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charged to a Partner without regard to whether the General Partner made either of the elections described above on behalf of the Fund. Furthermore, each Partner will be required to provide the Fund with any information necessary to allow the Fund to comply with its obligations to make Section 754 adjustments and/or its obligations as an electing investment partnership.

Tax-Exempt U.S. Partners

Unrelated Business Taxable Income - Under the terms of the principal agreements relating to the Fund, the General Partner will be required to use reasonable best efforts to conduct the affairs of the Fund in a manner that does not cause any tax-exempt U.S. Partner to recognize any "unrelated business taxable income" within the meaning of Section 512 of the Code; provided, however, that the General Partner may cause the Fund to borrow on a short-term basis and may guarantee the indebtedness of any portfolio company. The General Partner's undertaking will be deemed satisfied with respect to the making, holding or disposing of any portfolio investment if the tax-exempt U.S. Partners are given the opportunity to (or if all Limited Partners are otherwise required to) hold their proportionate shares of such portfolio investment directly or indirectly through an alternative investment vehicle treated as a corporation for U.S. federal income tax purposes. Notwithstanding this undertaking, it is possible that the Fund could realize income which would constitute unrelated business taxable income, and in that event each tax-exempt U.S. Partner would be subject to U.S. federal income tax on its share of such income and may be required to file a U.S. federal income tax return with respect to such income.

Taxable U.S. Partners

Limitations on Allowable Deductions - Under Section 67 of the Code, U.S. taxpayers who are individuals may deduct certain miscellaneous expenses (e.g., investment advisory fees, tax preparation fees, and unreimbursed employee expenses such as the cost of subscriptions to professional journals) only to the extent that these deductions exceed, in the aggregate, 2% of the taxpayer's adjusted gross income. Further, Section 68 of the Code disallows certain deductions otherwise allowable to taxpayers who are individuals; the amount disallowed varies based on the taxpayer's adjusted gross income. Part or all of the Fund's expenses allocated to any U.S. Partner who is an individual (including that Partner's share of the management fee payable to the Fund's Management Company) may be disallowed under these provisions, although tax-exempt U.S. Partners will generally not be affected. Finally, certain expenses (including the fees and expenses of placement agents, if any) incurred in connection with the offer and sale of the Limited Partner Interests are not deductible by any U.S. Partner. If the Management Company or an affiliate pays the fees or expenses of any placement agent, a corresponding portion of the Fund's expenses attributable to payments or accruals of the management fee is likely to constitute a nondeductible syndication expense.

Surtax on Unearned Income - Section 1411 of the Code generally imposes a 3.8% surtax on the "net investment income" of certain U.S. Partners who are citizens or resident aliens, and on the undistributed "net investment income" of certain U.S. estates and trusts. Among other items, "net investment income" generally would include a U.S. Partner's allocable share of the Fund's net gains and certain other income such as interest and dividends, less deductions allocable to such income. In addition, "net investment income" may include gain from the sale, exchange or other taxable disposition of an interest in the Fund, less certain deductions. U.S. Partners

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