restriction imposed on Capital Contributions,withdrawals of capital, any fee, any special allocation to the General Partner, and/or anyrequirement imposed on a Limited Partner by this Agreement, regardless of whether such noticeperiod, minimum amount, limitation, restriction, fee, special allocation or requirement, or thewaiver or reduction thereof, operates for the benefit of the Partnership, the General Partner or

fewer than all the Limited Partners;

(q) To establish such reserves as the General Partner shall, in its sole butreasonable discretion, deem appropriate to pay current and future, definite, contingent andpossible obligations of the Partnership;

(r) To establish separate classes of Partnership Interests with such rights andprivileges as the General Partner shall determine, and to amend this Agreement in connectiontherewith to reflect such multi-class structure;

(s) To convert the Partnership into a feeder fund that implements itsinvestment program and other activities through a master fund, and to amend this Agreement inconnection therewith to reflect such master-feeder structure;

(t) To delegate any of its investment management or other responsibilitieshereunder to one or more other Persons, including retaining one or more sub-advisors to managea portion of the Partnerships assets;


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(u) To engage third party firms (Servicers) that specialize in Loanorigination and servicing, and in connection therewith to enter into Loan origination andservicing agreements as described in the Memorandum, including the initial Loan Referral andServicing Agreement described in the Memorandum;

(v) To sell participation rights in the Loans to other entities, includingoffshore investment funds managed or advised by the Investment Manager and other affiliatedentities, and to charge a fee to purchasers of Loan participations for the participations; and

(w) To do any act, engage in any activity or execute any agreement of anynature, necessary or incidental to the accomplishment of the purposes of the Partnership inaccordance with the provisions of this Agreement and all applicable Federal, state and local lawsand regulations.

Section 3.03 Actions of General Partner. The General Partner is authorized, directedand empowered to act individually on behalf of the Partnership, and in accordance therewith, toexecute all documents and instruments on behalf of the Partnership. Third parties may rely on

execution of any documents on behalf of the Partnership by the General Partner.

Section 3.04 Liability and Indemnification.

(a) Neither the General Partner, the Investment Manager nor their managers,members, officers, directors, affiliates and employees shall be liable to the Partnership or theLimited Partners for any action taken or omitted to be taken in connection with the business oraffairs of the Partnership so long as such person or entity or person acted in good faith and is notfound to be guilty of gross negligence or willful misconduct with respect thereto. It shall beconclusively presumed and established that such entities or persons acted in good faith if anyaction is taken, or not taken, by it on the advice of legal counsel or other independent outside

consultants.

(b) The Partnership agrees to indemnify and hold harmless the GeneralPartner, the Investment Manager and their managers, members, officers, directors, affiliates andemployees from and against any and all claims, actions, demands, losses, costs, expenses(including attorneys fees and other expenses of litigation), damages, penalties or interest, as aresult of any claim or legal proceeding related to any action taken or omitted to be taken inconnection with the business and affairs of the Partnership (including the settlement of any suchclaim or legal proceeding); provided, however, that the party against whom the claim is made orlegal proceeding is directed is not guilty of gross negligence or willful misconduct as determinedby a final non-appealable court of competent jurisdiction. Any indemnity under this Section

shall be paid from and to the extent of Partnership assets only, and only to the extent that suchindemnity does not violate applicable Federal and state laws.

(c) If, to the extent, and at such times as any assets of the Partnership aredeemed to be plan assets within the meaning of the Employee Retirement Income Security Actof 1974, as amended (ERISA), of any Limited Partner that is an employee benefit plan


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governed by ERISA, the General Partner will be, and hereby acknowledges that it will beconsidered to be, a fiduciary within the meaning of Section 3(21)of ERISA as to that LimitedPartner. In such an event, or if any partner, employee, agent or affiliate of the General Partner, isever held to be a fiduciary of any Limited Partner, then, in accordance with Sections 405(b)(1),405(c)(2) and 405(d) of ERISA, the fiduciary responsibilities of that person shall be limited to

the persons duties in administering the business of the Partnership, and the person shall not beresponsible for any other duties to such Limited Partner, specifically including evaluating theinitial or continued appropriateness of this investment in the Partnership under Section 404(a)(1)of ERISA.

Section 3.05 Restrictions.

(a) The General Partner shall not authorize the transfer of a PartnersPartnership Interest if the result of said transfer will be a sale or exchange of more than fiftypercent (50%) of the Partnership Interests within a twelve (12) month period or if it wouldotherwise materially affect the income benefits anticipated by the Limited Partners.

(b) The General Partner shall not do any act, whether of omission orcommission, that would make it impossible to carry on the normal business of the Partnership(other than a sale at arms length of all or any portion of the Partnerships assets to whichLimited Partners owning more than fifty percent (50%) of the Partnership Interests held byLimited Partners hereby consent).

(c) Notwithstanding anything to the contrary herein, the General Partner maynot effect any transaction that constitutes an assignment of this Agreement in contravention ofrequirements under applicable law (such as the Investment Advisers Act of 1940, as amended, ifapplicable) requiring consents of advisory clients, unless and to the extent all consents requiredby such laws have been obtained.


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Section 3.06 Duty to Keep Books, Financial and Tax Reports.

(a) At all times during the existence of the Partnership, the General Partnershall keep true and complete records and books of account, in which shall be entered fully andaccurately each transaction of the Partnership. The General Partner has the power, in its sole andabsolute discretion, to delegate some or all of the administrative bookkeeping functions relatingto the Partnership to an administrator or agent, which may be the Partnerships accountants.Upon reasonable advance written notice and during reasonable business hours, a Limited Partnermay inspect and copy, at the Limited Partners expense and solely for a purpose reasonablyrelated to the Limited Partners interest as a Partner, the records of the Partnership required to bemaintained pursuant to Section 17-305 of the Act and any financial statements maintained by thePartnership. Any such inspection must be in good faith without any intent to damage thePartnership or any of its Partners in any manner. Copies of this Agreement and all amendmentshereto shall be furnished to each Limited Partner upon request.

(b) The General Partner shall cause to be prepared and distributed to eachPartner as soon as practicable following each Fiscal Year an annual financial statement preparedin accordance with U.S. generally accepted accounting principles (except that organizationalcosts shall be amortized over a period of sixty (60) months) and audited by an independentcertified public accounting firm. The General Partner shall also have prepared and filed allFederal, state and local income, franchise, gross receipts, payroll and other tax returns that thePartnership is obligated to file. Copies of all Partnership tax returns, information returns orreports shall be available to all Partners as soon as possible after the close of the PartnershipsFiscal Year at the offices of the Partnership. Copies of Schedule K-1 of the Partnerships TaxReturn (Form 1065) shall be distributed to all Partners as soon as practicable after thePartnerships Fiscal Year. The Partnership shall bear all fees incurred in providing such taxreturns and reports.

