INVESTINATION LP, a Delaware Series Limited Partnership

Investination Platform – Program Summary and Disclosures

The following information is presented as a summary of Investination LP’s, a Delaware protected series limited partnership (the “Partnership”), principal terms only and is qualified in its entirety by reference to the Partnership’s Limited Partnership Agreement (as amended, the “Partnership Agreement”), a copy of which will be provided to each prospective investor upon request. In the event that the terms described herein are inconsistent with or contrary to the terms of the Partnership Agreement, the Partnership Agreement shall control.


The Partnership:

The Partnership was formed as a protected series limited partnership pursuant to and in accordance with the provisions of the Delaware Revised Uniform Limited Partnership Act (6 Del. C. §17-101 et seq., as amended from time to time, the “Act”). The Act provides for the limitation of liability of each Series to the debts, liabilities, obligations and expenses of such Series and not those of any other Series or the Partnership in general, provided the conditions set out in §17-218 of the Act are met. Each Series will be formed to make an investment in a single or designated group of portfolio companies (each, a “Portfolio Company”). Investination GP LLC (the “General Partner”) is the sole general partner of the Partnership. Limited partners in the Partnership are referred to as the “Limited Partners” and together with the General Partner are referred to as the “Partners”. Investors will subscribe for limited partnership interests in one or more Series of the Partnership, which are referred to herein as “Interests.”
The General Partner may, without the approval of the Limited Partners, establish and designate various series of Interests (each, a “Series”) and each Series will have its own investment objective (which may invest in the same or different Portfolio Companies as those held by the then existing Series). The General Partner will be the general partner associated with each Series.


The Manager:

The General Partner has engaged BSEED Ltd, an Israeli corporation (the “Manager”) and an affiliate of the General Partner to serve as the investment adviser to each Series. The Manager is not registered as an investment adviser under the Investment Advisers Act of 1940 (the “Advisers Act”). To the extent required, the Manager intends to claim an exemption from registration with the Securities and Exchange Commission under the Advisers Act available to private fund advisers pursuant to Rule 203(m)-1 under the Advisers Act when required to do so.

If the Manager identifies an opportunity to sell an Investment that the Manager determines is desirable, the Manager will recommend to the General Partner that the relevant Series seek to sell the Investment. Upon receipt of such recommendation, the General Partner will seek the approval of, or otherwise poll or canvass, the Partners of such Series and will approve or reject the Manager’s recommendation in a manner consistent with the views expressed by a majority-in-interest of the Partners of such Series.


Investment Objective:

Each Series will be formed to invest in the securities of one or more designated Portfolio Companies (the “Investment”). There is no minimum or maximum size of any Series.


Capital Commitments:

The minimum Commitment to the Partnership by a Limited Partner will be US$10,000.00, although the General Partner reserves the right, in its sole discretion, to accept Commitments of lesser amounts. The Commitment of a Partner represents the amount anticipated by the General Partner to be drawn at the initial closing and which will primarily be used for purposes of the investment in the Portfolio Company, the payment of the Management Fee and the Administrative Fee. Accordingly, the amount invested by a Series in its Portfolio Company will be less than the aggregate contributions to such Series.

Management and Administration Fee:

Each Series will pay to the Manager (i) a management fee equal to 2% per annum of the total Capital Contributions to such Series (the Management Fee”) for the initial four year of such Series paid in advance, plus (ii) an administration fee equal to 4% of the total Capital Contributions (the “Administration Fee”) also paid in advance. The Administration Fee will be used by the Manager to fund the expenses of the relevant Series. The Manager has no obligation to fund expenses of a Series in excess of the Administration Fee. Unused Administration Fees are not refundable and will be retained by the Manager.

Closing:

The closing (the “Initial Closing”) of a Series will incur upon not less than three business days’ notice to the Limited Partners. The General Partner may accept commitments at more than one closing. There is no minimum commitments necessary for the Initial Closing. At the request of a Limited Partner, a Limited Partner may be permitted to prefund its commitment to the Partnership prior to it being called down by the General Partner. Prefunded commitments shall be deemed to have been contributed to the Partnership at the time it would have been required to be contributed pursuant to a capital call by the General Partner had they not been prefunded.
Partners admitted or increasing their Commitment at subsequent closings will bear their pro rata share of all expenses previously incurred by the Partnership (which is expected to be funded from the Administration Fee), and will share in any subsequent distribution and allocation of income, gain, loss or expense of the Partnership that is attributable to any Investment acquired by the Partnership prior to the date of their investment in the Partnership. If in the sole discretion of the General Partner, the foregoing procedures would not appropriately reflect a material change in the value of an Investment then held by the Partnership, the General Partner may (i) adjust the payment required to be made by such Partner participating in such subsequent closing to appropriately reflect such change in value or (ii) exclude such Limited Partner from participation in previously acquired Investments with respect to such Commitment and exclude existing Limited Partners from participation in any Investments to be acquired with such additional Commitment.

