BDC FUND II, LP

A California Limited Partnership

CONFIDENTIAL OFFERING MEMORANDUM

March 2020

PRIVATE OFFERING OF LIMITED PARTNERSHIP INTERESTS

Minimum Investment: $100,000

BDC Investment Advisors, LLC (“BDCIA”) offers limited partnership interests in BDC Fund II, LP (the
“Partnership”). The Partnership is a private non-diversified investment fund that invests primarily in the
debt and equity securities of publicly-traded business development companies. The Partnership seeks to
generate current income and capital appreciation.

Interests are being offered to those investors who meet the definition of an “accredited investor”
(“Accredited Investor”), as that term is defined in Regulation D promulgated under the Securities Act of
1933, as amended (the “Securities Act”), and other qualification requirements.

An investment in the Partnership is speculative and involves substantial risks, several of which are
described in this Offering Memorandum under the caption “Certain Risk Factors.” Prospective investors
should satisfy themselves that an investment in the Partnership is suitable for them and should carefully
examine this Offering Memorandum and the Partnership Agreement attached hereto as Exhibit A.

201130-084
Offering Memorandum No.
Anthony Ellrod
Recipient’s Name:

This Confidential Offering Memorandum is being given to the recipient solely for the purpose of his or
her evaluation of an investment in the limited 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 Offering Memorandum, agrees to return it and all related
documents to the General Partner if the recipient does not subscribe for a limited partnership interest.

GENERAL PARTNER
BDC Investment Advisors, LLC
1600 Rosecrans Avenue, 4th Fl.
Manhattan Beach, CA 90266
800.579.1651

THESE SECURITIES ARE SUBJECT TO A HIGH DEGREE OF RISK.

SEE “CERTAIN RISK FACTORS.”
 NOTICE TO ALL INVESTORS

THE DISTRIBUTION OF THIS OFFERING MEMORANDUM AND THE OFFER AND SALE OF
THE INTERESTS IN CERTAIN JURISDICTIONS MAY BE RESTRICTED BY LAW. THIS
OFFERING MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR WILL THERE BE ANY SALE OF INTERESTS IN
ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL.

THE OFFERING OF LIMITED PARTNERSHIP INTERESTS (“INTERESTS”) MADE HEREBY HAS

NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), THE SECURITIES LAWS OF ANY STATE OR THE SECURITIES LAWS OF
ANY OTHER JURISDICTION, NOR IS SUCH REGISTRATION CONTEMPLATED. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE INTERESTS WILL BE OFFERED AND SOLD UNDER THE EXEMPTION PROVIDED BY
SECTION 4(2) OF THE SECURITIES ACT AND REGULATION D PROMULGATED
THEREUNDER AND SIMILAR EXEMPTIONS IN THE LAWS OF THE STATES AND
JURISDICTIONS WHERE THE OFFERING OF THE INTERESTS WILL BE MADE. THEREFORE,
EACH SUBSCRIBER WILL BE REQUIRED TO AGREE THAT THE SUBSCRIBER, AND ANY
ACCOUNT FOR WHICH THE SUBSCRIBER IS ACQUIRING THE INTERESTS, (I) IS ACQUIRING
THE INTERESTS FOR THE SUBSCRIBER’S OWN ACCOUNT, FOR INVESTMENT AND NOT
FOR SALE IN CONNECTION WITH ANY DISTRIBUTION THEREOF; (II) WAS NOT FORMED
SOLELY FOR THE PURPOSE OF INVESTING IN THE INTERESTS; (III) SHALL NOT HOLD THE
INTERESTS FOR THE BENEFIT OF ANY OTHER PERSON; AND (IV) SHALL NOT SELL
PARTICIPATION INTERESTS IN THE INTERESTS OR ENTER INTO ANY OTHER
ARRANGEMENT PURSUANT TO WHICH ANY OTHER PERSON SHALL BE ENTITLED TO A
BENEFICIAL INTEREST IN THE DISTRIBUTIONS ON THE INTERESTS (IF ANY). THE
INTERESTS MAY BE OFFERED OR SOLD ONLY TO PERSONS WHO ARE “ACCREDITED
INVESTORS” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT AND “QUALIFIED
CLIENTS” AS DEFINED IN RULE 205-3 UNDER THE INVESTMENT ADVISERS ACT OF
1940, AS AMENDED (“ADVISERS ACT”).

THE PARTNERSHIP WILL NOT BE REGISTERED AS AN INVESTMENT COMPANY UNDER

THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY
ACT”). THEREFORE, EACH SUBSCRIBER WILL BE REQUIRED TO REPRESENT THAT, (I)
EXCEPT WHERE SPECIFICALLY APPROVED BY THE GENERAL PARTNER, IT IS ONE
BENEFICIAL OWNER FOR PURPOSES OF SECTION 3(c)(1) OF THE INVESTMENT COMPANY
ACT AND (II) IS NOT AN INVESTMENT COMPANY, AS DEFINED IN THE INVESTMENT
COMPANY ACT, OR AN ENTITY THAT WOULD BE AN INVESTMENT COMPANY BUT FOR
THE EXEMPTION FROM REGISTRATION AS AN INVESTMENT COMPANY PROVIDED FOR IN
SECTION 3(c)(1) OR SECTION 3(c)(7) OF SUCH ACT.

THE INTERESTS ARE SUBJECT TO SUBSTANTIAL RESTRICTIONS ON TRANSFERABILITY

AND RESALE CONTAINED IN THE AGREEMENT, INCLUDING THE FOLLOWING: INTERESTS
MAY NOT BE SOLD, ASSIGNED, PARTICIPATED, PLEDGED OR OTHERWISE TRANSFERRED
WITHOUT THE PRIOR WRITTEN CONSENT OF THE PARTNERSHIP, WHICH MAY BE GIVEN
OR WITHHELD IN ITS SOLE DISCRETION.
THERE IS NO MARKET FOR THE INTERESTS, AND NONE IS EXPECTED TO DEVELOP.
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED ABOVE, INTERESTS ARE NOT
REDEEMABLE AT THE OPTION OF THE HOLDER, AND SUBSCRIBERS WILL NOT HAVE THE
RIGHT TO WITHDRAW THEIR CAPITAL.

SUBSCRIBERS SHOULD PAY PARTICULAR ATTENTION TO THE INFORMATION UNDER

THE CAPTION “CERTAIN RISK FACTORS” IN THIS OFFERING MEMORANDUM.
INVESTMENT IN THE INTERESTS IS SUITABLE ONLY FOR SOPHISTICATED
INVESTORS AND REQUIRES THE FINANCIAL ABILITY AND WILLINGNESS TO ACCEPT
THE HIGH RISKS AND LACK OF LIQUIDITY INHERENT IN AN INVESTMENT IN A
PRIVATE COMPANY. SUBSCRIBERS MUST BE PREPARED TO BEAR SUCH RISKS FOR
AN EXTENDED PERIOD OF TIME AND TO LOSE THEIR ENTIRE INVESTMENT. NO
ASSURANCE CAN BE GIVEN THAT THE PARTNERSHIP’S INVESTMENT OBJECTIVES
WILL BE ACHIEVED OR THAT SUBSCRIBERS WILL RECEIVE A RETURN OF THEIR
CAPITAL. INVESTMENT RESULTS MAY VARY SUBSTANTIALLY ON A DAILY, WEEKLY,
QUARTERLY OR ANNUAL BASIS.

IN MAKING AN INVESTMENT DECISION, SUBSCRIBERS MUST RELY ON THEIR OWN

EXAMINATION OF THE PARTNERSHIP AND THE TERMS OF THE OFFERING, INCLUDING
THE MERITS AND RISKS INVOLVED. SUBSCRIBERS SHOULD NOT CONSTRUE THE
CONTENTS OF THIS OFFERING MEMORANDUM AS LEGAL, TAX, INVESTMENT OR OTHER
ADVICE. EACH SUBSCRIBER SHOULD MAKE HIS OWN INQUIRIES AND CONSULT HIS OWN
ADVISORS AS TO THE PARTNERSHIP AND THIS OFFERING AND AS TO LEGAL, TAX AND
OTHER MATTERS CONCERNING AN INVESTMENT IN THE PARTNERSHIP.

THIS OFFERING MEMORANDUM CONTAINS A SUMMARY OF THE AGREEMENT OF

LIMITED PARTNERSHIP AND OF OTHER DOCUMENTS REFERRED TO HEREIN. THE
INFORMATION SET FORTH IN THIS OFFERING MEMORANDUM DOES NOT PURPORT TO BE
COMPLETE, AND IT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE PARTNERSHIP
AGREEMENT AND THE OTHER DOCUMENTS, COPIES OF WHICH WILL BE MADE
AVAILABLE UPON REQUEST AND WHICH SHOULD BE REVIEWED PRIOR TO SUBSCRIBING
FOR INTERESTS.

NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THIS OFFERING TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN AS CONTAINED IN THIS
OFFERING MEMORANDUM, AND ANY REPRESENTATION OR INFORMATION NOT
CONTAINED IN THIS OFFERING MEMORANDUM MUST NOT BE RELIED. STATEMENTS IN
THIS OFFERING MEMORANDUM ARE MADE AS OF ITS DATE, UNLESS STATED
OTHERWISE, AND NEITHER THE DELIVERY OF THIS OFFERING MEMORANDUM AT ANY
TIME, NOR ANY SALE HEREUNDER, SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO SUCH DATE. THE GENERAL PARTNER RESERVES THE RIGHT TO
MODIFY ANY OF THE TERMS OF THE OFFERING AND THE INTERESTS DESCRIBED
HEREIN.

Subscribers having inquiries with respect to the Partnership or the Interests may direct such inquiries to
the General Partner at the address or telephone number set forth on the cover page.

iii
NOTICE TO RESIDENTS OF ALL STATES

THE INTERESTS OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATES AND
ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE INTERESTS ARE
SUBJECT TO RESTRICTION ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE INTERESTS HAVE NOT
BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION,
ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE
ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF
THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING MEMORANDUM.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
 TABLE OF CONTENTS

SUMMARY OF THE OFFERING.............................................................................................................1

INVESTMENT OBJECTIVE AND POLICIES..........................................................................................5
MANAGEMENT........................................................................................................................................7
The General Partner and the Partnership.................................................................................................7
Other Activities.......................................................................................................................................9
Fiduciary Duties of the General Partner; Indemnification and Exculpation............................................9
Prime Brokerage, Custody of Partnership Securities and Cash.............................................................10
COMPENSATION, EXPENSES AND THE PERFORMANCE ALLOCATION....................................10
Management Fee...................................................................................................................................10
Expenses...............................................................................................................................................10
Overhead...............................................................................................................................................11
Commissions: Finders’ Fees.................................................................................................................11
Performance Allocation.........................................................................................................................11
PLAN OF DISTRIBUTION......................................................................................................................12
Use of Proceeds.....................................................................................................................................12
The Offering..........................................................................................................................................12
Subscription Instructions.......................................................................................................................12
Anti-Money Laundering........................................................................................................................13
WHO MAY INVEST: SUITABILITY......................................................................................................13
WITHDRAWALS, TRANSFERABILITY AND DISTRIBUTIONS.......................................................15
ALLOCATION OF PROFITS AND LOSSES; INCOME TAX ALLOCATIONS...................................16
CERTAIN RISK FACTORS.....................................................................................................................17
Market Risks.........................................................................................................................................17
Risks Related to the Partnership’s Investment Strategy........................................................................18
Risks Related to the General Partner.....................................................................................................19
Additional Risk Factors.........................................................................................................................20
Regulatory Considerations....................................................................................................................22
POTENTIAL CONFLICTS OF INTEREST.............................................................................................24
BROKERAGE AND TRANSACTIONAL PRACTICES.........................................................................25
CERTAIN TAX CONSIDERATIONS.....................................................................................................26
Characterization of the Partnership.......................................................................................................26
Taxation of the Partnership and Its Partners..........................................................................................27
Taxation of Benefit Plans and Other Tax-Exempt Entities....................................................................31
Administrative Matters..........................................................................................................................31
ERISA CONSIDERATIONS FOR FIDUCIARIES OF EMPLOYEE BENEFIT PLANS........................32

GLOSSARY
EXHIBIT A: Agreement of Limited Partnership (Full Text)
EXHIBIT B: Part 2 of Uniform Application for Investment Adviser Registration (Form ADV—Part 2
Brochure)
ANNEX I: Subscription Documents
 SUMMARY OF THE OFFERING

The following is only a summary of the information contained in this Confidential Offering Memorandum
(“Offering Memorandum”) and is qualified in its entirety by the remainder of this Offering Memorandum,
including the Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”)
and the other exhibits to this Offering Memorandum. Capitalized terms not defined herein have the
meanings given to them in the Partnership Agreement. Prospective subscribers should consult their own
advisers in order to understand fully the consequences of an investment in the Partnership.

The General Partner The general partner of BDC Fund II, LP (the “Partnership”) is BDC
See “Management” Investment Advisors, LLC (“BDCIA” or the “General Partner”), a
limited liability company controlled by Nicholas Marshi and William
Hansen. The General Partner is registered as an investment adviser in
the State of California. It is responsible for all management decisions on
behalf of the Partnership and has discretionary trading authority over
the Partnership’s assets.

Investment Objectives The Partnership is a private non-diversified investment fund that invests
See “Investment Objective primarily in the debt and equity securities of publicly-traded business
and Policies” development companies (“BDCs”). The Partnership’s principal
investment objective is to generate current income and capital
appreciation, while seeking to minimize price volatility. By the
appropriate use of leverage, the Fund seeks to generate above average
returns over the long term.

BDCs are publicly-registered, closed-end investment companies with

shares that trade on a stock exchange. In addition, many BDCs have
issued publicly-traded fixed income securities. Unlike traditional equity
funds, BDCs operate for an indefinite period and continually recycle
their contributed capital. Historically, BDCs have made debt and equity
investments in small and middle-market private companies, usually as
part of a leveraged buy-out or recapitalization. Generally, BDCs elect to
be treated as regulated investment companies (“RIC”) for tax purposes
and thereby avoid corporate level taxation on ordinary income and
capital gains distributed to their stockholders as dividends. As an RIC, a
BDC is required to distribute at least ninety percent of its taxable
ordinary income and realized net short-term capital gains in excess of
realized net long- term capital losses and to meet specified source-of-
income and asset diversification requirements. Distributions out of
capital gains to BDC shareholders are generally eligible for favorable
capital gain tax treatment.

There can be no assurance that the investment objectives of the

Partnership will be achieved.
The Offering The Partnership is offering its limited partnership interests (“Interests”)
See “Who May Invest: to a limited number of qualified subscribers–generally individuals with
Suitability.” a net worth of at least $2.1 million (excluding primary residence) and
entities with assets of at least $5 million. Interests will be offered on a
continuous basis until suspended or terminated by the General Partner.

1
The minimum
initial investment
is $100,000. The
General Partner
may, in its
Liquidity
See “Withdrawals,
Transferability and
Distributions” and “Certain
Risk Factors”
Management Fees,
Expenses and Overhead
See “Compensation,
Expenses and the
Performance Allocation,”
“Brokerage and
Transactional Practices”
and “Potential Conflicts of
Interest”
discretion, waive or change the investment minimum. There is no
minimum or maximum amount of Interests to be sold. Limited Partners
are admitted on the first day of each month in the General Partner’s
discretion. Full payment for Interests must be made at the time of
subscription.
No market for the Interests is expected to develop. Subject to certain
conditions, a Limited Partner may withdraw all or part of its capital
account as of the last day of any calendar month on at least ten (10)
calendar days written notice to the General Partner. Without the consent
of the General Partner, partial withdrawals may not be made if they
would reduce a Limited Partner’s capital account balance below
$100,000 or made in amounts of less than $50,000.
The General Partner may waive the withdrawal restrictions for any
Limited Partner. However, the General Partner also may suspend the
Limited Partners’ withdrawal rights under certain circumstances. For
example, withdrawals might be suspended when market conditions are
such that any withdrawal cannot, in the General Partner’s sole
judgment, be effected without adverse consequences to the Partnership
or when one withdrawal, in combination with others, may be reasonably
expected to have the same effect.
Management Fee. The Partnership pays a Management Fee to the
General Partner of approximately 0.1667% per month (2.0% per
annum) of the balance in each Limited Partner’s capital account. The
Management Fee is calculated and payable as to each Limited Partner in
advance as of the beginning of each month based on the Limited
Partner’s capital account at the beginning of the month. Limited
Partners who are permitted by the General Partner to contribute capital
on a date other than the first day of a month or who are permitted to
withdraw capital on a date other than the last day of a month are
charged a prorated Management Fee. The General Partner may, in its
sole discretion, waive the Management Fee, in whole or in part, with
respect to any or all Limited Partners.
Expenses. The Partnership will pay or reimburse the General Partner
for certain costs and expenses incurred by or on behalf of the
Partnership, or for the Partnership’s benefit, including without
limitation:
Organizational and Offering Expenses. Organizational
expenses include, but are not limited to, legal, accounting and
government filing fees. Offering expenses include, without limitation,
2
 marketing expenses, printing of this Offering Memorandum and
exhibits thereto and the admission of Limited Partners.

Operating Expenses. Operating expenses include, without

limitation, (A) the Partnership’s ongoing accounting, auditing,
bookkeeping, tax preparation, administration, legal, consulting and
other professional fees and expenses; (B) all costs of communications
with Limited Partners; (C) investment and research-related expenses
including all commissions, bid-ask spreads, mark-ups, interest on
margin borrowing, costs relating to short sales, transfer taxes, custodian
fees, etc.; (D) all costs of protecting or preserving any investment held
by the Partnership; (E) losses, damages, charges, costs or expenses
arising from the Partnership’s indemnification obligations under the
Partnership Agreement and other contracts to which the Partnership
may become a party and (F) costs associated with dissolution, winding
up, liquidation or termination of the Partnership.

Overhead. The General Partner will pay, and shall not be reimbursed
by the Partnership for, its own overhead expenses. These include,
without limitation, rent, employee salaries and benefits and insurance.
All or a portion of the costs and expenses of the Partnership and the
General Partner may be paid for by securities brokerage firms that
execute trades for the Partnership or related accounts.

Performance Allocation At the end of each fiscal year (or a shorter period in certain
See “Compensation, circumstances), net profits and net losses for the year are allocated
Expenses and the among the Partners, and the General Partner receives a “Performance
Performance Allocation” Allocation” as to each Limited Partner equal to twenty percent (20%) of
the net profits allocated to that Limited Partner, but only to the extent
those net profits exceed net losses previously allocated to the Limited
Partner that have not been recovered. Solely for purposes of computing
the Performance Allocation, net profits and net losses include
unrealized gains and losses. This limitation prevents the General Partner
from receiving a Performance Allocation as to profits that simply
restore previous losses. The General Partner is entitled to receive a
Performance Allocation as to a Limited Partner only to the extent the
Limited Partner’s cumulative share of profits through the current period
exceeds the highest level of profits allocated to it for all prior periods. If
a Limited Partner withdraws or is distributed capital from the
Partnership, that Limited Partner’s Unrecouped Losses are reduced
proportionately based on the amount withdrawn or distributed.

The Performance Allocation is debited from the capital account of each

Limited Partner as of the end of each fiscal year (or upon the date of a
permitted or required withdrawal) and allocated to the capital account of
the General Partner in accordance with the terms of the Partnership
Agreement. The General Partner may, in its sole discretion, reduce or
waive the Performance Allocation with respect to any or all Limited
Partners.
Allocations and
Distributions
 Except as otherwise set forth herein and in the Partnership Agreement,
net profits and net losses (including unrealized as well as realized gains
and losses) are allocated to all Partners, including the General Partner,
in proportion to each Partner’s capital account as of the beginning of
each accounting period.

Limited Partners may elect to receive monthly or quarterly distributions

from dividend and interest payments received by the Partnership.
Limited Partners may opt out of monthly or quarterly distributions to
reinvest substantially all income and gain. Frequency of distributions
may be modified upon written notice to the General Partner at least ten
Indemnification and (10) days before the end of a month or quarter.
Exculpation
See “Management” Distributions, including withdrawals, generally are made in cash but
may be partly in cash or in kind, in the General Partner’s sole
discretion.
Subject to laws governing rights of indemnification under the federal
securities laws and otherwise, the Partnership Agreement provides for
exculpation and indemnification of the General Partner in connection
with any claim, damage or loss incurred by the General Partner by
virtue of its actions and inactions in connection with the Partnership’s
activities provided that the General Partner’s conduct satisfies certain
criteria set forth in the Partnership Agreement.

Risk Factors An investment in the Partnership involves substantial risks and

See “Certain Risk Factors” complex tax issues.
and “Certain Tax
Considerations”

Reports Each Partner will receive audited financial statements annually and
unaudited monthly summaries of the Partnership’s performance.
Partners will also annually receive copies of Schedule K-1 to the
Partnership’s tax return.

Prime Broker M.S. Howells & Co.

Custodian Pershing, LLC

Auditor Weaver & Tidwell, LLC

Administrator Yulish and Associates

Legal Counsel for the Ragghianti Freitas LLP
General Partner
 INVESTMENT OBJECTIVE AND POLICIES

Objective and Strategy

The Partnership’s investment objective is to generate current income and capital appreciation
primarily from investments in both the publicly-traded debt and equity securities of Business
Development Companies (“BDCs”). Furthermore, the Partnership seeks to prudently utilize varying
amounts of leverage
– in the form of margin borrowing – to achieve above average returns over the long turn

Background of BDCs

BDCs are publicly-registered, closed-end investment companies with shares that trade on a stock
exchange. A BDC is a unique kind of investment company, established by Congress in 1980 (see “History
of BDCs” below) to primarily focus on investing in or lending to private companies and making
managerial assistance available to them. A BDC provides its stockholders with the ability to retain the
liquidity of a publicly traded stock, while sharing in the possible benefits of investing in emerging-growth
or expansion- stage privately owned companies involved in leveraged buy-outs or recapitalizations.
Moreover, BDC investments are typically tax efficient because virtually all the BDCs elect to be treated
as regulated investment companies (“RIC”) for tax purposes and thereby avoid corporate level taxation on
ordinary income and capital gains distributed to their stockholders as dividends. As a RIC, a BDC is
required to distribute at least ninety percent of its taxable ordinary income and realized net short-term
capital gains in excess of realized net long-term capital losses on an annual basis.

BDCs are permitted to use indebtedness, but are restricted to amounts of leverage substantially
lower than most other lenders such as banks. BDCs are required to maintain investment asset coverage at
least equal to 150% of debt outstanding. The result is that BDCs debt to equity ratio is targeted not to
exceed 2:1. By contrast, other commercial lenders debt to equity ratios frequently exceed 10:1.

History of BDCs

In the 1970s, a perceived crisis in the capital markets led Congress to enact the Small Business
Investment Incentive Act of 1980 (“1980 Amendments”). The genesis of the crisis stemmed from the
limitation set forth in the private investment company exemption contained in Section 3(c)(1) of the
Investment Company Act. In essence, private equity and venture capital firms believed that their capacity
to provide financing to small, growing businesses was being stymied by their inability to raise equity
capital due to the limitation in the Investment Company Act. These firms urged Congress to ameliorate
the situation before the spigot of capital to small, growing businesses was closed shut. Congress
responded to such concerns by enacting the 1980 Amendments. The 1980 Amendments amended the
Investment Company Act and the Investment Advisers Act of 1940 to add a new category of closed-end
investment company: the "Business Development Company" or BDC.

Investment Process

The General Partner believes the BDC market is undergoing a historic expansion, continuing a
process that has been underway for the past 15 years. Since the BDC status was created by the 1980
Amendment, the number of companies making the election has increased from a handful to 87 at June 30,
2019. BDCs range in size from micro-cap stocks to large cap; with total assets under management of $108
billion, according to Advantage Data. The number of BDCs and the assets under management have grown
as banks have pulled back from leveraged lending. That shift in focus by the banks – and the resulting
impetus to BDCs - began around 2003 and accelerated after the Great Recession and shows no sign of
abating.

In selecting Partnership investments, the General Partner targets BDCs that have strong historical
credit performance, experienced management teams, diversified portfolios of investments and are paying
a substantial and sustainable current dividend. Furthermore, the Partnership will only invest in companies
whose stock and bond trading volume are sufficient to ensure the ability to liquidate on short notice any
portfolio position, should this be deemed necessary. Furthermore, the General Partner seeks to maintain
an appropriate mix of more volatile and higher paying common stocks and less volatile but lower yielding
fixed income securities in the Fund's portfolio. The relative proportion of BDC equity and debt securities
is not fixed, and will vary depending on the General Partner's views as to market conditions

There are currently 60 BDCs trading on U.S. stock exchanges. Of those companies, the General
Partner believes that 46 meet the Partnership’s minimum criteria for business performance, dividend
payout, market capitalization and trading volume. Adding both available common stock and fixed income
securities, the Partnership has nearly 100 different publicly traded investment opportunities to choose
from. Within 5 years we expect the total number of securities available for investment by the Partnership
will increase by 25%-50%.

Besides identifying new investments, the General Partner’s management team is involved in the
ongoing monitoring of all the prospective BDC companies. The General Partner believes in a "research
driven" approach to investment, which includes maintaining comprehensive coverage of the BDC sector
and all the potential players involved. On a daily basis the General Partner tracks every development at
every BDC in its universe, collecting, reading and analyzing every available press release, SEC filing,
company presentation and news report available. The General Partner believes that by its pervasive
review of public information, the Partnership is able to both identify buying opportunities and detect
problems with existing portfolio companies as early as possible. If portfolio investments exceed target
valuations, the Partnership may sell to “lock-in” gains, where possible. Also, the Partnership will seek to
dispose of under- performing investments, which no longer meet initial underwriting and minimum return
expectations

Ongoing monitoring of the BDC industry typically includes:

 Reviewing each BDCs' financial statements, including quarterly and annual SEC filings, debt
indentures, press releases and public presentations;

 Tracking, where possible, the performance of the material investments in each BDC's portfolio;

 Participating in quarterly conference calls or webcasts where company management reviews

business performance; and

 Meeting with BDC managers, as well as other industry professionals in private equity,
banking and investment banking to determine company and industry trends.

Use of Leverage

The Partnership uses leverage in the form of low cost margin borrowing to make additional
investments and to increase returns to its Partners. Given the secured nature of the collateral securing the
borrowing and the substantial amount of assets involved, the Partnership is able to borrow on very
favorable terms, typically at a very modest premium to the Fed Funds rate. The Partnership may borrow
up to two times the Partnership’s invested capital to boost the size of the investment portfolio and
generate additional income. However, the amount of leverage that the Partnership employs at any time
depends on the General
Partner’s assessment of the market and other factors at the time of any proposed borrowing. The
Partnership may and does reduce leverage if the General Partner believes the risks associated with the
additional borrowing exceed the benefits to the Partnership.

Other Matters

The General Partner’s investment approach is a process laden with assumptions and will be only
as strong and successful as the validity of the assumptions. The investment objectives and methods
summarized above represent the General Partner’s current intentions. Notwithstanding these investment
objectives and general policies, the Partnership Agreement imposes no limits on the types of securities in
which the Partnership may take positions, the types of positions it may take, the concentration of its
investments, or the amount of leverage the Partnership may employ, including the extent of the
Partnership’s margin trading and short positions. The General Partner has broad discretion to employ any
securities trading or investment techniques, whether or not contemplated by the expected investment
strategies and criteria described above. Depending on conditions and trends in securities markets and the
economy generally, the General Partner may pursue any other objectives or employ other techniques that
it considers appropriate and in the best interest of the Partnership. The General Partner cannot assure
investors that the Partnership’s will achieve its investment objectives. Further, many of the investment
techniques and activities described above are high risk activities that could result in substantial losses
under certain circumstances

This Offering Memorandum includes forward-looking statements. Forward-looking statements

may be identified by the presence in such statements of the words “may,” “will,” “expect,” “intend,”
“anticipate,” “believe,” “attempt,” “seek,” or “project” or the negatives, derivatives, and variations of
such words or comparable terminology. Neither the General Partner nor the Partnership undertakes any
obligation to publicly update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-
looking events discussed in this Offering Memorandum may not occur.

In addition, this Offering Memorandum includes statements of current application. The General
Partner has based these statements on the current implementation of the investment strategy described
herein. Neither the General Partner nor the Partnership undertakes any obligation to publicly update or
revise such statements, whether as a result of new information, future events or otherwise. In light of
these risks, uncertainties and assumptions, the current situation may change and such statements should
be viewed as forward-looking statements subject to the same risks, uncertainties and assumptions
described above.

INVESTMENTS IN THE INTERESTS DESCRIBED HEREIN INVOLVE SUBSTANTIAL

RISKS. THIS SUMMARY DOES NOT PURPORT TO BE A COMPLETE LIST OF ALL SUCH
RISKS. THERE CAN BE NO ASSURANCE THAT THE INVESTMENT STRATEGIES OF THE
PARTNERSHIP WILL BE ACHIEVED.

MANAGEMENT

The General Partner and the Partnership

The Partnership is a California limited partnership. Its general partner is BDC Investment
Advisors, LLC, a California limited liability company (formerly named Southland Capital Management,
LLC). The General Partner is registered as an investment adviser in the State of California. Its main
business address and telephone number are 1600 Rosecrans Ave., 4th Floor, Manhattan Beach, CA 90266;
(800) 579-1651.
 The General Partner administers the Partnership’s day-to-day affairs and is solely responsible for
the Partnership’s investing activities. As managers of the General Partner, Nicholas Marshi and William
Hansen control the management and operations of the Partnership. The Partnership’s performance
depends, to a great extent, on the ability and experience of Messrs. Marshi and Hansen in making
investment decisions.

No Limited Partners, individually or collectively, may take part in the management of the
business of the Partnership except in the very limited circumstances set forth in the Partnership
Agreement. Accordingly, no Limited Partner shall be subject to assessment or, except as set forth in the
Partnership Agreement, be personally liable for any of the debts or liabilities of the Partnership or any of
the losses thereof in excess of such Limited Partner’s capital contributions.

The General Partner’s management team has substantial experience in the leveraged buy-out
industry as lender, investor, sponsor and investment banker. Its two principals have a combined 40 years
of experience in different aspects of middle market acquisition financing of private companies. Both
principals have managed investments in private companies through several credit cycles, including both
growth and recessionary environments and are familiar with the valuation methodologies utilized in the
buy-out industry, due diligence standards, and legal and financial structures commonly utilized by buyers.
Moreover, they each have a multitude of contacts among sponsors, lenders, investment bankers,
accountants, lawyers and executives involved in the middle market private company buy-out industry.

Nicholas Marshi

Mr. Marshi joined Citibank in 1982 in their management training program. Subsequently, he was
posted in various capacities to Dubai, Puerto Rico and London. From 1985, Mr. Marshi was a senior
investment banker in the North American Department of Kleinwort Benson, a British merchant bank.
From 1987 to 1990, Mr. Marshi was in charge of the Los Angeles office of Kleinwort Benson. He was
responsible for a $300 million loan portfolio to middle market and large-cap U.S. companies. Mr. Marshi
was also a founding member of Kleinwort Benson's Mezzanine Fund, which invested subordinated debt
and equity in mid-size companies around the country. Mr. Marshi originated that fund’s first investment,
and was involved in numerous other transactions. Mr. Marshi was also responsible for investing the
bank's own capital directly in leveraged buy-outs and in equity funds.

In 1990, Mr. Marshi left Kleinwort Benson and established (with a partner) Kensington Capital
Corporation which acquired a number of middle market private companies in Southern California (and an
add-on acquisition in Canada) between 1992 and 1995. In 1999, Mr. Marshi and Mr. Hansen established
Southland Capital Corporation, which acquired three private companies in leveraged buy-outs, also all
situated in Southern California. At both Kensington Capital and Southland Capital Corporation, Mr.
Marshi was involved in the origination, negotiation and closing of the acquisitions, and served as the
Chairman or Managing Member of each entity, and was responsible for raising or refinancing all debt and
equity for the portfolio companies, and for the disposition of the investments.