The General Partner may agree to provide certain Limited Partners with additionalinformation on the underlying investments of the Partnership, as well as access to the GeneralPartner and its employees for relevant information.

ARTICLE IVResignation; Prohibition Against Transfer; Continuation

of Partnership; and Substitution of General Partner

Section 4.01 General Partner Resignation and Involuntary Withdrawal; Admission ofAdditional General Partners and Transfer by General Partner.

(a)

The General Partner shall not be permitted to voluntarily withdraw orresign as the General Partner except upon no less than thirty (30) days prior written notice to allLimited Partners. In the event of dissolution of the General Partner, or if a voluntary orinvoluntary petition for bankruptcy shall be filed by or against the General Partner, or theGeneral Partner shall make any assignment for the benefit of its creditors (collectively, an


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Involuntary Withdrawal), the General Partner or the General Partners trustee, receiver orassignee shall become inactive in the affairs of the Partnership, shall have none of the rights andpowers of a General Partner hereunder, shall have no authority to act on behalf of the Partnershipor have any voice in the management and operation of the Partnership, except as provided inSection 13.02 herein.

(b) The General Partner may admit additional general partners to thePartnership at such times as the General Partner shall determine, without the consent of theLimited Partners. Notwithstanding anything to the contrary, the General Partner shall have theright to transfer its interest, as the general partner of the Partnership, to any affiliate of theGeneral Partner, including any person or entity controlled by the General Partner, controlling theGeneral Partner or under common control with the General Partner, without the consent of theLimited Partners. In the event of such transfer by the General Partner to an affiliate, the GeneralPartner shall not be deemed to have resigned or withdrawn from the Partnership for purposes ofSection 13.01(a). Any affiliate transferee of the General Partner under this Section 4.01(b) shallassume the status of and shall have all of the rights, powers and obligations that the GeneralPartner possessed prior to such transfer. The General Partner shall not assign, transfer, sell,mortgage or otherwise encumber or transfer its interest as the General Partner of the Partnershipexcept as set forth herein. Any additional general partner or transferee of the General Partner asprovided herein, shall execute and acknowledge any and all instruments that are necessary orappropriate to effect the admission of any such person or entity as a general partner, including,without limitation, the written acceptance and adoption by such person of the provisions of thisAgreement and an amendment of the Certificate.

Section 4.02 Continuation of Partnership; Appointment of Substitute General Partnerby Limited Partners. If an event as set forth in Section 13.01(a) below occurs, the LimitedPartners shall have the right, within ninety (90) days after such event, by affirmative vote ofLimited Partners owning more than fifty percent (50%) of the Partnership Interests held by

Limited Partners, to appoint a substitute General Partner, in which event the Partnership shall notdissolve and shall continue its existence.

Section 4.03 Substitute General Partner Requirements. Any substitute General Partnershall execute and acknowledge any and all instruments that are necessary or appropriate to effectthe admission of any such person or entity as a substitute General Partner, including, withoutlimitation, the written acceptance and adoption by such person of the provisions of thisAgreement and an amendment of the Certificate. Any successor to such office of GeneralPartner shall assume the status of and shall have all of the rights, powers and obligations that theGeneral Partner possessed prior to its withdrawal, resignation or Involuntary Withdrawal fromthe Partnership.


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ARTICLE VStatus, Rights, Powers and

Voting Rights of Limited Partners

Section 5.01 Limited Liability. Neither Limited Partners, Substitute Limited Partnersnor Additional Limited Partners shall be personally liable or bound for the expenses, liabilities orobligations of the Partnership beyond the amount of such Partners Capital Contributions (asdefined in Section 8.01 below).

Section 5.02 Capital Contributions.

(a) No Limited Partner shall be entitled to a return of such Limited PartnersCapital Contribution or any portion thereof except as set forth in Section 7.01 below and no timehas been agreed upon for the return of any Partners Capital Contribution except as hereinprovided.

(b) Each Limited Partner, if such Limited Partner receives a return of all or

any part of such Limited Partners Capital Contribution, may, to the extent provided for in theAct, be liable to the Partnership for an amount equal to such distribution, if at the time of suchdistribution, the Limited Partner knew the Partnership was prohibited from making suchdistributions under the Act.

Section 5.03 Liability of Limited Partner. No Limited Partner shall be obligated toprovide any contributions to the Partnership other than the Original Capital Contribution (asdefined in Section 9.02 below) of such Limited Partner. No Limited Partner shall be obligated tomake any loan to the Partnership.

Section 5.04 Rights of Limited Partners to Inspect Books, Records, and Partnership

Documents. Each Limited Partner shall have the same right as the General Partner (except to theextent limited by Section 3.05 above) to inspect and copy the Partnerships books and recordsupon prior written notice at any reasonable time and at such Limited Partners sole cost andexpense, and to inspect and copy such other information (at such Limited Partners expense)concerning the affairs of the Partnership as is just and reasonable.

Section 5.05 No Restriction on Other Activities. Limited Partners may engage and holdinterests in business ventures of every kind and description for their own accounts including,without limitation, business ventures which are, directly or indirectly, in competition with thePartnership and whether the Partnership or any of the Partners also has an interest therein.Neither the Partnership nor any of the Partners shall have any rights in such independentbusiness ventures by virtue of this Agreement.

Section 5.06 Voting Rights. In addition to the rights to vote conferred upon the LimitedPartners in Sections 3.05(b), 4.02 and 13.02 in this Agreement, Limited Partners shall have theright to vote on amendments to this Agreement to the extent provided in Section 14.09 hereof.


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Section 5.07 Constructive Consent by Limited Partners. If the General Partner requiresthe consent of the Limited Partners in order to take action (including approving amendments tothis Agreement), and written notice of such action is mailed to such Limited Partners (certifiedmail, return receipt requested), those Limited Partners not affirmatively objecting in writingwithin thirty (30) days after such notice is mailed shall be deemed to have consented to the

proposed action set forth in the General Partners notice.

Section 5.08 Rights as to Dissolution. The Limited Partners shall have no right orpower to cause the dissolution and winding up of the Partnership by court decree or otherwise orto withdraw or reduce their Capital Contributions, except as set forth in the Certificate and thisAgreement. No Limited Partner shall have the right to bring an action for partition against thePartnership and each Partner hereby waives any right to partition of the Partnerships property.

Section 5.09 Consent by Limited Partners in Lieu of Meeting. Any action required bythis Agreement or the Act to be taken at any regular or special meeting of the Partners, may betaken without a meeting, without prior notice and without a vote, if a consent or consents inwriting, setting forth the action so taken, shall be signed by the Partners having not less than theminimum number of votes that would be necessary to authorize or take such action at a meetingat which all Partners entitled to vote thereon were present and voted.

