EFTA00239188.pdf

FOR EXISTING INVESTOR USE ONLY MEMORANDUM NO: CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM Relating to CLASS B INTERESTS of ALPHAKEYS MILLENNIUM FUND, L.L.C. THIS CONFIDENTIAL MEMORANDUM CONTAINS INFORMATION SPECIFIC TO CLASS B INTERESTS OF ALPHAKEYS MILLENNIUM FUND, L.L.C. PURSUANT TO AN EXEMPTION FROM THE CFTC IN CONNECTION WITH POOLS WHOSE PARTICIPANTS ARE LIMITED TO QUALIFIED ELIGIBLE PERSONS, AN OFFERING MEMORANDUM FOR THIS POOL IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE COMMISSION. THE CFTC DOES NOT PASS UPON THE MERITS OF PARTICIPATING IN A POOL OR UPON THE ADEQUACY OR ACCURACY OF AN OFFERING MEMORANDUM. CONSEQUENTLY, THE CFTC HAS NOT REVIEWED OR APPROVED THIS OFFERING OR ANY OFFERING MEMORANDUM FOR THIS POOL. CONFIDENTIAL UBSTERRAMAR00003856 EFTA00239188 FOR EXISTING INVESTOR USE ONLY This Confidential Private Placement Memorandum (as amended, restated or otherwise modified from time to time (for the avoidance of doubt, excluding any appendices attached hereto), the "Memorandum") is furnished on a confidential basis to a limited number of prospective investors (each, when admitted as a member, an "Investor") in AlphaKeys Millennium Fund, L.L.C. (f/k/a UBS Millennium Fund, L.L.C.) (the "AlphaKeys Fund") who are both qualified purchasers and accredited investors (unless otherwise permitted by law) for the purpose of providing certain information about a potential investment in Class B limited liability company interests (the "Class B Interests") in the AlphaKeys Fund. The Class B Interests have not been recommended, approved or disapproved by the U.S. Securities and Exchange Commission (the "SEC") or by the securities regulatory authority of any state or of any other jurisdiction, nor has the SEC or any such securities regulatory authority passed upon the accuracy or adequacy of this Memorandum. My representation to the contrary is a criminal offense. The Class B Interests have not been registered under the U.S. Securities Act of 1933, as amended (the "1933 Act"), the securities laws of any other state or the securities laws of any other jurisdiction, nor is such registration contemplated. The Class B Interests will be offered and sold in the United States under the exemption provided by Section 4(aX2) of the 1933 Act and Regulation D promulgated thereunder and other exemptions of similar import in the laws of the states and jurisdictions where the offering will be made. The AlphaKeys Fund will not be registered as an investment company under the U.S. Investment Company Act of 1940, as amended (the "1940 Act"). There is no public market for the Class B Interests and no such market is expected to develop in the future. The Class B Interests are subject to restrictions on transferability and resale and may not be sold or transferred except as permitted under the limited liability company agreement of the AlphaKeys Fund (as amended, restated or otherwise modified from time to time, the "AlphaKeys Fund Agreement", annexed hereto as Appendix B) and unless they are registered under the 1933 Act, or pursuant to an exemption from such registration thereunder and under any other applicable securities law registration requirements that may be available at such time. Required 1933 Act Disclosure. Pursuant to Rule 506 of Regulation D under the 1933 Act (the "Rule"), the AlphaKeys Fund is required, among other things, to disclose certain disciplinary events, in respect of various entities and/or individuals, that occurred prior to the Rule's effective date of September 23, 2013, and such disclosure is annexed hereto as Appendix C. Potential Investors should pay particular attention to the information under the "CERTAIN RISK FACTORS" and "POTENTIAL CONFLICTS OF INTEREST' sections of this Memorandum. Investment in the AlphaKeys Fund 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 the AlphaKeys Fund. Investors in the AlphaKeys Fund must be prepared to bear such risks for an extended period of time. No assurance can be given that the AlphaKeys Fund's or the Underlying Fund's (defined below) investment objective will be achieved or that Investors will receive a return of their capital. My losses by the AlphaKeys Fund will be borne solely by the Investors and not by the Administrator or its affiliates; therefore, the Administrator's and its affiliates' or subsidiaries' losses in the AlphaKeys Fund will be limited to losses attributable to the Class B Interests in the AlphaKeys Fund held by the Administrator and its affiliates or subsidiaries in their capacity as investors in the AlphaKeys Fund. CONFIDENTIAL UBSTERRAMAR00003857 EFTA00239189 FOR EXISTING INVESTOR USE ONLY In making an investment decision, prospective Investors must rely on their own examination of the AlphaKeys Fund and the terms of the offering of Class B Interests, including the merits and risks involved. Any representation to the contrary is a criminal offense. The U.S. Commodity Futures Trading Commission (the "CFTC") has not reviewed or approved this offering or this Memorandum. Prospective Investors should not construe the contents of this Memorandum as legal, tax, investment or accounting advice and each prospective Investor is urged to consult with its own advisers with respect to legal, tax, regulatory, financial and accounting consequences of its investment in the AlphaKeys Fund. Each prospective Investor shall agree that it has not relied on the AlphaKeys Fund, UBS Fund Advisor, L.L.C. (the "Administrator") in its capacity as the Administrator and the manager of the AlphaKeys Fund, or any of the Administrator's affiliates or employees for tax advice in connection with its investment. As used in this Memorandum, the following capitalized terms have the following meanings. "Underlying Fund" refers to Millennium USA LP and any intermediate investment vehicles controlled by the Underlying Fund Manager or its affiliates and into which the Underlying Fund directly or indirectly invests all or a portion of its assets (e.g., through a master-feeder structure). "Underlying Fund Manager' refers, individually or collectively, as the context may require, to Millennium Management LLC, a Delaware limited liability company, the general partner of the Underlying Fund. "Underlying Fund Memorandum" refers collectively to the Confidential Memorandum of Millennium USA LP and the Confidential Memorandum of Millennium Partners, L.P., and any supplements thereto, attached hereto as Appendix A. "Underlying Fund Documents" refers to the offering and organizational documents of Millennium USA LP, and certain other documents referred to herein related to the Underlying Fund. This Memorandum contains information concerning the AlphaKeys Fund Agreement and the Underlying Fund Documents. However, the information set forth in this Memorandum does not purport to be complete and is subject to and qualified in its entirety by reference to the AlphaKeys Fund Agreement and the Underlying Fund Documents, copies of which are attached as appendices to this Memorandum and/or will be provided to any prospective Investor upon request, as applicable, and which should be reviewed for complete information, including information concerning the rights, privileges and obligations of Investors in the AlphaKeys Fund. In the event that the descriptions or terms in this Memorandum are inconsistent with or contrary to the descriptions in or terms of the AlphaKeys Fund Agreement and the Underlying Fund Documents, the AlphaKeys Fund Agreement (or with respect to any terms applicable to the Underlying Fund, the Underlying Fund Documents) shall control. The Underlying Fund Documents were not prepared by or independently verified by the AlphaKeys Fund, the Administrator or any of their respective affiliates, and none of the foregoing makes any representation or warranty with respect to, or shall be responsible for, the accuracy or completeness of such information. The Underlying Fund, the Underlying Fund Manager and their respective partners, officers, directors, employees, members and affiliates take no responsibility for the contents of this Memorandum, make no representations as to the accuracy or completeness hereof and expressly disclaim any liability whatsoever for any loss arising from or in reliance upon any part of this Memorandum or from any actions of the AlphaKeys Fund, the Administrator or any Investors. CONFIDENTIAL UBSTERRAMAR00003858 EFTA00239190 FOR EXISTING INVESTOR USE ONLY The Underlying Fund, the Underlying Fund Manager and their respective partners, officers, directors, employees, members and affiliates have not endorsed and make no recommendation with respect to the securities offered hereby. The Underlying Fund and the Underlying Fund Manager have no responsibility to update any of the information provided in this Memorandum. The AlphaKeys Fund will be an investor of the Underlying Fund entitled to the rights of an investor under applicable law and the applicable Underlying Fund Documents. Investors in the AlphaKeys Fund, however, do not thereby become, and will not be, investors of the Underlying Fund and will not have rights as investors of the Underlying Fund. Rather, Investors in the AlphaKeys Fund will have rights as members in the AlphaKeys Fund. As such, the Investors in the AlphaKeys Fund will have no standing or recourse against any of the Underlying Fund, the Underlying Fund Manager, their respective affiliates or any of their respective general partners, investment advisers, officers, directors, employees, partners or members. Statements contained in this Memorandum and the Underlying Fund Memorandum (including those relating to current and future market conditions and trends in respect thereof) that are not historical facts are based on current expectations, estimates, projections, opinions and/or beliefs of the Administrator or the Underlying Fund Manager. Certain information contained in this Memorandum and the Underlying Fund Memorandum may constitute "forward-looking statements," which can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "anticipate," "project," "estimate," "intend," "continue," "target," or "believe" or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, including those set forth in CERTAIN RISK FACTORS and in the Underlying Fund Memorandum, the amount subscribed for by the AlphaKeys Fund and the AlphaKeys Fund's fees and expenses, actual events or results or the actual performance of the AlphaKeys Fund may differ materially from those reflected or contemplated in such forward- looking statements. No representation or warranty is being made herein as to the past or future investment performance of the AlphaKeys Fund or the Underlying Fund. Only those particular representations and warranties that may be made by the AlphaKeys Fund in a definitive investor application ("Investor Application") relating to the purchase of Class B Interests, when and if one is executed, and subject to such limitations and restrictions as may be specified in such Investor Application, shall have any legal effect. The Administrator is registered as a "commodity pool operator" with the CFTC and is a member of the National Futures Association ("NFA") in such capacity under the U.S. Commodity Exchange Act, as amended. With respect to the AlphaKeys Fund, the Administrator has claimed an exemption pursuant to CFTC Rule 4.7 for relief from certain requirements applicable to a registered commodity pool operator. See REGULATORY CONSIDERATIONS: "U.S. Commodity Exchange Act." Except where otherwise indicated, the information contained in this Memorandum has been compiled as of the date set forth below, and the information regarding the Underlying Fund is as of the date set forth in the Underlying Fund Memorandum. Neither the AlphaKeys Fund nor any of its affiliates has any obligation to update this Memorandum. Under no circumstances should the delivery of this Memorandum, irrespective of when it is made, create any implication that CONFIDENTIAL UBSTERRAMAR00003859 EFTA00239191 FOR EXISTING INVESTOR USE ONLY there has been no change in the affairs of the AlphaKeys Fund or of the Underlying Fund since such date. This Memorandum and the information contained herein are being furnished on a confidential basis exclusively for use by prospective Investors in evaluating the offering of the Class B Interests of the AlphaKeys Fund described herein. Each person who has received a copy of the Memorandum and the Underlying Fund Memorandum (whether from the Administrator, such person's financial advisor or otherwise) is deemed to have agreed (whether or not such person purchases any Class B Interests) (i) not to reproduce, disclose, distribute or make available this Memorandum, or any information contained herein, in whole or in part, to any other person (other than to such person's financial, legal, tax, accounting and other advisers assisting in such person's evaluation of the Class B Interests and the AlphaKeys Fund, provided that such advisers are first advised of and instructed to comply with the confidentiality and use restriction on the information contained in this Memorandum) without the Administrator's prior express written consent, which consent may be withheld in the Administrator's sole discretion, (ii) to use the information in this Memorandum exclusively for such person's evaluation of the Class B Interests and the AlphaKeys Fund and in connection with the monitoring and management of an investment in the AlphaKeys Fund, if made, and (iii) to return this Memorandum to the Administrator promptly upon request. Each prospective Investor is invited to meet with representatives of the AlphaKeys Fund and to discuss with, ask questions of and receive answers from such representatives concerning the terms and conditions of the offering of Class B Interests, and to obtain any additional information, to the extent that such representatives possess such information or can acquire it without unreasonable effort or expense, necessary to verify the information contained herein. No person has been authorized in connection herewith to give any information or make any representations other than as contained in this Memorandum and any representation or information not contained herein must not be relied upon as having been authorized by the AlphaKeys Fund and the Administrator or any of their respective directors, officers, employees, partners, shareholders, members, managers, agents or affiliates. Statements in this Memorandum are made as of the date of the initial distribution of this Memorandum unless otherwise expressly stated herein. The delivery of this Memorandum does not imply that any information contained herein is correct as of any time subsequent to the date of this Memorandum. The distribution of this Memorandum and the offer and sale of the Class B Interests in certain jurisdictions may be restricted by law. This Memorandum does not constitute an offer to sell or the solicitation of an offer to buy in any state or other jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such state or jurisdiction. The AlphaKeys Fund reserves the right to modify any of the terms of the offering and the Class B Interests described herein, subject only to any applicable restrictions described in the AlphaKeys Fund Agreement. The Memorandum is intended for U.S. investors; in the event Class B Interests are offered to a non-U.S. Investor, the AlphaKeys Fund may provide such Investor additional information. Prospective non-U.S. Investors should inform themselves as to the legal requirements and tax consequences within the countries of their citizenship, residence, domicile and place of business with respect to the acquisition, holding or disposal of Class B Interests, and any foreign exchange restrictions that may be relevant thereto. -iv- CONFIDENTIAL UBSTERRAMAR00003860 EFTA00239192 FOR EXISTING INVESTOR USE ONLY Notwithstanding anything to the contrary provided in any offering document relating to the AlphaKeys Fund (including this Memorandum, the Investor Application and the AlphaKeys Fund Agreement), each Investor or prospective Investor (and each employee, representative, or other agent of the Investor or prospective Investor) may disclose to any and all persons, without limitation of any kind, the tax treatment, tax strategy and tax structure of (i) the AlphaKeys Fund and the offering of its Class B Interests and (ii) any of its transactions, and all materials of any kind (including opinions or other tax analyses) that are provided to the Investor or prospective Investor relating to such tax treatment, tax strategy and tax structure all within the meaning of Treasury Regulations § 1.6011-4(bX3). For the avoidance of doubt, this authorization is not intended to permit disclosure of the names of, or other identifying information regarding, the participants in this offering, or of any information or the portion of any materials not relevant to the tax treatment, tax strategy or tax structure of the offering. INTERESTS ARE NOT DEPOSITS IN, OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE ADMINISTRATOR OR ANY OF ITS AFFILIATES, OR ANY U.S. OR NON-U.S. DEPOSITORY INSTITUTION. INTERESTS ARE NOT INSURED BY THE FDIC, AND ARE NOT DEPOSITS, OBLIGATIONS OF, OR ENDORSED OR GUARANTEED IN ANY WAY BY, ANY BANKING ENTITY. INTERESTS ARE SUBJECT TO INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE ENTIRE AMOUNT INVESTED. November 2018 CONFIDENTIAL UBSTERRAMAR00003861 EFTA00239193 FOR EXISTING INVESTOR USE ONLY TABLE OF CONTENTS PAGE I. SUMMARY OF TERMS 1 II. CERTAIN RISK FACTORS 25 Ill. POTENTIAL CONFLICTS OF INTEREST 36 N. BROKERAGE 40 V. APPLICATION FOR INTERESTS 41 VI. TAX ASPECTS 43 VII. CERTAIN ERISA AND OTHER CONSIDERATIONS 55 VIII. REGULATORY CONSIDERATIONS 58 IX. ANTI-MONEY LAUNDERING REGULATIONS 60 X. ADDITIONAL INFORMATION 61 APPENDIX A - CONFIDENTIAL MEMORANDUM OF MILLENNIUM USA LP, AS AMENDED FROM TIME TO TIME AND CONFIDENTIAL MEMORANDUM OF MILLENNIUM PARTNERS, L.P., AS AMENDED FROM TIME TO TIME A-1 APPENDIX B - AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF ALPHAKEYS MILLENNIUM FUND, L.L.0 B-1 APPENDIX C - REQUIRED 1933 ACT DISCLOSURE OF ALPHAKEYS MILLENNIUM FUND, L.L.0 C-I CONFIDENTIAL UBSTERRAMAR00003862 EFTA00239194 FOR EXISTING INVESTOR USE ONLY L SUNIMARY OF TERMS The following summary is qualified entirely by the detailed information appearing elsewhere in this Memorandum and by the terms and conditions of the limited liability company agreement of the AlphaKeys Fund (as amended, restated or otherwise modified from time to time, the "AlphaKeys Fund Agreement) attached hereto as Appendix B and the Investor Application, each of which should be read carefully and retained for future reference. Certain information contained in this Memorandum relating to the Underlying Fund Manager and the Underlying Fund has been derived by UBS Financial Services Inc. from materials finished by the Underlying Fund Manager. For a more detailed description of the Underlying Fund Manager and the Underlying Fund, see the Underlying Fund Memorandum. As used in this Memorandum, the following capitalized terms have the following meanings. "AlphaKeys Fund" refers to AlphaKeys Millennium Fund, L.L.C. (f/lc/a UBS Millennium Fund, L.L.C.), a Delaware limited liability company "Underlying Fund" refers to Millennium USA LP, a Delaware limited partnership, and any intermediate investment vehicles controlled by the Underlying Fund Manager or its affiliates and into which the Underlying Fund directly or indirectly invests all or a portion of its assets (e.g., through a master feeder structure). "Underlying Fund Manager" refers, individually or collectively, as the context may require, to Millennium Management LLC, a Delaware limited liability company, the general partner of the Underlying Fund. "Underlying Fund Memorandum" refers collectively to the Confidential Memorandum of Millennium USA LP and the Confidential Memorandum of Millennium Partners, L.P., and any supplements thereto, attached hereto as Appendix A. "Underlying Fund Documents" refers to the offering and organizational documents of Millennium USA LP, and certain other documents referred to herein related to the Underlying Fund. THE ALPHAKEYS FUND The AlphaKeys Fund is currently offering two classes of interests: Class A Interests and Class B Interests (together with additional classes, sub-classes, series or tranches of interests the AlphaKeys Fund may offer from time to time "Interests"). This Memorandum relates solely to an offering of Class B Interests. In respect of Class B Interests, the AlphaKeys Fund is offering two sub-classes of Interests: Advisory Sub-Class Interests and Brokerage Sub-Class Interests. Advisory Sub-Class Interests will be offered only to Investors who are clients of UBS Financial Services Inc. ("UBSFS") who invested through the UBS Institutional Consulting program or another UBSFS investment advisory program as permitted by the Administrator in its sole discretion (an "Advisors, Program"), pursuant to which UBSFS or its affiliates will receive a fee directly from such Investor (an "Advisory Sub-Class Investor") for the Advisory Sub-Class Interests. Brokerage Sub-Class Interests will be offered to all other clients of UBSFS unless otherwise determined by the Administrator (each, a "Brokerage Sub-Class Investor" and, together with each Advisory Sub-Class Investor, each an "Investor"). -1- CONFIDENTIAL UBSTERRAMAR00003863 EFTA00239195 FOR EXISTING INVESTOR USE ONLY INVESTMENT PROGRAM The AlphaKeys Fund has been organized to invest substantially all of its capital in Millennium USA LP, a Delaware limited partnership (the "Underlying Fund"), which may invest all or a portion of its assets through other investment vehicles (e.g. through a master-feeder structure) as further described in the Underlying Fund Memorandum. The objective of the AlphaKeys Fund is to invest in the Underlying Fund. The Underlying Fund's principal trading objective (through its investment in Millennium Partners, L.P. (the "Underlying Muter Fund")) is to achieve above-average appreciation by opportunistically trading and investing in a wide variety of securities, instruments, and other investment opportunities and engaging in a broad array of trading and investment strategies. There are no substantive limits on the investment strategies that may be pursued by the Underlying Fund. For a detailed description of the Underlying Fund's investment program, see "Millennium USA's Investment Program and Strategy" in Part One of the Underlying Fund Memorandum and the entirety of Part Two of the Underlying Fund Memorandum. The Underlying Fund is a limited partner of, and invests primarily in, the Underlying Muter Fund, a Cayman Islands exempted limited partnership. For ease of reference, the investment strategies, operations and performance of the Underlying Fund and Underlying Muter Fund are together referred to as those of the Underlying Fund. The AlphaKeys Fund from time to time may hold some of its assets in cash (not earning interest), or invested in money market securities, cash equivalents, short-to-medium term federal tax- exempt debt obligations and similar securities of governmental and private issuers, including funds that normally invest primarily in such securities ("Temporary Investments") (i) pending investment in the Underlying Fund or as the Administrator determines is necessary or prudent, in its discretion and/or (ii) pursuant to the retention of appropriate reserves (as determined in the sole discretion of the Administrator) in order to satisfy the AlphaKeys Fund's expenses. Subject to the foregoing, substantially all of the AlphaKeys Fund's assets are expected to be invested in the Underlying Fund. INTERESTS OFFERED The Underlying Fund offers and/or has issued multiple classes, sub-classes or series of interests ("Underlying Fund Interests"). The AlphaKeys Fund offers and/or has issued multiple classes, sub-classes, series or tranches of Interests. This Memorandum relates solely to an offering of Class B Interests, with respect to which the AlphaKeys Fund anticipates investing only in Class HH interests of the Underlying Fund, as described in the Underlying -2- CONFIDENTIAL UBSTERRAMAR00003864 EFTA00239196 FOR EXISTING INVESTOR USE ONLY Fund Memorandum. Class HH interests do not participate in gains and losses from "new issues" (as such term is defined by the Financial Industry Regulatory Authority, Inc. ("FINRA")) and activities that the Underlying Fund Manager determines are related thereto. The AlphaKeys Fund may invest in any other class, sub- class or series of the Underlying Fund if it is permitted to do so in the future by the Underlying Fund, in the Administrator's discretion without prior notice or consent. The Underlying Fund Memorandum should be read carefully by all prospective Investors. Investors in the AlphaKeys Fund will not be investors of the Underlying Fund and will have no direct interest in or rights with respect to or standing or recourse against the Underlying Fund, the Underlying Fund Manager or any affiliate, officer, director, member or partner or other affiliate of any of them. None of the AlphaKeys Fund, UBS Americas, Inc. or any of its affiliates has the right to participate in the control, management or operations of the Underlying Fund, nor has any discretion over the investments of the Underlying Fund. As a result of fees and expenses of the AlphaKeys Fund (including the Administrative Fee, as defined below) and the need to reserve amounts to pay AlphaKeys Fund obligations, the amount of each Investor's indirect investment in the Underlying Fund will be less than what it would have been had such Investor invested directly in the Underlying Fund. There can be no guarantee that the Underlying Fund will successfully employ its investment program or that either of the AlphaKeys Fund or the Underlying Fund achieves its investment objective. Any losses by the AlphaKeys Fund will be borne solely by the Investors and not by the Administrator or its affiliates. APPLICATION FOR INTERESTS Both initial and additional applications for Class B Interests by eligible Investors may be accepted at such times as the AlphaKeys Fund may determine, subject to the receipt of cleared funds on or before the acceptance date set by the AlphaKeys Fund. Capital contributions made prior to any closing, including the initial closing, the timing of which will be determined in the sole discretion of the Administrator (as defined below), may be held in an escrow or similar account pending such closing at the discretion of the Administrator. It is possible such account will not earn interest. After the initial closing, initial applications and additional capital contributions generally will be accepted monthly. The AlphaKeys Fund, in its sole and absolute discretion, reserves the -3- CONFIDENTIAL UBSTERRAMAR00003865 EFTA00239197 FOR EXISTING INVESTOR USE ONLY right to reject, in whole or in part, any application for Class B Interests in the AlphaKeys Fund at any time and to suspend acceptance of subscriptions, which suspension may later be terminated by the Administrator. Generally, the minimum initial investment in the AlphaKeys Fund is $250,000. Investors may make additional capital contributions in amounts not less than $50,000 unless otherwise determined by the Administrator, in its sole discretion. The AlphaKeys Fund, in its sole discretion, may vary the investment minimums from time to time. Contributions to the capital of the AlphaKeys Fund will be payable in cash. Investors must be "accredited investors" as defined in Regulation D promulgated under the 1933 Act (each, an "Accredited Investor") and "qualified purchasers" as defined in Section 2(aX51XA) of the Investment Company Act of 1940, as amended (the "1940 Act") (each, a "Qualified Purchaser") unless otherwise permitted by law. See APPLICATION FOR INTERESTS: "Eligible Investors." LEVERAGE: The AlphaKeys Fund may borrow money for any purpose, but currently contemplates borrowing only for limited purposes such as (i) for temporary or emergency purposes or in connection with withdrawals by an Investor, (ii) to invest in the Underlying Fund pending the receipt of capital contributions from Investors and (iii) to cover any shortfall in the AlphaKeys Fund's ability to perform any payment obligations when due. If the AlphaKeys Fund borrows money, its Net Asset Value (as defined below) may be subject to greater fluctuation until the borrowing is repaid. The Underlying Fund may use leverage in its trading of securities (subject to any restrictions described in the Underlying Fund Memorandum) and may sell securities short. The use of leverage and short sales has attendant risks and can, in certain circumstances, increase the adverse impact to which the Underlying Fund's portfolio (and in turn, that of the AlphaKeys Fund) may be subject. See "The Master Partnership's Investment Program and Description: Leverage and Loans" in the Underlying Fund Memorandum. THE ADMINISTRATOR UBS Fund Advisor, L.L.C. has been appointed by the Investors to provide certain administrative or support services to the AlphaKeys Fund (in such capacity, the "Administrator") pursuant to an administrative services agreement with the AlphaKeys Fund (the "Administrative Services Agreement"). One or more affiliates of the Administrator and the Placement Agent (as defined below) and third parties will be engaged to provide certain services to the AlphaKeys Fund at the expense of the AlphaKeys Fund. The Administrator and/or its affiliates provide certain administrative -4- CONFIDENTIAL UBSTERRAMAR00003866 EFTA00239198 FOR EXISTING INVESTOR USE ONLY and investment advisory services to registered and unregistered investment funds and individual accounts. The Administrator will serve as the "Manage?' of the AlphaKeys Fund (in such capacity, the "Manager") as such term is defined within the meaning of the Delaware Limited Liability Company Act, Title 6 of the Delaware Code, Section 18-101 et seq., as amended from time to time (the "LLC Act"). The Administrator and/or an affiliate may hold a nominal Interest in, and may therefore be an investor of, the AlphaKeys Fund. The Administrator currently serves (and may in the future serve) as administrator to one or more parallel funds investing in the Underlying Fund or similar funds managed by Millennium or an affiliate thereof (such funds "Other AlphaKeys Millennium Funds"). The Administrator is an indirect, wholly owned subsidiary of UBS Americas, Inc. (the "UBS Americas") which, in turn, is a wholly owned subsidiary of UBS AG (together with its affiliates, "UBS"), a Swiss bank. UBSFS, a wholly owned subsidiary of UBS Americas, is registered as a broker-dealer under the U.S. Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member of the New York Stock Exchange, Inc. and other principal securities exchanges. The offices of the Administrator are located at 1285 Avenue of the Americas, New York, New York 10019, and its telephone number is (800) 486-2608. The Administrator may, directly or indirectly, assign all or any part of its rights and duties under the Administrative Services Agreement to any individual or entity, with the prior approval of the AlphaKeys Fund. In the event of an assignment of the Administrative Services Agreement, the Manager of the AlphaKeys Fund is authorized to grant consent on behalf of the AlphaKeys Fund. The Manager will provide written notice to the Investors in the event that it grants consent to an assignment. Because the Manager and the Administrator are currently the same entity, it is unlikely that the Manager will withhold consent to an assignment proposed by the Administrator. In addition, notwithstanding anything to the contrary, the Manager may resign as Manager of the AlphaKeys Fund and cause the AlphaKeys Fund to admit a different individual or entity as manager in addition to or as a replacement and successor for the current Manager of the AlphaKeys Fund with (i) the prior consent of the AlphaKeys Fund, or (ii) prior notice to the AlphaKeys Fund and, to the extent consistent with applicable law, without the prior consent of the AlphaKeys Fund. The Manager expects (but is not required) to admit an entity not affiliated with the Manager as a successor manager. -5- CONFIDENTIAL UBSTERRAMAR00003867 EFTA00239199 FOR EXISTING INVESTOR USE ONLY The Administrator may be removed as the Manager of the AlphaKeys Fund and/or the Administrative Services Agreement may be terminated upon the vote of at least a majority-in-interest of Investors who are not affiliates of the Administrator ("Unaffiliated Investors") at a meeting of the Investors called for such purpose as further described in the AlphaKeys Fund Agreement. A substitute manager may be appointed upon the vote of at least a majority-in- interest of the Unaffiliated Investors. In certain circumstances, the AlphaKeys Fund Agreement permits the Administrator to reduce an Investor's voting or approval rights. ADMINISTRATIVE FEE In consideration for the services provided by the Administrator, the AlphaKeys Fund will pay the Administrator a fee (the "Administrative Fee") on behalf of each Brokerage Sub-Class Investor equal to (a) 1.0% per annum of the capital account balance of each Brokerage Sub-Class Investor with a Fee Base (as defined below) of less than $3 million and (b) 0.75% per annum of the capital account balance of each Brokerage Sub-Class Investor with a Fee Base of $3 million or more. The Administrative Fee is determined as of the appropriate date and payable monthly in arrears. The "Fee Base" with respect to any Brokerage Sub-Class Investor is the amount equal to the aggregate capital contributions made by such Brokerage Sub-Class Investor (including capital contributions made at the beginning of such fiscal period) less aggregate withdrawals made by, and distributions to, such Brokerage Sub-Class Investor, in each case with respect to the AlphaKeys Fund. The Administrative Fee is not paid to the Administrator in respect of Advisory Sub-Class Investors. If an Investor holding an Advisory Sub-Class Interest terminates its participation in an Advisory Program and, therefore, UBSFS or its affiliates are no longer receiving a fee from such Investor pursuant thereto, then the AlphaKeys Fund may convert such Investor's Advisory Sub-Class Interest into a Brokerage Sub-Class Interest and cause such Investor to bear the Administrative Fee due to the Administrator with respect to the Brokerage Sub-Class Interest accordingly, subject to waiver in the Administrator's discretion. The AlphaKeys Fund does not expect to permit mid-month investments or withdrawals. If the AlphaKeys Fund or the Administrator permits an Investor to make a capital contribution on any day other than the first day of any month, the AlphaKeys Fund may, in the Administrator's sole discretion, be required to pay, in lieu of a full Administrative Fee for such month, a prorated Administrative Fee with respect to such Investor for such month. -6- CONFIDENTIAL UBSTERRAMAR00003868 EFTA00239200 FOR EXISTING INVESTOR USE ONLY If the AlphaKeys Fund or the Administrator permits an Investor to make a withdrawal other than as of the last business day of a month, the Administrative Fee for such month may, in the Administrator's sole discretion, be prorated and paid accordingly, as appropriate. The Administrative Fee will be paid to the Administrator out of the AlphaKeys Fund's assets, and debited against each Investor's capital account by the amount of the Administrative Fee charged to the AlphaKeys Fund with respect to such Investor. The Administrative Fee will be in addition to the Underlying Fund Performance Allocation and other charges or expenses of the Underlying Fund (as described below). The Administrator may, in its sole discretion, waive or reduce the Administrative Fee with respect to any Investor and may otherwise vary the terms of the Administrative Fee as to an Investor. The Administrator may also vary the terms of the Administrative Fee with respect to a particular class, tranche or series (or sub-class, sub-tranche or sub-series) of Interests, in the Administrator's sole discretion. PLACEMENT FEE Brokerage Sub-Class Investors will be charged by UBSFS (in such capacity, the "Placement Agent") a placement fee (a "Placement Fee") of 2% of the Investor's capital contribution (including any additional capital contributions made by an Investor) to the AlphaKeys Fund (subject to waiver by the Placement Agent in limited circumstances). The Placement Fee is in addition to an Investor's capital contribution to the AlphaKeys Fund and will not be included in an Investor's capital account therein. Advisory Sub-Class Investors will not be charged a Placement Fee. Separately, the Administrator and the Placement Agent intend to compensate the Placement Agent's financial advisors, as well as others, for their ongoing servicing of clients with whom they have placed Interests. Such compensation will be payable out of the Administrative Fee. UNDERLYING FUND A performance allocation of 20% of any net profit (determined net PERFORMANCE of the Underlying Fund Management Fee as described herein) (the ALLOCATION "Underlying Fund Performance Allocation") will be charged annually, as further described in and subject to additional terms set forth in the Underlying Fund Memorandum. See "Fees and Expenses Relating to Millennium USA" and "Allocation of Gains and Losses" in Part One of the Underlying Fund Memorandum for further discussion of the Underlying Fund Performance Allocation. UNDERLYING FUND Neither the Underlying Fund nor the Underlying Master Fund pays -7- CONFIDENTIAL UBSTERRAMAR00003869 EFTA00239201 FOR EXISTING INVESTOR USE ONLY EXPENSES OTHER EXPENSES a management fee. As set forth in the Underlying Fund Memorandum, the Underlying Fund and the Underlying Master Fund each bear a range of fees and expenses including, but not limited to, expenses incurred with respect to, or in connection with, the Underlying Master Fund and its affiliates or incurred directly by the Underlying Master Fund (which cover, among other things, the expenses, salaries, fringe benefits, bonuses, fees and performance-based compensation paid or reimbursed to portfolio managers, other employees, consultants, subcontractors, agents and investment advisers engaged directly by the Underlying Master Fund and its affiliates, fees paid to persons or entities who assist in identifying and recruiting portfolio managers, and expenses related to computers, equipment and technology (including, without limitation, information technology hardware and software and third-party software licensing, implementation, data management and recovery services and custom developing costs) and expenses related to maintaining offices, including leases, fixtures and leasehold improvements). See "Fees and Expenses Relating to Millennium USA" in Part One of the Underlying Fund Memorandum and "The Master Partnership's Fees and Expenses" in Part Two of the Underlying Fund Memorandum for further discussion of the Underlying Fund's and Underlying Master Fund's expenses. BNY Mellon Alternative Investment Services (the "Sub- Administrator") performs certain administration, accounting and investor services for the AlphaKeys Fund and other investment funds sponsored or advised by UBSFS or its affiliates. In consideration for these services, the AlphaKeys Fund and certain of these other investment funds will pay the Sub-Administrator an annual fee calculated based upon the aggregate average net assets of the AlphaKeys Fund and certain of these other investment funds, subject to a minimum monthly fee, and will reimburse certain of the Sub-Administrator's expenses. In addition, the Administrator intends to retain a third party technology service provider (and the Administrator, UBSFS or an affiliate may own a non-controlling interest in such service provider) to provide an online portal through which the AlphaKeys Fund investors will receive certain of the reporting and monitoring services. The AlphaKeys Fund will bear all costs, fees and expenses incurred in the operation of the AlphaKeys Fund, other than those specifically required to be borne by the Administrator and other service providers pursuant to their agreements with the AlphaKeys Fund. Expenses ("Expenses") to be borne by the AlphaKeys Fund include, but are not limited to, the following: (i) all costs and expenses related to investment transactions and positions for the -8- CONFIDENTIAL UBSTERRAMAR00003870 EFTA00239202 FOR EXISTING INVESTOR USE ONLY AlphaKeys Fund's account, including, but not limited to, custodial fees, fees and expenses incurred in connection with the AlphaKeys Fund's investment in the Underlying Fund, including due diligence, "road show" and other marketing-related expenses and travel-related expenses, and fees and expenses related to any Temporary Investments made by the AlphaKeys Fund; (ii) all costs and expenses associated with borrowing; (iii) fees payable to the Conflicts Review Committee (as defined herein) and the costs and expenses of holding any meetings of the Conflicts Review Committee or of Investors that are permitted or required to be held under the terms of the AlphaKeys Fund Agreement or applicable law; (iv) all costs and expenses associated with the organization and operation of the AlphaKeys Fund, including offering costs and the costs of compliance with any applicable federal, state and other laws; tax preparation and reporting fees; taxes, including but not limited to, tax payments made on behalf of Investors; (v) fees and disbursements of any attorneys, accountants, auditors and other consultants and professionals engaged on behalf of the AlphaKeys Fund, including in connection with an audit; (vi) the costs of any liability or other insurance obtained on behalf of the AlphaKeys Fund or the Administrator; (vii) all costs and expenses of preparing, setting in type, printing and distributing reports and other communications to Investors; (viii) all expenses of valuing the AlphaKeys Fund's Net Asset Value, including any equipment or services obtained for the purpose of valuing the AlphaKeys Fund's investment portfolio, including appraisal and valuation services provided by third-party service providers; (ix) reporting and monitoring costs of an online portal; (x) all charges for equipment or services used for communications between the AlphaKeys Fund and any custodian or other agent engaged by the AlphaKeys Fund; (xi) the Administrative Fee and the fees and expenses of any custodians, third-party service providers (including service providers in which the Administrator, UBSFS, or an affiliate may own a non-controlling interest) and other persons providing administrative or sub-administrative services to the AlphaKeys Fund; (xii) fees and expenses incurred in connection with the preparation for or defense or disposition of any investigation, action, suit, arbitration or other proceeding, and any indemnification expenses related thereto; and (xiii) such other types of expenses as may be approved from time to time by the Administrator. The AlphaKeys Fund may pay costs and expenses, including any amounts paid or accrued by the AlphaKeys Fund vis-a-vis its investment in the Underlying Fund, such as withdrawal charges, if any. In addition, such expenses may be assessed against the individual Investor's capital account, in the Administrator's -9- CONFIDENTIAL UBSTERRAMAR00003871 EFTA00239203 FOR EXISTING INVESTOR USE ONLY discretion, as discussed further under "Withdrawals" below. Expenses (other than the Administrative Fee, which will be charged as described above) will be allocated pro rata among the Investors, unless otherwise determined by the Administrator. The AlphaKeys Fund will reimburse the Administrator for any of the above expenses that it may pay on behalf of the AlphaKeys Fund. The AlphaKeys Fund will bear its organizational and offering expenses, which may be amortized over a five year period. Such amortization over a five year period may be a divergence from U.S. Generally Accepted Accounting Principles ("GAAP"). Although amortization over a five year period is not deemed in accordance with GAAP, the Net Asset Value attributable to each Investor's capital account (as reported in the Investor's capital account statements) may still be calculated by amortizing organizational and offering costs over such five year period and may therefore differ from the Net Asset Value in the financial statements determined in accordance with GAAP. The Administrator may determine to bear, waive or delay certain expenses (including organizational expenses of the AlphaKeys Fund) in its sole discretion, under such terms and in such manner as the Administrator chooses. In addition to the foregoing costs and expenses, Investors will bear the cost of the AlphaKeys Fund's pro rata share of the Underlying Fund Performance Allocation and the Underlying Fund's and Underlying Master Fund's fees and expenses allocable to the AlphaKeys Fund in the Underlying Fund, each as described above. Among other things, under the Underlying Fund Documents, the Underlying Fund (and indirectly the AlphaKeys Fund, like all other investors in the Underlying Fund) has agreed to indemnify the Underlying Fund Manager and its affiliates (and each of its respective interest holders, directors, officers, employees, agents and each person who controls any of the foregoing and their executors, heirs, assigns, successors and other legal representatives). Any costs or liabilities associated with such indemnification will be borne in part by the Underlying Fund. See "Fees and Expenses Relating to Millennium USA" in Part One of The Underlying Fund Memorandum and "The Master Partnership's Fees and Expenses" in Part Two of the Underlying Fund Memorandum for further discussion of the Underlying Fund's and Underlying Master Fund's expenses. Appropriate reserves may be created, accrued and charged against net assets for contingent liabilities known to the Administrator. Reserves will be in such amounts, subject to increase or reduction, -10- CONFIDENTIAL UBSTERRAMAR00003872 EFTA00239204 FOR EXISTING INVESTOR USE ONLY and as of such date as the Administrator may deem necessary or appropriate. TERMS OF UNDERLYING FUND TERM WITHDRAWALS The terms of the Underlying Fund, including the terms described herein, are subject to change. In the event of any such change to the terms of the Underlying Fund, as an investor in the Underlying Fund, the AlphaKeys Fund will be subject to such changed terms. The AlphaKeys Fund's term is perpetual unless it is otherwise wound up under the terms of the AlphaKeys Fund Agreement. The AlphaKeys Fund will be voluntarily dissolved: (i) at the election of the Administrator, or (ii) as required by operation of law. Upon the occurrence of any event of dissolution, the Administrator, acting directly, or a liquidator under appointment by the Administrator, is charged with winding up the affairs of the AlphaKeys Fund and liquidating its assets. Net profits or net loss during the fiscal period including the period of liquidation will be allocated as described in the section titled SUMMARY OF TERMS: "Allocation of Profit and Loss." Upon the dissolution of the AlphaKeys Fund, its assets are to be distributed (1) first to satisfy the debts, liabilities and obligations of the AlphaKeys Fund, other than debts to Investors, including actual or anticipated liquidation expenses, (2) next to satisfy debts owing to the Investors and (3) finally to the Investors proportionately in accordance with the balances in their respective capital accounts. Assets may be distributed in kind if the Administrator or liquidator determines that such a distribution would be in the interests of the Investors in facilitating an orderly liquidation. An Investor shall be permitted to make a withdrawal of Class B Interests as of the close of business on March 31, June 30, September 30 and December 31 of each year (each such day, a "Withdrawal Date"). In the event that withdrawal requests are received for any Withdrawal Date aggregating to more than five percent (5%) of the aggregate Net Asset Value of the AlphaKeys Fund as of such Withdrawal Date, the Administrator may, in its sole discretion, (i) satisfy all such withdrawal requests or (ii) reduce all such withdrawal requests, pro rata based on the requested withdrawal amount of each Investor, so that only 5% (or a higher percentage, in the sole discretion of the Administrator) of the aggregate Net Asset Value of the AlphaKeys Fund as of such Withdrawal Date is withdrawn as of such date (the "Class B Gate"). To the extent a request for withdrawal of Class B Interests is not fully satisfied due to the Class B Gate, the applicable Investor will be deemed CONFIDENTIAL LiBSTERRAMAR00003873 EFTA00239205 FOR EXISTING INVESTOR USE ONLY automatically to have resubmitted a withdrawal request for the remaining portion of such unsatisfied request as of the next Withdrawal Date and, if the Class B Gate applies as of such next Withdrawal Date, such withdrawal request may be subject to reduction in the same manner as new withdrawal requests pursuant to the Class B Gate. For the avoidance of doubt, both new withdrawal requests for a Withdrawal Date and withdrawal requests deemed resubmitted for such Withdrawal Date will be reduced pro rata by the Class B Gate, if applicable, as of such date. Subject to the terms of withdrawal payments by the Underlying Fund, a withdrawing Investor subject to the Class B Gate(s) will generally receive payment as of each subsequent Withdrawal Date until the Investor's entire withdrawal request is satisfied. Capital not withdrawn from the AlphaKeys Fund by virtue of the foregoing restrictions shall remain at risk of (and will be subject to the profits and losses resulting from) the AlphaKeys Fund's business until the effective date of the withdrawal. In addition, to the extent the AlphaKeys Fund is restricted from making withdrawals from the Underlying Fund due to a gating or other restriction imposed by the Underlying Fund, the Administrator may, in its sole and absolute discretion, reduce the withdrawals requested by Investors pro rata according to the method described above. An Investor wishing to withdraw capital or withdraw from the AlphaKeys Fund must provide written notice to the Administrator at least one hundred and five (105) days prior to a Withdrawal Date, (unless the Administrator agrees to accept shorter notice), or upon such other notice period, which may be longer, as may be notified to the Investors, in the Manager's sole discretion. In the case of withdrawals of 95% or more of the balance of an Investor's capital account, an amount equal to 95% of the estimated withdrawal proceeds is generally expected to be payable to such Investor within sixty (60) days after the applicable Withdrawal Date, and the balance will be paid, subject to audit adjustment and with interest, within 30 days after the AlphaKeys Fund issues its audited financial statements for the year in which such Withdrawal Date occurred. In the case of withdrawals of less than 95% of the balance of an Investor's capital account, an amount equal to 100% of the estimated withdrawal proceeds is generally expected to be payable to such Investor within sixty (60) days after the applicable Withdrawal Date. -12- CONFIDENTIAL UBSTERRAMAR00003874 EFTA00239206 FOR EXISTING INVESTOR USE ONLY Notwithstanding the foregoing, amounts held back may be larger and/or paid out later than described above, as the ability of the AlphaKeys Fund to honor withdrawal requests may be dependent upon the AlphaKeys Fund's receipt of funds from the Underlying Fund and its ability to make withdrawals from the Underlying Fund, which is subject to the withdrawal terms of the Underlying Fund and may be delayed or suspended altogether. See "Millennium USA's Organization, Management, Structure, and Operations" in Part One of the Underlying Fund Memorandum. The Administrator may determine to satisfy a withdrawal request in full, without a holdback, in its discretion. Each withdrawal will be subject to a minimum withdrawal amount of U.S. $50,000 and no partial withdrawals will be permitted if the balance of the Investor's capital account with respect to its remaining Interests would be less than U.S. $250,000, provided that such requirements may be waived with respect to any Investor by the Administrator in its sole discretion. The amount due to any Investor whose Class B Interest or portion thereof is withdrawn will be equal to the value of the Investor's capital account or portion thereof based on the estimated Net Asset Value of the AlphaKeys Fund's assets as of the applicable Withdrawal Date, after giving effect to all allocations and charges to be made to the Investor's capital account (including the Administrative Fee) as of such date. The Administrator may establish reserves and holdbacks for estimated, projected or accrued expenses (including the Administrative Fee), liabilities and contingencies (even if such reserves or holdbacks are not otherwise required by generally accepted accounting principles) which could reduce the amount of a distribution upon withdrawal. In addition, in the sole discretion of the Administrator, any withdrawal by an Investor may be subject to a charge, as the Administrator may reasonably require, in order to defray the costs and expenses of the AlphaKeys Fund in connection with such withdrawal, including but not limited to any amounts paid or accrued by the AlphaKeys Fund vis-à-vis its investment in the Underlying Fund, withdrawal or similar charges imposed by the Underlying Fund. The AlphaKeys Fund may, at times, receive withdrawal proceeds in amounts that exceed the eligible withdrawal requests with respect to the AlphaKeys Fund. The Administrator will generally reinvest any such excess in the Underlying Fund as of the next available capital contribution date. However, as a result of such over-withdrawal, the AlphaKeys Fund may bear a greater amount of Underlying Fund Incentive Allocation and/or other fees and expenses than it would bear in the absence of such overwithdrawal. -13- CONFIDENTIAL UBSTERRAMAR00003875 EFTA00239207 FOR EXISTING INVESTOR USE ONLY To the extent permitted by applicable law, the Administrator may require any Investor to withdraw its Class B Interests (in whole or in part) for any or no reason. For example, the AlphaKeys Fund may terminate the Class B Interest of any Investor who is a UBS employee if the continued participation of such Investor is determined by the Administrator to subject any of the AlphaKeys Fund, the Administrator, or their respective affiliates to any adverse consequence under any laws, rules or regulations applicable to any of the AlphaKeys Fund, the Administrator, or their respective affiliates. Distributions in respect of any such required withdrawals may be made in the manner and in amounts described above for voluntary withdrawals by Investors. Please see "Withdrawal Rights" in the Underlying Fund Memorandum for a more detailed description of the withdrawal terms, including additional restrictions, applicable to the AlphaKeys Fund's investment in the Underlying Fund. LIMITATIONS ON WITHDRAWALS Notwithstanding anything herein to the contrary, and in accordance with the AlphaKeys Fund Agreement, the Administrator may suspend or delay the right of any Investor to withdraw all or a portion of its capital account or to receive a distribution from the AlphaKeys Fund if (i) the Administrator reasonably believes it necessary, prudent or appropriate in connection with the operation of the AlphaKeys Fund or (ii) the AlphaKeys Fund has not received sufficient funds from the Underlying Fund or if the AlphaKeys Fund's ability to make withdrawals from the Underlying Fund is suspended, delayed, modified or denied. See "Certain Risk Factors Relating to Millennium USA — Limit on Withdrawals" in Part One of the Underlying Fund Memorandum for a discussion of when the AlphaKeys Fund's ability to make withdrawals from the Underlying Fund may be suspended, delayed, modified or denied. Furthermore, unlike other interests in the Underlying Fund (including the interests in which Class A Interests are invested), the Underlying Fund's interests in which the Class B Interests are invested have no special withdrawal rights in the event of the death, disability, adjudication of incompetency, bankruptcy, insolvency or withdrawal from the general partner of the Underlying Master Fund of Israel A. Englander (a "Trigger Event"). The Administrator specifically reserves the right to prohibit an Investor from withdrawing all or a portion of its capital account or from receiving a distribution from the AlphaKeys Fund if such withdrawal or distribution would cause the assets of the AlphaKeys Fund to be considered "plan assets" under -14- CONFIDENTIAL UBSTERRAMAR00003876 EFTA00239208 FOR EXISTING INVESTOR USE ONLY Section 3(42) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and any rules and regulations thereunder, and the plan assets regulation set forth by the U.S. Department of Labor in the U.S. Code of Federal Regulations at 29 C.F.R. § 2510.3-101, as modified by Section 3(42) of ERISA (collectively, the "Plan Assets Rules"). Further, Investors should be aware that the withdrawal process could involve substantial complications and delays, as the ability of the AlphaKeys Fund to honor withdrawal requests may be dependent upon the AlphaKeys Fund's ability to make withdrawals from the Underlying Fund, which may be delayed or suspended altogether. Accordingly, the Administrator may determine that withdrawals should be delayed or suspended. The Administrator may so delay or suspend redemptions from the AlphaKeys Fund at a time when no such delay or suspension is in effect with respect to one or more Other AlphaKeys Millennium Funds. Notwithstanding anything to the contrary contained herein, once the AlphaKeys Fund has commenced liquidation, all withdrawal rights and requests may be canceled or altered in the Administrator's sole discretion. Withdrawals may be funded with cash or securities. Although the Administrator generally expects distributions in connection with withdrawals to be made in cash, any such distributions may be in cash, in-kind, or partly in cash and partly in-kind, in the Administrator's sole discretion. Please see "Limitation on Withdrawals" in the Underlying Fund Memorandum for a more detailed description of the withdrawal terms, including additional restrictions, applicable to the AlphaKeys Fund's investment in the Underlying Fund. OTHER INTERESTS Interests of classes of the AlphaKeys Fund, including Class A Interests, and interests of classes of Other AlphaKeys Millennium Funds (collectively, "Other Interests") generally are significantly more liquid than the Class B Interests. Such Other Interests with more favorable liquidity terms may be offered to clients of UBSFS from time to time, simultaneously with or at different times than the Class B Interests, to the extent such Other Interests become available. Generally, the availability of the Other Interests is limited and may depend upon withdrawals of such Other Interests from the AlphaKeys Fund or from the Other AlphaKeys Millennium Funds. As a result, there is no guarantee that any Other Interests would be available to any Investor, and the Investor is likely to only have access to the Class B Interests, which provide liquidity terms that are significantly less favorable than those applicable to the Other Interests. See CERTAIN RISK FACTORS -15- CONFIDENTIAL UBSTERRAMAR00003877 EFTA00239209 FOR EXISTING INVESTOR USE ONLY — Other Interest; Limited Liquidity below. CAPITAL ACCOUNTS The AlphaKeys Fund will maintain a separate capital account for each Investor, which will have an opening balance equal to such Investor's initial contribution to the capital of the AlphaKeys Fund. Each Investor's capital account will be increased by the sum of the amount of cash constituting additional contributions by such Investor to the capital of the AlphaKeys Fund, plus any amounts credited to such Investor's capital account as described below. Similarly, each Investor's capital account will be reduced by the sum of the amount of any withdrawal from the AlphaKeys Fund of the Class B Interest or portion of the Class B Interest of such Investor, plus the amount of any distributions to such Investor, plus any amounts debited against such Investor's capital account as described below. Capital accounts of Investors are adjusted as of the close of business on the last day of each fiscal period. The AlphaKeys Fund may, in the Administrator's sole discretion, establish a separate capital account with respect to an additional contribution by an Investor and Investors may hold multiple Interests. ALLOCATION OF PROFIT Net profits or net losses of the AlphaKeys Fund for each fiscal AND Loss period will be allocated among and credited to or debited against the capital accounts of all