Since 2009, Mr. Marshi has served as the Chief Investment Officer of the Partnership. He is
responsible for undertaking research on every BDC in the Partnership's universe, and the daily monitoring
of new developments, financial performance and managerial changes. In association with Mr. Hansen,
Mr. Marshi is also responsible for deciding which investments to purchase or sell and the amount of
leverage to use. Mr. Marshi is also the publisher and editor-in-chief of The BDC Reporter
(www.bdcreporter.com), the leading financial publication about the BDC sector with several thousand
subscribers. He is regularly cited in financial publications, including Bloomberg, Reuters, S&P Market
Intelligence.

William Hansen
 Mr. Hansen began his career with Dahlke & Co., a broker dealer on Wall St. in NYC in the
municipal bond-trading department in 1978. The firm was acquired in 1986 by Mercantile House
Holdings Limited. In 1988, Mr. Hansen left Mercantile to work closely with WestSphere Capital,
developing many contacts in the LBO community. In 1990 Mr. Hansen established Hansen Capital and
relocated from NYC to Los Angeles.

Hansen Capital was principally involved in identifying potential M&A prospects for would-be
buyers. Mr. Hansen was retained by a number of private equity firms around the country (including
WestSphere Capital, McCowen De Leeuw & Company, Seidler Equity Partners and Prometheus Capital)
to source buyout transactions. Primary responsibilities included identifying acquisitions on the West
Coast, negotiating the preliminary purchase price, arranging debt financing and raising equity capital
from investors. Mr. Hansen was involved in initiating and closing several middle market buy-outs in
association with his partner firms.

Other Activities

Neither the General Partner, Mr. Marshi nor Mr. Hansen is required to manage the Partnership as
its sole and exclusive function. Mr. Marshi or Mr. Hansen may engage in other business activities and the
General Partner may, and currently does, serve as the adviser to other funds or separate accounts, some of
which may have investment objectives that are the same or similar to the Partnership’s. The advice given
to other clients and accounts may differ from advice given to, or securities recommended or bought for,
the Partnership, even though their investment objectives may be the same or similar.

Fiduciary Duties of the General Partner; Indemnification and Exculpation

A general partner is accountable to a limited partnership as a fiduciary and consequently must

exercise good faith and integrity in handling partnership affairs, in addition to any obligations the general
partner may assume under its partnership agreement. Under the Partnership Agreement, the General
Partner (including its affiliates and any person acting on their behalf) will be indemnified by the
Partnership from and against any cost, liability or loss incurred or suffered by the General Partner or such
person solely by virtue of the General Partner or such person acting as or on behalf of the General Partner
for the Partnership in connection with the Partnership’s activities. In addition, the General Partner and
such persons will not be liable to the Partnership or any Partner for any cost, claim, liability, damage, loss
or expense suffered in connection with the Partnership’s activities, including, without limitation, any (a)
tax liability asserted against any Partner by any federal, state or local authority as a result of any position
taken by the Partnership or any Partner or (b) failure to obtain the lowest brokerage commission rates,
failure to combine or arrange orders so as to obtain the lowest brokerage commission rates with respect to
any transaction on behalf of the Partnership, or failure to recapture any brokerage commissions for the
benefit of the Partnership. Nevertheless, if such cost, claim, liability, damage, loss or expense arises out of
any action or inaction of the General Partner, these provisions will be available only if the General Partner
believed at the time of such action or inaction, in good faith, that such course of conduct was in the
interests of the Partnership, and such course of conduct did not constitute a breach by of the General
Partner’s fiduciary duty to the Partnership. In addition, the indemnification is available only as and to the
extent that it is not prohibited by applicable law governing rights of indemnification. Recoveries under
these provisions may be had only out of the assets of the Partnership and not from the Limited Partners.

The Partnership Agreement also provides that the Partnership will advance funds for legal
expenses and other costs as incurred by the General Partner and such persons in connection with any
claim or lawsuit.

Limited Partners may have a more limited right of action than they would ordinarily have as a
result of these limitations in the Partnership Agreement. To the extent that such exculpatory provisions
purport to
include indemnification for liabilities arising under the Securities Act, in the opinion of the SEC this
indemnification is contrary to public policy and therefore unenforceable.

The foregoing only briefly summarizes existing statutes, rules and decisions. Limited Partners
who believe that a breach of fiduciary duty by the General Partner has occurred should consult their own
counsel.

Prime Brokerage, Custody of Partnership Securities and Cash

The General Partner has retained M.S. Howells & Co. (“Prime Broker”) to serve as the
Partnership’s prime broker. The Prime Broker clears through Pershing, LLC (“Custodian”), which acts as
the Partnership’s custodian. The services that the Prime Broker and/or the Custodian provide as prime
broker and custodian may include custody, margin financing, clearing, settlement and stock borrowing in
accordance with the terms of the prime brokerage and custody agreements entered into with the
Partnership. The Prime Broker and/or the Custodian also provide the General Partner with other services,
which may include technology services (such as Bloomberg connections), capital introduction services,
portfolio reporting and access to electronic communications networks. The General Partner expects to use
a substantial portion of these services for research and trading on behalf of the Partnership and other
accounts, but some may be used for administrative purposes, which would not be within the safe harbor
of section 28(e) of the Securities Exchange Act of 1934, as amended. If the General Partner did not
receive these services in exchange for brokerage, custody and clearance fees and other charges from the
Prime Broker and the Custodian, the General Partner would be required to pay directly for all or some
portion of them. The General Partner expects to direct a significant portion of the Partnership’s securities
trades to the Prime Broker and the Custodian but is not required to direct a particular number or
percentage of trades to them or to continue to use them as the Partnership’s prime broker and custodian.
However, it has an incentive to do so based on their prior and continued services.

The Partnership’s obligations to the Prime Broker, the Custodian and their respective affiliates
will be secured by way of a first priority perfected security interest over all of the Partnership’s assets
held in custody. The Prime Broker, The Custodian and their respective affiliates may transfer to
themselves all rights, title and interest in and to those assets as collateral and may deal with, lend, dispose
of, pledge or otherwise use all such collateral for their own purposes.

COMPENSATION, EXPENSES AND THE PERFORMANCE ALLOCATION

Management Fee

For its services as the Partnership’s investment manager (and otherwise managing and
administering the Partnership’s affairs), the Partnership pays the General Partner a Management Fee as to
each Limited Partner of approximately 0.1667% per month (2.0% percent per annum) of the balance in
each Limited Partner’s capital account. For purposes of determining the Management Fee, the General
Partner makes a good faith valuation of the Partnership’s assets based on the valuation guidelines set forth
in the Partnership Agreement. This fee is paid in advance based on each Limited Partner’s capital account
as of the beginning of each month. Limited Partners who are permitted by the General Partner to
contribute capital on a date other than the first day of a month or who are permitted to withdraw capital on
a date other than the last day of a month are charged a prorated Management Fee as to that contribution.
The General Partner may waive or otherwise vary the Management Fee as to particular Limited Partners
by agreement with those Partners.

Expenses
 The Partnership will pay or reimburse the General Partner for certain costs and expenses incurred
by or on behalf of the Partnership, or for the Partnership’s benefit, including without limitation:

Organizational and Offering Expenses. Organizational expenses include, but are not limited to,
legal, accounting and government filing fees. Offering expenses include, without limitation, marketing
expenses, printing of this Offering Memorandum and exhibits thereto and the admission of Limited
Partners.

The financial statements of the Partnership will be prepared in accordance with generally
accepted accounting principles (“GAAP”). GAAP does not permit the amortization of organization costs.
Notwithstanding this, the Partnership may, at the discretion of the General Partner, amortize its
organization expenses over a period of time and, if it does, the audit opinion on the financial statements
may be qualified in this regard.

Operating Expenses. Operating expenses include, without limitation, (A) the Partnership’s
ongoing accounting, auditing, bookkeeping, tax preparation, administration, legal, consulting and other
professional fees and expenses; (B) all costs of communications with Limited Partners; (C) investment
and research- related expenses including all commissions, bid-ask spreads, mark-ups, interest on margin
borrowing, costs relating to short sales, transfer taxes, custodian fees, etc.; (D) all costs of protecting or
preserving any investment held by the Partnership; (E) losses, damages, charges, costs or expenses arising
from the Partnership’s indemnification obligations under the Partnership Agreement and other contracts
to which the Partnership may become a party and (F) costs associated with dissolution, winding up,
liquidation or termination of the Partnership.

Overhead

The General Partner will pay, and shall not be reimbursed by the Partnership for, its own
overhead expenses. These include, without limitation, rent, employee salaries and benefits and insurance.
All or a portion of the costs and expenses of the Partnership and the General Partner may be paid for by
securities brokerage firms that execute trades for the Partnership or related accounts.

Commissions; Finders’ Fees

The Partnership neither receives nor pays any commissions on sale of Interests. However, the
General Partner may share a portion of its Management Fee or Performance Allocation with persons who
solicit Subscribers on the Partnership’s behalf, and it may pay finders’ fees at its own expense to such
persons. In addition, solicitors may charge a commission or finders’ fee on a fully disclosed basis.

Performance Allocation

The General Partner receives a Performance Allocation with respect to each Limited Partner
equal to twenty percent (20%) of the amount by which the net profits of the Partnership otherwise
allocable to that Limited Partner in that fiscal year exceed that Limited Partner’s Unrecouped Losses.
Solely for purposes of computing the Performance Allocation, “profits” and “losses” include realized and
unrealized gains and losses. “Unrecouped Losses” of a Limited Partner are all net losses allocated to that
Limited Partner reduced (but not below zero) by all net profits allocated to that Limited Partner in the
fiscal year that the net losses are so allocated, or allocated to that Limited Partner in any subsequent year.
This is what is sometimes referred to as a “high water mark.” A high water mark means that if a Limited
Partner is allocated losses in any period followed by profits, there is no Performance Allocation to the
General Partner with respect to the profits until the losses have been fully recouped. Losses occurring
subsequent to a year in which the General Partner receives a Performance Allocation do not reduce the
Performance Allocation
that was made in the previous years, and those subsequent losses are borne by all Partners in proportion to
their respective capital accounts. In addition, if a Limited Partner withdraws or is distributed capital from
the Partnership, that Limited Partner’s Unrecouped Losses are reduced proportionately based on the
amount withdrawn or distributed.

The Performance Allocation is made at the end of each fiscal year; provided, however, that if a
Limited Partner withdraws capital on a date other than the last day of a fiscal year, the Performance
Allocation is made with respect to that Limited Partner for the portion of the year ending on the
withdrawal date with respect to the amount withdrawn. The General Partner, in its sole discretion, may
waive all or any portion of the Performance Allocation with respect to any Limited Partner.

PLAN OF DISTRIBUTION

Use of Proceeds

The proceeds of the offering of Interests are invested in securities and otherwise applied to the
activities and expenses of the Partnership, including the Management Fee payable to the General Partner
and the Partnership’s organization and offering costs.

The Offering

Minimum Subscription. The minimum subscription that may be accepted from a Limited Partner is
$100,000. The General Partner, in its sole discretion, may waive or change the minimum subscription
requirement for any investor and raise it in the future.

No Minimum or Maximum Amount of Interests to Be Sold. No minimum amount of Interests must

be sold before investors are admitted to the Partnership as Limited Partners and no maximum amount of
Interests has been fixed. The General Partner may continue to offer Interests until such time, if at all, as it
decides to terminate the offering.

Admission of Limited Partners. Subscriptions for Interests generally are accepted by the General
Partner as of the beginning of each month, and otherwise as the General Partner permits. The General
Partner may reject the Subscription Agreement of any subscriber for whom it appears that Interests may
not be a suitable investment or for any other reason regardless of whether a subscriber otherwise meets
the suitability standards set forth below. A subscriber should not rely on the General Partner to determine
the suitability of an investment in Interests for himself or itself.

Payment. Each Subscription Agreement must be accompanied by full payment in cash (or, with the
consent of the General Partner, securities) for all Interests subscribed.

No Interest. In the event the General Partner does not accept a subscriber’s subscription, any funds
received will be returned without interest.

Additional Capital Contributions. A Limited Partner may make additional Capital Contributions
with the consent of the General Partner. Additional Capital Contributions must equal $50,000 or more.

Subscription Instructions

The Subscription Documents contain detailed subscription instructions. In brief, a subscriber

must complete, date, and sign the Subscription Documents approved by the General Partner (attached as
Annex
1 to this Offering Memorandum) and, in accordance with the subscription instructions, deliver the signed
subscription documents and make payment (by check or wire transfer). Receipt of payment does not
constitute acceptance of a subscription.

General Partner’s Capital Contributions and Withdrawals

While the General Partner is not required to maintain any minimum investment in the
Partnership, the principals of the General Partner each intend to invest a portion of their liquid net worth
in the Partnership. The General Partner may contribute to and withdraw from the Partnership cash or
assets in such amounts from time to time as it deems appropriate. Any such withdrawals are not subject to
the notice, withdrawal fee, partial withdrawal or payment schedule provisions in the Partnership
Agreement to which the Limited Partners are subject.

Anti-Money Laundering

The General Partner is responsible for compliance with anti-money laundering laws and
regulations in effect in the United States and other jurisdictions. Compliance with such laws and
regulations requires, at a minimum, a detailed verification of a Limited Partner’s identity, including the
identity of any beneficial owner with an interest in the subscriber and the source of the funds being
invested. The Partnership, by written notice to any Limited Partner, may suspend the redemption rights of
a Limited Partner if the General Partner reasonably deems it necessary to do so to comply with anti-
money laundering regulations. Under certain circumstances, the General Partner may be obligated to
report suspicious activities to governmental and banking authorities.

WHO MANY INVEST: SUITABILITY

The Interests are suitable investments only for investors for which an investment in the
Partnership does not constitute a complete investment program and who fully understand, are willing to
assume, and who have the financial resources necessary to withstand the risks involved in the
Partnership’s investment program and to bear the potential loss of their entire investment in the Interests.

Prospective investors should satisfy themselves that an investment in Interests is suitable for
them, should examine this Offering Memorandum, which includes the full text of the Partnership
Agreement, and should request such additional information about the offering, the Partnership and the
General Partner and their activities as they consider necessary to make an informed investment decision.

In addition to the net worth and income standards described below, each investor must have funds
adequate to meet personal needs and contingencies, must not need prompt liquidity from the investment,
and must purchase Interests for investment only and not with a view to their sale or distribution.

Each investor should also have sufficient knowledge and experience in financial and business
matters generally and in securities investments in particular to be capable of evaluating the merits and
risks of investing in the Partnership. Investors who are subject to income tax should be aware that
investment in the Partnership is expected to create taxable income or tax liabilities in excess of cash
distributions available to pay such liabilities. Accordingly, Interests may not be a suitable investment for
prospective investors who are subject to and do not desire such consequences.

A purchase of Interests would not be suitable for an investor who, alone or together with its
purchaser’s representative, does not meet the suitability standards discussed below.
 Plan Investors and Tax-Exempt Entities. Interests may be a suitable investment for plan investors,
subject to their circumstances and investment objectives, and subject to the provisions of the plan’s
documents. As used in this Offering Memorandum, “Plan Investor” means any employee benefit plan
(defined below), any plan that covers only owners of the plan sponsor, any individual retirement account
as described in Code section 408(a) (an “IRA”), and any bank commingled trust fund for any or all of the
foregoing. In addition, depending on their circumstances and investment objectives and assuming the
provisions of their governing instruments and the nature of their tax exemptions permit such an
investment, tax-exempt entities may find Interests to be a suitable investment. Fiduciaries of employee
benefit plans (as defined under Title I of ERISA, whether or not tax-exempt), in consultation with their tax
and legal advisers, should consider carefully (a) whether an investment in Interests is consistent with their
fiduciary responsibilities, particularly the responsibilities outlined in Part 4 of Title I of ERISA, (b) the
effect of the possible treatment of assets of the Partnership as “plan assets” under DOL regulations, (c) the
effects of possible unrelated business taxable income, and (d) other risks discussed briefly under “ERISA
Considerations for Fiduciaries of Employee Benefit Plans.” Plan Investors are urged to consult with their
legal, financial and tax advisers before investing in Interests.

Accredited Investor. The Partnership will sell Interests to accredited investors (as described in
greater detail below), each of whom for regulatory reasons, must also have a net worth in excess of
$2,100,000 (exclusive of primary residence). To qualify as an accredited investor, an investor must satisfy
the definition of accredited investor under Rule 501(a) of the Securities Act of 1933. Generally, to be
treated as an accredited investor a purchaser must satisfy one of the following tests:

(a) Individuals. If the purchaser is an individual, the purchaser must have a net worth
excluding the value of the purchaser’s primary residence in excess of $1,000,000. Alternatively,
the individual had income of more than $200,000 (or $300,000 joint income with the individual’s
spouse) in each of the preceding two calendar years, and has a reasonable expectation of reaching
the same income level in the current year.

(b) Trusts. A revocable trust (including an IRA) generally is treated as an accredited

investor if each grantor is an accredited investor and the grantor(s) may amend or revoke the trust
at any time. An irrevocable trust generally is treated as an accredited investor if (1) it has total
assets in excess of $5,000,000, (2) was not formed for the specific purpose of acquiring Interests,
and (3) its investment in Interests is directed by a person experienced in financial and business
matters who is capable of evaluating the merits and risks of such investment, or the trustee of the
trust is a bank, and the bank makes the decision to invest in Interests on behalf of the trust.

(c) Certain Plan Investors. A Plan is treated as an accredited investor if (1) it is an

employee benefit plan, all of whose participants are accredited investors, (2) it is an employee
benefit plan and the investment decision is made by a plan fiduciary that is either a bank,
insurance company or registered investment adviser, (3) it has total assets in excess of
$5,000,000, or (4) it is a self-directed employee benefit plan with investment decisions made
solely by persons who are accredited investors.

(d) Other Tax-Exempt Entities; Corporations; Partnerships; Limited Liability

Companies; Other Entities. Any organization described in Code section 501(c), any corporation,
partnership, limited liability company and most other business entities not formed for the specific
purpose of acquiring Interests with total assets in excess of $5,000,000 is considered an
accredited investor.

(e) Other Purchasers. Other suitability standards are described in the Investor
Questionnaire included as an Appendix to the Subscription Agreement.
 Additional Net Worth Requirements. In addition to the net worth minimum set forth above, an
individual investor generally have minimum net worth of $2,100,000 (exclusive of the value of the
subscriber’s primary residence) or otherwise meet the definition of a “qualified client” as it is more fully
defined in the Subscription Documents.

Stricter State Standards. Residents of certain states may be subject to stricter suitability standards
than those stated above. The General Partner may reject the Subscription Agreements of prospective
investors not meeting such standards.

Reliance on Subscriber Information. The Subscription Agreement and Investor Questionnaire that
each subscriber must complete contain certain representations and requests for information regarding
whether a subscriber satisfies the Partnership’s suitability standards. Subscribers will be required to
provide any additional evidence the General Partner deems necessary to substantiate information or
representations contained in their Subscription Agreement, including the Investor Questionnaire. The
standards set forth above are only minimum standards. The General Partner imposes comparable
suitability standards in connection with any transfer of Interests or with subsequent additional capital
contributions. The General Partner may waive minimum suitability standards not imposed by law.

Investment Company Act. Any Limited Partner that is a corporation, partnership, limited liability
company, trust or other entity and that is defined as an “investment company” under the Investment
Company Act or that relies on the exclusion from the definition of an investment company provided by
Section 3(c)(1) or 3(c)(7) thereunder and that has an ownership percentage of 10% or more of the
ownership percentages of all Limited Partners must inform the General Partner of the number of
beneficial owners of its outstanding securities. Thereafter, that Limited Partner must inform the General
Partner immediately if that number changes. The General Partner may determine at any time that the
participation by that Limited Partner in the Partnership may cause the Partnership not to be excluded from
the definition of “investment company” under section 3(c)(1) of the Investment Company Act. On such a
determination, that Limited Partner is deemed to have given notice of withdrawal, effective as of any date
determined by the General Partner of such portion or all of the capital account of that Limited Partner as
the General Partner may determine is necessary or advisable. The date selected by the General Partner
may be before or after the time that the General Partner makes such determination.

WITHDRAWALS, TRANSFERABILITY AND DISTRIBUTIONS

Withdrawals. No Limited Partner has an absolute right to a return of its capital contribution or to
withdraw any capital except as set forth in the Partnership Agreement. Subject to certain conditions, a
Limited Partner may withdraw all or part of its capital account as of the last day of any calendar month on
at least ten (10) calendar days written notice to the General Partner. Without the consent of the General
Partner, partial withdrawals may not be made if they would reduce a Limited Partner’s capital account
balance below $100,000 or made in amounts of less than $50,000. The General Partner, in its sole
discretion, may waive the foregoing restrictions and allow the withdrawal of all or any part of the capital
account of any Limited Partner at any time.

Withdrawn amounts generally are paid within 30 calendar days of the effective date of the
withdrawal, although for complete withdrawals the General Partner may delay payment of a portion of the
withdrawal (generally 10%) pending final reconciliation of valuations. The General Partner also may elect
to further retain such payment pending completion of the Partnership’s audit for the fiscal year in which
the withdrawal occurs). Any retained withdrawal proceeds will not be considered to be invested in the
Partnership and will earn no interest. Upon withdrawal of all of its capital account, a Limited Partner shall
be deemed to have withdrawn from the Partnership, and upon notice of such withdrawal, a Limited
Partner
shall not be entitled to exercise any voting rights afforded to Limited Partners under the Partnership
Agreement. Withdrawal proceeds are reduced by the Performance Allocation due to the General Partner,
if any, in respect of the funds being withdrawn, and may be further reduced to pay accrued, future and
contingent expenses (including the Partnership’s indemnification obligations under which it may be
required to reserve capital to advance legal costs as incurred by the General Partner or other indemnified
persons) and other reserves as deemed necessary in the General Partner’s sole discretion.

The General Partner may suspend the right of any Limited Partner to withdraw capital from the
Partnership if, in the General Partner’s judgment, a suspension would be in the best interests of the
Partnership. Examples of some situations in which a suspension might occur are: when a withdrawal
would result in a violation of securities or other laws by the Partnership or the General Partner; when
disruptions in securities markets make pricing and/or liquidation of some or all Partnership assets difficult
or would result in losses to the Partnership if the Partnership attempted such liquidations; when the
General Partner determines, in consultation with tax advisors that the withdrawal could result in the
Partnership being treated as a “publicly-traded partnership” and thus taxable as a corporation; or if other
events make accurate determination of the Partnership’s net asset value or an orderly distribution of its
capital impractical.

Transferability. Only a limited number of persons will invest in the Partnership. Transferability of
Interests is very restricted. No market for Interests exists or can be expected to develop. Interests cannot
be resold unless either they are subsequently registered under the Securities Act of 1933, as amended (the
“Securities Act”) and registered or qualified under any applicable state securities laws or exemptions from
such registration and qualification are available. The General Partner will not recognize or permit any
disposition of Interests that does not comply in all respects with the Subscription Agreement, the
Securities Act, the Investment Company Act and any other applicable securities laws. Accordingly, a
purchaser of Interests must bear the economic risk of the investment indefinitely, subject to the Limited
Partners’ withdrawal rights as set forth above and provided in the Partnership Agreement.

Distributions. Limited Partners may elect to receive monthly or quarterly distributions from
dividend and interest payments received by the Partnership. Limited Partners may opt out of monthly or
quarterly distributions to reinvest substantially all income and gain. Frequency of distributions may be
modified upon written notice to the General Partner at least ten (10) days before the end of a month or
quarter. The General Partner determines the amount of all distributions by the Partnership and whether
such distributions are made in cash or in kind or partly in cash and partly in kind. Any distribution (other
than on voluntary or compulsory withdrawal as provided in the Partnership Agreement) is made to the
Partners in proportion to their respective capital accounts as of the end of the month preceding the date of
distribution.

ALLOCATIONS OF PROFITS AND LOSSES; INCOME TAX ALLOCATIONS

Except as described below and subject to the Performance Allocation, for each fiscal period
during which there is a net profit or net loss, the net profit or net loss is allocated and charged to the
Partners (including the General Partner) in proportion to their respective capital accounts as of the
beginning of the fiscal period.

Income Tax Allocations. For federal income tax purposes, the General Partner may cause taxable
income to be allocated in any fiscal year first to each Partner who has withdrawn or been distributed all or
part of the balance of such Partner’s capital account to the extent that such withdrawal or distribution
exceeds such Partner’s adjusted tax basis in such Partner’s Interest immediately prior to such withdrawal
or distribution. Taxable loss may be allocated first to each Partner who has withdrawn or been distributed
all of such Partner’s capital account in that fiscal year to the extent that such Partner’s adjusted tax basis
in
such Partner’s Interest exceeds that Partner’s capital account immediately prior to such withdrawal or
distribution. Thereafter, or if the General Partner elects not to allocate taxable income and loss as
described in the preceding two sentences, taxable income and loss will be allocated in another manner
that is consistent with the manner in which the economic benefits and burdens of the Partnership are
shared. Tax allocations of gain or loss are not made, however, until gain or loss is realized for tax
purposes, such as when an asset is sold or a short position is covered or an option position is closed.

These optional tax allocation provisions are designed to prevent remaining Partners from
receiving excess taxable income or loss that results when a Partner withdraws and is paid such Partner’s
share of unrealized gain or loss. If the General Partner elects to implement these special allocations, they
will tend to cause withdrawing Partners to be allocated taxable income and loss to the extent of their
shares of unrealized as well as realized gain or loss. Without this allocation, unrealized gain would be
effectively taxed to the withdrawing Partner on withdrawal as capital gain in the form of a cash
distribution in excess of basis. Therefore, the special allocation will not increase the taxable income of the
Partner withdrawing capital, but it might cause part or all of the income that might otherwise have been
characterized as long- term capital gain if the Partner had held its interest in the Partnership for more than
a year to be characterized as short-term capital gain or ordinary income. If the IRS does not respect these
special allocations, if made, the IRS will require that allocations be made in another manner that is
consistent with the manner in which the economic benefits and burdens of the Partnership are shared as if
no special allocation provisions were to exist.

CERTAIN RISK FACTORS

The purchase of Interests involves certain risks and is suitable only for persons of adequate
financial means who have no need for liquidity in this investment. Subscribers should therefore bear in
mind the following risk factors and conflicts of interest before purchasing an Interest. Many of those risks
are discussed more fully elsewhere in this Offering Memorandum. Subscribers should consult their own
legal, tax, and financial advisers as to these risks and an investment in the Partnership generally.

Market Risks

General Market Risk. As with any investment, there is a risk that the price of a security will rise
or fall. There could be many reasons for a decline or increase in the price of a security. These include
changing economic, political or market conditions and changes in interest rates.

Investments in Securities Generally. Investments in securities and other financial instruments

entail general investment risks that all investors face. Securities prices can be volatile. The markets for the
securities the Partnership holds can experience periods of substantial illiquidity. Regulatory bodies can
suspend the trading of securities. Securities prices are influenced by many unpredictable factors and the
Partnership is competing for investment opportunities with other investors, many of which have greater
investment research and other resources than the General Partner. The General Partner believes that its
investment strategies and research techniques will moderate risk through careful securities selection.
However, risk cannot be eliminated. No guarantee or representation is made that the General Partner’s
investment programs will be successful or that the Partnership's investment objectives will be achieved.

Competition. The securities industry, and the varied strategies and techniques to be engaged in by
the General Partner, are extremely competitive. The Partnership will compete with firms, including many
of the larger securities and investment banking firms, which have substantially greater financial resources
and research staffs.
 Partnership’s Investment Activities. The Partnership’s investment activities involve a high degree
of risk. The performance of any investment is subject to numerous factors which are neither within the
control of, nor predictable by, the General Partner. These factors include a wide range of economic,
political, competitive and other conditions which may affect investments in general or specific industries
or companies. In recent years, the securities markets have become increasingly volatile, which may
adversely affect the ability of the Partnership to realize profits. As a result of the nature of the
Partnership’s investing activities, it is possible that the Partnership’s financial performance may fluctuate
substantially from period to period.

Liquidity Risks. Though the Partnership intends that all of its securities positions will be publicly
traded, some of them may be difficult to liquidate at any given time. If markets are particularly volatile or
disrupted for any reason, the Partnership could have difficulty selling any investment at a desirable price.
The Partnership might suffer significant losses if forced to sell an illiquid investment as a result of
changing market conditions or as a result of margin calls or other factors.

Institutional Risk. The General Partner may enter into contractual arrangements with various
brokerage firms, banks and other institutions. There is a possibility that the institutions, including
brokerage firms and banks, with which the Partnership does business, or to which securities have been
entrusted for custodial purposes, will encounter financial difficulties that may substantially impair the
operational capabilities or the capital position of the Partnership.

Risks from Hedging Activities. The General Partner may utilize financial instruments or
transactions as a hedge against adverse market fluctuations. Hedging against a decline in the value of a
portfolio position does not eliminate fluctuations in the values of portfolio positions or prevent losses if
the values of such positions decline, but establishes other positions designed to offset the performance of
one or more portfolio positions. Hedging transactions may limit the potential for a gain in a portfolio
because an offsetting position may generate a loss though the portfolio generated a gain. The success of
the General Partner’s hedging transactions is subject to its ability to identify and structure appropriate
hedges. Thus, there is no assurance that a transaction entered into to reduce risk will not result in a poorer
overall performance for the Partnership than if the General Partner had not engaged in such hedging
transaction. Moreover, it should be noted that the Partnership's portfolio will always be exposed to certain
risks that cannot be fully hedged, such as credit risk (relating both to particular securities and
counterparties) and liquidity risk.

Risks Related to the Partnership’s Investment Strategy

Broad Discretionary Power to Choose Investments and Strategies. The Partnership Agreement
gives the General Partner broad discretionary power to decide what investments the Partnership will make
and what strategies it will use. While the General Partner currently intends to use the strategies described
under the caption “Investment Objective and Policies,” it is not obligated to do so, and it may choose
other investments and strategies that it believes are advisable.

Concentration of Investments. The Partnership’s investment portfolio (on account of size,

investment strategy and other considerations) is confined to the securities of a relatively small number of
BDC issuers. While the Partnership does not expect that any initial investment position will represent
more than ten percent of the Partnership’s portfolio, the Partnership Agreement does not limit the
Partnership’s concentration in particular issuers or types of investments. In addition, the Partnership’s
investment strategy does not contemplate a diversified portfolio. The Partnership intends to concentrate
its investments in several, relatively large security positions, industries or sectors relative to its capital.
Consequently, a loss in any one position or downturn in any one industry or sector could reduce the
Partnership’s performance materially. Also, any investment by the Partnership in the securities of a single
issuer or the concentration
of the Partnership’s investments in a particular industry or sector would be expected to increase the level
of risk.

Effect of Leverage on Yield Arbitrage. The Partnership’s investment strategy assumes the
Partnership will be able to borrow funds at a lower rate than the income received from its investments.
Currently, all of the prospective investments available to the Partnership are paying a dividend or interest
payment greater than projected borrowing costs. There is a risk, however, that interest rates charged to the
Partnership could increase at a greater rate than dividend income received and thereby reduce or erase the
positive yield arbitrage currently available.

Diminished BDC Dividends. If BDCs in which the Partnership invests reduce or eliminate their
dividend payout or interest payments from current levels, the positive yield arbitrage available to the Fund
would also reduce. While the General Partner’s research indicates that historically very few BDCs which
have paid a regular dividend have ever eliminated their payouts, there can be no assurance that this will
continue. Likewise, while no BDC has ever filed for bankruptcy, there can be no certainty that this will
continue to be the case in the future. Moreover, while no fixed income security has ever defaulted on a
scheduled payment, this may not continue to be the case in the future. A BDC could reduce or eliminate
its dividend or fail to pay its required debt interest payment for a number of reasons including
unexpectedly rapid repayment of outstanding assets without a commensurate redeployment of capital into
new investments on similar terms. A BDC could also face defaults or write-offs from a number of
investments or could face declining net interest spreads due to competition or change of strategy, each of
which would reduce income. Should the positive yield arbitrage be reduced, the Partnership’s returns
would be adversely affected. A BDC’s dividend could be reduced due to the issuance of new shares
without a commensurate increase in distributable income, because of a change in strategy by the BDC’s
board, or due to insufficient or onerous borrowing terms. Also, restrictions and provisions under the
Partnership’s leverage obligations may cause the Partnership to sell a portion of its assets to pay down its
leverage debt.