Distributions:

Distributions from a Series may be made at any time as determined by the General Partner. In general, distributions of cash available for distribution, as determined by the General Partner, will be distributed at least quarterly; provided that distributions shall not be required to be made unless the aggregate amount to be distributed equals or exceeds $100,000. The General Partner will be entitled to withhold from any distributions amounts necessary to create, in its reasonable discretion, reserves for expenses, liabilities (contingent or otherwise), as well as for any required tax withholdings.
Distribution proceeds from a Series will be allocated in the first instance to all Partners of the relevant Series (including, for the avoidance of doubt, the General Partner) in proportion to each of their percentage interests in the Partnership. Distribution proceeds which would otherwise be distributed to a Limited Partner (other than Limited Partners designated by the General Partner in its sole discretion), will be distributed in the following amounts and order of priority:

1. Return of Capital Contribution: First, 100% to such Limited Partner until such Limited Partner has received cumulative distributions equal to such Limited Partner’s capital contributions to the Series;

2. 80/20 Split: Thereafter, 80% to such Limited Partner and 20% to the General Partner (the distributions to the General Partner described in clause 3 above and this clause 4 being referred to collectively as “Carried Interest”).
Generally, any tax payments made by a Series or withheld from proceeds received by a Series will be deemed to have been distributed to the Limited Partners for purposes of these calculations.

Notwithstanding the foregoing, the General Partner may cause a Series to make distributions from time to time to the General Partner in amounts sufficient to permit the payment of the tax obligations of the General Partner and its direct and indirect owners in respect of allocations of income related to the Carried Interest. Any such distributions shall be taken into account in making subsequent distributions to the Partners.

In-Kind Distributions:

Except upon the dissolution and winding up of a Series or the mandatory withdrawal (as described below) of a Limited Partner, distributions prior to the termination of a Series may only take the form of cash or marketable securities. Distributions in kind of securities will be made in the same proportions as would cash in an amount equal to the fair market value (as reasonably determined by the General Partner) of the securities distributed. Upon dissolution and winding up of a Series or the withdrawal of a Limited Partner, distributions may also include non-marketable securities and other assets of the Series. The General Partner may, in its sole and absolute discretion, offer the option to all Limited Partners to receive a distribution in-kind of securities in connection with any disposition when such securities would otherwise have been sold by the Series.

Allocations of Profits and Losses:

The Partnership will establish and maintain a capital account for each Partner in each Series. All items of income, gain, loss and deduction will be allocated to the Partners’ capital accounts in a manner generally consistent with the distribution procedures outlined under “Distributions” above.

Offering and Organizational Fees:

Each Limited Partner (other than the General Partner and its affiliates) will pay its pro rata share based on Commitments of all legal, accounting, filing and other expenses incurred in connection with organizing and establishing the Series and the marketing and offering of interests in the Series (excluding placement and finders fees, but including filing fees and expenses and printing costs, or other similar amounts, incurred by the General Partner or its affiliates with respect to the offering of and subscription for Interests in the Series). The General Partner may engage placement agents and finders in connection with the offer and sale of Interests to certain Limited Partners, and the fees due to such placement agents and finders will be borne by the Partners solicited by such placement agents or finders with their prior written approval. It is intended that such expenses will be paid from the Administration Fee, however, the General Partner and its affiliates have no obligation to advance payment in the event that the aggregate expenses exceed the Administration Fee. In the event a Series’ aggregate expenses exceed such Series’ Administration Fee, the General Partner is authorized to cause such Series to borrow money and/or issue additional interests in such Series at such valuation as it determines is appropriate.

General Partner Expenses:

Each of the General Partner and its affiliates will be responsible for their overhead expenses, facilities expenses and compensation of their employees.