Investors as of the last day of each fiscal period in accordance with the balance of each such capital account for such fiscal period (provided that allocations may be adjusted to give effect to additional classes, sub-classes, series or tranches of interests created by the AlphaKeys Fund). Net profits or net losses will be measured as the net change in the Net Asset Value of the AlphaKeys Fund, including any net change in unrealized appreciation or depreciation of investments and realized income and gains or losses and expenses during a fiscal period, before giving effect to the Administrative Fee (and certain other items) and any withdrawals by Investors. In the event the Administrator determines that, based upon tax or regulatory reasons, or any other reasons, an Investor should not participate, in whole or in part, in allocations of net profit and net loss to one or more of its capital accounts attributable to trading or investing in any security, type of security or any other transaction, the Administrator may allocate such profit and/or loss to the capital accounts of such Investor or other Investors not subject to such limitations. The Administrator may also choose, based upon the reasons above, to allocate interest earned on any security, type of security or any other transaction to a memorandum account separate from such Investor's capital account(s). -16- CONFIDENTIAL UBSTERRAMAR00003878 EFTA00239210 FOR EXISTING INVESTOR USE ONLY To the greatest extent possible, allocations for federal income tax purposes generally will be made among the Investors so as to reflect equitably amounts credited or debited to each Investor's capital account. The AlphaKeys Fund may specially allocate items of taxable income and gain or loss and deduction to a withdrawing Investor. This special allocation to or from a withdrawing Investor could result in Investors (including the withdrawing Investor) receiving more or less items of income, gain, deduction or loss (and/or income, gains, deductions or losses of a different character) than they would receive in the absence of such allocations. VALUATION The AlphaKeys Fund and/or each class, sub-class, tranche or series of Interests issued by the AlphaKeys Fund will have a Net Asset Value determined at such times as the Administrator may determine. The Net Asset Value will be equal to the sum of the value of all the gross assets of the AlphaKeys Fund and/or each class, sub-class, tranche or series minus all gross liabilities of the AlphaKeys Fund and/or such class, sub-class, tranche or series, including (after accrual thereof) any expenses. The term "Net Asset Value" in respect of the AlphaKeys Fund or the Underlying Fund (or any class, tranche or series (or sub-class or sub-series) thereof) shall mean the then-current Net Asset Value of such AlphaKeys Fund or Underlying Fund (or such class, tranche or series (or sub- class or sub-series) thereof). The assets of the AlphaKeys Fund will be valued in accordance with GAAP or another methodology determined appropriate by the Administrator in its sole discretion. Based on current GAAP requirements, the Administrator expects to rely on valuation information provided by the Underlying Fund (which will be unaudited, except for information as of the date of the Underlying Fund's annual audit), which if inaccurate or incomplete could adversely affect the Administrator's ability to determine the Net Asset Value and, accordingly, value the Class B Interests accurately. In certain circumstances, the Administrator may be required by GAAP to make adjustments to the valuation information provided by the Underlying Fund. Absent bad faith or manifest error, valuation determinations made by the Administrator will be conclusive and binding. Except as otherwise determined by the Administrator, the AlphaKeys Fund's net profits and net losses will be determined in accordance with GAAP applied consistently and will include net realized and unrealized profits or losses on the AlphaKeys Fund's investments. LIABILITY OF InivEsToRs Investors in the AlphaKeys Fund will be members of a limited -17- CONFIDENTIAL UBSTERRAMAR00003879 EFTA00239211 FOR EXISTING INVESTOR USE ONLY liability company as provided under Delaware law. Under Delaware law and the AlphaKeys Fund Agreement, an Investor will not be liable for the debts, obligations or liabilities of the AlphaKeys Fund solely by reason of being an Investor, except that the Investor may be obligated to (i) make capital contributions to the AlphaKeys Fund pursuant to the AlphaKeys Fund Agreement and applicable law, including to repay any funds wrongfully distributed to the Investor, (ii) repay amounts paid to such Investor in connection with a withdrawal as a result of a determination by the Administrator that the amount paid to such Investor was materially incorrect, (iii) repay withholding or other taxes applicable with respect to such Investor paid by the AlphaKeys Fund, or (iv) repay liabilities of the AlphaKeys Fund incurred during a prior period in which such Investor was an Investor in the AlphaKeys Fund (including any such liabilities of the AlphaKeys Fund to the Underlying Fund). The Administrator will not be personally liable to any Investor for the repayment of any balance in such Investor's capital account or for capital contributions by such Investor to the capital of the AlphaKeys Fund or by reason of any change in the federal or state income tax laws applicable to the AlphaKeys Fund or its Investors. EXCULPATION AND INDEMNIFICATION The AlphaKeys Fund Agreement provides that the Manager will not be liable to the AlphaKeys Fund for any acts or omissions by the Manager, and any member, director, officer or employee of the Manager, or any of its affiliates, for any error of judgment, mistake of law or any act or omission in connection with the performance of its duties under the AlphaKeys Fund Agreement, unless it shall be determined by final judicial decision on the merits, from which there is no further right to appeal, that such error, mistake or act or omission constitutes willful misfeasance, bad faith or gross negligence in connection with the conduct of the Manager's duties under the AlphaKeys Fund Agreement; provided, that under no circumstance will the Manager be liable for any indirect or consequential damages. The AlphaKeys Fund (and not any Indemnified Person), will (i) be responsible for any losses resulting from "trading" errors and similar human errors, absent willful misfeasance, bad faith or gross negligence in the performance of the obligations and duties of any Indemnified Person, or (ii) receive the gain from such errors, as the case may be. The AlphaKeys Fund will indemnify the Manager, and any member, director, officer or employee of the Manager, and any of their affiliates (each, an "Indemnified Person") for, and hold each Indemnified Person harmless against, any loss, liability or expense, including, without limit, reasonable counsel fees, incurred on the -18- CONFIDENTIAL UBSTERRAMAR00003880 EFTA00239212 FOR EXISTING INVESTOR USE ONLY part of an Indemnified Person arising out of or in connection with the Manager's acceptance of, or the performance of its duties and obligations under, the AlphaKeys Fund Agreement, as well as the costs and expenses of defending against any claim or liability arising out of or relating to the AlphaKeys Fund Agreement, absent willful misfeasance, bad faith or gross negligence of its obligations to the AlphaKeys Fund; provided, however, that nothing contained in the AlphaKeys Fund Agreement shall constitute a waiver or limitation of any rights which the AlphaKeys Fund may have under applicable securities or other laws. Expenses incurred by an Indemnified Person in defense or settlement of any claim that may be subject to a right of indemnification hereunder will be advanced by the AlphaKeys Fund to such Indemnified Person prior to the final disposition thereof upon receipt of an undertaking by or on behalf of such Indemnified Person to repay such amount if a court of competent jurisdiction determines in a non-appealable judgment that the Indemnified Person was not entitled to be indemnified hereunder. Any and all judgments against the AlphaKeys Fund or the Manager in respect of which the Manager is entitled to indemnification shall be satisfied from the AlphaKeys Fund assets, including capital contributions. If the Manager determines that it is appropriate or necessary to do so, the Manager may cause the AlphaKeys Fund to establish reasonable reserves, escrow accounts or similar accounts to fund its obligations. The Administrative Services Agreement and the Investor Application provide that the Administrator and its affiliates will receive certain exculpation and indemnification rights that are substantially similar to those afforded to the Manager pursuant to the terms of the AlphaKeys Fund Agreement. In addition, the AlphaKeys Fund indemnifies (i) the Placement Agent under certain circumstances, as set forth in the placement agreement between the AlphaKeys Fund and the Placement Agent (the "Placement Agreement"); and (ii) the Sub-Administrator under certain circumstances, as set forth in the administration agreement between the AlphaKeys Fund and the Sub-Administrator. AMENDMENT OF THE The AlphaKeys Fund Agreement may be amended with the ALPHAKEYS FuND approval of (i) the Administrator in its capacity as Manager and AGREEMENT (ii) a majority-in-interest of the Investors. An Investor will be deemed to consent to a proposed amendment if the Investor has received notice of such amendment and did not object thereto within a reasonable, and specifically disclosed, time period that is consistent with applicable law. Amendments increasing the -19- CONFIDENTIAL UBSTERRAMAR00003881 EFTA00239213 FOR EXISTING INVESTOR USE ONLY obligation of any Investor to make capital contributions to the AlphaKeys Fund or reducing any Investor's capital account (in each case other than as permitted in the AlphaKeys Fund Agreement) may not be made without the consent of any Investors adversely affected thereby or unless any such Investor has received notice of such amendment and, in the case of an Investor objecting to such amendment, a reasonable opportunity to withdraw its Class B Interests. Amendments that (i) increase Investor rights, including with respect to voting, or (ii) otherwise would not adversely affect Investors, will not require Investor consent. The terms of the Underlying Fund, including the terms described herein, are subject to change. In the event of any change to the terms of the Underlying Fund, as an investor in the Underlying Fund, the AlphaKeys Fund will be subject to such changed terms and will change its terms accordingly. TRANSFER REgrfficrioNs No person may become a substitute Investor without the written consent of the Administrator, which consent may be withheld for any reason in its sole and absolute discretion and is expected to be granted, if at all, only under extenuating circumstances, in connection with a transfer to an entity that does not result in a change of beneficial ownership. The Administrator may require such documentation as it shall determine in its sole discretion. SUMMARY OF TAXATION The AlphaKeys Fund intends to be treated as a partnership for federal income tax purposes and not as an association or a publicly traded partnership taxable as a corporation. Subject to certain exceptions discussed in "TAX ASPECTS" below, as a partnership, the AlphaKeys Fund generally should not be subject to federal income tax, and each Investor will be required to report on its own annual tax return its distributive share of the AlphaKeys Fund's taxable income or loss (which, assuming the Underlying Fund and the Underlying Master Fund are each properly treated as a partnership for federal income tax purposes and not as an association or a publicly traded partnership taxable as a corporation, will consist almost entirely of the AlphaKeys Fund's share of the taxable income or loss of the Underlying Fund, which, in turn, will consist primarily of the Underlying Fund's share of the taxable income or loss of the Underlying Master Fund). Each Investor must report its share of the AlphaKeys Fund's taxable income or loss, regardless of the extent to which, or whether, the AlphaKeys Fund or such Investor receives corresponding distributions for such taxable year, and such Investor, thus, may incur income tax liabilities in excess of any distributions to or from the AlphaKeys Fund. -20- CONFIDENTIAL UBSTERRAMAR00003882 EFTA00239214 FOR EXISTING INVESTOR USE ONLY An investment in the AlphaKeys Fund may have the effect of requiring the Investor to file income or other tax returns in jurisdictions in which the AlphaKeys Fund, the Underlying Fund or the Underlying Master Fund conducts investment activities. In order for the AlphaKeys Fund to complete its tax reporting requirements, the AlphaKeys Fund must, among other things, receive timely information from the Underlying Fund. If the AlphaKeys Fund incurs a withholding tax or other tax obligation with respect to the share of AlphaKeys Fund income allocable to any Investor in the Administrator's sole discretion, the amount of such obligation shall be debited against the Capital Account of such Investor, and any amounts then or thereafter distributable to such Investor may be reduced by the amount of such taxes. If the amount of such taxes is greater than any such distributable amounts, then such Investor shall be required to pay to the AlphaKeys Fund, upon demand, the amount of such excess. Investors should note that the AlphaKeys Fund is not generally obligated, and does not intend, to make distributions. Further, the AlphaKeys Fund is not required, and does not intend, to make distributions to an Investor to cover U.S. federal and state income taxes or other tax liabilities of such Investor with respect to its allocable share of AlphaKeys Fund income and gain. Accordingly, a non-withdrawing Investor will be required to use cash from other sources in order to pay tax on its taxable income that is attributable to its Class B Interests in the AlphaKeys Fund. See "TAX ASPECTS." TAX-EXEMPT ENTITIES The AlphaKeys Fund may borrow for any purpose and it is expected that the Underlying Fund or Underlying Master Fund will use leverage in connection with its trading activities. However, the AlphaKeys Fund only intends to borrow in limited circumstances, if any. The Underlying Fund Memorandum provides that a portion of the Underlying Fund's income may be treated as "unrelated business taxable income" ("UBTI"), and therefore the AlphaKeys Fund may generate UBTI as well (which will be significant if the Underlying Fund generates significant UBTI, as it has in previous years). Therefore, a tax-exempt Investor may incur income tax liability with respect to its share of the net profits from such leveraged transactions and other transactions to the extent they are treated as giving rise to UBTI. Tax-exempt investors (including individual retirement accounts ("IRAs"), to the extent investments through IRAs are accepted) may be required to make payments, including estimated payments, and file an income tax return for any taxable year in which they have UBTI. To file an income tax return, it may be necessary for the IRA or other tax-exempt -21- CONFIDENTIAL UBSTERRAMAR00003883 EFTA00239215 FOR EXISTING INVESTOR USE ONLY investor to obtain an Employer Identification Number. The AlphaKeys Fund will not accept subscriptions from charitable remainder trusts. See TAX ASPECTS. Investment in the AlphaKeys Fund by tax-exempt entities requires special consideration. Trustees or administrators of such entities are urged to review carefully the matters discussed in this Memorandum. ERISA CONSIDERATIONS The Administrator will use reasonable efforts to prevent the assets of the AlphaKeys Fund from being considered "plan assets" within the meaning of the Plan Assets Rules by limiting investment in each class of Interests of the AlphaKeys Fund by "Benefit Plan Investors" (as defined in the Plan Assets Rules and described in CERTAIN ERISA AND OTHER CONSIDERATIONS below) to a level that would not be considered "significant" (as defined in the Plan Assets Rules). Investors and persons making the decision to invest in the AlphaKeys Fund on their behalf will be required to identify an Investor's Benefit Plan status. See CERTAIN ERISA AND OTHER CONSIDERATIONS below. If at any time the Administrator determines that equity participation in any class of equity interests in the AlphaKeys Fund by Benefit Plan Investors would be considered "significant" (as defined in the Plan Assets Rules), the Administrator will be permitted to cause one or more Benefit Plan Investors to withdraw or reduce their Interests in the AlphaKeys Fund (including on a non-pro rata basis) to the extent necessary so that equity participation in such class of the AlphaKeys Fund by Benefit Plan Investors would not be considered "significant" (as defined in the Plan Assets Rules). See "CERTAIN ERISA AND OTHER CONSIDERATIONS below. Each prospective Investor subject to ERISA and/or Section 4975 of the United States Internal Revenue Code of 1986, as amended (the "Code") (or any other similar laws) is urged to consult its own legal and financial advisers as to the provisions of ERISA and Section 4975 of the Code (or such similar laws) applicable to an investment in the AlphaKeys Fund. REPORTS TO INVESTORS The AlphaKeys Fund will furnish to Investors as soon as practicable after the end of each taxable year such information as is necessary for Investors to complete federal and state income tax or information returns, along with any other tax information required by law. For the AlphaKeys Fund to complete its tax reporting requirements, it must receive information on a timely basis from the Underlying Fund. -22- CONFIDENTIAL UBSTERRAMAR00003884 EFTA00239216 FOR EXISTING INVESTOR USE ONLY It is expected that the AlphaKeys Fund's Schedule K-1s will most likely not be available prior to April 15 (and may be available significantly later than April 15) and, accordingly, Investors would need to obtain extensions for the filing of their individual tax returns at the federal, state and local level. The AlphaKeys Fund also intends to deliver to the Investors audited annual financial reports of the AlphaKeys Fund as soon as practicable after the conclusion of the AlphaKeys Fund's fiscal year; however, the AlphaKeys Fund may deliver unaudited annual financial reports in its sole discretion. If the AlphaKeys Fund does deliver audited reports, such annual audit can be completed only once the AlphaKeys Fund receives audited financial statements for the same fiscal year from the Underlying Fund. Consequently, it is possible that audited annual financial reports of the AlphaKeys Fund may be completed later than would otherwise be the case (up to 180 days after the fiscal year end or any other period permitted by law). Furthermore, if the Underlying Fund is unable to complete its audit (or if the Underlying Fund issues a qualified audit report), the AlphaKeys Fund will be unable to complete its own audit (or the AlphaKeys Fund will have to issue a qualified audit report). In addition, Investors may receive quarterly and other unaudited periodic reports regarding the AlphaKeys Fund's operations. To the extent that such reports reflect valuations of investments made by the Underlying Fund, such valuations will be based on information provided by the Underlying Fund, in its sole discretion. Such valuations are subjective in nature and may not conform to any particular valuation standard. Audited financial reports, as well as other financial reports of the AlphaKeys Fund, will be prepared in accordance with GAAP or another methodology determined appropriate by the Administrator, in its sole discretion. It is possible that the reporting method used to prepare annual reports may differ from the method used with respect to preparation of quarterly reports. The AlphaKeys Fund will adopt the accrual method for tax accounting purposes or any other accounting method permitted by the Code which the Administrator determines in its sole discretion is in the best interests of the AlphaKeys Fund. -23- CONFIDENTIAL UBSTERRAMAR00003885 EFTA00239217 FOR EXISTING INVESTOR USE ONLY RISK FACTORS AND CONFLICTS OF INTEREST An investment in the AlphaKeys Fund (and its investment in the Underlying Fund) is speculative and involves significant risks and potential conflicts of interest, certain of which are described in more detail in CERTAIN RISK FACTORS below and "Certain Risk Factors Relating to Millennium USA" and "Certain Risk Factors Relating to an Investment in the Master Partnership" in the Underlying Fund Memorandum. An investment in the AlphaKeys Fund entails special tax risks. See SUMMARY OF TERMS: "Summary of Taxation." The Underlying Fund is not registered as an investment company under the 1940 Act and, therefore, the AlphaKeys Fund is not able to avail itself of the protections of the 1940 Act with respect to the Underlying Fund. The investment activities of the Administrator, the Underlying Fund Manager and the portfolio managers it retains, and their respective affiliates, for their own accounts and the other accounts they manage, may give rise to conflicts of interest that may disadvantage the AlphaKeys Fund. The AlphaKeys Fund's operations may give rise to other conflicts of interest. See POTENTIAL CONFLICTS OF INTEREST and "Related-Party Transactions and Other Accounts; Conflicts" in Part Two of the Underlying Fund Memorandum. UBSFS acts as the principal placement agent for the AlphaKeys Fund (in such capacity, the Placement Agent) and will bear its own costs associated with its activities as Placement Agent. The Administrator and the Placement Agent intend to compensate the Placement Agent's or its affiliates' financial advisors, as well as third-party securities dealers and other industry professionals, for their ongoing servicing of clients with whom they have placed Interests in the AlphaKeys Fund and such compensation will be based upon a formula that takes into account the amount of client assets being serviced as well as the investment results attributable to the clients' assets in the AlphaKeys Fund. -24- CONFIDENTIAL UBSTERRAMAR00003886 EFTA00239218 FOR EXISTING INVESTOR USE ONLY II. CERTAIN RISK FACTORS Prospective Investors should carefully consider the risks involved in an investment in the AlphaKeys Fund and in the Underlying Fund, including, but not limited to, those discussed below. Prospective Investors should consult their own legal, tax and financial advisors as to all of these risks and an investment in the AlphaKeys Fund generally. Prospective Investors should refer to "Certain Risk Factors Relating to Millennium USA" and "Certain Risk Factors Relating to an Investment in the Master Partnership" in the Underlying Fund Memorandum for more detailed risks related to the AlphaKeys Fund's investment in the Underlying Fund. Risks Associated With the Structure of the AlphaKeys Fund Risk of a Single Investment. The investment performance of the AlphaKeys Fund will depend almost entirely on the performance of the Underlying Fund, over which neither the AlphaKeys Fund nor the Administrator will have any control. The AlphaKeys Fund will not hedge the risks of any of the Underlying Fund's investments and the Administrator does not intend to take any defensive actions in the event of declining performance or asset losses at the Underlying Fund. As a result, the AlphaKeys Fund's investment performance could be materially worse than would be the case if the AlphaKeys Fund could diversify investments among asset classes or hedge investment risks, or if the Underlying Fund itself were diversified among asset classes. Layering of Fees and Expenses. Pursuant to the Administrative Services Agreement, each Investor shall pay to the Administrator a monthly Administrative Fee as set forth above in SUMMARY OF TERMS: "Fees and Expenses." The Administrative Fee is in addition to and separate from the Underlying Fund Performance Allocation, other fees and expenses of the Underlying Fund borne by the AlphaKeys Fund due to its status as a limited partner of the Underlying Fund, and the retention of appropriate reserves therefor as determined in the sole discretion of the Administrator, and in addition to the fees and expenses paid to other third parties engaged on behalf of the AlphaKeys Fund. Therefore, Investors of the AlphaKeys Fund bear two levels of fees, and investments by Investors in the AlphaKeys Fund are not investments in the Underlying Fund on a dollar-for-dollar basis. The returns for an investor in the Underlying Fund will depend on the timing and actual amount invested in the Underlying Fund and the performance thereof, as well as the timing and amount of capital contributed to the Underlying Fund and held in Temporary Investments and the performance thereof. Investors meeting minimum investment criteria set forth in the Underlying Fund Memorandum may invest directly in the Underlying Fund without incurring fees and expenses of the AlphaKeys Fund; however, direct interests in the Underlying Fund are not offered pursuant to this Memorandum or by UBS. Different Classes of Interests may Yield Higher Levels of Compensation. The Administrator and/or its affiliates may receive higher levels of compensation in connection with investments by Investors in the Advisory Sub-Class Interests, on the one hand, and Investors in the Brokerage Sub-Class Interests, on the other hand. For example, the Administrator and/or its affiliates may receive greater compensation from the Underlying Fund in connection with Investors' indirect investments in the Underlying Fund, and/or directly from the Investor, depending upon whether an Investor is purchasing Advisory Sub-Class Interests or Brokerage Sub-Class Interests. Accordingly, UBSFS and/or its affiliates may have a greater incentive to recommend an -25- CONFIDENTIAL UBSTERRAMAR00003887 EFTA00239219 FOR EXISTING INVESTOR USE ONLY investment in the AlphaKeys Fund to an Investor who will invest in a class of Interests that will yield a relatively higher level of compensation. In addition, as clients of UBSFS, Investors who invest in the Advisory Sub-Class Interests have an arrangement with UBSFS to directly compensate UBSFS for UBSFS's advisory services (and may also pay account servicing fees to UBSFS). Depending upon each such Investor's assets under management, among other factors, certain of these Investors may compensate UBSFS at higher levels than other such Investors. Accordingly, the Administrator and/or its affiliates may receive higher levels of compensation in connection with investments by some Investors in the Advisory Sub-Class Interests than they receive in connection with investments by other Investors in the Advisory Sub-Class Interests. Moreover, in certain cases, if the Investor is purchasing Advisory Sub-Class Interests (and investing through a UBS advisory program), the Investor may be subject to higher fees overall with respect to its AlphaKeys Fund investment than an investor purchasing Brokerage Sub-Class Interests (and investing through a brokerage account), due to the additional compensation paid by such Investor to the Administrator and/or its affiliates in connection with the advisory program. Potential Adverse Effects of Being Treated as a Single Investor in the Underlying Fund. The AlphaKeys Fund will hold a single interest in the Underlying Fund, and each Investor's indirect investment in the Underlying Fund will not be represented by a separate interest in the Underlying Fund. Therefore, the Underlying Fund Performance Allocation made in respect of the AlphaKeys Fund's investment in the Underlying Fund is based on the performance of the AlphaKeys Fund's investment as a whole and not upon the performance of a particular Investor's indirect investment in the Underlying Fund. Similarly, withdrawal charges, if any, charged by the Underlying Fund and other withdrawal-related provisions may be based on the withdrawal by the AlphaKeys Fund as a whole and not upon the withdrawal by a particular Investor. An Investor may not be able to make a withdrawal from the AlphaKeys Fund at times and in the amounts that a direct investor in the Underlying Fund would have been able to withdraw. As a result, an Investor's partial or complete withdrawal from the AlphaKeys Fund may be significantly delayed compared to the partial or complete withdrawal of a direct investor in the Underlying Fund. Additional investments in the AlphaKeys Fund, by new or existing Investors, and withdrawals from the AlphaKeys Fund, which will generally require additional capital contributions or withdrawals, as the case may be, to or from the Underlying Fund, may in certain circumstances create distortions in the economic benefits and detriments of an investment in the AlphaKeys Fund for different Investors. An existing Investor's indirect share of a loss carryforward established with respect to a contribution by the AlphaKeys Fund into the Underlying Fund may effectively be diluted by new capital contributions to the AlphaKeys Fund made by other Investors or by a withdrawal from the Underlying Fund in connection with withdrawals from the AlphaKeys Fund by other Investors. Thus, an existing Investor's indirect share of such loss carryforward will effectively be diluted by any new capital contributions in the AlphaKeys Fund. See "Allocation of Gains and Losses" in Part One of the Underlying Fund Memorandum. In addition, the Underlying Fund may issue additional classes, sub-classes or series of Underlying Fund Interests to investors in the Underlying Fund in order to track participation in "new issues" as defined under the rules of FINRA. Investors should be aware that even if one or more Investors are eligible to invest in "new issues," the AlphaKeys Fund expects to invest in a class, sub-class or series of Underlying Fund Interests which does not participate in "new issues." -26- CONFIDENTIAL UBSTERRAMAR00003888 EFTA00239220 FOR EXISTING INVESTOR USE ONLY In the sole discretion of the Administrator, any withdrawal by an Investor may be subject to a charge, as the Administrator may reasonably require, in order to defray the costs and expenses of the AlphaKeys Fund in connection with such withdrawal, including but not limited to any amounts paid or accrued by the AlphaKeys Fund vis-a-vis its investment in the Underlying Fund. No Recourse Against the Underlying Fund. Investors of the AlphaKeys Fund will not be investors in the Underlying Fund, will have no direct interest in the Underlying Fund and will have no standing or recourse against the Underlying Fund or its affiliates, including the Underlying Fund Manager. No Rights to Vote or Participate. Except as otherwise described below, in the event that there is an issue to be voted upon by the investors of the Underlying Fund, the Administrator, in its discretion, and not the Investors, will determine how the AlphaKeys Fund's interest in the Underlying Fund will be voted. The Administrator will determine whether the AlphaKeys Fund should vote "yes", "no" or abstain from voting, in its sole discretion. In addition, Investors will have no opportunity to participate directly in the day-to-day operations of the AlphaKeys Fund. The AlphaKeys Fund expects to vote in accordance with the Administrator's recommendations on such matters unless at least a majority of the Investors duly object. In addition, the AlphaKeys Fund expects to refrain from voting on the selection, approval or disposition of any investment in any depository institution or other financial company to the extent it deems advisable to do so under the Bank Holding Company Act of 1956, as amended (the "BHC Act"). (See "REGULATORY CONSIDERATIONS-U.S. Bank Holding Company Act" below.). Side Letters and Other Agreements with Clients. The Administrator may enter into side letters or other similar agreements with a particular Investor without the approval of other Investors of the AlphaKeys Fund. Any such side letter would have the effect of establishing rights under, altering or supplementing the terms of the AlphaKeys Fund Agreement or the Investor Application with respect to such Investor in a manner different from, and possibly more favorable to, such Investor than those applicable to other Investors. Such rights or terms in any such side letter or similar agreement may include, without limitation, (i) different notice periods or minimum initial and continuing investment amounts, (ii) the agreement of the Administrator to extend certain information rights or additional diligence, valuation or reporting rights to such Investor, including, without limitation, to accommodate special regulatory or other circumstances of such Investor, (iii) waiver or modification of certain confidentiality obligations of such Investor, (iv) waiver or modification of certain fee obligations of such Investor, (v) consent of the Administrator to certain transfers by such Investor or other exercises by the Administrator of its discretionary authority under the AlphaKeys Fund Agreement in certain respects for the benefit of such Investor, (vi) restrictions on, or special rights of such Investor with respect to the activities of the Administrator and its affiliates, (vii) special rights of such Investor with respect to withdrawals, (viii) additional obligations and restrictions on the Administrator and the AlphaKeys Fund with respect to the structuring of investments in light of the legal, tax and regulatory considerations of such Investor or (ix) other rights or terms necessary in light of particular legal, regulatory, public policy or other characteristics of such Investor. The terms of any such side letter or similar agreement will not be disclosed to other Investors unless the Administrator, in its sole discretion, otherwise determines. Any rights or terms so established in a side letter with an Investor will govern solely with respect to such Investor. To the extent determined appropriate by the -27- CONFIDENTIAL UBSTERRAMAR00003889 EFTA00239221 FOR EXISTING INVESTOR USE ONLY AlphaKeys Fund, an Investor that enters into a side letter or other agreement may be issued a new class, sub-class, tranche or series (or sub-series) of Interests in the AlphaKeys Fund. Unregistered Status. None of the AlphaKeys Fund, the Underlying Master Fund nor the Underlying Fund is registered as an investment company under the Investment Company Act. The Investment Company Act provides certain protections to Investors and imposes certain restrictions on registered investment companies, none of which will be applicable to the AlphaKeys Fund. Termination of the AlphaKeys Fund's Interest in the Underlying Fund. The Underlying Fund may, among other things, force the withdrawal of the AlphaKeys Fund's interest in the Underlying Fund at any time. In addition, the Administrator may determine at any time, subject to the restrictions on withdrawals from the Underlying Fund, to terminate the AlphaKeys Fund's investment in the Underlying Fund. Repayment of Capital and Distributions. The investors and former investors of the Underlying Fund, including the AlphaKeys Fund, shall be liable for the repayment and discharge of all debts and obligations of the Underlying Fund attributable to any fiscal year (or relevant portion thereof) during which they are or were investors of the Underlying Fund to the extent of their respective interests in the Underlying Fund in the fiscal year (or relevant portion thereof) to which any such debts and obligations are attributable. In meeting this obligation, the AlphaKeys Fund may be required to return to the Underlying Fund any amounts actually received by it from the Underlying Fund during or after the fiscal year to which any debt or obligation is attributable. In addition, the AlphaKeys Fund may be required to pay to the Underlying Fund amounts that are required to be withheld by the Underlying Fund for tax purposes. The AlphaKeys Fund may require Investors to return to the AlphaKeys Fund all or part of any distribution by the AlphaKeys Fund to the Investors in order to satisfy all or any portion of the AlphaKeys Fund's indemnification obligations. Similarly, Investors may be required in certain circumstances to repay or pay such amounts to the AlphaKeys Fund if the AlphaKeys Fund is unable otherwise to meet its obligations or as otherwise provided in the AlphaKeys Fund Agreement. In addition, if at any time following a withdrawal of all or a portion of an Investor's capital account, the Administrator determines, in its sole discretion, that the amount paid to an Investor or former Investor pursuant to such withdrawal was incorrect for any reason, including but not limited to (i) a determination by the Administrator that the amount paid to the AlphaKeys Fund pursuant to a withdrawal from the Underlying Fund was incorrect and the Administrator determines, in its sole discretion, that such amount should be allocated to such Investor or former Investor, or (ii) a determination by the Administrator, that the calculation of Net Asset Value was incorrect at the time such amount was paid to such Investor or former Investor, the AlphaKeys Fund may pay to such Investor or former Investor any additional amount that the Administrator determines such Investor or former Investor should have been entitled to receive, or, in its sole discretion, seek payment from such Investor or former Investor of the amount of any excess payment that the Administrator determines such Investor or former Investor received, in each case without interest, although, in its sole discretion, the Administrator may determine for any reason or no reason that such action is not feasible or practicable. In the event that the AlphaKeys Fund elects not to seek the payment of such amounts from an Investor or former Investor or is unable to -28- CONFIDENTIAL UBSTERRAMAR00003890 EFTA00239222 FOR EXISTING INVESTOR USE ONLY collect such amounts from an Investor or former Investor, the Net Asset Value of the AlphaKeys Fund will be less than it would have been had such amounts been collected. Involuntary Liquidation of an Investor's Interest. The AlphaKeys Fund may terminate the interest of any Investor in the AlphaKeys Fund at any time upon written notice to such Investor, for any reason or for no reason at all. Reports. The AlphaKeys Fund intends to deliver to Investors (i) audited annual financial reports of the AlphaKeys Fund as soon as practicable after the conclusion of the AlphaKeys Fund's fiscal year and (ii) such information as is necessary for such Investors to complete federal and state income tax or information returns. However, the AlphaKeys Fund may deliver unaudited annual financial reports in its sole discretion. If the AlphaKeys Fund does deliver audited reports, such annual audit can be completed only once the AlphaKeys Fund receives audited financial statements for the same fiscal year from the Underlying Fund. Consequently, it is possible that audited annual financial reports of the AlphaKeys Fund may be completed later than would otherwise be the case (up to 180 days after the fiscal year end or any other period permitted by law). For the AlphaKeys Fund to complete its tax reporting requirements, it must receive information on a timely basis from the Underlying Fund. If the Underlying Fund is unable to complete its audit (or if the Underlying Fund issues a qualified audit report), the AlphaKeys Fund will be unable to complete its own audit (or the AlphaKeys Fund will have to issue a qualified audit report). It is expected that the AlphaKeys Fund will most likely be unable to provide tax information to Investors without significant delays and Investors may need to seek extensions on the time to file their tax returns at the federal, state and local level. Quarterly reports from the Administrator regarding the AlphaKeys Fund's operations during such period also may be sent to Investors. Classes of Interests in both the Underlying Fund and AlphaKeys Fund, respectively, are Not Separate Legal Entities. Although Investors of the Underlying Fund, including the AlphaKeys Fund and certain Other AlphaKeys Millennium Funds, may hold separate classes of interests of the Underlying Fund, the Underlying Fund is a single legal entity and creditors of the Underlying Fund may enforce claims against any and all assets of the Underlying Fund. Thus, any and all assets of the Underlying Fund may be available to meet all liabilities of the Underlying Fund, including liabilities resulting from new issue investments, regardless of whether any particular liability is attributable to only one or less than all classes or series of interests (e.g., currency hedges). As an investor in the Underlying Fund, the AlphaKeys Fund may be subject to these same risks with respect to the Underlying Fund Interests. Similarly, although Investors may hold separate classes, sub-classes or series of Interests, the AlphaKeys Fund is a single legal entity and its creditors may enforce claims against any and all assets of the AlphaKeys Fund. Thus, regardless of whether an Investor holds Class A or Class B Interests, or Brokerage Sub-Class or Advisory Sub-Class Interests (as applicable), any and all assets of the AlphaKeys Fund may be available to meet all liabilities of the AlphaKeys Fund, regardless of whether any particular liability is attributable to only one or less than all classes or sub-classes of Interests. Idle Funds. The AlphaKeys Fund may retain a portion of the subscription proceeds that will not be invested in the Underlying Fund, to meet certain of its operating expenses. -29- CONFIDENTIAL UBSTERRAMAR00003891 EFTA00239223 FOR EXISTING INVESTOR USE ONLY Reserves. The AlphaKeys Fund may establish reserves for the payment of estimated, projected or accrued expenses (including the Administrative Fee), liabilities and contingencies. Such amounts set aside in a reserve will not be invested in the Underlying Fund (or repaid to Investors that have otherwise withdrawn from the AlphaKeys Fund), and accordingly, will not participate in the returns (positive or negative) of the Underlying Fund. Limited Operating History. The AlphaKeys Fund has only a limited operating history upon which Investors can evaluate the performance of the AlphaKeys Fund, although the Underlying Master Fund has a performance track record that begins in 1990. Although the Administrator will receive information from the Underlying Fund regarding its historical performance and investment strategy, the Administrator may not be able to independently verify and has not independently verified this information. The performance of the AlphaKeys Fund or the Underlying Fund cannot be relied upon as an indicator of their future performance. Liquidity Risks. Class B Interests in the AlphaKeys Fund will not be traded on any securities exchange or other market and are subject to substantial restrictions on transfer. The ability of the AlphaKeys Fund to honor withdrawal requests may be dependent upon the AlphaKeys Fund's ability to make withdrawals from the Underlying Fund, which may be restricted under the Underlying Fund Documents, delayed or suspended altogether. Furthermore, unlike other interests in the Underlying Fund (including the interests in which the Class A Interests are invested), the Underlying Fund's interests in which the Class B Interests are invested have no special withdrawal rights in the event of the death, disability, adjudication of incompetency, bankruptcy, insolvency or withdrawal from the general partner of the Underlying Master Fund of Israel A. Englander (a "Trigger Event"), or the occurrence of any other key person event. Please see "Other Interests; Limited Liquidity" below for additional discussion regarding differences in withdrawal terms between Class B Interests and Other Interests. In the sole discretion of the Administrator, any withdrawal by an Investor may be subject to a charge, as the Administrator may reasonably require, in order to defray the costs and expenses of the AlphaKeys Fund in connection with such withdrawal, including without limitation, any amounts paid or accrued by the AlphaKeys Fund vis-a-vis its investment in the Underlying Fund, withdrawal or similar charges imposed by the Underlying Fund Manager, if any (which may be substantial). In addition, the Administrator, in its sole discretion, may permit an Investor to make withdrawals at different times, and upon different terms, than those specified in "SUMMARY OF TERMS — Withdrawals". The Administrator may also, in its sole discretion, permit an Investor to withdraw from the AlphaKeys Fund, or cause the AlphaKeys Fund, upon an Investor's request, to repurchase, some or all of such Investor's Class B Interests at a discount to the Net Asset Value of the withdrawn or repurchased Class B Interests, at a time when such Investor is not otherwise entitled to withdraw from the AlphaKeys Fund. In addition, the Administrator may determine, in its sole discretion, to make such an offer to one or more Investors and not to the other Investors, and may do so without notice to the other Investors. No Assurance of Investment Return. The AlphaKeys Fund is intended for long-term Investors who can accept the significant risks associated with investing in illiquid securities. There can be no assurance that either of the AlphaKeys Fund or the Underlying Fund will achieve its investment objective. Investors should be aware that prior performance of the Underlying Fund is not necessarily indicative of future results. The possibility of partial or total loss of AlphaKeys Fund capital will exist, and prospective Investors should not subscribe unless they can readily bear -30- CONFIDENTIAL UBSTERRAMAR00003892 EFTA00239224 FOR EXISTING INVESTOR USE ONLY the consequences of such loss. Accordingly, an investment in the AlphaKeys Fund should only be considered by persons who can afford a loss of their entire investment. Withdrawal Risks. With respect to withdrawal requests, Investors must notify the AlphaKeys Fund upon the notice period set forth in "SUMMARY OF TERMS — Withdrawals" or upon such other notice period, which may be longer, as may be notified to the Investors, in the Manager's sole discretion. An Investor that elects to withdraw all or a portion of such Investor's capital account will not know the amount it will receive until after the election to withdraw has been made. It is possible that during the time period between the withdrawal notice date and the Withdrawal Date, general economic and market conditions, or specific events affecting the AlphaKeys Fund, could cause a decline in the value of Class B Interests. In addition, an Investor's partial or complete withdrawal from the AlphaKeys Fund could be limited or significantly delayed due to the operation of the Class B Gate, which would restrain the ability of the Investor to withdraw its capital. Further, the value of such Investor's investment may decline prior to the date on which the Investor's withdrawal is complete. As a result, the Investor may bear or be subject to additional or increased proportionate shares of fees, costs, expenses and liabilities that the Investor would not otherwise bear if not for the operation of the Class B Gate. See also "CERTAIN RISK FACTORS—Other Interests; Limited Liquidity" below. The foregoing is also separately applicable with respect to the AlphaKeys Fund's investment in, and potential withdrawal from, the Underlying Fund. Other Interests: Limited Liquidity. Interests of classes of the AlphaKeys Fund, including Class A Interests, and interests of classes of Other AlphaKeys Millennium Funds (collectively, "Other Interests") generally are significantly more liquid than the Class B Interests. Other Interests are generally able to be withdrawn entirely on an annual basis or for a greater percentage of a holder's interests on a quarterly basis. The exercise of such special withdrawal right by the AlphaKeys Fund on behalf of holders of Other Interests will not result in, or be deemed to create, any special withdrawal right for the holders of the Class B Interests (in their capacity as such). Upon the occurrence of a Trigger Event at the Underlying Fund, holders of Class B Interests will not have any right to withdraw any Underlying Interests in connection therewith, while holders of Other Interests may have such right. The ability of holders of Other Interests to withdraw such Other Interests when the holders of the Class B Interests are restricted from doing so may materially and adversely impact the Class B Interests, including without limitation, as a result of the holders of the Class B Interests bearing a larger portion of the expenses incurred by or on behalf of the AlphaKeys Fund. Additionally, Other Interests with more favorable liquidity terms may be offered to clients of UBSFS from time to time, simultaneously with or at different times than the Class B Interests, to the extent such Other Interests become available. Generally, the availability of the Other Interests is limited and may depend upon withdrawals of such Other Interests from the AlphaKeys Fund or from the Other AlphaKeys Millennium Funds. As a result, there is no guarantee that any Other Interests would be available to any Investor, and the Investor is likely to only have access to the Class B Interests, which provide liquidity terms that are significantly less favorable than those applicable to the Other Interests. -31- CONFIDENTIAL UBSTERRAMAR00003893 EFTA00239225 FOR EXISTING INVESTOR USE ONLY In addition to the Other Interests currently in existence, the Administrator may in the future establish additional classes or series of shares or interests that provide holders of those shares or interests with liquidity terms that are more favorable than those applicable to the Class B Interests. Forward-Looking Statements. This Memorandum and the Underlying Fund Memorandum may contain forward-looking statements. These forward-looking statements reflect the Administrator's or the Underlying Fund Manager's view with respect to future events. Actual events could differ materially from those in the forward-looking statements as a result of factors beyond the Administrator's or the Underlying Fund Manager's control. Prospective Investors are cautioned not to place undue reliance on such statements. Valuation Risk. The assets of the AlphaKeys Fund will be valued in accordance with GAAP or another methodology determined appropriate by the Administrator in its sole discretion. Based on current GAAP requirements, the Administrator expects to rely on valuation information provided by the Underlying Fund (which will be unaudited, except for information as of the date of the Underlying Fund's annual audit), which if inaccurate or incomplete could adversely affect the Administrator's ability to determine Net Asset Value and, accordingly, value the Class B Interests accurately. In certain circumstances, the Administrator may be required by GAAP to make adjustments to the valuation information provided by the Underlying Fund. Absent bad faith or manifest error, valuation determinations made by the Administrator will be conclusive and binding. Legal and Regulatory Risks Relating to Investment Strategy. Legal, tax and regulatory changes could occur during the term of the AlphaKeys Fund that may adversely affect the AlphaKeys Fund and/or the Underlying Fund. New (or revised) laws or regulations may be imposed by the U.S. Commodity Futures Trading Commission (the "CFTC"), the SEC, the Board of Governors of the Federal Reserve System (the "Federal Reserve") or other banking regulators, other U.S. or non-U.S. governmental regulatory authorities or self-regulatory organizations, including entirely new entities, that supervise the financial markets that could adversely affect the AlphaKeys Fund or the Underlying Fund. In particular, these agencies are empowered to promulgate a variety of new rules pursuant to recently enacted financial reform legislation in the United States. The AlphaKeys Fund and the Underlying Fund may also be adversely affected by changes in the enforcement or interpretation of existing statutes and rules by these governmental regulatory authorities or self-regulatory organizations. The regulatory environment for private funds is evolving, and changes in the regulation of private funds may adversely affect the value of the investments held by the AlphaKeys Fund and/or the Underlying Fund and the ability of the AlphaKeys Fund and/or the Underlying Fund to execute its investment strategy. The CFTC, the SEC, the Federal Deposit Insurance Corporation, other regulators and self-regulatory organizations and exchanges are authorized to take extraordinary actions in the event of market emergencies. The regulation of private funds and financial institutions is an evolving area of law and is subject to modification by government and judicial action. Section 13 of the BHC Act and related regulations (known as the "Volcker Rule") restrict the ability of a banking entity, such as UBS, to sponsor, acquire any interest in or engage in transactions with a fund, subject to certain exceptions. The Volcker Rule could cause disruptions and otherwise negatively impact any funds whose ownership, counterparties and/or service provider arrangements currently include a -32- CONFIDENTIAL UBSTERRAMAR00003894 EFTA00239226 FOR EXISTING INVESTOR USE ONLY banking entity, including the AlphaKeys Fund and any funds in which the AlphaKeys Fund may invest. The Administrator may in the future, in its sole discretion and without notice to the Investors, restructure the AlphaKeys Fund or the Administrator in order to comply with laws or regulations (including the BHC Act), or to reduce or eliminate the impact or applicability of any bank regulatory restrictions to which the Administrator or the AlphaKeys Fund: (i) are subject, or (ii) will be subject upon engaging in a new business transaction. The AlphaKeys Fund may also transfer any portion of its investment in the Underlying Fund to an investment vehicle affiliated with the Underlying Fund (including, without limitation, the Underlying Master Fund or any parallel fund established for the AlphaKeys Fund) as permitted by the Underlying Fund, in the Administrator's sole discretion and without prior notice or consent. It is impossible to determine the extent of the impact of any new laws, regulations or initiatives that may be proposed, or whether any of the proposals will become law. Compliance with any new laws or regulations could be more difficult and expensive and may affect the manner in which the AlphaKeys Fund and/or the Underlying Fund conducts business. Furthermore, new laws or regulations may subject the AlphaKeys Fund, the Underlying Fund or some or all of the Investors to increased taxes or other costs. Tax Risks. The AlphaKeys Fund expects to be treated as a partnership for federal income tax purposes and not as an association or a publicly traded partnership taxable as a corporation. It is possible that the AlphaKeys Fund may not be able to comply with any safe harbor requirements of or an exception to the publicly traded partnership rules in any given year, in which case it is possible that the AlphaKeys Fund may be treated as a publicly traded partnership. If it were determined that the AlphaKeys Fund should be treated as an association or publicly traded partnership taxable as a corporation, the taxable income of the AlphaKeys Fund would be subject to corporate income tax and distributions from the AlphaKeys Fund would be treated as dividends to the extent of the AlphaKeys Fund's earnings and profits. Each of the Underlying Fund and any applicable investment vehicles through which it may invest intend to operate as a partnership for U.S. federal income tax purposes and not as an association or a publicly traded partnership taxable as a corporation. If it were determined that either the Underlying Fund or any applicable investment vehicles through which it may invest should be treated as an association or publicly traded partnership taxable as a corporation, material adverse income tax consequences would result to Investors in the AlphaKeys Fund. The AlphaKeys Fund may, from time to time, report tax positions that may be subject to challenge by the Internal Revenue Service (the "IRS"). If the IRS challenges such a position and is successful, there may be substantial retroactive taxes, plus interest and possibly penalties. Changes or modifications in existing judicial decisions or in the current positions of the IRS, either taken administratively or as contained in published revenue rulings and revenue procedures, and the passage of new legislation (any of which may apply with retroactive effect), could substantially reduce, eliminate or modify the tax treatment outlined in this Memorandum. If the Underlying Fund or the Underlying Master Fund conducts business or other activities in a given state or local jurisdiction, then an Investor that is not a resident of that jurisdiction may nevertheless be subject to tax in that jurisdiction on its share of the AlphaKeys Fund's income attributable to those activities and may be required to file income tax or other returns in that -33- CONFIDENTIAL UBSTERRAMAR00003895 EFTA00239227 FOR EXISTING INVESTOR USE ONLY jurisdiction. Investors may also be subject to state and/or local franchise, withholding, capital gain or other tax payment obligations and filing requirements in those jurisdictions where the AlphaKeys Fund is regarded as doing business or earning income (directly or indirectly). See "Certain Tax Matters Relating to an Investment in Millennium USA" and "Certain Tax Matters Relating to the Master Partnership" in Part One of the Underlying Fund Memorandum and "TAX ASPECTS" in this Memorandum. Bank Holding Company Act Considerations. The Administrator is, for purposes of the BHC Act, a subsidiary of UBS, which is subject to supervision and regulation by the Federal Reserve. It is not expected that UBS will be deemed to control the AlphaKeys Fund for purposes of the BHC Act. In discharging its responsibilities as the Administrator, the Administrator and the AlphaKeys Fund will observe limitations arising from the BHC Act applicable to the Administrator or the AlphaKeys Fund. To the extent it deems it advisable under the BHC Act, the Administrator also intends to seek the approval from the Investors by negative consent with respect to any vote presented by the Underlying Fund if the AlphaKeys Fund holds an interest in the Underlying Fund of more than 24.99% of the total capital contributions to the Underlying Fund or where such consent or waiver pertains to the selection, approval or disposition of portfolio company investments (other than investments in depository institutions or other financial companies where the lower threshold, noted above, would apply). The AlphaKeys Fund expects to vote in accordance with the Administrator's recommendations on such matters unless at least a majority of the Investors duly object. If the AlphaKeys Fund holds an interest in the Underlying Fund of more than 24.99% of the total capital contributions to the Underlying Fund, the AlphaKeys Fund intends to limit its participation in any depository institution or other financial company to not more than 9.99% of any class of voting securities thereof. The Administrator intends to request that the Underlying Fund limit the AlphaKeys Fund's ownership interest in the Underlying Fund to not more than one-third of the total capital contributions of the Underlying Fund. In addition, the AlphaKeys Fund expects to refrain from voting on the selection, approval or disposition of any investment in any depository institution or other financial company to the extent it deems advisable to do so under the BHC Act. The Administrator reserves the right to rely on any regulatory or statutory provisions and available exemptions under the BHC Act, and to take all reasonable steps deemed necessary, advisable or appropriate in its sole discretion for the AlphaKeys Fund or the Administrator to comply with such regulatory or statutory provisions. (See "REGULATORY CONSIDERATIONS—U.S. Bank Holding Company Act" below.) In the event of any change to the BHC Act, or applicable regulations and interpretations under the BHC Act, the Administrator may, without the consent of any Investor, take such additional steps as it deems necessary, advisable or appropriate in its sole discretion for the AlphaKeys Fund or the Administrator to comply with the BHC Act, including restructuring the AlphaKeys Fund or the Administrator. There can be no assurance that the bank regulatory requirements applicable to UBS will not likewise apply to the AlphaKeys Fund and therefore have a material adverse effect on the AlphaKeys Fund and its operations. For example, such regulations could require the AlphaKeys Fund to dispose of