Leverage. The General Partner anticipates using margin and leverage. The Partnership may, in the
General Partner’s sole discretion, leverage its investment positions by borrowing funds from futures
commission merchants, securities broker-dealers, banks, or others. Such leverage increases both the
possibilities for profit and the risk of loss. At times the Partnership may hold a relatively large amount of
debt. The Partnership’s borrowings typically will be secured by the Partnership’s securities and other
assets. Under certain circumstances and applicable federal laws that limit the amount of borrowings that
may be secured by securities, a broker-dealer may seek or be forced to demand an increase in the
collateral that secures the Partnership’s obligations. If the Partnership is unable to deposit additional
collateral or in certain other circumstances, the broker-dealer may elect, or be forced to, liquidate assets
held in the Partnership’s account to satisfy the Partnership’s obligation to the broker-dealer and applicable
margin regulations. The amount of the Partnership’s borrowings and the interest rates on those
borrowings, which may fluctuate, could have a significant effect on the Partnership’s profitability.

Risks Related to the General Partner

Dependence on the General Partner. The Partnership’s success depends on the skill and expertise
of Messrs. Marshi and Hansen, the managing members of the General Partner. The Partnership cannot
assure investors that: (a) the Partnership will realize its investment objectives; (b) the Partnership’s
investment strategy will prove successful; or (c) investors will not lose all or a portion of their investment
in the Partnership.

The Partnership Agreement provides that the General Partner has absolute discretion and
authority in managing and controlling the investments and affairs of the Partnership, subject to specific
and express limitations in the Partnership Agreement or provided by applicable law notwithstanding the
Partnership
Agreement. Subject to its fiduciary duties to the Limited Partners, the General Partner may exercise this
discretion and authority conditionally or unconditionally, arbitrarily, or inconsistently in varying or
similar circumstances, without accountability to the Partnership or any Limited Partner. For example, the
General Partner may provide certain Limited Partners reports, special fee and allocation arrangements and
special withdrawal rights that it does not provide to other Limited Partners.

Operating Expenses. The expenses of operating the Partnership (including the Management Fee)
may exceed its income, thereby requiring that the difference be paid out of the Partnership’s capital,
reducing the Partnership’s investment capital and potential for profitability. These expenses may
constitute a high percentage relative to other investment entities.

Brokerage Commissions/Transaction Costs. During some periods, the Partnership’s activities

may involve a high level of trading, and the turnover of its portfolio may generate substantial transaction
costs. These costs will be borne by the Partnership regardless of its profitability.

Effect of the Performance Allocation. The Performance Allocation payable to the General Partner
may create an incentive for the General Partner to make riskier or more speculative investments than it
would otherwise make in the absence of performance-based compensation. The Performance Allocation
includes amounts in respect of any unrealized appreciation of the Partnership’s investments.

Liability Standard; Indemnification. Pursuant to the Partnership Agreement, the Partnership may
be required to indemnify the General Partner or any of its affiliates, agents, or attorneys from any action,
claim or liability arising from any act or omission made in good faith and in performance of its duties
under the Partnership Agreement. Any investigation, litigation or other proceeding undertaken by state or
federal regulatory agencies or private parties could require reserving and/or spending material amounts of
Partnership funds for legal and other costs and could have other materially adverse consequences for the
Partnership. The Partnership does not intend to carry any insurance to cover its indemnification
obligations and, if it should carry one or more insurance policies against such obligations in the future, the
coverage of such policies may be not be adequate to cover all claims arising thereunder. The availability
of indemnification may reduce the amount of funds the Partnership has available to invest on behalf of
Limited Partners and/or reduce any distributions that it might otherwise make to Limited Partners.

General Partner’s Right to Dissolve the Partnership and Expel Limited Partners. The Partnership
Agreement provides that the General Partner may at any time dissolve the Partnership on notice to the
Limited Partners. Accordingly, there is a risk that if the Partnership’s assets become depleted or the
Unrecouped Losses become significant and, as a result, the Management Fee and Performance Allocation
are reduced, the General Partner may elect to dissolve the Partnership at a time when dissolution may be
disadvantageous to the Limited Partners. In addition, the General Partner may expel a Limited Partner
from the Partnership at any time, in which event the expelled Limited Partner will be deemed to have
withdrawn entirely from the Partnership. Such expulsion could result in adverse tax and economic
consequences to the Limited Partner.

Additional Risk Factors

No Minimum Size of Partnership. The Partnership has no minimum level of capitalization. At low
asset levels, the Partnership may be unable to diversify its investments as fully as would otherwise be
desirable or to take advantage of potential economies of scale, including the ability to obtain the most
timely and valuable research and trading information from securities brokers. It is possible that even if the
Partnership operates for a period with substantial capital, Limited Partners’ withdrawals could diminish
the Partnership’s assets to a level that does not permit the most efficient and effective implementation of
the Partnership’s investment program.
 Restrictions on Transfer of Partnership Interests. There is no public market for the Interests.
Under the terms of the Partnership Agreement, Limited Partners are prohibited from selling their Interest
unless the General Partner consents. The Interests have not been registered under the Securities Act or
any state securities laws, and, for that reason, additional transfer restrictions are imposed by law.

Withdrawal from the Partnership. An investment in the Partnership offers limited liquidity since
the Interests are not freely transferable. A Limited Partner generally has the right to withdraw all or any
portion of its capital account at the times specified in this Memorandum subject to advance notice, a
“lock- up” period and other restrictions. The General Partner, in its sole discretion, may permit
withdrawals at other times and may waive the notice required from a Limited Partner prior to withdrawal.
An investment in the Partnership is suitable only for sophisticated investors who have no need for
liquidity in this investment. Distributions of proceeds upon a Limited Partner’s withdrawal may be
limited and may be in- kind where, in the view of the General Partner, the disposal of all or a part of the
Partnership’s assets to meet withdrawal requests would be prejudicial to the non-withdrawing Limited
Partners. In addition, the General Partner, by written notice to any Limited Partner, may suspend the
payment of withdrawal proceeds payable to such Limited Partner if the General Partner reasonably deems
it necessary to do so to comply with anti-money laundering regulations applicable to the Partnership, the
General Partner, and their affiliates, subsidiaries or associates or any of the Partnership’s other service
providers and in certain other limited circumstances.

Tax Liability Without Distributions. Limited Partners will be liable to pay taxes on their allocable
shares of the Partnership's taxable income. However, the Manager does not intend to make distributions to
the Limited Partners corresponding to profits, but instead intends to re-invest substantially all of the
Partnership’s income and gains for the foreseeable future. Taxable income can be expected to differ from
net profit, primarily because generally only realized gains and losses are considered for income tax
purposes but net profit and net loss will include unrealized gains and losses. It is possible that sales of
appreciated securities in a particular period could cause some Limited Partners to have taxable gain for
that period at the same time that unrealized losses result in an overall net loss. It generally will be
necessary for Limited Partners to pay such tax liabilities out of separate funds and not from distributions
from the Partnership.

Contingent Liabilities. Under certain circumstances, the Partnership may find it necessary when a
Limited Partner withdraws capital (or upon dissolution) to set up a reserve for contingent and future
liabilities and withhold a portion of such Limited Partner’s withdrawal proceeds. Reserves may be
established and withholding may occur, for example, if the Partnership becomes involved in material
litigation, to fund undetermined contingent liabilities or in the event it is audited by the IRS. In addition to
the foregoing, reserves also may be set aside by the Partnership to satisfy its obligations under the
indemnification provisions set forth in the Partnership Agreement or in other agreements to which it
becomes a party.

Short-Term Capital Gains. While the Partnership does not expect to trade frequently, frequent
profitable short-term trading by the Partnership would result in taxable short-term capital gains to the
Limited Partners. Under current law, short-term capital gains generally are taxed at a higher rate than
long- term capital gains. See “Certain Tax Considerations.”

Tax Risk. Prospective investors should read the section entitled “Income Tax Considerations” for
a discussion of some of the tax risks of investing in Interests, and talk to his or her own tax advisor about
how an investment in the Partnership would affect his or her personal tax situation.

Tax-Exempt Entities. Subscribers that may be considering investing in the Partnership on behalf
of a tax-exempt entity should consider the possible adverse tax consequences that could arise out of
unrelated
business taxable income (“UBTI”). Such subscribers should read the section entitled “ERISA
Considerations” and discuss the suitability of an investment in the Interests with their own tax advisors.

Liability of a Limited Partner for the Return of Capital Distributions. If a Limited Partner
receives a distribution from the Partnership which the Partnership is prohibited from making, the Limited
Partner may be liable to return all or part of the distribution, plus interest.

THE FOREGOING LIST DOES NOT PURPORT TO BE COMPLETE AND IT MAY NOT
DESCRIBE ALL OF THE RISKS AND CONFLICTS OF INTERESTS RELATING TO AN
INVESTMENT IN THE PARTNERSHIP. SUBSCRIBERS SHOULD READ THIS ENTIRE
OFFERING MEMORANDUM AND CONSULT WITH YOUR OWN LEGAL AND FINANCIAL
ADVISORS BEFORE INVESTING IN THE PARTNERSHIP.

Retirement Plan Risks

There are special considerations that apply to pension plans and IRAs investing in Interests. If a
Limited Partner is investing the assets of a pension, profit sharing, 401(k), Keogh or other qualified
retirement plan or the assets of an IRA in the Fund, the Limited Partner could incur liability or subject the
plan to taxation if:

 An investment is not consistent with the Limited Partner’s fiduciary duty under ERISA and the
Internal Revenue Code (“Code”);

 An investment is not made in accordance with the documents and instruments governing a plan or
IRA, including the plan’s investment policy;

 An investment does not satisfy the prudence and diversification requirements of ERISA;

 An investment impairs the liquidity of the plan;

 And investment produces “unrelated business taxable income” for the plan or IRA;

 An investor will not be able to assess the assets of the plan annually in accordance with ERISA
requirements; and

 An investment constitutes a prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code.

Regulatory Considerations

Regulatory Risks of Hedge Funds. The regulatory environment for hedge funds is evolving and
changes therein may adversely affect the Partnership’s ability to pursue its investment strategies. In
addition, the regulatory or tax environment for derivative securities and related instruments is evolving
and may be subject to modification by government or judicial action which may adversely affect the value
of the investments held by the Partnership. The effect of any future regulatory or tax change on the
Partnership is impossible to predict.

Investment Company Regulation. The Partnership intends to rely on the provisions of Section 3(c)
(1) of the Investment Company Act to avoid requirements that it register as an “investment company”
under the Investment Company Act and comply with its substantive provisions. If the Partnership were
registered as an investment company, the Act would require, among other things, that the Partnership
have
a board of directors some of whom are unrelated to the General Partner, compel certain custodial
arrangements, and regulate the relationship and transactions between the Partnership and the General
Partner. Compliance with some of those provisions could possibly reduce certain risks of loss by the
Partnership or Limited Partners, although such compliance could significantly increase the Partnership’s
operating expenses and limit the Partnership’s investment and trading activities. Interpretations of Section
3(c)(1) are complex and uncertain in several respects and, as a result, there can be no assurance that the
Partnership will remain entitled to rely on it. If the Partnership were found not to have been entitled to
such reliance, it and the General Partner could be subject to legal actions by the SEC and others and the
Partnership could be forced to terminate its business under adverse circumstances.

Private Offering Exemption. The Partnership intends to offer Interests on a continuing basis
without registration under any securities laws in reliance on an exemption for “transactions by an issuer
not involving any public offering.” While the General Partner believes reliance on such exemptions is
justified, there can be no assurance that factors such as the manner in which offers and sales are made,
concurrent offerings by other partnerships, investor qualification standards, the scope of disclosure
provided, failures to file notices or renewals of claims for exemption, or changes in applicable laws,
regulations, or interpretations will not cause the Partnership to fail to qualify for such exemptions under
Federal or one or more states’ laws. Failure to so qualify could result in the rescission of sales of Interests
potentially materially and adversely affecting the Partnership’s performance and business. Further, even
nonmeritorious claims that offers and sales of Interests were not made in compliance with applicable
securities laws could materially and adversely affect the General Partner’s ability to conduct the
Partnership’s business.

Investment Adviser Regulation. The General Partner is registered as an investment adviser in the
State of California. Applicable regulations under California law subject registered investment advisers to
a variety of filing, recordkeeping, and net capital requirements, as well as certain requirements and
prohibitions as to substantive activities. Violations of these regulations, similar state law or the
regulations promulgated thereunder could subject the General Partner to substantial penalties which, in
turn, could result in an untimely liquidation of the Partnership’s portfolio. For example, an investment
adviser will be deemed to have “custody” of the assets of a limited partnership of which it serves as the
adviser unless it follows certain procedures whenever it removes assets from the Partnership, for example
through payments of its management fees or withdrawal of capital. Such procedures rely on an
“independent representative” of the partnership verifying the general partner’s entitlement to receive
those payments or withdrawals. The Partnership has made arrangements with the Prime Broker and the
Administrator to establish such procedures. If those arrangements are not sufficient, within current or
future interpretations of the term “custody” by the Commissioner of Corporations of the State of
California (or other similar officials with jurisdiction over the business of the Partnership) or if the
General Partner does not adhere to the procedures specified in the arrangements referred to above, the
General Partner could be considered to have custody of the Partnership’s assets. In that event, the General
Partner will be in violation of the requirements specially imposed on “custodial” investment advisers.

Other. Securities and investment businesses generally are comprehensively and intensively
regulated under state and federal securities and similar laws and regulations that could limit some aspects
of the Partnership’s operations or subject the Partnership or the General Partner to the risk of sanctions for
noncompliance. Subscribers that are employee benefit plans should also consider certain factors discussed
under “ERISA Considerations.” Any investigation, litigation or other proceeding undertaken by state or
federal regulatory agencies or private parties could require spending material amounts of Partnership
funds for legal and other costs and could have other materially adverse consequences for the Partnership.
This offering will not be registered under the Securities Act and the Partnership is not registered as an
investment company under the Exchange Act. Hence, the Shareholders are not afforded certain regulatory
protection afforded to investors in offerings or entities that are registered under the U.S. securities laws.
 POTENTIAL CONFLICTS OF INTEREST

In the conduct of the Partnership’s business, conflicts may arise between the interests of the
General Partner and those of Limited Partners. While the General Partner is accountable to the
Partnership as a fiduciary and, consequently, must exercise good faith and integrity in handling the
Partnership’s business, prospective investors should be aware of the potential for such conflicts of interest
and their possible ramifications.

Brokerage Practices; “Soft Dollars”. The General Partner may be offered nonmonetary benefits
from brokers and dealers who effect transactions for the Partnership and their other clients. These may
take the form of investment research used in the management of all the General Partner’s clients (not just
the Partnership), referrals of investors, payment of certain expenses, and other services. Although the
General Partner believes the Partnership benefits from the receipt of these services, the Partnership may
not be the sole beneficiary. If brokers were not providing these services, the General Partner might have
to acquire them with its own funds. The practice of allowing brokers to pay for them creates an incentive
for the General Partner to select brokers or dealers to execute trades for the Partnership on the basis of the
benefits provided to it, rather than solely on the quality of the transactional services and the price charged
the Partnership. See “Brokerage and Transactional Practices.”

Capital Introduction. The General Partner may direct a portion of the Partnership’s portfolio
brokerage business to brokers and dealers who introduce Limited Partners to the Partnership. In this
event, the General Partner may allocate brokerage transactions to such brokers and dealers in part to
compensate them for referrals.

Performance Allocation and Fees. The structure of the Performance Allocation may create an
incentive for the General Partner to cause the Partnership to make riskier or more speculative investments
than it otherwise would in the absence of performance-based compensation to the General Partner. It may
also cause the General Partner to overvalue the Partnership’s securities to increase its income. In some
cases, fees charged by the General Partner may be greater than fees charged by other investment advisers
for similar services; in other cases, the General Partner’s fees may be lower.

Business Relationships with Affiliated Persons. The General Partner and Messrs. Marshi and
Hansen will devote so much of their time and resources to the activities of the Partnership as is necessary
and appropriate. However, Mr. Marshi or Mr. Hansen may sponsor, manage or participate in other
investment activities and programs unrelated to the Partnership’s activities (some of which may compete
with the Partnership’s investment activities). These other activities include, among other things, investing
for their own accounts and providing investment advisory services to various other accounts.

Investment and Transaction Opportunities. Potential conflicts of interest may arise in connection
with securities transactions for the accounts of the Partnership, other businesses in which the General
Partner is involved, any other advisory clients the General Partner may have now or in the future, and the
General Partner or its members themselves. These transactions could differ in substance, timing, and
amount, due to, among other things, differences in investment objectives or other factors affecting the
appropriateness or suitability of particular investment activities to the Partnership or other clients, or to
limitations on the availability of particular investment or transactional opportunities. The General Partner
will allocate transactions and opportunities among its various clients in a manner it believes to be as
equitable as possible, considering each client’s objectives, programs, limitations, and capital available for
investment, but all clients may not necessarily invest in the same securities. The General Partner is under
no obligation to provide the Partnership or any other client with any particular investment opportunity.
 The General Partner may combine purchase and sale orders on behalf of the Partnership with
orders for other portfolios over which the General Partner, Mr. Marshi or Mr. Hansen exercises trading
authority and allocate the securities or proceeds arising out of those transactions (and the related
transaction expenses) on an average price basis among the various participants in the transactions. In
particular cases the average price could be less advantageous to the Partnership than if the Partnership had
been the only account participating in the trade or had completed its trade before the other participants

No Separate Legal Representation. Legal counsel for the General Partner does not and will not
serve as counsel for the Partnership or represent the interests of the Limited Partners or the Partnership in
connection with the activities of the Partnership or any offering of Interests, and such counsel disclaims
any fiduciary or attorney-client relationship with the Limited Partners or the Partnership (even if such
counsel represents one or more Partners in matters unrelated to the Partnership). None of the Partnership,
potential investors in the Partnership as a group or the Limited Partners as a group has been represented
by separate counsel. The attorneys and certain other experts who perform services for the General Partner
on behalf of the Partnership all perform services for it and do not represent or perform services for the
Limited Partners. Prospective Limited Partners should obtain the advice of their own counsel regarding
legal matters.

BROKERAGE AND TRANSACTIONAL PRACTICES

In the course of its investment activities the Partnership incurs substantial transactional expenses,
including brokerage commissions. The General Partner, in its capacity as an agent of the Partnership, has
complete discretion in deciding what brokers and dealers the Partnership uses and in negotiating rates of
brokerage compensation. In addition to using brokers as agents and paying commissions, the Partnership
buys and sells securities directly from or to dealers acting as principal at prices that include markups or
markdowns.

Best Execution. The General Partner is not required to consider any particular criteria in choosing
brokers and dealers to utilize for Partnership trades. However, it seeks the “best execution” on an overall
basis, taking into account price, clearance, settlement, reputation, financial strength and stability,
efficiency of execution and error resolution, block trading and block positioning capabilities, special
execution capabilities, willingness to execute related or unrelated difficult transactions in the future, order
of call, on- line access to computerized data regarding clients’ accounts, the availability of stocks to
borrow for short trades, the competitiveness of commission rates in comparison to other brokers
satisfying the General Partner’s other selection criteria and other matters involved in the receipt of
brokerage services generally.

Soft Dollars. Under Section 28(e) of the Securities Exchange Act of 1934, as amended (the “Safe
Harbor”) the General Partner’s use of soft dollars generated by the Partnership’s commissions to acquire
certain research and brokerage goods or services is presumed not to breach the General Partner’s
fiduciary duty to the Partnership—even if the brokerage commissions paid are higher than the lowest
available—as long as (among other requirements) the commissions being paid by the Partnership are
reasonable in relation to the value of the goods and services obtained and they provide the General
Partner with lawful assistance in its investment decision-making. The Safe Harbor generally is not
available where transactions are effected on a principal basis (with a markup or markdown paid to the
broker-dealer), for transactions involving futures interests or for services or products that do not constitute
research or brokerage services as those terms are currently interpreted by the Securities and Exchange
Commission.
 CERTAIN TAX CONSIDERATIONS

The following discussion summarizes certain of the aspects of U.S. federal income taxation of the
Partnership and Limited Partners that a potential investor should consider. The discussion is based on the
Internal Revenue Code of 1986 (the “Code”), Treasury regulations promulgated under the Code
(“Regulations”) and court decisions and published rulings of the Internal Revenue Service (the “IRS”), all
as in effect on the date of this Offering Memorandum. It does not take into account the possible effect of
future legislation, regulatory or administrative changes or court decisions. The Partnership will not seek
any rulings from the Service as to any particular tax consequences. If any particular matter were
contested, a court might reach a conclusion contrary to those expressed below. Future legislation,
administrative action, or court decisions may change this discussion significantly, and any such changes
or decisions may have a retroactive effect as to the transactions contemplated herein. The General
Partner’s counsel has no continuing obligation to advise the General Partner, the Partnership, or any
Partner of any changes in the law that may affect the Partnership or the Limited Partners or that may
otherwise cause any part of the following summary to be inaccurate. This summary does not purport to
address all aspects of income taxation that may be relevant to a prospective investor, nor is it intended to
be applicable to all Limited Partners, some of which, such as financial institutions, insurance companies,
and foreign persons or entities, may be subject to special rules.

BECAUSE (i) THE INCOME TAX LAWS APPLICABLE TO PARTNERSHIPS AND SECURITIES
TRANSACTIONS ARE EXTREMELY COMPLEX, (ii) NEW LEGISLATION MAY MAKE
SUBSTANTIAL CHANGES TO THE CODE THAT AFFECT THE INCOME TAX CONSEQUENCES
ASSOCIATED WITH AN INVESTMENT IN THE PARTNERSHIP, AND (iii) THE FOLLOWING
SUMMARY DOES NOT PURPORT TO BE AN EXHAUSTIVE OR COMPLETE DESCRIPTION OF
ANY SUCH INCOME TAX CONSEQUENCES, PERSONS CONSIDERING AN INVESTMENT IN
THE PARTNERSHIP SHOULD CONSULT THEIR OWN TAX ADVISERS TO UNDERSTAND
FULLY THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF SUCH AN
INVESTMENT IN LIGHT OF THEIR OWN PARTICULAR SITUATION.

IRS REGULATIONS REQURE US TO INFORM YOU THAT THE FOLLOWING DISCUSSION OF

CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES (A) IS NOT INTENDED OR WRITTEN
TO BE USED, AND IT CANNOT BE USED, FOR THE PURPOSES OF AVOIDING CERTAIN TAX-
RELATED PENALTIES AND (B) IS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING
OF THE PARTNERSHIP ADDRESSED IN THIS MEMORANDUM. YOU SHOUD SEEK TAX
ADVICE BASED ON YOUR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX
ADVISOR.

Characterization of the Partnership

Under the provisions of the Code, the Partnership will be classified for U.S. federal income tax
purposes as a partnership and not as an association taxable as a corporation, provided that the Partnership
has not elected otherwise. The General Partner will not elect or authorize any person to elect to change
the Partnership’s status from that of a partnership for U.S. federal income tax purposes. Based on the
foregoing, the Partnership will not be subject to U.S. federal income taxation on income and gain realized
from its investments unless it is treated as a publicly traded partnership.

Partnerships that are considered “publicly-traded” will be treated as corporations for federal
income tax purposes. Being so characterized would substantially adversely affect Partners’ after-tax
income. Applicable Regulations create certain safe harbors in which partnerships may rest assured that
they are not “publicly-traded,” and the Partnership expects to satisfy at least one of the safe harbors at all
times. Under
the Partnership Agreement, the General Partner may suspend Partners’ withdrawal rights if the General
Partner determines that such withdrawals could cause the Partnership to be considered “publicly-traded.”

Additionally, it is expected that the Partnership will qualify for an exemption from publicly
traded status due to the type of its expected income and gains. A publicly-traded partnership generally
will not be taxable as a corporation if 90% or more of its gross income is “qualifying income,” including
interest, dividends and gains from the sale of capital assets held for the production of such income.

If the Partnership should at any time be classified as an association or a publicly traded

partnership taxable as a corporation, the Partners would not be treated as partners for tax purposes;
income or loss of the Partnership would not be passed through to the Partners and the Partnership would
be subject to tax on its net income and gains at the rates applicable to corporations. In addition, all or a
portion of distributions made by the Partnership to the Partners would be taxable to them as dividends (to
the extent of current or accumulated earnings and profits) or capital gains, while none of those
distributions would be deductible by the Partnership in computing its taxable income. Any such re-
characterization would reduce the after- tax return to a Partner from its investment in the Partnership.

The remainder of this discussion assumes that the Partnership will be treated as a partnership, and
not taxable as a corporation, for all U.S. federal, state and local tax purposes.

Taxation of the Partnership and Its Partners

General. The Partnership itself will not be subject to U.S. federal income tax. Instead, Partners
will be required to report on their own income tax returns their shares of the Partnership’s net long-term
capital gain or loss, net short-term capital gain or loss, net ordinary income or deduction, and various
other categories of income, gain, loss, deduction and credit (collectively, “tax items”). A Partner’s share
of any tax item will be governed by the Partnership Agreement unless (i) the Partnership Agreement is
silent as to the Partner’s share of that item or (ii) the allocation provided by the Partnership Agreement is
not considered to have “substantial economic effect” for tax purposes or is otherwise not in accordance
with the Partners’ interests in the Partnership (as described below). The General Partner believes that, if
examined, these allocations will be respected, there is no assurance that applicable Treasury Regulations
could not be interpreted by the Service in a manner materially adverse to the Partnership. If the
allocations provided by the Partnership Agreement are not respected by the Service or otherwise require
amendment for U.S. federal income tax purposes, the amount of taxable income allocated to any Partner
for U.S. federal income tax purposes may be increased, without any corresponding increase in
distributions to pay the additional tax liability. The Partnership has adopted the calendar year as its taxable
year and will file an annual partnership information return reporting the results of operations.

Each Partner will be taxable on his distributive share of the Partnership’s taxable income or gain
regardless of whether he has received or will receive any distribution of cash from the Partnership.

Cash distributions, to the extent they do not exceed a Partner’s basis in his Interest in the
Partnership, will not result in taxable income to that Partner, but will reduce his adjusted tax basis in his
Interest by the amount distributed. Cash distributed to a Limited Partner in excess of the adjusted tax basis
of his Interest is generally taxable either as capital gain or ordinary income, depending on the
circumstances. A distribution of property other than cash generally will not result in taxable income or
loss to the Partner to whom it is distributed.

All securities held by the Partnership will be marked to market at the end of each fiscal period for
financial statement presentation and capital account maintenance purposes. This treatment is inconsistent
with the general tax rule applicable to many securities transactions that a transaction does not result in a
gain or loss until it is closed by an actual sale or other disposition. The divergence between such
accounting and tax treatment frequently will result in substantial variation between financial statement
income (or loss) and taxable income (or loss) reported by the Partnership.

The Partnership may utilize a variety of investment and trading strategies which produce both
short- term and long-term capital gain (or loss), as well as ordinary income (or loss), although most of the
capital gain is expected to be short-term.

Character of Gains and Losses. The Partnership expects that its recognized gains and losses from
securities transactions will generally be characterized as capital gain or loss.

Short Sales. Gains and losses from short sales are generally considered short-term capital
gains and losses. However, under certain circumstances, they will be considered long-term if the
Partnership covers the short position with securities it had held for the long-term holding period at the
time it made the short sale. Making a short sale will terminate the holding period for “substantially
identical property” (e.g., securities of the same class) the Partnership holds long.

Constructive Sale Rules. The Code treats some common hedging transactions as
constructive sales for tax purposes. In particular, if the Partnership holds a security that has appreciated in
value and sells securities of the same class short or engages in similar hedging transactions, it will be
treated as if it had sold the appreciated securities.

Contributions. Generally, a contribution of cash to the Partnership will not be a taxable event to
the contributing Partner or to the Partnership.

Basis. A Limited Partner’s adjusted basis for its Interest will equal its initial basis in the Interest
(i.e., cash contributed) increased by (a) any further capital contributions, (b) his or her distributive share
of Partnership income (including tax-exempt income) and (c) any increase in his or her share of any debt
of the Partnership and decreased (but not below zero) by (x) distributions (including withdrawals) made
to him or her, (y) his or her distributive share of any Partnership deductions or losses, and (z) any
decrease in his or her share of any debt of the Partnership.

Distributions. A Limited Partner may be taxed on its “distributive” share of the Partnership’s
taxable income or gain regardless of whether it has received any distribution from the Partnership.
Because no regular distributions are contemplated, a Partner may incur tax liabilities arising from the
allocation of its share of Partnership taxable income. Notwithstanding the Partnership’s withdrawal
provisions, the only source for payment of such tax liabilities may be from the Partner’s own funds from
and sources other than the Partnership.

Cash distributions (e.g., upon a withdrawal of capital) generally will not cause a Partner to realize
taxable income, unless they exceed the Partner’s adjusted basis in his or her Interest, but they will reduce
that basis. If a distribution were to exceed a Partner’s basis, it would generally be taxable as short-term or
long-term capital gain, depending on the Partner’s holding period for the Interest. However, when a
Partner withdraws capital, the Partnership may specially allocate income, gain and losses to that Partner in
a manner that could convert what would otherwise be capital gains to ordinary income or long-term
capital gains into short-term capital gains.

Section 754 Election. Section 754 of the Code allows a partnership to elect to adjust the basis of
its assets upon (a) certain distributions of money or property to a Partner or (b) a transfer of an Interest by
sale or as a result of the death of a Partner. The general effect of making that election when a Partner has
received a distribution of cash would be that the adjusted basis of the Partnership’s capital assets would
be increased
by any capital gain (or decreased by any loss) recognized by the Partner who receives the distribution.
Where other property is distributed, the adjustments would reflect the difference, if any, between the
adjusted basis of the distributed property in the hands of the Partnership and the adjusted basis of the
property in the hands of the Partner who receives it. There would be no effect on the Partner who receives
the distribution in either event. In the case of a transfer of an Interest, when the Partnership later sells
assets that were held at the time of the transfer, the transferee would be treated as if he or she had directly
acquired a share of each of the Partnership’s assets, with a basis for those assets equal in the aggregate to
the basis of his or her Interest immediately after the transfer. In light of the nature and extent of the
Partnership’s expected buying and selling activities, and the likelihood that capital contributions and
withdrawals will occur throughout the term of the Partnership, it could be impracticable for the
Partnership to comply strictly with the basis adjustment rules that would apply if the Partnership were to
make a so-called “Section 754 election.”

The General Partner has discretion whether or not to make a Section 754 election, but once such
an election has been made, it remains in effect for all subsequent taxable years unless revoked with the
consent of the Service, and each subsequent distribution or transfer will result in the adjustments
described above.

If the General Partner does not elect to make adjustments under Section 754, any benefits that
might be available to a transferee of an Interest, or to remaining Partners after a substantial withdrawal,
by reason of a possible “step-up” in the basis of the Partnership’s assets may not be available. However,
in the case of withdrawals, the remaining Partners may receive a comparable benefit if the General
Partner chooses to specially allocate items of income and gain to the withdrawing Partner in accordance
with the Partnership Agreement.

Under IRS rules, if a Partner recognizes more than a $250,000 tax loss upon a redemption of its
interest in the Partnership, the Partnership will be required to reduce its basis in the Partnership’s assets
by the amount of the loss recognized by the redeeming Partner (previously, the Partnership was only
required to make such adjustments if a “Section 754 election” was in effect.

Limitations on Deductions. The ability of certain Limited Partners to deduct or otherwise utilize
Partnership losses or deductions allocated to them may be limited by special provisions of the Code,
including, but not limited to, the following:

Adjusted Basis of an Interest. A Limited Partner may not deduct losses in excess of the
adjusted basis of his or her Interest at the end of the year in which the loss is incurred. Losses in excess of
a Partner’s adjusted basis may be carried over to succeeding taxable years when the same limitation will
apply. See “Basis,” above.