Other Expenses:

Except as noted above, each Series will pay all out-of-pocket expenses related to the operation of the Series that the General Partner believes in good faith to be reasonable and in furtherance of the business of the Series, including fees, costs and expenses related to the purchase, holding and sale of the Series’ investment in the Portfolio Company, fees, costs and expenses of any administrators, custodians, attorneys, accountants and other professionals (including, to the extent applicable, the audit and certification fees and the costs of printing and distributing reports to Partners and costs of holding periodic meetings of the Partners), out-of-pocket fees and expenses of the General Partner and its affiliates relating to the Portfolio Company, including, without limitation, in connection with serving as a director to the Portfolio Company, to the extent not paid by the Portfolio Company, any insurance, indemnity or litigation expense, certain taxes and any fees or other governmental charges levied against the Partnership. It is intended that all such expenses will be paid from the Administration Fee, however, the General Partner and its affiliates have no obligation to advance payment in the event that the aggregate expenses exceed the Administration Fee.

Term:
Each Series will dissolve ten (10) years from its closing date but may be extended at the discretion of the General Partner for up to two consecutive one-year periods. A Series is subject to earlier dissolution and termination (i) by the General Partner in its discretion, (ii) upon the liquidation of the Series’ interest in the Portfolio Company, and (iii) upon the bankruptcy, dissolution or any similar event of withdrawal of the General Partner; provided that in such event a majority in interest of the Limited Partners may agree in writing to continue the business of the Partnership and to the appointment of another general partner which shall agree to purchase the interest of the General Partner, as described in the Partnership Agreement.

Mandatory Withdrawals:

A Limited Partner may be required to completely or partially withdraw from a Series if (i) in the reasonable judgment of the General Partner based upon the advice of counsel to the Partnership, by virtue of that Limited Partner’s interest in the Series, the assets of the Series would be reasonably likely to be characterized as assets of an employee benefit plan for purposes of ERISA, Section 4975 of the Code or any applicable similar law, whether or not such Limited Partner is subject to ERISA, the Code or any similar law, or the Series or any Partner is reasonably likely to be subject to any requirement to register under the 1940 Act or (ii) in the reasonable judgment of the General Partner, a significant delay, extraordinary expense or material adverse effect on the Series, the Partnership or any of its affiliates, or the Portfolio Company is reasonably likely to result without such withdrawal.

Transfer of Interests:

Only with the consent of the General Partner (which may be given or withheld in its sole and absolute discretion) may (i) a Limited Partner, directly or indirectly, assign, sell, exchange, pledge or transfer all or any part of its interest in a Series or (ii) any assignee, purchaser or transferee of an interest in a Series be admitted as a substitute Limited Partner. Further, a Limited Partner generally may not voluntarily withdraw any amount from a Series or voluntarily withdraw from the Partnership. The General Partner may transfer its interest as general partner to its affiliates as described in the Partnership Agreement.

Reports to Partners:

Each Series will furnish financial statements to all Limited Partners and tax information necessary for the completion of U.S. tax returns after the end of each fiscal year. The fiscal year of each Series will be the calendar year.

 Exculpation and Indemnification:

The General Partner, its affiliates and each of their respective members, officers, directors, employees, stockholders, shareholders, partners, and any other person who serves at the request of the General Partner on behalf of a Series as an officer, director, partner, member, or employee of any other entity (in each case, an “Indemnitee”) will not be liable to the Partnership, any Series or to any Limited Partner for (i) any act performed or omission made by such Indemnitee in connection with the conduct of the affairs of the Partnership or any Series or otherwise in connection with the Partnership Agreement or the matters contemplated therein in the absence of its own fraud or willful misconduct or (ii) any mistake, negligence, dishonesty or bad faith of any broker or other agent of the Partnership or any Series unless such Indemnitee was responsible for the selection or monitoring of such broker or agent and acted in such capacity with willful misconduct. A Series will indemnify each Indemnitee for any and all claims, liabilities, damages, losses, costs and expenses incurred by such Indemnitee and arising out of or in connection with the affairs of such Series, except that this indemnity shall not apply to (i) losses arising from such Indemnitee’s own fraud or willful misconduct (ii) any liability to pay tax arising out of the proper performance of the parties’ roles under the Partnership Agreement, (iii) General Partner expenses (as described under “General Partner Expenses” above) or (iv) claims, liabilities, damages, losses, costs and expenses to the extent arising out of conduct engaged in by an Indemnitee in such person’s capacity as a controlling person, director, officer, manager, partner, employee or agent of a Portfolio Company to the extent that such conduct occurred after the time at which the Series had disposed of all of its investment in the Portfolio Company. Limited Partners will be obligated to return amounts distributed to them to fund a Series’ indemnity obligations, subject to certain limitations set forth in the Partnership Agreement.