its investment in the Underlying Fund or the dissolution of the AlphaKeys Fund earlier than anticipated by the Administrator, potentially having a negative impact on the returns of the AlphaKeys Fund. (See "REGULATORY CONSIDERATIONS—U.S. Bank Holding Company Act" below.) -34- CONFIDENTIAL UBSTERRAMAR00003896 EFTA00239228 FOR EXISTING INVESTOR USE ONLY The foregoing risks do not purport to be a complete explanation of aU the risks involved in acquiring an interest in the AlphaKeys Fund or in the Underlying Fund. Potential Investors should read this entire document as well as the AlphaKeys Fund Agreement before making a determination whether to invest in the AlphaKeys Fund. CONFIDENTIAL UBSTERRAMAR00003897 EFTA00239229 FOR EXISTING INVESTOR USE ONLY III. POTENTIAL CONFLICTS OF INTEREST Prospective Investors should carefidly consider the potential conflicts of interest involved in an investment in the AlphaKeys Fund and in the Underlying Fund, including, but not limited to, those discussed below. Prospective Investors should refer to "Related-Party Transactions and Other Accounts; Conflicts" in the Underlying Fund Memorandum for more detailed conflicts of interest related to an investment in the Underlying Fund. The Administrator and its affiliates manage the assets of unregistered investment companies and individual accounts (collectively, "AlphaKeys Clients"). The AlphaKeys Fund has no interest in these activities. In addition, the Administrator, its affiliates, and any of their respective officers, directors, partners, members or employees, may invest for their own accounts in various investment opportunities, including in investment partnerships, private investment companies or other investment vehicles in which the AlphaKeys Fund will have no interest. The Administrator, the Placement Agent and their affiliates have a conflict of interest in that they benefit from the sale of Class B Interests due to the receipt of the Administrative Fee, the Placement Fee and other forms of compensation in connection with their relationship with the AlphaKeys Fund. See "Application for Interests" below. As a result of the various payments to UBS Fund Advisor, L.L.C., UBSFS and their respective affiliates the amount of compensation that UBS Americas' entities receive with respect to the sale of affiliated or proprietary hedge funds, funds of funds, private equity funds and real estate funds (including from the sale of Class B Interests in the AlphaKeys Fund) may be greater than the amount payable to the organization as a whole from the sale of unaffiliated fund investments. In addition, UBS AG and its affiliates ultimately benefit as a whole from the aforementioned sale of such affiliated or proprietary funds due to incentive and/or management fees paid to the managers of such affiliated or proprietary funds because they are subsidiaries or affiliates of UBS AG. In addition, while there may be other funds with better performance results and/or more preferential terms than those offered to the clients of UBSFS, UBSFS and its affiliates can only direct clients to invest in funds (including the AlphaKeys Fund) on the UBS platform. The Administrator provides all of its administrative and advisory services through the efforts of employees of its affiliate, UBSFS, which is also a registered investment adviser. All of the Administrator's officers and other personnel are employees of UBSFS. The Administrator does not pay overhead or payroll directly. All of the Administrator's officers and other personnel are paid fully by UBSFS. As a result, a reallocation is made internally from the Administrator to UBSFS to reimburse it for various expenses that UBSFS covers on behalf of the Administrator. The officers or employees of the Administrator will be engaged in substantial activities other than on behalf of the AlphaKeys Fund and may have conflicts of interest in allocating their time and activity among the AlphaKeys Fund and AlphaKeys Clients. In addition, the Administrator and/or its affiliates may now or in the future serve as administrator or placement agent to one or more similar funds managed by the Underlying Fund Manager or an affiliate or successor thereof. As a result, the Administrator may have conflicting interests with respect to such service. The affiliates of the Administrator may invest (or cause their clients to invest) in one or more funds managed by the Underlying Fund Manager, and thereby affect the AlphaKeys Fund's ability to invest into the Underlying Fund (for example, where the size of the aggregate investment by the affiliates and the Administrator is limited). The Administrator and their officers and employees -36- CONFIDENTIAL UBSTERRAMAR00003898 EFTA00239230 FOR EXISTING INVESTOR USE ONLY will devote so much of their time to the affairs of the AlphaKeys Fund as in their judgment is necessary and appropriate. The Administrator may appoint a committee or an independent representative (the "Conflicts Review Committee") to seek the approval in connection with any transactions that require approval under the Advisers Act, including Section 206(3) thereunder, or otherwise. To the extent permitted by law, the approval of the Conflicts Review Committee will be binding upon the AlphaKeys Fund and each of the Investors. The Conflicts Review Committee will not participate in the management or control of the AlphaKeys Fund. The AlphaKeys Fund may pay the members of the Conflicts Review Committee an initial fee and a fee for each review sought by the Administrator. The members of the Conflicts Review Committee will be treated as if they were the Administrator for indemnification purposes. UBSFS acts as the principal placement agent for the AlphaKeys Fund (in such capacity, the Placement Agent) and will bear its own costs associated with its activities as Placement Agent. The Administrator and the Placement Agent intend to compensate the Placement Agent's or its affiliates' financial advisors, as well as third-party securities dealers and other industry professionals, for their ongoing servicing of clients with whom they have placed Interests in the AlphaKeys Fund and such compensation will be based upon a formula that takes into account the amount of client assets being serviced as well as the investment results attributable to the clients' assets in the AlphaKeys Fund. Such compensation will be payable out of the Administrative Fee. Additionally, these entities, at their discretion, may charge Investors a Placement Fee based on the Investor's capital contribution (including any additional capital contributions made by an Investor). The Administrator's ability to defer, waive or reduce the administrative fee charged to other AlphaKeys Clients for similar services as those being provided herein may result in the AlphaKeys Fund and its Investors paying a higher Administrative Fee for the same set of services as those being provided to other AlphaKeys Clients at a lower fee or free of charge. In addition, the Administrator may, in its sole and absolute discretion, defer, waive or reduce the Administrative Fee with respect to an Investor that makes a substantial capital contribution to the AlphaKeys Fund or that makes investments across multiple funds administered by the Administrator and its affiliates. While there may be other funds with better performance results and/or more preferential terms, UBSFS and the financial advisors generally will only direct clients to invest in funds that are on the UBS platform. In approving funds for inclusion on the UBS platform, the Administrator and its affiliates have a conflict of interest in that they generally give priority to a fund which will provide compensation to the Administrator and its affiliates. In addition, the levels of compensation may vary among the funds on the UBS platform (including among the AlphaKeys Fund and other funds on the platform managed by UBSFS), and, accordingly, the Administrator and its affiliates may have a greater incentive to direct such clients to a fund on the UBS platform (and, in certain cases, particular share classes) that yields higher levels of compensation for the Administrator and/or its affiliates. Furthermore, while funds on the UBS platform (including the Underlying Fund) may offer multiple classes of interests, such funds (together with the Administrator or its affiliates) will determine which classes of interests are available for -37- CONFIDENTIAL UBSTERRAMAR00003899 EFTA00239231 FOR EXISTING INVESTOR USE ONLY investment by the clients of the Administrator and its affiliates, which may be the classes of interests paying higher levels of compensation to the Administrator or its affiliates. The Placement Agent and its affiliates may provide brokerage, prime brokerage, investment banking and other financial or advisory services from time to time to one or more accounts or entities managed by the Underlying Fund Manager or its affiliates, for which services the Placement Agent or such affiliates may receive compensation (all accounts other than the AlphaKeys Fund managed by the Underlying Fund Manager or its affiliates, excluding the Underlying Fund, are referred to collectively as the "Millennium Accounts"). The Placement Agent or its affiliates may have an interest in an account or investment vehicle managed by, or enter into relationships with, the Underlying Fund Manager or its affiliates on terms different, and potentially more favorable, than an Interest in the AlphaKeys Fund. In addition, the Underlying Fund Manager may receive research products and services in connection with the brokerage services that the Placement Agent and its affiliates may provide from time to time to the Underlying Fund or one or more Underlying Fund Accounts or to the AlphaKeys Fund. The Administrator, its affiliates or AlphaKeys Clients may have an interest in an account or investment vehicle managed by, or enter into relationships with, the Underlying Fund Manager or its affiliates on terms different, and potentially more favorable, than a Class B Interest in the AlphaKeys Fund. The Underlying Fund also may purchase investments from affiliates of the Administrator, which could create a potential conflict of interest, although the Administrator will at all times endeavor to act in the best interest of the AlphaKeys Fund. In addition, the Underlying Fund Manager may receive research products and services in connection with the brokerage services that the Administrator and its affiliates may provide from time to time to the Underlying Fund or one or more Millennium Accounts or to the AlphaKeys Fund. In addition, the Administrator intends to retain a third party technology service provider ("Service Provider") to provide an online portal through which the AlphaKeys Fund investors will receive certain reporting and monitoring services. The AlphaKeys Fund will bear its share of any ongoing costs, fees and expenses related to such online portal. The Administrator, UBSFS or an affiliate may own a non-controlling interest in such Service Provider. To the extent the Administrator, UBSFS or an affiliate owns such interest in the Service Provider, it will financially benefit from the fees the AlphaKeys Fund pays to the Service Provider. In addition, certain affiliates of the Administrator may act as a lender to the Underlying Fund, the portfolio companies in which the Underlying Fund invests or in connection with other transactions in which the Underlying Fund is involved. In cases where the Underlying Fund is the borrower, such UBS affiliate acting as a lender will have the ability to call capital from the Underlying Fund, which in turn may call capital from the AlphaKeys Fund. In such cases where the Underlying Fund's portfolio companies are the borrowers, such portfolio companies may convey a security interest in certain assets (including assets of the Underlying Fund), to such affiliate acting as a lender to a portfolio company of the Underlying Fund and such affiliate may have a liquidation preference over the Underlying Fund or may have interests that are divergent from those of the Underlying Fund. In addition, affiliates of the Administrator may purchase or sell assets to or from the Underlying Fund. The Administrator and/or its affiliates may receive higher levels of compensation, from the Underlying Fund in connection with the Investors' indirect investments in the Underlying Fund, -38- CONFIDENTIAL UBSTERRAMAR00003900 EFTA00239232 FOR EXISTING INVESTOR USE ONLY and/or directly from the Investor, depending upon whether an Investor is purchasing Advisory Sub-Class Interests or Brokerage Sub-Class Interests. Accordingly, UBSFS and its affiliates may have a greater incentive to direct clients to the AlphaKeys Fund who will invest in a class of Interests that will yield a relatively higher level of compensation. In addition, the Administrator and/or its affiliates may receive higher levels of compensation in connection with investments by some Investors in the Advisory Sub-Class Interests than they receive in connection with investments by other Investors in the Advisory Sub-Class Interests. Moreover, in certain cases, if the Investor is purchasing Advisory Sub-Class Interests (and investing through a UBS advisory program), the Investor may be subject to higher fees overall with respect to its AlphaKeys Fund investment than an investor purchasing Brokerage Sub-Class Interests (and investing through a brokerage account), due to the additional compensation paid by such Investor to the Administrator and/or its affiliates in connection with the advisory program. See also "CERTAIN RISK FACTORS—Different Classes of Interests may Yield Higher Levels of Compensation" above. CONFIDENTIAL UBSTERRAMAR00003901 EFTA00239233 FOR EXISTING INVESTOR USE ONLY IV. BROKERAGE Each of the AlphaKeys Fund and the Underlying Fund is directly responsible for the execution of its portfolio investment transactions and the allocation of brokerage. Transactions on U.S. stock exchanges and on some non-U.S. stock exchanges involve the payment of negotiated brokerage commissions. On the great majority of non-U.S. stock exchanges, commissions are fixed. No stated commission is generally applicable to securities traded in over-the-counter markets, but the prices of those securities may include undisclosed commissions or mark-ups. The AlphaKeys Fund will comply with Section 28(e) of the 1934 Act. However, the AlphaKeys Fund may not pay the lowest available commissions or mark-ups or mark-downs on securities transactions. Moreover, neither the Administrator or the AlphaKeys Fund have any responsibility to monitor the Underlying Fund's policy regarding, or its compliance with, its duty of best execution, including, if applicable, its compliance or non-compliance with the safe harbor provided by Section 28(e). See "The Master Partnership's Investment Program and Description: Brokerage" in Part Two of the Underlying Fund Memorandum for a description of the brokerage policies and selection by the Underlying Fund. -40- CONFIDENTIAL UBSTERRAMAR00003902 EFTA00239234 FOR EXISTING INVESTOR USE ONLY V. APPLICATION FOR INTERESTS Application Terms Both initial and additional applications for Class B Interests may be accepted from eligible investors (as described below) at such times as the Administrator may determine on the terms set forth below. The AlphaKeys Fund may, in its discretion, suspend the offering of Class B Interests at any time or permit applications on a more frequent basis. The AlphaKeys Fund, in its sole and absolute discretion, reserves the right to reject, in whole or in part, any application for Class B Interests in the AlphaKeys Fund. Capital contributions made prior to any closing, including the initial closing, the timing of which will be determined in the sole discretion of the Administrator, may be held in an escrow or similar account pending such closing at the discretion of the Administrator. It is possible that such account will not earn interest. After the initial closing, initial applications and additional capital contributions generally will be accepted monthly. Generally, the minimum required initial contribution to the capital of the AlphaKeys Fund from each Investor is $250,000, which minimum may be waived by the Administrator in its sole discretion. Investors may make additional capital contributions in amounts not less than $50,000, unless otherwise determined by the Administrator, in its sole discretion. The AlphaKeys Fund, in its sole discretion, may vary the investment minimums from time to time. Brokerage Sub-Class Investors will be charged by the Placement Agent a Placement Fee of 2% of the Investor's capital contribution (including any additional capital contributions made by an Investor) in the AlphaKeys Fund (subject to waiver by the Placement Agent in limited circumstances). Advisory Sub-Class Investors will not be charged a Placement Fee. Contributions to the capital of the AlphaKeys Fund will be payable in cash. The AlphaKeys Fund will not accept subscriptions from charitable remainder trusts. See TAX ASPECTS. Each new Investor will be obligated to agree to be bound by all of the terms of the AlphaKeys Fund Agreement. Each potential Investor also will be obligated to represent and warrant in the Investor Application (defined below) that, among other things, such Investor is purchasing a Class B Interest for its own account, and not with a view to the distribution, assignment, transfer or other disposition of such Class B Interest. Classes. Sub-Classes. Tranches and Series of Interests The AlphaKeys Fund may create additional classes, sub-classes, tranches or series of Interests, or rename or redesignate any issued class, sub-class, tranche or series, without providing prior notice to, or receiving consent from, Investors. Such classes, sub-classes, tranches or series may differ in terms, including, but not limited to, the amount and/or timing of fees charged (and may provide for no fees), minimum subscription amounts and withdrawal rights. The terms of any new classes, sub-classes, tranches or series will be determined by the Administrator. Eligible Investors Each prospective Investor will be required to certify that the Class B Interests being purchased are being acquired directly or indirectly for the account of an "accredited investor" as defined in -41- CONFIDENTIAL UBSTERRAMAR00003903 EFTA00239235 FOR EXISTING INVESTOR USE ONLY Regulation D promulgated under the 1933 Act (each, an "Accredited Investor") and that such Investor, as well as each of the Investor's equity owners under certain circumstances, as applicable, at the time of purchase, is a "qualified purchase?' as defined in Section 2(aX51)(A) of the 1940 Act (each, a "Qualified Purchaser"), unless otherwise permitted by law. Existing Investors who purchase additional Class B Interests in the AlphaKeys Fund and transferees of Class B Interests in the AlphaKeys Fund may be required to represent that they meet the foregoing eligibility criteria at the time of the additional purchase or transfer. The relevant Investor qualifications will be set forth in an investor application to be provided to prospective Investors, which must be completed by each prospective Investor (the "Investor Application"). -42- CONFIDENTIAL UBSTERRAMAR00003904 EFTA00239236 FOR EXISTING INVESTOR USE ONLY VL TAX ASPECTS Certain Material United States Federal Income Tax Considerations The following is a general summary of certain U.S. federal income tax considerations relating to an investment in the AlphaKeys Fund by prospective Investors. The discussion herein is intended to supplement the disclosure in the Underlying Fund Memorandum. Investors are urged to review "Certain Tax Matters Relating to an Investment in Millennium USA" and "Certain Tax Matters Relating to the Master Partnership" in the Underlying Fund Memorandum and to consult with their tax advisors to fully understand the tax consequences of an investment in the AlphaKeys Fund. This summary is based upon the Code, the U.S. Treasury regulations ("Treasury Regulations") promulgated thereunder, published rulings, court decisions and other applicable authorities, all as in effect on the date hereof and all of which are subject to change or differing interpretations (possibly with retroactive effect). This summary does not purport to address all of the U.S. federal income tax considerations that may be relevant to the AlphaKeys Fund or to all categories of Investors, some of whom may be subject to special rules (including, without limitation, dealers in securities or currencies, financial institutions or "financial services entities," life insurance companies, holders of Class B Interests held as part of a "straddle," "hedge," "constructive sale" or "conversion transaction" with other investments, U.S. persons whose "functional currency" is not the U.S. dollar, persons who have elected "mark to market" accounting, persons who have not acquired their Class B Interests upon their original issuance, persons who hold their Class B Interest through a partnership or other entity which is a pass- through entity for U.S. federal income tax purposes, persons that are not U.S. Persons (as defined below), and persons for whom a Class B Interest is not a capital asset). In addition, this summary does not discuss any state, local or foreign tax laws that may be applicable to an Investor. The AlphaKeys Fund has not sought a ruling from the IRS or an opinion of legal counsel as to any tax matters, and no representation is made as to the tax consequences of an investment in the AlphaKeys Fund. In addition, legislation was passed in the United States at the end of 2017 that has resulted in significant and complicated changes to the Code. Such changes, some, but not all of which are described herein, are expected to change the manner in which the AlphaKeys Fund, the Underlying Fund, and investors in the AlphaKeys Fund are taxed in the United States. In addition, because regulations and other official interpretations have not yet been issued with respect to many of such changes, their meaning may be uncertain in some cases. All investors should consult with their tax advisors regarding the status of such legislation and its effect on their investment in the AlphaKeys Fund. For purposes of this discussion, a "U.S. Person" or a "U.S. Investor" is (1) a citizen or resident of the United States, (2) a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States or any state thereof, including the District of Columbia, (3) an estate the income of which is subject to U.S. federal income taxation regardless of its source or (4) a trust which (a) is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person. In some cases, the activities of -43- CONFIDENTIAL UBSTERRAMAR00003905 EFTA00239237 FOR EXISTING INVESTOR USE ONLY an Investor other than its investment in the AlphaKeys Fund may affect the tax consequences to such Investor of an investment in the AlphaKeys Fund. Treatment as Partnership. It is intended that the AlphaKeys Fund will be treated as a partnership for U.S. federal income tax purposes and not as an association or "publicly traded partnership" taxable as a corporation. No rulings have been, or will be, requested from the IRS and no assurance can be given that the IRS or the courts will concur with such treatment. An entity that would otherwise be classified as a partnership for U.S. federal income tax purposes may nonetheless be taxable as a corporation if it is a "publicly traded partnership." A partnership which meets certain safe harbor requirements or certain other exceptions is not subject to the "publicly traded partnership" rules. It is possible that the AlphaKeys Fund may not be able to comply with any safe harbor requirements of or an exception to the publicly traded partnership rules in any given year, in which case it is possible that the AlphaKeys Fund may be treated as a publicly traded partnership. If it were determined that the AlphaKeys Fund should be treated as an association or publicly traded partnership taxable as a corporation, the taxable income of the AlphaKeys Fund would be subject to corporate income tax and distributions from the AlphaKeys Fund would be treated as dividends to the extent of the AlphaKeys Fund's earnings and profits. The Underlying Fund Manager intends that the Underlying Fund and the Underlying Master Fund each will operate as a partnership for U.S. federal income tax purposes and not as an association taxable as a corporation. In addition, the Underlying Fund Manager intends that each of the Underlying Fund and the Underlying Master Fund will not be treated as a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes. However, because the Manager does not control the Underlying Fund and the Underlying Master Fund, there can be no assurance in this regard. If it were determined that either the Underlying Fund or the Underlying Master Fund should be treated as an association or publicly traded partnership taxable as a corporation, material adverse income tax consequences would result to Investors in the AlphaKeys Fund. The remainder of this discussion assumes that each of the AlphaKeys Fund, the Underlying Fund and the Underlying Master Fund will be treated as a partnership for U.S. federal income tax purposes. Except as discussed below in "Audits", as a partnership, the AlphaKeys Fund generally will not be subject to U.S. federal income tax. Rather, each Investor will be required to report on its U.S. federal income tax return, and thus to take into account in determining its own U.S. federal income tax liability, its share of the AlphaKeys Fund's income, gains, losses, deductions and credits for the taxable year ending with or within such Investor's taxable year. An Investor's U.S. federal income tax liability will be determined with reference to its share of the AlphaKeys Fund's income, regardless of whether the AlphaKeys Fund receives any distributions from the Underlying Fund or the Investor receives any distributions from the AlphaKeys Fund. The AlphaKeys Fund is not required, and does not intend, to make distributions to an Investor to cover the U.S. federal income, state or other tax liability of such Investor with respect to its allocable share of AlphaKeys Fund income and gain. Accordingly, a non-withdrawing Investor may be required to use cash from other sources in order to pay tax on its taxable income that is attributable to its Class B Interests in the AlphaKeys Fund. -44- CONFIDENTIAL UBSTERRAMAR00003906 EFTA00239238 FOR EXISTING INVESTOR USE ONLY Allocation of the AlphaKeys Fund's Profits and Losses. For U.S. federal income tax purposes, income, gains, losses, deductions and credits of the AlphaKeys Fund will generally be allocated to the Investors in a manner consistent with the overall economic arrangement among the Investors. It is possible that the IRS will seek to reallocate certain items in a manner different from the manner in which such items were allocated by the AlphaKeys Fund. The AlphaKeys Fund may specially allocate items of taxable income and gain or loss and deduction to a withdrawing Investor. This special allocation to or from a withdrawing Investor could result in Investors (including the withdrawing Investor) receiving more or less items of income, gain, deduction or loss (and/or income, gains, deductions or losses of a different character) than they would receive in the absence of such allocations. There can be no assurance that, if the AlphaKeys Fund makes such a special allocation, the IRS will accept such allocation. If such allocation were successfully challenged by the IRS, the AlphaKeys Fund's income and gains allocable to the remaining Investors could be increased or decreased. Nature of the AlphaKeys Fund's Income and Losses. The AlphaKeys Fund's income, gains, losses, deductions and credits for any taxable year will consist almost entirely of the AlphaKeys Fund's share of the income, gains, losses, deductions and credits of the Underlying Fund (which items will be derived by the Underlying Fund primarily from the Underlying Master Fund) for the taxable year of the Underlying Fund ending with or within the AlphaKeys Fund's taxable year. The Underlying Fund and the Underlying Master Fund have made an election described in Section 475(f) of the Code (the "mark-to-market election"). The mark-to-market elections apply to all years of the Underlying Fund and the Underlying Master Fund unless revoked with the consent of the IRS. As a result of the Underlying Fund's and the Underlying Master Fund's mark-to-market election, the AlphaKeys Fund will generally be required to recognize ordinary gain or loss on all of the securities held by the Underlying Master Fund and the Underlying Fund at the end of each taxable year as if the Underlying Master Fund and the Underlying Fund have sold such securities for their fair market value on the last business day of such taxable year and notwithstanding that such securities may have been eligible for capital asset treatment in the absence of the mark-to-market election. Further, any gain or loss recognized on the sale or redemption of such securities generally would be ordinary. Limitations on an Investor's Deduction of the AlphaKeys Fund's Losses and Expenses. Various limitations may apply to restrict the deductibility of losses realized, and expenses incurred, by the AlphaKeys Fund through its interest in the Underlying Fund. An Investor's share of any such losses will be allowed only to the extent of the adjusted basis of the Investor's Class B Interest in the AlphaKeys Fund. Section 163(d) of the Code limits a non-corporate taxpayer's deduction for "investment interest" to the amount of "net investment income," as defined therein. This limitation could apply to limit the deductibility of a non-corporate Investor's indirect share of the AlphaKeys Fund's interest deductions, as well as the deductibility of interest paid by a non-corporate Investor on indebtedness incurred to finance his or her investment in the AlphaKeys Fund. Otherwise allowable deductions in connection with short sales are treated as "investment interest" for purposes of this limitation. In addition, Code Section 163(j) provides that a taxpayer's deduction for net business interest expense (which excludes investment interest -45- CONFIDENTIAL UBSTERRAMAR00003907 EFTA00239239 FOR EXISTING INVESTOR USE ONLY expense) is limited to 30% of adjusted taxable income. There are a number of uncertainties regarding the application of Section I63(j), including its application in the context of tiered partnerships, its application in the context of a partnership with both corporate and non- corporate partners, and its interaction with the Section 163(d) investment interest limitation. Some or all Investors may be affected by this new provision such that interest deductions that would otherwise have been allowable to such Investors are disallowed. Future guidance may provide more clarity on the operation of this rule in the context of funds like the AlphaKeys Fund, but the timing and scope of any such guidance is uncertain. Certain of the AlphaKeys Fund's direct expenses (including the Administrative Fee) will, and it is possible that some or all of the AlphaKeys Fund's allocable share of the Underlying Fund's expenses (including any management or similar fees paid by the Underlying Fund and its share of such fees paid by the Underlying Master Fund) may, be investment expenses rather than trade or business expenses, with the result that any non-corporate Investor (directly or through a partnership or other pass-through entity) will not be entitled to deduct his or her share of such investment expenses for tax years beginning after December 31, 2017 and before January 1, 2026, and otherwise may only be entitled to deduct such expenses to the extent that such share, together with such non-corporate Investor's other miscellaneous itemized deductions, exceeds 2% of such non-corporate Investor's adjusted gross income. Moreover, investment expenses are not deductible in determining income for alternative minimum tax purposes. In addition, for tax years beginning before December 31, 2017 and on or after January I, 2026, in the case of individuals whose adjusted gross income exceeds certain inflation- adjusted thresholds, the aggregate itemized deductions allowable for the year will be reduced by the lesser of (i) 3% of the excess of adjusted gross income over the applicable threshold or (ii) 80% of the aggregate itemized deductions otherwise allowable for the taxable year (determined after giving effect to the 2% limitation described above and any other applicable limitations). As a result of Revenue Ruling 2008-39 (the "Ruling"), it is possible that the IRS will treat the Underlying Fund as an investor in securities and other assets even if the Underlying Master Fund is properly treated as a trader in securities and other assets. In the Ruling, the IRS concludes that, in certain circumstances, which are generally applicable to a "fund of funds" structure, an upper tier partnership whose activities consist solely of acquiring, holding, and disposing of interests in several lower tier partnerships will not be deemed to be engaged in a trade or business solely as a result of the trade or business conducted by the lower tier partnership and that the fees paid by the upper tier partnership constitute miscellaneous items deductions subject to limitations described above. The Ruling does not clearly address the treatment of the upper tier partnership and management fees charged by the upper tier partnership in a "master feeder" structure. If this structure is within the rationale of the Ruling, the expenses charged at the Underlying Fund level will be treated as miscellaneous itemized deductions subject to limitations described above. Expenses that are attributable to the offering and sale of interests in the AlphaKeys Fund must be capitalized and cannot be deducted or amortized. The AlphaKeys Fund will be deemed to have made an election to amortize organizational expenses over a 180-month period for tax purposes unless the AlphaKeys Fund timely elects to capitalize such expenses. Prospective -46- CONFIDENTIAL UBSTERRAMAR00003908 EFTA00239240 FOR EXISTING INVESTOR USE ONLY Investors are urged to consult their own tax advisors with regard to these and other limitations on their ability to deduct losses and expenses with respect to the AlphaKeys Fund. Passive Activity Rules. The Code restricts the deductibility of losses from a "passive activity" against certain income not derived from a passive activity. This restriction applies to individuals, personal service corporations and certain closely held corporations. Pursuant to temporary Treasury Regulations, income or loss derived by the AlphaKeys Fund from the securities portfolio of the Underlying Fund and the Underlying Master Fund generally will not constitute income or loss from a passive activity. Therefore, passive losses from other sources generally could not be deducted against an Investor's share of such income and gain. However, there can be no assurance in this regard and it is possible that some or all of the income of the AlphaKeys Fund may constitute passive income or loss. Excess Business tosses. Under current law, taxpayers other than corporations are not permitted to deduct "excess business losses," very generally defined to be net losses attributable to trades or business of the taxpayer that exceed certain threshold amounts. In the case of partnerships, the limitation is applied at the partner level and each partner must take into account its allocable share of partnership income, gain, deductions and losses from trades or businesses of the partnership for purposes of calculating its excess business loss, if any. The limitation on deductibility of excess business losses is applied after the limitation on passive losses described above. The limitations on deductions of "excess business losses" may limit the deductibility of certain of the AlphaKeys Fund's losses. Any losses disallowed as a result of this limitation may be carried forward to future years, subject to certain limitations. U.S. Tax-Exempt Investors. Tax-exempt organizations are generally subject to U.S. federal income tax on a net basis on their unrelated business taxable income ("UBTI"). UBTI is defined generally as any gross income derived by a tax-exempt organization from an unrelated trade or business that it regularly carries on, less the deductions directly connected with that trade or business. Notwithstanding the foregoing, UBTI generally does not include any dividend income, interest income (or certain other categories of passive income) or capital gains recognized by a tax-exempt organization so long as such income is not debt-financed, as discussed below. UBTI also includes certain insurance income derived by controlled foreign corporations if a tax-exempt organization is a United States shareholder with respect to such corporation. A tax-exempt entity deriving gross income characterized as UBTI that exceeds $1,000 in any taxable year is obligated to file a federal income tax return, even if it has no liability for that year as a result of deductions against such gross income, including an annual $1,000 statutory deduction. The exclusion from UBTI for dividends, interest (or other passive income) and capital gains does not apply to income from "debt-financed property," which is treated as UBTI to the extent of the percentage of such income that the average acquisition indebtedness with respect to the property bears to the average tax basis of the property for the taxable year. Gain attributable to the sale of previously debt-financed property continues to be subject to these rules for 12 months after any acquisition indebtedness is satisfied. If the AlphaKeys Fund, the Underlying Fund or the Underlying Master Fund incurs acquisition indebtedness, a tax-exempt U.S. Investor would be deemed to have acquisition indebtedness equal to its allocable portion of -47- CONFIDENTIAL UBSTERRAMAR00003909 EFTA00239241 FOR EXISTING INVESTOR USE ONLY such acquisition indebtedness. If a tax-exempt U.S. Investor incurs indebtedness to acquire its Class B Interest, such indebtedness generally would also be treated as acquisition indebtedness. As a result of recent changes to the Code, UBTI is generally required to be calculated separately for each unrelated trade or business of a tax-exempt investor, which may limit the ability of a tax-exempt investor to offset its unrelated business taxable income or losses, if any, attributable to an investment made by the AlphaKeys Fund or the Underlying Fund against its unrelated business taxable income or losses from certain of its other activities (including, potentially, another investment made by the AlphaKeys Fund or the Underlying Fund). There continues to be uncertainty regarding these rules and tax-exempt investors should consult their own tax advisors regarding such recent changes and its effect on their investment in the AlphaKeys Fund. The Underlying Fund Memorandum provides that a portion of the Underlying Fund's income may be treated as UBTI, and therefore the AlphaKeys Fund may generate UBTI as well (which will be significant if the Underlying Fund generates significant UBTI, as it has in previous years). The potential for having income characterized as UBTI may have a significant effect on any investment by a tax-exempt entity in the AlphaKeys Fund and may make investment in the AlphaKeys Fund unsuitable for some tax-exempt entities. Tax-exempt entities (including IRAs) are responsible for paying any required federal taxes as a result of deriving UBTI. UBTI generated from this investment may also be subject to state and local taxes. Investors that are tax-exempt entities (including IRAs) are responsible for any tax filings and related costs referred to above. Tax-exempt Investors should consult their own tax advisors regarding all aspects of UBTI. Withdrawal of Investors. In general, when an Investor withdraws from the AlphaKeys Fund, the withdrawing Investor will recognize gain only as and after the cash (or certain marketable securities) distributed upon withdrawal exceeds the Investor's adjusted tax basis in its Class B Interest. A withdrawing Investor that receives only cash on a complete withdrawal from the AlphaKeys Fund will recognize a loss to the extent that its adjusted tax basis in its Class B Interest exceeds such cash. Any such loss may be recognized only after such Investor has received full payment in respect of its withdrawal amount. If an Investor withdraws less than its entire Class B Interest, the Investor will not recognize a loss, if any, until its Class B Interest is completely withdrawn. Any capital gain or loss recognized will be short-term, long- term, or some combination of both, depending upon the timing of the Investor's contributions to the AlphaKeys Fund. Moreover, in connection with a withdrawal from the AlphaKeys Fund, an Investor will generally recognize ordinary income or loss attributable to the Investor's indirect share of certain assets of the AlphaKeys Fund described in Section 751(c) of the Code. In addition, Investors will generally recognize ordinary income or loss in connection with a withdrawal from the AlphaKeys Fund as a result of the Underlying Fund's and Underlying Master Fund's mark- to-market election. Investors should consult their own tax advisors about the character of any gain or loss recognized on withdrawal from the AlphaKeys Fund. -48- CONFIDENTIAL UBSTERRAMAR00003910 EFTA00239242 FOR EXISTING INVESTOR USE ONLY As discussed above, the AlphaKeys Fund may specially allocate items of taxable income and gain or loss and deduction to a withdrawing Investor. This special allocation to or from a withdrawing Investor could result in Investors (including the withdrawing Investor) receiving more or less items of income, gain, deduction or loss (and/or income, gains, deductions or losses of a different character) than they would receive in the absence of such allocations. Adjustments to Basis of AlphaKeys Fund Assets. The AlphaKeys Fund Agreement authorizes the Administrator in its capacity as the Manager to make an election to adjust the tax basis of the AlphaKeys Fund's assets in the event of a transfer of a Class B Interest or of certain distributions by the AlphaKeys Fund. The Underlying Fund Documents contain similar provisions. Such election to adjust tax basis, once made, cannot be revoked without the consent of the IRS. Because of the complexity and added expense of the tax accounting required to implement such election, the Administrator, on behalf of the AlphaKeys Fund, and the Underlying Fund Manager on behalf of the Underlying Fund (according to the Underlying Fund Memorandum), presently do not intend to make this election. In certain circumstances, however, the AlphaKeys Fund or the Underlying Fund, or both, may be required to reduce the tax basis of their assets as a result of a transfer of a Class B Interest or as a result of certain distributions. Transferors and transferees of Class B Interests, and Investors making withdrawals from the AlphaKeys Fund, will in certain circumstances be required to provide information to the Administrator to enable the AlphaKeys Fund to comply with this requirement. Information Returns and Schedules. Investors will be furnished information on Schedule K-1 for preparation of their respective U.S. federal income tax returns. The furnishing of such information is subject to, among other things, the timely receipt by the AlphaKeys Fund of information from the Underlying Fund. It is expected that the AlphaKeys Fund's Schedule K-ls will most likely not be available prior to April 15 (and may be available significantly later than April 15) and, accordingly, Investors would need to obtain extensions for the filing of their individual tax return. Audits. The Administrator, in its capacity as the Manager of the AlphaKeys Fund, or an affiliate thereof, will be designated as the AlphaKeys Fund's "tax matters partner" and/or "partnership representative." The tax treatment of income and deductions of the Underlying Fund generally will be determined at the Underlying Fund level in a single proceeding, which the tax matters partner or partnership representative of the Underlying Fund will control, rather than by individual audits of the members of the Underlying Fund, including the AlphaKeys Fund. Similarly, the tax treatment of income and deductions of the AlphaKeys Fund generally will be determined at the AlphaKeys Fund level in a single proceeding, which the Administrator as tax matters partner and/or partnership representative of the AlphaKeys Fund will control, rather than by individual audits of the Investors of the AlphaKeys Fund. If the IRS audits the Underlying Fund's or the AlphaKeys Fund's tax returns, however, an audit of the Investors' own returns may result. Under partnership audit procedures which generally apply to taxable years of a partnership beginning on or after January 1, 2018 (unless the partnership elects to apply the rules for an earlier year), upon an audit of the AlphaKeys Fund, any adjustments to items of income, gain, loss, deduction or credit of the AlphaKeys Fund (and any Investor's distributive -49- CONFIDENTIAL UBSTERRAMAR00003911 EFTA00239243 FOR EXISTING INVESTOR USE ONLY share thereof), shall be determined at the partnership level, and, unless certain elections are made, the AlphaKeys Fund will be liable for paying an imputed underpayment of tax based on such adjustments and associated penalties and interest. Adjustments reallocating the distributive share of an item from one Investor to another will not be netted; instead, the imputed underpayment of tax in that case will be calculated without taking into account the decrease in an Investor's share of income or gain or the increase in an Investor's share of deduction or credit. Any imputed underpayment of tax generally would be assessed in the year the adjustment is finalized rather than the audited year and the amount of such tax generally would be determined using the highest statutory rates, ignoring Investor-level attributes. As a result, some or all of the Investors (including, without limitation, Investors who were not Investors during the audited year) might economically bear a greater amount of imputed tax (and associated penalties and interest) than the tax they would have borne if the adjustment had passed through to the Investors. Under certain circumstances, the AlphaKeys Fund might be able to demonstrate that the imputed underpayment of tax should be reduced with respect to specific Investors. Establishing such a reduction might require that Investors file amended returns, and pay tax, interest and penalties. There can be no guarantee that the AlphaKeys Fund will be able to (or if it is able to, will choose to) take any such actions to reduce the imputed underpayment of tax. Alternatively, the AlphaKeys Fund could elect to have taxes (and any associated interest and penalties) in respect of adjustments assessed and collected at the Investor level by issuing statements of adjustment to the persons who were Investors during the audited year. In such case, the audited year Investors would be required to pay any additional tax attributable to their share of such adjustments as an additional tax for the taxable year in which the statements are provided. Investors may be required to pay interest (at an increased rate) and penalties as a result of such adjustments. There can be no guarantee that the AlphaKeys Fund will or will not make such an election, or that such an election, if made, would not result in a greater economic cost for a particular Investors. The partnership audit rules will also apply to an audit of the Underlying Fund. While the Treasury Department has issued proposed and temporary final Treasury Regulations implementing these rules, there continues to be substantial uncertainty regarding certain aspects of the rules and their interpretation and future guidance is expected. All Investors should consult their own tax advisers regarding possible implications of these rules. Reporting and Listing Requirements. A direct or indirect participant in any "reportable transaction" may be required to disclose certain information in respect of such participation and such transaction to the IRS on IRS Form 8886. For purposes of the disclosure rules, a partner, in certain cases, may be treated as a participant in a reportable transaction in which its partnership participates. It is possible that the Underlying Fund and/or the AlphaKeys Fund will participate in one or more reportable transactions, and the AlphaKeys Fund and certain or all of the Investors may be required to report these transactions on IRS Form 8886. In addition, a withdrawal from the AlphaKeys Fund will be reportable by the withdrawing Investor if the Investor recognizes a loss on the withdrawal that equals or exceeds an applicable threshold amount. Failure to comply with the reporting requirements gives rise to substantial penalties. Certain states, including New York, may also have similar disclosure requirements. Investors should consult their tax advisors to determine whether filing Form 8886 in accordance with the disclosure rules is required. In addition, if the AlphaKeys Fund engages in certain tax shelter -50- CONFIDENTIAL UBSTERRAMAR00003912 EFTA00239244 FOR EXISTING INVESTOR USE ONLY transactions, tax-exempt investors may be subject to additional tax and reporting requirements. Prospective Investors are urged to consult their own tax advisors with regard to these rules. FATCA. Very generally and with limited exceptions, pursuant to Section 1471 through 1474 of the Code and any current and future guidance thereunder ("FATCA"), if an investor fails to meet certain requirements, including information, diligence and/or reporting requirements, that are mandated by FATCA, certain U.S. source income and potentially certain non-U.S. source income attributable to such investor will, in general, be subject to a 30% withholding tax. The U.S. source income with respect to which the 30% withholding applies includes interest (including original issue discount), whether or not the interest would qualify as "portfolio interest", dividends, compensation and gross proceeds realized upon the sale or other disposition of any property which can produce U.S. source interest or dividends ("Withholdable Payments"). The withholding tax is currently in effect with respect to payments other than gross proceeds and is expected to be in effect with respect to withholding on gross proceeds beginning after December 31, 2018. The AlphaKeys Fund will withhold at a 30% rate on Withholdable Payments (and potentially on payments of non-U.S. source income) attributable to an Investor if the Investor fails to provide the AlphaKeys Fund with sufficient information, certification or documentation that is required under FATCA, including information, certification or documentation necessary for the AlphaKeys Fund to (i) determine if the Investor is a non-U.S. Investor or a U.S. Investor and, if it is a non-U.S. Investor, if the non-U.S. Investor has "substantial United States owners" and/or is in compliance with (or meets an exception from) FATCA requirements and (ii) comply with the withholding requirements of FATCA. The AlphaKeys Fund, the Underlying Fund and the Underlying Master Fund may disclose the information, certifications or documentation provided by investors to the IRS, the Treasury or other parties as necessary to comply with FATCA. Furthermore, the Underlying Master Fund will be subject to a 30% withholding tax with respect to Withholdable Payments and potentially certain non-U.S. source income if it fails to timely enter into and continue to comply with a valid agreement with the Secretary of the Treasury in which the Underlying Master Fund agrees to obtain and verify certain information from each of its investors and comply with annual reporting requirements with respect to certain direct or indirect U.S. investors ("FFI Agreement"), if applicable, does not comply with the requirements of an applicable intergovernmental agreement and any implementing non-U.S. laws and regulations, or does not otherwise qualify for an exception from the foregoing requirements. In this respect, the Cayman Islands and the United States on November 29, 2013 entered into an intergovernmental agreement with respect to FATCA implementation (the "Cayman IGA"), under which the Underlying Master Fund may be required to obtain and provide to the Cayman Islands government certain information from each of its investors and meet certain other requirements. If the Underlying Master Fund complies with its obligations under the Cayman IGA, the Underlying Master Fund generally will not be subject to withholding under FATCA (and, for the avoidance of doubt, will not be required to enter into an FFI Agreement). Notwithstanding the foregoing, such withholding tax may still be applicable unless each applicable member of the same expanded affiliated group, if any, as the Underlying Master Fund also enters into and complies with the FFI Agreement, applicable intergovernmental agreement or qualifies for an exception. The economic returns from the -51- CONFIDENTIAL UBSTERRAMAR00003913 EFTA00239245 FOR EXISTING INVESTOR USE ONLY Underlying Master Fund may be significantly reduced as a result of withholding tax unless it complies with or satisfies an exemption from the requirements described above. Any investor (including the Underlying Fund) that fails to provide the Underlying Master Fund with the required information could, generally, be subject to the 30% withholding tax on the U.S. source payments described above and, possibly, on a portion of non-U.S. source payments, and in some cases, the Underlying Master Fund could require an investor to withdraw from the Underlying Fund. The scope of some of the requirements of and exceptions from FATCA are complex and remain potentially subject to material changes resulting from additional IRS guidance. Investors are urged to consult their advisers about the FATCA rules (some but not all of which are described above) that may be relevant to their investment in the AlphaKeys Fund. In addition, certain other countries have passed or may in the future pass legislation similar to FATCA, which may impact the AlphaKeys Fund, the Underlying Fund, the Underlying Master Fund and the Investors. All Investors are urged to consult their advisers about the implication of the FATCA requirements or the implications of legislation similar to FATCA for the AlphaKeys Fund and the Investors. Medicare Contribution Tax. The Code imposes a 3.8% Medicare contribution tax on the "net investment income" (as defined in Section 1411 of the Code and the regulations thereunder) of individuals whose income exceeds certain threshold amounts and of certain trusts and estates under similar rules. Investors are advised to consult their tax advisers regarding the possible implications of this additional tax on their investment in the AlphaKeys Fund. Certain Federal Tax Considerations for Non-U.S. Investors. The U.S. federal income tax treatment of a nonresident alien, non-U.S. corporation, non-U.S. partnership, non-U.S. estate or non-U.S. trust, each a "non-U.S. investor," investing in the AlphaKeys Fund is complex and will vary depending upon the circumstances and activities of the non-U.S. investor, the AlphaKeys Fund, the Underlying Fund, and the Underlying Master Fund. An investment in the AlphaKeys Fund may cause such non-U.S. investors to be subject to a withholding tax, tax on a net basis and to be required to file U.S. federal income tax returns (and could also subject such person to U.S. state and local tax and return filing requirements). Each non-U.S. investor is urged to consult with its own tax advisor regarding the U.S. and non-U.S. tax treatment of an investment in the AlphaKeys Fund. Implications of Non-U.S. Investments Certain non-U.S. investments of the Underlying Fund and the Underlying Master Fund, including investments in "controlled foreign corporations" and "passive foreign investment companies" ("PFICs") may cause an Investor to recognize taxable income prior to the AlphaKeys Fund's receipt of distributable proceeds, pay an interest charge on receipts that are deemed to have been deferred or recognize ordinary income that otherwise would have been treated as capital gain. -52- CONFIDENTIAL UBSTERRAMAR00003914 EFTA00239246 FOR EXISTING INVESTOR USE ONLY The Underlying Fund and the Underlying Master Fund may make investments that subject the AlphaKeys Fund and/or the Investors directly or indirectly to taxation and/or tax-filing obligations in non-U.S. jurisdictions, including withholding taxes on dividends, interest and proceeds. In particular, the Underlying Fund's and the Underlying Master Fund's non-U.S. investments may cause some of the income or gains of the AlphaKeys Fund to be subject to withholding or other taxes of non-U.S. jurisdictions, and could result in taxation on net income attributed to the jurisdiction if the AlphaKeys Fund were considered to be conducting a trade or business in the applicable country through a permanent establishment or otherwise. Such non- U.S. taxes and/or tax filing obligations may be reduced or eliminated by applicable income tax treaties, although Investors should be aware that the AlphaKeys Fund may not be entitled to claim reduced withholding rates on non-U.S. taxes or may choose not to assert any such claim. The tax consequences to Investors may depend in part on the activities and investments of the AlphaKeys Fund, as well as the Underlying Fund and the Underlying Master Fund. Accordingly, the AlphaKeys Fund will be limited in its ability to avoid adverse non-U.S. tax consequences resulting from the AlphaKeys Fund's underlying investments. Furthermore, some Investors may not be eligible for certain or any treaty benefits. Subject to applicable limitations, an Investor may be entitled to claim, for U.S. federal income tax purposes, a credit for its allocable share of certain non-U.S. income taxes incurred by the AlphaKeys Fund, including certain withholding taxes, so long as such non-U.S. tax qualifies as a creditable income tax under the applicable Treasury Regulations. Alternatively, an Investor may be able to deduct (subject to certain limitations) its share of such non-U.S. taxes for U.S. federal income tax purposes. In general, Investors that are U.S. persons may be required to report to the IRS transfers of property or cash by the Underlying Fund to a non-U.S. corporation or partnership (such as the Underlying Master Fund), in exchange for interests in such non-U.S. entities and may be required to file information returns with the IRS with respect to non-U.S. investments made by the Underlying Fund and the Underlying Master Fund. Investors that are U.S. persons may also be subject to filing requirements with respect to the AlphaKeys Fund's investment in a non-U.S. corporation classified as a PFIC regardless of the size of the Investor's investment. Investors should consult with their own tax advisers with respect to this new reporting requirement and any other reporting requirement that may apply. For additional information regarding the tax considerations of non-U.S. investments, including Cayman Islands tax considerations that may apply to an investment in the AlphaKeys Fund, Investors are strongly urged to refer to "Certain Tax Matters Relating to an Investment in Millennium USA" and "Certain Tax Matters Relating to the Master Partnership" in Appendix A and to consult with their own tax advisers. State and Local Tax Considerations In addition to the U.S. federal income tax consequences described above, prospective Investors should consider the potential state and local tax consequences of an investment in the AlphaKeys Fund. In particular, Investors may be subject to state and local taxes in jurisdictions in which the Underlying Fund, the Underlying Master Fund or the AlphaKeys Fund acquires certain investments or conducts its activities and may be required to file tax returns in those jurisdictions. In certain jurisdictions, the Underlying Fund, the Underlying Master Fund and/or the AlphaKeys Fund may be required to withhold certain state and/or local or other taxes on behalf of Investors. State and local tax laws may differ from U.S. federal income tax laws with -53- CONFIDENTIAL UBSTERRAMAR00003915 EFTA00239247 FOR EXISTING INVESTOR USE ONLY respect to the treatment of specific items of income, gain, loss, deduction and credit. Prospective Investors should consult their tax advisors with respect to the state, local and non- U.S. tax consequences of an investment in the AlphaKeys Fund. Future Changes in Tax Law Legislation was passed in the United States at the end of 2017 that has resulted in significant and complicated changes to the