Qualified Purchaser Standards

The following instructions are designed to assist prospective investors in determining whether they are “qualified purchasers.” Please note that it is not necessary to be a “qualified purchaser” to invest in a Fund. Rather, “qualified purchaser” status is just one method of qualifying as a “qualified eligible person” under CFTC Regulation 4.7 and thus being eligible to invest in a Fund. Capitalized terms used but not defined herein have the meanings set forth in the Subscription Agreement.

DEFINITIONS

For purposes of determining whether the Subscriber is a “qualified purchaser,” the following definitions and rules apply.

(i) Types of Investments. “Investments” means the following:

Securities, including stocks, bonds and notes, other than securities of an issuer that controls, is controlled by, or is under common control with, the prospective qualified purchaser (e.g., an interest in a family-owned or closely-held business). Notwithstanding the foregoing, Investments includes securities held in (i) any company that files reports pursuant to Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934, as amended, or has a class of securities that are listed on a “designated offshore securities market” as such term is defined by Regulation S under the Securities Act; (ii) any registered or unregistered investment company or commodity pool; and (iii) a company with shareholders’ equity of not less than $50 million (determined in accordance with generally accepted accounting principles) as reflected on the company’s most recent financial statements.
Real estate held for investment purposes. Real estate is not held for investment purposes if it is used by the prospective qualified purchaser or a related person for personal purposes or as a place of business, or in connection with the conduct of the trade or business of the prospective qualified purchaser or a related person; provided, that real estate owned by a prospective qualified purchaser who is engaged primarily in the business of investing, trading or developing real estate in connection with such business may be deemed to be held for investment purposes. Residential real estate shall not be deemed to be used for personal purposes if deductions with respect to such real estate are not disallowed by Section 280A of the U.S. Internal Revenue Code of 1986, as amended (the “Code”).
Commodity interests, namely commodity futures contracts, options or commodity futures and options on physical commodities traded on a contract market or board of trade, held for investment purposes. A commodity interest or physical commodity owned, or a financial contract entered into, by a prospective qualified purchaser who is engaged primarily in the business of trading, investing or reinvesting in commodity interests, physical commodities or financial contracts in connection with such business may be deemed to be held for investment purposes.
Physical commodities (e.g., gold and silver) held for investment purposes.
To the extent not securities, financial contracts (e.g., swaps and similar individually negotiated financial transactions) held for investment purposes (see 3 above).
In respect of a prospective qualified purchaser which would be an investment company but for the exclusions provided by Section 3(c)(1) or 3(c)(7) of the Investment Company Act of 1940, as amended (the “Company Act”), or a commodity pool, any amounts payable to such prospective qualified purchaser pursuant to a firm agreement or similar binding commitment pursuant to which a person has agreed to acquire an interest in, or make capital contributions to, the prospective qualified purchaser upon demand.
Cash and cash equivalents (e.g., foreign currencies, bank deposits, certificates of deposit, bankers acceptances and the net cash surrender value of an insurance policy) held for investment purposes. Neither cash used by an individual to meet everyday expenses nor working capital used by a business is considered cash held for investment purposes.(ii) Valuation. The value of Investments may be determined by either their fair market value on the most recent practicable date or their cost; provided, that in the case of commodity interests, value shall be the initial margin or option premium deposited in connection with such commodity interests, and there shall be deducted from the value the deductions described in (iii) below.

(iii) Deductions; “Net Investments”. Any outstanding indebtedness incurred to acquire Investments must be deducted from the value of the Investments. In addition, any outstanding indebtedness incurred by an owner of a Family Company (see (d), below) to acquire Investments must be deducted from the value of the Family Company’s Investments. “Net Investments” equals Investments minus such deductions.

(iv) Qualified Institutional Buyers. The term “qualified institutional buyer” (“QIB”) is defined in paragraph (a) of SEC Rule 144A and includes certain institutions that own and invest on a discretionary basis at least $100 million of securities of issuers that are not affiliated with the institution (subject to certain deductions), banks that own and invest on a discretionary basis at least $100 million of such securities and that have an audited net worth of at least $25 million, and certain registered dealers. A QIB is deemed to be a qualified purchaser if it is acting for its own account, the account of another QIB or the account of a qualified purchaser; provided, that (a) if the QIB is a dealer, it owns and invests at least $25 million of securities of unaffiliated issuers, and (b) if the QIB is an employee benefit plan or a related trust fund, it will not be deemed to be acting for its own account if the QIB permits investment decisions with respect to the plan to be made by plan beneficiaries, except with respect to investment decisions made solely by the fiduciary, trustee or sponsor of such plan.