The General Partner may cause the Partnership or a Series to purchase, at the Partnership’s expense (unless the General Partner elects to pay such expenses; see “Other Expenses” above), insurance to insure the General Partner or any other Indemnitee against liability for any breach or alleged breach of their responsibilities under the Partnership Agreement or otherwise in connection with the Partnership, any Series or the General Partner. Under the Partnership Agreement, to the fullest extent permitted by law each Partner agrees to indemnify and hold harmless the Partnership and the other Partners from and against any liability (including, without limitation, any liability for taxes, penalties, additions to tax or interest) with respect to income attributable to or distributions or other payments to such Partner.

Any person receiving indemnification payments under the Partnership Agreement shall reimburse the Partnership for such indemnification payments to the extent that such person also receives payments under an insurance policy in respect of such matter.

Tax Considerations:

It is intended that the Partnership will be treated as a partnership, and not an association taxable as a corporation for U.S. federal income tax purposes, and will be operated in a manner such that it should not be treated as a “publicly traded partnership” for U.S. federal income tax purposes. Each prospective investor is advised to consult its own tax advisor as to the income tax consequences of an investment in the Partnership.

UBTI and ECI:

The General Partner intends to use its reasonable best efforts to avoid the incurrence of any unrelated business taxable income (“UBTI”) by a U.S. tax-exempt Limited Partner and effectively connected income (“ECI”) by a non-U.S. Limited Partner.

ERISA:

Investment in the Partnership is generally open to institutions, including pension and other funds subject to ERISA.
 The Partnership may require certain representations or assurances from investors to determine compliance with ERISA provisions. The General Partner will use its reasonable best efforts to (i) limit equity participation by “benefit plan investors” (within the meaning of Section 3(42) of ERISA) to less than 25% of the total value of each class of equity interests in each Series, or (ii) structure investments of a Series and operate a Series in such a manner so as to qualify the Series as a “venture capital operating company” so that the underlying assets of such Series will not constitute “plan assets” of plans subject to Title I of ERISA or Section 4975 of the Code which invest in the Partnership. Potential investors should consult with their own advisors as to the consequences of making investments in a Series.

Risks:

Potential investors should be aware that an investment in the Partnership involves a high degree of risk. There can be no assurance that any Series’ investment objective will be achieved, or that a Limited Partner will receive a return of its capital. In addition, there will be occasions when the General Partner and its affiliates may encounter potential conflicts of interest in connection with the Partnership. Investment in the Partnership is suitable only for sophisticated investors and requires the financial ability and willingness to perform your own diligence of the proposed investment opportunity and accept the high risks and lack of liquidity inherent in an investment in the Partnership. Investors in the Partnership must be prepared to bear such risks for an extended period of time. Prospective investors are invited to meet with representatives of the Partnership to ask questions and receive answers concerning the terms and conditions of the proposed investment in the Portfolio Company and the offering of interests in a Series, and to obtain any additional information, to the extent the Partnership possesses such information or can acquire it without unreasonable effort or expense. Information obtained from the Partnership or its affiliates have been obtained from the Portfolio Company or other third parties and the Partnership has not verified the accuracy of such information. In making an investment decision, investors must rely on their own examination of the Partnership and the terms of this offering, including the merits and risks involved and should not rely on the diligence conducted by the Partnership or its agents (which is not yet complete). Prospective investors should not construe any information provided by or on behalf of the Partnership or its agents as legal, tax, investment or accounting advice, and each prospective investor is urged to consult with its own advisors with respect to legal, tax, regulatory, financial and accounting consequences of an investment in a Series.

Potential investors should carefully review the Selected Risk Factors annexed hereto as Exhibit A.