ARTICLE VIFees and Expenses

Section 6.01 Management Fee. In consideration for its services, the InvestmentManager shall receive a management fee (Management Fee) equal to 1/12 of 1.0% per month(approximately 1.0% annually) of each Limited Partners share of the Partnerships Net Worth.The Management Fee shall be payable monthly in advance and calculated as of the first day ofeach month. A pro rata Management Fee will be charged to Limited Partners on any amounts

permitted to be invested during any month. The Management Fee is payable to the InvestmentManager within fifteen (15) days after the beginning of each month. No part of the ManagementFee will be refunded in the event that a Limited Partner withdraws all or any of the value in theLimited Partners Capital Account during a month. The Investment Manager, in its solediscretion, may waive or reduce the Management Fee with respect to one or more LimitedPartners for any period of time, or agree to apply a different Management Fee for that LimitedPartner.

Section 6.02 Expenses.

(a) Organizational Expenses. The Partnership shall pay or reimburse the

General Partner and/or the Investment Manager for all organizational and initial offeringexpenses of the Partnership, including but not limited to, legal and accounting fees, printing andmailing expenses and government filing fees (including blue sky filing fees). The Partnershipintends to amortize organizational and initial offering expenses over a period of sixty (60)months from the date the Partnership commences operations.


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(b) Operating Expenses. The Partnership shall pay or reimburse the GeneralPartner and/or the Investment Manager for (A) all expenses incurred in connection with theongoing offer and sale of Interests, including but not limited to printing of the Memorandum andexhibits, documentation of performance and the admission of Limited Partners; (B) all operatingexpenses of the Partnership such as Management Fees, tax preparation fees, governmental fees

and taxes, insurance, administrator fees, communications with Limited Partners, research, duediligence and other costs related to the evaluation, selection and monitoring of Servicers, andongoing legal, accounting, auditing, bookkeeping, consulting and other professional fees andexpenses; (C) all fees to protect or preserve any investment held by the Partnership, asdetermined in good faith by the General Partner, including all fees and expenses in connectionwith the enforcement of the Partnerships rights and remedies with respect to any Loan; and (D)all fees and other expenses incurred in connection with the investigation, prosecution or defenseof any claims by or against the Partnership. The General Partner or the Investment Manager, intheir sole discretion, may from time to time pay for any of the foregoing Partnershiporganizational and operating expenses under Sections 6.02(a) and (b) or waive their right toreimbursement for any such expenses, as well as terminate any such voluntary payment or

waiver of reimbursement.

(c) General Partners Expenses. The General Partner shall pay its owngeneral operating and overhead type expenses associated with providing the management andadministrative services required under this Agreement. These expenses include all expensesincurred by the General Partner in providing for its normal operating overhead, including but notlimited to, the cost of providing relevant support and administrative services (e.g., employeecompensation and benefits, rent, office equipment, insurance, utilities, telephone, secretarial andbookkeeping services, etc.), but not including any Partnership operating expenses describedabove.

Section 6.03 Marketing Fees and Sales Charges. The General Partner may sell

Partnership Interests through broker-dealers, placement agents and other persons. The GeneralPartner reserves the right to pay a one-time subscription fee or sales charge, on a fully disclosedbasis, to a broker-dealer or placement agent based upon the Capital Contribution of the LimitedPartner introduced to the Partnership by such broker-dealer or agent. Any such sales chargewould be assessed against the referred Limited Partner and would reduce the amount actuallyinvested by the Limited Partner in the Partnership. Except as noted above, any marketing fee orcommission in connection with any Limited Partner referral activities, including ongoingpayments, will be paid solely by the General Partner or the Investment Manager and not by thePartnership or any Limited Partner.

ARTICLE VII

Withdrawals from Capital Account; Loans

Section 7.01 Permissible Withdrawals. A Limited Partner may withdraw all or any ofthe value in such Limited Partners Capital Account in the manner and to the extent provided inSection 7.02 below. The General Partner may withdraw all or any of the value in the General


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Partners Capital Account at any time, from time to time, without the consent of the LimitedPartners and without notice to any of the Limited Partners.

Section 7.02 Withdrawal Procedures.

(a) Subject to availability of funds and certain liquidity and other restrictions,a Limited Partner may withdraw a minimum of $50,000 from its Capital Account on the dayimmediately preceding the six (6) month anniversary of the initial Capital Contribution andpurchase of a Partnership Interest by such Limited Partner, and subsequent withdrawals may bemade on the last day of each successive semiannual period thereafter (each such date shall bereferred to herein as a Withdrawal Date), upon at least sixty (60) days prior written notice tothe General Partner, and in such other amounts and at such other times as the General Partnermay determine in its sole discretion. For example, if a Limited Partner makes its initialinvestment in the Partnership on August 1, 2004, then its first Withdrawal Date will be January31, 2005 and, thereafter, the Withdrawal Dates permitted for such Limited Partner will be July31 and January 31 of each year. Unless the General Partner consents, partial withdrawals maynot be made if they would reduce a Limited Partners Capital Account balance below $250,000.All withdrawals shall be deemed made prior to the commencement of the following fiscal period.

(b) A Limited Partner may not withdraw any of the value of the LimitedPartners Capital Account in connection with any securities held in a Side Pocket Account (asdefined in Section 9.08 below) until such time that the security is reallocated to such LimitedPartners Capital Account. At the sole discretion of the General Partner, a security may be heldin a Side Pocket Account indefinitely.

(c) The following provision shall apply to withdrawals:

(i) A Limited Partner who requests a withdrawal of less than ninety

five percent (95%) of the value of such Limited Partners CapitalAccount shall be paid within thirty (30) days after the applicableWithdrawal Date.

(ii) A Limited Partner who is withdrawing ninety five percent (95%)or more of the value of such Limited Partners Capital Account inthe aggregate during any Fiscal Year shall be paid ninety fivepercent (95%) of an amount estimated by the General Partner to bethe amount to which the withdrawing Limited Partner is entitled(calculated on the basis of unaudited data) within thirty (30) daysafter the applicable Withdrawal Date. The balance of the amount

remaining in a withdrawing Limited Partners Capital Account(subject to audit adjustments) shall be paid within fifteen (15) daysafter completion of the December 31 audited financial statementsfor the Fiscal Year in which the withdrawal occurs, together withinterest earned thereon at the applicable money market rate (as


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determined by the General Partner). The General Partner may, inits sole discretion, agree to pay up to the full Capital Accountbalance (calculated on the basis of unaudited data) to awithdrawing Limited Partner within thirty (30) days after theapplicable Withdrawal Date.