Amounts at Risk. The amount of loss an individual taxpayer may deduct generally is
limited to the amount that Limited Partner is “at risk” as to the Partnership. Where a Limited Partner has
financed an investment in the Partnership with certain types of nonrecourse borrowing, that Partner’s
amount “at risk” could be less than his or her adjusted basis in his or her Interest.

Capital Gains and Losses. Partnership net capital losses allocated to a Limited Partner for
a taxable year will be deductible by a Limited Partner that is a corporation to the extent of the Partner’s
capital gains and by an individual Limited Partner to the extent of his or her capital gains plus $3,000. An
individual Limited Partner may carry forward any unused capital loss indefinitely to succeeding taxable
years and a corporate Limited Partner generally will be entitled to a three-year carryback and a five-year
carryforward of any unused capital loss.
 Passive Losses and Income. Income or loss of the Partnership should be characterized as
“portfolio” income or loss and therefore as not arising from a “passive activity.” Thus, while a Limited
Partner can use losses allocated to him by the Partnership against his other income, passive activity losses
cannot offset income from the Partnership.

Interest Expenses. If and to the extent the Partnership is not considered to be engaged in
the conduct of a trade or business, interest expense incurred by the Partnership with respect to its
activities or by a non-corporate Partner to acquire or carry its Interests may be classified as investment
interest. Investment interest is deductible only to the extent of such taxpayer’s net investment income for
the taxable year.

“Net investment income” means the excess of investment income over investment
expenses. Long term capital gain from the disposition of investment property is not considered net
investment income unless the taxpayer elects to include the amount of such net capital gain as ordinary
income. Excess investment interest expense may be carried forward to and deducted in subsequent
taxable years to the extent it would be deductible if incurred in that year. This limitation, if applicable,
will be computed separately by each non-corporate Partner and not by the Partnership.

Investment Expenses. Individual taxpayers are subject to significant limitations on

deductions for investment advisory expenses, margin or other interest expenses incurred by the
Partnership to carry on its business, and other expenses of producing income. Whether your share of the
management fees and interest paid by the Partnership will be subject to these limitations will generally
depend on whether the Partnership is engaged in a trade or business activity for federal income tax
purposes or in an investor activity. The Partnership may take the position it is engaged in a trade or
business but this position could be challenged by the Service. If such a challenge were successful, Limited
Partners’ ability to deduct the Partnership’s management fees and interest would be limited. The Service
also could assert that the Performance Allocation is an investment advisory expense rather than a profit
“allocation” and, thus, subject it to these limitations.

Syndication Expenses. Syndication expenses relating to the promotion and sale of

Interests (including sales commissions paid by or on behalf of Partners in connection with the purchase of
Interests) must be capitalized and may not be deducted by the Partnership or any Partner. There can be no
assurance that the Service will not contend that amounts treated as deductible by the Partnership should
not be currently deducted, or that amounts claimed as organization costs should instead be treated as
syndication costs.

Wash Sales. Section 1091 of the Code disallows any deduction for losses arising from the
sale or other disposition of “shares of stock or securities” where, within a period beginning 30 days before
such sale or disposition and ending 30 days afterwards, the taxpayer acquires by purchase or by an
exchange on which the entire amount of gain or loss is recognized “substantially identical” stock or
securities. The disallowance also applies where, within the 61-day period, the taxpayer enters into a
contract or option to acquire substantially identical stock or securities. In instances where this rule
applies, appropriate adjustments are made to the basis of the stock, securities or options the acquisition of
which resulted in application of the rule. Hence, if the Partnership were to effect a “wash sale’ the
Partnership would not be able to recognize any loss realized in connection with the sale.

Taxation of Foreign Investors. An investment in the Partnership could have significant U.S.
federal income tax implications for foreign investors. Foreign investors should consider the potential U.S.
and local tax implications carefully and discuss them with their own tax adviser.
Taxation of Benefit Plans and Other Tax-Exempt Entities

Generally, “qualified” pension or profit sharing plans, IRAs and other tax-exempt entities
(collectively “Tax-Exempt Entities”) are exempt from Federal income tax on their passive investment
income, such as dividends, interest and capital gains, whether realized by the Tax-Exempt Entity directly
or indirectly through a partnership in which it is a partner. However, in some cases, Tax-Exempt Entities
may be subject to tax on a part of their share of income from an investment partnership. Tax-Exempt
Entities considering investing in the Partnership are urged to consult their own tax advisers.

The general exemption from tax for Tax-Exempt Entities does not apply to “unrelated business
taxable income” (“UBTI”). UBTI includes “unrelated debt-financed income,” which generally consists of
(i) income derived by a Tax-Exempt Entity (directly or through a partnership) from income-producing
property as to which there is “acquisition indebtedness” at any time during the taxable year, and (ii) gains
derived by a Tax-Exempt Entity (directly or through a partnership) from the disposition of property as to
which there is “acquisition indebtedness” at any time during the twelve-month period ending with the
date of such disposition. The Partnership may incur “acquisition indebtedness” through, among other
transactions, purchases of securities on margin. Since the calculation of the Partnership’s “unrelated debt-
financed 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.

To the extent the Partnership generates UBTI, a Tax-Exempt Limited Partner would be subject to
tax at the regular corporate tax rate. A Tax-Exempt Entity may be required to support, to the satisfaction
of the Service, the method used to calculate its UBTI. Each year the Partnership will be required to report
to a Partner that is a Tax-Exempt Entity the portion of its income and gains from the Partnership that will
be treated as UBTI. The calculation of that amount will be highly complex and there is no assurance that
the Partnership’s calculation of UBTI will be accepted by the Service.

Charitable Remainder Trusts. An investment in the Partnership may be inappropriate for a

charitable remainder trust. Pursuant to Code section 664(c), a charitable remainder trust that has any
UBTI in a taxable year is assessed an excise tax equal to the amount of such UBTI. The General Partner
anticipates that the Partnership may invest on margin and purchase other assets under circumstances that
may be deemed to involve acquisition indebtedness, and thus may generate UBTI. See the discussion of
UBTI above. A charitable remainder trust should consult with its own tax advisors before determining to
invest in the Partnership.

Administrative Matters

Partnership Tax Election, Returns, Audits. The Partnership may make various elections for
federal income tax purposes that could result in certain items of income, gain, loss and deduction being
treated differently for tax and accounting purposes. Elections permitted under the Code that may affect
the determination of the Partnership’s income, the deductibility of expenses, accounting methods and the
like must be made by the Partnership and not by the Partners, and these elections will be binding in most
cases on all Partners. Although the Partnership may elect to make optional adjustments to the basis of its
property upon distributions of Partnership property to a Partner and transfers of Interests, including
transfers by reason of death (Section 751 election), the General Partner does not currently anticipate
making that election.

The Partnership will file an annual partnership information return with the Service reporting the
results of its operations. After the end of each calendar year it will disseminate federal income tax
information reasonably necessary to enable each Partner to report its distributive share of the
Partnership’s
Partnership items. Each Partner must treat Partnership items reported on the Partnership’s returns
consistently on the Partner’s own returns, unless the Partner files a statement with the Service disclosing
the inconsistency.

The Code contains special procedures for the audit of partnerships by the Service. All such audits
will be at the Partnership level, and no deficiency resulting from such an audit will be assessed against a
Partner until the correctness of any challenge by the Service to any of the Partnership’s federal returns is
determined at the administrative or judicial level. The Partnership Agreement designates the General
Partner as the Partnership’s “tax matters partner,” who has considerable authority to make decisions
affecting the tax treatment and procedural rights of all Partners. An audit of the Partnership’s federal
returns may result in its income, and therefore items of income, gain, loss and deduction allocated to each
Partner, being adjusted. Any such adjustment will require each Partner to file an amended federal income
tax return for each year involved and may also result in an audit of the federal income tax returns of one
or more Partners.

State and Local Taxes. In addition to the federal income tax consequences described above, the
Partnership and the Limited Partners may be subject to various state and local taxes. Limited Partners
should consult their own tax advisers as to the application of income and other taxes imposed in their
states of residence, and in states where they are engaged in business, with respect to their investment in
the Partnership.

Foreign Taxes. The Partnership may invest in securities of entities that do business in foreign
countries. Foreign sovereigns sometimes impose a withholding tax on payments of interest, dividends and
capital gains to Partners residing in other countries and not otherwise subject to tax by that sovereign.
Some potential withholding taxes may be reduced or eliminated under tax treaties. Any withholding taxes
imposed will be treated as distributions to the appropriate Partners in the period in which such taxes are
withheld. The corresponding foreign tax payments will be allocated to Partners based on the deemed
distribution for purposes of claiming a foreign tax credit or deduction.

ERISA CONSIDERATIONS FOR FIDUCIARIES OF EMPLOYEE BENEFIT PLANS

In considering an investment in the Partnership, employee benefit plan fiduciaries should consider
whether the investment is in accordance with the documents and instruments governing such employee
benefit plan, whether the investment satisfies the diversification and other requirements of Title I of
ERISA, if applicable, whether the investment will result in unrelated business taxable income to the
employee benefit plan (see “Certain Tax Considerations—Taxation of Benefit Plans and Other Tax-
Exempt Entities”), and whether the investment provides sufficient liquidity and is otherwise prudent in
view of the employee benefit plan’s needs. Generally, all employee benefit plans, other than
governmental plans, plans of churches and similar organizations and foreign plans, are subject to Title I of
ERISA.

DOL regulations define what constitutes the assets of an employee benefit plan. These regulations
provide that, when an employee benefit plan invests in an equity interest in an entity, the employee
benefit plan’s assets will include both the equity interest and the undivided interest in each of the
underlying assets of the entity, unless the “less than 25%” exception (or another exception) is applicable.
The “less than 25%” exception applies on any date if, immediately after the most recent acquisition or
disposition of any equity interest in the entity, less than 25% of the value of each class of equity interest
in the entity is held by Plan Investors and “funds of funds” whose assets are treated as plan assets by
virtue of DOL regulations. Although governmental plans and plans of churches and similar organizations
are generally not subject to Title I of ERISA, they are generally included in the calculation. Also, other
Plan Investors, such as IRAs and plans covering only the owners of the plan sponsors, are generally
included. Interests held by the
General Partner and its affiliates are not included in the calculation unless those Interests are held by Plan
Investors maintained by the General Partner or any of its affiliates. None of the other exceptions is likely
to be applicable to investments in the Partnership.

If, by virtue of DOL regulations, investment in the Partnership by an employee benefit plan that is
subject to Title I of ERISA is deemed to be an investment by such employee benefit plan in the
underlying assets of the Partnership, the General Partner will be a fiduciary of such employee benefit
plan, with the following consequences: (a) the prudence standards, bonding requirements and other
provisions of Part 4 of Title I of ERISA applicable to investments by such an employee benefit plan and
its fiduciaries may extend to investments made by the Partnership, (b) co-fiduciary responsibility would
arise as between the fiduciaries of such an employee benefit plan and the General Partner, because the
General Partner would be deemed to be a fiduciary of the employee benefit plan, (c) financial information
concerning the Partnership would be required to be reported annually to the DOL, and (d) certain
transactions that the Partnership has entered into or might seek to enter into might constitute “prohibited
transactions” under ERISA and the Code, subject to a requirement that such transactions be rescinded and
resulting in potential penalties or excise tax liability and other fiduciary liability of the General Partner.
The potential excise tax liability described in clause (d) of the preceding sentence may also apply with
respect to some Plan Investors that are not employee benefit plans subject to Title I of ERISA, such as
IRAs and plans covering only the owners of the plan sponsors. See “Certain Tax Considerations—
Taxation of Benefit Plans and Other Tax- Exempt Entities.”

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[The next page is the Glossary]

 GLOSSARY

The capitalized terms used in this Prospectus have the meanings set forth in this glossary.

“Accredited Investor” — means an “accredited investor” as defined in Regulation D under the Securities
Act.

“Administrator” — means Yulish and Associates.

“Advisers Act” — means the U.S. Investment Advisers Act of 1940, as amended.

“Benefit Plan Investor” — means any of the following: (i) an employee benefit plan (as defined in
Section 3(3) of ERISA), whether or not it is subject to Title I of ERISA, including, but not limited to (A)
a plan which is maintained by a U.S. or non-U.S. corporation, governmental entity or church, (B) a Keogh
plan, and (C) an individual retirement account; (ii) a plan described in Section 4975(e)(1) of the Code; or
(iii) a non-U.S. entity or U.S. entity that is not an operating company and that is not publicly traded or
registered as an investment company under the Company Act, and in which 25% or more of the value of
any class of equity interests is held by a Benefit Plan Investor described in clause (i) or (ii) above.

“Code” — means the U.S. Internal Revenue Code of 1986 as amended.

“Custodian” — means Pershing, LLC.

“Employee Benefit Plan” — means a benefit plan investor within the meaning of U.S. Department of
Labor Regulation §2510.3-101(f)(2)).

“ERISA” — means the Employee Retirement Income Security Act of 1974, as the same may be amended
from time to time.

“General Partner” — means BDC Investment Advisors, LLC, a California limited liability company
(formerly named Southland Capital Management, LLC), any successor thereto, and any persons hereafter
admitted as additional general partners, in its or their capacity as general partner of the Partnership.

“Interest” — means the entire ownership interest of a Partner in the Partnership at the relevant time,
including the right of such Partner to any and all benefits to which a Partner may be entitled as provided
herein and in the Partnership Agreement, together with the obligations of such Partner to comply with all
the terms and provisions of the Partnership Agreement.

“Investment Company Act” — means the U.S. Investment Company Act of 1940, as amended.

“Investor Questionnaire” — means the investor questionnaire contained in the Subscription Documents.

“IRS” — means the U.S. Internal Revenue Service.

“Limited Partner” — means a person having a limited partnership interest in the Partnership.

“NAV” — means the Partnership’s net asset value.

“Offering Memorandum” — means this Confidential Offering Memorandum.

“Partners” — means the General Partner and all Limited Partners of the Partnership.

“Partnership” — means BDC Fund II, LP.

“Plan Assets” — means the assets of an Employee Benefit Plan.

“Prime Broker” — means M.S. Howells & Co.

“Plan Investor” — means any Employee Benefit Plan, any plan that covers only owners of the plan
sponsor, any individual retirement account as described in Code section 408(a) (an “IRA”), and any bank
commingled trust fund for any or all of the foregoing.

“Regulations” — means the regulations promulgated under the Code.

“SEC” — means the U.S. Securities and Exchange Commission.

“Securities Act” — means the U.S. Securities Act of 1933, as amended.

“Subscription Agreement” — means the subscription agreement contained in the Subscription

Documents.

“Subscription Documents” — means the subscription documents approved by the General Partner for
subscriptions for Interests annexed hereto as Annex I.

“UBTI” — means Unrelated Business Taxable Income.

“Unrecouped Losses” — means all net losses allocated to that Limited Partner reduced (but not below
zero) by all net profits allocated to that Limited Partner in the fiscal year that the net losses are so
allocated, or allocated to that Limited Partner in any subsequent year.

35
 EXHIBIT A

AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP
of
BDC FUND II, LP
(A California Limited Partnership)
 BDC FUND II, LP
A California Limited Partnership

AMENDED AND RESTATED

AGREEMENT OF LIMITED
PARTNERSHIP

Neither the Partnership nor the limited partnership interests therein have been or will be registered
under the Securities Act of 1933, as amended (the “Securities Act”), the Investment Company Act
of 1940, as amended, or the securities laws of any of the States of the United States. The offering of
such limited partnership interests is being made in reliance upon an exemption from the
registration requirements of the Securities Act, for offers and sales of securities which do not
involve any public offering, and analogous exemptions under state securities laws.

These securities are subject to restrictions on transferability and resale, may not be transferred or
resold except (i) as permitted under the Securities Act and applicable state securities laws pursuant
to registration or exemption therefrom, and (ii) in accordance with the requirements and conditions
set forth in this Limited Partnership Agreement.
 TABLE OF CONTENTS
Page

1. Formation..............................................................................................................................................1
2. Name.....................................................................................................................................................1
3. Term......................................................................................................................................................1
4. Addresses..............................................................................................................................................1
4.1. Partnership and General Partner....................................................................................................1
4.2. Limited Partners............................................................................................................................2
4.3. Agent for Service of Process.........................................................................................................2
5. Certain Definitions................................................................................................................................2
5.1. Act.................................................................................................................................................2
5.2. Adjusted Capital Account Deficit..................................................................................................2
5.3. Affiliate.........................................................................................................................................2
5.4. Capital Account.............................................................................................................................2
5.5. Capital Contribution......................................................................................................................3
5.6. Code..............................................................................................................................................3
5.7. Fiscal Period..................................................................................................................................3
5.8. Fiscal Quarter................................................................................................................................4
5.9. Fiscal Year....................................................................................................................................4
5.10. ICA..............................................................................................................................................4
5.11. Interest.........................................................................................................................................4
5.12. Limited Partner............................................................................................................................4
5.13. Majority in interest......................................................................................................................4
5.14. Net profit and net loss.................................................................................................................4
5.15. Ownership Percentage.................................................................................................................4
5.16. Partner.........................................................................................................................................4
5.17. Performance Allocation...............................................................................................................4
5.18. Regulations..................................................................................................................................4
5.19. Subscription Agreement..............................................................................................................4
6. Business of the Partnership...................................................................................................................4
7. Other Activities.....................................................................................................................................5
8. No Conflict...........................................................................................................................................5
9. Capital...................................................................................................................................................5
9.1. Limited Partners' Contributions.....................................................................................................5
9.2. General Partner's Capital Contributions........................................................................................5
9.3. No Interest.....................................................................................................................................5
9.4. No Other Contributions.................................................................................................................5
10. Profits and Losses.................................................................................................................................5
10.1. Books..........................................................................................................................................5
10.2. Accountings.................................................................................................................................5
10.3. Capital Accounts.........................................................................................................................6
10.4. Contingent Loss Accounts...........................................................................................................6
10.5. Allocations..................................................................................................................................6
10.6. Distributions..............................................................................................................................11
10.7. Valuation...................................................................................................................................12
10.8. Bank and Other Accounts..........................................................................................................12
11. Expenses.............................................................................................................................................13
12. The General Partner............................................................................................................................13
12.1. Management..............................................................................................................................13
 12.2. Expulsion of Limited Partners...................................................................................................15
12.3. Indemnity and Limitation of Liability.......................................................................................16
12.4. Tax Matters Partner...................................................................................................................17
13. Liability, Rights and Duties of Limited Partners.................................................................................17
13.1. Limited Liability........................................................................................................................17
13.2. Management..............................................................................................................................17
13.3. Withdrawals by Limited Partners..............................................................................................18
13.4. Adjustments to Withdrawal Proceeds........................................................................................18
13.5. Withdrawals by the General Partner..........................................................................................18
13.6. Distributions..............................................................................................................................18
13.7. Withholding on Withdrawals, Distributions and Allocations....................................................18
13.8. Restrictions on Withdrawal and Distributions...........................................................................19
13.9. Withdrawal or Dissolution of General Partner...........................................................................19
14. Dissolution and Termination...............................................................................................................19
14.1. Events of Dissolution................................................................................................................19
15. Assignments........................................................................................................................................20
15.1. General Partner..........................................................................................................................20
15.2. Limited Partners........................................................................................................................21
16. Amendments.......................................................................................................................................22
16.1. With Limited Partner Approval.................................................................................................22
16.2. Without Limited Partner Approval............................................................................................22
16.3. Amendments Requiring Unanimous Consent............................................................................23
17. Tax Elections......................................................................................................................................23
18. Power of Attorney...............................................................................................................................23
19. Notices................................................................................................................................................24
20. Severability.........................................................................................................................................24
21. Governing Law...................................................................................................................................24
22. Binding Effect.....................................................................................................................................24
23. Partition...............................................................................................................................................24
24. Counterparts........................................................................................................................................24
25. Entire Agreement................................................................................................................................24
26. Further Assurances..............................................................................................................................24
27. Headings; Gender; Number; References.............................................................................................24

ii
 AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

BDC FUND II, LP

This Amended and Restated Limited Partnership Agreement of BDC Fund II, LP, a California
limited partnership (the "Partnership"), is entered into as of the th day of , 2017 (this
"Agreement") by and between BDC Investment Advisors, LLC, a California limited liability company
(the "General Partner"), with an address at 1600 Rosecrans Avenue, 4th Floor, Manhattan Beach,
California 90266 and certain persons and entities as limited partners (the "Limited Partners" which
together with the General Partner shall collectively be referred to as the "Partners"). This Agreement
amends and restates in its entirety the Agreement of Limited Partnership dated as of , 2010.

Partnership.

1 Formation. The Partnership was formed under the California Revised Limited
Partnership Act (as in effect on the date hereof and as amended from time to time, the "Act") by the filing
of its Certificate of Limited Partnership ("Certificate") with the Secretary of State of California. 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 the requirements for the
formation and operation of the Partnership as a limited partnership under this Agreement and the Act and
under all other laws of the State of California and such other jurisdictions 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 execute all relevant certificates and other documents, as the General
Partner shall request.

2 Name. The name of the Partnership shall be, and its business shall be conducted under
the name, "BDC FUND II, LP" or such other name as the General Partner may hereafter adopt upon
causing an amendment to the Certificate to be filed with the Secretary of State of the State of California.
The Partnership shall have the exclusive ownership and right to use the Partnership name so long as the
Partnership continues, despite the withdrawal, expulsion, resignation or removal of any Limited Partner,
but upon the Partnership's termination or such time as there ceases to be a General Partner, the
Partnership shall assign the name and goodwill attached thereto to the General Partner without payment
by the assignee(s) of any consideration therefore.

3 Term. The term of the Partnership commenced upon filing of the Partnership's
Certificate with the California Secretary of State and shall continue indefinitely unless earlier terminated
as hereinafter provided.

4 Addresses.

4.1 Partnership and General Partner. The principal place of business and principal
executive office of the Partnership shall be the office of the General Partner at 1600 Rosecrans Avenue,
4th Floor, Manhattan Beach, California, or such other place or places as the General Partner may from
time to time designate by notice to each Limited Partner. The Partnership may also maintain such other
offices at such other places as the General Partner may deem advisable.

1
 4.2 Limited Partners. A current list of the full name and address of each Limited
Partner shall be kept with the records of the Partnership. A Limited Partner may change its address by
notice to the General Partner, which notice shall become effective on receipt or such later time as the
notice may specify.

4.3 Agent for Service of Process. The agent for service of process of the Partnership
in the State of California shall be Nicholas Marshi and the address for service of process is 1600
Rosecrans Avenue, 4th Floor, Manhattan Beach, California 90266. The General Partner may change such
agent for service of process or such address from time to time in the manner provided by applicable law;
provided that the Partnership shall continually maintain in California an agent for service of process of the
Partnership.

5 Certain Definitions. As used in this Agreement, the following terms shall have the
meanings indicated:

5.1 "Act" means the California Revised Limited Partnership Act as in effect on the
date hereof and as amended from time to time.

5.2 "Adjusted Capital Account Deficit" means, with respect to any Partner, the
deficit balance, if any, in the Capital Account of such Partner as of the end of the relevant Fiscal
Year, after giving effect to the following adjustments:

(a) Credit to such Capital Account any amounts that such Partner is obligated to
restore or is deemed to be obligated to restore pursuant to the penultimate sentence of
Regulations section 1.704-1(b)(4)(iv)(f); and

(b) Debit to such Capital Account the items described in Regulations sections 1.704-
1(b)(2)(ii)(d) (4), (5) and (6).

The definition of Adjusted Capital Account Deficit, as set forth in this section 5.2, is intended to
comply with Regulations section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

5.3 "Affiliate" means, when used with reference to a specified person, any person
directly or indirectly controlling, controlled by or under common control with the specified
person, a person owning or controlling ten percent or more of the outstanding voting securities of
the specified person, a person ten percent or more of whose outstanding voting securities are
owned or controlled by the specified person, any officer, director, general partner or trustee of the
specified person, and if the specified person is an officer, director, general partner or trustee, any
corporation, partnership or trust for which the specified person acts in any such capacity.

5.4 "Capital Account" means:

(a) Each individual Capital Account that shall be established and maintained for
each Partner in accordance with the following provisions:

(i) To the Capital Account of each Partner there shall be credited such
Partner's Capital Contribution(s), such Partner's share of net profit with respect thereto,
any items in the nature of income or gain that are specifically allocated thereto pursuant
hereto and the amount of any Partnership liabilities that are personally assumed by such
Partner or that are secured by any Partnership property distributed to such Partner with
respect thereto;
 (ii) From the Capital Account of each Partner, there shall be debited the
amount of cash and the gross asset value of any Partnership property distributed to such
Partner pursuant to any provision of this Agreement with respect thereto, such Partner's
share of net loss with respect thereto, any items in the nature of expenses or net loss that
are specifically allocated thereto pursuant hereto and the amount of any liabilities of such
Partner that are assumed by the Partnership or that are secured by any property
contributed by such Partner to the Partnership with respect thereto; and

(iii) In determining the amount of any liability, there shall be taken into
account Code section 752(c) and any other applicable provisions of the Code and
Regulations.

(b) If any interest in the Partnership is transferred in accordance with this

Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent that
they relate to the transferred interest.

(c) If the gross asset value of Partnership assets is adjusted pursuant hereto, the
respective Capital Account of all Partners shall be adjusted simultaneously to reflect the
aggregate net adjustment as if the Partnership were to have recognized gain or loss equal to the
amount of such aggregate net adjustment.

(d) The foregoing provisions and other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Regulations section 1.704-1(b),
and shall be interpreted and applied in a manner consistent therewith. If the General Partner
determines that it is prudent to modify the manner in which the Capital Accounts, or any debits or
credits thereto, are computed, the General Partner may make such modification if it is not likely
to have a material adverse effect on amounts distributable to any Partner pursuant hereto upon the
dissolution of the Partnership. The General Partner shall adjust the amounts debited or credited to
Capital Accounts with respect to any property contributed to the Partnership or distributed to a
Partner and any liabilities secured by such contributed or distributed property or assumed by the
Partnership or Partner in connection with such contribution or distribution if the General Partner
determines that such adjustments are necessary or appropriate under Regulations section 1.704-
1(b)(2)(iv). The General Partner shall also make any appropriate modifications if unanticipated
events might cause this Agreement not to comply with Regulations section 1.704-1(b), and the
General Partner shall make all elections provided for under such Regulations.

5.5 "Capital Contribution" means a cash investment by a Partner in the Partnership,

whether initially contributed or subsequently contributed as permitted herein, but excluding loans
designated as such.

5.6 "Code" means the Internal Revenue Code of 1986, as amended from time to time
(or any corresponding provisions of succeeding law).

5.7 "Fiscal Period" means the period that begins on the first day of each Fiscal Year,
and thereafter on the day immediately following the last day of the preceding Fiscal Period, and
that ends on the earliest of the last day of any calendar month, or any date as of which any
withdrawal or distribution of capital is made by or to any Partner, or the date that immediately
precedes the acceptance by the Partnership of any additional Capital Contribution or the
admission of any Partner.
 5.8 "Fiscal Quarter" means each period of three calendar months ending on any
March 31, June 30, September 30 or December 31.

5.9 "Fiscal Year" means the period from the date that the Partnership commences
through the succeeding December 31, or from any subsequent twelve-month period ending on the
succeeding December 31.

5.10 "ICA" means the Investment Company Act of 1940, as amended.

5.11 "Interest" means a unit of interest as a Limited Partner in the Partnership

representing a Capital Contribution by such Limited Partner of an amount determined as provided
in section 9.1.

5.12 "Limited Partner" means a limited partner of the Partnership.

5.13 "Majority in interest" of the Partners (or a class of Partners) means Partners (or
Partners of that class) whose Ownership Percentages aggregate more than fifty percent of the
Ownership Percentages of all Partners (or all Partners of that class).

5.14 "Net profit" and "net loss" mean for each Fiscal Year, Fiscal Quarter or Fiscal
Period, an amount equal to the Partnership's income or loss for such Fiscal Year, Fiscal Quarter
or Fiscal Period, determined in accordance with Code section 703(a) (for this purpose, all items
of income, gain, loss or deduction required to be stated separately pursuant to Code section
703(a)(1) shall be included in taxable income or loss).

5.15 "Ownership Percentage" of a Partner at any date means the percentage computed
by dividing the sum of that Partner's Capital Account balance at that date by the aggregate of all
Partners' Capital Account balances at that date.

5.16 "Partner" means a Limited Partner or a General Partner.

5.17 "Performance Allocation" has the meaning ascribed to it in Section 10.5.

5.18 "Regulations" means the Income Tax Regulations promulgated under the Code,
as such regulations may be amended from time to time (including corresponding provisions of
succeeding regulations).

5.19 "Subscription Agreement" means the subscription documents approved by the

General Partner for subscriptions for interests.

6 Business of the Partnership. The Partnership is organized to serve as a fund through

which the assets of its Partners may be utilized in investing and trading in a wide variety of securities and
financial instruments, domestic and foreign, whether publicly traded or privately placed, including but not
limited to common and preferred stocks, bonds and other debt securities, convertible securities, limited
partnership interests, mutual fund shares, options, warrants, commodities, futures contracts, currencies
(including forward contracts thereon), derivative products (including interest rate and currency derivatives
and structured/indexed securities), monetary instruments and cash and cash equivalents. In furtherance of
the foregoing, the Partnership may engage in any lawful act or activity for which limited partnerships may
be formed under the Act, and any and all activities necessary or incidental thereto.
 7 Other Activities. Any Partner and such Partner's Affiliates may engage in any activities,
whether or not related to the business of the Partnership, the Partners specifically recognizing that some
or all of them and their Affiliates are engaged in various aspects of the securities business, both for their
own accounts and for others, and such Partners may continue or initiate further, such activities.

8 No Conflict. The fact that any Partner, or any Affiliate of any Partner, or a member of
his or her family, is employed by, or is directly or indirectly interested in or connected with, any person,
firm or corporation employed or engaged by the Partnership to render or perform a service, or from whom
the Partnership may make any purchase, or to whom the Partnership may make any sale, or from or to
whom the Partnership may obtain or make any loan or enter into any lease or other arrangement, shall not
prohibit the Partnership from engaging in any transaction with such person, firm or corporation, or create
any additional duty of legal justification by such Partner or such person, firm or corporation beyond that
of an unrelated party, and neither the Partnership nor any other Partner shall have any right in or to any
revenues or profits derived from such transaction by such Partner, Affiliate, person, firm or corporation.

9 Capital.

9.1 Limited Partners' Contributions. Each Limited Partner has contributed or shall
contribute to the capital of the Partnership the amount in cash, or in kind or partly in cash and
partly in kind, of its Capital Contribution subscribed by such Limited Partner and approved by the
General Partner, in its exclusive discretion. The General Partner may, in its sole discretion,
accept initial Capital Contributions from persons wishing to become limited partners at any time.
Any Partner may, subject to the approval of the General Partner, make additional Capital
Contributions on the first day of each month (or such other time as the General Partner may
approve, in its exclusive discretion); provided that no benefit plan investor shall make additional
Capital Contributions if the effect of such contributions would be to cause any of the
Partnership's assets to be deemed assets of a benefit plan investor.

9.2 General Partner's Capital Contributions. The General Partner may contribute
such amount or amounts to the capital of the Partnership as it may from time to time, in its
exclusive discretion, elect to contribute.

9.3 No Interest. No Partner shall be entitled to receive from the Partnership payment
of any interest on any Capital Contribution.

9.4 No Other Contributions. Without the vote or consent of all Partners, no Partner
shall contribute any funds or other property to the capital of the Partnership except as is
expressly required or permitted by this Agreement.

10 Profits and Losses.

10.1 Books. The General Partner shall maintain complete and accurate accounts in
proper books of all transactions of or on behalf of the Partnership and shall enter or cause to be
entered therein a full and accurate account of all transactions, things and matters relating to the
Partnership's business as are required by the Commodity Exchange Act, the Investment Advisers
Act and applicable state law. The Partnership's books and accounting records shall be kept in
accordance with generally accepted accounting principles consistently applied throughout each
accounting period.