Certain Conflicts:

Affiliates of the General Partner and the Manager (the “Related Parties”) are in the business of providing services to venture capital companies, including “go to market consulting services.” It is anticipated that the Related Parties will provide services for a fee to a Series’ Portfolio Company. In negotiating the terms of any such services, the Related Parties will be representing their own interest, and not the Partnership’s interests. The provision of these services creates a conflict of interest in that the Manager and its affiliates have an interest in enhancing their fees. Furthermore, by investing in a Portfolio Company, the Manager will be enhancing the Portfolio Company’s ability to pay fees to the Related Parties. While the Related Parties will not tie the fee charged to a Portfolio Company for consulting services to the amount of capital a Series invests in such Portfolio Company, a Portfolio Company’s decision to retain a Related Party to provide any consulting services and the fee it is willing to pay therefor, may be influenced by the investment made by a Series in such Portfolio Company. Any fees earned by the Related Parties will be retained by the Related Parties and will not benefit the Partnership or any Series. By investing in the Partnership, each Limited Partner acknowledges and consents to the Related Parties providing services to Portfolio Companies.

The Manager or its affiliates may advise other clients with similar or overlapping investment strategies and may permit other clients of the Manager or its affiliates and one or more co-investors to invest in transactions in which the Partnership invests. Without limiting the foregoing, the Manager may give officers, employees and affiliates of the Manager the opportunity to co-invest side-by-side with any Series on substantially the same economic terms and conditions at the level of the Investment as those on which the Series invests. As a result, the Manager may be subject to conflicts of interests in allocating investment opportunities between the Partnership and its other clients and affiliates.

The Manager or its affiliates may acquire an interest in a Portfolio Company prior to the formation of a Series that will invest in such Portfolio Company. Upon formation of such Series, the Manager or the relevant affiliate may (i) contribute an interest in the Portfolio Company in-kind to such Series or (ii) sell an interest in the Portfolio Company to the Series. The Manager will notify investors in a Series if the Manager or its affiliates will sell any interest in the relevant Portfolio Company to such Series.

The General Partner, the Manager and their affiliates may from time-to-time be subject to other conflicts of interest in addition to the conflicts noted above, including, without limitation, conflicts relating to the valuation of the Investment in the event of an in-kind distribution to the Partners. If any matter arises that the General Partner determines in its good faith judgment constitutes an actual conflict of interest, the General Partner may take such actions as it determines reasonably and acting in good faith may be appropriate (and upon taking such actions the General Partner and its affiliates will be relieved of any liability for such conflict to the fullest extent permitted by law and shall be deemed to have satisfied its fiduciary duties related thereto to the fullest extent permitted by law). By acquiring an Interest in the Partnership, each Limited Partner will be deemed to have acknowledged the existence of any such actual or potential conflicts of interest and to have waived any claim with respect to any liability arising from the existence of any such conflict of interest.

Subscription Matters:

Persons interested in investing in a Series are required to complete and return to the General Partner the subscription documents for the Series, a copy of which will be made available to each prospective investor. Subscriptions may be rejected in whole or in part in the General Partner’s discretion and will be accepted only from accredited investors.

The Partnership or the General Partner, without any further act, approval or vote of any Partner, may enter into side letters or other writings with individual Limited Partners which have the effect of establishing rights under, or altering or supplementing, the terms of the Partnership Agreement. Any rights established, or any terms of the Partnership Agreement altered or supplemented, in a side letter with a Limited Partner shall govern solely with respect to such Limited Partner (but not any of such Limited Partner’s assignees or transferees unless so specified in such side letter) notwithstanding any other provision of the Partnership Agreement.
Amendments to the Partnership Agreement;

Amendments to the Partnership Agreement; Partner Consents:

The Partnership Agreement sets forth certain procedures for its amendment, including a provision allowing the General Partner without the consent of the Limited Partners to: (a) change the name of the Partnership; (b) cure any ambiguity or correct or supplement any provision thereof which is incomplete or inconsistent with any other provision thereof or correct any printing, stenographic or clerical errors or omissions; (c) amend certain allocation provisions in the Partnership Agreement; and (d) make any amendment so long as the changes do not adversely affect the rights and obligations of any existing Limited Partner as a whole in any material respect.

Wherever the consent or approval of a Limited Partner is required pursuant to the Partnership Agreement, such consent shall be deemed given by a Limited Partner if (i) such Limited Partner affirmatively grants such consent or approval, or (ii) such Limited Partner fails to respond within the allocated time period, which period, unless otherwise required by law or regulation, shall be at least five (5) days after the date on which a written notice containing information regarding the matter to be consented to or approved is sent to such Limited Partner.