(d) The General Partner may, in its sole discretion, require a Limited Partnerto withdraw all or any amount of the value of the Limited Partners Capital Account if theGeneral Partner considers such withdrawal to be in the best interest of the Partnership or for anyother reason or no reason at all. In such event, the General Partner shall give not less than five(5) days written notice to the Limited Partner specifying the date of withdrawal. As soon aspracticable thereafter, the withdrawing Limited Partner shall receive the balance of the value insuch Limited Partners Capital Account in accordance with Section 7.02(c) above, subject to allappropriate adjustments pursuant to the provisions of this Agreement.

(e) All payments under this Article VII shall be made in cash or securities in-kind or both, as the General Partner may in its sole and absolute discretion determine.

(f) All notices of withdrawal must specify the dollar amount or percentage ofvalue of a Limited Partners Capital Account to be withdrawn. The General Partner, in its solediscretion, may waive any notice periods or any other restrictions on withdrawals.

(g) The General Partner, in its sole discretion, may permit withdrawals at suchother times as it determines. If the General Partner in its discretion permits a Limited Partner towithdraw capital other than on a Withdrawal Date, the General Partner may impose anadministrative fee to cover the legal, accounting, administrative, brokerage, and any other costsand expenses associated with such withdrawal.

(h)

Upon withdrawal of all its Capital Account (excluding for purposeshereof, any remaining investments held in a Side Pocket Account), a Limited Partner shall bedeemed to have withdrawn from the Partnership, and upon notice of such withdrawal, a LimitedPartner shall not be entitled to exercise any voting rights afforded to Limited Partners under thisAgreement.

Section 7.03 Suspension of Payment of Withdrawals. The Partnership may suspend orpostpone the payment of any withdrawals from Capital Accounts:

(a) during any period in which the Partnerships portfolio investments are notsufficiently liquid to cover requested withdrawals;

(b) in the event that Limited Partners, in the aggregate, request withdrawals often percent (10%) or more of the value of the Partnerships Capital Accounts as of anyWithdrawal Date;


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(c) during the existence of any state of affairs which, in the opinion of theGeneral Partner, makes the disposition of the Partnerships investments impractical or prejudicialto the Partners, or where such state of affairs, in the opinion of the General Partner, makes thedetermination of the price or value of the Partnerships investments impractical or prejudicial tothe Partners;

(d) where any withdrawals or distributions, in the opinion of the GeneralPartner, would result in the violation of any applicable law or regulation; or

(e) for such other reasons or for such other periods as the General Partner mayin good faith determine.

All Limited Partners will be notified in writing of any such suspension and thetermination thereof.

Section 7.04 Limited Partner Loans. The General Partner shall have the right, in itssole and absolute discretion, upon written request of a Limited Partner (hereinafter, a

Borrowing Partner), to cause the Partnership to make a loan (the Partner Loan) to theBorrowing Partner. All Partner Loans shall be on such terms and conditions as shall besatisfactory to the General Partner in its sole and absolute discretion; provided, however, that thefollowing conditions shall apply to all Partner Loans (unless waived by the General Partner): (i)the amount of the Partner Loan shall at all times be no greater than twenty-five percent (25%) ofthe value of the Borrowing Partners Capital Account; (ii) the Partner Loan shall be secured by afirst priority perfected security interest in the Borrowing Partners Capital Account; (iii) thePartner Loan shall become payable at the earlier of the date of the next capital contribution orwithdrawal by any Partner or on the last day of the Fiscal Year in which the Partner Loan wasmade; (iv) the interest rate shall not be less than one percent (1%) over the prime rate per annum;and (v) the Borrowing Partner shall pay all of the General Partners and Partnerships costs and

expenses, including legal and accounting fees, incurred in connection with the Partner Loan.The Borrowing Partner shall execute and deliver any and all documents and instrumentsrequested by the General Partner in connection with the Partner Loan, including but not limitedto a promissory note and applicable security agreements and UCC financing statements.

ARTICLE VIIIAdditional Limited Partners

Section 8.01 Future Issuance of Partnership Interests. The General Partner may admitas of the first day of each month (or such other time as the General Partner elects to draw downsubscription funds from escrow in connection with the funding of a Loan or other investment)

(each such date, a Contribution Date), or at any other time that the General Partner determinesin its sole and absolute discretion, as additional Limited Partners (Additional LimitedPartners), persons who contribute cash or, in its sole discretion, persons who contributesecurities, for Partnership Interests (Capital Contributions). The General Partner may establishsuch minimum initial and/or additional Capital Contribution amount as the General Partner


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deems appropriate and that minimum may thereafter be waived or changed by the GeneralPartner. Any Capital Contribution received on a date other than a Contribution Date may, in theGeneral Partners discretion, be deferred and deemed made as of the following ContributionDate. The General Partner may, in its sole and absolute discretion, cause the Partnership to payinterest not to exceed the average current yield on the Partnerships cash and cash equivalents

(Interest Rate) to a Limited Partner on any Capital Contribution received by the Partnership ona date other than a Contribution Date and deemed made as of the following Contribution Date,for the period from the date of payment until the following Contribution Date. The amount ofcash received plus the interest earned thereon will be the Capital Contribution on theContribution Date. Notwithstanding the foregoing, with respect to Capital Contributionsreceived prior to a Contribution Date, the General Partner may, in its sole and absolutediscretion, deem such Capital Contribution to have been made as of the beginning of the priorContribution Date and in such event, the Partnership, in the sole and absolute discretion of theGeneral Partner, may charge such Limited Partner interest on such Capital Contribution at theInterest Rate for the period from the first day of such prior Contribution Date until the date of theCapital Contribution. In the event a Capital Contribution is accepted as of any day other than a

Contribution Date, the General Partner shall cause appropriate adjustments to be made forpurposes of applying the accounting and allocation provisions of this Agreement. In the eventthat Additional Limited Partners are admitted as of a Contribution Date pursuant to this Section,the General Partner shall end the prior fiscal period on the last day of the prior period andcommence a new fiscal period on the date of the admission of the Additional Limited Partner andupon such admission, the Partnership Interests shall be adjusted and reallocated based upon theCapital Accounts of the respective Partners. Any securities accepted as Capital Contributionsshall be valued by the General Partner, in its sole discretion, using the valuation criteria set forthin Section 9.05 below.

Section 8.02 Escrow of Subscription Proceeds. Subscription proceeds received from aprospective Limited Partner prior to a Loan closing (or closing with respect to other types ofinvestments) will be escrowed by the General Partner pending each such closing and invested bythe General Partner in an interest-bearing account. Interest earned on such escrowed amountswill be allocated proportionately among subscribers and added to their Capital Contributionamounts. Accordingly, new investors shall not be admitted as Limited Partners and shall notparticipate in the Partnerships investment returns until the General Partner draws down theirsubscription funds (plus interest) from escrow in connection with the closing of the next Loan orother investment by the Partnership.