Code. Such changes may affect the manner in which the AlphaKeys Fund, the Underlying Fund and the Investors are taxed in the United States. There are significant uncertainties regarding the interpretation and application of those recent legislative changes. Additional guidance is expected; however, the timing, form, scope and content of such guidance are not known. In addition, other legislation could be enacted which could substantially affect how the AlphaKeys Fund and the Investors are taxed. Prospective investors should consult their own tax advisors regarding the status of any such proposed changes and the effect, if any, on their investment in the AlphaKeys Fund. For additional information regarding the taxation of the AlphaKeys Fund, the Underlying Fund and the Underlying Master Fund, investors are strongly urged to refer to "Certain Tax Matters Relating to an Investment in Millennium USA" and "Certain Tax Matters Relating to the Master Partnership" in the Underlying Fund Memorandum. Importance of Obtaining Professional Advice The foregoing analysis is not intended as a substitute for careful tax planning. Accordingly, prospective Investors in the AlphaKeys Fund are strongly urged to consult their tax advisors with specific reference to their own situations regarding the possible tax consequences of an investment in the AlphaKeys Fund. -54- CONFIDENTIAL UBSTERRAMAR00003916 EFTA00239248 FOR EXISTING INVESTOR USE ONLY VII. CERTAIN ERISA AND OTHER CONSIDERATIONS The following section sets forth certain issues and consequences under ERISA, Section 4975 of the Code and the Plan Assets Rules, which a fiduciary of a "Benefit Plan Investor" (as defined in the Plan Assets Rules and described below) who has investment discretion (a "Fiduciary") should consider before deciding to invest such Benefit Plan Investor's assets in the AlphaKeys Fund. Furthermore, all potential Investors should read the following disclosure because it describes certain possible limitations on the operation of the AlphaKeys Fund that may result from participation in the AlphaKeys Fund by Benefit Plan Investors. The following summary is not intended to be complete, but only to address certain questions under ERISA, the Code and the Plan Assets Rules relating to an investment in the AlphaKeys Fund. The term "Benefit Plan Investor" is defined under the Plan Assets Rules and generally includes (i) "employee benefit plans" (as defined in Section 3(3) of ERISA) that are subject to the fiduciary responsibility provisions of ERISA, (ii) "plans" (as defined in Section 4975(eX I) of the Code) that are subject to Section 4975 of the Code, and (iii) entities that are deemed to be holding the assets of such an "employee benefit plan" or "plan" for purposes of ERISA and/or Section 4975 of the Code (but only to the extent of the percentage of the equity interests in such entity that are held by Benefit Plan Investors). ERISA and the Code impose certain duties on persons who are Fiduciaries of Benefit Plan Investors. Under these rules, any person who exercises any discretionary authority or control over the management or disposition of the assets of a Benefit Plan Investor, or renders investment advice for a fee, directly or indirectly, is a Fiduciary with respect to the Benefit Plan Investor. The Administrator will require a Benefit Plan Investor which proposes to invest in the AlphaKeys Fund to represent that it, and any Fiduciaries responsible for such Benefit Plan Investor's investments, are aware of and understand the AlphaKeys Fund's investment objective, policies and strategies and that the decision to invest "plan assets" in the AlphaKeys Fund was made with appropriate consideration of relevant investment factors with regard to the Benefit Plan Investor and is consistent with the duties and responsibilities imposed upon Fiduciaries with regard to their investment decisions under ERISA and/or the Code. Section 406 of ERISA and Section 4975 of the Code prohibit a Benefit Plan Investor from engaging in certain transactions involving "plan assets" with parties that are "parties in interest" under ERISA or "disqualified persons" under the Code with respect to the Benefit Plan Investor, unless the transaction is covered by a statutory exemption or a class or private exemption issued by the Department of Labor. Certain prospective Benefit Plan Investors may currently maintain relationships with the Administrator or other entities which are affiliated with the Administrator. Each of such persons may be deemed to be a party in interest or disqualified person to and/or a Fiduciary of any Benefit Plan Investor to which it provides investment management, investment advisory or other services. ERISA prohibits (and the Code penalizes) the use of "plan assets" for the benefit of a party in interest and also prohibits (or penalizes) a Fiduciary from using its position to cause a Benefit Plan Investor to make an investment from which it or certain third parties in which such Fiduciary has an interest would receive a fee or other consideration. Benefit Plan Investors should consult with their own counsel to determine if participation in the AlphaKeys Fund is a transaction which is prohibited by ERISA or the Code. Except with respect to the assets of any Investor used to purchase the Interests in the AlphaKeys Fund which are -55- CONFIDENTIAL UBSTERRAMAR00003917 EFTA00239249 FOR EXISTING INVESTOR USE ONLY invested as part of the Investor's participation in the UBSFS Advisory Program, Fiduciaries of Benefit Plan Investors will be required to represent that the decision to invest in the AlphaKeys Fund was made by them as Fiduciaries (independent of such affiliated persons), that such Fiduciaries are duly authorized to make such investment decision and that they have not relied on any individualized advice or the recommendation of such affiliated persons, as a primary basis for the decision to invest in the AlphaKeys Fund. The Plan Assets Rules provide when the assets of an entity such as the AlphaKeys Fund will be deemed to include "plan assets" as a result of an investment therein by Benefit Plan Investors. The Plan Assets Rules generally provide, in relevant part, that the underlying assets of an entity (that is neither a publicly-offered security nor a security issued by a company registered under the Investment Company Act) in which a Benefit Plan Investor makes an equity investment will be deemed, for purposes of ERISA, to be assets of the investing Benefit Plan Investor, unless (i) interests in each class of equity interests of the entity held by Benefit Plan Investors are not considered "significant" (as determined under the Plan Assets Rules) or (ii) the entity qualifies as an "operating company" (as defined in the Plan Assets Rules). Under the Plan Assets Rules, equity participation in an entity will be considered "significant" on any date if, immediately after the most recent acquisition of any equity interest in the entity, 25% or more of the value of any class of its equity interests is held in the aggregate by Benefit Plan Investors (calculated after disregarding the value of any equity interests held by non-Benefit Plan Investors (or any affiliates thereof) who either (i) have discretionary authority or control with respect to the assets of the entity, or (ii) provide direct or indirect investment advice to the entity for a fee). The Administrator will use reasonable efforts to limit investment in each class of Interests in the AlphaKeys Fund by Benefit Plan Investors to a level that would not be considered "significant" (as defined in the Plan Assets Rules), in order to prevent the AlphaKeys Fund from being treated as holding "plan assets" (within the meaning of the Plan Assets Rules) subject to ERISA and/or Section 4975 of the Code. If at any time the Administrator determines that equity participation in the AlphaKeys Fund by Benefit Plan Investors would be considered "significant" (as defined in the Plan Assets Rules), the Administrator will be permitted to cause one or more Benefit Plan Investors to withdraw or reduce their Interests to the extent necessary so that equity participation in the AlphaKeys Fund by Benefit Plan Investors would not be considered "significant" (as defined in the Plan Assets Rules). For the avoidance of doubt, the Administrator will treat all tranches or series (or sub-classes or sub-series thereof) in each designated class of the AlphaKeys Fund as constituting single classes of equity interests for purposes of the Plan Assets Rules; however the Plan Assets Rules do not specify what constitutes a "class" of equity interests, and there is no guarantee that the U.S. Department of Labor would treat the tranches or series (or sub- class, sub-tranche or sub-series) within a class as a single class of equity interests for purposes of the Plan Assets Rules. If the assets of the AlphaKeys Fund were determined to be "plan assets" under the Plan Assets Rules, there could be a number of adverse consequences under ERISA and the Code. For example, (i) if the AlphaKeys Fund were to engage in a transaction with a "party in interest" or "disqualified person" with respect to any Benefit Plan Investor investing in the AlphaKeys Fund which is not exempt under ERISA and/or the Code (such as borrowing from an entity which is an -56- CONFIDENTIAL UBSTERRAMAR00003918 EFTA00239250 FOR EXISTING INVESTOR USE ONLY affiliate of the sponsor of the Benefit Plan Investor or the leasing of property to an affiliate of a sponsor of the Benefit Plan Investor), the transaction would be prohibited under ERISA and/or the Code (and therefore subject to rescission), and such affiliate, the trustee of the Benefit Plan Investor and the Administrator could be subject to sanctions; (ii) under ERISA, the trustee of a Benefit Plan Investor (that is subject to ERISA) will be subject to liability for any losses arising from a breach of fiduciary duty, except where the breach is caused by a Fiduciary who is an appointed investment manager or who is specifically named in the plan document governing the Benefit Plan Investor; (iii) the Administrator could be deemed to be a Fiduciary of investing Benefit Plan Investors and the trustee of such Benefit Plan Investors that are subject to ERISA could be liable for losses because of the delegation of investment discretion to the Administrator without the benefit of an investment management agreement or plan designation; and (iv) any Fiduciary that exercises discretion to cause such Benefit Plan Investor to invest in the AlphaKeys Fund could be liable as a co-Fiduciary. A BENEFIT PLAN INVESTOR AND ITS FIDUCIARY MUST CONSULT THEIR OWN LEGAL AND FINANCIAL ADVISORS BEFORE INVESTING IN THE ALPHAKEYS FUND AND FULLY INFORM THEMSELVES AS TO ALL PAYMENTS MADE IN CONNECTION WITH THE OPERATION OF THE ALPHAKEYS FUND. BY INVESTING IN THE ALPHAKEYS FUND, THE FIDUCIARY SIGNIFIES ITS INFORMED CONSENT TO ALL SUCH PAYMENTS BY THE ALPHAKEYS FUND TO THE RECIPIENTS THEREOF AND TO THE RISKS INVOLVED IN INVESTING IN THE ALPHAKEYS FUND. The foregoing statements regarding the consequences under ERISA, the Code and the Plan Assets Rules of an investment in the AlphaKeys Fund, are based on the provisions of ERISA, the Code and the Plan Assets Rules as currently in effect and the existing administrative and judicial interpretations thereunder. No assurance can be given that administrative, judicial or legislative changes will not occur that will make the foregoing statements incorrect or incomplete. ACCEPTANCE OF SUBSCRIPTIONS ON BEHALF OF A BENEFIT PLAN INVESTOR IS IN NO RESPECT A REPRESENTATION BY THE ADMINISTRATOR OR ANY OTHER PARTY RELATED TO THE ALPHAKEYS FUND THAT THIS INVESTMENT MEETS THE RELEVANT LEGAL REQUIREMENTS WITH RESPECT TO INVESTMENTS BY ANY PARTICULAR BENEFIT PLAN INVESTOR OR THAT THIS INVESTMENT IS APPROPRIATE FOR ANY PARTICULAR BENEFIT PLAN INVESTOR. THE FIDUCIARY WITH INVESTMENT DISCRETION OVER THE ASSETS OF A BENEFIT PLAN INVESTOR SHOULD CONSULT WITH ITS LEGAL AND FINANCIAL ADVISORS AS TO THE PROPRIETY OF AN INVESTMENT IN THE ALPHAKEYS FUND IN LIGHT OF THE CIRCUMSTANCES OF SUCH BENEFIT PLAN INVESTOR. Employee benefit plans that are not subject to the requirements of ERISA or Section 4975 of the Code may be subject to similar rules under other applicable laws or documents, and should consult their own legal and financial advisors as to the propriety of an investment in the AlphaKeys Fund. -57- CONFIDENTIAL UBSTERRAMAR00003919 EFTA00239251 FOR EXISTING INVESTOR USE ONLY VIII. REGULATORY CONSIDERATIONS Securities Act of 1933 The offer and sale of Class B Interests in the AlphaKeys Fund will not be registered under the 1933 Act, in reliance upon the exemption from registration provided by Section 4(aX2) thereof and Regulation D promulgated thereunder. Each purchaser must be an Accredited Investor (unless otherwise permitted by law) and will be required to represent, among other customary private placement representations, that it is acquiring its interests in the AlphaKeys Fund for its own account for investment purposes only and not with a view to resale or distribution. Investment Company Act of 1940 The AlphaKeys Fund will not be subject to the provisions of the 1940 Act, in reliance upon Section 3(cX7) thereof. Section 3(cX7) excludes from the definition of "investment company" any issuer whose outstanding securities are owned exclusively by Qualified Purchasers. A Qualified Purchaser includes: (i) a natural person who owns not less than $5,000,000 in investments, (ii) a natural person or company, acting for its own account or the accounts of other Qualified Purchasers, who owns/invests on a discretionary basis not less than $25,000,000 in investments, and (iii) certain trusts. The Investor Application and the AlphaKeys Fund Agreement will each contain representations and restrictions on transfer designed to assure that the conditions of Section 3(cX7) will be met. Investment Advisers Act of 1940 The Administrator is registered as an investment adviser under the Advisers Act. U.S. Commodity Exchange Act The AlphaKeys Fund may indirectly through the Underlying Fund invest in commodity interests. The Administrator is registered with the CFTC and the NFA as a "commodity pool operator" and its status may be verified via the NFA's Background Affiliation Status Information Center (BASIC) at www.nfa.futures.org/basicnet. All investors in the AlphaKeys Fund must be "qualified eligible persons" as defined in applicable CFTC rules. The CFTC does not pass upon the merits of participating in a pool or upon the adequacy or accuracy of an offering memorandum. Consequently, the CFTC has not reviewed or approved this Memorandum or any offering in connection therewith. U.S. Bank Holdins Company Act The Administrator is, for purposes of the BHC Act, a subsidiary of UBS, which is subject to supervision and regulation by the Federal Reserve. It is not expected that UBS will be deemed to control the AlphaKeys Fund for purposes of the BHC Act. There can be no assurance that the bank regulatory requirements applicable to UBS will not likewise apply to the AlphaKeys Fund and therefore have a material adverse effect on the AlphaKeys Fund and its operations. For example, such regulations could require the AlphaKeys Fund to dispose of its investment in the Underlying Fund earlier than anticipated by the Administrator or the dissolution of the AlphaKeys -58- CONFIDENTIAL UBSTERRAMAR00003920 EFTA00239252 FOR EXISTING INVESTOR USE ONLY Fund earlier than anticipated by the Administrator, potentially having a negative impact on the returns of the AlphaKeys Fund. The Administrator, UBS and the AlphaKeys Fund may be able to rely on other statutory and regulatory provisions in order to maintain compliance with the BHC Act to the extent applicable to the AlphaKeys Fund. The Administrator reserves the right to rely on any such applicable exemptions and to take all reasonable steps deemed necessary, advisable or appropriate in its sole discretion for the AlphaKeys Fund or the Administrator to comply with the BHC Act, including, without limitation, refraining from voting on matters presented by the Underlying Fund and, if permitted, disposing of all or any portion of the AlphaKeys Fund's investment in the Underlying Fund or any portfolio company that does not conform to BHC Act requirements. The BHC Act and Federal Reserve regulations and interpretations thereunder may be amended over the term of the AlphaKeys Fund, which could also result in further restrictions on the activities or investments of the AlphaKeys Fund. _59_ CONFIDENTIAL UBSTERRAMAR00003921 EFTA00239253 FOR EXISTING INVESTOR USE ONLY IX. ANTI-MONEY LAUNDERING REGULATIONS As part of the AlphaKeys Fund's responsibility to comply with regulations aimed at the prevention of money laundering, the Administrator and its affiliates may require a detailed verification of an Investor's identity, any beneficial owner underlying the account and the source of the Investor's subscription payment. The AlphaKeys Fund, the Administrator, and the Sub-Administrator reserve the right to request such information as is necessary to verify the identity of a subscriber and the underlying beneficial owners of a subscriber's or an Investor's Class B Interest in the AlphaKeys Fund. In the event of delay or failure by the subscriber or Investor to produce any information required for verification purposes, the AlphaKeys Fund, the Administrator, and/or the Sub-Administrator may refuse to accept a subscription or may cause the withdrawal of such Investor from the AlphaKeys Fund. The AlphaKeys Fund, the Administrator , and/or the Sub-Administrator may suspend the payment of withdrawal proceeds of an Investor if the AlphaKeys Fund, the Administrator, and/or the Sub- Administrator reasonably deem it necessary to do so to comply with anti-money laundering regulations applicable to the AlphaKeys Fund, the Administrator or any of the AlphaKeys Fund's other service providers. Each Investor will be required to make such representations to the Administrator as the Administrator will require in connection with such anti-money laundering programs, including, without limitation, representations to the Administrator that such Investor is not a prohibited country, territory, individual or entity listed on the U.S. Department of Treasury Office of Foreign Assets Control ("OFAC") website and that it is not directly or indirectly affiliated with any country, territory, individual or entity named on an OFAC list or prohibited by any OFAC sanctions programs. Such Investor will also represent to the Administrator that amounts contributed by it to the AlphaKeys Fund were not directly or indirectly derived from activities that may contravene U.S. federal, state or international laws and regulations, including, without limitation, anti-money laundering laws and regulations. -60- CONFIDENTIAL UBSTERRAMAR00003922 EFTA00239254 FOR EXISTING INVESTOR USE ONLY X. ADDITIONAL INFORMATION Independent Auditors and Legal Counsel Ernst & Young LLP serves as the independent auditors of the AlphaKeys Fund. Its principal business address is 5 Times Square, New York, New York 10036. The Administrator may replace the auditors in its discretion. Ropes & Gray LLP, New York, New York, will act as counsel to the AlphaKeys Fund, the Administrator and their affiliates in connection with this offering of Class B Interests. In connection with this offering of Class B Interests and ongoing advice to the AlphaKeys Fund, the Administrator and their affiliates, Ropes & Gray LLP will not be representing the Investors of the AlphaKeys Fund. No independent counsel has been retained to represent Investors of the AlphaKeys Fund and the terms of this offering have not been negotiated on an arm's length basis. Ropes & Gray LLP's representation of the AlphaKeys Fund, the Administrator and their affiliates is limited to those specific matters upon which it has been consulted. There may exist other matters which would have a bearing on the AlphaKeys Fund and/or the Administrator or any of their affiliates upon which Ropes & Gray LLP has not been consulted. Ropes & Gray LLP does not undertake to monitor the compliance of the AlphaKeys Fund or the Administrator with the investment program, valuation procedures and other guidelines set out herein, nor does it monitor compliance with applicable laws. Additionally, Ropes & Gray LLP relies upon information furnished to it by the AlphaKeys Fund and/or the Administrator, and does not investigate or verify the accuracy and completeness of information set out herein concerning the AlphaKeys Fund or the Administrator, other service providers and their affiliates and personnel. Custodian/Escrow Agent The Bank of New York Mellon (the "Custodian") serves as the primary custodian of the assets of the AlphaKeys Fund, and may maintain custody of such assets with domestic and non-U.S. securities depositories, clearing agencies and sub-custodians (which may be banks or other financial institutions) identified to the Administrator. Assets of the AlphaKeys Fund and Millennium Fund are not held by the Administrator or commingled with the assets of other accounts other than to the extent that securities are held in the name of a custodian with a sub- custodian or in a securities depository, clearing agency or omnibus customer account of such custodian. The Custodian's principal business address is 240 Greenwich Street, New York, New York 10286. The AlphaKeys Fund has also entered into an Escrow Agreement with BNY Mellon Investment Servicing (US) Inc. -61- CONFIDENTIAL UBSTERRAMAR00003923 EFTA00239255 FOR EXISTING INVESTOR USE ONLY Inquiries Inquiries concerning the AlphalCeys Fund and Class B Interests in the AlphaKeys Fund, including information concerning purchase and withdrawal procedures, should be directed to: AlphaKeys Millennium Fund, L.L.C. Alternative Investments US 1285 Avenue of the Americas New York, New York 10019 All potential Investors in the AlphaKeys Fund are encouraged to consult appropriate legal and tax counsel. -62- CONFIDENTIAL UBSTERRAMAR00003924 EFTA00239256 FOR EXISTING INVESTOR USE ONLY Appendix A - CONFIDENTIAL MEMORANDUM OF THE UNDERLYING FUND This Appendix A contains (i) the Confidential Memorandum of Millennium USA LP, as amended from time to time (with respect to Class GG and I-II Interests) and (ii) the Confidential Memorandum of Millennium Partners, L.P., as amended from time to time (collectively, the "Underlying Fund Memorandum"). Each prospective Investor should carefully review the Underlying Fund Memorandum. The information included in the Underlying Fund Memorandum, including, without limitation, the terms of the AlphaKeys Fund's investment into the Underlying Fund and the risks associated therewith, was obtained from the Underlying Fund Manager. Such information has not been prepared by or independently verified by, and does not necessarily reflect the views or opinions of, the AlphaKeys Fund, UBSFS, the Administrator or any of their respective affiliates, and none of the foregoing makes any representation or warranty with respect to, or shall be responsible for, the accuracy or completeness of such information. Descriptions of any rights, benefits and effects described in the Underlying Fund Memorandum will inure to the benefit of, and/or apply to, the AlphaKeys Fund as a whole and not to the Investors. Purchasers of Class B Interests will not be limited partners of the Underlying Fund, will have no direct interest in the Underlying Fund, will have no voting rights in the Underlying Fund and will have no standing or recourse against any of the Underlying Fund, the Underlying Fund Manager, their respective affiliates or any of their respective general partners, investment advisors, officers, directors, employees, partners or members. Currently, the AlphaKeys Fund anticipates investing only in Underlying Fund Interests. There can be no assurance that the Underlying Fund will achieve its investment objective. The return for an Investor in the Underlying Fund will depend on the timing and actual amount invested in the Underlying Fund and the performance thereof, as well as the timing and amount of capital contributed to the Underlying Fund and held in Temporary Investments and the performance thereof. An Investor in the AlphaKeys Fund may suffer significant losses. Any losses by the AlphaKeys Fund will be borne solely by the Investors and not by the Administrator or its affiliates. A-1 CONFIDENTIAL UBSTERRAMAR00003925 EFTA00239257 FOR EXISTING INVESTOR USE ONLY millennium CONFIDENTIAL MEMORANDUM (Part One) Relating to (lass CC Interests and (lass 1111 Interests of MILLENNIUM USA LP THIS CONFIDENTIAL MEMORANDUM IS COMPRISED OF TWO PARTS, WHICH MUST BE READ TOGETHER. THIS PART ONE CONTAINS INFORMATION SPECIFIC TO CLASS GG INTERESTS AND CLASS HH INTERESTS OF MILLENNIUM USA LP, INCLUDING THE TERMS OF INVESTMENT IN MILLENNIUM USA LP AND ITS ORGANIZATION AND STRUCTURE. PART TWO CONTAINS INFORMATION SPECIFIC TO MILLENNIUM PARTNERS, L.P., INCLUDING ITS INVESTMENT ACTIVITIES, IN WHICH THE MAJORITY OF THE ASSETS OF MILLENNIUM USA LP ARE INVESTED. OTHER THAN SUCH TERMS CONTAINED IN THIS CONFIDENTIAL MEMORANDUM THAT ARE SPECIFIC TO CLASS GG INTERESTS AND CLASS HH INTERESTS, ALL OTHER DISCLOSURES CONTAINED HEREIN ARE APPLICABLE TO ALL LIMITED PARTNERS OF MILLENNIUM USA LP. General Partner: Millennium Management LLC 666 Fifth Avenue, 8th Floor New York, New York 10103-0899 Telephone: (212) 841-4100 October 2018 CONFIDENTIAL UBSTERRAMAR00003926 EFTA00239258 FOR EXISTING INVESTOR USE ONLY PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION IN CONNECTION WITH POOLS WHOSE PARTICIPANTS ARE LIMITED TO QUALIFIED ELIGIBLE PERSONS, AN OFFERING MEMORANDUM FOR THIS POOL IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE COMMODITY FUTURES TRADING COMMISSION. THE COMMODITY FUTURES TRADING COMMISSION DOES NOT PASS UPON THE MERITS OF PARTICIPATING IN A POOL OR UPON THE ADEQUACY OR ACCURACY OF AN OFFERING MEMORANDUM. CONSEQUENTLY, THE COMMODITY FUTURES TRADING COMMISSION HAS NOT REVIEWED OR APPROVED THIS OFFERING OR ANY OFFERING MEMORANDUM FOR THIS POOL. YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN FUTURES OR OPTIONS CONTRACTS, EITHER DIRECTLY OR INDIRECTLY, THROUGH ITS INVESTMENT IN MILLENNIUM PARTNERS, L.P. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE UNITED STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED STATES MARKET, MAY BE SUBJECT TO REGULATIONS WHICH OFFER DIFFERENT OR DIMINISHED PROTECTION TO THE POOL AND ITS PARTICIPANTS. FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY BE UNABLE TO COMPEL THE ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR MARKETS IN NON-UNITED STATES JURISDICTIONS WHERE TRANSACTIONS FOR THE POOL MAY BE EFFECTED. This Confidential Memorandum relates to an offering of: Class GG interests (the "Class GG Offered Interests"), and Class HH interests (the "Class HH Offered Interests," and together with the Class GG Offered Interests, the "Offered Interests") of Millennium USA LP, a Delaware limited partnership ("Millennium USA"). The Offered Interests of each class generally have the same rights and characteristics, except that the Class HH Offered Interests do not participate in gains and losses from "new issues" (as such term is defined by the Financial Industry Regulatory Authority) and activities that Millennium Management LLC ("Millennium Management") determines are related thereto. The Offered Interests generally may only be withdrawn at such times and on such notice as is specified below under "Millennium USA's Organization, Management, Structure, and Operations — Withdrawal Rights." The Offered Interests are suitable only for sophisticated investors (i) that do not require immediate liquidity for their investments, (ii) for which an investment in Millennium USA does not constitute a complete investment program and (iii) that fully understand and are willing to assume the risks involved in Millennium USA's investment program. Millennium USA's investment practices, by their nature, may be considered to involve a substantial degree of risk. (See "Certain Risk Factors Relating to Millennium USA" and "Millennium USA's Investment Program and Strategy"). Millennium USA carries out its investment and trading activities primarily by investing in Millennium Partners, L.P. (the "Master Partnership"), a Cayman DOC ID- 29147063.5 CONFIDENTIAL UBSTERRAMAR00003927 EFTA00239259 FOR EXISTING INVESTOR USE ONLY Islands exempted limited partnership initially organized in 1989 as a Delaware limited partnership. Notwithstanding the foregoing, it may also trade and invest part of its capital for its own account. Prospective purchasers should carefully read this Confidential Memorandum in its entirety (including both this Part One, which discusses Class GG Interests and Class HH Interests of Millennium USA, and Part Two, which discusses the Master Partnership). The contents of this Confidential Memorandum, however, should not be considered legal or tax advice and each prospective purchaser should consult with its own counsel and advisers as to all matters concerning an investment in Millennium USA. There will be no public offering of the Offered Interests. No offer to sell (or solicitation of an offer to buy) will be made in any jurisdiction in which such offer or solicitation would be unlawful. All references herein to "dollars" or "5" are to the lawful currency of the United States of America. Confidentiality of Fund Information This Confidential Memorandum and any other documents or informational materials provided to prospective purchasers or investors in Millennium USA with respect to Millennium USA, the Master Partnership and/or their respective affiliates (collectively, "Fund Information") have been provided solely for the information of the person to whom it has been delivered on behalf of Millennium USA and may not be reproduced, distributed or used for any other purpose by or on behalf of such person. By accepting any Fund Information, each prospective purchaser agrees that any reproduction or distribution of Fund Information, in whole or in part, or the disclosure of its contents, without the prior written consent of Millennium Management, is prohibited, and that it will keep confidential any Fund Information and will use this Confidential Memorandum and other Fund Information solely for the purposes of evaluating a possible investment, or its continued investment, in Millennium USA. Notwithstanding anything herein to the contrary, each prospective purchaser (and each employee, representative or other agent of such prospective purchaser) may disclose to any and all persons, without limitation of any kind, (i) the tax treatment and tax structure of Millennium USA and of any transactions described herein, as well as (ii) all materials of any kind (including opinions or other tax analyses) that are provided to the investor relating to such tax treatment and tax structure, it being understood that "tax treatment" and "tax structure" do not include the name or the identifying information of Millennium USA or the parties to a transaction. For this purpose, "tax treatment and structure" is limited to facts relevant to the tax treatment of the transactions of Millennium USA and does not include information relating to the identity of any partner (other than Millennium Management), its affiliates, agents or advisors. Each person accepting this Confidential Memorandum and any other written Fund Information agrees to return any such documentation to Millennium USA promptly upon request by Millennium Management. THIS CONFIDENTIAL MEMORANDUM IS ACCURATE AS OF ITS DATE, AND NO REPRESENTATION OR WARRANTY IS MADE AS TO ITS CONTINUED ACCURACY AFTER SUCH DATE. As part of its responsibility for the prevention of money laundering, Millennium USA (and any person acting on its behalf) reserves the right to require such information as is necessary to DOC ID- 29147063.5 CONFIDENTIAL UBSTERRAMAR00003928 EFTA00239260 FOR EXISTING INVESTOR USE ONLY verify the identity of a prospective purchaser, limited partner, or any beneficial owner underlying the account of a prospective purchaser or a limited partner, and the source of any payment by or on behalf of a prospective purchaser or a limited partner. In the event of delay or failure by a prospective purchaser or limited partner to produce any information required for verification purposes, Millennium USA may refuse to accept a subscription or may effect a compulsory withdrawal of any such limited partner from Millennium USA. NO OFFERING LITERATURE OR ADVERTISING IN WHATEVER FORM WILL BE EMPLOYED IN THE OFFERING OF THE OFFERED INTERESTS EXCEPT FOR THIS CONFIDENTIAL MEMORANDUM, STATEMENTS CONTAINED HEREIN AND WRITTEN MATERIALS SPECIFICALLY APPROVED BY MILLENNIUM MANAGEMENT. NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY REPRESENTATION OR GIVE ANY INFORMATION WITH RESPECT TO THE OFFERED INTERESTS, EXCEPT THE INFORMATION CONTAINED HEREIN. IN MAKING AN INVESTMENT DECISION, PROSPECTIVE PURCHASERS MUST RELY UPON THEIR OWN EXAMINATION OF MILLENNIUM USA AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE OFFERED INTERESTS ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM, AND IN COMPLIANCE WITH THE TERMS OF THE ORGANIZATIONAL DOCUMENTS OF MILLENNIUM USA. PROSPECTIVE PURCHASERS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. PROSPECTIVE PURCHASERS MUST REPRESENT THAT THEY ARE ACQUIRING THE OFFERED INTERESTS FOR INVESTMENT AND NOT FOR RESALE. EACH PROSPECTIVE PURCHASER IS INVITED TO MEET WITH REPRESENTATIVES OF MILLENNIUM MANAGEMENT TO DISCUSS WITH, ASK QUESTIONS OF, AND RECEIVE ANSWERS FROM SUCH PERSONS CONCERNING THE TERMS AND CONDITIONS OF THIS OFFERING OF THE OFFERED INTERESTS, AND TO OBTAIN ANY ADDITIONAL INFORMATION, INCLUDING MILLENNIUM USA'S HISTORICAL PERFORMANCE INFORMATION, TO THE EXTENT NECESSARY FOR A PROSPECTIVE PURCHASER TO MAKE AN INFORMED INVESTMENT DECISION. NOTWITHSTANDING THE FOREGOING, A PROSPECTIVE PURCHASER IS NOT ENTITLED TO RELY ON ANY SUCH ADDITIONAL INFORMATION CONCERNING MILLENNIUM USA, THE OFFERING OF INTERESTS OR MILLENNIUM MANAGEMENT IF SUCH ADDITIONAL INFORMATION IS NOT IN WRITING, AND EACH PROSPECTIVE PURCHASER IS INVESTING SOLELY ON THE BASIS OF THIS CONFIDENTIAL DOC ID- 29147063.5 CONFIDENTIAL UBSTERRAMAR00003929 EFTA00239261 FOR EXISTING INVESTOR USE ONLY MEMORANDUM, THE PARTNERSHIP AGREE 1ENT (AS DEFINED HEREIN) AND SUCH OTHER WRITTEN INFORMATION. * * DOC ID- 29147063.5 -iv- CONFIDENTIAL UBSTERRAMAR00003930 EFTA00239262 FOR EXISTING INVESTOR USE ONLY TABLE OF CONTENTS PART ONE: INFORMATION RELATING TO THE OFFERING AND MILLENNIUM USA LP Summary of Part One of the Confidential Memorandum 1 The Partnership 15 Interests Offered; Terms of the Offering 15 Certain Risk Factors Relating to Millennium USA 19 Suitability Requirements; Limitations on Transferability of Interests of Millennium USA 24 Millennium USA's Investment Program and Strategy 26 Use of Proceeds by Millennium USA 26 Millennium USA's Organization, Management, Structure, and Operations 26 Management of Millennium USA 32 The Administrator 33 Fees and Expenses Relating to Millennium USA 34 Allocation of Gains and Losses 36 Outline of the Partnership Agreement 38 Certain Tax Matters Relating to an Investment in Millennium USA 43 ERISA Considerations 60 Anti-Money Laundering Considerations 64 Millennium USA's Fiscal Year 66 Millennium USA's Legal Counsel 66 Millennium USA's Independent Public Accountants 66 Appendix Ito Part One: Description of Additional Classes PART Two: INFORMATION RELATING TO MILLENNIUM PARTNERS, L.P. Sununary of Part Two of the Confidential Memorandum II-1 The Fund's Investment Program and Strategy II-8 The Master Partnership's Organization 11-9 Certain Risk Factors Relating to an Investment in the Fund II-11 The Fund's Management. Structure and Operations II-46 The Fund's Investment Program and Description: Eligible Investments II-51 The Fund's Investment Program and Description: Investment Strategies and Techniques 11-52 The Fund's Investment Program and Description: Brokerage I1-58 The Fund's Investment Program and Description: Leverage and Loans II-61 The Fund's Risk Management Program II-61 The Master Partnership's Fees and Expenses II-62 Related-Party Transactions and Other Accounts; Conflicts 11-64 Certain Tax Matters Relating to the Master Partnership II-72 Certain Legal and Regulatory• Matters Relating to the Fund II-74 The Master Partnership's Fiscal Year 11-77 The Master Partnership's Independent Public Accountants II-78 DOC ID- 29147063.5 I-1 CONFIDENTIAL UBSTERRAMAR00003931 EFTA00239263 FOR EXISTING INVESTOR USE ONLY Summary of Part One of the Confidential Memorandum (Information Relating to Millennium USA LP) The following is a summary of certain information set forth more fully in the Eighth Amended and Restated Limited Partnership Agreement, as it may be amended from time to time (the "Partnership Agreement"), or elsewhere in this Confidential Memorandum of Millennium USA LP ("Millennium USA"). This summary should be read in conjunction with, and is qualified in its entirety by, such detailed information and the other sections of this Confidential Memorandum, including the sections entitled "Certain Risk Factors Relating to Millennium USA" and "Certain Tax Matters Relating to an Investment in Millennium USA," as well as Part Two of this Confidential Memorandum. In the event that any information in this summary contradicts the Partnership Agreement, the Partnership Agreement will control. The Partnership: Interests Offered: DOC ID- 29147063.5 Millennium USA is a Delaware limited partnership formed in November 1997. Millennium USA primarily invests its capital in Millennium Partners, L.P. (the "Master Partnership"). For a more detailed description of Millennium USA and its investment strategy, see "The Partnership" and "Millennium USA's Investment Program and Strategy," below. For a description of the Master Partnership, see Part Two of this Confidential Memorandum. Investors in Millennium USA are referred to herein as the "Limited Partners." The Limited Partners, together with Millennium Management LLC, the general partner of Millennium USA ("Millennium Management"), are referred to herein as the "Partners." Millennium Management is also the general partner of the Master Partnership. This Confidential Memorandum relates to an offering of Class GG interests (the "Class GG Offered Interests") and Class HH interests (the "Class HH Offered Interests," and together with the Class GG Offered Interests, the "Offered Interests") of Millennium USA. The Offered Interests of each class generally have the same rights and characteristics, except that the Class HH Offered Interests do not participate in gains and losses from "new issues" (as such term is defined by the Financial Industry Regulatory Authority) and activities that Millennium Management determines are related thereto. I-1 CONFIDENTIAL UBSTERRAMAR00003932 EFTA00239264 FOR EXISTING INVESTOR USE ONLY All offers are made subject to the approval of Millennium Management, and Millennium USA may cease offering the Offered Interests at any time without notice. The minimum initial subscription for an investment in Millennium USA is $5,000,000 and subsequent subscriptions may be made in $500,000 increments. Millennium Management may, in its sole discretion, permit Millennium USA to accept subscriptions of lesser amounts or establish different minimums in the future. Millennium Management reserves the right to reject a subscription in its sole and absolute discretion. Offered Interests generally will be sold only as of the first business day of a calendar month; monies received prior to the first business day of a calendar month will be held by Millennium USA or its agent and a prospective purchaser will not earn any interest on such monies or any return based on Millennium USA's performance during the period prior to the first business day of such month. In the sole and absolute discretion of Millennium Management, subscriptions may be accepted after the first business day of a calendar month, including, without limitation, because the prospective purchaser's subscription agreement and supporting documentation were not deemed to be complete by Millennium Management, in its sole discretion, on the first business day or because Millennium USA receives the prospective investor's subscription monies subsequent to the first business day. If Millennium Management elects, in its sole discretion, to accept a subscription subsequent to the first business day of a calendar month, for whatever reason, the subscription will be deemed by Millennium Management, in its sole discretion, to have been invested on the first business day of such calendar month at the relevant subscription price on such day. In such a situation, the prospective investor will, unless otherwise agreed by Millennium Management, be subject to an interest charge at a daily rate determined by Millennium USA for the portion of the month preceding the date that subscription monies are received or the date Millennium Management determines, in its sole discretion, that the subscription agreement of such investor was complete, as applicable, which will be assessed against the Offered Interests of the applicable Limited Partner. See "Interests Offered; Terms of the Offering — Interests Offered." For purposes of this Confidential Memorandum, a business day is any day, Monday through Friday, on which banks in New York City are open for business. DOC ID- 29147063.5 1-2 CONFIDENTIAL UBSTERRAMAR00003933 EFTA00239265 FOR EXISTING INVESTOR USE ONLY Purchaser Qualifications: The Offered Interests generally are intended only for prospective purchasers that are "qualified purchasers" (as such term is defined in Section 2(aX51) of the Investment Company Act of 1940, as amended), are taxable U.S. investors, and are persons for which such an investment is otherwise appropriate. As a condition to the acceptance of any subscription for Offered Interests, each prospective purchaser will be required to complete, to the satisfaction of Millennium Management and SS&C Financial Services LLC, herein referred to as the "Administrator," a signed subscription agreement ("Subscription Agreement") certifying these and other matters, making certain representations and agreeing to certain terms in a form to be provided by Millennium Management. (See "Interests Offered; Terms of the Offering — Interests Offered.") Millennium Management reserves the right to reject a subscription in its sole and absolute discretion. If a subscription is rejected, the unused subscription monies will be returned, without interest, at the risk and cost of the prospective purchaser, to the prospective purchaser's account from which the monies were originally remitted. Millennium USA's The investment objective of Millennium USA is to achieve Investment Program and above-average appreciation by opportunistically trading and Strategy: investing in a wide variety of securities, instruments, and other investment opportunities and engaging in a broad array of trading and investment strategies. THERE ARE NO SUBSTANTIVE LIMITS ON THE INVESTMENT STRATEGIES THAT MAY BE PURSUED BY MILLENNIUM USA. See "Millennium USA's Investment Program and Strategy" and the entirety of Part Two of this Confidential Memorandum. As discussed in "Millennium USA's Investment Program and Strategy," Millennium USA carries out its investment and trading activities primarily by investing in the Master Partnership, but it also may trade and invest part of its capital for its own account, when presented with investment opportunities that are appropriate for it and its investors but that may be inappropriate or not optimal (for tax or other reasons) for other direct or indirect investors in the Master Partnership. Similarly, such other investors may have the benefit of investments inappropriate or not optimal for Millennium USA. For these reasons, returns among Millennium USA and other DOC ID- 29147063.5 1-3 CONFIDENTIAL UBSTERRAMAR00003934 EFTA00239266 FOR EXISTING INVESTOR USE ONLY Certain Risk Factors: "New Issues": Sales Charees: DOC ID- 29147063.5 investment funds that invest in the Master Partnership will to some degree (and potentially materially) differ. Millennium USA may directly engage in any investment activities in which the Master Partnership engages (as more fully described in Part Two of this Confidential Memorandum). The investment program of the Master Partnership, and therefore of Millennium USA, involves significant risks, including the Master Partnership's reliance upon Millennium Management and portfolio managers selected by Millennium Management, limitations on withdrawals, the use of leverage, trading in derivative instruments and conflicts of interest related to investment opportunities and business activities among the Master Partnership's affiliates and their management. Prospective purchasers are urged to carefully review the sections titled "Certain Risk Factors Relating to Millennium USA" below and "Certain Risk Factors Relating to an Investment in the Master Partnership" in Part Two of this Confidential Memorandum. The Class HH Offered Interests (as well as certain other previously issued and outstanding classes) will not participate in gains and losses from "new issues" and activities that Millennium Management determines are related thereto. Policies with respect to the allocation of gains and losses from new issues and activities that Millennium Management determines are related thereto may be revised by Millennium Management at any time without prior notice to Limited Partners. (See "Interests Offered; Terms of the Offering— Treatment of New Issues.") Unless otherwise previously disclosed to an investor, there will be no sales charges payable to Millennium USA or Millennium Management in connection with the offering of Offered Interests to that investor. To the extent that any such charges are applicable and paid from an investor's funds, the investor's actual investment in the Offered Interests will be reduced. Millennium Management or its affiliates may enter into, and have from time to time entered into, agreements with placement agents providing for payment by Millennium Management or its affiliates of a portion of subscription amounts, or providing for ongoing payments based on a percentage of the Incentive Allocation due to Millennium Management that is attributable to the interests of an investor introduced by such placement agent or the payment of other amounts to the placement agents. 1-4 CONFIDENTIAL UBSTERRAMAR00003935 EFTA00239267 FOR EXISTING INVESTOR USE ONLY Limitations on As described below under "Suitability Requirements; Transferability: Limitations on Transferability of Interests of Millennium USA," each investor will be required to agree that (i) no Offered Interests, nor any interest therein, may be pledged, assigned, hypothecated, sold, exchanged or transferred (each, a "Transfer") without the prior consent of Millennium Management, which consent may be withheld in its sole discretion, or made subject to such conditions as may be imposed by Millennium Management in its sole discretion, and (ii) prior to considering any request to permit a transfer of Offered Interests, Millennium Management may require the submission by the proposed transferee of a certification as to the matters discussed in that section under "— Suitability Requirements" as well as such other documents, representations or undertakings as Millennium Management and/or the Administrator, as applicable, considers appropriate. Transferred interests generally will be deemed to have been sold and purchased as of the date of the transfer for all purposes, including calculating the Incentive Allocation (as defined herein), unless otherwise agreed to by Millennium Management, in its sole discretion. Millennium Management will not consent to any Transfer other than a Transfer (i) in circumstances in which the tax basis of the Offered Interest in the hands of the transferee is determined, in whole or in part, by reference to its tax basis in the hands of the transferor, (ii) to members of such Partner's immediate family (brothers, sisters, spouse, parents and children), or (iii) as a distribution from a qualified retirement plan or an individual retirement account (each, a "Permissible Transfer"), unless Millennium Management determines that the proposed Transfer will not cause Millennium USA to be treated as a "publicly traded partnership" taxable as a corporation for Federal tax purposes. Without limiting the foregoing, unless otherwise agreed to by Millennium Management, Millennium Management generally does not expect to consent to any Transfer (other than a Permissible Transfer) unless the Transfer (i) is between existing limited partners effective as of the beginning of the next fiscal quarter after 65 days' prior written notice to Millennium USA and the Administrator, and (ii) is based on the net asset value of the Offered Interests being transferred as of the effective date of the Transfer. NN it lid raw al Rights: DOC ID- 29147063.5 CONFIDENTIAL The following is a summary of the withdrawal rights associated with the Offered Interests, which are further described under 1-5 UBSTERRAMAR00003936 EFTA00239268 FOR EXISTING INVESTOR USE ONLY "Millennium USA's Organization, Management, Structure, and Operations — Withdrawal Rights": Offered Interests generally may be withdrawn on either the "Quarterly Withdrawal Schedule" or the "Annual Withdrawal Schedule," each as described below: Quarterly Withdrawal Schedule A Limited Partner may elect to withdraw up to 5% of the net asset value of such Limited Partner's Offered Interests as of the end of any calendar quarter (a "Quarterly Withdrawal") by providing written notice at least 90 days and no more than 180 days prior to the end of the applicable calendar quarter (a "Quarterly Withdrawal Date"). In addition, if as a result of Quarterly Withdrawals (whether or not consecutive) the net asset value of a Limited Partner's Offered Interests is equal to 5% or less of its aggregate subscription amounts for Offered Interests, a Limited Partner may withdraw the balance of such Offered Interests by providing written notice at least 90 days and no more than 180 days prior to the end of a calendar quarter. All notices must be provided to both Millennium USA and the Administrator. Annual Withdrawal Schedule A Limited Partner may elect to withdraw the entire net asset value of such Limited Partner's Offered Interests over a five (5) year period by making five consecutive annual withdrawal requests, with proceeds paid on a calendar quarterly basis within each such annual period as set forth in the table below (each annual period, an "Annual Withdrawal Period," and each calendar quarter end withdrawal date within an Annual Withdrawal Period, an "Annual Withdrawal Schedule Date"). A Limited Partner may elect to commence an Annual Withdrawal Period as of any calendar quarter, but such Annual Withdrawal Period does not have to coincide with a calendar year. A Limited Partner electing to withdraw Offered Interests pursuant to the Annual Withdrawal Schedule must provide written notice to both Millennium USA and the Administrator at least 90 days and no more than 180 days (i) prior to the First Annual Withdrawal Schedule Date of the First Annual Withdrawal Period and (ii) prior to the First Annual Withdrawal Schedule Date of each subsequent Annual Withdrawal Period. During each Annual Withdrawal Period, withdrawal amounts will be calculated based on the net asset value of such Limited DOC ID- 29147063.5 I-6 CONFIDENTIAL UBSTERRAMAR00003937 EFTA00239269 FOR EXISTING INVESTOR USE ONLY Partner's Offered Interests as of each Annual Withdrawal Schedule Date (excluding the net asset value of any additional Offered Interests subscribed for or otherwise received following the commencement of the Annual Withdrawal Schedule) as follows: First Annual Withdrawal Schedule Date; Percentage of NAV Second Annual Withdrawal Schedule Date; Percentage of NAV Third Annual Withdrawal Schedule Date; Percentage of NAV Fourth Annual Withdrawal Schedule Date; Percentage of NAV First Annual Withdrawal Period I/20th (5.00%) 1/19th (approx. 5.26%) 1/18th (approx. 5.56%) I/17th (approx. 5.88%) Second Annual Withdrawal Period I/16th (6.25%) 1/15th (approx. 6.67%) 1/14th (approx. 2.14%) 1/13'h (approx. 7.69%) Third Annual Withdrawal Period I/12th (approx. 8.33%) 1/11th (approx. 9.09.4) 1/10th (10.00%) I/9th (approx. 11.11%) Fourth Annual Withdrawal Period 118'h (12.50%) I/7'h (approx. 14.29%) 1/6th (approx. 16.67%) 1/56 (20.00%) Fifth Annual Withdrawal Period I/46 (25.00%) 1/314 (approx. 