10.2 Accountings. As soon as is reasonably practicable after the close of each Fiscal
Year, the General Partner shall cause to be made by an independent certified public accountant
selected by the General Partner a full and accurate accounting of the affairs of the Partnership as
of the close of that Fiscal Year, including a balance sheet as of the end of such Fiscal Year, a
profit and loss statement for that Fiscal Year and a statement of Partners' equity showing the
respective Capital Accounts of the Partners as of the close of such Fiscal Year and the
distributions, if any, to Partners during such Fiscal Year, and any other statements and
information necessary for a complete and fair presentation of the financial condition of the
Partnership, all of which the General Partner shall furnish to each Partner. The General Partner
shall furnish to each Partner information necessary for such Partner to complete such Partner's
Federal and state income tax returns. In addition, the Partnership shall prepare or cause to be
prepared and furnished to Partners such reports as are required to be given by the rules and
regulations promulgated by the U.S. Securities and Exchange Commission and any other reports
required by any other governmental authority which has jurisdiction over the activities of the
Partnership.

10.3 Capital Accounts. A separate Capital Account shall be maintained for each
Partner. Each Partner's share of the net profit or net loss attributable to the Capital Account of
such Partner shall be credited or debited, and any distributions to or withdrawals by such Partner
from such Capital Account shall be debited, to such Capital Account, as provided in section 5.4,
this section 10 and section 13.3.

10.4 Contingent Loss Accounts. A "Contingent Loss Account" shall be maintained

for each Partner. The Contingent Loss Account with respect to the Capital Account of any
Partner shall be increased by an amount equal to the net loss allocated to such Partner's Capital
Account under section 10.5, and reduced (but not below zero) by and to the extent of all net profit
subsequently allocated to such Capital Account under section 10.5. If a Limited Partner
withdraws or is distributed capital from the Partnership, that Limited Partner's Contingent Loss
Account shall be reduced proportionately based on the amount withdrawn or distributed.

10.5 Allocations. All net loss and all net profit for each Fiscal Period, except for
management fee expense which shall be allocated to each Limited Partner in accordance with
section 11.1, shall be allocated as of the last day of the Fiscal Period to the Partners in proportion
to their respective Capital Account balances as of the first day of such Fiscal Period; provided
that, as of the close of business on the last day of each Fiscal Year, the Partnership specially
allocates to the General Partner twenty (20) percent of the amount by which the profits (including
realized and unrealized gains and losses) of the Partnership allocable to each Limited Partner's
Capital Account in such Fiscal Year exceed the remaining unrecouped losses, if any, in such
Limited Partner's Contingent Loss Account (the "Performance Allocation"). The General Partner
receives the Performance Allocation, calculated and payable as of the last day of each Fiscal Year
prior to any accruals for, or the payment of, the Performance Allocation, but after adjustment for
any redemptions during that Fiscal Year. The General Partner, in its exclusive discretion, may
waive all or any portion of the Performance Allocation with respect to the Capital Account of any
Limited Partner. The Performance Allocation for any Fiscal Year is not subject to recapture or
reduction by reason of any Limited Partner incurring Losses in any subsequent Fiscal Year. In the
case of a Limited Partner who withdraws from the Partnership other than on the last day of a
Fiscal Year, the Performance Allocation with respect to such Limited Partner shall be calculated
as though the withdrawal date were the last day of that Fiscal Year. Anything herein to the
contrary notwithstanding, any recapture under applicable tax laws shall be allocated to the
Partners in the same proportions as the item generating the recapture shall have been allocated.
The taxable income and loss of the Partnership shall be allocated to the Partners, for purposes of
Federal and state income tax reporting, in the same manner as net profit and net loss are allocated
pursuant to this section 10.5, as adjusted pursuant to section 10.5.1.
 10.5.1 Special Capital Account Allocations. Notwithstanding the allocation
provisions of section 10.5, the following special allocations shall be made in allocating
net profit and net loss in the following order:

10.5.1.1 Minimum Gain Chargeback. Notwithstanding any other

provision of this section 10.5.1, if there is a net decrease in Partnership Minimum Gain
during any Fiscal Year, each Partner shall be specially allocated items of Partnership
income and gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an
amount equal to the portion of such Partner's share of the net decrease in Partnership
Minimum Gain, determined in accordance with Regulations section 1.704- 1T(b)(4)(iv)
(f), that is allocable to the disposition of Partnership property subject to Nonrecourse
Liabilities, determined in accordance with Regulations section 1.704- 1T(b)(4)(iv)(e).
Allocations pursuant to the preceding sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto. The items to
be so allocated shall be determined in accordance with Regulations section 1.704-1T(b)
(4)(iv)(e). This section 10.5.1.1 is intended to comply with the minimum gain chargeback
requirement in such Regulations section and shall be interpreted consistently therewith.

10.5.1.2 Partner Minimum Gain Chargeback. Notwithstanding any

other provision of section 10.5 except section 10.5.1.1, if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any Fiscal Year, each
Partner who has a share of the Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Regulations section 1.704- 1T(b)(4)
(iv)(h)(5), shall be specially allocated items of Partnership income and gain for such
Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount equal to the portion
of such Partner's share of the net decrease in Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Regulations section 1.704-
1T(b)(4)(iv)(h)(5), that is allocable to the disposition of Partnership property subject to
such Partner Nonrecourse Debt, determined in accordance with Regulations section
1.704-1T(b)(4)(iv)(h)(4). Allocations pursuant to the preceding sentence shall be made in
proportion to the respective amounts required to be allocated to each Partner pursuant
thereto. The items to be so allocated shall be determined in accordance with Regulations
section 1.704-1T(b)(4)(iv)(h)(4). This section 10.5.1.2 is intended to comply with the
minimum gain chargeback requirement in such Regulations section and shall be
interpreted consistently therewith.

10.5.1.3 Qualified Income Offset. If a Partner (who is not a General

Partner) unexpectedly receives any adjustments, allocations or distributions described
in Regulations section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704- 1(b)(2)
(ii)(d)(6), items of Partnership income and gain shall be specially allocated to such
Partner in an amount and manner sufficient to eliminate, to the extent required by the
Regulations, the Adjusted Capital Account Deficit of such Partner as quickly as
possible; provided that an allocation pursuant to this section 10.5.1.3 shall be made if
and only to the extent that such Partner would have an Adjusted Capital Account
Deficit after all other allocations provided for in this section 10.5.1 have been
tentatively made as if this section 10.5.1.3 were not in this Agreement.

10.5.1.4 Gross Income Allocation. If any Partner has a deficit Capital

Account at the end of any Fiscal Year that is in excess of the sum of the amount such
Partner is obligated to restore pursuant to this Agreement, the amount the Partner is
 deemed to be obligated to restore pursuant to the penultimate sentence of Regulations
sections 1.704-1T(b)(4)(iv)(f) and 1.704-1T(b)(4)(iv)(h)(5), and the amount such
Partner would be deemed obligated to restore if Partner Nonrecourse Deductions were
treated as Nonrecourse Deductions, such Partner shall be specially allocated items of
Partnership income and gain in the amount of such excess as quickly as possible;
provided that an allocation pursuant to this section 10.5.1.4 shall be made if and only to
the extent that such Partner would have a deficit Capital Account in excess of such sum
after all other allocations provided for in this section 10.5 have been tentatively made
as if section 10.5.1.3 and this section 10.5.1.4 were not in this Agreement.

10.5.1.5 Nonrecourse Deductions. Nonrecourse Deductions for any

Fiscal Year or other period shall be specially allocated to the Partners in proportion to
their Ownership Percentages.

10.5.1.6 Partner Nonrecourse Deductions. Any Partner Nonrecourse

Deductions for any Fiscal Year or other period shall be allocated to the Partner who bears
the risk of loss with respect to the loan to which such Partner Nonrecourse Deductions
are attributable in accordance with Regulations section 1.704-1T(b)(4)(iv)(g) (or
Regulations section 1.704-1T(b)(4)(iv)(h), if it becomes applicable to the Partnership).
To the extent permitted by Regulations sections 1.704-1T(b)(4)(iv)(g) and 1.704- 1T(b)
(4)(iv)(h)(7), the General Partner shall endeavor to treat distributions as having been
made from the proceeds of a Nonrecourse Liability or a Partner Nonrecourse Debt only to
the extent that such distributions would cause or increase an Adjusted Capital Account
Deficit for any Partner.

10.5.1.7 Section 754 Adjustment. If an adjustment to the adjusted tax

basis of any Partnership asset pursuant to Code section 734(b) or 743(b) is required,
pursuant to Regulations section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment shall be treated as an item
of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis) and such gain or loss shall be specially allocated to the Partners in a
manner consistent with the manner in which their Capital Accounts are required to be
adjusted pursuant to such Regulations section.

10.5.1.8 Imputed Interest. If the Partnership has taxable interest

income with respect to any promissory note pursuant to Code section 483 or Code
sections 1271 through 1288, (a) such interest income shall be specially allocated to the
Partner to whom such promissory note relates, and (b) the amount of such interest income
shall be excluded from the Capital Contribution credited to such Partner's Capital
Account in connection with payments of principal on such promissory note.

10.5.1.9 Basis Increases. If the adjusted tax basis of any Code section
38 property that has been placed in service by the Partnership is increased pursuant to
Code section 48(q), such increase shall be specially allocated among the Partners (as an
item in the nature of income or gain) in the same proportions as the investment tax credit
that is recaptured with respect to such property is shared among the Partners.

10.5.1.10 Basis Reductions. Any reduction in the adjusted tax basis

(or cost) of Partnership Code section 38 property pursuant to Code section 48(q) shall be
allocated among the Partners (as an item in the nature of expenses or net loss) in the same
proportions as the basis (or cost) of such property is allocated pursuant to Regulations
section 1.46-3(f)(2)(i).

10.5.1.11 Curative Allocations.

(a) The "Regulatory Allocations" consist of the "Basic Regulatory

Allocations," the "Nonrecourse Regulatory Allocations," and the "Partner Nonrecourse
Regulatory Allocations," all as defined in this section 10.5.1.11.

(b) The "Basic Regulatory Allocations" consist of allocations

pursuant to sections 10.5.1.3, 10.5.1.4 and 10.5.1.7. Notwithstanding any other provision
of this Agreement, other than the Regulatory Allocations, the Basic Regulatory
Allocations shall be taken into account in allocating items of income, gain, loss and
deduction among the Partners so that, to the extent possible, the net amount of such
allocations of other items and the Basic Regulatory Allocations to each Partner shall be
equal to the net amount that would have been allocated to such Partner if the Basic
Regulatory Allocations had not occurred. For purposes of applying the preceding
sentence, allocations pursuant to this section 10.5.1.11 shall only be made with respect to
allocations pursuant to section 10.5.1.9 to the extent that the General Partner reasonably
determines that such allocations will otherwise be inconsistent with the economic
agreement among the parties to this Agreement.

(c) The "Nonrecourse Regulatory Allocations" consist of all

allocations pursuant to sections 10.5.1.1 and 10.5.1.5. Notwithstanding any other
provision of this Agreement, other than the Regulatory Allocations, the Nonrecourse
Regulatory Allocations shall be taken into account in allocating items of income, gain,
loss and deduction among the Partners so that, to the extent possible, the net amount of
such allocations of other items and the Nonrecourse Regulatory Allocations to each
Partner shall be equal to the net amount that would have been allocated to such Partner if
the Nonrecourse Regulatory Allocations had not occurred. For purposes of applying the
preceding sentence, (i) no allocations pursuant to this section 10.5.1.11 shall be made
prior to the Fiscal Year during which there is a net decrease in Partnership Minimum
Gain, and then only to the extent necessary to avoid any potential economic distortions
caused by such net decrease in Partnership Minimum Gain, and (ii) allocations pursuant
to this section 10.5.1.11(c) shall be deferred with respect to allocations pursuant to
section 10.5.1.5 to the extent that the General Partner reasonably determines that such
allocations are likely to be offset by subsequent allocations pursuant to section 10.5.1.1.

(d) The "Partner Nonrecourse Regulatory Allocations" consist of all

allocations pursuant to sections 10.5.1.2 and 10.5.1.6. Notwithstanding any other
provision of this Agreement, other than the Regulatory Allocations, the Partner
Nonrecourse Regulatory Allocations shall be taken into account in allocating items of
income, gain, loss and deduction among the Partners so that, to the extent possible, the
net amount of such allocations of other items and the Partner Nonrecourse Regulatory
Allocations to each Partner shall be equal to the net amount that would have been
allocated to such Partner if the Partner Nonrecourse Regulatory Allocations had not
occurred. For purposes of applying the preceding sentence, (i) no allocations pursuant to
this section 10.5.1.11(d) shall be made with respect to allocations pursuant to section
10.5.1.6 relating to a particular Partner Nonrecourse Debt prior to the Fiscal Year during
which there is a net decrease in Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, and then only to the extent necessary to avoid any potential economic
distortions caused by such net decrease in Partner Minimum Gain, and (ii) allocations
pursuant to this section 10.5.1.11(d) shall be deferred with respect to allocations pursuant
to section 10.5.1.6 relating to a particular Partner Nonrecourse Debt to the extent that the
General Partner reasonably determines that such allocations are likely to be offset by
subsequent allocations pursuant to section 10.5.1.2.

(e) The General Partner shall have reasonable discretion, with

respect to each Fiscal Year, to (i) apply the provisions of sections 10.5.1.11(b), (c) and
(d) in whatever order is likely to minimize the economic distortions that might otherwise
result from the Regulatory Allocations and (ii) divide all allocations pursuant to sections
10.5.1.11(b), (c) and (d) among the Partners in a manner that is likely to minimize such
economic distortions.

10.5.1.12 Tax Allocations: Code Section 704(c).

(a) In accordance with Code section 704(c) and the Regulations

thereunder, income, gain, loss and deduction with respect to any property contributed to
the capital of the Partnership shall, solely for tax purposes, be allocated among the
Partners to take account of any variation between the adjusted basis of such property to
the Partnership for Federal income tax purposes and its initial gross asset value.

(b) Notwithstanding any of the foregoing provisions to the contrary,

if a Partner withdraws capital during a Fiscal Year, allocations of taxable income shall be
made as follows:

(i) First, to each Partner who has withdrawn all of such

Partner's Capital Account during that Fiscal Year, to the extent of the positive or
negative difference, if any, derived by subtracting such Partner's adjusted tax
basis in such Partner's interest in the Partnership with respect to such Capital
Account from the balance in such Capital Account immediately prior to such
withdrawal;

(ii) Second, to each Partner who has withdrawn part of such

Partner's Capital Account during that Fiscal Year and such withdrawal has
exceeded or is exceeded by such Partner's adjusted tax basis in such Partner's
Partnership interest with respect to such Capital Account as of the last day of that
Fiscal Year, an amount equal to (x) such excess plus (y) an amount equal to the
taxable income or loss otherwise allocable hereunder, less the amount allocated
under clause (x) above (but not below zero); and

(iii) Thereafter, to all Capital Accounts in the same

proportion as net profit and net loss are allocated among them for that Fiscal
Year.

The General Partner, in its exclusive discretion, may cause the Partnership to
make the election to adjust the basis of Partnership property under Code Section 754. In
any year in which the Code section 754 election is in effect and thereafter, this section
10.5.1.12(b) shall be null and void.

(c) Any elections or other decisions relating to such allocations shall

be made by the General Partner in any manner that reasonably reflects the purpose and
 intention of this Agreement. Allocations pursuant to this section 10.5.1.13 are solely for
purposes of Federal, state and local taxes and shall not affect, or in any way be taken into
account in computing, any Capital Account or share of net profit, net loss or other items
of any Partner, or distributions to any Partner, pursuant to any provision of this
Agreement.

10.5.1.13 Other Allocation Rules.

(a) Generally, all net profit and net loss shall be allocated among the
Partners as provided in section 10.5. If Partners are admitted to the Partnership on
different dates during any Fiscal Year, the net profit or net loss allocated among the
Partners for each such Fiscal Year shall be allocated in proportion to their respective
Capital Accounts from time to time during such Fiscal Year in accordance with Code
section 706, using any convention permitted by law and selected by the General Partner.

(b) For purposes of determining the net profit, net loss or any other
items allocable to any period, net profit, net loss and any such other items shall be
determined on a daily, monthly or other basis, as determined by the General Partner using
any permissible method under Code section 706 and the Regulations thereunder.

(c) The Partners are aware of the income tax consequences of the
allocations made by this section 10.5 and hereby agree to be bound by this section 10.5 in
reporting their shares of net profit and net loss for income tax purposes.

(d) Notwithstanding any of the foregoing provisions to the contrary,

if taxable gain to be allocated includes income resulting from the sale or disposition of
Partnership property or property of a limited partnership or joint venture in which the
Partnership owns an interest that is treated as ordinary income, such gain so treated as
ordinary income shall be allocated to and reported by each Partner in proportion to
allocations to that Partner of the items that gave rise to such ordinary income, and the
Partnership shall keep records of such allocations. In the event of the subsequent
admission of any new Partner, any item that would constitute "unrealized receivables"
under Code section 751 and the Regulations thereunder shall not be shared by the newly
admitted Partners, but rather shall remain allocated to existing Partners.

10.5.1.14 Provisional Allocation. If any amount claimed by the

Partnership to constitute a deductible expense in any Fiscal Year is treated by any
Federal, state or local taxing authority as a payment made to a Partner in such Partner's
capacity as a member of the Partnership for income tax purposes, with regard to such
authority, items of income and gain of the Partnership for such Fiscal Year shall first be
allocated to such Partner to the extent of such payment.

10.6 Distributions. The General Partner, in its exclusive discretion, shall determine
the amount and timing of all distributions by the Partnership. Except as otherwise provided in
this Agreement, distributions shall be made in proportion to the Partners' respective Ownership
Percentages as of the end of the month preceding the date of the distribution. Whether or not any
distributions are made to the Limited Partners, the General Partner shall have the right to
withdraw from time to time in cash net profit allocated to it under section 10.5 to the extent that
such net profit consists of realized gains, and any such net profit not so withdrawn shall be
credited to the General Partner's Capital Account; provided that the General Partner may also
withdraw any or all of its Capital Account balances at any time or times and otherwise in the
manner provided in section 13.3.

10.7 Valuation. "Net Assets" of the Partnership means the Partnership's assets less its
liabilities (and less any reserves determined to be necessary or appropriate by the General Partner
in its sole discretion) determined in accordance with generally accepted accounting principles and
generally accepted industry accounting practices, consistently applied, including any unrealized
profits and losses on securities held by the Partnership and all items of realized income or gain
and accrued and current expenses of the Partnership. For all purposes of determining the value of
the assets of the Partnership, unless the General Partner believes in good faith that the market
price of a security as reported by an exchange or dealer market in which it regularly trades is not
a security's fair price, securities shall be valued in accordance with the following provisions,
which are intended to comply with the requirements set forth in Regulations Section 1.704- 1(b)
(2(iv)(h) and should be construed in conformity therewith:

10.7.1 Securities listed or admitted to trading on most securities exchanges

(domestic and foreign) shall be valued at the last sale price on the valuation date on
which a sale occurred. In the case of securities traded on more than one securities
exchange, they shall be valued at the last price reported on the security's principal
exchange and, if that is not available, as reported by any other exchange on which the
security is listed or regularly traded.

10.7.2 Securities traded in the over-the-counter market shall be valued at the

highest "bid" price at the close of business on the valuation date as reported by the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
or, if no bid price is reported in NASDAQ as of the end of the valuation date, at the
highest bid price at the close of business on the valuation date as reported by the National
Quotation Bureau, Inc. or, if neither bid price is reported, at such price as the General
Partner determines in its sole discretion to be the security's fair market value.

10.7.3 Options (including options on securities indices) shall be valued at the

mid-point between the bid and the ask, where the bid is the maximum bid across the
multiple exchanges and the ask is the minimum ask across multiple exchanges.

10.7.4 The fair market value of securities held short by the Partnership shall be
calculated in the manner provided in section 10.7.1 for securities listed or admitted to
trading on a national securities exchange and in the manner provided in section 10.7.2 for
securities traded in the over-the-counter market, except that, in the case of securities
traded in the over-the-counter market, the "asked" price shall be used in lieu of the "bid"
price for purposes of applying the valuation method set forth in section 10.7.2. The fair
market value of securities sold short by the Partnership shall be treated as a liability of the
Partnership until the short position is closed.

10.7.5 Notwithstanding anything in this Section 10.7 to the contrary, the value
or amount of any other assets or liabilities of the Partnership shall be as determined in
good faith by the General Partner, in its exclusive discretion.

10.8 Bank and Other Accounts. All funds of the Partnership shall be deposited and
maintained in one or more accounts in the name of the Partnership at such bank or banks or other
financial institutions (including, without limitation, money market mutual funds and securities
brokerage firms) as may from time to time be selected by the General Partner. All withdrawals
 from any such account or accounts shall be made only by written instrument signed by or on
behalf of the General Partner.

11 Expenses.

11.1 Compensation. On the first day of each month, the Partnership shall pay to the
General Partner in advance, as compensation for its services in managing the business and affairs of the
Partnership, an amount equal to 0.1667% (a 2.0 percent annual rate) of the balance in each Limited
Partner's capital account (except Limited Partners as to which the General Partner has waived all or part
of the Management Fee) as of the beginning of such month (but prior to any deduction for the
Performance Allocation). The General Partner, in its exclusive discretion, may waive its right to receive
all or any part of the Management Fee with respect to any one or more Limited Partners for any one or
more months.

11.2 Organizational and Offering Expenses . The Partnership shall pay, or reimburse
the General Partner for, all usual and customary costs and expenses related to organizing the Partnership,
including but not limited to, legal, accounting and government filing fees, and all costs of the continuing
offer and sale of Interests.

11.2. Operating Expenses. The Partnership shall pay or reimburse the General Partner
for, all costs and expenses incurred by or on behalf of the Partnership, or for the Partnership's benefit,
including without limitation, (A) operating expenses of the Partnership such as ongoing accounting,
auditing, bookkeeping, legal and other professional fees and expenses, tax preparation fees, governmental
fees and taxes, administration fees and communications with Limited Partners, (B) investment-related
expenses including commissions, bid-ask spreads, mark-ups, interest on margin borrowing, costs relating
to short sales, transfer taxes, custodian fees, etc., (C) the General Partner's research related expenses, and
(D) cost of protecting or preserving any investment held by the Partnership, (E) losses, damages, charges,
costs or expenses arising from the Partnership's indemnification obligations under the Partnership
Agreement and other contracts to which the Partnership may become a party; and (F) costs associated
with dissolution, winding up, liquidation or termination of the Partnership.

11.3. Overhead Expenses. The General Partner will pay its own general operating and
overhead type expenses associated with providing the investment management and administrative
services required under the Partnership Agreement. These expenses include all expenses incurred by the
General Partner in providing for their normal operating overhead, including but not limited to, the cost of
providing relevant support and administrative services (e.g., employee compensation and benefits, rent,
office equipment, insurance, utilities, telephone, secretarial and bookkeeping services, etc.), but not
including any Partnership operating expenses described above. The General Partner may use "soft dollar"
commissions or a rebate by brokerage firms of commissions generated by Partnership securities
transactions executed through those firms, to pay some or all of such operating, administrative and
overhead expenses that the General Partner might otherwise have to bear or that otherwise provide
benefits to the General Partner and their affiliates.

12 The General Partner. The General Partner of the Partnership is BDC Investment
Advisors, LLC.

12.1 Management. Subject only to the rights of the Limited Partners to vote or
consent on specific matters as herein provided, the General Partner shall have the full, exclusive
and complete authority granted herein and in the Act to manage and control the business of the
Partnership for the purposes herein stated and shall make all decisions affecting the Partnership.
The General Partner shall exercise the authority granted herein to the best of its ability and shall
use its best efforts to carry out the business of the Partnership. The powers of the General Partner
include, but are not limited to, the right, power and authority to from time to time do the
following:

12.1.1 Expend the capital and revenues of the Partnership in furtherance of the
Partnership's business;

12.1.2 Enter into, execute and deliver stock, bond, debenture, note and other
securities subscription, purchase and sale agreements, participation agreements,
assignments, brokerage agreements, custodian agreements and any and all other
agreements, documents or instruments deemed by the General Partner to be necessary or
appropriate to the effective and proper performance of the General Partner's duties or
exercise of the General Partner's powers under this Agreement;

12.1.3 Enter into, execute and deliver brokerage agreements with securities
brokerage firms, to execute or effect trades for the Partnership's accounts and to make
arrangements with those firms whereby the General Partner agrees to direct trades for the
Partnership's accounts to those firms in exchange for certain non-monetary benefits
offered by those firms, which may include, among other things, referral of prospective
investors in the Partnership, research services, special execution capabilities, clearance,
settlement, reputation, financial strength and stability, efficiency of execution and error
resolution, quotation services and the availability of stocks to borrow for short trades;

12.1.4 Enter into, execute, deliver and terminate investment advisory

agreements with investment advisers, whether or not such investment advisers are
affiliated with the General Partner or its Affiliates, to manage some or all of the
Partnership's assets and to make arrangements whereby such advisers agree to direct
trades for the Partnership's accounts to certain securities firms in exchange for some or
all of the non-monetary benefits set forth in Section 12.1.3 of this Agreement;

12.1.5 Enter into and carry out the terms of the Subscription Agreements
without any further act, approval or vote of any Partner (including any agreements to
induce a person to purchase an interest);

12.1.6 Purchase, hold, sell, borrow or otherwise trade or deal in securities;

12.1.7 Sell (long or short), borrow, dispose of, trade or exchange the
Partnership's assets for such consideration and on such other terms and conditions and
evidenced by such documents or instruments as the General Partner deems appropriate;

12.1.8 Open and maintain margin accounts with securities brokers and custodial
accounts with banks or securities brokers;

12.1.9 Designate one or more securities brokers to maintain securities for the
Partnership in the names of nominees of such brokers;

12.1.10 Borrow money and securities from banks, securities brokers and other
lending institutions for any Partnership purpose and, in connection therewith, mortgage,
pledge or hypothecate any assets of the Partnership, to secure repayment of the borrowed
sums, and no bank, securities broker, other lending institution or other person to which
application for a loan is made by the General Partner shall be required to inquire as to the
 purposes for which such loan is sought, and as between the Partnership and such bank,
securities broker, other lending institution or person, it shall be conclusively presumed
that the proceeds of such loan are to be and will be used for purposes authorized
hereunder;

12.1.11 Engage and compensate such employees, agents, lawyers, accountants,

brokers and other professionals, consultants, experts and contractors, as the General
Partner may consider advisable in conducting the Partnership's business;

12.1.12 Maintain adequate office facilities, records and accounts of all operations
and expenditures and furnish the Limited Partners with all reports and statements of
account required to be furnished to them pursuant hereto or which the General Partner
deems advisable;

12.1.13 Purchase and maintain such policies of insurance as the General Partner
may consider appropriate, insuring the Partnership and the General Partner against
liabilities that may arise in connection with the business or management of the
Partnership;

12.1.14 To waive or reduce, in whole or in part, any notice period, minimum

amount requirement, or other limitation or restriction imposed on Capital Contributions,
withdrawals of capital, any fee, any special allocation to the General Partner, and/or any
requirement imposed on a Limited Partner by this Agreement, regardless of whether such
notice period, minimum amount, limitation, restriction, fee, or special allocation, or the
waiver or reduction thereof, operates for the benefit of the Partnership, the General
Partner or fewer than all the Limited Partners, and

12.1.15 Do any act, engage in any activity or execute any agreement of any
nature, necessary or incidental to the accomplishment of the purposes of the Partnership
in accordance with the provisions of this Agreement and all applicable Federal, state and
local laws and regulations.

12.2 Exceptions. Notwithstanding anything to the contrary in section 12.1, (a) the
General Partner shall not take direct possession or custody of securities held for the account of the
Partnership, (b) no act in contravention of this Agreement may be legally done without the vote
or consent of the General Partner and a majority in interest of the Limited Partners, and (c)
nothing herein shall authorize or empower the General Partner to, and the General Partner shall
not, cause the Partnership to (i) issue or transfer any interest in the Partnership except as herein
provided, (ii) extend Partnership credit to any person who a Partner has notified the Partnership is
not trustworthy, (iii) become bail, surety or endorser for any other person, or (iv) knowingly
permit or cause to be done anything whereby Partnership property may be seized, attached or
taken in execution or its ownership or possession otherwise endangered.

12.3 Expulsion of Limited Partners.

12.3.1 The General Partner may at any time, in its exclusive discretion, expel
from the Partnership with or without cause any Limited Partner with or without notice to
such Limited Partner specifying the effective date of such expulsion. In the event of such
expulsion, the expelled Limited Partner shall be deemed to have withdrawn from the
Partnership, effective as of the date fixed therefore by the General Partner.
 12.3.2 Anything herein to the contrary notwithstanding, without the consent of
the General Partner, no Limited Partner that is a corporation, partnership, trust or other
entity may at any time have an Ownership Percentage of ten percent (10%) or more of the
aggregate Ownership Percentages of the Limited Partners, unless such Limited Partner
does not have more than ten percent (10%) of its assets invested in one or more
companies (including the Partnership) that rely on the exclusions from the definition of
"investment company" under the ICA, provided by sections 3(c)(1) and 3(c)(7) of the
ICA, and each such Limited Partner covenants and agrees to inform the General Partner
from time to time of its investment of ten percent (10%) or more of its assets in such
companies. If, at any time, the Partnership is informed that any Limited Partner having
an Ownership Percentage of ten percent (10%) or more is in violation of the preceding
sentence, such Limited Partner shall be deemed to have given notice of withdrawal
pursuant to section 13.3, effective as of the last day of the Fiscal Quarter preceding such
violation, of such portion (or all) of the Capital Account of such Limited Partner as the
General Partner may determine is necessary or advisable to cure such violation, and such
withdrawal shall be consummated as provided in section 13.3 to the maximum feasible
extent.

12.4 Indemnity and Limitation of Liability.

12.4.1 The General Partner (including its managers, members, officers,

affiliates and employees) shall not be liable to the Partnership or the Limited Partners for
any action taken or omitted to be taken in connection with the business or affairs of the
Partnership so long it or such entity acted in good faith and is not adjudged by a final,
non-appealable court of competent jurisdiction to have breached its fiduciary duties to the
Partnership or its Partners or willfully violated this Agreement or applicable securities
laws and such violation was the proximate cause of the instant claim or legal proceeding.
For purposes of this Section 12.4, it shall be conclusively presumed and established that
such entity acted in good faith if any action is taken, or not taken, by it on the advice of
legal counsel or other independent outside consultants.

12.4.2 The Partnership agrees to indemnify and hold harmless the General
Partner and its managers, members, officers, affiliates and employees (each and
"Indemnitee") from and against any and all claims, actions, demands, losses, costs,
expenses (including attorney's fees and other expenses of litigation), damages, penalties
or interest, as a result of any claim or legal proceeding related to any action taken or
omitted to be taken in connection with the business and affairs of the Partnership
(including the settlement of any such claim or legal proceeding); provided that the
Indemnitee against whom the claim is made or legal proceeding is directed has not been
adjudged by a final, non-appealable court of competent jurisdiction to have breached its
fiduciary duty to the Partnership or its Partners or willfully violated this Agreement or
applicable securities laws and such violation was the proximate cause of the instant
claim, action or other adversarial legal proceeding of whatever nature and kind
("Proceeding"). Any indemnity under this Section 12.4 shall be paid from and to the
extent of Partnership assets only, and only to the extent that such indemnity does not
violate applicable Federal and state laws.

12.4.3 The right of indemnification conferred pursuant to this Section 12.4 is a

contract right which shall not be affected adversely as to any Indemnitee by any
amendment of this Agreement with respect to any action or inaction occurring prior to
such amendment; and subject to any requirements imposed by law, includes the right to
 have paid by the Partnership (as incurred) the expenses incurred in investigating,
defending or settling any such Proceeding in advance of its final disposition, which
expenses shall be paid promptly upon request of the Indemnitee.