ARTICLE IXCapital Accounts, Capital Contributions

Net Worth Adjustments and Taxable Income and Loss

Section 9.01 Capital Accounts. A Partners Capital Account as of a particular dateshall consist of the following:

(a) an amount equal to the Partners Original Capital Contribution;


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(b) the increases, if any, to such account by reason of Additional CapitalContributions;

(c) the decreases, if any, to such account by reason of withdrawals from suchCapital Account; and

(d) the increases or decreases, if any, to such Capital Account in accordancewith the provisions of Sections 9.05 and 9.06 below.

Section 9.02 Original Capital Contributions. A Partners Original CapitalContribution shall be the amount of the cash, or in the sole discretion of the General Partner, thevalue of the securities, contributed by such party upon such Partners admission as a Partner. Ifthe General Partner consents to a Limited Partners contribution of securities to the Partnership,the Partnership may, in the General Partners discretion, assess a special charge against suchLimited Partner equal to the actual costs incurred by the Partnership in connection with acceptingsuch contributed securities, including the costs of liquidating such securities or otherwiseadjusting the Partnerships portfolio to accommodate such securities. Such special charge will

be assessed as of the date on which such securities are contributed.

Section 9.03 Additional Capital Contributions.

(a) A Partner shall be permitted, with the consent of the General Partner, tomake additional Capital Contributions in an amount deemed appropriate by the General Partnerin cash or, in the sole discretion of the General Partner, securities (Additional CapitalContributions) to the capital of the Partnership as of the Contribution Date or at any other timethat the General Partner determines in its sole and absolute discretion. Any Additional CapitalContributions received on a date other than a Contribution Date may, in the General Partnersdiscretion, be deferred and deemed made as of the beginning of such following Contribution

Date. The General Partner may, in its sole and absolute discretion, cause the Partnership to payinterest on such Additional Capital Contribution at the Interest Rate to a Limited Partner on anyAdditional Capital Contribution received by the Partnership prior to a Contribution Date anddeemed made at the beginning of such following Contribution Date, for the period from the dateof payment until the following Contribution Date. The amount of cash received plus the interestearned thereon will be the Additional Capital Contribution on the Contribution Date.Notwithstanding the foregoing, with respect to Capital Contributions received prior to aContribution Date, the General Partner may, in its sole and absolute discretion, deem suchCapital Contribution to have been made as of the beginning of the prior Contribution Date and insuch event, the Partnership, in the sole and absolute discretion of the General Partner, maycharge such Limited Partner interest on such Capital Contribution at the Interest Rate for the

period from the first day of such prior Contribution Date until the date of the CapitalContribution. In the event a Capital Contribution is accepted as of any day other than aContribution Date, the General Partner shall cause appropriate adjustments to be made forpurposes of applying the accounting and allocation provisions of this Agreement. In the eventthat Additional Limited Partners are admitted as of a Contribution Date pursuant to this Section,


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the General Partner shall end the prior period on the last day of the prior period and commence anew period on the date of the admission of the Additional Limited Partner and upon suchadmission, the Partnership Interests shall be adjusted and reallocated based upon the CapitalAccounts of the respective Partners. Any securities accepted as an Additional CapitalContribution shall be valued by the General Partner, in its sole discretion, using the valuation

criteria set forth in Section 9.05 below.

(b) In connection with an Additional Capital Contribution by an existingLimited Partner, the General Partner may (i) treat such Additional Capital Contribution as aCapital Contribution with respect to one of such Limited Partners existing Capital Accounts or(ii) establish a new Capital Account to which such Capital Contribution shall be credited andwhich shall be maintained for the benefit of such Limited Partner separately from any existingCapital Account of such Limited Partner. Such separate Capital Account will be maintained forpurposes of calculating the applicable Performance Allocation and Loss Carryforward (as suchterms are defined in Section 9.06). If a Limited Partner has more than one Capital Account, anywithdrawals or distributions by such Limited Partner shall be applied to such Capital Accounts insuch manner and proportion as the General Partner shall determine in its sole discretion.

Section 9.04 Adjustment to Capital Accounts for Withdrawals. The Capital Account ofa Partner shall be reduced by the amount of each withdrawal made by such Partner from suchPartners Capital Account as of the date of such withdrawal. Notwithstanding anything to thecontrary contained in the Agreement, in the event a Partner withdraws all of its Capital Accountfrom the Partnership, the General Partner, in its sole discretion, may make a special allocation tosaid Partner for income tax purposes of the net capital gains recognized by the Partnership, in thelast Fiscal Year in which the withdrawing Limited Partner participated in the performance of thePartnership, in such manner as will reduce the amount, if any, by which such Partners CapitalAccount exceeds its income tax basis in its interest in the Partnership before such allocation.

Section 9.05 Determination of Net Worth. The net worth of the Partnership (NetWorth) shall be determined on the accrual basis of accounting in accordance with U.S.generally accepted accounting principles consistently applied, except that organizational costsshall be amortized over a period of sixty (60) months, and further, in accordance with thefollowing procedures:

(a) A determination shall be made on the last day of each month (or othertime period, as the case may be) as to the value of all Partnership assets and as to the amount ofliabilities of the Partnership. In making such determination, securities which are listed oradmitted to trading on a national securities exchange or over-the-counter securities listed onNASDAQ or securities which are not so listed, shall be valued at their last sales price on such

date, or if no sales occurred on such date, at their bid price for a long position and the askprice for a short position; provided, that if the General Partner determines that the valuation ofany securities pursuant to foregoing methods does not fairly represent market value, the GeneralPartner may value such securities as it reasonably determines. Illiquid Securities held in a SidePocket Account are carried at their fair value as determined in good faith by the General Partner.


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Loans will generally be carried at fair value, as determined by the General Partner. For securitiesnot listed on a security exchange or quoted on an over-the-counter market, but for which thereare available quotations, such valuation will be based upon quotations obtained from marketmakers, dealers or pricing services. Securities which have no public market and all other assetsof the Partnership are considered at such value as the General Partner may reasonably determine

in consultation with such industry professionals and other third parties as the General Partnerdeems appropriate. All values assigned to securities by the General Partner in good faithpursuant to the Partnership Agreement are final and conclusive as to all Partners.

(b) There shall be deducted the Management Fee payable to the InvestmentManager, estimated expenses for accounting, legal, custodial and other administrative services(whether performed therein or to be performed thereafter) and such reserves for contingentliabilities of the Partnership, including estimated expenses, if any, in connection therewith, as theGeneral Partner shall determine.

(c) After the foregoing determinations have been made, a further calculationshall be made to determine the increase or decrease in Net Worth of the Partnership during themonth (or other time period, as the case may be) just ended. The term increase in Net Worthshall be the excess of Net Worth at the end of any month (or other time period, as the case maybe) over that of the preceding period, after adjusting for interim Capital Contributions andwithdrawals. The term decrease in Net Worth shall be the amount by which the Net Worth atthe end of the month (or other time period, as the case may be) is less than the Net Worth of thePartnership as of the end of the preceding period after making the adjustments specified above.