33.33%) 1/2 (50.00%) 1/1 (100%) If a Limited Partner on the Annual Withdrawal Schedule does not make five consecutive annual requests, or does not provide timely notice for an Annual Withdrawal Period, any future withdrawal pursuant to the Annual Withdrawal Schedule will be treated as starting a new First Annual Withdrawal Period and will be subject to all applicable terms and requirements (including required annual notices) of the Annual Withdrawal Schedule. In addition, if a Limited Partner on the Annual Withdrawal Schedule subscribes for or otherwise receives additional Offered Interests during an Annual Withdrawal Period, any future withdrawal request pursuant to the Annual Withdrawal Schedule as to such additional Offered Interests will start with a new First Annual Withdrawal Period and will be subject to all applicable terms and requirements (including required annual notices) of the Annual Withdrawal Schedule. Notwithstanding the foregoing, a Limited Partner that has made consecutive Quarterly Withdrawals of 5% of such Limited Partner's Offered Interests and then elects to transition as of the following calendar quarter end to an Annual Withdrawal DOC ID- 29147063.5 1-7 CONFIDENTIAL UBSTERRAMAR00003938 EFTA00239270 FOR EXISTING INVESTOR USE ONLY Schedule will receive credit for the number of consecutive 5% Quarterly Withdrawals only as follows: • A Limited Partner that has made at least four but fewer than eight consecutive 5% Quarterly Withdrawals may elect to commence on the Annual Withdrawal Schedule beginning with the Second Annual Withdrawal Period. • A Limited Partner that has made at least eight consecutive 5% Quarterly Withdrawals may elect to commence on the Annual Withdrawal Schedule beginning with the Third Annual Withdrawal Period. A Limited Partner electing to transition from the Quarterly Withdrawal Schedule to the Annual Withdrawal Schedule in accordance with the foregoing must provide prior written notice to both Millennium USA and the Administrator at least 90 days and no more than 180 days prior to the First Annual Withdrawal Schedule Date, provided that such First Annual Withdrawal Schedule Date must be one full calendar quarter following such Limited Partner's last 5% Quarterly Withdrawal. A Limited Partner may only request a withdrawal of Offered Interests as of any calendar quarter end with the requisite notice pursuant to either the Quarterly Withdrawal Schedule or the Annual Withdrawal Schedule, and not both schedules. A Limited Partner is entitled to no more than one (1) withdrawal of Offered Interests per calendar quarter pursuant to either the Quarterly Withdrawal Schedule or the Annual Withdrawal Schedule, and no more than four (4) withdrawals per 12-month period. General Withdrawal requests are irrevocable upon receipt by Millennium USA, subject to Millennium Management's sole discretion to permit revocation in whole or in part; provided that Millennium Management determines that such action will not cause Millennium USA or the Master Partnership to be treated as a "publicly traded partnership" taxable as a corporation for Federal tax purposes. Withdrawal requests received outside of the specified notice period for a particular Quarterly Withdrawal Date or Annual Withdrawal Schedule Date will be deemed null and void and will not be honored. In addition, a withdrawal request received for an amount in excess of the maximum amount permitted to DOC ID- 29147063.5 1-8 CONFIDENTIAL UBSTERRAMAR00003939 EFTA00239271 FOR EXISTING INVESTOR USE ONLY be withdrawn will be honored only to the extent of such maximum amount, and the request as to the excess amount will be deemed null and void and will not be honored. Millennium Management may, in its sole and absolute discretion, permit a withdrawal of Offered Interests at intervals, in amounts and pursuant to such notice terms other than those set forth above or convert Offered Interests into interests of another class with substantially the same rights and characteristics if it determines that such a withdrawal or conversion would be permitted by applicable law; provided that Millennium Management determines that such action will not cause Millennium USA or the Master Partnership to be treated as a "publicly traded partnership" taxable as a corporation for Federal tax purposes. Millennium USA generally will pay 95% of the withdrawal payment within 30 days following the applicable withdrawal date (whether pursuant to the Quarterly Withdrawal Schedule or the Annual Withdrawal Schedule) and generally will withhold 5% of any withdrawal payment pending closing of Millennium USA's books and reconciliation of the amounts due for the quarter (in each case, computed on the basis of unaudited data as of the withdrawal date, and subject to any applicable reserves or holdbacks). However, if a withdrawal date coincides with a date as of which Millennium USA's financial statements are audited, the balance of the withdrawal payment will generally be made, subject to audit adjustments, after completion of the audit. If the amount of a withdrawal exceeds 90% of the aggregate value of the Limited Partner's Offered Interests (after taking into account any adjustments made in connection with the audit) immediately prior to the applicable withdrawal date, then Millennium USA generally will withhold from the withdrawal payment 10% of the aggregate value. The balance will be paid (subject to audit adjustments), within 30 days after the completion of the next audit of Millennium USA, subject to any applicable reserves or holdbacks. Balances held until following the completion of an audit, if any, will be paid with interest calculated from the applicable withdrawal date until the payment date at the average (calculated weekly) per annum short-term (13-week) Treasury Bill rate. DOC ID- 29147063.5 1-9 CONFIDENTIAL UBSTERRAMAR00003940 EFTA00239272 FOR EXISTING INVESTOR USE ONLY Millennium Management may, in its discretion, elect to withhold smaller amounts than those described above or to accelerate the repayment of withheld balances. Limitation on Millennium Management may, in its discretion, hold back a Withdrawals: Compulsory portion of the withdrawal proceeds payable to a Limited Partner Withdrawal: in respect of Offered Interests being withdrawn (whether such withdrawal is voluntary or compulsory) to satisfy contingent or expected liabilities. In addition, withdrawals may be suspended if Millennium Management or the Administrator reasonably deems it appropriate to do so to ensure compliance with applicable anti-money laundering regulations and in such other limited circumstances described herein. See "Millennium USA's Organization, Management, Structure and Operations — Withdrawal Rights" and "- Suspension for Anti-Money Laundering Purposes." A breach of a covenant under an agreement relating to indebtedness or similar obligations of the Master Partnership, could trigger an acceleration of such indebtedness or obligations, reducing or eliminating equity withdrawals from the Master Partnership by Millennium USA. See "Certain Risk Factors Relating to Millennium USA — Limitation on Withdrawals" herein and "Certain Risk Factors Relating to an Investment in the Master Partnership - Certain Market and Investment Risks - Indebtedness" in Part Two of this Confidential Memorandum. Millennium Management reserves the right, subject to applicable law, upon not less than five days' prior written notice (unless Millennium Management determines that it is necessary to reduce such period in order to comply with applicable law or similar requirements), to require any investor to withdraw all or any portion of its interests at any time for any reason or no reason. See "Millennium USA's Organization, Management, Structure, and Operations — Compulsory Withdrawal." Limited Liquidity: DOC ID- 29147063.5 Interests in Millennium USA other than the Offered Interests, and interests in additional feeder funds that also invest into the Master Partnership (collectively, "Other Interests"), generally are significantly more liquid than the Offered Interests. In addition, unlike the Other Interests, the Offered Interests have no special withdrawal right in the event of the death, disability, adjudication of incompetency, bankruptcy, insolvency or withdrawal from the general partner of the Master Partnership of Israel A. Englander (a "Trigger Event"). Please see "Certain Risk Factors Relating to Millennium USA" — "Different Terms of Interests" and "Limited Liquidity" for additional information regarding such differences in liquidity and the potential I-10 CONFIDENTIAL UBSTERRAMAR00003941 EFTA00239273 FOR EXISTING INVESTOR USE ONLY implications for holders of Offered Interests. General Partner; Incentive The general partner of Millennium USA is Millennium Allocation: Management. Israel A. Englander is currently the controlling trustee of Millennium Group Management LLC (formerly, Millennium International Management GP LLC), the managing member of Millennium Management. Millennium Management also serves as the general partner of the Master Partnership. Millennium Management and other affiliated entities that participate in the management of the Master Partnership's assets are collectively referred to herein as "Millennium." See "The Master Partnership's Management, Structure and Operations — Management" in Part Two of this Confidential Memorandum for a description of certain control relationships. As described below under "Allocation of Gains and Losses," at the end of each fiscal year of Millennium USA, or at such other date during a fiscal year as of which the following reallocation is required, 20% of the aggregate net capital appreciation of Millennium USA applicable to the Offered Interests will be reallocated to Millennium Management as its incentive allocation (the "Incentive Allocation"). Dissolution of Millennium Millennium Management has the right to compulsorily effect a USA: withdrawal of all issued interests of Millennium USA and/or dissolve Millennium USA at any time (including during a fiscal year), for any reason or for no reason. See "Outline of the Partnership Agreement — Term; Dissolution." Fees and Expenses Relating As described below under "Fees and Expenses Relating to to Millennium USA: Millennium USA," in addition to bearing the Incentive Allocation received by Millennium Management, Millennium USA is, directly, or through its investment in the Master Partnership, responsible for all expenses, without limitation, directly or indirectly, in connection with the operation of Millennium USA, including, without limitation: • all fees and expenses incurred in connection with any transactions, engagements, and other agreements that it enters into on its own behalf, including, among other things, costs and expenses of the Administrator, expenses in connection with the private placement of interests of Millennium USA (other than placement fees, if any); and • a generally pro raw portion of all fees and expenses incurred by Millennium Management and its affiliates with respect to, or in connection with (e.g. through the operation DOC ID- 29147063.5 CONFIDENTIAL UBSTERRAMAR00003942 EFTA00239274 FOR EXISTING INVESTOR USE ONLY of and the provision of services to), the Master Partnership and its affiliates or incurred directly by the Master Partnership or jointly by multiple feeder funds. See "The Master Partnership's Fees and Expenses" in Part Two of this Confidential Memorandum for a description and non- exhaustive list of such expenses, including, without limitation, the following general expense categories: compensation and fringe benefits payable to employees and fees payable to others providing services to the Master Partnership; expenses related to computers, equipment and technology; expenses related to maintaining offices, including leases and fixtures; insurance premiums; expenses related to investment activities; accounting, valuation, audit, tax and legal expenses; fees and expenses paid for the investment advisory services of affiliated entities that participate in the management of the Master Partnership's assets; and other miscellaneous expenses. Millennium generally seeks to allocate expenses among Millennium USA and the other feeder funds, including Millennium International (as defined herein) on a pro rata basis according to the relative values of their interests in the Master Partnership, but a particular expense may be allocated differently if Millennium determines in its discretion that it would be fair and reasonable to do so under the circumstances. In addition, expenses of Millennium that relate to the Master Partnership or Millennium USA as well as other activities of Millennium, including other funds or accounts managed by Millennium, are allocated among the applicable parties in a manner that Millennium determines, in its discretion, to be fair and reasonable under the circumstances. See "Related-Party Transactions and Other Accounts; Conflicts; Allocation of Expenses Among Feeder Funds and Other Accounts" in Part Two of this Confidential Memorandum. Administrator: DOC ID- 29147063.5 (See "Fees and Expenses Relating to Millennium USA" and "Certain Risk Factors Relating to Millennium USA— Compensation of Millennium Management.") Millennium USA has engaged SS&C Financial Services LLC (the "Administrator") to act as its administrator and provide certain administrative and accounting services to Millennium USA. Such services include, among others, (i) the calculation and issuance of the net asset values of Millennium USA (and each class, sub-class and series of Interests thereof) on a monthly basis, based on information provided by Millennium USA and Millennium Management; (ii) the recording of 1-12 CONFIDENTIAL UBSTERRAMAR00003943 EFTA00239275 FOR EXISTING INVESTOR USE ONLY Taxation: ERISA and Other Tax Exempt Entities: Anti-Money Laundering Considerations: DOC ID- 29147063.5 transactions and the reconciliation of cash, positions and transactions between Millennium USA's and the Master Partnership's books and records and their respective trading counterparties, prime brokers and custodians; (iii) the calculation of Millennium USA's profit and loss; (iv) registrar and transfer agency services; and (v) year-end support services with respect to Millennium USA's audit and tax processes, as may be required. (See "The Administrator.") Schulte Roth & Zabel LLP has rendered an opinion that Millennium USA and the Master Partnership will each be classified as a partnership and not as an association taxable as a corporation for federal tax purposes. Such counsel has also rendered its opinion that neither Millennium USA nor the Master Partnership will be treated as a "publicly traded partnership" taxable as a corporation. Accordingly, Millennium USA and the Master Partnership generally should not be subject to federal income tax, and each Limited Partner will be required to report on its own annual tax return such Limited Partner's distributive share of Millennium USA's taxable income or loss. (See "Certain Tax Matters Relating to an Investment in Millennium USA.") Entities subject to the U.S. Employee Retirement Income Security Act of 1974, as amended ("ERISA"), may purchase Offered Interests. Investment in Offered Interests by entities subject to ERISA (or other tax-exempt U.S. entities) requires special consideration. Trustees or administrators of such entities are urged to carefully review the matters discussed in this Confidential Memorandum. In particular, Millennium USA may utilize leverage in connection with its trading activities and may engage in certain other activities, which could give rise to "unrelated business taxable income". Millennium USA does not intend to permit investments by "benefit plan investors" (as defined in Section 3(42) of ERISA and any regulations promulgated thereunder) to equal or exceed 25% (or such other percentage as may be specified from time to time in regulations promulgated by the Department of Labor) of the value of any class of equity interests in Millennium USA. (See "ERISA Considerations.") In order to comply with laws and regulations aimed at the prevention of money laundering and terrorist financing, Millennium USA is required to adopt and maintain anti-money laundering procedures, and, accordingly, Millennium USA, or the Administrator on Millennium USA's behalf, may require prospective purchasers or existing Limited Partners to provide 1-13 CONFIDENTIAL UBSTERRAMAR00003944 EFTA00239276 FOR EXISTING INVESTOR USE ONLY evidence to verify their identity, the identity of their beneficial owners and controllers (where applicable), and the source of funds. In the event of delay or failure by a prospective purchaser or a Limited Partner to produce any information required for verification purposes, Millennium USA, or the Administrator on Millennium USA's behalf, may, among other things, refuse to accept the subscription or may effect a compulsory withdrawal of any such Limited Partner from Millennium USA. (See "Anti- Money Laundering Considerations.") DOC ID- 29147063.5 1-14 CONFIDENTIAL UBSTERRAMAR00003945 EFTA00239277 FOR EXISTING INVESTOR USE ONLY PART ONE: INFORMATION SPECIFIC TO THE OFFERING AND MILLENNIUM USA The Partnership This Confidential Memorandum relates to an offering of Class GG interests (the "Class GG Offered Interests") and Class HH interests (the "Class HH Offered Interests," and together with the Class GG Offered Interests, the "Offered Interests") of Millennium USA LP ("Millennium USA"). The Offered Interests generally are intended only for prospective purchasers that are taxable U.S. investors and are persons for which such an investment is otherwise appropriate. Investors in Millennium USA are referred to herein as the "Limited Partners." The Limited Partners, together with Millennium Management LLC, the general partner of Millennium USA ("Millennium Management"), are referred to herein as the "Partners." Millennium Management is also the general partner of the Master Partnership. The Offered Interests, together with all other interests in Millennium USA, are referred to herein as the "Interests." Millennium USA accepts investments from outside investors and primarily invests its capital in Millennium Partners, L.P. (the "Master Partnership") and may also invest through separate legal entities directly in the Master Partnership's underlying strategies. In addition to Millennium USA, Millennium International, Ltd. ("Millennium International") also accepts investments from outside investors and primarily invests its capital in the Master Partnership (or its underlying strategies) indirectly through Millennium Offshore Intermediate, L.P., a Cayman Islands exempted limited partnership (the "Intermediate Partnership"), which, in turn, invests all or substantially all of its capital in the Master Partnership. Each of Millennium USA and Millennium International will make separate investments from time to time as discussed below under "Millennium USA's Investment Program and Strategy." Millennium Global Estate LP ("Millennium Global Estate") also invests in the Master Partnership as part of a broader investment strategy. Additional feeder funds that invest into the Master Partnership or into its underlying strategies may be formed in the future. The Master Partnership and its investment program are described in detail in Part Two of this Confidential Memorandum. Interests Offered; Terms of the Offering Interests Offered Certain Characteristics of the Offered Interests. All offers are made subject to the approval of Millennium Management, and Millennium USA may cease offering the Offered Interests at any time without notice. Millennium Management reserves the right to reject a subscription in its sole and absolute discretion. From time to time Millennium USA may limit additional subscriptions, and in such circumstances Millennium Management will determine which subscriptions to accept across prospective and existing investors, in its sole discretion, taking into account such factors as it deems relevant, including potentially other interests of Millennium Management. The Offered Interests of each class generally have the same rights and characteristics, except that the Class HH Offered Interests do not participate in gains and losses from "new issues" (as such term is defined by the Financial Industry Regulatory Authority ("FINRA")) and activities that Millennium Management determines are related thereto. A description of other classes of DOC ID- 29147063.5 1-15 CONFIDENTIAL UBSTERRAMAR00003946 EFTA00239278 FOR EXISTING INVESTOR USE ONLY Interests of Millennium USA that are currently outstanding is set forth in Appendix I attached hereto. Offered Interests generally will be sold only as of the first business day of a calendar month; monies received prior to the first business day of a calendar month will be held by Millennium USA or its agent and a prospective purchaser will not earn any interest on such monies or any return based on Millennium USA's performance during the period prior to the first business day of such month. In the sole and absolute discretion of Millennium Management, subscriptions may be accepted after the first business day of a calendar month, including, without limitation, because the prospective purchaser's subscription agreement and supporting documentation were not deemed to be complete by Millennium Management, in its sole discretion, on the first business day or because Millennium USA receives the prospective purchaser's subscription monies subsequent to the first business day. If Millennium Management elects, in its sole discretion, to accept a subscription subsequent to the first business day of a calendar month, for whatever reason, the subscription will be deemed to have been invested on the first business day of such calendar month at the relevant subscription price on such day. In such a situation, the prospective investor will, unless otherwise agreed by Millennium Management, be subject to an interest charge at a daily rate determined by Millennium Management for the portion of the month preceding the date that subscription monies are received or the date Millennium Management determines, in its sole discretion, that the subscription agreement of such investor was complete, as applicable, which will be assessed against the capital account of the applicable Limited Partner. See "Interests Offered; Terms of the Offering — Interests Offered." For purposes of this Confidential Memorandum, a business day is any day, Monday through Friday, on which banks in New York City are open for business. There will be no public market for the Offered Interests, and they will not be transferable except under certain limited exceptions. (See "Suitability Requirements; Limitations on Transferability of Interests of Millennium USA.") Holders of other direct or indirect interests in Millennium USA or the Master Partnership will have the right to withdraw their interests pursuant to different and more favorable terms than are applicable to holders of the Offered Interests. As a condition to the acceptance of any subscription for Offered Interests, each prospective purchaser will be required to complete, to the satisfaction of Millennium Management and the Administrator (as defined herein), and sign a subscription agreement (a "Subscription Agreement") in a form to be provided by Millennium Management. Each prospective purchaser will be required in the Subscription Agreement to, among other things, (i) make certain representations, covenants and warranties, (ii) agree that Interests of Millennium USA or withdrawal proceeds in respect thereof may be used to offset obligations of the withdrawing Limited Partner and/or its affiliate(s) (to the extent that the withdrawing Limited Partner and such affiliate(s) have the same beneficial owner) to Millennium USA, the Master Partnership or their respective affiliates, (iii) provide certain information about the prospective purchaser to Millennium USA, Millennium Management and the Administrator and (iv) indemnify Millennium USA, Millennium Management, the Administrator and their respective affiliates for losses incurred by them with respect to the prospective purchaser providing false information or misrepresentations. Millennium USA, Millennium Management, and/or the Administrator may DOC ID- 29147063.5 1-16 CONFIDENTIAL UBSTERRAMAR00003947 EFTA00239279 FOR EXISTING INVESTOR USE ONLY also, from time to time, require such additional certifications, representations, and undertakings as they deem appropriate, including representations as to the net worth of a prospective purchaser. Millennium Management, on behalf of the Limited Partners, may select one or more persons (not affiliated with Millennium Management) to serve on a committee as may be established from time to time in the future without prior notice to Limited Partners, the purpose of which is to consider and, on behalf of the Limited Partners, approve or disapprove, to the extent required by applicable law or deemed advisable by Millennium Management, principal transactions, certain other related-party transactions, certain other transactions and matters involving potential conflicts of interest, including without limitation changes in control of Millennium Management and its affiliates. Such committee may approve of such matters prior to or contemporaneous with, or ratify such matters subsequent to, the consummation of such matters. The person(s) so selected may be exculpated and indemnified by Millennium USA in the same manner and to the same extent as Millennium Management. Under the terms of the Subscription Agreement, each holder of Interests agrees to notify Millennium Management and the Administrator promptly in writing if there is any change with respect to any information provided to Millennium Management and/or the Administrator and to provide any additional information reasonably requested by Millennium Management and/or the Administrator. Minimum Subscription. The minimum initial subscription for an investment in Millennium USA is $5,000,000 and subsequent additional subscriptions following an initial investment may be made in $500,000 increments. Millennium Management may, in its sole discretion, accept subscriptions of lesser amounts or establish different minimums in the future. Millennium Management reserves the right to reject a subscription in its sole and absolute discretion. Sales Charges and Commissions. Unless otherwise previously disclosed to an investor, there will be no sales charges payable to Millennium USA or Millennium Management in connection with the offering of Offered Interests to that investor. To the extent any such charges are applicable and paid from an investor's funds, the investor's actual investment in the Offered Interests will be reduced. Millennium Management or its affiliates may enter into, and have from time to time entered into, agreements with placement agents providing for payment by Millennium Management or its affiliates of a portion of subscription amounts, or providing for ongoing payments based on a percentage of the Incentive Allocation due to Millennium Management that are attributable to the Interests of an investor introduced by such placement agent, or the payment of other amounts to the placement agents. Withdrawal Rights. The withdrawal rights of the Offered Interests are described under "Millennium USA's Organization, Management, Structure, and Operations — Withdrawal Rights." Treatment of New Issues. The Class HH Offered Interests (as well as certain other classes of Interests issued and outstanding as set forth in Appendix I (collectively with the Class HH Offered Interests, the "Restricted Classes")) will not participate in gains and losses from "new issues" (as such term is defined by FINRA) and activities that Millennium Management determines are related thereto. DOC ID- 29147063.5 1-17 CONFIDENTIAL UBSTERRAMAR00003948 EFTA00239280 FOR EXISTING INVESTOR USE ONLY Because the Class GG Offered Interests (as well as certain other classes of Interests previously issued and outstanding as set forth in Appendix I (collectively with the Class GG Offered Interests, the "Unrestricted Classes")) will participate in gains and losses from new issues and activities that Millennium Management determines are related thereto, the value of the net assets attributable to such Interests will likely vary from the value of the net assets attributable to Interests of the Restricted Classes. If a Partner in an Unrestricted Class subsequently becomes restricted from the purchase of new issues, the Interest in the Unrestricted Class held by such Partner will be convened into an Interest in the corresponding Restricted Class. Millennium Management reserves the right to vary its policy with respect to the allocation of the gains and losses from new issues and activities that Millennium Management determines are related thereto as it deems appropriate for Millennium USA as a whole, in light of, among other things, interpretations of, and amendments to, FINRA's rules and practical considerations, including administrative burdens and principles of fairness and equity. Net Asset Value. The Administrator issues Millennium USA's and the Master Partnership's net asset value on a monthly basis after performing independent verification and reconciliation of Millennium USA's and the Master Partnership's assets and liabilities, as well as recording of their expenses, and independent checks on valuation. Valuations of publicly traded security positions are compared to market data independently obtained from third party market data providers. Valuations of security positions are compared to information received from third parties, including brokers and independent valuation service providers. Security positions and cash balances are reconciled with Millennium USA's and the Master Partnership's records based upon confirmations or statements that the Administrator independently receives from prime brokers and other financial institutions that hold assets of Millennium USA and the Master Partnership. The procedures performed do not constitute an audit in accordance with auditing standards generally accepted in the United States (although the financial statements of Millennium USA and the Master Partnership are audited in accordance with such standards by their independent auditors on an annual basis, see "Millennium USA's Independent Public Accountants"). The verification and review work conducted by the Administrator does not constitute a 100% verification of the valuation work of Millennium Management. The value of any investment on any valuation date is intended to represent the fair value of such investment on such date based upon the amount at which the investment could be exchanged between willing parties, other than in a forced liquidation sale, and is Millennium Management's estimate of such value using the methodology described in its valuation policies and procedures as they may be amended or revised from time to time. Any valuation of an investment may not reflect the actual amount that would be received by Millennium USA or the Master Partnership upon the liquidation of such investment. In addition, the timing of liquidations of investments may also affect the prices that could be obtained upon such liquidations. Millennium USA and the Master Partnership are entitled to rely, without independent investigation, upon pricing information and valuations furnished to them by third parties, including pricing services. See "Certain Risk Factors Relating to an Investment in the Master Partnership - Certain Market and Investment Risks — Valuation Risk" in Part Two of this Confidential Memorandum. DOC ID- 29147063.5 1-18 CONFIDENTIAL UBSTERRAMAR00003949 EFTA00239281 FOR EXISTING INVESTOR USE ONLY Certain Risk Factors Relating to Millennium USA Risk Factors Relevant to the Master Partnership. Part Two of this Confidential Memorandum contains a description of risk factors relevant to an investment in the Master Partnership. As Millennium USA primarily invests its assets in the Master Partnership, the risk factors described in Part Two of this Confidential Memorandum likewise apply to an investment in Millennium USA and should be carefully reviewed before any investment is made. Different Returns Among Investors in the Master Partnership. Millennium USA carries out its investment and trading activities primarily by investing in the Master Partnership. Millennium USA may trade and invest a portion of its capital for its own account, when presented with investment opportunities that are appropriate for it and its investors, but that may be inappropriate or not optimal (for tax or other reasons) for other direct or indirect investors in the Master Partnership. Similarly, such other investors may have the benefit of investments inappropriate or not optimal for Millennium USA. For these reasons, returns among Millennium USA and other feeder funds that invest in the Master Partnership will to some degree (and potentially materially) differ. Different Terms of Interests. Millennium USA has existing classes of Interests, and may, from time to time, establish additional classes or series of interests, that provide holders of those interests with rights additional to and/or different from (including, without limitation, with respect to fees, allocations, withdrawal rights, transfers, notices, transparency and reporting) the rights attached to the Offered Interests. In addition, and without limitation of the foregoing, different classes of interests may permit a Limited Partner to withdraw on less notice and/or at different times than holders of Offered Interests, and holders of some classes of interests other than the Offered Interests, which will likely constitute a substantial portion of the indirect ownership of the Master Partnership, are entitled to withdrawal upon the occurrence of a key person event or "Trigger Event." Although the principal of Millennium and certain of his affiliates and certain senior officers of Millennium are expected to hold Offered Interests initially, such persons as well as other senior officers and employees of Millennium, and other related parties, currently invest, and are in the future expected to continue to invest, in existing or newly established classes of interests that have such additional and/or different liquidity rights. In addition, Millennium USA may enter into letter agreements or other similar agreements with one or more Limited Partners that provide different rights to certain Limited Partners. In general, Millennium USA will not be required to notify any or all of the Limited Partners of any such new classes or agreements or any of the rights and/or terms or provisions thereof, nor will Millennium USA be required to offer such additional and/or different rights and/or terms to any or all of the existing Limited Partners. (See "Limited Liquidity" below.) Formation of Additional Vehicles. Millennium Management and its affiliates retain the right to organize additional investment vehicles and to advise additional clients. As set forth in the section entitled "Related-Party Transactions and Other Accounts; Conflicts" in Part Two of this Confidential Memorandum, the existence of such additional vehicles or accounts presents a number of conflicts among such vehicles or accounts, Millennium USA and the Master Partnership. Millennium Management and its affiliates will attempt to resolve such conflicts by making allocations and other judgments on a basis that they believe to be fair and equitable under the DOC ID- 29147063.5 1-19 CONFIDENTIAL UBSTERRAMAR00003950 EFTA00239282 FOR EXISTING INVESTOR USE ONLY circumstances, but there can be no guarantee that such actions will reduce or minimize the associated risk. Issuance of Debt or Preferred Securities and Similar Arrangements. Millennium USA or the Master Partnership may, without notice to or consent from existing investors, issue or guarantee classes of preferred equity, debt and convertible debt, or enter into similar arrangements, including letters of credit, or list a class of shares or interests of another feeder fund or other account on an exchange, which provide the holders thereof or parties thereto terms that are different from, and in some cases, preferential to, the terms applicable to the Interests held by existing Limited Partners in Millennium USA or to Millennium USA's interest in the Master Partnership. Such terms could include, among other things, a security interest over certain assets of the Master Partnership that would provide the holder thereof or party thereto the right to foreclose upon such assets following the occurrence of certain trigger events such as insolvency, bankruptcy, default or a suspension of withdrawals. If such securities are outstanding or such an arrangement exists and a trigger event occurs, it is possible that holders thereof or parties thereto would be entitled to receive assets of the Master Partnership in satisfaction of its obligations to them prior to the time that Limited Partners in Millennium USA are able to withdraw. Limited Liquidity. Interests of classes of Millennium USA other than the Offered Interests, and shares in additional feeder funds that also invest into the Master Partnership (collectively "Other Interests"), generally are significantly more liquid than the Offered Interests. Other Interests are generally able to be withdrawn entirely on an annual basis or for a greater percentage of a holder's interests on a quarterly basis. In addition, unlike the Other Interests, the Offered Interests have no special withdrawal right in the event of the death, disability, adjudication of incompetency, bankruptcy, insolvency or withdrawal from the general partner of the Master Partnership of Israel A. Englander (a "Trigger Event"), or the occurrence of any other key person event. The exercise of such a special withdrawal right by holders of Other Interests will not result in, or be deemed to create, any special withdrawal right for the holders of the Offered Interests (in their capacity as such). Upon the occurrence of a Trigger Event, holders of the Offered Interests will be subject to Millennium Management's plan for the continuation of its operations. More broadly, whether in the context of a Trigger Event or otherwise, holders of Offered Interests will not have any right to approve changes in control of Millennium Management and/or its affiliates, nor to withdraw any Offered Interests in connection therewith. In addition to the Other Interests currently in existence, Millennium USA and the additional feeder funds that invest in the Master Partnership may in the future establish additional classes or series of interests or shares that provide holders of those interests or shares with liquidity terms that are more favorable than those applicable to the Offered Interests. The ability of holders of Other Interests to withdraw Other Interests when the holders of the Offered Interests are restricted from doing so, may materially and adversely impact the Offered Interests, including without limitation, as a result of the holders of Offered Interests bearing a larger portion of the expenses incurred by or on behalf of the Master Partnership. Holdbacks: Suspension. Millennium Management may, in its discretion, hold back a portion of the withdrawal proceeds payable to a Limited Partner in respect of Offered Interests being withdrawn (whether such withdrawal is voluntary or compulsory) to satisfy contingent or expected liabilities. DOC ID- 29147063.5 1-20 CONFIDENTIAL UBSTERRAMAR00003951 EFTA00239283 FOR EXISTING INVESTOR USE ONLY In addition, withdrawals may be suspended if Millennium Management or the Administrator reasonably deems it appropriate to do so to ensure compliance with applicable anti- money laundering regulations and in such other limited circumstances described herein. See "Millennium USA's Organization, Management, Structure and Operations — Withdrawal Rights" and "- Suspension for Anti-Money Laundering Purposes." A breach of a covenant under an agreement relating to indebtedness or similar obligations of the Master Partnership could trigger an acceleration of such indebtedness or obligations, reducing or eliminating equity withdrawals from the Master Partnership by Millennium USA. See "Certain Risk Factors Relating to an Investment in the Master Partnership - Certain Market and Investment Risks - Indebtedness" in Part Two of this Confidential Memorandum. Limitations on Transferability. As discussed below under "Suitability Requirements; Limitations on Transferability of Interests of Millennium USA," the Offered Interests may not be pledged, assigned, hypothecated, sold, exchanged or transferred (each, a "Transfer") without the prior written consent of Millennium Management, which consent may be withheld in the discretion of Millennium Management or made subject to such conditions as may be imposed by Millennium Management in its sole discretion. Any attempted Transfer without such consent may be treated as void or may subject such Offered Interests to a compulsory withdrawal. Millennium Management does not expect to consent to any Transfer that does not meet the requirements set forth below under "Suitability Requirements; Limitations on Transferability of Interests of Millennium USA - Limitations on Transfer; Restrictions on Pledging Offered Interests". Millennium Management reserves the right in its sole discretion to determine whether a Transfer will preserve "high water marks" and holding periods that were applicable to the transferor. Prospective purchasers and prospective transferees must represent that they are purchasing the Offered Interests for investment and meet other suitability requirements as Millennium Management and/or the Administrator, as applicable, considers appropriate. There is no independent market for the purchase or sale of Offered Interests, and none is expected to develop. All of these factors increase the risk that an investor will not be able to liquidate or monetize its investment in the Offered Interests quickly or at a price that approximates the fair market value of the Offered Interests. Compensation of Millennium Management. The Incentive Allocation (defined below under "Allocation of Gains and Losses") may, under some circumstances, create an incentive to cause Millennium Management and the Master Partnership to make investments that are riskier or more speculative than would be the case if such compensation were not performance-based, particularly in any period after losses have been suffered. Further, individual Portfolio Managers (as defined in Part Two of this Confidential Memorandum) who are generally compensated based on their performance, may have similar incentives to engage in more speculative activities than would be the case if such compensation were not performance-based. In addition, because Millennium Management's Incentive Allocation is calculated on a basis that includes unrealized appreciation (and depreciation) of Millennium USA's assets, it may be greater than it would be if the allocation were based solely on realized gains. As discussed below under "Fees and Expenses Relating to Millennium USA," Millennium USA indirectly will be responsible for a (generally pro rata) portion of the expenses, salaries, DOC ID- 29147063.5 1-21 CONFIDENTIAL UBSTERRAMAR00003952 EFTA00239284 FOR EXISTING INVESTOR USE ONLY fringe benefits, bonuses, fees and performance-based compensation (collectively "Compensation") paid to the Portfolio Managers and other employees of, and consultants to the Master Partnership and its affiliates. Compensation expenses will also generally include management or "base" fees charged by Portfolio Managers or third party funds and other compensation paid to personnel who assist in overseeing groups of Portfolio Managers (e.g., the head of a particular strategy), which is based on the overall performance of such Portfolio Managers. This obligation in respect of Compensation is separate from and in addition to the Incentive Allocation. Pass-Through of Expenses. Partners of Millennium USA bear their respective allocable portions of Millennium USA's (through its investment in the Master Partnership) generally pro rata portion of the Master Partnership's costs and expenses as well as all of Millennium USA's costs and expenses (including the amounts payable to affiliates of Millennium Management). Millennium USA's allocable portion of expenses will generally be determined based on the assets of Millennium USA in proportion to the assets of other "feeder funds." This structure may create less of an incentive for Millennium Management to reduce operating and Compensation expenses than an alternative structure (such as a fixed management fee based on the amount of assets under management) would. (See "Fees and Expenses Relating to Millennium USA" and "Related-Party Transactions and Other Accounts; Conflicts" in Part Two of this Confidential Memorandum.) Distributions in Kind. Millennium Management does not currently intend to, but may, in its discretion, distribute securities or other property of Millennium USA (including interests in a special purpose vehicle or similar entity formed for the purpose) in lieu of, or in combination with, cash upon any withdrawal. The value of assets distributed in-kind may increase or decrease before they are able to be sold by the withdrawing Limited Partner. Assets distributed in-kind may not be readily marketable or saleable and may have to be held by the Limited Partners for an indefinite period of time. Contingency Reserves and Holdbacks. Millennium Management may, at any time or times, establish reserves (whether or not in accordance with U.S. generally accepted accounting principles ("GAAP")) for estimated or accrued expenses, liabilities or contingencies, including in connection with the dissolution of Millennium USA or any downsizing of Millennium USA following a Trigger Event (as defined herein). If reserves are established that are not in accordance with GAAP, they will be treated in the same manner as reserves that are in accordance with GAAP, i.e., in the period in which they are taken they shall be treated as an expense of Millennium USA (and, other than in connection with the dissolution of Millennium USA or any downsizing of Millennium USA following a Trigger Event, will reduce the net assets of Millennium USA and related Incentive Allocation (if applicable)), and, if and to the extent that they are subsequently reversed they will be taken into income in the period of such reversal (and will to that extent increase the net assets of Millennium USA and related Incentive Allocation (if applicable)). At the time such reserve is taken, Millennium USA may (but is not required to) provide that income from any subsequent reversal will be attributed solely to persons who were invested when the reserve was taken. The establishment of such reserves will not insulate any portion of Millennium USA's assets from being at risk, and the Master Partnership may make investment decisions relating to assets so reserved as it determines appropriate. DOC ID- 29147063.5 1-22 CONFIDENTIAL UBSTERRAMAR00003953 EFTA00239285 FOR EXISTING INVESTOR USE ONLY In addition to the power to establish reserves, Millennium Management, in its discretion, may hold back a portion of the amount payable to a Limited Partner in respect of a withdrawal (whether such withdrawal is voluntary or compulsory) to satisfy contingent or expected liabilities. The amount of the withdrawal proceeds held back will be determined by Millennium Management, in its sole discretion, taking into account such factors as it considers relevant with respect to any contingent or expected liability. Such holdbacks will reduce the amount paid to a withdrawing Limited Partner. The unused portion of any holdback will be distributed to the Limited Partner to which the holdback applied after Millennium Management has determined that the need therefor has ceased. Investment in the Master Partnership by Related Parties of Millennium Management. The principal, senior officers and certain employees of Millennium Management and its affiliates, and other related parties, may invest in, or have an interest in the returns of, Millennium USA and the other feeder funds through a number of channels, including in certain cases through deferred compensation arrangements. Some of these investments have been leveraged through the extension of credit by a third party to the investment vehicle through which these parties invest. In connection with structuring these investments, the third parties typically make an investment in a class of shares or interests of the relevant feeder fund that is entitled to more favorable liquidation and other rights than other classes under certain circumstances. For example, upon the occurrence of certain events, including declines in the capital of the Master Partnership or such feeder fund below pre-determined thresholds and changes in senior management, such extensions of credit can be terminated by the counterparties and the shares or interests of the feeder fund pledged to or held by the counterparties (up to an amount necessary to repay the extension of financing) can be redeemed or withdrawn without the imposition of contractual limits on redemptions or withdrawals or early redemption or withdrawal charges, on either a monthly or quarterly basis. In addition, Portfolio Managers (and related personnel) are given the opportunity to invest in entities through which they are able to achieve the rate of return of their own strategies. Such investments only share in the expenses generally allocated to such portfolio for purposes of determining compensation of Portfolio Managers and not the expenses of Millennium USA or the Master Partnership generally. Such entities could also lead to potential conflicts of interests. (See "Related-Party Transactions and Other Accounts; Conflicts; Portfolio Manager Investment in Own Strategies" in Part Two of this Confidential Memorandum.) While Millennium Management believes that in substantially all situations these kinds of relationships are useful in aligning the interests of management and Portfolio Managers with those of investors, they can lead to situations where the interests of management or Portfolio Managers diverge from those of other investors. Master-Feeder Structure; Feeder Funds with Differing Liquidity Terms. Millennium USA generally invests through a "master-feeder" structure in the Master Partnership. In addition to the risks presented by differences in the terms of the Offered Interests and Other Interests, the "master- feeder" fund structure presents certain unique risks to investors. For example, substantial withdrawals of capital by a feeder fund from the Master Partnership may impact the other feeder funds. Furthermore, certain feeder funds, including Millennium Global Estate, have different liquidity terms than Millennium USA. (See "Certain Risk Factors Relating to an Investment in the Fund; Business and Structural Risks—Possible Effect of Withdrawals and Redemptions" in Part Two of this Confidential Memorandum.) DOC ID- 29147063.5 1-23 CONFIDENTIAL UBSTERRAMAR00003954 EFTA00239286 FOR EXISTING INVESTOR USE ONLY Tax-Exempt Investors. Certain prospective purchasers may be subject to federal and state laws, rules and regulations which may regulate their participation in Millennium USA, or their engaging directly, or indirectly through an investment in Millennium USA, in investment strategies of the types which the Master Partnership or Portfolio Managers may utilize from time- to-time (e.g., leverage, the purchase and sale of options and limited diversification). While Millennium USA believes the Master Partnership's investment program is generally appropriate for tax-exempt organizations for which an investment in Millennium USA would otherwise be suitable, each type of exempt organization may be subject to different laws, rules and regulations, and prospective purchasers should consult with their own advisers as to the advisability and tax consequences of an investment in Millennium USA (and consider the alternative of investing in Millennium International). Since the Master Partnership is permitted to borrow, tax-exempt Limited Partners may incur income tax liability to the extent of their share of Millennium USA's share of the Master Partnership's "unrelated business taxable income." Trustees or administrators of entities subject to ERISA and other tax-exempt entities should consult their own legal and tax advisers. Identity and Reporting of Beneficial Ownership; Withholding on Certain Payments. In order to avoid a U.S. withholding tax of 30% on certain payments (including payments of gross proceeds) made with respect to certain actual and deemed U.S. investments, the Master Partnership has registered with the Internal Revenue Service (the "Service") and generally will be required to identify, and report information with respect to, certain direct and indirect U.S. account holders (including debtholders and equityholders). Limited Partners should consult their own tax advisors regarding the possible implications of these rules on their investment in the Offered Interests. Suitability Requirements; Limitations on Transferability of Interests of Millennium USA Suitability Requirements Each investor is required to represent that the Offered Interests are being acquired for its own account, for investment, and not with a view to resale or distribution. The Offered Interests are suitable investments only for sophisticated investors for which an investment in Millennium USA does not constitute a complete investment program, and that fully understand, are willing to assume, and have the financial resources necessary to withstand the risks involved in Millennium USA's investment program and to bear the potential loss of their entire investment in the Offered Interests. Investors in Millennium USA must be "accredited investors" as defined in Rule 501 under the Securities Act of 1933, as amended (the "Securities Act") and "qualified purchasers" as such term is defined in Section 2(aX51) of the Investment Company Act of 1940, as amended (the "Investment Company Act"), and must meet other suitability requirements set forth in the Subscription Agreement. Each prospective purchaser is urged to consult with its own advisers to determine the suitability of an investment in the Offered Interests for that prospective purchaser, and to evaluate the relationship of such an investment to the prospective purchaser's overall investment program and financial and tax position. Each prospective purchaser will be required to represent that, after DOC ID- 29147063.5 1-24 CONFIDENTIAL UBSTERRAMAR00003955 EFTA00239287 FOR EXISTING INVESTOR USE ONLY all necessary advice and analysis, its investment in Millennium USA is suitable and appropriate, in light of the foregoing considerations. Prior to any subscription for Offered Interests, each prospective purchaser must represent in writing, by completing and signing the Subscription Agreement, that it meets the suitability standards referred to in this Confidential Memorandum. Millennium Management has the right to reject a subscription for any reason or for no reason, even if the prospective purchaser satisfies Millennium USA's suitability requirements. Limitations on Transfer; Restrictions on Pledging Offered Interests Each investor must bear the economic risk of the investment for an extended period of time (subject to the limited rights of withdrawal described herein). Each investor will be required to agree that (i) no Offered Interests, nor any interest therein, may be Transferred without the prior written consent of Millennium Management (except by operation of law), which consent may be withheld in the discretion of Millennium Management or made subject to such conditions as may be imposed by Millennium Management in its sole discretion, (ii) prior to considering any request to permit transfer of Offered Interests, Millennium Management and/or the Administrator, as applicable, may require the submission by the proposed transferee of a certification as to the matters referred to in the preceding paragraphs as well as such other documents, representations or undertakings as Millennium Management and/or the Administrator considers appropriate, and (iii) any attempted pledge, transfer or assignment of Offered Interests in violation of the foregoing restrictions shall be invalid and void ab initio. Transferred Interests generally will be deemed to have been purchased as of the date of the transfer for all purposes, including calculating the Incentive Allocation, unless otherwise agreed to by Millennium Management, in its sole discretion. Millennium Management may in its sole discretion permit certain transferred interests to maintain their original purchase date and high water mark. Millennium Management and/or the Administrator on its behalf may refuse to issue, register or permit the transfer of Offered Interests if it is not satisfied that such issuance, registration or transfer is consistent with the best interests of Millennium USA. In addition, no Offered Interests may be issued, registered or transferred to any non-U.S. Person, directly or indirectly. Millennium Management may, in its sole discretion, elect to charge a Limited Partner the costs (including attorneys' fees) related to any requested transfer, assignment, pledge or encumbrance of the Limited Partner's Interests. Millennium Management will not consent to any Transfer other than a Transfer (i) in circumstances in which the tax basis of the Offered Interest in the hands of the transferee is determined, in whole or in part, by reference to its tax basis in the hands of the transferor, (ii) to members of such Partner's immediate family (brothers, sisters, spouse, parents and children), or (iii) as a distribution from a qualified retirement plan or an individual retirement account (each, a "Permissible Transfer"), unless Millennium Management determines that the proposed Transfer will not cause Millennium USA to be treated as a "publicly traded partnership" taxable as a corporation for Federal tax purposes. Without limiting the foregoing, unless otherwise agreed to by Millennium Management, Millennium Management generally does not expect to consent to any Transfer (other than a Permissible Transfer) unless the Transfer (i) is between existing limited partners effective as of the beginning of the next fiscal quarter after 65 days' prior written notice to Millennium USA and the Administrator, and (ii) is based on the net asset value of the Offered Interests being transferred as of the effective date of the Transfer. DOC ID- 29147063.5 1-25 CONFIDENTIAL UBSTERRAMAR00003956 EFTA00239288 FOR EXISTING INVESTOR USE ONLY Holders of Offered Interests that desire to pledge, transfer, assign, or otherwise dispose of Offered Interests should assume that they will not receive any help or assistance from Millennium Management in that regard. Millennium USA's Investment Program and Strategy The investment objective of Millennium USA is to achieve above-average appreciation by opportunistically trading and investing in a wide variety of securities, instruments, and other investment opportunities and engaging in a broad array of trading and investment strategies. THERE ARE NO SUBSTANTIVE LIMITS ON THE INVESTMENT STRATEGIES THAT MAY BE PURSUED BY MILLENNIUM USA. The Master Partnership's investment program and the strategies it employs are described in Part Two of this Confidential Memorandum and, except as otherwise indicated in this Part One of the Confidential Memorandum, should be construed as also being the investment program and strategies of Millennium USA insofar as Millennium USA invests through the Master Partnership. Millennium USA may directly engage in any investment activities in which the Master Partnership engages (as more fully described in Part Two of this Confidential Memorandum). Use of Proceeds by Millennium USA Net proceeds received by Millennium USA from the sale of Offered Interests generally will be invested and otherwise utilized by Millennium USA as described in this Confidential Memorandum. This means that the net proceeds will be invested primarily in the Master Partnership and used by the Master Partnership in its investment program and will be used by Millennium USA and the Master Partnership for expenses. A portion of the net proceeds received by Millennium USA may be employed in direct investments made by Millennium USA. (See "Millennium USA's Investment Program and Strategy.") Millennium USA's Organization, Management, Structure, and Operations Organization Millennium USA is a Delaware limited partnership formed in November 1997. Millennium USA's principal office is located at 666 Fifth Avenue, 8th Floor, New York, New York 10103-0899. Master-Feeder Relationship As discussed in Part Two of this Confidential Memorandum under "The Master Partnership's Organization — Organization," the master-feeder relationship between the Master Partnership and Millennium USA has been structured, among other reasons, to give U.S. taxpayers an opportunity to invest in the Master Partnership indirectly. Capital Structure Millennium USA and Millennium International and other existing feeder funds have, and feeder funds that may be formed in the future may have, a variety of classes (and sub-classes) of DOC ID- 29147063.5 1-26 CONFIDENTIAL UBSTERRAMAR00003957 EFTA00239289 FOR EXISTING INVESTOR USE ONLY interests and shares, respectively, outstanding, and may offer additional classes (and sub-classes) of shares and interests in the future, and, in some instances, have additional contractual (or "side letter") agreements with particular investors. The classes of interests issued by Millennium USA other than the Offered Interests that are outstanding as of the date hereof are set forth in Appendix I. The provisions of the different classes of outstanding shares or interests, and of such contractual undertakings, are not uniform, with the effect that some investors in the funds to some degree have different rights and entitlements from those of other investors, which may be true even though the fundamental economic terms of the investments are otherwise identical. Such differing provisions relate primarily to withdrawal rights (the frequency of permissible withdrawals, the notice period required for withdrawals, and the circumstances under which accelerated withdrawal is permissible) and the detail and frequency with which information is provided regarding returns or broad portfolio segment information. In the sole discretion of Millennium Management, (i) Millennium USA may issue other classes of interests in the future that may differ in terms of, among other things, denomination of currency, the fees/allocations charged, minimum commitment amounts, withdrawal rights and other rights, (ii) Millennium Management may establish and designate such new classes of interests without the approval of the Limited Partners, (iii) Millennium Management will determine the terms of such classes and (iv) Millennium Management may combine classes of interests or convert one class into another class, in each case, so long as such action does not adversely affect the terms of the other classes of interests in any material respect. Millennium International and Millennium USA do not generally enter into contractual arrangements or undertakings providing for withdrawal rights materially different from those generally available (subject to exceptions in order to address legal, regulatory, tax or similar requirements applicable to certain investors and in connection with deferred compensation arrangements or similar feeder fund investments as described under"Certain Risk Factors Relating to Millennium USA — Investment in the Master Partnership by Millennium Management and its Affiliates and Portfolio Managers"). Withdrawal Rights Offered Interests generally may be withdrawn on either the "Quarterly Withdrawal Schedule" or the "Annual Withdrawal Schedule," each as described below. Millennium USA may, in its sole and absolute discretion, permit a withdrawal of Offered Interests at intervals, in amounts and pursuant to such notice terms other than those set forth below or convert Offered Interests into interests in another class with substantially the same rights and characteristics if it determines that such a withdrawal or conversion would be permitted by applicable law; provided that Millennium Management determines that such action will not cause Millennium USA or the Master Partnership to be treated as a "publicly traded partnership" taxable as a corporation for Federal tax purposes. Withdrawal requests are irrevocable upon receipt by Millennium USA, subject to Millennium USA's sole discretion to permit revocation in whole or in part. Withdrawal requests received outside of the specified notice period for a particular Quarterly Withdrawal Date or Annual Withdrawal Schedule Date will be deemed null and void and will not be honored. In addition, a withdrawal request received for an amount in excess of the maximum amount withdrawable will be honored only to the extent of such maximum amount, and the request as to the excess amount will be deemed null and void and will not be honored. DOC ID- 29147063.5 1-27 CONFIDENTIAL UBSTERRAMAR00003958 EFTA00239290 FOR EXISTING INVESTOR USE ONLY Quarterly Withdrawal Schedule A Limited Partner may elect to withdraw up to 5% of the net asset value of such Limited Partner's Offered Interests as of the end of any calendar quarter (a "Quarterly Withdrawal") by providing written notice at least 90 days and no more than 180 days prior to the end of the applicable calendar quarter (a "Quarterly Withdrawal Date"). In addition, if as a result of Quarterly Withdrawals (whether or not consecutive) the net asset value of a Limited Partner's Offered Interests is equal to 5% or less of its aggregate subscription amounts for Offered Interests, a Limited Partner may withdraw the balance of such Offered Interests by providing written notice at least 90 days and no more than 180 days prior to the end of a calendar quarter. All notices must be provided to both Millennium USA and the Administrator. Annual Withdrawal Schedule A Limited Partner may elect to withdraw the entire net asset value of such Limited Partner's Offered Interests over a five (5) year period by making five consecutive annual withdrawal requests, with proceeds paid on a calendar quarterly basis within each such annual period as set forth in the table below (each annual period, an "Annual Withdrawal Period," and each calendar quarter end withdrawal date within an Annual Withdrawal Period, an "Annual Withdrawal Schedule Date"). A Limited Partner may elect to commence an Annual Withdrawal Period as of any calendar quarter, but such Annual Withdrawal Period does not have to coincide with a calendar year. A Limited Partner electing to withdraw Offered Interests pursuant to the Annual Withdrawal Schedule must provide written notice to both Millennium USA and the Administrator at least 90 days and no more than 180 days (i) prior to the First Annual Withdrawal Schedule Date of the First Annual Withdrawal Period and (ii) prior to the First Annual Withdrawal Schedule Date of each subsequent Annual Withdrawal Period. During each Annual Withdrawal Period, withdrawal amounts will be calculated based on the net asset value of such Limited Partner's Offered Interests as of each Annual Withdrawal Schedule Date (excluding the net asset value of any additional Offered Interests subscribed for or otherwise received following the commencement of the Annual Withdrawal Schedule) as follows: DOC ID- 29147063.5 1-28 CONFIDENTIAL UBSTERRAMAR00003959 EFTA00239291 FOR EXISTING INVESTOR USE ONLY First Annual Withdrawal Schedule Date: Percentage of NAV Second Annual Withdrawal Schedule Date: Percentage of NAV Third Annual Withdrawal Schedule Date: Percentage of NAV Fourth Annual Withdrawal Schedule Date: Percentage of NAV First Annual Withdrawal Period I/20a' (5.00%) 1/1O (approx. 5.26%) I/18''' (approx. 5.56%) I/17th (approx. 5.88%) Second Annual Withdrawal Period 1/16th (6.25%) 1/15th (approx. 6.67%) 1/14th (approx. 7.14%) 1/13th (approx. 7.69°4) Third Annual Withdrawal Period 1/12th (approx. 8.33%) 1/11th (approx. 9.09%) 1/10th (10.00%) 1/9th (approx. 11.11%) Fourth Annual Withdrawal Period 1/8th (12.50%) 'nth (approx. 14.2r/o) 1/6th (approx. 16.67%) 115th (20.00%) Fifth Annual Withdrawal Period 1/4th (25.00%) 1/3'd (approx. 