Counsel to the Partnership:

Brick & Patel LLP

Exhibit A

SELECT RISK FACTORS

Prospective Limited Partners should carefully consider the risks involved in an investment in a Series of the Partnership, including, but not limited to, those discussed below. Prospective Limited Partners should consult their own legal, tax and financial advisors as to all of these risks and an investment in any Series of the Partnership.

General Investment Risks:

General Investment Risks. All financial instrument investments present a risk of loss of capital. Such investments are subject to investment-specific price fluctuations as well as to macro-economic, market and industry-specific conditions, including, but not limited to, national and international economic conditions, domestic and international financial policies and performance, conditions affecting particular investments such as the financial viability, sales and product lines of corporate issuers, national and international politics and governmental events, and changes in income tax laws. No guarantee or representation is made that any Series of the Partnership will be profitable.

Competition. The markets in which a Series will invest are likely to be extremely competitive for attractive investment opportunities. Additionally, each Series’ purpose is limited to investing in one or a select number of specific portfolio companies. Thus, a Series might not be able to identify or successfully pursue attractive investment opportunities. There can be no assurance that a Series will be able to locate, consummate and exit investments that satisfy such Series’ objectives or realize upon their values, or that the Series will be able to invest fully its committed capital.

Risk of Limited Number of Investments. Each Series will invest in one or in a select number of investments, and as a consequence, the aggregate return of a Series will be substantially adversely affected by the unfavorable performance of even a single investment.

Non-U.S. Investments. The Series’ portfolio companies are expected will be predominantly located or operating principally in Israel, although the Partnership is not limited to investing in any specific jurisdictions. Investing in non-U.S. securities involve certain factors not typically associated with investing in U.S. securities, including risks relating to (i) currency exchange matters, such as fluctuations in the rate of exchange between the U.S. dollar and the applicable foreign currency, and costs associated with conversion of investment principal and income from one currency into another; (ii) differences in accounting, auditing and financial reporting standards, practices and disclosure requirements; (iii) certain economic and political risks; (iv) dividends, if any, may be subject to withholding taxes and additional non-U.S. taxes on income and gains recognized with respect to such securities may be imposed in the future; and (v) differences in applicable legal systems.

Reliance on Portfolio Company Management. Each portfolio company’s day-to-day operations will be the responsibility of such company’s management team. There can be no assurance that the existing management team, or any successor, will be able to operate the portfolio company in accordance with such company’s plans and/or objectives.
Non-Controlling Investments. The Partnership expects to hold a non-controlling interest in its portfolio companies and, therefore, will have a limited ability to protect its position in such portfolio companies.

Risks of Venture Capital Investments. The Partnership’s portfolio companies will have limited operating history; may be operating at a loss or have significant fluctuations in operating results; and may need substantial additional capital to achieve its objectives. Such companies will face intense competition, including competition
from companies with greater financial resources, more extensive capabilities and a larger number of qualified personnel. The Partnership’s portfolio companies will consist of smaller, less-established companies. Investments in such companies may involve greater risks than are generally associated with investments in more established companies. Less established companies tend to have lower capitalizations and fewer resources, and therefore, often are more vulnerable to financial failure. Such companies also may have shorter operating histories on which to judge performance and may have negative cash flow.

Illiquid and Long-Term Investments. Although the Partnership’s investments may occasionally generate some current income, the return of capital and the realization of gains, if any, from an investment generally will occur only upon the partial or complete disposition of such investment. While an investment may be sold at any time, it is not generally expected that this will occur for a number of years after the investment is made. It is unlikely that there will be a public market for the securities held by the Partnership at the time of their acquisition. The Partnership will generally not be able to sell the securities of portfolio companies publicly unless their sale is registered under applicable securities laws, or unless an exemption from such registration requirements is available. In addition, in some cases the Partnership may be prohibited by contract or regulatory reasons from selling certain securities for a period of time.

Contingent Liabilities on Disposition of Investments. In connection with the disposition of an investment in a portfolio company, the Partnership may be required to make representations about the business and financial affairs of such company typical of those made in connection with the sale of a business. The Partnership also may be required to indemnify the purchasers of such investment to the extent that any such representations are inaccurate or with respect to certain potential liabilities. These arrangements may result in the occurrence of contingent liabilities for which the General Partner may establish reserves or escrows.