Section 9.06 Allocation of Increases and Decreases in Net Worth.

(a) Any net increase or decrease in Net Worth during any month (or suchother period, as the case may be) shall be allocated as of the end of such month (or such other

period, as the case may be) to the Capital Accounts of all Partners in the proportions which eachPartners Capital Account bore to the sum of the Capital Accounts of all the Partners as of thebeginning of such month (or such other period, as the case may be).

(b) The General Partner shall have reallocated by credit to its Capital Accountand debit to each Limited Partners Capital Account at the close of each Fiscal Quarter (or suchother period, as the case may be), the net income of the Partnership (including any realized andunrealized gains and losses and net of the Management Fee) attributable to each Limited Partner(net increase in Net Worth) equal in the aggregate to twenty percent (20%) of such net increasein Net Worth allocated to each Limited Partner during any Fiscal Quarter (or in the case of awithdrawing Limited Partner, the net income attributable to such Limited Partner as of his

Withdrawal Date), as determined on the accrual basis of accounting (the PerformanceAllocation), subject to recoupment of any Loss Carryforward (as defined below). The GeneralPartner may, in its sole discretion, reallocate all or any portion of its Performance Allocation tocertain Limited Partners.


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(c) With respect to a security held in a Side Pocket Account, the PerformanceAllocation shall be deferred until the close of the Fiscal Year (or other period as the case may be)in which the General Partner determines that the security should no longer be maintained in aSide Pocket Account or the security becomes marketable or its sale or disposition occurs, inwhole or in part.

(d) The General Partner shall also receive a Performance Allocation withrespect to any amounts withdrawn by a Limited Partner, whether voluntary or involuntary, andupon dissolution of the Partnership under Article XIII below.

(e) The Performance Allocation shall be in addition to the allocations of thebalance of income and profits, or losses, to the General Partner based upon its Capital Account asset forth in Section 9.06(a).

(f) The General Partner, in its sole discretion, may waive all or any portion ofthe Performance Allocation with respect to one or more Limited Partners for any period of time.The General Partner may agree with a Limited Partner to apply a different rate of Performance

Allocation or a different Loss Carryforward (as defined below) applicable to such LimitedPartner for any period of time. If the General Partner waives its Performance Allocation or theInvestment Manager waives its Management Fee, it may effectuate such waiver by directlyrebating amounts to certain Limited Partners, by appropriate accounting adjustments, or by suchother methods as it deems reasonable and fair.

(g) In any Fiscal Quarter in which a Limited Partner has a decrease in NetWorth, the Performance Allocation in the succeeding Fiscal Quarter(s) shall be calculated on thenet increase in Net Worth for such Limited Partner for each such succeeding Fiscal Quarter(s)reduced by an amount equal to the decrease in Net Worth in the preceding Fiscal Quarter(s) forsuch Limited Partner (Loss Carryforward) until the aggregate reductions equal the Loss

Carryforward. In the event, however, that a Limited Partner withdraws funds at a time in whichsuch Limited Partner has a Loss Carryforward, the amount of such Loss Carryforward at suchwithdrawal date applicable to such Limited Partner shall be reduced by a percentage equal to onehundred percent (100%) multiplied by a fraction, the numerator of which is the amount to bewithdrawn from the Limited Partners Capital Account, and the denominator of which is theamount in such Capital Account immediately prior to the withdrawal.

(h) Notwithstanding the allocation rules set forth above, if the Partnership hasa material item of income or loss in any fiscal period which relates to a matter or transactionoccurring during a prior fiscal period (e.g., if the Partnership wins a cash settlement in a case itbegan in a prior year) the item of income or loss may, at the sole discretion of the General

Partner, be shared among the Partners (including persons who ceased to be Partners) inaccordance with their Partnership Interest in the Partnership during the prior period. A personwho has ceased to be a Partner will be liable for his or her proportionate share of prior fiscalperiod items and shall pay such share on demand, but the amount to be paid shall not exceed theamount of such Partners Capital Account at the time such prior fiscal period item arose.


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Section 9.07 Allocation for Tax Purposes.

(a) Ordinary income, gains, losses and deductions of the Partnership for eachyear shall accrue to, and be borne by, the Partners in proportion to their sharing of net increasesor decreases in Net Worth, the allocations of various types of taxable income and losses likewisebeing as nearly as possible proportionate.

(b) All allocations under this Section 9.07 shall be made pursuant to theprinciples of Section 704 of the Code and in conformity with Treasury Regulations promulgatedthereunder, or the successor provisions to such Section and Regulations.

(c) All matters concerning the allocation of profits, gains and losses amongthe parties (including the taxes thereon) and accounting procedures not expressly provided for bythe terms of this Agreement shall be determined by the General Partner in its sole and absolutediscretion in consultation with the accountants for the Partnership and the General Partner isexpressly permitted to use the aggregate method or any other method of apportioning taxablegain and loss under Treasury Regulation Section 704(b). The General Partners determination of

the foregoing matters shall be final and conclusive as to all parties.

(d) Any taxes, fees or other charges that the Partnership is required towithhold under applicable law with respect to any Partner shall be withheld by the Partnership(and paid to the appropriate government authority) and shall be deducted from the CapitalAccount of such partner as of the last day of the Fiscal Year (or earlier if the Partner withdraws)with respect to which amounts are required to be withheld.


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Section 9.08 Side Pocket Accounts.

(a) The Partnership shall maintain one or more separate memorandumaccounts or special sub-accounts (each a Side Pocket Account) on its books for certainprivately placed unregistered securities or instruments that, in the opinion of the General Partner,do not have a readily ascertainable market value (such as investment in illiquid Loans whichcannot be valued) or other illiquid instruments which may be valued but are not freelytransferable (collectively, Illiquid Securities), which are designated by the General Partner(either at the time of investment or any time subsequent thereto) to be held in a Side PocketAccount. An Illiquid Security may be held in a Side Pocket Account for any period of time,subject to the sole discretion of the General Partner. The Illiquid Security position in a SidePocket Account shall be carried at fair value as determined in good faith by the General Partner.Upon a determination by the General Partner that an Illiquid Security should no longer bemaintained in a Side Pocket Account or upon any sale, distribution to Partners or otherdisposition of all or a portion of an Illiquid Security, the value of the securities held or theproceeds thereof shall be reallocated, at such time as the General Partner determines in its soleand absolute discretion, from the Side Pocket Account to the Capital Accounts of each Partnerparticipating therein pro rata in accordance with such Partners interest in the Side PocketAccount.