33.33%) 1/2 (50.00%) I/1 (100%) If a Limited Partner on the Annual Withdrawal Schedule does not make five consecutive annual requests, or does not provide timely notice for an Annual Withdrawal Period, any future withdrawal pursuant to the Annual Withdrawal Schedule will be treated as starting a new First Annual Withdrawal Period and will be subject to all applicable terms and requirements (including required annual notices) of the Annual Withdrawal Schedule. In addition, if a Limited Partner on the Annual Withdrawal Schedule subscribes for or otherwise receives additional Offered Interests during an Annual Withdrawal Period, any future withdrawal request pursuant to the Annual Withdrawal Schedule as to such additional Offered Interests will start with a new First Annual Withdrawal Period and will be subject to all applicable terms and requirements (including required annual notices) of the Annual Withdrawal Schedule. Notwithstanding the foregoing, a Limited Partner that has made consecutive Quarterly Withdrawals of 5% of such Limited Partner's Offered Interests and then elects to transition as of the following calendar quarter end to an Annual Withdrawal Schedule will receive credit for the number of consecutive 5% Quarterly Withdrawals only as follows: • A Limited Partner that has made at least four but fewer than eight consecutive 5% Quarterly Withdrawals may elect to commence on the Annual Withdrawal Schedule beginning with the Second Annual Withdrawal Period. • A Limited Partner that has made at least eight consecutive 5% Quarterly Withdrawals (and any number of consecutive 5% Quarterly Withdrawals in excess thereof) may elect to commence on the Annual Withdrawal Schedule beginning with the Third Annual Withdrawal Period. A Limited Partner electing to transition from the Quarterly Withdrawal Schedule to the Annual Withdrawal Schedule in accordance with the foregoing must provide prior written notice DOC ID- 29147063.5 1-29 CONFIDENTIAL UBSTERRAMAR00003960 EFTA00239292 FOR EXISTING INVESTOR USE ONLY to both Millennium USA and the Administrator at least 90 days and no more than 180 days prior to the First Annual Withdrawal Schedule Date, provided that such First Annual Withdrawal Schedule Date mug be one full calendar quarter following such Limited Partner's last 5% Quarterly Withdrawal. A Limited Partner may only request a withdrawal of Offered Interests as of any calendar quarter end with the requisite notice pursuant to either the Quarterly Withdrawal Schedule or the Annual Withdrawal Schedule, and not both schedules. A Limited Partner is entitled to no more than one (1) withdrawal of Offered Interests per calendar quarter pursuant to either the Quarterly Withdrawal Schedule or the Annual Withdrawal Schedule, and no more than four (4) withdrawals per 12-month period. Withdrawal Price: Payments. The price at which Offered Interests will be withdrawn (the "Withdrawal Price") will be the net asset value of the applicable series of the Offered Interests, determined net of any applicable Incentive Allocation as of the close of business at the end of the applicable calendar quarter. Millennium USA generally will pay 95% of the withdrawal payment within 30 days following the applicable withdrawal date (whether pursuant to the Quarterly Withdrawal Schedule or the Annual Withdrawal Schedule) and generally will withhold 5% of any withdrawal payment pending closing of Millennium USA's books and reconciliation of the amounts due for the quarter (in each case, computed on the basis of unaudited data as of the withdrawal date, and subject to any applicable reserves or holdbacks). However, if a withdrawal date coincides with a date as of which Millennium USA's financial statements are audited, the withdrawal payment will generally be made, subject to audit adjustments, after completion of the audit. If the amount of a withdrawal exceeds 90% of the aggregate value of the Limited Partner's Offered Interests (after taking into account any adjustments made in connection with the audit) immediately prior to the applicable withdrawal date, then Millennium USA generally will withhold from the withdrawal payment 10% of the aggregate value. The balance will be paid (subject to audit adjustments), within 30 days after the completion of the next audit of Millennium USA, subject to any applicable reserves or holdbacks. Balances held until following the completion of an audit, if any, will be paid with interest, calculated from the applicable withdrawal date until the payment date at the average (calculated weekly) per annum short-term (13-week) Treasury Bill rate. Millennium Management may, in its discretion, elect to withhold smaller amounts than those described above or to accelerate the repayment of withheld balances. Please be advised that it is generally the policy of the Administrator that all withdrawal proceeds are paid to the account from which the monies were originally debited, unless otherwise agreed upon by Millennium Management and the Administrator. Payments generally will not be made to third party accounts that are not in the name of the withdrawing Limited Partner, unless otherwise required under law. DOC ID- 29147063.5 1-30 CONFIDENTIAL UBSTERRAMAR00003961 EFTA00239293 FOR EXISTING INVESTOR USE ONLY Withdrawals by an investor that holds more than one series of Offered Interests will be deemed to be made on a first-in first-out basis absent specific instructions to the contrary from the investor. In the event of the death of Mr. Englander, the death benefits distributable to the Master Partnership from "keyman" life insurance upon Mr. Englander's life will be deemed to be assets of the Master Partnership as of the date immediately prior to his death and therefore will be included in the calculation of net asset value of Millennium USA. Limited Liquidity. Other Interests generally are significantly more liquid than the Offered Interests. For instance and without limitation, unlike the Other Interests, the Offered Interests have no special withdrawal right in the event of the death, disability, adjudication of incompetency, bankruptcy, insolvency or withdrawal from the general partner of the Master Partnership of Israel A. Englander (a "Trigger Event"), or the occurrence of any other key person event. The exercise of such a special withdrawal right by holders of Other Interests will not result in, or be deemed to create, any special withdrawal right for the holders of the Offered Interests (in their capacity as such). Please see "Certain Risk Factors Relating to Millennium USA" — "Different Terms of Interests" and "Limited Liquidity" for additional information regarding such differences in liquidity and the potential implications for holders of Offered Interests. Other Withdrawal Rights. In addition, investors in other classes of Interests of Millennium USA may withdraw all of their capital accounts at such other time and upon such terms as permitted in respect of such class in accordance with the Partnership Agreement. Holdbacks. Millennium Management, in its discretion, may hold back a portion of the amount payable to a Limited Partner in respect of a withdrawal (whether such withdrawal is voluntary or compulsory) to satisfy contingent or expected liabilities. The amount of the withdrawal proceeds held back will be determined by Millennium Management in its sole discretion taking into account such factors as it considers relevant with respect to any contingent or expected liability. Such holdbacks will reduce the amount paid to a withdrawing Limited Partner. The unused portion of any holdback will be distributed to the Limited Partner to which the holdback applied if and to the extent that Millennium Management subsequently determines that the need therefor has ceased. Withdrawal or Transfer Charges. In the event that an investor makes a complete or partial withdrawal or Transfer on a date other than the regular withdrawal dates applicable to the particular class of Interests of Millennium USA, Millennium USA has the right to charge such withdrawing or transferring investor any legal, accounting and administrative, registrar and transfer costs associated with such withdrawal or Transfer of all or a portion of its Interests, and in that connection may establish reserves for contingencies, including general reserves for unspecified contingencies. Deferral of Withdrawal Payments. Payments of withdrawal proceeds may be suspended if Millennium Management and/or the Administrator determine that they will violate applicable law, including any applicable rules or regulations of any regulatory agency or exchange, or any contract or agreement to which Millennium USA or any affiliate is then a party. DOC ID- 29147063.5 1-31 CONFIDENTIAL UBSTERRAMAR00003962 EFTA00239294 FOR EXISTING INVESTOR USE ONLY Suspension for Anti-Money Laundering Purposes Withdrawals by any investor purchasing Offered Interests hereunder may be suspended if Millennium Management and/or the Administrator reasonably deem it appropriate to do so to ensure compliance with anti-money laundering regulations applicable to Millennium USA, Millennium Management, the Administrator or any of Millennium USA's other service providers. Please be advised that the Administrator may require any additional documentation, as reasonably necessary, to process a withdrawal request. Compulsory Withdrawal Millennium Management reserves the right, upon not less than five days' prior written notice (unless Millennium Management determines that it is necessary to reduce such period in order to comply with applicable law or similar requirements), to require any investor to withdraw all or any portion of its capital account at any time for any reason or no reason. Any such compulsory withdrawal will be effective as of the date specified in the notice. Conversion of Offered Interests Millennium USA from time to time may, for administrative convenience or any other reason, and without any consent of or notice to Limited Partners, redesignate and convert all or any portion of the outstanding Offered Interests into another class of Interests of Millennium USA with substantially the same rights and characteristics. Management of Millennium USA The general partner of Millennium USA and the general partner of the Master Partnership is Millennium Management, a Delaware limited liability company. As discussed under "Certain Legal and Regulatory Matters Relating to the Master Partnership" in Part Two of this Confidential Memorandum, Millennium Management is the commodity pool operator and commodity trading advisor of Millennium USA and the Master Partnership and has general responsibility and authority for supervising all aspects of Millennium USA's and the Master Partnership's business and operations. Millennium Management and other affiliated entities that participate in the management of the Master Partnership's assets are collectively referred to herein as "Millennium." The Limited Partners have no right to act on behalf of Millennium USA or the Master Partnership in connection with any matter. Millennium Management has the right to dissolve Millennium USA at any time (including during a fiscal year), for any reason or for no reason. In the case of such termination, Millennium USA's net assets (less reserves) will be distributed to the Limited Partners within 30 days after the completion of a final audit of Millennium USA's books (which must be performed within 90 days of the date of dissolution). Biographies of the principal and senior management of Millennium Management can be found under "The Master Partnership's Management, Structure and Operations — Management — Principals and Key Managers" in Part Two of this Confidential Memorandum. DOC ID- 29147063.5 1-32 CONFIDENTIAL UBSTERRAMAR00003963 EFTA00239295 FOR EXISTING INVESTOR USE ONLY The Administrator Millennium USA and the Master Partnership have each entered into an agreement (the "Services Agreement") with an independent third-party administrator, SS&C Financial Services LLC (the "Administrator"). Pursuant to the Services Agreement, the Administrator is responsible, under the overall supervision of Millennium Management, for matters pertaining to the administration of Millennium USA, including, among other things: (i) the calculation and issuance of the net asset values of Millennium USA (and each class, sub-class and series of Interests thereof) on a monthly basis, based on information provided by Millennium USA and Millennium Management; (ii) the recording of transactions and the reconciliation of cash, positions and transactions between Millennium USA's and the Master Partnership's books and records and their respective trading counterparties, prime brokers and custodians; (iii) the calculation of Millennium USA's profit and loss; (iv) registrar and transfer agency services, as more fully described below; and (v) year-end support services with respect to Millennium USA's audit and tax processes, as may be required. The administrative services provided by the Administrator include, among other things, (i) processing and reviewing subscription documents (and ancillary documentation provided in connection therewith) submitted by prospective investors; (ii) performing checks of prospective investors against the Department of Treasury Office of Financial Assets Control Specialty Designated National Lists; (iii) generally performing all actions related to the issuance, transfer and withdrawal of the Offered Interests; (iv) distributing monthly statements to Limited Partners; and (v) performing certain other administrative and clerical services in connection with the administration of Millennium USA. The office of the Administrator is located at One South Road, Harrison, New York 10528. The Administrator may have relationships with providers of technology, data or other services to Millennium USA and may receive economic and/or other benefits in connection therewith. The Administrator may subcontract with agents selected by the Administrator in good faith and with reasonable care for administrative and certain other services; provided that the Administrator gives Millennium USA prior written notice of the identify of such agent and, with respect to the performance of any material service, the opportunity to consent to the use of any such agent prior to the performance of any such services. The Administrator does not act as guarantor of Millennium USA's Offered Interests. Moreover, the Administrator is not responsible for any of the trading or investment decisions of Millennium USA (all of which are made by Millennium Management), or the effect of such trading decisions on the performance of Millennium USA. The Administrator will receive a monthly fee from Millennium USA. Certain extraordinary out-of-pocket expenses of the Administrator may also be charged to Millennium USA in accordance with the Services Agreement. The Services Agreement contains customary indemnification provisions whereby Millennium USA has agreed to indemnify the Administrator (and its officers, directors, investors, beneficiaries or employees, and any of their successors or assigns) against any and all losses, DOC ID- 29147063.5 1-33 CONFIDENTIAL UBSTERRAMAR00003964 EFTA00239296 FOR EXISTING INVESTOR USE ONLY claims, judgments, liabilities, costs, expenses (including, without limitation, reasonable attorneys' fees) and amounts paid in settlement incurred in connection with the Services Agreement, unless the action or omission giving rise thereto is found by a final determination of an arbitrator, mediator, or court of competent jurisdiction to have resulted solely from the fraud, gross negligence or willful misconduct by such indemnified party in connection with the performance of its duties and obligations under the Services Agreement. The Administrator's total liability in connection with the performance of the Services Agreement will be limited to the then average monthly services fee that was paid during the preceding 12 months, multiplied by 36. Fees and Expenses Relating to Millennium USA Millennium USA is, directly, or through its investment in the Master Partnership, responsible for all expenses, without limitation, directly or indirectly, in connection with its operation, including, without limitation: • all fees and expenses incurred in connection with any transactions, engagements, and other agreements that it enters into on its own behalf, including, among other things, costs and expenses of the Administrator, expenses incurred in connection with the private placement of Interests in Millennium USA (other than placement fees, if any); and • a generally pro rata portion of all fees and expenses incurred by Millennium Management and its affiliates with respect to, or in connection with (e.g. through the operation of and the provision of services to), the Master Partnership and its affiliates or incurred directly by the Master Partnership or jointly by multiple feeder funds. See "The Master Partnership's Fees and Expenses" in Part Two of this Confidential Memorandum for a description and non-exhaustive list of such expenses, including, without limitation, the following general expense categories: compensation and fringe benefits payable to employees, and fees payable to others providing services to the Master Partnership; expenses related to computers, equipment and technology; expenses related to maintaining offices, including leases and fixtures; insurance premiums; expenses related to investment activities; accounting, valuation, audit, tax and legal expenses; fees and expenses paid for the investment advisory services of affiliated entities that participate in the management of the Master Partnership's assets; and other miscellaneous expenses. This means that the Limited Partners of Millennium USA will each bear their respective pro rata portions of all of Millennium USA's costs, fees, and expenses (except with respect to Investor-Related Taxes) through reductions in their capital accounts. Millennium generally seeks to allocate expenses among Millennium USA and the other feeder funds, including Millennium International on a pro rata basis according to the relative values of their interests in the Master Partnership, but a particular expense (e.g., Investor-Related Taxes) may be allocated differently if Millennium determines in its discretion that it would be fair and reasonable to do so under the circumstances. In considering whether to allocate an expense to certain feeder funds or pro rata among all the feeder funds, Millennium will consider factors such as whether the resource or services to which such expense relates might ultimately directly or DOC ID- 29147063.5 1-34 CONFIDENTIAL UBSTERRAMAR00003965 EFTA00239297 FOR EXISTING INVESTOR USE ONLY indirectly benefit one or more feeder funds other than the initial beneficiary, whether such expense is de minimis in nature, and/or whether the expense associated with determining and administering such allocation would likely be disproportionate relative to the actual expense to be allocated. "Investor-Related Tax" means any tax withheld from Millennium USA or the Master Partnership or paid over by Millennium USA or the Master Partnership, in each case, directly or indirectly, with respect to or on behalf of a Partner or a direct or indirect beneficial owner of the Master Partnership, and interest, penalties and/or any additional amounts with respect thereto, including (i) a tax that is determined based on the status, action or inaction (including the failure of a Partner or a direct or indirect beneficial owner of the Master Partnership to provide information to eliminate or reduce withholding or other taxes) of a Partner or a direct or indirect beneficial owner of the Master Partnership, or (ii) an "imputed underpayment" within the meaning of Section 6225 of the Internal Revenue Code of 1986, as amended (the "Code"), and any other similar tax, attributable to a Partner or a direct or indirect beneficial owner of the Master Partnership, as determined by Millennium Management in its sole discretion. Certain expenses, including expenses for office space, services, personnel, equipment and software, among other things, incurred by Millennium in connection with the provision of investment management, administrative or other services to Millennium USA and other funds, accounts or third parties or otherwise in connection with the activities of Millennium will be allocated among Millennium USA and the recipients of the services that generate such items of expense. Millennium will seek to allocate such expenses fairly and equitably among Millennium USA and such other recipients based upon certain estimates and assumptions that Millennium believes are reasonable and appropriate, but which may be imprecise and may result in Millennium USA's bearing a larger portion of such expenses than if they were calculated in a different manner. In determining what expenses are allocable to Millennium USA and other funds, accounts or third parties or otherwise in connection with the activities of Millennium, the need to allocate common expenses may present a conflict. Millennium will attempt to mitigate any such conflicts by making allocations and other judgments on a basis that it believes to be fair and reasonable under the circumstances, although it may not be possible to fully or partially mitigate each such conflict, and such conflicts will not necessarily be resolved in favor of the Limited Partners. (See "Related- Party Transactions and Other Accounts; Conflicts; Allocation of Expenses Among Feeder Funds and Other Accounts" in Part Two of this Confidential Memorandum.) Assets of Millennium, including, without limitation, intellectual property developed in connection with services provided to Millennium USA and the Master Partnership, may be utilized in the conduct of other business activities in the sole discretion of Millennium without compensation or reimbursement to Millennium USA, including (without limitation) reimbursement of the costs incurred in the development of such assets, but subject to the appropriate allocation of ongoing expenses in accordance with Millennium's expense allocation policies as in effect from time to time. As described above under "Interests Offered; Terms of the Offering — Allocations of Gains and Losses," at the end of each fiscal year of Millennium USA, or at such other date during a fiscal year as of which the following reallocation is required, 20% of the aggregate Net Capital Appreciation of Millennium USA for the year will be reallocated to Millennium Management as its Incentive Allocation. The Incentive Allocation is calculated on the basis of realized and unrealized gains and losses and after all expenses, including a pro rata portion of the Master Partnership's expenses, as described above, are paid or accrued (See "Interests Offered; Terms of DOC ID- 29147063.5 1-35 CONFIDENTIAL UBSTERRAMAR00003966 EFTA00239298 FOR EXISTING INVESTOR USE ONLY the Offering — Allocations of Gains and Losses" and "Certain Risk Factors Relating to Millennium USA - Incentive Allocation"). Allocation of Gains and Losses A separate capital account will be created on the books of Millennium USA for, and in the amount of, each capital contribution of a Partner. At the end of each Accounting Period' of Millennium USA, any Net Capital Appreciation2 or Net Capital Depreciation; of Millennium USA, after payment of expenses (see "Certain Risk Factors Relating to Millennium USA — Compensation of Millennium Management" and "Fees and Expenses Relating to Millennium USA"), will be tentatively credited or debited to each Partner (including Millennium Management) in proportion to the opening balances of that Partner's capital account for such period (the Partner's "Partnership Percentage"). At the end of each fiscal year of Millennium USA, or at such other date during a fiscal year as of which the following reallocation is required, 20% of the aggregate Net Capital Appreciation of Millennium USA attributable to the Offered Interests tentatively credited to each Limited Partner's capital accounts (excluding, in Millennium Management's discretion, capital accounts of Special Limited Partners4) for the year will be reallocated to the capital accounts of Millennium Management as its "Incentive Allocation." The Net Capital Appreciation upon which the calculation of an Incentive Allocation is based is deemed reduced by the unrecovered balance, if any, in a Limited Partner's "Loss Recovery Account." A Loss Recovery Account is a memorandum account, established for each capital account of a Limited Partner upon its creation, the opening balance of which is zero. At "Accounting Period" means the following periods: each Accounting Period shall commcncc immediately after the close of the inunediately preceding Accounting Period: each Accounting Period shall close at the close of business on the first to occur of (i) the last day of Millennium USA's fiscal quarter (which shall be the calendar quarter). (ii) the date immediately prior to the effective dale of the admission of a new• Partner pursuant to the Partnership Agreement. (iii) the date inunediately prior to the effective date of a Partner's capital contribution pursuant to the Partnership Agreement. (iv) the effective date of any withdrawal by a Partner of capital pursuant to the Partnership Agreement. (v) the date when Millennium USA shall dissolve or (iv) such other date prior to dissolution as Millennium Management may from time to time determine in its discretion pursuant to the Partnership Agreement. "Net Capital Appreciation" means the increase in the value of Millennium USA's net assets. including unrealized gains, from the beginning of each Accounting Period to the end of such Accounting Period (before giving effect to any Investor-Related Taxes accrued or paid during such Accounting Period). 3 "Net Capital Depreciation" means the decrease in the value of Millennium USA's net assets, including unrealized losses, from the beginning of each Accounting Period to the end of such Accounting Period (before giving effect to any Investor-Related Taxes accrued or paid during such Accounting Period). "Special Limited Partner" is defined as any Limited Partner who is a member, officer, director or employee of Millennium USA or the Master Partnership: any other Limited Partner. as determined in the sole discretion of Millennium Management; Millennium Management or any person controlling, controlled by or under common control with it or any member. officer, director or employee of such person (collectively, the foregoing. "Affiliates"); immediate family of Israel A. Englander. the controlling trustee of Millennium GroupManagement LLC (formerly, Millennium International Management GP LLC), the managing member of Millennium Management. or trusts for the benefit of any member thereof: and any Limited Partner that is an entity directly or indirectly controlled by Millennium Management or Affiliates. DOC ID- 29147063.5 1-36 CONFIDENTIAL UBSTERRAMAR00003967 EFTA00239299 FOR EXISTING INVESTOR USE ONLY each date that an Incentive Allocation is to be determined, the balance in each Loss Recovery Account will include the aggregate Net Capital Depreciation since the last date on which a calculation of the Incentive Allocation was made and be reduced, but not beyond zero, by aggregate Net Capital Appreciation since such date. In the event that a Limited Partner with an unrecovered balance in any of its Loss Recovery Accounts withdraws all or a portion of its related capital accounts, the unrecovered balance in such Loss Recovery Accounts will be proportionately reduced. For purposes of determining allocations, including calculating the Incentive Allocation and the balance in a Limited Partner's Loss Recovery Account, any Investor-Related Taxes related to a Limited Partner shall be deemed distributed from the capital account of such Limited Partner to such Limited Partner and shall not be deemed to be expenses that reduce Net Capital Appreciation, increase Net Capital Depreciation or increase the balance of the Loss Recovery Account. In connection with the (i) downsizing of Millennium USA following a Trigger Event, or (ii) dissolution of Millennium USA, reserves for liabilities will be established for the estimated costs of downsizing or liquidating assets and liabilities, such as (without limitation) payments required as severance for personnel, or for termination of advisory or other agreements or contracts or leases, and the like. However, such reserves, and all other related costs and expenses, will be disregarded for the purpose of calculating Net Capital Appreciation or Net Capital Depreciation in determining the amount of the Incentive Allocation. Reserves, and related costs and expenses taken by the Master Partnership will also be reflected on the books of Millennium USA, and similarly disregarded in calculating the Incentive Allocation. Any unused portion of a reserve established in anticipation of possible downsizing or dissolution of Millennium USA that is not expected to be used will be reversed after Millennium Management, in its sole discretion, has determined that the need therefor has ceased. If a Limited Partner withdraws all or a portion of any of its capital accounts other than at the end of a fiscal year, an Incentive Allocation (the "Interim Year Incentive Allocation") with respect to such capital accounts will be determined and allocated to the capital account of Millennium Management on the effective distribution date for the period from the commencement of Millennium USA's fiscal year through the effective date of distribution. The Interim Year Incentive Allocation will be based upon the Net Capital Appreciation allocated to such capital account for the applicable period, prorated for the portion of the capital accounts being withdrawn. The next Incentive Allocation from the capital accounts of the Limited Partner (assuming that such Incentive Allocation is not an additional Interim Year Incentive Allocation) will be allocated to the capital account of Millennium Management as of the end of the fiscal year in which the Interim Year Incentive Allocation occurs and will be calculated as follows: an amount equal to 20% of the aggregate Net Capital Appreciation credited to the capital accounts of the Limited Partner from the commencement of the fiscal year during which the Interim Year Incentive Allocation occurred through the end of the fiscal year (disregarding the Interim Year Incentive Allocation to Millennium Management). The amount of any Incentive Allocation from the capital accounts of a Limited Partner determined under the preceding sentence will be reduced by any Interim Year Incentive Allocation. In no event shall any portion of the Interim Year Incentive Allocation made to Millennium Management be returned to the Limited Partner. Appropriate fiscal year-end adjustments, if required, will be made to the Limited Partner's Loss Recovery Accounts. DOC ID- 29147063.5 1-37 CONFIDENTIAL UBSTERRAMAR00003968 EFTA00239300 FOR EXISTING INVESTOR USE ONLY After an Incentive Allocation has been made from a Limited Partner's capital accounts, such capital accounts that are part of the same class and are subject to the same withdrawal period (other than the capital account established with respect to the initial capital contribution for such class and such withdrawal period of such Limited Partner (the "Initial Capital Account")) will be combined with the Initial Capital Account of such Limited Partner. A capital account of a Limited Partner will not be combined with another capital account to the extent that there is a Loss Recovery Account attributable to it. The Partnership Agreement provides that Millennium Management may amend the provisions of the Partnership Agreement relating to the Incentive Allocation so that it conforms to any applicable requirements of the Securities and Exchange Commission and other regulatory authorities, so long as such amendment does not increase the Incentive Allocation to more than 20% of aggregate Net Capital Appreciation for any fiscal year. In the event that Millennium Management determines that, for tax or regulatory reasons, or any other reasons as to which Millennium Management and any Partner agree, the Partner should not participate in the Net Capital Appreciation or Net Capital Depreciation attributable to trading in any security or type of security or to any other transaction, Millennium Management may allocate the Net Capital Appreciation or Net Capital Depreciation only to the capital accounts of Partners to whom such reasons do not apply, and if appropriate, may establish a separate memorandum account in which only the Partners having an interest in such security, type of security or transaction shall have an interest and Net Capital Appreciation and Net Capital Depreciation for that separate memorandum account will be separately calculated. In addition to the circumstances described under "Millennium USA's Organization, Management, Structure and Operations-Capital Structure," Millennium Management, in its sole and absolute discretion, may elect to reduce, waive or calculate differently the Incentive Allocation with respect to any person, including its affiliates. Outline of the Partnership Agreement The following outline summarizes the material provisions of the Partnership Agreement which are not discussed elsewhere in this Confidential Memorandum. This outline is not definitive, and each prospective purchaser should carefully read the Partnership Agreement in its entirety. Limited Liability. A Limited Partner is liable for debts and obligations of Millennium USA only to the extent of its Interest in Millennium USA in the fiscal year (or portion thereof) to which such debts and obligations are attributable. In order to meet a particular debt or obligation, a Limited Partner or former Limited Partner shall, in the discretion of Millennium Management, be required to make additional contributions or payments up to, but in no event in excess of, the aggregate amount of returns of capital and other amounts actually received by it from Millennium USA during or after the fiscal year to which such debt or obligation is attributable. Term; Dissolution. Millennium USA will continue until the earlier of (i) an event of withdrawal (as defined in the Delaware Revised Uniform Limited Partnership Act, as amended (the "Act")) of Millennium Management; provided that Millennium USA will not be dissolved nor required to be wound up in connection with any such event if (A) at the time of the occurrence of DOC ID- 29147063.5 1-38 CONFIDENTIAL UBSTERRAMAR00003969 EFTA00239301 FOR EXISTING INVESTOR USE ONLY such event there is at least one remaining general partner of Millennium USA who is authorized to and does carry on the business of Millennium USA, or (B) within 30 days after the occurrence of such event, Limited Partners having in excess of 50% of the Partnership Percentages of the Limited Partners agree in writing to continue the business of Millennium USA in which case the Limited Partners shall appoint, effective as of the date of such event, one or more additional general partners of Millennium USA; (ii) such time as Millennium Management, in its sole discretion, determines in writing to dissolve Millennium USA; (iii) the entry of a decree of judicial dissolution under Section 17-802 of the Act; or (iv) at any time there are no Limited Partners, unless Millennium USA is continued without dissolution pursuant to the Act. On dissolution of Millennium USA, withdrawals will be terminated and no further business will be done except the completion of incomplete transactions and the taking of such action as will be necessary for the winding up of the affairs of Millennium USA and the distribution of its assets. In connection with the dissolution of Millennium USA, reserves for liabilities will be established for the estimated costs of liquidating assets and liabilities, such as (without limitation) payments required as severance for personnel, or for termination of advisory or other agreements or contracts or leases, and the like. However, such reserves, and all other related costs and expenses, will be disregarded for the purpose of calculating Net Capital Appreciation or Net Capital Depreciation in determining the amount of the Incentive Allocation. Reserves, and related costs and expenses, taken by the Master Partnership will also be reflected on the books of Millennium USA, and treated similarly in calculating the Incentive Allocation. Any unused portion of a reserve established in anticipation of dissolution of Millennium USA that is not expected to be used will be reversed after Millennium Management, in its sole discretion, has determined that the need therefor has ceased. Capital Accounts. A separate capital account will be established on the books of Millennium USA for, and in the amount of, each capital contribution made by each Partner. A Partnership Percentage is determined for each Partner for each Accounting Period by dividing its capital accounts as of the beginning of such Accounting Period by the aggregate capital accounts of all Partners as of the beginning of such Accounting Period. Each Limited Partner's capital account is increased to reflect its share of Net Capital Appreciation, and is decreased to reflect withdrawals of capital, distributions and such Partner's share of Net Capital Depreciation. Additional Capital Contributions. With the prior approval of Millennium Management (which approval may be withheld for any reason or no reason), a Limited Partner may make additional capital contributions to Millennium USA at such time as Millennium Management may permit. Additional contributions by an existing Limited Partner will be subject to a new withdrawal period based on the class of Interest purchased and will be placed in a separate capital account. The Net Capital Appreciation and Net Capital Depreciation attributable to a Limited Partner's capital account for one class of Interest will not be aggregated with, or offset by, the Net Capital Appreciation and Net Capital Depreciation attributable to any other capital account held by the Limited Partner with respect to a different class of Interest. DOC ID- 29147063.5 1-39 CONFIDENTIAL UBSTERRAMAR00003970 EFTA00239302 FOR EXISTING INVESTOR USE ONLY Management. The management of Millennium USA is vested exclusively in Millennium Management. Valuation of Partnership Assets. Millennium USA's assets are valued by Millennium Management in accordance with the terms of the Partnership Agreement. Liabilities; Reserves. The liabilities of Millennium USA will be determined in accordance with GAAP, applied on a consistent basis, except as described below. Millennium Management may also at any time or times establish reserves (whether or not in accordance with GAAP) for estimated or accrued expenses, liabilities or contingencies, including in connection with the dissolution of Millennium USA or any downsizing of Millennium USA following a Trigger Event. If reserves are established that are not in accordance with GAAP, they will be treated in the same manner as reserves that are in accordance with GAAP, i.e., in the period in which they are taken they will be treated as an expense of Millennium USA (and will reduce the net assets of Millennium USA), and, if and to the extent that they are subsequently reversed they will be taken into income in the period of such reversal (and will to that extent increase the net assets of Millennium USA). Death Disability, etc. of a Limited Partner. In the event of the death, disability, adjudication of incompetency, bankruptcy, termination or dissolution of a Limited Partner, such Limited Partner or its personal representative (as defined in the Act) will be permitted to withdraw from Millennium USA as of the next occurring date on IA hi ch the Limited Partner could have withdrawn without regard to such death, disability, adjudication of incompetency, bankruptcy, termination or dissolution. Unless and until notice of withdrawal is properly given and such withdrawal occurs, the capital accounts of such Limited Partner will continue at the risk of Millennium USA's business until the effective date of the withdrawal or the earlier termination of Millennium USA. Assignability of Partner's Interest. Without the prior written consent of Millennium Management, which may be withheld in its sole discretion, a Partner may not (i) pledge, transfer or assign its Interest in Millennium USA in whole or in part to any person except by operation of law or (ii) substitute for itself as a Partner any other person. Admission of New Partners. Additional general partners and Limited Partners may, with the consent of Millennium Management, be admitted to Millennium USA at any time. Each new Partner is required to execute an agreement pursuant to which it becomes bound by the terms of the Partnership Agreement. Variation of Terms. Millennium Management may enter into a written agreement with a Limited Partner governing the following terms, among others: (i) the payment by such Limited Partner of a fee to Millennium Management in connection with the admission or the withdrawal from Millennium USA of such Limited Partner (which fee may, in Millennium Management's sole discretion, be paid to Millennium Management or such other persons as Millennium Management determines); (ii) the application of a lower or a higher performance-based percentage allocation than the Incentive Allocation to the capital accounts of such Limited Partner, (iii) the application of withdrawal and distribution arrangements that vary from those applicable to other Limited Partners; and (iv) the application of death, disability, bankruptcy or withdrawal arrangements that vary from those applicable to other Limited Partners. However, as noted above under "Millennium USA's Organization, Management, Structure, and Operations," Millennium USA does not generally enter DOC ID- 29147063.5 1-40 CONFIDENTIAL UBSTERRAMAR00003971 EFTA00239303 FOR EXISTING INVESTOR USE ONLY into contractual arrangements or undertakings providing for withdrawal rights materially different from those generally available to the same class (subject to exceptions in order to address legal, regulatory, tax or similar requirements applicable to certain investors and in connection with deferred compensation arrangements described under "Certain Risk Factors Relating to Millennium USA — Investment in the Master Partnership by Millennium Management and its Affiliates and Portfolio Managers"). Amendments to Partnership Agreement. The Partnership Agreement may be modified or amended at any time by the written approval of Partners having in excess of 50% of the Partnership Percentages of the Limited Partners and the written approval of Millennium Management. Without the approval of the other Partners, however, Millennium Management may amend the Partnership Agreement to (i) reflect changes validly made in the membership of Millennium USA and the capital contributions and Partnership Percentages of the Partners; (ii) change the provisions relating to the Incentive Allocation so that such provisions conform to any applicable requirements of the SEC and other regulatory authorities, so long as such amendment does not increase the Incentive Allocation to more than 20% of aggregate Net Capital Appreciation for any fiscal year; (iii) reflect a change in the name of Millennium USA; (iv) make a change that is necessary or, in the opinion of Millennium Management, advisable to qualify Millennium USA as a limited partnership or a partnership in which the Limited Partners have limited liability under the laws of any state, or ensure that Millennium USA is not classified as an association taxable as a corporation or treated as a publicly traded partnership taxable as a corporation for Federal tax purposes; (v) make a change that does not adversely affect the Limited Partners in any material respect; (vi) make a change that is necessary or desirable to cure any ambiguity, to correct or supplement any provision in the Partnership Agreement that is inconsistent with any other provision in the Partnership Agreement, or to change any other provision with respect to matters or questions arising under the Partnership Agreement that is not inconsistent with the provisions of the Partnership Agreement, in each case so long as such change does not adversely affect the Limited Partners; (vii) make a change that is necessary or desirable to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal or state statute, so long as such change is made in a manner which minimizes any adverse effect on the Limited Partners; (viii) make a change that is required or contemplated by the Partnership Agreement; (ix) make a change in any provision of the Partnership Agreement that requires any action to be taken by or on behalf of Millennium Management or Millennium USA pursuant to the requirements of applicable Delaware law if the provisions of applicable Delaware law are amended, modified or revoked so that the taking of such action is no longer required; (x) prevent Millennium USA or Millennium Management from being deemed in any manner an "Investment Company" subject to the provisions of the Investment Company Act; (xi) reflect the terms of the issuance of new classes (or combination of classes or conversion of one class into another class) of Interests so long as such amendment does not adversely affect the terms of the other classes of Interests in any material respect; or (xii) make any other amendments similar to the foregoing. Each Partner, however, must consent to any amendment which would (a) reduce its capital accounts or rights of contribution or withdrawal; or (b) amend the provisions of the Partnership Agreement relating to amendments. Reports to Partners. Millennium Management generally expects to provide Limited Partners with access to monthly investor balances and quarterly statements. Quarterly information will include an unaudited balance sheet and statement of operations of Millennium USA and an unaudited statement of changes in individual partner's capital from the end of the previous quarter DOC ID- 29147063.5 1-41 CONFIDENTIAL UBSTERRAMAR00003972 EFTA00239304 FOR EXISTING INVESTOR USE ONLY for such Limited Partner. Millennium Management will also provide an annual unaudited statement of changes in individual partner's capital and annual audited financial statements of Millennium USA. All information is available via a secure website. It should also be noted that Millennium Management and its affiliates reserve the right to provide, and may on occasion provide, certain additional information to Limited Partners who request such information. For instance, Millennium Management and its affiliates generally make their representatives available to answer questions from investors concerning Millennium USA, including with respect to the investments of Millennium USA. During those conversations, certain investors may receive information and reporting that other investors may not receive, and such information may affect an investor's decisions regarding Millennium USA. Exculpation. The Partnership Agreement provides that none of Millennium Management or its affiliates will be liable to any Limited Partner or Millennium USA for mistakes of judgment or for action or inaction which said person reasonably believed to be legally permissible and not contrary to the best interests of Millennium USA, or for losses due to such mistakes, action or inaction or to the negligence, dishonesty or bad faith of any employee, broker or other agent of Millennium USA; provided that such employee, broker or agent was selected, engaged or retained by Millennium USA with reasonable care. Millennium Management and its affiliates may consult with counsel, accountants and/or other experts in respect of Millennium USA's affairs and be filly protected and justified in any action or inaction which is taken in good faith in accordance with the advice or opinion of such counsel, accountants and/or other experts; provided that they were selected with reasonable care. The exculpation provisions of the Partnership Agreement will not be construed so as to provide for the exculpation of Millennium Management or its affiliates for any liability (including liability under Federal securities laws which, under certain circumstances, impose liability even on persons that act in good faith), to the extent (but only to the extent) that such exculpation would be in violation of applicable law, but will be construed so as to effectuate such provisions to the fullest extent permitted by law. Indemnification of General Partners. The Partnership Agreement provides that Millennium USA will indemnify and hold harmless Millennium Management, its affiliates and its and their respective personal representatives (as defined in the Act) (each an "Indemnified Party"), to the fullest extent permitted by law, from and against any loss or expense suffered or sustained by an Indemnified Party by reason of the fact that it is or was an Indemnified Party, including, without limitation any judgment, settlement, reasonable attorney's fees and other costs or expenses incurred in connection with the defense of any actual or threatened action or proceeding provided that such loss or expense resulted from a mistake of judgment on the part of an Indemnified Party, or from action or inaction that said Indemnified Party reasonably believed to be legally permissible and not contrary to the best interests of Millennium USA. Millennium USA will, in the sole discretion of Millennium Management, advance to any Indemnified Party, reasonable attorney's fees and other costs and expenses incurred in connection with the defense of any action or proceeding that arises out of such conduct. The Indemnified Parties will agree that in the event an Indemnified Party receives any such advance, such Indemnified Party will reimburse Millennium USA for such fees, costs and expenses to the extent it is determined that it was not entitled to indemnification. DOC ID- 29147063.5 1-42 CONFIDENTIAL UBSTERRAMAR00003973 EFTA00239305 FOR EXISTING INVESTOR USE ONLY The indemnification provisions of the Partnership Agreement will not be construed so as to provide for the indemnification of an Indemnified Party for any liability (including liability under Federal securities laws which, under certain circumstances, impose liability even on persons that act in good faith), to the extent (but only to the extent) that such indemnification would be in violation of applicable law, but shall be construed so as to effectuate such provisions to the fullest extent permitted by law. Required Notifications. Under the terms of the Partnership Agreement, each Limited Partner agrees to notify Millennium Management promptly if there is any change with respect to any information or representations made by such Limited Partner in the subscription documents submitted by or on behalf of such Limited Partner in connection with (i) its acquisition of an Interest or (ii) any additional capital contributions made by such Limited Partner. Certain Tax Matters Relating to an Investment in Millennium USA The following is a summary of certain aspects of the income taxation of Millennium USA and its Partners which should be considered by a Limited Partner. Millennium USA has not sought a ruling from the Internal Revenue Service (the "Service") or any other federal, state or local agency with respect to any of the tax issues affecting Millennium USA, nor has it obtained an opinion of counsel with respect to any federal tax issues other than the characterization of Millennium USA and the Master Partnership as partnerships for federal tax purposes. This summary of certain aspects of the federal income tax treatment of Millennium USA is based upon the Internal Revenue Code of 1986, as amended (the "Code"), judicial decisions, Treasury Regulations (the "Regulations") and rulings in existence on the date hereof, all of which are subject to change. This summary does not discuss the impact of various proposals to amend the Code or non-U.S. tax laws, which could change certain of the tax consequences of an investment in Millennium USA. This summary also does not discuss all of the tax consequences that may be relevant to a particular investor or to certain investors subject to special treatment under the federal income tax laws, such as insurance companies. EACH PROSPECTIVE LIMITED PARTNER SHOULD CONSULT WITH ITS OWN TAX ADVISOR IN ORDER TO FULLY UNDERSTAND THE FEDERAL, STATE, LOCAL AND FOREIGN INCOME TAX CONSEQUENCES OF AN INVESTMENT IN MILLENNIUM USA. In addition to the particular matters set forth in this section, tax-exempt organizations should review carefully those sections of this Confidential Memorandum regarding liquidity and other financial matters to ascertain whether the investment objectives of Millennium USA are consistent with their overall investment plans. Each prospective tax-exempt Limited Partner is urged to consult its own counsel regarding the acquisition of Interests. Tax Treatment of Partnership Operations Classification of Millennium USA and the Master Partnership. Each of Millennium USA and the Master Partnership has received an opinion of Schulte Roth & Zabel LLP, its counsel, that under the provisions of the Code and the Regulations, as in effect on the date of the opinion, as well as under the relevant authority interpreting the Code and the Regulations, and based upon DOC ID- 29147063.5 1-43 CONFIDENTIAL UBSTERRAMAR00003974 EFTA00239306 FOR EXISTING INVESTOR USE ONLY certain representations of Millennium Management, it will be classified as a partnership for federal tax purposes and not as an association taxable as a corporation. Schulte Roth & Zabel LLP has also rendered its opinion, based upon the respective anticipated operations of Millennium USA and the Master Partnership as well as certain representations of Millennium Management, that neither Millennium USA nor the Master Partnership will be treated as a "publicly traded partnership" taxable as a corporation. Unless otherwise indicated, references in the following discussion to the tax consequences of Millennium USA investments, activities, income, gain and loss, include the direct investments, activities, income, gain and loss of Millennium USA, and those indirectly attributable to Millennium USA as a result of it being a partner of the Master Partnership. As a partnership, Millennium USA generally is not itself subject to federal income tax. (See, however, "Tax Elections; Returns; Tax Audits" below.) Millennium USA files an annual partnership information return with the Service which reports the results of operations. Each Partner is required to report separately on its income tax return its distributive share of Millennium USA's net long-term capital gain or loss, net short-term capital gain or loss and all other items of ordinary income or loss. Each Partner is taxed on its distributive share of Millennium USA's taxable income and gain regardless of whether it has received or will receive a distribution from Millennium USA. Allocation of Profits and Losses. Under the Partnership Agreement, Millennium USA's net capital appreciation or net capital depreciation for each accounting period is allocated among the Partners and is debited or credited to their capital accounts. The Partnership Agreement provides that items of income, deduction, gain, loss or credit for each fiscal year generally are to be allocated for income tax purposes among the Partners pursuant to the principles of Regulations issued under Sections 704(b) and 704(c) of the Code, based upon amounts of Millennium USA's net capital appreciation or net capital depreciation allocated to each Partner's capital account. There can be no assurance however, that the particular methodology of allocations used by Millennium USA will be accepted by the Service. If such allocations are successfully challenged by the Service, the allocation of Millennium USA's tax items among the Partners may be affected. Under the Partnership Agreement, Millennium Management has the discretion to allocate specially an amount of Millennium USA's ordinary income and/or capital gain (including short- term capital gain) and deductions, ordinary loss and/or capital loss (including long-term capital loss) for federal income tax purposes to a withdrawing Partner to the extent that the Partner's capital account exceeds, or is less than, as the case may be, its federal income tax basis in its Interests. There can be no assurance that, if Millennium Management makes any such special allocations, the Service will accept such allocations. If such allocations are successfully challenged by the Service, Millennium USA's tax items allocable to the remaining Partners would be affected. Tax Elections; Returns; Tax Audits. The Code generally provides for optional adjustments to the basis of partnership property upon distributions of partnership property to a partner and transfers of partnership interests (including by reason of death) provided that a partnership election has been made pursuant to Section 754. Under the Partnership Agreement, Millennium Management, in its sole discretion, may cause Millennium USA to make such an election. Any DOC ID- 29147063.5 1-44 CONFIDENTIAL UBSTERRAMAR00003975 EFTA00239307 FOR EXISTING INVESTOR USE ONLY such election, once made, cannot be revoked without the Service's consent. The actual effect of any such election may depend upon whether the Master Partnership also makes such an election. As a result of the complexity and added expense of the tax accounting required to implement such an election, Millennium Management presently does not intend to make such election. Millennium Management decides how to report the partnership items on Millennium USA's tax returns. In certain cases, Millennium USA may be required to file a statement with the Service disclosing one or more positions taken on its tax return, generally where the tax law is uncertain or a position lacks clear authority. All Partners are required under the Code to treat the partnership items consistently on their own returns, unless they file a statement with the Service disclosing the inconsistency. Given the uncertainty and complexity of the tax laws, it is possible that the Service may not agree with the manner in which Millennium USA's items have been reported. In the event the income tax returns of Millennium USA are audited by the Service, the tax treatment of Millennium USA's income and deductions generally is determined at the limited partnership level in a single proceeding rather than by individual audits of the Partners. Millennium Management, or such other person designated by Millennium Management to serve as Millennium USA's partnership representative in the event of an audit by the Service, has considerable authority to make decisions affecting the tax treatment of all Partners, including extending the statute of limitations with respect to Millennium USA items and settling any such audit. An audit adjustment to Millennium USA's tax return for any tax year beginning after 2017 (a "Prior Year") could result in a tax liability (including interest and penalties) imposed on Millennium USA for the year during which the adjustment is determined (the "Current Year"). The tax liability generally is determined by using the highest tax rates under the Code applicable to U.S. taxpayers although Millennium USA may be able to use a lower rate to compute the tax liability by taking into account (to the extent it is the case and the implementing rules permit) that Millennium USA has certain tax exempt and foreign partners. Alternatively, Millennium USA may be able to elect with the Service to pass through such adjustments for any year to the partners who participated in Millennium USA for the Prior Year, in which case each Prior Year participating partner, and not Millennium USA, would be responsible for the payment of any tax deficiency, determined after including its share of the adjustments on its tax return for that year. If such an election is made by Millennium USA, interest on any deficiency will be at a rate that is two percentage points higher than the otherwise applicable interest rate on tax underpayments. If such an election is not made, Current Year partners may bear the tax liability (including interest and penalties) arising from audit adjustments at significantly higher rates and in amounts that are unrelated to their Prior Year economic interests in the partnership items that were adjusted. Similar principles apply to audits of the Master Partnership. A pass-through election may be effected through partnership tiers, whereby each partnership in the chain generally may choose to either pay the tax directly or push it out to its own partners (e.g., from the Master Partnership to Millennium USA and then to Millennium USA's Prior Year participating partners). Mandatory Basis Adjustments. Millennium USA is generally required to adjust its tax basis in its assets in respect of all Partners in cases of partnership distributions that result in a "substantial basis reduction" (Le., in excess of $250,000) in respect of Millennium USA's property. Millennium USA is also required to adjust its tax basis in its assets in respect of a transferee, in the case of a sale or exchange of an Interest, or a transfer upon death, when there DOC ID- 29147063.5 1-45 CONFIDENTIAL UBSTERRAMAR00003976 EFTA00239308 FOR EXISTING INVESTOR USE ONLY exists immediately after the transfer a "substantial