12.4.4 If, to the extent, and at such times as any assets of the Partnership are
deemed to be "plan assets" within the meaning of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), of any Limited Partner that is an employee
benefit plan governed by ERISA, the General Partner will be, and hereby acknowledges
that it will be considered to be, a fiduciary within the meaning of Section 3(21) of ERISA
as to that Limited Partner. In such an event, or if any partner, employee, agent or affiliate
of the General Partner, is ever 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 person's duties in administering the
business of the Partnership, and the person shall not be responsible for any other duties to
such Limited Partner, specifically including evaluating the initial or continued
appropriateness of this investment in the Partnership under Section 404(a)(1) of ERISA.

12.5 Tax Matters Partner. The "Tax Matters Partner" of the Partnership shall be the
General Partner. The Tax Matters Partner shall employ experienced tax counsel to represent the
Partnership in connection with any audit or investigation of the Partnership by the IRS, and in
connection with all subsequent administrative and judicial proceedings arising out of such audit.
The fees and expenses of such counsel and all other expenses incurred by the Tax Matters Partner
shall be a Partnership expense and shall be paid by the Partnership. Such counsel shall be
responsible for representing the Partnership; it shall be the responsibility of the General Partner
and of the Limited Partners, at their own expense, to employ tax counsel to represent their
respective separate interests.

13 Liability, Rights and Duties of Limited Partners.

13.1 Limited Liability. No Limited Partner shall be subject to assessment. Except as

may be required under the Act notwithstanding this Agreement, no Limited Partner shall be
personally liable for any of the debts or liabilities of the Partnership or any of the losses thereof in
excess of such Limited Partner's Capital Contributions.

13.2 Management. No Limited Partner, as such, shall take part in the management of
the business of, or transact any business for, the Partnership or have any right, power or authority
to sign for or bind the Partnership to any agreement, oral or written, or any instrument or other
document. Notwithstanding anything herein to the contrary, with and only with the vote or
consent of a majority in interest of the Limited Partners, the Partnership shall:

(a) Change the nature of its business;

(b) Elect to continue the Partnership's business other than under the circumstances
described in clause (g) or (h) of this section 13.2;

(c) With the additional vote or consent of such number of Limited Partners as is
necessary to constitute at least 75% of the Ownership Percentages of all Limited Partners, admit a
general partner to the Partnership as provided in section 14; and
 (d) With the additional vote or consent of all Limited Partners, elect to continue the
Partnership's business after the General Partner ceases to be the general partner of the Partnership
where there is no remaining or surviving general partner of the Partnership.

Notwithstanding the foregoing provisions of this section 13.2, the General Partner's vote
or consent for any of the actions contemplated by any of the preceding clauses shall also be
required prior to the taking of such action. The Limited Partners shall not have any voting rights
other than as expressly provided herein.

13.3 Withdrawals by Limited Partners . A Limited Partner may withdraw all or any
part of its Capital Account attributable to a particular Capital Contribution as of the last business
day of any Fiscal Quarter on thirty (30) calendar days' advance written notice to the General
Partner not less than one year after the investment of the capital being withdrawn was invested in
the Partnership. Notwithstanding the foregoing, a Limited Partner may withdraw all or any part
of its Capital Account attributable to net profits allocated to such Limited Partner's Capital
Account as of the last business day of any Fiscal Quarter on thirty (30) calendar days advance
written notice to the General Partner. Subject to the establishment of reasonable reserves under
the circumstances set forth herein, at least ninety percent (90%) of the withdrawal amount will be
made within thirty (30) days after the withdrawal date, with the remainder being paid as soon as
practicable after final reconciliation of valuations for the withdrawal date provided that that
General Partner may elect to retain the remainder until completion of the Partnership's audit for
the fiscal year in which the withdrawal occurs. No interest or other investment return will be paid
on any delayed payment. As to some or all of a withdrawal, the General Partner may establish a
segregated portfolio of some of the Partnership's securities and liquidate those securities for the
withdrawing Limited Partner's Capital Account. The General Partner, in its sole and absolute
discretion, may waive or modify the conditions of withdrawal for a Limited Partner. Limited
Partners shall not have the right to the return of their capital in the Partnership, except upon
dissolution thereof or as specified in this Section 13.

13.4 Adjustments to Withdrawal Proceeds. The General Partner, in the reasonable

exercise of its discretion, may reduce the proceeds of any withdrawal by a Limited Partner by the
Performance Allocation due the General Partner, if any, in respect of the funds being withdrawn
and for the purpose of creating and/or funding reserves to pay accrued, future and contingent
expenses (including the Partnership's indemnification obligations under which it may be required
to reserve capital to advance legal costs as incurred by the General Partner or other indemnified
persons).

13.5 Withdrawals by the General Partner. The General Partner may voluntarily
withdraw all or any portion of its Capital Account in the Partnership at any time without giving
notice to the Limited Partners.

13.6 Distributions. The General Partner, in its sole and absolute discretion, shall
determine the amount and timing of all distributions, if any, by the Partnership, and whether such
distributions shall be in cash or in kind or partly in cash and partly in kind. Except as otherwise
provided herein, all distributions shall be made in proportion to the Partners' respective balances
in their Capital Accounts.

13.7 Tax Withholding on Withdrawals, Distributions and Allocations . Each Limited

Partner acknowledges and agrees that the Partnership may be required to deduct and withhold tax
or to fulfill other obligations of such Limited Partner on any withdrawal or distribution or
allocation. All amounts withheld with respect to any withdrawal, distribution or allocation to a
Limited Partner shall be treated as amounts withdrawn or distributed to such Limited Partner for
all purposes under this Agreement as of the effective date of the related withdrawal, distribution
or allocation.

13.8 Restrictions on Withdrawals and Distributions . Any of the foregoing provisions

of this Section 13 notwithstanding, no withdrawal or distribution shall be made (i) during any
period during which any stock exchange on which a substantial part of securities owned by the
Partnership are traded is closed, other than for ordinary holidays, or dealings thereon are
restricted or suspended; (ii) when a withdrawal would result in a violation of securities or other
laws by the Partnership or the General Partner; (iii) during any period in which there exists any
state of affairs as a result of which (a) disposal of investments of the Partnership would not be
reasonably practicable or cannot be completed in a timely fashion to meet withdrawal requests
and might seriously prejudice the Partners or (b) it is not reasonably practicable for the
Partnership fairly to determine the value of its net assets; (iv) when the General Partner
determines, in consultation with tax advisors, that the withdrawal could result in the Partnership
being treated as a "publicly traded partnership" and thus taxable as a corporation; (v) during any
period in which there is a breakdown in the means of communication normally employed in
determining the prices of a substantial part of the investments of the Partnership; (vi) during any
period in which investments of the Partnership cannot be liquidated in a timely fashion to meet
withdrawal requests without having a significant adverse effect on the Partnership (but only to
the extent the Partnership has not received funds in respect of the liquidation of investments);
(vii) if events make accurate determination of the Partnership's net asset value impractical; (viii)
if events make the fair and orderly distribution of the Partnership's capital impractical or (vix) if,
in the General Partner's sole and absolute discretion, such a suspension of withdrawals or
distributions would be in the best interests of the Partnership. The General Partner shall give
prompt notice to Limited Partners who make withdrawal requests that are affected by any such
suspension. Unless a Limited Partner rescinds his or her suspended withdrawal request, the
withdrawal will generally become effective on the last business day of the calendar month in
which the suspension is lifted, on the basis of the Limited Partner's Capital Account balance at
that time.

13.9 Withdrawal or Dissolution of General Partner. The General Partner may

withdraw at the end of any Fiscal Quarter upon at least ninety (90) days written notice to all of
the Limited Partners. The General Partner's withdrawal or dissolution shall terminate the
Partnership unless the General Partner appoints, with the prior written consent of Limited
Partners whose Ownership Percentages constitute not less than 75% of the aggregate Ownership
Percentages of all Limited Partners, one or more substitute general partner(s) to serve as and to
perform the duties of the General Partner hereunder effective upon such retirement, withdrawal or
dissolution. Any substitute general partner(s) shall have the same rights, duties and obligations as
the General Partner has with respect to the Partnership.

14 Dissolution and Termination.

14.1 Events of Dissolution. The Partnership shall be dissolved upon the earliest to
occur of: (a) the withdrawal, resignation or involuntary withdrawal of the General Partner, or any
other event that results in such entity ceasing to be a General Partner, unless the remaining
Limited Partners agree, within ninety (90) days after such event, to continue the Partnership with
a new and qualified substitute General Partner pursuant to this Agreement or the Act; (b) an
election to dissolve the Partnership made by the General Partner, in its discretion, 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 of judicial dissolution under the Act, that under the law of the
State of California, mandatorily requires the dissolution of the Partnership.

14.2 Dissolution.

14.2.1 Procedures. The remaining General Partner shall wind up the affairs of
the Partnership, provided that if there is no remaining General Partner, the affairs of the
Partnership shall be wound up by the person or persons previously designated by the
General Partner to liquidate the Partnership's assets or, if the General Partner has made
no such designation, by the person or persons designated by the consent of a majority in
interest of the Limited Partners. Such Partners or persons, as the case may be, are
hereinafter called the "Liquidating Persons." The Liquidating Persons shall manage the
assets of the Partnership and shall liquidate at least so much of the Partnership's assets as
may be required to and shall pay all liabilities of the Partnership, costs of dissolution and
winding up, any payment the General Partner has agreed to make to the Liquidating
Persons for their services in connection with the dissolution and any loans to the
Partnership by any Partner, but excluding any distributions or withdrawals payable to any
Partners under section 13.3), establish a reserve for contingencies (including without
limitation all obligations under the indemnification provisions herein) and distribute the
Partnership's remaining assets (in cash or in kind or partly in cash and partly in kind, as
the Liquidating Persons may determine in their exclusive discretion). On any distribution
of assets to the Partners pursuant to this section 14.2, any such assets shall be distributed
in proportion to and to the extent of the Partners' respective Capital Account balances.
After a reasonable period of time has passed, any balance remaining in any reserve
established shall be distributed to the Partners as provided in this section 14.2. If the
Partnership's assets are insufficient to satisfy its liabilities, each Partner shall, to the
extent required by the Act, within thirty days after receiving notice thereof from the
Liquidating Persons, return in cash such part or all of the distributions made to such
Partner pursuant to this section 14.2 or applicable law as may be required to make up the
shortage, with each Partner making returns in proportion to such Partner's share in any
such distributions.

14.2.2 Legal Authority. The winding up of the affairs of the Partnership and the
distribution of its assets shall be conducted exclusively by the Liquidating Persons, who
are authorized, subject to sections 12 and this 14.2, to do any and all acts and things
authorized by law for those purposes.

14.2.3. No Recourse Against Partners. Each Partner shall look solely to the
assets of the Partnership for the return of such Partner's Capital Contributions, and, if the
Partnership property remaining after the payment or discharge of the debts and liabilities
of the Partnership is insufficient to return the Capital Contributions of each Partner, such
Partner shall have no recourse against any other Partner.

15 Assignments.

15.1 General Partner. Except as otherwise expressly provided in this Agreement,

there shall be no assignment (as that term is defined in Section 202(a)(1) of the Advisers Act of
1940, as amended) by the General Partner of all or any part of its interest as a General Partner or
in this Agreement without the prior written consent of Limited Partners having Ownership
Percentages of not less than 75% of the Ownership Percentages owned by all of the Limited
Partners.
 15.2 Limited Partners. The Interest of a Limited Partner may be transferred, assigned,
sold or conveyed (collectively "assigned") in whole or in part only with the prior written consent
of the General Partner (which may be withheld in its absolute discretion) and otherwise in
accordance with this Section 15.2.

15.2.1 Compliance. Notwithstanding anything to the contrary set forth in this

Agreement, no assignment of an Interest of a Limited Partner shall be valid or effective
if, in the opinion of counsel for the Partnership, such assignment would be likely to:

(a) require registration of the Interests under the Securities Act of 1933, as
amended (the "1933 Act");

(b) subject the Partnership to registration or regulation under, or election as a

"business development company" under, the Investment Company Act of 1940, as
amended;

(c) to the best of such counsel's knowledge, violate the laws or regulations
of any state or government agency applicable to such assignment;

(d) cause the Partnership to be treated as an association taxable as a

corporation for federal income tax purposes; or

(e) cause all or any portion of the Partnership's assets to constitute "plan
assets," i.e., assets of any Benefit Plan investor, under ERISA.

Prior to any assignment, the Limited Partner or his representative proposing the
assignment must provide sufficient information to permit counsel to the Partnership to
make the determination that the assignment complies with this section 15.2.

15.2.2 Substitution. Any assignee of a Limited Partner's Interest hereunder

shall be bound by the provisions of this Agreement. Prior to recognizing any assignment
of a Limited Partner's Interest in accordance with this section, the General Partner may
require the assigning Limited Partner to execute and acknowledge a written instrument of
assignment in form and substance satisfactory to the General Partner and may require the
assignee to execute an amendment to the Certificate of Limited Partnership and to
assume all obligations of the assigning Limited Partner. Any assignee who is not a
Partner at the time of the assignment shall be entitled to the allocations and distributions
attributable to the Interest assigned to him and to assign such Interest in accordance with
and subject to the terms of this Agreement; however, such assignee shall not be entitled
to any other rights of a Limited Partner until he becomes a substituted Limited Partner.
Notwithstanding the above, the Partnership and the General Partner shall incur no
liability for allocations and distributions made in good faith to an assigning Limited
Partner until the written instrument of assignment has been received by the Partnership
and recorded on its books and the effective date of the assignment has passed.

15.2.3 Admission of an Assignee as a Limited Partner . Except as otherwise

provided in section 15.2.6, no assignee of a Limited Partner's Interest shall be admitted to
the Partnership as a substituted Limited Partner until:

(a) the General Partner shall have given its prior written consent, which
consent may be withheld in its absolute discretion; and
 (b) the assignee shall have accepted, adopted and approved in writing all of
the terms and provisions of this Agreement as the same may have been amended, and the
assigning Limited Partner and the assignee shall have executed and acknowledged such
other instrument or instruments as the General Partner may deem necessary or desirable
to effect such admission. An amendment to the Partnership's Certificate of Limited
Partnership shall be executed and recorded to recognize the admission of a substituted
Limited Partner under this paragraph or under Section 6.8, if required under the Limited
Partnership Act.

15.2.4 Assignee's Capital Account. Upon an assignment of all or a part of an

Interest permitted hereunder, the assignor's Capital Account attributable to the assigned
part of such Interest shall be carried over to the assignee Partner, and the allocations
provided for herein shall be divided between the assignor and the assignee based upon the
number of months each held the assigned Interest in the Fiscal Year in which such
assignment occurred.

15.2.5 Encumbrance of Interest. Except where expressly provided otherwise by

the Act, a Limited Partner shall not mortgage, pledge or otherwise encumber all or any
part of its Interest or enter into any agreement that would cause any person to become
directly interested in the Partnership, except with the prior written consent of the General
Partner, which may be withheld in the General Partner's absolute discretion, and in
accordance with the requirements of this section 15.2.

15.2.6 Death, Insanity, Incompetency, Permanent Incapacity or Bankruptcy of a

Limited Partner. The Partnership shall not be dissolved upon the death, insanity,
incompetency, permanent incapacity or bankruptcy of a Limited Partner. The legal
representative of such Limited Partner shall become a substituted Limited Partner, subject
to all them terms and conditions of this Agreement and possessing all the rights and
obligations of a Limited Partner hereunder, upon complying with the requirements of
section 15.2.3(b) (as if such legal representative were an assignee of an Interest).

16 Amendments.

16.1 With Limited Partner Approval. Amendments to this Agreement may be

proposed by a General Partner or by Limited Partners whose Ownership Percentages aggregate
ten percent (10%) or more of the Ownership Percentages of all Limited Partners. The General
Partner shall submit to the Limited Partners a verbatim statement of any amendment so proposed.
The General Partner shall include in any such submission its recommendation as to the proposed
amendment. The amendment shall become effective only on the vote or consent of the General
Partner and a majority in interest of the Limited Partners; provided that, for purposes of obtaining
a written consent on a proposed amendment, the General Partner may require a response within a
specified reasonable time (which shall not be less than fifteen days) and failure to respond shall
constitute a vote and consent in accordance with the General Partner's recommendation as to the
proposed amendment.

16.2 Without Limited Partner Approval. Notwithstanding anything in this section

16.1 to the contrary, the General Partner may amend this Agreement without any vote, consent,
approval, authorization or other action of any Limited Partner and without notice to any Limited
Partner to (a) add to the representations, duties or obligations of the General Partner or surrender
any right or power granted to the General Partner in this Agreement for the benefit of the Limited
Partners; (b) cure any ambiguity, correct or supplement any provision in this Agreement which
 may be inconsistent with any other provision in this Agreement, or make any other provisions
with respect to matters or questions arising under this Agreement which will not be inconsistent
with the intent of this Agreement; (c) delete or add any provision of this Agreement required to
be so deleted or added by the staff of the SEC or by a state securities law administrator or similar
official, which addition or deletion is deemed by such official to be for the benefit or protection of
the Limited Partners; (d) reflect the withdrawal, expulsion, addition or substitution of Partners;
(e) reflect the proposal, promulgation or amendment of Regulations under Code section 704, or
otherwise, to preserve the uniformity of interests in the Partnership issued or sold from time to
time, if, in the opinion of the General Partner, the amendment does not have a material adverse
effect on the Limited Partners generally; (f) elect for the Partnership to be bound by any successor
statute to the Act, if, in the opinion of the General Partner, the amendment does not have a
material adverse effect on the Limited Partners generally; (g) conform this Agreement to changes
in the Act or interpretations thereof which, in the exclusive discretion of the General Partner, it
believes appropriate, necessary or desirable, if, in the General Partner's reasonable opinion, such
amendment does not have a materially adverse effect on the Limited Partners generally or the
Partnership; (h) change the name of the Partnership; (i) make any change which, in the exclusive
discretion of the General Partner, is advisable to qualify or to continue the qualification of the
Partnership as a limited partnership or a partnership in which the Limited Partners have limited
liability under the laws of any state or that is necessary or advisable, in the exclusive discretion of
the General Partner, so that the Partnership will not be treated as an association taxable as a
corporation for Federal income tax purposes; and (j) make any change which, in the exclusive
discretion of the General Partner, it believes appropriate, necessary or desirable, if, in the General
Partner's reasonable opinion, such change does not have a materially adverse effect on the
Limited Partners generally or the Partnership.

16.3 Amendments Requiring Unanimous Consent. Anything in section 16.1 or 16.2 to

the contrary notwithstanding, without the vote or consent of all of the Partners, no amendment
shall (a) change the Partnership to a general partnership, (b) increase the term of the Partnership,
(c) change the liability of the General Partner as such or the limited liability of the Limited
Partners as such, or (d) change clause (d) of section 13.2 or section 12.4, 13.4, 14.1 or 15.1.

17 Tax Elections. The General Partner shall make or cause the Partnership to make such
elections as the General Partner may consider advisable and in the interests of the Partnership under any
applicable tax law, including, without limitation, any elections under Code section 754.

18 Power of Attorney. Each Limited Partner irrevocably constitutes and appoints the
General Partner with full power of substitution and resubstitution, such Limited Partner's true and lawful
attorney, for such Limited Partner and in such Limited Partner's name, place and stead, and for such
Limited Partner's use and benefit, to sign, execute, deliver, certify, acknowledge, swear to, file, record
and publish (a) the Partnership's certificate of limited partnership and any amendment thereto or to this
Agreement as provided herein, (b) any other certificates, instruments, agreements and documents
necessary to qualify or continue the Partnership as a limited partnership or a partnership wherein limited
partners have limited liability in the states or other jurisdictions where the General Partner deems
necessary or desirable, (c) all conveyances, assignments, documents of transfer or other instruments and
documents necessary to effect the assignment of an interest in the Partnership, the substitution of a
Limited Partner or the dissolution and termination of the Partnership in accordance with this Agreement
and (d) all filings and submissions pursuant to any applicable law, regulation, rule, order, decree or
judgment which, in the opinion of the General Partner, may be necessary or advisable in connection with
the business of the Partnership. The power of attorney granted herein is coupled with an interest, shall be
irrevocable, shall survive the death, disability or incapacity of any Limited Partner, shall be deemed given
by each and every assignee and successor of each Limited Partner and may be exercised by the General
Partner by listing any or all of the names of the Limited Partners and executing such amendments,
certificates, instruments and other documents with the signature of any one or more members of the
General Partner acting on behalf of the General Partner, as attorney(s)-in-fact for all of the persons whose
names are so listed.

19 Notices. Except as otherwise expressly provided herein, any notice, consent,

authorization or other communication to be given hereunder shall be in writing and shall be deemed duly
given and received when delivered personally, when transmitted by facsimile transmission with receipt
acknowledged by the addressee, or if sent by mail, three days after being mailed by first class mail,
charges and postage prepaid, properly addressed to the party to receive such notice at the last address
furnished for such purpose by the party to whom the notice is directed.

20 Severability. If any provision of this Agreement, or the application of such provision to

any person or circumstance, shall be held invalid or unenforceable, the remainder of this Agreement, or
the application of such provision to persons or circumstances other than those to which it is held to be
invalid or unenforceable, shall not be affected thereby.

21 Governing Law. This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of California and, in particular, the provisions of the Act, as same
may be amended from time to time, without giving effect to the principles governing conflicts of laws.

22 Binding Effect. This Agreement shall bind and inure to the benefit of the parties and
their respective successors, assigns, heirs, devisees, legatees, legal representatives, executors and
administrators.

23 Partition. Each of the parties irrevocably waives during the term of the Partnership any
right that he, she or it may have to maintain any action for partition with respect to the property of the
Partnership.

24 Counterparts. This Agreement may be executed in one or more counterparts, each of

which shall be deemed an original and all of which together shall constitute one and the same instrument.

25 Entire Agreement. This Agreement contains the entire agreement of the parties and
supersedes all prior negotiations, correspondence, understandings and agreements between or among the
parties, regarding the subject matter hereof, other than any and all subscription agreements of the Limited
Partners subscribing for interests in the Partnership and any and all amendments and supplements thereto,
all of which subscription agreements, amendments and supplements shall continue in full force and effect.

26 Further Assurances. Each party shall execute such other and further certificates,
instruments and other documents as may be necessary and proper to implement, complete and perfect the
transactions contemplated by this Agreement.

27 Headings; Gender; Number; References . The headings at the beginning of the sections
hereof are solely for convenience of reference and are not part of this Agreement. As used herein, each
gender includes each other gender, and the singular includes the plural and vice versa, as the context may
require. All references to sections are intended to refer to sections of this Agreement, except as otherwise
indicated.

[remainder of page intentionally blank]

[signature page follows]

 IN WITNESS WHEREOF, this Amended and Restated Agreement of Limited
Partnership has been duly executed by or on behalf of the parties hereto as of
, 2017.

GENERAL PARTNER:

BDC Investment Advisors, LLC

By

Its: Manager

[SIGNATURES OF LIMITED PARTNERS ARE

SET FORTH ON SEPARATE SIGNATURE PAGES]
 EXHIBIT B

Part 2 of Uniform Application for Investment Adviser Registration

(Form ADV—Part 2 Brochure)
 PART 2A
ITEM 1: COVER SHEET

BDC Investment Advisors, LLC

1600 Rosecrans Avenue, 4th Floor

Manhattan Beach, CA 90266
(800) 579-1651

nmarshi@bdcia.com

www.southlandcapitalmanagement.com
www.bdcia.com
www.bdcreporter.com

March 27, 2019

This brochure provides information about the qualifications and business practices of BDC Investment
Advisors, LLC. If you have any questions about the contents of this brochure, please contact us at the
telephone number and/or e-mail address above. The information in this brochure has not been approved
or verified by the United States Securities and Exchange Commission or any state securities authority.

BDC Investment Advisors, LLC is a registered investment advisor. Registration of an investment advisor
does not imply any level of skill or training. The verbal and written communications of an investment
adviser provide you with information you need to determine whether to hire or retain the advisor.

Additional information about BDC Investment Advisors, LLC is also available on the SEC’s website at
www.adviserinfo.sec.gov. The Firm’s CRD number is 147627.
 PART 2A
ITEM 2: MATERIAL CHANGES

BDC Investment Advisors, LLC

Our previous annual updating amendment was dated February 27, 2018. Following is a summary of the
material changes made to Part 2 since that amendment.

Cover Sheet: Updated Nicholas Marshi’s e-mail address: nmarshi@bdcia.com

Item 4: As of December 31, 2018, we have $3.3 million in discretionary assets under management.

Please contact us at (800) 579-1651 or nmarshi@bdcia.com if

you would like a copy of our updated Part 2. Additional information about us is also
available on the SEC’s website at www.adviserinfo.sec.gov.
 ITEM 3
TABLE OF CONTENTS

Item 1: Cover Sheet

Item 2: Material Changes
Item 3: Table of Contents
Item 4: Advisory Business..........................................................................................................................1
Who we Are.............................................................................................................................................1
Services We Offer...................................................................................................................................1
Assets Under Management......................................................................................................................1
Item 5: Fees and Compensation..................................................................................................................1
BDC Fund II, LP.....................................................................................................................................1
Separately Managed Accounts.................................................................................................................2
General Disclosures.................................................................................................................................3
Item 6: Performance-Based Fees and Side-By-Side Management..............................................................4
Item 7: Types of Clients.............................................................................................................................4
Item 8: Methods of Analysis, Investment Strategies and Risk of Loss.......................................................4
Item 9: Disciplinary Information................................................................................................................5
Item 10: Other Financial Industry Activities and Affiliations.....................................................................5
Item 11: Code of Ethics, Participation or Interest in Client Transactions and Personal Trading.................6
Code of Ethics.........................................................................................................................................6
Personal Trading for Associated Persons.................................................................................................6
Item 12: Brokerage Practices......................................................................................................................6
Selection of Brokers................................................................................................................................6
Aggregation of Orders.............................................................................................................................7
Prime Brokerage......................................................................................................................................7
Item 13: Review of Accounts.....................................................................................................................8
Item 14: Client Referrals and Other Compensation....................................................................................8
Item 15: Custody........................................................................................................................................8
Item 16: Investment Discretion...................................................................................................................9
Item 17: Voting Client Securities...............................................................................................................9
Item 18: Financial Information.................................................................................................................10
Item 19: Requirements for State-Registered Advisors..............................................................................10
Principal Executive Officers and Management Persons.........................................................................10
California Disclosure Requirements......................................................................................................10
ITEM 4: ADVISORY BUSINESS
Who we Are
BDC Investment Advisors, LLC, formerly Southland Capital Management, LLC (referred to as “we,”
“our,” “us,” or “BDCIA”) has been registered as an investment advisor since October 2008. Our
principal owners and officers are G. Nicholas Marshi and William J. Hansen.

Services We Offer
We serve as the general partner and investment advisor to BDC Fund II, LP (the “Fund”), which is a
pooled investment vehicle. In addition, we may manage assets for clients who are not invested in the
Fund (referred to as “you” or “client”).

For the Fund, our investments are tailored to comply with the investment guidelines disclosed in the
offering materials for the Fund. Each potential investor receives a complete set of offering materials prior
to investing in the Fund.

BDCIA invests primarily in the common stock of publicly-traded business development companies
(“BDCs”). Our principal investment objective is to generate current income and capital appreciation.

BDCs are publicly-registered, closed-end investment companies with shares that trade on a stock
exchange. Unlike traditional equity funds, BDCs operate for an indefinite period and continually recycle
their contributed capital. Historically, BDCs have made debt and equity investments in small and middle-
market private companies, usually as part of a leveraged buy-out or recapitalization. Generally, BDCs
elect to be treated as regulated investment companies (“RIC”) for tax purposes and thereby avoid
corporate level taxation on ordinary income and capital gains distributed to their stockholders as
dividends. As an RIC, a BDC is required to distribute at least ninety percent of its taxable ordinary
income and realized net short-term capital gains in excess of realized net long-term capital losses and to
meet specified source-of-income and asset diversification requirements. Distributions out of capital gains
to BDC shareholders are generally eligible for favorable capital gain tax treatment.

Assets Under Management

As of December 31, 2018, we have $3.3 million in discretionary assets under management. We did not
manage any assets on a non-discretionary basis.

ITEM 5: FEES AND COMPENSATION

BDC Fund II, LP
We receive both an asset-based and an incentive allocation. The asset-based fee is 2% per year, billed in
monthly installments. This fee is billed monthly in advance, based on the value of the Fund as of first day
of the month. The incentive allocation is calculated as of December 31st each year. When profits for the
current year exceed the unrecouped net losses for prior years, we will receive an incentive allocation of
20% of the profits generated. Solely for purposes of computing the incentive allocation, net profits and
net losses include unrealized gains and losses. If you withdraw capital from the Fund, the incentive
allocation for the amount withdrawn will be calculated as of the withdrawal date.

Page 1
Investors are required to invest for a period of one year before making any withdrawals. After the one
year, investors may make withdrawals as of the last day of any calendar quarter by giving us 30 days
written notice.

We may negotiate the above fee with an individual investor, primarily depending on the size of the capital
contribution.

Separately Managed Accounts

We receive both an asset-based and a performance fee. The asset-based fee is 2% per year, billed in
monthly installments. This fee is billed monthly in advance, based on the value of the account as of first
day of the month. The performance fee is calculated as of December 31st each year. When profits for the
current year exceed the unrecouped net losses for prior years, we will receive a performance fee of 20%
of the profits generated. Solely for purposes of computing the performance fee, net profits and net losses
include unrealized gains and losses. If you withdraw capital from the account, the performance fee for
the amount withdrawn will be calculated as of the withdrawal date.

We will not manage money on a separate account basis for clients who are not qualified to pay a
performance fee.

For separately managed accounts, we generally require that you provide authorization for us to deduct our
fees directly from your investment account. Important information about the deduction of management
fees:

• You must provide authorization for us to deduct fees by initialing the appropriate section of our
investment management agreement.

• You will receive a detailed invoice each quarter which outlines our fees and how they are
calculated at the same time we request payment from the custodian.

• You will receive a statement from your custodian which shows all transactions in the account,
including the deduction of our fee.

• You are responsible for reviewing the accuracy of the fees being billed, as the custodian will not
do so.

You may elect to pay by check rather than having payment deducted directly from your account.

You may end our advisory relationship by providing 30 days written notice. We will prorate the advisory
fees earned through the termination date and send you a refund of the prepaid, unearned portion of your
fee. We process refund payments within 30 days of the termination date and will send you a check or
refund your investment account. In either case we will provide a final invoice detailing the calculation of
the refund.
General Disclosures
In order to pay an incentive allocation/performance fee you must meet certain requirements. As of
August 15, 2016, new clients and investors must meet one of the following criteria:

• Have a net worth (or together with spouse have a net worth) of at least $2.1 million.

• Have at least $1,000,000 invested with us.

Clients and investors with an inception date prior to August 15, 2016, may continue to rely on the
standards in place at the inception of the relationship. The subscription documents for the Fund and our
Investment Management Agreement provide additional qualifications standards. All incentive
allocations/performance fees will be made/charged in a manner that complies with applicable rules and
regulations, including Section 260.234 of the California Code of Regulations.

Incentive allocation/performance fee arrangements could create an incentive for us to make investments
that are riskier or more speculative than would be the case in the absence of the arrangement. In some
circumstances, we may receive increased compensation as a result of unrealized appreciation as well as
realized gains.

We will not accept investors in the Fund who are not qualified to pay an incentive allocation.

Because investors may only make withdrawals from the Fund as of the last day of a period, no refund of
management fees is provided when withdrawals are made.

Other Costs Involved

In addition to our advisory fees shown above, expenses associated with making investments on behalf of
the Fund will also be incurred. These fees include:

• mutual fund loads (if applicable). These charges are paid to brokers as a form of commission.

• management fees for ETFs and mutual funds. These are fees charged by the managers of the ETF
or mutual fund and are a portion of the expenses of the ETF or mutual fund.

• brokerage costs and transaction fees for any securities or fixed income trades. These are
generally charged by your custodian and/or executing broker.

• Accounting, administrator and legal fees for the Fund.

Additional information about brokerage costs and services is provided in “Item 12: Brokerage Practices.”