(b) In the event that the Partnership admits Partners to the Partnership after aninvestment in Illiquid Securities is made in a Side Pocket Account, such newly admitted Partnersshall not participate in such investments.

(c) Expenses of the Partnership will be shared by all of the Partners, includingthe General Partner. Notwithstanding the foregoing, any investment expense relatingspecifically to a Side Pocket Account shall be charged against the Capital Accounts of thePartners participating in such Side Pocket Account in proportion to their respective interests

therein.

(d) In the event the Partnership makes an investment which the GeneralPartner determines to be a follow-up investment to an Illiquid Security investment (each aFollow-Up Investment), the participating Partners will share in such Follow-Up Investment inproportion to their interest in the related Side Pocket Account; provided, however, that if aPartner shall have withdrawn from the Partnership, the General Partner will equitably adjust theinterests of the remaining participating Partners to reflect such Partners withdrawal and non-participation in the Follow-Up Investment. In its discretion, the General Partner need notdesignate as a Follow-Up Investment an additional investment in the same or similaropportunity as the investment for which a Side Pocket Account has been established. Such

investment may be designated as a new Illiquid Security investment.


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ARTICLE XRestrictions on Transfers of Partnership Interests ofLimited Partners; Admission of Substitute Limited

Partners; and Other Matters Affecting Partnership Interests

Section 10.01 Restrictions on Transfer of Partnership Interests of Limited Partners.

(a) Except for transfers by will or intestate succession or by operation of law,no Limited Partner may offer, sell, transfer, assign, exchange, hypothecate or pledge, orotherwise dispose of or encumber (hereinafter collectively, Transfer or Transferred), inwhole or in part, such Limited Partners Partnership Interest without the consent of the GeneralPartner, which may be given or withheld in the sole and absolute discretion of the GeneralPartner.

(b) No Limited Partner may Transfer, in whole or in part, such LimitedPartners Partnership Interest if such Transfer would cause the termination of the Partnership forFederal income tax purposes, and any purported Transfer that would cause the termination of the

Partnership for Federal income tax purposes shall be void ab initio. Counsel for the Partnershipshall give its written opinion to the General Partner (the expenses of which shall be borne by thetransferring Limited Partner) as to whether any contemplated Transfer would cause thetermination of the Partnership for Federal income tax purposes and the General Partner shall beentitled to rely conclusively upon such opinion in determining whether such Transfer wouldcause the termination of the Partnership and whether consent to such disposition should be given.

(c) No Transfer of any Partnership Interest of a Limited Partner may be madeunless the General Partner shall have received a written opinion of counsel satisfactory to theGeneral Partner that such proposed Transfer may be effected without:

(i)

registration of the Partnership Interest being made under theSecurities Act of 1933, as amended;

(ii) violating any applicable state securities or Blue Sky law(including investment suitability standards) or the laws of anyother jurisdiction;

(iii) the Company becoming subject to Investment Company Act of1940, as amended; or

(iv) violating the Act.

(d) In no event shall the Partnership Interest of a Limited Partner or anyportion thereof be Transferred to a minor or incompetent, unless by will or intestate succession.


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Section 10.02 Admission of Substitute Limited Partner.

(a) Subject to the provisions of this Article X, an assignee of the PartnershipInterest of a Limited Partner (which shall include any purchaser, transferee, donee or otherrecipient of any disposition of such Partnership Interest) shall be deemed admitted to thePartnership as a Limited Partner (hereinafter a Substitute Limited Partner) only upon thesatisfactory completion of the following:

(i) consent of the General Partner shall have been given, whichconsent shall be evidenced by a written consent executed by theGeneral Partner or by the execution by the General Partner of anamendment, if required, to the Certificate evidencing the admissionof such person as a Limited Partner;

(ii) the assignee shall have accepted and agreed to be bound by theterms and provisions of this Agreement (as it may be amendedfrom time to time) by executing a counterpart hereof and such

assignee shall have expressly assumed all of the obligations of theassignor Limited Partner hereunder, and shall have executed suchother documents or instruments as the General Partner may requirein its sole and absolute discretion in order to effect the admissionof such person as a Limited Partner;

(iii) an amendment to the Certificate, if required by the Act, evidencingthe admission of such person as a Limited Partner shall have beenfiled;

(iv) the assignee shall have delivered a letter containing a

representation that the assignees acquisition of the PartnershipInterest is made as a principal, for the assignees own account, forinvestment purposes only and not with a view to the resale ordistribution of such Partnership Interest, and that the assignee willnot Transfer such Partnership Interest or any fraction thereof toanyone in violation of this Agreement;

(v) if the assignee is a corporation, trust, partnership, limited liabilitycompany or other entity, the assignee shall have provided to theGeneral Partner evidence satisfactory to counsel for the Partnershipof its authority to become a Limited Partner under the terms and

provisions of this Agreement;

(vi) the assignee shall have complied with all applicable governmentalrules and regulations, if any;


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(vii) the assignee meets the suitability requirements for investing in thePartnership and the assignee completes a subscription agreementprovided by the General Partner; and

(viii) all costs and expenses incurred by the Partnership and GeneralPartner in connection with this Section 10.02 shall be paid by theperson or entity seeking to become a Substitute Limited Partner.

Section 10.03 Rights of Assignee of Partnership Interest.

(a) Subject to the provisions of Section 10.01, and except as required byoperation of law, the Partnership shall not be obligated for any purposes whatsoever to recognizethe assignment by any Limited Partner of such Limited Partners Partnership Interest until thePartnership has received notice thereof.

(b) Any person or entity who is the assignee of all or any portion of thePartnership Interest of a Limited Partner, but who has not become a Substitute Limited Partner,

and desires to make a further disposition of such Partnership Interest, shall be subject to all theprovisions of this Article X to the same extent and in the same manner as any Limited Partnerdesiring to make a disposition of such Limited Partners Partnership Interest.

Section 10.04 Effect of Bankruptcy, Death or Incompetence of a Limited Partner. Thebankruptcy of a Limited Partner or an adjudication that a Limited Partner is incompetent (whichterm shall include, but not be limited to, insanity), shall not cause the termination or dissolutionof the Partnership and the business of the Partnership shall continue. If a Limited Partnerbecomes bankrupt, the trustee or receiver of such Limited Partners estate or, if a Limited Partnerdies, such Limited Partners executor, administrator or trustee, or, if such Limited Partner isadjudicated incompetent, such Limited Partners committee, guardian or conservator, shall have

the rights of such Limited Partner for the purposes of settling or managing such LimitedPartners estate or property and such power as the bankrupt, deceased or incompetent LimitedPartner possessed to dispose of all or any part of such Limited Partners Partnership Interest andto join with any assignee in satisfying conditions precedent to the admission of the assignee as aSubstitute Limited Partner.