Portfolio Company Leverage. The Partnership’s investments may include portfolio companies whose capital structures may have significant leverage. The leveraged capital structure of such investments will increase the exposure of the portfolio companies to adverse economic factors such as rising interest rates, downturns in the economy or deteriorations in the condition of the portfolio company or its industry.

Material, Non-Public Information.
Certain employees of the General Partner and its affiliates may acquire confidential or material non-public information or be restricted from initiating transactions in the securities of a portfolio company. The Partnership will not be free to act upon any such information. Due to these restrictions, the Partnership may not be able to initiate a transaction that it otherwise might have initiated and may not be able to sell an investment that it otherwise might have sold.

Additional Capital. Certain portfolio companies may require additional financing to satisfy their working capital requirements. The amount of additional financing needed will depend upon the maturity and objectives of the particular portfolio company. A portfolio company may have to raise additional capital at a price unfavorable to the existing investors, including the Partnership. It is anticipated that each Series will invest substantially all of its investable capital shortly following a closing. Accordingly, a Series will typically not have the resources to make additional investments in such company, even when doing so would be prudent in order to preserve the Series’ proportionate ownership when a subsequent financing is planned or to protect the Series’ investment when such portfolio company’s performance does not meet expectations. The availability of capital is generally a function of capital market conditions that are beyond the control of the Partnership or any portfolio company. There can be no assurance that a portfolio company will be able to predict accurately the future capital requirements necessary for success or that additional funds will be available from any source.

Partnership Risks:

Lack of Operating History. The Partnership has no operating history and each Series, upon formation, will have had no operating history. Moreover, the past performance of the Manager’s principal should not be construed as an indication of the future results of the Partnership or any Series.

Business Dependent on Key Personnel. The success of the Partnership and each Series is significantly dependent upon the expertise of the Manager and its personnel. If the services of any such persons were to become unavailable, the ability of the Manager to perform its obligations to the Partnership would be severely impaired.

Interests are Illiquid. An investment in the Partnership is illiquid and involves a high degree of risk. Subscriptions for Interests should be considered only by sophisticated investors financially able to maintain their investments and who can afford to lose all or a substantial part of such investments. INTERESTS MAY NOT BE TRANSFERRED OR ASSIGNED WITHOUT THE CONSENT OF THE GENERAL PARTNER.

Liability and Indemnification. The Partnership will indemnify the General Partner, the Manager, their respective affiliates and their respective members, principals, officers and agents. The indemnification obligations could result in substantial fees and expenses to the Partnership.

Lack of Management Control by Investors. Investors do not participate in the management of the Partnership or in the conduct of its business.

Exemption from Regulation. The Partnership and each Series will not be registered as an investment company in reliance on an exemption from such registration available to privately offered investment companies. Accordingly, the protections of the Investment Company Act of 1940 (the “1940 Act”) (which, among other things, require financial instruments to be held in custody by a bank or broker in accordance with rules requiring the segregation of financial instruments, regulate the relationship between a registered fund and its service providers and directors and prohibit registered funds from engaging in certain transactions with affiliates are not applicable.

Dilution from Subsequent Closings. Limited Partners subscribing for Interests in a Series at subsequent closings will participate in existing investments of the Series, diluting the interest of existing Limited Partners therein. Although such Limited Partners will contribute their pro rata share of previously made capital draws, unless the General Partner in its discretion determines that a pro rata capital contribution from Limited Partners at a subsequent closing would not appropriately reflect a material change in the value of the investments then held by the relevant Series together, there can be no assurance that this payment will reflect the fair value of the relevant Series’ existing investments at the time such additional Limited Partners subscribe for Interests.

Diverse Limited Partner Group. The Limited Partners may have conflicting investment, tax and other interests with respect to their investments in the Partnership. The conflicting interests of individual Limited Partners may relate to or arise from, among other things, the nature of investments made by the Partnership, the structuring or the acquisition of investments and the timing of disposition of investments. As a consequence, conflicts of interest may arise in connection with decisions made by the General Partner or the Manager, including with respect to the nature or structuring of investments, that may be more beneficial for one investor than for another investor. In selecting, structuring and managing investments appropriate for the Partnership, the General Partner will consider the investment and tax objectives of the Partnership and its Partners as a whole, not the investment, tax or other objectives of any Limited Partner individually.