We believe the fees mentioned above are competitive; however you may be able to obtain similar services
from other sources at a lower price.
ITEM 6: PERFORMANCE-BASED FEES AND SIDE-BY-SIDE MANAGEMENT
We receive an incentive allocation for the Fund and a performance-based fee for all separately managed
accounts.

ITEM 7: TYPES OF CLIENTS

We provide investment advice to the Fund, which is a pooled investment vehicle. We anticipate that our
separately managed accounts will consist of high net worth individuals, retirement assets and businesses.

Our stated minimums for BDC Fund II, LP is $500,000.

We require a minimum investment commitment of $3,000,000 to manage assets in a separate account.

These minimums may be waived at our sole discretion.

ITEM 8: METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF LOSS

While our primary investment focus is BDC investments, we may also invest in other dividend-paying,
public securities traded on U.S. stock exchanges such as the common stock of real estate investment
trusts, or other public companies. However, we intend to limit non-BDC investments to not more than
20% of your or the Fund’s portfolio.

In selecting investments, we target companies that have strong historical cash flows, experienced
management teams, diversified portfolios of investments and are paying a substantial current dividend.
Furthermore, we will only invest in companies whose stock trading volume is sufficient to ensure the
ability to liquidate on short notice any portfolio position should this be deemed necessary. We seek to
identify individual stock investments with 12% annual or better all-in returns on an unleveraged basis
(including both distributions and any stock price appreciation).

There are currently 30 BDCs trading on U.S. stock exchanges. Of those companies, we believe that 25
meet our minimum criteria for business performance, dividend payout, market capitalization and trading
volume. The number of prospective BDC companies is anticipated by market observers to increase
substantially over the next five years as more investment management and private equity firms take
advantage of the 1980 Amendment to establish public vehicles.

Concentration of Investments. Managed investment portfolios (because of size, investment strategy and
other considerations) are expected be confined to the securities of relatively few issuers, primarily BDCs.
While we don’t expect that any initial investment position will represent more than ten percent of the
portfolios, our agreements with you and the Fund do not limit concentration in particular issuers or types
of investments. In addition, our investment strategy does not contemplate a diversified portfolio. We
intend to concentrate investments in several, relatively large security positions, industries or sectors
relative to capital. Consequently, a loss in any one position or downturn in any one industry or sector
could reduce performance materially. Also, any investment in the securities of a single issuer or the
concentration of investments in a particular industry or sector would be expected to increase the level of
risk.

Effect of Leverage on Yield Arbitrage. Our investment strategy assumes that the portfolios will be able to
borrow funds at a lower rate than the income received from their investments. Currently, all of the
available prospective investments are paying a dividend greater than projected borrowing costs. There is
a risk, however, that charged interest rates could increase at a greater rate than dividend income received
and thereby reduce or erase the positive yield arbitrage currently available.

Leverage. We anticipate using margin and leverage. We may, in our sole discretion, leverage the
investment positions by borrowing funds from futures commission merchants, securities broker-dealers,
banks, or others. Such leverage increases both the possibilities for profit and the risk of loss. At times the
portfolios may hold a relatively large amount of debt. Borrowings typically will be secured by securities
and other assets. Under certain circumstances and applicable federal laws that limit the amount of
borrowings that may be secured by securities, a broker-dealer may seek or be forced to demand an
increase in the collateral that secures the borrowers’ obligations. If we are unable to deposit additional
collateral or in certain other circumstances, the broker-dealer may elect, or be forced to, liquidate assets
held in the account to satisfy the obligation to the broker-dealer and applicable margin regulations. The
amount of the borrowings and the interest rates on those borrowings, which may fluctuate, could have a
significant effect on profitability.

Diminished BDC Dividends. If BDCs reduce or eliminate their dividend payout from current levels, the
available positive yield arbitrage would also reduce. While our research indicates that historically very
few BDCs which have paid a regular dividend have ever eliminated their payouts, there can be no
assurance that this will continue. Likewise, while no BDC has ever filed for bankruptcy, there can be no
certainty that this will continue to be the case in the future. A BDC could reduce or eliminate its dividend
for a number of reasons including: i) unexpectedly rapid repayment of outstanding assets without a
commensurate redeployment of capital into new investments on similar terms, ii) incurring defaults or
write-offs from a number of investments, or iii) declining net interest spreads due to competition or
change of strategy, each of which would reduce income. Should the positive yield arbitrage be reduced,
returns would be adversely affected. A BDC’s dividend could be reduced due to the issuance of new
shares without a commensurate increase in distributable income, because of a change in strategy by the
BDC’s board, or due to insufficient or onerous borrowing terms. Also, restrictions and provisions under
leverage obligations may cause you or the Fund to sell a portion of assets to pay down its leverage debt.

All investments involve different degrees of risk. You should be aware of your risk tolerance level and
financial situations at all times. We cannot guarantee the successful performance of an investment and
we are expressly prohibited from guaranteeing accounts against losses arising from market conditions.

ITEM 9: DISCIPLINARY INFORMATION

Registered investment advisors are required to disclose any material facts regarding any legal or
disciplinary actions that would be material to your evaluation of the investment advisor and each
investment advisor representative providing investment advice to you. We have no information of this
type to report.

ITEM 10: OTHER FINANCIAL INDUSTRY ACTIVITIES AND AFFILIATIONS

We serve as the general partner and investment advisor to the Fund. We do not expect to be engaged to
advise investors as to the appropriateness of investing in the Fund, and we will not receive any
compensation for doing so, or for selling interests in the Fund.
ITEM 11: CODE OF ETHICS, PARTICIPATION OR INTEREST IN CLIENT
TRANSACTIONS AND PERSONAL TRADING
Code of Ethics
We have adopted a set of enforceable guidelines (Code of Ethics), which describes unacceptable conduct by
BDCIA and our associated persons. Summarized, this Code of Ethics prohibits us from:

• placing our interests before yours,

• using non public information gathered when providing services to you for our own gains, or
• engaging in any act, practice or course of business that is, or might be considered, fraudulent,
deceptive, manipulative, or in violation of any applicable law, rule or regulation of a
governmental agency.

Please contact us if you would like to receive a full copy of this Code of Ethics.

Personal Trading for Associated Persons

We may buy or sell some of same securities for you that we already hold in our personal account. We
may also buy for our personal account some of the same securities that you already hold in your account.
Our associated persons may also invest directly in the Fund. It is our policy not to permit our associated
persons (or their immediate relatives) to trade in a way that takes advantage of price movements caused
by your transactions.

We may restrict trading for a particular security for our accounts or those of our associated person if there
is a pending trade in that security in a client account. Trades for our accounts (and those of our associated
persons) will be placed as part of a block trade with client trades, or individually after client trades have
been completed. Additional information about block trades is provided in “Item 12: Brokerage
Practices.” When our trades are placed after our client trades, we may receive a better or worse price than
that received by the client.

All persons associated with us are required to report all personal securities transactions to us quarterly.

We are the general partner of, and investment advisor to, the Fund. We do not expect to be engaged to
advise investors as to the appropriateness of investing in the Fund, and we will not receive any
compensation for doing so, or for selling interests in the Fund.

ITEM 12: BROKERAGE PRACTICES

Selection of Brokers
In selecting brokers to execute portfolio transactions, we make a good faith judgment of about which
broker would be appropriate. We take into consideration not only the available prices and rates of
brokerage commissions, but also other relevant factors that may include (without limitation):

• the execution capabilities of the broker/dealer,

 • custodial and other services provided by the broker/dealer that are expected to enhance our
general portfolio management capabilities,
• the size of the transaction,
• the difficulty of execution,
• the operational facilities of the broker-dealers involved, and
• the quality of the overall brokerage and research services provided by the broker/dealer.

When we select the broker/dealer for a transaction, we may cause you and/or the Fund to pay a higher
commission for effecting a transaction than another broker/dealer would have charged for effecting that
transaction. We do this if we determine in good faith that the amount of the commission is reasonable in
relation to the value of the brokerage and research services provided by the broker/dealer. The
determination is viewed in terms of either the particular transaction or our overall responsibilities with
respect to you and the Fund.

Aggregation of Orders
There are occasions on which portfolio transactions will be executed as part of concurrent authorizations
to purchase or sell the same security for the Fund, a separately managed account and/or one or more of
our associated persons.

We may choose to block (aggregate) trades for your account with those of other client accounts (including
the Fund) and personal accounts of persons associated with BDCIA. When we place a block trade, all
participants included in the block receive the same price per share on the trade. The price is calculated by
averaging the price of all of the shares traded. Due to the averaging of price over all of the participating
accounts, aggregated trades could be either advantageous or disadvantageous. Commission costs are not
averaged. You will pay the same commission whether your trade is placed as part of a block or on an
individual basis. The objective of the aggregated orders will be to allocate the executions in a manner
that is deemed equitable to the accounts involved.

Prime Brokerage
We obtain certain services for the Fund, including such services as custodial, recordkeeping, clearing and
related services, through what is known as a “prime brokerage” relationship. Under this relationship, a
single brokerage firm that we generally select provides the following services:

• maintains custody of the Fund’s assets (either directly or through clearing firms),
• provides margin credit, and
• provides related services.

This relationship allows us to seek valuable research and to compare execution quality and commission
rates, while maintaining only one custodial relationship. By using a brokerage firm, we also may avoid
paying custodial fees that banks charge other institutional investors. The prime broker receives interest
on credit balances, margin borrowings, stock loans and brokerage commissions as compensation.

Under this arrangement, the prime broker, among other things:

 • arranges for the delivery of securities bought, sold, borrowed and lent,
• makes and receives payments for securities,
• maintains custody of cash and securities, and
• provides detailed trading, portfolio and related reports.
The Fund’s obligations to the prime broker (and its affiliates) may be secured by way of a first priority
perfected security interest over all of the Fund’s assets held in custody. The prime broker (and its
affiliates) may transfer to themselves all rights, title and interest in and to those assets as collateral and
may deal with, lend, dispose of, pledge or otherwise use all such collateral for their own purposes.

ITEM 13: REVIEW OF ACCOUNTS

Nicholas Marshi, Chief Investment Officer, monitors stock prices, news developments and new SEC
filings on a daily basis.

On a monthly basis investors in the Fund receive Capital Account Statements and Dividend Distribution
Statements. On a quarterly basis, investors receive reports containing the following information:

• total amount of all additions to and withdrawals from the Fund as a whole, as well as the opening
and closing value of the Fund for the report period,

• a listing of securities positions on the closing date of the statement as required by Financial
Accounting Standards Board Accounting Standards Codification 946-210-540-4 through 6, and

• a listing of all additions to and withdrawals from the Fund by the investor and the total value of
the investor’s interest in the Fund at the end of the report period.

Separately managed account clients receive statements from the custodian of their account monthly.

ITEM 14: CLIENT REFERRALS AND OTHER COMPENSATION

We may also engage solicitors to provide investor referrals. We expect to pay these solicitors 20% of the
management fee and performance allocation we earn for managing the referred investors’ investment in
the Fund. If you are referred by a solicitor, this practice will be disclosed in writing and we will comply
with applicable rules or statutes.

ITEM 15: CUSTODY

As the general partner for the Fund, we have custody of the Fund’s assets. We have implemented the
following procedures for the Fund:

• All Fund assets are held by a qualified custodian.

• We provide audited financials for the Fund to each investor within days of the Fund’s fiscal year
end. This audit is performed by an independent CPA that is registered with, and subject to
regular inspection, by the Public Company Accounting Oversight Board.
 • All investors in the Fund receive quarterly reports as outlined in Item 13 above.

If you give us authority to deduct our fees directly from your separately managed account, we have
custody of those assets. In order to avoid additional regulatory requirements in these cases, we follow the
procedures outlined in “Item 5: Fees and Compensation.” You will also receive quarterly statements
directly from custodian of the account that details all transactions in the account.

We do not accept physical custody of client or investor assets.

ITEM 16: INVESTMENT DISCRETION

We manage the Fund on a discretionary basis and do not allow limitations to be placed on our investment
authority. Our investment philosophy is summarized above, and more completely described in the
offering materials for each Fund. In order to invest in a Fund, you must:

• Review the offering materials we provide. This Part 2A and the Part 2B for Nicholas Marshi and
William Hansen are included with the offering materials.

• Sign a copy of the limited partnership agreement for the Fund.

• Complete subscription documents for the Fund. These provide information about your
qualifications to invest in the Fund.

As one of the conditions of managing a separately managed account, you are required to provide
discretionary authority for us to manage your assets. Discretionary authority means that you are giving us
a limited power of attorney to place trades on your behalf. This limited power of attorney does not allow
us to withdraw money from your account, other than advisory fees if you agree to give us that authority.

You grant us discretionary authority by completing the following items:

• Sign a contract with us that provides a limited power of attorney for us to place trades on your
behalf. Any limitations to the trading authorization will be added to this agreement.

• Provide us with discretionary authority on the new account forms that are submitted to the
broker/dealer acting as custodian for your account(s).

All accounts are managed using the investment strategy described in the “Methods of Analysis,
Investment Strategies and Risk of Loss” section above. We do not allow clients to limit investments we
make that fall within the parameters of the investment strategy described.

ITEM 17: VOTING CLIENT SECURITIES

We vote all proxies for the Fund that, in our reasonable judgment alone, we determine affect the value of
the Fund. In so doing, we generally cast proxy votes in favor of proposals that increase shareholder value
and generally cast against proposals having the opposite effect. Mr. Marshi is responsible for our
decisions on proxy voting. He verifies that the proxies are voted in a prudent and diligent fashion and
only after a careful evaluation of the issue presented on the ballot. You may not provide direction
regarding any particular proxy solicitation.
You may provide authorization for us to vote your proxies as described above for your separately
managed account(s), or you may elect to retain the authority to vote the proxies yourself.

You may request a copy of our Proxy Policies and Procedures and/or information about how a proxy was
voted at any time.

ITEM 18: FINANCIAL INFORMATION

We do not charge or solicit pre-payment of more than $500 in fees per client six or months in advance.
We have never filed for bankruptcy and are not aware of any financial conditions that are reasonably
likely to impair our ability to meet our contractual obligations to clients.

ITEM 19: REQUIREMENTS FOR STATE-REGISTERED ADVISORS

Principal Executive Officers and Management Persons
Our principal executive officers are Nicholas Marshi and William Hansen. Additional information
regarding their education and business background is provided on Part 2B.

Neither BDCIA nor any management person has been involved in any of the items listed below.

• An award or otherwise being found liable in an arbitration claim alleging damages in excess of
$2,500, involving any of the following: 1) an investment or an investment-related business or
activity; 2) fraud, false statement(s), or omissions; 3) theft, embezzlement, or other wrongful
taking of property; 4) bribery, forgery, counterfeiting, or extortion; or 5) dishonest, unfair, or
unethical practices.

• An award or otherwise being found liable in a civil, self-regulatory organization, or

administrative proceeding involving any of the following: 1) an investment or an investment-
related business or activity; 2) fraud, false statement(s), or omissions; 3) theft, embezzlement, or
other wrongful taking of property; 4) bribery, forgery, counterfeiting, or extortion; or 5)
dishonest, unfair, or unethical practices.

California Disclosure Requirements

In our opinion, all material conflicts of interest regarding BDCIA, our representatives or any of our
employees which could reasonably be expected to impair our rendering of unbiased and objective advice
to an advisory client under Section 260.238(k) of the California Code of Regulations have been disclosed.
 BROCHURE SUPPLEMENT
ITEM 1: COVER SHEET

William J. Hansen
BDC Investment Advisors, LLC
1600 Rosecrans Avenue, 4th Floor
Manhattan Beach, CA 90266
(800) 579-1651

March 27, 2019

This Brochure Supplement provides information about William J. Hansen that supplements the BDC
Investment Advisors, LLC Brochure. You should have received a copy of that Brochure. Please contact
G. Nicholas Marshi, Managing Member at (800) 579-1651 or nmarshi@bdcia.com if you did not receive
BDC Investment Advisors, LLC’s Brochure or if you have any questions about the content of this
supplement.

Additional information about William J. Hansen is available on the SEC’s website at

www.adviserinfo.sec.gov.

ITEM 2: EDUCATIONAL BACKGROUND AND BUSINESS EXPERIENCE

William J. Hansen was born in 1956. He received a BA in Business and Psychology from University of
Vermont in 1978.

Employment Background
Employment Dates: 3/2008 - Present
Firm Name: BDC Investment Advisors, LLC
(formerly Southland Capital Management, LLC)
Type of Business: Investment Advisor
Job Title & Duties: Managing Member, Chief Marketing Officer

Employment Dates: 2/1998 - Present

Firm Name: Southland Capital Partners
Type of Business: Equity Sponsor
Job Title & Duties: Managing Member
BDC Investment Advisors, LLC
Brochure Supplement
William J. Hansen

Employment Background (continued)

Employment Dates: 1/1990 - Present

Firm Name: Hansen Capital
Type of Business: Investment Banking
Job Title & Duties: CEO & President

ITEM 3: DISCIPLINARY INFORMATION

Registered investment advisors are required to disclose any material facts regarding any legal or
disciplinary actions that would be material to your evaluation of each investment advisor representative
providing investment advice to you. There is no information of this type to report.

ITEM 4: OTHER BUSINESS ACTIVITIES

Mr. Hansen is the managing member of Southland Capital Partners, an equity sponsor firm, and CEO &
President of Hansen Capital, an investment banking firm. He spends approximately 5% of his time in
each of these capacities.

ITEM 5: ADDITIONAL COMPENSATION

Mr. Hansen does not receive any economic benefit from any non-client for providing advisory services.

ITEM 6: SUPERVISION
G. Nicholas Marshi, Managing Member, is responsible for the supervision of Mr. Hansen. His telephone
number is (800) 579-1651.

ITEM 7: REQUIREMENTS FOR STATE-REGISTERED ADVISORS

Investment advisors who are registered with a state regulatory agency rather than the SEC are required to
provide information about a wider range of disciplinary information than that described above. Mr.
Hansen has not declared personal bankruptcy and has no disciplinary information to report.

Page 2
 BROCHURE SUPPLEMENT
ITEM 1: COVER SHEET

G. Nicholas Marshi
BDC Investment Advisors, LLC
1600 Rosecrans Avenue, 4th Floor
Manhattan Beach, CA 90266
(800) 579-1651

March 27, 2019

This Brochure Supplement provides information about G. Nicholas Marshi that supplements the BDC
Investment Advisors, LLC Brochure. You should have received a copy of that Brochure. Please contact
William J. Hansen, Managing Member at (800) 579-1651 or bhansen@bdcia.com if you did not receive
BDC Investment Advisors, LLC’s Brochure or if you have any questions about the content of this
supplement.

Additional information about G. Nicholas Marshi is available on the SEC’s website at

www.adviserinfo.sec.gov.

ITEM 2: EDUCATIONAL BACKGROUND AND BUSINESS EXPERIENCE

G. Nicholas Marshi was born in 1957. He received a BA in History from Tufts University in 1980 and a
MA in Middle Eastern Studies from Harvard University in 1982.

Employment Background
Employment Dates: 3/2008 - Present
Firm Name: BDC Investment Advisors, LLC
(formerly Southland Capital Management, LLC)
Type of Business: Investment Advisor
Job Title & Duties: Chief Investment Officer. Managing investments in hedge funds

Employment Dates: 3/1998 - Present

Firm Name: Southland Capital Partners
Type of Business: Private Equity Group
Job Title & Duties: President. Identifying, investing and in selling private companies.
BDC Investment Advisors, LLC
Brochure Supplement
G. Nicholas Marshi

ITEM 3: DISCIPLINARY INFORMATION

Registered investment advisors are required to disclose any material facts regarding any legal or
disciplinary actions that would be material to your evaluation of each investment advisor representative
providing investment advice to you. There is no information of this type to report.

ITEM 4: OTHER BUSINESS ACTIVITIES

Mr. Marshi the Managing Member of Southland Capital Partners, LLC and the President of Kensington
Capital Corporation. Both entities are in the business of acquiring private companies for investment. He
spends approximately 10% of his time working with these entities.

ITEM 5: ADDITIONAL COMPENSATION

Mr. Marshi does not receive any economic benefit from any non-client for providing advisory services.

ITEM 6: SUPERVISION
William J. Hansen, Managing Member, is responsible for the supervision of Mr. Marshi. His telephone
number is (800) 579-1651.

ITEM 7: REQUIREMENTS FOR STATE-REGISTERED ADVISORS

Investment advisors who are registered with a state regulatory agency rather than the SEC are required to
provide information about a wider range of disciplinary information than that described above. Mr.
Marshi has not declared personal bankruptcy and has no disciplinary information to report.

Page 2
 ANNEX I

SUBSCRIPTION DOCUMENTS
 BDC FUND II, LP
A California Limited Partnership

Subscription Documents

To subscribe for limited partnership interests (“Interests”) in BDC Fund II, LP, a prospective investor must complete
the subscription documents contained in this booklet in accordance with the instructions set forth herein. Please
send all documents, at least five (5) business days prior to the intended subscription date by email
bhansen@bdcia.com. The original of this entire booklet should then be returned to the General Partner of the
Partnership, BDC Investment Advisors, LLC, at:

BDC Investment Advisors, LLC

1600 Rosecrans Avenue, 4th Fl.
Manhattan Beach, CA 90266

Please be sure that your name is the same in all signatures and places where it is printed on the documents.
Duplicate copies of the signature page of each signed document will be returned to you after your subscription is
accepted and a closing with respect to your subscription for Interests has occurred.

This booklet of subscription documents is an Exhibit to the Confidential Private Placement Offering Memorandum
of the Partnership relating to the private offering of the Interests. NO PERSON IS AUTHORIZED TO RECEIVE
THESE SUBSCRIPTION DOCUMENTS UNLESS SUCH PERSON HAS PREVIOUSLY RECEIVED, OR
SIMULTANEOUSLY RECEIVES, COPIES OF THE OFFERING MEMORANDUM BEARING ON ITS FIRST
PAGE THE NAME OF SUCH PERSON AND THE NUMBER SET FORTH ON THE COVER HEREOF.
Delivery
of these subscription documents to anyone other than the person named on the front cover of the Offering
Memorandum as the intended recipient is unauthorized, and any reproduction or circulation of this booklet, in whole
or in part, is prohibited.

Unless otherwise defined herein, or unless otherwise required by the context, all capitalized terms used in these
Subscription Documents have the meanings ascribed to them in the Offering Memorandum or the Partnership
Agreement of the Partnership attached thereto as Exhibit A.

Subscriptions from suitable prospective investors will be accepted in the sole discretion of the General Partner after
receipt of all Subscription Documents, properly completed and executed.
 INSTRUCTIONS TO SUBSCRIBERS

Subscription Corporations, partnerships, trusts and other entities must attach appropriate
Agreement authorizing instruments (i.e., corporate resolution or by-laws, partnership
agreement or trust instrument) and a list of authorized signatories.

IRA accounts must be established through a mutually acceptable custodian.

Contact the General Partner for more information. For IRAs, the IRA beneficiary
must complete the subscription documents, and the IRA custodian must approve
the subscription documents on behalf of the IRA subscriber.

Qualified Retirement Plans (ERISA) must attach all plan and trust documents and
any other instruments necessary to establish the status of the person executing the
Subscription Agreement as a named fiduciary of the plan.

IRS Form W-9 – Complete and sign a copy of IRS Form W-9 to certify your tax
identification number. For IRAs, the IRA custodian must also complete and sign a
W-9. If you are not a United States person, you must instead complete the
appropriate IRS Form W-8. For the appropriate Form W-8 and an updated Form
W-9, please go to www.irs.gov.

Investor Please read, complete, date and sign. Each Co-Subscriber must complete and sign
Questionnaire the signature page and check the applicable boxes as well.

Signature Page Please complete, date and sign. Each Co-Subscriber must complete and sign the
to Partnership signature page as well.
Agreement
Payment The full amount of your subscription is due at least one business day prior to the
first day of the month in which you wish your capital contribution to the
Partnership to become effective.

Wire transfers must be made to:

Bank: Bank of New York

New York, NY
ABA # 021-000-018
FBO: Pershing, LLC
A/C # 8900512385
FFC: BDC Fund II, LP
A/C # PQK-156251
Under reference: Subscription proceeds from:

i
 SUBSCRIPTION AGREEMENT

ARTICLE I
PURCHASE OF PARTNERSHIP INTEREST

1.1 Subscription. The undersigned (the “Subscriber”) hereby subscribes (the “Subscription”) to a
limited partnership interest in the amount set forth as the “Initial Capital Contribution” on the signature page hereto
(“Interest”) in BDC Fund II, LP (the “Partnership”) a limited partnership formed under the laws of the State of
California, with offices at 1600 Rosecrans Avenue, 4 th Floor, Manhattan Beach, California. This subscription shall
become effective when it has been duly executed by the Subscriber and this Subscription Agreement (the
“Agreement”) has been accepted and agreed to by BDC Investment Advisors, LLC (the “General Partner”).

1.2 Receipt of Offering Memorandum and Partnership Agreement Acknowledged . The undersigned
acknowledges receipt of a copy of the Partnership’s Confidential Offering Memorandum and related exhibits (the
“Offering Memorandum”), including the Amended and Restated Agreement of Limited Partnership attached thereto
as Exhibit A (the “Partnership Agreement”) and the General Partners’ Form ADV—Part 2 Brochure.

THE SUBSCRIBER ACKNOWLEDGES THAT THE SUBSCRIBER IS ACQUIRING THE INTEREST AFTER
INVESTIGATION OF THE PARTNERSHIP AND ITS PROSPECTS AND THAT NO OFFER OR
SOLICITATION HAS BEEN MADE TO THE SUBSCRIBER EXCEPT THROUGH THE OFFERING
MEMORANDUM AND THE PARTNERSHIP AGREEMENT. THE SUBSCRIBER FURTHER
ACKNOWLEDGES THAT THE SUBSCRIBER IS NOT RELYING UPON ANY REPRESENTATION MADE
BY ANY PERSON EXCEPT AS CONTAINED IN THE OFFERING MEMORANDUM AND THE
PARTNERSHIP AGREEMENT.

1.3 Payment For Subscription. The Subscriber understands and agrees that the Initial Capital
Contribution to the Partnership for the amount of the Subscriber’s subscription is to be made upon submission of
this Agreement.

1.4 Terms and Conditions. The Partnership shall have the right to accept or reject the Subscription, in
whole or in part, for any reason whatsoever in its sole discretion.

ARTICLE II
REPRESENTATIONS AND WARRANTIES

2.1 Representations and Warranties by the General Partner. The General Partner represents and
warrants to the Subscriber that:

(a) The General Partner has the full legal right, power and authority to: (i) enter into this
Agreement and to perform the General Partner’s obligations hereunder; and (ii) execute and deliver this Agreement,
and (iii) the consummation of the transactions contemplated herein will not result in a breach or violation of, or a
default under, any agreement, law, regulation or decree by which the Partnership is bound.

(b) The Subscriber will acquire the Subscriber’s Interest free and clear of any liens, charges or
encumbrances.

(c) No registration with, application to, approval of, or other action by, any Federal, state or
other governmental commission or regulatory body is required in connection with this Agreement and no Federal or
state agency has passed upon the Interest or made any findings or determination as to the fairness of this investment.

2.2 Survival of Representations and Warranties. The representations and warranties of the General
Partner shall survive the closing and shall be fully enforceable at law or in equity against the General Partner.

1
 2.3 Disclaimer.

(a) It is specifically understood and agreed by the Subscriber that the General Partner and its
affiliates have not made, nor by this Agreement shall be construed to make, directly or indirectly, explicitly or by
implication, orally or in writing, any representation, warranty, projection, assumption, promise, covenant, opinion,
recommendation or other statement of any kind or nature with respect to the anticipated profits or losses of the
Partnership.

(b) The General Partner has made available to the Subscriber and the Subscriber’s
accountants, attorneys and other advisors full and complete information concerning the financial structure of the
Partnership and the Subscriber acknowledges that the Subscriber has either reviewed such information or has waived
review of such information.

2.4 General Representations and Warranties by the Subscriber. The Subscriber represents and
warrants to the General Partner that:

(a) The Subscriber is acquiring the Interest for the Subscriber’s own account, as principal,
for investment purposes only and not with any intention to resell, distribute or otherwise dispose of or fractionalize
the Interest, in whole or in part.

(b) The Subscriber has been furnished, has carefully read, and has relied solely on (except for
information obtained pursuant to paragraph (c) below), the information contained in the Offering Memorandum,
including as Exhibit A thereto the full text of the Partnership Agreement and as Exhibit B thereto the General
Partner’s Form ADV—Part 2 Brochure, and no representations or warranties have been made to the Subscriber by
the General Partner or the Partnership, other than the representations set forth in the Offering Memorandum, the
Partnership Agreement and this Agreement.

(c) The Subscriber has had an unrestricted opportunity to: (i) obtain additional information
concerning the offering of Interests pursuant to the Offering Memorandum (the “Offering”), the Interests, the
General Partner, the Partnership and any other matters relating directly or indirectly to the Subscriber’s purchase of
the Interest; and (ii) ask questions of, and receive answers from, the General Partner concerning the terms and
conditions of the Offering and to obtain such additional information as may have been necessary to verify the
accuracy of the information contained in the Offering Memorandum, Partnership Agreement or otherwise provided.

(d) The Subscriber is an Accredited Investor (unless otherwise indicated in the attached
Investor Questionnaire) and has such knowledge and experience in financial and business matters that he or she is
capable of evaluating the merits and risks of investing in the Partnership, and all information that the Subscriber has
provided concerning the Subscriber, the Subscriber’s financial position and knowledge of financial and business
matters is true, correct and complete. The Subscriber acknowledges and understands that the General Partner will
rely on the information provided by the Subscriber in this Agreement and in the Investor Questionnaire that
accompanies this Agreement for purposes of complying with Federal and applicable state securities laws.

(e) Except as otherwise disclosed in writing by the Subscriber to the General Partner, the
Subscriber has not dealt with a broker in connection with the purchase of the Interest and agrees to indemnify and
hold the General Partner and the Partnership harmless from any claims for brokerage or fees in connection with the
transactions contemplated herein.

(f) The Subscriber is not relying on the General Partner with respect to any legal, investment
or tax considerations involved in the purchase, ownership and disposition of an Interest. The Subscriber has relied
solely on the advice of, or to the extent the Subscriber deems necessary has consulted with, in regard to the legal,
investment and tax considerations involved in the purchase, ownership and disposition of an Interest, the
Subscriber’s own legal counsel, business and/or investment adviser, accountant and tax adviser.

(g) If the Subscriber is a corporation, partnership, trust or other entity: (i) it is authorized and
qualified to become a limited partner in, and authorized to make its Initial Capital Contribution to, the Partnership;
(ii) the person signing this Agreement on behalf of such entity has been duly authorized by such entity to do so; and
(iii) unless otherwise approved by the General Partner, such entity was not organized or reorganized for the specific
purpose of acquiring the Interest.
 (h) The Subscriber understands that Interests cannot be sold, assigned, transferred,
exchanged, hypothecated or pledged, or otherwise disposed of or encumbered without the prior written consent of
the General Partner, which may be given or withheld in its sole and absolute discretion, and that no market will exist
for the resale of any Interests. The Subscriber understands further that withdrawals are restricted as summarized in
the Offering Memorandum and more fully set forth in the Partnership Agreement. In addition, the Subscriber
understands that Interests have not been registered under the Securities Act, or under any applicable state securities
or blue-sky laws or the laws of any other jurisdiction, and cannot be resold unless they are so registered or unless an
exemption from registration is available. The Subscriber understands that there is no plan to register the Interests
under any law.

(i) The Subscriber understands the various risks of an investment in the Partnership and that
the General Partner has conflicts of interest with the Partnership, and the Subscriber has carefully reviewed the
various risks and conflicts summarized in the Offering Memorandum under the captions “CERTAIN RISK
FACTORS” and “POTENTIAL CONFLICTS OF INTEREST.”