built-in loss" (i.e., in excess of $250,000) in respect of partnership property or the transferee would be allocated a loss of more than $250,000 upon a disposition of all of the partnership's assets at fair market value. For this reason, Millennium USA will require (i) a Partner who receives a distribution from Millennium USA in connection with a complete withdrawal, (ii) a transferee of an Interest (including a transferee in case of death) and (iii) any other Partner in appropriate circumstances to provide Millennium USA with information regarding its adjusted tax basis in its Interest. The Master Partnership has a similar tax basis adjustment obligation with respect to distributions by, and sales or transfers of interests in, the Master Partnership. Tax Consequences to a Withdrawing Limited Partner A Limited Partner receiving a cash liquidating distribution from Millennium USA, in connection with a complete withdrawal from Millennium USA, generally will recognize capital gain or loss to the extent of the difference between the proceeds received by such Limited Partner and such Limited Partner's adjusted tax basis in its Interest. Such capital gain or loss will be short- term, long-term or some combination of both, depending upon the timing of the Limited Partner's contributions to Millennium USA. However, a withdrawing Limited Partner will recognize ordinary income to the extent such Limited Partner's allocable share of Millennium USA's "unrealized receivables" exceeds the Limited Partner's basis in such unrealized receivables (as determined pursuant to the Regulations). For these purposes, accrued but untaxed market discount, if any, on securities held by Millennium USA will be treated as an unrealized receivable, with respect to which a withdrawing Limited Partner would recognize ordinary income. A Limited Partner receiving a cash nonliquidating distribution will recognize income in a similar manner only to the extent that the amount of the distribution exceeds such Limited Partner's adjusted tax basis in its Interest. As discussed above, the Partnership Agreement provides that Millennium Management may specially allocate items of Millennium USA ordinary income and/or capital gain (including short-term capital gain) and deductions, ordinary loss and/or capital loss (including long-term capital loss) to a withdrawing Partner to the extent its capital account would otherwise exceed or be less than, as the case may be, its adjusted tax basis in its Interest. Such a special allocation of income or gain may result in the withdrawing Partner recognizing ordinary income and/or capital gain, which may include short-term capital gain, in the Partner's last taxable year in Millennium USA, thereby reducing the amount of long-term capital gain recognized during the tax year in which it receives its liquidating distribution upon withdrawal. Such a special allocation of deduction or loss may result in the withdrawing Partner recognizing ordinary loss and/or capital loss, which may include long-term capital loss, in the Partner's last taxable year in Millennium USA, thereby reducing the amount of short-term capital loss recognized during the tax year in which it receives its liquidating distribution upon withdrawal. Distributions of Property. A partner's receipt of a distribution of property from a partnership is generally not taxable. However, under Section 731 of the Code, a distribution consisting of marketable securities generally is treated as a distribution of cash (rather than property) unless the distributing partnership is an "investment partnership" within the meaning of Section 731(cX3XC)(i) and the recipient is an "eligible partner" within the meaning of Section 731(c)(3XCXiii). Millennium USA will determine at the appropriate time whether it qualifies as DOC ID- 29147063.5 1-46 CONFIDENTIAL UBSTERRAMAR00003977 EFTA00239309 FOR EXISTING INVESTOR USE ONLY an "investment partnership." Assuming it so qualifies, if a Limited Partner is an "eligible partner," which term should include a Limited Partner whose contributions to Millennium USA consisted solely of cash, the rule treating a distribution of property as a distribution of cash would not apply. Tax Treatment ofMillennium USA Investments In General. The Master Partnership is engaged in a trade or business as a trader in securities and commodities. The Master Partnership has elected to report its income from sales of securities and commodities held in connection with such trade or business on a "mark-to-market" basis for Federal income tax purposes. Under this accounting method, (i) gains or losses recognized by the Master Partnership upon an actual disposition of securities and commodities held in connection with such trade or business are treated as ordinary income or loss and (ii) any such securities and commodities held by the Master Partnership on the last day of each taxable year are treated as if they were sold by the Master Partnership for their fair market value on that day, and gains or losses recognized on this deemed sale will be treated as ordinary income or loss. For purposes of measuring gain or loss with respect to any such security or commodity in any subsequent year, the amount of any gain or loss previously recognized under the mark-to-market rules is taken into account in determining the tax basis for the security or commodity. The Master Partnership is required to identify any securities and commodities that are not held in connection with such trade or business on the day such securities or commodities are acquired. If the Master Partnership fails to properly identify a security or commodity that is not held in connection with such trade or business, the Service may require the Master Partnership to recognize "mark-to-market" gains on such security or commodity as ordinary income at the end of each taxable year, but defer recognition of any "mark-to-market" losses, to the extent they exceed gains previously recognized with respect to such security or commodity, until the security or commodity is sold. Moreover, there can be no assurance that the Service will agree that the Master Partnership's securities and commodities activities will constitute trading rather than investing, in which case the Master Partnership may not be able to mark-to-market its positions. Millennium USA has also made a similar "mark-to-market" election described above. The Master Partnership may realize ordinary income from dividends and accruals of interest on securities. Income or loss from transactions involving certain derivative instruments, such as swap transactions, will also generally constitute ordinary income or loss. As described below, gain or loss from certain "Section 1256 Contracts" (defined below) held in connection with the securities trading activities will be treated as capital gain or loss. To the extent positions are treated as held for investment by Millennium USA or the Master Partnership, they would not be subject to the "mark-to-market" election described above. Gains and losses on such investment positions would be realized on the sale of the positions and would generally be capital gains and losses. Capital gains and losses recognized by Millennium USA or the Master Partnership may be long-term or short-term depending, in general, upon the length of time Millennium USA or the Master Partnership maintains a particular investment position and, in some cases, upon the nature of the transaction. Property held for more than one year generally will be eligible for long-term capital gain or loss treatment. DOC ID- 29147063.5 1-47 CONFIDENTIAL UBSTERRAMAR00003978 EFTA00239310 FOR EXISTING INVESTOR USE ONLY The income tax rate for corporations is 21%. Capital losses of a corporate taxpayer may be offset only against capital gains, but unused capital losses may be carried back three years (subject to certain limitations) and carried forward five years. The maximum ordinary income tax rate for individuals is 37%5 and, in general, the maximum individual income tax rate for "Qualified Dividends"' and long-term capital gains is 20% (unless the taxpayer elects to be taxed at ordinary rates - see "Limitation on Deductibility of Interest and Short Sale Expenses" below). The excess of capital losses over capital gains may be offset against the ordinary income of an individual taxpayer, subject to an annual deduction limitation of $3,000. Capital losses of an individual taxpayer may generally be carried forward to succeeding tax years to offset capital gains and then ordinary income (subject to the $3,000 annual limitation). (See, however, "Limitation on Deductibility of Net Losses" below.) An individual may be entitled to deduct up to 20% of such individual's "qualified business income" each year. However, it is not anticipated that income from Millennium USA will constitute qualified business income, except to the extent of certain ordinary income dividends received from real estate investment trusts or income from investments, if any, in partnerships conducting certain trades or businesses. In addition, individuals, estates and trusts are subject to a Medicare tax of 3.8% on net investment income ("NIP') (or undistributed NII, in the case of estates and trusts) for each such taxable year, with such tax applying to the lesser of such income or the excess of such person's adjusted gross income (with certain adjustments) over a specified amount.? NII includes net income from interest, dividends, annuities, royalties and rents and net gain attributable to the disposition of investment property. It is generally anticipated that net income and gain attributable to an investment in Millennium USA will be included in an investor's NII subject to this Medicare tax. However, the calculation of NII for purposes of the Medicare tax and taxable income for purposes of the regular income tax may be different. Furthermore, the Medicare tax and the regular income tax may be due in different taxable years with respect to the same income. The application of the tax (and the availability of particular elections is quite complex. Investors are urged to consult their tax advisors regarding the consequences of these rules in respect of their investments. Certain Section 1256 Contracts. A Section 1256 Contract includes certain futures contracts, and certain other contracts. With respect to any Section 1256 Contracts which are not treated as "commodities" for purposes of Section 475, gains and losses from such Section 1256 Contracts are marked to market annually, and generally are characterized as short-term capital gains or losses to the extent of 40% thereof and as long-term capital gains or losses to the extent of 60% thereof. Gains and losses from Section 1256 Contracts will be treated as ordinary income and losses, if such Section 5 The maximum rate for ordinary income for individuals is scheduled to increase to 39.6% in 2026. 6 A "Qualified Dividend" is generally a dividend front certain domestic corporations. and from certain foreign corporations that am either eligible for the benefits of a comprehensive income tax treaty with the United States or are readily tradable on an established securities market in the United States. Shams must be held for certain holding periods in order for a dividend thereon to be a Qualified Dividend. The amount is $250,000 for married individuals filing jointly. $125,000 for married individuals filing separately. $200.000 for other individuals and the dollar amount at which the highest income tax bracket for estates and mists begins. DOC ID- 29147063.5 1-48 CONFIDENTIAL UBSTERRAMAR00003979 EFTA00239311 FOR EXISTING INVESTOR USE ONLY 1256 Contracts are held to hedge property which would generate ordinary loss if sold at a loss or if such Section 1256 Contracts are held by the Master Partnership in connection with the commodities trade or business. If an individual taxpayer incurs a net capital loss for a year, the portion thereof, if any, which consists of a net loss on such Section 1256 Contracts may, at the election of the taxpayer, be carried back three years. Losses so carried back may be deducted only against net capital gain to the extent that such gain includes gains on Section 1256 Contracts. A Section 1256 Contract does not include a "securities futures contract" or any option on such a contract, other than a "dealer securities futures contract." Generally, a "securities futures contract" is a contract of sale for future delivery of a single security or a narrow-based security index. A "dealer securities futures contract" is treated as a Section 1256 Contract. A "dealer securities futures contract" is a securities futures contract, or an option to enter into such a contract, that (1) is entered into by a dealer (or, in the case of an option, is purchased or granted by the dealer) in the normal course of its trade or business activity of dealing in the contracts and (2) is traded on a qualified board of trade or exchange. Mixed Straddle Election. The Code allows a taxpayer to elect to offset gains and losses from positions which are part of a "mixed straddle." A "mixed straddle" is any straddle in which one or more but not all positions are Section 1256 Contracts. Pursuant to Temporary Regulations, Millennium USA may be eligible to elect to establish one or more mixed straddle accounts for certain of its mixed straddle trading positions. The mixed straddle account rules require a daily "marking to market" of all open positions in the account and a daily netting of gains and losses from positions in the account. At the end of a taxable year, the annual net gains or losses from the mixed straddle account are recognized for tax purposes. The application of the Temporary Regulations' mixed straddle account rules is not entirely clear. Therefore, there is no assurance that a mixed straddle account election by Millennium USA will be accepted by the Service. Effect of Straddle Rules on Limited Partners' Securities Positions. The Service may treat certain positions in securities held (directly or indirectly) by a Partner and its indirect interest in similar securities held by Millennium USA as "straddles" for federal income tax purposes. Investors should consult their tax advisors regarding the application of the "straddle" rules to their investment in Millennium USA. Limitation on Deductibility of Interest and Short Sale Expenses. For noncorporate taxpayers, Section 163(d) of the Code limits the deduction for "investment interest" (i.e., interest or short sale expenses for "indebtedness properly allocable to property held for investment"). Investment interest is not deductible in the current year to the extent that it exceeds the taxpayer's "net investment income," consisting of net gain and ordinary income derived from investments in the current year less certain directly connected expenses (other than interest or short sale expenses). For this purpose, Qualified Dividends and long-term capital gains are excluded from net investment income unless the taxpayer elects to pay tax on such amounts at ordinary income tax rates. For purposes of this provision, Millennium USA's activities (other than certain activities that are treated as "passive activities" under Section 469 of the Code) will be treated as giving rise to investment income for a Limited Partner (other than a Limited Partner who materially participates in Millennium USA's trade or business activities), and the investment interest DOC ID- 29147063.5 1-49 CONFIDENTIAL UBSTERRAMAR00003980 EFTA00239312 FOR EXISTING INVESTOR USE ONLY limitation would apply to a noncorporate Limited Partner's share of the interest and short sale expenses attributable to Millennium USA's operation. Such noncorporate Limited Partner would be denied a deduction for all or part of that portion of its distributive share of Millennium USA's ordinary losses attributable to interest and short sale expenses unless it had sufficient investment income from all sources including Millennium USA. A Limited Partner that could not deduct losses currently as a result of the application of Section 163(d) would be entitled to carry forward such losses to future years, subject to the same limitation. The investment interest limitation would also apply to interest paid by a noncorporate Limited Partner on money borrowed to finance its investment in Millennium USA. Potential investors are advised to consult with their own tax advisors with respect to the application of the investment interest limitation in their particular tax situations. Limitation on Deductibility of Business Interest Expense. Section 163(j) of the Code limits the deduction of business interest expense attributable to a trade or business generally to the sum of the taxpayer's (x) business interest income and (y) 30% of adjusted taxable income relating to a trade or business (calculated by excluding business interest expense and business interest income). Any business interest expense not deductible pursuant to the foregoing limitation is treated as business interest expense of the taxpayer that carries forward to succeeding taxable years, subject to the same limitation. For these purposes, Limited Partners such as noncorporate taxpayers for whom the investment interest rules apply in respect of their interest in Millennium USA (see "Limitation on Deductibility of Interest and Short Sale Expenses" above) generally are not expected to be subject to the business interest expense limitations determined by Millennium USA. The determination of what constitutes business interest expense in respect of Millennium USA's operations is determined at the partnership level. As described above, Millennium USA expects to be a trader in securities, in which case the foregoing limitations are initially calculated at the Millennium USA level. To the extent the limitation at the Millennium USA level applies to reduce the business interest expense deductible for a year, such excess shall carry forward to succeeding years and, subject to certain limitations, may be deducted by the Limited Partner to the extent Millennium USA has sufficient excess taxable income that was not offset by business interest expense in such year. Any amount not utilized will form part of the investor's adjusted basis in its interest in Millennium USA only at the time of disposition of such interest. Potential investors are advised to consult with their own tax advisors with respect to the application of the business interest expense limitation to their particular tax situations. Deductibility of Millennium USA Investment Expenditures and Certain Other Expenditures. Investment expenses (e.g., investment advisory fees) of an individual, trust or estate are not deductible. For taxable years beginning after 2025, such expenses would be deductible only to the extent they exceed 2% of adjusted gross income, would be further restricted in their deductibility for individuals with an adjusted gross income in excess of a specified amount and would not be deductible in calculating alternative minimum tax liability. Pursuant to Temporary Regulations issued by the Treasury Department, these limitations on deductibility should not apply to a noncorporate Limited Partner's share of the expenses of the Master Partnership to the extent that the Master Partnership is engaged, as it expects to be, in a trade or business within the meaning of the Code. However, there can be no assurance that the Service may not treat such expenses as investment expenses which are subject to the limitations. DOC ID- 29147063.5 1-50 CONFIDENTIAL UBSTERRAMAR00003981 EFTA00239313 FOR EXISTING INVESTOR USE ONLY In addition, these limitations may apply to certain expenses of the Master Partnership and Millennium USA, the fee to the Administrator and payments made on certain derivative instruments to the extent allocable to activities, if any, that are not part of the Master Partnership's or Millennium USA's trade or business (including investments, if any, in partnerships that are not managed by Millennium Management or its affiliates, or investments that are treated as held for investment). The consequences of these limitations will vary depending upon the particular tax situation of each taxpayer. Accordingly, noncorporate Limited Partners should consult their tax advisors with respect to the application of these limitations. A Limited Partner will not be allowed to deduct syndication expenses, including placement fees paid by such Limited Partner or Millennium USA. Any such amounts will be included in the Limited Partner's adjusted tax basis for its Interest. Application of Rules for Income and Losses from Passive Activities. The Code restricts the deductibility of losses from a "passive activity" against certain income which is not derived from a passive activity. This restriction applies to individuals, personal service corporations and certain closely held corporations. Pursuant to Temporary Regulations issued by the Treasury Department, income or loss from Millennium USA's securities investment and trading activity generally will not constitute income or loss from a passive activity. Therefore, passive losses from other sources generally could not be deducted against a Limited Partner's share of such income and gain from Millennium USA. Income or loss attributable to certain activities of Millennium USA, including investments in partnerships engaged in certain trades or businesses may constitute passive activity income or loss. Limitation on Deductibility of Net Losses. In the case of a noncorporate taxpayer, any net business loss for any taxable year beginning during the period 2018 through 2025 may not be used to offset nonbusiness income in excess of $250,000 ($500,000 in the case of a married couple filing jointly). To the extent Millennium USA is considered to be a trader in securities, as it expects to be, any net loss from Millennium USA may, therefore, be unavailable to offset investment income earned by a Limited Partner, including investment income earned outside of Millennium USA. Any disallowed loss will carry forward and may, subject to certain limitations, be used to reduce taxable income earned by such Limited Partner in future years. Any trading losses incurred by a partnership in which Millennium USA invests will be subject to the same limitations when allocated to a noncorporate Limited Partner. Application of Basis and "At Risk" Limitations on Deductions. The amount of any loss of Millennium USA that a Limited Partner is entitled to include in its income tax return is limited to its adjusted tax basis in its Interest as of the end of Millennium USA's taxable year in which such loss occurred. Generally, a Limited Partner's adjusted tax basis for its Interest is equal to the amount paid for such Interest, increased by the sum of (i) its share of Millennium USA's liabilities, as determined for federal income tax purposes, and (ii) its distributive share of Millennium USA's realized income and gains, and decreased (but not below zero) by the sum of (i) distributions (including decreases in its share of Millennium USA liabilities) made by Millennium USA to such Limited Partner and (ii) such Limited Partner's distributive share of Millennium USA's realized losses and expenses. DOC ID- 29147063.5 1-51 CONFIDENTIAL UBSTERRAMAR00003982 EFTA00239314 FOR EXISTING INVESTOR USE ONLY Similarly, a Limited Partner that is subject to the "at risk" limitations (generally, noncorporate taxpayers and closely held corporations) may not deduct losses of Millennium USA to the extent that they exceed the amount such Limited Partner has "at risk" with respect to its Interest at the end of the year. The amount that a Limited Partner has "at risk" will generally be the same as its adjusted basis as described above, except that it will generally not include any amount attributable to liabilities of Millennium USA or any amount borrowed by the Limited Partner on a non-recourse basis. Losses denied under the basis or "at risk" limitations are suspended and may be carried forward in subsequent taxable years, subject to these and other applicable limitations. "Phantom Income" From Millennium USA Investments. Pursuant to various "anti- deferral" provisions of the Code (the "Subpart F" and "passive foreign investment company" provisions), investments (if any) by Millennium USA in certain foreign corporations may cause a Limited Partner to recognize taxable income prior to Millennium USA's receipt of distributable proceeds. U.S. Withholding Taxes Certain interest, dividends and "dividend equivalent payments" received by the Master Partnership from sources within the United States may be subject to withholding taxes imposed by the United States. The Limited Partners will be informed by Millennium USA as to their proportionate share of the U.S. taxes paid by the Master Partnership, if any, which they will be required to include in their income. The Limited Partners should be entitled to claim an unrestricted credit or refund for their share of such U.S. taxes in computing their own federal income tax liability. In order to avoid a U.S. withholding tax of 30% on certain payments (including payments of gross proceeds) made with respect to certain actual and deemed U.S. investments, the Master Partnership has registered with the Service and generally will be required to identify, and report information with respect to, certain of its direct and indirect U.S. account holders (including debtholders and equityholders). Limited Partners should consult their own tax advisors regarding the possible implications of these rules on their investment in Interests. Reporting Requirements Regulations generally impose an information reporting requirement on a U.S. person's direct and indirect contributions of cash or property to a foreign partnership such as the Master Partnership where, (i) immediately after the contribution, the U.S. person owns (directly, indirectly or by attribution) at least a 10% interest in the foreign partnership or (ii) the value of the cash and/or property transferred during the twelve-month period ending on the date of the contribution by the transferor (or any related person) exceeds $100,000. Under these rules, a Limited Partner will be deemed to have transferred a proportionate share of the cash and property contributed by Millennium USA to the Master Partnership. Furthermore, if a U.S. person was required to report a transfer to a foreign partnership of appreciated property under the first sentence of this paragraph, and the foreign partnership disposes of the property while such U.S. person remains a direct or indirect partner, that U.S. person must report the disposition by the partnership. However, a DOC ID- 29147063.5 1-52 CONFIDENTIAL UBSTERRAMAR00003983 EFTA00239315 FOR EXISTING INVESTOR USE ONLY Limited Partner will not be required to file information returns with respect to the events described in this paragraph if Millennium USA complies with the reporting requirements. Millennium USA intends to file the required reports with the Service so as to relieve the Limited Partners of these reporting obligations. Regulations also generally impose a reporting requirement on any U.S. Limited Partner which, at any time during the taxable year of the Master Partnership, owns (indirectly or by attribution) more than 50% of the capital or profits of the Master Partnership. Millennium Management will notify any Limited Partner who owns the requisite indirect interest in the Master Partnership and will assist such person in meeting their reporting obligations. The foregoing discussion is only a brief summary of certain information reporting requirements. Substantial penalties may apply if the required reports are not made on time. Partners are strongly urged to consult their own tax advisors concerning these reporting requirements as they relate to their investment in Millennium USA. Unrelated Business /arable Income Generally, an exempt organization is exempt from federal income tax on its passive investment income, such as dividends, interest and capital gains, whether realized by the organization directly or indirectly through a partnership in which it is a partner, This type of income is exempt even if it is realized from securities trading activity which constitutes a trade or business. This general exemption from tax does not apply to the "unrelated business taxable income" ("UBTI") of an exempt organization. Generally, except as noted above with respect to certain categories of exempt trading activity, UBTI includes income or gain derived (either directly or through partnerships) from a trade or business, the conduct of which is substantially unrelated to the exercise or performance of the organization's exempt purpose or function. Separate calculations are made for each unrelated trade or business of the exempt organization, with losses usable only against the applicable unrelated trade or business and not against all UBTI generally. With respect to its investments, if any, in partnerships engaged in a trade or business, Millennium USA's income (or loss) from these investments may constitute UBTI. UBTI also includes "unrelated debt-financed income," which generally consists of (i) income derived by an exempt organization (directly or through a partnership) from income-producing property with respect to which there is "acquisition indebtedness" at any time during the taxable year, and (ii) gains derived by an exempt organization (directly or through a partnership) from the disposition of property with respect to which there is "acquisition indebtedness" at any time during the twelve-month period ending with the date of such disposition. With certain exceptions. tax-exempt organizations which are private foundations are subject to a 2% federal excise tax on their "net investment income." The rate of the excise tax for any taxable year may be reduced to I% if the private foundation meets certain distribution requirements for the taxable year. A private foundation will be required to make payments of estimated tax with respect to this excise tax. DOC ID- 29147063.5 1-53 CONFIDENTIAL UBSTERRAMAR00003984 EFTA00239316 FOR EXISTING INVESTOR USE ONLY Millennium USA may incur "acquisition indebtedness" with respect to certain of its transactions, such as the purchase of securities on margin. Based upon a published ruling issued by the Service which generally holds that income and gain with respect to short sales of publicly traded stock does not constitute income from debt financed property for purposes of computing UBTI, Millennium USA will treat its short sales of securities as not involving "acquisition indebtedness" and therefore not resulting in UBTI.9 To the extent Millennium USA recognizes income (i.e., dividends and interest) from securities with respect to which there is "acquisition indebtedness" during a taxable year, the percentage of such income which will be treated as UBTI generally will be based on the percentage which the "average acquisition indebtedness" incurred with respect to such securities is of the "average amount of the adjusted basis" of such securities during the taxable year. To the extent Millennium USA recognizes gain from securities with respect to which there is "acquisition indebtedness" at any time during the twelve-month period ending with the date of their disposition, the percentage of such gain which will be treated as UBTI will be based on the percentage which the highest amount of such "acquisition indebtedness" is of the "average amount of the adjusted basis" of such securities during the taxable year. In determining the unrelated debt-financed income of Millennium USA, an allocable portion of deductions directly connected with Millennium USA's debt-financed property is taken into account. Thus, for instance, a percentage of losses from debt-financed securities (based on the debt/basis percentage calculation described above) would offset gains treated as UBTI. Since the calculation of Millennium USA's "unrelated debt-financed income" is complex and will depend in large part on the amount of leverage, if any, used by Millennium USA from time to time,10 it is impossible to predict what percentage of Millennium USA's income and gains will be treated as UBTI for a Limited Partner which is an exempt organization. With respect to losses incurred during or after 2018, an exempt organization's share of the income or gains of Millennium USA which is treated as UBTI may not be offset by losses of the exempt organization either from Millennium USA or otherwise, unless such losses are treated as attributable to the same unrelated trade or business. To the extent that Millennium USA generates UBTI, the applicable federal tax rate for such a Limited Partner generally would be either the corporate or trust tax rate depending upon the nature of the particular exempt organization. An exempt organization may be required to support, to the satisfaction of the Service, the method used to calculate its UBTI. Millennium USA will be required to report to a Partner which is an exempt organization information as to the portion, if any, of its income and gains from Millennium USA for each year which will be treated as UBTI. The calculation of such amount with respect to transactions entered into by Millennium USA is 9 Moreover. income realized from option writing and futures contract transactions generally would not constitute UBTI. 10 The calculation of a particular exempt organization's UBTI would also be affected if it incurs indebtedness to finance its investment in Millennium USA. An exempt organization is required to make estimated tax payments with respect to its UBTI. DOC ID- 29147063.5 1-54 CONFIDENTIAL UBSTERRAMAR00003985 EFTA00239317 FOR EXISTING INVESTOR USE ONLY highly complex, and there is no assurance that Millennium USA's calculation of UBTI will be accepted by the Service. In general, if UBTI is allocated to an exempt organization such as a qualified retirement plan or a private foundation, the portion of Millennium USA's income and gains which is not treated as UBTI will continue to be exempt from tax, as will the organization's income and gains from other investments which are not treated as UBTI. Therefore, the possibility of realizing UBTI from its investment in Millennium USA generally should not affect the tax-exempt status of such an exempt organization." In addition, a charitable remainder trust will be subject to a 100% excise tax on any UBTI under Section 664(c) of the Code. A title-holding company will not be exempt from tax if it has certain types of UBTI. Moreover, the charitable contribution deduction for a trust under Section 642(c) of the Code may be limited for any year in which the trust has UBTI. A prospective purchaser should consult its tax advisor with respect to the tax consequences of receiving UBTI from Millennium USA. (See "ERISA Considerations.") Certain Issues Pertaining to Specific Exempt Organizations Private Foundations. Private foundations and their managers are subject to excise taxes if they invest "any amount in such a manner as to jeopardize the carrying out of any of the foundation's exempt purposes." This rule requires a foundation manager, in making an investment, to exercise "ordinary business care and prudence" under the facts and circumstances prevailing at the time of making the investment, in providing for the short-term and long-term needs of the foundation to carry out its exempt purposes. The factors which a foundation manager may take into account in assessing an investment include the expected rate of return (both income and capital appreciation), the risks of rising and falling price levels, and the need for diversification within the foundation's portfolio. In order to avoid the imposition of an excise tax, a private foundation may be required to distribute on an annual basis its "distributable amount," which includes, among other things, the private foundation's "minimum investment return," defined as 5% of the excess of the fair market value of its nonfunctionally related assets (assets not used or held for use in carrying out the foundation's exempt purposes), over certain indebtedness incurred by the foundation in connection with such assets. It appears that a foundation's investment in Millennium USA would most probably be classified as a nonfunctionally related asset. A determination that an Interest in Millennium USA is a nonfunctionally related asset could conceivably cause cash flow problems for a prospective Limited Partner which is a private foundation. Such an organization could be required to make distributions in an amount determined by reference to unrealized appreciation in the value of its Interest in Millennium USA. Of course, this factor would create less of a problem to the extent that the value of the investment in Millennium USA is not significant in relation to the value of other assets held by a foundation. Certain exempt organizations which realize UBTI in a taxable year will not constitute "qualified organizations" for purposes of Section 5I.1(cX9XB)(viX1) of the Code. pursuant to which, in limited circurnstmecs, income from certain real estate partnerships in which such organizations invest might be treated as exempt from UBTI. A prospective lax-exempt Limited Palmer should consult its tax advisor in this regard. DOC ID- 29147063.5 1-55 CONFIDENTIAL UBSTERRAMAR00003986 EFTA00239318 FOR EXISTING INVESTOR USE ONLY In some instances, an investment in Millennium USA by a private foundation may be prohibited by the "excess business holdings" provisions of the Code. For example, if a private foundation (either directly or together with a "disqualified person") acquires more than 20% of the capital interest or profits interest of Millennium USA, the private foundation may be considered to have "excess business holdings." If this occurs, such foundation may be required to divest itself of its Interest in Millennium USA in order to avoid the imposition of an excise tax. However, the excise tax will not apply if at least 95% of the gross income from Millennium USA is "passive" within the applicable provisions of the Code and Regulations. There can be no assurance that Millennium USA will meet such 95% gross income test. A substantial percentage of investments of certain "private operating foundations" may be restricted to assets directly devoted to their tax-exempt purposes. Otherwise, generally, rules similar to those discussed above govern their operations. Private Colleges and Universities. Net investment income of certain private colleges and universities is subject to a 1.4% tax. Such income is calculated in the same manner in which private foundations calculate their net investment income. Qualified Retirement Plans. Employee benefit plans subject to the provisions of ERISA, Individual Retirement Accounts and Keogh Plans should consult their counsel as to the implications of such an investment under ERISA and the Code. (See "ERISA Considerations.") Endowment Funds. Investment managers of endowment funds should consider whether the acquisition of an Interest is legally permissible. This is not a matter of federal law, but is determined under state statutes. It should be noted, however, that under the Uniform Prudent Management of Institutional Funds Act, which has been adopted, in various forms, by a large number of states, participation in investment partnerships or similar organizations in which funds are commingled and investment determinations are made by persons other than the governing board of the endowment fund is allowed. Certain Clubs and Trusts. Social clubs, voluntary employees' beneficiary associations and supplemental unemployment benefit trusts that are exempt from Federal income taxation under Sections 501(cX7), (c)(9) and (cX17), respectively, of the Code are subject to special UBTI rules. These rules generally require such tax-exempt organizations to characterize income that would not otherwise be treated as UBTI (including income earned by Millennium USA) as UBTI. Such tax- exempt organizations are advised to consult their tax advisors concerning these rules and their application to this investment. Excise Tax on Certain Reportable Transactions. A tax-exempt entity (including a state or local government or its political subdivision) may be subject to an excise tax equal to the greater of (i) 100% of the net income or (ii) 75% of the proceeds, attributable to certain "reportable transactions," including "listed transactions," if any, in which it participates. Under Regulations, these rules should not apply to a tax-exempt investor's Interest if such investor's tax-exempt status does not facilitate Millennium USA's participation, if any, in such transactions, unless otherwise provided in future guidance. Tax-exempt investors should discuss with their own advisors the applicability of these rules to their investment in Millennium USA. (See "Tax Shelter Reporting Requirements" below.) DOC ID- 29147063.5 1-56 CONFIDENTIAL UBSTERRAMAR00003987 EFTA00239319 FOR EXISTING INVESTOR USE ONLY Certain Reporting Obligations Certain U.S. persons ("potential filers") that own (directly or indirectly) more than 50% of the capital or profits of Millennium USA may be required to file FinCEN Form 114 (an "FBAR") with respect to Millennium USA's investments in foreign financial accounts. Failure to file a required FBAR may result in civil and criminal penalties. Potential filers should consult with their own advisors as to whether they are obligated to file an FBAR with respect to an investment in Millennium USA. Tax Shelter Reporting Requirements The Regulations require Millennium USA to complete and file Form 8886 ("Reportable Transaction Disclosure Statement") with its tax return for any taxable year in which Millennium USA participates in a "reportable transaction." Additionally, each Partner treated as participating in a reportable transaction of Millennium USA is generally required to file Form 8886 with its tax return (or, in certain cases, within 60 days of the return's due date). If the Service designates a transaction as a reportable transaction after the filing of a taxpayer's tax return for the year in which Millennium USA or a Partner participated in the transaction, Millennium USA and/or such Partner may have to file Form 8886 with respect to that transaction within 90 days after the Service makes the designation. Millennium USA and any such Partner, respectively, must also submit a copy of the completed form with the Service's Office of Tax Shelter Analysis. Millennium USA intends to notify the Partners that it believes (based on information available to Millennium USA) are required to report a transaction of Millennium USA, and intends to provide such Limited Partners with any available information needed to complete and submit Form 8886 with respect to Millennium USA's transactions. In certain situations, there may also be a requirement that a list be maintained of persons participating in such reportable transactions, which could be made available to the Service at its request. A Partner's recognition of a loss upon its disposition of an Interest in Millennium USA could also constitute a "reportable transaction" for such Partner, requiring such Partner to file Form 8886. A significant penalty is imposed on taxpayers who participate in a "reportable transaction" and fail to make the required disclosure. The maximum penalty is $10,000 for natural persons and $50,000 for other persons (increased to $100,000 and $200,000, respectively, if the reportable transaction is a "listed" transaction). Investors should consult with their own advisors concerning the application of these reporting obligations to their specific situations. State and Local Taxation In addition to the federal income tax consequences described above, prospective purchasers should consider potential state and local tax consequences of an investment in Millennium USA. State and local laws often differ from federal income tax laws with respect to the treatment of specific items of income, gain, loss, deduction and credit. A Partner's distributive share of the taxable income or loss of Millennium USA generally will be required to be included in determining its reportable income for state and local tax purposes in the jurisdiction in which it is a resident. To the extent Millennium USA is engaged in a trade or business, including through the acquisition DOC ID- 29147063.5 1-57 CONFIDENTIAL UBSTERRAMAR00003988 EFTA00239320 FOR EXISTING INVESTOR USE ONLY of an interest in a partnership that is itself engaged in a trade or business, a Partner's share of Millennium USA's income from that trade or business that is sourced to a particular jurisdiction may cause such Partner to be taxed in that jurisdiction and may cause such Partner to file tax returns in such jurisdiction. Prospective purchasers should consult their tax advisors with respect to the availability of a credit for any such tax in the jurisdiction in which that Partner is a resident. The tax laws of various states and localities limit or eliminate the deductibility of itemized deductions for certain taxpayers. As described above, the Master Partnership generally expects to be in a trade or business within the meaning of the Code. Accordingly, it is not anticipated that Millennium USA's and the Master Partnership's expenses associated with such trade or business will be subject to such limitations. However, certain expenses which are not associated with such trade or business may be limited in their deductibility in one or more states or localities. Moreover, there can be no assurance that various states and localities will not treat all of Millennium USA's and the Master Partnership's expenses, including interest expense, as investment expenses which are subject to such limitations. Prospective investors are urged to consult their tax advisors with respect to the impact of these provisions on the deductibility of certain itemized deductions, including interest expense, on their tax liabilities in the jurisdictions in which they are resident. One or more states may impose reporting requirements on Millennium USA and/or its Partners in a manner similar to that described above in "Tax Shelter Reporting Requirements." Investors should consult with their own advisors as to the applicability of such rules in jurisdictions which may require or impose a filing requirement. Millennium USA does not expect to be subject to the New York City unincorporated business tax, which is not imposed on a partnership which purchases and sells securities for its "own account." (This exemption may not be applicable to the extent a partnership in which Millennium USA invests conducts a business in New York City.) By reason of a similar "own account" exemption, it is also expected that a nonresident individual Partner should not be subject to New York State personal income tax with respect to his share of income or gain realized directly by Millennium USA. Individual Limited Partners who are residents of New York State and New York City should be aware that the New York State and New York City personal income tax laws limit the deductibility of itemized deductions and interest expense for individual taxpayers at certain income levels. As described above, the Master Partnership generally expects to be in a trade or business within the meaning of the Code. Accordingly, Millennium USA intends to treat its and Millennium USA's expenses associated with such trade or business as not being subject to the foregoing limitations on deductibility. However, there can be no assurance that New York State and New York City will not treat such expenses as investment expenses which are subject to such limitations. Further, these limitations may apply to certain expenses of the Master Partnership and Millennium USA that are not part of the Master Partnership's or Millennium USA's trade or business. Prospective Limited Partners are urged to consult their own tax advisors with respect to the impact of these provisions and the federal limitations on the deductibility of certain itemized deductions and investment expenses on their New York State and New York City tax liability. For purposes of the New York State corporate franchise tax and the New York City general corporation tax, a corporation generally is treated as doing business in New York State and New DOC ID- 29147063.5 1-58 CONFIDENTIAL UBSTERRAMAR00003989 EFTA00239321 FOR EXISTING INVESTOR USE ONLY York City, respectively, and is subject to such corporate taxes as a result of the ownership of a partnership interest in a partnership which does business in New York State and New York City, respectively.' Each of the New York State and New York City corporate taxes are imposed, in part, on the corporation's taxable income or capital allocable to the relevant jurisdiction by application of the appropriate allocation percentages. Moreover, a non-New York corporation which does business in New York State may be subject to a New York State license fee. A corporation which is subject to New York State corporate franchise tax solely as a result of being a limited partner in a New York partnership may, under certain circumstances, elect to compute its New York State corporate franchise tax by taking into account only its distributive share of such partnership's income and loss. There is currently no similar provision in effect for purposes of the New York City general corporation tax. Regulations under both the New York State corporate franchise tax and the New York City general corporation tax, however, provide an exception to this general rule in the case of a "portfolio investment partnership," which is defined, generally, as a partnership which meets the gross income requirements of Section 851(b)(2) of the Code. New York State (but not New York City) has adopted regulations that also include income and gains from commodity transactions described in Section 864(bX2)(8Xiii) as qualifying gross income for this purpose. Millennium USA's qualification as such a portfolio investment partnership must be determined on an annual basis and, with respect to a taxable year, Millennium USA may not qualify as a portfolio investment partnership. New York State imposes a quarterly withholding obligation on certain partnerships with respect to partners that are individual non-New York residents or corporations (other than "S" corporations). Accordingly, Millennium USA may be required to withhold on the distributive shares of New York source partnership income allocable to such partners to the extent such income is not derived from trading in securities for Millennium USA's own account. A trust or other unincorporated organization which by reason of its purposes or activities is exempt from federal income tax is generally also exempt from New York State and New York City personal income tax. A nonstock corporation which is exempt from federal income tax is generally presumed to be exempt from New York State corporate franchise tax and New York City general corporation tax. New York State imposes a tax with respect to such exempt entities on UBTI (including unrelated debt-financed income) at a rate which is currently equal to 9%. There is no New York City tax on the UBTI of an otherwise exempt entity. Each prospective Partner should consult its tax advisor with regard to the New York State and New York City tax consequences of an investment in Millennium USA. 12 New York State (but not New York City) generally exempts from corporate franchise tax a non-New York corporation which (i) does not actually or constructively own a I% or greater limited partnership interest in a partnership doing business in New York and (ii) has a tax basis in such limited partnership interest not greater than SI DOC ID- 29147063.5 1-59 CONFIDENTIAL UBSTERRAMAR00003990 EFTA00239322 FOR EXISTING INVESTOR USE ONLY Foreign Taxes It is possible that certain dividends and interest directly or indirectly received by Millennium USA from sources within foreign countries will be subject to withholding taxes imposed by such countries. In addition, Millennium USA or the Master Partnership may also be subject to capital gains taxes in some of the foreign countries where they purchase and sell securities. Tax treaties between certain countries and the United States may reduce or eliminate such taxes. It is impossible to predict in advance the rate of foreign tax Millennium USA will directly or indirectly pay since the amount of Millennium USA's assets to be invested in various countries is not known. The Limited Partners will be informed by Millennium USA as to their proportionate share of the foreign taxes paid by Millennium USA or the Master Partnership , which they will be required to include in their income. The Limited Partners generally will be entitled to claim either a credit (subject, however, to various limitations on foreign tax credits) or, if they itemize their deductions, a deduction (subject to the limitations generally applicable to deductions) for their share of such foreign taxes in computing their federal income taxes. A Limited Partner that is tax- exempt will not ordinarily benefit from such credit or deduction. Interest, dividend and other income realized by Millennium USA or the Master Partnership from non-U.S. sources, and capital gains realized, or gross sale or disposition proceeds received, on the sale of securities of non-U.S. issuers, may be subject to withholding and other taxes levied by the jurisdiction in which the income is sourced. Millennium Management and its affiliates operate throughout the world in various jurisdictions, including the United Kingdom, Luxembourg, Hong Kong, Japan, Singapore and Switzerland. Millennium Management and its affiliates generally endeavor to conduct such activities in a manner such that the Master Partnership (and Millennium USA) are not deemed to have a permanent establishment in any such jurisdiction, and in a jurisdiction where a relevant tax exemption (e.g., for investment entities) are granted, Millennium Management and its affiliates generally endeavor to enable to the Master Partnership (and Millennium USA) to benefit from such exemption. However, it is possible that the Master Partnership (or Millennium USA) may be deemed to have a permanent establishment in one or more of those jurisdictions and that Millennium USA or the Master Partnership (and possibly Limited Partners (directly or indirectly)) may be subject to non-U.S. net taxes and filing obligations in connection therewith. ERISA Considerations THE FOLLOWING SUMMARY OF CERTAIN ASPECTS OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") IS BASED UPON ERISA, JUDICIAL DECISIONS, DEPARTMENT OF LABOR ("DOL") REGULATIONS AND RULINGS IN EXISTENCE ON THE DATE HEREOF. THIS SUMMARY IS GENERAL IN NATURE AND DOES NOT ADDRESS EVERY ERISA ISSUE THAT MAY BE APPLICABLE TO MILLENNIUM USA, THE MASTER PARTNERSHIP OR A PARTICULAR INVESTOR. ACCORDINGLY, EACH PROSPECTIVE INVESTOR SHOULD CONSULT WITH ITS OWN COUNSEL IN ORDER TO UNDERSTAND THE ERISA ISSUES AFFECTING MILLENNIUM USA, THE MASTER PARTNERSHIP AND THE INVESTOR. DOC ID- 29147063.5 1-60 CONFIDENTIAL UBSTERRAMAR00003991 EFTA00239323 FOR EXISTING INVESTOR USE ONLY General Persons who are fiduciaries with respect to a U.S. employee benefit plan or trust within the meaning of and subject to the provisions of ERISA (an "ERISA Plan"), an individual retirement account or a Keogh plan subject solely to the provisions of the Code13 (an "Individual Retirement Account") should consider, among other things, the matters described below before determining whether to invest in Millennium USA (and thus the Master Partnership). ERISA imposes certain general and specific responsibilities on persons who are fiduciaries with respect to an ERISA Plan, including prudence, diversification, avoidance of prohibited transactions and compliance with other standards. In determining whether a particular investment is appropriate for an ERISA Plan, DOL regulations provide that a fiduciary of an ERISA Plan must give appropriate consideration to, among other things, the role that the investment plays in the ERISA Plan's portfolio, taking into consideration whether the investment is designed reasonably to further the ERISA Plan's purposes, the risk and return factors of the potential investment, including the fact that the returns may be subject to U.S. federal tax as unrelated business taxable income, the portfolio's composition with regard to diversification, the liquidity and current return of the total portfolio relative to the anticipated cash flow needs of the ERISA Plan, the projected return of the total portfolio relative to the ERISA Plan's funding objectives, and the limitation on the rights of Limited Partners to withdraw all or any part of their Offered Interests or to transfer their Offered Interests. Before investing the assets of an ERISA Plan in Millennium USA (and thus the Master Partnership), a fiduciary should determine whether such an investment is consistent with its fiduciary responsibilities and the foregoing regulations. For example, a fiduciary should consider whether an investment in Millennium USA (and thus the Master Partnership) may be too illiquid or too speculative for a particular ERISA Plan and whether the assets of the ERISA Plan would be sufficiently diversified. If a fiduciary with respect to any such ERISA Plan breaches its responsibilities with regard to selecting an investment or an investment course of action for such ERISA Plan, the fiduciary may be held personally liable for losses incurred by the ERISA Plan as a result of such breach. Plan Assets Defined ERISA and applicable DOL regulations describe when the underlying assets of an entity in which "benefit plan investors", as defined in Section 3(42) of ERISA and any regulations promulgated thereunder ("Benefit Plan Investors") invest are treated as "plan assets" for purposes of ERISA. Under ERISA, the term Benefit Plan Investors is defined to include an "employee benefit plan" that is subject to the provisions of Title I of ERISA, a "plan" that is subject to the prohibited transaction provisions of Section 4975 of the Code, and entities the assets of which are treated as "plan assets" by reason of investment therein by Benefit Plan Investors. Under ERISA, as a general rule, when an ERISA Plan invests assets in another entity, the ERISA Plan's assets include its investment, but do not, solely by reason of such investment, include any of the underlying assets of the entity. However, when an ERISA Plan acquires an "equity interest" in an entity that is neither: (a) a "publicly offered security;" nor (b) a security I3 References hereinafter made to ERISA include parallel references to the Code. DOCID-29147063.5 I-61 CONFIDENTIAL UBSTERRAMAR00003992 EFTA00239324 FOR EXISTING INVESTOR USE ONLY issued by an investment fund registered under the Company Act, then the ERISA Plan's assets include both the equity interest and an undivided interest in each of the underlying assets of the entity, unless it is established that: (i) the entity is an "operating company;" or (ii) the equity participation in the entity by Benefit Plan Investors is limited. Under ERISA, the assets of an entity will not be treated as "plan assets" if Benefit Plan Investors hold less than 25% (or such other percentage as may be specified from time to time in regulations promulgated by the DOL) of the value of each class of equity interests in the entity. Equity interests held by a person with discretionary authority or control with respect to the assets of the entity and equity interests held by a person who provides investment advice for a fee (direct or indirect) with respect to such assets or any affiliate of any such person (other than a Benefit Plan Investor) are not considered for purposes of determining whether the assets of an entity will be treated as "plan assets" for purposes of ERISA. The Benefit Plan Investor percentage of ownership test applies at the time of an acquisition by any person of the equity interests. In addition, an advisory opinion of the DOL takes the position that a withdrawal of an equity interest by an investor constitutes the acquisition of an equity interest by the remaining investors (through an increase in their percentage ownership of the remaining equity interests), thus triggering an application of the Benefit Plan Investor percentage of ownership test at the time of the withdrawal. Limitation on Investments by Benefit Plan Investors It is the current intent of Millennium Management to monitor the investments in Millennium USA and the Master Partnership to ensure that the aggregate investment by Benefit Plan Investors does not equal or exceed 25% (or such other percentage as may be specified from time to time in regulations promulgated by the DOL) of the value of any class of equity interests in each of Millennium USA and the Master Partnership so that assets of neither Millennium