(v) Knowledgeable Employees. “Knowledgeable Employee” means any natural person who is an executive officer, director, trustee, general partner, advisory board member, or person serving in a similar capacity of the Fund or an affiliated entity that manages the investment activities of the Fund, as well as an employee of the Fund or such an affiliate who, in connection with such employee’s regular functions or duties, participates in the investment activities of the Fund and/or other private investment funds the investment activities of which are managed by such affiliate; provided that such employee has been performing such functions for or on behalf of the Fund or such affiliate, or substantially similar functions for or on behalf of another investment management firm, for at least twelve months.

(vi) Joint Investments. A natural person may include in the amount of such person’s Investments any Investments held jointly with such person’s spouse, or Investments in which such person shares with such person’s spouse a community property or similar shared ownership interest. Spouses who are making a joint investment may include in the amount of each spouse’s Investments any Investments owned by the other spouse (whether or not such Investments are held jointly).

(vii) Investments of Parents and Subsidiaries. A company may include Investments owned by majority-owned subsidiaries of the company, Investments owned by a company (“Parent Company”) of which the company is a majority-owned subsidiary, and Investments owned by other majority-owned subsidiaries of the Parent Company.

(viii) Retirement Plan Investments. A natural person may include in the amount of such person’s Investments any Investments held in an individual retirement account or similar account the Investments of which are directed by and held for the benefit of such person.

QUALIFICATIONS

An individual Subscriber is a “qualified purchaser” if:

(a) The Subscriber owns not less than $5,000,000 in Net Investments.

(b) The Subscriber is a Knowledgeable Employee of the Sponsor or its affiliates.

(c) The sum of Net Investments that the Subscriber owns plus Net Investments that the Subscriber invests on a discretionary basis for the account(s) of other “qualified purchasers” is not less than $25,000,000.

A Subscriber which is not an Individual is a “qualified purchaser” if:

(d) The Subscriber is a company that is owned directly or indirectly by or for two or more natural persons who are related as siblings or spouse (including former spouses), or direct lineal descendants by birth or adoption, spouses of such persons, the estates of such persons, or foundations, charitable organizations, or trusts established by or for the benefit of such persons (each such entity, a “Family Company”), was not formed for the specific purpose of investing in the Fund, and owns not less than $5,000,000 in Net Investments.

(e) The Subscriber is a trust (other than a Family Company) that was not formed for the specific purpose of investing in the Fund, as to which the trustee or other person authorized to make decisions with respect to the trust and each settlor or other person who has contributed assets to the trust, is a “qualified purchaser.”

(f) The Subscriber is a company, partnership, trust or other entity that was not formed for the specific purpose of investing in the Fund, acts for its own account or the accounts of other “qualified purchasers” and in the aggregate owns and invests on a discretionary basis not less than $25,000,000 in Net Investments.

(g) The Subscriber is a “qualified institutional buyer.”

(h) The Subscriber is a company, partnership or other entity whose securities are beneficially owned exclusively by “qualified purchasers.”

(i) The Subscriber is a company, partnership or other entity whose securities are beneficially owned exclusively by Knowledgeable Employees.

If the Subscriber is a company, partnership, trust or other entity that, but for the exception provided in Section 3(c)(1) (100 beneficial owner exception) or Section 3(c)(7) (qualified purchaser exception) of the Company Act would be an investment company (an “excepted investment company”) and was in existence prior to April 30, 1996, all of the pre-April 30, 1996 beneficial owners of the outstanding securities of the Subscriber must consent to the Subscriber being treated as a qualified purchaser for purposes of investing in the Fund. For this purpose, beneficial ownership includes all direct owners as well as certain indirect owners as provided in SEC Rule 2a51-2 under the Company Act.