Section 10.05 Attachment by Creditors. If a Partnership Interest is subjected toattachment by a creditor, or is assigned for the benefit of any creditor, the Partnership Interestobtained by such creditor shall be only that of an assignee, and in no event shall such creditorhave the rights of a Substitute or Additional Limited Partner.

Section 10.06 Assignee. If a Limited Partner Transfers all or a portion of such LimitedPartners Partnership Interest, involuntarily, by operation of law or voluntarily, without theconsent required by this Article X, the transferee or assignee shall (i) be entitled only to receivethat proportion of profit and loss, and any distribution of Partnership assets, attributable to thePartnership Interest acquired by reason of such disposition from and after the effective date ofsuch disposition, and only upon written notification of same to the General Partner; and (ii) have


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no other rights as a Limited Partner unless admitted as a Substitute Limited Partner inaccordance with the terms of this Agreement.

ARTICLE XIRepresentations and Warranties

Section 11.01 Limited Partners. Each Limited Partner represents and warrants to thePartnership and to every other Partner as follows:

(a) Each Limited Partner will provide promptly, upon request by the GeneralPartner, all financial data, documents, reports, certifications or other information necessary orappropriate to enable the Partnership to apply for and obtain an exemption from the registrationprovisions of applicable law and any other information required by governmental agencieshaving jurisdiction over the Partnership.

(b) There is no misrepresentation contained in the Investor Questionnairecompleted by the Limited Partner.

(c) If such Limited Partner is a corporation, trust, partnership, limited liabilitycompany or other entity, that the officer signing on its behalf has been duly authorized to executeand deliver this Agreement and the Certificate.

(d) Each Limited Partner that is an entity that would be an investmentcompany under the Investment Company Act of 1940, as amended, but for an exclusion undereither Section 3(c)(1) or Section 3(c)(7) of such Act, has advised the General Partner of thenumber of persons that constitute beneficial owners of such Limited Partners outstandingsecurities (other than short-term paper) within the meaning of clause (A) of subsection 3(c)(1)of such Act, and will advise the General Partner promptly upon any change in that number.

Section 11.02 General Partner. The General Partner hereby represents and warrants tothe Partnership and to the Limited Partners as follows:

(a) That no commitments or obligations that would bind the Partnership havebeen entered into except as disclosed in the Memorandum, as amended from time to time, and aspermitted under this Agreement or as otherwise provided in a notice to Limited Partners.

(b) That to the best of its knowledge, no material default by it or thePartnership (or event which, with the giving of notice or the passage of time or both, wouldconstitute a default) has occurred under any agreement affecting the Partnership or its assets.

(c) That it has no actual knowledge of any claim, litigation, investigation,legal action or other proceeding in regard to liens affecting the Partnership or its assets; that tothe best of its knowledge, no such claim, litigation, investigation, legal action or otherproceeding is threatened before any court, commission, administrative body or other authority.


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ARTICLE XIISpecial Power of Attorney

Section 12.01 Execution and Consent. Each Limited Partner hereby irrevocablyconstitutes and appoints the General Partner and its respective successors (hereinafter referred toas Special Attorney) as the attorney-in-fact for such Limited Partner with power and authorityto act in the Limited Partners name and on the Limited Partners behalf to execute,acknowledge, swear to and file documents and instruments necessary or appropriate to theconduct of Partnership business, which will include, but not be limited to, the following:

(a) the Certificate and this Agreement, as well as amendments thereto asrequired by the laws of any state; and

(b) any other certificates, instruments and documents, including fictitiousname certificates, as may be required by, or may be appropriate under, the laws of any state; andany documents that may be required to effect the continuation of the Partnership, the admissionof an Additional or Substitute Limited Partner, the withdrawal of a Limited Partner, or the

dissolution and termination of the Partnership, provided such continuation, admission ordissolution and termination are in accordance with the terms of the Certificate and thisAgreement.

Section 12.02 Procedural Aspects. The power of attorney granted by each LimitedPartner to the Special Attorney:

(a) is a Special Power of Attorney, coupled with an interest, and isaccordingly irrevocable;

(b) may be exercised by the Special Attorney for each Limited Partner by

listing all of the Limited Partners executing any instrument with a single signature of suchSpecial Attorney acting as attorney-in-fact for all of them; and

(c) shall survive the delivery of an assignment by a Limited Partner of thewhole or any portion of such Limited Partners Partnership Interest; except that where theassignee has been approved in accordance with the provisions of this Agreement for admission tothe Partnership as a Substitute Limited Partner, the Power of Attorney shall survive the deliveryof such assignment for the sole purpose of enabling the Special Attorney to execute,acknowledge and file any instrument necessary to effect such substitution.

ARTICLE XIIIDissolution and Liquidation

Section 13.01 Dissolution. The Partnership shall be dissolved upon the earliest to occurof:


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(a) the withdrawal, resignation or Involuntary Withdrawal of the GeneralPartner, or any other event that results in such entity ceasing to be a General Partner, unless theremaining Limited Partners agree, within ninety (90) days after such event, to continue thePartnership with a new and qualified substitute General Partner pursuant to and in accordancewith the terms and conditions set forth in Article IV hereof;

(b) an election to dissolve the Partnership made by the General Partner, in itsdiscretion, upon thirty (30) days prior written notice to the Limited Partners; or

(c) the happening of any other event, including the entry of a decree ofjudicial dissolution under Section 17-802 of the Act, that under the law of the State of Delaware,mandatorily requires the dissolution of the Partnership.

Section 13.02 Liquidation. Upon the dissolution of the Partnership, the Liquidators,namely (i) the General Partner or, if there is no General Partner at the time, or if the principals ofthe General Partner are unable to act on its behalf, (ii) (a) the person or persons previouslydesignated in writing by the General Partner and notified to the Partnerships auditors, or (b) if

the General Partner has not made such a designation, the person or persons designated byLimited Partners owning more than fifty percent (50%) of the Partnership Interests held byLimited Partners, shall cause the cancellation of the Certificate, liquidate (or distribute) the assetsof the Partnership, pay off known liabilities, establish reserves for contingent liabilities andexpenses of liquidation, apply and distribute the balance of the proceeds of such liquidation inaccordance with Capital Account balances maintained in accordance with the provisions ofSection 9.01 hereof and the Act, and shall take all other steps necessary to wind up the affairs ofthe Partnership as promptly as practicable. To the extent reasonable, the business of thePartnership may continue to be conducted until liquidation is complete. For purposes hereof, theterm Liquidators shall also include the trustees, receivers or other persons required by law towind up the affairs of the Partnership.

Section 13.03 Notice of Dissolution. Upon the dissolution of the Partnership, theLiquidators shall promptly notify the Partners of such dissolution as well as known creditors andclaimants whose addresses appear on the Partnerships records.

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