USA nor the Master Partnership will be treated as "plan assets" under ERISA. Interests held by Millennium Management and its affiliates (other than a Benefit Plan Investor) are not considered for purposes of determining whether the assets of Millennium USA will be treated as "plan assets" for the purpose of ERISA. If the assets of Millennium USA were treated as "plan assets" of a Benefit Plan Investor, Millennium Management would be a "fiduciary" (as defined in ERISA and the Code) with respect to each such Benefit Plan Investor, and would be subject to the obligations and liabilities imposed on fiduciaries by ERISA. Similarly, if the assets of the Master Partnership were treated as "plan assets" of a Benefit Plan Investor, Millennium Management would be a "fiduciary" (as defined in ERISA and the Code) with respect to each such Benefit Plan Investor, and would be subject to the obligations and liabilities imposed on fiduciaries by ERISA. In such circumstances, Millennium USA (and/or the Master Partnership, as appropriate) would be subject to various other requirements of ERISA and the Code. In particular, Millennium USA (and/or the Master Partnership, as appropriate) would be subject to rules restricting transactions with "parties in interest" and prohibiting transactions involving conflicts of interest on the part of fiduciaries which might result in a violation of ERISA and the Code unless Millennium USA (and/or the Master Partnership, as appropriate) obtained appropriate exemptions from the DOL allowing Millennium USA (and/or the Master Partnership, as appropriate) to conduct its operations as described herein. As described above, under "Millennium USA's Organization, Management, Structure, and Operations" — "Compulsory Withdrawal", Millennium Management reserves may, in its sole discretion, require any Limited Partner to withdraw all or any portion of the balance in its capital account(s), including, without limitation, to ensure compliance with the percentage DOC ID- 29147063.5 1-62 CONFIDENTIAL UBSTERRAMAR00003993 EFTA00239325 FOR EXISTING INVESTOR USE ONLY limitation on investment in Millennium USA by Benefit Plan Investors as set forth above. Similar compulsory withdrawal terms apply to the Master Partnership. Millennium Management reserves the right, however, to waive the percentage limitation on investment in Millennium USA (and indirect investment in the Master Partnership) by Benefit Plan Investors and thereafter to comply with ERISA. Representations by Plans An ERISA Plan proposing to invest in Millennium USA (and thus the Master Partnership) will be required to represent that it is, and any fiduciaries responsible for the ERISA Plan's investments are, aware of and understand Millennium USA's and the Master Partnership's investment objectives, policies and strategies, and that the decision to invest plan assets in Millennium USA (and thus the Master Partnership) was made with appropriate consideration of relevant investment factors with regard to the ERISA Plan and is consistent with the duties and responsibilities imposed upon fiduciaries with regard to their investment decisions under ERISA. WHETHER OR NOT THE ASSETS OF MILLENNIUM USA OR THE MASTER PARTNERSHIP ARE TREATED AS "PLAN ASSETS" FOR PURPOSES OF ERISA, AN INVESTMENT IN MILLENNIUM USA (AND THUS THE MASTER PARTNERSHIP) BY AN ERISA PLAN IS SUBJECT TO ERISA. ACCORDINGLY, FIDUCIARIES OF ERISA PLANS SHOULD CONSULT WITH THEIR OWN COUNSEL AS TO THE CONSEQUENCES UNDER ERISA OF AN INVESTMENT IN MILLENNIUM USA (AND THUS THE MASTER PARTNERSHIP). ERISA Plans and Individual Retirement Accounts Having Prior Relationships with Millennium Management or its Affiliates Certain prospective ERISA Plan and Individual Retirement Account investors may currently maintain relationships with Millennium Management or other entities that are affiliated with Millennium Management. Each of such entities may be deemed to be a party in interest to, and/or a fiduciary of, any ERISA Plan or Individual Retirement Account to which any of Millennium Management or its affiliates provides investment management, investment advisory or other services. ERISA prohibits ERISA Plan assets to be used for the benefit of a party in interest and also prohibits an ERISA Plan fiduciary from using its position to cause the ERISA Plan to make an investment from which it or certain third parties in which such fiduciary has an interest would receive a fee or other consideration. Similar provisions are imposed by the Code with respect to Individual Retirement Accounts. ERISA Plan and Individual Retirement Account investors should consult with counsel to determine if participation in Millennium USA (and thus the Master Partnership) is a transaction that is prohibited by ERISA or the Code. Eligible Indirect Compensation The disclosures set forth in this Confidential Memorandum constitute Millennium's good faith efforts to comply with the disclosure requirements of Form 5500, Schedule C and allow for the treatment of its compensation as eligible indirect compensation. Future Regulations and Rulings DOC ID- 29147063.5 1-63 CONFIDENTIAL UBSTERRAMAR00003994 EFTA00239326 FOR EXISTING INVESTOR USE ONLY The provisions of ERISA are subject to extensive and continuing administrative and judicial interpretation and review. The discussion of ERISA contained herein is, of necessity, general and may be affected by future publication of regulations and rulings. Potential investors should consult with their legal advisors regarding the consequences under ERISA of the acquisition and ownership of Offered Interests. Anti-Money Laundering Considerations Identity Verification In order to comply with laws and regulations aimed at the prevention of money laundering and terrorist financing, Millennium USA is required to adopt and maintain anti-money laundering procedures and, accordingly, Millennium USA, or the Administrator on Millennium USA's behalf, may require prospective purchasers to provide evidence to verify their identity, the identity of their beneficial owners and controllers (where applicable), and the source of funds. Millennium USA, and the Administrator on Millennium USA's behalf, may request such information as is necessary to verify the identity of any Limited Partner (including any prospective purchaser or a transferee) and the identity of their beneficial owners and controllers (where applicable). Where the circumstances permit, Millennium USA, or the Administrator on Millennium USA's behalf, may be satisfied that full due diligence may not be required at subscription where an exemption applies under applicable law. However, detailed verification information may be required prior to the payment of any withdrawal proceeds or any transfer of an Offered Interest (unless Millennium USA or the Administrator on Millennium USA's behalf, determines in its sole discretion, to rely on an applicable exemption under applicable law). In the event of delay or failure by a prospective purchaser or Limited Partner to produce any information required for verification purposes, Millennium USA, or the Administrator on Millennium USA's behalf, may (i) refuse to accept or delay the acceptance of a subscription; (ii) in the case of a transfer of Offered Interests, refuse to consent to the relevant transfer of Offered Interests; or (iii) effect a compulsory withdrawal of any such Limited Partner from Millennium USA. Millennium USA, and the Administrator on Millennium USA's behalf, also may refuse to make any withdrawal or distribution payment to a Limited Partner if Millennium Management or the Administrator suspects or is advised that the payment of withdrawal proceeds or distribution amounts to such Limited Partner may be non-compliant with applicable laws or regulations, or if such refusal is considered nerPssary or appropriate to ensure the compliance by Millennium USA or the Administrator with any applicable laws or regulations. Freezing Accounts Each of Millennium Management and the Administrator reserves the right, and Millennium USA may be obligated, pursuant to any applicable anti-money laundering laws or the laws, regulations, and Executive Orders administered by the U.S. Department of Treasury's Office of Foreign Assets Control ("OFAC"), or other laws or regulations in any relevant jurisdiction (collectively, "AML/OFAC Obligations"), to "freeze the account" of a prospective purchaser or Limited Partner, either by (i) rejecting the capital contribution of a prospective purchaser or DOC ID- 29147063.5 1-64 CONFIDENTIAL UBSTERRAMAR00003995 EFTA00239327 FOR EXISTING INVESTOR USE ONLY Limited Partner; (ii) segregating the assets in the account in compliance with applicable laws or regulations; (iii) declining any withdrawal request of a Limited Partner; (iv) suspending payment of withdrawal proceeds to a Limited Partner; and/or (v) refusing to make any distribution to a Limited Partner. Millennium USA may be required to report such action and to disclose the identity to OFAC or other applicable governmental and regulatory authorities. Sanctions and Required Representations Millennium USA is subject to laws that restrict it from dealing with certain persons, including persons that are located or domiciled in sanctioned jurisdictions. Accordingly, each prospective purchaser and Limited Partner (including any transferee) will be required to make certain representations to Millennium USA in connection with applicable AML/OFAC Obligations. Where a Limited Partner is named on the OFAC list, any list maintained under the European Union or United Kingdom Regulations (as extended to the Cayman Islands by statutory instrument) or any similar list maintained under applicable law, Millennium USA may be required to cease any further dealings with the Limited Partner's interest in Millennium USA until such sanctions are lifted or a license is sought under applicable law to continue dealings. Required Reporting If any person in the Cayman Islands, including, without limitation, service providers to the Master Partnership located in the Cayman Islands, knows or suspects or has reasonable grounds for knowing or suspecting that another person is engaged in criminal conduct or money laundering or is involved with terrorism or terrorist financing and property and the information for that knowledge or suspicion came to their attention in the course of business in the regulated sector, or other trade, profession, business or employment, the person will be required to report such knowledge or suspicion to (i) the Financial Reporting Authority of the Cayman Islands, pursuant to the Proceeds of Crime Law (2018 Revision) of the Cayman Islands, if the disclosure relates to criminal conduct or money laundering, or (ii) a police officer of the rank of constable or higher, or the Financial Reporting Authority, pursuant to the Terrorism Law (2018 Revision) of the Cayman Islands, if the disclosure relates to involvement with terrorism or terrorist financing and property. Such a report will not be treated as a breach of confidence or of any restriction upon the disclosure of information imposed by any enactment or otherwise. Pursuant to the Anti-Money Laundering Regulations (2018 Revision) of the Cayman Islands, as amended and revised from time to time, the Master Partnership must designate natural persons to act as Anti-Money Laundering Compliance Officer, Money Laundering Reporting Officer and Deputy Money Laundering Reporting Officer (collectively, the "AML Officers") of the Master Partnership. Prospective Purchasers and Limited Partners may obtain details (including contact details) of the current AML Officers of the Master Partnership, by contacting info@m1p.com. Delegation Where permitted by applicable law, and subject to certain conditions, Millennium USA may delegate the maintenance of its anti-money laundering procedures (including the acquisition of due diligence information) to a suitable person. DOC ID- 29147063.5 1-65 CONFIDENTIAL UBSTERRAMAR00003996 EFTA00239328 FOR EXISTING INVESTOR USE ONLY Millennium USA's Fiscal Year The fiscal year-end of Millennium USA is December 31. Millennium USA's Legal Counsel Schulte Roth & Zabel LLP ("SRZ") has been engaged by Millennium Management as U.S. counsel to represent it in connection with the organization of Millennium USA and this offering of Offered Interests in Millennium USA. No separate counsel has been engaged to independently represent the Limited Partners in connection with these matters. Other counsel may also be retained where Millennium Management on its own behalf, or on behalf of Millennium USA, determines that to be appropriate. In advising Millennium USA and Millennium Management with respect to the preparation of this Confidential Memorandum, SRZ has relied upon information that has been furnished to it by Millennium USA, Millennium Management and their affiliates, and has not independently investigated or verified the accuracy or completeness of the information set forth herein. In addition, SRZ does not monitor the compliance of Millennium USA or Millennium Management with the investment guidelines set forth in this Confidential Memorandum, Millennium USA's terms or applicable law. There may be situations in which there is a "conflict" between the interests of Millennium Management and those of Millennium USA. In these situations, Millennium Management and Millennium USA will determine the appropriate resolution thereof, and may seek advice from SRZ in connection with such determinations. Millennium Management and Millennium USA have consented to SRZ's concurrent representation of such parties in such circumstances. Millennium USA's Independent Public Accountants Millennium USA has retained Ernst & Young LLP, 5 Times Square, New York, New York 10036, certified public accountants, as its auditor. DOC ID- 29147063.5 1-66 CONFIDENTIAL UBSTERRAMAR00003997 EFTA00239329 FOR EXISTING INVESTOR USE ONLY APPENDIX I TO PART ONE: DESCRIPTION OF ADDITIONAL CLASSES The classes of Interests other than the Offered Interests issued by Millennium USA that were outstanding as of the date hereof are as follows: Class Designation Withdras% al Rights New Issue Eligibility Class A Each December 3111 Eligible Class B Each December 310) Not Eligible Class C Quarterly ma) Eligible Class D Quarterly ma) Not Eligible Class M Annual Eligible Class N Annual Not Eligible Class O Quarterly 121 Eligible Class P Quarterly '2, Not Eligible Class Q Annual Eligible Class R Annual Not Eligible Class S Quarterly 1' 1 Eligible Class T Quarterly 121 Not Eligible Class U Annual Eligible Class V Annual Not Eligible Class W Quarterly (2) Eligible Class X Quarterly (2) Not Eligible Class CC Quarterly (2) Eligible Class DI) Quarterly (2) Not Eligible Class EE Quarterly (4) Eligible Class FE Quarterly to Not Eligible Class MM Annual (3) Eligible Class NN Annual (3) Not Eligible Class OO Quarterly (2) Eligible Class PP Quarterly (2) Not Eligible Class SC-A Semi-annual ,” Eligible Class SC-B Semi-annual (3) Not Eligible Class SC-GG Quarterly/Annual(6) Eligible Class SC-WI Quarterly/Annual(6) Not Eligible (I) Holders ofClass A. Class B. Class C. and Class D interests have certain rights to convert interests with quarterly withdrawal rights (but that are subject to a contractual limit on withdrawals) for interests with annual withdrawal rights, and vice versa. (2) Class C, Class I), Class 0, Class P, Class S, Class T, Class IV, Class X, Class CC, Class DI), Class 00 and Class PP interests are subject to contractual limit on withdrawals. The contractual lint! on withdrawals applied to Class C, Class D. Class a Class P. Class S. Class T. Class IV, Class I. Class 00 and Class PP interests allocates DOC ID- 29147063.5 I-67 CONFIDENTIAL UBSTERRAMAROOOO3998 EFTA00239330 FOR EXISTING INVESTOR USE ONLY aggregate withdrawal requests in excess of the applicable threshold among requesting investors in proportion to the relative size of their withdrawal requests. while the contractual limit on withdrawals applied to Class CC and Class DD interests allocates aggregate withdrawal requests in excess of the applicable threshold among requesting investors in proportion to the relative size of the investor. (3) Class SC-A and Class SC-B interests are subject to semi-annual withdrawal rights following the expiration ofa minimum holding period ending on die last day of the eighth full fiscal quarter following the date such interests were purchased, and are a contractual limit on withdrawals that limits an investor's withdrawals to 3/3 i/3% of its interests then eligible for withdrawal. Class SC-A and Class SC-B interests are also subject to an i8% incentive allocation and a minimum initial subscription amount ofS20 million. (4) Class EE and Class FF generally may be withdrawn, in whole or in part, as of the last day ofeach calendar quarter, subject to a 25% quarterly limit that limits the amount of interests any single investor may withdraw on a single withdrawal date. Withdrcnrals occurring before the last day of the fourth fill! calendar quarter after purchase of such interests are subject to a charge equal to 4% of the withdrawn amount. (5) Class AA' and Class NN generally may be withdrawn, in whole or in part, as of the last day oldie fourth fill fiscal quarter following the date such interests were purchased. and thereafter, as ofeach anniversary of such date, subject to timely receipt ofa notice of withdrawal. (6) Class SC-GG and Class SC-1111 interests are, other than being subject to an 18% incentive fee. otherwise subject to the same terms as the Class GG and Class NH Interests described in this Part One. Interests of each class of Millennium USA participate equally in the profits and losses of Millennium USA, except that Interests that are offered and sold solely to persons who are restricted from participating in new issues will not directly or indirectly participate in the gains and losses from new issues and activities that Millennium Management determines are related thereto (see "Interests Offered; Terms of the Offering — Interests Offered — Treatment of New Issues"). The outstanding Class C and Class D interests of Millennium USA have quarterly withdrawal rights and are subject to a contractual limit on withdrawals that limits withdrawal of those classes (and the corresponding classes of shares of Millennium International) to the greater of (x) US$150 million or (y) 17.5% of the aggregate net asset value of those two classes and the corresponding shares of Millennium International, as of that quarterly withdrawal date. This contractual limit on withdrawals does not take into account any other classes of Interests of Millennium USA, any other classes of shares in Millennium International, or any interests in Millennium Global Estate. The outstanding Class O, Class P, Class S, and Class T interests of Millennium USA have quarterly withdrawal rights and are subject to a contractual limit on withdrawals that limits withdrawal of those classes (and the corresponding classes of shares of Millennium International) to the greater of (x) US$150 million or (y) 17.5% of the aggregate net asset value of those four classes and the corresponding shares of Millennium International, as of that quarterly withdrawal date. This contractual limit on withdrawals does not take into account any other classes of Interests of Millennium USA, any other classes of shares in Millennium International, or any interests in Millennium Global Estate. The outstanding Class W and Class X interests of Millennium USA have quarterly withdrawal rights and are subject to a contractual limit on withdrawals that limits withdrawal of those classes (and the corresponding classes of shares in Millennium International) to the greater of (x) US$150 million or (y) 17.5% of the aggregate net asset value of (i) all outstanding Class W DOC ID- 29147063.5 1-68 CONFIDENTIAL UBSTERRAMAR00003999 EFTA00239331 FOR EXISTING INVESTOR USE ONLY and Class X interests and (ii) the net asset value of the corresponding shares in Millennium International (if any), all as of the applicable withdrawal date. This contractual limit on withdrawals does not take into account any other classes of Interests of Millennium USA, any other classes of shares in Millennium International, or any interests in Millennium Global Estate. The outstanding Class CC and Class DD interests of Millennium USA have quarterly withdrawal rights and are subject to a contractual limit on withdrawals that limits withdrawal of those classes (and the corresponding classes of shares of Millennium International) to the greater of (x) US$150 million or (y) 17.5% of the aggregate net asset value of those two classes and the corresponding shares of Millennium International, as of that quarterly withdrawal date. This contractual limit on withdrawals does not take into account any other classes of Interests of Millennium USA, any other classes of shares of Millennium International, or any interests in Millennium Global Estate. Unlike the contractual limit on withdrawals applied to Class C, Class D, Class O, Class P, Class S, Class T, Class W, Class X, Class OO and Class PP interests, the contractual limit on withdrawals applied to Class CC and Class DD interests allocates aggregate withdrawal requests in excess of the applicable threshold among requesting investors in Class CC and Class DD interests in proportion to the relative size of the investor (rather than the relative size of the withdrawal request). Class EE and Class FF of Millennium USA generally may be withdrawn, in whole or in part, as of the last day of each calendar quarter, subject to a 25% quarterly limit that limits the amount of interests any single holder may withdraw on a single withdrawal date. Withdrawals occurring before the last day of the fourth full calendar quarter after purchase of such interests are subject to a charge equal to 4% of the withdrawal amount. Class MM and Class NN generally may be withdrawn, in whole or in part, as of the last day of the fourth full fiscal quarter following the date such interests were purchased, and thereafter, as of each anniversary of such date, subject to timely receipt of a notice of withdrawal. The outstanding Class OO and Class PP interests of Millennium International have quarterly withdrawal rights and are subject to a contractual limit on withdrawals that limits withdrawals of those classes (and the corresponding classes of shares in Millennium International) to the greater of (x) US$150 million or (y) 17.5% of the aggregate net asset value of those two classes and the corresponding shares of Millennium International, as of that quarterly withdrawal date. This contractual limit on withdrawals does not take into account any other classes of Interests of Millennium USA, any other classes of shares of Millennium International, or any interests in Millennium Global Estate. Class SC-A and Class SC-B interests are subject to semi-annual withdrawal rights following the expiration of a minimum holding period ending on the last day of the eighth full fiscal quarter following the date such interests were purchased, and are a contractual limit on withdrawals that limits an investor's withdrawals to 3/3 1/3% of its interests then eligible for withdrawal. Class SC-A and Class SC-B interests are also subject to an 18% incentive allocation and a minimum initial subscription amount of $20 million. Class SC-GG and Class SC-14H interests are, other than being subject to an 18% incentive fee, otherwise subject to the same terms as the Class GG and Class HH Interests described in this DOC ID- 29147063.5 1-69 CONFIDENTIAL UBSTERRAMAR00004000 EFTA00239332 FOR EXISTING INVESTOR USE ONLY Part One. DOC ID- 29147063.5 I-70 CONFIDENTIAL UBSTERRAMAR00004001 EFTA00239333 FOR EXISTING INVESTOR USE ONLY millennium CONFIDENTIAL MEMORANDUM (Part Two) Relating to MILLENNIUM PARTNERS, L.P. THIS CONFIDENTIAL MEMORANDUM IS COMPRISED OF TWO PARTS, WHICH MUST BE READ TOGETHER. PART ONE OF THIS CONFIDENTIAL MEMORANDUM, ISSUED IN RELATION TO A PRIVATE FUND THAT INVESTS ALL OR A PORTION OF ITS ASSETS, DIRECTLY OR INDIRECTLY, IN MILLENNIUM PARTNERS, L.P., CONTAINS INFORMATION SPECIFIC TO THE APPLICABLE FUND REFERENCED THEREIN, INCLUDING THE TERMS OF INVESTMENT AND ORGANIZATION AND STRUCTURE OF SUCH FUND. THIS PART TWO CONTAINS INFORMATION SPECIFIC TO MILLENNIUM PARTNERS, L.P. INTERESTS IN MILLENNIUM PARTNERS, L.P. ARE NOT BEING OFFERED FOR SALE DIRECTLY. October 2018 CONFIDENTIAL UBSTERRAMAR00004002 EFTA00239334 FOR EXISTING INVESTOR USE ONLY TABLE OF CONTENTS PART Two: INFORMATION RELATING TO MILLENNIUM PARTNERS, LP Summary of Part Two of the Confidential Memorandum 1 The Fund's Investment Program and Strategy 8 The Master Partnership's Organization 9 Certain Risk Factors Relating to an Investment in the Fund 11 The Fund's Management, Structure and Operations 50 The Fund's Investment Program and Description: Eligible Investments 54 The Fund's Investment Program and Description: Investment Strategies and Techniques 55 The Fund's Investment Program and Description: Brokerage 62 The Fund's Investment Program and Description: Leverage and Loans 64 The Fund's Risk Management Program 65 The Master Partnership's Fees and Expenses 65 Related-Party Transactions and Other Accounts; Conflicts 67 Certain Tax Matters Relating to the Master Partnership 77 Certain Legal and Regulatory Matters Relating to the Fund 79 The Master Partnership's Fiscal Year 82 The Master Partnership's Independent Public Accountants 82 Appendix I: Relying Advisers CONFIDENTIAL UBSTERRAMAR00004003 EFTA00239335 FOR EXISTING INVESTOR USE ONLY Summary of Part Two of the Confidential Memorandum (Information Relating to Millennium Partners, L.P.) The following is a summary of certain detailed information set forth more fully in the Third Amended and Restated Limited Partnership Agreement, as amended or supplemented from time to time (the "Partnership Agreement") of Millennium Partners, L.P. (the "Master Partnership") and elsewhere in this Confidential Memorandum. This summary should be read in conjunction with, and is qualified in its entirety by, such detailed information. The Master Partnership: Certain Risk Factors: The Master Partnership is an exempted limited partnership registered under the laws of the Cayman Islands. The Master Partnership currently accepts investments from a limited number of affiliated private funds that invest all or a portion of their assets, directly or indirectly, in the Master Partnership or its trading subsidiaries or strategies (each, a "Feeder Fund" and each such Feeder Fund collectively, together with the Master Partnership, its trading subsidiaries or strategies and the entities through which the Portfolio Managers (as defined below) and related personnel invest in their strategies, the "Fund"). Millennium Management LLC, a Delaware limited liability company registered in the Cayman Islands, is the sole general partner of the Master Partnership (the "General Partner"). The Partnership Agreement grants substantially all of the power to control the affairs and operations of the Master Partnership to the General Partner, which is in turn currently ultimately controlled by Israel A. Englander as the controlling trustee of the Millennium Group Management Trust. The General Partner, its affiliated Relying Advisers (as defined herein) and other affiliated entities that participate in the management of the Master Partnership's assets are collectively referred to herein as "Millennium." The investment program of the Fund involves significant risks, including the Fund's reliance upon Millennium and internal and third-party portfolio managers (the "Portfolio Managers") selected by Millennium, the use of leverage and trading in derivative instruments, and certain potential conflicts of interest related to investment opportunities and business activities among the Fund's affiliates and their management. See "Certain Risk Factors Relating to an Investment in the Fund" and "Related- Party Transactions and Other Accounts; Conflicts." CONFIDENTIAL UBSTERRAMAR00004004 EFTA00239336 FOR EXISTING INVESTOR USE ONLY The Fund's Investment Program and StrateEv: The investment objective of the Fund is to achieve above- average appreciation by opportunistically trading and investing in a wide variety of securities, instruments and other investment opportunities, and engaging in a broad array of trading and investment strategies. THERE ARE NO SUBSTANTIVE LIMITS ON THE INVESTMENT STRATEGIES THAT MAY BE PURSUED BY THE MASTER PARTNERSHIP. See "The Fund's Investment Program and Description: Investment Strategies." Millennium is responsible for managing the capital of the Fund in accordance with the Fund's investment objective. Millennium selects, monitors and evaluates Portfolio Managers and allocates and reallocates the Fund's invested capital among them. Millennium also makes direct (i.e., not through Portfolio Managers) investments of the Fund's capital, either as a profit- seeking investment (e.g., direct trading activities, which may include increasing the Fund's exposure to certain strategies or positions or to the net combined positions held by a number of Portfolio Managers) or as hedges, or "contra" trades that seek to establish a reduction in certain exposures. See "The Fund's Investment Program and Strategy." As discussed under "The Fund's Investment Program and Description: Eligible Investments," Millennium does not establish fixed guidelines regarding diversification of investments to be followed by the Fund; the Fund is authorized to invest in all types of securities and other financial instruments of U.S. and non-U.S. issuers, and to sell securities short. The Fund invests opportunistically and the universe of eligible investments is not materially limited by any Millennium policies. However, as is disclosed under "The Fund's Investment Program and Description: Investment Strategies," the investment strategies that the Fund employs include, among others, most or all of the following core strategies: • Relative Value Fundamental Equity; • Statistical Arbitrage/Quantitative, • Fixed-Income; • Merger Arbitrage and Event-Driven; and • Commodities. II-2 CONFIDENTIAL UBSTERRAMAR00004005 EFTA00239337 FOR EXISTING INVESTOR USE ONLY The Fund may, and typically does, also invest in certain other strategies which may include, among others, closed-end fund/asset arbitrage, distressed investing, convertible arbitrage and options arbitrage. The Fund may concentrate investments in a select few strategies while not employing others and may employ additional investment strategies or suspend any such strategies, as determined by Millennium in its discretion, at any time without notice. Leverage: Risk Management: The Master Partnership's Fees and Expenses: The Fund has the power to borrow and ordinarily does borrow very significant sums on a secured or unsecured basis and will continue to do so whenever deemed appropriate by Millennium, including to enhance the Fund's returns and meet withdrawal obligations that would otherwise result in the premature liquidation of investments. Additionally, certain exchange- traded, non-exchange-traded, derivative and other securities and instruments that may be traded will themselves have embedded leverage. The use of leverage can substantially increase the risk of losses to which the Fund's investment portfolio may be subject. See "The Fund's Investment Program and Description: Leverage and Loans." Millennium's risk management personnel engage in regular monitoring of the Fund's portfolio and of the Portfolio Managers' trading activity. The results of this monitoring program are used to assess the risk-adjusted profitability of the Portfolio Managers (using a number of metrics), to make capital allocation decisions, and to quantify and manage the risks inherent in the Fund's portfolio. See "The Fund's Management, Structure and Operations." All expenses incurred by or allocated to the Master Partnership, without limitation, are assessed against the interests of the partners of the Master Partnership and, in turn, against the interests of investors in the Feeder Funds, including, without limitation, expenses incurred by Millennium with respect to, or in connection with (e.g., through the operation of and the provision of services to), the Master Partnership. The Master Partnership does not charge or pay Millennium a management fee. See "The Master Partnership's Fees and Expenses" for a non-exhaustive list of such expenses, including, without limitation, the following general expense categories: compensation and fringe benefits payable to employees, and fees payable to others providing services to the Muter Partnership; expenses related to computers, equipment and CONFIDENTIAL UBSTERRAMAR00004006 EFTA00239338 FOR EXISTING INVESTOR USE ONLY technology; expenses related to maintaining offices, including leases and fixtures; insurance premiums; expenses related to investment activities; accounting, valuation, audit, tax and legal expenses; fees and expenses paid for the investment advisory services of affiliated entities that participate in the management of the Master Partnership's assets; and other miscellaneous expenses. Brokerage Issues: As discussed below under "The Fund's Investment Program and Description: Brokerage Issues," the Fund executes and clears transactions through a number of brokerage firms. Brokers may also act as custodians for the Fund's securities. To the extent that securities are purchased in non-U.S. markets, non-U.S. brokers and/or custodians (including sub-custodians of prime brokers) may be used and may maintain custody of the securities until such time as they are sold. In selecting brokers, dealers and other counterparties to effect portfolio transactions for the Fund and provide financing for the Fund's portfolio, Millennium and its Portfolio Managers will consider such factors as they deem appropriate under the circumstances. Millennium does not have an obligation to obtain the lowest available commission cost. Accordingly, if Millennium determines in good faith that the commissions charged by a broker or the prices charged by a dealer are reasonable in relation to the value of the brokerage and research products or services provided by the broker or dealer, the Fund may pay commissions to the broker or prices to the dealer in an amount greater than another might charge. Subject to its duty to seek to obtain best execution, Millennium has complete discretion in deciding what brokers, dealers and other counterparties the Fund will use and in negotiating the rates of compensation the Fund will pay to such brokers, dealers and other counterparties. In many instances that discretion is delegated to Portfolio Managers who make specific trading decisions, subject to oversight by Millennium. Millennium maintains policies and procedures to review the quality of executions, including periodic review by relevant personnel. See "The Fund's Investment Program and Description: Brokerage." From time to time, brokers (including prime brokers) assist the Fund and other Feeder Funds and products in raising additional capital. Additionally, brokers provide capital introduction and marketing assistance services, and Millennium's representatives from time to time speak at conferences and programs sponsored by brokers, for investors interested in investing in private 11-4 CONFIDENTIAL UBSTERRAMAR00004007 EFTA00239339 FOR EXISTING INVESTOR USE ONLY investment funds. Through such events, prospective investors in the Fund or other Feeder Funds and products encounter Millennium's representatives. Certain of the Fund's prime brokers (or their affiliates) also advise private funds or clients that make investments in the Feeder Funds or may facilitate such investments in other ways. Neither Millennium nor the Fund directly compensate any prime broker for engaging in such activities (except in circumstances where Millennium is required to do so under applicable law). However, the events and other services provided by a prime broker may influence Millennium to some extent in selecting prime brokers and determining the extent to which a prime broker will be used. With respect to "soft dollar" arrangements, the conflicts that typically give rise to concerns underlying the use of soft dollars do not generally exist for Millennium, because the Fund (and not the General Partner) bears all of the expenses related to its own operation. Therefore, the use of soft dollars by Millennium generally does not result in any expense shifting between the General Partner, on the one hand, and the Fund (and, indirectly, investors in the Feeder Funds), on the other hand. Millennium has determined that the use of soft dollars will be limited to payment for research and brokerage products and services that Millennium believes meet the requirements of Section 28(e) of the U.S. Securities Exchange Act of 1934 ("Section 28(e)"), and the U.S. Securities Exchange Commission ("SEC") interpretations thereof, in jurisdictions and transactions where Section 28(e) applies. Although potentially outside the scope of Section 28(e), Millennium has also adopted a policy to the effect that the requirements of Section 28(e) should generally be satisfied by its non-U.S. management companies in addition to any local requirements that are applicable to a particular management company with respect to the use of soft dollars. Millennium generates soft dollars with commissions on securities transactions, and, in accordance with SEC interpretations, with markups, markdowns, commission equivalents or other fees paid to a dealer for executing a transaction. In addition, to the extent consistent with applicable regulatory requirements, soft dollars may be generated through futures transactions, certain principal transactions, non-U.S. transactions or other transactions. A consequence of the use of soft dollar arrangements is that, under U.S. generally accepted accounting principles, items that II-5 CONFIDENTIAL UBSTERRAMAR00004008 EFTA00239340 FOR EXISTING INVESTOR USE ONLY would otherwise be characterized as expenses in the consolidated financial statements of the Master Partnership will instead be subsumed within commissions. As a result, line-item expenses will appear smaller than they would have had soft dollars not been utilized. It is possible that some expenses paid through the utilization of soft dollar arrangements might be greater than if Millennium or the Fund had purchased the research or brokerage services in question directly or had produced them internally. In certain jurisdictions, separate research charges may be assessed alongside the Fund's transactions and collected by the Fund's trading counterparty, for the purpose of funding a research payment account controlled by Millennium. Such research charges are separate and independent of any commissions. Related-Party Transactions: Conflicts: Given the Fund's investment program, short-term market considerations are frequently involved. Turnover of portions of the Fund's portfolio, and, therefore, brokerage commissions, will be substantially greater than the turnover rates of other types of investment vehicles. Significant conflicts of interest among the Fund (and investors in the Feeder Funds), Millennium management entities and Millennium principals may exist from time to time. These conflicts include, but are not limited to, conflicts arising from businesses conducted by the Millennium management entities that are unrelated to, and may be competitive with, the businesses of the Fund, including sponsorship or management of other investment funds, conflicts related to third party fund investments, and the allocation of certain investments directly to affiliates, including the Feeder Funds. See "Related-Party Transactions; Conflicts." Certain Tax Matters As discussed under "Certain Tax Matters Relating to the Master Relating to the Master Partnership," the Master Partnership is an exempted limited Partnership: partnership under Cayman Islands law. The Master Partnership has received an undertaking as to tax concessions pursuant to Section 17 of the Exempted Limited Partnership Law (as amended) from the Governor in Cabinet of the Cayman Islands dated November 28, 2000, which provides that, for a period of 50 years from the date thereof, no law thereafter enacted in the Cayman Islands imposing any taxes to be levied on income or capital assets, gains or appreciation will apply to any income or property of the Master Partnership. 11-6 CONFIDENTIAL UBSTERRAMAR00004009 EFTA00239341 FOR EXISTING INVESTOR USE ONLY There can be no assurance that the U.S. or Cayman Islands tax laws or the tax laws of other relevant jurisdictions will not be changed adversely with respect to the Master Partnership, the Feeder Funds, or their respective investors or that their income tax status will not be successfully challenged by such authorities. Certain Reeulatory Matters: Fiscal Year: The Master Partnership's Independent Public Accountants: Prospective investors should consult their own advisers regarding tax treatment by the jurisdiction applicable to them. Investors should rely only upon advice received from their own tax advisers based upon their own individual circumstances and the laws applicable to them. Each of the Master Partnership and the Feeder Funds is exempt from registration under the U.S. Investment Company Act of 1940, as amended (the "Investment Company Act"), pursuant to Section 3(cX7) thereof. The General Partner is registered as an investment adviser with the SEC under the U.S. Investment Advisers Act of 1940, as amended. Certain affiliates of the General Partner and certain Portfolio Managers are "Relying Advisers" who rely on the General Partner's registration as an investment adviser. The General Partner is also registered as a commodity trading advisor with the U.S. Commodity Futures Trading Commission. Certain of the Fund's non-U.S. based investment managers are registered or licensed in their local jurisdictions, as described under "The Fund's Management, Structure and Operations— Affiliated Relying Advisers," and a number of affiliated entities are registered under the U.S. Commodities Exchange Act, as amended, as described under "Certain Legal and Regulatory Matters Relating to the Fund—U.S. Commodities Exchange Act." The fiscal year-end of the Master Partnership is December 31. The Master Partnership has retained Ernst & Young LLP, 5 Times Square, New York, New York 10036, certified public accountants, as its auditor. II-7 CONFIDENTIAL UBSTERRAMAR00004010 EFTA00239342 FOR EXISTING INVESTOR USE ONLY PART TWO: INFORMATION SPECIFIC TO THE FUND The Fund's Investment Program and Strategy Investment Objective The investment objective of the Fund (as defined herein) is to achieve above- average appreciation by opportunistically trading and investing in a wide variety of securities, instruments and other investment opportunities, and engaging in a broad array of trading and investment strategies. There are no substantive limits on the investment strategies that may be pursued by the Fund. As is described in greater detail below, in carrying out its investment program and strategies, the Fund may, directly or indirectly, trade, invest in or otherwise obtain exposure to U.S. and non-U.S. equity and debt securities (both public and non-public), currencies, futures and forward contracts, commodities, mortgage-backed and asset-backed securities, options and other derivative instruments, loan participations and other means of obtaining credit exposure to selected borrowers, and a variety of other investment opportunities. Portfolio Managers Millennium (as defined herein) is responsible for managing the capital of the Fund in accordance with the Fund's investment objectives. Millennium selects, monitors and evaluates Portfolio Managers (as defined herein) and allocates and reallocates the Fund's invested capital among them. Subject to the oversight of Millennium, the Portfolio Managers generally make day-to-day investment and trading decisions for the Fund. The term "Portfolio Manager" refers to a group, typically one to five individuals but sometimes many more, operating as a single team to manage a portion of the Fund's assets. In some instances a team-member is a sub-Portfolio Manager to whom day-to-day responsibility for oversight of a portion of a Portfolio Manager's portfolio is delegated. Although most of Millennium's Portfolio Managers are actively involved in the day-to-day investment decision-making process with respect to their respective strategies, Millennium may, and does, allocate capital to Portfolio Managers who manage larger teams and whose primary function is to oversee and manage other investment personnel that are responsible for making investment decisions within a particular strategy or strategies. Most Portfolio Managers are employed by Millennium, while certain others are third-party independent contractors not employed by Millennium, and in certain cases are Relying Advisers (as defined herein). Certain Portfolio Managers employed by Millennium form limited liability companies or other entities in connection with the performance of their services to Millennium. Portfolio Managers operate their respective trading groups and are primarily responsible for their groups' trading, personnel, and similar decisions, subject to Millennium's risk management, and, in the case of Portfolio Managers that are Millennium employees or that are Relying Advisers, to Millennium's supervision and control. Portfolio Managers that are independent contractors are responsible for hiring of personnel and certain other aspects of their business, although Millennium generally retains ultimate control over the Millennium accounts managed by such Portfolio Managers. 11-8 CONFIDENTIAL UBSTERRAMAR00004011 EFTA00239343 FOR EXISTING INVESTOR USE ONLY Millennium may also provide certain administrative or other services to such Portfolio Managers, and has done so for certain Portfolio Managers. Certain of such Portfolio Managers also manage capital for one or more other clients. Certain Portfolio Managers who were directly employed by Millennium or who managed assets of the Fund exclusively have become independent contractors or are now providing services to other clients, and others may do so in the future. Firm Trading Millennium also makes direct (i.e., not through Portfolio Managers) investments of the Fund's capital, either as a profit-seeking investment (e.g., direct trading activities) or as hedges or "contra" trades that seek to establish a reduction in certain of the Fund's exposures. Millennium's direct trading activities have included, and may in the future include, increasing (potentially materially) the Fund's exposure to certain strategies or positions or to netted positions held by a number of Portfolio Managers. However, there is no obligation for Millennium to engage in such activities. Additionally, there is no guarantee that direct trading activities will be profitable, and, with respect to increasing the Fund's exposure to certain strategies or positions, such activities may exacerbate any losses associated with such strategies or positions. Investments in Funds Managed by Third--Party Managers In some cases, the Fund's capital is invested in investment funds managed by third- party asset managers. The Fund or Millennium may also take an equity stake in the third- party management company. See "Related-Party Transactions and Other Accounts; Conflicts." Other Structures The Fund may also, from time to time, enter into joint venture arrangements (including with Portfolio Managers), co-invest with third parties, and provide seed capital to managers, or enter into relationships that encompass elements of more than one of these categories, as well as new structures that Millennium determines are appropriate for the Fund. Millennium may in the future establish additional Feeder Funds or investment vehicles that invest in the Master Partnership directly or through existing Feeder Funds, or establish new classes of shares or interests of existing Feeder Funds. The Master Partnership has invested and may continue to invest a portion of its assets in investment funds managed by third party Portfolio Managers. The Master Partnership's Organization Organization Organization of the Master Partnership; Master-Feeder Relationship. Millennium Partners, L.P. (the "Master Partnership") was initially organized in 1989 as a Delaware limited partnership and was redomiciled in the Cayman Islands as of January 1, 2000. The Master Partnership is registered as an exempted limited partnership in the Cayman Islands 11-9 CONFIDENTIAL UBSTERRAMAR00004012 EFTA00239344 FOR EXISTING INVESTOR USE ONLY and therefore, as described below under "Certain Tax Matters Relating to the Master Partnership — Certain Cayman Islands Tax Matters," general and limited partners in the Master Partnership are not currently subject to income, corporation, capital gains or other taxes in the Cayman Islands. Millennium Management LLC, a Delaware limited liability company (the "General Partner") is also registered as a foreign company in the Cayman Islands as required by Cayman Islands law for the general partner of an exempted limited partnership. The General Partner may change its legal structure in the future and become a limited partnership or similar limited liability vehicle without notice to investors in the Feeder Funds. The General Partner, its affiliated Relying Advisers (as defined herein) and other affiliated entities that participate in the management of the Master Partnership's assets are collectively referred to herein as "Millennium." Millennium may sponsor one or more additional investment vehicles, and in some cases Feeder Funds may invest in other assets including through managed accounts managed by the General Partner or its affiliates, which may to some degree compete with the Fund for some investment opportunities and may present additional conflicts. See "Related-Party Transactions and Other Accounts; Conflicts." The General Partner is the sole general partner of the Master Partnership, with substantially all of the power to control its affairs and operations. The Master Partnership currently accepts investments from a limited number of affiliated private funds that invest all or a portion of their assets, directly or indirectly, in the Master Partnership or the Master Partnership's trading subsidiaries or strategies (each, a "Feeder Fund" and each such Feeder Fund collectively, together with the Master Partnership, its trading subsidiaries or strategies and the entities through which the Portfolio Managers and related personnel invest in their strategies, the "Fund"). Currently, the Feeder Funds are: • Millennium USA LP ("Millennium USA"), a Delaware limited partnership formed in November 1997, which accepts investments from taxable U.S. investors that qualify as "accredited investors" and "qualified purchasers" under the U.S. federal securities laws. Millennium USA primarily invests its capital in the Master Partnership. • Millennium International, Ltd. ("Millennium International"), an exempted company incorporated in December 1997 under the laws of the Cayman Islands, which accepts investments from persons who are not "U.S. Persons" and from tax-exempt U.S. Persons (e.g., 501(cX3) non-profit organizations and individual retirement accounts) that qualify as "accredited investors" and "qualified purchasers" under the U.S. federal securities laws. Millennium International primarily invests its capital indirectly in the Master Partnership, through its investment in Millennium Offshore Intermediate, L.P. ("Millennium Offshore Intermediate"), a Cayman Islands exempted limited partnership formed in May 2011. II-10 CONFIDENTIAL UBSTERRAMAR00004013 EFTA00239345 FOR EXISTING INVESTOR USE ONLY • Millennium Global Estate LP ("Millennium Global Estate"), a Delaware limited partnership formed in May 2000, which accepts investments only from insurance company segregated asset accounts, insurance company qualified general accounts and insurance dedicated partnerships that qualify as "accredited investors" and "qualified purchasers" under the U.S. federal securities laws. In accordance with the investment requirements imposed by applicable insurance laws and regulations, Millennium Global Estate invests a portion of its assets in the Master Partnership only as a part of a broader investment strategy. Subsidiaries The Master Partnership owns or controls a number of direct or indirect subsidiaries that may trade in their own names and are currently generally consolidated into the financial reports of the Master Partnership. Although there is currently no plan to do so, the Master Partnership may in the future invest in trading subsidiaries that take in outside investments, and the Feeder Funds may in the future invest directly in the Master Partnership's trading subsidiaries. Capital Structure The equity ownership of the Master Partnership is divided into general partner interests and limited partner interests. The interests differ in the amount of liability that they impose on their holders and in the ability to control the Master Partnership. The liability of limited partners is generally limited to the amount of invested capital at risk, while the liability of general partners can exceed invested capital. The Third Amended and Restated Limited Partnership Agreement of the Master Partnership, as amended or supplemented from time to time (the "Partnership Agreement"), grants the power to control the Master Partnership to the General Partner. The general partner interests and the limited partner interests both participate in the net capital appreciation and net capital depreciation of the Master Partnership, with the capital account of each partner being adjusted on a monthly basis to reflect changes in the Master Partnership's net asset value. There is no incentive compensation paid or allocated to the General Partner at the Master Partnership level. Certain Risk Factors Relating to an Investment in the Fund Prospective investors should consider the following factors in determining whether an investment in a Feeder Fund is a suitable investment: Business and Structural Risks Possible Effect of Withdrawals and Redemptions Substantial withdrawals of capital by a Feeder Fund from the Master Partnership in connection with investor withdrawals or redemptions could require the Master Partnership to liquidate investments more rapidly than might otherwise be desirable to raise the necessary cash to fund the withdrawals. Similarly, Feeder Funds or other investment CONFIDENTIAL UBSTERRAMAR00004014 EFTA00239346 FOR EXISTING INVESTOR USE ONLY vehicles established by Millennium from time to time may invest directly in certain entities through which the Fund invests its capital, and may add or withdraw capital from such entities from time to time without notice to investors in the Feeder Funds. There is a risk that substantial withdrawals and redemptions could be targeted for a single date or occur during a short period of time; moreover, contractual limits on withdrawals and redemptions and early withdrawal or redemption charges may be waived and will not apply upon the occurrence of a Trigger Event (as defined in Part One of the applicable version of this Confidential Memorandum) with respect to those classes of shares or interests of a Feeder Fund with a redemption right in the event of a Trigger Event. Additionally, as discussed below under "Leveraged Deferred Compensation and Similar Arrangements," certain contracts with counterparties who have provided leverage in connection with deferred compensation arrangements of principals and/or senior officers have invested in a class of shares of a Feeder Fund whereby the equity capital held by the counterparty can be withdrawn from the Feeder Fund under certain circumstances, without the imposition of contractual limits on withdrawals, and such terms are likely to be applicable in connection with similar arrangements expected to be established in the future for investments in the Feeder Funds that are not part of deferred compensation arrangements. As a result, the ability of the Fund to plan for and anticipate the volume of withdrawals and redemptions (other than the advance written notice requirements imposed by the Feeder Funds' organizational documents) can be limited. In the event that there are substantial withdrawals, the Fund could find it difficult to adjust its asset allocation and investment strategies to the suddenly reduced amounts of assets. In addition, in order to provide sufficient funds to pay the amounts withdrawn, the Fund might be required to close out positions at an inappropriate time or on unfavorable terms, and events of default and increased collateral requirements could be triggered under certain of the Fund's borrowing facilities and counterparty relationships. In the event of a high volume of withdrawals, such liquidation of positions could adversely affect the value of an investor's interests. Finally, to the extent that a Feeder Fund reduces the restrictions on redemptions that are applicable to its investors, the Fund may be in a position where it is attempting to liquidate less liquid positions to satisfy redemption requests from the other Feeder Funds' investors, which could adversely affect the value of an investor's interests. Furthermore, certain classes of shares of the Feeder Funds have different liquidity terms than other Feeder Funds, which may permit investors in such classes to withdraw capital at a time when investors in other classes are not permitted to do so. For example, Millennium Global Estate, which was established for insurance company segregated accounts, insurance company general accounts and insurance dedicated partnerships, permits withdrawals from limited partners' capital accounts in amounts necessary to satisfy death benefit obligations payable in respect of a limited partner's obligations under an insurance policy and under certain circumstances required by applicable law. Millennium may in the future establish additional classes or Feeder Funds or investment vehicles that invest in the Master Partnership which provide liquidity terms similar to those of Millennium Global Estate or otherwise permit investors to withdraw capital to comply with requirements that are outside of Millennium's control or otherwise at times when investors in other classes or Feeder Funds are not permitted to do so. II-12 CONFIDENTIAL UBSTERRAMAR00004015 EFTA00239347 FOR EXISTING INVESTOR USE ONLY Business Dependent on Key Individuals; Reliance on Portfolio Managers The success of the Fund is significantly dependent upon the expertise of a number of individuals including certain of those individuals listed under "The Fund's Management, Structure and Operations—Principal and Key Managers" below. If certain of these individuals or other individuals designated as such from time to time should cease to be involved in the ongoing operation of Millennium for any reason, the Fund may be exposed to the risk of termination of critical agreements containing "key man" clauses. In addition, in the case of the death, disability, adjudication of incompetency, bankruptcy, insolvency or withdrawal of Mr. Englander, the Fund may be exposed to the withdrawal or redemption, without the imposition of contractual limits on withdrawals and redemptions or early withdrawal or redemption charges, of a substantial portion of the equity capital of the Fund. Millennium grants trading authority to a number of Portfolio Managers. The success of the Fund's investment program (and the return on investments in the Feeder Funds) depends generally on the performance of these Portfolio Managers, rather than on the trading and investing skills of Millennium itself. To the extent that Millennium is unable to select, manage, allocate appropriate levels of capital to and retain Portfolio Managers that, in the aggregate, are able to produce consistent positive returns for the Fund (particularly, outperforming Portfolio Managers) or, conversely, to the extent that Millennium does not adequately monitor, supervise and allocate capital away from Portfolio Managers that are underperforming, the performance of the Fund (and the return on investments in the Feeder Funds) will be adversely affected. Portfolio Managers who are successful may be able to negotiate agreements providing for additional compensation to them, which will reduce the profits available to the Feeder Funds and their investors. Investment by Related Parties of Millennium The principal, senior officers and certain employees of Millennium, and other related parties, may invest in, or have an interest in the returns of, the Fund through a number of channels, including in certain cases through deferred compensation arrangements. Some of these investments have been leveraged through the extension of credit by a third party to the investment vehicle thro