(j) The Subscriber represents that it understands that an investment in the Partnership
involves significant risks not associated with other investment vehicles and is suitable only for persons of adequate
financial means who have no need for liquidity in this investment. The Subscriber also represents that no assurances
or guarantees have been made to the Subscriber by anyone regarding whether the Partnership’s investment objective
will be realized or whether the Partnership’s investment strategy will prove successful. The Subscriber recognizes
that he or she may lose all or a portion of its investment in the Partnership. The Subscriber also understands that if it
is subject to income tax, an investment in the Partnership is likely (if the Partnership is successful) to create taxable
income or tax liabilities in excess of cash distributions to pay such liabilities.

(k) The Subscriber has carefully reviewed the section entitled “BROKERAGE AND
TRANSACTION PRACTICES” in the Offering Memorandum and, in particular, the provisions describing the
authority of the General Partner to use “soft dollar” commissions or a rebate by brokerage firms of commissions
generated by Partnership securities transactions executed through those firms to pay expenses that the General
Partner might otherwise have to bear or that otherwise provide benefits to the General Partner and their affiliates.

(l) The Subscriber is willing and able to bear the economic risks of an investment in the
Partnership for an indefinite period of time. The Subscriber offers, as evidence of ability to bear economic risk, the
information required hereinafter in these Subscription Documents.

(m) The Subscriber has carefully reviewed and understands the Partnership Agreement,
including without limitation the indemnification and exculpatory provisions set forth therein. The Subscriber
understand that such provisions provide, among other things, that under certain conditions, (i) the General Partner
shall be held harmless to the Partnership or its Partners, (ii) in the event of any claim against the General Partner, the
Partnership may be required to pay the General Partner’s legal fees as incurred and (iii) Limited Partners may have a
more limited right of action than they would ordinarily have as a result of these provisions in the Partnership
Agreement.

(n) The Subscriber maintains its domicile or principal place of business, and is not merely a
transient or temporary resident, at the physical address shown on the signature page of this Agreement.

(o) The Subscriber represents that all of the information contained in this Agreement is
complete and accurate and that the Subscriber will notify the General Partner immediately of any material change in
any such information. The Subscriber understands that the General Partner and the Partnership will rely on the
information contained herein and indemnify the General Partner and the Partnership for any damages, losses or costs
it may suffer as the result of misrepresentations or omissions herein.

(p) The Subscriber represents that it has relied solely upon investigations made by
himself/herself, his/her attorney and accountant and agents in making the decision to participate in the proposed
offering. Subscriber further acknowledges that no statement, printed material or inducement has been given or made
by the Partnership or its representatives which is contrary to the information contained in the Offering Memorandum
and related Exhibits.
 (r) The Subscriber understands that the Partnership reserves the right to make reports available
solely in electronic form through the website of the General Partner. The Subscriber hereby agrees to accept such
electronic delivery in satisfaction of any regulatory requirements under any applicable law.

2.5 Representations by Entities Governed by ERISA. In the event that the Subscriber is governed
pursuant to the rules and regulations of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), the person executing this Agreement on behalf of the Subscriber represents and warrants as follows:

(a) Such person is either a named fiduciary of the Plan (as defined in Section 402(a)(2) of
ERISA) or an investment manager of the Plan (as defined in Section 3(38) of ERISA) with full authority under the
terms of the Plan and full authority from all Plan beneficiaries, if required, to cause the Plan to invest in the
Partnership and to execute this Agreement. Such investment has been duly approved by all other named fiduciaries
whose approval is required, if any, and is not prohibited or restricted by any provisions of the Plan or of any related
instrument.

(b) As a named fiduciary or investment manager, such person has independently determined
that the investment by the Plan in the Partnership satisfies all requirements of Section 404(a)(1) of ERISA, and will
not be prohibited under any of the provisions of Section 406 of ERISA or Section 4975(c)(1) of the Code. The
undersigned has requested and received all information from the General Partner that it, after due inquiry,
considered relevant to such determinations. In determining that the requirements of Section 404(a)(1) are satisfied,
the undersigned has taken into account (i) that there is a risk of a loss of the Plan’s investment; (ii) that an
investment in the Partnership will be relatively illiquid, and funds so invested will not be readily available for the
payment of employee benefits; (iii) that the Partnership’s portfolio will not be diversified; (iv) the cash flow
requirements and funding objectives of the Plan; and (v) the Plan’s other investments. Taking these factors, and all
other factors relating to the Partnership into account, the undersigned has concluded that investment in the
Partnership constitutes an appropriate part of the Plan’s overall investment program.

(c) Such person will notify the General Partner, in writing, of (i) any termination, substantial
contraction, merger or consolidation of the Plan, or transfer of its assets to any other plan, (ii) any amendment to the
Plan or any related instrument that materially affects the investments of the Plan or the authority of any named
fiduciary or investment manager to authorize Plan investments; and (iii) any alteration in the identity of any named
fiduciary or investment manager, including itself, who has the authority to approve Plan investments.

(d) Such person acknowledges that neither the General Partner nor any of its Affiliates render
any investment advice on a regular basis pursuant to a mutual understanding, arrangement or agreement, written or
otherwise, between the Plan and any of such parties who will act in regard to the Partnership and none of such
parties renders any investment advice to the Plan that furnishes the primary basis for investment decisions with
respect to assets of the Plan.

(e) If the General Partner or any partner, employee or agent of the General Partner is ever
held to be a fiduciary, it is agreed that, in accordance with the provisions of Section 405(b)(1), 405(c)(2), and 405(d)
of ERISA, the fiduciary responsibilities of such persons shall be limited to his or its duties in administering the
business of the Partnership, and such persons shall not be responsible for any other duties with respect to the Plan
(specifically including evaluating the initial or continued appropriateness of the Plan’s investment in the Partnership
under Section 404(a)(1) of ERISA).

(f) It is further understood that anything contained in the Partnership Agreement to the
contrary notwithstanding, at any time the General Partner, in its sole discretion, determines that the continued
participation by the Plan in the Partnership could cause a violation of any of the provisions of Section 406 of ERISA
or Section 4975 of the Code, the General Partner may require the Plan to withdraw in whole or in part from the
Partnership in accordance with the provisions of the Partnership Agreement. Nothing herein shall be construed to
impose any responsibility on the General Partner to determine whether investment in the Partnership satisfies the
requirements of Section 404(a)(1) of ERISA, or to relieve the undersigned or any other fiduciary of responsibility
for preventing the Plan from violating the provisions of Section 406 of ERISA or Section 4975 of the Code.
 2.6 Representations and Warranties by Subscriber under USA PATRIOT Act. Subscribers should
check the Office of Foreign Assets Control (“OFAC”) website at <http://www.treas.gov/ofac> before making the
following representations:

(a) The Subscriber represents that the amounts contributed by it to the Partnership were not
and are not directly or indirectly derived from activities that may contravene federal, state or international laws and
regulations, including anti-money laundering laws and regulations.

(b) The Subscriber understands and agrees that any withdrawal or redemption proceeds paid
to it will be paid to the same account from which the Subscriber’s investment in the Partnership was originally
remitted, unless the General Partner, in its sole discretion, agrees otherwise.

(c) The Subscriber understands and agrees that, by law, the General Partner or the
Partnership may be obligated to “freeze” the Subscriber’s Interests, either by prohibiting additional contributions
and/or declining any withdrawal requests with respect to the Interests in compliance with governmental regulations,
and the General Partner may also be required to report such action and to disclose the Subscriber’s identity to
OFAC.

ARTICLE III
MISCELLANEOUS

3.1 Notices. Any notice, demand or request required or permitted to be given or made hereunder shall
be in writing and shall be deemed given or made when sent by facsimile or electronic mail if received during normal
business hours of the recipient or during non-business hours if receipt is confirmed, when delivered in person, or
when sent to such party at such address by registered or certified mail, return receipt requested.

3.2 Assignment. Except as provided in the Partnership Agreement, this Agreement is not transferable
or assignable by the undersigned.

3.3 Pronouns and Plurals. Whenever the context may require, any pronoun used herein shall include
the corresponding masculine, feminine or neuter forms. The singular form of nouns, pronouns and verbs shall
include the plural and vice versa.

3.4 Further Action. The parties shall execute and deliver all documents, provide all information and
take or forbear from taking all such action as may be necessary or appropriate to achieve the purposes of this
Agreement. Each party shall bear its own expenses in connection therewith.

3.5 Applicable Law; Venue. This Agreement shall be construed in accordance with and governed by
the laws of the State of California without regard to California conflict of laws rules. All disputes arising out of this
Agreement shall be subject to the exclusive jurisdiction and venue of the California state courts of San Francisco
County (or, in the case of exclusive federal jurisdiction, the United States District Court for the Northern District of
California) and the Subscriber consents to the personal and exclusive jurisdiction and venue of these courts.

3.6 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, administrators, successors, legal representatives, personal representatives, permitted
transferees and permitted assigns. If the undersigned is more than one person, the obligation of the undersigned shall
be joint and several and the agreements, representations, warranties and acknowledgments herein contained shall be
deemed to be made by and be binding upon each such person and such person’s heirs, executors, administrators and
successors.

3.7 Integration. This Agreement, together with the Partnership Agreement, constitutes the entire
agreement among the parties pertaining to the subject matter hereof and supersedes and replaces all prior and
contemporaneous agreements and understandings, whether written or oral, pertaining thereto. No covenant,
representation or condition not expressed in this Agreement shall affect or be deemed to interpret, change or restrict
the express provisions hereof.

3.8 Amendment. This Agreement may be modified or amended only with the written approval of all
parties.
 3.9 Creditors. None of the provisions of this Agreement shall be for the benefit of or enforceable by
creditors of any party.

3.10 Waiver. No failure by any party to insist upon the strict performance of any covenant, agreement,
term or condition of this Agreement or to exercise any right or remedy available upon a breach thereof shall
constitute a waiver of any such breach or of any other covenant, agreement, term or condition.

3.11 Rights and Remedies. The rights and remedies of each of the parties hereunder shall be mutually
exclusive, and the implementation of one or more of the provisions of this Agreement shall not preclude the
implementation of any other provision.

3.12 Counterparts. This Agreement may be executed in counterparts, all of which taken together shall
constitute one agreement binding on all the parties notwithstanding that all the parties are not signatories to the
original or the same counterpart.

3.13 INDEMNITY. THE UNDERSIGNED AGREES TO INDEMNIFY AND HOLD HARMLESS

THE GENERAL PARTNER AND THE PARTNERSHIP, AND EACH OTHER PERSON, IF ANY, WHO
CONTROLS ANY SUCH ENTITY WITHIN THE MEANING OF SECTION 15 OF THE SECURITIES ACT
AGAINST ANY AND ALL LOSS, LIABILITY, CLAIM, DAMAGES AND EXPENSE WHATSOEVER
(INCLUDING, BUT NOT LIMITED TO, ANY AND ALL EXPENSES WHATSOEVER REASONABLY
INCURRED IN INVESTIGATING, PREPARING OR DEFENDING AGAINST ANY LITIGATION
COMMENCED OR THREATENED OR ANY CLAIM WHATSOEVER) ARISING OUT OF OR BASED UPON
ANY BREACH OR FAILURE BY THE UNDERSIGNED TO COMPLY WITH ANY REPRESENTATION,
WARRANTY, COVENANT OR AGREEMENT MADE BY THE UNDERSIGNED HEREIN OR IN ANY
OTHER DOCUMENT FURNISHED BY THE UNDERSIGNED TO ANY OF THE FOREGOING IN
CONNECTION WITH THIS AGREEMENT.
 INVESTOR QUESTIONNAIRE

A. SUBSCRIBER INFORMATION

Subscriber further represents and warrants that the following information is true and complete:

Name of Subscriber: Date of Birth or Formation:

Name of Joint Subscriber, if any: Date of Birth or Formation:

Amount of Initial Capital Contribution: $

Subscriber’s Taxpayer Identification Number (required):

Custodian / Trustee’s Taxpayer Identification Number (required for IRAs / retirement plans):

Type of owner or form of ownership:

Individual Limited Liability Company IRA

Partnership Tenants in Common Keogh Plan
Corporation Joint Tenants With Right of Survivorship
Trust Employee Benefit Plan Other

If “Other,” please specify:

Subscriber’s Country of Citizenship (Individuals) or Jurisdiction of Formation (Entities):

Subscriber’s Primary Physical/Street Address: Mailing Address, if different:

Telephone number: ( ) - Fax number: ( ) -

Email (required):
If the Subscriber is a corporation, limited liability company, partnership or a trust, please provide as appropriate the
names and addresses of the officers, directors, partners, managers, members and principal beneficiaries. To the
extent the context permits, all of the information in this questionnaire is furnished on behalf of and is applicable to
each of the persons listed below. The General Partner or any administrator of the Fund may require any one of
these individuals to complete a separate Investor Questionnaire.

Degree(s) received (Applicable to individual subscribers):

School Degree Year Received

Employment during the past five years (with dates):

Employment, Position or Occupation From To Nature of Duties

Approximate number of years Subscriber has been investing:

Subscriber’s approximate current portfolio value: $

Please check frequency of Subscriber’s (or custodian’s) investments in:

Often Occasionally Seldom Never

Real estate, other than principal residence (directly

or through entities managed by others)

Tax shelter programs (real estate, leasing, oil and gas, cattle
breeding)

Marketable securities (stocks, bonds, debentures, notes)

Commodity futures

Venture capital investments

Other private investment funds, including hedge funds and

commodity pools

If necessary, please list where duplicate reports should be sent. IRA or retirement plan subscribers should list the
custodian or trustee’s address.
B. BANK WIRE INFORMATION

Value Date for Capital Contribution:

(The 1st business day of the month immediately following acceptance of subscription)

Name of Remitting Bank:

Address:

SWIFT/ABA/CHIPS/UID:

Account name:

Account number:

Under Reference:

In accordance with industry best practices and anti-money laundering regulations, redemption payments will be paid
only to the bank account used for the subscription payment unless special approval is obtained. The bank account
above will be certified as the Subscriber’s bank account of record. The titling of the bank account must match the
titling of this subscription. If not, the General Partner must be notified now regarding the discrepancy and its reason.
The General Partner may reject any subscription at any time where payment is from a different bank account than
the bank account of record or a bank account with different titling than the subscription, regardless of whether such
payment was received in advance or accordance with the payment deadline requirements.
C. ACCREDITED INVESTOR STATUS

Unless otherwise determined by the General Partner in its sole discretion, the General Partner will accept
subscription offers only from persons who are “Accredited Investors,” as that term is defined in Regulation D under
the Securities Act. PLEASE CHECK THE APPROPRIATE SPACE(S) IN THIS SECTION INDICATING THE
BASIS ON WHICH YOU QUALIFY AS AN INVESTOR.

1. Qualification as an Accredited Investor . Please check the categories applicable to you indicating the
basis upon which you qualify as an Accredited Investor for purposes of the Securities Act and
Regulation D thereunder.

INDIVIDUAL WITH NET WORTH IN EXCESS OF $1.0 MILLION (EXCLUDING PRIMARY

RESIDENCE). A natural person (not an entity) whose net worth, or joint net worth with his or her
spouse, at the time of purchase exceeds $1,000,000 excluding the value of the person’s primary
residence. (Explanation: In calculating net worth, you may include your equity in personal
property and real estate other than your primary residence, cash, short-term investments, stock and
securities. Your inclusion of equity in personal property and real estate other than your primary
residence should be based on the fair market value of such property less debt secured by such
property. Indebtedness secured by your primary residence up to its fair market value may be
excluded from your net worth. Indebtedness secured by your primary residence in excess of its fair
market value, however, should be considered a liability and deducted from your net worth.)

INDIVIDUAL WITH A $200,000 INDIVIDUAL ANNUAL INCOME. A natural person (not an entity)
who had an individual income of more than $200,000 in each of the preceding two calendar years,
and has a reasonable expectation of reaching the same income level in the current year.

INDIVIDUAL WITH A $300,000 JOINT ANNUAL INCOME. A natural person (not an entity) who had
joint income with his or her spouse in excess of $300,000 in each of the preceding two calendar
years, and has a reasonable expectation of reaching the same income level in the current year.

CORPORATIONS OR PARTNERSHIPS. A corporation, partnership, or similar entity that has in

excess of $5 million of assets and was not formed for the specific purpose of acquiring an Interest
in the Fund.

REVOCABLE TRUST. A trust that is revocable by its grantors and each of whose grantors is an
accredited investor. (If this category is checked, please also check the additional category or
categories under which the grantor qualifies as an accredited investor.)

IRREVOCABLE TRUST. A trust (other than an ERISA plan) that (i) is not revocable by its grantors,
(ii) has in excess of $5 million of assets, (iii) was not formed for the specific purpose of acquiring
an Interest, and (iv) is directed by a person who has such knowledge and experience in financial
and business matters that such person is capable of evaluating the merits and risks of an
investment in the Fund.

IRA OR SIMILAR BENEFIT PLAN. An IRA, Keogh or similar benefit plan that covers a natural
person who is an accredited investor. (If this category is checked, please also check the additional
category or categories under which the natural person covered by the IRA or plan qualifies as an
accredited investor.)

PARTICIPANT-DIRECTED EMPLOYEE BENEFIT PLAN ACCOUNT. A participant-directed employee

benefit plan investing at the direction of, and for the account of, a participant who is an accredited
investor. (If this category is checked, please also check the additional category or categories under
which the participant qualifies as an accredited investor.)

OTHER ERISA PLAN. An employee benefit plan within the meaning of Title I of the ERISA Act
other than a participant-directed plan with total assets in excess of $5 million or for which
investment decisions (including the decision to purchase an Interest) are made by a bank,
registered investment adviser, savings and loan association, or insurance company.
 GOVERNMENT BENEFIT PLAN. A plan established and maintained by a state, municipality, or any
agency of a state or municipality, for the benefit of its employees, with total assets in excess of $5
million.

NON-PROFIT ENTITY. An organization described in Section 501(c)(3) of the Internal Revenue

Code, as amended, with total assets in excess of $5 million (including endowment, annuity and life
income funds), as shown by the organization’s most recent audited financial statements.

OTHER INSTITUTIONAL INVESTOR (check one).

A bank, as defined in Section 3(a)(2) of the Securities Act (whether acting for its own
account or in a fiduciary capacity);
A savings and loan association or similar institution, as defined in Section 3(a)(5)(A) of
the Securities Act (whether acting for its own account or in a fiduciary capacity;
A broker-dealer registered under the Exchange Act;
An insurance company, as defined in section 2(13) of the Securities Act;
A “business development company,” as defined in Section 2(a)(48) of the ICA;
A small business investment company licensed under Section 301(c) or (d) of the Small
Business Investment Act of 1958, as amended; or
A “private business development company” as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940, as amended.

EXECUTIVE OFFICER OR DIRECTOR. A natural person who is an executive officer, director or

general partner of the Fund or the General Partner.

ENTITY OWNED ENTIRELY BY ACCREDITED INVESTORS. A corporation, partnership, private

investment company or similar entity each of whose equity owners is a natural person who is an
accredited investor. (If this category is checked, please also check the additional category or
categories under which each natural person qualifies as an accredited investor.)

NOT AN ACCREDITED INVESTOR. None of the foregoing applies.

2. Qualification as a Qualified Client.

The Subscriber has a net worth in excess of $2,100,000 excluding the Subscriber’s primary
residence. Each direct or indirect ultimate equity owner of the Subscriber has a net worth in excess
of $2,100,000 (excluding each equity owner’s primary residence), if the Subscriber is (1) a private
investment company (a company that would be defined as an investment company under the ICA,
but for the exception from that definition provided by ICA section 3(c)(1)), (2) an investment
company registered under the ICA or (3) a business development company as defined in Advisers
Act section 202(a)(22).

3. Qualification as a Sophisticated Person. Please check below, if applicable, indicating that you are a
Sophisticated Person for purposes of the Securities Act and Regulation D thereunder.

The Subscriber is a person with knowledge and experience in financial and business matters so as
to be capable of evaluating the relative merits and risks of an investment in the Fund. The
Subscriber is not utilizing any other person to be its purchaser representative in connection with
evaluating such merits and risks. The Subscriber offers as evidence of knowledge and experience
in these matters the information requested hereinafter on this Investor Questionnaire and the
representations set forth in the Subscription Agreement. If the Subscriber requires the use of the
services of a Purchaser Representative, as defined in Regulation D, a separate questionnaire will
be provided.
D. ERISA PLANS

If the Subscriber is a qualified retirement plan subject to the fiduciary provisions of Title I of ERISA, or of Section
4975 of the Internal Revenue Code of 1986, as amended (the “Code”), check the appropriate spaces below:

TITLE TO UNITS TO BE REGISTERED AS FOLLOWS:

Type of Plan (check one)

CORPORATE PLAN IRA

KEOGH (H.R.-10) PLAN OTHER:

Investment Discretion with respect to Invested Assets Exercised by (check one)

INDIVIDUAL INDIVIDUAL FIDUCIARY

EMPLOYER CORPORATE FIDUCIARY
(bank, insurance company, investment broker, etc.)

NAME OF FIDUCIARY:

E. REPRESENTATIONS AND WARRANTIES BY LIMITED LIABILITY COMPANIES, CORPORATIONS,

PARTNERSHIPS, TRUSTS AND ESTATES

If the Subscriber is a corporation, partnership or trust, the Subscriber and each person signing on behalf of the
Subscriber represents and warrants that:

1. Was the undersigned organized or reorganized for the specific purpose, or for the purpose among other
purposes, of acquiring interests in the Fund?
Yes No

2. Will the Subscriber, at any time, invest more than 40% of the Subscriber’s assets in the Fund?
Yes No

3. Under the Subscribing entity’s governing documents and in practice, are the Subscribing entity’s
investment decisions based on the investment objectives of the Subscribing entity and its owners
generally and not on the particular investment objectives of any one or more of its individual owners?
Yes No

4. Does any individual shareholder, partner or member or group of shareholders, partners or members of
the undersigned have the right to elect whether or not to participate in the investment of the
Subscribing entity in the Fund or to determine the level of participation of such partner or group
therein?
Yes No

5. Is the Subscribing entity authorized and qualified to become a Limited Partner in the Fund and does the
Subscribing entity and the undersigned hereto further represent and warrant that such signatory has
been duly authorized by the Subscribing entity to execute the Subscription Documents?
Yes No

6. Is the undersigned a private investment company which is not registered under the Company Act, as
amended, in reliance on Section 3(c)(1) or Section 3(c)(7) thereof?
Yes No
F. TAXPAYER ID NUMBER; NO BACKUP WITHHOLDING; NON-U.S. FOREIGN PERSON OR ENTITY

If the Subscriber is a “non-U.S. person or entity,” allocations of Fund income may be subject to withholding and
taxation under the Internal Revenue Code, as amended (“Code”). Subscriber acknowledges that it may be required to
file U.S. income tax returns. If Subscriber is a foreign corporation, foreign partnership, foreign trust or foreign estate
(as those terms are defined in the Code and the regulations thereunder), please contact the General Partner. The
Subscriber understands that the information contained in this item may be disclosed to the Internal Revenue Service
by the Fund and that any false statement contained in this item could be punished by fine, imprisonment or both.

1. The Subscriber certifies that the taxpayer identification number being supplied herewith by the
Subscriber is the Subscriber’s correct taxpayer identification number and that the Subscriber is not
subject to backup withholding under Section 3406 of the Code and the regulations thereunder?
Yes No

2. The Subscriber certifies that the Subscriber is not a “Non-U.S. person” or, if an entity, that Subscribing
entity is not a foreign corporation, foreign partnership, foreign trust or foreign estate, as those terms are
defined in the Code and the regulations thereunder?
Yes No

3. If the Subscriber’s non-foreign status changes or if any other information in this item changes, the
Subscriber agrees to notify the General Partner within 30 days thereafter?
Yes No
G. COMPLIANCE WITH THE USA PATRIOT ACT

To comply with applicable anti-money laundering/OFAC rules and regulations, you are required to provide the
following information:

1. Payment Information.

(a) Name of the bank from which your payment to the Fund is being wired (the “Wiring Bank”):

(b) Is the Wiring Bank located in the United States or another “FATF Country”1?
Yes No

(c) Are you a customer of the Wiring Bank?

Yes No

2. Additional Information.

The following materials must be provided to the General Partner:

Where the Subscriber is an Individual:

(One of the following) A copy of a current valid Government issued bearing photo and
signature. (Passport, National ID Card, Driver's License, etc.)

Where the Subscriber is a Company:

Certificate or evidence of incorporation or registration (Articles of incorporation,

certificate of good standing, etc.)

Authorized Signatory List

Where the Entity is a Partnership:

Evidence of formation (copy of Partnership Agreement, Business License, Certificate of

Good Standing or equivalent)

Authorized Signatory List

Where the Entity is a Trust:

Copy of the Trust Deed or Declaration (or equivalent)

Authorized Signatory List

Where the Entity is a Fund of Funds: is a Company

Pertinent Partnership / Company due diligence as above

1
As of the date hereof, countries and entities that are members of the Financial Action Task Force on Money Laundering (each an
“FATF Country”) are: Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Denmark, the European Commission,
Finland, France, Germany, Greece, the Gulf Co-operation Council, Hong Kong, Iceland, India, Ireland, Italy, Japan, Luxembourg,
Mexico, the Kingdom of the Netherlands, New Zealand, Norway, Portugal, the Republic of Korea, the Russian Federation,
Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The list of FATF
Countries may be expanded to include future FATF members and FATF compliant countries.
 SUBSCRIPTION AGREEMENT AND
INVESTOR QUESTIONNAIRE SIGNATURE
PAGE

Date:

$
Amount of Initial Capital Contribution

SIGNATURE FOR INDIVIDUAL SUBSCRIBER:

(Including Individual IRA Account Holders)

(Print Name) (Signature)

(Print Name of Joint Subscriber, if any) (Signature of Joint Subscriber, if any)

- OR -

SIGNATURE FOR PARTNERSHIP, CORPORATION, TRUST OR OTHER ENTITY SUBSCRIBER:

(Print Name of Subscriber) (Signature)

(Print Name and Title of Person Signing)

- OR -

CUSTODIAN APPROVAL FOR AN IRA ACCOUNT: By signing below, the undersigned, a qualified IRA
custodian, is consenting to the IRA account being invested in the Interests.

(Print Name of Custodian)

(Signature of Custodian Representative)

(Print Name and Title of Custodian Representative)

 LIMITED PARTNERSHIP AGREEMENT SIGNATURE PAGE

The undersigned, desiring to enter into the Agreement of Limited Partnership (the “Agreement”) of BDC
Fund II, LP, a California limited partnership (the “Partnership”), in or substantially in the form furnished
to the undersigned with the Confidential Offering Memorandum, hereby agrees to all of the terms of the
Agreement and agrees to be bound by the terms thereof and to become a Limited Partner thereunder, and
the undersigned hereby joins in the execution and swears to this Agreement and hereby authorizes this
signature page to be attached thereto.

Witness the execution hereby by the undersigned as a limited partner of the Partnership and individually.

(Print Name of Subscriber)

(Social Security or Employer Identification Number)

Signature for Individual Subscribers:* Signature for Subscribers Other Than

(Including Individual IRA Account Holders) Individuals:

By:
(Signature of Subscriber) (Signature of Authorized Signatory)

(Signature of Subscriber, if Joint) (Print Name and Title of Authorized Signatory)

Date:

Residence or Business Address of Subscriber: CUSTODIAN APPROVAL FOR AN IRA

ACCOUNT: By signing below, the undersigned, a
qualified IRA custodian, is consenting to the IRA
account being invested in the Interests.

Street (Print Name of Custodian)

City State Zip Code (Signature of Custodian Representative)

(Print Name and Title of Custodian Representative)

*IRA subscriptions must be signed by the Individual IRA Account Holder and may have to be approved by
the Custodian.
 PARTNERSHIP’S ACCEPTANCE

BDC Investment Advisors, LLC, on behalf of BDC Fund II, LP, the partnership named above, hereby
accepts this foregoing Subscription Agreement as of , 20 .

BDC Investment Advisors, LLC

General Partner

By:
William J. Hansen
Its: Manager

Date:
 ADDITIONAL SUBSCRIPTION FORM

BDC Investment Advisors, LLC

1600 Rosecrans Avenue, 4th Floor
Manhattan Beach, CA 90266

(Investor Name)

Ladies and Gentlemen:

The undersigned hereby wishes to contribute additional capital to subscribe for additional Interests
(“Interests”) in the capital of BDC Fund II, LP (the “Partnership”). The undersigned shall contribute such capital
by making a payment by wire in the manner indicated on the attached payment information sheet. Please indicate
amount to be invested.
Total Subscription Amount $

Desired Subscription Date

(Effective the 1st Business Day of the month immediately following
acceptance of subscription by Partnership)

The undersigned acknowledges that: (i) the undersigned is purchasing additional Interests on the terms and
conditions contained in the Limited Partnership Agreement of the Partnership, as amended from time to time, and
the Subscription Agreement previously executed by the undersigned and accepted by the Partnership (the
“Subscription Agreement”), and (ii) the representations and warranties of the undersigned contained in the
Subscription Agreement remain true and correct in all material respects as of the date set forth, including the
undersigned’s certification that the undersigned continues to meet the definition of an “accredited investor.” THE
UNDERSIGNED AGREES TO NOTIFY THE GENERAL PARTNER PROMPTLY SHOULD THERE BE
ANY CHANGE IN ANY OF THE FOREGOING INFORMATION.

Dated: ,

For Corporation, Fund, Trust For Individual Shareholders:

or Other Entity Shareholders:

Print Name:

(Print Name of Entity) (Signature)

(If any Joint Limited Partners)

By:

Print Name: Print Name:

Title:
(Signature)
 REQUEST FOR WITHDRAWAL OF INTERESTS

Dated: ,
To: BDC Investment Advisors, LLC
1600 Rosecrans Avenue, 4th Floor
Manhattan Beach, CA 90266
1
FACSIMILE: ( ) -

Re: ;
(Investor Name) (Ref.)

Dear Sirs:

The Investor hereby requests that the Partnership shall withdraw:2

all of the Interests registered in the Investor’s name.

3
the exact quantity of U.S. $

Election Regarding Minimum Investment Requirements:

In the event that (i) after such withdrawal the value on such Withdrawal Date of the Interests of the
Partnership registered in the Investor’s name would be less than U.S. $100,000 and (ii) the General Partner does not
consent to the Investor’s remaining investment being reduced to less than U.S. $100,000, please:

(check one)
disregard this Request for Withdrawal.

withdraw all of the Interests registered in the Investor’s name.

1
The original executed copy of the Withdrawal Form should be sent to the General Partner, at the address provided in the
Directory. All requests for withdrawals must be received in the offices of the General Partner at least ten (10) days prior to the
Withdrawal Date (the last business day of a calendar month) and shall be irrevocable. Although Withdrawal Forms may be sent
by facsimile, Partners should be aware of the risks associated with sending documents in this manner. The Partnership will not
make payment of monies until the original Withdrawal Forms are received at the offices of the General Partner. The General
Partner will not be responsible in the event any Withdrawal Notice sent by facsimile is not received. If a Withdrawal Notice is
submitted by facsimile, it must be submitted to the General Partner at the address and facsimile number listed above, and the
original signed Withdrawal Form must be received by the General Partner prior to the Withdrawal Date.

2
Withdrawal requests shall not be processed however until the General Partner has received original subscription documents
and any additional information it requires in accordance with applicable investor identity, anti-money laundering laws and rules
and Partnership policies.

3
In the event that a Partner’s request for partial redemption of Interests would have the effect of reducing a Partner’s
remaining investment to less than U.S. $100,000, the General Partner may require a withdrawal of all such Partner’s Interests.
 Updated Wire Instruction Information:

If the original instructions for the account to which the cash proceeds of the withdrawal to be sent are
different from the original instructions as disclosed in the Subscription Agreement, please note the updated wire
transfer instructions below. I understand that the Partnership assumes no responsibility for paying funds per the
revised instructions. (initials)

Name of Bank ....................................

Address of Bank .................................

ABA Number/SWIFT Code ...............

Beneficiary Bank (if applicable) ........
ABA Number/SWIFT Code ...............
Account Number ................................
Sub Account Number (if applicable):
Name Under Which Account
Is Held ................................................
REF (if any) .......................................

Very truly yours,

Signature of Limited Partner

(Print name)

Mailing Address

REQUESTS FOR WITHDRAWAL MUST BE