Potential Conflicts of Interest. Investors should be aware that there will be occasions when the General Partner and its affiliates may encounter potential conflicts of interest in connection with the Partnership. By acquiring an interest in the Partnership, each Limited Partner will be deemed to have acknowledged the existence of any such actual or potential conflicts of interest and to have waived any claim with respect to any liability arising from the existence of any such conflict of interest.

Risks Related to the Manager

Other Accounts Advised by the Investment Manager. The Investment Manager will manage other funds and/or accounts which could increase the level of competition for the same investments the Investment Manager might otherwise make.

Carried Interest. The General Partner will receive the Carried Interest based on the performance of the Partnership. This Carried Interest may create an incentive for the Manager to make investments on behalf of the Partnership that are riskier or more speculative than would be the case if such Carried Interest were not made.

No Independent Counsel for Investors. While the General Partner has consulted with counsel, regarding the structure and terms of the Partnership, such counsel does not represent any Investor in its capacity as an investor in the Partnership. The Partnership urges each prospective investor to consult its own legal, tax, and financial advisors regarding the desirability of investing in the Partnership and its suitability for such prospective investor in view of such prospective investor’s particular circumstances and risk tolerances.

Tax and Regulatory Risks

Lack of Government Regulation. The offering of Interests has not been registered or qualified under the U.S. securities laws, including the Securities Act of 1933 (the “Securities Act”), or the laws of any applicable jurisdiction. Investors therefore do not have the benefit of any of the protections afforded by the Securities Act with respect to registered offerings (which, among other things, requires specified disclosure in connection with the offering of securities). Furthermore, the Partnership will not register as an investment company under the 1940 Act.

Legal and Regulatory Developments; Increasing Regulatory Oversight. Legal and regulatory changes could occur during the term of the Partnership that may adversely affect the Partnership. Several events in the past several years, including severe market disruptions and volatility, financial institution failures and defaults, and large-scale financial frauds, have caused lawmakers and regulators to promulgate a large number of new laws and regulations and to consider additional oversight of financial markets, including possible registration and disclosure requirements and other heightened oversight of private investment funds, new or increased restrictions with respect to certain investment techniques and related financial instruments, potential changes to the tax treatment of investment vehicles and their advisors and other substantial changes to the broader legal and regulatory framework in which such funds operate. The Securities and Exchange Commission (“SEC”), as well as other regulators and self-regulatory organizations, may implement regulations that could affect the Partnership’s operations to varying degrees. The regulation of private investment funds and their transactions is also subject to modification by legislative and/or judicial action.

In the event that the Manager is required to respond to any legal or regulatory investigation or proceeding with respect to the Partnership, the Partnership will bear its share of the cost of any legal fees and expenses, which may be substantial, that are incurred by the Manager, to the extent that it did not breach its duty of care owed to the Partnership.

Compliance with ERISA Restrictions. The Partnership intends to use commercially reasonable efforts to cause employee benefit plans subject to Title I of ERISA and/or Section 4975 of the Code and other “benefit plan investors,” as defined in pursuant to ERISA and the regulations thereunder, in the aggregate to hold less than 25% of each class of equity interests in the Partnership. If the assets of the Partnership were to become “plan assets” subject to ERISA and Section 4975 of the Code, certain investments made or to be made by the Partnership in the normal course of its operations might result in non-exempt prohibited transactions and might have to be rescinded.

Tax Considerations. The Partnership may be audited by U.S. federal, state or other tax authorities. An income tax audit may result in an increased tax liability of the Partnership. While the Partnership does not anticipate that its portfolio companies will issue dividends, the portfolio companies are organized in Canada and any dividends issued to the Partnership by such companies will likely be subject to withholdings.

Deduction of Expenses. The management fee and certain other service fees of the Partnership (collectively, the “service fees”) are “miscellaneous itemized deductions” that, under current law, cannot be deducted. Accordingly, a Limited Partner’s taxable income from the Partnership is likely to exceed the actual net income it realizes from the Partnership over the life of the Partnership. This will have the effect of increasing a Limited Partner’s effective tax rate with respect to its investment in the Partnership.

Under new IRS audit procedures, the IRS will assert any tax liability against the Partnership. Limited Partners may be required to make a contribution to the Partnership, even after the close of the commitment period, for the payment of the tax liability and interest.

The foregoing list of risk factors does not purport to be a complete enumeration or explanation of the risks involved in an investment in the Partnership. Prospective Limited Partners should consult with their own advisers before deciding to invest in the Partnership.